Total revenues for the first quarter of 2020 were $6.7 million, an increase of $0.6 million from revenues of $6.1 million reported in the prior year period, and a slight decrease of $0.6 million from the fourth quarter of 2019.
Total revenue consists of both product revenue and contract revenue. Product revenues for the first quarter of 2020 were $5.6 million, an increase of $0.1 million from product revenues of $5.5 million reported in the prior year period. The slight increase in product revenue was achieved despite some minor disruptions resulting from the Covid-19 pandemic.
Contract revenues were $1.1 million compared to $0.6 million reported in the prior year, reflecting a contribution of contract R&D work from designing a display for a Tier One customer in the consumer space.
Gross margin for the first quarter was 21% on gross profit of $1.4 million compared to a gross margin of 22% on gross profit of $1.3 million in the prior year period. The lower gross margin in the 2020 first quarter is due to lower production volumes and some yield losses due to delayed response times from equipment maintenance providers related to Covid-19 travel restrictions.
Operating loss for the first quarter of 2020 was $1.3 million compared to an operating loss of $2.2 million in the prior year period. Net loss for the first quarter of 2020 was $1.4 million or $0.03 per share compared to a loss of $1.4 million or $0.03 per share in the prior year period. Net loss for the prior year period reflects a $0.8 million non-cash gain related to the decrease in fair value of a warrant liability.
Adjusted EBITDA the first quarter was negative $0.8 million compared to a negative $1.5 million in the prior year period. Historically, the first quarter has typically been eMagin’s lowest revenue quarter and is not indicative of results to be expected for the full year.
“As the only USA manufacturer of OLED microdisplays, we are deemed an essential business by the US government and have continued to produce and ship products during the COVID-19 pandemic. We also have implemented additional employee health and safety measures per CDC guidelines and continue to supply products on a timely basis to our customers as well as maintain a healthy supply chain,” said CEO Andrew G. Sculley.
“Consumer, medical and military customers are increasingly turning to eMagin because of our technological leadership in display brightness, contrast, and resolution. This leadership in brightness is further demonstrated by our proprietary Direct Patterning Display (dPd™) capability,” Sculley added. “Unlike traditional OLEDs that produce colors by using a white source with filters that eliminate about 80% of the emitted light, with dPd, we make full color displays by directly depositing each of the primary color materials (RGB) on respective sub-pixels. This allows us to use highly efficient phosphorescent materials, which increases the brightness further.”
“First quarter revenue, consisting of $5.6 million product revenue from sales of displays, and $1.1 million from contract R&D work, was $0.6 million above our expectations for the quarter, primarily due to contract R&D work from designing a display for a Tier One customer in the consumer space,” Sculley reported. “This customer is evaluating our dPd technology and we are also enabling new, differentiated features through our advanced backplane design, and expect that work on this project continue through 2020.”
“We also realized a slight increase in military R&D contracts as a part of an overall trend which involves the increasing use of digital visual systems that present data from multiple sensors to soldiers for at a glance viewability, often through the use of AR/VR,” he added.
eMagin reported solid bookings of $6 million during the first quarter. At March 31, 2020, the company’s backlog of open orders was $14.9 million, including $13.3 million shippable within 12 months. This compares to a backlog of orders shippable within twelve months of $11.7 million as of December 31, 2019.