SEDG
#We never give the precise numbers mainly because it's influenced by many (inaudible), but it's less than 50%.
And indeed, SolarCity, as I mentioned before is, for the first time after quite a long period, is below 10%
So again, also here we're not giving the exact numbers, but it is increasing every quarter by a few percentage.
It's not yet got to third of our total business, but it's in the right direction.
As I think previously our goal is to reach 2017 ---+ to finish 2017 where 50% of the business coming from commercial, and 50% is coming from residential, and I think it's doable.
So, I think we're on the long-term goals, we will reach these numbers.
So, as mentioned before, I guess that we're a little bit slow on this rollout.
And I would expect that, if we were expecting the majority to be from the new inverter in Q3, I think that will be two quarters later.
The reason are simple.
We mainly, in one hand, didn't want to stop the cost reduction on the older products, and we need them for storage because it will take a little bit longer until we will adopt the new inverter for storage purposes.
So, we had to keep enough resources on keep improving and reducing the cost of the current generation, and that came a little bit on the favor of rolling up the new inverter.
That plus the fact that we need to adapt the production line, and we don't want to risk the total capacity and to take even a slight risk of being, again, in a situation that we need to [air-ship] inverter as we have been doing five, six quarters ago.
The total of the two elements cause us to slow down a little bit ramp-up and to be a little bit more careful in this, but nothing is in another level.
So, we feel very comfortable that we can meet all of our cost reduction targets with the current blend we have, so I think that we'll keep increasing gross margin as was originally planned with the current blend between the current inverters and the new one, which is, as mentioned before, a little bit different than what we thought few quarters ago.
The plan was to ramp up all the products in Mexico.
We're just ending up with the economy of scale in China and in Europe.
We found out that we'll ---+ ending up with more expensive inverters coming in Mexico than from China, and it wouldn't make anything positive to our growth.
But, we're planning to put all product, the full [mirroring].
So, we keep the full mirroring, and we'll just have the two factories we currently have will adapt, line-by-line, to produce instead of the current inverters, the new inverters.
And that's why it take a little bit longer than expected.
But, we weren't ever planning to do Mexico only from the new inverter.
That wasn't the plan.
No, I think that we will ---+ what I believe, that we won't have impact on the long-term model as well as on the revenues.
I think that we do the blend early enough and slow enough so I think that it won't affect the model you have.
So, the line is running very smoothly and very nicely in general.
It has the potential to reduce big portion of the labor that can impact up to 10% of the cost of the optimizer.
We didn't ---+ we need six automated [line] currently.
We have one.
Five others supposed to be ready some time in Q3, and hopefully installed still during 2016.
So, I think that most of the real impact of a fully automatic line from the financial perspective will occur during next year.
But again, saying all this, everything that we have in the model is supported by the cost reduction plans that we're currently having, and we feel very comfortable with keeping (inaudible), increasing our gross margin and profitability along the lines that we previously gave you.
Thank you.
So, I feel that we have a relatively good view, but I\
Sorry, okay, can you one more time.
It was a little bit broken.
I'm not trying---+.
So, I think that as [we described] in the past, the main geography so far for on-grid is Europe, mainly Germany, because of a specific subsidy.
They are subsidizing 25%, direct subsidy of 25% of the extra, or the direct cost of the storage part of the solar system.
So, Germany is the biggest market today for storage.
Australia, as mentioned before, is a very strong market.
US, we start to see a very nice demand.
And South Africa is probably the fourth country due to a unstable grid.
So, these are the main four markets we see.
We do see very big potential in many other countries, such as India and some other remote areas.
But, I think this will come to [a massive] only when the prices of the batteries will reach a price of below $200 per kilowatt hour.
So, I think that the fact that we'll have other suppliers will not change [the] geography.
It will just simply give the customer the ability to choose from more than one option.
I think we plan that it will be 50%-50%.
Commercial is growing worldwide very nicely, and we are growing very, very nicely in commercial, and we are becoming more and more competitive with every larger inverter we're introducing.
So, I think that it is definitely growing.
I wouldn't expect it to be more than 50% in 2017.
I would expect it to be more than 50% beyond 2017.
But, for 2017, I think we'll end up where it should be around 50%-50%.
I don't think it will grow faster than that.
In summary, our fiscal third quarter results show continued successful execution of our business strategy, with strong revenues, consistent growth in profitability, and accelerated cash generation.
Thank you for joining us on today's call.
