Solar energy systems company Shoals (NASDAQ: SHLS) announced better-than-expected revenue in Q2 CY2026, with sales up 47.4% year on year to $163.4 million. The company expects next quarter’s revenue to be around $160 million, close to analysts’ estimates. Its non-GAAP profit of $0.12 per share was 20.3% above analysts’ consensus estimates.

Is now the time to buy SHLS? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Shoals' second quarter results for 2026 came in above Wall Street’s revenue and earnings expectations, but the market reacted negatively to the report. Management pointed to robust demand in the core utility-scale solar market and record levels of new orders as key drivers of the quarter. CEO Brandon Moss emphasized ongoing operational improvements and a successful legal outcome in a major intellectual property case as factors supporting the company’s performance. However, a decline in operating margin and cautious commentary on the pace of productivity gains highlighted some of the operational hurdles Shoals faces as it consolidates manufacturing operations.

Looking ahead, Shoals’ management expects continued strong demand for utility-scale solar and battery energy storage products, supported by a record backlog and expanding international presence. The company’s guidance reflects confidence in improved margins as factory consolidation efficiencies materialize and a favorable product mix emerges. Moss noted, “Our focus is execution through the back end of the year, producing as much product as we can at this new mega facility and making it as efficient as possible.” Management also highlighted new product introductions and partnerships—particularly in energy storage—as important contributors to future growth.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to strong U.S. and international demand, an expanding product suite, and operational investments to support growth and efficiency.

• Utility-scale solar demand: Robust sales and order activity in the U.S. utility-scale solar segment drove overall performance, with over $1 billion in unique projects quoted in the quarter. Management cited ongoing strength in customer engagement and order conversion as indicators of healthy market demand.
• Backlog at new highs: Shoals reported a record backlog and awarded orders (BLAO) of $801 million, a 19% increase year over year. About $700 million of this is scheduled for shipment over the next four quarters, providing strong revenue visibility and supporting the company’s growth outlook.
• Factory consolidation and productivity: The company continued consolidating manufacturing into its new mega facility, which is expected to improve efficiency and margins over time. Moss acknowledged the complexities of this transition, stating, “Factory consolidations are never an easy task, but we've made steady progress and continue to identify opportunities for improvement.”
• Expansion into energy storage: Shoals’ battery energy storage system (BESS) business delivered $20 million in revenue for the quarter, with additional orders secured. The company also announced a partnership with TerraFlow to supply energy storage solutions for utility-scale and data center applications, supporting diversification efforts.
• International and product diversification: International backlog reached $102 million, with particular traction in Australia. Shoals is also expanding its product mix with offerings like AirLink, a new power delivery solution for data centers, positioning the company for growth in adjacent markets beyond traditional solar.

Drivers of Future Performance

Management expects a combination of operational efficiencies, product innovation, and a robust pipeline to shape performance in the coming quarters, while closely monitoring cost pressures and market expansion opportunities.

• Operational efficiency gains: As productivity improves in the new consolidated facility, Shoals anticipates better fixed cost leverage and incremental margin expansion. CFO Dominic Bardos stated that optimizing factory performance and achieving planned cost efficiencies are central to the margin outlook for the remainder of the year.
• Product and geographic diversification: The company is emphasizing growth in energy storage and data center markets, as well as expanding internationally. Management believes the introduction of new products like AirLink and partnerships with companies such as TerraFlow will contribute to both top-line growth and margin expansion over time.
• Market and policy headwinds: While demand remains strong, management is monitoring potential impacts from tariffs, changing U.S. trade policy, and customer project timing. Moss noted that although tariffs and policy changes may cause near-term “speed bumps,” they do not expect these to alter the underlying demand trajectory for Shoals’ core products.

Catalysts in Upcoming Quarters

In the coming quarters, our analyst team will track (1) Shoals’ ability to improve productivity and margins as its consolidated facility ramps up, (2) the pace of order conversion and backlog fulfillment, especially in new product lines like BESS and AirLink, and (3) progress in international expansion and new partnerships such as TerraFlow. Additionally, we will monitor the impact of evolving trade policy and tariffs on customer demand and cost structure.

Shoals currently trades at $9.30, in line with $9.37 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

Our Favorite Stocks Right Now

ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.

Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.

Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.