SolarEdge Technologies Inc. announced on Thursday that it has reduced its outlook for third-quarter profits and gross margins, as well as its expectations for fourth-quarter revenue. The company attributes this change to a slowdown in solar-power installations in Europe.

During the second part of the third quarter of 2023, SolarEdge experienced unexpected cancellations and delays in its existing backlog from European distributors. CEO Zvi Lando stated that this slowdown is unrelated to the Israel-Hamas war.

The company cites higher-than-expected inventory and slower-than-expected installation rates as the reasons behind these cancellations and delays. Installation rates in September were particularly slow, which is unusual for this time of year when there is typically a rise in installation rates.

SolarEdge emphasizes that this revised guidance is not connected to the recent tragic events in Israel.

The new projections for the third quarter indicate that revenue will fall within a range of $720 million to $730 million, compared to the previous estimate of $880 million to $920 million. Adjusted gross margins are predicted to range from 20.1% to 21.1%, down from the previous forecast of 28% to 31%.

The adjusted operating income is expected to be between $12 million and $31 million, while the previous forecast was $115 million to $135 million.

Full third-quarter results will be disclosed on November 1. Analysts surveyed by FactSet predict that the company will report adjusted earnings of $1.86 per share on revenue of $910 million.

This downward revision in guidance affected other solar power-related stocks in after-hours trading as well. Enphase Energy Inc., a microinverter maker, saw a decrease of 13% in its shares, while solar-panel manufacturer SunPower Corp. experienced a decline of 7%. Additionally, the Invesco Solar ETF, TAN, dropped 7%.

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