LightPath Technologies(LPTH) - 2025 Q4 - Annual Results

Executive Summary LightPath Technologies reported significant revenue growth in Q4 and full year fiscal 2025, driven by robust demand for Germanium-free optics, despite increased net losses and adjusted EBITDA losses due to higher operating expenses and non-cash charges Financial Highlights (Q4 & FY2025) LightPath Technologies reported significant revenue growth in Q4 and full year fiscal 2025, driven by robust demand for Germanium-free optics, despite increased net losses and adjusted EBITDA losses due to higher operating expenses and non-cash charges Q4 & FY2025 Financial Highlights | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change (QoQ) | Year Ended June 30, 2025 | Year Ended June 30, 2024 | % Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $12.2 million | $8.6 million | 41.4% | $37.6 million | $31.7 million | 17.3% | | Gross Profit | $2.7 million | $2.5 million | 6.6% | $10.1 million | $8.6 million | 17.4% | | Operating Expenses | $7.2 million | $4.7 million | 52.0% | $22.0 million | $16.5 million | 33.4% | | Net Income (Loss) | $(7.1) million | $(2.4) million | -199.8% | $(14.9) million | $(8.0) million | -85.7% | | Adjusted EBITDA* (non-GAAP) | $(2.0) million | $(1.1) million | -77.1% | $(5.1) million | $(2.8) million | -83.8% | Operational & Strategic Highlights The company secured significant IR camera orders, a strategic investment, and commenced production of Germanium-free IR camera products, validating its strategy to shift towards BlackDiamond™ glass and higher-value systems - Announced an initial $18.2 million purchase order for IR cameras, with a follow-on $22.1 million purchase order, expected to be delivered in CY 2026 and CY 2027 respectively[7] - Secured an $8.0 million strategic investment from Ondas Holdings and Unusual Machines to support growth in the drone/UAV sector[7] - Commenced production of two high-end cooled IR camera products, redesigned from G5 Infrared's original design to utilize LightPath's proprietary BlackDiamond™ Glass in place of Germanium[7] - Awarded an initial $2.2 million engineering development model order for IR cameras by L3Harris Technologies for the Navy's SPEIR Program[7] Management Commentary Management commentary highlights the validation of strategic shifts towards Germanium-free optics and IR camera systems, driven by accelerating market demand and key orders Strategic Focus and Market Demand LightPath's CEO highlighted the validation of their strategy to move away from Germanium optics, scale BlackDiamond™ glass into defense verticals, and expand into complete IR camera systems. Geopolitical uncertainty and Chinese export restrictions are accelerating customer demand for Germanium alternatives, favoring LightPath's solutions - Strategy validated by moving away from Germanium optics, scaling BlackDiamond™ glass into defense, and pushing into complete IR camera systems[5] - Supply chain risk and Chinese critical mineral export restrictions are accelerating customer demand for Germanium alternatives, driving adoption of BlackDiamond™ solution[5] - Focus on converting market's Germanium supply chain angst into BlackDiamond™-based camera sales to build sustainable, long-term value[9] Key Orders and Strategic Investments The company secured substantial orders for IR cameras from a global technology customer and defense contracts, alongside a strategic investment to bolster its position in the drone/UAV sector - Booked an initial $18.2 million IR camera order and a follow-on $22.1 million purchase order from a leading global technology customer[6] - Secured a $2.2 million engineering development model order from L3Harris for the Navy's SPEIR program[6] - Added $9.7 million in cooled-camera orders for counter UAS applications with an existing defense customer[6] - Secured an $8.0 million strategic investment from Ondas Holdings and Unusual Machines to support growth in the drone/UAV sector[7] Product Innovation and Germanium-Free Transition LightPath launched new industrial-grade MWIR OGI cameras and is actively redesigning G5's product line to replace Germanium with its proprietary BlackDiamond™ material, driven by customer demand for secure supply chains - Launched first industrial-grade MWIR OGI camera and validated its performance in line with EPA processes[7] - Actively redesigning G5's product line to implement proprietary BlackDiamond™ material in place of Germanium due to intense customer demand for secure supply chains[7][8] - Germanium-free redesigns reduce supply chain risk and shorten time-to-field, expanding reachable market in defense and industrial sectors[9] Fourth Quarter Fiscal 2025 Financial Results The fourth quarter of fiscal 2025 saw significant revenue growth, but also increased operating expenses, leading to a wider net loss and adjusted EBITDA loss Revenue Analysis (Q4 FY2025) Total revenue for Q4 FY2025 increased significantly by 41.4% year-over-year, primarily driven by strong growth in Assemblies & Modules and Infrared Components Q4 FY2025 Revenue by Product Group | Product Group | Q4 FY2025 Revenue ($ in millions) | Q4 FY2024 Revenue ($ in millions) | % Change | | :--- | :--- | :--- | :--- | | Infrared Components | $4.9 | $3.0 | 63% | | Visible Components | $2.8 | $3.2 | -11% | | Assemblies & Modules | $4.2 | $1.4 | 203% | | Engineering Services | $0.3 | $1.0 | -75% | | Total Revenue | $12.2 | $8.6 | 41.4% | Gross Profit (Q4 FY2025) Gross profit increased by 6.6% in Q4 FY2025, but gross margin as a percentage of revenue decreased due to a significant increase in inventory reserve charges, mainly for visible components Q4 FY2025 Gross Profit | Metric | Q4 FY2025 | Q4 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Gross Profit | $2.7 million | $2.5 million | 6.6% | | Gross Margin % | 22.0% | 29.2% | -7.2 percentage points | - Gross margin percentage decreased primarily due to an approximately $0.5 million increase in inventory reserve charges, mainly attributable to visible components[10] Operating Expenses (Q4 FY2025) Operating expenses rose by 52.0% in Q4 FY2025, driven by the integration of G5, increased sales and marketing, higher materials spend for new product development, and an increase in the fair value of acquisition liabilities Q4 FY2025 Operating Expenses | Metric | Q4 FY2025 | Q4 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Operating Expenses | $7.2 million | $4.7 million | 52.0% | - Increase primarily due to: (i) G5 acquisition integration and increased sales/marketing; (ii) higher materials spend for internally-funded new product development; and (iii) a $1.4 million increase in fair value of acquisition liabilities[11] Net Loss and EPS (Q4 FY2025) Net loss significantly widened in Q4 FY2025, primarily due to increased non-cash, non-operating expenses related to the G5 acquisition and its financing Q4 FY2025 Net Loss and EPS | Metric | Q4 FY2025 | Q4 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net Loss | $(7.1) million | $(2.4) million | -199.8% | | Loss per Share (Basic & Diluted) | $(0.16) | $(0.06) | -166.7% | - Change in net loss primarily driven by an increase in certain non-cash, non-operating expenses associated with the G5 acquisition and related financing[12] Adjusted EBITDA (Q4 FY2025) Adjusted EBITDA loss increased substantially in Q4 FY2025 compared to the prior year, reflecting the overall increase in expenses and losses Q4 FY2025 Adjusted EBITDA Loss | Metric | Q4 FY2025 | Q4 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA Loss | $(2.0) million | $(1.1) million | -77.1% | Full Year Fiscal 2025 Financial Results Full year fiscal 2025 saw revenue growth across most product groups, but also a significant increase in operating expenses and net loss, leading to a wider adjusted EBITDA loss Revenue Analysis (FY2025) Full year fiscal 2025 revenue increased by 17.4%, primarily driven by strong growth in Assemblies & Modules and Engineering Services FY2025 Revenue by Product Group | Product Group | FY2025 Revenue ($ in millions) | FY2024 Revenue ($ in millions) | % Change | | :--- | :--- | :--- | :--- | | Infrared Components | $14.3 | $14.1 | 2% | | Visible Components | $11.7 | $11.2 | 4% | | Assemblies & Modules | $8.0 | $4.5 | 79% | | Engineering Services | $3.2 | $2.0 | 63% | | Total Revenue | $37.2 | $31.7 | 17.4% | Gross Profit (FY2025) Gross profit for fiscal 2025 increased by 17.4%, maintaining a consistent gross margin percentage. This was favorably impacted by product mix but unfavorably by increased inventory reserve charges FY2025 Gross Profit | Metric | FY2025 | FY2024 | % Change | | :--- | :--- | :--- | :--- | | Gross Profit | $10.1 million | $8.6 million | 17.4% | | Gross Margin % | 27.2% | 27.2% | 0.0 percentage points | - Gross margin percentage was favorably impacted by product mix (more revenue from higher-margin assemblies and modules, and engineering services) and unfavorably by an approximately $0.5 million increase in inventory reserve charges, primarily related to visible components[14][15] Operating Expenses (FY2025) Operating expenses for fiscal 2025 increased by 33.4%, primarily due to higher legal and consulting fees, increased sales and marketing, higher materials spend for new product development, and an increase in the fair value of acquisition liabilities FY2025 Operating Expenses | Metric | FY2025 | FY2024 | % Change | | :--- | :--- | :--- | :--- | | Operating Expenses | $22.0 million | $16.5 million | 33.4% | - Increase due to: (i) higher legal and consulting fees related to business development and strategic initiatives (including G5 acquisition expenses) and increased sales/marketing; (ii) higher materials spend for internally funded new product development; and (iii) a $1.4 million increase in fair value of acquisition liabilities[16] Net Loss and EPS (FY2025) Net loss for fiscal 2025 significantly increased, driven by higher non-cash, non-operating expenses related to the G5 acquisition and its financing FY2025 Net Loss and EPS | Metric | FY2025 | FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net Loss | $(14.9) million | $(8.0) million | -85.7% | | Loss per Share (Basic & Diluted) | $(0.36) | $(0.21) | -71.4% | - Change in net loss driven by an increase in certain non-cash, non-operating expenses associated with the G5 acquisition and the related financing[17] Adjusted EBITDA (FY2025) Adjusted EBITDA loss for fiscal 2025 more than doubled compared to the prior fiscal year, reflecting the increased operational and non-operating losses FY2025 Adjusted EBITDA Loss | Metric | FY2025 | FY2024 | % Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA Loss | $(5.1) million | $(2.8) million | -83.8% | Company Information & Investor Relations This section provides an overview of LightPath Technologies' business, its vertically integrated solutions, global manufacturing presence, and details for the investor conference call About LightPath Technologies LightPath Technologies is a leading provider of next-generation optics and imaging systems for defense and commercial applications, offering vertically integrated solutions from proprietary BlackDiamond™ glass to complete IR optical systems, with manufacturing facilities globally - LightPath Technologies is a leading provider of next-generation optics and imaging systems for defense and commercial applications[21] - Offers vertically integrated solutions, including proprietary BlackDiamond™ chalcogenide-based glass materials and complete IR optical systems[21] - Primary manufacturing in Orlando, Florida, with additional facilities in Texas, New Hampshire, Latvia, and China[21] Earnings Call Details Management hosted an investor conference call on September 25, 2025, to discuss Q4 and full year fiscal 2025 financial results, provide a corporate update, and conduct a Q&A session. A replay was available until October 9, 2025 - Management hosted an investor conference call on September 25, 2025, at 5:00 p.m. Eastern time[19] - The call discussed Q4 and full year fiscal 2025 financial results and provided a corporate update[19] - A playback of the call was available through Thursday, October 9, 2025, via dial-in and webcast replay[20] Non-GAAP Financial Measures This section defines non-GAAP financial measures like EBITDA and Adjusted EBITDA, explaining their rationale for providing additional insights into operating results, and includes a detailed reconciliation table Definition and Rationale The company uses non-GAAP financial measures like EBITDA and Adjusted EBITDA to provide investors with additional insights into operating results, excluding items that may disproportionately impact results. Management believes these measures enhance the ability to analyze underlying business operations and are used for forecasting and planning - EBITDA is calculated by adjusting net income to exclude net interest expense, income tax expense or benefit, depreciation, and amortization[22] - Adjusted EBITDA further excludes: (1) non-cash income/expense from mark-to-market adjustments related to warrants; and (2) loss on extinguishment of debt[22] - Management believes these non-GAAP measures provide useful information for understanding period-over-period operating results, analyzing underlying business operations, and are used as guides in forecasting, budgeting, and planning[23][24] Reconciliation of Non-GAAP Financial Measures A reconciliation table is provided to bridge GAAP net loss to non-GAAP EBITDA and Adjusted EBITDA for both the fourth quarter and full fiscal year 2025 and 2024, detailing the adjustments made Reconciliation of Non-GAAP Financial Measures | Metric | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | Year Ended June 30, 2025 ($) | Year Ended June 30, 2024 ($) | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(7,055,980) | $(2,353,773) | $(14,873,182) | $(8,007,346) | | Depreciation and amortization | 792,488 | 1,062,559 | 4,149,240 | 4,048,409 | | Income tax provision | (122,402) | (53,912) | 37,790 | 67,490 | | Interest expense | 312,967 | 42,814 | 1,118,213 | 191,862 | | EBITDA | $(6,072,927) | $(1,302,312) | $(9,567,939) | $(3,699,585) | | Stock-based compensation | 298,309 | 216,765 | 1,043,464 | 1,019,023 | | Loss on extinguishment of debt | — | — | 418,502 | — | | Change in fair value of warrant liability | 2,224,270 | — | 1,353,716 | — | | Change in fair value of acquisition liabilities | 1,430,000 | — | 1,560,445 | — | | Foreign exchange (gain) loss | 141,583 | (31,876) | 129,882 | (72,741) | | Adjusted EBITDA | $(1,978,765) | $(1,117,423) | $(5,061,930) | $(2,753,303) | | % of revenue | -16% | -13% | -14% | -9% | Forward-Looking Statements and Contact This section includes a disclaimer regarding forward-looking statements, outlining inherent risks and uncertainties, and provides contact information for investor relations inquiries Forward-Looking Statements Disclaimer This section contains forward-looking statements regarding future events, financial performance, strategic initiatives, and market conditions. These statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations, and readers are cautioned not to place undue reliance on them - Statements include expectations regarding purchase orders, program awards, financial performance, impact of G5 acquisition, product portfolio performance, demand for Germanium-free products, sustainable revenue growth, government/military projects, and supply chain risk management[28] - Subject to risks and uncertainties such as need for additional capital, varying product demand, reliance on key customers, raw material availability, international tariffs, political risks, economic uncertainty, geopolitical tensions, and inability to sustain profitable sales growth[28] - Readers are cautioned not to place undue reliance on these statements, which speak only as of the date they are made, and the company has no obligation to update them[28][29] Investor Contact Information Investor inquiries can be directed to Lucas A. Zimmerman of MZ Group – MZ North America - Contact: Lucas A. Zimmerman, MZ Group – MZ North America[30] - Email: LPTH@mzgroup.us, Phone: 949-259-4987[30] Condensed Consolidated Financial Statements This section presents the company's condensed consolidated balance sheets, statements of comprehensive income (loss), statements of changes in stockholders' equity, and statements of cash flows for fiscal years 2024 and 2025 Condensed Consolidated Balance Sheets The balance sheet shows an increase in total assets from $48.1 million in FY2024 to $81.5 million in FY2025, primarily driven by increases in current assets, intangible assets, and goodwill. Total liabilities also increased significantly from $17.9 million to $31.6 million Key Balance Sheet Figures | Metric | June 30, 2025 ($) | June 30, 2024 ($) | | :--- | :--- | :--- | | Total Assets | $81,505,766 | $48,086,964 | | Total Liabilities | $31,628,488 | $17,887,299 | | Total Stockholders' Equity | $15,644,768 | $30,199,665 | - Significant increases in current assets (cash, receivables, inventories), intangible assets, and goodwill, largely due to acquisitions[32] - Increase in liabilities driven by accounts payable, accrued liabilities, and loans payable[32] Condensed Consolidated Statements of Comprehensive Income (Loss) The statement of comprehensive income shows a net loss of $(14.9) million for FY2025, significantly wider than $(8.0) million in FY2024, primarily due to increased operating expenses and other non-operating expenses Key Comprehensive Income (Loss) Figures | Metric | Year Ended June 30, 2025 ($) | Year Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Revenue, net | $37,202,630 | $31,726,192 | | Gross profit | $10,130,114 | $8,631,246 | | Total operating expenses | $21,952,995 | $16,457,910 | | Operating loss | $(11,822,881) | $(7,826,664) | | Net loss | $(14,873,182) | $(8,007,346) | | Comprehensive loss | $(14,404,432) | $(8,103,946) | | Loss per common share (basic & diluted) | $(0.36) | $(0.21) | - Operating loss widened from $(7.8) million in FY2024 to $(11.8) million in FY2025[35] - Other income (expense), net, significantly contributed to the loss, moving from $(113,192) in FY2024 to $(3,012,511) in FY2025, largely due to interest expense, loss on extinguishment of debt, and change in fair value of warrant liability[35] Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased from $30.2 million in FY2024 to $15.6 million in FY2025. This was primarily influenced by the net loss, preferred cumulative dividends, and reclassification of warrant liability, despite new issuances of common and preferred stock Key Stockholders' Equity Changes | Metric | June 30, 2025 ($) | June 30, 2024 ($) | | :--- | :--- | :--- | | Total Stockholders' Equity | $15,644,768 | $30,199,665 | | Accumulated Deficit | $(230,716,757) | $(215,843,575) | | Series G Convertible Preferred Stock | $34,232,510 | — | | Additional Paid-in Capital | $244,953,346 | $245,140,758 | - Issuance of preferred stock under private equity placement contributed $19.48 million[38] - Issuance of common stock for acquisition of G5 contributed $4.87 million[38] - Net loss of $(14.87) million and preferred cumulative dividends plus accretion of $(14.75) million significantly reduced equity[39] Condensed Consolidated Statements of Cash Flows Cash flows from operating activities resulted in a net outflow of $(8.3) million in FY2025, a significant change from a net inflow of $0.5 million in FY2024. Investing activities saw a substantial increase in cash used, primarily due to the G5 acquisition, while financing activities provided a large net inflow from new stock and debt issuances Key Cash Flow Figures | Metric | Year Ended June 30, 2025 ($) | Year Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(8,331,390) | $521,037 | | Net cash used in investing activities | $(19,738,323) | $(2,665,236) | | Net cash provided by (used in) financing activities | $29,296,277 | $(1,466,440) | | Change in cash, cash equivalents and restricted cash | $1,396,768 | $(3,664,222) | | Cash, cash equivalents and restricted cash, end of period | $4,877,036 | $3,480,268 | - Operating cash flow shifted from positive to negative, largely influenced by the increased net loss and changes in working capital[41] - Investing cash outflow significantly increased due to the $18.49 million acquisition of G5[41] - Financing cash flow turned strongly positive due to proceeds from preferred stock ($18.68 million), warrants ($4.62 million), and loans payable ($6.66 million)[42]