SolarEdge Technologies announced exceptional results for Q1 2020: It had achieved record revenues of more than $430 million, with gross margin of 32.5% and net income of $50.7 million. “Despite the challenges triggered by COVID-19 during the quarter, we were able to get products to our customers and satisfy demand,” said Zvi Lando, CEO of SolarEdge. But the second quarter is expected to be different: The company’s outlook for the Second Quarter 2020 is of revenues within the range of $305-$335 million and gross margin of 30%-32%.
Based in Herzliya, Israel, SolarEdge provides intelligent inverter solutions for photovoltaic (PV) systems, monitoring platform for PV installations, and other smart energy solutions. During the conference call following the report last week, Lando revealed that during the COVID-19 impacted month of March and April, installation rates of SolarEdge products outside of the US increased by 15% compared to the same period last year.
“Installations in Italy, historically a strong SolarEdge market, declined by 47%. In the last three weeks, however, the installation rates there have started to rise again. In the Netherlands, where we are the market leader, our product installations are flat when compared to March and April of last year. The most positive data comes from Germany where our product installations during this period were up 42%. In the US, during the same period, the installation rate of our products declined by 16% compared to March and April of 2019.
“While it is difficult to foresee how long this downturn will last, we are preparing for various scenarios. In addition, effective April 1, our senior executives voluntarily reduced their base salaries by 20%.” Ronen Faier, Chief Financial Officer, said the company plans to reduce its operating expenses to the level of Q3, 2019 (app. 20% lower): “As part of our reaction to the economic slowdown that we are already seeing from COVID-19, we have reviewed carefully our business plan for 2020 and implemented certain cost-cutting measures.
“It includes a reduction in executive management’s base salary, general halt on recruitment and freeze on salary increases, which were planned for April. In addition, we are eliminating workforce redundancies and adjusting our headcount and to the reduced level of activity in certain regions as well as renegotiating other expenses such as rental agreements and consulting services. Some of these adjustments are still ongoing and the effect will be seen in our operating expenses for Q2 and Q3.”