SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 13:-SEGMENT INFORMATION

Following the completion of three acquisitions during 2018 and 2019, the Company has changed its segments measurement, beginning in 2019. The purpose of the new measurement is to provide the Company’s chief operating decision maker (“CODM”) better information to assess segment performance and to make resource allocation decisions. The Company now operates in five different operating segments: Solar, Critical Power (formerly known as UPS), Energy Storage, e-Mobility and Automation Machines.

The Company's Chief Executive Officer is the CODM who makes resource allocation decisions and assesses performance based on the financial information presented on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the operating segments.

Segment profit is comprised of gross profit for the segment less operating expenses that do not include amortization, stock based compensation expenses and certain other items.

The Company manages its assets on a group basis, not by segments, as many of its assets are shared or commingled. The Company’s CODM does not regularly review asset information by segments and, therefore, the Company does not report asset information by segment.

The Company identified one operating segment as reportable – the Solar segment. The other operating segments are insignificant individually and in the aggregate and therefore their results are presented together under “All other”.

The Solar segment includes the design, development, manufacture, and sales of an intelligent inverter solution designed to maximize power generation at the individual PV module level. The solution consists mainly of the Company’s power optimizers, inverters and cloud-based monitoring platform.

The “All other” category includes the design, development, manufacturing and sales of UPS products, energy storage products, e-Mobility products and automated machines for industries. Intersegment sales are a source of revenue for one of the operating segments included in the “All other” category.

The Company accounts for intersegment sales as if the sales were to third parties, that is, at current market prices.

F - 22

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 13:-SEGMENT INFORMATION (cont.)

The following table presents information on reportable segments profit (loss) for the periods ended June 30, 2020:

	Three months ended June 30, 2020					Six months ended June 30, 2020
	Solar		All other			Solar		All other
Revenues	$	310,048	$	22,290		$	717,695	$	45,861
Cost of revenues		205,346		19,238			470,161		40,691
Gross profit		104,702		3,052			247,534		5,170
Research and development		26,374		5,852			53,457		10,060
Sales and marketing		15,020		2,179			33,643		4,322
General and administrative		8,718		2,927			17,874		8,018
Segments profit (loss)	$	54,590	$	(7,906	)	$	142,560	$	(17,230	)

The following table presents information on reportable segments profit (loss) for the periods ended June 30, 2019:

	Three months ended June 30, 2019					Six months ended June 30, 2019
	Solar		All other			Solar		All other
Revenues	$	306,746	$	18,264		$	559,814	$	37,067
Cost of revenues		193,528		15,536			359,842		31,869
Gross profit		113,218		2,728			199,972		5,198
Research and development		22,280		3,039			42,512		5,481
Sales and marketing		17,149		2,307			32,349		4,017
General and administrative		7,577		2,556			14,069		4,501
Segments profit (loss)	$	66,212	$	(5,174	)	$	111,042	$	(8,801	)

The following table presents information on reportable segments reconciliation to consolidated revenues for the periods presented:

	Three months ended June 30,					Six months ended June 30,
	2020			2019		2020			2019
Solar segment revenues	$	310,048		$	306,746	$	717,695		$	559,814
All other segment revenues		22,290			18,264		45,861			37,067
Intersegment revenues		(487	)		-		(487	)		-
Consolidated revenues	$	331,851		$	325,010	$	763,069		$	596,881

F - 23

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

U.S. dollars in thousands (except share and per share data)

NOTE 13:-SEGMENT INFORMATION (cont.)

The following table presents information on reportable segments reconciliation to consolidated operating income for the periods presented:

	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Solar segment profit	$	54,590		$	66,212		$	142,560		$	111,042
All other segment loss		(7,906	)		(5,174	)		(17,230	)		(8,801	)
Segments operating profit		46,684			61,038			125,330			102,241
Amounts not allocated to segments:
Stock based compensation expenses		(13,961	)		(11,372	)		(26,734	)		(21,076	)
Amortization		(2,651	)		(3,291	)		(5,336	)		(5,262	)
Legal settlement (see Note 11)		-			-			4,900			-
Cost of products adjustments		-			(319	)		(313	)		(1,001	)
Other unallocated expenses		-			(703	)		-			(1,501	)
Adjustments:
Intersegment profit		(107	)		-			(107	)		-
Consolidated operating income	$	29,965		$	45,353		$	97,740		$	73,401