Shares of SemiLEDs Corporation (NASDAQ: LEDS) soared approximately 47% on Tuesday, closing at $2.24 after a quarterly report revealed that equipment resales accounted for nearly all of the company's gross profit. Trading volume reached 45.3 million shares, about 5.5 times the company's 8.27 million shares outstanding, reflecting intense investor interest. The Nasdaq Composite rose 0.9% on the day.
The company's fiscal third-quarter results, for the period ended May 31, 2026, showed a dramatic turnaround. Revenue surged to $9.074 million from $1.064 million in the prior quarter, while net income swung to $1.523 million, or $0.18 per diluted share, compared to a loss of $603,000, or $0.07 per share, in the previous quarter. Gross margin improved sharply to 27% from just 1%.
However, a closer look at the filing reveals that the bulk of the revenue came from buy-sell equipment transactions, where SemiLEDs purchases machinery and resells it to customers. These deals generated $7.4 million in revenue and $2.3 million in gross profit, accounting for roughly 82% of total revenue and 94% of the quarter's $2.46 million gross profit. This product mix underscores that the headline revenue growth does not stem from core LED operations.
Revenue from LED chips, components, and lighting products totaled $1.106 million, a 153% increase from $437,000 in the same period last year. The improvement was primarily driven by components, which rose 177% to $998,000. Despite this progress, these core product lines contributed only 12% of overall revenue, highlighting the company's continued reliance on equipment resales.
On a year-over-year basis, total revenue dropped 49% from $17.651 million in Q3 FY2025, but gross profit jumped 162% to $2.46 million, and net income rose from $223,000. The company attributed the improved margins to the equipment resale business, which compensated for lower revenue from those orders. The balance sheet showed cash increasing to $5.978 million from $3.978 million at the end of Q2, but current assets of $13.870 million barely exceeded current liabilities of $13.487 million, indicating a tight liquidity position.
Customer concentration remains a significant risk. The top three customers accounted for 95% of revenue in the quarter, and the top ten represented 99%. The company's filing continues to include a going-concern warning, citing potential challenges in maintaining operations. SemiLEDs may need to raise additional capital through stock sales, asset divestitures, or debt to improve liquidity. The company noted that a single major order can swing results each quarter.
Looking ahead, SemiLEDs stated, "We anticipate more buy-sell purchase orders in the fourth quarter." However, it also flagged risks, including potential declines in shipments, delayed payments, and the possibility that new orders may not materialize. The stock's trading volume, which exceeded five times its outstanding shares, suggests speculative interest as investors weigh whether equipment margins can hold and whether LED-component sales will continue to grow.