SolarEdge (SEDG) 2026年第三季度业绩电话会议：第四季度营收指引下调

核心要点

• SolarEdge Technologies（纳斯达克股票代码：SEDG）公布2026财年第三季度GAAP营收为3.261亿美元，环比下降5.8%，同比下降4.1%。Non-GAAP营收为3.254亿美元，接近管理层指引区间3.10亿美元至3.40亿美元的中点。
• Non-GAAP毛利率达到34.7%，其中包括约3600万美元的关税相关收益。扣除该项目后，管理层预计毛利率为23.6%。
• 公司实现780万美元的自由现金流，连续第五个季度为正。今年迄今的自由现金流为3170万美元。
• 管理层指引2026财年第四季度营收为2.45亿美元至2.75亿美元，低于投资者日上设定的3.10亿美元目标。下调反映了渠道库存管理、美国和德国需求疲软、退出盈利能力较低的市场以及外汇压力。
• Nexis在本季度贡献了超过1亿美元的营收。储能连续第二个季度按营收计仍是SolarEdge最大的产品类别。
• 管理层预计2027财年第一季度营收将环比下降10%以上。对于2027财年全年，公司预计营收同比基本持平，调整后EBITDA接近盈亏平衡。

关键财务数据

美国市场营收为1.459亿美元，占总营收的44.7%，环比下降5.8%。欧洲市场营收环比下降8.2%至1.417亿美元，占总营收的43.5%。国际市场实现营收3850万美元，环比增长4.3%。

业务与运营表现

Nexis与储能业务重要性提升

Nexis系统在第三季度贡献了超过1亿美元的营收。管理层表示，继第二季度首次出货后，三相Nexis在欧洲的普及继续推进，系统平均规模更大，储能配储率更高。

在美国，Nexis已被列入所有与SolarEdge合作的领先第三方所有权及预付租赁公司的合格供应商名单（AVL）。管理层表示，最初的安装商和客户反馈积极。

储能营收增长得益于新安装系统更高的配储率以及改造升级量的增加。在德国和荷兰，向SolarEdge超过100万户家庭的已安装用户群追加销售电池带来的营收突破3000万美元，高于第二季度的2000多万美元。

公司预计将于2027财年第一季度开始在欧洲推出单相Nexis，完成该平台的全球发布。

巩固美国工商业市场地位仍是首要任务

SolarEdge表示，其在美国屋顶工商业领域的市场份额保持在50%以上，且项目储备健康。管理层指出，电价上涨、数据中心相关需求以及储能配储率提升的可能性是支撑因素。

据管理层称，住宅和工商业市场的安全港协议（Safe harbor agreements）总额达17亿美元，如果算上所需的功率优化器，可能达到33亿美元。

重组重新配置资源

SolarEdge正在淡出部分利润率较低的区域市场，并将资源重新分配至核心区域及数据中心业务机遇。受影响的市场每年代表约4000万至5000万美元的营收。

管理层预计重组每季度将产生数百万元（中单数字，即400万至600万美元）的净节省，其中包括约300万美元的销售成本和200万美元的营业费用。预计全额效益将自2027财年第一季度起显现。

数据中心SST研发取得进展

SolarEdge继续研发用于数据中心的原生直流（DC-native）电网至机架（grid-to-rack）动力系统架构。该架构旨在支持13.8 kV至34.5 kV的中压输入，并输出800伏直流电。

公司表示，其固态变压器（SST）单元继续展现出99%以上的效率。管理层按计划推进，预计将于2026年底前完成实验室可运行系统，2027年进行试点安装，2028年实现量产出货。

尽管面临更广泛的降本要求，SolarEdge仍增加了对SST研发的投资。管理层表示，与超大规模客户（hyperscalers）及其他生态系统参与者的讨论证实了其观点，即下一代数据中心将向800伏架构转型。

管理层业绩指引

与投资者日上给出的第四季度营收水平相比下降5000万美元，其中包括：在美国和德国主动管理渠道库存造成约3500万美元，淡出低盈利市场造成1000万美元，以及欧元汇率变动造成500万美元。

第四季度毛利率区间反映了固定成本分摊不足，且未计入任何潜在的额外关税退税。管理层表示，第四季度可能仍有约400万美元待退还。

风险与关注焦点

• 受高利率及补充性监管指引出台延迟的影响，美国住宅市场需求依然疲软。
• 德国拟改革其《可再生能源法案》（EEG），这可能会降低上网电价补贴并拖累新装机量。
• 管理层预计正常的冬季季节性因素和政策不确定性将使2027财年第一季度营收承压。
• 第四季度和第一季度出货量下降预计将减少固定成本分摊，并对毛利率构成压力。
• 库存升至6.211亿美元，同时应收账款周转天数（DSO）由上一季度的57天增至60天。
• 2027财年的复苏框架部分取决于监管政策的明朗化、Nexis的普及、储能改造需求、安全港订单以及规模效应的改善。

分析师问答亮点

毛利率与现金流：管理层承认第一季度出货量减少也将影响毛利率，但未提供具体的季度毛利率预测。公司预计Nexis、美国制造收益增加、运营改善以及规模效应的潜在复苏将在2027财年后期对毛利率形成支撑。

2027财年市场假设：SolarEdge预计美国和欧洲市场在明年初仍将保持疲软。管理层认为，一旦政策不确定性缓解，Nexis和不断提高的储能配储率将有助于扩大市场份额。

加州财产税：管理层表示，针对新光伏和储能系统可能征收的1.1%年度财产税可能会产生一定影响，但与更广泛的联邦监管不确定性相比，预计不会是主要驱动因素。

SST机遇：管理层表示，客户及生态系统的讨论日益集中于800伏数据中心架构。SolarEdge正在针对34.5 kV设计其平台，同时保留向下扩展至13.8 kV的能力。

定价：公司表示尚未看到需要调整定价的价格下跌，目前认为没有降低Nexis价格的理由。

业绩电话会议完整文字实录

完整财报电话会议逐字稿

管理层陈述

Operator

Good morning, and welcome, everyone, to the SolarEdge Conference Call for the third quarter ended September 30, 2026. This call is being webcast live on the company's website at www.solaredge.com in the investors section on the Events Calendar page.

The call is the sole property and copyright of SolarEdge with all rights reserved, and any recordings, reproduction or transmission of this call without the expressed written consent of SolarEdge is prohibited. You may listen to a webcast replay of this call by visiting the Event Calendar page of the SolarEdge Investor website.

I would now like to turn the call over to Mr. Jeff Osborne, Head of Investor Relations. Please go ahead, sir.

分析师问答

Jeffrey Osborne

Good morning, and thank you for joining us to discuss SolarEdge's operating results for the third quarter ended September 30, 2026, as well as the company's outlook for the fourth quarter of 2026. With me today are Shuki Nir, Chief Executive Officer; Maos Sigron, Chief Financial Officer; and Meir Adest, Co-Founder of SolarEdge.

Shuki will begin with a brief review of the results for the third quarter ended September 30, 2026. Maos will review the financial results for the third quarter, followed by the company's outlook for the fourth quarter of 2026. We will then open the call for questions. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.

We encourage you to review the safe harbor statements contained in our earnings press release and our filings with the SEC for a more complete description of such risks and uncertainties. We disclaim any obligation to update our forward-looking statements. Please note, during this earnings call, we may refer to certain non-GAAP measures, which are not measures prepared in accordance with U.S. GAAP.

The non-GAAP measures are being presented because we believe they provide investors with a means of evaluating and understanding how the company's management evaluates the company's operating performance. Reconciliation of these measures can be found in our earnings press release and SEC filings and are provided directly as part of this earnings call.

These non-GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with U.S. GAAP. Listeners who do not have a copy of the quarter ended September 30, 2026, press release may obtain a copy by visiting the Investor Relations section of the company's website.

With that, I will turn the call over to Shuki.

Yehoshua Nir

Thank you, Jeff. Good morning, everyone, and thank you for joining our call today. As highlighted on previous calls, our turnaround continues to be guided by four priorities: driving profitable growth, expanding global market share, scaling the SolarEdge Nexis platform and advancing our opportunity in SSTs for data centers.

In the third quarter, we made further progress on each of them. We met the midpoint of our revenue and gross margin guidance even as the market presented a more challenging near-term backdrop as we continue to pursue profitable growth. This was also our fifth consecutive quarter of positive free cash flow, reflecting the steady progress we have made over the past two years. But before I get into the details of Q3, I would like to address the outlook. We expect Q4 revenue of $245 million to $275 million below the expectations provided at our Investor Day. This decline is a result of two main developments.

First, our two main markets are expected to be soft in Q4 and Q1. The U.S. residential market continues to be slow, mainly due to delays in additional guidance surrounding fear clarity and higher interest rates. And Germany is currently reforming its renewable Policy Act called EEG. If the current draft is adopted, the reduction of feed-in tariff support could meaningfully weigh on demand for new installations.

When adjusting for the expected levels of installation in the U.S. and Germany and in order not to over ship products into the channel, we expect our revenue in Q4 to further decline. We believe this inventory discipline is warranted as Q4 is typically followed by a seasonally weak Q1.

Second, we are making deliberate decisions to exit select underperforming geographic markets and redirect resources towards our core markets and higher growth opportunities. In addition, given the lower revenue outlook, we are taking additional actions to reduce costs, simplify operations and support profitability. These are difficult but necessary decisions to build a more focused and competitive SolarEdge.

Maos will walk you through the financial impact of the actions we are taking. While the near-term backdrop is soft, the underlying fundamentals and growth drivers we laid out at our Investor Day remain in place. Even in this environment, our third quarter results provide solid evidence that the underpinnings of our growth initiatives are taking shape.

Shifting to our second priority, market share gains. Starting with the U.S. commercial and industrial market. We continue to build on our higher than 50% market share in rooftop C&I, and our pipeline remains healthy. The outlook for the C&I market remains solid, supported by rising electricity prices, data center-driven demand and the expectation that storage attach rates will increase over time. Within the U.S. resi market, demand remains soft. It is consistent with the broader financing-driven headwinds and the higher interest rates.

Beyond the near term, we continue to believe the market evolution towards higher battery attach rates and third-party ownership plays to our strength, namely our long-standing position as a leading provider to TPOs and our fully integrated decoupled battery architecture. Our confidence is supported by the visibility provided by the safe harbor transaction in both resi and C&I. These agreements amount to $1.7 billion and may reach $3.3 billion when required optimizers are added.

Turning to Europe. In the third quarter, we witnessed the expected seasonal decline but continue to ramp up Nexis rephase to deliver commercial storage solutions and to accelerate our battery upsell activities. Speaking of battery upsell activities, we continue to leverage our installed base of over 1 million homes in the Netherlands and Germany. In the quarter, we recognized more than $30 million in revenue from upselling to them, up from more than $20 million in Q2.

Turning to our third priority, scaling the Nexis platform. Nexis Systems delivered strong sequential growth and contributed over $100 million in revenue this quarter. We see continued adoption of 3-Phase Nexis in European markets since we started shipping in the second quarter. Nexis installations have shown higher average system size as it addresses the 10 to 30-kilowatt segment in Germany. They've also come with a higher attach rate of storage due to the built-in advantages the Nexis solution has in a PV plus storage environment.

In the U.S., Nexis has been added to the approved vendor list of every leading CPO and prepaid lease company we work with. And our MetaColor solution was approved by California's top utility. It allowed us to start rolling out Nexis in July. And so far, we have received very positive feedback, which aligns with our value proposition. With Nexis, homeowners get higher, installers can complete more jobs faster and PPOs can maximize fleet return on investment.

It's important to note that the Nexis packable battery has led to installations of systems ranging between 5 to 40 kilowatt hour to address different market segments. As BTP gain market momentum, we are seeing average battery system sizes increase. We expect to begin rolling out single-phase Nexis in Europe in the first quarter of next year, completing the platform's launch globally.

As many of you are aware, Nexis is also a key enabler of the continued shift in our mix towards EV plus storage solutions. Storage revenue grew again this quarter, driven by both higher attach rates on new systems and rising retrofit volume. Storage was our largest product category by revenue for the second quarter in a row. We view this as an important marker of the transition we've been describing towards a holistic energy solution, which we believe more than doubles SolarEdge potential revenue.

Turning to our fourth priority in the data center market. In the third quarter, we continued to advance our DC native grid-to-rack powertrain from medium voltage to 800-volt DC. It is important to note that our solution is designed to support medium voltage ranging between 13.8 kilovolts through 34.5 kilovolts. Building on the live lab demonstrations we discussed last quarter, our 3-Phase conversion stage is now operating under load in our lab with system level validation of the full power pass underway. At the heart of the system is our SST cell.

During the quarter, the cell completed high-voltage installation testing in our lab at the level used for 34.5 kilovolt class equipment and its transformer completed partial discharge testing well above its operating voltage. This is a key step towards direct connection to 34.5 kilowatt grid. Our SFT cell has continued demonstrating efficiency above 99% in all demonstrations. In the ecosystem, we issued our 800 volt DC protection and grounding white paper developed with NVIDIA and offered as a technology-neutral framework.

We have also extended our collaboration with Infineon on solid-state circuit protection. And at OCP, we showcased our SST cell on NVIDIA's AI Factory NGX ecosystem work. At the same time, we have continued live demonstrations to prospective customers and active engagement in several RFI. We remain on track for a working system in our labs by the end of 2026, pilot installations in 2027 and volume shipments in 2028, consistent with the timeline we discussed at the Investor Day.

To summarize, in the third quarter, we continued to execute against a challenging near-term backdrop. We delivered on our guidance, grew Nexis meaningfully, continue to shift our mix towards storage, advanced our data center opportunity with a high visibility customer showcase and took further action to streamline the business. The opportunity ahead remains strong and promising, and we remain focused on improving our execution and capitalizing on our advantages in the markets we participate in.

With that, I will turn the call over to Maos.

Maoz Sigron

Thank you, Shuki, and good morning, everyone. Starting with our quarterly results. GAAP revenue for the third quarter was $326.1 million, down 5.8% quarter-over-quarter and 4.1% year-over-year. Non-GAAP revenue was $325.4 million, down 5.8% quarter-over-quarter and 4.2% year-over-year, in line with the midpoint of our $310 million to $340 million guidance range.

GAAP revenue from the U.S. amounted to $145.9 million, down 5.8% quarter-over-quarter, representing 44.7% of revenue. Revenue from Europe was $141.7 million, down 8.2% quarter-over-quarter, representing 43.5% of revenue. International market revenue was $38.5 million, up 4.3% quarter-over-quarter, representing 11.8% of revenue. GAAP gross margin was 33.2% this quarter compared to 27.5% in the second quarter and 21.2% in the third quarter of last year.

Non-GAAP gross margin was 34.7% this quarter compared to 28.6% in the second quarter and 18.8% in the third quarter of last year. This quarter's results included the benefit of approximately $36 million related to EPA tariff matters. Excluding this item, we estimate non-GAAP gross margin was approximately 23.6%, near the midpoint of our previously guided range of 22% to 26%.

The year-over-year improvement was driven by the EPA refund, 45x benefit associated with the transition to U.S. manufacturing and the continued cost discipline. GAAP operating expenses for the third quarter were $110.1 million compared to $111.2 million in the second quarter and $107.3 million in the third quarter of last year.

Non-GAAP operating expenses were $88.8 million compared to $88.5 million in the second quarter and $87.7 million in the third quarter of last year, essentially flat on a sequential and year-over-year basis and in line with the midpoint of our previous guidance range of $86 million to $91 million.

As Shuki discussed, we recently took additional restructuring actions to streamline our cost structure, including deemphasizing select geographic markets by reallocating resources to more profitable regions and activities. Specifically, we have chosen to accelerate our investment in the data center opportunity relatively to our initial plan. These actions will create a more agile organization while supporting continued innovation.

From a modeling perspective, we are expected to deliver net savings in the mid-single-digit million each quarter, including approximately $3 million from COGS and $2 million from OpEx. From a top line perspective, the regions in which we are deemphasizing, given the lower profitability profile represent approximately $40 million to $50 million of annual revenue. Given the timing of implementation, we expect to see the top line headwind starting in the fourth quarter, while the full expense benefit will be realized in the first quarter of 2027.

GAAP operating loss was $1.9 million compared to $16 million in the second quarter and $35.2 million in the third quarter of last year. Non-GAAP operating income for the third quarter was $23.9 million compared to $10.2 million in the second quarter and a non-GAAP operating loss of $23.8 million in the third quarter of last year.

As for the gross margin, this result included the benefit of approximately $36 million related to EPA tariff matter. GAAP net loss was $8.4 million compared to $30.8 million in the second quarter and $50.1 million in the third quarter of last year. Non-GAAP net income was $21.1 million in the third quarter compared to $3.6 million in the second quarter and a non-GAAP net loss of $18.3 million in the third quarter of last year.

GAAP net loss per diluted share was $0.14 in the third quarter and the non-GAAP net income per diluted share was $0.29. Adjusted EBITDA was $31.8 million in the third quarter compared to $18.3 million in the second quarter and an adjusted EBITDA loss of $14.1 million in the third quarter of last year. The quarterly results included the benefit of approximately $36 million related to IEEPA matter.

We generated $20.4 million of operating cash flow and $7.8 million of free cash flow in the third quarter compared to $3.1 million of free cash flow in the second quarter and $22.8 million in the third quarter of last year, marking the fifth consecutive quarter of positive free cash flow. Year-to-date, free cash flow was $31.7 million.

Our capital expenditure this quarter was $12.6 million, up from $8.3 million in the second quarter, including continued investment in our SST program, manufacturing capacity and investment in our new headquarters in Israel, which consolidates several locations into one, including expanding our advanced R&D facility. Year-to-date, capital expenditure was approximately $25 million, and we now expect full year capital expenditure in the range of approximately $45 million to $55 million. We continue to expect positive free cash flow for the full year, reflecting our improving operating performance, continued discipline in managing expense and capital investments and our ongoing ability to monetize 45X credits.

Turning now to our balance sheet. As of September 30, 2026, our cash, cash equivalents, restricted cash and marketable securities net of debt were $260.9 million compared to $264.6 million as of June 30, 2026. Cash and cash equivalents were $555.1 million, up from approximately $527.3 million in the second quarter.

Trade receivables decreased to $209.6 million from $211.9 million in the second quarter, with DSO increasing to 60 days from 57 days in the second quarter this year. Inventory increased to $621.1 million from $599.8 million in the second quarter this year, reflecting higher finished goods and lower raw materials. We are watching both closely and continue to manage our cash conversion cycle actively.

Turning now to our outlook for the fourth quarter of 2026. As Shuki mentioned, we expect overall market conditions to remain soft. We anticipate continued weakness in the U.S. and further weakening in Germany ahead of the decision of feed and tariff reform. We expect revenue to be within the range of $245 million to $275 million.

This revenue is below the $310 million we outlined as part of our full year 2026 target at the Investor Day. The net change at the midpoint is $50 million, and I will detail the three main contributions. The first is $35 million for proactive channel inventory management in both the U.S. and Germany.

In the U.S., this is affected in part due to delays in additional guidance surrounding clarity and interest rate. In Germany, it is driven in part by the lack of clarity of potential regulatory changes. We believe these proactive measures should reduce the risk of channel inventory challenges in 2027.

Second, we expect our decision to the emphasize less profitable markets to reduce fourth quarter revenue by approximately $10 million. Third is the euro exchange rate, which is anticipated to reduce revenue by another $5 million. We expect non-GAAP gross margin to be within the range of 17% to 21%.

This range reflects the under absorption of fixed costs in the fourth quarter and does not include any impact from a potential EPA refund. During the second quarter, we received $13.3 million EPA refund and $36 million in the third quarter. We believe approximately $4 million remain to be returned during the fourth quarter. We expect non-GAAP operating expenses to be within the range of $87 million to $91 million.

Looking ahead to Q1 2027, we believe normal winter seasonality, combined with continued regulatory uncertainty in the U.S. and Germany will result in a 10% plus sequential decline in revenue. Beyond the first quarter, our expectation is that the policy uncertainty in the U.S. and Germany will be behind us.

We believe that this will allow the growth drivers we have discussed, namely our Nexis Solution, storage retrofit opportunity and safe Arbor backlog to result in a flat year-over-year growth profile for our business, which following our recent restructuring actions is expected to result in an adjusted EBITDA breakeven profile for 2027.

In addition, as we expect customer pilot of our SST to conclude during 2027, we anticipate further clarity on the growth trajectory of our SST business for 2028. With these growth opportunities and our continued focus on operational discipline, we believe we will continue to drive profitable growth in the years ahead.

I will now turn the call over to operator to open it up for questions. Operator?

Operator

[Operator Instructions] And we'll go first this morning, gentlemen, to Brian Lee with Goldman Sachs.

Brian Lee

I guess a couple of questions. Just appreciate all the additional color on the puts and takes around what happened here into year-end and how to think about it heading into '27. The gross margin view here, I guess, should we anticipate that given the lower volume in Q1, that gross margin is going to be even lower in Q1 off of the Q4 level? And then kind of what's the pace of recovery on gross margins? I know you said adjusted breakeven for the year, but how should we be thinking about how that translates to gross margins as well as free cash flow for 2027?

Maoz Sigron

Okay. Thank you for the question, Brian. So, we shared a 90% midpoint gross margin. It actually takes the fixed cost that we have to more or less 17%. So if you are looking on the improvement that we are keeping and doing, this is about 2%. This is how we're getting to the 90%. Of course, with the seasonality and as we said, we're expecting more or less a 10% and plus reduction in Q1.

Of course, the gross margin will impact as well. As you know, we are not guiding more than the quarter for the full year. And as we said about 2027, we are expecting a flattish year with -- from revenue. And on EBITDA -- adjusted EBITDA point of view, we're expecting more or less a breakeven. So more or less, you can actually take a reasonable assumption based on the yearly margin that we're expecting for the full year 2026, kind of same start point for 2027 with some improvement that we already have in the numbers that I just shared and the efforts that we shared also in the Investor Day. First is the Nexis. Second is the 45X. We're expecting more revenue from us manufacturing next year and the operational excellence that's still running, and we're expecting to see more improvement next year.

Yehoshua Nir

And actually, to add to that, Brian, as you know, scale, and as you mentioned, scale is actually driving the margin. And our expectation is that once the clarity hopefully is going to be finalized, we will see resumed growth in the U.S. resi, where we are very, very well positioned between our long-term engagement with the TPOs.

And the way that we have worked together with them for many, many years, coupled with the fact that Nexis we've just started actually with Nexis, but it shows very, very positive feedback that we are receiving from installers and from the CPOs about the value that it brings, the ease of installation and the round trip efficiency that actually delivers better returns to the CPOs.

So we feel that when the market is coming back, we will be very well positioned to benefit from that. And hopefully, we will get some clarity in Germany as well by that time. And then similar to cases that happened before in which there is a change in regulation, the initial drop is a little bit harder and then it recovers a little bit. So we believe or we hope that scale is going to come back later in 2027, and that will allow us not only to gain share and to increase revenue, but also to expand our margin.

Brian Lee

That's super helpful color. Maybe just quickly on that because you guys have a diversified business geographically as well as end market. When you talk about a flat revenue growth outlook for next year, what are you embedding in there? Are you embedding share gains? Are you embedding -- U.S. is flat, Europe is up or vice versa? Just kind of what are some of the underlying sort of base case assumptions between Europe growth, U.S. growth? And then what you're assuming for your own share gains in that environment?

Yehoshua Nir

Yes, it's a great question. And I'd like to remind everybody; we are guiding only for the current quarter. We are not guiding beyond that. So, we are trying to give color here about Q1 '27 and then a little bit more about the rest of the year. So, what we currently know about the beginning of the year is Q1, both in the U.S. and in Europe is expected to be soft. for the reasons that we mentioned in our prepared remarks, the new expected regulation in Germany.

And even if is clarified in Q1, it does take time for the financial system to actually go about it. Now in terms of what is going to happen next in the year, as we mentioned, we are pleased with the feedback that we're receiving on Nexis in the U.S. Nexis 3-Phase in Europe is actually getting more traction because we started that in early Q2. And what we are seeing over there is actually average size of each system is actually growing and the attach rate percentage is actually growing.

So that gives us early indications that we can gain share in Europe. And we believe that if Nexis is actually coming up as expected, and the market is trending more and more towards storage, which Nexis was designed to actually support, we will be in a position to gain some market share in Europe and also to gain some storage share in the U.S. We mentioned the safe harbor that gives us confidence for that. So that's on the resi side.

On the C&I side in the U.S., we are coming from the very same place that we've discussed in our earnings day. Our market share is supported by something that is structural, both the advantages of the technology as well as domestic content and SEC listings, all are supporting our current market share and hopefully will support additional market share in the future.

Operator

We'll go next now to Philip Shen with ROTH Capital Partners.

Philip Shen

I wanted to ask a little bit more about the U.S. market. Specifically, this is -- the weakness is being driven by the delayed FEOC and PFE guidance. But I wanted to check in with a bit of a nuanced topic. In California, which is a big market, it seems like there could be a new 1.1% annual property tax applied to new solar and storage systems. And so that exemption to not pay that tax is going away at the end of the year. Do you see that as being a headwind for '27 as well? And is that fully factored into your outlook?

Yehoshua Nir

Yes. Thank you, Phil and thank you for joining us today. It's compared with the clarification that is required around FEOC and PFE this change in regulation in California, it will have some impact, obviously, but it's one of these things that are gives and takes that are happening on an ongoing basis. We wouldn't attach a major impact for something like that.

As you know, and you know it very, very well, in different states, there are different incentives that are given for solar systems. Now there are many other benefits that are given for storage, not only from BTPs, but actually some state funded or utility funded plants. So these are the ins and outs that are going on an ongoing basis.

We believe that once FEOC and PSE are going to be clarified, it will give -- it will allow the DPOs and the prepaid lease companies to raise more money and to raise it in a better terms, and that will actually increase the demand for solar and storage systems. And over there, Nexis is very well positioned. So that's kind of how we look at it going into '27.

Philip Shen

Okay. And then on SST, I know you mentioned that the timeline is the same as before, nothing has really changed that much. But I was wondering if you might be able to give a little bit of color on the conversations that you're having. Is -- do you have a sense for how much 800 volt could be coming online? Do you get -- is the share of 800 volts of data center build in '28, '29? Has that changed and increased at all? Just was curious if you could just give us a little more color.

Yehoshua Nir

Yes, absolutely. First of all, we are excited with the progress that we've made on the SST. And we talked about the restructuring and the fact that we are reducing expenses and deemphasizing certain geographic markets. We're actually increasing our investment on the SST because we are satisfied with the progress that we've made.

And we believe that the opportunity is not only a big opportunity, but actually it's a real opportunity. In the conversations that we've had with different players in the ecosystem, whether these are prospects, the incumbents and other horizontal players, I think that the message coming from everybody is very similar.

In order to move to the next-next-gen of the NVIDIA GPUs the power architecture in the data center is going to change to 800 volt. Initially, people are going to do it with the side car because that's the easy way and call it less -- there is less risk, but they are going to lose a ton of efficiency on the way.

And as we described at our Investor Day, we believe that people will quickly move into the native type solutions and definitely the SST. And these conversations are now -- I would say that almost every hyperscaler or no cloud is talking about testing one flavor or another of the SSTs in the coming year. And this is why we're excited about where we are.

As you know, we started early on the SST. We are in a leading position. And our intention is to continue, to maintain the lead and if possible, actually to extend it. And by the end of this year, we'll have a working system in our lab, and we are in discussions in order to see how we can actually have some pilot installations with customers in 2027.

So from that perspective, we're excited about where we are. And from what we are hearing, the intention of the ecosystem is actually to move to 800 volt. There has been some confusion around 13.8 versus 34.5 -- both of them are medium voltage. 13.8 is there, absolutely, but 34.5 is where the real large data centers are going to -- this is going to be the power source of the large data centers.

And our product and our solution is designed to work with 34.5. It's this is the way that we designed it. This is the way that we develop it, and this is the system that we are going to have available for customers. The gap between 13.8 to 34.5, and you definitely know that is big. It's not like a linear progress that somebody who's made 13.8 can move into 34.5.

Our products can definitely scale down to 13.8 if needed. But we feel that it's going in that direction. And there will be some POCs with 13.8, but later on, definitely, the hyperscalers are going to go to the 34.5.

Operator

[Operator Instructions] We'll go next now to Corinne Blanchard with Deutsche Bank.

Corinne Blanchard

Maybe I want to go back actually on the four priorities that you highlighted this morning and maybe as well one that you mentioned like exiting some of the underperforming markets. Can you give us a little bit more color on that one? Which market would it be? And what would be then the -- maybe the trade-off, like where would you focus right now in those markets or geographies?

Yehoshua Nir

So what we've been doing on an ongoing basis, I would say, is continuously monitor different geographic markets that we operate in as well as different segments of our business. And we are analyzing to see what their contribution is today, what the potential is and how profitable they can be in the long term because our goal, and we said it from day one is profitable growth and not just growth for the sake of growth.

And in recent months, and obviously, we have to analyze these things carefully and there are many moving parts. But in recent months -- in recent weeks, actually, we've come to the conclusion that there are several geographic markets that are underperforming, and we don't see them coming in with the profitability that we would like to see. And because of that, we are deemphasizing these markets.

Actually, a year ago, we deemphasized some markets already, and now we are doing -- we're repeating the same -- a similar process in these other markets. And it's important to note that at the end of the day, we need and we actually aimed at being able to meet the breakeven point EBITDA -- adjusted EBITDA breakeven point with a flattish year next year.

And then we had to make some choices. And one of the choices, as I mentioned earlier, was due to our progress with the SST, we have to invest over there, and we've moved some additional people to work on the SST. And these markets are the ones that we have to deemphasize in order to actually meet our financial goals.

Corinne Blanchard

Maybe on the -- sorry, go ahead.

Maoz Sigron

Just maybe to give some more color on the other process that we have shared. And you know that we shared the $50 million change. So part of it is definitely related to the contract that Shuki just mentioned with the $10 million. We have additional $5 million from the exchange rate and another $35 million from the channel inventory, which is the total $50 million compared to the implied number that we have from the Investor Day.

Corinne Blanchard

And maybe -- on the same topic, I think you mentioned in the prepared remarks that cost savings, reducing cost as well as part of the strategy. Is it just a question of exiting some of those markets? Or is it more a question of reducing your workforce? I think you guys went through that a couple of years ago. And then maybe as well on the overall strategy, are you considering any pricing cuts in some of the markets to remain in line with competition?

Maoz Sigron

Okay. So, we did the process that is a combination between the countries that we have discussed before. This is, of course, part of the restructuring. But there is additional part that is not related and related to across optimization globally, including the reallocation of resources towards the SST investment that we are going to -- we are increasing and we are expecting to increase as part of the progress that we have. So, this is a combination. And as we said, this is all going to be implemented during the quarter, and we're expecting the full saving to start from Q1 next year.

Yehoshua Nir

Yes. And as for pricing, Corinne, the -- we've not seen price decreases or price declines that require us to change our price. With the introduction of Nexis, as we said, we introduced it in Europe in Q2, in the U.S. in Q3 and the single phase Nexis is expected in Europe in the first quarter of 2027. Nexis brings a lot of value to the entire chain, right, between homeowners, installers and the CTOs. And at the moment, we don't see any reason to actually reduce our prices. The value is there and people are actually quite happy with the product and the solution that they are getting.

Operator

And gentlemen, it appears we have no further questions this morning. Mr. Nir, I'd like to turn things back to you, sir, for any closing comments.

Yehoshua Nir

Yes. Thank you. Just before we end, I would like to express my appreciation to the outstanding team and our loyal partners whose hard work is actually driving our turnaround and positioning us very well to capture the exciting opportunities ahead of SolarEdge. And thank you for everyone who joined our call today.

Operator

Thank you very much, gentlemen. Again, ladies and gentlemen, this will bring us to the conclusion of SolarEdge's third quarter conference call. We'd like to thank you all so much for joining us today and wish you all a great day. Goodbye.