nLIGHT, Inc. Q2 FY2025 earnings call

• Scott Keeney highlighted strong execution across A&D, with record A&D revenue driven by HELSI-2 program shipments and laser sensing opportunities. A&D is expected to grow by at least 40% in 2025. Commercial revenue was ahead of expectations but resources are being rationalized for commercial markets. - Joe Corso discussed second quarter financial results: total revenue $61.7 million, up 22% year-over-year; gross margin improved due to better execution; operating expenses decreased; adjusted EBITDA was positive $5.6 million; balance sheet had $114 million in cash, cash equivalents, etc., with progress on working capital.

Aerospace and Defense (A&D) revenue in the second quarter was a record $40.7 million, up 48.6% year-over-year and accounting for approximately 66% of total sales (up from 54% in the same quarter a year ago). Commercial revenue was $21 million, a decrease of 9% year-over-year but up 11% sequentially. Commercial includes microfabrication and industrial, with improvements in the quarter but no sustained improvement expected for overall demand, especially in industrial applications.

For the third quarter of 2025, revenue is expected to be in the range of $62 million to $67 million. A&D revenue is expected to increase sequentially and year-over-year. Products gross margin in Q3 is expected to be in the range of 32% to 36%, development gross margin approximately 8%, resulting in total gross margin range of 24% to 30%. Adjusted EBITDA for Q3 is expected to be in the range of approximately $2 million to $6 million.

• Amplifier transition from R&D to manufacturing has some risk but is ongoing. - Uncertainty in commercial market demand and potential execution challenges in international opportunities related to directed energy programs.

Q: Congrats on the good results, what drove A&D outperformance?

A: Strong execution on existing programs, particularly amplifier sales into the HELSI-2 program.

Q: Views on 2026?

A: Too early to specify detailed 2026 outlook but confident in continued growth in A&D.

Q: What is the significance of the amplifier transition?

A: Important to scale production from R&D teams to manufacturing teams for higher volumes.

Q: How did HELSI-2 drive 2025 growth?

A: Deliveries into HELSI-2 program were a significant driver of A&D revenue and have knock-on effects for related development work.

Q: Commercial market rationalization, which areas are being pulled back from?

A: Less attractive growth markets, with engineers working on defense-based lasers now instead