SolarEdge Returns to Operating Profit but Issues Weak Q3 Forecast, Shares Drop Over 20%

Israeli solar energy company SolarEdge reported a sharp improvement in its second-quarter 2026 results, returning to adjusted operating profit for the first time in three years and surpassing market expectations. The company's revenue reached $346.2 million, a 19.6% increase from $289.4 million in the same quarter last year and above analysts' forecast of $342.2 million. Adjusted earnings per share were 5 cents, compared to a loss of 43 cents in the previous quarter and 81 cents a year earlier, beating analyst estimates that ranged from a 1.8-cent loss to break-even.

Despite the strong Q2 performance, SolarEdge's weak guidance for the current third quarter overshadowed the results, causing the stock to plunge over 20% at Nasdaq opening. The company forecasted Q3 revenues between $310 million and $340 million, with a midpoint of $325 million, which is 12.6% below analysts' consensus of $371.8 million and a 6.1% decline from Q2. SolarEdge attributed the shortfall to ongoing weakness in the U.S. residential solar market and did not expect significant revenue acceleration in Q3.

The company also reduced its net loss by 75% to $30.8 million from $124.7 million in Q2 2025 and returned to an adjusted operating profit of $10.2 million, compared to adjusted operating losses in prior quarters. CEO Zvi Lando described the quarter as a "significant milestone" in SolarEdge's transformation, highlighting 20% revenue growth, a substantial reduction in operating loss, and positive free cash flow generation. He noted that strong demand in Europe and U.S. commercial and industrial solar markets offset weakness in the U.S. residential segment.

SolarEdge expects an adjusted gross margin of 22%-26% and adjusted operating expenses between $86 million and $91 million in Q3. The forecast excludes potential tariff refunds under IEEPA; the company received $11.5 million in such refunds in July, which would have resulted in an adjusted operating profit for Q3 at the midpoint of guidance. Prior to the report, analyst sentiment was cautious, with 21 out of 26 analysts recommending hold, four sell, and only one buy, with an average price target of $45.25. TD Cowen recently lowered its price target from $85 to $75 but maintained a buy rating, while Wells Fargo initiated coverage with a hold rating and a $36 target. Following the earnings release, SolarEdge shares dropped to about $38 per share.