Fusemachines Reports Revenue Growth and Operating Loss Improvements in Q3 2026 Results

Sequential cost reductions accompanied revenue growth, while nine-month revenue fell and operating cash outflows increased from a year earlier.

Rhea-AI Summary

Fusemachines (FUSE) reported third-quarter 2026 revenue of $1.845 million, with sequential operating improvements but a wider net loss. Revenue grew 2.8% from Q2. GAAP operating loss narrowed 14.0% sequentially to $2.314 million, while adjusted EBITDA, a non-GAAP earnings measure, remained negative at $1.4 million, improving 39.2%. Net loss widened to $4.623 million from $2.8 million in Q2, including a $2.212 million non-cash loss from revaluing a forward purchase derivative liability.

Stockholders’ equity improved $9.1 million during the quarter, primarily through forward purchase agreement transactions and shares issued to settle obligations, but a $8.215 million deficit remained. Cash was $1.454 million at September 30, down from $4.221 million at year-end. Nine-month operating cash outflow reached $4.807 million versus $488,000 a year earlier. Substantial doubt remains about the company’s ability to continue as a going concern.

9 points · 0 major

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3 major · 17 points

How the balance works

Positive

• Moderate pointQ3 operating loss of $2.314 million narrowed 14.0% sequentially but widened from $1.094 million a year earlier.
• Moderate pointAdjusted EBITDA loss narrowed 39.2% sequentially to $1.4 million from $2.3 million.
• Moderate pointStockholders’ equity improved $9.1 million during Q3, primarily through forward purchase agreement transactions and obligation-settling share issuances.
• Moderate pointNine-month convertible-note proceeds of $2.050 million provided financing. 17% of market cap
• Minor pointQ3 revenue of $1.845 million grew 2.8% sequentially, versus $1.792 million a year earlier.

4 minor points

• Minor pointQ3 operating expenses fell 9.8% sequentially to $3.295 million, but exceeded $2.090 million a year earlier.
• Minor pointForward purchase agreement share sales generated $679,000 in proceeds during the first nine months.
• Minor pointNine-month convertible-note repayments of $224,000 reduced borrowing obligations.
• Minor pointShort-term insurance debt fell to $64,000 at September 30 from $342,000 at December 31.

Negative

• Major pointSubstantial doubt about continued operations remains, alongside a stockholders’ deficit and negative operating cash flow.
• Major pointNine-month operating loss widened to $8.039 million from $3.263 million a year earlier.
• Major pointNine-month net loss widened to $8.344 million from $5.213 million a year earlier.
• Moderate pointNine-month operating cash outflow increased to $4.807 million from $488,000 a year earlier.
• Moderate pointCash fell to $1.454 million at September 30 from $4.221 million at December 31.
• Moderate pointNine-month revenue declined to $5.518 million from $5.779 million a year earlier.
• Moderate pointNine-month gross profit declined to $2.892 million from $3.291 million a year earlier.
• Moderate pointNine-month operating expenses increased to $10.931 million from $6.554 million a year earlier.
• Moderate pointCurrent liabilities of $12.686 million exceeded current assets of $3.638 million at September 30.
• Moderate pointCurrent convertible notes payable reached $1.245 million at September 30, versus none at December 31.
• Moderate pointOutstanding common shares increased to 32,424,711 from 28,938,266 at December 31, diluting existing holders.

6 minor points

• Minor pointQ3 net loss widened to $4.623 million, versus $2.8 million in Q2 and $1.174 million a year earlier.
• Minor pointQ3 basic and diluted loss per share was $0.15, versus $0.10 in Q2 and $0.15 a year earlier.
• Minor pointForward purchase derivative revaluation produced a $2.212 million non-cash loss in Q3.
• Minor pointQ3 gross profit declined to $981,000 from $996,000 a year earlier.
• Minor pointQ3 interest expense increased to $353,000 from $74,000 a year earlier.
• Minor pointNine-month interest expense increased to $459,000 from $213,000 a year earlier.

News Explained

At September 30, 2026, $1.454 million in cash equaled 103.2 days of third-quarter operating cash use at that rate.

Fusemachines reported third-quarter 2026 results; its issued and outstanding common shares rose from 28,938,266 on December 31, 2025, to 32,424,711 on September 30, 2026.

Issuing additional shares increases the total share count and reduces existing holders’ percentage ownership absent offsetting changes. At September 30, 2026, $1.454 million in cash equaled 103.2 days of third-quarter operating cash use at that quarter’s rate.

Sources and calculations

• Fusemachines Q3 2026 results release (2026-11-03)
• Dilution definition (undated)
• Fusemachines Q3 2026 fundamentals (2026Q3)

• Available liquidity against the last reported quarterly operating outflow, in days at that rate $1,454,000 / ($1,296,000 / 92) = 103.2 days

Key Figures

Revenue: $1.85 million; up 2.8% GAAP loss from operations: $2.3 million; improved 14.0% Adjusted EBITDA loss: $1.4 million; improved 39.2% +3 more

Revenue

$1.85 million; up 2.8%

Q3 2026, quarter-over-quarter

GAAP loss from operations

$2.3 million; improved 14.0%

Q3 2026, quarter-over-quarter

Adjusted EBITDA loss

$1.4 million; improved 39.2%

Q3 2026, quarter-over-quarter

GAAP net loss

$4.6 million

Q3 2026, compared with $2.8 million in Q2 2026

Stockholders’ equity improvement

$9.1 million

Q3 2026

Total operating expenses

$3.3 million; declined 9.8%

Q3 2026, quarter-over-quarter

Key Terms

non-gaap, gaap, derivative liability, going concern

4 terms

non-gaap financial

"Adjusted EBITDA, a non-GAAP financial measure"

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

View in glossary

gaap financial

"The Company’s GAAP loss from operations improved 14.0%"

GAAP, or Generally Accepted Accounting Principles, are a set of standardized rules and guidelines that companies follow when preparing their financial statements. They ensure consistency, transparency, and comparability across different companies, making it easier for investors to understand and compare financial information accurately. This helps investors make informed decisions based on trustworthy and uniform financial reports.

View in glossary

derivative liability financial

"fair value of its forward purchase derivative liability"

A derivative liability is an obligation a company owes because of a derivatives contract—such as an option, future, swap, or forward—that has moved against it and now has negative value. Think of it like a settled bet that turned into a bill: if market moves go the other way, the company may have to pay cash or deliver assets. Investors care because these liabilities can create sudden losses, add leverage or counterparty risk, and change a company’s true financial exposure beyond its everyday operations.

going concern financial

"substantial doubt about its ability to continue as a going concern"

Going concern is the accounting assumption that a company will keep operating and meeting its obligations for the foreseeable future. The phrase matters most when a company or its auditors disclose substantial doubt about it, a formal warning that the business may not have enough resources to continue without raising money, restructuring, or selling assets. That language in a filing or press release signals elevated financial risk.

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Adjusted EBITDA (non-GAAP) improves 39.2%, revenue grows 2.8%, and GAAP operating loss improves 14.0% quarter-over-quarter

NEW YORK, Nov. 03, 2026 (GLOBE NEWSWIRE) -- Fusemachines Inc. (Nasdaq: FUSE) (“Fusemachines” or the “Company”), a leading provider of enterprise AI products and services, today announced its financial results for the third quarter ended September 30, 2026, reporting significant improvements in operating performance, continued quarter-over-quarter revenue growth, and a strengthened stockholders’ equity position.

The Company’s GAAP loss from operations improved 14.0% to $2.3 million, while revenue increased 2.8% to $1.85 million. Its GAAP net loss was $4.6 million, compared with $2.8 million in the second quarter of 2026, and included a $2.2 million non-cash charge associated with the change in the fair value of its forward purchase derivative liability. The Company also reported a 39.2% quarter-over-quarter improvement in Adjusted EBITDA, a non-GAAP financial measure, with its Adjusted EBITDA loss narrowing to $1.4 million from $2.3 million in the second quarter of 2026.

These improvements reflect the impact of the Company's cost-reduction initiatives which have lowered operating expenses without affecting continued revenue growth. The Company also improved stockholders’ equity by $9.1 million during the quarter, reducing its stockholders’ deficit by 52.7%, primarily as a result of forward purchase agreement transactions, and shares issued to settle vendor invoices and employee obligations. The Company continues to have a stockholders’ deficit and negative operating cash flow, and its financial statements disclose substantial doubt about its ability to continue as a going concern.

“Our 39.2% quarter-over-quarter improvement in our Adjusted EBITDA demonstrates the meaningful progress we are making in improving the financial and operational performance of Fusemachines,” said Sameer Maskey, Founder and Chief Executive Officer of Fusemachines. “Our cost-reduction initiatives are delivering measurable results, allowing us to significantly reduce operating losses while continuing to grow revenue. We remain focused on building a more efficient operating structure, strengthening our financial position, and advancing our enterprise AI business.”

Third Quarter 2026 Financial Highlights

• Adjusted EBITDA (non-GAAP) improved 39.2% quarter-over-quarter, with the non-GAAP loss narrowing to $1.4 million compared with $2.3 million in Q2 2026, an improvement of $0.9 million.
• GAAP net loss was $4.6 million, or $.15 per basic and diluted share, compared with $2.8 million, or $.10 per basic and diluted share, in Q2 2026, including a $2.2 million non-cash loss associated with the change in fair value of the forward purchase derivative liability.
• GAAP loss from operations improved 14.0%, narrowing to $2.3 million compared with $2.7 million in the prior quarter.
• Revenue increased 2.8% quarter-over-quarter to $1.85 million compared with $1.79 million in the prior quarter.
• Total operating expenses declined 9.8% to $3.3 million from $3.7 million in Q2 2026.
• Combined cost of revenue and operating expenses declined 7.2% to $4.2 million from $4.5 million, demonstrating improved overall cost efficiency.
• 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, primarily as a result of forward purchase agreement transactions and share issuances for payables and accrued wages.
  

Improving Operational Efficiency While Growing Revenue
During the third quarter, Fusemachines continued executing cost-reduction initiatives designed to improve operating efficiency while supporting the growth of its enterprise AI business.

Total operating expenses declined 9.8% sequentially, with general and administrative expenses decreasing 10.9% and selling and marketing expenses declining 7.0%. Combined cost of revenue and operating expenses fell 7.2% compared with the prior quarter.

Despite these expense reductions, quarterly revenue increased to $1.85 million from $1.79 million, representing 2.8% sequential growth.

The combination of higher revenue and lower operating expenses contributed to a 14.0% improvement in GAAP operating loss and a 39.2% improvement in Adjusted EBITDA, highlighting the effectiveness of the Company's ongoing operational restructuring and cost-management efforts.

Non-GAAP Financial Measures
This press release includes Adjusted EBITDA, a non-GAAP financial measure. Fusemachines defines Adjusted EBITDA as net loss before interest expense, income taxes, depreciation and amortization, adjusted for stock-based compensation, including restricted stock units, changes in fair value, gains or losses on extinguishment of debt and payables, and severance expense.

Management uses Adjusted EBITDA to evaluate the Company’s operating performance and the results of its cost-reduction initiatives, and believes it provides investors with useful supplemental information for comparing operating performance across periods. Management excludes interest expense, income taxes, and depreciation and amortization because these items relate to the Company’s capital structure, tax position and historical investments rather than its current operations. Management excludes stock-based compensation, including restricted stock unit expense, because it is a non-cash expense. Management excludes changes in fair value, including the change in fair value of the forward purchase derivative liability, and gains on extinguishment of payables, because these items are non-cash, result from financing and settlement transactions or changes in the Company’s stock price, and are not indicative of operating results. Management excludes severance expense incurred in connection with the Company’s cost-reduction initiatives because it does not reflect ongoing operating costs.

Adjusted EBITDA is not calculated in accordance with GAAP and should not be considered a substitute for GAAP net loss, operating cash flow, or other GAAP measures. Other companies may calculate similarly titled measures differently.

About Fusemachines
Founded in 2013, Fusemachines is a global provider of enterprise AI products and services, on a mission to democratize AI. Leveraging proprietary AI Studio, AI Engines and AI Agents, the Company helps drive clients’ AI Enterprise Transformation, regardless of where they are in their Digital AI journeys. With offices in North America, Asia and Latin America, Fusemachines provides a suite of enterprise AI offerings and specialty services that allow organizations of any size to implement and scale AI.

Fusemachines continues to actively pursue the mission of democratizing AI by providing high-quality AI education in underserved communities and helping organizations achieve their full potential with AI.

To learn about Fusemachines,visit www.fusemachines.com

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of applicable securities laws that involve substantial risks and uncertainties. Any statements, other than statements of historical fact included in this press release, are forward-looking statements, including statements concerning the Company's business strategy, operational efficiency, cost-management initiatives, future growth, financial position, financing plans, and efforts to maintain its Nasdaq listing. Forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied.

These risks include, among others, the Company's ability to obtain additional financing, manage liquidity, continue as a going concern, sustain operating cost reductions, retain and attract customers, commercialize its AI offerings, strengthen stockholders’ equity, and maintain compliance with applicable Nasdaq listing requirements; the impact of changes in the fair value of the forward purchase derivative liability; and dilution from equity issuances. Additional risks and uncertainties are described under the heading “Risk Factors” in the Company's most recent Annual Report on Form 10-K and in subsequent filings with the U.S. Securities and Exchange Commission, including its Quarterly Reports on Form 10-Q, which are available on the SEC's website at www.sec.gov.

You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Except as required by applicable law, Fusemachines undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media Contact:

pr@fusemachines.com

Investor Contact:

ir@fusemachines.com

+1 347 212-5075

Fusemachines Inc. and Subsidiaries Condensed Consolidated Interim Balance Sheets (all amounts in USD, in thousands, except number of shares and per share data)
		September 30, 2026				December 31, 2025
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			1,454				4,221
Accounts receivable, net			1,400				1,264
Unbilled revenue			16				16
Prepaid expenses and other current assets			575				753
Customer incentive asset, current			193				-
Total current assets			3,638				6,254
Property and equipment, net			244				305
Customer incentive asset, non-current			364				-
Intangible assets, net			259				206
Deferred tax assets			11				11
Operating lease right-of-use assets			482				744
Other assets			11				16
Total assets			5,009				7,536
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable			4,527				5,012
Accrued expenses and other current liabilities			4,734				4,618
Convertible notes payable, current			1,245				-
Related party loan payable, current			300				300
Forward purchase derivative liability			708				9,692
Operating lease liability, current			45				85
Short term debt			64				342
Cumulative mandatorily redeemable common and preferred stock liability, current			1,063
Total current liabilities			12,686				20,049
Accounts payable non-current			-				143
Warrant liability			30				121
Cumulative mandatorily redeemable common and preferred stock liability, non-current			-				1,048
Operating lease liability			508				751
Total liabilities			13,224				22,112
Commitments and Contingencies
Stockholder’s deficit:
Convertible preferred stock ($0.0001 par value, 5,000,000 shares authorized as of September 30, 2026 and December 31, 2025, respectively; Nil shares issued as of September 30, 2026 and December 31, 2025, respectively; Nil shares outstanding as of September 30, 2026 and December 31, 2025)			-				-
Common stock ($0.0001 par value, 500,000,000 shares authorized as of September 30, 2026 and December 31, 2025; 32,424,711 shares and 28,938,266 shares issued and outstanding as of September 30,2026 and December 31, 2025, respectively)			4				3
Additional paid in capital			35,821				31,311
Share subscription receivable			(738	)			(11,005	)
Accumulated deficit			(43,573	)			(35,145	)
Accumulated other comprehensive income			271				260
Total stockholders’ deficit			(8,215	)			(14,576	)
Total liabilities and stockholders’ deficit			5,009				7,536

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Fusemachines Inc. and Subsidiaries Condensed Consolidated Interim Statements of Operations and Comprehensive Loss (all amounts in USD, in thousands, except number of shares and per share data)
		Three Months ended, September 30								Nine Months ended, September 30
		2026				2025				2026				2025
		(Unaudited)								(Unaudited)
Revenue			1,845				1,792				5,518				5,779
Cost of revenue			(864	)			(796	)			(2,626	)			(2,488	)
Gross Profit			981				996				2,892				3,291
Operating expenses:
Selling and marketing			356				293				1,151				934
General and administrative			2,653				1,632				8,904				5,131
Research and development			286				165				876				489
Total operating expenses			3,295				2,090				10,931				6,554
Loss from operations			(2,314	)			(1,094	)			(8,039	)			(3,263	)
Other (expense) income:
Interest expense			(353	)			(74	)			(459	)			(213	)
Loss on extinguishment of convertible notes payable			-				-				-				(391	)
Gain on extinguishment of payable			105				-				612				-
Gain/(loss) on change in fair value of convertible notes and warrant liability			42				(61	)			91				(1,405	)
Loss on change in fair value of forward purchase derivative liability			(2,212	)			-				(604	)			-
Other (expense) income			109				55				59				59
Total other (expense)/income, net			(2,309	)			(80	)			(301	)			(1,950	)
Loss before income taxes			(4,623	)			(1,174	)			(8,340	)			(5,213	)
Provision for income tax			-				-				(4	)			-
Net loss			(4,623	)			(1,174	)			(8,344	)			(5,213	)
Deemed dividend related to Shortfall Warrants modification											(84	)			-
Net loss attributable to common stockholders (i)			(4,623	)			(1,174	)			(8,428	)			(5,213	)
Weighted-average common shares outstanding - basic and diluted (ii)			30,586,609				7,672,654				29,502,942				7,406,332
Net loss per common share - basic and diluted (i/ii)			(0.15	)			(0.15	)			(0.29	)			(0.70	)
Other Comprehensive income (loss)
Net loss			(4,623	)			(1,174	)			(8,344	)			(5,213	)
Change in foreign currency translation adjustment			2				8				11				8
Total comprehensive loss			(4,621	)			(1,166	)			(8,333	)			(5,205	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

Fusemachines Inc. and Subsidiaries Condensed Consolidated Interim Statements of Cash Flows (all amounts in USD, in thousands)
		Nine months ended September 30,
		2026				2025
			(Unaudited)
Cash flows from operating activities
Net Loss			(8,344	)			(5,213	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment			74				73
Amortization of intangible asset			103				66
Amortization of customer incentive asset			22				-
Provision for credit losses			-				46
Stock-based compensation			1,309				176
Amortization of right-of-use assets			215				65
Amortization of convertible note discount			294				-
Changes in fair value of convertible notes at fair value and warrant liability			(91	)			1,405
Change in fair value of forward purchase derivative liability			604				-
Accretion of cumulative mandatorily redeemable common and preferred stock liability			83				71
Loss on extinguishment of debt			-				391
Gain on extinguishment of payable			(612	)			-
Unrealized foreign exchange gain/(loss)			-				(7	)
Changes in operating assets and liabilities:
Accounts receivable, current, net			(208	)			87
Unbilled revenue			(20	)			56
Prepaid expenses and other current assets			185				(44	)
Accounts receivable, net			-				4
Other assets			4				(7	)
Accounts payable			(156	)			1,989
Operating lease liabilities			(232	)			(53	)
Accrued expenses and other current liabilities			1,963				461
Deferred revenue			-				(54	)
Net cash used in operating activities			(4,807	)			(488	)
Cash flows from investing activities
Costs capitalized for internally developed software			(157	)			(72	)
Purchases of property and equipment			(27	)			(8	)
Net cash used in investing activities			(184	)			(80	)
Cash flows from financing activities
Proceeds from Convertible notes payable, current			2,050				180
Repayment of Convertible notes payable, current			(224	)			-
Proceeds received from sales of forward purchase agreement shares			679				-
Payment of director and officer insurance liability (short term debt)			(376	)			-
Proceeds from director and officer insurance liability (short term debt)			98				-
Payment of deferred transaction costs			-				(5	)
Net cash (used in) / provided by financing activities			2,227				175
Effect of exchange rate changes on cash and cash equivalents			(4	)			(1	)
Net change in cash and cash equivalents			(2,767	)			(394	)
Cash and cash equivalents at beginning of the period			4,221				500
Cash and cash equivalents at end of the period			1,454				106
Supplemental disclosures of cash flow information
Cash paid for income taxes			22				18
Cash paid for interest			12				-
Non-cash investing and financing activities:
Deemed dividend related to shortfall warrant modification			84				-
Common Stock issued upon cashless exercise of stock options			39				707
Unpaid deferred transaction costs as of the end of the period			-				507
Waiver of deferred transaction costs as of the end of the period			-				505
Issuance of shares vested upon repayment and forgiveness of 2023 Promissory Notes			-				3
Warrants issues in connection with new Convertible Notes (Refer note 6)			231				-
Shortfall warrant amendment (Refer note 16)			494				-
Issuance of common stock as consideration payable to customer (Refer note 4)			578
Issuance of common stock to settle outstanding severance pay of employees (Refer note 9)			460				-
Issuance of common stock to settle outstanding invoices of vendor (Refer note 18)			1,298				-
Adjustment of share subscription receivable on account of partial early termination of forward contract (Refer note 15)			9,588
(Loss)/Gain on extinguishment of debt			-				(391	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were Fusemachines’ Q3 2026 revenue and net loss?

Fusemachines reported $1.845 million in revenue and a $4.623 million net loss for the quarter ended September 30, 2026. Revenue rose 2.8% from Q2, while net loss widened from $2.8 million. Basic and diluted loss per share was $0.15.

How much did Fusemachines’ adjusted EBITDA improve in Q3 2026?

Fusemachines’ adjusted EBITDA loss narrowed 39.2% quarter over quarter to $1.4 million from $2.3 million. Adjusted EBITDA is a non-GAAP measure and is not a substitute for GAAP net loss or operating cash flow.

What does Fusemachines exclude from adjusted EBITDA?

Fusemachines excludes interest, income taxes, depreciation and amortization, as well as stock-based compensation, fair-value changes, gains or losses on extinguishment of debt and payables, and severance expense. The measure is intended to supplement, rather than replace, GAAP financial results.