Financial Results - nLIGHT, Inc. announced preliminary results for Q4 2024, with actual results still being finalized, indicating potential material differences from management's expectations[5] - The press release regarding the preliminary results was issued on January 14, 2025, and is included as Exhibit 99.1[5] Regulatory Compliance - The company is subject to the reporting requirements of the Securities Exchange Act of 1934, ensuring compliance with financial disclosure regulations[9]

Company Overview - nLight (LASR) shares increased by 5.9% to close at $10.46, supported by strong trading volume, contrasting with a 2.3% loss over the past four weeks [1] - The company is experiencing growth in its aerospace and defense sector, driven by rising demand for directed energy systems and laser sensing products [1] Financial Performance - nLight is projected to report a quarterly loss of $0.14 per share, reflecting a year-over-year decline of 7.7% [2] - Expected revenues for the upcoming quarter are $51.15 million, which is a decrease of 1.4% compared to the same quarter last year [2] Earnings Estimates and Stock Movement - The consensus EPS estimate for nLight has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Comparison - nLight is part of the Zacks Electronics - Semiconductors industry, where another company, Ambarella (AMBA), saw a 2.7% increase in its stock price, closing at $78.18, with a 9.2% return over the past month [3] - Ambarella's consensus EPS estimate for its upcoming report is -$0.01, which represents a significant year-over-year change of +95.8% [4]

Financial Data and Key Metrics - Q3 2024 revenue was $56.1 million, an 11% increase both sequentially and year-over-year, above the midpoint of guidance [4] - Aerospace and defense (A&D) revenue grew 59% year-over-year to a record $30.3 million, driven by record A&D product revenue of $15.3 million, up 135% year-over-year [4][22] - Microfabrication revenue grew 19% year-over-year to $14.3 million, while industrial revenue declined 41% year-over-year to $11.6 million [23] - Products gross margin improved to 28.8%, and overall gross margin was 22.4%, within guidance range [4] - Net loss on a non-GAAP basis was $3.7 million or $0.08 per share, compared to a net loss of $4.9 million or $0.10 per share in Q3 2023 [29] - Adjusted EBITDA was negative $1 million, compared to negative $1.9 million in Q3 2023 [30] - Cash and investments totaled $107 million with no debt, and average DSO improved to 58 days from 65 days at the end of 2023 [31] Business Line Performance - Aerospace and defense (A&D) business grew 59% year-over-year, driven by record A&D product revenue and strong performance in directed energy and laser sensing programs [4][22] - Microfabrication revenue grew 40% sequentially to $14 million, driven by orders from a long-term customer, though volatility in demand is expected to continue [14][42] - Industrial revenue declined 41% year-over-year, with weak demand in cutting and welding markets, particularly due to competition from Chinese suppliers [23][24] - Additive manufacturing saw progress with the launch of the Corona AFX-2000 laser, which achieved 3x faster print speeds in validation with a leading customer [19] Market Performance - A&D market remains a key growth driver, with strong demand for directed energy systems and laser sensing products, particularly in the U.S. and Israel [5][9][10] - Commercial markets, including microfabrication and industrial, face headwinds due to weak demand and competition from Chinese suppliers, with challenges expected to persist into 2025 [15][16][48] Strategy and Industry Competition - The company is leveraging its vertical integration strategy in the directed energy market, with revenue generated at nearly every level of integration, making it an ideal supplier for U.S. government and foreign allies [10] - Manufacturing operations in Shanghai have been fully transitioned to Thailand and the U.S., with the company expecting normalized production levels in a few quarters [13] - The company continues to innovate in industrial markets, introducing new products like the nfinity laser for precision thick metal cutting and the Corona AFX-2000 for additive manufacturing [15][19] Management Commentary on Operating Environment and Future Outlook - Management expects continued growth in the A&D business, with strong visibility into backlog and design wins, though timing of revenue recognition for new technologies remains uncertain [38][52] - Commercial markets are expected to remain challenging into 2025, with no significant rebound anticipated in industrial or microfabrication revenue [48][49] - The company is focused on maintaining a strong balance sheet and managing working capital to support long-term growth objectives [33] Other Important Information - The company expects Q4 2024 revenue to be in the range of $49 million to $54 million, with A&D product revenue expected to grow sequentially [34][35] - Q4 gross margin is expected to be in the range of 17% to 21%, with adjusted EBITDA projected to be between negative $5 million and negative $2 million [36] Q&A Session Summary Question: Visibility into A&D product revenue beyond Q4 - The company has strong visibility into continued growth in A&D product revenue, supported by a robust backlog and design wins in directed energy and sensing programs [38][39] Question: Engagement with Israeli defense primes, including IRON BEAM - The company is deeply engaged with Israeli defense primes and is a supplier for the IRON BEAM project, with solid funding and future development opportunities [40][41] Question: Decline in commercial business revenue - The decline in commercial revenue is attributed to weak demand and competition from Chinese suppliers, with no significant rebound expected in 2025 [45][46][48] Question: Impact of Chinese suppliers in the U.S. market - Chinese suppliers are impacting the U.S. market through excess capacity and competition, though higher tariffs could provide some relief [50][51] Question: Growth outlook for A&D in 2025 - The company expects continued growth in A&D in 2025, supported by backlog and design wins, though timing of revenue recognition remains uncertain [52][53] Question: Backlog progression and commercial business outlook - Backlog is progressing, with growth in orders and design wins for critical programs in directed energy and sensing [56][57] - Commercial business is expected to remain weak, with microfabrication revenue returning to normalized levels and continued pressure in industrial markets [60][61] Question: Manufacturing transition from Shanghai - The transition of manufacturing from Shanghai to Thailand and the U.S. is complete, with a ramp-up period still ongoing [62] Question: Size of the directed energy opportunity - The directed energy market is significant, with U.S. and Israeli spending in the multi-hundred million dollar range annually, and the company participates at various levels of integration [65][66] Question: Maximum power laser for directed energy - The company produces the highest power laser in the world at over 350 kilowatts, with ongoing development to scale up to a megawatt [68] Question: 10% customers in the quarter - The company had a couple of customers at the 10% level in the quarter, primarily U.S. government or prime contractors, with similar expectations for the future [69] Question: Weakness in low-power lasers - Weakness in low-power lasers is largely related to the additive manufacturing market, with most demand at 1 kilowatt or below [72] Question: Margin profile of backlog - The margin profile of backlog is better than recent results, though fixed cost absorption remains a challenge at lower revenue levels [73] Question: Linearity of backlog - Backlog is not linear, with variability in development work and material integration across quarters [74]

Financial Performance - Revenues decreased to $151.2 million for the nine months ended September 30, 2024, compared to $158.0 million for the same period in 2023, primarily due to decreased sales in the Laser Products segment [77]. - The net loss for the nine months ended September 30, 2024, was $35.8 million, compared to a net loss of $28.4 million for the same period in 2023 [77]. - Revenue from the Industrial market decreased by 40.9% to $11.6 million for the three months ended September 30, 2024, compared to $19.6 million in the same period of 2023 [85]. - Revenue from the Aerospace and Defense market increased by 59.1% to $30.3 million for the three months ended September 30, 2024, compared to $19.0 million in the same period of 2023 [85]. - The overall revenue for the three months ended September 30, 2024, was $56,129, reflecting a 10.9% increase compared to the same period in 2023 [88]. Profitability and Margins - The gross profit margin improved to 22.4% for the three months ended September 30, 2024, compared to 19.6% for the same period in 2023 [84]. - The gross profit for Laser Products in the three months ended September 30, 2024, was $12,475, resulting in a gross margin of 30.3% [96]. - The Advanced Development segment's gross profit varies with contract types and successful project execution, impacting overall profitability [82]. Research and Development - Research and development expenses were 20.2% of total revenue for the three months ended September 30, 2024, compared to 21.2% for the same period in 2023 [84]. - The company anticipates continued investment in research and development to achieve its technology and product roadmap [80]. - Research and Development expenses for the three months ended September 30, 2024, increased by 5.4% to $11,328 compared to the same period in 2023 [100]. Expenses - Sales, General and Administrative expenses for the three months ended September 30, 2024, increased by 11.1% to $13,021 compared to the same period in 2023 [101]. - Income tax expense for the three months ended September 30, 2024, was $261 thousand, an increase of $74 thousand, or 39.6%, from $187 thousand in the same period of 2023 [105]. - For the nine months ended September 30, 2024, income tax expense was $525 thousand, a significant increase of $1,530 thousand compared to a benefit of $(1,005) thousand in 2023, reflecting a 152.2% change [105]. Cash Flow and Liquidity - As of September 30, 2024, the company had cash and cash equivalents of $41.7 million, down from $53.5 million as of December 31, 2023, a decrease of $11.8 million [108]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $1.5 million, despite a net loss of $35.8 million [111]. - Net cash used in investing activities during the nine months ended September 30, 2024, was $10.9 million, primarily due to the net purchase of marketable securities and capital expenditures [112]. - The company believes existing sources of liquidity will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months [109]. Segment Performance - The company operates in two reportable segments: Laser Products and Advanced Development, serving three primary end markets: Industrial, Microfabrication, and Aerospace and Defense [76]. - Laser Products revenue for the three months ended September 30, 2024, increased by 7.9% to $41,132, while Advanced Development revenue rose by 19.7% to $14,997 compared to the same period in 2023 [88]. - For the nine months ended September 30, 2024, Laser Products revenue decreased by 11.7% to $104,960, while Advanced Development revenue increased by 17.8% to $46,207 compared to the same period in 2023 [88]. Market Insights - North America accounted for 64.7% of total revenue in the three months ended September 30, 2024, with revenue increasing by 16.0% to $36,332 compared to the same period in 2023 [90]. - The decrease in China revenue for the three months ended September 30, 2024, was driven by a decline in the Microfabrication and Industrial markets [92]. - The increase in Advanced Development revenue was primarily due to development contracts awarded in the second half of 2023, all included in the Aerospace and Defense market [89]. Other Income - Other income, net for the three months ended September 30, 2024, increased by $795 thousand, or 148.3%, compared to the same period in 2023, totaling $1,331 thousand [104]. - For the nine months ended September 30, 2024, other income, net rose by $597 thousand, or 29.9%, reaching $2,594 thousand compared to $1,997 thousand in 2023 [104]. Credit Facilities - The company had a $40.0 million revolving line of credit, which was amended to extend the maturity date to September 24, 2027 [114]. - No amounts were outstanding under the line of credit as of September 30, 2024, and the company was in compliance with all covenants [115].

Core Viewpoint - nLight reported a quarterly loss of $0.08 per share, which aligns with the Zacks Consensus Estimate and shows improvement from a loss of $0.10 per share a year ago [1] - The company achieved revenues of $56.13 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 0.75% and up from $50.63 million year-over-year [2] Financial Performance - nLight has surpassed consensus EPS estimates three out of the last four quarters, with a surprise of 16.67% in the previous quarter [1] - The company has also topped consensus revenue estimates four times over the last four quarters [2] Market Performance - nLight shares have increased approximately 4.2% since the beginning of the year, while the S&P 500 has gained 24.3% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at -$0.05 for the coming quarter and -$0.42 for the current fiscal year [4][7] - The estimate revisions trend for nLight is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Electronics - Semiconductors industry, to which nLight belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, suggesting potential challenges ahead [8] - QuickLogic, another company in the same industry, is expected to report a quarterly loss of $0.05 per share, reflecting a significant year-over-year decline [9]

Revenue Performance - Revenues for Q3 2024 were $56.1 million, an increase of 10.9% compared to $50.6 million in Q3 2023[3]. - For Q4 2024, nLIGHT expects revenues to range from $49 million to $54 million, with a midpoint of $51.5 million[4]. - nLIGHT's strong performance in Microfabrication contributed to the overall revenue growth alongside Aerospace & Defense[2]. Profitability and Loss - Net loss for Q3 2024 was $10.3 million, or $0.21 per diluted share, compared to a net loss of $11.9 million, or $0.26 per diluted share in Q3 2023[3]. - The company reported a 13% reduction in net loss year-over-year, indicating improved financial performance[3]. - The company experienced a net loss of $35.830 million for the nine months ended September 30, 2024, compared to a net loss of $28.432 million for the same period in 2023, indicating an increase in losses of about 26%[17]. - nLIGHT, Inc. had a non-GAAP net loss of $(16.423) million for the nine months ended September 30, 2024, compared to $(7.636) million for the same period in 2023, indicating a worsening of approximately 115%[19]. Gross Margin and EBITDA - Gross margin improved to 22.4% in Q3 2024, up from 19.6% in Q3 2023, reflecting a 500 basis point increase[3]. - Projected gross margin for Q4 2024 is expected to be between 17% and 21%[4]. - Adjusted EBITDA for Q4 2024 is anticipated to be in the range of ($5) million to ($2) million[4]. - The company reported an adjusted EBITDA of $(994) thousand for the three months ended September 30, 2024, compared to $(1.919) million for the same period in 2023, showing an improvement in operational performance[18]. Cash and Investments - Cash and investments at the end of Q3 2024 were approximately $107 million, with no debt[2]. - Cash and cash equivalents decreased to $41.456 million as of September 30, 2024, down from $53.210 million at the end of 2023, reflecting a decline of approximately 22%[17]. - The cash flows from operating activities provided $1.528 million for the nine months ended September 30, 2024, a significant decrease from $9.687 million for the same period in 2023, reflecting a decline of approximately 84%[17]. Assets and Liabilities - As of September 30, 2024, nLIGHT, Inc. reported total assets of $291.294 million, a decrease from $306.803 million as of December 31, 2023, representing a decline of approximately 5%[16]. - Total current liabilities increased to $36.145 million as of September 30, 2024, compared to $32.752 million at the end of 2023, marking an increase of about 10%[16]. - The company’s total stockholders' equity decreased to $235.270 million as of September 30, 2024, from $254.419 million at the end of 2023, a decline of about 7.5%[16]. - nLIGHT, Inc. reported a decrease in inventory to $48.828 million as of September 30, 2024, down from $52.160 million at the end of 2023, representing a reduction of about 6.4%[16]. Stock-Based Compensation - Stock-based compensation for the nine months ended September 30, 2024, was $18.961 million, slightly down from $19.645 million for the same period in 2023, a decrease of about 3.5%[19].

Company Overview - nLight (LASR) shares increased by 28.1% to close at $13.23, following a notable trading volume, contrasting with a 4.6% loss over the past four weeks [1] - The company is focusing on technological advancements in the aerospace and defense sectors, particularly in laser sensing and directed energy applications [1] Financial Performance - nLight is expected to report a quarterly loss of $0.08 per share, reflecting a year-over-year change of +20% [2] - Projected revenues for the upcoming quarter are $55.71 million, which is a 10% increase from the same quarter last year [2] Earnings Estimates and Stock Movement - The consensus EPS estimate for nLight has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Comparison - nLight operates within the Zacks Electronics - Semiconductors industry, where Broadcom Inc. (AVGO) has a consensus EPS estimate of $1.39, reflecting a +25.2% change year-over-year [4] - Broadcom Inc. has a Zacks Rank of 2 (Buy), indicating a more favorable outlook compared to nLight [4]

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $50.5 million, a 13% increase compared to Q1 2024 but a 5% decrease compared to Q2 2023 [15] - Products revenue was $34.5 million, up 17% sequentially but down 13% year-over-year [15] - Development revenue reached $16.1 million, a 6% increase from the prior quarter and a 17% increase from the same quarter last year [15] - Overall gross margins improved to approximately 24%, up from 17% in Q1 2024 and 23% in Q2 2023 [16][17] - Products gross margin expanded to 30%, compared to 21% in the prior quarter and 29% in the same quarter last year [17] Business Line Data and Key Metrics Changes - Aerospace and defense revenue was $27.4 million, representing 54% of total revenue, which is a 26% increase quarter-over-quarter and a 12% increase year-over-year [15] - Industrial revenue was $12.9 million, accounting for 26% of total revenue, an 8% increase from the prior quarter but a 22% decrease from Q2 2023 [16] - Microfabrication revenue was $10.2 million, representing 20% of total revenue, down 5% sequentially and 16% year-over-year [16] Market Data and Key Metrics Changes - The aerospace and defense sector showed strong growth, particularly in directed energy and laser sensing applications [3][4] - Microfabrication revenue has stabilized after a period of low demand, with signs of renewed interest emerging [9] - The industrial market is shifting towards higher power solutions, particularly in cutting applications [10] Company Strategy and Development Direction - The company is focusing on vertical integration in the directed energy market, which allows for optimized system-level performance at competitive costs [6] - Continued investment in R&D and new product development is aimed at addressing customer pain points in various markets, including EV and battery sectors [11] - The collaboration with EOS in additive manufacturing is expected to enhance product offerings and drive broader adoption of metal 3D printing technologies [12][28] Management Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of 2024, expecting growth to be higher than the first half, particularly in defense sectors [24] - The company anticipates continued sequential revenue growth in Q3 2024, with guidance in the range of $53 million to $58 million [21] - Management highlighted the importance of maintaining a strong balance sheet and effective working capital management to support long-term growth objectives [20] Other Important Information - The company ended Q2 2024 with cash equivalents and investments of $115 million and no debt [3][19] - Adjusted EBITDA for Q2 2024 was a loss of $1.6 million, an improvement from a loss of $4.9 million in Q1 2024 [18] Q&A Session Summary Question: Overview of segment performance and guidance - Management confirmed that the strong performance in aerospace and defense was a significant driver for the quarter, with a 26% increase in revenue [22][23] Question: Profitability outlook for fiscal 2025 - Management remains optimistic about achieving year-over-year revenue growth in fiscal 2024, with expectations for a strong second half [24] Question: Margin expectations despite revenue growth - Management explained that while revenue from laser products increased, the gross margin guidance reflects a more normalized flow-through from Q2 to Q3 [25][26] Question: Contribution of EOS partnership - The partnership with EOS is expected to enhance the company's position in the additive manufacturing space, reflecting the strength of its technology [27][28] Question: Success in the Chinese market - Management noted that revenue from China is a small part of the business, with slight improvements in ordering patterns observed [31] Question: Backlog margin profile - Management indicated that the backlog is skewing towards higher power sales, which should positively impact gross margins [33]

Financial Performance - Revenues decreased to $95.0 million for the six months ended June 30, 2024, down from $107.4 million in the same period of 2023, primarily due to decreased sales in the Laser Products segment[73]. - The company reported a net loss of $25.5 million for the six months ended June 30, 2024, compared to a net loss of $16.6 million for the same period in 2023[73]. - Revenue from the Industrial market decreased by 31.8% to $24.9 million for the six months ended June 30, 2024, compared to $36.5 million in 2023[82]. - Revenue from the Aerospace and Defense market increased by 7.7% to $49.1 million for the six months ended June 30, 2024, compared to $45.6 million in 2023[82]. - The gross profit margin for the six months ended June 30, 2024, was 20.3%, down from 24.6% in the same period of 2023[81]. - Operating expenses increased to 49.2% of total revenue for the six months ended June 30, 2024, compared to 43.1% in the same period of 2023[81]. - Total revenue for the three months ended June 30, 2024, was $50,511 thousand, a decrease of $2,793 thousand (5.2%) compared to $53,304 thousand in 2023[86]. - Gross profit for Laser Products for the three months ended June 30, 2024, was $11,106 thousand, with a gross margin of 32.2%[88]. Research and Development - The company anticipates continued investment in research and development to achieve its technology and product roadmap[77]. - Research and Development expenses decreased by $268 thousand (2.2%) for the three months ended June 30, 2024, compared to the same period in 2023[92]. Market Dynamics - The company expects fluctuations in demand for its semiconductor and fiber laser solutions based on market cycles and evolving competitive dynamics[75]. - Laser Products revenue decreased for the three and six months ended June 30, 2024, primarily due to decreased unit sales to the Industrial and Microfabrication markets, partially offset by increased revenue from the Aerospace and Defense market[85]. - Advanced Development revenue increased for the three and six months ended June 30, 2024, due to new development contracts, all included in the Aerospace and Defense market[85]. - North America revenue for the three months ended June 30, 2024, increased by $1,323 thousand (3.9%) compared to the same period in 2023, driven by the Aerospace and Defense market[86]. Cash Flow and Liquidity - Cash and cash equivalents were $49.6 million as of June 30, 2024, a decrease from $53.5 million as of December 31, 2023[98]. - For the six months ended June 30, 2024, the company reported net cash provided by operating activities of $7.1 million, compared to a net cash used of $3.5 million in the same period of 2023[102]. - The company experienced a net loss of $25.5 million during the six months ended June 30, 2024, which was offset by increases in working capital of $10.5 million and non-cash expenses totaling $22.1 million[102]. - Net cash used in investing activities was $8.9 million, driven by net purchases of marketable securities of $5.2 million and capital expenditures of $3.7 million[103]. - Net cash used in financing activities was $1.8 million, consisting of taxes paid on stock awards of $3.3 million, partially offset by proceeds from stock option exercises and employee stock plan purchases of $1.5 million[104]. - The company has a $40.0 million revolving line of credit with Banc of California, which is secured by assets and expires on September 24, 2024[105]. - The company anticipates that its existing sources of liquidity will be sufficient to meet working capital and capital expenditure needs for at least the next 12 months[99]. Future Outlook - The company may explore additional financing sources, including equity and debt financing arrangements, to support future capital requirements[99]. - The company may enter into arrangements to acquire or invest in complementary businesses, services, technologies, and intellectual property rights in the future[99]. - There were no material changes to the company's contractual obligations as previously disclosed in the Annual Report for the year ended December 31, 2023[106]. - The company does not believe inflation had a material effect on its business during the three and six months ended June 30, 2024[107].

Company Performance - nLight reported a quarterly loss of $0.10 per share, better than the Zacks Consensus Estimate of a loss of $0.12, compared to a loss of $0.02 per share a year ago, indicating an earnings surprise of 16.67% [1] - The company posted revenues of $50.51 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 2.64%, but down from $53.3 million year-over-year [2] - Over the last four quarters, nLight has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Outlook - nLight shares have declined approximately 10.6% since the beginning of the year, while the S&P 500 has gained 15.8% [3] - The company's earnings outlook is mixed, with the current consensus EPS estimate for the coming quarter at -$0.05 on revenues of $57.97 million, and -$0.36 on revenues of $215.39 million for the current fiscal year [7] Industry Context - The Electronics - Semiconductors industry, to which nLight belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry outlook can materially affect stock performance [5][8]