SEGMENT INFORMATION

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

SEGMENT INFORMATION

NOTE 14:-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.

F - 29

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 14:-SEGMENT INFORMATION (cont.)

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. 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.

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

	Three months ended September 30, 2020					Nine months ended September 30, 2020
	Solar		All other			Solar		All other
Revenues	$	312,480	$	25,615		$	1,030,175	$	71,476
Cost of revenues		203,590		21,283			673,751		61,974
Gross profit		108,890		4,332			356,424		9,502
Research and development		26,466		7,421			79,923		17,481
Sales and marketing		15,160		2,328			48,803		6,650
General and administrative		10,593		1,210			28,467		9,228
Segments profit (loss)	$	56,671	$	(6,627	)	$	199,231	$	(23,857	)

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

	Three months ended September 30, 2019					Nine months ended September 30, 2019
	Solar		All other			Solar		All other
Revenues	$	387,772	$	22,784		$	947,586	$	59,851
Cost of revenues		250,493		16,058			610,335		47,927
Gross profit		137,279		6,726			337,251		11,924
Research and development		23,707		2,754			66,219		8,235
Sales and marketing		16,551		2,256			48,900		6,273
General and administrative		7,473		2,045			21,542		6,546
Segments profit (loss)	$	89,548	$	(329	)	$	200,590	$	(9,130	)

F - 30

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 14:-SEGMENT INFORMATION (cont.)

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

	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020			2019
Solar segment revenues	$	312,480	$	387,772	$	1,030,175		$	947,586
All other segment revenues		25,615		22,784		71,476			59,851
Adjustment of intersegment revenues		-		-		(487	)		-
Consolidated revenues	$	338,095	$	410,556	$	1,101,164		$	1,007,437

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

	Three months ended September 30,						Nine months ended September 30,
	2020			2019			2020			2019
Solar segment profit	$	56,671		$	89,548		$	199,231		$	200,590
All other segment loss		(6,627	)		(329	)		(23,857	)		(9,130	)
Segments operating profit		50,044			89,219			175,374			191,460
Amounts not allocated to segments:
Stock based compensation expenses		(16,259	)		(11,367	)		(42,993	)		(32,443	)
Amortization		(2,833	)		(3,409	)		(8,169	)		(8,671	)
Legal settlement (see Note 11)		-			-			4,900			-
Cost of products adjustments		-			(107	)		(313	)		(1,108	)
Other unallocated expenses		(558	)		(14	)		(558	)		(1,515	)
Non recurring expenses		-			(8,305	)		-			(8,305	)
Adjustments:
Intersegment profit		-			-			(107	)		-
Consolidated operating income	$	30,394		$	66,017		$	128,134		$	139,418