SolarEdge is a global player in the big game, this is without a doubt anymore.
The company confirmed that their recent purchase of an uninterruptible power supply (UPS) technology group and a South Korean lithium ion battery manufacturer means they will be offering energy storage products tied to their inverter offerings. Even as the global and U.S. solar markets were relatively flat to last year, the company managed to grow 44% – consuming the market share of other power electronics makers.
The company also announced Israel as the location of their 50 MW-AC utility scale project – by far the biggest plant it has won a contract to supply to date – as revenues from their offerings for the commercial market grew to over 46% of total sales. SolarEdge shipped over 1.1 GW in the quarter, and is projecting further Q4 growth.
Revenue growth did slow, and gross margins did slip from 36% to 33%. Also noted were “growing pains” as product replacements were greater this quarter than prior, and R&D resources were constrained (even as spending in the department grew). And there will have to be significant amounts of money spent to scale the energy storage arm from ~200-250 MWh/year capacity to the more than 1 GWh/year that the company will do “over a few years”.
SolarEdge earned $236 million in revenue in Q3, bringing in $34 million of operating income, and a net income of $45.6 million, with gains from a one time transition tax benefit of about $11 million. Total cash and investments increased to $453 million, 3.6% greater than Q2’18 and 49% growth over the $304 million they had a year ago.
Besides the fact that SolarEdge ate someone’s lunch to grow 44% in a global market that some are predicting to contract, the most exciting announcement was that the company confirmed the most obvious secret: SolarEdge will be offering home energy storage products that are aligned with their inverters. CEO and Founder Guy Sella noted:
So on the metric side you can assume, we can assume; we believe that very soon above 30% of all solar system will come inherently with storage connected to them.
Multiple analysts on the earnings call noted this future expansion and spoke of margin differences and paying for the expansion. SolarEdge has experience designing energy storage interfaces with multiple energy vendors, including Tesla and LG.
The company noted that U.S. revenue was 51% of sales, with Europe at 35% of sales.