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Good afternoon, and welcome to Nextpower's investor conference call to discuss today's announcement. That Nextpower has entered into a definitive agreement to acquire Prevalon Energy. Today's call is being webcast live, and a replay will be available on the Investor Relations section of Nextpower's website.

The press release and accompanying investor presentation are also available on the Investor Relations website. I will now turn the call over to Ms. Sarah Lee, Head of Investor Relations.

Thank you. Before we begin, I would like to remind everyone that today's remarks will include forward-looking statements, including statements regarding the proposed acquisition of Prevalon Energy, the expected timing and completion of the transaction, the anticipated benefits of the acquisition, expected strategic, operational and financial impacts integration plans, market opportunities, customer demand, product capabilities and other expectations regarding future performance. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied.

These risks include, among others, the possibility that the transaction may not close on the expected time line or at all, the failure to obtain required approvals or satisfy closing conditions, integrated risks, market and customer demand, supply chain and execution risks and other risks described in Nextpower's filings with the SEC.

We may also discuss non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures, where applicable, are included in today's materials or in our SEC filings. We undertake no obligation to update forward-looking statements, except as required by law. With that, I'll turn the call over to Dan, Founder and CEO of Nextpower.

Thank you all for joining us on this important day for Nextpower. We announced that we have entered into a definitive agreement to acquire Prevalon Energy, a leading provider of utility-scale battery energy storage systems, abbreviated as BESS, energy management software, advanced controls and life cycle services.

Subject to customary closing conditions, including regulatory approval, this acquisition will put us immediately in the BESS and AI data center power supply business by virtue of Prevalon's technology, backlog and team capabilities. This transaction represents a logical and significant next step in our evolution.

Since 2013, we've built Nextpower with the objective of providing our customers with intelligent, reliable, high-performing energy infrastructure that can be deployed at scale. We've done that in solar by combining hardware, software, controls, engineering and services into an integrated platform that improves execution, energy yield, long-term reliability and customer returns.

Our customers are operating in a power environment that is changing very quickly. Electricity demand is accelerating due to AI, data centers, electrification, industrial growth and grid modernization.

Power systems are becoming more dynamic, distributed and operationally complex. There's been a tremendous build-out of solar in many electric grids and BESS is a valuable tool to shift solar supply in evening hours. That's why storage is now essential for many customers and markets we serve.

BESS is becoming a critical part of how power plants, data centers, industrial facilities and grids are designed and operated. Customers need infrastructure that can generate, store, convert and deliver electricity reliably at scale with the flexibility to respond and changing power demand and deliver power when it's needed.

They also need partners with the engineering depth, operating experience, balance sheet and long-term commitment to support critical infrastructure over decades. We project the global demand for BESS outside China could represent an opportunity of up to $35 billion in 2030, with the U.S. alone representing nearly $15 billion. That is the strategic context for today's announcement. Prevalon offers a proven utility scale energy storage platform with an experienced, trusted team in utility connected and salt-powered mission-critical applications.

Prevalon has over 6 gigawatt hours deployed and contracted globally with a project base across utilities, independent power producers, developers and AI data centers. This platform includes integrated BESS, power electronics, controls and an energy management software and life cycle services supported by long-term service agreements.

We believe Nextpower can accelerate Prevalon's growth by combining these capabilities with our deep customer relationships, experienced engineering, lab capabilities, supply chain discipline, proven execution model and investment-grade financial capability.

Prevalon's capabilities are highly complementary to Nextpower's. This is a natural platform expansion driven by customers' growing needs for reliable, flexible and dispatchable power infrastructure. First, upon closing the acquisition, we'll extend our market-leading solar technology platform in large-scale BESS, power controls, energy management software and life cycle services.

This will enable Nextpower to offer our customers complete firm power solutions. Second, it will broaden the markets we serve. We expect the combination to strengthen our position across solar-plus storage, stand-alone storage, AI data center power supply, distributed energy systems and other applications where flexible and dispatchable power is becoming essential.

Third, it will deepen our value proposition to customers. Our customers want infrastructure partners that can help them solve the full system challenge, not just one component. Together, Nextpower and Prevalon can help customers design, deploy and operate increasingly complex power systems with greater reliability, resiliency and long-term performance.

Finally, it will accelerate our strategic evolution. This transaction builds on the investments we've already made across electrical systems, power conversion, automation, robotics and software. It will move us further toward our long-term vision of being at the heart of the next-generation electricity infrastructure.

A key driver behind this transaction is Prevalon's technology. Prevalon's platform is available in both DC and AC blocks and is designed to deliver a high-density modular BESS for utility scale applications. The system is factory assembled and pretested, which includes -- which helps reduce field complexity, improve project certainty and accelerate installation and commissioning.

Prevalon's insightOS operating system provides the control layer for storage and hybrid power applications. It is designed to support real-time visibility, coordinated system control and secure operations across complex power environments. And for AI data center specifically, Prevalon's hybrid power stabilizer addresses a challenge that's becoming increasingly important. Rapid AI-driven load swings. AI workloads can create power volatility that traditional architectures were not designed to manage. Prevalon Solution provides active power control, not simply backup power by responding in real time, stabilizing voltage and frequency and supporting continuous operations across grid-connected, hybrid and stand-alone environments.

That distinction matters. Prevalon's hybrid power stabilizer is already delivering for 1.3 gigawatts of hyperscaler power infrastructure applications. The team is working with industry leaders to support rapid deployment of grid-connected and self-powered AI data centers. For mission-critical facilities, power quality and uptime are not simply cost issues.

They are operating imperatives -- the ability to integrate battery systems controls, power conversion and software into a unified architecture is increasingly important as customers design data centers and industrial facilities that function more like power plants than traditional buildings. We believe Prevalon brings differentiated Expertise in exactly these areas. Equally important, Prevalon's team shares Nextpower's focus on quality, reliability, customer success and execution discipline. This is a business built around complex, reliable, long lifetime infrastructure, consistent with Nextpower's product and business culture.

For customers, we believe this combination will mean access to a broader set of integrated energy solutions from a reliable investment-grade counterparty with deep expertise in power generation, power management and long-term infrastructure support. For Nextpower, we believe it will meaningfully expand our addressable market, strengthens our customer relevance and positions us to the center of the fast-growing segments of the electricity infrastructure market.

I'll make one final point. We will not lose focus on our core solar business. Solar remains central to Nextpower's strategy and customer value proposition. What this acquisition will do is extend our platform around core by adding storage controls, software and life cycle services with a high performance -- a high-performing mature team that shares our customer-centric values. I'll now turn over to Chuck, our Chief Financial Officer, to walk through the transaction terms and financial framework.

Thanks, Dan. Turning to the transaction terms and financial framework. We have entered into a definitive agreement to acquire Prevalon for total consideration of up to $365 million. This includes approximately $150 million of initial cash consideration, $50 million of Nextpower stock and up to $165 million of contingent cash consideration tied to profit targets over 4 years.

Please note, we expect the transaction to close with over $75 million of cash and cash equivalents. In connection with the transaction, Nextpower will make inducement grants under a management incentive plan in the form of performance stock units to Prevalon's owner managers valued at up to $100 million with vesting tied to 4 years of cumulative profit of Prevalon and up to $35 million in restricted stock units for existing and new employees. The transaction is expected to close near the end of our fiscal Q1, subject to regulatory approvals, including antitrust review and customary closing conditions.

In connection with the transaction, we are updating our fiscal year 2027 outlook to reflect the anticipated contribution from Prevalon following close. Subject to closing, we expect fiscal year revenue of 2027 revenue of approximately $4 billion to $4.4 billion compared with our prior outlook of $3.8 billion to $4.1 billion.

We also expect fiscal 2027 adjusted EBITDA to be between $845 million to $930 million compared to our prior outlook of $825 million to $900 million. This updated outlook reflects our current view of Prevalon's expected revenue and profit contribution after the anticipated closing date as well as the timing of contracted project activity and customer deployment schedules. We will continue to provide updates through our regular financial reporting cadence.

As we discussed in our most recent earnings conference call, we have increasing confidence in our ability to exceed our previously disclosed 2030 revenue outlook. In fact, this transaction is incremental to our 2030 targets. We expect to provide a more comprehensive update at our Capital Markets Day later this year.

Prevalon operates a lean model with OpEx in the mid-single digits. We expect operating margins this year in the low double-digit range with the opportunity to expand to mid-teens or higher over time as data center activity scales and life cycle services, supply chain discipline and execution efficiency contribute to mix and margin improvement.

Prevalon is expected to add capabilities in large-scale battery energy storage systems, energy management software, advanced controls and life cycle services. The company has an installed base and contracted project activity across utility, storage and data center-related applications. Prevalon's backlog meets a similar high bar to Nextpower. We expect backlog as of the closing date to be significantly above $300 million. Before moving on, I want to be clear about how we are approaching this transaction. We are not underwriting this transaction and speculative upside.

We are acquiring a business with proven deployments, real customer relationships, life cycle service capabilities and a pipeline aligned with markets where we are already seeing significant customer demand. This transaction is consistent with our capital allocation model. It's expected to be funded through a combination of cash and Nextpower equity, and we believe this structure allows us to preserve financial flexibility, provide significant management incentives and retention, aligning long-term interests in the future growth of the combined company.

We are not assuming that value creation depends on large unproven cost synergies. The strategic rationale is primarily about expanding our customer offerings, broadening our addressable market and leveraging Prevalon's storage and controls capabilities across Nextpower's customer relationships, engineering platform, supply chain discipline and execution model. So the financial lens is straightforward. This is an accretive transaction with a strategic platform expansion, structured with balance sheet discipline and focused on long-term profitable growth.

Our integration approach will also be focused and disciplined. First, we will prioritize customer continuity and project execution. These are critical infrastructure projects and execution reliability will be our first priority.

Second, we'll focus on retaining and supporting Prevalon's technical, commercial and operational talent. This team brings deep domain expertise in storage, software controls and service.

Third, we will work to bring the combined capabilities of Nextpower in Prevalon to customers where we see the strongest strategic fit, including solar plus storage, AI data center power infrastructure and stand-alone BESS deployments.

We believe there are meaningful opportunities over time to leverage Nextpower's global customer relationships, execution platform and supply chain capabilities. We'll provide additional updates as appropriate after closing. With that, I'll turn it back to Dan.

To close, I want to reinforce 3 key messages from today's announcement. First, this transaction is strategic expansion of Nextpower's platform. We are extending our solar power technology platform to incorporate a broader set of integrated energy infrastructure solutions encompassing power generation, conversion, storage, control and software.

Second, Prevalon will bring proven products and capabilities in markets where demand for reliability, resiliency and dispatchable power is increasing rapidly. Its experience across utility-scale storage, microgrids, grid services and mission-critical applications is directly aligned with where we see growing customer needs. Finally, the combination will strengthen our ability to serve customers over the long term. Our customers are building infrastructure that must perform reliably for decades. They need partners that can deliver integrated systems, manage complexity and stand behind that performance.

We are excited about the opportunity ahead, and we look forward to welcoming the Prevalon team to Nextpower following the close of the transaction. Operator, we're ready to take questions.

[Operator Instructions] Your first question comes from the line of Moses Sutton with BNP Paribas.

There we go. Hopefully, you hear me now. Exciting stuff. How are you first intending to optimize supply chain? This is like one of the tried and true things you're always doing. You did it for trackers, you do it for other products now. There's a lot of assembly within country. Is there a domestic content element here that you're going to sort of work through? Does that work through 50-50 in the JV? So just really anything first on supply chain optimization and how that's going to sort of help both on a margin standpoint and how you're going to use that to go to the market?

And then on the go-to-market approach, should we think of this as you cross-sell through EPC like you do with PV? Or given the nature of storage, is this much more you go to a lot of these developer and site owners that you have relationships with already and ongoing relationships, you can cross-sell into past plants and into new ones. Or is it like both of them? How do we think of how you use that go-to-market from all the leverage you have, especially in the U.S. market already? So 2 things there on go-to-market and on supply chain.

Moses, Dan here. Thanks for your question. First, we stand on a foundation of success with our prior acquisitions of really helping them drive down costs through supply chain execution and also just our financial position can help the margin position of these companies. This company has a mature team, but they have limited staff. We are well staffed with supply chain in 13 global offices. And with respect to domestic content, there's a variety of needs from customers regarding the degree of domestic content we're doing, for example, with our trackers, spectrum all the way up to 100% of domestic content.

Prevalon is in a position to support customer needs on those domestic content. And we're here to help them and where we can be constructive, whether it's in sourcing, longer-term procurement, being able to have the financial resources, more buying power, in some cases, some of the suppliers we already have legacy relationships with.

So we're really excited and believe we'll be able to be constructive to improve their margin by lower COGS costs. With respect to go-to-market, the -- we -- first of all, I directly spoke to 5 of their customers to just understand how well has the company performed in the design phase, in the modeling phase. in the preconstruction support, in the factory acceptance test, in the delivery phase, commissioning and long-term operation. And they have great scores from these customers. That really made a difference for us on this particular opportunity. We were looking very broadly across the storage space for a long time.

What's great is that actually, there's some overlap between our existing customers and theirs. But there's a lot of complementary customers they will bring -- Prevalon will bring to Nextpower and Nextpower will bring to Prevalon. Many of our legacy solar-only customers started doing storage heavily 3, 5 years ago.

And most of those are not currently Prevalon customers. Conversely, Prevalon has some direct relationships with utilities that we weren't speaking to at with hyperscalers, Tier 1 hyperscalers that we were not speaking to and with pure-play battery storage developers.

So the team is quite mature, competent and self-sufficient. And what's different about this acquisition from the approximately 10 that we've already completed is those other 10 generally were earlier stage, so we did full integration. In this case, our business model is to -- Prevalon will continue operating as a wholly owned subsidiary. And so then we can make referrals and vice versa.

And we'll really -- it's early days. We need for this to close and then see how we can be most constructive. But we really see this as a 1 plus 1 equals a lot more than 2, Moses. Thanks for your question.

And your next question comes from the line of Praneeth Satish with Wells Fargo.

Maybe I'll start on the guidance. So the revenue guidance was increased, $250 million, EBITDA, $25 million. I guess first question, is that a half year contribution from the Prevalon deal? Or is there a little bit more there since it closes in Q2 -- fiscal Q2? And then how should we think about the long-term margin profile here? It's about 10%, but longer term, it sounds like you can get that margin higher? And do you think it can approach your corporate average over time?

Great. Thank you, Praneeth. It's Chuck here. So yes, we're thinking this is basically 3 quarters of a year in our updated outlook. It's very early days, but what we've outlooked is already in backlog. So basically, their backlog is well north of $300 million. That's what we expect it to land at the end of Q1.

And the timing could be a little bit different. So the year is covered in backlog. It could be higher. Margins could be better. We want to be prudent given it's early in the year. And then margins could be better over time. We expect them to improve to mid-teens, maybe higher.

It's very analogous to the early days of solar, where margins were more compressed because the systems cost more. As we layer in additional technology, software, inverters, other things, I would expect it to be higher. Could it be higher than trackers long term? Hard to say. But right now, we see in the short term, intermediate term, improving margins and a better business. Thank you, Praneeth.

Yes. I'd like to just add an additional -- I agree with everything you said, Chuck. I just want to add one additional strategic element on the margin side. Where you add value, a lot of value is on the power electronics. And this acquisition is highly synergistic with our inverter and power conditioning system acquisition that we announced a few weeks ago.

And we're really going to lean into technology there, both on the hardware, the software and the control side. And we're going to use our labs and our phenomenal team to complement the excellent engineering talent that's at Prevalon to further deliver value for customers in terms of how these systems interact with the grid.

There's a lot of white space here. And the more margin -- or excuse me, the more value we contribute, the more margin you can generate in that.

And your next question comes from Brian Lee with Goldman Sachs.

Congrats on the deal here. I had a couple of questions. Just maybe first off on the -- is there a recurring revenue portion of this? I know you mentioned the LTSAs. Is there an attach rate and margin profile for that business? And then specifically on hyperscalers, are there contracts whether in pipeline or backlog?

Maybe just can you speak to the visibility into the potential there? And maybe even what kind of we should think in terms of the dollar content opportunity for, let's say, a typical 1 gigawatt data center if we're trying to size it?

Yes, certainly, Brian. I'll take the first part. Dan can take the second. Yes, there is a recurring element via LTSA. There's opportunities as well for additional services. We don't want to go into too much detail there today, but there is an element of recurring revenue that we're excited about.

Yes, is the answer to your question. Prevalon is currently fulfilling a Tier 1 hyperscaler AI data center, and they have capability, which is very complicated stuff, and they're doing it. And so they have backlog. And when we talk about -- when we speak about backlog in the context of Prevalon, it's the same standard that we speak about backlog with legacy Nextpower.

We're talking about a fully execute a legal agreement with a deposit with liquidated damages if the company doesn't deliver or the customer doesn't take. So these are enduring contracts I personally spoke with customers in this category, and it's very exciting stuff that's really at the forefront. What's so cool about this thing is you think about batteries as, oh, we've seen huge growth in solar and wind, which are intermittent resources, okay? So we think about these -- and there's been a lot like a solar developed in the middle of the day. So you think about like arbitrage to shift into the evening peak. So that's all true, and that's kind of a use case.

So the batteries really help renewables. But the batteries also help traditional power stuff. So if you -- and this is something -- I'm an electrical engineer. I spent a lot of time trying to understand this, been educated by the Prevalon team and industry experts.

So the existing grid can't handle some of these AI data center loads, which like are very fast in consuming power and also going offline. It's measured in tens of milliseconds. And so if you put a traditional rotating machine at the customer facility, it might be on the customer side of the large utility transformer or if you try to operate that facility run by the rotating machine, you can actually damage the machine because of the nature of the transient loads.

The batteries are much more responsive and able to help. And so it's very exciting because the battery systems with the correct control technologies can basically support both renewables and traditional power as we look forward to seeing these loads expand in the grid.

And your next question comes from Philip Shen with ROTH Capital Partners.

Dan, Chuck, congrats on the acquisition. I was wondering if you could elaborate more on how much more business Prevalon can win with the combination with you guys. What were the -- I mean, I know you can't give win rates and so forth. But is there a fair amount of business that they weren't able to win because they weren't of your size and didn't have your capabilities.

But with this combination and combine that with your service-first mentality. I've already been in touch with one of your customers, and they love the idea of this acquisition. And so I just wanted to see how this 1 plus 1 equals 3 and a more -- if you can qualify or quantify that in more words or in more detail, that would be fantastic.

Phil, great question, as always. So as we always roll, we went out and spoke to a lot of customers about our potential launch into the battery business. The sentiment was overwhelmingly positive, favorable as we've had many customers asking us to do more and energy storage was right up there.

And the energy storage pairs really well with the power conversion in that category also. So the -- for all intents and purposes, the Prevalon business model is really not supply constrained. And the team -- the company was only a few years old after spinning out from Mitsubishi, and it's very impressive what they did, which is really a testament to the quality of the team with very little liquidity.

And so we really feel that given our investment-grade rating, given our global footprint with 12 or 13 global offices, our legacy trusted relationships and then the help we can provide with some supply chain engineering back office and things that they need. And the TAM is growing so quickly in this market. We're very optimistic about the ability of the Prevalon business to grow, and we're there to support them every step of the way.

And your next question comes from Christine Dendrinos with RBC.

Can you all hear me?

Yes.

Great. Maybe just to follow-up on that last comment about not being supply chain constrained. I guess the question is, can you speak to the overall manufacturing capacity that you have today? And then how you're approaching that kind of going forward, if there's any additional bottlenecks or things that need to change for you to rapidly scale?

Sure. Thanks, Chris. At a high level, Prevalon follows the same supply chain strategy that Nextpower does. Prevalon is a technology company like Apple. And what they've really focused on is working with component suppliers and leading manufacturers that can meet their quality specification, engineering, commissioning, long-term reliability to make their proprietary products in a variety of factories to meet end customer needs with respect to domestic content or technical factors and so forth.

So they have a surprisingly sophisticated supply chain developed given the relatively young nature of the company. And so we can definitely help that, but the strategies are similar and the approach will enable us to globally scale to meet customer needs where -- and the supply chain that you've seen with Nexpower, what we developed a sort of hybrid strategy in supply chain where starting about 6 years ago, in major markets like the U.S., Brazil, India and so forth, we developed local supply chain that did most of what was needed, in some cases, 100% if required.

Or those markets could also export to other markets. And we've imported the U.S. We've exported from the U.S. with same with Brazil and India and Saudi Arabia. And so their supply chain model is very analogous with ours. And our team has already been coordinating with theirs that once this transaction closes, we're going to hit the ground running to help them manufacture cost-effective, reliable products in the regions that are optimized for customer needs to maximize margin.

And your next question comes from Vikram Bagri with Citi.

Maybe I'm asking this question a little too soon, but can you talk a bit more about the terms of contingent payment to give us a flavor of what is expected from the business over the next 4 years. The contingent payment itself is as big as the initial acquisition price. I imagine some of that, as you pointed out, is to retain the talent with deep knowledge in the space and in the technology.

And then as a housekeeping, is Prevalon an approved supplier to any of the hyperscalers? Have they done loop testing with any of the larger players in the space? Is any of the backlog that you disclosed tied to behind-the-meter hyperscaler projects?

Yes. Thank you, Vikram. I'll take the first part. Dan can take the second. So this is structured with a pretty heavy earn-out over 4 years. And it's done that way because we see very significant growth at pretty much any level across the earn-out spectrum, it's highly accretive to us. And so it's really a shared model where the owners share in the benefits of high growth and the company benefits with well more than half of the overall economics longer term over the next 4 years.

And so we do well, the management team does well, and we see very, very strong growth over this 4-year horizon tied to the tailwinds that Dan mentioned earlier. And so overall, it is less upfront and more over time, but it's a shared model for mutual success.

And with respect to your backlog comment, again, to Nextpower's backlog standard, which is the gold standard. We diligenced Prevalon's backlog, their largest single project that they're fulfilling today is a Tier 1 hyperscaler AI data center. I personally spoke to the customer and heard good things across the board.

Prevalon passed the factory acceptance test on the first try, which is really good. The standards were very high. And so it all checked out. And the -- there's -- you see it in the news, but there's a lot of need for this stuff because customers are desperate to bring power on line. But the -- to do an old-school stiff grid to support these wildly varying loads.

In fact, the hyperscaler I spoke to told me that you could literally have 400 megawatts of load coming up within 5 seconds, like you can't support that with a generator. You can see it. I think I mentioned on the last earnings call, if you're in an automobile off the line, 0 to 60, an electric car just is much faster than internal combustion car. And so it's much more responsive. And so the same is true.

So these battery systems can be dispatched on a period of tens of milliseconds. There's no way a throttle and an old-school generator can do that. And so this is a really, really high-value application, too. So it's something we want to support the Prevalon team and going further evolving that. Thanks for your question.

And your next question comes from Dushyant Ailani with Jefferies.

Can you hear me?

Yes.

Perfect. Maybe just one on -- could you just talk to us a little bit about the competitive landscape of Prevalon? How does that compare -- how does their offering compare versus peers? Also, we expect to see some supply coming online. So how do you think that kind of impacts Prevalon's strategy to go get in the market?

Okay. I'll take this. So first off, the supply coming on, that's great, okay? The supply you hear coming online is mostly like batteries. But I'd be a little careful because not all batteries are created equal. You need prismatic cells and things I don't know that much about, but it takes a while to bring out the sort of quality and performance metrics.

This is a very uncompromising space to make a battery that performs reliably. But more supply is good, okay? And we did a very deep competitive landscape survey. We actually hired a third-party consulting firm as we -- first of all, I just want to back up, we take M&A very, very seriously.

And our track record of our M&A producing earnings and differentiated technical advantage is very strong. The first acquisition we did was a machine learning company 10 years ago that complemented our internal staff. And from that, we were able to develop our TrueCapture software. And Chuck, what have we said that the earnings profile of that business is?

Well, the margins are north of 90%, and it's about 2% of our revenue. It's turned into a very, very great franchise.

Okay. So that's -- we don't -- we're not cavalier when it comes to M&A. This is a big deal for us. And every deal has to work. So as part of that, we retained an excellent third-party company that did a survey. They reached out to 100 customers. We spoke to 70 customers, this third-party company did, and we asked them about things that matter in this space.

Safety, on-time delivery, online availability, how much are these systems actually available after they're delivered. The ability of the company, the battery company to support the engineering, the business ethics of the company, things like that. And then we analyze those results. We also looked at a third-party report that spoke about -- it did assessments in arrears about how many -- how well these systems have stayed online historically. And across these metrics, the Prevalon team scored very well. So we feel really good about that. And -- was there another part to this question?

Go ahead.

Yes, I guess I had one more follow-up. Just on that $300 million backlog, could you just tell us how that converts or over what time period that converts to revenue? I think you mentioned it does cover the full year, but maybe beyond that, too? Or...

It is. We're not going into great detail today, but it's well north of $300 million. It fully covers this year and into following years, and we expect that backlog number to grow over this year.

This concludes our time for questions. I will now turn the call back to Dan for closing remarks.

To close, I want to reinforce 3 key messages from today's announcement. First, everyone, thank you for joining us on short notice. We appreciate that. Okay. This transaction is a strategic expansion of our platform strategy. We're extending out our solar power technology to incorporate a broader set of integrated energy infrastructure solutions encompassing power generation, conversion, storage, control and software.

Second, Prevalon will bring proven products and capabilities in markets where demand for reliability, resiliency and dispatchable power is increasing rapidly and its experience in utility scale storage, microgrids, grid services and mission-critical applications is directly aligned with where we see growing customer needs.

Finally, the combination will strengthen our ability to serve customers over the long term. Our customers are building infrastructure that must perform reliably for decades. And they need partners that can deliver integrated systems, manage complexity and stand beyond that performance. We're really excited about the opportunity ahead. We look forward to welcoming Prevalon to Nextpower and following the close of the transaction.

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 Nextpower's Fourth Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions]

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 Nextpower's Fourth Quarter Fiscal Year 2026 Earnings Call. I'm Sarah Lee, Nextpower's Head of Investor Relations, and I'm joined by 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 actual results to differ materially from our expectations. Those statements are based on 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 website 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 website.

And now I'll turn the call over to our CEO and founder. Dan?

Good afternoon, everyone, and thank you for joining us. We're pleased to report a strong finish to fiscal year '26 and recap what has been a defining year for Nextpower. We delivered solid financial performance across the business, including 20% revenue growth year-over-year, strong profitability and record backlog of over $5.25 billion. Demand remains healthy, and we continue to see strong bookings momentum supported by a flight to quality across our customer base.

Let me lay out a few key themes you will hear during today's call. First, our core tracker business continues to strengthen and perform at industry-leading levels. Second, we're seeing clear traction from our platform strategy with increasing adoption of our expanded product portfolio.

Third, we're continuing to invest in innovation, both organically and through targeted acquisitions to build a more integrated power plant technology platform. Let's start with our core business where we continue to win in the market. We saw one of the highest booking quarters in our history and we exited the year with record backlog as we continue to lead the global solar market. We continue to increase our backlog while growing revenue and profit. Our global footprint and flexible supply chain position us well to capture the underlying market demand and mitigate fluid policy dynamics in any one region.

According to the International Energy Agency, global electricity demand is forecast to grow 3.6% per year until 2030 compared to 2.9% per year for the prior decade. This translates to around 5,400 terawatt hours of incremental electricity needs over the next 5 years. A structurally increasing demand driven by data centers, electrification and industrial growth. This is creating an unprecedented need for new generation capacity. And solar, particularly when paired with storage, is documented to be one of the most scalable and cost-effective solutions to meet that demand. According to Rystad Energy, solar power is predicted to account for over 60% of new generation capacity brought online globally between 2025 and 2030 or around 3,000 gigawatts AC. By virtue of our market leadership, Nextpower is very well positioned to help meet this demand.

Second, we're seeing clear traction from our platform strategy. Customers have been asking us to offer additional products and services beyond trackers to simplify procurement, accelerate installation speed and improve system performance and long-term reliability. We're building our platform to meet that demand, and we believe integration across the power plant is becoming a key differentiator. Howard will provide more detail on how our strategy is translating into customer adoption and bookings activity. We believe these trends will continue to support long-term growth across our markets.

Third, we're continuing to expand our platform capabilities. As we've disclosed previously, we've been investing in the development of power conversion solutions, which we view as a critical component of integrated power plant architecture. We're now delivering on our complete solar platform and on our everything, but the panel strategy, while also addressing the storage and data center demand, all-in-one go.

Our internally developed technologies very unique with a design intended to enable higher operating efficiency and reliability, coupled with enhanced ease of maintenance. We plan to manufacture these products in the United States as we expect domestic content and very strong cybersecurity to be important differentiators in the power conversion market.

While we're completing internal development of our next-gen power conditioning technology, we're expanding our product portfolio and accelerating time to market through an agreement announced today to acquire key power conversion product lines that are ready to ship and a planned U.S. manufacturing footprint that can also serve as a launching pad for our internally developed products.

We think that this acquisition, which is subject to foreign direct investment approval by the Spanish government and other customary closing conditions, has similar attributes to our eBOS acquisition of Bentek last summer with solid core technology and expertise that Nextpower can quickly propel to meaningful scale across our market footprint.

We see power conversion as an increasingly critical layer of this system, optimizing solar power plant yield, enabling integration with battery storage and delivering power quality management and buffering capabilities that are increasingly important for data center applications. We are intentionally leaning into investments to support this next phase of growth.

While this will modestly impact near-term profitability, we expect these investments to drive accelerated growth beginning next year. We're increasingly confident to exceed our previously disclosed 2030 revenue outlook. Overall, we're very pleased with our performance in fiscal '26 and progress we're making against our strategic plan. We believe the company is well positioned for continued growth, supported by strong backlog, increasing customer adoption of our platform and ongoing investment in innovation.

With that, I'll turn it over to Howard and walk through our commercial performance and product innovation in more detail.

Thank you, Dan. We are really pleased with how we finished the quarter and the year. Starting with sales and bookings. This was one of our strongest quarters to date, contributing to a record year in bookings and backlog. We continue to have good diversity across customers, products and regions with 79% of FY '26 bookings in the U.S. and 21% from rest of world regions.

In the U.S., we continue to see strong demand across the country, supported by a flight to quality and what we believe is our superior technology platform. Internationally, Europe was a highlight with record fiscal year bookings. The global pipeline continues to grow, and we are seeing more and more countries becoming increasingly active with solar deployment. In particular, Europe Middle East, India, Africa and Australia continue to strengthen.

As we look ahead, demand remains healthy across our markets and overall pipeline visibility remains strong. Our customers are telling us consistently that their pipelines are moving forward overall as most projects continue to advance through permitting, financing and construction. Project timing continues to remain manageable on a portfolio basis with most project delivery schedules not deviating materially. Some projects do accelerate and others push out. This pattern is consistent with what we've seen historically.

The quality of our bookings and backlog remains very high, providing excellent visibility into project timing and execution. It is important to note, our bookings and backlog are based solely on firm orders and contracts. We do not include awards or late-stage negotiations in our backlog or bookings numbers.

Moving on to pricing. We had a modest gain in our overall ASP year-on-year due in part to higher attach rates of nontracker products and services in the U.S. as we rolled out our expanded product portfolio. Individual product pricing, like trackers continue to align with the broader solar cost reduction curve, which is a healthy dynamic that drives ongoing solar power demand growth. We continue to invest in R&D and scaling initiatives to reduce costs. For example, just in the past year, we reduced installation time by 20% for our flagship NX Horizon tracker according to a third-party engineering study. We are also driving down lifetime cost of ownership by increasing performance and reliability. For example, we released the next generation of our tracker control system, including TrueCapture, which leads the industry in system performance gains.

As discussed in November at Capital Markets Day, our strategy is to offer a complete solar technology platform, which includes everything but the panel. Customers are increasingly looking for more integrated solutions to simplify project procurement, design and execution, reduce risk and improve overall system performance. Our platform is designed to meet this demand, and we believe integration across the power plant is becoming a key differentiator for Nextpower. One example is the ramp of our innovative tracker plus foundation products, which are already being deployed at a multi-gigawatt scale with annualized bookings run rate now exceeding $100 million. The NX Horizon and NX Earth Truss Foundation Systems enable our trackers to be installed across all soil conditions with better quality and reduce install time and cost.

The integration of our eBOS offerings is also being well received. Recall, we purchased Bentek about 1 year ago, and already our eBOS business is accelerating with record bookings in this past quarter and over 40% bookings growth year-on-year for this business.

A few other highlights for the quarter are worth mentioning. First, we received initial purchase orders for our new NX PowerMerge eBOS solution. PowerMerge enables NX Power to now offer both trunk bus and combiner box eBOS solutions, which together comprise the vast majority of utility scale systems. This provides a powerful platform to expand eBOS sales.

Second, we signed another multiyear gigawatt scale steel module frame agreement with JinkoSolar for U.S. manufactured steel frames. Steel module frames are simply a better engineered solution than traditional aluminum frames and are particularly well suited for robotic installation.

And third, we are seeing early success in bundled deployments with projects incorporating multiple elements of our platform. Demand also remains strong for our core product set, which includes trackers that handle more complex terrain and extreme weather environments. We surpassed 50 gigawatts of cumulative sales of our terrain-following tracker called XTR and over 30 gigawatts of our NX Hail Pro tracker solutions. Just over the last fiscal year, our Hail Pro trackers conducted 4,605 hail stows with 57 events experiencing hail of up to 3 inches in diameter and a 99.99% module survival rate. We also recognized record to TrueCapture revenue in FY '26. These products continue to differentiate us and are driving incremental value.

Finally, we are very excited about the announced definitive agreement to acquire power conversion products, along with the excellent team and supply capability. As Dan noted, this versatile platform can be used for solar, storage and data center applications. The central inverter system has a rating of 4.5 MVA for solar applications and 5.2 MVA for storage and data center use cases. The units are currently in UL and IEC certification testing, which is expected to be completed by next quarter. We have already signed a conditional letter of intent with a key customer for over 100 megawatts of power conversion products and expect this business to generate revenue in the current fiscal year.

In summary, we had an excellent quarter and year, and we enter our new fiscal year with momentum. We are well positioned to achieve our FY '27 outlook supported by strong backlog, great customer partnerships and our expanded product platform.

With that, I'll turn it over to Chuck.

Thank you, Howard, and good afternoon, everyone. First, I'll walk through our financial results for the fourth quarter and fiscal 2026. For the fourth quarter, revenue was $881 million, down 3% sequentially, but above our expectations due to continued strength in North America, which included strong execution in our TrueCapture business. It's important to note, this was the first quarter with our new JV in the Middle East. As you know, we are not consolidating the JV, and as expected, this reduced our reported revenue by approximately 300 basis points.

For the full fiscal year, revenue increased 20% to approximately $3.56 billion. We finished the year well above our initial plan. This was primarily due to a very strong U.S. market and a continuing leadership position in the global solar tracker market.

Gross margins overachieved in Q4, primarily due to tariff recovery, record TrueCapture and U.S. revenue concentration, partially offset by elevated freight and logistics costs particularly related to disruptions in the Middle East.

Adjusted EBITDA for the fourth quarter was $202 million and 23% margin. This was above our expectations, driven by higher gross margins, offset by growth in investments in OpEx, primarily R&D and infrastructure. For the full year, adjusted EBITDA was $854 million, well above our initial plan and our updated plan for Q4.

Cash generation continues to be a hallmark of Nextpower. We generated $154 million of adjusted free cash flow in the quarter and $514 million for the full fiscal year, also above our plan for the year and the quarter. We ended the quarter with approximately $1.1 billion in cash and cash equivalents and no debt and we achieved an investment-grade credit rating during the year.

Now I want to discuss our plan for fiscal year '27. Given our strong bookings position, we are increasing the targets that we outlined at Capital Markets Day 6 months ago to revenue in the range of $3.8 billion to $4.1 billion and adjusted EBITDA in the range of $825 million to $900 million.

On the revenue side, we expect a geographic mix in the U.S. in the high 70s and the rest of the world in the low 20s. For fiscal '27, we expect more than 40% growth in our non-tracker business, bringing total non-tracker revenue to approximately 15% of total revenue. In addition, for Q1 we see revenue growth in the low single digits sequentially.

We expect gross margins to continue to be in the low 30s, including elevated freight and logistics costs, particularly related to disruptions in the Middle East. As a reminder, our capital allocation strategy is to first prioritize organic investments. Second, we pursue disciplined M&A that strengthens our platform and creates customer value. And third, we return capital to shareholders. During the year, we initiated share repurchase activity under our $500 million authorization, adding a complementary lever to return capital to shareholders.

As Dan mentioned, we are leaning into investment in certain new platform initiatives, including our accelerated expansion into the power conversion market. Consistent with our capital allocation strategy of balancing internal innovation with targeted M&A, we plan to invest approximately $130 million to accelerate our Power Conversion business with $50 million of incremental COGS and OpEx and up to $80 million in the asset purchase agreement. We believe this strategy will yield a very strong return on invested capital as we accelerate the ramp of this business and drive incremental revenue and gross margins in fiscal year '28.

We continue to target adjusted EBITDA margins in the low 20% range. In the near term, we expect operating expenses to be elevated as we invest in platform expansion with OpEx in the range of approximately 10.5% to 11.5% of revenue.

As we scale the business, we expect to drive operating leverage and return to our long-term target of 8% to 9%. We expect capital expenditures to be in the range of $75 million to $100 million and adjusted free cash flow in the range of $450 million to $500 million. Capital investments are targeted to growth and scale initiatives, specifically for foundations, frames, power conversion and our ERP transformation.

Overall, we believe the business is well positioned to deliver continued growth and profitability, supported by strong backlog, disciplined execution and ongoing investment in our platform. With that, we're happy to take your questions.

[Operator Instructions] And your first question comes from Brian Lee with Goldman Sachs.

Maybe first one, just all the color, Chuck, around the guidance for '27 is super helpful. Given the growth in non-tracker sales expected for '27, it kind of implies growth in tracker is about high single-digit percent year-on-year. One is that about the right ballpark we should be thinking? And then two, how should we think about this in the context of U.S. versus non-U.S. growth in trackers? Where are you expecting growth to be most robust, especially given the strong year in the U.S. in 2026? And then I had a quick follow-up.

Great. Thank you, Brian. I'll take the first part and Howard can talk about the international markets. That's right. As we outlined at Capital Markets Day, we basically said, we expect to grow with or faster than the industry in the tracker side. And this year is a great example. We started the year off looking at roughly 10% revenue growth and finish at around 20%. Here's the beginning of the year, beginning of our fiscal '27 year, and we see a really strong tracker market overall bookings and backlog are at record levels. And so we feel really good about where the tracker market is going. But we're really excited about the 40-plus percent growth in non-tracker, but here at the beginning of the year, so we want to be a bit cautious, but we're feeling very optimistic.

And then Howard, the second part, this year, we expect kind of low -- high 70% U.S. concentration and your views on international.

Brian, so the global market is really quite strong when you look at it in totality. The U.S. has outperformed, frankly, in the last year, a lot of tailwinds, very strong demand driven by of course, electricity demand in general, the high cost of energy. We've had a global disruption with fossil fuel and the conflict in the Middle East.

So we continue to see very strong pipeline and order book for the U.S. And then internationally, Europe had a record year sales. We're very bullish on Europe in other parts of the world, Australia, India, Middle East also. There's been some -- a few delays on projects, but we're also seeing quite a bit of demand in our pipeline in the Middle East.

So yes, we're very -- as we enter the year, we feel very good about the outlook for FY '27. It's bolstered by our backlog, our position in the market, our differentiated offering. And now with inverter, we've got the complete power plant platform, and we're going to be increasing our non-tracker business going forward.

Brian, I would also add that we said in the prepared remarks, we're not consolidating the Middle East. So as you look at the tracker business year-over-year, you have 3 quarters that included our Middle East business. And next year, we're not consolidating that. So while the tracker revenue growth on a pro forma basis would be quite a bit higher. Second part, Brian?

Yes, that's super helpful color. I appreciate it. Maybe for Dan. Congrats on the Zigor deal. I think you said during your prepared remarks, Dan, that it will accelerate the fiscal 2030 targets from last Capital Markets Day. Can you kind of quantify, I know you said at the time, 10% of revenue and $530 million of sales for electrical. Can you kind of quantify how much this does impact the electrical strategy first laid out at the Analyst Day last year?

Yes. Thanks, Brian. Our core business is expanding. And with this latest acquisition and launch into the inverter and power conversion business and acceleration of that, we definitely anticipate our 2030 target to come up. We're planning a Capital Markets Day later this year, and we'll provide greater granularity already on those targets at that time.

Your next question comes from the line of Christine Cho with Barclays. [Operator Instructions]

For the power conversion, when should we expect deliveries? And how should we -- and when should we expect to start seeing in bookings? And you talk about how these products are needed for optimizing solar plant yield power quality for data centers and then enabling integration with battery storage. I don't know if you think about it separately, but would you be able to sort of force rank them by size of opportunity as well?

Christine, this is Dan. I'll take this. Feel free to add if I miss anything, Howard. We expect bookings for this in the near term, Christine, and some small revenue later this fiscal year, ramping as quickly but prudently as possible as we go forward and build U.S. capacity and support customer needs. Howard?

I think you covered it, Dan. I would just add that as we noted in our remarks, the power conversion system that we acquired is currently going through UL and IEC testing is pretty much all the way through testing. And we have a conditional order for over 100 megawatts with a leading IPP and so just to -- we feel very confident in recognizing revenue this fiscal year from the Power Conversion business.

Yes. And Christine, in terms of ranking the data centers, the battery and the solar, we'll provide more color on that at the Capital Markets Day.

Okay. And then you talk about like on the solar side, how you -- everything with the module strategy. Could you do something like everything, but the battery on the storage side? How should we think about that? And what would that entail besides the converter product?

Yes. So what we can tell you, what we're doing now is, we've made a significant advancement in this power conversion area that supports battery energy storage. The organic inverter we're developing also is very well suited for batteries. So yes, to support batteries with power conversion. And that's what we're prepared to talk -- to speak about today. There's -- we -- but the growth in that sector, we see is very strong.

And your next question comes from the line of Philip Shen with ROTH Capital Partners.

I wanted to start off with our bookings. We're calculating roughly $1 billion plus of bookings for the quarter. You guys have had this really nice run rate for a while now. Do you anticipate this sustaining for the coming quarters? Or could it accelerate? And I think you guys said the geo mix was kind of roughly 80/20. I wasn't sure if that was for a backlog or for the bookings. So if you could give some color there, that would be fantastic.

Phil, this is Howard. So the answer is we anticipate growing our bookings this fiscal year. So continued growth. And also with respect to the 80/20 that was with respect to bookings. Sorry, if there's an echo, we're investigating that. So that is relative to bookings, the 79%, 21% rest of world.

Great. And then you guys have done a very good job of gaining share in recent years. A number of your large customers are even sourcing you guys 100%. That said, I think some of these guys may be working on diversifying their tracker vendors. What are your thoughts on this? How do you manage this, especially as you guys try to expand horizontally and provide more adjacent offerings.

Yes. Thanks, Phil. We focus on customers by providing amount of value by hyper-focusing on operational excellence, on-time delivery, our customer satisfaction, our Net Promoter Scores have never been higher. And we're also focused on delivering significantly lower levelized cost of energy as measured by more energy, more gigawatt hours per gigawatt delivered for our systems through a variety of engineering product features and reliability of our products performing.

Our fantastic bookings quarter last quarter, which was a new record for the company and the steady growth of backlog is quantifies that we went public 2 years and a quarter ago. At that time, our backlog was $2.1 billion. Today, it's over $5.25 billion. So our numbers speak for themselves. But we're not going to compromise on quality, reliability or safety to win incremental accounts or projects. So we're really focused on very high-quality systems that are demonstrating phenomenal performance in extreme weather conditions that are outperforming in terms of how much energy they produce and having a customer experience that delivers very high satisfaction. And we believe we earn -- we need to keep earning customer trust and projects, and our results have underscored that outcome.

Your next question comes from the line of Benjamin Kallo with Baird.

Congrats on the results. Just more on power electronics. Internally, you're developing your product, you made this acquisition. Is the acquisition more about geography or technology or expanding the breadth? And who do you see as your competitors now, because I know you guys are evolving very rapidly. That's my only question.

Ben, this is Dan. This was really around time to market and the platform that we acquired is also complementary to our organic platform. What we're really focused, we've spoken to many customers about this, and we've looked at a wide variety of inverter technologies. We've been doing this a long time. Back in the early '90s in a prior company, we introduced the first IGBT inverter in the industry that was used in the solar industry. And what customers want, they really want reliability. It's essential. It's the single -- improvement reliability is the single greatest opportunity for the solar power plants and battery plants to have higher availability, produce more energy and lower the LCOE. And we are going to relentlessly focus on delivering that.

This acquisition accelerates our time to market. It does give us a larger footprint. Initially, we're going to be focused on the United States, but the platform supports global applications. Additionally, the platform supports new projects for solar and batteries, which are typically 1,500 volts. But it's designed to be -- able to be manufactured and fulfill up to 2,000 volts.

Additionally, it's proven to be able to be used for repower applications, both at 600 volts and 1,000 volts. As power plants age, there are growing needs for repowering. So regardless of the application that we're serving, what we want to provide is the same exemplary customer experience for our dependability, reliability, customer service performance. In this area, that includes providing things like spare parts, service agreements and so forth, partnering with the industry and using our existing staff to help. And we look forward to contributing to the industry and helping our customers achieve higher performance of their fleets.

Your next question comes from the line of Dushyant Ailani with Jefferies.

Guys, can you here me?

Yes.

Maybe the first one, I wanted to -- I know that you guys said that you're not -- your delays are similar to historical delays. But maybe if you can talk about, if you're hearing anything on the tax equity front from your customers? Are they seeing any potential delays because of fee or anything to that extent? And then I have a follow-up.

Thanks for the question. So this is Howard. On the first part of your question, we are able to manage our financial profile very well because we have a portfolio of projects and customers. And by and large, they execute to plan because we work with EPCs and owners. There's a schedule. Most of the time, they're executing to a pre-agreed plan with us to deliver our product to their job sites. That's the core, makes up the bulk of our revenue each and every quarter. Then we have some projects that can push out and some that can come in, accelerate in. So on balance, because of this portfolio approach, we are able to hit our numbers and operate the company in a very stable way, in a way that enables growth as well.

Now the second part of your question had to do -- and that's basically -- that's a historical profile for the company. We're not seeing an extraordinary number of projects that are accelerating or pushing out. Maybe some increases, but it's modest, okay, on that level.

As far as tax equity goes, we pulse customers. We're not seeing this being a bottleneck for the industry at this time. And there are many reasons for this that can include safe harbor. It can include whether or not they're the 40AE or not on the tax credit front. And so -- and we're just not seeing these impacts. We've seen some rumors of impacts, but we're not seeing that for the company.

Understood. And then my follow-up is just on the backlog. Could you maybe talk about to the extent you can on the composition of how much is bundled and how much is not? Maybe just some qualitative discussion around that piece, please?

Sure. We're in the early -- first, I want to back up for a second and emphasize what Dan was talking about on power conversion. Now that we have power conversion, that's really the final piece to our entire solar power plant platform, everything about the panel. And the other thing that's amazing about it that we're very excited about is that it's a gateway to storage and the data centers now that we've got power conversion. So this is a significant event that we announced today and we're very happy about that.

We're doing it, as Dan said, to deliver customer value and amount of value, okay? And what that means is, by bundling to your question, which means, okay, the tracker is still the core. Now we have eBOS connected to its foundations, steel frames that improve module reliability and speed of install. And now power conversion. We can deliver a unified optimized engineered, fully engineered integrated system, hardware and software by one very bankable company that's investment grade. We think that's unique, differentiating, lowers cost, delivers higher performance. And we are beginning to see orders for that. Not power conversion, but we have orders for multiple things. We have multiple orders that have trackers, foundations, eBOS, robotic inspection, TrueCapture, other elements that are fully bundled to the customer for one project.

We'll be giving more color as we increase these types of sales in the future. Thanks for the question.

And your next question comes from the line of Praneeth Satish with Wells Fargo.

So this Zigor/Apex acquisition gives you an entry, as you noted, into data center into the data center market. I guess conceptually, should we view this as a one-off deal or kind of the first in the series of moves to build out a broader data center power infrastructure platform. I guess, how do you think about the opportunity set here beyond just inverters and data centers?

Sure. Thanks, Praneeth. Well, just to contextualize, many of the projects that we've supported over the last 5 years, the data center is an off-taker, okay? So it's not a new concept that we're supporting data centers with these large power plants. This does provide many new exciting vectors for us to participate in the data center area specifically.

Obviously, if solar is part of that, the supply of the data center, whether it's remote or co-located, now there's a significant additional element for the inverter to have value as part of that project. Additionally, we can now be supporting a battery.

As Howard mentioned, it's a completely new revenue area for us to support that. And then there's a lot of ways these loads are being supported. They are a traditional grid connection where there's of solar and/or battery at a remote location. There are applications where there's a main utility transformer. However, if the data center is requiring a lot of very fast ramping of power, there can be voltage collapse on that side of the data center.

And so you need to support that with local resources, and it turns out, there's a lot of talk about gas, but gas is too slow to support many of those applications. These are measured -- those things are measured in milliseconds, not seconds and minutes where gas could perform.

You can think of the difference, for example, an acceleration between an internal combustion car and an EV. And so there is the opportunity for batteries to deliver much faster response rate to support even a grid-connected system on the customer side of the main transformer. So there's many different applications, many ways to support needs that are being fulfilled. And this technology platform is quite scalable and allows us to right size and provide the right technology for our partner supporting these applications.

Got it. That's helpful. And maybe just switching gears on the Saudi JV. Can you comment on, I guess, recent booking activity and whether the geopolitical tensions, the war in the Middle East has had any impact on customer demand?

Sure. I'll start and then Dan will finish. This is Howard. So we're really happy with launching the JV. We did so in January, as you know. It's just been a few months. We're already off to a very good start there. We have leadership in place and very pleased to be working with our JV partner in the market. We brought Nextpower to the JV in over 2 gigawatts worth of orders to jump-start the JV. And so that's been a good thing. And the JV already has received good news about upcoming awards for it. There's been -- obviously, there's a conflict happening in the region. And Dan will actually talk about in his remarks, how that's creating actually more tailwinds in a way for demand for energy independence and solar power.

Yes. I'll start with last week, I was on vacation in Hawaii with my parents -- not my parents, excuse me, my family. And while normal people would be hanging out at the beach, while I was sitting there, I was thinking about, gee, we've been able to get Hawaii from the time we did early solar projects from 95% oil that was burned for power down to 65%. Okay, that's progress, but they're still burning oil. I did the math. How much is the -- so since the latest Iran war, oil price went up, how much is that costing a little Hawaii? It's about $400 million a year by my calculations that they're going to have to spend for oil for power generation, okay.

So that's going to -- that will increase the need for renewable power and renewables are mostly solar in Hawaii and some wind. Okay, what about globally? So since the war, about 20% of global supplies of liquefied natural gas have been impacted because of the Strait of Hormuz constraints. And so we've seen LNG go up 30% to 50% for Europe and Asia. It's incredible tailwind for the global economics of renewables and solar, in particular, because solar is the fastest way to install and the lowest cost in most markets.

So we really think there's a structural reset, huge long-term tailwind that has been introduced, and it doesn't look like these things are going to reset right away. I believe the largest liquefied natural gas facility in the world or certainly one of them was in Qatar, got hit by missiles from Iran and is projected to take 3 to 5 years to come back online and there's other constraints there. It's not a flip of the switch. So I think the fundamentals for solar are -- have been structurally -- there's a new structural tailwind that didn't exist before the war.

And your next question comes from the line of Chris Dendrinos with RBC Capital Markets.

Yes. I guess maybe just sticking on the topic of oil here. Can you speak to how much that might be impacting your freight costs and shipping costs here?

Certainly. Thank you, Chris. It did have a minor impact in Q4. It was not a full quarter impact. And we have baked it into our outlook. So we'll comment on the exact number, but it's relatively small in the grand scheme of things for us because of our superior diversified global supply chain. As you'll recall, Chris, we've localized manufacturing around the world. And thus, while we have an impact, it's much more muted than it would have been if we're shipping around the world from a single location. So it is an impact. It's built into our outlook and give it -- the second part, Chris?

That was kind of just the main crux of it, how that was weighing on margins this year. But I guess maybe on the second part of the question here, just the tariff piece of the equation and how you're thinking about that going through the year? And I think you might have mentioned there was, I think, a recovery during the quarter. If you could speak to the impact of that?

Yes, I won't go into it in detail because as you know, it's a very fluid situation, but we did have some recoveries in Q4. These were effectively with customers. And as you know, we treat our customers like partners and work with them on the tariff impact. And so there were some recoveries in Q4, there'll likely be more throughout this year, and -- but we won't comment on the details. Thank you.

And your next question comes from Sean Milligan with Needham & Company.

I was hoping on the power conversion side to get some clarity. So does the acquisition today increase the TAM that you outlined at the Capital Markets Day last year? And then is there a way for us to think about when you say a 100-megawatt order, like what that kind of equates to in revenue? And then just like how we would think about cents per watt basis and solar foundation and stuff, how can we convert that to -- on the power conversion side?

So on the TAM side of the equation, it doesn't change the TAM. It accelerates our ability to go get the TAM. That's for sure. And it's also one of the things that we haven't talked too much about is how it's complementary with our ongoing organic inverter development effort, which we did talk about at Capital Markets Day. Very complementary technologies that can work together and the teams can work together and amplify what each other is doing. So we're excited about that. As far as ASP, we're not talking about that at this time, but on the 100-megawatt order, it's not going to be a material impact to our financials in FY '27. Chuck, did you have anything you want to add?

No. Well said, Howard.

Okay. And then when you move past FY '27, like this product would be incremental to margins. Is there any kind of -- I know in the slide deck at the Capital Markets Day, you had sort of a directional graphic, but is there any way you can quantify maybe how margins on this product look versus the core tracker business?

Well, we think in general, long term, this will have higher margins than core tracker because there's a significant amount of embedded IP in our next-gen inverter. Now, it will take a while to ramp to that because, as you know, the early life cycle with smaller unit volumes, you don't have the economy of scale, just like in our other businesses, when they start off, they have a lower margin profile. And as you mature, you get to kind of the full margin profile. And so this acceleration will drive very small revenue this year, as Dan mentioned in the tail end of this year. It will -- we expect to generate revenue and profit next year and then the real acceleration will be kind of '28 and beyond, where we'll be accelerating what we'd already outlined at Capital Markets Day.

Your next question comes from Gordon Johnson with GLJ.

Can you hear me?

Yes.

So you've talked about hyperscaler and data center-driven demand for several quarters. Can you size for us even directionally, what percentage of your fiscal year '26 bookings or backlog is tied to projects directly serving hyperscaler load growth, whether co-located or grid connected? And what is that mix assumed to be in fiscal year '27? And then I have a follow-up.

Okay. So this is Howard. It's material to our financials because we're very close with owner-developer customers. We have visibility into their pipelines. We talk to them about their end customers, although they're very -- quite -- they can be quite secretive about specifics, which is understandable. And so it's a material part of our business. We're not disclosing the percentage or anything like that, but we see it as an increasing slice of the U.S. pie in particular.

Okay. That's helpful. And then I'm a bit old school. I care about free cash flow and your free cash flow this quarter, 20% above consensus and pretty significant growth quarter-over-quarter, ended the year with $1.1 billion in cash, no debt, $500 million buyback authorization. And given your investment-grade rating, what's the case for not being more aggressive on repurchases here? And how should we think about the relative claim of the TRA payments, which were $27 million in fiscal '26 on an annual free cash flow basis over the next several years.

Yes. Yes, in the TRA, I don't think it's built into our outlook, and I'm not going to comment on that specifically. We are very proud of our cash generation. It is truly a fortress balance sheet, and this is a really good company that has really strong EBITDA to free cash flow conversion. We significantly overperformed our own expectations in Q4. We have a bit more muted outlook for '27 given the strong performance in Q4. But I would say we're pleased with the $500 million authorization of the Board to do buybacks, and we have a plan in place, and you'll see in our statement of cash flows, there were some minor repurchases this quarter, and we'll see how the plant operates throughout the next year.

Yes, I'd like to just pile on and actually give a shout out to our CFO, Chuck Boynton, and I appreciate your question, Kevin. Because Chuck has brought and with his fantastic team in FP&A and Treasury and our controller and the other folks in finance are real discipline around and real focus on cash flow. We're old school too. And so when we think about investments. We were looking on return on invested capital. When we think about businesses we're going to acquire, we're looking -- we look at EBITDA, but we're looking more at cash flow. When we think about large opportunities with customers, we're looking at payment terms and liabilities.

And I think what you'll find is in the industry, our performance on cash flow is exemplary. And so that didn't happen by accident. So Chuck's brought that with his team. A lot of focus on that, and we look at it in every aspect of our business. And it's another way that we're trying to differentiate ourselves. And one of the results was our investment-grade rating that we achieved last year. Thank you for that question.

And your last question comes from Maheep Mandloi with Mizuho.

Sorry if I missed it, but can you clarify like what the capacity expansion in the Arizona power conversion factory could look like? And what capacity do you expect there? And how many new listings or spending would transfer for available supply over there?

Maheep, sorry, we couldn't really understand. Could you run that for us again, please?

Sure. Just first question on the power conversion manufacturing capacity, how much should we expect on an on going basis the next year? And are you waiting for any dual certifications?

Okay. Thank you. I'll speak to that. The product family that we're -- that we just acquired is in advanced stages of certification. We have passed all the tests that have been conducted at this time and anticipate those to be coming in the near term. And with respect to capacity, we want to be in a position of being able to support multiple gigawatts of demand next year. And we -- I think what you found is when we take on when Next Power takes on supply chain, we approach that very seriously. And we're going to build as fast as we prudently can, but we're not going to sacrifice reliability or quality. So that's -- the constraint is that it's not space or cash flow. It's around how fast can we prudently scale this business to deliver the reliable performance that our customers expect. Howard?

I'll just add that we -- as part of the acquisition of assets, we have a supply agreement that is currently at 1 gigawatt per year capacity. It can ramp quite easily to 3 gigawatts per year, and we are committed to U.S. manufacturing.

This concludes our time for questions. I will now turn the call back to Dan for closing remarks.

I'd like to thank folks that dialed into this call, investors. I'd really like to thank our customers, our suppliers and especially our dedicated team. The companies we've acquired have been -- it's been a fantastic year. We've accomplished everything we set out to do. In many cases, we've exceeded those targets. There's a recap on our shareholder letter that's available on the share -- on the shareholder page of our homepage. I invite you all to download it. Thank you for your questions, and we look forward to seeing you at the next earnings call in our Capital Markets Day.

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 Nextpower's Third Quarter Fiscal Year 2026 Earnings Call.

[Operator Instructions]

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 Nextpower's Third Quarter Fiscal Year 2026 Earnings Call. I'm Sarah Lee, Nextpower's Head of Investor Relations, and I'm joined by 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 in our industry that may be considered forward-looking statements, and such statements involve risks and uncertainties and 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 web page 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 web page.

And now I will turn the call over to our CEO and Founder. Dan?

Good afternoon, and thank you for joining us. Nextpower delivered another strong quarter characterized by solid operational discipline and execution increased backlog and continuing [indiscernible] Market Symposium, where we to showcase our expanding portfolio of value-enhancing 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 Nayan 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 Nextpower Arabia, we're focused on building local operations, manufacturing capability, and long-term partnerships that support the Kingdom's energy ambitions. Together with Abuneyan 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 1 of the most dynamic energy transitions in the world. Rapid growth in electricity demand driven by economic transformation, mega projects 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% 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 the solar generation infrastructure projects.

Discerning power plant owners greatly value Nextpower'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 continue 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 multiyear basis, which is consistent with the nature of the utility scale solar power industry with large-scale projects spanning multiple quarters in multiple geographies. We are increasing our outlook for the remainder of the year based on the strength and diversity of our backlog and a continued flight to quality that favors Nextpower 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, Nextpower'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 cited 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 Next Horizon Hale Pro tracker. During calendar year 2025, our systems executed 2,170 hailstones 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 booked a 552-megawatt order incorporating a technology bundle on a single project including our NX Horizon Hal Pro Tracker, EBOS 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 2 new countries. We are also excited about the formation of our new JV company NextPower 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 introduced our NX Earth Trust 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 end market demand and continued discipline across the business. For our fiscal 20,263rd 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 GAAP 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 in 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 3 years. This program reflects our confidence and 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 15. 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 3 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 billion 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 time lines 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?

[Operator Instructions] Your first question comes from the line of Philip Shen with ROTH.

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 I wanted to understand that your bookings cleared $1 billion in Q3.

And then if you can share some color on the revenue for 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?

Phil, this is Howard Wenger. Thanks for your questions. So yes, we're really pleased with the quarter with everything that we executed, the name change, the Capital Markets Day, coming -- being prepared for that and the customer day and the noncore 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 1 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, EBOs, robotic inspection and other 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.

Howard, quickly, just can you clarify? You said 1 of the stronger quarters that you've had in some time, does that mean for bookings specifically that this quarter was 1 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 $1 billion. Is that fair?

Really appreciate the question, Phil, and your persistence.

And your next question comes from the line of Praneeth Satish with Wells Fargo.

Congrats on the. 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 in 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.

Praneeth, Dan Shugar here. We were speaking specifically about several projects that are on federal lands that are now moving forward. While 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 are very safe harbored, they have a lot of visibility into the future. And it's really quite positive.

And your next question comes from Dimple Gosai of Bank of America.

Well done on a very nice quarter. This quarter you noted rice cooking and rising bundled attach. So could you give us a sense of what the tax rate is for true capture, EBOS, Artra, robotics, any sense and color there would be helpful. And then also give us a sense of just the growth gross margin uplift 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 reset, for example, the eBOS acquisition we made, which is significant occurred in May of '25. So it's was at like 8 months.

So using eBOS 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 seeing some very significant projects. The one we highlighted as an example, is a 552-megawatt project, where we have our trackers, foundations, EBOS and TrueCapture, 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, Chuck?

Certainly. Thanks, Tim. We don't break out in detail the nontrack 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, quite a bit higher and other wins are kind of around the corporate average. But I would just think of it from a modeling standpoint, it's roughly consistent with the guidance and how what we provided.

Your next question comes from Brian Lee of Goldman Sachs.

Kudos on the solid execution. The first question I had was 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 Analyst Day last November, maybe just how should we think about flow through into next year given the stronger results here?

And then a follow-up would just be on some of the accounting here with the IRA side, they're down despite higher U.S. mix. Curious, I mean that does mean ex IRA gross margins are higher here than the past couple of quarters. But is that timing related? Or is there something with respect to sharing of credits and pricing that's impacting that dynamics of U.S. sales higher, but IRA credits.

Yes. 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 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, we just provided our outlook just a couple of months ago at our Capital Markets Day. So we're not updating or changing that. But I'll just say with the strength of the business, we feel 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 Strouse of JPMorgan.

Great to see the 2.25 gig NXTRAC or Arabia order. I know we've talked about in the past kind of the longer-term targets from KSA and whatnot. But just kind of curious, just looking out over the next, whatever, 12, 18, 24 months, kind of what a reasonable expectation might be. Can we expect to see similar gigawatt-scale orders coming through from that JV? And I have a quick follow-up.

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 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, the -- so the largest market in Saudi Arabia, and UAE is also a very strong market. There -- there's a project called the Round-The-Clock project, very interesting, 5 gigawatt of solar single project with a tremendous amount of battery. It's either 19 or 29 gigawatt hours, I can't remember at the sensitive. But that enables 24/7 renewable power -- solar power to be served to the region. That's really quite an interesting project. And we're seeing but exemplifies the ambitious scale of what's happening there.

And I think it also provides a little bit of context for how cost-effective solar is because, obviously, they're -- there's a tremendous amount of oil and gas there. Solar is lowest cost way to generate power even though all those natural resources are there. And so we're excited to be a participant in the region. We were the first -- we did the first utility scale power plant in the region, the 400-megawatt Sakaka project in Saudi Arabia 7 years ago, which has performed with exemplary reliability. And there's a strong flight to quality performance there. We personally visited one of our projects that was in the field that was outperforming it was operating at about 105% of expectation in the whole system. And so the customers are really pleased with that.

So yes, we're very excited about being there. Thank you.

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 that you guys are issuing a buyback authorization, I 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?

Yes. No, it will 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 a more of a formalized program versus just opportunistic.

Your next question comes from Julian Dumulan Smith of Jefferies.

This is Bishan here for Julien. 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 with the timing. And then, Chuck, if you want to weigh in on the second part. So the JV has been launched, and we closed it a few weeks ago. It's operational. The 2.25 gigawatt project that we announced were already delivering on that. project this quarter materially. And we had an existing factory in Riyadh, that's continued to produce. We have a new factory under construction 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 Abu Nayan Holdings, fantastic organization, and we're set up in operating Chuck, second part.

Yes. So the way I think about this is, as Dan mentioned, Ivan in is a blue-chip company. It's the kind of company that a great Silicon Valley company we want to partner with. And so we're really proud to partner with them as we mentioned in the past, it's structured is 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 high-ROIC 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 will 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 [indiscernible] is going to be a great partner.

SP1 Awesome. And then just 1 quick follow-up. When you talk about the power conversion, could you just talk a little bit about how that -- how your conversations with customers are evolving there? What does it look 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've been in this business since the 1980s. And power conversion has been the opportunity for greatest operational performance of solar and batteries over that -- for that whole time, okay? And why are we launching this category? Well, it's because 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 #1 item on a pareto to improve the operating fleets around the world is to have better reliability and performance in 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 these -- this particular solution in the field at our Capital Markets Day, we're looking forward to fulfilling some initial beta projects with customers this year and then scaling the business responsibly after that.

Your next question comes from Vikram Bagri of Citi.

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 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?

Yes. 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 Day is still intact. Thank you.

And Chuck 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?

Yes. 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 a supplier. And so while it may not matter as much to you financial community, it matters a lot to our customers is really a testament to how well the company is managed and the discipline approach that we take to operating our business.

Dan, do you want to add anything?

Yes. 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 10 years ago, there were a lot of developers that were then flipping projects. Today, the -- 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're in the Middle East. I mentioned a few weeks ago, there's a huge system there, not with ex 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 or to reserve over life of the project, really be a much more important attribute as the industry has matured and go on to long-term risk-adjusted levelized cost of energy optimization.

And your next question comes from Ben Kallo of Baird.

Congrats on the results. Two questions, maybe bigger picture. Number one, with all the emphasis on bring your own power, has that showed up in your discussions or in orders? And maybe just talk to that?

And then the second question energy storage volumes are very large, said at least. Any way that you guys are thinking about addressing that market or working with that market?

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, the energy requirement for chips is just going up and up. So what's happening, what you're seeing in this country, which spills over to other countries is some of the larger hyperscalers are getting more and more involved.

You've seen some announcements directly in making sure that the power is there for their expansion and their requirements. So there's no question that, that's the bring your own power is part of the equation. There's no question that we're seeing that in our opportunity base.

And with respect to storage, I'll just start and do finish. There's this great symiotic 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% of the new electrical capacity this year. Well, from January of 2025 to November of 2025, over 80% was solar and storage. And 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 the solar power platform that extends into storage. And our power conversion system is something that can be used for in the storage category.

Dan?

Yes. Thanks, Ben. When we've heard this bring your own power, it can mean there can be 2 definitions of that, okay? Definition 1 can be install electric generating capacity at some point in the grid that has been contractually generating a certain amount of gigawatt hours that flow through the grid to an end use. Definition #2 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 of the second thing. So let's just speak to the first thing for a minute.

That's been happening for more than 5 years. A huge amount of our projects are 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 is 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 under irritable 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 Nextpower serving battery storage as well as solar are inverter platform power conditioning system, the fundamental architectures can definitely support both 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 at the Capital Markets Day and showed folks in the field.

And your next question comes from Jon Windham with UBS.

Perfect. Perfect timing to bring me on. I guess 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 the what was supposed to be EV batteries into stationary storage Silanis 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 a wash 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. 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. Kind of like base Qatar drugs go together. And so what they do is they're quite complementary.

And the other thing has just been amazing to see over the last 5 years, solar -- or excuse me, storage 5 years ago was predominantly 1 out storage. Then you saw a 2-hour store. Now we're seeing 4-hour storage. We have some customers with projects that are 6 or 8 hours storage. I mentioned the project in the United Arab Emirates that's 24-hour storage. I mean it's my mind botteling. 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 a commensurate reduction in the cost, that allows for hours and allows solar to be more and more ubiquitous as the deployments continue. So we're very excited about the manufacturing build-out and we think that will be a very good thing for the industry.

And your next question comes from Dylan Messano of Wolf.

I think earlier in the call, you mentioned there was a little bit of pull forward in the quarter. 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?

Yes. So like we mentioned before, we're not updating or changing our fiscal '27 outlook from Capital Markets Day. It was just a couple of months ago. And as it relates to Q3, it was an incredibly strong quarter. When our customers would like us to accelerate schedules, we can. It's overall, a very, very strong quarter. We raised the year in Q3 was incredibly strong on the heels of customers wanting more product earlier.

Howard, do you want to add anything else? No. You -- well, I'll just say that we're in very close contact with our customers. Some want acceleration somewhat 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 1 quarter to the next.

But the year looks really good. The next quarter. We've talked about Q4, you got that. Q1 FY '27 looks very strong and up and to the right. So Yes, 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. We really appreciate everyone dialing in. Thank you for those that participated in our 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.

Good morning, everyone, and welcome. Thank you all for joining us today. I'm Sarah Lee, Head of Investor Relations. So great to see you. Before we get started, let's just go through a couple of housekeeping items. [Operator Instructions] And also another reminder, no photos today.

We'll be making forward-looking statements today. These statements are based on our current beliefs and expectations, and we undertake no obligation to update them. We'll also be using GAAP and non-GAAP financial measures. Reconciliations can be found on our Investor Relations web page, where you'll also find a link to today's replay as well as presentation materials. Now let's go through the agenda.

After Dan's opening remarks, our engineering and product leaders will come to the stage and walk you through our technology platform. For those of us here in person, we'll then look at product demonstrations. And the online community will then rejoin us for a customer panel, followed by a fireside chat featuring utilities perspective. Then Chuck will walk us through financials and outlook, and our management team will answer your questions. And the program concludes there for the online participants.

For those of us here, we'll have lunch, then we'll step outside for a tour of our R&D center. We really hope you enjoy the program today. And with that, please help me welcome to the stage, our CEO and Founder, Dan Shugar.

Good morning. We couldn't be more excited to welcome you all here today. It's a great day for our industry, a great day for Nextracker. I'd like to revisit where we were -- we're approaching 3 years since our IPO. And I'd like to revisit where we were, where we are and where we're going. We've really focused on delivering since day 1, delivering for our customers, delivering for our supply partners, delivering for our team and delivering for our investors.

Since our IPO, we've generated $7.7 billion of revenue, a 21% annually compounded growth, $1.3 billion of cash flow. And most importantly, we've delivered on meeting or exceeding expectations. When we finished -- when we did the IPO, we were concluding a year where we delivered about $1.9 billion of revenue. We've been able to continually improve our revenue and our earnings. And how do we do that? Well, we did that by really focusing on innovation and innovation that delivers tangible value for our customers, innovations that can be quantified and monetized through their projects with their IEs, independent engineers and their banks and through reliable and consistent performance.

So that's really what we're all about at our core. And then we have a hyper focus on customer, ensuring that their needs are met through the process and relentless focus on execution by building a high-quality team that focus on culture and meeting or exceeding expectations.

We're very proud of what we've achieved in the tracker space. We've had #1 share for 10 consecutive years globally and in the United States. We've delivered over 150 gigawatts. And by sense of scale, that's 3x the peak load of the state of California, more than the peak load of Texas and more than the peak load of Canada. Okay. What's next? Well, today, we're celebrating our rebrand to Nextpower.

And we've been on a journey to expand our platform for the last few years, starting with foundations that support trackers using technology that we've developed organically and also acquired through integrating electrical balance system and other things I'll cover shortly. These -- why do we do these things? We did these things because we speak to our customers and try to understand what are your pain points and what's impeding your project?

What are opportunities to deliver more value to you? And then by listening to need, customer market need, innovating and understanding the full value, we're able to create or acquire technology that delivers those values and then relentlessly execute to bring that to market. So Nextpower really celebrates the next phase of the company growth, where we've transitioned from, a few years ago, we were a pure-play tracker company.

Now we're doing most of a clean energy power plant that uses solar. And so we'll be unpacking that this morning. Let's take in a short video.

[Presentation]

Wonderful. So what's driving our future? We have three very strong tailwinds happening. One is demand. We're in an electricity super cycle. We'll look at the data, but we've seen unprecedented load growth in over half a century, needing electricity to power our communities, our businesses, our AI and electrification of everything that's happening. Two, our customers have expressed to us, they want us to do more.

We have extraordinarily high-customer satisfaction with the products we deliver. And customers are saying, please, can you do a larger scope. And so they want an integrated solutions to their clean power needs, not to buy a set of parts and then have those assembled in a field. And three, perhaps most importantly is economics, incredible that solar is the lowest cost way to generate power in most of the world, in almost every grid on most of the continents.

And so this economics, combined with speed to market and ability to build these plants very quickly and have low risk on a forward look are drivers why solar is continuing to accelerate. Taking stock last year, on a terawatt hour basis, the highest standard, solar delivered more than twice as much new power than any other form of generating power. Today, we're in this electricity super cycle. We're approaching 1 terawatt a year of new power generation being installed.

And if you look at solar's role in that, we're dominating because of economics, speed, lower risk and the other factors we mentioned. Let's analyze the economic story around solar. If you look at the levelized cost of energy on an unsubsidized basis, solar is about 1/3 lower cost than gas, about half the cost of coal and 1/3 the cost of new nuclear.

And while we're winning today, we're going to continue breaking away from the power generation pack as you look forward because there's an economy of mass production, innovation that's going to continue driving down the cost of solar as we look forward. And we can look at that everywhere from the solar cell to the panel, to the tracker electronics, all these systems.

And Nextracker is in the forefront of many of these elements. So we expect over the next year, the cost of solar on a levelized cost of energy basis to drop over 50%. So we're very confident with where this is going. And time lines matter. We're all seeing these headlines. We need power, need power in many markets around the world.

From the time a plant is fully permitted, solar can -- a 1 gigawatt solar plant can be installed in 1 year and the cost is about $1 billion. A gas plant, best case 3 to 4 years and cost us $2 billion. A nuclear plant, we're seeing 10-plus years, $15 billion. So we're winning on cost no matter how you slice it.

Okay. Let's cover our comprehensive energy technology platform. This is the Nextpower platform. It's an integrated cohesive offering for our customers of products and services tied together with software, ready to help customers design, build and operate the most advanced power plants in the world. And so we started with the tracker. And we're not going to stop innovating on tracker.

That's our core. It's sort of the skeletal system of the clean energy plant. Radiating outward with the structural, the foundation, we have technology to be able to build in virtually any geotechnical condition and reduce risk to our customers. Electrical, to be able to deliver high reliability systems to deliver more energy over the life of the plant, and software and services, we're going to hear from our expert panel about how we're integrating information that goes from design, fulfillment, construction, commissioning and long-term operation in an integrated software platform.

Okay, the connected plant. So what does this really mean? Well, since day 1, when we -- since we've been shipping in 2013, 2014, our initial systems, we have embedded sensors on every tracker that we're shipping. We measure key parameters that are important to the operation of the plant. We're collecting today over 500 million data points a day. And that we've been able to develop technology to use that information to deliver exemplary performance in more energy, more reliability, lower operations maintenance and more durability for extreme weather.

That's what this tech is all about. The tracker remains at the core. We've been #1 for 10 years. We're relentlessly focused on the tracker. That's not going to change. When we look at the acquisitions we've done, we also look at the talent at these companies, and we've brought in extraordinary talent in these technologies, and you're going to hear from some of these leaders today. And we're very excited about the continued growth of our team to be able to offer these products and services.

How do we really think about bringing technology in that has value? Well, there's two components. One is internal innovation. Nextracker has revolutionized the solar power plant, starting with our NX Horizon system. That's, as I mentioned, over 150 gigawatts has been delivered. So internal innovation has an extraordinarily high return. We've tripled our investment in R&D from about $30 million a year to $100 million a year today.

And that's resulted in nine new major product lines and enhancements that we've introduced to the market. What you see with Nextracker is we introduce products, they're sold and then they deliver because they're delivering value for customers. Additionally, we have an acquisition strategy to bring new technology in that brings value to customers and accelerates our time to market.

We've completed over eight acquisitions over the last 18 months. We're going to hear about what those are. And they are complementary technologies and products that really expand our platform and round out our platform and rapidly integrate and benefit from our scale to market. Today, we couldn't be more excited than to be introducing the NX Power conversion product family. These are solutions for solar and storage, inverters, power conditioning units that take DC electricity, convert them to AC electricity.

So power conversion has long been the Achilles heel of the industry. If you ask customers today, what's your largest pain point on these systems, on operating your systems, commissioning your systems, it always comes down to the inverter. For my entire career in solar, which started in 1988, that's been true. Now I've been very fascinated by inverters since early in my career. So in the late '80s, early 1990s, I was working at PG&E.

I'm an electrical engineer. We built a lab to basically help accelerate new inverter technology into the market. We tested the first IGBT inverters. We, both bipolar inverters and normal -- and positively grounded inverters, negatively ground inverters and introduced a whole new class. When I left PG&E in 1994, we fielded the very first IGBT inverter use in solar. And we've really focused on how these technologies can be more efficient, lower cost and higher reliability.

And so today, customers want products that are more efficient, reliable, easier to service. And so we've integrated the customer needs with our legacy experience and created a -- essentially requirements document for our product. I'm very proud of our team for having incubated a next-generation class of inverters and power conditioning units here at Nextracker. Our design features modularity, ultra-high efficiency, innovative thermal management, high reliability, field swappability and most importantly, made in the U.S.A. cybersecurity in our product family.

Today, operating in our labs in the back of this building and in the field, we have alpha units. And we're going to go to market with initial pilot projects with customers. Our plan is next year. Okay. We spoke about software a little bit. What we're looking at in this image is Nextracker's remote powering center in Nashville, Tennessee, where we aggregate information and use that to help customers achieve exemplary performance of their fleets.

So our goal is to really make the plants more intelligent, predictive and reliable in a unified software platform that optimizes design, deployment, operation of this fleet. And so we're looking at the trackers, the structural, electrical and robotics where we can see certain components failing, we can command mobile robots to go in the field, and we're going to hear more about that today and leverage really this robotic and AI to deliver exemplary performance of these plants.

Our competitive advantage really comes to -- starts with our culture and our team, relentless focus on customers, our incredible base of customers, our fortress balance sheet that our CFO is going to be speaking about, innovation on our -- part of our DNA, scale and execution. And so we're very focused on everything we touch, everyone we interact with, we want to meet or exceed expectations.

We're poised for growth. This year, we've projected a midpoint of $3.4 billion. Now what we're -- today, we're articulating a vision to grow additional products and services beyond the tracker at a much faster growth rate as we look forward. And we're sharing a target for fiscal 2030 at the midpoint of $5.2 billion. We're going to see sustained growth of our Tracker business.

We've set our growth to the midpoint of industry projections. If the industry goes faster, we'll grow faster in our core business. Very excitingly, we expect our additional products and services to grow much faster and by 2030 to comprise 1/3 of our total revenue. And so we're very optimistic. We're going to hear from customers today about how solid the queue is, the projects, the pipeline, and we're very confident about solar's ability to continue to lead in new power generation, both in the United States and the other 44 countries that Nextracker is serving around the world.

Today, we're #1 on four continents. What's next? Well, we're going to expand our product family, our offering. We have a new name, but our vision and mission remains the same. We're really -- we envision a world powered by clean energy. And our mission is to remain the most trusted partner delivering intelligent, reliable and productive power technology. So we really appreciate you being here or dialing into our presentation today and continue to work together as we advance clean power to serve customers.

And with that, I'd like to introduce Howard Wenger, a good friend, President of Nextracker, to join us.

Great. Thank you, Dan. We are really excited about this next chapter for the company. I mean Nextracker and Nextpower, it's the same company, but a new label. It just reflects where we're headed, as Dan mentioned. We're going from a single unified platform trackers to a much larger scope.

And we're going to talk a little bit more in this section about the tech and the drive to serve our customers. I've been working with Dan for over 35 years. We met each other at PG&E. We're both engineers. It reflects really the DNA of the company. We're a tech company. We're an engineering-led company. And the reason why we focus on innovation so much is because it unlocks so much value for customers and to drive the cost of solar energy down.

We've always had -- we've been working in solar power this whole time, decades. So we've seen the whole trajectory. We've done every element in our careers in the solar power value chain. We've made solar cells, panels, inverters, trackers. We're the first guys to say, "Hey, one-axis, single-axis tracker north-south, that's the best way to go with backtracking back over 30 years ago."

We have a formidable team in this company, formidable, 1,700 employees, 600 engineers, dozens of PhDs grinding each and every day to drive more yield, lower cost, add value for customers, execute for our shareholders, that's what we're about. We're about driving the cost of solar down, so it can become one of the dominant sources of energy worldwide.

Our whole lives have been dedicated to that. And this chapter of Nextpower is really all about that, delivering a unified platform. We've talked with customers so much about this transition. It's not something that happened overnight. We've been working on this transition. We've had this as part of our strategy for quite some time. And it really comes down to our customers, as Dan noted, saying, please do more. Please, please do more.

We invited -- we had a strategy offsite for the executive team. We invited some customers there. And I'll never forget one of them, CEO of a Tier 1 IPP owner developer. At the end of his talk, he turned and we asked him a question, is there some -- any kind of message you want to give us? And he just said, please do more. Why? Why? Because we're the company -- there's a reason why we're #1 for the last 10 years in tracker.

We have the best tech, best execution. We deliver for our customers on time, in the sequence that they want, the product. We're proven to be a trusted partner, and we have a 2-way partnership with our customers. In utility scale power, it's all about relationship and partnership, and it's 2-way. It's a 2-way trust. We've developed that bond with the top EPCs and top owner developers around the world. And they -- and we asked for their guidance. Please do more. They want ROI. This is the common theme at the end of the day that we all want. We all want maximum ROI. Shareholders want it. EPCs want it. Owners want it. We want it.

And so -- and they want a pain-free, headache-free experience. So we're in a unique position with the strongest balance sheet in our sector to really keep driving innovation, increase the speed of install, lower cost through the whole life cycle and deliver from day 1 through day 10,000, 30 years later on the energy promise and the production of these systems.

That's the core of who we are as a company. That's what all of our employees and team work day in and day out. So serving customers and driving tech, innovation, cost, energy. This is what customers see today. It's a fragmented solution set. It's not optimized. There's a lot of time wasted. There's a lot of frictional heating.

I mean there's a lot -- there are a number of tracker companies, there are a number of foundation companies, inverter companies, eBOS companies, all with different warranties and software and controls. We've been thinking about a unified platform for some time. This is a simple drawing, but it's actually a lot there. Every component is interconnected online. We're getting millions of data points every day.

We can optimize the performance of the system. There's different foundations here, tracker, eBOS, the whole interconnected plant, really everything but the panel. We even purchased and had our own development to develop an advanced module frame because that connects with the tracker, so we can optimize that. So everything that touches the tracker, the entire platform, we can now -- and we are poised to deliver that. It's not just a drawing, it's real.

We have over 20 products and services across these four areas that we've organized to make it simple for you and a good way to communicate what we're doing. So we have our trackers. Dan mentioned, yes, we're not going away from that. We spend $100 million a year in R&D. The biggest slice of that pie is tracker innovation. We are not straying from that. We're going to keep innovating and keep making it better and continue our run as a global leader in trackers.

But then we have software and services. We have foundations, module frames, electrical eBOS, and we'll be introducing the power conversion system next summer on customer sites. This is delivering the connected plant. We call it the power of one, one company, one warranty, one place to go for our customers. Everything unified, optimized, engineered to deliver the system and the performance for the long term. Let's have a look at this video.

[Presentation]

Okay, I still get goosebumps, sorry. That's amazing. Okay. That really does a great job in communicating what we're doing. We just want to emphasize that there are savings and synergies to unlock across the whole life cycle from design, deployment, operational through these four product line areas or product family areas.

And for example, I'm highlighting in the deployment phase for structural and Jake Morin, our Chief Product Officer, will talk more about this. We bought a couple of specialty foundation companies. And now that we have foundations in the tracker, we're able to redesign the foundation and the tracker interface to eliminate, for example, here, 1 million components in a typical 500-megawatt plant. That's just one -- not only does it reduce the number of components, which is cost reduction, it's way easier to install now.

So that's the power of bringing all of these pieces together under one platform, just an illustration. We talk a lot about levelized cost of energy and total cost, customer cost of energy in our industry. And if you look for a typical U.S. utility scale PV system as an example. At the IPO, we -- and thank you for investing if you did at the IPO, we communicated that we have better tech that lowers the LCOE by 7%.

Well, now with this platform, we're estimating an additional 8% reduction in the cost of energy. That benefits our owners and our EPC partners and us. Those are additives. So 7% plus 8% reduction is a 15% net LCOE benefit. Very powerful. This platform also opens up the wallet share opportunity for us or the opportunity to share -- to deliver more for our customers financially and also be a bigger part of their projects. On the left, the historical Nextracker for the most part, has been trackers, 9% of the total capital cost stack for an owner and for an EPC.

Well, now with the addition of additional software and services, including robots and robotic inspection, which we'll talk about, electrical, structural and trackers, you add that all together, it triples the opportunity for us. That's a triple that is very powerful for our next stage of growth. Some might call that a home run. Okay. I just made that up. That's pun.

Okay. So -- but the important thing, really, the important thing is we have a track record for scaling our innovation globally. We have an amazing footprint over 45 countries where we have operating systems, offices around the world, 90 manufacturing facilities serving the world. Dan mentioned #1 share, four continents. We're delivering more than 1 gigawatt per week some weeks.

That's a natural gas-fired power plant or nuclear power plant every week. We have that capability. So we're at scale with trackers. We're going to get at scale for everything else that we're doing, the additional services, and we're well on our way. As we noted in the last earnings call, we had a record quarter for eBOS bookings, a record quarter for foundation bookings. Last quarter, the eBOS Bentek, the company that we bought, they were in business for 40 years.

That quarter was the strongest quarter of bookings they ever had. It was the first full quarter of operation under Nextracker/Nextpower. So we're already on our way. And Dan showed how we're going to grow from $3.4 billion to $5.2 billion as a target. And this breaks it out on a relative basis, approximately where that's going to come from between the different product families.

Okay. With that, we're going to transition to our technical panel, and I'd like for them to come join me on the stage. We've got three great speakers for you. First, we're going to hear from Jake Morin. He's our Chief Product Officer. He's going to be talking about trackers, foundations and frames, so that's structural product family area. And just to give you a little more information, this is new information.

For the last 12 months, we've delivered in this part of this business, the structural part. Again, that would be trackers, foundations and advanced frames. In frames, we have no sales as part of this. $3 billion in total revenue as of Q2 for this segment on a trailing 12-month basis. And we project approximately $3.6 billion in 2030 or 68%. And again, this is the flagship and core of our business. So with that, I'll hand it over to Jake.

Thank you, Howard. I'll take that clicker from you. Thank you. Good morning, everyone. Well, Howard, do you want to address the foundations and frames?

Sure, sure. Okay. Yes, that was tracker. That was tracker. Sorry. Can you go back one slide? So that was for trackers only. Sorry, I misspoke. And now for foundations and frames, which is really -- this is for foundations, $284 million trailing 12-month revenue. We project $870 million for this part of the structural pie or 17% of total Nextracker revenue in FY '30. I hope that's clear. And we will have Q&A later. Okay. Jake, thank you.

All right. Thank you. Hello, everyone. Good morning. I'm Jake Morin, our Chief Product Officer here at Nextracker. And thank you all for coming here today. I know it's a long journey for some of you. I grew up in Phoenix, Arizona. And one of the things Phoenix teaches you is to respect the sun. You don't walk outside in the summer to go get the mail without your shoes on, unless you want your feet burned and everything.

But one of the exciting things for me at Nextracker over the last 2 decades designing solar trackers is we're harnessing the power of the sun. It's more than respect. It's about using the trackers for shade for crops. It's about developing advanced software and control algorithms that generate more energy, right? And so that's -- it's just been really exciting to be at Nextracker for the last decade, helping build that here.

We're going to talk about this connected power plant. The sections for me that I'm going to speak about are the ones highlighted in orange here. We have NX Horizon, the backbone of the solar power plant, maximizing energy capture. We have NX Anchor and NX Earth Truss. Those are faster, more predictable to install foundation solutions for our customers.

Getting out of the soil is really difficult. We help them do that in a consistent way. And we have our advanced and patented steel module frames. They're stronger, more reliable, U.S. manufactured. Really, what makes all of this amazing though is that we now have the opportunity, and we've begun this work to design them as one holistic system that works together and drives value to our customers.

A little history on single-axis solar tracking. As Howard and Dan noted, back in the '90s, they pioneered the commercialization of single-axis solar trackers. Now these were mechanically linked systems. They had an axle tying 40 or more trackers together with a single controller. The rows all move together as one.

And this was really critical to commercializing utility-scale solar because the cost of solar panels was so high that you needed to squeak out as much juice as you could. And Dan and Howard did that. Howard actually wrote the very first backtracking algorithm or simulation to prove it was good.

And in the 2010s, Nextracker came on the scene, and our CTO, Alex Au, reinvented the single-axis solar tracker with an independently controlled self-powered single-axis tracker. Now instead of all 40 trackers moving at once, they could all move individually. You had open row access, so you could do maintenance of the plant with more efficiently.

And you could implement control algorithms like TrueCapture to drive even more energy gain into the power plant. So it's really a game changer. But our next phase is about more than the tracker. It's about integrating these things together so that we're not selling a tracker, we're selling a connected power plant. That's where we're going for the next phase here. And our new network as we go to build that power plant is a big advantage.

As Dan referenced, we have 3.75 million smart interconnected intelligent single-axis solar trackers spread across the globe, 3.75 million. We have 75,000 weather stations. Those things are measuring wind speed, wind direction, the height of floods as they go across the floodplains, off the mountains on a rainy season. They're measuring irradiance. How much is the sun shining that day? Right?

We have an incredible network spread across the globe of 1,500 sites. And what that does is it helps us improve the reliability of our systems. It helps us flag things early, let our customers know this needs attention. You want to generate more energy, we're here to help you, right? Most importantly, we have a digital backbone. It's ready. We have the largest distributed network of power plants that we can come in and add new products onto.

We have the largest footprint on the power plant. We have the distributed network. You want to connect a sensor out on a string. Easiest way to do it is through Nextracker's integrated network, right? Let's talk about NX Horizon. This is the benchmark. This is the state-of-the-art in single-axis solar tracking. This is the product that's the envy of our competitors. It has lower LCOE.

With our TrueCapture control algorithms, we gain up to 4% increased energy gain. We have more tracking range, 60 degrees plus or minus on our standard product, but 75 degrees plus or minus on our Hail Pro product, which, by the way, reduces our risk. We have the best extreme weather risk profile in the industry as well. We have patented control algorithms for stowing for wind that make it more safe and generate more energy through dynamic and stage stow performance.

And it's bankable. DNV GL, UL, major insurers are in talking to us about identifying how we are delivering lower risk on Nextracker projects, and that's showing up for our customers in terms of value, right? But the next phase for Horizon is about integrating it with our foundations, right? When we went out and acquired NX Earth Truss, what we had was an A frame, yes, and sitting on top of it was that thing on the bottom, a bunch of parts and pieces.

We brought them in. We knew exactly what to do as part of our plan. We're going to design this not as one, two products, but one designed to work together. And what does that deliver? Well, first, 20% faster install for our customers. That's huge in the foundation phase, getting out of the ground, really hard, and we're doing it faster. And oh, by the way, 1 million fewer parts on a 500-megawatt plant. That's a big deal.

This is a substantial savings for our customers, right? On top of that, it's better reliability, and it's smoother to execute. It's just better all the way around. And this is what we do through innovation at Nextracker -- at Nextpower, right? We were able to view this plant holistically and integrate it. We've also expanded where these products can go. If you look at NX Horizon, we released XTR. That's about following terrain, enabling more site access; Hail Pro, that's about going into areas where hail is too risky and reducing that risk.

And we're doing the same thing on the foundation solutions side. When we started with NX Earth Truss, it was about rocky hard soils. We're driving traditional pile systems, was just too hard. It's just too hard, too expensive. And the same thing with NX Anchor. We were targeting frost heave, very soft soils, very expansive clays in Texas. But now we have products that fit the entire suite of soils out in the world, where we can address any soil type.

And our customers can come to us and get one consistent solution that's faster to install, fewer components to install that works on every single soil, right? And this is the power of integration. This is what we can do. But our foundation systems aren't just about putting steel on the ground, they're really about doing it smartly and intelligently, right? We have a whole team dedicated to developing new novel, innovative, patented ways to install foundations.

Our NX Truss Driver, shown here on your left, is a GPS-guided semi-automatic way to install in hardened rocky soils. The machine tells you where to go. It tells you when you are there. You push a single button and it drills into rock and sets the pile all in one smooth continuous motion, really innovative stuff. It sets the top of the pile exactly where it needs to be, so you don't have to adjust it. The tracker just goes on, saving our customers tons and tons of time in the field.

And our NX Anchor driver sets 2 piles at once, so that you can reduce your install time by up to 40%, right? These are real innovative patented things that are driving value to our customers in the foundation installation phase and are really only possible by designing them in conjunction with the tracker. We're taking that up to the next level. We have the ground covered. We have the tracker covered. We're moving up to the steel module.

And we've developed internally and acquired through Origami an advanced patented steel module frame. Now there's a problem with solar panels in the industry. They're getting bigger. They have cost pressure. The frames are getting smaller, the glass is getting thinner. Meanwhile, we're going into more difficult sites with higher wind speeds, right? How do you address this? With innovation, right? So we have a steel module frame that delivers 2.1x the mechanical strength of an equivalent aluminum frame.

It's faster to install, right? And it's U.S. made, free from tariffs, made with U.S. local steel, right. It's an amazing product. And we have lots of space to make this even better, too. So when you tie all those together, what you end up with is not the one product of NX Horizon, but this combined structural base for the solar power plant forming a backbone. We've expanded into all different types of markets, adding new values to our customers with XTR, low-carbon products, Hail Pro. But really, when I look forward, I'm excited about three things.

One is continuing to bring the power of automation to our offerings. And we can reduce that total install time and speed deployments. Yes, we're the fastest to deploy power today, as Dan said. And yes, we can do it even faster, and we will. Two, expanding the market for our trackers. Dual land use like agrivoltaics, is going to be really important for the future and enabling that we can go in more and more places with increased terrain following.

But really, the third one has me most excited is actually about connecting everything across Nextracker's product line into that connected power plant. It's about having robotics communicate with our tracker network to deliver real intelligence, actionable intelligence to our customers.

It's about seamlessly integrating the eBOS offering with our tracker backbone. So it's the fastest to install eBOS system, right? And it's about providing the necessary data up into the cloud, so Jyoti can tie it all together as she'll talk about. So Nextracker is really poised to deliver on this vision. And with Howard, I pass it back to you.

Great. Thanks, Jake. Nice. Okay. Some applause. Excellent. So thank you so much, Jake. So now we're going to talk about eBOS and power conversion. Right now, on a trailing 12-month basis, this is really the Bentek acquisition, $59 million as of Q2 FY '26. We're projecting a 10x growth in this sector. That's combining the power conversion family that Dan discussed with eBOS in 2030. So really a tremendous opportunity. And we have Ryan Schofield, who's our Vice President of Electrical, to walk you through this. Ryan?

Thank you, Howard, and good morning, everybody. As Howard mentioned, Ryan Schofield, Vice President of Electrical here at Nextpower. While I'm relatively new to Nextpower, this marks the 15th year in my journey in the eBOS industry. When I first started, combiner boxes had just graduated to 1,000 volt. Overmolded wire harnessing only existed in the automotive industry. UL standards were in their very early stages.

And I'm not honestly sure the acronym eBOS existed. So what is eBOS? That's a great question. It's the electron highway. It's how you move power from the module to the inverter where DC current is then switched into AC current. The Nextpower products I oversee are a critical conduit from the module to the grid. And how do we do that? It seems pretty simple. At a high level, the majority of utility scale projects are broken into two main product categories.

The first being trunk bus systems and the second are combiner box systems. They both accomplish the same goal. Again, moving electrons from the module to the inverter to be transitioned. But what's different is that all of our customers have a different approach to things. At Nextpower, we believe in having -- taking an agnostic approach to that. Not every project is built the same way and not every condition is the same. It's our job to provide options to our suppliers, to our customers to build their project in the most effective way.

It's also important to note that eBOS is installed in the later stages of a project. What that means is it's the most critical to the project. It's what actually produces power on your project. I'm a little biased toward eBOS, and I always have been. But again, it's the power, it's how you're producing, and it's what all these agreements are written off of. It's how you produce power and how much and how effectively.

So while this seems relatively simple, it's not always that easy. On a typical utility scale project, 1 megawatt of power can have up to 500 different connection points. That means on a 500-megawatt plant, there's over 0.25 million connections carrying DC current over thousands of acres of the project. To go one step deeper, millions of feet of cable need to be cut into tens of thousands of segmented cuts within inches of accuracy, then you need to strip that cable within millimeters of accuracy and install components within a newton meter of force, the same pressure it takes to open up your bedroom door by just pushing on it.

That's rather complicated. And we have a lot of field installers who are taking safety into mind and speed of install. That's why a product like PowerMerge was so exciting for us. It took the best of both worlds. It took traditional IPC technology and offered field flexibility to installers to install it on the DC trunk line while also taking a factory installed approach as far as overmolding and pre-installing tap wires in the factory.

It gave you a chance to test the product before you shipped it. It gave you a single compression force to install on the DC trunk line, and it gave that flexibility. So why do we do it different at Nextpower? Well, as Howard mentioned earlier, the tracker is the backbone of a solar project. It's the site design basis for almost every project. It's what you first lay out. It tells you how many 1-string rows, 2-string rows, 3- and 4-string rows you have.

What does that mean to an eBOS supplier? It starts telling you how much cable you're going to need on a project. It tells you your module type. It tells you your fuse sizing, and it allows you to optimize harnessing solutions for better material planning and smoother execution of the overall project. We can even go a level deeper on that and talk about foundations.

Foundations, as you just heard, there are all different types of options, screw pile and different ways to install it based on soil conditions. It might sound odd, but what it tells an eBOS supplier, is that going to be an above-ground DC collection or below-grade DC collection. Again, same thing, helps our EPC partners install faster, reduce labor and save time. That's critical to every project.

Again, going back to the fact that eBOS is installed at the late stage of the project. You have to get it right the first time. That starts moving us into what, power conversion products, which is where it really gets interesting. This is what closes the loop from DC collection to producing power and putting it on the grid.

As Howard and Dan had both mentioned earlier, this has always been a pain point for customers. The inverter is the heartbeat of a solar project. It's what makes everything go and again, is electrical and what produces the actual power. We spent tens of millions of dollars on R&D with the brightest minds around the globe developing this product. It's not quite ready for commercialization yet, but when it is, we are going to give the industry a modular, highly efficient, innovatively thermal and reliable unit.

Field swappable is probably one of the most interesting pieces. It allows O&M capabilities and reduces downtime for our partners. In the event that there's an issue, you can swap it, you can plug it and you can get back up and running quickly. Unfortunately, this has been an area that the industry has kind of forgotten about in the past. We've taken it for granted. Now we're going to go back and address it and do it differently here at Nextpower.

So what's next for us? We're going to continue to innovate and build off of our eBOS platform, starting with things like 2,000 volt. I was part of the transition between 1,000 volt and 1,500 volt. And when it comes, it's going to happen quick, and we need to be prepared for it. We have a great groundwork, then we're going to continue to build off of that and accelerate it and drive the industry.

Second thing we're going to do is we're going to continue to execute on our company core value -- core company values. First being innovation. We're going to continue to innovate our products, give our customers what they want and do it differently and think differently. We're then going to execute on those. Take all these ideas, put everything together, listen to our customers and make it happen.

And finally, we're going to do it with the best team in the world. So before I sign off, I do want to tell you three reasons why I'm excited to be part of Nextpower. Main being, we have a chance to do this at a global scale. Electronics is something that, again, is new to Nextpower. We're going to take it a notch up.

We're going to do it across the globe. We're going to do it with software. We're going to do it with trackers, and we're going to use all of this to integrate it to be able to solve problems for our customers and do it right from the first time. Second to that is, again, the global scale, but more so is the innovation.

So with that, Howard, I'm going to turn it back to you.

Great. Thank you. Thanks, Ryan. Okay. Last up, we're going to be talking about software and services. This includes robotic inspection and our sensory Vantage product. Currently, $81 million trailing 12-month total revenue. We're targeting $250 million 2030 or about 5%. Jyoti is going to bring this to life. Jyoti Jain is our Head of Product Development for Software for the company. Jyoti?

Thank you, Howard. Hi, everybody. My name is Jyoti Jain, and I'm responsible for software products here at Nextpower. And I'm going to start with a small personal story today. Two years back, I reached out to Howard here, asking him for a reference for a position at another company. And he asked me, would you like to explore opportunities at Nextracker instead?

He didn't know that, but I was a bit apprehensive about that. Why? You see I'm a software professional. I have built software applications for companies that build networking products, smart grid, EV charging, solar, but never for a company that was building mechanical and structural products. I was worried about my potential impact here. I could not have been more wrong.

You see, don't get me wrong, software has always added value for the solar industry, but marginal value. But now with access to new technologies, I believe that software can add transformational value to the solar industry. There has never been a better time to be a software professional in solar industry. So what are we talking about here? We're talking about technologies like cloud infrastructure.

We're talking about technologies like robotics, like drones, like mobile apps. These are all the technologies that make the power plant a connected power plant. But how does it matter? Why should you care? Are these just because they -- are we doing these just because they sound cool? No. We're talking about control systems like TrueCapture.

This is a technology that uses sophisticated intelligence to harness more energy from the sun, and that's dollars for our customers. We're talking about applications like NX Navigator. That's an application that uses smart intelligence and automatically puts a plant into safety mode when there is a hail event approaching and saves the plant from a potential $1 million damage, and that's value for our customers.

We're talking about applications, mobile app like NX Pulse that after we launched that, we reduced the time and cost of commissioning by over 50%, and that's value for our customers. We're talking about value-added robotic systems for cleaning, for inspection. You see all of these are things that help realize the value invested in these power plants. So how are we executing on this? Well, we have already laid out the groundwork.

As Jake mentioned, we are getting data from every single tracker row. That's very granular data on a utility scale power plant. And now we are utilizing this data. We are getting 500 million data records every day and growing. Now the story about this data is impressive, but it's not complete without talking about how are we utilizing this data. What does it do? You see we in the software world in the last decade got really good at collecting a lot of data, granular data, accurate data.

We got good at storing it. And then what do we do? We turn it over for analysis. We turn it into charts and graphs and dashboards, but somebody has to look at it. Somebody has to draw conclusions and act on it. And that's getting harder because the data is growing, and it's becoming more complex. But software now can help. Now with Agentic AI, we can analyze this data in real time, draw conclusions from it and act on it.

Imagine part of a power plant not performing correctly, we can detect it immediately. we can turn that into impact analysis and action. And what does that do for our customers? When you turn data into action, you don't lose value. You save value for our customers, and that's meaningful.

The same data is powering our software suite. We are developing our software suite around the needs of our customers. And what do our customers need? They need to track their projects at the portfolio level. They need to track their projects at the site level and at the field level, and we have a solution for each. Now what do they want to do? Or why do they need this? They -- all they want to do is they want to develop their projects fast and put them into production. They want to generate maximum energy. So how are we helping them do that?

One of our interfaces, what we have done there is we have actually put together useful information that helps them with faster project development. As an example, do you know that for a 100-megawatt power plant, we have to ship millions of parts. Now imagine organizing that and building that. What we have done is we have created an interface and organized this information in a way that they know when these parts are arriving and how to plan their build schedule around that and then develop the plant fast. That keeps their cost low. And this is really useful for them.

We've got mobile app like NX Pulse that allows them to do commissioning by themselves so that they can meet their development schedules. What does this do for our customers? It creates stickiness. They want to develop more projects with NX Power, and that's value for us. Robotics is another area using that, we want to transform this industry. Now the concept of robots is not new. Did you know it's been around for over 100 years. So what's new now? What's changed? I believe there are 2 reasons.

The first reason is that these technologies are rapidly dropping in cost and now becoming affordable for a cost-sensitive industry like solar, and we want to leverage that. And the second reason is that these technologies have come to a point where they're becoming more reliable, more predictable. How do I know that? Well, I don't know if any of you have taken your ride in the Waymo self-driving car. When I took my first ride, the first 5 minutes, I was at the edge of my seat.

I was like, did I make a mistake here? But then within the next 5 or 10 minutes, I felt like relaxed. I was hardly noticing the absence of a human driver. I was able to trust that car with my life. You see these technologies seem to be reaching a tipping point where we are able to trust them. So at Nextpower, we are going to leverage that to be able to drive more value. Our product, NX Ranger that you will see today, we are training that to detect issues at the plant.

We are able to detect electrical issues, connectors that have not been installed correctly. We are able to detect hotspots on modules, and that is valuable for our customers. Our NX Vantage product can detect fire before it can cause damage. These are value-added services, and we are going to invest in this. We are investing in this. And frankly, some of the jobs at the solar power plant should not be done by humans. They should be done by robots.

My section here will not be complete without talking about services. Nextpower offers top-notch services at the design phase, at the deployment phase and at the operational phase. And you may not know this, but a lot of these services are also enabled by the software that we develop in-house. So an example of that. NX Pulse, our commissioning app, it was first used by our own commissioning team. We used it, we perfected it, and then we turned it over and also offered it to our customers. You see we use our own software very heavily to enable these services.

This is one of the reasons why the customers love us. Now you've heard Dan talk about all the acquisitions, and that's great. But now comes the important part of putting it all together into a single cohesive solution. And we are already seeing the benefits of doing that. As I said, we are developing an advanced design software. Now what we have done is we are now putting all these products together as components of a single system.

Just recently, we used our software to design a project where we use data from the civil analysis for the project and match that with the foundation design so that we could reduce the material cost and then calculated the tracker design on top. We designed it as a single project and reduced the cost of the project by $5 million for our customer. What are we going to do? We are going to do this in a way that we can do it over and over for every project. This is how we drive down the LCOE.

You see for us, AI is not just a buzzword. It is a technology that we really need. It is a technology that we're using to solve tough real-world problems. So where do we go from here? In 2030, we will deliver a single fully integrated solution under the NX One digital ecosystem. Dan is acquiring companies, growing the business. Howard has given us the mandate to deliver a fully integrated solution. Jake and Ryan are building most of the products. We in the software group have the responsibility to stitch it all together as a single cohesive solution, so that we can deliver the synergies that come from putting all of these technologies together.

Let's watch this next video that shows you how.

[Presentation]

Okay. Great. Thank you, technical panel. Thank you. Give it up. Thank you. So you can see how we're driving tech and innovation. Every power plant represents $200 million, $400 million of investment, $1 billion of investment. That's a big reason why there's been a flight to quality. Systems are getting bigger, more ubiquitous, A lot of money is pouring in. And customers really want to work with a trusted company that can deliver. And we're just now on the next phase of the journey.

So we're going to pause the webcast for approximately 40 minutes. We'll be coming back on the webcast at 10:40 Pacific/01:40 Eastern. We'll have a break in about 20 minutes. If you can hang in there for 20 here, we are going to have a demonstration now of our technology so you can get it a little more.

[Break]

Okay. Great. We're going to turn on the webcast back on. It's right on time, 10:40 Pacific/1:40 Eastern. Thank you for being punctual. So we have a great exciting customer panel for you next. Jonathan Eastwood, who leads North America Sales and Global Sales Enablement for us will moderate the panel. And I would like to invite Jonathan and our guests to the platform. Thank you.

Great. Thanks, Howard. Great to be here today. I want to welcome everyone. My name is Jonathan Eastwood. I'm Senior Vice President of Sales at Nextpower. I have to get used to that. I want to see Nextracker so desperately after 7 years working here. It's been a great run. It's great to be here and excited to have these panelists with me today to give you a customer perspective.

So at the center of Nextpower it is our customer. Innovation doesn't come in isolation. It comes through strong partnerships. It comes through collaboration. It comes from a lot of feedback, right? We're out in the field. We're talking to customers. We're understanding their problems, and they're trying to find solutions to those problems to make their projects more efficient. So today's customer panel will provide a perspective on the power markets, some of the technical challenges, the opportunities and the future of energy.

So let's get into it. So let's start to get to know our panelists. I'd like to invite each of you to briefly introduce yourself, tell us a bit about your company and then tell us something about the power sector that excites you. Craig, why don't we start with you?

Yes, Craig Cornelius, Chief Executive Officer at Clearway Energy Group, one of the bigger competitive power producers in the U.S. and, at that, a principally renewable-driven enterprise. And what excites me about being here is really a function of the relationship that I've been able to enjoy with the leadership team at this company that our company over a decade has enjoyed with Nextracker and then Nextpower as a supplier of products.

And the reason why I've sustained those relationships now for 2 decades in technology creation and then deployment in our solar industry in the U.S. and why they've been central to our company is that this group of people here at this company have sustained more clarity of vision on how to drive this industry forward than any other team in the industry. And I've known basically every one of them that's in particular, in the technology segment. And I think that really comes from 2 places, which you touched on in your remarks.

The first is real clarity around the importance of a customer's experience as an owner of a power plant. And evident in all the innovations that we saw this morning is an understanding of what it means for people to deploy equipment to a site and then need to turn it into a power plant and what it means to own that power plant after it's operational. And then second, coupled with that customer-centric view of purpose is a deep appetite for innovation and a dissatisfaction with what could be better. And those are the things that excite me about being a customer for this company.

And I'm excited about being a customer of this company because it's going to put us in a position to build bigger power plants that are more cost effective and make this technology one of the dominant drivers of our country's energy economy.

Appreciate that.

Thanks. I'm Dan Barcelo, Chairman and CEO of T1 Energy. Echoing on Craig's comments here, what we've been impressed with Nextpower is the way they've moved into what the customer wants, particularly on the steel frames, recent transaction we did to buy steel frames to continue more domestic content. That's been really refreshing to me as a relative new entrant into the solar space. There's 2 things, I think, that also that really excite us now is, one is the growth and the other is about American manufacturing and energy security.

On the growth, it's something I haven't seen in my career, particularly in power markets. This growth is astounding. What we used to see in energy was technology unlocked energy like 3D seismic or offshore drilling or fracking or CCGT technology. And now it's almost reversed. It's now energy is the governor of tech in terms of delivering the power for AI. And I just think it's a different macro landscape than we've seen before, and we're very excited to be part of that.

The second part of it is what's happening on the American manufacturing side and the energy security side. It's a different place now. People are looking for energy security. They're looking for supply chains. They're looking for surety of supply, obviously, at a low cost and a competitive cost for projects.

But that is a very important driving factor for us, and that's why we're excited to be in the space in the solar manufacturer side, but the interfacing with customers or my customers, whether it will be a future developer or a Nextracker as a partner on that, but that's all about how do we scale. So my job is here to produce at the quality and the cost that those customers want, whereas their job is about execution and scaling. And that's very exciting parts for me.

Thank you, Dan. Nick, why don't you round us out, please?

Yes. Thank you. Nick Cohen, President and CEO of Doral Renewables LLC. We're based in Philadelphia. I have 10 years experience in coal and gas, but the last 10 years has been renewables. We have a very large queued-up solar and storage portfolio. And we take our projects from -- we start at scratch and take them all the way through owning and operating. We're notable for very large projects. The Mammoth project in Indiana is 1.3 gigawatts. The first 400 megawatts are operating right now and the other 900 megawatts are under construction. So how do we do that?

We connect with farmers. We have a special way to connect with farmers and people, and that relationship advantage is also one that extends to our vendors and our partners. And next, -- I guess, as we get into the conversation, I can connect the dots, how Nextracker is really special when it comes to partnerships and how you drive value for our company.

Appreciate that. So let's dive into market dynamics and what's shaping the U.S. energy landscape. Let's get a perspective from our panelists. So starting with you, Craig, from your vantage point, what are the biggest shifts you're seeing in the U.S. energy markets right now?

Sure. Yes, I'll try to give you an answer broken into sort of the next 5 years and what happens after those.

We'll save the future for my last question.

I'll give you a little both, but that sounds great. And I'm really going to focus on solar technology and the technologies that are adjacent to it as the market that Nextpower really focuses on serving. So first, projects are getting bigger. Over the next few years, over half the volume are going to be power plants that are 300-megawatt AC or bigger. And that number going back a few years ago would have been less than half that size. Second, they're increasingly hybridized.

So for the last number of years, if you're building a power plant that's a solar power plant with a battery attached to it, it was going to be in California or the Desert Southwest, which were 2 places where the market design supported a long-term contract for a battery that was typically 4 hours. Over the next years into '28 and beyond, we're going to see the markets where that kind of hybridization happens and at size extend beyond California, the Desert Southwest to the rest of the WEC to MISO to SPP, so increasingly hybridized. Cost and prices have gone up.

That's a function of a cost-plus return market in a market where scarcity creates project pricing power and pricing power throughout the value chain. Everything of size that can get permitted and interconnected between now and 2030 will get built. And the differentiating factor, and it comes from companies that have had long-term insight like Nick's and ours will be whether you filed an interconnection queue position in '21 or '22, and that lets you put a project online by those dates.

And then last, certainty of execution and reliability of a delivered product is now paramount where even going back a couple of years ago, you wouldn't have seen that. So that's sort of the way that we see the market for the near term, and we think it sort of plays really deeply into the strengths of Nextpower as a company and a lot of the product innovation that they're focused on. And maybe later, I'll look over 2030 for the future.

Appreciate that. Dan, so shifting to you. As a U.S.-based advanced solar panel manufacturer, what are the key drivers enabling the reshoring of U.S. manufacturing?

Reshoring really is about policy driven, first and foremost. And we've seen that both when we started with the IRA. We saw the great sucking sound of investment from Europe and everywhere else on earth to bring projects to bear in the U.S. There was a continuation of that in elements, particularly on the manufacturing side with OBBB that 45x preserved. I think all of those things, whether it's -- sometimes you think of it like a carrot-and-stick and sometimes you think there's 2 carrots and one is in your eye, but it is a policy-driven effect that's really driving and underpinning, in my mind, the reshoring, okay?

There are worlds where there's no need to make anything here and just import it. But what we can see both on the bipartisan side that it has to be driven there. Now when we get to why is that driven, that, I think, is when you look at critical minerals, when you look at rare earths, when you look at semiconductors, there is a real, real need for surety of supply. There's a real need for supply chains that are made in America. And I think there's a lot of support for how does the American worker benefit from that.

And those are the parts that have really been incentives, both from the tax incentives, both from the tariff incentives to not -- or disincentives to have it. So from our standpoint, it's very focused on how do we do that in a new modern way. And that means there's a lot of automation, but that means there's a lot of jobs. That means we're a good employer. It's high skilled labor. Our Dallas factory has over 1,200 employees, a payroll of over $100 million. These are big, big manufacturing things that didn't exist.

So for me, it's still a continuation of that policy, but we never forget that we have to deliver quality product at the lowest cost possible to enable developers and other parties to go. Otherwise, we're just not going to be competitive with international markets. I spent my career competing on drilling for natural gas or producing power, and it's always the same thing. The molecules, electrons, they don't know where they are. The machines don't know where they are. It always has to be about economics, and we strive to do that.

Excellent. Appreciate that. So Nick, from your perspective, how is America going to meet the demand for power over the next decade?

In my career, 20 years in this business, I've never seen demand forecasts like we see today. And I'll tell you, even a couple of years ago, we could sell the power as fast as we can bring the projects to market. So the demand was already there. And now we have this increase in demand. And there's something out there that I think is better than a crystal ball. It's called the queue, as Craig referenced. That queue is predicting the future. And this -- I'm open to all sources of energy. We need as much as we can get.

When you look in the queue, you've got 80% of the projects are solar and storage, more than 80% queued across America. And that is telling you what the next 7 to 10 years of construction is going to look like. These queue processes take a long time to get through, and they are just stacked up with solar and storage. So the future of the energy market is going to be these technologies, these generation technologies. And what we're trying to do now is figure out how can we squeeze more energy out of less land.

And a lot of times, people just think about the panels and the technology advances there, which are predictable. But where we're seeing just remarkable advantages are in the other technologies, especially around the digital power plant and the trackers. And the performance of our operating assets exceeds what we expected. And I'm sure it's just all the little things that contribute to the operation of the plant and the reliability that actually turn out to be big things when you look at the outcomes.

So the future is more solar and storage. It's achievable, more achievable than anything else that's going into tillable farm fields that require less complexity and then just squeezing out as much production as you possibly can using all these technologies.

What has the response been? You work with a lot of farmers and there's a lot of heritage farming, what has the response been like from those folks who you're engaging with at the community level? How do they see this opportunity?

So one of my favorite parts about where we are in this industry is that solar is the only energy source that really engages a lot of people in the community. For example, in our Mammoth project in Northern Indiana, we have 110 farming families. And in order to have large projects, you need to get a lot of yeses from the farmers. And how do you do that? You need to connect with them. One of the ways is through agrovoltaics. And that's where the partnership, for example, here at Nextpower has made a very big difference because farmers are struggling right now.

And their great-grandparents grew oats, okay? Oats were the fuel for the horses. And then the grandparents and the parents grew ethanol, corn for ethanol. And now the same sunshine is coming down and getting utilized for electrons, the fuel of the future. But you need to get community acceptance. And electrons don't exactly look like corn in the field. So when you can bring agrivoltaics, you can bring food back to the farm, it's a big deal. And this is a new trend sweeping across America. We're getting more yeses than ever.

And so to optimize the reality of agrovoltaics, it's a lot more complicated than it sounds. We went to Nextracker, Nextpower, and we said, how can you help us? And I'm sure if any of you were walking around earlier, if you just look over there on the other side of the fence, there's food growing, okay? That's a big deal. If you want to connect with farmers and you want to get yeses, okay, and you want to power America, you need to do more with the land.

And so Nextracker has data and research. They've invested in all kinds of methodologies that we've applied to our projects, and then that helps us connect with the farmers. It makes it very real. And I mean, right now we are growing food and running thousands of sheep and all of it is because of the partnership and the collaboration with you guys.

I can tell you firsthand, our CEO has been trying -- working to evangelize agrovoltaics since I've been here, and it's super exciting because you're starting to see pockets of agrovoltaics that are coming into these projects, but the scale has actually been increasing every year since I've been here, which is really exciting.

So with every new phase of growth in our industry, there's technical challenges, there's opportunities. We want to jump into how technology and partnerships are driving and redefining what's possible. So Craig, what do you see as some of the biggest gaps in technology adoption that could meaningfully accelerate deployment and cost reduction for your power plants?

Yes. in the near term, that sort of stretch over the next 3 to 5 years where people are trying to harness as much in the way of permitted resources interconnection queue positions as feasible to really respond to what is kind of an immediate demand-driven sort of power supply crisis, construction duration and feasibility of project completion at speed is sort of a key consideration. And so the host of product innovations that then Nextracker had driven to allow for EPCs to construct a 300- to 500-megawatt power plant in fewer days are pretty important to the ability to get teams, capital into a project, get that project completed and move it on to another project.

Our company is now at a tempo where we're arranging $6 billion to $7 billion worth of project financing for a single year's execution cadence and then need to move our teams and that capital rotation along to the next family of projects. And so the ability to get a big project built quick, enabled by some of the kinds of construction efficiencies that these products enable is a really important near-term technology adoption necessity. And then when we look further out and we think about the long-term sustainability of our industry, returning to systems-driven and vertical integration-driven cost efficiencies is going to be pretty essential.

And when we created what is the modern utility scale solar industry, which as Nick rightly points out, is the dominant source of new generating capacity additions in the country and has been now for a number of years, we were in a pattern where we were driving about a 6% per year digression in LCOE between projects that were built in 2011 and projects that were turned on in early 2020. And after the COVID supply chain shock and sort of the current scarcity-driven demand moment, we saw PPA prices double.

It's useful, as an industry, is building more domestic manufacturing capacity and creating a capacity to produce good returns that drive further investment for us to be earning high returns and for margins to expand throughout the value chain. But as we look to 4 or 5 years down the line, we need to return to that cadence of systemic LCOE compression. And when we think about what gets us there, as an industry, we think it's big projects that can amortize costs over something that's larger.

It is systems-driven innovation where the ideas that you saw earlier today around 2,000-volt system architecture, robotic-enabled speed to construction deployment, a more fully integrated design, both between the module and the foundation and the tracking system and what it means to deploy them in a construction environment. And then ultimately, power conversion systems that function with maximum efficiency in conjunction with the DC side of a project. All those things being knit together are how we can drive LCOE compression while sustaining good returns and margins throughout the supply chain.

So I think the vision that Nextracker has for harnessing constituent technologies to deliver that system result is totally on point. It's responsive to what we as a customer are hoping to see happen. I think that's one important technology trend for sure. The other technology trend that I think becomes increasingly important as we look to the end of the decade is the behavior of these systems in the grid because -- as we look to the time after 2030, where you see the outcome of that sustained 80% a year or 80% of the queue and I don't know, 50% to 60% of new capacity additions per year coming from solar and storage, it's a very important part of the system in most of the country.

And that actually has the potential to be very useful for grid costs and reliability, we think. It's the first item in the merit order. It's actually quite low cost. What we've seen in California and Texas over the last few years is that both of those systems have sustained low wholesale prices and improved grid reliability after you saw the deployment boom in both of those markets in solar and storage.

But the behavior of these systems, their dispatch ability, the reliability of the power conversion systems that interface between the solar power plant on the farm and the power grid are going to be pretty essential. And again, I think Nextracker focus on delivering an innovative quality product that enables that is going to be quite a great opportunity as well.

Amazing response. Thank you. So Dan, what technologies are emerging in the market that can strengthen U.S. manufacturing and enhance the supply chain resiliency?

So from the manufacturing lens, I guess I'll break it into 2 parts. One is the ecosystem that we live in and thrive and depend on and the other is like what are we doing at our plants. So we have one of the most modern solar module plants in the world. It is -- uses a lot of labor, but increasingly, that labor is about taking care of the machines and taking care of more of the AGVs and eventually even robotics when we get there. But the first step is really about what IT has put on it.

We partnered with Palantir at this facility to examine all data. It should be easier to track your solar panel than your pizza. So I tell people like when you order a pizza, you can see where it is and what it's doing, it's components. We have to get there as a solar industry in the United States with full traceability, but it also goes to quality. When we're doing 20,000 panels a day, where were those panels? Where did the glue come from? Where did the glass come from? Was it a bad batch of wafers from this? How do we ensure that quality component?

And a lot of that is an entire data ontology that we go through every day. So we put a lot of effort into how we're making this plant one of the premier to serve our customers with that. It doesn't stop there, though. A lot of the designs of plants have been designed and built for a labor pool that is more accessible. As we grow and expand, we'd like to employ a lot of labor and have a lot of jobs, but we'd also like to expand with a lower rate. because one of the pieces that makes American solar less competitive is the labor cost in cents per watt, particularly at the module side as you go into cells and wafers and probably much less so.

But we always have to look about expanding quickly with more automation, more processes, and that's where putting more technology on our plant works very well. So that's one key part, both on the manufacturing side. I think eventually, there will be elements about where do we go from a TOPCon into the future as we go into future tech, but we'll leave that for more of the science and the R&D parts. Right now we're very focused on delivering the best efficiency, TOPCon silicon quality.

The second part goes into the ecosystem. And there, I think there's an ecosystem on one side of the plant and there's an ecosystem on the other side of the plant. When I look on the one side of the buyers, it's about scale. How do we get to the level of scale that perhaps China has, where it has a terawatt of manufacturing capacity, deploying 256 gigawatts in the first half of this year. America shouldn't be thinking about 50 gigs or 80 gigs. It should be hundreds and hundreds of gigawatts of manufacturing capacity, but then it has to go somewhere. So how does it scale?

So that's where I think partnerships or Nextpower is a great example of how can their business get that many trackers on because my modules are just rectangles and they just sit there, and they have to be deployed into developers and deployed into field scale. So I think that's one important part of a challenge for me is how does the ecosystem absorb this. The other part is integration into the supply chain. There, the U.S. industry is, we'll say, growing, right? There just simply aren't the process engineers, equipment engineers.

We're doing this now with our 5-gigawatt solar cell plant in north of Austin and Rockdale. That will employ 300 of the world's best wet chemical engineers, and we need to keep building that. China has over 50,000 of those engineers that have been doing it for 15 years. There's so much knowledge embedded from cell texturing to wafers to wafer slicing. And all of that leads into an adjacent industry to the solar industry, which people forget about is semiconductors.

The semiconductor industry needs those same processes, those same engineers, the specialty gases, the wet chemicals, and we need a very, very robust big industry there. While solar may be like the dumb cousin of semiconductors and chip technology, the silicon-based starting point, the poly supply, the wafering, all of that's critical. So as we're building up our chains backwards and going to cells and then with partners like Corning on wafers, I think building out the employment base for that is only going to drive costs lower because it's all about a supply chain that's bigger and more robust.

And I think sitting adjacent to the semiconductor industry, that's the next wave. America doesn't want to be dependent just on Taiwan or other countries for semiconductors. It has to build a massive semiconductor industry that needs a tremendous amount of silicon.

Appreciate that. Yes, your reference to the manufacturing digital twin remind me of the digital twin we're building in the field. So you have your manufacturing digital option, you have your field digital twin and you really know what's going on with your power plant. So Nick, going back to -- so partnerships and technology, how are they influencing how projects are developed and financed today?

Yes. The market shifted and the partnerships are more important than ever. There was a time when you try to do everything yourself as much as possible. And -- but supply chains became very complicated and policies and all sorts of things to try to navigate. And when you're talking about millions of parts, you really need to figure out how you're not just going to be a transactional player anymore because the partnerships matter. You need to lean on your partners for things that weren't anticipated. I mean for you guys, the -- for one thing, it's just a matter of fact the performance is there for when you're operating.

We've used HailStow. HailStow, we had a massive hail event and no damage. TrueCapture really works. And I think a lot of the outcomes of those technologies were very bespoke to our partnership and how we were able to really work with you guys to get stuff done in a way that wasn't transactional. But I want to focus the value of the partnership on before the actual completion of the project, before the delivery of the performance that is so inherent and happens with you guys.

When you talk about the before part, the more that you can bundle together and put on another partner, the better because we have to worry about farmers and community issues and data centers who are buying our power. And the last thing we need to worry about are 2 million bolts and where they're coming from and are they in compliance with all the rules that are out there. And so -- and that's what we love about you guys is that you're taking on more and more of that as like turnkey. And what that means for us is increased liquidity and also increased project velocity.

I can't overstate enough how important that is because, for example, right now, we're putting 11,000 panels on per day at Mammoth. If you try to count to 11,000, that's going to take you 3.5 hours. And somehow, we're able to affix 11,000 70-pound panels. And it's because your technology makes it very easy and there was so much like collaboration that took place beforehand to make sure that it was like very planned. And because of that we're able to complete the project much more quickly than we would have otherwise.

And then also, when you look to the future, as I mentioned earlier, there's a wave taking over America of farmers that are saying, yes, people who said no a year or 2 ago are calling us back and saying, Please, can we get in this project? And the commitment to Agrovoltaics, it's a big deal. It's going to drive the future of solar because we're getting widespread community acceptance. And we couldn't do it with anyone else.

The other thing that happens with the partnership is when things -- unexpected things happen, you can rely on a partner. You can't rely on a transactional company. So like we had a couple of instances. I know one time, we were having a lot of trouble with data and Nextracker's data was doing what it was supposed to be doing, but some other vendor, it wasn't. We called Howard, and he was on vacation. I guess with his wife, he pulled over, took our call, and it was a Friday morning and somehow miraculously data experts showed up to our site on Saturday. It was Friday morning and somehow you got these people mobilized. They came on Saturday, they were geniuses.

They got the job done and they saved us from like a very big situation. And like that's a partner. You have -- you can call the leader of the organization and they can just solve the problem for you. So that's why partnerships are important. There's a lot of surprises that happen in this business. And developers are realizing it. And as a result, they're aligning themselves as partners rather than as transactional as they used to be.

That's great. Thank you. So we're going to close on just a little bit of a look to the future, get a perspective on where the power sector is heading. Dan, I'll start with you. So by 2035, what will a competitive U.S. solar manufacturing industry look like? And which forces will matter most to get to over 100 gigawatts of annual manufacturing capacity?

Yes. I think if we're just 100 in 2035, we've already lost the energy races, the AI races. I think the numbers just need to be so much larger. Like I said, if China is already at a terawatt of manufacturing capacity, America is just scratching. So I think of what's happening with solar and storage and how it's being deployed now, you could look back to the early '90s how natural gas was attacked by coal and how natural gas rose. The natural gas was a geological feature, but it was also a technology feature with fracking.

Solar just works, the lower marginal cost, the LCOE can be very competitive. So solar and storage are doing to gas, what gas did to coal and that's going to continue. So I would expect that as the energy growth continues, we have to go towards that China level of capacity, manufacturing capacity and also deployment. So I think the integration parts are going to be critical as we go back into the chain on how do we have a real robust polysilicon supply, wafers, et cetera, et cetera.

When you see what Tesla just announced a 50-gigawatt lithium refinery in Corpus Christi, that's -- nothing like that existed in the United States. The scale of what we need to start manufacturing is here. And I do think America has the components for it. It has the ingenuity, it has the risk capital. It has the appetite for it. It has the technology for it. And fundamentally, the solar industry is about converting a silica to a silicon and even glass, right, silica. So all we're doing is converting, and that requires water, energy and people.

There are technology aspects, which we now have, and we can manufacture the machines, but this is fundamentally an energy conversion of silica and America has a lot of the natural resources in silica form, and we should be able to make a lot of that here and drive the lower cost so we can have that scale in the U.S., too.

Great. Craig, so as the energy markets continue to evolve, what new factors are driving project economics and investment decisions for Clearway?

I mean, I think, we kind of talked about that at the outset. It's sort of -- we're focused on building as much power generation as we can to enable critical needs, and in our company's context, also pacing the way that we deploy capital into that generation in a way that is methodical. And so that's sort of how things work in our business context. What -- when you'd sort of posed the last question about a look out to 2035, we have some ability through a family of projects that we're constructing to have a decadal vision for the build-out of a whole family of resources across a wide variety of geographies.

And what we foresee is densification of power generation across a substantial portion of the country's land mass in a way that is responsive to a lot of the community concerns that as an industry, I think, we have to be more sophisticated about. An opportunity for a lot of the rural communities in America to play a much more important role in energy supply. And I think we're just at the beginning of having those communities fully appreciate how beneficial for them that could be.

And probably a multiplication of aggregate demand for primary energy supply that's provided by electricity that's still a little hard for people to imagine. And the guide for that, that I keep in mind is what the U.S. energy landscape looked like between the 1870s and 1890s when the advent of the steam engine coevolved with a whole host of other industrial technologies. And if you were to look at the BTUs of energy supplied and consumed in the country between the end of the civil war and the point in time where steamships, locomotives and all the industries that they enabled reach their -- sort of their full maturity, it was orders of magnitude increases.

And I think the co-evolution of the computation technologies today that we're serving electricity to and the industries that those computation technologies enable with the corresponding supply that's needed for electricity could surprise us to the upside quite a lot as we think out to 2035 and the end of the 2030s, by which time I expect land use, interconnection and a lot of the things that pace deployment in the short run will be things that we've been able to sort through.

Wonderful. So we will wrap up on that note. I want to say thank you to the panelists. Thank you for your perspective. Thank you for your partnership. It's been a great working relationship. And yes, we'll close out. So thank you very much.

All right. We got 4 and 2 here. Great. So here we are in the program. We're going to do 15 minutes here with Jeff Guldner, a fireside chat. Then, we'll do 15 minutes with Chuck, our CFO, who will give the outlook. And then we'll wrap with executive Q&A, will be done at noon, and we'll have lunch and then a tour outside. So without further ado...

Energy policy in the U.S. in 15 minutes.

Let me introduce Jeff briefly. Dan Shugar had the great idea to recruit Jeff for our Board. And thank you, Shug. And Jeff, he has incredible experience. He was 20 years plus Arizona Public Service, CEO; and then 5 years as the Chair and CEO of Pinnacle West, the parent. So he brings this incredible utility perspective. He also has a J.D. Law degree. So he's got integrity and a U.S. naval officer for 10 years.

Thank you for your service. It's been great to have you on the Board for about 1.5 years. So we're going to get right into it. We have a short period of time. So Jeff, I'm going to hand it over to you. A lot is happening. We're talking about electric demand super cycle. How real is that? What's going on in Arizona? Let's start there and then the rest of the U.S.

Yes. The prior panel just teed it up perfectly. And you heard Dan say this is generational. You heard Craig say, this is probably -- we're under assuming what the growth is going to be. And I do -- I think it's kind of when you look at growth in the utility side, so load growth, which is what the generation is serving, right? So when you look at load growth on the utility side, typically, we got excited when we'd see like 1% to 2% load growth. Energy efficiency for years basically kept that flat.

And so when you'd bring a big customer, a big customer was like 50 megawatts was an enormous customer, you get crazy excited about that on the utility side, and you'd be really happy when you saw a couple of percent of growth. That has fundamentally changed with 2 major things. So electrification, we knew was coming, and that was something that we were expecting, but that's going to get offset with a lot of energy efficiency. The demand growth that's coming from manufacturing and from AI has truly been eye-opening.

I'll give you an example in Arizona before we go to data centers. Data centers are typically what -- I think I spent the last 2 years of my career talking about nothing but data centers. But if you look at Arizona, we hosted at APS, Taiwan Semiconductor. And so they're building a large fab, multiple fabs in the Phoenix area. Our previously largest customer at APS was a 70-megawatt Freeport-McMoRan mine. So 70 megawatts, enormous customer. Data centers came in usually around 50 megawatts.

TSMC, when it fully builds out, will be about 1,000. And so for context, the grid, APS' share of the Phoenix and Arizona grid, we peaked this summer at 8,600 megawatts. So that 1 manufacturing facility, which take a few years to build, but that manufacturing facility and the supply chain it's supporting as it scales up, that's going to be a gigawatt of addition. When you add to that, the data centers that are coming with AI and you've got really now in the U.S., Virginia kind of led the way, a lot of data center construction initially in Virginia, we all learned a lot from watching that.

And then right now, between Georgia and Arizona is we're competing for like who's #2 or who's #3 in that growth. And there's a lot of reasons. People don't want to build data centers in California, but they want to be near California. And so there's a lot of that focus on the Phoenix metropolitan area. Again, context, we've been trying to clear these data centers to go without affecting reliability. That's been the biggest challenge. 8,600-megawatt peak system, we've cleared about 4,000 megawatts of new load to move forward at APS. And so that's going to be 5, 6, 7 years, I expect.

There's another 20,000 megawatts of soft demand that is in the queue. So again, not all that's real. There's a lot of competing similar data centers vying for multiple locations. So we know that, that 20,000 is probably not real, but it is a big number. And what I hear is when people talk about, well, maybe energy efficiency will come around and the data centers will get less to use. What we're seeing is on the chip side, energy density of the racks is going up. So you're about to see typically racks were like 20, 40 kilowatts. You're talking now about megawatt size racks because the energy density on those chips are going up.

So my opinion, personal opinion is that if you see any efficiencies work into the system, they will get backfilled in with more demand. And so for at least the next few years, I'd say the next 5 years plus, every megawatt of power that's available is going to get used by somebody. Everybody is in the hunt to say, where can I get power and power is determining now where these data centers site. One other thing before I probably go to reliability, load factor is changing as well. And so most systems, if you take our 8,600-megawatt summer peak in Phoenix, a day like today, it's about 80-some degrees in Phoenix right now.

So air conditioners aren't really running for the most part. You're going to see a peak probably of 3,500 megawatts. So summer peak, 8,600 megawatts, shoulder month is what we're in now. Those are in the 4,000 megawatts. That's like a 50% load factor. So there's a lot of efficiency, and that's kind of where we'll get to in kind of the role that you see storage and solar and other things come into play is there's a lot of efficiency in trying to build that up. But the data centers do run at a very high load factor.

So what that's doing is system-wide, it's pushing the peak demand up, but it's also pushing the energy, so that load factor is moving up and what's called the load duration curve, you actually see that shift up a little bit. So we'll still only have 1 peak day. but we'll see a lot more energy consumption. Just one other last quick point. That 4,000 megawatts that we cleared at APS to move forward with, that was all peak management. So what we're doing is trying to say, let's figure out a way that we can cover the peak.

After 4,000 megawatts, there was an energy deficit that was showing up and the energy deficit was happening from 11:00 p.m. until about 7:00 a.m. So think about your batteries all get exhausted, those 4-hour batteries, they get exhausted about 11:00. What are you going to serve it with? And so that's the challenge the system planners are trying to figure out now is how do I deal with that higher load factor, but still work to have a more efficient system.

Okay. That was amazing. So Arizona, I mean, it's a really fast-growing state, a lot happening there. Let me see if I got this right. You're saying that peak demand is 8,000 megawatts. The generating capacity is actually around 4,000. You handle the deficit or the gap with load management.

No. So we've got probably 10,000 megawatts or so to cover that gigawatts. What we're doing though is that 8,000 megawatts that we have today is going to get added 4,000 megawatts with new load. So we're going to move from 8,000 megawatts to 12,000 megawatts in the next 5 years.

And you're saying there's 20,000 megawatts behind that.

And there's another queue...

And the queue...

Queue of folks that are interested in getting in there and which is to the point I think Craig made, we don't know exactly what that future is going to look like, but we know that the near term, it's going up. That's a lot.

Okay. So one of the things that I'm sure kept you up at night when you were CEO of APS and over at Pinnacle West is just keeping the lights on. I mean that's like the #1 thing for utility, reliability. Are you -- what's your -- how do you feel about all the different forms of power gen coming on and a lot more solar and storage and managing all that?

Yes. I'd say that's really going to be the puzzle. So one thing I think you'll see, which is a challenge if you're focused on decarbonizing the grid, the reality is that the amount of demand and that load factor change we're seeing is just going to drive more natural gas. And the way we used to think about it at APS is we were doing probably 80% solar, wind and storage and about 20% gas. And the way that we thought about it is that 20% gas is what unlocked the 80% wind, solar and storage because you've got to have that firming resource that's going to be there for that peak day that you're hitting the hottest day in the summer and you're worried about power plant outages and things like that.

The thing that gets complicated in this, the system planning has gotten so much more challenging because it used to be just manage that peak demand. And so now just to give some context where I think solar is going to be so important because it is, it's the cheapest source of energy that we can build right now. It's almost all hybrid. Like I don't think APS has done a non -- just a straight solar system for probably 3 or 4 years. We have always done hybrid. We need to have battery storage to shift that on to peak to create the maximum value for our customers.

But it's easy to build and it doesn't really fail, right? So you're -- unlike you lose a coal plant on the hottest day of the summer and it's a 500-megawatt power plant, that's a big gap to fill. And so that folks like the reliability, the steadiness of the solar. The batteries are what's making the system much more challenging to operate. So we're putting a ton of batteries on around the West. I think we're probably leading the nation right now in that. You're seeing more of it now going up into the Pacific Northwest. Every system is a little bit different.

But the most important thing that sometimes people don't remember is the batteries don't produce power. So you have to have something that puts the power in the battery. And that's one of the key, I think, key leverage points for solar. It's -- you're always going to have your solar at the bottom of the dispatch stack. It's got no fuel cost. Even if I put a natural gas plant on the system, I'm going to have to run that potentially for reliability, but I probably really don't want to run that in the middle of the day to charge the batteries.

So I got to figure out the system design that is going to let me fully charge the batteries, but then have reliable capacity so that on that summer day, when I'm hitting that peak, I can actually go to something that I know is going to be there. And if we have clouds or rain or something, I've got firm capacity, that's there. But that system design is getting really challenging, but a natural gas plant has fuel cost. Solar has no fuel cost.

And so the folks who run the system are always trying to do that model to say, how do I optimize the design so that I can get the cheap energy, charge the batteries with it, have the capacity that I need and still be able to meet this customer growth that we're seeing. But I will tell you, like the days when we used to think we were excited about shaving, we had about a couple of hundred megawatt smart thermostat program. That's awesome, but you then get a 500-megawatt data center show up. That just absorbed it all. So you do have to look at the supply side. And I think what you'll see is more gas that will enable additional renewables.

Okay. That's a good lead into the next one. So well, first of all, it's a 2-part question. One is you really changed the game in Arizona as a leader of the utility there. You went 0 -- I think you have net zero goals there. You drove a lot of renewables. I'd like to hear why you got behind that and also why you joined our Board in that context because obviously, you believe in what we're doing.

Yes. I mean, I do think -- I mean, the political cycles will change. And so we're in a political cycle right now and that's creating some headwinds. The tailwinds, I've been 25 years in the utility business in Arizona and just watching -- I remember in the late '90s when we were opposing the solar portfolio standard, we actually had a solar portfolio standard that we're going to prove in Arizona and the team, we had very environmentally minded folks. They believed in carbon issues.

They were trying to figure out how to decarbonize, but they're like, Oh my God, the cost of this stuff and, of course, it was trough, like solar trough systems. So the cost of this stuff is just prohibitive. It's just crazy. And so what's been remarkable to see, and this is -- I think just -- it's been fun being on the Board to watch the team think systemically about how do you go after cost. It's been the actual reduction of the cost of solar. So LCOE is a good indicator. It's not what system planners typically use now. They're using much more capacity as a blend of that.

But again, when you see the cheap fuel and for a utility, one of the -- I think, one of the really interesting concepts is utilities don't make money on burning gas. So when you burn gas in a system, most utilities have a fuel adjuster and you get to recover the expense from your customers, dollar for dollar. And it goes up and down, bills go up and down. When you put a solar system in, it's an investment. So you earn on that as a utility. And so I think a lot of utilities began to see like, Oh, this is interesting because my customers aren't exposed to the fuel volatility, and I can actually earn a return on the investment.

Again, at APS, we PPA a little more than half of the new systems that we do. So there's a blend. But from a utility investment standpoint, it's a good option because it's got no fuel cost. And as long as you can figure out that reliability shift, so I can shift it on to batteries, it's going to continue to be a key investment. It also doesn't have quite the supply chain constraints. Interconnection definitely is a headwind. Supply chain constraints in the gas side is a tailwind. If you go out today to go build a new gas plant, I think it's about a 6 year -- you're going to be 6 years talking to GE Vernova to get a new turbine in place.

People can juggle that around a little bit, but that's a challenge. And the same thing on the gas supply, we're going to build some more gas in Arizona to take care of this data center growth. That requires a new pipeline. And so solar capacity is still something that you can get in quickly. And again, it provides that low-cost energy. So I'm still excited about it. I still think that's why this is going to continue to make a difference as we move the energy policy forward in the country.

That's great, Jeff. I think we're going to have to leave it there unless you have something else you want to add or give us some advice, not just Nextpower but our industry.

Yes. I think, it's just trying to lean into the opportunity. Initially, I'd say as the data center stuff began to grow, there was some pushback about saying like, oh, folks are going to go now to more natural gas, and that's what the utilities want. The utilities just want to have a reliable system. We have to keep the lights on every day. And the worst thing you can do for a data center is have a reliability issue. And so there's all kinds of opportunities to share generation, to partner with data centers on efficiency.

And so to me, I think the opportunity that we can all embrace developers in this sector as well as the utility operators is how can you lean in on the efficiency side so that we make the system more efficient. If we do that, data centers could actually be a benefit to customers. They could bring the overall build down because we're using the system more efficiently and they're paying a big part of that. And so that's the big challenge is how do we make sure we operate things as efficiently as we can with the growth challenges that we have in front of us, and I know we can do it.

And there's just one more thing I want to add on the policy front. You and I had an interesting conversation. If you can just talk to federal policy versus state policy and how that may or may not drive things going forward?

Yes. I think -- I mean, certainly a headwind right now, the Department of the Interior has got a guidance out, and we have a lot of federal land in the West. And so we had guidance out that says that's going to require a secretary level approval to move projects forward on federal land. I was quite worried about that initially. And as I talk to more developers, what was interesting is those folks have portfolios of land. So they're looking at a bunch of different sites. Interconnections are driving a lot of that, trying to figure out where can I interconnect.

And a lot of the developers said, yes, we're just going to go develop off federal land. And so it's now the system of how are you going to work through some of the challenges that get presented to you as these headwinds. The thing I keep falling back on is you got 17 states still that have a zero carbon plan. So even if we're not playing in COP right now, and we're not engaged nationally on that, energy policy is driven at the state level, and you still have a lot of states who are committed and utilities even in states, Arizona did not have a zero carbon plan, we put one together at APS. And so you still have a lot of utilities and a lot of states that are putting that climate vision forward and trying to drive to that outcome.

Great. Thank you, Jeff, so much for this chat.

Thanks, everybody.

Okay. We are going to welcome...

Many of you had flight disruptions and you still made it, so that's fantastic. This is actually the dress rehearsal today. Dan, the main event is tomorrow, right? Well, tomorrow, we've got 110, 120 customers coming to see the technology. So this is a warm up. So thank you for being part of our dress rehearsal. So for those of you that I've not met, and there's a lot of old faces in here and some new ones. I'm Chuck Boynton, the CFO of Nextpower. Welcome to our corporate headquarters.

The events team here, fantastic. Gina, thank you. This used to be all cubes. Dan's office is here, Howard, myself, Bruce, Peter, we're right behind the wall, and this is our headquarters. And so we've moved all the desks out and brought tables. So thank you all. It's fantastic.

Any public company CFO is a little cautious sharing long-term forecasts, myself included. But after today and with the strategy, I feel really good about where we are, and we're super excited to share this long-term forecast. As Dan mentioned, our strategy is to build this really compelling world's leading energy platform. And so we're going to walk into that in detail. And looking out over the next 5 years and beyond, we have the right people and the right strategy to go execute.

The slide is not -- they're moving the notes, but the -- there, we go. Back one. Yes, I'll do it. So Dan showed this. We're really proud of the history here. You've seen really tremendous revenue growth from before the IPO through today. If you look at the chart, $1.2 billion of revenue in fiscal '21, up through our last completed year in fiscal '25 of $3 billion. And during that time, profitability has increased. I'll point you though to fiscal '22, and that was in the middle of COVID, supply chain disruptions, steel price doubled, freight costs tripled or more, we still were able to make money. So this is a really durable, strong business model with a hallmark of incredible execution.

Now the line here is our overall EBITDA percentage. And with growing revenues and margin expansion, it's no surprise that free cash flow expands. And so we've generated a significant amount of free cash flow, and we've taken that free cash flow and reinvested it back in the business. And if you look at the R&D investments, we've invested $172 million sort of since the IPO in R&D, over $200 million life to date for sure. And we've invested about $330 million in M&A, buying companies and whatnot, all while paying down our debt. We have no debt now.

And we have accumulated $845 million of cash on the balance sheet that we intend to use to continue to grow the company. And we'll talk about capital allocation here shortly. So this transformation that you're seeing, where historically, 87% of our revenue came from the traditional tracker and 13% from other products and services. That's a fiscal '26. If you went back in time, it would be even more tracker. Now as we look out to 2030, we expect that to be roughly 2/3 core tracker and 1/3 of new products and services.

Now let's talk a little bit about profitability. And this is some new data for all of you. I know you're super excited to see new information, and we're going to get to it. So this chart shows the anticipated relative profitability by these different categories. No surprise, software and services has the highest margin profile. And why is that? Well, software typically is engineers like Jyoti that are in OpEx, in very little cost. And so if you scale revenue in a software services business, your margins tend to be quite high.

Next would be electrical. Think about that as eBOS and the new power inverter product that Dan mentioned. No surprise that in the electrical side, margins are quite high. Why? There's a lot of IP. We are engineers. That's our heritage. And that intellectual property, that innovation manifests in terms of the margin profile. The next category trackers, we all know trackers. It's who we are. It's our heritage. And then the next one would be structural. Think about that as foundations and frames. And the margins are a little more below tracker. Why?

Because the high embedded amount of raw material. So still great technology. You put that together with our OpEx, which I'll talk about here shortly. And that means that we expect to have overall EBITDA margins in the low 20s. Consistent, we expect to be there next year and beyond. And so we'll talk about OpEx here, and then we'll get into the outlook. So operating leverage. We think about OpEx in 3 key categories: R&D that we all know, we intend to continue to invest heavily in R&D. Why? It protects your margins and drives future revenue growth.

Sales and marketing, we'll continue to invest heavily in sales and marketing to both grow the business internationally. We intend to deploy that expense internationally to grow the global share. And if you think about the U.S., it's -- you met Jonathan and our customers, phenomenal. U.S. share of revenue is about 70%. We expect over time in multiple years for international to be a much bigger growth driver long term. And so we'll invest sales and marketing dollars internationally to grow revenue and take the new products that we're developing here and take those around the world.

And then lastly, G&A. Sorry for my finance and IT teams, but we intend to be efficient on the G&A side. And as we scale the company, hold our G&A costs down, probably not flat, but hold them down. And then what you'll see is about 100 to 200 basis point benefit from lower OpEx overall in this kind of next 4-year horizon.

Okay. Now you have some data. I can see all the eyes perk up here. Okay. So Howard and the other execs reviewed the various business lines. This is the roll-up of those numbers that you've seen. And I'm going to walk through these in a little bit of detail. It's pretty dense. So what you'll see in the top left on the revenue side is the new other products and services are roughly $300 million of the $3 billion we did in fiscal '25. In fiscal '26 this year, we expect those new products and services to be roughly $400 million to $500 million and into '27, that will grow to $500 million to $600 million.

And by fiscal '30, we expect that to be $1.5 billion to $1.8 billion. That is impressive, impressive growth. You're talking about a CAGR of over 40%. So that is really part of the main message today is the amazing growth that we're seeing from these new products and services. Now let's look at the core tracker part of our business, $2.7 billion in fiscal '25. And that's -- this year, we expect that to be $2.9 billion to $3 billion. That's our outlook for this year.

And I'll remind you that we -- this is -- we completed 2 quarters. We raised our outlook at the end of Q1, raised it again a few weeks ago at the end of Q2. And this is the detail behind the outlook that we provided 3 weeks ago. Next year, we're seeing an initial outlook for fiscal '27 of $3.1 billion to $3.2 billion, going to $3.3 billion to $3.8 billion. Now many of you might say, gee, that looks conservative. Well, we actually are not prognosticating the tracker market in 2030. We're taking the industry experts who forecast the tracker market and aligning our numbers to the industry. And your question is why?

Well, it's very -- there's a lot -- you all have forecasts. So many of my sell-side and buy-side friends out there, you have numbers that are way higher, way lower in between. They're all over the map. And so our view is we're going to align with the industry experts, Think of those as the -- not the buy side or sell side, but the industry experts will align ours. And if the market does a lot more, which we hope it does, we'll do more. If it's less, we'll do less. And so our forecast is based on the industry outlook and for the tracker piece.

Now on the profitability side, this is a little -- I'll unpack this in some detail. The tracker side is relatively straightforward. The other products and services, though, in fiscal '25, the actual profitability of those was $52 million on $300 million roughly of revenue. In this year, fiscal '26, you'll see that EBITDA is $20 million to $30 million, down from last year. And you may ask why? It's because we're investing heavily in the technology to prove out and drive the cost down of the new acquisitions that we've done, invest, commercialize and then globally roll out.

Now the benefit, what do we see from that? Well, in fiscal '27, we see the profitability of those other products and services tripling. Huge growth in profitability from '26 to '27. And then in fiscal '30, we see a really strong contribution of profit from those other products and services up to $345 million to $375 million of EBITDA from that category.

So now let's look at the summary. And what we see here in fiscal '25, our actual results, $3 billion of revenue, $776 million of EBITDA and free cash flow of $622 million. In fiscal '26 this year that we're in, the outlook that we just provided, $3.275 billion to $3.475 billion. Very strong EBITDA, $775 million to $815 million. Our adjusted free cash flow, really new data important, $400 million to $500 million of free cash flow. And the outlook now that you're seeing for the first time for '27, we're seeing 10% growth. And again, we're doing this pretty much like 6 months before we normally would provide an outlook for '27. So this is a -- we're doing this to give you context really for the 2030 targets.

But our initial outlook today here 6 months away from next year starting, we're planning for 10% growth over '26. Adjusted EBITDA of $800 million to $900 million and adjusted free cash flow of $550 million to $650 million. And then as you look out into 2030, we call this a target, not an outlook because, again, the industry is hard to predict what will happen with the industry. But our target for 2030 is $4.8 billion to $5.6 billion in revenue. We're looking at EBITDA of $1.1 billion to $1.3 billion in EBITDA and adjusted free cash flow of $800 million to $1 billion of free cash flow.

So now let's talk a bit about capital allocation. I always think about capital allocation as that is a job of management to do a great job on behalf of you, our shareholders and our investors. And our goal is to drive a really strong capital allocation strategy. Well, the net of it is we're not changing our tune today. It's the same message that our priority is, number one, invest in internal growth. Organic investment is the best return. You saw today the inverter announcement that we've spent a lot of time and energy to go build out a really sort of next-gen piece of technology. And you're going to see today outside and you heard it here, the amazing tech that we've built. That's number one.

Number two is M&A, deploy your capital to buy companies to generate better value for your customers. And number three, it would be return capital to shareholders, which, as you know, there's a sort of standstill with the Flex spin, but we won't talk about that until next calendar year when that expires. And so now just look at the investments that we've made in R&D since '23. This year, estimate over $100 million of R&D spend in fiscal '26.

A lot of that is companies that we've acquired and perfecting that technology. And we plan on investing about $500 million in additional R&D spend between now and the end of 2030. For that investment that we've made, we have 1,400 patents issued and pending. As Howard mentioned, out of our 1,700 employees, Howard, 600 are engineers. I mean this is a true engineering-led company.

Now let's look at category 2, which is M&A and investing in these companies. We have really deep domain. We talk about the 3 key pillars of who we are: mechanical engineering, electrical engineering, software engineering. Those are the 3 things that we are world-class at and no one can debate. The acquisitions we've made to date all fit within those 3 areas that we have deep domain. Not that we wouldn't go outside of that, but they're right in line with our strategy. And so you'll look at the strategic fit of these is pretty obvious.

And I was talking with Peter Aschenbrenner, our Head of Strategy, and we've been trying to kind of lay breadcrumbs over the last year. And I think you'll agree that with our earnings calls and whatnot that we've kind of telegraphed where we were going today. Peter said, I think, we're laying more than breadcrumbs, more like pieces of bread. So it's maybe no surprise to you the announcement of Nextpower today and this integrated platform strategy. So I think you'd all agree that this unveil today is kind of right in line with where we have been sort of talking and messaging with the company.

And you'll see us continue to invest in R&D and acquire more companies. Now one of the outputs of a great company is return on invested capital. And I'm not going to share the charts and compare. We could do that, and you could do your own math. And you'll see that we are top decile of return on invested capital of companies out there. And so if you think about why does ROIC matter? Well, it's the same math that we talked about on the panel, LCOE, that's effectively a similar metric, NPV, ROI. They're all the same. But ROIC to us is kind of a religion.

It's -- I'm going to take money and I'm going to invest it in a project or a company or R&D and then what return do I get from that investment? And you've seen very disciplined model of -- with the companies that we've acquired, the prices that we've paid are appropriate. We're not overpaying for a bunch of companies. It's a disciplined process. We've got a really, really amazing corporate development team here. Some of them are walking around here. So really, really great team. I'd encourage you to meet them.

And this high return on invested capital, what does it mean? It means, one, that we're capital efficient. We're making good decisions. We're good capital allocators, a critical job for us running a company. It second means that we're driving good operating margins. It's good discipline. We're not spending too much and we're driving great profits.

And lastly, I'll touch on our recent JV announcement in Saudi Arabia. This is an example of kind of the disciplined approach to driving ROIC and a good model for our shareholders. That market requires factories, local content. You got to build factories that takes money and capital. The wholesale energy prices in that region are incredibly low. But they've got a vision, this Vision 2030 is really amazing vision of driving huge amounts of projects that us, on our own, if we were to compete and win all that business, it could be very challenging on the margin side.

With a local partner, we think we can do better on the margin side. And importantly, we won't consolidate the JV. It's roughly 50-50, but we won't consolidate. And what that means is that as we win business there and hopefully get to #1 share in that market that we'll have a really strong P&L and still have a high return on invested capital. So I'm going to close with -- this is a really, really compelling story. You heard from Dan, super exciting, this energy super-cycle. It is just it's here, it's real, and the demand drivers are incredible.

You heard from Craig and the team, that our customers are partners, and Jonathan. It's really who we are, customer first. Now we have more products and services to go drive revenue and make happier customers, with happier customers comes margin. We have a really compelling business model, capital-light, disciplined operations, a fortressed balance sheet. And as Dan says, culture is probably the most important thing. We have an amazing culture of innovation and a track record of execution.

So with that, I'll invite Howard and Dan, and we're going to do some Q&A for about 15 minutes.

Fabulous. Thank you all. We'll take your questions. Yes, sir. Are we bringing a mic around for the questions? Yes.

I wanted to start, Vikram from Citi, about your thoughts about return of capital to shareholders. If I do some of the rough math on acquisitions, it seems like the return on invested capital on acquisitions is pretty high. If you add $500 million of R&D spend over the next few years, add the acquisition capital of $200 million to $300 million, it seems like the acquisition multiple on those assets drops to 2x to 3x adjusted EBITDA in 2030. How does the return on buying back shares or dividend compare to that? What's the rationale for returning the capital to shareholders? Is that the opportunity for acquisitions are not that many and the right use of capital for that is to return to shareholders is...

Yes. Great. Thanks for the question. We'll do a 2-part answer. First is the strategic value of what we're doing. So when we bring in new tech, it essentially delivers a mountain of value for our customer. So then a suite of projects gets delivered. Also, as Chuck indicated, when we first do an acquisition, a number of these companies are early stage or need additional investment. So when we started Nextracker, our margins weren't where the tracker business is today. It takes a few years to operationalize and then get the true value and scale.

And so now we're seeing the power of that happening with some of the earlier acquisitions. So the results of our strategy, both with organic development and with the acquisition is being realized in the exemplary financial results we're achieving.

Chuck, can now you handle the second part comparing that to the dividends?

Certainly. So we're not going to address or talk about a buyback or dividend program today. We've been super clear that, that sort of standstill or lockup is through early next year. And at that point, we'll review with the Board, but we are not going to talk about or kind of sort of estimate or give you signals of what the plan is. So I'd say, stay tuned on that one.

Great. Moses, is there a microphone? Joe, then Moses.

Moses is not going to look away. Just speaking about automation, you've talked a lot about robotics at the QC level, operating projects. But with the exception of foundations, I didn't hear much today about automating the assembly process, in particular, when we're talking about moving modules around. I'm wondering if that's part of the plan? And if so, how?

Yes. Thanks for the question, Joe. First, we're excited about robotics to help in all phases of construction. There are many great companies involved in module assist with robotics, and Nextracker partnered with many of them today. And so we're definitely part of that ecosystem. That's awesome. As covered by Jake Morin, our Chief Product Officer, we're ready in semi-automated installation of foundations with our machines. And the machines I can see right out our window during the tour part upcoming, we're going to go outside and look, you're going to see those firsthand.

And for example, with the Earth Truss system, we acquired this incredible technology from Ojjo. All the operator does is load one part then pushes a button in the machine in fully automatic using GPS and a very sophisticated control system will go to precisely where it needs to go, locate, orient the part, drill into rock, blow out the dust, set the foundation within about a centimeter of precision in one continuous automated robotic operation.

So as we move forward with that technology and other technologies, both on the foundation and other mechanical parts of the system, we'll increasingly be bringing robotics to bear more automation, computer control, as Jyoti Jain covered in our NX One system, knowing where all the materials are there. And so over time, you will see more robotics done in the field. And if we don't see others very active working on certain areas to add value to customers, we will take it on and solve it.

Okay. Moses.

Two related questions on pricing power and the product road map. If you start to see the bundled product strategy gain, let's say, majority traction, something that's really looking quite material. And typically, for those customers, they would then see like the cost savings, at time, a headache thing, warranties under one umbrella, all of that. Would you then potentially see more pricing power than I think what Howard you walked through per product so that the implied price curve at each product, even if it's sold as a bundle, is actually angled flat or up instead of the typical industry modest deflation? And then how do you think of this bundled product strategy rolling out in U.S. versus the international markets, which are quite different?

Okay. So -- we want to drive cost out, friction out. And there's a certain amount of that we absolutely want to pass on to the customer because the lower the cost and price of solar, the bigger the market. That's what's driven the whole industry. There's been a cost curve down. I mean, solar is a factor of 10 to 15 less than it was 12 years ago in terms of cost. That's why it's the #1 source of new power generation. So we want to keep that going. Of course, we think that the bundle can be very competitively and fairly priced to our customers. Meaning we earn a fair return and so does our customer partner. That's our strategy, and that's how we want to keep driving the market.

As far as going international with the bundle, our strategy is to first focus on the U.S. We have the strongest position globally in the U.S. Wood Mac quoted we had about a 45% market share last year. So we have a very strong position here. the center of gravity for the company is here. The demand for a bundled solution is starting here. So our strategy is get it right here and over time, migrate it out. Now we are beginning to do that selectively. For example, in Australia, Dan was just there. We rolled out this new Earth Truss foundation system to the Australian market.

So we're going to be doing that selectively over time internationally. But our 2030 plan absolutely contemplates a global market for the bundle. Great question.

Just building on it, being in Australia last week, it was fantastic. And seeing our Earth Truss technology on the ground there and customer -- the customer response was very overwhelming. It turns out a lot of the sites down there are very rocky. It's perfect technology. And so that's an example of what we're going to keep rolling out.

Thanks, Moses. Phil?

Great. Thanks for the great presentation, the detailed view into your vision and what to expect ahead. As it relates to your dry run, this is the dry run for tomorrow, right, Howard. I got to imagine that tomorrow, some of these guys are going to ask like what else there might be? You guys have an impressive collection of offerings at this point. But given the R&D spend, I got to imagine there might be more behind the curtain. So maybe a peek into that would be very interesting, if possible. And then in terms of additional gaps in the offering, what else might there be?

And then secondly, you talked about in your prepared remarks, you used to address 10% of the wallet share. Now you're at 30% roughly in your fiscal '30 guide. What do you think the underlying assumption is in terms of the amount of wallet share that you can have access to or is baked into your fiscal '30 assumption or guide? How much wallet do you expect to get in that fiscal year 30?

Thanks, Phil. You have always been the -- set the gold standard for being able to like pack as much into a single question. And it's...

In a very astute way.

And gracious way. So thank you for that. I'll take the first part. What else? Hey, we've only today announced we're launching in the power conversion space with inverters and converters for solar and storage. What else you got? Well, I will share something that it was on -- one of the logos was on our screen. We just acquired another company last week called Fracsun, super great technology, what it is. It's actually operating in the field.

And there's upwards of 20 gigawatts of this operating with power plants. In fact, some of our customers that spoke today, it's actually on their systems. What it is, is it's a measuring a device that puts on -- you put on the system that measures exactly how much soiling loss am I experiencing in real time. And so it's a patented technology, fantastic team. We just acquired that. And that helps customers discern soiling is one of the biggest untapped opportunities to increase yield.

For example, on an annualized basis, the fleet, let's say, in the United States might be 3% soiling loss. But if you're in the West, in a place that doesn't rain, over the course of the summer, your system might be down 15% or 20% when power rates are very, very valuable. Well, to address this Nextracker -- Nextpower, excuse me. This can take a while.

Keep in mind that Dan founded the company. So Nextracker has been in his brain for quite some...

Yes. And I kind of came up -- myself and one of my former executives came up with Nextracker. Howard actually came up with Nextpower. So it's -- but I'm happy to transition because it's more appropriate. But this is why earlier this summer, we announced acquiring a robotic cleaning technology and team. And we have a tremendous amount of experience with this operating in the Middle East, where you can have an Arabian sandstorm come and within 1 or 2 days, see 30% to 40% of your system power go down. So it's really needed in some markets.

And it's -- but very under-commercialized in many markets. And so in order to -- so we have a technology, we haven't launched it yet commercially, but we expect to be doing that next year. And we think we have a fantastic team, fantastic technology at a great price point and tremendous efficacy. But you want to know where to do it. Well, where does it -- because you can have certain sites be in the same town or city, one site area has fairly low soiling loss, another site has very high soiling loss.

Fracsun has developed measurement technologies to be able to pinpoint where the efficacy is for these types of solutions and has also developed a global model. And this technology is not only operating here, but it's operating in many places overseas. So that's one of many things we can talk about, and we're going to see out in the field shortly. Chuck, can you answer the second part of the question?

Yes, I'll go quick. So 2030, 1/3 of our revenue comes from new products and services, but the TAM is actually double the tracker TAM for our share of wallet. So 9% to 27%. So in theory, if we got to 100% attach rate, the non-tracker piece would be double the tracker business. And our expectations in 2030, it's only 1/3 of the tracker business. So a huge amount of room.

And I'll just add to that, that we're not disclosing at this time. We do have a detailed model with attach rates by solution set that we're not disclosing. But it rolls up and you're spot on, Chuck. Okay. I think we have time for a couple more questions. Shelly?

Yes. Dan, Howard, Chuck, this is a fantastic event. I appreciate you hosting. I have a 2-part question. The first part is when it comes to non-trackers, how should we think about the cadence of growth or the contributions from these various different products and platforms as you work towards the 2030 target, right? I'm cognizant that some of these products are in pilot phase and take time to scale. And then the second part of the question really comes down to inverters. From what I understand, it's a pretty competitive market. So how should we think about the value proposition of your product and the contribution from this specifically versus eBOS?

Great. I'll take the second part of your question first and then ask Chuck to comment on the first part of your question. Thank you, Dimple. So Howard in his presentation, when he introduced our Electrical segment, and we had Ryan Schofield present on that showed in 2030 in the mid-$500 million range for revenue growth at that time. That's in the context of our target that you're $5.2 billion at the midpoint. So call it, 10%-ish of the revenue that would be electrical products.

Now we have eBOS, which we just showed the trailing 12 months being about $86 million. And that we anticipate to grow strongly with our new products and services that we're adding into that area. Inverter is also part of that. What are the features of our inverter that would enable customers to be excited about it? Well, this inverter and power conversion system, our initial market for that is going to be the United States. It has the following attributes: higher efficiency, very strong reliability, modularity, meaning very efficient operations and maintenance and manufactured in the United States with strong cybersecurity.

Those aspects resonate with our customers, and we're confident that, that product will have uptake in the market. At the same time, as I just contextualize, we're not putting a target out there that is showing we're going to take the moon with any of these existing products -- product families, but rather, we're going to create expectations we can meet and beat. That was the whole theme of how we've come to market through the IPO. And every single expectation we've tried to create both with our customers, our employees, our suppliers and our investors.

Chuck part 2?

Yes, I'll go very quickly. So we gave you an initial outlook for '27, which implies double-digit growth. But again, it's -- normally, we'd provide that 2 quarters from now. And then some of these businesses are brand new. For example, the frame business, you met the CEO of T1 today, our first customer. And so that will scale. That market is huge actually, but we have modest expectations. And Dan mentioned the inverter. Other ones are ready to scale. We have the new PowerMerge product coming out early next year, and the eBOS business is already doing quite well.

The foundation business is super exciting. I mean there's a lot of opportunity there. But our view is it's going to be kind of steady with some really nice growth coming from the new products and services. And remember, in the tracker, we'll see what the market does. And we expect to maintain or grow share. If the market is a lot bigger, we'll grow faster.

Great. I'll take this opportunity for a quick wrap-up. First, for those of you that came here, thank you for braving the flight, the current system with flights, to be here; for our online community, thanks for dialing in and your participation. We really appreciate all the investors with your trust and confidence and the analysts that have thoughtfully covered the company. I want to take this opportunity -- we've been talking a lot about customers because we really gravitate toward being customer-centric, but I really want to take this opportunity to thank the Nextracker team for everything you've done to get us to this point.

We keep expanding to provide more products and services, all the way from our ambassadors in the field that are supporting customers during construction, our construction managers through everyone in every department. And at this moment, I just have to give a huge shout out to our marketing department. And as Chuck mentioned, we pulled out where you're sitting. It was Chuck's idea, Hey, why don't we do this here? We wanted you to really have a feel for the company, which is why you're right in our headquarters where normally, there's about 75 workstations here, and we're going to take you in the field and show you these technologies.

Thank you, and we look forward to the tour part of the event. This concludes our webcast.

Thank you.

Good afternoon, everyone, and thank you for standing by. My name is Nicole, and I will be your conference operator today. Today's call is being recorded. I would like to welcome everyone to Nextracker's Second Quarter Fiscal Year 2026 Earnings Call. [Operator Instructions]

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 Nextracker's Second Quarter Fiscal Year 2026 Earnings Call. I'm Sarah Lee, Nextracker's Head of Investor Relations, and I'm joined by 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. In such statements involve risks and uncertainties that may cause actual results to differ materially from our expectations.

Those statements are based on 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 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. 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, we 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 first half of fiscal 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 of systems 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 U.S. 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 installation during the construction phase.

We also launched NX PowerMerge in September, our new electrical balance of system trunk bus product and achieved record eBOS bookings in Q2 and the highest quarterly sales in Bentek's 40-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 partnerships. Today, we announced we entered into an agreement to form Nextracker Arabia, a joint venture with Abunayyan Holding, expanding our manufacturing footprint and commercial presence across the Middle East and North Africa. Nextracker has a strong legacy of reliable performance in Saudi Arabia, starting with KSA's first utility scale installation, the 405-megawatt Sakaka solar park where our system has demonstrated exemplary reliability. The JV will localize production, strengthen regional supply chains and advanced 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, 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 TrueCapture and our Navigator control system, underscoring the value and 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 NX Horizon-XTR 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 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 U.S., 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 U.S., 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 in FY '25, we 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 by 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 U.S. components and ability to deliver 100% domestic content to U.S. 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 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.

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 and 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 '26 outlook. We now expect revenue between $3.275 billion and $3.475 billion, adjusted EBITDA between $775 million 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 232 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 U.S. policy environment remains intact and permitting processes and time lines 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 Instructions] Your first question comes from the line of Mark Strouse with JPMorgan.

Yes. So Dan, I think being the first quarter that you guys were reporting since One Big Beautiful Bill but also safe harbor being updated. Just curious for your take. I don't want to 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 first IPO-ed, you were quoting some industry sources for some pretty significant growth. Just curious with everything that's kind of changed between now and then how you're thinking about that going forward.

Yes. Thanks, Mark. We feel the fundamentals for solar are very strong. We've spoken to our customers and in the U.S., 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. What's interesting is as the industry moves forward, how the economics of solar stack up when tax credits are gone down the road.

And way back about 6 or 7 years ago, Nextracker did the largest solar project in the Western Hemisphere at the time. It was a project in Mexico, we did for now called Villanueva we did with our partner, EPC partners solve. And there were no tax credits down there. That was an all-source solicitation. And that project stood on its own, the economics work, the no tax credits in North America. So since then, 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 Nextracker platforms have our increasing yield.

And so many of our customers share our view that the industry can stand on its own without tax credits and be economically viable in most of the U.S., most of the world. While this has happened this year, what we've seen is also significant escalations in the cost of fossil power generating equipment on CapEx. And we've seen a lot of volatility on fuel pricing and things like that. So we're confident in the long-term prospects for our industry for solar. And we feel great about our current position with record backlog today at over $5 billion.

Your next question comes from the line of Brian Lee with Goldman Sachs.

Kudos on the nights execution here. I guess just one question I'd have around the cadence for this year. I know you don't necessarily control the project timing. But first half of the fiscal year has been really strong, evident in the numbers here. So 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 lines 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've stated, Dan, record bookings in eBOS, can you guys provide any kind of rough thoughts around the bookings mix, tracker on tractor U.S., non-U.S.? I'll take a stab at that one.

Great. Thanks, Brian. I'll take part 1 and Howard will take part 2. So we had a really, really strong first half of the year. Kudos to our operations team, an 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 basis. 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, the 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 in the shareholder letter that you'll see Q4 is a bigger quarter than Q3. And so I think overall, 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 in scale, it is becoming a little more linear.

Howard, do you want to take the second part?

Sure. So you asked about eBOS and the mix of non-tracker and tracker and then sort of a regional look. So kind of a multipart question there. Thank you. We are -- we have a strategy of 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 a number of acquisitions, as we've announced, one of them you asked about is the eBOS. We acquired Bentek. And in the first full quarter that they were with us we achieved a record bookings, and that's over a 40-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 Onsight, 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 will get into how these -- the tracker, non-tracker business and we'll give a lot more detail on how they fit and how they're going to grow and what the percentages are, et cetera, there. So please come for that day on November 12.

And I'll just say that from a U.S. and non-U.S. mix perspective, the U.S. has really had a very strong run, and we expect that to continue. And meanwhile, as we noted, revenue was up 49% year-on-year in the U.S. 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 of backlog.

Your next question comes from the line of Philip Shen with ROTH.

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 who 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 the coming quarters, especially with the increased number of product offerings?

And my second question here is on the poly 232. I think in your shareholder letter, you talked about the steel and aluminum 232 impacting your back half margins. But on the poly 232, which is potentially going to be announced in the next few weeks. How are you and your customers prepared or potentially high 232 tariff that may have a limited quarter level for the different segments of the value chain?

I'll take the first part, Phil. Howard, and Dan will take the second part. So yes, 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 and particularly for foundations, which we're very pleased about.

Another quarter of increased backlog. So you can infer from that, that monotonically increasing backlog is a good thing. And so we are going to get into it 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.

Phil. So with respect to 232 as it relates to poly, so we don't buy poly wafer cells. I will say though, last week, we toured a major new 5 gigawatt module manufacturing facility. I had the pleasure of meeting some executives from Corning, which has 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 in a position to really comment on how all that's going to 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 has been involved in advanced module frame 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 Nextracker 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 our amazing acquisition we did with Origami with their frame design address those issues by providing more rigidity to the solar panel, which provide longer term, we 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 U.S. 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 the solar power system and the stream thing will help get that done.

Your next question comes from the line of Praneeth Satish with Wells Fargo.

Maybe just kind of digging into the T1 Energy partnership that you announced a few weeks ago. Are you viewing this as maybe a blueprint for future deals with other U.S. solar manufacturers? And if so, how far along are those discussions? Could we see more deals this year? Or do you view the T1 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 track our product that better integrates the steel frame designs and enhances the overall performance?

Yes. Thanks, Praneeth. For 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, RE+, which was last month and in the run-up to the T1 transaction you mentioned and afterwards.

So we see this as a great win for everyone. Really owners, the IPPs that are operating these plants want to see longer-term durability the module industry wants to be able to source competitive domestic product and increase their U.S. content. And EPCs want more durable solar panels to handle and the ship in 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 the frame, you 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 it's a co-optimized structural element that has to survive dynamic forces. And it seems that it's true with the solar panel on the tracker. So there's a lot of opportunities to co-optimize these products and to really serve the industry. both before frames that work with Nextracker as well as other support systems. We're very excited about this product family, and it's been very well received in the market.

Your next question comes from the line of Sean Milligan with Needham.

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

Yes. This is Howard. Yes. 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 just the energy yield has gone up over time with innovation. We've been able to -- back 20 years ago, for example, even in a place like Germany, Southern Germany, a tracker gain was about over fixed till 12%. You fast forward to today, 20 years later, because a lot of the innovations that Nextracker 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 on a mountain side, these niche applications that are incredibly difficult, you might -- it might be appropriate for fixed tilt.

Your next question comes from the line of Dimple Gosai with Bank of America.

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 JV? Is there any local manufacturing planned or in place? And then further to that, what kind of revenue contribution or manufacturing footprint you expect by '27, right? Like maybe give us a sense of pricing or margins in those regions compared to the U.S., please?

Yes, Dimple. Dan here. I'll provide a bit of context then 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 7 years ago, we did the first utility scale project in Saudi Arabia with the 400 megawatts Sakaka 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 Abunayyan, one of the most respected participants in the water, energy and infrastructure industries with 75 years of experience. And local content matters.

So you asked, are we increasing capacity. Yes, there's actually a factory. Typically, we work with other partners to run factories. In this case, we actually stood up an Nextracker factory in Saudi Arabia. And Chuck is going to comment on the -- how we're dealing with that in a moment. And that facility is shipping finished goods. We have multi-gigawatt orders, we're fulfilling right now and a long history with delivering well over 6 gigawatts across the region. Now that region is very challenging environmentally with extreme temperature win sands. And our systems have really stood up well with exemplary performance, differentiated reliability and higher energy yield.

Now the way we structured this particular business arrangement in Nextracker Arabia is it's a joint venture. There's a technology licensing component, and we're not going to consolidate. Chuck 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.

Sure, Dan. So first of all, before I get to the market, I just want to say that we couldn't be more pleased, as Dan mentioned, because finding the right partner is nontrivial. We found the right partner, and we believe they felt the right partner to an Abunayyan Holding. And 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 going to bring the market. We're going to bring the technology together, we're going to go and win. And so we feel very good about the plan that we've developed together and to execute.

And we're going to 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 want to make that clear, which is a very strong market, okay? They have a 2030 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 are some very strong markets within that region that we can go and conquer together. So very exciting. And with that, I'll hand it over to Chuck.

Thanks, Howard. Yes, Dimple. Abunayyan is really a blue-chip company. It's the kind of partner that a U.S. specifically Silicon Valley technology company would want to partner with. And we spend a lot of time with them working on this transaction, and they are really incredibly sharp astute people, great partners. As Dan mentioned, this is going to be a roughly 50-50 JV that we do not plan to consolidate. And it really fits with our kind of asset-light model kind of high ROIC. And given that the JV will have factories and operations, we think it's better overall for our financials that way.

And then on the revenue side, we will have a license fee 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, the aspirations in that market are incredibly strong, and we're really excited about the future.

Your next question comes from the line of Corinne Blanchard with Deutsche Bank.

Maybe the first one, can you talk about to capture. I think you mentioned in makeup 2% of the quarterly revenues -- so maybe I or if you can talk about the expected contribution through 2026. And then maybe a quick regional market update for trackers would be great.

I'll take the first part, Corinne. TrueCapture, as 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 commissioning and as predicted, it rebounded to a really strong quarter of around 2% recognized this quarter. Howard, do you want to take the second part?

I'll just say that adoption continues to increase. So when we did the IPO back 2.5 years ago, almost 3, we're at about 1%. So the adoption of our TrueCapture software continues. And we keep adding features and capability and the energy yield keeps going up. So it's more and more compelling with a very strong backlog for TrueCapture.

Your final question comes from the line of Ben Kallo with Baird.

My question was just about you guys have made several acquisitions, but half a dozen. And just thinking about your appetite going forward? And then also how we think about how you feed the different acquisitions with capital, whether that's R&D or other types of capital going forward? How you allocate that and how we should think about that number as we go forward to next year as you grow each of those businesses integrate them?

Thanks, Ben. I'll take the first part. This is Dan. Chuck will take the second. So first, we view the 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 as opportunities for greater yield. And we factored that into our -- also complement that with our own thinking and experience about how to get more profitability out of these systems and help drive lower LCOE and so forth.

So we've significantly increased our internal R&D budget. We've roughly tripled it in the last 2 to 3 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 frame activity. As I mentioned, Nextracker's worked on that for many years. There's features in almost every module frame that's sold today that has our DNA there. We really saw we needed to really help control that to provide value to the module companies, EPCs and owners. And so we had an internal program for the last few years to develop the next-generation advanced module frame.

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 of its traditional aluminum frames. So we really evaluated on an objective basis that they needed -- they've taken the company as far as they could. They needed sort of an exit. And so we evaluated that and thought hey, 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. And in terms of capital allocation, can you speak to that, Chuck?

Yes. Certainly. And Ben, 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. And we are really, really intentional with not making the mistake of killing the company you've acquired by not investing in it. We actually buy the company, we have an investment case, and we stick to our guns. We're 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 -- and I'm really proud of the work. And it's really bearing fruit, you can tell. And I think so we're excited about the investments that we're making. We're not going to slow down, and we appreciate that. Dan, do you want to close?

Yes. I do want to just say on these new businesses were growing. It takes time to operationalize these and get the leverage of scale with it 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.

Good afternoon, everyone, and thank you for standing by. My name is Jason, and I will be your conference operator today. Today's call is being recorded. I would like to welcome everyone to Nextracker's First Quarter Fiscal Year 2026 Earnings Call. After the speaker's remarks, there will be a Q&A session. At this time, for opening remarks, I'd 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 Nextracker's First Quarter Fiscal Year 2026 Earnings Call. I'm Sarah Lee, Nextracker's Head of Investor Relations, and I'm joined by Dan Shugar our CEO and Founder; Howard Wenger, our President; and Chuck Boynton, our CFO.

Following brief prepared remarks, we will transition to a Q&A session. 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 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 on Form 10-Q and annual report on Form 10-K, which 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.

Now I will turn the call over to our CEO and founder. Dan?

Good afternoon, everyone, and thank you for joining us. I'm pleased to report our strong start to fiscal year '26 building on the momentum we established last year. Nextracker continues to deliver consistent growth and strong financial performance driven by technological leadership, operational excellence and relentless focus on customer value. We delivered robust financial results across all key metrics. Q1 revenue grew 20% year-over-year to $864 million, and adjusted EBITDA increased 23% to $215 million. Our backlog hit a new record of over $4.75 billion, reflecting healthy global demand and an increasingly strong competitive position. We also continued to generate solid cash flow and strengthen our balance sheet.

We're particularly pleased with our strong Q1 performance, considering the evolving U.S. policy environment. Our ability to consistently execute in challenging conditions speaks to the strength of our team, differentiated products and the quality of our customer relationships. One of the most impactful developments in the quarter was the passage of the OBBBA reconciliation bill, which addressed a significant portion of the uncertainty surrounding solar manufacturing and investment tax spreads.

While further clarification is expected, particularly around treasury cuts and safe harbor provisions, we believe Nextracker is well positioned by virtue of our deep backlog and highly flexible U.S. supply chain. We've worked tirelessly with our suppliers to open and expand over 25 manufacturing facilities across the United States. The Federal Energy Regulatory Commission reported that solar accounted for more than 80% of new U.S. generation capacity in 2024.

Globally, solar contributed more than twice as much incremental electricity as the next largest energy source. And looking forward, the International Energy Agency predicts that solar will become the largest source of global electricity supply within the next decade. These powerful trends reinforce our conviction to solar and Nextracker, in particular, will play a central role in the future of energy. We're scaling our platform to address this rapidly expanding opportunity and announced this morning's 3 strategic acquisitions in the fields of robotics and AI.

These technologies from autonomous inspection and robotic cleaning to 3D site mapping, integrate directly with our control and monitoring systems to help customers optimize performance reduce O&M costs and lower risk. This initiative exemplifies our strategy of combining breakthrough engineering with digital innovation to deliver more value across the full life cycle of the project. As we move beyond being the global leader in solar trackers and evolve into a broader technology platform for utility scale solar, we're excited to provide a more detailed look into our strategy at our upcoming Capital Markets Day on November 12 at our headquarters.

With that, I'll turn it over to our President, Howard Wenger, to go deeper into our Q1 performance and the exciting developments across our technology portfolio.

Thank you, Dan. Q1 was another great quarter for Nextracker, marked by strong customer bookings and backlog and excellent operational delivery. This forward momentum continues to be driven by a flight to quality in the market. As Dan noted, our performance is especially encouraging given the ongoing U.S. policy dynamics and further underscores the strength of our global leadership position. According to WoodMackenzie, Nextracker is now the #1 tracker provider worldwide for the tenth consecutive year, increasing our market share to 26% during 2024. We're in the leading market position in North America, Latin America and Oceania, which includes Australia. We are pleased to report we are also the top provider in Europe, highlighted by the flagship projects like the 550-megawatt Oricheio solar power plant in Greece, one of the largest in the region.

Moving to pricing, cost and project timing. In Q1, pricing for Nextracker was generally stable, and the company continued to manage costs well. Project timing was also stable and manageable on a portfolio basis with some projects accelerating and some pushing out consistent with previous quarters. Our backlog and large project portfolio provided excellent visibility and helped reduce uncertainty.

On the product side, we've continued to experience strong demand for our core NX Horizon tracker systems and TrueCapture technology. Our recently introduced Hail Pro system and expanded XTR tracker series are seeing rapid adoption with quarter-over-quarter sales up 43% and 22%, respectively. Hail Pro is winning in the market due to its ability to produce both hail damage risk and insurance costs. This is yet another example of innovation driven by customer feedback and in this case, the insurance industry.

We are pleased by the positive traction we are seeing as our technology platform expands to a more complete solution, including adding foundations in EBOS to our industry-leading tracker systems. Our foundation products and services continue to gain momentum with cumulative sales of NX Firth Trust now over 1 gigawatt. We are also excited by customer reaction to our new EVOS solutions which we began selling during the quarter. We are optimistic about our ability to significantly scale our EVOS production.

As Dan mentioned, we recently executed a series of strategic technology acquisitions, extending our platform and capabilities in robotics, automation and AI. This includes acquiring the company's Onsight technology and Amir Robotics and the IP from SenseHawk. These acquisitions complement our own internal efforts by incorporating ground-based robots and drones to provide incremental customer value across the full project life cycle. Onsight's autonomous inspection robots and field-based detection technologies, are already in use and available for immediate sale to U.S. customers. We'll be providing detailed global rollout plans for these new products at a later date.

To lead us in this rapidly emerging area, we have appointed Dr. Francesco Borelli is our new Chief AI and Robotics Officer. Dr. Borelli is a globally recognized leader in AI and predictive model-based control systems. He brings decades of experience in autonomous technologies, and he played a key role in developing our true capture program. We're very excited about the potential of AI, robotics and automation to further enhance the full customer experience and help drive project life cycle value.

With that, I will now turn it over to our Chief Financial Officer, Chuck Boynton, to go over our financial results in more detail.

Thank you, Howard, and good afternoon, everyone. I'm pleased to share our financial results for our first quarter of fiscal year 2026. Q1 revenue was $864 million, representing year-over-year growth of 20% Q1 adjusted EBITDA expanded to $215 million, a 23% increase year-over-year. This translates to an adjusted EBITDA margin of 25%, which was an increase of approximately 100 basis points compared to the previous year. Our adjusted gross margin was 33%, we recognized a 150 basis point benefit in Q1 for 45X related to historical shipments. We continue to believe that our gross margins should be in the low 30s with OpEx in the 9% to 10% range, yielding operating margins in the low 20s.

On the cash side, we generated $70 million in adjusted free cash flow during the quarter down from the same period last year, primarily driven by growth investments in capital expenditures and working capital. We see strong cash generation throughout the year with over $450 million of free cash flow. We exited the quarter with $743 million in total cash with no debt. Our strong balance sheet and cash flow generation remain competitive advantages.

Moving on to our outlook. Looking ahead, our outlook assumes the current U.S. policy environment remains in effect. And in addition, that permitting processes and timelines will remain consistent with historical levels. As Dan mentioned, we are closely monitoring potential updates to safe harbor provisions and other regulatory actions, which could impact project timing customer investment behavior and our financial results. For the full year fiscal 2026, we expect revenue to be in the range of $3.2 billion to $3.45 billion, with relatively balanced quarterly revenue for the remainder of the year. Adjusted EBITDA to be in the range of $750 million to $810 million and adjusted diluted EPS to be in the range of $3.96 to $4.27 per share. Our increased outlook is grounded in several key factors, including the strength and diversity of our backlog, a continued flight to quality among solar developers and the deep capability and commitment of our global team.

With that, we're happy to answer any questions you may have. Operator?

[Operator Instructions]

Our first question is from Dimple Gosai with Bank of America.

Can you please discuss what conversations have looked like with developers post the OBBB? Are they kind of in wait-and-see mode? And maybe you can also just expand on bookings momentum. I know you've grown from what you previously described as significantly higher than $4.5 billion to $4.7 billion this quarter. But is that pace of bookings picking up? Or any commentary there would really be helpful.

Dimple, this is Howard Wenger. So we are in touch with our owner developers closely. And let me just start off by saying we're really happy with the company's performance and please with the quarter and the outlook for the year. And what we're hearing is that they're feeling good about their portfolios. And as you know, we team up with Tier 1 developers who are quite sophisticated. They're able to safe harbor their projects and perfect their projects. And we feel what we're hearing and what we're seeing is that our backlog is solid. No projects are dropping out, and we're looking forward to continuing to execute. And the sales team did a great job in the quarter. We had another sequential growth in our backlog quarter-over-quarter, 15th quarter in a row. And so we're seeing a good set of demand signals across the globe. So feeling very good about where we're at at this moment.

Our next question is from Praneeth Satish with Wells Fargo.

Maybe I'll touch on our new business here, the venture into AI and robotics. I know you'll probably offer more details at the Analyst Day. But just generally, are you planning to offer these solutions as a service with the recurring revenue stream or will this be primarily an equipment sale model? And then how do these robotic acquisitions integrate with your existing TrueCapture software? Are there any synergies here given that you'll have all these extra data points? And can this all be wrapped up as one service?

Praneeth, Dan Shugar here. We're so excited about the suite of robotic technologies that we've just launched. In terms of the go-to-market, there's a range of solutions that we brought in today. For example, we have drones. We've actually -- we completed the acquisition of this technology multiple quarters ago, that's already being used, that's integrated into our existing TrueCapture technology, where from using the technology from SenseHawk that we acquired, we're using that to actually create a complete as build digital twin of the sites being used in our TrueCapture technology that's been implemented for a very long time already in use, and that's happening, and that goes with our TrueCapture. We have these other technologies with robotic cleaning and with the Onsight Technologies, where we have both a ground-based robot and a stationary camera that detects a fire and other parameters on site. So how that's integrated in, we'll be getting into greater detail later. But these technologies are well along. They're either being offered commercially today or they're in a fairly advanced stage of productization.

Our next question is from Brian Lee with Goldman Sachs.

Just had two. One, Howard, going back to the comment around backlog. You said it did grow quarter-on-quarter. I know you changed kind of the language semantics a bit. So I wanted to confirm that, that was the case. It did grow. And I guess that implies bookings were $900 million, maybe close to $1 billion again. And curious if anything in the quarter you saw pauses from customers due to policy uncertainty or vice versa, any pull forwards to try to get ahead of the Bill passage? And I had a follow-up.

Got it. Brian. So yes, I want to confirm our backlog grew quarter-over-quarter. Your math, you can do the math in terms of -- and you just said it in terms of what we booked at lease and get in the ballpark. That's a number that we don't disclose, but yes, our backlog grew quarter-on-quarter for the 15th consecutive quarter for the company. Happy about that, and what we're seeing is the pipeline is actually growing for the company. As you know, we have a global business. And we're still roughly tracking on the 1/3s, 2/3s as we grow, 2/3 being North America and 1 for Rest of the World. And -- but we're not seeing pull-ins per se. And when we talk about North America and the U.S. in particular. We're not seeing pull-ins on projects like in a very broad systematic way, we're seeing some pull-ins. We're seeing some pushouts.

And those are -- I'd characterize those as normal because we have a broad portfolio of projects and just that's the way project schedules are. Some can pull in from one quarter to the next, some can push out. It's very normal facts -- fact pattern with respect to operations, now there is -- we expect clarity on the treasury guidance coming up in a few weeks. That could change some customer behavior. We don't know. And we'll know then. And we are seeing some limited amount of safe harbor interest, and we're prepared to address that with our very robust supply chain and flex capacity. So hopefully, that gives you more color and you had a follow-on, Brian.

No, that's great. I appreciate all that color. Very helpful. And if you could bear with me just one more math question and then I'll get out of here. On the IRA credit impact, the vendor rebate, I think it was 11 percentage points on gross margin this quarter. That was up significantly like 300 to 400 basis points incremental versus what you've seen in prior quarters. What's kind of driving that? Because I did see international revenue growth was better than the U.S. this quarter. So curious how that worked out this quarter to be such a higher impact and then how we should think about that number in relation to gross margin, maybe going forward, is it going to stay at that level? Is it a flat line? Does it go down?

Yes. Thanks, Brian. This is Chuck. So we did have a really strong quarter, 45x was a little higher than normal. I had mentioned in the prepared remarks about 150 basis points. That's a little more than $10 million incremental benefit. And that's really relating back to kind of vendor reconciliations going back the last couple of years. Looking forward, we expect it to be, call it, 9% to 10% of total revenue, that's a little higher than it's been. That's partially driven by U.S. demand for U.S.-made products. So we're actually delivering more U.S. product to our customers. And with that, the costs are a little higher, but the 45x credit helps to offset that. So I do want to call out and say thank you to our operations team. They have just done a phenomenal job. Our on-time delivery is incredible, and we're delivering local around the world in the U.S., a roll hallmark working with our manufacturing partners to deliver really compelling U.S.-made content that does generate a 45X credit benefit offsetting higher costs.

Our next question is from Philip Shen with ROTH Capital Partners.

First one is on your backlog, what percentage of the backlog is safe harbored? And then can you talk separately on what kind of -- how much risk there is with the Trump executive order expected to be released August 18. And then finally, as it relates to the interior memo, where the Secretary has to review all the permitting for projects that touch federal land. When you look at your backlog, what kind of impact could that have depending on how they enforce that?

Dan Shugar here, Howard and I will tag team on this. We were thinking about this in the preparation for this call, we were thinking as a run-up over the last, let's say, year or even longer, well, what percentage was safe harbored when we ask our Tier 1 customers, how do they feel about the integrity of their pipeline, their projects, they feel good about it because safe harbor under roles that exist. So I'd say -- so when you asked the question, I think a lot of projects in the United States benefit from that. That's taking the longer view on the safe harbor. Howard, do you want to pick it up from there?

Sure. I mean we heard on Nexaris call that they feel good about their portfolio through 2029. And that's there indicate they're one of the leading developers in the country. But we -- and we work with them and other Tier 1 customers like them who echo what Dan said, they feel very good about their pipelines. They're able to manage it from a safe harbor perspective. And so we believe that a very high percentage of our backlog, that's U.S. is safe harbor to answer your question directly. And like the vast majority of it, okay? That's the way -- that's based on the information that we have.

As far as risk, again, I'd point to the [indiscernible] call Erica, we don't -- it's early to digest what the interior department guidelines are and what the treasury is going to come out with in a few weeks. And so we're -- I think the industry is still digesting it. But there -- what we're hearing is that it's manageable. The early read on this is that it's manageable going forward and that they're through the OBBB, which was the bill that was passed that provided -- that was actually a good outcome we think, for -- based on our close proximity with customers that's providing the bridge that's needed to beyond the incentive platform that we've been on for the last couple of years. So that should give you -- I think we've answered your questions, Phil.

Our next question is from Julien Dumoulin-Smith with Jefferies.

Let me just continue on that same line of thinking here. Just first, a high-level question. I mean how do you think about the cadence of the overall industry? If you think about both safe harbor dynamics that you're seeing on pull-in as well as potentially some of that safe harbor material falling off '29, 2030. How do you think about how that squares with the timing of orders and a potential eventual pickup with backlog activity, clearly not as meaningful here in the very near term. But how does it square with what you're expecting here at '25 through, call it, the next 4 years, timing-wise?

So the connection was a little bit janky, there, but I think we got the gist of it, Julien. Thank you. So we think look, 1 thing that we did is under Dan's leadership, honestly and with the ops team working hand and glove for the last few years is really spin up the U.S. domestic supply chain. We are the first company to come out with a 100% domestic tracker. We've only increased capacity since then. We have over 25 facilities feeding our U.S. business. And so we're in a really good position with a lot of flex capacity, very significant capacity. And the reason why we point that out is, should the rules dictate that, let's just say the safe harbor requirement goes up from 5% hypothetically. We don't know, but let's just say it was double to 10%. We're in position to serve our customers with additional safe harbor capability. And so yes, there could be some -- you can call it pull in, you can call it whatever you want, but there could be additional shipments by Nextracker depending on the guidance that comes out.

Yes. I'll just pile on to Howard's comments that the Federal Energy Regulatory Commission has mapped that shows last year, over 80% of the power capacity you saw in the United States with solar and Lawrence Berkeley Lab, which is funded by the U.S. Department of Energy calculated almost 7,000 projects are sold in flow plus storage. There's this incredible need for power in the United States, period. You see it dominating the news, the headlines. People are talking about other ways to make power and there's limited availability of gas turbines, nuclear is way out there in terms of time frame. And solar is available, affordable and has no fuel risk. And so we also see now storage in ERCOT and California. -- an incredible scale, keeping the lights on, you can look at the demand today. And from last week online and see that with batteries, the solar power is available till 10:00, 11:00 p.m., when folks are going to sleep and the power drops. So we think that this is going to be an enduring story. We have a very compelling manufacturing and jobs May USA, energy dominance, facts on the ground situation. we see policymakers responding to that. So we see the U.S. market despite a lot of fluidity as it's been up into the right. Our backlog reflects that. Our bookings reflect that, and our revenues reflect that. Meanwhile, we're continuing to expand overseas.

As Howard mentioned, we achieved leadership in Europe as the #1 provider in Europe. And we saw our total market share globally increased from 23% in 2023 to 26% in 2024. That's a double-digit increase globally. So we're really focused on serving the global market in global manufacturer provides tremendous strength.

[indiscernible] on a microphone here. Just with respect to the diversification comment from last quarter, about 1/3 over 5 years. Obviously, you guys have a Analyst Day target out in November here. Can you be a little bit more greatly on the different pieces that you're expecting on diversification? I know you kind of said there are a couple of them out there in the market as part of [indiscernible], et cetera. Any broader or more specific sense you can sort of coffee into that winter here in the [indiscernible].

Your connection is quite spotty, but we'll speak to the growth in nontracker technologies. So let's do a quick review. We acquired a machine learning company about 10 years ago called BrightBox. We built a fantastic software business that created tremendous value for customers help with stickiness with our track our overall value proposition and improve the yield of trackers. It also demonstrated that Nextracker knows how to work with companies that we acquire and get the technology integrated in a way that's accretive. Then last summer, we acquired the 2 foundation companies, and we've introduced those products in a major launch. That suite of products is going very well with incredible customer uptake. We're ahead of plan from a sales standpoint, and we're integrating the ops very pleased with how that's going. So far, that -- those technologies have been focused in the United States. We do plan on launching the foundation technologies in selected international markets next year. The TrueCapture software suite I mentioned a moment ago, has been offered globally for many years and in fact, is on the uptake internationally.

Now the last quarter, we products -- that's -- we're really focused initially in the United States, but we'll be at the correct time ramping that internationally as well. And the acquisitions and new businesses we announced today in robotics, both the on-site evaluation with [indiscernible] an owner asset management class.

We're going to be rolling that out both geographically and from a product diversification standpoint over time, and we'll definitely be unpacking that further at the Capital Markets Day in November.

Our next question is from Ben Kallo with Baird.

Just maybe we talked a lot about safe harboring, but if you didn't have any color on past the ITC expiration any kind of product development there. And it's a long ways away, but how you guys think about that it [indiscernible] agreements will respond in time to make projects go forward or pencil out. And then just maybe another question that you've talked a little bit about, but on the robotics and AI acquisitions, is, do you think this is like an add-on to the customer wallet? Or should we think about it maybe the question is how you price it? Is it against costs? Or is it digital costs on top of a project.

Thanks, Ben. This is Howard. So on Part 1, past the ITC, look, let's just step back and take stock of where solar spend over the last 30, 40 years, right? We first had to validate that it was reliable and technically sound. We've done that as an industry. We then had to prove that it could economically compete. We've done that to the point now where if you go to the Middle East, solar power is now $15 per megawatt hour, $0.015 per kilowatt hour. Okay. That's an unsubsidized market, free market. Nextracker has -- was the first company to be in the Middle East, where there we have an office.

We are in a great position. We can compete in that market and when we have a differentiated value proposition that we just keep building with these acquisitions and our own internal organic efforts. And so what you're seeing is that solar power, but as Dan mentioned, it is the fastest-growing, most impactful new energy technology going in, in the United States and around the world. If you look past the ITC, if we're at a level playing field, the industry can compete when you add storage to the equation, it's really an unbeatable for power dispatchable power combination.

So we feel in our engagement with very large owner developers who their companies and their investors are pouring billions of dollars into them. Why? Because they have a durable value proposition that can compete is to provide energy to the fast-growing electricity markets in the U.S., and they just needed a bridge and so we're in the middle of that bridge right now. We think we're in good stead with the OBBB. We're going to get more guidelines. But beyond that, we're -- it's durable, and it's unstoppable and we feel really good about it. And that's from an industry and company perspective for solar power.

Okay. AI and pricing. So right now, the way we're thinking about it, especially when you think about Onsight who's out in the market, it has robots and customers in 7 states in a couple of dozen sites, with real technology being deployed and being paid for. It's done what we're migrating towards is more of a robot as a service model, where there's recurring revenue for those services, and it's in addition to the services that we provide today. But as part of our whole platform development and constellation, Dan talked about tracker, which is core and we're investing a lot in tracker, we've tripled our R&D spend in the last 3 years. A lot of that going to our core tracker technology, okay? And then we're building around that with these additional acquisitions, including the robotics.

Our next question is from Dylan Nassano with Wolfe Research.

Just on backlog, can you give us an update on how much of current backlog you expect to ship over, call it, the coming 6 to 8 quarters. I think that's a metric you've shared before. And then a quick follow-up on tech when you're talking about building out the EBOS capacity, are you looking to actually expand the current product offering beyond the products you currently make to potentially compete more directly with some of the leading EBOS players?

Dylan, this is Chuck. It really hasn't changed much. It was a metric we used to publish. We stopped because it kind of was the same each quarter, call it, high 80s, low 90s would be shipped over the next 8-ish quarters. Not much movement there, and we stopped disclosing that because it just wasn't that meaningful.

And the second question on BanTech products, we'll have Howard answer that.

Okay. We offer 2 product lines through Ben tech. They cover 100% of the use cases currently in the solar industry. And 1 is based on combiner box approach and one's based on a truck-bus approach with low break disconnects. And so we are -- one of the reasons why we really like [indiscernible] was that they had a robust product development effort. They have new products in their pipeline. We're helping them bring those to the market, and we expect to be adding to the products point A to what is offered today. And point B, we're working with them to scale so that we can better match the volume Nextracker has. We have an incredible footprint in the U.S. and then first U.S. and then the Rest of the World. So there's a lot of what we upside to the EBOS business for Nextracker.

Our next question is from Ameet Thakkar with BMO.

I just wanted to ask you, maybe pivoting away from the executive order, but on section the Section 232 tariff [ investigation]. I was just wondering what sort of kind of feedback you've got from your customers on that and kind of given your ability to kind of make you work with a greater array of different solar modules that might be better positioned to kind of respond to that? Have you seen kind of -- any kind of additional interest as a result of that.

Yes. We're flexible to work with a wide range of solar panels. Nextracker has spent a lot of contribute a lot to making these panels compatible with our tracker, if you actually pull the specifications of solar panel, you'll see that almost every panel has a 400-millimeter hole in the frame. That came from Nextracker about 12 years ago, 13 years ago. And so we have a very strong product management function that closely coordinates with their counterparts at the module companies. It's great to see the growth in the solar panel manufacturing industry here in the United States. There's over 30 companies that have actually made and shipped solar panels in the U.S. which is kind of staggering from where it was 5 years ago. So it's great to see that and to see the expansion of both legacy players and new players. So we're very excited about that, that growth.

Our next question is from Joseph Osha with Guggenheim.

Two questions for you. First, looking at Ventech, I'm wondering if we might see you start to use that platform to do a completely custom harnesses without insulation per se connectors, what the thought might be there? And then secondly, looking at some of these acquisitions you've just completed, we do see some companies out there like [indiscernible] based really seeking to sort of automate the whole assembly process and all of that. Do I kind of sense that you're maybe moving that direction with these acquisitions that you're making?

Okay. I'll do Part A and Dan will do Part B. This is Howard. So for Ventech, we're not -- as I mentioned before, we're able to provide both platforms that are predominantly used in the U.S., large-scale solar industry for wiring systems. And we're not, at this time, prepared to talk about some of the development that we're doing, including the area that you discussed, which is on the custom partners. But thank you for the question. Dan, do you want to talk about?

Thank you. Yes. So you asked about [indiscernible], which is a great company that has a sort of fuel factory assembly, installation process. We're supporting [indiscernible] 100% with everything we can do to help that. There's also another dozen companies working on the field factory or installation or automation for installation. And we're supporting pretty much all the folks that are coming and asking how -- for specific things to facilitate fuel factory installation to make labor more efficient, safer. We think all of that is good. We think it's a hard problem. There's multiple ways to approach it. And so we are supporting all the leaders that we're engaged with in that particular activity. And we think that's the right approach, and there's a lot of -- we've seen progress and a lot of opportunity for future progress.

In our robotic programs that we've announced, these things attach basically separate buckets, okay? We're going after things that validate -- that support the EPC to validate installation quality, identified deviations to support [indiscernible] on more efficient punchline. We're doing it to then create a digital 3D map of the job site that supports adaptive tracking. We think what we're doing is unique in this area, and our TrueCapture really delivers the results and expectations we're creating. We're have unique unique robotic technology we've acquired with Amir Robotics on cleaning.

Nextracker was a very early mover on robotic cleaning. For the last 7 years, we've been supporting our customers in the Middle East to empirically evaluate how robotic cleaning technology support. We've worked with a bunch of companies. We understand the tech we've really leaned in. And so that really improves more yield gain. And then with the on-site Technologies acquisition, it's really supporting a higher durability and reliability of the solar power assets by inspecting things like the connectors and electrical gas system and then providing feedback on and also reducing risk on where these are going.

If I could pull back for a second and just talk about where these -- why we did these robotic cleaning -- or excuse me, robotic category acquisition. It was really customer driven, a lot as is a lot of our technology we actually didn't really believe in robotic cleaning if you went back 10 years ago. We didn't think it was very cost effective. But we saw our customers in areas that are very dry and that have high dust warm really showed us the need. You can have a major dose storm and see array performance degrade significantly in a short amount of time. We saw the need for robotic cleaning. And so similarly, and we really then worked to find who are the best teams in these areas.

And the Amir Robotics team is incredible, has legacy in robotic cleaning, fantastic domain expertise, and we really focus on the key team. Similarly, with on-site technologies. The team there really came from operations and maintenance of solar power. They have specific domain expertise. And we just love how the team was thinking about it. It wasn't a robot in search of a solution. What they came up with was a need that was solved by a robotic technology that significantly lowered the cost, improve reliability and reduce risk on the job site.

So these are our value the Nextracker. Customer demand drives then how we come up with solutions to lower the levelized cost of energy improved durability system.

With that question, that concludes our call today. Thank you all very much. As Howard mentioned, big picture, very excited about our progress. We're off to an amazing start in Q1 and look forward to welcoming you all at our Capital Markets Day in November.

That concludes the conference call. Thank you for your participation. Enjoy the rest of your day. Goodbye.