LightPath's Q1 2026 Earnings Call: Contradictions on Capacity Expansion, Supply Chain Challenges, and Growth Projections

Date of Call: November 11, 2025

Financials Results

• Revenue: $15.1M, up 79% YOY (vs $8.4M in Q1 FY2025)
• EPS: $0.07 loss per basic and diluted share, vs $0.04 loss prior year (net loss $2.9M vs $1.6M)
• Gross Margin: 30% of revenue ($4.5M gross profit), down from 34% prior year; gross profit up 58% YOY

Guidance:

• Management is targeting to replicate Q1 revenue in the December quarter (they are "shooting for" Q1 levels).
• Expect margin expansion during FY2026 and intend to step up gross margin toward ~35% by fiscal year end (March).
• Continue reporting adjusted EBITDA; adjusted EBITDA was positive this quarter and management expects continuation.
• $8M strategic investment from Ondas/Unusual Machines to fund capacity, hiring and commercialization of uncooled drone solutions.
• Scaling production: larger Texas facility move, added BlackDiamond glass capacity and camera integration in Orlando.

Business Commentary:

* Record Backlog and Revenue Growth: - LightPath Technologies reported a record backlog of $90 million for Q1 2026, more than 4x the level of just a few short quarters ago. - The company's revenue increased by 79% to $15.1 million in Q1 2026 compared to $8.4 million in the same year-ago quarter. -

. - The growth was driven by increased customer adoption of its technologies and strategic acquisitions that expanded its product offerings.

• Shift to Systems and Subsystems:
• More than 66% of LightPath's backlog is now in systems and subsystems, reflecting a strategic shift from components.
• This shift is expanding margins and deepening customer relationships, as customers rely more on LightPath for critical capabilities and supply assurance.

• The transition is part of the company's strategy to move up the value chain and capture more of the value created in the photonics industry.

• Strategic Investments and Partnerships:

• LightPath received an $8 million strategic investment from Ondas Holdings and Unusual Machines to support its commercialization roadmap.
• This investment underscores LightPath's strategic relevance in reshoring advanced optical and imaging technologies to the U.S. and Europe.

• The partnership is intended to accelerate commercialization, particularly around uncooled infrared solutions for drone applications.

• Germanium-Free Technology and Supply Chain Resiliency:

• LightPath's proprietary BlackDiamond glass, a domestic alternative to germanium, is enabling germanium-free infrared optics and camera systems.
• Customers are switching to LightPath's technology due to supply chain disruptions caused by China's restrictions on germanium exports.
• The strategic focus on domestic alternatives is aimed at increasing supply chain resiliency and mitigating potential disruptions.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management cited "record orders," a backlog of ~ $86–90M, revenue up 79% YOY to $15.1M, gross profit up 58% to $4.5M, adjusted EBITDA positive $0.4M, and an $8M strategic investment to scale production — framing these as evidence of an inflection point and expected margin expansion.

Q&A:

• Question from Richard Shannon (Craig-Hallum Capital Group LLC): I wanted to ask about germanium and BlackDiamond glass. It seems some reports that maybe China is opening up the window for acquisition of germanium outside the country. I wanted to see if you're seeing that and whether there's any different reaction or approach to germanium given that? And then also maybe as a follow-on here, maybe you can talk to us about how fast you're converting your portfolio of cameras and subassemblies to BlackDiamond and how fast you expect the customers to transition there?
  Response: China may loosen availability but customers remain risk‑averse and prefer BlackDiamond; conversion of cameras is ongoing but paced by internal engineering resources and hiring, with priority on delivering current revenue before accelerating redesigns.

• Question from Richard Shannon (Craig-Hallum Capital Group LLC): Maybe just addressing the supply chain resiliency and capacity. You mentioned a couple of dynamics specifically regarding Visimid. If you can describe where else you're having to work to improve capacity either from an internal capability or equipment point of view or with external suppliers? And over what time frame do you expect that to be improved or resolved?
  Response: Capacity additions are needed broadly (Latvia, Orlando, more glass furnaces); most elements are vertically integrated except detector focal plane arrays, which are vendor-constrained and addressed through vendor collaboration.

• Question from Richard Shannon (Craig-Hallum Capital Group LLC): Any thoughts as to how you'd like us to think about the sales progression in the December quarter would be a great help here. And then how do we think about the EBITDA follow-through on that as well?
  Response: No formal guidance; management is "shooting for" matching Q1 revenue in Q2 and expects continued positive adjusted EBITDA.

• Question from Glenn Mattson (Ladenburg Thalmann & Co. Inc.): In the past, you said that NGSRI would be like potentially a fall of 2025 award or maybe first Q calendar '26. Is that still your expectation? And I guess in the second quarter that you talked about the upgraded Texas facility that services that contract. So I don't know if you're trying to signal high confidence there? Or if you can clarify that, that would be helpful as well.
  Response: Timeline is uncertain due to government processes, but Lockheed is flight‑test ready; LightPath made a deliberate capacity investment with Lockheed to be prepared if awarded.

• Question from Glenn Mattson (Ladenburg Thalmann & Co. Inc.): On the gross margin... with the 2/3 backlog in systems and modules, maybe just directionally, can you remind us of where you think that's going medium and long term?
  Response: Management expects margin expansion and aims to reach roughly 35% gross margin by fiscal year end (March); Q1 mix (more IR components) pulled margins down despite strong dollars.

• Question from Glenn Mattson (Ladenburg Thalmann & Co. Inc.): You mentioned scaling operations and I just wonder what that means in terms of OpEx. If you're trying to signal some increased investment there.
  Response: Not expecting a major OpEx increase; capacity additions are primarily CapEx (e.g., furnaces) and relatively low-cost assembly workstations and footprint rationalization.

• Question from Jaeson Schmidt (Lake Street Capital Markets, LLC): Curious how many of these sort of 8-figure deals you have in the pipeline?
  Response: Approximately seven (7–8) opportunities that could each generate $10M+ annually.

• Question from Jaeson Schmidt (Lake Street Capital Markets, LLC): Would we expect any sort of noise in the gross margin line with these capacity expansion plans here in the December quarter?
  Response: CFO does not expect margin degradation from the planned capacity expansions and models improvement instead.

• Question from Jaeson Schmidt (Lake Street Capital Markets, LLC): Looking at that backlog number, at one point G5 was about 2/3 of that backlog. Is that still the case?
  Response: Yes — G5 remains roughly two‑thirds of the backlog, though it fluctuates.

• Question from Orin Hirschman (AIGH Investment Partners): Going back to the question on those other potential awards of decent size awards. Can you just go back and just what's -- go through what's really driving it? Is it the long-range infrared cameras? What are behind most of those deals if there is -- if there are 1 or 2 trends that are noticeable?
  Response: The primary driver is BlackDiamond glass — improved performance and supply‑chain independence — plus demand for long‑range/mid‑range thermal cameras (counter‑UAS and defense programs).

• Question from Orin Hirschman (AIGH Investment Partners): In terms of the long-range cameras for spotting drones and UAS, is there any other technology that's crept up that could spot them from the same distance or without -- without using -- without having to use frequency -- radio frequency?
  Response: Thermal cameras remain essential for visual validation at range and in adverse conditions; other sensors (RF/radar) require visual confirmation before kinetic engagement.

• Question from Orin Hirschman (AIGH Investment Partners): The systems that are being shipped, are they primarily just to the military directly? Or are they actually to customers that are integrating them into systems that actually do the defense and try and take it down?
  Response: Cameras are shipped to integrators (defense primes and smaller integrators), not directly to militaries for long‑range cameras.

• Question from Orin Hirschman (AIGH Investment Partners): Do integrators integrate so the drone is kept under surveillance and the system does calculations to help countermeasure decisions?
  Response: Yes — integrators incorporate cameras into pan‑tilt systems and use camera data for tracking, distance/azimuth and additional calculations to support countermeasures.

• Question from Orin Hirschman (AIGH Investment Partners): On the missile program. Are there other missile programs that need the same level of sophistication that are in any stage of discussion or anything moving along through the pipeline?
  Response: Yes — LightPath is integrated into two additional missile programs, though they are earlier stage than NGSRI.

• Question from Orin Hirschman (AIGH Investment Partners): Are those actually clear that those programs are going to go into production? Have you talked about those programs?
  Response: They are earlier stage and not assured for production yet, but prior development and environmental testing shorten future program timelines.

• Question from Orin Hirschman (AIGH Investment Partners): Is there a non-GAAP OpEx number pulling out acquisition-related charges?
  Response: No — management does not have a non‑GAAP OpEx number excluding acquisition charges available.

Contradiction Point 1

Capacity Expansion and Production Ramp

It involves the company's strategic approach to meeting increased demand through capacity expansion, impacting production timelines and revenue projections.

How quickly are you transitioning your camera and subassembly portfolio to BlackDiamond glass? - Richard Shannon(Craig-Hallum Capital Group)

2026Q1: LightPath is focused on converting our portfolio of cameras and subassemblies to BlackDiamond glass, which is critical to long-term growth. This conversion process is ongoing. - Sam Rubin(CEO)

What does the Visimid capacity expansion signal, and what other work will it handle besides the Lockheed contract? - Glenn Mattson(Ladenburg Thalmann & Co.)

2025Q4: We are seeing extremely strong demand for our NGSRI and border security cameras, and we have expanded our capacity at Visimid to meet this increased demand. - Sam Rubin(CEO)

Contradiction Point 2

Growth Opportunities and Revenue Projections

It involves the company's outlook on growth opportunities and revenue projections, which are crucial for investor expectations.

How many $10M+ annual revenue opportunities are in the pipeline? - Jaeson Schmidt(Lake Street Capital Markets)

2026Q1: We currently have about 7 such opportunities, with counter-UAS and larger system programs contributing. - Sam Rubin(CEO)

What was G5's contribution to Q2 revenue? Additionally, how much of the $90 million backlog is from G5? - Jaeson Schmidt(Lake Street Capital Markets)

2025Q4: We have about $90 million of backlog on our books already reflecting our strong pipeline of orders, which we expect to ship over the next fiscal years 2026 and 2027. - Albert Miranda(CFO)

Contradiction Point 3

Germanium and BlackDiamond Glass Supply and Demand

It involves the company's strategic positioning and resource allocation in response to evolving material supply constraints, which could affect production capabilities and financial performance.

How are you addressing germanium and BlackDiamond glass with China opening a window for overseas germanium acquisitions? - Richard Shannon (Craig-Hallum Capital Group LLC)

2026Q1: The germanium situation changes daily, but China remains cautious about using germanium in defense applications. Customers are switching to BlackDiamond due to supply chain concerns. The transition pace is limited by resources, but priorities are currently on short-term revenue. - Sam Rubin(CEO)

What caused the delays in the Apache program? - Glenn Mattson (Ladenburg Thalmann)

2025Q3: We continue to work closely with our suppliers. As I mentioned earlier in my prepared remarks, we've had our own glass production ready to go for a while, and we've just been waiting for the glass to start the production ramp. And now we are on a known path towards resolution. - Sam Rubin(CEO)

Contradiction Point 4

Capacity Expansion and Gross Margin Expectations

It involves changes in operational strategies and financial forecasts, specifically regarding capacity expansion and gross margin expectations, which are critical for investor confidence and business planning.

What steps are you taking to improve capacity internally or through external suppliers, and how long will resolution take? - Richard Shannon (Craig-Hallum Capital Group LLC)

2026Q1: Capacity additions are needed across all production areas due to strong demand. Vendors may face constraints, but most components are vertically integrated. Investments in glass and new facilities are planned to accommodate growth. - Sam Rubin(CEO)

Are there capacity constraints on the G5 side, and can production be moved to Orlando? - Scott Buck (H. C. Wainwright)

2025Q3: Capacity constraints on the G5 side are minimal with the ability to add shifts and trained workforce. Detector supply is secured with large orders, and LightPath can provide optical components if needed. Overall, capacity is not a concern. - Sam Rubin(CEO)

Contradiction Point 5

Impact of Supply Chain Constraints

It highlights differing perspectives on how supply chain constraints have affected the company's operations, which could influence investor perceptions regarding the company's resilience and adaptability.

How are you addressing germanium and BlackDiamond glass given China’s recent opening of a window for overseas germanium acquisitions? Additionally, how quickly are you transitioning your camera and subassembly portfolio to BlackDiamond glass? - Richard Shannon(Craig-Hallum Capital Group LLC)

2026Q1: The yield issues in the quarter were not particularly bad, only normal in nature. However, due to the lack of extra materials from China, the yield issues became amplified, causing delays in delivery. - Sam Rubin(CEO)

How are Chinese supply chain disruptions affecting this quarter? - Orin Hirschman(AIGH Investment Partners)

2025Q2: We've shipped most of the impacted orders already in the first six weeks of this quarter. The supply chain from China is still slow, causing uncertainty about order fulfillment for the rest of the quarter. - Albert Miranda(CFO)