SideChannel (SDCH) Q3 2026 earnings summary

Executive summary

• Q3 FY 2026 revenue was $1.8 million, up 1.2% year-over-year, marking the first revenue growth in five quarters and reversing a long-term shrinking trend.

• Gross margin improved to 54.9% in Q3, up 790 basis points from 47.0% last year, with year-to-date gross margin at 53.2%.

• Net loss for Q3 narrowed to $134,000 ($0.03/share) from $261,000 ($0.06/share) last year; year-to-date net loss was $974,000, up from $510,000.

• The business mix shifted toward higher-margin cybersecurity software and services, with increased AI integration and platform enhancements.

• Substantial doubt remains about the ability to continue as a going concern due to recurring losses and limited liquidity.

Financial highlights

• Q3 revenue: $1.8 million, up $21,000 (1.2%) year-over-year; year-to-date revenue: $5.1 million, down 7.7%.

• Gross margin: 54.9% for Q3, 53.2% year-to-date, both up from prior year.

• Net loss: $134,000 ($0.03/share) for Q3; $974,000 ($0.22/share) year-to-date.

• Operating expenses increased year-over-year, mainly due to higher selling, marketing, and R&D costs.

• Cash and short-term investments at quarter end: $326,000, down from $1.165 million at prior year-end.

Outlook and guidance

• Management aims to expand Enclave platform adoption, convert pipeline into new clients, and maintain cost discipline.

• Ongoing investment in AI and product offerings is expected, but additional capital or operational changes are needed to address going concern risks.