Precision Optics (NASDAQ:POCI) reported record fourth-quarter and full-year revenue for fiscal 2026, as higher manufacturing volumes and operational improvements supported its second consecutive quarter of positive adjusted EBITDA. Management said the company is entering fiscal 2027 with a stronger production organization but expects a temporary decline in revenue from an existing satellite communications customer to weigh on first-half results.
For the quarter ended June 30, revenue rose 42% year over year to $8.8 million, compared with $6.2 million in the prior-year period. Full-year revenue increased 65% to $31.5 million from $19.1 million, exceeding the company’s most recent guidance. Fourth-quarter gross margin improved to 25.3% from 13.0% a year earlier, while gross profit increased to $2.2 million from about $800,000.
Profitability Improves as Production Scales
Precision Optics reported a fourth-quarter net loss of approximately $100,000, narrowing from a $1.4 million loss in the prior-year quarter. The company recorded adjusted EBITDA of positive $355,000, compared with negative $857,000 a year ago. The third and fourth quarters together generated more than $600,000 in positive adjusted EBITDA, according to Chief Financial Officer Wayne Coll.
For the full year, net loss narrowed to $3.6 million, or $0.43 per share, from $5.8 million, or $0.85 per share, in fiscal 2025. Full-year adjusted EBITDA improved to a loss of $2.1 million from a loss of $3.7 million, outperforming management’s most recent projected loss range of $2.5 million to $2.7 million.
Production revenue, including systems manufacturing, the micro-optics lab and Ross Optical, rose 57% in the fourth quarter to $8 million. Full-year production revenue doubled to $28.1 million. Engineering revenue declined to approximately $800,000 in the quarter from $1.1 million a year earlier and fell to $3.5 million for the year from $4.9 million.
Coll noted that fourth-quarter figures included the effects of IEEPA tariff refunds. Customer billings and refunds lowered reported revenue by approximately $558,000, while tariff refunds retained by the company reduced cost of goods sold by about $707,000. Together, those items added roughly three percentage points to quarterly margin, he said.
Cash equivalents totaled $9.8 million at June 30, compared with $1.8 million a year earlier. Bank debt was approximately $1.3 million at year-end, and the company had no revolving line of credit borrowings. Coll said the company’s March public offering strengthened its balance sheet.
Medical and Defense Programs Continue to Advance
The company’s single-use cystoscope program improved its yield and throughput, with two production lines operating multiple shifts. Forkey said Precision Optics is finishing the existing order and expects a follow-on order without an interruption in production.
Precision Optics is also ramping production on its single-use ophthalmic line under a previously announced $3.5 million follow-on order. The program generated $413,000 in fourth-quarter revenue, with an overall yield of 90%. Management said the line is now operating consistently at a 94% yield.
Ross Optical generated about $1.5 million in fourth-quarter revenue, a 55% increase from the prior year, while full-year revenue rose 32% to $4.9 million. Forkey said Ross Optical can accommodate additional volume without a proportional increase in fixed costs.
The company also received a $1.3 million follow-on order from a large defense customer. While the order arrived later than expected, Forkey said the customer indicated its program received a multiyear renewal and should generate ongoing orders for years. The parties are working toward a manufacturing agreement intended to support more continuous production.
Satellite Communications Opportunity Expands
Satellite communications remains a central growth focus, although Precision Optics expects an existing customer to reduce revenue by about 40% in the first quarter of fiscal 2027, followed by an additional reduction in the second quarter. Management attributed the reduction to constraints in satellite launch capacity rather than the company’s products and said its latest customer communications point to a recovery by the end of fiscal 2027.
Forkey said the existing satellite program delivered record quarterly revenue in the fourth quarter and achieved a 99% overall yield. He said the company’s manufacturing experience in precise optomechanical assemblies has positioned it to seek other satellite opportunities.
In August, Precision Optics announced an initial $50,000 engineering order from a U.S. space technology developer building a new satellite constellation. The company subsequently received a second order worth approximately $50,000 for additional engineering work. The customer’s stated objective is to begin production in roughly six to 12 months, potentially affecting the company’s fourth fiscal quarter of 2027.
Forkey said the new customer discussions have broadened beyond subassemblies to potentially include higher-level assemblies containing electro-optics, electronic circuits, optics and mechanics. He said the eventual opportunity could be larger than the existing satellite program, though it remains too early to quantify. During the question-and-answer session, Forkey said the new opportunity could be “north of” the approximately $12 million to $13 million annualized run rate reached by the existing satellite customer at the end of fiscal 2026.
Fiscal 2027 Outlook
Precision Optics expects fiscal 2027 revenue of $30 million to $33 million, roughly in line with fiscal 2026, and adjusted EBITDA between negative $1.2 million and negative $1.7 million. Management expects quarterly losses early in the year, followed by a return to quarterly profitability by year-end.
The company said the expected profitability improvement despite relatively flat revenue reflects better yield, utilization and production-line efficiency. Management expects the second half to benefit from growth in single-use medical devices, renewed defense production, programs moving from development into manufacturing, and new engineering engagements.
Forkey said the company has expanded its commercial organization, including the appointment of Peter Thier as senior vice president of sales and marketing. Precision Optics is targeting opportunities in medical devices and laser-based satellite communications while seeking to build a broader engineering-development pipeline.
About Precision Optics (NASDAQ:POCI)
Precision Optics Corporation, Inc (NASDAQ: POCI) designs and manufactures advanced optical and imaging systems, primarily for the medical device market. The company develops products used in minimally invasive surgery, including endoscopes, surgical cameras, and specialized visualization systems that help physicians view internal anatomy during diagnostic and therapeutic procedures.
Its product portfolio includes reusable and single-use endoscopes, three-dimensional imaging systems, fluorescence imaging technologies, and custom optical components and assemblies.
