nLIGHT’s Laser Scaling Timelines and Defense Supply Chain Signals Don’t Match

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Date of Call: Aug 6, 2026

Financials Results

• Revenue: $82.6M, up 34% YOY and up 3% sequentially
• EPS: $0.15 per diluted share (non-GAAP), compared to $0.06 per diluted share in the prior year and $0.20 last quarter
• Gross Margin: 31.1% (GAAP), compared to 29.9% in the second quarter of 2025 and 33.1% last quarter; 32.6% (non-GAAP), up from 30.9% in the same period last year and 34.4% last quarter

Guidance:

• Q3 revenue expected in the range of $63 to $73 million (midpoint $68M).
• Overall gross margin expected in the range of 24% to 30%.
• Product gross margin expected in the range of 34% to 40%.
• Development gross margin expected to be approximately 8%.
• Adjusted EBITDA expected in the range of $1 to $7 million.
• Expects Q3 demand remains strong despite supply chain challenges impacting ability to ship $17M of product revenue into future quarters.

Business Commentary:

Revenue and Product Growth:

• Enlight reported record revenue of $82.6 million for Q2 2026, up 34% year-over-year, driven by record product revenue of $59 million, which grew 45% year-over-year.
• The growth was primarily attributed to increased demand for solutions in both defense and advanced manufacturing markets.

Strong Performance in Aerospace and Defense:

• Aerospace and defense revenue reached a record $57.3 million, up 41% year-over-year, with product revenue in this segment growing 72% year-over-year.
• The increase was driven by progress in the Healthy C2 program, growth in munitions programs, and execution across multiple directed energy and laser sensing programs.

Commercial Market Expansion:

• Revenue from commercial markets, including industrial and microfabrication, was $25.3 million, an increase of 20% year-over-year.
• Growth in this segment was fueled by increased demand for additive manufacturing products and sales associated with last-time buys of cutting and welding products.

Challenges in Supply Chain:

• The company is experiencing challenges in sourcing parts and materials from Chinese suppliers, primarily affecting commercial products.
• This issue is due to increased scrutiny on dual-use products and could potentially impact future quarters, though mitigation strategies are being implemented.

Financial Metrics and Outlook:

• Enlight generated a record $20.7 million in cash from operations during Q2 2026, with adjusted EBITDA of $10.7 million.
• The company expects continued strong demand and is focused on managing supply chain issues to support future growth, particularly with new programs like the Joint Laser Weapon System (JLWS).

Sentiment Analysis:

Overall Tone: Positive

• CEO noted 'Q2 represented another strong quarter of execution' with record revenue and cash from operations. He is 'extremely encouraged by the growing pipeline of opportunities.' The company sees 'increased demand for our solutions across both defense and advanced manufacturing markets,' and the JLWS award is a 'critical step forward' for scaling production-ready systems.

Q&A:

• Question from Jonathan Siegman (Stiefel): How does the JLWS award work and roll into 26 and 27, and how does that help relative to the headwind from Healthy Too?
  Response: JLWS revenue starts in Q3, continues into Q4, and ramps in 2027; it will be a 'nice replacement and then some' for the trailing Healthy C2 program.

• Question from Louis DePalma (William Blair): From a technology standpoint, how is the JLWS prototype different from the Healthy2 prototype and the HADES platform?
  Response: GLWS is a continuation that builds on Healthy C2 and expands the HADES product line at various power levels, focusing on transitioning technology into products.

• Question from Louis DePalma (William Blair): What is the projected timeline for fielding laser systems at scale?
  Response: Depends on budget progress; no program of record expected next year, but initial prototypes for higher power levels expected in coming years, leading to low-rate production and scaling.

• Question from Louis DePalma (William Blair): Could the restocking of traditional kinetic munitions benefit your sensing business, and could you become a second supplier on missile programs?
  Response: Yes, restocking is a benefit, with content and unit growth on existing programs expected to continue. Expanding sensing opportunities with missiles is part of the plan, though the gestation period is long.

• Question from Jim Ricciuti (Needham & Company): Can you elaborate on the supply chain issue causing the Q3 shortfall and its resolution?
  Response: The issue is increased Chinese scrutiny on dual-use optics components, affecting commercial products. It is a recent development (<5 weeks), and resolution could take months to quarters depending on mitigation; demand remains strong.

• Question from Jim Ricciuti (Needham & Company): What is the current mitigation strategy for sourcing components outside China?
  Response: Working with existing partners, qualifying new partners, and redesigning products for more supply chain flexibility; focus has been on de-risking China over time.

• Question from Jim Ricciuti (Needham & Company): Could this supply issue impact defense products like JLWS?
  Response: Primarily commercial; defense supply chain is mostly domestic, but some commercial items used in defense have exposure. Initial JLWS work is unaffected.

• Question from Greg Palm (Craig Hallam): Is the supply issue a political football or a manufacturing delay, and how long has it been going on?
  Response: Not related to manufacturing; it's a recent (last handful of weeks) supply chain delay due to China's dual-use export controls.

• Question from Greg Palm (Craig Hallam): Are customers likely to seek competitors due to delays?
  Response: No, demand remains very strong, and the company is eager to ship products as soon as possible.

• Question from Keith Hoosom (North Coast Research): Are you having new discussions for sensing lasers in space development?
  Response: Yes, sensing and other applications are important in space, and discussions are ongoing.

• Question from Kieran McCabe (Cantor Fitzgerald): Why is Q3 guidance wider than normal?
  Response: The wider range is related exclusively to supply chain challenges.

• Question from Kieran McCabe (Cantor Fitzgerald): What trends are you seeing in additive manufacturing?
  Response: Strong demand across segments, including rocket engines and broader aerospace/defense components.

• Question from Jan Engelbrecht (Baird): Is JLWS a continuation of Healthy C2, and what do the ceiling values imply?
  Response: JLWS and Healthy C2 are separate contracts; the $607M ceiling is for Enlight's awarded portion, and Healthy C2 remains on track for 2026 delivery.

• Question from Jan Engelbrecht (Baird): Is the Infantry Squad Vehicle program addressing power bottlenecks for lasers?
  Response: Yes, it's an example of technology improvements important for mobile platforms, alongside other programs addressing power supply advancements.

• Question from Greg Palm (Craig Hallam): How does the $17M impact break down by segment?
  Response: The unfulfilled demand shortfall is largely from commercial end markets, though some commercial items are reported in A&D demand remains strong across segments.

Contradiction Point 1

Timeline for Fielding Laser Systems at Scale

Conflicting statements on when initial prototypes for higher power levels will be ready, impacting expectations for product scaling and market entry.

What was Louis DePalma's question for the company during the earnings call? - Louis DePalma (William Blair)

2026Q2: No program of record is anticipated in the next year. Over the coming years, there will be increasing interest and demand, leading to initial prototypes, low-rate production, and eventual scaling. - Scott Keeney(CTO)

When will Halsey, JLWS, and HADES laser systems be fielded at scale? - Louie DiPalma (William Blair)

2026Q2: There will not be a program of record over the next year. The path is: increasing interest and demand now, transition to initial prototypes for higher power levels in the coming couple of years, then move to low rate production, and eventually scale up. - Scott Keeney(CTO)

Contradiction Point 2

Impact of Supply Chain Issue on Defense Products and JLWS Ramp-Up

Contradiction on whether the supply issue affects defense products, including JLWS, creating uncertainty about program timelines and execution.

Greg Palm (Craig Hallam) - Greg Palm (Craig Hallam)

2026Q2: The impact is mostly on commercial products. Defense supply chain is largely domestic, but some commercial items used in defense have Chinese component exposure. The initial work on JLWS (the first $44M funded work) and significant subsequent work is unaffected by these issues. - Joe Corso(CFO) & Scott Keeney(CTO)

Does the supply issue impact defense products, including the JLWS ramp-up? - Greg Palm (Craig-Hallum)

2026Q2: The issue is mostly commercial due to dual-use strategy. There is some indirect exposure to defense products, but the majority of the defense supply chain is domestic. For JLWS, the initial work (the $44 million funded portion) and significant work beyond it is all systems go and largely unaffected by the supply chain issue. - Joe Corso(CFO) & Scott Keeney(CTO)

Contradiction Point 3

Supply Chain Constraint Scope and Nature

Inconsistent characterization of supply chain issues affecting commercial products, shifting from a broad market-driven shortfall to a specific geopolitical cause.

Jim Ricciuti (Needham & Company) - Jim Ricciuti (Needham & Company)

2026Q2: The issue stems from increased Chinese scrutiny on dual-use products, affecting optics components. This is a recent development (past few weeks) and primarily impacts commercial products. - Scott Keeney(CTO) & Joe Corso(CFO)

What supply chain challenges are impacting Q3 guidance, and when might these issues be resolved? - Greg Palm (Craig-Hallum)

2026Q1: The upside in the industrial segment was driven by better-than-expected performance in additive manufacturing and last-time buys in cutting and welding. - Joe Corso(CFO)

Contradiction Point 4

Timeline for Directed Energy Program of Record (POR)

Contradictory statements on the near-term expectation for a formal defense program, shifting from a positive budgetary signal to a definitive multi-year absence.

What are your thoughts on the company's revenue growth and future outlook? - Louis DePalma (William Blair)

2026Q2: No program of record is anticipated in the next year. - Scott Keeney(CTO)

What is the projected timeline for large-scale deployment of Halsey, JLWS, and HADES laser systems? - Peter Arment (Baird)

2026Q1: The president’s budget signals the growing importance of directed energy. The data shows increases... which aligns with priorities set by officials... Commentary from defense leaders further reinforces this trend. - Scott Keeney(CTO)

Contradiction Point 5

Timeline for Production Orders from Directed Energy Programs

Contradiction on the near-term expectation for production orders versus continued development, impacting financial visibility and investor outlook.

Louis DePalma (William Blair) - Louis DePalma (William Blair)

2026Q2: The timeline depends on U.S. budget progress. No program of record is anticipated in the next year. - Scott Keeney(CTO)

What is the projected timeline for large-scale deployment of Halsey, JLWS, and HADES laser systems? - Jonathan Siegmann (Stifel)

20260227-2025 Q4: The expected orders include continuation of existing programs, new programs building on current work, and low-rate initial production (LRIP) orders. All three types are anticipated. - Scott Keeney(CTO)

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