Results

nLIGHT Inc.

05/08/2026 | Press release | Distributed by Public on 05/08/2026 10:22

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the following words: "ability," "anticipate," "attempt," "believe," "can be," "continue," "could," "depend," "enable," "estimate," "expect," "extend," "grow," "if," "intend," "likely," "may," "objective," "ongoing," "plan," "possible," "potential," "predict," "project," "propose," "rely," "should," "target," "will," "would" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.
These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements include, but are not limited to, statements about: our business model and strategic plans; our expectations regarding manufacturing; our future financial performance; demand for our semiconductor and fiber laser solutions; our ability to develop innovative products; our expectations regarding product volumes and the introduction of new products; our technology and new product research and development activities; the impact of new import and export controls; the impact of changes in regulations and customs, tariffs and trade barriers, or the perception that any of them could occur; the impact of inflation; the impact of seasonality; the effect on our business of litigation to which we are or may become a party; and the sufficiency of our existing liquidity sources to meet our cash needs.
You should refer to the "Risk Factors" section of this report for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, which although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Overview
nLIGHT, Inc. is a leading provider of high-power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications. We design, develop, manufacture, integrate and sell a range of high-power semiconductor lasers and fiber lasers and related components, modules and subsystems that are typically integrated into laser systems or manufacturing tools built by us or our customers. We also make high energy pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser systems for directed energy and laser sensing systems for use in a wide range of commercial and defense applications. Our long history of commercial technology development and vertical integration enables us to develop products that leverage the same underlying technology across a variety of applications and markets, thereby enabling us to leverage the development of shared technologies in unique combinations to offer innovative and reliable products to customers in each of our end markets. We sell our products into three primary end markets: Aerospace and Defense, Industrial, and Microfabrication.
We operate in two reportable segments consisting of the Laser Products segment and the Advanced Development segment.
Revenues increased to $80.2 million in the three months ended March 31, 2026 compared to $51.7 million in the same period in 2025 due primarily to an increase in both product and development revenue from the Aerospace and
Defense end market. We generated net income of $0.6 million for the three months ended March 31, 2026 compared to a net loss of $8.1 million for the same period in 2025.
Factors Affecting Our Performance
Demand for our Products and Solutions
Our revenue depends largely on market conditions, competitive pressure, and achievement of design wins. We consider a design win to occur when a customer notifies us that it has selected one of our products to be incorporated into a product or system under development by such customer. In the Aerospace and Defense market, our business also depends in large part on continued investment in laser technology by the U.S. government and its allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future.
Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of ASPs of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature. We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications.
Technology and New Product Development
We invest heavily in the development of our semiconductor, fiber laser, directed energy, and laser-sensing technologies to provide solutions to our current and future customers. We anticipate that we will continue to invest in research and development to achieve our technology and product roadmap. Our product development is targeted to specific sectors of the market where we believe the performance of our products provides a significant benefit to our customers. We believe our close coordination with our customers regarding their future product requirements enhances the efficiency of our research and development expenditures.
Manufacturing Costs and Gross Margins
Product gross profit, in absolute dollars and gross margin, may fluctuate from period to period based on product sales mix, sales volumes, changes in ASPs, production volumes, the corresponding absorption of manufacturing overhead expenses, the cost of purchased materials, production costs and manufacturing yields. Product sales mix can affect gross profits due to variations in profitability related to product configurations and cost profiles, customer volume pricing, availability of competitive products in various markets, and new product introductions, among other factors. Even though certain of our products are built offshore by contract manufacturers, capacity utilization affects gross margin because of the fixed cost associated with our U.S.-based manufacturing capabilities. Change in sales and production volumes impact absorption of fixed costs, manufacturing efficiencies and production costs.
Our Development gross profit varies with the type and terms of contracts, contract volume, project mix, changes in the estimated cost of projects at completion, and successful execution on projects during the period. Most of our Development contracts have historically been structured as cost plus fixed fee due to the technical complexity of the research and development services, but we also perform work under fixed price contracts where gross margin can change from period to period based on the estimated cost of the project at completion.
Seasonality
Our quarterly revenues can fluctuate with general economic trends, the timing of capital expenditures by our customers, holidays, and general economic trends. In addition, as is typical in our industry, we tend to recognize a larger percentage of our quarterly revenues in the last month of the quarter, which may impact our working capital trends.
Global Economic Conditions
A portion of our sales are generated from products manufactured outside the United States and we sell our products globally. Changing trade dynamics, including changes in tariffs and export regulations, could disrupt our supply chain, disrupt customer sales, and increase input costs. We continue to monitor macroeconomic trends, global inflationary pressures, and uncertainties related to international trade policy, including tariff actions and regulatory shifts. For instance, in February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). In March 2026, the U.S. Court of International Trade Court issued an additional ruling stating that importers that have paid tariffs under IEEPA are
due refunds. We are currently evaluating the impact of this decision on our business, as the ultimate timing and amount of any potential refunds is uncertain and subject to further legal and regulatory developments.
Changes in global economic conditions and tariffs on goods to and from the U.S. did not have a material impact on our financial results in the three months ended March 31, 2026. However, changes in global economic conditions and uncertainty related to tariffs could increase our operational complexity, and have a negative impact on revenue and profitability in the future.
Results of Operations
The following table sets forth our operating results as a percentage of revenues for the periods indicated (which may not add up due to rounding):
Three Months Ended March 31,
2026 2025
Revenue:
Products 72.6 % 69.1 %
Development 27.4 30.9
Total revenue 100.0 100.0
Cost of revenue:
Products 40.9 45.9
Development 26.0 27.4
Total cost of revenue 66.9 73.3
Gross profit 33.1 26.7
Operating expenses:
Research and development 14.8 22.0
Sales, general, and administrative 18.8 23.3
Restructuring 0.4 -
Total operating expenses 34.0 45.3
Loss from operations (0.9) (18.6)
Other income:
Interest income 1.9 3.3
Interest expense (0.4) (0.1)
Other income, net 0.3 -
Income (loss) before income taxes 0.9 (15.4)
Income tax expense 0.1 0.3
Net income (loss) 0.8 % (15.7) %
Revenues by End Market
Our revenues by end market were as follows for the periods presented (dollars in thousands):
Three Months Ended March 31, Change
2026 % of Revenue 2025 % of Revenue $ %
Aerospace and Defense $ 55,127 68.8 % $ 32,706 63.3 % $ 22,421 68.6 %
Microfabrication 13,029 16.2 10,106 19.6 2,923 28.9
Industrial 12,025 15.0 8,856 17.1 3,169 35.8
$ 80,181 100.0 % $ 51,668 100.0 % $ 28,513 55.2 %
The increase in revenue from the Aerospace and Defense market for the three months ended March 31, 2026 compared to the same period in 2025 was driven by increased unit sales of directed energy laser products across all regions and progress on existing development contracts. The increase in revenue from the Microfabrication market for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to increased unit sales of semiconductor lasers in all regions. The increase in revenue from the Industrial markets for the three months ended March 31, 2026 compared to the same period in 2025 was the result of increased unit sales of additive fiber lasers in North America, partially offset by decreased unit sales of other industrial laser products.
Revenues by Segment
Our revenues by segment were as follows for the periods presented (dollars in thousands):
Three Months Ended March 31, Change
2026 % of Revenue 2025 % of Revenue $ %
Laser Products $ 58,202 72.6 % $ 35,678 69.1 % $ 22,524 63.1 %
Advanced Development 21,979 27.4 15,990 30.9 5,989 37.5
$ 80,181 100.0 % $ 51,668 100.0 % $ 28,513 55.2 %
The increase in Laser Products revenue for the three months ended March 31, 2026 compared to the same period in 2025 was the result of increased units sales across all end markets. The increase in Advanced Development revenue for the three months ended March 31, 2026 compared to the same period in 2025 was driven by progress on existing research and development contracts. All Advanced Development revenue is included in the Aerospace and Defense market.
Revenues by Geographic Region
Our revenues by geographic region were as follows for the periods presented (dollars in thousands):
Three Months Ended March 31, Change
2026 % of Revenue 2025 % of Revenue $ %
North America $ 59,255 73.9 % $ 36,085 69.8 % $ 23,170 64.2 %
Asia Pacific 11,872 14.8 9,128 17.7 2,744 30.1
EMEA(1)
9,054 11.3 6,455 12.5 2,599 40.3
$ 80,181 100.0 % $ 51,668 100.0 % $ 28,513 55.2 %
(1) EMEA consists of Europe, the Middle East, and Africa.
Geographic revenue information is based on the location to which we ship our products. The increase in North America Revenue for the three months ended March 31, 2026 was due to increased revenue across all end markets, with revenue from the Aerospace and Defense market representing most of the increase. The increases in Asia Pacific and EMEA revenues for the three months ended March 31, 2026 compared to the same period in 2025 were the result of increased revenues from the Aerospace and Defense and Microfabrication markets, partially offset by decreased revenue from the Industrial market.
Cost of Revenues and Gross Margin
Products cost of revenue consists primarily of manufacturing materials, labor, shipping and handling costs, duties, and manufacturing-related overhead. We order materials and supplies based on backlog and forecasted customer orders. We expense all warranty costs and inventory provisions as cost of revenues.
Development cost of revenue consists primarily of materials, labor, subcontracting costs, and an allocation of indirect costs including overhead and general and administrative.
Our gross profit and gross margin were as follows for the periods presented (dollars in thousands):
Three Months Ended March 31,
2026 2025
Products Development Total Products Development Total
Gross profit $ 25,392 $ 1,121 $ 26,513 $ 11,954 $ 1,845 $ 13,799
Gross margin 43.6 % 5.1 % 33.1 % 33.5 % 11.5 % 26.7 %
The increase in products gross margin for the three months ended March 31, 2026 compared to the same period in 2025 was driven primarily by sales mix and the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales. The decrease in development gross margin for the three months ended March 31, 2026 compared to the same period in 2025 was primarily the result of an increase in revenue from cost-plus fixed fee (CPFF) contracts relative to firm fixed price (FFP) contracts. CPFF contracts generally have a lower average gross margin than FFP contracts.
Operating Expenses
Our operating expenses were as follows for the periods presented (dollars in thousands):
Research and Development
Three Months Ended March 31, Change
2026 2025 $ %
Research and development $ 11,846 $ 11,374 $ 472 4.1 %
The increase in research and development expense for the three months ended March 31, 2026 compared to the same period in 2025 was driven by an increase in stock-based compensation of $0.5 million, an increase in employee compensation due to an increase in headcount, partially offset by a decrease in project-related expenses.
Sales, General and Administrative
Three Months Ended March 31, Change
2026 2025 $ %
Sales, general, and administrative $ 15,091 $ 12,035 $ 3,056 25.4 %
The increase in sales, general and administrative expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to an increase in stock-based compensation of $3.9 million and an increase in employee compensation, partially offset by a higher allocation of costs from sales, general and administrative to development projects, and decrease in bad debt recoveries.
Interest Income
Three Months Ended March 31, Change
2026 2025 $ %
Interest income $ 1,562 $ 1,688 $ (126) (7.5)%
The decrease in interest income, for the three months ended March 31, 2026 compared to the same period in 2025 was driven primarily by a decrease in income earned from marketable securities, partially offset by an increase in income earned from cash equivalents.
Interest income is primarily earned from our marketable securities (U.S. treasuries), recognized using the effective yield method, and cash equivalents (money market securities).
Interest (expense)
Three Months Ended March 31, Change
2026 2025 $ %
Interest expense $ (300) $ (48) $ (252) 525.0%
The increase in interest (expense), for the three months ended March 31, 2026 compared to the same period in 2025 was driven primarily by an increase in interest expense on line of credit (LOC). Interest expense on the LOC for the three months ended March 31, 2025 was immaterial due to the timing of the draw.
Other Income, net
Three Months Ended March 31, Change
2026 2025 $ %
Other income, net $ 155 $ 14 $ 141 1,007.1%
Other income, net is primarily attributable to changes in net realized and unrealized foreign exchange transactions resulting from currency rate fluctuations.
Income Tax Expense
Three Months Ended March 31, Change
2026 2025 $ %
Income tax expense $ 53 $ 137 $ (84) (61.3) %
We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, China and South Korea. While our tax expense is largely dependent on the geographic mix of earnings related to our foreign operations, we also record tax expense for uncertain tax positions taken and associated penalties and interest. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States, and a partial valuation allowance in China as of March 31, 2026. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates and deductibility of certain costs and expenses by jurisdiction.
The decrease in income tax expense for the three months ended March 31, 2026, compared to the same period in 2025 was driven by a decrease in income from our foreign operations. Our tax expense is dependent on the geographic mix of earnings and primarily related to our foreign operations.
Liquidity and Capital Resources
We had cash and cash equivalents and restricted cash of $298.5 million and $99.0 million as of March 31, 2026 and December 31, 2025, respectively. In addition, we had marketable securities of $34.4 million and $34.9 million at March 31, 2026 and December 31, 2025, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $199.0 million from December 31, 2025 to March 31, 2026.
For the three months ended March 31, 2026, our principal sources of liquidity was from our public offering and cash collected from customers. We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from period to period and will depend on many factors, including the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our products and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property
rights. From time to time, we may explore additional financing sources which could include equity, equity-linked and debt financing arrangements.
The following table summarizes our cash flows for the periods presented (in thousands):
Three Months Ended March 31,
2026 2025
Net cash provided by (used in) operating activities $ 9,683 $ (20)
Net cash used in investing activities (1,368) (2,433)
Net cash provided by financing activities 191,235 18,765
Effect of exchange rate changes on cash (38) 56
Net increase in cash, cash equivalents and restricted cash $ 199,512 $ 16,368
Net Cash Provided by Operating Activities
During the three months ended March 31, 2026, net cash provided by operating activities was $9.7 million, which was the result of $0.6 million net income and non-cash expenses totaling $15.1 million related primarily to depreciation, amortization, and stock-based compensation, offset by cash used in net working capital of $6.0 million. The cash used in net working capital in the three months ended March 31, 2026 was driven by $8.2 million increase in prepaid expenses and other current assets, $2.5 million decrease in accrued and other long-term liabilities, $1.6 million decrease in accounts payable, and $0.6 million decrease in lease liabilities. The uses of cash were offset by a $2.7 million decrease in accounts receivable, $2.6 million increase in deferred revenues, $1.3 million decrease in inventory, and $0.2 million decrease in other assets, net.
Net Cash Used in Investing Activities
During the three months ended March 31, 2026, net cash used in investing activities was $1.4 million, which was driven by net capital expenditures of $2.1 million, offset by the net proceeds from maturities and sales of marketable securities of $0.7 million.
Net Cash Provided by Financing Activities
During the three months ended March 31, 2026, net cash provided by financing activities was $191.2 million, which consisted of proceeds from our public offering, net of underwriting discounts and offering costs, of $191.3 million and proceeds from stock option exercises of $0.2 million, offset by tax payments related to stock award issuances of $0.2 million.
Credit Facilities
We have a $40.0 million revolving LOC with Banc of California dated September 24, 2018, which is secured by our assets and matures on September 24, 2027. The LOC agreement contains restrictive and financial covenants, including a minimum total cash covenant, and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 5.75% on the LOC at March 31, 2026 is based on the Prime Rate, minus a margin based on our liquidity levels.
As of March 31, 2026, $20.0 million was outstanding on the LOC and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.
Contractual Obligations
There have been no material changes to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
nLIGHT Inc. published this content on May 08, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 08, 2026 at 16:22 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]