Israeli-based solar PV inverter manufacturer SolarEdge has this week reported yet another blockbuster quarter with increased revenue, gross margin, and record shipments, at the same time as the company begins to expand beyond the solar market with moves into the energy storage, grid services, & virtual power plant sectors.
Recent history for SolarEdge, a leading provider of inverter solutions, has been good — frighteningly good. 2017 saw the company go from strength to strength with quarterly revenue growing from $115.1 million in the first quarter, $136.1 million in the second quarter, $166.6 million in the third quarter, and $189.3 million in the fourth quarter — sequentially record-breaking quarters.
It is then with little surprise that we find SolarEdge reported yet another record quarter of earnings this week with its first-quarter earnings report for 2018, posting total revenues of $209.9 million for the quarter — up 11% on the previous quarter and 82% on the same quarter a year earlier — and a gross margin of 37.9% — both at the high end of the company’s previously guided expectations, expectations that themselves ignored the traditionally soft start to a year.
Earnings per share for the quarter (on a GAAP basis) were $0.75 with net income of $35.7 million — up 83% from $19.5 million in the prior quarter and up 152% from $14.2 million year over year.
“We are pleased to announce strong first quarter results with record revenues and record profitability, despite the traditional seasonal slowdown and continued industry-wide components shortages,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “Our continued technological innovation and operational excellence, coupled with our introduction of new products and financial strength positions us for further growth and industry leadership.”
SolarEdge shipped a total of 800 megawatts (MW) worth of inverters in the first quarter, made up of 2.5 million power optimizers and 100,000 inverter units — record shipment figures for a company used to seeing record figures.
Looking forward, SolarEdge doesn’t expect things to taper off anytime soon, with guidance for the second quarter predicting revenue to be in the range of $220 million to $230 million and gross margins remaining flat between 36% and 38%.
The successful quarter also reveals a looming battle between SolarEdge and competitor SMA Solar Technology, as highlighted recently by PV Tech’s Senior News Editor and solar expert Mark Osborne. “As soon as SolarEdge had reported first quarter 2018 results and guidance for the second quarter, it was apparent before collating all the figures that the Israel-based company was rapidly closing the revenue gap on bigger rival SMA Solar,” Osborne said this week, highlighting the marginal gap that now exists between the two companies (see below).
Speaking of SolarEdge’s confidence in its first-quarter guidance and its ability to follow through, Osborne complained that, in comparison to SMA’s seasonal reality, “SolarEdge doesn’t know what seasonality is, as over the last three years its revenue in the first quarters of 2016 and 2017, showed only a very small seasonal correction but in the first quarter of 2018, its revenue progression hasn’t flinched at all.”
What makes SolarEdge’s performance all the more impressive is the company’s recent steps beyond its traditional solar boundaries into tangential markets — inverter-embedded electric vehicle charging, grid services and virtual power plants, and energy storage.
In November of last year, SolarEdge launched the world’s first-ever solar inverter-integrated electric vehicle (EV) charger which — combining supplemental grid power with solar PV power. The specifics of the technology see the EV charger embedded into SolarEdge’s HD-Wave inverter and leverages its solar boost mode to enable the faster charging, utilizing both grid and PV to charge at 9.6kW (40 Amp) Level 2 charging. If solar PV is not available, the inverter-integrated EV charger will use grid power to charge at 7.6kW (32 Amp) Level 2 charging.
“SolarEdge is dedicated to developing innovative solutions for increasing the use of renewable energy and cost savings for our customers and end users,” explained Guy Sella. “Adding EV charging to our growing range of products further enables system owners to easily manage their energy needs.”
Fast-forward to May and, just a week before the company unveiled its quarterly earnings report, SolarEdge unveiled a new grid services and virtual power plant solution which will allow utilities to make use of distributed energy generation systems to more efficiently meet their demands.
“Implementing a new model of energy generation requires simultaneous advancements at the hardware, system, and network levels. Our HD-Wave inverter made PV more energy-efficient and cost-effective,” said Lior Handelsman, Marketing and Product Strategy VP of SolarEdge, Founder. “At the system level, our inverters synchronize energy production, usage, and storage to create a seamless user experience with our monitoring platform. Now at the network level, our grid services enable the aggregation and synchronization of multiple PV systems to create a distributed network. This is an important milestone in making solar energy ubiquitous.”
A few days later, SolarEdge also announced an agreement to acquire Uninterruptible Power Supply (UPS) company Gamatronic Electronic Industries.
“This acquisition is our first step in expanding our business to new fields outside the solar arena,” Guy Sella said, underselling their “first steps” somewhat. “The multi-billion dollar UPS market is expected to undergo significant changes in the coming years and we believe that combining SolarEdge’s innovation, operational excellence and business leadership with Gamatronic’s technology and extensive experience in this field will allow us to become a UPS market leader.”
It’s little wonder, then, that the company’s share price is sitting well above any previous 5-year high, with investor confidence in the company strong enough to boost the company’s price ever higher.