NLIGHT, INC. Q4 FY2024 earnings call

• Aerospace and defense: 2024 saw aerospace and defense revenue grow 20% y-o-y to $109.5M, backlog increased over 50% y-o-y to $167M. Key programs include Healthy 2 (DoD-funded $171M to develop 1-megawatt laser, shipments started in 2024 with acceleration in 2025) and Army's DEM short (50-kilowatt laser development). Laser sensing markets also showed growth with new contracts and EMD shipments. • Commercial markets: 2024 was challenging with 25% y-o-y revenue decline. Semiconductor fab in Vancouver, WA is crucial for laser diodes. Metal additive manufacturing in aerospace and defense has growth opportunities with nLIGHT's Corona AFX technology.

Aerospace and defense revenue grew 20% year-over-year to $110 million in 2024, accounting for more than 60% of total sales and becoming the primary growth driver. Revenue from aerospace and defense in Q4 2024 was part of the overall results. Commercial markets had revenue down 25% year-over-year in 2024 due to competition from China and muted global manufacturing demand.

• Q1 2025 revenue expected $45M to $51M (midpoint $48M) with product revenue ~$33M and development revenue ~$15M. • Q1 2025 gross margin expected 13% to 17% (product gross margin 16% to 20%, development gross margin ~8%). • Q1 2025 adjusted EBITDA expected -$6M to -$3M. • Expect aerospace and defense revenue to grow at least 25% in 2025.

• Commercial markets face continued headwinds from competition with China and muted global manufacturing demand. • Timing of delivery of defense products can cause execution challenges. • Uncertainty around tariffs and their impact on commercial markets.

Q: How should we think about revenues over the course of 2025 for aerospace and defense given Q4 challenges?

A: Confidence in A&D markets growing at least 25% over 2023, though quarterly trajectory can be tricky but backlog supports growth.

Q: What's the status of the handoff to contract manufacturing partner in Thailand and its impact on gross margins?

A: There will be improvement in gross margins due to execution and transition, with ramping volumes being a bigger driver.

Q: Assumptions in Q1 guide, including inventory reserves?

A: Q1 guide midpoint doesn't assume Q4 shortfall rolling over, back to normalized operating environment for gross margin.

Q: Tariffs impact on commercial markets?

A: Directionally could be beneficial, but not relying on it.

Q: Funded backlog details?

A: Funded backlog is $167M, all shippable in 2025-2026; total defense-type opportunities in pipeline are ~$399M including funded and unfunded.