Israel-based solar inverter manufacturer SolarEdge‘s net loss expanded by over 1877% year-over-year (YoY) to $1.21 billion in the third quarter (Q3) of the financial year (FY) 2024-25 from $61.18 million, impacted by impairment and inventory write-down of $1.03 billion.

The company wrote down $612 million of inventory, of which $536 million is related to its solar business and $76 million to its non-solar business.

The write-down was due to excess inventory and partial write-downs of certain stock-keeping units (SKUs) due to pricing reductions and promotions implemented in Europe. Additionally, the company took a $47 million charge related to non-cancellable raw material orders.

For the solar business, the company wrote down $94 million from the retirement of machinery due to downsizing manufacturing units.

In the energy storage business, there was an impairment of manufacturing assets by $113 million due to the continued lower utilization of power optimizer Sella 1 and the lack of certainty around future orders.

There was also a write-down of $28 million of various other intangible assets and certain investments carrying higher value in their books than the fair market.

The company also reported a 64.02% YoY drop in revenue to $260.9 million in Q3 FY25 from $725.3 million.

Revenues from the solar segment were $247.5 million, down 63% from $676.9 million in the same quarter of the previous year.

The earnings per share (EPS) loss rose to $15.33 from $1.73 in Q3 FY24.

This quarter’s solar revenues from the U.S. amounted to $128.7 million, representing 52% of its total solar revenues. Solar revenues from Europe amounted to $78.9 million, representing 32% of our seller revenues. In international markets, solar revenues amounted to $39.9 million, representing 16% of its total solar revenues.

9M results

In the first nine months (9M) of FY25, SolarEdge had consolidated revenue of $730.71 million, a 75% YoY decline from $2.66 billion.

The company also reported a net loss of $1.49 billion in 9M from a profit of $19.67 million in 9M FY24.

The company’s EPS for 9M FY25 reached $1.90 from $0.92 in 9M FY24.

Shipments

SolarEdge shipped 850 MW of inverters and 189 MWh of batteries for solar module applications in 9M.

The company shipped 341 MW to the U.S., 91 MW to Europe, and 318 MW to the international markets, for an approximate total of 850 MW.

Nearly 67% of total inverter shipments during Q3 were to the commercial and utility segment. The remaining 33% were residential.

In Q3, it shipped 189 MWh of batteries, with a majority shipped to Europe and international markets. As a result of the pricing decreases and promotions it implemented earlier this year, the average selling price (ASP) per watt, excluding battery revenues, was $0.203. This quarter, its blended ASP/kWh on all solar module-attached batteries was $317.

This decrease is primarily due to additional price reductions, promotions, and geographic mix shifts.

The company is focused on regaining market share using its paid-for European inventory despite past write-downs and demand declines. SolarEdge aims to close price gaps with low-cost competitors through aggressive pricing and promotions.

SolarEdge Interim Chief Executive Officer Ronen Faier said the company had a good Q3 in the U.S. Still, with the recent developments, it will be difficult to predict the market. However, he sees a clear decline in Europe and no signs of strengthening. He expects the decline to continue into 2025.

The company also plans to sell Inflation Reduction Act (IRA) tax credits. It has already sold $40 million of IRA credits. With at least half of its business coming from inventory already paid for and existing on its balance sheet, the credits would help cover operating expenses and generate cash flow.

The company has provided guidance for Q4 FY25 within the range of $180 million to $200 million in revenues. The solar segment’s gross margin is expected to be between 0% and 3%, including approximately 1,050 basis points of net IRA manufacturing tax credit.

In Q1 FY25, the company posted a net loss of $108.6 million, an improvement of 37.7% YoY compared to a net loss of $174.5 million.

It reported a net loss of $162.4 million in Q4 of 2023, an 880% YoY drop from the net profit of $20.8 million.