What changed in this filing

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Item 1. Financial Statements

2023-11-06 compared with 2023-08-07 · 221 added, 149 removed, 553 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

CURRENT ASSETS:

16 unchanged sentences

(in thousands, except per share data)

September 30,

LIABILITIES AND STOCKHOLDERS’ EQUITY

17 unchanged sentences

Common stock of $ 0.0001 par value - Authorized:

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

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

issued and outstanding:

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

56,810,559 and 56,133,404 shares as of September 30, 2023 and December 31, 2022 , respectively

Additional paid-in capital

5 unchanged sentences

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)

(in thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

5 unchanged sentences

Total operating expenses

Operating income

Operating income (loss)

Financial income (expense), net

Income before income taxes

Net basic earnings per share of common stock

Net diluted earnings per share of common stock

Weighted average number of shares used in computing net basic earnings per share of common stock

Weighted average number of shares used in computing net diluted earnings per share of common stock

Other income (loss), net

Income (loss) before income taxes

Net income (loss)

Net basic earnings (loss) per share of common stock

Net diluted earnings (loss) per share of common stock

Weighted average number of shares used in computing net basic earnings (loss) per share of common stock

Weighted average number of shares used in computing net diluted earnings (loss) per share of common stock

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

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss), net of tax:

9 unchanged sentences

(in thousands, except per share data)

Additional paid in

other comprehensive

Retained earnings

Balance as of January 1, 2023

8 unchanged sentences

Balance as of June 30, 2023

Issuance of Common Stock upon exercise of stock-based awards

Stock based compensation

Other comprehensive loss adjustments

Balance as of September 30, 2023

* Represents an amount less than $1.

2 unchanged sentences

(in thousands, except per share data)

Additional paid in

other comprehensive

income (loss)

Retained earnings

comprehensive

Balance as of January 1, 2022

7 unchanged sentences

Stock based compensation

Other comprehensive income adjustments

Other comprehensive loss adjustments

Balance as of June 30, 2022

Issuance of Common Stock upon exercise of stock-based awards

Stock based compensation

Other comprehensive loss adjustments

Balance as of September 30, 2022

* Represents an amount less than $1.

3 unchanged sentences

(in thousands, except per share data)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

17 unchanged sentences

Investment in available-for-sale marketable securities

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

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

Purchase of property, plant and equipment

1 unchanged sentence

Purchase of intangible assets

Disbursements for loans receivables

Investment in privately-held companies

Proceeds from governmental grant

Proceeds from sale of a privately-held company

Other investing activities

Net cash used in investing activities

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

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from financing activities:

Tax withholding in connection with stock-based awards, net

Payment of finance lease liability

Payments of finance lease liability

Proceeds from secondary public offering, net of issuance costs

30 unchanged sentences

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes.

The duration, scope and effects of the ongoing Covid-19 pandemic and the conflict in Ukraine, government and other third-party responses to it, and the related macroeconomic effects, including to the Company’s business and the business of the Company’s suppliers and customers are uncertain, rapidly changing and difficult to predict.

As a result, the Company’s accounting estimates and assumptions may change over time in response to this evolving situation.

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)

Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.

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 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.

As of September 30, 2023 , and December 31, 2022 , two contract manufacturers collectively accounted for 40.9 % 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.

12 unchanged sentences

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.

Pursuant to ASC 805, "Business Combination", 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.

15 unchanged sentences

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.

The results of Hark have been included in the Company's consolidated statements of income (loss) 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.

3 unchanged sentences

MARKETABLE SECURITIES

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

Amortized cost

Gross unrealized gains

Gross unrealized losses

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

unrealized gains

unrealized losses

Matures within one year:

Corporate bonds

governmental bonds

Treasury securities

Government securities

Matures after one year:

Corporate bonds

governmental bonds

Treasury securities

Government agency securities

Government securities

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

Amortized cost

Gross unrealized gains

Gross unrealized losses

unrealized gains

unrealized losses

Matures within one year:

Corporate bonds

governmental bonds

Treasury securities

Government securities

Matures after one year:

Corporate bonds

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.

Treasury securities

Government securities

Proceeds from sales of available-for-sale marketable securities during the nine months ended September 30, 2023 and 2022 were $ 2,807 and $ 29,235 , which led to realized losses of $ 125 and $ 723 , respectively.

There were no proceeds from sales of available-for-sale marketable securities during the three months ended September 30, 2023 .

Proceeds from sales of available-for-sale marketable securities during the three months ended September 30, 2022 were $ 5,811 , which led to realized gains of $ 121 .

As of September 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

September 30, 2023

December 31, 2022

4 unchanged sentences

PREPAID EXPENSES AND OTHER CURRENT ASSETS

June 30, 2023

September 30, 2023

December 31, 2022

1 unchanged sentence

Government authorities

Loan receivables (2)

Interest from marketable securities

Prepaid expenses and other

Total prepaid expenses and other current assets

(*) Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products for the Company.

(1) Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products, components and other testing equipment for the Company.

The Company purchases these components directly from other suppliers.

The Company does not reflect the sale of these components to the contract manufacturers in its revenues.

(2) Loan receivables is a loan to a third party.

The loan will be repaid on a monthly basis with an additional agreed interest for the long term portion of the loan.

See Note 8 for additional information.

The loan is measured at its amortized cost and is subjected to the Company's credit risk policy as stated in the most recent 10-K filing.

Expected provision for credit loss regarding this loan was immaterial.

The amortized cost of the loan receivable approximates its fair value as of September 30, 2023.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

INTANGIBLE ASSETS, NET

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

June 30, 2023

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

September 30, 2023

December 31, 2022

8 unchanged sentences

* 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:

For the three months ended September 30, 2023 and 2022 , the Company recorded amortization expenses related to intangible assets in the amount of $ 2,663 and $ 2,464 , respectively.

For the nine months ended September 30, 2023 and 2022 , the Company recorded amortization expenses related to intangible assets in the amount of $ 5,901 and $ 7,741 , respectively.

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

2028 and thereafter

2 unchanged sentences

(in thousands, except per share data)

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

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

Goodwill at December 31, 2022

1 unchanged sentence

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.

Goodwill at September 30, 2023

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

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

OTHER LONG TERM ASSETS

June 30, 2023

September 30, 2023

December 31, 2022

Severance pay fund

Cloud computing arrangements

Severance pay fund

Investments in privately held companies (1) (2)

Loan receivables

Total other long term assets

(1) In January 2023, the Company completed an investment of $ 5,500 in the common stock of a privately-held company which represents 34.8 % of its outstanding shares.

The Company accounted for this investment using the equity method of accounting.

The Company's share of net earnings or losses in the nine months ended September 30, 2023 was immaterial.

(2) In April and July of 2023, the Company completed a total investment of $ 2,500 in the preferred stock of a privately-held company which represents 4.5 % of its outstanding shares on a fully diluted basis.

The Company accounted for this investment as an equity investment without readily determinable fair values.

No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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”).

During the nine months ended September 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 June 30, 2023, the Company entered into forward contracts and put and call options to sell U.S.

As of September 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 38 million and NIS 622 million , respectively.

1 unchanged sentence

These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting from fair value remeasurement, were recorded immediately in the statement of income, under " Financial income (expense), net ".

As of September 30, 2023, the Company entered into put and call option contracts to sell Euro ("EUR") for USD in the amount of EUR 120 million.

The Company classifies cash flows related to its hedging as operating activities in its condensed consolidated statement of cash flows.

1 unchanged sentence

Balance sheet location

September 30,

Derivative assets of options and forward contracts:

Designated cash flow hedges

Prepaid expenses and other current assets

Non-designated hedges

Prepaid expenses and other current assets

Total derivative assets

Derivative liabilities of options and forward contracts:

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Affected line item

1 unchanged sentence

Non Designated Hedging Instruments

Condensed Consolidated Statements of Income - Financial income (expense), net

Condensed Consolidated Statements of Income (loss) - Financial income (expense), net

Designated Hedging Instruments

Condensed Consolidated Statements of Comprehensive Income - Cash flow hedges

Condensed Consolidated Statements of Comprehensive Income (loss) - Cash flow hedges

See Note 17 for information regarding losses from designated hedging instruments reclassified from accumulated other comprehensive loss.

3 unchanged sentences

FAIR VALUE MEASUREMENTS

In accordance with ASC 820, the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique.

In accordance with ASC 820, "Fair Value Measurement" the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique.

Cash and cash equivalents are classified within Level 1 because these assets are valued using quoted market prices.

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 June 30, 2023 and December 31, 2022, by level within the fair value hierarchy:

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

Fair value measurements as of

Fair Value Hierarchy

June 30, 2023

December 31, 2022

September 30,

Cash and cash equivalents:

Money market mutual funds

Derivative instruments

Short-term marketable securities:

Corporate bonds

governmental bonds

Treasury securities

Government securities

Long-term marketable securities:

Corporate bonds

governmental bonds

Treasury securities

Government agency securities

Government securities

Derivative instruments

WARRANTY OBLIGATIONS

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,

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

Balance, at the beginning of the period

11 unchanged sentences

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,

Three Months Ended

September 30,

Nine Months Ended

September 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 June 30, 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 September 30, 2023:

Total deferred revenues

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

June 30, 2023

December 31, 2022

September 30,

Accrued expenses

22 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 June 30, 2023 and December 31, 2022:

June 30, 2023

December 31, 2022

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

September 30,

Unamortized issuance costs

Net carrying amount

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.

For the three months ended September 30, 2023 and 2022 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 733 and $ 730 , respectively.

For the nine months ended September 30, 2023 and 2022 the Company recorded amortized debt issuance costs related to the Notes in the amount of $ 2,196 and $ 2,186 , respectively.

As of September 30, 2023, the unamortized issuance costs of the Notes will be amortized over the remaining term of approximately 2 years.

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

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 .

As of September 30, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 578,048 .

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

As of September 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 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.

As of September 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 11,845,915 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;

1 unchanged sentence

The Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company .

In 2021, the Company has also committed to issuing additional shares, which carry certain performance conditions (including business performance targets and a continued service relationship with the Company) and are treated as PSUs for accounting purposes.

The market condition for the PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed in the S&P 500 index over a one to three year performance period.

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

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

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

STOCK CAPITAL (Cont.)

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

4 unchanged sentences

Outstanding as of December 31, 2022

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.

Outstanding as of September 30, 2023

Vested and expected to vest as of September 30, 2023

Exercisable as of September 30, 2023

The intrinsic value is the amount by which the closing price of the Company’s common stock on September 30, 2023 of $ 129.51 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 June 30, 2023

Unvested as of September 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 June 30, 2023

Unvested as of September 30, 2023

Employee Stock Purchase Plan ("ESPP"):

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

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

As of September 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 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.

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

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

In accordance with ASC No.

3 unchanged sentences

(in thousands, except per share data)

STOCK CAPITAL (Cont.)

Stock-based compensation expenses:

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:

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Stock-based compensation expenses:

7 unchanged sentences

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.

The total tax benefit associated with stock-based compensation for the three months ended September 30, 2023 and 2022 was $ 3,124 and $ 2,646 , respectively.

The tax benefit realized from stock-based compensation for the three months ended September 30, 2023 , and 2022 was $ 1,589 and $ 3,060 , respectively.

The total tax benefit associated with stock-based compensation for the nine months ended September 30, 2023 , and 2022 was $ 11,422 and $ 9,182 , respectively.

The tax benefit realized from stock-based compensation for the nine months ended September 30, 2023 , and 2022 was $ 7,050 and $ 8,871 , respectively.

As of September 30, 2023 , there were total unrecognized compensation expenses in the amount of $ 290,401 related to non-vested equity-based compensation arrangements granted.

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

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

COMMITMENTS AND CONTINGENT LIABILITIES

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.

As of September 30, 2023 , contingent liabilities exist regarding guarantees in the amounts of $ 5,804 , and $ 1,821 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 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.

As of September 30, 2023 , the Company had non-cancellable purchase obligations totaling approximately $ 1,116,593 , out of which the Company recorded a provision for loss in the amount of $ 13,463 .

As of September 30, 2023 , the Company had contractual obligations for capital expenditures totaling approximately $ 120,572 .

These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s general manufacturing process and mainly to its new manufacturing site in the U.S.

Legal claims:

11 unchanged sentences

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.

As of September 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 June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

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

25 unchanged sentences

(in thousands, except per share data)

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

Details about Accumulated Other Comprehensive Loss Components

ACCUMULATED OTHER COMPREHENSIVE LOSS (Cont.)

The following table summarizes the reclassification out of "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

September 30,

Nine Months Ended

September 30,

Affected Line Item in the

Statement of Income

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

10 unchanged sentences

OTHER OPERATING EXPENSE (INCOME)

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

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Impairment of goodwill and intangible assets

Sale of assets

Write-off of property, plant and equipment

Impairment of property, plant and equipment

Total other operating expense (income), net

2 unchanged sentences

(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.

The effective tax rate for the three months ended September 30, 2023 , and 2022 was ( 143.6 )% and 58.0 % , respectively.

The change in effective tax rate in the three months ended September 30, 2023 compared to the corresponding period in 2022 is mainly due to the IRC Section 174 R&D capitalization, and other expenses not recognized for GILTI purposes, which did not decrease in line with the decrease in our taxable income, as well as unfavorable impact of losses in foreign subsidiaries where we do not anticipate a future tax benefit.

The effective tax rate for the nine months ended September 30, 2023 and 2022 was 33.6 % and 42.1 % , respectively.

The lower tax rate in the nine months ended September 30, 2023 compared to the corresponding period 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 June 30, 2023, and December 31, 2022, unrecognized tax benefits were $ 3,035 and $ 2,756 , respectively.

As of September 30, 2023 , and December 31, 2022 , unrecognized tax benefits were $ 3,155 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 June 30, 2023, and December 31, 2022.

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

In August 2022, the U.S.

4 unchanged sentences

Treasury Department, the Company will be examining the benefits that may be available to it, such as the availability of tax credits for domestic manufacturers, in the coming months.

The Company also announced its plans to establish manufacturing capabilities in the United States during 2023.

During the third quarter, the Company began manufacturing inverters in the U.S.

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

EARNINGS PER SHARE

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

EARNINGS (LOSS) PER SHARE

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

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Shares used in computing net EPS of common stock, basic

Net income attributable to common stock, basic

Net income (loss) attributable to common stock, basic

Notes due 2025

Net income attributable to common stock, diluted

Net income (loss) attributable to common stock, diluted

Shares used in computing net EPS of common stock, basic

2 unchanged sentences

Shares used in computing net EPS of common stock, diluted

Earnings per share:

Shares excluded from the calculation of diluted net EPS due to their anti-dilutive effect

Earnings (loss) per share:

Shares excluded from the calculation of net diluted due to their anti-dilutive effect

SOLAREDGE TECHNOLOGIES INC.

5 unchanged sentences

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.

The Company does not allocate to its operating segments revenue recognized due to advance payments received for performance obligations that extend for a period greater than one year, related to Accounting Standard Codification 606, “Revenue from Contracts with Customers” (ASC 606).

The Company does not allocate to its operating segments revenue recognized due to advance payments received for performance obligations that extend for a period greater than one year, related to ASC 606, “Revenue from Contracts with Customers”.

Segment profit is comprised of gross profit for the segment less operating expenses that do not include amortization of purchased intangible assets, impairments of goodwill and intangible assets, stock based compensation expenses, and certain other items.

8 unchanged sentences

Three Months Ended

June 30, 2023

Six Months Ended

June 30, 2023

September 30, 2023

Nine Months Ended

September 30, 2023

Cost of revenues

7 unchanged sentences

(in thousands, except per share data)

SEGMENT INFORMATION (Cont.)

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2022

September 30, 2022

Nine Months Ended

September 30, 2022

Cost of revenues

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Solar revenues

4 unchanged sentences

Three Months Ended

Six Months Ended

June 30,

September 30,

Nine Months Ended

September 30,

Solar segment profit

3 unchanged sentences

Stock based compensation expenses

Amortization related to business combinations

Impairment of goodwill and intangible assets

Disposal of assets related to Critical Power

Other unallocated expenses, net

Consolidated operating income

Sale of Critical Power assets

Other unallocated expenses (income), net

Consolidated operating income (expense)

SUBSEQUENT EVENTS

On November 1, 2023, the Company announced the approval by the Board of Directors of a share repurchase program which authorizes the repurchase of up to $ 300 million of the Company’s common stock.

Under the share repurchase program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan or other means, including through 10b5-1 trading plans, all in compliance with the rules of the SEC and other applicable legal requirements.

The timing, manner, price and amount of any common share repurchases under the share repurchase program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.

The program does not obligate the Company to acquire any amount of common stock, it may be suspended, extended, modified, discontinued or terminated at any time at the Company’s discretion without prior notice, and will expire on December 31, 2024.

In October 2023, the Company decided to discontinue its light commercial e-Mobility ("LCV") activity related to the supply of products to its sole customer.

On November 3, 2023, Daphne Shen, a purported stockholder of the Company, filed a proposed class action complaint for violation of federal securities laws, individually and putatively on behalf of all others similarly situated, in the U.S District Court of the Southern District of New York against the Company, the Company’s CEO and the Company’s CFO.

The complaint alleges that the Company violated various securities laws and seeks class certification, damages, interest, attorneys’ fees, and other relief.

Due to the early stage of this proceeding, we cannot reasonably estimate the potential range of loss, if any.

The Company disputes the allegations of wrongdoing and intends to vigorously defend against them.

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