Core Insights - nLight experienced significant growth in 2025, particularly in the aerospace and defense (A&D) sector, with full-year revenue reaching $261 million, a 32% increase year-over-year [3][7] - The company reported a record adjusted EBITDA of $23.5 million for the year, driven by improved gross margins and operational efficiencies [2][7] Financial Performance - Full-year gross margin improved to approximately 30%, up from 17% in 2024, due to favorable business mix and manufacturing execution [2] - Fourth-quarter revenue was a record $81.2 million, representing a 71% increase year-over-year, with A&D revenue specifically up 87% [10] - The company achieved a GAAP net loss of $4.9 million for the quarter, significantly reduced from a loss of $25 million in the same quarter the previous year [14] Strategic Focus - nLight is shifting its focus from legacy industrial markets to directed energy and laser sensing, anticipating a near-term revenue headwind of $25–30 million from this transition [6][15] - The company has raised over $190 million to fund a new 50,000 square foot manufacturing facility and to support capacity expansion in directed energy and sensing applications [17] Program Milestones - Key milestones include progress on the HELSI-2 program, a $171 million initiative to develop a 1 MW high-energy laser, with expected completion in late 2026 [8] - The company successfully delivered a 50 kW laser module for the DE M-SHORAD program, contributing to record defense product revenue in 2025 [8][11] Market Outlook - nLight's funded backlog was approximately $162 million at year-end 2025, with guidance for Q1 2026 revenue expected to be between $70 million and $76 million [5][18] - The company anticipates continued growth in A&D, potentially in double digits for 2026, supported by backlog and new contract opportunities [20]

Financial Data and Key Metrics Changes - Revenues for the full year of 2025 were $261 million, up 32% year-over-year [4] - Total revenue in the fourth quarter was a record $81.2 million, an increase of 71% compared to $47.4 million in the fourth quarter of 2024 [15] - Gross margins increased to approximately 30% in 2025, up from 17% in 2024 [14] - Adjusted EBITDA for the fourth quarter was a positive $10.7 million, compared to a loss of $11.3 million in the same quarter last year [21] Business Line Data and Key Metrics Changes - Aerospace and defense (A&D) revenue was a record $175 million for the full year, growing 60% year-over-year [4] - A&D revenue in the fourth quarter was $56.3 million, up 87% year-over-year [15] - Development revenue in the fourth quarter was $26.1 million, an increase of 66% year-over-year [15] - Revenue from commercial markets was $24.9 million, an increase of 44% year-over-year [16] Market Data and Key Metrics Changes - The company experienced strong growth in directed energy and laser sensing markets, with significant contract awards expected in the coming months [5][9] - The company began shipping to several new international customers during 2025, indicating a growing pipeline of global opportunities [9] Company Strategy and Development Direction - The company plans to use proceeds from a recent equity offering to build a new 50,000 square foot manufacturing facility and invest in supply chain and staffing [11] - The decision to exit cutting and welding markets is aimed at focusing resources on A&D markets, which are expected to drive growth [12][34] - The company is optimistic about new contract wins in directed energy, laser sensing, and advanced manufacturing [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth for 2026, supported by a funded backlog of approximately $162 million [22] - The company anticipates revenue for the first quarter of 2026 to be in the range of $70 million-$76 million [24] - Management highlighted the importance of staying vigilant and responsive to market demands, particularly in defense [65] Other Important Information - The company raised over $190 million through a follow-on equity offering, enhancing its cash position to over a quarter billion dollars [11][22] - The exit from cutting and welding is expected to result in a revenue headwind of approximately $25 million-$30 million for 2026 [36] Q&A Session Summary Question: Expectations for orders in directed energy - Management indicated that there will be a mix of new programs, continuation of existing programs, and low-rate production orders [29] Question: Near-term prospects for sensing programs - Existing laser sensing programs are in full-rate production and will drive more revenue in the near term, while new programs will contribute over the next year or two [31] Question: Decision to exit cutting and welding - The decision was made to focus on more attractive growth opportunities in directed energy and sensing, despite some near-term margin headwinds [34] Question: Revenue headwind from exiting cutting and welding - The revenue headwind will start in 2026, with a significant impact expected in the second half of the year [36] Question: Growth expectations for A&D business - The A&D business is expected to grow double digits in 2026, with current backlog supporting this growth [40] Question: Capacity addition in Longmont - The capacity expansion is driven by anticipated strong market demand, with investments being made ahead of demand [55]