nLIGHT, Inc. (LASR) Bundle
Understanding nLIGHT, Inc. (LASR) Revenue Streams
Understanding nLIGHT, Inc.’s Revenue Streams
The revenue analysis for nLIGHT, Inc. focuses on its primary revenue sources, year-over-year growth, segment contributions, and significant changes in revenue streams.
Breakdown of Primary Revenue Sources
nLIGHT generates revenue through two main segments: Laser Products and Advanced Development. The revenue from these segments for the three and nine months ended September 30, 2024, is detailed below:
| Segment | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Laser Products | $41,132 | $38,103 | $3,029 | 7.9% |
| Advanced Development | $14,997 | $12,531 | $2,466 | 19.7% |
| Total Revenue | $56,129 | $50,634 | $5,495 | 10.9% |
For the nine months ended September 30, 2024, total revenue was $151,167 compared to $158,029 in 2023, marking a decrease of $6,862 or 4.3%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates are as follows:
- Three Months Ended September 30, 2024: 10.9% increase compared to the same period in 2023.
- Nine Months Ended September 30, 2024: 4.3% decrease compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions of each segment to overall revenue were:
| Segment | Revenue ($) | Percentage of Total Revenue (%) |
|---|---|---|
| Laser Products | $104,960 | 69.4% |
| Advanced Development | $46,207 | 30.6% |
| Total Revenue | $151,167 | 100% |
Analysis of Significant Changes in Revenue Streams
In the three months ended September 30, 2024, the Laser Products segment saw a revenue increase driven by the Microfabrication and Aerospace and Defense markets. However, for the nine months, it experienced a decline primarily due to decreased sales in the Industrial market.
The Advanced Development segment's growth was fueled by development contracts awarded in late 2023. Revenue from this segment has shown resilience, recording a 17.8% increase for the nine-month period compared to the previous year.
Geographic Revenue Distribution
The geographic distribution of revenue for the nine months ended September 30, 2024 is as follows:
| Region | Revenue ($) | Percentage of Total Revenue (%) |
|---|---|---|
| North America | $100,696 | 66.6% |
| China | $8,877 | 5.9% |
| Rest of World | $41,594 | 27.5% |
| Total Revenue | $151,167 | 100% |
The increase in North America revenue was largely driven by the Aerospace and Defense market, while revenue from the Rest of World segment decreased significantly, primarily due to lower demand in the Industrial market.
A Deep Dive into nLIGHT, Inc. (LASR) Profitability
A Deep Dive into nLIGHT, Inc.'s Profitability
Gross Profit Margin is a key indicator of profitability. For the three months ended September 30, 2024, the gross profit was $12,550 thousand, resulting in a gross margin of 22.4%. In comparison, for the same period in 2023, the gross profit was $9,938 thousand with a gross margin of 19.6%. For the nine months ended September 30, 2024, the gross profit totaled $31,888 thousand, translating to a gross margin of 21.1%, down from $36,309 thousand and 23.0% margin in 2023.
| Period | Gross Profit (in $ thousands) | Gross Margin (%) |
|---|---|---|
| Q3 2024 | $12,550 | 22.4% |
| Q3 2023 | $9,938 | 19.6% |
| 9M 2024 | $31,888 | 21.1% |
| 9M 2023 | $36,309 | 23.0% |
Operating Profit Margin is another critical metric. For the three months ended September 30, 2024, the loss from operations was ($11,826) thousand, yielding an operating margin of (21.0)%. This compares to a loss of ($12,583) thousand and an operating margin of (24.7)% for the same quarter in 2023. For the nine-month period ending September 30, 2024, the loss from operations was ($39,188) thousand, representing an operating margin of (25.9)%, compared to ($32,306) thousand and (20.5)% in 2023.
| Period | Operating Loss (in $ thousands) | Operating Margin (%) |
|---|---|---|
| Q3 2024 | ($11,826) | (21.0)% |
| Q3 2023 | ($12,583) | (24.7)% |
| 9M 2024 | ($39,188) | (25.9)% |
| 9M 2023 | ($32,306) | (20.5)% |
Net Profit Margin reflects the overall profitability after all expenses. For the three months ended September 30, 2024, the net loss was ($10,335) thousand, resulting in a net profit margin of (18.4)%. In Q3 2023, the net loss was ($11,879) thousand, with a margin of (23.5)%. For the nine months ended September 30, 2024, the net loss was ($35,830) thousand, equating to a net profit margin of (23.6)%, compared to ($28,432) thousand and (18.0)% in 2023.
| Period | Net Loss (in $ thousands) | Net Profit Margin (%) |
|---|---|---|
| Q3 2024 | ($10,335) | (18.4)% |
| Q3 2023 | ($11,879) | (23.5)% |
| 9M 2024 | ($35,830) | (23.6)% |
| 9M 2023 | ($28,432) | (18.0)% |
When comparing profitability ratios with industry averages, the company’s gross margin of 22.4% in Q3 2024 is below the industry average of approximately 30%. The operating margin of (21.0)% also indicates a struggle compared to the industry average of a positive margin. The net profit margin further illustrates the challenges faced by the company, with an average margin in the industry typically around 10% to 15%.
In terms of operational efficiency, the company reported total operating expenses of $24,349 thousand for Q3 2024, which accounted for 43.4% of revenues. This is a decrease from 44.4% in Q3 2023, indicating some improvements in cost management. The research and development expenses increased by 5.4% year-over-year for the three months ended September 30, 2024, totaling $11,328 thousand, reflecting the company's ongoing investment in innovation.
| Period | Total Operating Expenses (in $ thousands) | Operating Expenses as % of Revenue |
|---|---|---|
| Q3 2024 | $24,349 | 43.4% |
| Q3 2023 | $22,446 | 44.4% |
| 9M 2024 | $65,882 | (Total %) |
| 9M 2023 | $70,000 | (Total %) |
Debt vs. Equity: How nLIGHT, Inc. (LASR) Finances Its Growth
Debt vs. Equity: How nLIGHT, Inc. Finances Its Growth
As of September 30, 2024, nLIGHT, Inc. reported total liabilities of $56.0 million compared to total assets of $291.3 million, indicating a solid asset base relative to its liabilities.
Overview of the Company's Debt Levels
nLIGHT, Inc. has both short-term and long-term debt obligations. The company’s current liabilities consist of:
- Accounts payable: $16.5 million
- Accrued liabilities: $14.1 million
- Deferred revenues: $2.9 million
- Current portion of lease liabilities: $2.6 million
The total current liabilities amount to $36.1 million. Long-term liabilities include:
- Long-term lease liabilities: $10.0 million
- Other long-term liabilities: $4.2 million
The total long-term liabilities add up to $14.2 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
nLIGHT, Inc.'s debt-to-equity ratio stands at approximately 0.24, calculated from total liabilities of $56.0 million and total stockholders' equity of $235.3 million. This ratio is significantly lower than the industry average, which typically ranges from 0.5 to 1.0 for technology companies, indicating a conservative approach to leveraging debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
nLIGHT has a revolving line of credit of $40.0 million with Banc of California, which was amended on September 27, 2024, to extend the maturity date to September 24, 2027. The credit facility bears an unused credit fee of 0.25% and has interest rates based on the Prime Rate. As of September 30, 2024, no amounts were outstanding under this line of credit.
How the Company Balances Between Debt Financing and Equity Funding
nLIGHT, Inc. balances its capital structure by utilizing both debt and equity financing. For the nine months ended September 30, 2024, the company reported:
- Net cash provided by operating activities: $1.5 million
- Net cash used in investing activities: $10.9 million
- Net cash used in financing activities: $2.4 million
The company’s equity financing includes additional paid-in capital of $537.8 million as of September 30, 2024, which reflects its ability to raise funds through equity markets.
| Financial Metric | Amount (in millions) |
|---|---|
| Total Assets | $291.3 |
| Total Liabilities | $56.0 |
| Total Stockholders' Equity | $235.3 |
| Debt-to-Equity Ratio | 0.24 |
| Revolving Line of Credit | $40.0 |
| Net Cash from Operating Activities | $1.5 |
| Net Cash Used in Investing Activities | $10.9 |
| Net Cash Used in Financing Activities | $2.4 |
Assessing nLIGHT, Inc. (LASR) Liquidity
Assessing nLIGHT, Inc.'s Liquidity
Current and Quick Ratios: As of September 30, 2024, the current ratio is calculated at approximately 2.31 with current assets of $113.8 million and current liabilities of $49.3 million. The quick ratio, which excludes inventory, stands at about 1.49.
Analysis of Working Capital Trends: Working capital as of September 30, 2024, amounts to $64.5 million, reflecting a decrease from $70.4 million at December 31, 2023. This change indicates a tightening of liquidity despite a positive current ratio.
Cash Flow Statements Overview
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net cash provided by operating activities | $1,528 | $9,687 |
| Net cash used in investing activities | $(10,923) | $(13,163) |
| Net cash used in financing activities | $(2,369) | $(2,062) |
| Effect of exchange rate changes on cash | $12 | $(198) |
| Net decrease in cash, cash equivalents, and restricted cash | $(11,752) | $(5,736) |
Cash Flow Trends: The net cash provided by operating activities saw a significant decline from $9.7 million in 2023 to $1.5 million in 2024, primarily due to a net loss of $35.8 million. Cash used in investing activities decreased slightly, while cash used in financing activities increased marginally.
Liquidity Concerns or Strengths
Potential Liquidity Concerns: The decrease in cash and cash equivalents from $53.5 million at December 31, 2023, to $41.7 million at September 30, 2024, raises concerns about the sustainability of liquidity. The reliance on cash collected from customers remains critical for future operations.
Strengths: The company maintains a $40.0 million revolving line of credit, which was recently amended to extend the maturity date to September 24, 2027, providing additional liquidity options.
Is nLIGHT, Inc. (LASR) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company is critical for investors looking to determine if the stock is overvalued or undervalued. Key metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios provide insights into the company's financial health.
Price-to-Earnings (P/E) Ratio
The P/E ratio for nLIGHT, Inc. as of September 30, 2024, is calculated as follows:
- Stock Price: $6.20
- EPS (Earnings Per Share): -$0.75
- P/E Ratio: Not applicable (negative earnings)
Price-to-Book (P/B) Ratio
The P/B ratio gives investors an idea of how much they are paying for each dollar of net assets. As of September 30, 2024:
- Book Value per Share: $4.86
- Current Share Price: $6.20
- P/B Ratio: 1.28
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To assess the valuation through the EV/EBITDA ratio:
- Market Capitalization: $299.63 million
- Total Debt: $0
- Cash and Cash Equivalents: $41.7 million
- EBITDA (for the last twelve months): -$35.83 million
- Enterprise Value: $257.93 million
- EV/EBITDA Ratio: Not applicable (negative EBITDA)
Stock Price Trends
Over the last twelve months, the stock price of nLIGHT, Inc. has shown the following trends:
- 12-Month High: $9.50
- 12-Month Low: $5.00
- Current Price: $6.20
Dividend Yield and Payout Ratios
As of September 30, 2024, nLIGHT, Inc. does not pay a dividend:
- Dividend Yield: 0%
- Payout Ratio: Not applicable (no dividends paid)
Analyst Consensus on Stock Valuation
The consensus among analysts regarding the stock valuation is as follows:
- Buy Ratings: 2
- Hold Ratings: 5
- Sell Ratings: 1
| Metric | Value |
|---|---|
| P/E Ratio | Not applicable |
| P/B Ratio | 1.28 |
| EV/EBITDA Ratio | Not applicable |
| 12-Month High | $9.50 |
| 12-Month Low | $5.00 |
| Current Price | $6.20 |
| Dividend Yield | 0% |
| Payout Ratio | Not applicable |
| Buy Ratings | 2 |
| Hold Ratings | 5 |
| Sell Ratings | 1 |
Key Risks Facing nLIGHT, Inc. (LASR)
Key Risks Facing nLIGHT, Inc.:
Overview of Internal and External Risks:
nLIGHT, Inc. faces various internal and external risks that impact its financial health. Key external risks include intense competition in the laser technology market, which has led to pricing pressures. In the nine months ended September 30, 2024, the company reported a decrease in revenue from the Industrial segment by $19.6 million or 35.0%, highlighting the competitive landscape.
Additionally, regulatory changes and trade policies, particularly in international markets like China, can significantly affect operations. Revenue from China decreased by $257,000 or 2.8% in the nine months ended September 30, 2024.
Operational, Financial, or Strategic Risks:
Recent earnings reports indicate operational risks related to production costs and supply chain disruptions. For example, the gross margin for Laser Products was reported at 28.8% for the nine months ended September 30, 2024, a decline from 30.2% in the same period of 2023, primarily due to lower production volumes.
Financially, the company reported a net loss of $35.8 million for the nine months ended September 30, 2024, compared to a net loss of $28.4 million for the same period in 2023. This increase in loss underscores the financial pressure from operational inefficiencies and market competition.
Mitigation Strategies:
To address these risks, nLIGHT has implemented various mitigation strategies, including diversifying its product offerings and expanding into new markets. The company reported an increase in revenue from the Aerospace and Defense segment by $14.7 million or 22.8% for the nine months ended September 30, 2024. This strategic focus on sectors with higher growth potential helps to offset losses in more competitive markets.
| Risk Factor | Description | Impact on Financials | Mitigation Strategy |
|---|---|---|---|
| Market Competition | Intense competition leading to pricing pressures | Revenue decrease in Industrial segment by $19.6 million | Diversification of product offerings |
| Regulatory Changes | Changes in trade policies affecting international operations | Revenue decline from China by $257,000 | Engagement with regulatory bodies |
| Operational Inefficiencies | Higher production costs and supply chain disruptions | Gross margin decline to 28.8% | Improvement in manufacturing processes |
| Financial Losses | Increased net losses impacting liquidity | Net loss of $35.8 million | Cost reduction initiatives and operational restructuring |
Future Growth Prospects for nLIGHT, Inc. (LASR)
Future Growth Prospects for nLIGHT, Inc.
Analysis of Key Growth Drivers
The company is poised for growth driven by several key factors, including product innovations, market expansions, and potential acquisitions. In the Laser Products segment, revenue from the Aerospace and Defense market saw a significant increase of $11,251 or 59.1% for the three months ended September 30, 2024, compared to the same period in 2023. This growth reflects increased market demand and higher average selling prices (ASPs).
Additionally, the Advanced Development segment reported a revenue increase of 17.8% for the nine-month period ended September 30, 2024, driven primarily by development contracts awarded in late 2023. The company’s focus on innovative technologies, particularly in semiconductor and fiber laser solutions, suggests a sustained trajectory for revenue growth.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, revenue is projected to reach approximately $200 million, reflecting a growth rate of about 5-10% compared to the previous year. Earnings estimates indicate a potential improvement in net loss margins, with anticipated losses narrowing to approximately $30 million for the fiscal year. Analysts project that with continued focus on high-margin sectors, particularly Aerospace and Defense, the company may achieve profitability by 2025.
Strategic Initiatives or Partnerships That May Drive Future Growth
Strategic partnerships with key players in the Aerospace and Defense sectors are critical for future growth. The company has recently entered into collaborations aimed at enhancing its product offerings and expanding its market reach, particularly in North America. These partnerships are expected to yield joint development projects that leverage cutting-edge laser technologies, further supporting revenue growth.
Competitive Advantages That Position the Company for Growth
nLIGHT, Inc. maintains several competitive advantages, including a strong product portfolio in the high-demand Aerospace and Defense market, which accounted for 54.0% of total revenue in Q3 2024. The company’s commitment to research and development, with an investment of $11.3 million in R&D expenses for the three months ended September 30, 2024, positions it well against competitors. Furthermore, a robust pipeline of innovative products is expected to enhance market share and drive future sales growth.
| Growth Driver | Details |
|---|---|
| Product Innovations | Increased revenue in Aerospace and Defense by $11,251 (59.1%) |
| Market Expansion | Projected revenue growth to $200 million in 2024 |
| Strategic Partnerships | New collaborations in high-margin sectors |
| R&D Investment | Investment of $11.3 million in R&D for Q3 2024 |
Overall, the combination of strong market demand, strategic initiatives, and continued investment in innovation establishes a solid foundation for future growth opportunities for the company.
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Resources:
- nLIGHT, Inc. (LASR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of nLIGHT, Inc. (LASR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View nLIGHT, Inc. (LASR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.