Solaredge Technologies, Inc.: Form 10-Q for the period ended Sep 30, 2025

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this Form 10-Q or statements incorporated by reference from documents we have filed with the Securities and Exchange Commission may contain forward-looking statements that are based on our management’s expectations, estimates, projections, beliefs and assumptions in accordance with information currently available to our management. Forward-looking statements should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this report. This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, backlog, industry and regulatory environment, effects of acquisitions, growth opportunities, potential future impairments, and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward-looking statements. Forward-looking and other statements regarding our sustainability efforts and aspirations are not an indication that these statements are necessarily material to investors or requiring disclosure in our filing with the Securities and Exchange Commission (“SEC”). In addition, historical, current and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future, including future rule-making. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this filing. Important factors that could cause actual results to differ materially from our expectations include:

• future demand for renewable energy including solar energy solutions;
• our ability to forecast demand for our products accurately and to match production to such demand as well as our customers' ability to forecast demand based on inventory levels;
• changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Inflation Reduction Act and the One Big Beautiful Bill Act;
• changes in the U.S. and global trade environments, including the imposition and/or increase of import tariffs or other restrictive trade measures;
• ability to successfully operate our global operations with a reduced work force;
• macroeconomic conditions in our domestic and international markets, such as inflation concerns, interest rates and recessionary concerns;
• changes, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications;
• the retail price of electricity derived from the utility grid or alternative energy sources;
• interest rates and supply of capital in the global financial markets in general and in the solar market specifically;
• competition, including introductions of power optimizer, inverter and solar photovoltaic (“PV”) system monitoring products by our competitors;
• developments in alternative technologies or improvements in distributed solar energy generation;
• historic cyclicality of the solar industry and periodic downturns;
• product quality or performance problems in our products;
• loss of key executives, and our ability to retain key personnel and attract additional qualified personnel
• shortages, delays, price changes, or cessation of operations or production affecting our suppliers of key components;
• delays, disruptions, and quality control problems in manufacturing;
• our dependence upon a small number of outside contract manufacturers and limited or single source suppliers;
• changes to net metering policies or the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications;
• capacity constraints, delivery schedules, manufacturing yields, and costs of our contract manufacturers and availability of components;
• performance of distributors and large installers in selling our products;
• consolidation in the solar industry among our customers and distributors;
• our ability to effectively manage changes in our organization, expansion into new markets, or discontinuing businesses;
• our ability to recognize expected benefits from restructuring plans;
• any unauthorized access to, disclosure, or theft of personal information or unauthorized access to our network or other similar cyber incidents;
• our ability to implement our new Enterprise Resource Planning ("ERP") system;
• the impact of the continued U.S. government shutdown;
• our ability to integrate acquired businesses;
• disruption to our business operations due to the evolving state of war in Israel and political conditions related to the war and Israeli government's plans to significantly reduce the Israeli Supreme Court's judicial oversight;
• our dependence on ocean transportation to timely deliver our products in a cost-effective manner;
• fluctuations in global currency exchange rates;
• the impact of evolving legal and regulatory requirements, including corporate social responsibility and sustainability, requirements;
• existing and future responses to and effects of pandemics, epidemics or other health crises;
• federal, state, and local regulations governing the electric utility industry with respect to solar energy;
• business practices and regulatory compliance of our raw material suppliers;
• our ability to maintain our brand and to protect and defend our intellectual property;
• volatility of our stock price;
• our customers’ financial stability, creditworthiness, and debt leverage ratio;
• our ability to effectively design, launch, market, and sell new generations of our products and services;
• our ability to retain, and events affecting, our major customers;
• natural disasters, public health events and other disruptions;
• impairment of our goodwill or other long-lived and intangible assets;
• our liquidity and ability to service our debt; and

the other factors set forth below in Part II, Item 1.A under “Risk Factors and in Part I, Item 1A under Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Overview

We develop, manufacture and sell products in a solar segment that addresses a broad range of energy market segments through our diversified product offering, including residential, commercial and large scale photovoltaic or PV, home energy management, grid services and virtual power plants. In prior years, we also had product offerings for the e-mobility market, automation machines (“Automation Machines”) and energy storage. In October 2023, we decided to discontinue our light commercial vehicle (“LCV”), e-Mobility activity. In October 2024, we completed the sale of Automation Machines. Additionally, in November 2024, the Company announced the closure of our Energy Storage Division. On September 4, 2025, as part of the decision to close our Energy Storage Division, we sold our last battery cell manufacturing facility in South Korea. In April 2025, we divested from our PV tracker business, as part of our effort to focus on our core activities.

Following the sale of Automation Machines and the discontinuation of our Energy Storage activity in 2024, the Company now operates as one operating segment, the Solar segment, that constitutes consolidated results.

In light of the Inflation Reduction Act (the “IRA”) legislation in the United States, which incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of product with domestic content, as well as by incentivizing local manufacturing of our products, we manufacture the vast majority of our products in the United States. This includes residential inverters in Texas, optimizers and commercial inverters in Florida, and manufacturing of batteries in Utah. As part of our effort to streamline and centralize, we have discontinued manufacturing in China, Mexico, and Hungary. We continue to manufacture a minor portion of our products in Israel, at our Sella 1 facility. We also continue to maintain manufacturing capabilities in Vietnam, with a third-party manufacturer. As of September 30, 2025, we shipped approximately 140.0 million power optimizers, 6.1 million inverters and 418.0 thousand batteries for PV applications. Over 4.4 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform. As of September 30, 2025, we shipped approximately 60.1 GW of our DC optimized inverter systems and approximately 3.0 GWh of our batteries for PV applications.

Our revenues for the three months ended September 30, 2025, and 2024 were $340.2 million and $235.4 million, respectively. Gross profit as a percentage of revenue was 21.2% for the three months ended September 30, 2025, compared to our gross loss as a percentage of revenue of 309.1% for the three months ended September 30, 2024. Net loss for the three months ended September 30, 2025, and 2024 was $50.1 million and $1,230.8 million, respectively.

Our revenues for the nine months ended September 30, 2025, and 2024 were $849.1 million and $705.2 million, respectively. Gross profit as a percentage of revenue was 14.3% for the nine months ended September 30, 2025, compared to our gross loss as a percentage of revenue of 108.5% for the nine months ended September 30, 2024. Net loss for the nine months ended September 30, 2025 and 2024 was $273.3 million and $1,518.9 million respectively.

Global Circumstances Influencing our Business and Operations

Demand for Products

A prolonged softness in demand in the global market for solar products has continued to adversely impact the solar industry. Additionally, uncertainty related to changes in tariffs, trade policies, legislation, and guidance including from H.R.1, may further contribute to market volatility and adversely impact customer demand for our products, pricing and our financial performance. Despite a prolonged softness in demand , we have seen an increase in sales due to more normalized channel inventory in both the United States and in Europe. Additionally, the attachment rate of batteries within solar installations is rising globally, which we believe has led an increase in demand for our batteries.

Impact of the H.R.1 on U.S. Tax Incentives

On July 4, 2025, H.R.1, was enacted into law introducing amendments to the clean energy tax credits contained in the IRA. The IRA provides energy tax credits that are significant to SolarEdge and its U.S. based customers, and material changes thereto could adversely affect our revenue, our eligibility for certain tax credits, tax credits available to our customers, competitiveness and demand for our products and our financial condition. H.R.1 accelerates the phase-out timeline for certain credits and imposes new eligibility criteria.

Section 45X of the Internal Revenue Code (the “Code”), as enacted by the IRA, offers Advanced Manufacturing Production Tax Credits (“AMPTC”s) that incentivize the manufacturing of eligible components within the U.S. H.R.1 does not shorten the term of such Section 45X credits. The Company established manufacturing capabilities in the U.S. in 2023, and further expanded such capabilities in 2024 and 2025. On October 24, 2024, regulations concerning the application of Section 45X were published by the U.S. Treasury Department which contain detailed rules concerning eligibility, qualifying and accounting for AMPTCs. Of particular relevance to the Company are the tax credits that we generate as a result of rules concerning the qualification and measurement of AMPTCs to Residential Inverters, Commercial Inverters and DC-Optimized Inverter Systems that we manufacture in the United States. In 2024 and the first nine months of 2025, we sold a significant part of the AMPTCs that we generated from our U.S. production of eligible components.

Among other changes, H.R.1 shortens the term of the investment tax credit and production tax credit under Section 48E and 45Y of the Code, used by customers of SolarEdge who are engaged in third-party ownership (“TPO”) models, such as residential solar leases and power purchase agreements, and commercial solar customers and developers, shortening the end date from 2034 to 2027. However, H.R.1 also includes a 12-month period in which such customers can begin construction giving them four years to complete their projects. Projects begun after twelve months from enactment of H.R.1 must be placed in service by December 31, 2027, to receive the credit. H.R.1 eliminates the individual residential tax credit under Section 25D of the Code at the end of 2025. These changes may negatively impact the eligibility of our customers and individuals to obtain tax credits, which may negatively affect the overall demand for our products.

H.R.1 also amends the domestic content bonus credit rules for Section 48E projects. Projects commencing construction after June 16, 2025 must meet a 45% domestic content threshold, up from 40%, and the threshold thereafter increases on an annual basis until 2029. In addition, H.R.1 introduced new Foreign Entity of Concern (“FEOC”) requirements for Sections 45X, 45Y, and 48E of the Code. These restrictions will require threshold percentages of non FEOC components that increase over time, beginning January 1, 2026. If we are unable to provide components with non-FEOC percentages towards their total requirement, our customers’ eligibility to qualify for certain tax credits could be impaired, which may adversely affect our revenue, gross margins, business operations and competitive position. In addition, beginning January 1, 2026, in order to receive the 45X credit manufacturers must also reach a required percentage of non-FEOC content in their manufactured components. If the Company is unable to reach that required percentage, it could have adverse impacts on our gross margins.

On August 15, 2025, the U.S. Treasury Department and the IRS released Notice 2025-42, its first set of guidance for H.R.1 related to beginning of construction requirements applicable to our customers. While it removed the ability for projects over 1.5 GW to utilize the 5% safe harbor method, it kept in place the physical work test method for all projects. The U.S. Treasury Department is expected to provide additional guidance on the FEOC requirements included in H.R. 1 that could create challenges for the Company to meet the FEOC requirements or to assist our customers in meeting them. If we are unable to meet the requirements this may adversely affect our revenue, or our customers eligibility to obtain certain tax credits, the overall demand for our products, our results of operations and cash flows.

Trade Tariff Uncertainties

The current trade situation is creating uncertainty about what impact new or existing tariffs, trade restrictions or retaliatory actions may have on us, the solar industry, our partners, and our customers. We have relocated our contract manufacturing to the United States, where we manufacture the vast bulk of our products. We continue to manufacture a minor portion of our products in Israel, at our Sella 1 facility. Certain critical subcomponents for our products are still sourced from outside the United States. If not resolved, the escalation in trade tensions or the implementation of broader tariffs, trade restrictions or other retaliatory measures on our products or components or subcomponents originating from countries outside of the United States, could adversely impact our ability to source necessary components or subcomponents, manufacture products at competitive cost, or sell our products at prices customers are willing to pay. In addition, retaliatory measures from other countries on products originating from the United States for export could adversely impact our ability to sell our products at competitive prices in such countries. Certain of the subcomponents used in our products are being imported to the United States from China, which may be subject to significantly increased tariffs. In light of the aforementioned, we continue to adjust our supply chains and are exploring alternative suppliers outside of China, however, there is no assurance that we will be successful in identifying suitable alternatives, or that such alternatives, if identified, will not result in increased costs or reduced operational efficiency.

If the price of solar power systems increases, as well as the cost of manufacturing our products in the United States, the use of solar power systems could become less economically feasible and could further reduce our gross margins or reduce the demand of solar power systems manufactured and sold, which in turn may decrease demand for our products. Additionally, existing or future tariffs may negatively affect key partners, suppliers and manufacturers. Such outcomes could adversely affect the amount or timing of our revenue, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products. Any such developments could materially and adversely affect our business operations, results of operations and cash flows.

Disruptions Due to the War in Israel

Due to the war that began on October 7, 2023, some of our employees in Israel were called to active reserve duty and additional employees may be called in the future, if needed. In the three months ended September 30, 2025, approximately 6.3% of our employees in Israel were called to active reserve duty for varying periods. On October 9, 2025, Israel, Hamas, the United States and other countries in the region agreed to a framework for a ceasefire in Gaza between Israel and Hamas. It is unknown whether this ceasefire will endure, or if other conflicts in Gaza, Lebanon, Yemen, Iran, or in the broader region will reemerge or escalate in the future.

While our offices and facilities are open worldwide, including in Israel, and, to date, we have not had material disruptions to our ability to manufacture and deliver products and services to customers. A reemergence of conflicts in Israel could materially adversely affect our business, financial condition, and results of operations. Due to the ongoing and evolving nature of the conflict in Israel, and the extent of these events, the adverse effect on our business operations is still unknown.

The majority of our key employees and officers are residents of Israel. If any of our facilities in Israel were to be damaged, destroyed or otherwise rendered unable to operate, whether due to war, acts of hostility, earthquakes, fire, floods, storms, other natural disasters, employee malfeasance, terrorist acts, power outages or otherwise, or if performance of our research and development is disrupted for any other reason, such an event could delay commercialization of our products, and if we choose to manufacture all or any part of them internally, jeopardize our ability to manufacture our products as promptly as our prospective customers will likely expect, or possibly at all. If we experience delays in achieving our development objectives within a timeframe that meets our prospective customers’ expectations, our business, prospects, financial results and reputation could be harmed.

Key Operating Metrics

In managing our business and assessing financial performance, from time to time we have supplemented the information provided in our financial statements with other operating metrics, such as inverters shipped, power optimizers shipped, Megawatts shipped, and Megawatt hours shipped. These operating metrics have been utilized historically by our management to evaluate the acceptance of our products, measure our performance, identify trends affecting our business, and formulate projections. In the third quarter of 2025, we re-evaluated the key operating metrics that we have historically used to measure our operating performance to improve their accuracy and relevance to the Company's business. This process includes our application of new data, technologies, and/or product changes that may allow us to identify metrics that we view to be the most reflective of our business.

Specifically, the markets that we serve are increasingly transitioning away from discreet product purchases and toward more comprehensive systems and solutions. This trend is occurring across all of our regions and end markets. As a result of these market trends, we are adjusting our technology platform and go to market strategies to cater to this trend by offering more comprehensive solutions. These trends also result in the cost of our inverter, optimizer, and energy storage products becoming a widely varying fraction of the overall value of the solutions that we provide. In addition, the ASP calculation for these units also widely varies due to diverse end market exposure. As such, trends in costs and selling prices per megawatt and megawatt hour are less representative of our overall business performance. We believe that this trend will only continue to become more prevalent in the future. Additionally, the Company believes that revenue recognition is a more accurate measurement than products shipped, for the purpose of assessing the Company’s actual earnings rather than mere operational activity. In some cases, products shipped may not be recognized as revenue in a specific quarter due to timing of delivery, and results may differ as such in the metrics used currently in our financial statements. Accordingly, management has determined that i) inverters shipped1, ii) optimizers shipped2, and iii) MWh of batteries shipped3, should be removed as key operating metrics, starting with the fourth quarter of 2025, in favor of i) inverters recognized as revenue, ii) optimizers recognized as revenue, and iii) MWh of batteries recognized as revenue, which we believe would accurately reflect the Company’s actual operations. In addition, we intend to begin disclosing revenue derived from inverters, optimizers and batteries on a quarterly basis within our upcoming quarterly reports on Form 10Q.

In an effort to simplify the Company’s product portfolio and streamline our business, we plan on reducing the variety of Stock Keeping Units ("SKU"), in a manner in which we would no longer be able to track Megawatts shipped as a metric. The move to our Single SKU concept means that the Company will not be able to determine the AC power rating of inverters at the time of shipment. The AC power rating will only be determined once it is installed in the field, which typically occurs at least 6 months after shipment and can be altered in accordance with an end users needs. As a result, the Company will no longer be able to provide Megawatts shipped4 as key operating metrics, starting with the fourth quarter of 2025.

Key Operating Metrics Intended to be Removed:

1 Excluding batteries for PV applications, based on the aggregate nameplate capacity of inverters shipped during the applicable period. Nameplate capacity is the maximum rated power output capacity of an inverter, as specified by the manufacturer.

Key Operating Metrics Intended to be Included:

1 The Company believes that its financial performance is better reflected by revenue recognized as opposed to products shipped, which reflects operating activity.

2 Id.

3 Id.

4 With the transition to the Single SKU concept, the Company will no longer be able to determine the power rating of inverters at the time of shipment, as this power rating will only be established upon installation in the field, typically occurring at least six months post-shipment.

Results of Operations

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report.

The following table sets forth selected consolidated statements of loss data for each of the periods indicated.

(In thousands)

SOLAREDGE TECHNOLOGIES INC. | 2025 Form 10-Q | 9

Comparison of three and nine months ended September 30, 2025, and the three and nine months ended September 30, 2024

Revenues

(In thousands)

Revenues increased by $104.7 million, or 44.5%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to (i) an increase of $105.0 million related to an increase in the number of inverters and power optimizers sold; and (ii) an increase of $16.7 million related to an increase in the number of batteries for PV applications sold; these were partially offset by (i) a decrease of $10.8 million in revenues due to the discontinuation of our Energy Storage Business; and (ii) a decrease of $4.3 million related to less ancillary solar products sold.

Revenues from outside of the U.S. comprised 40.3% of our revenues in the three months ended September 30, 2025 compared to 56.2% in the three months ended September 30, 2024.

The number of power optimizers recognized as revenues increased by approximately 1.2 million units, or 67.1%, from approximately 1.8 million units, in the three months ended September 30, 2024, to approximately 2.9 million units in the three months ended September 30, 2025. The number of inverters recognized as revenues increased by approximately 38.5 thousand units, or 71.0%, from approximately 54.2 thousand units in the three months ended September 30, 2024 to approximately 92.7 thousand units in the three months ended September 30, 2025. The megawatt hours of batteries for PV applications recognized as revenues increased by approximately 44.9 megawatt hours, or 24.2%, from approximately 185.6 in the three months ended September 30, 2024 to approximately 230.0 megawatt hours in the three months ended September 30, 2025.

Our blended Average Selling Price (“ASP”) per watt for solar products excluding batteries for PV applications is calculated by dividing the sales of solar products, excluding the sales of batteries for PV applications, by the name plate capacity of inverters shipped. Our blended ASP per watt for solar products shipped excluding batteries for PV applications decreased by $0.017, or 8.8%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024. This decrease in blended ASP per watt is primarily attributed to a decrease in the sale of residential products that are characterized by higher ASP per watt. This decrease in blended ASP per watt was partially offset by a higher number of power optimizers shipped, compared to the number of inverters shipped.

Our blended ASP per watt/hour for batteries for PV applications is calculated by dividing batteries for PV applications sales, by the nameplate capacity of batteries for PV applications shipped. Our blended ASP per watt/hour for batteries for PV applications decreased by $0.013, or 4.2%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The decrease in blended ASP per watt/hour is primarily attributed to a price reduction,of our batteries for PV applications mainly in Europe, which was intensified by an increase in sales in Europe compared to sales in the U.S.

Revenues increased by $143.8 million, or 20.4%, in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to (i) an increase of $179.7 million related to an increase in the number of inverters and power optimizers sold; (ii) an increase of $40.9 million related to the higher number of batteries for PV applications sold; these were partially offset by (i) a decrease of $38.2 million related to less ancillary solar products sold; (ii) a decrease of $27.6 million in revenues due to the discontinuation of our Energy Storage Business; and (iii) a decrease of $8.2 million in revenues from automation machines, which was sold in October 2024..

Revenues from outside of the U.S. comprised 38.7% of our revenues in the nine months ended September 30, 2025 compared to 62.3% in the nine months ended September 30, 2024.

The number of power optimizers recognized as revenues increased by approximately 2.9 million units, or 59.4%, from approximately 4.8 million units, in the nine months ended September 30, 2024, to approximately 7.7 million units in the nine months ended September 30, 2025. The number of inverters recognized as revenues increased by approximately 69.0 thousand units, or 37.9%, from approximately 181.9 thousand units in the nine months ended September 30, 2024 to approximately 250.8 thousand units in the nine months ended September 30, 2025. The megawatt hours of batteries for PV applications recognized as revenues increased by approximately 212.0 megawatt hours, or 52.3%, from approximately 405.0 megawatt hours in the nine months ended September 30, 2024 to approximately 617.0 megawatt hours in the nine months ended September 30, 2025.

Our blended ASP per watt for solar products shipped excluding batteries for PV applications decreased by $0.016, or 8.6%, in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This decrease in blended ASP per watt is primarily attributed to price reductions. This decrease in blended ASP per watt was partially offset by a higher number of power optimizers shipped, compared to the number of inverters shipped; as well as higher ASP due to increase in sales in the U.S. compared to sales in Europe, which is characterized by a higher demand for residential products, which have a higher ASP per watt out of our total solar product mix.

Our blended ASP per watt/hour for batteries for PV applications decreased by $0.059, or 16.8%, in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The decrease in blended ASP per watt/hour is primarily attributed to a price reduction,of our batteries for PV applications mainly in Europe, which was intensified by an increase in sales in Europe compared to sales in the U.S, as well as, an increase in the sale of our three-phase battery that is sold at a lower ASP per watt/hour.

Cost of Revenues and Gross Profit (loss)

(In thousands)

Cost of revenues decreased by $695.2 million, or 72.2%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to:

• a decrease of $666.6 million related to prior year inventory write-down accruals; and
• a decrease , in direct cost of revenues sold, of $8.6 million, associated primarily with the AMPTC recognized and a decrease in shipment costs, which was partially offset by the increase in the volume of revenues.

Gross profit as a percentage of revenue was 21.2% in the three months ended September 30, 2025, compared to gross loss as a percentage of revenue of 309.1%, in the three months ended September 30, 2024, primarily due to:

• a decrease of inventory write-down accruals resulting in higher gross margin of approximately 312.3%; and
• lower absolute fixed and other production related costs, which were divided this quarter by significantly higher revenue, resulting in higher gross margin of approximately 22.0%.

Cost of revenues decreased by $742.9 million, or 50.5%, in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to:

• a decrease of $676.3 million related to prior year inventory write-down accruals;
• a decrease in warranty expenses and warranty accruals of $39.8 million associated primarily with a lower cost of materials;
• a decrease in direct cost of revenues sold of $9.2 million associated primarily with the AMPTC recognized and a decrease in shipment costs which was partially offset by the increase in revenues; and
• a decrease in personnel-related costs of $10.4 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics.

Gross profit as a percentage of revenue was 14.3% in the nine months ended September 30, 2025 compared to gross loss as a percentage of revenue of 108.5% in the nine months ended September 30, 2024 primarily due to:

• a decrease of inventory write-down accruals resulting in higher gross margin of approximately 111.8%; and
• lower absolute fixed and other production related costs, which were divided this period by significantly higher revenue, resulting in higher gross margin of approximately 7.0%;

Operating Expenses:

Research and Development

(In thousands)

Research and development costs decreased by $16.2 million or 23.1%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to:

• a decrease in personnel-related costs of $12.9 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics;
• a decrease in depreciation and amortization of $1.6 million; and
• a decrease in expenses related to consulting and sub-contracting of $1.5 million.

Research and development costs decreased by $45.5 million or 21.1%, in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to:

• a decrease in personnel-related costs of $32.6 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics;
• a decrease in depreciation and amortization of $4.7 million;
• a decrease in material consumption in an amount of $3.7 million; and
• a decrease in expenses related to consulting and sub-contracting of $3.1 million.

Sales and Marketing

(In thousands)

Sales and marketing expenses decreased by $10.5 million, or 28.1%, in the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to:

• a decrease in personnel-related costs of $7.9 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics; and
• a decrease of $1.1 million in marketing expenses.

Sales and marketing expenses decreased by $29.0 million, or 25.0%, in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to:

• a decrease in personnel-related costs of $22.9 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics; and
• a decrease of $2.2 million in marketing expenses.

General and Administrative

(In thousands)

General and administrative expenses decreased by $14.6 million, or 35.5%, in the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to:

• a decrease of $11.3 million in doubtful debt expenses; and
• a decrease in personnel-related costs of $6.0 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics.

These were partially offset by a decrease of $2.7 million related to potential legal claims.

General and administrative expenses decreased by $34.5 million, or 31.1%, in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to:

• a net reversal of doubtful debt in the amount of $16.8 million in the nine months ended September 30, 2025, compared to an expense of $24.3 million, in the nine months ended September 30, 2024, mainly related to the collection of doubtful debt and a lower amount of provisions for doubtful debts; and
• a decrease in personnel-related costs of $11.7 million resulting primarily from our Restructuring Plans designed to reduce operating expenses and align our cost structure to current market dynamics;

These were partially offset by:

• an increase of $11.2 million related to potential legal claims; and
• an increase of $8.1 million primarily due to a penalty for postponing the commencement of our campus lease agreement.

Other operating expense (income), net

(In thousands)

Other operating expenses, net, decreased by $234.3 million in the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to:

• a decrease of $206.7 million in losses related to the impairment of property, plant and equipment;
• a decrease of $22.5 million in losses related to the impairment of intangible assets; and
• a decrease of $2.3 million in losses related to the impairment of goodwill.

Other operating expenses, net, decreased by $195.5 million, in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily due to:

• a decrease of $206.4 million in losses related to the impairment of property, plant and equipment;
• a decrease of $22.5 million in losses related to the impairment of intangible assets;
• a gain in the nine months ended September 30, 2025 of $10.1 million from sale of property, plant, and equipment compared to a loss of $1.8 million in the nine months ended September 30, 2024; and
• an increase of $4.2 million in income related to lower than expected discontinuation charges;

These were partially offset by:

• an increase of $37.1 million related to impairment of held for sale asset; and
• an increase of $18.0 million related to the sale of the PV tracker business.

Financial income (expense), net

(In thousands)

Financial income, net decreased by $2.5 million in the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily due to:

• $0.4 million expenses in the three months ended September 30, 2025 compared to income of $4.6 million as a result of fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S. dollar; and
• a decrease of $3.4 million in interest income related to our marketable securities investments;

These were partially offset by:

• a decrease of $3.9 million due to credit loss related to loans receivable; and
• an increase of $2.2 million mainly due to interest income from loans receivable.

Financial income, net was $5.8 million in the nine months ended September 30, 2025, compared to financial expenses, net in the amount of $2.4 million in the nine months ended September 30, 2024, primarily due to:

• a decrease of $16.5 million in credit loss expenses related to loans receivable; and
• $8.2 million income in the nine months ended September 30, 2025 compared to expenses of $0.5 million in the nine months ended September 30, 2024, as a result of fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S. dollar,

These were partially offset by:

• a decrease of $9.8 million in interest income related to our marketable securities investments.
• expense of $3.6 million in the nine months ended September 30, 2025 compared to income of $0.8 million in the nine months ended September 30, 2024 due to hedging; and
• an increase of $3.9 million in interest expenses primarily related to our Notes 2029.

Other income (expense)

(In thousands)

Other expense increased by $11.1 million in the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, primarily due to an increase of $10.0 million in impairment of investments in privately held companies.

Other expense was $10.8 million in the nine months ended September 30, 2025 as compared to other income of $14.6 million in the nine months ended September 30, 2024, primarily due to:

• a decrease in income of $15.5 million in gain from the repurchase of the 2025 Notes recognized in prior year;
• an increase in expenses of $10.1 million as a result of impairment of investment in privately held company.
• a decrease in income of $3.0 million in realized gain from marketable securities;

These were partially offset by $4.0 million income from sale of an investment in a privately held company.

Income taxes

(In thousands)

Income taxes decreased by $118.5 million in the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The difference is primarily due to the fact that in September 30, 2024 financials we booked a valuation allowance for its losses and deferred tax assets to date.

Income taxes decreased by $71.2 million in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The difference is primarily due to the fact that in September 30, 2024 financials we booked a valuation allowance for its losses and deferred tax assets to date..

Net loss from equity method investments

(In thousands)

Net loss from equity method investments decreased by $0.2 million, or 34.8% in the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Net loss from equity method investments decreased by $0.5 million, or 34.0% in the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

Net loss

(In thousands)

As a result of the factors discussed above, net loss in the three months ended September 30, 2025 and September 30, 2024 was $50.1 million and $1,230.8 million, respectively.

As a result of the factors discussed above, net loss in the nine months ended September 30, 2025 and September 30, 2024 was $273.3 million and $1,518.9 million respectively.

Liquidity and Capital Resources

The following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods:

(In thousands)

(In thousands)

As of September 30, 2025, our cash and cash equivalents were $439.5 million. This amount does not include $59.1 million invested in available-for-sale marketable securities, $47.5 million in restricted cash, and $0.5 million invested in deposits and restricted deposits. Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements and other investments. As of September 30, 2025, we have open commitments for capital expenditures in an amount of approximately $26.5 million. These commitments mainly reflect purchases of automated assembly lines and other machinery related to our manufacturing and operations. We also have purchase obligations in the amount of $530.7 million, related to raw materials and commitments for the future manufacturing of our products.

Beginning in the fourth quarter of 2024, we started to sell AMPTCs. We plan to pursue additional tax credit sales in the future.

We believe that cash provided by operating activities, as well as our cash and cash equivalents, and available-for-sale marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months as well as in the longer term, including the self-funding of our capital expenditure, operational commitments and the redemption of our debt.

Operating Activities

Operating cash flows consist primarily of net loss, adjusted for certain non-cash items and changes in assets and liabilities. Cash provided by operating activities was $51.6 million in the nine months ended September 30, 2025 compared to cash used in operating activities of $351.1 million in the nine months ended September 30, 2024, attributed to a decrease in net loss adjusted for certain non-cash items as well as a decrease in operating working capital requirements.

Investing Activities

Investing cash flows consist primarily of capital expenditures, investment in, sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits, cash used for acquisitions, and disbursements and receipts from collections of loans made by the Company. Cash provided by investing activities increased by $27.6 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by a decrease of $81.7 million in purchase of property plant and equipment, an increase of $55.6 million in proceeds provided by sales and maturities of available-for-sale marketable securities, a decrease of $37.5 million in disbursements of loans made by the Company, an increase of $36.3 million in sale of property plant and equipment, a decrease of $25.4 million in the purchase of privately-held companies, an increase of $23.7 million in proceeds from loans receivables, a decrease of $10.4 million in cash used for a business combination, and a decrease of $10.0 million in purchase of intangible assets, these were partially offset by an increase of $253.7 million in purchases of available-for-sale debt investments.

Financing Activities

Financing cash flows consisted primarily of repurchases of our common stock under the share repurchase program, which expired on December 31, 2024, the issuance, repayment and partial repurchase of convertible senior notes, and our employee equity incentive plans. Cash used in financing activities in the nine months ended September 30, 2025 increased by $329.7 million compared to the nine months ended September 30, 2024, primarily due to an increase of $342.3 million in cash used due to the repayment of our Notes 2025, a decrease of $329.2 million in cash provided by the issuance of the Notes 2029, these were partially offset by a decrease of $262.8 million in cash used for the repurchase of our Notes 2025, a decrease of $50.3 million in cash used in share repurchases, and a decrease of $28.3 million in cash used to purchase the capped call transactions.

Share Repurchases

On November 1, 2023, we announced the approval by the Board of Directors of a share repurchase program which authorized the repurchase of up to $300 million of the Company’s common stock. Under the share repurchase program, repurchases could be made using a variety of methods, which may have included open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or a non-discretionary trading plan or other means, including through 10b5-1 trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the share repurchase program were determined by the Company in its discretion and depended on a variety of factors, including legal requirements, price and economic and market conditions. The program did not obligate the Company to acquire any amount of common stock, it could have been suspended, extended, modified, discontinued or terminated at any time at the Company’s discretion without prior notice, and expired on December 31, 2024. The Company repurchased 753,364 shares under the program.

During the six months ended June 30, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $66.79 per share for a total of $50.3 million.

Convertible Senior Notes

On June 28, 2024, we sold an aggregate principal amount of $300 million of 2.25% convertible senior notes due in 2029 in a transaction exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. The net proceeds from the offering of the Notes 2029 were approximately $293.2 million, after deducting fees and estimated expenses. Separately, we have entered into capped call transactions. We used approximately $25.2 million of the net proceeds from this offering to pay the cost of the capped call transactions and approximately $267.9 million of the net proceeds from this offering to repurchase $285.0 million principal amount of its outstanding 0.000% convertible notes due 2025. As a result of the repurchase of Notes 2025, we recognized a gain of $15.5 million which was recorded under other income. We intend to use the remainder of the net proceeds from the offering for general corporate purposes.

On July 8, 2024, we sold an aggregate principal amount of $37 million of the Notes 2029. The Notes 2029 were sold pursuant to the Initial Purchasers’ exercise of the option granted by the Company to the Initial Purchasers to purchase additional Notes 2029, as described above in Note 11, “Convertible Senior Notes.”

In March 2025 the Company repurchased $5.2 million principal amount of its Notes 2025. The Company recorded a net gain of $146 thousands under other income, from this repurchase.

After such repurchases, an aggregate of $342.3 million principal amount of the Notes 2025 remained outstanding.

We settled all of our remaining Notes 2025 on September 15, 2025, when the Notes 2025 reached maturity. As part of the settlement, we paid $342.3 million in cash towards principal amount of the Notes 2025 and no shares were issued in connection with the settlement as the conversion value was less than the principal amount of the Notes 2025. Following the settlement, there were no Notes 2025 outstanding as of September 30, 2025.

Critical Accounting Policies and Significant Management Estimates

Management believes that there have been no significant changes during the nine months ended September 30, 2025 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, except as mentioned in Note 1, “General” (if any).

We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in foreign currency exchange rates, customer concentrations, interest rates and commodity prices. We do not hold or issue financial instruments for trading purposes.

Foreign Currency Exchange Risk

Approximately 34.9% and 62.3% of our revenues for the nine months ended September 30, 2025, and September 30, 2024, respectively, were earned in non-U.S. dollar denominated currencies other than the U.S. dollar, principally the Euro. Our expenses are generally denominated in the currencies in which our operations are located, primarily the U.S. dollar, NIS, and Euro. Our NIS denominated expenses consist primarily of personnel and overhead costs. Our consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. A hypothetical 10% change in foreign currency exchange rates between the Euro and the U.S. dollar would increase or decrease our net income by $12.8 million for the nine months ended September 30, 2025. A hypothetical 10% change in foreign currency exchange rates between NIS and the U.S. dollar would increase or decrease our net income by $4.5 million for the nine months ended September 30, 2025.

For purposes of our consolidated financial statements, local currency assets and liabilities are translated at the rate of exchange to the U.S. dollar on the balance sheet date, and local currency revenues and expenses are translated at the exchange rate as of the date of the transaction or at the average exchange rate to the U.S. dollar during the reporting period.

To date, we have used derivative financial instruments, specifically foreign currency forward contracts and put and call options, to manage exposure to foreign currency risks by hedging portions of the anticipated payroll payments denominated in NIS. These derivative instruments are designated as cash flow hedges.

In addition, from time to time we enter into derivative financial instruments to hedge the Company’s exposure to currencies other than the U.S. dollar, mainly forward contracts to sell Euro for U.S. dollars. These derivative instruments are not designated as cash flow hedges.

Concentrations of Major Customers

Our trade accounts receivables potentially expose us to a concentration of credit risk with our major customers. As of September 30, 2025, two major customers accounted for approximately 40.1% of our consolidated trade receivables, net balance. As of September 30, 2024, three major customers jointly accounted for approximately 37.4% of our consolidated trade receivables, net balance. For the three months ended September 30, 2025, one major customer accounted for approximately 23.1% of our total revenues. For the three months ended September 30, 2024, one major customer accounted for approximately 16.7% of our total revenues. For the nine months ended September 30, 2025 two major customers accounted for approximately 32.4% of our total revenues. For the nine months ended September 30, 2024 one major customer accounted for approximately 11.0% of our total revenues.

Commodity Price Risk

We are subject to risk from fluctuating market prices of certain commodity raw materials which are used in our products, including Copper, Lithium, Nickel and Cobalt. Prices of these raw materials may be affected by supply restrictions or other market factors from time to time, and we do not enter into hedging arrangements to mitigate commodity risk. Significant price changes for these raw materials could reduce our operating margins if we are unable to recover such increases from our customers, and could harm our business, financial condition, and results of operations.

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, 2025. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our chief executive officer and chief financial officer concluded, as of September 30, 2025, that our disclosure controls and procedures were effective and operating to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and to provide reasonable assurance that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

We substantially completed the implementation of our new ERP system during the fiscal quarter ended June 30, 2025. We are performing our post-implementation activities. The implementation of that ERP system is expected to, among other things, improve user access security and automate a number of accounting, back office and reporting processes and activities, thereby decreasing the amount of manual processes previously required. The implementation resulted in, and the post-implementation activities may result in, changes to certain of our processes and procedures. These changes have been and will continue to be subject to our evaluation of the operating effectiveness of internal controls over financial reporting. Except for the implementation of the new ERP system as described in this paragraph, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the other information set forth in this report, you should carefully consider the risks set forth below and the risk factors as described in Part I, Item 1A, “Risk Factors”, in our Annual Report on Form 10-K for the year ended December 31, 2024. Other than the risk factors set forth below, there have been no material changes to the risk factors previously disclosed in the 2024 Form 10-K.

Changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Inflation Reduction Act and the One Big Beautiful Bill Act could reduce demand for our products, reduce or eliminate tax credits available to us and to our customers, harm our business and otherwise adversely impact our results of operations.

National, state and local government bodies in many countries, including the United States, have provided incentives in the form of rebates, tax credits, feed-in tariffs and others to manufacturers, system owners, distributors and installers of solar PV systems and battery energy storage systems.

In August 2022, the IRA was signed into federal law. The IRA provided for, among other things, certain incentives, including certain tax credits for solar energy, that are significant to the Company and its U.S. based customers. On July 4, 2025, H.R.1 was enacted into law, introducing amendments to clean energy tax credits contained in the IRA. The H.R.1 accelerates the phase-out timeline for our customers' tax credits and imposes new eligibility criteria for the Company and our customers.

The Company has invested significant resources in establishing our manufacturing presence in the U.S. to benefit from the incentives available under the IRA, including tax credits available to us for manufacturing in the U.S. and tax credits available to certain of our US customers. The Company established manufacturing capabilities in the U.S. in 2023 and further expanded such capabilities in 2024 and 2025. Moreover, we incorporate into our planning and agreements with our customers and suppliers certain assumptions regarding U.S. tax incentives. Material changes thereto could adversely affect our revenue, our eligibility for certain tax credits, tax credits available to our customers, competitiveness and demand for our products and our financial condition.

Section 45X of the Code, as enacted by the IRA, offers Advanced Manufacturing Production Tax Credits (“AMPTC”s) that incentivize the manufacturing of eligible components within the U.S. Of particular relevance to the Company are the tax credits that we generate as a result of rules concerning the qualification and measurement of AMPTCs to Residential Inverters, Commercial Inverters and DC-Optimized Inverter Systems that we manufacture in the United States. H.R.1 does not shorten the term of such Section 45X credits.

Among other changes, H.R.1 shortens the term of the investment tax credit and production tax credit under Section 48E and 45Y of the Code, available to the Company’s customers, who are engaged in third-party ownership (“TPO”) models, such as residential solar leases and power purchase agreements, and commercial solar customers and developers, shortening the end date from 2034 to 2027. H.R.1 also includes a 12-month window in which such customers can begin construction, giving them four years to complete their projects. Projects begun after twelve months from enactment of H.R.1 must be placed in service by December 31, 2027, to receive the credit. H.R.1 also amends the domestic content bonus credit rules for Section 48E projects: Projects commencing construction after June 16, 2025 must meet a 45% domestic content threshold, up from 40%, and the threshold thereafter increases by 5% on an annual basis until 2029. H.R.1 eliminates the individual residential tax credit under Section 25D of the Code at the end of 2025. These changes may negatively impact the eligibility of our customers and individuals to obtain tax credits, which may negatively affect the overall demand for our products.

H.R.1 has also introduced new Foreign Entity of Concern (“FEOC”) requirements including for Sections 45X, 45Y, and 48E of the Code. These restrictions will require threshold percentages of non-FEOC material assistance that increase over time, for projects that begin on January 1, 2026. On July 7, 2025, the President issued an Executive Order titled “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources.” In response, on August 15, 2025, the U.S. Treasury Department released IRS Notice 2025-42, its first set of guidance for H.R. 1 related to beginning of construction requirements applicable to our customers. While it removed the ability for projects over 1.5 GW to utilize the 5% safe harbor method, it kept in place the ability to utilize the physical work test method for all size projects and codified that inverters could be utilized for this method. The U.S Department of Treasury is expected to provide additional guidance on the FEOC requirements included in H.R. 1 that could create challenges for the Company to meet the FEOC requirements or to assist our customers in meeting them. If we are unable to meet the requirements this may adversely affect our revenue, or our customers eligibility to obtain certain tax credits, the overall demand for our products, our results of operations and cash flows.

Unfavorable regulatory treatment, or guidance, expiration of or changes to the benefits made available, which we relied upon in structuring certain projects and investments, or any adverse impacts on our ability to increase production in the U.S. in a timely manner to benefit from the incentives available under the IRA and H.R.1, could adversely impact our business and financial condition. The U.S. Administration and to a lesser extent, portions of the European Union, have expressed a prioritization of fossil fuels over renewable energy. For example, in Germany there is a discussion regarding the possibility of reducing small residential customer’s feed-in tariffs. If successful, certain of these legislative actions could further slow the solar market potentially resulting in adverse effects on overall demand for our products, impacts to our revenue, operations and cash flows.

Changes in the global trade environment, including the United States trade environment, such as the increase or imposition of import tariffs, could adversely affect the amount or timing of our revenue, results of operations or cash flows.

The United States has recently imposed significant new tariffs on nearly all products and components imported into the United States and could propose additional tariffs or increases to those already in place. We have relocated our contract manufacturing to the United States, where we manufacture the vast bulk of our products. We continue to manufacture a minor portion of our products in Israel, at our Sella 1 facility. However, certain components and subcomponents necessary for our products are currently required to be imported from outside the U.S. It is unknown whether and to what extent these tariffs will remain in place or if other new laws or regulations will be adopted. In addition, retaliatory tariffs may be imposed on products exported from the United States to other countries in which we sell our products. Due to broad uncertainty regarding the breadth, timing and extent of any regulatory changes related to trade, in the United States or abroad, we cannot predict the impact, if any, that these changes could have to our business, financial condition, ability to compete, and the results of operations.

It is unknown what effect any such new tariffs or retaliatory actions will have on the solar industry and our customers. The resulting environment of escalating trade tension, retaliatory trade tension, or other trade actions, restrictive measures, additional trade restrictions, or barriers, if implemented on a broader range of products or components from outside the United States, or with respect to products shipped from the United States, could harm our ability to obtain necessary product components or to sell our products at prices customers are willing to pay, which could have a material adverse effect on our business, prospects, results of operations and cash flows.

Furthermore, if the price of solar power systems in the United States increases, as well as the cost of manufacturing our products in the United States, the use of solar power systems could become less economically feasible and could reduce our gross margins or reduce the demand of solar power systems manufactured and sold, which in turn may decrease demand for our products. Additionally, existing or future tariffs could negatively affect key partners, suppliers and manufacturers. Such outcomes could adversely affect the amount or timing of our revenue, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products. It is difficult to predict what further trade-related actions the U.S. and other governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions. As additional new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or if affected countries take retaliatory trade actions, such changes could have a material adverse effect on our business, financial condition, results of operations or cash flows.