Nextracker's Strong Q2 FY 2025 Performance

Nextracker, a leader in solar tracking solutions, reported a robust second quarter in fiscal year 2025, achieving its seventh consecutive quarter of double-digit revenue growth, as stated by CEO Dan Shugar. The earnings call highlighted a 29% year-over-year revenue increase for the first half and a significant backlog exceeding $4.5 billion.

This success prompted an upward revision of profit targets to $645 million. New products, NX Horizon and NX Foundation Solutions, are anticipated to enhance project efficiency. Additionally, the company will benefit from a 10% investment tax credit due to its 100% domestically manufactured tracker. Nextracker forecasts its strongest quarter in Q4 and continued growth through fiscal 2026.

Key Takeaways

• Revenue increased 29% year-over-year for H1 FY 2025.
• Record backlog over $4.5 billion.
• Profit target raised by $20 million to $645 million.
• Introduction of new products expected to boost efficiency.
• 100% domestically manufactured tracker eligible for a 10% ITC.
• Continued bipartisan support in clean energy.

Company Outlook

• Anticipates growth in fiscal 2026 due to a strong product lineup.
• Increased research and development investments to drive innovation.
• Management focused on balanced growth and profitability in both U.S. and international markets.

Bearish Highlights

• Potential margin normalization due to competitive international projects.
• Increased R&D expenses impacting operational costs in the short term.
• Significant revenue from new Foundations business not expected this year.

Bullish Highlights

• Strong global demand driving backlog growth; 90% of expected revenue to be recognized in eight quarters.
• Strong balance sheet with $1.5 billion in liquidity.
• Revenue increases from software sales, particularly from TrueCapture.

Misses

• No major misses reported during the earnings call.

Q&A Highlights

• Customers can qualify for 24.7 points towards the tax credit with Nextracker's domestic content.
• Future gross margin expectations in the high 20s to low 30s.
• CEO reaffirmed commitment to renewable energy.

InvestingPro Insights

Nextracker's performance aligns with a 38.5% revenue growth over the last twelve months, complemented by a 29% year-over-year increase for H1 FY 2025. The company's P/E ratio of 9.88 suggests potential undervaluation amid strong fundamentals and backlog. While it faced a 34.94% price decline over three months, its cash flow adequately covers interest payments, enabling continued R&D investments.

Full Transcript – Nextracker Inc (NXT) Q2 2025

Operator: Good afternoon, everyone, and thank you for standing by. My name is Sierra, and I will be your conference operator today…

Dan Shugar: Thank you, Mary, and thank you all for joining our Q2 earnings call. We are very pleased with the continued strong execution by the Company…

Conclusion

Nextracker remains optimistic about its growth trajectory, driven by a mix of strong product demand and a clear commitment to advancing renewable energy solutions.