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Fusemachines Falls 13% on Q3 Loss, Revenues Increase Y/Y
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Shares of Fusemachines Inc. (FUSE - Free Report) have declined 12.8% since the company reported earnings for the quarter ended Sept. 30, 2026, compared with the S&P 500 Index’s 2% decline over the same period. Over the past month, the stock has lost 13%, underperforming the S&P 500’s 6.3% decrease.
Fusemachines incurred a third-quarter 2026 loss per share of 15 cents, which remained flat year over year.
Revenues of $1.9 million indicated a 3% rise from $1.8 million in the year-ago quarter.
However, net loss widened to $4.6 million from $1.2 million, primarily reflecting higher operating expenses and a noncash derivative valuation charge.
Gross profit declined 1.5% to $1 million, while operating loss widened to $2.3 million from $1.1 million.
Fusemachines Inc. Price, Consensus and EPS Surprise
Revenues from AI Solutions, comprising products and services, totaled $1.8 million, while AI Education services contributed $0.02 million.
Geographically, U.S. revenues declined 2.4% to $1.7 million, while international revenues increased to $0.2 million from $0.1 million.
Adjusted EBITDA loss widened to $1.4 million from $0.9 million in the prior-year quarter.
Fusemachines' Management Commentary
Management emphasized the company's focus on enterprise AI adoption, product development and expanding its commercial reach. Its strategy centers on integrating agentic AI solutions into business operations while leveraging its global technical workforce.
However, management acknowledged that intense industry competition, rapid technological developments and lengthy enterprise sales cycles could affect revenue growth and profitability.
Management also highlighted financing requirements. The company reported a working capital deficit of approximately $9.1 million and an accumulated deficit of $43.6 million at quarter-end.
These conditions raised substantial doubt about its ability to continue as a going concern without additional financing or improved operating cash generation.
Factors Influencing FUSE's Quarterly Results
Cost of revenues increased 8.5% to $0.9 million, primarily reflecting annual salary increments. Gross margin consequently contracted to 53.2% from 55.6%.
Total operating expenses increased 57.7% to $3.3 million from $2.1 million. General and administrative expenses climbed to $2.7 million from $1.6 million, reflecting higher stock-based compensation, professional services costs and other administrative expenses.
Selling and marketing expenses increased to $0.4 million from $0.3 million, while research and development expenses rose to $0.3 million from $0.2 million.
Additionally, a $2.2 million noncash loss related to changes in the fair value of the forward purchase derivative liability significantly affected reported earnings.
Interest expenses increased to $0.4 million from $0.1 million, primarily due to convertible notes issued in August 2026.
FUSE's Liquidity and Financing Outlook
Fusemachines’ cash and cash equivalents declined to $1.5 million as of Sept. 30, 2026, from $4.2 million as of Dec. 31, 2025.
Net cash used in operating activities increased to $4.8 million during the first nine months of 2026 from $0.5 million in the year-ago period, reflecting a deterioration in operating cash flows and heightened liquidity pressures.
Management expects additional capital to be necessary to support operations, product development and working capital requirements.
An equity purchase agreement with Roth Principal Investments provides potential access to up to $20 million in financing.
Convertible notes issued in August 2026 mature in February 2027, creating additional refinancing or repayment requirements.
Other Developments
In August 2026, Fusemachines entered into a three-year agreement with Qintess involving a minimum $6.5 million commitment to purchase AI software and services. The arrangement includes potential issuance of up to 1.3 million common shares, subject to specified conditions.
In September, the company issued approximately 2.1 million shares to settle $1.3 million in outstanding vendor obligations, reducing liabilities without cash payments.
The company also underwent a financial leadership transition, appointing David R. Wells as consulting chief financial officer following Christine Chambers' departure.
These developments reflect efforts to strengthen commercial opportunities and manage financial obligations, although profitability and liquidity remain significant challenges.
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Fusemachines Falls 13% on Q3 Loss, Revenues Increase Y/Y
Shares of Fusemachines Inc. (FUSE - Free Report) have declined 12.8% since the company reported earnings for the quarter ended Sept. 30, 2026, compared with the S&P 500 Index’s 2% decline over the same period. Over the past month, the stock has lost 13%, underperforming the S&P 500’s 6.3% decrease.
Fusemachines incurred a third-quarter 2026 loss per share of 15 cents, which remained flat year over year.
Revenues of $1.9 million indicated a 3% rise from $1.8 million in the year-ago quarter.
However, net loss widened to $4.6 million from $1.2 million, primarily reflecting higher operating expenses and a noncash derivative valuation charge.
Gross profit declined 1.5% to $1 million, while operating loss widened to $2.3 million from $1.1 million.
Fusemachines Inc. Price, Consensus and EPS Surprise
Fusemachines Inc. price-consensus-eps-surprise-chart | Fusemachines Inc. Quote
FUSE's Other Key Business Metrics
Revenues from AI Solutions, comprising products and services, totaled $1.8 million, while AI Education services contributed $0.02 million.
Geographically, U.S. revenues declined 2.4% to $1.7 million, while international revenues increased to $0.2 million from $0.1 million.
Adjusted EBITDA loss widened to $1.4 million from $0.9 million in the prior-year quarter.
Fusemachines' Management Commentary
Management emphasized the company's focus on enterprise AI adoption, product development and expanding its commercial reach. Its strategy centers on integrating agentic AI solutions into business operations while leveraging its global technical workforce.
However, management acknowledged that intense industry competition, rapid technological developments and lengthy enterprise sales cycles could affect revenue growth and profitability.
Management also highlighted financing requirements. The company reported a working capital deficit of approximately $9.1 million and an accumulated deficit of $43.6 million at quarter-end.
These conditions raised substantial doubt about its ability to continue as a going concern without additional financing or improved operating cash generation.
Factors Influencing FUSE's Quarterly Results
Cost of revenues increased 8.5% to $0.9 million, primarily reflecting annual salary increments. Gross margin consequently contracted to 53.2% from 55.6%.
Total operating expenses increased 57.7% to $3.3 million from $2.1 million. General and administrative expenses climbed to $2.7 million from $1.6 million, reflecting higher stock-based compensation, professional services costs and other administrative expenses.
Selling and marketing expenses increased to $0.4 million from $0.3 million, while research and development expenses rose to $0.3 million from $0.2 million.
Additionally, a $2.2 million noncash loss related to changes in the fair value of the forward purchase derivative liability significantly affected reported earnings.
Interest expenses increased to $0.4 million from $0.1 million, primarily due to convertible notes issued in August 2026.
FUSE's Liquidity and Financing Outlook
Fusemachines’ cash and cash equivalents declined to $1.5 million as of Sept. 30, 2026, from $4.2 million as of Dec. 31, 2025.
Net cash used in operating activities increased to $4.8 million during the first nine months of 2026 from $0.5 million in the year-ago period, reflecting a deterioration in operating cash flows and heightened liquidity pressures.
Management expects additional capital to be necessary to support operations, product development and working capital requirements.
An equity purchase agreement with Roth Principal Investments provides potential access to up to $20 million in financing.
Convertible notes issued in August 2026 mature in February 2027, creating additional refinancing or repayment requirements.
Other Developments
In August 2026, Fusemachines entered into a three-year agreement with Qintess involving a minimum $6.5 million commitment to purchase AI software and services. The arrangement includes potential issuance of up to 1.3 million common shares, subject to specified conditions.
In September, the company issued approximately 2.1 million shares to settle $1.3 million in outstanding vendor obligations, reducing liabilities without cash payments.
The company also underwent a financial leadership transition, appointing David R. Wells as consulting chief financial officer following Christine Chambers' departure.
These developments reflect efforts to strengthen commercial opportunities and manage financial obligations, although profitability and liquidity remain significant challenges.