SolarEdge Technologies (SEDG) investor relations material

Executive summary

• Q1 2026 revenue grew 46% year-over-year to $310.5 million, marking the fifth consecutive quarter of annual growth and sixth consecutive quarter of margin expansion, driven by higher sales of power optimizers and batteries, despite lower inverter sales and discontinued energy storage business.

• Focused on profitable growth, global market share expansion, scaling Nexis, and AI data center power investments, with innovation and new product launches including the second-generation commercial battery and advanced AI data center power solution targeting pilot installations in 2027.

• U.S. residential market faced headwinds from tax credit policy changes and FEOC uncertainty, but company expects to benefit from market rebound and higher battery attach rates; European market rebounded in March and April, with strong demand for PV plus storage and Nexis platform fully booked for Q2.

• Strategic focus shifted to core markets and products, consolidating manufacturing in the US and Israel, and discontinuing operations in China, Mexico, and Hungary.

• Net loss narrowed year-over-year, reflecting improved gross profit and reduced operating expenses, with positive cash flow and continued investment in innovation.

Financial highlights

• Q1 non-GAAP revenue: $310 million, up 46% year-over-year, down 7% sequentially; GAAP revenue: $310.5 million, up 41.5% year-over-year.

• U.S. revenue: $150 million (51% of total), down 20% sequentially; Europe: $114 million (37%), up 14%; International: $38 million (12%), up 5%.

• Non-GAAP gross margin: 23.5%, up from 23.3% in Q4; GAAP gross margin: 22.0%, up from 8.0% in Q1 2025.

• Non-GAAP operating loss: $25 million; excluding $14 million doubtful debt, ongoing operating loss was $11 million, flat sequentially; GAAP operating loss: $55 million.

• Non-GAAP net loss: $26.3 million ($0.43 per share); GAAP net loss: $57.4 million ($0.95 per share), improved from $98.5 million in Q1 2025.

• Cash and investments: $583 million as of March 31, 2026; cash and cash equivalents at quarter-end were $512.4 million, with $29.3 million in marketable securities and $41.0 million in restricted cash.

• Free cash flow positive for the quarter: $21 million (non-GAAP), $20.7 million (GAAP); net cash and investments portfolio increased by $2 million quarter-over-quarter.

Outlook and guidance

• Q2 2026 revenue guidance: $325–$355 million, with no significant pull forward of revenue.

• Q2 non-GAAP gross margin guidance: 23%–27%.

• Q2 non-GAAP operating expenses: $86–$91 million.

• Implied Q2 EBIT loss at midpoint: ~$3.5 million, approaching breakeven.

• Expects positive cash flow for full year 2026 despite higher CapEx and working capital investments; management expects sufficient liquidity for at least the next 12 months.

• Ongoing monitoring of US tax credit changes (H.R.1) and trade tariffs, which may impact future demand, margins, and eligibility for incentives.