SOLAREDGE TECHNOLOGIES, INC. 10-Q

ITEM 1A . Risk Factors In addition to the other information set forth in this report, you should carefully consider the risks set forth below and the risk factors as described in Part I, Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2024 . Other than the risk factors set forth below, there have been no material changes to the risk factors previously disclosed in the 2024 Form 10-K. Changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Inflation Reduction Act and the One Big Beautiful Bill Act could reduce demand for our products, reduce or eliminate tax credits available to us and to our customers, harm our business and otherwise adversely impact our results of operations. National, state and local government bodies in many countries, including the United States, have provided incentives in the form of rebates, tax credits, feed-in tariffs and others to manufacturers, system owners, distributors and installers of solar PV systems and battery energy storage systems. In August 2022, the IRA was signed into federal law. The IRA provided for, among other things, certain incentives, including certain tax credits for solar energy, that are significant to the Company and its U.S. based customers. On July 4, 2025, H.R.1 was enacted into law, introducing amendments to clean energy tax credits contained in the IRA. The H.R.1 accelerates the phase-out timeline for our customers' tax credits and imposes new eligibility criteria for the Company and our customers. The Company has invested significant resources in establishing our manufacturing presence in the U.S. to benefit from the incentives available under the IRA, including tax credits available to us for manufacturing in the U.S. and tax credits available to certain of our US customers. The Company established manufacturing capabilities in the U.S. in 2023 and further expanded such capabilities in 2024 and 2025. Moreover, we incorporate into our planning and agreements with our customers and suppliers certain assumptions regarding U.S. tax incentives. Material changes thereto could adversely affect our revenue, our eligibility for certain tax credits, tax credits available to our customers, competitiveness and demand for our products and our financial condition. Section 45X of the Code, as enacted by the IRA, offers Advanced Manufacturing Production Tax Credits (“AMPTC”s) that incentivize the manufacturing of eligible components within the U.S. Of particular relevance to the Company are the tax credits that we generate as a result of rules concerning the qualification and measurement of AMPTCs to Residential Inverters, Commercial Inverters and DC-Optimized Inverter Systems that we manufacture in the United States. H.R.1 does not shorten the term of such Section 45X credits. Among other changes, H.R.1 shortens the term of the investment tax credit and production tax credit under Section 48E and 45Y of the Code, available to the Company’s customers, who are engaged in third-party ownership (“TPO”) models, such as residential solar leases and power purchase agreements, and commercial solar customers and developers, shortening the end date from 2034 to 2027. H.R.1 also includes a 12-month window in which such customers can begin construction, giving them four years to complete their projects. Projects begun after twelve months from enactment of H.R.1 must be placed in service by December 31, 2027, to receive the credit. H.R.1 also amends the domestic content bonus credit rules for Section 48E projects: Projects commencing construction after June 16, 2025 must meet a 45% domestic content threshold, up from 40%, and the threshold thereafter increases by 5% on an annual basis until 2029. H.R.1 eliminates the individual residential tax credit under Section 25D of the Code at the end of 2025. These changes may negatively impact the eligibility of our customers and individuals to obtain tax credits, which may negatively affect the overall demand for our products. H.R.1 has also introduced new Foreign Entity of Concern (“FEOC”) requirements including for Sections 45X, 45Y, and 48E of the Code. These restrictions will require threshold percentages of non-FEOC material assistance that increase over time, for projects that begin on January 1, 2026. On July 7, 2025, the President issued an Executive Order titled “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources.” In response, on August 15, 2025, the U.S. Treasury Department released IRS Notice 2025-42, its first set of guidance for H.R. 1 related to beginning of construction requirements applicable to our customers. While it removed the ability for projects over 1.5 GW to utilize the 5% safe harbor method, it kept in place the ability to utilize the physical work test method for all size projects and codified that inverters could be utilized for this method. The U.S Department of Treasury is expected to provide additional guidance on the FEOC requirements included in H.R. 1 that could create challenges for the Company to meet the FEOC requirements or to assist our customers in meeting them. If we are unable to meet the requirements this may adversely affect our revenue, or our customers eligibility to obtain certain tax credits, the overall demand for our products, our results of operations and cash flows. Unfavorable regulatory treatment, or guidance, expiration of or changes to the benefits made available, which we relied upon in structuring certain projects and investments, or any adverse impacts on our ability to increase production in the U.S. in a timely manner to benefit from the incentives available under the IRA and H.R.1, could adversely impact our business and financial condition. The U.S. Administration and to a lesser extent, portions of the European Union, have expressed a prioritization of fossil fuels over renewable energy. For example, in Germany there is a discussion regarding the possibility of reducing small residential customer’s feed-in tariffs. If successful, certain of these legislative actions could further slow the solar market potentially resulting in adverse effects on overall demand for our products, impacts to our revenue, operations and cash flows. SOLAREDGE TECHNOLOGIES INC. | 2025 Form 10-Q | 20 Changes in the global trade environment, including the United States trade environment, such as the increase or imposition of import tariffs, could adversely affect the amount or timing of our revenue, results of operations or cash flows. The United States has recently imposed significant new tariffs on nearly all products and components imported into the United States and could propose additional tariffs or increases to those already in place. We have relocated our contract manufacturing to the United States, where we manufacture the vast bulk of our products. We continue to manufacture a minor portion of our products in Israel, at our Sella 1 facility. However, certain components and subcomponents necessary for our products are currently required to be imported from outside the U.S. It is unknown whether and to what extent these tariffs will remain in place or if other new laws or regulations will be adopted. In addition, retaliatory tariffs may be imposed on products exported from the United States to other countries in which we sell our products. Due to broad uncertainty regarding the breadth, timing and extent of any regulatory changes related to trade, in the United States or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition, ability to compete, and the results of operations. It is unknown what effect any such new tariffs or retaliatory actions will have on the solar industry and our customers. The resulting environment of escalating trade tension, retaliatory trade tension, or other trade actions, restrictive measures, additional trade restrictions, or barriers, if implemented on a broader range of products or components from outside the United States, or with respect to products shipped from the United States, could harm our ability to obtain necessary product components or to sell our products at prices customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations and cash flows. Furthermore, if the price of solar power systems in the United States increases, as well as the cost of manufacturing our products in the United States, the use of solar power systems could become less economically feasible and could reduce our gross margins or reduce the demand of solar power systems manufactured and sold, which in turn may decrease demand for our products. Additionally, existing or future tariffs could negatively affect key partners, suppliers and manufacturers. Such outcomes could adversely affect the amount or timing of our revenue, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products. It is difficult to predict what further trade-related actions the U.S. and other governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions. As additional new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or if affected countries take retaliatory trade actions, such changes could have a material adverse effect on our business, financial condition, results of operations or cash flows. ITEM 2 . Unregistered Sales of Equity Securities and Use of Proceeds. None ITEM 3 . Defaults upon Senior Securities. None SOLAREDGE TECHNOLOGIES INC. | 2025 Form 10-Q | 21 ITEM 4 . Mine Safety Disclosures Not applicable.