IPG Photonics NASDAQ: IPGP reported second-quarter 2026 revenue of $279 million, up 11% from a year earlier and representing its third consecutive quarter of double-digit year-over-year sales growth. Revenue exceeded the midpoint of the company’s guidance, while bookings improved and book-to-bill remained above one, according to management.
CEO Mark Gitin said growth was led by industrial solutions, particularly welding applications tied to battery manufacturing. The company also cited contributions from cleaning and additive manufacturing, while advanced solutions improved sequentially on demand from semiconductor customers.
“Growth in both revenue and bookings points to sustained demand for our products across our end markets,” Gitin said.
Industrial Growth Led by Battery Welding
Industrial solutions revenue increased 16% year over year and 4% sequentially in the second quarter. CFO Tim Mammen attributed the annual increase to growth in welding, marking, cleaning and additive manufacturing, while the sequential gain was driven primarily by welding and cleaning.
Management said demand in battery manufacturing remained strong across electric-vehicle and stationary-storage applications. Gitin said stationary storage is increasingly being supported by data-center energy requirements associated with artificial intelligence, as well as grid stability needs tied to solar and other renewable-energy sources.
The company said its battery-related wins have been supported by its Adjustable Mode Beam lasers, beam-delivery technology and real-time process monitoring capabilities. Gitin said those offerings have helped IPG secure recent business with two major global automotive manufacturers.
Additive manufacturing revenue also grew significantly from the prior year. Gitin said IPG’s latest laser products can raise process speeds by roughly 1.5 to two times in certain applications, which the company said can improve customer productivity and lower the total cost per part. The company is working with OEM customers to expand additive manufacturing beyond its traditional aerospace and defense uses into areas including medical and consumer devices.
Sales of emerging growth products represented 58% of total second-quarter revenue, up from 53% in the first quarter. Mammen said the increase was driven by strong growth in lasers and solutions for battery manufacturing processes.
Advanced Solutions Shows Semiconductor Momentum
Advanced solutions revenue declined 9% year over year, as growth in semiconductor applications was offset by lower micromachining and defense revenue. However, the segment increased 10% sequentially, supported by semiconductor growth and an improvement in micromachining applications.
Gitin said the company is gaining business with large semiconductor-equipment manufacturers in lithography, metrology and inspection applications. He said IPG is working with customers on product design and development opportunities as demand rises for GPUs and high-bandwidth memory chips used in AI-related applications.
In defense, IPG began shipping Lockheed Martin’s order for its CROSSBOW directed-energy system during the second quarter and expects to ship additional units in the third quarter. Gitin said the company recently demonstrated CROSSBOW at White Sands Missile Range and that the system has undergone testing in domestic and overseas environments.
Management said it sees potential for the system in military and civilian infrastructure applications, citing the need for cost-effective countermeasures against Group 1 and Group 2 drones.
Medical Acquisition and Business Outlook
On July 16, IPG entered into a binding offer to acquire Lumibird Medical, which provides diagnostic and treatment systems for ophthalmology. The company expects the transaction to close in the fourth quarter of 2026.
Gitin said the acquisition would expand IPG’s advanced solutions business into medical markets, combine its urology business with Lumibird Medical’s ophthalmology operations, and increase the company’s addressable medical market by approximately $1 billion. IPG expects the deal to be accretive to gross margin, EBITDA and adjusted earnings per share in its first year.
Separately, management said medical bookings and backlog remain strong, with shipments expected to increase during the second half of 2026. Gitin said the company expects its existing medical business, currently representing roughly 7% to 8% of revenue according to comments on the call, to more than double over the next two to three years. New product approvals and introductions are planned for 2026 and 2027.
Margins, Cash Position and Third-Quarter Guidance
GAAP gross margin was 40.4%, while adjusted gross margin was 40.7%, above the company’s guidance range. Results included approximately $4.7 million in tariff refunds, contributing about 170 basis points to gross margin. Lower inventory provisions and product costs also helped margins, though Mammen said manufacturing cost absorption remains below the company’s medium-term target.
- GAAP operating income was $5 million, and GAAP diluted earnings per share were $0.12.
- Adjusted operating income was $24 million, while adjusted diluted earnings per share were $0.58.
- Adjusted EBITDA totaled $49 million.
- The company ended the quarter with $871 million in cash equivalents and short-term investments, $33 million in long-term investments and no debt.
- Cash flow from operations was $38 million, while capital expenditures were $21 million during the quarter.
IPG maintained its full-year capital-expenditure outlook of $90 million to $100 million, including spending for a major fiber manufacturing facility in Germany.
For the third quarter, the company forecast revenue of $265 million to $295 million, adjusted gross margin of 37.5% to 40.5%, and adjusted diluted earnings per share of $0.30 to $0.60. The outlook incorporates an estimated tariff impact of about 150 basis points on adjusted gross margin. IPG expects third-quarter adjusted EBITDA of $35 million to $51 million.
Mammen said the company expects operating expenses to rise modestly as it continues investing in growth initiatives, while management continues to pursue product-cost reductions, manufacturing-efficiency improvements and pricing optimization in differentiated applications.
About IPG Photonics (NASDAQ:IPGP)
IPG Photonics Corporation is a global leader in the design and manufacture of high-performance fiber lasers and amplifiers used in industrial, medical, scientific, and telecommunications applications. The company's core products include ytterbium and erbium fiber lasers, diode lasers, and fiber amplifiers that deliver high power and efficiency for precision cutting, welding, marking, and engraving. IPG's systems are engineered to optimize process speed, reliability, and energy consumption, making them a preferred choice for advanced manufacturing environments.
In addition to stand-alone laser sources, IPG offers turnkey laser systems and integrated solutions tailored to sectors such as automotive, electronics, aerospace, additive manufacturing, and life sciences.
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