LASR Q1 Earnings Call: Defense Growth Drives Results Amid Tariff Uncertainty
Laser company nLIGHT (NASDAQ:LASR) reported revenue ahead of Wall Street's expectations in Q1 CY2025, 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 LASR? Find out in our full research report (it's free).
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
Market Capitalization: $871.6 million
nLIGHT's first quarter results were shaped by continued momentum in the aerospace and defense segment, which management said accounted for over 60% of total sales, up sharply from the prior year. CEO Scott Keeney highlighted that growth was 'primarily driven by another quarter of record defense revenue,' with particular strength in directed energy laser programs. The ongoing HEL-TD program, a Department of Defense initiative for a one-megawatt high-energy laser, was a significant contributor to this performance. Keeney also pointed to stabilization in microfabrication operations as a factor supporting modest sequential improvement in commercial sales, though underlying demand in these markets remains challenged. Management emphasized the benefits of nLIGHT's vertical integration, which enables efficient production and delivery of high-power laser systems for defense customers.
Looking ahead, nLIGHT's positive revenue outlook is anchored by management's expectation for continued expansion in aerospace and defense. Keeney stated, 'The solid start to the year combined with our growing pipeline of both directed energy programs and laser sensing opportunities gives me increased confidence that we can grow our revenue in aerospace and defense by at least 25% in 2025.' CFO Joe Corso outlined that further sequential growth is anticipated in the second quarter, while commercial segments are expected to remain weak. Management acknowledged uncertainty surrounding tariffs, especially regarding input costs in the commercial business, but does not forecast a significant negative impact to defense margins in the near term. The company's ability to shift production between U.S. and Thai facilities was cited as a mitigating factor.
Management attributed first quarter results to a surge in defense product sales, progress on major U.S. and international programs, and operational flexibility in response to global trade developments.
Defense sales acceleration: The defense business, particularly directed energy lasers for military applications, drove revenue growth, with management noting more than 50% year-over-year expansion in defense product sales. This was largely fueled by shipments for the HEL-TD high-energy laser program, which remains on track for completion in 2026.
Pipeline expansion in laser sensing: The company reported that laser sensing products—used in missile guidance, range finding, and countermeasures—continue to gain traction. nLIGHT has bid on multiple new programs, increasing both the number and size of opportunities in this segment.
U.S. and international program momentum: Management highlighted ongoing work supporting the U.S. Department of Defense, including the Golden Dome executive order and the Army's DEM SHORAD initiative. Internationally, nLIGHT continues to supply technology for Israel's Iron Beam system and is building a pipeline with foreign allies.
Commercial market stabilization: While industrial and microfabrication markets remain soft, the company cited stabilization at its Thai contract manufacturer as a driver for sequential improvement in commercial sales. Management does not expect a near-term recovery in these markets.
Tariff mitigation strategies: Management addressed heightened tariff risks, especially for commercial lasers with input costs from China. The company has shifted production away from Shanghai to the U.S. and Thailand, aiming to reduce direct tariff exposure. While short-term defense margins may fluctuate, management does not anticipate material long-term impact from tariffs on defense demand or profitability.
nLIGHT's outlook is shaped by ongoing strength in defense programs, margin sensitivity to tariffs, and persistent softness in non-defense markets.
Defense pipeline and program execution: Management expects continued sequential growth from defense contracts, citing high visibility on funded programs such as HEL-TD and DEM SHORAD. The pipeline of new opportunities, including classified and international projects, is expected to drive at least 25% revenue growth in aerospace and defense for the year.
Tariff-related margin risk: While management believes tariff exposure is limited for defense products, they acknowledged potential headwinds for commercial gross margins if high tariffs on Chinese inputs persist or escalate. The company's ability to shift manufacturing to Thailand and the U.S. is expected to reduce, but not eliminate, risk.
Commercial segment headwinds: Weak demand in industrial and microfabrication markets is expected to continue throughout the year. Management does not anticipate a near-term recovery and sees incremental risk from tariffs potentially affecting customer demand and material costs.
In the coming quarters, the StockStory team will be monitoring (1) execution against major defense programs and the pace of new contract wins, (2) gross margin trends as the company navigates shifting tariff policies, and (3) any evidence of stabilization or renewed growth in commercial and microfabrication markets. Progress on international defense contracts and the impact of manufacturing shifts will also be critical markers for nLIGHT's performance.
nLIGHT currently trades at a forward price-to-sales ratio of 3.8×. At this valuation, is it a buy or sell post earnings? See for yourself in our full research report (it's free).
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