0001852131-25-000050
SEC filingRevenue grew 20% YoY to $864M driven by 27% GW increase; gross margin contracted to 32.6% (GAAP) but adjusted margin held at 33.0%.
Revenue for Q1 FY26 (three months ended June 27, 2025) totaled $864.3 million, a 20% increase from $719.9 million in the prior-year period. The growth was driven by a 27% increase in gigawatts (GW) delivered, with particular strength in Rest of World markets—up 27% to $264.8 million—led by Latin America, the Middle East, and Europe. U.S. revenue rose 17% to $599.5 million on higher project volumes.
GAAP gross profit increased 19% to $281.7 million, but gross margin contracted to 32.6% from 33.0% a year ago. The decline was primarily due to a 21% increase in cost of sales to $582.5 million, partially offset by a $93.2 million reduction from the 45X advanced manufacturing production credit recognized on domestically produced components (up from $47.0 million in the prior year). On an adjusted basis (excluding stock-based compensation and intangible amortization), gross margin was 33.0%, down from 33.5%.
Operating income grew 16% to $186.2 million as SG&A expenses rose 22% to $73.9 million (due to stock-based compensation, acquisition costs, and sales organization expansion), and R&D spending increased 31% to $21.6 million (driven by continued innovation investment). Operating margin declined to 21.5% from 22.2%. Net income increased 26% to $157.2 million, reflecting higher income before taxes and a lower effective tax rate of 17.7% (vs. 17.9% prior year) due to a California tax credit benefit. Adjusted EBITDA rose 23% to $214.8 million, with margin expanding to 24.9% from 24.3%.
The company operates in two geographic segments: U.S. and Rest of World. The U.S. segment contributed 69% of total revenue ($599.5M), growing 17% YoY. Rest of World contributed 31% ($264.8M), growing 27% YoY. Growth in Rest of World outpaced the U.S., indicating an improving international mix. Segment profitability is not disclosed.
Management did not provide explicit forward guidance, but highlighted strategic priorities including expanding capabilities through recent acquisitions (Bentek for electrical infrastructure and OnSight for autonomous inspection robots) and continued investment in R&D to drive innovation. The company noted liquidity of approximately $1.7 billion and expects to fund operations, capital expenditures, and Tax Receivable Agreement payments for at least the next 12 months. The impact of the recently enacted One Big Beautiful Bill Act (OBBBA) is being evaluated but no material changes were reported.
As of June 27, 2025, Nextracker held $743.4M in cash and cash equivalents, down from $766.1M at March 31, 2025. The company has no debt outstanding. Total assets stood at $3.4B, with stockholders' equity of $1.8B. Inventory increased to $227.1M from $209.4M, reflecting continued investment in project fulfillment. Deferred tax assets were $511.3M, primarily related to the company's investment in Nextracker LLC. The TRA liability was $391.9M, with an additional $24.5M classified as current.
Nextracker disclosed $363.1M in remaining performance obligations as of June 27, 2025, of which 72% ($261.5M) is expected to be recognized within 12 months. The remaining long-term unperformed obligation primarily relates to extended warranty and deposits collected in advance on certain tracker projects. The company also has $14.5M in contingent earnout liabilities from the Bentek and OnSight acquisitions, with a maximum possible payout of $27.0M. Product warranty reserves totaled $18.5M, up from $18.0M at the start of the quarter.
Nextracker did not repurchase any shares or pay dividends during the quarter. Capital expenditures were $11.3M, representing 1.3% of revenue. The company made $86.4M in cash payments for acquisitions (net of cash acquired), primarily for Bentek and OnSight. No debt was issued or repaid. The company also made a $2.9M TRA payment and a $3.0M distribution to former non-controlling interest holders.
Nextracker operates as a single reportable segment. The CODM uses consolidated net income as the primary measure of segment profit. Revenue was $864.3M for the quarter, with $599.5M (69.4%) from the U.S. and $264.8M (30.6%) from the Rest of the World. The company's segment expenses include material cost ($563.3M), 45X vendor credits ($93.2M), freight/labor/other cost of sales ($112.4M), SG&A ($73.9M), and R&D ($21.6M).
Net income of $157.2M significantly exceeded operating cash flow of $81.3M, reflecting a large working capital outflow of $81.6M. This negative cash conversion cycle is a key anomaly that indicates the company is funding growth through operating cash flow timing differences. Capex intensity increased sharply to $11.3M (from $2.9M), representing 13.9% of operating cash flow vs. 2.4% in the prior year. Free cash flow (not explicitly stated) would be approximately $70.1M after subtracting capex from CFO.
Capital returns to shareholders were absent; the $3.0M distribution to former non-controlling interest holder and $2.9M TRA payment comprised the main financing uses. The company ended the quarter with $743.4M in cash, a decline of $22.7M from the prior period. The $86.8M spend on acquisitions (net of cash acquired) was the dominant investing use, nearly eight times capex.
Overall, operating cash flow declined 32.7% year-over-year, primarily due to working capital drag. The company's cash generation remains positive but is increasingly consumed by investment activities rather than returned to shareholders.