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, December 31,
2026 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, Nine Months ended,
September 30 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.
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