4Q25 Non-GAAP EPS: -$0.37, miss estimates by $0.33
FY26 Guidance: Raised FY26 revenue target to at least $375M. Set Q1’26 revenue target of $38M to $40M.
Comment: 4Q showed a step change in scale driven by Ondas Autonomous Systems. OAS revenue was $29.6M, while Ondas Networks remained small at $0.5M, reflecting longer customer deployment timelines. Gross margin expanded to 42% from 21% last year on higher volume and mix. Profitability remains the key debate. Operating loss widened to $23.3M as operating expenses stepped up to support rapid growth and the acquired businesses, and net loss was $101.0M, largely driven by an $82.2M noncash warrant valuation charge. Adjusted EBITDA loss was ($9.9M), worse YoY. Backlog and liquidity are the bullish offsets. Management highlighted backlog of $68.3M exiting 2025 and positioned the balance sheet as well funded to support the 2026 ramp. Shares rose about 8% in the same day session after the earnings update, reflecting the revenue inflection and the step up in the FY26 revenue target, before giving back some gains the next day. What to watch next is conversion of backlog into quarterly revenue, evidence that gross margin stays in the 40% range as deliveries scale, and whether operating expense growth moderates relative to revenue into 2H26. The key swing factors are timing of large program shipments, integration execution across acquired assets, and whether adjusted EBITDA trajectory improves meaningfully through 2026 as management has framed. 1Q26 recommended trading range: $9 to $13. Neutral Outlook.
4Q25 Revenue: $17.72B, +12.0% YoY, miss estimates by $390M
4Q25 Non-GAAP EPADS: $2.53, miss estimates by $0.52
FY26 Guidance: No formal guidance raised.
Comment: The quarter showed continued growth, but the market focused on the profitability reset from heavier ecosystem investment and a more intense domestic competitive environment. Revenue rose 12% YoY to RMB123.9B, driven by transaction services revenue up 19% and online marketing services up 5%. Profitability compressed despite higher scale. Non-GAAP net income attributable to ordinary shareholders declined 12% YoY to RMB26.3B, and non-GAAP diluted EPS per ADS fell to RMB17.69 from RMB20.15 last year. Operating expenses increased 10% YoY, led by higher sales and marketing spend. Balance sheet strength remains a strategic buffer. Cash, cash equivalents and short-term investments increased to RMB422.3B at year end, which supports continued investment despite weaker near-term earnings optics. Shares rose about 4.6% in the same day session after the earnings release. What to watch next is whether management can stabilize profitability while sustaining Temu’s overseas momentum under tighter cross border rules, and whether domestic competition intensity eases enough to reduce the need for incremental subsidies and marketing. Key swing factors are the pace of spend in sales and marketing, regulatory changes affecting low value parcel economics, and the trajectory of take rate and fulfillment costs as PDD invests in supply chain capability. 1Q26 recommended trading range: $95 to $120. Neutral Outlook.
