Q3 FY2026
Filed Nov 6, 2026Third-quarter revenue rose 17.9% to $640,000, but gross margin fell to 59.2% and net loss widened 87.9% to $3,734,000 on a $1.8 million write-off and about $0.5 million of legal expenses.
Revenue grew 17.9% year over year and total liabilities and related-party debt fell sharply. Against that, gross margin declined from 74.6% to 59.2%, SG&A rose 88.2% including a $1.8 million write-off and about $0.5 million of legal expenses, the net loss widened 87.9%, and the company reported $2.7 million of operating cash outflow in the quarter. No guidance was issued.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenue, Q3 2026 (three months ended September 30, 2026)GAAP | $640,000 | – | 17.9% increase ($97,000) |
| Platform usage revenue, Q3 2026GAAP | $428,000 | – | decreased by $63,000, or 12.8% |
| Professional and managed services revenue, Q3 2026GAAP | $212,000 | – | increased by $160,000, or 307.7% |
| Cost of revenue, Q3 2026GAAP | $261,000 | – | 89.1% increase ($123,000) |
| Gross profit, Q3 2026GAAP | $379,000 | – | – |
| Gross profit margin, Q3 2026GAAP | 59.2% | – | – |
| Selling, general and administrative expenses, Q3 2026GAAP | $4,113,000 | – | 88.2% increase ($1,928,000) |
| Write-off of previously capitalized service contracts included in SG&A, Q3 2026GAAP | $1.8M | – | – |
| Legal expenses related to ongoing litigation included in SG&A, Q3 2026GAAP | approximately $0.5 million | – | – |
| SG&A excluding the write-off and legal expenses, Q3 2026 (company characterization)non-GAAP | decreased by approximately $0.4 million, or approximately 18%, compared to the prior-year period | – | approximately 18% decrease (company estimate) |
| Depreciation and amortization expense, Q3 2026GAAP | $10,000 | – | – |
| Interest expense, Q3 2026GAAP | $2,000 | – | – |
| Net loss, Q3 2026GAAP | $3,734,000 net loss | – | 87.9% increase ($1,747,000) |
| Net loss per share, Q3 2026GAAP | $(0.31) per share | – | – |
| Net cash used in operating activities, nine months 2026GAAP | $5.4M | – | – |
| Net cash used in investing activities, nine months 2026GAAP | zero | – | – |
| Net cash provided by financing activities, nine months 2026GAAP | $7.4M | – | – |
| Cash and cash equivalents, September 30, 2026GAAP | $3.5 million, plus $0.1 million of restricted cash | decreased by $2.3 million | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Platform usage revenueThe filing does not state a segment-level driver for this line. | $428,000 | – | decreased by $63,000, or 12.8% |
| Professional and managed services revenueThe filing does not state a segment-level driver. Management attributes the total revenue increase to completion of customer transactions initiated in prior periods and revenue from new customers acquired in the current period. It attributes the cost of revenue increase to a higher number of on-site events held in the quarter. | $212,000 | – | increased by $160,000, or 307.7% |
Capital returns
- The filing reports no share repurchases and no dividends for the quarter or the nine months.
- Holders exercised stock options to purchase 89,405 shares during the third quarter, providing aggregate cash proceeds of approximately $0.73 million.
What drove it
- Management attributes the revenue increase to completion of customer transactions initiated in prior periods and revenue from new customers acquired in the current period.
- Management attributes the cost of revenue increase primarily to a higher number of on-site events held in the quarter compared with the prior-year period.
- Management attributes the SG&A increase primarily to a $1.8 million write-off of previously capitalized service contracts that had been subject to amortization, and approximately $0.5 million of legal expenses related to ongoing litigation.
- SG&A in the quarter also included an approximately $0.3 million reduction from reversal of previously recognized stock-based compensation associated with forfeited awards.
- Management attributes the decline in depreciation and amortization to capitalized software being fully impaired during 2025, so no software assets were amortized in the quarter.
- Management attributes the decline in interest expense primarily to a lower outstanding short-term loan balance.
- Management attributes the net loss increase primarily to the higher SG&A, including the write-off and legal expenses.
- Management attributes the decline in platform usage revenue to no stated cause in the filing; the filing reports the $63,000 decrease without explanation.
Concerns
- Gross profit margin fell to 59.2% from 74.6% in the prior-year period, and gross profit declined to $379,000 from $405,000 while revenue rose.
- Platform usage revenue, the larger of the two reported revenue lines, decreased 12.8% year over year to $428,000.
- Net loss widened 87.9% to $3,734,000, or $(0.31) per share, against $1,987,000, or $(0.84) per share, in the prior-year period. Per-share figures are presented after the 1-for-15 reverse stock split effective December 1, 2025.
- SG&A rose 88.2% to $4,113,000. The company describes the $1.8 million write-off and about $0.5 million of legal expenses as non-recurring, but the filing does not provide a recurring SG&A figure on a GAAP basis.
- Net cash used in operating activities was $2.7 million in the third quarter alone and $5.4 million for the nine months.
- Cash and cash equivalents declined $2.3 million from June 30, 2026 to $3.5 million at September 30, 2026.
- The filing references ongoing litigation, and legal expenses related to it were about $0.5 million in the quarter. The filing does not describe the litigation.
- The Company appointed an interim Chief Financial Officer effective September 30, 2026.
What to watch
- Whether the professional and managed services revenue gain of $160,000 recurs in coming quarters, given that management attributes it to completed prior-period transactions and new customers.
- Whether platform usage revenue returns to growth as TEN, the new Digital Experience Platform launched in 2026, is adopted and as customers move to subscription arrangements.
- Gross margin trajectory, given that management attributes the cost of revenue increase to a higher number of on-site events.
- Whether SG&A excluding the write-off and legal expenses continues to decline, as the company reports approximately 18% lower SG&A on that basis.
- Cash burn: operating cash outflow of $2.7 million in the third quarter against cash of $3.5 million at September 30, 2026.
- Use of proceeds from the $7.5 million offering closed June 30, 2026 and the Form S-3 shelf registration for $100 million, filed in the quarter.
- Progress of the acquisition strategy described by management.
- Outcome of the ongoing litigation referenced in the filing.
- Appointment of a permanent Chief Financial Officer, given the interim appointment.
Balance sheet and cash flow
- Cash and cash equivalents were $3.5 million plus $0.1 million of restricted cash at September 30, 2026, compared with $1.6 million at December 31, 2025 and $0.3 million at September 30, 2025.
- Management attributes the increase from year-end primarily to gross proceeds of the $7.5 million common stock offering, which closed on June 30, 2026, partly offset by cash used in operating activities.
- Cash and cash equivalents decreased by $2.3 million from $5.8 million at June 30, 2026. Management attributes this primarily to $2.7 million of cash used in operating activities during the third quarter, partly offset by $0.7 million of proceeds from stock option exercises.
- Short-term loans from related parties were $0.1 million at September 30, 2026, compared with $4.6 million at December 31, 2025. Management attributes the decline primarily to settlement of $4.6 million of debt by offsetting against a receivable due from a related party, as well as cash repayments.
- Total liabilities were $2.0 million at September 30, 2026, compared with $7.7 million at December 31, 2025. The filing describes this as a decline of approximately 74%.
- Net cash used in operating activities was $5.4 million for the nine months ended September 30, 2026, compared with $9.0 million in the prior-year period. Management attributes the decrease primarily to the absence of $4.7 million of advances to related parties in the prior-year period, partly offset by a $2.9 million decrease in non-cash stock-based compensation expense, and the absence of a $1.3 million non-cash loss on extinguishment of debt recognized in the prior-year period.
- The filing does not report total assets, total equity, or total debt.
Analysis
TEN Holdings reported third-quarter 2026 revenue of $640,000, up 17.9% from $543,000 a year earlier. Management attributes the increase to the completion of customer transactions initiated in prior periods and to revenue from new customers acquired in the quarter. The mix within revenue moved sharply. Platform usage revenue fell 12.8% to $428,000, while professional and managed services revenue rose 307.7% to $212,000. The filing does not give a segment-level explanation for either line, so the reader cannot tell from the release whether the services gain is recurring. Management describes the strategy as a transition from managed services toward subscription revenue on the TEN platform, which is the opposite direction from the mix shift printed in this quarter.
Profitability weakened. Cost of revenue rose 89.1% to $261,000, which management ties to a higher number of on-site events. Gross profit fell to $379,000 from $405,000, and gross margin declined to 59.2% from 74.6%. SG&A rose 88.2% to $4,113,000, including a $1.8 million write-off of previously capitalized service contracts and about $0.5 million of legal expenses related to ongoing litigation. The company states that SG&A excluding these items declined about 18%, and that the quarter also included an approximately $0.3 million benefit from reversal of forfeited stock-based compensation. Net loss widened 87.9% to $3,734,000, or $(0.31) per share, against $1,987,000, or $(0.84) per share, a year earlier. Per-share amounts reflect the 1-for-15 reverse stock split effective December 1, 2025.
Cash flow and the balance sheet show a different picture. Net cash used in operating activities was $2.7 million in the third quarter and $5.4 million for the nine months, compared with $9.0 million in the prior-year nine months. Management attributes the nine-month improvement mainly to the absence of $4.7 million of related-party advances made in the prior year. Cash and cash equivalents were $3.5 million at September 30, 2026, down $2.3 million from June 30, 2026, and up from $1.6 million at year-end 2025, which management attributes primarily to the $7.5 million offering closed June 30, 2026. Short-term related-party loans fell to $0.1 million from $4.6 million at year-end, and total liabilities fell to $2.0 million from $7.7 million, reflecting an offset of $4.6 million of debt against a related-party receivable.
The company issued no guidance in this filing and did not provide a previous outlook for comparison. Its stated priorities are to expand recurring revenue on TEN, invest in the platform, and pursue acquisitions. The filing discloses a $100 million universal shelf registration on Form S-3, an interim CFO appointment effective September 30, 2026, and a headquarters relocation to New York. Figures in this read are as printed. The filing does not state whether the gross margin, SG&A and net loss figures are presented under U.S. GAAP in every instance, so the basis labels follow the statement line items.
Management, verbatim
Third quarter revenue increased 17.9% year over year to $640,000, as we completed customer engagements that had been initiated in prior periods and added revenue from new customers.
Virgilio Torres, Chairman and Chief Executive Officer, TEN Holdings
Our third-quarter results reflect two significant expenses that we consider non-recurring: a $1.8 million write-off of previously capitalized service contracts and approximately $0.5 million in legal expenses.
Virgilio Torres, Chairman and Chief Executive Officer, TEN Holdings
With TEN now in the market, a leaner cost structure, and a simplified balance sheet, we believe TEN Holdings is positioned to build a more scalable, recurring revenue business and create long-term value for our shareholders.
Virgilio Torres, Chairman and Chief Executive Officer, TEN Holdings
Not in the filing
stated, not guessed- Prior-year and prior-quarter figures for platform usage revenue and professional and managed services revenue in dollar terms (only the changes are printed).
- Change in gross profit and gross margin in percentage points versus the prior year.
- Prior-year depreciation and amortization change in percentage terms.
- Prior-year and prior-quarter comparisons for the quarter's SG&A excluding the write-off and legal expenses in dollar terms.
- Total assets, total equity and total debt at September 30, 2026.
- Operating income or operating loss line, which the filing does not print.
- Income tax line and effective tax rate.
- Non-GAAP reconciliation and non-GAAP EPS, which the filing does not provide.
- Revenue, earnings or cash flow guidance for future periods.
- Previous-period outlook for comparison (no prior release was provided).
- Nine-month prior-year and current-year revenue, gross profit and net loss lines.
- Share price reaction, consensus estimates and analyst expectations, none of which are in the documents.
- Details of the ongoing litigation and the nature of the write-off of capitalized service contracts beyond the amounts stated.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.