Enlight (LASR) Q4 2025: A&D Revenue Soars 87% as Focus Shifts to Defense Growth
Enlight’s Q4 marked a decisive pivot toward defense, with aerospace and defense (A&D) revenue surging and commercial market exposure deliberately reduced. The company’s exit from cutting and welding, coupled with a major capital raise, signals a clear strategy to deepen its position in high-growth defense and sensing markets. Capacity expansion and a robust backlog provide visibility, but execution risk rises as Enlight transitions from legacy to next-generation programs.
Summary
- Defense-First Realignment: Enlight is concentrating resources on A&D and advanced manufacturing, moving away from legacy industrial segments.
- Margin Expansion via Mix Shift: Improved product mix and operational discipline drove substantial gross margin gains.
- Execution Risk Rises: Growth now hinges on timely contract wins and ramping new programs amid sector complexity.
Performance Analysis
Enlight delivered a record fourth quarter, with total revenue rising sharply, led by aerospace and defense (A&D), the company’s core growth engine. A&D accounted for a substantial majority of quarterly sales, reflecting both product and development contract momentum. The product mix shift—industry term for changing the proportion of sales from different business lines—was a primary lever for margin improvement, as defense programs carry higher profitability than legacy industrial applications.
Gross margin expanded to over 30%, a material improvement from the prior year, driven by scale, manufacturing execution, and winding down structurally weaker segments. Commercial markets, including microfabrication and industrial, grew modestly but remain a smaller, less resilient contributor. The decision to exit cutting and welding, which had become a “melting ice cube,” removed a revenue stream with positive but unsustainable margins, reallocating talent and capital to higher-growth, higher-margin domains.
- A&D Outperformance: Revenue up 87% YoY, with both product and development contracts driving growth and visibility.
- Industrial Exit Impact: Cutting and welding wind-down introduces a $25–30 million annual revenue headwind, but is not expected to materially impair margin trajectory.
- Cash and Capital Strength: Post-equity raise, cash exceeds $250 million, supporting facility expansion and supply chain investments.
Operational leverage was evident in both adjusted EBITDA and cash flow, as Enlight’s cost structure flexed with volume. The company’s funded backlog of $162 million underpins near-term growth but requires continued contract conversion to sustain momentum into 2027.
Executive Commentary
"2025 was an exceptional year for Enlight, with strong outperformance in our A&D markets, which had a record fourth quarter. Our accelerated revenue growth also drove significant year-over-year improvements in our gross margins, adjusted EBITDA, and cash flow, demonstrating the leverage that is inherent in our model."
Scott Keeney, Chairman and CEO
"Strong revenue growth, a favorable mix of business, and excellent execution from our manufacturing and operations team drove meaningful expansion to our gross margins, which increased to approximately 30% in 2025, up from 17% in 2024. At the same time, we managed to reduce our non-GAAP operating expenses, which enabled our incremental gross margins to flow through to adjusted EBITDA."
Joe Corso, Chief Financial Officer
Strategic Positioning
1. Defense Market Focus
Enlight is doubling down on defense, prioritizing directed energy—high-power lasers for military applications—and laser sensing, which provide missile guidance and countermeasures. These segments are characterized by long contract cycles, high technical barriers, and multi-year revenue visibility. The company’s vertical integration, from chip to full laser module, is a differentiator in winning major U.S. and allied contracts.
2. Exit from Legacy Industrial
The decision to exit cutting and welding reflects a strategic pivot away from commoditized, low-growth markets. While these segments offered positive margins, their long-term outlook was weak due to overcapacity and shifting industry dynamics. Enlight is reallocating engineering and operational talent to support defense and advanced manufacturing, particularly additive manufacturing (metal 3D printing), which is more aligned with A&D customers.
3. Capital Deployment and Capacity Expansion
With over $250 million in cash, Enlight is investing ahead of demand by building out a new 50,000 square foot manufacturing facility in Colorado. This expansion is designed to enable simultaneous production of multiple high-energy laser systems, supporting anticipated contract wins and scaling delivery for key defense programs. Management also highlighted supply chain investments and potential M&A as ongoing capital allocation priorities.
4. Backlog and Pipeline Visibility
The $162 million funded backlog provides a baseline for 2026, but management emphasized that new contract wins—especially in directed energy and sensing—are critical for sustaining double-digit growth. The timing of awards and ramp of new programs will determine whether Enlight can exceed baseline projections, especially as legacy commercial revenues decline.
5. Execution Complexity and Risk Management
Management is acutely aware of execution risk, given the technical complexity and dependency on government program schedules. The CEO’s emphasis on vigilance and detail orientation signals recognition that growth will require flawless delivery on multiple, concurrent defense programs, as well as adaptability to shifting Department of Defense priorities.
Key Considerations
This quarter marks a strategic inflection for Enlight, as it consolidates around defense and advanced manufacturing while managing the operational and financial implications of exiting legacy businesses. Investors should focus on the company’s ability to convert pipeline opportunities, scale new facilities, and maintain cost discipline as the business model matures.
Key Considerations:
- Defense Program Ramp: Success in delivering on the $171 million high-energy laser program and new classified sensing contracts will be pivotal for future growth.
- Margin Sustainability: Ongoing gross margin improvements depend on maintaining a favorable product mix and efficient factory utilization as volumes scale.
- Industrial Wind-Down: The exit from cutting and welding removes a revenue source but is expected to have limited impact on overall profitability due to resource redeployment.
- Capital Allocation Discipline: Large cash reserves must be deployed effectively, balancing facility build-out, supply chain resilience, and potential M&A without diluting returns.
- Backlog Conversion: Growth beyond baseline depends on timely contract awards and successful transition of prototypes to production orders.
Risks
Execution risk is elevated as Enlight shifts from legacy to next-generation A&D programs, with timing and delivery of government contracts remaining uncertain. Dependence on a concentrated set of large defense awards introduces volatility, and any delay or disruption could impact revenue and margin trajectories. Additionally, capital deployment risk rises with the scale of new investments in manufacturing and supply chain capabilities.
Forward Outlook
For Q1 2026, Enlight guided to:
- Revenue of $70 million to $76 million, with product revenue at $54 million and development revenue at $19 million.
- Overall gross margin of 27% to 32%, product gross margin of 34% to 39%, and development gross margin of approximately 8%.
For full-year 2026, management maintained a growth outlook:
- Double-digit A&D growth supported by backlog, with upside if new contracts are secured in the first half.
Management highlighted several factors that will shape the year:
- Timing of new prototype and production awards in directed energy and sensing
- Ability to successfully ramp new manufacturing capacity and integrate redeployed talent
Takeaways
Enlight’s transformation into a defense-centric business is underway, with operational leverage and capital strength positioning the company for multi-year growth—if execution matches ambition.
- Defense-Driven Growth: The A&D segment is now the primary value driver, with new contract awards and program execution determining future upside.
- Industrial Exit Prunes Weakness: Cutting and welding wind-down clarifies the business mix, reducing exposure to cyclical and commoditized markets.
- Contract Conversion Is Critical: Investors should watch the pace of new awards and backlog conversion as the key determinant of near- and long-term performance.
Conclusion
Enlight’s Q4 2025 results confirm a decisive strategic pivot: the company is now a defense-first, high-growth platform, with operational discipline and capital resources to match. The next phase will test its ability to deliver on complex programs and translate a robust pipeline into durable, profitable growth.
Industry Read-Through
Enlight’s results underscore a wider sector shift: defense and aerospace suppliers with scalable, vertically integrated laser and sensing technologies are gaining share as government priorities accelerate around non-kinetic and directed energy solutions. Exiting commoditized industrial segments is increasingly seen as necessary for sustaining growth and margin expansion. The pace of government contract awards, supply chain resilience, and ability to pre-invest in capacity are now critical differentiators across the defense technology landscape. Peers in adjacent markets should note: capital discipline and focus on high-barrier, high-visibility programs are emerging as keys to long-term outperformance.