Abstract
ZTE will report third-quarter 2026 financial results on October 26, 2026 post-Market, and this preview synthesizes consensus expectations, last quarter’s performance, and this quarter’s forecast to frame what matters most for revenue, profitability, and the stock’s near-term drivers.Market Forecast
For the current quarter, forecasts indicate revenue of RMB 36.68 billion, representing 7.52% year-over-year growth, with estimated EBIT of RMB 2.25 billion (up 17.77% year over year) and adjusted EPS of RMB 0.28 (down 34.12% year over year). Margin guidance is not disclosed in the available forecast; net profit margin is therefore referenced qualitatively in the outlook section, with the consensus focus on operating leverage and mix.Expectations around the core business emphasize steady delivery on connectivity and solutions, with shipment timing skewed to the second half based on the company’s cadence this year. Among business lines, Government and Enterprise is viewed as a key growth engine supported by compute power solutions; in the latest available breakdown it generated RMB 27.63 billion, and analysts widely expect its growth to outpace the company-level 7.52% revenue increase this quarter.
Last Quarter Review
ZTE’s most recently reported quarter delivered revenue of RMB 43.04 billion, up 11.54% year over year, with a gross profit margin of 23.13%, net profit attributable to shareholders of RMB 1.44 billion (net profit margin 3.35%), and adjusted EPS of RMB 0.29, down 47.27% year over year. Revenue surpassed the prior estimate by RMB 3.77 billion (a 9.59% beat), while adjusted EPS fell short by RMB 0.19 against the estimate; net profit grew 10.07% quarter over quarter, indicating sequential improvement in earnings despite EPS pressure.Within the disclosed business mix, Carrier Network contributed RMB 31.77 billion, Government and Enterprise RMB 27.63 billion, and Consumer Business RMB 18.63 billion; the company’s quarter was marked by a revenue beat, stable gross margin in the low-20s, and continued emphasis on R&D and product delivery. On the product side, the portfolio refresh remained active, including new-generation terminal offerings that align with the broader compute power roadmap, supporting second-half execution.
Current Quarter Outlook
Main business: Connectivity and solutions delivery
The principal revenue engine remains connectivity and end-to-end solutions delivery anchored by execution on large projects and steady fulfillment of backlog. The latest quarter’s 23.13% gross margin and 3.35% net margin set a baseline for profitability dynamics heading into this print, and the market will look for any early signs of margin stabilization or incremental improvement as delivery scales through the year’s back half. With last quarter’s revenue outperformance against estimates and a 10.07% sequential increase in net profit, the immediate question is whether this momentum can carry into the current quarter’s shipments without eroding margin.Forecasts point to RMB 36.68 billion in revenue this quarter, up 7.52% year over year, with EBIT of RMB 2.25 billion, up 17.77% year over year. The juxtaposition of a double-digit EBIT increase and a forecast EPS decline of 34.12% suggests moving pieces below the EBIT line and within non-operating items; investors will parse commentary around expenses, financing, and any non-recurring items that could shape reported earnings per share. The company’s cadence this year has skewed deliveries to the second half, and the sell-side expects consistent execution on connectivity projects alongside disciplined cost control to protect the gross margin foundation established last quarter.
Most promising business: Government and Enterprise compute power
Government and Enterprise, supported by compute power offerings, is positioned by multiple institutions as the essential incremental growth vector this quarter. In the latest available mix, this business contributed RMB 27.63 billion, and sell-side previews characterize compute power solutions as expanding within the broader enterprise digitalization opportunity set. The consolidated revenue forecast implies a 7.52% year-over-year increase for the quarter; analysts commonly expect Government and Enterprise to grow faster than this company-level pace as compute power demand builds and delivery cycles align with contract milestones.The positive EBIT forecast growth of 17.77% year over year aligns with a thesis that higher-value projects and solution intensity can enhance operating leverage when volumes are met. Given last quarter’s gross margin of 23.13%, the quality of revenue within Government and Enterprise will be a focal point: projects that bundle hardware, software, and services typically shape contribution margins and cash conversion differently than pure hardware shipments. The investment community will also watch for commentary on order visibility and the handoff to fourth-quarter fulfillment, as that will influence whether the anticipated acceleration in compute power translates into sustained top-line and EBIT momentum into year-end.
Stock price drivers this quarter
Earnings sensitivity this quarter hinges on four parts: revenue delivery against the RMB 36.68 billion forecast, mix-driven margin behavior, EPS bridge dynamics versus EBIT, and the roadmap for fourth-quarter execution. With adjusted EPS forecast at RMB 0.28, down 34.12% year over year despite a forecast EBIT increase, clarity around non-operating items and any timing effects will be essential for the market’s interpretation of underlying performance strength. A repeat of last quarter’s revenue outperformance would support the equity narrative, but investors will likely require confirmation that this does not come at the expense of pricing or incremental cost absorption.New product momentum on the terminal side provides a tangible storyline for the Consumer Business to complement compute power growth, showcased by recent AI-forward devices under the Nubia brand. While terminals typically carry their own margin profiles, the strategic rationale ties back to the broader compute and connectivity ecosystem, potentially enhancing cross-sell and solution stickiness. The approval to issue up to RMB 8.00 billion in corporate bonds to professional investors adds a financing lever that could support growth investments and working capital for larger projects; near-term, the focus will be on how management sequences any issuance relative to operating cash flow, and how that sequencing interacts with interest expense trends over subsequent quarters.
Analyst Opinions
Across our sample within the stipulated time window, bullish opinions dominate with a ratio of bullish to bearish at 5:0. Recent institutional notes consistently emphasize two pillars: connectivity plus compute power as dual engines, and a profit recovery trajectory as execution normalizes in the year’s second half. One prominent institution reiterated a Buy stance in late August with the view that compute power is “accelerating” and the AI product layout is “deepening,” pointing to an improving earnings path as volumes scale. Another institution maintained a Buy rating in early May under the theme “connectivity + compute power dual-drive,” framing the company’s path as one of bottoming and recovery on profitability as new product cycles unfold and as operating leverage returns through delivery.A third institution’s deep-dive earlier this year highlighted “leapfrog growth” in compute power and underscored the link between sustained R&D and long-term competitiveness, a narrative that aligns with the current quarter’s expected EBIT growth of 17.77% year over year. Separately, a comprehensive report from another broker in late January characterized the strategy as “connectivity as the base, compute power as the wing,” effectively capturing the investment case that the market is applying this quarter: the core franchise underwrites stability, while compute power provides upside torque as the delivery profile shifts to the second half. Finally, a consolidated financial preview as of October 19 indicated consensus for a 7.52% year-over-year uplift in quarterly revenue and described the institutional stance as bullish, consistent with the aggregate tone of the research flow we reviewed.
The dominant bullish view stresses three near-term validation points. First, revenue execution: last quarter’s top-line beat of RMB 3.77 billion established that orders are translating into delivery, and the street expects the company to remain on track relative to the RMB 36.68 billion forecast in this print. Second, margin resilience: despite the hybrid mix of hardware, software, and services, maintaining a gross margin foundation around the low-20s is seen as achievable, especially as compute power projects ramp and services content grows. Third, earnings bridge: while adjusted EPS is forecast to decline year over year, analysts expect the EBIT growth profile to anchor the quality of earnings this quarter, with management commentary clarifying any non-operating drags and setting the stage for a cleaner translation into EPS and cash flow in the fourth quarter.
Within that framework, institutions plan to scrutinize a handful of metrics to validate the bullish case. These include the quarterly revenue print relative to RMB 36.68 billion and the year-over-year delta at 7.52%, the evolution of gross margin versus the 23.13% level reported last quarter, and the net margin trajectory against the prior 3.35% marker. On the earnings line, a positive surprise would likely require an EPS outcome closer to flat quarter over quarter rather than the forecast year-over-year decline of 34.12%; however, given the implied strength in EBIT, analysts will tolerate some EPS noise if management credibly attributes it to timing and non-operating factors that are unlikely to persist. With Government and Enterprise positioned as the principal growth contributor—complemented by renewed energy on the Consumer Business franchise through AI-oriented devices—the majority opinion is that the current setup supports a constructive stance into the event, contingent on delivery and an outlook that corroborates a healthy run-rate into the final quarter of the year.
In short, the majority institutional lens frames this quarter as a checkpoint on three dimensions: consistent revenue delivery, mix and margin stewardship as compute power scales, and a clean explanation of the EPS bridge given the stronger EBIT forecast. Provided those elements line up with what the street is modeling, the balance of opinion anticipates confirmation of a gradual profit recovery path, with emphasis on execution in Government and Enterprise and on the reinforcement of the product pipeline that underpins both compute power and terminal momentum into year-end.
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