nLight Q4 Earnings Call Highlights

by · The Markets Daily

nLight (NASDAQ:LASR) executives highlighted strong aerospace and defense-driven growth in 2025, alongside higher profitability and a strengthened balance sheet, during the company’s fourth-quarter and year-end earnings call. Management also detailed a strategic shift away from legacy industrial markets and outlined investments aimed at expanding capacity for directed energy and sensing opportunities.

2025 results driven by record defense performance

Chairman and CEO Scott Keeney called 2025 “an exceptional year,” citing accelerated growth and improved margins tied largely to aerospace and defense (A&D). Full-year revenue was $261 million, up 32% year-over-year. A&D revenue reached a record $175 million, up 60%, as the company executed on existing programs, ramped production of new fiber amplifiers, and secured new contract awards that management said provide visibility into continued growth.

CFO Joe Corso said the revenue growth, favorable business mix, and manufacturing execution helped lift full-year gross margin to approximately 30% versus 17% in 2024. He added that reduced non-GAAP operating expenses enabled the margin improvement to flow through to a record $23.5 million of adjusted EBITDA in 2025, while working capital discipline helped generate more than $21 million in cash flow from operations for the year.

Directed energy and laser sensing momentum

Keeney said nLight is focused in A&D on directed energy and laser sensing, and that both markets experienced accelerated growth in 2025. In directed energy, he emphasized the company’s vertically integrated capabilities “from chips to components” through beam-combined lasers and laser weapon modules that include beam directors and atmospheric correction.

Management cited several directed energy milestones:

  • Progress on the HELSI-2 program, described as a $171 million effort to develop a 1 MW high-energy laser with an expected completion date in late 2026. Keeney said shipments of critical components were a significant driver of record defense product revenue in 2025 and are expected to be a substantial contributor in 2026.
  • Substantial completion of work in the fourth quarter on the Army’s DE M-SHORAD program, including delivery of a 50 kW laser weapon module and beam director for integration into a Stryker vehicle. Keeney said the company successfully delivered the module to its partner for integration and test.
  • International progress, with Keeney noting shipments to several new international customers during 2025 and a growing pipeline as allies accelerate directed energy programs for counter-UAS and other threats.

Keeney also pointed to the U.S. president’s “Golden Dome” executive order as an area that could drive future directed energy and sensing activity, particularly around non-kinetic missile defense. He said the company expects new contracts to be awarded in coming quarters from different agencies, though he added that management hoped to provide more detail later on the scope and timing.

In laser sensing, Keeney described applications including missile guidance, proximity detection, range finding, and countermeasures. He noted a $50 million contract signed in the third quarter of 2025 for an existing long-running missile program incorporating one of the company’s sensing products. In the fourth quarter, he said nLight began the initial stages of low-rate initial production on a new classified sensing program, adding that early success on multiple classified programs has increased both prospects and the size of the sensing pipeline.

Record fourth quarter and margin expansion

Corso reported fourth-quarter revenue of $81.2 million, a record, up 71% from $47.4 million in the prior-year quarter and up 22% sequentially. A&D revenue was $56.3 million, up 87% year-over-year and 24% sequentially.

Within A&D, product revenue was $30.2 million (up 109% year-over-year), while development revenue was $26.1 million (up 66% year-over-year). Corso said the sequential increase in development revenue was primarily due to delivery of the 50 kW laser to support DE M-SHORAD, and he expects development revenue to decline sequentially in the first quarter of 2026 given that delivery milestone.

Commercial revenue (industrial and microfabrication) was $24.9 million, up 44% year-over-year and 17% sequentially, including $14.2 million from microfabrication and $10.7 million from industrial markets.

Fourth-quarter gross margin was 30.7%, compared with 2.4% a year earlier and 31.1% in the third quarter. Product gross margin was 37.3%, with Corso citing mix, lower factory utilization, and higher inventory charges tied to exiting cutting and welding as drivers of the sequential decline. Development gross margin improved to 16.8%, which Corso attributed largely to the DE M-SHORAD delivery and execution on other ongoing programs.

GAAP net loss for the quarter was $4.9 million, or $0.10 per share, versus a GAAP net loss of $25.0 million, or $0.51 per share, in the year-ago quarter. On a non-GAAP basis, the company posted net income of $7.8 million, or $0.14 per diluted share. Adjusted EBITDA was $10.7 million in the quarter.

Portfolio shift and capital raise to fund capacity build

Management said commercial markets performed in line with expectations, as microfabrication and advanced manufacturing gains were offset by continued declines in cutting and welding. Keeney said nLight decided in the fourth quarter to exit the cutting and welding markets, describing the move as part of a resource alignment toward A&D growth. Corso said customers have been notified and the company is working through last-time buys and other wind-down actions, with modest cutting and welding revenue expected to continue in the first half of 2026.

Corso guided to a full-year revenue headwind of approximately $25 million to $30 million associated with the exit, and said the company expects the revenue stream to be effectively at zero by the second half of 2026. In response to investor questions, management said it plans to transition overhead and personnel previously allocated to cutting and welding toward defense programs, and Corso said the company does not expect the exit to have a material impact on how it is thinking about margin and cash flow going forward.

Executives also discussed a follow-on equity offering completed earlier in the month, which Keeney said raised over $190 million after expenses. Combined with existing cash, management said the company now has more than a quarter billion dollars on the balance sheet. Corso said the funds will be used to invest ahead of demand, including building out and equipping a new 50,000 square foot manufacturing facility in Longmont, Colorado; supporting supply chain readiness; investing in staffing and new product development; and maintaining flexibility for potential M&A, though he said nothing is imminent.

Guidance and backlog commentary

Corso said funded backlog was approximately $162 million as of December 31, 2025, essentially flat versus $167 million at the end of 2024. For the first quarter of 2026, the company expects revenue of $70 million to $76 million, with the midpoint including approximately $54 million of product revenue and $19 million of development revenue.

First-quarter gross margin is expected to be 27% to 32%, including product gross margin of 34% to 39% and development gross margin of approximately 8%. The company guided to adjusted EBITDA of $5 million to $10 million for the quarter. Corso also said non-GAAP operating expenses are expected to remain in the $17 million to $19 million range per quarter throughout 2026.

In Q&A, management reiterated expectations for total revenue growth in 2026, while noting that timing of government programs can affect results. Corso said A&D could grow double digits in 2026 and indicated that growth is supported by backlog, while overall company growth would also depend on converting additional opportunities into funded backlog during the year.

About nLight (NASDAQ:LASR)

nLIGHT, Inc designs, develops, manufactures, and sells semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications. The company operates in two segments, Laser Products and Advanced Development. It offers semiconductor lasers with various ranges of power levels, wavelengths, and output fiber sizes; and programmable and serviceable fiber lasers for use in industrial and aerospace and defense applications. The company also provides laser sensors, including light detection and ranging technologies for intelligence, surveillance, and reconnaissance applications; and fiber amplifiers, beam combination, and control systems for use in high-energy laser systems in directed energy applications.

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