Welcome to the SolarEdge Conference Call for the Fourth Quarter and Full Year ended December 31 2019. This call is being webcast live on the company's website at www.solaredge.com in the Investors section on the event calendar page. This call is the sole property and the copyright of SolarEdge with all rights reserved in any recording, 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 conference over to Erica Mannion at Sapphire Investor Relations, Investor Relations for SolarEdge. Erica you may begin.

Good afternoon. Thank you for joining us to discuss SolarEdge's operating results for the fourth quarter and full year ended December 31, 2019 as well as the company's outlook for the first quarter of 2020. With me today are: Zvi Lando, CEO, VP of Global Sales; and Ronen Faier, Chief Financial Officer. Zvi will begin with a brief review of the results for the fourth quarter and full year ended December 31, 2019. Ronen will review the financial results for the fourth quarter and full year followed by the company's outlook for the first quarter of 2020. Then we will 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 press release and the slides published today for a more complete description. All material contained in the webcast is a sole property and copyright of SolarEdge technologies with all rights reserved. Please note this presentation describes certain non-GAAP measures including non-GAAP net income and non-GAAP net diluted earnings per share which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are presented in this presentation, as we believe that they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance. 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 December 31, 2019 press release or the presentation may obtain a copy by visiting the Investors Section of the company's website. Now I will turn the call over to Zvi.

Thank you, Erica. Good afternoon and thank you all for joining us on our conference call. We are pleased to report that we have concluded the quarter with record revenue of $418 million and the year with record revenues of $1.43 billion thus achieving our second consecutive year of higher than 50% year-over-year growth. We are reporting many other record and noteworthy financial results and I will let Ronen go into them further in a few minutes. As expected most of our growth originated from our solar business, while we continue to grow and invest in our acquired businesses in line with our plans. This quarter we shipped over 1.6 gigawatt of AC nameplate inverters approximately 788 megawatts of which were shipped in North America. Shipments to Europe consisted of 620 megawatts. This quarter we shipped 701 megawatts of commercial products compared to 543 megawatts in the previous quarter. Overall this quarter we shipped 4.5 million power optimizers and approximately 187,000 inverters. I know many of you are concerned about the effects that the Coronavirus may have on our business. Before addressing the business aspects, I'm happy to report that all of our -- and our CMs, employees at the factory in China are healthy and most have returned to work. We share with all of you our wishes for the full recovery of those who are ill and express sympathy for those whose lives have been disrupted by this tragedy. Regarding the delivery of products, we do not expect any disruption to our revenue in Q1 or Q2. As is to be expected we may experience some level of continued air shipments in order to meet the growing demand for our products. Just a bit of background on how we have been able to manage the situation. In anticipation…

Thank you, Zvi, and good afternoon, everyone. Before starting the review of our financial results for the fourth quarter and full year of 2019, I would like to remind listeners that while the overview will be on a GAAP basis in certain cases I will be discussing non-GAAP numbers and measures which exclude stock-based compensation, one-time asset disposal, changes in deferred tax, amortization and depreciation of acquired assets, cost of product adjustments and other onetime expenses related to the acquisitions of SMRE, Kokam and the UPS division. Finance expenses related to the impact on financing expenses of the revenue recognition standard and the adoption of the newly enacted leasing accounting standard as well as non-GAAP earnings per share. I will conclude this introduction by noting that the effect of the acquisitions closed in the reported years on the GAAP results is meaningful as a result of amortization of accounting elements identified in the purchase price allocation studies that we recently performed. This reconciliation of pro forma to GAAP results discussed on this call is available on our website and in the press release issued today. For the fourth quarter of 2019, total revenues were $418.2 million a 2% increase compared to $410.6 million last quarter and a 59% increase compared to $263.7 million for the same quarter last year. Revenues from the sale of solar products were $389 million and were driven by very strong growth in the United States while Europe and rest of the world demonstrated typical fourth quarter seasonal slowdown. U.S. solar revenues grew this quarter to $236.6 million and represented 60.8% of our solar revenue. These U.S. revenues included a negligible amount of safe harbor revenues. Solar revenues from Europe were $118.9 million or 30.6%, following the traditional seasonal pattern of the solar industry. Rest of…

Thank you. Ladies and gentlemen, at this time we will open the floor for questions. [Operator Instructions] And our first question comes from Colin Rusch with Oppenheimer Funds.

Thanks guys. Could you speak a little bit to what's going on in the commercial market? Obviously, the growth in that segment has been very strong. Can you talk a little bit about where you're winning and why as well as the prospect for some geographic expansion besides just Japan?

So momentum in the solar business has been – in the commercial business has been improving in the last few quarters and it's very widespread geographically. We're seeing a good momentum in the U.S. but also in places like Brazil, Australia and Asia Pacific and Asia Pacific in general. It has not been related to new products. We're actually expecting to release new products in that area only in the next quarter. So, it was based on our current product portfolio just broader adoption of our solution and a wider geographical spread of our sales force.

Okay. And then on the energy storage products, at the Analyst Day you talked about that being ready in midyear. Can you give us a progress update in terms of where you're at from a testing perspective? And when we can expect that product to go out into base shipments?

So, we're roughly on schedule with the plan that we presented at the Analyst Day and -- but we don't expect to generate significant revenue from this product before the second half of the year.

Okay. I’ve some follow-up questions. Thanks guys.

Thank you.

And our next question comes from Mark Strouse with JPMorgan.

Hi. Good evening. Thank you very much for taking my question. Zvi, I was just hoping you can maybe touch on the competitive dynamics within resi? And any market share data that you track that you think is worth well?

GTM -- if we start with North America, GTM latest numbers I think gave us somewhat -- just above 60% market share. We don't have the means to track that much more accurately than what is reported. We look at the installation company, by installation company, and measure what is our share of their business. And sometimes even more importantly what is their business. Because actually today market share trends can come more as a result of how these installation companies are faring one compared to each other rather than if you are gaining one installer versus the other. We don't see any -- there are movements here and there, but we don't see any significant trends in one direction or the other in the market. In terms of the global residential market, we're seeing good momentum in Australia, and in particular in Europe and Germany that comes back to, what I mentioned before about the offering of a residential 3-phase storage compatible system which we began to ship at the end of the third quarter, and that is giving us access to the large residential market in Germany, which we had -- we did not have an ideal offering for in the past. Overall, as you can hear from the description, we're spread across many segments and many geographies. So there's not only one geography or segment that has a huge impact by itself. And we're managing and tracking each one to maximize our market share in that specific segment or in that specific geography.

Okay. Very helpful. And just one more quick one, I'll hop in queue. Ronen, you said immaterial safe harbor revenue in 4Q. Is there any contribution to your 1Q guidance from safe harboring?

So in general, as I mentioned at the end of my part, we received approximately $75 million as a prepayment for safe harbor orders, all of them are going to be shipped within Q1 and Q2. The majority of those are coming from relatively large customers. The small customers usually do not place safe harbor. And what we expect for the next quarter is pretty much what we expected from them anyway. So in general, I think that of course, well everything will be both delivered in Q1 and Q2 in roughly similar numbers. We do not see a major change or difference compared to what we expect to see in a regular year.

Okay. Very helpful. Thank you.

And our next question comes from Philip Shen with Roth Capital Partners.

Hey, guys. Thanks for questions. First one is on the Q1 margin outlook. It looks a little bit light relative to Q4. I was wondering if you might be able to provide a little bit more color around that why it might be down from 37%. And perhaps was it due to the higher mix of safe harboring or maybe higher mix of commercial volumes? Thanks.

So, as I mentioned in the script that we've read, usually during the fourth quarter while we do our financials for the year, we update our assumptions for the warranty accrual and this year given a lot of cost reductions that we were able to do both in the cost of products that we deliver to customers or in refurbished products that we sell as replacement units, as well as some changes that we did both in the shipment costs and other costs that we had, we saw a relatively nice reduction in the cost of every shipment of a product that we sell for replacement. Now today we have such a big installed base that when you take this amount and you apply it to the installed base you get a fairly good reduction in the overall cost. This contributed dramatically to this quarter where if we wouldn't have this periodical update that we do every two quarters; our gross margins will be approximately 34.5% and not 37.8% as they were right here. So we basically enjoyed a one-time benefit, which means that once you normalize the gross margins the gross margins for Q4 were slightly lower again without this one-time adjustment. This quarter the gross margins will be about 1% lower than the margins that we saw in Q3. This is mainly as a result of the higher air shipments that we noted in the last quarter. We expected last quarter to incur additional air shipments of 250 basis points actually it was closer to 180 basis points. And when you take this and you combine it with a little bit of cost reduction, the end result again neutralizing this adjustment was about 100 basis point less. For Q1, we basically expect the same trend. So it means that due to the coronavirus disruption, we are able to manufacture the product that we need but we may need more air shipments to ship them, which will continue to put pressure on the gross margin. But all-in-all the effect that we see is mostly related to the higher air shipments compared to any other aspect of our operational factors.

Great. Thanks. And then as it relates to the air shipments, just to be very clear -- and sorry if I missed this, but is it factored into your Q1 guidance…

Of course.

…so how much have you factored into the Q1 guide? And then also can you talk to us about -- give us a little bit more color on coronavirus. I know Zvi talked a bunch about it. But for example what kind of utilization are you guys -- or throughput or output are you guys operating at right now relative to where you would prefer to be? One of your peers is talking about being closer to 50%. So some color on that? And how you plan on navigating through would be great? Thanks.

Okay. So I'll start with the margin and then I'll -- Zvi will answer about corona. With regards to the margins, in the fourth quarter the overall effect of the air shipments was slightly higher than 500 basis points and this is something that we baked a similar assumption into Q1 as well. There may be a little bit of savings there again very much related to our manufacturing. But in general this is the assumption that we have baked into the assumptions that you see on the guidance. As for the corona itself Zvi will answer.

So since the beginning of Chinese New Year, which was prior to the big impact of corona, but as I mentioned we were operating during Chinese New Year at the rate of somewhere in the China factory of 40% to 50% capacity and we held that steady through the period since and it's beginning to climb up in the last week and we anticipate it to gradually increase to the call it 80%, 85% of the planned capacity over the next three or four weeks. That just relates to the China factory and obviously the other factories are working at normal levels.

Great. Thanks for the detail on both topics, and I’ll pass it on.

And our next question comes from Maheep Mandloi with Credit Suisse Securities.

Hi. Thanks for taking the questions. Could you just probably talk about your thoughts around the mix of residential versus commercial going forward for Q1 or for the rest of the year, especially as you've launched the 2-phase products in Europe and other regions and have access to the Japanese markets now?

So, actually the residential opportunity in Japan is at its infancy. So, we don't anticipate that to be a major factor in the next few quarters. In terms of the 3-phase product for Europe that's just a residential product and it -- and we anticipate that to continue to grow and contribute to the growth on the residential front, while in parallel, as I said before, we see a lot of opportunities to grow in commercial, both here in North America, as well as in some of the emerging markets that are more -- emerging markets like India, Brazil, Spain and such that are more commercial-oriented right now. So, generally the mix that we are typically at is around 40-60, so 40% commercial, 60% residential. I don't think that it's going to differ dramatically from that ratio in the next few quarters. We have plans and products to introduce that should allow us to grow in both segments and I anticipate that the growth will be roughly the same in both segments. So, the ratio will remain the same.

Got it. Thanks. And maybe on -- just on your visibility. Could you just talk about like how much visibility do you have going forward? And I know, you haven't guided Q2, but as we look for the shipments in Q2, do you still expect any impact from the Coronavirus in Q2 based on where you're standing today?

So, actually visibility from a backlog perspective for Q1 and Q2 is very good compared to anything that we that haven't -- had in the past in terms of the visibility of demand. And as we said that, we're -- current inventories and production rate and assuming and again assuming that the trend that began with the return of employees to working in the factories and the ramp-up plans that we're executing in our other factories hold, we should be able to deliver without interruption on the Q2 -- Q1 of course and Q2 orders as well, but that we already see them quite clearly.

Got it. And just like one last question for me and I'll jump back in the queue. From an ASP point of view, it looks like the residential ASPs were down just preliminary amounts around 8% in the quarter. Could you probably talk about like what led to that, or is the cost reduction more on the commercial side than on the residential side?

Actually the 8% that we mentioned was across the board, not on the residential side. And the main reason for it is actually mix. From pricing environment in Q4, we didn't see any major changes in pricing, pricing to the customers themselves and therefore, any movements that was there in ASP was mostly related to the mix of the products or related to mix among countries. In general, due to the fact that we have shipped dramatically higher amount of our commercial product, this is something that of course drags the ASP per watts down. And this was mainly the case in this quarter.

Got it. Thank you.

And our next question comes from Jeff Osborne with Cowen & Company.

Hey good afternoon guys. Just a couple of questions. Maybe following up on Philip's questions around the margins, I just -- because there's a lot of discussion about sequential changes running. I just want to make clear -- or understand the cumulative magnitude of air shipping off of the 34% or so base of gross margins is about 500 basis points? And then there's an additional hit?

Correct.

Okay. So that gets you to 39%. And then I assume there's an additional hit because of tariffs still, or can you just talk about that? It just seems like your normalized gross margins are closer to 40% and as Vietnam ramp? I'm just trying to understand what your company looks like?

So, first of all, let's start with the air shipments. The effect that we had in Q4 was close to 500 basis points indeed and this is something that again, we expect to continue at least into Q1, given the fact that with -- although having enough products to ship due to our manufacturing in light of the coronavirus in some cases we do need to air ship everything, because of the fact that the ramp-up back from the Chinese is a little bit slower. So this is the first thing. When it comes to the -- what we call the arithmetic effect of the margins related to the tariffs themselves, I can say that it's roughly 200 basis points of effect, when you take into account the price increases that we did on one hand and the fact that today still the vast majority of the products coming -- are coming from China. And we see this in our cost of goods sold.

Got it. And just to that point, can you touch on how your expansion in Vietnam and Hungary is going, and the percentage of your capacity just that would be tariff-free? Any thoughts on that?

So in general, it continues to be as very much as planned with one modification of course is that as the revenue grows we also need to adjust all the time upwards the amounts that we need to manufacture in Vietnam and Hungary. In general, we don't break the -- completely the products and where they come from, but in general we expect to be by the end of the year with the majority of the products coming to the United States coming from a non-tariff countries, there will be though some a part that is still coming from China either due to the fact that capacity in Vietnam is ramping, but again, the demand is ramping relatively quicker. And also due to the fact that in order to allow the ramping to be very smooth, in some cases we do not mirror all of the product production in all of the sites, and therefore, we may find ourselves that in some situations products sold to the U.S. of a specific model are not necessarily produced in Vietnam or in Hungary, and therefore are coming from China. But again the idea is that to have the vast majority coming from Vietnam and Hungary.

Got it. Just two quick ones if I could. The $75 million of safe harbor, it sounded like you said that that would sort of be equally spread out between Q1 and Q2. A, did I hear that right? And then B, can you just articulate if there's any meaningful C&I mix to that, or is that 100% residential? That was question one. And then question two is around the visibility. Can you just talk about what the lead times you have are? And whether you're fully booked into Q1 and taking orders for Q2?

So the delivery of the safe harbor will be roughly split between Q1 and Q2. The final ratio will be some optimization also of air shipment costs and getting it when it's needed and not spending money on air shipments to get it before that. There is C&I in the mix. So it's not only strictly residential. There is also C&I safe harbor in the $75 million, and the last part of the question?

Yeah, I was taking about lead times and whether you're fully booked for the guidance? And what visibility? How far in the Q2 are you taking orders?

So, Q1 obviously is fully booked. And Q2 is more than 50% booked at this point. And we're continuing to take orders for delivery in Q2 but it's more than 50% booked already.

Excellent. That's all I had. Thank you.

And our next question comes from Jim Ricchiuti with Needham & Company.

Hi, guys. This is Mike Cikos on for Jim Ricchiuti. Just a couple of questions for you.

Hi.

The first on pricing. With respect to the mix issues that we saw this quarter. Just wanted to get a sense. So was residential pricing stable in Q4 if we exclude any mix issues coming from commercial? And then I guess similarly I know over the last couple of years that pricing has been relatively stable versus, I guess, over the longer-term you've seen a more traditional call it 5% to 7% price erosion. How do you see pricing playing out over 2020?

So first of all, for the first part of the question, yes, prices has been stable in Q4 as they were in the previous quarter. I think that all-in-all the, I would call it the competitive environment do not support dramatic price reductions at this point of time. When it comes to looking into the future, in general, we do not see today yet anything that is disrupting dramatically the I would call it competitive landscape as was the case in previous year where prices indeed fell from let's say anything between 5% to 10%. And if you remember, these were the days where still most of the inverter companies were making relatively large amount of profits some of them were looking to be acquired and therefore try to capture market share. I think that today we have a much more rationalized environment where other than us and maybe one other companies most of the inverter companies are not really making money. And with the absence of heated competition or anyone that really can sacrifice major profitability prices are relatively stable. From -- on a customer basis, you will see or you may see some changes based on volumes or growth, but all-in-all today, at least, we do not see any competitive reason to go back to the 5% to 10% that we used to see in the past.

Okay, that's helpful. And then just shifting back to the supply chain. I appreciate everything that you guys are elaborating on with respect to coronavirus. But I just wanted to ask is there I guess more of an impetus to accelerate your manufacturing facilities over in Vietnam and Hungary given coronavirus, or are you guys able to tackle everything with what you currently have set up in China and the ramp that you had already laid out to us at the Analyst Day?

So, as Ronen mentioned before the motivation for ramping our non-China production was there prior to corona in order to be able to supply all of the North American demand from non-tariff location. So within that -- in that context, we've been working on ramping Vietnam ramping Hungary and also building Sella One, the factory in Israel. So, we've been pushing on all cylinders to get that done for the tariff reasons. Corona stick in the same place, but it's -- that is not -- didn't make a huge difference because we've been pushing hard on this anyway.

And our next question comes from Jed Dorsheimer with Canaccord Genuity Inc.

Hey, thanks, and congratulations on a good quarter.

Thank you.

I guess, first, just a higher level and sort of on the non-solar side of the business. And how to I guess conceptually think about the ramp as we look out over the sort of the three-leg solution that you're trying to push. So far, we haven't seen a huge ramp in terms of growth. That's largely been on the solar. Would you attribute that to the EV being 60% Tesla in North America? And as you look at 100-plus vehicles coming into the market over the next couple of years, how are you guys thinking about sort of that geographic mix shift and rate of growth on the non-solar side of the business? And then I have one follow-up.

I think we've been describing that the businesses that we bought were not anticipated to contribute major revenue or profit in the next call it 12 to 24 months. It's seeding us in markets that are long-term and synergetic to our markets. And we're executing on the plan to make that happen and what I reported was early indicators that represent that we are on path with the plan that we've laid out. But I don't see that having any meaningful impact on our financial numbers topline or bottom-line like I say in the in the next 12 to 24 months.

Got it. So, I guess, you wouldn't see an acceleration as you see a greater number of non-Tesla-based EVs coming into the market to -- I would think that that would be a pretty significant opportunity for you in terms of the rate of growth, particularly on the storage side.

No, as I mentioned, we are -- currently, our offering is relevant for the light commercial vehicle segment which is a growth segment and we are seeded with a few opportunities. But in this industry, the time that it takes these type of opportunities to evolve into meaningful volumes is a long period of time. So that's the segment that, we're operating in. We see tremendous potential. That's why we are in this segment. And we're tracking to what we plan to do in terms of putting ourselves in a position to ride this wave in the future. But in terms of something that becomes real volume and significant numbers, it will take this wave time to develop.

Got it. And then Ronen, just as a follow-up. Since the IPO, I think you guys have been – I mean, dealing with a relatively high-class problem in terms of the air shipments. Just -- I'm curious why you haven't been able to – is it a function of competition that you're not able to fully pass the additional costs on to the customers, or I guess what are the dynamics associated with that number not having come down to zero I guess?

So, I'll maybe start by the way by the reason that this is happening, because I think that it's very important. This is the second year – consecutive year that we're growing at 50% from $607 million to $937 million and from $937 million to $1.43 billion. And no company at that size usually plan for 50% growth. Now, you need to understand that in the hardware business and I think that you know it that better than many the fact is that every additional investment that you do in manufacturing capacity, even if it comes from the contract manufacturers it's relatively large. It's building a building it's having the floor, its having the machinery. And usually you do not plan for 50%. And yet this growth happened to us and we were doing everything in our ability and strength to first of all be able and manufacture. And this is a major task and anyone in our operational organization would testify. When it comes though to the air shipments? And can we basically roll it into our customers? It's actually a business decision that we've made. As you may have noted, this is a high-class problem. Yes maybe we could have rolled everything to our customers and get another 100% of margin or not, but we still decided that we would like to be able – and the fact that we are profitable to be able to come to our customers and say, look we support you. Growth problems are our problems we are dealing with it we will pay for it. The only thing that you need to do is to order as in advance as possible. Allow us to plan properly, the growth and allow us to plan properly the manufacturing. And as long as you do this, we will bear the costs associated with allowing you to grow. Another element that we added is the fact that, we saw – across the history of SolarEdge many smaller customers growing with us simply because of this because they knew that once we commit to something we're able to deliver it. And this was the case here. We believe that now with the capacity that we are building and again the Coronavirus is a relatively good example, I think that we're getting closer to solve this issue. And we hope that our customers will appreciate the fact that when we needed to suffer some costs in bringing products to them, we're doing it on our account and in most cases, we see customers appreciating this.

It's been quite the story. So I won't argue with the success. Thank you.

Thank you, Jed.

Thank you.

Our next question comes from Brian Lee with Goldman Sachs.

Hey, guys. Thanks for taking the questions. I just had two. One was on the megawatts. I guess, overall residential megawatts were down sequentially from Q3 megawatts for North America though were up over 30%. So it seems like the commercial volumes accounted for a much larger part of the mix here, drove all the North America growth. Is that the right read? And could you give us a sense of how much your residential megawatts in North America declined quarter-over-quarter and year-over-year?

So Brian, we'll have to check this and come back, especially since we don't have this data in front of us. In general, though, I would just like to mention one thing and this is the fact that all in all a lot of the shipments that you see and what we report is not relatively -- or not necessarily related to what was installed. Sometimes we ship in advance due to manufacturing reasons. There are some times because manufacturing reasons or shipment issues, you see higher commercial mix in general. So I wouldn't take one-to-one and reflect from what you see in shipment what you see in the installation. With regards to the numbers, I'll have to check and come back with it later.

Okay. Yes, we'll circle up with a follow-up there. The second question is also on the model I guess with the ASPs I know there's been a few questions here around how you get to the minus 8% that's reported here. I mean when we run the math you gave us the commercial megawatts, you gave us the residential megawatts and if we flow that through the model mix shift from Q3 to Q4, a lot more commercial drives about a 4% ASP reduction on a blended basis. So there's another four percentage points that seems to be implied by either commercial ASPs having come down by it would seem the math would suggest low- to mid-teens or residential ASPs having come down by close to 7%, 8% or a mix of those two. So I know there's different moving pieces here, but the mix itself only explains about four percentage points of the 8% reported. So could you give us maybe a bit more color around what might be happening in terms of the bridge for the other part of the ASP decline here? Thank you.

Sure. So again, let me start by saying that when you look at prices that we give to our customers prices remain stable. So all of the changes that you see in the ASP are strictly a, I would call it a result of the fact that you simply see changes in the mixes themselves. So we do not see anything that is happening in I would call it real numbers or real prices falling in what we sell to the customer. Now when it comes to the analysis, it's actually a combination of several things. First of all, not all commercial sales are born the same with the same ASP, because for example, if you take a 33-kilowatt inverter or 120-kilowatt inverter, the ASP per watt can be dramatically different. And now the fact that you ship commercial megawatt very much depends not only to -- whether it's commercial or residential, but actually which kind of commercial product you sold. That's number one. The other thing that needs to be taken into account is that today in the residential sales that you see, you see today higher portion of elements that are not necessarily just related to the solar products. As we discussed in the Analyst Day, the RP elements related to smart home and smart energy products these are usually products that are added and they do not have a label of nameplate capacity. So by definition, selling more commercial is actually in this case diluting the amount of the residential sales that are characterized with this higher ASP due to the other elements. So I think that all in all I'm not sure that I can give you exactly what is the reason for every piece that is moving or at least we can, but we cannot do it publically because this is a business information. But I can tell that all of the changes that are coming are basically based on first of all move towards higher mix of commercial in the commercial itself moving to higher capacity systems. And in general the fact that when you have lower residential in the mix, the lower is the portion of the RP elements that are increasing to the ASP per watts that you see.

Okay. Thanks guys. Appreciate the color.

At this time, this concludes today's question-and-answer session. I will now turn it back to Zvi Lando for closing remarks.

In summary, we concluded a very positive year on all fronts. Far exceeding the $1 billion market revenues and above $230 million in non-GAAP net income. All of this while investing significant resources and laying the ground for future growth and expansion into adjacent markets. We're proud of our achievements in particularly in what was a challenging year for us given the professional and personal loss of Guy Sella, our Founder and long-time CEO who is greatly missed. I thank our team for their contribution and thank you for joining us on the call today. Thank you.

Ladies and gentlemen, this concludes today's teleconference. Thank you for your participation and you may now disconnect your phone lines. Have a great day.