ARRY Q2 Deep Dive: Revenue Growth and Regulatory Uncertainty Shape Outlook

Solar tracking systems manufacturer Array (NASDAQ:ARRY) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 41.6% year on year to $362.2 million. The company’s full-year revenue guidance of $1.20 billion at the midpoint came in 6.1% above analysts’ estimates. Its non-GAAP profit of $0.25 per share was 27.9% above analysts’ consensus estimates.

Is now the time to buy ARRY? Find out in our full research report (it’s free).

StockStory’s Take

Array’s second quarter results drew a negative market response, as investors focused on margin pressures and regulatory headwinds despite significant year-over-year revenue and volume growth. Management highlighted that improved execution and operational changes, particularly in the front end of the business and supply chain expansion, drove the sharp rise in sales volumes. CEO Kevin Hostetler noted, “We are reaping the benefits of the impactful work we’ve initiated to strengthen the front end of our business while also expanding and fortifying our supply chain network.” Margin contraction, however, was attributed to rising tariffs and commodity-driven input costs, alongside ongoing order book adjustments.

Looking ahead, Array’s raised full-year guidance is based on expectations for continued volume growth, a stronger product mix, and increased customer engagement, but with caution around ongoing regulatory shifts and tariff uncertainties. Management acknowledged that the evolving tax credit landscape and new executive orders could delay customer purchasing decisions in the near term. CFO Keith Jennings stated, “We are more confident in our ability to remain agile with ample balance sheet flexibility to respond to both risks and opportunities,” while also emphasizing the potential for further industry consolidation and the need to adapt to changing compliance requirements.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to operational improvements, successful product launches, and proactive order book management, while acknowledging tariff pressures and regulatory complexities.

• Volume-led growth: The company saw over 50% year-over-year volume growth, driven by enhanced customer engagement and a stronger supply chain, which allowed Array to capture more market share and accelerate project delivery schedules.
• Product mix evolution: New offerings, including OmniTrack and SkyLink, now comprise over 35% of Array’s order book, reflecting accelerated adoption and customer preference for solutions that handle challenging terrains. Management also reported the first project win for Hail XP, a tracker designed for extreme weather, with positive initial customer feedback.
• Legacy contract clean-up: Management worked closely with a major customer to descale and reconfigure underperforming legacy fixed-price agreements, resulting in a higher-margin order book despite a reduction in overall backlog dollars. This shift is expected to boost future profitability and reduce volatility in margin performance.
• Tariff and input cost headwinds: The quarter was impacted by rising tariffs and commodity prices, which increased costs and weighed on margins. Management responded by expanding domestic sourcing, placing forward buys for steel, and structuring contracts to allow for tariff cost pass-through where feasible.
• Order book quality and customer mix: Array improved the quality of its order book by increasing direct engagement with utilities, developers, and independent power producers (IPPs). About half of the order book now represents business with these Tier 1 customers, including several new relationships, supporting a more predictable revenue stream.

Drivers of Future Performance

Array’s outlook for the remainder of the year hinges on volume growth, product adoption, and its ability to navigate regulatory and margin headwinds.

• Regulatory uncertainty: Management is preparing for continued regulatory changes—including new tax credit rules and executive orders—by refining compliance processes and ensuring commercial readiness for safe harbor strategies. CEO Hostetler warned that delays in regulatory clarity could postpone some customer order decisions, potentially shifting demand into later quarters.
• Product innovation and customer value: The adoption of new products like Hail XP, OmniTrack, and SkyLink is central to Array’s growth strategy. These products aim to address complex site requirements and extreme weather risks, allowing for price premiums and improved margins relative to legacy offerings.
• Margin management: Despite optimism on volume and product mix, management flagged ongoing risks from tariffs and commodity input costs. CFO Jennings highlighted that a portion of tariff-related costs can be passed through to customers, but “denominator math” may continue to create margin drag, especially as new tariffs are imposed on certain international components.

Catalysts in Upcoming Quarters

In the coming quarters, our team will be monitoring (1) the pace at which regulatory clarity emerges around tax credits and executive orders, (2) the continued adoption rate of new products like Hail XP and OmniTrack, and (3) the ability to maintain or grow margins amid tariff and input cost pressures. The integration and performance of the pending APA Solar acquisition will also be a critical signpost for long-term growth.

Array currently trades at $5.63, down from $5.85 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

High Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.