Revenue Growth Amid Cost Pressures
Revenue increased 7.7% year-over-year to $4.10B in Q1 FY2026 (vs. $3.81B in Q1 FY2025), but this top-line growth was more than offset by a dramatic rise in operating costs, causing operating income to fall 49.7% to $1.07B.
Severe Operating Margin Compression
Operating margin contracted sharply from approximately 56.0% to 26.2% year-over-year, a decline of nearly 30 percentage points, indicating that cost increases — likely related to wildfire liabilities or infrastructure spending — significantly outpaced revenue growth.
Net Income and EPS Decline Significantly
Net income fell 63.0% to $531M from $1.44B, with basic EPS dropping from $3.73 to $1.38, reflecting the impact of elevated below-the-line charges or increased interest expense on the company's $40.3B long-term debt load.