What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-06 · 191 added, 245 removed, 113 unchanged (79% of the section changed)

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In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future, including future rule-making.

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

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

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

• 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 imposition of import tariffs;

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

• changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Inflation Reduction Act;

• our ability to forecast demand for our products accurately and to match production to such demand as well as our customers' ability to forecast demand based on inventory levels;

• macroeconomic conditions in our domestic and international markets, as well as inflation concerns, rising interest rates and recessionary concerns;

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

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• product quality or performance problems in our products;

• our ability to forecast demand for our products accurately and to match production to such demand as well as our customers' ability to forecast demand based on inventory levels;

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

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

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

• 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;

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

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

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

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

• Our ability to recognize expected benefits from restructuring plans;

• any unauthorized access to, disclosure, or theft of personal information or unauthorized access to our network or other similar cyber incidents;

• our ability to integrate acquired businesses;

• disruption to our business operations due to the evolving state of war in Israel and political conditions related to the Israeli government's plans to significantly reduce the Israeli Supreme Court's judicial oversight;

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

• fluctuations in global currency exchange rates;

• the impact of evolving legal and regulatory requirements, including emerging environmental, social and governance requirements;

• existing and future responses to and effects of pandemics, epidemics or other health crises;

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

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

• changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Inflation Reduction Act;

• changes in the U.S.

trade environment, including the imposition of import tariffs;

• 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;

• disruption to our business operations due to the evolving state of war in Israel;

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

• volatility of our stock price;

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

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• 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;

• macroeconomic conditions in our domestic and international markets, as well as inflation concerns, financial institutions instability, rising interest rates, recessionary concerns, the prospect of a shutdown of the U.S.

federal government and the Israeli government's plans to significantly reduce the Israeli Supreme Court's judicial oversight;

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

• our ability to service our debt;

• any unauthorized access to, disclosure, or theft of personal information or unauthorized access to our network or other similar cyber incidents;

• the impact of evolving legal and regulatory requirements, including emerging environmental, social and governance requirements;

the other factors set forth under “Item 1A .

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 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.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 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.

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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 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, efficient integration (DC coupled) with SolarEdge storage solutions, and improved operating and maintenance, or O&M with remote monitoring at the module level.

The SolarEdge Energy Hub inverter 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 that enables access to a cloud-based monitoring platform and in many cases, a battery and additional smart energy management solutions.

Our solutions address a broad range of solar market segments, from residential 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 also include energy storage systems or ESS, home backup systems, electric vehicle, or EV, components and charging capabilities, home energy management, grid services and virtual power plants, or VPPs, and lithium-ion batteries.

We develop, manufacture and sell products in a solar segment that addresses a broad range of energy market segments through our diversified product offering, including residential, commercial and large scale photovoltaic or PV, energy storage and backup solutions, electric vehicle or EV charging capabilities, home energy management, grid services and virtual power plants, as well as products in our non-solar businesses including lithium-ion cells, batteries and energy storage systems, which are part of our Energy Storage Segment as well as automation machines ("Automation Machines") and in prior years, we also had product offerings for the e-mobility market.

In October 2023, we decided to discontinue our light commercial vehicle ("LCV") e-Mobility activity.

The remaining e-mobility activity, which includes PV applications, has been included under the solar segment starting January 1, 2024.

The Company identified two reportable segments:

the Solar segment and Energy Storage segment.

The Solar segment includes the design, development, manufacturing, and sales of its DC optimized inverter solutions designed to maximize power generation at the PV module level and batteries for PV applications.

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

The Energy Storage segment includes the design, development, manufacturing, and sales of high-energy, high-power, lithium-ion cells and BESS solutions for C&I and Utility markets.

The Energy Storage segment provides purpose-built components and solutions, hardware and software, as well as pre and post sales engineering support to design, build, and manage battery and system solutions according to the customer’s use cases and mission profiles.

The “All other” category includes the design, development, manufacturing and sales of e-Mobility products and automated machines (in prior periods).

In the third quarter of 2020, we began commercial shipments 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.

In 2023, we expanded the manufacturing capacity of Sella 1 to add an additional inverter line that reached full manufacturing capacity in the third quarter of 2023.

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

In May 2022, we opened “Sella 2”,our own manufacturing facility for Li-Ion cells, in Korea.

Sella 2 currently has a 2GWh capacity.

Sella 2 began producing and shipping cells at the end of 2022 and is expected to gradually increase manufacturing capacity during 2024.

In light of the Inflation Reduction Act of 2022 (“IRA”), legislation in the United States that incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of US-manufactured products, as well as by incentivizing manufacturers of such products domestically, we have begun manufacturing products in the U.S.

With the ramp-up of this new site and due to a decrease in demand, this quarter we have reduced capacity in our manufacturing site in China and discontinued manufacturing of our products in Mexico, with the intention to close the Mexico manufacturing site in coming months.

We are a leader in the global module-level power electronics or MLPE market.

As of September 30, 2023, we shipped approximately 122.9 million power optimizers, 5.5 million inverters and 229.5 thousand residential batteries.

Over 3.6 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform.

As of September 30, 2023, we shipped approximately 51.7 GW of our DC optimized inverter systems and approximately 1.6 GWh of our residential batteries.

Our revenues for the three months ended September 30, 2023, and 2022 were $725.3 million and $836.7 million, respectively.

Gross margin for the three months ended September 30, 2023, and 2022 was 19.7% and 26.5%, respectively.

Net loss for the three months ended September 30, 2023 was $61.2 million compared to net income in the amount of $24.7 million for the three months ended September 30, 2022.

Our revenues for the nine months ended September 30, 2023, and 2022 were $2,660.5 million and $2,219.6 million, respectively.

Gross margin for the nine months ended September 30, 2023, and 2022 was 28.6% and 26.3%, respectively.

Net income for the nine months ended September 30, 2023 and 2022 was $196.7 million and $73.0 million, respectively.

In light of the Inflation Reduction Act legislation in the United States, which incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of product with domestic content, as well as by incentivizing local manufacturing of our products, we have begun manufacturing inverters in Texas and are currently establishing additional manufacturing capabilities in Florida for optimizers and inverters.

With the ramp up of these new sites and due to a decrease in demand for our products, we have reduced capacity in our manufacturing site in China and discontinued manufacturing of our products in Mexico.

As of March 31, 2024 , we shipped approximately 126.2 million power optimizers, 5.6 million inverters and 259.6 thousand residential batteries.

Over 3.8 million installation s, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform.

As of March 31, 2024 , we shipped approximately 53.6 GW of our DC optimized inverter systems and approximately 1.8 GWh of our batteries for PV applications .

Our revenues for the three months ended March 31, 2024 and March 31, 2023 were $204.4 million and $943.9 million , respectively.

Gross loss was 12.8% for the three months ended March 31, 2024 , compared to gross margin of 31.8% for the three months ended March 31, 2023 .

Net loss was $157.3 million for the three months ended March 31, 2024 , compared to net income of $138.4 million for the three months ended March 31, 2023 .

Global Circumstances Influencing our Business and Operations

Demand for Products

We have seen a slowdown in demand for our products in our Solar segment from our direct customers since the second part of the third quarter of 2023.

This was a result of slowed market demand in the third quarter of 2023 as distributors began to take actions to reduce inventory levels.

In particular, beginning in the second part of the third quarter of 2023, we experienced substantial unexpected cancellations and push outs of existing backlog from our European distributors.

We attribute these cancellations and pushouts to high inventory in the channels and slower than expected installation rates both in the United States and Europe.

This trend continued in the following quarters.

Additionally, the Company anticipates a continued lower level of revenues in the second quarter of 2024 when compared to the same quarter last year, as the inventory destocking process continues.

Disruptions due to the war in Israel

Violence between Hamas and Israel started on October 7th when the terrorist group launched an unprecedented attack on Israel.

On October 8th, the Israeli Government declared that the Security Cabinet of the State of Israel approved a war situation in Israel.

Approximately 11% of our workforce in Israel, where we are headquartered, have been called into active reserve duty.

Recently, Israel’s credit outlook was cut to negative by S&P Global Ratings, which cited risks that the war could spread more widely and have a more pronounced impact on the country’s economy than expected.

Our offices and facilities are currently open worldwide, including in Israel, and, to date, we have not had disruptions to our ability to manufacture and deliver products and services to customers.

We are prioritizing and reallocating resources between projects to minimize the impact on our business.

Due to these recent events, and their ongoing and evolving nature, the extent of the adverse effect on our business operations is still unknown.

A prolonged war or an escalation could materially adversely affect our business, financial condition, and results of operations.

Due to the war that began on October 7, 2023, approximately 10% of our employees in Israel were called to active reserve duty and additional employees may be called in the future, if needed.

About 75% of these employees have returned to work, though recruitments for additional reserve duties may and have reoccurred.

While our offices and facilities are open worldwide, including in Israel, and, to date, we have not had disruptions to our ability to manufacture and deliver products and services to customers, a prolonged war or an escalation of the current conditions in Israel could materially adversely affect our business, financial condition, and results of operations.

Due to the recency of these events, and their ongoing and evolving nature, the extent of the adverse effect on our business operations is still unknown.

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 may continue to have, a multidimensional impact on the global economy, the energy landscape in general and the global supply chain.

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.

In 2022, rising global interest in becoming less dependent on gas and oil led to higher demand for our products.

The conflict adversely affected the prices of raw materials arriving from Eastern Asia and resulted in an increase in gas and oil prices.

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 is currently decreasing, a change or escalation of this ongoing conflict, could increase the impacts from the circumstances described above and may have an adverse effect on our business and results of operations.

While the impact of this conflict decreased in 2023, a change or escalation of this ongoing conflict could increase the impacts from the circumstances described above and may lead to an adverse effect on our business and results of operations.

Inflation Reduction Act

In August 2022, the U.S.

government enacted the IRA, which includes several incentives intended to promote clean energy, battery and energy storage, electrical vehicles, and other solar products and is expected to impact our business and operations.

As part of such incentives, the IRA will, among other things, extend the investment tax credit (“ITC”) for residential solar installations through 2034 and for commercial installations through 2024 and is therefore expected to increase the demand for solar products.

The IRA is expected to further incentivize residential and commercial solar customers and developers due to the inclusion of a tax credit for qualifying energy projects of up to 30%.

Since these regulations are still pending administrative guidance from the Internal Revenue Service and U.S.

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

government enacted the Inflation Reduction Act of 2022 (the “IRA”), which includes several provisions intended to accelerate U.S.

manufacturing and adoption of clean energy, battery and energy storage, electrical vehicles, and other solar products and is expected to impact our business and operations.

As part of such incentives, the IRA, among other things, extends the investment tax credit and production tax credit through 2034 and is therefore expected to increase the demand for solar products.

The IRA also further incentivizes residential and commercial solar customers and developers through the inclusion of a tax credit for qualifying energy projects of up to 30%.

Section 45X of the IRA offers advanced manufacturing production tax credits that incentivize the production of eligible components within the U.S.

To that end, we established manufacturing capabilities in the U.S.

in 2023 and announced additional capacity expected during 2024.

These provisions of the law are new and regulations and guidance concerning their implementation are gradually being published by the U.S.

Treasury Department.

We continue to monitor the benefits that may be available to us, such as the availability of tax credits for domestic manufacturers.

To the extent that tax benefits or credits may be available to competing technology and not to our technology, our business could be adversely disadvantaged.

Demand for Products

The demand environment for our products experienced a slowdown beginning in the third quarter of 2023 in Europe.

During the second part of the third quarter of 2023, we experienced substantial unexpected cancellations and pushouts of existing backlog from our European distributors.

We attribute these cancellations and pushouts to high inventory in the channels and slower than expected installation rates.

In particular, installation rates for the third quarter were much slower at the end of the summer and in September where traditionally there is a rise in installation rates.

As a result, third quarter revenue, gross margin and operating income was below the low end of the prior guidance range.

Additionally, the Company anticipates significantly lower revenues in the fourth quarter of 2023 as the inventory destocking process continues.

Key Operating Metrics

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However, revenues may increase in a non-correlated manner to the “megawatt shipped” metric since other products such as power optimizers, are not accounted for in this metric.

Three Months Ended

September 30, 2023

Nine Months Ended

September 30, 2023

Three months ended March 31,

Inverters shipped

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Megawatts shipped 1

Megawatts hour shipped - residential batteries

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

Megawatts hour shipped - batteries for PV applications

1 Excluding batteries for PV applications, 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.

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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.

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

Cost of revenues

Gross profit (loss)

Operating expenses:

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Financial income (expense), net

Other income (loss), net

Other loss, net

Income (loss) before income taxes

Tax benefits (income taxes)

Net loss from equity method investments

Net income (loss)

Comparison of three and nine months ended September 30, 2023, to the three and nine months ended September 30, 2022

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Three Months Ended

(In thousands)

Revenues decreased by $111.4 million, or 13.3%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, primarily due to (i) a decrease of $89.0 million related to the number of residential batteries sold mainly in Europe;

and (ii) a decrease of $17.2 million related to a decrease in the number of ancillary solar products sold.

Revenues from outside of the U.S.

comprised 73.0% of our revenues in the three months ended September 30, 2023 as compared to 69.9% in the three months ended September 30, 2022.

The decrease in revenues was due to high inventory in the channels and slower than expected installation rates.

The number of power optimizers recognized as revenues decreased by approximately 2.9 million units, or 46.9%, from approximately 6.1 million units in the three months ended September 30, 2022 to approximately 3.3 million units in the three months ended September 30, 2023 as a result of lower demand.

The number of inverters recognized as revenues increased by approximately 9.5 thousand units, or 3.7%, from approximately 257.1 thousand units in the three months ended September 30, 2022 to approximately 266.6 thousand units in the three months ended September 30, 2023.

The relative increase in inverters shipped vs.

the decrease in optimizers shipped this quarter is a result of our ability to catch up inverter production with demand that we were not able to fulfil in previous quarters.

The megawatts hour of residential batteries recognized as revenues decreased by approximately 209.2 megawatts hour, or 57.6% from approximately 363.0 in the three months ended September 30, 2022 to approximately 153.7 megawatts hour in the three months ended September 30, 2023, as a result of lower demand.

Our blended Average Selling Price (“ASP”) per watt for solar products excluding residential batteries is calculated by dividing the sales of solar products, excluding the sales 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 $0.069, or 29.5%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The decrease in blended ASP per watt is mainly attributed to the increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix and a relatively lower number of power optimizers and other solar products shipped compared to the number of inverters shipped, leading to a reduced overall effect on our ASP per watt.

This decrease in blended ASP per watt was partially offset by price increases that went into effect gradually during 2022 and the first half of 2023, as well as by the appreciation of the Euro against the U.S.

Our blended ASP per watt/hour for residential batteries is calculated by dividing residential battery sales, by the nameplate capacity of residential batteries shipped.

Our blended ASP per watt/hour for residential batteries increased by $0.027, or 6.1%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The increase in blended ASP per watt/hour is mainly attributed to the increase in the sale of one phase batteries that are characterized by higher ASP per watt/hour, as well as the appreciation of the Euro against the U.S.

Revenues increased by $440.9 million, or 19.9%, in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to an increase of $497.9 million related to an increase in the number of inverters sold, with significant growth in revenues coming from Europe.

This increase was partially offset by a decrease of $53.7 million related to a decrease in the number of ancillary solar products sold.

Revenues decreased by $739.5 million, or 78.3%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to (i) a decrease of $614.3 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease of $78.4 million related to the lower number of batteries for PV applications sold, primarily in Europe;

and (iii) a decrease of $22.8 million in revenues generated from e-mobility components, related to the discontinuation of the Company’s LCV e-Mobility activity.

The overall decrease in revenues was due to the decline in demand that began in the third quarter of 2023.

This decline was the result of high inventory in the channels and slower than expected installation rates beginning in the third quarter of 2023, leading to substantial unexpected cancellations and push outs of existing backlog, from our distributors, which continued into the first quarter of 2024.

Revenues from outside of the U.S.

comprised 75.7% of our revenues in the nine months ended September 30, 2023 as compared to 62.7% in the nine months ended September 30, 2022.

The increase in revenues in the nine months ended September 30, 2023 was partially offset by a decrease in revenues in the third quarter of 2023 due to unexpected cancellations and pushouts of existing backlog from our European distributors.

The number of power optimizers recognized as revenues decreased by approximately 1.7 million units, or 10.2%, from approximately 17.0 million units in the nine months ended September 30, 2022 to approximately 15.3 million units in the nine months ended September 30, 2023 as a result of lower demand.

The number of inverters recognized as revenues increased by approximately 234.7 thousand units, or 33.6%, from approximately 697.7 thousand units in the nine months ended September 30, 2022 to approximately 932.4 thousand units in the nine months ended September 30, 2023.

The relative increase in inverters recognized versus the decrease in optimizers recognized in the nine months ended September 30, 2023 was a result of our ability to catch up inverter production with demand that we were not able to fulfil in previous quarters.

The megawatts hour of residential batteries recognized as revenues decreased by approximately 19.6 megawatts hour, or 3.0% from approximately 660.8 megawatts hour in the nine months ended September 30, 2022 to approximately 641.2 megawatts hour in the nine months ended September 30, 2023 due to a decrease in demand.

Our blended ASP per watt for solar products shipped excluding residential batteries decreased by $0.054, or 22.1%, in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

The decrease in blended ASP per watt is mainly attributed to a relatively lower number of power optimizers and other solar products shipped compared to the number of inverters shipped, leading to an overall reduction in our ASP per watt as well as due to an increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix.

This decrease in blended ASP per watt was partially offset by price increases that went into effect gradually during 2022 and in the first half of 2023, as well as by the appreciation of the Euro against the U.S.

Our blended ASP per watt/hour for residential batteries decreased by $0.005, or 1.0%, in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

The decrease in blended ASP per watt/hour is mainly attributed to the addition of a three phase battery, which is sold at a lower ASP per watt/hour, to our product portfolio, which was partially offset by the appreciation of the Euro against the U.S.

Cost of Revenues and Gross Profit

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

comprised 68.1% of our revenues in the three months ended March 31, 2024, as compared to 72.9% in the three months ended March 31, 2023.

The number of power optimizers recognized as revenues decreased by approximately 5.5 million units, or 83.7%, from approximately 6.5 million units in the three months ended March 31, 2023 to approximately 1.1 million units in the three months ended March 31, 2024.

The number of inverters recognized as revenues decreased by approximately 270 thousand units, or 81.2%, from approximately 332 thousand units in the three months ended March 31, 2023 to approximately 62.3 thousand units in the three months ended March 31, 2024.

The megawatts hour of batteries for PV applications recognized as revenues decreased by approximately 122.7 megawatts hour, or 56.8% from approximately 216.1 in the three months ended March 31, 2023 to approximately 93.4 megawatts hour in the three months ended March 31, 2024 , as a result of lower demand.

Our blended Average Selling Price (“ASP”) per watt for solar products excluding batteries for PV applications is calculated by dividing the solar revenues, excluding revenues from the sale of batteries for PV applications, by the nameplate capacity of inverters shipped.

Our blended ASP per watt for solar products decreased by $0.049, or 22%, in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The decrease in blended ASP per watt is mainly attributed to price reduction across our product offerings, a relatively lower number of power optimizers and other solar products shipped compared to the number of inverters shipped, leading to an overall reduction in our ASP per watt as well as due to an increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix.

This decrease in blended ASP per watt was partially offset by 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.

Our blended ASP per watt/hour for batteries for PV applications is calculated by dividing batteries for PV applications revenues, by the nameplate capacity of batteries for PV applications shipped.

Our blended ASP per watt/hour for batteries for PV applications decreased by $0.092 , or 19.4% , in the three months ended March 31, 2024 , as compared to the three months ended March 31, 2023 .

The decrease in blended ASP per watt/hour is mainly attributed to price reduction of our batteries for PV applications.

This decrease in ASP per watt/hour was partially offset by an increase in the sale of our one-phase battery that is sold at a higher ASP per watt/hour.

Cost of Revenues and Gross Profit (loss)

Three Months Ended

(In thousands)

Cost of revenues

Cost of revenues decreased by $32.2 million, or 5.2%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, primarily due to:

• a decrease in direct cost of revenues sold of $83.5 million associated mainly with a decrease in the volume of products sold;

• a decrease in customs duties of $5.0 million attributed to the decrease in volumes of products manufactured in China for the U.S.

• a decrease in shipment and logistic costs in an aggregate amount of $3.2 million due to a decrease in shipment rates and a decrease in expedited shipments costs.

These were partially offset by:

• an increase in warranty expenses and warranty accruals of $28.0 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 of $14.0 million in inventory accrual which is mainly attributed to a higher inventory write-down;

• an increase in other production costs of $6.6 million, which is mainly attributed to charges from our contract manufacturers related to the downsizing of our manufacturing in Mexico and China, as well as ramp up costs associated with Sella 2, our Li-Ion battery cell manufacturing facility located in South Korea;

• an increase in personnel-related costs of $5.6 million related to the expansion of our production, operations, and support headcount, which grew in parallel to our growing install base worldwide and manufacturing volumes which were partially offset by the depreciation of the New Israeli Shekel (“NIS”) against the U.S.

Gross profit as a percentage of revenue decreased to 19.7% from 26.5% in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, primarily due to:

• An increase in personnel and manufacturing related costs from the expansion of our infrastructure geared towards accelerated growth;

• an increase in costs related to our existing install base such as warranty expenses, which were divided this quarter by lower revenue resulting in lower gross margin;

• an increase in inventory accrual for impairment of excess inventory;

• an increased portion of sales of commercial products out of our total product mix, which are characterized with lower gross margin;

• our non-solar businesses, referred to in our financial results as "all other segments", are generally characterized by a lower gross profit which effect was amplified this quarter.

These were partially offset by:

• favorable exchange rates on our sales outside of the U.S.;

• gradual price increases across our product offerings;

• continued cost reduction efforts.

Cost of revenues increased by $264.3 million, or 16.2%, in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to:

• an increase in direct cost of revenues sold of $112.4 million associated primarily with an increase in the volume of products sold;

• an increase in warranty expenses and warranty accruals of $101.7 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 of $20.4 million in inventory accrual which is mainly attributed to changes in inventory valuations, and higher inventory accruals related to our initial manufacturing in Sella 2, partially offset by a decrease in inventory write-off related to the discontinuation of our UPS related activities in the comparable period;

• an increase in personnel-related costs of $14.8 million related to the expansion of our production, operations, and support headcount which grew in parallel to our growing install base worldwide;

• an increase in other production costs of $6.5 million, which is mainly attributed to charges from our contract manufacturers related to the downsizing of our manufacturing sites in China and discontinuance of our manufacturing site in Mexico, as well as ramp up costs associated with Sella 2, our Li-Ion battery cell manufacturing facility located in South Korea.

These were partially offset by:

• a decrease in customs duties of $4.2 million attributed to the decrease in volumes of products manufactured in China for the U.S.

• a decrease in shipment and logistic costs in an aggregate amount of $2.7 million due to a decrease in shipment rates and a decrease in expedited shipments costs.

Gross profit as a percentage of revenue increased to 28.6% from 26.3% in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 primarily due to:

• gradual price increases across our product offerings;

• favorable exchange rates on our sales outside of the U.S.;

• a decrease in shipment rates as well as a reduced portion of expedited shipments out of our total shipments;

• continued cost reduction efforts.

These were partially offset by:

• an increased portion of sales of commercial products out of our total product mix, which are characterized with lower gross margins;

• an increase in warranty expenses and warranty accruals associated primarily with the change in the composition of our install base, as well as an increase in costs related to the different components of our warranty expenses, as reflected in our actual support costs;

• higher revenues from our non-solar businesses, which are generally characterized by a lower gross profit, which effect was amplified this quarter;

• an increase in inventory accrual for impairment of excess inventory.

Gross profit (loss)

Cost of revenues decreased by $413.2 million , or 64.2% , in the three months ended March 31, 2024 , as compared to the three months ended March 31, 2023 , primarily due to:

• a decrease in direct cost of revenues sold of $293.6 million associated primarily with a decrease in the volume of products sold;

• a decrease in warranty expenses and warranty accruals of $74.8 million associated primarily with a decrease in revenues;

• a decrease in shipment and logistic costs in an aggregate amount of $39.9 million due to a decrease in volumes shipped and a decrease in expedited shipments costs.

Gross profit as a percentage of revenue decreased from 31.8% in the three months ended March 31, 2023 to gross loss of 12.8% in the three months ended March 31, 2024 primarily due to:

• price reduction primarily in our batteries for PV applications, a higher portion of our single phase batteries out of our total product mix as well as an increase in the ratio of commercial products compared to residential products, resulting in lower gross margin of approximately 12%;

• lower absolute fixed and other production related costs, which were divided this quarter by significantly lower revenue, resulting in lower gross margin o f approximately 30% .

Operating Expenses:

Research and Development

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Three months ended March 31,

(In thousands)

Research and development

Research and development costs increased by $10.4 million or 15.0%, in the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to:

• an increase in personnel-related costs of $6.4 million resulting from an increase in our research and development headcount as well as salary expenses associated with annual merit increases, which were partially offset by the depreciation of the NIS against the U.S.

dollar 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;

• an increase in expenses related to consultants and sub-contractors in an amount of $2.4 million.

Research and development costs increased by $35.6 million or 16.9%, in the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to:

• an increase in personnel-related costs of $21.6 million resulting from an increase in our research and development headcount as well as salary expenses associated with annual merit increases, which were partially offset by the depreciation of the NIS against the U.S.

dollar 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;

• an increase in expenses related to consultants and sub-contractors in an amount of $7.4 million;

• an increase in depreciation expenses of property and equipment in an amount of $2.7 million;

• an increase in expenses related to other overhead costs in an amount of $2.5 million.

Research and development costs decreased by $4.5 million or 5.7% , in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 , primarily due to:

• a decrease in expenses related to consultants and sub-contractors in an amount of $2.8 million ;

• a decrease in personnel-related costs of $1.5 million primarily attributed to salaries and benefits expenses, hedging, as well as a decrease in headcount in alignment with our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics, which was partially offset by a one-time restructuring costs.

Sales and Marketing

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Three months ended March 31,

(In thousands)

Sales and marketing

Sales and marketing expenses decreased by $2.4 million, or 5.6%, in the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to a decrease in personnel-related costs of $3.2 million as a result of a depreciation of the NIS against the U.S.

dollar, a decrease in employee equity-based compensation and a decrease in sales commissions, which were partially offset by an increase in headcount outside of the U.S.

This decrease was partially offset by an increase in expenses related to other marketing activities by $1.0 million.

Sales and marketing expenses increased by $8.5 million, or 7.3%, in the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to:

• an increase in personnel-related costs of $3.0 million as a result of an increase in headcount supporting our growth outside of the U.S, as well as salary expenses associated with annual merit increases and employee equity-based compensation, which were partially offset by the depreciation of the NIS against the U.S.

• an increase of $1.8 million in expenses related to other marketing activities;

• an increase of $1.4 million in training-related expenses as a result of resuming training activities that had been previously cancelled or postponed due to Covid-19 restrictions in 2022;

• an increase in expenses related to other overhead costs of $0.9 million.

Sales and marketing expenses decreased by $2.1 million , or 5.0% , in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 , primarily due to:

• a decrease of $1.4 million in training-related expenses .

• a decrease in personnel-related costs of $1.1 million primarily attributed to salaries and benefits expenses, a decrease in headcount in alignment with our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics which was partially offset by a one-time restructuring costs.

General and Administrative

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Three months ended March 31,

(In thousands)

General and administrative

General and administrative expenses increased by $11.2 million, or 40.0%, in the three months ended September 30, 2023 compared to the three months ended September 30, 2022, primarily due to:

• an increase in expenses related to doubtful debt of $7.6 million;

• an increase in expenses related to consultants and sub-contractors of $2.2 million;

• an increase in personnel-related costs of $1.4 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with annual merit increases, which were partially offset by the depreciation of the NIS against the U.S.

General and administrative expenses increased by $29.4 million, or 35.6%, in the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022, primarily due to:

• an increase in expenses related to consultants and sub-contractors of $11.7 million;

• an increase in expenses related to doubtful debt of $9.1 million;

• an increase in personnel-related costs of $6.4 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with annual merit increases, which were partially offset by the depreciation of the NIS against the U.S.

General and administrative expenses decreased by $5.7 million , or 15.6% , in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 , primarily due to:

• a decrease in expenses related to consultants and sub-contractors in an amount of $3.6 million ;

• a decrease in personnel-related costs of $3.4 million primarily attributed to salaries and benefits expenses, a decrease in headcount in alignment with our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics which was partially offset by a one-time restructuring costs.

These were partially offset by:

• an increase in expenses related to an accrual for credit losses in an amount of $1.3 million.

Other operating expense (income), net

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Three months ended March 31,

(In thousands)

Other operating expense (income), net

Other operating income, net, decreased by $2.7 million in the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to:

• a decrease of $1.6 million in income related to the discontinuation of our UPS-related activities and the sale of assets related to these activities;

• a decrease of $1.1 million in income related to the sale of property, plant and equipment.

Other operating income, net was $1.4 million, in the nine months ended September 30, 2023, compared to other operating expenses, net of $2.0 million in the nine months ended September 30, 2022, primarily due to:

• a decrease 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 $0.7 million in expenses related to write-offs of property, plant and equipment.

These were partially offset by a decrease of $1.5 million in income from the sale of property, plant and equipment.

Financial expense, net

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Other operating expense, net was $2.4 million in the three months ended March 31, 2024 compared to other operating income of $1.4 million in the three months ended March 31, 2023 primarily due to:

• a decrease of $1.8 million in income related to the sale of property, plant and equipment and other assets.

• an increase of $1.7 million in impairment of property, plant and equipment.

Financial income (expense), net

Three months ended March 31,

(In thousands)

Financial income (expense), net

Financial expense, net decreased by $25.2 million in the three months ended September 30, 2023, compared to the three months ended September 30, 2022, primarily due to:

• a decrease of $19.0 million in expenses due to fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S.

• an increase of $4.6 million in income related to hedging transactions.

Financial income, net was $19.2 million in the nine months ended September 30, 2023, compared to financial expenses, net in the amount of $52.1 million in the nine months ended September 30, 2022, primarily due to:

• an income of $4.8 million in the nine months ended September 30, 2023, compared to expenses of $55.4 million in the nine months ended September 30, 2022, as a result of fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S.

• an increase of $9.9 million in interest income and accretion (amortization) of discount (premium) on marketable securities.

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

Other income (loss), net

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Financial expense , net, was $7.1 million in the three months ended March 31, 2024 , compared to financial income, net, in the amount of $23.7 million in the three months ended March 31, 2023 , primarily due to fluctuations in foreign exchange rates between the Euro and the NIS against the U.S.

Three months ended March 31,

(In thousands)

Other income (loss), net

Other loss was $0.5 million in the three months ended September 30, 2023, compared to other income, of $7.7 million in the three months ended September 30, 2022, primarily due to a decrease in gain from the sale of an investment in a privately-held company.

Other loss, net was $0.6 million in the nine months ended September 30, 2023, compared to other income, net of $6.8 million in the nine months ended September 30, 2022, primarily due to a decrease in gain from the sale of investment in a privately-held company.

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Other loss, net

Other loss decreased by $0.1 million , or 100.0% , in the three months ended March 31, 2024 , compared to the three months ended March 31, 2023 , due to a decrease in realized loss on marketable securities.

Income taxes (tax benefits)

Three months ended March 31,

(In thousands)

Income taxes increased by $1.9 million, or 5.5%, in the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, primarily due to an increase of $11.0 million in current tax expenses mainly attributed to an increase in the Company’s Global Intangible Low Taxed Income (“GILTI”) tax and unfavorable impact of losses in foreign subsidiaries where we do not anticipate a future tax benefit.

This increase was partially offset by an increase of $8.3 million in deferred tax income.

Income taxes increased by $46.5 million, or 87.7%, in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to an increase of $61.2 million in current tax expenses mainly attributed to an increase in profit before tax in our foreign subsidiaries.

This increase was partially offset by an increase of $14.4 million in deferred tax income.

Tax benefits (income taxes)

Tax benefits was $23.8 million in the three months ended March 31, 2024, compared to income taxes in the amount of $29.3 million in the three months ended March 31, 2023 primarily due to:

• an increase of $37.9 million in deferred tax income driven by the net operating loss in the current quarter compared to net profit in the comparable period in 2023, as well as the increase of the Preferred Technological Enterprises Tax rate in Israel, This was offset by lower tax benefits relating to stock-based compensation;

• a decrease of $15.8 million in current tax expenses mainly related to the decrease in profits before tax in certain jurisdictions, partially offset by an increase in our provision for uncertain tax positions .

Net loss from equity method investments

Three months ended March 31,

(In thousands)

Net loss from equity method investments

Net loss from equity method investments increased by $0.3 million , or 100% in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 .

Net Income (loss)

Three months ended September 30, 2023 to 2022

Nine months ended September 30, 2023 to 2022

Three months ended March 31,

(In thousands)

Net income (loss)

As a result of the factors discussed above, net loss was $61.2 million in the three months ended September 30, 2023, as compared to a net income of $24.7 million in the three months ended September 30, 2022.

As a result of the factors discussed above, net income increased by $123.8 million, or 169.7% in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

As a result of the factors discussed above, the net loss was $157.3 million in the three months ended March 31, 2024 , compared to net income of $138.4 million in the three months ended March 31, 2023 .

Segment analysis

Following the discontinuation of the Critical Power segment in June 2022, we operated in four different operating segments:

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

In October 2023, we decided to discontinue our LCV e-Mobility activity and the remaining e-Mobility activity is included under the solar segment starting January 1, 2024.

We have identified two operating segments as reportable – the Solar and the Energy Storage segments.

The other operating segments are insignificant individually, and therefore, their results are presented together under “All other.”

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

Segment profit (loss) is comprised of gross profit (loss) for the segment less operating expenses excluding amortization and impairment of purchased intangible assets, stock based compensation expenses, restructuring charges, discontinued activity charges, impairment of property, plant and equipment and certain other items (which are reported under "Not allocated to segments").

Year ended March 31,

(In thousands)

Segment profit (loss)

Energy Storage

Segment profit (loss)

Not allocated to segments

Revenues not allocated to segments

Expenses, net not allocated to segments

Solar revenues decreased by $718.4 million, or 79.1%, in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023 primarily due to (i) a decrease of $614.3 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease o f $78.4 million related to the number of batteries for PV applications sold primarily in Europe;

(iii) a decrease of $30.1 million in the amount of ancillary solar products sold.

As discussed above, this decrease in revenues was due to high inventory in the channels and slower than expected installation rates beginning in the third quarter of 2023, leading to substantial unexpected cancellations and push outs of existing backlog from our distributors.

Solar operating loss was $110.4 million, in the three months ended March 31, 2024, as compared to profit of $206.7 million in the three months ended March 31, 2023.

This was due to the decrease in revenue of $718.4 million followed by a lesser decrease of $393.3 million in cost of revenues, mainly attributed to fixed and other production related costs.

This was partially offset by a decrease of $8.0 million in operating expenses as a result of our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics.

Energy Storage

Energy Storage revenues increased by $1.5 million, or 16.2%, in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

Energy Storage operating loss decreased by $6.3 million , or 34.3% , in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The decrease in operating loss was p rimarily due to an increase in revenues followed by a decrease of $1.8 million in cost of revenues and a decrease of $3.1 million in operating expenses primarily due to a decrease in the doubtful debt expenses.

All other segments revenues decreased by $22.6 million, or 86.8%, in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023 , primarily due to the discontinuation of the Company’s LCV e-Mobility activity.

All other segments operating profit was $0.1 million in the three months ended March 31, 2024 , compared to operating loss of $4.4 million , in the three months ended March 31, 2023 .

This improvement was mainly due to the discontinuation of our LCV e-Mobility activity.

Not allocated to segments

There were no significant changes in revenues not allocated to segments in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

Expenses, net, not allocated to segments increased by $11.6 million , or 29.1% , in the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase was mainly due to an increase in costs related to the Restructuring Plan as well as an increase in impairment of property, plant, and equipment, all of which are not assessed by our CODM and therefore not allocated to any of the segments above.

Liquidity and Capital Resources

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

Three Months Ended September 30,

Nine Months Ended September 30,

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

Three Months Ended March 31,

(In thousands)

Net cash provided by (used in) operating activities

Net cash used in investing

Net cash provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

As of September 30, 2023, our cash and cash equivalents were $551.1 million.

Net cash provided by (used in) investing activities

Net cash used in financing activities

Decrease in cash and cash equivalents

As of March 31, 2024 , our cash and cash equivalents were $214.2 million .

This amount does not include $734.6 million invested in available-for-sale marketable securities and $1.1 million invested in restricted bank deposits.

Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements, other investments and any potential future share repurchases.

As of September 30, 2023, we have open commitments for capital expenditures in an amount of approximately $120.6 million.

As of March 31, 2024 , we have open commitments for capital expenditures in an amount of approximately $33.0 million .

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

2 unchanged sentences

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 decreased by $39.8 million in the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, mainly due to higher net income adjusted for certain non-cash items.

This was partially offset by higher operating working capital requirements, specifically, an increase in inventory procurement and manufacturing.

Operating cash flows consist primarily of net income (loss), adjusted for certain non-cash items and changes in assets and liabilities.

Cash used in operating activities was $217.0 million in the three months ended March 31, 2024 as compared to $7.9 million cash provided by operating activities in the three months ended March 31, 2023 , ma inly due to net loss adjusted for certain non-cash items generated in the three months ended March 31, 2024 as compared to net income adjusted for certain non-cash items in the three months ended March 31, 2023, which was partially offset by lower operating working capital requirements.

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, cash used for acquisitions and disbursements and receipts from collections of loans made by the Company.

Cash used in investing activities decreased by $192.3 million in the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily driven by a decrease of $247.0 million in investments in available-for-sale marketable securities, an increase of $16.2 million in proceeds provided by sales and maturities of available-for-sale marketable securities as well as an increase of $6.8 million in proceeds provided by government grants in relation to capital expenditures.

This decrease in cash used in investing activities was partially offset by a $24.2 million decrease in proceeds provided by the sale of a privately-held company, an increase of $16.7 million in cash used for a business combination, an increase of $13.0 million in disbursements of loans made by the company, an increase of $11.2 million in the purchase of intangible assets and a $8.0 million increase in investments in privately-held companies.

Cash provided by investing activities was $149 million in the three months ended March 31, 2024 as compared to cash used in investing activities of $67.8 million in the three months ended March 31, 2023 , primarily driven by an increase of $308 million in proceeds provided by sales and maturities of available-for-sale marketable securities and a decrease of $12 million in purchase of property plant and equipment.

This was partially offset by an increase of $90.2 million in investments in available-for-sale marketable securities, a $5.8 million increase in disbursements of loans made by the Company and a $3.3 million increase in cash used in purchase of privately-held companies.

Financing Activities

Financing cash flows consist primarily of proceeds from the sale of shares of common stock in a public offering and employee equity incentive plans.

Cash used in financing activities in the nine months ended September 30, 2023 was $11.3 million compared to $647.1 million cash provided by financing activities in the nine months ended September 30, 2022, primarily due to a

$650.5 million decrease in cash provided by the issuance of common stock, net through a secondary public offering which occurred in March 2022 and a $27.3 million decrease in proceeds provided by the exercise of stock-based awards.

Financing cash flows consisted primarily of repurchases of our common stock under the share repurchase program, proceeds from the sale of shares of common stock in a public offering and employee equity incentive plans.

Cash used in financing activities in the three months ended March 31, 2024 increased by $45.8 million compared to the three months ended March 31, 2023 , primarily due to a $50.0 million increase in cash used in share repurchases and on account of share repurchases, and a $8 million decrease in proceeds provided by the exercise of stock-based awards.

This was partially offset by a decrease of $12.0 million in withholding taxes remitted to the tax authorities related to the exercise of stock-based awards.

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 $650.5 million.

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

See Note 15b to our condensed consolidated financial statements for more information.

Share Repurchases

3 unchanged sentences

The program does not obligate SolarEdge 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.

During the three months ended March 31, 2024 , the Company repurchased 505,896 shares of common stock from the open market at an average cost of $65.67 per share for a total of $33.2 million.

Critical Accounting Policies and Significant Management Estimates

Management believes that there have been no significant changes during the nine months ended September 30, 2023 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except as mentioned in Note 1, “General” (if any).

Management believes that there have been no significant changes during the three months ended March 31, 2024 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended December 31 , 2023 , except as mentioned in Note 1, “General” (if any).

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