AI Takeaway
SOLV's Q1 FY2026 results showed significant earnings deterioration with net income plunging 90.5% YoY to $13M on a 3.0% revenue decline to $2.007B, driven by a sharp 7.5% rise in SG&A expenses and negative operating cash flow of -$189M, though the balance sheet improved materially with long-term debt cut by 41.4% and stockholders' equity up 52.3%.
Revenue
$2.01B
-3.04% YoY
EPS (Basic)
$0.07
-91.14% YoY
Gross Margin
54.7%
++0.84% YoY
Operating Income
$81M
-46.71% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue fell 3.0% YoY to $2.007B in Q1 FY2026 from $2.070B in the prior-year period, suggesting softening demand or pricing pressure in SOLV's core markets. Despite the revenue decline, gross margin actually improved modestly by approximately 84 basis points to 54.7%, indicating some resilience in pricing or product mix.
Source: Source: 10-Q Income Statement
SG&A expenses rose sharply by 7.5% YoY to $827M, significantly outpacing revenue trends and acting as the primary driver of operating income's 46.7% collapse to $81M. This cost inflation likely reflects increased selling investments, restructuring-related costs, or elevated administrative expenses following the company's separation or transformation activities.
Source: Source: 10-Q Income Statement
Net income dropped 90.5% YoY to just $13M, with diluted EPS falling from $0.78 to $0.07, reflecting the combined impact of lower revenue, higher SG&A, and potentially elevated interest or other below-the-line charges. The net margin compressed dramatically to just 0.65% from an estimated 6.6% in the prior-year period.
Source: Source: 10-Q Income Statement
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Upgrade to unlockOperating cash flow swung to -$189M in Q1 FY2026 from +$29M a year ago, representing a 751.7% deterioration. If this trend persists, SOLV may face liquidity constraints, particularly given its current ratio of only 1.07x and ongoing capital expenditure needs. The company's decision to repurchase $67M in shares while burning cash operationally adds further pressure.
Source: Source: 10-Q Cash Flow Statement
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Upgrade to unlockReported EPS of $1.48 versus the $1.38 analyst consensus — a +7.3% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $2.01B | $2.07B | -3.04% |
Gross Profit | $1.1B | $1.11B | -1.53% |
Operating Income | $81M | $152M | -46.71% |
Net Income | $13M | $137M | -90.51% |
EPS (Basic) | $0.07 | $0.79 | -91.14% |
EPS (Diluted) | $0.07 | $0.78 | -91.03% |
R&D Expense | $189M | $193M | -2.07% |
SG&A Expense | $827M | $769M | +7.54% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $14.1B | $14.53B | -2.96% |
Current Assets | $3.58B | $3.05B | +17.36% |
Total Liabilities | $9.13B | $11.27B | -18.97% |
Current Liabilities | $3.35B | $2.57B | +30.40% |
Stockholders' Equity | $4.97B | $3.26B | +52.33% |
Cash & Equivalents | $561M | $534M | +5.06% |
Long-Term Debt | $4.58B | $7.81B | -41.44% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $-189M | $29M | -751.72% |
Investing Cash Flow | $-77M | $-114M | +32.46% |
Financing Cash Flow | $-50M | $-139M | +64.03% |
Share Buybacks | $67M | $0 | — |
D&A | $135M | $129M | +4.65% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 54.7% | 53.8% | +0.84% |
Operating Margin | 4.0% | 7.3% | -3.31% |
Net Margin | 0.6% | — | — |
ROE | 0.3% | — | — |
ROA | 0.1% | — | — |
Current Ratio | $1.071 | — | — |
Debt to Equity | $1.837 | — | — |
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SOLV's Q1 FY2026 results were disappointing, with revenue declining 3.0% to $2.007B and net income collapsing 90.5% to just $13M (diluted EPS of $0.07). The primary culprit was a 7.5% surge in SG&A expenses to $827M, which crushed operating income by 46.7% to $81M. On the positive side, the company significantly reduced long-term debt by 41.4% to $4.575B, improving its balance sheet.
SOLV's net income fell 90.5% YoY to $13M in Q1 FY2026, driven by a combination of a 3.0% revenue decline and a 7.5% jump in SG&A expenses to $827M. This cost-revenue mismatch compressed operating income by nearly half to $81M, and additional below-the-line charges further reduced net income to near zero. The net margin fell to just 0.65% from an estimated ~6.6% in the prior-year period.
No — SOLV reported negative operating cash flow of -$189M in Q1 FY2026, a sharp reversal from +$29M in the prior-year quarter. This means the company is currently burning cash from its core operations, which is a concern given its tight current ratio of 1.07x. The company also spent $67M on share buybacks during the quarter, adding further pressure to its cash position.
SOLV's balance sheet showed meaningful improvement on the debt side, with long-term debt reduced by 41.4% to $4.575B and stockholders' equity rising 52.3% to $4.969B. However, near-term liquidity is tight, with a current ratio of just 1.07x and current liabilities growing 30.4% YoY to $3.346B. Cash and equivalents stood at $561M, providing a modest but limited liquidity buffer.
SOLV's gross margin actually improved slightly in Q1 FY2026, rising approximately 84 basis points to 54.7% from 53.8% in the prior-year period. This suggests the company maintained pricing discipline or benefited from a favorable product mix shift despite the 3.0% revenue decline. However, the gross margin improvement was more than offset by the surge in SG&A expenses, which drove operating margin down to just 4.0%.