Q2 FY2026
Filed Aug 20, 2026Revenue recovered sequentially as Daqo resumed sales, but polysilicon pricing below production cost kept gross margin at negative 132.0% and net loss attributable to shareholders at $81.2 million.
Sales volume and revenue improved from Q1 2026 and operating losses narrowed, but the Company remained deeply loss-making as polysilicon ASP of $4.04/kg was below average total production cost of $5.95/kg and average cash cost of $4.57/kg.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $62.7 million | – | – |
| Cost of revenuesGAAP | $145.4 million | – | – |
| Gross lossGAAP | $82.7 million | – | – |
| Gross marginGAAP | negative 132.0% | – | – |
| Selling, general and administrative expensesGAAP | $15.8 million | – | – |
| Research and development expensesGAAP | $1.6 million | – | – |
| Total operating expensesGAAP | $15.4 million | – | – |
| Loss from operationsGAAP | $98.1 million | – | – |
| Operating marginGAAP | negative 156.5% | – | – |
| Net lossGAAP | $112.4 million | – | – |
| Net loss attributable to Daqo New Energy Corp. shareholdersGAAP | $81.2 million | – | – |
| Loss per basic ADSGAAP | $1.20 | – | – |
| Loss per diluted ADSGAAP | $1.20 | – | – |
| Adjusted net loss attributable to Daqo New Energy Corp. shareholdersnon-GAAP | $81.2 million | – | – |
| Adjusted loss per basic ADSnon-GAAP | $1.20 | – | – |
| Adjusted loss per diluted ADSnon-GAAP | $1.20 | – | – |
| EBITDAnon-GAAP | negative $29.3 million | – | – |
| EBITDA marginnon-GAAP | negative 46.8% | – | – |
| Polysilicon production volumeother | 43,675 MT | – | – |
| Polysilicon sales volumeother | 15,190 MT | – | – |
| Polysilicon average total production costother | $5.95/kg | – | – |
| Polysilicon average cash costother | $4.57/kg | edging down by 0.4% | – |
| Polysilicon average selling priceother | $4.04/kg | – | – |
Q3 2026 and full year of 2026 outlook
- NoteQ3 2026 polysilicon production volume: approximately 40,000 MT to 45,000 MT
- NoteFull year of 2026 polysilicon production volume: approximately 160,000 MT to 180,000 MT, inclusive of the impact of the Company's annual facility maintenance
Capital returns
- $7.8 million in stock repurchases made by the Company's subsidiary, Xinjiang Daqo, from its minority shareholders during the six months ended June 30, 2026.
What drove it
- Revenue increased sequentially primarily because higher sales volumes followed the resumption of normal sales activities starting in June.
- Polysilicon sales volume increased to 15,190 MT from 4,482 MT in Q1 2026 after the Company adjusted sales and pricing strategies toward a more market-oriented approach.
- The sequential improvement in gross margin was primarily due to inventory impairment provisions declining to $55.7 million from $98.9 million in Q1 2026.
- SG&A expense increased sequentially primarily due to higher sales volume.
- R&D expense increased primarily due to R&D of next-generation energy solutions for AIDCs.
- The Company operated at approximately 57% of nameplate capacity utilization during the period.
Concerns
- Polysilicon ASP was $4.04/kg, below average total production cost of $5.95/kg and average cash cost of $4.57/kg.
- Gross margin remained negative 132.0%, and operating margin remained negative 156.5%.
- Revenue of $62.7 million was below $75.2 million in Q2 2025, while net loss attributable to shareholders was $81.2 million versus $76.5 million in Q2 2025.
- Management cited weak domestic demand, elevated inventory levels, subdued demand, depressed pricing and accumulating industry-wide inventories.
- Net cash used in operating activities was $276.2 million for the six months ended June 30, 2026.
What to watch
- Q3 2026 polysilicon production against guidance of approximately 40,000 MT to 45,000 MT.
- Whether polysilicon prices recover following the reported stabilization in spot prices and rebound in forward prices of more than 10% from their recent low.
- The relationship between polysilicon ASP and production costs, which were $4.04/kg, $5.95/kg and $4.57/kg, respectively, in Q2 2026.
- Inventory impairment provisions after the Q2 2026 provision of $55.7 million.
- Operating cash use and the balance of readily convertible assets as the Company pursues AIDC energy-solution initiatives.
Balance sheet and cash flow
- Cash, cash equivalents and restricted cash: $555.3 million as of June 30, 2026, compared to $559.4 million as of March 31, 2026 and $598.6 million as of June 30, 2025.
- Short-term investments: $250.0 million as of June 30, 2026, compared to $288.3 million as of March 31, 2026 and $418.8 million as of June 30, 2025.
- Notes receivable balance: $71.7 million as of June 30, 2026, compared to $20.8 million as of March 31, 2026 and $49.0 million as of June 30, 2025.
- Held-to-maturity investment: $51.0 million as of June 30, 2026, compared to $50.3 million as of March 31, 2026 and nil as of June 30, 2025.
- Fixed term deposit within one year: $928.9 million as of June 30, 2026, compared to $1.0 billion as of March 31, 2026 and $960.7 million as of June 30, 2025.
- The Company reported zero debt.
- Aggregate cash, short-term investments, bank notes receivable, held-to-maturity investments and fixed term bank deposit balance was $1.92 billion at the end of Q2 2026, compared to $2.00 billion at the end of Q1 2026.
- Net cash used in operating activities was $276.2 million for the six months ended June 30, 2026, compared to $105.4 million in the same period of 2025.
- Net cash used in investing activities was $159.6 million for the six months ended June 30, 2026, compared to $342.7 million in the same period of 2025.
- Net cash used in financing activities was $7.8 million for the six months ended June 30, 2026, compared to $32.0 thousand in the same period of 2025.
- Net decrease in cash, cash equivalents and restricted cash was $425.0 million for the six months ended June 30, 2026, compared to $439.8 million in the same period of 2025.
Analysis
Daqo's Q2 2026 revenue rose to $62.7 million from $26.7 million in Q1 2026 as the Company resumed normal sales activities in June. Polysilicon sales volume reached 15,190 MT, compared with 4,482 MT in Q1 2026, while production was 43,675 MT. Management attributed the sales recovery to a more market-oriented sales and pricing strategy after it had initially refrained from below-cost sales.
The improved sales volume came with substantial price pressure. Polysilicon ASP fell to $4.04/kg from $5.96/kg in Q1 2026, below both the $5.95/kg average total production cost and $4.57/kg average cash cost. Gross loss narrowed to $82.7 million from $139.4 million, and gross margin improved to negative 132.0% from negative 521.5%. The stated driver was a reduction in inventory impairment provisions to $55.7 million from $98.9 million, rather than a return to positive product economics.
Operating loss narrowed to $98.1 million from $150.8 million and net loss attributable to shareholders narrowed to $81.2 million from $88.4 million. EBITDA improved to negative $29.3 million from negative $83.1 million. Against Q2 2025, however, revenue was lower than $75.2 million, gross margin was worse than negative 108.3%, and net loss attributable to shareholders exceeded $76.5 million. SG&A rose sequentially to $15.8 million on higher sales volume, while R&D rose to $1.6 million due to AIDC energy-solution development.
Liquidity remains a principal offset to operating losses. The Company reported zero debt and an aggregate $1.92 billion balance of cash, short-term investments, bank notes receivable, held-to-maturity investments and fixed term bank deposits at quarter-end, compared with $2.00 billion at the end of Q1 2026. Cash, cash equivalents and restricted cash were $555.3 million. For the six months ended June 30, 2026, net cash used in operating activities was $276.2 million, and net cash used in investing activities was $159.6 million.
Management guided Q3 2026 polysilicon production of approximately 40,000 MT to 45,000 MT and full-year 2026 production of approximately 160,000 MT to 180,000 MT. The guide follows Q2 production above management's previously referenced 35,000 MT to 40,000 MT range, but no prior outlook document was provided for formal guidance comparison. The central operating issue is whether price stabilization and the cited industry measures can lift polysilicon pricing above Daqo's reported production costs.
Management, verbatim
In the second quarter of 2026, market sentiment across the solar PV industry remained cautious amid weak domestic demand and elevated inventory levels, which drove prices lower across the solar value chain.
Mr. Xiang Xu, CEO of Daqo New Energy
As a result, our sales volume increased from 4,482 MT last quarter to 15,190 MT, with average selling price falling to $4.04/kg.
Mr. Xiang Xu, CEO of Daqo New Energy
In light of the current market dynamics, we expect total polysilicon production volume in the third quarter of 2026 to be approximately 40,000 MT to 45,000 MT.
Mr. Xiang Xu, CEO of Daqo New Energy
Not in the filing
stated, not guessed- Segment revenue disclosure
- Q2 2026 operating cash flow
- Q2 2026 free cash flow
- Dividend declaration or payment
- Revenue guidance
- Gross margin guidance
- Operating expense guidance
- Tax-rate guidance
- Prior outlook document for comparison
- Polysilicon average selling price for Q2 2025
- Polysilicon production volume for Q2 2025
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.