nLIGHT (NASDAQ:LASR) Surprises With Strong Q1, Stock Jumps 16.3%

Yahoo

08-05-2025

Laser company nLIGHT (NASDAQ:LASR) reported Q1 CY2025 results exceeding the market's revenue expectations , with sales up 16% year on year to $51.67 million. On top of that, next quarter's revenue guidance ($56 million at the midpoint) was surprisingly good and 11.7% above what analysts were expecting. Its non-GAAP loss of $0.04 per share was 78.7% above analysts' consensus estimates.
Is now the time to buy nLIGHT? Find out in our full research report.
Revenue: $51.67 million vs analyst estimates of $47.34 million (16% year-on-year growth, 9.1% beat)
Adjusted EPS: -$0.04 vs analyst estimates of -$0.19 (78.7% beat)
Adjusted EBITDA: $116,000 vs analyst estimates of -$5.14 million (0.2% margin, significant beat)
Revenue Guidance for Q2 CY2025 is $56 million at the midpoint, above analyst estimates of $50.15 million
EBITDA guidance for the full year is -$1.5 million at the midpoint, above analyst estimates of -$11.98 million
Operating Margin: -18.6%, up from -33.1% in the same quarter last year
Free Cash Flow was -$2.30 million, down from $9.82 million in the same quarter last year
Market Capitalization: $425.7 million
Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ:LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.
A company's long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, nLIGHT's 2.9% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a rough starting point for our analysis.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. nLIGHT's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.8% annually. nLIGHT isn't alone in its struggles as the Electronic Components industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
We can better understand the company's revenue dynamics by analyzing its most important segments, Laser Products and Advanced Developments, which are 69.1% and 30.9% of revenue. Over the last two years, nLIGHT's Laser Products revenue (lasers, amplifiers, and directed energy products) averaged 10.4% year-on-year declines. On the other hand, its Advanced Developments revenue (R&D contracts) averaged 13.4% growth.
This quarter, nLIGHT reported year-on-year revenue growth of 16%, and its $51.67 million of revenue exceeded Wall Street's estimates by 9.1%. Company management is currently guiding for a 10.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 4.3% over the next 12 months. While this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.
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Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
nLIGHT's high expenses have contributed to an average operating margin of negative 19.2% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It's hard to trust that the business can endure a full cycle.
Analyzing the trend in its profitability, nLIGHT's operating margin decreased by 21.1 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. nLIGHT's performance was poor no matter how you look at it - it shows that costs were rising and it couldn't pass them onto its customers.
This quarter, nLIGHT generated a negative 18.6% operating margin. The company's consistent lack of profits raise a flag.
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company's growth is profitable.
nLIGHT's earnings losses deepened over the last five years as its EPS dropped 46.6% annually. We tend to steer our readers away from companies with falling EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, nLIGHT's low margin of safety could leave its stock price susceptible to large downswings.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For nLIGHT, its two-year annual EPS declines of 1.1% show it's still underperforming. These results were bad no matter how you slice the data.
In Q1, nLIGHT reported EPS at negative $0.04, up from negative $0.17 in the same quarter last year. This print easily cleared analysts' estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street is optimistic. Analysts forecast nLIGHT's full-year EPS of negative $0.51 will reach break even.
We were impressed by how significantly nLIGHT blew past analysts' EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street's estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 16.3% to $10 immediately after reporting.
nLIGHT had an encouraging quarter, but one earnings result doesn't necessarily make the stock a buy. Let's see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free.