Nextracker’s second quarter results were met with a negative market reaction despite the company delivering both revenue and non-GAAP earnings above Wall Street expectations. Management attributed the quarter’s performance to strong global demand for its solar tracker systems, expansion of its U.S. supply chain, and stable project execution. CEO Dan Shugar highlighted the company’s ability to navigate a shifting U.S. policy landscape, stating, “Our ability to consistently execute in challenging conditions speaks to the strength of our team, differentiated products and the quality of our customer relationships.” Ongoing policy uncertainty and investor concern about forward momentum appeared to weigh on sentiment.
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Nextracker (NXT) Q2 CY2025 Highlights:
- Revenue: $864.3 million vs analyst estimates of $845.1 million (20% year-on-year growth, 2.3% beat)
- Adjusted EPS: $1.16 vs analyst estimates of $1.02 (13.4% beat)
- Adjusted EBITDA: $214.8 million vs analyst estimates of $199.6 million (24.9% margin, 7.6% beat)
- The company slightly lifted its revenue guidance for the full year to $3.33 billion at the midpoint from $3.3 billion
- Management raised its full-year Adjusted EPS guidance to $4.12 at the midpoint, a 7.2% increase
- EBITDA guidance for the full year is $780 million at the midpoint, above analyst estimates of $762.7 million
- Operating Margin: 21.5%, in line with the same quarter last year
- Backlog: $4.82 billion at quarter end, up 16.1% year on year
- Market Capitalization: $7.96 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Nextracker’s Q2 Earnings Call
- Dimple Gosai (Bank of America) asked about the pace of bookings and developer sentiment post-OBBBA passage; President Howard Wenger emphasized stable backlog and no project dropouts, stating the sales team saw sequential growth and positive demand signals.
- Praneeth Satish (Wells Fargo) questioned the business model for new robotics and AI offerings; CEO Dan Shugar explained that some solutions are already integrated within TrueCapture, with a mix of equipment sales and service models under development.
- Brian Lee (Goldman Sachs) pressed for details on backlog growth and the impact of higher vendor rebates on margins; CFO Charles Boynton clarified that the elevated rebate benefit was due to reconciliations from prior periods and expects future levels to normalize.
- Philip Shen (ROTH Capital Partners) sought clarity on the percentage of backlog safe-harbored and risks from upcoming federal policy changes; management responded that the vast majority of U.S. backlog is safe-harbored, and early reads suggest new guidelines are manageable.
- Julien Dumoulin-Smith (Jefferies) asked about the timeline for industry cadence and diversification of non-tracker technologies; Wenger described progress in international expansion and plans to scale new product categories, with more detail to come at Capital Markets Day.
Catalysts in Upcoming Quarters
In the quarters ahead, our team will monitor (1) further regulatory updates impacting safe harbor provisions and permitting for U.S. solar projects, (2) customer adoption and monetization of newly launched robotics and AI-based solutions, and (3) the pace of international expansion for eBOS and foundation products. Progress on integrating recent acquisitions and scaling recurring service revenues will also be key indicators to watch.
Nextracker currently trades at $53.80, down from $64.96 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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