Laser technology company nLIGHT saw its stock surge 22% after its first-quarter earnings report revealed both revenue and profit exceeded market expectations, primarily driven by robust demand for high-energy lasers in the defense sector.

**Earnings Highlights** The report showed nLIGHT's Q1 revenue reached $62 million, an 18% year-over-year increase, surpassing analysts' expectations of $58 million. Adjusted loss per share was $0.05, better than the market's anticipated loss of $0.12 and an improvement from the $0.10 loss in the same period last year. The gross margin was 28.5%, up from 25.0% a year earlier, primarily benefiting from product mix optimization and improved production efficiency.

**Defense Business as Growth Engine** Revenue from the defense business grew 45% year-over-year to $28 million, accounting for 45% of total revenue. The company stated that multiple high-energy laser directed-energy weapon projects have entered the production phase, including the U.S. Army's IFPC-HEL program and the Navy's ODIN program. The defense order backlog increased to a record $110 million, up 20% from the previous quarter. Management noted on the earnings call that with ongoing conflicts in the Middle East, military procurement priorities for anti-drone and anti-rocket laser systems have significantly increased.

**Industrial and Medical Businesses** Industrial business revenue grew 5% year-over-year to $25 million, with stable demand for lasers used in semiconductor and photovoltaic equipment but soft orders in the consumer electronics sector. Medical aesthetic business revenue increased 10% year-over-year to $9 million.

**Financial Outlook** nLIGHT expects Q2 revenue to be between $62 million and $65 million, higher than the market's expectation of $61 million. The full-year revenue guidance was raised to a range of $245 million to $255 million. The company maintains its target of achieving adjusted EBITDA breakeven for the full year.

As of Thursday's close, nLIGHT's stock price was $12.85, bringing its year-to-date gain to approximately 65%. Analysts noted that nLIGHT is a pure-play in the defense laser sector, and its unique position in the directed-energy weapon supply chain benefits from the global cycle of rising defense spending. Among the six analysts currently covering the stock, four have a Buy rating, two have a Hold rating, and the median price target is $15.