One of the world's largest makers of semiconductor materials, born from the November 2025 spin-off of DuPont's electronics business. It produces CMP pads and slurries, lithographic materials, and famous brands like Kapton and Kalrez, used by chipmakers and electronics manufacturers. The name "Qnity" (said "cue-ni-tee") blends the physics symbol for electrical charge, Q, with "unity"—a nod to bringing partners together.
Revenue rose 22% to $1.43B on AI-driven volume, but operating income fell 22% as transformation charges and debt-service costs reshaped the bottom line.
growth accelerated, but the cost of independence is now visible in the income statement. Revenue rose 22% to $1.43 billion on a 23% volume increase, yet fell 22% to $199 million as transformation charges climbed to $42 million and interest payments on $4.1 billion in new debt weighed on cash flow. The company is growing its top line faster than ever as a standalone entity, but the is shrinking.
Key takeaways
rose 22% to $1.43 billion, driven entirely by a 23% increase in volume, with the Interconnect Solutions up 30% on AI-driven demand in advanced packaging, AI PCB, and thermal management.
fell 22% to $199 million and contracted 7.9 points to 13.9%, as SG&A expenses rose 30% to $200 million and transformation, integration, and other charges climbed to $42 million from $2 million a year ago.
improved 0.5 points to 46.6%, as the 21% increase in cost of sales was outpaced by the 22% growth.
What changed
The Q1 FY2026 flag on trajectory is partially resolved: free cash flow rebounded to $151 million from $13 million in Q1, but remains well below the $224 million generated in Q2 FY2025, confirming that the debt load has structurally reduced cash generation.
Volume growth in Interconnect Solutions accelerated further to 30% from 23% in Q1, indicating that AI-driven demand has not softened and remains the company's primary growth engine.
The multi-year transformation plan flagged in Q1 is now producing material charges: transformation, integration, and other costs rose to $42 million in Q2 from $2 million a year ago, directly reducing .
What to watch
Transformation charge trajectory: the $42 million in Q2 is a sharp increase from $2 million a year ago; whether this level persists or grows will determine how long remains under pressure.
run rate: $151 million in Q2 is an improvement from Q1's $13 million but still below the prior year; the second half will show whether the company can approach the $420 million generated in Q4 FY2025.
Interconnect Solutions volume growth sustainability: the 30% increase is tied to AI technology ramps; any deceleration would signal a shift in the demand environment that has driven the company's growth.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 net sales rose 22% to $1.4B on 23% volume growth, led by Interconnect Solutions up 30%, while transformation charges surged.
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Consolidated increased 22% to $1,429M in Q2 FY2026, driven by a 23% volume increase, with Interconnect Solutions up 30% and Semiconductor Technologies up 16%.
improved slightly to 47% in Q2 FY2026 from 46% a year ago, as a 21% rise in cost of sales was outpaced by growth.
fell 31% to $136 million, and dropped 34% to $0.59, reflecting the higher operating costs and on the $4.1 billion in that was not outstanding in the prior-year quarter.
fell 33% to $151 million from $224 million a year ago, as declined to $376 million from $480 million due to interest payments on the new debt and higher .
The company repurchased $50 million in shares during the quarter under its $500 million authorization, bringing total buybacks to $75 million since the program began in Q1 FY2026.
Share repurchases continued at a measured pace of $50 million in Q2, up from $25 million in Q1, suggesting management is deploying the authorization gradually rather than aggressively.
improved 0.5 points to 46.6%, reversing the contraction flagged in Q3 FY2025 when input costs were rising, though the improvement is modest relative to the growth.
pace against the $500 million authorization: with $425 million remaining, the rate of deployment will signal management's confidence in cash flow generation under the debt load.
SG&A expenses jumped 30% to $200M, and transformation, integration and other charges soared to $42M from $2M, primarily for IT independence and organizational redesign.
for Interconnect Solutions grew 44% to $197M on strong AI-driven demand, while Semiconductor Technologies rose 12% to $253M.
fell to $376M from $480M due to interest payments on new and higher , while the company repurchased $50M in shares and paid dividends.
Quantitative and Qualitative Disclosures About Market Risk
For the Company’s disclosures about market risk, please see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report filed with the SEC. There have been no material changes to the Company’s disclosures about market risk in Part II—Item 7A…
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For the Company’s disclosures about market risk, please see “Part II—Item 7A—Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report filed with the SEC. There have been no material changes to the Company’s disclosures about market risk in Part II—Item 7A of our Annual Report.