Datasea 2026 Q1 Earnings 89.8% Net Loss Reduction Amid Revenue Drop

Datasea (DTSS) reported fiscal 2026 Q1 earnings on Nov 14, 2025, with a 34.5% revenue decline to $13.81 million but a significant 89.8% reduction in net loss to $-201,159. While the results aligned with management’s strategic pivot to high-margin services, the persistent seven-year quarterly losses highlight ongoing challenges.

Revenue

Datasea’s total revenue fell 34.5% year-over-year to $13.81 million in Q1 2026. The 5G AI Multimodal communication segment remained the primary contributor at $13.33 million, with new vertical solutions adding $920,000 in revenue. Acoustic Intelligence Business and Ultrasonic Sound Disinfection Equipment generated $488,000 and $479,000, respectively, while digital technical services and sleep monitoring accounted for smaller portions at $4,593 and $6,056. The decline reflects management’s deliberate restructuring toward higher-margin technology services, though the shift has yet to reverse the overall revenue trajectory.

Earnings/Net Income

The company narrowed its net loss to $-201,159 in Q1 2026, an 89.8% improvement from $-1.97 million in the prior year. Earnings per share improved to a loss of $0.02 from $0.49, driven by cost rationalization and a shifted revenue mix. Despite these gains, Datasea has sustained losses for seven consecutive years in the same quarter, underscoring structural challenges in achieving profitability. The 8.46% gross margin, up from 0.93%, indicates progress in margin optimization but remains insufficient to offset prolonged operational costs.

Price Action

Post-earnings, Datasea’s stock price edged down 2.29% in the latest trading day, declined 5.00% during the most recent week, and fell 14.50% month-to-date. The mixed performance reflects investor skepticism about the company’s ability to sustain margin improvements while managing recurring losses.

The stock’s post-earnings decline suggests market uncertainty despite the reduction in net losses.

CEO Commentary

Management emphasized a strategic pivot from scale to profitability, prioritizing high-margin 5G+AI and acoustic solutions. CEO Zhixin Liu highlighted continued R&D in acoustic AI and neuro-regulation, framing the results as a step toward sustainable commercialization. The tone remained cautiously optimistic, acknowledging the need for sustained execution in margin expansion and R&D commercialization.

Guidance

Datasea provided no explicit forward-looking guidance for Q2 2026. However, management reiterated its focus on high-margin technology services and acoustic product development, aligning with prior commitments to long-term profitability.

Additional News

1. Acoustic Smart Health Shoes Contract: Datasea secured a $1 million agreement for acoustic health insoles, marking entry into the $1 trillion wearable market.

2. Acoustic Technology Breakthrough: The company advanced AI-driven acoustic neuromodulation for healthcare, targeting a $100 billion global market by 2030.

3. $100M 5G+AI Contracts: New partnerships with Qingdao clients reinforced Datasea’s strategic expansion in digital services, supporting FY2026 growth.

Datasea’s strategic repositioning toward high-margin offerings has yielded margin improvements but faces headwinds in revenue stabilization and long-term profitability. Investors remain cautious amid persistent quarterly losses and mixed stock performance.