First Solar Q2 2025 Earnings Reaction

Ray Marce

Alright, welcome back to Market & Earnings Digest. I'm Ray Marce, here with Mark Dalli, and today we're diving into First Solar's Q2 2025 results. Mark, I gotta say, this one surprised a lot of people. First Solar came in with $1.1 billion in revenue, which is up nearly 9% year over year, and adjusted EPS of $3.18. That was well ahead of what analysts were expecting, and the market definitely noticed—shares popped about 5% after hours.

Mark Dalli

Yeah, Ray, and it's not just the headline numbers. If you look under the hood, the beat was really driven by strong third-party module sales. They sold about 3.6 gigawatts of modules, which is above their own internal guidance. And then there's the Section 45X tax credits—$312 million worth, which they managed to monetize for $296 million in cash. That helped offset the ramp costs from their new facilities, so even with those expenses, they kept operating expenses in check and net cash actually improved to $600 million from $400 million last quarter.

Ray Marce

Yeah, and I think that's what caught a lot of analysts off guard. Coming into this quarter, there was a lot of caution—people were worried about tariffs, global supply chain pressures, and just the general volatility in the solar market. But First Solar managed to sidestep most of those issues, at least for now. I mean, the EPS beat was almost 19% above the high end of expectations. That's not nothing.

Mark Dalli

Exactly. And, you know, analysts were bracing for softer results because of all those global headwinds. But First Solar's domestic manufacturing focus and those U.S. policy incentives really gave them an edge. It's a good reminder that sometimes the market underestimates how much policy can move the needle for these companies.

Ray Marce

Yeah, and just to put a bow on it, the company is still investing in R&D, pushing next-gen modules, and they didn't have any of those supply chain or warranty headaches that have cropped up in past quarters. So, all in all, a very clean quarter, and the market's reaction makes sense.

Mark Dalli

So, let's talk about what's driving all this. Production is ramping up at their new Ohio and Alabama factories, and they're on track to get Louisiana online in the second half of the year. Capital expenditures are still on target—$1 to $1.5 billion for the year—which is all about meeting that utility-scale demand.

Ray Marce

Yeah, and the demand side is just as impressive. After the quarter ended, they booked another 2.1 gigawatts in July alone, which pushes their backlog to 64 gigawatts. That's stretching all the way out to 2030. I mean, that's a huge number, and it really shows how much appetite there is from utilities and, increasingly, data centers looking for low-carbon power.

Mark Dalli

And CEO Mark Widmar was pretty clear on the call—U.S. incentives and tariffs are giving First Solar a real edge, especially in utility-scale projects. The IRA, Section 45X, and those tariffs on Chinese imports are all working in their favor. He even pointed out that utility-scale solar is just more cost-competitive and faster to deploy than things like nuclear or fossil fuels right now.

Ray Marce

Yeah, and, you know, I've watched a few solar cycles over the years, and it's always the same story—when policy support is there, margins hold up. When it's not, you get those supply gluts and margins just collapse. I remember back in, what was it, 2012 or so, when the market was flooded with cheap panels from Asia and everyone got crushed. This time, the U.S. protections are really making a difference. It's not a guarantee, but it does give First Solar a buffer that a lot of their competitors just don't have.

Mark Dalli

Yeah, and so far, no major disruptions from tariffs, at least according to management. They're still keeping an eye on international sales, but the U.S. market is more than making up for any softness elsewhere. And with all the investment in next-gen tech and sustainability, they're positioning themselves for the long haul.

Ray Marce

So, looking ahead, First Solar actually raised their full-year 2025 guidance. They're now expecting $4.9 to $5.7 billion in revenue, which is up from their previous range. EPS guidance is also higher at the low end, and module sales are now expected to be at least 16.7 gigawatts. That's a pretty strong signal of management confidence, especially with that backlog and the U.S. demand story holding up.

Mark Dalli

Yeah, and management also flagged some upside from data center power needs, which is a theme we've touched on in other episodes—like with Meta and Alphabet, where AI and cloud are driving huge energy demand. But, of course, there are still risks. If the IRA gets revised or if global oversupply picks up, that could put pressure on margins. But for now, First Solar's net cash is looking a lot better—guidance is for $1.3 to $2 billion by year-end, up from just $400 to $900 million before. That's a big improvement in liquidity.

Ray Marce

Yeah, and for long-term investors, that backlog is key. Sixty-four gigawatts locked in means a lot more predictability than you usually get in this industry. It doesn't mean there aren't risks, but it does give you a bit of a cushion if things get bumpy. And, you know, management is still talking about multi-year growth, not just a one-off pop.

Mark Dalli

Absolutely. It's a good setup for the next few years, as long as policy stays supportive. And with all the talk about decarbonization and energy transition, First Solar's in a pretty sweet spot right now. But, as always, we'll keep an eye on those policy risks and global competition.

Ray Marce

Alright, I think that wraps it up for this episode. We'll be back soon with more earnings reactions and market analysis. Make sure to follow us in order to stay informed for your weekly market updates and earnings reports.

Mark Dalli

Cheers, Ray. And thank you to all our listeners, remember The information provided on this podcast is for informational purposes only and should not be considered financial advice. You should consult with a qualified financial advisor before making any investment decisions. We look forward to seeing you next time on Market & Earnings Digest.