KOPIN CORP Q4 FY2024 earnings call

• 2024 was a record year in revenue and orders since the disposition of the HBT business. Achieved 25% year-over-year growth, with Q4 revenue up 71% y-o-y. Quality rates improved and more predictable. Fourth quarter 2024 expense structure closer to normalized with lower legal costs. Reorganized teams under One Kopin strategy, formed new business development, program management, and quality teams. Implemented fab-lite strategy, bringing online new OLED and micro LED vendors. Rebranded, launched new website, and reinvigorated marketing. - Looking to 2025, reaffirms revenue guidance of $52M-$55M. Addressed tariffs, noting government contracts allow price increases if tariffs affect costs and raw wafer inventory supports 2025 demand. Executing One Kopin strategy to focus on European and Southeast Asian defense markets. Actively exploring strategic partnerships. Implementing AI-assisted factory and process automation for improved manufacturing efficiency. - Highlighted progress in neural display architecture, with operational prototypes and aim to announce milestones soon. Discussed IVAS program and contributions to related opportunities.

For the fourth quarter of 2024, total revenues were $14.6 million compared to $8.6 million in the prior year, representing a 71% year-over-year increase. Product revenues in the fourth quarter of 2024 were $12.6 million, up from $6.8 million in the prior year's fourth quarter, with a 100% year-over-year increase in defense product revenues. Funded research and development revenue in the fourth quarter of 2024 was $1.7 million, a decrease of $60,000 compared to Q4 2023, essentially flat. For the full year 2024, total revenues were $50.3 million compared to $40.4 million in the prior year, a 25% year-over-year increase. Product revenues for the year ended December 28, 2024, were $43.6 million compared to $25.9 million in the prior year, driven by an 82% increase in defense product revenues. R&D revenues for 2024 were 3% lower than the prior year, essentially flat.

• Reaffirms 2025 revenue guidance of $52 million to $55 million. - SG&A expected to be in the range of $10 million to $12 million. - Internal R&D goal is 7% of revenues. - Automation expected to improve margins throughout 2025.

• Litigation costs: $46 million loss in 2024 included $24.8 million reserve for Blue Radio's litigation. - Geopolitical and supply chain uncertainties. - Tariff impacts on costs and pricing.

Q: Asks about neural display technical improvements and commercial deployments.

A: Neural display is demonstrable, with next milestone being putting the technology into a headset, hopeful to announce a milestone this quarter or next.

Q: Asks about OpEx development and 2025 expectations.

A: SG&A expected to be around $10M to $12M, internal R&D goal is 7% of revenues, funded R&D is dependent on customer revenues.

Q: Asks about impact of government changes on customer engagement and contract pushouts, and Q1 order activity.

A: Not seen impacts from government budget cuts, have many funding requests, seeing influx of training and simulation opportunities and demand for optical systems globally, and have seen significant orders in Q1 with more to be announced.

Q: Asks about gross margin dynamics and next year's outlook.

A: Q4 had some mix issues with lower margin programs, Q3 2024 was a model for margins, automation expected to improve margins throughout 2025.

Q: Asks about update on the lawsuit.

A: No update on Colorado court, motions entered in Q4 regarding Massachusetts case, appeal of any judgment in Colorado expected to be sub-$1 million and a one-time cost.