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News   Press Releases

SolarEdge Announces Third Quarter 2017 Financial Results

SEDG | November 8, 2017

SolarEdge Announces Third Quarter 2017 Financial Results

SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in PV inverters, power optimizers, and module-level monitoring services, today announced its financial results for the third quarter ended September 30, 2017.

Third Quarter 2017 Highlights

  • Revenues for the quarter of $166.6 million
  • GAAP gross margin for the quarter of 34.9%
  • GAAP operating income for the quarter of $25.4 million
  • GAAP net income for the quarter of $28.0 million
  • Non-GAAP net income for the quarter of $31.5 million
  • GAAP net diluted earnings per share for the quarter of $0.61
  • Non-GAAP net diluted earnings per share for the quarter of $0.66
  • Cash flow from operating activities of $33.6 million
  • 676 Megawatts (AC) of inverters shipped for the quarter

“We are happy to report another record quarter, in revenues, profitability and cash flow generation. On the operational side, we shipped more than two million optimizers this quarter, and have now shipped more than 20 million optimizers since initiating sales in 2010,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “Sales this quarter from outside the United States were 51% of our revenues, resulting from our continued investment in global sales. We continue to generate increasing cash flow from operations which enhances our financial strength and allows us to continue to invest in new products and development of new markets.”

Quarter Ended September 30, 2017 Summary

The Company reported record revenues of $166.6 million, up 22% from the prior quarter and up 30% year over year.

GAAP gross margin reached 34.9%, up from 34.6% in the prior quarter and up from 32.6% year over year.

GAAP operating expenses were $32.7 million, an increase of 17% from the prior quarter and 38% year over year.

GAAP operating income was $25.4 million, up 33% from $19.1 million in the prior quarter and up from $18.2 million year over year.

GAAP net income was $28.0 million, up 24% from $22.5 million in the prior quarter and up from $15.6 million year over year.

Non-GAAP net income was $31.5 million, up 22% from $25.8 million in the prior quarter and up from $20.9 million year over year.

GAAP net diluted earnings per shares (“EPS”) was $0.61, up from $0.50 in the prior quarter and up from $0.35 year over year.

Non-GAAP net diluted EPS was $0.66, up from $0.55 in the prior quarter and up from $0.46 year over year.

As of September 30, 2017, cash, cash equivalents, restricted cash and marketable securities totaled $304.7 million, compared to $274.7 million on June 30, 2017.

Outlook for the Quarter Ending December 31, 2017

The Company also provides guidance for the fourth quarter ending December 31, 2017 as follows:

  • Revenues to be within the range of $175 million to $185 million;
  • Gross margins to be within the range of 33% to 35%.

Conference Call

The Company will host a conference call to discuss these results at 4:30 P.M. EST on Wednesday, November 8, 2017. The call will be available, live, to interested parties by dialing 888-298-3457. For international callers, please dial +1 719-325-2199. The Conference ID number is 6325065. A live webcast will also be available in the Investors Relations section of the Company’s website at: http://investors.solaredge.com.

A replay of the webcast will be available in the Investor Relations section of the Company’s web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.

About SolarEdge

SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems. The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system. Supporting increased PV proliferation, the SolarEdge system consists of power optimizers, inverters, home energy management, storage solutions, and a cloud-based monitoring platform. SolarEdge’s solutions address a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations. SolarEdge is online at http://www.solaredge.us.

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this release. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. The Company believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information, among other things, concerning: our possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; financing and investment plans; dividend policy; competitive position; industry and regulatory environment; general economic conditions; potential growth opportunities; and the effects of competition. These forward-looking statements are often characterized by the use of words such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negative or plural of those terms and other like terminology.

Forward-looking statements are only predictions based on our current expectations and our projections about future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Given these factors, you should not place undue reliance on these forward-looking statements. These factors include, but are not limited to, the matters discussed in the section entitled “Risk Factors” of our Registration Statement on Form S-1 (including the related prospectus), Annual Report on Form 10-KT for the year ended December 31, 2016, filed on February 21, 2017, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of November 8, 2017. The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

 
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
  Three months ended   Nine months ended
September 30, September 30,
2017  

2016

 2017     2016
Unaudited Unaudited
 
Revenues $ 166,552 $ 128,484 $ 417,705 $ 378,441
Cost of revenues   108,498   86,609   273,909     256,719
 
Gross profit   58,054   41,875   143,796     121,722
 
Operating expenses:
 
Research and development, net 14,363 9,935 38,546 27,876
Sales and marketing 13,217 10,036 35,953 27,792
General and administrative   5,078   3,664   12,782     10,191
 

Total operating expenses

   32,658   23,635   87,281     65,859
 
Operating income 25,396 18,240 56,515 55,863
 
Financial income, net   2,666   390   7,671     1,892
 
Income before taxes on income 28,062 18,630 64,186 57,755
 
Taxes on income (tax benefit)   91   3,014   (484 )   4,067
 
Net income $ 27,971 $ 15,616 $ 64,670   $ 53,688
 
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  September 30,   December 31,
  2017     2016  
Unaudited
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 149,448 $ 104,683
Restricted cash 1,400 897
Marketable Securities 81,488 74,465
Trade receivables, net 91,694 71,041
Prepaid expenses and other accounts receivable 38,201 21,347
Inventories   62,356     67,363  

 

Total current assets

   424,587     339,796  
 
LONG-TERM ASSETS:
Marketable securities 72,351 44,262
Property, equipment and intangible assets, net 45,714 37,381
Prepaid expenses and lease deposits 732 489
Deferred tax assets, net   5,822     2,815  
 

Total long term assets

   124,619     84,947  
 

Total assets

 $ 549,206   $ 424,743  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables, net $ 42,700 $ 34,001
Employees and payroll accruals 17,640 13,018
Warranty obligations 12,942 13,616
Deferred revenues 2,743 1,202
Accrued expenses and other accounts payable   16,407     8,648  
 

Total current liabilities

   92,432     70,485  
 
LONG-TERM LIABILITIES:
Warranty obligations 58,625 44,759
Deferred revenues 26,858 18,660
Lease incentive obligation   1,838     2,061  
 

Total long-term liabilities

   87,321     65,480  
 
COMMITMENTS AND CONTINGENT LIABILITIES
 
STOCKHOLDERS’ EQUITY:
 
Common stock 4 4
Additional paid-in capital 323,076 307,098
Accumulated other comprehensive loss (297 ) (324 )
Retained earnings (accumulated deficit) 46,670 (18,000 )
 

Total stockholders’ equity

 369,453 288,778
 

Total liabilities and stockholders’ equity

 $ 549,206   $ 424,743  
 
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Nine months ended
September 30,
  2017       2016  
Unaudited

Cash flows provided by operating activities:
Net income $ 64,670 $ 53,688
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and intangible assets 4,932 3,468
Amortization of premiums on available-for-sale marketable securities 1,310 829
Stock-based compensation 12,183 8,132
Deferred tax assets, net (3,063 ) 2,327
Realized losses on Cash Flow Hedges - 2
 
Changes in assets and liabilities:
Inventories 5,005 19,216
Prepaid expenses and other accounts receivable (17,360 ) 8,214
Trade receivables, net (20,168 ) (38,105 )
Trade payables, net 8,667 (21,699 )
Employees and payroll accruals 4,509 (916 )
Warranty obligations 13,192 15,514
Deferred revenues 9,699 5,069
Accrued expenses and other accounts payable 7,537 2,192
Lease incentive obligation   (223 )   (185 )
 
Net cash provided by operating activities   90,890     57,746  
 

Cash flows used in investing activities:
Purchase of property and equipment (13,203 ) (13,869 )
Decrease (increase) in restricted cash (503 ) 2,471
Decrease (increase) in short and long-term lease deposits (60 ) 37
Investment in available-for-sale marketable securities (82,469 ) (85,579 )
Maturities of available-for-sale marketable securities   46,513     21,654  
 
Net cash used in investing activities $ (49,722 ) $ (75,286 )
 

Cash flows from financing activities:
Issuance costs related to initial public offering $ - $ (194 )
Proceeds from issuance of shares upon exercise of options   3,795     1,774  
 
Net cash provided by financing activities   3,795     1,580  
 
Increase (decrease) in cash and cash equivalents 44,963 (15,960 )
Cash and cash equivalents at the beginning of the period 104,683 106,150
Effect of exchange rate differences on cash and cash equivalents   (198 )   (176 )
 
Cash and cash equivalents at the end of the period $ 149,448   $ 90,014  
 
SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except gross profit and per share data)
(Unaudited)
 
Reconciliation of Non-GAAP Financial Measures
 
  Reconciliation of GAAP to Non-GAAP Gross Profit
Three months ended   Nine months ended
September 30, 2017   June 30, 2017   September 30,2016 September 30, 2017   September 30,2016
 
Gross profit (GAAP) 58,054 47,066 41,875 143,796 121,722
Stock-based compensation 538   517   385   1,548   941  
Gross profit (Non-GAAP) 58,592   47,583   42,260   145,344   122,663  
 
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Gross margin (GAAP) 34.9 % 34.6 % 32.6 % 34.4 % 32.2 %
Stock-based compensation 0.3 % 0.4 % 0.3 % 0.4 % 0.2 %
Gross margin (Non-GAAP) 35.2 % 35.0 % 32.9 % 34.8 % 32.4 %
 
Reconciliation of GAAP to Non-GAAP Operating expenses
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Operating expenses (GAAP) 32,658 27,951 23,635 87,281 65,859
Stock-based compensation R&D 1,423 1,280 927 3,908 2,398
Stock-based compensation S&M 1,439 1,204 849 3,673 2,421
Stock-based compensation G&A 1,137   1,033   939   3,054   2,371  
Operating expenses (Non-GAAP) 28,659   24,434   20,920   76,646   58,668  
 
Reconciliation of GAAP to Non-GAAP Operating income
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Operating income (GAAP) 25,396 19,115 18,240 56,515 55,863
Stock-based compensation 4,537   4,034   3,100   12,183   8,132  
Operating income (Non-GAAP) 29,933   23,149   21,340   68,698   63,995  
 
Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Tax on income (Tax benefit) (GAAP) 91 186 3,014 (484 ) 4,067
Deferred tax asset (realized) 959   773   (2,179 ) 3,064   (2,326 )
Tax on income (Tax benefit) (Non-GAAP) 1,050   959   835   2,580   1,741  
 
Reconciliation of GAAP to Non-GAAP Net income
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Net income (GAAP) 27,971 22,524 15,616 64,670 53,688
Stock-based compensation 4,537 4,034 3,100 12,183 8,132
Deferred tax realized (asset) (959 ) (773 ) 2,179   (3,064 ) 2,326  
Net income (Non-GAAP) 31,549   25,785   20,895   73,789   64,146  
 
Reconciliation of GAAP to Non-GAAP Net basic EPS
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Net basic earnings per share (GAAP) 0.66 0.54 0.38 1.55 1.32
Stock-based compensation 0.11 0.10 0.08 0.29 0.20
Deferred tax realized (asset) (0.03 ) (0.02 ) 0.05   (0.08 ) 0.06  
Net basic earnings per share (Non-GAAP) 0.74   0.62   0.51   1.76   1.58  
 
Reconciliation of GAAP to Non-GAAP Net diluted EPS
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Net diluted earnings per share (GAAP) 0.61 0.50 0.35 1.44 1.21
Stock-based compensation 0.07 0.06 0.06 0.19 0.14
Deferred tax realized (asset) (0.02 ) (0.01 ) 0.05   (0.06 ) 0.05  
Net diluted earnings per share (Non-GAAP) 0.66   0.55   0.46   1.57   1.40  
 
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
Three months ended Nine months ended
September 30, 2017 June 30, 2017 September 30,2016 September 30, 2017 September 30,2016
Number of shares used in computing net diluted earnings per share (GAAP) 46,131,556 44,831,590 43,995,227 44,937,527 44,348,461
Stock-based compensation 1,535,258   2,228,246   1,742,211   2,084,722   1,343,651  
Number of shares used in computing net diluted earnings per share (Non-GAAP) 47,666,814   47,059,836   45,737,438   47,022,249   45,692,112  

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, +1 510-498-3263
Chief Financial Officer
investors@solaredge.com
or
Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari, +1 617-542-6180
investors@solaredge.com

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