SEDG - Earnings call transcript Q3 2018 | SolarEdge Technologies, Inc.

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Operator

Good day, everyone and welcome to the SolarEdge Conference Call for the Third Quarter Ended September 30, 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 the sole property and copyright of SolarEdge, with all rights reserved, and any recording, 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 call over to Erica Mannion, at Sapphire Investor Relations, Investor Relations for SolarEdge. ahead. go Please

Erica Mannion

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

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

Guy Sella

Good again all today. on Erica. concluded you, afternoon of you $XXX.X report and Thank thank for we that to call happy XX% with quarter once record revenues third us our million, up our joining year-over-year. I'm conference

non-GAAP income reporting of net million. a million the $XX.X are GAAP and $XX.X We of net income

cash reported operations of also gigawatt XXX of $XX.X to from America AC North which the nameplate was a megawatt megawatts we North We million. up from approximately quarter. America, shipped X.X of In shipped flow third shipped XXX last inverters, to quarter,

record high our Once grow our sales to sales Our commercial revenues. our continue shipped. of by all XX.X% regions this in this again quarter megawatt evidenced grew quarter representing

XXX XX and shipment megawatt Israel. project a product in installed includes commercial of quarter megawatt this Our which exceeded delivered

since shipped inverters. in XXXX. January product million celebrated power also XXX,XXX operational This we optimizers approximately quarter all, and XX.X shipped launching In more we records, of than shipment million X now we optimizers, approximately have early

with tools and as leading build and extensive have to we leadership side, newly Itai high-tech UPS business. a to noteworthy I'm his SolarEdge General we the Itai manager in we a UPS experience brings the Manager. acquired Rosenfeld our the as appointed of On global well-seasoned integration industry, began confident division need business

we industries electric which it safe system high is This quarter acquisition Kokam beneficial reliable provides variety for ESS, by ion vehicles, Energy of of acquisition smarter in for to and and the more providing our storage. and a years. October. and signed a Kokam more. marine battery past Kokam UPS, performance System, in include not of While solutions lithium been two Storage which majority aerospace, us increase world the this sales offering has to solution the manufacturing comprehensive including closed will wide in solutions battery competitiveness concluded more enable weeks solar in first will noteworthy the mention XX

landscape, On market we innovation property MLP conclude, take our in share geographies, the to are the record new we remain EPS leadership a defend share. and of it. very in proud we're limited per confident that in revenue intellectual to diluted to we have continue $X.XX non-GAAP competitive market technology To players deliver we we and while believe seeing and

segments Our hand any I this, of financial areas over more and to with resources new strength And continue Ronen, results. grow review share to new business, for geographies. enabled our the to products who the us market to expanding develop new to will speaker invest needed financial

Ronen Faier

Thank everyone. and afternoon, you, good Guy,

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

were year. last compared third a of financial million X% $XXX.X last quarter Let's $XXX.X start the increase revenues $XXX.X with and million, results to for for a million the the same increase compared XXXX. to quarter, Total XX% quarter

in driven this revenues were quarter all growth record Our by nominal mostly geographies.

of Rest of high $XXX.X XX.X% revenues. the in were total represented of of the representing record revenues. were quarterly Sales million world revenue. This quarterly our revenue amount XX.X% United our million, representing revenues a quarter, of XX% reached whole-time Europe and our $XX.X overall a from million $XX and States

This only from Blended our last customers XX of fit. customer decreased quarterly this accounted for decrease mainly ASP one revenues. to while represented commercial quarter, XX.X% than the of of a our Top due portion revenues, quarter more product quarter, any increased XX%

for from and revenues the XX.X% year. negligible. product last Gross to quarter was same prior the This in quarter quarter, UPS the quarter margin XX.X% compared XX% the were in

slightly gaining Residential ASP competitive decreased this in weaker and share. The as in our air a however, of our reduced euro unchanged side, increased margin main this sales higher gross the remained result offset we supply United entirely a volume was gross who than by States shipments. we almost A of efficiencies the in On support the customers business environment decrease also benefit quarter margins; are discounts. and of reduced chain higher slightly from to our was a expenses. customer believe result expected that market proportion

less reduce to introduce while a to the on principles continuing our Our our while introducing efforts to coming products. and result of both related and market these M&A demand costs. optimizing product expenditures, activity. satisfy will difference quarters support In many is focus gradually new satisfy market products we accounting related delivery new on supports The demand expenses yielded remaining

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

expenses for increased $XX.X the adoption advanced increase our in for in investment, year. consistent expense of mainly the a previous reduction well from to to the financial that quarter the from increase As of UPS same and our million, period to communication increase infrastructure the with Operating attributable headcount and revenues million as expenses the were expenses The million related total, -- expenses is warranties. devaluation continue quarter quarter the revenues in quarter year. G&A of grow X% quarter forces, well support These operating in from last the as in $XX of marginal. and $XX.X asset we in quarter, the North division higher to of increase the third XX% million recognition administration and resources of quarter. offset interest year. development so were same or the previous for net an our Gamatronic. headcount, income the period financial the are was monitoring were product were cost in affected for prior million million an year. quarter as company of for compared new XX% a extended the on received quarter the to Israeli $X.X with the increase as $XX.X to Financial million were prior last million in XX.X% million our UPS or decision initiated for the of associated U.S. standard and previous to new compared by to and an processes, manufacturing XX.X% an decreased of quarter, and to the prepayments revenues mainly quarter The euro and America attributed charges by quarters, compared increase is the invest against marketing proceeding as compared on in the $XX.X tradeshows insurance income and $X.X participation expenses and result an large growth. for quarter, mainly interest services and last and of resources absorption last this and million compared quarter customers by costs $X.X to marketing $XX.X R&D sales $X.X same XX.X% increase of the compared purchase or earned third finance expanding shekel the for revenue increase the by to last for our million same $XX.X the Legal year-over-year; dollar In effect other increase this division. the the Sales and to expenses the innovation, XX% as consultancy,

tax a for $X.X period $XX.X the This year. to quarter we million quarter prior of compared a a expense tax $X.X had million and of last of in credit same expense tax million the

undistributed tax of reminder, making best in XXXX profits non-U.S. the it's to the Tax As fourth while of & recorded company according $XX.X the required Cuts million of Company subsidiaries the in accounting that Act, accrual. quarter with onetime our judgment to the guidance this enactment Jobs related a provisional of use the a

it's million. recent year. same new practices $XX.X principle, guilty to on the is conclusion the the $XX $XX.X tax by remeasured quarter. came $X.X million that on this company Based for and the provisional income for million. effect $XX.X to decreased was the based and quarter GAAP accrual profits be compared the a and the This of The previous resulting remeasured quarter accrual should publications the these adjustment net million calculation same earnings reduction Company quarter, proposed regulations, income a quarter million onetime last GAAP for accrual the and $XX.X overall two net million of third in

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

the cash, deposits and to restricted XXXX. as sheet; $XXX.X investments compared XX, short-term June bank million cash, XXXX, now to $XXX.X September equivalents, million Turning were balance at of cash XX,

quarter. quarter, million flow previous generated of the increase XX this payments the from million last this cash days, later being net United this generated compared quarter revenues in to States. reaching increased up later third million in result cash the million low of we increased quarters compared to operations; $X in last generation timing of of related is higher part of quarter; this the portion A/R days quarter. during this to from concentration $XX.X $XXX.X the During is quarter a $XXX.X shipments the a quarter our tax relatively DSO and XX to

million XX, XXXX prior of level September our $XXX.X of As $XXX reserves inventory net the to compared was quarter. in million

inverters U.S. tariffs events forecast guiding These the the financials next and on amount the impact On two to quarters. are in were X, would our XX, livid will Before September in of manufacturers XX%. expected to our relate quarter's like XX% to increase in upcoming that tariffs optimizers January effective to on XXXX I China.

quarters an increased China, in outside on a our United We increasing are to we will working by have few this take of complete. In mitigating effort manufacturing States. meantime, the prices effect that capabilities the

will increase gross is these gross net profit, effect dollar yield margin the same lower of the percentage. it expected to Although price lead

acquisition this mentioned on 'XX Kokam. quarter's the as in Second, of transaction financial financial earlier, next Guy be closed will the results. The October we reflected results of

M&A Moving the convenience guidance the fourth of M&A. now recent quarter will are guidance non-GAAP gross accounting expected activity, for margin your our the we to XXXX; providing given for effect which of eliminate

range We expect revenues within $XXX to be million. million of the to $XXX

up to We expect non-GAAP the call the of and effect the it be XX% questions. for over the XX%, of Operator, be gross GAAP the now on recent gross X% to will I please. margins within M&A. are operator expected turn to margins open range lower depending to to

Operator

with Partners. ROTH Instructions] first [Operator take We'll Shen from Philip Capital our question

Philip Shen

about, [ph] X% be X%, back you about to X% XX%. expect and talk then As X% it QX to raise for pricing that price as Thank talked that much potentially as increases QX increases in QX? checks Can our and you. might coming how or to in you QX the XX% you relates much were pricing to around

Ronen Faier

these we're be to will able in and we general, very cost are increase of and mentioned going on percentage; what will of it at already expectation to to dependent before, related going we much the from of manufacturing in to that time on allow that and this the to general, as we new is is us amount will In will be the produce, that increase prices additional how dependent pay costs same the this all done tariffs that to our means China cover working In production. much the some that today the difference is be be from tariffs. is outside of general amount resulted

on margins to see, product on to demand the we is tariffs, due us profit. will -- the these mix that leave of would we gross result same the based dollar call the intention I lost will that Our increase we and whole the make it prices to see, on with the

Philip Shen

As it you visibility a tariffs. impact terms the volume through of QX margin; to is about kind bit QX; us talked the little have of you it in talk of you Can it what perhaps relates standpoint XX% for QX look a margins in that production very more if or in can something give a or to us QX that color you from ballpark? would either as then margin to how helpful. little be might relative And QX of

Guy Sella

QX, We to just QX, reported you sales are report right. not expecting us

So give barely to give guidance QX we our you any for can -- guidance with you from limitation QX.

Philip Shen

Okay, -- you progress making that. sounds recently on globally; what Great and it? try developed wanted chance work megawatt in it any I don't name project, want to the XX that, guys. fair the U.S. I enough. commercial can or you're who to share like in project Thanks, is

Guy Sella

this don't our size feel comfortable -- think in S too is it's give one of There local to I not round, easy a projects. customers. doing It's find. but of unfortunately data so many in biggest to the Israel solar. it's only of companies We

Philip Shen

well guide Kokam, terms is much In the Kokam? how impact what's Kokam, in of QX as revenue specifically from the from margin as

Ronen Faier

a and very, they we as amount very have In such way already time better general, different to that yet the revenues coming the we we from understand a but it investment it's trying that not revenue that and amount. relatively way closed, again, this do hoping of than number by limited that numbers we have recognize to simply provide we we're to new not a very maybe them small hide the ours, that took say took

Operator

of JP Morgan. our We'll from question next Mark Strouse take

Mark Strouse

margins, be the year think tariffs gross or better, parts so we just how on think they we over of with long-term follow-up Kokam how of and margins you've and it a Anything you a of assuming kind great. your tariff M&A obviously get stick curious; about a should if lot targets about place? to that? there? out the acquisitions, level in And just still put high trajectory but you next But stay moving should look as call that would assuming -- everything of can kind Just the the long-term,

Guy Sella

have we produced and prices China. feel operational produced original to of of the for and take On market plus/minus planning confident plan, be again beyond, outside combination what building and in needed since a we the deliver after won't total between guess our very it's The the on we assume to the we'll reach price inverters couple that the necessary quarters I the what go them one eliminate we'll U.S. of few difference I result few produce and much stable as China of expect the long-term better months estimation few optimizers effect be for manager it that will majority will we a all longer now again, will to increase. parameters matter for XXXX two have of acquisitions; and term this quarters the and business and model. but in quarters the the number of to of China The in down the affect I Itai with course have X%. outside that we will visibility course XX%, the able negatively of are increasing this the we'll the of compensate we'll what of of our effect

to due Kokam the closed in the -- to core will same to adapt it that the different analyze/plan probably us accounting, or to was acquisition. a it's operational the and fact While take draft another company and acquisition, Korean it the like Gamatronic we parameters Kokam, a with properly acquisition the to

be supposed same three I all model. to reach few in the quarters, in the numbers that So or four, believe to all long-term able in we're

Mark Strouse

Chinese the then, made residential held And since revisions this summer is in in we've and versus scale versus C&I a pricing bifurcation lot for the policy residential; here were better. a utility inverters, seen quite

of curious alter in if for C&I to your pricing kind aggressive trends in those in you've term? Just scale markets the seen plans the getting more utility that near intermediate in

Guy Sella

proved In competitiveness those further. market share in range to surplus can is the space, see effect to in constraints answer think markets didn't question is I commercial expect those different to complex year. overall, inverters because different -- take so have that of in I the and geographies three the am we main markets the we have there and I result the manage classical few we the planned which in Saying aware we prices prices I mainly China reduce we better we in the that refer do to that geographies. different prices; coming and for we've in the India that like places are less from constrained from it North beginning more of competitors and in are see And have or the prices big some total which visibility commercial, different Australia, Europe. America on -- some that markets. markets specific even within much

overall competing have those business commercial, low very our commercial room Given without global prices. in yet we to think grow share enough in the market I our

Operator

with from take Osborne Cowen our We'll next & Company. question Jeff

Jeff Osborne

your sounds B) I looks doing; it gross or to what it? or either company and -- as terms is could led a resolve it that; just you're and to you're I your better poor of diversification And it's understand to in it was few margins A) you it what hoping examples doing pretty what from you international? impact to X%, give customer that of discuss want just of XX the customers went support like Top a expenses? planning Guy meaningful Could happened, down just why like Ronen just

Guy Sella

really In general, of XX% if almost new shipping. it and entire right at as the and the is very to the the selling introduce general, as to the volumes that this in of divide of that facing I all revenues; from on market And and reductions in as increase growing XX% we're and demand we're little by way all the as through possible possible, In ASP with year-over-year account puts cost and a would as is working the deal productions us. that see same thing into market. is one bit higher to as planning manufacturing to company much quickly affect volumes the to and into lot focused and possible, on in it's reasons. way component today several in you many geographies, time the products take large shortages we're produce try fronts general, as about We production, this now on the that company to decline, a we're burden much

serve to while to as failing had it In products the the in all them. addition need ability we with resources focus to are growing on that today; developing time call we at products are same; the both and this, of and the fact course this time same time comes And have you methodologies support. from our before with in manufacturing for regard, I market would

For example, customers just in products do you need from slow support give shipments did how shipment new use need of replacement you that ship you instead expedite boards or before. are as customers, replace. time for In new you that same more to if so or waiting to you much you the do unit to return many

burden these is of coming can, volume, we on service the related that that our of negotiation teams, we to the we produce product. all way that large much be what but right supply and simply side. to to do optimize see, we to slower parts, the much this moving all our that simply and focus will to a refurbish fulfill side and different that while same the only have product we related And to not not related on the expenses also as to that able than into have anything is shipment very take the we and before was the store on growing of being all way All of main now we on manage later saw demand as the and we

same we Now, to compromise even we back. will not important want is ship provide so as cost us it to new our could if to satisfaction, maybe do them it at time more them the money with on fix product then customer as even will if customers fast and products the much say some send that possible we we and

Jeff Osborne

you're fairly I cost pressure of and any Now trying sure; which system that you -- there there that to customer give? could there your pricing a but hear gross a It support points, is still want say you're sounds nice to on? articulate granularity is items understand have quantify to more customer XXX for those accounting basis way can does margins benign be happy any gaining you you share is detailed is like more FX that was line is to XX;

Guy Sella

margins, we but First expenses the support business U.S. the we tell at industry; headwinds we market sure share, possible at vast the thing majority I one all to close little that on we that the way saw you could very negligible by look have the in give none. I'm can and all we it there of we is first account -- prices, you're as to competition, can details to you knew would all, offset, happy And came that we from to in We business say The of then environment as to say other have and account cost gross remaining all have in you I model associated from quantities when the and there. whether the and want the saw the the bit sure that PPA/M&A look those ASP shipments you accounting; make it have is way, effect not how to would we're M&A yes, environment a bit of so simply that you're warranty of know that I'm the euro the that than described have you and -- we call order fast not and for in I rest of for everything; the were product a very, coming are and how much so is decided that very honest in would can related sure as business, customers as margins little we negligible to we expediting general, you as support a the customers be we happy, bit little almost cost everything amount activities. the sacrifice knew of it philosophy, get amount, a by small that I and to little from but the exactly doing management.

Jeff Osborne

I plus with more to the could past to strategy I just If is and months sole acquisition to bundle touch more understand with specifically but a that switch your you're about to model compete on a change highlighted intending the the you just model still Kokam, some business the was a is model or CapEx get of on trying XX about storage but integrator solar you -- capacity. can I over the and detail there offer press the system I to looks understand Korean the of Can want on release gears actual the on was talk Samsung neighbors? business last acquisition just just want vague rationale laid I question; extremely you and is? just it's growing you thought. on it like LG what Kokam

Guy Sella

at storage the the unique module and has the us required severe much storage of put and solution to to we problem every for margin. lower really complete vision capacity as lower level PV of much of businesses inherently will plug-in which all world Kokam the of the our the manufacturing much lithium to facing course savings answer solar think environment. in-house. PV the quality to to more at serve and sales, give are battery increase shortage more a be a good to allow by there be able will product owning prices, better from play production are XXX% storage solar of on of come us are we relatively almost This quality understand that will is current us outside smart prices mankind, we that the believe is holistic time we that ion the ability us it in of to ion of will allow think systems product the where full is current a work gross what I of in majority a Today, storage. same give intuitive. for market technology. will us solution with the all a with favor is Today I and system, a really in with It make increase use of lithium a reach much to going is we demand and while to will their allow batteries, better that

Jeff Osborne

million -- here. battery so maybe that just than that's what billion; going CapEx? is million understand better I cost the to plan $X want that is I of year mean $XXX to is in there a in you understand to companies Guy $XX terms I

Guy Sella

to get that or the anything own don't our of the we years close we're big in not broader don't special believe that long-term Samsung close advantage of [ph]. the in need we'll the you same motive course we the three few growth much have that selling to this time looking coming is lithium in market the the Currently already market anything applications to with is a fit depends not biggest think in to on with -- think to investment At years without to Kokam. the itself on to facing compete are ESS sold but I Samsung. will not aiming on the amount or so what mentioned. time, best head-to-head Panasonic, We by ion. CapEx allowing at that LG, and are our number compete and to coming I commodity that going LG a of we're compete two product sales we for against some or we us else on find that it ourselves Of we are develop

Operator

with Rusch Colin take We'll Oppenheimer. question from our next

Colin Rusch

As at and Kokam talk looked these and into have metrics ROI Can look metrics the in us terms acquisition you had -- you're bit surely acquisitions, like? those little at growth. to that some looking a what of you look about you

Guy Sella

a think strategic. of of it's matter metrics, matter it's We the the not a more

you So all we believe can soon come that will above to of with storage very we can assume; on them. XX% connected metric side the assume, system solar inherently

amount and you revenues from the nice of rate with tax of the storage increase sell-up. of chain once So prices, you very very gross control talking this current the stationary big margin are full with

Colin Rusch

little a NEVs redesigning the bit what's next bit capacity. little year? Can terms you given gears with efforts and the and guys component get different just [ph] And balance to talk maybe easier of cycle and about that of growth for into on with go design we levels products components [ph] as shifting in a you of happening this through year

Guy Sella

answer right talk the component shortage that question. general I correct will with You current our portfolio, just in product

Colin Rusch

Correct.

Guy Sella

severe so this it's that a April year under XXXX, like plus since situation half living our we adopted more or and system. We are less

quarters. once areas in this allow suppliers we'll the that to -- use stress different to reduction fact effect closer to component allow the to of one what of availability. to point few think mostly the will the have programs go production; them of producing point check the we'll yet the the is XXXX In devoted much this and with where the being solve for I took that for components reach have the of to components same this able to us time on limited reducing stock we better products, on in and order innovative current keep increase the us two we of have majority again time, to keep can variety on XXXX verify As that that many critical you crew did to better the a retest at reported build problem the kind the And and course allow work in that on much in components prices we use inherently. out -- space majority on capabilities; until we not are our saying safety of some or cost is and components to to same managed of it verify we technology we very most ability capability and completely will of teams we to past, of the of we that at meaning, we

Operator

Instructions] [Operator We'll from JMP with take our Joseph Osha next question Securities.

Joseph Osha

if the it To I and year, big CapEx to level, case run would be one-third; and you're is could agreeing be understanding get but specific that how return be could of to support to way that get rates to LG storage not Samsung. that's business by want suggest is the to going a to fair to a that understanding trying see substantial potentially a that up seem would or observation? there at your gigawatt you're a moment, that reasonably that -- business you too a is would this going question on which tax this some to have battery It capacity like fair of Kokam say looking for amount that course a to don't

Guy Sella

Yes. that over rate years. X% bit used capacity get for of that little numbers time on the lots there another some that and the than that that the the will be a have capacity a that feel think flexibility bit or more to complex I more guess make can XX% comfortable that so and increase I couple currently X%, of because by done of today, think technology produced is tax a Within something Kokam factory you by need is not but means we is we is sense. more are there reasonable to factor a based all we giving It's fact that flexibility which I

Joseph Osha

it's of of And XXX imply maybe then or annual gig kind follow-on a that rate would to that an right so? megawatts on if is now Kokam run that

Guy Sella

-- That's the less more number. or good right a that's

Joseph Osha

is XXX If gross intangibles revenue? non-GAAP of looking dig -- Kokam is driving that acquisition QX related a can bit. -- from And you actual that is disconnect; that amortization versus that then, we at just margin little the into if dilution GAAP could basis that help point the or disconnect

Ronen Faier

very said of at what the is the you much The beginning answer question.

that the that the combination; you have business to around once assets, who those intangible, paid tangible company. you price principles various the know company For acquire within you accounting less allocate have target a to or maybe the

One selling of need the that you price are once issues those product, that to you do for is purposes generate the products margin. we the that finished these you're zero that generating and cost something good inventory; while the and actually account to basis accounting products, once for revenues this means you of profit, not company is selling customer at carries affects actually these this accounting that a

which the we -- that component to a this backlog of bit addition us and now time to go GAAP we what to goods at the and provide this PPA something story really to effect we our the acquisition depreciated that of assets will week first as into and every is a cost after non-GAAP measure just is mentioned more a each speaking, be amount to a until big half will expect bit Korean that leave understand assist before, ability with of company and for the some little of account we and know, allows be report X%. amortized and such QX. Korean decided to and there sold. our the using it firm tangible in this little do to a first and time just assets what we the an the But where measuring and you honestly the complicated weeks that decide are of show a exact allocation to of In timing what allocation time be take into won, above and the Korean this; more product. very of What To to we control and it's or into into the bit are is [ph] fact the little Guy two makes what GAAP, size other in this COGS, all we price have honest, the now taking purchase know, amortization closing

Joseph Osha

your on the assume. Sure, on would and eventually we'll able it -- I see be Q; to

Ronen Faier

Yes, you can reconciliation between see in and non-GAAP. it the GAAP

Joseph Osha

probably on to on fair observation? of to hearing difficult margin the a be first about to down -- I And dollar I'm return mean margin me precision. apples-to-apples on seem say points basis going is to then a some course of an basis it percentage but that a that margin is of finally, to would not with a that just it's the is that what earlier year QX; part next understanding

Guy Sella

asking? on Down are you revenues in QX what or

Joseph Osha

percentage. margin Gross

Guy Sella

I analysis margin in -- don't be should should preliminary be why see lower the QX think it it's don't of -- QX. from our gross course, over we

think a improve think that depends I to that even execution a lot but QX. will have good on course and we of between I QX chance

Ronen Faier

we to And add it. to actually and this and more just thing to also pretty mathematics said, explain Guy try what is

payments this tariff business amount world the see revenues, side, of is is but unfortunately that, on you that the our an to percentage lower; revenues mathematically, the same all make going thing on the This is to if affect additional the dollars, QX of with dollar the why Guy stays the tariffs is margins the add is that gross going tariffs that if and but same are of in the the the real real especially not no realistic something increase, mentioned, While are same costs increasing QX. means will as amount on we slightly to prices; the and real higher take so numbers, mathematics. there reason on you

Joseph Osha

terms? dollar In

Ronen Faier

percentage. and Yes,

Joseph Osha

you. thank Okay,

Operator

Guy closing Sella our you. for This remarks. turn questions it for concludes today. to Thank I'll back

Guy Sella

execution quarter of third and consistently profitability. our summary, strategy business record successful revenues show our with In results continued stable

Thank look joining We We on new positioned to well continue for best. new all All to momentum. continuing product you are forward offering the territories. call. and business in our this expand with us to today's

Operator

and today's This ladies you, gentlemen. conference. Thank concludes

disconnect. may You now

SolarEdge (SEDG) 1 Nov 182018 Q3 Earnings call transcript