Kopin Corporation (NASDAQ:KOPN) Q4 2025 Earnings Call Transcript

Kopin Corporation (NASDAQ:KOPN) Q4 2025 Earnings Call Transcript March 27, 2026

Kopin Corporation misses on earnings expectations. Reported EPS is $-0.015 EPS, expectations were $-0.01.

Operator: Good morning, everyone, and welcome to the Kopin Corporation Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Friday, March 27, 2026, and the earnings press release accompanying this conference call was issued earlier this morning. Before we get started, I’d like to remind everyone that during today’s call, we will be making forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on the company’s current expectations, projections, beliefs and estimates and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those forward-looking statements.

Potential risks include, but are not limited to, demand for our products, operating results of our subsidiaries, market conditions and other factors discussed in our most recent annual report on Form 10-K and other documents filed with the Securities and Exchange Commission. Although the company believes that the assumptions underlying these statements are reasonable, any of them can be proven inaccurate, and there can be no assurances that the results will be realized. The company undertakes no obligation to update the forward-looking statements made during today’s call. Kopin Corporation’s Chief Executive Officer, Michael Murray, will begin today’s call with an overview of Kopin’s strategic progress and business developments. Following Michael, Kopin’s CFO, Erich Manz, will review the company’s fourth quarter 2025 unaudited preliminary financial results.

I would now like to turn the conference over to Michael Murray. Michael, the floor is yours.

Michael Murray: Thank you, operator, and good morning to everyone, and welcome to our fourth quarter and full year 2025 earnings call. I want to start by saying that 2025 was a truly transformational year for Kopin. We made significant progress on our strategic initiatives, strengthened our balance sheet with $56 million in capital from strategic and institutional investors, advanced our defense programs and established partnerships that we believe will drive meaningful growth for years to come. Like many other firms, our fourth quarter revenues were impacted by the government shutdown and the associated procurement and milestone recognition delays were deeper than anticipated. However, our underlying business fundamentals and long-term growth pipeline remain exceptionally strong.

Indeed, due to geopolitical conflicts and tensions, we are already experiencing increased demand and order signals for our products and solutions to feel confident that we can recover quickly from this isolated event, which was outside of our control. Over the past 3 years, we have fundamentally transformed Kopin from a legacy microdisplay company into a strategically positioned, vertically integrated and advanced technology platform company. The first phase of our transformation plan included an assembled new management team, reconstituting our Board of Directors, reorganizing our engineering teams, greatly improving our manufacturing facility and processes resulting in some of the highest and most consistent customer satisfaction, quality control and employee survey scores ever in our company history.

Our capital structure is in a far better place than it was even 12 months ago. And now we have the partnerships, the capital and the technological capabilities to invest aggressively in the people, technologies and production capacity needed to significantly accelerate our growth trajectory. Now let me walk you through each of these areas in more detail. When it pertains to strategic partnerships and global expansion, 2025 was a pivotal year for Kopin, as we executed on several transformational strategic initiatives. First, our ONE Kopin initiative integrated 3 separate businesses into one, creating parenting advantages, reduce costs and focus the company on our collective goals. Our fab-light strategy completed its next phase as we expanded our OLED deposition partnerships to U.S. DoD and European-approved suppliers.

This has created a significant surge in OLED demand for the company, and we continue to gain share in this market space. We’re also executed on time and full initiatives exceptionally well, and our customer scorecards reflect our excellent performance and in turn, we are seeing increased levels of new opportunities to reward our efforts. We also executed on our European expansion with our partnership with Theon International, which we announced in August. This engagement has opened the door to the rapidly expanding and growing European, Southeast Asian and NATO defense markets. Sales with Theon have commenced and we are executing on our aggressive 3-year strategic plan for revenue and technology sharing. Theon reached across Europe, Southeast Asia and NATO markets, gives us immediate access to the defense budgets that are expanding significantly in response to evolving global security threats.

We are making good progress on joint development initiatives and expect this partnership to become an increasingly meaningful contributor to our revenue base this year and more significantly next year. Theon International is a critical relationship for Kopin. They develop and manufacture cutting-edge night vision and thermal imaging systems for defense and security applications with a truly global footprint spanning more than 50 countries. Theon started its operations in 1997 and today occupies a leading role in the sector, thanks to its international presence and is one of the fastest-growing companies in Europe. Their production of night vision and thermal imaging systems aligns perfectly with our microdisplay technologies and capabilities.

Increased defense budgets across NATO member states and the need for enhanced situational awareness and nighttime operations, border security and counterterrorism missions are primary drivers of significant growth expectations, especially across Europe. Our increased focus in Europe has already started to pay off as we’ve announced 3 new contracts with 3 new European customers in just the first quarter of 2026 alone, which will grow our European business significantly this year and potentially double next year. As governments worldwide are investing in modernization efforts and advanced night vision technologies, innovations such as thermal imaging, augmented reality data overlays, digital night vision and the use of high-resolution sensors are improving performance, durability and cost effectiveness, thus expanding the range of applications where our joint solutions can compete effectively.

Kopin and Theon together are uniquely positioned to capture those opportunities. In addition, our partnerships with Ondas Holdings and unusual machines have positioned us to capitalize on the explosive growth in the U.S. drone market. The U.S. Army has signaled its intent to procure over 1 million drones in the coming years, which is only further accelerated due to the recent geopolitical developments such as the ongoing conflict in Iran. And the first-person drone market is projected to grow from under $300 million to $1.2 billion by 2030, a 31% compound annual growth rate. We continue to advance these partnerships and are encouraged by the pace of the development activity and we have partnered with several of the top drone dominance companies in the industry today.

The defense drone market represents a significant opportunity for our display and optical technologies, and we expect to announce several new customer orders this year. I’m going to touch on the defense programs and give you an update there. Our defense programs continue to represent the core of our business and our strength and strongest growth driver. We continue to supply Thermal Weapon Sight programs, which remain core to our revenue and on SBMC, formerly known as IVAS, the $22 billion Army program now under Anduril, continues to progress prime contractor selections and critical technology acquisition areas and wins are expected. Our IBAS-funded color microLED program is positioned and progressing well, and we’ve continued to support multiple armored vehicles, aircraft HUDs and helmet systems and next-generation weapon sight systems and programs across the Department of War.

Again, our first color microLED is being designed with the Army, for the Army for this end application in mind. Soldier Borne Mission Command is also an all-encompassing program that includes software, hardware and networking elements designed to give soldiers the tools that deliver the right information quickly and intuitively as warfare evolves and increases in complexity. The U.S. Army has selected a third prime contractor to provide early demonstrable hardware in 2026 and 2027 and followed by a second phase of demonstrations and production selection awards in 2027. Along with prime contractor selections, we expect wins for critical technology acquisition areas where Kopin fits in to follow a similar path. This represents a generational opportunity for Kopin, and we’re actively engaged with the relevant stakeholders to ensure our technology is well positioned for selection.

Furthermore, we have negotiated a similar microLED product with Theon and the European market as part of our strategic investment, which opens an additional addressable market outside of the United States. $15.4 million color microLED award through the IBAS program remains a landmark win representing a $1 billion serviceable available market in the United States alone for Kopin. With similar product negotiated for Theon and the European market, this is an exceptional opportunity for growth. Development is progressing on schedule, and our customer engagement remains strong. We believe our color microLED technology and growing portfolio of devices will be a significant growth driver as we move towards production in the coming years. Given the long-term nature of many of our existing programs and the contract wins throughout 2025, our current pipeline remains exceptionally strong.

As a reminder, several of our programs have congressional budget demands through 2030 and several of our contracts are indefinite demand, indefinite quantity, or IDIQ, which allows for even greater revenue than we currently have on order or are forecasting. Increasing geopolitical tensions mean defense spending is unlikely to decrease and the way wars are fought is evolving rapidly. Soldiers in the field are tasked with needing more information sooner to assess threat levels and make the best decisions for themselves and their teams. Our products and technologies can help to make our soldiers and the soldiers of our allies safer, meaning more men and women in uniform make at home. We believe we can begin meaningful accelerated growth over the next several years as the only manufacturer in the world of 4 different types of microdisplays.

Our technologies and desire to provide application-specific optical solutions means we can meaningfully capture more orders and demand across some of the fastest-growing segments in defense and other applications. And we are partnered with global players in the field to do so. Now to touch on our technology and operational progress. On the operational front, our investment into automation is delivering meaningful results. Both phases of our optical automation program are now operational, and we’re seeing meaningful improvements in the throughput, quality consistency and cost efficiency from that investment. We expect these automation investments to deliver over $1 million in annual operating expense savings as they reach full utilization. Turning to some advanced technology.

Our NeuralDisplay technology continues to advance and has proven that a microdisplay is not just a display but a bidirectional sensing system providing and consuming images and data at the same time. NeuralDisplay technology represents a meaningful leap forward in how information is presented to the end user. By leveraging advanced processing and display optimization, NeuralDisplay has the potential to significantly enhance image quality, reduce power consumption and improve the overall user experience for both defense and commercial applications. We are encouraged by the interest we see from customers and expect to provide more substantial updates as we progress through the development milestones for this year. As the only manufacturer in the world producing 4 types of microdisplays being microLED, AMLCD, LCOS and OLED and the inventor of a fifth type, which is NeuralDisplay, we maintain a unique competitive advantage that positions us well across multiple defense and industrial applications.

And we continue to see exciting new applications for our microdisplays and sensing technologies which I look forward to providing updates on very, very soon. Now let’s look at 2025 year-end review and talk a little bit about 2026 outlook. To summarize, 2025 was a year of significant transformation for the company. We brought in new leadership with our CFO, Erich Manz, added experienced Board members, established the transformative Theon partnership, won the landmark IBAS color microLED program, raised $56 million in capital to remove going concern doubt, funded our growth and invested in automation to improve quality and efficiency. I am more excited and encouraged about our outlook today than I ever have been before or since I joined the company.

We are in a completely different company and space today. And I would argue we are far better and more sustainable than we ever have been before. This offers tremendous and significant growth potential for Kopin. I believe we are on the cusp of meaningful changes at Kopin. I’m incredibly proud of the team for navigating an environment which has so much change over a short period of time. There have been a lot of distractions, but our team has kept heads down and focused on the company’s mission, direction and potential. Now looking ahead to 2026, we now enter the second phase of our transformation plan. The first phase was fix, focus and grow. Our second phase is accelerate, expand and innovate. Acceleration of our revenue growth within our current customer base and markets and new ones to support long-term sustainable growth and profitability, acceleration of time to market with new technologies, proof of concepts and production, expand our customer reach, solution depth and concentration, expand our geographic reach and partnerships to help us grow and importantly, expand our product portfolios.

Innovation is core to our capability at Kopin. And this year, the market will see several new technologies and announcements in new and exciting markets that will accelerate our revenue, expand our customer base and balance our business dependencies. Our priorities are clear: execute on defense programs, grow our Theon partnership revenues and advance our microLED technology towards production and deliver profitable growth. While the government shutdown created an unexpected and longer headwind than expected in Q4 and we expect some degree of continued impact in Q1 2026, we are confident that our strategic positioning and strong pipeline will drive meaningful revenue recovery as government operations normalize. To this end, we are providing a conservative guidance for 2026 of between $52 million to $60 million in revenue for 2026.

I will now turn the call over to our CFO, Erich Manz, to review our fourth quarter 2025 financial results in further detail. Erich?

Erich Manz: Thank you, Michael. Before I begin, I’d like to note that the financial results we are discussing today are unaudited. And while subject to finalization, we do not expect any material changes. We’ll be filing our 10-K for the 2025 fiscal year in the coming days, which will supplement the unaudited financial results outlined below. As Michael mentioned, our fourth quarter results came in softer than expected, driven by the factors he outlined. I would also note that our reported results reflect the deconsolidation of our U.K. entity in the fourth quarter due to technical accounting considerations that were the result of a fourth quarter investment in that entity. The deconsolidation was not a significant factor in the quarter’s operating results.

And while it does impact comparability, we expect this to be temporary in nature and anticipate reconsolidating the entity in the near term. Importantly, the softness of the quarter does not reflect the change in the underlying direction of the business or in our level of conviction. From my perspective and based on what I’ve seen since joining the company, is making a meaningful progress in positioning itself for the next phase of growth. We are continuing to build momentum in transitioning the business with a clear focus on strengthening our financial foundation, improving operational execution and aligning our resources around the opportunities we believe will drive sustainable long-term growth. This is my first full quarter as CFO. I’ve been focused on gaining an understanding of the business, our opportunities and our internal structure to support growth.

As we progress into the new year, the focus of my team is strengthening our financial reporting, improving operational visibility and supporting Kopin’s strategic growth initiatives. With that context, let me walk through the financial results for the quarter. Total revenues for the fourth quarter ended December 27, 2025, were $8.4 million as compared to $14.6 million for the fourth quarter ended December 28, 2024. The year-over-year decrease in revenues was primarily attributed to the government shutdown and associated procurement delays, which impacted timing of expected program orders, product shipments and contract activity during the quarter. Product revenues for the fourth quarter were $5.6 million as compared to $12.6 million in the year ago period.

The decrease was primarily due to government shutdown related delays in product orders and several of our end customers experienced, resulting in lower orders and shipments of products for U.S. defense applications. Standard training and simulation order flow, which can ship within the same quarter was seasonally lower than expected as well. Product order flow has since returned to anticipated levels, while new European product orders have exceeded forecast. Non-product revenues, which are defined as funded R&D, collaborative agreement and grant revenues, were $2.5 million in the fourth quarter of 2025 as compared to $1.7 million in the fourth quarter of 2024. The increase was primarily driven by the IBAS color microLED development program.

However, revenue and research awards were lower due to delays. Several of these new contracts have been awarded with several others still expected. Cost of product revenue for the fourth quarter of 2025 was $4.7 million or 83% of net product revenues as compared to $10.7 million or 84% of net product revenues for the fourth quarter of 2024. The decrease in cost of product revenue as a percentage of net product revenues was primarily attributable to changes in product mix. Actions taken throughout the year with regards to quality, cost containment and automation allowed for similar results to the comparative period even with the reduced volume. Research and development expenses for the fourth quarter of 2025 were $3.5 million as compared to $3.2 million for the fourth quarter of 2024.

The increase is not material and the company considers it to be within the range of normal quarterly fluctuations. This spending level ensures continued investments in internally funded technology development, including new technology, process improvements and microLED advancements. Selling, general and administrative expenses were $4.5 million in the fourth quarter of 2025 as compared to $3.1 million in the fourth quarter of 2024. The increase was primarily due to higher professional fees and outside services associated with the capital raise and strategic partnership transactions completed during the quarter, partially offset by lower incentive compensation costs. As of December 27, 2025, the company had cash and cash equivalents of $37.8 million.

The bonded cash of $23 million is presented as a long-term asset. And as a result of the deconsolidation of Kopin Europe previously mentioned, it was approximately $8 million of cash that will not be shown within the consolidated results. Our cash position has improved primarily driven by the completion of $56 million in private placements from strategic and institutional investors. With that, I’ll turn the call back over to Michael for closing remarks.

Michael Murray: Thanks, Erich. Before we open up to questions, I want to leave you with this. The government shutdown was an unforeseen and unexpected speed bump, not a roadblock or a trend. Our balance sheet is the strongest it’s ever been. Our partnerships with Theon and the U.S. defense contractors are generating real activity, and our defense pipeline is both deep and durable. What sets Kopin apart is straightforward. We are the only company in the world manufacturing 4 types of microdisplays, and we embed to the fifth. And we are the sole-source provider on several programs of record within the Department of War and now NATO. Every product we build, whether it goes into a weapon sight, a helmet-mounted display or an armored vehicle system exists to keep soldiers safer and more effective.

Our surgical headsets produce better patient outcomes and our next-generation technology will enable advances in other markets as well. That mission drives every decision we make, and it’s why we’ve aligned ourselves with the government agencies we have, the Pentagon, NATO and Tier 1 defense primes and partners globally who share that commitment. And there’s more to come and soon. We believe 2026 will be the year this company begins to demonstrate our full potential of everything we built thus far. And I’m encouraged to say that I’m looking forward to 2026 and 2027 as we pivot this company towards our second phase of our transformation plan. And with that, operator, we’ll open the call to questions.

Q&A Session

Operator: [Operator Instructions] And we’ll take our first question today from Jonathan Siegmann with Stifel.

Jonathan Siegmann: Can you maybe highlight what your backlog is as of December 31st and the remaining performance obligations. You ended the third quarter with a pretty high. Just wanted to see how that trended given revenues were lower.

Michael Murray: Yes. So at the end of the year, backlogs were in the range of, I believe, $37 million, and we’re expecting to book very soon several larger orders. We’re talking tens of millions of dollars in the next, I’d say, 8 weeks that are deliverable for this year. So we walked into 2026 with a very decent backlog cover and order cover to hit our revenue growth.

Jonathan Siegmann: Great. Yes, much improved relative to 12 months ago. And then in September, you had previously expected the microLED program to be — the development program to be finished this year. Did the delays from Q4 extend that into ’27? Or can we still expect that to be actually completed this year?

Michael Murray: So we are working towards completion for this year with the milestones that we originally had. Not sure at this point if that will drip into 2027. But from a technical point of view, the milestones that we’ve achieved and the technical program is well on track. However, we’re unsure how the Army will respond to their testing. But from what we can control, our technical milestones are on track and actually a little bit ahead of schedule.

Operator: Our next question comes from Jaeson Schmidt with Lake Street.

Jaeson Schmidt: Just following up on the SBMC program. Good to see that the milestones are on track. Curious how we should be thinking about potential capacity needs as you get better line of sight to that program ramping?

Michael Murray: Fantastic question. Thanks, Jaeson. So part of this program under the Industrial Base Analysis and Sustainment Act, Jaeson, is to build the capacity here in the United States. And one of the milestones that we’ve reached within this quarter is we have selected certain tooling equipment, and we have purchased that equipment for our production line. We believe that we can service the requirements for SBMC as well as other programs with this production line that we’re implementing right now within Kopin. And we have some exciting news coming around how we are going to optimize our throughput of that production line and some other interesting things that we’re going to be doing with the facilities here in the United States for that volume specifically.

Currently, we do not need any further CapEx to invest, to hit the volumes for SBMC and our new pilot heads-up displays as well as some of the thermal weapon sight displays that we’re also targeting as being microLEDs. So there is further IBAS award money that we are expecting to grow our backlog — or pardon me, our capacity but we are not clear on when that money may or may not come at this point.

Jaeson Schmidt: Got you. That’s helpful. And then just as a follow-up, regarding the automation initiatives, I know you mentioned $1 million in annualized savings at full utilization. When do you expect that to be achieved?

Michael Murray: We’re actually starting to see it now, starting to wash through our OpEx, Jaeson, as we speak. And we have some good data that we can share offline to show the cost savings, the scrap savings and the throughput increases that our automation has provided us. Much of this automation is in camera systems for testing devices, whether it be a thermal weapon sight or a display. So we’re seeing that OpEx savings right now as we speak, and this will be the first year that we can actually show quarter-over-quarter results on the automation side of things.

Operator: Our next question comes from Austin Moeller with Canaccord.

Austin Moeller: So I was just going to ask about how you view the commercial market opportunity in the United States for drones now that the FCC has put the DJI ban in place?

Michael Murray: [indiscernible] would be the word. Where we fit in, Austin, and thanks for the question, is in the first-person viewers. So we’ve already been demonstrating our DVAS technology, which is a monocle that swings off of a helmet that you can actually view drone information as well as our dark wave capability, which also allows you to view drone information. So those 2 technologies we’re seeing increased demand for because of the drone market. But in the first-person viewer controller market, because of the FTC, we’re seeing companies that normally would buy their devices out of China, come to Kopin and ask us please just redesign this with your displays and optics, period, full stop. So we have a number of those activities going on right now.

We expect to have some meaningful results to share by Q3, and we have several massive drone companies that are working with us right now. And some of the volumes that they’re talking about, Austin, are anywhere between 60,000 to 100,000 first-person viewers, which is 120,000 to 240,000 microdisplays and optics for Kopin that we would put through the facility starting Q3, Q4 of this year. So we’re absolutely seeing an increased demand in that area for sure.

Austin Moeller: Okay. And how do you think about the $450 billion reconciliation bill that’s being talked about for this year to be passed before the midterms. How much do you think might be allocated specifically for microdisplays and optics? I guess how do you think about the timing and cadence of contract award opportunities out of that should it be passed?

Michael Murray: We’ve been very active on Capitol Hill, specifically with our local congressmen and senators. Firstly, for additional monies through the IBAS award office, I’ve been very vocal that we’ve requested between $10 million to $50 million of additional IBAS funding for our expansion and we’ve been, I think, successful. We have not seen what will come out of the budget, obviously, but we expect to see that around September, Austin. Furthermore, we are seeing much more demand for defense systems in Soldier Borne systems, meaning Thermal Weapon Sight, night vision goggles, certainly the next generation of capabilities in that area, and we are squarely focused in that. And the Department of War has clearly stated that Kopin is the partner of choice for that technology.

So we’re absolutely enthused with what the budget is looking like right now for us, and we are very active on Capitol Hill to make sure that, that industrial base money comes to Kopin, and we can grow that production line that we spoke about earlier to the highest performance as well as throughput. So we’re also seeing increased demands and budgeting in Europe as well, which is now we’re active in discussions directly with NATO. So we think that’s going to prove positive for the company.

Operator: Our next question comes from Christian Schwab with Craig-Hallum.

Christian Schwab: I’m wondering if you could elaborate a little bit more regarding a few mentions regarding new markets and new technologies. And are these opportunities outside the defense industry? I’m just kind of wondering if you could give any further clarity of what you’re hinting at? Or am I reading that wrong?

Michael Murray: I am trying not to. I’m very excited about the new technology that we’ve been developing. We’ve been very quiet about how we spend our internal research and development, Christian, for a reason. I think the 2 programs that we’re going to announce this year will be very shocking to the market. They are new markets. They are new devices and new technology areas for the company. And I was hoping that we would be able to speak about them today and during our demo days in New York City, which is next week, unfortunately, they’re not ready yet to talk about, but we will be announcing 2 new products and product lines in 2 new markets this year. Thanks, Christian. I wish I could talk about it more, but we’ll have to wait.

Operator: At this time, there are no further questions in queue. I will now turn the meeting back to Michael Murray.

Michael Murray: Thank you, operator, and thank you to everyone for joining us today. We appreciate your continued support and look forward to updating you on our progress in the months to come. If you have any further questions, please feel free to reach out to our IR firm, MZ Group, who would be happy to answer them and schedule calls if need be. Thank you very much for joining, and we appreciate your support. Thank you.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may now disconnect your line at this time, and have a wonderful day.