Israeli inverter maker SolarEdge has generated satisfactory third quarter returns, meeting the upper margin of the company’s guidance.
Revenues reached a new high of $410.6 million, up 26% on the April-to-June period and 74% on the $236 million generated this time last year. The latest business added up to nine-month revenues of more than $1 billion for the first time. As a result, gross profits almost doubled from $77.9 million in the third quarter of 2018, to $139 million.
Net income for the three-month window was $41.6 million, up 26% from $33.1 million in Q2 but down 9% from the $45 million banked in Q3 last year. Cashflow from operating activities was up from $50.8 million in the last quarter, to $68.7 million.
Operating expenses rose in tandem, 12% from $65.3 million in Q2 to $73.3 million. SolarEdge pointed out that, to some extent, operating expenses increased due “to acceleration of equity awards and other payments related to the untimely death of Mr Guy Sella, former chairman, CEO and founder of the company.” In the unsentimental business of the balance sheet, those payments made up $8.3 million of non-recurring expenses.
“Our performance this quarter was at the upper range of our guidance with record revenues, record non-GAAP profitability [a figure not taking into consideration standard accounting rules] and record cash generation,” said acting CEO and vice principal of global sales Zvi Lando.
A somber quarter
“While we are pleased with the financial and operational results this was a somber quarter for the company due to the untimely passing of Mr. Guy Sella, founder, chairman and CEO of SolarEdge. Guy was not only our CEO and chairman but a technological visionary, a role model and dear friend, and will be greatly missed. SolarEdge management, most of whom have been leading the company together with Guy for many years, are dedicated to continue to strive for excellence in innovation and execution. We believe we are well positioned for continued growth both in our core business as leaders of PV inverter technology and in our new businesses of lithium-ion cells and batteries, e-mobility powertrain solutions and uninterruptible power supply systems.”
Gross margin for SolarEdge came in at 33.9%, slightly down on the previous quarter’s 34.1% but a year-on-year improvement on last year’s 33% for July to September. The company blamed increased air shipments and the China-U.S. trade dispute. SolarEdge added, due to manufacturing bottlenecks air shipments had to be made but said manufacturing capacity ramp-ups are well under way.
In terms of shipped hardware, SolarEdge counted 4.6 million power optimizers leaving its factories, along with 188,000 inverters and 1.5 GW of solar project generation capacity. Power optimizer and inverter shipments have doubled since the third quarter of 2017, noted the company.
SolarEdge launched its ‘Smart Modules’ in Europe in September. The products are sourced from tier-1 suppliers and equipped with proprietary SolarEdge, module-level monitoring hardware. The service enables customers to buy solar projects off the shelf and better integrate system components into SolarEdge’s software.