Precision Optics 2025 Q3 Earnings Misses Targets as Net Income Declines 561%

Precision Optics (POCI) reported its fiscal 2025 Q3 earnings on May 15th, 2025. Precision Optics missed expectations with a 561.3% increase in net loss and a revenue decline of 20.2% compared to the same quarter last year. The company anticipates sequential revenue growth and aims for break-even adjusted EBITDA in the upcoming quarter. Despite the challenges faced in Q3, Precision Optics remains optimistic about its future performance, driven by the successful restart of production lines and strategic initiatives to enhance growth.

Revenue

In the latest quarter, the total revenue for Precision Optics fell significantly to $4.19 million, a decrease from $5.24 million in the same period last year.

Earnings/Net Income

The company's earnings per share (EPS) saw a sharp decline, with losses deepening to $0.30 per share in 2025 Q3 from a $0.05 loss per share in 2024 Q3. This indicates a substantial worsening of profitability, reflected in the net loss which widened to $-2.10 million. This performance signals ongoing financial challenges for Precision Optics.

Price Action

Post-Earnings Price Action Review

The strategy of purchasing Precision Optics shares after a revenue increase on earnings release day and holding for 30 days has delivered mixed outcomes over the past five years. Although there were some instances of positive returns during periods of revenue growth, the overall performance has been inconsistent and lackluster. For instance, in 2020, a revenue raise resulted in a 5.6% stock price increase, marking the highest return of the period. However, in 2022, a revenue increase led to a 4.1% loss, highlighting the strategy's vulnerability during market downturns. Over the past five years, the strategy yielded a modest total return of 7.6%, underscoring its susceptibility to fluctuating market conditions and company-specific developments. Investors should take note that past performance does not guarantee future results, and outcomes may vary depending on evolving market dynamics.

CEO Commentary

Joseph Forkey, CEO of Precision Optics, highlighted significant milestones achieved during the quarter, including a record production backlog supported by a Main Purchase Agreement with a top aerospace company, ensuring minimum annual purchase commitments of nearly $4 million through 2026. He acknowledged challenges faced, specifically low initial yields on their single-use cystoscope production line, which led to a temporary production pause and affected gross margins. However, Forkey expressed optimism, stating that production had successfully restarted with improved yields, and initiatives like the Unity Imaging Platform were expected to drive growth. He anticipates a positive fourth quarter characterized by sequential revenue growth and potential break-even adjusted EBITDA.

Guidance

Looking ahead, Precision Optics expects to achieve sequential revenue growth in the upcoming fourth quarter, with a target of reaching break-even or better adjusted EBITDA. The company anticipates that improved production results and advancements in new programs will further enhance performance, reflecting their strategic focus on expanding production capacity and meeting customer demand through ongoing investments.

Additional News

Precision Optics has recently undergone notable changes within its executive team. The company has appointed Buell Duncan, a former Chief Marketing Officer at IBM, and Joseph P. Pellegrino, Jr., a former Chief Financial Officer at LeMaitre Vascular, Inc., to its Board of Directors. These appointments are expected to bring valuable expertise and strategic insights to the company. Furthermore, Precision Optics has successfully closed a $5.1 million offering of common stock, which is intended to fund business expansion and support anticipated growth. This financial move aligns with the company's strategy to enhance production capabilities and meet increasing customer demand across its key markets.