Laser company nLIGHT (NASDAQ: LASR) beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 71.3% year on year to $81.19 million. On top of that, next quarter’s revenue guidance ($73 million at the midpoint) was surprisingly good and 6.3% above what analysts were expecting. Its non-GAAP profit of $0.14 per share was 27.3% above analysts’ consensus estimates.

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“2025 was an exceptional year for nLIGHT, with strong revenue growth driven by continued strength in our A&D markets as we executed well against existing programs and won new awards that helped drive additional growth,” commented Scott Keeney, nLIGHT’s President and Chief Executive Officer.

Company Overview

Founded by a former CEO and Harvard-educated entrepreneur Scott Keeneyn, nLIGHT (NASDAQ: LASR) offers semiconductor and fiber lasers to the industrial, aerospace & defense, and medical sectors.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, nLIGHT’s sales grew at a sluggish 3.2% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a rough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. nLIGHT’s annualized revenue growth of 11.6% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

nLIGHT also breaks out the revenue for its most important segments, Laser Products and Advanced Developments, which are 67.9% and 32.1% of revenue. Over the last two years, nLIGHT’s Laser Products revenue (lasers, amplifiers, and directed energy products) averaged 22.6% year-on-year growth while its Advanced Developments revenue (R&D contracts) averaged 28.3% growth.

This quarter, nLIGHT reported magnificent year-on-year revenue growth of 71.3%, and its $81.19 million of revenue beat Wall Street’s estimates by 5.9%. Company management is currently guiding for a 41.3% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11% over the next 12 months, similar to its two-year rate. This projection is commendable and suggests the market is baking in success for its products and services.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

nLIGHT’s high expenses have contributed to an average operating margin of negative 19% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, nLIGHT’s operating margin rose by 1 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

nLIGHT’s operating margin was negative 6.7% this quarter. The company's consistent lack of profits raise a flag.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

nLIGHT’s EPS grew at a decent 8.4% compounded annual growth rate over the last five years, higher than its 3.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of nLIGHT’s earnings can give us a better understanding of its performance. As we mentioned earlier, nLIGHT’s operating margin expanded by 1 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For nLIGHT, its two-year annual EPS growth of 68.2% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.

In Q4, nLIGHT reported adjusted EPS of $0.14, up from negative $0.30 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects nLIGHT’s full-year EPS of $0.24 to grow 13.1%.

Key Takeaways from nLIGHT’s Q4 Results

We were impressed by nLIGHT’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. Investors were likely hoping for more, and shares traded down 6% to $57.75 immediately following the results.

Is nLIGHT an attractive investment opportunity at the current price? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).