Moderna sells vaccines made with messenger RNA, mainly to distributors and governments. European COVID vaccine deliveries and lower research costs helped it earn $130 million from operations in the third quarter of 2026. Yet its operations consumed $2.715 billion of cash over the first nine months, including a large patent settlement. New borrowing gives Moderna more time to develop cancer treatments, while its vaccine business still needs to produce enough cash to support that work.
Analysis period: July–September 2026, with January–September comparisons. Research cutoff: November 7, 2026, New York time; latest company financial update reviewed: November 6.
Source: Moderna’s third-quarter 2026 Form 10-Q, consolidated statements, pp. 7 and 11; management discussion, pp. 38–43.
1. European deliveries revived sales, while COVID still dominates
Nearly all the quarter’s increase in vaccine sales came from Europe. Moderna delivered more COVID vaccines under long-term government partnerships. These contracts are helping it grow even though its U.S. vaccine sales were slightly below the same quarter last year.
The geographic comparison shows where the recovery occurred. These are sales to customers in each region, rather than a count of people vaccinated.
| Net product sales, US$ millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| United States | 782 | 771 | 901 | 914 |
| Europe | 16 | 314 | 16 | 569 |
| Rest of world | 175 | 188 | 255 | 236 |
| Total | 973 | 1,273 | 1,172 | 1,719 |
Europe supplied $298 million of the $300 million quarterly increase. Over nine months, its growth also offset a decline in the rest of the world. Moderna has therefore established a more useful international source of sales, but these figures do not establish a broad recovery in vaccination demand across all markets.
Source: 2026 Form 10-Q, Note 3, p. 15; management discussion, p. 38. Regional contributions are calculated from the reported figures.
Government partnerships also pay Moderna to keep factories ready to manufacture vaccines. This readiness revenue rose to $94 million from $49 million over nine months and is reported separately from product sales. The UK arrangement illustrates the purpose: a ten-year partnership supports local production and the ability to respond to a pandemic. For Moderna, the model adds payment for manufacturing availability alongside payment for doses delivered. Maintaining that capacity also carries costs.
Sources: 2026 Form 10-Q, Note 4, p. 16, and management discussion, p. 38; 2025 Form 10-K, Note 4, “Stand-Ready Manufacturing Revenue”; Moderna’s description of its UK manufacturing facility, March 27, 2026.
The product mix remains narrow. Spikevax and mNEXSPIKE generated $1.244 billion, or 97.7% of quarterly product sales. The vaccine against respiratory syncytial virus (RSV), mRESVIA, improved to $29 million from $2 million, but remains small. The new flu vaccine mFLUSIVA contributed an immaterial amount after its September launch, and the flu/COVID combination vaccine had not been commercialized by September 30. Five approved products thus represent a wider future offering than the current revenue base.
Source: 2026 Form 10-Q, Notes 1 and 3, pp. 12 and 15. COVID’s share is calculated as $1,244 million divided by $1,273 million.
2. Research cuts restored quarterly profit, but the year remains loss-making
Research cuts were essential to the return to quarterly profit. Quarterly revenue increased 29.2%, while research and development expense fell 27.2%. The combination more than covered higher manufacturing and administrative costs.
| Consolidated results, US$ millions | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Revenue | 1,016 | 1,313 | 1,266 | 1,847 |
| Cost of sales | 207 | 318 | 416 | 1,366 |
| Research and development | 801 | 583 | 2,357 | 1,883 |
| Selling, general and administrative expense | 268 | 282 | 710 | 671 |
| Operating profit / (loss) | (260) | 130 | (2,217) | (2,073) |
| Net profit / (loss) | (200) | 162 | (1,996) | (1,963) |
Operating profit measures the result before investment income, borrowing costs and taxes. Moderna retained 9.9 cents of operating profit per dollar of quarterly revenue, compared with an operating loss of 25.6 cents a year earlier. Investment income helped lift net profit above operating profit, although interest income fell and borrowing costs increased.
Source: 2026 Form 10-Q, consolidated statement of operations, p. 7; management discussion, pp. 39–40. Margins are calculated using total revenue.
Management is concentrating its research budget on selected programs while several large vaccine studies finish or wind down. Spending fell on several vaccine studies, including flu/COVID, RSV and norovirus, and on employees and outside services. Oncology work and COVID studies required after approval partly offset those savings over nine months. The savings reflect a narrower development effort as well as lower spending on the work that continues.
A funding estimate also helped the quarter. Moderna recognized a $33 million benefit from revising earlier estimates under its Blackstone flu-development agreement. That benefit equaled roughly one-quarter of reported operating profit. It should not be assumed to repeat each quarter. Nevertheless, the broader research reduction is supported by the nine-month comparison: research expense fell 20.1% even though Blackstone expense offsets fell to $143 million from $274 million.
Source: 2026 Form 10-Q, Note 5, p. 17; management discussion, p. 39.
Manufacturing did not improve by every measure. Quarterly cost of sales rose to 24.4% of product sales plus manufacturing-readiness revenue, from 20.8%. Moderna attributed the increase mainly to higher sales volume and greater costs for unused manufacturing capacity. Meanwhile, higher legal spending pushed administrative expense up despite savings elsewhere. The profit recovery therefore depends partly on spending choices outside production, rather than uniformly better economics across the business.
Source: 2026 Form 10-Q, management discussion, pp. 39–40. The cost percentages use Moderna’s disclosed revenue scope and are calculated before rounding.
The longer comparison reinforces that point. Third-quarter 2024 revenue was $1.862 billion and research expense was $1.137 billion. In the same quarter of 2026, revenue was still 29.5% below that earlier level, but research expense had fallen to $583 million. Moderna is finding a smaller cost base after the contraction in COVID sales; it has not regained its earlier sales scale.
Source: Third-quarter 2025 Form 10-Q, statement of operations, p. 6, including third-quarter 2024 comparatives; 2026 Form 10-Q, p. 7.
The first nine months tell a less favorable story than the profitable quarter. The March patent settlement with Arbutus and Genevant created an immediate $876 million cost. Removing only that charge helps show the operating improvement, while keeping ongoing license amortization and all other reported costs in the comparison.
| Settlement comparison, US$ millions, before tax | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Reported operating loss | (2,217) | (2,073) |
| Add back initial Arbutus/Genevant settlement expense | 0 | 876 |
| Operating loss excluding that initial charge, calculated | (2,217) | (1,197) |
Calculation notes: This is a narrow, non-GAAP comparison, not an estimate of recurring profit. The 2026 result retains $14 million of license amortization—the cost of the purchased patent rights spread over their useful life—as well as inventory losses, pay in shares, funding benefits and other reported items. It is an operating calculation before tax; no assumed tax benefit has been applied.
Moderna still incurred a substantial loss even on that narrower basis. It also recorded $33 million of tax expense despite the overall loss. Some foreign subsidiaries earned taxable income, while Moderna could not recognize most potential future tax savings from losses elsewhere. Applying a standard tax rate to the settlement adjustment would obscure that treatment.
Source: 2026 Form 10-Q, statement of operations, p. 7; Notes 12 and 14, pp. 28–31.
3. Sales arrived before customer payments, keeping cash use high
The nine-month operating cash outflow improved only slightly despite sales growth. Moderna recorded more sales that customers had not yet paid for. It also paid the patent settlement and built vaccine inventory for the respiratory season.
Net customer receivables—the amounts expected after discounts and similar deductions—rose from $184 million at year-end to $1.367 billion. The cash-flow statement shows $1.184 billion tied up in additional receivables, compared with $703 million in the first nine months of 2025. The disclosed issue is collection timing: recorded sales had not yet become cash available for research or bills.
Source: 2026 Form 10-Q, balance sheet, p. 6; cash-flow statement, p. 11; Note 9, p. 22; management discussion, pp. 41–42.
Distributors generally do not pay Moderna in advance, while some government and other arrangements do. The cash-flow statement recorded a $160 million benefit from the change in advance customer payments. That partly offset the collection gap and the $159 million used to build inventory. The balance of payments received or billable before revenue recognition reached $407 million, but Moderna still owes the associated goods or services.
| Cash generation and investment, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Operating cash flow | (2,803) | (2,715) |
| Cash paid for property and equipment | 153 | 146 |
| Free cash flow, calculated | (2,956) | (2,861) |
| Cash paid for intangible assets | 10 | 74 |
| Cash remaining after both types of investment, calculated | (2,966) | (2,935) |
Calculation notes: Free cash flow here means operating cash flow minus cash purchases of property and equipment. Spending rows are positive amounts to subtract. The last row also subtracts intangible-asset purchases; it excludes securities trading and financing.
Source: 2026 Form 10-Q, cash-flow statement, p. 11; Note 9, p. 24; management discussion, pp. 41–42.
The $950 million settlement was paid in July. Of that payment, $876 million relates to the expense already recorded in the first quarter, while $74 million bought patent rights and appears as an investing outflow. Removing the expense from an earnings comparison does not undo the cash payment. The table already includes both parts of the payment.
Sales estimates also affect the eventual cash collected. Moderna recorded $2.597 billion of gross quarterly product sales, then deducted $1.324 billion for contractual discounts, fees, expected returns and rebates. Those deductions leave the $1.273 billion of net product sales reported above. Gross invoices therefore do not represent the revenue Moderna expects to keep.
Over nine months, Moderna lowered its estimate of refunds and other fees on earlier sales by $59 million, increasing revenue. Even after that revision, the recorded obligation for returns and other fees rose from $509 million to $600 million. New expected obligations exceeded amounts settled with customers. These estimates matter because unsold doses can come back from distributors. The filing does not separate price and dose-volume effects sufficiently to attribute the sales increase to better pricing.
Source: 2026 Form 10-Q, Note 3, pp. 15–16, and Note 12, p. 28. The return-provision reconciliation appears in the calculation notes below.
4. New borrowing preserves resources but creates large future repayments
The convertible financing largely replenished cash consumed by the business. Management says the proceeds may support oncology investment and debt repayment. That provides flexibility while new treatments move toward possible launches, but the financing adds obligations that vaccine sales have not yet covered.
Moderna issued $3 billion of convertible notes—bonds that can be exchanged for shares—in September. After $43 million of issuance costs and $329 million spent on options intended to limit the effect of issuing more shares, the transaction supplied $2.628 billion. Cash, cash equivalents and investments together ended September at $7.976 billion, only $159 million below year-end. This near-stable total reflects the financing, rather than cash self-sufficiency.
Only $1.195 billion of the total was cash and cash equivalents. Another $3.976 billion was invested in securities due within a year, and $2.805 billion in securities due after one year through five years. The portfolio mainly holds government and corporate debt. These securities provide resources that can mature or be sold, although sale values can change with market conditions.
Source: 2026 Form 10-Q, cash-flow statement, p. 11; Notes 6 and 11, pp. 18 and 26–27; management discussion, p. 41.
| Financing debt at September 30, 2026, US$ millions | Principal owed | Contractual maturity | Interest terms |
|---|---|---|---|
| Secured term loan | 600 | November 24, 2030 | Variable; approximately 9.23% at September 30 |
| Unsecured convertible notes | 3,000 | March 1, 2032 | No regular interest; special interest possible under specified conditions |
The term loan requires no principal payments before maturity. At its September rate, annual interest on $600 million would be about $55 million, before fees and changes in rates. The convertible notes avoid regular cash interest, but their principal remains payable unless they are converted, redeemed or repurchased earlier. Moderna may settle conversions with cash, shares or a mixture. Certain corporate events can require cash repurchases before maturity.
The debt therefore concentrates repayment needs in 2030 and 2032 rather than the next year. The options are designed to offset some new shares or cash payments above principal, up to a contractual limit. They leave the principal obligation in place. Accounting carrying values are lower than principal because issuance costs are spread over the debt terms.
Source: 2026 Form 10-Q, Note 11, pp. 26–27. The annual interest amount is an illustrative calculation, not a forecast.
Lenders have also committed to provide another $900 million that Moderna has not drawn. The first $400 million is available through November 2027 subject to conditions; the other $500 million is available through November 2028 and also requires specified regulatory milestones. The loan is backed by substantially all company assets and limits additional borrowing, asset sales and certain payments. When its financial test applies, Moderna must hold at least $500 million of qualifying cash and securities at each weekly test date. That minimum rises to $750 million if borrowing under the agreement exceeds $1 billion. The test is waived when the preceding 30-day average total market value of its shares exceeds $5 billion. Moderna reported compliance at September 30.
Facilities and equipment leases also require cash: remaining contractual payments totaled $1.040 billion, including $97 million in 2027. The latest annual purchase-obligation schedule reported $1.438 billion at December 31, 2025, with $481 million due within the following year. The quarterly filing did not supply a refreshed purchase schedule and reported no material change to those commitments. These contracts limit how quickly Moderna can cut spending if sales disappoint. Their payments must be included once when assessing future cash needs.
Sources: 2026 Form 10-Q, Notes 10–11, pp. 25–27, and “Contractual Obligations,” p. 43; 2025 Form 10-K, contractual obligations table, p. 96. The annual purchase amounts are historical commitments, not September balances.
Losses reduced shareholders’ accounting equity—the assets left after subtracting liabilities—to $6.837 billion from $8.650 billion. Employee share issuance and stock compensation partly offset the loss, while the dilution-protection options reduced equity. Moderna paid no cash dividends or share repurchases during the nine months. Shares outstanding rose from about 394 million to 404 million through employee awards and option exercises.
Pay awarded in shares and share options, called stock compensation, was $351 million over nine months. It did not require an equivalent cash payment during the period, but it is part of employee pay and can increase the number of shares. In the profitable quarter, equity awards and the convertible notes increased the share count used for diluted earnings per share. Reported diluted EPS was $0.38, below basic EPS of $0.40. These potential shares are distinct from shares actually issued.
Source: 2026 Form 10-Q, statements of equity and cash flows, pp. 9–11; Notes 13 and 15, pp. 30 and 32. Detailed equity and EPS checks appear below.
5. New vaccines need orders that put more factory capacity to work
A broader vaccine range has not yet removed the cost of unused stock and capacity. Moderna must produce ahead of the respiratory season, while the final number of orders is uncertain. Adding products can help use its manufacturing network, but approval alone does not establish demand.
Inventory, including raw materials expected to be used after one year, rose to $382 million from $267 million. Stock classified for use within a year increased, while raw materials expected to be used later declined. Moderna attributed the cash spent on inventory to production for the 2026–2027 season. It nevertheless charged $133 million to expenses for inventory that had lost value, compared with $147 million a year earlier. Excess quantities, expiration and other adjustments caused these losses. No new losses on firm purchase commitments were recorded, versus $24 million previously. The reduction is progress, but $54 million of unused-capacity costs remained.
Source: 2026 Form 10-Q, Note 7, p. 21; management discussion, pp. 39 and 42.
Moderna spent $146 million in cash on property and equipment, including facilities, manufacturing and laboratory equipment, and computer systems. The recorded value of property and equipment fell to $2.036 billion from $2.134 billion as depreciation built up. Depreciation spreads past spending into expenses over the years those assets are used. Moderna does not disclose how much current spending maintains facilities and how much expands them.
Assets such as patent rights, whose cost is spread over a limited useful life, rose to $102 million from $45 million, chiefly because of the settlement license. That license had a remaining book value of $60 million at September 30. Its business benefit is access to the covered technology for future products.
Source: 2026 Form 10-Q, Notes 8–9 and 12, pp. 22–23 and 28; investing discussion, p. 42.
mFLUSIVA offers a concrete opportunity to win new business. The FDA approved it for adults aged 50 and older in August, but Moderna’s September launch followed the season’s contracting cycle. Its first meaningful commercial test is therefore whether it can secure orders when customers next choose their supplies, rather than the size of its initial quarter.
The clinical comparison supports a selling point with a specific boundary. In the FDA label’s study of adults aged 50 and older, confirmed flu illness occurred in 2.0% of mFLUSIVA recipients versus 2.8% receiving GSK’s standard-dose comparator; the reported relative efficacy improvement was 26.6%. That result does not establish the same advantage over Sanofi’s high-dose Fluzone. Approval for people aged 65 and older relied on immune-response evidence, with confirmatory clinical work still required. The label also reports more frequent short-term reactions than the standard-dose comparator. Moderna must convert the evidence into contracts against established alternatives.
Sources: 2026 Form 10-Q, Note 3, p. 15, and business highlights, p. 34; FDA mFLUSIVA prescribing information, revised August 2026, sections 1, 6.1 and 14, especially Table 5. The 26.6% result is a relative comparison, not a percentage-point difference.
Commercial success also brings payments to development partners. Following mFLUSIVA’s first sale, Blackstone became entitled to a low-single-digit percentage of influenza and combination-vaccine sales, plus milestone payments of up to $750 million. The milestones depend on reaching cumulative sales thresholds. Moderna had recorded no liability for these royalties or milestones at September 30. This arrangement shared development risk, but part of future vaccine revenue will support those obligations.
The flu/COVID combination adds another route to sales, with approvals in Europe and Canada. U.S. refiling still awaited FDA guidance. Norovirus shows the uncertainty in development: an interim analysis in its large Phase 3 trial did not meet the standard for early success. Moderna did not plan to enroll another group that season and was seeking guidance from health authorities. The next development step therefore remained unresolved. Cost discipline and product expansion must therefore be judged together.
Source: 2026 Form 10-Q, Note 5, p. 17; business updates, p. 34.
6. Cancer results support further investment, with costs and profits shared
Intismeran now has stronger clinical evidence, but it is still a development program rather than a revenue source. The treatment is designed around the mutations in an individual patient’s tumor. Moderna and Merck are testing whether adding it to Merck’s KEYTRUDA helps prevent cancer from returning after surgery.
In the Phase 3 trial after surgery for high-risk skin cancer, stage IIB–IV melanoma, the combination reduced the measured rate of cancer returning or death by 42% relative to KEYTRUDA alone. Median follow-up was 24.6 months. Merck’s October 22 disclosure also gives an easier comparison: the estimated proportion alive without recurrence at two years was 82.2% with the combination and 70.0% with KEYTRUDA alone, a 12.2-percentage-point difference.
The benefit was not apparent during the first six months. Longer follow-up is still needed to determine whether patients live longer overall. The results support seeking approval while that follow-up continues. Moderna and Merck were working toward submissions and a possible launch, subject to approval.
Sources: 2026 Form 10-Q, business highlights, p. 33; Merck and Moderna’s Phase 3 disclosure, October 22, 2026, “Study design and additional data”; Moderna’s November 6 results release, oncology update. The 42% measure comes from a hazard ratio of 0.58; the two-year percentage-point difference is a separate calculation.
The partnership reduces what Moderna must pay and shares what it may eventually earn. Development costs and any profits or losses are generally split equally worldwide, subject to contractual exceptions. Moderna primarily handles process development and manufacturing, while Merck generally leads trials. Moderna recorded $293 million of collaboration expense after Merck reimbursements over nine months, versus $304 million a year earlier. These net expenses should not be treated as the cost of the entire joint program.
Source: 2026 Form 10-Q, Note 5, p. 16.
Manufacturing is a central commercial task because each patient needs an individually designed batch. Moderna’s purpose-built Marlborough facility began shipping clinical patient batches in September 2025. That gives it operating experience, while a commercial launch still requires the necessary approvals and reliable delivery at greater scale.
The business opportunity is to add a source of revenue beyond seasonal respiratory vaccines. The decisive steps are approval, successful production for individual patients, and paid treatment demand. The available results support further investment, but they do not yet establish a launch date, selling price or contribution to Moderna’s profit.
Sources: 2025 Form 10-K, “Manufacturing,” pp. 22–23; 2026 Form 10-Q, Note 5 and business highlights, pp. 16 and 33–35.
7. Patent agreements remove some uncertainty, but a large exposure remains
The patent settlements do not eliminate all potential cash claims. The Arbutus/Genevant agreement resolved worldwide disputes and provides infectious-disease licenses without future royalties to those parties. That benefits the existing and future vaccine portfolio, but Moderna may still owe up to another $1.3 billion depending on the outcome of an appeal concerning U.S. government-use liability.
Moderna recorded no liability for that additional amount because it did not consider a loss probable at September 30. This is an accounting judgment, not a finding that payment is impossible. The disclosed maximum is large beside the cash needed for ongoing development. The filing does not estimate a likely payment.
There was also a favorable development after quarter-end. On October 28, Moderna and GSK settled pending U.S. and European disputes through infectious-disease patent cross-licenses, with neither party required to make payments for those licenses. In contrast, a September European Patent Office decision revoked one of Moderna’s patents asserted against Pfizer and BioNTech, leading to dismissal of related proceedings in several countries. Other infringement cases continue, including claims against Moderna. The evidence supports lower uncertainty in specific disputes, rather than assigning a cash recovery or a blanket clearance to its patent portfolio.
Sources: 2026 Form 10-Q, Note 12, pp. 28–29; Part II, Item 1, p. 44, including the October 28 GSK settlement.
8. Moderna has more time to turn its wider product range into cash
Moderna has made operational progress, while financing still supports the transition to a broader business. International deliveries and a smaller research budget have restored quarterly operating profit. The cancer results provide a stronger reason to preserve development capacity. The remaining challenge is turning those advances into cash earnings across a full year.
On November 6, management raised expected 2026 revenue growth to 15%–25%. Using 2025 revenue of $1.944 billion, that implies $2.24–$2.43 billion. Its expense forecasts total about $5.4 billion, including the settlement. Together, those rounded assumptions imply an operating loss of $2.97–$3.16 billion. This is a calculation from management’s outlook, not its own profit forecast.
Management projected $8.1–$8.3 billion of year-end cash and investments, including the convertible financing but excluding further credit-facility draws. That balance measures funding available to support the business.
Sources: Moderna’s November 6, 2026 results release, “2026 Financial Framework,” pp. 2–3; 2025 Form 10-K, consolidated statement of operations, p. 103. Calculations are detailed below.
The business assessment would strengthen if customers pay for seasonal deliveries, new vaccine orders improve factory use, and intismeran reaches an approved, workable commercial model. Slower collections, more unused stock, a further patent payment or delayed launches would consume resources without the expected revenue. Moderna now has more time to execute. The clearest measure of progress will be cash left from product sales after paying for production and continued development.
Reporting basis and calculation notes
Reporting basis: This analysis uses Moderna, Inc. and its consolidated subsidiaries under U.S. GAAP, with intercompany balances eliminated. The selected Form 10-Q, whose interim financial statements are unaudited, covers the quarter ended September 30, 2026, was filed November 6, 2026, and has accession 0001682852-26-000197, CIK 0001682852. Earnings comparisons distinguish the three months from the nine months ended September 30. Balance-sheet comparisons use December 31, 2025. Moderna reports one operating segment; product and regional sales are not separate profit measures.
The research cutoff is November 7, 2026, New York time. The latest financial and business disclosure reviewed is dated November 6; October clinical results and the October 28 settlement are included. Coverage is limited to the documents cited. The supplied full filing text was the foundation, with relevant historical filings, the FDA label and original company disclosures checked alongside it.
Sources: SEC filing index; 2026 Form 10-Q, Note 2; 2025 Form 10-K, Note 2. Selected consolidated facts were cross-checked against SEC company XBRL facts, matching accession, US-dollar units and the actual start and end dates. The 2026 property-and-equipment figure includes assets under financing leases, consistent with the balance-sheet note.
Calculation notes: Dollar inputs below are in US$ millions unless stated otherwise. Parentheses mean negative amounts. Calculations use rounded filing figures, so ratios are approximate.
- Growth and quarterly profit. Revenue growth compares the same periods: $1,313 / $1,016 − 1 = 29.2% for the quarter, and $1,847 / $1,266 − 1 = 45.9% for nine months. Quarterly operating profit reconciles as the prior $260 loss + $297 additional revenue + $218 lower research expense − $111 higher cost of sales − $14 higher administrative expense = $130 profit.
Cost of sales divided by product sales plus readiness revenue is $318 / ($1,273 + $31) = 24.4%, versus $207 / ($973 + $20) = 20.8%. Net profit divided by total revenue is $162 / $1,313 = 12.3%, versus a loss margin of $200 / $1,016 = 19.7% in the prior quarter.
- Profit to operating cash. The cash calculation removes accounting expenses and income that did not use or supply cash in the period. It then includes when customers, suppliers and others actually paid or were paid.
| Profit-to-cash check, US$ millions | First nine months 2025 | First nine months 2026 |
|---|---|---|
| Net loss | (1,996) | (1,963) |
| Net noncash adjustments | 519 | 527 |
| Cash effect of operating-asset and liability changes | (1,326) | (1,279) |
| Operating cash flow | (2,803) | (2,715) |
The 2026 noncash total adds back $351 of pay in shares and $190 of depreciation and amortization, then subtracts $14 of other net adjustments. The remaining adjustments subtract $33 of investment income that did not provide current-period cash, then add back $2 of investment losses and $17 of other noncash expenses. More receivables and inventory used $1,343; the remaining operating-balance changes supplied $64, leaving the $1,279 outflow shown above.
- Opening and closing cash. For 2026, $2,597 opening cash − $2,715 operating outflow − $1,462 investing outflow + $2,776 financing inflow = $1,196 closing cash. These totals include restricted cash: $2 at the start and $1 at the end. For 2025, $1,929 opening cash − $2,803 operating outflow + $1,994 investing inflow + $12 financing inflow + $2 exchange-rate effect = $1,134 closing cash.
The 2026 investing outflow consists of $1,242 net securities purchases, $146 equipment purchases and the $74 license purchase. Financing provided $3,000 from notes and $172 from employee share plans, less $43 issuance fees, $329 options, $7 employee share-settlement taxes and $17 financing-lease payments, totaling $2,776.
- Sales estimates and receivables. Expected returns and other fees reconcile as $509 opening obligation + $300 estimated obligations on current sales − $59 reduction for earlier sales − $1 current-sale settlements − $149 prior-sale settlements = $600. Net receivables are $2,608 gross amounts − $1,235 contractual deductions − $6 allowance for customers who may not pay = $1,367.
Contractual deductions are separate from the much smaller allowance for nonpayment. Balance-sheet receivables increased $1,183; the cash-flow statement reports a $1,184 movement. Each figure is used on its own reporting basis.
- Assets, liabilities and equity. At September 30, $13,468 assets = $6,631 liabilities + $6,837 equity. At December 31, $12,338 assets = $3,688 liabilities + $8,650 equity.
Paid-in capital records amounts contributed through share issuance and share-based pay, with related deductions. Its balance is $1,382 at the start + $162 option exercises + $10 employee stock purchases + $351 stock compensation − $7 employee share-settlement taxes − $329 dilution-protection options = $1,569.
Retained earnings, the accumulated profit left in the business, fell from $7,223 to $5,260 because of the $1,963 net loss. Other comprehensive income records certain value changes outside net profit. Its balance fell from $45 to $8: $33 of net securities-related losses and $4 of currency-translation losses. These movements together reduce equity by $1,813. There were no reported repurchases or share retirements to include.
- Shares and earnings per share. Basic EPS divides quarterly profit by the average shares actually outstanding: $162 / 401 million shares = approximately $0.40. Diluted EPS also considers shares that awards and convertible debt could create. It adds back $1 of convertible interest after tax and adds 24 million potential shares from equity awards and 5 million from the notes: $163 / 430 million shares = approximately $0.38.
The notes' full initial conversion amount is about 14 million shares. The quarterly calculation includes only 5 million because the notes were outstanding for part of the quarter. In loss periods, potential shares are excluded when including them would make the loss per share look smaller. The 2025 quarterly count of 390 million and the 2026 nine-month count of 398 million follow that rule.
- Management’s annual outlook. Revenue: $1,944 × 1.15 = $2,235.6 and $1,944 × 1.25 = $2,430. Expenses: $1,700 cost of sales + $2,700 research + $1,000 administration = $5,400. Subtraction gives a $2,970–$3,164.4 operating loss before interest and tax. These are rounded forecasts and include the settlement expense.
Sources: 2026 Form 10-Q, statements on pp. 6–11, Notes 2–3, 9, 11–15, and management discussion on pp. 39–42; November 6 financial outlook, pp. 2–3; 2025 Form 10-K, p. 103.
This report is for information and business analysis only. It is not investment advice.