SemiLEDs Corporation Reports 49% Revenue Decline but Improved Profitability in Q3 2026

SemiLEDs Corporation reported a significant decline in financial performance for the third quarter and nine months ended May 31, 2026, as detailed in its latest 10-Q filing. The company generated net revenues of $9.1 million for the three months ended May 31, 2026, a 49% decrease from $17.7 million in the same period last year. For the nine months, revenues fell 57% to $12.7 million from $29.8 million. The decline was primarily attributed to a substantial reduction in sales from buy-sell purchase orders of equipment, which accounted for a significant portion of the company's revenue.

Despite the drop in revenue, SemiLEDs reported a net income of $1.5 million for the three months ended May 31, 2026, compared to a net income of $223,000 for the same period in 2025. This improvement in profitability was driven by a gross profit margin increase to 27% from 5% year-over-year, largely due to better margins on the remaining buy-sell orders. The company's cost of revenues also decreased significantly, down 60% to $6.6 million, reflecting the reduced volume of equipment sales.

Operationally, SemiLEDs has made strategic adjustments, including a focus on enhancing its LED components and lighting products, which saw increased sales during the quarter. Sales of LED components rose to $998,000 from $360,000, while lighting products increased to $90,000 from $47,000. The company continues to concentrate its efforts on niche markets, particularly in Japan, the United States, India, and the Netherlands, where it has historically generated most of its revenue.

As of May 31, 2026, SemiLEDs reported cash and cash equivalents of $6.0 million, a notable increase from $2.6 million a year earlier. The company has implemented cost reduction measures and is exploring opportunities to sell certain manufacturing equipment to improve liquidity. However, it acknowledged the uncertainty surrounding future buy-sell orders and the potential for revenue fluctuations in upcoming quarters. The management expressed confidence in its liquidity plan, which includes raising additional capital through equity offerings and optimizing operational efficiencies to meet its financial obligations.

Looking ahead, SemiLEDs aims to stabilize its revenue streams by continuing to focus on higher-margin products and expanding its market presence. The company is also committed to managing its costs effectively while navigating the challenges posed by competitive pressures and market conditions. The outlook remains cautious, with management emphasizing the need for successful execution of its strategies to ensure sustainable growth and profitability in the future.