Executive Summary

Q1 FY2026 revenue fell 32.3% year over year to $5.33M as unit volume declined 38% (10,448 vs. 16,880) and ASP dropped ~$93 to $960; gross margin improved 300 bps to 42.4% on higher rental mix, but net loss widened to $2.01M and EPS to $0.30 due to higher G&A, depreciation and interest expense .
Mix shift: retail revenue declined 45.2% to $3.8M, wholesale rose 42.3% to $1.4M; rental launched contribution at ~$0.1M with 79.8% gross margin, supporting overall margin resilience despite lower volumes .
Balance sheet/liquidity: cash increased to $2.33M from $0.84M at March 31, 2025; short-term loan payables at $6.32M; interest expense spiked to $0.55M, pressuring bottom line .
No formal guidance or call transcript provided; comparability note: all share and per share data reflect the 1-for-5 reverse split effective July 7, 2025 (retroactively applied in filings/press release) .

What Went Well and What Went Wrong

What Went Well
- Margin quality: gross margin rose to 42.4% (+300 bps YoY) aided by rental services’ 79.8% gross margin and lower input costs, partially offsetting volume/ASP pressure .
- Wholesale momentum: wholesale revenue grew 42.3% YoY as dealer network expanded, providing diversification from pressured retail channels .
- CEO tone on strategic execution: “We plan to continue to focus on expanding our geographic presence, enhancing our product and service offerings, and upholding rigorous product safety standards... We are confident that these initiatives will lay a solid foundation for sustainable growth.” .
What Went Wrong
- Demand headwinds: retail revenue fell 45.2% YoY amid heightened consumer concern following lithium-battery incidents in NYC and store closures/dispositions impacting footprint .
- Operating leverage negative: total operating expenses rose 19.7% YoY to $3.77M (higher depreciation, professional fees, and product/software development), driving operating loss to $1.50M .
- Financing burden: interest expense surged to $546K, contributing to the $2.01M net loss and negative EBITDA of $1.27M .

Financial Results

Consolidated P&L trend (oldest → newest)

Metric	Q1 FY2025 (Jun-24)	Q2 FY2025 (Sep-24)	Q3 FY2025 (Dec-24)	Q1 FY2026 (Jun-25)
Revenue ($USD Millions)	$7.87	$6.82	$5.68	$5.33
Gross Profit ($USD Millions)	$3.10	$2.90	$2.56	$2.26
Gross Margin (%)	39.4%	42.6%	45.1%	42.4%
Total Operating Expenses ($USD Millions)	$3.15	$4.14	$3.50	$3.77
Operating Income (Loss) ($USD Millions)	$(0.05)	$(1.23)	$(0.94)	$(1.50)
Net Income (Loss) ($USD Millions)	$(0.18)	$(1.14)	$(0.68)	$(2.01)
Diluted EPS ($)	$(0.01)	$(0.05)	$(0.03)	$(0.30)
EBITDA ($USD Millions)	$0.06	$(1.19)	$(0.80)	$(1.27)

Notes: Shares/EPS figures in Q1 FY2026 and comparatives reflect the April 2, 2024 stock split and July 3, 2025 1-for-5 reverse split (retroactive) .

Segment revenue breakdown (oldest → newest)

Segment Revenue ($USD Millions)	Q1 FY2025	Q2 FY2025	Q3 FY2025	Q1 FY2026
Retail	$6.9	$5.9	$4.9	$3.8
Wholesale	$1.0	$0.9	$0.7	$1.4
Rental Services	$0.0	—	$0.05	$0.1

KPIs and Operating Drivers

KPI	Q1 FY2025	Q2 FY2025	Q3 FY2025	Q1 FY2026
Units Sold (units)	16,880	15,056	9,989	10,448
Average Sales Price ($/EV)	$1,053	—	—	$960
Rental Gross Margin (%)	—	—	—	79.8%
Interest Expense ($USD)	$68,082	$23,795	$155,673	$546,234
Cash ($USD Millions, period-end)	$4.47	$1.27	$1.37	$2.33

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
—	—	—	—	The company did not provide formal quantitative guidance this quarter .

Earnings Call Themes & Trends

Note: No Q1 FY2026 earnings call transcript was available; themes reflect management’s prepared remarks across press releases.

Topic	Previous Mentions (Q2–Q3 FY2025)	Current Period (Q1 FY2026)	Trend
Safety/Regulation	NYC DOT trade-in program launched Jan 2025; Fly-11 PRO selected; focus on UL-certified products .	Reiterated focus on quality/safety amid industry safety concerns; product safety standards emphasized .	Stable emphasis on safety .
Demand/Macro	Demand softened amid NYC lithium-battery incidents; retail pressured .	Continued retail softness from safety concerns; customers shifting to oil-powered vehicles .	Worsening retail demand .
Rental Services	Launch in FY2025; minimal revenue in Q3; margin accretive .	Rental revenue ~$0.1M; 79.8% gross margin; margin support .	Improving contribution .
Wholesale/Dealer Network	Wholesale declined in Q2–Q3 due to store closures at customers .	Wholesale revenue +42.3% YoY on dealer expansion .	Improving wholesale channel .
Technology/App	Ongoing development of Fly E-Bike and Go Fly apps .	Continued product/service portfolio optimization; software development elevated in OpEx .	Continued investment .
Geographic Expansion	Targeting Miami, LA, Toronto; strong Electrify Expo engagement .	Plans to expand geographic presence reiterated .	Stable expansion plan .
Cost Inputs/Supply	Battery cost improvements aided margins .	Supplier pricing still supportive; gross margin aided by mix .	Stable cost tailwind .
Legal/Regulatory	FY2025 included $1.0M settlement payments to UL LLC .	No new legal updates in Q1 PR; continued safety focus .	Neutral .

Management Commentary

“Our wholesale revenue grew by 42.3% year-over-year, driven by the expansion of our dealer network, and our gross margin improved to 42.4%, supported by our rental services business, which achieved a gross margin of 79.8%.” — Zhou (Andy) Ou, CEO .
“We plan to continue to focus on expanding our geographic presence, enhancing our product and service offerings, and upholding rigorous product safety standards… We are confident that these initiatives will lay a solid foundation for sustainable growth.” — CEO .
Prior quarter context: “We achieved a gross margin of 45.1% in Q3 FY2025… Our Fly-11 PRO was selected as the official model for NYC DOT’s $2 million trade-in program.” — CEO .

Q&A Highlights

No Q1 FY2026 earnings call transcript was available; therefore, there are no Q&A takeaways or clarifications to report this quarter [earnings-call-transcript not found].

Estimates Context

Metric	Q1 FY2026 Consensus	Actual
Revenue ($USD Millions)	N/A*	$5.33
Primary EPS ($)	N/A*	$(0.30)
EBITDA ($USD Millions)	N/A*	$(1.27)

*Values retrieved from S&P Global; consensus data were not available for this period via S&P Global.

Implications: With no published consensus, we cannot characterize beats/misses; however, negative operating leverage (higher OpEx and interest) against lower revenue suggests estimate revisions could drift lower on profitability while revenue base resets lower given retail softness .

Key Takeaways for Investors

Mix defense: Despite a 32% revenue decline, gross margin held above 42% on rental mix and supplier pricing improvements; rental’s 79.8% margin is a structural offset worth watching for scale-up potential .
Channel transition: Wholesale strength (+42% YoY) partially offsets retail weakness tied to NYC safety concerns; expanding the dealer network appears to be the near-term growth lever .
Cost/financing pressure: Elevated G&A (professional fees), depreciation, and notably higher interest expense ($546K) drove negative EBITDA ($1.27M) and widened net loss; deleveraging OpEx and refinancing could be catalysts .
Liquidity improved sequentially (cash $2.33M), but short-term borrowings remain high ($6.32M); funding strategy and working capital discipline are key execution watch items .
Safety narrative persists: Ongoing publicized battery incidents continue to weigh on retail demand; company’s emphasis on UL-certified products and NYC DOT program participation remains central to re-building demand .
No guidance/call limits visibility: Absent guidance and transcript reduces near-term estimate confidence; focus on monthly/quarterly segment trends (wholesale bookings, rental fleet utilization) and OpEx trajectory .
Corporate actions: EPS comparability is maintained post 1-for-5 reverse split; monitor listing compliance milestones and any follow-on capital actions after the June 2025 offering .

Appendix: Additional Detail

Operating expense mix (Q1 FY2026): Selling $1.32M (down 18.1% YoY), G&A $2.44M (up 59.5% YoY; higher professional fees, depreciation), total OpEx $3.77M (+19.7% YoY) .
Balance sheet snapshot (June 30, 2025): Cash $2.33M; inventories $5.94M; short-term loan payables $6.32M; current liabilities $10.75M .
Cash flows (Q1 FY2026): CFO $(5.28)M; CFI $(0.41)M; CFF +$7.17M (includes $6.37M net proceeds from common stock issuance) .

Sources: Q1 FY2026 press release and financial statements ; prior-quarter press releases and 8-Ks ; FY2025 press release for legal/expense context ; reverse split 8-K .

Fly-E Group, Inc. (FLYE)·Q1 2026 Earnings Summary