SOLAREDGE TECHNOLOGIES, INC. 10-K

ITEM 8 . FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm (PCAOB ID: 1281 ) F2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-6 Consolidated Statements of Income for the year ended December 31, 2024, 2023 and 2022 F-8 Consolidated Statements of Comprehensive Income for the year ended December 31, 2024, 2023 and 2022 F-9 Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2024, 2023 and 2022 F-10 Consolidated Statements of Cash Flows for the year ended December 31, 2024, 2023 and 2022 F-11 Notes to Consolidated Financial Statements F-13 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. 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. F - 2 Warranty obligation Description of the Matter 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. F - 3 Valuation of Inventories - Provisions for slow moving, excess and obsolete inventory items Description of the Matter 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 F - 4 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, 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. 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 F - 5 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) December 31, 2024 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 274,611 $ 338,468 Restricted cash 135,328 - Marketable securities 311,279 521,570 Trade receivables, net of allowances of $ 43,038 and $ 16,400 , respectively 160,423 622,425 Inventories, net 645,897 1,443,449 Prepaid expenses and other current assets 506,769 378,394 Total current assets 2,034,307 3,304,306 LONG-TERM ASSETS: Marketable securities 42,597 407,825 Deferred tax assets, net - 80,912 Property, plant and equipment, net 343,438 614,579 Operating lease right-of-use assets, net 41,393 64,167 Goodwill and intangible assets, net 58,046 78,341 Loan receivables, net 45,678 2,438 Other long-term assets 64,736 35,163 Total long-term assets 595,888 1,283,425 Total assets $ 2,630,195 $ 4,587,731 The accompanying notes are an integral part of the consolidated financial statements. F - 6 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEETS (Cont.) (in thousands, except per share data) December 31, 2024 2023 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Trade payables, net $ 93,491 $ 386,471 Employees and payroll accruals 76,292 76,966 Warranty obligations 140,249 183,047 Deferred revenues and customers advances 140,870 40,836 Accrued expenses and other current liabilities 243,872 205,911 Convertible senior notes, net 346,305 - Total current liabilities 1,041,079 893,231 LONG-TERM LIABILITIES: Convertible senior notes, net 330,006 627,381 Warranty obligations 292,116 335,197 Deferred revenues 231,049 214,607 Finance lease liabilities 39,159 41,892 Operating lease liabilities 30,018 45,070 Other long-term liabilities 8,426 18,444 Total long-term liabilities 930,774 1,282,591 COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS’ EQUITY: Common stock of $ 0.0001 par value - Authorized: 125,000,000 shares; issued: 58,780,490 shares at December 31, 2024 and 57,123,437 shares at December 31, 2023; outstanding: 58,027,126 shares at December 31, 2024 and 57,123,437 shares at December 31, 2023. 6 6 Additional paid-in capital 1,813,198 1,680,622 Treasury stock, at cost; 753,364 shares held ( 50,194 ) - Accumulated other comprehensive loss ( 76,477 ) ( 46,885 ) Retained earnings (Accumulated deficit) ( 1,028,191 ) 778,166 Total stockholders’ equity 658,342 2,411,909 Total liabilities and stockholders’ equity $ 2,630,195 $ 4,587,731 The accompanying notes are an integral part of the consolidated financial statements. F - 7 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands, except per share data) Year ended December 31, 2024 2023 2022 Revenues $ 901,456 $ 2,976,528 $ 3,110,279 Cost of revenues 1,778,660 2,272,705 2,265,631 Gross profit (loss) ( 877,204 ) 703,823 844,648 Operating expenses: Research and development 277,237 321,482 289,814 Sales and marketing 146,865 164,318 159,680 General and administrative 147,455 146,504 112,496 Other operating expenses, net 259,527 31,314 116,538 Total operating expenses 831,084 663,618 678,528 Operating income (loss) ( 1,708,288 ) 40,205 166,120 Financial income (expense), net ( 14,570 ) 41,212 3,750 Other income (loss), net 14,547 ( 318 ) 7,285 Income (loss) before income taxes ( 1,708,311 ) 81,099 177,155 Income taxes ( 96,150 ) ( 46,420 ) ( 83,376 ) Net loss from equity method investments ( 1,896 ) ( 350 ) - Net income (loss) $ ( 1,806,357 ) $ 34,329 $ 93,779 Net basic earnings (loss) per share of common stock $ ( 31.64 ) $ 0.61 $ 1.70 Net diluted earnings (loss) per share of common stock $ ( 31.64 ) $ 0.60 $ 1.65 Weighted average number of shares used in computing net basic earnings (loss) per share of common stock 57,082,182 56,557,106 55,087,770 Weighted average number of shares used in computing net diluted earnings (loss) per share of common stock 57,082,182 57,237,518 58,100,649 The accompanying notes are an integral part of the consolidated financial statements. F - 8 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands, except per share data) Year ended December 31, 2024 2023 2022 Net income (loss) $ ( 1,806,357 ) $ 34,329 $ 93,779 Other comprehensive income (loss), net of tax: Available-for-sale marketable securities 4,575 20,489 ( 20,740 ) Cash flow hedges ( 2,678 ) 5,701 ( 2,635 ) Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment nature ( 35,379 ) ( 5,375 ) ( 20,540 ) Foreign currency translation adjustments 3,890 5,409 ( 1,875 ) Total other comprehensive income (loss) ( 29,592 ) 26,224 ( 45,790 ) Comprehensive income (loss) $ ( 1,835,949 ) $ 60,553 $ 47,989 The accompanying notes are an integral part of the consolidated financial statements. F - 9 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands, except per share data) SolarEdge Technologies, Inc. Stockholders’ Equity Common stock Additional paid in Capital Treasury stock Accumulated other comprehensive Income (loss) Retained earnings Total Number Amount Balance as of December 31, 2021 52,815,395 $ 5 $ 687,295 $ - $ ( 27,319 ) $ 650,058 $ 1,310,039 Issuance of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ 27,140 and $ 834 of offering costs 2,300,000 1 650,525 - - - 650,526 Issuance of common stock upon exercise of stock-based awards 940,880 * - 4,030 - - - 4,030 Issuance of Common stock under employee stock purchase plan 77,129 * - 17,863 - - - 17,863 Stock based compensation - - 145,919 - - - 145,919 Other comprehensive loss adjustments, net - - - - ( 45,790 ) - ( 45,790 ) Net income - - - - - 93,779 93,779 Balance as of December 31, 2022 56,133,404 $ 6 $ 1,505,632 $ - $ ( 73,109 ) $ 743,837 $ 2,176,366 Issuance of common stock upon exercise of stock-based awards 790,745 * - 226 - - - 226 Issuance of Common stock under employee stock purchase plan 199,288 * - 20,693 - - - 20,693 Stock based compensation - - 154,071 - - - 154,071 Other comprehensive income adjustments, net - - - - 26,224 - 26,224 Net income - - - - - 34,329 34,329 Balance as of December 31, 2023 57,123,437 $ 6 $ 1,680,622 $ - $ ( 46,885 ) $ 778,166 $ 2,411,909 Issuance of common stock upon exercise of stock-based awards 796,905 * - 173 - - - 173 Issuance of Common stock under employee stock purchase plan 860,148 * - 18,468 - - - 18,468 Stock based compensation - - 142,277 - - - 142,277 Repurchase of common stock ( 753,364 ) - - ( 50,194 ) - - ( 50,194 ) Capped call transactions related to the Notes 2029 - - ( 28,342 ) - - - ( 28,342 ) Other comprehensive loss adjustments, net - - - - ( 29,592 ) - ( 29,592 ) Net loss - - - - - ( 1,806,357 ) ( 1,806,357 ) Balance as of December 31, 2024 58,027,126 $ 6 $ 1,813,198 $ ( 50,194 ) $ ( 76,477 ) $ ( 1,028,191 ) $ 658,342 * Represents an amount less than $1. The accompanying notes are an integral part of the consolidated financial statements. F - 10 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except per share data) Year ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income (loss) $ ( 1,806,357 ) $ 34,329 $ 93,779 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 59,865 57,196 49,676 Provision to write down inventories to net realizable value 738,757 46,369 10,170 Loss on impairment and disposal of property, plant and equipment 224,772 25,168 649 Stock-based compensation expenses 137,251 149,945 145,539 Impairment of goodwill and intangible assets 24,674 5,622 118,492 Deferred income taxes, net 79,209 ( 43,071 ) ( 11,055 ) Gain from repurchasing of convertible notes ( 15,456 ) - - Loss (gain) from exchange rate fluctuations 11,918 ( 26,878 ) 9,527 Other items 8,030 8,164 4,382 Changes in assets and liabilities: Trade receivables, net 451,707 296,429 ( 457,610 ) Inventories, net 67,799 ( 737,223 ) ( 351,255 ) Prepaid expenses and other assets ( 122,484 ) ( 92,067 ) ( 64,991 ) Operating lease right-of-use assets, net 15,805 16,525 14,878 Trade payables, net ( 285,505 ) ( 67,795 ) 194,524 Warranty obligations ( 85,541 ) 133,090 120,169 Deferred revenues and customers advances 119,519 39,632 44,376 Operating lease liabilities ( 15,829 ) ( 15,981 ) ( 14,976 ) Accrued expenses and other liabilities 78,547 ( 9,567 ) 125,010 Net cash provided by (used in) operating activities ( 313,319 ) ( 180,113 ) 31,284 Cash flows from investing activities: Investment in available-for-sale marketable securities ( 253,431 ) ( 296,396 ) ( 507,171 ) Proceeds from maturities of available-for-sale marketable securities 719,454 277,382 201,974 Proceeds from sales of available-for-sale marketable securities 114,564 2,807 29,236 Purchase of property, plant and equipment ( 108,163 ) ( 170,523 ) ( 169,341 ) Business combinations, net of cash acquired ( 10,417 ) ( 16,653 ) - Purchase of intangible assets ( 10,000 ) ( 10,600 ) - Disbursements for loans receivables ( 37,500 ) ( 58,000 ) - Investment in privately-held companies ( 25,664 ) ( 8,000 ) - Proceeds from loans receivables 32,150 - - Proceeds from governmental grant - 6,794 4,479 Other investing activities ( 4,707 ) 4,295 23,779 Net cash provided by (used in) investing activities $ 416,286 $ ( 268,894 ) $ ( 417,044 ) F - 11 SOLAREDGE TECHNOLOGIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.) (in thousands, except per share data) Year ended December 31, 2024 2023 2022 Cash flows from financing activities: Repurchase of common stock $ ( 50,194 ) $ - $ - Partial repurchase of Notes 2025 ( 267,900 ) - - Proceeds from issuance of Notes 2029, net of issuance costs 329,214 - - Capped call transactions related to Notes 2029 ( 28,342 ) - - Tax withholding in connection with stock-based awards, net ( 281 ) ( 9,259 ) 3,023 Proceeds from secondary public offering, net of issuance costs - - 650,526 Other financing activities ( 2,626 ) ( 2,697 ) 1,058 Net cash provided by (used in) financing activities ( 20,129 ) ( 11,956 ) 654,607 Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 11,367 ) 16,319 ( 15,824 ) Increase (decrease) in cash, cash equivalents and restricted cash 71,471 ( 444,644 ) 253,023 Cash and cash equivalents at the beginning of the period 338,468 783,112 530,089 Cash, cash equivalents and restricted cash, end of period $ 409,939 $ 338,468 $ 783,112 Supplemental disclosure of non-cash activities: Purchase of intangible assets and business combinations $ - $ 11,307 $ - Right-of-use asset recognized with corresponding lease liability $ 2,931 $ 18,077 $ 46,004 Purchase of property, plant and equipment $ 5,783 $ 6,323 $ 16,106 Supplemental disclosure of cash flow information: Cash paid for income taxes $ 17,004 $ 137,981 $ 74,689 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, 2024 2023 2022 Cash and cash equivalents $ 274,611 $ 338,468 $ 783,112 Restricted cash 135,328 - - Cash, cash equivalents and restricted cash, end of period $ 409,939 $ 338,468 $ 783,112 F - 12 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data) NOTE 1: GENERAL 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). NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”). a. Principles of 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. F - 13 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) b. Use of estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, government grants, income taxes and related disclosures in the accompanying notes. Actual results could differ from those estimates. 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. F - 14 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) c. Financial statements in U.S. dollars: 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. dollar. Financing activities, including cash investments are primarily made in U.S. dollars. 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. 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 (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. 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. d. Cash and cash equivalents: 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. e. 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. f. Restricted bank deposits: 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. g. Marketable Securities: 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 (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. F - 15 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. h. Investment in privately-held companies: 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. F - 16 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) i. Trade receivables: Trade receivables are stated net of credit losses allowance. The Company is exposed to credit losses primarily through sales of products. 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 $ 16,400 Increase in provision for expected credit losses 33,799 Recoveries collected ( 5,809 ) Amounts written off charged against the allowance ( 66 ) Foreign currency translation ( 1,286 ) Balance as of December 31, 2024 $ 43,038 j. Loan receivables: 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. F - 17 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. k. Inventories: Inventories are stated at the lower of cost or net realizable value. Cost includes depreciation, labor, material, shipment and overhead costs. 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). l. Property, plant and equipment: 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 equipment 14.3 - 33.3 (mainly 14.3 ) Office furniture and equipment 7 - 20 (mainly 7 ) Machinery and equipment 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 m. Government assistance 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 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. F - 18 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. 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. n. Leases: 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. 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. F - 19 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. o. Business Combination: 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. p. Intangible 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 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 100 Trade names 20 - 50 (mainly 50 ) Patents 9.5 - 10 (mainly 9.5 ) q. Impairment of long-lived assets: 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. F - 20 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) r. Goodwill: 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 . s. Cloud computing arrangements: 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. F - 21 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) t. Severance pay: 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. 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. u. Derivatives and Hedging: 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. dollar. 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. v. Revenue recognition: 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. F - 22 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 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. 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; 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. 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 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). F - 23 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. 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 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 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). w. Cost of revenues: 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. F - 24 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. x. Warranty obligations: 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. F - 25 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) y. Advertising costs 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. z. Research and development costs: Research and development costs, are charged to the consolidated statement of income (loss) as incurred. aa. Concentrations of credit risks: 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. 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. 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. ab. Concentrations of supply risks: 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. F - 26 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. ac. Fair value of financial instruments: 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. ad. Stock-based compensation: 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. F - 27 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. 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. 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, 2024 2023 2022 ESPP Risk-free interest 4.42 % - 5.42 % 5.38 % - 5.46 % 1.64 % - 4.70 % Dividend yields 0 % 0 % 0 % Volatility 70.94 % - 104.93 % 56.44 % - 66.78 % 71.28 % - 71.97 % Expected term 6 months 6 months 6 months PSU Risk-free interest 3.9 %- 4.2 % 4.09 % 1.77 % Dividend yields 0 % 0 % 0 % Volatility 65.18 %- 76.7 % 71.60 % 67.42 % Expected term 2 - 3 years 3 years 1 - 3 years F - 28 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) ae. 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). af. Income taxes: 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. F - 29 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) ag. New accounting pronouncements not yet effective: 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. Additionally, the newly added categories also apply to the income taxes paid disclosure. Implementation of said additions are subject to quantitative thresholds. 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. ah. Recently issued and adopted pronouncements: 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). F - 30 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 3: BUSINESS COMBINATIONS 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: Amount Weighted Average Useful Life (In years) Cash $ 2,914 Net liabilities assumed ( 903 ) Identified intangible assets: Technology 4,049 7 Customer relationships 1,241 1 Trade name 665 2 Goodwill 11,344 Total $ 19,310 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). F - 31 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 4: 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. company. 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. company. 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. 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. 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). F - 32 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 5: MARKETABLE SECURITIES The following is a summary of available-for-sale marketable securities at December 31, 2024: Amortized cost Gross unrealized gains Gross unrealized losses Fair value Matures within one year: Corporate bonds $ 290,570 $ 97 $ ( 811 ) $ 289,856 U.S. Treasury securities 12,596 - ( 2 ) 12,594 U.S. Government agency securities 8,810 19 - 8,829 311,976 116 ( 813 ) 311,279 Matures after one year: Corporate bonds 36,006 252 ( 17 ) 36,241 U.S. Government agency securities 6,309 47 - 6,356 42,315 299 ( 17 ) 42,597 Total $ 354,291 $ 415 $ ( 830 ) $ 353,876 The following is a summary of available-for-sale marketable securities at December 31, 2023: Amortized cost Gross unrealized gains Gross unrealized losses Fair value Matures within one year: Corporate bonds $ 487,083 $ 679 $ ( 5,942 ) $ 481,820 U.S. Treasury securities 15,324 - ( 63 ) 15,261 U.S. Government agency securities 8,787 11 ( 3 ) 8,795 Non-U.S. Government securities 15,161 673 ( 140 ) 15,694 526,355 1,363 ( 6,148 ) 521,570 Matures after one year: Corporate bonds 342,223 1,902 ( 4,444 ) 339,681 U.S. Treasury securities 2,430 - ( 22 ) 2,408 U.S. Government agency securities 44,100 107 ( 121 ) 44,086 Non-U.S. Government securities 20,488 1,162 - 21,650 409,241 3,171 ( 4,587 ) 407,825 Total $ 935,596 $ 4,534 $ ( 10,735 ) $ 929,395 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 F - 33 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 6: INVENTORIES, NET As of December 31, 2024 2023 Raw materials $ 209,259 $ 340,604 Work in process 3,113 20,885 Finished goods 433,525 1,081,960 $ 645,897 $ 1,443,449 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. NOTE 7: PREPAID EXPENSES AND OTHER CURRENT ASSETS As of December 31, 2024 2023 Vendor non-trade receivables 1 $ 181,953 $ 102,991 Government authorities 213,290 167,221 Prepayments 25,291 29,578 Loan receivables, net - 55,418 Assets held for sale 60,500 - Other 25,735 23,186 Total prepaid expenses and other current assets $ 506,769 $ 378,394 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. F - 34 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 8: PROPERTY, PLANT AND EQUIPMENT, NET As of December 31, 2024 2023 Cost: Land $ 1,087 $ 12,823 Buildings and plants 60,498 153,813 Computers and peripheral equipment 47,279 57,527 Office furniture and equipment 8,955 10,992 Laboratory and testing equipment 60,638 67,248 Machinery and equipment 209,906 362,363 Leasehold improvements 110,380 96,730 Assets under construction and payments on account 34,949 88,077 Gross property, plant and equipment 533,692 849,573 Less - accumulated depreciation 190,254 234,994 Total property, plant and equipment, net $ 343,438 $ 614,579 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. F - 35 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 9: LEASES The following table summarizes the Company’s lease-related assets and liabilities recorded in the consolidated balance sheets: As of December 31, Description Classification on the consolidated Balance Sheet 2024 2023 Assets: Operating lease assets, net of lease incentive obligation Operating lease right-of use assets, net $ 41,393 $ 64,167 Finance lease assets Property, plant and equipment, net 46,610 49,926 Total lease assets $ 88,003 $ 114,093 Liabilities: Operating leases short term Accrued expenses and other current liabilities $ 11,861 $ 17,704 Finance leases short term Accrued expenses and other current liabilities 3,382 3,253 Operating leases long term Operating lease liabilities 30,018 45,070 Finance leases long term Finance lease liabilities 39,159 41,892 Total lease liabilities $ 84,420 $ 107,919 The following table presents certain information related to the operating and finance leases: Year ended December 31, 2024 2023 Finance leases: Finance lease cost $ 4,100 $ 4,154 Weighted average remaining lease term in years 14.38 14.99 Weighted average annual discount rate 2.30 % 2.30 % Operating leases: Operating lease cost $ 17,503 $ 18,479 Weighted average remaining lease term in years 10.67 9.50 Weighted average annual discount rate 4.76 % 3.68 % The following table presents supplemental cash flows information related to the lease costs for operating and finance leases: Year ended December 31, 2024 2023 Cash paid for amounts included in measurement of lease liabilities: Operating cash flows for operating leases $ 17,685 $ 17,930 Operating cash flows for finance leases $ 350 $ 373 Financing cash flows for finance leases $ 2,877 $ 2,794 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 Finance Leases 2025 $ 12,148 $ 3,418 2026 6,602 3,418 2027 4,050 3,949 2028 3,237 3,138 2029 2,403 3,212 Thereafter 23,492 32,676 Total lease payments $ 51,932 $ 49,811 Less amount of lease payments representing interest ( 10,053 ) ( 7,270 ) Present value of future lease payments $ 41,879 $ 42,541 Less current lease liabilities ( 11,861 ) ( 3,382 ) Long-term lease liabilities $ 30,018 $ 39,159 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. F - 36 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 10: INTANGIBLE ASSETS, NET 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 test included comparing the sum of the estimated undiscounted future cash flow attributable to the identified assets group and its carrying amounts, and recognizing an impairment for the amount to which the carrying amount exceeds the fair value of the assets groups. The Company'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 $ 10,675 $ ( 2,753 ) $ 7,922 $ 26,990 $ ( 14,096 ) $ 12,894 Customer relationships 1,526 ( 1,216 ) 310 3,193 ( 1,781 ) 1,412 Trade names 1,279 ( 464 ) 815 624 ( 94 ) 530 Assembled workforce 3,575 ( 3,575 ) - 3,575 ( 2,582 ) 993 Patents 2,000 ( 1,381 ) 619 22,000 ( 2,484 ) 19,516 Total $ 19,055 $ ( 9,389 ) $ 9,666 $ 56,382 $ ( 21,037 ) $ 35,345 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: 2025 $ 2,786 2026 2,211 2027 2,084 2028 998 2029 636 2030 and thereafter 951 $ 9,666 F - 37 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 11: GOODWILL 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: Solar Energy Storage Total Goodwill at December 31, 2022 $ 28,768 $ 2,421 $ 31,189 Changes during the year: Acquisitions 12,266 - 12,266 Foreign currency adjustments ( 402 ) ( 57 ) ( 459 ) Goodwill at December 31, 2023 40,632 2,364 42,996 Changes during the year: Acquisitions 11,344 - 11,344 Impairment losses - ( 2,251 ) ( 2,251 ) Foreign currency adjustments ( 3,596 ) ( 113 ) ( 3,709 ) Goodwill at December 31, 2024 $ 48,380 $ - $ 48,380 As of December 31, 2024 and December 31, 2023 there were $ 92,355 and $ 90,104 accumulated goodwill impairment losses, respectively. F - 38 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 12: OTHER LONG TERM ASSETS As of December 31, 2024 2023 Cloud computing arrangements 29,366 13,666 Investments in privately held companies 20,976 7,650 Severance pay fund 9,185 9,241 Prepaid expenses and other 5,209 4,606 Total other long term assets $ 64,736 $ 35,163 F - 39 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 13: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES 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 $ 1,262 $ 4,477 Non-designated hedges Prepaid expenses and other current assets - 410 Total derivative assets $ 1,262 $ 4,887 Gains (losses) on derivative instruments are summarized below: Year ended December 31, Affected line item 2024 2023 2022 Foreign exchange contracts Non Designated Hedging Instruments Consolidated Statements of Income - Financial income (expense), net $ 802 $ 2,337 $ 4,716 Designated Hedging Instruments Consolidated Statements of Comprehensive Income - Cash flow hedges $ ( 445 ) $ ( 1,990 ) $ ( 8,965 ) See Note 22 for information regarding gains (losses) from designated hedging instruments reclassified from accumulated other comprehensive loss. F - 40 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 14: FAIR VALUE MEASUREMENTS In accordance with ASC 820, the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique. 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 Description Fair Value Hierarchy December 31, 2024 December 31, 2023 Assets: Cash, cash equivalents and restricted cash: Cash Level 1 $ 239,020 $ 309,521 Money market mutual funds Level 1 $ 21,075 $ 22,311 Deposits Level 1 $ 14,516 $ 6,636 Restricted cash Level 1 $ 135,328 $ - Derivative instruments Level 2 $ 1,262 $ 4,887 Short-term marketable securities: Corporate bonds Level 2 $ 289,856 $ 481,820 U.S. Treasury securities Level 2 $ 12,594 $ 15,261 U.S. Government agency securities Level 2 $ 8,829 $ 8,795 Non-U.S. Government securities Level 2 $ - $ 15,694 Long-term marketable securities: Corporate bonds Level 2 $ 36,241 $ 339,681 U.S. Treasury securities Level 2 $ - $ 2,408 U.S. Government agency securities Level 2 $ 6,356 $ 44,086 Non-U.S. Government securities Level 2 $ - $ 21,650 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. F - 41 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 15: 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, 2024 2023 2022 Balance, at the beginning of the period $ 518,244 $ 385,057 $ 265,160 Accruals for warranty during the period 60,137 250,266 211,202 Changes in estimates ( 5,345 ) 20,017 1,914 Settlements ( 140,671 ) ( 137,096 ) ( 93,219 ) Balance, at end of the period 432,365 518,244 385,057 Less current portion ( 140,249 ) ( 183,047 ) ( 103,975 ) Long term portion $ 292,116 $ 335,197 $ 281,082 NOTE 16: 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, 2024 2023 2022 Balance, at the beginning of the period $ 255,443 $ 213,577 $ 169,345 Revenue recognized ( 41,035 ) ( 29,650 ) ( 23,017 ) Increase in deferred revenues and customer advances 157,511 71,516 67,249 Balance, at the end of the period 371,919 255,443 213,577 Less current portion ( 140,870 ) ( 40,836 ) ( 26,641 ) Long term portion $ 231,049 $ 214,607 $ 186,936 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: 2025 $ 140,870 2026 14,019 2027 11,947 2028 11,008 2029 10,668 Thereafter 183,407 Total deferred revenues $ 371,919 F - 42 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 17: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES As of December 31, 2024 2023 Accrued expenses $ 164,493 $ 142,130 Government authorities 51,705 34,309 Operating lease liabilities 11,861 17,704 Accrual for sales incentives 11,671 5,862 Other 4,142 5,906 Total accrued expenses and other current liabilities $ 243,872 $ 205,911 NOTE 18: CONVERTIBLE SENIOR NOTES 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 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. F - 43 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. F - 44 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, 2024 2023 Notes 2025 Principal $ 347,500 $ 632,500 Unamortized issuance costs ( 1,195 ) ( 5,119 ) Net carrying amount Notes 2025 $ 346,305 $ 627,381 Notes 2029 Principal 337,000 - Unamortized issuance costs ( 6,994 ) - Net carrying amount Notes 2029 330,006 - Total notes carrying amount $ 676,311 $ 627,381 Costs related to the Notes 2025 and the Notes 2029 were as follows: Year ended December 31, 2024 2023 2022 Notes 2025 Debt issuance cost $ 2,280 $ 2,930 $ 2,916 Notes 2029 Debt issuance cost $ 792 $ - $ - Contractual interest expense $ 3,854 $ - $ - F - 45 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. NOTE 19: OTHER LONG TERM LIABILITIES As of December 31, 2024 2023 Tax liabilities $ 1,111 $ 3,577 Accrued severance pay 6,079 12,967 Other 1,236 1,900 $ 8,426 $ 18,444 F - 46 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 20: STOCK CAPITAL a. Common stock rights: 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. b. Secondary public offering: 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. LLC, J.P. Morgan Securities LLC, and Morgan Stanley & Co. 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 . c. Equity Incentive Plans: 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, 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 . The Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company. In 2021, the Company has also committed to issuing additional shares, which 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. F - 47 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. 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 474,280 $ 44.68 5.22 $ 112,479 Exercised ( 135,008 ) 29.77 - - Forfeited or expired ( 243 ) 5.01 - - Outstanding as of December 31, 2022 339,029 $ 50.64 4.86 $ 79,414 Vested and expected to vest as of December 31, 2022 338,345 $ 50.45 4.85 $ 79,315 Exercisable as of December 31, 2022 300,865 $ 38.52 4.58 $ 73,875 Outstanding as of December 31, 2022 339,029 $ 50.64 4.86 $ 79,414 Exercised ( 21,613 ) 10.48 - 3,572 Outstanding as of December 31, 2023 317,416 $ 53.38 4.05 $ 17,366 Vested and expected to vest as of December 31, 2023 317,166 $ 53.24 4.05 $ 17,366 Exercisable as of December 31, 2023 307,719 $ 47.70 3.97 $ 17,366 Outstanding as of December 31, 2023 317,416 $ 53.38 4.05 $ 17,366 Exercised ( 33,331 ) 5.18 - 750 Forfeited or expired ( 666 ) 3.96 - - Outstanding as of December 31, 2024 283,419 $ 59.16 3.42 $ 17 Vested and expected to vest as of December 31, 2024 283,382 $ 59.13 3.44 $ 17 Exercisable as of December 31, 2024 282,196 $ 58.07 3.43 $ 17 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. F - 48 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: RSU PSU Number of Shares Outstanding Weighted average grant date fair value Number of Shares Outstanding Weighted average grant date fair value Unvested as of January 1, 2022 1,759,972 $ 189.25 108,595 $ 296.40 Granted 683,548 266.06 40,637 294.48 Vested ( 805,872 ) 131.79 - - Forfeited ( 149,133 ) 214.65 - - Unvested as of December 31, 2022 1,488,515 232.05 149,232 295.88 Granted 1,138,764 134.44 32,348 314.22 Vested ( 661,967 ) 198.16 ( 107,165 ) 296.76 Forfeited ( 105,026 ) 253.80 - - Unvested as of December 31, 2023 1,860,286 182.52 74,415 302.58 Granted 2,737,530 34.62 292,932 31.46 Vested ( 749,031 ) 173.07 ( 14,543 ) 298.92 Forfeited ( 453,438 ) 143.44 ( 18,550 ) 259.59 Unvested as of December 31, 2024 3,395,347 $ 70.62 334,254 $ 67.52 d. Employee Stock Purchase Plan: 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. F - 49 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) e. Stock-based compensation expenses: The Company recognized stock-based compensation expenses related to all stock-based awards in the consolidated statement of income (loss) for the years ended December 31, 2024, 2023 and 2022, as follows: Year ended December 31, 2024 2023 2022 Stock-based compensation expenses: Cost of revenues $ 21,952 $ 23,200 $ 21,818 Research and development 62,546 66,944 63,211 Sales and marketing 27,328 30,987 31,017 General and administrative 25,425 28,814 29,493 Total stock-based compensation expenses $ 137,251 $ 149,945 $ 145,539 Stock-based compensation capitalized: Inventory $ 3,100 $ 2,460 $ - Other long-term assets 1,926 1,666 380 Total stock-based compensation capitalized $ 5,026 $ 4,126 $ 380 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. f. 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 . F - 50 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 21: COMMITMENTS AND CONTINGENT LIABILITIES a. Guarantees: 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. b. Contractual purchase obligations: 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. c. Legal claims: 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. F - 51 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. Lowe. 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. F - 52 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 22: ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Unrealized gains (losses) on available-for-sale marketable securities Unrealized gains (losses) on cash flow hedges Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment in nature Unrealized gains (losses) on foreign currency translation Total Beginning balance as of January 1, 2022 $ ( 4,709 ) $ 874 $ ( 17,420 ) $ ( 6,064 ) $ ( 27,319 ) Revaluation ( 26,944 ) ( 9,890 ) ( 20,540 ) ( 1,875 ) ( 59,249 ) Tax on revaluation 5,583 925 - - 6,508 Other comprehensive loss before reclassifications ( 21,361 ) ( 8,965 ) ( 20,540 ) ( 1,875 ) ( 52,741 ) Reclassification 736 7,024 - - 7,760 Tax on reclassification ( 115 ) ( 694 ) - - ( 809 ) Losses reclassified from accumulated other comprehensive income 621 6,330 - - 6,951 Net current period other comprehensive loss ( 20,740 ) ( 2,635 ) ( 20,540 ) ( 1,875 ) ( 45,790 ) Ending balance as of December 31, 2022 $ ( 25,449 ) $ ( 1,761 ) $ ( 37,960 ) $ ( 7,939 ) $ ( 73,109 ) Revaluation 25,898 ( 1,973 ) ( 5,375 ) 5,409 23,959 Tax on revaluation ( 5,487 ) ( 17 ) - - ( 5,504 ) Other comprehensive income (loss) before reclassifications 20,411 ( 1,990 ) ( 5,375 ) 5,409 18,455 Reclassification 107 8,325 - - 8,432 Tax on reclassification ( 29 ) ( 634 ) - - ( 663 ) Losses reclassified from accumulated other comprehensive income 78 7,691 - - 7,769 Net current period other comprehensive (income) loss 20,489 5,701 ( 5,375 ) 5,409 26,224 Ending balance as of December 31, 2023 $ ( 4,960 ) $ 3,940 $ ( 43,335 ) $ ( 2,530 ) $ ( 46,885 ) Revaluation 8,782 ( 678 ) ( 35,379 ) 3,890 ( 23,385 ) Tax on revaluation ( 1,995 ) 233 - - ( 1,762 ) Other comprehensive income (loss) before reclassifications 6,787 ( 445 ) ( 35,379 ) 3,890 ( 25,147 ) Reclassification ( 2,966 ) ( 2,538 ) - - ( 5,504 ) Tax on reclassification 754 305 - - 1,059 Losses reclassified from accumulated other comprehensive income ( 2,212 ) ( 2,233 ) - - ( 4,445 ) Net current period other comprehensive income (loss) 4,575 ( 2,678 ) ( 35,379 ) 3,890 ( 29,592 ) Ending balance as of December 31, 2024 $ ( 385 ) $ 1,262 $ ( 78,714 ) $ 1,360 $ ( 76,477 ) F - 53 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) 2024 2023 2022 Unrealized gains (losses) on available-for-sale marketable securities $ 2,966 $ ( 107 ) $ ( 736 ) Financial income (expenses), net ( 754 ) 29 115 Income taxes $ 2,212 $ ( 78 ) $ ( 621 ) Total, net of income taxes Unrealized gains (losses) on cash flow hedges 296 ( 964 ) ( 801 ) Cost of revenues 1,487 ( 4,981 ) ( 4,142 ) Research and development 327 ( 1,057 ) ( 959 ) Sales and marketing 428 ( 1,323 ) ( 1,122 ) General and administrative $ 2,538 $ ( 8,325 ) $ ( 7,024 ) Total, before income taxes ( 305 ) 634 694 Income taxes 2,233 ( 7,691 ) ( 6,330 ) Total, net of income taxes Total reclassifications for the period $ 4,445 $ ( 7,769 ) $ ( 6,951 ) F - 54 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 23: EARNINGS (LOSS) PER SHARE The following table presents the computation of basic and diluted earnings (loss) per share (“EPS”): Year ended December 31, 2024 2023 2022 Basic EPS: Numerator: Net income (loss) $ ( 1,806,357 ) $ 34,329 $ 93,779 Denominator: Shares used in computing net earnings (loss) per share of common stock, basic 57,082,182 56,557,106 55,087,770 Diluted EPS: Numerator: Net income (loss) attributable to common stock, basic $ ( 1,806,357 ) $ 34,329 $ 93,779 Notes due 2025 - - 2,203 Net income (loss) attributable to common stock, diluted $ ( 1,806,357 ) $ 34,329 $ 95,982 Denominator: Shares used in computing net earnings (loss) per share of common stock, basic 57,082,182 56,557,106 55,087,770 Notes due 2025 - - 2,276,818 Effect of stock-based awards - 680,412 736,061 Shares used in computing net earnings (loss) per share of common stock, diluted 57,082,182 57,237,518 58,100,649 Earnings (loss) per share: Basic $ ( 31.64 ) $ 0.61 $ 1.70 Diluted $ ( 31.64 ) $ 0.60 $ 1.65 F - 55 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, 2024 2023 2022 Stock-based awards 2,203,364 666,217 773,853 Notes 2025 2,056,978 2,276,818 - Notes 2029 1 2,521,310 - - Total shares excluded 6,781,652 2,943,035 773,853 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. NOTE 24: OTHER OPERATING EXPENSES, NET Year ended December 31, 2024 2023 2022 Impairment of intangible assets and goodwill $ 24,674 $ 5,622 $ 118,492 Impairment and disposal by abandonment of property, plant and equipment 224,772 25,168 649 Other 10,081 524 ( 2,603 ) Total other operating expense, net $ 259,527 $ 31,314 $ 116,538 F - 56 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 25: RESTRUCTURING AND OTHER EXIT ACTIVITIES 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: Solar All other Employee termination costs Contract termination and other Employee termination costs Inventory write-down Contract termination and other Total Cost of revenues $ 1,939 $ 13,388 $ 82 $ 6,918 $ 17,921 $ 40,248 Research and development 3,560 248 560 - - 4,368 Sales and marketing 1,113 - 115 - - 1,228 General and administrative 568 118 262 - - 948 Other operating expenses - - - - 2,356 2,356 Total $ 7,180 $ 13,754 $ 1,019 $ 6,918 $ 20,277 $ 49,148 Restructuring and other exit charges for the year ended December 31, 2023 by segments and type of cost were as follows: Solar All other Employee termination costs Contract termination and other Employee termination costs Inventory write-down Contract termination and other Total Cost of revenues $ 2,561 $ 20,593 $ - $ 27,159 $ 9,489 $ 59,802 Sales and marketing - - 4 - - 4 General and administrative - - 297 - 87 384 Total $ 2,561 $ 20,593 $ 301 $ 27,159 $ 9,576 $ 60,190 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 $ 2,373 $ 27,774 $ 30,393 Charges 8,199 6,918 34,031 Cash payments ( 9,499 ) - ( 40,491 ) Non-cash utilization and other - ( 34,692 ) - Balance as of December 31, 2024 $ 1,073 $ - $ 23,933 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 and employee terminations related to the all other segment, is $ 6,765 . F - 57 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 26: INCOME TAXES a. Tax rates in the U.S: The Company is subject to U.S. federal tax at the rate of 21 %. 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. 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. 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). b. Corporate tax in Israel: 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. c. Carryforward tax losses: As of December 31, 2024, the foreign subsidiaries have carryforward tax losses of $ 1,292 which do not have an expiration date. d. Deferred taxes: 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. F - 58 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: December 31, 2024 2023 Deferred tax assets, net: Research and Development carryforward expenses $ 15,857 $ 25,527 Carryforward tax losses (1) 219,341 44,294 Stock based compensation expenses 38,499 28,715 Deferred revenue 12,999 13,244 Lease liabilities 10,634 12,872 Inventory Impairment 10,833 11,136 Foreign currency translation 13,672 4,985 Property, plant and equipment 11,662 - Allowance and other reserves 20,549 17,367 Total Gross deferred tax assets, net 354,046 158,140 Less, Valuation Allowance ( 331,816 ) ( 51,245 ) Total deferred tax assets, net 22,230 106,895 Deferred tax liabilities, net: Intercompany transactions ( 4,200 ) ( 4,470 ) Right-of-use assets ( 11,066 ) ( 13,353 ) Purchase price allocation ( 3,149 ) ( 4,129 ) Property, plant and equipment ( 4,377 ) ( 5,481 ) Other ( 549 ) - Total deferred tax liabilities, net $ ( 23,341 ) $ ( 27,433 ) Recorded as: Deferred tax assets, net $ - $ 80,912 Deferred tax liabilities, net ( 1,111 ) ( 1,450 ) Net deferred tax assets (liabilities) $ ( 1,111 ) $ 79,462 (1) Related to deferred tax assets that would only be realizable upon the generation of net income in certain foreign jurisdictions. 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. F - 59 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) e. Uncertain tax positions are comprised as follows: December 31, 2024 2023 2022 Balance, at the beginning of the period $ 15,908 $ 2,756 $ 2,192 Increases related to current year tax positions - 1,502 564 Increase for tax positions related to prior years 16,418 11,778 - Decreases related to prior year tax positions - ( 128 ) - Balance, at end of the period $ 32,326 $ 15,908 $ 2,756 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. f. Income (loss) before income taxes are comprised as follows: Year ended December 31, 2024 2023 2022 Domestic $ ( 4,169 ) $ 49,758 $ 47,324 Foreign ( 1,704,142 ) 31,341 129,831 Income (loss) before income taxes $ ( 1,708,311 ) $ 81,099 $ 177,155 g. Income taxes (tax benefit) are comprised as follows: Year ended December 31, 2024 2023 2022 Current taxes: Domestic $ 4,036 $ 42,960 $ 56,958 Foreign 12,905 46,531 37,473 Total current taxes 16,941 89,491 94,431 Deferred taxes: Domestic 18,163 ( 2,244 ) ( 8,955 ) Foreign 61,046 ( 40,827 ) ( 2,100 ) Total deferred taxes 79,209 ( 43,071 ) ( 11,055 ) Income taxes, net $ 96,150 $ 46,420 $ 83,376 F - 60 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) h. 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, 2024 2023 2022 Statutory tax rate 21 % 21 % 21 % Effect of: Income tax at rate other than the U.S. statutory tax rate ( 0.64 )% ( 37.3 )% ( 10.8 )% Losses and timing differences for which valuation allowance was provided ( 26.09 )% 27.7 % 5.2 % Prior year income taxes (benefit) ( 0.03 )% ( 1.0 )% 2.9 % R&D Capitalization and other effects of TCJA - % 42.5 % 18.9 % Non-deductible expenses ( 2.85 )% 4.5 % 13.2 % IRA tax benefits 2.85 % - % - % Other individually immaterial income tax items, net 0.13 % ( 0.2 )% ( 3.3 )% Effective tax rate ( 5.63 )% 57.2 % 47.1 % 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. i. Tax assessments: 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. The statute of limitations relating to the consolidated U.S. federal income tax return is closed for all tax years up to and including 2020. 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. F - 61 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) j. 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. F - 62 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. k. 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. F - 63 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 27: FINANCIAL INCOME (EXPENSE), NET Year ended December 31, 2024 2023 2022 Exchange rate (loss) gain, net $ ( 13,513 ) $ 24,181 $ ( 1,547 ) Interest income on marketable securities 17,893 25,668 10,551 Allowance for credit losses allocated to loan receivables ( 17,528 ) ( 144 ) - Convertible note ( 6,926 ) ( 2,930 ) ( 2,916 ) Hedging 802 2,337 4,716 Financing component expenses related to ASC 606 ( 11,805 ) ( 9,773 ) ( 7,038 ) Bank charges ( 1,242 ) ( 1,418 ) ( 1,584 ) Interest income 16,427 7,494 2,932 Interest expense ( 1,156 ) ( 1,269 ) ( 1,530 ) Other 2,478 ( 2,934 ) 166 Total financial income (expenses), net $ ( 14,570 ) $ 41,212 $ 3,750 NOTE 28: SEGMENT, GEOGRAPHIC AND PRODUCT INFORMATION a. Segment Information: 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). F - 64 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: Year ended December 31, 2024 Solar All other Revenues $ 842,440 $ 58,032 Less: Direct costs of goods 480,001 50,746 Salaries 349,889 16,792 Inventory costs 683,543 73,568 Shipment and logistics 69,968 760 Warranty 70,031 ( 1,589 ) Depreciation 46,180 1,577 Other directly related overhead costs 50,077 4,175 Other 1 226,148 33,145 Segments profit (loss) $ ( 1,133,397 ) $ ( 121,142 ) Year ended December 31, 2023 Solar All other Revenues $ 2,815,539 $ 160,155 Less: Direct costs of goods 1,188,078 154,774 Salaries 378,051 31,190 Inventory costs 22,545 10,397 Shipment and logistics 205,122 5,002 Warranty 313,173 ( 2,987 ) Depreciation 43,179 1,972 Other directly related overhead costs 45,939 4,851 Other 1 254,935 29,449 Segments profit (loss) $ 364,517 $ ( 74,493 ) F - 65 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) Year ended December 31, 2022 Solar All other Revenues $ 2,921,175 $ 188,490 Less: Direct costs of goods 1,282,650 156,927 Salaries 338,062 40,163 Inventory costs 9,301 256 Shipment and logistics 249,159 8,593 Warranty 235,214 4,458 Depreciation 34,255 2,004 Other directly related overhead costs 37,653 4,587 Other 1 248,019 16,639 Segments profit (loss) $ 486,862 $ ( 45,137 ) 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, 2024 2023 2022 Solar segment revenues $ 842,440 $ 2,815,539 $ 2,921,175 All other segment revenues 58,032 160,155 188,490 Revenues from financing component 984 834 614 Consolidated revenues $ 901,456 $ 2,976,528 $ 3,110,279 F - 66 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, 2024 2023 2022 Solar segment profit $ ( 1,133,397 ) $ 364,517 $ 486,862 All other segment loss ( 121,142 ) ( 74,493 ) ( 45,137 ) Segments operating profit ( 1,254,539 ) 290,024 441,725 Amounts not allocated to segments: Stock based compensation expenses ( 137,251 ) ( 149,945 ) ( 145,539 ) Amortization and depreciation of acquired assets ( 8,017 ) ( 7,969 ) ( 9,478 ) Impairment and disposal by abandonment of long-lived assets ( 251,823 ) ( 30,790 ) ( 119,141 ) Restructuring and other exit activities ( 49,148 ) ( 60,190 ) ( 4,314 ) Other unallocated income (expenses), net ( 7,510 ) ( 925 ) 2,867 Consolidated operating income (loss) ( 1,708,288 ) 40,205 166,120 Financial income (expense), net ( 14,570 ) 41,212 3,750 Other income (loss), net 14,547 ( 318 ) 7,285 Income (loss) before income taxes $ ( 1,708,311 ) $ 81,099 $ 177,155 b. Revenues by geographic, based on customers’ location: Year ended December 31, 2024 2023 2022 United States $ 379,617 $ 759,611 $ 1,133,798 Europe (*) 163,561 661,542 528,197 Germany 83,217 692,047 449,160 Netherlands 13,586 326,314 382,226 Italy 62,276 223,943 330,565 Rest of the world 199,199 313,071 286,333 Total revenues $ 901,456 $ 2,976,528 $ 3,110,279 (*) Except for Germany, Netherlands and Italy F - 67 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) c. Revenues by type: Year ended December 31, 2024 2023 2022 Inverters $ 247,634 $ 1,374,026 $ 1,137,142 Optimizers 314,916 902,411 1,135,040 Batteries for PV applications 190,460 378,275 429,119 Energy storage systems 49,913 83,717 76,325 e-Mobility components and telematics 2,398 68,425 94,446 Communication 5,423 32,945 72,812 Others 90,712 136,729 165,395 Total revenues $ 901,456 $ 2,976,528 $ 3,110,279 d. Long-lived assets by geographic location: As of December 31, 2024 2023 Israel $ 266,254 $ 364,438 Korea - 199,422 United States 87,715 47,083 China 6,898 38,037 Europe 19,741 23,478 Other 4,223 6,288 Total long-lived assets (*) $ 384,831 $ 678,746 (*) Long-lived assets are comprised of property and equipment, net and Operating lease right-of-use assets, net. F - 68 SOLAREDGE TECHNOLOGIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (in thousands, except per share data) NOTE 29: SUBSEQUENT EVENTS 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. - - - - - - - - - - - - - - - - - - - - - F - 69 ITEM 9 . Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.