SOLAREDGE TECHNOLOGIES, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements contained in this Form 10-Q or statements incorporated by reference from documents we have filed with the Securities and Exchange Commission may contain forward-looking statements that are based on our management’s expectations, estimates, projections, beliefs and assumptions in accordance with information currently available to our management. Forward-looking statements should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this report. This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, industry and regulatory environment, effects of acquisitions, growth opportunities and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking and other statements regarding our sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or requiring disclosure in our filing with the Securities and Exchange Commission (“SEC”). 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 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; • 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; • interest rates and supply of capital in the global financial markets in general and in the solar market specifically; • competition, including introductions of power optimizer, inverter and solar photovoltaic (“PV”) system monitoring products by our competitors; • developments in alternative technologies or improvements in distributed solar energy generation; • historic cyclicality of the solar industry and periodic downturns; • product quality or performance problems in our products; • 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; 3 • 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; • 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; • our ability to retain key personnel and attract additional qualified personnel; • our ability to effectively design, launch, market, and sell new generations of our products and services; • our ability to retain, and events affecting, our major customers; and • our ability to service our debt; the other factors set forth under “Item 1A . 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. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Overview 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. 4 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 worldwide. 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 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. 5 Disruptions due to the war in Israel 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 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 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 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. 6 Key Operating Metrics In managing our business and assessing financial performance, we supplement the information provided by the financial statements with other operating metrics. These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business and formulate projections. We use metrics relating to shipments of inverters, power optimizers and megawatts to evaluate our sales performance and to track market acceptance of our products. We provide the “megawatts shipped” and “megawatts hour shipped” metrics, which are calculated based on inverter or battery nameplate capacity shipped, respectively, to show adoption of our system on a nameplate capacity basis. Nameplate capacity shipped is the maximum rated power output capacity of an inverter or battery, and corresponds to our financial results in that higher total nameplate capacities shipped are generally associated with higher total revenues. 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 March 31, 2024 2023 Inverters shipped 68,882 329,653 Power optimizers shipped 1,070,987 6,440,683 Megawatts shipped 1 946 3,608 Megawatts hour shipped - batteries for PV applications 128 221 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. 7 Results of Operations The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report. The following table sets forth selected consolidated statements of income (loss) data for each of the periods indicated. Three Months Ended March 31, 2024 2023 (In thousands) Revenues 204,399 943,889 Cost of revenues 230,586 643,763 Gross profit (loss) (26,187 ) 300,126 Operating expenses: Research and development 75,351 79,873 Sales and marketing 38,911 40,966 General and administrative 30,865 36,567 Other operating expense (income), net 2,391 (1,434 ) Total operating expenses 147,518 155,972 Operating income (loss) (173,705 ) 144,154 Financial income (expense), net (7,064 ) 23,674 Other loss, net - (125 ) Income (loss) before income taxes (180,769 ) 167,703 Tax benefits (income taxes) (23,754 ) 29,325 Net loss from equity method investments 296 - Net income (loss) (157,311 ) 138,378 Revenues Three Months Ended March 31, 2023 to 2024 2024 2023 Change (In thousands) Revenues 204,399 943,889 (739,490 ) (78.3 )% 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. 8 Revenues from outside of the U.S. 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. 9 Cost of Revenues and Gross Profit (loss) Three Months Ended March 31, 2023 to 2024 2024 2023 Change (In thousands) Cost of revenues 230,586 643,763 (413,177 ) (64.2 )% Gross profit (loss) (26,187 ) 300,126 (326,313 ) (108.7 )% 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 March 31, 2023 to 2024 2024 2023 Change (In thousands) Research and development 75,351 79,873 (4,522 ) (5.7 )% 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 ; and • 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. 10 Sales and Marketing Three months ended March 31, 2023 to 2024 2024 2023 Change (In thousands) Sales and marketing 38,911 40,966 (2,055 ) (5.0 )% 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 March 31, 2023 to 2024 2024 2023 Change (In thousands) General and administrative 30,865 36,567 (5,702 ) (15.6 )% 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. 11 Other operating expense (income), net Three months ended March 31, 2023 to 2024 2024 2023 Change (In thousands) Other operating expense (income), net 2,391 (1,434 ) 3,825 (266.7 )% 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, 2023 to 2024 2024 2023 Change (In thousands) Financial income (expense), net (7,064 ) 23,674 (30,738 ) (129.8 )% 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. dollar. 12 Other loss Three months ended March 31, 2023 to 2024 2024 2023 Change (In thousands) Other loss, net - (125 ) 125 (100.0 )% 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, 2023 to 2024 2024 2023 Change (In thousands) Tax benefits (income taxes) (23,754 ) 29,325 (53,079 ) (181.0 )% 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; and • 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, 2023 to 2024 2024 2023 Change (In thousands) Net loss from equity method investments 296 - 296 100.0 % 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 . 13 Net Income (loss) Three months ended March 31, 2023 to 2024 2024 2023 Change (In thousands) Net income (loss) (157,311 ) 138,378 (295,689 ) -213.7 % 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, 2023 to 2024 2024 2023 Change (In thousands) Solar Revenues 190,102 908,505 (718,403 ) (79.1 )% Segment profit (loss) (110,383 ) 206,689 (317,072 ) (153.4 )% Energy Storage Revenues 10,616 9,133 1,483 16.2 % Segment loss (12,177 ) (18,521 ) 6,344 (34.3 )% All other Revenues 3,447 26,064 (22,617 ) (86.8 )% Segment profit (loss) 55 (4,365 ) 4,421 (101.3 )% Not allocated to segments Revenues not allocated to segments 234 187 47 25.1 % Expenses, net not allocated to segments (51,200 ) (39,649 ) (11,551 ) 29.1 % 14 Solar 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 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. 15 Liquidity and Capital Resources The following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods: Three Months Ended March 31, 2024 2023 (In thousands) Net cash provided by (used in) operating activities $ (217,019 ) $ 7,923 Net cash provided by (used in) investing activities 149,008 (67,780 ) Net cash used in financing activities (50,987 ) (5,222 ) Decrease in cash and cash equivalents $ (118,998 ) $ (65,079 ) 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 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. We also have purchase obligations in the amount of $484.3 million related to raw materials and commitments for the future manufacturing of our products. We believe our cash and cash equivalents, and available-for-sale marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months as well as in the longer term, including the self-funding of our capital expenditure and operational commitments. Operating Activities Operating cash flows 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 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. 16 Financing Activities 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. Share Repurchases On November 1, 2023, we 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 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 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).