Note: This is an earnings call transcript. Content may contain errors.

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DATE

Thursday, Oct. 23, 2025, at 5 p.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer and Founder — Dan Shugar
  • President — Howard Wenger
  • Chief Financial Officer — Chuck Boynton

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TAKEAWAYS

  • Revenue -- Revenue for Q2 was $905 million, up 42% year over year.
  • Adjusted EBITDA -- Adjusted EBITDA for Q2 was $224 million, reflecting a 29% year-over-year increase and an EBITDA margin of 25%.
  • Year-to-date revenue -- Revenue for the first half of fiscal 2026 (period ending Mar. 31, 2026) was $1.77 billion, up 31% year over year, setting a company first-half record.
  • Adjusted free cash flow -- Adjusted free cash flow for the quarter was $171 million, and year-to-date adjusted free cash flow was $241 million.
  • Cash and liquidity -- $845 million in cash, no debt as of quarter-end, and total liquidity nearing $1.8 billion, including a renewed $1 billion unsecured revolving credit facility.
  • Year-end guidance (fiscal 2026) -- Revenue projected at $3.275 billion to $3.475 billion for fiscal 2026; adjusted EBITDA forecasted at $775 million to $815 million for fiscal 2026; adjusted diluted EPS expected at $4.04 to $4.25 for fiscal 2026.
  • Backlog -- Backlog exceeded $5 billion at quarter-end, with bookings described as "record" across multiple product lines.
  • U.S. revenue growth -- U.S. revenue grew 49% year over year.
  • eBOS bookings -- Achieved record quarterly sales for the Bentech business, representing the highest in its forty-year history.
  • New product agreements -- Signed a multi-year, multi-gigawatt agreement with a leading U.S. solar panel manufacturer for advanced module frame technology worth over $75 million.
  • International expansion -- Announced the formation of Nextracker Arabia, a 50-50 joint venture with Abu Nayen Holdings, targeting the Middle East and North Africa region without company consolidation.
  • Tariff headwinds -- CFO Boynton reported "tariff-related headwinds of approximately 300 bps in Q2," up 200 bps over Q1, mitigated by supply chain and domestic manufacturing strategies.
  • TrueCapture revenue contribution -- TrueCapture contributed approximately 2% of Q2 revenue, according to CFO Boynton.
  • R&D investment -- The company has roughly tripled its annual R&D budget over the past two to three years, now near $100 million.
  • Gross and operating margins outlook -- For the second half of the year, management expects gross margins to remain in the low 30% range and operating margins to be in the low 20% range for the remainder of fiscal 2026.

SUMMARY

Nextracker (NXT +8.74%) exceeded $5 billion in backlog and secured a multi-year module frame supply deal exceeding $75 million that enhances domestic content for U.S. customers. Management indicated international momentum by launching Nextracker Arabia, a joint venture with Abu Nayen Holdings that addresses the growing Middle East and North Africa solar market, with operations structured to avoid on-balance sheet consolidation. U.S. revenue grew 49% year over year, supported by a broadening product platform and strong adoption of non-tracker offerings such as eBOS and TrueCapture, the latter representing 2% of Q2 revenue. Tariffs increased to a 300-basis-point headwind in Q2, but were partially offset by a diversified domestic supply chain and manufacturing footprint. Updated full-year fiscal 2026 guidance raised expectations for revenue, adjusted EBITDA, and adjusted diluted EPS.

  • Management stated, "we continue to strengthen our competitive position through innovation, operational excellence, and serving our customers."
  • President Wenger noted historic records in bookings and customer additions across multiple service and hardware product lines, including foundational and fire detection technologies.
  • CFO Boynton described the company as "highly capital efficient," noting no debt and significant liquidity, supporting ongoing innovation and geographic growth initiatives.

INDUSTRY GLOSSARY

  • eBOS (Electrical Balance of System): Integrated electrical systems and components required to connect solar arrays, inverters, and grid infrastructure.
  • TrueCapture: Nextracker's AI-based tracker control software aimed at maximizing solar plant energy yield and performance.
  • Bifacial PV modules: Solar panels that can generate electricity from light striking both the front and rear surfaces, increasing total energy output.
  • NX Horizon: Nextracker's flagship solar tracker system for utility-scale solar installations.
  • NX Gemini: Two-in-portrait solar tracker platform designed to optimize performance for developers and asset owners.
  • NX PowerMerge: Company's electrical balance system trunk bus product, introduced September 2025 as a new grid integration solution.
  • NX Vantage: AI-enabled fire identification solution providing visual analysis for solar project safety.
  • NX Earth Trust Foundation: Recent product integrating foundational systems with reduced parts count for installation efficiency.
  • Adjusted EBITDA: Earnings before interest, taxes, depreciation, and amortization, as adjusted for certain non-recurring or non-cash items, used by management to assess ongoing company performance.

Full Conference Call Transcript

Dan Shugar, our CEO and founder, Howard Wenger, our president, and Chuck Boynton, our CFO. As a reminder, there will be a replay of this call posted on the IR website along with the earnings press release and shareholder letter. Today's call contains statements regarding our business financial performance and operations, including our business and our industry that may be considered forward-looking statements. And such statements involve risks and uncertainties that may cause results to differ materially from our expectations. Those statements are based on current beliefs, assumptions, expectations and speak only as of the current date.

For more information on those risks and uncertainties, please review our earnings press release shareholder letter and our SEC filings, including our most recently filed quarterly report Form 10-Q and Annual Report on Form 10-Ks, are available on our IR website at investors.nextracker.com. This information is subject to change, and we undertake no obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. Please note we will provide GAAP and non-GAAP measures on today's call. The full non-GAAP to GAAP reconciliations can be found in the appendix to the press release and the shareholder letter as well as the financial section of the IR website.

And now I'll turn the call over to our CEO and founder, Dan. Good afternoon, and thank you for joining us.

Dan Shugar: We're very pleased to report another quarter of strong execution. Before we cover the company's performance, I'd like to remind everyone we will be hosting our inaugural Capital Markets Day at our headquarters in Fremont on November 12. We look forward to welcoming many of you as we explain the details of our long-term strategy, platform expansion, and growth opportunities. Given that, after Howard, Chuck, and I provide our prepared remarks on the quarter, will hold a more limited Q&A today. Now turning to our performance. We delivered yet another solid quarter. Reflecting the team's continued focus on innovation, long-term customer partnerships, and execution.

In Q2, revenue grew 42% year over year to $905 million, and adjusted EBITDA increased 29% to $224 million. For the 2026, revenue was up 31% year over year to $1.77 billion, a record first half for the company. Over the past year, we've significantly expanded our technology platform. From foundations and electrical balance system solutions to AI and robotics. And our suite of complementary products and services is gaining traction. Last week, we announced a multiyear agreement with a leading US solar panel manufacturer for multi-gigawatt volumes of our advanced module frame technology, a deal valued at over $75 million.

This agreement provides tangible value to customers It significantly increases domestic content of solar panels, which supports eligibility for tax credits. Our advanced frame technology also improves durability of solar panels, for more reliable, long-term performance for owners and can facilitate faster and installation during the construction phase. We also launched NX PowerMerge in September, our new electrical balances system trunk bus product, and achieved record eBOS bookings in Q2. The highest quarterly sales in Bendech's forty-year history. We saw other products gaining traction as well. We booked our first fully integrated NX Earth Trust foundation, which reduced parts count over an order of magnitude.

And we saw strong adoption of our NX Vantage fire identification system, which employs AI-based visual analysis. Together, these product lines broaden the capability of our platform. Connecting the tracker electrical, and digital systems into one cohesive solution that maximizes project value for our customers, and enables us to capture increased wallet share. We are scaling these innovations across our high-volume tracker footprint. With over 150 gigawatts shipped to date. Translating measured R&D and M&A investments into meaningful revenue and profit. Internationally, we continue to expand our market presence and partnership, Today, we announced we entered into an agreement to form Nextracker Arabia, a joint venture with Abu Nayen Holdings.

Expanding our manufacturing footprint and commercial presence across The Middle East and North Africa. Nextracker Inc. has a strong legacy of reliable performance in Saudi Arabia, starting with KSA's first utility-scale installation. The 405 megawatt Secaucus Solar Park where our system has demonstrated exemplary reliability. The JV will localize production, strengthen regional supply chains, and advance Saudi Arabia's clean energy goals under vision 2030. Looking at the broader picture, we continue to benefit from powerful structural tailwinds. Including increasing electricity demand, a flight to quality, and very solid long-term customer relationships. Our strategy is clear.

Through a combination of internal innovation targeted acquisitions, and world-class operational execution we're building a compelling integrated technology platform that delivers the lowest cost most reliable solutions to meet our customers' needs. Chuck will walk through our updated FY '26 outlook shortly. But we're confident in our ability to deliver sustained profitability and cash generation while scaling our platform globally. And finally, before turning the call over to Howard, to review some of the highlights from the quarter, I want to thank our customers for their continued partnership and trust and our employees for their passion in driving innovation and customer satisfaction. Thanks, Dan. We continue to see strong global demand for our products and services.

Howard Wenger: Growing backlog to over $5 billion at quarter end. It has been gratifying to see continued sales gains, and customer traction with our emerging solar technology platform In Q2, we had record bookings for eBOS, and foundations a record number of new customers and contracts added for robotic inspection and fire detection services, And we recently announced a new multi-gigawatt agreement for advanced module frames. The speed of adoption of these additional products and services is very encouraging and a testament to our market footprint and capability to scale quickly. We also had record quarterly bookings for TruCapture and our navigator control system. Underscoring the value in energy yield enhancement and plant performance and control.

Our strategy is to build a cohesive platform by harmonizing these new products and services with our industry-leading and Horizon tracker system. This approach will deliver superior economics and reliability improved installation efficiency, and excellent customer experience. In fact, we are seeing many project orders now with multiple Nextracker Inc. products and services, not just the tracker. At Capital Markets Day, we will go into the details of our solar technology platform. Now let's move to regional demand. In The US, bookings and revenue were up significantly year over year, with revenue up 49%. We have benefited from a flight to quality and an ongoing shift toward domestically manufactured systems.

Outside of The US, internationally, we highlight Europe in the quarter, which has emerged as a top market for the company. Coming off the strongest year ever for Nextracker Inc. in FY '25, see the markets in Europe broadening, and gaining momentum. Delivering record sales in Q2. We are also excited by our new KSA joint venture to address the growing MENA region. Turning to project timing, cost and pricing. Project timing remains stable and manageable on a portfolio basis consistent with previous quarters, with some projects accelerating and others pushing out. Our deep backlog and broad project portfolio provide excellent visibility and reduce uncertainty.

Pricing continues to track the broader solar cost curve and we continue to invest in R&D, and scalable infrastructure to drive cost out. Our company culture is to relentlessly serve our customers and deliver the most value at competitive cost and pricing. This innovation and customer-centric approach is working as evidenced increased market share and sustained earnings. We always work very closely with our customers, including managing U.S. Tariff impacts, The tariffs are substantial, as we all know, but impacts are mitigated by our domestic supply chain with over 25 partner manufacturing facilities producing US components and ability to deliver 100% content to US treasury guidelines.

In parallel, some of our customers have told us they have successfully increased their power purchase agreement pricing, both in the near term and beyond the tax credit horizon. This helps buffer some solar supply chain cost impacts and can help bridge the industry going forward as government policy changes get in implemented. In summary, our business fundamentals remain strong. Demand is healthy, Our backlog is large and expanding. Project timing and execution visibility is solid. And we continue to strengthen our competitive position through innovation, operational excellence, and serving our customers. With that, I'll hand it over to Chuck to walk through the financials in more detail.

Chuck Boynton: Thanks, Howard, and good afternoon, everyone. We again delivered strong financial and operational performance this quarter. Q2 revenue was $905 million and adjusted EBITDA was $224 million representing a 25% EBITDA margin. Year to date, we've generated approximately $1.8 billion in revenue, up 31% from last year. And $438 million in adjusted EBITDA, demonstrating continued execution across all aspects of the business. Adjusted free cash flow was $171 million for the quarter and $241 million year to date. We remain highly capital efficient and our cash generation continues to support investment in growth and innovation.

We closed the quarter with $845 million in cash, no debt and total liquidity of nearly $1.8 billion including our recently renewed $1 billion unsecured revolving credit facility with investment grade terms. This balance sheet strength provides us with significant flexibility to fund future expansion and strategic investments. Turning to profitability. Q2 gross margins and operating margins remained strong, reflecting benefits of 45x manufacturing credits solid cost management, and a favorable regional mix. We continue to see tariff related headwinds of approximately 300 bps in Q2, up 200 bps over Q1, Our geographic mix diversified supply chain, domestic manufacturing footprint, and disciplined execution have helped offset those impacts.

Looking ahead, we are raising our full year FY 2026 outlook We now expect revenue between $3.275 and $3.475 billion, adjusted EBITDA between $775 and $815 million and adjusted diluted EPS in the range of $4.04 to $4.25 per share. For the second half of the year, we expect modest margin impact due to section two thirty two tariffs and a higher percentage of international projects. Based on project schedules, we expect the second half revenue to be slightly more weighted toward Q4. In addition, we expect gross margins to continue to be in the low 30s and operating margins in the low 20s.

Our outlook assumes the current US policy environment remains intact and permitting processes and timelines will remain consistent with historical levels. Overall, we feel confident in our ability to deliver sustained growth and profitability while continuing to invest in innovation and long-term value creation. We continue to execute at a high level while maintaining strong margins and cash flow and strengthening our balance sheet. We believe our strategy, team and platform uniquely position us to deliver long-term shareholder value. With that, we'll move to Q&A. Operator,

Operator: We will now begin the question and answer session. Please limit yourself to one question. If you have a follow-up question, kindly rejoin the queue. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press 9 to raise your hand, and 6 to unmute. Your first question comes from the line of Mark Strouse with JPMorgan. Your line is open. Please go ahead.

Mark Strouse: Yes. Good afternoon. Thank you very much for taking our questions. So Dan, I think being the first quarter that you guys reporting since one big beautiful bill, but also safe harbor being updated. Just curious for your take. I don't wanna steal thunder from the Analyst Day here in a few weeks, but kind of how you're thinking about industry growth through the next several years. Let's call it through the end of the decade. I think when you when you first IPO, you were quoting some industry sources for some pretty significant growth. Just curious with everything that's kinda changed between now and then, you're thinking about that going forward. Thank you.

Dan Shugar: Yeah. Thanks, Mark. We feel the fundamentals for solar are very strong. We've spoken to our customers and in The US, customers have safe harbored immense amounts of projects and gigawatts. Orders are continuing. The fundamentals overseas are strong. As evidenced by our sustained bookings and backlog. The know, what's interesting is as the industry moves forward, how the economics of solar stack up when tax credits are gone. You know, down the road. And way back, about six or seven years ago, Nextracker Inc. did the largest solar project in the Western Hemisphere at the time. It was a project in Mexico. We did for now called Via Nueva. We did with our partner EPC partner Solve.

And there were no tax credits down there. That was an all source solicitation. And that project stood on its own. The economics were no tax credits in North America. So since then, you know, solar panels have gotten a lot more efficient. The power of the panels has roughly doubled since that project happened. Inverters are more efficient. The next tracker platforms have are increasing yield. And so many of our customers share our view that the industry you know, can stand on its own without tax credits, and be economically viable in most of most of The US, most of the world.

While this has happened you know, this year, what we've seen is also significant escalations in the cost of fossil power generating equipment on CapEx and yeah, we've seen a lot of volatility on fuel pricing, things like that. So we're confident in the long-term prospects for our industry for solar. And you know, our we feel great about our current position with record backlog today at over $5 billion.

Operator: Your next question comes from the line of Brian Lee with Goldman Sachs. Your line is open. Please go ahead.

Brian Lee: Hey, Good afternoon. Thanks for taking the questions. Kudos on the nice execution here. I guess, just one question I'd have around the cadence for this year. I know you don't necessarily control all the project timing, but first half of the fiscal year has been really strong, evident in the numbers years. It is a bit of a different seasonal cadence. Can you maybe give us some sense? Is this pull forward ahead of policy changes in The U. S? Or are there other factors driving the project time line this year versus historical And then I'll just throw one in there.

I don't know if I'll get an answer, but given the evolving mix of business and you stated, Dan, record bookings in EVOS, you guys provide any kind of rough thoughts around the bookings mix tracker, nontracker, US, non US? I'll take a stab at that one. Thank you, guys.

Chuck Boynton: Great. Thanks, Brian. I'll take part one and Howard will take part two. So we had a really, really strong first half of the year. Kudos to our operations team. On incredibly strong delivery. Our on-time delivery is stellar and our customers really enjoy how we operate. As you know, we look at our business on an annual multiyear and you can't just look at one quarter and say, that's a trend. Having said that, we have raised our outlook now both Q1 and in Q2. So we are seeing strength in the year. As you know, one quarter out, the trucks are scheduled, deliveries are scheduled. And so we feel really good about where Q3 is landing.

We did note in the prepared remarks and in the shareholder letter that you'll see Q4 is a bigger quarter than Q3. And so I think overall, know, we feel good about where the year is landing. And we'll see how strong Q4 will come in if it's going to be bigger we'll let you know next quarter. But right now we feel really good with the pace and cadence of the business this year. It's a little smoother, quite frankly, than last year and a year before. So we do think that as we grow and scale it is becoming a little more linear Howard, do you wanna take the second part?

Howard Wenger: Sure. So you asked about eBOS and you know, the mix of non tracker and tracker and then sort of a regional look. So have a multipart question there. Thank you. We are we have a strategy building out a platform that has our tracker at the core and we're executing to that both with organic investment in R&D and new products within the company and also inorganic through M&A. We've executed a number of M&A number of acquisitions as we've announced. One of them you asked about is the EBOS. We acquired BenTech And in the first full quarter, that they were with us, we achieved a record bookings. And that's over a forty-year history of that company.

So that gives you a sense of our market presence and platform and ability to scale these acquisitions. We're really happy with the start there. We also had record bookings in our advanced foundations business. Also through acquisition and internal R&D combined. And we had a record, we purchased On-site, which is a robotic inspection company. Had a record number of new customers signed in the quarter and contracts there as well. So we're really happy with the non tracker part of the business.

At the upcoming Capital Markets Day, we'll get into how these the tracker, non tracker business, and we'll give a lot more detail on how they fit and they're gonna grow and what the percentages are, etcetera there. So please come for that day on November 12 and I'll just say that we're from a US and non US mix perspective, The US has really had a very strong run and we expect that to continue And meanwhile, as we noted, revenue is up 49% year on year. In The US. Okay? Quarter on quarter or year on year for the quarter. Meanwhile, the international business keeps growing.

And so we're very pleased with how the strength of our global bookings status is and now we're over $5 billion on backlog. Thanks for the question.

Operator: Your next question comes from the line of Philip Shen with Roth. Your line is open. Please go ahead.

Philip Shen: Hey, guys. Thanks for taking my questions. First one is on bookings. Your bookings and book to bill have been consistently impressive. With the expansion of your technology platform, our check suggests that your customers will already spend a large chunk of their wallet with you. Are open to spending yet more, Can you talk about how bookings could continue to trend in the coming quarters, especially with the increased number product offerings. And my second question here is on the Poly two thirty two. I think in your shareholder letter, you talk about the steel and aluminum. Two thirty two impacting your back half margins.

But on the Poly two thirty two, which is potentially gonna be announced in the next few weeks. How are you and your customers prepared for a potentially high two thirty two tariff that may have a limited quota level for the different segments of the value chain. Thanks, guys.

Howard Wenger: I'll take the first part, Phil, Howard, and Dan will take the second part. So, yeah, another very good quarter for us on sales, very strong, demand is still there. For us, we think there's a flight to quality and that our customers want to for us to do more. And so that's what we're doing. We're responding to customer demand and we're unlocking a lot of synergies between the tracker and other elements of what we're selling. As evidenced by record bookings in particular for foundations. Which we're very pleased about. Another quarter of increased backlog so you can infer from that monotonically increasing backlog is a good thing.

And so we are gonna get into it in a in a lot more detail at Capital Markets Day, on how these different products and services and solutions integrate together and how customers are responding to that. Thanks for the question part a Phil, and Dan will take the next one.

Dan Shugar: Hey, Phil. So with respect to two thirty two as it relates to Poly, so we don't buy poly wafer cells. I will say, though, last week, we toured a major new five gigawatt module manufacturing facility. I had the pleasure of meeting some executives from Corning. Which is really stepped up to increase their production in The United States Of polysilicon and other stuff. And so the we're just very gratified to see the significant build out of capacity in The United States, but we're not a position to really comment on know, how all that's gonna play out with respect to raw materials. For our customers.

I will say, though, that with respect to tariffs, that was part of the logic in us doing our launching our steel frame business. Okay. So this has just been very well received in the market. The fundamental reason we first started looking at this, Nextracker Inc. has been involved in advanced module frames since we founded the company. We came up if you look at almost every solar panel today, there's features in those frames that were the XTRAC or DNA. Okay? So we've done a lot of engineering and research on that. The legacy frame have been aluminum. And aluminum was okay when solar panels were small.

But today, solar panels are huge, and you have this floppy module problem where the aluminum is not strong enough. Well, our frame designs that we have both our next gen frames are amazing acquisition we did with Origami. With their frame design, address those issues, but by providing more rigidity to the solar panel, which provide longer term believe, greater durability of the performance of the solar panel as well as facilitate attachments of those panels to reduce installation time and labor. What it also does, though, is address the supply chain issue. And essentially, we can manufacture these frames in The United States using US supplied steel We're already doing this. It's happening.

We have capacity on the ground. And this allows our customers to have a better position with it can allow them to have a better position with respect to tax credits and also increase the content. Of the product. So we're doing our part which is to further increase domestic manufacturing of many of the aspects of a solar power system and the Stream thing will help get that done. Thanks for the question. Next question, please.

Operator: Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is open. Please go ahead.

Praneeth Satish: Thanks. Good afternoon. Maybe just kind of digging into the t one energy partnership that you announced a few weeks ago. Are you viewing this as maybe a blueprint for future deals with other US solar manufacturers? And, you know, if so, how far along are those discussions? Could we see more deals this year? Or do you view the t one deal as kind of more of a one off or more kind of an exclusive pilot?

And then maybe just kind of longer term on the product side for steel frames, you mentioned some of the benefits, but is there an opportunity to maybe design or develop a new tracker product that better integrates steel frame designs and enhances the overall performance.

Dan Shugar: Yeah. Thanks, Praneeth. For on question number one, we see the need as universal. For solar panels These panels the physical area has significantly increased in these panels. And the need to provide more mechanical stability and functionality in these panels applies really to everyone. And so we've had a very positive reaction to the launch of our advanced module frame business. At the major trade show of the year, RA plus, which was last month. And in the run up to the t one transaction you mentioned and afterwards. So we see this as a great win for everyone, really, owners, the IPPs that are operating these plants wanna see longer term durability.

The module industry wants to be able to source competitive domestic product and increase their US content. And EPCs want more durable solar panels to handle in the shipment and the installation phase. Now the next thing that's possible is, hey. Can we co optimize the frame with the tracker system? And the answer is yes. In another part of our shareholder letter, we commented on how we just launched our integrated Earth Trust product in the foundation space, and there's an analogy here. With that product, we were able to reduce the parts count by an order of magnitude.

So if you look at the existing foundation and the new foundation, we're able to engineer a lot of these parts out. The analogy with a frame, can think about an automobile. Old cars, they had a very strong automobile frame. Okay? And then the panels were just sort of hung on. The car the side panels. And then you came out with these, like, unibody cars where the it's a co optimized structural element. That has to survive dynamic forces. And it's the same thing true with the solar panel and the tracker. So there's a lot of opportunities to cooptimize these products and to really serve the industry.

Both for frames that work with Nextracker Inc. as well as other support systems. We're very excited about this product family, and it's been very well received in the market. Next question, please.

Operator: Your next question comes from the line of Sean Milligan with Needham. Your line is open. Please go ahead.

Sean Milligan: Thank you for my question. Great quarter. I was curious on the international side. You mentioned a lot of markets, and so was interested to see what your comments are around tracker uptake in those markets. And, you know, if you just go back a couple of years, you know, how much additional share have trackers taken in those markets are growing to and kind of where you see that heading over time?

Howard Wenger: Yeah. This is Howard. Yeah. Trackers there's no question. Trackers are the predominant structure for utility scale solar projects. And also, larger DG distributed generation projects have gone to trackers. And the just the energy yield has gone up over time with innovation. We've been able to back twenty years ago, for example, even a place like Germany, Southern Germany, a tracker gain was about over fixed till 12%. You fast forward to today, twenty years later, because a lot of the innovations that Nextracker Inc. has implemented we're now at 18 to 20% gain over a fixed tilt in the same region.

So that's there's just sort of this very important drive for energy yield, lower cost that's happening with scale, this virtuous cycle that's allowed trackers to become the dominant platform. And that's in just about every region of the world. The only place that we're seeing some fixed tilt is like super like, incredibly like, a mountainside. These niche applications that are incredibly difficult. You might it might be appropriate for fixed tilt. Thanks for the question.

Operator: Your next question comes from the line of Dimple Gosai with Bank of America. Your line is open. Please go ahead. Good evening. Appreciate the opportunity to ask a question here.

Dimple Gosai: Team, you mentioned or you called out expansion in the middle East through Nextracker Arabia JV. Can You Help Quantify The Level Of Investment In Saudi Arabia '27? Right? Like, maybe give us a sense of pricing or margins in those regions compared to The US. Please?

Dan Shugar: Yes. Hey, Dimple. Dan here. I'll provide a bit of context, and ask Howard to provide more color on the market and Chuck to go deeper on the numbers. We're extremely excited to be launching Nextracker Arabia. As noted earlier, we have a long legacy. Seven years ago, we did the first utility scale project in Saudi Arabia. With the 400 megawatts cocker project. We've exported from Saudi Arabia many times from manufacturing capacity that we've set up there. The market is growing very fast in Saudi Arabia. It's one of the top growing markets in the world.

And what's really key is to work with the right partner, and we couldn't be more pleased than to be partnering with ABO-9N. One of the most respected participants in the water, energy, and infrastructure industries with seventy five years of experience. And local content matters. So you asked, are we you know, increasing capacity? Yes. There's actually a factory Typically, we work with other, you know, partners to run factories. In this case, we actually stood up an extractor factory in Saudi Arabia. And Chuck is gonna comment on the how that how we're dealing with that in a moment. And that facility shipping finished goods We have multi gigawatt orders we're fulfilling right now.

And a long history with delivering well over six gigawatts across the region. Now that region is very challenging. Environmentally with extreme temperature, wind, sand, dust, and our systems have really stood up well with exemplary performance differentiated reliability, and higher energy yield. Now the way we've structured this particular business arrangement in Nextracker Arabia is it's a joint venture There's a technology licensing component. And we're not gonna consolidate. Chuck or first, I'm sorry. Howard, can you speak a little more about the market and the regions we serve? And then, Chuck, comment a bit more on the financial aspects.

Howard Wenger: Sure, Dan. So first of all, before I get to the market, I just wanna say that we couldn't be more pleased as Dan mentioned because finding the right partner is non trivial. We found the right partner and we believe they found the right partner too in Abu Nayan Holding. And the just the culture fit is there, first and foremost to make a joint venture work, you have to speak the same language, be on the same page, and be highly complementary and synergistic, which we are. They're gonna bring the market We're gonna bring the technology. Together, we're gonna go and win.

And so we feel very good about the plan that we've developed together and to execute. And we're gonna hit the ground running with projects that we've already secured in the region that will go into the joint venture. And as far as the market goes, it's not just Saudi Arabia, I wanna make that clear. Which is a very strong market. Okay? They have a twenty thirty vision that they're executing on, they need to install 20 gigawatts per year there to execute to that vision in Saudi, KSA, but the joint venture also covers the MENA region, Middle East, North Africa, and there's some very strong markets with that region that we can go and conquer together.

So very exciting and with that, I'll hand it over to Chuck. Thanks Howard. Yeah, Dimple, you know, Abenayan is really a blue chip company. It's the kind of partner that a US, you know, and specifically Silicon Valley technology company would wanna partner with. And we spent a lot of time with them working on transaction, and they are really incredibly sharp, astute people. Great partners. As Dan mentioned, this is gonna be a roughly fifty JV that we do not plan to consolidate. And it really fits with our kind of asset light model kind of heroic. And given that the JV will have factories and operations, we think it's better overall for our financials that way.

And then, you know, on the revenue side, we will have license and be able to sell our technology in. And then we think this will be a really good business for years to come. I won't comment specifically on 2027, but as Howard mentioned, their aspirations in that market are incredibly strong. And we're really excited about the future.

Operator: Your next question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is open. Please go ahead.

Corinne Blanchard: Good afternoon. Thank you for taking my question. Maybe the first one, can you talk about true cap I think you mentioned it makes up 2% of the quarterly revenues. So maybe if I level, if you can talk about the expected contributions for 2026. And then maybe a quick regional market update for trackers would be great. Thank you.

Chuck Boynton: I'll take the first part, Corinne. TrueCapture is we mentioned last quarter TrueCapture rev rec is really tied to commissioning of systems. And it's been around 2% of revenue last quarter. We said it did dip a little bit because of just the timing of commissionings. And as predicted, it rebounded to a really strong quarter. Of around 2% recognized this quarter. Howard, do want to take the second part?

Howard Wenger: I'll just say that adoption continues to increase So we did the IPO back two and a half years ago, almost three, we're at about 1%. So the adoption of our true capture software continues and we keep adding features and capability and the energy yield is going up. So it's more and more compelling with a very strong backlog for true capture. Thank you.

Operator: Your final question comes from the line of Ben Kallo with Baird. Your line is open. Please go ahead.

Ben Kallo: Hey. Thanks for fitting me in, My question was just about you know, you guys made several acquisitions, maybe half a dozen. And just thinking about your appetite, going forward, and then also how we think about how, you know, you feed the different acquisitions with capital whether that's R&D or other, source or other types of capital, going forward, how you allocate that, how we should think about that in numbers as we go forward to next year as you grow each of those businesses and integrate them.

Dan Shugar: Thanks, Ben. I'll take the first part. This is Dan. Chuck will take the second. So first, we view the you know, new products services we do holistically, meaning that we look to internally generated products and services as well as acquisitions that we can do. We are very close to customers and really just ask them, like, what are your pain points? Like, how is it going? Like, where are you having issues? Where do you see this opportunity? For greater yield? And we factored that into our also complement that with our own thinking of and experience about you know, how to get more profitability out of these systems or and help drive lower LCOE and so forth.

So you know, we've significantly increased our internal R&D budget. We've roughly tripled it in the last two to three years to roughly $100 million today. And then with respect to acquisitions, we try to have a very objective evaluation of what we can do in the market and needs in the market. I'll give you a case study, which is our advanced module of Frame. Activity. As I mentioned, Nextracker Inc. has worked on that for many years. We there's features in almost every module frame that's sold today that has our DNA there. We had we really saw we needed to really help control that to provide value to the module companies, EPC and owners.

So we had an internal program for the last few years to develop the next generation advanced module frame. But we were also supporting a third party, Origami Solar, that had developed a beautiful universal frame, which has the same sort of fit and function as traditional aluminum frames. So we really evaluated on an objective basis that they needed they'd taken the company as far as they could. They needed sort of an exit. And so we evaluated that and thought, hey. We, you know, we like what we're doing internally, but this helps our speed to market, and it provides an initial immediate customer need.

And then that team provided incredible engineering and other merits to complement our internal effort. So we it's really how we think about things in terms of solving customer needs. That brings that forward. In terms of capital allocation, can you speak to that, Chuck? Yeah. Certainly. And, Ben, any one of your questions was funding these post close. We do have a very experienced M&A team in the company, both sourcing and integration. We are really, really intentional with not making the mistake of killing the company you've acquired by not investing in it. Actually buy the company, We have an investment case, and we stick to our guns playing the long game, Ben.

We're not looking at the short-term results. So we're heavily investing in things like R&D and marketing and sales. To ensure success. We've built out a really capable team to manage these investments. I'm really proud of the work. And it's really bearing fruit, you can tell. And I think so you know, we're excited about the investments that we're making. We're not going to slow down. And we appreciate that. Dan, you want to close? Yeah. I do want to just say on these new businesses, we're we're we're we're growing. It takes time to operationalize these and get the leverage of scale. With the drops through into, like, significant margin.

And so we feel great about the portfolio as we've brought in the foundations. I mentioned we just launched this integrated product, which reduces the part count significantly, lowers the cost. We love the margin profile of as we optimize products, how they contribute to the overall company. And so both with the organic and the new businesses we're bringing in, We look forward to unpacking those in our Capital Market Day upcoming. Thank you all for joining. We look forward to welcoming you either in person or on our Capital Markets Day on November 12.