Revenue of $1,235.8 million beat the $1,070.8 million estimate by 15.4%, up 138.1% year over year on product revenue of $1,073.6 million (+179.4%).
Non-GAAP diluted EPS of $0.94 beat the $0.69 estimate by 36.0%; GAAP diluted EPS was $0.78 against $(0.10) a year ago.
Full-year 2026 guidance raised for the third time this year: revenue $4.4B to $4.6B, non-GAAP operating income $960M to $1,030M, non-GAAP EPS $3.10 to $3.40, non-GAAP gross margin about 34%.
The one thing that matters: the earnings beat did not reach cash. Operating cash flow was negative $27.1 million on $249.0 million of net profit, as contract assets absorbed $430.3 million in the quarter; the release does not say when those convert to billings.
Key metrics
Metric
Reported
Prior year
Change
Revenue
$1,235.8 million
—
+138.1%
Product revenue
$1,073.6 million
—
+179.4%
Non-GAAP gross margin
34.5%
30.4%
+412 basis points
Non-GAAP operating income
$285.7 million
—
+$239.4 million
Adjusted EBITDA
$299,496 thousand
$59,049 thousand
—
Net cash (used in) provided by operating activities
$(27,147) thousand
$19,669 thousand
—
Guidance changes
Item
New guidance
Prior guidance
FY2026 Revenue
$4.4B - $4.6B
—
FY2026 Non-GAAP Gross Margin
~34%
—
FY2026 Non-GAAP Operating Income
$960M - $1,030M
—
FY2026 Non-GAAP EPS
$3.10 - $3.40
—
Quality of earnings
Profit is running well ahead of cash. Net profit of $249.0 million turned into operating cash flow of $(27.1) million, against $226.4 million of operating cash flow in Q2, with contract assets $(430.3) million, inventories $(170.4) million and other long-term assets $(178.0) million the main drains.
The adjusted gap is mostly stock comp. Non-GAAP operating income of $285.7 million sits $60.2 million above GAAP $225.4 million, of which $60.1 million is stock-based compensation.
Below the line helped GAAP EPS. Interest income of $22.1 million and other income of $12.6 million added to pretax profit of $249.8 million, while the tax provision was only $0.8 million.
Gotchas & watch items
Current contract assets rose to $792.8 million from $178.9 million at December 31, 2025, and a new customer consideration asset of $306.5 million ($91.0 million current, $215.5 million long-term) appeared on the balance sheet.
Installation stayed loss-making: installation gross margin was (4.8)% on $84.9 million of revenue, versus 8.9% a year ago.
Capital spending stepped up to $153.5 million in the quarter from $12.3 million a year ago, and cash, cash equivalents and restricted cash fell $180.4 million.
Electricity gross margin fell to 25.7% from 43.8% a year ago.