Nextpower Raises Guidance as Backlog Passes $6 Billion

Nextpower's latest quarter delivered record revenue and bookings, but falling margins explain why the stock's valuation debate is not settled. Fiscal second-quarter revenue rose 22.5% from a year earlier to $1.109 billion, while backlog moved above $6 billion. Management also raised its fiscal 2027 outlook.

GAAP net income increased to $165 million from $147 million, and GAAP diluted earnings per share rose to $1.08 from $0.97. Adjusted earnings were $1.31 a share, above the $1.10 consensus cited by TIKR. The accounting basis matters because the adjusted figure excludes stock compensation, intangible amortization and acquisition-related costs.

Growth is spreading beyond solar trackers. Complementary offerings accounted for about 22% of quarterly revenue, electrical balance-of-system bookings exceeded $100 million, and the company signed a 1.1-gigawatt inverter framework agreement. NX PowerMerge also reached more than 2 gigawatts of backlog. Those details make the growth story broader than a simple recovery in tracker volumes.

Nextpower raised its fiscal 2027 revenue range to $4.20 billion to $4.45 billion from $4.10 billion to $4.40 billion. It increased adjusted diluted earnings guidance to $4.61 to $4.87 a share from $4.42 to $4.73. Record bookings support that outlook, while the completed Zimmermann acquisition adds fixed-tilt products and exposure to 15 more countries.

The balance sheet provides room to execute. Nextpower ended the quarter with more than $1 billion of cash and no debt after funding acquisitions, and it returned about $162 million through share repurchases. Operating cash flow was $158 million and adjusted free cash flow was about $135 million.

Margins are the main counterweight. GAAP gross margin fell to 31.1% from 32.4% a year earlier and 35.9% in the preceding quarter. Adjusted gross margin declined to 32.0% from 33.1% a year earlier and 36.6% sequentially. Management expects third-quarter adjusted EBITDA margin to be one to two percentage points below the fourth quarter because of product mix and cost timing. The original report also cited pressure from diesel, steel, logistics and new-product ramp costs.

Jefferies added Nextpower to its Franchise Pick list and removed GE Vernova, helping Nextpower shares rise 15%. TIKR put Nextpower at 16 times forward earnings before the move, compared with 37 times for GE Vernova. That comparison explains the analyst switch, but a lower multiple is not enough by itself. Nextpower must show that its expanding product platform can preserve margins as revenue and backlog grow. The November 16 capital-markets day is the next chance for management to connect the larger platform with a durable profit framework.