10-Q 1 zk2431390.htm 10-Q SOLAREDGE TECHNOLOGIES, INC. - 1419612 - 2024
Vendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products, components and other testing equipment for the Company. The Company purchases these components directly from other suppliers. The Company does not reflect the sale of these components to the contract manufacturers in its revenues. Loan receivables are loans to third parties. The loan repayments are expected on a monthly or annual basis as per the contractual terms of each loan agreement. The loan is measured at its amortized cost and is subjected to the Company's credit risk policy. The loans bear interest that represent market interest rate. As of March 31, 2024, the Company's provision for credit loss was $2,395. The amortized cost of the loan receivable approximates its fair value as of March 31, 2024. 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UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2024
 
OR
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from _________ to __________
 
Commission File Number: 001-36894
 
 
SOLAREDGE TECHNOLOGIES, INC.
 
(Exact name of registrant as specified in its charter)
 
Delaware
 
20-5338862
(State or other jurisdiction of
incorporation or organization)
 
(IRS Employer
Identification No.)
 
 
1 HaMada Street
Herziliya Pituach, 4673335, Israel
(Address of Principal Executive Offices, zip code)
 
972 (9) 957-6620
 
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.0001 per share
SEDG
NASDAQ (Global Select Market)
 
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes    No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
 
Yes ☒    No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller Reporting Company
   
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
 
Yes ☐    No
 
As of May 1, 2024, there were 57,299,404 shares


TABLE OF CONTENTS
 

F-1
F-1
F-3
F-4
F-5
F-6
F-8
3
17
18
 
19
19
19
20
21
21
21
21
21
 
2

PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 
(in thousands, except per share data)
 
   
March 31,
2024
   
December 31,
2023
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
214,229
   
$
338,468
 
Marketable securities
   
466,407
     
521,570
 
Trade receivables, net of allowances of $19,110 and $16,400, respectively
   
404,390
     
622,425
 
Inventories, net
   
1,549,122
     
1,443,449
 
Prepaid expenses and other current assets
   
354,919
     
378,394
 
Total current assets
   
2,989,067
     
3,304,306
 
LONG-TERM ASSETS:
               
Marketable securities
   
268,203
     
407,825
 
Deferred tax assets, net
   
122,564
     
80,912
 
Property, plant and equipment, net
   
605,223
     
614,579
 
Operating lease right-of-use assets, net
   
59,474
     
64,167
 
Intangible assets, net
   
33,037
     
35,345
 
Goodwill
   
41,470
     
42,996
 
Other long-term assets
   
47,784
     
37,601
 
Total long-term assets
   
1,177,755
     
1,283,425
 
Total assets
 
$
4,166,822
   
$
4,587,731
 
 
F - 1

 
SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.)
 
(in thousands, except per share data)
 
 
 
   
March 31,
2024
   
December 31,
2023
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
           
CURRENT LIABILITIES:
           
Trade payables, net
 
$
171,412
   
$
386,471
 
Employees and payroll accruals
   
73,666
     
76,966
 
Warranty obligations
   
181,333
     
183,047
 
Deferred revenues and customers advances
   
36,081
     
40,836
 
Accrued expenses and other current liabilities
   
196,398
     
205,911
 
Total current liabilities
   
658,890
     
893,231
 
LONG-TERM LIABILITIES:
               
Convertible senior notes, net
   
628,115
     
627,381
 
Warranty obligations
   
321,166
     
335,197
 
Deferred revenues
   
218,535
     
214,607
 
Finance lease liabilities
   
40,630
     
41,892
 
Operating lease liabilities
   
40,982
     
45,070
 
Other long-term liabilities
   
17,953
     
18,444
 
Total long-term liabilities
   
1,267,381
     
1,282,591
 
COMMITMENTS AND CONTINGENT LIABILITIES
           
STOCKHOLDERS’ EQUITY:
               
Common stock of $0.0001 par value - Authorized: 125,000,000 shares; issued: 57,298,691 shares at
March 31, 2024 and 57,123,437 shares at December 31, 2023; outstanding: 56,792,795 shares at
March 31, 2024 and 57,123,437 shares at December 31, 2023.
   
6
     
6
 
Additional paid-in capital
   
1,719,523
     
1,680,622
 
  Treasury stock, at cost; 505,896 shares held
   
(33,222
)    
-
 
Accumulated other comprehensive loss
   
(66,611
)
   
(46,885
)
Retained earnings
   
620,855
     
778,166
 
Total stockholders’ equity
   
2,240,551
     
2,411,909
 
Total liabilities and stockholders’ equity
 
$
4,166,822
   
$
4,587,731
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
F - 2

SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
 
(in thousands, except per share data)
 
   
Three Months Ended
March 31,
 
   
2024
   
2023
 
Revenues
 
$
204,399
   
$
943,889
 
Cost of revenues
   
230,586
     
643,763
 
Gross profit (loss)
   
(26,187
)
   
300,126
 
Operating expenses:
               
Research and development
   
75,351
     
79,873
 
Sales and marketing
   
38,911
     
40,966
 
General and administrative
   
30,865
     
36,567
 
Other operating expense (income), net
   
2,391
     
(1,434
)
Total operating expenses
   
147,518
     
155,972
 
Operating income (loss)
   
(173,705
)
   
144,154
 
Financial income (expense), net
   
(7,064
)
   
23,674
 
Other loss, net
   
-
     
(125
)
Income (loss) before income taxes
   
(180,769
)
   
167,703
 
Tax benefits (income taxes)
   
23,754
     
(29,325
)
Net loss from equity method investments
   
(296
)
   
-
 
Net income (loss)
 
$
(157,311
)
 
$
138,378
 
Net basic earnings (loss) per share of common stock
 
$
(2.75
)
 
$
2.46
 
Net diluted earnings (loss) per share of common stock
 
$
(2.75
)
 
$
2.35
 
Weighted average number of shares used in computing net basic earnings (loss) per share of common stock
   
57,140,126
     
56,215,490
 
Weighted average number of shares used in computing net diluted earnings (loss) per share of common stock
   
57,140,126
     
59,193,831
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
F - 3

 
SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
 
(in thousands, except per share data)
 
   
Three Months Ended
March 31,
 
   
2024
   
2023
 
Net income (loss)
 
$
(157,311
)
 
$
138,378
 
Other comprehensive income (loss), net of tax:
               
Available-for-sale marketable securities
   
1,491
     
6,177
 
Cash flow hedges
   
(2,365
)
   
(331
)
Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment nature
   
(13,382
)
   
(10,800
)
Foreign currency translation adjustments
   
(5,470
)
   
859
 
Total other comprehensive loss
   
(19,726
)
   
(4,095
)
Comprehensive income (loss)
 
$
(177,037
)
 
$
134,283
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
F - 4

SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
 
(in thousands, except per share data)
 
   
Common stock
                               
   
Number
   
Amount
   
Additional paid in
Capital
   
Treasury stock
   
Accumulated
other comprehensive
loss
   
Retained earnings
   
Total
 
Balance as of January 1, 2024
   
57,123,437
   
$
6
   
$
1,680,622
   
$
-
   
$
(46,885
)
 
$
778,166
   
$
2,411,909
 
Issuance of common stock upon exercise of stock-based awards
   
175,254
     
*-
     
13
     
-
     
-
     
-
     
13
 
Stock based compensation
   
-
     
-
     
38,888
     
-
     
-
     
-
     
38,888
 
Repurchase of common stock
   
(505,896
)
   
*-
     
-
     
(33,222
)
   
-
     
-
     
(33,222
)
Other comprehensive loss adjustments
   
-
     
-
     
-
     
-
     
(19,726
)
   
-
     
(19,726
)
Net loss
   
-
     
-
     
-
     
-
     
-
     
(157,311
)
   
(157,311
)
Balance as of March 31, 2024
   
56,792,795
   
$
6
   
$
1,719,523
   
$
(33,222
)
 
$
(66,611
)
 
$
620,855
   
$
2,240,551
 
 
   
Common stock
   
Additional paid in
Capital
   
Accumulated
other comprehensive
loss
     
Retained earnings
   
Total
 
   
Number
   
Amount
                 
Balance as of January 1, 2023
   
56,133,404
   
$
6
   
$
1,505,632
   
$
(73,109
)
 
$
743,837
   
$
2,176,366
 
Issuance of common stock upon exercise of stock-based awards
   
209,760
     
*-
     
75
     
-
     
-
     
75
 
Stock based compensation
   
-
     
-
     
40,070
     
-
     
-
     
40,070
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(4,095
)
   
-
     
(4,095
)
Net income
   
-
     
-
     
-
     
-
     
138,378
     
138,378
 
Balance as of March 31, 2023
   
56,343,164
   
$
6
   
$
1,545,777
   
$
(77,204
)
 
$
882,215
   
$
2,350,794
 
 
* Represents an amount less than $1.
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
F - 5

 
SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
(in thousands, except per share data)
 
   
Three Months Ended
March 31,
 
   
2024
   
2023
 
Cash flows from operating activities:
           
Net income (loss)
 
$
(157,311
)
 
$
138,378
 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
               
Depreciation and amortization
   
14,988
     
13,464
 
Loss (gain) from exchange rate fluctuations
   
7,799
     
(20,441
)
Stock-based compensation expenses
   
37,606
     
39,235
 
Deferred income taxes, net
   
(41,847
)
   
(3,930
)
Other items
   
4,371
     
2,810
 
Changes in assets and liabilities:
               
Trade receivables, net
   
210,376
     
(55,002
)
Inventories, net
   
(105,810
)
   
(141,521
)
Prepaid expenses and other assets
   
42,164
     
(20,591
)
Right-of-use assets
   
5,255
     
3,918
 
Trade payables, net
   
(210,449
)
   
(50,410
)
Employees and payroll accruals
   
(2,460
)
   
10,227
 
Warranty obligations
   
(15,582
)
   
57,864
 
Deferred revenues and customers advances
   
(523
)
   
9,325
 
Operating lease liabilities
   
(5,219
)
   
(3,958
)
Accrued expenses and other liabilities, net
   
(377
)
   
28,555
 
Net cash provided by (used in) operating activities
   
(217,019
)
   
7,923
 
Cash flows from investing activities:
               
Investment in available-for-sale marketable securities
   
(129,221
)
   
(38,979
)
Proceeds from sales and maturities of available-for-sale marketable securities
   
319,605
     
11,597
 
Purchase of property, plant and equipment
   
(26,347
)
   
(38,338
)
Disbursements for loans receivables
   
(7,500
)
   
-
 
Investment in privately-held companies
   
(8,831
)
   
(5,500
)
Proceeds from loan receivables
   
1,625
     
-
 
Other investing activities
   
(323
)
   
3,440
 
Net cash provided by (used in) investing activities
 
$
149,008
   
$
(67,780
)
 
F - 6

 
SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)
 
(in thousands, except per share data)
 
   
Three Months Ended
 March 31,
 
   
2024
   
2023
 
Cash flows from financing activities:
           
Repurchase of common stock
 
$
(33,222
)
 
$
-
 
Payments on account of repurchase of common stock
   
(16,778
)
   
-
 
Tax withholding in connection with stock-based awards, net
   
(470
)
   
(4,541
)
Other financing activities
   
(517
)
   
(681
)
Net cash used in financing activities
   
(50,987
)
   
(5,222
)
                 
Effect of exchange rate differences on cash and cash equivalents
   
(5,241
)
   
9,816
 
                 
Decrease in cash and cash equivalents
   
(124,239
)
   
(55,263
)
Cash and cash equivalents at the beginning of the period
   
338,468
     
783,112
 
Cash and cash equivalents at the end of the period
 
$
214,229
   
$
727,849
 
                 
Supplemental disclosure of non-cash activities:
               
Right-of-use asset recognized with a corresponding lease liability
 
$
1,085
   
$
11,258
 
Purchase of property, plant and equipment
 
$
4,760
   
$
12,304
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
F - 7

 
SOLAREDGE TECHNOLOGIES INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 
(in thousands, except per share data)
 
NOTE 1:       GENERAL
 
  a.
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 Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company’s future ready Energy Hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup capabilities, and optional connection to the Company's smart EV charger, (iii) a remote cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv) batteries for PV applications that are used to increase energy independence and maximize self-consumption for PV system's owners including a battery ,and (v) additional smart energy management solutions.
 
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.
 
  b.
The Company has expanded its activity to other areas of smart energy technology organically and through acquisitions. The Company offers a variety of energy solutions, which include lithium-ion cells, batteries, and energy storage systems (“Energy Storage”), automated machines for industrial use (“Automation Machines”), as well as cloud-based energy management solutions.
 
  c.
Basis of Presentation:
 
The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
 
The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2023, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2024, have been applied consistently in these unaudited interim condensed consolidated financial statements. Certain prior year amounts have been reclassified to conform to current year presentation.
 
  d.
Use of estimates:
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.
 
  e.
Concentrations of supply risks:
 
The Company depends on two contract manufacturers and several limited or single source component suppliers. Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.
 
As of March 31, 2024, and December 31, 2023, two contract manufacturers collectively accounted for 44.9% and 58.5% of the Company’s total trade payables, net, respectively.
 
The Company's own manufacturing facility, Sella 1, located in the north of Israel, is primarily used in the Company's Solar segment operations. Additionally, Sella 2, a Company owned manufacturing facility in South Korea, together with a smaller Company owned facility, are used for the Energy Storage segment.

 

F - 8


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

  f.
New accounting standards updates:
 
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. ASU 2023-07 is effective for fiscal periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-07.
 
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. The Company is currently evaluating the impact of adopting ASU 2023-09.

 

NOTE 2:       INVESTMENTS IN PRIVATELY-HELD COMPANIES
 
In January 2023, the Company completed an investment of $5,500 in the common stock of Weev Energy B.F. Ltd., ("Wevo"), a privately-held company, which represented 34.8% of Wevo's outstanding shares. The investment agreement included a call option to acquire Wevo's remaining outstanding shares. The Company accounted for the common stock and the call option as a single hybrid instrument.
 
The Company accounted for its investment in Wevo using the equity method of accounting. Under this method, the investment, which was initially recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the investee as they occur, rather than when dividends or other distributions are received. The Company's share of net losses in the three months ended March 31, 2024 were $296.
 
In January 2024, the Company completed an investment of $6,000 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 $6,000 as of March 31, 2024.
 
As of March 2024, the Company completed an investment of $5,000 in the preferred stock of Stardust Solution, Inc, ("Stardust"), a privately-held U.S. company. The Company accounted for the Stardust investment as an equity investment that does not have readily determinable fair values. As such, the Company’s non-marketable equity securities had a carrying value of $5,000 as of March 31, 2024.
 
Investments in privately-held companies are included within other long-term assets in the condensed consolidated balance sheets. As of March 31, 2024, the carrying value of investments in privately-held companies was $16,183.
 
There were no impairment charges for the three months ended March 31, 2024 associated with this equity method investment.

 

F - 9


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 3:       MARKETABLE SECURITIES
 
The following is a summary of available-for-sale marketable securities as of March 31, 2024:
 
   
Amortized cost
   
Gross unrealized gains
   
Gross unrealized losses
   
Fair value
 
Matures within one year:
                       
Corporate bonds
 
$
440,981
   
$
1,018
   
$
(3,949
)
 
$
438,050
 
U.S. Treasury securities
   
6,434
     
-
     
(67
)
   
6,367
 
U.S. Government agency securities
   
3,112
     
-
     
(9
)
   
3,103
 
Non-U.S. Government securities
   
18,328
     
648
     
(89
)
   
18,887
 
     
468,855
     
1,666
     
(4,114
)
   
466,407
 
Matures after one year:
                               
Corporate bonds
   
209,742
     
516
     
(2,816
)
   
207,442
 
U.S. Government agency securities
   
44,128
     
35
     
(92
)
   
44,071
 
Non-U.S. Government securities
   
16,158
     
532
     
-
     
16,690
 
     
270,028
     
1,083
     
(2,908
)
   
268,203
 
Total
 
$
738,883
   
$
2,749
   
$
(7,022
)
 
$
734,610
 
 
The following is a summary of available-for-sale marketable securities as of 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
 
 
The Company did not sell any available-for-sale marketable securities during the three months ended March 31, 2024
 
Proceeds from sales of available-for-sale marketable securities during the three months ended March 31, 2023 were $2,807, which led to realized losses of $125.
 
As of March 31, 2024, and December 31, 2023, the Company did not record an allowance for credit losses for its available-for-sale marketable securities.

 

F - 10


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 4:       INVENTORIES, NET
 
   
March 31,
2024
   
December 31,
2023
 
Raw materials
 
$
311,748
   
$
340,604
 
Work in process
   
19,324
     
20,885
 
Finished goods
   
1,218,050
     
1,081,960
 
Total inventories, net
 
$
1,549,122
   
$
1,443,449
 

 

NOTE 5:       PREPAID EXPENSES AND OTHER CURRENT ASSETS
 
   
March 31,
2024
   
December 31,
2023
 
Vendor non-trade receivables1
 
$
54,294
   
$
102,991
 
Government authorities
   
157,248
     
167,221
 
Loan receivables2
   
61,480
     
55,418
 
Interest from marketable securities
   
6,141
     
7,515
 
Prepaid expenses and other
   
75,756
     
45,249
 
Total prepaid expenses and other current assets
 
$
354,919
   
$
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.
 
2 Loan receivables are loans to third parties. The loan repayments are expected on a monthly or annual basis as per the contractual terms of each loan agreement. The loan is measured at its amortized cost and is subjected to the Company's credit risk policy. The loans bear interest that represent market interest rate. As of March 31, 2024, the Company's provision for credit loss was $2,395. The amortized cost of the loan receivable approximates its fair value as of March 31, 2024.

 

F - 11


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 6:       OTHER LONG TERM ASSETS
 
   
March 31,
2024
   
December 31,
2023
 
Cloud computing arrangements
 
$
18,212
   
$
13,666
 
Severance pay fund
   
8,329
     
9,241
 
Investments in privately held companies
   
16,183
     
7,650
 
Loan receivables
   
-
     
2,438
 
Prepaid expenses and other
   
5,060
     
4,606
 
Total other long term assets
 
$
47,784
   
$
37,601
 

 

F - 12


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 7:       DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
 
During the three months ended March 31, 2024, the Company instituted a foreign currency cash flow hedging program to reduce the risk of a forecasted increase in the value of foreign currency cash flows, resulting from payment of salaries in Israeli currency, the New Israeli Shekels (“NIS”). The Company hedges portions of the anticipated payroll denominated in NIS for a period of one to nine months with hedging contracts. These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.
 
As of March 31, 2024, the Company entered into put and call options to sell U.S. dollars (“USD”) for NIS in the amount of NIS 276 million.
 
In addition to the above-mentioned cash flow hedge transactions, the Company occasionally enters into derivative instrument arrangements to hedge the Company’s exposure to currencies other than USD. 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), under "Financial income (expense), net".
 
As of March 31, 2024, the Company entered into a cross-currency swap contract to sell Euro (“EUR”) for USD in the amount of EUR 18 million.
 
The Company classifies cash flows related to its hedging as operating activities in its condensed consolidated statement of cash flows.
 
The fair values of outstanding derivative instruments were as follows:
 
 
Balance sheet location
 
March 31,
2024
   
December 31,
2023
 
Derivative assets of options and forward contracts:
             
Designated cash flow hedges
Prepaid expenses and other current assets
 
$
1,807
   
$
4,477
 
Non-designated hedges
Prepaid expenses and other current assets
   
74
     
410
 
Total derivative assets
   
$
1,881
   
$
4,887
 
Derivative liabilities of options and forward contracts:
                 
Designated cash flow hedges
Accrued expenses and other current liabilities
 
$
(17
)
 
$
-
 
 
Gains (losses) on derivative instruments are summarized below:
 
 
Affected line item
 
Three Months Ended
March 31,
 
   
2024
   
2023
 
Foreign exchange contracts
             
Non Designated Hedging Instruments
Condensed Consolidated Statements of Income (loss) - Financial income (expense), net
 
$
612
   
$
-
 
Designated Hedging Instruments
Condensed Consolidated Statements of Comprehensive Income (loss) - Cash flow hedges
 
$
(1,538
)
 
$
(2,057
)
 
See Note 15 for information regarding losses from designated hedging instruments reclassified from accumulated other comprehensive loss.

 

F - 13


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 8:       FAIR VALUE MEASUREMENTS
 
In accordance with ASC 820, "Fair Value Measurement" the Company measures its cash equivalents and marketable securities, at fair value using the market approach valuation technique. Cash and cash equivalents are classified within Level 1 because these assets are valued using quoted market prices. Marketable securities and foreign currency derivative contracts are classified within level 2 due to these assets being valued by alternative pricing sources and models utilizing market observable inputs.
 
The following table sets forth the Company’s assets that were measured at fair value as of March 31, 2024 and December 31, 2023, by level within the fair value hierarchy:
 
       
Fair value measurements as of
 
Description
 
Fair Value Hierarchy
 
March 31,
2024
   
December 31,
2023
 
Assets:
               
Cash and cash equivalents:
               
Cash
 
Level 1
 
$
196,434
   
$
309,521
 
Money market mutual funds
 
Level 1
 
$
12,734
   
$
22,311
 
Deposits
 
Level 1
 
$
5,061
   
$
6,636
 
Derivative instruments
 
Level 2
 
$
1,881
   
$
4,887
 
Short-term marketable securities:
                   
Corporate bonds
 
Level 2
 
$
438,050
   
$
481,820
 
U.S. Treasury securities
 
Level 2
 
$
6,367
   
$
15,261
 
U.S. Government agency securities
 
Level 2
   
3,103
     
8,795
 
Non-U.S. Government securities
 
Level 2
 
$
18,887
   
$
15,694
 
Long-term marketable securities:
                   
Corporate bonds
 
Level 2
 
$
207,442
   
$
339,681
 
U.S. Treasury securities
 
Level 2
 
$
-
   
$
2,408
 
U.S. Government agency securities
 
Level 2
   
44,071
     
44,086
 
Non-U.S. Government securities
 
Level 2
 
$
16,690
   
$
21,650
 
Liabilities:
                   
Derivative instruments
 
Level 2
 
$
(17
)
 
$
-
 
 
NOTE 9:  WARRANTY OBLIGATIONS
 
Changes in the Company’s product warranty obligations for the three months ended March 31, 2024 and 2023, were as follows:
 
   
Three Months Ended March 31,
 
   
2024
   
2023
 
Balance, at the beginning of the period
 
$
518,244
   
$
385,057
 
Accruals for warranty during the period
   
18,847
     
82,852
 
Changes in estimates
   
106
     
3,365
 
Settlements
   
(34,698
)
   
(28,303
)
Balance, at end of the period
   
502,499
     
442,971
 
Less current portion
   
(181,333
)
   
(129,278
)
Long term portion
 
$
321,166
   
$
313,693
 

 

F - 14


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 10:  DEFERRED REVENUES AND CUSTOMERS ADVANCES
 
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. Deferred revenues are classified as short-term and long-term deferred revenues based on the period in which revenues are expected to be recognized.
 
Changes in the balances of deferred revenues and customer advances during the period are as follows:
 
   
Three Months Ended March 31,
 
   
2024
   
2023
 
Balance, at the beginning of the period
 
$
255,443
   
$
213,577
 
Revenue recognized
   
(30,056
)
   
(11,742
)
Increase in deferred revenues and customer advances
   
29,229
     
22,589
 
Balance, at the end of the period
   
254,616
     
224,424
 
Less current portion
   
(36,081
)
   
(27,507
)
Long term portion
 
$
218,535
   
$
196,917
 
 
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 March 31, 2024:
 
2024
 
$
32,493
 
2025
   
13,899
 
2026
   
13,529
 
2027
   
11,430
 
2028
   
10,436
 
Thereafter
   
172,829
 
Total deferred revenues
 
$
254,616
 

 

NOTE 11:  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
 
   
March 31,
2024
   
December 31,
2023
 
Accrued expenses
 
$
126,435
   
$
142,130
 
Government authorities
   
38,220
     
34,309
 
Operating lease liabilities
   
16,525
     
17,704
 
Accrual for sales incentives
   
8,869
     
5,862
 
Finance lease liabilities
   
3,257
     
3,253
 
Other
   
3,092
     
2,653
 
Total accrued expenses and other current liabilities
 
$
196,398
   
$
205,911
 

 

F - 15


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 12:  CONVERTIBLE SENIOR NOTES
 
On September 25, 2020, the Company sold $632,500 aggregate principal amount of its 0.00% convertible senior notes due 2025 (the “Notes”). The Notes were sold pursuant to an indenture, dated September 25, 2020 (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The Notes do not bear regular interest and mature on September 15, 2025, unless earlier repurchased or converted in accordance with their terms. The Notes are general senior unsecured obligations of the Company. Holders may convert their Notes prior to the close of business on the business day immediately preceding June 15, 2025 in multiples of $1,000 principal amount, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2020 (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business-day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each trading day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events as described in the Indenture. In addition, holders may convert their Notes, in multiples of $1,000 principal amount, at their option at any time beginning on or after June 15, 2025, and prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of the Notes, without regard to the foregoing circumstances. The initial conversion rate for the Notes was 3.5997 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $277.80 per share of common stock, subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture.
 
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 may require the Company to repurchase all or a portion of their Notes, in multiples of $1,000 principal amount, at a repurchase price of 100% of the principal amount of the Notes, plus any accrued and unpaid special interest 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 may be increased.
 
The Convertible Senior Notes consisted of the following as of March 31, 2024 and December 31, 2023:
 
   
March 31,
2024
   
December 31,
2023
 
Liability:
           
Principal
 
$
632,500
   
$
632,500
 
Unamortized issuance costs
   
(4,385
)
   
(5,119
)
Net carrying amount
 
$
628,115
   
$
627,381
 
 
For the three months ended March 31, 2024 and 2023 the Company recorded amortized debt issuance costs related to the Notes in the amount of $735 and $731, respectively.
 
As of March 31, 2024, the unamortized issuance costs of the Notes will be amortized over the remaining term of approximately 1.5 years.
 
The annual effective interest rate of the Notes is 0.47%.
 
As of March 31, 2024, the estimated fair value of the Notes, which the Company has classified as Level 2 financial instruments, is $577,428. The estimated fair value was determined based on the quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period. As of March 31, 2024, the if-converted value of the Notes did not exceed the principal amount.

 

F - 16


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 13:  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.  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 March 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 13,676,076 shares are still available for future grants.
 
The Share Reserve will automatically increase on January 1st of each year during the term of the 2015 Plan, commencing on January 1st 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 31st of the preceding calendar year; provided, however, that the Company’s board of directors may determine that there will not be a January 1st 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 31st.
 
The Company granted under its 2015 Plan, PSU awards to certain employees and officers which vest upon the achievement of certain performance or market conditions subject to their continued employment with the Company.
 
The market condition for the PSUs is based on the Company’s total shareholder return ("TSR") compared to the TSR of companies listed in the S&P 500 index over a one to three year performance period. 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 March 31, 2024, an aggregate of 8,617,974 options are still available for future grants under the 2015 Plan.

 

F - 17


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

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, 2023
   
317,416
   
$
53.38
     
4.05
   
$
17,366
 
Exercised
   
(3,421
)
   
3.93
     
-
     
247
 
Outstanding as of March 31, 2024
   
313,995
   
$
53.92
     
3.85
   
$
11,378
 
Vested and expected to vest as of March 31, 2024
   
313,869
   
$
53.81
     
3.84
   
$
11,378
 
Exercisable as of March 31, 2024
   
309,120
   
$
49.86
     
3.80
   
$
11,378
 
 
The intrinsic value is the amount by which the closing price of the Company’s common stock on March 31, 2024 of $70.98 or the price on the day of exercise exceeds the exercise price of the stock options multiplied by the number of in-the-money options.
 
A summary of the activity in the RSUs and related information is as follows: