SolarEdge strengthens again with 45% Q3 revenue increase year-over-year

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The growing adoption rates of module level power electronics (MLPE) in much of solar’s mature markets continues to serve power electronics firm SolarEdge well, with third quarter (Q3) fiscal results revealing yet another strong three months for the Israeli company.

SolarEdge hit revenues of $125.2 million for the quarter, a record total that bested Q2’s $124.8 million and represented a 44.9% increase year-over-year.

Inverter shipments were once again 416 MW, a figure also reached in fiscal Q2, while GAAP gross margin hit 32.5%, which was a slight increase on Q2 and a steady increase year-over-year, when GAAP gross margin stood at 27.4%.

The power optimizer specialist saw its GAAP operating expenses reach $21 million for the quarter, or 16.8% of revenue. This represented a slight increase on Q2, when operating expenses ran to $19.3 million, or 15.5% of revenue.

By the same token, operating income was up from $19.3 million in Q2 to $19.7 million in Q3 – a large increase on the $9.8 million posted in Q3 last year.

SolarEdge shares, however, fell slightly to $0.47, down from $0.55 in Q2 (on a GAAP net diluted basis), but non-GAAP net diluted earnings per share was $0.51, which represented an improvement on Q2 ($0.44) and Q3 last year ($0.20).

Looking ahead to Q4 2016, SolarEdge is forecasting revenues to be within the range of $125 million to $134 million, and gross margins to settle somewhere between 29% to 31%. "We are pleased with another strong quarter despite challenging market conditions," said SolarEdge founder, chairman and CEO Guy Sella. "Our growing customer base, continued diligent execution, strong balance sheet and increased cash flow from operations, coupled with our advanced technology, position us well moving forward."

US market key

In a conference call held to discuss the Q3 results, the CEO added that 302 MW of the 416 MW of nameplate inverters shipped went to the North American markets. In total, SolarEdge shipped more than 1.4 million power optimizers and 52,000 inverters globally during the third quarter. These numbers were actually lower than Q2 – something Sella attributed to an "increase in commercial sales and the growing acceptance of our large-scale inverters."

The company has noticed a slight slowdown in the U.S. residential market, Sella added, but suggested that demand in the mid and long term will pick up once more. "Significantly broader" acceptance of SolarEdge’s 27kW and 33 kW inverters is also evident in both the U.S. and Europe, while growing demand for storage is evident in Australia, South Africa, European and U.S. markets.

"We finally feel that this new segment can with time become a significant source of revenue growth for our business," Sella said. The CEO also revealed that SolarEdge will begin mass production of its HD Wave inverters this forthcoming quarter, but revenues from the sale of this technology are unlikely to be recognized in Q4.

Finally, the CEO confirmed that SolarEdge would not be proceeding with plans to open up manufacturing facilities in Mexico due to a lack of "economic competitiveness". Instead, the company will ramp up and increase its capacity at its Israeli fab.