Earnings call transcript: nLIGHT Q1 2026 earnings beat expectations

nLIGHT Inc. (LASR) reported impressive financial results for the first quarter of 2026, significantly surpassing analysts’ expectations. The company posted earnings per share (EPS) of $0.20, more than doubling the forecasted $0.09, marking a 122.22% surprise. Revenue reached $80.2 million, exceeding the anticipated $72.14 million by 11.17%. Despite these strong results, the stock experienced a 7.15% decline, closing at $71.29, although it showed a slight recovery in aftermarket trading. The stock has since declined further to $66.19, reflecting the high volatility characteristic of LASR shares, which carry a beta of 2.34. This volatility comes despite an extraordinary 669% return over the past year and a 76% gain year-to-date, according to InvestingPro data.

nLIGHT demonstrated robust performance in Q1 2026, with a 55% increase in revenue compared to the same period last year. The Aerospace and Defense segment was a major contributor, with a 98% year-over-year growth in product revenue. This growth was partially offset by a slight sequential decline in total revenue from Q4 2025, reflecting seasonal variations.

nLIGHT’s Q1 2026 EPS of $0.20 surpassed the forecasted $0.09, representing a 122.22% surprise. The revenue of $80.2 million exceeded expectations by 11.17%. This performance highlights the company’s ability to capitalize on strong demand, particularly in its Aerospace and Defense segment.

Despite the earnings beat, nLIGHT’s stock fell 7.15% during regular trading hours, closing at $71.29. The decline may reflect valuation concerns, as InvestingPro analysis indicates the stock is currently overvalued relative to its Fair Value estimate. The company’s market capitalization now stands at $3.73 billion, and the stock trades at a high revenue valuation multiple—a factor investors may be weighing against the strong quarterly performance.

For deeper insights into nLIGHT’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available for LASR and 1,400+ other US equities. These reports transform complex Wall Street data into clear, actionable intelligence through intuitive visuals and expert analysis.

nLIGHT’s future guidance remains optimistic, with projected EPS growth through FY 2027. Notably, 6 analysts have revised their earnings upwards for the upcoming period, according to InvestingPro Tips, which offers 13 additional exclusive tips for LASR subscribers. Analysts forecast full-year 2026 EPS of $0.28, suggesting the company will turn profitable this year after posting a loss of $0.47 per share over the last twelve months. Revenue forecasts for upcoming quarters suggest continued strength, particularly in the Aerospace and Defense segments. The company plans to use proceeds from a recent equity offering to expand manufacturing capabilities and invest in product development.

CEO Scott Keeney stated, "Our strong Q1 results reflect the exceptional performance in our Aerospace and Defense segment, and we remain committed to driving growth through continued innovation and strategic investments."

During the earnings call, analysts inquired about the sustainability of growth in the Aerospace and Defense segment and the impact of macroeconomic factors on future performance. Management emphasized their strategic focus on innovation and diversification to mitigate potential risks.

John Marchetti, VP of Corporate Development and Head of Investor Relations, nLIGHT: Good afternoon, everyone. Thank you for joining us today to discuss nLIGHT’s first quarter 2026 earnings results. I’m John Marchetti, nLIGHT’s VP of Corporate Development and the Head of Investor Relations. With me on the call today are Scott Keeney, nLIGHT’s Chairman and CEO, and Joe Corso, nLIGHT’s CFO. Today’s discussion will contain forward-looking statements, including financial projections and plans for our business, some of which are beyond our control, including the risks and uncertainties described from time to time in our SEC filings. Our results may differ materially from those projected on today’s call, and we undertake no obligation to update publicly any forward-looking statement except as required by law. During the call, we will be discussing certain non-GAAP financial measures.

We have provided reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings release and in our earnings presentation, both of which can be found on the investor relations section of our website. I will now turn the call over to nLIGHT’s Chairman and CEO, Scott Keeney.

Scott Keeney, Chairman and Chief Executive Officer, nLIGHT: Thank you, John. Q1 represented an exceptional quarter for nLIGHT, with total revenue, gross margin, and adjusted EBITDA comfortably beating our expectations. First quarter revenue of $80 million grew 55% year-over-year and was driven by aerospace and defense revenue of $55 million, which grew 69% year-over-year. I am particularly pleased with the continued expansion of our products gross margin and record adjusted EBITDA in the quarter. Product gross margins were a record 44% and increased from 33% in the same quarter a year ago. Our adjusted EBITDA was a record $14 million in the quarter. The expansion in our gross margins and the record adjusted EBITDA demonstrate the leverage that is inherent in our model and reinforces our commitment to growing the business profitably.

I would like to focus my prepared remarks today on important developments within our directed energy market, which continues to be the most strategic and highest growth opportunity for nLIGHT. Directed energy remains a key priority for the U.S. and allied governments, driven by the need for highly scalable, low cost per shot solutions to counter a rapidly evolving threat environment. Our focus remains on supporting customers across a broad range of power levels and mission profiles, and we are increasingly engaged not only as a laser supplier, but also as a system-level partner. Importantly, we are seeing growing customer demand for solutions that emphasize the three keys to success in directed energy, power scaling, high brightness, and atmospheric correction. Areas where we believe our two-decade investment in laser technology provides a meaningful competitive advantage and where we have consistently delivered for our customers.

Today, we officially launched our HADES portfolio of scalable beam combined high energy lasers and effectors with integrated atmospheric correction. Production-ready HADES is designed around nLIGHT’s vertically integrated laser technology stack, encompassing semiconductor laser diodes, fiber amplifiers, beam combination, and atmospheric correction. The platform architecture enables system growth to hundreds of kilowatts while maintaining pristine beam quality through advanced atmospheric correction, providing defense customers with a common modular foundation that scales from near-term operational deployments to higher power systems capable of addressing increasingly sophisticated and demanding threats. Each system can be integrated with existing beam directors, sensors, and battle management architectures, enabling rapid deployment across a broad range of military platforms and battlefield environments. One example of this power scaling is the work we are doing on the production of the 1 megawatt CBC high energy laser as part of HELSI-2.

We remain on track for this program, importantly, this laser is based on the same architecture that we use across all our HADES portfolio of CBC lasers, demonstrating the scalability of the platform to deliver solutions that address a wide range of mission scenarios from counter UAS through counter cruise missile and more. We also continue to make progress on the US Navy’s HELCAP program, where we’re combining the 300 kilowatt CBC laser that we delivered under the HELSI program with an nLIGHT advanced beam control system that incorporates our proprietary adaptive optics for atmospheric correction. This work will help accelerate the development and deployment of future multi-hundred kilowatt systems over the coming years.

Looking ahead, we remain encouraged by the pipeline of directed energy opportunities, including follow-on production content, upgrades to existing platforms, and new prototype programs that should position us for continued growth over the next several years. Importantly, we have seen the U.S. government follow up on these program successes with increases to budgets associated with directed energy. There’s currently nearly $400 million in each of the 2027 and 2028 budgeted for directed energy prototypes and procurement. The overall annual budget for directed energy laser weapons increases to approximately $1 billion in each of the two fiscal years with the inclusion of high power multi-hundred kilowatt directed energy prototypes that are expected to be funded through the science and technology portion of the budget.

We continue to believe that our differentiated CBC high power laser technology, combined with our advanced atmospheric correction capabilities and our U.S.-based manufacturing, positions us favorably to win meaningful new awards in the coming months and years. The growing pipeline of opportunities in our directed energy markets was a primary driver behind our decision to raise additional capital through a follow-on equity offering during the quarter. We raised over $190 million after fees and expenses, which combined with our existing cash, leaves us with approximately $330 million on our balance sheet. We intend to use a portion of these proceeds to build out and equip our new 50,000 sq ft manufacturing facility in Longmont, Colorado, invest ahead of our demand and supply chain, and increase staffing to help accelerate new directed energy product development. In summary, our strategy remains consistent.

Leverage our vertically integrated technology platform, execut