10-Q – 2026-08-03 – nxt-20260703.htm

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
Form  10-Q
(Mark One)

☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2026

Or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 001-41617

Nextpower Inc.
(Exact name of registrant as specified in its charter)

Delaware 36-5047383
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

6200 Paseo Padre Parkway , Fremont , California 94555

(Address, including zip code of registrant’s principal executive offices)

( 510 ) 270-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.0001 par value NXT The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐

i

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No  ☒
As of July 24, 2026, there were 151,729,520 shares of the registrant’s Class A common stock outstanding and no shares of the registrant’s Class B common stock outstanding.

ii

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Page

Item 1.
Financial Statements :
2

Unaudited Condensed Consolidated Balance Sheets as of July 3, 2026 and March 31, 2026
2

Unaudited Condensed Consolidated Statements of Operations for the three-month periods ended July 3, 2026 and June 27, 2025
3

Unaudited Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended July 3, 2026 and June 27, 2025
4

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three-month periods ended July 3, 2026 and June 27, 2025
5

Unaudited Condensed Consolidated Statements of Cash Flows for the three-month periods ended July 3, 2026 and June 27, 2025
6

Notes to the Unaudited Condensed Consolidated Financial Statements
7

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
15

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
24

Item 4.
Controls and Procedures
25

PART II. OTHER INFORMATION

Item 1.
Legal Proceedings
26

Item 1A.
Risk Factors
26

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
58

Item 3.
Defaults Upon Senior Securities
58

Item 4.
Mine Safety Disclosures
58

Item 5.
Other Information
58

Item 6.
Exhibits
59

Signatures
60

1

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Nextpower Inc.
Unaudited condensed consolidated balance sheets
(In thousands, except share and per share amounts)

As of July 3, 2026 As of March 31, 2026
ASSETS
Current assets:
Cash and cash equivalents
$ 1,213,898 $ 1,094,976
Accounts receivable, net of allowance of $ 2,164 and $ 2,078 , respectively
444,711 417,043
Contract assets 607,382 533,257
Inventories
261,625 262,276
Section 45X credit receivable 311,560 352,598
Other current assets
189,070 186,406
Total current assets
3,028,246 2,846,556
Property and equipment, net 89,183 78,356
Goodwill 488,950 488,950
Other intangible assets, net 80,640 78,046
Deferred tax assets 509,009 511,815
Other assets 66,179 69,489
Total assets
$ 4,262,207 $ 4,073,212
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 535,974 $ 533,490
Accrued expenses
112,955 130,133
Deferred revenue
319,837 307,492

Other current liabilities
157,596 192,747
Total current liabilities
1,126,362 1,163,862

Tax receivable agreement (TRA) liability 373,811 372,659
Long-term deferred revenue 113,007 102,493
Other liabilities 91,924 99,801
Total liabilities 1,705,104 1,738,815
Commitments and contingencies (Note 7)

Stockholders’ equity:
Class A common stock, $ 0.0001 par value, 900,000,000 shares authorized, 151,654,811 shares and 149,391,483 shares issued and outstanding, respectively
15   15  

Additional paid-in-capital 4,361,372   4,305,726  
Accumulated deficit ( 1,806,172 ) ( 1,971,527 )
Accumulated other comprehensive income 1,888   183  

Total stockholders’ equity 2,557,103 2,334,397
Total liabilities and stockholders’ equity
$ 4,262,207 $ 4,073,212

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2

Nextpower Inc.
Unaudited condensed consolidated statements of operations
(In thousands, except share and per share amounts)

Three-month periods ended
July 3, 2026 June 27, 2025
Revenue $ 935,170   $ 864,253  
Cost of sales 599,317   582,527  
Gross profit
335,853 281,726
Selling, general and administrative expenses 100,438   73,936  
Research and development 44,508   21,560  
Operating income
190,907 186,230
Interest expense 253   1,216  
Other income, net ( 8,271 ) ( 5,953 )
Income before income taxes
198,925   190,967  
Provision for income taxes 33,570   33,784  
Net income
165,355   157,183  

Earnings per share:
Basic $ 1.10   $ 1.06  
Diluted $ 1.07   $ 1.04  
Weighted-average shares used in computing per share amounts:
Basic 150,778,130   147,631,000  
Diluted 155,141,856   150,900,696  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

Nextpower Inc.
Unaudited condensed consolidated statements of comprehensive income
(In thousands)

Three-month periods ended
July 3, 2026 June 27, 2025
Net income $ 165,355   $ 157,183  
Other comprehensive income, net of tax:
Unrealized gain on derivative instruments 1,705   —  

Comprehensive income $ 167,060   $ 157,183  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4

Nextpower Inc.
Unaudited condensed consolidated statements of stockholders ’ equity
(In thousands, except share amounts)

Class A common stock
Three-month period ended July 3, 2026 Shares outstanding Amounts Additional paid-in-capital Accumulated deficit Accumulated other comprehensive income Total stockholders’ equity
BALANCE AT MARCH 31, 2026 149,391,483   $ 15   $ 4,305,726   $ ( 1,971,527 ) $ 183   $ 2,334,397  
Net income —  —  —  165,355   —  165,355  
Stock-based compensation expense —  —  29,638   —  —  29,638  
Vesting of RSU and PSU awards 1,024,863   —  —  —  —  — 
Exercises of options awards 1,238,465   —  26,008   —  —  26,008  

Total other comprehensive income —  —  —  —  1,705   1,705  

BALANCE AT JULY 3, 2026 151,654,811   $ 15   $ 4,361,372   $ ( 1,806,172 ) $ 1,888   $ 2,557,103  

Class A common stock
Three-month period ended June 27, 2025 Shares outstanding Amounts Additional paid-in-capital Accumulated deficit Accumulated other comprehensive loss
Total stockholders’ equity
BALANCE AT MARCH 31, 2025 145,648,231   $ 15   $ 4,185,823   $ ( 2,557,410 ) $ ( 298 ) $ 1,628,130  
Net income —  —  —  157,183   —  157,183  
Stock-based compensation expense —  —  22,310   —  —  22,310  
Vesting of RSU and PSU awards 2,315,743   —  —  —  —  — 

Total other comprehensive loss
—  —  —  —  ( 479 ) ( 479 )
BALANCE AT JUNE 27, 2025 147,963,974   $ 15   $ 4,208,133   $ ( 2,400,227 ) $ ( 777 ) $ 1,807,144  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

Nextpower Inc.
Unaudited condensed consolidated statements of cash flows
(In thousands)

Three-month periods ended
July 3, 2026 June 27, 2025
Cash flows from operating activities:
Net income $ 165,355   $ 157,183  
Depreciation and amortization of intangible assets
8,766   5,789  
Changes in working capital and other, net
( 53,062 ) ( 81,648 )
Net cash provided by operating activities
121,059   81,324  
Cash flows from investing activities:
Purchases of property and equipment
( 15,899 ) ( 11,258 )

Payment for business acquisitions, net of cash acquired —   ( 86,413 )

Other investing activities ( 6,000 ) ( 400 )
Net cash used in investing activities
( 21,899 ) ( 98,071 )
Cash flows from financing activities:

Proceeds from exercises of options awards 26,008 —
TRA payment —   ( 2,944 )
Distribution to former non-controlling interest holder —   ( 3,010 )
Payment of acquisition deferred purchase price ( 6,246 ) —

Net cash provided by (used in) financing activities
19,762   ( 5,954 )

Net increase (decrease) in cash and cash equivalents
118,922   ( 22,701 )
Cash and cash equivalents beginning of period
1,094,976   766,103  
Cash and cash equivalents end of period
$ 1,213,898   $ 743,402  

Non-cash investing and financing activities:

Unpaid purchases of property and equipment
$ 2,084   $ 1,415  

Right-of-use assets obtained in exchange of lease liabilities —   884  
Unpaid purchase of intangible assets —   372  
Transfers from property and equipment, net to inventories 2,744   —  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

Table of Contents
NEXTPOWER
Notes to the unaudited condensed consolidated financial statements

1. Description of business and organization of Nextpower Inc.
Nextpower Inc. and its subsidiaries (“Nextpower”, “we”, the “Company”) is a leading global provider of solar and energy technology solutions for utility-scale power plants. Founded in 2013 by our Chief Executive Officer, Dan Shugar, Nextpower pioneered and remains the global market leader in solar tracking systems. Nextpower now delivers an integrated suite of structural, electrical, and digital solutions across the full lifecycle of solar power plants, from design and construction through operations and maintenance. Nextpower’s integrated solutions are designed to streamline project execution, increase energy yield and long-term reliability, and enhance customer return on investment. Nextpower has operations in the United States, Brazil, Argentina, Peru, Mexico, Spain and other locations in Europe, India, Australia, the Middle East and Africa.

2. Summary of accounting policies
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for reporting financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2026, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2026 (the “Form 10-K”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary to present the Company’s financial statements fairly have been included. Operating results for the three-month period ended July 3, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2027 or any future period. The unaudited condensed consolidated balance sheet as of March 31, 2026 was derived from the Company’s audited consolidated financial statements included in the Form 10-K. All intercompany transactions and balances within Nextpower have been eliminated.
Certain prior year amounts have been reclassified to conform to the current year presentation.
The first quarters for fiscal years 2027 and 2026 ended on July 3, 2026 (94 days) and June 27, 2025 (88 days), respectively.
Translation of foreign currencies
The reporting currency of the Company is the United States dollar (“USD”). The functional currency of the Company and its subsidiaries is primarily the USD. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income, net in the accompanying unaudited condensed consolidated statements of operations. The Company recognized foreign currency exchange losses of $ 1.0  million and $ 0.3  million during the three-month periods ended July 3, 2026 and June 27, 2025, respectively, driven by unfavorable exchange rate fluctuations in certain currencies.

Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Estimates are used in accounting for, among other things: impairment of goodwill, impairment of long-lived assets, allowance for credit losses, provision for excess or obsolete inventories, valuation of deferred tax assets, warranty reserves, contingencies, operation-related accruals, fair values of awards granted under stock-based compensation plans and fair values of assets obtained and liabilities assumed in business combinations. Due to geopolitical conflicts (including the Russian invasion of Ukraine and the U.S.-Iran war), there has been and will continue to be uncertainty and disruption in the global economy and financial markets. These estimates may change as new events occur and additional information is obtained. Actual results may differ from previously estimated amounts, and such differences may be material to the unaudited condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the unaudited condensed consolidated financial statements.
7

Table of Contents
NEXTPOWER
Notes to the unaudited condensed consolidated financial statements

Product warranty
Nextpower offers an assurance type warranty for its products against defects in design, materials and workmanship for a period ranging from two to ten years , depending on the component. For these assurance type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable, which is typically when products are delivered. The estimated warranty liability is based on the Company’s warranty model which relies on historical warranty claim information and assumptions based on the nature, frequency and average cost of claims for each product line by project. When little or no experience exists, the estimate is based on comparable product lines and/or estimated potential failure rates. These estimates are based on data from Nextpower specific projects. Estimates related to the outstanding warranty liability are re-evaluated on an ongoing basis using best-available information and revisions are made as necessary.
The following table summarizes the activity related to the estimated accrued warranty reserve for the three-month periods ended July 3, 2026 and June 27, 2025:

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands)
Beginning balance $ 32,845 $ 17,981
Provision for warranties issued
2,514 2,323
Payments
( 1,283 ) ( 1,832 )
Ending balance $ 34,076 $ 18,472

Out of the total warranty liabilities of $ 34.1  million, $ 32.8  million and $ 18.5  million as of July 3, 2026, March 31, 2026, and June 27, 2025, respectively, $ 8.2  million, $ 8.0  million, and $ 8.0  million, respectively, were presented within other liabilities on the unaudited condensed consolidated balance sheets, while short-term warranty liabilities were presented within other current liabilities.

Inventories
Inventories are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Nextpower’s inventory primarily consists of finished goods to be used and to be sold to customers, including components procured to complete the tracker system projects.

Other current assets
Other current assets include short-term deposits and advances of $ 29.5  million and $ 51.3  million as of July 3, 2026 and March 31, 2026, respectively, primarily related to advance payments to certain vendors for procurement of inventory.
Deferred tax assets
Deferred tax assets of $ 509.0  million and $ 511.8  million as of July 3, 2026 and March 31, 2026, respectively, are primarily related to the Company’s investment in Nextpower LLC (the “LLC”) as described in Note 12 in the notes to the consolidated financial statements included in the Form 10-K.

Accrued expenses
Accrued expenses include accruals primarily for freight and tariffs of $ 71.1  million and $ 58.2  million as of July 3, 2026 and March 31, 2026, respectively. In addition, accrued expenses also include $ 41.9  million and $ 71.9  million of accrued payroll as of July 3, 2026 and March 31, 2026, respectively.

TRA liability
The TRA liability related to the amount expected to be paid to Flex Ltd. (“Flex” or the “former parent”), TPG Inc. (“TPG”) and TPG Rise Climate Flash Cl BDH, L.P., TPG Rise Climate BDH, L.P. and The Rise Fund II BDH, L.P. (collectively, the “TPG Affiliates”) pursuant to the Tax Receivable Agreement (as defined in the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations–Liquidity and Capital Resources” in the Form 10-K), was
8

Table of Contents
NEXTPOWER
Notes to the unaudited condensed consolidated financial statements

$ 393.2  million and $ 393.2  million, as of July 3, 2026 and March 31, 2026, respectively, of which $ 373.8  million and $ 372.7  million, respectively, was included in TRA liability and $ 19.4  million and $ 20.5  million, respectively, was included in other current liabilities on the unaudited condensed consolidated balance sheets. During the three-month period ended June 27, 2025, a payment of $ 2.9  million, was made to the former parent, TPG and the TPG Affiliates, which is presented as a financing activity on the unaudited condensed consolidated statement of cash flows. No payment was made during the three-month period ended July 3, 2026.

Other liabilities
Other liabilities primarily consist of long-term lease liabilities of $ 38.4  million and $ 41.0  million, and contingent earnouts for the Company’s acquisitions of $ 34.9  million and $ 38.6  million, as of July 3, 2026 and March 31, 2026, respectively.

Recently adopted accounting pronouncement
Financial Accounting Standards Board (“FASB”) Accounting Standards Update 2025-05, Financial Instruments—Credit Losses : In July 2025, the FASB issued a new accounting standard, which provides a practical expedient (for all entities) related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under FASB Accounting Standards Codification (“ASC”) 606. The Company adopted the new guidance in the first quarter of fiscal year 2027 with an immaterial impact on its unaudited condensed consolidated financial statements.

3. Revenue
Based on ASC 606 provisions, the Company disaggregates its revenue from contracts with customers by those sales recorded over time and sales recorded at a point in time. The following table presents Nextpower’s revenue disaggregated based on timing of transfer-point in time and over time for the three-month periods ended July 3, 2026 and June 27, 2025:

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands)
Timing of Transfer
Point in time
$ 95,972 $ 16,963
Over time
839,198 847,290
Total revenue $ 935,170 $ 864,253

Contract balances
The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities (deferred revenue) on the unaudited condensed consolidated balance sheets. Nextpower’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. When billing occurs subsequent to revenue recognition, a contract asset results. Contract assets of $ 607.4 million and $ 533.3 million as of July 3, 2026 and March 31, 2026, respectively, are presented in the unaudited condensed consolidated balance sheets, of which $ 144.8  million and $ 133.9  million, respectively, will be invoiced at the end of the projects as they represent funds withheld until the products are installed by a third party, arranged by the customer, and the project is declared operational. The remaining unbilled receivables will be invoiced throughout the project based on a set billing schedule such as milestones reached or completed rows delivered. Contract assets increased by $ 74.1  million from March 31, 2026 to July 3, 2026 due to fluctuations in the timing and volume of billings for the Company’s revenue recognized over time.
During the three-month periods ended July 3, 2026 and June 27, 2025, Nextpower converted $ 141.2  million and $ 151.6  million of deferred revenue to revenue, respectively, which represented 34 % and 44 %, respectively, of the beginning period balance of deferred revenue.
Remaining performance obligations
As of July 3, 2026, Nextpower had $ 432.8  million of the transaction price allocated to the remaining performance obligations. The Company expects to recognize revenue on approximately 74 % of these performance obligations in the next 12 months. The
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Notes to the unaudited condensed consolidated financial statements

remaining long-term unperformed obligation primarily relates to extended warranty and deposits collected in advance on certain tracker projects.

4. Goodwill and intangible assets
Goodwill
During the three-month period ended July 3, 2026, there were no changes to the Company’s goodwill balance, which remained at $ 489.0  million as of July 3, 2026.
Other intangible assets
During the three-month period ended July 3, 2026, the total gross value of other intangible assets increased by $ 6.0  million, due to additional developed technology acquired by the Company.
The components of identifiable intangible assets are as follows:

As of July 3, 2026 As of March 31, 2026
Gross
carrying
amount Accumulated
amortization Net
carrying
amount Gross
carrying
amount Accumulated
amortization Net
carrying
amount
(In thousands)
Developed technology $ 78,642 $ ( 10,681 ) $ 67,961 $ 72,673 $ ( 8,784 ) $ 63,889
Customer relationships 19,159 ( 8,113 ) 11,046 19,159 ( 7,022 ) 12,137
Trade names and other intangibles
5,157 ( 3,524 ) 1,633 5,157 ( 3,137 ) 2,020
Total
$ 102,958 $ ( 22,318 ) $ 80,640 $ 96,989 $ ( 18,943 ) $ 78,046

The gross carrying amount of other intangible assets are removed when fully amortized. Total intangible asset amortization expense recognized in operations during the three-month periods ended July 3, 2026 and June 27, 2025 was as follows:

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands)

Cost of sales
$ 1,985 $ 1,159
Selling general and administrative expense
1,390 900
Total amortization expense
$ 3,375 $ 2,059

The estimated future annual amortization expense for the acquired finite-lived intangible assets as of July 3, 2026 is as follows:

Fiscal year ending March 31, Amount
(In thousands)
2027 (1) $ 10,007
2028 12,204
2029 11,836
2030 8,882
2031 8,061
Thereafter 29,632
Total amortization expense
$ 80,622

(1) Represents estimated amortization for the remaining fiscal nine-month period ending March 31, 2027.
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Notes to the unaudited condensed consolidated financial statements

5. Stock-based compensation
The Company adopted the First Amended and Restated 2022 Nextpower LLC Equity Incentive Plan in April 2022 (the “LLC Plan”), which provides for the issuance of options, unit appreciation rights, performance units, performance incentive units, restricted incentive units and other unit-based awards to employees, directors and consultants of the Company. Additionally, in connection with the Company’s initial public offering (“IPO”), the Company approved the Second Amended and Restated 2022 Nextpower Inc. Equity Incentive Plan (together with the LLC Plan, the “2022 Plan”) to reflect, among other things, that the underlying equity interests with respect to awards issued under the LLC Plan shall, in lieu of common units of the LLC, relate to Class A common stock of Nextpower for periods from and after the closing of the IPO.
The following table summarizes the Company’s stock-based compensation expense:

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands)
Cost of sales $ 4,445 $ 2,238
Selling, general and administrative expenses 21,168 18,492
Research and development 4,025 1,580
Total stock-based compensation expense $ 29,638 $ 22,310

During the three-month period ended July 3, 2026, the Company granted 0.2  million time-based unvested restricted share units (“RSU”) awards to certain of its employees under the 2022 Plan. The vesting for these unvested RSU awards is contingent upon time-based vesting with continued service over a three-year period from the grant date, with a portion of the awards vesting at the end of each year. The weighted average fair value per share of the RSUs granted during the period was estimated to be $ 129.65 per award.
In addition, the Company also granted 0.2  million performance-based vesting (“PSU”) awards whereby vesting is generally contingent upon (i) time-based vesting with continued service through March 31, 2029, and (ii) the achievement of certain metrics specific to the Company, which could result in a range of 0 - 300 % of such PSUs ultimately vesting. The weighted average fair value per share of the PSUs granted during the three-month period ended July 3, 2026 was estimated to be $ 164.43 per award. The fair value of these PSU awards granted during the period was determined using Monte-Carlo simulation models, which is a probabilistic approach for calculating the fair value of the awards. During the three-month period ended July 3, 2026, approximately 0.4  million PSU awards were granted and immediately vested, which represent the number of awards achieved above target levels based on the achievement of certain performance-based metrics related to PSU awards granted in fiscal year 2024.
No option awards were granted during the three-month period ended July 3, 2026.
Additionally, during the three-month period ended July 3, 2026, 1.4  million awards were forfeited primarily due to option awards granted in fiscal year 2023 that were forfeited upon exercises as a result of the maximum benefit limit stipulated within the applicable award agreement.
The total unrecognized compensation expense related to unvested awards under the 2022 Plan as of July 3, 2026 was approximately $ 215.2  million, which is expected to be recognized over a weighted-average period of approximately 2.2 years.

6. Earnings per share
Basic earnings per share excludes dilution and is computed by dividing net income by the weighted-average number of shares of Class A common stock outstanding during the applicable periods.
Diluted earnings per share reflects the potential dilution from stock-based compensation awards. The potential dilution from awards was computed using the treasury stock method based on the average fair market value of the Company’s common stock for the period.
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Notes to the unaudited condensed consolidated financial statements

The computation of earnings per share and weighted average shares outstanding of the Company’s common stock for the period is presented below:

Three-month periods ended
July 3, 2026 June 27, 2025
Income Weighted average shares outstanding Per share Income Weighted average shares outstanding Per share
Numerator Denominator Amount Numerator Denominator Amount
(In thousands, except share and per share amounts)
Basic EPS
Net income $ 165,355   150,778,130   $ 1.10   $ 157,183   147,631,000   $ 1.06  

Effect of Dilutive Impact
Common stock equivalents from options awards (1) 1,482,913   1,438,906  
Common stock equivalents from RSUs (2) 1,951,226   1,127,229  
Common stock equivalents from PSUs (3) 929,587   703,561  

Diluted EPS
Net income $ 165,355   155,141,856   $ 1.07   $ 157,183   150,900,696   $ 1.04  

(1) During the three-month periods ended July 3, 2026 and June 27, 2025, no options awards and approximately 0.9 million options awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.
(2) During the three-month periods ended July 3, 2026 and June 27, 2025, an immaterial amount of RSU awards and approximately 0.4  million RSU awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.
(3) During the three-month periods ended July 3, 2026 and June 27, 2025, an immaterial amount of PSU awards and approximately 0.4  million PSU awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

7. Commitments and contingencies
Litigation and other legal matters
Nextpower has accrued for a loss contingency to the extent it believes that losses are probable and estimable. The amounts accrued are not material, but it is reasonably possible that actual losses could be in excess of Nextpower’s accrual. Any related excess loss could have a material adverse effect on Nextpower’s results of operations or cash flows for a particular period or on Nextpower’s financial condition.
On February 6, 2024, pursuant to the Third Amended and Restated Limited Liability Company Agreement of Nextpower LLC (the “LLC Agreement”), the LLC made pro rata tax distributions in an aggregate amount of $ 94.3  million to the common members of the LLC, including an aggregate of $ 48.5  million to Yuma Acquisition Sub LLC and Yuma Subsidiary, Inc. (“Yuma Sub”). As of the date of the tax distribution, Yuma Acquisition Sub LLC and Yuma Sub were wholly-owned subsidiaries of Nextpower. On February 21, 2025, Flex and Flextronics International USA, Inc. (collectively, the "Flex Plaintiffs") filed suit in the Delaware Court of Chancery, alleging that the Flex Plaintiffs are entitled to the distribution that was paid to Yuma Acquisition Sub LLC and Yuma Sub on February 6, 2024 under the terms of the contracts governing the Spin-off. The complaint asserts claims against Nextpower, the LLC, Yuma Acquisition Sub LLC and Yuma Sub (collectively “Defendants”) for breach of contract, breach of the implied covenant of good faith and fair dealing, mistake and unjust enrichment. On January 21, 2026, the court issued a memorandum opinion granting Defendants’ motion to dismiss the complaint. On February 16, 2026, the Flex Plaintiffs filed a notice of appeal with the Delaware Supreme Court. Briefing on appeal has been completed and oral argument is scheduled to occur on September 23, 2026.
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Notes to the unaudited condensed consolidated financial statements

Based on the current procedural posture of this matter, including the court’s memorandum opinion granting Defendants’ motion to dismiss and the pending appeal, Nextpower is unable to reasonably estimate a loss, if any, arising from this matter.
Antidumping and Countervailing Duties
Since April 2022, Nextpower has imported proprietary crystalline solar photovoltaic (“CSPV”) smart modules from Malaysia and Thailand that provide off-grid power to our controllers located either on each tracker row or on weather stations at the project site. In December 2024, U.S. Customs and Border Protection (“CBP”) instructed Nextpower to pay approximately $ 1  million in antidumping duty and countervailing duty (“AD/CVD”) cash deposits relating to a limited number of entries based on perceived certification deficiencies. To mitigate AD/CVD risk arising from potential procedural deficiencies in certain certifications submitted in connection with these imports, Nextpower submitted a prior disclosure to CBP. Additionally, Nextpower and filed a request for a changed circumstances review (“CCR”) with the U.S. Department of Commerce (“Commerce”), seeking an exclusion for its off-grid smart CSPV modules from the AD/CVD orders on CSPV cells and modules from China. In December 2025, Commerce issued the final results of the CCR and granted an exclusion for Nextpower's off-grid smart CSPV modules for purposes of the countervailing duty order, retroactive to January 1, 2022, and for purposes of the antidumping duty order, retroactive to December 1, 2022. Although Commerce's CCR determination substantially reduced Nextpower's potential AD/CVD exposure, the outcome of the pending litigation challenging the Solar Duty Waiver Regulation and CBP's treatment of Nextpower's certifications remain uncertain. Accordingly, Nextpower could be required to pay additional AD/CVD amounts with respect to certain entries if the U.S. Court of Appeals for the Federal Circuit upholds the U.S. Court of International Trade's decision or if CBP determines that applicable certifications are invalid. Additional background regarding the AD/CVD orders and related litigation is described in our Form 10-K.

8. Income taxes
The Company follows the guidance under ASC 740-270, “ Interim Reporting ,” which requires a company to calculate the income tax associated with ordinary income using an estimated annual effective tax rate.
The following table presents income tax expense recorded by the Company along with the respective consolidated effective tax rates for each period presented:

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands, except percentages)
Income tax $ 33,570 $ 33,784
Effective tax rates 16.9 % 17.7 %

The decrease in income tax expense and effective tax rate from the three-month period ended June 27, 2025 to the three-month period ended July 3, 2026 is primarily driven by jurisdictional mix of income and stock-based compensation deductions.

9. Segment reporting
Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or a decision-making group, in deciding how to allocate resources and in assessing performance. Resource allocation decisions and Nextpower’s performance are assessed by its Chief Executive Officer, identified as the CODM, using consolidated net income as the primary measure of segment profit to support business expansion, new product development and operational efficiencies.
The measure of segment assets is reported on the unaudited condensed consolidated balance sheets as total consolidated assets.
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Notes to the unaudited condensed consolidated financial statements

For all periods presented, Nextpower has one operating and reportable segment. The following table presents significant segment expenses with respect to the Company’s single reportable segment for the three-month periods ended July 3, 2026 and June 27, 2025:

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands)

Revenue $ 935,170 $ 864,253
Less:
Material cost 558,009 563,294
45X vendor credits ( 103,309 ) ( 93,206 )
Tariffs, net of refunds (1) 3,921   10,796  
Freight, labor and other cost of sales 140,696 101,643
Selling, general and administrative expenses 100,438 73,936
Research and development 44,508 21,560

Interest expense 253 1,216
Other income, net ( 8,271 ) ( 5,953 )

Provision for income taxes 33,570 33,784
Net income $ 165,355 $ 157,183

(1) Includes International Emergency Economic Powers Act tariffs refunds of $ 13.8  million for the three-month period ended July 3, 2026. For the three-month period ended June 27, 2025, $ 10.8  million tariffs expense has been reclassified to tariffs, net of refunds to conform to the current year presentation.
The following table sets forth geographic information of revenue based on the locations to which the products are shipped:
Three-month periods ended
July 3, 2026 June 27, 2025
Revenue: (In thousands)
U.S.
$ 775,617 $ 599,498
Rest of the World
159,553 264,755
Total $ 935,170 $ 864,253

The United States is the principal country of domicile.

10. Derivative financial instruments
Cash Flow Hedges
During the fiscal quarter ended July 3, 2026, the Company entered into forward foreign exchange contracts to effectively lock in the value of anticipated foreign currency denominated revenues against foreign currency fluctuations. The related forward foreign exchange contracts have been designated as hedging instruments and are accounted for as cash flow hedges. The Company’s forward foreign exchange contracts, including cash flow hedges, are measured at fair value as Level 2 by hierarchy level on a recurring basis, based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers. The effective gain or loss on cash flow hedges is initially recorded as a component of other comprehensive income, net of tax, and is subsequently reclassified into the line item within the unaudited condensed consolidated statements of operations in which the hedged items are recorded, in the same period in which the hedged item affects earnings. The aggregate notional amount of these outstanding cash flow hedge contracts as of July 3, 2026 was 74.0  million Euros. Deferred gains were $ 2.3 million as of July 3, 2026 and are expected to be recognized primarily as a component of revenue in the unaudited condensed consolidated statements of operations over the next twelve-month period.
The changes in accumulated other comprehensive income related to the cash flow hedges were immaterial for the three-month period ended July 3, 2026 and the gains recognized upon settlement of the hedged transactions were recorded in revenue on the unaudited condensed consolidated statement of operations.
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Notes to the unaudited condensed consolidated financial statements

The following table presents the fair value of the Company’s derivative instruments utilized for foreign currency risk management purposes at July 3, 2026 and March 31, 2026, respectively (in thousands):

Asset Derivatives Liability Derivatives
Fair Value Fair Value
Balance Sheet Location July 3, 2026 March 31, 2026 Balance Sheet Location July 3, 2026 March 31, 2026
Derivatives designated as cash flow hedge:
Foreign exchange forward contracts Other current assets $ 2,305   $ 598   Other current liabilities $ —   $ ( 6 )

11. Subsequent events
On July 17, 2026, the Company completed the previously announced acquisition of 100 % of the ownership interests in Prevalon Energy LLC (“Prevalon”), a U.S.-headquartered provider of large-scale battery energy storage systems (“BESS”), power stabilization solutions, and lifecycle services, for total consideration of up to $ 365  million, consisting of (i) approximately $ 150  million in cash consideration paid at closing, net of cash and restricted cash acquired, (ii) $ 50  million in stock consideration consisting of shares of Class A common stock of the Company to be issued one year after closing and priced at the average of the daily volume-weighted average prices for the Company’s Class A common stock on the Nasdaq Stock Market LLC for each of the 60 consecutive complete trading days ending with May 27, 2026, and (iii) up to $ 165  million of contingent cash consideration. The acquisition extends the Company’s technology platform across BESS, energy management software, and power control technologies and lifecycle services supporting grid-connected storage, hybrid power plants, AI data center infrastructure, and other critical power applications.
On July 30, 2026, the Company completed the previously announced acquisition of complementary assets of Zigor Corporation’s power conversion business and its U.S.-based subsidiary, Apex Power, for total consideration of up to approximately $ 80.5  million in cash, consisting of $ 46.0  million paid at closing and up to $ 34.5  million of contingent cash consideration. This acquisition expands Nextpower’s energy infrastructure technology portfolio, including UL-certified central inverters for utility-scale solar and energy storage projects in the United States.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context requires otherwise, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Nextpower,” the “Company,” “we,” “us” and “our” shall mean, prior to the initial public offering (“IPO”), Nextpower LLC (“Nextpower LLC” or the “LLC”) and its consolidated subsidiaries, and following the IPO and the related transactions completed in connection with the IPO, Nextpower Inc. and its consolidated subsidiaries. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Flex” refer to Flex Ltd., a Singapore incorporated public company limited by shares and having a registration no. 199002645H, and its consolidated subsidiaries, unless the context otherwise indicates.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our unaudited condensed consolidated financial statements with a narrative from the perspective of the Company’s management. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three-month period ended July 3, 2026 (this “Quarterly Report”) and our audited consolidated financial statements and the related notes and other information included in our Annual Report on Form 10-K for the year ended March 31, 2026, filed with the SEC on May 19, 2026 (the “Form 10-K”). In addition to historical financial information, the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are based upon current expectations that involve risks, uncertainties and assumptions. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions are intended to identify forward-looking statements. Our actual results and timing of selected events may differ materially from those results anticipated and discussed in the forward-looking statements as a result of many factors. Factors that might cause
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such a discrepancy include, but are not limited to, those discussed under the sections below titled “Liquidity and Capital Resources” and “Risk Factors.” All forward-looking statements in this document are based on information available to us as of the date of this Quarterly Report and we assume no obligation to update any such forward-looking statements, except as required by law.

OVERVIEW
We are a leading global provider of solar and energy technology solutions for utility-scale power plants. Founded in 2013 by our Chief Executive Officer, Dan Shugar, we pioneered and remain the global market leader in solar tracking systems. We now deliver an integrated suite of structural, electrical, and digital solutions across the full lifecycle of solar power plants, from design and construction through operations and maintenance. Our integrated solutions are designed to streamline project execution, increase energy yield and long-term reliability, and enhance customer return on investment.
We have shipped more than 160 GW of solar tracker systems as of July 3, 2026 to projects on six continents for use in utility-scale and distributed generation solar applications. Our customers include engineering, procurement and construction firms (“EPCs”), as well as solar project developers and owners. Developers originate projects, select and acquire sites, obtain permits, select contractors, negotiate power offtake agreements, and oversee the building of projects. EPCs design and optimize the system, procure components, build and commission the plant, and operate the plant for a limited time until transfer to a long-term owner. Owners, which are often independent power producers, own and operate the plant, typically as part of a portfolio of similar assets. Owners generate cash flows through the sale of electricity to utilities, wholesale markets, or end users.
For the majority of our projects, our direct customer is the EPC. We also engage with project owners and developers and enter into master supply agreements that cover multiple projects. We are a qualified, preferred provider to some of the largest solar EPCs, project owners and developers in the world. We had revenues of $0.9 billion for the three-month period ended July 3, 2026 and $3.6 billion for fiscal year 2026.
Business acquisitions
On July 17, 2026, we completed the previously announced acquisition of 100% of the ownership interests in Prevalon Energy LLC (“Prevalon”), a U.S.-headquartered provider of large-scale battery energy storage systems (“BESS”), power stabilization solutions, and lifecycle services, for total consideration of up to $365 million, consisting of (i) approximately $150 million in cash consideration paid at closing, net of cash and restricted cash acquired, (ii) $50 million in stock consideration consisting of shares of our Class A common stock to be issued one year after closing and priced at the average of the daily volume-weighted average prices for our Class A common stock on the Nasdaq Stock Market LLC for each of the 60 consecutive complete trading days ending with May 27, 2026, and (iii) up to $165 million of contingent cash consideration. The acquisition extends our technology platform across BESS, energy management software, and power control technologies and lifecycle services supporting grid-connected storage, hybrid power plants, AI data center infrastructure, and other critical power applications.
On July 30, 2026, we completed the previously announced acquisition of complementary assets of Zigor Corporation’s power conversion business and its U.S.-based subsidiary, Apex Power, for total consideration of up to approximately $80.5 million in cash, consisting of $46.0 million paid at closing and up to $34.5 million of contingent cash consideration. This acquisition expands our energy infrastructure technology portfolio, including UL-certified central inverters for utility-scale solar and energy storage projects in the United States.
Revenue mix
The following tables set forth geographic information of revenue based on the locations to which the products are shipped:

Three-month periods ended
July 3, 2026 June 27, 2025
Revenue: (In thousands, except percentages)
U.S.
$ 775,617 83% $ 599,498 69%
Rest of the World
159,553 17% 264,755 31%
Total $ 935,170 $ 864,253

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The following table sets forth the revenue from customers that individually accounted for greater than 10% of our revenue during the periods included below:

Three-month periods ended
July 3, 2026 June 27, 2025
(In millions)
Customer A $ 152.1 *
Customer H * $ 99.5

*    Percentage below 10%

Critical accounting policies and significant management estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Estimates are used in accounting for, among other things: impairment of goodwill, impairment of long-lived assets, allowance for credit losses, provision for excess or obsolete inventories, valuation of deferred tax assets, warranty reserves, contingencies, operation-related accruals, fair values of awards granted under stock-based compensation plans and fair values of assets obtained and liabilities assumed in business combinations. We periodically review estimates and assumptions, and the effects of our revisions are reflected in the period they occur. We believe that these estimates and assumptions provide a reasonable basis for the fair presentation of the unaudited condensed consolidated financial statements.
Refer to the critical accounting policies and significant management estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K, where we discussed our more significant policies and estimates used in the preparation of the unaudited condensed consolidated financial statements. There have been no material changes to our critical accounting estimates since the Form 10-K.

Key components of our results of operations
The following discussion describes certain line items in our unaudited condensed consolidated statements of operations.
Revenue
We derive our revenue primarily from the sale of solar trackers and energy yield management systems to our customers. To a lesser extent, we also derived our revenue from foundations, steel frames, eBOS, AI and robotic services, and other. Our revenue growth is dependent on (i) our ability to maintain and expand our market share, (ii) total market growth and (iii) our ability to develop and introduce new products driving performance enhancements and cost efficiencies throughout the solar power plant.
Cost of sales and gross profit
Cost of sales consists primarily of purchased components net of any incentives or rebates earned from our suppliers, shipping and other logistics costs, applicable tariffs, standard product warranty costs, amortization of certain acquired intangible assets, stock-based compensation and direct labor. Direct labor costs represent expenses of personnel directly related to project execution such as supply chain, logistics, quality, tooling, operations and customer satisfaction. Amortization of intangibles consists of developed technology and certain acquired patents over its expected period of use and is also included under cost of sales.
Steel prices, cost of transportation, and labor costs in countries where our suppliers perform manufacturing activities affect our cost of sales. Our ability to lower our cost of sales depends on implementation and design improvements to our products as well as on driving more cost-effective manufacturing processes with our suppliers. We generally do not directly purchase raw materials such as steel or electronic components and generally do not hedge against changes in their price. Most of our cost of sales are directly affected by sales volume. Personnel costs related to our supply chain, logistics, quality, and tooling are not directly impacted by our sales volume.
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Operating expenses
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of personnel-related costs associated with our administrative and support functions. These costs include, among other things, personnel costs, stock-based compensation, facilities charges including depreciation associated with administrative functions, professional services, travel expenses, and allowance for bad debt. Professional services include audit, legal, tax and other consulting services. We have expanded our sales organization and expect to scale our sales headcount to support our planned growth. We have incurred and expect to continue to incur on an ongoing basis certain new costs related to the requirements of being a publicly traded company, including insurance, accounting, tax, legal and other professional services costs, which could be material. Amortization of intangibles consists of customer relationships and trade names over their expected period of use and is included under selling, general and administrative expenses. Acquisition-related costs are also included under selling, general and administrative expenses.
Research and development
Research and development expenses consist primarily of personnel-related costs associated with our engineering employees, stock-based compensation, third-party consulting and supporting our new business acquisitions. Research and development activities include improvements to our existing products, development of new tracker products and energy yield management systems and innovations to expand our technology platform. We expense substantially all research and development expenses as incurred. We expect that the dollar amount of research and development expenses will increase in amount over time.
Income tax expense
The provision for income taxes primarily represents the Company’s U.S. federal, state, and local income taxes as well as foreign income taxes payable by its subsidiaries. We expect to receive a tax benefit for foreign tax credits in the United States for the foreign tax paid.

RESULTS OF OPERATIONS
The financial information and the discussion below should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report.
In addition, reference should be made to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Form 10-K.

Three-month periods ended
July 3, 2026 June 27, 2025 % Change
Unaudited Condensed Consolidated Statement of Operations Data: (In thousands, except percentages)
Revenue $ 935,170  $ 864,253  8  %
Cost of sales 599,317  582,527  3 
Gross profit
335,853  281,726  19 
Selling, general and administrative expenses 100,438  73,936  36 
Research and development 44,508  21,560  106 
Operating income
190,907  186,230  3 
Interest expense 253  1,216  (79)
Other income, net (8,271) (5,953) 39 
Income before income taxes
198,925  190,967  4 
Provision for income taxes 33,570  33,784  (1)
Net income
$ 165,355  $ 157,183  5  %

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Non-GAAP Financial Measures
We present Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin as supplemental measures of our performance. We define Adjusted gross profit as gross profit plus stock-based compensation expense and intangible amortization. We define Adjusted operating income as operating income plus stock-based compensation expense, intangible amortization and non-recurring integration activities related to acquisitions. We define Adjusted net income as net income (loss) plus stock-based compensation expense, intangible amortization, non-recurring tax adjustments, and non-recurring integration activities related to acquisitions and other discrete events as applicable, net of their tax effects. We define Adjusted EBITDA as net income (loss) plus (i) interest, net, (ii) debt extinguishment costs, (iii) provision for income taxes, (iv) depreciation expense, (v) intangible amortization, (vi) stock-based compensation expense, (vii) non-recurring integration activities related to acquisitions and (viii) other discrete events as applicable. We define Adjusted gross margin as the percentage derived from Adjusted gross profit divided by revenue. We define Adjusted net income margin as the percentage derived from Adjusted net income divided by revenue. We define Adjusted EBITDA margin as the percentage derived from Adjusted EBITDA divided by revenue.
Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, U.S. GAAP. We present these Adjusted financial measures because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we may use all or any combination of Adjusted gross profit, Adjusted operating income, Adjusted net income and Adjusted EBITDA when determining incentive compensation and to evaluate the effectiveness of our business strategies.
Among other limitations, Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted net income margin, Adjusted gross margin and Adjusted EBITDA margin do not reflect our cash expenditures or future capital expenditures or contractual commitments (including under the Tax Receivable Agreement, as defined below), do not reflect the impact of certain cash or non-cash charges resulting from matters we consider not to be indicative of our ongoing operations and do not reflect the associated income tax expense or benefit related to those charges. In addition, other companies in our industry may calculate Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin differently from us, which further limits their usefulness as comparative measures.
Because of these limitations, Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin should not be considered in isolation or as substitutes for performance measures calculated in accordance with U.S. GAAP. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted financial measures on a supplemental basis. You should review the reconciliation to the most directly comparable U.S. GAAP measure of Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin below and not rely on any single financial measure to evaluate our business.

Three-month periods ended
July 3, 2026 June 27, 2025
Other Financial Information: (In thousands, except percentages)
Adjusted gross profit $ 342,283 $ 285,123
Adjusted operating income 228,068 211,678
Adjusted net income 186,262 175,502
Adjusted EBITDA 232,553 214,774
Adjusted gross margin 36.6% 33.0%
Adjusted net income margin 19.9% 20.3%
Adjusted EBITDA margin 24.9% 24.9%

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The following table provides a reconciliation of gross profit to Adjusted gross profit, operating income to Adjusted operating income, net income to Adjusted net income, net income to Adjusted EBITDA, gross margin to Adjusted gross margin, net income margin to Adjusted net income margin, and net income margin to Adjusted EBITDA margin for each period presented.

Three-month periods ended

July 3, 2026 June 27, 2025
Reconciliation of GAAP to Non-GAAP Financial Measures:
(In thousands, except percentages)
GAAP gross profit & margin $ 335,853 35.9% $ 281,726 32.6%
Stock-based compensation expense
4,445 2,238
Intangible amortization
1,985  1,159 

Adjusted gross profit & margin $ 342,283 36.6% $ 285,123 33.0%

GAAP operating income & margin $ 190,907 20.4% $ 186,230 21.5%
Stock-based compensation expense
29,638  22,310 
Intangible amortization
3,375  2,059 

Acquisition related costs (1) 4,148 1,079

Adjusted operating income & margin $ 228,068 24.4% $ 211,678 24.5%

GAAP net income & margin $ 165,355 17.7% $ 157,183 18.2%
Stock-based compensation expense
29,638  22,310 
Intangible amortization
3,375  2,059 
Adjustment for taxes
(16,254) (7,129)

Acquisition related costs (1) 4,148 1,079

Adjusted net income & margin $ 186,262 19.9% $ 175,502 20.3%

GAAP net income & margin $ 165,355 17.7% $ 157,183 18.2%
Interest, net
(9,159) (5,371)

Provision for income taxes 33,570 33,784
Depreciation expense 5,391 3,730
Intangible amortization 3,375 2,059
Stock-based compensation expense 29,638 22,310

Acquisition related costs (1) 4,148 1,079

Other 235 —
Adjusted EBITDA & margin
$ 232,553 24.9% $ 214,774 24.9%

(1) Represents transaction and integration costs incurred in relation to our acquisitions. We do not believe that the acquisition transaction costs are normal operating expenses indicative of our core operating performance, nor were these charges taken into account as factors in evaluating management’s performance when determining incentive compensation or to evaluate the effectiveness of our business strategies.

The data below, and discussion that follows, represents our results from operations.
Comparison of the three-month periods ended July 3, 2026 and June 27, 2025
Revenue
Revenue increased by $70.9 million, or 8%, for the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025, driven by a higher average selling price resulting from increasing costs per watt coupled with increased customer demand in the U.S, offset with lower GW delivered most notably in Rest of the World. Revenue increased by approximately $176.1 million, or 29%, in the U.S. during the three-month period ended July 3, 2026 compared to the three-
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month period ended June 27, 2025 as the number of projects and volume of shipments increased year over year, Rest of the World decreased by $105.2 million, or 40%, primarily resulting from decreased shipments to Latin America, and the Middle East, partially offset with increased shipments to Europe.
Cost of sales and gross profit
Cost of sales increased by $16.8 million, or 3%, during the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025, primarily driven by the volume of shipment increase in the U.S., and to a lesser extent, higher freight and logistics costs as a result of the U.S.-Iran war, along with higher cost associated with the increase in headcount as a result of our recent business acquisitions, partially offset by the impact from a $10.1 million increase in Internal Revenue Code Section 45X tax credit (“45X Credit”) that is earned over time for certain clean energy components domestically produced and sold by a manufacturer, coupled with the impact from a $6.9 million decrease in tariffs, net of refunds. We recognize a reduction in cost of sales for 45X Credits earned on components manufactured in the U.S. During the three-month periods ended July 3, 2026 and June 27, 2025, we recognized approximately $103.3 million and $93.2 million, respectively, of reduction to cost of sales related to the 45X Credit earned on production of eligible components shipped during the period, which offset tariffs of approximately $3.9 million and $10.8 million respectively. Freight and logistics costs also increased slightly as a percentage of revenue during the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025.
Gross profit increased by $54.1 million, or 19%, during the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025, primarily resulting from the volume of shipment increase in the U.S. noted above and the impact from the 45X Credit recognized in the period, which more than offset the higher freight and logistics costs noted above.
Selling, general and administrative expenses
Selling, general and administrative expenses increased by $26.5 million, or 36%, to $100.4 million for the three-month period ended July 3, 2026 from approximately $73.9 million for the three-month period ended June 27, 2025 while increasing 219 basis points from approximately 9% to approximately 11% as a percentage of revenue during the same period. The increase in selling, general and administrative expenses was primarily the result of an increase in costs of approximately $20.7 million related to our continued expansion of our sales organization in line with the growth in the global market and the expansion of our supporting functions also required to support our current and planned growth. In addition, acquisition-related costs and stock-based compensation expense increased $3.1 million and $2.7 million, respectively.
Research and development
Research and development expenses increased by $22.9 million, or 106%, to $44.5 million for the three-month period ended July 3, 2026 from approximately $21.6 million during the three-month period ended June 27, 2025, primarily driven by our continued investment in innovation, increasing our engineering team and supporting our recent business acquisitions.
Interest expense
Interest expense decreased by $1.0 million, or 79%, to $0.3 million for the three-month period ended July 3, 2026 from $1.2 million during the three-month period ended June 27, 2025, primarily driven by lower amortization of the issuance cost and related commitment fee as a result of the new revolving credit facility entered on September 8, 2025, which replaced the credit facility entered into on February 13, 2023.
Other income, net
Other income, net was $8.3 million for the three-month period ended July 3, 2026, which primarily included $9.3 million of interest income, partially offset by $1.0 million of unfavorable foreign currency exchange losses and other. Other income, net
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was $6.0 million income for the three-month period ended June 27, 2025, which primarily included $6.3 million of interest income, partially offset by $0.3 million of unfavorable foreign currency exchange losses.
Provision for income taxes
We accrue and pay income taxes according to the laws and regulations of each jurisdiction in which we operate. Most of our revenue and profits are generated in the United States with a statutory income tax rate of 21% for the three-month periods ended July 3, 2026 and June 27, 2025.
For the three-month periods ended July 3, 2026 and June 27, 2025, we recorded total income tax expense of $33.6 million and $33.8 million, respectively, which reflected consolidated effective income tax rates of 16.9% and 17.7%, respectively. The decrease in tax expense as well as effective tax rate from the three-month period ended June 27, 2025 to the three-month period ended July 3, 2026 is driven by jurisdictional mix of income and stock-based compensation deductions.
From time to time, we are subject to income tax audits in the jurisdictions in which we operate. The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax rules and regulations in a number of jurisdictions. Due to such complexity of these uncertainties, the ultimate resolution may result in a payment or refund that is materially different from our estimates.

LIQUIDITY AND CAPITAL RESOURCES
Our principal uses of cash have been to fund our operations and invest in research and development and our cash flow generation and credit facilities have continued to provide adequate liquidity for our business. We enhanced our capital structure with a $1.0 billion unsecured revolving credit facility expanding our total liquidity to over $2.0 billion as of July 3, 2026.
Credit Facilities
As of July 3, 2026, we had approximately $919.4 million available under the revolving credit facility, net of $80.6 million of outstanding letters of credit. We were in compliance with all applicable covenants as of July 3, 2026.
Supplier Finance Program
We participate in various supplier finance programs administered by a third-party financial institution. Under such programs, certain suppliers may, at their sole discretion, elect to sell one or more of their receivables from us to a financial institution. Our payment obligations to the financial institution are not accelerated and remain subject to the original contractual terms agreed with the supplier. We do not provide guarantees or collateral in connection with these arrangements. Amounts payable under the programs are included in accounts payable on the unaudited condensed consolidated balance sheets and payments made under the programs are reported as operating activities on the unaudited condensed consolidated statements of cash flows. The outstanding amount payable under our supplier finance programs as of July 3, 2026 was $174.8 million.
Tax Receivable Agreement
In connection with the IPO, on February 13, 2023, Nextpower Inc. also entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) that provided for the payment by us to Flex, TPG Rise Flash, L.P (“TPG Rise”), and the TPG Affiliates (or certain permitted transferees thereof) of 85% of the tax benefits, if any, that we are deemed to realize under certain circumstances, as more fully described in the Form 10-K. There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, the payments under the Tax Receivable Agreement exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement or are not sufficient to permit us to make payments under the Tax Receivable Agreement after we have paid taxes. Prior to the separation from Flex, Yuma, Inc. (“Yuma”) and Yuma Sub assigned their respective rights under the Tax Receivable Agreement to an entity that remains an affiliate of Flex.
We believe that our cash provided by operations and other existing and committed sources of liquidity, including our revolving credit facility, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments, potential debt service requirements and payments under the Tax Receivable Agreement for at least the next 12 months.
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Cash Flows Analysis

Three-month periods ended
July 3, 2026 June 27, 2025
(In thousands)
Net cash provided by operating activities
$ 121,059  $ 81,324 
Net cash used in investing activities
(21,899) (98,071)
Net cash provided by (used in) financing activities
19,762  (5,954)

Three-month period ended July 3, 2026
Net cash provided by operating activities was $121.1 million during the three-month period ended July 3, 2026. Total cash provided during the period was driven by net income of $165.4 million adjusted for non-cash charges of approximately $45.1 million primarily related to stock-based compensation expense, depreciation and amortization, and deferred income taxes costs. Cash from net income was further decreased by the overall increase in our net operating assets and liabilities, primarily our net working capital accounts, resulting in an outflow of approximately $89.4 million as we continue to fund our current and planned growth.
Net cash used in investing activities was approximately $21.9 million and directly attributable to $15.9 million paid for the purchase of property and equipment, coupled with $6.0 million paid for the purchase of intangible assets.
Net cash provided by financing activities was $19.8 million primarily resulting from $26.0 million of proceeds from the issuance of common stock upon option exercises, offset by a $6.2 million payment of acquisition deferred purchase price.
Three-month period ended June 27, 2025
Net cash provided by operating activities was $81.3 million during the three-month period ended June 27, 2025. Total cash provided during the period was driven by net income of $157.2 million adjusted for non-cash charges of approximately $28.1 million primarily related to stock-based compensation expense, depreciation and amortization, and deferred income taxes. Cash from net income was further decreased by the overall increase in our net operating assets and liabilities, primarily our net working capital accounts, resulting in an outflow of approximately $103.9 million as we continued to fund our current and planned growth.
Net cash used in investing activities was approximately $98.1 million and directly attributable to the $86.8 million payment for the business acquisitions net of cash acquired, coupled with the purchase of property and equipment.
Net cash used in financing activities was $6.0 million primarily resulting from a $3.0 million tax distribution to our former non-controlling interest holder pursuant to the LLC Agreement, and a $2.9 million payment to Flex, TPG and the TPG Affiliates pursuant to the Tax Receivable Agreement.

Cash management and financing
We had a total liquidity of over $2.0 billion as of July 3, 2026, primarily related to unutilized amounts under the revolving credit facility net of cumulative letters of credit issued in conjunction with our customer contracts, and our cash and cash equivalents.

Contractual obligations and commitments
Information regarding our debt obligations, operating lease commitments, obligations under the Tax Receivable Agreement and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K.
There were no material changes in our contractual obligations and commitments as of July 3, 2026.
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Surety Bonds
We are required to provide surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee our performance in accordance with contractual or legal obligations. These off-balance sheet arrangements do not adversely impact our liquidity or capital resources.

Recently adopted accounting pronouncements
Refer to Note 2 in the notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements during the three-month period ended July 3, 2026 .

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in commodity prices, such as steel and customer concentrations. We do not hold or issue financial instruments for trading purposes as of July 3, 2026.
There were no material changes in our exposure to market risks for changes in interest and foreign currency exchange rates for the three-month period ended July 3, 2026 as compared to the fiscal year ended March 31, 2026.

Concentration of major customers
Our customer base consists primarily of EPCs, as well as solar project developers and owners. We do not require collateral on our trade receivables. The loss of any one of our top five customers could have a materially adverse effect on our revenue and profits.
The following table sets forth the percentage of our total revenue from our customers that exceeded 10% of our total revenue and from our five largest customers during the periods included below:

Three-month periods ended
July 3, 2026 June 27, 2025
Customer A 16% *
Customer H * 12%
Top five largest customers 46% 37%

*    Percentage below 10%
Commodity price risk
We are subject to risk from fluctuating market prices of certain commodity raw materials, such as steel, that are used in our products. Prices of these raw materials may be affected by supply restrictions or other market factors from time to time, and we do not enter into hedging arrangements to mitigate commodity risk. Significant price changes for these raw materials could reduce our operating margins if we are unable to recover such increases from our customers, and could harm our business, financial condition and results of operations.
In addition, we are subject to risk from fluctuating logistics costs. As a result of disruptions caused by geopolitical conflicts, consumer and commercial demand for shipped goods has increased across multiple industries, which in turn has reduced the availability and capacity of shipping containers and available ships worldwide. These disruptions caused, and may in the future cause, increased logistics costs and shipment delays affecting the timing of our project deliveries, the timing of our recognition of revenue and our profitability.
Foreign currency exchange risk
We transact business in various foreign countries and are, therefore, subject to risk of foreign currency exchange rate fluctuations. We have established a foreign currency risk management policy to manage this risk. We intend to manage our
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foreign currency exposure by evaluating and using non-financial techniques, such as currency of invoice, leading and lagging payments and receivables management.
Based on our overall currency rate exposures as of July 3, 2026 and March 31, 2026, including the derivative financial instruments intended to hedge the nonfunctional currency-denominated monetary assets, liabilities and cash flows, and other factors, a 10% appreciation or depreciation of the U.S. dollar from its cross-functional rates would not be expected, in the aggregate, to have a material effect on our financial position, results of operations and cash flows in the near-term.

ITEM 4. CONTROLS AND PROCEDURES
a. Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Principal Financial Officer, to allow timely decisions regarding required disclosure. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of July 3, 2026. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
b. Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended July 3, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
c. Inherent Limitations on Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, believes that our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives and are effective at the reasonable assurance level. However, our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of conducting our business, we have in the past and may in the future become involved in various legal actions and other claims. We may also become involved in other judicial, regulatory and arbitration proceedings concerning matters arising in connection with the conduct of our businesses. Some of these matters may involve claims of substantial amounts. In addition, from time to time, third parties may assert intellectual property infringement claims against us in the form of letters and other forms of communication. These legal proceedings may be subject to many uncertainties and there can be no assurance of the outcome of any individual proceedings. We do not believe that the final outcomes of these matters, and we are not a party to any other legal proceedings that we believe, if determined adversely to us, would have a material adverse effect on our business, financial condition or results of operations .
For more information, see Note 7 “Commitments and contingencies” in the notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.

ITEM 1A. RISK FACTORS
Our business and our ability to execute our strategy are subject to many risks. These risks and uncertainties include, but are not limited to, the following:
Summary of Risk Factors
• The demand for solar energy and, in turn, our products is impacted by many factors outside of our control, and if such demand does not continue to grow or grows at a slower rate than we anticipate, our business and prospects will suffer.
• Competitive pressures within our industry may harm our business, results of operations, financial condition and prospects.
• We face competition from conventional and other renewable energy sources that may offer products and solutions that are less expensive or otherwise perceived to be more advantageous than solar energy solutions.
• Delays in construction projects and any failure to manage our inventory could have a material adverse effect on us.
• Our results of operations may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our results of operations for a particular period to fall below expectations.
• The reduction, elimination or expiration of government incentives for, or regulations mandating or restricting the use of, renewable energy and solar energy specifically could reduce demand for solar energy systems and harm our business.
• International regulation of and incentives for solar projects vary by jurisdiction and may change or be eliminated.
• Changes in the global trade environment, including the imposition of tariffs, other import duties and trade restrictions, could adversely affect our business growth and the amount or timing of our revenues, results of operations or cash flows.
• Future acquisitions, strategic investments, strategic transactions, partnerships, joint ventures or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our business, financial condition and results of operations.
• We rely heavily on our suppliers and our operations could be disrupted if we encounter problems with our suppliers or if there are disruptions in our supply chain.
• Economic, political and market conditions can adversely affect our business, financial condition and results of operations.
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• If we do not maintain environmental, social and governance (“ESG”) practices and disclosures that meet the expectations of customers, regulators, employees, and investors, our relationships with these stakeholders could suffer, which could adversely affect our business and financial results.
• Our business and industry, including our customers and suppliers, are subject to risks of severe weather events, natural disasters, climate change and other catastrophic events.
• Third party technology system limitations or failures could harm our business.
• Our business, operating results and financial condition could be materially harmed by evolving regulatory uncertainty or obligations applicable to our products and services.
• We may not be able to convert our orders in backlog into revenue.
• Our contracts may be canceled, suspended, delayed or not renewed, and we may be unable to replace such business on comparable terms, which could have a material adverse effect on our business, financial condition and results of operations.
• An increase in interest rates, or a reduction in the availability of tax equity or project debt financing, could make it difficult for project developers and owners to finance the cost of a solar energy system and could reduce the demand for our products.
• We are dependent on a relatively small number of customers for our sales. A loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment, could harm our business and negatively impact our revenue, results of operations and cash flows.
• Defects, performance problems or vulnerabilities in our products could result in loss of customers, reputational damage and decreased revenue, and we may face warranty, indemnity and product liability claims arising from our products.
• Cybersecurity or other data security incidents could materially disrupt our operations, compromise sensitive information, and adversely affect our financial performance and reputation.
• Failure to comply with current or future federal, state, local and foreign laws, regulations, rules and industry standards relating to privacy and data protection could adversely affect our business, financial condition, results of operations and prospects.
• We may experience delays, disruptions or quality control problems in our product development operations.
• Our continued expansion into new markets could subject us to additional business, financial, regulatory and competitive risks.
• The development and use of artificial intelligence in our business introduces risks that could adversely affect our operations, financial condition, and reputation.
• Electric utility industry policies and regulations may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that could significantly reduce demand for our products or harm our ability to compete.
• A drop in the price of electricity sold may harm our business, financial condition and results of operations.
• Technological advances in the solar components industry or developments in alternative technologies could render our systems uncompetitive or obsolete.
• If we fail to, or incur significant costs in order to, obtain, maintain, protect, defend or enforce our intellectual property, our business and results of operations could be materially harmed.
• We use “open source” software, and any failure to comply with the terms of one or more open source licenses could adversely affect our business, financial condition and results of operations.
• We invest significant time, resources and management attention to identifying and developing project leads that are subject to our sales and marketing focus and if we are unsuccessful in converting such project leads into binding purchase orders, our business, financial condition and results of operations could be materially adversely affected.
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• Our growth depends in part on the success of our strategic relationships with third parties on whom we rely for new projects and who provide us with valuable customer feedback that helps guide our innovation.
• We may need to defend ourselves against third-party claims that we are infringing, misappropriating or otherwise violating others’ intellectual property rights, which could divert management’s attention, cause us to incur significant costs, and prevent us from selling or using the technology to which such rights relate.
• Failure by our manufacturers or our component or raw material suppliers to use ethical business practices and comply with applicable laws and regulations may adversely affect our business, financial condition and results of operations.
• We could be adversely affected by any violations of the FCPA and other foreign anti-bribery laws.
• We may incur obligations, liabilities or costs under environmental, health and safety laws, which could have an adverse impact on our business, financial condition and results of operations.
• Fluctuations in foreign currency exchange rates could increase our operating costs and impact our business.
• We are required to pay others for certain tax benefits that we are deemed to realize under the Tax Receivable Agreement, and the amounts we may pay could be significant.
Investing in our Class A common stock involves a high degree of risk. If any of the following risks occur, it could have a material adverse effect on our business, financial condition, results of operations or prospects. Risks that are not presently known to us or that we do not currently consider material could also have a material adverse effect on our business, financial condition and results of operations. If any of these or the following risks occur, the trading price of our Class A common stock could decline, and you could lose part or all of your investment. Some statements in this Quarterly Report, including statements in the following risk factors, constitute forward-looking statements. See the section entitled “Special note regarding forward-looking statements.”
Risks related to our business and our industry
The demand for solar energy and, in turn, our products is impacted by many factors outside of our control, and if such demand does not continue to grow or grows at a slower rate than we anticipate, our business and prospects will suffer.
Our future success depends on continued demand for utility-scale solar energy. Solar energy is a rapidly evolving and competitive market that has experienced substantial changes in recent years, and we cannot be certain that EPCs, developers, owners and operators of solar projects will remain active in the market or that new potential customers will pursue solar energy as an energy source at levels sufficient to grow our business. The demand for solar energy, and in turn, our products, may be affected by many factors outside of our control, including:
• availability, scale and scope of government subsidies, government and tax incentives and financing sources to support the development and commercialization of solar energy solutions, including the timing, interpretation and implementation of such programs;
• levels of investment by project developers and owners of solar energy products, which tend to decrease when economic growth slows or capital becomes more expensive or less available;
• the emergence, continuance or success of, or increased government support for, other alternative or conventional energy generation technologies and products;
• local, state and federal permitting and other regulatory requirements related to environmental, land use and transmission issues, each of which can significantly impact the feasibility and timelines for solar projects and may result in delays, increased costs or project cancellations;
• technical and regulatory limitations regarding the interconnection of solar energy systems to the electrical grid;
• the cost and availability of raw materials and components necessary to produce solar energy, such as steel, polysilicon and semiconductor chips;
• regional, national or global macroeconomic trends, including further increased interest rates, inflation or a reduction in the availability of tax equity or project debt financing, which could make it difficult for project developers and owners to finance the cost of a solar energy system and new projects; and
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• shifts in electricity demand, including those with the rapid expansion of data centers and other energy-intensive facilities, which may affect the timing, scale or economics of solar development or the competitiveness of solar energy relative to other generation technologies.
If demand for solar energy fails to continue to grow, demand for our products will plateau or decrease, which would have an adverse impact on our ability to increase our revenue and grow our business. In addition, demand may be volatile and subject to regional or project-specific fluctuations, which may make it difficult to forecast our operating results. If we are not able to mitigate these risks and overcome these difficulties successfully, our business, financial condition and results of operations could be materially and adversely affected.
Competitive pressures within our industry may harm our business, results of operations, financial condition and prospects.
We face intense competition from a large number of solar tracker companies in nearly all of the markets in which we compete. The solar tracker industry is currently fragmented and competition may increase further as the industry evolves or consolidates. This may result in price competition, including downward pressure on pricing, which could adversely affect our revenue and margins. In addition, as we expand our product offerings and offer additional technologies and services, the size and number of competitors will continue to increase.
Some of our competitors are developing or are currently manufacturing products based on different solar power technologies that may ultimately have costs similar to or lower than our projected costs. In addition, some of our competitors have or may in the future have lower costs of goods sold, lower operating costs, greater name and brand recognition in specific markets in which we compete or intend to sell our products, greater market shares, access to larger customer bases, greater resources and significantly greater economies of scale than we do. Additionally, new competitors may enter our market as a result of, among other factors, lower research and development costs, reduced barriers to entry or the availability of government incentives or financing.
We may also face adverse competitive effects from other participants in the solar industry. For example, the price for solar panels has experienced significant declines in several markets globally in recent periods. Substantial pricing declines for panels can make the returns on investment for tracker technology less competitive in comparison to fixed tilt racking systems. In addition, other risks include EPCs subjecting their subcontractors who compete for their business, such as us, to contractual clauses that carry higher contractual risk to us, such as “pay if paid” clauses that require an EPC to pay us only when the EPC’s end customer pays the EPC, higher liquidated damages amounts, increased contractual liabilities above 100% of the contract value and more limited force majeure clauses, among others, which could increase our risk exposure, reduce our margins or adversely affect our cash flows.
In addition, part of our strategy is to continue to grow our revenues from international markets. Any new geographic market could have different characteristics from the markets in which we currently sell products, and our ability to compete in such markets will depend on our ability to adapt properly to these differences, including local regulatory requirements, customer preferences, competitive dynamics, currency fluctuations and geopolitical considerations. We may also face competition from lower cost providers in any new markets we enter, which could decrease the demand for our products or cause us to reduce the cost of our products in order to remain competitive. Any of these factors could have a material adverse effect on our business, results of operations, financial condition, and prospects.
We face competition from conventional and other renewable energy sources that may offer products and solutions that are less expensive or otherwise perceived to be more advantageous than solar energy solutions.
We face significant competition from providers of conventional and other renewable energy alternatives such as coal, nuclear, natural gas and wind, as well as emerging technologies such as energy storage and hybrid generation solutions. We compete with conventional energy sources primarily based on price, predictability of price and energy availability, environmental considerations and the ease with which customers can use electricity generated by solar energy projects. If solar energy systems cannot offer a compelling value to customers based on these factors, then our business growth may be impaired.
Conventional energy sources generally have substantially greater financial, technical, operational and other resources than solar energy sources, and as a result may be able to devote more resources to research, development, promotion and product sales or respond more quickly to evolving industry standards and changes in market conditions than solar energy systems. Conventional and other renewable energy sources may be better suited than solar for certain locations or customer requirements and may also offer other value-added products or services that could help them compete with solar energy sources. In addition, conventional
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generation technologies, particularly those using fossil fuels, may in certain markets be able to produce electricity at a lower cost than solar, particularly where fuel costs are low or subsidized. Non-renewable generation is typically available for dispatch at any time, as it is not dependent on the availability of intermittent resources such as sunlight, which may make such generation more attractive to certain customers or grid operators, particularly in markets that do not adequately compensate for intermittency or capacity attributes.
In addition, advancements in competing technologies, including improvements in energy storage, grid infrastructure or alternative renewable generation sources, could reduce the relative advantages of solar energy or alter customer preferences. The cost-effectiveness, performance and reliability of solar energy products and services, compared to conventional and other renewable energy sources, could materially and adversely affect the demand for our products and services, which could have a material adverse effect on our business, financial condition and results of operations.
Delays in construction projects and any failure to manage our inventory could have a material adverse effect on us.
Many of our products are used in large-scale projects, which generally require a significant amount of planning and preparation and which have been and can be delayed and rescheduled for a number of reasons, including customer or partner labor availability, difficulties in complying with environmental and other government regulations or obtaining permits, interconnection delays, financing issues, changes in project priorities, additional time required to acquire rights-of-way or property rights, unanticipated soil conditions, or health-related shutdowns or other work stoppages. These delays have in the past resulted in and may in the future result in unplanned downtime, increased costs and inefficiencies in our operations, and increased levels of excess inventory.
Our results of operations may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our results of operations for a particular period to fall below expectations.
Our quarterly results of operations are difficult to predict and may fluctuate significantly in the future. Because we recognize a significant portion of our revenue over time based on the costs incurred to date on a project as a percentage of the total costs we expect to incur, and recognize certain other revenue only when control of the equipment transfers to the customer, any delays in large projects from one quarter to another may cause our results of operations for a particular period to fall below expectations. We have experienced seasonal and quarterly fluctuations in the past as a result of a variety of factors, including fluctuations in our customers’ businesses, changes in local and global market trends, fluctuations in economic, political, financial, industry and market conditions, regulatory or policy changes causing customers to delay, change or abandon their projects, as well as seasonal weather-related disruptions. For example, our customers’ ability to install solar energy systems is affected by weather, such as during the winter months. Inclement weather may also affect our logistics and operations by causing delays in the shipping and delivery of our materials, components and products which may, in turn, cause delays in our customers’ solar projects.
Further, given that we operate in a rapidly growing industry, the true extent of these fluctuations may have been masked by our recent growth rates and consequently may not be readily apparent from our historical results of operations and may be difficult to predict. Our financial performance, sales, working capital requirements and cash flows may fluctuate, and our past quarterly results of operations may not be good indicators of future performance or prospects. Any substantial fluctuation in revenues could have an adverse effect on our financial condition, results of operations, cash flows and stock price for any given period. In addition, revenue and other operating results in future fiscal quarters may fall short of the expectations of investors and financial analysts, which could have an adverse effect on the price of our common stock.
The reduction, elimination or expiration of government incentives for, or regulations mandating or restricting the use of, renewable energy and solar energy specifically could reduce demand for solar energy systems and harm our business.
Federal, state, local and foreign government bodies provide incentives to owners, end users, distributors and manufacturers of solar energy systems to promote solar electricity in the form of tax credits, rebates, subsidies and other financial incentives. The range and duration of these incentives varies widely by jurisdiction. Our customers typically use our systems for grid-connected applications wherein solar power is sold under a power purchase agreement or into an organized electric market. This segment of the solar industry has historically depended in large part on the availability and size of government incentives supporting the use of renewable energy. Consequently, the reduction, elimination or expiration of government incentives for grid-connected solar electricity may negatively affect the competitiveness of solar electricity relative to conventional and non-solar renewable sources of electricity, and could harm or halt the growth of the solar electricity industry and our business. These reductions,
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eliminations or expirations could occur without warning. Any changes to the existing framework of these incentives could cause fluctuations in our results of operations and create uncertainty in customer demand and project timing.
The Inflation Reduction Act of 2022 (the “IRA”) made significant changes to the federal income tax credits available to solar energy projects, including the ITC under Section 48 of the U.S. Internal Revenue Code (“IRC”) for certain energy projects. As a result of changes made by the IRA, United States taxpayers may be entitled to a 30% tax credit under the ITC (now Section 48E), for certain qualifying projects and increased further to 40% for projects that satisfy certain "domestic content" requirements. Guidance issued by the U.S. Treasury Department regarding the availability of the ITC (and its successor under Section 48E commonly referred to as a “tech neutral” credit that became effective January 1, 2025) has changed in the past and is subject to change in the future. The IRA also introduced a per-unit tax credit (the “Section 45X Credit” or “45X Credit”) that is earned over time for certain clean energy components domestically produced and sold by a manufacturer. The IRA itself was substantially amended by the OBBBA (described below) on July 4, 2025, including with respect to the Section 48E and the Section 45X Credit, in a manner which materially reduced the future availability of these credits.
Under the IRA, investments in certain solar projects may qualify for an additional bonus credit amount if the solar energy project satisfies certain “domestic content” requirements. On May 12, 2023, the U.S. Treasury Department and the IRS released Notice 2023-38 providing guidance with respect to the IRA’s domestic content bonus credit. On May 16, 2024, the U.S. Treasury Department and the IRS released Notice 2024-41, which includes a “safe harbor” that taxpayers may use to classify certain components of solar projects for the purpose of qualifying for the domestic content bonus credit. On January 16, 2025, the U.S. Treasury Department and the IRS released Notice 2025-08, which introduced an updated elective safe harbor for the domestic content bonus credit. Generally, for a qualified facility or energy project to qualify for a domestic content bonus, the project must include specified amounts of U.S.-manufactured iron, steel and manufactured products and be able to substantiate that content and its country of manufacture. We have invested in developing a supply chain and U.S. manufacturing footprint to allow us to sell customers a solar tracker that we believe complies with the domestic content requirements provided in the Notices discussed above.
In 2024, the U.S. Treasury Department and the IRS issued final Treasury regulations on the elective payment of applicable credits under Section 6417 of the IRC and the transfer of certain credits under Section 6418 of the IRC. These final Treasury regulations provide guidance to taxpayers related to selling applicable tax credits including the ITC and Section 45X Credit.
On October 28, 2024, the U.S. Treasury Department and the IRS published the 45X Treasury regulations regarding the Section 45X Credit, which became effective on December 27, 2024. The 45X Treasury regulations confirm that torque tubes and structural fasteners, including several used in our trackers, may qualify as eligible components.
The amount of the Section 45X Credit varies depending on the eligible component. In the case of torque tubes and structural fasteners, the credit amount is equal to $0.87 per kilogram and $2.28 per kilogram, respectively, through the end of 2029.
The Section 45X Credit amount will be reduced each year by 25% starting in 2030 and end after 2032. Our eligible U.S. manufacturing suppliers avail themselves of the Section 45X Credits to varying degrees and we accounted for some of these economic benefits in our cost of acquiring torque tubes and structural fasteners. Beginning in calendar year 2025, in certain circumstances, we have directly obtained the benefit of the Section 45X Credit through the use of an election authorized in the Section 45X Treasury regulations.
In lieu of Section 48E, as a result of changes made by the IRA, United States taxpayers may elect to claim a production tax credit under Section 45Y of the IRC for qualified solar facilities if the construction of the facility began after December 31, 2024 and the facility is timely placed in service for federal income tax purposes.
The PTC is available in respect of kilowatt hours of electricity produced by a qualifying solar project and sold to one or more unrelated persons during the ten years following the date on which the qualifying solar project is placed in service. The amount of PTC available varies based on an annual inflation adjustment. The available credit amount is increased by up to 10% if the domestic content requirements described above are satisfied.
The IRA created Sections 48E and 45Y, which are “technology neutral” tax credit incentives that replace each of the ITC and the production tax credit under Section 45 of the IRC (“PTC”), respectively, for certain qualifying projects that begin construction after 2024. These provisions require that a project satisfy a “zero greenhouse gas emissions” standard in order to qualify for the tax credits. Taxpayers that began construction of energy projects or facilities that qualify for the ITC or PTC prior to 2025 may choose to claim the ITC, PTC, or one of the “technology neutral” tax credits in respect of the project assuming that certain continuous construction requirements are met.
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On January 7, 2025, the U.S. Treasury Department and the IRS released final Treasury regulations which were published in the Federal Register on January 15, 2025 regarding the Section 45Y Credit and Section 48E with respect to certain qualified facilities and/or energy storage technology claiming such tax credits.
On July 4, 2025, a U.S. federal budget reconciliation bill known as the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA, among other things, materially changed most of the federal renewable energy incentives, including those described in Sections 45X, 48E, and 45Y. In particular, the OBBBA significantly altered the availability of the Section 48E and 45Y tax credits our customers rely upon for qualified solar facilities. For example, whereas under the IRA, Section 48E and 45Y credits were available through 2032 or such later period until the U.S. power sector emitted 75% less carbon emissions than 2022 levels, the OBBBA substantially reduced this timeframe to require that projects begin construction by July 4, 2026 to utilize a continuity safe harbor that permits solar projects to be placed in service within four calendar years following the calendar year in which the project began construction for tax credit eligibility. Alternatively, solar projects that begin construction after July 4, 2026 must be placed in service by December 31, 2027 to qualify for the Section 48E and 45Y credits. Such acceleration in the expiration of these tax credits will reduce the number of projects in future years that would have otherwise qualified for such credits, likely reducing the overall project volume over time.
Additionally, on July 7, 2025 President Trump issued an Executive Order directing the Secretary of the Treasury to take measures to strictly enforce the termination of the Sections 48E and 45Y credits for wind and solar facilities. The Executive Order specifically directs the Secretary of the Treasury to issue new restrictions concerning “beginning of construction” requirements that appear in many provisions of the OBBBA and which govern eligibility for these tax credits. The Executive Order targets “safe harbor” practices in which our customers seek to establish that their projects have begun construction by the relevant deadline (and therefore qualify for the tax credit) by incurring 5% or more of applicable project costs. Treasury guidance required by this Executive Order was issued on August 22, 2025 in the form of IRS Notice 2025-42. Under this guidance the 5% safe harbor was eliminated effective September 2, 2025 and additional requirements were imposed on solar projects for purposes of demonstrating both the start of physical construction and continuous physical construction thereafter.
In June 2026, a federal district court vacated Notice 2025-42 finding the notice to be arbitrary and capricious in Oregon Environmental Council v. IRS . The government may appeal the decision, or Treasury may issue new guidance to replace the vacated notice. It remains uncertain whether developers can rely on the restored safe harbor and thus which beginning of construction standards will ultimately apply to our customers’ project. Such requirements, and the ongoing uncertainty resulting from the vacatur and any subsequent appeal or replacement guidance, may diminish our customers’ ability to qualify their projects for Section 48E or 45Y tax credits, which in turn could reduce demand for our products and materially harm our business and results of operations.
In addition, the OBBBA introduced certain “foreign entity of concern” (“FEOC”) restrictions relating to prohibited foreign entities on owners of qualified facilities claiming such Section 48E and 45Y tax credits, as well as on manufacturers of components that otherwise qualify for the Section 45X credit. Under these rules, a “prohibited foreign entity” includes a “specified foreign entity” or “foreign influenced entity”, and in general means that certain entities (governments or companies) that are under the ownership, control, or influence of deemed foreign adversaries, such as China, are ineligible for such tax credits. Under the OBBBA a taxpayer must comply with the FEOC rules applicable to a tax credit in order to qualify for such tax credit. The FEOC restrictions apply to Sections 45X, 48E and 45Y in somewhat different ways. However, these rules generally require that Nextpower evaluate its ownership, the ownership of certain members of its supply chain partners, any rights regarding the ability to appoint board members and executives of Nextpower and its supply chain partners, certain payments made by Nextpower and its supply chain partners, and certain contractual arrangements entered into by Nextpower and its supply chain partners with other parties. On February 12, 2026, the U.S. Treasury Department issued interim guidance under Notice 2026-15 regarding material assistance tests related to prohibited foreign entities, and requested public comment. Additional Treasury guidance and/or regulations implementing the FEOC provisions of the OBBBA are pending and may alter current interpretations of the restrictions.
Nextpower is currently evaluating itself and its supply chain partners who provide components for U.S. qualified facilities and will continue to do so as the Treasury Department issues clarifying guidance or regulations. To the extent that our suppliers are disqualified from 45X eligibility as a result of FEOC restrictions, our cost of goods sold may increase and we may become less profitable and/or competitive. In addition, to the extent our tracker components are produced by suppliers which impair our customers’ ability to qualify their projects for Section 48E or 45Y credits (or related domestic content bonus credits), we may become less competitive and our business and results of operations could be materially harmed.
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Although we continue to expand our international presence, the impact of the OBBBA, Executive Orders, Treasury Department guidance, and other regulatory actions on the U.S. solar market may adversely impact our business. The substantially reduced timelines for our customers to qualify for the Section 48E or 45Y tax credits may reduce the number of solar projects that our customers build in the United States and therefore reduce the demand for our trackers in the U.S. market. In addition, we may not have an adequate supply of tracker products that satisfy the FEOC or domestic content requirements to remain competitive and meet customer demand. Compliance with FEOC and domestic content requirements also may increase our record-keeping, accounting and production costs.
The OBBBA did not change the prevailing wage and apprenticeship requirements imposed on our customers by the IRA. If we or our customers are unable to satisfy or cure respective prevailing wage and apprenticeship requirements for projects that establish the beginning of construction on or after January 29, 2023, the tax credits available to the customers will be substantially lower. If we or a significant portion of our customers are unable to satisfy prevailing wage and apprenticeship requirements under the IRA, demand for our tracker products may be adversely impacted by the reduced tax credits available to our customers, which could have a material adverse effect on our business, financial condition and results of operations.
Certain provisions of the IRA have been the subject of substantial public interest and have been subject to debate, and there are divergent views on potential implementation, guidance, rules and regulatory principles by a diverse group of interested parties. We expect a similar pattern of divergent interpretations with respect to OBBBA, the Executive Order and implementing guidance and regulations. There can be no assurance that our products will fully qualify for the benefits under the IRA or the OBBBA or that competitors will not disproportionately benefit or gain competitive advantages as a result of the implementation or interpretation of these laws. In addition, if our suppliers incorrectly interpret the requirements of the tax credits or the OBBBA and it is later determined that the tax credits were incorrectly claimed, we may be penalized. As a result, the final interpretation and implementation of the provisions in the IRA or OBBBA could have a material adverse impact on us.
Furthermore, future legislative enactments or administrative actions could limit, amend, repeal or terminate federal tax incentives that we currently do, or hope to, leverage. Any reduction, elimination, or discriminatory application or expiration of current and any future federal tax incentives may materially adversely affect our future operating results and liquidity.
Changes to tax laws and regulations that are applied adversely to us or our customers could materially adversely affect our business, financial condition, results of operations and prospects, including our ability to optimize the changes brought about by the passage of the IRA.
In addition, federal, state, local and foreign government bodies have implemented additional policies that are intended to promote or mandate renewable electricity generally or solar electricity in particular. For example, many U.S. states have adopted procurement requirements for renewable energy production and/or a renewable portfolio standard (“RPS”) that requires regulated utilities to procure a specified percentage of total electricity delivered to customers in the state from eligible renewable energy sources, including utility-scale solar power generation facilities, by a specified date. There can be no assurances that RPSs or other policies supporting renewable energy will continue. Proposals to extend compliance deadlines, reduce renewable requirements or solar set-asides, or entirely repeal RPSs emerge from time to time in various jurisdictions. Reduction or elimination of RPSs, restrictions or prohibitions imposed on solar projects, as well as changes to other renewable-energy and solar-energy policies, could reduce the potential growth of the solar energy industry and materially and adversely affect our business.
Moreover, changes in policies of recent U.S. presidential administrations have created regulatory uncertainty in the renewable energy industry, including the solar energy industry, and have adversely affected and may continue to adversely affect our business. For example, in the span of less than six years, the United States joined, withdrew from, and then rejoined the 2015 Paris Agreement on climate change mitigation following changes in administration between U.S. Presidents Obama, Trump and Biden. To start his second term, U.S. President Trump signed numerous executive orders including for the U.S. to again withdraw from the Paris Climate Treaty, to expedite deregulated oil and gas drilling, and revoke executive orders and actions from the previous administration related to, among other things, the implementation of the energy and infrastructure provisions of the IRA. Additionally, the U.S. Department of the Interior and U.S. Department of Energy have recently taken several steps to prohibit, prevent or delay new renewable energy projects. For example, on July 15, 2025 the Department of Interior issued an internal memo entitled “Departmental Review Procedures for Decisions, Actions, Consultations, and Other Undertakings Related to Wind and Solar Energy Facilities.” The memo mandates that 69 categories of previously routine permitting and review activities related to wind and solar projects be elevated to top levels within the Department of Interior, which may substantially slow approval timelines and reduce the number of projects permitted.
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In RENEW Northeast et al. v. U.S. Department of Interior et al., renewable energy industry groups filed an action in December 2025 alleging that several federal agency actions targeted wind and solar development, slowing or blocking renewable energy permitting in violation of the Administrative Procedure Act. In April 2026, the District Court of Massachusetts found irreparable harm as plaintiffs showed imminent economic injuries, including permitting delays, increased compliance costs, disruption to existing investments, and project-related harms. The court held that the balance of equities and public interest favored relief, due to the asserted harms to renewable energy development, the grid, and the environment outweighed the agencies’ interest in continuing policies the court found likely unlawful. The injunction may reduce some immediate permitting barriers for covered entities, but it does not eliminate regulatory uncertainty as the case remains pending, the ruling is subject to appeal, and the agencies may pursue alternative actions.
These or similar actions by the U.S. Administration could materially reduce the number of future solar projects and/or delay the timing of projects or result in cancellations of planned or in-process projects and could have a material adverse impact on our business, financial condition and results of operations.
In addition, the U.S. Supreme Court’s decision on June 30, 2022 in West Virginia v. EPA, holding that the U.S. Environmental Protection Agency (“EPA”) exceeded its authority in enacting a subsequently repealed rule that would have allowed electric utility generation facility owners to reduce emissions with “outside the fence measures,” may limit EPA’s ability to address greenhouse gas emissions comprehensively without specific authorization from Congress. It is difficult to predict what further actions will be taken that may impact our business including revisions to the federal incentives related to renewable energy.
International regulation of and incentives for solar projects vary by jurisdiction and may change or be eliminated.
The international markets in which we operate or may operate in the future may have or may put in place policies to promote renewable energy, including solar. These incentives and mechanisms vary from country to country. In seeking to achieve growth internationally, we may make investments that, to some extent, rely on governmental incentives and support in a new market.
There is no assurance that foreign governments will provide or continue to provide sufficient incentives and support to the solar industry or that the industry in any particular country will not suffer significant downturns in the future as the result of changes in public policies or government interest in renewable energy, any of which would adversely affect demand for our solar products.
Changes in the global trade environment, including the imposition of tariffs, other import duties and trade restrictions, could adversely affect our business growth and the amount or timing of our revenues, results of operations or cash flows.
Trade tensions, particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain materials for and components of our products such as steel and low-power solar modules, and for products used in solar energy projects more broadly, such as electrical equipment, storage batteries and solar modules.
In recent years, imposition and withdrawal of import tariffs have been erratic and unpredictable. On February 20, 2026, the U.S. Supreme Court ruled that import tariffs imposed by President Trump purportedly under the International Emergency Economic Powers Act (“IEEPA”) were unlawful. As a result, it is expected that the U.S. government will refund with interest at least a sizable portion of the IEEPA tariffs, although the timing and precise coverage of those tariff refunds remain uncertain.
Effective February 24, 2026, President Trump imposed a 10% tariff on most goods under Section 122 of the Trade Act of 1974 (“Section 122 Tariffs”). The Section 122 Tariffs generally apply uniformly against most U.S. imports from most countries, but do not apply to imports of products that qualify for preferential treatment under the United States – Mexico – Canada Agreement (USMCA) or to imports of certain products that are ordinarily unrelated to solar energy projects.
There currently are tariffs on imports of steel, aluminum and copper products, including certain derivative products containing steel, aluminum and/or copper, imposed under Section 232 of the Trade Expansion Act of 1962 (“Section 232 Tariffs”). Effective April 6, 2026, the Administration revised the Section 232 Tariff framework, including by generally applying a 50% tariff to the full customs value of covered steel, aluminum and copper products, applying a lower 25% tariff to certain products and applying a 10% tariff to covered derivative products made from aluminum or copper smelted and cast in the United States, or from steel melted and poured in the United States . Certain products also qualify for Section 232 tariff exemptions. Section 232 tariffs are not additive to the Section 122 Tariffs. Although the April 6, 2026 Section 232 Tariff revisions reduced our tariff exposure for certain imported components, Section 232 Tariffs continue to affect our costs and gross margins and could result in interruptions in our product supply chains.
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There are also tariffs on various items of solar equipment, including solar cells and modules, inverters and power optimizers, imported from China under Section 301 of the Trade Act of 1974 (“Section 301 Tariffs”). At present, Section 301 Tariffs are 50% on Chinese crystalline solar photovoltaic (“CSPV”) cells and modules, 25% on Chinese steel products, 25% on Chinese parts of lead-acid storage batteries (including separators thereof) and 25% on Chinese lithium-ion non-EV batteries. These Section 301 Tariffs are additive to Section 122 Tariffs.
In addition, the Trump Administration has indicated that new Section 301 Tariffs may be implemented in the near future following investigations covering a broad range of countries, including major sourcing markets. The timing, rates, country coverage, product coverage and interaction with other tariffs remain uncertain. If implemented, these additional Section 301 tariffs could increase our costs, reduce our gross margins, adversely affect sourcing and pricing decisions, and otherwise adversely affect our business, financial condition, results of operations and cash flows.
Nextpower products include proprietary, low-power CSPV modules that provide off-grid power to our controllers located either on each tracker row or on weather stations at the project site. Such low-power CSPV modules, if sourced from China, are impacted by Section 301 Tariffs on solar modules. All tariffs on solar cells and modules also may indirectly affect us by increasing the costs of components of solar energy projects, thereby adversely impacting the financial viability of solar energy projects in which our products are used, which could lead to decreased demand for our products.
Under an August 2023 “circumvention” determination by the U.S. Department of Commerce (“Commerce”), CSPV cells and modules produced in Cambodia, Malaysia, Thailand and Vietnam using certain Chinese components are subject to antidumping duty and countervailing duty (“AD/CVD”) orders on CSPV cells and modules from China (“Solar Circumvention Determination”). AD/CVD cash deposit rates for imported CSPV modules covered by the China AD/CVD orders vary significantly depending on the producer and exporter of the modules and may amount to over 250% of the entered value of the modules.
As a result of a Presidential Proclamation 10414 issued by President Biden on June 6, 2022, entries of CSPV cells and models covered by the Solar Circumvention Determination that entered the United States prior to June 6, 2024 generally did not face the collection of AD/CVD amounts if the importers of such cells and modules submitted required certifications to U.S. Customs and Border Protection (“CBP”). Nextpower imported proprietary, low-power CSPV smart modules from Malaysia and Thailand covered by the Solar Circumvention Determination between April 1, 2022 and November 30, 2022, While Nextpower submitted certifications for the low-power CSPV smart modules it imported during this period, Nextpower did not strictly follow all the certification procedures for a number of the entries. In addition, the AD/CVD exemption put in place by Presidential Proclamation 10414 is subject to a pending court challenge.
If U.S. courts strike down the AD/CVD exemption put in place by Presidential Proclamation 10414 or CBP determines that Nextpower’s submitted certifications were invalid, Nextpower could be required to pay AD amounts with respect to the applicable entries of the low-power CSPV smart modules. To mitigate the AD duty risk, Nextpower has submitted a prior disclosure to CBP informing CBP of the potential procedural deficiencies with respect to the certifications submitted by Nextpower. CSPV cells and modules produced in Cambodia, Malaysia, Thailand and Vietnam that are not covered by the Solar Circumvention Determination are subject to AD/CVD orders. AD/CVD cash deposit rates for imports of CSPV modules covered by the Cambodia, Malaysia, Thailand and Vietnam AD/CVD orders vary significantly depending on the producer and exporter of the modules and may amount to over 3,000% of the entered value of the imported merchandise.
In August 2025, Commerce initiated AD/CVD investigations targeting CSPV cells and modules from India, Indonesia and Laos. On February 26, 2026, Commerce published affirmative preliminary CVD determinations in the investigations and imposed significant CVD cash deposit rates. On April 23, 2026, Commerce issued preliminary affirmative dumping determinations covering CSPV cells and modules from those countries and imposed significant AD cash deposit rates. Although we have taken steps to mitigate potential exposure through supply chain adjustments, these preliminary determinations, and the proceedings’ final determinations (expected in September 2026), could adversely affect our costs, supply chain flexibility, project timing and results of operations.
On July 17, 2026, Commerce initiated a circumvention proceeding targeting CSPV cell and modules produced in Ethiopia using Chinese inputs and CSPV cells produced in Ethiopia using Chinese inputs and incorporated into CSPV modules produced in Vietnam. If the circumvention proceeding results in a final determination of circumvention, Commerce is expected to include the merchandise targeted by the circumvention proceeding within the longstanding AD/CVD orders covering CSPV cells and modules from China.
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On July 1, 2025, Commerce initiated a Section 232 investigation to determine the effects on U.S. national security of imports of polysilicon and its derivatives. Once completed, the investigation may result in President Trump imposing tariffs on imports into the United States of polysilicon and its derivatives. It is possible that such Section 232 tariffs could apply to CSPV cells and modules, which would negatively impact our business.
Imports of solar modules produced in China or incorporating cells or other materials (e.g., polysilicon) produced in whole or in part in China may be detained by CBP under the Uyghur Forced Labor Prevention Act (Public Law No. 117-78). To the extent that such detentions occur, solar modules may not reach project sites, which may result in significant delays in the development and entry into operation of solar energy projects.
The ultimate severity or duration of any solar panel supply chain disruption due to CBP detentions or otherwise and or its effects on our clients’ solar project development and construction activities, and associated consequences on our business, is uncertain.
If an environment of significantly increased U.S. tariffs and trade restrictions continues or further escalates, the global economy could be adversely affected, including through higher costs, higher interest rates or lower demand for renewable energy, any of which could materially affect our business, financial condition, results of operations, and prospects. In addition, we export products manufactured in the United States to projects outside of the United States, which exposes our business to retaliatory tariffs imposed by other countries. Such retaliatory tariffs, if applicable to our products, could adversely affect the demand for our products or make us less competitive in those countries.
Existing tariffs and duties, the possibility of additional or increased tariffs or duties in the future, and the potential detention by CBP of solar modules all have created uncertainty in the solar industry. If the price of solar systems increases, the use of solar systems could become less economically feasible and could reduce our gross margins or reduce the demand for solar systems, which in turn may decrease demand for our products.
Additionally, existing or future tariffs and CBP detentions of solar modules may negatively affect key customers and suppliers, and other supply chain partners. Such outcomes could adversely affect the amount or timing of our revenues, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to delay their purchase of our products. It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions. While we have taken actions with the intention of, among other things, mitigating the effect of AD/CVD duties, Section 301 Tariffs and Section 232 Tariffs on our business, we may not be able to do so broadly or on attractive terms.
Any of the foregoing risks could have a material adverse effect on our business, financial condition and results of operations.
Future acquisitions, strategic investments, strategic transactions, partnerships, joint ventures or alliances could be difficult to identify and integrate, divert the attention of key management personnel, disrupt our business, dilute stockholder value and adversely affect our business, financial condition and results of operations.
As part of our business strategy, we have, and in the future expect to continue to make, investments in and/or acquire complementary companies, services or technologies, such as our acquisitions of Ojjo, the foundations business of SPI, Bentek, OnSight, Origami, Prevalon and other recent acquisitions. We have also entered into, and may in the future enter into, joint ventures or similar strategic arrangements, such as our Nextpower Arabia joint venture. Our ability as an organization to acquire and integrate other companies, services or technologies, and to structure, negotiate and manage joint ventures and other strategic arrangements, in a successful manner in the future is not guaranteed. We may not be able to find suitable acquisition candidates or joint venture partners, and we may not be able to complete such acquisitions or joint ventures on favorable terms, if at all. When we complete acquisitions or enter into joint ventures, we may not ultimately strengthen our competitive position or ability to achieve our business objectives, and any acquisitions or joint ventures we complete could be viewed negatively by our end-customers or investors. In addition, our due diligence may fail to identify all of the problems, liabilities or other shortcomings or challenges of an acquired business, joint venture partner, product or technology, including issues related to intellectual property, product quality or product architecture, regulatory compliance practices, revenue recognition or other accounting practices or issues with employees or customers. Joint ventures involve unique risks, including our potential inability to control the operations, strategies or financial decisions of our joint venture partners, the potential for our partners to have economic or business interests inconsistent with our own, the possibility that we may be responsible to joint venture partners for indemnifiable losses and the risk that our partners may be unable or unwilling to fulfill their obligations under the
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relevant joint venture agreements. If we are unsuccessful at integrating such acquisitions, or the technologies associated with such acquisitions, into our company, or at managing our joint ventures effectively, the revenue and results of operations of the combined company could be adversely affected. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel, or the capabilities of joint venture partner, or accurately forecast the financial impact of an acquisition or joint venture transaction, causing unanticipated write-offs or accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, or to fund our obligations under any joint venture arrangements each of which could adversely affect our business, financial condition and the market price of our Class A common stock. The sale of equity or issuance of debt to finance any such acquisitions or joint ventures could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations.
In connection with our acquisitions and strategic investments, we have recorded, and expect to continue to record, significant amounts of goodwill and other intangible assets on our unaudited condensed consolidated balance sheet. We are required to test goodwill for impairment at least annually, generally at the beginning of our fourth fiscal quarter, and to test our finite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. Triggering events that could require an interim or annual impairment assessment include declines in our historical or projected revenue, operating income or cash flows, a sustained decline in the price or market capitalization of our Class A common stock, deterioration in general macroeconomic, industry or market conditions, reductions in demand or project volumes, the loss of one or more significant customers, adverse changes in the regulatory or incentive environment, or the failure of an acquired business to perform as we expected at the time of acquisition. If the carrying value of a reporting unit or asset exceeds its estimated fair value, we may be required to recognize a non-cash impairment charge, which could be significant. Any such charge could have a material adverse effect on our results of operations and financial condition in the period in which it is recognized.
We rely heavily on our suppliers and our operations could be disrupted if we encounter problems with our suppliers or if there are disruptions in our supply chain.
We purchase our components through arrangements with various suppliers located across the globe. We depend on our suppliers to source materials and manufacture critical components for our products. Our reliance on these suppliers, in certain cases on an exclusive or sole-source basis, makes us vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules and costs which could disrupt our ability to procure these components in a timely and cost-efficient manner. As we expand our product offerings, the complexity of our supply chain could increase, exposing us to additional problems or disruptions. Any shortages of components or raw materials for these products could affect our ability to timely deliver our products to our customers, which may result in liquidated damages or contractual disputes with our customers, harm our reputation and lead to a decrease in demand for our products.
For example, our products are manufactured from steel and, as a result, our business is significantly affected by the price of steel. When steel prices are higher, the prices that we charge customers for our products may increase, which may decrease demand for our products. Conversely, if steel prices decline, customers may demand lower prices and our competitors’ responses to those demands could result in lower sale prices or lower sales volume and, consequently, negatively affect our profitability. A significant portion of the steel used to produce our products is derived directly or indirectly from steel mills located in China. At times, pricing and availability of steel can be volatile due to numerous factors beyond our control, including domestic and international economic conditions, global steel capacity, import levels, fluctuations in the costs of raw materials necessary to produce steel, sales levels, competition, consolidation of steel producers, labor costs, transportation costs, import duties, tariffs and foreign currency exchange rates. The volatility in the availability and cost of steel may impact our business. Imports of China-origin steel currently are subject to significant tariffs and trade restrictions, including reciprocal tariffs and Section 301 Tariffs, which materially increase the cost of such imports. Imports of steel and many steel derivative products from other countries are subject to tariffs and other trade measures (with limited exceptions for certain countries). Accordingly, ongoing trade disputes, unpredictable tariff policies and uncertainty with respect to the potential for such policy changes may increase procurement costs or restrict access to necessary materials for our products, like steel, potentially leading to disruptions with our suppliers or in our supply chain. We continue to evaluate the potential impact of the imposition of such tariffs and trade restrictions to our business and financial condition, but we expect that these tariffs will significantly increase our costs.
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Further, if any of our suppliers were unable or unwilling to manufacture the components that we require for our products in sufficient volumes or at sufficiently high-quality levels or to renew existing terms under supply agreements, we would need to identify, qualify and select acceptable alternative suppliers. An alternative supplier may not be available to us when needed or may not be in a position to satisfy our quality or production requirements on commercially reasonable terms, including price. In certain cases, identifying, qualifying and transitioning to alternative suppliers may require engineering validation, testing or customer approval, which can take time and may not be feasible within project schedules. In addition, we may enter into exclusive arrangements which prohibit or limit our ability to use alternative suppliers. In some cases, we may rely on a limited number of suppliers, or single-source suppliers, for certain components, which may increase our exposure to supply disruptions. Any significant disruption to our ability to procure our components, and our suppliers’ ability to procure materials to manufacture components for our products could increase the production cost of our products or reduce or delay our ability to perform under our contracts and could thereby adversely affect our business, financial condition and results of operations.
In addition, as noted above, the federal law provides incremental tax credits for U.S. solar projects satisfying domestic content requirements. While the impact of these requirements on us remains fluid and uncertain pending customer response and any future implementing regulations, if we are unable to provide our tracker products in a manner that satisfies applicable domestic content requirements, we might experience a decline in sales for U.S. projects, especially if our competitors are able to satisfy such domestic content requirements. In addition, compliance with these requirements may increase our production costs. In light of the foregoing, our U.S. sales, profitability and results of operations in the United States may be adversely affected by applicable domestic content requirements which must be satisfied in order for solar projects to be eligible for these incremental credits. Further, the sourcing of compliant materials under domestic content rules may become more complex due to evolving guidance, limited supplier availability, or capacity constraints.
Further, disruption in our supply chain and transportation channels, including changes by carriers and transportation companies relating to delivery schedules, shortages in available cargo capacity or labor availability, payment terms and frequency of service and pricing as well as cargo ship incidents, shipping channel disruptions or work stoppages or strikes could impact our ability to timely deliver our products to our customers or increase delivery costs. For example, in the recent past we have seen many shipping companies pause or reroute shipments through the Suez Canal and the Red Sea as a result of attacks against commercial vessels in the area, causing rerouting of commercial vessels. Similarly, the U.S.-Iran war has resulted in a cessation or substantial curtailment of shipments through the Strait of Hormuz. As a result, we have and may continue to experience increased costs and delivery delays. Geopolitical tensions, armed conflicts, trade restrictions or other global events may further exacerbate these risks.
Economic, political and market conditions can adversely affect our business, financial condition and results of operations.
Macroeconomic developments, such as the global or regional economic effects resulting from political tensions between the U.S. and Europe, the Ukraine-Russian war, and U.S.-Iran war (including the disruption of transporting goods through the Suez Canal and the Strait of Hormuz), further increases in inflation and related economic policy responses, evolving trade policies or trade wars, extended U.S. federal government shutdowns, or the occurrence of similar events that lead to uncertainty or instability in economic, political or market conditions, could have a material adverse effect on our business, financial condition and results of operations.
Local political issues and conflicts could have a material adverse effect on our results of operations and financial condition if they affect geographies in which we do business or obtain our components. Local conflicts, such as the Ukraine-Russian war or the U.S.-Iran war, could also have a significant adverse impact on regional or global macroeconomic conditions, give rise to regional instability or result in heightened economic tariffs, sanctions and import-export restrictions in a manner that adversely affects us, including to the extent that any such actions cause material business interruptions, delays or restrict our ability to conduct business with certain suppliers. Additionally, such conflicts or sanctions may significantly devalue various global currencies and have a negative impact on economies in geographies in which we do business, which may in turn adversely affect our revenues, costs and margins.
The financial markets and the global economy have also been, and may continue to be, adversely affected by the recent global escalation in tariffs and trade restrictions, including through higher costs, higher interest rates or lower global demand for energy, any of which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, because the solar projects in which our products are used require substantial upfront capital investment which is expected to be recovered over a period of multiple years, uncertainty and perceived instability regarding future macroeconomic conditions may deter investment in, or financing of, these solar projects and in turn reduce demand for our products.
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Adverse macroeconomic conditions, including slow growth or recession, high unemployment, labor shortages, ongoing or increasing inflation, tighter credit, higher interest rates and currency fluctuations, or the perception that adverse macroeconomic conditions may occur or persist, may cause current or potential customers to reduce or eliminate their budgets and spending, which could cause customers to delay, decrease or cancel projects with us. In addition, such conditions may increase our costs, reduce our ability to forecast demand and operating results, and adversely affect our liquidity or access to capital.
If we do not maintain environmental, social and governance (“ESG”) practices and disclosures that meet the expectations of customers, regulators, employees, and investors, our relationships with these stakeholders could suffer, which could adversely affect our business and financial results.
Many governments, customers, investors and employees have enhanced their focus on ESG practices and disclosures, and expectations in this area are rapidly evolving and in some cases may be inconsistent or conflicting. Failure to adequately maintain ESG practices that meet diverse stakeholder expectations may result in an inability to attract customers, loss of business, diluted market valuation, and an inability to attract and retain top talent. In addition, standards, processes and governmental requirements for disclosing sustainability metrics have frequently changed in recent years, resulting in changes in the data that we must collect or disclose about our ESG practices, and could result in significant revisions to our sustainability commitments or our ability to achieve them. As governments impose greenhouse gas emission reporting requirements and other ESG-related laws, we are subject to at least some of these rules and concomitant regulatory risk exposure. ESG compliance and reporting could be costly, and we could be at a disadvantage compared to companies that do not have similar reporting requirements.
For example, rules adopted by the SEC in 2024 could require significantly expanded climate-related disclosures in our periodic reporting, which may require us to incur significant additional costs to comply, including the implementation of significant additional internal controls regarding matters that have not been subject to such controls in the past. Although the rule has been stayed by the SEC and the SEC recently announced that it has voted to end its legal defense of these enhanced climate-related disclosure rules, it is possible that these rules could be reinstated in the future.
In addition, although the SEC’s 2024 rule requiring extensive climate-related disclosures has been voluntarily stayed, we are still subject to other laws regarding climate-related disclosures in other jurisdictions. For example, in October 2023, California enacted climate disclosure laws that may require companies such as ours to report on greenhouse gas emissions and climate-related financial risks. Similarly, we may be subject to the requirements of the EU Corporate Sustainability Reporting Directive (and its implementing laws and regulations) and other EU and EU member state regulations, or disclosure requirements on various sustainability topics. These requirements vary across jurisdictions, and may result in increased complexity and cost, to achieve compliance, including the need to implement new systems processes and controls. Furthermore, industry and market practices continue to evolve, and we may have to expend significant efforts and resources to keep up with market trends and stay competitive among our peers, which could result in higher associated compliance costs and penalties for failure to comply with applicable laws and regulations. In addition, if our ESG disclosures are perceived to be inaccurate, misleading or not aligned with evolving standards, we could be subject to reputational harm, regulatory scrutiny or litigation. Our ability to collect, validate and report ESG data may also be limited by the availability and reliability of information from third parties, including our suppliers.
Our business and industry, including our customers and suppliers, are subject to risks of severe weather events, natural disasters, climate change and other catastrophic events.
Our headquarters and testing facilities, which conduct functional and reliability testing for our components and products, are located in the Bay Area of Northern California and our solar projects are located in the U.S. and around the world. A severe weather event or other catastrophe impacting our headquarters or testing facilities could cause significant damage and disruption to our business operations. In addition, a severe weather event or other catastrophe could significantly impact our supply chain by causing delays in the shipping and delivery of our materials, components and products which may, in turn, cause delays in our customers’ solar projects. Our customers’ ability to install solar energy systems is also affected by weather events, such as during the winter months, and other catastrophic events.
In addition, our operations and facilities and those of the third parties on which we rely are subject to the risk of interruption by fire, power shortages, nuclear power plant accidents and other industrial accidents, terrorist attacks and other hostile acts, cybersecurity attacks and other data security incidents, labor disputes, including labor shortages, public health issues, including pandemics and epidemics, and other events beyond our and their control. Any damage and disruption in any locations in which
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we have offices or in which our customers or suppliers operate, which are caused by severe weather events (such as extreme cold weather, hail, hurricanes, tornadoes and heavy snowfall), seismic activity, fires, tsunamis, floods and other natural disasters or catastrophic events could result in a delay or even a complete cessation of our worldwide or regional operations and could cause severe damage to our products and equipment used in our solar projects. Global climate change is increasing the frequency and intensity of certain types of severe weather events. Even if our tracker products and other products and technologies are not damaged, severe weather, natural disasters and catastrophic events may cause damage to the solar panels that are mounted to our tracker products, which could result in decreased demand for our products, loss of customers and the withdrawal of coverage for solar panels and solar tracking systems by insurance companies. Any of these events would negatively impact our ability to deliver our products and services to our customers and could result in reduced demand for our products and services, and any damage to our products and equipment used for our solar projects could result in large warranty claims which could, individually or in the aggregate, exceed the amount of insurance available to us or may not be covered by insurance at all. Further, our insurance coverage may become more limited or more expensive over time due to increased climate-related risks. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.
Third party technology system limitations or failures could harm our business.
Our business depends, in part, on the integrity and performance of the technology systems supporting our products and services. Our products and services operate in conjunction with, and we are dependent upon, third-party systems, products, services, solutions and components, including third-party cloud providers. If new systems fail to operate as intended or our existing systems cannot expand to cope with increased demand or otherwise fail to perform, we could experience unanticipated disruptions in service, slower response times and delays in the introduction of new products and services. We could experience a systems failure due to, among other things, human error by our employees, contractors or vendors, electrical or telecommunications failures or disruptions, including third-party cloud disruptions, hardware or software failures or defects, cyberattacks, sabotage or similar unexpected events. High-profile outages involving third-party cloud providers have caused widespread disruptions to their customers’ operations. If one of our third-party cloud providers experience a similar outage, our products and services could be disrupted. Additionally, there have been and may continue to be attacks on certain of our third-party providers, and we cannot guarantee that our or our third-party providers’ systems and networks have not been breached or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our products and services and to the networks or the systems of third parties that support our products and services or the compromise, loss or corruption of data. Our ability to monitor, remediate or recover from incidents involving third-party providers may be limited, and such providers may not meet our security or service expectations. Any such issue that causes an interruption in our products and services, decreases the responsiveness of our products and services or otherwise affects our products and services could impair our reputation, damage our brand name and negatively impact our business, financial condition and operating results.
Our business, operating results and financial condition could be materially harmed by evolving regulatory uncertainty or obligations applicable to our products and services.
Changes in regulatory requirements applicable to the industries and sectors in which we operate, in the United States and in other countries, could materially affect the sales and use of our products and services. This includes emerging laws and regulations related to artificial intelligence (AI), cybersecurity, privacy and data protection, which may impose new compliance obligations on our operations, including requirements relating to data collection, storage, use, security and governance. These laws may be complex, evolving and, in some cases, inconsistent across jurisdictions, increasing the cost and complexity of compliance. In particular, economic sanctions and changes to export and import control requirements may impact our ability to sell and support our products and services in certain jurisdictions. If we were to fail to comply with export controls laws and regulations, U.S. economic sanctions or other similar laws, including restrictions from the international community, or conflict mineral regulations, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations and the possible loss of our export or import privileges.
Obtaining the necessary export license for a particular sale or transaction may not be possible, may be time-consuming and may result in the delay or loss of sales opportunities. Further, U.S. export control laws and economic sanctions prohibit the export of services to certain U.S. embargoed or sanctioned countries, governments and persons, as well as for prohibited end-uses. Even though we take precautions to ensure that we comply with all relevant export control laws and regulations, including restrictions from the international community, any failure to comply with such laws and regulations could have negative consequences for us, including reputational harm, government investigations and penalties.
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We may not be able to convert our orders in backlog into revenue.
Our reported backlog reflects expected future revenue from executed contracts, purchase orders and other customer commitments. Backlog can be subject to large variations from quarter to quarter and comparisons of backlog from period to period are not necessarily indicative of future revenue. Because backlog is inherently uncertain and subject to change, the contracts comprising our backlog may not result in actual revenue in any particular period or at all due to a variety of reasons including project cancellations, suspensions, delays, scope reductions, failure to execute anticipated supply agreements under framework or volume commitment arrangements, or the failure of projects to proceed to completion. The actual revenue from such contracts may differ from our backlog estimates. The timing of receipt of revenue, if any, on projects included in backlog could change because many factors affect the scheduling of projects. In addition, our ability to convert backlog into revenue may be adversely affected by the financial condition or creditworthiness of our customers and counterparties, which could result in delayed payments, order reductions, or cancellations. Cancellation of or adjustments to contracts have occurred in the past and may occur in the future.
If a significant number of our contracts or orders are canceled, suspended, delayed, reduced in scope, or not renewed or replaced, or if anticipated volumes under framework or volume commitment arrangements are not realized, the actual revenue we receive may be materially less than our backlog estimates, which could have a material adverse effect on our business, financial condition and results of operations. The failure to realize any or all amounts in our backlog could adversely affect our future revenue and gross margins. As a result, our backlog as of any particular date may not be an accurate indicator of our future financial performance.
Our contracts may be canceled, suspended, delayed or not renewed, and we may be unable to replace such business on comparable terms, which could have a material adverse effect on our business, financial condition and results of operations.
Our customers, which include project owners, developers and engineering, procurement and construction (“EPC”) contractors, have in the past and may in the future cancel, suspend, delay or reduce the number or size of projects for which they procure our products and services for a variety of reasons, including capital constraints, changes in project economics, supply chain considerations, evolving market conditions, or an inability to obtain permits, financing or regulatory approvals. In addition, many of our contracts, purchase orders and framework or supply agreements may permit our customers to cancel or suspend orders, including for convenience, sometimes on relatively short notice and, in certain cases, with limited compensation beyond amounts payable for products delivered or costs incurred.
In certain cases, our customers enter into framework arrangements or volume commitments with us that contemplate the future execution of project-specific supply agreements or purchase orders. These arrangements may not result in binding orders for the full anticipated volumes, and customers may reduce or fail to fulfill such commitments. As a result, we may not realize the level of business or revenue contemplated at the time such arrangements are entered into. Furthermore, our customers may elect to source products from alternative suppliers, develop in-house capabilities, or pursue different technologies or system designs, including as a result of cost pressures, technological changes, domestic content requirements or other regulatory or commercial considerations. As a result, the demand for our products and services from existing or prospective customers may be reduced or may not materialize as expected.
While our contracts may provide for certain protections, including deposits, cancellation fees, or payment for work performed or costs incurred prior to cancellation, such protections may not fully compensate us for the loss of anticipated revenues or margins associated with canceled, suspended or delayed projects. In addition, the timing of customer decisions to cancel, suspend or delay projects may occur after we have made commitments to procure materials, allocate manufacturing capacity or incur other costs, which may not be fully recoverable.
An increase in interest rates, or a reduction in the availability of tax equity or project debt financing, could make it difficult for project developers and owners to finance the cost of a solar energy system and could reduce the demand for our products.
Many solar project owners depend on financing to fund the initial capital expenditure required to construct a solar energy project. As a result, an increase in interest rates, or a reduction in the supply of project debt or tax equity financing, could reduce the number of solar projects that receive financing or otherwise make it difficult for project owners to secure the financing necessary to construct a solar energy project on favorable terms, or at all, and thus lower demand for our products which could limit our growth or reduce our sales. In addition, increased financing costs may delay project development timelines or reduce the size or scope of projects. In addition, we believe that a significant percentage of project owners
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