nLIGHT Q2 2025 slides: record A&D revenue drives 22% growth, outlook raised

nLIGHT Inc . (NASDAQ:LASR) shares surged over 20% in premarket trading Friday after the laser manufacturer’s Q2 2025 earnings presentation revealed significant revenue growth driven by record performance in its aerospace and defense segment. The company also raised its full-year outlook for the A&D business, signaling continued momentum in this high-growth area.

Quarterly Performance Highlights

nLIGHT reported total revenue of $61.7 million for the second quarter, representing a 22% year-over-year increase and a 19% sequential improvement from Q1. The company’s performance exceeded the high end of its guidance across key metrics including revenue, gross margin, and adjusted EBITDA.

The standout performer was the aerospace and defense (A&D) segment, which posted record revenue of $40.7 million, jumping 49% year-over-year and 24% quarter-over-quarter. This segment now represents approximately 66% of nLIGHT’s total revenue, highlighting the company’s successful strategic pivot toward defense applications.

As shown in the following chart of quarterly revenue by market segment, A&D has become the dominant revenue driver for nLIGHT, while industrial markets continue to face challenges:

"Execution drives upside" was a key message in the presentation, as the company demonstrated its ability to capitalize on growing demand in the directed energy market. The A&D segment’s growth was balanced between product revenue, which increased 75% year-over-year to $19.8 million, and development revenue, which rose 30% to $20.9 million.

Detailed Financial Analysis

nLIGHT’s gross margin performance showed significant improvement, with total gross margin reaching 29.9% and product gross margin expanding to 38.5%. This represents a substantial improvement from the 30.3% product gross margin reported in the same quarter last year.

The following chart illustrates the company’s consistent improvement in product gross margins over the past several quarters:

The company maintained strong expense discipline while investing in growth opportunities. Non-GAAP operating expenses totaled $16.8 million in Q2, with R&D expenses of $9.0 million and SG&A expenses of $7.7 million. This disciplined approach to spending, combined with revenue growth and margin expansion, contributed to adjusted EBITDA of $5.6 million for the quarter.

nLIGHT’s balance sheet remains robust with $113.7 million in cash and marketable securities. The company has also made significant improvements in working capital management, reducing days sales outstanding (DSO) from 73 days in Q2 2023 to 59 days in Q2 2025, and days of inventory (DOI) from 143 days to 87 days over the same period.

The following charts demonstrate the company’s improved balance sheet and working capital metrics:

While A&D continues to drive growth, the company’s other segments showed mixed performance. Microfabrication revenue increased 11% year-over-year to $11.3 million, but industrial revenue declined 25% year-over-year to $9.7 million, reflecting ongoing challenges in commercial markets.

Forward-Looking Statements

Based on the strong performance in its A&D segment, nLIGHT has raised its 2025 outlook for A&D revenue growth to at least 40% year-over-year, up significantly from its previous guidance of 25%. This increase reflects the company’s confidence in continued execution against existing programs and a growing pipeline of new opportunities in directed energy applications.

For the third quarter of 2025, nLIGHT provided the following guidance:

The company expects Q3 2025 revenue to range between $62 million and $67 million, with a midpoint of $64.5 million representing further sequential growth. Products revenue is projected at approximately $45 million, with A&D revenue expected to increase sequentially. Advanced development revenue is forecast at approximately $19 million.

Gross margin is expected to be between 24% and 30%, with products gross margin ranging from 32% to 36%. Adjusted EBITDA is projected to be between $2.0 million and $6.0 million for the third quarter.

The company’s key messages for the quarter emphasize its successful execution and strategic focus on the high-growth A&D segment:

nLIGHT’s stock performance reflects investor enthusiasm about the company’s strategic direction and improved financial results. After closing at $20.47 on August 7, the stock surged 20.91% to $24.75 in premarket trading on August 8, continuing the positive momentum seen after previous quarterly results. With its strengthened position in the aerospace and defense market and improved operational efficiency, nLIGHT appears well-positioned to sustain its growth trajectory through the remainder of 2025.

Full presentation:

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