• Total Revenue (Q4 2024): $47.4 million, a decrease of 9% from $51.9 million in Q4 2023.
• Product Revenue (Q4 2024): $31.7 million, down from $37.9 million in Q4 2023.
• Development Revenue (Q4 2024): Increased by 12% year over year to $15.7 million.
• Total Revenue (Full Year 2024): $198.5 million, a decrease of 5% from $209.9 million in 2023.
• Aerospace and Defense Revenue (2024): Increased 20% year over year to $109.5 million.
• Gross Margin (Q4 2024): 2%, negatively impacted by non-routine charges; adjusted gross margin would have been approximately 15%.
• Product Gross Margin (Q4 2024): 1%, adjusted for non-routine charges would have been approximately 20%.
• Development Gross Margin (Q4 2024): 6%, compared to 9% in Q4 2023.
• Non-GAAP Operating Expenses (Q4 2024): $17.7 million, compared to $17.4 million in Q4 2023.
• GAAP Net Loss (Q4 2024): $25 million or $0.51 per share, compared to a net loss of $13.2 million or $0.28 per share in Q4 2023.
• Cash Equivalents and Investments (End of 2024): $100.9 million, compared to $113.1 million at the end of 2023.
• Inventory (End of 2024): Decreased to $40.8 million from $52.1 million at the end of 2023.
• Funded Backlog (End of 2024): $167 million, 55% higher than at the end of 2023.
• Q1 2025 Revenue Guidance: Expected to be in the range of $45 million to $51 million.
• Q1 2025 Gross Margin Guidance: Total gross margin expected to be in the range of 13% to 17%.
• Q1 2025 Adjusted EBITDA Guidance: Expected to be in the range of approximately negative $6 million to negative $3 million.

• Warning! GuruFocus has detected 3 Warning Signs with LASR.

Release Date: February 27, 2025

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

Positive Points

• Revenue from Aerospace and Defense grew to more than 60% of total sales by the end of 2024, becoming the primary growth driver.
• Aerospace and Defense markets grew 20% year over year to a record $110 million.
• Backlog increased by more than 50% year over year in 2024 to a record $167 million.
• nLight Inc (NASDAQ:LASR) is well-aligned with the Department of Defense's critical priorities, such as directed energy and laser sensing.
• The company has a strong pipeline of directed energy programs and laser sensing opportunities, expecting at least 25% revenue growth in Aerospace and Defense in 2025.

Negative Points

• Total revenue in the fourth quarter of 2024 decreased by 9% compared to the fourth quarter of 2023.
• Commercial markets faced challenges with revenue down 25% year over year due to competition from China and muted global manufacturing demand.
• Total gross margin in the fourth quarter was only 2%, significantly impacted by non-routine charges related to inventory reserves.
• GAAP net loss for the fourth quarter was $25 million, or $0.51 per share, compared to a net loss of $13.2 million in the fourth quarter of 2023.
• The company faces execution challenges and timing issues with the delivery of defense products, impacting revenue recognition.

Q & A Highlights

Q: Given the backlog, how should we think about the revenues over the course of the year, particularly in light of some challenges experienced in Q4? A: Joseph Corso, CFO: We are confident that our Aerospace and Defense (A&D) markets should be up at least 25% over 2023. The quarterly trajectory can be difficult to predict, but we expect revenue from A&D markets to increase as the year progresses. The backlog indicates minimal "go get" for 2025, so we feel positive about the year's outlook.

Q: Where do you stand with the handoff to the contract manufacturing partner in Thailand, and what does that mean for gross margins? A: Joseph Corso, CFO: There will be some improvement in gross margins as we work through execution and transition back to full capacity. However, the bigger driver for gross margins will be ramping volumes. As we resolve these issues, margins will improve.

Q: Can you provide more details on the assumptions baked into the Q1 guidance, particularly regarding the $4 million shortfall from Q4? A: Joseph Corso, CFO: The Q1 guidance does not assume that the Q4 revenue shortfall rolls over into Q1. The revenue demand and growth in Q1 are more natural. We expect defense business growth and commercial business decline in Q1. We are not anticipating any unusual cost of goods issues seen in Q4.

Q: Can you confirm the funded backlog and its timeline for shipment? A: Joseph Corso, CFO: The funded backlog is $167 million, up 55% year over year. It is all shippable in 2025 and 2026.

Q: Regarding the executive order for the Iron Dome, what scale and timeline can we expect for nLIGHT's involvement? A: Scott Keeney, CEO: The initiative involves a broad range of defense applications with significant funding. While some programs extend further, there is an emphasis on the near term. We are actively engaged with several initiatives, and more information will be available in the coming months.

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