Precision Optics (POCI) Q2 2026 earnings summary

Executive summary

• Q2 FY2026 revenue reached a record $7.4 million, up 64% year-over-year and 10% sequentially, driven by strong production programs in aerospace and single-use medical devices, despite declines in engineering and micro-optics lab revenues.

• Operational improvements and leadership changes have begun to address manufacturing inefficiencies, with positive impacts expected in the second half of the fiscal year.

• Net loss widened to $1.8 million for the quarter, with EPS of $(0.23), reflecting margin pressures and higher costs.

• Product development bookings and Ross Optical backlog are at multi-year highs, signaling a rebound in these segments.

• Fiscal 2026 is described as a transition year, with investments in infrastructure and personnel to support future growth.

Financial highlights

• Production revenue was $6.4 million, up from $3.1 million year-over-year; engineering revenue was $1.0 million, down 29% year-over-year.

• Gross margin declined to 2.8% from 14.2% sequentially and 23.6% year-over-year, impacted by manufacturing scrap, yield issues, and tariff effects.

• Net loss was $1.8 million, compared to $1.0 million a year ago and $1.6 million in the prior quarter.

• Adjusted EBITDA was -$1.5 million, versus -$0.6 million year-over-year and -$1.2 million sequentially.

• Cash at quarter-end was $0.88 million; bank debt stood at $1.6 million.

Outlook and guidance

• Full-year revenue guidance raised to $26–$28 million, up from $25 million previously, representing 36%–47% growth over FY25.

• Full-year Adjusted EBITDA guidance revised to -$2.5 million to -$3.0 million, reflecting delayed margin recovery.

• Q3 expected to show strong improvement; Q4 forecasted to achieve positive Adjusted EBITDA.

• Management anticipates current cash is insufficient to fund operations for at least one year, raising substantial doubt about going concern status.

• Long-term growth prospects remain strong, with expectations for substantial growth in coming years.