Q2 FY2026
Filed Aug 27, 2026Canadian Solar reported Q2 2026 net revenues of $1.2 billion at the high end of guidance, while gross margin fell to 13.9% and net loss attributable to Canadian Solar widened to $77 million.
Revenue and battery energy storage shipments reached the high end of guidance, but gross margin declined sharply, operating expenses increased sequentially, and the Company recorded a $77 million GAAP net loss attributable to Canadian Solar.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenuesGAAP | $1,207,714 (In Thousands of U.S. Dollars) | up 12% sequentially | down 29% yoy |
| Gross profitGAAP | $168,475 (In Thousands of U.S. Dollars) | – | – |
| Gross marginGAAP | 13.9% | – | – |
| Total operating expensesGAAP | $239,534 (In Thousands of U.S. Dollars) | – | down from $378 million in Q2 2025 |
| Selling and distribution expensesGAAP | $74,907 (In Thousands of U.S. Dollars) | – | – |
| General and administrative expensesGAAP | $152,300 (In Thousands of U.S. Dollars) | – | – |
| Research and development expensesGAAP | $20,796 (In Thousands of U.S. Dollars) | – | – |
| Income (loss) from operationsGAAP | $ (71,059 ) (In Thousands of U.S. Dollars) | – | – |
| Interest expenseGAAP | $ (63,624 ) (In Thousands of U.S. Dollars) | – | – |
| Interest incomeGAAP | $21,043 (In Thousands of U.S. Dollars) | – | – |
| Income (loss) before income taxes and equity in losses of affiliatesGAAP | $ (67,340 ) (In Thousands of U.S. Dollars) | – | – |
| Income tax expenseGAAP | $ (16,339 ) (In Thousands of U.S. Dollars) | – | – |
| Net income (loss)GAAP | $ (85,774 ) (In Thousands of U.S. Dollars) | – | – |
| Net income (loss) attributable to Canadian Solar Inc.GAAP | $ (76,859 ) (In Thousands of U.S. Dollars) | – | – |
| Earnings (loss) per share - basicGAAP | $ (1.40 ) | – | – |
| Earnings (loss) per share - dilutedGAAP | $ (1.40 ) | – | – |
| Total solar module shipments recognized as revenueother | 3.1 GW | up 25% qoq | down 60% yoy |
| Total battery energy storage shipments recognized as revenueother | 3.7 GWh | up 82% qoq | up 73% yoy |
| Net cash provided by (used in) operating activitiesGAAP | $ (180,761 ) (In Thousands of U.S. Dollars) | – | – |
| Net cash used in investing activitiesGAAP | $ (137,897 ) (In Thousands of U.S. Dollars) | – | – |
| Net cash provided by financing activitiesGAAP | $331,050 (In Thousands of U.S. Dollars) | – | – |
| Solar modules revenueGAAP | $589,377 (In Thousands of U.S. Dollars) | – | – |
| Battery energy storage solutions revenueGAAP | $425,922 (In Thousands of U.S. Dollars) | – | – |
| Solar power and battery energy storage asset sales revenueGAAP | $61,114 (In Thousands of U.S. Dollars) | – | – |
| Power services revenueGAAP | $20,053 (In Thousands of U.S. Dollars) | – | – |
| Revenue from electricity, battery energy storage operations and othersGAAP | $32,703 (In Thousands of U.S. Dollars) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| ManufacturingHigher sales of solar modules and battery energy storage solutions contributed to the sequential increase in total net revenues. | $ 1,097,535 (In Thousands of U.S. Dollars) | – | – |
| Recurrent EnergyQuarterly performance was light, primarily due to the deferral of planned project sales to the second half; electricity revenue increased sequentially following the COD of a major utility-scale solar project in Spain. | $ 117,306 (In Thousands of U.S. Dollars) | – | – |
Q3 2026 outlook
- Revenue$1.3 billion to $1.5 billion
- Gross margin13.5% to 15.5%
- NoteTotal module shipments recognized as revenue: 3.5 GW to 3.8 GW
- NoteTotal battery energy storage shipments: 3.4 GWh to 3.8 GWh
- Note2026 U.S. market solar modules guidance reiterated: 6.5 GW to 7.0 GW
- Note2026 U.S. market battery energy storage solutions guidance reiterated: 4.5 GWh to 5.5 GWh
Capital returns
- Repurchase of shares by subsidiary: — (Three Months Ended June 30, 2026).
- Capital contributions from tax equity investors in subsidiaries: $23,038 (In Thousands of U.S. Dollars).
What drove it
- Net revenues increased sequentially due to higher sales of solar modules and battery energy storage solutions, partially offset by lower project sales.
- The sequential and year-over-year gross-margin decreases were primarily due to the absence of IEEPA tariff refund benefits recognized in the previous quarter and the absence of the release of unrealized profit upon sales-type leasing of a U.S. project in Q2 2025.
- Sequential operating-expense growth reflected higher ramp-up costs and logistics costs.
- Battery energy storage shipments of 3.7 GWh exceeded guidance of 2.8 GWh to 3.2 GWh.
- e-STORAGE contracted backlog, including contracted long-term service agreements, was $3.5 billion as of June 30, 2026.
- The total solar project development pipeline was 21.7 GWp and the battery energy storage project development pipeline was 84.1 GWh as of June 30, 2026.
Concerns
- Solar module shipments recognized as revenue were down 60% yoy.
- Net revenues were down 29% yoy.
- Gross margin was 13.9%, compared to 25.1% in Q1 2026 and 29.8% in Q2 2025.
- Net loss attributable to Canadian Solar Inc. was $ (76,859 ) (In Thousands of U.S. Dollars), compared to net income attributable to Canadian Solar Inc. of $7,197 (In Thousands of U.S. Dollars) in Q2 2025.
- Total debt increased mainly due to new non-recourse debt drawdown for construction of solar and battery energy storage projects under Recurrent Energy in the U.S.
- Management said ramp-up costs associated with the Jeffersonville, Indiana solar cell facility will weigh on profitability for the remainder of the year.
What to watch
- Closure of Recurrent Energy project sales delayed from the second quarter, which management expects to drive a sequentially stronger third quarter.
- Q3 2026 gross margin guidance of 13.5% to 15.5% and the effect of Jeffersonville ramp-up costs on profitability.
- Execution against Q3 module shipment guidance of 3.5 GW to 3.8 GW and battery energy storage shipment guidance of 3.4 GWh to 3.8 GWh.
- Expansion of the Mesquite, Texas module factory to a 10 GWp nameplate capacity, expected to be completed in the second half of 2026.
- Phase II of the Jeffersonville, Indiana HJT solar cell factory, for which trial production is expected in the first quarter of 2027.
Balance sheet and cash flow
- Cash and cash equivalents: $ 1,461,248 (In Thousands of U.S. Dollars) as of June 30, 2026.
- Restricted cash - current and non-current: $389,108 (In Thousands of U.S. Dollars) as of June 30, 2026.
- Total debt, including financing liabilities: $7.1 billion as of June 30, 2026, compared to $6.8 billion as of March 31, 2026.
- Total non-recourse debt under Recurrent Energy: $2.6 billion as of June 30, 2026.
- Non-recourse borrowings: $ 2,622,080 (In Thousands of U.S. Dollars) as of June 30, 2026.
- Other short-term and long-term borrowings: $ 3,756,350 (In Thousands of U.S. Dollars) as of June 30, 2026.
- Convertible notes - non-current: $ 420,063 (In Thousands of U.S. Dollars) as of June 30, 2026.
- Green bonds - current: $ 147,995 (In Thousands of U.S. Dollars) as of June 30, 2026.
- Purchase of property, plant and equipment and intangible assets: $ (171,840 ) (In Thousands of U.S. Dollars).
- Cash, cash equivalents and restricted cash at the end of the period: $ 1,850,356 (In Thousands of U.S. Dollars).
Analysis
Canadian Solar generated Q2 2026 net revenues of $1,207,714 (In Thousands of U.S. Dollars), up 12% sequentially and down 29% yoy. Revenue reached the high end of the Company’s $1.0 billion to $1.2 billion guidance. The sequential improvement was driven by higher solar-module and battery-energy-storage-solution sales, partly offset by lower project sales. Solar module shipments recognized as revenue were 3.1 GW, up 25% qoq but down 60% yoy, while battery energy storage shipments were 3.7 GWh, up 82% qoq and 73% yoy and above the 2.8 GWh to 3.2 GWh guidance range.
Profitability deteriorated materially. Gross profit was $168,475 (In Thousands of U.S. Dollars), versus $270,820 (In Thousands of U.S. Dollars) in Q1 2026, and gross margin was 13.9%, versus 25.1%. Management attributed the margin decline primarily to the absence of IEEPA tariff refund benefits recognized in the previous quarter and to normalized energy storage margins. Operating expenses rose to $239,534 (In Thousands of U.S. Dollars) from $197,954 (In Thousands of U.S. Dollars) sequentially, reflecting higher ramp-up and logistics costs. The Company consequently posted loss from operations of $ (71,059 ) (In Thousands of U.S. Dollars) and a GAAP net loss attributable to Canadian Solar Inc. of $ (76,859 ) (In Thousands of U.S. Dollars), or $ (1.40 ) per diluted share.
The two businesses showed different operating conditions. Manufacturing revenue was $ 1,097,535 (In Thousands of U.S. Dollars), supported by solar modules revenue of $589,377 (In Thousands of U.S. Dollars) and battery energy storage solutions revenue of $425,922 (In Thousands of U.S. Dollars). Recurrent Energy revenue was $ 117,306 (In Thousands of U.S. Dollars), and management characterized its quarterly performance as light because planned project sales were deferred to the second half. Electricity revenue increased sequentially after commercial operation of a major utility-scale solar project in Spain. The Company also reported $3.5 billion of e-STORAGE contracted backlog, including contracted long-term service agreements.
Cash flow remained negative in operations, with net cash used in operating activities of $ (180,761 ) (In Thousands of U.S. Dollars), driven by changes in working capital. Capital spending included $ (171,840 ) (In Thousands of U.S. Dollars) for property, plant and equipment and intangible assets. Total debt, including financing liabilities, increased to $7.1 billion as of June 30, 2026, from $6.8 billion as of March 31, 2026, mainly due to new non-recourse construction debt at Recurrent Energy. Cash and cash equivalents were $ 1,461,248 (In Thousands of U.S. Dollars) as of June 30, 2026.
For Q3 2026, the Company expects revenue of $1.3 billion to $1.5 billion, gross margin of 13.5% to 15.5%, module shipments of 3.5 GW to 3.8 GW, and battery energy storage shipments of 3.4 GWh to 3.8 GWh. Management expects third-quarter margins to remain stable but stated that Jeffersonville solar-cell-facility ramp-up costs will weigh on profitability for the remainder of the year. The Company also expects delayed Recurrent Energy project sales to close in the third quarter and reiterated 2026 U.S. market guidance for 6.5 GW to 7.0 GW of solar modules and 4.5 GWh to 5.5 GWh of battery energy storage solutions.
Management, verbatim
During the quarter, shipments within our Manufacturing segment were in line with expectations, with slight operational outperformance in battery energy storage, as we continue to navigate global macroeconomic uncertainties with agility.
Colin Parkin, CEO of Canadian Solar
For the quarter, we achieved total revenue of $1.2 billion with a gross margin of 13.9%.
Xinbo Zhu, Senior VP and CFO
Meanwhile, at Recurrent, we expect to close the delayed project sales from the second quarter, driving a sequentially stronger third quarter.
Colin Parkin, CEO of Canadian Solar
Not in the filing
stated, not guessed- Non-GAAP revenue, gross profit, operating income, net income, EPS, cash flow, or margin measures were not reported.
- Free cash flow was not reported.
- Dividend declarations or payments were not reported.
- A Q2 2026 prior-outlook document was not separately provided; therefore, no formal comparison against prior guidance is included.
- Q3 2026 operating-expense guidance was not reported.
- Q3 2026 tax-rate guidance was not reported.
- Year-over-year and sequential percentage changes for individual reported product and service revenue line items were not reported.
- Year-over-year and sequential percentage changes for Manufacturing and Recurrent Energy segment revenue were not reported.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.