Executive Summary

SolarEdge delivered Q2 2025 upside on both revenue and EPS and continued a margin recovery: revenue $289.43M (+32% q/q; +9% y/y) and non-GAAP EPS loss of $0.81, with GAAP gross margin improving to 11.1% and non-GAAP to 13.1% . Against S&P Global consensus, revenue beat by ~$15M and EPS loss was narrower than expected (see Estimates Context).
Mix and execution drove the beat: higher volume utilization, increased U.S. production, favorable regional mix, and a smaller-than-expected tariff hit (~1% vs 2% expected), lifting gross margins above the guided range .
Q3 2025 guidance implies continued sequential growth and margin expansion: revenue $315–$355M; non-GAAP GM 15–19% (incl. ~2% tariff impact); non-GAAP OpEx $85–$90M . Management also reduced expected H2 tariff headwind to ~2% from 4–6% and now expects positive free cash flow for full-year 2025 (was ~breakeven in Q1) .
Strategic narrative tightened: market share recapture, especially U.S. TPO and C&I, early share gains in Europe, acceleration of NexSys platform, and ramping U.S. manufacturing with 45X support; company plans to redeem ~$343M notes due next month from cash on hand .

What Went Well and What Went Wrong

What Went Well
- Margin recovery and top-line growth: non-GAAP GM rose to 13.1% from 7.8% on higher utilization, more U.S. production, and favorable mix; tariff impact only ~1% vs 2% expected and Q2 revenue rose 32% q/q .
- Guidance/macro tailwinds clarity: H2 tariff headwind lowered to ~2% and FY25 free cash flow now expected to be positive; improved visibility from policy (45X extension) and onshoring strategy .
- Strategic wins: multi-year C&I wins (e.g., retailer, Solar Landscape), early market share gains in Europe, and traction in EV charging software (Wivo) and commercial storage; NexSys on track for year-end initial volume. “We are firmly moving in the right direction on all four priorities” (CEO) .
What Went Wrong
- Operating losses persist: non-GAAP operating loss of $48.3M and GAAP net loss of $124.7M despite improvements .
- One-time charges: $18M loss on tracker business disposition and a $37M write-down of the Sella II facility (partly offset by a $10M gain on a Korea sale) weighed on results .
- Europe remains challenging: while channel inventories largely normalized, management still sees a weak market into next year; U.S. resi outlook in 2026 pressured by elimination of the 25D credit (partially offset by TPO shift) .

Financial Results

Actuals by quarter

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($M)	265.41	219.48	289.43
GAAP Gross Margin %	-4.1%	8.0%	11.1%
Non-GAAP Gross Margin %	—	7.8%	13.1%
Non-GAAP EPS (loss)	—	(1.14)	(0.81)
GAAP Net Loss ($M)	(130.82)	(98.52)	(124.74)

Q2 2025 actual vs S&P Global consensus (beats in bold)

Metric	Q2 2025 Consensus	Q2 2025 Actual	Surprise
Revenue ($M)	274.49*	289.43	Beat
Primary EPS (loss)	(0.84)*	(0.81)	Beat

Values marked with * retrieved from S&P Global.

Geographic revenue mix (Non-GAAP), sequential comparison

Region	Q1 2025 ($M, %)	Q2 2025 ($M, %)
United States	132 (62%)	185 (66%)
Europe	47 (22%)	65 (23%)
International	33 (16%)	31 (11%)
Total Non-GAAP Revenue	212	281

KPI highlights

KPI	Q1 2025	Q2 2025
Inverter shipments (MW AC)	1,208	1,194
Battery shipments (MWh)	180	247
Free Cash Flow ($M)	+19.85	(9.06)
Cash & investments portfolio (gross)	~$794	~$812
Net cash (net of short-term debt)	~$455	~$470
Net of total debt ($M)	113.2	131.8
Accounts receivable ($M)	133	217
Inventory ($M)	637	529

Notes: totals may not sum due to rounding. Non-GAAP revenue excludes discontinued ops .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	—	315–355	—
Non-GAAP Gross Margin % (incl. tariff impact)	Q3 2025	—	15–19% incl. ~2% tariff	—
Non-GAAP OpEx ($M)	Q3 2025	—	85–90	—
Tariff GM headwind	H2 2025	4–6% (prior expectation)	~2% (updated)	Lowered
Free Cash Flow	FY 2025	~Breakeven	Positive	Raised

Management also reiterated intention to redeem ~$343M notes due next month using cash on hand .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’24 and Q1’25)	Current Period (Q2’25)	Trend
Tariffs & margin impact	Q1: guided 2% GM hit in Q2; H2 at 4–6%; plan to offset by 2026	H2 headwind cut to ~2%; Q2 tariff impact ~1% vs 2% expected	Improving
U.S. manufacturing & 45X	Q1: ramp to 70k inverters/quarter; onshoring supports IRA/45X	Reiterated multi-site U.S. footprint; plan to export U.S.-made products; supports margin	Strengthening
Europe channel & share	Q1: destocking largely done by end-Q2; early share gains	Channel mostly normalized; initial share gains continue; market remains weak	Stabilizing, cautious
C&I and enterprise momentum	Q1: multi-year enterprise wins; C&I opportunities growing	Multi-year Solar Landscape and U.S. retailer agreements; commercial storage record sales	Positive
Product innovation	Q1: NexSys initial volume targeted YE 2025; EV charging solution launched	NexSys on track; software traction (Wivo); larger German 3-phase and stackable batteries ahead	On track
Cash/FCF & leverage	Q4: FCF positive; Q1: 2025 ~breakeven; redeem converts with cash	Now expect FY25 positive FCF; $812M gross cash/investments; redeem ~$343M notes	Better

Management Commentary

CEO on progress and trajectory: “Q2 results and Q3 outlook both show that we are firmly moving in the right direction on all four priorities” .
CFO on gross margin drivers: “The higher gross margin is largely due to higher revenue… higher U.S. production volume and favorable regional mix… tariffs impacted our gross margin by 1% compared to an expectation of two” .
CEO on tariffs and H2 impact: “When added together, the gross margin headwind in the second half is expected to decline to approximately 2% from the previous expectation of 4% to 6%” .
CEO on Europe and NexSys: “We have seen initial market share gains in Europe in the second quarter… our next generation platform [NexSys] coming soon… will allow us to be more competitive” .

Q&A Highlights

Demand sustainability and safe harbor: Management said Q3 guide does not assume a material pull-forward tied to 25D or safe harbor; pleased with underlying progress .
Margin cadence: Leverage from higher volumes on a fixed cost base (~$90–95M embedded in COGS) and increased U.S. production expected to drive further margin gains; mix remains a swing factor .
C&I strength: Strong U.S. C&I demand, potential for allocation as domestic content and FiOQ requirements favor SolarEdge; no specifics on safe harbor deals .
Europe inventory/pricing: Channel largely normalized; management denied rumors of recent across-the-board price cuts, attributing noise to local promotions .
45X monetization and converts: 45X treated as ongoing; expect FY25 FCF positive; plan to retire ~$343M notes at maturity with cash on hand .

Estimates Context

Q2 2025 results vs S&P Global consensus: revenue $289.43M vs $274.49M consensus (beat), Primary EPS (loss) $(0.81) vs $(0.84) consensus (beat). Street had 24 revenue and 23 EPS estimates for Q2 [GetEstimates].
Q3 2025 setup: guidance $315–$355M brackets the current revenue consensus of ~$336.70M; consensus Primary EPS (loss) is $(0.42)* [GetEstimates].
Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Execution improving: Two straight quarters of sequential and y/y revenue growth and expanding margins, with Q2 tariff headwind milder than expected and H2 impact now materially lower (~2%) .
Clear path to further gross margin gains: Volume leverage on fixed costs, higher U.S. production benefiting from 45X, and new products with better cost structures support continued margin expansion into H2 and 2026 .
U.S. exposure and policy positioning are advantages: Domestic content and FiOQ support TPO and C&I share gains; management expects to offset tariff pressures by 2026 .
Balance sheet/liquidity manageable: ~$812M cash/investments and plan to redeem ~$343M notes; FY25 free cash flow upgraded to positive from ~breakeven last quarter .
Watch Europe and 2026 U.S. resi dynamics: Europe demand remains weak despite early share gains; 25D expiration may pressure U.S. direct ownership, with TPO likely to absorb part of the shift where SolarEdge is well positioned .
Near-term stock catalysts: Continued margin expansion, Q3 delivery vs guide, visibility on tariff offsets, and NexSys introduction; any additional large C&I/enterprise wins or evidence of Europe share recapture could re-rate the trajectory .

Citations:

Q2 2025 press release and financials
Q2 2025 earnings call transcript
8-K (Item 2.02) with exhibits and reconciliations
Q1 2025 press release and call for prior quarter comps and guidance context

SOLAREDGE TECHNOLOGIES, INC. (SEDG)·Q2 2025 Earnings Summary