SolarEdge Technologies, an Israel-based solar inverter producer, has reported a return to non-GAAP operating profitability for the first time since the second quarter of 2023. However, its shares fell around 24% after the company issued weaker-than-expected guidance for the third quarter. The company's second-quarter 2026 revenue of US$346.2 million, up 20% year-on-year and 11.5% sequentially, was driven by stronger demand in Europe and growth in the US commercial and industrial (C&I) segment. Non-GAAP gross margin increased to 28.6%, compared with 13.1% in the same period last year, marking the company’s sixth consecutive quarter of year-on-year gross margin expansion. Non-GAAP operating income reached US$10.2 million, compared with a loss of US$48.3 million a year earlier, while non-GAAP net income was US$3.6 million. CEO Shuki Nir attributed the growth to strong demand in Europe and the US C&I segment, offsetting industry-wide softness in US residential demand. On a GAAP basis, SolarEdge narrowed its operating loss to US$16 million from US$115.5 million in the second quarter of 2025. Net loss improved to US$30.8 million, or US$0.50 per diluted share, compared with a loss of US$124.7 million, or US$2.13 per share, a year earlier. The company generated positive free cash flow of US$3.1 million during the quarter and increased its cash and investments portfolio, net of debt, to US$264.6 million as of 30 June, up from US$244.2 million at the end of 2025. However, the company's third-quarter outlook was weaker than expected, with revenue expected to be US$310-340 million, below market expectations, citing continued uncertainty in US residential solar demand. This is a concern given the policy uncertainty and market headwinds shaping the US solar sector, as discussed in a previous interview with SolarEdge’s North America general manager. The company's recent performance and outlook raise questions about the sustainability of its growth and the impact of market dynamics on its profitability.
