nLIGHT (LASR) Q2 Revenue Jumps 22%

Key Points

• nLIGHT reported GAAP revenue of $61.7 million in Q2 2025, exceeding analyst expectations by 11.8%.

• Non-GAAP EPS turned positive at $0.06, far ahead of the -$0.09 non-GAAP estimate and a year-over-year improvement.

• Aerospace & Defense revenue rose 50.4% year over year and now represents over 63% of the company’s total sales.

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nLIGHT (NASDAQ:LASR), a laser technology specialist focused on industrial and defense applications, reported financial results for Q2 2025 on August 7, 2025. The release revealed GAAP revenue of $61.7 million, up 22.2% from the same period in 2024, and topping the consensus GAAP estimate of $55.2 million. Non-GAAP earnings per share (EPS) rose to $0.06, not only reversing a year-ago non-GAAP loss of $(0.10) per share in Q2 2024 but surpassing the projected non-GAAP -$0.09. This marked a return to non-GAAP profitability, propelled by record revenues in the Aerospace & Defense segment, though the company continued to show a GAAP net loss. All major profit and margin metrics improved, and management raised full-year 2025 growth guidance for Aerospace & Defense to at least 40% year-over-year, up from the prior outlook of at least 25%. The quarter demonstrated execution and momentum in core defense programs, but also highlighted that commercial segments remain under pressure.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Understanding nLIGHT’s Business and Strategic Focus

nLIGHT develops and manufactures high-performance laser products for use in industrial, microfabrication, and defense markets. Its core products include programmable fiber lasers and laser sensing systems, which are central to sectors such as metal manufacturing, additive manufacturing, and directed energy defense systems. These laser systems serve both large-scale manufacturing needs and advanced government programs.

In recent years, nLIGHT has sharpened its focus on high-growth areas, especially in Aerospace & Defense. It invests heavily in research and development to advance technologies like fiber lasers and multiplexed chip architectures, which improve power, efficiency, and reliability. The company’s vertically integrated manufacturing model -- producing critical components in-house -- provides both innovation speed and supply chain flexibility, key factors for winning defense contracts and rapidly adapting its product lineup. Staying ahead in intellectual property protection and nurturing relationships with major government and defense clients are also essential drivers for its continued success.

Quarter in Review: Metrics, Achievements, and Market Shifts

The quarter saw nLIGHT deliver financial results that surpassed both its guidance and Wall Street projections. Revenue (GAAP) rose 22.2%, settling at $61.7 million. This result beat independent analyst forecasts by almost $6.5 million (GAAP revenue, Q2 2025; actual: $61.7 million vs. estimate: $55.2 million; difference: $6.5 million, rounded from $6.492571 million), marking a clear revenue outperformance, with GAAP revenue of $61.7 million exceeding the analysts' estimate of $55.2 million by $6.5 million, or 11.75%. Non-GAAP EPS, a profit measurement that excludes certain one-off and non-cash charges, swung to a positive $0.06 versus the expected -$0.09. Adjusted EBITDA, which gauges operating profitability before taxes, depreciation, and other non-operational items, was $5.6 million and exceeding nLIGHT’s own forecasted revenue range.

Performance was fueled by significant growth in the Aerospace & Defense business. That segment contributed $40.7 million in GAAP revenue, up 48.6%. As a result, Aerospace & Defense made up more than 63% of nLIGHT’s total revenue, up from 49% a year ago. Management raised its full-year expectation for the segment, now projecting at least 40% growth in 2025. In contrast, the Industrial segment’s revenue declined to $9.7 million, reflecting ongoing weak demand. Microfabrication revenue (GAAP) reached $11.3 million, as prior disruptions at contract manufacturers were resolved.

Margin performance was another highlight. The company’s gross margin (GAAP) -- the percent of revenue remaining after direct production costs -- reached 29.9%, an improvement of 6.4 percentage points versus a year prior. Rather than any short-term benefits from tariff-related duty reclaims, which had helped results in the prior quarter. Operating loss (GAAP) narrowed significantly, and GAAP net losses decreased to $3.6 million from $11.7 million a year ago.

Operationally, nLIGHT continued to invest in research and development, with expense levels slightly lower but still elevated at $11.0 million. The company also drew $20 million on its credit line to ensure liquidity while building inventory for major defense programs. This prudent move boosted total cash and marketable securities to $113.7 million at quarter end (June 30, 2025), collectively offering a financial buffer as working capital needs grow.

During the period, strategic advances included a continued ramp-up in complex government laser programs. Key contributors cited were the HEL-TD (high-energy laser) project and other defense contracts, and were described by management as central to their “portfolio of directed energy products and laser sensing solutions.” Meanwhile, manufacturing of commercial lasers continued to shift away from China, with production now centered in the U.S. and Thailand to mitigate tariff exposure. No new dividend was declared or changed in the quarter. LASR does not currently pay a dividend.

Looking Forward: Management Guidance and Priorities

Management provided clear guidance for Q3 2025, forecasting GAAP revenue between $62 million and $67 million, with the midpoint of guidance implying a further sequential increase. The company expects product revenue of approximately $45 million and advanced development revenue of approximately $19 million. Gross margins (GAAP) are forecast to remain robust, between 24% and 30%, with the products portion potentially running even higher. Adjusted EBITDA is projected between $2.0 million and $6.0 million.

Looking to the rest of the year, nLIGHT lifted its full-year 2025 Aerospace & Defense growth outlook to at least 40%. Risks remain in the continued reliance on defense revenues, pressure in commercial markets, and potential impacts from global tariff changes, which could affect margins and demand in unpredictable ways.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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