Good morning, and thank you for joining us to discuss SolarEdge's operating results for the first quarter ended March 31, 2026, as well as the company's outlook for the second quarter of 2026. With me today are Shuki Nir, Chief Executive Officer, Asaf Alperovitz, Chief Financial Officer, and Meir Adest, Co-Founder of SolarEdge.

Shuki will begin with a brief review of the results for the first quarter ended March 31, 2026. Asaf will review the financial results for the first quarter, followed by the company's outlook for the second quarter of 2026.

We will then open the call for questions. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.

We encourage you to review the safe harbor statements contained in our earnings press release and our filings with the SEC for a more complete description of such risks and uncertainties. We disclaim any obligation to update any forward-looking statements.

Please note, during this earnings call, we may refer to certain non-GAAP measures, which are not measures prepared in accordance with US GAAP. The non-GAAP measures are being presented because we believe that they provide investors with a means of evaluating and understanding how the company's management evaluates the company's operating performance.

Reconciliation of these measures can be found in our earnings press release and SEC filings. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with US GAAP.

Listeners who do not have a copy of the quarter ended March 31, 2026 press release may obtain a copy by visiting the investor relations section of the company's website. With that, I will turn the call over to Shuki.

Thank you, Erica. Good morning, everyone, and thank you for joining our call today.

Last quarter, I spoke about SolarEdge shifting from defense to offense, with 2026 being a year of transformation and acceleration for the company. Our priorities are clear: driving towards profitable growth, expanding global market share, scaling SolarEdge Nexus, and investing in high-growth adjacencies such as AI data center power.

We are doing this while maintaining the operational and financial discipline we have established. The team's morale and energy are the strongest they have been in years, and we are all aligned around improving our execution and maximizing the various opportunities ahead of us.

The first aspect of our transformation is achieving profitable growth. We have been steadily growing our revenues while expanding our gross margin in recent quarters.

First quarter revenue was up on a year-over-year basis for the fifth consecutive quarter, growing 46% over Q1 2025. This was achieved without a significant pull-forward of revenue and was once again accompanied by expanded margins.

At the midpoint of our guidance, we expect to approach break-even operating profit in the second quarter. This marks an important milestone in our transformation and reflects the relentless focus our entire team has had on operational efficiency and delivering best-in-class products and customer experience.

The next area of transformation is market share gains, starting with the US resi market. The market got off to a slow start this year as customers faced changes in tax credit policies and uncertainty related to FEOC.

These uncertainties have slowed tax equity funding for TPOs, creating strain on installers' businesses and cash flows. Even so, we believe we are well positioned to benefit when the market rebounds, since the anticipated market evolution towards the 48E tax credit and higher battery attach rates are expected to play directly to our strengths, namely, our position as a leading provider to TPOs and our fully integrated DC-coupled battery architecture.

Turning to the US C&I market, where we continue to build momentum. As our scalable architecture of inverters and optimizers enhances the returns for C&I rooftop projects by harvesting more energy, enhancing safety, and enabling customers to benefit from tax credits with products that are designed to be both domestic content and FEOC compliant.

These advantages have resulted in share gains and, more specifically, in continued penetration of enterprise accounts, which come with a more stable cadence of business and improved visibility. We view this position as structural rather than cyclical.

Domestic content and FEOC compliance are difficult for non-US competitors to replicate quickly, and we expect this continue to support our market share over multiple quarters. We secured additional safe harbor transactions from both resi and C&I customers in the quarter and expect to secure additional deals in the second quarter, primarily through the physical work test method.

These transactions provide several important strategic benefits. First, they increase the visibility of our potential future revenue and share gains.

The associated products can be deployed for up to 4 years and will translate into revenue when the customers take delivery of the entire product. Second, they create a natural entry point for incremental sales.

When installers complete a safe-harbored solar installation that also requires a battery or an EV charger, we are well positioned to capture that upset. Third, these transactions allow us to size our operations more efficiently and support a more stable and predictable manufacturing profile over time.

Next, let's turn to Europe. The market was slow in the first two months of the year, but picked up in March, a trend that continued into April, driven in part by rising electricity prices in the region.

Despite the slow start, we delivered a strong first quarter in Europe, with revenue reaching its highest point since Q4 2023. The revenue growth is a result of stronger battery demand in both resi and C&I across the region.

I would like to highlight that the strength in Europe is even before we have fully ramped the export of US-manufactured products and before the rollout of SolarEdge Nexus platform. Speaking of Nexus, our third area of transformation is product innovation and leadership.

The SolarEdge Nexus launch event in Germany exceeded our expectations. Nearly 1,000 installers joined us in person or via the live stream, creating an atmosphere so electric, you could feel it in the room.

What made the moment truly powerful was our customers' reaction. Their enthusiasm wasn't just polite applause; it was genuine excitement because Nexus was built for the customers.

Every feature exists because we listened closely, understood their pain points, and learned what they valued and what frustrated them in day-to-day installations and operations. Their feedback became the blueprint for Nexus, and the result is something we believe is truly special.

The excitement is already reflected in the order book. Our entire planned Q2 Nexus production is fully booked by European customers, and we continue to expand capacity to meet additional demand.

We believe the Nexus platform positions us at the leading edge of technology and feature innovation. It also enables us to address incremental segments of the market, including larger homes, which account for over 50% of the residential market in Germany.

In addition, two weeks ago, we unveiled the second generation of our commercial battery, the CSS Outdoor 197 kWh solution, which marks another major step forward in our energy storage roadmap. This new system is purpose-built for medium to large-scale installations, whether deployed as a stand-alone storage asset or paired seamlessly with PV.

What sets the solution apart is the software suite, which enables multiple optimization modes, from maximizing self-consumption to peak shaving, tariff optimization, and managing export and import limitations. The fourth element of our transformation is investing in AI data center power solutions.

At GTC 26, Nvidia featured a live, energized 800V DC power rack, which reinforced that high-voltage DC power is moving from concept to infrastructure roadmap. The 800V DC evolution aligns exceptionally well with the technical capabilities SolarEdge has been building for 20 years.

We believe this represents a multibillion-dollar addressable opportunity over time. Our plan is to deliver a working system in 2026, initial piloted installations in 2027, and a broader rollout in 2028.

Since our last call, we've continued to advance our solid-state transformer platform and have made progress toward a system capable of converting 34.5 kV directly to 800V DC at efficiencies above 99%. To summarize, while executing on our transformation plan, we believe we have a clear line of sight to profitable growth.

We have multiple tailwinds supporting continued global market share gains. We are moving toward high-volume shipments of new products.

We are advancing our AI data center power solutions. We have firmly shifted to offense, and will press our advantages in every market that we serve.

Lastly, I would like to briefly address our CFO transition. Asaf will continue in his role through June 9th, and I would like to use this opportunity to thank him for his professionalism and commitment to the company, and for all the work he has done to further our turnaround.

Our CFO search is well underway with strong candidates, our finance organization is deep, our systems and processes are well established, and we expect no disruption to our 2026 plan or to our financial discipline. With that, I will turn the call over to Asaf.

Thank you, Shuki, and good morning, everyone. Starting with our quarterly results, non-GAAP revenues for the first quarter were $310 million, up 46% year-over-year and down 7% quarter-over-quarter, outperforming the typical seasonal decline of 10% to 15%.

This result does not include any significant one-time or pull-forward of revenue from safe harbor. Revenues from the US this quarter amounted to $150 million, down 20% quarter-over-quarter and representing 51% of our revenues.

Revenues from Europe were $114 million, up 14% quarter-over-quarter and representing 37% of our revenues. International markets revenues were $38 million, up 5% quarter-over-quarter and representing 12% of our revenues.

Non-GAAP gross margin this quarter was slightly up to 23.5% compared to 23.3% in Q4, towards the high end of our guidance. We achieved higher gross margins despite the lower revenue, largely due to a more favorable product mix and lower seasonal warranty costs.

A brief note on tariffs: on February 20th, the US Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act, or IEEPA, were invalid. The refund submission process with US Customs and Border Protection has already commenced, and we anticipate that the refunds could total approximately $55 million.

These potential refunds are not included in our Q2 guidance. Non-GAAP operating expenses for the first quarter were $97.7 million.

However, excluding a one-time doubtful debt expense of approximately $14 million, our ongoing operating expenses were approximately $84 million, below our guidance range and down from $88.7 million last quarter. This doubtful debt is related to one of our US customers, but not to Freedom Forever, which I will discuss shortly.

This opex reduction is largely reflective of our ongoing cost control, the efficiency measures we've implemented, and our focus on our core businesses. We are keeping our costs in check despite the continued headwinds we face from a strengthening New Israeli Shekel against the US dollar.

A brief note on our exposure to the bankruptcy of Freedom Forever. Freedom has been a long-standing and valued partner of ours and the scale they brought to the residential solar market over the years.

We have a net zero exposure on our balance sheet as we have not recognized significant revenue from Freedom over the course of the last 18 months. During this period, payments received were first applied to a reduction in their outstanding balances.

Given the uncertainty around Freedom's financial position, remaining amounts owed to us have been fully offset by a deferred revenue liability on the balance sheet throughout this 18-month period and netted to zero. We hold a UCC lien against Freedom's assets representing the amount owed to us by Freedom, which we equal approximately $100 million.

We do not know what, if any, amount will be recovered, but any amount we ultimately recover would be recognized as a benefit in our P&L in the period received. Non-GAAP operating loss for Q1 was approximately $25 million.

When excluding the one-time $14 million doubtful debt expense, our ongoing operating loss was approximately $11 million, flat with Q4 despite 7% lower revenue. As these results demonstrate, we are relentlessly pursuing even greater operational efficiency as we continue to journey back to profitable growth.

Our non-GAAP net loss was $26.3 million in Q1, compared to a non-GAAP net loss of $8.2 million in Q4. Non-GAAP net loss per share was 43 cents in Q1, compared to 14 cents in Q4.

Both non-GAAP net loss and loss per share were also impacted by the one-time $14 million doubtful debt charge I just mentioned. Turning now to our balance sheet, as of March 31, 2026, our cash and investments totaled approximately $583 million.

During the first quarter, we generated roughly $21 million of free cash flow. Our cash and investment increased by about $2 million in the quarter, as free cash flow was partly offset by several items, the largest being a one-time non-operational $26 million payment related to a lease amendment for our new headquarters.

Aligned with our efficiency measures, this amendment significantly reduces our planned footprint when we move into the new campus next year and is expected to lower our annual lease expenses by approximately $8 million. Our capital expenditures this quarter were approximately $4 million.

For the full year 2026, we anticipate capital expenditures in the range of $60 to $80 million. The main bucket of capex this year are: one, increased production capacity in the US for both PV and batteries; two, investment in our new headquarters in Israel, largely related to advanced R&D facilities; three, investment related to our AI data center offering; and lastly, ongoing maintenance capex.

Despite this higher capex and our planned investment in working capital to support our anticipated growth and the Nexus launch, we expect to generate positive cash flow for the full year 2026. This reflects solid underlying operating performance, continued discipline in managing expenses and capital investments, and our continued ability to monetize 45X credits, which are an important contributor to our cash flow expectations.

Turning to our working capital items, our rigorous focus on cash management continue to yield positive results. In Q1, our cash conversion cycle reached its fastest point in many years, driven by lower DSO and higher DPOs.

This is despite our inventory growing by $44 million, largely related to higher raw materials procurement in support of our Nexus launch and higher battery demand. AR net decreased this quarter to $223 million, compared to $267 million last quarter, driven by our strong collections.

Turning now to our guidance for the second quarter of 2026. We are expecting revenues to be within the range of $325 to $355 million.

This range does not include any significant one-time pull-forward of revenue. We expect non-GAAP gross margins to be within the range of 23% to 27%.

This range does not include any impact from potential IEEPA refunds. We expect non-GAAP operating expenses to be in the range of $86 million to $91 million.

For comparison, ongoing operating expenses in Q1 were $84 million, excluding the one-time $14 million doubtful debts charge. The midpoint of our opex guidance therefore reflects a modest sequential increase, driven primarily by the strengthening of the New Israeli Shekel against the US dollar net of our hedging activities.

At the midpoint of our Q2 guidance, the implied EBIT loss for the period is approximately $3.5 million, bringing us close to break-even. This represent a meaningful step in our focus on gradual progression towards profitable growth as we move into the third quarter.

I will now turn the call over to the operator to open it up for any questions. Operator?

Yes, good afternoon, everybody. Thank you very much for taking our questions.

Shuki, I think you touched on Europe a bit. I was hoping that you could just kind of give a real-time update with what you're seeing in Europe over the last couple of months, not necessarily overall 1Q, but really just since the conflict in Iran broke out, what you're seeing with power pricing, what you're seeing with kind of real-time demand in that region broadly.

Thank you.

Yes, thank you, Mark. As we said, the first two months of the year started slow, and then since March, including April, which is part of Q2 obviously, we've seen an increased activity and an increased demand coming from the region.

It's across several countries. It's not just unique to one specific country.

We believe that it's partially related with the increase and the expected increase in electricity prices as you noted. The war in Iran impacts these prices.

What we've seen actually is not only an increase in demand for PV only, but actually an increase in demand for PV plus storage. As we mentioned before, both in C&I and in resi, we are seeing that increase.

The SolarEdge solution that actually is not only the inverter and the battery, but actually a sophisticated energy management system that in more advanced markets where dynamic tariffs and sometimes negative tariffs may change the ROI quite significantly, that combination of a battery, inverter, and a system that manages the storage, the import and export, and other features is very much in need. We are seeing, as I said, stronger demand coming from the market, and we are well positioned to serve it both on the C&I side with the introduction of the second-generation storage solution and with the upcoming rollout of Nexus.

Okay. Then as my follow-up, I was hoping you could comment on C&I within the US.

You mentioned that you're gaining share, which makes sense because of your Dom-Com and FEOC. Just curious if you can comment on the competitive environment, if you're seeing some of your existing competitors potentially move around their operations, if you're seeing any new competitors potentially coming into that space.

Thank you.

Yes, the US C&I, as there have been three leaders in the market of rooftop C&I for the last several years. Out of these three, we are the only ones who can offer our customers not only a winning solution, but actually a product that is qualified for both domestic content and FEOC compliant.

With that, we are seeing something that is not cyclical, it's actually structural, a change that we believe will help us maintain that level of share for future quarters. Now, to the best of our knowledge, none of these two other major competitors have made any changes to their domestic content and/or for one of them the FEOC compliance.

There are obviously other players that have much lower market share that can penetrate this market, but we believe that we've established our solution not only by harvesting more energy, but actually by integrating together with the systems of enterprises, which is a much more stable and predictable segment of the market, and also, and we mentioned it as well, we are in the process of securing safe harbor transactions with the larger customers, the ones who are interested in that, through the physical work test, which helps us secure future revenue and future share as well.

Hey, guys. Thanks for taking my questions.

First one is a follow-up on Freedom. I think in the documents or the bankruptcy docs, they owe you guys $50 million on a credit line and then $56 million on a product debt line.

What do you have a lien on with respect to those credit facilities? In the first day of the hearing, it seems like these liens are or may be in dispute and that you may not have a lien on cash collateral.

I was wondering if you think that's true. It also seems like the company was late on making payments in Q4, and that's why you may have secured the lien.

Just was wondering if you could address if you think you're covered on the loan. Then this other $14 million expense you took, that's not Freedom, can you give us a little more color on who that might be and what the situation is there?

Thanks.

Hi, Philip. How are you?

Good morning, and thank you for your question. As it relates to Freedom, maybe I'll give some background and history.

I think I related to that in the prepared remarks, and I think we said that we did not recognize any meaningful revenue from Freedom over the past 18 months. While Freedom, as has been a valued customer of ours over the years, our current financial exposure to them in our books is zero.

During this 18-month period, the payment that we received from Freedom were first applied to reduction in their outstanding balances, the loan you mentioned and so forth. I think we've taken a very cautious approach, and because of the uncertainty around Freedom's financial condition, and any remaining amount owed to us by them, we have fully offset by a deferred revenue liability on our balance sheet throughout this entire period.

Net zero exposure. As it relates to the lien that you just mentioned, we do hold a lien.

It may allow us for some level of recovery, if any, but we are certainly not relying on our outlook. If anything will be received, it will be an upside, and again we are not relying on that.

I think it's also important to say, before I'll get to your second question in terms of this $14 million doubtful debt, is that when we are looking ahead, we continue to believe that demand for solar and storage will be driven primarily by attractive both project and system economics, regardless of which installation companies are active in the market, in the field. Of course, the installer landscape will further evolve, and we expect more partners to choose SolarEdge, particularly as we scale out the rollout of Nexus, which we believe will strengthen our value proposition and positioning with both installers, distributors, and homeowners, of course.

Now, regarding your second question about this $14 million of doubtful debt that we have recognized in this quarter, it's a, as you said, $14 million, it's a US customer that is experiencing financial, operational challenges lately. We believe, and of course this is not Freedom, just to avoid any confusion, it's another customer, not related to Freedom whatsoever.

We are not disclosing the customer name, and we believe that given the circumstances and the financial challenges this customer is experiencing, we took a conservative and responsible approach. We have actually written down the entire amount they owe us.

We do hope, of course, for their recovery, and if conditions improve in the future, we will reassess the situation accordingly. Did I answer your question fully, Phil?

Yes, Asaf. Thank you very much.

Appreciate the color and detail.

Sure, anytime.

Hey. Thanks for taking the questions.

I guess one question I had, you said for Q1 results as well as Q2 guide, there's not a significant amount of pull-forward revenue, i.e. safe harbor.

You did say that there's a significant amount of physical work test safe harbor that you're seeing or anticipating. Just question would be I think your peer has had multiple straight quarters of meaningful amount of safe harbor revenue as well as what they're anticipating in the current quarter, and you guys apparently are seeing a lot more on the other classification, the physical work test.

Is that a function of your strategy, go-to-market and sales? Is that just a function of your customers?

Or is there any kind of market share implications of why your number one competitor in the US resi market is seeing a lot of sort of in-period safe harbor versus the physical work? Just curious on kind of how we should interpret that.

Good morning, and thank you for the question. I'll start, and I'm sure Shuki will shed more color on the market indication.

As we discussed in the prepared remarks, in the last couple of quarters, we have signed multiple physical work test transactions with both leading TPOs and enterprise customers alike. We believe also that some of our existing and potential new customers may be interested in signing additional transactions before July, July 4th, that is.

Also we are in the process of closing more deals, and we, as I said, we believe we're very well positioned to do that with all TPOs in the market given our key advantages from you know harvesting more power, efficiencies in both high and low power, our DC-coupling solutions, etc., etc. We believe it all represent a great opportunity for us to increase market share, and clearly, as we sign such transaction, for us, it increases the visibility significantly for up to 4 years horizon, and also helps us secure market share, significant market share.

Shuki, you want to add any color?

To your first point, Phil, yes, neither Q1 revenue nor the Q2 guidance assumes any significant pull-forward of revenue related to the 5% safe harbor. I think that we covered it in previous calls, but just to make sure that everybody is on the same page, the 5% safe harbor deals are transactions in which the customer is actually buying the product in the first 100 days after the signing of the contract, and it's not necessarily for products that they are going to install in the period.

This is why they are referred to as pull-forward of revenue, while the physical work test has a built-in advantage to the customers because they will complete the transaction only when they need a product, and this is when they are going to install the product. From our perspective, as Asaf mentioned, it secures future revenue and share.

It does allow us to have a more efficient operation because we get predictability for customers' forecasts and orders, and it does line up the revenue together with the actual purchases from the customers. Whether there are advantages and disadvantages to physical work tests, we believe that the physical work test provides better visibility for us and some advantages to the customers.

Because on the resi side, we are securing the deals using the Nexus platform, that actually provides the level of confidence that the customers need that this is a product that will actually be modern and a leading product also in the next 3 to 4 years, and we are sharing the same view. That allows us actually to plan forward, and for them to plan forward, on a system that is robust, that is here to stay, and that is about to be rolled out in the coming quarters, which from the ground up was designed to be PV plus storage plus sophisticated energy management system.

On the C&I side, as Asaf mentioned, large companies, they are interested in physical work test because they have visibility into their business and what they would like to do with regard to PV, and we are best positioned to support them in that. That's the reason that you see a lot of interest in our physical work test.

Makes a lot of sense. I'll follow up offline.

Just second question on Europe. It seems like that's gonna be a source of strength going forward, and you're seeing some good trends there.

Can you kind of level set us a little bit? I know historically Europe's been a lower-priced environment, based on some of our data, it seems like at least 20% lower if not more ASP per watt.

Then, I think you've also had maybe more commercial versus resi mix in Europe historically. What are kind of the pricing and margin implications for you guys as Europe maybe becomes a bigger source of the mix and outgrows some of the challenges that you're seeing in the US resi market?

Just any thoughts around pricing and margin as it fits to Europe.

Thank you, Brian. As in the last several quarters, we've been excited about the potential in Europe, the potential SolarEdge has in Europe.

The region in which SolarEdge lost share in previous years was actually Europe. We see a huge potential to actually gain share both in the residential and the C&I side of the market.

In a way, we mentioned it, Q2 supply of Nexus for Europe is already all of it is booked. It's not a very large quantity, but it's all booked, and we are working very hard in order to increase the supply to support the Q3 demand.

When we bring Nexus, and we talked about the launch event and the excitement and all the benefits that Nexus has, and because of that, we don't think, and we talked about it in the past, pricing is not necessarily a matter of just the price in the market, but it's also the relative advantages that one product has versus another and what it does bring to the customer. While we've always harvested more energy, now with the energy management system that we are introducing, and the dynamic tariffs, and the increasing electricity prices in Europe, the benefits that are coming from a system that can actually optimize the entire energy consumption, import, and export is significantly higher, and we believe that with stable pricing, we can actually gain market share.

Now, as it pertains to margin, Asaf will add more color, but at the outset, we've just started exporting US-made products into Europe. The inverters and optimizers that are made in the US, when they are exported to Europe will generate better margin.

Nexus, as a platform and as a product, has a better cost advantage by itself. That will be also a tailwind for our margins.

Asaf, do you...

Maybe just to add, good morning. As we do not break down margin by territory or product, but to give you some color, very generally, the US resi margin profile would be the highest, and the EU storage or international market storage is the lowest.

Again, now that, as Shuki mentioned, we start exporting US-produced products to Europe, the cost structure will significantly improve. With that, of course we will work hard to also enhance the European products margin.

Hey, guys. [clears throat] Good morning.

Thanks for the time. I appreciate the opportunity to connect here.

I wanted to just follow up maybe just on this other customer and Freedom. Just what market share do they represent with you all, what market share do they represent in the marketplace, such that we just try to understand what that means as a headwind and understand, because I heard your comments at the outset you're saying you're on the offense.

How do you think about the market sort of displacing those lost sales? Again, I'm thinking more prospectively.

Obviously, you've been underweighting these customers of late. How do you think about that make-shift of your own customer base evolves here?

Then I've got a follow-up.

Thank you. Good morning.

In terms of this $14 million customer for which we had this doubtful debt provision, I can say that for the last three quarters or so, we had very low revenue from them reported in the books. No direct impact, I would say.

We believe that generally there's no vacuum in the market, certainly new potential players, installer, will get in. I think, as Shuki and I mentioned, considering the Nexus rollout and our significant advantages, we believe that we are best positioned to gain market share with such players.

Shuki, you want to add?

We do recognize, Julien, it's a good point, and we do recognize that these two valued partners of ours, we wish they would do better, they would recover, and they would come back to be loyal partners with SolarEdge. The demand is fulfilled by the channel, and it's coming from homeowners, TPOs, and C&I customers.

The advantages that we deliver to them and to the installers are such that we believe will convince others that they would like to join the SolarEdge installation group. We do hope that these partners of ours do recover and that they go back to install many, many SolarEdge systems.

Got it. Excellent.

Then maybe taking the more of the offenses step, how do you think about coming back later this year providing some sort of analyst day-like view and providing some sort of presumably multi-year view on not just resi, but also the C&I and perhaps novel products here? How do you think about kind of giving a full flesh and full-throated view on some of the emerging end markets, but also product portfolio here?

Just to make sure we've asked explicitly.

Thank you. We, as and I talked about it, Asaf has been a great partner of mine, and we are making good progress with the CFO transition.

We do plan to have an investor day after Labor Day. On that day, obviously, we will have the new CFO, Meir will join us, and I will be there as well.

Hopefully, you guys will be able to join us as well for something that it will be a bit longer-term and a bit deeper than what we can do on a quarterly call.

Good morning. Thanks.

I just wanted to follow up on the comment on picking up more installers. I guess what I'm wondering is can you speak to adding new customers with that transition to TPO and 48E?

Are you in conversations at a new group? Thanks.

Thank you, Chris. We've always been in conversations with different installers in the market.

We do see an uptick in their interest in working with SolarEdge with the upcoming Nexus. We believe that installation companies, their business is around identifying what the market needs and then being able to deliver that to the market.

Obviously, we're in discussions with different groups and different installation companies. We believe that once the demand for the SolarEdge solutions is out there, there will be installation companies that will be able to actually install them and bring that value to the customers.

Got it. Then maybe just as a follow-up here on Europe, you highlighted growing demand, strength in Germany.

Are there other regions where you're seeing similar strengths? Is this maybe more isolated to Germany?

Thanks.

What we said about Germany was actually that we're seeing some strength in March and April, but also Nexus is actually opening a new segment for us that is about 50% of the market, which is the large homes, and large installations that are above the 10 kW. We also are seeing an increase in demand for upsell to existing installed base in the Netherlands and in other countries as well.

In the Netherlands, it's more pronounced obviously because of the very large installed base that we have and the benefits that homeowners over there are going to have if they do that ahead of the January 1st expiration of the feed-in tariff. We also see in Italy, we have a strength in the commercial storage.

As we mentioned in the previous call, we have focused our energy, attention, and go-to-market motion into I would say 10 countries in Europe. In all of them, we are seeing that the demand is picking up, and there is interest in partnering with SolarEdge.

One other segment that we can actually address with Nexus that we didn't mention before is the new build. In different countries, in different states actually in the US as well, there are incentives for builders if they do include a system over there.

There is a variation of Nexus that is actually very attractive for that segment of the market as well.

Thanks so much, guys. Could you talk about remaining inventory in the channel that you guys still see clearing out, or any of that that might be a little bit of a headwind here over the next couple quarters?

Thank you, Colin. As we said in previous calls, the vast majority of our distributors in Europe have already resumed normal levels of inventory.

As days of inventory in the channel is a result of the amount of inventory divided by the sales. When sales are picking up actually, what you're seeing is that the days of inventory, by definition, are going down.

That situation is not changed, if at all it even improved a little bit. As we said before, when we talk about normalized levels of inventory, there are gives and takes, ins and outs, etc.

Sometimes one distributor can have a bit too much, and another distributor can have a bit too little. When we look at it from a market perspective, from a company's perspective, our channel inventory is normalized.

I'd like to emphasize that as we move into the single-SKU concept, it will allow our distribution partners to carry much less inventory in order to fulfill the very same sales, actually one could say to fulfill even more sales, because they will have to have only one type of inverter for the single phase or for the three phase, as an example, or for the C&I, and that will support different levels of power, as opposed to the four or five different SKUs that they had to carry before. We are working with them through this transition, hopefully we'll see the channel inventory even becoming healthier in the future.

Excellent. Then following up on the data center opportunity, can you just give us the current status on where you're at from a product development perspective in terms of kind of sub-units or sub-systems within the product, how mature that is, where you're at with testing at this point, and when we could see a little bit more robust product announcement from you guys?

Hi, thanks for the question. Basically what we're doing these days is preparing prototypes, which we could share with hyperscalers and potential hyperscalers and neo-clouds potential customers.

We're planning on showing proof of concept towards the end of this year, so that we could then have pilot plans at their data centers throughout next year, leading to ramp up and mass deployment in 2028.

Hey, good morning, team. Thank you for taking my question.

Maybe one thing I wanted to clarify, we have heard from some of your peer about price cuts. Is it a strategy that you have also been implementing, or that you intend to implement, or are you in a different state of seeing the market?

Yes, thank you. We we have not implemented price cuts, and as I mentioned before, we believe that price reflect value is reflected in the price.

It's not necessarily a cost-plus model. We believe that with the value that we bring to the customers that both in terms of the C&I side with the storage and the and the energy management over there, and in the resi side with Nexus, that has a much, much better performance in low power and high power versus competition, we we feel confident that we can gain share while keeping that this premium over competition.

At the same time, the market is dynamic, and and if we see a need to to to change it, as I mentioned earlier, the Nexus and the products that are made in the US allow us some some room that are lower-cost products, and that will allow us some room to move if we need to.

Thank you. Maybe another one on battery.

Your battery shipment were pretty strong this quarter, especially again if we compare versus some of your peer. Can you just talk again, how do you view that trend to continue for the rest of the year, and maybe if you see a different view Europe versus the US, that will be helpful.

Thank you.

Yes, generally speaking, and talking about the market in general, you see attach rates of storage to PV going up and to the right, I would say in almost every segment and almost every state or country. Some of them are very advanced.

In some places, you have more than 90% attach rate, like NEM 3 installations in California, and some of them are still early on in their advancement toward higher attach rates. You can have a battery as a stand-alone as well.

Our C&I battery can be a stand-alone as well, but the combination of PV plus battery in a dynamic rate environment, it allows for a much, much higher return on investment if it's managed well. I'll give you just one example.

If at noon the rates are very low, or sometimes negatives, and at night the rates are high, it would make sense that you charge the battery from the solar during lunchtime, and then when the night comes, and it's peak hour and the rate is high, you'd use the battery in order to power your house or your business. It's not that sophisticated the way I explained it.

In some cases, it becomes a little bit more sophisticated because we need to predict what the solar production is going to be next day and what the rates are, but having that system in place actually increases the ROI quite significantly. The benefit that SolarEdge has, we mentioned it earlier as well, is higher efficiency in low power.

Most people don't realize it, but most of the time their houses are operating on 1 or 2 kW and even less. The round-trip efficiency of SolarEdge Nexus is higher than competition on that regard as well.

Hey, thanks for the questions. Maybe just on the US solar market and how much of the guidance in Q2 kind of come back to that, or US market in general.

How to think about the progress here in Q3, Q4 for solar specifically outside of the Nexus platform?

Thank you, Maheep. If I understood you correctly, you're asking about the resi US market dynamics, how are they affecting our Q2 guidance?

As in resi and commercial combined, yeah. Just trying to understand the mix for US in Q2 and how to think about that in Q3, Q4.

Thanks.

Obviously, as we said, the resi market in the US started the year slower than anticipated even, because of the slowdown in tax equity investments. We hope that this situation is resolved one way or another in the coming months, and then we believe that the market is going to be stronger.

For Q2, we didn't assume that the market is going to be stronger. On the C&I side, the market continues to be in a good shape, and we are seeing, as we said earlier, we are seeing structural change that is leading towards our share, and we expect that to continue actually.

I think,

hi, good morning. I think you also asked to give some color beyond Q2.

As we do not provide guidance beyond the next quarter. With that, what we can say and what we believe is that we do have an opportunity to continue growing, certainly in Q3, supported by our market share momentum, the continued rollout of Nexus, the introduction of the new C&I batteries, storage solutions, and all of these things Shuki mentioned.

That's as much as color that we can provide for the longer term.

Appreciate it. Thanks.

Sure.

Hi. Good morning, everyone.

I wanted to go back to the challenges faced by customers in the US. I was wondering how much stress are you seeing in the US market?

We have one bankruptcy announced and one doubtful expense. We have a fair idea about who it might be.

Are you seeing the situation get worse due to capital cost and availability issues? Is this stress something that you foresee could accelerate after safe harbor expiration?

I ask because you saw this Freedom Forever issue coming from a mile away, and you managed the balance sheet very well. I was wondering how many more customers are you monitoring for such issues?

Is that a meaningful number?

Maybe I'll start, and Shuki can provide some more market indications. We have a very solid team here treasury, and we always of course look and review, and we have certain procedure to ensure we manage our customers credits very well.

I think that beyond this, thank God, we don't see major exposure not in the US or I would say globally. Of course, from time to time, things may change, and sometimes you have unexpected surprises.

Generally, I would say we don't see significant exposure related to any of our significant or major customers globally.

Yes, I just would add to that that as we said earlier, there is the concern about the slowdown of tax equity investment. We believe that the underlying demand for solar plus storage systems exists.

It does add value to many homeowners around the US. The TPOs and other providers are going to find a way to deliver that value to these customers.

Whether it will be with this type of an investors or other types, we believe that they will find a way, and once they do, once the market rebounds, SolarEdge is very well positioned to benefit from that. We are the natural partner for the TPOs.

The increased attach rate for batteries and solar is something that plays to our strength. When we look beyond the current quarter, we believe that we can see that the growth resumes.

Got it. Then, switching gears, are you on track to on-shore residential inverter and optimizer production to the US by 2Q, and I think the target was mid-year, if you can update us about the timing, since it's a meaningful driver of 45 benefits, and hence, the gross margins.

Try to understand how much of that on-shoring is baked into second quarter guidance and how much of that shows up in third quarter. Thank you.

Onshoring of manufacturing, and we said it before, we've ramped up our manufacturing. We have a manufacturing facility through our partners.

We're working with Jabil and Flex. With our partners, we have manufacturing facilities in Tampa in Florida, in Austin, Texas, and in Salt Lake City.

All three manufacturing facilities are already ramped. US demand was actually served by domestic manufacturing since last year, and as we said in our previous call, we've started exporting US-made products to Europe and to Asia, and we're continuing in that trend going into the second quarter.

At this stage, I would say for inverters and optimizers, more than 90% of our production is made in the US.

Yes, thank you for your interest in SolarEdge and joining our call today. I would also like to thank the SolarEdge team for their continued commitment, and we look forward to updating you in future quarters.

Thank you very much.