Solar panel manufacturer First Solar (NASDAQ:FSLR) met Wall Streets revenue expectations in Q3 CY2025, with sales up 79.7% year on year to $1.59 billion. On the other hand, the company’s full-year revenue guidance of $5.08 billion at the midpoint came in 3.8% below analysts’ estimates. Its GAAP profit of $4.24 per share was 1.9% below analysts’ consensus estimates.
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First Solar (FSLR) Q3 CY2025 Highlights:
- Revenue: $1.59 billion vs analyst estimates of $1.59 billion (79.7% year-on-year growth, in line)
- EPS (GAAP): $4.24 vs analyst expectations of $4.32 (1.9% miss)
- Adjusted EBITDA: $207.8 million vs analyst estimates of $617.1 million (13% margin, 66.3% miss)
- The company dropped its revenue guidance for the full year to $5.08 billion at the midpoint from $5.3 billion, a 4.2% decrease
- EPS (GAAP) guidance for the full year is $14.50 at the midpoint, missing analyst estimates by 4.2%
- Operating Margin: 29.2%, down from 36.3% in the same quarter last year
- Market Capitalization: $25.05 billion
StockStory’s Take
First Solar’s third quarter results were marked by robust shipment volumes and continued expansion of U.S. manufacturing capacity, helping the company deliver revenue in line with Wall Street expectations. Management attributed the strong top-line growth to record module sales, improved cash collections, and accelerated customer payments ahead of regulatory changes. CEO Mark Widmar highlighted the company’s “commitment to responsible solar” and recent progress in qualifying new U.S. facilities, while also addressing the operational impact of glass supply interruptions and contract defaults by key customers.
Looking forward, management’s guidance reflects caution as First Solar navigates supply chain headwinds, customer contract terminations, and changing global trade dynamics. The company’s reduced outlook is shaped by ongoing tariff uncertainties, the phased ramp of new U.S. production lines, and efforts to recover value from terminated contracts. CFO Alexander Bradley emphasized that “incremental underutilization costs and margin erosion from terminated agreements,” coupled with higher start-up expenses at new facilities, will affect profitability in the near term. Management also stressed the importance of policy developments and customer demand in shaping future growth.
Key Insights from Management’s Remarks
Management pointed to record module shipments, contract enforcement actions, and both operational and policy-driven challenges as critical factors in the quarter’s performance and outlook.
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Record module sales: First Solar delivered 5.3 gigawatts of module sales in the quarter, driven by accelerated customer demand and improved working capital, according to CEO Mark Widmar. The company’s U.S. factories produced 2.5 gigawatts, with the balance from international operations.
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BP contract termination impact: The termination of 6.6 gigawatts of bookings with BP affiliates resulted in significant debookings and legal proceedings. Management recognized $61 million from down payments as revenue and is pursuing an additional $324 million in termination payments through litigation.
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Glass supply chain disruption: Two U.S. glass suppliers experienced manufacturing issues, leading to reduced output at the Alabama facility and increased underutilization charges. Corrective actions were implemented, but the incident reduced Q3 production by 0.2 gigawatts.
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Expansion of U.S. manufacturing: The company initiated production at its Louisiana facility and announced plans for a new 3.7 gigawatt module finishing plant in the U.S. to onshore production, aiming to mitigate tariff impacts and qualify for domestic tax credits.
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Policy and trade environment shifts: Management cited evolving U.S. tariffs, antidumping rulings, and anticipated FEOC guidance as key influences on contract structuring, pricing, and supply chain strategy, underscoring the importance of domestic production and compliance.
Drivers of Future Performance
Management’s outlook for the next year is shaped by supply chain adjustments, customer demand stability, and the evolving trade policy landscape.
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Tariff and trade policy changes: Anticipated U.S. tariff adjustments and further FEOC (Foreign Entity of Concern) guidance are expected to impact pricing, contract terms, and the competitiveness of domestically produced modules. Management believes these factors could both support pricing power and introduce new risks.
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Manufacturing ramp and cost control: The phased ramp-up of new U.S. facilities, including the Louisiana plant and the planned finishing line, is expected to improve gross margins through lower tariff exposure and increased eligibility for domestic tax credits. However, higher start-up and underutilization costs will pressure margins in the near term.
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Customer contract enforcement and demand: The resolution of outstanding termination payments and active negotiation of new contracts will be key to stabilizing revenue. Management remains cautious, noting that further utility and developer pivots, especially among multinational energy firms, could pose risks to backlog confidence.
Catalysts in Upcoming Quarters
In future quarters, our team will closely monitor (1) the pace and profitability of the Louisiana and new U.S. finishing facility ramp-up, (2) progress in rebooking volumes lost to contract terminations with pricing discipline, and (3) developments in U.S. trade policy, including tariffs and FEOC guidance. Execution on cost containment and legal recoveries from former customers will also serve as key indicators of management’s ability to stabilize and grow the business.
First Solar currently trades at $245, up from $232.91 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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