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    LASR
    Earnings call· Jun 2026(Q2 FY26)

    NLIGHT Q2 FY26 earnings call LASR

    Aug 6, 2026 Source

    Executive summary

    nLIGHT Q2 FY26 — Record Revenue and Strong Defense Demand Amidst Supply Chain Headwinds

    nLIGHT delivered a strong second quarter with record revenue and cash generation, driven by robust demand in defense and advanced manufacturing. The company secured a significant Joint Laser Weapon System contract, bolstering its long-term defense outlook. However, Q3 guidance reflects new supply chain challenges, primarily impacting commercial product shipments due to increased scrutiny on dual-use components from China, creating near-term uncertainty.

    Highlights

    5

    • Record Q2 revenue of $82.6 million, up 34% year-over-year.

    • Record products revenue of $59 million, growing 45% year-over-year.

    • Record cash from operations of $20.7 million generated in the quarter.

    • Aerospace and Defense revenue reached a record $57.3 million, increasing 41% year-over-year.

    • Awarded the Joint Laser Weapon System (JLWS) contract with a ceiling of over $600 million.

    Concerns

    3

    • Q3 FY26 revenue guidance of $63 million to $73 million is negatively impacted by an estimated $17 million in product revenue due to supply chain challenges.

    • Q3 FY26 Adjusted EBITDA guidance of $1 million to $7 million reflects lower expected product volumes and gross margins.

    • Supply chain delays for certain components from Chinese suppliers are affecting commercial product shipments, with resolution timing uncertain.

    Guidance & targets

    8
    CategoryTargetConfidence
    Total Revenue
    $63 million to $73 million
    high materiality
    Medium
    Product Revenue
    approximately $43 million
    medium materiality
    Medium
    Development Revenue
    $25 million
    medium materiality
    Medium
    Overall Gross Margin
    24% to 30%
    high materiality
    Medium
    Product Gross Margin
    34% to 40%
    medium materiality
    Medium
    Development Gross Margin
    approximately 8%
    medium materiality
    Medium
    Adjusted EBITDA
    $1 million to $7 million
    high materiality
    Medium
    Non-GAAP Operating Expenses
    $17 million to $19 million per quarter
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Aerospace and Defense
    Record revenue driven by continued progress in HELSI-2, growth in munitions programs, and execution across other directed energy and laser sensing programs.
    Product Revenue Growth YoY: 72%Product Revenue Growth QoQ: 3%Development Revenue: $23.2 millionDevelopment Revenue Growth YoY: 11%Development Revenue Growth QoQ: 5%
    		$57.3 million41%——
    Commercial Markets (Industrial and Microfabrication)
    Benefited from increased demand for additive manufacturing products and an increase in sales associated with last-time buys of cutting and welding products. The company is exiting legacy cutting and welding markets.
    		$25.3 million20%1%—
    Microfabrication
    Part of the commercial markets segment, performing at the upper end of the expected through-cycle range.
    		$13.3 million———
    Industrial
    Benefited from increased demand for additive manufacturing products and last-time buys of cutting and welding products. The company is exiting legacy cutting and welding markets.
    		$12 million———

    Operational metrics

    12
    Non-GAAP gross margin
    32.6%up from 30.9% in Q2 FY25; down from 34.4% in Q1 FY26
    Q2 FY26

    Excludes stock-based compensation.

    Non-GAAP products gross margin
    42.4%compared to 40% in Q2 FY25; compared to 44.6% in Q1 FY26
    Q2 FY26

    At the high end of guidance range, but down sequentially on higher manufacturing spend, partially offset by increased volumes.

    Non-GAAP development gross margin
    7.5%compared to 13.1% in Q2 FY25; compared to 7.2% in Q1 FY26
    Q2 FY26

    Variability primarily due to contract mix and timing of program deliverables.

    Non-GAAP operating expenses
    $19.5 millionup from $16.8 million in Q2 FY25; up from $17.1 million in Q1 FY26
    Q2 FY26

    Increase primarily due to higher employee compensation expenses and R&D material spend.

    Non-GAAP net income
    $9.6 millioncompared to $2.9 million in Q2 FY25; compared to $11.8 million in Q1 FY26
    Q2 FY26

    Non-GAAP net income for the second quarter.

    Non-GAAP EPS
    $0.15compared to $0.06 in Q2 FY25; compared to $0.20 in Q1 FY26
    Q2 FY26

    Non-GAAP diluted EPS for the second quarter.

    Adjusted EBITDA
    $10.7 millioncompared to $5.6 million in Q2 FY25; compared to $13.8 million in Q1 FY26
    Q2 FY26

    Adjusted EBITDA for the second quarter.

    Cash and investments balance
    $330.8 million
    Q2 FY26

    Includes cash, cash equivalents, restricted cash, and investments.

    Line of credit repayment
    $20 million
    Q2 FY26

    Repaid amount previously drawn down on a $40 million line of credit.

    JLWS contract share
    75%
    multiyear

    nLIGHT's approximate share of the total JLWS contract ceiling with a second vendor.

    Revenue impact from supply chain
    $17 million
    Q3 FY26

    Expected product revenue that would have shipped in Q3 FY26 but is now delayed to future quarters due to supply chain issues.

    Legacy cutting and welding markets
    no material revenue
    H2 FY26

    Company is exiting these markets.

    Industry KPIs

    4
    MetricValueDetails
    Segment revenue growthAerospace and Defense: $57.3 million; Commercial: $25.3 millionUSD
    Design wins product cycle rampsJoint Laser Weapon System (JLWS) award
    Supply demand imbalance lead timesDelays in sourcing parts and materials
    Operating margin incremental leverage31.1%%

    Deals & partnerships

    1
    Department of WarJoint Laser Weapon System (JLWS) contract for high-energy laser weapon systemsover $600 millionmultiyear

    nLIGHT will develop, integrate, and deliver multiple high-energy laser weapon systems, building on HELSI-1 and DE M-SHORAD. Leverages proprietary coherent beam combination and atmosphere correction technology. Total contract ceiling for nLIGHT and a second vendor is $847 million, with nLIGHT's share being $607 million (approximately 75%).

    Risks & headwinds

    3
    Supply chain delays from Chinese suppliersQ3 FY26, potentially longer

    $17 million in Q3 FY26 product revenue delayed

    Mitigation: Working with existing supply chain partners, evaluating and qualifying new partners, evaluating product redesigns for future flexibility.

    Increased scrutiny on dual-use products by ChinaRecent development (past few weeks), duration uncertain

    Affecting optics components, primarily for commercial products

    Mitigation: Derisking China for some time, shifted focus to markets outside China, moved manufacturing out of China. Requalification and redesign take time.

    Lower product volumes impacting gross marginQ3 FY26

    Expected Q3 FY26 overall gross margin 24%-30%, product gross margin 34%-40%

    Mitigation: Focus on managing fixed manufacturing costs, but gross margin is largely dependent on production volumes.

    What to watch in Q3 FY26

    4

    Resolution of supply chain delays

    next quarter
    Current$17M in Q3 product revenue delayed
    TargetReduced or eliminated impact on revenue

    Why it matters

    The supply chain issues are a new and significant headwind impacting Q3 guidance, and their resolution is crucial for future revenue and margin performance.

    We are currently experiencing challenges in getting some parts and materials from certain Chinese suppliers. While these materials do not represent a large portion of the overall bill of material of our products, delays in sourcing these materials, which primarily affect our commercial products, will not allow us to fully satisfy our customer demand in the third quarter.

    Q&A highlights

    5

    How will the JLWS award contribute to revenue in 2026 and 2027, and how does it offset the anticipated tail-off of the HELSI-2 program?

    JLWS will start contributing revenue in Q3 2026, ramping up in 2027, and is expected to more than replace the HELSI-2 program's declining contribution.

    “Actually, I'll characterize it as it will be a nice replacement and then some relative to the HELSI-2 program. So a couple of quarters ago, there was some concern that the HELSI-2 program was going to fall off, and we knew it would trail off. But with the award, the win with JLWS will more than make up for that as we get into 2027.”

    asked by Jonathan Siegmann · answered by Joseph Corso

    2 min read6 chapters

    Detailed Narrative

    01

    Directed Energy Market Expansion and JLWS Contract

    nLIGHT is experiencing significantly expanded demand in directed energy, driven by the Department of War's Joint Laser Weapon System (JLWS) contract. This multiyear agreement has a contract ceiling of over $600 million for nLIGHT, representing approximately 75% of the total $847 million contract value. The JLWS award is a critical step towards building production-ready laser weapon systems at scale, with operational system demonstrations expected as early as 2028.

    02

    HADES Product Family and Technology Differentiation

    The company's HADES family of directed energy products is central to its defense strategy, differentiated by power, brightness, and atmospheric correction capabilities. HADES can scale from tens of kilowatts to 1 megawatt while maintaining exceptional beam quality. This technology, combined with proprietary atmospheric correction, provides an operational solution for neutralizing various threats and was instrumental in securing the JLWS award.

    03

    Progress on Existing Defense Programs

    nLIGHT continues to advance its existing directed energy programs, including the production of its 1-megawatt CBC high-energy laser for HELSI-2, which remains on track for delivery in late 2026. Progress is also being made on the U.S. Navy's HELCAP program for anti-ship cruise missile defense, integrating a 300-kilowatt CBC laser with an advanced beam control system incorporating adaptive optics for atmospheric correction.

    04

    Kinetic Weapons and Space Domain Growth

    Beyond directed energy, nLIGHT saw strong growth in products for kinetic weapons, driven by global restocking efforts and new mission applications. The space domain also presents accelerating opportunities for laser sensing and advanced manufacturing products, with high-energy pulse lasers being designed into new commercial and defense programs, and commercial fiber lasers used in launch ammunition markets.

    05

    Commercial Market Performance and Strategic Exit

    Commercial markets, including industrial and microfabrication, showed year-over-year growth. Industrial markets benefited from increased demand for additive manufacturing products and last-time buys in cutting and welding. The company is strategically exiting its legacy cutting and welding markets, expecting no material revenue from these in the second half of the year, focusing on higher-growth areas.

    06

    Supply Chain Headwinds and Mitigation Efforts

    Recent supply chain challenges🌐, primarily related to optics from Chinese suppliers, are impacting Q3 FY26 revenue guidance by an estimated $17 million. These delays, stemming from increased scrutiny on dual-use products, mainly affect commercial products. nLIGHT is actively mitigating risks by working with existing partners, qualifying new ones, and evaluating product redesigns to enhance future flexibility, building on prior efforts to derisk its supply chain from China.

    AI-generated summary of the company’s earnings call. Not investment advice.