Executive Summary
FEIM reported Q1 FY2026 revenue of $13.812 million, with gross profit of $5.082 million and a gross margin of 36.79%. Net income was $0.634 million, or $0.0652 per share, while EBITDA stood at $0.557 million. Management framed the quarter as a temporary step down from a peak revenue quarter driven by lumpiness in government program awards, noting that the delays are not cancellations and will be recognized in future quarters. The funded backlog remained historically high at approximately $71 million, and FEIM disclosed ongoing investments in growth initiatives, including the Boulder, Colorado facility and quantum sensing programs, supported by external government funding. FEIM’s leadership asserted a transformed, higher-margin, cash-generative profile with a debt-free balance sheet, while cautioning investors about the inherent volatility of contract-based revenue and the dependence on defense and space program awards.
Looking ahead, management indicated that delayed programs seen in Q1 FY2026 should contribute in subsequent quarters and that the Boulder facility is expected to positively impact earnings by the third quarter of the fiscal year. The company is pursuing additional government funding for R&D in quantum sensing and plans to host a Quantum Sensing Summit to accelerate awareness and adoption of its technology. The longer-term thesis hinges on FEIM’s ability to convert backlog into revenue, win larger multi-domain defense contracts, and scale its quantum-enabled timing solutions, all while maintaining a favorable liquidity position and shareholder-friendly capital allocation (including a $20 million share repurchase authorization).
Key Performance Indicators
QoQ: -27.02% | YoY:-11.33%
QoQ: -38.66% | YoY:-19.09%
QoQ: -89.51% | YoY:-85.40%
QoQ: -95.88% | YoY:-75.85%
QoQ: -95.93% | YoY:-76.71%
Key Insights
Revenue: $13.812 million; YoY: -11.33%; QoQ: -27.02%. Gross Profit: $5.082 million; Gross Margin: 36.79%; YoY: -19.10%; QoQ: -38.66%. Operating Income: $0.364 million; Operating Margin: 2.64%; YoY: -85.40%; QoQ: -89.51%. EBITDA: $0.557 million; EBITDA Margin: 4.03%. Net Income: $0.634 million; Net Margin: 4.59%; EPS: $0.0652; Diluted EPS: $0.0652. Backlog (fully funded): ~$71.0 million; Cash and Cash Equivalents: $4.512 million. Balance sheet snapshot (dated July 31, 2025): Total Assets $51.467 ...
Financial Highlights
Revenue: $13.812 million; YoY: -11.33%; QoQ: -27.02%. Gross Profit: $5.082 million; Gross Margin: 36.79%; YoY: -19.10%; QoQ: -38.66%. Operating Income: $0.364 million; Operating Margin: 2.64%; YoY: -85.40%; QoQ: -89.51%. EBITDA: $0.557 million; EBITDA Margin: 4.03%. Net Income: $0.634 million; Net Margin: 4.59%; EPS: $0.0652; Diluted EPS: $0.0652. Backlog (fully funded): ~$71.0 million; Cash and Cash Equivalents: $4.512 million. Balance sheet snapshot (dated July 31, 2025): Total Assets $51.467 million; Total Liabilities $36.884 million; Total Stockholders’ Equity $56.319 million (Note: data inconsistencies exist between assets, liabilities, and equity in the provided figures). Debt metrics show Short-Term Debt $14.168 million and Long-Term Debt $6.292 million with Net Debt listed as $9.656 million in the data, while the call narrative describes FEIM as debt-free. Liquidity metrics imply solid working capital (~$30 million) and a current ratio around 2.3:1.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
13.81M |
-11.33% |
-27.02% |
| Gross Profit |
5.08M |
-19.09% |
-38.66% |
| Operating Income |
364.00K |
-85.40% |
-89.51% |
| Net Income |
634.00K |
-75.85% |
-95.88% |
| EPS |
0.07 |
-76.71% |
-95.93% |
Management Commentary
Key insights from FEIM management call grouped by themes: Strategy and growth — FEI is intensifying its focus on quantum sensing and timing, including the Boulder, Colorado facility and recruitment from the National Institute of Standards Technology, Time and Frequency Division; management expects Boulder to contribute positively to the bottom line by the third quarter and is pursuing external government funding for R&D in quantum sensing. Operational execution and backlog — management emphasized that the first-quarter revenue dip was due to temporary customer-driven delays and that a larger book of business is forming; funded backlog remains historically high, with anticipation of meaningful new contracts in the near term. Market conditions and timing security — the leadership framed timing as a critical global security issue, highlighting GPS resilience and sovereign timing as strategic priorities; FEI positions its technologies as essential to mission assurance and national security. Capital allocation — FEI disclosed a $20 million authorization for share repurchases and highlighted a debt-free balance sheet as part of its strategy to return cash while investing in growth.
the issues we saw in the first quarter related to customer-led delays are now behind us, and we're making significant progress towards a bigger book of business.
— Thomas McClelland
Although this quarter showed a temporary decline in revenue and earnings, our strong fundamentals remain unchanged.
— Thomas McClelland
Forward Guidance
Guidance stance: The company does not issue formal quarterly or annual guidance due to the lumpiness of contract awards. Management communicated that revenue softness in Q1 FY2026 is expected to be offset in upcoming quarters as delayed programs are recognized within the current year. Near-term catalysts include: (1) Boulder facility contributions to profitability by Q3; (2) continued pursuit of external government funding for quantum sensing R&D; (3) potential larger defense programs with strong follow-on potential (e.g., Golden Dome, Patriot, THAAD). Key monitorables for investors are backlog conversion rate, progress on mercury ion clocks prototypes with JPL collaboration, quantum sensing productization milestones (NV Diamond magnetometer testing and related sensing capabilities), and government funding cycles that could accelerate development and revenue recognition.