nLIGHT’s first quarter was marked by robust revenue growth and a significant year-over-year improvement in profitability, with results exceeding Wall Street expectations and prompting a strong positive market reaction. Management attributed the outperformance to another quarter of record defense revenue, which accounted for over 63% of total sales, up from 49% a year ago. CEO Scott Keeney highlighted that “the outperformance was primarily driven by another quarter of record defense revenue,” specifically citing strong momentum in directed energy and laser sensing programs for aerospace and defense customers. Sequential improvements in microfabrication, supported by stabilized operations at a Thai contract manufacturing partner, also contributed to the quarter.
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nLIGHT (LASR) Q1 CY2025 Highlights:
- Revenue: $51.67 million vs analyst estimates of $47.34 million (16% year-on-year growth, 9.1% beat)
- Adjusted EPS: -$0.04 vs analyst estimates of -$0.19 (78.7% beat)
- Adjusted EBITDA: $116,000 vs analyst estimates of -$5.14 million (0.2% margin, significant beat)
- Revenue Guidance for Q2 CY2025 is $56 million at the midpoint, above analyst estimates of $50.15 million
- EBITDA guidance for the full year is -$1.5 million at the midpoint, above analyst estimates of -$11.98 million
- Operating Margin: -18.6%, up from -33.1% in the same quarter last year
- Market Capitalization: $970.5 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions nLIGHT’s Q1 Earnings Call
- Jim Ricchiuti (Needham and Company) asked about the visibility for aerospace and defense product sales beyond Q2. CEO Scott Keeney responded that strong program pipelines and increased orders provide growing confidence, but broader economic uncertainties remain.
- Jim Ricchiuti (Needham and Company) also inquired about tariff impacts on different business segments. CFO Joe Corso explained that industrial fiber lasers are most exposed to tariff-related input cost increases, while defense is relatively insulated in the near term.
- Greg Palm (Craig Hallum) questioned what would be required to increase the full-year aerospace and defense revenue outlook. Keeney cited ongoing traction in both U.S. and international defense markets but pointed to tariff uncertainty as a limiting factor for guidance changes.
- Ruben Roy (Stifel) probed the company’s approach to passing through increased costs from tariffs. Keeney described a mix of cost pass-through, production shifts, and regulatory mitigation, while Corso indicated that any widening of margin guidance is to reflect this uncertainty.
- Troy Jensen (Cantor Fitzgerald) asked about the sustainability of recent margin improvement and the significance of duty reclaim benefits. Corso clarified that while duty reclaim provided a one-time margin boost, future gross margins will depend on product mix and successful ramp-up in defense volumes.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) continued ramp and delivery milestones for major defense programs like HEL-TD and DEM SHORAD, (2) the scale and timing of international defense contract wins, particularly with allies such as Israel, and (3) the extent to which nLIGHT can mitigate tariff-related cost pressures through supply chain adjustments. Progress in strengthening commercial market demand will also be a key indicator for broader business health.
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