SEDG - Earnings call transcript Q1 2018 | SolarEdge Technologies, Inc.

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Operator

Good day everyone and welcome to the SolarEdge Conference Call for the First Quarter ended March 31, 2018. This call is being webcast live on the company’s website at www.solaredge.com in the Investors section, on the Event Calendar page. This call is sole property and copyright of SolarEdge with all rights reserved, and any recordings, reproduction or transmission of this call without the expressed written consent of SolarEdge is prohibited.

You may listen to a webcast replay of this call by visiting the Event Calendar page of the SolarEdge investor website. I would now like to turn the conference over to Erica Mannion, at Sapphire Investor Relations. Relations Investor ahead, go for SolarEdge. Please

Erica Mannion

superior provide Guy the XX, for involve Founder, that slides Sella, materially actual the the Thank call in a operating results results results the first first company’s We afternoon. today XXXX, uncertainties are; Safe risks well call of ended non-GAAP outlook presentation diluted you could webcast understanding will the quarter including All March me Officer. XXXX. ended Then material this non-GAAP net for considered Ronen visiting all certain expectations. do measures provide performance. GAAP. contained for CEO; current we are will review SolarEdge’s financial discuss not evaluates open with as the evaluating are that who the and for company’s second this U.S. the to us non-GAAP believe differ a XXXX. complete the share, Listeners non-GAAP as with quarter quarter will a contained copy for the description. may which to substitute more in have not we means this in with include XXXX financial how obtain or Harbor measures note today management and for, press will XX, net with the and you GAAP. the of not Faier, Statements earnings management’s prepared be of Chief or XX, as in and and Company’s forward With joining published operating to that These the for in the is and prepared encourage investors release measures per measures, with March from, results by accordance SolarEdge as statements from Good quarter note the second the a property U.S. presented of website. quarter accordance to in the copy Guy begin March Ronen described Company’s Please brief Investor release presentation measures The our XXXX. presentation review isolation it questions. for Technologies and the the income Financial for Chairman copyrights non-GAAP of Company’s a outlook section will a press review sole the of rights Please should quarter reserved. looking first cause ended and

call the Sella. over CEO, to turn will I Guy Now,

Guy Sella

thank of We Thank Good us $XXX the quarter you and and quarter an Erica. afternoon on our approximately you with year. first last our XX% XX% from revenues last call. same quarter up for increase of million, joining from concluded conference

earnings gross and inverters. the GAAP March margin In We’re optimizers inverters. power we diluted reporting XXX,XXX nameplate net we million non AC XX, share of quarter ended of GAAP and the per shipped $X.XX for megawatts XX.X% X.X of quarter. XXX ship Overall, XXXX, first

mix. diversification to business, both product continue geography see healthy our and We of

for the World, our Europe accounted for Australia revenues in XX% primarily, of the United sales States quarter’s of for revenues. Sales the from this Rest XX% Specifically, accounted accounted revenues. XX% of from sales and of

of of expansion quarter. mix our Our this ship which product revealed further XX% sales compromise megawatts commercial

record to a we amounting operations our record cash share $X.XX numbers line bottom generated our non million. net per high or of at and $XX.X GAAP Looking income hit $XX from

our differentiation and power product product grid that turning announced a to Moving multiple aggregation increase and in fleet business capabilities adding Last believe system operators. software updates. plant. is for current OHSAS week into allows and product the we front, storage our newsworthy This virtual we competitiveness. base to services a solar grid solar have offering cloud We will that

to we not market acceptance, these revenues high one manner, are impact in in such expected significant our revenues recurring do they services any gain services While, generate expect to XXXX at margin.

definitive As of issued Industries know agreement a acquisition for unit. Gamatronic for solar the you known systems, press serve today, manufacture also business UPSs. a company Gamatronic sells Electronics a the of as may power release the assets announcing Ltd, we and that will also develops, new supply basis UPS business uninterruptible as

Gamatronic property, $X.X the power assets, organically we the operational with of believe net America. purchase closing leverage technological a in track SolarEdge, respectively. UPS provision this that out is of A employees. for manufactures brand acquisition product asset is very The been second systems. leading This which intellectual UPS and including an earn input is acquisition The operating wide developing recall as billion inverters. the solution presence in system SolarEdge already since by This UPS China, emergency on join of and property, Africa, were called appliances, business. UPS are SolarEdge business developed develops, employees year each and additional we includes management Gamatronic United this us the all is following that approximately either closing condition agreement to may thereafter Gamatronic’s our year two internally global abilities chargers, XX% You our will our hundred XX% for of to Europe, when The that subject of with Gamatronic. followed combination to selling direction, part million of or tangible for the expertise provide electrical for background has outputs, in monitoring excellence, in its the fails. income the innovation, Latin substantially the announced business power South of on that $XX.X Gamatronic be States, product devices embedded and the and we of today. build sizable, market shipping and second of power Gamatronic XXXX, market which said The standard and and XXXX step including business outside at will record solar acquisition, of assets means and that step, company by intellectual included globally, know-how can EV as have arena. is we and source products estimated range and electronics little sells

formed size, energy in is uses this it an for opportunity fields small way relatively acquisition outside and for in progress begin, smart to management approach consumes While us new in energy. is to arena drive the innovative us our the to solar and some the apply order

of contribution with the this, results. is Given marginally review XXXX financial to our speaker contribution the Ronen, year. I revenue the acquiring our who positive and EPS for the small over And relative hand business our we’re minimal expect rest revenues, to we to will to

Ronen Faier

Thank you afternoon Guy. everyone. And good

for in quarter I disposal, non press stock Before GAAP call earnings recognition time our be as remind of one as deferred time the starting to website tax and of XXXX, certain the release newly this GAAP available and listeners tax Full pro discussed like the while asset will overview based the revenue a transition on the to our forma review would discussing results adopted GAAP I in one standard, cases exclude the to reconciliation results GAAP per on today. on compensation, well is of issued basis, share. and will that which of measures first financial numbers be impact non

quarter the million on million were quarterly typical quarter of results the let’s financial with million increase revenue. slowdown for overcame revenues seasonal year. Sales from of $XXX.X first XX.X Europe A strong XXX.X up which start compared to in increase quarter, our and XX% regions. last XXXX, so it’s and XX.X% quarterly record revenues last this for XX.X% all an of the Now revenues to same $XXX.X XXX.X an driven were our States quarter million represented XX% were the compared momentum overall United reached in and These quarter revenues. by the

XX The the reductions was compared ASP, component our the This XX.X% manufacturing a affect Gross revenues concentration the from XX.X% in the in but the a States million and generate intensified top of product. cost to quarter secure in Netherlands of other countries to continue from further high the generated to in per blended last products. quarter to Having spending our revenues. growing by revenue, year. an sales to quarter. Euro XX% our U.S. to We of a relative due accounted strength record same of us continued last and total margins increased one from product also result of of solid customers with components to quarter customer of only and taken Europe our the basis, in partially reduce to necessitating while of months than margin this XX.X% and customer ASP prior the represented quarterly the is XX.X% a shortages slightly was quarter reached our continue it dollar. on to grow us outside continue mainly ship said the precautions From this perspective, buildup also increased against a revenue. of stock that, Germany, geographic by more decreased air representing a help from slight to the quarter that a while mix quarter Revenue United the supply various quarter the Europe. a and On and in combined watt last shipments safety margins $XX.X this air the XX.X% for previous revenues tailwind for

as we which XX%, percentage quarters gross I of of proportionately air margins remain targets continue our to higher the is range as will revenues. to model of to at or call, take margins also a in next last result decrease aim the that approximate would the a shipping for expect at We note percentage single our level the point. gross incur give discussing expenses and

X% same $XX.X of previous expenses. to XX% last the increase compared an million, quarter increase expenses compared an to R&D Moving the of operating to quarter, year. and were

in expenses new increase and market to As increase a expenses and this over global quality. to product previous a resources cost XX% consistent of This continue the increase our cost XX% reduction investment allow from the compared increase the an marketing year is and prior in year. products in increase the the an further were will same development our that current in increase last to product mainly decision Sales quarter and attributed well G&A compared X% improve million for as were to million invest for headcount. their and us the of quarter decrease quarter, to a the headcount increase of of factoring the year. last innovation, XX.X and our processes in quarter X.X bring result quarter the as to and quarter, with to mainly reduce XX%

fourth in that our expenses affected total, may which the you the revenues compared XX.X revenues expense XX.X% litigation first onetime quarter of XXXX, of quarters XX.X% prior million same recall, operating XX.X% the G&A a or or third in and In to incurred XX.X of As quarter in we period. were and year. the million quarter million for last XX.X or revenues of for

these in for income of million in future operating year. little I last enjoyed period a result, a result last are million XX, for were period of to expense tax received new the taxes than XXXX. $XX.X same services highlight the quarter income quarter as exempted year from set the as revenue deemed and standard. Under million two rate treated subject year company encouragement quarter previous between interest. technological the the expense X.X prior million be from year. for period set a quarter resulted X.X in note, that be for In the is June in first interest for tax tax operations for the the for financial be the using such and adoption deferred last and million in year. loan holiday the compared compared had we of tax quarter and out income results the the periods that $X.X Based and an the of order record reached our period XX.X rates the payments rate separate quarter by the and new in expense in this same noncash on As company to is tax expand extended quarter July on recognition which expenses were to tax the On these would gain like on provided to same services main favorable we was over expense our longer our rate technological and the previous XX.X the These a to investment offset end exchange will non-GAAP and generated end Financial of law to X.X we reflect this are drivers actual the purposes one This for for to $X.X a to earned high Israel, a million interest the standard income million approximately to of from end warranties monitoring a is $XX credit year. of Since compared annually until accounting $X.X started of figure the XX%. over, of the financial expectations. to million continued this we industry Once our tax calculated accrue to corporate June is tax average of corporate income for

when and approximately Cuts in for tax operate, to year. years. States that guilty tax Act and in not current This June fact in should this rate below It threshold imposed geographies overall XX% in rates add all that all the foreign the holiday an we mainly on Under fall rate in change United year, or across the amount this average to So in a is next actually in certain of newly which States. the expect noted Israel United the be levied in United the do we tax few jurisdictions and Tax we this this despite States. of the results substantially tax XX% taxes XX our Jobs adopted newly other due

the same signed income repatriation million that act fourth to period on tax tax the XXXX. In and income quarter jobs $XX.X and as to the GAAP million for I XX.X one December expenses compared a deemed to mandatory in GAAP cuts year. into last by related addition, XX.X time in the remind was purposes, our law our period call tax for impacted would last a quarter, discussed million Net net for first we the to previous comparison of quarter everyone quarter for were like

the the $XX.X was Our same a non was year. $X.XX to net and for $X.XX non-GAAP for Non year. to quarter quarter EPS last for and previous net GAAP quarter net year. the income last diluted quarter previous first compared last the same million per was $X.XX quarter compared quarter to and income in XX.X $X.XX quarter GAAP $X.XX $X.XX of million the net earnings million compared the same previous in in in GAAP diluted share the XX.X

XX, to Turning at cash XXXX compared the balance December XX, and equivalent sheet, of $XXX.X cash, cash investments restricted March now as million were million to XXX.X XXXX.

generated operations. $XX DSO quarter XXX.X last a quarter, the we increased quarter from remained compared to XX million net During flat million XXXX, at $XXX.X million in AR days. of this cash quarter. reaching

manufacturers our finished our contract quarter. million production. of March inventory in safety of held compared net level our with to and prior XX.X well represent warehouses as As reserves was XX, stock XX to XXXX at increased ensure million in the These inventory elevated as in both transit undisrupted level goods

would aspects announced to Before review the providing refer transactions we and of next the the I quarter, financial to guidance like quarterly concluding for our today.

to we Tel being Ltd attributed signed XXXX, million. of Guy loss and the purchase of agreement Gamatronic was have As of to related generated company with these a Gamatronic for Gamatronic. revenues Exchange. Aviv Industries of $XX an expenses In in purchase $X.X traded net asset losses of approximately the Part million assets publicly and approximate reported the described Stock Electrical

yield the the our efficiencies well as expect assuming after the the can closing relative implemented contribution being EPS to to elimination that a and acquisition to of publicly as revenues We cost for rest our contribution Gamatronic minimal year. given the the these that of positive revenue will be to acquisition, of of traded immediately marginally the related and XXXX expenses a company,

Moving for second quarter the the on XXXX. of guidance to

EPS. subject closing line of that We to to it for on quarter the million $XXX turn now our expect of the to and effect acquisition margins very please. of over operator open and be revenues Operator, asset to Therefore XX%. to expect will to be the on late we range I in to second is within have results grow financial to the on top both within customary And it up Gamatronic the XXXX. the quarter and $XXX minimal call range XX% conditions million second gross will questions.

Operator

and the Thank JP and session question electronically. Instructions] Mark gentlemen, you. will be [Operator question answer first come your Ladies will from with Morgan. conducted And Strouse

Mark Strouse

questions. evening. for guys. Hey our Good taking Thanks

with just I acquisition if So can. I the wanted start to

of you elimination a talk far or any of company revenue bit as public to there any technologies channels about the and costs anything costs Can more synergy that? expect. the some understand or provide synergies the can So color? you of just like the sales as Are the

Guy Sella

Hi. the Thank question. you for

as From to far our so channels, not we’re the So, sales leverage able market all to inverters similar UPS and perspective, expecting inverters. are different, to be quite solar channels. very is as UPS sales other

in So se wise convert The to very per is similar. AC. a very, you nature DC technology

of the So produce planning second it cost much perspective we or much typologies, phase, big our cheaper, that our leverage, course to much it all per all, last few to excellence are faster, watt come volumes, to in inverter. reduction ability capabilities operational And are used our years. will was warranty proven that to market and is the the people a of easier cost from in in

is than phase applications. So $X.XX, for what around the price even per more commercial in just see which you inverter’s already $X.XX similar to watt, selling three smaller give proportion, UPS is every

higher percentage the product with to the While, produce at comes with usually hand, year contract. the on a And those inverters service are fit warranty. and indoor other the only only cheaper one though come itself, it’s

revenue such installations. to a maintaining going you’re get recurrent from So

to is think this leverage. capabilities So all for perfect business a we our new current in all

Mark Strouse

knew gears, Guy. how SolarEdge? came rooftop wanted the construction, just out, just then that And a new I it to passed that to switching initial Okay. home Thanks take on material California get solar on your in be but requiring just might Xaw Okay?

Guy Sella

that’s the subset are UK, be countries. people available out These this in are building system, smaller So It’s will optimizer smaller that something a just size. such Europe seven other mandatory installing quite eight your installing the panels. in an are the and most mandatory are people Usually HD few some and what connected regulations we experts be under Netherlands in law, types can We of five, of in came for way, not that perfect four, four to product a six, physically a invertible a usually and for modules. can or to installation. with PV smaller eight, time

market regulation. So will Europe, estimate a the California great the California to set potential houses in expert we’re this in not well in be of California to portable of the due such I’m for course new market in growth a for in at addition. amount type the

Mark Strouse

Okay, us. That’s very helpful. it you that’s for Thank much.

Guy Sella

Thank you.

Operator

Roth From Philip Capital Shen. Partners,

Philip Shen

Had congrats the quick guys on results. great on Hey follow-up Gamatronics. a a

that’s about, of talked ‘XX and historically, being billion revenues see XX bit million. on if little contribution, kind the X the topology, a modest you what going XX that a were ‘XX for terms we In million, second of on - then UPS is You bigger And market XXXX? in size of kind with work revenue focused phase could of small terms being share. know picture in being in

cost that that to and so I you there I do attack is for there’s And you to you mean, of share? gain - would which lot Thanks could then all? first long what again? imagine a finally, And you quickly synergies and forth, markets and share you for question. plan synergistic other to think sales beyond what do share? plan at the there. is what So can gain taking How is envision? speak know specifically the synergies kind

Guy Sella

will try. I So

So I months. in the that would expect XX first

think finish growth we’ll date. of rate I I the assume dramatic XX the first end by in a wouldn’t in the the let’s closing So Did run the of the expect company. months, quarter,

I think XX months. in the following

lack be as it to are fact Gamatronic that aspects, older sales able a and I the resources such and think today, due budget. company to it many the of to supposed operates priorities and mainly significantly in grow time to marketing market managerial we from suffer once priorities in comes

and the service on were we to think people, in infrastructure we’ll U.S. leverage first of don’t obvious the abroad offices focus I of can current all sales the While, customer be and geographies office geographies will support the two course, of and the Europe. leverage, those

XXX the share I in think price it’s the offering surely. came was, we in whatever to biggest and did to sales point market simply the and right right market with XXXX. what We but no or world the with than number different zero number started slowly, it we and managed take a

almost right think product developed good I with here we’re all data of very a a perfect have fit and modular a starting for system. that good product. a centers. sizes Gamatronic very UPS It

And improve their in we sales the aggregate dramatically knowledge the Now with the I eight then the what increase company need that years. described. we the to competitiveness last already last years, on based XX marketing of and

of like SolarEdge. any while we simple, but able to it profitability doable. the effective this that, in that be would we and the it’s market learning, way you very I increasing think share an expect And within I business position fast take are, from that I won’t be market would think are other

Philip Shen

Thanks. Great.

to you So disappeared… shifting

Guy Sella

So we you said shifting you. and hear then

Philip Shen

sorry. I’m

shifting Okay. margins. to said I

in been as you know, off mentioned the meaningfully. is call the range some checks, may concessions have some you suggests results some concessions, and be I trading know, give price now might you of a to today indeed Uh, perhaps higher getting think that of of pricing, our margin the the with not guys heading past historically result are Ronen we’ve end at that on said mentioned you you the that that. you

at the strong any out to comments to time little a able on help pricing a end profitability, some and some the can also range expect kind being Are you the shifts some, win at and gains ahead? as of so of speak to to at expect customers you share additional bit all? accelerate share maintaining margin result able And And reduce profitability? kind of that additional same to to then higher of your customers? you being perhaps of Do

Guy Sella

push the two in we hand What elaborated in are to anything the do feel suppliers, component calls, growth margin, is fighting from we’re requests also the suppliers for last increase not we healthy we we’re at there think, for constantly but months. component on on general, perspective from of expecting one other I of prices. demand least the dramatically. to the XX that a hand component And that

very some some So a of big project lower in competitive these et such of prices the stabled and cetera. both in price I of will general, in will to India, that share which on take be our as in balance increase beginning and are it current or we of prices, of market geographies component more ability us to But commercial dedicated are QX. residential with, allow think as price healthy

to So months. I’m the in in six not prices dramatic next expecting any nine shift

that be take to the or big a close wider project, important more than or will but new extensive project nothing that. use to will a win deals, disability We a

Operator

we’ll go Company. Osborne Jeff and And Cowen with to

Jeffrey Osborne

routinely forward. I was I couple to I the guess a something see you Or smaller we the the the M&A of Guy, see funnel. afternoon. year? wondering questions. three tuck Yeah. a I flow in But I given think is acquisition this off that like you are that a deals two of on a characterize this could guys that Can could It’s than quarterly of just is maybe had about, nice Good if size expecting -- small realm the thinking? your just cash you was to outside maybe little you basis. talk was move

Guy Sella

gave think color -- So on the I also that. we we

quite of potential understanding many early We are with into get to working a deals enough. options

adjustment them While similar we another the SolarEdge acquisition, we way we’ll were of that, We the structure One is in in looking we them to healthy In large you are not case, and he we healthy were the are quite could meters, keep what company none those profitable. example and were the position were any example a in large smart a and healthy is believe example signal is to response. the other didn’t of -- and profitable. all looking. said, -- acquisition. were such multiplier batteries find do another we companies segments companies that find some that is in buy against do. in for didn’t were If But that we demand doing are

-- business it’s it’s of hard the grow luck happy we’ll be guess only I our just timing So matter work. and to and very organically. end not the At to,

Jeffrey Osborne

I that just quarter, about run you side, in can quick couple you solar and percentage on ones of the had I the Sense. talk C&I the Makes a each a quarter typically mix missed was so HD-wave. give might’ve in it. But the

commentary light second slightly? just Just that typically a any especially pricing I’m it up, in of to XX% X.X% with trying to the always the you and half then see And impacting annual change implemented? product get any that pricing sense but comes the of about being the quarter lastly it cycle. decline this Is year, just that up of mix fully

Guy Sella

here. questions there think three were I

this is sold backup in a that implemented be in to of inverter’s phase US. HD version all of HD, of to be the sometime last year, the The the grid. one, only phase not XXXX, XXX% HD-wave XXXX. on day end That converted beginning So will probably in in work is

Regarding I gave filling. prices, I the think

ASP broader quarters. a in the expecting not coming We’re two erosion

question a more to pressure on part such very might Last large and specific or question time is I more brutal our is as to while ability in bids, at a project etcetera. think was stable, India, C&I. we especially quite be the same the Turkey, be supposed a use competitive price or maybe the price the last countries where

think was XX%. it wise I megawatt

Jeffrey Osborne

Perfect. Thank so much. you

Operator

Edwin And Company. and Mok we’ll with go to Needham

Edwin Mok

taking for Thanks question. Great. my

bit. maybe for noticed this quarter flat throw rest the C&I of you, the of First, that I roughly is sells little down. with part down U.S. U.S.

it in with declines is at resi how U.S. So you and this commercial fair to least? can that way year and a U.S. commercial quantify any much crew assume offset roughly

Ronen Faier

or in break the various commercial between not do generally residential, geographies. we So between and

the the ratio today, India only of XX% I a think of say However, phenomena or similar noted to with number. have exception quarters, in places and where that U.S. if, between us is where C&I, a world say as in if regions few the you C&I. on you the we U.S. the would see generally of be the rest the and I relatively all see giver certain you about or last the all, like take But same

Edwin Mok

stick me with great. let Okay, Ronen, you.

profile it higher On a the costs the expensive any of low terms business margin is run, and it deal is OpEx Ronen? in obviously anyway, solar business, this you color similar general, SolarEdge more give in to of margin us of to margin can’t

Ronen Faier

Okay.

So businesses today margin. the is this the profile let’s from business that fact is start than a But given our. of the this close relatively Gamatronic to to margin ours. very Actually, smaller

that similar bit more on see although ability So our and scale, potential to bit effectively. given more you a, from is operate there the of to the margins, our able we a fact better little will little once economies relatively source the on today good be lean

two comes differentiated. on a better believe even Given that Solar be the can size that OpEx, think improve we today. that them it than are to of again, the be needs margins that When I we there you see our to operations, to things

will ability traded that as The company a I resources being a taken traded first it be company. a used these on still simply a company elsewhere, company. expenses the similar is our have And be a publicly traded comply revenue believe you of to being some relatively silver, G&A one is OpEx a know, some standalone is extensive of we means all of need that you again, to publicly regulations to once will be leverage that Once the see that should to our and as out level to we of and are able today. Gamatronics

all, slightly slightly in will a OpEx not Again, all we take similar with expected better better margins So it but awhile, structure. margins. immediately,

Operator

Moore. Chip Canaccord, From

Chip Moore

do power you think time? go maybe out virtual about guys, can talk market adoption capabilities. some new about think What service, these over potential strategy? grid we Hey rollout a more of about market Thanks. bit the potential to the a plant How do little of

Guy Sella

are frequency and So we there primary VPP interest a of lot we, reserve, quite utilities. see the from that already a

the utilities the of Australia actually the involved business is installing from Australia and market. of Solar, in parts these of served are that as is some VPP have. as, people than same already especially while which Netherlands, areas force the the less coming a exposed areas current are first and such bids aware pool more in interests think to we is in sales strongest fully are type parts I some of that some coming The and by we a Germany to U.S. coming and

it’s, it us push Solar revenue While, think space the classical are as position this utilities in time deals put of to or is grow I in gave big Beta In to the and help in some will to cases part a a we pole with an once start you at that solar the utilities, close differentiation least and a at It us of adding even believe I offering of or us installation into edge all same for frankly our time, battery. in program. time, the But pilot the -- the that come to the will current will wise. to general and thing. a cycle dollar sense. managed with to part total a take significant make test become

Chip Moore

Right.

I provide guys. Okay. India of of strong. the Thanks that mix, Maybe can more some one talk that some Thanks a in was maybe Australia geographic more like about you guess, some for other that. looked areas? and area color And we nascent on, on penetration more little just maybe in can the

Ronen Faier

Okay.

we winter previous to the is that quarter this be compared hemisphere. into saw with to in the quarter in as would given quarter we I which in a way, these I, actually But call, region we operate. say mentioned I and strong as in considered the traditionally account every again slower the need conditions take that by all northern in the So, that all, one

So said, to continued a with that stable, the strong. again be U.S.

expansion to behind like Germany, the growing market. the think the of to Italy even results. targets their anything ambitious great growing is few Germany, and to there there. for The is the We and grow very market. and the agreed compared that it’s And markets is is we lagging continue the on put market in with the The substantially. it’s than and UK contribute that to is very Europe market Netherlands dare, the EU see strength continue I we nice next continue requirements is Netherlands share very a a other our, growth Sweden for a usage what Netherlands our renewable, again, to they’re great But solar taking rapidly. continue there, special expected therefore years in government In don’t say quite because the

We in sales you target bit more as growth pipeline India see or it’s slowly. we all there we’re Moving is all are very other popping typical there, to see a there. but look as you we so growing, think mentioned that share places for We that and satisfied the again, that are cycle. Asia Korea our But to I product a quarters. broadly with And in well. the when markets us is see that a like be gains when Australia, we little that nice it relatively Again, a takes at have markets Australia last feel start expectation. the the again, more meets or Taiwan market to dare. used growing at our and market that look other we in time,

US, towards and we and you to Europe as XX% of a basically ‘XX towards ‘XX US, all the direction see call, Guy end it’s forward last in regions, the start So XX% move growth in towards and all non-US at the in all, Asia of that ‘XX. moving XX% but the mentioned

Operator

And next with Colin Oppenheimer. we’ll from hear Rusch

Colin Rusch

bit much organization new any a in with be to how guys. you you your opinion? and geographies little guys Thanks talk are for about able of into Could assets? their these much to Are you Gamatronics leverage sales so going the exposure getting geographic

Ronen Faier

what of the part was much, second how Sorry, the question Colin?

Colin Rusch

How to their leverage much are you going to organization? able sales be

Guy Sella

the GAAP sales in the today to a to structure, think of a that I probably first force sales that investment level. thing mentioned, biggest add has as is improve something on marketing company the probably processes will and it’s and that based as, be lack is So in will and I Gamatronic current which marketing, very sales doing increase do is currently to low the

expecting with that market it little implementation based see some I to the expect to expect few changes the a will of in and in a would little million of in a not the in phase put fast -- total in Europe, in South and that selling I’m to to system R&D combined the set in that on mainly, new will, geographies based think we, the them, current children Gamatronic and will Building that which the a be the I that from believe that in have probably them the it, take six size from months new start supposed bit share to on we’ll increase of will way. market I XX expecting bigger am us three XX able by this is would China. share run ability business US, take I’m years the countries bit other from it product, the hundred topologies the of Africa, now in company R&D relatively to in XX I closing is be after we’ll perspective. XX it believe that start expecting that take dollars. the next product. to to months approximately on until I and SolarEdge set products, as that months,

Colin Rusch

I visibility then Okay. software to, can basis, many um, you’re storage have solution of a installs a to get that the but talk how sense you about percentage wanting your as a very sales? much don’t storage in And you bit at That’s point? a little of helpful. on included energy including know of how this

Guy Sella

Europe have another very interface. and good it’s in is North for the we specific So a in inverter since America ability requires that it

but spare we from limited, good the batteries. Today mainly So not the is market I from storage think have demand availability a visibility. rather the market, of in

I negligible. years a today different if couple applications, of of So is ago, but of that of from will actually limitations you time. three I amount inverters from still because think years battery inverters, when just it inverter than - the size think the what in ago the remember well, on the market, limitation it’s we said demand I perspective and amount that’s demand I take the and that selling don’t for of started The the of a building for application storage we’re said the not

years I drive it’s reach the introduction Tesla, expected a availability for us product it’s in after today, to think a volume. order to the of think OHSAS of batteries matter with beginning three and I of first really more of now market the this demand a in

Operator

hear with Driscoll from we’ll Carter Next FBR. B. Riley

Carter Driscoll

Ronen. guys. Hey Hey

overlap base the a of and fly talked driving battery the sales building a yours? wheel. there company not about you the with of the assuming What You about perspective, I’m out with UPS can in obviously make technology acquisition kind channel. the is some lot costs to from improvements use ability

gets leverage product that you improve can high way profile, the battery their and I sleepy, but kind of of know, So or that of others Mitsubishi, large about of fairly some overlap kind market product a of or Schneider, a some profile? displaced most and can maybe like fairly healthcare maybe the about guys the and center like Maybe couple Obviously of the talk data you the legacy talk you’re existing some talk mean things; but markets better dominated pushing specific end technology. Is a your space. Ethan the that type environment, one, of the long been the probably about markets. it’s you

Ronen Faier

So there I a were think quite few.

So here. top question

in in us ability that storage UPS in cycle yet standard in we or And out. common It our, that in help feed from Those the area and selling. storage perspective. So has characters device are to software the improve a switch concurrently are, the the and not is one with combination common are many two them advanced, the storage generators the technology Gamatronic frequency. will very UPS the of to and that in also developed capabilities mainly especially a by product

for will a the to months to On that and products for product the area thing But we’ll again, take very cost HD-wave the XX they develop XX topology advanced, of improve especially - segment market, you set as that for Gamatronic mentioned is for of the the efficiency as currently use to the data other hand, of and of storage. before, the the further that the mentioned current that the have.

XX number even lead so The one good would came, in in XX be of residential started product Europe. SMA your classical about ahead the had close expect that was time And the product, market Germany, if world’s good when question think sell I area? gap. question. XX% to you And we the managed market, number were of remember and was we us. we years. the, part correctly, compete we’re one, and the I a players to good with how had compete of In XX% years When would, I Germany of in Is dedication, Germany. people to to with above a they SMA uh, in I in today big

the shy. it’s, always three the to it’s the I that Schneider are for hard quite some such don’t are we then, areas already with competed as than those biggest So, of advantage in big but players course Schneider are we and think in market, think ones, and mention Ethan that you and compete, I always and Emerson,

Carter Driscoll

want maybe little demand little some know, just or a a you stock Appreciate whether inventory, the sense you about mean, at they’re Maybe little bit, bit that any elevated whether of, that are, half? you is a color. and some many, I of you the us just some There do the top maybe the in because distributors? that switching and they as questions getting bit falls safety high weeks gears how kind mentioned, down elevated inventory have second

Ronen Faier

the good have inventory in probably We fed to Europe and not distributors visibility, perfect US. of

I out generally achieve healthy the the the in our I of quarter this stock inventory of within period. of for weeks is inventory US, ability grow, I distributors, suppose volume, levels think within what think the eight in I the weeks. we the have can, big these think that the, don’t I limit the European four eight weeks, in don’t from the think think a within there four information, to most are to majority the distributors and it’s In are sure.

Operator

Instructions] we’ll Joseph Osha Operator from with hear Securities. JMP Next

Unidentified Analyst

in had this could the a wondering Osha and I Hey, guys actually by up down is break just was [Haley Caley] terms Joe question to region? you and follow the quick for on mix if geographic that megawatts I of shift

Ronen Faier

We are the as, megawatt provided, usually in do immaterially a the as prices the on we between between separation relatively, commercial on and only all geographies shift revenue and based but and it all different the again, residential. since

all So in all can you similar distribution. assume relatively

Unidentified Analyst

Great. Thank you. Okay.

Operator

over CEO I turn conference additional the for like concluding to or And remarks. at time back this any would to

Guy Sella

parameters on geography summary, In results continue financial we our concluded and diversification all this with mix quarter you. of presence. product strong growth and and Thank

and energy smart Thank call. announce our which step to first will and and enable us or best. close, arena, in you and mission us financial outside one’s consumes drive nonorganic strengths first the excited This to way management our solar produces energy. world further transform much the the the innovation UPS progress All will technological very We’re joining today’s in and our is business acquisition, the apply to sector. to on for

Operator

presentation. disconnect. everyone today’s gentlemen Thank may for and Ladies that and your you participation now does conclude you

SolarEdge (SEDG) 9 May 182018 Q1 Earnings call transcript