Solaredge Technologies, Inc.: Form 10-Q for the period ended Jun 30, 2026

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 and on information currently available to our management. The 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 be profitable in the future;
• the rapidly evolving and competitive nature of the solar industry;
• changes in tax laws, tax treaties, regulations, guidance or the interpretation of them, including the Inflation Reduction Act and the H.R.1;
• fluctuations in demand for solar energy solutions, including if demand for solar energy solutions does not resume growth or grows at a slower rate than anticipated;
• macroeconomic conditions in our domestic and international markets, such as inflation concerns, interest rates and recessionary concerns;
• changes in the U.S. and global trade environments, including the imposition and/or increase of import tariffs or other restrictive trade measures;
• 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 PV market specifically;
• competition, including introduction of power optimizers and inverters, electric vehicle (“EV”) chargers, batteries and photovoltaic (“PV”) system monitoring products by our competitors;
• our reliance on distributors and large installers to assist in selling our products, and the failure of these customers to perform as expected;
• 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;
• changes in our geographic footprint or product and service offerings;
• our dependence upon a small number of outside contract manufacturers and limited or single source suppliers;
• delays, disruptions, and quality control problems in manufacturing;
• shortages, delays, price changes, or cessation of operations or production affecting our suppliers of key components;
• capacity constraints, delivery schedules, manufacturing yields, and costs of our contract manufacturers and availability of components;
• changing political, geopolitical conditions, and the conditions of the global energy market;
• performance of distributors and large installers in selling our products;
• consolidation in the solar industry among our customers and distributors;
• our ability to implement our new Enterprise Resource Planning ("ERP") system;
• discontinuation of our e-Mobility business, energy storage business, and PV Tracker business;
• our ability to successfully operate our global operations with a reduced work force;
• 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;
• attempts by third parties, our employees, or our vendors to gain unauthorized access to our network or seek to compromise our products and services;
• emerging issues related to the development and use of artificial intelligence;
• loss of key executives, and our ability to retain key personnel and attract additional qualified personnel;
• disruption to our business operations due to the evolving conflict in Israel and other conditions in Israel that affect our operations;
• tax benefits that are available to us under Israeli law require us to meet various conditions and may be terminated or reduced in the future;
• difficulty to enforce a judgment of a U.S. court against our officers and directors, to assert U.S. securities laws claims in Israel;
• our dependence on ocean transportation to timely deliver our products in a cost-effective manner;
• entry into business engagements with South Korean military bodies;
• fluctuations in global currency exchange rates;
• the impact of evolving legal and regulatory requirements including emerging corporate social responsibility requirements;
• existing and future responses to and effects of pandemics, epidemics or other health crises;
• reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications;
• changes to net metering policies may reduce demand for electricity from PV systems;
• stringent and changing data privacy and security laws, rules, regulations and other obligations;
• existing electric utility industry regulations and changes to regulations may present technical, regulatory, and economic barriers to the purchase and use of PV systems;
• business practices and regulatory compliance of our raw material suppliers;
• our ability to maintain our brand and to protect and defend our intellectual property;
• claims for remuneration or royalties for assigned service invention rights by our employees;
• impairment of our goodwill or other long-lived and intangible assets;
• volatility of our stock price;
• provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management;
• our certificate of incorporation includes a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum;
• our customers’ financial stability, creditworthiness, and debt leverage ratio;
• our liquidity and ability to service our debt; and

the other factors set forth below in Part II, Item 1A under “Risk Factors” and in Part I, Item 1A under ”Risk Factors” in our Annual Report on Form 10-K/A for the year ended December 31, 2025 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 are a global smart energy technology company. We develop, manufacture and sell products that address a broad range of energy market segments through our diversified product offering, including residential, commercial and large scale PV, energy storage and backup solutions, EV charging capabilities, home energy management, grid services and virtual power plants. By leveraging engineering capabilities and focusing on innovation, safety and reliability, we create smart energy solutions that power our lives and drive future progress. We launched or ramped up sales of several new products in the second quarter of 2026. Most notably, after we successfully launched SolarEdge Nexis, our next-generation residential product portfolio, we continued the rollout of the platform in key markets. We also expanded our commercial energy storage business with the CSS-OD 107, a 107 kWh battery, featuring a 29.9 kW or 49.9 kW battery inverter output, scalable up to 2.1MW hour size sites and the CSS-OD 197, a 197 kWh battery, featuring a 50 kW or 100 kW battery inverter output, scalable up to 4MW hour size sites. Both solutions are suitable for outdoor or indoor installations.

In Q2 2026, we continued the transition of our inverter products to a Single SKU concept. This is a software-defined platform that significantly reduces the complexity of our business for residential and commercial applications globally. It allows us to manufacture and ship one SKU of an inverter to the residential market, and minimal SKUs for the commercial market, which can then be programmed to the desired kilowatt rating in the field. This framework simplifies forecasting, manufacturing, inventory management, logistics, service and support, for both us and our customers. It also adds flexibility for home and business owners who can boost the inverter rating if a larger system is needed in the future.

In light of the Inflation Reduction Act (the “IRA”) in the United States, which incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of products 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 inverters in Texas, power optimizers and inverters in Florida, and 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.

In the second quarter of 2026, we continued to strategically focus on our core markets and product lines to better align resources with markets and product lines that exhibit the strongest potential. As part of this strategic portfolio rationalization, we are concentrating our operations in key jurisdictions while discontinuing local activities in certain countries. Accordingly, we operate as one operating segment that constitutes consolidated results.

Our revenues for the three months ended June 30, 2026 and 2025 were $346.2 million and $289.4 million, respectively. Gross profit as a percentage of revenue for the three months ended June 30, 2026, and 2025 was 27.5% and 11.1%, respectively. Net loss for the three months ended June 30, 2026, and 2025 was $30.8 million and $124.7 million, respectively.

Our revenues for the six months ended June 30, 2026 and 2025 were $656.7 million and $508.9 million, respectively. Gross profit as a percentage of revenue for the six months ended June 30, 2026, and 2025 was 24.9% and 9.8%, respectively. Net loss for the six months ended June 30, 2026, and 2025 was $88.1 million and $223.3 million, respectively.

Global Circumstances Influencing our Business and Operations

Demand for Products

A prolonged softness in demand in the global market for PV products has continued to adversely impact the solar industry. Additionally, uncertainty related to changes in tariffs, trade restrictions and policies, legislation, and guidance including from H.R.1, may contribute to growing market volatility and adversely impact customer demand for our products, pricing and our financial performance. Despite a prolonged softness in demand, in the first half of 2026, we have seen an increase in sales, mainly of our C&I products. Additionally, in the second quarter of 2026, we have seen an increase in demand for our batteries. We expect the softness in demand for PV products to continue in the third quarter and there can be no assurance that our sales will continue to increase or will not decrease.

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

In August 2022, the U.S. government enacted the IRA, which contains several provisions intended to accelerate U.S. manufacturing and adoption of clean energy such as solar, wind, hydrogen and electric vehicles and therefore had positive impacts on our business and operations along with the overall U.S. solar market. Some of the applicable provisions in the IRA that positively impact the market for renewable energy include Section 48E, the tech-neutral investment tax credit ("ITC"), and 45Y, the production tax credit ("PTC"). The IRA includes incentives for residential and commercial solar customers and developers through the inclusion of ITCs for qualifying energy projects of up to 30% with a potential to gain further bonus credits such as through the utilization of Domestic Content. Section 45X of the IRA offers advanced manufacturing production credits (“AMPTCs”) that incentivize the production of eligible components within the United States. In light of such incentives, we established manufacturing capabilities in the United States starting in 2023 and further expanded such capabilities in 2024, 2025 and 2026. On October 24, 2024, the U.S. Internal Revenue Service (the “IRS”) and the U.S. Department of the Treasury (the “Treasury”) issued a Notice of Proposed Rule followed by a Final Rule that became effective on December 27, 2024, concerning the application of Section 45X which contain details concerning eligibility, qualifying and accounting for AMPTCs for components produced and sold after December 31, 2022. 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 2025, and continuing into 2026, we sold a significant part of the AMPTCs that we generated from our U.S. production of eligible components.

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 us and our 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, eliminates the 25D individual homeowner credit, and imposes new eligibility criteria. Among other changes, H.R.1 shortens the term of the ITC and PTC under Sections 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. H.R.1 also included a 12-month period in which such customers who began construction were given four years to complete their projects through the end of 2030. Projects begun after twelve months from enactment (July 4, 2026) of H.R.1 must be placed in service by December 31, 2027, to receive the credit. H.R.1 eliminated 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%. Since January 1, 2026, such threshold was increased to 50% and shall thereafter be further increased by 5% on an annual basis, until 2029. In addition, H.R.1 introduced new Prohibited Foreign Entities ("PFE") requirements for Sections 45X, 45Y, and 48E of the Code. Since January 1, 2026, these restrictions require threshold percentages of non-PFE components that increase over time. Currently, we manufacture components aimed at helping our customers meet their non-PFE percentage requirements. However, if the Treasury were to release new rules or guidance that impact our ability to provide components with non-PFE 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, as of January 1, 2026, in order to receive the 45X credit, manufacturers must also reach a required percentage of non-PFE content in their manufactured components. Today, we meet the required threshold. However, if the Treasury guidance relating to the calculation of non-PFE content should change in a way that would impact our ability to reach that required percentage, it could have adverse impacts on our manufacturing costs, results of operations, cash flows, gross margin, and profits.

On August 15, 2025, the Treasury and the IRS released Notice 2025-42, its first set of guidance for H.R.1 related to the beginning of construction requirements applicable to our customers. While it removed the ability for projects over 1.5 MW to utilize the 5% safe harbor method (still allowing projects equal to or less than 1.5 MW to continue using it), it kept in place the physical work test method for all projects.

On February 12, 2026, the U.S. Department of Treasury and IRS released IRS Notice 2026-15 providing additional guidance on H.R.1 related to the PFE rules enacted in H.R.1. Specifically, this notice confirms the ability to rely on temporary safe harbor tables and existing safe harbor tables for the determination of material assistance from a PFE. This guidance provides answers to several compliance questions related to the Company’s 45X Credits material assistance calculations and its customers' 48E material assistance calculation among other things. While this removed some uncertainty around the Material Assistance Cost Ratio calculation, impending Notice of Proposed Rule and Final Rule on this same topic expected later this year could create challenges for the Company to meet the PFE 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, cash flows, gross margins and profits.

To the extent that tax benefits or credits may be impacted through new regulation, issued guidance, interpretation, or by new laws passed by Congress, our business could be disadvantaged or advantaged. Reductions in AMPTCs, without an offsetting reduction in our manufacturing costs, would adversely affect our results of operations and cash flows, and have an adverse impact on our gross margin, which may include transitioning into a gross loss. We continue to monitor the benefits that may be available to us, such as the availability of tax credits for domestic manufacturers.

Trade and Tariff Uncertainties

The current trade environment continues to create uncertainty regarding the impact of tariffs, trade restrictions and retaliatory measures on our business, the solar industry, our suppliers, and our customers.

On February 20, 2026, the Supreme Court of the United States (the “U.S. Supreme Court”) invalidated certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Following the decision and subsequent actions by the U.S. Customs and Border Protection (“CBP”), we became eligible to claim refunds of previously paid IEEPA-related duties. In the three and six months ended June 30, 2026, the Company received and recognized refunds and associated interest of $13.6 million from CBP related to tariffs paid during fiscal 2025 and the first quarter of fiscal 2026, of which $13.3 million was recognized as a reduction to cost of revenues and $0.3 million was recognized as interest income in the three and six months ended June 30, 2026. Our remaining claims are subject to CBP review and processing, and we cannot provide assurance regarding the amount or timing of any additional refunds.

In addition, following the U.S. Supreme Court's ruling, the U.S. Administration imposed a temporary import surcharge under Section 122 of the Trade Act of 1974 (“Section 122”). The surcharge was initially set at 10% ad valorem on substantially all imports, with a statutory ceiling of 15%, subject to carve-outs for certain goods (e.g., electronics and critical minerals) and products qualifying under the United States-Mexico-Canada Agreement. The surcharge took effect on February 24, 2026, for a maximum period of 150 days. On May 7, 2026, the U.S. Court of International Trade held that the Section 122 proclamation was invalid. This ruling has been appealed, and the U.S. Court of Appeals for the Federal Circuit issued a temporary stay of the ruling pending resolution of the appeal. The evolving legal status and expiration of the Section 122 tariffs create additional uncertainty regarding our tariff exposure and any potential recovery of Section 122 duties paid. If the Section 122 proclamation is ultimately held invalid and refund mechanisms are established, we may be eligible to recover some or all of the Section 122 duties we paid. However, the outcome of the appeal and the availability, timing and amount of any potential refunds remain uncertain and are subject to further judicial and administrative proceedings.

Although the IEEPA tariffs were invalidated, our tariff exposure has not been eliminated. During July 2026, the United States imposed additional tariffs under Section 301 of the Trade Act of 1974 (“Section 301”) on imports from numerous trading partners, generally ranging from 10% to 12.5% and subject to specified exceptions and exemptions. These tariffs are in addition to existing tariff measures, including certain Section 301 tariffs applicable to imports from China. Other trade-related duties may also affect the products, components and raw materials used in our business.

On July 28, 2026, the Federal Communications Commission (the “FCC”) updated its “Covered List,” maintained under the Secure and Trusted Communications Networks Act, to include power inverters produced in foreign countries, effective immediately and prospectively for new product authorizations. Under this action, new inverter models that do not qualify as “domestic end products” (as defined under the Buy American Act, 48 C.F.R. § 25.101(a)) are generally prohibited from receiving the FCC equipment authorizations required to import, market, or sell such products in the United States. The FCC’s order applies to new inverter models and certain equipment modifications requiring FCC equipment authorization in the future and generally does not impact products that were authorized by the FCC prior to this order. We believe that SolarEdge inverter products continue to be eligible for sale and installation under the new order.

We have relocated our contract manufacturing to the United States, where we now manufacture the substantial majority of our products. We continue to manufacture a minor portion of our products in Israel at our Sella 1 facility. Certain components and subcomponents used in our products continue to be sourced from suppliers outside the United States, including from China. Consequently, our cost structure may be affected by existing or future tariffs and other trade measures, including trade restriction orders. In addition, retaliatory measures imposed by other countries on products exported from the United States could adversely affect our international sales. In response to the evolving trade environment, we continue to evaluate and adjust our supply chain and sourcing strategies, including efforts to diversify suppliers and reduce tariff exposure where economically and operationally feasible. However, there can be no assurance that such efforts will fully mitigate the impact of current or future tariffs, trade restrictions or other trade-related measures, and any resulting increases in costs, supply chain disruptions or reductions in demand could adversely affect our business, financial condition and results of operations.

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 in Gaza that began on October 7, 2023, followed by additional military conflicts with Iran and Hezbollah in Lebanon during 2024, 2025 and the first half of 2026, 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 June 30, 2026, approximately 7% of our employees in Israel were called to active reserve duty for varying periods. Despite the ceasefire framework agreed between Israel, Hamas, the United States and other countries in the region and the moderation of the hostilities involving Israel, Iran, Yemen and Lebanon, it is unknown whether any ceasefires or periods of relative calm will endure, or if other conflicts 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.

Performance Measures

In managing our business and assessing financial performance, we supplement the information provided by our financial statements with other operating metrics. These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business and formulate projections. We provide the following metrics: (i) inverters recognized as revenue; (ii) power optimizers recognized as revenue; and (iii) Megawatt hours (MWh) of batteries recognized as revenue.

1 Metrics may not match those disclosed in the 10-Q for June 30, 2025 due to change in performance measures since that time.

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)

Comparison of three and six months ended June 30, 2026, and the three and six months ended June 30, 2025

Revenues

(In thousands)

Revenues increased by $56.8 million, or 19.6%, in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to (i) an increase of $63.0 million related to a higher number of batteries and battery accessories sold; and (ii) an increase of $4.9 million in communication products sold; partially offset by (i) a decrease of $13.9 million in the number of inverters and optimizers sold; and (ii) a decrease of $8.1 million due to the discontinuation of our Energy Storage Business.

Revenues from outside of the U.S. comprised 55.3% of our revenues in the three months ended June 30, 2026 compared to 36.0% in the three months ended June 30, 2025.

The number of power optimizers recognized as revenues decreased by approximately 0.1 million units, or 5.9%, from approximately 2.6 million units in the three months ended June 30, 2025 to approximately 2.5 million units in the three months ended June 30, 2026. The number of inverters recognized as revenues decreased by approximately 23.6 thousand units, or 27.4%, from approximately 86.2 thousand units in the three months ended June 30, 2025 to approximately 62.6 thousand units in the three months ended June 30, 2026. The megawatt hours of batteries recognized as revenues increased by approximately 217.0 megawatt hours, or 103.8%, from approximately 209.0 in the three months ended June 30, 2025 to approximately 426.0 megawatt hours in the three months ended June 30, 2026.

Revenues increased by $147.8 million, or 29.0%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to (i) an increase of $115.0 million related to the higher number of batteries and battery accessories sold; (ii) an increase of $31.1 million related to an increase in the number of optimizers sold; and (iii) an increase of $10.1 million related to an increase in communication products sold ; these were partially offset by (i) a decrease of $17.0 million related to a decrease of inverters sold; and (ii) a decrease of $15.2 million in revenues due to the discontinuation of our Energy Storage Business.

Revenues from outside of the U.S. comprised 52.3% of our revenues in the six months ended June 30, 2026 compared to 37.7% in the six months ended June 30, 2025.

The number of power optimizers recognized as revenues increased by approximately 0.1 million units, or 3.6%, from approximately 4.8 million units, in the six months ended June 30, 2025, to approximately 4.9 million units in the six months ended June 30, 2026. The number of inverters recognized as revenues decreased by approximately 45.0 thousand units, or 28.5%, from approximately 158.1 thousand units in the six months ended June 30, 2025 to approximately 113.1 thousand units in the six months ended June 30, 2026. The megawatt hours of batteries recognized as revenues increased by approximately 371.0 megawatt hours, or 96.1%, from approximately 386.0 megawatt hours in the six months ended June 30, 2025 to approximately 757.0 megawatt hours in the six months ended June 30, 2026.

Cost of Revenues and Gross Profit

(In thousands)

Cost of revenues decreased by $6.2 million, or 2.4%, in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to a decrease in the direct cost of revenues sold of $34.2 million associated mainly with an increase in AMPTC and IEEPA refunds recognized; excluding such AMPTC incentives would have caused us to transition into a gross loss, for both periods presented.

This was partially offset by:

• an increase of $25.2 million in indirect costs of revenue primarily related to inventory write-down accruals; and
• an increase in warranty expenses and warranty accruals of $4.7 million associated primarily with an increase in the volume of products sold.

Gross profit as a percentage of revenue was 27.5% in the three months ended June 30, 2026, compared to 11.1%, in the three months ended June 30, 2025, primarily due to:

• lower absolute fixed and other production related costs, which were divided this period by higher revenues, resulting in higher gross margin of approximately 10.5%; and
• an improvement in the direct cost of revenue of approximately 15.9% associated primarily to product mix and IEEPA refunds recognized.

These were partially offset by an increase in inventory write-down accruals of approximately 9.3%.

Excluding the AMPTC incentives would have caused our gross profit as a percentage of revenue to transition from a gross profit to a gross loss.

Cost of revenues increased by $34.1 million, or 7.4%, in the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to:

an increase in direct cost of revenues sold of $26.3 million, associated primarily with an increase in the volume of products sold, which was partially offset by the AMPTC and IEEPA refunds recognized; excluding such AMPTC incentives would have caused us to transition into a gross loss, for both periods presented; and

• an increase of $25.6 million in indirect costs of revenues primarily related to inventory write-down accruals.

These were partially offset by:

• a decrease in support-related costs of $7.2 million resulting primarily from a decrease in consulting and personnel related costs; and
• a decrease in warranty expenses and warranty accruals of $5.2 million associated primarily with a lower cost of materials and changes in estimates and policies.

Gross profit as a percentage of revenue was 24.9% in the six months ended June 30, 2026 compared to 9.8% in the six months ended June 30, 2025 primarily due to:

• lower absolute fixed and other production-related costs, which were divided this period by significantly higher revenue, resulting in higher gross margin of approximately 13.1%; and
• an improvement in the direct cost of revenue of approximately 7.9% associated primarily with product mix and IEEPA refunds recognized.

These were partially offset by an increase in inventory write-down accruals of approximately 5.9%.

Excluding the AMPTC incentives would have caused our gross profit as a percentage of revenue to transition from a gross profit to a gross loss.

Operating Expenses:

Research and Development, net

(In thousands)

Research and development, net costs decreased by $0.6 million, or 1.2%, in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to:

• a decrease related to $2.4 million of income recognized from a grant for research and development activities in the three months ended June 30, 2026;
• a decrease in expenses related to consulting and sub-contracting of $1.0 million; and
• a decrease in depreciation and amortization expenses of $0.8 million.

These were partially offset by:

• an increase in personnel-related costs of $2.2 million, mainly driven by the weakening of the U.S. dollar against the NIS; and
• an increase of $1.8 million in other directly related overhead costs.

Research and development, net costs decreased by $12.5 million or 10.8%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to:

• a decrease in personnel-related costs of $10.1 million resulting primarily from a decrease in salary expenses associated with employee stock-based compensation in the six months ended June 30, 2025, which was partially offset by the weakening of the U.S. dollar compared to the NIS;
• a decrease related to $2.4 million of income recognized from a grant for research and development activities in the six months ended June 30, 2026; and
• a decrease in depreciation and amortization of $1.8 million.

These were partially offset by an increase in other directly related overhead costs of $3.0 million.

Sales and Marketing

(In thousands)

Sales and marketing expenses decreased by $1.5 million, or 5.1%, in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to a decrease of $1.5 million in marketing expenses.

Sales and marketing expenses decreased by $5.7 million, or 9.4%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to:

• a decrease of $1.9 million in marketing expenses;
• a decrease in personnel-related costs of $1.7 million resulting primarily from a reduction in workforce, which was partially offset by the weakening of the U.S. dollar compared to the NIS; and
• a decrease in depreciation and amortization of $0.7 million.

General and Administrative

(In thousands)

General and administrative expenses increased by $4.8 million, or 24.0%, in the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to:

• a decrease in net reversal of doubtful debt expenses of $9.2 million in the three months ended June 30, 2026 compared to the three months ended June 30, 2025 mainly related to collection of doubtful debts; and
• an increase in personnel-related costs of $4.1 million resulting mainly from an increase in salary expenses associated with employee stock-based compensation, as well as the weakening of the U.S. dollar against the NIS.

These were partially offset by lower expenses related to potential legal claims, which decreased by $8.3 million compared to the prior-year period.

General and administrative expenses increased by $11.0 million, or 22.0%, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to the recognition of doubtful debt expense of $11.1 million during the six months ended June 30, 2026, compared to a net reversal of $18.1 million, during the six months ended June 30, 2025, mainly resulting from collections of accounts previously considered doubtful.

This was partially offset by:

• a decrease of $8.5 million in expenses related to potential legal claims compared to the prior-year period; and
• a decrease of $8.1 million due to a penalty recognized in the prior-year period related to the postponement of the commencement of our campus lease agreement.

Other operating expense, net

(In thousands)

Other operating expenses, net, decreased by $39.1 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to:

• a decrease of $36.7 million as the prior-year period included an impairment related to an asset classified as held-for-sale; and
• a decrease of $17.9 million as the prior-year period included a sale of the PV tracker business line.

These were partially offset by an increase related to $6.7 million losses from sale and disposal of property, plant and equipment for the three months ended June 30, 2026, compared to $10.0 million related to gains recognized from sale of property, plant, and equipment in the three months ended June 30, 2025.

Other operating expenses, net, decreased by $26.2 million, in the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to:

• a decrease of $36.7 million as the prior-year period included an impairment related to an asset classified as held-for-sale; and
• a decrease resulting from $17.9 million loss from sale of the PV tracker business line included in the prior-year period, compared to a $7.6 million loss from sale of the LCV e-Mobility activity in the six months ended June 30, 2026.

These were partially offset by:

• an increase related to $7.6 million losses from sale and disposal of property, plant and equipment for the six months ended June 30, 2026, compared to $10.0 million related to gains recognized from sale of property, plant, and equipment in the six months ended June 30, 2025; and
• an increase of $3.1 million due to income recognized in the prior-year period as a result of lower than expected discontinuation charges.

Financial income (expense), net

(In thousands)

Financial expense, net increased by $5.1 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily due to:

• an increase of $2.6 million in foreign currency losses, primarily attributable to fluctuations in the Euro and NIS relative to the U.S. dollar;
• a decrease of $1.3 million in interest income related to our marketable securities investments; and
• a decrease of $1.1 million in financial income related to amortization of premiums and accretion of discount on available-for-sale marketable securities in the three months ended June 30, 2025.

Financial expense, net was $13.4 million in the six months ended June 30, 2026, compared to financial income, net in the amount of $2.7 million in the six months ended June 30, 2025, primarily due to:

• an expense of $3.1 million in the six months ended June 30, 2026 compared to an income of $4.4 million in the six months ended June 30, 2025, as a result of fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S. dollar;
• a decrease of $5.7 million in interest income, mainly related to our marketable securities investments; and
• an increase of $2.4 million primarily due to interest expense.

Other income, net

(In thousands)

Other income, net decreased by $4.0 million in the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, primarily as the prior-year periods included a sale of investment in a privately held company.

Income taxes

(In thousands)

Income taxes decreased by $3.3 million in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The decrease is primarily due to higher taxes recorded in the three months ended June 30, 2025, in connection with the settlement with the Israeli Tax Authority for tax years 2016 through 2018 and a provision for uncertain tax positions.

Income taxes decreased by $7.8 million in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The decrease is primarily due to the reduced California state income tax expense as a result of Senate Bill 302, as discussed in Note 17 of the condensed consolidated financial statements, a reduction in the withholding taxes paid on certain intra-group interest payments and a tax expense recorded in the six months ended June 30, 2025, in connection with the settlement with the Israeli Tax Authority for tax years 2016 through 2018.

Net loss from equity method investments

(In thousands)

Net loss from equity method investments decreased in the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, as the prior-year periods included an impairment of our equity investment.

Net loss

(In thousands)

As a result of the factors discussed above, net loss decreased by $94.0 million in the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

As a result of the factors discussed above, net loss decreased by $135.1 million in the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

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)

As of June 30, 2026, our cash and cash equivalents were $527.3 million. This amount does not include $19.7 million invested in available-for-sale marketable securities and $54.7 million in restricted cash. Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements and other investments. As of June 30, 2026, we have open commitments for capital expenditures in an amount of approximately $12.8 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 $340.0 million, related to raw materials and commitments for the future manufacturing of our products.

As of June 30, 2026, we had a non-cancelable lease commitment for the initial term of a lease of approximately $272.8 million for new offices in Israel, which has not yet commenced. The lease is expected to commence by the end of 2026. The initial term of the lease agreement is 15 years commencing on the transfer of possession, with an option to extend the lease for additional periods of up to 10 years, subject to the conditions of the lease agreement. In November 2025, we amended our lease agreement with the developer for our new campus to reduce the leased area. In connection with the amendment, we agreed to make a lease modification payment of $28.8 million, which is accounted for as prepaid lease consideration under Accounting Standards Codification 842, "Leases". The full amount had been paid as of June 30, 2026.

Beginning in the fourth quarter of 2024, we started to sell AMPTCs to third parties pursuant to tax credit agreements. We plan to pursue additional tax credit sales in the future. Our inability to complete sales or delays in doing so may affect the timing of our cash inflows. Failing to sell AMPTCs could result in significant delays in the realization of the credits’ value, and would have a material negative effect on our liquidity.

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 $35.8 million in the six months ended June 30, 2026 compared to $26.0 million in the six months ended June 30, 2025, attributed to an increase in working capital needs partially offset by lower net loss adjusted for certain non-cash items.

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, proceeds from sale of business and equity investments, and disbursements and receipts from collections of loans made by us. Cash used in investing activities was $18.5 million in the six months ended June 30, 2026 as compared to cash provided by investing activities of $136.2 million in the six months ended June 30, 2025, primarily driven by a decrease of $274.3 million in proceeds provided by maturities of available-for-sale marketable securities, a decrease of $27.4 million in proceeds from loans receivables, an increase of $26.2 million in payments made before lease commencement and a decrease of $9.7 million in proceeds from sale of property, plant and equipment; these were partially offset by a decrease of $172.8 million in purchases of available-for-sale marketable securities, a decrease of $6.6 million in payment related to governmental grant and an increase of $3.2 million in the withdrawal from restricted bank deposits.

Financing Activities

Financing cash flows consist primarily of issuance, repayment and partial repurchase of convertible senior notes, and our employee equity incentive plans. Cash provided by financing activities was $10.8 million in the six months ended June 30, 2026 as compared to cash used in financing activities of $6.6 million in the six months ended June 30, 2025, primarily due to an increase of $7.3 million related to tax withholding in connection with stock-based awards, net, a decrease of $5.1 million in cash used for the repurchase of our Notes 2025 and an increase of $3.8 million related to issuance of common stock upon exercise of stock-based awards.

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 (the "Notes 2029") in a transaction exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act (the "Notes 2029 Offering"). The net proceeds from the Notes 2029 Offering 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 the Notes 2029 Offering to pay for the cost of the capped call transactions and approximately $267.9 million of the net proceeds from the Notes 2029 Offering to repurchase $285.0 million of our outstanding 0.000% convertible notes due 2025 (the "Notes 2025"). We intend to use the remainder of the net proceeds from the Notes 2029 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 exercise of options granted by the Company to several initial purchasers of the Notes 2029 represented by Goldman Sachs & Co. LLC to purchase additional Notes 2029. For additional information, please see Note 11, “Convertible Senior Notes.”

In March 2025 we repurchased $5.2 million principal amount of our Notes 2025. We recorded a net gain of $146 thousand under other income from this repurchase. We settled all of our outstanding Notes 2025 on September 15, 2025. 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 amounts of the Notes 2025.

Critical Accounting Policies and Significant Management Estimates

Management believes that there have been no significant changes during the six months ended June 30, 2026 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2025, 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 48.1% and 34.1% of our revenues for the six months ended June 30, 2026 and 2025, 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 loss by $14.8 million for the six months ended June 30, 2026. A hypothetical 10% change in foreign currency exchange rates between NIS and the U.S. dollar would increase or decrease our net loss by $26.3 million for the six months ended June 30, 2026.

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 our 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 June 30, 2026, two major customers accounted for approximately 26.3% of our consolidated trade receivables, net balance. As of June 30, 2025, two major customers accounted for approximately 22.5% of our consolidated trade receivables, net balance. For the three months ended June 30, 2026, two major customers accounted for approximately 28.8% of our total revenues. For the three months ended June 30, 2025, one major customer accounted for approximately 16.4% of our total revenues. For the six months ended June 30, 2026, one major customer accounted for approximately 16.8% of our total revenues. For the six months ended June 30, 2025, two major customers accounted for approximately 24.0% 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 June 30, 2026. 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 June 30, 2026, 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 June 30, 2026, 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/A for the year ended December 31, 2025 (the “2025 Form 10-K/A”) and Part II, Item 1A, “Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 (the “Q1 2026 Form 10-Q”). Other than the risk factors set forth below, there have been no material changes to the risk factors previously disclosed in the 2025 Form 10-K/A and Q1 2026 Form 10-Q.

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.

We depend on the ongoing availability of certain raw materials and components to assemble our products. Since 2025, the United States has imposed significant new tariffs on a broad range of imported products and components and may adopt additional tariffs, trade restrictions or other measures in the future. Although certain tariffs previously imposed under the International Emergency Economic Powers Act were invalidated by the Supreme Court of the United States (the “U.S. Supreme Court”) in February 2026 and subsequently rescinded, other trade measures remain in effect or have been implemented as replacements.

In addition, following the U.S. Supreme Court's ruling, the U.S. Administration imposed a temporary import surcharge under Section 122 of the Trade Act of 1974 (“Section 122”). The surcharge was initially set at 10% ad valorem on substantially all imports, with a statutory ceiling of 15%, subject to carve-outs for certain goods (e.g., electronics and critical minerals) and products qualifying under the United States-Mexico-Canada Agreement. The surcharge took effect on February 24, 2026, for a maximum period of 150 days. On May 7, 2026, the U.S. Court of International Trade held that the Section 122 proclamation was invalid. This ruling has been appealed, and the U.S. Court of Appeals for the Federal Circuit issued a temporary stay of the ruling pending resolution of the appeal. The evolving legal status and expiration of the Section 122 tariffs create additional uncertainty regarding our tariff exposure and any potential recovery of Section 122 duties paid during the quarter. If the Section 122 proclamation is ultimately held invalid and refund mechanisms are established, we may be eligible to recover some or all the Section 122 that we have paid. However, the outcome of the appeal and the availability, timing and amount of any potential refunds remain uncertain and are subject to further judicial and administrative proceedings.

Most recently, with the expiration of Section 122 tariffs, in July 2026, the U.S. Administration imposed additional tariffs under Section 301 of the Trade Act of 1974 (“Section 301”) on imports from numerous trading partners, with rates generally ranging from 10% to 12.5%, subject to specified exemptions and exceptions. These tariffs are in addition to existing duties and may apply alongside other trade measures, including Section 301 tariffs applicable to imports from China, tariffs under Section 232 of the Trade Expansion Act of 1962, antidumping and countervailing duties, and any future tariffs or trade restrictions that may be adopted. As with the Section 122 surcharge discussed above, these Section 301 tariffs may also be subject to legal challenge, and we cannot predict the outcome of any such challenge or its effect on our tariff exposure.

In addition, on July 28, 2026, the Federal Communications Commission (the “FCC”) updated its “Covered List,” maintained under the Secure and Trusted Communications Networks Act, to include power inverters produced in foreign countries, effective immediately and prospectively for new product authorizations. Under this action, new inverter models that do not qualify as “domestic end products” (as defined under the Buy American Act, 48 C.F.R. § 25.101(a)) are generally prohibited from receiving the FCC equipment authorizations required to import, market, or sell such products in the United States. The FCC’s order applies to new inverter models and certain equipment modifications requiring FCC equipment authorization in the future and generally does not impact products that were authorized by the FCC prior to this order. We believe that SolarEdge inverter products continue to be eligible for sale and installation under the new order. We continuously evaluate the impact of this and other trade restrictions on our business. Inability to comply with such trade restrictions would have a material adverse effect on our business, financial condition, results of operations and cash flows.

We have relocated our contract manufacturing to the United States, where we now manufacture the substantial majority 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 continue to be sourced from suppliers outside the United States, and imports of such items may be subject to existing or future tariffs or other trade restrictions. 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 measures may be imposed by foreign governments on products exported from the United States to markets in which we sell our products.

The scope, duration and impact of current and future tariffs and trade measures remain uncertain and may increase our cost of revenue, disrupt supply chains, create cost volatility, reduce demand for our products, adversely affect our customers, suppliers, contract manufacturers and other business partners, or impair our ability to compete effectively. Continuing uncertainty regarding trade policy may also cause customers to accelerate, delay or cancel purchases, resulting in sales volatility and fluctuations in operating results.

In particular, if tariffs increase the cost of components imported into the United States, increase the cost of manufacturing our products, or increase the cost of solar power systems generally, solar power systems may become less economically attractive, which could reduce demand for our products and adversely affect our gross margins. It is difficult to predict what additional trade-related actions may be taken by the United States or other governments, including further tariff increases, new trade restrictions, or retaliatory measures. Any such actions could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Disruption to our business operations as a result of the evolving conflict in Israel and other conditions in Israel that affect our operations may limit our ability to develop, produce and sell our products.

Our headquarters and principal research and development center are located in Israel. As a result, political, economic, and military conditions in Israel directly affect our business, operations, and workforce.

Israel has been involved in a number of armed conflicts and has been the target of terrorist activity, including threats from Gaza, Iran, the Houthi militants in Yemen, Hezbollah militants in Lebanon, Iranian militias in Syria, and others. Violence between Hamas and Israel intensified on October 7, 2023, when the terrorist group launched an unprecedented attack on Israel. On October 8, 2023, the Israeli Government announced that the Security Cabinet of the State of Israel approved a war situation in Israel. Since that time, and in connection with subsequent regional hostilities, the ongoing state of war has disrupted and continues to disrupt our business operations.

In the second quarter of 2025, Israel and the Islamic Republic of Iran engaged in a 12‑day war, which subsequently stabilized due to a brokered ceasefire. More recently, during the first half of 2026, Israel was again engaged in direct military conflicts with Iran and in significant hostilities with Hezbollah in Lebanon. Although hostilities have since moderated, it is unknown whether any ceasefires or periods of relative calm will endure, or whether conflicts involving Gaza, Lebanon, Iran, Yemen, or other parts of the region may reemerge or escalate in the future.

Because our headquarters and a substantial portion of our workforce are based in Israel, these conflicts have impacted, and may continue to impact, the availability of our workforce. Some of our employees, executive officers, and directors residing in Israel are obligated to perform reserve duty in the Israeli military and are subject to being called to active duty under emergency circumstances. In the year ended December 31, 2025, approximately 279 employees, or 13% of our workforce in Israel, and in the second quarter of 2026, approximately 179 employees, or 7%, were called to active reserve duty for varying periods, which adversely affected workforce availability. Additional employees may be called to reserve duty in the future.

Any future armed conflict, political instability, or violence in Israel or the surrounding region may impair our ability to manage our business effectively, operate our manufacturing plant in northern Israel, conduct research and development activities, or otherwise carry out our operations. In the event of a significant escalation of existing hostilities or the outbreak of additional conflicts, we may be forced to cease or significantly curtail operations, which could delay the distribution and sale of our products.

The majority of our key employees and officers are residents of Israel. If any of our offices or facilities in Israel were damaged, destroyed, or rendered inoperable as a result of war, hostile actions, terrorist attacks, earthquakes, fire, floods, storms, power outages, employee malfeasance, or other natural or man‑made events, our ability to conduct research and development, manufacture products, and operate our business could be materially adversely affected. Any resulting delay in the achievement of our development or commercialization objectives could harm our business, prospects, financial results, and reputation.

In addition, several countries, principally in the Middle East, restrict business dealings with Israeli companies, and other countries or groups may impose similar restrictions if hostilities or regional political instability persist or intensify. If instability in neighboring states results in the establishment of fundamentalist Islamic regimes or governments more hostile to Israel, it could be subject to additional political, economic, or military constraints, which could materially adversely affect our operations and our ability to sell products in the region.

Any interruption or curtailment of trade between Israel and its current trading partners, or a significant downturn in Israel’s economic or financial condition, could have a material adverse effect on our business, financial condition, and results of operations. Since the start of the war with Hamas, we have become aware of pressure being placed on some of our customers not to engage in business with us due to our affiliation with Israel. In addition, adverse developments in foreign policy toward Israel could negatively impact our ability to do business with suppliers and customers, which could, in turn, harm our reputation, results of operations, or financial condition.

While our offices and facilities worldwide, including in Israel, remain open and, to date, we have not experienced material disruptions to our ability to manufacture and deliver products and services to customers, any reemergence or escalation of conflicts in Israel or the surrounding region could materially adversely affect our business, financial condition, and results of operations.

Additionally, in 2023, the Israeli government announced plans to significantly reduce the Israeli Supreme Court's judicial oversight, including reducing its ability to strike down legislation that it deems unreasonable, and plans to increase political influence over the selection of judges. Although the Israeli Supreme Court partially struck down these plans, the current government has vowed to make other changes to law that limit the powers of the Supreme Court. If such government plans are eventually enacted, they may cause operational challenges for us since we are headquartered in Israel and many of our employees are located in Israel.