Fusemachines — Q3 2026 Earnings Summary

Financial Performance:

• Revenue increased 2.8% quarter-over-quarter to $1.85 million (from $1.79 million in Q2 2026); revenue for the nine months ended September 30, 2026, was $5.518 million compared to $5.779 million in the prior year period.
• GAAP loss from operations improved 14.0% quarter-over-quarter to $2.3 million (from $2.7 million in Q2 2026).
• GAAP net loss was $4.6 million ($0.15 per share), compared to $2.8 million ($0.10 per share) in Q2 2026, including a $2.2 million non-cash charge for the change in fair value of the forward purchase derivative liability.
• Adjusted EBITDA (non-GAAP) loss narrowed 39.2% quarter-over-quarter to $1.4 million (from $2.3 million in Q2 2026).
• Total operating expenses declined 9.8% sequentially to $3.3 million (from $3.7 million in Q2 2026), driven by a 10.9% decrease in general and administrative expenses and a 7.0% decrease in selling and marketing expenses.
• Combined cost of revenue and operating expenses fell 7.2% to $4.2 million from $4.5 million in the prior quarter.
• Stockholders' equity improved by $9.1 million, reducing the stockholders' deficit from $17.4 million at June 30, 2026, to $8.2 million at September 30, 2026.
• Cash and cash equivalents decreased to $1.454 million at September 30, 2026, from $4.221 million at December 31, 2025.
• Net cash used in operating activities for the nine months ended September 30, 2026, was $4.807 million.
• Net cash provided by financing activities for the nine months ended September 30, 2026, was $2.227 million.
• Total liabilities were $13.224 million at September 30, 2026, down from $22.112 million at December 31, 2025.

Risks and Challenges:

• The Company continues to have a stockholders' deficit and negative operating cash flow.
• Financial statements disclose substantial doubt about the Company's ability to continue as a going concern.
• Forward-looking statements highlight risks including the ability to obtain additional financing, manage liquidity, sustain operating cost reductions, retain customers, and maintain compliance with Nasdaq listing requirements.
• Risks include the impact of changes in the fair value of the forward purchase derivative liability and dilution from equity issuances.

Management Commentary and Tone:

• Sameer Maskey, Founder and CEO, stated that the 39.2% improvement in Adjusted EBITDA demonstrates meaningful progress in financial and operational performance.
• Management emphasized that cost-reduction initiatives are delivering measurable results, allowing for reduced operating losses while continuing revenue growth.
• The Company remains focused on building a more efficient operating structure, strengthening its financial position, and advancing its enterprise AI business.

Other Key Points:

• Stockholders' equity improved primarily as a result of forward purchase agreement transactions and shares issued to settle vendor invoices and employee obligations.
• The Company issued common stock to settle outstanding severance pay of employees ($460 thousand) and outstanding invoices of vendors ($1.298 million) during the nine-month period.
• Proceeds from sales of forward purchase agreement shares were $679 thousand during the nine months ended September 30, 2026.
• The Company recorded a $2.2 million non-cash loss associated with the change in fair value of the forward purchase derivative liability in Q3 2026.
• The Company has offices in North America, Asia, and Latin America and utilizes proprietary AI Studio, AI Engines, and AI Agents.