0001178913-20-001355 | 10-Q | XBRL Viewer | Solaredge Technologies INC

FAIR VALUE MEASUREMENTS (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Level 1 [Member] \| Money Market Mutual Funds [Member]
Fair value of assets	$ 28,412	$ 527
Level 2 [Member] \| Derivative instruments asset Forward contracts designated as hedging instruments [Member]
Fair value of assets	613
Level 2 [Member] \| Short-term corporate bonds [Member]
Fair value of assets	95,143	91,845
Level 2 [Member] \| Long-term corporate bonds [Member]
Fair value of assets	102,457	117,778
Level 2 [Member] \| Long-term governmental bonds [Member]
Fair value of assets	$ 1,406	$ 1,398

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CURRENT ASSETS:
Cash and cash equivalents	$ 324,072	$ 223,901
Short-term bank deposits	8,085	5,010
Restricted bank deposits	27,515	27,558
Marketable securities	95,143	91,845
Trade receivables, net of allowances of $4,509 and $2,473, respectively	235,673	298,383
Prepaid expenses and other current assets	66,874	115,268
Inventories, net	198,557	170,798
Total current assets	955,919	932,763
LONG-TERM ASSETS:
Marketable securities	103,863	119,176
Operating lease right-of-use assets, net	37,896	35,858
Property, plant and equipment, net	195,982	176,963
Deferred tax assets, net	17,095	16,298
Intangible assets, net	69,111	74,008
Goodwill	125,520	129,654
Other long-term assets	8,454	9,904
Total long term assets	557,921	561,861
Total assets	1,513,840	1,494,624
CURRENT LIABILITIES:
Trade payables, net	139,138	157,148
Employees and payroll accruals	58,894	47,390
Current maturities of bank loans and accrued interest	15,048	15,673
Warranty obligations	70,158	65,112
Deferred revenues and customers advances	30,706	70,815
Accrued expenses and other current liabilities	75,737	80,576
Total current liabilities	389,681	436,714
LONG-TERM LIABILITIES:
Bank loans		173
Warranty obligations	116,099	107,451
Deferred revenues	98,134	89,982
Operating lease liabilities	30,336	30,213
Deferred tax liabilities, net	2,202	4,461
Other long-term liabilities	10,970	13,960
Total long-term liabilities	257,741	246,240
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY:
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of March 31, 2020 and December 31, 2019; issued: 49,599,493 and 49,081,457 shares as of March 31, 2020 and December 31, 2019, respectively; outstanding: 49,599,493 and 48,898,062 shares as of March 31, 2020 and December 31, 2019, respectively.	5	5
Additional paid-in capital	491,873	475,792
Accumulated other comprehensive loss	(5,390)	(1,809)
Retained earnings	379,930	337,682
Total stockholders' equity	866,418	811,670
Total liabilities and stockholders' equity	$ 1,513,840	$ 1,494,624

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 42,248	$ 17,975
Available-for-sale securities:
Changes in unrealized gains (losses), net of tax	(1,165)	485
Reclassification adjustments for losses included in net income		120
Net change	(1,165)	605
Cash flow hedges:
Changes in unrealized gains, net of tax	538
Foreign currency translation adjustments, net	(2,954)	(1,301)
Total other comprehensive loss	(3,581)	(696)
Comprehensive income	38,667	17,279
Comprehensive loss attributable to non-controlling interests		849
Comprehensive income attributable to SolarEdge Technologies, Inc.	$ 38,667	$ 18,128

GENERAL

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GENERAL

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), (iii) a related cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters of a solar PV system to enable customers and system owners as applicable, to monitor and manage the solar PV systems and (iv) a storage solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third party manufacturers, to store and supply power as needed.

The Company and its subsidiaries sell their intelligent inverter solution products worldwide through large distributors and electrical equipment wholesalers to smaller solar installers as, well as directly to large solar installers and engineering, procurement and construction firms (“EPCs”).

The Company has expanded its activity to other areas of smart energy technology through acquisitions. The Company now offers energy solutions which include lithium-ion cells, batteries and energy storage systems (“energy storage”), electric vehicle, or EV components and charging capabilities (“e-Mobility”), as well as uninterrupted power supply solutions (“UPS”).

b.Recently issued and adopted pronouncement:

In June 2016 the FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2020. This standard requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit risks. For available-for-sale (“AFS”) debt securities with unrealized losses, the standard eliminates the concept of other-than-temporary impairments and requires allowances to be recorded instead of reducing the amortized cost of the investment.

This standard limits the amount of credit losses to be recognized for AFS debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.

F - 10

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 1:-GENERAL (Cont.)

The Company adopted Topic 326 effective January 1, 2020, based on the composition of the Company’s trade receivables, investment portfolio and other financial assets, current economic conditions and historical credit loss activity. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

The Condensed Consolidated Financial Statements for the three months ended March 31, 2020 are presented under the new standard, while comparative periods presented are not adjusted and continue to be reported in accordance with the Company’s historical accounting policy (See Note 7).

c.Basis of Presentation:

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with Article 10 of Regulation S-X, “Interim Financial Statements” and the rules and regulations for Form 10-Q of the Securities and Exchange Commission (the “SEC”). Pursuant to those rules and regulations, the Company has condensed or omitted certain information and disclosures in footnotes that it normally includes in its annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

In management’s opinion, the Company has made all adjustments (consisting only of normal, recurring adjustments, except as otherwise indicated) necessary to fairly present its condensed consolidated financial position, results of operations, and cash flows. The Company’s interim period operating 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, 2019, contained in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2020, have been applied consistently in these unaudited interim condensed consolidated financial statements, except for ASC 815 - Derivatives and Hedging (see Note 6) and the adoption of ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) (see Note 7).

d.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. These two contract manufacturers collectively accounted for 43.4% and 42.3% of the Company’s trade payables as of March 31, 2020 and December 31, 2019, respectively.

F - 11

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 1:-GENERAL (Cont.)

e.COVID-19 Considerations:

The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain, rapidly changing and difficult to predict. As a result, the Company’s accounting estimates and assumptions may change over time in response to COVID-19. Such changes could result in future impairments of goodwill, intangibles, long-lived assets, inventories, incremental credit losses on receivables and AFS debt securities, or an increase in the Company’s insurance liabilities as of the time of a relevant measurement event (see Note 14).

f.Certain prior period amounts have been reclassified to conform to the current period presentation.

SEGMENT INFORMATION (Schedule of Reportable Segments and Operating Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Segment Reporting Information [Line Items]
Revenues	$ 431,218	$ 271,871
Cost of revenues	291,210	185,761
Gross profit	140,008	86,110
Research and development	36,695	26,199
Sales and marketing	24,253	20,172
General and administrative	16,185	11,691
Segment profit (loss)	42,248	17,975
Solar profit	87,970	44,830
All other loss	9,323	3,627
Segments operating profit	78,647	41,203
Expenses not allocated to segments:
Stock based compensation expenses	12,773	9,704
Amortization	2,686	1,971
Legal settlement (see Note 11)	(4,900)
Cost of products adjustment	313	682
Other unallocated amounts		798
Consolidated operating income	67,775	28,048
Solar [Member]
Segment Reporting Information [Line Items]
Revenues	407,647	253,069
Cost of revenues	264,815	166,315
Gross profit	142,832	86,754
Research and development	27,083	20,231
Sales and marketing	18,623	15,200
General and administrative	9,156	6,493
Segment profit (loss)	87,970	44,830
All Other [Member]
Segment Reporting Information [Line Items]
Revenues	23,571	18,802
Cost of revenues	21,452	16,333
Gross profit	2,119	2,469
Research and development	4,209	2,442
Sales and marketing	2,142	1,710
General and administrative	5,091	1,944
Segment profit (loss)	$ (9,323)	$ (3,627)

COMMITMENTS AND CONTINGENT LIABILITIES

3 Months Ended

Mar. 31, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 8:-COMMITMENTS AND CONTINGENT LIABILITIES

a.Guarantees:

As of March 31, 2020, contingent liabilities exist regarding guarantees in the amounts of $51,472, $18,643, $2,033 and $56 in respect of projects with customers, bank loans, office rent lease agreements and customs transactions, respectively.

b.Contractual purchase obligations:

The Company has contractual obligations to purchase goods and raw materials.

These contractual purchase obligations relate to inventories held by contract manufacturers and purchase orders initiated by the contract manufacturers and suppliers, which cannot be canceled without penalty. The Company utilizes third parties to manufacture its products. In addition, it acquires raw materials or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on its projected demand and manufacturing needs.

As of March 31, 2020, the Company had non-cancellable purchase obligations totaling approximately $500,414 out of which the Company already recorded a provision for loss in the amount of $2,119.

As of March 31, 2020, the Company had contractual obligations for capital expenditures totaling approximately $70,961. These commitments reflect purchases of automated assembly lines and other machinery related to the Company’s manufacturing.

c.Legal claims:

From time to time, the Company may be involved in various claims and legal proceedings. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss. These accruals are reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter.

In September, 2018, the Company’s German subsidiary, SolarEdge Technologies GmbH received a complaint filed by competitor SMA Solar Technology AG (“SMA”). The complaint, filed in the District Court Düsseldorf, Germany, alleges that SolarEdge's 12.5kW - 27.6kW inverters infringe two of the plaintiff’s patents. In its complaint, SMA requests inter alia an injunction and a determination for a claim for damages for sales in Germany. Plaintiff also asserts a value in dispute of 5 million Euros (approximately $5,500) for both patents. In November 2019, the first instance court accepted the claim of infringement for one of the two patents and the Company has filed an appeal to the Appeals Court Dusseldorf and is challenging the validity of the allegedly infringed patent in the German Patent Court. Also, in November 2019 the first instance court stayed the infringement proceedings regarding the other one of the two patents since it considered it to be highly likely that the patent would be invalid. The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against these lawsuits.

F - 17

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 8:-COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)

In May 2019, the Company was served with three lawsuits by Huawei Technologies Co., Ltd., a Chinese entity (“Huawei”), against the Company's two Chinese subsidiaries and its equipment manufacturer in China. The lawsuits, filed in the Guangzhou intellectual property court, allege infringement of three patents and ask for an injunction of manufacture, use, sale and offer for sale, and damage awards of 30 million RMB (approximately $4,250). Following the receipt of the lawsuits, the Company filed three lawsuits in China against Huawei for unauthorized use of patented technology. The Company believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against these lawsuits.

In August 2019, the Company was served with a lawsuit by certain former shareholders of S.M.R.E S.p.A (“SMRE”), against its Italian subsidiary that purchased the shares of SMRE in the tender offer which followed the SMRE Acquisition. The shareholders who tendered their shares are asking for the difference between 6 Euro per share, which is the amount they tendered their shares, and 6.77 Euro per share, for a total award of 2.7 million Euros (approximately $2,950). The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit.

In December 2019, the Company received a lawsuit filed by a former consultant of the Company and its Israeli subsidiary in the amount of 25.5 million NIS (approximately $7,150) claiming damages caused relating to a terminated consulting agreement and stock options therein. The Company believes it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit.

WARRANTY OBLIGATIONS (Tables)

3 Months Ended

Mar. 31, 2020

Product Warranties Disclosures [Abstract]

Schedule of Warranty Obligations

Changes in the Company’s product warranty obligations for the three months ended March 31, 2020 and 2019 were as follows:

	Three months ended March 31,
	2020			2019


Balance, at beginning of period	$	172,563		$	121,826
Additions and adjustments to cost of revenues		26,373			22,105
Usage and current warranty expenses		(12,679	)		(7,185	)

Balance, at end of period		186,257			136,746
Less current portion		(70,158	)		(35,229	)

Long-term portion	$	116,099		$	101,517

EARNINGS PER SHARE (Schedule of Computation of Basic and Diluted Net Earnings (Loss) Per Share) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Numerator:
Net income	$ 42,248	$ 17,975
Net loss attributable to Non-controlling interests		1,041
Net income attributable to SolarEdge Technologies, Inc.	$ 42,248	$ 19,016
Denominator:
Shares used in computing net earnings per share of common stock, basic	49,193,240	47,020,218
Effect of stock-based awards	2,979,480	2,006,109
Shares used in computing net earnings per share of common stock, diluted	52,172,720	49,026,327

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

MARKETABLE SECURITIES (Tables)

3 Months Ended

Mar. 31, 2020

Marketable Securities [Abstract]

Schedule of AFS Marketable Debt Securities

The following table summarizes the AFS marketable debt securities as of March 31, 2020:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

AFS – matures within one year:
Corporate bonds	$	95,321	$	101	$	(279	)	$	95,143

AFS – matures after one year:
Corporate bonds		103,376		104		(1,023	)		102,457
Governmental bonds		1,398		8		-			1,406
		104,774		112		(1,023	)		103,863

Total	$	200,095	$	213	$	(1,302	)	$	199,006

F - 12

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 3:-MARKETABLE SECURITIES (Cont.)

The following table summarizes the AFS marketable debt securities as of December 31, 2019:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

AFS – matures within one year:
Corporate bonds	$	91,677	$	196	$	(28	)	$	91,845

AFS – matures after one year:
Corporate bonds		117,692		336		(250	)		117,778
Governmental bonds		1,398		-		-			1,398
		119,090		336		(250	)		119,176

Total	$	210,767	$	532	$	(278	)	$	211,021

SUBSEQUENT EVENTS (Details) $ in Millions	1 Months Ended
SUBSEQUENT EVENTS (Details) $ in Millions	Apr. 29, 2020 USD ($) m²	Mar. 31, 2020
Subsequent Event [Member]
Area of land \| m²	56,143
Purchase land amount \| $	$ 9
Senior Executives [Member]
Percentage of salaries reduced		20.00%
Directors [Member]
Percentage of salaries reduced		20.00%

INCOME TAXES (Schedule of Taxes on Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Taxes Schedule Of Taxes On Income Details
Current period taxes	$ 12,458	$ 4,895
Deferred tax income net, and others	(3,536)	(973)
Taxes on income	$ 8,922	$ 3,922

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

OTHER OPERATING INCOME

3 Months Ended

Mar. 31, 2020

Other Income and Expenses [Abstract]

OTHER OPERATING INCOME

NOTE 11:-OTHER OPERATING INCOME

At the time of the acquisition of Kokam Co., Ltd. (“Kokam”), Kokam had an outstanding claim against it for damages. The claim was settled for an amount of $4,900, which was recognized as an expense in other operating expenses in the consolidated statement of income in the year ended December 31, 2019. In March 2020, the Company was indemnified for the full amount by a major selling shareholder of Kokam. The Company recognized this as income in other operating income.

INCOME TAXES (Schedule of Uncertain Tax Positions) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Balance at January 1,	$ 8,962	$ 8,499
Increases related to current year tax positions	96	463
Closing balance	$ 9,058	$ 8,962

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 6:-DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company accounts for derivatives and hedging based on ASC 815 (“Derivatives and Hedging”). ASC 815 requires the Company to recognize all derivatives on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.

To protect against the increase in value of forecasted foreign currency cash flows resulting from salary denominated in the Israeli currency, the New Israeli Shekels (“NIS”), during the three months ended March 31, 2020, the Company instituted a foreign currency cash flow hedging program. The Company hedges portions of the anticipated payroll denominated in NIS for a period of one to six months with hedging contracts.

Accordingly, when the dollar strengthens against the foreign currencies, the decline in present value of future foreign currency expenses is offset by losses in the fair value of the hedging contracts. Conversely, when the dollar weakens, the increase in the present value of future foreign currency cash flows is offset by gains in the fair value of the hedging contracts. These hedging contracts are designated as cash flow hedges, as defined by ASC 815 and are all effective hedges.

As of March 31, 2020, the Company entered into forward contracts to sell U.S. dollars for NIS in the amount of $17,985 for a period of six months. See Note 5 for information on the fair value of these hedging contracts.

The fair value of derivative assets as of March 31, 2020, was $613, which was recorded in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets. As of December 31, 2019, the Company had no derivative instruments.

For the three months ended March 31, 2020, the Company recorded unrealized gain in the amount of $538, net of tax effect, in “accumulated other comprehensive loss” related to the derivative assets designated as hedging instruments.

The Company had no gains or losses related to derivative instruments during the three months ended March 31, 2019.

SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14:-SUBSEQUENT EVENTS

a.Subsequent to March 31, 2020, the Company’s senior executives who had already waived their 2020 base salary increases also agreed voluntarily to reduce their base salaries by 20%. In addition, the Company’s directors agreed to reduce the cash portion of their compensation by 20% and the Company has temporarily put on hold most plans for expanding its workforce and suspended planned salary increases.

b.On April 29, 2020, the Company signed an agreement for the purchase of 56,143 square meters of land in South Korea for the development of a factory for lithium-ion cells and batteries. The land purchase is for approximately $9 million to be paid over the next three years.

CREDIT LOSSES

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

CREDIT LOSSES

NOTE 7:-CREDIT LOSSES

Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, prospectively. This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. As stated above, the Company didn’t record a noncash cumulative effect adjustment on the opening consolidated balance sheet as of January 1, 2020, due to immateriality.

The Company is exposed to credit losses primarily through sales of products. The Company’s expected loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables.

Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is based on aging of the accounts receivable balances and the financial condition of customers. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default.

The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted as of March 31, 2020. Estimates are used to determine the allowance. The allowance is based on assessment of anticipated payment and other historical, current and future information that is reasonably available.

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected:

	Three months ended March 31,
	2020


Balance, at beginning of period	$	2,473
Provision for expected credit losses		2,442
Amounts written off charged against the allowance and others		(406	)

Balance, at end of period	$	4,509

STOCKHOLDERS' EQUITY (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 12,773	$ 9,704
Unrecognized compensation expense	141,601
General and administrative expenses	16,185	$ 11,691
Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Intrinsic value of options exercised	$ 47,898
Weighted average grant date fair value of options granted	$ 53.01
Maximum [Member] \| Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options available for future grant under the plan	10,000,000
2007 Plan, Transferred to 2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options available for future grant under the plan	379,358
2015 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options reserved for issuance under the plan	12,828,270
2015 Plan [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual increase percentage	5.00%
2015 Plan [Member] \| Common Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options available for future grant under the plan	8,627,031
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options reserved for issuance under the plan	2,687,451
Number of options available for future grant under the plan	2,159,092
Maximum number of excess shares authorized	487,643
Number of Common stock purchased	528,359
Maximum percentage of salary	10.00%
Maximum amount authorized per person	$ 10
Maximum percentage of common stock	85.00%
ESPP [Member] \| Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Annual increase percentage	1.00%

WARRANTY OBLIGATIONS (Details) - USD ($) $ in Thousands	3 Months Ended
WARRANTY OBLIGATIONS (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Mar. 31, 2019
Changes in the Company's product warranty liability
Balance, at beginning of period	$ 172,563	$ 121,826
Additions and adjustments to cost of revenues	26,373	22,105
Usage and current warranty expenses	(12,679)	(7,185)
Balance, at end of period	186,257	136,746
Less current portion	(70,158)	(35,229)
Long term portion	$ 116,099	$ 101,517

STOCKHOLDERS' EQUITY (Schedule of Stock Option Activity) (Details) - Option [Member] - Employees and Members of Board of Directors [Member] $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares
Number of Options
Outstanding as of December 31, 2019 \| shares	2,112,009
Granted \| shares	59,558
Exercised \| shares	(428,300)
Forfeited and expired \| shares
Outstanding as of March 31, 2020 \| shares	1,743,267
Vested and expected to vest as of March 31, 2020 \| shares	2,143,613
Exercisable as of March 31, 2020 \| shares	1,406,616
Weighted average exercise price
Outstanding as of December 31, 2019 \| $ / shares	$ 15.44
Granted \| $ / shares	101.81
Exercised \| $ / shares	7.72
Forfeited and expired \| $ / shares
Outstanding as of March 31, 2020 \| $ / shares	20.28
Vested and expected to vest as of March 31, 2020 \| $ / shares	17.51
Exercisable as of March 31, 2020 \| $ / shares	$ 15.04
Weighted average remaining contractual term in years
Outstanding as of December 31, 2019	3 years 6 months 29 days
Ountstanding as of March 31, 2020	3 years 9 months 3 days
Vested and expected to vest as of March 31, 2020	5 years 7 months 20 days
Exercisable as of March 31, 2020	2 years 8 months 8 days
Aggregate intrinsic Value
Outstanding as of December 31, 2019 \| $	$ 168,229
Ountstanding as of March 31, 2020 \| $	108,568
Vested and expected to vest as of March 31, 2020 \| $	139,067
Exercisable as of March 31, 2020 \| $	$ 94,018

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2020	May 07, 2020
Document and Entity Information [Abstract]
Entity Central Index Key	0001419612
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2020
Entity File Number	001-36894
Entity Registrant Name	SOLAREDGE TECHNOLOGIES, INC.
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes
Entity Tax Identification Number	20-5338862
Entity Address, Country	IL
Entity Address, City or Town	Herziliya Pituach
Entity Address, State or Province	DE
Entity Address, Address Line One	1 HaMada Street
Entity Address, Postal Zip Code	4673335
City Area Code	972
Local Phone Number	(9) 957-6620
Entity Information, Former Legal or Registered Name	N/A
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Title of each class	Common stock, par value $0.0001 per share
Trading Symbol	SEDG
Name of Exchange on which Security is Registered	NASDAQ
Entity Common Stock, Shares Outstanding		49,630,559

GENERAL (Narrative) (Details)	3 Months Ended	12 Months Ended
GENERAL (Narrative) (Details)	Mar. 31, 2020	Dec. 31, 2019
Accounts Payable [Member]
Organization Consolidation and Presentation of Financial Statements [Line Items]
Concentration risk (as a percent)	43.40%	42.30%

SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 13:-SEGMENT INFORMATION

Following three acquisitions completed during 2018 and 2019, the Company has changed its segments measurement, beginning in 2019. The purpose of the new measurement is to provide the Company’s chief operating decision maker (“CODM”) better information to asses’ segment performance and to make resource allocation decisions. The Company now operates in five different operating segments: Solar, UPS, energy storage, e-Mobility and machinery.

The Company's CODM is our Chief Executive Officer who makes resource allocation decisions and assesses performance based on financial information presented on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the operating segments.

Segment profit is comprised of gross profit for the segment less operating expenses that do not include amortization, stock based compensation expenses and certain other items.

The Company manages its assets on a group basis, not by segments, as many of its assets are shared or commingled. The Company’s CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

The Company identified one operating segment as reportable – the solar segment. The other operating segments are insignificant individually and in aggregate and therefore their results are presented together under “All other”.

The solar segment includes the design, development, manufacturing, and sales of an intelligent inverter solution designed to maximize power generation at the individual PV module level. The solution consists mainly of the Company’s power optimizers, inverters and cloud-based monitoring platform.

The “All other” category includes the design, development, manufacturing and sales of UPS products, energy storage products, e-Mobility products, and special machines for automated and semi-automated linear sewing, digital welding and digital cutting.

F - 23

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 13:-SEGMENT INFORMATION (cont.)

Information on reportable segments and reconciliation to consolidated operating income is as follows:

	Three months ended					Three months ended
	March 31, 2020					March 31, 2019
	Solar		All other			Solar		All other
Revenues	$	407,647	$	23,571		$	253,069	$	18,802
Cost of revenues		264,815		21,452			166,315		16,333
Gross profit		142,832		2,119			86,754		2,469
Research and development		27,083		4,209			20,231		2,442
Sales and marketing		18,623		2,142			15,200		1,710
General and administrative		9,156		5,091			6,493		1,944
Segments profit (loss)	$	87,970	$	(9,323	)	$	44,830	$	(3,627	)

	Three months ended
	March 31,
	2020			2019

Solar profit	$	87,970		$	44,830
All other loss		9,323			3,627
Segments operating profit		78,647			41,203
Expenses not allocated to segments:
Stock based compensation expenses		12,773			9,704
Amortization		2,686			1,971
Legal settlement (see Note 11)		(4,900	)		-
Cost of products adjustments		313			682
Other unallocated expenses		-			798
Consolidated operating income	$	67,775		$	28,048

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowances of trade receivable	$ 4,509	$ 2,473
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized shares	125,000,000	125,000,000
Common stock, issued shares	49,599,493	49,081,457
Common stock, outstanding shares	49,599,493	48,898,062

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows provided by operating activities:
Net income	$ 42,248	$ 17,975
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment	5,004	3,870
Amortization of intangible assets	2,321	1,971
Amortization of premium and accretion of discount on available-for-sale marketable securities, net	120	(59)
Stock-based compensation expenses	12,773	9,704
Deferred income tax benefit, net	(2,859)	(973)
Other expenses, net	235	186
Changes in assets and liabilities:
Inventories, net	(29,004)	964
Prepaid expenses and other assets	49,888	10,885
Trade receivables, net	59,420	(7,379)
Operating lease right-of-use assets and liabilities, net and effect of exchange rate differences	(1,247)	828
Trade payables, net	(17,589)	(21,720)
Employees and payroll accruals	11,821	3,250
Warranty obligations	13,809	14,947
Deferred revenues and customers advances	(31,729)	1,730
Other liabilities	(7,466)	20,271
Net cash provided by operating activities	107,745	56,450
Cash flows from investing activities:
Proceeds from sales and maturities of available-for-sale marketable securities	42,333	44,575
Purchase of property, plant and equipment	(27,053)	(10,620)
Investment in available-for-sale marketable securities	(31,924)	(15,316)
Withdrawal from (investment in) bank deposits	(3,316)	3,813
Withdrawal from (investment in) restricted bank deposits	36	(182)
Business combination, net of cash acquired		(39,315)
Net cash used in investing activities	(19,924)	(17,045)
Cash flows from financing activities:
Repayment of bank loans	(15,232)	(1,003)
Proceeds from bank loans	15,295	51
Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards	3,308	309
Change in non-controlling interests		(1,987)
Other financing activities	(56)
Net cash provided by (used in) financing activities	3,315	(2,630)
Increase in cash, cash equivalents and restricted cash	91,136	36,775
Cash, cash equivalents and restricted cash at the beginning of the period	223,901	187,764
Effect of exchange rate differences on cash, cash equivalents and restricted cash	9,035	1,939
Cash, cash equivalents and restricted cash at the end of the period	324,072	226,478
Supplemental disclosure of non-cash activities:
Operating lease, right of use asset	$ 2,158	$ 32,531

COMMITMENTS AND CONTINGENT LIABILITIES (Details) € / shares in Units, $ in Thousands, € in Millions, ₪ in Millions, ¥ in Millions	1 Months Ended		3 Months Ended			12 Months Ended
	Aug. 31, 2019 USD ($)	Aug. 31, 2019 EUR (€) € / shares	Mar. 31, 2020 USD ($)	Mar. 31, 2020 CNY (¥)	Mar. 31, 2020 EUR (€)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 ILS (₪)
Non-cancelable purchase obligations			$ 500,414
Provision for loss			2,119
Contractual obligations for capital expenditures			70,961
Lawsuit claims			4,250
Difference amount of tendered shares for shareholders of SMRE	$ 2,950
Former Consultant and Israeli Subsidiary [Member]
Lawsuit claims						$ 7,150
SMRE [Member] \| Minimum [Member]
Difference amount per share of tendered shares for shareholders of SMRE \| € / shares		€ 6
SMRE [Member] \| Maximum [Member]
Difference amount per share of tendered shares for shareholders of SMRE \| € / shares		€ 6.77
Euro [Member] \| SMRE [Member]
Difference amount of tendered shares for shareholders of SMRE \| €		€ 2.7
RMB [Member]
Lawsuit claims \| ¥				¥ 30
Israel, New Shekels \| Former Consultant and Israeli Subsidiary [Member]
Lawsuit claims \| ₪							₪ 25.5
Patents [Member]
Value in dispute			5,500
Patents [Member] \| Euro [Member]
Value in dispute \| €					€ 5.0
Projects with customers [Member]
Guarantees amount			51,472
Bank loans [Member]
Guarantees amount			18,643
Office Rent Lease Agreements [Member]
Guarantees amount			2,033
Customs Transactions [Member]
Guarantees amount			$ 56

FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Measured at Fair Value

The following table sets forth the Company’s assets that were measured at fair value as of March 31, 2020 and December 31, 2019, by level within the fair value hierarchy:

		Fair value measurements as of
	Fair Value	March 31,		December 31,
Description	Hierarchy	2020		2019


Measured at fair value on a recurring basis:

Assets:
Cash equivalents:
Money market mutual funds	Level 1	$	28,412	$	527

Derivative instruments asset:
Forward contracts designated as hedging instruments	Level 2	$	613	$	-

Short-term marketable securities:
Corporate bonds	Level 2	$	95,143	$	91,845

Long-term marketable securities:
Corporate bonds	Level 2	$	102,457	$	117,778
Governmental bonds	Level 2	$	1,406	$	1,398

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

MARKETABLE SECURITIES (Schedule of AFS Marketable Debt Securities) (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
AFS - matures after one year, Amortized cost	$ 104,774	$ 119,090
AFS - matures after one year, Gross unrealized gains	112	336
AFS - matures after one year, Gross unrealized losses	(1,023)	(250)
AFS - matures after one year, Fair value	103,863	119,176
Amortized cost	200,095	210,767
Gross unrealized gains	213	532
Gross unrealized losses	(1,023)	(278)
Fair value	199,006	211,021
Corporate bonds [Member]
AFS - matures within one year, Amortized cost	95,321	91,677
AFS - matures within one year, Gross unrealized gains	101	196
AFS - matures within one yearr, Gross unrealized losses	(279)	(28)
AFS - matures within one year, Fair value	95,143	91,845
AFS - matures after one year, Amortized cost	103,376	117,692
AFS - matures after one year, Gross unrealized gains	104	336
AFS - matures after one year, Gross unrealized losses	(1,302)	(250)
AFS - matures after one year, Fair value	102,457	117,778
Governmental bonds [Member]
AFS - matures after one year, Amortized cost	1,398	1,398
AFS - matures after one year, Gross unrealized gains	8
AFS - matures after one year, Gross unrealized losses
AFS - matures after one year, Fair value	$ 1,406	$ 1,398

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 10:-EARNINGS PER SHARE

Basic net Earnings Per Share (“EPS”) is computed by dividing the net earnings attributable to SolarEdge Technologies, Inc. by the weighted-average number of shares of common stock outstanding during the period.

Diluted net EPS is computed by giving effect to all potential shares of common stock, including stock options, to the extent dilutive, all in accordance with ASC No. 260, "Earnings Per Share."

No shares were excluded from the calculation of diluted net EPS due to their anti-dilutive effect for the three months ended March 31, 2020 and 2019.

F - 21

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 10:-EARNINGS PER SHARE (Cont.)

The following table presents the computation of basic and diluted net EPS attributable to SolarEdge Technologies, Inc. for the periods presented:

	Three months ended March 31,
	2020		2019


Numerator:
Net income	$	42,248	$	17,975
Net loss attributable to Non-controlling interests		-		1,041
Net income attributable to SolarEdge Technologies, Inc.	$	42,248	$	19,016

Denominator:
Shares used in computing net earnings per share of common stock, basic		49,193,240		47,020,218
Effect of stock-based awards		2,979,480		2,006,109
Shares used in computing net earnings per share of common stock, diluted		52,172,720		49,026,327

CREDIT LOSSES (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Schedule of Allowance for Credit Losses

	Three months ended March 31,
	2020


Balance, at beginning of period	$	2,473
Provision for expected credit losses		2,442
Amounts written off charged against the allowance and others		(406	)

Balance, at end of period	$	4,509

STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

STOCKHOLDERS' EQUITY

NOTE 9:-STOCKHOLDERS’ EQUITY

a.Common Stock:

	Number of shares
	Authorized as of				Issued as of				Outstanding as of
	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019

Stock of $0.0001 par value:
Common stock		125,000,000		125,000,000		49,599,493		49,081,457		49,599,493		48,898,062

b.Stock Incentive plans:

The Company’s 2007 Global Incentive Plan (the “2007 Plan”) was adopted by the board of directors on August 30, 2007. The 2007 Plan terminated upon the Company’s IPO on March 31, 2015 and no further awards may be granted thereunder. All outstanding awards will continue to be governed by their existing terms and 379,358 available options for future grant were transferred to the Company’s 2015 Global Incentive Plan (the “2015 Plan”) and are reserved for future issuances under the 2015 plan.

F - 18

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 9:-STOCKHOLDERS’ EQUITY (Cont.)

The 2015 Plan became effective upon the consummation of the IPO. The 2015 Plan provides for the grant of options, RSUs and other share-based awards to directors, employees, officers, and nonemployees of the Company and its Subsidiaries. As of March 31, 2020, a total of 12,828,270 shares of common stock were reserved for issuance under the 2015 Plan (the “Share Reserve”).

The Share Reserve will automatically increase on January 1st of each year during the term of the 2015 Plan, commencing on January 1st of the year following the year in which the 2015 Plan becomes effective, in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year; provided, however, that our board of directors may determine that there will not be a January 1st increase in the Share Reserve in a given year or that the increase will be less than 5% of the shares of capital stock outstanding on the preceding December 31st.

The aggregate maximum number of shares of common stock that may be issued on the exercise of incentive stock options is 10,000,000. As of March 31, 2020, an aggregate of 8,627,031 shares of common stock are still available for future grant under the 2015 Plan.

A summary of the activity in the stock options granted to employees and members of the board of directors for the three months ended March 31, 2020 and related information are as follows:

	Number of Options			Weighted average exercise price		Weighted average remaining contractual term in years		Aggregate intrinsic Value

Outstanding as of December 31, 2019		2,112,009			15.44		3.58		168,229
Granted		59,558			101.81
Exercised		(428,300	)		7.72
Forfeited or expired		-			-
Outstanding as of March 31, 2020		1,743,267			20.28		3.76		108,568

Vested and expected to vest as of March 31, 2020		2,143,613			17.51		5.64		139,067

Exercisable as of March 31, 2020		1,406,616			15.04		2.69		94,018

The aggregate intrinsic value represents the total intrinsic value (the difference between the fair value of the Company’s common stock as of the last day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on the last day of each period.

F - 19

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 9:-STOCKHOLDERS’ EQUITY (Cont.)

The total intrinsic value of options exercised during the three months ended March 31, 2020 was $47,898.

The weighted average grant date fair values of options granted to employees and executive directors during the three months ended March 31, 2020 was $53.01.

A summary of the activity in the RSUs granted to employees and directors for the three months ended March 31, 2020 is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of December 31, 2019		2,742,589			52.77
Granted		61,524			101.87
Vested		(268,648	)		38.96
Forfeited		(58,611	)		54.27
Unvested as of March 31, 2020		2,476,854			55.45

f.Employee Stock Purchase Plan (“ESPP”):

The Company adopted an ESPP effective upon the consummation of the IPO. As of March 31, 2020, a total of 2,687,451 shares were reserved for issuance under this plan. The number of shares of common stock reserved for issuance under the ESPP will increase automatically on January 1st of each year, for ten years, by the lesser of 1% of the total number of shares of the Company’s common stock outstanding on December 31st of the preceding calendar year or 487,643 shares.

However, the Company’s board of directors may reduce the amount of the increase in any particular year at their discretion, including a reduction to zero.

The ESPP is implemented through an offering every six months. According to the ESPP, eligible employees may use up to 10% of their salaries to purchase common stock shares up to an aggregate limit of $10 per participant for every six months’ plan. The price of an ordinary share purchased under the ESPP is equal to 85% of the lower of the fair market value of the ordinary share on the subscription date of each offering period or on the purchase date.

As of March 31, 2020, 528,359 common stock shares had been purchased under the ESPP.

As of March 31, 2020, 2,159,092 common stock shares were available for future issuance under the ESPP.

In accordance with ASC No. 718, the ESPP is compensatory and as such results in recognition of compensation cost.

F - 20

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 9:-STOCKHOLDERS’ EQUITY (Cont.)

g.Stock-based compensation expense for employees and nonemployees:

The Company recognized stock-based compensation expenses related to stock options, RSUs and PSUs granted to employees and non-employee consultants and ESPP in the condensed consolidated statement of income for the three months ended March 31, 2020 and 2019, as follows:

	Three months ended March 31,
	2020		2019

Cost of revenues	$	2,273	$	1,354
Research and development		5,378		3,490
Selling and marketing		3,192		2,404
General and administrative		1,930		2,456

Total stock-based compensation expense	$	12,773	$	9,704

As of March 31, 2020, there were total unrecognized compensation expenses in the amount of $141,601 related to non‑vested equity‑based compensation arrangements granted under the Company’s Plans. These expenses are expected to be recognized during the period from April 1, 2020 through February 29, 2024.

INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Schedule of Inventories

	March 31, 2020		December 31, 2019


Raw materials	$	84,948	$	64,714
Work in process		18,790		20,752
Finished goods		94,819		85,332

	$	198,557	$	170,798

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenues	$ 431,218	$ 271,871
Cost of revenues	291,210	185,761
Gross profit	140,008	86,110
Operating expenses:
Research and development	36,695	26,199
Sales and marketing	24,253	20,172
General and administrative	16,185	11,691
Other operating income	(4,900)
Total operating expenses	72,233	58,062
Operating income	67,775	28,048
Financial expenses, net	16,605	6,151
Income before income taxes	51,170	21,897
Income taxes	8,922	3,922
Net income	42,248	17,975
Net loss attributable to Non-controlling interests		1,041
Net income attributable to SolarEdge Technologies, Inc.	$ 42,248	$ 19,016
Net basic earnings per share of common stock attributable to SolarEdge Technologies, Inc.	$ 0.86	$ 0.40
Net diluted earnings per share of common stock attributable to SolarEdge Technologies, Inc.	$ 0.81	$ 0.39
Weighted average number of shares used in computing net basic earnings per share of common stock	49,193,240	47,020,218
Weighted average number of shares used in computing net diluted earnings per share of common stock	52,172,720	49,026,327

INCOME TAXES

3 Months Ended

Mar. 31, 2020

Income Taxes

INCOME TAXES

NOTE 12:-INCOME TAXES

a.Income taxes (tax benefit) are comprised as follows:

	Three months ended March 31,
	2020			2019


Current period taxes	$	12,458		$	4,895
Deferred tax income, net and others		(3,536	)		(973	)

Taxes on income	$	8,922		$	3,922

F - 22

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 12:-INCOME TAXES (cont.)

b.Uncertain tax positions:

	March 31, 2020		December 31, 2019


Balance at January 1,	$	8,962	$	8,499
Increases related to current year tax positions		96		463

	$	9,058	$	8,962

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Net Earnings (Loss) Per Share

The following table presents the computation of basic and diluted net EPS attributable to SolarEdge Technologies, Inc. for the periods presented:

	Three months ended March 31,
	2020		2019


Numerator:
Net income	$	42,248	$	17,975
Net loss attributable to Non-controlling interests		-		1,041
Net income attributable to SolarEdge Technologies, Inc.	$	42,248	$	19,016

Denominator:
Shares used in computing net earnings per share of common stock, basic		49,193,240		47,020,218
Effect of stock-based awards		2,979,480		2,006,109
Shares used in computing net earnings per share of common stock, diluted		52,172,720		49,026,327

INVENTORIES

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 2:-INVENTORIES

	March 31, 2020		December 31, 2019


Raw materials	$	84,948	$	64,714
Work in process		18,790		20,752
Finished goods		94,819		85,332

	$	198,557	$	170,798

WARRANTY OBLIGATIONS

3 Months Ended

Mar. 31, 2020

Product Warranties Disclosures [Abstract]

WARRANTY OBLIGATIONS

NOTE 4:-WARRANTY OBLIGATIONS

Changes in the Company’s product warranty obligations for the three months ended March 31, 2020 and 2019 were as follows:

	Three months ended March 31,
	2020			2019


Balance, at beginning of period	$	172,563		$	121,826
Additions and adjustments to cost of revenues		26,373			22,105
Usage and current warranty expenses		(12,679	)		(7,185	)

Balance, at end of period		186,257			136,746
Less current portion		(70,158	)		(35,229	)

Long-term portion	$	116,099		$	101,517

OTHER OPERATING INCOME (Details) $ in Thousands	3 Months Ended
OTHER OPERATING INCOME (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Other Operating Expenses Abstract
A settlement of pre-acquisition legal claim against Kokam	$ 4,900

INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2020

Income Taxes Tables

Schedule of Taxes on Income

a.Income taxes (tax benefit) are comprised as follows:

	Three months ended March 31,
	2020			2019


Current period taxes	$	12,458		$	4,895
Deferred tax income, net and others		(3,536	)		(973	)

Taxes on income	$	8,922		$	3,922

Schedule of Uncertain Tax Positions

	March 31, 2020		December 31, 2019


Balance at January 1,	$	8,962	$	8,499
Increases related to current year tax positions		96		463

	$	9,058	$	8,962

STOCKHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Composition of Common Stock Capital

a.Common Stock:

	Number of shares
	Authorized as of				Issued as of				Outstanding as of
	March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019

Stock of $0.0001 par value:
Common stock		125,000,000		125,000,000		49,599,493		49,081,457		49,599,493		48,898,062

Schedule of Stock Option Activity

A summary of the activity in the stock options granted to employees and members of the board of directors for the three months ended March 31, 2020 and related information are as follows:

	Number of Options			Weighted average exercise price		Weighted average remaining contractual term in years		Aggregate intrinsic Value

Outstanding as of December 31, 2019		2,112,009			15.44		3.58		168,229
Granted		59,558			101.81
Exercised		(428,300	)		7.72
Forfeited or expired		-			-
Outstanding as of March 31, 2020		1,743,267			20.28		3.76		108,568

Vested and expected to vest as of March 31, 2020		2,143,613			17.51		5.64		139,067

Exercisable as of March 31, 2020		1,406,616			15.04		2.69		94,018

Schedule of RSU Activity

A summary of the activity in the RSUs granted to employees and directors for the three months ended March 31, 2020 is as follows:

	Number of RSUs			Weighted average grant date fair value
Unvested as of December 31, 2019		2,742,589			52.77
Granted		61,524			101.87
Vested		(268,648	)		38.96
Forfeited		(58,611	)		54.27
Unvested as of March 31, 2020		2,476,854			55.45

Schedule of Recognized Stock-Based Compensation Expense

	Three months ended March 31,
	2020		2019

Cost of revenues	$	2,273	$	1,354
Research and development		5,378		3,490
Selling and marketing		3,192		2,404
General and administrative		1,930		2,456

Total stock-based compensation expense	$	12,773	$	9,704

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

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-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21484-112644

Reference 13: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109259400&loc=d3e21475-112644

+ Details

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) - USD ($)
$ in Thousands

Common Stock [Member]

Additional paid in capital [Member]

Accumulated other comprehensive loss [Member]

Retained earnings [Member]

Total

Non-controlling interests [Member]

Stockholders Equity

Balance at Dec. 31, 2018

$ 5

$ 371,794

$ (524)

$ 191,133

$ 562,408

$ 8,318

$ 570,726

Balance (in shares) at Dec. 31, 2018

46,052,802

Issuance of Common Stock upon exercise of employee and non-employees stock-based awards

^[1]

309

Issuance of Common Stock upon exercise of employee and non-employee stock options, shares

254,515

Equity based compensation expenses to employees and nonemployee

9,704

Issuance of Common stock upon business combination

^[1]

34,601

Issuance of Common stock upon business combination, shares

1,194,046

Non-controlling interests related to business combination

67,734

Change to non-controlling interests

977

1,987

(2,964)

(1,987)

Other comprehensive loss adjustments

(696)

(849)

(1,545)

Net income

19,016

(1,041)

17,975

Balance at Mar. 31, 2019

$ 5

417,385

(1,220)

210,149

626,319

71,198

697,517

Balance (in shares) at Mar. 31, 2019

47,501,363

Balance at Dec. 31, 2019

$ 5

475,792

(1,809)

337,682

811,670

Balance (in shares) at Dec. 31, 2019

48,898,062

Issuance of Common Stock upon exercise of employee and non-employees stock-based awards

^[1]

3,308

Issuance of Common Stock upon exercise of employee and non-employee stock options, shares

701,431

Equity based compensation expenses to employees and nonemployee

12,773

Change to non-controlling interests

Other comprehensive loss adjustments

(3,581)

Net income

42,248

Balance at Mar. 31, 2020

$ 5

$ 491,873

$ (5,390)

$ 379,930

$ 866,418

Balance (in shares) at Mar. 31, 2020

49,599,493

[1]	Represents an amount less than $1.

STOCKHOLDERS' EQUITY (Schedule of Composition of Common Stock Capital) (Details) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Common stock capital
Par value	$ 0.0001	$ 0.0001
Authorized	125,000,000	125,000,000
Common stock, issued shares	49,599,493	49,081,457
Common stock, outstanding shares	49,599,493	48,898,062

INVENTORIES (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 84,948	$ 64,714
Work in process	18,790	20,752
Finished goods	94,819	85,332
Inventories, net	$ 198,557	$ 170,798

STOCKHOLDERS' EQUITY (Schedule of RSU Activity) (Details) - Restricted Stock Units (RSUs) [Member] - Employees and Members of Board of Directors [Member]	3 Months Ended
	Mar. 31, 2020 $ / shares shares
Number of RSUs
Unvested as of December 31, 2019 \| shares	2,742,589
Granted \| shares	61,524
Vested \| shares	(268,648)
Forfeited \| shares	(58,611)
Unvested as of March 31, 2020 \| shares	2,476,854
Weighted average grant date fair value
Unvested as of December 31, 2019 \| $ / shares	$ 52.77
Granted \| $ / shares	101.87
Vested \| $ / shares	38.96
Forfeited \| $ / shares	54.27
Unvested as of March 31, 2020 \| $ / shares	$ 55.45

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Derivative [Line Items]
Fair value of derivative assets	$ 613
Unrealized gain	538
Foreign Exchange Forward Contracts [Member]
Derivative [Line Items]
Forward contracts to sell U.S. dollars for NIS	$ 17,985

MARKETABLE SECURITIES

3 Months Ended

Mar. 31, 2020

Marketable Securities [Abstract]

MARKETABLE SECURITIES

NOTE 3:-MARKETABLE SECURITIES

The following table summarizes the AFS marketable debt securities as of March 31, 2020:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

AFS – matures within one year:
Corporate bonds	$	95,321	$	101	$	(279	)	$	95,143

AFS – matures after one year:
Corporate bonds		103,376		104		(1,023	)		102,457
Governmental bonds		1,398		8		-			1,406
		104,774		112		(1,023	)		103,863

Total	$	200,095	$	213	$	(1,302	)	$	199,006

F - 12

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 3:-MARKETABLE SECURITIES (Cont.)

The following table summarizes the AFS marketable debt securities as of December 31, 2019:

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value

AFS – matures within one year:
Corporate bonds	$	91,677	$	196	$	(28	)	$	91,845

AFS – matures after one year:
Corporate bonds		117,692		336		(250	)		117,778
Governmental bonds		1,398		-		-			1,398
		119,090		336		(250	)		119,176

Total	$	210,767	$	532	$	(278	)	$	211,021

As of March 31, 2020, the Company didn’t record an allowance for credit losses for its AFS marketable debt securities (See Note 7).

CREDIT LOSSES (Schedule of Allowance for Credit Losses) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Receivables [Abstract]
Balance, at beginning of period	$ 2,473
Provision for expected credit losses	2,442
Amounts written off charged against the allowance and others	(406)
Balance, at end of period	$ 4,509

SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

Schedule of Reportable Segments and Operating Income

Information on reportable segments and reconciliation to consolidated operating income is as follows:

	Three months ended					Three months ended
	March 31, 2020					March 31, 2019
	Solar		All other			Solar		All other
Revenues	$	407,647	$	23,571		$	253,069	$	18,802
Cost of revenues		264,815		21,452			166,315		16,333
Gross profit		142,832		2,119			86,754		2,469
Research and development		27,083		4,209			20,231		2,442
Sales and marketing		18,623		2,142			15,200		1,710
General and administrative		9,156		5,091			6,493		1,944
Segments profit (loss)	$	87,970	$	(9,323	)	$	44,830	$	(3,627	)

	Three months ended
	March 31,
	2020			2019

Solar profit	$	87,970		$	44,830
All other loss		9,323			3,627
Segments operating profit		78,647			41,203
Expenses not allocated to segments:
Stock based compensation expenses		12,773			9,704
Amortization		2,686			1,971
Legal settlement (see Note 11)		(4,900	)		-
Cost of products adjustments		313			682
Other unallocated expenses		-			798
Consolidated operating income	$	67,775		$	28,048

FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 5:-FAIR VALUE MEASUREMENTS

In accordance with ASC 820, the Company measures its cash equivalents, foreign currency derivative contracts, and marketable securities, at fair value using the market approach valuation technique. Cash equivalents and marketable securities are classified within Level 1 or Level 2. This is because these assets are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Foreign currency derivative contracts are classified within the Level 2 value hierarchy, as the valuation inputs are based on quoted prices and market observable data of similar instruments.

The following table sets forth the Company’s assets that were measured at fair value as of March 31, 2020 and December 31, 2019, by level within the fair value hierarchy:

		Fair value measurements as of
	Fair Value	March 31,		December 31,
Description	Hierarchy	2020		2019


Measured at fair value on a recurring basis:

Assets:
Cash equivalents:
Money market mutual funds	Level 1	$	28,412	$	527

Derivative instruments asset:
Forward contracts designated as hedging instruments	Level 2	$	613	$	-

Short-term marketable securities:
Corporate bonds	Level 2	$	95,143	$	91,845

Long-term marketable securities:
Corporate bonds	Level 2	$	102,457	$	117,778
Governmental bonds	Level 2	$	1,406	$	1,398

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

STOCKHOLDERS' EQUITY (Schedule of Recognized Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 12,773	$ 9,704
Cost of revenues [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	2,273	1,354
Research and development [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	5,378	3,490
Selling and marketing [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	3,192	2,404
General and administrative [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation expense	$ 1,930	$ 2,456