Executive Summary

Q2 2025 delivered record revenue of $10.73M (+30.9% q/q; +25.9% y/y) and margin expansion to 31.3%, driving operating income of $2.24M and diluted EPS of $0.26 .
Strength was broad-based: Optex Richardson revenue rose 47.8% y/y on periscope production capacity increases; AOC revenue grew 3.8% with higher laser filter demand .
Backlog ended at $41.1M with an updated delivery schedule indicating $11.1M and $10.7M slated for Q3 and Q4 2025, respectively; post-quarter a $5.7M AOC award was announced (Aug’25–Dec’26) .
No formal financial guidance was provided; liquidity improved with working capital of $17.9M, cash of $3.5M, and $0 drawn on the credit facility (renewal expected before May 22, 2025) .
Consensus estimates from S&P Global were not available for EPS/revenue for Q2 2025; investors should anchor on actuals and backlog visibility; subsequent award supports demand narrative .

What Went Well and What Went Wrong

What Went Well

Record quarterly revenue; CEO emphasized “factory performance” and customer trust underpinning growth: “record-breaking quarter for revenue” driven by high-quality delivery and team execution .
Periscope production increased 50% in the first six months of FY25 versus FY24, improving throughput and margins via fixed-cost absorption .
Operating leverage: operating income rose to $2.24M (+65% y/y), with adjusted EBITDA up to $2.44M (+49% y/y) on higher volumes and mix .

What Went Wrong

Orders softened: six-month new orders fell 12.3% y/y to $15.7M, with Optex Richardson down 19.8% y/y, timing of awards cited as driver .
AOC backlog declined 29.4% y/y to $10.1M, reflecting order timing and commercial optical assemblies softness; though laser filter demand remained strong .
Legacy fixed-price contracts remain under margin pressure; contract loss reserves stood at $226K (down from $259K) with inflationary materials/labor impacting certain periscope IDIQ orders .

Financial Results

Sequential and YoY Comparison

Metric	Q1 2025 (Dec 29, 2024)	Q2 2025 (Mar 30, 2025)
Revenue ($USD Millions)	$8.198	$10.730
Gross Profit ($USD Millions)	$2.128	$3.361
Gross Margin %	26.0%	31.3%
Operating Income ($USD Millions)	$0.916	$2.237
Net Income ($USD Millions)	$0.844	$1.768
Diluted EPS ($USD)	$0.12	$0.26
Adjusted EBITDA ($USD Millions, Non-GAAP)	$1.137	$2.435

Metric	Q2 2024 (Mar 31, 2024)	Q2 2025 (Mar 30, 2025)
Revenue ($USD Millions)	$8.523	$10.730
Gross Profit ($USD Millions)	$2.557	$3.361
Gross Margin %	30.0%	31.3%
Operating Income ($USD Millions)	$1.356	$2.237
Net Income ($USD Millions)	$1.062	$1.768
Diluted EPS ($USD)	$0.16	$0.26
Adjusted EBITDA ($USD Millions, Non-GAAP)	$1.630	$2.435

Segment Breakdown (External Revenue and Margins)

Segment	Q2 2024 External Revenue ($USD Millions)	Q2 2025 External Revenue ($USD Millions)	Gross Margin % Q2 2024	Gross Margin % Q2 2025
Optex Richardson	$4.274	$6.319	21.7%	26.1%
Applied Optics Center (AOC)	$4.249	$4.411	36.4%	36.1%

Key Operating KPIs

KPI	Q1 2025	Q2 2025
Backlog ($USD Millions)	$42.0	$41.1
Working Capital ($USD Millions)	$15.9	$17.9
Cash & Equivalents ($USD Millions)	$2.491	$3.531
Operating Cash Flow ($USD Millions)	$2.801 (three months)	$3.985 (six months YTD)
Accounts Receivable ($USD Millions)	$1.734	$4.238

Non-GAAP note: Adjusted EBITDA reconciled to GAAP per the 8‑K/10‑Q .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Financial Guidance	FY 2025	None provided	None provided	Maintained (no formal guidance)
Backlog Expected Deliveries	Q3 2025	N/A	$11.1M expected delivery from backlog	Informational update
Backlog Expected Deliveries	Q4 2025	N/A	$10.7M expected delivery from backlog	Informational update
Credit Facility	Through May 22, 2025	$3M revolver; renewal pending	Company expects renewal prior to maturity	Maintained access; renewal expected
Dividends	FY 2025	None	None	Maintained

Note: Company does not issue formal revenue/EPS/margin guidance; backlog schedules provide visibility but are not guidance.

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was found. We reviewed MD&A across Q1 and Q2 2025 to track themes [Search attempted; none found between 2025-05-01 and 2025-06-15] .

Topic	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Supply chain, periscope components	Material shortages in FY23–H1 FY24; alternative sourcing; ramp not yet fully meeting demand	Improved supplier performance and manpower; periscope production up 50% in H1 FY25	Improving execution
Tariffs/macro	Elevated commodity costs; inflation impacting margins	Minimal tariff risk; domestic sourcing; Taiwan components covered by inventory; future orders priced for tariffs	Tariff risk contained; inflation pressure persists on older contracts
Production capacity	Applied Optics strong filters/day windows; Optex Richardson mixed	Throughput gains at Richardson driving revenue/margin; AOC stable growth	Positive capacity scaling
Backlog/orders	Backlog $42.0M; Q2 delivery $9.5M; orders -40.6% q/q timing	Backlog $41.1M; Q3/Q4 expected deliveries $11.1M/$10.7M; six-month orders -12.3% y/y; AOC post-quarter +$5.7M award	Backlog visibility intact; near-term order timing mixed
Liquidity/credit facility	$2.5M cash; $0 drawn; paid down $1.0M; SOFR+ margin	$3.5M cash; $0 drawn; compliance with covenants; renewal expected pre-5/22/25	Strengthened

Management Commentary

“We are proud to announce a record-breaking quarter for revenue…Our factory performance underscores the strength of our team…we remain dedicated to upholding the highest standards while driving continued growth.” — Danny Schoening, CEO .
Tariffs: “We currently do not anticipate any significant material risks as a result of the recent tariff uncertainties…future orders for…commercial products will be subject to revised pricing inclusive of any potential tariff impact.” .
Execution: “In the first six months of fiscal year 2025, we have increased our periscope production levels by 50% over the 2024 fiscal year level.” .

Q&A Highlights

No Q2 2025 earnings call transcript available; therefore, no Q&A highlights or clarifications could be reviewed [Search attempted; none found between 2025-05-01 and 2025-06-15].

Estimates Context

S&P Global consensus estimates for Q2 2025 were unavailable for EPS and revenue; actual revenue was reported at $10.73M. Values retrieved from S&P Global.*
Implication: With limited microcap coverage, buyside should rely on actuals and backlog cadence; the magnitude of the beat/miss vs Street cannot be assessed in aggregate.

Metric	Q2 2025 Consensus	Q2 2025 Actual
Primary EPS Consensus Mean	N/A*	$0.26
Revenue Consensus Mean ($USD)	N/A*	$10.73M

*Values retrieved from S&P Global.

Key Takeaways for Investors

Operating leverage intact: revenue growth and fixed-cost absorption expanded gross margin to 31.3% and lifted operating income to $2.24M; adjusted EBITDA rose to $2.44M .
Segment mix favors defense: Optex Richardson periscope ramp drove +47.8% y/y revenue; AOC margins remain high (36.1%) on laser filters/day windows .
Backlog provides near-term visibility (Q3/Q4 expected deliveries $11.1M/$10.7M) with added AOC $5.7M award post-quarter, supporting H2/FY26 revenue runway .
Liquidity and balance sheet improved (working capital $17.9M; cash $3.5M; $0 drawn), supporting capex and potential opportunistic actions; credit facility renewal expected .
Watch order timing: Six-month orders down 12.3% y/y and AOC backlog lower y/y on timing; monitor conversion from proposals to bookings over next 3–6 months .
Risk lens: legacy fixed-price contracts carry margin risk; contract loss reserves remain; commodity inflation still a headwind for older awards .
Trading setup: absent Street estimates, stock reactions likely hinge on backlog updates, award flow, and sustained periscope throughput/margin trends; the subsequent $5.7M award is a positive catalyst .

Optex Systems Holdings Inc (OPXS)·Q2 2025 Earnings Summary