Fusemachines reported modest revenue growth and narrower operating losses in the third quarter, as cost reductions lowered expenses. But its GAAP net loss widened from the prior quarter, partly because of a non-cash charge tied to the fair value of a forward purchase derivative liability. The company also reduced its stockholders’ deficit, though it continued to report negative operating cash flow and a substantial doubt about its ability to continue as a going concern.
Key details
- Revenue rose 2.8% quarter over quarter to $1.85 million, from $1.79 million in the second quarter.
- Operating performance improved: GAAP loss from operations narrowed 14% to $2.3 million from $2.7 million.
- Costs declined: Operating expenses fell 9.8% to $3.3 million. Combined cost of revenue and operating expenses decreased 7.2% to $4.2 million.
- Adjusted EBITDA loss narrowed 39.2% to $1.4 million from $2.3 million. Adjusted EBITDA is a non-GAAP measure.
- GAAP net loss increased to $4.6 million, or $0.15 per share, from $2.8 million, or $0.10 per share, in the prior quarter. The third-quarter result included a $2.2 million non-cash loss related to a change in the fair value of the forward purchase derivative liability.
- Stockholders’ deficit shrank by $9.1 million, from $17.4 million at June 30 to $8.2 million at September 30, a 52.7% reduction. The improvement was primarily attributed to forward purchase agreement transactions and shares issued to settle vendor invoices and employee obligations.
- Despite the reduced deficit, Fusemachines said it still had negative operating cash flow and a stockholders’ deficit. Its financial statements included a going-concern warning, indicating substantial doubt about its ability to continue operating.
What changed
The quarter showed better operating results: revenue increased while expenses and the operating loss declined. The higher net loss reflects, in part, a non-cash valuation charge rather than a deterioration in operating performance. The equity improvement was partly tied to financing-related transactions and issuing shares to settle obligations; it did not eliminate the company’s stockholders’ deficit or negative operating cash flow.