SolarEdge Technologies (SEDG) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $265.4M, up 30% sequentially but down 73% year-over-year, with $241.2M from solar and $24M from non-solar businesses.

• GAAP net loss was $130.8M, improved from Q1 2024 but down from a $119.5M profit in Q2 2023; non-GAAP net loss was $101.2M.

• Sell-through reached $520M, up 18% quarter-over-quarter, indicating undershipment of $275M.

• The company implemented a restructuring plan, reducing headcount by 16% in H1 2024 and further by 400 employees in July.

• Channel inventory clearing is ongoing, with U.S. normalization expected by Q3 2024 and Europe by early 2025.

Financial highlights

• GAAP gross margin was -4.1%, improved from -12.8% in Q1 2024 but down from 32.0% in Q2 2023; non-GAAP gross margin was 0.2%.

• GAAP net loss per share was $(2.31); non-GAAP net loss per share was $(1.79).

• Cash and equivalents stood at $814M; net of debt, $165.3M as of June 30, 2024.

• Inventory levels decreased to $1.5B, with average inventory days down to 519.

• Free cash flow was negative $140M, with cash used in operations at $44.8M.

Outlook and guidance

• Q3 2024 revenue guidance: $260M–$290M; solar segment $245M–$280M.

• Non-GAAP gross margin expected between -3% and +1%, including 560 bps IRA benefit.

• Non-GAAP operating expenses expected at $111M–$116M.

• Normalized quarterly revenue of $550M and gross margin of ~23% (including IRA/45X) targeted by Q2 2025.

• Cash flow positive expected in H1 2025.