Executive Summary
LightPath Technologies reported QQ2 2025 revenue of $7.42 million, up 1.5% year over year, but with a net loss of $2.61 million and an EBITDA loss of $1.49 million. The quarter reflected ongoing macro-driven supply-chain constraints tied to China-origin materials and a transitional mix toward higher-value offerings, including uncooled and cooled infrared camera systems. Management emphasized a strategic inflection through the acquisition of G5 Infrared, which materially expands LightPath’s exposure to high-margin, high-ASP defense imaging, and positions the company to accelerate its LightPath 3.0 vision—from components to subsystems and ultimately to system solutions.
Key near-term catalysts center on the G5 integration, including anticipated LRIP activity that could scale into full-scale production, with management signaling multiple programs of record and a target to push combined 12-month revenue above $55 million. The earnout for G5 implies projected G5 revenue of $21–$27 million in the first year, underscoring aggressive growth expectations. While the pace of near-term revenue ramp is uncertain, the investment thesis rests on cross-selling opportunities (coatings services, uncooled and cooled IR cameras, gas-imaging, and optical assemblies) and a potential higher-margin camera portfolio that could lift LightPath’s overall gross margins over time. Management reaffirmed a long-run EBITDA target around 15%, contingent on successful integration and scale.
From a balance-sheet and cash-flow perspective, LightPath ended QQ2 with $3.2 million in cash and cash equivalents and $3.9 million of debt, plus a backlog of $19.8 million. The company financed the G5 acquisition with $25.5 million of 6.5% fixed convertible preferred equity, $1.5 million of private placements, and $5.4 million of senior secured promissory notes, indicating a patience-friendly capital structure aligned with a growth strategy rather than immediate dilution. While near-term profitability remains negative, the mix shift toward higher-ASP, higher-margin products provides a pathway to sustained value creation if the G5-related revenue ramp and cross-sell opportunities materialize as anticipated.
Key Performance Indicators
QoQ: -32.12% | YoY:-10.95%
QoQ: -80.44% | YoY:-39.31%
QoQ: -60.96% | YoY:-52.42%
QoQ: -60.24% | YoY:-43.76%
Key Insights
Revenue: $7.4249m, up 1.49% YoY; QoQ change -11.61% (Q1 2025 was $8.4004m).
Gross Profit: $1.9308m; gross margin 26.00%; YoY gross profit change -10.95%; QoQ gross profit change -32.12%.
Operating Income: -$2.4843m; operating margin -33.46% (ratio).
EBITDA: -$1.4944m; EBITDA margin notated as -20.15% of revenue (per EBITDAR and margin metrics disclosed).
Net Income: -$2.6119m; net margin -35.18%; basic/diluted EPS -$0.0657.
Weighted Avg Shares: 39.7289m.
Backlog: $19.8m as of 12/31/2024.
Cash &a...
Financial Highlights
Revenue: $7.4249m, up 1.49% YoY; QoQ change -11.61% (Q1 2025 was $8.4004m).
Gross Profit: $1.9308m; gross margin 26.00%; YoY gross profit change -10.95%; QoQ gross profit change -32.12%.
Operating Income: -$2.4843m; operating margin -33.46% (ratio).
EBITDA: -$1.4944m; EBITDA margin notated as -20.15% of revenue (per EBITDAR and margin metrics disclosed).
Net Income: -$2.6119m; net margin -35.18%; basic/diluted EPS -$0.0657.
Weighted Avg Shares: 39.7289m.
Backlog: $19.8m as of 12/31/2024.
Cash & Equivalents: $3.2011m; Total debt: $3.9383m; Net debt: $9.2764m.
Cash Flow: Net cash provided by operating activities: -$0.7374m; Capital expenditures: -$0.0804m; Free cash flow: -$0.8178m.
Balance Sheet: Total assets $45.8282m; Total liabilities $19.1253m; Total stockholders’ equity $26.7029m; Cash & cash equivalents $3.2011m; Total debt $12.4775m; Net debt $9.2764m.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
7.42M |
1.49% |
-11.61% |
| Gross Profit |
1.93M |
-10.95% |
-32.12% |
| Operating Income |
-2.48M |
-39.31% |
-80.44% |
| Net Income |
-2.61M |
-52.42% |
-60.96% |
| EPS |
-0.07 |
-43.76% |
-60.24% |
Key Financial Ratios
operatingProfitMargin
-33.5%
operatingCashFlowPerShare
$-0.02
freeCashFlowPerShare
$-0.02
priceEarningsRatio
-13.42
Management Commentary
Strategic and acquisition-driven transformation:
- Acquisition rationale and LRIP potential: “LRIP is low rate initial production. We'll be moving into LRIP very soon and from there, shortly into full scale production.”
- Cross-selling opportunities across optics coatings, uncooled and cooled IR cameras, and gas-imaging applications, supported by G5’s coating services that account for up to 20% of G5’s revenue.
- Integration and growth expectations: management highlighted that G5 has a strong pipeline and multiple programs of record expected to begin production within 2 years, with a 12-month revenue target for the combined entity of >$55 million.
- Margin dynamics: “the camera business has higher margins than the LightPath visible or infrared component business, so in terms of expectations, the margin will blend upwards with the portfolio being added.”
Operational and market dynamics:
- Germanium and broader supply-chain risks from China: shipments were delayed/shifted due to Germanium export restrictions; management expects no revenue loss but timing shifts; alternative materials adoption is accelerating across customers.
- Near-term ramp and production readiness: focus on increasing glass capacity with modest capex; no significant new capital outlays anticipated for capacity expansion.
- Defense and surveillance markets: drones/CUAS, border security, and naval programs are highlighted as key growth vectors with LRIP potential and a sizable addressable market in coming years.
LRIP is low rate initial production. We'll be moving into LRIP very soon and from there, shortly into full scale production.
— Sam Rubin
The camera business has higher margins than the LightPath visible or infrared component business. So in terms of expectations, the margin will blend upwards with the portfolio being added.
— Albert Miranda
Forward Guidance
Management did not provide quarterly earnings guidance but outlined a clear strategic forward path anchored in the G5 acquisition. The company targets combined revenue of more than $55 million in the 12 months following closing, driven by G5’s programs-of-record (e.g., border patrol towers, naval camera systems) and cross-sell opportunities with LightPath’s infrared components and optics. The first-year earnout for G5 implies $21–$27 million in revenue for G5, signaling aggressive growth expectations. Management emphasized that margins are expected to rise as the portfolio mix shifts toward higher-ASP, higher-margin cameras, with camera margins exceeding those of existing LightPath components. The long-term EBITDA target of approximately 15% is presented as an achievable objective with successful integration and scale, though near-term profitability remains negative. Investors should monitor: (1) progression of LRIP awards and production line starts; (2) progress of cross-sell penetration into G5’s customer base and defense programs; (3) supply-chain stabilization for optics materials (germanium alternatives and related supply) and (4) integration milestones and cost synergies from G5.