EARNINGS REVIEW
Growth alongside substantial operating cash outflow
Historical earnings report · Management guidance reflects expectations at the time of the release, not subsequent outcomes. The financial comparison uses the site’s normalized dataset, including comparative figures restated in later filings.
Revenue rose 122.7% year on year but declined sequentially. Data-center deployments and design wins from a small number of large customers drove shipments. Strong annual growth and sequential weakness can coexist.
Assessment · The central issue is the pace of cash absorption rather than revenue growth alone. Collections, inventory normalization and external funding needs are essential to assessing sustainability.
01 Drivers by business
Revenue rose 122.7% year on year but declined sequentially. Data-center deployments and design wins from a small number of large customers drove shipments. Strong annual growth and sequential weakness can coexist.
02 Margins and earnings quality
Gross margin improved to 9.9% from 6.3% sequentially and 9.6% a year earlier. Quarterly OCF from filed cumulative amounts was nevertheless −6.615 B$: margin recovery and cash conversion diverged. The May 5 release was preliminary and disclosed an independent review of transactions involving export-control issues. Tables use the subsequently filed 10-Q; the review is not presented as completed.
03 Cash conversion and funding
Quarterly OCF was $-6.615 billion, cash CapEx $0.080 billion and analytical OCF-minus-CapEx $-6.696 billion. Cumulative flows with the same fiscal-year start are subtracted; acquisition payments are excluded from CapEx.
Company-defined FCF was not verified and is left blank. OCF minus PP&E purchases is provided only as analytical FCF. Cash and cash equivalents and total liabilities are not interchangeable with debt or net cash.
04 RPO versus order backlog
Filed RPO was $2.136 billion. Obligations under contracts with an original term of one year or less are excluded, so this is not total server backlog. RPO growth alone cannot determine future consolidated revenue growth.
05 Guidance at the announcement date
At May 5, next-quarter revenue guidance was $11.0–12.5 billion and FY26 guidance was $38.9–40.4 billion. The lower end was below the previous quarter’s at-least-$40-billion annual outlook.
06 Investment checkpoints
The central issue is the pace of cash absorption rather than revenue growth alone. Collections, inventory normalization and external funding needs are essential to assessing sustainability.
Quarterly results · CY-aligned view
| Metric · B$ | 2025 full-year total | 1Q FY25 Q3 2025-03-31 | 2Q FY25 Q4 2025-06-30 | 3Q FY26 Q1 2025-09-30 | 4Q FY26 Q2 2025-12-31 | 2026 total of 1 included quarters | 1Q FY26 Q3 2026-03-31 | QoQ Δ | YoY Δ |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 28.057 | 4.600 | 5.757 | 5.018 | 12.682 | 10.243 | 10.243 | −2.439 | 5.643 |
| Operating income | 1.032 | 0.147 | 0.228 | 0.182 | 0.474 | 0.626 | 0.626 | 0.152 | 0.479 |
| Operating margin (%) | 3.677 | 3.191 | 3.967 | 3.632 | 3.740 | 6.110 | 6.110 | 2.370 pp | 2.919 pp |
| Net income | 0.873 | 0.109 | 0.195 | 0.168 | 0.401 | 0.483 | 0.483 | 0.083 | 0.375 |
| FCF · company definition | — | — | — | — | — | — | — | — | — |
| Operating cash flow · total | 0.549 | 0.627 | 0.864 | −0.918 | −0.024 | −6.615 | −6.615 | −6.592 | −7.242 |
| Net cash CapEx · common | 0.109 | 0.033 | 0.023 | 0.032 | 0.021 | 0.080 | 0.080 | 0.059 | 0.048 |
| Cash CapEx · Chinese company definition | — | — | — | — | — | — | — | — | — |
| FCF · total calculation | 0.440 | 0.594 | 0.841 | −0.950 | −0.045 | −6.696 | −6.696 | −6.651 | −7.290 |
| Net cash · liquid assets less borrowings | −0.772 | 0.047 | 0.418 | −0.565 | −0.772 | −7.468 | −7.468 | −6.697 | −7.515 |
| Liquid assets · including short-term investments | 4.106 | 2.540 | 5.176 | 4.211 | 4.106 | 1.305 | 1.305 | −2.801 | −1.235 |
| Borrowings · interest-bearing debt | 4.878 | 2.492 | 4.758 | 4.776 | 4.878 | 8.773 | 8.773 | 3.895 | 6.281 |
| Cash and cash equivalents | 4.091 | 2.536 | 5.170 | 4.197 | 4.091 | 1.290 | 1.290 | −2.801 | −1.246 |
| Total liabilities · accounting liabilities | 21.009 | 4.359 | 7.717 | 7.862 | 21.009 | 15.876 | 15.876 | −5.133 | 11.517 |
CY denotes the calendar quarter with the greatest overlap with the fiscal period. If the first period has no start date, 89 days before its end is used only for calendar mapping. Financial values are not recalculated into calendar quarters. Incomplete years show totals of included quarters; cash, liabilities, borrowings and net cash use the last period-end balance. QoQ and YoY show absolute changes; margin changes are percentage points. Dashes indicate missing evidence or incomparable periods or definitions. Total liabilities never substitute for borrowings.
Definitions and evidence coverage
A dash means unavailable or undisclosed, not zero. Company-defined FCF may differ from total operating cash flow less common-basis CapEx. Total liabilities are accounting liabilities, not interest-bearing debt.
Tables use SEC-filed comparative values verified through 2026-10-17. Guidance retains the original announcement date; later outcomes are not backdated into past forecasts. This report does not claim a complete conference-call Q&A review.