SolarEdge Technologies, Inc. (SEDG) — Fundamental Analysis
Snapshot & Big Picture
SolarEdge Technologies designs and manufactures DC-optimized inverters and power optimization systems for solar photovoltaic installations, primarily serving residential and commercial markets globally. Once a high-growth darling of the clean energy sector — growing revenue from roughly $490M in mid-2016 to a peak near $3.1B in fiscal 2022 — the company has since experienced a dramatic reversal. A combination of inventory gluts across the European solar market, aggressive competition (particularly from Chinese manufacturers), rising interest rates dampening residential solar demand, and significant restructuring charges have compressed revenue sharply and pushed profitability deeply into the red. The fiscal years 2024 and 2025 represent the most turbulent period in the company's public history, though the most recent quarterly data hints at some tentative stabilization.
Latest Quarter Snapshot (Q1 2026, Period Ending March 31, 2026)
The most current data available comes from the 10-Q filed May 7, 2026, covering the quarter ended March 31, 2026. This is more recent than the annual figures and provides the freshest read on the business.
| Metric | Q1 2026 |
|---|---|
| Revenue | $310.5M |
| Gross Margin | 22.0% |
| Operating Margin | -17.7% |
| Net Margin | -18.5% |
| EBITDA | -$49.1M |
| Current Ratio | 2.02x |
| Debt-to-Equity | 0.017x |
| Capital Expenditures | $3.7M |
| CapEx as % of Revenue | 1.2% |
Q1 2026 gross margin of 22.0% is the strongest reading since fiscal 2023 and meaningfully above the deeply negative gross margins seen across all of fiscal 2024. Operating and net margins remain negative, but the losses are narrowing. The current ratio of 2.02x suggests adequate short-term liquidity, and the debt-to-equity ratio of 0.017x — the first non-null reading in this dataset — indicates an essentially debt-free balance sheet. Capital expenditure has been slashed to just $3.7M (1.2% of revenue), signaling aggressive cost control and minimal near-term expansion investment.
Profitability — Multi-Year Trend
SolarEdge's profitability story is one of a strong foundation eroded by external shocks and operational missteps. From 2016 through 2022, gross margins held in the 27%–35% range, operating margins were consistently positive (5%–15%), and net margins were healthy. The collapse began in 2023 and accelerated sharply into 2024.
| Fiscal Year End | Revenue | Gross Margin | Operating Margin | Net Margin | EBITDA |
|---|---|---|---|---|---|
| Dec 2016 | $240.0M | 33.7% | 13.9% | 10.6% | $36.1M |
| Dec 2017 | $607.0M | 35.4% | 15.0% | 13.9% | $98.2M |
| Dec 2018 | $937.2M | 34.1% | 14.9% | 13.7% | $152.0M |
| Dec 2019 | $1,425.7M | 33.6% | 13.3% | 10.3% | $216.8M |
| Dec 2020 | $1,459.3M | 31.6% | 9.8% | 9.6% | $174.4M |
| Dec 2021 | $1,963.9M | 32.0% | 10.5% | 8.6% | $246.7M |
| Dec 2022 | $3,110.3M | 27.2% | 5.3% | 14.2% | $215.8M |
| Dec 2023 | $2,976.5M | 23.6% | 1.4% | 1.2% | $97.4M |
| Dec 2024 | $901.5M | -97.3% | -189.5% | -200.4% | -$1,648.4M |
| Dec 2025 | $1,184.4M | 16.6% | -25.5% | -34.2% | -$271.2M |
Fiscal 2024 represents the nadir: a deeply negative gross margin of -97.3% reflects massive inventory write-downs, restructuring charges, and asset impairments rather than just weak pricing. Fiscal 2025 shows a partial recovery with gross margin returning to positive territory at 16.6%, though operating and net losses remain substantial. The Q1 2026 gross margin of 22.0% suggests the recovery trajectory is continuing, but operating profitability has not yet been restored.
Financial Health
Liquidity: SolarEdge has maintained a current ratio above 2.0x in recent periods, indicating it can cover near-term obligations. The ratio peaked at nearly 4.8x in December 2016 and has gradually declined as the business scaled and then contracted, sitting at 2.02x in Q1 2026 — still a reasonable buffer. Debt-to-equity was not available (null) in any annual filing through fiscal 2025, but the Q1 2026 10-Q reports a de minimis 0.017x ratio, confirming the company carries very little financial debt. This is a meaningful structural positive: despite deep operating losses, the balance sheet is not heavily leveraged.
Capital Expenditures: CapEx trends tell an important story about the company's investment cycle and subsequent retrenchment.
| Period | Capital Expenditures | CapEx / Revenue |
|---|---|---|
| Jun 2016 (FY) | $15.7M | 3.2% |
| Dec 2016 | $11.0M | 4.6% |
| Dec 2017 | $21.4M | 3.5% |
| Dec 2018 | $38.6M | 4.1% |
| Dec 2019 | $72.6M | 5.1% |
| Dec 2020 | $126.8M | 8.7% |
| Dec 2021 | $149.3M | 7.6% |
| Dec 2022 | $169.3M | 5.4% |
| Dec 2023 | $170.5M | 5.7% |
| Dec 2024 | $108.2M | 12.0% |
| Dec 2025 | $23.5M | 2.0% |
| Q1 2026 | $3.7M | 1.2% |
CapEx rose steadily through the growth years, peaking at $170.5M in fiscal 2023 (5.7% of revenue). In fiscal 2024, the absolute dollar amount fell to $108.2M but the CapEx-to-revenue ratio spiked to 12.0% — a misleading ratio driven almost entirely by the collapse in revenue rather than new spending. By fiscal 2025, CapEx was slashed to just $23.5M (2.0% of revenue), and Q1 2026 shows further compression to $3.7M (1.2% of revenue). This dramatic pullback signals management is in capital preservation mode, deferring growth investments until profitability stabilizes. While this reduces near-term cash burn, sustained underinvestment could eventually weigh on competitive positioning, particularly in R&D-intensive product categories.
Growth
| CAGR Window | Start Year (Revenue) | End Year (Revenue) | CAGR |
|---|---|---|---|
| 3-Year (FY2022 → FY2025) | FY2022: $3,110.3M | FY2025: $1,184.4M | -27.5% |
| 5-Year (FY2020 → FY2025) | FY2020: $1,459.3M | FY2025: $1,184.4M | -4.1% |
| 10-Year (FY2016 Jun → FY2025) | FY2016 (Jun): $489.8M | FY2025: $1,184.4M | +9.2% |
The CAGR data captures the full arc of SolarEdge's story in stark terms. The 3-year CAGR of -27.5% reflects the violent revenue collapse from the 2022 peak through fiscal 2025 — one of the sharpest multi-year contractions seen in the sector. The 5-year CAGR of -4.1% shows that even relative to fiscal 2020, the company has shrunk slightly in revenue terms, erasing roughly half a decade of top-line progress. The 10-year CAGR of +9.2% provides the only bright framing: measured from mid-2016, the company has still nearly tripled its revenue base, underscoring that the core technology and market position were genuinely valuable before the recent downturn disrupted the trajectory.
Plain English Summary
SolarEdge was once one of the cleanest growth stories in renewable energy hardware — a company with expanding margins, rising revenues, and a market-leading inverter technology. That story fell apart between 2023 and 2024, when a perfect storm of European demand weakness, inventory overhangs, Chinese competitive pressure, and restructuring costs pushed the company to its worst financial performance since going public. Revenue dropped from over $3.1 billion in fiscal 2022 to roughly $900 million in fiscal 2024, and the company posted enormous losses that wiped out years of accumulated profits. The good news visible in the data is that fiscal 2025 and the first quarter of 2026 show early signs of stabilization: revenue is recovering modestly, gross margins have returned to positive territory (22% in Q1 2026), and capital expenditures have been dramatically cut to preserve cash. The balance sheet carries very little debt, which is a meaningful cushion as management works through the restructuring. However, the company is not yet operationally profitable, operating margins remain deeply negative, and the path back to the 30%+ gross margins and double-digit operating margins of the 2017–2021 era is far from certain. Investors watching SEDG are essentially betting on whether management can right-size the cost structure, fend off intensifying competition, and benefit from any recovery in global solar installation demand — none of which is guaranteed in the near term.
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