What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-04 · 292 added, 365 removed, 13 unchanged (98% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NOTE REGARDING FORWARD-LOOKING STATEMENTS

contained in this Form 10-Q or statements incorporated by reference from documents we have filed with the Securities and Exchange Commission

may contain forward-looking statements that are based on our management’s expectations, estimates, projections, beliefs and assumptions

in accordance with information currently available to our management.

Forward-looking statements should be read in conjunction with our

unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this report.

This discussion contains

certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the

Securities Exchange Act of 1934, as amended.

Forward-looking statements include information concerning our possible or assumed future

results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive

position, industry and regulatory environment, effects of acquisitions, growth opportunities and the effects of competition.

Forward-looking

statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,”

“could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,”

“potential,” “predict,” “project,” “should,” “will,” “would” or

similar expressions and the negatives of those terms.

Forward-looking

statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements

to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Form 10-Q or statements incorporated by reference from documents we have filed with the Securities and Exchange Commission may contain forward-looking statements that are based on our management’s expectations, estimates, projections, beliefs and assumptions in accordance with information currently available to our management.

Forward-looking statements should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this report.

This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, industry and regulatory environment, effects of acquisitions, growth opportunities and the effects of competition.

Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Given these uncertainties, you should not place undue reliance on forward-looking statements.

Also, forward-looking statements represent

our management’s beliefs and assumptions only as of the date of this filing.

Important factors that could cause actual results to

differ materially from our expectations include:

existing and future responses to and

effects of Covid-19;

future demand for renewable energy

including solar energy solutions;

changes to net metering policies or

the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications;

Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this filing.

Important factors that could cause actual results to differ materially from our expectations include:

• existing and future responses to and effects of Covid-19;

• future demand for renewable energy including solar energy solutions;

• changes to net metering policies or the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications;

• changes in the U.S.

trade environment,

including the recent imposition of import tariffs;

federal, state, and local regulations

governing the electric utility industry with respect to solar energy;

the retail price of electricity derived

from the utility grid or alternative energy sources;

interest rates and supply of capital

in the global financial markets in general and in the solar market specifically;

competition, including introductions

of power optimizer, inverter and solar photovoltaic (“PV”) system monitoring products by our competitors;

developments in alternative technologies

or improvements in distributed solar energy generation;

historic cyclicality of the solar

industry and periodic downturns;

defects or performance problems in

our products;

our ability to forecast demand for

our products accurately and to match production with demand;

our dependence on ocean transportation

to timely deliver our products in a cost-effective manner;

our dependence upon a small number

of outside contract manufacturers and limited or single source suppliers;

capacity constraints, delivery schedules,

manufacturing yields, and costs of our contract manufacturers and availability of components;

delays, disruptions, and quality control

problems in manufacturing;

shortages, delays, price changes,

or cessation of operations or production affecting our suppliers of key components;

business practices and regulatory

compliance of our raw material suppliers;

performance of distributors and large

installers in selling our products;

disruption in our global supply chain

and rising prices of oil and raw materials as a result of the conflict between Russia and Ukraine may adversely affect our business;

customers’ financial stability, creditworthiness, and debt leverage ratio;

our ability to retain key personnel

and attract additional qualified personnel;

our ability to effectively design,

launch, market, and sell new generations of our products and services;

our ability to maintain our brand

and to protect and defend our intellectual property;

our ability to retain, and events

affecting, our major customers;

our ability to manage effectively

the growth of our organization and expansion into new markets;

our ability to integrate acquired

fluctuations in global currency exchange

unrest, terrorism, or armed conflict

general economic conditions in our

domestic and international markets;

consolidation in the solar industry

among our customers and distributors;

trade environment, including the imposition of import tariffs;

• federal, state, and local regulations governing the electric utility industry with respect to solar energy;

• the retail price of electricity derived from the utility grid or alternative energy sources;

• interest rates and supply of capital in the global financial markets in general and in the solar market specifically;

• competition, including introductions of power optimizer, inverter and solar photovoltaic (“PV”) system monitoring products by our competitors;

• developments in alternative technologies or improvements in distributed solar energy generation;

• historic cyclicality of the solar industry and periodic downturns;

• defects or performance problems in our products;

• our ability to forecast demand for our products accurately and to match production with demand;

• our dependence on ocean transportation to timely deliver our products in a cost-effective manner;

• our dependence upon a small number of outside contract manufacturers and limited or single source suppliers;

• capacity constraints, delivery schedules, manufacturing yields, and costs of our contract manufacturers and availability of components;

• delays, disruptions, and quality control problems in manufacturing;

• shortages, delays, price changes, or cessation of operations or production affecting our suppliers of key components;

• business practices and regulatory compliance of our raw material suppliers;

• performance of distributors and large installers in selling our products;

• disruption in our global supply chain and rising prices of oil and raw materials as a result of the conflict between Russia and Ukraine may adversely affect our business;

our customers’ financial stability, creditworthiness, and debt leverage ratio;

• our ability to retain key personnel and attract additional qualified personnel;

• our ability to effectively design, launch, market, and sell new generations of our products and services;

• our ability to maintain our brand and to protect and defend our intellectual property;

• our ability to retain, and events affecting, our major customers;

• our ability to manage effectively the growth of our organization and expansion into new markets;

• our ability to integrate acquired businesses;

• fluctuations in global currency exchange rates;

• unrest, terrorism, or armed conflict in Israel;

• general economic conditions in our domestic and international markets;

• consolidation in the solar industry among our customers and distributors;

• our ability to service our debt;

the other factors set forth under

Risk Factors” in “Part II-OTHER INFORMATION” section of this report, our annual report on Form 10-K

for the year ended December 31, 2021 and subsequent reports on Form 10-Q and in other documents we file from time to time with the SEC

that disclose risks and uncertainties that may affect our business.

preceding list is not intended to be an exhaustive list of all of our forward-looking statements.

You should not rely upon forward-looking

statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are

reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking

statements will be achieved or will occur.

Except as required by law, we assume no obligation to update these forward-looking statements,

or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new

information becomes available in the future.

are a leading provider of an optimized inverter solution that has changed the way power is harvested and managed in a solar photovoltaic,

known as PV systems.

Our direct current or 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, for improved return on investment, or ROI.

Additional benefits of the DC

optimized inverter system include comprehensive and advanced safety features, improved design flexibility, and improved operating and

maintenance, or O&M with module-level and remote monitoring.

Our future ready SolarEdge energy hub inverter which supports, among

other things, connection to a DC-coupled battery for full or partial home backup, and optional connection to the SolarEdge smart EV charger.

The typical SolarEdge optimized inverter system consists of power optimizers, inverters, a communication device which enables access to

a cloud-based monitoring platform and in many cases, additional smart energy management solutions.

Our solutions address a broad range

of solar market segments, from residential solar installations to commercial and small utility-scale solar installations.

introducing the optimized inverter solution in 2010, SolarEdge has expanded its activity to other areas of smart energy technology, both

through organic growth and through acquisitions.

SolarEdge now offers energy solutions which include not only residential, commercial

and small utility scale PV systems but also product offerings in the areas of energy storage systems or ESS and backup including our own

SolarEdge home battery, electric vehicle, or EV components and charging capabilities, home energy management, grid services and virtual

power plants or VPPs, lithium-ion batteries and uninterrupted power supply, known as UPS solutions.

the third quarter of 2020 we began commercial shipments to the U.S.

• the other factors set forth under “Item 1A.

Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2021 and subsequent reports on Form 10-Q and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

We are a leading provider of an optimized inverter solution that has changed the way power is harvested and managed in a solar photovoltaic, known as PV systems.

Our direct current or 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, for improved return on investment, or ROI.

Additional benefits of the DC optimized inverter system include comprehensive and advanced safety features, improved design flexibility, and improved operating and maintenance, or O&M with module-level and remote monitoring.

Our future ready SolarEdge energy hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup, and optional connection to the SolarEdge smart EV charger.

The typical SolarEdge optimized inverter system consists of power optimizers, inverters, a communication device which enables access to a cloud-based monitoring platform and in many cases, additional smart energy management solutions.

Our solutions address a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations.

Since introducing the optimized inverter solution in 2010, SolarEdge has expanded its activity to other areas of smart energy technology, both through organic growth and through acquisitions.

SolarEdge now offers energy solutions which include not only residential, commercial and small utility scale PV systems but also product offerings in the areas of energy storage systems or ESS and backup including our own SolarEdge home battery, electric vehicle, or EV components and charging capabilities, home energy management, grid services and virtual power plants or VPPs, lithium-ion batteries and uninterrupted power supply, known as UPS solutions.

In June 2022, we decided to discontinue our stand-alone UPS related activities and that the developed technologies will be integrated in solar products as uninterrupted power supply becomes required or relevant.

In the third quarter of 2020 we began commercial shipments to the U.S.

from our manufacturing facility in the North of Israel, “Sella 1”.

The proximity of Sella 1 to our R&D team and labs, enables us to accelerate new product development cycles as well as define

equipment and manufacturing processes of newly developed products which can then be adopted by our contract manufacturers world-wide.

The proximity of Sella 1 to our R&D team and labs, enables us to accelerate new product development cycles as well as define equipment and manufacturing processes of newly developed products which can then be adopted by our contract manufacturers world-wide.

During the second quarter of 2021, Sella 1 reached full manufacturing capacity.

In 2020, we began construction of “Sella 2”,

a 2GWh Li-Ion cell factory in Korea.

The new factory is being constructed to meet the growing global demand for Li-Ion cells and batteries,

specifically in the energy storage system (“ESS”) and e-Mobility markets.

Sella 2 is expected to initiate test runs for manufacturing

in the first half of 2022.

are a leader in the global module-level power electronics (“MLPE”) market.

As of March 31, 2022, we have shipped approximately

89.6 million power optimizers, 3.7 million inverters and 16.3 thousand residential batteries.

Over 2.6 million installations, many of

which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform.

As of March 31,

2022, we have shipped approximately 31.6 GW of our DC optimized inverter systems and approximately 160.4 MW of our residential batteries.

revenues for the three months ended March 31, 2022, and 2021 were $655.1 million and $405.5 million, respectively.

Gross margins

for the three months ended March 31, 2022, and 2021 was 27.3% and 34.5%, respectively.

Net income for the three months ended March 31,

2022 and 2021 was $33.1 million and $30.1 million, respectively.

Impact & Response

continued to present challenges on our operations and business in 2021, primarily, operational challenges which we reported on continuously

Due to the worldwide growing trend in availability and administration of vaccines against Covid-19, many restrictions resulted

from the pandemic were gradually lifted by governments across the globe.

However, the future impact of the Covid-19 pandemic remains highly

In May 2022, we announced the opening of “Sella 2”, a 2GWh Li-Ion cell factory in Korea.

The new factory is intended to help the Company meet the growing global demand for Li-Ion cells and batteries, specifically in the energy storage system (“ESS”) and e-Mobility markets.

Sella 2 is currently in testing phase, with ramp-up expected to initiate during the second half of 2022.

We are a leader in the global module-level power electronics (“MLPE”) market.

As of June 30, 2022, we have shipped approximately 94.9 million power optimizers, 4.0 million inverters and 45.8 thousand residential batteries.

Over 2.75 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform.

As of June 30, 2022, we have shipped approximately 34.2 GW of our DC optimized inverter systems and approximately 411.0 MW of our residential batteries.

Our revenues for the three months ended June 30, 2022, and 2021 were $727.8 million and $480.1 million, respectively.

Gross margin for the three months ended June 30, 2022, and 2021 was 25.1% and 32.5%, respectively.

Net income for the three months ended June 30, 2022 and 2021 was $15.1 million and $45.1 million, respectively.

Our revenues for the six months ended June 30, 2022, and 2021 were $1,382.9 million and $885.5 million, respectively.

Gross margin for the six months ended June 30, 2022, and 2021 was 26.1% and 33.5%, respectively.

Net income for the six months ended June 30, 2022 and 2021 was $48.2 million and $75.2 million, respectively.

Covid-19 Impact & Response

Covid-19 continued to present challenges on our operations and business in 2021, primarily, operational challenges which we reported on continuously during 2021.

Due to the worldwide growing trend in availability and administration of vaccines against Covid-19, many restrictions resulted from the pandemic were gradually lifted by governments across the globe.

However, the future impact of the Covid-19 pandemic remains highly uncertain.

Resurgences of Covid-19 cases and the emergence of new variants may adversely impact our results of operations.

the mandatory government shutdowns resulted from recent increase in Covid-19 cases in Shanghai lead to delays in our scheduled shipments

from the Shanghai port.

Our first priority continues to be to protect and support our employees while maintaining company operations and

support of our customers with as few disruptions as possible.

We follow the guidance issued by applicable local authorities and health

officials in each region in which we do business, including in our headquarters located in Israel.

we have not experienced any new disruptions resulting directly from Covid-19 in first quarter of 2022 , the pandemic and general global

economic conditions continued to present challenges to our operations and business.

In the first quarter of 2022, we experienced

and expect to continue to experience in the second quarter of 2022, disruptions to our logistics supply chain caused by constraints in

the global transportation system including limited availability of local ground transportation coupled with congestion in shipping ports

and industry-wide component shortages.

These factors have impacted our ability to accurately plan and forecast the delivery of our products

to customers and have also increased the total shipping time and cost of ocean freight for components and finished goods.

Moreover, industry-wide

component shortages require our R&D teams to focus their attention on manufacturing and production design workarounds solutions which

can impact our ability to meet our plans to roll out new innovative products and services.

Our operation team is working tirelessly to

mitigate the impact of the disruptions described above.

of Ukraine’s Conflict on the Energy Landscape

conflict between Ukraine and Russia, which started in early 2022, and the sanctions and other measures imposed in response to this conflict

have increased the level of economic and political uncertainty.

While we do not have any meaningful business in Russia or Ukraine

and we do not have physical assets in these countries, this conflict has, and is likely to continue to have, a multidimensional impact

on the global economy, the energy landscape in general and the global supply chain.

On one hand, in the first quarter of 2022, rising

global interest in becoming less dependent on gas and oil led to higher demand for our products.

On the other hand, the conflict further

adversely affected the prices of raw materials arriving from Eastern Asia, and resulted in an increase in gas and oil prices, leading

to additional increases in shipping rates.

Furthermore, various shipment routes were adversely impacted by the conflict resulting

in increased shipment lead times and shipping costs for our products.

While the impact of this conflict cannot be predicted at this time,

the circumstances described above may have an adverse effect on our business and results of operations.

revenues for the first quarter 2022 of $655.1 million, reflect an increase from revenues of $551.9 million in the fourth quarter

Operating Metrics

managing our business and assessing financial performance, we supplement the information provided by the financial statements with other

operating metrics.

These operating metrics are utilized by our management to evaluate our business, measure our performance, identify

trends affecting our business and formulate projections.

We use metrics relating to shipments (inverters, power optimizers, residential

batteries and megawatts shipped 1 ) to evaluate our sales performance and to track market acceptance of our products.

use metrics relating to monitoring (systems monitored) to evaluate market acceptance of our products and usage of our solution.

provide the “megawatts shipped” metric, which is calculated based on inverter nameplate capacity shipped, to show adoption

of our system on a nameplate capacity basis.

Nameplate capacity shipped is the maximum rated power output capacity of an inverter and

corresponds to our financial results in that higher total nameplate capacities shipped are generally associated with higher total revenues.

For example, the mandatory government shutdowns resulted from the increase in Covid-19 cases in Shanghai, that were recently eased, led to delays in our scheduled shipments from the Shanghai port.

Our first priority continues to be to protect and support our employees while maintaining company operations and support of our customers with as few disruptions as possible.

We follow the guidance issued by applicable local authorities and health officials in each region in which we do business, including in our headquarters located in Israel.

While we have not experienced any new disruptions resulting directly from Covid-19 in the second quarter of 2022, the pandemic and general global economic conditions continued to present challenges to our operations and business.

In the second quarter of 2022, we experienced and expect to continue to experience in the third quarter of 2022, continued disruptions to our logistics supply chain caused by constraints in the global transportation system including limited availability of local ground transportation coupled with congestion in shipping ports and industry-wide component shortages.

These factors have impacted our ability to accurately plan and forecast the delivery of our products to customers and have also increased the total shipping time and cost of ocean freight for components and finished goods.

Moreover, industry-wide component shortages require our R&D teams to focus their attention on manufacturing and production design workarounds solutions which can impact our ability to meet our plans to roll out new innovative products and services.

Our operation team is working tirelessly to mitigate the impact of the disruptions described above.

Impact of Ukraine’s Conflict on the Energy Landscape

The conflict between Ukraine and Russia, which started in early 2022, and the sanctions and other measures imposed in response to this conflict have increased the level of economic and political uncertainty.

While we do not have any meaningful business in Russia or Ukraine and we do not have physical assets in these countries, this conflict has, and is likely to continue to have, a multidimensional impact on the global economy, the energy landscape in general and the global supply chain.

On one hand, in the first half of 2022, rising global interest in becoming less dependent on gas and oil led to higher demand for our products.

On the other hand, the conflict further adversely affected the prices of raw materials arriving from Eastern Asia and resulted in an increase in gas and oil prices, leading to additional increases in shipping rates.

Furthermore, various shipment routes were adversely impacted by the conflict resulting in increased shipment lead times and shipping costs for our products.

While the impact of this conflict cannot be predicted at this time, the circumstances described above may have an adverse effect on our business and results of operations.

Our revenues for the second quarter 2022 of $727.8 million, represent continued growth from revenues of $655.1 million in the first quarter of 2022.

Key Operating Metrics

In managing our business and assessing financial performance, we supplement the information provided by the financial statements with other operating metrics.

These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business and formulate projections.

We use metrics relating to shipments (inverters, power optimizers, residential batteries and megawatts shipped 1 ) to evaluate our sales performance and to track market acceptance of our products.

We use metrics relating to monitoring (systems monitored) to evaluate market acceptance of our products and usage of our solution.

We provide the “megawatts shipped” metric, which is calculated based on inverter nameplate capacity shipped, to show adoption of our system on a nameplate capacity basis.

Nameplate capacity shipped is the maximum rated power output capacity of an inverter and corresponds to our financial results in that higher total nameplate capacities shipped are generally associated with higher total revenues.

However, revenues increase with each additional unit, not necessarily each additional MW of capacity sold.

Accordingly, we also provide

the “inverters shipped”, “power optimizers shipped” and "residential batteries shipped" operating metrics.

optimizers shipped

batteries shipped

residential batteries, based on the aggregate nameplate capacity of inverters shipped during the applicable period.

Nameplate capacity

is the maximum rated power output capacity of an inverter as specified by the manufacturer.

of Operations

results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related

notes included elsewhere in this report.

following table sets forth selected consolidated statements of income data for each of the periods indicated.

and development

and marketing

and administrative

operating expenses

Accordingly, we also provide the “inverters shipped”, “power optimizers shipped” and "residential batteries shipped" operating metrics.

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

Inverters shipped

Power optimizers shipped

Megawatts shipped 1

Residential batteries shipped

1 Excluding residential batteries, based on the aggregate nameplate capacity of inverters shipped during the applicable period.

Nameplate capacity is the maximum rated power output capacity of an inverter as specified by the manufacturer.

Results of Operations

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report.

The following table sets forth selected consolidated statements of income data for each of the periods indicated.

Three Months Ended

Six Months Ended

(In thousands)

Cost of revenues

Operating expenses:

before income taxes

of three months ended March 31, 2022 and three months ended March 31, 2021

months ended March 31,

increased by $249.6 million, or 61.6%, in the three months ended March 31, 2022 as compared to the three months ended March 31,

2021, primarily due to (i) an increase in the number of inverters and power optimizers sold, with significant growth in revenues coming

from Europe and the U.S;

(ii) an increase of $52.0 million related to the number of residential batteries sold mainly in the U.S and Europe;

Research and development

Sales and marketing

General and administrative

Other operating expenses (income), net

Total operating expenses

Operating income

Financial expense, net

Income before income taxes

Comparison of three and six months ended June 30, 2022, to the three and six months ended June 30, 2021

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Revenues increased by $247.7 million, or 51.6%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, primarily due to (i) an increase in the number of inverters and power optimizers sold, with significant growth in revenues coming from Europe and the U.S;

and (ii) an increase of $103.4 million related to the number of residential batteries sold mainly in Europe and the U.S.

Revenues from outside of the U.S.

comprised 57.3% of our revenues in the three months ended June 30, 2022 as compared to 63.4% in the three months ended June 30, 2021.

The number of power optimizers recognized as revenues increased by approximately 0.3 million units, or 5.5%, from approximately 4.9 million units in the three months ended June 30, 2021 to approximately 5.2 million units in the three months ended June 30, 2022.

The number of inverters recognized as revenues increased by approximately 57.3 thousand units, or 32.3%, from approximately 177.3 thousand units in the three months ended June 30, 2021 to approximately 234.6 thousand units in the three months ended June 30, 2022.

The number of residential batteries recognized as revenues in the three months ended June 30, 2022 was approximately 18.9 thousand units.

Our blended Average Selling Price ("ASP") per watt for solar products excluding residential batteries is calculated by dividing the solar revenues, excluding revenues from the sale of residential batteries, by the name plate capacity of inverters shipped.

Our blended ASP per watt for solar products shipped excluding residential batteries decreased by $0.034, or 12.5%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021.

The decrease in blended ASP per watt is mainly attributed to the increase in all geographies in the sale of commercial products out of our total solar product mix that are characterized with lower ASP per watt as well as the depreciation of the Euro and other currencies against the U.S.

Dollar which, coupled with our increased sales in Europe, accelerated this effect.

This decrease in blended ASP per watt was partially offset by price increases that went into effect gradually during the second half of 2021 and the first half of 2022.

Revenues increased by $497.3 million, or 56.2%, in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to (i) an increase in the number of inverters and power optimizers sold, with significant growth in revenues coming from Europe and the U.S;

(ii) an increase of $155.4 million related to the number of residential batteries sold mainly in Europe and the U.S ;

and (iii) an increase of $20.1 million related to the number of powertrain kits supplied by SolarEdge e-Mobility.

Revenues from outside

comprised 59.4% of our revenues in the three months ended March 31, 2022 as compared to 59.7% in the three months ended

March 31, 2021.

number of power optimizers recognized as revenues increased by approximately 1.9 million units, or 50.6%, from approximately 3.8 million

units in the three months ended March 31, 2021 to approximately 5.7 million units in the three months ended March 31, 2022.

The number of inverters recognized as revenues increased by approximately 23.1 thousand units, or 12.6%, from approximately 182.9 thousand

units in the three months ended March 31, 2021 to approximately 206.0 thousand units in the three months ended March 31,

The number of residential batteries recognized as revenues in the three months ended March 31, 2022 was approximately 9.7 thousand.

blended Average Selling Price ("ASP") per watt for solar products excluding residential batteries is calculated by dividing the solar

revenues by the name plate capacity of inverters shipped.

Our blended ASP per watt for solar products shipped excluding residential batteries

increased by $0.045, or 20.2%, in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

in blended ASP per watt is mainly attributed to a relatively higher number of power optimizers and other solar products shipped compared

to the number of inverters shipped, which increased our total solar revenues but did not impact the watt amount used for calculating the

ASP per watt, as well as an increase in the sale of products with enhanced capabilities such as the SolarEdge energy hub inverter that

are characterized with higher ASP per watt, and price increases that went into effect during the second half of 2021.

increase in blended ASP per watt was partially offset by the increase in the sale of commercial products out of our total solar product

mix in the U.S and in ROW that are characterized with lower ASP per watt as well as the depreciation of the Euro and other currencies

against the U.S.

of Revenues and Gross Profit

months ended March 31,

of revenues increased by $210.7 million, or 79.4%, in the three months ended March 31, 2022 as compared to the three months ended

March 31, 2021, primarily due to:

an increase in the volume of products

sold and the increase in the cost of components used in the manufacturing of our products;

a significant increase in shipment

and logistic costs in an aggregate amount of $29.4 million due to (i) an increase in shipment rates;

and (ii) an increase in volumes

an increase in warranty expenses and

warranty accruals of $17.9 million associated primarily with an increased number of products in our install base as well as an increase

in costs related to the different elements of our warranty expenses which include the cost of the products, shipment and other related

an increase in custom duties of $10.1 million

attributed to higher tariff charges due to the manufacture of a higher portion of our products for the U.S.

an increase in other production costs

of $14.9 million, which is mainly attributed to charges from our contract manufacturers due to manufacturing disruptions, related

to the global supply constraints, increased logistics costs resulting from transportation disruptions and the mobilization of components

among our different manufacturing sites and ramp up costs associated with the new contract manufacturing site in Mexico;

an increase in personnel-related costs

of $4.2 million related to the expansion of our production, operations, and support headcount which grew in parallel to our growing

install base worldwide and the increase in costs associated with the production of powertrain units manufactured by the SolarEdge e-Mobility

increases were partially offset by:

a decrease of $5.9 million in

inventory accrual which is mainly attributed to changes in inventory valuations related to manufacturing volumes, anticipated future use

of such raw materials and inventory write-offs.

profit as a percentage of revenue decreased from 34.5% in the three months ended March 31, 2021 to 27.3% in the three months ended

March 31, 2022 as a result of the factors summarized above.

and Development

months ended March 31,

and development

and development costs increased by $19.4 million or 41.2%, in the three months ended March 31, 2022 compared to the three months ended

March 31, 2021, primarily due to:

an increase in personnel-related costs

of $15.6 million resulting from an increase in our research and development headcount as well as salary expenses associated with employee

equity-based compensation.

The increase in headcount reflects our continuing investment in enhancements of existing products as well as

research and development expenses associated with bringing new products to the market;

a decrease in reimbursement of costs,

in an amount of $2.6 million, related to the research and development activities performed by SolarEdge e-Mobility;

an increase in expenses related to

material consumption in the manufacturing of prototypes during our development process in an amount of $1.5 million;

an increase in depreciation expenses

of property and equipment in an amount of $0.9 million.

increases were partially offset by:

a decrease in expenses related to

consultants and sub-contractors in an amount of $2.3 million.

and Marketing

months ended March 31,

and marketing

and marketing expenses increased by $8.4 million, or 31.2%, in the three months ended March 31, 2022 compared to the three months

ended March 31, 2021, primarily due to:

an increase in personnel-related costs

of $5.7 million as a result of an increase in headcount supporting our growth in all geographies, as well as salary expenses associated

with employee equity-based compensation;

an increase in expenses related to

marketing activities by $1.2 million due to the renewal of marketing activities, exhibitions and shows, which were cancelled or postponed

in 2020 and first half of 2021 due to Covid-19 restrictions.

and Administrative

months ended March 31,

and administrative

and administrative expenses increased by $6.6 million, or 33.2%, in the three months ended March 31, 2022 compared to the three months

ended March 31, 2021, primarily due to:

an increase in personnel-related costs

of $6.8 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with employee

equity-based compensation;

an increase in expenses related to

consultants and sub-contractors in an amount of $2.3 million.

increases were partially offset by:

a decrease of $3.6 million related

to a provision for legal claims.

operating expenses

months ended March 31,

Revenues from outside of the U.S.

comprised 58.3% of our revenues in the six months ended June 30, 2022 as compared to 61.7% in the six months ended June 30, 2021.

The number of power optimizers recognized as revenues increased by approximately 2.2 million units, or 25.1%, from approximately 8.7 million units in the six months ended June 30, 2021 to approximately 10.9 million units in the six months ended June 30, 2022.

The number of inverters recognized as revenues increased by approximately 80.4 thousand units, or 22.3%, from approximately 360.2 thousand units in the six months ended June 30, 2021 to approximately 440.6 thousand units in the six months ended June 30, 2022.

The number of residential batteries recognized as revenues in the six months ended June 30, 2022, was approximately 28.6 thousand units.

Our ASP per watt for solar products excluding residential batteries is calculated by dividing the solar revenues by the name plate capacity of inverters shipped.

Our blended ASP per watt for solar products shipped excluding residential batteries increased by $0.005, or 1.9%, in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

The increase in blended ASP per watt is mainly attributed to a relatively higher number of other solar products shipped compared to the number of inverters shipped, which increased our total solar revenues but did not impact the watt amount used for calculating the ASP per watt, an increase in the sale of products with enhanced capabilities such as the SolarEdge energy hub inverter that are characterized with higher ASP per watt, and price increases that went into effect gradually during the second half of 2021 and the first half of 2022.

This increase in blended ASP per watt was partially offset by the increase in the sale of commercial products out of our total solar product mix that are characterized with lower ASP per watt as well as the depreciation of the Euro and other currencies against the U.S.

Dollar which, coupled with our increased sales in Europe, accelerated this effect.

Cost of Revenues and Gross Profit

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Cost of revenues

Cost of revenues increased by $221.3 million, or 68.3%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, primarily due to:

• an increase in the volume of products sold and the increase in the unit cost of components used in the manufacturing of our products;

• a significant increase in shipment and logistic costs in an aggregate amount of $38.0 million due to (i) an increase in shipment rates;

and (ii) an increase in volumes shipped;

• an increase in warranty expenses and warranty accruals of $23.3 million associated primarily with an increase in the number of products in our install base as well as an increase in costs related to the different elements of our warranty expenses which include the cost of the products, shipment and other related expenses;

• an increase in custom duties of $4.2 million attributed to higher tariff charges due to an increase in volumes sold and the manufacture of a higher portion of our products for the U.S.

• an increase in other production costs of $22.1 million, which is mainly attributed to charges from our contract manufacturers due to manufacturing disruptions, related to the global supply constraints, increased logistics costs resulting from transportation disruptions and the mobilization of components among our different manufacturing sites and ramp up costs associated with the new contract manufacturing site in Mexico;

• an increase of $7.5 million in inventory accrual which is mainly attributed to changes in inventory valuations related to manufacturing volumes, anticipated future use of raw materials, and general inventory write-offs including those related to the discontinuation of our UPS related activities.

• an increase in personnel-related costs of $6.0 million related to the expansion of our production, operations, and support headcount which grew in parallel to our growing install base worldwide and an increase in the costs associated with the production of powertrain units manufactured by the SolarEdge e-Mobility division.

Gross profit as a percentage of revenue decreased from 32.5% in the three months ended June 30, 2021 to 25.1% in the three months ended June 30, 2022 as a result of the factors summarized above.

Cost of revenues increased by $432.0 million, or 73.3%, in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to:

• an increase in the volume of products sold and the increase in the unit cost of components used in the manufacturing of our products;

• a significant increase in shipment and logistic costs in an aggregate amount of $67.4 million due to (i) an increase in shipment rates;

and (ii) an increase in volumes shipped;

• an increase in warranty expenses and warranty accruals of $41.2 million associated primarily with an increase in the number of products in our install base as well as an increase in costs related to the different elements of our warranty expenses which include the cost of the products, shipment and other related expenses;

• an increase in custom duties of $14.3 million attributed to higher tariff charges due to an increase in volumes sold and the manufacture of a higher portion of our products for the U.S.

• an increase in other production costs of $37.0 million, which is mainly attributed to charges from our contract manufacturers due to manufacturing disruptions, related to the global supply constraints, increased logistics costs resulting from transportation disruptions and the mobilization of components between our different manufacturing sites as well as ramp up costs associated with our new contract manufacturing site in Mexico;

• an increase in personnel-related costs of $10.2 million related to the expansion of our production, operations, and support headcount which grew in parallel to our growing install base worldwide and an increase in the costs associated with the production of powertrain units manufactured by the SolarEdge e-Mobility division.

Gross profit as a percentage of revenue decreased from 33.5% in the six months ended June 30, 2021 to 26.1% in the six months ended June 30, 2022 as a result of the factors summarized above.

Operating Expenses:

operating expenses decreased by $2.2 million, in the three months ended March 31, 2022 compared to the three months ended March 31,

2021 due to a decrease in write-offs of property, plant and equipment.

months ended March 31,

expenses, net decreased by $0.6 million, or 10.6%, in the three months ended March 31, 2022 compared to the three months ended March 31,

2021, primarily due to a decrease of $4.0 million in expenses related to foreign exchange fluctuations, mainly between the Euro, the New

Israeli Shekel and the South Korean Won against the U.S.

decrease was partially offset by:

a decrease of $2.6 million in financial

income related to hedging transactions.

an increase of $0.8 million in realized

loss on marketable securities.

months ended March 31,

taxes increased by $4.3 million, or 54.5%, in the three months ended March 31, 2022, as compared to the three months ended March 31, 2021,

primarily due to an increase of $3.4 million in current tax expenses mainly attributed to an increase in taxable income in our foreign

subsidiaries.

This increase in taxable income is associated with the provisions of Section 174 of the U.S Internal Revenue Code, which

went into effect on January 1, 2022, and required capitalization of our research and development expenses.

months ended March 31,

a result of the factors discussed above, net income increased by $3.0 million, or 10.1% in the three months ended March 31, 2022

as compared to the three months ended March 31, 2021.

and Capital Resources

following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods:

months ended March 31,

cash provided by (used in) operating activities

cash used in investing activities

cash provided by (used in) financing activities

(decrease) in cash, cash equivalents and restricted cash

of March 31, 2022, our cash and cash equivalents were $1,002.8 million.

This amount does not include $608.2 million invested in available

for sale marketable securities, $0.3 million invested in short-term restricted bank deposits and $1.5 million invested in long-term restricted

bank deposits.

Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements and

other investments.

As of March 31, 2022, we have open commitments for capital expenditures in an amount of approximately $144.2 million.

Research and Development

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Research and development

Research and development costs increased by $22.2 million or 42.1%, in the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to:

• an increase in personnel-related costs of $17.6 million resulting from an increase in our research and development headcount as well as salary expenses associated with annual merit increases and employee equity-based compensation.

The increase in headcount reflects our continued investment in enhancements of existing products as well as research and development expenses associated with bringing new products to the market;

• a decrease in reimbursement of costs related to the research and development activities performed by SolarEdge e-Mobility in an amount of $1.8 million;

• an increase in expenses related to other overhead costs in an amount of $1.5 million;

• an increase in depreciation expenses of property and equipment in an amount of $1.3 million.

These increases were partially offset by:

• a decrease in expenses related to consultants and sub-contractors in an amount of $1.0 million.

Research and development costs increased by $41.6 million or 41.7%, in the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to:

• an increase in personnel-related costs of $33.2 million resulting from an increase in our research and development headcount as well as salary expenses associated with annual merit increase and employee equity-based compensation.

The increase in headcount reflects our continued investment in enhancements of existing products as well as research and development expenses associated with bringing new products to the market;

• a decrease in reimbursement of costs, in an amount of $4.4 million, related to the research and development activities performed by SolarEdge e-Mobility;

• an increase in depreciation expenses of property and equipment in an amount of $2.5 million;

• an increase in expenses related to other overhead costs in an amount of $1.8 million;

• an increase in expenses related to material consumption in the manufacturing of prototypes during our development process in an amount of $1.4 million.

These increases were partially offset by:

• a decrease in expenses related to consultants and sub-contractors in an amount of $3.3 million.

Sales and Marketing

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Sales and marketing

Sales and marketing expenses increased by $9.5 million, or 32.3%, in the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to:

• an increase in personnel-related costs of $5.7 million as a result of an increase in headcount supporting our growth in all geographies, as well as salary expenses associated with annual merit increase and employee equity-based compensation;

• an increase in expenses related to marketing activities by $1.6 million due to the renewal of marketing activities, exhibitions and shows, which were cancelled or postponed in 2020 and first half of 2021 due to Covid-19 restrictions;

• an increase in expenses related to travel in an amount of $1.0 million.

Sales and marketing expenses increased by $17.9 million, or 31.8%, in the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to:

• an increase in personnel-related costs of $11.4 million as a result of an increase in headcount supporting our growth in all geographies, as well as salary expenses associated with annual merit increases and employee equity-based compensation;

• an increase in expenses related to marketing activities by $2.8 million due to the renewal of marketing activities, exhibitions and shows, which were cancelled or postponed in 2020 and first half of 2021 due to Covid-19 restrictions;

• an increase in expenses related to travel in an amount of $1.3 million.

General and Administrative

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

General and administrative

General and administrative expenses increased by $8.8 million, or 45.2%, in the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to:

• an increase in personnel-related costs of $5.7 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with annual merit increases and employee equity-based compensation;

• an increase in expenses related to consultants and sub-contractors in an amount of $1.0 million;

• an increase in expenses related to doubtful debt in an amount of $1.0 million.

General and administrative expenses increased by $15.3 million, or 39.1%, in the six months ended months ended June 30, 2022, compared to the six months ended months ended June 30, 2021, primarily due to:

• an increase in personnel-related costs of $12.5 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with annual merit increases and employee equity-based compensation;

• an increase in expenses related to consultants and sub-contractors in an amount of $3.3 million;

• an increase in expenses related to doubtful debt in an amount of $1.0 million;

• an increase in expenses related to overhead costs in an amount of $1.0 million;

These increases were partially offset by:

• a decrease of $3.5 million related to a provision for legal claims.

Other operating expenses (income), net

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Other operating expenses (income), net

Other operating expenses, net, were $4.7 million, in the three months ended June 30, 2022, compared to other operating income of $0.9 million in the three months ended June 30, 2021, primarily due to:

• an increase of $4.0 million in expenses related to write-offs of goodwill and intangible assets related to the discontinuation of our UPS related activities;

• an increase of $0.7 million in expenses related to write-offs of property, plant and equipment;

• a decrease of $0.9 million in income related to a payment made to us from an escrow account with regards to a working capital adjustment in connection with the Kokam acquisition.

Other operating expenses (income), net increased by $3.3 million, in the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to:

• an increase of $4.0 million in expenses related to write-offs of goodwill and intangible assets related to the discontinuation of our UPS related activities;

• a decrease of $0.9 million in income related to a payment made to us from an escrow account with regards to a working capital adjustment in connection with the Kokam acquisition.

These increases were partially offset by:

• a decrease of $1.6 million in expenses related to write-offs of property, plant and equipment.

Financial expense, net

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Financial expense, net

Financial expenses, net increased by $12.6 million, or 721.1%, in the three months ended June 30, 2022, compared to the three months ended June 30, 2021, primarily due to an increase of $15.1 million in expenses related to foreign exchange fluctuations, mainly due to the strengthening of the U.S.

Dollar against the Euro, the New Israeli Shekel and the South Korean Won .

This increase was partially offset by an increase of $2.2 million in financial income related to hedging transactions.

Financial expenses, net increased by $11.9 million, or 152.0%, in the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily due to an increase of $11.1 million in expenses related to foreign exchange fluctuations, mainly due to the strengthening of the U.S.

Dollar against the Euro, the New Israeli Shekel and the South Korean Won against the U.S.

Please refer to the section entitled "Foreign Currency Exchange Risk" under Item 3 of this report for additional information.

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

Income taxes decreased by $2.1 million, or 24.2%, in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, primarily due to a decrease of $3.1 million in current tax expenses mainly attributed to a decrease in taxable income.

This decrease was partially offset by a decrease of $1.4 million in deferred tax income.

Income taxes increased by $2.2 million, or 13.4%, in the six months ended June 30, 2022, as compared to the six months ended June 30, 2021, primarily due to a decrease of $2.3 million in deferred tax income.

Three months ended June 30, 2022 to 2021

Six months ended June 30, 2022 to 2021

(In thousands)

As a result of the factors discussed above, net income decreased by $30.0 million, or 66.5% in the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

As a result of the factors discussed above, net income decreased by $27.0 million, or 35.9% in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Liquidity and Capital Resources

The following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

As of June 30, 2022, our cash and cash equivalents were $745.5 million.

This amount does not include $859.8 million invested in available for sale marketable securities, $1.4 million invested in long-term restricted bank deposits and $0.3 million invested in short-term restricted bank deposits.

Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements and other investments.

As of June 30, 2022, we have open commitments for capital expenditures in an amount of approximately $92.9 million.

These commitments mainly reflect purchases of automated assembly lines and other machinery related to our manufacturing operations.

also have purchase obligations in the amount of $1,426.7 million related to raw materials and commitments for the future manufacturing

of our products.

believe that cash provided by operating activities as well as our cash and cash equivalents, and available for sale marketable securities

will be sufficient to meet our anticipated cash needs for at least the next 12 months as well as in the longer term, including the self-funding

of our capital expenditure and operational commitments.

cash flows consists primarily of net income adjusted for certain non-cash items and changes in assets and liabilities.

Cash used in operating

activities in the three months ended March 31, 2022 was $163.0 million as compared to $24.1 million cash provided by operating cash

flows in the three months ended March 31, 2021, mainly due to extended shipping times to customers and a significant increase in

inventory procurement which resulted in unfavorable changes in working capital in the three months ended March 31, 2022 compared

to the three months ended March 31, 2021, which was partially offset by higher net income adjusted for certain non-cash items.

cash flows consist primarily of capital expenditures, investment in, sales and maturities of available for sale marketable securities,

investment and withdrawal of bank deposits and restricted bank deposits, and cash used for acquisitions.

Cash used for investing activities

decreased by $138.4 million in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily

driven by a $172.5 million decrease in purchases of available-for-sale debt investments, net.

This decrease was partially offset by an

increase of $17.5 million in capital expenditures, net and a $16.5 million decrease in cash provided by withdrawal from bank deposits

and restricted bank deposits.

cash flows consisted primarily of the issuance and repayment of short-term and long-term debt and proceeds from the sale of shares of

common stock in a public offering and employee equity incentive plans.

Cash provided by financing activities in the three months ended

March 31, 2022 was $652.3 million compared to $2.1 million cash used in financing activities in the three months ended March 31,

2021, primarily due to a $650.5 million increase in cash provided by the issuance of common stock, net through a secondary public offering

and a $4.0 million increase in cash received from the exercise of stock-based awards net of withholding taxes remitted to the tax

public offering

March 17, 2022, we offered and sold 2,300,000 shares of the Company’s common stock at a public offering price of $295.00 per

We also have purchase obligations in the amount of $1,532.5 million related to raw materials and commitments for the future manufacturing of our products.

We believe that cash provided by operating activities as well as our cash and cash equivalents, and available for sale marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months as well as in the longer term, including the self-funding of our capital expenditure and operational commitments.

Operating Activities

Operating cash flows consists primarily of net income adjusted for certain non-cash items and changes in assets and liabilities.

Cash used in operating activities in the six months ended June 30, 2022, was $85.6 million as compared to $62.8 million cash provided by operating cash flows in the six months ended June 30, 2021, mainly due to extended shipping times to customers which extended the period of time between payment to our vendors and delivery to and collection from our customers, and a significant increase in inventory procurement in response to increased demand for our products, including increased purchasing of battery cells for our residential storage solution, and, increased safety stocks intended to mitigate supply chain disruptions, all of which resulted in unfavorable changes in working capital in the six months ended June 30, 2022, compared to the six months ended June 30, 2021, which was partially offset by higher net income adjusted for certain non-cash items.

The Company returned to cash generation from operating activities in the second quarter of 2022.

Investing Activities

Investing cash flows consist primarily of capital expenditures, investment in, sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits, and cash used for acquisitions.

Cash used for investing activities decreased by $10.1 million in the six months ended June 30, 2022, as compared to the six months ended June 30, 2021, primarily driven by a $82.9 million decrease in purchases of available-for-sale debt investments, net.

This decrease was partially offset by a $46.6 million decrease in cash provided by withdrawal from bank deposits and restricted bank deposits as well as an increase of $26.2 million in capital expenditures, net.

Financing Activities

Financing cash flows consisted primarily of the issuance and repayment of short-term and long-term debt and proceeds from the sale of shares of common stock in a public offering and employee equity incentive plans.

Cash provided by financing activities in the six months ended June 30, 2022, was $648.4 million compared to $21.2 million cash used in financing activities in the six months ended June 30, 2021, primarily due to a $650.5 million increase in cash provided by the issuance of common stock, net through a secondary public offering, a decrease of $16.3 million in repayment of bank loans and an increase of $3.5 million in cash received from the exercise of stock-based awards net of withholding taxes remitted to the tax authorities.

Secondary public offering

On March 17, 2022, we offered and sold 2,300,000 shares of the Company’s common stock at a public offering price of $295.00 per share.

The net proceeds to the Company after underwriters' discounts and commissions and offering costs were $650,526.

We intend to use

the proceeds from the public offering for general corporate purposes, which may include acquisitions.

See Note 11b to our condensed consolidated

financial statements for more information.

We intend to use the proceeds from the public offering for general corporate purposes, which may include acquisitions.

See Note 11b to our condensed consolidated financial statements for more information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis