LASR Q2 Earnings Surpass Estimates on Strong A&D Growth

nLight LASR reported better-than-expected second-quarter 2026 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate.

nLIGHT reported second-quarter 2026 non-GAAP earnings of 15 cents per share, up 150% from 6 cents a year ago. The figure surpassed the Zacks Consensus Estimate of 14 cents by 7.1%.

Revenues of $82.6 million increased 33.8% year over year and beat the consensus estimate of $79 million by 5.2%. Results benefited from strong aerospace and defense (A&D) demand, with A&D revenues climbing 41% to a record $57.3 million.

LASR's Product Revenues Reach a Record

Product revenues increased 45.4% year over year to a record $59.4 million. Development revenues rose 11.1% to $23.2 million, supported by continued execution across multiple defense programs.

Within A&D, record product revenues of $34.1 million surged 72% year over year. Management cited progress on the HELSI-2 directed-energy program, higher munitions sales and execution across other directed-energy and laser-sensing programs.

nLIGHT's Commercial Markets Advance

Commercial revenues, comprising industrial and microfabrication markets, totaled $25.3 million, up 20% from the year-ago quarter. Microfabrication revenues rose 17% to $13.3 million as order patterns remained healthy.

Industrial revenues increased 24% year over year to $12 million. Results benefited from stronger additive-manufacturing demand and higher sales related to last-time purchases of cutting and welding products. The company is exiting its legacy cutting and welding markets and does not expect material revenues from them in the second half of 2026.

LASR Posts Healthy Product Margins

GAAP gross margin expanded to 31.1% from 29.9% a year earlier. Products gross margin improved to 41.2% from 38.5%, aided by favorable sales mix and better absorption of fixed manufacturing costs on higher production volumes.

Development gross margin contracted to 5.6% from 13.1%, reflecting contract mix and the timing of program deliverables. Non-GAAP total gross margin was 32.6%, while non-GAAP products gross margin reached 42.4%.

nLIGHT's Operating Costs Increase

Non-GAAP operating expenses increased to $19.5 million from $16.8 million on higher employee compensation and research and development material spending.

Adjusted EBITDA nearly doubled to $10.7 million from $5.6 million.

LASR Strengthens Cash Generation

nLIGHT generated record operating cash flow of $20.7 million in the second quarter. Capital expenditures totaled $4.9 million.

The company ended the second quarter of 2026 with $330.8 million in cash, restricted cash and investments. During the second quarter, LASR repaid the $20 million previously drawn on its credit facility, leaving no outstanding balance on the line of credit.

LASR Provides Guidance for Q3 2026

For the third quarter of 2026, nLIGHT expects revenues between $63 million and $73 million. The outlook includes about $43 million of product revenues and $25 million of development revenues at the midpoint assumptions. The Zacks Consensus Estimate is pegged at $66.01 million, indicating a year-over-year decline of 1.1%.

The guidance excludes roughly $17 million of product revenues that the company otherwise expected to ship during the quarter. Management attributed the delay mainly to difficulties obtaining certain materials, particularly optics, from Chinese suppliers. The disruption is primarily affecting commercial products, although some defense products have indirect exposure.

LASR expects third-quarter gross margin between 24% and 30%, with product gross margin of 34-40% and development gross margin of approximately 8%. Adjusted EBITDA is projected between $1 million and $7 million.

Meanwhile, the recently awarded Joint Laser Weapon System program is expected to begin contributing revenues in the third quarter and ramp more meaningfully in 2027. Management expects the program to more than offset the eventual decline in HELSI-2 revenues as nLIGHT advances its directed-energy portfolio.

Zacks Rank and Stocks to Consider

Currently, LASR carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Lumentum LITE, Applied Materials AMAT and Analog Devices ADI, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Lumentum have surged 127.4% year to date. The Zacks Consensus Estimate for LITE’s fiscal 2026 earnings is pegged at $8.19 per share, up by 5 cents over the past 30 days, indicating an increase of 297.6% year over year.

Shares of Applied Materials have jumped 105.2% year to date. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.17 per share, up by 3 cents over the past seven days, indicating a rise of 29.2% year over year.

Analog Devices shares have surged 39.1% year to date. The Zacks Consensus Estimate for ADI’s fiscal 2026 earnings is pegged at $12.42 per share, up by 10 cents over the past 30 days, indicating an increase of 59.4% year over year.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research