Laser company nLIGHT (NASDAQ: LASR) reported Q2 CY2026 results topping the market’s revenue expectations, with sales up 33.8% year on year to $82.59 million. The company expects next quarter’s revenue to be around $68 million, close to analysts’ estimates. Its non-GAAP profit of $0.15 per share was in line with analysts’ consensus estimates.
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nLIGHT (LASR) Q2 CY2026 Highlights:
- Revenue: $82.59 million vs analyst estimates of $78.93 million (33.8% year-on-year growth, 4.6% beat)
- Adjusted EPS: $0.15 vs analyst estimates of $0.14 (in line)
- Adjusted EBITDA: $10.73 million vs analyst estimates of $11 million (13% margin, 2.4% miss)
- Revenue Guidance for Q3 CY2026 is $68 million at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for Q3 CY2026 is $4 million at the midpoint, below analyst estimates of $7.70 million
- Operating Margin: -4.3%, up from -6.9% in the same quarter last year
- Market Capitalization: $4.26 billion
StockStory’s Take
nLIGHT’s second quarter saw strong revenue growth, surpassing Wall Street’s expectations, but the market reacted negatively due to concerns over future earnings and supply chain disruptions. Management attributed the robust sales to increased demand in both defense and advanced manufacturing, with significant contributions from new directed energy contracts and a growing pipeline in laser sensing applications. CEO Scott Keeney highlighted the importance of recent defense awards and record revenue from aerospace and defense segments. However, the company also faced rising operating expenses tied to higher compensation and research investments, which weighed on margins despite improved year-over-year performance.
Looking forward, nLIGHT’s guidance is shaped by ongoing supply constraints, particularly the availability of critical optical materials from Chinese suppliers. Management cautioned that these issues could persist for several quarters, primarily impacting commercial product shipments. CFO Joseph Corso noted that while defense programs like the Joint Laser Weapon System (JLWS) are largely insulated from these delays, uncertainty remains regarding the resolution of these supply bottlenecks. Keeney emphasized continued customer demand, stating the company is actively qualifying new suppliers and redesigning products to mitigate risks, but acknowledged the outlook for the coming quarters is clouded by these logistical challenges.
Key Insights from Management’s Remarks
Management highlighted that record results were fueled by strong defense and advanced manufacturing demand, but escalating supply chain issues and rising operating expenses created new headwinds.
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Defense contract momentum: The recent Department of War Joint Laser Weapon System (JLWS) award significantly expanded nLIGHT’s pipeline, positioning the company for multiyear growth in directed energy systems. Management described JLWS as a critical step toward large-scale laser weapon deployment, citing the scalability of the HADES platform and coherent beam combination technologies as key differentiators.
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Aerospace and defense product surge: Aerospace and defense product revenue grew sharply, driven by progress in HELSI-2 and munitions programs. Management highlighted strong demand for high-energy lasers and kinetic weapon components, as global restocking and new mission applications fueled customer orders.
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Commercial segment transition: While commercial revenue increased, management noted that growth was aided by additive manufacturing demand and last-time buys in cutting and welding products. The company is exiting its legacy cutting and welding markets, expecting minimal revenue from these segments in the second half of the year.
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Supply chain disruptions: nLIGHT faced new delays sourcing optical materials from China due to increased export scrutiny. Although these components represent a small portion of the bill of materials, supply interruptions have prevented the company from meeting full customer demand in Q3, especially for commercial products.
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Cost management and investment: Operating expenses rose due to higher compensation and increased spending on research and development materials. Management expects expenses to remain elevated as the company invests in new programs and navigates ongoing supply chain complexities.
Drivers of Future Performance
nLIGHT’s outlook is shaped by persistent supply chain headwinds, evolving demand in defense, and continued investment in research and development.
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Supply chain resolution timeline: The company’s Q3 forecast assumes ongoing delays in sourcing optical materials, mainly affecting commercial shipments. Management is pursuing alternative suppliers and redesigns but cannot predict when the disruption will end, introducing risk to both revenue and margin projections for the remainder of the year.
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Defense backlog and program ramp-up: Management expects strong ongoing demand for defense lasers, with the JLWS contract set to offset the tapering of HELSI-2 contributions starting in 2027. While most defense programs remain insulated from supply chain challenges, some commercial components may indirectly affect certain defense shipments if delays persist.
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Commercial market uncertainty: Although demand for industrial and microfabrication lasers remains high, the company’s exit from legacy cutting and welding and the current supply disruptions could lead to uneven revenue in these segments. Management is monitoring customer patience and potential competitive risks if delays extend.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be watching (1) the pace of supply chain recovery and the company’s success in qualifying new suppliers, (2) the initial revenue impact and execution milestones of the JLWS directed energy contract, and (3) demand stability in additive manufacturing and microfabrication as legacy commercial segments wind down. Continued progress in defense applications and the outcome of planned product redesigns will also be key signposts.
nLIGHT currently trades at $58.94, down from $75.44 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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