SOLAREDGE TECHNOLOGIES, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements contained in this Form 10-Q or statements incorporated by reference from documents we have filed with the Securities and Exchange Commission may contain forward-looking statements that are based on our management’s expectations, estimates, projections, beliefs and assumptions and on information currently available to our management. The forward-looking statements should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this report. This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, backlog, industry and regulatory environment, effects of acquisitions, growth opportunities, potential future impairments, and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking and other statements regarding our sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or requiring disclosure in our filing with the Securities and Exchange Commission (“SEC”). In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future, including future rule-making. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this filing. Important factors that could cause actual results to differ materially from our expectations include: • Future demand for renewable energy, including solar energy solutions; • our ability to be profitable in the future; • the rapidly evolving and competitive nature of the solar industry; changes in tax laws, tax treaties, regulations, guidance or the interpretation of them, including the Inflation Reduction Act and the H.R.1; • fluctuations in demand for solar energy solutions, including if demand for solar energy solutions does not resume growth or grows at a slower rate than anticipated; • macroeconomic conditions in our domestic and international markets, such as inflation concerns, interest rates and recessionary concerns; • changes in the U.S. and global trade environments, including the imposition and/or increase of import tariffs or other restrictive trade measures; • the retail price of electricity derived from the utility grid or alternative energy sources; • interest rates and supply of capital in the global financial markets in general and in the PV market specifically; • competition, including introduction of power optimizers and inverters, electric vehicle ("EV") chargers, batteries and photovoltaic (“PV”) system monitoring products by our competitors; • our reliance on distributors and large installers to assist in selling our products, and the failure of these customers to perform as expected. • developments in alternative technologies or improvements in distributed solar energy generation; • historic cyclicality of the solar industry and periodic downturns; • product quality or performance problems in our products; • changes in our geographic footprint or product and service offerings; • our dependence upon a small number of outside contract manufacturers and limited or single source suppliers; • delays, disruptions, and quality control problems in manufacturing; • shortages, delays, price changes, or cessation of operations or production affecting our suppliers of key components; SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 3 • capacity constraints, delivery schedules, manufacturing yields, and costs of our contract manufacturers and availability of components; • changing political, geopolitical conditions, and the conditions of the global energy market; • performance of distributors and large installers in selling our products; • consolidation in the solar industry among our customers and distributors; • our ability to implement our new Enterprise Resource Planning ("ERP") system; • discontinuation of our e-Mobility business, energy storage business, and PV Tracker business; • our ability to successfully operate our global operations with a reduced work force; • our ability to recognize expected benefits from restructuring plans; • any unauthorized access to, disclosure, or theft of personal information or unauthorized access to our network or other similar cyber incidents; • attempts by third parties, our employees, or our vendors might gain unauthorized access to our network or seek to compromise our products and services; • emerging issues related to the development and use of artificial intelligence; • loss of key executives, and our ability to retain key personnel and attract additional qualified personnel; • disruption to our business operations due to the evolving conflict in Israel and other conditions in Israel that affect our operations; • tax benefits that are available to us under Israeli law require us to meet various conditions and may be terminated or reduced in the future; • difficulty to enforce a judgment of a U.S. court against our officers and directors, to assert U.S. securities laws claims in Israel; • our dependence on ocean transportation to timely deliver our products in a cost-effective manner; • entry into business engagements with South Korean military bodies; • fluctuations in global currency exchange rates; • the impact of evolving legal and regulatory requirements including emerging corporate social responsibility requirements; • existing and future responses to and effects of pandemics, epidemics or other health crises; • reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications; • changes to net metering policies may reduce demand for electricity from PV systems; • stringent and changing data privacy and security laws, rules, regulations and other obligations; • existing electric utility industry regulations and changes to regulations, may present technical, regulatory, and economic barriers to the purchase and use of PV systems; • business practices and regulatory compliance of our raw material suppliers; • our ability to maintain our brand and to protect and defend our intellectual property; • claims for remuneration or royalties for assigned service invention rights by our employees; • impairment of our goodwill or other long-lived and intangible assets; • volatility of our stock price; • provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management; • our certificate of incorporation includes a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum; • our customers’ financial stability, creditworthiness, and debt leverage ratio; • our liquidity and ability to service our debt; and the other factors set forth below in Part II, Item 1A under “Risk Factors” and in Part I, Item 1A under ”Risk Factors” in our Annual Report on Form 10-K/A for the year ended December 31, 2025 and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 4 Overview We are a global smart energy technology company. We develop, manufacture and sell products that address a broad range of energy market segments through our diversified product offering, including residential, commercial and large scale photovoltaic or PV, energy storage and backup solutions, EV charging capabilities, home energy management, grid services and virtual power plants. By leveraging engineering capabilities and with focusing on innovation, safety and reliability, we create smart energy solutions that power our lives and drive future progress. We launched or ramped up sales of several new products in the first quarter of 2026. Most notably, after we successfully launched our next-generation residential product portfolio, called SolarEdge Nexis, we continued the roll out with units installed in key markets. We also expanded our commercial energy storage business with CSS-OD, a102.4 kWh rated solution scalable up to megawatt hour size sites and with the 197 kWh battery, the CSS-OD 197, featuring a 50 kW or 100 kW battery inverter output, scalable up to 4MW hour size sites. Both solutions are suitable for outdoor or indoor installations. In Q1 2026, we continued the transition of our inverter products to a Single SKU concept. This is a software-defined platform that significantly reduces the complexity of our business for residential and commercial applications globally. It allows us to manufacture and ship one SKU of an inverter to the residential market, and minimal SKUs for the commercial market, which can then be programmed to the desired kilowatt rating in the field. This framework simplifies forecasting, manufacturing, inventory management, logistics, service and support, for both us and our customers. It also adds flexibility for home and business owners who can boost the inverter rating if a larger system is needed in the future. In light of the Inflation Reduction Act (the “IRA”) in the United States, which incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of products with domestic content, as well as by incentivizing local manufacturing of our products, we manufacture the vast majority of our products in the United States. This includes inverters in Texas, power optimizers and inverters in Florida, and batteries in Utah. As part of our effort to streamline and centralize, we have discontinued manufacturing in China, Mexico, and Hungary. We continue to manufacture a minor portion of our products in Israel at our Sella 1 facility. We also continue to maintain manufacturing capabilities in Vietnam. In the first quarter of 2026, we continued to strategically focus on our core markets and product lines to better align resources with markets and product lines that exhibit the strongest potential. As part of this strategic portfolio rationalization, we are concentrating our operations in key jurisdictions while discontinuing local activities in certain countries. Accordingly, we operate as one operating segment that constitutes consolidated results. Our revenues for the three months ended March 31, 2026 and March 31, 2025 were $310.5 million and $219.5 million, respectively. Gross profit as a percentage of revenue was 22.0%, for the three months ended March 31, 2026, compared to 8.0%, for the three months ended March 31, 2025. Net loss for the three months ended March 31, 2026, and March 31, 2025 was $57.4 million and $98.5 million, respectively. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 5 Global Circumstances Influencing our Business and Operations Demand for Products A prolonged softness in demand in the global market for PV products has continued to adversely impact the solar industry. Additionally, uncertainty related to changes in tariffs, trade policies, legislation, and guidance including from H.R.1, may contribute to growing market volatility and adversely impact customer demand for our products, pricing and our financial performance. Despite a prolonged softness in demand, we have seen an increase in sales due to more normalized channel inventory. Additionally, the attachment rate of batteries within solar installations is rising globally, which we believe has led an increase in demand for our batteries. I mpact of the H.R.1 on U.S. Tax Incentives In August 2022, the U.S. government enacted the IRA, which contains several provisions intended to accelerate U.S. manufacturing and adoption of clean energy such as solar, wind, hydrogen and electric vehicles and therefore had positive impacts on our business and operations along with the overall U.S. solar market. Some of the applicable provisions in the IRA that are positively impacting the market for renewable energy include the extension of 48E, the tech-neutral investment tax credit ITC, and 45Y, the tech-neutral PTC. The IRA includes incentives for residential and commercial solar customers and developers through the inclusion of ITCs for qualifying energy projects of up to 30% with a potential to gain further bonus credits such as through the utilization of Domestic Content. Section 45X of the IRA offers advanced manufacturing production credits (“AMPTCs”), that incentivize the production of eligible components within the United States. In light of such incentives, we established manufacturing capabilities in the United States starting in 2023 and further expanded such capabilities in 2024 and 2025. On October 24, 2024, the U.S. Internal Revenue Service (the “IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued a Notice of Proposed Rule followed by a Final Rule that became effective on December 27, 2024, concerning the application of Section 45X which contain details concerning eligibility, qualifying and accounting for AMPTCs for components produced and sold after December 31, 2022. 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. In 2024 and 2025, we sold a significant part of the AMPTCs that we generated from our U.S. production of eligible components. On July 4, 2025, H.R.1 was enacted into law introducing amendments to the clean energy tax credits contained in the IRA. The IRA provides energy tax credits that are significant to us and our U.S. based customers, and 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. H.R.1 accelerates the phase-out timeline for certain credits, eliminates the 25D individual homeowner credit, and imposes new eligibility criteria. Among other changes, H.R.1 shortens the term of the investment tax credit ("ITC") and production tax credit ("PTC") under Sections 48E and 45Y of the Code, used by customers of SolarEdge 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. However, H.R.1 also includes a 12-month period in which such customers can begin construction giving them four years to complete their projects through the end of 2030. Projects begun after twelve months from enactment (July 4, 2026) of H.R.1 must be placed in service by December 31, 2027, to receive the credit. H.R.1 eliminated 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. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 6 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%. Since January 1, 2026, such threshold was increased to 50% and shall thereafter be further increased by 5% on an annual basis, until 2029. In addition, H.R.1 introduced new Prohibited Foreign Entities ("PFE") requirements for Sections 45X, 45Y, and 48E of the Code. Since January 1, 2026, these restrictions require threshold percentages of non-PFE components that increase over time. Currently, we manufacture components aimed at helping our customers meet their non-PFE percentage requirements. However, if the Treasury were to release new rules or guidance that impact our ability to provide components with non-PFE percentages towards their total requirement, our customers’ eligibility to qualify for certain tax credits could be impaired, which may adversely affect our revenue, gross margins, business operations and competitive position. In addition, as of January 1, 2026, in order to receive the 45X credit, manufacturers must also reach a required percentage of non-PFE content in their manufactured components. Today, we meet the required threshold. However, if the Treasury guidance relating to the calculation of non-PFE content should change in a way that would impact our ability to reach that required percentage, it could have adverse impacts on our manufacturing costs, results of operations, cash flows, gross margin, and profits. On August 15, 2025, the Treasury and the IRS released 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 MW to utilize the 5% safe harbor method (still allowing projects equal to or less than 1.5 MW to continue using it), but kept in place the physical work test method for all projects. On February 12, 2026, the U.S Department of Treasury and IRS released IRS Notice 2026-15 providing additional guidance on H.R. 1 related to the PFE rules enacted in H.R.1. Specifically, this notice confirms the ability to rely on temporary safe harbor tables and existing safe harbor tables for the determination of material assistance from a PFE. This guidance provides answers to several compliance questions related to the Company’s 45X Credits material assistance calculations and its customers' 48E material assistance calculation among other things. While this removed some uncertainty around the Material Assistance Cost Ratio calculation, impending Notice of Proposed Rule and Final Rule on this same topic expected later this year could create challenges for the Company to meet the PFE 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, cash flows, gross margins and profits. To the extent that tax benefits or credits may be impacted through new regulation, issued guidance, interpretation, or by new laws passed by Congress, our business could be disadvantaged or advantaged. Reductions in AMPTCs, without an offsetting reduction in our manufacturing costs, would adversely affect our results of operations and cash flows, and have an adverse impact on our gross margin, which may include transitioning into a gross loss. We continue to monitor the benefits that may be available to us, such as the availability of tax credits for domestic manufacturers. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 7 Trade Tariff Uncertainties The current trade situation is creating uncertainty about what impact new or existing tariffs, trade restrictions or retaliatory actions may have on us, the solar industry, our partners, and our customers. On February 20, 2026, the Supreme Court of the United States (the "U.S. Supreme Court") issued a decision invalidating certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). Following this ruling, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection (“CBP”) to establish a process for the submission and review of refund claims related to affected IEEPA tariffs. On April 20, 2026, CBP launched an online portal through which companies may submit IEEPA tariff refund requests. Such claims are subject CBP review and validation, and the approval, timing, and amount of any refunds remain subject to CBP determination. As a result of this ruling, we may be eligible to receive tariff refunds. However, the realization of any such refunds remains uncertain, and there can be no assurance that any amounts will ultimately be received. In addition, following the U.S. Supreme Court’s decision, the Administration announced the imposition of new global tariffs of up to 15% under Section 122 of the Trade Act of 1974. 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. Certain critical subcomponents for our products are still sourced from outside the United States. If not resolved, the escalation in trade tensions or the implementation of broader tariffs, trade restrictions or other retaliatory measures on our products or components or subcomponents originating from countries outside of the United States, could adversely impact our ability to source necessary components or subcomponents, manufacture products at competitive cost, or sell our products at prices customers are willing to pay. In addition, retaliatory measures from other countries on products originating from the United States for export could adversely impact our ability to sell our products at competitive prices in such countries. Certain of the subcomponents used in our products are being imported to the United States from China, which may be subject to significantly increased tariffs. In light of the aforementioned, we continue to adjust our supply chains and are exploring alternative suppliers outside of China, however, there is no assurance that we will be successful in identifying suitable alternatives, or that such alternatives, if identified, will not result in increased costs or reduced operational efficiency. If the price of solar power systems 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 further 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 may 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. Any such developments could materially and adversely affect our business operations, results of operations and cash flows. Disruptions Due to the War in Israel Due to the war in Gaza that began on October 7, 2023, followed by additional military conflicts with Iran and Hezbollah in Lebanon during 2024, 2025 and the first quarter of 2026, some of our employees in Israel were called to active reserve duty and additional employees may be called in the future, if needed. In the three months ended March 31, 2026, approximately 6.8% of our employees in Israel were called to active reserve duty for varying periods. Despite the ceasefire framework agreed between Israel, Hamas, the United States and other countries in the region and the moderation of the hostilities involving Israel, Iran, Yemen and Lebanon, it is unknown whether any ceasefires or periods of relative calm will endure, or if other conflicts in Gaza, Lebanon, Yemen, Iran, or in the broader region will reemerge or escalate in the future. While our offices and facilities are open worldwide, including in Israel, and, to date, we have not had material disruptions to our ability to manufacture and deliver products and services to customers. A reemergence of conflicts in Israel could materially adversely affect our business, financial condition, and results of operations. Due to the ongoing and evolving nature of the conflict in Israel, and the extent of these events, the adverse effect on our business operations is still unknown. The majority of our key employees and officers are residents of Israel. If any of our facilities in Israel were to be damaged, destroyed or otherwise rendered unable to operate, whether due to war, acts of hostility, earthquakes, fire, floods, storms, other natural disasters, employee malfeasance, terrorist acts, power outages or otherwise, or if performance of our research and development is disrupted for any other reason, such an event could delay commercialization of our products, and if we choose to manufacture all or any part of them internally, jeopardize our ability to manufacture our products as promptly as our prospective customers will likely expect, or possibly at all. If we experience delays in achieving our development objectives within a timeframe that meets our prospective customers’ expectations, our business, prospects, financial results and reputation could be harmed. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 8 Performance Measures In managing our business and assessing financial performance, we supplement the information provided by our financial statements with other operating metrics. These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business and formulate projections. We provide the following metrics: (i) inverters recognized as revenue; (ii) power optimizers recognized as revenue; and (iii) Megawatt hours (MWh) of batteries recognized as revenue. Three Months Ended March 31, 1 2026 2025 Inverters recognized as revenue (in thousands) 50.5 72.0 Power optimizers recognized as revenue (in thousands) 2,438.4 2,113.2 Megawatt hours recognized as revenue - batteries 331 177 _______________________ 1 Metrics may not match those disclosed in the 10-Q for March 31, 2025 due to change in performance measures since that time. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 9 Results of Operations The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report. The following table sets forth selected consolidated statements of loss data for each of the periods indicated. Three Months Ended March 31, 2026 2025 (In thousands) Revenues $ 310,501 $ 219,480 Cost of revenues 242,220 201,944 Gross profit 68,281 17,536 Operating expenses: Research and development, net 50,155 61,997 Sales and marketing 27,449 31,657 General and administrative 36,422 30,183 Other operating expense (income), net 9,298 (3,575 ) Total operating expenses 123,324 120,262 Operating loss (55,043 ) (102,726 ) Financial income (expense), net (1,037 ) 10,068 Other income, net — 148 Loss before income taxes (56,080 ) (92,510 ) Income taxes (1,286 ) (5,726 ) Net loss from equity method investments — (287 ) Net loss $ (57,366 ) $ (98,523 ) SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 10 Comparison of three months ended March 31, 2026, and 2025 Revenues Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Revenues $ 310,501 $ 219,480 $ 91,021 41.5 % Revenues increased by $91.0 million, or 41.5%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to an increase of $35.9 million related to an increase in the number of power optimizers sold; an increase of $53.0 million related to an increase in the number of batteries sold; and an increase of $19.3 million related to more ancillary solar products sold; these were partially offset by (i) a decrease of $7.8 million in revenue from inverters sold; and (ii) a decrease of $7.0 million in revenues due to the discontinuation of our Energy Storage Business. Revenues from outside of the U.S. comprised 49.1% of our revenues in the three months ended March 31, 2026, compared to 39.8% in the three months ended March 31, 2025. The number of power optimizers recognized as revenues increased by approximately 0.3 million units, or 15.4%, from approximately 2.1 million units in the three months ended March 31, 2025 to approximately 2.4 million units in the three months ended March 31, 2026. The number of inverters recognized as revenues decreased by approximately 21.4 thousand units, or 29.8%, from approximately 72.0 thousand units in the three months ended March 31, 2025 to approximately 50.5 thousand units in the three months ended March 31, 2026. The megawatt hours of batteries recognized as revenues increased by approximately 154 megawatt hours, or 86.8% from approximately 177 in the three months ended March 31, 2025 to approximately 331 megawatt hours in the three months ended March 31, 2026 as a result of increase in demand. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 11 Cost of Revenues and Gross Profit Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Cost of revenues $ 242,220 $ 201,944 $ 40,276 19.9 % Gross profit $ 68,281 $ 17,536 $ 50,745 289.4 % Cost of revenues increased by $40.3 million, or 19.9%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to: an increase in the direct cost of revenues sold of $60.4 million associated primarily with an increase in the volume of products sold, offset by an increase in AMPTC recognized; excluding such AMPTC incentives would have caused us to transition into a gross loss, for both periods presented. This was partially offset by: • a decrease in warranty expenses of $9.9 million associated primarily with a lower cost of materials and changes in estimates and policies; and • a decrease in ramp-up and underutilization costs of $9.5 million. Gross profit as a percentage of revenue in the three months ended March 31, 2026 was 22.0%, compared to 8.0%, in the three months ended March 31, 2025, primarily due to: • lower absolute fixed and other production related costs, which were divided this period by higher revenues, resulting in higher gross margin of approximately 7.8%, • an improvement in the direct cost of revenue of approximately 6.5% associated primarily to product mix, increase of US made products and the AMPTC recognized, offset by an increase in costs due to the manufacturing in the U.S.; and • a decrease in warranty expenses of approximately 2.7% associated primarily with a lower cost of materials and changes in estimates and policies. These were partially offset by approximately 2.9% due to higher discontinuation and restructuring gains in the three months ended March 31, 2025. Excluding the AMPTC incentives would have caused our gross profit as a percentage of revenue to transition from a gross profit to a gross loss. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 12 Operating Expenses: Research and Development, net Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Research and development, net $ 50,155 $ 61,997 $ (11,842 ) (19.1 )% Research and development, net costs decreased by $11.8 million or 19.1%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to: • a decrease in personnel-related costs of $12.3 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics, which was partially offset by the weakening of the USD compared to the NIS; and • a decrease in depreciation and amortization of $1.0 million; This was partially offset by: • an increase in other directly overhead costs of $1.2 million. Sales and Marketing Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Sales and marketing $ 27,449 $ 31,657 % (4,208 ) (13.3 )% Sales and marketing expenses decreased by $4.2 million, or 13.3%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to: • a decrease in personnel-related costs of $2.3 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics; • a decrease in travel and hospitality costs of $0.8 million; and • a decrease in depreciation and amortization of $0.5 million. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 13 General and Administrative Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) General and administrative $ 36,422 $ 30,183 $ 6,239 20.7 % General and administrative expenses have increased by $6.2 million, or 20.7%, in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to a net provision for doubtful debt in the amount of $13.4 million in the three months ended March 31, 2026 compared to a net reversal of $8.1 million in the three months ended March 31, 2025 mainly related to collection of doubtful debt. This was partially offset by: • a decrease of $8.1 million primarily due to a penalty for postponing the commencement of our campus lease agreement in the three months ended March 31, 2025; • a decrease in personnel-related costs, of $4.7 million primarily resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics. This was partially offset by the weakening of the USD compared to the NIS; and • a decrease in expenses related to consultants and sub-contractors in the amount of $2.0 million. Other operating expense (income), net Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Other operating expense (income), net $ 9,298 $ (3,575 ) $ 12,873 (360.1 )% Other operating expense, net, was $9.3 million in the three months ended March 31, 2026 compared to other operating income, net, of $3.6 million in the three months ended March 31, 2025 primarily due to: • an increase of $7.6 million in expenses related to loss from sale of the LCV e-Mobility activity; and • a decrease in income of $3.1 million as a result of lower than expected discontinuation charges in the three months ended March 31, 2025. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 14 Financial income (expense), net Three Months Ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Financial income (expense), net $ (1,037 ) $ 10,068 $ (11,105 ) (110.3 )% Financial expense, net, was $1.0 million in the three months ended March 31, 2026, compared to financial income, net, in the amount of $10.1 million in the three months ended March 31, 2025, primarily due to: • a decrease of $4.8 million in interest income; and • a decrease of $4.9 million in foreign currency income to due foreign currency fluctuations. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 15 Other income, net Three months ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Other income, net $ — $ 148 $ (148 ) (100.0 )% Other income, net decreased by $0.1 million, or 100.0%, in the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Income taxes Three months ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Income taxes $ (1,286 ) $ (5,726 ) $ 4,440 (77.5 )% Income taxes were $1.3 million in the three months ended March 31, 2026, compared to an amount of $5.7 million in the three months ended March 31, 2025 primarily due to the reduced California state income tax expense as a result of Senate Bill 302, as discussed in Note 18 to the condensed consolidated financial statements, a reduction in the withholding taxes paid on certain intra-group interest payments and a tax expense recorded in in the three months ended March 31, 2025, in connection with the settlement with the Israeli Tax Authority for tax years 2016–2018. Net loss from equity method investments Three months ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Net loss from equity method investments $ — $ (287 ) $ 287 (100.0 )% Net loss from equity method investments decreased in the three months ended March 31, 2026 compared to the three months ended March 31, 2025, due to impairment of our equity investment in 2025. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 16 Net loss Three months ended March 31, 2025 to 2026 2026 2025 Change (In thousands) Net loss $ (57,366 ) $ (98,523 ) $ 41,157 (41.8 )% As a result of the factors discussed above, net loss decreased by $41.2 million or 41.8% in the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Liquidity and Capital Resources The following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods: Three Months Ended March 31, 2026 2025 (In thousands) Net cash provided by operating activities $ 24,428 $ 33,823 Net cash provided by (used in) investing activities (20,440 ) 67,597 Net cash provided by (used in) financing activities 1,988 (6,237 ) Increase in cash and cash equivalents $ 5,976 $ 95,183 As of March 31, 2026, our cash and cash equivalents were $512.4 million. This amount does not include $29.3 million invested in available-for-sale marketable securities, $41.0 million in restricted cash, and $0.5 million invested in deposits and restricted deposits. Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements and other investments. As of March 31, 2026, we have open commitments for capital expenditures in an amount of approximately $17.5 million. These commitments mainly reflect purchases of automated assembly lines and other machinery related to our manufacturing and operations. We also have purchase obligations in the amount of $297.2 million, related to raw materials and commitments for the future manufacturing of our products. As of March 31, 2026, we had a non-cancelable lease commitment for the initial term of a lease of approximately $274.2 million for new offices in Israel, which has not yet commenced. The lease is expected to commence during the next twelve months. The initial term of the lease agreement is 15 years commencing on the transfer of possession, with an option to extend the lease for additional periods of up to 10 years, subject to the conditions of the lease agreement. In November 2025, we amended our lease agreement with the developer for our new campus to reduce the leased area. In connection with the amendment, we agreed to make a lease modification payment of $28.8 million, which is accounted for as prepaid lease consideration under Accounting Standards Codification 842, "Leases". The full amount had been paid as of March 31, 2026. Beginning in the fourth quarter of 2024, we started to sell AMPTCs to third parties pursuant to tax credit agreements. We plan to pursue additional tax credit sales in the future. Our inability to complete sales or delays in doing so may affect the timing of our cash inflows. Failing to sell AMPTCs could result in delays between 18-24 months in the realization of the credits’ value, and would have a negative effect on our liquidity. We believe that cash provided by operating activities, as well as our cash and cash equivalents, and available-for-sale marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months as well as in the longer term, including the self-funding of our capital expenditure, operational commitments and the redemption of our debt. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 17 Operating Activities Operating cash flows consist primarily of net loss, adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities was $24.4 million in the three months ended March 31, 2026 compared to $33.8 million in the three months ended March 31, 2025, attributed to an increase in working capital needs partially offset by lower net loss adjusted for certain non-cash items. Investing Activities Investing cash flows consist primarily of capital expenditures, investment in sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits, cash used for acquisitions, proceeds from sale of business and equity investments, and disbursements and receipts from collections of loans made by us. Cash used in investing activities was $20.4 million in the three months ended March 31, 2026 as compared to cash provided by investing activities of $67.6 million in the three months ended March 31, 2025, primarily driven by a decrease of $134.1 million in proceeds provided by sales and maturities of available-for-sale marketable securities, an increase of $26.2 million in payments made before lease commencement, a decrease of $13.6 million in proceeds from loans receivables, these were partially offset by a decrease of $72.5 million in purchases of available-for-sale marketable securities, a decrease of $6.6 million in payment related to governmental grant and a decrease of $6.4 million in capital expenditures. Financing Activities Financing cash flows consist primarily of issuance, repayment and partial repurchase of convertible senior notes, and our employee equity incentive plans. Cash provided by financing activities was $2.0 million in the three months ended March 31, 2026 as compared to cash used in financing activities of $6.2 million in the three months ended March 31, 2025, primarily due to a decrease of $5.1 million in cash used for the repurchase of our Notes 2025, an increase of $3.8 million related to issuance of common stock upon exercise of stock-based awards, partially offset by an increase of $1.1 million in tax withholding in connection with stock-based awards, net. Convertible Senior Notes On June 28, 2024, we sold an aggregate principal amount of $300 million of 2.25% convertible senior notes due in 2029 (the "Notes 2029") in a transaction exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act (the "Notes 2029 Offering"). The net proceeds from the Notes 2029 Offering were approximately $293.2 million after deducting fees and estimated expenses. Separately, we have entered into capped call transactions. We used approximately $25.2 million of the net proceeds from the Notes 2029 Offering to pay for the cost of the capped call transactions and approximately $267.9 million of the net proceeds from the Notes 2029 Offering to repurchase $285.0 million of our outstanding 0.000% convertible notes due 2025 (the "Notes 2025"). We intend to use the remainder of the net proceeds from the Notes 2029 Offering for general corporate purposes. SOLAREDGE TECHNOLOGIES INC. | 2026 Form 10-Q | 18 On July 8, 2024, we sold an aggregate principal amount of $37 million of the Notes 2029. The Notes 2029 were sold pursuant to the exercise of options granted by the Company to several initial purchasers of the Notes 2029 represented by Goldman Sachs & Co. LLC to purchase additional Notes 2029. For additional information, please see Note 11, “Convertible Senior Notes.” In March 2025 we repurchased $5.2 million principal amount of our Notes 2025. We recorded a net gain of $146 thousands under other income from this repurchase. We settled all of our outstanding Notes 2025 on September 15, 2025. As part of the settlement, we paid $342.3 million in cash towards principal amount of the Notes 2025 and no shares were issued in connection with the settlement as the conversion value was less than the principal amounts of the Notes 2025. Critical Accounting Policies and Significant Management Estimates Management believes that there have been no significant changes during the three months ended March 31, 2026 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025, except as mentioned in Note 1, “General” (if any).