SolarEdge Technologies, Inc. 2026 Q2 Earnings Call

Please go ahead. Good morning, thank you for joining us to discuss SolarEdge's operating results for the second quarter, June 30, 2026, as well as the company's outlook for the third quarter of 2026.

With me today are Shuki Nir, Chief Executive Officer, Maoz Sigron, Chief Financial Officer, and Meir Adest, co-founder of SolarEdge. Shuki will begin with a brief review of the results for the second quarter ended June 30, 2026. Moz will review the financial results for the second quarter, followed by the company's outlook for the third quarter of 2026. We will open the call for questions. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.

We encourage you to review the safe harbor statements contained in our earnings press release and our filings with the SEC for a more complete description of such risks and uncertainties. We disclaim any obligation to update any forward-looking statements. Please note, during this earnings call, we may refer to certain non-GAAP measures, which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are being presented because we believe that they provide investors with a means of evaluating and understanding how the company's management evaluates the company's operating performance. Reconciliation of these measures can be found in our earnings press release and SEC filings. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP. Listeners who do not have a copy of the quarter ended June 30, 2026 press release may obtain a copy by visiting the Investor Relations section of the company's website.

With that, I will turn the call over to Shuki.

Thank you, Erica. Good morning, everyone, and thank you for joining our call today. On our last call, I discussed how 2026 would be a year of transformation and acceleration for the company, built around four main priorities: driving profitable growth, expanding global market share, scaling the SolarEdge Nexis platform, and advancing our opportunity in power infrastructure for the AI factories of the future. This quarter, we saw tangible progress across each of these priorities, and I'm pleased to say that we reached an important milestone in our turnaround. Starting with our execution towards profitable growth. Since the beginning of 2025, we have grown our quarterly revenue year-over-year and have just delivered a strong second quarter. Revenue grew 20% year-over-year to $346 million, once again, with no significant pull forward of revenue and non-GAAP gross margin expanded for the sixth consecutive quarter.

Combined with our continued expense discipline, we delivered non-GAAP operating profitability for the first time in nearly three years, an important milestone in our transformation and a reflection of the relentless focus our team has maintained on operational efficiency and customer centricity. Looking to the third quarter, we expect revenue to be in the range of $310 million-$340 million. Most of the sequential decline is expected in Europe at approximately $15 million at the midpoint, mainly due to seasonality. At the same time, given the continued softness in the market, we do not expect the typical third quarter pickup in the U.S. Shifting to our second priority, market share gains. Our objective in 2026 has been to grow market share through product innovation, operational focus, and improved customer satisfaction.

The U.S. resi market demand remained soft in the second quarter as customers navigated a slower tax equity funding environment and continued uncertainty around FEOC. This environment has resulted in less funds available to start new projects and to pay for the completion of existing ones. It has put a strain on installers' businesses and cash flows and led to lower purchases from distributors, who have also reduced the amount of inventory they carry. We expect this softness to continue in the third quarter as the market awaits further clarity and better funding environment. With that said, when the market rebounds, we believe we are well positioned to gain share. This is due to our fit with the TPO business model and the amount of safe harbor transactions closed ahead of the July 4th deadline.

We will share more information about the safe harbor transactions in both resi and C&I during our Investor Day on September 10th. In U.S. C&I, we have seen strong momentum. Better execution across EPCs, small C&I customers, and enterprise accounts has helped increase our market share to more than 50% of U.S. C&I rooftop installations in the most recent report. In addition, SolarEdge systems now installed on rooftops of more than 60% of Fortune 100 companies. The outlook for this market remains positive, supported by rising electricity prices and data center-driven demand. We have been the only major C&I inverter vendor to deliver U.S.-manufactured products at scale designed to meet domestic content, non-FEOC, and FCC Covered List requirements. Together with the safe harbor agreements we have secured, we believe that we can gain further share in the coming years.

In Europe, we more than doubled our revenue year-over-year as demand for solar grew in anticipation of higher electricity prices, and demand for storage increased in anticipation of the phase-out of net metering across several major markets. We believe the excitement around Nexis, along with the orders we have received in recent months, are positive indicators of our ability to gain share in the DACH region in the coming quarters. We expect a similar momentum across Europe with the planned rollout of the single-phase Nexis in Q1 2027. In addition, in recent quarters, we have launched retrofit campaigns in the Netherlands and the DACH region, where our combined installed base is greater than 1 million homes. In Q2, we generated more than $20 million in upsell activities, and we expect this opportunity to continue growing. Turning to our third priority, scaling the Nexis platform.

At Intersolar Europe in Germany this June, the highlight for us was the fantastic feedback we received from installers about Nexis. As discussed in previous calls, the platform was designed from the ground up to be a leading PV and storage solution in an environment where the grid is congested and utilities introduce dynamic tariffs. Recently, an independent renewable energy engineering consultant benchmarked Nexis against a leading competitor in Europe from the homeowner's perspective. The analysis shows that Nexis is expected to deliver €5,000 in additional savings over 15 years, driven by superior round-trip efficiency across all power levels and higher PV production. In the second quarter, we began to meaningfully roll out the three-phase version of Nexis in Europe, with shipments exceeding $60 million.

In the U.S., initial feedback from installers and TPOs has been very positive, and we expect Nexis installations to grow as we begin to roll out in volume. Nexis has been approved on a growing list of U.S. financing platforms, spanning TPO, prepaid PPA, and loan products, giving installers and homeowners more ways to access SolarEdge Nexis regardless of how they choose to finance. Turning to our fourth priority in the AI factory market, where we believe there is a substantial long-term opportunity. In the second quarter, our data center business shifted from development to demonstration as we continue to advance our solution and to engage with prospects and the ecosystem. Prospective customers, which importantly included their technical and engineering teams, had the opportunity to see live demonstrations of our SST in our labs.

These demonstrations validated several critical elements of the system, including 99% efficiency across a range of power levels, direct conversion from medium voltage AC to a regulated DC bus, and encouraging installation results. In a number of RFIs we have responded to, efficiency is a key area of focus. Efficiency directly translates into greater compute capacity within a fixed power envelope, and this additional compute leads to higher revenue, lower cost per token, and improved return on investment for the data center. Our technical progress and customer evaluations and feedback have increased our confidence in both the size of this opportunity and the strength of our position. We believe SolarEdge is developing a highly differentiated solution that addresses the growing need for greater power efficiency and increased compute capacity within data centers.

We remain focused on our next planned milestones, getting to a working system in our lab by the end of this year, followed by pilot installations in 2027 and volume shipments in 2028. To summarize, the second quarter marked a meaningful point in our turnaround. We returned to non-GAAP operating profitability and made progress in all four priorities. While we are pleased with this progress, our team continues to focus on maintaining the operating and financial discipline, driving profitable growth, gaining share in our core markets, scaling up the Nexis platform, and advancing our SST to capture the AI factory opportunity. Lastly, I would like to welcome our new CFO, Maoz. His experience across finance, operations, capital markets, and organizational transformation is highly relevant as we continue our journey from turnaround to profitable growth.