Luna Innovations Reports Third Quarter 2023 Results

Q3 Highlights

• Total revenue of $30.7 million, up 5% year over year
• Gross margin of 57%, compared to 58% for the prior year
• Net income of $0.5 million, compared to net income of $1.2 million for the prior year
• Adjusted EBITDA of $4.2 million, compared to $4.5 million for the prior year
• Adjusted EPS of $0.07, compared to $0.09 for the prior year

(ROANOKE, VA, November 14, 2023) - Luna Innovations Incorporated (NASDAQ: LUNA), a global leader in advanced optical technology, today announced its financial results for the three and nine months ended September 30, 2023.

"We delivered solid performance this quarter in spite of continued macroeconomic headwinds," said Scott Graeff, President and Chief Executive Officer of Luna. "We realized multiple significant wins in our Sensing business, providing further proof of the breadth of applications and abundance of opportunities for our fiber sensing solutions. We also recognized a particularly strong showing from our Communications Test business, where we saw significant increase in revenue after realizing moderate recovery from the headwinds this business faced last quarter.”

Third Quarter Fiscal 2023 Financial Summary

Highlights of the financial results for the three months ended September 30, 2023 are:

A reconciliation of Adjusted EPS and Adjusted EBITDA to the nearest comparable figures under generally accepted accounting principles ("GAAP") can be found in the schedules included in this release.

Revenue for the three months ended September 30, 2023 increased 5% compared to the prior-year period. 

Gross margin was 57% for the three months ended September 30, 2023, compared to 58% for the three months ended September 30, 2022, driven primarily by product mix. Operating income and margin were $1.2 million and 4% of total revenue, respectively, for the three months ended September 30, 2023, compared to an operating income of $1.5 million and 5% of total revenue, respectively, for the three months ended September 30, 2022. 

Net income was $0.5 million, or $0.01 per fully diluted share, for the three months ended September 30, 2023, compared to net income of $1.2 million, or $0.04 per fully diluted share, for the three months ended September 30, 2022. Adjusted EPS was $0.07 for the three months ended September 30, 2023 compared to $0.09 for the three months ended September 30, 2022.

Adjusted EBITDA was $4.2 million for three months ended September 30, 2023, compared to $4.5 million for the three months ended September 30, 2022.

Nine Months Ended Fiscal 2023 Financial Summary

Highlights of the financial results for the nine months ended September 30, 2023 are:

A reconciliation of Adjusted EPS and Adjusted EBITDA to the nearest comparable GAAP figures can be found in the schedules included in this release.

Revenue for the nine months ended September 30, 2023 increased 9% compared to the prior-year period.

Gross profit of $49.5 million for the nine months ended September 30, 2023 increased from $47.2 million for the nine months ended September 30, 2022 primarily due to higher sales. Operating loss and margin improved to $1.2 million and1% of total revenue, respectively, for the nine months ended September 30, 2023, compared to $3.3 million and 4% of total revenue, respectively, for the nine months ended September 30, 2022.

Net loss was $3.0 million, or $0.09 per fully diluted share, for the nine months ended September 30, 2023, compared to a net income of $8.4 million, or $0.26 per fully diluted share, for the nine months ended September 30, 2022, due to the gain on sale ofLuna Labs. Adjusted EPS was $0.11 for the nine months ended September 30, 2023, compared to $0.12 for the nine months ended September 30, 2022.

Adjusted EBITDA was $7.8 million for the nine months ended September 30, 2023, compared to $7.5 million for the nine months ended September 30, 2022.

Q3 and Recent Business Highlights

• Named George Gomez-Quintero as Chief Financial Officer
• Awarded a multi-year service contract for system deployed on the largest fiber-optic monitoring solution ever installed
• Secured multiple sales of seismic monitoring DAS instruments to American seismic labs and the U.S. government
• Secured $1.5M+ in new orders for DAS and DTS systems for pipeline monitoring from the largest energy company in the UAE
• Renewed global supply partnership agreement for infrastructure monitoring with one of the world's largest multinational conglomerates
• Successfully deployed fiber optic-sensing based traffic monitoring for the Utah Department of Transportation

2023 Full-Year Outlook

Luna is updating the 2023 revenue outlook and maintaining the adjusted EBITDA outlook: 

• Total revenue of $120 million to $125 million for the full year 2023
• Adjusted EBITDA of $14 million to $18 million for the full year 2023

Luna is not providing an outlook for net income, which is the most directly comparable GAAP measure to Adjusted EBITDA, because changes in the items that Luna excludes from net income to calculate Adjusted EBITDA, such as share-based compensation, tax expense, and significant non-recurring charges, among other things, can be dependent on future events that are less capable of being controlled or reliably predicted by management and are not part of Luna's routine operating activities.

The outlook above does not include any future acquisitions, divestitures, or unanticipated events.

Non-GAAP Financial Measures

In evaluating the operating performance of its business, Luna’s management considers Adjusted EBITDA and Adjusted EPS, which are non-GAAP financial measures. Adjusted EBITDA and Adjusted EPS exclude certain charges and income that are required by GAAP. Adjusted EBITDA and Adjusted EPS provide useful information to both management and investors by excluding the effect of certain non-cash expenses and items that Luna believes may not be indicative of its operating performance, because either they are unusual and Luna does not expect them to recur in the ordinary course of its business, or they are unrelated to the ongoing operation of the business in the ordinary course. 

Adjusted EBITDA and Adjusted EPS should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Adjusted EBITDA and Adjusted EPS have been reconciled to the nearest GAAP measure in the table following the financial statements attached to this press release.

Conference Call Information

As previously announced, Luna will conduct an investor conference call at 8:30 am (ET) today, November 14, 2023, to discuss its financial results for the three and nine months ended September 30, 2023.The investor conference call will be available via live webcast on the Luna website at www.lunainc.com under the tab "Investor Relations." To participate by telephone, the domestic dial-in number is 1.800.715.9871 .and the international dial-in number is.1.646.307.1963. Participants should ask to join the Luna Innovations Incorporated conference call, conference ID 6862329, and are advised to dial in at least fifteen minutes prior to the call. A replay of the conference call will be available on the company's website under "Webcasts and Presentations" for 30 days following the conference call.

About Luna

Luna Innovations Incorporated (www.lunainc.com) is a leader in optical technology, providing unique capabilities in high-performance, fiber optic-based, test products for the telecommunications industry and distributed fiber optic-based sensing for a multitude of industries. Luna’s business model is designed to accelerate the process of bringing new and innovative technologies to market.

Forward-Looking Statements

The statements in this release that are not historical facts constitute “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These statements include Luna's expectations regarding its projected full year 2023 financial results and outlook, and the Company's ability to secure additional significant wins. Management cautions the reader that these forward-looking statements are only predictions and are subject to a number of both known and unknown risks and uncertainties, and actual results, performance, and/or achievements of Luna may differ materially from the future results, performance, and/or achievements expressed or implied by these forward-looking statements as a result of a number of factors. These factors include, without limitation, failure of demand for Luna's products and services to meet expectations, failure of target market to grow and expand, technological and strategic challenges, uncertainties related to the macroeconomic conditions and those risks and uncertainties set forth in Luna’s Form 10-Q for the quarter ended September 30, 2023, and Luna's other periodic reports and filings with the Securities and Exchange Commission ("SEC"). Such filings are available on the SEC’s website at www.sec.gov and on Luna’s website at www.lunainc.com. The statements made in this release are based on information available to Luna as of the date of this release and Luna undertakes no obligation to update any of the forward-looking statements after the date of this release.

Investor Contact:

Allison Woody
Phone: 540-769-8465
Email: [email protected]