Nlight ((LASR)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call of nLIGHT, Inc. painted a largely positive picture, with strong performance in the Aerospace and Defense (A&D) segment taking center stage. The company reported record revenue in this area, alongside significant growth in defense products. Improved gross margins and a turnaround in financial performance with positive adjusted EBITDA and non-GAAP net income were also highlighted. However, challenges persist in the commercial markets, which saw a year-over-year decline, and the company continues to experience a GAAP net loss. Despite these challenges, the robust growth and performance in the A&D sector were the standout features of the call.
Record Aerospace and Defense Revenue
Aerospace and Defense revenue represented a significant 66% of nLIGHT’s total sales, marking an impressive increase from 54% a year ago. The A&D revenue reached a record $40.7 million, up 48.6% year-over-year and 24% sequentially. This growth underscores the company’s strategic focus on the A&D sector as a key driver of its overall performance.
Strong Gross Margin Improvement
The company’s gross margin saw a notable improvement, reaching 29.9% in Q2, up from 23.5% in the same quarter last year. This improvement was driven by better-than-expected revenue and higher factory absorption, reflecting nLIGHT’s operational efficiency and strategic product mix.
Significant Growth in Defense Products
Defense products revenue experienced remarkable growth, increasing by 74.5% year-over-year and 18% sequentially. This surge was primarily due to increased deliveries of directed energy products, highlighting nLIGHT’s strength and competitive edge in the defense sector.
Improved Financial Performance
nLIGHT reported a positive adjusted EBITDA of $5.6 million, a significant turnaround from a loss of $1.6 million in the same quarter last year. Additionally, the company achieved a non-GAAP net income of $2.9 million, compared to a non-GAAP net loss of $4.6 million in Q2 2024, showcasing its improved financial health.
Decline in Commercial Markets
Despite the positive developments in A&D, nLIGHT faced challenges in the commercial markets, where revenue decreased by 9% year-over-year. Although there was an 11% sequential increase, the company does not foresee a sustained improvement in overall demand, indicating ongoing difficulties in this segment.
Ongoing Net Loss
The company reported a GAAP net loss of $3.6 million, or $0.07 per share, for Q2, which is an improvement from a net loss of $11.7 million, or $0.25 per share, a year ago. While the loss has narrowed, it remains a concern that nLIGHT is addressing as part of its broader financial strategy.
Positive Outlook for A&D Growth
Looking ahead, nLIGHT remains optimistic about its A&D growth prospects. The company expects A&D revenue to grow sequentially throughout the remainder of 2025, projecting at least 40% growth for the year. This positive outlook is supported by strategic initiatives such as the HELSI-2 program and expanding international opportunities in directed energy markets.
In summary, nLIGHT’s earnings call highlighted a strong performance in the Aerospace and Defense segment, with record revenues and significant growth in defense products. Despite challenges in the commercial markets and ongoing net losses, the company’s improved gross margins and financial performance signal a positive trajectory. The forward-looking guidance suggests continued growth in A&D, reinforcing nLIGHT’s strategic focus and potential for future success.