Datasea Inc. reported its unaudited financial results for the second quarter of fiscal year 2026, ending December 31, 2025. Revenue rose to $26.68 million, up from $20.5 million in the same period a year earlier. Gross profit surged to $2.32 million, a 278% year‑over‑year increase, and the company’s gross margin expanded to 8.7% from 1.48% in the prior year’s six‑month period.
The dramatic lift in gross profit is driven by a strategic shift toward high‑margin acoustic high‑tech products and away from low‑margin 5G messaging traffic. The mix change has increased the proportion of revenue generated from acoustic solutions, which carry higher gross margins, while the company has maintained disciplined cost control, preventing the higher revenue mix from eroding profitability. The result is a margin expansion that reflects both pricing power in the acoustic segment and operational efficiency gains.
Operating cash flow turned positive, a turnaround from the negative cash flow reported in the prior year’s second quarter. The improvement reflects the combined effect of higher gross profit, tighter cost management, and a more favorable revenue mix. While the exact figure is not disclosed, the positive cash flow signals that the company’s profitability gains are translating into stronger cash generation.
Chief Executive Officer Zhixin Liu said, "The six‑month period ended December 31, 2025 represents an important milestone in the Company’s strategic transformation. While we intentionally moderated the pace of revenue expansion, our gross profit increased by 278% year‑over‑year and gross margin expanded to 8.7%, underscoring the effectiveness of our shift toward high‑value, technology‑driven businesses. We believe the significant improvement in profit quality helps support the Company’s long‑term sustainable development strategy."
The results underscore Datasea’s pivot from legacy low‑margin services to a portfolio centered on acoustic AI and 5G+AI multimodal solutions. By concentrating on high‑margin offerings, the company is positioning itself for long‑term profitability, even as it moderates revenue growth. The strategic focus on acoustic technology also opens new markets in healthcare, wellness, and intelligent devices, providing a broader revenue base for future expansion.
Comparing to the prior year’s second quarter, revenue was $20.5 million and gross profit was $0.4 million, yielding a gross margin of 2.0%. The jump to $26.68 million in revenue and $2.32 million in gross profit, coupled with the margin expansion to 8.7%, illustrates a significant shift in the company’s operating profile. The higher margin and improved cash flow reinforce the narrative that Datasea’s strategic realignment is delivering tangible financial benefits.
Segment data from the prior year shows that the 5G+AI segment generated $13.32 million in revenue, while new vertical solutions contributed $0.92 million. Although specific segment figures for the current quarter are not disclosed, the overall mix shift toward acoustic high‑tech products is a key driver of the improved profitability metrics.
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