nLIGHT (LASR) Q1 FY26 earnings call: guidance and Q&A

How should investors think about the timing of the increased Directed Energy budgets, and how does the newly launched HADES platform differentiate itself from other products?

Scott Keeney explained that the President's budget for Directed Energy, while significant ($400M in FY27/28 for prototypes/procurement, $1B total annual budget), will take time to work through Congress, with more insights expected in the fall. He highlighted HADES as a platform for scaling to higher power, offering brighter beams, atmospheric correction, and a smaller form factor suitable for challenging integrations like the Stryker.

“The budget numbers that we provided were the President's budget request, and that will work its way through the appropriations process in the coming quarters. We should have more insights this fall, but those -- that can be delayed.”

asked by Peter Arment · answered by Scott Keeney

Can HADES be integrated into aircraft, given its small size, and how does nLIGHT view competition in the sub-70kW laser market where HADES is not the primary solution?

Scott Keeney confirmed that HADES's small size, weight, and power (SWaP) leadership makes it suitable for airborne applications, though product engineering would differ. For lower power lasers (e.g., 30kW), nLIGHT partners with others, providing key components rather than full effector integration. He emphasized that HADES is uniquely positioned for higher power, brighter beams, and atmospheric correction, which are critical for more sophisticated threats.

“But as you noted, it becomes even more important as you look at airborne applications. And one of the topics that we talked a bit about is our leadership with respect to swap, size, weight and power.”

asked by Louie Dipalma · answered by Scott Keeney

What drove the significant upside in product gross margins, and what is nLIGHT's competitive advantage in the lower power laser market (below 70kW) where coherent beam combining is not the primary differentiator?

Joe Corso attributed about half of the product gross margin upside to volume leverage and the other half to favorable customer and product mix, particularly from A&D markets. Scott Keeney clarified that while coherent beam combining is key for high power, nLIGHT provides spectral beam combined sources and components for lower power applications. Their differentiation comes from 25 years of experience, leading SWaP, high reliability, and serviceable lasers.

“About half of it was just volume related, just leveraging overhead and selling more through the factory and keeping the factory more occupied. And then the other half was a combination of slightly higher margin.”

asked by Jonathan Siegmann · answered by Joseph Corso

What specifically drove the upside in the industrial segment, and when can investors expect updates on the new prototype programs mentioned last quarter?

Joe Corso noted that while last-time buys for cutting and welding contributed, the brighter upside in Industrial came from additive manufacturing, which is showing better growth than anticipated. Scott Keeney reiterated that the budget process for higher-level programs will take time, with more insights expected in the fall. He clarified that the prototypes alluded to last quarter were for FY27, not the current fiscal year.

“The industrial -- upside in Industrial was a little bit better than we expected around producing revenue and taking orders for last time buys in our cutting and welding business. But the brighter upside spot really was additive manufacturing.”

asked by Greg Palm · answered by Joseph Corso

Is nLIGHT facing any capacity constraints that prevent breaking through the $80M revenue level, and what factors could cause product gross margins to fall from the current 44% level?

Joe Corso stated that nLIGHT is not capacity constrained, having improved laser building capacity and efficiency. He noted that breaking the $80M threshold requires more demand signals. Regarding gross margins, he explained that volume is the primary factor, followed by product mix. While there can be some variability (a couple of hundred basis points), the company is comfortable consistently achieving 40% or above product gross margins.

“Short answer, Troy, is we are not capacity constrained today. We've really done a great job of improving both the capacity on the lasers that we're building, as well as the efficiency with which we are building those lasers.”

asked by Troy Jensen · answered by Joseph Corso