Frequency Electronics (FEIM) delivered a solid QQ2 2026 performance characterized by a sequential revenue uptrend and a historically high funded backlog, underscoring a shift toward non-space U.S. DoD programs while maintaining exposure to space/defense growth initiatives. Revenue reached $17.1 million for the quarter, up 24% sequentially, with funded backlog at $82 million at quarter‑end—the highest in company history and implying favorable visibility into the mid‑term. Management emphasized a multi‑year growth trajectory supported by expanding opportunities in quantum sensing, alt‑PNT, proliferated satellites, and defense modernization. While gross margin remained healthy at approximately 38%, mix shifts toward higher engineering content non‑recurring work offered some margin variability. The company cautioned that near‑term results can be non‑linear as funding cycles and program start timelines evolve, but signaled that the current backlog and funded awards point to a continuing up‑tempo trajectory. FEIM also highlighted strategic investments (e.g., Colorado magnetometer/quantum tech efforts) and large anticipated programs (Golden Dome, SHIELD, NTS‑3) that could materially elevate future revenue contribution and market position over the coming years.

Key Performance Indicators

Revenue

Increasing

17.13M

QoQ: 24.00% | YoY: 13.60%

Gross Profit

Decreasing

6.54M

38.16% margin

QoQ: 28.61% | YoY: -2.42%

Operating Income

Decreasing

1.71M

QoQ: 370.88% | YoY: -27.53%

Net Income

Decreasing

1.80M

QoQ: 184.07% | YoY: -25.88%

EPS

Decreasing

0.18

QoQ: 176.07% | YoY: -28.00%

Revenue Trend

Margin Analysis

- Revenue: $17.127 million for the three months ended Oct 31, 2025, up 24% sequentially and +13.6% year‑over‑year (YoY).
- Gross profit: $6.536 million; gross margin 38.16% (down vs prior year mix but still robust given program mix).
- Operating income: $1.714 million; operating margin ~10.01% (operating income as a percentage of revenue).
- Net income: $1.801 million; net margin ~10.52%; EPS $0.18.
- Backlog: funded backlog at quarter end $82.0 million, up 17% since fiscal year‑end; management contends funded backlog is conservative relative to total bookings.
- Cash flow: net cash from operating activities negative at $(0.523) million; capex $(0.613) million; free cash flow $(1.136) million; cash at period end $4.376 million; liquidity remains solid with current ratio ~2.6x.
- Balance sheet: total assets $92.255 million; total liabilities $33.800 million; total stockholders’ equity $58.455 million; cash and cash equivalents $2.992 million; total debt $8.398 million; net debt ≈ $(5.406) million.
- Revenue mix: Satellite/commercial & US government revenue ~ $4.6 million (27%); non-space DoD revenue ~$11.9 million (69%); other revenue ~$0.56 million. The year‑over‑year shift toward non-space DoD reflects a higher mix of shipment‑based and percentage‑of‑completion revenue.
- Backlog visibility and growth optionality: FEIM expects backlog to exceed $100 million in the not‑too‑distant future, driven by funded awards and potential follow‑on funding on existing contracts.

Frequency Electronics Inc (FEIM) Q2 2026 Earnings Report

Company Status Snapshot

Earnings Highlights

Executive Summary

Key Performance Indicators

Revenue Trend

Margin Analysis

Financial Highlights

Income Statement

Key Financial Ratios

Metric	Value	YoY Change	QoQ Change
Revenue	17.13M	13.60%	24.00%
Gross Profit	6.54M	-2.42%	28.61%
Operating Income	1.71M	-27.53%	370.88%
Net Income	1.80M	-25.88%	184.07%
EPS	0.18	-28.00%	176.07%