10-Q · May 15, 2026
In Q1 2026, Wetouch Technology (WETH) saw a modest revenue increase of 6.5% year-over-year to $16.3 million, driven by higher sales volume and improved average pricing. The company reported a notable improvement in net…
Earnings analysis · 10-Q
WETH earnings analysis
Filed August 14, 2026 · Our reading of the company's report
The latest report
Wetouch delivered solid year-over-year growth in the second quarter, with revenue up 12.9% to $14.0 million and gross margin up 1.8 percentage points to 34.9%, supported by higher volumes and a shift toward higher-end…
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Wetouch delivered solid year-over-year growth in the second quarter, with revenue up 12.9% to $14.0 million and gross margin up 1.8 percentage points to 34.9%, supported by higher volumes and a shift toward higher-end touchscreens. However, revenue and profitability moderated sequentially from the prior quarter, while $1.0 million of share-based compensation contributed to only 3.2% operating-income growth and net income remained flat at $2.2 million. Cash generation and liquidity were strong, but facility delays, potential funding needs and unremediated material weaknesses remain important concerns.
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.
What stood out
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Revenue grew year over year
Second-quarter revenue was $14.0 million, up 12.9% year over year, driven by a 7.8% increase in units shipped to 663,555 and a 6.0% favorable foreign-exchange impact. Sequentially, revenue declined from $16 million in 2026 Q1 to $14.0 million, or approximately 12.5%.
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Gross margin expanded
Gross profit increased 19.5% year over year to $4.9 million, while gross margin expanded 1.8 percentage points to 34.9% from 33.1%. Management attributed the improvement to higher sales of high-end products, partly offset by labor costs rising 3.4% and material costs rising 2.2%.
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Operating profit remained positive
Operating income increased 3.2% year over year to $3.2 million, implying a 22.9% operating margin versus 25.0% in the prior-year quarter. The result benefited from a $0.4 million, or 44.4%, reduction in G&A expenses, but was pressured by $1.0 million of share-based compensation expense that was nil in the prior-year quarter.
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Broad-based product growth
All disclosed end-application categories grew year over year. Medical touchscreens were the fastest-growing category at 15.0%, followed by POS at 16.5%; automotive revenue was the largest category at $3.536 million, or 25.2% of total revenue.
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First-half earnings improved
Six-month revenue increased 9.4% year over year to $30.3 million and six-month net income rose 25.0% to $6.0 million from $4.8 million. Six-month operating income increased 16.9% to $8.3 million from $7.1 million.
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Liquidity and collections improved
Six-month operating cash flow was $5.5 million, up from $4.7 million in the prior-year period. Cash and equivalents increased to $127.5 million from $118.4 million at December 31, 2025, while DSO improved to 47 days from 56 days.
What to watch
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Facility delays and capital needs
The new facility project has progressed more slowly than expected because of delayed construction-material supplies. Completion is now estimated for the first half of 2027 and production commencement by the end of 2027; total capital requirements are approximately $14.8 million, with $9.1 million recorded in construction in progress as of June 30, 2026.
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Unremediated control weaknesses
Management stated that disclosure controls were not effective at a reasonable assurance level as of June 30, 2026 because previously identified material weaknesses had not been fully remediated. The company cannot assure that remediation efforts will be successful.
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Receivables and customer concentration
Accounts receivable increased $2.6 million during the first six months of 2026 and reduced operating cash conversion, despite DSO improving to 47 days from 56 days at December 31, 2025. The company also reports revenue concentration among a limited number of major customers.
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Potential financing and dilution
The company may seek additional financing if existing cash and operating cash flow are insufficient for the facility project, whose remaining disclosed construction commitment was RMB7.3 million, equivalent to $1.08 million, as of June 30, 2026. Management cautioned that equity financing could dilute shareholders and debt could increase service obligations.
Management's outlook
No explicit revenue or EPS guidance was provided. Management estimates the new facility will be completed by the first half of 2027 and commence production by the end of 2027; it expects cash, operating cash flow and bank borrowings to fund operations and commitments over the next 12 months.
Earlier filings 2
10-K · April 13, 2026
Wetouch Technology (WETH) is a China-based manufacturer of medium- to large-sized projected capacitive touchscreens (7"–42") focused on automotive, POS/financial terminals, gaming/lottery and industrial HMI markets.…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.