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    SEDG
    Earnings call· Jun 2026(Q2 FY26)

    SOLAREDGE TECHNOLOGIES Q2 FY26 earnings call SEDG

    Aug 5, 2026 Source

    Executive summary

    SolarEdge Q2 FY26 — Return to Non-GAAP Operating Profitability and Nexis Rollout

    SolarEdge achieved a significant turnaround in Q2 FY26, returning to non-GAAP operating profitability driven by strong revenue growth and expanding gross margins. The company made tangible progress across its strategic priorities, including market share gains in U.S. C&I and the successful rollout of its Nexis platform in Europe. While Q3 guidance reflects seasonal declines and continued U.S. residential market softness, SolarEdge remains focused on operational efficiency, product innovation, and advancing its AI factory power infrastructure solution for future growth.

    Highlights

    5

    • Revenue grew 20% year-over-year to $346 million.

    • Non-GAAP gross margin expanded for the sixth consecutive quarter to 28.6%.

    • Achieved non-GAAP operating profitability for the first time in nearly 3 years, reaching $10.2 million.

    • U.S. C&I market share increased to more than 50% of rooftop installations.

    • Nexis platform shipments exceeded $60 million in Europe, with positive initial feedback in the U.S.

    Concerns

    3

    • Q3 revenue guidance of $310 million to $340 million implies a sequential decline, mainly due to expected $15 million sequential decline in Europe from seasonality and continued U.S. residential market softness.

    • U.S. residential market demand remained soft due to a slower tax equity funding environment and uncertainty around FEOC.

    • Q3 non-GAAP gross margin guidance of 22% to 26% is lower than Q2's 28.6%, primarily due to lower business scale.

    Guidance & targets

    5
    CategoryTargetConfidence
    Revenue
    $310 million to $340 million
    high materiality
    High
    Non-GAAP Gross Margin
    22% to 26%
    high materiality
    High
    Non-GAAP Operating Expenses
    $86 million to $91 million
    medium materiality
    High
    Capital Expenditure
    $60 million to $80 million
    medium materiality
    High
    Free Cash Flow
    Positive
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    U.S.
    Represented 44.7% of total revenue.
    		$154.9 million—down 2%—
    Europe
    Represented 44.6% of total revenue. Expected to decline by approximately $15 million sequentially in Q3 due to seasonality.
    		$154.4 millionmore than doubledup 36%—
    International
    Represented 10.7% of total revenue.
    		$36.9 million—down 5%—

    Operational metrics

    20
    GAAP Revenue
    $346.2 millionup 11.5% QoQ, up 19.6% YoY
    Q2 FY26
    Non-GAAP Revenue
    $345.5 millionup 11.5% QoQ, up 23% YoY
    Q2 FY26

    Above the midpoint of guidance range, no significant pull forward of revenue.

    GAAP Gross Margin
    27.5%vs 22% in Q1 FY26, vs 11.1% in Q2 FY25
    Q2 FY26
    Non-GAAP Gross Margin
    28.6%vs 23.5% in Q1 FY26, vs 13.1% in Q2 FY25
    Q2 FY26

    Above the high end of guidance range. Driven by continued cost discipline, favorable product mix, IEEPA refunds, and improved operational leverage.

    IEEPA Tariff Refunds Benefit
    $13.3 million
    Q2 FY26

    Included in gross margin improvement. An additional $11.5 million received in July.

    GAAP Operating Expenses
    $111.2 millionvs $123.3 million in Q1 FY26, vs $147.6 million in Q2 FY25
    Q2 FY26
    Non-GAAP Operating Expenses
    $88.5 millionvs $97.7 million in Q1 FY26, vs $85.2 million in Q2 FY25
    Q2 FY26

    At the midpoint of guidance range. Despite headwinds from strengthening NIS against USD, maintaining cost control and efficiency.

    GAAP Operating Loss
    $16 millionvs $55 million loss in Q1 FY26, vs $115.5 million loss in Q2 FY25
    Q2 FY26
    Non-GAAP Operating Income
    $10.2 millionvs $24.8 million loss in Q1 FY26, vs $48.3 million loss in Q2 FY25
    Q2 FY26

    First time achieving non-GAAP operating profitability in nearly 3 years.

    GAAP Net Loss
    $30.8 millionvs $57.4 million loss in Q1 FY26, vs $124.7 million loss in Q2 FY25
    Q2 FY26
    Non-GAAP Net Income
    $3.6 millionvs $26.3 million loss in Q1 FY26, vs $47.7 million loss in Q2 FY25
    Q2 FY26

    Positive for the first time since Q2 2023.

    GAAP Net Loss per Share
    $0.50vs $0.95 loss in Q1 FY26, vs $2.13 loss in Q2 FY25
    Q2 FY26
    Non-GAAP Net Profit per Diluted Share
    $0.05vs $0.43 loss in Q1 FY26, vs $0.81 loss in Q2 FY25
    Q2 FY26
    Cash and investments balance
    $601.6 millionup from $581.1 million as of Dec 31, 2025
    as of Jun 30, 2026
    Capital expenditure
    $12 million
    H1 FY26
    Nexis shipments
    exceeding $60 million
    Q2 FY26
    Upsell activities
    more than $20 million
    Q2 FY26

    Expected to continue growing.

    U.S. C&I rooftop market share
    more than 50%
    most recent report

    Driven by better execution, technology superiority, and compliance with FEOC/domestic content.

    Fortune 100 companies with SolarEdge systems
    more than 60%
    current
    SST efficiency
    99%
    Q2 FY26

    Across a range of power levels, with direct conversion from medium-voltage AC to a regulated DC bus.

    Industry KPIs

    4
    MetricValueDetails
    Ai data center revenue99%%
    Inventory channel inventorynormalized
    Node platform ramp scheduleNexis 3-phase version rollout in Europe; SST working prototype in lab
    End market segment revenue mixU.S.: $154.9 million (44.7% of revenue); Europe: $154.4 million (44.6% of revenue); International: $36.9 million (10.7% of revenue)USD

    Product announcements

    3
    ProductTypeDetails
    Nexis (3-phase version)launch
    Nexis (single-phase version)roadmap
    SST (AI Factory Offering)milestone

    Risks & headwinds

    4
    U.S. Residential Market SoftnessQ3 FY26

    Expected to continue in Q3 FY26

    Mitigation: Well-positioned to gain share when market rebounds due to fit with TPO business model, safe harbor transactions, and Nexis advantages.

    European SeasonalityQ3 FY26

    Sequential decline of approximately $15 million at midpoint in Europe for Q3 FY26

    Mitigation: Focus on Nexis rollout and growing demand for storage products.

    Strengthening New Israeli Shekelongoing

    Continued headwinds

    Mitigation: Maintaining ongoing cost control and leveraging efficiency measures.

    Component Price Increasesongoing

    Absorbing some price increases (e.g., memory)

    Mitigation: Supply chain team working diligently to secure supply and support customers.

    What to watch in Q3 FY26

    5

    U.S. Residential Market Rebound

    next quarter
    CurrentSoft, awaiting clarity on FEOC and better funding environment
    TargetMarket rebound with increased funding and FEOC clarity

    Why it matters

    A rebound in the U.S. residential market is crucial for overall revenue growth and market share expansion.

    We expect this softness to continue in the third quarter as the market awaits further clarity and better funding environment. With that said, when the market rebounds, we believe we are well positioned to gain share.

    Q&A highlights

    5

    Why is Q3 gross margin guidance lower sequentially?

    The sequential decline in Q3 non-GAAP gross margin (22-26% vs 28.6% in Q2) is primarily due to the lower scale of business in Q3, which impacts the absorption of fixed costs within the cost of goods. Without this scale effect, there would be a small quarter-over-quarter improvement.

    “the gross margin for Q3, we're expecting 24%. The main reason for that is the scale of the business that is different in Q3 and very much in line with our fixed cost that we have in the cost of goods. And this is actually the main reason. If you take this out, you actually can see a small improvement quarter-over-quarter.”

    asked by Christine Cho · answered by Maoz Sigron

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Priorities and Turnaround

    SolarEdge reported Q2 FY26 as a meaningful point in its turnaround, achieving non-GAAP operating profitability for the first time in nearly three years. This was driven by 20% YoY revenue growth and six consecutive quarters of non-GAAP gross margin expansion, reflecting a focus on operational efficiency and customer centricity. The company's strategy revolves around profitable growth, expanding global market share, scaling the Nexis platform, and advancing power infrastructure for AI factories.

    02

    U.S. Market Dynamics and Share Gains

    The U.S. residential market experienced continued softness due to a slower tax equity funding environment and uncertainty regarding FEOC regulations, leading to reduced distributor inventory. Despite this, SolarEdge gained significant market share in U.S. C&I, now exceeding 50% of rooftop installations, supported by strong execution and compliance with domestic content and non-FEOC requirements. Over 60% of Fortune 100 companies utilize SolarEdge systems.

    03

    European Growth and Nexis Platform Rollout

    European revenue more than doubled YoY, driven by anticipation of higher electricity prices and increased demand for storage ahead of net metering phaseouts. The 3-phase Nexis platform saw meaningful rollout in Europe, with shipments exceeding $60 million in Q2. An independent analysis showed Nexis could deliver EUR 5,000 in additional savings over 15 years compared to a leading competitor. The single-phase Nexis is planned for rollout in Q1 2027.

    04

    AI Factory Opportunity (SST)

    SolarEdge's data center business transitioned from development to demonstrations in Q2, showcasing a working prototype of its SST solution with 99% efficiency and direct conversion from medium-voltage AC to a regulated DC bus. The company aims for a working system in its lab by year-end, pilot installations in 2027, and volume shipments in 2028, expressing high confidence in the opportunity's size and its differentiated solution.

    05

    Financial Discipline and Cash Management

    The company maintained rigorous cost control, with non-GAAP operating expenses within guidance. Free cash flow generation was positive at $3.1 million in Q2, and the company expects positive free cash flow for the full year 2026. Working capital management improved, with decreased net AR, lower DSO, and higher DPO. Capital expenditures for H1 were $12 million, with full-year guidance of $60 million to $80 million, focusing on U.S. production capacity, R&D facilities, and AI factory investments.

    AI-generated summary of the company’s earnings call. Not investment advice.