SolarEdge Technologies, Inc. (SEDG) Earnings Call Transcript & Summary

Excellent. All right. Welcome back, everyone. Thanks for the time and the opportunity to connect today. So we're going to kick off this afternoon session with Ronen Faier, of our friends over at SolarEdge. A real pleasure to have you and the team on the line here this afternoon to get folks on the line, please being as e-mail, chat, myself, Aric, how have you guys like to compile the questions here, but it is a real pleasure to, Ronen, to have you joining us from South California as it might be today.

Thank you very much, and thanks for having me today.

Of course, of course, my pleasure. So maybe at the outset, any opening comments, anything new on your mind as there's a lot of issues that we are ready and wanting to ask you, but it's open like an introduction for you first, sir?

No. So of course, we'll start with the question soon. Just as we said a little bit prior to the call, I think that we're in amazingly interesting times, not just in the solar industry, but also for us, as solar, as you know, we see an era of amazing demand, great market opportunities ahead of us and at the same time very crazy world outside with component suppliers, vendors. This is the times that -- it's time to have finance management, and I hope that we do so.

Excellent. Love it. Two quick questions on my side. I'm going to turn it over to Aric, just at the outset. I mean we've talking a lot about resi storage today and availability and several of the prior presenters have talked about it already. You all are facing a nice ramp on that front. Do you want to talk about how you see yourselves positioned on that and just whether it's availability of sales, whether it just altogether, the headwinds seem to be parting and your execution is on track here? Do you want to talk about that just in very brief?

Sure. So in general, as you mentioned, we have started shipping our batteries last quarter. We need to remember, of course, that we install inverters with other batteries for a long time. We have 100 -- over 100,000 systems with -- of inverters with batteries that are not ours. But we have started shipping last quarter. It is always a little bit of a rough start for any product. We're ramping up our manufacturing. We have signed an agreement with Samsung SDI that gives us, I would say, a very nice ability to ramp up of 1 gigawatt hour of sales for next year. And yet, in a world where supply chain is very hectic where things are mostly stuck on transportation, we find ourselves where we build the capacity, we have the product, we're delivering it, and we hope for the best that when new coronavirus mutations or anything will not stop it. But all in all, it's a great start. And I think that it's a very interesting product and it's a very interesting offering once we introduce batteries together with our inverters.

Excellent. And maybe the second quick question before we dig into it. But the big question we've heard repeatedly today is how is NEM going to fare for all the companies? I know that's more of a resi solar question than a manufacturing question. But that being said, I'm still going to ask you the question. I mean how do you think about the net impact weighing on the demand for micros here? Again, I get it's one of the geographies for you. But at the same time, obviously, perhaps making it up on the left hand with some of the storage products, how do you think about attach rates here, some of the scenarios here for NEM? And also just altogether any thoughts on slowing micro demand?

So in general, we do not yet see and we talk to a lot of our customers. We do not yet see an impact or a large impact of what is expected on our business. And as you mentioned, first of all, today, 60% of our business is happening outside of the United States or here, of course, this has no effect and our business in the U.S. is much more than just California. So in a sense, when we talk to our customers, there are 2 things that they are mentioning related to the same effect. The first one is, as you mentioned, is the fact of batteries. People are looking today for resilience and people look today for the ability to back their homes. They see it as something that is very important. They also look at self-consumption. And of course, the availability of batteries in the [indiscernible] relatively reasonably priced batteries is something that mitigates some of the effect. That's one thing that people -- that you see. The second thing is that -- and again, I do not know how to quantify it, but there is an agenda out there of people that would like to have green energy, even if the pricing and the economics are not as good as they are. And this is something that's also pushing. So right now, we do not see any impact. Again, we need to see it coming online, and we need to understand whether everyone was wrong diminishing the effect that they see here. But in general, I think that whatever happens with NEM at 3.0, it will increase the attachment of batteries. I believe that we will have more capacity. And I hope that eventually, we will not see a big impact.

Got it. Aric, do you want to jump in?

Got it. Just following up on that, I wanted to touch more on resi storage, specifically. As you think about the strategy for your ramp into 2022, can you just talk about some of the key areas that you're focused on executing upon right now to really drive that volume into next year, whether it's the cell supply? Whether it's like is manufacturing the area that you really need to be focusing on? Or is it really securing offtake contracts from installers, et cetera. If you could just walk us through your thought process there, that would be very helpful.

Sure. So I'll start to go from raw materials to demand and to [ installed base ]. From a raw materials point of view, I think that we're in a good position. We signed an agreement with Samsung SDI for providing 1 gigawatt hour of cells in 2022. This plus a little bit of residual of cells that they provide us from 2021, I think, gives us enough volumes on the cell side. And to this, I'm adding the fact that our Sella 2 factory, the factory that we built in Korea for our own battery cell will start manufacturing by the second half of next year and will add to this number. So I think that when we look at supply chain from cell capabilities, we have good partners, we have captive capacity. I think that this is something that supports a lot. The next stage after having the sales is to make a battery. And here, we are ramping up. We're working today with Flex who is manufacturing our batteries in Europe. We're ramping up the line. I can tell you that in general, it's a difficult product. It's large. It's heavy. It's a product that you have to handle with care because it does have NMC cells in it. It's a product that need components that are sometimes in shortages and therefore, the ability to get everything on time is always a challenge, even though we have commitments to get everything on time. But in general, I think that here, we should expect that we will not be able to reach within Q1 250-megawatt hour of manufacturing capacity. This is as we said in the past will come by -- towards the end of the second quarter. But I would say that on the manufacturing and supply chain, this is an area that we put a lot of emphasis to make sure that the manufacturing is streamlined that the quality is at the right place that we wanted to have to be and then that we can start shipping goods. Talking into geographies now, I think that there are 3 major geographies that are interesting for us. First of all, is the U.S. market. The need for resilience in the U.S. market is large. The demand is large. I'm not sure that it is yet fulfilled by most of the players that are there. We talk to our customers, they are striving to get batteries and this is an area that we're going to focus. The second one is Italy. In Italy, we see today a situation where the government imposed some kind of a benefit plan that if you are installing in solar plus battery, you can get back 110% of your investment as a tax break within 5 years. So actually, the government actually pays you to put solar plus battery. This is a regulation that will stay at least until June this year. We hope that -- June 2022, and we hope that it is going to be extended. But for sure, there's a short term, I would call it, opportunity by selling to Italy and selling as much batteries as possible. The [indiscernible] will be Germany. A new [ counselor ] was -- started to act last week. They basically said that they would like to triple the amount of solar in Germany until the end of the decade. And we need to understand that the amount that is already installed in Germany was installed over the last 20 years. So we're talking about a very large market. This is a market that because of limitations on the sale of products or the sale of electricity into the grid, you need to basically have a battery. So we think that it's a very good market. And of course, other than these 3 areas, we are looking into different markets such as Poland, where we see that prices of electricity are encouraging batteries, Australia, where there is a very nice play that you can make on mitigation of electricity prices with batteries. All of those are pushing. And the beautiful thing that we like about our business is the fact that in all of these countries, we are already a market leader. We do not need to build the business there in order to push the batteries. These are markets that we're already considered to be market leaders, and therefore, the battery introduction be a little bit easier. The last area that I would like to touch in completing the cycle is on the installation and installers training. And again, it's a different product. It's a product that on one hand, many installers are used to install with our systems because they installed Tesla or LG batteries with solar inverters. But still, it's a product that is bigger, that is heavier, the logistic is more complex. And this is why we will need to train them, and we will need to support them a little bit more closely. All in all, I think that things are on track. The capacity is there. And I think that having eventually a product of inverter and a battery really introduces many more opportunities into residential solar, and we're waiting to harvest on those as well.

All right. Appreciate all the insight there. Another area that you touched upon just a little bit earlier on really focusing on managing the freight and logistics dynamics. Could you just talk a little bit about how you perceive the latest backdrop there? And are you seeing like any improving data points around those constraints and just your strategy on navigating that?

So here, I must say that we hear everyone talking about a little bit of easing there. We do not see it yet. We see it in future contracts or talks about future contracts that are supposed to be in more reasonable prices and reasonable terms. I must say that the combination of a holiday season plus the new Omicron variant that is creating a little bit of complexity does not really show any relief right now. What we do see, though, is that more carriers are building capacity. And the big question is going to be actually if we will see air traffic, which is by the way, a very large player in the overall capacity between Asia and the United States and Europe coming back to normal, we will see easing. I think that as long as we do not see more air traffic, this is something that will take time to recover from. And the new variant in this case, I think, is a little bit more troubling than other elements simply because we do see limitations that are now placed on air commercial traffic, and this is something that we're very much watching. I don't have a lot of strategy about it because eventually as long as we have products manufactured in China, Vietnam, Europe and Israel, you need to ship it to the United States, and there is not much of a way to avoid it. The one relief that we do have is that we did announce our new factory that we're going to build with one of the contract manufacturers in Mexico. And I believe that over the next 3 quarters of next year, we will have this production coming online and growing. And once we have the Mexico capacity, at least the U.S. will be liberated from the need of ocean freight or air freight, not only reducing dramatically the costs associated with freight, but also increasing the working capital efficiency that we're utilizing today and decreasing the level of inventories that we need to carry. So I think that this will be the major lift. And until then, we're at the hands of the new COVID variants and other elements that are controlling air and ocean freight traffic.

Got it. And just to touch upon the Mexico piece a little further. Can you just talk about your views on contract manufacturing diversification long term? Would you expect generally to have manufacturing close to demand on a forward basis? Like you're talking Mexico to the U.S., you have like Hungary and Israel to serve like I would imagine EU market. Is that the long-term vision? Or are you still expecting to have more [indiscernible] business type trade?

So the view that we had for many years is the fact that we want to have in every major continent, our own manufacturing footprint, whether a SolarEdge footprint or a contract manufacturer, which is usually our preference given the fact that they provide a lot of flexibility to grow rapidly and if needed, to reduce rapidly and this was not the case until now, but it's something that you need to be aware of. So in general, we would like to have a facility everywhere that we ship. There are 2 main reasons for this. First of all, COVID did prove that the world is vulnerable, especially when you need to mobilize large hardware pieces around the world, and this is something that makes a lot of sense. In order to make a lot of sense, you also need to make sure that you have the local supply chain in every area because, for example, if you manufacture in Mexico, but you bring all of the components from China, you're still dependent on this international traffic. So building the capacity is not just having the contract manufacturers, it also means to have the supply chain as much localized as possible, and these are steps that we're taking as well. In general, the other thing that we'll push is batteries. Batteries are heavy, they are relatively [indiscernible] to be mobilized. And in general, they are more complicated products. So I think that the more you move into bigger products that are more complicated, you would like to be closer to your markets. In general, we have right now everything that we want, but we will have to look into new opportunities and into new implications when they evolve. For example, the new act here in the United States that is pushing towards Maiden America is something that at least in the past, we have not considered having our own U.S. facility, we will have to consider. We do not have a lot of thoughts around it right now. We have to see how things are shaping and we need to remember that inverters are a relatively small piece of the overall puzzle of putting a PV solar. But I think that this is something that we'll have to look at. And I think that what you again start to see especially today when you see a little bit of trade wars between China and the United States is still a little bit more of nationalism. When it comes to trying to bring back manufacturing, we may find ourselves manufacturing in more than one place in every continent simply because [indiscernible] reason, but at least as long as there are no major changes there, Mexico, Hungary, Israel, China, Vietnam seems like a very nice footprint.

Got it. And just as a quick follow-up to that you mentioned, it sounds like one of the areas that might be a constraint for the strategy is the availability of the components. Is that something you're working with your component suppliers on and having more of that supply near where you would like to have manufacturing, for instance, like Mexico?

So yes. Yes. But again, we need to understand what kind of products because, for example, if you talk about the semiconductors, these are usually small components. You can airship them, you can transport them relatively easily and you don't have [ hubs ] everywhere. So [indiscernible], I think that the areas that are more interesting are related to the heavier and more volumetric sides of the supply chain. So this will be the covers, the aluminum heat sinks, cables. These are the areas that you would like to like to localize. But in general -- and even if you talk about [ G ], we all talk about carbon footprint when you manufacture, the ability to have local manufacturing and local supply chain is always preferred when you have a global footprint.

Got it. And maybe just to move on away from the freight and logistics side and thinking more long-term vision -- our maybe vision is not the right word, but long-term strategy around product road map. Your peers have made some announcements of late around expected cost reductions and the things that they're going to be implementing for their product. Would love to hear -- and I would imagine you're going to talk about this more at your Analyst Day. But at this time, we'd love to hear some of the potential improvements that you could implement for your own optimizer and inverter products and how you think about that?

So first of all, we need to differentiate between short term and long term. Short term, everything is more expensive. Products are more expensive today, components are more expensive today, metals are more expensive today. So I'm simply removing the short term from the discussion or my answer now. I think the answer to your question is innovation. And I think that both our peers and us in this sense are very similar. We're a technology company more than just being an inverter company. And the fact is that, yes, the combination of more and more semiconductor elements into our product is something that reduces our component count and reduces cost. The fact that we're able to present novel technologies as we did with the HD Wave for which we won the Edison award 2 years ago simply by presenting a new novel way to change the way that energy is converted and this is coming through innovation, allows us to make products that are smaller and usually in power electronics [indiscernible] cheaper. And as we are going to move into a more and more sophisticated materials that we're going to use in our products as well, again, we will be able to change and reduce the cost related to more of the traditional components that we have. So I think that we have a very nice road map for cost reduction, both for our inverters and optimizer. I can tell you that we are presenting every few years a new inverter version and a new optimizer version. Usually, every inverter and every optimizer are not just cheaper on the cost per watt because when you have an optimizer that is usually supporting bigger modules, the cost per watt is smaller, even if you sell it at the same price. We're also trying to reduce the component count and to make the product a little bit more efficient. So actually, the cost is lower. But I want to add something that will be a little bit countering everything that I said right now. And this is the fact that when you look at the future of solar in residential homes, you will find actually offering that is much more sophisticated. For example, if you take for today, the energy hub, the energy hub is an inverter that can support a battery, that can support very easily the connection to other elements around your home, that can easily connect to your load board at home, and they can be more flexible for future expansions of your PV system or the additional of other elements [indiscernible] EV charger or other elements. And that actually means that while you can make each product cheaper, when you add more features into it, you actually increase the price of this enhanced product and you're able actually to get better revenues from this one because actually, the selling price is higher. So if you look at on a like-to-like product, costs will go down, price should go down. But if you look at the product and you compared to a next-generation product that will be much more feature rich and capabilities rich, you will actually see higher cost and higher price, but the value that it brings to the overall system is bigger.

And is there any specific -- at this time, any specific innovations that you would call out as you think of your future product road map? I know your peers have talked a lot about, like, for instance, gallium nitride integration. But, yes, curious if there's anything you would want to call out at this time or if it's a wait until March.

So some of them will expose in March. Let's leave something for March or else people [indiscernible] party. But some things will leave for much, some things we will not even reveal then. The one thing I will say is that like any technology company, you need to be in the forefront of technology in looking into new materials. And when you look into new materials and new technologies, there's always a trade-off that you need to do. Because on one hand, it enhances your product and allows you to make more feature rich or capabilities rich product or even more reliable product. At the same time, you need to look at the materials themselves and make sure that they are available, and they are not actually creating constraints on your supply chain. And again, one thing that we saw in the last year is that you do not want to be relying on, for example, on one company to provide. So I think that it's always a game between finding the right new components that will allow you more edge and more cost reduction and at the same time, making sure that you're securing supply and you're not dependent on highly new technologies that in case of component [indiscernible] right now will stop you from manufacturing. And I think that this is the big arc of innovation and making products is to find a way of how to balance all of them. But definitely, our innovation is also built on new materials and new technologies that go into that.

Got it. And you just alluded to earlier with like lower costs, like lower pricing. How do you think about your pricing strategy here in terms of -- as you enable lower cost, would we strive to really improve your margin profile? Would you like to try to price to gain more share? However, you would want to frame the strategy there?

So unfortunately, life is more complex. And the fact is that we see -- I don't think that we can control a lot of it. Sometimes, especially when we talk here in the United States, when we talk to U.S. investors, we tend to forget that most of the solar business is happening outside of the United States. And we basically live -- solar lives in 2 almost different universes. There is the one that is resi U.S., where we have one peer and us competing with [indiscernible] of the segment. And there is the other rest of the world in commercial where the other peer is much less evident, and most of the competition is Chinese, and the dynamics there are completely different. So looking at outside of the United States, for good and bad, Chinese companies do not show right now that they have constraints on supply. They do not show at least right now that they have constraints on shipping. And therefore, their pricing strategy is not changing. They are not increasing prices. I'm not sure that they are decreasing prices, but at least they are not increasing. And therefore, our capability in those highly competitive markets where the competition is mostly around price and the competition is mostly Chinese, I think that we have less of tools to decide whether how much we turn the knobs in order to get to the right gross margin that we were or pricing. It's basically about market share and market share is a little bit more price sensitive. And this is why, by the way, we're not increasing prices dramatically even now in those areas simply because this is the market, and this is the competition. The U.S. is slightly different because in the U.S., yes, we have -- we do see that there is a trend of growing [indiscernible] out there. And I think that this -- to hopefully de facto situation that we have may be allowing us to do so. We have decided as a company that at least in the near term, we're not increasing prices. Whatever orders we received, we will respect. We know that our customers are struggling with inflationary environment right now. We do not want to be those who are adding to their complexity. If we see that the situation out there, both on manufacturing and supply chain and logistics is staying high, we may consider or we will consider actually price increases on orders that we have not yet received. And we will always try to make sure that we're looking also at the long term because at the end, we meet those customers where pricing is good and bad, when we see it when the supply chain is good and bad. And it's a long-term relationship. And pricing strategy needs to be, I would say, a long viewed rather than just being able to optimize current situation.

Ronen, it's Julien here, just jumping in. I had a lot of questions coming inbound. Thank you for your thoughts. So just -- and maybe even at the outset, just going back to where we stood a couple of [indiscernible] ago, I got a clarifying question inbound here. What is your California exposure? I mean, broadly, I know you probably haven't defined it, but how would you characterize that just to put this to rest as a concern? Because I imagine it's not...

Not so. I would say, again, we're not breaking it generally, but I would say it's less than 10%, roughly.

All right. That's a good answer. I'll leave it at that. And then it's even better than anyone else to answer it. Even better. Now so here, let me go back to another comment you made earlier, and there was a follow-up. But I mean, how are you thinking about getting into battery manufacturing? And to what extent would you like to get into it even more so? And if so, how do you think about it, right? Again, I mean, more strategically, how do you think about that end market given the prospects and frankly scaling it, right? And you talked about scaling manufacturing earlier, that was more of a micro's comment, but how do you think about the storage strategy where we stand today, given what probably is better demand outlook than I imagine what you even saw a year ago?

So I think that we are already a battery manufacturer and cell battery manufacturers, whether we like it or not. We acquired Kokam in 2018. And I think that what you see is that everyone is increasing the battery manufacturing capacity. I believe that we will increase it over time. We've always said that we want to be, and this time, explicitly shows that we want to be mastering our destiny when it comes to the critical component. And therefore, I'd not be surprised if you will see more -- an increase of more and more battery manufacturing capabilities, both on the [ sell ] and on the assembly of packs in the future. I think that we will have to wait to see, first of all, Sella 2 starting to produce. We make a large investment. We haven't seen even one cell coming out. We need to figure this out before we do, but I do expect us over time to be increasing the capacity. And I do expect us to increase the capacity, not necessarily in Korea, simply given the fact that, again, mobilizing cells and mobilizing batteries is relatively complicated. And here, we see or may see more opportunities. So we are battery maker, we are a cell maker, and we will continue to grow the capacity as we grow. We believe that eventually, every solar system will come with the battery. So if we see today attachment rates that are relatively small, I believe that if you believe in growth of solar, you should eventually have similar growth in the battery capacity that we will manufacture.

Right. Excellent. And then I mean, related to the [indiscernible] Vietnam here. Where are we in that facility in just bringing facilities back online or ramping?

So it's back to normal about a week or 1.5 weeks ago, it's already back to normal. We have the people there. And in general, Vietnam still suffers from COVID. There are eruptions there. We have a situation where the factory -- it's not our factory, of course, it's a contract manufacturer. They have a high percentage of vaccination. So we do not see an impact right now of what's happening. But in general, it's back to where it's supposed to be. And this is part of the relief that we expect to see in Q1, especially on the margin front because that means that we have more capacity that we can put on boats that we can sell in Q1 and less airfreight. So right now, it's all good. And with all that said, COVID is still there, and we still see, at least in the last few days, we should expect turbulence in this area.

Right. And even just to fully clarify that, that is consistent with what you were planning?

Yes, yes, definitely.

Okay. Got it. Yes. You -- all right. Wonderful. And then just to keep going on the clarification here, geographical, I think I heard you, this is my interpretation of the other question coming in about it. Is there U.S. manufacturing angle here of any sort, flavor? I mean, especially given the domestic content requirements and benefit from an ITC perspective. I mean could -- are you open to that? I mean obviously, the logistics costs [indiscernible] what's your thought?

So we're open for everything in general. I must say that we need to understand that for inverters alone, there's not a lot of reasoning for this, simply due to the fact that, again, inverters are 10% of the cost of the installation. So in order to have the domestic content, you need to have something bigger. So by definition, modules or other ranking or everything, this will be much more relevant for the U.S. But as things will change and as maybe again, batteries will become more prominent in the offering and larger portion of it, it's something that we will have to look at. There is always a kind of triangulation that you need to take into account. The first one is that it needs to be economic. And as long as a product is not highly automated, manufacturing in the U.S. is very expensive. And we have to look at the entire picture of whether taking a U.S. product will eventually make a cheaper product to the customer and profitable product for us. In general, we never rule out any manufacturing in any area, it just needs to make sense.

Yes, indeed. And then if I could jump in with a little bit of a third question here. You talked about go-to-market here. What sales channels do you expect typically rely on? And is there a thought process on further energizing sales efforts? But again, so this is -- I think it goes back a little bit to geography, but just altogether, how do you scale? How do you build out? How do you set out? And I got a follow-up on this one, too.

Okay. So in general, we're already selling today in 41 countries. And 60% of our business is coming from outside the United States. I think that there are energizing sales is not just coming from simply taking share. At least in the U.S., we have a very strong [indiscernible] very worthy competition. And sometimes, by the way, it's not even related to us. If you have -- you see it in the U.S. that you see optimizers or microinverters are also almost a religion. And sometimes it doesn't matter if I energize myself or not in the United States, it's one installer that is our installer compared to our peers installer is getting stronger, I see share gains in the United States and vice versa. So in general, in the U.S., I think that the way to have more revenues and grow is what we presented 2 years ago in the concept of ARPI, its average revenue per installation. We simply sell much more into the installation by products that are more sophisticated, we add batteries, we add other elements, and this is how we grow. The other element that we grow is going into new segments. We have our new small utility, large commercial inverter out at 300 -- sorry, 330-kilowatt inverter. We already started installing it. We are going to continue and test it and start installing next year. We'll go into more -- and we can definitely grow there. And this is, of course, when we talk about U.S. Everything outside of the United States has continued to take share by offering much more technological products compared to our Chinese competition, especially product that can work with smart home, that can work with the battery, that can work with EV chargers that are needed. And lastly, it's still geographical expansion. More and more countries are opening for us. So Korea is becoming bigger. Taiwan is becoming bigger by the year. Thailand is a very nice market for us. Brazil is booming again. In general, we should at all directions in all fronts, and we try to be accurate in the way that we do it. But I think that all in all, when we look at the prospect and growth, we still see very nice growth ahead of us.

Got it. Excellent. The last question for me. I know we're starting to come up on time. Quick one. I mean when you think about expanding, right? And certainly, some of your peers, I'll frame it that way, are talking about getting more and more grid services and trying to upsell customers. As you just described in some form, how do you think about kind of following their lead or not, right? Again, it almost feels like, in fact, if I can rephrase that, I know you all are a manufacturer. And frankly, you've got a lot of great partners in the form of some of these residential solar companies that are dealers and otherwise. But at some point, how do you think about offering a suite of products such that you're effectively having a good customer relationship, whether that's great services or otherwise? But again, the real question is, they [indiscernible] this whole home approach that is SolarEdge and frankly, Generac at that. You seem like the obvious next company to talk about your solution there in an integrated fashion.

So in fact, again -- and this is something that we've raised 2 years ago in our Analyst Day. We do believe that eventually, homes will have inverters, it's more than just an inverter. And we're not just talking about to add a battery, which is the obvious one. But for example, in Italy, we're already selling today water heaters that are [indiscernible] to the inverter and can be controlled by the inverter and are actually the cheapest form of energy. If you look about grid services, we're offering grid services for 3 years already. We have over 40 agreements, if I'm not mistaken, that are active over the last 3 years. We have started to sell EV chargers 2.5 years ago, and we are increasing these sales all the time. So I think that in general, the direction that our peers that you mentioned are portraying is actually the one that is right, and we are following exactly or leading, I believe, some of it. Over time, you need to provide a solution for a home. And this solution needs to be much more than an inverter. As a company, we want to control as much as possible from this solution. So we would like to control, of course, the software that is moving it. We would like to control as many as possible elements of the hardware that is moving it, and we want to partner with as many companies that are providing ancillary services. We already know how to work with Alexa and Google Home and how to connect to those. So I think that, yes, this is the situation that you see, a much more connected home and much more holistic approach and we definitely go in this direction. And again, in our Analyst Day in March, we will present much more about this.

Let me just ask you one more quick question, and then I'll turn it to Aric. If I can ask you the obvious one. What would you like to share about previewing your Analyst Day in March, if at all? Like how would you frame what, not like the actual metrics, but how would you frame the sort of the direction of the update?

So I think that the direction will be mostly, I would call it strategic and technological. And I will explain again without stealing the thunder from the day itself, but the idea is very simple. I think that what we're seeing in solar is twofold. The first one is that we move beyond just residential or commercial solar. And we will explain the logic and why we believe that we have the ability to go outside of residential and commercial and to compete in places where people may not understand what is the value proposition that we have, and we believe that we have a lot of it. So that's one thing. Solar will become bigger, both and all elements of solar will become bigger. We see it that the tailwind is working in our direction. Governments are pushing more solar, electrification, digitization, urbanization. And they're all creating a situation where solar and storage will have to be present in all levels. It needs to be at the grid. It needs to be commercial. It needs to be residential. We'll basically portray how do we see this future. So that will be one side. The other side that we will try to do is to talk a little bit about the other businesses that we have, which people, again, sometimes do not credit us for having them in -- even in the area that is very close to me, which is the storage where we have today a nonsolar storage business, Kokam that we have acquired and we operate, and we believe that we can continue and grow it and to add to the overall portfolio of products that we have. And in general, this is what we'll try to show of what are the strategic direction, the technology behind them and what is the overall areas that we're dealing with, and there are more than solar today.

Got it. Aric, do you want to close it out here? I know there's a lot to ask here.

That's a great closing comment, and I appreciate the thoughts on the [indiscernible] expansion and everything, and we're looking forward to everything ahead.

Thank you very much. And again, thank you very much for hosting me.

It's always a pleasure, sir. Have a great day. We'll talk to you soon.

Same. Same. Bye-bye. All the best. Stay healthy. Stay safe. Bye-bye.

Thank you, Ronen.