SolarEdge Technologies : Quarter Ended June 30, 2020 Slides

Second Quarter 2020

Earnings Summary

August 3, 2020

Safe Harbor

Use of Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include information, among other things, concerning: the expected impact of the COVID-19 pandemic and related public health measures on our business, results of operations, financial condition and liquidity; our possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; new products and services; financing and investment plans; dividend policy; competitive position; industry and regulatory environment; general economic conditions; potential growth opportunities; and the effects of competition.

Forward-looking statements are only predictions based on our current expectations and are inherently subject to risks and uncertainties. They should not be considered guarantees of future results, which could differ materially from the results set forth in, contemplated by, or underlying this presentation.

Factors that could cause actual results to differ materially from our expectations are described in the reports filed by SolarEdge with the Securities and Exchange Commission and we encourage you to review our filings carefully, especially the sections entitled "Risk Factors" in our annual report on Form 10-K and our quarterly reports on Form 10-Q, noting that many of the risks, uncertainties and other factors identified therein are, and will be, amplified by the COVID-19 pandemic. .

SolarEdge undertakes no duty or obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or changes in its expectations.

This presentation describes non-GAAP revenues, gross margin, operating expenses, operating income, net income and non-GAAP net diluted earnings per share, which are not measures prepared in accordance with U.S. GAAP (i.e. "Non-GAAP" measures). The Non-GAAP measures are presented in this presentation as we believe that they provide investors with a means of evaluating and understanding how SolarEdge's management evaluates the company's operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP.

2

Second Quarter Key Metrics

3.5M	142K	1.44 GW $331.9M
Power Optimizers	Inverters Shipped	Systems Shipped	Revenues

Shipped

3

Financial Results for Quarter

Revenue of $331.9 million

Revenue from solar products of $310.1 million

Total cash and investments, net of debt, $577.4 million GAAP gross margin of 31.0%

Non-GAAP gross margin of 32.4%

Non-GAAP gross margin for the solar business of 33.8% GAAP operating income of $30.0 million

Non-GAAP operating income of $46.6 million GAAP net income of $36.7 million Non-GAAP net income of $52.1 million

Net diluted GAAP earnings per share of $0.70

Net diluted Non-GAAP earnings per share of $0.97 Cash flow from operation of $59.3 million

4

Noteworthy

Revenues of $331.9 million led by Europe, the U.S. and Australia Continued profitability and healthy cash generation

Sales and installations in Europe have returned, and in some countries exceeding, pre COVID-19 rates Signs of recovery in the U.S., although not at pre COVID-19 level, yet

Commercial business grew to 56% of MW shipped

Company continues to operate at full capacity despite country specific restrictions

Positive new product reception in the U.S. (EnergyHub) and Germany (3 phase storage inverter) Sella 1 factory in Israel set to start manufacturing in August

Tracking indicators such as weekly new orders, installation rates and distributor sell outs all trending positively though the rate of improvement varies between regions and segments

5

GAAP Financial Results

*USD in millions	Q2 19	Q1 20	Q2 20
Revenues	325.0	431.2	331.9
Gross margin	34.1%	32.5%	31.0%
Operating expenses **	65.3	72.2	73.0
Operating income	45.4	67.8	30.0
Net income	33.1	42.2	36.7
Net diluted earnings per share	0.66	0.81	0.70

*With the exception of gross margin and per share data

** Q1 20 includes non recurring operating income of ($4.9M).

6

NON-GAAP Financial Results

*USD in millions	Q2 19	Q1 20	Q2 20
Revenues	325.0	431.2	331.9
Gross margin	35.7%	33.6%	32.4%
Operating expenses	54.9	66.3	61.1
Operating income	61.0	78.6	46.6
Net income	49.3	50.7	52.1
Net diluted earnings per share	0.94	0.95	0.97

*With the exception of gross margin and per share data

7

Units Shipped

Power optimizers shipped
K Units
5,500
			5,060
5,000
		4,587	4,454
4,500
		3,731
4,000			3,516
3,500
2,738 3,004	3,134	3,029
3,000
2,500
2,000

1,500

1,000

500

-

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

8

Inverters shipped

K Units
220.0
					202.0
200.0
				187.9	186.8
180.0
				160.1
160.0
					141.7
140.0
		121.8	120.5	130.7
120.0		113.8
100.0

80.0

60.0

40.0

20.0

0.0

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

Quarterly Revenues

9

Gross Margins Trend by Quarters (%)

			GAAP							Non-GAAP
40%							40%
			34.3%				35.7%	35.1%	35.5%
35% 34.1%	33.9%	32.5%	31.0%			35%				33.6%	32.4%
30%							30%
25%							25%
20%							20%
%								15%
15
10%							10%
5%							5%
0%								0%
Q2 19	Q3 19	Q4 19	Q1 20	Q2 20		Q2 19	Q3 19	Q4 19	Q1 20	Q2 20

10

GAAP Operating Expenses

11

Consolidated Operating Income

				GAAP					Non-GAAP
70			66.0		67.8		90		89.2
							85.3
										78.7
60							80
50		45.4		50.5			70	61.0
						60
40
						50					46.6
						30.0
30						40
20							30
						20
10							10
0							0
		Q2 19	Q3 19	Q4 19	Q1 20	Q2 20		Q2 19	Q3 19	Q4 19	Q1 20	Q2 20
							USD Millions
12	*	GAAP Q1 20, Q4 19 and Q3 19 include non recurring operating (income) expenses of ($4.9M), $22.4M and $8.3M respectively

Consolidated Net Income

GAAP

Non-GAAP

70

60

		52.8
50
	42.2
41.6
40		36.7
33.1
30

20

10

0

Q2 19

Q3 19

Q4 19

Q1 20

Q2 20

90

80

70

60

50

40

30

20

10

0

USD Millions

87.4

63.6

49.3	50.7	52.1

Q2 19

Q3 19

Q4 19

Q1 20

Q2 20

13 * Q1 20, Q4 19 and Q3 19 include non recurring operating (income) expenses of ($4.9M), $22.4M and $8.3M respectively

Balance Sheet & Cash flow

USD in millions	Q2 19	Q1 20	Q2 20
Cash deposits and	373.6	558.7	592.7
investments
Inventory	148.9	198.6	264.5
Capital Expenditures	11.7	27.4	26.4
Total Debt*	22.0	15.0	15.3

Cash Flow From Operations

50.8

107.7

59.3

* Debt balances relate to pre acquisition loans in Kokam and SMRE

14

Third Quarter Guidance*

Revenues to be within the range of $325 million to $350 million;

Non-GAAP gross margins expected to be within the range of 32% to 34%;

Revenues from solar products to be within the range of $305 million to $325 million;

Non-GAAP gross margins from sale of solar products expected to be within the range of 33% to 35%

*The pandemic effects on economies around the world are unprecedented. The guidance includes the anticipated impact of the COVID-19 pandemic and related public health measures on the

Company's business, at the time of publication.

15

Appendix

Reconciliation of GAAP to Non-GAAP

Reconciliation of Non-GAAP Financial Measures

				Reconciliation of GAAP to Non-GAAP Gross Profit
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Gross profit (GAAP)	102,963	140,008			110,670	242,971	196,780
Stock-based compensation	2,359	2,273			1,651	4,632	3,005
Cost of product adjustment	----	313			319	313	1,001
Amortization and depreciation of acquired assets	2,325			2,356			3,307		4,681		4,384
Gross profit (Non-GAAP)	107,647	144,950			115,947	252,597	205,170

				Reconciliation of GAAP to Non-GAAP Gross Margin
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Gross margin (GAAP)	31.0%	32.5%			34.1%	31.8%	33.0%
Stock-based compensation	0.7%	0.5%			0.5%	0.6%	0.5%
Cost of product adjustment	----	0.1%			0.1%	----	0.2%
Amortization and depreciation of acquired assets	0.7%			0.5%			1.0%		0.6%		0.7%
Gross margin (Non-GAAP)	32.4%	33.6%			35.7%	33.1%	34.4%

17

Reconciliation of GAAP to Non-GAAP

		Reconciliation of GAAP to Non-GAAP Operating expenses
		Three months ended			Six months ended
	June 30, 2020		March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating expenses (GAAP)	72,998	72,233		65,317	145,231		123,379
Stock-based compensation - R&D	(5,847)	(5,378)		(4,176)	(11,225)		(7,666)
Stock-based compensation - S&M	(3,445)	(3,192)		(2,722)	(6,637)		(5,126)
Stock-based compensation - G&A	(2,310)	(1,930)		(2,823)	(4,240)		(5,279)
Amortization and depreciation of acquired assets - R&D	(25)	(26)		(9)	(51)		(45)
Amortization and depreciation of acquired assets - S&M	(292)	(295)		51	(588)		(807)
Amortization and depreciation of acquired assets - G&A	(9)	(8)		(26)	(17)		(26)
Acquisition related expenses	----	----		(151)	----		(949)
Assets disposal	----	----		(552)	----		(552)
Other operating income (expenses)	----		4,900		----		4,900		----
Operating expenses (Non-GAAP)	61,070	66,303		54,909	127,373		102,929

			Reconciliation of GAAP to Non-GAAP Operating income
		Three months ended			Six months ended
	June 30, 2020		March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Operating income (GAAP)	29,965	67,775		45,353	97,740	73,401
Cost of product adjustment	----	313		319	313	1,001
Stock-based compensation	13,961	12,773		11,372	26,734	21,076
Amortization and depreciation of acquired assets	2,651	2,686		3,291	5,337	5,262
Acquisition related expenses	----	----		151	----	949
Assets disposal	----	----		552	----	552
Other operating ( income) expenses	----		(4,900)		----		(4,900)		----
Operating income (Non-GAAP)	46,577	78,647		61,038	125,224	102,241

18

Reconciliation of GAAP to Non-GAAP

	Reconciliation of GAAP to Non-GAAP Financial expenses (income), net
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Financial expenses (income), net (GAAP)	(11,565)	16,605			(773)	5,040	5,378
Non cash interest	(1,200)	(1,128)			(850)	(2,328)	(1,635)
Currency fluctuation related to lease standard	(892)	1,033			(577)	141	(1,525)
Amortization and depreciation of acquired assets	----			(982)			----		(982)		----
Financial expenses (income), net (Non-GAAP)	(13,657)	15,528			(2,200)	1,871	2,218

				Reconciliation of GAAP to Non-GAAP Tax on income
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Tax on income (GAAP)	4,862	8,922			13,213	13,784	17,135
Deferred tax realized (asset)	3,236			3,536			987		6,772		1,960
Tax on income (Non-GAAP)	8,098	12,458			14,200	20,556	19,095

19

Reconciliation of GAAP to Non-GAAP

				Reconciliation of GAAP to Non-GAAP Net income
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net income attributable to Solaredge Technologies Inc. (GAAP)	36,668	42,248			33,128	78,916	52,144
Cost of product adjustment	----	313			319	313	1,001
Stock-based compensation	13,961	12,773			11,372	26,734	21,076
Amortization and depreciation of acquired assets	2,651	3,668			3,291	6,319	5,262
Acquisition related expenses	----	----			151	----	949
Assets disposal	----	----			552	----	552
Other operating ( income) expenses	----	(4,900)			----	(4,900)	----
Non cash interest	1,200	1,128			850	2,328	1,635
Currency fluctuation related to lease standard	892	(1,033)			577	(141)	1,525
Deferred tax realized (asset)	(3,236)			(3,536)			(987)		(6,772)		(1,960)
Net income attributable to Solaredge Technologies Inc. (Non-GAAP)	52,136	50,661			49,253	102,797	82,184

20

Reconciliation of GAAP to Non-GAAP

				Reconciliation of GAAP to Non-GAAP Net basic EPS
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net basic earnings per share (GAAP)	0.74	0.86			0.69	1.59	1.10
Cost of product adjustment	----	0.01			0.01	0.01	0.02
Stock-based compensation	0.28	0.25			0.24	0.54	0.45
Amortization and depreciation of acquired assets	0.05	0.08			0.07	0.13	0.11
Acquisition related expenses	----	----			----	----	0.02
Other operating ( income) expenses	----	(0.10)			----	(0.10)	----
Assets disposal	----	----			0.01	----	0.01
Non cash interest	0.02	0.02			0.02	0.05	0.03
Currency fluctuation related to lease standard	0.02	(0.02)			0.01	----	0.04
Deferred tax realized (asset)	(0.06)			(0.07)			(0.02)		(0.14)		(0.04)
Net basic earnings per share (Non-GAAP)	1.05	1.03			1.03	2.08	1.74

21

Reconciliation of GAAP to Non-GAAP

				Reconciliation of GAAP to Non-GAAP Net diluted EPS
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Net diluted earnings per share (GAAP)	0.70	0.81			0.66	1.51	1.05
Cost of product adjustment	----	0.01			----	----	0.02
Stock-based compensation	0.24	0.21			0.19	0.47	0.35
Amortization and depreciation of acquired assets	0.05	0.07			0.07	0.11	0.11
Acquisition related expenses	----	----			----	----	0.01
Other operating ( income) expenses	----	(0.09)			----	(0.09)	----
Assets disposal	----	----			0.01	----	0.01
Non cash interest	0.02	0.02			0.02	0.05	0.04
Currency fluctuation related to lease standard	0.02	(0.02)			0.01	----	0.03
Deferred tax realized (asset)	(0.06)			(0.06)			(0.02)		(0.13)		(0.04)
Net diluted earnings per share (Non-GAAP)	0.97	0.95			0.94	1.92	1.58

	Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
		Three months ended			Six months ended
	June 30, 2020			March 31, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Number of shares used in computing net diluted earnings per share (GAAP)	52,536,437	52,172,720			49,940,034	52,357,838	49,358,280
Stock-based compensation	1,154,279			1,399,732			2,130,135		1,277,006		2,448,673
Number of shares used in computing net diluted earnings per share (Non-GAAP)	53,690,716	53,572,452			52,070,169	53,634,844	51,806,953

22

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