SolarEdge, the Israel-headquartered developer of DC power optimizers, solar inverters and storage solutions, has posted solid second quarter (Q2) 2017 financial results, revealing a record gross margin of 35% and revenues of $111.5 million.
Although a 13% contraction on Q1 2017, SolarEdge’s revenues for the quarter (ended December 31, 2016, but classed in Israeli accounting terms as Q2 2017) were close to initial projections. Sights were lowered on an anticipated slowdown in the U.S. residential solar market, from where the company draws the bulk of its revenues.
Of the 413 MW of inverters shipped in the quarter, 271 MW were shipped in North America. In hard numbers terms, Q2 saw SolarEdge ship 1.3 million power optimizers and 57,000 inverters globally, generating $24.7 million in positive cash flow, and posting a GAAP operating income of $15.1 million for the quarter.
The 35% gross margin was the highest yet recorded by the Israeli firm, besting Q1 2017’s 32.6% gross margin, and up year-on-year from 30.9%. Operating income fell slightly, down from $18.2 million in Q1 to $15.1 million in Q2.
On a conference call to discuss the results, SolarEdge CEO Guy Sella expressed his confidence that any financial impact of the U.S. residential solar slowdown would soon be offset by greater growth in other markets, chiefly Europe, and the bedding-in of the firm’s HD-Wave inverters, which began shipping during the quarter.
“The general slowdown in the growth rate of the residential PV business in the U.S. had a downward effect on our revenues this quarter,” Sella said, adding: “it is important to mention that from everything we can measure, we continue to gain market share in the U.S. and in Europe.
“Specifically, revenues in Europe and other countries outside of North America grew significantly when compared to the same quarter last year. While the European market is starting to return to growth, the U.S. market is still showing significant signs of softness. In the rest of the world, our business is growing at a healthy rate.”
Sella added that SolarEdge remains confident in its ability to grow revenues and profitability in 2017. For the quarter ending March 31, 2017, SolarEdge expects to reach revenues within the range of $110 million to $120 million, with gross margin falling slightly to 31% to 33%.