Nextpower Q2 FY2027 Earnings: Record Revenue Came with Lower Margins

Nextpower (NASDAQ: NXT) reported Q2 FY2027 revenue of $1.109 billion, up about 22.5% from $905.3 million a year earlier, while GAAP diluted EPS increased about 11.3% to $1.08 from $0.97. For the quarter ended October 2, 2026, record bookings pushed backlog above $6 billion, but GAAP gross margin and adjusted EBITDA margin both narrowed year over year. Quarterly operating cash flow was $158 million, with adjusted free cash flow of approximately $135 million.

Core Earnings Data

Revenue grew faster than each of the major profit measures. GAAP gross profit increased 17.9%, operating income rose 14.4%, and net income advanced 12.7%, compared with revenue growth of 22.5%.

Both GAAP and adjusted margins declined, showing that the higher sales volume did not translate proportionally into earnings growth.

Adjusted results exclude items including stock-based compensation, intangible amortization, acquisition-related costs, and related tax effects.

Business and Product Performance

Management attributed the record bookings and backlog to continued demand for solar tracker products and faster adoption of additional products and services. Energy storage and other complementary offerings generated approximately 22% of Q2 revenue, indicating that Nextpower is expanding beyond its core tracker business.

Electronic balance-of-system, or eBOS, bookings exceeded $100 million for the first time in a quarter, while foundations also recorded their highest quarterly bookings. NX PowerMerge had more than 2 GW in backlog, and Nextpower secured a 1.1 GW inverter framework agreement covering five projects.

Nextpower also completed its acquisition of Zimmermann PV-Steel Group for approximately €230 million, subject to customary working-capital adjustments and without stock or an earnout. The transaction added fixed-tilt and structural products, provided access to an established European customer base, and expanded Nextpower’s reach by 15 countries to a total of 68.

Revenue Growth Outpaced Profit Expansion

The quarter’s main financial tension was the gap between revenue growth and margin performance. Revenue rose about 22.5%, but gross profit increased about 17.9%, resulting in a 1.3-percentage-point decline in GAAP gross margin to 31.1%.

Below gross profit, research and development spending increased about 69.5% to $45.6 million from $26.9 million. Selling, general and administrative expenses rose about 9.0% to $92.2 million. The higher R&D spending contributed to operating income growing more slowly than revenue, although SG&A growth remained below the top-line increase.

The tax provision increased about 38.4% to $49.6 million, compared with pretax income growth of approximately 17.7%. This further limited net income growth. Results also included approximately $99 million of IRA 45X advanced manufacturing tax-credit vendor rebates and tariffs, net, compared with $67 million in Q2 FY2026; the company did not quantify the separate effect of each component.

Cash Flow and Balance Sheet

Quarterly operating cash flow reached $158 million, while company-defined adjusted free cash flow was approximately $135 million. For the first six months of FY2027, operating cash flow was $279.2 million, compared with $268.2 million a year earlier, while adjusted free cash flow was nearly unchanged at $240.1 million versus $241.5 million.

Nextpower ended the quarter with $1.030 billion in cash and cash equivalents and no debt. Cash declined by $65.1 million from March 31, 2026, as six-month uses of cash included $132.5 million for business acquisitions, $39.0 million of capital expenditures, and $162.1 million of share repurchases.

FY2027 Guidance

Nextpower raised both ends of every major FY2027 guidance range. The updated outlook calls for higher revenue, GAAP earnings, adjusted EBITDA, and adjusted EPS than the previous ranges.

The company expects Q3 FY2027 revenue to grow approximately 10% year over year. It also expects the Q3 adjusted EBITDA margin to be roughly one to two percentage points below the Q4 margin, indicating a planned profitability step-up in the final quarter.

The adjusted EBITDA outlook excludes approximately $185 million of stock-based compensation, net intangible amortization, and acquisition-related costs. Adjusted EPS excludes approximately $0.99 per share for those items after tax effects.

Recent Insider Transactions

The supplied transaction records show three sales and seven zero-price stock awards among the 10 most recent entries. These transactions are reported objectively and do not, by themselves, establish insiders’ views of the company’s outlook.

Risks for Investors to Monitor

• Continued margin pressure: GAAP gross margin and adjusted EBITDA margin declined despite record revenue. The stated gap between Q3 and Q4 adjusted EBITDA margins makes the expected Q4 improvement an important execution point.
• Backlog conversion: Backlog exceeded $6 billion, but the timing and profitability of converting those orders into recognized revenue remain important to future results.
• Acquisition integration: The €230 million Zimmermann transaction expands Nextpower’s products and geographic reach, while also adding integration requirements and potential intangible-amortization effects on GAAP earnings.
• Policy and tariff exposure: Quarterly results included approximately $99 million of IRA 45X vendor rebates and tariffs, net. Changes in tax-credit policy, regulation, or tariff costs could affect future margins and project economics.

Summary

Nextpower delivered record Q2 FY2027 revenue, bookings, and adjusted EBITDA as demand expanded across trackers and complementary products. However, profit growth trailed revenue and both GAAP and adjusted margins narrowed. The raised FY2027 outlook, more than $6 billion of backlog, and positive cash generation support continued expansion, while backlog conversion, acquisition integration, and the expected Q4 margin improvement are the main items to monitor.

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