Executive Summary

Q3 2025 revenue and EPS beat Street: revenue $66.7M vs $63.9M consensus and non‑GAAP diluted EPS $0.08 vs ~$0.02 consensus; gross margin expanded to 31.1% and Adjusted EBITDA rose to $7.1M, driven by record Aerospace & Defense (A&D) revenue and 41% products gross margin . Q3 2025 consensus: Revenue $63.89M*, EPS $0.016*.
Guidance: Q4 2025 revenue $72–$78M (midpoint $75M) broadly in line with consensus $75.2M*, with total GM 27–32% (products GM 34–39%, development ~8%) and Adjusted EBITDA $6–$11M; management raised full‑year 2025 A&D growth to exceed prior “at least 40%” outlook .
Strategic momentum: Record A&D revenue ($45.6M) on amplifier shipments into HELSI‑2 and strength in laser sensing; signed a new $50M contract for an existing missile program; amplifiers targeted at >50% incremental gross margins, supporting structural margin expansion .
Watch‑outs: Q4 margin guide implies sequential step‑down on freight/duties (~150–200 bps) and mix; development GM fell sequentially to 6.4%; GAAP OpEx included $1.7M restructuring (China/cutting & welding) and higher SBC tied to performance shares .

Note: Consensus/estimate values marked with * are retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

Record A&D revenue and product margin leverage: “record aerospace and defense revenue of $46M… products gross margin… record 41%” underpinning “leverage… in our operating model” .
New business wins fortify 2026 pipeline: Signed “a new $50M contract for an existing long‑running missile program” in laser sensing; management highlighted a growing pipeline including Golden Dome-related opportunities .
Booked programs offset HELSI‑2 wind‑down: “Based on what we are working on today, the hole is already filled” for post‑HELSI‑2 revenue, with additional directed energy and sensing programs already won and booked for 2026 .

What Went Wrong

Development margin compression QoQ: Development GM decreased to 6.4% (from 13.1% in Q2) due to completion of smaller, higher‑margin programs in the prior quarter .
Commercial markets remain soft YoY: Commercial (industrial + microfabrication) revenue $21.2M, down 18% YoY; management does “not believe… overall demand picture has significantly changed” and expects commercial decline in 2026 .
Near‑term margin headwinds guided: Q4 GM guide down on freight/duties (~150–200 bps) and intra‑quarter mix shifts; GAAP OpEx included a $1.7M restructuring charge tied to reducing China exposure and cutting/welding activities .

Financial Results

Results vs Consensus (Q3 2025)

Metric	Q3 2025 Actual	Q3 2025 Consensus	Surprise
Revenue ($M)	66.74	63.89*	+2.85
Non-GAAP Diluted EPS ($)	0.08	0.016*	+0.064

Note: Consensus values marked with * are retrieved from S&P Global.

Quarterly Trend and YoY

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($M)	56.13	61.74	66.74
Total Gross Margin (%)	22.4%	29.9%	31.1%
GAAP Net Loss ($M)	(10.34)	(3.59)	(6.87)
GAAP Diluted EPS ($)	(0.21)	(0.07)	(0.14)
Non-GAAP Diluted EPS ($)	(0.08)	0.06	0.08
Adjusted EBITDA ($M)	(0.99)	5.55	7.11

End-Market Revenue Mix

End Market ($M)	Q3 2024	Q2 2025	Q3 2025
Aerospace & Defense	30.28	40.70	45.55
Industrial	11.59	9.75	9.58
Microfabrication	14.26	11.29	11.61
Total	56.13	61.74	66.74

Selected KPIs and Operating Metrics

KPI	Q3 2024	Q2 2025	Q3 2025
Products Gross Margin (%)	—	38.5%	41%
Development Gross Margin (%)	4.7%	13.1%	6.4%
GAAP OpEx ($M)	24.35	22.69	28.05 (incl. $1.7M restructuring)
Non-GAAP OpEx ($M)	18.3	16.8	17.5
Cash, Cash Eq., Restricted & Investments ($M)	—	114	116
Cash from Operations ($M)	—	—	5.2 (Q3 CFO remark)

Non‑GAAP definitions and reconciliations provided by the company; see press release tables .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	$62–$67M (midpoint $64.5M)	Actual $66.74M	Beat vs guide
Total Gross Margin (%)	Q3 2025	24%–30%	Actual 31.1%	Above
Products Gross Margin (%)	Q3 2025	32%–36%	Actual 41%	Above
Development Gross Margin (%)	Q3 2025	~8%	Actual 6.4%	Below
Adjusted EBITDA ($M)	Q3 2025	$2–$6	Actual $7.1	Above
Revenue ($M)	Q4 2025	—	$72–$78 (midpoint $75)	New
Total Gross Margin (%)	Q4 2025	—	27%–32%	New
Products Gross Margin (%)	Q4 2025	—	34%–39%	New
Development Gross Margin (%)	Q4 2025	—	~8%	New
Adjusted EBITDA ($M)	Q4 2025	—	$6–$11	New
Non‑GAAP OpEx ($M)	Q4 2025	—	~$18	New
A&D Revenue Growth	FY 2025	At least 40% (raised from ≥25% in Q2)	Exceed “at least 40%”	Raised/Improved

Management noted Q4 GM headwinds from freight/duties (~150–200 bps) and mix .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025, Q2 2025)	Current Period (Q3 2025)	Trend
Directed Energy/HELSI‑2	Q1: Record A&D; confidence in ≥25% A&D growth . Q2: HELSI‑2 progress; A&D 66% of sales; amplifier transition to production; raised A&D growth to ≥40% .	Record A&D $45.6M; amplifier shipments a key driver; HELSI‑2 on track for 2026 completion .	Strengthening execution and revenue contribution
Laser Sensing	Q2: Pipeline expanding; LRIP expected on classified program H2 2025 .	Signed $50M follow‑on missile sensing contract; sensing pipeline broadening; programs progressing .	Increasing bookings/visibility
International Defense	Q2: Began shipping to new international DE customer; pipeline building .	Continued international success; global urgency supports adoption (Iron Beam/DragonFire references) .	Broadening opportunities
Amplifier Manufacturing Transition	Q2: Moving from R&D to manufacturing to scale .	Amplifiers driving >50% incremental GM; continued manufacturability improvements .	Margin tailwind as scale improves
Commercial Markets (Industrial/Microfab)	Q2: Sequential improvement but no sustained demand change; China manufacturing exited .	Commercial $21.2M; flat QoQ overall; microfab stable; industrial additive strength; 2026 commercial expected to decline .	Stabilized near‑term; structurally soft
Supply Chain/Freight & Duties	—	Q4 GM headwind ~150–200 bps from freight/duties; mix effects .	Near‑term margin drag
China footprint/Restructuring	Q2: Completed Shanghai transfer; no mfg in China .	$1.7M restructuring to right‑size China/cutting & welding .	De‑risking/realigning cost base

Management Commentary

“Q3 represented another solid quarter… record aerospace and defense revenue of $46M… products gross margin… record 41%… adjusted EBITDA… more than $7M” (Scott Keeney, CEO) .
“Amplifiers and other products… drive incremental gross margins meaningfully north of 50%… we expect that to continue to expand” (Joe Corso, CFO) .
“During the third quarter, we signed a new $50M contract for an existing long‑running missile program” (Scott Keeney) .
“Based on what we are working on today, the hole is already filled” regarding HELSI‑2 trailing off; booked programs in both directed energy and sensing to offset .
“Q4 total gross margin 27%–32%; products 34%–39%; development ~8%… adjusted EBITDA $6–$11M” (Joe Corso) .

Q&A Highlights

Gross margin trajectory: Q4 GM step‑down driven by freight/duties (~150–200 bps) and intra‑market mix; overall margin still a function of volume, mix, and factory leverage .
HELSI‑2 timeline and revenue cadence: On track for 2026; cost‑plus contract not recognized linearly; amplifiers are key product revenue driver .
Post‑HELSI‑2 outlook: Management stated the revenue “hole is already filled” with booked programs in DE and sensing; additional high‑probability 2026 wins expected .
Development vs. product revenue: Advanced development revenue is a positive indicator but not a 1:1 predictor of long‑term product revenue; DEM SHORAD ramping down .
Commercial end‑markets: Microfabrication stabilized (~$8–$12M range) but overall commercial expected to decline in 2026; additive manufacturing a relative bright spot .

Estimates Context

Q3 2025 results vs S&P Global consensus: Revenue $66.74M vs $63.90M*; non‑GAAP diluted EPS $0.08 vs $0.016*; clear beat on both lines . Consensus values marked with * are retrieved from S&P Global.
Q4 2025 guidance: Revenue $72–$78M (midpoint $75M) broadly in line with consensus $75.20M*; no EPS guidance provided, but GM mix suggests modest sequential EPS risk despite revenue growth .
Model adjustments: Street likely to raise near‑term revenue/EPS on Q3 beat and A&D momentum, but may temper Q4 GM/EPS given guided freight/mix headwinds and lower development margin run‑rate .

Note: Estimates marked with * are values retrieved from S&P Global.

Key Takeaways for Investors

Structural A&D inflection: Two consecutive record quarters in A&D (Q2/Q3) with amplifier shipments and a $50M sensing contract broaden 2026 visibility; management says 2026 post‑HELSI‑2 “hole” already filled with booked work .
Margin expansion drivers intact: Products GM at 41% with >50% incremental margins on amplifiers suggests continued operating leverage as volumes scale, despite near‑term freight/mix headwinds .
Commercial drag manageable: Commercial revenue stabilized QoQ but remains a YoY headwind and is expected to decline in 2026; continued resource reallocation and restructuring should limit downside .
Q4 setup: Revenue guide midpoint in line with Street; watch mix and freight on GM; non‑GAAP OpEx ~ $18M supports EBITDA guide $6–$11M .
Capital and liquidity: ~$116M cash/investments and positive operating cash flow in Q3 provide capacity to execute on growth programs without near‑term capital pressure .
Stock drivers: Continued A&D bookings/awards (domestic and international), amplifier production scaling, and visibility on Golden Dome and procurement reforms could be upside catalysts; any slippage in development margins or commercial weakness would be watch‑outs .
Non‑GAAP lens: Results and guidance hinge on product mix and SBC‑adjusted profitability; investors should track non‑GAAP EPS/EBITDA vs. revenue growth for operating leverage confirmation .

Sources: Q3 2025 Form 8‑K/Ex.99.1 and financials , Q3 2025 earnings call transcript , Q2 2025 press release and prior commentary , Q1 2025 press release . Estimates retrieved from S&P Global.

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