Core Insights - The performance of IPG Photonics' international operations is critical for understanding its financial strength and growth potential [1][2] - The company's total revenue for the quarter ending June 2025 was $250.72 million, reflecting a year-over-year decline of 2.7% [4] International Revenue Breakdown - Germany contributed $22.3 million, or 8.9% of total revenue, which was an 8.27% miss against the consensus estimate of $24.31 million [5] - China generated $74.17 million, accounting for 29.6% of total revenue, exceeding expectations by 40.53% compared to the forecast of $52.78 million [6] - Other Europe brought in $34.24 million, representing 13.7% of total revenue, slightly below the projected $34.61 million by 1.07% [7] - The "Other" category accounted for $26.79 million, or 10.7% of total revenue, missing the estimate of $29.39 million by 8.84% [8] - The Rest of the World contributed $3.52 million, making up 1.4% of total revenue, surpassing the estimate of $1.96 million by 79.49% [9] - Japan's revenue was $15.8 million, or 6.3% of total revenue, exceeding expectations by 72.9% against the forecast of $9.14 million [10] Future Revenue Projections - Analysts project total revenue of $235.63 million for the current fiscal quarter, indicating a 1.1% increase from the prior year [11] - For the full year, total revenue is expected to reach $950.43 million, a decline of 2.7% from the previous year [13] Conclusion - The reliance on international markets presents both opportunities and challenges for IPG Photonics, necessitating close monitoring of international revenue trends to forecast future performance [14]

Core Insights - IPG Photonics reported Q2 2025 earnings with revenue of $250.7 million, exceeding analyst estimates of $229.6 million, and non-GAAP EPS of $0.30, tripling expectations of $0.10, despite a 3% year-over-year revenue decline [1][2] Financial Performance - Revenue (GAAP) for Q2 2025 was $250.7 million, a 3% decrease from $257.6 million in Q2 2024 [2] - Non-GAAP EPS was $0.30, down 42% from $0.52 in Q2 2024 [2] - GAAP net income fell 67% to $6.6 million from $20.2 million in the prior year [2] - Adjusted EBITDA decreased by 20% to $31.5 million compared to $39.4 million in Q2 2024 [2] - Gross margin remained steady at 37.3% year-over-year [2] Business Overview - IPG Photonics specializes in high-performance fiber lasers and photonics systems for industrial, medical, and advanced technology markets [3] - The company focuses on materials processing applications, including cutting, welding, and micromachining, as well as medical procedures and emerging sectors like battery production [3] Strategic Focus - The company relies on four pillars: technological leadership, vertical integration, significant manufacturing scale, and diversification across end-markets [4] - Recent strategies include expanding into medical and advanced applications, which have higher growth rates [4] - Key success factors include rapid new product development and global manufacturing agility [4] Revenue Breakdown - Materials processing accounted for 85% of total sales but declined by 6% year-over-year [6] - Medical and advanced systems revenue rose by 21% year-over-year, driven by strategic wins and new product launches [6] - Emerging growth products constituted 54% of total sales in Q2 2025, up from 51% in Q1 2025 [5] Regional Sales Trends - Asia saw a 14% increase in sales, while North America declined by 4% and Europe dropped by 24% year-over-year [7] Profitability Metrics - Operating income fell to $0.1 million from $12.0 million, with operating margin at 0% [9] - The company faced tariff-driven costs impacting margins by 150 to 200 basis points [11] Strategic Milestones - Continued growth in emerging product lines and increased R&D investment of $58.3 million in the first half of 2025 [10] - Successful product launches in battery welding and micromachining contributed to market share gains [10] Future Guidance - For Q3 2025, revenue is projected between $225 million and $255 million, with adjusted gross margin of 36% to 38% [13] - Management plans to mitigate tariff impacts through supply chain adjustments and selective pricing changes [11]

Financial Performance - Net sales decreased by $6.9 million, or 2.7%, to $250.7 million for the three months ended June 30, 2025, compared to $257.6 million for the same period in 2024[88]. - For the six months ended June 30, 2025, net sales decreased by $31.2 million, or 6.1%, to $478.5 million from $509.7 million in the same period in 2024[102]. - Net income decreased by $13.6 million to $6.6 million for the three months ended June 30, 2025, compared to $20.2 million for the same period in 2024[101]. - Net income decreased by $33.9 million to $10.4 million for the six months ended June 30, 2025, compared to $44.3 million for the same period in 2024[115]. - Cost of sales decreased by $20.8 million, or 6.6%, to $295.1 million for the six months ended June 30, 2025, with gross margin increasing to 38.3%[106]. Revenue Sources - Approximately 85% of revenues for the first half of 2025 and 88% for the full fiscal year of 2024 were derived from customers in materials processing[69]. - Materials processing sales accounted for 84.7% of total revenue and decreased by 6.0% year over year, primarily due to lower sales in cutting and welding applications[89]. - Other applications sales increased by 20.7% year over year, driven by higher revenue in advanced applications and medical procedures[89]. Expenses - Research and development expense increased by $2.4 million, or 8.7%, to $29.9 million for the three months ended June 30, 2025, representing 11.9% of sales[92]. - General and administrative expense increased by $3.3 million, or 10.4%, to $34.9 million for the three months ended June 30, 2025, accounting for 13.9% of sales[93]. - Sales and marketing expense increased by $4.5 million, or 9.9%, to $50.0 million for the six months ended June 30, 2025, representing 10.4% of sales[107]. Foreign Exchange Impact - Foreign exchange losses for the quarter ended June 30, 2025, were primarily due to the appreciation of the euro against the U.S. dollar[84]. - The company incurred a foreign exchange transaction loss of $3.1 million for the three months ended June 30, 2025, compared to a $3.2 million loss for the same period in 2024[96]. - The company incurred a foreign exchange transaction loss of $5.5 million for the six months ended June 30, 2025, compared to a loss of $4.9 million for the same period in 2024[112]. - As of June 30, 2025, the loss on foreign exchange transactions totaled $3.1 million, a slight decrease from a loss of $3.2 million for the same period in 2024[135]. - A 5% change in the exchange rate of the U.S. dollar to the euro could result in a foreign exchange gain of $2.2 million if the U.S. dollar appreciates, or a loss of $2.3 million if it depreciates[136]. - A 5% change in the exchange rate of the U.S. dollar to the Chinese yuan could lead to a foreign exchange loss of $1.4 million if the U.S. dollar appreciates, or a gain of $1.5 million if it depreciates[136]. - The company is exposed to foreign currency translation risk, which affects the translated amounts of assets and liabilities due to changes in functional currency exchange rates relative to the U.S. dollar[137]. - Management attempts to minimize foreign currency exposure by offsetting foreign currency denominated assets and liabilities, though effectiveness is limited[135]. - The company will continue to analyze its exposure to currency exchange rate fluctuations and their potential impact on financial results[139]. Asset Management - An impairment of long-lived assets amounting to $26.6 million was recorded due to sanctions affecting operations in Belarus, with remaining asset value at $4.2 million as of June 30, 2025[65]. - Provisions for slow-moving, obsolete, or excess inventory totaled $7.8 million for the three months ended June 30, 2025, compared to $14.0 million for the same period in 2024[76]. - The average selling prices of products generally decrease as they mature, influenced by competition and increased manufacturing efficiencies[71]. - The company has ceased new investments in Belarus and has qualified third-party vendors to supply components previously sourced from that region[66]. Cash Flow and Investments - Cash provided by operating activities decreased by $96.9 million to $11.2 million for the six months ended June 30, 2025, from $108.1 million in 2024[124]. - Net cash used in investing activities was $261.5 million for the six months ended June 30, 2025, compared to cash provided of $308.6 million in 2024[125]. - Net cash used in financing activities was $34.5 million for the six months ended June 30, 2025, down from $210.2 million in 2024[126]. - As of June 30, 2025, cash and cash equivalents were $359.2 million, down from $620.0 million at December 31, 2024[117]. - Short-term investments increased to $540.4 million as of June 30, 2025, from $310.2 million at December 31, 2024[117]. - The company expects to continue making investments in capital expenditures and assess acquisition opportunities[116]. Strategic Initiatives - The company plans to continue investing in research and development to enhance existing products and develop new technologies, with spending expected to remain at current or increased levels[78][79]. - The company continues to monitor international trade relations and their potential impact on operations and financial results[64]. - The company is vertically integrated, allowing for reduced manufacturing costs and better quality control[62].

Financial Data and Key Metrics Changes - Second quarter revenue increased by 10% sequentially and 2% year over year, marking the first year-over-year revenue increase since 2022, driven by modest demand improvement across multiple markets [5][18] - Revenue for the quarter was $251 million, with a gross margin of 37.3%, remaining flat year over year [22][23] - Adjusted earnings per diluted share were $0.30, exceeding guidance [24][27] Business Line Data and Key Metrics Changes - Revenue from materials processing decreased by 6% year over year due to divestitures and lower sales in cutting, welding, and additive manufacturing, partially offset by higher revenue in micromachining and the Clean Laser acquisition [18][19] - Medical and advanced applications revenue increased by 21%, driven by higher sales in these segments [18] - Emerging growth products accounted for 54% of sales, indicating strong performance in various laser sources and systems [20] Market Data and Key Metrics Changes - North America sales increased by 31% sequentially but were down 4% year over year, primarily due to higher sales in medical and advanced applications [20] - European sales were stable with less than a 1% sequential decline and down 11% year over year, impacted by lower cutting and welding sales [20] - Asia saw a 4% sequential increase and a 14% year-over-year increase, benefiting from higher sales in welding and cutting, as well as advanced applications [21] Company Strategy and Development Direction - The company is targeting a $5 billion total addressable market (TAM) with strategic initiatives aimed at driving profitable growth [5] - Focus on developing innovative lasers and photonic solutions for medical, micromachining, and advanced applications, with significant progress reported in these areas [9][11] - Capital allocation strategy emphasizes organic growth investments and strategic M&A, with plans to spend approximately $100 million on CapEx in 2025 [12][25] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand stabilization, noting improvements in industrial production and inventory normalization among customers [16][46] - The company is adapting to tariff-related challenges by leveraging supply chain flexibility and has successfully mitigated potential delays in customer orders [15][17] - Future guidance anticipates revenue between $225 million and $255 million for 2025, with adjusted gross margins between 36% and 38% [26][27] Other Important Information - The company repurchased $30 million of its stock during the quarter, continuing a trend of returning cash to shareholders [12][25] - The Crossbow laser counter UAV solution has been delivered to Lockheed Martin, showcasing the company's capabilities in directed energy systems [9][10] Q&A Session Summary Question: Can you provide any color on book to bill by region? - Management indicated that the book to bill ratio was approximately one across all regions, which is a positive sign [30][32] Question: How do you view the opportunity for directed energy over the next few years? - Management highlighted the directed energy market as a significant growth area, particularly addressing threats from smaller drones, with ongoing partnerships and extensive testing [34][37] Question: Can you walk us through the Q3 guidance? - Management noted that they were able to ship a significant portion of anticipated orders due to effective tariff mitigation strategies and observed broad-based improvements in demand [42][46] Question: What is the outlook for the systems business? - Management expressed excitement about the Clean Laser acquisition and noted improvements in other systems areas, including micro machining and robotic systems [63][65] Question: How is the competitive environment in the medical business changing? - Management reported strong positioning in the urology market and continued growth with new customer acquisitions [66][68]

Financial Data and Key Metrics Changes - Second quarter revenue increased by 10% sequentially and 2% year over year, marking the first year-over-year revenue increase since 2022, driven by modest demand improvement across multiple markets [5][17] - Revenue came in at $251 million, up 10% sequentially but down 3% year over year, with foreign currency contributing approximately $4 million or 1% to revenue [21][24] - Gross margin was 37.3%, flat year over year, while adjusted gross margin was 37.8%, driven by improved manufacturing cost absorption [21][22] Business Line Data and Key Metrics Changes - Revenue from materials processing decreased by 6% year over year due to divestitures and lower sales in cutting, welding, and additive manufacturing, partially offset by higher revenue in micromachining and the Clean Laser acquisition [17] - Medical and advanced applications revenue increased by 21%, driven by higher sales in these segments [17] - Emerging growth products accounted for 54% of sales, indicating strong performance across various laser sources and systems [18] Market Data and Key Metrics Changes - North America sales increased by 31% sequentially but were down 4% year over year, primarily driven by higher sales in medical and advanced applications [19] - Europe saw stable performance with less than a 1% sequential decline and an 11% year-over-year decrease, while Asia experienced a 4% sequential increase and a 14% year-over-year increase, benefiting from higher sales in welding and cutting [20] Company Strategy and Development Direction - The company is focusing on strategic initiatives targeting a $5 billion total addressable market (TAM) with hundreds of millions in revenue growth opportunities [5] - Continued investment in innovative lasers and photonic solutions is aimed at expanding into medical, micromachining, and advanced applications [8][11] - The capital allocation strategy emphasizes organic growth investments and strategic M&A, with an expected CapEx of approximately $100 million in 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding demand stabilization, noting improvements in industrial production and normalized inventories among cutting OEM customers [15][44] - The company is adapting to the dynamic operating environment by leveraging its global manufacturing supply chain to minimize tariff impacts [14] - Future guidance indicates expected revenue of $225 million to $255 million for 2025, with adjusted gross margin between 36% and 38% [24] Other Important Information - The company repurchased $30 million of its stock during the quarter, building on $1 billion in share repurchases over the past three years [12] - The appointment of five key leaders aims to strengthen the organization and support continued global growth [13] Q&A Session Summary Question: Can you provide any color on book to bill by region? - Management indicated that the book to bill ratio was approximately one across all regions, which was a positive sign [28][30] Question: How is the opportunity for directed energy over the next few years? - Management highlighted that directed energy is a growing market, particularly addressing threats from smaller drones, with significant potential in both defense and civilian sectors [31][34] Question: Can you walk us through the Q3 guidance? - Management noted that they were able to ship $10 million of the anticipated $15 million in Q2, and they see broad-based improvement in demand across various applications [39][42] Question: How did the order book look as the quarter progressed? - Management reported a significant improvement in bookings compared to the previous year, with April being a strong month for bookings [58] Question: Can you comment on the systems business and its recent performance? - Management expressed excitement about the Clean Laser acquisition and noted increases in other areas of systems, including micro machining and welding [60][62] Question: What is the competitive environment in the medical business? - Management stated that they have a strong position in the urology market and are continuing to grow their share with new customer acquisitions [64][66]

Core Insights - IPG Photonics reported quarterly earnings of $0.3 per share, exceeding the Zacks Consensus Estimate of $0.1 per share, but down from $0.45 per share a year ago, resulting in an earnings surprise of +200.00% [1] - The company achieved revenues of $250.72 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 11.88%, although this is a decrease from $257.64 million year-over-year [2] - IPG has surpassed consensus EPS estimates three times over the last four quarters and topped revenue estimates four times in the same period [2] Future Outlook - The sustainability of IPG's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $232.77 million, and for the current fiscal year, it is $0.93 on revenues of $928.72 million [7] - The Zacks Rank for IPG is currently 2 (Buy), indicating expectations for the stock to outperform the market in the near future [6] Industry Context - The Lasers Systems and Components industry, to which IPG belongs, is currently ranked in the top 1% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8]

Q2 2025 Financial Performance - Revenue reached $250.7 million[3], a decrease of 3% year-over-year compared to $257.6 million in Q2 2024[14] - Adjusted EBITDA was $31.5 million[3], down 20% from $39.4 million in Q2 2024[14] - Adjusted EPS was $0.30[3], a 42% decrease compared to $0.52 in Q2 2024[14] - Gross margin was 37.3%[14], consistent with Q2 2024 but down from 39.4% in Q1 2025[14] Business Highlights - The company shipped $10 million of the $15 million in orders impacted by tariffs[3] - The company bought back $30 million of shares[3] - Sales in North America improved sequentially, driven by higher revenue in cutting, cleaning, medical, and advanced applications[13] - Sales in Asia increased due to growth in welding, cutting, and advanced applications[13] Q3 2025 Outlook - Revenue is projected to be between $225 million and $255 million[18] - Adjusted gross margin is expected to be between 36% and 38%[18] - Adjusted EPS is forecasted to be between $0.05 and $0.35[18] - Adjusted EBITDA is expected to be between $22 million and $36 million[18]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section summarizes IPG Photonics' Q2 2025 financial performance, management commentary, and key highlights, noting sequential revenue improvement [Second Quarter 2025 Financial Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance%20Overview) IPG Photonics reported Q2 2025 financial results above expectations, with sequential revenue improvement driven by demand recovery, and a book-to-bill ratio of approximately one Financial Performance Summary (in millions, except percentages and per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (YoY) | | :----------------------------- | :------------------------------- | :------------------------------- | :----------- | :------------------------------- | :------------------------------- | :----------- | | Revenue | $250.7 million | $257.6 million | (3)% | $478.5 million | $509.7 million | (6)% | | Gross margin | 37.3% | 37.3% | 0% pts | 38.3% | 38.0% | +0.3% pts | | Operating income | $0.1 million | $12.0 million | (99)% | $1.9 million | $31.1 million | (94)% | | Operating margin | — % | 4.7% | (4.7)% pts | 0.4% | 6.1% | (5.7)% pts | | Net income | $6.6 million | $20.2 million | (67)% | $10.4 million | $44.3 million | (77)% | | Earnings per diluted share | $0.16 | $0.45 | (64)% | $0.24 | $0.97 | (75)% | | Adjusted gross margin | 37.8% | 37.5% | +0.3% pts | 38.9% | 38.2% | +0.7% pts | | Adjusted EBITDA | $31.5 million | $39.4 million | (20)% | $64.2 million | $79.6 million | (19)% | | Adjusted earnings per diluted share | $0.30 | $0.52 | (42)% | $0.61 | $1.03 | (41)% | [Management Comments](index=1&type=section&id=Management%20Comments) Dr. Mark Gitin, CEO, expressed satisfaction with Q2 results exceeding expectations, noting sequential revenue improvement driven by general industrial and e-mobility markets - Revenue improved sequentially, driven by modest demand recovery in general industrial and e-mobility markets[3](index=3&type=chunk) - Excluding divestitures, Q2 2025 marked the first year-over-year revenue increase since 2022[3](index=3&type=chunk) - Reported strong growth in medical and advanced applications, supported by a customer win[3](index=3&type=chunk) - Launching a directed energy system for counter-UAV applications[3](index=3&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Second quarter revenue was **$251 million**, a **3%** year-over-year decrease due to divestitures, but showed growth excluding them, with materials processing sales decreasing **6%** YoY and other applications sales increasing **21%** YoY Key Financial Metrics (in millions, except percentages) | Metric | Q2 2025 | Q2 2024 | Change YoY | | :----------------------------- | :------ | :------ | :--------- | | Revenue | $251M | $257.6M | (3)% | | Materials Processing Sales | 85% of total revenue | - | (6)% | | Other Applications Sales | - | - | 21% | | Emerging Growth Products Sales | 54% of total revenue | 51% (prior quarter) | +3% pts QoQ | | Asia Sales | - | - | 14% | | North America Sales | - | - | (4)% | | Europe Sales | - | - | (24)% | | GAAP Gross Margin | 37.3% | 37.3% | Flat | | Adjusted EBITDA | $31.5M | $39.4M | (20)% | | Adjusted EPS | $0.30 | $0.52 | (42)% | - Changes in foreign exchange rates increased revenue growth by approximately **1%**[4](index=4&type=chunk) - IPG spent **$15 million** on capital expenditures and **$30 million** on share repurchases during the second quarter[5](index=5&type=chunk) [Business Outlook and Financial Guidance](index=2&type=section&id=Business%20Outlook%20and%20Financial%20Guidance) This section outlines IPG Photonics' Q3 2025 financial guidance, including revenue, margin, earnings, and associated risks [Q3 2025 Guidance](index=2&type=section&id=Q3%202025%20Guidance) For the third quarter of 2025, IPG Photonics anticipates revenue between **$225 million** and **$255 million**, with an adjusted gross margin of **36%** to **38%** - The second quarter book-to-bill ratio was approximately **one** on the higher revenue[6](index=6&type=chunk) - Continued demand is observed into the third quarter despite uncertainty related to tariffs[6](index=6&type=chunk) Q3 2025 Financial Guidance (in millions, except per share data and percentages) | Metric | Q3 2025 Guidance | | :----------------------------- | :--------------- | | Revenue | $225M - $255M | | Adjusted Gross Margin | 36% - 38% | | Operating Expenses | $89M - $91M | | Adjusted Earnings per Diluted Share | $0.05 - $0.35 | | Adjusted EBITDA | $22M - $36M | [Risk Factors and Assumptions](index=2&type=section&id=Risk%20Factors%20and%20Assumptions) The provided guidance is subject to various risks, including trade policy changes, product demand fluctuations, order cancellations, competition, tariffs, currency fluctuations, and general economic conditions - Actual results may differ from guidance due to factors such as trade policy changes, product demand, order cancellations, competition, tariffs, currency fluctuations, and general economic conditions[8](index=8&type=chunk) - Guidance assumes exchange rates relative to the U.S. dollar of euro **0.85**, Japanese yen **144**, and Chinese yuan **7.16**[8](index=8&type=chunk) [Company Information and Disclosures](index=2&type=section&id=Company%20Information%20and%20Disclosures) This section provides supplemental financial information, conference call details, company overview, and a safe harbor statement [Supplemental Financial Information & Conference Call](index=2&type=section&id=Supplemental%20Financial%20Information%20%26%20Conference%20Call) Additional unaudited financial information is available on the company's investor relations website, and a conference call was held on August 5, 2025, to discuss the financial results - Additional supplemental financial information is available in the unaudited Financial Data Workbook and Second Quarter 2025 Earnings Call Presentation on investor.ipgphotonics.com[9](index=9&type=chunk) - A conference call was held on August 5, 2025, at 10:00 am ET, with a live webcast and archive available on the investor relations website[10](index=10&type=chunk) [About IPG Photonics Corporation](index=2&type=section&id=About%20IPG%20Photonics%20Corporation) IPG Photonics Corporation is a global leader in high-power fiber lasers and amplifiers, primarily serving materials processing and other diverse applications - IPG Photonics Corporation is the leader in high-power fiber lasers and amplifiers[11](index=11&type=chunk) - Products are primarily used in materials processing and other diverse applications[11](index=11&type=chunk) - Mission is to develop innovative laser solutions delivering superior performance, reliability, and usability at a lower total cost of ownership[11](index=11&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) The Safe Harbor Statement clarifies that forward-looking statements in the release involve inherent risks and uncertainties, outlining numerous factors that could cause actual results to differ materially - Statements relating to future plans, events, or performance are forward-looking and involve risks and uncertainties[12](index=12&type=chunk) - Factors that could cause actual results to differ materially include business conditions in served markets, general economic conditions, international operations risks, trade controls and tariffs, market penetration, foreign currency fluctuations, fixed costs, competition, acquisitions, inventory write-downs, intellectual property claims, supply chain interruptions, and government regulations[12](index=12&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated statements of operations, balance sheets, and cash flows, detailing financial position and performance [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024, detailing revenue, cost of sales, gross profit, operating expenses, operating income, and net income Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $250,721 | $257,645 | $478,514 | $509,654 | | Cost of sales | $157,148 | $161,459 | $295,129 | $315,932 | | Gross profit | $93,573 | $96,186 | $183,385 | $193,722 | | Operating expenses: | | | | | | Sales and marketing | $25,552 | $22,487 | $49,982 | $45,485 | | Research and development | $29,937 | $27,487 | $58,273 | $56,868 | | General and administrative | $34,882 | $31,602 | $67,690 | $62,760 | | Loss on foreign exchange | $3,098 | $3,244 | $5,509 | $4,919 | | Total operating expenses | $93,469 | $84,146 | $181,454 | $162,582 | | Operating income | $104 | $12,040 | $1,931 | $31,140 | | Net income | $6,605 | $20,154 | $10,363 | $44,253 | | Diluted EPS | $0.16 | $0.45 | $0.24 | $0.97 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing the company's assets, liabilities, and total equity Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | **ASSETS** | | | | Cash and cash equivalents | $359,184 | $620,040 | | Short-term investments | $540,414 | $310,152 | | Accounts receivable, net | $201,038 | $171,131 | | Inventories | $303,841 | $284,780 | | Total current assets | $1,474,156 | $1,430,995 | | Property, plant and equipment, net | $621,352 | $588,375 | | Total assets | $2,379,448 | $2,289,264 | | **LIABILITIES AND EQUITY** | | | | Accounts payable | $41,522 | $35,385 | | Accrued expenses and other current liabilities | $170,790 | $152,048 | | Total current liabilities | $216,952 | $205,019 | | Total liabilities | $274,896 | $264,793 | | Total IPG Photonics Corporation stockholders' equity | $2,104,552 | $2,024,471 | | Total liabilities and equity | $2,379,448 | $2,289,264 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, categorizing cash flows into operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :----------------------------- | :----------------------------- | | Net income | $10,363 | $44,253 | | Net cash provided by operating activities | $11,229 | $108,054 | | Net cash (used in) provided by investing activities | $(261,516) | $308,644 | | Net cash used in financing activities | $(34,457) | $(210,228) | | Effect of changes in exchange rates on cash and cash equivalents | $23,888 | $(604) | | Net (decrease) increase in cash and cash equivalents | $(260,856) | $205,866 | | Cash and cash equivalents — End of period | $359,184 | $720,540 | [Supplemental Schedule of Non-GAAP Financial Measures (Unaudited)](index=7&type=section&id=Supplemental%20Schedule%20of%20Non-GAAP%20Financial%20Measures%20(Unaudited)) This section details the company's non-GAAP financial measures, including definitions, rationale, and reconciliations to GAAP [Use of Non-GAAP Adjusted Financial Information](index=7&type=section&id=Use%20of%20Non-GAAP%20Adjusted%20Financial%20Information) This section defines and explains the company's use of non-GAAP financial measures, presented as supplemental information to enhance understanding of financial performance by excluding certain non-recurring or non-cash items - Non-GAAP financial measures are provided as supplemental information to enhance understanding of the Company's financial performance and should not be considered a substitute for GAAP measures[19](index=19&type=chunk) - Adjusted gross profit, adjusted operating income, adjusted EBITDA, and adjusted net income exclude non-recurring, infrequent, or unusual charges, including acquisition and integration charges, amortization of acquisition-related intangibles, foreign exchange gains/losses, and gain/loss on disposal of assets/divestiture[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - Management uses non-GAAP measures to evaluate operating results and trends by eliminating items that might obscure comparisons or reduce forecasting ability[25](index=25&type=chunk) - A quantitative reconciliation of forward-looking Non-GAAP adjusted EPS and adjusted EBITDA to GAAP is not provided due to the inherent difficulty in estimating the timing or amount of certain significant items[28](index=28&type=chunk) [Reconciliation of Gross Profit to Adjusted Gross Profit, Adjusted Gross Margin](index=9&type=section&id=Reconciliation%20of%20Gross%20Profit%20to%20Adjusted%20Gross%20Profit%2C%20Adjusted%20Gross%20Margin) This section provides a detailed reconciliation of GAAP gross profit to adjusted gross profit and adjusted gross margin for the three and six months ended June 30, 2025, and 2024, highlighting adjustments for amortization of acquisition-related intangibles and acquisition and integration charges Reconciliation of Gross Profit to Adjusted Gross Profit, Adjusted Gross Margin (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Gross profit | $93,573 | $96,186 | $183,385 | $193,722 | | Gross margin | 37.3% | 37.3% | 38.3% | 38.0% | | Amortization of acquisition-related intangibles | $1,061 | $440 | $2,077 | $928 | | Acquisition and integration charges | $260 | — | $482 | — | | Adjusted gross profit | $94,894 | $96,626 | $185,944 | $194,650 | | Adjusted gross margin | 37.8% | 37.5% | 38.9% | 38.2% | [Reconciliation of Operating Income to Adjusted Operating Income](index=9&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Adjusted%20Operating%20Income) This section reconciles GAAP operating income to adjusted operating income for the three and six months ended June 30, 2025, and 2024, by adding back amortization of acquisition-related intangibles, acquisition and integration charges, and loss on foreign exchange Reconciliation of Operating Income to Adjusted Operating Income (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Operating income | $104 | $12,040 | $1,931 | $31,140 | | Amortization of acquisition-related intangibles | $2,594 | $1,377 | $5,096 | $2,802 | | Acquisition and integration charges | $1,068 | — | $2,059 | — | | Loss on foreign exchange | $3,098 | $3,244 | $5,509 | $4,919 | | Gain on sale of assets | — | — | — | $(6,776) | | Adjusted operating income | $6,864 | $16,661 | $14,595 | $32,085 | [Reconciliation of Net Income to Adjusted EBITDA](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) This section provides a reconciliation from GAAP net income to EBITDA and then to adjusted EBITDA for the three and six months ended June 30, 2025, and 2024, by adjusting for various non-cash and non-recurring items Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $6,605 | $20,154 | $10,363 | $44,253 | | Interest income, net | $(8,001) | $(12,778) | $(15,445) | $(26,955) | | Provision for income taxes | $1,666 | $4,858 | $8,523 | $14,361 | | Depreciation | $12,172 | $13,309 | $23,728 | $27,236 | | Amortization | $3,654 | $2,010 | $7,439 | $4,270 | | EBITDA | $16,096 | $27,553 | $34,608 | $63,165 | | Stock based compensation | $11,287 | $8,570 | $22,054 | $18,302 | | Acquisition and integration charges | $1,068 | — | $2,059 | — | | Loss on foreign exchange | $3,098 | $3,244 | $5,509 | $4,919 | | Gain on sale of assets | — | — | — | $(6,776) | | Adjusted EBITDA | $31,549 | $39,367 | $64,230 | $79,610 | [Reconciliation of GAAP to Non-GAAP Net Income, and GAAP to Non-GAAP Net Income per Share, Diluted](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Net%20Income%2C%20and%20GAAP%20to%20Non-GAAP%20Net%20Income%20per%20Share%2C%20Diluted) This section provides a reconciliation of GAAP net income to adjusted net income and adjusted net earnings per diluted share for the three and six months ended June 30, 2025, and 2024, by adjusting for various items and their tax impacts Reconciliation of GAAP to Non-GAAP Net Income, and GAAP to Non-GAAP Net Income per Share, Diluted (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $6,605 | $20,154 | $10,363 | $44,253 | | Amortization of acquisition-related intangibles | $2,594 | $1,377 | $5,096 | $2,802 | | Acquisition and integration charges | $1,068 | — | $2,059 | — | | Loss on foreign exchange | $3,098 | $3,244 | $5,509 | $4,919 | | Certain discrete tax items | $275 | $(85) | $4,889 | $1,912 | | Tax impact of non-GAAP adjustments | $(710) | $(1,075) | $(1,858) | $(342) | | Adjusted net income | $12,930 | $23,615 | $26,058 | $46,768 | | Adjusted net earnings per diluted share | $0.30 | $0.52 | $0.61 | $1.03 | | Weighted average diluted shares outstanding | 42,577 | 45,012 | 42,720 | 45,601 | [Reconciliation of GAAP to Non-GAAP Effective Tax Rate](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Effective%20Tax%20Rate) This section reconciles the GAAP effective tax rate to the non-GAAP adjusted tax rate for the three and six months ended June 30, 2025, and 2024, by accounting for discrete tax items and the net impact of non-GAAP adjustments Reconciliation of GAAP to Non-GAAP Effective Tax Rate (in percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Tax rate | 20% | 19% | 45% | 25% | | Discrete tax items | (3)% | — % | (26)% | (3)% | | Net impact of non-GAAP adjustments | (3)% | 1% | (2)% | (1)% | | Adjusted tax rate | 14% | 20% | 17% | 21% | - During the first fiscal quarter of 2025, the Company refined its methodology to report non-GAAP measures, recasting prior period non-GAAP financial measures to conform to the current presentation[35](index=35&type=chunk)

Leadership Appointments - IPG Photonics Corporation announced five senior leadership appointments to advance its growth strategy [1] - Dr. Paulus Bucher appointed as Senior Vice President of Global Operations, focusing on operational efficiency and effectiveness [2] - Jennifer Kartono appointed as Senior Vice President, Chief Human Resources Officer, aiming to build a high-performing team and strengthen organizational capability [3] - Andrey Mashkin promoted to Vice President and General Manager of Global Lasers, responsible for the development and growth of laser products [4] - Mira Sahney joined as Senior Vice President, Global Laser Systems, overseeing integrated laser solutions for various applications [5] - Dr. Alex Schoenfelder appointed as Senior Vice President and General Manager of Global Components, responsible for laser diodes and optics [6] Company Vision and Strategy - CEO Dr. Mark Gitin emphasized the importance of collaboration and innovation among the new leadership team to expand the business and enter new markets [7] - The company aims to execute with speed, serve customers with excellence, and drive profitable growth [7] Company Overview - IPG Photonics is a leader in high-power fiber lasers and amplifiers, primarily used in materials processing [9] - The company's mission is to develop innovative laser solutions that enhance productivity and reduce costs for end users [9] - IPG is headquartered in Marlborough, Massachusetts, with over 30 facilities worldwide [9]

Core Insights - IPG Photonics Corporation reported a revenue of $250.7 million for Q2 2025, a decrease of 3% year-over-year, but noted a modest demand recovery in general industrial and e-mobility markets [2][3][4] - The company achieved a book-to-bill ratio of approximately one, indicating stable demand despite uncertainties related to tariffs [7][8] - Management highlighted a year-over-year revenue increase excluding divestitures, marking the first such increase since 2022, driven by growth in medical and advanced applications [3][4] Financial Performance - Revenue for the first half of 2025 was $478.5 million, down 6% from $509.7 million in the same period of 2024 [2] - Gross margin remained flat at 37.3% year-over-year, while adjusted EBITDA decreased by 20% to $31.5 million [5][2] - Net income for Q2 2025 was $6.6 million, a decline of 67% compared to $20.2 million in Q2 2024, with diluted earnings per share dropping to $0.16 from $0.45 [2][5] Revenue Breakdown - Materials processing sales, which accounted for 85% of total revenue, decreased by 6% year-over-year, while other applications saw a 21% increase driven by medical and advanced applications [4] - Emerging growth products represented 54% of total revenue, up from 51% in the previous quarter, with a notable 14% increase in sales in Asia [4][5] Business Outlook - For Q3 2025, IPG expects revenue between $225 million and $255 million, with adjusted gross margin projected between 36% and 38% [8] - The company anticipates adjusted earnings per diluted share in the range of $0.05 to $0.35 and adjusted EBITDA between $22 million and $36 million [8]