Fatpipe Inc/UT
For the period ended Sep 30, 2026. Filed Nov 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 4, 2026
FATN$4.38-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001493152-26-035447
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-04.
0001493152-26-049949
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 104 previous paragraphs and 131 current paragraphs.
80 unchanged; 22 reworded; 24 added; 2 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
In Q2 2027, the current quarter ended September 30, 2026, net revenue was $4,834,061, an increase of $874,830, or 22%, from the prior period ended September 30, 2025. Product revenue was $3,322,745 compared to $2,420,579 in the prior period, an increase of $902,166, or 37%, reflecting increased sales of our product solutions as FatPipe continued to execute on its GTM strategy. Service revenue increased by $12,030, while consulting revenue decreased by $39,366 due to the timing of consulting engagements.
Current report
In the three months ended September 30, 2026, our gross profit was $4,349,128, an increase of $702,801, or 19%, reflecting the increase in net revenue.
Current report
In the three months ended September 30, 2026, our general and administrative expense was $1,062,395, a decrease of $330,280, or 24%, compared to the prior period, primarily due to $625,220 in non-cash stock-based compensation expense recorded in the second quarter of the prior year, with $14,750 expense in the current quarter.
Current report
Employee cost expenses in the three months ended September 30, 2026 were $576,338, an increase of $13,686, or 2%, compared to the prior period, attributable to inflation adjusted salaries.
Current report
Interest expense during the three months ended September 30, 2026 was $101,846, as compared to $126,033 in the prior fiscal year period. The decrease was due to the lower outstanding loan balance.
Current report
For the Six Months Ended September 30, 2026 and 2025
Current report
Revenue
Current report
In the six months ended September 30, 2026, net revenue was $9,865,599, an increase of $1,970,445, or 25%, from the prior period ended September 30, 2025. Product revenue was $6,861,479 compared to $4,812,882 in the prior period, an increase of $2,048,597, or 43%, as FatPipe continued to execute successfully on its GTM strategy. Service revenue increased by $3,130, while consulting revenue decreased by $81,282 due to the timing of consulting engagements.
Current report
Cost of Revenue
Current report
Gross Profit and Gross Margin
Current report
Sales and Marketing Expense
Current report
In the six months ended September 30, 2026, our sales and marketing expense was $2,696,209, an increase of $441,908, or 20%, compared to the prior period, primarily due to increased sales headcount and advertising and promotional efforts to support revenue growth.
Current report
General and Administrative Expense
Current report
In the six months ended September 30, 2026, our general and administrative expense was $2,226,101, an increase of $246,427, or 12%, compared to the prior period. Non-cash stock-based compensation expense was $219,040 in the six months ended September 30, 2026, compared to $625,220 in the prior period. Excluding non-cash stock-based compensation, G&A increased primarily due to provisioning contract impairment expenses during the year as opposed to at the year end.
Current report
Product Development Expense
Current report
Employee Cost Expense
Current report
Depreciation and Amortization Expense
Current report
Other Income (Expense)
Current report
Interest income during the six months ended September 30, 2026 was $76,050 as compared to $48,748 in the prior fiscal year period.
Current report
On October 1, 2026, we entered into a secured revolving line of credit of up to $1.5 million with KeyBank National Association (the “Revolving Facility”), which is available for working capital and matures on September 30, 2027. Borrowings under the Revolving Facility bear interest at the Adjusted Daily SOFR Index plus 3.00%, and availability is subject to our compliance with the financial and other covenants described under “Debt” below. As of November 4, 2026, no amounts were outstanding under the Revolving Facility.
Current report
On July 2, 2026, we filed a shelf registration statement on Form S-3 registering up to $20.0 million of common stock and/or debt securities and entered into an At-the-Market Offering Agreement with H.C. Wainwright & Co., LLC, under which we may offer and sell up to $10.0 million of our common stock from time to time (the “ATM program”). The ATM program forms part of, and is not in addition to, the $20.0 million registered under the shelf registration statement. As of the date of this report, we had not sold any shares under the ATM program. Our ability to raise capital under the ATM program will depend on market conditions and the trading price of our common stock, and any sales would dilute our existing shareholders.
Current report
On October 1, 2026, subsequent to the end of the quarter, the Company refinanced the Fortis Bank loan with KeyBank National Association. The Company entered into a $4.5 million secured term loan (the “Term Loan”) and a secured revolving line of credit of up to $1.5 million available for working capital (the “Revolving Facility”), and used approximately $4.47 million of the Term Loan proceeds to repay the Fortis Bank loan in full. Borrowings under both facilities bear interest at the Adjusted Daily SOFR Index plus 3.00%, compared with the Prime Rate plus 1.00% under the Fortis Bank loan. Based on benchmark rates at the time of the refinancing, the Company expects an approximately 110 basis point reduction in its annual borrowing rate; actual savings will depend on changes in benchmark rates and outstanding balances. The Term Loan requires 35 monthly principal payments of $75,000 beginning November 1, 2026, plus accrued interest, with the remaining balance of approximately $1.9 million due at maturity on October 1, 2029. The Revolving Facility matures on September 30, 2027. The facilities are guaranteed by the Company’s subsidiary, FatPipe Technologies, Inc., are secured by substantially all personal property assets of the Company and FatPipe Technologies, Inc., and require the Company to maintain a ratio of Total Funded Debt to EBITDA of no greater than 2.50 to 1.00 and a Fixed Charge Coverage Ratio of at least 1.20 to 1.00, each tested quarterly. As of November 4, 2026, no amounts were outstanding under the Revolving Facility. See Note 11 to the consolidated financial statements.
Current report
Recurring Billings
Current report
FatPipe GAAP revenue is aligned to new bookings of contracts. Billings follow customer deployments. As booked revenue converts to billings, FatPipe has seen strong billings growth, with total billings billed on a monthly basis up 55% YoY. As this faster-growing revenue segment scales, it represents a larger portion of FatPipe’s total income.
Removed paragraphs (2)
Previous report
In the three months ended June 30, 2026, product revenue was $3,538,734 compared to $2,392,303 during the same period in 2025, representing an increase of $1,146,431, or 47.9%. Overall, net revenue was $5,031,538, an increase of $1,095,615, or 27.8%, from the prior period ended June 30, 2025. The increase was driven primarily by product revenue, partially offset by decreases in service revenue of $8,900 and consulting revenue of $41,916. The increase in product revenue was primarily due to increased sales of our product solutions due to the Company’s ability to fully execute on its core business following the closing of the IPO in April 2025. Service revenue marginally decreased due to contract timings. Consulting revenue decreased due to the timing of consulting engagements.
Previous report
In the three months ended June 30, 2026, our general and administrative expense was $1,163,706, an increase of $576,707, or 98.2%, compared to the prior period, primarily due to higher professional fees, intra-year provisions on contract receivables, and public-company operating costs.
Reworded paragraphs (22)
Previous wording
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this prospectus are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.
Current wording
We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this report are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise.
Previous wording
SD-WAN. The market for SD-WAN products was estimated to be approximately $4.5 billion in 2023 (according to the research published via the Maia Research Report) with expected market size to grow to over $17.6 billion by 2030. The North America and Asia-Pacific (“APAC”) segments of the market, which represent FatPipe’s primary markets, are expected to achieve continued growth in the near term. According to Gartner, Inc., the North America market for SD-WAN solutions will grow at an estimated 18% compound annual growth rate (“CAGR”) through 2025, while growth in APAC is projected to exceed 60% CAGR. This significant growth trajectory has been attributed to several factors, including the rise in remote work, need for enhanced network security, migration of applications to the cloud, and overall digital transformation efforts of enterprises.
Current wording
SD-WAN. The market for SD-WAN products was estimated to be approximately $4.5 billion in 2023 (according to the research published via the Maia Research Report) with expected market size to grow to over $17.6 billion by 2030. The North America and Asia-Pacific (“APAC”) segments of the market, which represent FatPipe’s primary markets, are expected to achieve continued growth in the near term. According to Gartner, Inc., the North America market for SD-WAN solutions will grow at an estimated 18% compound annual growth rate (“CAGR”), while growth in APAC is projected to exceed 60% CAGR. This significant growth trajectory has been attributed to several factors, including the rise in remote work, need for enhanced network security, migration of applications to the cloud, and overall digital transformation efforts of enterprises.
Previous wording
In the three months ended June 30, 2026, our cost of revenue was $390,062, an increase of $163,128, or 71.9%, from the prior period ended June 30, 2025. Cost of revenue increased in line with higher product sales volumes. The cost of revenue includes costs associated with providing services to our customers, such as costs associated with hosting our cloud services.
Current wording
In the three months ended September 30, 2026, our cost of revenue was $484,933, an increase of $172,029, or 55%, from the prior period ended September 30, 2025. Cost of revenue increased in line with higher product sales volumes. The cost of revenue includes costs associated with providing services to our customers, such as costs associated with hosting our cloud services.
Previous wording
Our gross margin decreased to 92.2% in the three months ended June 30, 2026 from 94.2% in the prior period, reflecting a higher proportion of product sales.
Current wording
Our gross margin decreased to 90% in the three months ended September 30, 2026 from 92% in the prior period, reflecting a higher proportion of product sales.
Previous wording
In the three months ended June 30, 2026, our sales and marketing expense was $1,355,250, an increase of $303,585, or 28.9%, compared to the prior period. This was primarily due to increased advertising and promotional efforts to support revenue growth.
Current wording
In the three months ended September 30, 2026, our sales and marketing expense was $1,340,959, an increase of $138,323, or 12%, compared to the prior period. This was primarily due to increased sales headcount and advertising and promotional efforts to support revenue growth.
Previous wording
Product development expense in the three months ended June 30, 2026 was $527,045, an increase of $52,588, or 11.1%, compared to the prior period, as the Company continued its development plans for its cybersecurity products.
Current wording
Product development expense in the three months ended September 30, 2026 was $524,781, an increase of $35,624, or 7%, compared to the prior period, as the Company continued its development plans for its cybersecurity and monitoring products.
Previous wording
Depreciation and amortization expense in the three months ended June 30, 2026 was $43,114, a decrease of $48,843, compared to the prior period. These expenses are categorized under general and administrative expenses.
Current wording
Depreciation and amortization expense in the three months ended September 30, 2026 was $42,426, a decrease of $61,682, compared to $104,108 in the prior period. These expenses are categorized under general and administrative expenses.
Previous wording
Interest income during the three months ended June 30, 2026 was $41,682 as compared to $5,799 in the prior fiscal year. The increase was due to higher average cash balances and interest rates.
Current wording
Interest income during the three months ended September 30, 2026 was $34,368 as compared to $42,949 in the prior fiscal year period.
Previous wording
In the three months ended June 30, 2026, our gross profit was $4,641,476, an increase of $932,487, or 25.1%, from the prior period. The increase in gross profit reflects an increase in net revenue.
Current wording
In the six months ended September 30, 2026, our gross profit was $8,990,604, an increase of $1,635,288, or 22%, from the prior period. The increase in gross profit reflects the increase in net revenue.
Previous wording
Employee cost expenses in the three months ended June 30, 2026 were $694,010, an increase of $100,819, or 17.0%, compared to the prior period, attributable to headcount added to support revenue growth.
Current wording
Employee cost expenses in the six months ended September 30, 2026 were $1,270,348, an increase of $114,505, or 10%, compared to the prior period, attributable to headcount added to support revenue growth.
Previous wording
Interest expense during the three months ended June 30, 2026 was $95,112, as compared to $69,888 in the prior year, reflecting the higher outstanding term-loan balance.
Current wording
Interest expense during the six months ended September 30, 2026 was $196,958, as compared to $195,921 in the prior fiscal year period.
Previous wording
In the three months ended June 30, 2026, the Company recognized an income tax benefit of $370,925, compared to an income tax provision of $215,185 in the prior period. The current-period benefit reflects a change in estimate, recognized as a discrete item during the quarter, relating to the phased reduction of a previously accrued income tax payable balance following the Company’s application of available U.S. federal net operating loss carryforwards against taxable income. The Company’s effective tax rate applicable to ordinary income for the period was minimal as a result of the utilization of net operating loss carryforwards. Consistent with interim reporting guidance, the change in estimate was recognized discretely and excluded from the estimated annual effective tax rate applied to ordinary income.
Current wording
In the three months ended September 30, 2026, the Company recognized an income tax benefit of $370,815, compared to an income tax benefit of $12,595 in the prior period. In the six months ended September 30, 2026, the Company recognized an income tax benefit of $741,740, compared to an income tax provision of $202,590 in the prior period. The current-period benefit reflects a change in estimate, recognized as a discrete item in each quarter of the current fiscal year, relating to the phased reduction of a previously accrued income tax payable balance following the Company’s application of available U.S. federal net operating loss carryforwards against taxable income. The Company’s effective tax rate applicable to ordinary income for the period was minimal as a result of the utilization of net operating loss carryforwards. Consistent with interim reporting guidance, the change in estimate was recognized discretely and excluded from the estimated annual effective tax rate applied to ordinary income.
Previous wording
We believe we have sufficient sources of funding to meet our business requirements and plans for the next 12 months and in the longer term. Cash generated by operations and cash raised from the public offering of our common stock are our primary source of liquidity for funding our strategic business requirements.
Current wording
We believe we have sufficient sources of funding to meet our business requirements and plans for the next 12 months and in the longer term. Our primary sources of liquidity for funding our strategic business requirements are our cash and cash equivalents, cash generated by operations, and borrowings available under our revolving line of credit. We may also raise additional capital through our at-the-market offering program.
Previous wording
To fund our cash requirements in the ordinary course of business, we anticipate that we will continue to primarily rely on operating cash flows, supplemented by our total cash and cash equivalents, together with the cash raised from the public offering of our common stock conducted in April 2025. Our capital requirements, including but not limited to, servicing our lease obligations and fixed asset purchases, will depend on many factors, including our growth rate and the timing and extent of operating expenses.
Current wording
To fund our cash requirements in the ordinary course of business, we anticipate that we will continue to primarily rely on operating cash flows, supplemented by our total cash and cash equivalents and borrowings available under the Revolving Facility described below. Our capital requirements, including but not limited to, servicing our debt and lease obligations and fixed asset purchases, will depend on many factors, including our growth rate and the timing and extent of operating expenses.
Previous wording
In March 2025, the Company obtained a $5 million term loan from Fortis Bank, of which $3 million was used to repay an outstanding loan from the bank loan noted above. The Fortis Bank loan is repayable in 120 equal monthly installments commencing from March 1, 2025 and the interest is charged at the Prime Rate plus 1%. The “Prime Rate” is the Prime Rate in effect on the first business day of the month (as published in the Wall Street Journal newspaper) in which SBA received the application, or the first day of the month in which any interest rate change occurs. The interest rate will be adjusted every calendar quarter (the “change period”) beginning April 1, 2025 (date of first rate adjustment). The interest rate works out to 8.75% as on the reporting date. The loan is secured by substantially all assets of the Company, certain personal properties of directors of the Company, along with a personal guarantee given by them and a trust, where the directors are trustees. During the three months ended June 30, 2026, the Company made principal payments totaling $92,728.
Current wording
In March 2025, the Company obtained a $5 million term loan from Fortis Bank, of which $3 million was used to repay an existing term loan from a local bank. The Fortis Bank loan is repayable in 120 equal monthly installments commencing from March 1, 2025 and the interest is charged at the Prime Rate plus 1%. The “Prime Rate” is the Prime Rate in effect on the first business day of the month (as published in the Wall Street Journal newspaper) in which SBA received the application, or the first day of the month in which any interest rate change occurs. The interest rate will be adjusted every calendar quarter (the “change period”) beginning April 1, 2025 (date of first rate adjustment). The interest rate works out to 8.75% as on the reporting date. The loan is secured by substantially all assets of the Company, certain personal properties of directors of the Company, along with a personal guarantee given by them and a trust, where the directors are trustees. During the six months ended September 30, 2026, the Company made principal payments totaling $183,586.
Previous wording
Future maturities of long-term debt are as follows:
Current wording
Future maturities of long-term debt as of September 30, 2026, which reflect the Fortis Bank loan prior to its refinancing, are as follows:
Previous wording
Interest expense was $95,112 and $69,888 for the three months ended June 30, 2026 and 2025, respectively.
Current wording
Interest expense was $101,846 and $126,033 for the three months ended September 30, 2026 and 2025, respectively, and $196,958 and $195,921 for the six months ended September 30, 2026 and 2025, respectively.
Previous wording
Net cash used in operating activities in the three months ended June 30, 2026 was $679,047 compared to $508,604 in the prior period. The increase in cash used was primarily due to growth in contracts receivable and inventory to support higher sales volumes, partially offset by higher net income.
Current wording
Net cash used in operating activities in the six months ended September 30, 2026 was $1,786,279 compared to $108,769 in the prior period. The increase in cash used was primarily due to growth in contracts receivable of $3,135,375 and a decrease in accrued expenses and other current liabilities of $740,295, partially offset by higher net income.
Previous wording
Net cash used in investing activities in the three months ended June 30, 2026 was $4,520 as compared to $42,449 in the prior period. Cash used in investing activities was primarily due to the purchase of equipment.
Current wording
Net cash used in investing activities in the six months ended September 30, 2026 was $3,522 as compared to $35,447 in the prior period. Cash used in investing activities was primarily due to the purchase of equipment.
Previous wording
Net cash used in financing activities in the three months ended June 30, 2026 was $92,728, consisting of repayments of the term loan. In the three months ended June 30, 2025, net cash provided by financing activities was $3,593,250, which included $3,784,472 in proceeds from the Company’s April 2025 IPO, partially offset by $191,222 in repayment of debt.
Current wording
Net cash used in financing activities in the six months ended September 30, 2026 was $183,586, consisting of repayments of the term loan. In the six months ended September 30, 2025, net cash provided by financing activities was $3,581,185, which included $3,867,472 in proceeds from the Company’s April 2025 IPO, partially offset by $286,287 in repayment of debt.
Previous wording
In addition to our financial results determined in accordance with the generally accepted accounting principles in the United States (“GAAP”), our management uses adjusted earnings before interest, taxes, depreciation, and amortization expenses to net income (“Adjusted EBITDA”), a non-GAAP measure, as a key measure in operating our business. We use Adjusted EBITDA to make strategic decisions, establish business plans and forecasts, identify trends affecting our business, and evaluate performance. For example, we use Adjusted EBITDA as a measure of our operating performance. Adjusted EBITDA is presented for supplemental informational purposes only, should not be considered a substitute for, or a more meaningful measure than, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for Adjusted EBITDA to the most directly comparable financial measure presented in accordance with GAAP. Investors are encouraged to review the related GAAP financial measure and the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure.
Current wording
In addition to our financial results determined in accordance with the generally accepted accounting principles in the United States (“GAAP”), our management uses adjusted earnings before interest, taxes, depreciation, and amortization expenses to net income (“Adjusted EBITDA”), a non-GAAP measure, as a key measure in operating our business. We use Adjusted EBITDA to make strategic decisions, establish business plans and forecasts, identify trends affecting our business, and evaluate performance. For example, we use Adjusted EBITDA as a measure of our operating performance. Adjusted EBITDA is presented for supplemental informational purposes only, should not be considered a substitute for, or a more meaningful measure than, financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided below for Adjusted EBITDA to the most directly comparable financial measure presented in accordance with GAAP. Investors are encouraged to review the related GAAP financial measure and the reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure. Impairment of legacy contract assets represents the portion of contract provision made for legacy contracts.
Previous wording
In the three months ended June 30, 2026, our Adjusted EBITDA was $1,287,426, an increase of $192,793 compared to $1,094,633 in the prior fiscal year, primarily due to higher revenues and operating income and the add-back of stock-based compensation.
Current wording
In the six months ended September 30, 2026, our Adjusted EBITDA was $2,450,700, an increase of $627,531 compared to $1,823,169 in the prior fiscal year period, primarily due to higher revenues and operating income.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
In the six months ended September 30, 2026, our cost of revenue was $874,995, an increase of $335,157, or 62%, from the prior period ended September 30, 2025. Cost of revenue increased in line with higher product sales volumes. The cost of revenue includes costs associated with providing services to our customers, such as costs associated with hosting our cloud services.
Current report — wording carried from elsewhere
Our gross margin decreased to 91% in the six months ended September 30, 2026 from 93% in the prior period, reflecting a higher proportion of product sales.
Current report — wording carried from elsewhere
Product development expense in the six months ended September 30, 2026 was $1,051,826, an increase of $88,212, or 9%, compared to the prior period, as the Company continued its development plans for its cybersecurity and monitoring products.
Current report — wording carried from elsewhere
Depreciation and amortization expense in the six months ended September 30, 2026 was $85,540, a decrease of $110,525, compared to $196,065 in the prior period. These expenses are categorized under general and administrative expenses.
Current report — wording carried from elsewhere
The foreign exchange gain/(loss) results from currency conversion from U.S. dollars to Indian rupees.