SolarEdge Technologies reported that quarter-on-quarter revenues inched up 2% to $338.1 million in Q3, on the back of record solar revenues in Europe and significant quarterly growth in residential solar installations and sell-through in North America.
“In September sell-through reported by our distributors [in North America] was up 22% in residential and more than 40% up in commercial megawatts sold when compared to August, and [it was] at a level higher than the same month in 2019. As a result, current distributor inventory of our residential products are at a healthy level,” Zvi Lando, CEO of SolarEdge said. In light of this, the company anticipates 50% growth in residential sales in North America in Q4, he added.
The situation in commercial solar is more complex, however, and the European and North American markets are following a similar pattern.
“Initially, there was an expectation that commercial will overcome the pandemic at a faster pace, and as such, distributors and EPCs increased inventory during the first months of the pandemic. In actuality, commercial installations both in Europe and the U.S. – and even in Australia – are recovering slower than residential, and inventories in the channel are still high,” Lando said during yesterday’s Q3 earnings call.
Even though the commercial market has been slow during the pandemic, Lando said that he expects this segment to see significant growth as the market recovers in 2021.
Despite the onset of a second wave of the global pandemic in Europe, SolarEdge reported record solar revenues of $165.6 million in Europe in Q3, up from $144.3 million in the previous quarter.
During Q3, revenues generated from the sale of solar products from Europe represented 53% of SolarEdge’s $312.5 million in solar revenues. Although much of last quarter’s increase in Europe was due to strength in the Netherlands and Germany, traditionally strong markets for SolarEdge, the company also reported growth and record revenues in France, Poland and Switzerland.
The latest rounds of Covid-related lockdowns in Europe and all of the question marks around the pandemic are a concern, but SolarEdge is optimistic about next year, Lando said.
“During the first round of lockdowns in most of the world, residential continued almost without interruption,” he said. Throughout the first phase of the pandemic, Europe was installing at a higher rate than residential installation in 2019, he pointed out. Based on the signs that his company is seeing now, Lando thinks that this pattern will repeat during the current round of lockdowns in Europe, Australia and elsewhere.
For SolarEdge, the bigger restraint around the lockdowns is the ability to move people around. “That has definitely impacted [us], and [it] will probably be a couple of more months at least until that begins to ease,” Lando said. SolarEdge’s research and development activities have continued as planned, but pandemic-related travel restrictions have impacted the company’s certification and production target dates. “And we expect this will delay the release of our residential battery by several months,” Lando reported.
On a megawatt basis, in Q3 SolarEdge delivered 419 megawatts to the U.S., 708 megawatts to Europe and 254 megawatts to the rest of the world. Whereas residential products represented 49% of its megawatts shipped, commercial products were 51%.
Last quarter of SolarEdge’s top 10 solar customers represented 61% of its solar revenues. Two distributors alone accounted for more than 10% of the company’s quarterly revenues in Q3, Ronen Faier, SolarEdge’s CFO noted.
SolarEdge finished Q3 well positioned for growth; at the end of the quarter, its cash, cash equivalents, bank deposits, restricted bank deposits and investments stood at $1.2 billion, due in part to a convertible loan raised at the end of the quarter.
During the third quarter, SolarEdge generated $28.4 million in cash flow from operations.
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