What nLight (LASR) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 11% year over year to $73.8 million, exceeding guidance despite supply constraints that delayed about $15 million in shipments; nLight expects to deliver the deferred products in the first half of 2027.
• nLight forecast Q4 revenue of $84 million to $90 million and expects sequential growth in defense and space and advanced manufacturing. Its $627 million Joint Laser Weapon System award and progress on defense programs are supporting growth.
• Product gross margin reached a record 47.4%, while non-GAAP net income increased to $10.2 million. The company also recorded about $7.5 million in restructuring charges, primarily tied to completing its exit from China operations.

nLight NASDAQ: LASR reported an 11% increase in third-quarter revenue and forecast further growth in the fourth quarter, even as supply constraints delayed approximately $15 million in product shipments until 2027.

Revenue for the third quarter of 2026 was $73.8 million, up from $66.7 million a year earlier but down 11% from the preceding quarter. Chairman and CEO Scott Keeney said revenue exceeded the high end of the company’s August guidance despite constraints that prevented nLight from fully satisfying customer demand.

“This is a supply chain issue rather than a demand issue,” Keeney said, adding that the company expects to deliver the deferred shipments in coming quarters.

Supply constraints and fourth-quarter outlook

CFO Joe Corso said the approximately $15 million of unshipped third-quarter product revenue was largely related to advanced manufacturing. The company expects to catch up on those shipments in the first half of 2027, rather than in the fourth quarter.

Corso said supply had improved enough to meet current customer demand, but not enough to also clear the backlog. He clarified during the question-and-answer session that the $15 million excluded from fourth-quarter guidance was not an additional $15 million beyond the previously deferred amount.

When nLight issued its third-quarter outlook, it said the midpoint excluded about $17 million in product revenue because of supply constraints. Corso said the company managed to ship a couple of million dollars of that amount during the quarter.

For the fourth quarter, nLight forecast revenue of $84 million to $90 million. At the $87 million midpoint, the outlook includes approximately $63 million in product revenue and $24 million in development revenue. The company also projected adjusted EBITDA of $12 million to $18 million and total gross margin of 30% to 36%.

Corso said the company expects both defense and space and advanced manufacturing revenue to grow sequentially in the fourth quarter. Based on current demand and backlog, he also expects growth to continue into the first part of 2027, helped in part by the deferred shipments. He said it was too early to comment on the latter part of 2027.

Defense programs support growth

Defense and space revenue rose 15% from a year earlier to $52.5 million, driven by both product and development revenue. Development revenue across the company increased 34% year over year to $25.7 million, reflecting progress on the HELSI-2 program and the initial ramp of the Joint Laser Weapon System, or JLWS, contract.

Keeney said nLight’s $627 million JLWS award expands its role from a laser supplier to a system-level partner developing and integrating containerized high-energy laser weapon systems. He said the award builds on work under the HELSI-1, HELSI-2 and DE M-SHORAD programs.

For HELSI-2, Corso said nLight is largely finished shipping amplifier power and has shifted its efforts toward assembling the 1-megawatt laser. That change contributed to a sequential decline in defense and space product revenue in the third quarter, he said.

Advanced manufacturing revenue was $21.3 million, essentially flat year over year and down 16% sequentially. Corso attributed the sequential decline to supply constraints and said revenue would have grown on both comparisons without them, even after accounting for the company’s exit from legacy cutting and welding markets.

Margins and China exit

Third-quarter product gross margin reached a record 47.4%, up from 41% a year earlier. Corso attributed the sequential improvement to favorable product mix, strong factory absorption, lower reserves and reduced tariff spending. Total gross margin was 33.1%, compared with 31.1% a year earlier.

The company reported a GAAP net loss of $7.2 million, or 12 cents per share, compared with a loss of $6.9 million, or 14 cents per share, a year earlier. Non-GAAP net income rose to $10.2 million, or 16 cents per diluted share, from $4.3 million, or 8 cents per diluted share. Adjusted EBITDA increased to $11.1 million from $7.1 million.

Operating expenses included approximately $7.5 million in nonrecurring restructuring charges, primarily associated with completing the company’s exit from operations in China. Keeney said nLight is qualifying alternative suppliers, seeking supply from outside China, modifying some product designs and evaluating whether to bring certain capabilities in-house.

The company ended the quarter with $314.5 million in cash equivalents, restricted cash and investments. Keeney said the balance sheet gives nLight flexibility to invest in capacity and inventory while evaluating opportunities to accelerate growth or improve control over critical technologies and supply.

About nLight (NASDAQ:LASR)

nLight, Inc NASDAQ: LASR develops and manufactures semiconductor and fiber lasers for industrial, microfabrication, aerospace and defense, and other specialized applications. Its products are designed to deliver high optical power, precision and reliability for uses such as materials processing, metal cutting and welding, additive manufacturing, and directed-energy systems.

The company offers a range of laser components and systems, including high-power diode lasers, fiber lasers, and related optical and beam-delivery technologies.

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