• Revenue: $56.1 million, up 11% year over year.
• Aerospace and Defense Revenue: $30.3 million, 59% increase year over year.
• Microfabrication Revenue: $14.3 million, 19% increase year over year.
• Industrial Revenue: $11.6 million, 41% decrease year over year.
• Gross Margin: 22%, up from 20% a year ago.
• Product Gross Margin: 29%, up from 24% a year ago.
• Development Gross Margin: 5%, down from 7% a year ago.
• Non-GAAP Operating Expenses: $18.3 million, up $2.3 million year over year.
• Net Loss (Non-GAAP): $3.7 million or 8 per share.
• Net Loss (GAAP): $10.3 million or 21 per share.
• Adjusted EBITDA: Negative $1 million.
• Cash and Investments: $107 million, no debt.
• Cash Used in Operations: $5.6 million for the quarter.
• CapEx: $1.6 million for the quarter.
• Fourth Quarter Revenue Guidance: $49 million to $54 million.
• Fourth Quarter Gross Margin Guidance: 17% to 21%.
• Fourth Quarter Adjusted EBITDA Guidance: Negative $5 million to negative $2 million.

• Warning! GuruFocus has detected 6 Warning Signs with LASR.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• nLight Inc (NASDAQ:LASR) reported third-quarter revenue of $56.1 million, which was above the midpoint of their guidance range and represented an 11% growth both sequentially and year over year.
• The aerospace and defense business grew 59% year over year, driven by record A&D product revenue.
• The company maintains a strong balance sheet with $107 million in cash and investments and no debt.
• nLight Inc (NASDAQ:LASR) has made significant progress in its directed energy programs, including the Healthy Two program and the Army's DDM SHORAD effort.
• The company successfully transitioned its manufacturing operations from Shanghai to Thailand and the US, reducing reliance on China.

Negative Points

• The industrial segment experienced a 41% year-over-year decline in revenue, with continued competition from Chinese laser manufacturers impacting sales.
• Overall demand in the industrial market remains weak, with challenges persisting in the cutting market.
• The company reported a net loss on a non-GAAP basis of $3.7 million or 8 cents per share.
• Development gross margin decreased to 5% due to increased estimated costs on a significant fixed-price contract.
• nLight Inc (NASDAQ:LASR) expects continued volatility and pressure in its commercial markets, with no significant rebound anticipated in 2025.

Q & A Highlights

Q: Can you discuss your visibility into product revenue in the Aerospace and Defense (A&D) business beyond Q4? A: Scott Keeney, CEO, explained that they have strong visibility into continued growth in A&D products due to a strong backlog. The growth is driven by key segments in directed energy and sensing. Timing of revenue can be an issue due to new technology, but they expect continued growth. Joseph Corso, CFO, added that the backlog supports this visibility.

Q: Can you elaborate on your engagement with defense primes in Israel, particularly regarding the Iron Beam project? A: Scott Keeney, CEO, stated that nLight is deeply engaged with the Iron Beam project, supplying current products and involved in future developments. The $500 million award and additional funding highlight the solid support for Iron Beam, and nLight is a key player in this technology.

Q: What is causing the decline in commercial business revenue, and what are your expectations for 2025? A: Joseph Corso, CFO, noted volatility and lack of visibility in the commercial business, with continued pressure in the industrial segment. They do not expect a significant rebound in 2025, with the commercial business likely remaining at low levels. Scott Keeney, CEO, emphasized that A&D is the growth driver, not the commercial segment.

Q: How competitive are Chinese suppliers in the US market, and could potential tariffs impact this? A: Joseph Corso, CFO, explained that the impact is broader than just US visibility, as excess capacity in China affects global dynamics. Higher tariffs could help US customers, but the situation is complex and not solely dependent on tariffs.

Q: Can you provide insights into the backlog and its impact on future revenue? A: Scott Keeney, CEO, confirmed that they are seeing growth in backlog, driven by expansion in orders and design wins in both directed energy and sensing. Joseph Corso, CFO, added that the backlog includes firm orders and design wins, indicating good progress and supporting future revenue growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.