nLight Reports Record Q2 Revenue of $83 Million, Up 34%

On Thursday, nLight (NASDAQ: LASR ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary nLight reported a strong Q2 2026 with record revenues of $83 million, a 34% increase year-over-year, driven by a 45% increase in product revenue.

The company secured the Joint Laser Weapon System contract with a ceiling of over $600 million, which will significantly contribute to revenue starting in late 2026 and beyond. Gross margins improved year-over-year but faced slight sequential declines due to higher manufacturing spending. nLight is experiencing supply chain challenges, particularly from Chinese suppliers affecting commercial product deliveries, which impacts Q3 guidance. Despite supply chain issues, demand remains strong across defense and commercial markets, with continued growth in laser sensing and advanced manufacturing opportunities.

Full Transcript OPERATOR Hello everyone. Thank you for joining us and welcome to nLight's second quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand.

To withdraw your question, press star one again. I will now hand the conference over to John Marchetti. John, please go ahead. John Marchetti, VP of Corporate Development and Head of Investor Relations Good afternoon everyone.

Thank you for joining us today to discuss nLight's second quarter 2026 earnings results. I'm John Marchetti, nLight's VP of Corporate Development and the Head of Investor Relations, and with me on the call today are Scott Keeney, nLight's chairman and CEO, and Joe Corso, nLight's CFO. Today's discussion will contain forward-looking statements, including statements related to our financial projections and plans for our business, our growth opportunities and demand for our products, the impact of export controls and related supply chain challenges on our product manufacturing and delivery, and our mitigation strategies to address such supply chain challenges.

These forward-looking statements are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially from these statements, including the risks mentioned in today's earnings release as well as other risks and uncertainties described from time to time in our SEC filings, including without limitation our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q. We undertake no obligation to update any forward-looking statement except as required by law. During the call we will also be discussing certain non-GAAP financial measures.

We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings press release and in our earnings presentation, both of which can be found on the Investor Relations section of our website. I will now turn the call over to nLight's chairman and CEO, Scott Keeney. Scott Keeney, CEO Thank you, John. Q2 represented another strong quarter of execution for nLight with revenue, gross margin and adjusted EBITDA at or above our expectations.

Our second quarter revenue was a record 83 million and grew 34% year over year, driven by record products revenue of $59 million which grew 45% year over year. Adjusted EBITDA in the quarter was a solid $11 million and we generated a record $21 million in cash from operations. During the second quarter we saw increased demand for our solutions across both defense and advanced manufacturing markets. Our pipeline of new opportunities in directed energy significantly expanded with the recent award of the Department of Defense's Joint Laser Weapon System contract.

Our laser sensing and advanced manufacturing opportunities also continue to grow, providing us with a broad base of new and existing programs and customers that we expect will continue to provide long-term growth opportunities for nLight. Directed energy is an increasingly important priority for the US and our allies, driven by the need for highly scalable, low cost per shot solutions to counter a rapidly evolving threat environment. Our focus remains on supporting customers across a broad range of power levels and mission profiles, and we are increasingly engaged not only as a laser supplier but also as a system-level partner.

nLight's high energy lasers are differentiated across three key dimensions: power, brightness and atmospheric correction. We believe all are essential to the successful deployment of directed energy laser weapons, and it's across all three dimensions where we believe our HADES family of directed energy products outperforms competing solutions. HADES can scale from tens of kilowatts to a megawatt of power while maintaining exceptional beam quality. When combined with our proprietary atmospheric correction technology, HADES provides defense customers with an operational solution capable of neutralizing a wide range of threats.

Designed to be low SWaP, HADES can be delivered in a variety of form factors, enabling rapid deployment across a broad range of military platforms and battlefield environments. HADES was instrumental in helping us win the recent Joint Laser Weapon System, or JLWS, award, a new multi-year DoD agreement with a contract ceiling of over $600 million. Under JLWS, nLight will develop, integrate and deliver multiple high energy laser weapon systems that build on the successful delivery of our 300 kilowatt high energy HELSI 1 laser and our 50 kilowatt high energy DE M-SHORAD laser.

nLight will leverage its proprietary coherent beam combination and atmospheric correction technology and its vertically integrated manufacturing to deliver modular containerized systems that can be integrated across a variety of platforms and rapidly deployed in theater. With increasing US defense prioritization of directed energy lasers and planned demonstrations of operational systems expected as early as 2028, JLWS represents a critical step forward in fielding production-ready laser weapon systems at scale. We also continued to make progress with existing directed energy programs in the second quarter.

Our work on the production of our 1 megawatt CBC high energy laser as part of HELSI 2 continues to go well and we remain on track for this program. Importantly, this laser is based on the same architecture that we use across our HADES portfolio of CBC lasers, demonstrating the scalability of the platform to deliver solutions that address a wide range of mission scenarios.

We are making steady progress on the US Navy's Hellcat program for anti-ship cruise missile defense where we are integrating our 300 kilowatt CBC laser that we delivered under the HELSI 1 program with a proprietary advanced beam control system that incorporates our adaptive optics for atmospheric correction. We believe this work will continue to accelerate the development and deployment of future multi-hundred kilowatt systems over the coming years. We also continue to see increased interest in our defense products outside of directed energy.

In the second quarter we delivered strong growth in our products for kinetic weapons which remains an important growth driver within our defense markets. These products are delivered into long-standing programs of record and are in high demand due to global restocking efforts as well as new mission applications where the use case for weapons is expanding. Within the space domain we see accelerating need for both our laser sensing and advanced manufacturing products.

Our high energy pulsed lasers are being designed into several new programs that are in the early stages of adoption across the commercial and defense markets and we have a growing pipeline of customers using our commercial fiber lasers with our proprietary dynamic beam shaping technology in the launch ammunition markets as well. In summary, I'm extremely encouraged by the growing pipeline of opportunities across our entire portfolio of defense and advanced manufacturing solutions and demand for our products remains strong.

Our strategy remains consistent: leverage our vertically integrated technology platform, execute with discipline on existing programs and invest to accelerate and support long-term growth and value creation. We believe this approach positions nLight to succeed across the multi-year opportunities that remain ahead of us. Let me now turn the call over to Joe to discuss our second quarter financial results. Joe Corso (CFO) Thank you, Scott.

We had a strong second quarter with record product revenue and solid execution. Demand for our products across both our space and defense and our advanced manufacturing markets continued to accelerate, and our pipeline of new opportunities continues to build. Further, our focus on working capital management and targeted capex enabled us to generate record operating cash flow in the quarter while positioning ourselves for long-term growth. 7 million in the second quarter of 2025, and up 3% compared to the prior quarter.

3 million in the quarter, up 41% year over year. A and D growth was driven by record A and D product revenue, which grew 72% year over year and 3% sequentially. 2 million grew 11% year over year and 5% compared to the prior quarter. The year-over-year and sequential growth in our revenue from the aerospace and defense market was primarily driven by continued progress in our HELSI 2 program, growth in our munitions program, and execution across multiple other directed energy and laser sensing programs.

3 million, an increase of 20% year over year and 1% compared to the prior quarter. 3 million. Revenue of $12 million from our industrial markets benefited from increased demand for our additive manufacturing products and an increase in sales associated with last-time buys of our cutting and welding products. As we previously announced, we are exiting our legacy cutting and welding markets, and we do not expect to generate material revenue from these markets in the second half of the year.

1% last quarter. 4% last quarter. 6% last quarter. The year-over-year increase in products gross margin was primarily driven by sales mix and the positive impact of higher production volumes on fixed manufacturing costs.

Products gross margins were at the high end of our guidance range but down sequentially on higher manufacturing spend, partially offset by increased volumes. 6% last quarter. 1% last quarter. The variability in development gross margin is primarily the result of contract mix and the timing of program deliverables in any given quarter.

2% last quarter. 2 million in the prior quarter. The year-over-year increase in GAAP operating expenses is primarily due to higher stock-based compensation. 1 million last quarter.

The increase in non-GAAP operating expenses was primarily due to higher employee compensation expenses and an increase in R and D material spend. We expect non-GAAP OPEX to remain in the $17 to $19 million per quarter range in the second half of 2026. 01 per diluted share last quarter. 20 per diluted share last quarter.

8 million in the first quarter of 2026. 8 million. 7 million in cash from operations during the quarter. Turning to guidance, based on the information available today, we expect revenue for the third quarter of 2026 to be in the range of $63 to $73 million.

The midpoint of $68 million includes approximately $43 million of product revenue and $25 million of development revenue. Please note that our revenue guidance for the third quarter excludes approximately $17 million of product revenue that we would have expected to ship in the third quarter but is now expected to be delivered in future quarters. We are currently experiencing challenges in getting some parts and materials from certain Chinese suppliers.

While these materials do not represent a large portion of the overall bill of material of our products, delays in sourcing these materials, which primarily affect our commercial products, will not allow us to fully satisfy our customer demand in the third quarter. Overall gross margin in the third quarter is expected to be in the range of 24% to 30%, with product gross margin in the range of 34% to 40% and development gross margin of approximately 8%. The expected sequential decline in products gross margin is largely driven by the lower expected product volumes.

As we've mentioned previously, as a vertically integrated manufacturing business, gross margin is largely dependent on production volumes and absorption of fixed manufacturing costs. We expect adjusted EBITDA for the third quarter of 2026 to be in the range of $1 to $7 million. With that, I will turn the call over to the operator for questions. OPERATOR We will now begin the question-and-answer session.

Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one. Again, we ask that you pick up your handset when asking a question to allow for optimum sound quality.

If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jonathan Siegman with Stifel. Jonathan, your line is open.

Please go ahead. Jonathan Siegman, Analyst at Stifel Good evening. Thank you so much for the time. Congratulations on strong results.

Could you maybe talk a little bit about how the JLWS award rolls into '26 and '27? I realize you may not give exact numbers on that, but maybe you can square that with the headwind that you might see for HELSI 2? Thank you very much. Joe Corso (CFO) Hi, John.

The JLWS award will start to contribute revenue in the current quarter, will run into the into the fourth quarter, and then, you know, really start to ramp up in 2027. But the second half of the year will be, you know, just really the initial stages of the program. Jonathan Siegman, Analyst at Stifel Its contribution in '27, how should we think about how much of that helps relative to the headwind you might see with HELSI 2? Scott Keeney, CEO Actually, I'll characterize it as it will be a nice replacement and then some relative to the HELSI 2 program.

So a couple of quarters ago, there was some concern that the HELSI 2 program was going to fall off, and we knew it would trail off. But with the award, the win with JLWS will more than make up for that as we get into 2027. OPERATOR Your next question comes from the line of Louis De Palma with William Blair. Louis, your line is open.

Please go ahead. Louis De Palma, Analyst at William Blair Joe and John, good afternoon. Scott Keeney, CEO Hi, Louie. Louis De Palma, Analyst at William Blair From a technology standpoint, how is the prototype for the Joint Laser Weapon System that you're developing different from the HELSI 2 prototype and your HADES platform?

Scott Keeney, CEO Hey, Louis, this is Scott. Thanks for the question. The program that we just won, JLWS, is, as Joe just mentioned, a continuation, extension, transition, if you will, for the work we've done on HELSI to demonstrate the technology. JLWS is a program that's focused on transitioning that into products at, again, the high power levels.

So it builds on what we've done with HELSI, it builds on the HADES product family, and continues to both expand our product line at various power levels.