Kopin (KOPN -4.02%), a technology firm specializing in microdisplays used in defense systems and industrial devices, reported Q2 FY2025 earnings on August 12, 2025. The company reported a sharp decline, with GAAP revenue dropping to $8.5 million in Q2 2025 from $12.3 million in Q2 2024, and missed Wall Street’s GAAP revenue and earnings expectations. Revenue (GAAP) fell to $8.5 million, down from $12.3 million in Q2 FY2024, and was below the analyst consensus of $10.57 million (GAAP). Earnings per share (GAAP) were a loss of ($0.03), greater than the expected loss of ($0.01). The period’s performance reflected weakening fundamentals, as defense sector order delays impacted short-term results. Management characterized this as a transitional phase, with initiatives underway to expand market reach and address operational challenges.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | ($0.03) | ($0.01) | ($0.05) | 0.02 |
| Revenue | $8.5 million | $10.57 million | $12.3 million | (30.9 %) |
| Net Product Revenue | $7.5 million | $11.1 million | (32.4 %) | |
| Gross Profit | $1,383,366 | $3,651,095 | -62.1 % | |
| Research and Development Expense | $1.9 million | $1.8 million | 5.6 % decrease | |
| Selling, General and Administration Expense | $4.9 million | $7.3 million | (32.9 %) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q4 2024 earnings report.
Understanding Kopin’s Business and Strategic Focus
Kopin designs and manufactures microdisplay products, which are miniature high-resolution screens used in applications such as thermal weapon sights, pilot helmet displays, and wearable industrial devices. Its technology portfolio includes active-matrix liquid crystal displays, organic light-emitting diode displays, and related systems that power defense electronics, as well as emerging medical and industrial devices.
Recently, its focus has leaned heavily toward innovation in new display types and automated manufacturing, aiming to keep a technological edge. Management has also emphasized forming new partnerships, especially outside the US, to reduce reliance on government spending and to diversify revenue streams. Success for Kopin depends on maintaining product leadership in display technology, securing long-term defense contracts, and expanding presence in new geographic markets.
Quarter Review: Financial and Operational Developments
During Q2 2025, revenue (GAAP) dropped 31.5% year over year. Management cited delays in government-related defense orders, along with lower orders for training, simulation, and optical inspection modules, as the main reasons for lower product revenue in Q2 FY2025. Defense segment revenue was $6.3 million, down 39% year over year. Meanwhile, industrial and enterprise segment revenue rose to $1.0 million (GAAP), and a small but new contribution came from medical applications at $0.2 million (GAAP).
Earnings per share (GAAP) were a loss of ($0.03), as Kopin struggled with the effect of fixed costs on lower production volumes. Gross profit (GAAP) was $0.43 million, largely due to the high cost of product revenue, which reached 94% of product sales. This increase in production costs per unit reflected underutilized facilities as fewer orders came in. Operating expenses saw a reduction, with selling, general, and administrative costs dropping to $4.9 million, mainly from lower legal fees.
Cost control efforts were evident: Research and development expense increased to $1.9 million in the second quarter of 2025 from $1.8 million in the prior-year period, with internal investment rising by $0.3 million year over year as the company advanced production automation initiatives. Management continues to reposition the business through streamlining and process improvements, while also investing in innovation. Progress during the quarter included the achievement of a key milestone for the NeuralDisplay microdisplay product, which features improved hardware and software integration, as well as the first phase launch of optical automation aimed at reducing costs and raising quality in manufacturing.
An important development was the new partnership with Theon Sensors, S.A, a global developer of night vision and electro-optical systems. This relationship is expected to give Kopin access to new defense opportunities across Europe and Southeast Asia, regions where it has historically had minimal reach. Order flow improved toward the end of Q2 2025, with newly won contracts in helmet-mounted displays and micro light-emitting diode (MicroLED) research segments contributing to a positive book-to-bill ratio, indicating more orders were booked than filled during the period.
KOPN does not currently pay a dividend.
Financial Position and Balance Sheet Developments
The company ended Q2 2025 with $27.8 million in cash, restricted cash, and marketable securities, down from $36.6 million at the end of FY2024. Inventory increased slightly to $6.7 million as of June 28, 2025. Kopin carried $41.4 million in current liabilities, including $24.8 million specifically related to ongoing litigation damages as of June 28, 2025, while stockholders’ equity (GAAP) declined to $16.0 million as of June 28, 2025. This balance sheet structure reflects current pressures but maintains some financial resources for continued investment and operational adjustments.
Leadership changes were also announced, with Erich Manz set to join as Chief Financial Officer effective September 2.
Outlook and Investor Considerations
The company did state that order flow from key defense customers had improved after the end of the quarter and that additional contracts are anticipated over the coming months.
Investors should monitor developments in defense order timing and watch how quickly new partnerships, like the collaboration with Theon Sensors, impact reported financials. Progress on technology and automation, as well as any improvement in gross margins, will be critical to stabilizing and growing the business in the near future. KOPN does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
