What Kopin (KOPN) Said on Its Q3 Earnings Call

Key Points

• Revenue climbed 52% year over year to $18.2 million, driven by funded development work that more than offset lower product sales. Kopin posted a $500,000 operating loss, generated about $2.4 million in operating cash, and ended the quarter with $25.8 million in cash and equivalents.
• An additional $18.6 million government award brought total color MicroLED funding to $34 million; Kopin put its combined backlog at roughly $45 million to $47 million and is targeting a manufacturing transition in mid-2027. It also plans to demonstrate Neural I/O in early 2027, with commercial revenue targeted for 2028.
• Management said fourth-quarter GAAP profitability remained achievable and aims to sustain profitability through 2027, with about 50% of anticipated 2027 revenue already in backlog. Kopin expects current liquidity to fund operations beyond Q4 2027.

Kopin NASDAQ: KOPN reported a 52% increase in third-quarter revenue as funded development work for its color MicroLED displays and Neural I/O optical interconnect technology offset a decline in product sales. The company narrowed its operating loss from the preceding quarter and generated cash from operations.

Revenue for the quarter ended Sept. 26, 2026, rose to $18.2 million from $12 million a year earlier and increased 43% from the second quarter. Chief Executive Officer Michael Murray said the company is using government and partner funding to develop technologies and manufacturing capacity that it hopes to convert into multiyear product programs.

Kopin posted an operating loss of $500,000, an improvement of $3 million from the second quarter. Its net loss was $3.4 million, or $0.02 per share, compared with net income of $4.1 million, or $0.02 per share, a year earlier. The latest quarter included approximately $2.7 million in net investment losses, largely reflecting noncash changes in the fair value of strategic equity investments.

Chief Financial Officer Erich Manz cautioned that the year-earlier results included a $5.1 million reduction in a litigation accrual and an approximately $3.3 million reduction in accrued legal fees, making some year-over-year comparisons less meaningful.

Development Revenue Drives Growth

Product revenue fell to $8.8 million from $10.7 million a year earlier, although it increased 15% from the second quarter. Non-product revenue rose to $9.4 million from $1.3 million, including $5.4 million in research and development revenue from the Fabric.AI program and $3.1 million in grant revenue from the color MicroLED award.

Fabric.AI is funding up to $15 million of development activities through a successful demonstration. Kopin had received $9 million by the end of the third quarter, including $4 million during the period.

Product costs were 73% of product revenue, down from 79% a year earlier. Manz said lower scrap and favorable one-time items contributed to the improvement and that the third-quarter ratio should not be treated as representative of future periods. In response to an analyst’s question, he said he expected product gross margin to return to the low 20% range.

Cash generated by operations was approximately $2.4 million in the quarter, supported in part by Fabric.AI funding. Kopin ended the quarter with $25.8 million in cash and equivalents. Its $51.3 million in total cash, restricted cash and marketable securities included $24.2 million in restricted cash collateralizing a bond related to the appeal of the BlueRadios litigation matter.

MicroLED Funding and Manufacturing Expansion

Murray said an additional $18.6 million sole-source government award brought total funding for Kopin’s color MicroLED platform to $34 million. The new award funds designs for two displays: one for next-generation aviation helmets and another for thermal weapon sights. The company remains on track to transition to MicroLED manufacturing in mid-2027, he said.

Kopin also demonstrated its color MicroLED display for the Soldier Borne Mission Command program to prime contractors and the program office during the quarter. Murray said the company had received small prototype orders from contractors evaluating the display. He said programs such as Soldier Borne Mission Command could represent hundreds of millions of dollars in revenue over their lives, though he did not present that figure as contracted revenue.

Asked about backlog, Murray said the additional award was additive to reported backlog and put the combined figure at roughly $45 million to $47 million. He estimated that $5 million to $7 million from the initial MicroLED award would remain to be consumed in 2027.

Kopin has secured a 30,000-square-foot facility next to its headquarters, allowing it to use more of its existing space for manufacturing. Murray said the company expects to add approximately 10,000 to 15,000 square feet of manufacturing capacity during 2027, with the additional capacity available around midyear.

Neural I/O Demonstrations and Drone Timing

Kopin and Fabric.AI plan to demonstrate Neural I/O at CES and SPIE Photonics West in early 2027. Murray said initial transmission-link testing had begun and that the demonstration would show a path to at least 1.6 terabits of bandwidth, while noting that it would be limited because the design is not yet fully monolithic.

A joint white paper modeled 1.3 to 1.6 times greater useful training throughput per GPU in a 10,000-GPU system, equivalent to roughly 23% to 38% less training time for the same workload. Murray emphasized that those figures were modeled results. Kopin is targeting first-generation production silicon and commercial Neural I/O revenue in 2028.

In defense, Kopin announced a $2.4 million OLED microdisplay order from a new European thermal weapon sight customer, with deliveries starting in the fourth quarter over six months. The company expects its OLED deposition line to come online in early 2027.

Drone-related orders have moved more slowly than Kopin previously expected after an additional testing phase was added to the Drone Dominance Program. Murray nevertheless said more than a dozen new Sentinel first-person-view customers had placed small prototype headset orders for the program and other government uses. He maintained an expectation of around $10 million in drone goggle revenue in 2027.

Profitability Outlook

Kopin recorded $41.5 million in revenue through the first nine months of 2026, up 34% from the same period a year earlier. Manz said the company had good visibility into its 2027 pipeline, with approximately 50% of anticipated revenue already in backlog.

Asked whether fourth-quarter GAAP profitability remained the goal, Manz said it was achievable based on Kopin’s revenue projection and spending profile. He added that the company’s current model aims for profitability to be sustainable through 2027. Kopin expects its current liquidity to fund operations beyond the fourth quarter of 2027, he said.

About Kopin (NASDAQ:KOPN)

Kopin Corporation develops and supplies microdisplays, optical components and wearable display systems. Its technologies include active-matrix liquid-crystal, liquid-crystal-on-silicon and OLED displays, along with related optics and electronics used to create compact, high-resolution viewing systems. The company's products serve defense, enterprise, medical and other markets. Applications include helmet-mounted displays, night-vision and thermal-imaging systems, industrial and training equipment, and medical devices.

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