XMax shares declined following its second-quarter earnings report, even as its strategic pivot toward artificial intelligence continues to support top-line growth.
Shares of XMax Inc. (XMAX) have declined 3.8% since the company reported earnings for the quarter ended June 30, 2026, outpacing the S&P 500 Index’s 2% loss over the same period. Over the past month, XMAX fell 0.6%, compared to a 1.7% gain for the S&P 500.
For the second quarter of 2026, XMax reported net sales of $2.7 million, a 7.1% increase from $2.6 million a year earlier. Net income reached $32.4 million, or 53 cents per share, reversing a net loss of $289,907, or 2 cents per share, recorded in the prior-year quarter.
Revenue from residential and commercial furniture sales dropped 35.9% to $1.6 million from $2.6 million, while newly launched API-based services contributed $1.1 million in revenue against zero a year earlier. The furniture segment generated an operating income of $314,123, whereas the API-based services segment posted an operating loss of $605,816.
Overall gross profit decreased 15.1% to $1.1 million from $1.3 million, with gross margin contracting to 40% from 50%. However, excluding API-based service revenues, gross margin expanded to 73% from 50%, reflecting a greater mix of higher-margin furniture products. Operating expenses rose 55.9% to $2.3 million from $1.5 million. While selling expenses declined 6% to $290,479, general and administrative expenses surged 72.3% to $2 million, primarily due to increased cloud service and filing fees. Consequently, XMax recorded an operating loss of $1.2 million, compared to $196,494 a year earlier.
The company concluded June with $34.6 million in cash and cash equivalents, up from $6.7 million at the end of 2025. Total current assets grew to $46.9 million from $11.8 million, and working capital stood at $45.3 million as of June 30, 2026, compared to $9.4 million on December 31, 2025. For the first six months of 2026, operating activities consumed $4.3 million in cash versus $230,104 a year earlier, while financing activities provided $45.3 million.
CEO Xiaohua Lu described the quarter as transformative, citing the launch of XMax's API platform and the generation of its first AI-related revenues. Management stated that the company intends to build scalable AI software and platform-based services through XMax AI Inc. in the United States and Elonx AI Holdings PTE. LTD. in Singapore. XMax also highlighted service agreements with new customers as steps toward establishing its AI infrastructure and serving enterprises seeking to incorporate advanced AI capabilities into commercial applications.
The sharp improvement in reported earnings was primarily investment-driven rather than the result of operating profitability. Other income totaled $41.5 million against an expense of $94,410 a year earlier, largely because XMax recognized a $42.1 million unrealized gain on its investment in Preamble Capital. The gain also resulted in $7.8 million of deferred income tax expense. At the operating level, furniture demand remained under pressure. Management attributed lower furniture sales to challenging market conditions and tariffs, while the first contribution from API-based services helped consolidated revenues grow. The new AI services also weighed on the overall gross-margin profile because of their initial cost mix.
XMax advanced a strategic expansion into AI during the period while retaining furniture as a principal business line. The company incorporated XMax AI Inc. in Nevada on April 1 and Elonx AI Holdings PTE. LTD. in Singapore on June 4. Both businesses focus on enterprise AI infrastructure and Model-as-a-Service solutions delivered through cloud-based inference APIs, with revenues based on customer compute usage. The expansion represents a significant diversification of XMAX's operations, with management targeting areas including AI software, cloud and GPU compute infrastructure, model access and enterprise AI deployment while continuing to operate its established furniture business.
Additionally, XMax entered into a June 24 term sheet for a proposed joint venture transaction to acquire a 68% stake in a company that is owned by two professors for $4 million. The company paid a $500,000 deposit upon execution of the term sheet.
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