Kopin Corp (KOPN) Q3 2026 Earnings Call Transcript

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DATE

Nov. 10, 2026

CALL PARTICIPANTS

• Investor Relations – John James
• Chief Executive Officer – Michael Murray
• Chief Financial Officer – Erich Manz

TAKEAWAYS

• Total Revenue — $18.2 million, an increase of 52% year over year driven by research and development revenue from the Fabric.AI program and grant revenue under the U.S. government color MicroLED award.
• Loss from Operations — $500,000, representing a $3 million sequential improvement from the second quarter of 2026.
• Operating Cash Flow — $2.4 million, supported by development funding received from the Fabric.AI program.
• Total IBAS Funding — $34 million, following a new $18.6 million sole-source award from the Office of the Secretary of War for color MicroLED displays.
• Fabric.AI Development Revenue — $5.4 million, contributing to a total of $9 million received to date out of a potential $15 million funding agreement.
• Product Revenue — $8.8 million, a 15% increase sequentially but a decrease from $10.7 million in the third quarter of 2025.
• Grant Revenue — $3.1 million, reflecting progress under the company’s color MicroLED platform technology program.
• Cost of Product Revenue — 73% of product revenues, an improvement from 86% in the second quarter of 2026 due to lower scrap levels and one-time favorable items.
• Research and Development Expenses — $5.6 million, an increase from $2.5 million in the third quarter of 2025 due to higher funded research and development activity.
• Selling, General, and Administrative Expenses — $6.7 million, representing 37% of revenue compared to 40% in the second quarter of 2026.
• Net Loss — $3.4 million, or $0.02 per share, which included approximately $2.7 million of non-cash net losses on strategic equity investments.
• Cash and Cash Equivalents — $25.8 million, as of Sept. 26, 2026, up from $24.9 million at the end of the second quarter of 2026.
• Total Backlog — $45 million to $47 million pro forma, including the recent $18.6 million award not yet captured in the reported third-quarter backlog.
• 2027 Revenue Visibility — 50%, representing the portion of forecasted 2027 revenue currently held in the company’s backlog.
• Drone Goggle Revenue Guidance — $10 million for 2027, based on existing customer orders and conservative projections for the Drone Dominance Program.
• Capital Expenditures — $1.4 million in the third quarter, with an additional $1 million to $1.5 million expected for the remainder of 2026 to build domestic manufacturing capability.
• European Defense Orders — $8.5 million year to date, including a recent $2.4 million OLED microdisplay order from a thermal weapon sight manufacturer.
• Neural I/O Opportunity Pipeline — several hundred million dollars, including potential interest from U.S. defense and government law enforcement agencies.
• Manufacturing Grant — $800,000, awarded by the Massachusetts Manufacturing Innovation Initiative to install equipment for MicroLED and Neural I/O production.
• MicroLED Transition Timeline — mid-2027, for the commencement of product manufacturing in the company’s Westborough facility.

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RISKS

• Manz noted that the improvement in cost of product revenue to 73% was “primarily attributable to lower scrap levels and certain favorable items that were one-time in nature,” and warned that this ratio “should not be viewed as representative of the company’s anticipated cost structure in future periods.”
• Murray stated that the Drone Dominance Program “has moved more slowly than expected” due to the addition of an unplanned flight-testing phase called Gauntlet 2.5, which has shifted the timing of volume orders.

SUMMARY

Kopin Corporation (KOPN -1.77%) reported a transition toward a manufacturing-led model, focusing on onshoring MicroLED and OLED production to serve defense and AI infrastructure markets. Management reported that the company achieved positive operating cash flow during the quarter while narrowing its operating loss through increased funded development revenue. The company is expanding its physical footprint in Westborough, Massachusetts, by adding a 30,000 sq ft facility to house corporate functions, thereby dedicating its existing space entirely to manufacturing expansion. The company stated that it expects to achieve GAAP profitability in the fourth quarter of 2026 as it gains operating leverage from its $34 million in total funded development programs.

• The Neural I/O platform is scheduled for its first public demonstration at CES in Jan. 2027, with management reporting modeled results showing a 23% to 38% reduction in training time for AI workloads.
• CEO Murray stated, “Neural I/O could expand a tightly connected compute domain from roughly 72 GPUs today, row-scale configuration spanning hundreds to thousands of connected GPUs.”
• The company expects its internal OLED deposition line to become operational in early 2027, with the goal of reaching full domestic sourcing for OLED displays by 2028.
• CFO Manz indicated that current liquidity is sufficient to fund operations beyond the fourth quarter of 2027, with approximately $51.3 million in total cash and marketable securities.
• Management confirmed that more than a dozen new customers have placed prototype orders for the Sentinel FPV goggle for use in the Drone Dominance Program and other government use cases.
• The company intends to move to a monolithic integrated circuit design for its Neural I/O chipset as soon as possible to target commercial revenue in 2028.

INDUSTRY GLOSSARY

• Neural I/O: A MicroLED-based optical interconnect technology designed to replace electrical links in AI data centers with parallel optical channels.
• IBAS (Industrial Base Analysis and Sustainment): A U.S. Department of Defense program aimed at maintaining and improving the capabilities of the domestic industrial base.
• MicroLED: A display technology using microscopic light-emitting diodes that offers higher brightness and lower power consumption than traditional displays.
• OLED Deposition: The process of applying organic layers to a substrate to create an OLED display, a capability Kopin is moving in-house.
• SerDes (Serializer/Deserializer): Integrated circuits used in high-speed communications to convert data between serial and parallel interfaces.
• Gauntlet: The specific evaluation and flight-testing phases used by the Department of War to select vendors for the Drone Dominance Program.

Full Conference Call Transcript

Operator: Good afternoon, everyone, and welcome to the Kopin Corporation Third Quarter 2026 Earnings Call. Please note that this event is being recorded. At this time, I would like to turn the conference call over to John James, Investor Relations for Kopin. Please go ahead.

John James: Good afternoon, everyone, and welcome to the Kopin Corporation Third Quarter 202

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