SolarEdge Technologies Q4 Earnings Call Highlights

Key Points

• Strong turnaround: Q4 revenue rose about 70% year‑over‑year (full‑year +30%), non‑GAAP gross margin climbed to ~23%, and the company generated ~$43M in Q4 free cash flow (FY FCF ~$77M vs. -$421M in 2024).
• Product and growth roadmap: Management is scaling the Nexis single‑SKU platform (launch Mar. 19; high‑volume shipments expected in Q3 2026, transition largely H2 2026), pushing higher battery attach rates, and investing in an AI data‑center power effort (800V DC/SST) that likely won’t contribute revenue before 2027.
• Operational momentum and guidance: SolarEdge reported U.S. share gains and a ramp in U.S. manufacturing, guided Q1 revenue of $290M–$320M with 20%–24% gross margin, held ~<$581M> in cash at year‑end, and said portfolio optimization actions are largely complete despite one‑time charges from Kokam and an e‑Mobility sale.

SolarEdge Technologies NASDAQ: SEDG outlined continued progress in its turnaround and detailed priorities for 2026 during its fourth-quarter earnings call, emphasizing year-over-year revenue growth, expanding margins, and a shift toward “offense” as it targets profitable growth while scaling new products and investing in an AI data center power opportunity.

Fourth-quarter results extend turnaround momentum

CEO Shuki Nir said the company gained momentum throughout 2025, with revenue and gross margin improving each quarter. Fourth-quarter revenue increased 70% year-over-year and, according to management, outperformed typical seasonal patterns without a “significant one-time pull forward” from Safe Harbor or 25B activity. Nir added that SolarEdge generated $43 million of free cash flow in the quarter and exceeded the top end of its margin guidance.

For full-year 2025, Nir said SolarEdge grew revenue 30% year-over-year, raised gross margin from negative territory in 2024 to 23% in the fourth quarter of 2025, and produced $77 million in free cash flow versus negative $421 million in 2024. He described 2025 as a year focused on restoring discipline, rebuilding margins, and stabilizing the financial situation.

Segment and regional highlights: U.S. share gains, Europe stabilization

Nir said SolarEdge increased market share in the U.S. across residential, commercial, and storage categories. In Europe, he said the company gained share in commercial and industrial (C&I) and stabilized its share position in residential, despite a slow market. He also noted the company continued ramping U.S. manufacturing to serve domestic demand and began exporting its first products late in the year.

In the Q&A, management said channel inventory levels had largely normalized. Nir said most European distributors had returned to “normal levels of inventory,” and the U.S. channel also had “normal levels” with “nothing major to report.”

Financial details: margins, portfolio actions, and cash

CFO Asaf Alperovitz reported non-GAAP fourth-quarter revenue of $334 million, slightly down sequentially but better than the typical 10%–15% seasonal decline. Regionally, U.S. revenue was $198 million (59% of revenue), Europe was $99 million (30%), and international markets were $37 million (11%).

Non-GAAP gross margin rose to 23.3% from 18.8% in the prior quarter, which Alperovitz attributed largely to higher sales of U.S.-made products and lower seasonal warranty costs. Non-GAAP operating expenses were $88.7 million, slightly higher sequentially and within guidance, with the Israeli shekel cited as a headwind net of hedging.

SolarEdge’s non-GAAP operating loss narrowed to $11 million from $23.8 million in Q3, and non-GAAP net loss improved to $8.2 million from $18.3 million. Non-GAAP net loss per share was $0.14 versus $0.31 in the prior quarter.

On the balance sheet, Alperovitz said cash and equivalents totaled approximately $581 million at year-end, increasing by about $34 million in Q4, driven by roughly $43 million in quarterly free cash flow. He said inventory increased by $22 million due to higher raw material procurement for the Nexis launch and higher battery demand, while accounts receivable declined to $267 million from $286 million due to strong collections.

SolarEdge also discussed portfolio optimization actions. Subsequent to year-end, Alperovitz said the company sold the remainder of its e-Mobility business for $12 million, resulting in an approximately $8 million GAAP net loss. In Q4, the company recorded a one-time non-cash finance expense of about $60 million related to the closure of the Kokam battery manufacturing division. Management said portfolio optimization actions are “largely complete,” following prior divestitures including the tracker business and battery manufacturing facilities in South Korea.

Outlook: Q1 guidance and operational focus

For the first quarter of 2026, SolarEdge guided revenue to $290 million–$320 million, with non-GAAP gross margin of 20%–24% and non-GAAP operating expenses of $88 million–$93 million. Management said the midpoint implies better-than-normal seasonality and that guidance does not include any significant one-time pull forward of revenue.

Alperovitz said Q1 gross margin at the midpoint would be slightly lower than Q4 mainly due to lower revenue seasonality, partially offset by higher sales of U.S.-made products and early efficiencies from the “single SKU” rollout. He also said tariffs are being treated as an ongoing cost of doing business and were not quantified separately, adding that exports of U.S.-produced products can allow the company to recover some tariff costs through a drawback mechanism over time.

Nexis platform rollout, storage attach rates, and AI data center power

Management repeatedly highlighted 2026 priorities: profitable growth, market share gains, scaling the Nexis platform, and investing in AI data center power solutions. Nir said SolarEdge will concentrate efforts in a more selective set of markets where it believes it can win, enabling global rollout of the single-SKU concept, warehouse consolidation, and supply chain streamlining.

On products, Nir said SolarEdge’s Nexis platform is on schedule, with a launch event planned in Germany on March 19. He said early customer feedback has been positive and described features aimed at simplifying installation and serviceability. In Q&A, management said rollout will begin in the DACH region and the U.S., then expand to additional European countries and Australia, with high-volume shipments expected to begin in the third quarter of 2026. Nir said most of the transition should occur in the second half of 2026, with completion potentially around Q1 2027.

Storage was another theme. Nir said battery attach rates are expected to rise globally and argued SolarEdge’s DC-coupled architecture provides efficiency advantages versus AC-coupled alternatives. He said SolarEdge became the number two supplier for residential batteries in the U.S. in the third quarter of 2025 and expects storage to become a larger part of sales. He also said the company intends to address opportunities in its installed base where it makes sense.

SolarEdge also expanded on its AI data center power initiative centered on an 800-volt DC architecture and a solid-state transformer (SST) concept. Nir said the company is pursuing a system to convert 34.5 kilovolts directly to 800-volt DC with efficiency above 99% and has engaged potential customers and ecosystem partners under NDA at a technical level. In response to analyst questions, management said it does not expect revenue from the data center initiative before 2027 and noted the industry is expecting a ramp beginning in 2028. Nir added that SolarEdge’s experience in mass production of power electronics could be a key differentiator as the market develops. The company said it has not yet decided where to manufacture the SST product, though the U.S. is being considered, and that investment in the effort is included in Q1 guidance.

Alperovitz also noted SolarEdge is increasing investment in working capital to support anticipated growth and expects higher capital expenditures in 2026 compared with about $25 million in 2025, citing incremental investment tied to SST development and production ramping.

About SolarEdge Technologies NASDAQ: SEDG

SolarEdge Technologies NASDAQ: SEDG is a global provider of solar energy solutions focused on optimizing photovoltaic (PV) power generation. The company's core offerings include power optimizers, inverters and cloud-based monitoring platforms designed to maximize energy output and improve safety across residential, commercial and utility-scale installations. By coupling module-level electronics with centralized inverters, SolarEdge's technology enables real-time performance monitoring and rapid fault detection to enhance system reliability.

In recent years, SolarEdge has expanded its product portfolio beyond solar PV to include energy storage systems, electric vehicle (EV) charging solutions and smart energy management tools.

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