nLIGHT(US:LASR)2023-11-04 12:13Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was $50.6 million, down from $60.1 million in Q3 2022, indicating a year-over-year decline [27] - Product revenue decreased to $38.1 million from $48 million in the same period last year [27] - Gross margin was 20%, down from 22% in Q3 2022, while product gross margin fell to 24% from 26% [27] - Non-GAAP operating expenses were $16 million, a decrease of $3.3 million compared to $19.3 million in Q3 2022 [28] - Net loss on a non-GAAP basis was $4.9 million, compared to a loss of $5.1 million in Q3 2022 [29] Business Line Data and Key Metrics Changes - Aerospace and Defense revenue declined 6% year-over-year to $19 million, representing 38% of total revenue [5] - Core defense products revenue decreased 20% year-over-year to approximately $6.5 million due to supply chain challenges [13] - Industrial revenue declined 12% year-over-year to $19.6 million, but increased by approximately 18% compared to the previous quarter [14] - Microfabrication revenue fell 32% year-over-year to $12 million, representing 24% of total revenue [15] Market Data and Key Metrics Changes - The company is experiencing increased demand for directed energy laser technology from foreign allies, with customers shifting from developing their own lasers to purchasing from nLIGHT [11] - The company noted aggressive pricing strategies from domestic Chinese laser manufacturers in international markets [21] Company Strategy and Development Direction - The company is transitioning manufacturing from Shanghai to the U.S. and a contract manufacturer in Thailand, aiming to enhance operational efficiency [10] - nLIGHT is focusing on expanding its directed energy footprint and has secured additional options on the HELSI-2 contract, increasing its total value to $171 million [18][19] - The company is investing in new product development and has secured design wins in the industrial sector, particularly in the EV battery industry [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expects resolution by the end of the year, which should positively impact revenue in 2024 [55] - The company remains optimistic about long-term growth opportunities in defense and industrial sectors, particularly in additive manufacturing [34][36] - Management highlighted the importance of maintaining a strong balance sheet, ending the quarter with approximately $112 million in cash and no debt [9][38] Other Important Information - Adjusted EBITDA for Q3 2023 was a negative $1.9 million, compared to negative $1.4 million in Q3 2022 [37] - The company expects Q4 2023 revenue to be in the range of $45 million to $50 million [42] Q&A Session Summary Question: Opportunities for programs of record in defense business - Management indicated that there are no large programs of record currently, but significant development programs are ongoing, with potential for future awards contingent on demonstration success [44] Question: Market activity and HELSI contract details - Management confirmed that the HELSI-2 contract was awarded based on successful milestones from HELSI-1, and there are additional opportunities being pursued [60] Question: Changes in demand for commercial business - Management noted that demand remains relatively muted, with customers building more inventory during COVID and now operating with less safety stock [32] Question: Supply chain constraints and revenue impact - Management expects supply chain issues to resolve by early 2024, which should allow for revenue recovery from previously missed opportunities [55][76]