SolarEdge Technologies, Inc. (SEDG) Cash Flow Statement

The OCF/NI ratio has been persistently negative, but the magnitude of divergence is striking: in 2024Q1, OCF was -$217.0M against a -$157.3M net loss, while in 2026Q2, OCF of $11.4M contrasts with a -$30.8M net loss. This suggests that non-cash charges, particularly inventory write-downs and depreciation, are inflating the gap, but the recent positive OCF indicates that cash generation is recovering faster than accounting profitability. Investors should monitor whether this conversion quality persists as inventory charges normalize.

The FCF trajectory shows a clear V-shaped recovery, driven by both revenue rebound and aggressive cost containment, with CapEx slashed from $47.4M in 2024Q3 to $8.3M in 2026Q2. However, the current FCF margin of 0.9% remains far below peers like ENPH at 11.5%, indicating that the company is only just reaching breakeven cash generation. The sustainability of this trajectory hinges on whether revenue growth can outpace the need for renewed capital investment.

The dramatic reduction in CapEx intensity suggests that SEDG is prioritizing cash preservation over expansion, which may be appropriate given the inventory crisis, but it also raises questions about future capacity and product development. With depreciation and amortization running at $5.7M in 2026Q2, current CapEx of $8.3M barely covers replacement needs, implying that growth capex is minimal. This could constrain the company's ability to capitalize on the solar market recovery if demand accelerates.

The consistent positive working capital changes, even during the loss-making quarters, suggest that SEDG is liquidating inventory and tightening collections, which has been a primary driver of the OCF recovery. However, this is a finite source of cash; once inventory levels are normalized, the company will need to generate cash from operations itself. The $963.2M inventory write-down in 2024Q3 likely reset the inventory base, making future working capital releases less pronounced.

The absence of shareholder returns and the small acquisition activity (net acquisitions of -$2.6M to $8.9M) indicate that management is conserving cash to navigate the downturn. The $9.2M buyback in 2026Q2 is immaterial relative to the company's market cap and likely opportunistic. This conservative deployment is consistent with a company still in recovery mode, but investors should watch for any shift toward returning capital once profitability stabilizes.

The $2.1B gap between net income and operating cash flow is primarily attributable to non-cash charges like inventory write-downs and stock-based compensation, which totaled over $200M in the period. This divergence suggests that the company's cash position is less impaired than the income statement implies, but it also highlights the severity of the accounting losses. As the write-downs fade, the gap should narrow, but the persistence of SBC will continue to create a wedge between earnings and cash.