0001852131-26-000006
SEC filingNextpower's Q3 FY26 revenue grew 34% YoY to $909M, led by strong U.S. demand and acquisitions, but gross margin contracted 380 bps due to tariffs.
For the three-month period ended December 31, 2025, Nextpower reported revenue of $909.4 million, a 34% increase from $679.4 million in the prior-year quarter. The growth was driven by a 26% increase in gigawatts (GW) delivered, particularly in the U.S., and contributions from recent acquisitions (Bentek, OnSight, Origami, Fracsun). Cost of sales rose 42% to $621.2 million, outpacing revenue growth due to higher tariffs ($39.2 million increase) and increased headcount from acquisitions, partially offset by a $44.6 million increase in 45X tax credits recognized as a reduction to cost of sales. Gross profit increased 20% to $288.1 million, but gross margin contracted 380 basis points to 31.7% from 35.5% in the prior year, reflecting tariff headwinds and higher input costs.
Selling, general and administrative expenses increased 17% to $82.7 million, driven by expansion of the sales organization to support global growth, but decreased as a percentage of revenue from 10.4% to 9.1%. Research and development expenses rose 46% to $29.3 million as the company continued investing in innovation and integrating new acquisitions. Operating income grew 17% to $176.1 million, with operating margin declining from 22.1% to 19.4% due to the gross margin compression and higher operating expenses. Net income increased 12% to $131.2 million, with diluted EPS not disclosed. The effective tax rate rose from 26.7% to 27.3%, driven by higher pretax income and a change in earnings mix.
Revenue from the U.S. segment increased 63% to $735 million, representing 81% of total revenue, up from 66% in the prior-year quarter, as the number of projects and shipment volumes grew. Rest of World revenue declined 24% to $174.4 million, primarily due to decreased shipments to Latin America and the Middle East, partially offset by growth in Europe and Australia. The geographic mix shift toward the U.S. reflects strong domestic demand and the impact of tariffs that favor domestic production. No segment-level profitability is provided, but the U.S. likely benefited from 45X credits which are tied to domestic manufacturing.
Management did not provide specific financial guidance for upcoming quarters but highlighted strategic priorities: continued organic growth and disciplined M&A to expand the technology platform (electrical infrastructure, robotics, steel frames). The company expects R&D expenses to increase in dollar terms to support innovation. Liquidity is robust at approximately $1.8 billion, bolstered by a new $1.0 billion unsecured revolving credit facility maturing in 2030. In January 2026, Nextpower announced a $500 million share repurchase program over three years. The company also formed a joint venture in Saudi Arabia (Nextpower Arabia) to serve the MENA region. Key risks include tariff exposure, supply chain costs, and integration of acquisitions. Overall, Nextpower is positioning for sustained growth through market leadership and technology differentiation, while managing margin headwinds from tariffs and investments.
As of December 31, 2025, Nextpower held $952.6 million in cash and cash equivalents, up from $766.1 million at March 31, 2025. The company had no outstanding debt under its new $1.0 billion unsecured revolving credit facility (entered September 8, 2025), with $891.4 million available net of $108.6 million in outstanding letters of credit. Total assets stood at $3.80 billion, with stockholders' equity of $2.15 billion. Key working capital items included accounts receivable of $452.2 million, contract assets of $443.4 million, and inventories of $275.3 million. Deferred tax assets were $517.6 million, primarily related to the company's investment in Nextpower LLC.
Remaining performance obligations (RPO) totaled $419.5 million as of December 31, 2025, with approximately 77% expected to be recognized as revenue within 12 months. The company has a Tax Receivable Agreement (TRA) liability of $371.2 million (current portion) plus $20.7 million in other current liabilities. Contingent earnout liabilities for acquisitions were $32.4 million, with a maximum possible payout of $58.5 million. The company disclosed a potential AD/CVD duty liability that was substantially reduced following a December 2025 Commerce ruling granting a retroactive exclusion for its off-grid smart CSPV modules, but the outcome of related litigation remains uncertain.
On January 27, 2026, the board approved a new $500.0 million share repurchase program with a three-year term. No dividends were declared or paid. Capital expenditures were $31.5 million for the nine-month period (1.2% of sales). The company made $27.4 million in TRA payments and $14.2 million in acquisition deferred purchase price payments. No debt was issued or repaid during the period; the prior credit facility was terminated and replaced with a new unsecured facility, resulting in a $5.8 million loss on debt extinguishment.
Nextpower operates as a single reportable segment. The CODM (CEO) uses consolidated net income to assess performance and allocate resources. Geographic revenue for the nine months ended December 31, 2025: U.S. $2.02 billion (75.5% of total) and Rest of World $657.4 million (24.5%). The U.S. is the principal country of domicile.