KOPIN CORP (KOPN)·Q2 2025 Earnings Summary

Executive Summary

• Q2 revenue of $8.45M and EPS of $(0.03) missed S&P Global consensus on both revenue ($10.57M*) and EPS (−$0.0133*), driven by U.S. government budget delays that pushed customer orders into 2H25; management cited improving order flow with a positive book-to-bill in Q2 and recovery into Q3/Q4 .
• Mix and under-absorption pressured product margins: cost of product revenues rose to 94% of product revenues vs 83% in Q1 and 84% in Q4’24, reflecting lower volumes; automation initiatives are expected to reduce OpEx by ~$1.0–$1.5M in 2H25 and ~$1.0M in 2026 .
• Strategic $15M investment/partnership from Theon (49% of Kopin Europe plus $7M convert at $3.00 with forced conversion at $4.50 trigger) positions Kopin to access EU/NATO demand and accelerate AR-enabled systems; management expects initial Theon-related sales to start in Q4’25 .
• Additional commercial momentum post-quarter with a ~$9M follow-on defense contract adds to backlog and supports 2H revenue ramp alongside delayed Q2 orders now received .

What Went Well and What Went Wrong

• What Went Well

  • Strategic expansion: “The recently announced Theon Sensors…investment…is a transformational event,” expected to accelerate revenue growth in new markets and scale operations; initial sales with Theon expected in Q4’25 .
  • Operational improvement underway: Phase 1 optical inspection automation is live; management expects ~$1.0–$1.5M of OpEx recovery in 2H25 and another ~$1.0M in 2026 after Phase 2 by year-end .
  • Commercial wins/backlog: Positive book-to-bill in Q2 and a ~$9M follow-on thermal imaging assembly contract announced Aug 14, reinforcing defense demand .

• What Went Wrong

  • Top-line shortfall: Q2 revenue $8.45M vs $10.57M consensus*, and down ~31% YoY, reflecting U.S. government budget delays and customer uncertainty delaying orders .
  • Margin pressure from under-absorption: Cost of product revenues were 94% of product revenue (vs 83% in Q1), as lower volumes reduced fixed-cost absorption .
  • Expense commentary discrepancy: 8-K reports SG&A of $4.9M in Q2, while CFO on the call referenced $7.9M; investors should anchor to filed 8-K/financials .

Financial Results

Headline metrics (USD, except ratios)

YoY and QoQ detail for Q2 2025

• Revenue: $8.45M vs $12.34M in Q2 2024 (−31.5% YoY) ; vs $10.5M in Q1 2025 (−19.6% QoQ) .
• EPS: $(0.03) vs $(0.05) YoY and $(0.02) QoQ .
• Cost of product revenues: 94% vs 79% YoY and 83% QoQ (mix/under-absorption) .

Segment/end-market breakdown (Q2)

KPIs and other items

• Book-to-bill: 2.8:1 in Q1; positive in Q2 (orders delayed in Q2 now largely received) .
• Notable contracts: ~$9M follow-on defense thermal imaging assembly (Aug 14) .
• Indexing: Added to Russell 2000/3000 (Jun 27, 2025) .
• Balance sheet: Cash/restricted/marketable securities $27.84M; Accrued litigation damages $24.8M at 6/28/25 .

Guidance Changes

Note: Q1 2025 reiterated “double-digit revenue growth in 2025” vs 2024 without a range .

Earnings Call Themes & Trends

Management Commentary

• “The recently announced Theon Sensors…investment in Kopin Europe and our global operations is a transformational event for Kopin.” – Michael Murray, CEO .
• “Revenue in the second quarter of 2025 was lower than expectations due to order delays related to US government budget process delays…We are now experiencing improved order flow…” .
• “With this [Theon] agreement, we expect sales…to commence in the fourth quarter of this year…an aggressive three-year strategic plan for revenue, technology sharing and growth” .
• “We expect to introduce the second phase [of automation] by the end of this year…which we believe will save the company significant operating expenses in the 2025 [and] around $1,000,000 of OpEx reduction…in 2026” .
• CFO on mix/margins: “Cost of product revenues…94% of net product revenues…[vs] 79%…The decrease in cost…was primarily the result of lower sales with insufficient [volume] to absorb fixed costs” .

Q&A Highlights

• Theon opportunity sizing and prioritization: Management expects near-term revenue from application-specific solutions (DayVAS, DarkWave) to Theon customers starting in Q4, plus internal OLED/LCD/FLCoS/microLED supply opportunities; capacity utilization expected to improve at Dalgety Bay (Europe) and Reston (U.S.) .
• Book-to-bill clarification: Q2 was positive but below expectations; many missed in-quarter turns and funded R&D orders have since arrived; ~$20M of funded R&D orders expected for 2025 .
• Automation impact: Phase 1 implemented; ~$1.0–$1.5M OpEx recovery in 2H25; additional ~$1.0M OpEx reduction in 2026 post Phase 2 .
• European manufacturing strategy: OLED line moved to Europe; Kopin can design/ship OLED within Europe—a key advantage for Theon and EU/NATO customers .

Estimates Context

• Q2 2025 results vs S&P Global consensus: Revenue $8.45M vs $10.57M* (miss), EPS $(0.03) vs $(0.0133)* (miss), EBITDA $(5.24)M vs $(1.73)M* (miss); management attributed shortfalls primarily to U.S. budget-related order delays .
• Forward quarters: Street models a rebound with Q3 2025 revenue ~$13.89M* and EPS −$0.01*, and Q4 2025 revenue ~$13.05M* and EPS −$0.018*; management expects Theon-related sales to begin in Q4 .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Near-term setup: Q2 was a demand-timing miss driven by U.S. budget delays; order flow is improving with many delayed orders received and positive book-to-bill, positioning 2H for sequential improvement .
• Structural catalyst: Theon partnership injects $15M, opens EU/NATO channels, and targets AR-enabled systems revenue from Q4; expect better fab utilization and operating leverage as volumes recover .
• Margin path: Automation underway should reduce OpEx by ~$1.0–$1.5M in 2H25 and ~$1.0M in 2026; mix normalization plus higher volumes should alleviate under-absorption over time .
• Defense demand intact: New ~$9M follow-on order post-quarter and continued traction in thermal weapon sights and helmet-mounted systems support backlog and visibility into 2H .
• Watch items: SG&A commentary discrepancy (8-K $4.9M vs call $7.9M); legal liabilities remain on the balance sheet (accrued $24.8M), though a post-Q2 court order reduced damages amount—appeal planned .
• Estimate implications: Street likely lowers near-term margins post-miss but may lift 2H/FY26 revenue on Theon pipeline and contract momentum; automation benefits may underpin improving operating metrics into 2026 .

Appendices

Q2 2025 Income Statement Extracts (for reference)

• Revenue detail: Product $7.50M; Funded R&D $0.91M; Other $0.05M; Total $8.45M .
• Expense detail: Cost of product $7.07M (94% of product rev), R&D $1.95M, SG&A $4.90M .
• Net loss: $(5.17)M; Basic/Diluted EPS $(0.03); Shares 166.35M .

Balance Sheet Highlights (6/28/25)

• Cash/restricted/marketable securities $27.84M; AR $9.48M; Inventory $6.69M; Total assets $61.18M .
• Current liabilities $41.43M (includes Accrued litigation damages $24.8M); Equity $16.04M .

Additional Relevant Press Releases (Q2 timeframe)

• Theon’s THEON NEXT initiative naming Kopin as key AR/microdisplay partner with $15M financing structure and JV in Europe .
• NGSRI VDS Phase 2 development contract progression with Lockheed Martin (visual display subsystem) .
• HMDmd/Kopin begin production deliveries of CR3 surgical display systems to Carl Zeiss Meditec (FDA/CE compliant) .

All document references: Q2 2025 8-K earnings release -; Q2 2025 call transcript -; Q1 2025 8-K -; Q4 2024 8-K -; Theon/Kopin investment PR -; Theon initiatives PR -; $9M follow-on PR -; NGSRI update -; HMDmd deliveries -; BlueRadios update (post-Q2) -.