What changed in this filing

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Item 1. Financial Statements

2023-08-07 compared with 2023-05-08 · 243 added, 108 removed, 459 unchanged (43% of the section changed)

18 unchanged sentences

Total long-term assets

The accompanying notes are an integral part of the condensed consolidated financial statements.

SOLAREDGE TECHNOLOGIES INC.

20 unchanged sentences

Common stock of $ 0.0001 par value - Authorized:

125,000,000 shares as of March 31, 2023 and December 31, 2022;

125,000,000 shares as of June 30, 2023 and December 31, 2022;

issued and outstanding:

56,343,164 and 56,133,404 shares as of March 31, 2023 and December 31, 2022, respectively

56,556,340 and 56,133,404 shares as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenues

3 unchanged sentences

General and administrative

Other operating income, net

Other operating expense (income), net

Total operating expenses

8 unchanged sentences

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ( LOSS) (Unaudited)

(in thousands, except per share data)

Three Months Ended

Six Months Ended

Other comprehensive income (loss), net of tax:

4 unchanged sentences

Total other comprehensive loss

Comprehensive income

Comprehensive income (loss)

The accompanying notes are an integral part of the condensed consolidated financial statements.

10 unchanged sentences

Balance as of March 31, 2023

Issuance of common stock upon exercise of stock-based awards

Issuance of common stock under employee stock purchase plan

Stock based compensation

Other comprehensive loss adjustments

Balance as of June 30, 2023

* Represents an amount less than $1.

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

(in thousands, except per share data)

Additional paid in

8 unchanged sentences

Balance as of March 31, 2022

Issuance of common stock upon exercise of stock-based awards

Issuance of common stock under employee stock purchase plan

Stock based compensation

Other comprehensive income adjustments

Balance as of June 30, 2022

* Represents an amount less than $1.

3 unchanged sentences

(in thousands, except per share data)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization

Loss (gain) from exchange rate fluctuations

Stock-based compensation expenses

Impairment of goodwill and intangible assets

Deferred income taxes, net

Loss (gain) from exchange rate fluctuations

Changes in assets and liabilities:

7 unchanged sentences

Accrued expenses and other liabilities, net

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

Investment in available-for-sale marketable securities

Proceed from sales and maturities of available-for-sale marketable securities

Purchase of property, plant and equipment

Investment in available-for-sale marketable securities

Investment in a privately-held company

Business combinations, net of cash acquired

Purchase of intangible assets

Investment in privately-held companies

Proceeds from governmental grant

Other investing activities

4 unchanged sentences

(in thousands, except per share data)

Three Months Ended

Six Months Ended

Cash flows from financing activities:

Proceeds from secondary public offering, net of issuance costs

Proceeds from exercise of stock-based awards

Tax withholding in connection with stock-based awards, net

Payment of finance lease liability

Proceeds from secondary public offering, net of issuance costs

Other financing activities

5 unchanged sentences

Supplemental disclosure of non-cash activities:

Purchase of intangible assets and business combinations

Right-of-use asset recognized with a corresponding lease liability

10 unchanged sentences

The Company now offers a variety of energy solutions, which include lithium-ion cells, batteries, and energy storage systems (“Energy Storage”), full powertrain kits for electric vehicles, or EVs (“e-Mobility”), as well as automated machines for industrial use (“Automation Machines”).

On April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd.

("Hark"), a UK-based energy IoT company for the commercial and industrial ("C&I") sector, which operates under the newly established consulting segment (see note 2).

Basis of Presentation:

10 unchanged sentences

Such changes could result in future impairments of goodwill, intangibles, long-lived assets, inventories, incremental credit losses on receivables and available-for-sale marketable debt securities, or an increase in the Company’s insurance liabilities as of the time of a relevant measurement event.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Concentrations of supply risks:

1 unchanged sentence

Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.

As of March 31, 2023, and December 31, 2022, two contract manufacturers collectively accounted for 31.3 % and 34.3 % of the Company’s total trade payables, net, respectively.

As of June 30, 2023, and December 31, 2022, two contract manufacturers collectively accounted for 45.4 % and 34.3 % of the Company’s total trade payables, net, respectively.

In the second quarter of 2022, the Company announced the opening of “Sella 2”, a two gigawatt-hour (GWh) Li-Ion battery cell manufacturing facility located in South Korea.

Sella 2 began producing and shipping cells at the end of 2022 and is expected to reach full manufacturing capacity in 2023.

Sella 2 began producing and shipping cells at the end of 2022 and is expected to reach full manufacturing capacity in early 2024.

Sella 2 is the Company's second owned manufacturing facility following the establishment of Sella 1 in 2020.

6 unchanged sentences

(in thousands, except per share data)

BUSINESS COMBINATIONS

On April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd.

("Hark"), a UK-based energy IoT company for the commercial and industrial ("C&I") sector for approximately $ 18,346 in cash.

Hark's platform is expected to enable the Company to offer its commercial and industrial customers expanded capabilities in energy management and connectivity, including identification of potential energy savings, detection of anomalies in assets’ energy consumption, and optimization of energy usage and carbon emissions through load orchestration and storage control.

Pursuant to ASC 805, the Company accounted for the Hark acquisition as a business combination using the acquisition method of accounting.

Identifiable assets and liabilities of Hark, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition.

The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill.

The Company recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date.

Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins.

The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed were based on reasonable estimates and assumptions.

The following table summarizes the preliminary fair values estimation of assets acquired and liabilities assumed as of the date of the acquisition:

Weighted Average Useful Life (In years)

Net liabilities assumed

Identified intangible assets:

Current technology

Customer relationships

Acquisition costs were immaterial and are included in general and administrative expenses in the consolidated statements of income.

Goodwill generated from this acquisition was primarily attributable to the assembled workforce and expected post-acquisition synergies from combining Hark platform with the Company's product offering to its commercial and industrial customers.

All of the Goodwill was assigned to the new Consulting segment (see Note 21).

Goodwill was not deductible for tax purposes.

The fair values of technology, customer relationships and trade name were derived by applying the multi-period excess earnings method, with-and-without method, and the relief-from-royalty method, respectively, all of which are under the income approach whose underlying inputs are considered Level 3.

The fair values assigned to assets acquired and liabilities assumed were based on management's estimates and assumptions.

The results of Hark have been included in the Company's consolidated statements of income since the acquisition date and are not material.

Pro forma financial information has not been presented because the impact of the acquisition was not material to the Company's statement of income.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

MARKETABLE SECURITIES

The following is a summary of available-for-sale marketable securities as of March 31, 2023:

Gross unrealized

Available-for-sale – matures within one year:

The following is a summary of available-for-sale marketable securities as of June 30, 2023:

Amortized cost

Gross unrealized gains

Gross unrealized losses

Matures within one year:

Corporate bonds

governmental bonds

Available-for-sale – matures after one year:

governmental bonds

Matures after one year:

Corporate bonds

governmental bonds

The following is a summary of available-for-sale marketable securities as of December 31, 2022:

Gross unrealized

Available-for-sale – matures within one year:

Amortized cost

Gross unrealized gains

Gross unrealized losses

Matures within one year:

Corporate bonds

governmental bonds

Available-for-sale – matures after one year:

governmental bonds

Matures after one year:

Corporate bonds

governmental bonds

As of March 31, 2023, and December 31, 2022, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

governmental bonds

As of June 30, 2023, and December 31, 2022, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

INVENTORIES, NET

June 30, 2023

December 31, 2022

Raw materials

3 unchanged sentences

PREPAID EXPENSES AND OTHER CURRENT ASSETS

June 30, 2023

December 31, 2022

Vendor non-trade receivables (*)

8 unchanged sentences

(in thousands, except per share data)

INTANGIBLE ASSETS, NET

Acquired intangible assets consisted of the following as of June 30, 2023 , and December 31, 2022 :

June 30, 2023

December 31, 2022

Intangible assets with finite lives:

Current Technology

Customer relationships

Assembled workforce

Patents and licenses*

Gross intangible assets

Less - accumulated amortization

Total intangible assets, net

* See Note 16

For the three months ended June 30, 2023 and 2022 the Company recorded amortization expenses related to intangible assets in the amount of $ 1,820 and $ 2,619 , respectively.

For the six months ended June 30, 2023 and 2022 the Company recorded amortization expenses related to intangible assets in the amount of $ 3,238 and $ 5,277 , respectively.

Expected future amortization expenses of intangible assets as of June 30, 2023 are as follows:

2028 and thereafter

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Changes in the carrying amount of goodwill for the period ended June 30, 2023 were as follows:

Goodwill at December 31, 2022

Changes during the year:

Foreign currency adjustments

Goodwill at June 30, 2023

As of June 30, 2023 and December 31, 2022 there were $ 90,104 accumulated goodwill impairment losses.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

OTHER LONG TERM ASSETS

June 30, 2023

December 31, 2022

Severance pay fund

Cloud computing arrangements

Investments in privately held companies

Total other long term assets

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

During the three months ended March 31, 2023, the Company instituted a foreign currency cash flow hedging program to reduce the risk of a forecasted increase in the value of foreign currency cash flows, resulting from payment of salaries in Israeli currency, the New Israeli Shekels (“NIS”).

During the six months ended June 30, 2023, the Company instituted a foreign currency cash flow hedging program to reduce the risk of a forecasted increase in the value of foreign currency cash flows, resulting from payment of salaries in Israeli currency, the New Israeli Shekels (“NIS”).

The Company hedges portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts.

These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.

As of March 31, 2023, the Company entered into forward contracts and put and call options to sell U.S.

As of June 30, 2023, the Company entered into forward contracts and put and call options to sell U.S.

dollars (“USD”) for NIS in the amount of approximately NIS 106.25 million and NIS 216 million, respectively.

4 unchanged sentences

Balance sheet location

Derivative assets of options and forward contracts:

Designated cash flow hedges

Prepaid expenses and other current assets

Derivative liabilities of options and forward contracts:

3 unchanged sentences

Three Months Ended

Six Months Ended

Affected line item

12 unchanged sentences

Marketable securities and foreign currency derivative contracts are classified within level 2 due to these assets being valued by alternative pricing sources and models utilizing market observable inputs.

The following table sets forth the Company’s assets that were measured at fair value as of March 31, 2023 and December 31, 2022, by level within the fair value hierarchy:

Fair Value Hierarchy

The following table sets forth the Company’s assets that were measured at fair value as of June 30, 2023 and December 31, 2022, by level within the fair value hierarchy:

Fair value measurements as of

March 31, 2023

Fair Value Hierarchy

June 30, 2023

December 31, 2022

1 unchanged sentence

Money market mutual funds

Derivative instruments

Short-term marketable securities:

1 unchanged sentence

governmental bonds

Long-term marketable securities:

1 unchanged sentence

governmental bonds

Derivative instruments

WARRANTY OBLIGATIONS

Changes in the Company’s product warranty obligations for the three months ended March 31, 2023 and 2022, were as follows:

Three Months Ended March 31,

Changes in the Company’s product warranty obligations for the three and six months ended June 30, 2023 and 2022, were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Balance, at the beginning of the period

10 unchanged sentences

Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized.

Significant changes in the balances of deferred revenues and customer advances during the period are as follows:

Three Months Ended

Changes in the balances of deferred revenues and customer advances during the period are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Balance, at the beginning of the period

4 unchanged sentences

Long term portion

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023 :

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2023:

Total deferred revenues

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

June 30, 2023

December 31, 2022

Accrued expenses

2 unchanged sentences

Accrual for sales incentives

Finance lease

Total accrued expenses and other current liabilities

17 unchanged sentences

If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the Notes may be increased.

The Convertible Senior Notes consisted of the following as of March 31, 2023 and December 31, 2022 :

The Convertible Senior Notes consisted of the following as of June 30, 2023 and December 31, 2022:

June 30, 2023

December 31, 2022

Unamortized issuance costs

Net carrying amount

For the three months ended March 31, 2023 and 2022 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 731 and $ 728 , respectively.

As of March 31, 2023, the unamortized issuance costs of the Notes will be amortized over the remaining term of approximately 2.5 years.

For the three months ended June 30, 2023 and 2022 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 732 and $ 728 , respectively.

For the six months ended June 30, 2023 and 2022 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 1,463 and $ 1,456 , respectively.

As of June 30, 2023, the unamortized issuance costs of the Notes will be amortized over the remaining term of approximately 2.2 years.

The annual effective interest rate of the Notes is 0.47 %.

As of March 31, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 823,730 .

As of June 30, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 727,116 .

The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period.

As of March 31, 2023, the if-converted value of the Notes exceeded the principal amount by $ 59,537 .

As of June 30, 2023, the if-converted value of the Notes did not exceed the principal amount.

SOLAREDGE TECHNOLOGIES INC.

17 unchanged sentences

The 2015 Plan provides for the grant of options, restricted stock units ("RSU"), performance stock units ("PSU"), and other share-based awards to directors, employees, officers, and non-employees of the Company and its subsidiaries.

As of March 31, 2023, a total of 20,853,755 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”) , an aggregate of 12,005,195 shares are still available for future grants.

As of June 30, 2023, a total of 20,853,755 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 11,933,444 shares are still available for future grants.

The Share Reserve will automatically increase on January 1 st of each year during the term of the 2015 Plan, commencing on January 1 st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5 % of the total number of shares of capital stock outstanding on December 31 st of the preceding calendar year;

6 unchanged sentences

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000 .

As of March 31, 2023, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

As of June 30, 2023, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

SOLAREDGE TECHNOLOGIES INC.

7 unchanged sentences

Outstanding as of December 31, 2022

Outstanding as of March 31, 2023

Vested and expected to vest as of March 31, 2023

Exercisable as of March 31, 2023

The aggregate intrinsic value in the tables above represents the total intrinsic value (the difference between the fair value of the Company’s common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of each period.

Outstanding as of June 30, 2023

Vested and expected to vest as of June 30, 2023

Exercisable as of June 30, 2023

The intrinsic value is the amount by which the closing price of the Company’s common stock on June 30, 2023 of $ 269.05 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.

A summary of the activity in the RSUs and related information is as follows:

2 unchanged sentences

Unvested as of December 31, 2022

Unvested as of March 31, 2023

Unvested as of June 30, 2023

A summary of the activity in the PSUs and related information is as follows:

2 unchanged sentences

Unvested as of December 31, 2022

Unvested as of March 31, 2023

Unvested as of June 30, 2023

Employee Stock Purchase Plan ("ESPP"):

The Company adopted an ESPP effective upon the consummation of the IPO.

As of March 31, 2023, a total of 4,150,380 shares were reserved for issuance under this plan.

As of June 30, 2023, a total of 4,150,380 shares were reserved for issuance under this plan.

The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1 st of each year, for ten years, by the lesser of 1 % of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares.

3 unchanged sentences

The price of an ordinary share purchased under the ESPP is equal to 85 % of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of March 31, 2023, 738,876 shares of common stock had been purchased under the ESPP.

As of March 31, 2023, 3,411,504 shares of common stock were available for future issuance under the ESPP.

As of June 30, 2023, 780,370 shares of common stock had been purchased under the ESPP.

As of June 30, 2023, 3,370,010 shares of common stock were available for future issuance under the ESPP.

In accordance with ASC No.

4 unchanged sentences

Stock-based compensation expenses:

The Company recognized stock-based compensation expenses related to all stock-based awards in the condensed consolidated statement of income for the three months ended March 31, 2023, and 2022, as follows:

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the three and six months ended June 30, 2023, and 2022, as follows:

Three Months Ended

Six Months Ended

Stock-based compensation expenses:

Cost of revenues

3 unchanged sentences

Total stock-based compensation expenses

For the three months ended March 31, 2023, the Company capitalized stock-based compensation expenses in the amount of $ 430 related to ERP implementation, which were included within other long-term assets in the condensed consolidated balance sheets and $ 405 related to inventory.

For the three months ended March 31, 2022, the Company did not capitalize any stock-based compensation expenses.

The total tax benefit associated with share-based compensation for the three months ended March 31, 2023 and 2022 was $ 4,197 and $ 3,478 , respectively.

The tax benefit realized from share-based compensation for three months ended March 31, 2023 and 2022 was $ 2,842 and $ 2,927 , respectively.

As of March 31, 2023, there were total unrecognized compensation expenses in the amount of $ 335,864 related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized during the period from April 1, 2023 through February 28, 2027.

Stock-based compensation capitalized:

Other long-term assets

Total stock-based compensation capitalized

The total tax benefit associated with share-based compensation for the three months ended June 30, 2023 and 2022 was $ 4,102 and $ 3,058 , respectively.

The tax benefit realized from share-based compensation for the three months ended June 30, 2023, and 2022 was $ 2,619 and $ 2,885 , respectively.

The total tax benefit associated with share-based compensation for the six months ended June 30, 2023, and 2022 was $ 8,298 and $ 6,536 , respectively.

The tax benefit realized from share-based compensation for the six months ended June 30, 2023, and 2022 was $ 5,461 and $ 5,812 , respectively.

As of June 30, 2023, there were total unrecognized compensation expenses in the amount of $ 318,954 related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized during the period from July 1, 2023, through May 31, 2027.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

COMMITMENTS AND CONTINGENT LIABILITIES

As of March 31, 2023 , contingent liabilities exist regarding guarantees in the amounts of $ 5,876 , and $ 1,899 in respect of office rent lease agreements and customs and other transactions, respectively.

As of June 30, 2023, contingent liabilities exist regarding guarantees in the amounts of $ 5,937 , and $ 1,875 in respect of office rent lease agreements and other transactions, respectively.

Contractual purchase obligations:

2 unchanged sentences

In addition, the Company acquires raw materials or other goods and services, including product components, by issuing authorizations to its suppliers to purchase materials based on its projected demand and manufacturing needs.

As of March 31, 2023 , the Company had non-cancelable purchase obligations totaling approximately $ 1,617,376 , out of which the Company recorded a provision for loss in the amount of $ 8,052 .

As of March 31, 2023 , the Company had contractual obligations for capital expenditures totaling approximately $ 121,347 .

As of June 30, 2023, the Company had non-cancelable purchase obligations totaling approximately $ 1,443,251 , out of which the Company recorded a provision for loss in the amount of $ 8,818 .

As of June 30, 2023, the Company had contractual obligations for capital expenditures totaling approximately $ 132,988 .

These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s general manufacturing process and mainly to its plans to establish manufacturing capabilities in the United States.

5 unchanged sentences

In September 2018, the Company’s German subsidiary, SolarEdge Technologies GmbH, received a complaint filed by competitor SMA Solar Technology AG (“SMA”).

The complaint, filed in the District Court Düsseldorf, Germany, alleges that SolarEdge's 12.5kW - 27.6kW inverters infringed on two of the plaintiff’s patents.

The complaint, filed in the District Court Düsseldorf, Germany, alleged that SolarEdge's 12.5kW - 27.6kW inverters infringed on two of the plaintiff’s patents.

SMA asserted a value in dispute of EUR 5.5 million (approximately $ 5,973 ) for both patents.

The Company challenged the validity of both patents and the first patent was invalidated and SMA’s appeal on the matter was denied in January 2023.

In August 2021, the German Patent Court rendered SMA's second patent invalid, and this invalidity has been appealed by SMA and a hearing is pending.

The Company believes that it has meritorious defenses to these claims and intends to vigorously defend against the remaining lawsuit.

On July 28, 2022, the Company was served with complaints filed by Ampt LLC in the International Trade Commission (the “Commission”) pursuant to Section 337 of the Tariff Act of 1930, as amended, in the District Court for the District of Delaware alleging patent infringement against the Company and its subsidiary SolarEdge Technologies Ltd.

On October 24, 2022, the complaint filed in the District Court of Delaware was administratively stayed until the Commission's action is resolved.

The Company believes that it has meritorious defenses to the complaints and intend to vigorously defend against them.

As of March 31, 2023 , an immaterial amount for legal claims was recorded in accrued expenses and other current liabilities.

In August 2021, the German Patent Court rendered SMA's second patent invalid, and this invalidity has been appealed by SMA.

In May 2023 the Federal Supreme Court as final instance in the nullity proceedings revoked the second patent, and SMA withdrew its infringement complaint.

On July 28, 2022, the Company and its subsidiary SolarEdge Technologies Ltd were served with complaints filed by Ampt LLC ("Ampt") in the International Trade Commission (the “Commission”) pursuant to Section 337 of the Tariff Act of 1930, as amended, and related lawsuits in the District Court for the District of Delaware alleging patent infringement against the Company.

On May 9, 2023, Ampt and the Company entered into a settlement agreement pursuant to which the parties agreed to dismiss all proceedings related to the complaints, and the parties have granted each other 10-year cross-licenses for certain intellectual property.

As of June 30, 2023, an immaterial amount for legal claims was recorded in accrued expenses and other current liabilities.

SOLAREDGE TECHNOLOGIES INC.

3 unchanged sentences

The following table summarizes the changes in accumulated balances of other comprehensive gain (loss), net of taxes:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Unrealized gains (losses) on available-for-sale marketable securities

4 unchanged sentences

Tax on reclassification

Losses reclassified from accumulated other comprehensive income

Losses reclassified from accumulated other comprehensive income (loss)

Net current period other comprehensive income (loss)

3 unchanged sentences

Tax on revaluation

Other comprehensive loss before reclassifications

Other comprehensive income (loss) before reclassifications

Reclassification

Tax on reclassification

Losses reclassified from accumulated other comprehensive loss

Net current period other comprehensive loss

Losses reclassified from accumulated other comprehensive income (loss)

Net current period other comprehensive income (loss)

Ending balance

8 unchanged sentences

(in thousands, except per share data)

The following table summarizes the reclassifications from "Accumulated other comprehensive loss" into the statement of income:

Details about Accumulated Other Comprehensive

Loss Components

The following table summarizes the changes in "Accumulated other comprehensive loss", net of taxes:

Details about Accumulated Other Comprehensive Loss Components

Three Months Ended

Six Months Ended

Affected Line Item in the Statement of Income

Available-for-sale marketable securities

Unrealized gains (losses) on available-for-sale marketable securities

Financial income (expense), net

Total, net of income taxes

Cash flow hedges

Unrealized gains (losses) on cash flow hedges, net

Cost of revenues

5 unchanged sentences

Total reclassifications for the period

OTHER OPERATING INCOME

In the three months ended March 31, 2023, the Company recorded a gain from sale of property, plant and equipment and other assets in the amount of $ 1,434 .

The effective tax rate for the three months ended March 31, 2023, and 2022 was 17.5 % and 27.1 %, respectively.

The lower tax rate in the current quarter compared to the first quarter of 2022 is mainly due to the fact that the Company's income before tax, most of which is subject to tax rates lower than the US statutory rate, increased.

OTHER OPERATING EXPENSE (INCOME)

The following table presents the expenses (income) recorded in the three and six months ended June 30, 2023, and 2022:

Three Months Ended

Six Months Ended

Impairment of goodwill and intangible assets

Sale of assets

Write-off of property, plant and equipment

Total other operating expense (income), net

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

The effective tax rate for the three months ended June 30, 2023, and 2022 was 22.3 % and 30.5 %, respectively, and for the six months ended June 30, 2023, and 2022 the effective tax rate was 19.8 % and 28.2 %, respectively.

The lower tax rate in the three and six months ended June 30, 2023 compared to the corresponding periods in 2022 is mainly due to the fact that the Company's income before tax, most of which is subject to tax rates lower than the US statutory rate, increased.

Conversely, the IRC Section 174 R&D capitalization, and other expenses not recognized for GILTI purposes, did not increase in the same proportion.

As of March 31, 2023, and December 31, 2022, unrecognized tax benefits were $ 2,883 and $ 2,756 , respectively.

As of June 30, 2023, and December 31, 2022, unrecognized tax benefits were $ 3,035 and $ 2,756 , respectively.

If recognized, such benefits would favorably affect the Company’s effective tax rate.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes.

The total amount of penalties and interest were immaterial as of March 31, 2023, and December 31, 2022.

The total amount of penalties and interest were immaterial as of June 30, 2023, and December 31, 2022.

In August 2022, the U.S.

10 unchanged sentences

The following table presents the computation of basic and diluted earnings per share (“EPS”):

Three Months Ended March 31,

Shares used in computing net earnings per share of common stock, basic

Three Months Ended

Six Months Ended

Shares used in computing net EPS of common stock, basic

Net income attributable to common stock, basic

1 unchanged sentence

Net income attributable to common stock, diluted

Shares used in computing net earnings per share of common stock, basic

Shares used in computing net EPS of common stock, basic

Notes due 2025

Effect of stock-based awards

Shares used in computing net earnings per share of common stock, diluted

Shares used in computing net EPS of common stock, diluted

Earnings per share:

4 unchanged sentences

SEGMENT INFORMATION

Following the discontinuation of Critical Power in June 2022, the Company operates in four different operating segments:

Solar, Energy Storage, e-Mobility and Automation Machines.

Following the discontinuation of Critical Power in June 2022, the Company operates in five different operating segments:

Solar, Energy Storage, e-Mobility, Automation Machines, and the newly formed Consulting segment.

The Company’s Chief Executive Officer, who is the chief operating decision maker (“CODM”), makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the operating segments.

7 unchanged sentences

The Solar segment solution consists mainly of the Company’s power optimizers, inverters, batteries, and cloud‑based monitoring platform.

The “All other” category includes the design, development, manufacturing, and sales of energy storage products, e-Mobility products, UPS products, and automated machines.

The “All other” category includes the design, development, manufacturing, and sales of energy storage products, e-Mobility products, automated machines, and consulting services.

The following tables present information on reportable segments profit (loss) for the period presented:

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

Cost of revenues

Gross profit (loss)

Research and development

Sales and marketing

General and administrative

Segments profit (loss)

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

The following table presents information on reportable segments profit (loss) for the period presented:

Three Months Ended March 31,

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

Cost of revenues

Gross profit (loss)

Research and development

3 unchanged sentences

The following table presents information on reportable segments reconciliation to consolidated revenues for the periods presented:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Solar revenues

All other segment revenues

Revenues from financing component

All other revenues

Revenues from finance component

Consolidated revenues

The following table presents information on reportable segments reconciliation to consolidated operating income for the periods presented:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

June 30,

Solar segment profit

3 unchanged sentences

Stock based compensation expenses

Other unallocated expenses

Impairment of goodwill and intangible assets

Disposal of assets related to Critical Power

Other unallocated expenses, net

Consolidated operating income

SUBSEQUENT EVENTS

On April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd.

("Hark"), a UK-based energy IoT company for the commercial and industrial ("C&I") sector for approximately USD 16.7 million in cash.

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 1. Financial Statements