What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-26 · 1407 added, 1842 removed, 268 unchanged (92% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements

of Independent Registered Public Accounting Firm (PCAOB ID:

Balance Sheets as of December 31, 2023 and 2022

Statements of Income for the year ended December 31, 2023, 2022 and 2021

Statements of Comprehensive Income for the year ended December 31, 2023, 2022 and 2021

Statements of Stockholders’ Equity for the year ended December 31, 2023, 2022 and 2021

Statements of Cash Flows for the year ended December 31, 2023, 2022 and 2021

to Consolidated Financial Statements

of Independent Registered Public Accounting Firm

the Shareholders and the Board of Directors of SolarEdge Technologies Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of SolarEdge Technologies Inc.

(the "Company") as of December 31, 2023 and 2022,

the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in

the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December

31, 2023, in conformity with U.S.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Income for the year ended December 31, 2024, 2023 and 2022

Consolidated Statements of Comprehensive Income for the year ended December 31, 2024, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for the year ended December 31, 2024, 2023 and 2022

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of SolarEdge Technologies Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of SolarEdge Technologies Inc.

(the Company) as of December 31, 2024 and 2023, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

generally accepted accounting principles.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's

internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework

issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2024

expressed an unqualified opinion thereon.

financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,

and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts

and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates

made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable

basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matters

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matters below, providing separate opinions on the critical audit matters or on the account or disclosures to which they

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 25, 2025 expressed an unqualified opinion thereon.

Basis for opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the account or disclosures to which they relate.

Warranty obligation

Description of the Matter

described in Notes 2w and 14 to the consolidated financial statements, as of December 31, 2023, the warranty obligation was $512,748 thousand.

Substantially all of

the Company's warranty obligations are related to the solar business.

The Company's products include a warranty of up to 12 years for

inverters, up to 25 years for its power optimizers and 10 years for batteries for PV applications.

In order to predict the failure rate

of each product, the Company established a reliability model based on the estimated mean time between failures ("MTBF") and an additional

model to capture non-systematic failures.

Predicted failure rates are updated periodically based on new product versions and analysis

of the root cause of actual failures, as are warranty related replacement costs.

the management’s warranty obligations valuation of the solar business was complex and subject to judgment due to the significant

estimations required in calculating its amount.

In particular, the warranty obligations are subject to significant assumptions such as

product failure rates, the average cost of products replacements and other warranty related costs.

How We Addressed the

Matter in Our Audit

obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the accounting for warranty

obligations of solar business, including controls over management's review of the significant assumptions and data underlying the warranty

obligations valuation.

test the Company’s warranty obligations our substantive audit procedures included, among others, look back analysis and testing

the accuracy and completeness of the underlying data used in management's warranty obligations valuation assessment.

We assessed the accuracy

of historical data used in estimating forecasted failure rates, repair replacement ratios and other warranty related costs and compared

them to actual warranty claims.

In addition, we involved a specialist to assess the assumptions and the precision of the inputs underlying

the MTBF model, including, evaluating the appropriateness of the MTBF model and its consistency with data obtained from external sources.

of Inventories - Provisions for Excess Inventories and excess product for the contractual obligations

As described in Notes 2x and 15 to the consolidated financial statements, as of December 31, 2024, the warranty obligation was $432,365 thousand.

Substantially all of the Company's warranty obligations are related to the solar business.

The Company's products include a warranty of up to 12 years for inverters, up to 25 years for its power optimizers and 10 years for batteries for PV applications.

In order to predict the failure rate of each product, the Company established a reliability model based on the estimated mean time between failures ("MTBF") and an additional model to capture non-systematic failures.

Predicted failure rates are updated periodically based on new product versions and analysis of the root cause of actual failures, as are warranty related replacement costs.

Auditing the management’s warranty obligations valuation of the solar business was complex and subject to judgment due to the significant estimations required in evaluation its amount.

In particular, the warranty obligations are subject to significant assumptions such as product failure rates, the average cost of products replacements and other warranty related costs.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the valuation of for the warranty obligations of the solar business, including controls over management's review of the significant assumptions and data underlying the warranty obligations valuation.

To test the management's warranty obligations valuation, our substantive audit procedures included, among others, look back analysis and testing the accuracy and completeness of the underlying data used in management's warranty obligations valuation assessment.

We assessed the accuracy of historical data used in estimating forecasted failure rates, repair replacement ratios and other warranty related costs and compared them to actual warranty claims.

In addition, we involved a specialist to assess the assumptions and the precision of the inputs underlying the MTBF model, including, evaluating the appropriateness of the MTBF model and its consistency with data obtained from external sources.

Valuation of Inventories - Provisions for slow moving, excess and obsolete inventory items

Description of the Matter

of December 31, 2023, the Company’s consolidated inventories balance was $1,443 thousand and the Company’s contractual obligations

to purchase inventories from contract manufacturers ("contractual purchase obligations") were $543 thousand.

As described in Notes

1, 5 and 20 to the consolidated financial statements, the Company values its inventories at the lower of cost or net realizable value.

Reserves for potentially excess inventories and excess product contractual purchase obligations are made based on management's analysis

of inventory levels, future sales forecasts, and market conditions.

Auditing the valuation

of inventory reserves for the excess inventories and excess product contractual purchase obligations were complex and subject to judgment

due to the significant estimates and assumptions required by management to calculate the reserves, especially, the future salability of

the inventories.

These assumptions include the assessment by inventory category of future demand and market conditions for the Company's

How We Addressed the

Matter in Our Audit

obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's excess

inventory reserve process and excess product contractual purchase obligations including management's assessment of the underlying assumptions

test the valuation of inventory reserve for the excess inventories and excess product contractual purchase obligations our substantive

audit procedures included, among others, evaluating the reasonableness of the significant assumptions used by management including those

related to forecasted inventory usage, future demand, and market conditions.

We examined the completeness, accuracy, and relevance of

the underlying data used in management's estimate.

We held discussions with appropriate non-financial personnel including sales, R&D

and operating management, regarding strategic or operational changes in the business would impact expected demand or related carrying

value of inventories, introduction of new products and other factors to corroborate management's assertions regarding excess inventories.

We performed an examination of historical forecasted sales estimation to actual utilization of inventories and performed sensitivity analysis

on demand assumptions to evaluate the changes in the inventory reserve that would result from changes in the assumptions.

Kost Forer Gabbay & Kasierer

Member of EY Global

have served as the Company's auditor since 2007.

As of December 31, 2024, the Company’s consolidated inventories balance was $645,897 thousand, and recorded inventory impairment charges of $738,757 thousand.

As described in Notes 2k, 6 to the consolidated financial statements, the Company values its inventories at the lower of cost or net realizable value.

Reserves for slow moving, excess and obsolete inventory items are recorded based on management's analysis of inventory levels, future sales forecasts, and market conditions.

Auditing the valuation of inventory reserves for the slow moving, excess and obsolete inventory items were complex and subject to judgment due to the significant estimates and assumptions required by management to estimate the reserves, especially, the future salability of the inventories.

These assumptions include the assessment by inventory category of future demand and market conditions for the Company's products.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company's reserve for slow moving, excess and obsolete inventory items, process including management's assessment of the underlying assumptions and data.

To test the valuation of inventory reserve for the slow moving, excess and obsolete inventory items, our substantive audit procedures included, among others, evaluating the reasonableness of the significant assumptions used by management including those related to forecasted inventory usage, future demand, and market conditions.

We examined the completeness, accuracy, and relevance of the underlying data used in management's estimations.

We held discussions with appropriate non-financial personnel including sales, R&D and operating management, regarding strategic or operational changes in the business would impact expected demand or related carrying value of inventories, introduction of new products and other factors to corroborate management's assertions regarding the inventory reserves.

We performed procedures to compare recent sales transactions or market data to cost of inventories to assess that the carrying value of inventories was the lower of cost or net realizable value.

We performed an examination of the assumptions by comparing those assumptions to historical data as well as reviewing such assumptions for management bias.

We considered macroeconomic trends within the industry, including trends that could impact the movement of the products provided by the Company.

/s/ Kost Forer Gabbay & Kasierer

A Member of EY Global

We have served as the Company's auditor since 2007.

Tel-Aviv, Israel

February 25, 2025

of Independent Registered Public Accounting Firm

the Shareholders and the Board of Directors of SolarEdge Technologies Inc.

on Internal Control Over Financial Reporting

have audited SolarEdge Technologies Inc.'s internal control over financial reporting as of December 31, 2023, based on criteria established

in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework),

(the COSO criteria).

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of SolarEdge Technologies Inc.

Opinion on Internal Control Over Financial Reporting

We have audited SolarEdge Technologies Inc.'s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

In our opinion, SolarEdge Technologies Inc.

(the Company) maintained, in all material respects, effective internal

control over financial reporting as of December 31, 2023, based on the COSO criteria.

also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated

balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders'

equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February

26, 2024 expressed an unqualified opinion thereon.

Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of

the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control

over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting

based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,

testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other

procedures as we considered necessary in the circumstances.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income (loss), comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 25, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

and Limitations of Internal Control Over Financial Reporting

company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance

with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any

evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,

or that the degree of compliance with the policies or procedures may deteriorate.

Kost Forer Gabbay & Kasierer

Member of EY Global

TECHNOLOGIES INC.

BALANCE SHEETS

thousands, except per share data)

and cash equivalents

receivables, net of allowances of $ 16,400

and $ 3,202 ,

expenses and other current assets

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Kost Forer Gabbay & Kasierer

A Member of EY Global

Tel-Aviv, Israel

February 25, 2025

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

CURRENT ASSETS:

tax assets, net

plant and equipment, net

lease right-of-use assets, net

long-term assets

Cash and cash equivalents

Restricted cash

Marketable securities

Trade receivables, net of allowances of $ 43,038 and $ 16,400 , respectively

Inventories, net

Prepaid expenses and other current assets

Total current assets

LONG-TERM ASSETS:

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

TECHNOLOGIES INC.

BALANCE SHEETS (Cont.)

thousands, except per share data)

AND STOCKHOLDERS’ EQUITY

payables, net

and payroll accruals

revenues and customers advances

expenses and other current liabilities

Marketable securities

Deferred tax assets, net

Property, plant and equipment, net

Operating lease right-of-use assets, net

Goodwill and intangible assets, net

Loan receivables, net

Other long-term assets

Total long-term assets

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

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEETS (Cont.)

(in thousands, except per share data)

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

senior notes, net

lease liabilities

long-term liabilities

Trade payables, net

Employees and payroll accruals

Warranty obligations

Deferred revenues and customers advances

Accrued expenses and other current liabilities

Convertible senior notes, net

Total current liabilities

LONG-TERM LIABILITIES:

AND CONTINGENT LIABILITIES

STOCKHOLDERS’

stock of $ 0.0001

par value - Authorized:

31, 2023 and December 31, 2022;

issued and outstanding:

and 56,133,404

shares as of December 31, 2023 and December 31, 2022, respectively

paid-in capital

other comprehensive loss

Convertible senior notes, net

Warranty obligations

Deferred revenues

Finance lease liabilities

Operating lease liabilities

Other long-term liabilities

Total long-term liabilities

COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS’ EQUITY:

liabilities and stockholders’ equity

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

TECHNOLOGIES INC.

STATEMENTS OF INCOME

thousands, except per share data)

ended December 31,

and development

and marketing

and administrative

operating expenses, net

Common stock of $ 0.0001 par value - Authorized:

125,000,000 shares;

58,780,490 shares at December 31, 2024 and 57,123,437 shares at December 31, 2023;

58,027,126 shares at December 31, 2024 and 57,123,437 shares at December 31, 2023.

Additional paid-in capital

Treasury stock, at cost;

753,364 shares held

Accumulated other comprehensive loss

Retained earnings (Accumulated deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share data)

Year ended December 31,

Cost of revenues

Gross profit (loss)

Operating expenses:

income (expense), net

income (loss), net

before income taxes

loss from equity method investments

basic earnings per share of common stock

diluted earnings per share of common stock

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

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

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

TECHNOLOGIES INC.

STATEMENTS OF COMPREHENSIVE INCOME

thousands, except per share data)

ended December 31,

comprehensive income (loss), net of tax:

Available-for-sale

marketable securities

currency translation adjustments on intra-entity transactions that are of a long-term investment nature

currency translation adjustments

other comprehensive income (loss)

Comprehensive

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

TECHNOLOGIES INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

thousands, except per share data)

Technologies, Inc.

Research and development

Sales and marketing

General and administrative

Other operating expenses, net

Total operating expenses

Operating income (loss)

Financial income (expense), net

Other income (loss), net

Income (loss) before income taxes

Net loss from equity method investments

Net income (loss)

Net basic earnings (loss) per share of common stock

Net diluted earnings (loss) per share of common stock

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

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

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

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

Year ended December 31,

Net income (loss)

Other comprehensive income (loss), net of tax:

Available-for-sale marketable securities

Cash flow hedges

Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment nature

Foreign currency translation adjustments

Total other comprehensive income (loss)

Comprehensive income (loss)

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

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except per share data)

SolarEdge Technologies, Inc.

Stockholders’ Equity

comprehensive

as of December 31, 2020

effect of adopting ASU 2020-06

of common stock upon exercise of stock-based awards

of Common stock under employee stock purchase plan

based compensation

comprehensive loss adjustments, net

as of December 31, 2021

of common stock upon exercise of stock-based awards

of Common stock under employee stock purchase plan

based compensation

of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140

of offering costs

comprehensive loss adjustments, net

as of December 31, 2022

of common stock upon exercise of stock-based awards

of Common stock under employee stock purchase plan

based compensation

comprehensive income adjustments, net

as of December 31, 2023

Additional paid in

Treasury stock

Accumulated other comprehensive

Income (loss)

Retained earnings

Balance as of December 31, 2021

Issuance of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140 and $ 834 of offering costs

Issuance of common stock upon exercise of stock-based awards

Issuance of Common stock under employee stock purchase plan

Stock based compensation

Other comprehensive loss adjustments, net

Balance as of December 31, 2022

Issuance of common stock upon exercise of stock-based awards

Issuance of Common stock under employee stock purchase plan

Stock based compensation

Other comprehensive income adjustments, net

Balance as of December 31, 2023

Issuance of common stock upon exercise of stock-based awards

Issuance of Common stock under employee stock purchase plan

Stock based compensation

Repurchase of common stock

Capped call transactions related to the Notes 2029

Other comprehensive loss adjustments, net

Balance as of December 31, 2024

* Represents an amount less than $1.

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

TECHNOLOGIES INC.

STATEMENTS OF CASH FLOWS

thousands, except per share data)

ended December 31,

flows from operating activities:

to reconcile net income to net cash provided by (used in) operating activities:

and amortization

(gain) from exchange rate fluctuations

compensation expenses

of goodwill and long-lived assets

income taxes, net

in assets and liabilities:

expenses and other assets

receivables, net

payables, net

and payroll accruals

revenues and customers advances

expenses and other liabilities, net

cash provided by (used in) operating activities

flows from investing activities:

in available-for-sale marketable securities

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

of property, plant and equipment

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

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except per share data)

Year ended December 31,

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

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

Gain from repurchasing of convertible notes

Loss (gain) from exchange rate fluctuations

Changes in assets and liabilities:

Trade receivables, net

Inventories, net

Prepaid expenses and other assets

Operating lease right-of-use assets, net

Trade payables, net

Warranty obligations

Deferred revenues and customers advances

Operating lease liabilities

Accrued expenses and other liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Investment in available-for-sale marketable securities

Proceeds from maturities of available-for-sale marketable securities

Proceeds from sales of available-for-sale marketable securities

Purchase of property, plant and equipment

Business combinations, net of cash acquired

Purchase of intangible assets

Disbursements for loans receivables

combinations, net of cash acquired

of intangible assets

in privately-held companies

from governmental grant

from sale of a privately-held company

from bank deposits, net

investing activities

cash used in investing activities

TECHNOLOGIES INC.

STATEMENTS OF CASH FLOWS (Cont.)

thousands, except per share data)

ended December 31,

flows from financing activities:

withholding in connection with stock-based awards, net

of finance lease liability

from secondary public offering, net of issuance costs

of bank loans

financing activities

provided by (used in) financing activities

(decrease) in cash and cash equivalents

cash equivalents at the beginning of the period

exchange rate differences on cash and cash equivalents

cash equivalents at the end of the period

disclosure of non-cash activities:

of intangible assets and business combinations

asset recognized with corresponding lease liability

of property, plant and equipment

disclosure of cash flow information:

for income taxes

The accompanying

notes are an integral part of the consolidated financial statements.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS

thousands, except per share data)

Technologies, Inc.

(the “Company”) and its subsidiaries design, develop, and sell an intelligent inverter solution designed

to maximize power generation at the individual photovoltaic (“PV”) module level while lowering the cost of energy produced

by the solar PV system and providing comprehensive and advanced safety features.

The Company’s products consist mainly of (i) power

optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually

per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company's future

ready energy hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup capabilities,

and optional connection to the Company's smart EV charger, (iii) a remote cloud-based monitoring platform, that collects and processes

information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv)

batteries for PV applications that are used to increase energy independence and maximize self-consumption for PV system's owners including

a battery ,and (v) additional smart energy management solutions.

Company and its subsidiaries sell products worldwide through large distributors, electrical equipment wholesalers, as well as directly

to large solar installers and engineering, procurement and construction firms.

Company has expanded its activity to other areas of smart energy technology organically and through acquisitions.

The Company offers a

variety of energy solutions, which include lithium-ion cells, batteries and energy storage systems (“Energy Storage”), full

powertrain kits and batteries for electric vehicles, or EVs (“e-Mobility”), as well as automated machines for industrial use

(“Automation Machines”).

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

("Hark"), a UK-based energy IoT company

for the commercial and industrial ("C&I") sector.

October 2023, the Company decided to discontinue its light commercial vehicle e-Mobility ("LCV") activity (see Note 24).

Investment in privately-held companies

Proceeds from loans receivables

Proceeds from governmental grant

Other investing activities

Net cash provided by (used in) investing activities

SOLAREDGE TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)

(in thousands, except per share data)

Year ended December 31,

Cash flows from financing activities:

Repurchase of common stock

Partial repurchase of Notes 2025

Proceeds from issuance of Notes 2029, net of issuance costs

Capped call transactions related to Notes 2029

Tax withholding in connection with stock-based awards, net

Proceeds from secondary public offering, net of issuance costs

Other financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Increase (decrease) in cash, cash equivalents and restricted cash

Cash and cash equivalents at the beginning of the period

Cash, cash equivalents and restricted cash, end of period

Supplemental disclosure of non-cash activities:

Purchase of intangible assets and business combinations

Right-of-use asset recognized with corresponding lease liability

Purchase of property, plant and equipment

Supplemental disclosure of cash flow information:

Cash paid for income taxes

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

The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet:

Year ended December 31,

Cash and cash equivalents

Restricted cash

Cash, cash equivalents and restricted cash, end of period

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except per share data)

SolarEdge Technologies, Inc.

(the “Company”) and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual photovoltaic (“PV”) module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features.

The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of MPP individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company's future ready energy hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup capabilities, and optional connection to the Company's smart EV charger, (iii) a remote cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv) batteries for PV applications that are used to increase energy independence and maximize self-consumption for PV system's owners including a battery ,and (v) additional smart energy management solutions.

The Company and its subsidiaries sell products worldwide through large distributors, electrical equipment wholesalers, as well as directly to large solar installers and engineering, procurement and construction firms.

The Company expanded its activity to other areas of smart energy technology organically and through acquisitions.

The Company offers a variety of energy solutions, which include lithium-ion cells, batteries, a cloud-based monitoring platform, EV chargers, as well as cloud-based energy management solutions.

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

("Hark"), a UK-based energy IoT company for the C&I sector.

In October 2023, the Company decided to discontinue its light commercial vehicle e-Mobility ("LCV") activity (see Note 25).

On April 1, 2024, the Company completed the acquisition of all outstanding shares of Wevo, an Israel-based software startup, specializing in EV charging optimization and management (see Note 3)

In November 2024, the Company decided to discontinue its Energy Storage activity (see Note 25).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S.

The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S.

Principles of consolidation:

consolidated financial statements include the accounts of the Company and its subsidiaries.

Intercompany transactions and balances including

profit from intercompany sales not yet realized outside the Company have been eliminated upon consolidation.

The consolidated financial statements include the accounts of the Company and its subsidiaries.

Intercompany transactions and balances including profit from intercompany sales not yet realized outside the Company have been eliminated upon consolidation.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Use of estimates:

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

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 could differ from those estimates.

preparing the Company’s consolidated financial statements, management also considered the economic implications of inflation expectations

on its critical and significant accounting estimates.

In addition, the duration, scope and effects of the war in Israel and the conflict

in Ukraine, government and other third-party responses to it, and the related macroeconomic effects, including to the Company’s

business and the business of the Company’s suppliers and customers are uncertain, rapidly changing and difficult to predict.

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

changes could result in future impairments of goodwill and long-lived assets, inventories write-offs, incremental credit losses on receivables

and available-for-sale marketable debt securities and changes in warranty obligations as of the time of a relevant measurement event.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

In preparing the Company’s consolidated financial statements, management also considered the economic implications of inflation on key accounting estimates.

In addition, the duration, scope and effects of the war in Israel and the conflict in Ukraine, government and other third-party responses to it, and the related macroeconomic effects, including to the Company’s business and the business of the Company’s suppliers and customers are uncertain, rapidly changing and difficult to predict.

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

Such changes could result in future impairments of goodwill and long-lived assets, inventories write-offs, incremental credit losses on receivables and available-for-sale marketable debt securities and changes in warranty obligations as of the time of a relevant measurement event.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Financial statements in U.S.

major part of the Company’s operations is carried out in the United States, Israel and certain other countries.

The functional currency

of these entities is the U.S.

A major part of the Company’s operations is carried out in the United States, Israel and certain other countries.

The functional currency of these entities is the U.S.

Financing activities, including cash investments are primarily made in U.S.

monetary accounts maintained in currencies other than the U.S.

Accordingly, monetary accounts maintained in currencies other than the U.S.

dollar are translated into U.S.

dollars in accordance with Financial Accounting

Standards Board Accounting Standards Codification (“ASC”) No.

dollars in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) No.

830 “Foreign Currency Matters”.

All transaction

gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of income as financial income or

expenses, as appropriate.

financial statements of other Company’s subsidiaries whose functional currency is other than the U.S.

dollar have been translated

into U.S dollars.

All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the statements of income (loss) as financial income or expenses, as appropriate.

The financial statements of other Company’s subsidiaries whose functional currency is other than the U.S.

dollar have been translated into U.S dollars.

Assets and liabilities have been translated using the exchange rates in effect as of the balance sheet date.

of income amounts have been translated using the date of the transaction or at the average exchange rate for the relevant period.

resulting translation adjustments are reported as a component of stockholders’ equity in accumulated other comprehensive income

Gains and losses arising from intercompany foreign currency transactions that are of a long-term investment in nature are reported

in the same manner as translation adjustments.

Statements of income (loss) amounts have been translated using the date of the transaction or at the average exchange rate for the relevant period.

The resulting translation adjustments are reported as a component of stockholders’ equity in accumulated other comprehensive income (loss).

Gains and losses arising from intercompany foreign currency transactions that are of a long-term investment in nature are reported in the same manner as translation adjustments.

Cash and cash equivalents:

equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or

less at the date acquired.

Cash equivalents are short-term, highly liquid investments that are readily convertible to cash, with original maturities of three months or less at the date acquired.

Restricted cash

Restricted cash represents cash, held as certificates of deposit that are collateralized under a letter of credit, issued to customer and vendors.

The letters of credit are required as a performance security, with a face amount equal to the aggregate purchase price of an executed sales agreement.

The letters of credit were issued per the terms of the executed sales and purchasing agreements and the Company has collateralized certificates of deposit under these letters of credit in an aggregated amount of $ 135,328 , which is reflected as restricted cash on the Company’s consolidated balance sheet as of December 31, 2024.

Restricted bank deposits:

restricted bank deposits possess an original maturity of more than three months and less than a year from the date of investment.

restricted bank deposits possess an original maturity of more than one year from the date of investment.

Restricted bank deposits are

primarily used as collateral for the Company's office leases and credit cards.

Short-term restricted bank deposits possess an original maturity of more than three months and less than a year from the date of investment.

Long-term restricted bank deposits possess an original maturity of more than one year from the date of investment.

Restricted bank deposits are primarily used as collateral for the Company's office leases and credit cards.

Marketable Securities:

securities consist of corporate and governmental bonds.

The Company determines the appropriate classification of marketable securities

at the time of purchase and re-evaluates such designation at each balance sheet date.

Marketable securities consist of corporate and governmental bonds.

The Company determines the appropriate classification of marketable securities at the time of purchase and re-evaluates such designation at each balance sheet date.

In accordance with FASB ASC No.

320 “Investments

- Debt and Equity Securities”, the Company classifies marketable securities as available-for-sale.

Available-for-sale

("AFS") securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss),

a separate component of stockholders’ equity, net of taxes.

Realized gains and losses on sales of marketable securities, as determined

on a specific identification basis, are included in other income (loss), net on the consolidated statements of income.

The amortized cost

of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest,

are included in financial income (expenses), net.

Company classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual

maturity date.

Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with

maturities greater than 12 months are classified as long-term.

each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as

well as the ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 326.

for credit losses on AFS debt securities are recognized as a charge in financial income (expenses), net, on the consolidated statements

of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders'

Company has not recorded credit losses on AFS debt securities for the years ended December 31, 2023, 2022 and 2021.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

320 “Investments - Debt and Equity Securities”, the Company classifies marketable securities as available-for-sale.

Available-for-sale ("AFS") securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders’ equity, net of taxes.

Realized gains and losses on sales of marketable securities, as determined on a specific identification basis, are included in other income (loss), net, on the consolidated statements of income (loss).

The amortized cost of marketable securities is adjusted for amortization of premium and accretion of discount to maturity, both of which, together with interest, are included in financial income (expenses), net.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

The Company classifies its marketable securities as either short-term or long-term based on each instrument’s underlying contractual maturity date.

Marketable securities with maturities of 12 months or less are classified as short-term and marketable securities with maturities greater than 12 months are classified as long-term.

On each reporting period, the Company evaluates whether declines in fair value below carrying value are due to expected credit losses, as well as the ability and intent to hold the investment until a forecasted recovery occurs, in accordance with ASC 326.

Allowance for credit losses on AFS debt securities are recognized as a charge in financial income (expenses), net, on the consolidated statements of income (loss), and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders' equity.

The Company has not recorded credit losses on AFS debt securities for the years ended December 31, 2024, 2023 and 2022.

Investment in privately-held companies:

Company's equity investments are investments in equity securities of privately-held companies, that are not traded and therefore not supported

with observable market prices.

The Company elected to account for its equity investments without readily determinable market values that

either (i) do not meet the definition of in-substance common stock or (ii) do not provide the Company with control or significant influence

using Accounting Standards Update (“ASU”) 2016-01.

Company adjusts the carrying value of its investments to fair value upon observable transactions for identical or similar investments

of the same issuer.

Company periodically evaluates the carrying value of the investments in privately-held companies when events and circumstances indicate

that the carrying amount of the investment may not be recovered.

The maximum loss the Company can incur for its investments is their carrying

Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the privately-held

companies, the amount of cash that the privately-held companies have on-hand, the ability to obtain additional financing and overall market

conditions in which the privately-held companies operate or based on the price observed from the most recent completed financing.

gains and losses on investments in privately-held companies, realized and unrealized, are recognized in other income (loss).

The Company's equity investments are investments in equity securities of privately-held companies, that are not traded and therefore not supported with observable market prices.

The Company elected to account for its equity investments without readily determinable market values that either (i) do not meet the definition of in-substance common stock or (ii) do not provide the Company with control or significant influence using Accounting Standards Update (“ASU”) 2016-01.

The Company accounts for equity investments through which it exercise significant influence but do not have control over the investee under the equity method.

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 adjusts the carrying value of its investments to fair value upon observable transactions for identical or similar investments of the same issuer.

The Company periodically evaluates the carrying value of the investments in privately-held companies when events and circumstances indicate that the carrying amount of the investment may not be recovered.

The maximum loss the Company can incur for its investments is their carrying value.

The Company may determine the fair value by reviewing equity valuation reports, current financial results, long-term plans of the privately-held companies, the amount of cash that the privately-held companies have on-hand, the ability to obtain additional financing and overall market conditions in which the privately-held companies operate or based on the price observed from the most recent completed financing.

All gains and losses, whether due to an impairment or revaluation, on investments in privately-held companies, realized and unrealized, are recognized in other income (loss), net.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Trade receivables:

receivables are stated net of credit losses allowance.

Trade receivables are stated net of credit losses allowance.

The Company is exposed to credit losses primarily through sales of products.

allowance against gross trade receivables reflects the current expected credit loss inherent in the receivables portfolio determined based

on the Company’s methodology.

The Company’s methodology is based on historical collection experience, customer creditworthiness,

current and future economic condition and market condition.

Additionally, specific allowance amounts are established to record the appropriate

provision for customers that have a higher probability of default.

Trade receivables are written off after all reasonable means to collect

the full amount have been exhausted.

following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of trade receivables

to present the net amount expected to be collected:

Balance, at beginning

of the period

Increase in provision

for expected credit losses

The allowance against gross trade receivables reflects the current expected credit loss inherent in the receivables portfolio determined based on the Company’s methodology.

The Company’s methodology is based on historical collection experience, customer creditworthiness, current and future economic condition and market condition.

Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default.

Trade receivables are written off after all reasonable means to collect the full amount have been exhausted.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of trade receivables to present the net amount expected to be collected:

Balance as of January 1, 2024

Increase in provision for expected credit losses

Recoveries collected

1 unchanged sentence

Foreign currency translation

Balance, at end of the

Balance as of December 31, 2024

Loan receivables:

receivables are carried at the outstanding principal amount.

An allowance for credit loss on loan receivables is established when, based

on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual

terms of the loan agreement.

The Company determines this by considering several factors, including the credit risk and current financial

condition of the borrower, the borrower’s ability to pay current obligations, historical trends, and economic and market conditions.

The Company performs a credit quality assessment on the loan receivable on a quarterly basis and reviews the need for an allowance in

accordance with ASC 326.

The Company evaluates the extent and impact of any credit deterioration that could affect the performance and

the value of the secured property, as well as the financial and operating capability of the borrower.

income is recorded on an accrual basis at the stated interest rate and is recorded in financial income (expense) in the accompanying consolidated

statements of income.

Expected provision for credit loss regarding the Company's loans was immaterial.

The amortized cost of the loan

receivable approximates its fair value as of December 31, 2023.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

are stated at the lower of cost or net realizable value.

Loan receivables are carried at the outstanding principal amount.

An allowance for credit loss on loan receivables is established when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.

The Company determines this by considering several factors, including the credit risk and current financial condition of the borrower, the borrower’s ability to pay current obligations, historical trends, and economic and market conditions.

The Company performs a credit quality assessment on the loan receivable on a quarterly basis and reviews the need for an allowance in accordance with ASC 326.

The Company evaluates the extent and impact of any credit deterioration that could affect the performance and the value of the secured property, as well as the financial and operating capability of the borrower.

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 represents market interest rate.

As of December 31, 2024 and 2023, the Company's provision for credit loss was $ 17,672 and $ 144 , respectively, which was recorded under Financial income (expense), net.

As of December 31, 2024, the loans are presented under long-term assets on the consolidated balance sheets.

As of December 31, 2023, the loans were presented under prepaid expenses and other current assets and other long-term assets on the consolidated balance sheets.

The Company granted a loan to a single customer.

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

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Interest income is recorded on an accrual basis at the stated interest rate and is recorded in financial income (expense), net, in the accompanying consolidated statements of income (loss).

The amortized cost of the loan receivable approximates its fair value as of December 31, 2024.

Inventories are stated at the lower of cost or net realizable value.

Cost includes depreciation, labor, material, shipment and overhead costs.

reserves are provided to cover risks arising from slow-moving, excess inventory items or technological obsolescence.

The Company periodically

evaluates the quantities on hand relative to historical, current and projected sales volume.

Based on this evaluation, an impairment charge

is recorded when required to write-down inventory to its net realizable value.

Cost of finished goods and raw materials is determined

using the moving average cost method.

Inventory reserves are provided to cover risks arising from slow-moving, excess inventory items and technological obsolescence.

The Company periodically evaluates the quantities on hand relative to historical, current and projected sales volume.

Based on this evaluation, an impairment charge is recorded when required to write-down inventory to its net realizable value.

Cost of finished goods and raw materials is determined using the moving average cost method (see Note 6).

Property, plant and equipment:

plant and equipment are stated at cost, net of accumulated depreciation and government grants.

Assets under construction represent the

construction or development stage of property and equipment that have not yet been placed in service for the Company's intended use.

is calculated by the straight-line method over the estimated useful life of the assets, at the following rates:

Property, plant, and equipment are stated at cost, net of accumulated depreciation and government grants.

Assets under construction represent the construction or development stage of property and equipment that have not yet been placed in service for the Company's intended use.

Depreciation is calculated by the straight-line method over the estimated useful life of the assets, at the following rates:

Buildings and plants

3 - 5.7 (mainly 5.7 )

Computers and peripheral

Computers and peripheral equipment

14.3 - 33.3 (mainly 14.3 )

Office furniture and

Office furniture and equipment

7 - 20 (mainly 7 )

Machinery and equipment

Laboratory and testing

the shorter of the lease term or useful economic life

10 - 20 (mainly 10 )

Laboratory and testing equipment

10 - 20 (mainly 15 )

Leasehold improvements

over the shorter of the lease term or useful economic life

Government assistance

manufacturing production tax credits

August 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 (the “IRA”), which contains several provisions

intended to accelerate U.S.

manufacturing and adoption of clean energy such as solar.

Some of the applicable provisions in the IRA include

the extension of the Production Tax Credit (“PTC") through 2034.

These provisions of the law are new and regulations and guidance

concerning their implementation are gradually being published by the U.S.

Treasury Department.

Section 45X of the IRA offers advanced

manufacturing production tax credits ("AMPTC"), which incentivize the production of eligible components within the United States.

end, the Company established manufacturing capabilities in the United States in 2023 and announced additional capacity expected in 2024.

Advanced manufacturing production tax credits

In August 2022, the U.S.

government enacted the Inflation Reduction Act of 2022 (the “IRA”), which includes several incentives intended to promote clean energy, battery and energy storage, electrical vehicles, and other solar products, and is impacting our business and operations.

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

The IRA further incentivizes residential and commercial solar customers and developers by providing significant tax credits for qualifying energy projects.

The IRA further provides Advanced Manufacturing Production Tax Credits ("AMPTCs") for U.S.

manufacturing of eligible components (under IRC §45X), including PV inverters and DC-optimized systems.

The Company has been manufacturing eligible products in the U.S.

since the fourth quarter of 2023.

In addition to using the tax credits to offset tax due to the U.S.

government, the IRA allows taxpayers to elect to have AMPTCs refunded

in cash ("Direct Pay") or transfer these credits to a third party.

The Direct Pay option is available as a one-time election, in any taxable

year after December 31, 2022, for a facility in which eligible components are produced, and is applicable for five years.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Refundable and transferable tax credits are

similar in essence to government grants.

This is because the taxpayer can realize the benefit regardless of whether they owe income tax

or not in the relevant years.

government, the IRA allows taxpayers to elect to have AMPTCs refunded in cash ("Direct Pay") or sell these credits to a third party.

The Direct Pay option is available as a one-time election, in any taxable year after December 31, 2022, for a facility in which eligible components are produced, and is applicable for five years.

In 2024 the Company sold a significant part of the AMPTCs it generated from the U.S.

production of eligible components.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Refundable and transferable tax credits are similar in essence to government grants.

This is because the taxpayer can realize the benefit regardless of whether they owe income tax or not in the relevant years.

Therefore, these amounts are not considered income taxes and fall outside the scope of Topic 740.

they are treated as government grants.

grants are recognized when there is reasonable assurance that:

(1) the Company will comply with the relevant conditions and (2) the grant

disbursement will be received.

The Company recognize's AMPTCs as a reduction in the cost of revenues in the statement of income.

does this systematically over time as it recognizes the related expenses.

Alternatively, the Company recognizes the grant immediately

if the grant compensates the Company for expenses that it has already incurred.

The AMPTCs are also reflected in the consolidated balance

sheet as a reduction of income tax payable within accrued expenses and other liabilities, as a tax prepayment, or as AMPTCs to be sold

within prepayment and other assets.

The way the Company expects to utilize the AMPTCs determines where they are recorded.

the year that ended December 31, 2023, the Company recognized AMPTCs worth $ 6,020

as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers.

As of December 31, 2023,

benefits recognized from AMPTCs of $ 6,020

were recorded as a tax prepayment within prepayment and other current assets.

plant and equipment

2020, SolarEdge Ltd, a wholly owned subsidiary of the Company, entered into an agreement with the Israeli Ministry of Economy and Industry

to partially subsidize the construction of Sella 1, a factory for production of inverters and optimizers, in the amount of approximately

2020, SolarEdge Korea (formerly Kokam), a wholly owned subsidiary of the Company, entered into an agreement with Chungcheongbuk-do province

of South Korea to partially subsidize the construction of Sella 2, a factory for production of lithium-ion cells and batteries, in the

amount of approximately $ 12,000 .

assistance is in the form of a cash subsidy, which the government will pay as a grant upon the satisfaction of predetermined construction

completion milestones.

When the defined milestones are reached and the right to receive a subsidy amount becomes virtually certain, the

amount of the grant is recorded as a reduction of the related asset's value under “Property, plant and equipment, net”.

Company did not record reduction of property, plant and equipment for the year ended December 31, 2023.

Company recorded reduction of property, plant and equipment in the amount of $ 7,359

for the year ended December 31, 2022.

of December 31, 2023, the Company has a right to receive of $ 2,018

that has yet to be received which was recorded under “Prepaid expenses and other current assets”.

Company determines if an arrangement is a lease at inception.

Contracts containing a lease are further evaluated for classification as

an operating or finance lease.

Instead, they are treated as government grants.

Government grants are recognized when there is reasonable assurance that:

(1) the Company will comply with the relevant conditions and (2) the grant disbursement will be received.

The Company recognize's AMPTCs as a reduction in the cost of revenues in the statement of income (loss).

The Company does this systematically over time as it recognizes the related expenses.

The AMPTCs are also reflected in the consolidated balance sheet, according to the way the Company expects to utilize them:

as a reduction of income tax payable within accrued expenses and other liabilities, as a tax prepayment, or, if AMPTCs are to be sold, within prepayment and other assets.

As of December 31, 2024 and 2023, AMPTCs of $ 80,516 and $ 6,020 , were recorded as a tax prepayment within prepayment and other current assets, respectively.

Property, plant and equipment

In 2020, SolarEdge Korea (formerly Kokam), a wholly owned subsidiary of the Company, entered into an agreement with Chungcheongbuk-do province of South Korea to partially subsidize the construction of Sella 2, a factory for production of lithium-ion cells and batteries, in the amount of approximately $ 12,000 .

The assistance is in the form of a cash subsidy, which the government will pay as a grant upon the satisfaction of predetermined construction completion milestones.

When the defined milestones are reached and the right to receive a subsidy amount becomes virtually certain, the amount of the grant is recorded as a reduction of the related asset's value under “Property, plant and equipment, net”.

In November 2024, following the announced discontinuation of SolarEdge Korea, the Company is required to return approximately $ 10,000 in subsidies granted to date.

The Company recorded an accrual under accrued expenses and other current liabilities in the consolidated balance sheets.

The Company did not record reduction of property, plant and equipment related to grants for the years ended December 31, 2024 and 2023.

The Company determines if an arrangement is a lease at inception.

Contracts containing a lease are further evaluated for classification as an operating or finance lease.

In determining the leases classification the Company assesses among other criteria:

(i) The lease term

is for a major part of the remaining economic life of the underlying asset (ii) The present value of the sum of the lease payments and

any residual value guaranteed by the lessee that is not already included in the lease payments equals or exceeds substantially all of

the fair value of the underlying asset.

Operating leases are included in operating lease right-of-use (“ROU”) assets, other

current liabilities and long-term operating lease liabilities in the Company’s consolidated balance sheets.

Finance leases are included

in property, plant and equipment, net, other current liabilities, and long-term finance lease liabilities in the Company’s consolidated

balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s

obligation to make lease payments arising from the lease.

For leases with terms greater than 12 months, the Company records the ROU asset

and liability at commencement date based on the present value of lease payments according to their term.

Certain lease agreements include

rental payments that are adjusted periodically for the consumer price index ("CPI").

The ROU and lease liability were calculated using

the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons.

Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the

lease payments at commencement date.

(i) The lease term is for a major part of the remaining economic life of the underlying asset (ii) The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already included in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.

Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities and long-term operating lease liabilities in the Company’s consolidated balance sheets.

Finance leases are included in property, plant and equipment, net, other current liabilities, and long-term finance lease liabilities in the Company’s consolidated balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

For leases with terms greater than 12 months, the Company records the ROU asset and liability at commencement date based on the present value of lease payments according to their term.

Certain lease agreements include rental payments that are adjusted periodically for the consumer price index ("CPI").

The ROU and lease liability were calculated using the CPI as of the adoption date and will not be subsequently adjusted, unless the liability is reassessed for other reasons.

The Company uses incremental borrowing rates based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

The ROU asset also includes any lease payments made and net of lease incentives.

Lease terms may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expenses

are recognized on a straight-line basis over the lease term or the useful life of the leased asset.

addition, the carrying amount of the ROU and lease liabilities are remeasured if there is a modification, a change in the lease term,

a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease expenses are recognized on a straight-line basis over the lease term or the useful life of the leased asset.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

In addition, the carrying amount of the ROU and lease liabilities are remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Business Combination:

Company allocates the fair value of the purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired

based on their estimated fair value.

The excess of the fair value of the purchase price over the fair values of these identifiable assets

and liabilities is recorded as goodwill.

Such valuations require management to make significant estimates and assumptions, especially

with respect to intangible assets.

estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology and

discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently

uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, which does not

exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the

corresponding offset to goodwill.

The Company allocates the fair value of the purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair value.

The excess of the fair value of the purchase price over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired technology and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, which does not exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the finalization of the measurement period, any subsequent adjustments are recorded to earnings.

Intangible Assets:

identifiable finite-lived intangible assets are amortized on a straight-line basis or accelerated method over the estimated useful lives

of the assets.

Acquired identifiable finite-lived intangible assets are amortized on a straight-line basis or accelerated method over the estimated useful lives of the assets.

The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives.

The Company routinely reviews the remaining estimated useful lives of finite-lived intangible assets.

In case the Company reduces the

estimated useful life for any asset, the remaining unamortized balance is amortized over the revised estimated useful life (see Note 9).

In case the Company reduces the estimated useful life for any asset, the remaining unamortized balance is amortized over the revised estimated useful life (see Note 10).

Depreciation is calculated by the straight-line method over the estimated useful life of the assets, at the following rates:

Current technology

14.3 - 20 (mainly 20 )

Customer relationships

20 - 50 (mainly 50 )

9.5 - 10 (mainly 9.5 )

Impairment of long-lived assets:

Company’s long-lived assets to be held and used, including property, plants and equipment, ROU assets and identifiable intangible

assets that are subject to amortization, other than goodwill, are reviewed for impairment in accordance with ASC 360 “Property,

Plants and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group)

may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or

asset group) to the future undiscounted cash flows expected to be generated by the assets (or asset group).

If such evaluation indicates

that the carrying amount of the asset (or asset group) is not recoverable, the assets are considered to be impaired, the impairment to

be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value (see Note 9).

the years ended December 31, 2023, 2022 and 2021, the Company recorded impairment charges of long-lived assets in the amount of $ 30,790 ,

and $ 2,209 ,

respectively, presented under Other operating expenses, net.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

reflects the excess of the consideration transferred, including the fair value of any contingent consideration and any non-controlling

interest in the acquiree, over the assigned fair values of the identifiable net assets acquired.

Goodwill is not amortized, and is assigned

to reporting units and tested for impairment at least on an annual basis, in the fourth quarter of the fiscal year.

goodwill impairment test is performed according to the following principles:

initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit

is less than its carrying amount.

the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative

impairment test is performed.

An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair

value is recognized (see Note 10).

the year ended December 31, 2023, the Company did not record any impairment charges.

the year ended December 31, 2022, the Company recorded impairment charges of goodwill in the amount of $ 90,104 .

the year ended December 31, 2021, the Company did not record any impairment charges.

The Company’s long-lived assets to be held and used, including property, plants and equipment, ROU assets and identifiable intangible assets that are subject to amortization, other than goodwill, are reviewed for impairment in accordance with ASC 360 “Property, Plants and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted cash flows expected to be generated by the assets (or asset group).

If such evaluation indicates that the carrying amount of the asset (or asset group) is not recoverable, the assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value (see Note 10).

For the years ended December 31, 2024, 2023 and 2022, the Company recorded impairment charges of long-lived assets in the amount of $ 249,588 , $ 30,790 and $ 29,037 , respectively, presented under Other operating expenses, net.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Goodwill reflects the excess of the consideration transferred, including the fair value of any contingent consideration and any non-controlling interest in the acquiree, over the assigned fair values of the identifiable net assets acquired.

Goodwill is not amortized, and is assigned to reporting units and tested for impairment at least on an annual basis, in the fourth quarter of the fiscal year.

The goodwill impairment test is performed according to the following principles:

(1) An initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

(2) If the Company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is performed.

An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized (see Note 11).

For the year ended December 31, 2024, the Company recorded impairment charges of goodwill in the amount of $ 2,251 .

For the year ended December 31, 2023, the Company did not record any impairment charges.

For the year ended December 31, 2022, the Company recorded impairment charges of goodwill in the amount of $ 90,104 .

Cloud computing arrangements:

2021, due to the growing size and complexity of the Company, the Company decided to implement a new global enterprise resource planning

("ERP") system, which will replace the Company's existing operating and financial systems.

During 2022, the Company began implementing

a cloud-based ERP system.

The implementation is expected to occur in phases over the next several years.

Company incurs costs to implement cloud computing arrangements ("CCA") that are hosted by third party vendors.

Implementation costs associated

with CCA are capitalized when incurred during the application development phase until the software is ready for its intended use.

costs are then amortized on a straight-line basis over the contractual term of the cloud computing arrangement and are recognized as an

operating expense within the consolidated statements of income.

Capitalized amounts related to such arrangements are recorded within other

long-term assets in the consolidated balance sheets.

Cash payments for CCA implementation costs are classified as cash outflows from operating

of December 31, 2023, and 2022 the Company had capitalized implementation costs related to its upcoming ERP conversion in the amounts

and $ 3,457 ,

respectively presented under other long-term assets in the consolidated balance sheet.

In 2021, due to the growing size and complexity of the Company, the Company decided to implement a new global enterprise resource planning ("ERP") system, which will replace the Company's existing operating and financial systems.

During 2022, the Company began implementing a cloud-based ERP system.

The Company's implementation of this system is expected to be completed in 2025.

The Company incurs costs to implement cloud computing arrangements ("CCA") that are hosted by third party vendors.

Implementation costs associated with CCA are capitalized when incurred during the application development phase until the software is ready for its intended use.

The costs are then amortized on a straight-line basis over the contractual term of the cloud computing arrangement and are recognized as an operating expense within the consolidated statements of income (loss).

Capitalized amounts related to such arrangements are recorded within other long-term assets in the consolidated balance sheets.

Cash payments for CCA implementation costs are classified as cash used in operating activities.

As of December 31, 2024, and 2023 the Company had capitalized implementation costs related to its upcoming ERP conversion in the amounts of $ 29,366 and $ 13,666 , respectively presented under other long-term assets in the consolidated balance sheet.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Severance pay:

employees of the Company’s Israeli subsidiary are included under Section 14 of the Severance Pay Law, 1963, under which these employees

are entitled only to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary.

These payments

cause the Company to be released from any future obligation under the Israeli Severance Pay Law to make severance payments in respect

of those employees;

The employees of the Company’s Israeli Subsidiary are included under Section 14 of the Severance Pay Law, 1963, under which these employees are entitled only to monthly deposits made in their name with insurance companies, at a rate of 8.33% of their monthly salary.

These payments cause the Company to be released from any future obligation under the Israeli Severance Pay Law to make severance payments in respect of those employees;

therefore, related assets and liabilities are not presented in the consolidated balance sheets.

applicable, severance costs are recorded in each entity in accordance with local laws and regulations.

the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 23,643 ,

in severance expenses related to its employees, respectively.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

If applicable, severance costs are recorded in each entity in accordance with local laws and regulations.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded $ 21,959 , $ 23,643 and $ 17,202 in severance expenses related to its employees, respectively.

Derivatives and Hedging:

Company accounts for derivatives and hedging based on ASC 815 (“Derivatives and Hedging”).

ASC 815 requires the Company to

recognize all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value (i.e., gains or losses) of

a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the

type of hedging relationship.

protect against the increase in value of forecasted foreign currency cash flows resulting from salary denominated in the Israeli currency,

the New Israeli Shekels (“NIS”), during the year ended December 31, 2023, the Company instituted a foreign currency cash flow

hedging program whereby portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts.

when the dollar strengthens against the NIS, the decline in present value of future foreign currency expenses is offset by losses in the

fair value of the hedging contracts.

Conversely, when the dollar weakens, the increase in the present value of future foreign currency

cash flows is offset by gains in the fair value of the hedging contracts.

These hedging contracts are designated as cash flow hedges,

as defined by ASC 815 and are all effective hedges.

Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S.

These derivative instruments are not designated as cash flow hedges, as defined by ASC 815, and therefore all gains and losses, resulting

from fair value remeasurement, were recorded immediately in the statement of income, as a financial income (expense), net.

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

The Company accounts for derivatives and hedging based on ASC 815 (“Derivatives and Hedging”).

ASC 815 requires the Company to recognize all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.

To protect against the increase in value of forecasted foreign currency cash flows resulting from salary denominated in the Israeli currency, NIS, during the year ended December 31, 2024, the Company instituted a foreign currency cash flow hedging program whereby portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts.

Accordingly, when the dollar strengthens against the NIS, the decline in present value of future foreign currency expenses is offset by losses in the fair value of the hedging contracts.

Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by gains in the fair value of the hedging contracts.

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

The Company also entered into derivative instrument arrangements to hedge the Company’s exposure to currencies other than the U.S.

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

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

Revenue recognition:

are recognized in accordance with ASC 606;

revenue from contracts with customers is recognized when control of the promised goods or services

is transferred to the customers, in an amount that the Company expects in exchange for those goods or services.

Company’s products and services consist mainly of (i) power optimizers, (ii) inverters, (iii) batteries for PV applications, (iv)

a related cloud-based monitoring platform, (v) communication services, (vi) warranty extension services, (vii) Lithium-ion cells and other

storage solutions (viii) EV components, and (ix) automated machinery for manufacturing lines.

Company recognizes revenue under the core principle that transfer of control to the Company’s customers should be depicted in an

amount reflecting the consideration the Company expects to receive in revenue.

order to achieve that core principle, the Company applies the following five-step approach:

(1) identify the contract with a customer,

(2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the

performance obligations in the contract, and (5) recognize revenue when the performance obligation is satisfied.

Revenues are recognized in accordance with ASC 606;

revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that the Company expects in exchange for those goods or services.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

The Company’s products and services consist mainly of (i) power optimizers, (ii) inverters, (iii) batteries for PV applications, (iv) a related cloud-based monitoring platform, (v) communication services, and (vi) warranty extension services.

The Company recognizes revenue under the core principle that transfer of control to the Company’s customers should be depicted in an amount reflecting the consideration the Company expects to receive in revenue.

In order to achieve that core principle, the Company applies the following five-step approach:

(1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when the performance obligation is satisfied.

(1) Identify the contract with a customer

contract is an agreement or purchase order between two or more parties that creates enforceable rights and obligations.

In evaluating

the contract, the Company analyzes the customer’s intent and ability to pay the amount of promised consideration (credit risk) and

considers the probability of collecting substantially all of the consideration.

Company determines whether collectability is reasonably assured on a customer-by-customer basis pursuant to its credit review policy.

A contract is an agreement or purchase order between two or more parties that creates enforceable rights and obligations.

In evaluating the contract, the Company analyzes the customer’s intent and ability to pay the amount of promised consideration (credit risk) and considers the probability of collecting substantially all of the consideration.

The Company determines whether collectability is reasonably assured on a customer-by-customer basis pursuant to its credit review policy.

The Company typically sells to customers with whom it has a long-term business relationship and a history of successful collection.

a new customer, or when an existing customer substantially expands its commitments, the Company evaluates the customer’s financial

position, the number of years the customer has been in business, the history of collection with the customer, and the customer’s

ability to pay, and typically assigns a credit limit based on that review.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

the performance obligations in the contract

a contract’s inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance

For a new customer, or when an existing customer substantially expands its commitments, the Company evaluates the customer’s financial position, the number of years the customer has been in business, the history of collection with the customer, and the customer’s ability to pay, and typically assigns a credit limit based on that review.

(2) Identify the performance obligations in the contract

At a contract’s inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance obligations.

The main performance obligations are the provisions of the following:

providing of the Company’s products;

monitoring services;

cloud based monitoring services;

extended warranty services and communication services.

Depending on the shipping terms agreed with the customer,

the Company may perform shipping and handling activities after the customer obtains control of the goods and revenue is recognized.

Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods.

of this accounting policy election, the Company does not consider shipping and handling activities after the customer obtains control

of the goods as promised services to its customers.

Depending on the shipping terms agreed with the customer, the Company may perform shipping and handling activities after the customer obtains control of the goods and revenue is recognized.

The Company has elected to account for shipping and handling costs as activities to fulfill the promise to transfer the goods.

As a result of this accounting policy election, the Company does not consider shipping and handling activities after the customer obtains control of the goods as promised services to its customers.

(3) Determine the transaction price

transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services

to a customer, excluding amounts collected on behalf of third parties.

Generally, the Company does not provide price protection, stock

rotation, and/or right of return.

The Company determines the transaction price for all satisfied and unsatisfied performance obligations

identified in the contract from contract inception to the beginning of the earliest period presented.

Rebates or discounts on goods or

services are accounted for as variable consideration.

The transaction price is the amount of consideration to which the Company is entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Generally, the Company does not provide price protection, stock rotation, and/or right of return.

The Company determines the transaction price for all satisfied and unsatisfied performance obligations identified in the contract from contract inception to the beginning of the earliest period presented.

The Company has elected to apply the practical expedient to not evaluate payment terms of one year or less for the existence of a significant financing component.

Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities (e.g., sales tax and other indirect taxes).

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Rebates or discounts on goods or services are accounted for as variable consideration.

The rebate or discount program is applied retrospectively for future purchases.

Provisions for rebates, sales incentives and discounts to customers are accounted for as reductions in revenue in the same period the

related sales are recorded.

for rebates for direct customers is presented net of receivables.

Accrual for sale incentives related to non-direct customers is presented

under accrued expenses and other current liabilities.

The Company accrued $ 74,096

and $ 176,706

for rebates and sales incentives as of December 31, 2023 and 2022, respectively.

a contract provides a customer with payment terms of more than a year, the Company considers whether those terms create variability in

the transaction price and whether a significant financing component exists.

of December 31, 2023, the Company has not provided payment terms of more than a year.

performance obligations that extend for a period greater than one year are those that include a financial component:

(i) warranty extension

services, (ii) cloud-based monitoring, and (iii) communication services.

The Company recognizes financing component expenses in its consolidated

statement of income in relation to advance payments for performance obligations that extend for a period greater than one year.

financing component expenses are reflected in the Company’s deferred revenues balance.

Provisions for rebates, sales incentives and discounts to customers are accounted for as reductions in revenue in the same period the related sales are recorded.

Accrual for rebates for direct customers is presented net of receivables.

Accrual for sale incentives related to non-direct customers is presented under accrued expenses and other current liabilities.

The Company accrued $ 53,026 and $ 74,096 for rebates and sales incentives as of December 31, 2024 and 2023, respectively.

When a contract provides a customer with payment terms of more than a year, the Company considers whether those terms create variability in the transaction price and whether a significant financing component exists.

As of December 31, 2024, the Company has not provided payment terms of more than a year.

The performance obligations that extend for a period greater than one year are those that include a financial component:

(i) warranty extension services, (ii) cloud-based monitoring, and (iii) communication services.

The Company recognizes financing component expenses in its consolidated statement of income (loss) in relation to advance payments for performance obligations that extend for a period greater than one year.

These financing component expenses are reflected in the Company’s deferred revenues balance.

(4) Allocate the transaction price to the performance obligations in the contract

Company performs an allocation of the transaction price to each separate performance obligation, in proportion to their relative standalone

selling prices.

The Company performs an allocation of the transaction price to each separate performance obligation, in proportion to their relative standalone selling prices.

(5) Recognize revenue when a performance obligation is satisfied

is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer.

either transfers over time or at a point in time, which affects when revenue is recorded.

from sales of products are recognized based on the transfer of control, which includes but is not limited to, the agreed International

Commercial terms, or “INCOTERMS”.

Revenues related to warranty extension services, cloud-based monitoring, and communication

services are recognized over time on a straight-line basis.

revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments

received from customers for the Company’s products.

Deferred revenues are classified as short-term and long-term deferred revenues

based on the period in which revenues are expected to be recognized (see Note 15).

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Revenue is recognized when or as performance obligations are satisfied by transferring control of a promised good or service to a customer.

Control either transfers over time or at a point in time, which affects when revenue is recorded.

Revenues from sales of products are recognized based on the transfer of control, which includes but is not limited to, the agreed International Commercial terms, or “INCOTERMS”.

Revenues related to warranty extension services, cloud-based monitoring, communication services and other services are recognized over time on a straight-line basis since these services have a consistent continuous pattern of transfer to a customer during the contract period.

Billed accounts receivables include all outstanding invoices to customers, as well as amounts allowed to be billed according to contractual billing terms with customers.

Deferred revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services, other services and advance payments received from customers for the Company’s products.

Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized (see Note 16).

Cost of revenues:

of revenues includes the following:

product costs consisting of purchases from contract manufacturers and other suppliers, direct and

indirect manufacturing costs, shipping and handling, support, warranty expenses, provision for losses related to slow moving and dead

inventory, personnel and government grants related to the AMPTCs.

and handling costs, which amounted to $ 214,349 ,

and $ 116,574 ,

for the years ended December 31, 2023, 2022 and 2021, respectively, are included in the cost of revenues in the consolidated statements

Shipping and handling costs include custom tariff charges and all other costs associated with the distribution of finished

goods from the Company’s point of sale directly to its customers.

the year ended December 31, 2023, the Company recognized AMPTCs worth approximately $ 6,020

as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers.

Cost of revenues includes the following:

product costs consisting of purchases from contract manufacturers and other suppliers, direct and indirect manufacturing costs, shipping and handling, support, warranty expenses, provision for losses related to slow moving and dead inventory, personnel and government grants related to the AMPTCs.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Shipping, handling and warehouse costs, which amounted to $ 79,534 , $ 214,349 and $ 257,753 , for the years ended December 31, 2024, 2023 and 2022, respectively, are included in the cost of revenues in the consolidated statements of income.

Shipping, handling and warehouse costs include custom tariff charges and all other costs associated with the distribution of finished goods from the Company’s point of sale directly to its customers.

In the years that ended December 31, 2024 and 2023, the Company recognized AMPTCs worth $ 88,655 and $ 6,020 , as a reduction in the cost of revenues for the inverters produced in the United States and sold to customers.

Warranty obligations:

Company provides a product warranty for its solar segment related products as follows:

a standard 10 -year

limited warranty for its batteries for PV applications, a standard 12 -year

limited warranty for the majority of its inverters, that is extendable up to 25

years for an additional cost and a 25 -year

limited warranty for power optimizers.

Company maintains reserves to cover the expected costs that could result from the standard warranty.

The warranty liability is in the

form of product replacement and associated costs.

Warranty reserves are based on the Company’s best estimate of such costs and are

included in cost of revenues.

The reserve for the related warranty expenses is based on various factors including assumptions about the

frequency of warranty claims on product failures, derived from results of accelerated lab testing, field monitoring, analysis of the history

of product field failures, and the Company’s reliability estimates.

Company has established a reliability measurement system based on the units’ estimated mean time between failure, or MTBF, a metric

that equates to a steady-state failure rate per year for each product generation.

The MTBF predicts the expected failure rate of each

product within the Company's products installed base during the expected product warranted lifetime.

Company performs accelerated life cycle testing, which simulates the service life of the product in a short period of time.

accelerated life cycle tests incorporate test methodologies derived from standard tests used by solar module vendors to evaluate the period

over which solar modules wear out.

Corresponding replacement costs are updated periodically to reflect changes in the Company’s

actual and estimated production costs for its products, rate of usage of refurbished units as a replacement of faulty units, and other

costs related to logistic and subcontractors’ services associated with the replacement products.

addition, through the collection of actual field failure statistics, the Company has identified several additional failure causes that

are not included in the MTBF model.

Such causes, which mostly consist of design errors, workmanship errors caused during the manufacturing

process and, to a lesser extent, replacement of non-faulty units by installers, result in generating additional replacement costs to the

replacement costs projected under the MTBF model.

other products, the Company accrues for warranty costs based on the Company’s best estimate of product and associated costs.

Company’s other products are sold with a standard limited warranty that typically range in duration from one to ten years.

obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Convertible senior notes:

January 1, 2021, the Company early adopted ASU 2020-06 using the modified retrospective approach.

The Notes are accounted for as a single

liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.

the new standard resulted in an increase of retained earnings in the amount of $ 2,884 ,

a decrease of an additional paid-in capital in the amount of $ 36,336 ,

an increase of convertible senior notes, net, in the amount of $ 45,282

and a decrease of deferred tax liabilities, net, in the amount of $ 11,830 .

The impact of adoption of this standard on the Company’s earnings per share was immaterial.

Company’s Convertible Senior Notes are included in the calculation of diluted Earnings Per Share (“EPS”) if the assumed

conversion into common shares is dilutive, using the “if-converted” method.

This involves adding back the periodic non-cash

interest expense net of tax associated with the Notes to the numerator and by adding the shares that would be issued in an assumed conversion

(regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS,

unless the Notes are antidilutive (see Note 22).

The Company provides a product warranty for its solar segment related products as follows:

a standard 10 -year limited warranty for its batteries for PV applications, a standard 12 -year limited warranty for the majority of its inverters, that is extendable up to 25 years for an additional cost and a 25 -year limited warranty for power optimizers.

The Company maintains reserves to cover the expected costs that could result from the standard warranty.

The warranty liability is in the form of product replacement and associated costs.

Warranty reserves are based on the Company’s best estimate of such costs and are included in cost of revenues.

The reserve for the related warranty expenses is based on various factors including assumptions about the frequency of warranty claims on product failures, derived from results of accelerated lab testing, field monitoring, analysis of the history of product field failures, and the Company’s reliability estimates.

The Company has established a reliability measurement system based on the units’ estimated mean time between failure, or MTBF, a metric that equates to a steady-state failure rate per year for each product generation.

The MTBF predicts the expected failure rate of each product within the Company's products installed base during the expected product warranted lifetime.

The Company performs accelerated life cycle testing, which simulates the service life of the product in a short period of time.

The accelerated life cycle tests incorporate test methodologies derived from standard tests used by solar module vendors to evaluate the period over which solar modules wear out.

Corresponding replacement costs are updated periodically to reflect changes in the Company’s actual and estimated production costs for its products, rate of usage of refurbished units as a replacement of faulty units, and other costs related to logistic and subcontractors’ services associated with the replacement products.

In addition, through the collection of actual field failure statistics, the Company has identified several additional failure causes that are not included in the MTBF model.

Such causes, which mostly consist of design errors, workmanship errors caused during the manufacturing process and, to a lesser extent, replacement of non-faulty units by installers, result in generating additional replacement costs to the replacement costs projected under the MTBF model.

For other products, the Company accrues for warranty costs based on the Company’s best estimate of product and associated costs.

The Company’s other products are sold with a standard limited warranty that typically range in duration from one to ten years.

Warranty obligations are classified as short-term and long-term obligations based on the period in which the warranty is expected to be claimed.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Advertising costs

costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of income.

incurred advertising expenses of $ 13,476 ,

for the years ended December 31, 2023, 2022, and 2021, respectively.

Advertising costs are expensed when incurred and are included in sales and marketing expenses in the consolidated statements of income (loss).

The Company incurred advertising expenses of $ 12,015 , $ 13,476 , and $ 11,090 for the years ended December 31, 2024, 2023, and 2022, respectively.

Research and development costs:

and development costs, are charged to the consolidated statement of income as incurred.

Research and development costs, are charged to the consolidated statement of income (loss) as incurred.

Concentrations of credit risks:

instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted

bank deposits, marketable securities, trade receivables, loan receivables, derivative instruments and other accounts receivable.

and cash equivalents and restricted bank deposits are mainly invested in major banks in the U.S., Israel, Germany, Italy and Korea.

believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit

risk exists with respect to these investments.

Company's debt marketable securities include investments in highly-rated corporate debentures (located mainly in U.S., Canada, France,

UK, Australia, Cayman Islands and other countries) and governmental bonds.

The financial institutions that hold the Company's debt marketable

securities are major financial institutions located in the United States.

The Company believes its debt marketable securities portfolio

is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount the Company may invest in an issuer

(see Note 2f.).

trade receivables of the Company derive from sales to customers located primarily in the United States and Europe.

Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for credit losses

(see Note 2h.).

The Company generally does not require collaterals, however, in certain circumstances, the Company may require letters

of credit, other collateral, or additional guarantees.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, restricted bank deposits, marketable securities, trade receivables, loan receivables, derivative instruments and other accounts receivable.

Cash and cash equivalents, restricted cash and restricted bank deposits are mainly invested in major banks in the U.S., Israel, Germany, Italy and Korea.

Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.

The Company's debt marketable securities include investments in high-rated corporate debentures (located mainly in the U.S., Canada, France, UK, Australia, Cayman Islands and other countries) and governmental bonds.

The financial institutions that hold the Company's debt marketable securities are major financial institutions located in the United States.

The Company believes its debt marketable securities portfolio is a diverse portfolio of highly-rated securities and the Company's investment policy limits the amount the Company may invest in an issuer (see Note 2g.).

The trade receivables of the Company derive from sales to customers located primarily in the United States and Europe.

The Company performs ongoing credit evaluations of its customers for the purpose of determining the appropriate allowance for credit losses (see Note 2i.).

The Company generally does not require collaterals, however, in certain circumstances, the Company may require letters of credit, other collateral, or additional guarantees.

From time to time, the Company may purchase trade credit insurance.

Company had two major customers (customers with attributable revenues that represents more than 10% of total revenues) for the year ended

December 31, 2023, one major customer for the year ended December 31, 2022, and two major customers for the year ended December 31, 2021

that accounted for approximately 24.0 %,

of the Company’s consolidated revenues, respectively.

The Company had one major customer (customers with attributable revenues that represent more than 10% of the Company's total revenues) for the year ended December 31, 2024, two major customers for the year ended December 31, 2023, and one major customer for the year ended December 31, 2022 that accounted for approximately 12.9 %, 24.0 % and 18.5 % of the Company’s consolidated revenues, respectively.

All of the revenues from these customers were generated in the solar segment.

Company had three major customers (customer with a balance that represents more than 10% of total trade receivables, net) as of December

31, 2023 and as of December 31, 2022 that accounted in the aggregate for approximately 47.1 %

of the Company’s consolidated trade receivables, net, respectively.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The Company had three major customers (customer with a balance that represents more than 10% of total trade receivables, net) as of December 31, 2024 and as of December 31, 2023 that accounted in the aggregate for approximately 43.4 % and 47.1 %, of the Company’s consolidated trade receivables, net, respectively.

Concentrations of supply risks:

Company depends on two contract manufacturers and several limited or single source component suppliers.

Reliance on these vendors makes

the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing

yields, and costs.

of December 31, 2023 and 2022, two contract manufacturers collectively accounted for 58.5 %

of the Company’s total trade payables, net, respectively.

the second quarter of 2022, the Company announced the opening of “Sella 2”, a two gigawatt-hour (GWh) Li-Ion battery cell

manufacturing facility located in South Korea.

Sella 2 began producing and shipping cells at the end of 2022 and is expected to gradually

increase manufacturing capacity throughout 2024.

Sella 2 is the Company's second owned manufacturing facility following the establishment

of Sella 1 in 2020.

Sella 1 is the Company's manufacturing facility in the North of Israel that produces power optimizers and inverters.

The Company depends on certain contract manufacturers and several limited or single source component suppliers.

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

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

As of December 31, 2024 one contract manufacturer accounted for 26.2 % 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.

The Company's own manufacturing facility, Sella 1, located in the North of Israel, is used in the Company's Solar segment operations.

Fair value of financial instruments:

following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

carrying value of cash and cash equivalents, short-term bank deposits, restricted bank deposits, trade receivables, net, bank loans, prepaid

expenses, loan receivables and other current assets, trade payables, net, employee and payroll accruals and accrued expenses and other

current liabilities approximate their fair values due to the short-term maturities of such instruments.

measured at fair value on a recurring basis as of December 31, 2023 and 2022 are comprised of money market funds, derivative instruments

and marketable securities (see Note 13).

Company applies ASC 820 “Fair Value Measurements and Disclosures”, with respect to fair value measurements of all financial

assets and liabilities.

Fair value is an exit price, representing the amount that would be received for the sale of an asset or paid to

transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should

be determined based on assumptions that market participants would use in pricing an asset or a liability.

three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies

in measuring fair value:

1- Observable

inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

other inputs that are directly or indirectly observable in the marketplace.

3- Unobservable

inputs which are supported by little or no market activity.

fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when

measuring fair value.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

The carrying value of cash and cash equivalents, restricted cash, short-term bank deposits, restricted bank deposits, trade receivables, net, bank loans, prepaid expenses, loan receivables and other current assets, trade payables, net, employee and payroll accruals and accrued expenses and other current liabilities approximate their fair values due to the short-term maturities of such instruments.

Assets measured at fair value on a recurring basis as of December 31, 2024 and 2023 are comprised of money market funds, derivative instruments and marketable securities (see Note 14).

The Company applies ASC 820 “Fair Value Measurements and Disclosures”, with respect to fair value measurements of all financial assets and liabilities.

Fair value is an exit price, representing the amount that would be received for the sale of an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

A three-tiered fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Stock-based compensation:

Company uses the closing trading price of its common stock on the day of the grant date as the fair value of awards of restricted stock

units ("RSUs"), and performance stock units that are based on the Company's financial performance targets ("PSUs").

The compensation expense

for RSUs is recognized using a straight-line attribution method over the requisite employee service period while compensation expense

for PSUs is recognized using an accelerated amortization model.

The Company estimates the forfeitures at the time of grant and revised,

if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Estimated forfeitures are based on actual historical

pre-vesting forfeitures.

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.

Company's 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.

For market conditions awards, 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.

The Company uses the closing trading price of its common stock on the day of the grant date as the fair value of awards of restricted stock units ("RSUs"), and performance stock units that are based on the Company's financial performance targets ("PSUs").

The compensation expense for RSUs is recognized using a straight-line attribution method over the requisite employee service period while compensation expense for PSUs is recognized using an accelerated amortization model.

The Company estimates the forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Estimated forfeitures are based on actual historical pre-vesting forfeitures.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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 Company granted PSUs 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.

In addition, the Company granted PSUs based on the 30-day successive average trading price of the Company’s common stock (the “30-Day Price”) over a three year performance period, which are expected to vest if certain 30-Day Price levels are met.

For market conditions awards, 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.

The Company recognizes such compensation expenses on an accelerated vesting method.

Company selected the Black-Scholes-Merton option-pricing model as the most appropriate fair value method for its stock-option awards and

Employee Stock Purchase Plan (“ESPP”).

The option-pricing model requires a number of assumptions, of which the most significant

are the fair market value of the underlying common stock, expected stock price volatility, and the expected option term.

Expected volatility

for stock-option awards and ESPP was calculated based upon the Company’s stock prices.

The expected term of options granted is based

upon historical experience and represents the period between the options’ grant date and the expected exercise or expiration date.

The Company selected the Black-Scholes-Merton option-pricing model as the most appropriate fair value method for its stock-option awards and Employee Stock Purchase Plan (“ESPP”).

The option-pricing model requires a number of assumptions, of which the most significant are the fair market value of the underlying common stock, expected stock price volatility, and the expected option term.

Expected volatility for stock-option awards and ESPP was calculated based upon the Company’s stock prices.

The expected term of options granted is based upon historical experience and represents the period between the options’ grant date and the expected exercise or expiration date.

The risk-free interest rate is based on the yield from U.S.

treasury bonds with an equivalent term.

The Company does not use dividend

yield rate since the Company has not declared or paid any dividends on its common stock and does not expect to pay any dividends in the

foreseeable future.

modification of the terms of a stock-based award is treated as an exchange of the original award for a new award with total compensation

cost equal to the grant-date fair value of the original award plus the incremental value of the modification to the award.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The fair value for options, PSU and ESPP

granted to employees is estimated at the date of grant using the following assumptions:

ended December 31,

Stock Options (1)

Risk-free interest

Dividend yields

Expected option term

Estimated forfeiture

The Company does not use dividend yield rate since the Company has not declared or paid any dividends on its common stock and does not expect to pay any dividends in the foreseeable future.

A modification of the terms of a stock-based award is treated as an exchange of the original award for a new award with total compensation cost equal to the grant-date fair value of the original award plus the incremental value of the modification to the award.

The fair value for PSU and ESPP granted to employees is estimated at the date of grant using the following assumptions:

Year ended December 31,

Risk-free interest

4.42 % - 5.42 %

5.38 % - 5.46 %

1.64 % - 4.70 %

Dividend yields

70.94 % - 104.93 %

56.44 % - 66.78 %

71.28 % - 71.97 %

Expected term

1 unchanged sentence

Dividend yields

65.18 %- 76.7 %

Expected term

No new options were granted in 2023 and 2022.

Earnings per share

net EPS is computed by dividing the net earnings attributable to SolarEdge Technologies, Inc.

by the weighted-average number of shares

of common stock outstanding during the period.

net EPS is computed by giving effect to all potential shares of common stock, to the extent dilutive, including stock options, RSUs, PSUs,

shares to be purchased under the Company’s ESPP, and the Notes due 2025, all in accordance with ASC No.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Earnings (loss) per share

Basic net EPS is computed by dividing the net earnings (losses) attributable to SolarEdge Technologies, Inc.

by the weighted-average number of shares of common stock outstanding during the period.

Diluted net EPS is computed by giving effect to all potential shares of common stock, to the extent dilutive, including stock options, RSUs, PSUs, shares to be purchased under the Company’s ESPP, the Notes 2025, and Notes 2029, all in accordance with ASC No.

260, "Earnings Per Share."

The Company’s convertible senior notes are included in the calculation of diluted Earnings Per Share (“EPS”) if the assumed conversion into common shares is dilutive, using the “if-converted” method.

This involves adding back the periodic cash and non-cash interest expense net of tax associated with the Notes to the numerator and by adding the shares that would be issued in an assumed conversion (regardless of whether the conversion option is in or out of the money) to the denominator for the purposes of calculating diluted EPS, unless the Notes are antidilutive (see Note 23).

Income taxes:

Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes”.

ASC 740 prescribes the use

of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial

reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences

are expected to reverse.

income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax

bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

Deferred tax assets are

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

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.

has not been recorded for (a) taxes that would apply in the event of disposal of investments in subsidiaries, as it is generally the Company’s

intention to hold these investments, not to realize them;

and (b) taxes that would apply on the distribution of unremitted earnings from

foreign subsidiaries, as these are retained for reinvestment in the Group.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Company accounts for uncertain tax positions in accordance with ASC 740-10 two-step approach to recognizing and measuring uncertain tax

The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of

available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be

sustained on audit, including resolution of any related appeals or litigation processes.

The second step is to measure the tax benefit

as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.

The Company and its subsidiaries account for income taxes in accordance with ASC 740, “Income Taxes”.

ASC 740 prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent 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.

Tax has not been recorded for (a) taxes that would apply in the event of disposal of investments in subsidiaries, as it is generally the Company’s intention to hold these investments, not to realize them;

and (b) taxes that would apply on the distribution of unremitted earnings from foreign subsidiaries, as these are retained for reinvestment in the Group.

The Company accounts for uncertain tax positions in accordance with ASC 740-10 two-step approach to recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes.

The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative probability) likely to be realized upon ultimate settlement.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

New accounting pronouncements not yet effective:

November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”

(“ASU 2023-07”).

Additional segment reporting information required by ASU 2023-07 includes:

disclosing the title and position

of the individual or the name of the group or committee identified as the CODM, provide in interim periods all disclosures about a reportable

segment’s profit or loss and assets that are currently required annually, and additional disclosures regarding significant segment

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.

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

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

Improvements to Income Tax Disclosures” (“ASU 2023-09”).

ASU 2023-09 requires additional categories of information about federal, state and foreign income taxes to be included

in effective tax rate reconciliation disclosure.

ASU 2023-09 requires additional categories of information about federal, state and foreign income taxes to be included in effective tax rate reconciliation disclosure.

Additionally, the newly added categories also apply to the income taxes paid disclosure.

1 unchanged sentence

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

Since ASU 2023-09 addresses only disclosures, the adoption of ASU 2023-09 is not expected to have a significant impact on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income (loss) Statement Expenses" (“ASU 2024-03”).

ASU 2024-03 requires disaggregation of certain costs and expenses included in each relevant expense caption on the Company's consolidated income (loss) statements in a separate note to the financial statements at each interim and annual reporting period, including amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization.

ASU 2024-04 is effective fiscal years beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2024-03.

Recently issued and adopted pronouncements:

time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting

bodies are adopted by the Company as of the specified effective date.

The Company believes that the impact of recently issued or newly

effective standards were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements

or are not expected to have a material impact on the condensed consolidated financial statements.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (“ASU 2023-07”).

Additional segment reporting information required by ASU 2023-07 includes:

disclosing the title and position of the individual or the name of the group or committee identified as the CODM, provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually, and additional disclosures regarding significant segment expenses.

Effective December 31, 2024, the Company has adopted this standard retroactively.

The adoption of this ASU affects only disclosures, with no impacts to the Company's financial condition and results of operations (see Note 28).

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

BUSINESS COMBINATIONS

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

("Hark"), a UK-based energy IoT company

for the commercial and industrial ("C&I") sector for approximately $ 18,346

in cash, out of which $ 1,245

held by the company for a period of one year.

Hark's platform is expected to enable the Company to offer its commercial and industrial

customers expanded capabilities in energy management and connectivity, including identification of potential energy savings, detection

of anomalies in assets’ energy consumption, and optimization of energy usage and carbon emissions through load orchestration and

storage control.

to ASC 805, "Business Combination", the Company accounted for the Hark acquisition as a business combination using the acquisition method

of accounting.

Identifiable assets and liabilities of Hark, including identifiable intangible assets, were recorded based on their estimated

fair values as of the date of the closing of the acquisition.

The excess of the purchase price over the fair value of the net assets acquired

was recorded as goodwill.

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

of the acquisition date.

Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future

cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins.

The Company’s

management believes the fair values recognized for the assets acquired and the liabilities assumed were based on reasonable estimates

and assumptions.

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

In January 2023, the Company completed an investment of $ 5,500 in the common stock of Wevo, an Israel-based software startup, specializing in EV charging optimization and management for sites with large quantities of EV chargers, which represented 34.8 % of Wevo's outstanding shares.

On April 1, 2024, the Company completed its acquisition of all of Wevo's remaining outstanding shares for approximately $ 13,331 in cash.

Pursuant to ASC 805, "Business Combination", the Company accounted for the Wevo acquisition as a business combination, using the acquisition method of accounting.

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

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

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

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

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

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 initial 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)

Net liabilities assumed

Identified intangible

relationships

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

generated from this acquisition was primarily attributable to the assembled workforce and expected post-acquisition synergies from combining

Hark platform with the Company's product offering to its commercial and industrial customers.

All of the Goodwill was assigned to the

Solar segment (see Note 21).

Goodwill was not deductible for tax purposes.

The fair values of technology, customer relationships and trade

name were derived by applying the multi-period excess earnings method, with-and-without method, and the relief-from-royalty method, respectively,

all of which are under the income approach whose underlying inputs are considered Level 3.

The fair values assigned to assets acquired

and liabilities assumed were based on management's estimates and assumptions.

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

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

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Identified intangible assets:

Customer relationships

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

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

All of the Goodwill was assigned to the Solar segment (see Note 28).

Goodwill is not deductible for tax purposes.

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

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

The results of Wevo operations 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 statements of income (loss).

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

INVESTMENT IN PRIVATELY-HELD COMPANY

In January 2024, the Company completed an investment of $ 6,075 in the preferred stock of Ivy Energy, Inc, ("Ivy"), a privately-held U.S.

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 December 31, 2024.

In 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, under ASC 321, Equity Securities, 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.

The Company accounted for its investment in Ampeers using the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures.

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

As of December 31, 2024 and December 31, 2023 the carrying value of investments in privately-held companies was $ 9,185 and $ 9,241 , 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).

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

MARKETABLE SECURITIES

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

The following is a summary of available-for-sale marketable securities at December 31, 2024:

Amortized cost

Gross unrealized gains

Gross unrealized losses

Matures within one year:

1 unchanged sentence

Treasury securities

Government agency

Government securities

Government agency securities

Matures after one year:

Corporate bonds

Treasury securities

Government agency

Government securities

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

Government agency securities

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

Amortized cost

Gross unrealized gains

Gross unrealized losses

Matures within one year:

1 unchanged sentence

Treasury securities

Government agency securities

Government securities

2 unchanged sentences

Treasury securities

Government agency securities

Government securities

from maturity of available-for-sale marketable securities during the years ended December 31, 2023, 2022 and 2021, were $ 277,382 ,

and $ 187,375 ,

respectively.

from sales of available-for-sale marketable securities during the year ended December 31, 2023 were $ 2,807 ,

which led to realized losses of $ 125 .

from sales of available-for-sale marketable securities during the year ended December 31, 2022 were $ 29,236 ,

which led to realized losses of $ 434 .

from sales of available-for-sale marketable securities during the year ended December 31, 2021 were $ 14,813 ,

which led to realized losses of $ 16 .

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Proceeds from maturity of available-for-sale marketable securities during the years ended December 31, 2024, 2023 and 2022, were $ 719,454 , $ 277,382 and $ 201,974 , respectively.

Proceeds from sales of available-for-sale marketable securities during the year ended December 31, 2024 were $ 114,564 , which led to realized gains of $ 2,966 .

Proceeds from sales of available-for-sale marketable securities during the year ended December 31, 2023 were $ 2,807 , which led to realized losses of $ 125 .

Proceeds from sales of available-for-sale marketable securities during the year ended December 31, 2022 were $ 29,236 , which led to realized losses of $ 434

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

INVENTORIES, NET

of December 31,

As of December 31,

Raw materials

1 unchanged sentence

Finished goods

Company recorded inventory write-downs of $ 46,369 ,

for the years ended December 31, 2023, 2022 and 2021, respectively.

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.

During the year ended December 31, 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 were necessary, primarily due to a slowdown in the demand for the Company's products , 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).

The Company recorded inventory write-downs of $ 738,757 , $ 46,369 and $ 10,170 for the years ended December 31, 2024, 2023 and 2022, respectively.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

of December 31,

Vendor non-trade

receivables 1

As of December 31,

Vendor non-trade receivables 1

Government authorities

Loan receivables 2

Interest from marketable

Prepaid expenses

Total prepaid expenses

and other current assets

Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products, components and other

testing equipment for the Company.

Loan receivables, net

Assets held for sale

Total prepaid expenses and other current assets

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

The Company purchases these components directly from other suppliers.

The Company does not reflect

the sale of these components to the contract manufacturers in its revenues.

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 loans bear interest that represent market interest rate.

The amortized cost of the loan receivable approximates

its fair value as of December 31, 2023.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

PROPERTY, PLANT AND EQUIPMENT, NET

of December 31,

and peripheral equipment

Office furniture

and equipment

and testing equipment

and equipment

construction and payments on account

Gross property,

plant and equipment

Less - accumulated

Total property,

plant and equipment, net

expenses for the years ended December 31, 2023, 2022 and 2021, were $ 49,544 ,

and $ 29,359 ,

respectively.

the year ended December 31, 2023, impairment loss of $ 25,168

was recorded as a result of Company's decision to discontinue its LCV activity and other restructuring efforts related

to the Solar segment (see Note 23).

losses for the years ended December 31, 2022, and 2021, were $ 649

and $ 2,113 ,

respectively.

following table summarizes the Company’s lease-related assets and liabilities recorded in the consolidated balance sheets:

Classification

on the consolidated Balance Sheet

Operating lease assets,

net of lease incentive obligation

lease right-of use assets, net

As of December 31,

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

During the year ended 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.

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.

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.

For the years ended December 31, 2024, 2023 and 2022, the Company recorded impairment and abandonment by disposal of property, plant, and equipment in the amount of $ 224,772 , $ 25,168 , and $ 649 , respectively, under Other operating expense (income), net in the consolidated statements of income (loss) section.

Depreciation expenses for the years ended December 31, 2024, 2023 and 2022, were $ 51,966 , $ 49,544 and $ 40,580 , respectively.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

The following table summarizes the Company’s lease-related assets and liabilities recorded in the consolidated balance sheets:

As of December 31,

Classification on the consolidated Balance Sheet

Operating lease assets, net of lease incentive obligation

Operating lease right-of use assets, net

Finance lease assets

plant and equipment, net

Property, plant and equipment, net

Total lease assets

Operating leases short

expenses and other current liabilities

Finance leases short

expenses and other current liabilities

Operating leases long

lease liabilities

Operating leases short term

Accrued expenses and other current liabilities

Finance leases short term

Accrued expenses and other current liabilities

Operating leases long term

Operating lease liabilities

Finance leases long term

lease liabilities

Finance lease liabilities

Total lease liabilities

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

following table presents certain information related to the operating and finance leases:

ended December 31,

average remaining lease term in years

average annual discount rate

average remaining lease term in years

average annual discount rate

following table presents supplemental cash flows information related to the lease costs for operating and finance leases:

ended December 31,

Cash paid for amounts

included in measurement of lease liabilities:

cash flows for operating leases

cash flows for finance leases

following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years of the operating

and finance lease liabilities recorded in the consolidated balance sheets:

lease payments

amount of lease payments representing interest

value of future lease payments

current lease liabilities

lease liabilities

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The following table presents certain information related to the operating and finance leases:

Year ended December 31,

Finance leases:

Finance lease cost

Weighted average remaining lease term in years

Weighted average annual discount rate

Operating leases:

Operating lease cost

Weighted average remaining lease term in years

Weighted average annual discount rate

The following table presents supplemental cash flows information related to the lease costs for operating and finance leases:

Year ended December 31,

Cash paid for amounts included in measurement of lease liabilities:

Operating cash flows for operating leases

Operating cash flows for finance leases

Financing cash flows for finance leases

The following table reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years of the operating and finance lease liabilities recorded in the consolidated balance sheets:

Operating Leases

Total lease payments

Less amount of lease payments representing interest

Present value of future lease payments

Less current lease liabilities

Long-term lease liabilities

As of December 31, 2024, the Company has a lease commitment for the initial term of the lease of approximately $ 255,500 for new offices in Israel, which has not yet commenced.

The lease commitment is expected to commence during 2026.

The initial term of the lease agreement is 15 years commencing on the transfer of possession, and with an option to extend the lease for additional periods of up to 10 years , subject to the conditions of the lease agreement.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

INTANGIBLE ASSETS, NET

October 2023, the Company has decided to cease the use of SolarEdge Korea's (formerly Kokam) trade name and solar technology, as such,

the Company recognized an impairment charge of $ 4,798

and the assets were disposed.

June 2022, the Company decided to discontinue its stand-alone uninterrupted power supply activities or UPS (“Critical Power”).

The Company recorded a loss in the amount of $ 1,226

pertaining to Critical Power's current technology and customer relationships.

October 2022, following the e-Mobility and Automation Machines reporting unit’s analysis, an impairment test for 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.

As a result, the Company recorded a current technology impairment

related to e-Mobility's asset group and a $ 245 trade

name impairment related to Automation Machines' asset group.

impairments are recorded under Other operating expenses, net in the consolidated statement of income (see Note 23) additional information.

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

of December 31,

Intangible assets

with finite lives:

relationships

Gross intangible

Less - accumulated

Total intangible

expenses for the years ended December 31, 2023, 2022 and 2021, were $ 7,652 ,

and $ 10,176 ,

respectively.

future amortization expenses of intangible assets as of December 31, 2023 are as follows:

During the year ended December 31, 2024, an impairment test for the Solar and Energy Storage asset group's long-lived assets was performed.

The Company's impaired and disposed intangible assets in the amount of $ 22,438 , 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 December 31, 2024, and 2023:

As of December 31, 2024

As of December 31, 2023

Gross carrying amount

Accumulated amortization

Net carrying amount

Gross carrying amount

Accumulated amortization

Net carrying amount

Current technology

Customer relationships

Assembled workforce

Amortization expenses for the years ended December 31, 2024, 2023 and 2022, were $ 7,899 , $ 7,652 and $ 9,096 , respectively.

Expected future amortization expenses of intangible assets as of December 31, 2024 are as follows:

2030 and thereafter

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

is tested for impairment annually in the fourth quarter of each year and is examined between annual tests if an event occurs or circumstances

change that would indicate the carrying amount may be impaired.

Company completed its annual goodwill impairment test in the fourth quarter of 2023 for all reporting units and determined the following:

to impairment indicators of the solar reporting unit, which include, among other things, a deterioration in the environment in which the

Company operates, a qualitative assessment of the Company’s solar reporting unit was performed in order to determine whether it

is necessary to conduct the quantitative goodwill impairment test.

Based on the results, the Company believes that it is more likely than

not that the fair value of said reporting unit is greater than its carrying value and therefore a quantitative goodwill impairment test

was not performed, and no goodwill impairment was recorded for the year ended December 31, 2023.

to impairment indicators of the Energy Storage reporting unit, which include, among other things, a decline in planned revenue and earnings

compared with the projected results, the Company performed a quantitative goodwill impairment test and determined that the fair value

of this reporting unit is greater than its carrying value and therefore no goodwill impairment was recorded for the year ended December

Company completed its annual goodwill impairment test in the fourth quarter of 2022 for all reporting units and determined the following:

June 2022, the Company decided to discontinue its stand-alone Critical Power activities.

The Company recorded an impairment in the amount

pertaining to Critical Power's goodwill.

to impairment indicators of the e-Mobility reporting unit, which include, among other things, a shift in the Company's strategy that may

result in a decline of the projected growth forecasted at the time of acquisition, the Company performed a quantitative goodwill impairment

As a result, the Company recorded goodwill impairment in the amount of $ 80,534

for the year ended December 31, 2022, which is presented under Goodwill impairment in the consolidated statement of income.

addition, a quantitative test has also been performed for the Automation Machines reporting unit due to indicators of impairment identified,

which include, among other things, managerial changes and a decline in the overall financial performance compared with past projections.

As a result, the Company recorded goodwill impairment in the amount of $ 6,788 ,

for the year ended December 31, 2022, which was recorded under Goodwill impairment in the consolidated statement of income.

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 decline in fair value of the e-Mobility and Automation Machines

reporting units was primarily resulted from an increased discount rate and reduced estimated future cash flows.

The following summarizes

the goodwill activity for the years ended December 31, 2023, and 2022:

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(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.

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 was 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.

As of December 31, 2024 the Company did not identify any additional indicators of impairment.

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.

The following summarizes the goodwill activity for the years ended December 31, 2024, and 2023:

Energy Storage

Goodwill at December 31, 2022

Changes during the year:

currency adjustments

Foreign currency adjustments

Goodwill at December 31, 2023

Changes during the year:

currency adjustments

Impairment losses

Foreign currency adjustments

Goodwill at December 31, 2024

of December 31, 2023 and December 31, 2022 there were $ 90,104

accumulated goodwill impairment losses.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

As of December 31, 2024 and December 31, 2023 there were $ 92,355 and $ 90,104 accumulated goodwill impairment losses, respectively.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

OTHER LONG TERM ASSETS

of December 31,

As of December 31,

Cloud computing arrangements

Investments in privately held companies

Severance pay fund

Investments in privately

held companies 1

Loan receivables

Prepaid expenses and

Total other long term

January 2023, the Company completed an investment of $ 5,500

in the common stock of a privately-held company which represents 34.8 %

of its outstanding shares.

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

The Company's share of net

loss for the year ended December 31, 2023 was $ 350 .

April and July of 2023, the Company completed a total investment of $ 2,500

in the preferred stock of a privately-held company which represents 4.5 %

of its outstanding shares on a fully diluted basis.

The Company accounted for this investment as an equity investment without readily

determinable fair values.

No impairment or other adjustments related to observable price changes in orderly transactions for identical

or similar investments were identified.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Prepaid expenses and other

Total other long term assets

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

dollars (“USD”) for NIS and

Euro ("EUR") for USD in the amounts of approximately NIS 541

million and EUR 60

million, respectively.

fair values of outstanding derivative instruments were as follows:

sheet location

assets of options and forward contracts:

cash flow hedges

expenses and other current assets

Non-designated

expenses and other current assets

derivative assets

liabilities of options and forward contracts:

cash flow hedges

expenses and other current liabilities

Non-designated

expenses and other current liabilities

derivative liabilities

(losses) on derivative instruments are summarized below:

ended December 31,

exchange contracts

As of December 31, 2024, the Company entered into forward contracts and put and call options to sell USD both, in the amount of NIS 100 million.

The fair values of outstanding derivative instruments were as follows:

Balance sheet location

December 31, 2024

December 31, 2023

Derivative assets of options and forward contracts:

Designated cash flow hedges

Prepaid expenses and other current assets

Non-designated hedges

Prepaid expenses and other current assets

Total derivative assets

Gains (losses) on derivative instruments are summarized below:

Year ended December 31,

Affected line item

Foreign exchange contracts

Non Designated Hedging Instruments

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

Designated Hedging Instruments

Statements of Income - Financial income (expense), net

Hedging Instruments

Statements of Comprehensive Income - Cash flow hedges

Note 21 for information regarding gains (losses) from designated hedging instruments reclassified from accumulated other comprehensive

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Consolidated Statements of Comprehensive Income - Cash flow hedges

See Note 22 for information regarding gains (losses) from designated hedging instruments reclassified from accumulated other comprehensive loss.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

FAIR VALUE MEASUREMENTS

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

valuation technique.

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

Marketable securities and foreign currency derivative contracts are classified within level 2 due to these assets being valued by alternative

pricing sources and models utilizing market observable inputs.

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

the fair value hierarchy:

value measurements as of

Value Hierarchy

Cash and cash equivalents:

market mutual funds

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

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

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

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

Fair value measurements as of

Cash, cash equivalents and restricted cash:

Money market mutual funds

Restricted cash

Derivative instruments

Short-term marketable

Short-term marketable securities:

Corporate bonds

Treasury securities

1 unchanged sentence

Government securities

Long-term marketable

Long-term marketable securities:

Corporate bonds

Treasury securities

1 unchanged sentence

Government securities

Derivative instruments

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

in the Company’s product warranty obligations for the years ended December

31, 2023 , 2022 and 2021 were as follows:

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 10 and 11).

The inputs to these models are considered Level 3.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

WARRANTY OBLIGATIONS

Changes in the Company’s product warranty obligations for the years ended December 31, 2024, 2023 and 2022 were as follows:

Year ended December 31,

Balance, at the beginning of the period

4 unchanged sentences

Long term portion

revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments

received from customers for the Company’s products.

Deferred revenues are classified as short-term and long-term deferred revenues

based on the period in which revenues are expected to be recognized.

changes in the balances of deferred revenues during the period are as follows:

Balance, at the beginning

of the period

DEFERRED REVENUES

Deferred revenues consist of deferred cloud-based monitoring services, communication services, warranty extension services and advance payments received from customers for the Company’s products and other services.

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

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

Year ended December 31,

Balance, at the beginning of the period

Revenue recognized

Increase in deferred

revenues and customer advances

Balance, at the end of

Increase in deferred revenues and customer advances

Balance, at the end of the period

Less current portion

Long term portion

following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied

(or partially unsatisfied) as of December 31, 2023:

deferred revenues

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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 December 31, 2024:

Total deferred revenues

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

4 unchanged sentences

Accrual for sales incentives

Finance lease

Total accrued expenses and other current liabilities

CONVERTIBLE SENIOR NOTES

September 25, 2020, the Company sold $ 632,500

aggregate principal amount of its 0.00 %

convertible senior notes due 2025 (the “Notes”).

The Notes were sold pursuant to an indenture, dated September 25, 2020 (the

“Indenture”), between the Company and U.S.

Bank National Association, as trustee (the “Trustee”).

not bear regular interest and mature on September

15, 2025 , unless earlier repurchased or converted in accordance with their terms.

The Notes are general senior unsecured

obligations of the Company.

may convert their Notes prior to the close of business on the business day immediately preceding June 15, 2025 in multiples of $ 1,000

principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending

on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading

days (whether or not consecutive) during the period of 30

consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than

or equal to 130% of the conversion price on each applicable trading day;

(2) during the five-business-day period after any five consecutive

trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of that five consecutive trading

day period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading

On September 25, 2020, the Company sold an aggregate principal amount of $ 632,500 of its 0.00 % convertible senior notes, due 2025 (the "Notes 2025").

The Notes 2025 were sold pursuant to an indenture, dated September 25, 2020 (the “Indenture”), between the Company and U.S.

Bank National Association, as trustee.

The Notes 2025 do not bear regular interest and mature on September 15, 2025 , unless earlier repurchased or converted in accordance with their terms.

The Notes 2025 are general senior unsecured obligations of the Company.

Holders may convert their Notes 2025 prior to the close of business on the business day immediately preceding June 15, 2025 in multiples of $1,000 principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2) during the five-business-day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes 2025 for each trading day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;

or (3) upon the occurrence of specified corporate events as described in the Indenture.

In addition, holders may convert their Notes,

in multiples of $1,000 principal amount, at their option at any time beginning on or after June 15, 2025, and prior to the close of business

on the second scheduled trading day immediately preceding the stated maturity date of the Notes, without regard to the foregoing circumstances.

The initial conversion rate for the Notes was 3.5997

shares of common stock per $ 1,000

principal amount of Notes, which is equivalent to an initial conversion price of approximately $ 277.80

per share of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture.

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.

addition, upon the occurrence of a fundamental change (as defined in the Indenture), holders of the Notes may require the Company to repurchase

all or a portion of their Notes, in multiples of $ 1,000

principal amount, at a repurchase price of 100% of the principal amount of the Notes, plus any accrued and unpaid special interest, if

any, to, but excluding, the repurchase date.

If certain fundamental changes referred to as make-whole fundamental changes occur, the conversion

rate for the Notes may be increased.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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

of December 31,

issuance costs

carrying amount

the years ended December 31, 2023, 2022 and 2021 the Company recorded amortized debt issuance costs related to the Notes in the amount

and $ 2,903 ,

respectively.

of December 31, 2023, the issuance costs of the Notes will be amortized over the remaining term of approximately 1.70

annual effective interest rate of the Notes is 0.47 %.

of December 31, 2023, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $ 577,156 .

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.

of December 31, 2023, the if-converted value of the Notes did not exceed the principal amount.

In addition, holders may convert their Notes 2025, in multiples of $1,000 principal amount, at their option at any time beginning on or after June 15, 2025, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the Notes 2025, without regard to the foregoing circumstances.

The initial conversion rate for the Notes 2025 was 3.5997 shares of common stock per $1,000 principal amount of Notes 2025, which is equivalent to an initial conversion price of approximately $277.80 per share of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture.

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), holders of the Notes 2025 may require the Company to repurchase all or a portion of their Notes 2025, in multiples of $ 1,000 principal amounts, at a repurchase price of 100% of the principal amount of the Notes 2025, plus any accrued and unpaid special interest to, but excluding the fundamental change repurchase date.

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 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.

Bank National Association, as trustee.

The Notes 2029 will bear interest at a rate of 2.25% per year, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2025.

The Notes 2029 mature on July 1, 2029 , unless repurchased, redeemed or converted in accordance with their terms prior to such date.

The Notes 2029 are general senior unsecured obligations of the Company.

Holders may convert their Notes 2029 at any time prior to the close of business on the business day immediately preceding April 1, 2029 in multiples of $ 1,000 principal amount, only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2024 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes 2029 for each trading day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day;

or (3) upon the occurrence of specified corporate events or if the Company provides a notice of redemption as described in the Indenture 2029.

In addition, holders may convert their Notes 2029, in multiples of $1,000 principal amount, at their option at any time beginning on or after April 1, 2029, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the Notes 2029, without regard to the foregoing circumstances.

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.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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 2029 to be redeemed, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date.

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 partial repurchase of Notes 2025.

The Company accounts for the Notes 2029 at amortized cost, as a single unit of account on the balance sheet.

The carrying value of the liability is represented by the face amount of the Notes 2029, less debt issuance costs, adjusted for any amortization of issuance costs.

Issuance costs are being amortized as interest expense over the term of the Notes 2029, using the effective interest rate method.

The capped call transactions are expected generally to reduce the potential dilution to the common stock upon any conversion of the Notes 2029 and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes 2029, as the case may be, in the event that the market price per share of common stock, as measured under the terms of the capped call transactions, is greater than the strike price of the capped call transactions.

The strike price initially corresponds to the conversion price of the Notes and is subject to customary anti-dilution adjustments.

If, however, the market price per share of common stock exceeds $ 48.84 , the initial cap price of the capped call transactions, there would nevertheless be unmitigated dilution and/or no offset of any cash payments, in each case, attributable to the amount by which the market price of the common stock exceeds the cap price.

The cap price is subject to certain customary adjustments under the terms of the capped call transactions.

The capped call transactions are considered a freestanding instrument as they were entered into separately and apart from Notes 2029.

In addition, the conversion or redemption of the Notes 2029 would not automatically result in the exercise of the capped call.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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 consolidated balance sheets.

On 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.

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.

The Convertible Senior Notes consisted of the following as of December 31, 2024 and 2023:

As of December 31,

Unamortized issuance costs

Net carrying amount Notes 2025

Unamortized issuance costs

Net carrying amount Notes 2029

Total notes carrying amount

Costs related to the Notes 2025 and the Notes 2029 were as follows:

Year ended December 31,

Debt issuance cost

Contractual interest expense

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

As of December 31, 2024, the unamortized issuance costs of the Notes 2025 and Notes 2029 will be amortized over the remaining term of approximately 8 months and 4.5 years, respectively.

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

and 2.75 %, respectively.

As of December 31, 2024, the estimated fair value of Notes 2025 and Notes 2029, which the Company has classified as Level 2 financial instruments, is $ 324,913 and $ 241,363 , respectively.

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

As of December 31, 2024, the if-converted value of the Notes 2025 and Notes 2029 did not exceed the principal amount.

OTHER LONG TERM LIABILITIES

of December 31,

As of December 31,

Tax liabilities

Accrued severance pay

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

STOCK CAPITAL

Common stock rights:

stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each

share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions

out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation

of the Company.

Common stock confers upon its holders the right to receive notice of, and to participate in, all general meetings of the Company, where each share of common stock shall have one vote for all purposes, to share equally, on a per share basis, in bonuses, profits, or distributions out of fund legally available therefor, and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.

Secondary public offering:

March 17, 2022, the Company offered and sold 2,300,000

shares of the Company’s common stock, at a public offering price of $ 295.00

The shares of Common Stock were issued and sold in a registered offering pursuant to the underwriting agreement dated March

17, 2022, among the Company, Goldman Sachs & Co.

On March 17, 2022, the Company offered and sold 2,300,000 shares of the Company’s common stock, at a public offering price of $ 295.00 per share.

The shares of Common Stock were issued and sold in a registered offering pursuant to the underwriting agreement dated March 17, 2022, among the Company, Goldman Sachs & Co.

Morgan Securities LLC, and Morgan Stanley & Co.

LLC (the “Underwriting

All of the offered shares were issued at closing, including 300,000

shares of Common Stock that were issued and sold pursuant to the underwriters’ option to purchase additional shares under the Underwriting

Agreement, which was exercised in full on March 18, 2022.

net proceeds to the Company were $ 650,526

after deducting underwriters' discounts of $ 27,140

and commissions of $ 834 .

LLC (the “Underwriting Agreement”).

All of the offered shares were issued at closing, including 300,000 shares of Common Stock that were issued and sold pursuant to the underwriters’ option to purchase additional shares under the Underwriting Agreement, which was exercised in full on March 18, 2022.

The net proceeds to the Company were $ 650,526 after deducting underwriters' discounts of $ 27,140 and commissions of $ 834 .

Equity Incentive Plans:

Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007.

2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder.

All outstanding awards

will continue to be governed by their existing terms and 379,358

available options for future grants were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and

are reserved for future issuances under the 2015 plan.

The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007.

The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder.

All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grants were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan.

The 2015 Plan became effective upon the consummation of the IPO.

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 December 31, 2023, a total of 20,853,755

shares of common stock were reserved for issuance pursuant to stock awards under the 2015 Plan (the “Share Reserve”), an aggregate

of 11,042,805

shares are still available for future grants.

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 .

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.

2021, the Company has also committed to issuing additional shares, which are subject to resale registration rights and which carry certain

performance conditions (including business performance targets and a continued service relationship with the Company) and are treated

as PSUs for accounting purposes.

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.

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.

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 December 31, 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 11,340,502 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 .

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

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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.

Additionally, the Company granted PSUs, based on the average trading price of the Company’s common stock based on the 30-Day Price, over a three year performance period, which are expected to vest if certain 30-Day Price levels are met.

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.

The Company recognizes such compensation expenses on an accelerated vesting method.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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 December 31, 2023, an aggregate of 8,617,974

options are still available for future grants under the 2015 Plan.

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

average exercise price

average remaining contractual term in years

intrinsic Value

Outstanding as

of December 31, 2022

Outstanding as

of December 31, 2023

Vested and expected

to vest as of December 31, 2023

Exercisable as

of December 31, 2023

intrinsic value is the amount by which the closing price of the Company’s common stock on December 31, 2023 of $ 93.60

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.

total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 3,572 ,

and $ 65,668 ,

respectively.

options were granted in 2023.

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

average grant date fair value

as of January 1, 2023

as of December 31, 2023

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

average grant date fair value

as of January 1, 2023

as of December 31, 2023

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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 December 31, 2024, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

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

Number of options

Weighted average exercise price

Weighted average remaining contractual term in years

Aggregate intrinsic Value

Outstanding as of December 31, 2021

Forfeited or expired

Outstanding as of December 31, 2022

Vested and expected to vest as of December 31, 2022

Exercisable as of December 31, 2022

Outstanding as of December 31, 2022

Outstanding as of December 31, 2023

Vested and expected to vest as of December 31, 2023

Exercisable as of December 31, 2023

Outstanding as of December 31, 2023

Forfeited or expired

Outstanding as of December 31, 2024

Vested and expected to vest as of December 31, 2024

Exercisable as of December 31, 2024

The intrinsic value is the amount by which the closing price of the Company’s common stock on December 31, 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.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 750 , $ 3,572 , and $ 37,948 , respectively.

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

Weighted average grant date fair value

Unvested as of January 1, 2022

Unvested as of December 31, 2022

Unvested as of December 31, 2023

Unvested as of December 31, 2024

Employee Stock Purchase Plan:

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

As of December 31, 2023, total of 4,150,380

shares were reserved for issuance under this plan.

The number of shares of common stock reserved for issuance under the ESPP will increase

automatically on January 1st 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

However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion,

including a reduction to zero.

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.

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.

of December 31, 2023, 938,164

shares of common stock had been purchased under the ESPP.

of December 31, 2023, 3,212,216

shares of common stock were available for future issuance under the ESPP.

accordance with ASC No.

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

As of December 31, 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 1st 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.

However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.

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.

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 December 31, 2024, 1,798,312 shares of common stock had been purchased under the ESPP.

As of December 31, 2024, 2,839,711 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 CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Stock-based compensation expenses:

Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income for the

years ended December 31, 2023, 2022 and 2021, as follows:

ended December 31,

Stock-based compensation

and development

and marketing

and administrative

Total stock-based

compensation expenses

Stock-based compensation

long-term assets

Total stock-based

compensation capitalized

total tax benefit associated with share-based compensation for the year ended December 31, 2023, 2022 and 2021 was $ 27,551 ,

and $ 19,113 ,

respectively.

The tax benefit realized from share-based compensation for the year ended December 31, 2023, 2022 and 2021 was $ 8,866 ,

and $ 13,379 ,

respectively.

of December 31, 2023, there were total unrecognized compensation expenses in the amount of $ 332,367

related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized during the period from

January 1, 2024 through November 30, 2027.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income (loss) for the years ended December 31, 2024, 2023 and 2022, as follows:

Year ended December 31,

Stock-based compensation expenses:

Cost of revenues

Research and development

Sales and marketing

General and administrative

Total stock-based compensation expenses

Stock-based compensation capitalized:

Other long-term assets

Total stock-based compensation capitalized

For the year ended December 31, 2024, no amounts were recorded in regard to tax benefits associated with share-based compensation.

The total tax benefits associated with share-based compensation for the years ended December 31, 2023 and 2022 were $ 27,551 and $ 7,747 , respectively.

The tax benefit realized from share-based compensation for the years ended December 31, 2023 and 2022 was $ 8,866 and $ 10,171 , respectively.

As of December 31, 2024, there were total unrecognized compensation expenses in the amount of $ 234,913 related to non-vested equity-based compensation arrangements granted.

These expenses are expected to be recognized during the period from January 1, 2025 through February 28, 2029.

Repurchase of Common Stock:

On November 1, 2023, the Company announced that the Company's Board of Directors approved a share repurchase program which authorizes the repurchase of up to $ 300,000 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 share repurchase program expired on December 31, 2024.

During year ended December 31, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $ 66.63 per share for a total of $ 50,194 .

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

COMMITMENTS AND CONTINGENT LIABILITIES

of December 31, 2023, contingent liabilities exist regarding guarantees in the amounts of $ 6,123

in respect of office rent lease agreements and customs and other transactions, respectively.

As of December 31, 2024, contingent liabilities exist regarding guarantees in the amounts of $ 133,907 , $ 11,071 and $ 1,558 in respect of securing projects with customers, office rent lease agreements and other transactions, respectively.

Contractual purchase obligations:

Company has contractual obligations to purchase goods and raw materials.

These contractual purchase obligations relate to inventories

and other purchase orders, which cannot be canceled without penalty.

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.

of December 31, 2023, the Company had non-cancelable purchase obligations totaling approximately $ 1,041,253 ,

out of which the Company recorded a provision for loss in the amount of $ 24,963 .

of December 31, 2023, the Company had contractual obligations for capital expenditures totaling approximately $ 95,499 .

The Company has contractual obligations to purchase goods and raw materials.

These contractual purchase obligations relate to inventories and other purchase orders, which cannot be canceled without penalty.

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 December 31, 2024, the Company had non-cancelable purchase obligations totaling approximately $ 390,270 , out of which the Company recorded a provision for loss in the amount of $ 37,404 .

As of December 31, 2024, the Company had contractual obligations for capital expenditures totaling approximately $ 35,021 .

These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing process.

Legal claims:

time to time, the Company may be involved in various claims and legal proceedings.

The Company reviews the status of each matter and assesses

its potential financial exposure.

If the potential loss from any claim or legal proceeding is considered probable and the amount can be

reasonably estimated, the Company accrues a liability for the estimated loss.

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.

November 3, 2023, Daphne Shen, a purported stockholder of the Company, filed a proposed class action complaint for violation of federal

securities laws, individually and putatively on behalf of all others similarly situated, in the U.S District Court of the Southern District

of New York against the Company, the Company’s CEO and the Company’s CFO.

The complaint alleges violations of Section 10(b)

and Rule 10b-5 of the Exchange Act, as well as violations of Section 20(a) of the Exchange Act against the individual defendants.

complaint seeks class certification, damages, interest, attorneys’ fees, and other relief.

On December 13, 2023, Javier Cascallar

filed a similar proposed class action.

On February 7, 2024, the Court consolidated the two actions, and appointed co-lead plaintiffs and

lead counsel.

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

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.

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.

In December 2023 the court of Milan, rendered a decision ordering SolarEdge to pay, in favor of each plaintiff, the difference

between the price paid ( 6

Euro per share) and 6.44

Euro per share, i.e.

euros per share.

The Company is currently evaluating whether to appeal this decision.

of December 31, 2023, the Company recorded an accrual of $ 2,011

for legal claims which was recorded under accrued expenses and other current liabilities.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

From time to time, the Company may be involved in various claims and legal proceedings.

The Company reviews the status of each matter and assesses its potential financial exposure.

If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.

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.

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

The complaint alleges violations of Section 10(b) and Rule 10b-5 of the Exchange Act, as well as violations of Section 20(a) of the Exchange Act against the individual defendants.

The complaint seeks class certification, damages, interest, attorneys’ fees, and other relief.

On December 13, 2023, Javier Cascallar filed a similar proposed class action.

On January 2, 2024, six purported lead plaintiffs filed motions in the Shen litigation seeking to consolidate the Cascallar and Shen litigations and appoint lead plaintiffs and lead counsel pursuant to the procedures of the Private Securities Litigation Reform Act of 1995.

On February 7, 2024, the Court consolidated the two actions (the "Consolidated Securities Litigation"), and appointed co-lead plaintiffs (the “Plaintiffs”) and lead counsel.

On April 22, 2024, the co-lead Plaintiffs filed an amended complaint adding two additional officers.

The amended complaint made substantially similar allegations and claims.

Defendants moved to dismiss the amended complaint on July 15, 2024 (the “Motion”), and the motion was fully briefed as of September 17, 2024.

On December 4, 2024, the Court issued an order granting in part the Motion, dismissing all allegations except those relating to two purported misstatements, characterizing inventory levels as low.

The Court allowed the Plaintiffs to again amend their complaint, and they filed a Second Amended Complaint on January 3, 2025.

On February 10, 2025, Defendants moved to dismiss the Second Amended Complaint insofar as it attempts to resurrect any of the allegations dismissed in the Court’s December 4 order.

Discovery remains stayed pending the Court’s ultimate decision on the motion to dismiss the Second Amended Complaint.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

On March 15, 2024, Abdul Hirani filed a purported derivative complaint in the United States District Court for the Southern District of New York against certain current and former SolarEdge 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.

The Hirani complaint makes largely the same allegations as those in the abovementioned securities litigation, namely, that the Company failed to disclose information about SolarEdge’s 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 Hirani complaint contends that defendants’ role in allowing those alleged misstatements to be made constitutes (i) breach of fiduciary duty, (ii) aiding and abetting breach of fiduciary duty, (iii) unjust enrichment, (iv) waste of corporate assets, and (v) securities fraud under Section 10(b) of the Exchange Act.

The complaint seeks compensatory and punitive damages, interest, attorneys’ fees, and other relief.

On June 10, 2024, Jonathan 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 as well as Lior Danziger and J.B.

The Blaufarb complaint makes largely the same allegations as those in the complaint in the abovementioned securities litigation and seeks declaratory relief, corporate governance reforms, damages, restitution, attorneys’ fees, and other relief.

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.

September 9, 2024 the parties agreed to stay the Hirani and Blaurarb actions pending a decision on the motion to dismiss in the Consolidated Securities Litigation.

The parties have agreed to keep the stay in place pending a decision on the motion to dismiss the plaintiffs’ Second Amended Complaint in the Consolidated Securities Litigation.

On August 7, 2024, Edwin 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 Derivative Actions.

The Isaac complaint makes largely the same allegations as those in the Daphne Shen and Javier Cascallar cases.

It also pleads the similar counts to those in the aforementioned securities claims, 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 complaint seeks declaratory relief, damages, interest, unspecified equitable relief, attorneys’ fees, and other relief.

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.

Due to the early stage of these proceedings, we 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.

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.

On December 6, 2023, the courts of Milan rendered a decision ordering SolarEdge to pay, in favor of each plaintiff, the difference between the price paid ( 6 Euro per share) and 6.44 Euro per share, i.e.

0.44 euros per share for a total payment of approximately $ 1.6 million Euros.

The Company has paid the amount due under the judgement and appealed this decision.

The first hearing was held on November 27, 2024, and the case was adjourned to January 14, 2026.

On January 13, 2025, Stellantis Europe s.p.a.

("Stellantis") submitted an application for injunctive relief, to the Court of Turin, Italy, claiming that SolarEdge e-Mobility was allegedly in breach of contract.

The application for injunctive relief is aimed at obtaining the following interim measures:

i) order the Company to resume supply of spare parts and technical assistance activities in favor of Stellantis;

and ii) to order the Company to pay a penalty of 100,000 Euro for each day of delay in fulfilling the order above.

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

As of December 31, 2024, the Company recorded an accrual of $ 350 for legal claims which was recorded under accrued expenses and other current liabilities.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

1 unchanged sentence

Unrealized gains (losses) on cash flow hedges

Foreign currency translation adjustments on intra-entity transactions

that are of a long-term investment in nature

Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment in nature

Unrealized gains (losses) on foreign currency translation

1 unchanged sentence

Tax on revaluation

Other comprehensive income (loss) before reclassifications

Other comprehensive loss before reclassifications

Reclassification

Tax on reclassification

Gains reclassified from accumulated other comprehensive income

Net current period other comprehensive income (loss)

Losses reclassified from accumulated other comprehensive income

Net current period other comprehensive loss

Ending balance as of December 31, 2022

4 unchanged sentences

Losses reclassified from accumulated other comprehensive income

Net current period other comprehensive loss

Net current period other comprehensive (income) loss

Ending balance as of December 31, 2023

6 unchanged sentences

Ending balance as of December 31, 2024

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the years ended December

31, 2023, 2022 and 2021:

about Accumulated Other

Comprehensive

Income (Loss) Components

Reclassified from Accumulated Other

Comprehensive

Income (Loss)

Line Item in the

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2024, 2023 and 2022:

Details about Accumulated Other Comprehensive Income (Loss) Components

Amount Reclassified from Accumulated Other Comprehensive Income (Loss)

Affected Line Item in the

Statement of Income (loss)

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

9 unchanged sentences

Total reclassifications for the period

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

EARNINGS PER SHARE

following table presents the computation of basic and diluted EPS attributable to SolarEdge Technologies Inc.:

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

EARNINGS (LOSS) PER SHARE

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

Year ended December 31,

Shares used in computing net EPS of common stock, basic

Net income attributable to common stock, basic

Net income (loss)

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

Net income (loss) attributable to common stock, basic

Notes due 2025

Net income attributable to common stock, diluted

Shares used in computing net EPS of common stock, basic

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

Shares used in computing net EPS of common stock, diluted

Earnings per share:

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

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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

Earnings (loss) per share:

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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

Year ended December 31,

Stock-based awards

Total shares excluded

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.

In July 2024, following a subsequent 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 the Company's computation of diluted net income (loss) per share.

OTHER OPERATING EXPENSES, NET

ended December 31,

Impairment of property,

plant and equipment

Impairment of intangible

Gain on sale of assets

Legal settlements and

contingencies 2

SolarEdge Korea (formerly

Kokam) purchase escrow 3

Total other operating

In the year ended December 31, 2021, the Company received a payment of $ 859

out of the SolarEdge Korea (formerly Kokam) acquisition escrow, with regards to a working capital adjustment.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Year ended December 31,

Impairment of intangible assets and goodwill

Impairment and disposal by abandonment of property, plant and equipment

Total other operating expense, net

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

RESTRUCTURING AND OTHER EXIT ACTIVITIES

October of 2023, the Company made an announcement regarding its restructuring plans to adjust its manufacturing capacity and increase

operating efficiency, including terminating the manufacturing process in Mexico, reducing manufacturing capacity in China, and discontinuing

the Company’s LCV activity.

The program is expected to be completed by the end of the first half of 2024.

These decisions were made

in order to better align the Company with current market conditions.

Company determined that the discontinuation of the LCV activity does not represent a strategic shift that will have a major effect on

the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

Restructuring

and other exit charges for the year ended December 31, 2023 by segments and type of cost were as follows:

termination costs

termination and other

On January 21, 2024, the Company announced the adoption of a restructuring plan in response to challenging industry conditions (the “Restructuring Plan”).

Under the Restructuring Plan, the Company reduced its headcount by approximately 900 over the first half of 2024 in an involuntary workforce reduction.

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.

On July 15, 2024, the Company announced additional workforce reductions, resulting in the layoff of 400 employees.

On November 27, 2024, the Company announced the closure of its Energy Storage Division.

Under the closure, the Company expects to reduce its headcount by approximately 500 employees, primarily employees working in manufacturing positions in South Korea.

This closure and associated headcount reduction represented approximately 12% of the Company’s overall employee population, at the time, almost all of whom will be dismissed over the first half of 2025.

The Company determined that the discontinuation of its Energy Storage activity does not represent a strategic shift that will have a major effect on the Company's operations and financial results and therefore it did not meet the criteria for discontinued operations classification.

Restructuring and other exit charges for the year ended December 31, 2024 by segments 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

Research and development

Sales and marketing

General and administrative

the year ended December 31, 2022, the Company recorded $ 4,314

of inventory write-downs in cost of revenues as a result of Critical Power's discontinuation.

The Company did not record

any restructuring and other exit activities costs for the year ended December 31, 2021

The Company’s liability

balance for the restructuring and other exit charges is as follows:

termination costs

termination and other

Other operating expenses

Restructuring and other exit charges for the year ended December 31, 2023 by segments 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

Sales and marketing

General and administrative

For the year ended December 31, 2022, the Company recorded $ 4,314 of inventory write-downs in cost of revenues as a result of Critical Power's discontinuation.

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

Employee termination costs

Inventory write-down 1

Contract termination and other

Balance as of January 1, 2024

Cash payments

Foreign currency adjustments

Non-cash utilization and other

Balance as of December 31, 2024

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

The total amount expected

to be incurred for restructuring and other exit charges, which primarily consists of contract terminations related to the solar segment,

is $ 10,558 .

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The total amount expected to be incurred for restructuring and other exit charges, which primarily consists of contract and employee terminations related to the all other segment, is $ 6,765 .

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Tax rates in the U.S:

Company is subject to U.S.

The Company is subject to U.S.

federal tax at the rate of 21 %.

December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to U.S.

On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law making significant changes to U.S.

income tax law.

changes include, but are not limited to, a corporate tax rate decrease from 35 %

effective for tax years 2018 onwards and created new taxes on certain foreign-sourced earnings and certain related-party payments - the

Global Intangible Low Taxed Income (“GILTI”).

Furthermore, changes introduced by the Tax Act to Section 174 of the Internal

Revenue Code, that came into effect on January 1, 2022, require taxpayers to amortize research and development expenditures over five

years (if incurred in the U.S.) or fifteen years (if incurred outside the U.S.), thereby increasing taxable income and payable tax.

Tax Act required the Company to pay U.S.

These changes include, but are not limited to, a corporate tax rate decrease from 35 % to 21 % effective for tax years 2018 onwards and created new taxes on certain foreign-sourced earnings and certain related-party payments - the Global Intangible Low Taxed Income (“GILTI”).

Furthermore, changes introduced by the Tax Act to Section 174 of the Internal Revenue Code, that came into effect on January 1, 2022, require taxpayers to amortize research and development expenditures over five years (if incurred in the U.S.) or fifteen years (if incurred outside the U.S.), thereby increasing taxable income and payable tax.

The Tax Act required the Company to pay U.S.

income taxes on accumulated foreign subsidiaries earnings not previously subject to U.S.

tax at a rate of 15.5 %

to the extent of foreign cash and certain other net current assets and 8 %

on the remaining earnings.

The total tax liability was calculated to approximately $ 8,500 ,

which will be paid over the eight-year period provided in the Tax Act (ending 2024).

income tax at a rate of 15.5 % to the extent of foreign cash and certain other net current assets and 8 % on the remaining earnings.

The total tax liability was calculated to approximately $ 8,500 , which are paid over the eight-year period provided in the Tax Act (ending 2025).

Corporate tax in Israel:

taxable income of Israeli companies is subject to corporate tax at the rate of 23 %.

The taxable income of Israeli companies is subject to corporate tax at the rate of 23 %.

The Israeli Subsidiary is also eligible for tax benefits as further described in note 26j.

Carryforward tax losses:

of December 31, 2023, the foreign subsidiaries have carryforward tax losses of $ 205,263

which do not have an expiration date.

As of December 31, 2024, the foreign subsidiaries have carryforward tax losses of $ 1,292 which do not have an expiration date.

Deferred taxes:

taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for income tax purposes.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

components of the Company’s deferred tax liabilities and assets are as follows:

tax assets, net:

and Development carryforward expenses

tax losses (1)

compensation expenses

Lease liabilities

Foreign currency

and other reserves

Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Significant components of the Company’s deferred tax liabilities and assets are as follows:

Deferred tax assets, net:

Less, Valuation

Total deferred

tax assets, net

tax liabilities, net:

price allocation

Research and Development carryforward expenses

Carryforward tax losses (1)

Stock based compensation expenses

Deferred revenue

Lease liabilities

Inventory Impairment

Foreign currency translation

Property, plant and equipment

Total deferred

tax liabilities, net

tax assets, net

tax liabilities, net

Allowance and other reserves

Total Gross deferred tax assets, net

Less, Valuation Allowance

Total deferred tax assets, net

Deferred tax liabilities, net:

Intercompany transactions

Right-of-use assets

Purchase price allocation

Property, plant and equipment

Total deferred tax liabilities, net

Deferred tax assets, net

Deferred tax liabilities, net

Net deferred tax assets (liabilities)

(1) Related to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions.

Company’s Israeli subsidiary’s tax-exempt profit from Benefited Enterprises (as defined in note 25j) is permanently reinvested,

Therefore, deferred taxes have not been provided for such tax-exempt income.

Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries.

Such additional

tax liability in respect of these subsidiaries has not been provided for in the Financial Statements as the Company’s management

and the Board of Directors has determined that the Company intends to reinvest earnings of its subsidiaries indefinitely.

Uncertain tax positions are comprised

at the beginning of the period

related to current year tax positions

for tax positions related to prior years

related to prior year tax positions

at end of the period

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

total amount of gross unrecognized tax benefits above would affect the Company's effective tax rate, if recognized.

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

As of December 31, 2023,

the Company accrued $ 2,927 .

total amount of penalties and interest were not material as of December 31, 2022 and 2021.

is reasonably possible that the Company’s gross unrecognized tax benefits will decrease by an insignificant amount in the next 12

months, primarily due to the lapse of the statute of limitations.

Income before income taxes are comprised

ended December 31,

Income before

Income taxes (tax benefit) are comprised

ended December 31,

The Company’s Israeli Subsidiary’s tax-exempt profit from Benefited Enterprises (as defined in note 26j) is permanently reinvested, Therefore, deferred taxes have not been provided for such tax-exempt income.

The Company may incur additional tax liability in the event of intercompany dividend distributions by some of its subsidiaries.

Such additional tax liability in respect of these subsidiaries has not been provided for in the Financial Statements as the Company’s management and the Board of Directors has determined that the Company intends to reinvest earnings of its subsidiaries indefinitely.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Uncertain tax positions are comprised as follows:

Balance, at the beginning of the period

Increases related to current year tax positions

Increase for tax positions related to prior years

Decreases related to prior year tax positions

Balance, at end of the period

The total amount of gross unrecognized tax benefits above would affect the Company's effective tax rate, if recognized.

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

As of December 31, 2024 and 2023, the Company accrued $ 9,165 and $ 2,927 , respectively.

The total amount of penalties and interest were not material as of December 31, 2022.

It is reasonably possible that the Company’s gross unrecognized tax benefits will decrease by an insignificant amount in the next 12 months, primarily due to the lapse of the statute of limitations.

Income (loss) before income taxes are comprised as follows:

Year ended December 31,

Income (loss) before income taxes

Income taxes (tax benefit) are comprised as follows:

Year ended December 31,

Current taxes:

Total current

Total deferred

Income taxes,

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

Reconciliation of theoretical tax

expense to actual tax expense:

differences between the statutory tax rate of the Company and the effective tax rate are result of a variety of factors, including different

effective tax rates applicable to non-US subsidiaries that have tax rates different than the Company tax rate, tax benefits relating to

stock-based compensation and adjustments to valuation allowances on deferred tax assets of such subsidiaries.

reconciliation between the theoretical tax expense and the actual tax expense as reported in the consolidated statements of income is

ended December 31,

at rate other than the U.S.

Total current taxes

Deferred taxes:

Total deferred taxes

Income taxes, net

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Reconciliation of theoretical tax expense to actual tax expense:

The differences between the statutory tax rate of the Company and the effective tax rate are result of a variety of factors, including different effective tax rates applicable to non-US subsidiaries that have tax rates different than the Company tax rate;

valuation allowance on deferred tax assets related to losses and other deferred tax assets, where the Company does not foresee the realization of the same;

and tax-exempt IRA credits.

A reconciliation between the theoretical tax expense and the actual tax expense as reported in the consolidated statements of income (loss) is as follows:

Year ended December 31,

Statutory tax rate

timing differences for which valuation allowance was provided

income taxes (benefit)

R&D Capitalization

and other effects of TCJA

Non-deductible

Other individually

immaterial income tax items, net

Income tax at rate other than the U.S.

statutory tax rate

Losses and timing differences for which valuation allowance was provided

Prior year income taxes (benefit)

R&D Capitalization and other effects of TCJA

Non-deductible expenses

IRA tax benefits

Other individually immaterial income tax items, net

Effective tax rate

The change in effective tax rate for the year ended December 31, 2024 compared to the year ended December 31, 2023, is mainly due to the Company transitioning to a significant loss position in 2024 and the valuation allowance recorded against the tax benefit of such loss, as well as the valuation allowance booked against deferred tax assets of the Company and its subsidiaries from previous years.

These, together with expenses that are not deductible for tax purposes, decreased the tax benefit of said loss, and were partially offset by the tax benefit of AMPTCs the Company generated during the year from its U.S manufacturing of eligible products and ITCs the Company purchased during 2024 from third parties.

Tax assessments:

Israeli tax authorities issued a tax order for tax year 2016 and tax assessments for tax years 2017 and 2018 against the Company’s

Israeli subsidiary, challenging the subsidiary's positions on several issues.

The Israeli subsidiary has protested the order before the

Central District Court in Israel and appealed the tax assessments.

Company believes it has adequately provided for these items, however adverse results could have a material impact on the Company’s

financial statements.

of December 31, 2023, the Company and certain of its subsidiaries filed U.S.

The Israeli tax authorities issued tax orders for tax years 2016-2018 against the Company’s Israeli Subsidiary, challenging the subsidiary's positions on several issues.

The Israeli Subsidiary has protested the orders before the Central District Court in Israel.

The Company believes it has adequately provided for these items, however adverse results could have a material impact on the Company’s financial statements.

As of December 31, 2024, the Company and certain of its subsidiaries filed U.S.

federal and various state and foreign income tax returns.

1 unchanged sentence

federal income tax return is closed for all tax years up to and including 2020.

statute of limitations related to tax returns of the Company’s Israeli subsidiary for all tax years up to and including 2015 has

statute of limitations related to tax returns of the Company’s other subsidiaries has lapsed for part of the tax years, which differs

between the different subsidiaries.

Tax benefits for Israeli companies

under the Law for the Encouragement of Capital Investments, 1959 (the “Investments Law”):

Israeli subsidiary elected tax year 2012 as a "Year of Election" for “Benefited Enterprise” status under the Investments Law.

According to the Investments Law, the Israeli subsidiary elected to participate in the alternative benefits program which provides certain

benefits, including tax exemptions and reduced tax rates (which depend on, inter alia, the geographic location in Israel).

eligible for Benefited Enterprise benefits is taxed at a regular corporate tax rate.

meeting the requirements under the Investments Law, undistributed income derived from Benefited Enterprise from productive activity will

be exempt from tax for two years from the year in which the Israeli subsidiary first has taxable income (“exempt period”),

provided that 12 years have not passed from the beginning of the year of election.

October 24, 2018, the Company’s Israeli subsidiary received an approval from the Israeli Tax Authorities confirming the applicability

of the two-year tax exemption as provided in the Investments Law until December 31, 2018.

As of December 31, 2018, approximately $ 289,900

was derived from tax exempt profits earned by the Israeli subsidiary “Benefited Enterprises” in the two tax years exempt period,

tax years 2017 - 2018.

The Company has determined that such tax-exempt income will not be distributed as dividends and intends to reinvest

the amount of its tax-exempt income earned by the Israeli subsidiary.

Accordingly, no provision for deferred income taxes has been provided

on income attributable to the Israeli subsidiary “Benefited Enterprises” as such income is essentially permanently reinvested.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

the Israeli subsidiary’s retained tax-exempt income is distributed, the income would be taxed at the applicable corporate tax rate

which depends on the foreign ownership in each tax year.

December 31, 2023, the Israeli subsidiary had generated income under the provision of the Investments Law.

to amendment 73 to the Investments Law (the “2017 Amendment"), a preferred enterprise located in development area A will be subject

to a tax rate of 7.5 %

instead of 9 %

effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16 %).

2017 Amendment also prescribes special tax tracks for preferred technological enterprises (“PTE”), which are subject to rules

that were issued by the Ministry of Finance.

June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technological Income and Capital Gain for Technological

Enterprise), 2017 (the “Regulations”) were published.

Regulations describe, inter alia, the mechanism used to determine the calculation of the benefits under the PTE regime.

According to these

regulations, a company that complies with the terms under the PTE regime may be entitled to certain tax benefits with respect to income

generated during the company’s regular course of business and derived from the preferred intangible asset, excluding income derived

from intangible assets used for marketing and income attributed to production activity.

PTE, which is located in the center of Israel will be subject to tax at a rate of 12 %

on profits deriving from intellectual property, or 6 %

if its annual revenues exceed NIS 10

billion ("Threshold").

The Israeli subsidiary notified the ITA of its election to implement the PTE with effect from January 1, 2019,

and its PTE income was subject to a 12% tax rate in the years 2019-2021, and in 2022-2023 to a 6% tax rate as the group surpassed the

The Company currently expects not to meet the Threshold in 2024 and consequently expects its tax on its PTE income to be 12%

The Company adjusted its deferred taxes accordingly.

Benefits for Research and Development:

tax law (section 20A to the Israeli Tax Ordinance (New Version), 1961) allows a tax deduction for research and development expenses, including

capital expenses, in the year in which they are paid.

Such expenses must relate to scientific research in industry, agriculture, transportation

or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research.

Expenses incurred in

scientific research that are not approved by the relevant government ministry are amortized over a three-year period starting from the

tax year in which they are paid.

The Company’s Israeli subsidiary intends to submit a formal request to the relevant government

ministry in order to obtain such approval for 2019 - 2021.

Tax benefits under the Law for the

Encouragement of Industry (Taxes), 1969:

Company’s Israeli subsidiary claims currently to be qualified as ‘industrial company’ as defined by this law and as

such, is entitled to certain tax benefits, consisting mainly of accelerated depreciation and amortization of patents and certain other

intangible property.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

The statute of limitations related to tax returns of the Company’s Israeli Subsidiary for all tax years up to and including 2015 has lapsed.

The statute of limitations related to tax returns of the Company’s other subsidiaries has lapsed for part of the tax years, which differs between the different subsidiaries.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Tax benefits for Israeli companies under the Law for the Encouragement of Capital Investments, 1959 (the “Investments Law”):

The Israeli Subsidiary elected tax year 2012 as a "Year of Election" for “Benefited Enterprise” status under the Investments Law.

According to the Investments Law, the Israeli Subsidiary elected to participate in the alternative benefits program which provides certain benefits, including tax exemptions and reduced tax rates (which depend on, inter alia, the geographic location in Israel).

Income not eligible for Benefited Enterprise benefits is taxed at a regular corporate tax rate.

Upon meeting the requirements under the Investments Law, undistributed income derived from Benefited Enterprise from productive activity will be exempt from tax for two years from the year in which the Israeli Subsidiary first has taxable income (“exempt period”), provided that 12 years have not passed from the beginning of the year of election.

On October 24, 2018, the Company’s Israeli Subsidiary received an approval from the Israeli Tax Authorities confirming the applicability of the two-year tax exemption as provided in the Investments Law until December 31, 2018.

As of December 31, 2018, approximately $ 289,900 was derived from tax exempt profits earned by the Israeli Subsidiary “Benefited Enterprises” in the two tax years exempt period, tax years 2017 - 2018.

The Company has determined that such tax-exempt income will not be distributed as dividends and intends to reinvest the amount of its tax-exempt income earned by the Israeli Subsidiary.

Accordingly, no provision for deferred income taxes has been provided on income attributable to the Israeli Subsidiary “Benefited Enterprises” as such income is essentially permanently reinvested.

If the Israeli Subsidiary’s retained tax-exempt income is distributed, the income would be taxed at the applicable corporate tax rate which depends on the foreign ownership in each tax year.

Pursuant to amendment 73 to the Investments Law (“2017 Amendment"), a preferred enterprise located in development area A will be subject to a tax rate of 7.5 % instead of 9 % effective from January 1, 2017 and thereafter (the tax rate applicable to preferred enterprises located in other areas remains at 16 %).

The 2017 Amendment also prescribes special tax tracks for preferred technological enterprises (“PTE”), which are subject to rules that were issued by the Ministry of Finance.

On June 14, 2017, the Encouragement of Capital Investments Regulations (Preferred Technological Income and Capital Gain for Technological Enterprise), 2017 (“Regulations”) were published.

The Regulations describe, inter alia, the mechanism used to determine the calculation of the benefits under the PTE regime.

According to these regulations, a company that complies with the terms under the PTE regime may be entitled to certain tax benefits with respect to income generated during the company’s regular course of business and derived from the preferred intangible asset, excluding income derived from intangible assets used for marketing and income attributed to production activity.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

A PTE, which is located in the center of Israel will be subject to tax at a rate of 12 % on profits deriving from intellectual property, or 6 % if its annual revenues exceed NIS 10 billion ("Threshold").

The Israeli Subsidiary notified the ITA of its election to implement the PTE with effect from January 1, 2019, and its PTE income was subject to a 12% tax rate for the years 2019-2021, and in 2022-2023 to a 6% tax rate as the group surpassed the Threshold.

In 2024, the Company incurred losses for tax purposes.

Tax Benefits for Research and Development:

Israeli tax law (section 20A to the Israeli Tax Ordinance (New Version), 1961) allows a tax deduction for research and development expenses, including capital expenses, in the year in which they are paid.

Such expenses must relate to scientific research in industry, agriculture, transportation or energy, and must be approved by the relevant Israeli government ministry, determined by the field of research.

Expenses incurred in scientific research that are not approved by the relevant government ministry are amortized over a three-year period starting from the tax year in which they are paid.

The Company’s Israeli Subsidiary submitted a formal request to the relevant government ministry in order to obtain such approval for tax years 2019-2021 and intends to submit a similar request with respect to tax year 2023.

Tax benefits under the Law for the Encouragement of Industry (Taxes), 1969:

Some of the Company’s Israeli Subsidiaries claim tax benefits as ‘industrial companies’ under the Law for the Encouragement of Industry (Taxes), 1969, Such benefits consist mainly of accelerated depreciation and amortization of patents and certain other intangible property and the ability to file consolidated tax returns.

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

FINANCIAL INCOME (EXPENSE), NET

ended December 31,

Exchange rate (loss)

Interest income on marketable

Year ended December 31,

Exchange rate (loss) gain, net

Interest income on marketable securities

Allowance for credit losses allocated to loan receivables

Convertible note

Financing component expenses

related to ASC 606

Financing component expenses related to ASC 606

Interest income

Interest expense

Total financial income

(expenses), net

GEOGRAPHIC AND PRODUCT INFORMATION

Total financial income (expenses), net

SEGMENT, GEOGRAPHIC AND PRODUCT INFORMATION

Segment Information:

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

Solar, Energy

Storage, e-Mobility and Automation Machines.

In October 2023, the Company decided to discontinue its LCV activity.

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.

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).

profit (loss) is comprised of gross profit 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.

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

The Company’s CODM

does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

Company identified two

operating segments as reportable – the Solar segment and the Energy Storage segment.

The other operating segments are insignificant

individually and therefore their results are presented together under “All other”.

Solar segment includes the design, development, manufacturing, and sales of an intelligent inverter solution designed to maximize power

generation at the individual 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.

Energy Storage segment includes the design, development, manufacturing, and sales of high-energy, high-power, lithium-ion cells and racks

and containerized battery systems 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.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

“All other” category includes the e-Mobility products, automated machines and UPS products (in prior periods).

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

ended December 31, 2023

Cost of revenues

Gross profit (loss)

Research and development

Sales and marketing

General and administrative

The Company identified one operating segments as reportable – the Solar segment.

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

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

The Company does not allocate to its operating segments revenue recognized due to advance payments received for performance obligations that extend for a period greater than one year (“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.

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

The Company’s CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

The Solar segment includes the design, development, manufacturing, and sales of an intelligent inverter solution designed to maximize power generation at the individual 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 “All other” category includes automated machines, energy storage and e-Mobility (in prior periods).

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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

December 31, 2024

Direct costs of goods

Inventory costs

Shipment and logistics

Other directly related overhead costs

Segments profit (loss)

ended December 31, 2022

Cost of revenues

Gross profit (loss)

Research and development

Sales and marketing

General and administrative

December 31, 2023

Direct costs of goods

Inventory costs

Shipment and logistics

Other directly related overhead costs

Segments profit (loss)

ended December 31, 2021

Cost of revenues

Gross profit (loss)

Research and development

Sales and marketing

General and administrative

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

December 31, 2022

Direct costs of goods

Inventory costs

Shipment and logistics

Other directly related overhead costs

Segments profit (loss)

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

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

ended December 31,

1 Represents marketing, bad debt and other production related costs.

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

Year ended December 31,

Solar segment revenues

Energy Storage segment

All other segment revenues

Revenues from financing

Revenues from financing component

Consolidated revenues

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

ended December 31,

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

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

Year ended December 31,

Solar segment profit

Energy Storage segment

profit (loss)

All other segment loss

Segments operating profit

Amounts not allocated

based compensation expenses

and depreciation of acquired assets

of goodwill and long-lived assets

Restructuring

and other exit activities

unallocated income (expenses), net

Consolidated operating

Revenues by geographic, based on customers’

ended December 31,

Amounts not allocated to segments:

Stock based compensation expenses

Amortization and depreciation of acquired assets

Impairment and disposal by abandonment of long-lived assets

Restructuring and other exit activities

Other unallocated income (expenses), net

Consolidated operating income (loss)

Financial income (expense), net

Other income (loss), net

Income (loss) before income taxes

Revenues by geographic, based on customers’ location:

Year ended December 31,

United States

2 unchanged sentences

(*) Except for Germany, Netherlands and Italy

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

Revenues by type:

ended December 31,

Year ended December 31,

Batteries for PV applications

e-Mobility components

and telematics

Energy storage systems

e-Mobility components and telematics

Communication

1 unchanged sentence

Long-lived assets by geographic location:

of December 31,

As of December 31,

United States

Total long-lived assets (*)

(*) Long-lived assets are comprised of property and equipment, net and Operating lease right-of-use assets, net.

TECHNOLOGIES INC.

TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands,

except per share data)

SOLAREDGE TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

(in thousands, except per share data)

SUBSEQUENT EVENTS

In January 2024, the Company entered into an agreement

to acquire minority shares in Ampeers Energy GmbH ("Ampeers") from existing shareholders as well as through a share capital increase.

Ampeers, a German-based company, is involved in the programming, operation and marketing of an information and communications technology

The investment is subject to customary closing conditions and regulatory approvals and is expected to close during the first

half of 2024.

Also in January 2024, the Company completed a

minority investment in Ivy Energy, a U.S.

company that provides software to real estate owners for distribution of solar energy between

multi dwelling units.

On January 21, 2024, the Company announced adoption

of additional measures in response to challenging industry conditions, including reducing its headcount by approximately 16 %

over the first half of 2024 through an involuntary workforce reduction plan.

These decisions were made in order to better align the Company

with current market conditions.

The significant part of the workforce reduction occurred in January 2024.

On January 6, 2025, the Company announced its adoption of additional measures in order to achieve the financial stability necessary to drive its turnaround, and executing organizational goals to support growth, which includes reducing its headcount by approximately 400 employees.

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

- - - - - - - - - - - - - - - - - - - - -

Changes in and Disagreements

with Accountants on Accounting and Financial Disclosure

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

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-K

Item 8. Financial Statements and Supplementary Data