Kopin Corporation Q2 FY2025 earnings call

• Hired Erich Manz as new CFO, starting September 2, from Allegro MicroSystems.
• Announced $15 million strategic investment from Theon International for growth in Europe, SE Asia, and NATO; licensing and development agreement for technologies; sales with Theon expected to commence in Q4 '25.
• Second quarter 2025 results: didn't meet expectations due to government budget uncertainty, but order book recovering; introduced first phase of optical inspection, expecting second phase by end of year; AI-enabled neural display hardware prototype demonstrated; received contract for color MicroLED microdisplay for soldier vision systems; strong defense pipeline including SBMC program.
• Focus on defense programs with long-term contracts through 2030 and IDIQs, and technology advancements in displays.

Total revenues for Q2 '25 were $8.5 million vs $12.3 million prior year. Product revenues in Q2 '25 were $7.5 million compared to $11.1 million in Q2 '24. Funded research and development revenues decreased by $900,000 from $1.2 million in Q2 '24. Cost of product revenues for Q2 '25 was $7.1 million (94% of net product revenues) compared to $8.7 million (79% of net product revenues) in Q2 '24. R&D expenses for Q2 '25 were $1.9 million, an increase of ~$100,000 from the year ago quarter. SG&A expenses were $7.9 million in Q2 '25 compared to $7.3 million in Q2 '24. Net loss for Q2 '25 was $5.2 million or $0.03 per share.

• Expect sales with Theon to start in Q4 2025.
• Long-term pipeline is strong with programs through 2030 and IDIQ contracts providing potential for increased revenue.
• Anticipate prime contractor selections soon for SBMC and related awards for critical technology acquisition areas.

• Potential risks include demand for products, operating results of subsidiaries, market conditions, as detailed in SEC filings.

Q: Jaeson Schmidt asks about the size of the Theon opportunity longer term.

A: Michael Murray mentions internal spend on microdisplays, application-specific solutions like DayVAS and DarkWAVE, and near-term pursuits in Europe with research and development dollars flowing in Q4.

Q: Jaeson Schmidt asks about priority for Theon on capacity.

A: Michael Murray talks about utilization of Dalgety Bay facility for absorption rate and cost structure, and focus on application-specific solutions to increase fab utilization.

Q: Glenn Mattson asks about manufacturing reorganization and automation.

A: Michael Murray states optical inspection was introduced in Q2, second phase by end of year, expecting ~$1 million OpEx reduction in 2026 from automation.

Q: Glenn Mattson asks about who Theon previously used.

A: Michael Murray talks about alignment with Theon and moving OLED production to Europe for advantages in serving European customers.