Nextpower Inc. (NXT) Q3 2026 Earnings Call Transcript

Good afternoon, everyone, and thank you for standing by. My name is Kevin, and I will be your conference operator today. Today's call is being recorded. I would like to welcome everyone to NextPowers' third quarter fiscal year 2026 earnings call. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute. At this time, for opening remarks, I would like to pass the call over to Ms. Sarah Lee, Head of Investor Relations. Sarah, you may begin.

Thank you, and good afternoon, everyone. Welcome to NexPowers' third quarter fiscal year 2026 earnings call. I'm Sarah Lee, NexPowers' Head of Investor Relations, and I'm joined by Dan Sugar, 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 actual results to differ materially from our expectations. Those statements are based on our current beliefs, assumptions, and 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-K, which are available on our IR webpage at investors.nextpower.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 webpage. And now I will turn the call over to our CEO and founder, Dan.

Good afternoon and thank you for joining us. Next Power delivered another strong quarter characterized by solid operational discipline and execution, increased backlog, and continuing focus on customers and innovation. This call represents an important milestone for the company, being the first quarterly earnings report under our new NextPower brand. At our Capital Markets Day last November, we outlined our strategic evolution, started several years ago, from a pure play tracking system supplier to an end-to-end solar technology platform. We followed that with a technology and market symposium where we engaged directly with customers to showcase our expanding portfolio of value-enhancing products and services that we are building around our core tracker business, including our roadmap to incorporate power conversion solutions for utility-scale solar solar and battery energy storage. Customer response to the strategy has been very positive, and Howard will share more detail on how this is translating into customer adoption. We recently completed the formation of NextPower Arabia, our joint venture with Abu Nayyan Holding in the Middle East. The JV is already off to a strong start and will supply 2.25 gigawatts of advanced tracking systems to one of the world's largest utility-scale solar projects. With the launch of Next Power Arabia, we're focused on building local operations, manufacturing capability, and long-term partnerships that support the kingdom's energy ambitions. Together with Abu Nayyan Holdings, we are advancing the localization of renewable energy technologies, strengthening supply chains and creating the foundation to locally manufacture and support up to 12 gigawatts of solar capacity annually, with the potential to create thousands of jobs over time. Saudi Arabia and the surrounding GCC sit at the center of one of the most dynamic energy transitions in the world. Rapid growth in electricity demand driven by economic transformation, megaprojects, and the expansion of AI and digital infrastructure calls for solutions that can scale quickly, reliably, and efficiently. Solar energy is uniquely positioned to meet that demand. As the lowest cost and most scalable power generation technology available today, solar is playing a central role in the energy future of Saudi Arabia and the broader MENA region. Let's turn to our financial performance. We delivered robust financial results across all key metrics. Q3 revenue grew 34% year-on-year to $909 million, and adjusted EBITDA increased 15% to $214 million. Fiscal year-to-date revenue increased 32 percent year-over-year to $2.68 billion. We generated solid cash flow and further strengthened our balance sheet. We also became the first pure-play solar product company to achieve a formal investment-grade rating, reinforcing confidence that NextPower can stand behind projects for decades, supporting financing, warranties, service, and asset performance over the full life cycle of these solar generation infrastructure projects. Discerning power plant owners greatly value NexPower's financial strength. Based on our performance and the visibility we have across our business, we are raising our fiscal 2026 financial outlook, which Chuck will discuss in more detail. Finally, I would like to thank our customers for their continued trust and partnership and our employees for their commitment to innovation and execution. We remain focused on scaling our technology platform and creating long-term value for shareholders. I'll now turn the call over to Howard to provide more color on the quarter.

Thank you, Dan. During the quarter, we saw continued strong customer bookings, which drove further backlog growth. We also continued to innovate and release important hardware and software to the market, and we had another strong quarter of financial performance enabled by our global operations team. We manage our business on an annual and multi-year basis, which is consistent with the nature of the utility-scale solar power industry, with large-scale projects spanning multiple quarters and multiple geographies. We are increasing our outlook for the remainder of the year based on the strength and diversity of our backlog, a continued flight to quality that favors Nexpower and the deep capability and commitment of our global team. Turning now to regional demand. In the U.S., bookings were up and revenue increased 63% year over year, reflecting Nexpower's technology and customer experience advantage for what we call a flight to quality. There also continues to be an increasing demand shift for domestically manufactured systems which we are able to meet with our robust domestic supply chain and favorable lead times. U.S. project and demand creation continues with developers generally reporting their ability to move projects forward through to final permitting and financing and they are doing so across multiple years of completion providing extended visibility. Encouragingly, several customer projects sited on federal lands that have been on hold have begun to move forward as well. Demand for our core tracker technology remains strong, as reflected in sustained customer adoption of the NX Horizon Hale Pro Tracker. During calendar year 2025, our systems executed 2,170 hail stoves worldwide with our customers reporting a less than 0.007% module breakage rate. This is very good news and supports our innovation thesis. Our expanding technology platform is now gaining traction for both tracker and non-tracker offerings with an increasing and more diverse mix in our order book. For example, this quarter we We booked a 552 megawatt order incorporating a technology bundle on a single project, including our NX Horizon Hale Pro Tracker, eBoss manufactured in the U.S., our NX Earth Trust Foundation System, and our True Capture Control System. Moving to the international market, Europe again stood out with record quarterly bookings and expansion into two new countries. We are also excited about the formation of our new JV company, Nexpower Arabia, to serve growing demand across the MENA region. Saudi Arabia alone has ambitions to install 130 gigawatts of renewable energy by 2030. We also introduce our NXEarthTrust Foundation solution overseas, marking a positive step in the international expansion of our technology platform. As Dan noted, we announced plans at our Capital Markets Day to extend our platform to include power conversion solutions. This project remains on track with customer pilots planned for calendar year 2026. Turning now to project timing and pricing, project timing remains stable and manageable on a portfolio basis, consistent with previous quarters, with some projects accelerating and others pushing out. On balance, Q3 saw a modest net pull-in. Pricing continues to track the broader solar cost curve, and we continue to invest in R&D and scalable infrastructure to reduce cost while improving system performance. Our culture is to relentlessly serve our customers and deliver maximum value at competitive cost and pricing. In summary, our business fundamentals remain strong. Demand is healthy. our backlog is large and growing. Project timing and execution visibility is solid, and we continue to strengthen our competitive position through innovation, customer focus, and operational excellence. With that, I'll turn the call over to Chuck.

Thank you, Howard. Good afternoon, everyone. Overall, Q3 was another quarter of strong execution with results that reflected both healthy and market demand and continued discipline across the business. For our fiscal 2026 third quarter, revenue was $909 million and adjusted EBITDA was $214 million, representing an adjusted EBITDA margin of 23%. On a year-to-date basis, adjusted EBITDA increased 22% year-over-year, demonstrating the durability of our margin profile even as we navigate tariffs and invest in growth initiatives. We generated gap net income of $435 million year-to-date, underscoring the high-quality earnings power of the business. 81% of Q3 revenue came from the U.S., with 19% from rest-of-world markets. Year-to-date, our revenue mix was 75% U.S. and 25% rest-of-world. This geographic balance gives us both scale and diversification, while allowing us to maximize investment returns and prioritize disciplined execution. Turning now to cash flow. We generated $123 million of operating cash flow in the quarter and $391 million year-to-date. Capital expenditures remain modest, resulting in adjusted free cash flow of $119 million in Q3 and $360 million year-to-date. This level of cash generation reflects strong underlying profitability, disciplined working capital management, and the capital-efficient nature of our business. Importantly, it gives us significant flexibility to invest in growth while maintaining robust liquidity. Our balance sheet remains a core competitive advantage. We exited the quarter with $953 million of cash and cash equivalents and no debt. We also recently achieved a formal investment-grade credit rating, which we view as a meaningful external validation of our cash predictability, disciplined financial management, and the durable business model. This milestone is important to our customers and suppliers while also enhancing our financial flexibility. Our capital allocation priorities remain unchanged. First, we continue to prioritize organic investment and new products and services. Second, disciplined M&A that strengthens our technology platform and creates customer value. Third, return of capital to shareholders. Today, we are announcing that the board authorized a share repurchase program of up to $500 million over three years. This program reflects our competence in the long-term outlook of the business and our ability to generate durable cash flows while maintaining flexibility to invest for growth. Investments in organic growth and M&A continue to be our top priorities, followed by share repurchases. Moving on to tariffs. As expected, tariffs continued to have an impact on margins, particularly on a year-over-year basis. This quarter, the tariff impact was $44 million, up from $33 million last quarter. This increase was due to the partial impact in Q2, given the effective date of the new tariffs, was August 15th. Our diversified and increasingly localized supply chain, combined with pricing discipline and operational execution, has allowed us to manage these impacts efficiently. We currently work with over 25 U.S. partner manufacturing facilities, and NextPower was the first to deliver 100% domestic content trackers under U.S. Treasury guidelines, and we're seeing increased customer adoption of these solutions to mitigate tariff exposure. We also continue to work very closely with our customers to manage tariff-related impacts across multiple projects. Looking ahead, we expect tariff-related margin pressure to remain manageable and largely consistent with our prior expectations. Finally, based on our performance through the first three quarters, the strength and the quality of our backlog, and continued demand across our core markets, we are increasing our financial outlook for fiscal year 2026. We now expect revenue between $3.425 and $3.5 billion, adjusted EBITDA between $810 million and $830 million, and adjusted diluted EPS in the range of $4.26 to $4.36. We continue to expect gross margins to be in the low 30s and operating margins in the low 20s. The current outlook for next year indicates another year of solid growth. Our outlook assumes the current U.S. 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 flows. We believe our strategy, team, and platform uniquely position us to deliver long-term shareholder value. Thank you, and with that, we'll take your questions. Operator?

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, a reminder to please press star 9 to raise your hand and star 6 to unmute. Please stand by as we compile the Q&A roster. Your first question comes from the line of Philip Shen with Roth. Your line is open. Please go ahead.

Hey, guys. Thanks for taking my questions. Great job on the quarter. I wanted to check in with you on bookings in the quarter and book-to-bill specifically. I know you guys talked about record backlog and backlog being greater than $5 billion, but wanted to understand if your bookings cleared $1 billion in FQ3. And then if you can share some color on the revenue for FQ3, what was the mix for the U.S. business of tracker versus non-tracker? And then how might you expect that to trend in the coming quarters or years?

Hey, Phil, this is Howard Wenger. Thanks for your questions. So, yeah, we're really pleased with the quarter, with everything that we executed, the name change, the capital markets day, coming, you know, being prepared for that and the customer day and the announcement of JV. So with all of that, we continue to execute the business really well. Bookings were strong, revenue, the financials. As far as bookings, to your question, we did have growth in our backlog. It is a new record. We're not giving specific numbers, but suffice it to say that it was one of our stronger quarters that we've had in some time, and we're really pleased with that. It was a little bit weighted to the United States, just to give you some color. And as far as tracker and non-tracker on the revenue mix, the non-tracker business is starting to have an impact. And what we're seeing is a little more mix on the U.S. from that, because we're rolling out the non-tracker part of our platform, first in the United States, and I'm talking about foundations, eBoss, robotic inspection, and software and services are more focused on the U.S. market first. And that is having some impact on bookings and revenue and the mix weighting

there towards the U.S. Thanks for your question. Great, thanks. Hey, Howard, quickly, just can you clarify, you said one of the stronger quarters that you've had in some time. Does that mean for bookings specifically that this quarter was one of the stronger bookings quarters in a long

time? Or does that mean just your quarter overall? I was speaking particularly to bookings when you look at contribution to our backlog, Phil. Great. So that would suggest that it was at least a billion. Is that fair? Really appreciate the question, Phil, and your persistence. Thanks, Howard. I'll pass. We'll leave it right there. Thank you so much.

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

Thanks and congrats on the floor. Maybe if you could just provide a little bit more detail on the permit freeze. You mentioned that some of the projects on federal lands are still moving forward. I guess, are you seeing any slowdown at the front of the funnel for projects that would be targeting 2028 and service days that require permits this year? Or are you saying that so far developers have been able to kind of manage around some of these constraints? Just any clarity there would be helpful.

Hey, Praneet. Dan Sugar here. We were speaking specifically about several projects that are on federal lands that are now moving forward. Well, in total number, those are a small percentage of the projects that we're working on. It was great to see that those move forward. And so, Howard, do you want to take the second part of that question?

Sure. So we're in close touch with developer owners and EPC partners both. But on the developer owner side, what we're seeing and hearing is their project portfolios are moving forward. Now, some are completely not on public lands, public and federal lands. In fact, a number of many developers that way, they have very little exposure to public lands. And consequently, they're less impacted. But what we're reporting on is both favorable velocity of projects through to the permit phase, both on the public lands and on private lands. And that includes areas where there are a federal nexus. And just generally speaking, in the U.S., we're very pleased with the broadening pipeline that we have and growing pipeline of opportunities. And so developers are navigating. They're very safe harbored. They have a lot of visibility into the future. And it's really quite positive. Good to hear.

And your next question comes from Dimple Gosai of Bank of America. Your line is open. Please go ahead.

Hold on in a very nice quarter, and good evening, gents. This quarter, you noted record bookings and rising bundled attach. So could you give us a sense of what the attach rate is for, you know, true capture, e-boss, earth trust, robotics, any sense and color there would be helpful? And then also give us a sense of just the gross margin uplift, you know, for a typical bundle versus tracker only, especially given that you're seeing some more traction on that side.

Sure. So this is Howard. I'll take the first part. And Chuck, if you want to talk about gross margin, I can also do that. But on the attached side, first of all, we have both an inorganic and organic approach to innovation and filling out our platform. So we're developing new tech internally, but we're also making acquisitions, as you know. Some of those acquisitions are fairly recent. For example, the eBoss acquisition we made, which is significant, occurred in May of 25. So it's been, what is that, like eight months. So using eBoss as an example, what we're seeing is by far the pipeline is expanding exponentially in terms of opportunities because of our sales platform. and we're beginning to see more and more bookings and sales and revenue come through that particular channel we're not giving specific attach numbers at this time but suffice it to say we're we're seeing some some very significant projects the one we highlighted as an example is a 552 megawatt project where we have our trackers, foundations, eBoss, and True Capture all bundled together. So we'll be talking more and more about that as our pipeline matures for these other products and services that are what we call non-tracker, but fill out the platform and complement the tracker. As to financials and margin, do you want to weigh in on that? Certainly. Thanks, Dimple.

We don't break out in detail the non-tracker tracker revenue splits. Really today, it's all about scaling the technology and the go-to-market. In general, they're roughly at the corporate average. Of course, some are higher. Software, as you know, Dimple, is quite a bit higher and other ones are kind of around the corporate average. But I would just think of it from a modeling standpoint is roughly consistent with the guidance and the outlet that we provided.

Thank you.

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

Hey, guys. Good afternoon. Thanks for taking the questions and kudos on the solid execution. The first question I had was, you know, given the higher base of revenue and profit here for fiscal 26, is there any update on the view for fiscal 27 that you provided at the analysts they asked November maybe just how should we think about flow through into next year given the stronger results here and then follow-up would just be on you know some of the accounting here with the IRA credit they're down despite higher U.S. mix curious I mean that does mean x IRA gross margins are higher here than the past couple quarters but is that timing related or is there something with respect to sharing of credits and pricing that's impacting that dynamic of So, you know, U.S. sales higher, but IRA credits down.

Yeah, the IRA credits are roughly in line with the prior quarter. Brian, what you're seeing effectively is the blending of the tariff impact. And, you know, as I mentioned in the prepared remarks, the tariff impact went from $33 million last quarter to $44 million this quarter. And that's really just because you have a full quarter impact of the overall tariffs. as it relates to our outlook for next year. You know, we just provided our outlook just a couple months ago at our Capital Markets Day, so we're not updating or changing that. But I'll just say, you know, with the strength of the business, we feel, you know, really good going into next year and we're set up for a strong Q4 and feel really good about going into next year with a great backlog.

And your next question comes from Mark Strauss of JPMorgan. Your line is open. Please go ahead.

Thanks for taking our questions. great to see the the 2.25 gig next tracker arabia order i know we we've talked about in the past kind of the the longer term targets from ksa and whatnot but just kind of curious uh just looking out over the next you know whatever 12 18 24 months uh kind of what a reasonable expectation might be uh can we expect to see similar gigawatt scale orders coming through from that uh that jv then I have a quick follow-up. Thank you. Hey, Mark. Dan Sugar here. We just came back from

spending a lot of time in Abu Dhabi and Dubai and Saudi Arabia. And that market is really, really strong in terms of the amount of solar that's happening there. the, I mean, not just in those countries, but the region, very strong. We're seeing very strong double-digit gigawatt growth happening, very ambitious targets that are being set and executed upon with multiple public solicitations from some of the largest energy participants in the region. There's national targets and there's targets at utilities. Really big stuff happening. For example, in UAE, so the largest market is Saudi Arabia, and UAE is also a very strong market. there there's a project called the round the clock project very interesting five gigawatt of solar single project with um a tremendous amount of battery it's either 19 or 29 gigawatt hours i can't remember at this instant but that enables 24 7 renewable power solar power to be serve to the region uh that's really a quite a quite an interesting project and we're seeing but it's it exemplifies the um ambitious scale of what's happening there and i think it also provides uh you know a little bit of context for how cost effective solar is because obviously there there's a tremendous amount of oil and gas there solar is the lowest cost way to generate power um even though all those natural resources are there and so um we're excited to be a participant in the region we were the first we did the first utility scale power plant um in the region the 400 megawatt secaga project in saudi arabia seven years ago which has performed with exemplary reliability and uh there's a strong flight to quality performance there uh we personally visited one of our projects uh that was in the field it was outperforming it was operating at about 105 percent of expectation the whole system and so the customers are are really pleased with that so um yeah we're very excited about being there Thank you.

Okay, thanks, Dan. If I can ask you a quick follow-up to Chuck, I think I know the answer to this, but since it's the first time you guys are issuing a buyback authorization, just want to check just how you're planning to approach that. Is there a base level of buyback activity you're looking to do each quarter, or is it just completely random, completely opportunistic? Thank you.

Yeah, it'll be a structured program, Mark. But again, since we're kind of first time in the market, we're going to kind of go slow and cautious out of the gates because, again, what's new to us, and so we'll develop our program more formally. But the goal would be for it to be more of a formalized program versus just opportunistic.

And your next question comes from Julian Dumoulin-Smith of Jefferies. Your line is open. Please go ahead.

Hi, this is Deshaun here for Julian. Hi, you guys. I just had a quick few questions on the Saudi JV. Maybe if you could share a little bit more about the timing of it and how does the margin cadence look like? Just how can we think about it kind of flowing through over time, the 2.25 gigawatts?

I'll start with the timing, and then, Chuck, if you want to weigh in on the second part. so the jv has been uh launched and uh we closed it um a few weeks ago it's it's operational the 2.25 gigawatt project that we announced we're already delivering on that project this quarter materially. And we had an existing factory in Riyadh that's continuing to produce. We have a new factory under construction in Jeddah. We visited that factory last week. It looks fantastic. It's quite large scale. Additionally, we're continuing to work with some of our legacy supply partners. And we're extremely pleased to be partnered with Abunayan Holdings, fantastic organization. And we're set up and operating. Chuck, second part two?

Yeah. So the way I think about this is, as Dan mentioned, Abunayan is a blue chip company. It's the kind of company that a great Silicon Valley company would want to partner with. And so we're really proud to partner with them. As we mentioned in the past, it's structured as roughly a 50-50 JV. It's not quite, we will not consolidate. And that is on purpose because effectively it fits well with our heroic capital light model. And so what you'll see is when the JV sells projects, we effectively will generate revenue by selling some technology into the JV. There'll be a revenue, a royalty. And then, of course, our share of the JV's profits. So, we'll provide a little more color next quarter as we do our kind of 2028 outlook or guidance, or 2027 outlook and guidance. So, I'd say stay tuned, but we're really excited about this opportunity, and we think Abunayan is going to be a great partner. Awesome. Thank you, guys. And then just one

quick follow-up. I wanted to talk about the power conversion. Could you just talk a little bit about how that, you know, how your conversations with customers are evolving there? What does that look like? Like are they more focused on best versus solar and how does the competitive landscape look like for power conversion?

I'll speak to that. Howard and I have been in this business since the 1980s and power conversion has been the opportunity for greatest operational performance of solar batteries over that for that whole time okay and you know why are we launching this this uh category well it's because uh it's not easy let's start with that and we take it very seriously we're doing it because there's opportunity to deliver higher efficiency higher reliability and availability Safer and better service of that product category. We have a lot of experience here at the company with our technical team and our leadership team in this area. And we're factoring in user requirements to be able to achieve higher plant availability. the number one item on a Pareto to improve the operating fleets around the world is to have better reliability and performance of this particular category. So that's why we're doing it. And we're approaching it where we're not cutting corners, but yet developing a product that's competitive and has local manufacturing attributes. We're starting in the United States. We have operating alpha units. We showed our skid of this particular solution in the field at our Capital Markets Day, and we're looking forward to fulfilling some initial beta projects with customers this year and then scaling the business responsibly after that. Thank you. Next question, please.

Your next question comes from Vikram Bagri of Citi. Your line is open. Please go ahead.

Good evening, everyone. I wanted to ask a housekeeping question first, and then I have a follow-up. You mentioned the non-tracker margins are comparable to corporate average. At the analyst's day, the margins for non-tracker were indicated to be about 6%. So are you saying those margins are tracking higher, the EBITDA margin expected to the analyst day? And what changed between analyst day and now?

Yeah, nothing has changed. I was talking gross margins, not EBITDA margins. And effectively, because it's a fairly small base, it doesn't really change the overall profile. But I'd point out a big part of the non-tracker revenue is software, and that's way, way above the corporate average. The other ones are smaller, and therefore, the way to think about it in the short term is kind of blending with the corporate average. It's not going to change a whole lot. Over time, what we outlined at our capital markets today is still intact.

Thanks, Shrek. And as a follow-up, you mentioned in your prepared comments, IG rating is important for customers. Can you highlight in which regions is it important? Does it play an important role in Saudi? and if there is a way to quantify how many customers consider is important, like how much of an edge does it provide to you relative to your competition? Thank you.

Yeah, so investment grade rating is important to all customers and suppliers, some different. Internationally, it makes a big difference. If you're working with a large developer or owner, they care deeply about the credit profile of their counterparty, whether it's a customer or supplier. And so while it may not matter as much to you financial community, it matters a lot to our customers, really a testament to how well the companies manage and the discipline approach that we take to operating our business. Dan, do you want to add

anything? Yeah, what I would add is that if you look at a number of markets, let's just talk about the United States. If you went back five or 10 years ago, there were a lot of developers that were then flipping projects. Today, some of that occurs, but most of those type of organizations have evolved into also operators, owners of systems, independent power producers. Also, we've seen a huge growth in utility ownership of solar. And folks are really concerned about the long-term operation, really optimizing the risk-adjusted, levelized cost of energy. And that's really important. We were in the Middle East, I mentioned a few weeks ago. There's a huge system there, not with next power, that's being completely dismantled and rebuilt. due to let's just say performance issues and we folks want to be not be penny wise and pound foolish so we're really seeing long-term ability to support the development finance supply operation spare parts warranty reserve over the life of the project really be a much more important attribute as the industry has matured and gone to long-term risk-adjusted, levelized

cost of energy optimization. Thank you. And your next question comes from Ben Callow of Baird.

Your line is open. Please go ahead. Hey, guys. Congrats on the results. Two questions made a bigger picture. Number one, with all the emphasis on bring your own power, Or has that showed up in your discussions or in orders? And maybe just talk to that. And then the second question, you know, energy storage volumes are very large, to say the least. Any way that you guys are thinking about, you know, addressing that market or working with that market? And thanks, guys.

Hey, Ben, this is Howard. So I'll start and then Dan will finish. So on the bring your own power, there's absolutely an amazing dynamic that's happening in not only the United States, but around the world with respect to AI, electrification, which includes electric vehicles, the data centers that powers everything that we do, robotics. um the energy requirement for chips is just going up and up so what what what's happening what you're seeing in in this country it which spills over to other countries is some of the larger hyperscalers are are getting more and more involved you've seen some announcements uh directly in making sure that the power is there for their expansion and their requirements um so there's no question that that's the bring your own power uh is part of the equation there's no question that we're seeing that uh in our opportunity base um and as with respect to storage i'll just start and dan will finish there's this great symbiotic relationship between solar and storage and it's the fastest thing that can be deployed to market we've seen that in the united states alone over 80 percent of the new electrical capacity this year well in from january of 2025 to november of 2025 over 80 percent was solar and storage. And, you know, companies are reporting, large developer owners are reporting that they span both fossil and renewables, and over 80% of their portfolios are solar and storage. So it's a logical extension for NextPower to offer this solar power platform that extends into storage, and our power conversion system is something that can be used for in the storage

category. Dan? Yeah, thanks, Ben. When we've heard this, bring your own power, it can mean there can be two definitions of that, okay? Definition one can be install electric generating capacity at some point in the grid that is then contractually generating a certain amount of gigawatt hours that flow through the grid to an end use. Definition number two could be on-site power, where the power is right there at the load, which reduces or potentially eliminates the need to be connected to the grid, okay? Almost all of what's happened and happening and discussed is the first definition. There are some cases in the second thing. So let's just speak to the first thing for a minute. That's been happening for more than five years. A huge amount of our projects with our customers are for serving those applications, hyperscalers, data centers that are buying the energy to support through the wire, but through the wires to support their operations. So people have been bringing their own power. That's increasing, but it's not necessarily co-located at the actual facility. We have seen some projects co-located at the actual facility on the customer side of the meter. I do think we'll see some more of that, but customers generally want the grid and they can supply their own energy through the grid. The grid's a very reliable thing. It's kind of a battery, if you will. And then what happens on the customer side of the meter is backup power and uninterruptible power supply. So I'd say it's been happening for quite a while, and we're going to see increased pull as large concentrated loads with data centers increases. With respect to NexPower serving battery storage as well as solar, our inverter platform, power conditioning system, the fundamental architectures can definitely support both. It was conceived that way. We're continuing to evolve it. there are some differences as it goes to final productization for how in software and some of the applications for how those systems interface. But the fundamental platform can apply to both, and that's how we introduced it at Capital Markets Day and showed folks in the field.

Thank you, guys. And your next question comes from John Windham with UBS. Your line is open. Please go ahead.

Hey, perfect timing to bring me on because I have a follow-up question. So, Dan, you've been in the industry a long time. You've been a leader of it. I'd love to get your thoughts on the potential impact from greater availability of storage in the United States. Obviously, Ford had a very big announcement converting some of their what was supposed to be EV batteries into stationary storage. Stellantis and GM could potentially do the same thing. Just your thoughts on the potential impact to solar demand if we sort of go to a market that's awash in batteries.

We think it's fabulous to build capacity of making battery cells, packs, containers in the United States and other major markets. Fantastic development. And there's been a lot of tailwind to stationary storage that's come from electric vehicle demand and manufacturing scale up. And then in the case of a few of the companies you mentioned, repurposing some of that capacity to stationary storage. We think it's awesome. And we think, as Howard mentioned, solar and storage go together. uh kind of like bass guitar and drums go together and so what they they do is they're quite complementary and the uh the other thing's just been amazing to see over the last five years solar or excuse me storage five years ago was predominantly one hour storage then you saw two-hour storage now we're seeing four-hour storage we have some customers with projects that are six or eight-hour storage. I mentioned the project in the United Arab Emirates that's 24-hour storage. I mean, it's mind-boggling. So what we've seen happen in storage is the same thing that happened in photovoltaic cells, where there was this cost reduction from the production learning curve effect, where every time the cumulative production doubled, cost dropped about 20%. And with this exponential growth in storage, you're seeing, you know, a commensurate reduction in the cost. That allows more hours and allows solar to be more and more ubiquitous as it gets, as the deployments continue. So we're very excited about the manufacturing buildout. And we think that'll be a very good thing for the industry. Thank you.

And your next question comes from Dylan Nisano of Wolf. Your line is open. Please go ahead.

Thanks for taking my question. I think earlier in the call, you mentioned there was a little bit of pull forward in And then obviously, you raised the guidance for the year. So I guess I just wanted to check on that kind of within the context of the preliminary fiscal 2027 guidance that you gave on the Capital Markets Day.

Yeah. So like we mentioned before, we're not updating or changing our fiscal 27 outlook from Capital Market State. It was just a couple of months ago. And as it relates to Q3, it was an incredibly strong quarter. you know um when our customers uh would like us to accelerate schedules we can uh the you know it was overall a very very strong quarter we raised the year uh and q3 was just incredibly strong on the heels of customers wanting more product earlier howard do you want to add anything

else no you you well i'll just say that uh we're very close contact with our customers some want acceleration. Some want to slow down because of a particular situation, a site or timing. And we are just really working to meet the schedules of our customers and have exceptional on-time delivery, which we do have. In this particular quarter, there was a net acceleration. We have a portfolio of projects we manage on an annual basis, as we've said. And so You can see revenue going from one quarter to the next, but the year looks really good. The next quarter, we've talked about Q4, you've got that. Q1, FY27 looks very strong and up and to the right. So, yeah, we're very pleased with our backlog, and it really gives us visibility to manage the company on an annual basis. Thank you so much.

Okay. Hey, we really appreciate everyone dialing in. Thank you for those that participated on Capital Markets Day. And this concludes this quarter's earnings call. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.