nLIGHT, Inc. Q4 FY2025 earnings call

• 2025 was exceptional for Enlight with strong A&D market outperformance, record fourth quarter A&D revenue of $175 million (+60% y-o-y). • Success in directed energy market with key programs like healthy tube ($171M), LCTU program, and delivery of 50-kilowatt CBC high energy laser. • Laser sensing markets performed well with new $50M contract in Q3 2025 and start of low rate initial production in Q4 on a classified sensing program. • Raised over $190M via follow-on equity offering to build new manufacturing facility in Longmont, CO and invest in supply chain, staffing, and new product development. • Decided to exit cutting and welding markets in Q4 2025, focusing on advanced manufacturing like metal 3D printing. • 2025 full-year revenue $261M, up 32% y-o-y; fourth quarter revenue $81.2M, up 71% y-o-y. • Gross margins improved, adjusted EBITDA was record $23.5M in 2025, cash flow from operations over $21M.

For 2025, total revenues were $261 million, up 32% y-o-y. A&D revenue was $175 million, up 60% y-o-y, contributing 67.05% to total revenue. Commercial markets: microfabrication and advanced manufacturing revenue increased, while cutting and welding declined, with decision to exit cutting and welding in Q4. Fourth quarter total revenue was $81.2 million, up 71% y-o-y. A&D revenue was $56.3 million, up 87% y-o-y. Commercial markets revenue was $24.9 million, up 44% y-o-y. Full-year gross margin was ~30%, up from 17% in 2024. Fourth quarter gross margin was 30.7%. Product gross margin was 37.3%, development gross margin was 16.8%. Adjusted EBITDA for 2025 was $23.5 million, fourth quarter adjusted EBITDA was $10.7 million.

• Expect revenue for Q1 2026 to be in range of $70M to $76M, midpoint $73M including ~$54M product revenue and $19M development revenue. • Overall gross margin expected to be 27% to 32% in Q1 2026, product gross margin 34% to 39%, development gross margin ~8%. • Adjusted EBITDA expected to be in range of $5M to $10M in Q1 2026. • 2026 expected to be a growth year with opportunities in directed energy, laser sensing, and advanced manufacturing, but timing of new contracts affects growth.

• Uncertainty in timing of government programs which can affect execution of defense work. • Structural weakness in industrial markets, particularly cutting and welding, which led to decision to exit, but may have short-term revenue impact. • Dependence on successful execution of new programs and contracts in directed energy and sensing markets which are highly technical.

Q: Congratulations on the strong end of the year. Can you give a sense of whether expected orders in next few months on directed energy side would be more development for new programs, continuing of existing development programs, or how soon are we to actual some production orders?

A: John, it's actually all of the above. There are certainly examples of continuation. There's examples of new programs that certainly build on things we've done. And there are orders for the low-rate production program. So really all three.

Q: On the sensing side, which is greater for near-term prospects, existing laser sensing programs in full-rate production or new programs moving into LRIP?

A: Near-term, the existing laser sensing programs that we're working on are in full-rate production, so those will tend to drive more revenue in the near-term. As we think about the new programs that we're working on, as they move into LRIP, they will start to contribute more, and then over the next year or two will be a much larger proportion of our overall sensing business. But both are actually growing quite nicely right now.

Q: Why now the decision to exit cutting and welding? What should we be expecting in terms of longer-term P&L impacts from a margin standpoint?

A: Short answer is focus. We are transitioning people to focus on core growth opportunities in direct energy, sensing, and advanced manufacturing. In near term, might have a little margin headwind as lose some revenue with positive incremental margin, but don't expect it to have material impact on margin and cash flow going forward. Revenue headwind of $25 to $30 million in full year 2026.

Q: Thoughts on using cash raise, plans for facility building in Colorado and other priorities?

A: Raised capital to accelerate growth, giving flexibility to pursue multiple opportunities. Use includes investing ahead of demand, building out Colorado facility, investing in supply chain, people, new product development, and potential M&A opportunistically.

Q: Quantified capex needed for capacity expansion? Did you say earlier OPEX expected to be between $17 and $19 million every quarter this year?

A: Haven't quantified capex specifically, but expected to be higher than 2025. Non-GAAP OpEx expected to be between $17 and $19 million every quarter in 2026.

Q: Thoughts on share count in Q1 with new capital raise?

A: Q1 share count probably be in the 55-ish million range from a diluted EPS perspective.