Kopin (NASDAQ:KOPN) executives told investors its fourth-quarter results were weighed down by U.S. government shutdown-related delays, but said demand signals in defense end markets remain strong and the company expects a recovery as procurement activity normalizes.
On a Friday morning earnings call, CEO Michael Murray described 2025 as a “transformational year,” pointing to a strengthened balance sheet, expanded manufacturing and automation capabilities, and a set of strategic partnerships aimed at broadening Kopin’s defense and drone-related opportunities. CFO Erich Manz, in his first full quarter in the role, provided an overview of unaudited preliminary financial results and said the company is focused on improving operational visibility and financial reporting as it enters what management called the second phase of its multi-year transformation plan.
Shutdown-related delays hit fourth-quarter revenue
Product revenue fell to $5.6 million from $12.6 million. Manz said the decline reflected shutdown-related delays in product orders and reduced shipments tied to U.S. defense applications, along with standard training and simulation order flow that was “seasonally lower than expected.” He added that product order flow has since returned to anticipated levels and that new European product orders have exceeded forecasts.
Non-product revenue—defined as funded R&D, collaborative agreement, and grant revenue—rose to $2.5 million from $1.7 million, primarily driven by the IVAS color MicroLED development program. However, Manz noted that some revenue and research awards were lower due to delays, while several new contracts have been awarded and others are still expected.
Cost of product revenue was $4.7 million, or 83% of net product revenue, compared with $10.7 million, or 84%, a year earlier. Manz said the slight improvement in cost as a percentage of product revenue was driven by product mix, and he credited quality initiatives, cost containment, and automation efforts for helping maintain similar performance despite lower volume.
Operating expenses were mixed. Research and development expense increased to $3.5 million from $3.2 million, which Manz characterized as within normal quarterly fluctuations and reflective of continued investment in internally funded technology development and MicroLED process improvements. Selling, general and administrative expense rose to $4.5 million from $3.1 million, largely due to higher professional fees and outside services tied to capital-raise and partnership transactions, partially offset by lower incentive compensation.
Balance sheet strengthened following $56 million capital raise
Murray said Kopin raised $56 million in capital from strategic and institutional investors during 2025, describing it as a key step in strengthening the company’s financial position. Manz reported cash and cash equivalents of $37.8 million as of Dec. 27, 2025, with $23 million of bonded cash presented as a long-term asset.
Manz also noted that Kopin deconsolidated its U.K. entity in the fourth quarter due to what he described as “technical accounting considerations” stemming from a fourth-quarter investment in that entity. He said the change was not a significant factor in operating results but does affect comparability. The deconsolidation removed approximately $8 million of cash from the consolidated results, and he said the company expects the situation to be temporary and anticipates reconsolidating the entity in the near term.
Defense programs and European expansion highlighted as growth drivers
Murray said defense programs remain Kopin’s “core” business and strongest growth driver, citing ongoing supply to thermal weapon sight programs and continued participation in Soldier Borne Mission Command (SBMC), previously known as IVAS. He said the SBMC program is a $22 billion Army effort now under Anduril, and that Kopin’s IVAS-funded color MicroLED program is progressing.
Management also emphasized the company’s partnership with Theon International, announced in August, which Murray said provides access to growing defense markets in Europe, Southeast Asia, and NATO member countries. According to Murray, sales with Theon have begun, joint development work is underway, and he expects the partnership to become “an increasingly meaningful contributor” to revenue in 2026 and more significantly in 2027. Murray added that Kopin had already signed three new contracts with three new European customers in the first quarter of 2026, which he said could significantly increase European business this year and potentially double it next year.
Murray discussed the company’s $15.4 million color MicroLED award through the IBAS program, calling it a “landmark win” and describing it as representing a $1 billion serviceable addressable market in the U.S. alone. He said Kopin has negotiated a similar MicroLED product for Theon and the European market, expanding the addressable opportunity beyond the United States. Development is on schedule, he said, and customer engagement remains strong.
In response to an analyst question, Murray said year-end backlog was “in the range of” $37 million and that the company expects to book additional larger orders—“tens of millions of dollars”—within about eight weeks that would be deliverable in 2026.
Operational automation and new product hints
Murray said both phases of Kopin’s optical automation program are now operational, driving improvements in throughput, quality consistency, and cost efficiency. He said the automation investments are expected to deliver more than $1 million in annual operating expense savings at full utilization. In the Q&A, he said the company is “starting to see it now,” with savings flowing through operating expenses and the ability to show quarter-over-quarter results in 2026.
He also highlighted progress on NeuralDisplay technology, which he described as turning a microdisplay into a bidirectional sensing system that can provide and consume images and data simultaneously. Murray said the technology could enhance image quality, reduce power consumption, and improve user experience across defense and commercial applications, with additional updates expected as development milestones are reached.
In another Q&A exchange, Murray said Kopin expects to announce two new products and product lines in two new markets during 2026, though he declined to share details during the call, stating they were not yet ready to be discussed.
Drone market opportunity and 2026 revenue guidance
Murray also discussed drone-related opportunities, citing partnerships with Ondas Holdings and Unusual Machines and noting U.S. Army intent signals to procure more than 1 million drones in coming years. He referenced a projection for the first-person drone market to grow from under $300 million to $1.2 billion by 2030, representing a 31% compound annual growth rate. Responding to an analyst question about commercial drone demand, Murray said interest has increased in first-person viewer products and that some companies are asking Kopin to redesign devices with its displays and optics. He said the company expects meaningful results to share by the third quarter, and cited potential volumes discussed with customers ranging from 60,000 to 100,000 first-person viewers, implying 120,000 to 240,000 microdisplays and optics.
Looking ahead, Murray said Kopin expects some continued impact from the shutdown into the first quarter of 2026 but provided “conservative” revenue guidance of $52 million to $60 million for 2026. He framed the company’s next phase as “accelerate, expand, and innovate,” with priorities to execute on defense programs, grow Theon partnership revenue, advance MicroLED technology toward production, and deliver profitable growth.
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.
