What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-07 · 310 added, 176 removed, 700 unchanged (41% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

CURRENT ASSETS:

16 unchanged sentences

(in thousands, except per share data)

September 30,

LIABILITIES AND STOCKHOLDERS’ EQUITY

5 unchanged sentences

Accrued expenses and other current liabilities

Convertible senior notes, net

Total current liabilities

11 unchanged sentences

125,000,000 shares;

57,705,386 shares at June 30, 2024 and 57,123,437 shares at December 31, 2023;

56,952,022 shares at June 30, 2024 and 57,123,437 shares at December 31, 2023.

57,935,436 shares at September 30, 2024 and 57,123,437 shares at December 31, 2023;

57,182,072 shares at September 30, 2024 and 57,123,437 shares at December 31, 2023.

Additional paid-in capital

2 unchanged sentences

Accumulated other comprehensive loss

Retained earnings

Retained earnings (Accumulated deficit)

Total stockholders’ equity

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenues

10 unchanged sentences

Income (loss) before income taxes

Tax benefits (income taxes)

Net loss from equity method investments

9 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

4 unchanged sentences

Foreign currency translation adjustments

Total other comprehensive loss

Total other comprehensive income (loss)

Comprehensive income (loss)

3 unchanged sentences

(in thousands, except per share data)

Additional paid in

Treasury stock

other comprehensive

Retained earnings (Accumulated deficit)

Balance as of January 1, 2024

11 unchanged sentences

Balance as of June 30, 2024

Issuance of common stock upon exercise of stock-based awards

Stock based compensation

Capped call transactions related to notes 2029

Other comprehensive gain adjustments

Balance as of September 30, 2024

SOLAREDGE TECHNOLOGIES INC.

14 unchanged sentences

Balance as of June 30, 2023

Issuance of common stock upon exercise of stock-based awards

Stock based compensation

Other comprehensive loss adjustments

Balance as of September 30, 2023

* Represents an amount less than $1.

3 unchanged sentences

(in thousands, except per share data)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization

Provision to write down inventories to net realizable value

Loss on impairment and disposal of property, plant and equipment

Stock-based compensation expenses

Impairment of goodwill and intangible assets

Deferred income taxes, net

5 unchanged sentences

Prepaid expenses and other assets

Right-of-use assets

Operating lease right-of-use assets, net

Trade payables, net

16 unchanged sentences

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)

(in thousands, except per share data )

Six Months Ended

Nine Months Ended

September 30,

Cash flows from financing activities:

32 unchanged sentences

Use of estimates:

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

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

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

In accordance with ASC 360-10, the Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that long-lived assets may be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.

During the second quarter of 2024, and close to the issuance date of the convertible Notes 2029, although the Company's share price deteriorated and albeit the slowdown in the Company's operations, the Company determined that no impairment was recorded.

In addition to other events and circumstances, the Company believes that it is reasonably possible to estimate that the undiscounted cash flows may change in the near term and could result in the impairment of those long-lived assets to fair value.

The Company's estimate of cash flows may change in the near future because of the losses incurred by the group's assets related to the Solar and Energy Storage segments due to high inventory levels in the channels which leads to slower than expected sales.

During the third quarter of 2024, the Company's share price continued to deteriorate and a major slowdown in operations occurred, leading the Company to perform an impairment test.

For detailed information on impairments related to long-lived assets, refer to Notes 7 and 8.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Concentrations of supply risks:

1 unchanged sentence

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

As of June 30, 2024 one of our contract manufacturer accounts for 12.9 % of the Company’s total trade payables, net.

As of September 30, 2024 none of the Company's contract manufacturers account for more than 10% of the Company’s total trade payables, net.

As of December 31, 2023, two contract manufacturers collectively accounted for 58.5 % of the Company’s total trade payables, net.

1 unchanged sentence

Additionally, Sella 2, a Company owned manufacturing facility in South Korea, together with a smaller Company owned facility, are used for the Energy Storage segment.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

New accounting standards updates:

4 unchanged sentences

ASU 2023-07 is effective for fiscal periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact of adopting ASU 2023-07 .

Since ASU 2023-07 addresses only disclosures, the adoption of ASU 2023-07 is not expected to have a significant impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

4 unchanged sentences

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact of adopting ASU 2023-09.

Since ASU 2023-07 addresses only disclosures, the adoption of ASU 2023-07 is not expected to have a significant impact on its consolidated financial statements.

SOLAREDGE TECHNOLOGIES INC.

13 unchanged sentences

From the initial investment through to the purchase of all remaining shares, the Company's share of net losses were $ 646 .

The fair value of the original investment was determined by multiplying the total fair value of Wevo, as outlined below, by the Company's 34.8 % ownership stake and applying a discount to account for lack of control.

The Company determined that the acquisition date fair value of the original investment on April 1, 2024 was $ 5,979 , resulting in a gain of $ 1,125 .

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

Weighted Average

Useful Life (In years)

Weighted Average Useful Life (In years)

Net liabilities assumed

8 unchanged sentences

The results of Wevo have been included in the Company's consolidated statements of income (loss) since its acquisition date and are not material.

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

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

SOLAREDGE TECHNOLOGIES INC.

4 unchanged sentences

The Company accounted for the Ivy investment as an equity investment that does not have readily determinable fair values.

As such, the Company’s non-marketable equity securities had a carrying value of $ 6,075 as of June 30, 2024.

As such, the Company’s non-marketable equity securities had a carrying value of $ 6,075 as of September 30, 2024.

As of March 2024, the Company completed an investment of $ 5,000 in the preferred stock of Stardust Solution, Inc, ("Stardust"), a privately-held U.S.

The Company accounted for the Stardust investment as an equity investment that does not have readily determinable fair values.

As such, the Company’s non-marketable equity securities had a carrying value of $ 5,000 as of June 30, 2024.

The Company accounted for the Stardust investment as an equity investment that does not have a readily determinable fair market value.

In April 2024, the Company completed an investment of approximately $ 17,000 in the preferred stock of Ampeers Energy GmbH ("Ampeers"), a privately-held German company, which represented 28.23 % of Ampeers' outstanding shares.

1 unchanged sentence

Under this method, the investment, which was initially recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee as they occur, rather than when dividends or other distributions are received.

The Company's share of net losses in the three and six months ended June 30, 2024 were $ 567 .

Investments in privately-held companies are included within other long-term assets in the condensed consolidated balance sheets.

As of June 30, 2024, the carrying value of investments in privately-held companies was $ 27,405 .

There were no impairment charges for the three and six months ended June 30, 2024 and 2023 associated with this equity method investment.

As of September 30, 2024 and December 31, 2023 the carrying value of investments in privately-held companies was $ 22,574 and $ 7,650 , respectively.

In September 2024, the Company impaired its investment in Stardust in the amount of $ 5,000 .

This impairment was recorded under Other income (loss), net in the consolidated statements of income (loss).

There were no impairment charges for the three and nine months ended September 30, 2023 associated with these equity investments.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

MARKETABLE SECURITIES

The following is a summary of available-for-sale marketable securities as of June 30, 2024:

unrealized gains

unrealized losses

The following is a summary of available-for-sale marketable securities as of September 30, 2024:

Amortized cost

Gross unrealized gains

Gross unrealized losses

Matures within one year:

6 unchanged sentences

Government agency securities

Government securities

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

unrealized gains

unrealized losses

Amortized cost

Gross unrealized gains

Gross unrealized losses

Matures within one year:

8 unchanged sentences

Government securities

Proceeds from sales of available-for-sale marketable securities during the three months ended June 30, 2024 were $ 51,918 which led to realized gains of $ 1,970 .

Proceeds from sales of available-for-sale marketable securities during the six months ended June 30, 2024 and 2023 were $ 51,918 and $ 2,807 , which led to realized gains of $ 1,970 and losses of $ 125 , respectively.

The Company did not sell any available-for-sale marketable securities during the three months ended June 30, 2023.

As of June 30, 2024, and December 31, 2023, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

Proceeds from sales of available-for-sale marketable securities during the three months ended September 30, 2024 were $ 18,724 which led to realized gains of $ 777 .

The Company did not sell any available-for-sale marketable securities during the three months ended September 30, 2023.

Proceeds from sales of available-for-sale marketable securities during the nine months ended September 30, 2024 and 2023 were $ 70,642 and $ 2,807 , which led to realized gains of $ 2,747 and losses of $ 125 , respectively.

As of September 30, 2024, and December 31, 2023, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

INVENTORIES, NET

September 30,

Raw materials

2 unchanged sentences

Total inventories, net

The Company records inventory write-downs for excess or obsolete inventory or when it believes that the net realizable value of inventory is less than its carrying value.

As of September 30, 2024, the Company examined its current inventory balances, analyzed inventory in its channels and evaluated future installation rates.

The Company concluded that significant write-downs are necessary, primarily due to slowdown in the Company's products demand, excess inventory in the channels, repeated price reductions and the introduction of a new generation of products.

The Company records write-downs under Cost of revenues, in the consolidated statements of income (loss).

During the three and nine months ended September 30, 2024, the Company recorded write-downs of $ 627,905 and $ 638,966 , respectively.

During the three and nine months ended September 30, 2023, the Company recorded write-downs of $ 8,728 and $ 20,674 , respectively.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

September 30,

Government authorities

Vendor non-trade receivables 1

Loan receivables 2

Loan receivables, net 2

Total prepaid expenses and other current assets

2 unchanged sentences

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

2 L oan receivables are loans to third parties.

2 Loan receivables are loans to third parties.

The loan repayments are expected on a monthly or annual basis as per the contractual terms of each loan agreement.

The loan is measured at its amortized cost and is subjected to the Company's credit risk policy.

The loans bear interest that represent market interest rate.

As of June 30, 2024, the Company's provision for credit loss was $ 11,578 which was recorded under Financial income (expense), net.

The amortized cost of the loan receivable approximates its fair value as of June 30, 2024.

As of June 30, 2024 and December 31, 2023 the balance includes a loan granted to the Company’s customer at the amount of $ 80,000 and 43,000 , respectively.

Considering the loan amount the customer balance would potentially expose the Company to a concentration of credit risk.

The loans bear interest that represents market interest rate.

As of September 30, 2024, the Company's provision for credit loss was $ 11,578 which was recorded under Financial income (expense), net.

The amortized cost of the loan receivable approximates its fair value as of September 30, 2024.

As of September 30, 2024 and December 31, 2023 the Company granted loans to a customer in the amounts of $ 80,000 and $ 43,000 , respectively.

Considering the loan amounts, the customer's balance would potentially expose the Company to a concentration of credit risk.

See Note 10 for more information regarding the long-term portion of the loan.

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

PROPERTY, PLANT AND EQUIPMENT, NET

September 30,

Buildings and plants

Computers and peripheral equipment

Office furniture and equipment

Laboratory and testing equipment

Machinery and equipment

Leasehold improvements

Assets under construction and payments on account

Gross property, plant and equipment

Less - accumulated depreciation

Total property, plant and equipment, net

The Company evaluates the recoverability of the carrying amount of its property, plant and equipment when events or circumstances indicate the carrying amount of an asset or asset group may not be recoverable.

If the Company determines the carrying amount of an asset or asset group is not recoverable based upon the expected undiscounted future cash flows of the asset or asset group, an impairment loss is recorded equal to the excess of the carrying amounts over the estimated fair values of the property, plant and equipment.

During the third quarter of 2024, the Company identified certain conditions in which, events or changes in circumstances indicated that the carrying value of certain long-lived assets may not be recoverable and as a result conducted impairment assessments.

Upon completion of such assessments, the Company disposed by abandonment and impaired certain property, plants and equipment, including but not limited to, machinery, buildings, plants, and assets under construction in the Solar and Energy Storage asset groups.

During the three and nine months ended September 30, 2024, the Company recorded impairment and abandonment by disposal of property, plant and equipment in the amount of $ 204,888 and $ 206,620 , respectively, under Other operating expense (income), net in the consolidated statements of income (loss) section.

Depreciation expenses for the three months ended September 30, 2024 and 2023, were $ 13,965 and $ 12,627 , respectively.

Depreciation expenses for the nine months ended September 30, 2024, and 2023, were $ 40,464 and $ 36,118 , respectively.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

INTANGIBLE ASSETS, NET

Acquired intangible assets consisted of the following as of June 30, 2024, and December 31, 2023:

In September 2024, an impairment test for the Solar and Energy Storage asset group's long-lived assets was performed.

The test included comparing the sum of the estimated undiscounted future cash flow attributable to the identified assets group and its carrying amounts, and recognizing an impairment for the amount to which the carrying amount exceeds the fair value of the assets groups.

The Company impaired and disposed intangible assets in the amount of $ 22,474 , which mainly relates to patents and licenses under the Solar asset group that are no longer relevant for the Company's continued and future operations, and technology related to the Energy Storage asset group.

Acquired intangible assets consisted of the following as of September 30, 2024, and December 31, 2023:

September 30,

Intangible assets with finite lives:

5 unchanged sentences

Total intangible assets, net

For the three months ended June 30, 2024 and 2023, the Company recorded amortization expenses related to intangible assets in the amount of $ 2,032 and $ 1,820 , respectively.

For the six months ended June 30, 2024 and 2023, the Company recorded amortization expenses related to intangible assets in the amount of $ 3,929 and $ 3,238 , respectively.

Expected future amortization expenses of intangible assets as of June 30, 2024 are as follows:

For the three months ended September 30, 2024 and 2023, the Company recorded amortization expenses related to intangible assets in the amount of $ 2,823 and $ 2,663 , respectively.

For the nine months ended September 30, 2024 and 2023, the Company recorded amortization expenses related to intangible assets in the amount of $ 6,751 and $ 5,901 , respectively.

Expected future amortization expenses of intangible assets as of September 30, 2024 are as follows:

2029 and thereafter

Changes in the carrying amount of goodwill for the period ended June 30, 2024 were as follows:

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Goodwill is assessed annually for impairment in the fourth quarter of each year and is examined between annual tests if events or circumstances arise that indicate that the carrying amount may be impaired.

In light of impairment indicators which include, among other factors, a sustained decline in the Company's stock price and, as a result, the Company's market capitalization, the Company decided to conduct an impairment test as of September 30, 2024.

The fair value of the reporting units was estimated using a discounted cash flow analysis.

When performing this analysis, the Company also considered multiples of earnings from comparable public companies.

The Company performed a qualitative assessment of its Energy Storage reporting unit in order to determine whether it was necessary to conduct the quantitative goodwill impairment test.

Based on the results of this assessment, the Company acknowledged that it was more likely than not, that the fair value of said reporting unit is lower than its carrying value, and as such a quantitative goodwill impairment test was performed.

Based on the results of the quantitative test, the Energy Storage reporting unit's goodwill was impaired in its entirety.

This goodwill impairment was recorded under Other operating expense (income), net in the consolidated statements of income (loss) section.

The Solar reporting unit was also examined.

As a result of such quantitative testing, the Company determined that its fair value exceeds its carrying amount, and therefore no impairment was recorded.

Changes in the carrying amount of goodwill for the period ended September 30, 2024 were as follows:

Energy Storage

1 unchanged sentence

Changes during the year:

Accumulated impairment losses

Foreign currency adjustments

Goodwill at June 30, 2024

As of June 30, 2024 and December 31, 2023 there were $ 90,104 accumulated goodwill impairment losses.

Goodwill at September 30, 2024

For the three and nine months ended September 30, 2024, the Company recorded goodwill impairment losses in the amount of $ 2,251 .

The Company did not record any goodwill impairment losses for the three and nine months ended September 30, 2023.

As of September 30, 2024 and December 31, 2023 accumulated goodwill impairment amounted to $ 92,355 and $ 90,104 , respectively.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

OTHER LONG TERM ASSETS

September 30,

Loan receivables

Cloud computing arrangements

7 unchanged sentences

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

During the six months ended June 30, 2024, the Company instituted a foreign currency cash flow hedging program to reduce the risk of a forecasted increase in the value of foreign currency cash flows, resulting from payment of salaries in Israeli currency, the New Israeli Shekels (“NIS”).

During the nine months ended September 30, 2024, the Company instituted a foreign currency cash flow hedging program to reduce the risk of a forecasted increase in the value of foreign currency cash flows, resulting from payment of salaries in Israeli currency, the New Israeli Shekels (“NIS”).

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

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

As of June 30, 2024, the Company entered into put and call options to sell U.S.

dollars (“USD”) for NIS in the amount of NIS 115 million.

As of September 30, 2024, the Company entered into forward contracts and put and call options to sell U.S.

dollars (“USD”) both, in the amounts of NIS 148 million.

In addition to the above-mentioned cash flow hedge transactions, the Company occasionally enters into derivative instrument arrangements to hedge the Company’s exposure to currencies other than USD.

3 unchanged sentences

Balance sheet location

September 30,

Derivative assets of options and forward contracts:

6 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Affected line item

12 unchanged sentences

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

The following table sets forth the Company’s assets that were measured at fair value as of June 30, 2024 and December 31, 2023, by level within the fair value hierarchy:

The following table sets forth the Company’s assets that were measured at fair value as of September 30, 2024 and December 31, 2023, by level within the fair value hierarchy:

Fair value measurements as of

Fair Value Hierarchy

June 30, 2024

December 31, 2023

September 30,

Cash and cash equivalents:

11 unchanged sentences

Government securities

In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill and long-lived assets to nonrecurring fair value measurements.

The implied fair values of the Solar and Energy Storage reporting units were estimated using the discounted cash flow approach (see Notes 8 and 9).

The inputs to these models are considered Level 3.

WARRANTY OBLIGATIONS

Changes in the Company’s product warranty obligations for the three and six months ended June 30, 2024 and 2023, were as follows:

Changes in the Company’s product warranty obligations for the three and nine months ended September 30, 2024 and 2023, were as follows:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Balance, at the beginning of the period

11 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Balance, at the beginning of the period

4 unchanged sentences

Long term portion

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2024:

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2024:

Total deferred revenues

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

September 30,

Accrued expenses

21 unchanged sentences

If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the Notes 2025 may be increased.

On June 28, 2024, the Company sold an aggregate principal amount of $ 300,000 of its 2.25 % convertible senior notes , due 2029 (the “ Notes 2029”).

On June 28, 2024, the Company sold an aggregate principal amount of $ 300,000 of its 2.25 % convertible senior notes, due in 2029 (the “Notes 2029”).

The Notes 2029 were sold pursuant to an indenture, dated June 28, 2024 (the “Indenture 2029”), between the Company and U.S.

9 unchanged sentences

The initial conversion rate for the Notes 2029 is 29.1375 shares of common stock per $ 1,000 principal amount of Notes 2029, which is equivalent to an initial conversion price of approximately $ 34.32 per share of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture 2029.

Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.

SOLAREDGE TECHNOLOGIES INC.

1 unchanged sentence

(in thousands, except per share data)

In addition, upon the occurrence of a fundamental change (as defined in the Indenture 2029), holders of the Notes 2029 may require the Company to repurchase all or a portion of their Notes 2029, in multiples of $ 1 principal amounts, at a repurchase price of 100% of the principal amount of the Notes 2029, plus any accrued and unpaid interest, if any, to, but not including, the repurchase date.

Upon conversion, the Company may choose to pay or deliver, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock.

In addition, upon the occurrence of a fundamental change (as defined in the Indenture 2029), holders of the Notes 2029 may require the Company to repurchase all or a portion of their Notes 2029, in multiples of $ 1,000 principal amounts, at a repurchase price of 100% of the principal amount of the Notes 2029, plus any accrued and unpaid interest, if any, up to, but not including, the repurchase date.

If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion rate for the Notes 2029 may be increased.

The Notes 2029 are not redeemable prior to July 6, 2027.

On or after July 6, 2027, the Company may redeem the Notes 2029 at its option if the last reported sale price of the common stock has been at least 130% of the conversion price, then in effect, for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on and including the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The net proceeds from the offering of the Notes were approximately $ 293.2 million, after deducting fees and estimated expenses.

Separately, the Company has entered into capped call transactions (as detailed below).

The Company used approximately $ 25.2 million of the net proceeds from this offering to pay the cost of the capped call transactions.

The Company also used approximately $ 267.9 million of the net proceeds from this offering to repurchase $ 285 .0 million principal amount of its Notes 2025.

The net proceeds from the offering of the Notes 2029 were approximately $ 293,200 , after deducting fees and estimated expenses.

Congruently, the Company has entered into capped call transactions (as detailed below).

The Company used approximately $ 25,230 of the net proceeds from this offering to pay the cost of the capped call transactions.

The Company also used approximately $ 267,900 of the net proceeds from this offering to repurchase $ 285,000 principal amount of its Notes 2025.

The Company recorded under other income a gain of $ 15,456 from the repurchase of Notes 2025.

9 unchanged sentences

As the capped call transactions are indexed to the Company's common stock, they were recorded as a reduction of additional paid-in capital in the condensed consolidated balance sheets.

The convertible senior notes consisted of the following as of June 30, 2024 and December 31, 2023:

O n July 8, 2024 the Company sold to Goldman Sachs & Co.

LLC, as representative of the several initial purchasers (the “Initial Purchasers”), and the Initial Purchasers purchased from the Company, $ 37,000 aggregate principal amount of additional Notes 2029.

The additional Notes 2029 were sold pursuant to the Initial Purchasers’ exercise of the option granted by the Company to the Initial Purchasers to purchase additional Notes 2029, solely to cover over-allotments, under the purchase agreement described in the Company's Form 8-K filed on June 28, 2024.

The net proceeds from the exercise of the option granted by the Company to the Initial Purchasers of the Notes 2029 were approximately $ 36,237 , after deducting fees and estimated expenses.

Congruently, the Company has entered into additional capped call transactions.

The Company used approximately $ 3,111 of the net proceeds from this offering to pay the cost of the additional capped call transactions.

The Company intends to use the remainder of the net proceeds from the offering for general corporate purposes.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

The convertible senior notes consisted of the following as of September 30, 2024 and December 31, 2023:

September 30,

Unamortized issuance costs

3 unchanged sentences

Total notes carrying amount

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Costs relates to the Notes for the three and six months ended June 30, 2024 were as fol lows:

Costs related to the Notes 2025 and the Notes 2029 for the three and nine months ended September 30, 2024 were as follows:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Debt issuance cost

1 unchanged sentence

Contractual interest expense

As of June 30, 2024, the unamortized issuance costs of the Notes 2025 and Notes 2029 will be amortized over the remaining term of approximately 1.2 and 5 years, respectively.

As of September 30, 2024, the unamortized issuance costs of the Notes 2025 and Notes 2029 will be amortized over the remaining term of approximately 1 and 4.8 years, respectively.

The annual effective interest rate of Notes 2025 and Notes 2029 is 0.47 %.

and 2.75 %, respectively.

As of June 30, 2024, the estimated fair value of Notes 2025 and Notes 2029, which the Company has classified as Level 2 financial instruments, is $ 316,746 and $ 287,880 , respectively.

As of September 30, 2024, the estimated fair value of Notes 2025 and Notes 2029, which the Company has classified as Level 2 financial instruments, is $ 324,044 and $ 306,633 , respectively.

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

As of June 30, 2024, the if-converted value of the Notes 2025 and Notes 2029 did not exceed the principal amount.

As of September 30, 2024, the if-converted value of the Notes 2025 and Notes 2029 did not exceed the principal amount.

SOLAREDGE TECHNOLOGIES INC.

10 unchanged sentences

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

As of June 30, 2024, a total of 23,709,926 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 12,570,551 shares are still available for future grants.

As of September 30, 2024, a total of 23,709,926 shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate of 12,392,004 shares are still available for future grants.

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

provided, however, that the Company’s board of directors may determine that there will not be a January 1 st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31 st .

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

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

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

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

The Company uses a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period, as well as the possible outcomes pertaining to the TSR market condition.

1 unchanged sentence

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

As of June 30, 2024, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

As of September 30, 2024, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

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

exercise price

average remaining contractual term in years

Number of options

Weighted average exercise price

Weighted average remaining contractual term in years

Aggregate intrinsic Value

Outstanding as of December 31, 2023

Outstanding as of June 30, 2024

Vested and expected to vest as of June 30, 2024

Exercisable as of June 30, 2024

The intrinsic value is the amount by which the closing price of the Company’s common stock on June 30, 2024 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.

Forfeited or expired

Outstanding as of September 30, 2024

Vested and expected to vest as of September 30, 2024

Exercisable as of September 30, 2024

The intrinsic value is the amount by which the closing price of the Company’s common stock on September 30, 2024 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.

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

2 unchanged sentences

Unvested as of December 31, 2023

Unvested as of June 30, 2024

Unvested as of September 30, 2024

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

2 unchanged sentences

Unvested as of December 31, 2023

Unvested as of June 30, 2024

Unvested as of September 30, 2024

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Employee Stock Purchase Plan ("ESPP"):

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

As of June 30, 2024, a total of 4,638,023 shares were reserved for issuance under this plan.

As of September 30, 2024, a total of 4,638,023 shares were reserved for issuance under this plan.

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

1 unchanged sentence

The ESPP is implemented through an offering every six months.

According to the ESPP, eligible employees may use up to 15 % of their salaries to purchase common stock up to an aggregate limit of $ 15 per participant for every six months plan.

According to the ESPP, eligible employees may use the lesser of either up to 15 % of their salaries or $ 15,000 per participant, to purchase common stock for every six month plan.

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

As of June 30, 2024, 1,183,310 shares of common stock have been purchased under the ESPP.

As of June 30, 2024, 3,454,713 shares of common stock were available for future issuance under the ESPP.

As of September 30, 2024, 1,183,310 shares of common stock have been purchased under the ESPP.

As of September 30, 2024, 3,454,713 shares of common stock were available for future issuance under the ESPP.

In accordance with ASC No.

718, the ESPP is compensatory and, as such, results in recognition of compensation cost.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

Stock-based compensation expenses:

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income (loss) for the three and six months ended June 30, 2024, and 2023, as follows:

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income (loss) for the three and nine months ended September 30, 2024, and 2023, as follows:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Stock-based compensation expenses:

1 unchanged sentence

Research and development

Selling and marketing

Sales and marketing

General and administrative

3 unchanged sentences

Total stock-based compensation capitalized

The total tax benefit associated with stock-based compensation for the three months ended June 30, 2024 and 2023 was $ 4,744 and $ 4,102 , respectively.

The tax benefit realized from stock-based compensation for the three months ended June 30, 2024, and 2023 was $ 1,283 and $ 2,619 , respectively.

The total tax benefit associated with stock-based compensation for the six months ended June 30, 2024, and 2023 was $ 10,110 and $ 8,298 , respectively.

The tax benefit realized from stock-based compensation for the six months ended June 30, 2024, and 2023 was $ 2,624 and $ 5,461 , respectively.

As of June 30, 2024, there were total unrecognized compensation expenses in the amount of $ 314,604 related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized during the period from July 1, 2024, through May 31, 2028.

The Company did not recognize any tax benefits realized with stock-based compensation for the three and nine months ended September 30, 2024.

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

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

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

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

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

As of September 30, 2024, there were total unrecognized compensation expenses in the amount of $ 264,268 related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized during the period from October 1, 2024, through August 31, 2028.

Repurchase of Common Stock:

3 unchanged sentences

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

During the six months ended June 30, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $ 66.79 per share for a total of $ 50,315 .

During the nine months ended September 30, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $ 66.79 per share for a total of $ 50,315 .

SOLAREDGE TECHNOLOGIES INC.

2 unchanged sentences

COMMITMENTS AND CONTINGENT LIABILITIES

As of June 30, 2024, contingent liabilities exist regarding guarantees in the amounts of $ 10,526 , and $ 1,954 in respect of office rent lease agreements and other transactions, respectively.

As of September 30, 2024, contingent liabilities exist regarding guarantees in the amounts of $ 10,871 , and $ 1,502 in respect of office rent lease agreements and other transactions, respectively.

Contractual purchase obligations:

2 unchanged sentences

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

As of June 30, 2024, the Company had non-cancellable purchase obligations totaling approximately $ 404,149 , out of which the Company recorded a provision for loss in the amount of $ 23,358 .

As of June 30, 2024, the Company had contractual obligations for capital expenditures totaling approximately $ 23,875 .

As of September 30, 2024, the Company had non-cancellable purchase obligations totaling approximately $ 443,830 , out of which the Company recorded a provision for loss in the amount of $ 46,617 .

As of September 30, 2024, the Company had contractual obligations for capital expenditures totaling approximately $ 18,452 .

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

4 unchanged sentences

These accruals are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter.

O n March 15, 2024, Abdul Hirani (“Hirani”) filed a purported derivative complaint in the United States District Court for the Southern District of New York against certain current and former Company executive officers and board members, including Zvi Lando, Ronen Faier, Nadav Zafrir, Betsy Atkins, Marcel Gani, Dana Gross, Dirk Hoke, Avery More, and Tal Payne (collectively, “Defendants”).

The Hirani complaint makes largely the same allegations as those in the Consolidated Securities Litigation described below, namely, that the Company failed to disclose information about its inventory in Europe and cancellation rates from European distributors, which allegedly resulted in material misstatements about the Company’s business and prospects in its quarterly filings.

On June 10, 2024, Jonathan Blaufarb (“Blaufarb”) filed a second purported derivative complaint in the United States District Court for the Southern District of New York against the same Defendants as those named in the Hirani Complaint.

The Blaufarb complaints makes largely the same allegations as well.

It also pleads the same counts as those in the Hirani complaint, as well as additional counts for abuse of control and gross mismanagement.

Defendants accepted service of the Hirani and Blaufarb complaints via stipulation that was so-ordered on July 12, 2024, and the two cases were consolidated with the Hirani matter designated as the lead case.

The parties have until September 10, 2024 to file a proposed case schedule.

On November 3, 2023, Daphne Shen, a purported stockholder of the Company, filed a proposed class action complaint for violation of federal securities laws, individually and punitively on behalf of all others similarly situated, in the U.S.

7 unchanged sentences

Defendants moved to dismiss the amended complaint on July 15, 2024 (the “Motion”).

The Plaintiffs have until August 26, 2024 to file their opposition to the Motion, and defendants will have three weeks thereafter to file a reply brief in support of their Motion.

The Motion was fully briefed as of September 16, 2024, and the parties are awaiting a decision.

Due to the early stage of this proceeding, the Company cannot reasonably estimate the potential range of loss, if any, or the likelihood of a potential adverse outcome.

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

In August 2019, the Company was served with a lawsuit filed in the civil courts of Milan, Italy against the Italian subsidiary of SolarEdge e-Mobility S.r.l (previously SMRE S.p.A) that purchased the shares of SolarEdge e-Mobility in the tender offer that followed the SolarEdge e-Mobility Acquisition by certain former shareholders of SolarEdge e-Mobility who tendered their shares.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in thousands, except per share data)

On March 15, 2024, Abdul Hirani (“Hirani”) filed a purported derivative complaint in the United States District Court for the Southern District of New York against certain current and former Company executive officers and board members, including Zvi Lando, Ronen Faier, Nadav Zafrir, Betsy Atkins, Marcel Gani, Dana Gross, Dirk Hoke, Avery More, and Tal Payne (collectively, “Defendants”).

The Hirani complaint makes largely the same allegations as those in the Consolidated Securities Litigation described above, namely, that the Company failed to disclose information about its inventory in Europe and cancellation rates from European distributors, which allegedly resulted in material misstatements about the Company’s business and prospects in its quarterly filings.

The Blaufarb complaints makes largely the same allegations as well.

It also pleads the same counts as those in the Hirani complaint, as well as additional counts for abuse of control and gross mismanagement.

Defendants accepted service of the Hirani and Blaufarb complaints via stipulation that was so-ordered on July 12, 2024, and the two cases were consolidated (the “Consolidated Derivative Actions”) with the Hirani matter designated as the lead case.

On September 9, 2024, the parties agreed to stay the Consolidated Derivative Actions pending a decision on the motion to dismiss in the Consolidated Securities Litigation.

On August 7, 2024, Edwin Isaac (“Isaac”) filed a purported derivative complaint in the United States District Court for the District of Delaware against the same Defendants as those named in the Consolidated Securities Litigation.

The Isaac complaint makes largely the same allegations as those included in the amended complaint in the Consolidated Securities Litigation and Consolidated Derivative Actions.

It also pleads the similar counts to those in the Consolidate Securities Litigation, including (i) breach of fiduciary duty, (ii) contribution, (iii) violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9, (iv) unjust enrichment, (v) waste of corporate assets, and (vi) aiding and abetting breach of fiduciary duty.

The parties are conferring on service of process and a possible stay of proceedings pending resolution of the motion to dismiss in the Consolidated Securities Litigation.

In August 2019, the Company was served with a lawsuit filed in the civil courts of Milan, Italy against the Italian subsidiary of SolarEdge e-Mobility S.r.l (previously SMRE S.p.A) that purchased the shares of SolarEdge e-Mobility S.r.l in the tender offer that followed the SolarEdge e-Mobility S.r.l Acquisition by certain former shareholders of SolarEdge e-Mobility S.r.l who tendered their shares.

The lawsuit asked for damages of approximately $ 3,000 , representing the difference between the amount for which they tendered their shares ( 6 Euro per share) and 6.7 Euros per share.

2 unchanged sentences

The Company filed an appeal to this decision on May 30, 2024 in the Court of Appeals of Milan, First Civil Chamber.

As of June 30, 2024, the Company recorded an accrual of $ 2,154 for legal claims which was recorded under accrued expenses and other current liabilities.

As of September 30, 2024, the Company recorded an accrual of $ 391 for legal claims which was recorded under accrued expenses and other current liabilities.

SOLAREDGE TECHNOLOGIES INC.

3 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

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

29 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Affected Line Item in the

2 unchanged sentences

Financial income (expense), net

Tax benefits (income taxes)

Total, net of income taxes

5 unchanged sentences

Total, before income taxes

Tax benefits (income taxes)

Total, net of income taxes

1 unchanged sentence

OTHER OPERATING EXPENSE (INCOME)

The following table presents the expenses (income) recorded in the three and six months ended June 30, 2024, and 2023:

The following table presents the expenses (income) recorded in the three and nine months ended September 30, 2024, and 2023:

Three Months Ended

Six Months Ended

Impairment of property, plant and equipment

Loss (gain) from sales and disposal of assets

Legal settlements and contingencies

September 30,

Nine Months Ended

September 30,

Impairment of intangible assets and goodwill

Impairment and disposal by abandonment of property, plant and equipment

Loss (gain) from sales of assets

Total other operating expense (income), net

6 unchanged sentences

The adoption of the Restructuring Plan follows the Company’s previous measures taken to align with current market conditions, including termination of manufacturing in Mexico, reduction of manufacturing capacity in China, and discontinuation of the Company’s light commercial vehicle e-mobility activity.

Restructuring and other exit charges for the three months ended June 30, 2024 , by segment and type of cost were as follows:

termination costs

termination and

Inventory write-

termination and

Restructuring and other exit charges for the three months ended September 30, 2024, by segment and type of cost were as follows:

Employee termination costs

Contract termination and other

Employee termination costs

Inventory write-down

Contract termination and other

Cost of revenues

2 unchanged sentences

General and administrative

Restructuring and other exit charges for the six months ended June 30, 2024 , by segment and type of cost were as follows:

Restructuring and other exit charges for the nine months ended September 30, 2024, by segment and type of cost were as follows:

Employee termination costs

1 unchanged sentence

Employee termination costs

Inventory write-down

Contract termination and other

4 unchanged sentences

The Company’s liability balance for the restructuring and other exit charges is as follows:

termination costs

termination and

Employee termination costs

Inventory write-down 1

Contract termination and other

Balance as of December 31, 2023

1 unchanged sentence

Non-cash utilization and other

Balance as of June 30, 2024

Balance as of September 30, 2024

1 Inventory write-down is included under Inventories, net on the balance sheet.

2 unchanged sentences

(in thousands, except per share data)

For the three months ended June 30, 2024 , the Company reported tax benefits and an effective tax rate of 8.6 % , compared to the three months ended June 30, 2023 , where the Company reported income taxes and an effective tax rate of 22.3 % .

For the six months ended June 30, 2024 , the Company reported tax benefits and an effective tax rate of 11.1 % , compared to the six months ended June 30, 2023 , where the Company reported income taxes and an effective tax rate of 19.8 % .

The change in effective tax rate in the three and six months ended June 30, 2024 compared to the corresponding period in 2023 is primarily attributable to the fact that the pre-tax loss for the quarter was in jurisdictions where the Company is either subject to a lower tax rate or where we do not anticipate a future tax benefit.

As of June 30, 2024 , and December 31, 2023 , unrecognized tax benefits were valued at $ 20,152 and $ 15,908 , respectively.

For the three months ended September 30, 2024, the Company reported income taxes at an effective tax rate of ( 11.2 )%, compared to the three months ended September 30, 2023, where the Company reported income taxes at an effective tax rate of ( 143.6 )%.

The change in effective tax rate in the three months ended September 30, 2024 compared to the corresponding period in 2023 is mainly due to the impairments and disposals, which significantly increased the quarterly loss before income tax, offset by higher tax expenses resulting from an increase in the valuation allowance during the quarter.

For the nine months ended September 30, 2024, the Company reported income taxes at an effective tax rate of ( 6.0 )%, compared to the nine months ended September 30, 2023, where the Company reported income taxes at an effective tax rate of 33.6 %.

The change in effective tax rate in the nine months ended September 30, 2024 compared to the corresponding period in 2023 is mainly due to the Company transitioning to a loss position in 2024 which has increased significantly as a result of impairments and disposals, in addition to higher tax expenses due to valuation allowance.

Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent that the Company believes they will not be realized.

The Company considers all available evidence, including historical information, long range forecast of future taxable income and evaluation of tax planning strategies.

Amounts recorded for valuation allowance can result from a complex series of judgments about future events and can rely on estimates and assumptions.

Based primarily on the negative evidence outweighing the positive evidence, including the Company's three year cumulative, consolidated GAAP loss, historical tax losses and the difficulty in forecasting excess tax benefits related to equity-based compensation, the Company believes there is uncertainty as to when it will be possible to utilize certain net operating losses (each a "NOL"), credit carryforwards and other deferred tax assets.

Therefore, the Company recorded a valuation allowance against the deferred tax assets for which it is more-likely-than-not they will not be realized.

Should the Company's operating results improve and projections show continued utilization of the tax attributes, the Company would consider that as significant positive evidence and future reassessment may result in the determination that all or a portion of the valuation allowance is no longer required.

If this were to occur, any reversal of the valuation allowance would result in a corresponding non-cash income tax benefit, thereby increasing total DTAs.

As of September 30, 2024, and December 31, 2023, the Company recorded valuation allowance in the amount of $ 217,314 and $ 51,245 , respectively.

As of September 30, 2024, and December 31, 2023, unrecognized tax benefits were valued at $ 21,992 and $ 15,908 , respectively.

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

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

The total amount of penalties and interest as of June 30, 2024 and December 31, 2023 were $ 5,345 and $ 2,927 , respectively.

As of June 30, 2024 the deferred tax asset related to stock based compensation was $ 33,934 .

Given the decrease in the Company's stock price, it is possible that the actual value of the stock based awards will be less than the grant date fair value awards, resulting in a possible write-off of the deferred tax asset.

The total amount of penalties and interest as of September 30, 2024 and December 31, 2023 were $ 5,543 and $ 2,927 , respectively.

In August 2022, the U.S.

5 unchanged sentences

since the fourth quarter of 2023.

In the three and six months ended June 30, 2024, the Company manufactured and sold products that entitle it to $ 15,161 and $ 30,121 of AMPTCs, respectively, which were recorded as a reduction in of cost of revenues.

As of June 30, 2024 and December 31, 2023 benefits from AMPTCs of $ 36,141 and $ 6,020 , respectively, were recorded as a tax prepayment within prepayment and other current assets.

The implementation of the new incentive rules is complex and further guidance by the U.S.

Treasury on these rules is still pending.

In the three and nine months ended September 30, 2024, the Company manufactured and sold products that entitle it to $ 13,963 and $ 44,084 of AMPTCs, respectively, which were recorded as a reduction in of cost of revenues.

As of September 30, 2024 and December 31, 2023 benefits from AMPTCs of $ 68,001 and $ 6,020 , respectively, were recorded as a tax prepayment within prepaid expenses and other current assets.

On October 24, 2024, final regulations concerning the application of IRC §45X were published.

The regulations contain detailed rules concerning the eligibility, qualifying and accounting for AMPTCs.

Of particular relevance to the Company are the rules concerning the qualification and measurement of AMPTCs to Residential Inverters, Commercial Inverters and DC-Optimized Inverter Systems, that are included in the definition of Microinverters.

SOLAREDGE TECHNOLOGIES INC.

4 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

1 unchanged sentence

Net income (loss) attributable to common stock, basic

Notes due 2025

Net income (loss) attributable to common stock, diluted

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

Notes due 2025

Effect of stock-based awards

2 unchanged sentences

The following outstanding shares of common stock equivalents were excluded from the calculation due to their antidilutive nature:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Stock-based awards

Total shares excluded

1 In conjunction with the issuance of the Notes 2029 in June 2024, the Company used approximately $ 25.2 million of the net proceeds from this offering to pay the cost of the capped call transactions.

In accordance with FASB ASC 260, antidilutive contracts, such as purchased put options and purchased call options are excluded from the computation of diluted net income (loss) per share.

1 In conjunction with the issuance of the Notes 2029 in June 2024, the Company used approximately $ 25,230 of the net proceeds from this offering to pay the cost of the capped call transactions.

I n July 2024, following an additional issuance of the Notes 2029, $ 3,111 of net proceeds were used to pay the cost of capped call transactions.

In accordance with FASB ASC 260, antidilutive contracts, such as purchased call options are excluded from the computation of diluted net income (loss) per share.

Accordingly, any potential impact resulting from capped call transaction is excluded from our computation of diluted net income (loss) per share.

5 unchanged sentences

Solar, Energy Storage and Automation Machines.

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

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

The Company does not allocate to its operating segments revenue recognized due to advance payments received for performance obligations that extend for a period greater than one year (“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 that do not include amortization and impairment of purchased intangible assets, stock based compensation expenses, restructuring charges, discontinued activity charges and certain other items.

Segment profit (loss) is comprised of gross profit (loss) for the segment less operating expenses that do not include amortization, disposal by abandonment and impairment of long-lived assets, and impairment of purchased intangible assets, stock based compensation expenses, restructuring charges, discontinued activity charges and certain other items.

The Company manages its assets on a group basis, not by segments, as many of its assets are shared or co-mingled.

12 unchanged sentences

Energy Storage

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Cost of revenues

4 unchanged sentences

Segments profit (loss)

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Cost of revenues

4 unchanged sentences

Segments profit (loss)

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Cost of revenues

4 unchanged sentences

Segments profit (loss)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Cost of revenues

9 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Solar segment revenues

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Solar segment profit (loss)

5 unchanged sentences

Restructuring and other exit activities

Impairment of long-lived assets

Impairment and disposal by abandonment of long-lived assets

Amortization and depreciation of acquired assets

Other unallocated expenses

Other unallocated income (expenses)

Consolidated operating income (loss)

3 unchanged sentences

SUBSEQUENT EVENTS

On July 8, 2024, the Company sold an aggregate principal amount of $ 37 million of the Company’s Notes 2029.

The Notes were sold pursuant to the Initial Purchasers’ exercise of the option granted by the Company to the Initial Purchasers to purchase additional Notes.

On July 15, 2024, the Company announced its adoption of additional measures in response to challenging industry conditions, including reducing its headcount by approximately 400 employees.

These decisions were made in order to better align the Company with current market conditions.

On November 4, 2024, the Company announced that it closed its first transaction for the sale of §45X Advanced Manufacturing Production Tax Credits in consideration for a cash payment of $ 40,000 , net of discounts and fees to Genworth Financial Inc.

(the "Tax Credits").

The credits were generated from the sales of inverters, produced during the first half of 2024, at the Company's facility in Austin, Texas.

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

What changed 10-Q

Item 1. Financial Statements