Kopin(KOPN) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $12 million, down from $13.3 million in the prior year [19] - Product revenues decreased to $10.7 million from $10.9 million in Q3 2024, primarily due to a decline in revenues from pilot helmets and training products [20] - Net income for Q3 2025 was $4.1 million, or $0.02 per share, compared to a net loss of $3.5 million, or $0.03 per share in Q3 2024 [21] Business Line Data and Key Metrics Changes - Funded research and development revenues decreased to $1.2 million from $2.3 million in Q3 2024, mainly due to project completion timing [20] - Cost of product revenue was $8.4 million, or 79% of net product revenues, compared to $8.3 million, or 76% in the prior year [20] - R&D expenses were $2.5 million, a slight decrease from the previous year, attributed to reduced spending on U.S. defense programs [21] Market Data and Key Metrics Changes - The U.S. Army aims to purchase at least 1 million drones in the next two to three years, significantly increasing demand compared to the current annual purchase of approximately 50,000 drones [9] - The first-person drone market is projected to grow from under $300 million last year to as much as $1.2 billion by 2030, representing a compound annual growth rate of around 31% [9] Company Strategy and Development Direction - The company has entered strategic partnerships with organizations like Ondas Holdings and Theon International, enhancing its position in the defense sector [5][7] - Kopin aims to leverage increased defense budgets and modernization efforts globally, particularly in Europe and NATO countries [7][14] - The company is focusing on high-demand areas such as thermal weapon sights and armored vehicle applications, with a strong opportunity pipeline exceeding $1 billion [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue and profitability goals for 2027 and 2028, supported by a strong pipeline and ongoing defense spending [14] - The geopolitical landscape is expected to drive continued growth in defense spending, with a focus on providing advanced technologies for military applications [15] - Management highlighted a transformation within the company, emphasizing improved quality, customer relationships, and a solid capital structure [16][17] Other Important Information - The company has successfully addressed quality issues in manufacturing, achieving some of the highest quality scores in its history [16] - A recent legal judgment resulted in a lower-than-expected liability, allowing the company to focus on growth and operational improvements [16] Q&A Session Summary Question: Any developments on neural display? - The company demonstrated a bidirectional microdisplay that allows drone control using eye movement, indicating a commitment to invest in this technology [28][29] Question: What should be expected regarding quarterly OpEx? - The company anticipates that spending will remain consistent with previous quarters, with a focus on growth [30][31] Question: Can you size the near-term opportunities in the pipeline? - The company has approximately 80% of the backlog needed to meet its 2026 plan, with strong visibility on major programs until 2030 [35][36] Question: Update on Kopin One initiatives and automation? - The Kopin One initiative is fully integrated, and automation efforts are expected to enhance efficiency and throughput in the manufacturing process [40][41] Question: Clarification on pilot aviation heads-up display issue? - The decrease in military revenues was attributed to a timing issue in manufacturing demand, not a fundamental problem [51] Question: Insights on the medical partnership and growth? - The company is working with HMDMD on expanding its medical product pipeline, with increased requests for armored vehicle systems noted [55] Question: Revenue expectations from European markets? - The company expects to see initial revenue from Europe in 2026, with significant growth anticipated in 2027 and 2028 [63][64]