nLIGHT(US:LASR)2025-05-08 22:00Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $51.7 million, a 16% increase from $44.5 million in Q1 2024 [13] - Aerospace and Defense (A&D) revenue was $32.7 million, up 50.4% year over year and 8.6% sequentially [13] - Gross margin for Q1 2025 was 26.7%, compared to 16.8% in Q1 2024, with a benefit of approximately $1.9 million related to duty reclaim [15][16] - GAAP net loss for Q1 2025 was $8.1 million or $0.16 per share, an improvement from a net loss of $13.8 million or $0.29 per share in the same quarter a year ago [17] Business Line Data and Key Metrics Changes - Defense product sales grew more than 150% year over year, significantly contributing to the overall revenue increase [4][13] - Commercial markets, including industrial and microfabrication, saw revenue of $19 million, a decrease of 16.8% year over year but up 9.9% sequentially [14] Market Data and Key Metrics Changes - The defense sector represented over 63% of total sales in Q1 2025, up from 49% in the same quarter a year ago [4] - The company expects A&D revenue to grow at least 25% year over year in 2025, driven by a strong pipeline of opportunities [9][13] Company Strategy and Development Direction - The company is focused on vertical integration in the directed energy market, leveraging its technology stack to deliver high-performance lasers [6][7] - The Healthy II program, a $171 million DoD initiative, is expected to be a significant growth driver through 2026 [6] - The company is optimistic about long-term growth in metal additive manufacturing, particularly in aerospace and defense [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of A&D revenue, citing strong demand and a growing pipeline of opportunities [9][12] - Concerns were raised about the potential impact of tariffs on margins, particularly in the industrial fiber laser business [26][27] - The company does not expect a significant long-term impact from tariffs on defense business but acknowledges potential short-term margin variability [11][20] Other Important Information - The company ended Q1 2025 with total cash and investments of $117 million and drew down $20 million from its $40 million line of credit [17][18] - Inventory increased to $43.8 million, primarily to support the forecasted ramp in directed energy products [18] Q&A Session Summary Question: Visibility on A&D product sales beyond Q2 - Management indicated strong visibility due to the Healthy II program and increasing orders contributing to defense revenue growth [22][25] Question: Impact of tariffs on different business segments - The industrial fiber laser business is expected to be most affected by tariffs, with potential indirect impacts on demand across commercial markets [26][28] Question: Changes in A&D outlook and conditions for guidance increase - Management noted continued traction in both US and international markets for directed energy applications, with tariffs adding uncertainty [32] Question: Update on commercial market outlook - The outlook remains unchanged, with expectations of a decline of 15% to 20% in the commercial segment, despite a better quarter in microfabrication [42][44] Question: Gross margin expectations and tariff-related risks - Management acknowledged the complexity of passing through costs and indicated a potential impact on gross margins depending on the tariff situation [46][48] Question: Funded and unfunded backlog updates - No major updates were provided, but management expressed satisfaction with the current level of backlog and pipeline development [49]