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FOXX Stock Down 14% As Q3 Loss Widens Y/Y on Rising Costs
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Shares of Foxx Development Holdings Inc. (FOXX - Free Report) have declined 13.8% since the company reported results for the quarter ended March 31, 2026, underperforming the S&P 500 index’s 1.4% gain over the same period. Over the past month, FOXX shares dropped 36.8%, compared with the S&P 500’s 4.5% advance.
Foxx Development incurred a loss per share of $5.19 for the third quarter of fiscal 2026, which widened from 58 cents in the comparable period last year.
Net revenues fell 23.9% year over year to $8.7 million from $11.4 million in the prior-year quarter. The company incurred a net loss of $36.3 million wider than a loss of $4.1 million a year earlier. Gross profit swung to a loss of $1.5 million from a gross profit of $0.7 million in the prior-year quarter.
Foxx Development Holdings Inc. Price, Consensus and EPS Surprise
Foxx said the decline in revenues was mainly driven by lower sales of mobile phones, wearable devices and app service commissions. Mobile phone revenue, which remained the company’s largest contributor, fell 9.8% year over year to approximately $8 million. Wearable products and other revenues declined 83.7% to about $0.3 million. App service commission revenues dropped 53% to roughly $0.3 million. Tablet product sales remained insignificant during the quarter.
Management attributed weaker mobile phone sales partly to lower order volumes after the company attempted to increase selling prices to offset rising chip costs. Customers responded poorly to the price increases, contributing to reduced demand. The company also cited weakened consumer spending power and longer smartphone replacement cycles as additional headwinds.
Margin Pressure and Expense Growth
Foxx’s profitability deteriorated significantly during the quarter. Cost of goods sold decreased 5.7% year over year to $10.1 million, but remained above revenue levels, resulting in a negative gross margin. Management said cost reductions were aided by negotiations with vendors to absorb shipping and tariff costs beginning in July 2025.
Operating expenses surged to $32.5 million from $4.2 million in the prior-year quarter. The increase was driven primarily by a $25.9 million impairment charge related to right-of-use assets tied to excess warehouse space. Foxx said its transition toward a dropship arrangement reduced warehouse utilization, forcing the company to sublease space below lease rates and triggering the impairment.
Provision for credit losses also rose sharply to $1.7 million from $0.4 million a year earlier, while general and administrative expenses more than doubled to $2.9 million. Research and development expenses increased 31.3% to $1.1 million.
Interest expense climbed to $2.3 million from $1.6 million in the year-ago period, largely related to unpaid purchase balances with vendors.
Management Commentary and Strategic Shifts
Management said the company continued diversifying its customer and supplier base to reduce reliance on a limited number of counterparties. The company noted that new customer relationships initially generated smaller order sizes while new product development cycles typically required six to nine months before reaching mass production.
Foxx also discussed the impact of changes to the Affordable Connectivity Program, which reduced demand across sales channels beginning in 2024. In response, the company expanded into e-commerce through TikTok Shop and pursued broader product diversification initiatives.
During the quarter, Foxx continued investing in research and development, including a January 2026 agreement with a third party to develop the company’s FOXX OS mobile operating system platform. The project includes development of proprietary applications, cross-platform compatibility frameworks and integration of advertising and paid-service modules.
Liquidity Position
Cash and cash equivalents totaled $3.2 million at March 31, 2026, compared with $1.9 million at June 30, 2025.
Net cash provided by operating activities totaled approximately $1.3 million during the first nine months of fiscal 2026, compared with net cash used in operating activities of $4.7 million in the prior-year period.
Other Developments
Foxx exited its AIoT business during the nine-month period ended March 31, 2026. The company said it completed the sale of AIoT products and disposed of related equipment in December 2025.
The company also formed several subsidiaries, including Foxx Development (Singapore) Pte. Ltd. and Foxx Technologies Inc., though neither had significant operations as of March 31, 2026.
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FOXX Stock Down 14% As Q3 Loss Widens Y/Y on Rising Costs
Shares of Foxx Development Holdings Inc. (FOXX - Free Report) have declined 13.8% since the company reported results for the quarter ended March 31, 2026, underperforming the S&P 500 index’s 1.4% gain over the same period. Over the past month, FOXX shares dropped 36.8%, compared with the S&P 500’s 4.5% advance.
Foxx Development incurred a loss per share of $5.19 for the third quarter of fiscal 2026, which widened from 58 cents in the comparable period last year.
Net revenues fell 23.9% year over year to $8.7 million from $11.4 million in the prior-year quarter. The company incurred a net loss of $36.3 million wider than a loss of $4.1 million a year earlier. Gross profit swung to a loss of $1.5 million from a gross profit of $0.7 million in the prior-year quarter.
Foxx Development Holdings Inc. Price, Consensus and EPS Surprise
Foxx Development Holdings Inc. price-consensus-eps-surprise-chart | Foxx Development Holdings Inc. Quote
Revenue Trends and Product Performance
Foxx said the decline in revenues was mainly driven by lower sales of mobile phones, wearable devices and app service commissions. Mobile phone revenue, which remained the company’s largest contributor, fell 9.8% year over year to approximately $8 million. Wearable products and other revenues declined 83.7% to about $0.3 million. App service commission revenues dropped 53% to roughly $0.3 million. Tablet product sales remained insignificant during the quarter.
Management attributed weaker mobile phone sales partly to lower order volumes after the company attempted to increase selling prices to offset rising chip costs. Customers responded poorly to the price increases, contributing to reduced demand. The company also cited weakened consumer spending power and longer smartphone replacement cycles as additional headwinds.
Margin Pressure and Expense Growth
Foxx’s profitability deteriorated significantly during the quarter. Cost of goods sold decreased 5.7% year over year to $10.1 million, but remained above revenue levels, resulting in a negative gross margin. Management said cost reductions were aided by negotiations with vendors to absorb shipping and tariff costs beginning in July 2025.
Operating expenses surged to $32.5 million from $4.2 million in the prior-year quarter. The increase was driven primarily by a $25.9 million impairment charge related to right-of-use assets tied to excess warehouse space. Foxx said its transition toward a dropship arrangement reduced warehouse utilization, forcing the company to sublease space below lease rates and triggering the impairment.
Provision for credit losses also rose sharply to $1.7 million from $0.4 million a year earlier, while general and administrative expenses more than doubled to $2.9 million. Research and development expenses increased 31.3% to $1.1 million.
Interest expense climbed to $2.3 million from $1.6 million in the year-ago period, largely related to unpaid purchase balances with vendors.
Management Commentary and Strategic Shifts
Management said the company continued diversifying its customer and supplier base to reduce reliance on a limited number of counterparties. The company noted that new customer relationships initially generated smaller order sizes while new product development cycles typically required six to nine months before reaching mass production.
Foxx also discussed the impact of changes to the Affordable Connectivity Program, which reduced demand across sales channels beginning in 2024. In response, the company expanded into e-commerce through TikTok Shop and pursued broader product diversification initiatives.
During the quarter, Foxx continued investing in research and development, including a January 2026 agreement with a third party to develop the company’s FOXX OS mobile operating system platform. The project includes development of proprietary applications, cross-platform compatibility frameworks and integration of advertising and paid-service modules.
Liquidity Position
Cash and cash equivalents totaled $3.2 million at March 31, 2026, compared with $1.9 million at June 30, 2025.
Net cash provided by operating activities totaled approximately $1.3 million during the first nine months of fiscal 2026, compared with net cash used in operating activities of $4.7 million in the prior-year period.
Other Developments
Foxx exited its AIoT business during the nine-month period ended March 31, 2026. The company said it completed the sale of AIoT products and disposed of related equipment in December 2025.
The company also formed several subsidiaries, including Foxx Development (Singapore) Pte. Ltd. and Foxx Technologies Inc., though neither had significant operations as of March 31, 2026.