AI Takeaway
XYZ reported Q1 FY2026 revenue of $6.06B (+4.9% YoY) with a dramatically improved gross margin of 48.0%, but swung to a net loss of $308.7M driven by a 36.6% surge in R&D spending and a 152.2% collapse in operating income.
Revenue
$6.06B
++4.94% YoY
EPS (Basic)
$-0.52
-267.74% YoY
Gross Margin
48.0%
++8.36% YoY
Operating Income
$-171.99M
-152.23% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue grew 4.9% YoY to $6.06B in Q1 FY2026, while cost of revenue fell 9.6% YoY to $3.15B, suggesting meaningful improvements in production efficiency or a favorable shift in product/service mix.
Source: Source: 10-Q Income Statement
Gross margin expanded sharply by approximately 8.4 percentage points YoY to 48.0%, up from 39.7% in the prior-year period, indicating significantly better unit economics or pricing power.
Source: Source: 10-Q Income Statement & Key Ratios
R&D expense surged 36.6% YoY to $1.04B, which was the primary driver of the swing to an operating loss of -$172.0M from operating income of $329.3M in Q1 FY2025, reflecting aggressive investment in future product development.
Source: Source: 10-Q Income Statement
2 more insights available
Upgrade to unlockR&D expenses jumped 36.6% YoY to $1.04B in Q1 FY2026, turning operating income into a loss of -$172.0M. If these investments do not translate into revenue-generating products or services in a timely manner, sustained losses could erode shareholder value.
Source: Source: 10-Q Income Statement
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $0.85 versus the $0.68 analyst consensus — a +24.4% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.06B | $5.77B | +4.94% |
Cost of Revenue | $3.15B | $3.48B | -9.61% |
Gross Profit | $2.91B | $2.29B | +27.06% |
Operating Income | $-171.99M | $329.3M | -152.23% |
Net Income | $-308.68M | $189.87M | -262.57% |
EPS (Basic) | $-0.52 | $0.31 | -267.74% |
EPS (Diluted) | $-0.52 | $0.30 | -273.33% |
R&D Expense | $1.04B | $760.7M | +36.57% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $39.99B | $36.4B | +9.87% |
Current Assets | $23.77B | $19.71B | +20.57% |
Total Liabilities | $18.31B | $14.96B | +22.36% |
Current Liabilities | $11.97B | $8.69B | +37.76% |
Stockholders' Equity | $21.72B | $21.47B | +1.15% |
Cash & Equivalents | $6.86B | $7.09B | -3.25% |
Long-Term Debt | $7.29B | $5.11B | +42.76% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $965.6M | $133.34M | +624.18% |
Investing Cash Flow | $300.03M | $914.71M | -67.20% |
Financing Cash Flow | $-251.91M | $-1.21B | +79.21% |
Share Buybacks | $635.99M | $445.3M | +42.82% |
D&A | $95.98M | $88.95M | +7.90% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 48.0% | 39.7% | +8.36% |
Operating Margin | -2.8% | 5.7% | -8.54% |
Net Margin | -5.1% | — | — |
ROE | -1.4% | — | — |
ROA | -0.8% | — | — |
Current Ratio | $1.986 | — | — |
Debt to Equity | $0.843 | — | — |
Other companies in Transaction & Payment Processing Services
XYZ reported a net loss of -$308.7M and EPS of -$0.52 in Q1 FY2026, a sharp reversal from net income of $189.9M and EPS of $0.31 in Q1 FY2025. Without consensus analyst estimates available in this filing, it is not possible to confirm whether results beat or missed expectations.
The headline story is a dramatic gross margin expansion to 48.0% (from 39.7%) alongside a 4.9% revenue increase to $6.06B, but a 36.6% surge in R&D spending to $1.04B pushed the company to a net loss of -$308.7M. On the positive side, operating cash flow jumped 624.2% YoY to $965.6M, suggesting strong underlying cash generation.
XYZ's net loss of -$308.7M in Q1 FY2026 was primarily driven by a 36.6% YoY increase in R&D expenses to $1.04B, which more than offset the $619.6M improvement in gross profit. This reflects a strategic decision to invest heavily in future growth at the expense of near-term profitability.
XYZ's revenue grew 4.9% YoY to $6.06B in Q1 FY2026, up from $5.77B in the prior-year period. Notably, cost of revenue declined 9.6% YoY, which drove gross profit up 27.1% to $2.91B and expanded gross margin by 8.4 percentage points to 48.0%.
XYZ maintains a current ratio of 1.99x and holds $6.86B in cash, suggesting adequate near-term liquidity, but long-term debt has risen 42.8% YoY to $7.29B and the company is running at a net loss of -$308.7M. The strong operating cash flow of $965.6M provides a meaningful buffer, though rising leverage and sustained losses are key metrics to watch.