Bank of America: Unitree Robotics’ third-quarter revenue rises but profit falls as R&D spending increases and gross margin declines; BofA cuts earnings forecasts

Why did revenue growth not translate into profit growth?

In the third quarter of 2026, Unitree Robotics reported revenue of 665 million yuan, up 70% year over year but down 9% quarter over quarter and 10% below BofA’s forecast. Net profit was 113 million yuan, down 17% year over year and 50% quarter over quarter, and 48% below the bank’s forecast.
Gross margin fell to 50.6%, down 8.3 percentage points year over year and 4.0 percentage points quarter over quarter, and below BofA’s forecast of 54.6%. Meanwhile, operating expenses accounted for 34.0% of revenue, above the bank’s expectation of 21.3%; together, these factors weighed on operating profit.
Operating profit for the quarter was 110 million yuan, down 25% year over year and 56% quarter over quarter, and 55% below BofA’s forecast. In the first three quarters of 2026, net profit excluding non-recurring gains and losses was 349 million yuan, down 19% year over year.

Third-quarter R&D spending rose 250% year over year to approximately 19% of revenue. It was directed mainly toward embodied intelligence models and computing power, as well as team expansion and new product development.
On 22 October, the company disclosed preliminary research on a self-evolving robotics model, aiming to link literature research, code writing, simulation training, real-world testing and self-evaluation into an automated loop to accelerate model iteration and improve data-use efficiency.
BofA believes that, if successfully established, this loop could shorten robot skill development cycles and reduce the work needed to adapt to new tasks. The key to broader application is whether increased R&D investment can deliver more reliable autonomous task execution.

After incorporating the third-quarter results, BofA cut its net profit forecasts for 2026, 2027 and 2028 by approximately 15%, 2% and 2%, respectively, to 621 million, 1.19 billion and 1.684 billion yuan. The revisions reflect lower revenue forecasts, a lower gross margin assumption and a higher operating expense assumption for 2026.
The bank lowered its 2026 revenue forecast from 2.713 billion yuan to 2.65 billion yuan, including a reduction in its quadruped robot revenue forecast from 895 million yuan to 830 million yuan. It lowered its overall gross margin forecast for 2026 from 55.1% to 53.4%.
BofA still expects fourth-quarter 2026 revenue of 833 million yuan, up 25.2% from the third quarter, and net profit of 235 million yuan, up 108.2% from the third quarter.

BofA acknowledged the company’s progress and investment in embodied intelligence, but believed the valuation at the time already reflected substantial expectations for future growth: based on the bank’s 2027 revenue forecast, Unitree Robotics traded at 67 times sales, compared with a peer average of 14 times.
The bank also expects competition could lower the company’s gross margin over the next two to three years. BofA cut its discounted cash flow-based price target from 350 yuan to 345 yuan and maintained its Underperform rating; the share price listed in the report was 695.90 yuan.