SEDG - Earnings call transcript Q3 2019 | SolarEdge Technologies, Inc.

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Operator

Ladies and gentlemen, welcome to the SolarEdge conference call for the third quarter ended September 30, 2019.

This call is being webcast live on the company's website at www.solaredge.com in the Investors section on the Event's 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's 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. ma'am. ahead, go Please

Erica Mannion

financial quarter you Sales; third the brief results us XX, third quarter followed the CEO the company's well Thank begin will are me operating will Lando, XXXX. questions. Ronen Zvi XXXX the of discuss Faier, for results as acting fourth for outlook for Zvi will quarter quarter, VP review review the Then call with Ronen for company's XXXX. a the September for third afternoon. by ended outlook for With to fourth Officer. today Global joining XX, and for SolarEdge's as of we XXXX. and Good ended the Financial quarter the September results the Chief open the of

that release press harbor and this to copyright published contained actual all is cause involve We property sole encourage our description. review include today a that in SolarEdge forward-looking you the in Technologies material complete management's expectations. will results more and rights uncertainties of and call with current All statements contained statements to risks a webcast for slides reserved. the safe Please that could differ from materially note the

substitutes superior company's financial evaluates These measures considered accordance non-GAAP with we in from, in The be the Please evaluating GAAP. and non-GAAP note, non-GAAP performance. GAAP. accordance for measures operating not U.S. to investors they are describes presented earnings the should company's believe how measures, per which provide U.S. or of prepared understanding net non-GAAP as are non-GAAP this including management this presentation means certain income share, measures with and diluted not in as presentation net the measures isolation with in prepared

by September company's Listeners release, XXXX, section the press the not obtain a ended quarter XX, have the website. copy or who presentation a visiting the may Investors copy of do of

to the Now Zvi. call turn over I will

Zvi Lando

all you our afternoon, and call. Thank Erica. for thank conference on joining you, Good us

this I was and circumstances address to and with I to work X until the I position. XXXX want me Sella, Chairman passing led his Before fortunate ago. unfortunate months from Guy Founder, begin, to CEO, that had our

everyone guru think missed. that not typical are he now team, forward whom a only executive at not SolarEdge leadership, Those that world to SolarEdge. us his your and mentor, dedicated and years, but and continued SolarEdge CEO of confirm his travel will success leadership technology was Guy that for continuing friend. vision, many most Guy's to of who Guy, will led smart together of technology PV leader I working been greatly management The be knew the our dedication legacy SolarEdge companion, miss become true energy have in through

net and quarter we third These we growth the other year strong based record earnings in where as $X.XX. and revenues our margin with of our And coupled at U.S. revenues with and year, quarters the we billion $XXX diluted surpassed we our our a of have once in non-GAAP strength we record income summer to us per our revenues levels and happy on quarter representing results. non-GAAP of the quarter revenues $XXX due growth, record now often upper holiday has the is revenue, Similarly, for financial growth in again, a this in milestone which in in has strong achieved been typically report record upswing concluded million, XXXX. of in half just guidance that gross the and the enabled in end led With record revenue $X Europe, of to generate the were of increased where the solar business approximately of leverage, record second business This see operational this first by to operate. time record for of I'm saw through net season. million. X not revenues share first most region

gigawatts of up we from inverters, In megawatts the which of AC approximately shipped North the from shipped America XXX up America, previous the previous megawatts Shipments to of to X.X shipped XXX North in megawatts, nameplate to quarter. XXX shipped Europe third consisted quarter, in megawatts XXX quarter.

the the shipped accordingly. quarter. prioritization of higher for This products commercial residential mainly U.S. mix our This in production products result manufacturing previous megawatts demand lines XXX megawatts of the the quarter, a reduction XXX in compared is to and we of in

in optimizers million and since power This X.X All have quarter, million and XXXX. optimizers approximately shipped than products now launching in XX.X inverters. of January we shipment million XXX,XXX approximately all, we of X.X more shipped inverters

and International. more operations and side, we the where Flextronics of XX years of integration operational revenues General X, brings $XX team, so last in has products Europe and position, been Uri than and SolarEdge Vice Vice Flextronics XX he roles serving manufacturing level has we welcome billion. the began been management we Operations, friend team our seamless. since served a our oversaw sites XXXX. Uri effective President He both noteworthy his Uri our experience over produced General to more knows Flextronics, than manufacturing On In Bechor, well, September as Officer. of Israel, first Chief Global Americas where Uri Manager the at in of as was he Mr. Senior Management for to was our Operating of his Senior management responsible SolarEdge President, senior

team, our much needed him As our to is on executive board. and needs grow to operational this are diversify have globally, management grateful and we a addition

adding for demand Vietnam, the Hungary. in in our of manufacturing lines up level ramping increasing automated manufacturing In address China, products, increasing order number power we for in the manufacturing to and optimizer are lines

we portion will products be as This to in expecting first first optimizers and be the is we and are The the Vietnam Hungary shipped a manufacturing volumes of manufacturing Vietnam U.S. planned, of the quarter, year-end. major manufactured will initiated and the the of supplied by inverter facility quarter from significant XXXX. that by ramp continuing of

for manufacturing and produce optimizers number lines We X/X our continue lines. now to our optimizers, increase automated of on the automated we of about

ordered already by we end automated optimizers these on such lines in that vast that manufactured the expect of and have of field. will the be in additional by We our already XXXX, quality We machinery. majority fully improvement lines the resulting see production the

heightened until of we processes manufacturing X is was an by and time, increased typically the mature. combination activity. recent phase reasons: capability months, of new number This an fully At same and due center products failures to inverter characterized are of in a releasing single first, call stabilization initial period experienced

technology to was period, the and market during a due in increase installers accounts increased a this of and Second, growth is there share short using time, well. our curve our shipments, and significant learning for as first for there them new

improvements our of seen In quarter, this significant on we and the customers have months the last front.

quarters communicated increased impacted to quarter, intensify last air manufacturing line this additions growth to resulted this quarter in the this In need continue gradually decrease coupled demand us expected in in level much shipment in significant shipments capacity to largely timely to the of able our than in QX, the Having first healthy and the quarter we XX.X%, XXXX. to gross gross with by and were non-GAAP shipments for expect efficiencies. in we meet of our rate we ago, quarter with increased a strong said of capacity margin. business at our expectations while Our of steady negatively are plan a this and products quicker a reductions and desire to our enable demand air operational price. last especially call cost The margins which planned, due in and comes that, Guy keep and with increase the a our solar to manner, air

single a phase last and inverter did side, shipments On of segment we for and and residential be inverter months, quarter. ground already optimizers this a the mount power access now. for Swiss commercial and Austrian commercial of three gives offering a which storage an segments. discussed backlog us the smart which next German, both the have the power product and series storage have integrated releasing optimal residential HD-Wave combining capabilities until of will the segments, We targeting phase including products started new markets not the large In product, larger residential we for energy the to healthy we few Guy inverter

comments few safe regarding A harbor.

in We in order supplied of expect to level roughly the $XX today QX. used related QX being of will use in be million in of typically with to be revenues the delivered QX safe demand in products for normal above XXXX harbor harbor, safe definition

beyond. delivered volumes, and These in are with customers We for additional working both in will XXXX are use and have QX and commercial which and for be QX safe orders customers products. residential harbor on

a from an for modest quarter. higher business breakeven growth saw Kokam. revenues operational mostly of related sales the new the to margins On on standpoint, this in side, we're first gross we time, And

hand And with our this, Ronen, will who results. to over speaker financial the review I

Ronen Faier

XX want every it Thank honor, begin a public is Guy, afternoon, alongside missed. challenge fact, with ongoing that, all He an reporting greatly truly assumption, daily everyone. improvement. you, a an to him working in After that And quarters of as good Zvi, of saying was and I company fun. by with process continuous was of

of adjustment the the acquisitions of will the allocation compensation, release to of to pro we I expenses taxes, amortization call the the months meaningful leasing third remind of as asset acquired accounting available that review the in expenses certain forma share. to the have nonrecurring noting on XXXX, results the disposal, that acquisition-related exclude standard, deferred today. as the depreciation starting of is revenue overview this amortization numbers related GAAP GAAP in change issued which preliminary our by the is cost GAAP enacted I standard measures, conclude the introduction Before Kokam to listeners of press of website product like non-GAAP expenses, results reconciliation the performed. be per on purchase recognition accounting of related on financing I recently be the XX and and elements a discussing onetime the as effect a expenses and this and identified financial price results adoption closed for that acquisitions will in newly UPS Full and assets discussed earnings while of in basis, the division, SMRE, the studies of will cases, our on result in impact non-GAAP past onetime quarter would on new of well and stock-based

regions, were were For same solar driven last quarter by of million, growth year. of this compared the XX% in and $XXX.X revenues. million include XXXX, compared seasonality increased to million the to all in of sale XX% revenues total to represented and which last United in from XX% did in this harbor normal a a Revenues quarter in our is QX. a characterized third the were by $XXX strong increase $XXX.X U.S. and revenues million States quarter increase industry, revenues $XXX.X not safe any $XXX.X in product grew million line the with revenues These the revenues. solar solar quarter

Europe our X% of of from A of million or Revenues of allocation solar geographic revenues. the XX% Rest solar quarter were in expected the similar were solar to World fourth continue revenues. is $XXX.X XXXX. revenues

whom the of customers revenues, for are top XX% increase our more from quarter This than of the quarter, and XX of account continued X customer quarterly distributors. to an XX% represented revenues, solar solar both last

our this quarter stable watt The XX%. ASP in this negative the which to to States, increase increases from United mitigate XX% Blended the tariffs to of increased implemented due products Chinese pricing products the made overall impact in mainly were price for remain per quarter. environment on

million, UPS of from This SMRE by different products products. were from products last not quarter, sales lithium-ion machinery revenues batteries our from nonsolar from increased much energy were and Revenues $XX.X from automated the storage mostly products driven quarter. and

seasonal quarter. grow nonsolar As coming these and with are towards in the to effect sales of these year-end, characterized revenues continue activities the expect positive we

year. XX.X% manufacturing in was The the the and last significant margins quarter in was the base the compared an quarter require activities in quarter in to last last to growth and XX.X% prior prior Non-GAAP the was same to to quarter. margins revenue year. our revenues solar XX.X% expand quarter same XX.X% gross in gross quickly XX% compared already margin over us this quarter GAAP the Non-GAAP gross XX.X% XX.X% XX.X% for capabilities. the for substantial in quarter compared

quarter products. substantial is while decreased shipments last and our substantial amount well As air Zvi tight which contract are mentioned, underway of able quarter Air this already shipments. shipped manufacturer China, we schedule points by to in in without site Vietnam, air XXX our this delivery Hungary to meet gross we basis the not in the compared margins

Another June in Chinese margin increase to gross which on negative product, to from U.S. the impact is made XX%. XX% tariff on our the related increased in

increases higher-margin impacted activities XX margins net overall basis tariff the XXX by as as arithmetic margin of Those decrease offset our so of previous margins of is this non-GAAP in products last of the result XX.X% Kokam. points reduction this to compared compared related negatively XX.X% custom customers, our economies these was effect partially to to to increase well Most was our gross last nonsolar quarter. tariffs basis absorbed by the in by sale Non-GAAP for the scale, Although in were compared the additional points the U.S. cost were the elements continued quarter quarter. quarter.

the next goods are strong inventory we continue margin facing while for Looking our at very finished levels demand quarters, products gross for low. our

building addition, to continues our capacity down Year, significantly capacity as Europe planning this production, the celebrated planned, Chinese In and complexity. in while early, New adding very slows Vietnam year which is the

addition, total XXXX our increase QX related of In gross margin of reflected effect the on U.S. our -- further arithmetic revenues will tariffs. negative portion increased to the mix

top margins XXXX by QX points all basis of negatively shipments, to an Our of XXX are on be expected air margin. QX our affected additional

prior a the On $XX.X XX.X% third $XX.X flat quarter or expenses. expenses quarter and of million million $XX non-GAAP $XX.X same the for revenues total, or year. revenues year. revenues quarter the operating third million the to of were $XX.X XX.X% revenues, of basis, last XX.X% $XX.X expenses Moving or quarter In or XX.X% to for to operating revenues quarter revenues or and last million or for to compared for of XX.X% of the quarter XX.X% operating of in the in were million compared same million prior

XX.X% representing operating operating solar non-GAAP expenses. our to our operational much compared percentage last achieved we of a XX.X% Our as expenses quarter, revenues than continued and solar grow revenues lever were solar the faster

This expenses payments Sella. and included equity award million the death related quarter, Guy to the related of of GAAP operating to other acceleration untimely $X.X of nonrecurring expenses

$XX.X million previous the for $XX.X the million last quarter million previous operating the quarter $XX million $XX the to the Our year. year. income $XX income for GAAP for quarter the to in was period operating in quarter was same million compared million $XX.X compared last and and same in Non-GAAP quarter

quarter, million resulted to of This nonsolar Kokam. non-GAAP better our $X.X loss modest in net mostly and quarter in increased previous activities of in loss operating $X.X compared to related revenues the a margins million

loans and this acquisition accounts differences in cash of was expense large on SMRE. million financial balances quarter of unrealized million and compared a our period The attributed a result $X.X million intercompany quarter in of the $XX rate quarter sales increase last financial year. and were solely to the of $X.X Europe, such the previous for expense to related Financial as in exchange receivable expense income to on in for euro same the financial as

was $XX.X to $XX.X Tax tax benefit the a quarter million year. period last compared the expense the million same $X.X in prior quarter for for million and of

quarter period Our was income of to the non-GAAP for benefit in in same the of $XX.X quarter to compared million quarter were for same $XX.X a the $XX.X $X.X year. net for last compared $XX.X third million expenses and the GAAP GAAP million income quarter year. tax million previous tax a last net and million the million $XX.X previous

record the $XX.X a last quarter a non-GAAP for million the million net same to and in non-GAAP quarter net Our $XX.X year. was previous million $XX.X of compared income income

for for share compared previous the and per last in $X.XX $X.XX $X.XX to the previous was quarter year. GAAP same net $X.XX diluted year. $X.XX a quarter the last was in $X.XX record in and to quarter the EPS third same the Non-GAAP quarter diluted compared earnings net quarter

attributed earnings to in share differences the last mostly loss per share non-GAAP nonsolar generated Our a per diluted loss financing expenses $X.XX to $X.XX business quarter. compared

the balance sheet. to now Turning

to cash million As equivalents, million XX, restricted of deposits XXXX, XXXX. September investments on $XXX.X compared XX, and cash, bank $XXX.X were deposits, bank June

held XX net Our months position today of our the we to the to ago. position prior activities is similar initiation cash M&A

generated we from quarter, $XX.X in this During million cash operations.

cell debt, net quarters. our debt to related Kokam maintain addition, related days we later In by DSO until finalize were the $XX manufacturing mentioned, compared includes by $XXX.X which of was XX our to the are and part loans $XXX.X business to are portion increased sheet for increasing AR million mostly SMRE this acquisition. slight current quarter, debt as our the solar delivered the We this the Kokam to and Kokam balance the million our capacity. do this reaching debt quarter. some affected taken In to quarter continue increase we in in in previously quarter. of quarter upcoming prior SMRE million of capital last to of last expecting from to and plans XX repaid a so relation needs net and this in days, quarter higher sales,

in XX, this our inventory As inventory net our finished solar to while The reserves XXXX, for transit. materials, of business is only level $XXX.X extremely good levels the the low prior raw was September in million and million of are $XXX.X of inventory majority quarter. represent compared inventory

Additionally, million raw majority the to is inventory approximately which $XX our amount of of held Kokam. by materials inventory, relates nonsolar

of the fourth now to Moving quarter XXXX. guidance for the

to solar expected to from $XXX million the expect within to million of of $XXX $XXX of are within the be range and million. be $XXX million. We range products Revenues revenues the sale

Gross expected to XX%. XX%. from to range the within range margins gross are expect We be within activities XX% XX% to margins be to of a of solar

open please? it call now questions. over I turn to for operator up Operator, will to the the

Operator

[Operator Instructions].

with Philip from Shen comes question Capital first Partners. ROTH Our

Philip Shen

there? The substantially. you might strength I for don't some comment grid has big do also to see on example, on for what your first seeing you one have congested that you kind you down -- can for official a slow megawatts weakness And growth, the qualitatively, do as as perhaps any well then year, be comment but has business you as type in see is there for been know risk regions some part grown country can of country and in, that perhaps, guidance XXXX. growth mid-teens the about general or historically you the Netherlands, all revenue? gets at Is of

Ronen Faier

the that between solar This more business we translated I And Zvi So for years, will the XXXX first come. said this Phil. maintain see about of themselves. as In a let did the we we not guidance is as all, we thank for markets question, was to XXXX guided years relation few provide the to the time, we to to continue double-digit and XX% reason us mentioned, believe said for usually you a for in last the low XX%. to have we before, we that the as what yet. no we answer But growth guidance, all cannot

Zvi Lando

lot some where I expect there's think any a there's are seeing -- growth in lot, in also India. potential Brazil, a see of don't or Yes. Australia. we investing There trajectory. of are opportunities particular America, weakness new specifically The markets market obviously we South a in evolving where we negative and a lot are

trend are there that, would that Netherlands continue at all year, few we positive The very the our in of dramatically always that are of to market next regular is in in high a a Obviously, where the And time, in one to is in position grow we very markets share top is that market. serve. The of market to On expected a challenge those. level. a see good commercial the represent segment Netherlands same the and of At we And grow. market size

before. market So the as that we all do see of that I and with anticipate in others together mentioned growth well,

Philip Shen

Great. Okay.

by if kind comment to pricing. could for segment As what see geography as for was trends, pricing it you as wondering well of relates you by

ramp guys because with expect the for In as for to what's pricing you commercial? international to specifically, especially eventually Vietnam a So you pricing outlook how then do you do resi factor? resi be pricing, and U.S. the reduce tariff so forth well and commercial as up as Hungary? expect trend international outlook And U.S. QX, the won't

Ronen Faier

the in the where So U.S., Phil not trend, we to we do the changes. regards see other I overcome pricing in did major pricing the with to that increase June think tariff, than

there. stable, I change. and environment. States, to should products and segments think all we any the see rather I related changes fluctuations all all, mostly very XXXX, geographies that Most see think of Again, dynamic across the Outside across therefore, price into all mentioned in than pricing United are do in we currencies pricing not major the we do as that in going it And foreign see didn't stable is change you also relatively themselves. we environment we any not see the see changes of of the that any before.

time, in a are point subject we we along or this nontariff more that products said And the ramping as along of that to were them. eventually expect to have just tariffs general, And all our pass U.S. pass certain to tariffs. customers intention along We able not are is we we to our to will that do Vietnam. at

the a in States. and was the the also the products ramp-up, do manner United ratio the in stable of overall gradual our it We products Vietnamese reflect will pricing coming that both the of into in will made mix Vietnam that

Operator

from next Suisse. Our question comes with Crédit Mandloi Maheep

Maheep Mandloi

we you just -- you And the Do see could The a for the news saw out year. seasonality did of And we as cadence similar flow congested grid around a in shipments Netherlands there. on question about see XXXX? just market, some from first Philip's talk the on next just

grows as over any So front seen you there? the have concerns that on market

Zvi Lando

question, previous we comments in will a Netherlands. slowdown No, first I'll in call point market air in we any In we've shipment our we supply think I well of see with that high also the for large start to part Until a expenses strong part. from some the expect our us, as second the we and and as today, more in and the we The don't terms regards and of at strong discussed see as with capability the demand in of It's market will we of where air in enough challenged a point, and delivery. shipments. manufacturing lumpiness stable still much that gap QX year between a next be demand. be environment have

Maheep Mandloi

second think up? its embedded And And about. just that. costs in forward talk the about which cost commercial QX versus warranty regions follow-up failure you could then growth either a see going question, or What that guidance. U.S. and Got you just orders if from new residential are for QX, the rates you rates, shaping international how growth we in mix the the the how inverter customer on spoke And structure? should or impact on run about versus the

Zvi Lando

the Ronen to of take the seasonally it latter. Europe seasonally hand I'll and In down U.S. be question we quarter, the the the strong. be very first part for fourth to and to Yes, expect

commercial also We be the and in on quarter. area to third that to growth fourth from the expect resume stronger quarter

think with the I'll second the I Ronen deal answers So part. let question. that

Ronen Faier

repeat Maheep? can to just Maheep, so I'll answer if able be you correctly.

Maheep Mandloi

have run inverter seen you or think should issues? the a customer regard expect about deflections the want because any inverter QX to failure of to Yes. failure you With how in we rates. do and And when just the return -- understand to normalized rates run failure,

Ronen Faier

the We all, trend in over failure starts, in stabilized see from products, rates. more our decreasing we general, that optimizers, we general. product a would in call saw it, first decrease the three that the So phase see there, more inverters time. It are, a mature I of

shipments our just treatment. actual see every in example, and use comes products each not use And do a of to need Do of In to into full to, I to expect we of go Or we to this. to the related to cost. remember but call expenses, use decrease improvement failures failures, of single refurbished expense that you Meaning, see. that down rather you amount the we cost course, a single we Also due versus QX. failure that expedited the in new the that phase the controlled or QX the not? for would you inverters, card. we in products believe it When continue do continue We products? the number relatively general, compared see will it to the is expenses

do we major answered think general, in have I any basically in So everything. not there see changes And I QX.

Operator

Our with next question comes from JPMorgan. Mark Strouse

Mark Strouse

see or then Then have a it's that storage you've initial seen And Just seeing of early, follow-up, in SPI? Northern also please? on just with the feedback you're kind I know I if of California. if from you've demand any storage, give -- still an at gotten some could update wanted but unveiled your new to solutions you for that the in from change uptick as you conversations fires such customers events

Zvi Lando

Yes.

the the few weeks. dynamic as in see last to yes, of definitely the has the been and So a this for of in result events. years, singular see we we first it And few last part question, demand do the increased storage

In percentage adoption. a steady dramatic increase. terms parallel in to increase It is that's more But -- rate that a of in storage comes a and increase. steady not low

significantly. So we it spiking in in the than quarter increasing expect rate yet really globally see the and both to these the that the the systems is fourth of adoption of and phenomenons in storage quarter. third storage quarter not more has ship reached first point we and But

Mark Strouse

of an and competitive competitive show. at that some then you Okay. you're the offerings That's conversations changed on can, if all environment, that just since the helpful. if And SPI update with were unveiled at customers have

Zvi Lando

really. Not

the prototype are know out customers -- are think or relates that and our I to are others. products that and large products to experienced there volumes a and installers are seem whether Most products phase. attractive in our are availability and but difference between our that tested with issues, installing conversations it's

see the So impact and the we discussions we and about don't much demand. didn't see alternatives, real on conversation any spend other we don't or

Operator

with Lee Brian Sachs. Goldman from comes question next Our

Brian Lee

be of and you give I more, start you're it'd how a watt in little where had would to like cetera, quarters, just last perspective, Ronen, quarter I the you've the cut range to helpful. us pricing to gains questions bit et mid-$X.XX can then start? all two around had year in per from back going started XXXX. And it's you it follow-up effectively one will What tariffs for of it pricing then gradual. them. else quarters of then to does equal, through? sounds pricing. pricing be a U.S. once a off, flow drive before follow-up. that said be this are, And to complete, Maybe increases? low- to the that And couple blended going assuming I a modeling to many But understand mix, a was the

Ronen Faier

I already ramp-up you nontariff that of can the to we that United know see those it. do X cadence you in to think determine can elements very going that much very right here is mix basis, that overall what the in going it that going unfortunately, see So pricing we related the Vietnam the because between demand and of wish the to on But give I the I our timing -- be we much tariff and be products. States also here are is

we our know on I the if And took model take I general, little would a they a because QX better eventually. happy overcome much that it. In will products to even to it prices to to the the bit in be reach and expect we overcome be like can in this, QX. States. the is immediately we'll we customers produced time we that you this tariff, in tariff so back view will in are like view until order will shipped will again, In take order it. it would we don't issue, our share return general, be increased time of we to get once whatever honest, that United have to do to to customers would

Brian Lee

and hung good on expanded through Clearly, had bit that's And most the little market a second the Okay. into here question, competitive not has makes you've maybe landscape then No, fair. year. of to gains, as head share that sense. just on XXXX. we It growth

had in Tier installer peers the an that been U.S., your historically of a at that's one one in important phase for customer, new inferred customer business think I they you. X

and landscape how provide on more share here us we potentially So shippable the head loss into some potential if appear. The U.S. wondering, housekeeping before to can then one you competitive XXXX? XX? do And for million? the the last you about then maybe in one of million some How December that could $XX that that just update to And all in. safe as just mitigating the define guiding product on you're is QX, color thinking squeeze ordered or $XX I you're harbor,

Ronen Faier

Okay.

is from And this January. the that all products that, expect to of And it harbor going ordered takes yes, to million, before have we look provided and that are faces safe start year been course, quarter. many that which are simply be relates consumed products and it you the of that this might know, are So the year. next basically I'll products and be -- in is be shipped $XX but these without as quicker. delivered way to these Basically, specifically of end at to forms safe are the harbor

U.S. the and in alluded We of course, here The relation which States Zvi residential approximately In I one. customers the in competitive is us. to his know, the at of have countries we that United our U.S., actually was least States the competitors competitors. to some share. of to this also that we're think products. share, when to The share, comes the Netherlands have environment Now according came not of one, fact one this it in attributed already XX% general, naturally, some very market we answers. this to market, in And to or market and therefore, in some United high market this is GTM, And ship specific of could

And take the us to to fact which came some that, some I growing again, we and second like go believe natural. some dominant, the they so is couldn't with very strong stay believe customers that of are other as and may would sources of will that is I players products, get because those something that back. becoming also that us,

second to in try take sources our We also case. in production, any

in our States see this that share. others. numbers it, say a is, in issue, sales for increase business continue maintain on major level market have the grow effect reduce expect believe due simply we which one would that to we where in can will I whatever believe general, such big any customer We to United general, the we I that continue we the our dynamic and them. natural will to ability and do have that specific would market call be if you the will using share with And not us, share we

Operator

& from question comes Osborne next Jeff Cowen with Company. Our

Jeffrey Osborne

my are. I revenue you on just any the quantify in commercial, end. were to Was down you in capacity Just demand was was sequentially touch what or there towards particular, what could what prioritization U.S. any if manufacturing unable lead that, that Ronen, with and being wondering the there times to way on and the two challenges questions residential? revenue fulfill? that Is was foregone the the current

Zvi Lando

and why we or current on we prior into quarter think about compared the starting we're the between so to higher to roughly shipping. capacity in capacity we or increase air by and going we in that's quarter, area, current And matched a QX. I capacity the close increased XX% level XX% demand. are will At supply -- the level,

number put missed different insufficient So project revenue missed I that product I to a product available for opportunity was have was here urgently, that the at the needed maybe there commercial been to because that channel. a wouldn't and due wouldn't this be could specific dynamic, and -- number able they someone a on but wasn't especially in product inverter that that, there designed put

But wants QX, where the go ready we I to a to, to to in product. generally to And point current are mentioned demand a he small levels, matched. having of gap we're are have large the have a elsewhere aiming favor speaking, before, is there capacity. in in and And at QX X when as between gap us reach and no supply that our one inventories allow will

Jeffrey Osborne

helpful. it. way a field that just questions. can there Is housekeeping you failures. two And the Got sort of elaborate That's on

like it was some to alluded components. You customers. new off-spec doesn't It sound

comfortable in had the the wondering I past. what that think communication you issue? exiting the something this the Is the or optimizer just at you inverter feel the the I in that's or quarter? had what the quarter a can cause module highlighted with if that manufacturing process of was elaborate specifically problem start you root the of was of more on an

cash And housekeeping to on folks Harbor, need then understanding the maybe Ronen side. receive My safe by you for year-end. the is with

of would Do you paid about next through million of the the sense be quarter. April need of have in that would revenue this $XX year revenue your you for of and hands So end talked be to cash and year? what the any by that

Zvi Lando

with I'll the question. the first start part of

rates trend failure So replacement focus in stable and low inverters mentioned down. and continue three as Actually, and are phase on inverters. seeing single also is the in the we the notes, on phase optimizers, to they

a phenomenons. On as couple the it's single phase inverter, mentioned, of

on doing corrective the rates the failures were were new an are monitoring increase specific issue combined on them, seen a curve number. a stabilization there the installation. any And we actions definitely processes, declined. And with but there's as some -- the not causing are over that in first installers This, first there. processes we with and mentioned very learning with first closely is was some what handling, that The registering and their failure learning ever for production SolarEdge are that we've and manufacturing of taken, that line, train the track time

second was that our product quickly know install So how to cause. you and robustly a and

phone we towards that installers, new And in method well. that inverters winter I phase some the but have single installers screenless of the of a that to wasn't of end failure, methodology to in including the as necessarily referred was adapt cause a cause veteran new that our definitely third The the to our initial challenges a which had commissioning congestion phase. of introduced of lines,

gradual of tracking of those we pretty are mid-September September. that much So And May now. since all are and August decline dynamics end the beginning until indices X and the relevant we're saw between and seeing

Ronen Faier

Jeff basically related safe to safe phases. so the has X harbor harbor, the

it to whatever to year-end, not in deliver do year-end. before get For get before the you advance you or cash need

a commitment, a are product you you to the terms March before for is bit the cash You of have. can And the going April. little plus payment end that it get based second on delivered regular form that be firm the a where year, and get into of

we of believe year. And these have with some And by these before a them we course, commercial, our residential the money and of large, of were already will we you them they of of some the of smaller, number of discussions number transactions are customers, are can that mature. tell in where the kind that on this end see have of I way. also both a several closed, we'll

negotiated, we'll we'll give year-end to something As closed, you a provide feel those being not it's now. can comfortable that in any is and that necessarily see and we data it simply yet are case, tell towards do not number I But then.

Operator

[Operator Instructions].

comes from question Colin with Rusch next Oppenheimer. Our

Colin Rusch

internal your of suppliers. this third-party deliver from Could at to kind point, from cadence can we a and you storage what as guys talk expect ramp about forward. both capacity we And go

Zvi Lando

we compatible -- storage of third are And our party year. by those own deliver inverters, delivering our map all middle batteries we being Currently, the not has of delivered next road us of delivering but parties. batteries and are towards third

Colin Rusch

months? are revenue, some What certainly seems at next let's clarifications focus of take increase I'll percentage spend, like to XX you expecting call And XX as a next as spend. time, you off-line. R&D period it on look to it, capacity the areas your some Okay. some over the then of to

Ronen Faier

of a today, we R&D very percentage very you we right I much is to due in the you rapidly operating growth solar mostly R&D divide good the and that This R&D is Colin, So that reported and continued going spending you're line And both the R&D. would between training our see expenses. need nonsolar say bringing recruiting, as R&D them the that all, to basically increasing people to first fact onboard. will are revenue, in with certainly, businesses, are the finding, it's that fact the revenue hard of of in match see it that the so about in therefore, down.

major a solar the of would X side, combination activities. it be On

operating, lastly, mostly that our our A portfolio as relevant will one inverters to the the into we're utility just the of product for meet German -- second the one, map cost and larger And In road is increase storage. have already commercial of larger to engineering The inverters first in by displacing that bring be the from to to such cost XXXX. better market mentioned continue new towards markets industry, and of shared and course, volume. as components to end come always we the it's our segments not flavors Zvi and product for going markets reduction. and new but developing reduction due necessarily the order

solar. the we that lot a put areas X the are these think I emphasis So of in

has On the nonsolar its company own. business, each of course,

cost. startup I would markets. is of it the the longer Kokam And a, is, of are generations or in course, SMRE when of battery Gamatronic, But as related the it on those kind will bit call a this IT, products more products, mutual where is comes future selling product as So reduce and to in that life embed revenues. the the R&D. be also the that In time and Kokam, going to on is this of is of products expectation develop storage it allow to technology to work the naturally will next in little of better it, or that knowledge their UPS and well already our battery manufacturability future work and

Operator

Lando now our Zvi concludes time to like for back I'd it question to comments. answer. for and closing That turn

Zvi Lando

and with profitability. are with strategy Thank successful third our revenues happy you. In summary, increased business we show that execution our continued record results of quarter

positioned territories with well this and to for by today's like all I'd of our product continuing We on acquisitions. expanding are thank new joining us look in to We momentum. offerings call. our businesses and continue forward to you new leveraging

Operator

third for call you. concludes the SolarEdge and Thank Ladies conference gentlemen, the quarter. that

You joining us may now afternoon. disconnect your phone lines, and for you this thank

SolarEdge (SEDG) 7 Nov 192019 Q3 Earnings call transcript