LightPath Technologies, Inc. (LPTH) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with a 120% revenue increase and a positive EBITDA. Despite increased operating expenses, the net loss is mainly due to a non-cash adjustment, indicating underlying business strength. The backlog and cash position are robust, and strategic investments and partnerships, like with Lockheed Martin, highlight growth potential. The Q&A shows positive sentiment with plans for expansion and product development, though competitive pressures exist. Overall, the company's strong fundamentals and strategic initiatives suggest a positive stock price reaction.
Key Financial Performance
Revenue $16.4 million, increased 120% year-over-year from $7.4 million. The increase was driven by higher sales of infrared components, visible components, assemblies and modules, and engineering services, with G5 being the largest contributor.
Gross Profit $6 million, increased 212% year-over-year from $1.9 million. The increase was due to higher revenue from assemblies and modules, improved gross margins on engineering services, and a favorable mix in infrared components.
Operating Expenses $14.6 million, increased from $4.4 million year-over-year. The increase was primarily due to a $7.6 million fair value adjustment of the G5 earn-out liability, integration of G5, M&A costs related to Amorphous, higher sales and marketing spending, and increased personnel costs.
Net Loss $9.4 million, increased from $2.6 million year-over-year. The increase was mainly due to the $7.6 million fair value adjustment of the G5 earn-out liability. Excluding this adjustment, the net loss would have been $1.8 million, an improvement from the prior year.
Adjusted EBITDA $0.6 million positive, improved from a loss of $1.3 million year-over-year. This reflects better core operating performance by excluding non-core, non-cash items.
Cash and Cash Equivalents $73.6 million as of December 31, 2025, increased from $4.9 million as of June 30, 2025. The increase was due to a successful capital raise of approximately $65 million in net proceeds.
Backlog $97.8 million, reflecting a strong order book driven by higher-margin systems and subsystems.
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Operating Highlights
Black Diamond Glass: Proprietary chalcogenide glass licensed from U.S. Naval Research Laboratories, positioned as a secure alternative to germanium for infrared imaging. It aligns with the National Defense Authorization Act (NDAA) requirements for domestic sourcing.
G5 Infrared Cameras: Redesigned cameras using Black Diamond materials, enabling better performance and cost efficiency. G5 has booked over $80 million in new orders since acquisition, compared to $15 million in revenue the prior year.
Amorphous Materials Acquisition: Acquired to enhance production of large-diameter Black Diamond lenses, enabling applications in long-range imaging and space-related programs.
Defense and Aerospace: Positioned as a supplier of choice for mission-critical applications due to compliance with NDAA and proprietary materials.
Space Imaging: Potential to supply optical systems for satellite programs, including the Golden Dome program and Space Development Agency's satellite constellations.
Drone and Surveillance Markets: FCC ruling on critical components boosts demand for U.S.-made optical assemblies and cameras.
Revenue Growth: Achieved record revenue of $16.4 million in Q2 2026, a 120% increase year-over-year.
Gross Margin Improvement: Gross margin increased to 37%, driven by higher-margin assemblies and modules.
Capacity Expansion: Acquisition of Amorphous Materials adds 50% capacity and mitigates risks by diversifying production locations.
Capital Raise: Raised $65 million to fund growth initiatives, including M&A and capacity expansion.
Focus on U.S. Manufacturing: Realigned operations to comply with NDAA and FCC requirements, reducing reliance on foreign materials.
Long-Term Growth Strategy: Plans to leverage proprietary technologies and acquisitions to capture significant market share within 3-4 years.
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Risk or Challenges
Market Conditions: The company faces challenges related to the time-consuming nature of satellite development and government procurement processes, which operate in 2-year tranches. This could delay revenue realization from large-scale satellite programs.
Supply Chain Disruptions: Until recently, the company was producing glass in only one location, making it vulnerable to potential disruptions, such as hurricanes, that could significantly impact production.
Regulatory Hurdles: The company must comply with new FCC regulations banning critical components used in drones from non-U.S. sources. While this aligns with their current operations, it may require further evaluation and adjustments for drone-related camera systems.
Strategic Execution Risks: The company has a compressed 3-4 year window to capture significant market share and establish dominance in its field. This requires accelerated investments and acquisitions, which could strain resources and execution capabilities.
Economic Uncertainties: The company raised $65 million for growth investments, but the reliance on external funding highlights potential risks if market conditions or investor sentiment change.
Competitive Pressures: While the company has unique differentiators like Black Diamond glass, competitors are actively working to catch up, which could erode their competitive advantage over time.
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Guidance & Outlook
Revenue Growth: The company expects to continue its revenue growth trajectory, supported by a $97.8 million backlog and increasing customer adoption of its technologies. The focus is on converting backlog to revenue while protecting margins.
Gross Margin: The company aims to maintain gross margins at or above 35% by Q4 of fiscal 2026, with a focus on higher-margin systems and subsystems.
Product Development: Plans to redesign all G5 cameras to use Black Diamond materials by autumn 2026, enabling the production of long-range cameras without reliance on germanium. This is expected to enhance competitiveness and market share.
Market Expansion: The company is targeting significant growth in the defense and aerospace sectors, including opportunities in satellite imaging systems and long-range surveillance applications. The U.S. government’s Golden Dome program and other satellite initiatives present long-term growth potential, though revenue from these programs is expected to materialize in 2+ years.
Capital Allocation: The company has raised $65 million in net proceeds to fund strategic investments and M&A opportunities aimed at accelerating growth over the next 3-4 years. Investments will focus on revenue-generating activities and capacity expansion.
Strategic Focus: The company is prioritizing rapid scaling over the next 3 years to capture significant market share in the defense and industrial sectors. This includes leveraging proprietary technologies and a vertically integrated supply chain.
Compliance and Regulation: The company is well-positioned to benefit from U.S. regulations mandating the use of domestically produced optical materials and components, including the National Defense Authorization Act and FCC rulings on drone components.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Sales to Europe were significantly greater this quarter. Is that due to one specific customer or NATO spending in your facility in Latvia? Is it specifically camera products like the G5?
A:The increase is due to NATO spending in defense in Europe and Israel. These are not yet camera systems, but some G5 shipments to Europe are included. Some products go through the European market and return to the U.S., but detailed tracking data is unavailable.
Q:Are you looking at building lenses for optical inter-satellite links?
A:Yes, the company already has a strong business in free space optical communication between satellites and holds a dominant market position. Discussions are ongoing with customers to increase capacity for this growing market.
Q:What is the 3-year window you mentioned, and what does it signify?
A:The 3-year window represents the time frame in which the company has a competitive advantage due to its solutions outperforming germanium. This advantage is expected to last 3-5 years, during which the company aims to capture significant market share. Defense programs won during this period will provide long-term benefits.
Q:Where are you directing resources to capture opportunities during this competitive advantage window?
A:Resources are focused on capacity and product development. Investments are being made in product development, glass production, assembly, and fabrication. The company is prepared for these expansions and aims to accelerate product offerings.
Q:What is the timeline for converting all relevant cameras and subsystems to Black Diamond?
A:The company aims to complete the conversion within the calendar year, targeting the end of autumn.
Q:Can you discuss the programs Amorphous is involved in and the potential to scale their $3 million run rate?
A:Amorphous primarily serves one large defense prime customer, accounting for about 80% of their revenue, with involvement in two major airborne platforms. LightPath plans to expand Amorphous' offerings by leveraging its own capabilities in fabrication, molding, and coating.
Q:How should we think about gross margin for the March quarter?
A:The year-to-date gross margin is 33%, with a goal of 35%. Favorable events like high-margin engineering contracts contributed to the December quarter, but maintaining 33-35% is expected.
Q:Were you impacted by the government shutdown?
A:No, the company was not impacted by the government shutdown.
Q:What is the cost difference for a customer between a 5mm and a 15mm Black Diamond lens?
A:The cost difference arises from material costs and the number of lenses that can fit in a coating chamber. Larger lenses like 15mm result in higher coating costs due to fewer lenses fitting in the chamber.
Q:Review of Unclear Management Responses
A:Management avoided providing specific cost figures for the 5mm vs. 15mm Black Diamond lenses, citing a lack of exact numbers. Additionally, they did not provide detailed tracking data for products returning to the U.S. from Europe.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Act NDAA
Agency
Authorization Act
DJI
Defense Authorization
Earth orbit
FCC
NDAA compliant
National Defense
SDA
acquisition LightPath
acquisition Materials
acquisition line
acquisition week
adjustment earn
ban drone
camera system
cash flow
cash plan
chalcogenide glass
detection
differentiator
improvement
inch diameter
market share
progress
raise
resource
return
satellite camera
surprise
war chest
LPTH Transcript
LightPath Technologies, Inc. (LPTH) Q2 2026 Earnings Call Transcript
Positive2-11
The earnings call reveals strong financial performance with a 120% revenue increase and a positive EBITDA. Despite increased operating expenses, the net loss is mainly due to a non-cash adjustment, indicating underlying business strength. The backlog and cash position are robust, and strategic investments and partnerships, like with Lockheed Martin, highlight growth potential. The Q&A shows positive sentiment with plans for expansion and product development, though competitive pressures exist. Overall, the company's strong fundamentals and strategic initiatives suggest a positive stock price reaction.
LightPath Technologies, Inc. (LPTH) Q1 2026 Earnings Call Transcript
Positive11-11
The company shows strong financial performance with increased cash reserves and a significant backlog growth, indicating robust demand. The strategic shift to BlackDiamond glass enhances supply chain resilience and product performance. Despite no specific guidance, EBITDA is expected to remain positive, and gross margin improvements are targeted. Positive sentiment from analysts regarding strategic investments and partnerships suggests a favorable outlook, leading to a positive stock price prediction.
LightPath Technologies, Inc. (LPTH) Q4 2025 Earnings Call Transcript
Unknown9-25
The earnings call summary indicates financial struggles with increased net loss and operating expenses, despite revenue growth. The Q&A reveals management's avoidance of clear answers on key topics like backlog breakdown and Lockheed decision timeline, raising uncertainty. Although there is potential for future EBITDA profitability and backlog growth, the current financial health and lack of precise guidance suggest a negative sentiment. The decrease in gross margin and increased expenses further contribute to a negative outlook for the stock price over the next two weeks.
LightPath Technologies, Inc. (NASDAQ:LPTH) Q3 2025 Earnings Call Transcript
Unknown5-17
The earnings call presents a mixed picture: strong revenue and gross profit growth, but increased operating expenses and net loss. The acquisition of G5 Infrared shows promise with new orders and potential defense contracts, but integration risks and economic factors in China pose challenges. The Q&A reveals some delays and uncertainties, particularly with the Apache project and sales integration. The lack of a shareholder return plan and slightly reduced revenue guidance further contribute to a neutral sentiment. Without the market cap, the overall prediction remains neutral, balancing positive and negative factors.
LPTH Report
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