Aeluma, Inc. Q3 2026 earnings call

Good afternoon, and welcome to Aeluma's third quarter fiscal 2026 earnings call. I'm here today with Founder and CEO, Dr. Jonathan Klamkin, and CFO Christopher Stewart. Today's discussions and responses to questions may include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. These risks and uncertainties are detailed in the earnings press release issued today, along with the reports filed with the United States Securities and Exchange Commission. These reports, along with today's earnings release, can be found under the Investors section of our website. Aeluma assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Throughout the discussion, the company will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA.

A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC filings. Now, I'll turn the call over to Aeluma's CEO, Jonathan Klamkin.

Thank you, Alex, and thank you all for joining today's call. Today, I'll begin with a recap of the Optical Fiber Communication Conference, or OFC, which took place this March in Los Angeles, and how Aeluma's engagements in the AI datacom market have accelerated. OFC is the premier optical networking and communication conference, and this year there was a notable emphasis on the massive build-out of data centers for AI. Data center CapEx investments continue to surge. This has placed an historic demand on high-performance photonics for interconnects, and the supply chain wasn't prepared. In response, NVIDIA made three investments, each of $2 billion in Lumentum, Coherent, and Marvell to secure supply of key components, especially lasers, and $3.2 billion in Corning for components and packaging. Major laser suppliers are sold out. Therefore, investments are being made to scale indium phosphide fab capacity.

However, some major hurdles stand in the way. First, adding fab capacity may require several years. Second, although efforts are being made to transition to 6-inch indium phosphide, many claim this won't provide sufficient supply to meet market demand. Last, there is a major shortage of indium phosphide substrates of all sizes. Suppliers are sold out for years with only limited increase in capacity expected in the near term, and geopolitics adding a degree of uncertainty. When we commenced operations in 2021, we shared foresight with the investment community. We stated that indium was in short supply, that indium phosphide substrates were too small, expensive, and fragile, and that indium phosphide manufacturing doesn't scale to large volumes. We suggested a different path to address the future needs of datacom and consumer electronics. Don't use indium phosphide substrates.

Put the detector and laser materials on lower cost, larger diameter substrates and leverage volume microelectronics manufacturing. GaN on silicon became a mainstream technology for power electronics. Why not work toward indium phosphide on silicon? We put our heads down to mature our technology. We instilled a philosophy of setting and then beating milestones. We attracted strategic government and commercial partners, and we grew our talented team to continue building traction across AI, mobile, defense and aerospace, and other key markets. This laid the groundwork for the high degree of interest in our technology at the recent OFC conference. The industry is hungry for a solution to address near-term demand and supply chain constraints and to enable future generation integrated microsystems such as co-packaged optics or CPO. Encouragingly, the industry is thinking long term. They are taking measures to address near-term needs while also anticipating massive future growth opportunities.

The growing demand for 200G per lane transceivers and the transition to 400G per lane provide opportunities for Aeluma's high-speed InGaAs photodiodes. By not using indium phosphide substrates, we can overcome supply constraints and win on cost. The so-called slow and wide architectures driven by microLEDs, micro VCSELs, and other technologies require new high-speed photodiode array formats. Aeluma has been developing such photodiodes on non-indium phosphide substrates for a defense customer, anticipating the dual use applicability of the technology for commercial markets. Right now, high-power lasers for transceivers are a bottleneck in commercial applications. Customers want more power and better reliability to withstand the stringent requirements for data centers. Lasers are failing at high power and high temperature. The interest in quantum dot lasers has surged for their potential to improve power handling, increase reliability, and eliminate optical isolators.

Aeluma is the first company to offer MOCVD quantum dot lasers. Compared to MBE, a technique used by others, MOCVD has much higher throughput and is the industry standard for volume production. For example, MOCVD is used exclusively for large volume VCSEL manufacturing for facial recognition in mobile phones. Given all the moving pieces in the supply chain, a common question is: where does Aeluma fit in the ecosystem? We sit at the intersection of semiconductor materials, photonic component design, and manufacturing, and this is a rarefied and strategic position. Our proprietary platform combines the advantages of compound semiconductors with scalable microelectronics manufacturing. We can produce photonics at large volumes with an outsourced supply chain, or we can partner with customers that have their own manufacturing infrastructure. For very large markets such as mobile, we may license our intellectual property as a go-to-market strategy.

Allow me to go into more detail on the tailwinds driving our target markets, which are illustrated in slide two. AI infrastructure and data centers. AI is driving a major build-out of data centers. As mentioned in our last call, the top four hyperscalers invested more than $300 billion in data center CapEx in 2025. This number will approach $700 billion in 2026 and is expected to surpass $1 trillion in 2029. Optical networking will be approximately 15% of this investment. This is the huge opportunity for photonics, and it's fueling a breadth of activity in this space. While photonic components were developed in the 1990s for telecom networks to connect people, today they are needed for AI to connect machines at scale. This market is propelling Aeluma's photonics product roadmap forward.

Customers are considering our technology to address current supply gaps and for long-term growth opportunities. This provides us with an ideal combination of near-term revenue paths to drive production ramp and qualification plans and to develop longer-term strategic partnership opportunities. This is an exciting time for the photonics industry because higher performance requirements are accelerating innovation. Existing technologies are being pushed to their limits, and new technologies are being evaluated for adoption. Photonic components of all shapes and sizes are needed across the data center for slow and wide and fast and narrow transceiver formats. Many of these traditionally depend on indium phosphide technology, which has become a critical bottleneck. Aeluma's product offerings manufactured with non-indium phosphide substrates are illustrated in slide three. For slow and wide applications, candidates being considered on the transmit side are microLEDs, micro VCSELs, and silicon microring modulators.

Aeluma's non-indium phosphide high-speed InGaAs photodiode arrays can pair with any of these transmitter technologies. For fast and narrow transmitters, indium phosphide EMLs are being pushed to 400G per lane performance, as are thin film lithium niobate modulators and silicon Mach-Zehnder modulators. Aeluma's non-indium phosphide high-speed InGaAs photodiodes can also pair with any of these transmitter technologies. For silicon photonics CPO transceivers, indium phosphide lasers are a bottleneck due to supply constraints, performance requirements, and packaging complexity. Alternative gallium arsenide quantum dot lasers are being considered to address these challenges. Aeluma's MOCVD quantum dot lasers offer high power handling, scalability, and the potential for better reliability. As customers continue to evaluate our photodiode and laser technologies for AI data centers, and we navigate this highly active market, we have gained increasing confidence in our manufacturing approach and go-to-market strategy. Mobile and consumer electronics.

Mobile OEMs are gearing up to adopt shortwave infrared or SWIR for image sensors in smartphones. SWIR sensors improve eye safety, achieve high-resolution imaging, and can be positioned behind the OLED display, thereby preserving important screen real estate. InGaAs is the gold standard for SWIR, but it is manufactured on indium phosphide substrates and therefore is expensive and doesn't scale. Alternative SWIR technologies were evaluated but showed subpar performance. Early in Aeluma's history, we explained that the winning approach for broad market adoption is to combine the best-in-class SWIR material, InGaAs, with scalable manufacturing. Our InGaAs photodiode arrays on non-indium phosphide substrates are optimized for performance and scale and deliver on key technical metrics such as dark current and sensitivity. We have been engaged across the supply chain from the OEMs to the Tier-1 and Tier-2 suppliers.

To execute our capital-light model, we are partnering with established manufacturers and where appropriate, we can license our technology for this high volume application. While qualification and production will require a multi-year effort, our engagements in this target market are progressing steadily through evaluation and feasibility. At the same time, we continue to mature our technology with foundry partners. The sheer scale of this market is massive and one that will drive to silicon substrate sizes. This is an exciting growth opportunity for Aeluma, and we are carefully positioning our company and technology to capitalize. Defense and aerospace. Aeluma's technology is truly dual use. It is high performance technology engineered for the rigors of defense systems, but also applicable to commercial markets. We successfully attracted strategic non-dilutive funding from government agencies for development.

These programs were leveraged to mature our technology and to gain traction with the government, prime contractors, private defense tech companies, and commercial customers. In several cases, these contracts have progressed to later stage programs focused on technology transition that will benefit both defense and commercial sectors. We recently announced new contracts to advance quantum dot lasers and quantum nonlinear materials, along with partnerships with Tower Semiconductor and Sumitomo Chemical Advanced Technologies. The stated strategic priority for fiscal year 2026 was to win three to seven new development contracts for non-dilutive funding for R&D and growth of partnership opportunities. We have met this goal, having secured six contracts to date totaling well over $5 million in value. Supply chain and scaling. On supply chain, we have been working with fabrication foundries, materials companies, integration and packaging partners for several years. A disruptive semiconductor company's supply chain is proprietary information.

As an example, in the public domain, earlier this year, quantum company IonQ announced its intention to acquire SkyWater, a pure play U.S. semiconductor foundry. IonQ was presumably already working with SkyWater as a foundry partner, yet I don't believe this information was disclosed prior to the acquisition announcement. Aeluma works with several supply chain partners. These include fabrication foundries, some of which are compound semiconductor fabs and others silicon fabs. Some are capable of a 100 mm wafer fabrication, some 200 mm, and some up to 300 mm. For many of our target markets, 150 mm wafers are sufficient. Even so, Aeluma's use of non-indium phosphide substrates at this size provides a path to scale and meet demand while overcoming supply chain constraints and winning on cost.

Thank you, Jonathan. Moving on to our financial results. For the fiscal third quarter, revenue was $1.2 million compared to $1.3 million in the third quarter of last year and $1.3 million in the second quarter of fiscal 2026. Government R&D contracts were the principal source of revenue for the quarter and continue to provide non-dilutive capital to advance our technology and expand our strategic relationships. GAAP net loss for the fiscal third quarter was $1.8 million, or $0.10 per basic and diluted share, compared to net income of $1.5 million, or $0.12 per share in the prior year period, and a net loss of $1.9 million, or $0.11 per share in the prior quarter.

Non-GAAP net loss for the quarter was $701,000, or $0.04 per share, compared to breakeven in the third quarter last year and a loss of $797,000, also $0.04 per share last quarter. The year-over-year change in GAAP net income was primarily due to a one-time $2.3 million gain in the fair value of derivative liabilities that we recorded in the third quarter of 2025. Employee-related costs and R&D spending have increased year-over-year as we have added key positions to expand our capabilities and scale our operations. Adjusted EBITDA loss for the third quarter was $911,000, compared to a gain of $109,000 in the same period last year and in line with our prior quarter.

We closed the quarter with a strong balance sheet, including $37.8 million in cash and cash equivalents and no long-term debt. Cash decreased $792,000 from the close of the December quarter, reflecting increased spending on new hires and investments in R&D. Going forward, we expect to increase spending as we continue to add additional resources and increase our R&D investments to capitalize on the opportunities in our commercial pipeline. In March, we established an ATM facility to provide us with the flexibility to raise capital when market conditions warrant and when we believe it is in the best interest of the company and our shareholders. In establishing the ATM, we did not register any additional shares. We simply allocated $50 million of our existing shelf capacity to an ATM. To date, we have not sold any shares through this facility.

As an early-stage growth company, we believe having an ATM in place is a prudent financial measure that positions us for strategic growth and can serve as a way to attract targeted institutional investors through reverse inquiries. We remain committed to operating in a disciplined, capitally efficient manner while ensuring that we are sufficiently capitalized for execution on the value creation opportunities for our shareholders. Turning to guidance, we are updating our full year revenue guidance to $4.2 million-$4.6 million, narrowed from the previous range of $4 million-$6 million. The updated range is primarily the result of delays in the execution of several government contracts and the subsequent start of work for these new programs. Government shutdowns and other factors led to these delays.

As we have stated, our government contracts are a great source of non-dilutive funding for development, but they do come with a degree of uncertainty in quarter to quarter and even year to year revenue. These contracts have enabled our technology development and directly led to commercial traction. As shared in previous earnings calls this year, our focus is on commercializing our technology to capitalize on several high growth market opportunities, including AI datacom. Therefore, any future government bids will emphasize later stage development and transition opportunities versus fundamental development and feasibility. To echo Jonathan's sentiment, we are very excited about the momentum that is building across our target markets and the progress we are making with customers and supply chain partners.

Interest in Aeluma's technology has never been higher, and our strong value proposition is being amplified by the explosive growth in the data center market, which is putting a spotlight on the shortcomings of traditional indium phosphide-based photonics. With that, I'll turn the call back over to Jonathan for his closing remarks before we open the call to your questions.

Thank you, Chris. To summarize, this quarter further reinforced that Aeluma is gaining traction and momentum. We continue to execute our strategic priorities, strengthen our technical foundation, accelerate our go-to-market plan, and expand operations to scale. Building on the momentum from the OFC conference, our customer engagements are strengthening and driving our transition to commercialization. As always, I want to thank our incredible team for their hard work and dedication, and want to thank all of you for your unwavering support and enthusiasm. Operator, you can now open the call to questions.