What is the projected timeline for laser systems like HELSI-2, JLWS, and HADES to be fielded at scale?

Fielding at scale depends on U.S. budget progress. Initial prototypes for higher power levels are expected in the coming couple of years, followed by low-rate production, but no program of record is anticipated within the next year. “But we don't anticipate that there will be a program of record over the next year. We do anticipate that we will see increasing interest and increasing demand. And we will transition to initial prototypes for the higher power levels in the coming couple of years. And from there, it goes to a low rate production set of opportunities, and it will scale from there.”

Can you elaborate on the specific component causing the Q3 shortfall, its origin, and the expected timeline for resolution, given the risk of prolonged issues?

The issue is with optics from Chinese suppliers, related to increased scrutiny on dual-use products. It primarily affects commercial products. The problem is recent, and resolution could be quick or take months, depending on mitigation strategies. “And those challenges come from what appears to be China increasing scrutiny on dual-use products for defense tech products. And the particular commodity that I would highlight would be optics, these are not specialized components. They're materials where China has built out an outsized portion of the overall supply chain over time. And we're seeing delays in the ability to get some of those components that's affecting Q3.”

What are nLIGHT's current mitigation strategies for the supply chain issues, and can these components be sourced outside of China?

nLIGHT is working with existing supply chain partners, evaluating and qualifying new partners, and redesigning products for future flexibility. They have been derisking China for some time, but requalification and redesign take time. “Again, we have been derisking China for some time now. We've shifted our focus to markets outside of China. We've moved our manufacturing out of China. But it does take time on the supply chain side to requalify, redesign some of these complex lasers. And so we're in the midst, and we've been working on this on -- working with our existing supply chain partners. We're evaluating and qualifying new partners. And where we can, we're evaluating redesign of our products to provide more flexibility for the future.”

LASR

nLIGHT (LASR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 6, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Total Revenue	$63 million to $73 million high materiality	Q3 · FY26	Medium
Product Revenue	approximately $43 million medium materiality	Q3 · FY26	Medium
Development Revenue	$25 million medium materiality	Q3 · FY26	Medium
Overall Gross Margin	24% to 30% high materiality	Q3 · FY26	Medium
Product Gross Margin	34% to 40% medium materiality	Q3 · FY26	Medium
Development Gross Margin	approximately 8% medium materiality	Q3 · FY26	Medium
Adjusted EBITDA	$1 million to $7 million high materiality	Q3 · FY26	Medium
Non-GAAP Operating Expenses	$17 million to $19 million per quarter medium materiality	H2 FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 million	41%	—	—
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 million	20%	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	—	—	—

Deals & partnerships

Department of War Joint Laser Weapon System (JLWS) contract for high-energy laser weapon systems over $600 million multiyear

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

Supply chain delays from Chinese suppliers Q3 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 China Recent 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 margin Q3 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

Resolution of supply chain delays

next quarter

Current $17M in Q3 product revenue delayed

Target Reduced 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.

Find out whether LASR delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.