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- **Revenue Growth Accelerates**: Q3 2025 revenue up 19% YoY to $67M, driven by 70% YoY growth in defense products.
- **Profitability Improves**: Gross margin expands to 41%, adj. EBITDA turns positive at $7M.
- **HELSI-2 Program Momentum**: $171M program on track for 2026 completion, with Q3 shipments driving defense revenue.
- **Sensing Contract Win**: $50M missile guidance system contract highlights sensing market expansion.
- **Q4 Guidance Strong**: $75M midpoint revenue, 27-32% gross margin, $6-11M adj. EBITDA.
- **Risk Management**: $1.7M China restructuring charge, but free cash flow positive at $5.2M.

**【CEO Summary Section】**
- Q3 2025 revenue reached $67 million, up 19% YoY, driven by record Aerospace & Defense (A&D) revenue of $46 million (+70% YoY in defense products). 
- Gross margin expanded to 41% (vs. 29% Q3 2024), with adjusted EBITDA of $7 million.
- HELSI-2 program ($171M, 1MW laser) on track for 2026 completion; Q3 shipments contributed to defense product growth.
- Directed energy programs (e.g., DE M-SHORAD) nearing completion; international demand for counter-UAS systems growing.
- Laser sensing signed $50M contract for missile guidance system, with pipeline expansion under Golden Dome initiatives.

**【CFO Financial Commentary】**
- Q3 GAAP net loss: $6.9M (-$0.14/share) vs. $10.3M (-$0.21) Q3 2024.
- Non-GAAP net income: $4.3M (+$0.08/share) vs. $2.9M (+$0.06) Q2 2025.
- Q4 2025 guidance: $72-78M revenue (midpoint $75M), 27-32% gross margin, $6-11M adj. EBITDA.
- Free cash flow positive at $5.2M; ending cash: $116M.
- A&D product gross margin expected to remain >35% as volumes scale.

**【Q&A Key Highlights】**
- **HELSI-2 Timeline**: On track for 2026 completion; no acceleration expected.
- **Gross Margin Volatility**: Q4 2025 margin decline (~150-200bps) due to higher material costs, mix shifts, and one-time freight expenses.
- **Post-HELSI-2 Growth**: Booked programs will offset HELSI-2 decline; pipeline includes directed energy and sensing contracts.
- **Commercial Markets**: Microfabrication stabilizing at $8-12M/Q, industrial sales resilient despite cutting/welding decline.
- **International Expansion**: New customers in Europe and Middle East driving directed energy demand.
- **China Restructuring**: $1.7M Q3 charge to exit low-margin China manufacturing.


nLIGHT, Inc. (LASR) Q3 2025 Earnings Call Transcript

- **A&D Dominance**: 66% of Q2 revenue (up 48.6% YoY) driven by HELSI-2 program shipments and new international directed energy wins.
- **Gross Margin Expansion**: 29.9% total GM (vs. 23.5% YoY) from defense product volume growth and factory absorption.
- **Q3 Guidance**: $62-67 million revenue (midpoint +15% YoY), with A&D growth and 24-30% total GM.
- **2025 Outlook**: CEO confident in 40%+ A&D growth, citing pipeline expansion and Golden Dome initiative alignment.
- **Risks**: Commercial market rationalization may limit industrial demand recovery; amplifier production transition execution risk.

**【CEO Summary Section】**
- **Record A&D Revenue Growth**: A&D revenue reached $40.7 million (66% of total), up 48.6% YoY, driven by directed energy products and development revenue. HELSI-2 program shipments were a key driver, with $171 million in DoD funding.
- **Directed Energy Progress**: 
  - Transitioning SWaP amplifier production to manufacturing teams for higher volumes.
  - Army's DE M-SHORAD program nearing completion with 50kW laser delivery for Stryker vehicle integration.
  - New international customer shipments and growing pipeline for counter-UAS systems.
- **Golden Dome Initiative**: Positioning to benefit from U.S.-based non-kinetic missile defense development, with potential future program details.
- **Commercial Rationalization**: Sequential improvement in microfabrication and industrial, but no sustained demand recovery expected. Focusing resources on additive manufacturing growth.

**【CFO Financial Commentary】**
- **Revenue Performance**: Q2 total revenue $61.7 million (+22% YoY, +19.5% QoQ), with A&D up 48.6% YoY and 24% QoQ. Commercial revenue $21 million (-9% YoY, +11% QoQ) due to microfabrication pent-up demand resolution.
- **Gross Margin Expansion**: Total GM 29.9% (vs. 23.5% YoY, 26.7% QoQ), driven by:
  - Products GM 38.5% (vs. 30.3% YoY, 33.5% QoQ) from higher defense product volumes and factory absorption.
  - Development GM 13.1% (vs. 8.7% YoY, 11.5% QoQ) from fixed-price program completions.
- **Operating Expenses**: Non-GAAP OpEx $16.8 million (-7% YoY, -6% QoQ), guided to remain ~$18 million in Q3.
- **Profitability**: Non-GAAP net income $2.9 million ($0.06 EPS), vs. loss of $4.6 million YoY. Adjusted EBITDA $5.6 million (vs. -$1.6 million YoY).
- **Q3 Guidance**: 
  - Revenue $62-67 million (midpoint +15% YoY, +4% QoQ), with A&D growth.
  - Products GM 32-36%, development GM ~8%, total GM 24-30%.
  - Adjusted EBITDA $2-6 million.

**【Q&A Key Highlights】**
- **A&D Growth Drivers**: 
  - Execution on existing programs (HELSI-2, laser sensing) exceeded expectations.
  - New international customer wins and pipeline expansion.
  - Transitioning amplifier production to manufacturing teams for scalability.
- **Gross Margin Volatility**: 
  - Q2 upside from exceptional factory absorption and execution; Q3 guidance reflects normalized expectations.
  - Long-term leverage from fixed-cost absorption as volumes grow.
- **2026 Outlook**: 
  - Pipeline growth and backlog support confidence, but timing variability limits visibility.
  - Focus on directed energy and laser sensing programs aligned with DoD priorities.
- **Amplifier Transition Risks**: 
  - Ongoing process to move from R&D to manufacturing; internal controls being implemented.
  - Potential delays in scaling production volumes.
- **Commercial Strategy**: 
  - Rationalizing investments in lower-growth industrial applications.
  - Leveraging additive manufacturing expertise for defense crossover opportunities.

nLIGHT, Inc. (LASR) Q2 2025 Earnings Call Transcript

- **A&D Dominance**: Q1 A&D revenue up 50.4% YoY ($32.7M), with defense products growing 150% YoY. 2025 A&D growth target: +25% YoY, driven by HELSI-2 ($171M, 1MW laser by 2026) and international programs.
- **Profitability Boost**: Q1 gross margin 26.7% (23% ex-duties), up from 16.8% YoY. Q2 products gross margin target: 27%-33%.
- **Tariff Resilience**: Defense business insulated by U.S. manufacturing; commercial risks mitigated via Thailand/U.S. production shifts. No significant near-term margin impact expected.
- **Commercial Challenges**: Microfabrication stabilized but industrial demand weak. Full-year commercial revenue down 15%-20% YoY.

**【CEO Summary Section】**
- Q1 2025 revenue reached $51.7 million, up 16% YoY, driven by 50.4% growth in Aerospace & Defense (A&D) revenue to $32.7 million. Defense product revenue surged 150% YoY, fueled by HELSI-2 program deliveries.
- A&D revenue is expected to grow at least 25% YoY, supported by programs like HELSI-2 ($171M, targeting 1MW laser by 2026) and DE M-SHORAD. International opportunities, including Israeli Iron Beam, are expanding.
- Commercial markets remain challenging, with microfabrication stabilization offsetting weak industrial demand. Tariffs may cause short-term margin variability but are unlikely to impact long-term A&D profitability.

**【CFO Financial Commentary】**
- Q1 GAAP net loss was $8.1M, but adjusted EBITDA improved to $116K vs. -$4.9M YoY. Gross margin expanded to 26.7% (23% excluding duty reclaim benefits), up from 16.8% YoY, driven by higher A&D volumes and favorable mix.
- Q2 2025 revenue guidance: $53M-$59M (midpoint $56M), with A&D expected to grow sequentially. Products gross margin target: 27%-33%, development margin: 8%. Adjusted EBITDA forecast: -$4M to +$1M.
- Balance sheet: $117M cash (including $20M line of credit draw) to support A&D growth and mitigate tariff-related working capital needs.

**【Q&A Key Highlights】**
- **A&D Visibility**: HELSI-2 and pipeline programs provide strong product sales visibility. Defense business is less tariff-sensitive due to U.S. manufacturing and limited China supply chain exposure.
- **Tariff Impact**: Industrial lasers face input cost pressures, but production shifts to Thailand and U.S. mitigate risks. No significant near-term impact on margins, but uncertainty remains for 2H 2025.
- **Commercial Outlook**: Microfabrication stabilized but industrial demand weak. Full-year commercial revenue expected down 15%-20% YoY.
- **Cash Management**: $100M+ cash buffer deemed adequate, with line of credit used to fund working capital for A&D growth.

nLIGHT (LASR)-8 May 25-2025 Q1 Earnings call transcript

- **A&D Dominance**: 60% of revenue from A&D, up 20% YoY to $109.5M, with 25%+ growth expected in 2025.
- **Backlog Strength**: $167M funded backlog (55% YoY growth) and $399M total pipeline support visibility.
- **Megawatt Momentum**: 300kW laser demonstrated; $171M Healthy 2 program accelerating shipments in 2025.
- **Commercial Challenges**: Industrial revenue down 25% YoY, but long-term opportunities in metal AM and fabs.
- **Financial Recovery**: Gross margin improving as volumes ramp; EBITDA breakeven expected at $55-60M quarterly revenue.

**【CEO Summary Section】**
- **Aerospace & Defense Growth**: Revenue from A&D markets grew 20% YoY to $109.5 million (60% of total sales), with product revenue up 25% and development revenue up 16%. Backlog increased 55% YoY to $167 million.
- **Key Programs**: 
  - $171 million Healthy 2 program (1MW laser) with components shipped in H2 2024.
  - Army DEM short effort (50kW laser) with critical hardware delivered in H2 2024.
  - $25 million missile guidance contract with shipments starting Q3 2024.
- **2025 Outlook**: A&D revenue expected to grow 25%+ driven by funded backlog and new programs like Iron Dome for America.
- **Commercial Challenges**: Revenue down 25% YoY due to China competition and weak industrial demand, but long-term potential in metal AM and semiconductor fabs.

**【CFO Financial Commentary】**
- **Q4 2024 Results**: 
  - Total revenue $47.4 million (-9% YoY), A&D revenue $41.3 million (+21% YoY).
  - GAAP net loss $25 million (-89% YoY loss), adjusted EBITDA loss $11.3 million.
  - Gross margin 2% (vs 19% YoY), impacted by $6M industrial inventory reserves.
- **2025 Guidance**: 
  - Q1 revenue $45-51 million (midpoint $48M), A&D growth offset by commercial decline.
  - 2025 A&D revenue growth 25%+ supported by $399M pipeline (including $167M funded backlog).
  - EBITDA breakeven expected at $55-60M quarterly revenue.

**【Q&A Key Takeaways】**
- **A&D Growth Timing**: Sequential A&D revenue growth expected in 2025, with Q1 2025 revenue slightly below Q4 2024 due to timing delays.
- **Manufacturing Transition**: China exit complete; Thailand CMG partner expected to improve commercial laser margins over time.
- **Backlog Visibility**: $167M funded backlog shippable in 2025-2026, with $232M additional pipeline opportunities.
- **Tariff Impact**: Potential U.S. tariffs on Chinese lasers could benefit nLIGHT, but not currently factored into guidance.
- **Megawatt Program**: 300kW laser demonstrated; 1MW Healthy 2 program on track for 2026 completion with accelerating shipments in 2025.


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