SolarEdge Technologies (SEDG -4.11%), a leading provider of smart energy technology focused on solar inverters and energy management products, released its second quarter 2025 results on August 7, 2025. The company reported non-GAAP revenue of $281.0 million for Q2 2025, ahead of the $274.2 million non-GAAP analyst estimate. Non-GAAP net loss per share was $(0.81) for Q2 2025, beating the expected $(0.88) non-GAAP EPS. Non-GAAP gross margin improved to 13.1% in Q2 2025, but profitability and positive free cash flow remained elusive, reflecting a business still undergoing a turnaround. The quarter showed a sequential recovery in sales and margins, though continued regulatory and demand headwinds persist, particularly in Europe and from recently enacted tariffs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $(0.81) | $(0.88) | $(1.79) | 54.8 % |
| Revenue (Non-GAAP) | $281.0 million | $274.2 million | N/A | N/A |
| Gross Margin (Non-GAAP) | 13.2 % | 0.2 % | +12.9 pp | |
| Operating Expenses (Non-GAAP) | $85.2 million | $114.8 million | (-25.8 %) | |
| Free Cash Flow (Non-GAAP) | $(9.1) million | $(66.9) million | 86.4 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
What SolarEdge Technologies Does and Recent Focus
SolarEdge builds DC-optimized inverter systems used in solar power installations. Its main product lines include power optimizers, string inverters, smart energy management platforms, and batteries for both residential and commercial customers. The company’s technology helps maximize energy generation while allowing real-time monitoring and increased safety for rooftop solar systems.
In recent quarters, the company has prioritized technological innovation, global market expansion, navigating evolving government incentives and tariffs, and aligning its products with higher efficiency and safety standards. Success depends on keeping costs under control, ensuring supply chain diversity, and maintaining competitive product offerings across all the segments it serves.
Quarter Highlights: Revenue Growth, Margin Recovery, and Market Actions
During the quarter, SolarEdge reported non-GAAP revenue growth to $281.0 million in Q2 2025, above non-GAAP estimates and up 32% from the previous quarter on a non-GAAP basis. This marks a second straight period of sequential improvement. The company reported a non-GAAP gross margin of 13.1% for Q2 2025, a marked increase from last year’s 0.2% (non-GAAP) and new tariffs had a roughly one percentage point drag on non-GAAP gross margin—Tariffs are expected to increase their impact later in the year, with management anticipating a 4% to 6% gross margin impact in the second half of 2025. Free cash flow (non-GAAP) turned negative at $(9.1) million for Q2 2025, narrowing the deficit compared to the $(66.9) million outflow in the prior-year period, but swinging down from the previous quarter’s positive result.
Non-GAAP operating expenses declined to $85.2 million in Q2 2025, down 25.8% from Q2 2024. Non-GAAP net loss per share of $(0.81) for Q2 2025 was less severe than analyst expectations or the prior quarter, but the company remains unprofitable. Battery shipments reached 247 megawatt-hours in Q2 2025, a 32% increase over the prior quarter on a non-GAAP basis. Inverter volumes held nearly steady with 1,194 megawatts shipped in Q2 2025.
On technology, SolarEdge advanced its SolarEdge ONE software platform (energy management), and reaffirmed Q4 launch timing for its Nexis residential energy solution. New product launches align its offerings with Germany’s latest regulation 14a and emphasize compliance with safety and cybersecurity standards, as recently validated by independent testing (VDE Renewables). In Q1 2025, SolarEdge highlighted traction in the utility-scale sector, referencing increased revenue from its optimized utility product line.
Geographically, with particular focus on regaining European market share through pricing and promotion campaigns. Notably, Germany and the Netherlands showed increased sell-through in Q1 2025. In the U.S. SolarEdge leveraged its domestic manufacturing base to secure incentives under the Inflation Reduction Act. Management flagged a multi-year partnership in commercial and industrial (C&I) solar installations with a major global logistics group. However, leadership confirmed lingering demand weakness in Europe and noted ongoing challenges from high tariffs—Tariffs are expected to cut 4–6% from gross margins in the second half of 2025, after the approximately 1% non-GAAP gross margin hit.
Looking Ahead: Guidance and Priorities
Guidance for Q3 2025 projects non-GAAP revenue in a range of $315 million to $355 million, which represents approximately 19% sequential growth at the midpoint over Q2 2025 non-GAAP revenue. Non-GAAP gross margin is expected to be within the range of 15% to 19% for Q3 2025, though tariffs will continue to weigh on profitability with an estimated 2% negative impact on non-GAAP gross margin. Management held non-GAAP operating expense forecasts steady at $85–$90 million for Q3 2025, reflecting ongoing cost-control efforts. However, the company did not provide net income guidance, and leadership continues to caution that persistent losses and free cash flow breakeven are the realistic targets for the full year.
Investors and analysts should monitor SolarEdge's margin trajectory, supply chain adaptation in response to tariffs, market recovery in Europe, and progress in commercial and utility battery deployments. Management’s focus remains on margin recovery, inventory reduction, and the U.S. manufacturing ramp, all under uncertain regulatory and demand conditions.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
