Revenues for the third quarter of 2018 grew 60% to $6.9 million, an increase of $2.6 million from revenues of $4.3 million reported a year ago. Revenue for the first nine months of 2018 increased 33% over the year ago period to $20.8 million.
Product revenues increased in the quarter by 51% to $6.0 million compared to $4.0 million in the third quarter of 2017. The increase in product revenue was due to growth from US and foreign military programs and to a larger proportion of sales of displays with higher average unit prices. Contract revenues totaled $0.8 million in the third quarter of 2018 compared to $0.3 million in the same quarter of last year.
Overall gross margin for the third quarter was 35% compared to 7% in the prior year period. The increase in gross margin was primarily due to increased volumes and higher yields, resulting in lower costs per displays, as well as the addition of several military related contracts at favorable margins. Operating loss for the third quarter was $1.3 million versus an operating loss of $3.0 million in the third quarter of last year.
“We had another strong quarter supported by growth in our military and commercial business as we deepened our penetration both in the U.S. and abroad. As a result of efforts to expand our revenue base, we are seeing significant interest globally in our technology with 57% of our revenues this quarter outside the US. Total revenues in the third quarter were $6.9 million, a 60% year-over-year increase, with sales to 66 customers. Our production yields continued to improve, driving up our product and overall gross margins to 35%,” said CEO Andrew Sculley.
“On the military side of the business, our momentum is continuing as evidenced by several new program wins, reinforcing the value of our cutting-edge technology,” he added. “In addition, we continue to successfully execute on a number of existing key domestic and foreign military programs. Earlier this year we participated in the DefExpo18 show to capitalize on India’s rapid market expansion and I am pleased to report that we now have five new Indian customers. On the commercial front, we are seeing expanded interest from established medical device companies to incorporate our microdisplays into their products.”
“Our backlog at the end of September for the next 12 months was $10.9 million, reflective of the strong bookings we have had throughout this year, representing an increase of $1.3 million from 2017 year-end. While our backlog can vary depending on the timing of new orders as well as shipment dates, demand has remained very strong and we are encouraged by the ongoing level of interest in our OLED microdisplays,” concluded Sculley.