NEXTracker Lifts 2026 Outlook on Strong Solar Demand

NEXTracker, Inc. Class A ((NXT)) has held its Q3 earnings call. Read on for the main highlights of the call.

NEXTracker Earnings Call Signals Strong Momentum Despite Tariff Headwinds

Management struck an upbeat tone on NEXTracker’s latest earnings call, emphasizing strong operational execution, accelerating growth and a reinforced balance sheet. Robust revenue and EBITDA gains, record backlog and bookings trends, and substantial cash generation underpinned a confident outlook and an upgrade to fiscal 2026 guidance. While executives acknowledged rising tariff costs, U.S. market concentration and project timing variability as real but manageable risks, the overall sentiment leaned clearly positive, with the company positioning itself as a high-quality beneficiary of global solar and energy-transition investment.

Revenue Growth and Upgraded Top-Line Outlook

NEXTracker reported third-quarter revenue of $909 million, up 34% year over year, bringing fiscal year-to-date revenue to $2.68 billion, a 32% increase. Management’s confidence in the demand backdrop and execution led to a higher fiscal 2026 revenue guidance range of $3.425 billion to $3.5 billion. The upgrade signals that the company sees its current growth trajectory as sustainable, supported by a strong backlog and expanding geographic and product footprints.

Profitability, EBITDA Performance and Margin Targets

Adjusted EBITDA for the quarter reached $214 million, up 15% year over year, translating into a healthy 23% adjusted EBITDA margin. Year-to-date adjusted EBITDA rose 22%, underscoring NEXTracker’s ability to convert growth into profits despite cost pressures. Looking ahead to fiscal 2026, the company raised its adjusted EBITDA guidance to a range of $810 million to $830 million and is targeting gross margins in the low 30% range and operating margins in the low 20s. These targets highlight management’s expectation that scale, product mix and operational discipline will offset persistent headwinds such as tariffs.

Cash Generation and a Fortress-Like Balance Sheet

The company delivered strong cash results, with Q3 operating cash flow of $123 million and adjusted free cash flow of $119 million. For the fiscal year to date, operating cash flow reached $391 million and adjusted free cash flow $360 million. NEXTracker ended the quarter with $953 million in cash and cash equivalents and carried no debt, giving it significant financial flexibility. This cash-rich, debt-free position supports continued investment in growth initiatives and cushions the impact of any market or policy volatility.

New Investment-Grade Credit Rating Boosts Credibility

NEXTracker’s Nextpower entity achieved a formal investment-grade credit rating for the first time as a pure-play solar product company. Management highlighted this as a key milestone that should enhance confidence among customers and suppliers, lower financing costs and broaden access to capital. The rating serves as an external validation of the company’s financial strength and is likely to support long-term contract negotiations and large-scale project wins.

Record Backlog, Bookings Strength and Rising Global Demand

Management pointed to a record backlog and robust bookings environment, with analysts referencing a backlog in excess of $5 billion. Europe stood out with record quarterly bookings and entry into two new countries, signaling momentum beyond the company’s core U.S. footprint. The large, diversified backlog underpins the raised outlook and suggests that the demand pipeline for utility-scale solar trackers and related products remains strong across multiple regions.

U.S. Market Dominance as Both Strength and Risk

The U.S. remained the primary growth engine, with third-quarter U.S. revenue up 63% year over year and U.S. bookings also increasing. Domestic manufacturing requirements and a flight-to-quality trend in favor of established, reliable suppliers appear to be benefiting NEXTracker. However, the U.S. accounted for 81% of Q3 revenue and 75% year-to-date, heightening exposure to U.S. policy decisions, permitting timelines and tariff changes. Management framed this concentration as a competitive advantage today but acknowledged it as a strategic risk that needs ongoing management.

Product and Technology Momentum Across the Portfolio

NEXTracker highlighted solid traction for its technology platform, particularly the NX Horizon Hail Pro solution, which has achieved 2,170 hail stows in calendar 2025 with less than 0.007% module breakage. The company is also seeing growing demand for bundled offerings that combine trackers, electrical balance-of-system components, its Earth Truss foundation solution and the TrueCapture software platform; one example cited was a 552 MW order for a full bundle. In addition, progress on power conversion solutions continues, with customer pilots planned for 2026, signaling an ambition to move deeper into the solar system value chain.

Strategic Expansion and Saudi Joint Venture Execution

Strategic expansion efforts took center stage with the launch of the Nextpower Arabia joint venture with Abunayyan Holding. The JV is already supplying 2.25 GW to a major utility-scale project, operating a factory in Riyadh and building a new facility in Jeddah. Over time, the partnership is designed to support localization goals and enable up to 12 GW of annual manufacturing capacity in Saudi Arabia. This move expands NEXTracker’s footprint in a key growth region and aligns it with local content requirements for large projects.

Capital Allocation and New Share Repurchase Program

Alongside its organic growth and strategic investments, NEXTracker’s board authorized a share repurchase program of up to $500 million over three years. Management reiterated that capital allocation priorities remain focused on funding internal growth and pursuing disciplined mergers and acquisitions, with buybacks as an additional tool to return capital to shareholders. The program reflects confidence in the company’s valuation and cash generation capacity.

Tariff-Related Margin Pressure Remains Manageable

Tariffs emerged as a clear headwind, with the quarterly impact rising to $44 million from $33 million in the previous quarter, largely due to the timing of effective dates. While this pressure is expected to persist, management characterized it as manageable within the broader margin framework. The company appears to be using pricing, sourcing and operational levers to offset some of the tariff effects, but investors should expect ongoing noise in quarter-to-quarter profitability.

Concentration Risk and Policy-Driven Exposures

NEXTracker’s heavy reliance on the U.S. market increases its sensitivity to domestic policy shifts, permitting bottlenecks and tariff dynamics. With 81% of Q3 revenue coming from the U.S., any changes in federal or state policy, as well as in interconnection and permitting processes, could impact project timing and revenue recognition. Management is working to diversify geographically, but for now, U.S. concentration remains a key risk factor embedded in the growth story.

Project Timing Variability and Permitting Uncertainty

The company noted that some projects are accelerating while others are being delayed, reflecting normal volatility in utility-scale solar development and permitting. Uncertainty around federal land permits, including recent freezes, remains a risk, although there are signs of improvement as several previously stalled federal projects have begun to move forward. This variability can create lumpiness in quarterly results, even as the long-term demand trend stays intact.

Limited Detail on Bookings and Non-Tracker Attach Rates

Despite strong bookings commentary, management declined to provide specific Q3 bookings figures, even as analysts suggested that bookings may have exceeded $1 billion. The company also did not disclose attach-rate percentages for non-tracker products like eBOS or software and did not break out margins for bundled solutions. While non-tracker revenue remains a relatively small base, the limited granularity leaves some uncertainty for investors trying to model the profitability and growth potential of these emerging product lines.

Complex Margin Dynamics from IRA Credits and Tariffs

NEXTracker flagged that the interaction of U.S. Inflation Reduction Act credits, tariffs and pricing strategies creates a complex margin picture and quarter-to-quarter volatility. In the latest quarter, tariffs rose while IRA-related benefits were roughly stable, leading to mixed short-term impacts on margins. Over time, management expects to navigate these moving pieces through portfolio mix, localization and pricing, but the near-term margin profile will likely remain somewhat noisy.

Upgraded Guidance Points to Confidence in Multi-Year Growth

Looking ahead, NEXTracker raised its fiscal 2026 outlook, now projecting revenue of $3.425 billion to $3.5 billion and adjusted EBITDA of $810 million to $830 million. The company also guided to adjusted diluted EPS of $4.26 to $4.36, supported by targeted gross margins in the low 30s and operating margins in the low 20s, assuming current U.S. policy and permitting trends hold. This upgraded guidance builds on a strong year-to-date performance, robust cash generation, a nearly $1 billion cash position with no debt, a record backlog and the newly announced $500 million share repurchase authorization. While tariff costs—$44 million this quarter—remain a known drag, management stressed that these headwinds are manageable within its long-term financial framework.

In closing, NEXTracker’s earnings call painted the picture of a company executing well amid a complex policy and cost environment. Strong top-line growth, solid margins, record backlog, powerful cash generation and a clean balance sheet have given management the confidence to raise long-term guidance and return capital to shareholders. At the same time, investors will need to watch how tariff pressures, U.S. concentration and permitting volatility play out. For now, the balance of evidence suggests that NEXTracker remains well positioned to benefit from the ongoing global build-out of utility-scale solar infrastructure.