General Electric's 10-Q for the quarter ended September 30, 2026, filed October 20, 2026, shows revenue climbing through the first three quarters of FY2026. Net income grew more slowly than sales in the third quarter, and diluted EPS slipped from Q2. The figures below are taken from the company's SEC filings. Where I calculate a ratio, I say so.
Revenue trajectory: steady build, then a slower Q3 in earnings
Revenue rose each quarter, from $12.39B in Q1 to $13.35B in Q2 and $14.12B in Q3. That is about 13.9% growth from Q1 to Q3 and about 5.8% sequentially in Q3. Net income did not track sales in the same way. It rose from $1.90B in Q1 to $2.37B in Q2, then eased to $2.29B in Q3, a sequential decline of about 3.5% while revenue grew about 5.8%.
| Metric | Q1 FY2026 | Q2 FY2026 | Q3 FY2026 |
|---|---|---|---|
| Revenues | $12.392B | $13.349B | $14.118B |
| Pre-tax income (continuing ops) | $2.198B | $2.801B | $2.805B |
| Income tax expense | $252M | $407M | $385M |
| Net income (NetIncomeLoss) | $1.904B | $2.370B | $2.288B |
| Net income / revenue (calc.) | ~15.4% | ~17.8% | ~16.2% |
| Tax / pre-tax income (calc.) | ~11.5% | ~14.5% | ~13.7% |
| Diluted EPS | $1.81 | $2.26 | $2.20 |
| Diluted weighted-average shares | 1.054B | 1.047B | 1.041B |
Conversion of sales into earnings
Net income as a share of revenue was about 15.4% in Q1, rose to about 17.8% in Q2, and eased to about 16.2% in Q3. The Q2 high was the strongest quarter of conversion in the year. Q3 gave back part of that gain even though revenue was the highest of the three quarters.
The Q3 tax line can look like a step-up, but the reported data does not support that for the sequential comparison. Tax expense fell from $407M in Q2 to $385M in Q3, and the effective rate on pre-tax income moved from about 14.5% to about 13.7% (calculated). The step-up is relative to Q1, when tax was $252M on pre-tax income of $2.20B, a rate of about 11.5%. Against Q1, Q3 tax is higher. Against Q2, it is lower.
Pre-tax income was essentially flat between Q2 ($2.801B) and Q3 ($2.805B). Net income fell by about $82M over the same period, even though tax expense also fell. Pre-tax income less tax was about $2.39B in Q2 and about $2.42B in Q3. Reported net income was $2.37B and $2.29B. The remaining gap between after-tax income and reported net income is about $24M in Q2 and about $132M in Q3. The reported line items do not itemize what makes up that Q3 gap. Non-controlling interest was $8M in Q3 and equity-method income was $66M, so neither explains it fully. Readers who want to understand the Q3 decline should check the full income statement in the 10-Q before drawing conclusions from it.
EPS and the share count
Diluted EPS was $1.81 in Q1, $2.26 in Q2 and $2.20 in Q3. The Q2 to Q3 move of about 2.7% is smaller than the net income decline of about 3.5%, so the lower share count helped per-share results. Diluted weighted-average shares fell from 1.054B in Q1 to 1.047B in Q2 and 1.041B in Q3. That is about a 1.2% reduction across the year.
As a check, net income divided by diluted shares reproduces the reported EPS in each quarter: $1.90B / 1.054B ≈ $1.81, $2.37B / 1.047B ≈ $2.26, and $2.29B / 1.041B ≈ $2.20. The reported data shows repurchases of common stock of $2.40B in Q1, $2.13B in Q2 and $1.98B in Q3. The falling share count is consistent with that buyback activity. Repurchases are large enough that they matter to the per-share trend, so the reader should watch whether they continue to offset dilution and how much of EPS growth comes from operations versus a smaller denominator.
From Q1 to Q3, revenue rose about 13.9%, net income about 20.2%, and diluted EPS about 21.5%. The gap between EPS growth and net income growth is small, which indicates that the reduced share count contributed a modest part of the improvement.
Cost lines
SG&A was $1.08B in Q1, $1.13B in Q2 and $1.11B in Q3. As a share of revenue (calculated) it went from about 8.7% to about 8.5% to about 7.9%. R&D was $440M, $460M and $458M. Spending on overhead therefore grew more slowly than revenue over the year. Q3 operating leverage is one of the more visible positives in the reported data. It does not, by itself, explain the Q3 net income decline, which is why the unitemized gap between after-tax pre-tax income and reported net income matters.
Questions for the reader
- Is the Q2 conversion rate of about 17.8% the normal level for this business, or was Q2 unusually strong? Q1 and Q3 suggest a range of about 15–16%.
- What explains the roughly $130M gap between Q3 after-tax pre-tax income and reported net income? Is it recurring or one-time?
- How much of the EPS growth through the year comes from operations, and how much from buybacks that shrink the denominator?
- Does Q3 revenue growth of about 5.8% sequentially continue into Q4 without a further drop in conversion?
This article describes reported results and calculated ratios only. It does not assess what the shares are worth or whether they are a good investment. Those judgments belong to the reader.