10-Q · May 5, 2026
RYTHM, Inc. reported substantial revenue growth in Q1 2026, with total revenue of $13.3 million, marking a 2370% increase year-over-year. The company also achieved a gross profit of $10.4 million and a diluted EPS of…
Earnings analysis · 10-Q
RYM earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
RYTHM posted Q2 revenue of $23.021 million, up 1,027% year over year and roughly 77% sequentially, as licensing revenue reached $17.500 million and lifted gross margin to 80.5%. Operating income was $1.936 million and…
Read full summary
RYTHM posted Q2 revenue of $23.021 million, up 1,027% year over year and roughly 77% sequentially, as licensing revenue reached $17.500 million and lifted gross margin to 80.5%. Operating income was $1.936 million and diluted EPS was $0.09, although reported earnings benefited from a $1.205 million quarterly tax benefit and the six-month result included a $26.798 million non-cash tax benefit. Cash flow improved materially, with $9.697 million of six-month operating cash flow, but the $80.0 million of Convertible Notes maturing through February 2027, substantial related-party concentration, and reliance on expected licensing receipts remain key constraints.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.09
What stood out
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Revenue accelerated to $23.0 million
Q2 revenue was $23.021 million, up $20.979 million (1,027%) from $2.042 million a year earlier and approximately 77% above Q1 2026 revenue of $13 million. Growth was led by $17.500 million of Licensing Revenue and $5.521 million of non-licensing product revenue.
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Margins turned sharply positive
Gross margin expanded to 80.5% from 33.4% a year ago, while operating margin improved to 8.4% from negative 332.9%. Gross profit increased $17.854 million to $18.536 million, driven principally by licensing revenue.
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Returned to quarterly GAAP profitability
The company reported diluted EPS of $0.09 versus a diluted loss per share of $3.74 a year earlier. Sequentially, EPS declined from $1.33 in Q1 2026 because Q1 included the bulk of the $26.8 million non-cash deferred-tax benefit recognized year to date.
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Operating cash flow turned positive
Six-month operating cash flow swung to an inflow of $9.697 million from an outflow of $15.138 million. With no investing cash flows during the period, free cash flow was also $9.697 million and capex intensity was 0.0%.
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Cash balance supports near-term liquidity
Management reported $41.9 million of cash and cash equivalents at June 30, 2026 and stated that cash, anticipated contractual licensing revenue, and financing flexibility should cover needs for at least the next 12 months.
What to watch
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Reported earnings rely on non-cash tax benefits
The $0.09 quarterly diluted EPS included a $1.205 million income-tax benefit; year-to-date net income of $21.106 million included a $26.798 million non-cash tax benefit. Underlying Q2 continuing-operations income before tax was a $21 thousand loss.
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Near-term note maturities exceed cash
Convertible Notes total $80.0 million and mature through February 2027, versus $41.9 million of cash at June 30, 2026; $72.0 million is held by a Green Thumb subsidiary. Management acknowledges a cash repayment election could raise substantial doubt about going concern.
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High related-party revenue concentration
Related parties represented $17.7 million of Q2 revenue, or roughly 77% of the $23.021 million total, and $1.8 million of quarterly interest expense. This creates material concentration in both revenue and financing.
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Debt service burden increased
Interest expense rose to $1.727 million from $291 thousand a year ago, reflecting the $80.0 million of Convertible Notes. The notes carry 10.0% annual interest and default interest can accrue at 14.0%.
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No formal risk-factor update
No material changes to risk factors were reported versus the March 3, 2026 Form 10-K. However, the filing continues to state that $80.0 million of note maturities through February 2027 require management attention.
Management's outlook
The 10-Q provides no explicit quantitative revenue or EPS guidance. Management says it believes $41.9 million of cash, anticipated contractual Licensing Revenue, and its ability to address Convertible Notes will fund requirements for at least 12 months after issuance of the financial statements.
Earlier filings 4
10-K · March 3, 2026
RYTHM (formerly Agrify) completed a strategic pivot in 2025 from equipment to consumer packaged goods and brand licensing, acquiring MC Brands (May 20, 2025) and VCP IP (Aug 27, 2025) and beginning to recognize…
10-K · April 15, 2024
Agrify describes a strategy of selling integrated cultivation (VFUs + Agrify Insights SaaS) and extraction equipment, built partly through six acquisitions since 2020 to create a single-provider offering. The company…
10-K · November 28, 2023
Agrify positions itself as an integrated provider of indoor cannabis cultivation and extraction solutions, combining proprietary VFUs and Agrify Insights™ software with an expanded portfolio of six acquired brands since…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.