SolarEdge kept up its growth streak in the third quarter of 2019, hitting record revenues yet again, while also marking the death of founding CEO Guy Sella.
SolarEdge reported third-quarter revenue of $410.6 million, beating its projections of $395 million to $410 million for the quarter. The company also outpaced its second-quarter revenues of $325 million, its previous record, by 26 percent.
Revenue for the first nine months of 2019 rose to just over $1 billion, compared to $674 million in the same period in 2018, Zvi Lando, acting CEO and vice president of global sales, noted in Wednesday’s conference call.
Net income in GAAP terms was $41.6 million, down from $45.6 million in the same quarter last year. But in non-GAAP terms, the third quarter was a record-breaker with $63.6 million in net income, compared to $49.3 million in the second quarter and $42.7 million in the same quarter last year.
The Fremont, Calif.-based company ended the quarter with $432.9 million in cash and equivalents, compared to $373.6 million at the end of the second quarter.
Lando opened Wednesday’s conference call by mourning Sella's death from cancer in August. Sella, 59, founded SolarEdge in 2006 as a solar microelectronics competitor to the then-dominant string inverter ecosystem. He led it through a successful 2015 IPO and to its current stance as a dominant supplier in the U.S. and European residential solar markets.
“Guy was not only our CEO and chairman but a technological visionary, a role model and dear friend, and he will be greatly missed,” Lando said.
Still, “we believe we are well positioned for continued growth,” he said, “both in our core business as leaders of PV inverter technology and in our new businesses of lithium-ion cells and batteries, e-mobility powertrain solutions and uninterruptible power supply systems.”
Residential and commercial-scale solar inverters and DC optimizers drive almost all of SolarEdge's business, accounting for $387.8 million in third-quarter revenue. The company shipped 1.5 gigawatts (AC) of its power optimizers and inverters, up from 1.3 gigawatts in the second quarter, although it also reported an erosion in gross margins due to air shipment costs driven by manufacturing capacity constraints.
SolarEdge is ramping up manufacturing capacity at its Hungary factory and contract facility in Vietnam to manage the costs of U.S. tariffs against Chinese-made solar equipment. At the same time, SolarEdge and U.S.-based microinverter maker Enphase, its key competitor in U.S. residential solar markets, have been aided by the Trump administration’s actions against China’s Huawei, which was viewed as a potentially disruptive entrant to the U.S. market.
SolarEdge, like most of its competitors in the residential solar panel and inverter space, is also expanding into behind-the-meter batteries, energy management systems, and grid services using data from its millions of deployed solar systems. The company’s technology is integrating Tesla Powerwall batteries, grid-controllable water heaters, Nest thermostats, and smart EV chargers for Vermont utility Green Mountain Power, for example, and Tesla and LG batteries for Australian utility AGL’s virtual power plant project.
SolarEdge has also gone on an acquisition spree in the past two years, buying uninterrupted power specialist Gamatronic, South Korean battery manufacturer Kokam and Italian electric mobility firm SMRE. Those non-solar enterprises drove revenue of about $20 million in the third quarter, a relatively slender share of overall business.
But SolarEdge is working on integrating these new opportunities into its broadening market opportunities, particularly for solar-plus-storage applications, Lando said. For example, while SolarEdge now uses third-party batteries for its small but growing share of solar customers who want energy storage, it plans to integrate Kokam’s lithium-nickel-manganese-cobalt battery technology offerings starting next year.
These new opportunities could play a key role in driving record quarters for SolarEdge in the future.