Israel-based solar inverter manufacturer SolarEdge reported revenue of $346.2 million in the second quarter (Q2) of 2026, a 19.6% year-over-year (YoY) increase from $289.4 million and surpassing analysts’ expectations by $5.08 million.

The company returned to operating profitability for the first time since the second quarter of 2023.

Chief Executive Officer Yehoshua Nir said the U.S. residential market remained soft during the quarter because of a slower tax equity funding environment and continued uncertainty around Foreign Entity of Concern (FEOC).

He said the funding environment had reduced project starts, strained installers’ cash flows, and prompted distributors to lower inventory levels. The company expects these conditions to continue through the third quarter.

Revenue from the U.S. totaled $154.9 million, representing 44.7% of SolarEdge’s total revenue. Revenue from Europe totaled $154.4 million, accounting for 44.6% of total revenue.

Revenue from other markets totaled $36.9 million, representing 10.7% of total revenue.

Nir said SolarEdge’s U.S. commercial and industrial business continued to gain momentum, with the company capturing more than 50% of U.S. C&I rooftop installations. He added that SolarEdge systems are now installed on the rooftops of more than 60% of Fortune 100 companies.

European revenue more than doubled year over year, driven by higher demand for solar and storage systems ahead of rising electricity prices and the phaseout of net metering in several major markets. Shipments of the three phase version of the company’s Nexis platform exceeded $60 million during the quarter.

Nir said retrofit campaigns in the Netherlands and the DACH region generated more than $20 million in upsell revenue during the quarter. He attributed the growth to SolarEdge’s installed base of more than one million homes across those markets and said the retrofit opportunity is expected to continue expanding.

Net income stood at $3.6 million, compared to a net loss of $47.7 million in the same period last year.

Diluted earnings per share (EPS) stood at $0.05, beating analysts’ expectations by $0.05. The company had reported an EPS loss of $0.81 in the corresponding quarter of 2025.

1H 2026

For the first half (1H) of 2026, the company reported revenues of $656.7 million, a 29.1% YoY increase from $508.9 million.

Its net loss narrowed to $22.7 million from $113.8 million in the corresponding period of the previous year.

The EPS loss was $0.38, compared to an EPS loss of $1.95 in the corresponding period of the previous year.

Chief Financial Officer Maoz Sigron said the company’s non-GAAP gross margin exceeded the high end of its guidance range, supported by continued cost discipline, a favorable product mix, higher operating leverage, and a $13.3 million benefit from International Emergency Economic Powers Act (IEEPA) tariff refunds.

Sigron said the company expects third quarter revenue to range between $310 million and $340 million. He said most of the sequential decline is expected in Europe because of seasonal factors, while the U.S. residential market is expected to remain weak as customers continue to face constrained tax equity funding and uncertainty surrounding FEOC.

The company expects non-GAAP gross margins of 22% to 26% and non-GAAP operating expenses of $86 million to $91 million during the quarter. Sigron added that the midpoint of the guidance would imply a return to non-GAAP operating profitability after accounting for the $11.5 million in IEEPA  tariff refunds received in July.

He added that SolarEdge continues to expect positive free cash flow for the full year. The company plans capital expenditure of $60 million to $80 million in 2026, primarily to expand U.S. production capacity for photovoltaic products and batteries, develop its new headquarters in Israel, advance its AI factory offering, and fund maintenance projects.

Nir said SolarEdge expects to gain market share when the U.S. residential market recovers, citing the company’s alignment with third-party ownership financing models and the volume of safe harbor transactions completed before the July 4 deadline. He added that the outlook for the U.S. commercial and industrial segment remains positive, supported by rising electricity prices and growing data center demand.

Nir noted that channel inventory remains normalized across Europe and the U.S. despite softer demand. He added that storage is becoming a larger share of SolarEdge’s business as attachment rates increase in residential markets and retrofit activity accelerates ahead of feed-in tariff and net metering changes. He also said storage pricing has remained stable, with quarter-over-quarter changes primarily reflecting product mix rather than pricing pressure.

Nexis is manufactured in the U.S. and complies with FCC Covered List requirements. He said the recent FCC action will not delay the product’s rollout and that Nexis has already been approved by multiple financing companies in the U.S.

He also said SolarEdge’s data center power business progressed from product development to customer demonstrations during the quarter. The company expects to complete a working solid-state transformer system by the end of 2026, begin pilot installations in 2027, and start commercial shipments in 2028.

SolarEdge reported revenues of $310.5 million in the first quarter of 2026, a 41.5% YoY jump from $219.5 million and beating analysts’ expectations by $5.03 million.