Net profit plummeted by more than 80%, Invt sharply hit the limit down, and the liquid cooling narrative faces its first test!

The leader in liquid-cooled temperature control, Invt, released a quarterly report showing net profit plummeting over 80%, which is the first real test of the growth narrative for this hundred-billion-yuan company. Powered by the AI computing boom, Invt’s stock price soared more than twofold last year, but the profit statement is now being hit far harder than expected by ballooning expenses from capacity expansion, shrinking gross margins due to rising copper prices, and continually worsening cash flow.

On April 21, Invt opened and immediately hit the lower limit, with its share price at 108.97 yuan/share, a drop of 10%. Over 400,000 orders were locked at the limit-down board, with its total market value evaporating by more than 10 billion yuan to 106.5 billion yuan compared with the previous trading day. Yet, just the previous day, the stock had hit the upper limit, reaching an all-time high and closing up 9.41%—the dramatic reversal between the two trading days reflects the sudden shift in market expectations.

The trigger for this crash was the company's Q1 2026 report released on the evening of April 20. Data show the company’s first quarter operating revenue reached 1.175 billion yuan, up 26.03% year-on-year; but net profit attributable to shareholders was only 8.6576 million yuan, down 81.97% year-on-year; non-recurring net profit dropped to 5.3929 million yuan, down 87.10% year-on-year. The huge scissors gap between income and profit caught the market off guard.

In response, Invt explained that the drop in gross margin was mainly due to product mix adjustment, the increase in financial expenses was a result of exchange losses and rising interest expenses, and longer collections cycles led to increased bad debt provisions; the company’s current operations are normal. Institutions such as Kaiyuan Securities attributed the pressure to expansion pains from explosive growth in the liquid cooling business, expecting profitability to turn as liquid cooling products are delivered in Q2.

Triple Pressure Adds Up, Profit Space Narrows

Behind the profit drop, multiple financial indicators are under pressure simultaneously, showing the sources are not singular.

On financial expenses, Invt’s Q1 grew a staggering 7761.24% to 20.0638 million yuan, which the company said was mainly due to lower exchange gains and higher interest expenses. Analysts pointed out that the company accelerated financing to expand capacity, leading to increased interest costs. Meanwhile, credit impairment losses rose from 7.5269 million yuan a year ago to 30.1572 million yuan, up nearly fourfold. The company cited increased bad debt provisions on receivables as the main cause. According to sector analysts, this is related to changes in customer structure, rising share of overseas major customers, and longer payment terms—resulting in higher receivables and rising bad debt risks.

At the gross margin level, the company’s margin has fallen for two consecutive years—from 32.35% in 2023 to 27.86% in 2025. Copper, a core raw material, has seen prices surge since 2023, hitting a high in February 2026 and continuing to fluctuate. As a mid-tier temperature control provider, Invt faces strong suppliers upstream and large clients such as Tencent, Alibaba, and major telecom operators downstream; rising costs cannot be fully passed on—it must absorb them internally. Details from the Q1 cash flow statement also confirm this: cash received from goods sales was similar to last year, but cash paid for goods increased by about 200 million yuan.

Worth noting is that the signs of "rising income without rising profit" are not new. The Q1 2025 report showed similar pressure—revenue was 933 million yuan, up 25.07% YoY, but net profit attributable to shareholders was 48.01 million yuan, down 22.53% YoY. In Q1 2026, net profit fell sharply from 48.01 million yuan to 8.65 million yuan, marking an extreme worsening of the trend.

Cash Flow Keeps Bleeding, Expansion Pains Intensify

Alongside profit pressure is the ongoing deterioration of operating cash flow.

In Q1 2026, Invt’s net operating cash flow was -386 million yuan, a YoY increase of 126.25% in the negative. Despite continued revenue growth, cash flow has been losing ground with the gap widening. The company attributed this mostly to payments due to suppliers and rising wages during the reporting period.

On capital expenditure, Q1 spending was 126 million yuan, nearly doubling YoY. On its investor interaction platform, Invt said its Suzhou base has been in production for years, Zhongshan and Zhengzhou bases are being built and coming online in phases, and new capacity will be added in 2026. The time gap between high expansion spending and yet-to-be-scaled deliveries of liquid cooling products forms the core contradiction putting pressure on profits.

Liquid Cooling Logic Unchanged, Competitive Landscape Shifts Faster

The long-term growth logic of Invt's segment remains recognized by the market. As AI computing demand keeps exploding and server power density rises, liquid cooling is shifting from an “option” to a “must-have” for data centers. According to Dongwu Securities, the global server liquid cooling market may reach 80 billion yuan in 2026.

In terms of customer resources, Invt has been certified as the first integrated cold plate solution provider for Intel’s Xeon 6 platform, is among 40 core infrastructure suppliers for Nvidia Blackwell, and its CDU products are Google-certified. Overseas business gross margin is as high as 52%, about 30 points higher than domestic. However, domestic revenue still accounts for about 82%, which drags down overall gross margin—the increased share of high-margin overseas business will take time to prove.

Meanwhile, high prosperity is attracting many new entrants. Besides traditional temperature control manufacturers, several listed companies have announced cross-sector moves into liquid cooling, with industry competition evolving rapidly from “blue ocean” to “red ocean”. Tang Rulin, director of Huaxin Consulting Institute for AI Integration, told the media, Invt’s profit decline also signals new competitors entering the liquid cooling market, potentially impacting overall market share.

Institutions Cautiously Optimistic, Turning Point Hangs on Q2 Delivery

Despite the Q1 report’s disappointment, institutions remain cautiously optimistic about Invt’s full-year profit outlook. According to Wind, 10 institutions have a consensus forecast for Invt’s 2026 net profit attributable to shareholders at 1.11 billion yuan, with consensus revenue at 9.66 billion yuan.

Industry insiders generally believe Q1 was at the node where traditional AIDC orders began to recover while liquid cooling orders had not yet scaled delivery—revenue growth and gross margin are normal, higher expenses reflect expanding big clients and capacity. Tang Rulin also noted, the Q1 financial results represent phase pressure, with the key to fundamentals recovery hinging on whether related Q2 orders are smoothly delivered, “In the favorable context for the liquid cooling industry, Invt’s fundamentals recovery this year still depends on Q2 performance.”

However, short-term uncertainties must not be ignored. Copper prices remain high, competitive pressure keeps growing, and Invt has made clear it has no plans to disclose detailed client cooperation information, which partly limits market judgment over its ability to realize orders. As a reference, in all of 2025 the company achieved revenue of 6.068 billion yuan, up 32.23% YoY, with net profit of 522 million yuan, up 15.3% YoY. In comparison, Q1 2026 net profit of just 8.6576 million yuan means the previously highly consistent optimistic expectations are now facing substantial recalibration.

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