LASR — nLIGHT, Inc.

Summary of nLIGHT Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Full Year Revenue: $261 million, up 32% year-over-year.
• Q4 Revenue: $81.2 million, a record, representing a 71% increase from Q4 2024 and a 22% increase from Q3 2025.
• Aerospace & Defense (A&D) Revenue: $175 million for the year, up 60% year-over-year; Q4 A&D revenue reached $56.3 million, an 87% increase year-over-year.
• Gross Margin: Improved to approximately 30% for the year, up from 17% in 2024; Q4 gross margin was 30.7%.
• Adjusted EBITDA: Record of $23.5 million for 2025; Q4 adjusted EBITDA was $10.7 million, compared to a loss of $11.3 million in Q4 2024.
• Net Loss: Q4 net loss of $4.9 million ($0.10 per share), improved from a loss of $25 million in Q4 2024.
• Cash Position: Ended 2025 with $134 million in cash, up from $101 million at the end of 2024.

2. Strategic Updates and Business Highlights

• A&D Market Focus: Continued strong performance in directed energy and laser sensing markets, with significant contract wins and program execution.
• HELSI-2 Program: A $171 million contract for a 1-megawatt high-energy laser is on track for completion in late 2026.
• Manufacturing Expansion: Plans to build a new 50,000 square foot facility in Longmont, Colorado, funded by a recent $190 million equity offering.
• Exit from Cutting and Welding: Decision made to exit these markets to focus resources on A&D and advanced manufacturing, with an expected revenue headwind of $25 million to $30 million in 2026.

3. Forward Guidance and Outlook

• Q1 2026 Revenue Guidance: Expected to be between $70 million and $76 million, with a midpoint of $73 million.
• Gross Margin Expectations: Projected to be in the range of 27% to 32% for Q1 2026.
• Adjusted EBITDA Guidance: Anticipated to be between $5 million and $10 million for Q1 2026.
• Long-term Growth: Confident in continued growth in A&D markets, with a funded backlog of approximately $162 million as of December 31, 2025.

4. Bad News, Challenges, or Points of Concern

• Market Exit Impact: The exit from cutting and welding is expected to create a revenue headwind of $25 million to $30 million in 2026, with a full run rate impact anticipated in the second half of the year.
• Execution Risks: Challenges remain in executing highly technical defense contracts, with timing of government program awards being uncertain.
• Microfabrication Revenue Uncertainty: Potential flat or declining revenue in microfabrication due to reduced contributions from the China market.

5. Notable Q&A Insights

• Future Contracts: Management indicated expectations for new contracts across directed energy and laser sensing, including both new and existing programs.
• Focus on Execution: CEO Scott Keeney emphasized the importance of vigilance and execution in a competitive environment, particularly in defense markets.
• Capacity Expansion Justification: The decision to expand manufacturing capacity is driven by anticipated strong market demand over the next few years, with efforts to build out the facility already underway.
• Equity Raise Utilization: The raised capital will be used to invest in manufacturing capabilities, supply chain improvements, and potential M&A opportunities.

Overall, nLIGHT demonstrated strong financial performance in 2025, driven by significant growth in A&D markets, while also addressing challenges related to exiting less profitable segments and managing execution risks in a complex defense landscape.