nLight Q2 2026 Earnings Report

nLight EPS Results

• Actual EPS: $0.15
• Consensus EPS: $0.14
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.06

nLight Revenue Results

• Actual Revenue: $82.59 million
• Expected Revenue: $78.59 million
• Beat/Miss: Beat by +$4.01 million
• YoY Revenue Growth: +33.80%

nLight Announcement Details

• Quarter: Q2 2026
• Date: 8/6/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 6, 2026
• Conference Call Time: 5:00PM ET

nLight (NASDAQ:LASR), Inc. is a photonics company that develops and manufactures semiconductor and fiber lasers, optical amplifiers, and related laser components and systems. Its products are designed for applications requiring high power, precision, reliability, and advanced beam control.

The company serves customers in industrial, microfabrication, aerospace and defense, and other specialized markets. Its technologies are used in areas such as materials processing, manufacturing, directed-energy systems, and other applications that rely on high-performance laser sources.

Founded in 2000 and headquartered in Vancouver, Washington, nLight operates internationally, with research, development, manufacturing, and sales activities serving customers across North America, Europe, and Asia. The company completed its initial public offering on the Nasdaq under the symbol LASR in 2018. nLight was co-founded by Scott Keeney, who has served as its chief executive officer.

nLight Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record second-quarter results included revenue of $82.6 million, up 34% year over year, record product revenue of $59 million, $10.7 million in adjusted EBITDA, and record operating cash flow of $20.7 million.
• Positive Sentiment: nLIGHT won the Joint Laser Weapon System contract, with a ceiling of more than $600 million. The program begins contributing revenue in the third quarter, is expected to ramp in 2027, and management says it should more than offset the expected wind-down of HELSI-2.
• Positive Sentiment: Demand remained strong across defense, laser sensing, additive manufacturing, and microfabrication, while kinetic-weapons programs benefited from global restocking and expanding mission applications.
• Negative Sentiment: Supply-chain delays involving optics and other materials from Chinese suppliers are expected to defer roughly $17 million of product revenue from the third quarter into future periods, primarily affecting commercial products. Third-quarter revenue is guided to $63 million-$73 million, with adjusted EBITDA of only $1 million-$7 million and gross margin of 24%-30%.
• Neutral Sentiment: The company is qualifying alternative suppliers, redesigning products where possible, and shifting manufacturing and sourcing outside China, but management said the disruption could resolve quickly or persist for months to quarters.

Presentation

[Operator]

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 at nLIGHT]

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.

[John Marchetti, VP of Corporate Development and Head of Investor Relations at nLIGHT]

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, Chairman and CEO at nLIGHT]

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 War's Joint Laser Weapon System contract.

[Scott Keeney, Chairman and CEO at nLIGHT]

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 U.S. 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.

[Scott Keeney, Chairman and CEO at nLIGHT]

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 DoW 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 kW high energy HELSI-1 laser and our 50 kW high energy DE M-SHORAD laser.

[Scott Keeney, Chairman and CEO at nLIGHT]

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 U.S. defense prioritization of directed energy lasers and planned demonstrations of operational systems expected as early as 2028, JLWS represents a critical step forward fielding production-ready laser weapon systems at scale. We also continue to make progress with existing directed energy programs in the second quarter. Our work on the production of our 1 MW 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.

[Scott Keeney, Chairman and CEO at nLIGHT]

We are making steady progress on the U.S. Navy's HELCAP program for anti-ship cruise missile defense, where we are integrating our 300 kW 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 longstanding 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.

[Scott Keeney, Chairman and CEO at nLIGHT]

Within the space domain, we see accelerating need for both our laser sensing and advanced manufacturing products. Our high energy pulse lasers are being designed into several new programs that are in the early stages of adoption across the commercial and defense markets. 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.

[Scott Keeney, Chairman and CEO at nLIGHT]

Let me now turn the call over to Joe to discuss our second quarter financial results.

[Joe Corso, CFO at nLIGHT]

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 continue 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. Turning to the results. Total revenue in the second quarter was $82.6 million, an increase of 34% compared to $61.7 million in the second quarter of 2025, and up 3% compared to the prior quarter. Aerospace and defense revenue was a record $57.3 million in the quarter, up 41% year-over-year. A&D growth was driven by record A&D product revenue, which grew 72% year-over-year and 3% sequentially.

[Joe Corso, CFO at nLIGHT]

Development revenue of $23.2 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. Second quarter revenue from our commercial markets, which include industrial and microfabrication, was $25.3 million, an increase of 20% year-over-year and 1% compared to the prior quarter. Revenue from our microfabrication markets was $13.3 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.

[Joe Corso, CFO at nLIGHT]

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. Total gross margin in the second quarter was 31.1%, compared to 29.9% in the second quarter of 2025 and 33.1% last quarter. On a non-GAAP basis, which excludes stock-based compensation, total gross margin in the second quarter was 32.6%, up from 30.9% in the same period last year and 34.4% last quarter. Products gross margin in the second quarter was 41.2%, compared to 38.5% in the second quarter of 2025 and 43.6% 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.

[Joe Corso, CFO at nLIGHT]

Products gross margins were at the high end of our guidance range, but down sequentially on higher manufacturing spend, partially offset by increased volumes. Non-GAAP products gross margin in the quarter was 42.4%, compared to 40% in the second quarter of 2025 and 44.6% last quarter. Development gross margin was 5.6%, compared to 13.1% in the same quarter a year ago and 5.1% 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. Non-GAAP development gross margin in the quarter was 7.5%, compared to 13.1% in the same period a year ago and 7.2% last quarter. Moving down the income statement. GAAP operating expenses were $29.3 million in the second quarter, compared to $22.7 million in the second quarter of 2025 and $27.2 million in the prior quarter.

[Joe Corso, CFO at nLIGHT]

The year-over-year increase in GAAP operating expenses is primarily due to higher stock-based compensation. Non-GAAP operating expenses were $19.5 million in the quarter, up from $16.8 million in the second quarter of 2025 and $17.1 million last quarter. The increase in non-GAAP operating expenses was primarily due to higher employee compensation expenses and an increase in R&D material spend. We expect non-GAAP OpEx to remain in the $17 million-$19 million per quarter range in the second half of 2026. GAAP net loss in the second quarter of 2026 was $1.3 million, or $0.02 per share, compared to a net loss of $3.6 million, or $0.07 per share in the same quarter a year ago, and positive net income of $645,000, or $0.01 per diluted share last quarter.

[Joe Corso, CFO at nLIGHT]

On a non-GAAP basis, net income for the second quarter was $9.6 million, or $0.15 per diluted share, compared to $2.9 million, or $0.06 per diluted share in the second quarter of 2025, and $11.8 million, or $0.20 per diluted share last quarter. Adjusted EBITDA for the second quarter was $10.7 million, compared to $5.6 million in the same quarter last year and $13.8 million in the first quarter of 2026. Turning to the balance sheet. We ended the second quarter with total cash equivalents, restricted cash and investments of $330.8 million. During the second quarter, we repaid the $20 million that we had previously drawn down on our $40 million line of credit, and we generated a record $20.7 million in cash from operations during the quarter. Turning to guidance.

[Joe Corso, CFO at nLIGHT]

Based on the information available today, we expect revenue for the third quarter of 2026 to be in the range of $63 million-$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.

[Joe Corso, CFO at nLIGHT]

Overall gross margin in the third quarter is expected to be in the range of 24%-30%, with product gross margin in the range of 34%-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 million-$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 Siegmann with Stifel. Jonathan, your line is open. Please go ahead.

[Jonathan Siegmann, Analyst at Stifel]

Good evening. Thank you so much for the time. Congratulations on the strong results. Could you maybe talk a little bit about how the JLWS award rolls into 2026 and 2027? I realize you may not give exact numbers on that, but maybe you can square that with the headwind that you might see from HELSI-2. Thank you very much.

[Joe Corso, CFO at nLIGHT]

Hi, John. The JLWS award will start to contribute revenue in the current quarter. We'll run into the fourth quarter and then really start to ramp up in 2027. The second half of the year will be just really the initial stages of the program.

[Jonathan Siegmann, Analyst at Stifel]

Its contribution in 2027, how should we think about how much of that helps relative to the headwind you might see with HELSI-2?

[Joe Corso, CFO at nLIGHT]

Actually, I'll characterize it as it will be a nice replacement and then some relative to the HELSI-2 program. A couple of quarters ago, there was some concern that the HELSI-2 program was going to fall off. We knew it would trail off, with the award, the win with JLWS will more than make up for that as we get into 2027.

[Jonathan Siegmann, Analyst at Stifel]

Thank you.

[Operator]

Your next question comes from the line of Louie DiPalma with William Blair. Louie, your line is open. Please go ahead.

[Louie DiPalma, Analyst at William Blair]

Scott, Joe, and John, good afternoon.

[Joe Corso, CFO at nLIGHT]

Hi, Louie.

[Louie DiPalma, 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, Chairman and CEO at nLIGHT]

Hey, Louie, this is Scott. Thanks for the question. The program that we just won, JLWS, as Joe just mentioned, is 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. It builds on what we've done with HELSI, it builds on the HADES product family, and continues to both expand our product line and at various power levels.

[Louie DiPalma, Analyst at William Blair]

Okay. I guess from a high level related to HELSI-2, JLWS, and HADES, what would you estimate is the projected timeline on when some of the laser systems will be fielded at scale?

[Scott Keeney, Chairman and CEO at nLIGHT]

Yeah, that will depend on how the U.S. budgets, in particular, progress and we're seeing, you know, continued expansion and interest in those programs. We don't anticipate that there will be a program of record over the next year. We do anticipate that we will see increasing interest and increasing demand. We will transition to initial prototypes for the higher power levels in the coming couple of years. From there, it goes to a low rate production set of opportunities, and it will scale from there.

[Louie DiPalma, Analyst at William Blair]

Great. One final question. As you know, the missile industry is in the midst of a dynamic period with multi-year agreements established for many of the top 15 programs. Should this have a positive impact on your sensing business? Is there the potential for you to be incorporated as a second supplier on some of these missile programs that you aren't involved in today?

[Joe Corso, CFO at nLIGHT]

Good question, Louie. The short answer is yes. I think the restocking that we are seeing of traditional kinetic munitions, particularly on the missile side, will be a benefit to nLIGHT. If you go back over the last 18 months, for example, we announced a $25 million award, just roughly 18 months ago. We followed up at the end of last year with a $50 million award for, both of those awards were for roughly the same period of performance. We are seeing in certain programs, just the number of units continue to grow, and our content continue to grow. We expect that to continue here in the coming years. The second part of your question is, it is part of our plan from a sensing perspective to expand the number of opportunities that we have with missiles in particular.

[Joe Corso, CFO at nLIGHT]

As you know, that gestation period is, and can be long, but it's certainly something that is in the plan for us.

[Louie DiPalma, Analyst at William Blair]

Good. Thanks, everyone.

[Joe Corso, CFO at nLIGHT]

Thank you.

[Operator]

Your next question comes from the line of Jim Ricchiuti with Needham & Company. Jim, your line is open. Please go ahead.

[Jim Ricchiuti, Analyst at Needham & Company]

Thanks. I was hoping to better understand the supply chain situation. I wonder if you could elaborate on the component or material that is creating that shortfall in the Q3 guide. Otherwise, it would sound like your Q3 product guide would be significantly better, and overall revenue much higher. I'm trying to get a better sense as to when this could be resolved, what some of the challenges are.

[Scott Keeney, Chairman and CEO at nLIGHT]

Good, Jim. This is Scott. I appreciate the question. You're exactly right. Q2 was a record quarter. We've got very strong demand across the board. We would've guided higher had it not been for the supply chain challenges that we're seeing. Those challenges come from what appears to be China increasing scrutiny on dual use products for defense tech products. The particular commodity that I would highlight would be optics. These are not specialized components. They're materials where China has built out an outsized portion of the overall supply chain over time. We're seeing delays in the ability to get some of those components that's affecting Q3. In terms of the outlook, I'll let Joe chime in a little further to expand upon that.

[Joe Corso, CFO at nLIGHT]

Jim, your observation was absolutely right. We have a very strong demand in the third quarter, and we wanted to try to quantify that and give you some direction to give you a sense that we would have expected that. What we do expect, that demand is still there, the forecast is still strong, backlog is strong. Our ability to execute on that backlog in the fourth quarter is still a little bit of a question mark for us at this point.

[Jim Ricchiuti, Analyst at Needham & Company]

Well, again, if the supply is coming out of China and it sounds like they control a fair amount of the supply chain for this material, what's the risk that this just ends up going on for more than a few quarters? I guess trying to get a sense as to how, and I assume this is affecting more of your defense business, is that right?

[Joe Corso, CFO at nLIGHT]

Jim, good question. The actual impact of it is more on the commercial side of the business and the products that we build. As Scott said, this is largely related to the dual-use nature of our products. As you know, we've spent a lot of time over the last couple of years de-risking and moving manufacturing out of China. Our revenue base has certainly moved out of China. A good bit of our supply chain has moved out of China. From an overall percentage of the bill of materials, we're not talking about a lot of the BOM, but it doesn't take more than just a couple of components for us to complete the build. We could see that this could resolve itself quite quickly or it'll take months to quarters, depending on what the particular mitigation strategy is, right?

[Jim Ricchiuti, Analyst at Needham & Company]

Okay. I'll jump back in the queue. Thank you.

[Operator]

Your next question comes from the line of Greg Palm with Craig-Hallum. Greg, your line is open. Please go ahead.

[Greg Palm, Analyst at Craig-Hallum]

Yeah, thanks. I'm going to, I guess, follow up on that because my very next question was going to be, what is your current mitigation strategy? Can you find these components outside of China? Presumably, you're already trying, just give us some sense on what the availability is at this point.

[Scott Keeney, Chairman and CEO at nLIGHT]

Yeah, Greg, it's Scott here. Again, we have been de-risking China for some time now. We've shifted our focus to markets outside of China. We've moved our manufacturing out of China. It does take time on the supply chain side to re-qualify, redesign some of these complex lasers. We're in the midst, and we've been working on this, on working with our existing supply chain partners. We're evaluating and qualifying new partners. Where we can, we're evaluating redesign of our products to provide more flexibility for the future. Those are some of the themes that we're focused on here. This is something we've talked about, but it's something that has even greater focus now.

[Greg Palm, Analyst at Craig-Hallum]

Okay. I just want to be clear, I think you said it mostly impacts commercial. Is there any chance that this could or would impact anything in defense and specifically, for instance, the ramp-up or potential contribution of JLWS?

[Scott Keeney, Chairman and CEO at nLIGHT]

Yeah. As Joe said, this is mostly commercial as part of our dual-use strategy. There's some exposure here, even if it's indirect, to our defense products. The majority of our defense supply chain is domestic. We do use some of our own commercial items, which do have exposure to some of these Chinese components that go into our defense products. In terms of the implications for JLWS, I think I would just put that in that context, that this is a fairly small number of products, but it is something that we're working through.

[Joe Corso, CFO at nLIGHT]

Greg, just to be clear, the initial work that we are going to do on JLWS will largely be unaffected by this supply chain issue. For us right now, that program is all systems go.

[Greg Palm, Analyst at Craig-Hallum]

Yeah. Just to be clear, you're referring to the $44 million. Is that what you call the initial work?

[Joe Corso, CFO at nLIGHT]

Well, that's the initial funded work. The initial plan is beyond the $44 million, I'm also referring to significant work beyond the $44 million in JLWS that will be unaffected by these issues.

[Greg Palm, Analyst at Craig-Hallum]

Okay. All right. Thanks.

[Joe Corso, CFO at nLIGHT]

Thank you.

[Operator]

Your next question comes from the line of Keith Housum with Northcoast Research. Keith, your line is open. Please go ahead.

[Keith Housum, Analyst at Northcoast Research]

Thanks, guys. Sorry to belittle the point here, but I just want to ensure this is more of a political football as opposed to a manufacturing delay, correct?

[Joe Corso, CFO at nLIGHT]

It's not at all related to manufacturing products, no.

[Keith Housum, Analyst at Northcoast Research]

Okay. Got you. How long has this been going on for? I know you don't have a crystal ball and you can't predict when it might be resolved, but just trying to understand how long it's been going on to give us an idea if there's any chance of this being quick come and go?

[Joe Corso, CFO at nLIGHT]

This has been a very recent development, just over the past handful of weeks as this started to crop up.

[Keith Housum, Analyst at Northcoast Research]

Okay. I guess, finally, any chance that your customers actually will go looking elsewhere to competitors for this? Your lasers are so unique and design is spiked into their products that they'll be patient and wait?

[Scott Keeney, Chairman and CEO at nLIGHT]

Yeah, I think that the short answer is we see very strong demand. This is a supply chain delay. We're working through that demand remains strong, we're eager to ship those products as soon as possible.

[Keith Housum, Analyst at Northcoast Research]

Okay. I guess, changing subjects into the more happier tone. There's so much going on now with the space development in terms of rockets and, perhaps data centers in the sky. As you're thinking about your sensing lasers, are you having discussions that are opening up new use cases with some of these various conversations about how to utilize space more effectively here?

[Scott Keeney, Chairman and CEO at nLIGHT]

Short answer is yes. I mentioned space briefly in my comments and in subsequent calls, look forward to providing more information about where we're engaged. It gets complex due to the nature of those programs. Keith, yes. The short answer to your question is, sensing and other applications are important in space also.

[Keith Housum, Analyst at Northcoast Research]

All right. I will stand due to the remark. Appreciate it. Thank you.

[Operator]

Your next question comes from the line of Kieran McCabe with Cantor Fitzgerald. Kieran, your line is open. Please go ahead.

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Great. Thank you for taking my question. For Troy Jensen. I guess maybe my first question, and I apologize if I'm maybe looking at too close here, splitting hairs, but the 3Q guidance is a little bit of wider range than normal. Is that driven by the supply chain issue or timing of projects or just kind of more conservatism in your forecast and maybe, how that may relate to 4Q and going into 2027?

[Joe Corso, CFO at nLIGHT]

Yeah. The slightly wider range this quarter is related exclusively to supply chain, Kieran.

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Great. Thanks. I guess my second question is on, you mentioned strong demand in additive manufacturing. I know in our survey work we're seeing a lot of strong demand for metal printing, and also in the A&D sector, and also I believe one of the companies that reported this just this week talked about strengths in and demand in rocketry and stuff. I know you kind of answered partially in the prior question, but any kind of color you can provide maybe on what you're seeing in the additive manufacturing space and kind of the trends and demands that you're seeing there?

[Scott Keeney, Chairman and CEO at nLIGHT]

Yeah. Kieran. We're seeing strong demand across really all the segments of our business, including additive, and you highlighted two of the key drivers there. Certainly, rocket engines is one, but a broader range of aerospace and defense components, we're seeing significant demand increases there.

[Kieran McCabe, Analyst at Cantor Fitzgerald]

Great. Thank you for taking my questions.

[Scott Keeney, Chairman and CEO at nLIGHT]

Thank you.

[Operator]

As a reminder, if you would like to ask a question, please press star one to raise your hand. Your next question comes from the line of Jan Engelbrecht with Baird. Jan, your line is open. Please go ahead.

[Jan Engelbrecht, Analyst at Baird]

Good afternoon, Scott, Joe, and John. Congrats on another nice set of results. I think I'll stay with JLWS and just wanted to see, that contract structure, should we assume that sort of HELSI-2 rolls into that, or are they two separate things if there's additional work that the government wants to do on HELSI-2? And then just a quick cleanup on that sort of announcement. I noticed that the ceiling value for nLIGHT was listed as $607 million, and then I think the Department of War put out a ceiling value for the second vendor and yourself of $847 million. Should we sort of read into that you're sort of getting basically about 75% of that contract if the ceiling values are reached, or would you caution us against that? Thank you.

[Joe Corso, CFO at nLIGHT]

No. Second question first. Your math is right on that, Jan. The $627 million is the ceiling for the contract that we were awarded. To your first part of your question, HELSI-2 and JLWS are two separate contracts. JLWS has a particular scope of work that was defined in our release and in the Department of War's release, HELSI-2 remains on track for us to deliver the 1 MW laser late in 2026.

[Jan Engelbrecht, Analyst at Baird]

Perfect. Thanks, Joe. If I may, with a quick follow-up. There was some recent announcement on the Infantry Squad Vehicle-Heavy program. I think they want to procure just three prototypes initially. There's plans for 600 vehicles over the lifetime. The whole idea that the government wants to do there is to sort of have a hybrid onboard power, sort of a generator and then a battery. That directly would benefit nLIGHT just as we think about sort of mobile platforms that can actually have enough power to house these laser weapon systems. Is that how you guys are seeing it? Are you seeing enough work being done and sort of maybe call it VC funding or just investments in general that are going to actually solving the power bottleneck?

[Jan Engelbrecht, Analyst at Baird]

It does seem like beam quality and lethality is not really the issue here for laser weapon systems, it's power constraints. Just wanted to get your thoughts on that. Thank you.

[Scott Keeney, Chairman and CEO at nLIGHT]

Yeah, Jan, I think that that program is one example of improvements in the broader set of technology that is important here. You're exactly right. That having power supplies continue to improve is important. It's one of many programs that are going on, that are addressing those issues. Ground, naval, airborne, other platforms, important work going on there. We're seeing progress there.

[Jan Engelbrecht, Analyst at Baird]

Perfect. Thanks, Scott. Appreciate it. Thanks for taking my question.

[Joe Corso, CFO at nLIGHT]

Thanks, Jan.

[Operator]

Your next question comes from the line of Greg Palm with Craig-Hallum. Greg, your line is open. Please go ahead.

[Greg Palm, Analyst at Craig-Hallum]

Yeah. Thanks for taking the follow-up. Just given this $17 million impact, I am just curious how that is impacting your assumptions by segment. I guess my question is, can you give us a little bit better sense of how you are thinking about revenue? Was there no change to defense relative to what you were thinking a couple of weeks ago, this is 100% coming out of industrial and microfab? Of the two, is there one where it is more impacted versus the other?

[Joe Corso, CFO at nLIGHT]

First, Greg, the demand, when we talk about a strong demand environment, as you've seen in the first two quarters of the year, it really has been broad-based. When we look at the expected unfulfilled demand in the third quarter at the midpoint of our guide, certainly much more of it is coming from the commercial end markets than the defense end markets. As you know, there's some commercial items that we sell that are reported as A&D. It's not 100% of it, but it's largely commercial oriented in terms of the shortfall.

[Greg Palm, Analyst at Craig-Hallum]

I guess what I'm getting at, should we assume that commercial revenues are down significantly year-over-year because of this, or not necessarily?

[Joe Corso, CFO at nLIGHT]

Greg, we don't guide with that level of specificity. I think what we talked about at the end of 2025 was that there was going to be a headwind from the cutting and welding business. We've done a little bit better than we thought there. The additive manufacturing business has had better demand and better performance than we had anticipated, and as has the micro fabrication market, right? We've talked about a kind of through cycle range of $8 million-$12 million a quarter. We've been performing this year on the upper end of that range, and we would have expected that to continue in the second half of the year, if not for some of these supply chain challenges. The demand is still there. Timing of execution, that's where we're a little bit less certain around Q4 at this point.

[Greg Palm, Analyst at Craig-Hallum]

Okay. I think you're clear. Thanks.

[Joe Corso, CFO at nLIGHT]

Thank you.

[Operator]

We have reached the end of the Q&A session. I will now turn the call back to John Marchetti for closing remarks.

[John Marchetti, VP of Corporate Development and Head of Investor Relations at nLIGHT]

Thank you, everyone, for joining us this afternoon and for your continued interest in nLIGHT. We will be participating in several investor conferences over the next several weeks, and we look forward to speaking with you during those events and throughout the quarter. Have a great day.

[Operator]

This concludes today's call. Thank you for attending. You may now disconnect

Participants

Executives

• Scott Keeney, Chairman and CEO

Analysts

• John Marchetti, VP of Corporate Development and Head of Investor Relations at nLIGHT
• Joe Corso, CFO at nLIGHT
• Jonathan Siegmann, Analyst at Stifel
• Louie DiPalma, Analyst at William Blair
• Jim Ricchiuti, Analyst at Needham & Company
• Greg Palm, Analyst at Craig-Hallum
• Keith Housum, Analyst at Northcoast Research
• Kieran McCabe, Analyst at Cantor Fitzgerald
• Jan Engelbrecht, Analyst at Baird