Revenues for the first quarter of 2016 were US$7.0 million, an increase of 17% from the first quarter of 2015, and included US$1.0 million of licensing revenue from the agreement signed in December.
Revenues for the first quarter of 2016 were US$7.0 million, an increase of 17% from the first quarter of 2015, and included US$1.0 million of licensing revenue from the agreement signed in December.
Product revenues (primarily display sales) totalled US$5.3 million, 4% more than first quarter last year. The higher product revenues were primarily due to product mix as customers purchased more of the Company’s higher priced advanced microdisplays. R&D contract revenues totalled approximately US$706,000, a decrease of 20% from the first quarter last year. The lower revenues in the quarter reflect the late award of a key R&D contract which will be performed in Q2 instead of Q1.
Gross margin for the first quarter was 48 percent on gross profit of US$3.3 million compared to a gross margin of 39 percent on a gross profit of US$2.4 million in the same quarter last year. Excluding the profit contribution from the license revenues, on which there were no cost of revenues during the quarter, the gross margin for the first quarter would have been 39%, comparable to the prior year quarter.
Operating expenses for the first quarter of 2016, including R&D expenses, increased to US$3.3 million from US$2.0 million in the first quarter of 2015. Last year’s quarter included approximately US$500,000 in favourable effects from a reduction in the allowance for bad debts and the reversal of the Company's vacation accrual. This year's first quarter reflected higher spending in our HMD effort, higher legal expenses and costs associated with the consolidation of the Company’s finance and procurement functions.
| eMagin reports financial results for Q1 2016 (US$ ,000) |
2016 Q1 |
2015 Q1 |
|---|---|---|
| Revenue - Products | 5,295 | 5,104 |
| Revenue - Contract | 706 | 885 |
| Revenue - License | 1,000 | - |
| Gross profit | 3,335 | 2,360 |
| Operating expenses | 3,313 | 2,031 |
| Net (loss) Income | 14 | 320 |
| Net result per share - basic($) | - | 0.01 |
At March 31, 2016, the Company had approximately US$9.1 million of cash and cash equivalents compared to US$9.3 million of cash and cash equivalents at December 31, 2015.
Andrew G. Sculley, President and CEO, said:
- We remain encouraged by the expanding commercialization potential of some of our newest product efforts including, among others, our WUXGA display technology, and our leading 2Kx2K microdisplays
- Some of our newest WUXGA displays are already shipping; and our 2Kx2K microdisplay prototypes will be ready for sampling by customers in Q4 of this year
- Discussions continue with several companies who are interested in incorporating our display technology into high-volume production applications
- We made further progress on yield and through-put improvements in our production processes which enabled us to build additional inventory to meet customer demand
- We continue to focus on improving manufacturing by strengthening our production resources and adding equipment to achieve better results
- As our yields and through-put improve, we see the potential for lower unit costs “Finally, we remain committed to furthering our industry leading technology and continued to invest in our R&D and Sales and Marketing during Q1. Our cash position remained strong at the end of the quarter and our balance sheet remains debt free.”
- Looking into 2016, we are encouraged by what we believe to be expanding end markets for Virtual Reality, Augmented Reality and Night Vision applications leveraging our leading OLED technology
- We believe our technology approach in these markets remains superior to the competition
- While military product sales held steady in the quarter, we believe that future growth in this segment will be largely driven by newer contracts and programs that are currently under review to receive funding for next generation technology
- Our military contract R&D efforts, where we work closely with the U.S. government and with international companies on designing next generation requirements and specifications, position us well to capture these new production contract vehicles when awarded
- Overall we feel eMagin's presence in both domestic and international military markets remains quite strong
- For 2016, we are focusing on the following objectives:
- Expansion of our presence in major military programs and overall customer count
- Further progress on display sales under the commercial licensing agreement that we signed in December
- Advancement of discussions with high volume production partners to incorporate our technology into displays and other products
- Continued progress in manufacturing improvements
- Consolidation of our finance and procurement functions from our Bellevue to Hopewell Junction facilities
- Potential new product introductions in the commercial sector to leverage our leading display and headset technologies
- These new products have the potential to provide revenue this year