SolarEdge Technologies, Inc. (NASDAQ:SEDG) shares slid 10.4% on Wednesday after the company’s fourth-quarter revenue forecast fell short of analyst expectations, eclipsing a solid performance in the prior quarter.
For the third quarter, the smart energy solutions provider reported an adjusted loss of $0.31 per share, beating the consensus estimate of a $0.41 loss. Revenue rose to $340.21 million, up 18% from $289.41 million in the prior quarter and 44.5% higher year-over-year, surpassing expectations of $330.29 million.
Margins showed strong recovery, with gross margin rising to 21.2% from 11.1% sequentially, and non-GAAP gross margin improving to 18.8% from 13.1%. The company noted that tariffs negatively impacted margins by about 2% during the period.
However, investors zeroed in on the company’s downbeat fourth-quarter guidance, which overshadowed the upbeat results. SolarEdge projected Q4 revenue between $310 million and $340 million, below the $343.3 million consensus estimate.
“We’re making steady progress in our turnaround, with three consecutive quarters of revenue growth and improving margins, and we’re not done yet,” said Shuki Nir, CEO of SolarEdge. “With energy taking an increasingly vital role in powering the global economy, we believe that SolarEdge is positioned for continued growth, sustained profitability, and leadership in smart energy solutions.”
The company also reported a sharp improvement in cash generation, posting positive free cash flow of $22.8 million, compared with negative $9.1 million in the previous quarter. Operating cash flow totaled $25.6 million, reversing from a $7.8 million outflow previously.
During the quarter, SolarEdge recognized sales from about 92,700 inverters, 2.95 million optimizers, and 230 MWh of PV batteries, reflecting continued adoption of its smart energy ecosystem.