Kopin NASDAQ: KOPN reported second-quarter 2026 revenue growth of 51% year over year, driven by government-funded MicroLED development work, its collaboration with Fabric.AI, an augmented-reality thermal clip-on partnership and Army research programs. The company also outlined progress in its Color MicroLED, first-person-view drone, OLED manufacturing and AI infrastructure initiatives.
Total revenue for the quarter ended June 27 reached $12.7 million, compared with $8.5 million a year earlier. Product revenue was largely flat at $7.6 million, versus $7.5 million in the prior-year quarter, as higher defense revenue from thermal weapon sights and liquid-crystal displays was mostly offset by lower industrial sales. Non-product revenue increased to $5.1 million from $1 million, reflecting grant, collaboration and funded research-and-development revenue.
Profitability and Balance Sheet
Cost of product revenue was $6.6 million, or 86% of net product revenue, improving from $7.1 million, or 94% of net product revenue, in the year-earlier period. Chief Financial Officer Erich Manz attributed the improvement primarily to product mix.
Research and development expense increased to $4.5 million from $1.9 million, largely because of funded R&D costs associated with the government award for ultra-bright, full-color MicroLED displays. Selling, general and administrative expense rose modestly to $5.1 million from $4.9 million, reflecting higher professional fees and accrued performance-based compensation.
Loss from operations narrowed to $3.5 million from $5.5 million. Net income attributable to common stockholders was $0.9 million, or $0.00 per share, compared with a net loss of $5.2 million, or $0.03 per share, a year earlier. Manz said the improvement reflected revenue growth, a $1.9 million rise in other income that included approximately $2.3 million of investment gains, and a $2.1 million income-tax benefit tied to the expiration of a statute of limitations on an uncertain tax position.
At the end of June, Kopin had $24.3 million of cash and cash equivalents and $50.3 million of total cash, restricted cash and marketable securities. That total included $26 million of restricted cash, including $24.2 million collateralizing a supersedeas bond related to the BlueRadios litigation appeal. The company said it does not expect a further update on the federal appeal until approximately mid-2027.
Management maintained its expectation for a stronger second half that exceeds its prior guidance, though it did not provide a new numerical range. Manz said Kopin expects to begin generating GAAP profitability and positive free cash flow in the fourth quarter of 2026.
MicroLED Program Advances
Chief Executive Officer Michael Murray said Kopin achieved three milestones under the U.S. government’s Industrial Base Analysis and Sustainment, or IBAS, program for Color MicroLED development. The company reported more than 150,000 nits of single-panel full-color brightness, above the program’s threshold target; early integration progress for Army ground-soldier vision applications; and delivery and installation work for new MicroLED bonding equipment at its Westborough, Massachusetts headquarters.
The bonding equipment is intended to attach MicroLED arrays to digital backplanes, a key production step. Kopin expects to transition to manufacturing product in mid-2027. Murray said the technology could support Army programs including Soldier Borne Mission Command, while the company is also pursuing applications in heads-up displays, weapon sights and helmet-mounted systems.
During the question-and-answer session, Murray said Kopin expects to complete three additional IBAS milestones during the fourth quarter, positioning it to provide Color MicroLED samples to industry and government customers in 2027. He said the company expects awards and potentially low-rate initial production in 2027, while main production for the Army program remains slated for 2028.
Drone and OLED Manufacturing Plans
Kopin said it received multiple Sentinel FPV prototype orders from customers participating in evaluations tied to the Pentagon’s Drone Dominance Program. Sentinel is a first-person-view headset designed to provide drone imagery while preserving a user’s peripheral awareness, unlike fully enclosed goggles.
Murray said Drone Dominance Program winners could require tens of thousands of FPV goggles, with volume orders potentially beginning in late 2026 following Phase II evaluations and awards. He added that the company is negotiating several larger production orders for 2027 and characterized the potential Sentinel opportunity next year as “tens of millions of dollars,” though he said results will depend on which drone manufacturers win program awards.
The company has received more than $45 million in orders so far in 2026, according to management. Its defense activity also includes a $21.5 million follow-on thermal imaging production contract, European helmet-mounted display programs, a DarkWAVE development order with Theon, and initial Sentinel production orders.
Kopin is bringing OLED deposition in-house to support FPV demand and international OLED orders. Its OLED deposition line is expected to come online in early 2027. Murray said the company expects in-house deposition to improve gross margin by at least 15 points next year by reducing external margin costs, and said the system should cover expected demand through 2027 and 2028.
AI Infrastructure and Dallas Expansion
Kopin plans to open an optics and photonics design center in Dallas before year-end. The facility is expected to include laboratory, engineering, research-and-development and manufacturing capacity focused on the company’s Neural I/o platform and application-specific optical solutions.
The company is working with Fabric.AI under a $15 million initial development order to develop GPU-to-GPU connectivity technology. Kopin expects to complete a demonstrable chiplet by the end of 2026 and demonstrate the Neural I/o platform at CES in January 2027. Murray said the demonstration is expected to show real-time transmission and reception of data through a transceiver tile, with a roadmap toward a 1.6-terabit-per-second solution.
Management said it has signed several new nondisclosure agreements, including with current NVIDIA NVLink partners, and has received early interest from potential quantum-computing and semiconductor customers. However, Murray said he does not expect production revenue from Neural I/o in 2027, instead anticipating development and R&D orders that could range from $20 million to $30 million for a chip program. He said production revenue would more likely begin in 2028.
Kopin also said both phases of its optical automation program are operational and remain on track to produce approximately $1 million in annual operating-expense savings while increasing production capacity as utilization rises.
About Kopin (NASDAQ:KOPN)
Kopin Corporation NASDAQ: KOPN is a technology company specializing in the development and manufacture of high-resolution microdisplays and optical components for wearable electronics. Headquartered in Westborough, Massachusetts, Kopin designs both liquid crystal on silicon (LCOS) and organic light-emitting diode (OLED) microdisplays, as well as complete display engines and optical modules tailored for use in augmented reality (AR), virtual reality (VR), industrial, medical, and defense applications.
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