0001628280-26-033590
SEC filingRevenue plunged 48% YoY to $60.6M amid regulatory headwinds and OEM delays, with gross margin contracting to 31.6%.
Microvast's revenue for Q1 2026 was $60.6 million, a 48.0% decline from $116.5 million in Q1 2025. The decrease was driven by a 48.9% reduction in sales volume (273.9 MWh vs 535.7 MWh), attributed to evolving regulatory and geopolitical dynamics, including demand shifts in India and Korea, OEM-caused platform delays in Europe and APAC transportation/mining sectors, and US customers front-loading orders in 2025 due to tariff uncertainty. Gross profit fell 55.5% to $19.2 million, with gross margin weakening from 36.9% to 31.6% primarily due to lower production utilization reducing fixed cost absorption. Operating expenses decreased 7.1% to $27.1 million, as reductions in G&A (down 8.3% on lower credit losses and employee costs) and S&M (down 21.4% on lower service fees) partially offset a 6.8% increase in R&D from expanding US presence. The company posted an operating loss of $7.9 million versus a $15.3 million profit a year ago. Net profit of $48.2 million (vs $61.8 million) was heavily influenced by a $63.8 million non-cash fair value gain on warrants and convertible loan, masking the operating weakness.
Revenue by geography showed a pronounced shift toward Europe, which contributed 71% of total revenue in Q1 2026 (up from 52% in Q1 2025), while Asia & Pacific dropped to 29% from 43%. European revenue of $43.2 million declined 28% YoY, with Italy ($31.3M) remaining the top country despite a 14% drop. Asia & Pacific revenue plunged 66% to $17.1 million, led by China falling 66% to $14.9 million. US revenue nearly vanished at $0.2 million (down 96%), reflecting customer pull-forward and absence of new orders. The mix shift toward Europe is strategic, as average selling prices are higher there, but continued volume weakness across all regions underscores broader demand challenges.
Management expressed substantial doubt about going concern but outlined plans to improve liquidity: positive net operating cash flow from a $168.7M order backlog, refinancing of short-term debt, equity issuance under a Controlled Equity Offering ($27.7M raised to date), and deferring ESS development to focus on near-term cash-generative commercial vehicle applications. A potential sale of the Lake Mary, Florida facility for $11.5M is anticipated in Q2 2026. Capital expenditures were $4.2M in Q1 2026, primarily for Huzhou Phase 3.2 expansion. The company expects gross margins to remain stable given secured contract pricing and current raw material market conditions. However, risks include tariff impacts, raw material inflation, and the ability to secure additional financing for the Clarksville plant. No explicit quantitative guidance was provided for future periods.
As of March 31, 2026, Microvast held $126.1 million in cash and cash equivalents and $47.9 million in restricted cash, totaling $174.0 million. Total debt comprised $138.8 million in bank borrowings (including $111.2 million short-term), $41.7 million in bonds payable (maturing January 2027), and $76.5 million in a convertible loan (maturing May 2026). Shareholders' equity stood at $466.1 million, with an accumulated deficit of $1,074.0 million. The company disclosed substantial doubt about its ability to continue as a going concern, noting that existing cash and assets held for sale may not be sufficient to fund operations through the next twelve months. Plans to alleviate this include generating cash through operations and refinancing short-term borrowings, with $30.1 million refinanced during the quarter.
Purchase commitments for non-cancelable inventory obligations totaled $29.1 million as of March 31, 2026. Capital commitments for construction and property, plant, and equipment were $17.3 million, with $15.0 million due within the next 12 months. The company also had $2.3 million in liens, a decrease of $21.3 million from December 31, 2025, partly due to the settlement of the DPR Construction litigation. Additionally, the company disclosed a confidential settlement agreement related to the Clenera arbitration, with a second payment due on or before July 15, 2026.
No share buybacks or dividends were reported. Debt activity included $51.7 million in proceeds from bank borrowings and $20.8 million in repayments, resulting in a net increase of $30.9 million in bank borrowings. Capital expenditures were $2.9 million, representing 4.7% of sales. The convertible loan's fair value decreased from $140.9 million to $76.5 million, driven by a $63.8 million gain recognized in the income statement.
The company operates as a single reportable segment. Revenue by geography for the three months ended March 31, 2026: Italy contributed 52% ($31.3 million), France 19% ($11.7 million), China 25% ($14.9 million), and other regions 4%. Long-lived assets were concentrated in China (66%) and the United States (31%).
Net profit was $48.2 million in Q1 2026, but operating cash flow was negative $(22.8) million, a significant divergence driven by non-cash gains. The largest adjustment was a $63.8 million gain from changes in fair value of warrant liability and convertible loan, which inflated net income but did not generate cash. Working capital was a major drag: notes receivable increased $3.3 million, inventories rose $7.0 million, and accrued expenses and other liabilities fell $16.3 million. Accounts receivable provided a $33.5 million inflow, partially offsetting these outflows.
Capex of $2.9 million was modest relative to the company's size, and no free cash flow is explicitly stated. Financing activities generated $29.3 million, primarily from net bank borrowings ($30.9 million after proceeds and repayments). The company ended the period with $174.0 million in cash, cash equivalents, and restricted cash, up from $169.2 million at the start of the quarter.
Anomalies include the large fair value adjustment and the $27.0 million decrease in notes payable, which contributed to the operating cash outflow. The going concern disclosure highlights liquidity risk despite the cash balance.