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SEC filingRevenue more than doubled to $16.5M from low-risk testing services, narrowing operating losses to -$81K despite margin compression and China weakness, while strong cash generation of $2.3M from operations funded $876K capex.
Revenue surged 123.6% to $16.5 million in Q3 FY2026 from $7.4 million prior year, primarily from incremental final testing services in the SBS segment. These new streams, commencing late in Q1, required no capital investment and carried lower risk profiles, displacing higher-margin equipment sales and compressing gross margins to 15.5% despite gross profit growth of 29.3% to $2.6 million. Management notes this mix shift explains the margin dynamic, as low-risk services generated volume without upfront costs but at reduced profitability versus historical levels.
Decreased China demand pressured results amid U.S.-China trade tensions, though SBS gains elsewhere provided offset. Management flags revenue volatility risks if global semiconductor demand weakens further, with supply chain challenges, tariff uncertainty, and inflation threatening gross margins and operations. As final testing services grow within SBS revenue, margins are expected below historical norms due to their lower-risk, lower-margin nature. Inventories rose on regional backlogs, signaling operational momentum outside China, but prudent capacity management remains key in this cyclical industry.