Kopin Reports Q1’23 Financials: Defense Product Revenues Soar Despite Overall Revenue Dip

Kopin Panasonic CES 2020 Both resize

Kopin, the developer and provider of high-performance application-specific optical solutions consisting of high-resolution microdisplays, microdisplays subassemblies and related components for defense, enterprise, industrial, and consumer products announced encouraging results from its first quarter of 2023. Kopin’s efforts and resources are on the growing defense business and it is keeping an eye what Apple does with its headset to see if there is a very large scale consumer MicroOLED opportunity a little further down the road for its technologies.

Kopin had licensed some of its MicroOLED and optical technologies to Lightning Silicon, a spin-off from the company, to focus on near-term business opportunities. This essentially removed the burden of MicroOLED R&D operating expenses from Kopin, while Kopin could continue to benefit from royalties and its equity position in Lightning Silicon.

CategoryQ1’23Q1’22QoQ Change (%)
License and Royalties0.20.20.0%
Kopin display revenues by category (in $ millions)

First Quarter Financial Results

Kopin reported Q1’23 total revenues of $10.8 million, which represents a 7% decrease quarter-over-quarter (QoQ) from $11.6 million in Q1’22. Despite the overall revenue dip, product revenues saw a year-over-year (YoY) increase of 17.6%. Defense product revenues showed substantial growth, up 35% YoY or by $1.7 million. However, industrial product revenues experienced a downturn, decreasing 39% YoY or by $0.6 million.

($ in millions)Q1’23QoQ Change (%)Q4’22QoQ Change (%)Q3’22QoQ Change (%)Q2’22
Net income-2.63+57.31%-6.16+0.16%-6.15-8.85%-5.65
Net profit margin-24.43%+51.53%-50.53%-3.64%-52.43%-10.58%-47.42%
Operating income-2.83+54.47%-6.22+54.73%-4.02-26.27%-5.47
Cost of revenue6.62+28.05%5.17-54.73%11.43-12.81%13.05

In Q1’23, funded research and development revenues were down by $2.0 million, a 41% decline. This was due to the transition of certain defense development programs into production.

Cost of product revenues in Q1’23 was significantly lower at $6.6 million or 87% of net product revenues, compared to $7.8 million or 120% of net product revenues in Q1’22. This reduction is attributed to lower material usage for warranty issues and the use of previously written-off materials.

Research and Development (R&D) expenses for Q1’23 were $2.3 million, marking a substantial 57% decrease YoY from $5.4 million in Q1’22. This reduction was primarily driven by customer-funded programs moving into production and the completion of certain display development activities.

Selling, General and Administration (SG&A) expenses in Q1’23 slightly increased to $4.6 million from $4.5 million in Q1’22. The minor increase was primarily due to increased professional fees, which were partly offset by lower cash and stock-based compensation and benefits.