BEIJING, Sept. 30, 2026 /PRNewswire/ -- Recon Technology, Ltd (NASDAQ: RCON) ("Recon" or the "Company"), a China-based independent solutions integrator in the oilfield service and environmental protection, electric power and coal chemical industries, today announced its financial results for fiscal year 2026.

Fiscal Year Ended June 30, 2026 Financial Highlights:

• Total revenue increased by approximately RMB43.6 million ($6.4 million) or 65.8% to RMB109.9 million ($16.2 million) for the year ended June 30, 2026 from RMB66.3 million ($9.8 million) for the same period in 2025.
• Gross profit increased to RMB36.5 million ($5.4 million) for the year ended June 30, 2026, from RMB15.2 million ($2.2 million) for the same period in 2025.
• Gross margin increased to 33.2% for the year ended June 30, 2026 from 23.0% for the same period in 2025.
• Net loss was RMB31.6 million ($4.7 million) for the year ended June 30, 2026, a decrease of RMB12.1 million ($1.8 million) from net loss of RMB43.7 million ($6.4 million) for the same period of 2025.

 

Management Commentary

Mr. Shenping Yin, Founder and Chief Executive Officer of Recon, commented: "Fiscal 2026 marked a significant turning point for Recon. Revenue increased by 65.8% to RMB109.9 million, and gross margin was lifted to 33.2%. These factors, when combined, narrowed our net loss compared to the previous year. The primary growth driver was our strategic expansion into overseas oilfield projects.

We are pleased to announce that we have reached a significant milestone that we have been working towards for several years. On 28 September 2026, we held a ceremony to mark the commencement of operations at our waste plastic chemical recycling plant in Weifang, Shandong Province. The plant has been designed to process 40,000 tons of low-value waste plastics per year, with an expected output of 30,000 tons of pyrolysis oil and 6,000 tons of carbon residue. This strategic partnership provides Recon with a solid foundation in the circular economy, offering a new growth opportunity in addition to our core oilfield services.

As we look ahead to fiscal 2027, our strategic priorities are clear as we will bring the chemical recycling plant to commercial production, extend our overseas and offshore oilfield footprint, and rebuild our domestic service capabilities. Oil price volatility and broader macroeconomic conditions continue to present challenges, however, we enter the new year with a more diversified business portfolio, a strengthened margin profile and a diligent cost structure. These elements, we believe, will underpin sustainable, long-term growth for our shareholders."

Fiscal Year Ended 2026 Financial Results:

Revenue

Total revenues for the year ended June 30, 2026 were approximately RMB109.9 million ($16.2 million), an increase of approximately RMB43.6 million ($6.4 million) or 65.8% from RMB66.3 million ($9.8 million) for the same period in 2025.

• Revenue from automation product and software increased by RMB35.6 million ($5.3 million) or 104.5%. The increase was primarily driven by a RMB44.2 million revenue increase from overseas oilfield projects, partially offset by an RMB8.6 million decline in domestic business. The overseas revenue growth benefited from a phase-II oilfield capacity construction of a major overseas automation maintenance project. The domestic business decline was mainly due to reduced maintenance efforts in the domestic market during the period, as our focus shifted towards overseas projects. Going forward, the Company will reallocate personnel from overseas to strengthen domestic market maintenance services.
• Revenue from equipment and accessories increased by RMB9.4 million ($1.4 million) or 51.2%. The increase in revenue from equipment and spare parts was primarily driven by rising demand for new purchases and maintenance of such items. This was due to the ongoing need of domestic oilfield clients to maintain stable production levels.
• Revenue from oilfield environmental protection increased by RMB2.0 million ($0.3 million) or 19.4% primarily due to an increase in the settlement prices for some wastewater treatment clients.
• Revenue from platform outsourcing services decreased by RMB3.5 million ($0.5 million) or 100.00%. FGS's operations were materially and adversely affected by strategic shifts in its major clients' business decisions to terminate online cooperation of third-party companies and unfavorable changes in domestic industry policies. Consequently, FGS's revenue and active business activities declined precipitously, resulting in zero revenue for fiscal year 2026.

Cost of revenue

Cost of revenues increased from RMB51.0 million for the year ended June 30, 2025 to RMB73.4 million ($10.8 million) for the same period in 2026.

For the years ended June 30, 2025 and 2026, cost of revenue from automation product and software was approximately RMB28.6 million and RMB47.2 million ($7.0 million), respectively, representing an increase of approximately RMB18.6 million ($2.7 million) or 65.0%. The increase in cost of revenue from automation product and software was primarily attributable to increased revenue of automation products and software.

For the years ended June 30, 2025 and 2026, cost of revenue from equipment and accessories was approximately RMB13.2 million and RMB20.4 million ($3.0 million), respectively, representing an increase of approximately RMB7.2 million ($1.1 million) or 54.7%. The increase in costs of revenue was primarily driven by expanded business activity, mirroring the same factor behind the growth in revenue.

For the years ended June 30, 2025 and 2026, cost of revenue from oilfield environmental protection was approximately RMB8.5 million and RMB5.7 million ($0.8 million), respectively, representing a decrease of approximately RMB2.8 million ($0.4 million) or 33.1%. While actively pursuing new business opportunities in a constrained market, the Company undertook testing projects. Given their high uncertainty, equipment costs for these projects were fully expensed upon purchase in the prior period, resulting in lower costs in the current period compared to the prior period.

For the years ended June 30, 2025 and 2026, cost of revenue from platform outsourcing services was approximately RMB0.6 million and nil, respectively, representing a decrease of approximately RMB0.6 million ($0.1 million) or 100.0%. The reason for the decrease is consistent with that of the revenue decline.

Gross profit

Gross profit increased to RMB36.5 million ($5.4 million) for the year ended June 30, 2026 from RMB15.2 million ($2.2 million) for the same period in 2025. Our gross profit as a percentage of revenue increased to 33.2% for the year ended June 30, 2026 from 23.0% for the same period in 2025.

• For the years ended June 30, 2025 and 2026, our gross profit from automation product and software was approximately RMB5.5 million and RMB22.5 million ($3.3 million), respectively, representing an increase in gross profit of approximately RMB17.0 million ($2.5 million) or 310.4%. The gross margin expansion to 32.3% was primarily driven by the higher-margin overseas oilfield projects, which contributed RMB44.2 million of revenue, representing approximately 63% of automation segment revenue for fiscal 2026. Excluding the overseas projects, our domestic automation gross margin remained relatively stable.
• For the years ended June 30, 2025 and 2026, gross profit from equipment and accessories was approximately RMB5.2 million and RMB7.4 million ($1.1 million), respectively, representing an increase of approximately RMB2.2 million ($0.3 million) or 42.4%. The increase in gross profit was consistent with the change in revenue. The gross margin for equipment and accessories has remained relatively stable in this period.
• For the years ended June 30, 2025 and 2026, gross profit from oilfield environmental protection was approximately RMB1.7 million and RMB6.6 million ($1.0 million), respectively, representing an increase of RMB4.9 million ($0.7 million) or 288.2%. The lower gross profit in fiscal 2025 was mainly due to testing projects, where the related equipment used for these projects was fully expensed as it was consumed during execution, when we were not sure that revenue from these projects could be recognized. The increase in gross margin from 16.9% to 53.4% was mainly attributable to the absence, in fiscal 2026, of the one-time testing project costs that were fully expensed as incurred in fiscal 2025, when revenue recognition for those testing projects remained uncertain. Excluding the impact of such one-time testing costs, the normalized gross margin for fiscal 2025 would have been higher, and the fiscal 2026 margin of 53.4% reflects a normal standard in settlement prices for certain wastewater treatment clients together with a more favorable project mix.
• For the years ended June 30, 2025 and 2026, gross profit from platform outsourcing services was approximately RMB2.8 million and nil, respectively, representing a decrease of approximately RMB2.8 million ($0.4 million) or 100.0%. The decrease in gross profit was consistent with the change in revenue.

Operating expenses

Selling expenses decreased by 43.6%, or RMB4.1 million ($0.6 million), from RMB9.3 million ($1.4 million) in the year ended June 30, 2025 to RMB5.2 million ($0.8 million) in the same period of 2026.

General and administrative expenses increased by 11.8%, or RMB5.8 million ($0.9 million), from RMB49.6 million ($7.3 million) in the year ended June 30, 2025 to RMB55.4 million ($8.2 million) in the same period of 2026.

Net recovery of credit losses of RMB2.9 million ($0.4 million) for the year ended June 30, 2025 as compared to net provision for credit losses of RMB4.1 million ($0.6 million) for the same period in 2026.

Research and development expenses decreased by 21.7%, or RMB3.6 million ($0.5 million) from RMB16.4 million ($2.4 million) for the year ended June 30, 2025 to RMB12.9 million ($1.9 million) for the same period of 2026.

Loss from operations

Loss from operations was RMB41.2 million ($6.1 million) for the year ended June 30, 2026, compared to a loss of RMB57.3 million ($8.4 million) for the same period of 2025. This RMB16.1 million ($2.4 million) decrease in loss from operations was mainly driven by higher gross profit, as previously discussed.

Change in fair value of warrant liability

The Company classified the warrants issued in connection with common share offering as liabilities at their fair value and adjusted the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. Gain in change in fair value of warrant liability was RMB6,226 ($917) and RMB671 ($99) for the years ended June 30, 2025 and 2026, respectively. The primary reason for the decrease in the fair-value gain of the warrant liability was the change in the fair value assessment price.

Interest income

Net interest income was RMB10.9 million ($1.6 million) for the year ended June 30, 2026, compared to net interest income of RMB12.3 million ($1.8 million) for the same period of 2025. The RMB1.4 million ($0.2 million) decrease in net interest income was primarily attributable to the Company's receipt of partial repayments of loans to third parties, partially offset by interest income from outstanding loans to third parties, during the year ended June 30, 2026.

Other income (expenses), net.

Other net expenses was RMB1.3 million ($0.2 million) for the year ended June 30, 2026, compared to other net income of RMB1.3 million ($0.2 million) for the same period of 2025. The RMB2.6 million ($0.4 million) decrease in other net income was primarily due to the closure of Qinghai BHD and the disposal of 51% equity interest in MSJ, which together resulted in a total loss on equity shares investments of RMB1.1 million. Additionally, following the closure of the Qinghai office, RMB0.6 million in payables that could no longer be settled was recognized as income, RMB0.2 million in receivables that could not be collected was written off as a loss and an increase in foreign exchange transaction expenses of RMB1.0 million due to the fluctuation of exchange rate of RMB against US dollars during the year ended June 30, 2026 compared to the same period of 2025.

Net loss

As a result of the factors described above, net loss was RMB31.6 million ($4.7 million) for the year ended June 30, 2026, a decrease of RMB12.1 million ($1.8 million) from net loss of RMB43.7 million ($6.4 million) for the same period of 2025.

Cash and short-term investment

As of June 30, 2026, we had cash in the amount of approximately RMB29.7 million ($4.4 million) and short-term investment in bank fixed income product of approximately RMB9.0 million ($1.3 million). As of June 30, 2025, we had cash in the amount of approximately RMB98.9 million ($14.6 million) and short-term investment in bank fixed income product of approximately RMB3.6 million ($0.5 million).

About Recon Technology, Ltd ("RCON")

Recon Technology, Ltd (NASDAQ: RCON) is the People's Republic of China's first NASDAQ-listed non-state-owned oil and gas field service company. Recon supplies China's largest oil exploration companies with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measure for increasing petroleum extraction levels, reducing impurities and lowering production costs. Through the years, RCON has taken leading positions within several segmented markets of the oil and gas field service industry. RCON also has developed stable long-term cooperation relationship with its major clients. Since 2023, Recon also entered into the business of chemical recycling of waste plastic. For additional information please visit: http://www.recon.cn/.

Forward-Looking Statements

Recon includes "forward-looking statements" within the meaning of the federal securities laws throughout this press release. A reader can identify forward-looking statements because they are not limited to historical fact or they use words such as "scheduled," "may," "will," "could," "should," "would," "expect," "believe," "anticipate," "project," "plan," "estimate," "forecast," "goal," "objective," "committed," "intend," "continue," or "will likely result," and similar expressions that concern Recon's strategy, plans, intentions or beliefs about future occurrences or results. Forward-looking statements are subject to risks, uncertainties and other factors that may change at any time and may cause actual results to differ materially from those that Recon expected. Many of these statements are derived from Recon's operating budgets and forecasts, which are based on many detailed assumptions that Recon believes are reasonable, or are based on various assumptions about certain plans, activities or events which we expect will or may occur in the future. However, it is very difficult to predict the effect of known factors, and Recon cannot anticipate all factors that could affect actual results that may be important to an investor. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors, including those factors disclosed under "Risk Factors" in Recon's most recent Annual Report on Form 20-F and any subsequent half-year financial filings on Form 6-K filed with the Securities and Exchange Commission. All forward-looking statements are qualified in their entirety by the cautionary statements that Recon makes from time to time in its SEC filings and public communications. Recon cannot assure the reader that it will realize the results or developments Recon anticipates, or, even if substantially realized, that they will result in the consequences or affect Recon or its operations in the way Recon expects. Forward-looking statements speak only as of the date made. Recon undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances arising after the date on which they were made, except as otherwise required by law. As a result of these risks and uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, Recon.

 

 

 

 

 

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SOURCE Recon Technology, Ltd