Executive Summary / Key Takeaways

• Nextracker's market leadership in solar trackers is expanding, driven by a "flight to quality" and robust global demand for solar energy, with the company holding a commanding 26% global market share in 2024.
• The company is strategically evolving into a comprehensive solar technology platform through significant organic R&D and targeted acquisitions in electrical balance of systems (eBOS), foundations, AI, and robotics.
• Nextracker delivered strong financial performance in Q2 FY26, with revenue up 42% year-over-year to $905 million and adjusted EBITDA increasing 29% to $224 million, underscoring operational excellence.
• A record backlog exceeding $5 billion provides significant revenue visibility and confidence in future growth, despite ongoing policy uncertainties and tariff headwinds.
• Nextracker's technological differentiation, flexible U.S. supply chain, and strategic international expansion position it for sustained profitability and market share gains in the rapidly growing global energy transition.

A Leader in the Solar Revolution

Nextracker Inc. ($NXT), founded in 2013, has rapidly ascended to become a global leader in solar tracker technologies, a critical component enabling solar panels to follow the sun's movement and optimize energy output. This core business has propelled the company to ten consecutive years of market leadership in gigawatts shipped, with over 150 GW of solar tracker systems deployed across six continents by October 2025. The company's success is deeply intertwined with powerful structural tailwinds, including surging global electricity demand, driven by the proliferation of AI data centers, electric vehicles, and expanding urban infrastructure. Solar energy is now the fastest-growing power generation source globally, accounting for over 80% of new U.S. generation capacity in 2024, and is projected by the International Energy Agency to become the largest source of global electricity supply within the next decade.

In response to this expanding market opportunity and evolving customer needs, Nextracker has strategically transitioned from a pure-play tracker supplier to a comprehensive solar power technology platform provider. This evolution is designed to offer integrated solutions that accelerate solar power plant construction, increase performance, and enhance long-term reliability for its diverse customer base of engineering, procurement, and construction (EPC) firms, as well as solar project developers and owners.

Technological Edge: Engineering the Future of Solar

Nextracker's competitive moat is significantly reinforced by its differentiated technology and relentless innovation. At its core, the company's NX Horizon solar tracker system is renowned for its reliability and performance. Complementing this, the NX Horizon-XTR, a terrain-following tracker, expands the addressable market by enabling solar projects on sloped, uneven, and challenging terrains, radically reducing the need for expensive site grading. The Hail Pro series, including Hail Pro-60 and Hail Pro-75, offers automatic stowing features using weather service information, designed to protect systems during severe weather events and reduce insurance costs for owners. These innovations have demonstrably increased energy yield, with Nextracker's systems achieving 18% to 20% greater energy output over fixed-tilt systems in regions like Southern Germany, a significant improvement from 12% two decades ago.

Beyond hardware, Nextracker's TrueCapture energy yield management system leverages software and advanced algorithms to optimize solar plant performance. This technology, which accounted for approximately 2% of total revenue in Q2 FY26 and Q3 FY25, has seen increasing adoption since the company's IPO, with record quarterly bookings in Q2 FY26. TrueCapture's ability to boost total energy yield is recognized by regional independent engineers through extensive measurement and verification programs, providing tangible value to project owners.

Nextracker's strategic expansion into adjacent technologies further solidifies its platform. The acquisition of Bentek Corporation, a pioneer in electrical balance of systems (eBOS), has enabled Nextracker to offer integrated electrical infrastructure components, such as its new NX PowerMerge trunk bus product. This allows customers to source both tracker systems and eBOS components from a single, bankable supplier, streamlining procurement and project logistics. The NX PowerMerge achieved record eBOS bookings in Q2 FY26 and contributed to Bentek's highest quarterly sales in its 40-year history. Nextracker sees "massive synergy" between eBOS and trackers, given their physical and design interdependencies, and aims to co-optimize these solutions for increased customer value.

Similarly, the acquisitions of Ojjo and Solar Pile International expanded Nextracker's foundations business, offering innovative solutions like the NX Earth Truss. This integrated foundation system significantly reduces parts count and facilitates solar project development in challenging soil conditions. The company booked its first fully integrated NX Earth Truss Foundation in Q2 FY26, demonstrating strong customer uptake.

In the realm of digital innovation, Nextracker has invested over $40 million in AI and robotics technologies through acquisitions like OnSight Technology, Amir Robotics, and the IP from SenseHawk. These initiatives include autonomous inspection robots, fire detection systems (NX Vantage Fire Identification System), robotic cleaning, and 3D site mapping for creating "as-built" digital twins. These technologies integrate directly with Nextracker's control and monitoring systems to optimize performance, reduce operations and maintenance (O&M) costs, and lower project risk. The company is migrating towards a "robot as a service" model, which is expected to generate recurring revenue streams.

Furthermore, the acquisition of Origami Solar, a pioneer in roll-formed steel frame technology, has allowed Nextracker to enter the advanced module frame market. A multiyear agreement with a leading U.S. solar panel manufacturer for multi-gigawatt volumes, valued at over $75 million, highlights the market's reception. This technology not only improves the durability of solar panels and facilitates faster installation but also significantly increases the domestic content of solar panels, supporting eligibility for tax credits. Nextracker's R&D budget has roughly tripled in the last two to three years to approximately $100 million, underscoring its commitment to both organic innovation and the strategic integration of acquired technologies.

Financial Strength and Growth Momentum

Nextracker's financial performance reflects its robust market position and operational execution. For the second quarter of fiscal year 2026, the company reported revenue of $905 million, a substantial 42% increase year-over-year. Adjusted EBITDA grew 29% to $224 million, resulting in a healthy adjusted EBITDA margin of 25%. For the first half of fiscal year 2026, revenue reached $1.77 billion, up 31% year-over-year, with adjusted EBITDA of $438 million. This consistent performance is driven by a 41% increase in gigawatts delivered in Q2 FY26, particularly in the U.S., and contributions from recent acquisitions.

The U.S. market remains a significant growth engine, accounting for 76% of Nextracker's revenue in Q2 FY26, with U.S. revenue increasing by approximately 49% year-over-year. The Rest of the World contributed 24% to revenue, with notable increases in shipments to Latin America, Australia, the Middle East, and Europe.

Profitability metrics remain strong, with gross profit increasing 30% to $292.9 million in Q2 FY26. The company's gross margins are expected to remain in the low 30s, with operating margins in the low 20s. These margins are supported by the Internal Revenue Code Section 45X tax credit, which provided a $93.2 million boost in Q2 FY26 and is expected to contribute 9% to 10% of total revenue going forward, partially offsetting tariff-related headwinds of approximately 300 basis points in Q2 FY26.

Nextracker's financial stability is further highlighted by its strong liquidity position. As of September 26, 2025, the company held $845 million in cash and had no debt, boasting total liquidity of nearly $1.8 billion, including a recently renewed $1 billion unsecured revolving credit facility. This robust balance sheet enables significant flexibility to fund future expansion and strategic investments.

The company generated $268.2 million in net cash from operating activities for the six months ended September 26, 2025, and expects to generate over $450 million in free cash flow for the full fiscal year 2026.

Strategic Expansion and Competitive Edge

Nextracker's strategic focus on platform expansion and integrated solutions is a direct response to, and a driver of, its competitive positioning. The company's market leadership, with a 26% global market share in 2024, is a testament to its "flight to quality" trend, where customers increasingly seek reliable, high-performing, and bankable solutions. While the solar tracker industry is fragmented and competitive, Nextracker differentiates itself through its holistic approach, combining advanced hardware with sophisticated software. This integrated platform strategy, which includes TrueCapture for energy yield optimization and NX Navigator for monitoring and control, provides a competitive edge against competitors that may be more focused on singular hardware or module offerings.

For instance, against a hardware-focused competitor like Array Technologies (ARRY), Nextracker's integrated software solutions are generally viewed as providing greater efficiency in optimizing solar plant performance in dynamic environments. Nextracker's emphasis on end-to-end project management, from foundations to electrical components and digital controls, offers a more comprehensive value proposition. Similarly, when compared to module-centric players like First Solar (FSLR) or system integrators like SunPower (SPWR), Nextracker's specialized tracking technology and its ability to integrate seamlessly with various panel types offer superior adaptability for complex, utility-scale projects.

A significant competitive advantage for Nextracker is its highly flexible U.S. supply chain. With over 25 partner manufacturing facilities across the United States, the company can deliver 100% domestic content, a critical factor for customers seeking to qualify for federal tax incentives. This domestic manufacturing capability also helps mitigate the impact of tariffs and trade restrictions, providing a buffer against supply chain disruptions and cost volatility.

Internationally, Nextracker is actively expanding its footprint. The formation of Nextracker Arabia, a joint venture with Abunayyan Holding, is a strategic move to localize production and strengthen supply chains in the rapidly growing Middle East and North Africa (MENA) region. This initiative leverages Nextracker's proven track record in challenging environments, such as the 405-megawatt Sakaka solar park in Saudi Arabia, where its systems have demonstrated exemplary reliability and higher energy yield. This regional hub will enhance Nextracker's presence in markets with ambitious clean energy goals, like Saudi Arabia's Vision 2030, which targets approximately 20 gigawatts of solar per year.

Outlook and Risks: A Balanced View

Nextracker's outlook for fiscal year 2026 reflects confidence in its growth trajectory, underpinned by its record backlog exceeding $5 billion. The company updated its full-year FY26 guidance, expecting revenue between $3.275 billion and $3.475 billion, adjusted EBITDA between $775 million and $815 million, and adjusted diluted EPS in the range of $4.04 to $4.25 per share. This outlook assumes the current U.S. policy environment remains intact and permitting processes are consistent with historical levels.

However, the company acknowledges potential headwinds. For the second half of FY26, Nextracker anticipates a modest margin impact due to Section 232 tariffs and a higher percentage of international projects, which typically carry lower margins. To support its strategic growth initiatives, the company plans to increase operating expenses as a percentage of revenue by approximately 100 basis points and raise capital expenditures to around $100 million in FY26.

Key risks include ongoing policy uncertainty, particularly concerning the "One Big Beautiful Bill Act" (OBBBA) and Executive Orders that have materially altered federal renewable energy incentives, including the availability of Section 48E and 45Y tax credits. The introduction of foreign entity of concern (FEOC) restrictions and the elimination of the 5% safe harbor for beginning of construction requirements could impact project timelines and demand for trackers in the U.S. market. Nextracker also faces potential antidumping and countervailing duty (ADCVD) liability, estimated at up to $120 million plus compounded interest, related to past imports of CSPV smart modules. Furthermore, the rapid evolution of AI technologies introduces risks such as flawed algorithms, biases, and the uncertain legal and regulatory landscape surrounding AI. Despite these challenges, management remains confident in the strong fundamentals of solar energy and Nextracker's ability to adapt and execute.

Conclusion

Nextracker Inc. stands as a compelling investment opportunity, firmly rooted in its established market leadership in solar trackers and strategically expanding into a comprehensive solar technology platform. The company's history of innovation, culminating in a diverse portfolio spanning advanced trackers, intelligent software, eBOS, foundations, AI, and robotics, creates a formidable competitive advantage. This technological differentiation, coupled with a robust U.S. manufacturing footprint and strategic international partnerships, positions Nextracker to capitalize on the accelerating global demand for clean energy.

Nextracker's strong financial performance, characterized by significant revenue growth, expanding profitability, and a substantial backlog, underscores its operational excellence and resilience amidst a dynamic policy landscape. While regulatory uncertainties and tariff pressures present challenges, the company's proactive investments in R&D and strategic acquisitions are designed to drive long-term value creation and solidify its position as an indispensable partner in the global energy transition. For discerning investors, Nextracker's blend of market dominance, technological prowess, and disciplined financial management offers a compelling narrative for sustained growth in the decades to come.