Executive Summary

Q3 2025 delivered the third straight quarter of sequential revenue growth to $340.21M (+18% q/q) with substantial margin expansion (Non-GAAP GM 18.8% vs 13.1% in Q2), positive free cash flow ($22.8M), and a sharply narrower Non-GAAP operating loss ($23.8M vs $48.3M in Q2) .
Results modestly beat S&P Global consensus: revenue $340.2M vs $336.7M estimate and Non-GAAP EPS -$0.31 vs -$0.42 estimate; EBITDA was still negative but improved sequentially; management guided Q4 revenue to $310–$340M and raised Non-GAAP GM range to 19–23% (incl. ~2% tariff headwind) .
Management emphasized turnaround execution (single SKU platform, U.S. manufacturing ramp, Nexus next-gen platform), regional recovery (EU revenue ~€100M; +45% q/q), and safe-harbor structures with TPOs/C&I that enhance visibility without pulling revenue forward .
New Infineon collaboration to develop solid-state transformer solutions for future DC-architecture data centers adds an AI/data center optionality angle; commercialization visibility is medium term (2027–2028) .

What Went Well and What Went Wrong

What Went Well
- Sequential growth and operating leverage: Non-GAAP GM rose to 18.8% (high end of Q3 guide) and Non-GAAP opex held to $87.7M; free cash flow turned positive ($22.8M) .
- U.S. manufacturing benefits and product mix support margins; management sees continued ~2% tariff headwind but offset by U.S.-made products and Nexus introduction .
- Strategic progress: single-SKU platform to simplify forecasting/logistics/service; regained #1 U.S. resi inverter share in Q2 per WoodMac; safe-harbor structures with TPOs/C&I customers without revenue pull-forward .
What Went Wrong
- Profitability remains negative: GAAP net loss ($50.1M) and Non-GAAP net loss ($18.3M); EBITDA still negative despite improvement .
- Tariffs remain a consistent ~2% gross margin headwind in Q3 and Q4 outlook; mix/geography still a swing factor .
- Europe remains challenging despite inventory normalization; recovery is underway but dependent on storage attach, Nexus ramp and U.S. export competitiveness .

Financial Results

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$219.48	$289.43	$340.18
Non-GAAP Diluted EPS ($)	-$1.14	-$0.81	-$0.31
GAAP Diluted EPS ($)	-$1.70	-$2.13	-$0.84
Non-GAAP Gross Margin %	7.8%	13.1%	18.8%
GAAP Gross Margin %	8.0%	11.1%	21.2%
Non-GAAP Operating Loss ($M)	-$72.45	-$48.33	-$23.76
Free Cash Flow ($M)	$19.85	-$9.06	$22.80

Mix and cadence context: tariffs impacted GM by ~2% in Q3; Q4 guide assumes ~2% tariff impact as well .

Actual vs S&P Global consensus (latest three quarters)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue – Actual ($M)	$219.48	$289.43	$340.18
Revenue – Consensus ($M)	204.23*	274.49*	336.70*
Revenue – Surprise ($M)	+15.25	+14.94	+3.48
Non-GAAP EPS – Actual ($)	-1.14	-0.81	-0.31
Non-GAAP EPS – Consensus ($)	-1.16*	-0.84*	-0.42*
EPS – Surprise ($)	+0.02	+0.03	+0.11

Values with asterisks were retrieved from S&P Global (consensus and derived surprises).

Q3 2025 segment/regional mix

Region	Revenue ($M)	Mix
U.S.	$203	60%
Europe	$101	30%
International (ex-U.S./EU)	$36	10%
Total	$340	100%

Operating liquidity and balance sheet highlights

Operating cash flow $25.6M and FCF $22.8M in Q3; net cash/investments (net of debt) rose by $77M to $208.8M q/q .
Total cash and investments portfolio was ~ $547M at 9/30/25 (post $342M note repayment) .

KPIs and shipments

KPI	Q1 2025	Q2 2025	Q3 2025
Inverter MW (AC) shipped	1,208 MW	1,194 MW	1,471 MW
Batteries shipped (MWh)	180	247	269
Inverters recognized as revenue (units)	n/a	n/a	~92.7k
Optimizers recognized as revenue (units)	n/a	n/a	~2.95M
Batteries recognized as revenue (MWh)	n/a	n/a	230

Note: Beginning Q4 2025, management will discontinue “MW shipped” metrics in favor of “recognized as revenue” counts, aligned to the single-SKU/software-defined platform .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	$315–$355	—	—
Non-GAAP GM %	Q3 2025	15–19% (incl. ~2% tariff)	—	—
Non-GAAP OpEx ($M)	Q3 2025	85–90	—	—
Revenue ($M)	Q4 2025	—	$310–$340	New; midpoint $325M, seasonally lower vs Q3 midpoint $335M
Non-GAAP GM %	Q4 2025	—	19–23% (incl. ~2% tariff)	Raised sequential range vs Q3 guide (+4 pp to the range top)
Non-GAAP OpEx ($M)	Q4 2025	—	85–90	Maintained sequentially

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Turnaround, margin rebuild	Positive FCF; GM turning positive; focus on execution	Second straight q/q and y/y revenue growth; GM expansion; opex discipline	Third straight q/q growth; Non-GAAP GM 18.8%; positive FCF; opex at midpoint	Improving
Tariffs & supply chain	Guide included ~2 pp tariff impact	Guide included ~2% tariff impact	~2% GM impact in Q3 and Q4 guide; supply diversification ongoing	Persistent headwind, managed
Product platform (Nexus, single SKU)	—	Described platform evolution and disclosures shift	Single-SKU software-defined inverters; Nexus shipments started; new EMS for C&I	Accelerating rollout
U.S. manufacturing, IRA 45X	—	U.S. manufacturing emphasized	U.S. production supports global exports; 45X applies to exports too	Expanding leverage
Regional trends (EU normalization)	—	—	EU revenue ~€100M; +45% q/q; inventory normalized; Europe still challenging	Stabilizing/recovering
AI/data centers (SST)	—	—	Infineon collaboration; 2027–28 commercialization window	New optionality
VPP/grid services	—	—	500+ MWh in VPPs across 16 U.S. states, PR; rising attach rates	Building capacity

Management Commentary

“We’re making steady progress in our turnaround, with three consecutive quarters of revenue growth and improving margins... positioned for continued growth, sustained profitability, and leadership in smart energy solutions.” – CEO Shuki Nir .
“Single SKU” software-defined inverter platform will reduce complexity and improve margins; over-the-air rating upgrades possible .
Europe: “EU revenues reaching EUR 100 million... up 45% q/q and up 21% y/y... position in Europe will continue to improve as we ramp sales of commercial storage, deliver U.S.-made products, and roll out the next generation Nexus platform” .
Cash/FCF: “positive free cash flow... ~ $547 million cash and investments (post repayment)... inventory DIO improved; CCC down to 168 days” – CFO Asaf Alperovitz .
Data center opportunity: “collaboration with Infineon to advance our solid-state transformer platform... expected 800V DC architecture starting 2027; 99% efficiency target” – CEO .

Q&A Highlights

2026 cadence: Management won’t guide FY26; typical Q1 seasonality ~10% down vs Q4; expects positive FCF in Q4 and FY25 .
Gross margin drivers: fixed-cost absorption, U.S.-made mix (45X), Nexus higher-margin products, and single-SKU efficiencies; tariffs ~2% headwind persists .
Safe-harbor: Emphasizing physical-work test structures with TPOs/C&I that improve visibility without revenue pull-forward .
U.S. manufacturing for export: 45X credits apply; scalable with Jabil/Flex; targeting “most” manufacturing in the U.S. over time .
C&I positioning: claims to be the only scaled player with non-FIAC and domestic content–compliant C&I solution; see share gains ahead .

Estimates Context

Q3 2025 beat S&P Global consensus on revenue ($340.2M vs $336.7M) and Non-GAAP EPS (-$0.31 vs -$0.42); EBITDA remained negative but improved sequentially (see table above). Q1 and Q2 also modestly beat on revenue and EPS versus consensus. Values marked with asterisks are from S&P Global.
Implications: Street models likely raise gross margin trajectory assumptions (mix/45X/Nexus) while moderating Q4 revenues for seasonality; tariff headwinds (~2%) remain in estimates .

Key Takeaways for Investors

The turnaround is tracking: three quarters of sequential revenue growth, accelerating margin expansion, and renewed FCF generation are evident and supported by U.S.-manufactured mix and single-SKU efficiencies .
Q4 guide implies seasonal revenue softness but a raised margin profile (19–23% Non-GAAP GM), a constructive setup for 2026 mix-driven margin improvement even if top-line is choppy .
Europe is stabilizing with normalized channel inventory; new Nexus products and U.S.-made exports can improve competitiveness without sacrificing margins .
Tariffs (~2%) are a recurring headwind but appear manageable via sourcing, pricing, and manufacturing footprint; monitor policy risk .
Structural TPO/C&I positioning plus safe-harbor structures enhance forward visibility without revenue pull-forward risk—important for quality of earnings in the next 12 months .
Optionality: Infineon collaboration on data center DC architecture offers medium-term upside (2027–28), introducing an AI-adjacent narrative that could influence multiple expansion as milestones emerge .
Near-term trading lens: focus on Nexus ramp/margin mix, Q4 GM delivery vs guide, and incremental disclosures (revenue by inverters/optimizers/batteries starting Q4 10-Q) that may catalyze sentiment if quality of revenues continues to improve .

Additional Reference Items

Non-GAAP items: Q3 GAAP COGS benefited from ~ $15M one-time gain tied to discontinued storage claims; Seller 2 facility sale generated ~$26.1M proceeds with a small capital gain .
VPP milestone: >500 MWh storage enrolled across 16 U.S. states, PR; rising attach rates and incentive participation support DER-driven recurring revenue opportunities .

SOLAREDGE TECHNOLOGIES, INC. (SEDG)·Q3 2025 Earnings Summary