SolarEdge falls 12% as the company projects Q1 sales well below expectation
SolarEdge Technologies (SEDG) released its earnings report for the fourth quarter of the year. While the company reported a narrower-than-expected loss, it fell short of analysts' sales estimates. This resulted in a decline in SolarEdge's stock price, as the company also provided a lower sales forecast for the first quarter than anticipated. Shares tumbled from $84 to $64 in reaction but were able to recover approximately half of those losses in after hours trade.
In terms of financials, SolarEdge reported revenues of $316.0 million for the fourth quarter, representing a 65% decline compared to the same period last year. Revenues from the solar segment were $282.4 million, down 66% from the previous year.
The company's gross margin also faced challenges, with a negative 17.9% on a GAAP basis and a 3.3% non-GAAP gross margin. The gross margin from the solar segment was 4.0%. Operating expenses for the quarter were $181.2 million, up 14% from the previous quarter. Non-GAAP operating loss was $107.8 million, compared to an income of $149.6 million in the previous year.
The company posted a loss of $0.92 per share, which, despite being an operational shortfall, was a narrower figure than the $1.34 per share FactSet consensus loss anticipated by analysts. This piece of performance indicated SolarEdge managed a form of cost-efficiency or revenue management that fared better than the heavily bearish environment might suggest.
The company expects Q1 revenues to range from $175 million to $215 million. Non-GAAP gross margin is projected to be between negative 3% and positive 1 % with the inclusion of approximately 850 basis points of net IRA (Investment Tax Credit) manufacturing tax credit. The solar segment's gross margin is expected to be within the range of 1% to 5% with the inclusion of approximately 900 basis points of net IRA manufacturing tax credit.
SolarEdge has faced challenges within the solar industry, with rising interest rates and weakened demand impacting its performance. The company's stock lost 67% in 2023 and was dropped from the S&P 500.
In response to market conditions, SolarEdge implemented cost reduction measures and cut 900 jobs in January. Despite these difficulties, SolarEdge remains optimistic about its position in the industry and its expanding product portfolio.
It is worth noting that the Energy-Solar industry as a whole has experienced a decline, ranking as the worst overall performer among 197 industry categories for most of the previous year. The collective performance of the industry is down 7% year-to-date.
In conclusion, SolarEdge Technologies reported a narrower-than-expected loss for the fourth quarter but missed sales estimates. The company's performance was impacted by factors such as rising interest rates and weakened demand within the solar industry. However, SolarEdge remains confident in its ability to navigate these challenges and capitalize on future growth opportunities through its expanding product portfolio and cost reduction measures. Investors will be closely monitoring the company's performance in the coming quarters to assess its progress in this evolving market.