Gevo Inc. (GEVO) stock surged Wednesday after the renewable fuels and carbon management company reported third-quarter 2026 results that blew past Wall Street's expectations.

The company posted adjusted earnings of 12 cents per share, easily beating the analyst estimate of 3 cents. Revenue jumped 94.2% year over year to $82.95 million, topping the $54.41 million estimate.

CEO Paul Bloom called it Gevo's strongest financial performance to date, pointing to growing revenue and cash flow from compliance and voluntary carbon markets.

Carbon Credits Fuel the Beat

Gevo's carbon business did most of the heavy lifting. Revenue included approximately $20 million from previously banked Canadian Clean Fuel Regulation (CFR) credits and approximately $10 million from additional CFR credits recognized during the quarter.

Gross profit surged to $48 million from $13 million a year earlier. Gross margin expanded to about 58% from 30%. Even excluding that $20 million in nonrecurring CFR credit revenue, quarterly revenue still grew roughly 47% year over year.

Adjusted EBITDA climbed to $44 million from $7 million in the year-ago quarter. Net income came in at $23 million, or 9 cents per diluted share, compared with a net loss of $8 million a year earlier.

The company ended September with $68 million in cash and cash equivalents, and third-quarter operating cash flow reached $41 million.

Tax Credits and Production Expansion

Gevo locked in contracts to sell $70 million in Section 45Z clean fuel production tax credits. These agreements cover substantially all its expected 2026 credits from ethanol and renewable natural gas production. The company expects higher credit sales in 2027 as production expands.

On the production side, Gevo plans to complete its North Dakota debottlenecking project by year-end 2026. That expansion should lift annual low-carbon ethanol production capacity to approximately 75 million gallons. The company then aims to roughly double annual low-carbon ethanol production to about 150 million gallons, with startup expected to begin in 2028.

Third-quarter ethanol production rose to 19 million gallons from 17 million gallons a year earlier. Renewable natural gas production slipped slightly to 91,729 MMBtu from 92,396 MMBtu.

Gevo also continues to pursue commercial offtake agreements for its planned sustainable aviation fuel project.

Guidance Gets a Boost

Gevo expects its carbon business to generate more than $50 million in revenue during 2026. The company raised its full-year adjusted EBITDA forecast to more than $90 million, though that figure includes approximately $20 million in nonrecurring revenue from previously banked CFR credits.

For 2027, Gevo raised its adjusted EBITDA forecast to more than $70 million, up from its previous outlook of approximately $60 million.

The company also expects recent changes to the 45ZCF-GREET model to generate more than $10 million in additional annual gross profit benefits from its existing renewable natural gas assets, subject to third-party validation.

Meanwhile, Gevo's partnership with Praj in India aims to generate revenue through isobutanol technology licensing and catalyst sales, potentially starting in 2028.

On the earnings call, management emphasized disciplined capital allocation, saying the company plans to prioritize projects offering attractive risk-adjusted returns while preserving financial flexibility.

GEVO Price Action: Gevo shares were up 15.83% at $1.61 during premarket trading on Wednesday, according to market data.