Represents an amount less than $1. See Note 16 http://fasb.org/us-gaap/2023#PrepaidExpenseAndOtherAssetshttp://fasb.org/us-gaap/2023#PrepaidExpenseAndOtherAssetshttp://fasb.org/us-gaap/2023#AccountsPayableAndAccruedLiabilitiesCurrentAndNoncurrent0001419612--12-31Q3falseVendor non-trade receivables derived from the sale of components to manufacturing vendors who manufacture products, components and other testing equipment for the Company. The Company purchases these components directly from other suppliers. The Company does not reflect the sale of these components to the contract manufacturers in its revenues. Loan receivables is a loan to a third party. The loan will be repaid on a monthly basis with an additional agreed interest for the long term portion of the loan. See Note 8 for additional information. The loan is measured at its amortized cost and is subjected to the Company's credit risk policy as stated in the most recent 10-K filing. Expected provision for credit loss regarding this loan was immaterial. The amortized cost of the loan receivable approximates its fair value as of September 30, 2023. In January 2023, the Company completed an investment of $5,500 in the common stock of a privately-held company which represents 34.8% of its outstanding shares. The Company accounted for this investment using the equity method of accounting. The Company's share of net earnings or losses in the nine months ended September 30, 2023 was immaterial. In April and July of 2023, the Company completed a total investment of $2,500 in the preferred stock of a privately-held company which represents 4.5% of its outstanding shares on a fully diluted basis. The Company accounted for this investment as an equity investment without readily determinable fair values. 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UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2023
 
OR
 
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________ to __________
 
Commission File Number: 001-36894
 
 
SOLAREDGE TECHNOLOGIES, INC.
 
(Exact name of registrant as specified in its charter)
 
Delaware
20-5338862
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
 
1 HaMada Street
Herziliya Pituach, 4673335, Israel
(Address of Principal Executive Offices, zip code)
 
972 (9) 957-6620
 
Registrant’s telephone number, including area code
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.0001 per share
SEDG
NASDAQ (Global Select Market)
 
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
 
Yes ☒        No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
 
Yes ☒        No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller Reporting Company
     
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐
 
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes ☐        No
 
As of November 1, 2023, there were 56,811,229 shares of the registrant’s common stock, par value of $0.0001 per share, outstanding.

 
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION
 
F-1
F-1
F-3
F-4
F-5
F-7
F-9
3
17
18
  
PART II. OTHER INFORMATION
 
18
18
18
18
18
18
19
19
 
2

 
PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
 
(in thousands, except per share data)
 
   
September 30,
2023
   
December 31,
2022
 
ASSETS
           
CURRENT ASSETS:
           
Cash and cash equivalents
 
$
551,122
   
$
783,112
 
Marketable securities
   
477,275
     
241,117
 
Trade receivables, net of allowances of $14,930 and $3,202, respectively
   
939,545
     
905,146
 
Inventories, net
   
1,177,805
     
729,201
 
Prepaid expenses and other current assets
   
217,720
     
241,082
 
Total current assets
   
3,363,467
     
2,899,658
 
LONG-TERM ASSETS:
               
Marketable securities
   
436,139
     
645,491
 
Deferred tax assets, net
   
60,147
     
44,153
 
Property, plant and equipment, net
   
604,819
     
543,969
 
Operating lease right-of-use assets, net
   
67,331
     
62,754
 
Intangible assets, net
   
41,947
     
19,929
 
Goodwill
   
41,201
     
31,189
 
Other long-term assets
   
36,103
     
18,806
 
Total long-term assets
   
1,287,687
     
1,366,291
 
Total assets
 
$
4,651,154
   
$
4,265,949
 
 

F - 1


SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.)
 
(in thousands, except per share data)
 
   
September 30,
2023
   
December 31,
2022
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
           
CURRENT LIABILITIES:
           
Trade payables, net
 
$
399,274
   
$
459,831
 
Employees and payroll accruals
   
77,740
     
85,158
 
Warranty obligations
   
174,125
     
103,975
 
Deferred revenues and customers advances
   
22,064
     
26,641
 
Accrued expenses and other current liabilities
   
203,448
     
214,112
 
Total current liabilities
   
876,651
     
889,717
 
LONG-TERM LIABILITIES:
               
Convertible senior notes, net
   
626,647
     
624,451
 
Warranty obligations
   
341,687
     
281,082
 
Deferred revenues
   
212,025
     
186,936
 
Finance lease liabilities
   
40,323
     
45,385
 
Operating lease liabilities
   
46,580
     
46,256
 
Other long-term liabilities
   
16,835
     
15,756
 
Total long-term liabilities
   
1,284,097
     
1,199,866
 
COMMITMENTS AND CONTINGENT LIABILITIES
               
STOCKHOLDERS’ EQUITY:
               
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of September 30, 2023 and December 31, 2022; issued and outstanding: 56,810,559 and 56,133,404 shares as of September 30, 2023 and December 31, 2022, respectively
   
6
     
6
 
Additional paid-in capital
   
1,633,800
     
1,505,632
 
Accumulated other comprehensive loss
   
(83,949
)
   
(73,109
)
Retained earnings
   
940,549
     
743,837
 
Total stockholders’ equity
   
2,490,406
     
2,176,366
 
Total liabilities and stockholders’ equity
 
$
4,651,154
   
$
4,265,949
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 

F - 2


SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
 
(in thousands, except per share data)
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Revenues
 
$
725,305
   
$
836,723
   
$
2,660,484
   
$
2,219,577
 
Cost of revenues
   
582,488
     
614,722
     
1,900,236
     
1,635,976
 
Gross profit
   
142,817
     
222,001
     
760,248
     
583,601
 
Operating expenses:
                               
Research and development
   
80,082
     
69,659
     
246,481
     
210,855
 
Sales and marketing
   
40,351
     
42,726
     
125,539
     
117,017
 
General and administrative
   
39,110
     
27,933
     
111,876
     
82,483
 
Other operating expense (income), net
   
-
     
(2,724
)
   
(1,434
)
   
1,963
 
Total operating expenses
   
159,543
     
137,594
     
482,462
     
412,318
 
Operating income (loss)
   
(16,726
)
   
84,407
     
277,786
     
171,283
 
Financial income (expense), net
   
(7,901
)
   
(33,146
)
   
19,157
     
(52,062
)
Other income (loss), net
   
(484
)
   
7,654
     
(609
)
   
6,810
 
Income (loss) before income taxes
   
(25,111
)
   
58,915
     
296,334
     
126,031
 
Income taxes
   
36,065
     
34,172
     
99,622
     
53,081
 
Net income (loss)
 
$
(61,176
)
 
$
24,743
   
$
196,712
   
$
72,950
 
Net basic earnings (loss) per share of common stock
 
$
(1.08
)
 
$
0.44
   
$
3.49
   
$
1.33
 
Net diluted earnings (loss) per share of common stock
 
$
(1.08
)
 
$
0.43
   
$
3.34
   
$
1.29
 
Weighted average number of shares used in computing net basic earnings (loss) per share of common stock
   
56,671,504
     
55,730,328
     
56,435,880
     
54,788,734
 
Weighted average number of shares used in computing net diluted earnings (loss) per share of common stock
   
56,671,504
     
58,747,538
     
59,297,423
     
57,886,041
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 

F - 3


SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
 
(in thousands, except per share data)
 
   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2023
   
2022
   
2023
   
2022
 
Net income (loss)
 
$
(61,176
)
 
$
24,743
   
$
196,712
   
$
72,950
 
Other comprehensive income (loss), net of tax:
                               
Available-for-sale marketable securities
   
2,562
     
(9,579
)
   
9,400
     
(23,647
)
Cash flow hedges
   
(923
)
   
(140
)
   
(938
)
   
(4,656
)
Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment nature
   
(9,989
)
   
(30,799
)
   
(22,724
)
   
(66,129
)
Foreign currency translation adjustments
   
1,833
     
1,872
     
3,422
     
(6,515
)
Total other comprehensive loss
   
(6,517
)
   
(38,646
)
   
(10,840
)
   
(100,947
)
Comprehensive income (loss)
 
$
(67,693
)
 
$
(13,903
)
 
$
185,872
   
$
(27,997
)
 
The accompanying notes are an integral part of the condensed consolidated financial statements.
 

F - 4


SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
 
(in thousands, except per share data)
 
   
Common stock
                         
   
Number
   
Amount
   
Additional
paid in
Capital
   
Accumulated
other comprehensive
loss
   
Retained
earnings
   
Total
 
Balance as of January 1, 2023
   
56,133,404
   
$
6
   
$
1,505,632
   
$
(73,109
)
 
$
743,837
   
$
2,176,366
 
Issuance of common stock upon exercise of stock-based awards
   
209,760
     
*-
     
75
     
-
     
-
     
75
 
Stock based compensation
   
-
     
-
     
40,070
     
-
     
-
     
40,070
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(4,095
)
   
-
     
(4,095
)
Net income
   
-
     
-
     
-
     
-
     
138,378
     
138,378
 
Balance as of March 31, 2023
   
56,343,164
   
$
6
   
$
1,545,777
   
$
(77,204
)
 
$
882,215
   
$
2,350,794
 
Issuance of common stock upon exercise of stock-based awards
   
171,682
     
*-
     
89
     
-
     
-
     
89
 
Issuance of common stock under employee stock purchase plan
   
41,494
     
*-
     
10,046
     
-
     
-
     
10,046
 
Stock based compensation
   
-
     
-
     
39,978
     
-
     
-
     
39,978
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(228
)
   
-
     
(228
)
Net income
   
-
     
-
     
-
     
-
     
119,510
     
119,510
 
Balance as of June 30, 2023
   
56,556,340
   
$
6
   
$
1,595,890
   
$
(77,432
)
 
$
1,001,725
   
$
2,520,189
 
Issuance of Common Stock upon exercise of stock-based awards
   
254,219
     
*-
     
18
     
-
     
-
     
18
 
Stock based compensation
   
-
     
-
     
37,892
     
-
     
-
     
37,892
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(6,517
)
   
-
     
(6,517
)
Net loss
   
-
     
-
     
-
     
-
     
(61,176
)
   
(61,176
)
Balance as of September 30, 2023
   
56,810,559
   
$
6
   
$
1,633,800
   
$
(83,949
)
 
$
940,549
   
$
2,490,406
 
 
* Represents an amount less than $1.
 

F - 5


SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
 
(in thousands, except per share data)
 
   
Common stock
                         
   
Number
   
Amount
   
Additional
paid in
Capital
   
Accumulated
other
comprehensive

loss
   
Retained
earnings
   
Total
 
Balance as of January 1, 2022
   
52,815,395
   
$
5
   
$
687,295
   
$
(27,319
)
 
$
650,058
   
$
1,310,039
 
Issuance of common stock upon exercise of stock-based awards
   
270,751
     
*-
     
1,478
     
-
     
-
     
1,478
 
Stock based compensation
   
-
     
-
     
34,107
     
-
     
-
     
34,107
 
Issuance of common stock in a secondary public offering, net of underwriters' discounts and commissions of $27,140 and $834 of offering costs
   
2,300,000
     
1
     
650,525
     
-
     
-
     
650,526
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(18,748
)
   
-
     
(18,748
)
Net income
   
-
     
-
     
-
     
-
     
33,123
     
33,123
 
Balance as of March 31, 2022
   
55,386,146
   
$
6
   
$
1,373,405
   
$
(46,067
)
 
$
683,181
   
$
2,010,525
 
Issuance of common stock upon exercise of stock-based awards
   
211,839
     
*-
     
164
     
-
     
-
     
164
 
Issuance of common stock under employee stock purchase plan
   
35,105
     
*-
     
8,141
     
-
     
-
     
8,141
 
Stock based compensation
   
-
     
-
     
37,171
     
-
     
-
     
37,171
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(43,553
)
   
-
     
(43,553
)
Net income
   
-
     
-
     
-
     
-
     
15,084
     
15,084
 
Balance as of June 30, 2022
   
55,633,090
   
$
6
   
$
1,418,881
   
$
(89,620
)
 
$
698,265
   
$
2,027,532
 
Issuance of Common Stock upon exercise of stock-based awards
   
261,016
     
*-
     
1,866
     
-
     
-
     
1,866
 
Stock based compensation
   
-
     
-
     
36,632
     
-
     
-
     
36,632
 
Other comprehensive loss adjustments
   
-
     
-
     
-
     
(38,646
)
   
-
     
(38,646
)
Net income
   
-
     
-
     
-
     
-
     
24,743
     
24,743
 
Balance as of September 30, 2022
   
55,894,106
   
$
6
   
$
1,457,379
   
$
(128,266
)
 
$
723,008
   
$
2,052,127
 
 
* Represents an amount less than $1.
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F - 6


SOLAREDGE TECHNOLOGIES INC.

 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
(in thousands, except per share data)
 
   
Nine Months Ended
September 30,
 
   
2023
   
2022
 
Cash flows from operating activities:
           
Net income
 
$
196,712
   
$
72,950
 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
               
Depreciation and amortization
   
42,019
     
37,312
 
Loss (gain) from exchange rate fluctuations
   
(8,170
)
   
58,100
 
Stock-based compensation expenses
   
115,015
     
106,932
 
Impairment of goodwill and intangible assets
   
-
     
4,008
 
Deferred income taxes, net
   
(18,199
)
   
(3,822
)
Other items
   
6,915
     
8,594
 
Changes in assets and liabilities:
               
Inventories, net
   
(437,801
)
   
(188,579
)
Prepaid expenses and other assets
   
19,822
     
(55,478
)
Trade receivables, net
   
(40,011
)
   
(377,089
)
Trade payables, net
   
(53,996
)
   
53,683
 
Employees and payroll accruals
   
12,099
     
12,119
 
Warranty obligations
   
130,863
     
82,025
 
Deferred revenues and customers advances
   
18,580
     
41,440
 
Accrued expenses and other liabilities, net
   
(24,051
)
   
67,789
 
Net cash used in operating activities
   
(40,203
)
   
(80,016
)
Cash flows from investing activities:
               
Investment in available-for-sale marketable securities
   
(214,516
)
   
(461,491
)
Proceeds from sales and maturities of available-for-sale marketable securities
   
194,617
     
178,415
 
Purchase of property, plant and equipment
   
(130,024
)
   
(125,085
)
Business combinations, net of cash acquired
   
(16,653
)
   
-
 
Purchase of intangible assets
   
(10,600
)
   
-
 
Disbursements for loans receivables
   
(13,000
)
   
-
 
Investment in privately-held companies
   
(8,000
)
   
-
 
Proceeds from governmental grant
   
6,796
     
-
 
Proceeds from sale of a privately-held company
   
-
     
24,175
 
Other investing activities
   
3,193
     
3,472
 
Net cash used in investing activities
 
$
(188,187
)
 
$
(380,514
)
 

F - 7


SOLAREDGE TECHNOLOGIES INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)
 
(in thousands, except per share data)
 
   
Nine Months Ended
September 30,
 
   
2023
   
2022
 
Cash flows from financing activities:
           
Tax withholding in connection with stock-based awards, net
 
$
(9,267
)
 
$
(4,686
)
Payments of finance lease liability
   
(2,123
)
   
(2,109
)
Proceeds from secondary public offering, net of issuance costs
   
-
     
650,526
 
Other financing activities
   
85
     
3,404
 
Net cash provided by (used in) financing activities
   
(11,305
)
   
647,135
 
                 
Increase (decrease) in cash and cash equivalents
   
(239,695
)
   
186,605
 
Cash and cash equivalents at the beginning of the period
   
783,112
     
530,089
 
Effect of exchange rate differences on cash and cash equivalents
   
7,705
     
(38,365
)
Cash and cash equivalents at the end of the period
 
$
551,122
   
$
678,329
 
                 
Supplemental disclosure of non-cash activities:
               
Purchase of intangible assets and business combinations
 
$
11,307
   
$
-
 
Right-of-use asset recognized with a corresponding lease liability
 
$
17,658
   
$
43,274
 
Purchase of property, plant and equipment
 
$
19,574
   
$
16,008
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F - 8


SOLAREDGE TECHNOLOGIES INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 

(in thousands, except per share data)

 

NOTE 1:       GENERAL
 
  a.
SolarEdge Technologies Inc. (the “Company”) and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual photovoltaic (“PV”) module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features. The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company’s Energy Hub inverter which supports, among other things, connection to a DC-coupled battery for full or partial home backup, and optional connection to the Company's smart EV charger, (iii) a remote cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv) a residential storage and backup solution which includes a company designed and manufactured lithium-ion DC-coupled battery that is used to increase energy independence and maximize self-consumption for homeowners including a battery, and (v) additional smart energy management solutions.
 
The Company and its subsidiaries sell products worldwide through large distributors, electrical equipment wholesalers, as well as directly to large solar installers and engineering, procurement, and construction firms.
 
  b.
The Company has expanded its activity to other areas of smart energy technology organically and through acquisitions. The Company now offers a variety of energy solutions, which include lithium-ion cells, batteries, and energy storage systems (“Energy Storage”), full powertrain kits for electric vehicles, or EVs (“e-Mobility”), as well as automated machines for industrial use (“Automation Machines”).
 
On April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd. ("Hark"), a UK-based energy IoT company for the commercial and industrial ("C&I") sector, which operates under the newly established consulting segment (see note 2).
 
  c.
Basis of Presentation:
 
The unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In management’s opinion, the unaudited condensed consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. The Company’s interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year.
 
The significant accounting policies applied in the annual consolidated financial statements of the Company as of December 31, 2022, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 22, 2023, have been applied consistently in these unaudited interim condensed consolidated financial statements. Certain prior year amounts have been reclassified to conform to current year presentation.
 
  d.
Use of estimates:
 
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.
 
  e.
Concentrations of supply risks:
 
The Company depends on two contract manufacturers and several limited or single source component suppliers. Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.
 
As of September 30, 2023, and December 31, 2022, two contract manufacturers collectively accounted for 40.9% and 34.3% of the Company’s total trade payables, net, respectively.
 
In the second quarter of 2022, the Company announced the opening of “Sella 2”, a two gigawatt-hour (GWh) Li-Ion battery cell manufacturing facility located in South Korea. Sella 2 began producing and shipping cells at the end of 2022 and is expected to reach full manufacturing capacity in early 2024. Sella 2 is the Company's second owned manufacturing facility following the establishment of Sella 1 in 2020. Sella 1 is the Company's manufacturing facility in the North of Israel that produces power optimizers and inverters for the Company's solar activities.
 
  f.
New accounting standards updates:
 
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued or newly effective standards were not applicable to the Company, did not have a material impact on the condensed consolidated financial statements or are not expected to have a material impact on the condensed consolidated financial statements.

 

F - 9


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 2:       BUSINESS COMBINATIONS
 
On April 6, 2023, the Company completed the acquisition of all outstanding shares of Hark Systems Ltd. ("Hark"), a UK-based energy IoT company for the commercial and industrial ("C&I") sector for approximately $18,346 in cash. Hark's platform is expected to enable the Company to offer its commercial and industrial customers expanded capabilities in energy management and connectivity, including identification of potential energy savings, detection of anomalies in assets’ energy consumption, and optimization of energy usage and carbon emissions through load orchestration and storage control.
 
Pursuant to ASC 805, "Business Combination", the Company accounted for the Hark acquisition as a business combination using the acquisition method of accounting. Identifiable assets and liabilities of Hark, including identifiable intangible assets, were recorded based on their estimated fair values as of the date of the closing of the acquisition. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill. The Company recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date. Such preliminary valuation required estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. The Company’s management believes the fair values recognized for the assets acquired and the liabilities assumed were based on reasonable estimates and assumptions.
 
The following table summarizes the preliminary fair values estimation of assets acquired and liabilities assumed as of the date of the acquisition:
 
   
Amount
   
Weighted Average Useful Life (In years)
 
Cash
 
$
448
       
Net liabilities assumed
   
(1,837
)
     
Identified intangible assets:
             
Current technology
   
6,576
     
5
 
Customer relationships
   
283
     
1
 
Trade name
   
610
     
5
 
Goodwill
   
12,266
         
Total
 
$
18,346
         
 
Acquisition costs were immaterial and are included in general and administrative expenses in the consolidated statements of income.
 
Goodwill generated from this acquisition was primarily attributable to the assembled workforce and expected post-acquisition synergies from combining Hark platform with the Company's product offering to its commercial and industrial customers. All of the Goodwill was assigned to the new Consulting segment (see Note 21). Goodwill was not deductible for tax purposes. The fair values of technology, customer relationships and trade name were derived by applying the multi-period excess earnings method, with-and-without method, and the relief-from-royalty method, respectively, all of which are under the income approach whose underlying inputs are considered Level 3. The fair values assigned to assets acquired and liabilities assumed were based on management's estimates and assumptions.
 
The results of Hark have been included in the Company's consolidated statements of income (loss) since the acquisition date and are not material. Pro forma financial information has not been presented because the impact of the acquisition was not material to the Company's statement of income.

 

F - 10


SOLAREDGE TECHNOLOGIES INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

 

(in thousands, except per share data)

 

NOTE 3:       MARKETABLE SECURITIES
 
The following is a summary of available-for-sale marketable securities as of September 30, 2023:
 
   
Amortized
cost
   
Gross
unrealized gains
   
Gross
unrealized losses
   
Fair value
 
Matures within one year:
                       
Corporate bonds
 
$
449,162
   
$
227
   
$
(8,838
)
 
$
440,551
 
U.S. Treasury securities
   
27,951
     
-
     
(200
)
   
27,751
 
Non-U.S. Government securities
   
9,123
     
-
     
(150
)
   
8,973
 
     
486,236
     
227
     
(9,188
)
   
477,275
 
Matures after one year:
                               
Corporate bonds
   
400,408
     
49
     
(10,950
)