SolarEdge Technologies Reports Disappointing Fourth Quarter Results

SolarEdge Technologies Reports Disappointing Fourth Quarter Results

SolarEdge Technologies (NASDAQ: SEDG), a leading player in smart energy technology, encountered a tumultuous fourth quarter, marked by a narrower-than-expected loss but disappointing sales figures that fell short of estimates. As a consequence, SolarEdge stock experienced a notable decline, exacerbated by the company’s lighter sales forecast for the upcoming quarters.

Financial Performance Overview

The company, known for its innovative solutions in the solar energy sector, reported a stark decline in financial performance for the fourth quarter.

  • Revenue Decline: SEDG reported a significant decrease in revenues for Q4, amounting to $316.0 million, marking a 65% decline compared to the same quarter last year. The solar segment, particularly, saw a 66% decrease in revenues year-over-year.
  • Negative Gross Margin: The company’s GAAP gross margin turned negative to 17.9%, contrasting sharply with positive margins reported in the previous year. This was attributed to market challenges including higher interest rates and lower power prices, resulting in an inventory buildup and slowed shipments.
  • Increased Operating Expenses: Operating expenses on a GAAP basis increased by 14% from the prior quarter to $181.2 million. Non-GAAP operating expenses saw a decrease of 8% quarter-over-quarter.
  • Expanded Losses: SEDG reported a GAAP operating loss of $237.6 million, compared to a loss of $16.8 million in the prior quarter. The net loss on a GAAP basis also expanded significantly to $162.4 million, with a loss per share of $2.85.
  • Full Year Performance: Total revenues for the full year 2023 were $3.0 billion, slightly down by 4% from the prior year. The GAAP gross margin for the year decreased to 23.6% from 27.2% in the prior year. Non-GAAP operating income and GAAP net income also saw declines.

Balance Sheet and Cash Flow Highlights

  • Cash Position: As of December 31, 2023, SEDG’s cash, cash equivalents, bank deposits, restricted bank deposits, and marketable securities, net of debt, totaled $634.7 million, a decrease from the previous quarter.
  • Operating Cash Flow: The company experienced a significant shift in cash flow, with cash used in operating activities for Q4 amounting to $139.9 million, in contrast to cash generated in the same quarter of the previous year.

Industry Challenges

SolarEdge’s struggles are reflective of broader challenges within the solar industry, including rising interest rates and weakened demand. The company witnessed a significant decline in its stock value, losing 75% in 2023 and experiencing a portfolio rebalancing that led to its removal from the S&P 500. Additionally, SolarEdge recently underwent a workforce reduction, cutting 900 jobs, or 16% of its workforce.

SolarEdge’s Chief Executive, Zvi Lando, acknowledged the challenging market conditions but expressed confidence in the company’s ability to navigate through them. Lando highlighted SolarEdge’s expanding product portfolio and operational efficiency measures as key factors positioning the company for future growth cycles.

SolarEdge Stock Performance

Ahead of the earnings report, SolarEdge stock experienced a major decline, falling under 13% to 72.95 in Wednesday trading. Year-to-date, SEDG shares have lost about 20%, and over the past 12 months, they have declined by 75%.

SolarEdge Stock Performance

The company’s IBD Composite Rating was 27 out of a best-possible 99, and its IBD Relative Strength Rating was 7 out of 99. However, SolarEdge stock had an Accumulation/Distribution Rating of B-, indicating slightly more institutions are buying than selling shares.

Future Outlook

Despite the current challenges, SolarEdge remains focused on expanding its product portfolio and implementing operational and cost-reduction measures to position itself for recovery and growth in upcoming industry cycles. The company provided guidance for the first quarter ending March 31, 2024, including revenue projections and expectations for gross margin and operating expenses.

Revenues: Expected to be within the range of $175 million to $215 million. Non-GAAP gross margin: Anticipated to be within the range of negative 3% to positive 1%, including approximately 850 basis points of net IRA manufacturing tax credit. Non-GAAP operating expenses: Estimated to be within the range of $122 million to $130 million. Revenues from the solar segment: Predicted to be within the range of $160 million to $200 million. Gross margin from the solar segment: Expected to be within the range of 1% to 5%, including approximately 900 basis points of net IRA manufacturing tax credit.

Alternative Solar Stocks to Consider

Investors seeking alternatives amidst SolarEdge’s downturn may find promising opportunities in alternative solar stocks. Two such options include First Solar (FSLR) and Canadian Solar (CSIQ).

First Solar (FSLR) presents potential for growth, boasting a robust backlog and ongoing capacity expansion. Despite subdued performance in recent months, the company’s forward-looking indicators suggest a promising outlook. With a focus on research and development, First Solar is positioned to capitalize on future opportunities in the solar market.

Canadian Solar (CSIQ) offers an undervalued investment opportunity with a favorable forward price-earnings ratio. Recent financing agreements and significant project developments underscore the company’s growth potential. With a strong pipeline and strategic positioning in the market, Canadian Solar is poised for long-term success in the solar industry.


SolarEdge Technologies’ fourth-quarter results fell short of expectations, reflecting ongoing challenges within the solar industry. Despite the downturn, the company remains focused on strategic initiatives to navigate through the current market conditions and position itself for future growth. As investors assess alternative investment opportunities within the solar sector, companies like First Solar and Canadian Solar emerge as potential candidates for growth and value.

Also read: Best Renewable Energy Stocks You Should Buy in UK

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