Prepared remarks
Good afternoon, everyone, and thank you for standing by. My name is Kevin, and I will be your conference operator today. Today's call is being recorded. I would like to welcome everyone to Nextpower's Third Quarter Fiscal Year 2026 Earnings Call. At this time, for opening remarks, I would like to pass the call over to Ms. Sarah Lee, Head of Investor Relations. Sarah, you may begin.
Thank you, and good afternoon, everyone. Welcome to Nextpower's Third Quarter Fiscal Year 2026 Earnings Call. I'm Sarah Lee, Nextpower's Head of Investor Relations, and I'm joined by Dan Shugar, our CEO and Founder; Howard Wenger, our President; and Chuck Boynton, our CFO. As a reminder, there will be a replay of this call posted on the IR website, along with the earnings press release and shareholder letter. Today's call contains statements regarding our business, financial performance and operations, including our business and our industry that may be considered forward-looking statements, and such statements involve risks and uncertainties that may cause actual results to differ materially from our expectations. Those statements are based on our current beliefs, assumptions and expectations and speak only as of the current date. For more information on those risks and uncertainties please review our earnings press release, shareholder letter and our SEC filings, including our most recently filed quarterly report Form 10-Q and annual report on Form 10-K, which are available on our IR web page at investors.nextpower.com.
This information is subject to change, and we undertake no obligation to update any forward-looking statements as a result of new information, future events or changes in our expectations. Please note, we will provide GAAP and non-GAAP measures on today's call. The full non-GAAP to GAAP reconciliations can be found in the appendix to the press release and the shareholder letter as well as the financial section of the IR web page. And now I will turn the call over to our CEO and Founder. Dan?
Good afternoon, and thank you for joining us. Nextpower delivered another strong quarter characterized by solid operational discipline and execution, increased backlog and continuing focus on customers and innovation. This call represents an important milestone for the company being the first quarterly earnings report under our new Nextpower brand. At our Capital Markets Day last November, we outlined our strategic evolution. It started several years ago from a pure-play tracking system supplier to an end-to-end solar technology platform. We followed that with a Technology and Market Symposium, where we engaged directly with customers to showcase our expanding portfolio of value-enhancing products and services that we are building around our core tracker business, including our roadmap to incorporate power conversion solutions for utility-scale solar and battery energy storage. Customer response to the strategy has been very positive.
And Howard will share more detail on how this is translating into customer adoption. We recently completed the formation of Nextpower Arabia, our joint venture with Abunayyan Holding in the Middle East. The JV is already off to a strong start and will supply 2.25 gigawatts of advanced tracking systems to one of the world's largest utility-scale solar projects. With the launch of Nextpower Arabia, we're focused on building local operations, manufacturing capability, and long-term partnerships that support the Kingdom's energy ambitions. Together with Abunayyan Holding, we are advancing the localization of renewable energy technologies, strengthening supply chains and creating the foundation to locally manufacture and support up to 12 gigawatts of solar capacity annually with the potential to create thousands of jobs over time. Saudi Arabia and the surrounding GCC sit at the center of one of the most dynamic energy transitions in the world.
Rapid growth in electricity demand driven by economic transformation, mega projects and the expansion of AI and digital infrastructure calls for solutions that can scale quickly, reliably and efficiently. Solar energy is uniquely positioned to meet that demand. As the lowest cost and most scalable power generation technology available today, solar is playing a central role in the energy future of Saudi Arabia and the broader MENA region. Let's turn to our financial performance. We delivered robust financial results across all key metrics. Q3 revenue grew 34% year-on-year to $909 million, and adjusted EBITDA increased 15% to $214 million. Fiscal year-to-date revenue increased 32% year-over-year to $2.68 billion. We generated solid cash flow and further strengthened our balance sheet. We also became the first pure-play solar product company to achieve a formal investment-grade rating, reinforcing confidence that Nextpower can stand behind projects for decades, supporting financing, warranties, service and asset performance over the full life cycle of the solar generation infrastructure projects.
Discerning power plant owners greatly value Nextpower's financial strength. Based on our performance and the visibility we have across our business, we are raising our fiscal 2026 financial outlook, which Chuck will discuss in more detail. Finally, I would like to thank our customers for their continued trust and partnership and our employees for their commitment to innovation and execution. We remain focused on scaling our technology platform and creating long-term value for shareholders. I'll now turn the call over to Howard to provide more color on the quarter.
Thank you, Dan. During the quarter, we saw continued strong customer bookings, which drove further backlog growth. We also continue to innovate and release important hardware and software to the market, and we had another strong quarter of financial performance enabled by our global operations team. We manage our business on an annual and multiyear basis, which is consistent with the nature of the utility-scale solar power industry with large-scale projects spanning multiple quarters in multiple geographies. We are increasing our outlook for the remainder of the year based on the strength and diversity of our backlog, a continued flight to quality that favors Nextpower and the deep capability and commitment of our global team. Turning now to regional demand. In the U.S., bookings were up and revenue increased 63% year-over-year, reflecting Nextpower's technology and customer experience advantage for what we call a flight to quality.
There also continues to be an increasing demand shift for domestically manufactured systems, which we are able to meet with our robust domestic supply chain and favorable lead times. U.S. project and demand creation continues with developers generally reporting their ability to move projects forward through to final permitting and financing and they are doing so across multiple years of completion, providing extended visibility. Encouragingly, several customer projects cited on federal lands that have been on hold have begun to move forward as well. Demand for our core tracker technology remains strong as reflected in sustained customer adoption of the NX Horizon Hail Pro tracker. During calendar year 2025, our systems executed 2,170 hail stows worldwide with our customers reporting a less than 0.007% module breakage rate. This is very good news and supports our innovation thesis. Our expanding technology platform is now gaining traction for both tracker and non-tracker offerings with an increasing and more diverse mix in our order book.
For example, this quarter, we booked a 552-megawatt order incorporating a technology bundle on a single project including our NX Horizon Hail Pro tracker, eBOS manufactured in the U.S., our NX Earth Truss foundation system and our TrueCapture control system. Moving to the international market. Europe again stood out with record quarterly bookings and expansion into 2 new countries. We are also excited about the formation of our new JV company NextPower Arabia to serve growing demand across the MENA region. Saudi Arabia alone has ambitions to install 130 gigawatts of renewable energy by 2030. We also introduced our NX Earth Truss foundation solution overseas, marking a positive step in the international expansion of our technology platform. As Dan noted, we announced plans at our Capital Markets Day to extend our platform to include power conversion solutions. This project remains on track with customer pilots planned for calendar year 2026.
Turning now to project timing and pricing. Project timing remains stable and manageable on a portfolio basis, consistent with previous quarters, with some projects accelerating and others pushing out. On balance, Q3 saw a modest net pull in. Pricing continues to track the broader solar cost curve, and we continue to invest in R&D and scalable infrastructure to reduce cost while improving system performance. Our culture is to relentlessly serve our customers and deliver maximum value at competitive cost and pricing. In summary, our business fundamentals remain strong. Demand is healthy. Our backlog is large and growing. Project timing and execution visibility is solid, and we continue to strengthen our competitive position through innovation, customer focus and operational excellence. With that, I'll turn the call over to Chuck.
Thank you, Howard. Good afternoon, everyone. Overall, Q3 was another quarter of strong execution with results that reflected both healthy end market demand and continued discipline across the business. For our fiscal 2026 third quarter, revenue was $909 million and adjusted EBITDA was $214 million, representing an adjusted EBITDA margin of 23%. On a year-to-date basis, adjusted EBITDA increased 22% year-over-year, demonstrating the durability of our margin profile even as we navigate tariffs and invest in growth initiatives. We generated GAAP net income of $435 million year-to-date, underscoring the high-quality earnings power of the business. 81% of Q3 revenue came from the U.S. with 19% from rest of world markets. Year-to-date, our revenue mix was 75% U.S. and 25% rest of world. This geographic balance gives us both scale and diversification while allowing us to maximize investment returns and prioritize disciplined execution.
Turning now to cash flow. We generated $123 million of operating cash flow in the quarter and $391 million year-to-date. Capital expenditures remain modest, resulting in adjusted free cash flow of $119 million in Q3 and $360 million year-to-date. This level of cash generation reflects strong underlying profitability, disciplined working capital management and the capital efficient nature of our business. Importantly, it gives us significant flexibility to invest in growth while maintaining robust liquidity. Our balance sheet remains a core competitive advantage. We exited the quarter with $953 million of cash and cash equivalents and no debt. We also recently achieved a formal investment-grade credit rating, which we view as a meaningful external validation of our cash predictability, disciplined financial management and the durable business model. This milestone is important to our customers and suppliers, while also enhancing our financial flexibility.
Our capital allocation priorities remain unchanged. First, we continue to prioritize organic investment in new products and services; second, disciplined M&A that strengthens our technology platform and creates customer value; third, return of capital to shareholders. Today, we are announcing that the Board authorized a share repurchase program of up to $500 million over 3 years. This program reflects our confidence and the long-term outlook of the business and our ability to generate durable cash flows while maintaining flexibility to invest for growth. Investments in organic growth and M&A continue to be our top priorities followed by share repurchases. Moving on to tariffs. As expected, tariffs continued to have an impact on margins, particularly on a year-over-year basis. This quarter, the tariff impact was $44 million, up from $33 million last quarter. This increase was due to the partial impact in Q2 given the effective date of the new tariffs was August 15.
Our diversified and increasingly localized supply chain, combined with pricing discipline and operational execution has allowed us to manage these impacts efficiently. We currently work with over 25 U.S. partner manufacturing facilities, and Nextpower was the first to deliver 100% domestic content trackers under U.S. treasury guidelines, and we're seeing increased customer adoption of these solutions to mitigate tariff exposure. We also continue to work very closely with our customers to manage tariff-related impacts across multiple projects. Looking ahead, we expect tariff-related margin pressure to remain manageable and largely consistent with our prior expectations. Finally, based on our performance through the first 3 quarters, the strength and the quality of our backlog and continued demand across our core markets, we are increasing our financial outlook for fiscal year 2026. We now expect revenue between $3.425 billion and $3.5 billion, adjusted EBITDA between $810 million and $830 million and adjusted diluted EPS in the range of $4.26 to $4.36.
We continue to expect gross margins to be in the low 30s and operating margins in the low 20s. The current outlook for next year indicates another year of solid growth. Our outlook assumes the current U.S. policy environment remains intact and permitting processes and timelines will remain consistent with historical levels. Overall, we feel confident in our ability to deliver sustained growth and profitability while continuing to invest in innovation and long-term value creation. We continue to execute at a high level while maintaining strong margins and cash flows. We believe our strategy, team, and platform uniquely position us to deliver long-term shareholder value. Thank you. And with that, we'll take your questions.
Questions and answers
Your first question comes from the line of Philip Shen with ROTH.
Great job on the quarter. I wanted to check in with you on bookings in the quarter and book-to-bill specifically. I know you guys talked about record backlog and backlog being greater than $5 billion. But I wanted to understand if your bookings cleared $1 billion in Q3. And then if you can share some color on the revenue for Q3 what was the mix for the U.S. business of tracker versus non-tracker, and then how might you expect that to trend in the coming quarters or years?
Phil, this is Howard Wenger. Thank you for your questions. We are very pleased with the quarter and everything we executed, including the name change, preparing for Capital Markets Day, Customer Day, and announcing our joint venture. Overall, we executed the business very well, with strong bookings and revenue. Regarding bookings, we experienced growth in our backlog, reaching a new record. We are not providing specific numbers, but I can say it was one of our strongest quarters in a while, and we are very satisfied with that. There was a bit more weight in bookings from the United States. As for the revenue mix between tracker and non-tracker, the non-tracker business is starting to have an impact. We are seeing a shift in the U.S. due to the rollout of the non-tracker segments of our platform, which includes foundations, eBOS, robotic inspection, and other software and services that are focused primarily on the U.S. market. This shift is influencing our bookings and revenue mix toward the U.S. Thank you for your question.
Howard, very quickly, just can you clarify, you said 1 of the stronger quarters that you've had in some time. Does that mean for bookings specifically that this quarter was one of the stronger bookings quarters in a long time? Or does that mean just your quarter overall?
I was speaking particularly to bookings when you look at contribution to our backlog, Phil.
Great. So that would suggest that it was at least $1 billion. Is that fair?
Really appreciate the question, Phil, and your persistence. We'll leave it right there. Thank you so much.
And your next question comes from the line of Praneeth Satish with Wells Fargo.
Congrats on the quarter. Maybe if you could just provide a little bit more detail on the permit freeze. You mentioned that some of the projects on federal lands are still moving forward. I guess are you seeing any slowdown at the front of the funnel for projects that would be targeting 2028 in service days that require permits this year? Or are you saying that so far, developers have been able to kind of manage around some of these constraints? Just any clarity there would be helpful.
Praneeth, it's Dan Shugar here. We were speaking specifically about several projects that are on federal lands that are now moving forward. While in total number, those are a small percentage of the projects that we're working on, it was great to see that those move forward. And so Howard, do you want to take the second part of that question?
Sure. We're maintaining close communication with both developer owners and EPC partners. From the developer owner perspective, we are observing that their project portfolios are progressing. Some projects are entirely off public and federal lands, and many developers have minimal exposure to public lands, making them less affected by any constraints. What we're reporting indicates favorable progress of projects through to the permitting phase, both on public and private lands, including areas with federal involvement. Overall, in the U.S., we're very pleased with the expanding pipeline and increasing opportunities. Developers are effectively navigating the situation, feeling secure, and having clear visibility into the future, which is quite encouraging.
And your next question comes from Dimple Gosai of Bank of America.
Well done on a very nice quarter. This quarter you noted record bookings and rising bundled attach. So could you give us a sense of what the attach rate is for TrueCapture, eBOS, Earth Truss, robotics? Any sense and color there would be helpful. And then also give us a sense of just the growth gross margin uplift for a typical bundle versus tracker only, especially given that you're seeing some more traction on that side.
Sure. So this is Howard. I'll take the first part. And Chuck, if you want to talk about gross margin, I can also do that. But on the attached side, first of all, we have both an inorganic and organic approach to innovation and filling out our platform. So we're developing new tech internally but we're also making acquisitions, as you know. Some of those acquisitions are fairly recent, for example, the eBOS acquisition we made, which is significant occurred in May of '25. So it's been, what is that like, 8 months. So using eBOS as an example, what we're seeing is, by far, the pipeline is expanding exponentially in terms of opportunities because of our sales platform. And we're beginning to see more and more bookings and sales and revenue come through that particular channel. We're not giving specific attach numbers at this time. But suffice it to say, we're seeing some very significant projects. The one we highlighted as an example, is a 552-megawatt project, where we have our trackers, foundations, eBOS and TrueCapture all bundled together. So we'll be talking more and more about that as our pipeline matures for these other products and services that are what we call non-tracker but fill out the platform and complement the tracker. As to financials and margin, do you want to weigh in on that, Chuck?
Certainly. Thanks, Dimple. We don't break out in detail the non-tracker or tracker revenue splits. Really, today, it's all about scaling the technology and the go-to-market. In general, they're roughly at the corporate average. Of course, some are higher software, as you know, Dimple, is quite a bit higher and other wins are kind of around the corporate average. But I would just think of it from a modeling standpoint, it's roughly consistent with the guidance and the outlook that we provided.
Your next question comes from Brian Lee of Goldman Sachs.
Congratulations on the strong execution. My first question pertains to the higher revenue and profit base for fiscal '26. Is there any update on your outlook for fiscal '27 that you shared during the Analyst Day last November? Specifically, how should we approach the flow-through into next year considering these robust results? Additionally, I have a follow-up regarding the accounting for the IRA credits, which have declined despite an increased U.S. mix. This decline suggests that gross margins, excluding IRA credits, are higher than in the previous quarters. Is this variation related to timing, or is there an issue with how credits are shared and priced that is affecting the dynamic of increased U.S. sales but lower IRA credits?
Yes. The IRA credits are roughly in line with the prior quarter, Brian. What you're seeing effectively is the blending of the tariff impact, and as I mentioned in the prepared remarks, the tariff impact went from $33 million last quarter to $44 million this quarter, and that's really just because you have a full quarter impact of the overall tariffs. As it relates to our outlook for next year, we just provided our outlook just a couple of months ago at our Capital Markets Day. So we're not updating or changing that. But I'll just say with the strength of the business, we feel really good going into next year, and we're set up for a strong Q4 and feel really good about going into next year with a great backlog.
And your next question comes from Mark Strouse of JPMorgan.
Great to see the 2.25 gig Nextracker Arabia order. I know we've talked about in the past kind of the longer-term targets from KSA and whatnot. But just kind of curious, just looking out over the next, whatever, 12, 18, 24 months, kind of what a reasonable expectation might be, can we expect to see similar gigawatt-scale orders coming through from that JV? Then I have a quick follow-up.
It's Dan Shugar here. We just returned from spending considerable time in Abu Dhabi, Dubai, and Saudi Arabia, where the market for solar energy is exceptionally strong. This strength extends not only to those countries but to the entire region. We are witnessing impressive double-digit gigawatt growth with ambitious targets being established and pursued, supported by multiple public solicitations from some of the largest energy companies in the area. There are national targets along with utility-specific goals, indicating significant developments. For example, Saudi Arabia is the largest market, with the UAE also showing strong potential. There’s a noteworthy project known as the Round-The-Clock project in the UAE, which is a 5-gigawatt solar initiative featuring a substantial battery capacity of either 19 or 29 gigawatt hours. This project facilitates the delivery of solar power continuously to the region, illustrating the ambitious scale of operations there.
It also highlights how cost-effective solar energy is, considering the abundant oil and gas resources. We are excited to be involved in this region, having established the first utility-scale power plant there—the 400-megawatt Sakaka project in Saudi Arabia—seven years ago, which has consistently performed reliably. There’s a clear preference for high-quality performance in the area. We recently visited one of our projects that was exceeding expectations, operating at about 105% efficiency overall, leaving customers very satisfied. We are truly enthusiastic about our presence in this market. Thank you.
If I can ask you a quick follow-up to Chuck, I think I know the answer to this, but since it's the first time that you guys are issuing a buyback authorization, I just want to check, just how you're planning to approach that? Is there a base level of buyback activity you're looking to do each quarter? Or is it just completely random, completely opportunistic?
Yes. No, it will be a structured program, Mark. But again, since we're kind of first time in the market, we're going to kind of go slow and cautious out of the gates because again, what's new to us. And so we'll develop our program more formally. But the goal would be for it to be a more of a formalized program versus just opportunistic.
Your next question comes from Dushyant Ailani for Julien.
This is Dushyant here for Julien. I just had a quick few questions on the Saudi JV. Maybe if you could share a little bit more about the timing of it and how does the margin cadence look like? Just how can we think about it kind of flowing through over time, the 2.25 gigawatts?
I'll begin with the timing. Chuck can add to this afterward. The joint venture has been launched, and we completed it a few weeks ago. It's now operational. We are actively delivering on the 2.25 gigawatt project this quarter. Our existing factory in Riyadh has been consistently producing, and we have a new factory being built in Jeddah. We visited that site last week, and it looks fantastic and is quite large-scale. Furthermore, we continue to collaborate with some of our legacy supply partners and are very pleased to be working with Abunayyan Holdings, a fantastic organization, and we are fully operational. Chuck, you can address the second part.
Yes. I view this as Dan mentioned, Abunayyan is a blue-chip company. It's the type of company that we are excited to partner with. We are proud to collaborate with them. As stated before, it is structured as a roughly 50-50 joint venture. It won't be consolidated intentionally because it aligns well with our capital-light model focused on high return on invested capital. Therefore, when the joint venture sells projects, we will generate revenue by providing some technology to the joint venture. This will include revenue from royalties and, of course, our share of the joint venture's profits. We will provide more details next quarter as we present our outlook for 2028 or guidance for 2027. So, I would say stay tuned, but we are really excited about this opportunity, and we believe Abunayyan will be a great partner.
Awesome. I have a quick follow-up. When you mention power conversion, could you elaborate on how your discussions with customers are progressing? What does that look like? Are they placing more emphasis on power storage compared to solar? Also, how is the competitive landscape shaping up for power conversion?
I'll speak to that. Howard and I have been in this business since the 1980s, and power conversion has consistently provided the best operational performance for solar and batteries. We’re launching this category because it's challenging, and we take it very seriously. Our goal is to deliver higher efficiency, reliability, availability, and safer, better service for this product category. We have extensive experience within our technical and leadership teams in this area, and we’re considering user requirements to enhance plant availability. The top priority for improving operating fleets worldwide is to have better reliability and performance in this specific category. That's the reason behind our efforts. We're not cutting corners; instead, we're developing a competitive product with local manufacturing. We’re starting in the United States and have operational alpha units. We showcased this solution at our Capital Markets Day, and we are looking forward to completing some initial beta projects with customers this year and then responsibly scaling the business afterward.
Your next question comes from Vikram Bagri of Citi.
I wanted to ask a housekeeping question first, and then I have a follow-up. You mentioned the non-tracker margins are comparable to corporate average. At the Analyst Day, the margins for non-tracker were indicated to be about 6%. So are you saying those margins are tracking higher the EBITDA margin expected to the Analyst Day? And what changed between Analyst Day and now?
Yes. Nothing has changed. I was talking gross margins, not EBITDA margins. And effectively, because it's a fairly small base, it doesn't really change the overall profile. But I'd point out, a big part of the non-tracker revenue is software, and that's way, way above the corporate average. The other ones are smaller and therefore, the way to think about it in the short term, is kind of blending with the corporate average. It's not going to change a whole lot. Over time, what we outlined at our Capital Markets Day is still intact. Thank you.
And as a follow-up, you mentioned in your prepared comments, IG rating is important for customers. Can you highlight in which regions is it important? Does it play an important role in Saudi? And if there is a way to quantify how many customers consider is important, like how much of an edge does it provide to you relative to your competition?
Yes. So investment-grade rating is important to all customers and suppliers, some different. Internationally, it makes a big difference. If you're working with a large developer or owner, they care deeply about the credit profile of their counterparty, whether it's a customer or a supplier. And so while it may not matter as much to you, the financial community, it matters a lot to our customers. It's really a testament to how well the company is managed and the disciplined approach that we take to operating our business. Dan, do you want to add anything?
What I want to add is that when you look at various markets, particularly in the United States, a decade ago many developers were focused on flipping projects. Nowadays, while some still do that, most have transitioned into being operators and owners of systems, as well as independent power producers. We've also seen significant growth in utility ownership of solar. There is a heightened focus on the long-term operation and optimizing the risk-adjusted levelized cost of energy, which is crucial. Recently, I was in the Middle East where a large system, not associated with Nextpower, is being completely dismantled and rebuilt due to performance issues. People recognize the importance of not being penny wise and pound foolish. We are witnessing a growing emphasis on the long-term capability to support development, financing, supply, operation, spare parts, and warranty reserves throughout the life of a project, which has become a vital attribute as the industry has matured and continues to optimize long-term risk-adjusted levelized costs of energy.
And your next question comes from Ben Kallo of Baird.
Congrats on the results. Two questions, maybe bigger picture. Number one, with all the emphasis on bring your own power, has that showed up in your discussions or in orders? And maybe just talk to that? And then the second question energy storage volumes are very large to say the least. Any way that you guys are thinking about addressing that market or working with that market?
Ben, this is Howard. I'll start and then Dan will finish. Regarding bring your own power, we are experiencing an incredible dynamic not just in the United States but globally concerning AI, electrification, which includes electric vehicles, and the data centers that support our operations, as well as robotics. The energy demand for chips continues to rise significantly. What we are observing in this country is also reflected in others, as major hyperscalers are increasingly involved. There have been several announcements focused on ensuring the availability of power for their expansion needs. It's clear that bring your own power is a factor in our opportunities. As for storage, there is a strong symbiotic relationship between solar and storage, making it the fastest deployed solution in the market. In the United States alone, over 80% of new electrical capacity from January to November of 2025 was solar and storage. Large developers are reporting that their portfolios include both fossil and renewable sources, with more than 80% being solar and storage. Therefore, it makes sense for Nextpower to provide a solar power platform that incorporates storage, and our power conversion system is suitable for the storage category. Dan?
Thank you, Ben. When we talk about bringing your own power, it can have two meanings. One meaning is installing electric generating capacity at a point in the grid that has a contractual obligation to deliver a certain amount of gigawatt hours to an end user. The other meaning involves on-site power where the energy is generated right at the location, reducing or possibly eliminating the need for a grid connection. Most of the discussions have revolved around the first meaning, although there are some cases of the second. Focusing on the first meaning, this has been happening for over five years now. A significant portion of our projects are aimed at supporting applications like hyperscalers and data centers, which purchase energy to be delivered through the grid for their operations. While the interest in bringing their own power is increasing, it is not necessarily located at the facility itself.
There have been some projects at the customer site, and I expect to see more, but generally, customers prefer the reliability of the grid and can source their energy through it. The grid acts as a sort of battery, with backup and uninterruptible power supply managed on the customer side of the meter. This trend has been ongoing, and as the demand from large data centers grows, we anticipate increased interest. Regarding Nextpower’s offerings for battery storage as well as solar, our inverter platform and power conditioning system are designed to support both. This was our intention, and we are continuously enhancing it. There are some differences in software and application as we finalize the product, but the core platform is applicable for both, which we introduced at Capital Markets Day and showcased in the field.
And your next question comes from Jon Windham with UBS.
Perfect timing to bring me on. I guess I have a follow-up question. So Dan, you've been in the industry a long time, you've been a leader of it. I'd love to get your thoughts on the potential impact from greater availability of storage in the United States. Obviously, Ford had a very big announcement converting some of the what was supposed to be EV batteries into stationary storage. Stellantis and GM could potentially do the same thing. Just your thoughts on the potential impact to solar demand if we sort of go to a market that's a wash in batteries.
We believe it's fantastic to enhance the production capacity for battery cells, packs, and containers in the United States and other key markets. There has been significant momentum for stationary storage driven by electric vehicle demand and expanded manufacturing efforts. Some companies you've mentioned have been repurposing part of that capacity for stationary storage, which we find impressive. Additionally, as Howard pointed out, solar and storage are complementary, much like bass guitar and drums. It has been remarkable to observe the transformation in storage over the past five years; previously, it was mainly 1-hour storage, then 2-hour, and now we're seeing 4-hour storage. Some of our customers are working on projects with 6 or 8 hours of storage, and I highlighted a project in the United Arab Emirates that offers 24-hour storage. It's astonishing. The developments in storage mirror the advancements in photovoltaic cells, where cost reductions were driven by what is known as the production learning curve effect; every time cumulative production doubled, costs dropped about 20%. With the rapid growth in storage, we are witnessing a similar decline in costs, enabling longer storage durations and making solar more widespread as deployments increase. We are very enthusiastic about the expansion of manufacturing, and we believe it will greatly benefit the industry.
And your next question comes from Dylan Nassano of Wolfe.
I think earlier in the call, you mentioned there was a little bit of pull forward in the quarter. And then obviously, you raised the guidance for the year. So I guess I just wanted to check on that kind of within the context of the preliminary fiscal 2027 guidance that you gave on the Capital Markets Day?
Yes. So like we mentioned before, we're not updating or changing our fiscal '27 outlook from Capital Markets Day. It was just a couple of months ago. And as it relates to Q3, it was an incredibly strong quarter. When our customers would like us to accelerate schedules, we can. It's overall, a very, very strong quarter. We raised the year in Q3 was incredibly strong on the heels of customers wanting more product earlier. Howard, do you want to add anything else?
We are in close contact with our customers. Some prefer to speed things up, while others want to slow down due to specific site or timing issues. We are focused on meeting our customers' schedules and maintaining our strong on-time delivery performance. In this quarter, there was a net acceleration. We manage a portfolio of projects annually, which can cause fluctuations in revenue from quarter to quarter. However, the overall year looks promising. Looking ahead to Q4 and Q1 of FY '27, we anticipate strong growth. We are very satisfied with our backlog, which provides us with the visibility needed to manage the company effectively throughout the year. Thank you.
Okay. We really appreciate everyone dialing in. Thank you for those that participated in our Capital Markets Day, and this concludes this quarter's earnings call.
This concludes today's call. Thank you for attending. You may now disconnect.