SolarEdge growth slows in Q4 FY 2016, but year-on-year results strong

The fourth and final quarter of fiscal year (FY) 2016 for Israel’s power component specialist SolarEdge marked a slight deceleration of the growth that had propelled the firm to the upper reaches of the global inverter supply chain.
In its Q4 2016 summary, SolarEdge reported revenues of $124.8 million, which represented a 0.4% decrease from the $125.2 million generated in the FY Q3, while gross margin was also down sequentially from 32.5% to 31.4%.
However, examined against Q4 2015, the company’s robust performance over the past 12 months is stark: Q4 revenue for this year is 26.8% higher than the same period last year, with gross margin also surpassing the 28.7% achieved in 2015’s final quarter.
GAAP operating expenses for Q4 were consistent with the previous quarter, at around $21 million, and up from the $16.4 million spent in Q4 2015. This increased expenditure saw operating income hit $17.9 million for Q4 2016, which was a decrease on the $19.7 million generated in Q3.
This slight end-of-year contraction fell short of analyst estimates, which had projected Q4 revenue of closer to $130 million. However, despite Q4’s slowdown, SolarEdge remained bullish on the back of another undoubtedly strong 12-month period for the firm.
Revenues for the entire FY hit a record $489.9 million, which is a 50.7% increase on FY 2015, with gross margin of 31% above the 25.2% posted last year. Operating income was also at record levels, reaching $71.8 million (from a 49.8% increase in operating expenses) compared to $28.3 million in 2015.
"Our fiscal 2016 results demonstrate consistent and strong execution with record revenues and 51% annual growth," said SolarEdge founder, chairman and CEO Guy Sella. "We maintain our profitability and continue to generate cash flow from our operations, quarter over quarter. While this quarter is characterized by a general slowdown in the U.S. residential market, we were able to compensate with increased sales in other geographic regions in which we sell."
Sella added that SolarEdge remains on target with its plans to grow the business and increase its global market share.
Over the course of FY 2016 SolarEdge shipped 1,615 MW-AC of inverters, of which 427 MW were shipped in Q4. The North American market has come to account for around three-quarters of all revenue for the firm, but demand for SolarEdge’s StorEdge solution is expected to increase in Australia and Germany in particular.
Earlier this year the company shipped its 10 millionth power optimizer, setting it on course for market leadership in the global residential inverter segment – a market that has become increasingly fierce in recent years as low-cost but high-quality inverters from Chinese players Huawei and Sungrow have entered the market.
In Q1 2017 guidance, SolarEdge expects revenue of between $130 million and $139 million, with gross margins to be within the range of 30% to 32%.