MIT's Q1 2026: Contradictions Emerge on International Strategy, LEA Adoption, and Revenue Growth

Date of Call: November 14, 2025

Financials Results

• Revenue: $5.6M, up 6.2% YOY (Q1 '26)
• EPS: $0.05 per share, improved from breakeven in Q1 '25 (net income $509k vs net loss $25k)
• Gross Margin: 30%, compared to 26.1% in Q1 '25 (gross profit up 22% to $1.7M)

Guidance:

• Q2 FY'26 revenue expected to be approximately $3.4M, reflecting holiday-season softness and limited exhibitor capital spending.
• Q2 gross margin percentage expected to revert to a more historical/lower level due to revenue mix and seasonality.
• Continued benefits from a lean operating model, partially offset by selected hires to support DCS integration.
• DCS acquisition closed Oct 31; integration expected to take a few quarters.

Business Commentary:

• Revenue and Profitability Improvement:
• Moving iMage Technologies reported a 6.2% increase in Q1 '26 revenue to $5.6 million, with an increase in gross profit by 22% to $1.7 million.

• The improvement was driven by the acceleration of customer projects and operational efficiency.

• Acquisition of DCS Cinema Loudspeaker Line:

• MIT acquired the DCS Cinema Loudspeaker line for $1.5 million in cash, with potential returns in as little as 2-3 years.

• The acquisition expands MIT's addressable market and enhances its audio capabilities, complementing the LEA amplifier offering.

• Operational and Cost Management:

• MIT reduced operating expenses by 8% to $1.32 million in Q1 '26 compared to Q1 '25, achieving an operating income of $350,000.

• The reduction in expenses was due to streamlining the organization and project execution, contributing to profitability.

• Strong Cash Position:

• MIT ended Q1 '26 with net cash of $5.5 million or approximately $0.55 per common share.
• The strong cash position enabled the acquisition of DCS Loudspeaker assets and supports continued business growth.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management emphasized profitability and operational progress: Q1 revenue up 6.2% to $5.6M, operating income of $350k and net income $509k. CEO/CRO described the DCS acquisition as accretive and a growth-enhancing strategic fit; CFO reiterated solid net cash ($5.5M) and optimism about long-term opportunities despite seasonal Q2 headwinds.

Q&A:

• Question from Neal Fagan (Private Investor): Did I understand that you think you can recoup the purchase cost with revenue over the next 2 to 3 years? Is that the metric you were using?
  Response: Yes — management modeled recouping the $1.5M DCS purchase within 2–3 years.

• Question from Neal Fagan (Private Investor): Is this a case of where the DCS line in you guys' opinion has enormous potential that wasn't being realized by the previous owners and can you take this to a much higher level than what was being done when you acquired it?
  Response: They believe DCS is well respected with significant unrealized potential and broad market acceptance versus prior ownership.

• Question from Neal Fagan (Private Investor): Are you feeling like going to market with both DCS and LEA amplifiers is going to potentially accelerate the acceptance and adoption of the LEA power amplifiers?
  Response: Yes — they intend to leverage synergies between DCS and LEA to accelerate LEA adoption.

• Question from Neal Fagan (Private Investor): Can you give us a few numbers around the DCS speakers like a typical theater, a single-screen room, what's the revenue opportunity if it was outfitted with new DCS speakers?
  Response: No ASP or per-theater revenue figures were available on the call; management did not have those metrics in front of them.

• Question from Neal Fagan (Private Investor): When do you think you might go into more detail about the status of pursuing international markets and the game plan?
  Response: They will provide more detail after completing DCS onboarding; timing depends on integration progress.

Contradiction Point 1

International Market Strategy

It involves the company's approach to international markets, which is crucial for expansion and revenue growth.

Could you elaborate on your international market strategy, especially in the Middle East and Europe? - Neal Fagan(Private Investor)

2026Q1: Once the business integration process is complete, MIT will have a clearer picture of their international market strategy and will share more details in future communications. - Philip Rafnson(CEO)

Are you planning to expand internationally through partnerships and distributor agreements or by deploying Moving iMage staff locally? - Neil Fagan(Private Investor)

2025Q4: We continue to look at opportunities, whether it's products or services. If it warrants having people outside the U.S., MiT employees will be deployed. We cannot discuss timing at this point. - Francois Godfrey(COO)

Contradiction Point 2

LEA Power Amplifiers Adoption

It pertains to the adoption timeline and market expectations for a key product line, which impacts revenue projections and market positioning.

How could combining DCS and LEA amplifiers in a go-to-market strategy accelerate adoption of LEA products? - Neal Fagan(Private Investor)

2026Q1: There are synergies between DCS and LEA products, and combining them in a go-to-market strategy is expected to accelerate the adoption of LEA power amplifiers. - Philip Rafnson(CEO)

Can you provide an update on the LEA power amplifiers' progress and whether they remain expected to be a major revenue contributor? - Neil Fagan(Private Investor)

2025Q4: We are still optimistic about the adoption of LEA Professional amplifiers by major exhibitors. The sales process in the cinema industry tends to be lengthy due to operational testing, but we are on track for their inclusion in operational structures. - Francois Godfrey(COO)

Contradiction Point 3

Recurring Revenue Growth

It involves the company's expectations for recurring revenue growth, which is a critical component of financial stability and sustainability.

Can you elaborate on your international market strategy, specifically in the Middle East and Europe? - Neal Fagan(Private Investor)

2026Q1: As we grow our customer base, we can see that recurring revenue increase, and we intend to grow the customer base. - Francois Godfrey(COO)

What primarily comprises the $8 million to $9 million annual recurring revenue? Will recurring revenue grow steadily during fiscal 2026? - Neil Fagan(Private Investor)

2025Q4: The $8 million to $9 million annual recurring revenue primarily consists of operational items, dependent on our customer base. As we grow our customer base, we can see that recurring revenue increase, and we intend to grow the customer base. - Francois Godfrey(COO)

Contradiction Point 4

Market Conditions and Revenue Impact

It involves the company's outlook on market conditions and their impact on revenue, which is crucial for investor expectations.

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2026Q1: We published our Q3 financial statements in our press release this morning and expect to file our Form 10-Q by the end of business this afternoon. As we have discussed, Q3 2025 revenue declined 8.2% to $3.571 million. However, we were able to meaningfully reduce our operating loss to $270,000 from $649,000 due to a substantial improvement in our gross margin percentage. Gross margin dollars increased 57% to $1.063 million in Q3 2025 versus $676,000 in Q3 2024. - Bill Greene(CFO)

Is there any specific question? - Operator

2025Q3: Thanks, Chris, and thank you all for your interest in our company. Today's press release touches on some economic industry headwinds that are impacting revenue in the second half of our fiscal year. But the longer-term outlook for Moving iMage remains very encouraging. - Francois Godfrey(COO)

Contradiction Point 5

Product Line Strategy

It involves the company's different strategies for integrating DCS and LEA products, which could impact market positioning and revenue expectations.

Can you clarify your expectations for recouping the purchase cost of the DCS speaker line and the potential of the acquired DCS line? - Neal Fagan (Private Investor)

2026Q1: MIT intends to recoup the $1.5 million purchase cost within the next 2 to 3 years by returning the DCS line to its former performance levels. The DCS line has significant potential and market acceptance, and it is highly regarded globally. - Philip Rafnson(CEO)

Regarding the DCS acquisition this quarter, what strategic alignment exists with LEA and sister companies? What impact is expected on the LEA line? What developments should we anticipate over the next year? - Gene Munster (Loup Ventures)

2025Q2: The DCS acquisition also provides a strategic opportunity to leverage a sister company's sales force and channel relationships to accelerate the adoption of LEA power amplifiers. - Philip Rafnson(CEO)