Analysis of Reportable Segments
SolarEdge Technologies Inc. operates in 2 segments: Solar and All other.
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- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2015
- Return on Assets (ROA) since 2015
- Price to Earnings (P/E) since 2015
- Price to Operating Profit (P/OP) since 2015
- Price to Sales (P/S) since 2015
- Analysis of Debt
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Segment Profit Margin
SolarEdge Technologies Inc., profit margin by reportable segment
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Solar | |||||
| All other |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The segment profit margin data for the periods from 2018 to 2022 reveals distinct trends for the two segments presented.
- Solar Segment Profit Margin
- The solar segment shows a generally positive profit margin throughout the observed years. Starting from 21.99% in 2019, the margin declined to 18.84% in 2020 but improved to 20.63% in 2021. However, in 2022, there was a noticeable decrease to 16.67%. Despite the fluctuations, the solar segment consistently maintained profitability, though the downward shift in 2022 may suggest emerging pressures or challenges affecting margin performance.
- All Other Segment Profit Margin
- The "All other" segment demonstrates persistent negative profit margins over the entire period, indicating sustained losses. Margins started at -19.29% in 2019 and worsened significantly to -35.84% in 2020. Subsequently, there was an improvement, with margins rising to -26.9% in 2021 and further to -23.95% in 2022. While still negative, the gradual improvement after 2020 suggests some recovery or cost management efforts within this segment, albeit without returning to profitability.
- Overall Trends
- The data indicates a stable yet slightly declining profitability in the core solar segment and ongoing challenges in the other segments, though with some tentative progress. The contrast between the positive margins in the solar segment and negative margins in the other category highlights a divergence in operational performance across business areas. Monitoring these trends closely will be essential for identifying opportunities to sustain and enhance profitability, particularly focusing on mitigating losses in the "All other" segment.
Segment Profit Margin: Solar
SolarEdge Technologies Inc.; Solar; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segments profit (loss) | |||||
| Revenues | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segments profit (loss) ÷ Revenues
= 100 × ÷ =
- Revenue Trends
- Revenues display a consistent upward trajectory from 2019 through 2022. The figures increase from approximately 1.34 billion USD in 2019 to nearly 2.92 billion USD in 2022, indicating significant growth and expansion in the segment over the four-year period.
- Segment Profit (Loss) Evolution
- Segment profit shows fluctuations during the period under review. Starting at around 293.9 million USD in 2019, it declines to approximately 255.7 million USD in 2020, then rebounds to 368.7 million USD in 2021 and increases further to 486.9 million USD in 2022. This pattern signals a temporary dip followed by a robust recovery and substantial profits in the later years.
- Segment Profit Margin Analysis
- The segment profit margin demonstrates a declining trend over the analyzed period. It begins at 21.99% in 2019, decreases to 18.84% in 2020, experiences a modest recovery to 20.63% in 2021, and then falls to its lowest point of 16.67% in 2022. Despite increased profits, the reduced margin suggests rising costs or pricing pressures affecting profitability ratios.
- Overall Insights
- The data indicates strong revenue growth coupled with increasing segment profits in absolute terms, especially notable in 2021 and 2022. However, the downward trending profit margin reveals a diminishing efficiency in profit generation relative to revenue, potentially due to higher operational expenses or competitive market dynamics. The segment appears to be expanding its scale with profit gains but at the cost of decreasing margin percentages.
Segment Profit Margin: All other
SolarEdge Technologies Inc.; All other; segment profit margin calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Segments profit (loss) | |||||
| Revenues | |||||
| Segment Profitability Ratio | |||||
| Segment profit margin1 | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Segment profit margin = 100 × Segments profit (loss) ÷ Revenues
= 100 × ÷ =
- Revenues
- The revenues for the segment demonstrated a consistent upward trend from 2019 to 2022. Starting at $89,042 thousand in 2019, revenues increased to $102,804 thousand in 2020, followed by a more significant rise to $176,167 thousand in 2021, and reaching $188,490 thousand in 2022. This indicates a strong growth trajectory over the period, with the most notable increase occurring between 2020 and 2021.
- Segments Profit (Loss)
- The segment consistently reported losses throughout the period from 2019 to 2022. The loss widened substantially from -$17,174 thousand in 2019 to -$36,844 thousand in 2020, continuing to deepen to -$47,387 thousand in 2021. In 2022, the loss slightly improved to -$45,137 thousand, indicating a marginal reduction but remaining significant in scale.
- Segment Profit Margin
- The segment profit margin followed a similar pattern to the profit (loss), remaining negative throughout. It deteriorated from -19.29% in 2019 to a low of -35.84% in 2020. Although there was some recovery after 2020, the margin still remained substantially negative at -26.9% in 2021 and -23.95% in 2022. This trend suggests ongoing cost or efficiency challenges impacting profitability despite revenue growth.
- Overall Analysis
- While the segment demonstrated robust revenue growth, particularly between 2020 and 2022, this growth has been accompanied by increasing losses initially and only slight improvements thereafter. The negative profit margins throughout the period indicate that increased revenues have not translated into profitability. The slight improvement in the loss and profit margin in the last recorded year may suggest early signs of operational improvement or cost control but profits remain elusive. This trend highlights the importance of addressing cost structures or other factors contributing to sustained losses despite top-line growth.
Revenues
SolarEdge Technologies Inc., revenues by reportable segment
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Solar | |||||
| All other | |||||
| Total |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Solar Segment Revenue
- The solar segment revenue shows a consistent upward trend over the observed periods. Starting from approximately $1.34 billion in 2019, it increased slightly to around $1.36 billion in 2020, representing modest growth. A more pronounced increase occurred in 2021, with revenue reaching approximately $1.79 billion, followed by a substantial rise to about $2.92 billion in 2022. This indicates strong momentum and growing demand within the solar segment.
- All Other Segment Revenue
- Revenues from the "All other" segment also demonstrate a growth pattern over the years. From about $89 million in 2019, it expanded to roughly $103 million in 2020. This growth accelerated in 2021, with revenue reaching approximately $176 million, followed by a more moderate increase to $188 million in 2022. While smaller in magnitude compared to the solar segment, it contributes steadily to the total revenue base.
- Total Revenue
- Total revenues exhibit a clear upward trajectory consistent with the sum of the two segments. Starting at about $1.43 billion in 2019, total revenues grew slightly to approximately $1.46 billion in 2020. Significant growth was observed in 2021, with revenues reaching nearly $1.96 billion, and a strong surge in 2022, with total revenues exceeding $3.11 billion. The accelerating growth in total revenue is primarily driven by the solar segment, with contributions from the other segment enhancing overall revenue diversification.
Segments profit (loss)
SolarEdge Technologies Inc., segments profit (loss) by reportable segment
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Solar | |||||
| All other | |||||
| Total |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Solar Segment Profit
- The Solar segment exhibited a generally increasing trend in profits over the reported periods from 2019 to 2022. Starting at $293.9 million in 2019, there was a slight decline to $255.7 million in 2020, followed by a notable recovery and growth to $368.7 million in 2021 and further to $486.9 million in 2022. This upward trajectory suggests strengthening performance and expansion within the Solar segment.
- All Other Segment Profit (Loss)
- The All Other segment consistently reported losses throughout the same period. The losses widened from $17.2 million in 2019 to $36.8 million in 2020, further increasing to $47.4 million in 2021, before slightly improving to $45.1 million in 2022. Despite the minor improvement in the last year, the segment has remained a negative contributor to overall profitability.
- Total Segment Profit
- The total profit exhibited a pattern reflecting the movements in both segments. After reaching $276.8 million in 2019, total profit decreased to $218.9 million in 2020, mirroring the Solar segment’s downturn and increasing losses in All Other. Subsequently, total profit rose significantly to $321.4 million in 2021 and advanced further to $441.7 million in 2022, driven primarily by the strong performance in the Solar segment.
- Overall Observations
- The data indicate that the Solar segment is the principal driver of profitability, showing strong growth after a moderate dip in 2020. In contrast, the All Other segment consistently detracts from profits, with losses deepening until a slight reduction in 2022. The company’s total profitability trends closely follow the Solar segment’s performance, highlighting its dominant impact on overall financial outcomes.