Nextracker (NXT) Q1 EPS Jumps 25%

Key Points

• Non-GAAP adjusted EPS of $1.16 beat expectations by 7.4% in Q1 FY2026, but GAAP revenue of $864 million missed estimates by 4.2% in Q1 FY2026.

• Gross margin (GAAP) edged down to 32.6% in Q1 FY2026.

• Full-year guidance for fiscal 2026 was raised, citing a backlog of over $4.75 billion as of Q1 FY2026.

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Nextracker (NASDAQ:NXT), a leader in solar tracking and energy technology, published its Q1 FY2026 results on July 29, 2025, revealing a mixed performance. The company’s non-GAAP adjusted earnings per share (EPS) came in at $1.16, beating analyst estimates of $1.08. However, revenue (GAAP) was $864 million, falling short of the $902.31 million GAAP revenue forecast. This quarter showed solid profitability and resilient margins, even with a revenue miss and a decline in free cash flow. Management raised its full-year outlook, underpinned by a growing order backlog and new product initiatives.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2025 earnings report.

Business and Recent Focus Areas

Nextracker (NASDAQ:NXT) designs advanced solar tracking systems. Its flagship platform, NX Horizon, automatically adjusts the position of solar panels to maximize electricity output. The company’s tracking technology boosts energy yield, reduces costs, and provides reliability for large solar installations.

Recent strategic priorities include launching new tracker models and expanding energy project solutions through acquisitions. The company has been investing in innovation and deepening its manufacturing partnerships, especially in the United States, to qualify for incentive programs and respond flexibly to supply chain shifts. Key factors for success remain rapid product advancement, regulatory navigation, strong supply chain management, and close customer relationships.

Quarter Highlights: Financial Performance and Initiatives

Adjusted EPS exceeded estimates by 7.4% in Q1 FY2026. The revenue figure (GAAP), while up 20.0% from the prior year, missed expectations by 4.2% in Q1 FY2026. Gross margin slipped from 33.0% a year ago to 32.6%. Adjusted EBITDA rose 23% year over year in Q1 FY2026.

International markets played a growing role in the quarter. Overseas revenue grew 27% year over year in Q1 FY2026, with projects in 17 countries outside the U.S. Despite this growth, international revenue generally carries lower margins compared to U.S. deals, a trend confirmed by management on the quarterly call. The backlog surpassed $4.75 billion as of Q1 FY2026, offering visibility into future sales.

The company announced three new acquisitions, including automation and artificial intelligence (AI) ventures and the $78 million purchase of Bentek, which specializes in electrical balance of system (eBOS) solutions. eBOS components play a central role in connecting major system parts and enabling efficient project buildouts. Management sees these moves as steps toward a broader solar technology platform, rather than focusing solely on solar trackers. Notably, sales of NX Horizon Hail Pro (a tracker designed for hail-prone regions) rose 43% quarter over quarter in Q1 FY2026, and quarter-over-quarter sales of NX Horizon-XTR (a tracker tailored for complex terrain) jumped 22% in Q1 FY2026. Over 1 gigawatt in NX Earth Truss foundation products—structural systems that support solar panels—have now been supplied as of Q1 FY2026, reflecting new customer uptake for these product lines.

Profitability also reflected a substantial benefit from U.S. manufacturing tax credits, specifically the Section 45X program, which aims to encourage domestic production of clean energy equipment. Nextracker booked $93 million in credits in Q1 fiscal year 2026, about double the amount booked in Q1 fiscal year 2025. The company highlighted that regulatory uncertainties remain, with future project eligibility and timing subject to possible policy changes.

Operating cash flow was $81 million in Q1 fiscal year 2026, compared to $121 million in Q1 fiscal year 2025, Adjusted free cash flow declined 40.6% year over year in Q1 fiscal year 2026. The fall reflects higher levels of investment in research and development, working capital, and acquisition-related activities. Liquidity remains strong, with $743 million of cash and no debt as of Q1 FY2026, but the cash position declined compared to the end of the prior year. The company spent $86.8 million on strategic acquisitions in Q1 FY2026 and increased capital expenditures as it builds out its platform solutions and manufacturing footprint.

Looking Ahead: Guidance and Focus Areas

Management raised its full-year guidance across all major financial targets for FY2026. Revenue (GAAP) is now expected to be between $3.2 billion and $3.45 billion for FY2026, up from the previous upper limit of $3.4 billion. Adjusted EBITDA outlook increased to $750 million–$810 million for FY2026, while non-GAAP adjusted EPS guidance was lifted to $3.96–$4.27 for FY2026. The company stated that most business for the year is already contracted, but noted that guidance assumes current U.S. regulations and incentive programs remain stable. Any change to government policies or incentive frameworks, particularly Section 45X credits, could have a material impact on project economics and forward results.

Over the next quarters, observers should watch for several trends: the pace at which newly acquired businesses, such as Bentek and AI/robotics units, become materially accretive to revenue and profit; the evolution of margin structure as international sales rise; and the effect of ongoing investments in research and manufacturing. Project backlog and customer bookings will continue to provide an indicator of demand. Integration of recent acquisitions and execution on new platform offerings will be key to long-term results.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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