Conference Transcript - LASR 2026-09-15

Clarke Jeffries, Analyst — Piper Sandler

All right. We'll go ahead and get started with the next one. My name is Clark Jeffries. I head up defense tech research here at Piper Sandler. I'm very pleased to be joined by John Marchetti, VP of Corporate Development and head of IR at InLight. Thank you for coming to Nashville.

John Marchetti, Head of Investor Relations

Thanks for having us.

Clarke Jeffries, Analyst — Piper Sandler

Yeah. Well, maybe you could just start us off with what does InLight do and what does the business look like here in 2026? You know, people come from various backgrounds, different disciplines. Maybe we can do a crash course on it.

John Marchetti, Head of Investor Relations

Sure. So the company, Enlight, is 25 years old, founded in 2000, I guess a little bit older than that now. Our current chairman and CEO, Scott Keeney, is the founder of the company as well. And really, the ultimate goal of the company would be a high-energy laser manufacturer. We're vertically integrated from semiconductor chip all the way through end product. and really the company was designed with the idea of bringing the efficiency of Moore's Law to the laser manufacturing world. We began early days with both a dual-use strategy from the outset, so there's always been a defense component to the company. Throughout the years, that's vacillated a bit in terms of the percentage of revenue. The company went public in 2018. At that point, defense was probably only about 20% of the business. And a big piece of it was on the commercial industrial side, primarily in cutting and welding. And we had probably close to 40% of revenue coming from China, had a large manufacturing facility in Shanghai as well. Fast forward to today, that revenue split, if you will, has completely flipped. We're now close to 80% defense. We've actually exited the cutting and welding business. And we are, I think we did less than 1% of revenue in our most recent quarter from China. We no longer have manufacturing overseas, or at least no longer in China, I should say, and all of the defense manufacturing is done here in the United States.

Clarke Jeffries, Analyst — Piper Sandler

Yeah, and then maybe just some subsets of that. Who are the customers, right? I mean, are you working with primes? Are you doing direct work with the government as research and development? And then on the part of the business that is the 20% to 30% that's non-defense, Who are the kind of main purchasers there?

John Marchetti, Head of Investor Relations

So if you think of our defense business today, it's really sort of in two buckets. There's directed energy, which we can talk a bit about. There's certainly a lot of interest there for counter-UAS and counter-missile. And then we do what we call laser sensing, which is using high-energy lasers, typically high-energy pulse lasers, for LIDAR-type applications. Most of that is classified, and there typically the customer is a prime or even a prime or even a prime to a subprime. We're typically a few steps removed from that customer. On the directed energy side, it's really however the government ultimately wants to procure the weapon. We've done systems where we have sold direct to the DOW or one of the services, but we've also done it through partners.

Speaker 2

The DEM should build to that exquisite level.

Clarke Jeffries, Analyst — Piper Sandler

It's typically those people putting things into the air. Well, let's talk about this defense evolution, where you're over 70% of the business now is defense. Three years ago, it was about 40%. At the time of the IPO, it seems like it was even lower than that. So where did the pivot come from? And maybe you could describe what was technology versus product market fit just naturally coming together. and then maybe some central IP that steers what the center of the business is, whether it's used for a defense application or a commercial application.

John Marchetti, Head of Investor Relations

I think the big turning point for Enlight was back in 2019. The company made an acquisition of a company called Neutronics, now Enlight Defense Systems in Colorado. And what that really did, what Enlight historically has been very, very good at is power scaling. Did it in its commercial markets, you know, typically known for the brightness of its beams, things along those lines. What the Neutronic acquisition really gave Enlight was the ability to do some beam combination work. So how do you take those beams and turns out? And so I do think we're past the, you know, can you do it stage, right? And now with the joint laser weapon system contract that we announced in July, you're really now, you know, the government is asking for multi-hundred kilowatt laser weapons that it can get out in the field, test in various scenarios, so that hopefully we can then get to that program of record around what the different services need at what power levels.

Clarke Jeffries, Analyst — Piper Sandler

Yeah, and maybe you could just give some frame of reference for the people in the room around what does a 50 do, what does a 500 do, what does a mega, because I think, you know, I maybe have some sense of exposure because we do have some of these tactical prototypes that are out there, but like when we think about the context of Golden Dome and things like that have been attempted in the past around naval equipment, you know, what does a one mega lot laser do, what does a 50 do?

John Marchetti, Head of Investor Relations

Sure. So if you think about how the industry typically breaks it down at, you know, there's low power, medium power, and high power, not terribly, you know, challenging there, but at low power, typically 30 kilowatts and below, you know, you're doing primarily class one, class two counter drone work. So relatively unsophisticated threats, quadcopters, things around those lines. You know, maybe at 30 you can address some fairly unsophisticated Class III, but at a limited distance and those kind of things. Probably even less than that at those low power ranges. You get up into the medium power range, 50 to 100 kilowatt. Now you're doing, you know, what you consider sort of true tactical defense, right? You're doing, you know, Class III counter UAS. So think Shaheed drones, things like that, all the way up, you know, through maybe some, you know, rockets, artillery, mortar, things along those lines. Then you get into the high power systems, the multi-hundred kilowatt. Now you're talking about anti-cruise missile, right, how you're going after, you know, whether it's ground or maritime or what have you. The one megawatt is a little bit kind of on its own, right? And the biggest use case that that at least initially will be tested against is anti-hypersonic. Can that address hypersonic threats? And today, I don't know that we know the answer to that yet. We'll deliver that laser late this year, early next. That will go into testing with the government. And hopefully, we can answer a bunch of those questions as well.

Clarke Jeffries, Analyst — Piper Sandler

Yeah, yeah. So, I mean, massively fascinating. We're probably in a directed energy renaissance just based off of the reaction to the drone threat in economics of having a kinetic interceptor or kinetic effector versus a directed energy solution. But, you know, where are we at today in terms of sort of the work you're doing with Lockheed and other primes in terms of where they're evaluating laser systems? Like, is the procurement apparatus not ready to fully replace all these counter-UAS solutions? And they're probably looking for the tactical side and then the call option are some of those larger systems. Or is the larger system in 2026 getting, like, tremendous year-over-year interest? Just when we think about the kind of systems that will probably hit the market first and then maybe have more opportunity later down the line, maybe you could kind of frame that. Sure.

John Marchetti, Head of Investor Relations

I mean, I don't think it's crazy to think that you may kind of step up in power as you evolve. I mean, the e-help program that was recently announced is at that 30-kilowatt level, And that's probably the closest to a true program of record domestically. But again, I think part of what this newest award, the Joint Laser Weapon System Contract, is designed to do is provide those test units so that we can evaluate what we want to do with these systems. I mean, ultimately, you're not going to replace the systems. You're going to augment them. There's always going to be some kinetic response to this. Directed energy is part of a layered defense system. It's not designed to completely displace all kinetic, you know, defensive countermeasures. But what you're really trying to do is give that commander, that battlefield commander, the ability to choose the, you know, the response that's appropriate for the threat. And so to that end, if you're trying to do counter cruise missile, a 50 kilowatt laser isn't going to be effective. It's not going to solve that problem. It can't get far enough out to address that threat early enough, you know, to take it down. So, you know, depending on, and that's really what I think the U.S. is doing right now, is really trying to identify how do we want these, where do we need them, and what do we want them to do? You tell me that, I can tell you what system you need, right? And so I think we've proven out the technology enough from an R&D and does it work perspective to now being at the stage where it's, okay, so then what do we need where in order to address these different threats at different points of the different services needs?

Clarke Jeffries, Analyst — Piper Sandler

Yeah. And then let's, you know, just maybe talk about the IP that the business have that, you know, you mentioned some atmosphere correction. I know you have some sort of beam forming or coherent beam technology. Maybe we could just talk about that in terms of maybe some competitors out there that have failed to be able to do the energy scaling where it's broken down and what that proprietary IP element might be in the future. Sure.

John Marchetti, Head of Investor Relations

So I think there's been a couple of advantages for Enlight. First of all, we are vertically integrated, as I mentioned, and having that much quicker feedback loop as you're going through this, I think really gives Enlight an advantage, right? We can make changes to our chip design that allow us to get a couple of points of efficiency that then when you get that into the amplifiers and then all the way into the system has an enormous benefit at the systems level that you wouldn't get that same kind of feedback if you were just shipping those chipsets off to another customer. So having that vertical integration and allowing us to do that. But if you think about directed energy overall, there's sort of three keys to success, right? It's power scaling, it's the brightness of the beam, which I don't think gets enough, you know, sort of attention, and then it's that atmosphere correction. How do you make sure that enough of that energy is getting through the atmosphere to make sure that it's transferring that energy to the target? And you need, you know, a pretty good combination of all of those things to be successful. And like I said, Enlight Proper has always, I think, been very, very good at the power scaling and the brightness of its beams. I'm sorry, this thing does not want to stay on, so I apologize. You know, the brightness of the beam has always been something that Enlight is known for, even in our commercial business. The reason people choose our semiconductor lasers is because it's a very bright, consistent beam. But then that ability then to adjust the wave front to make sure as much of that energy is going through the atmosphere as possible, I think is really important. And you touched on it a little bit. Part of that is the beam combination work that we do, and part of it is the atmospheric correction work, and they work together. And again, back to that vertical integration benefit, if you look, when you're thinking about building a high-energy laser for defense, the amplifiers are the building blocks of that laser. So you can almost think of them like servers in a server rack. My engineers would hate me to say that, but you put all of those in to continue to get to whatever power level you're trying to get to. but each one of those amplifiers is essentially a laser and you have to then take each one of those disparate beams and combine them into one and there's two primary ways that you look at doing it uh one is spectral beam combination so the easiest way to kind of describe that is a reverse prism you put a bunch of different colors of light in to get one color out the other side that works very well at low power at 30 kilowatts and below that's what we typically sell into the market. The challenge that you have is as you try to get to higher and higher power, you're trying to cram more and more light in. And so, you know, you start to have to really, you know, you run out of room, so to speak. And so what that typically results in then is a poor quality beam out the other side. And if you're starting with a poor quality beam, it's going to want to dissipate more as you go through the atmosphere.

Clarke Jeffries, Analyst — Piper Sandler

So that's where the Moore's law comes in.

John Marchetti, Head of Investor Relations

There's a very parallel versus serial very much of this and so what we do is coherent beam combination at 50 kilowatts and below so or above excuse me as those beams are coming out of the amplifiers we lock each one of those into a channel we route that up through our optical head to the lens and if you were to look down the barrel of our lens it looks like a giant honeycomb because each one of those beams has its own independent path out so if you could see our laser fire we look like kind of the old original Star Wars Death Star. All those beams come out independently, and then they get focused at the target. And that allows us not only to make sure those beams stay extremely bright, so they're transferring more energy, but allows us to adjust each one of those beams individually to make sure that phase front stays in sync so that it's traveling through the atmosphere in the best way possible.

Clarke Jeffries, Analyst — Piper Sandler

Yeah. Well, maybe to take a little bit of a detour away from the defense side. Let's talk about the markets you're still involved in on the commercial and industrial side. Microfabrication, that's a third of the business today, along with the industrial markets. So let's maybe talk about major products, main customers, some of the medical use cases, things that are interesting there. Let's just talk about some sort of baseline of information around where is the strategic and non-defense part?

John Marchetti, Head of Investor Relations

So if you think about our microfabrication business, we're essentially selling just the semiconductor laser, right? That second step, if you will, in our vertical integration. Those semiconductor lasers are typically sold to other laser manufacturers. They're going into their, you know, they're typically the power source, or we call the seed source, into their systems. Again, typically chosen because we operate in extremely tight tolerances. So at whatever nanometer wavelength you need, not only are we typically very true to that, but then we're repeatable from laser to laser to laser to laser. So you can always get the same performance out of it. You know, sold into a whole host of electronics manufacturing applications. So difficult for us to really determine demand. You know, we typically say that's for us a $10 to $12 million a quarter business. It's been running a little bit above that. I think largely as a result of some of the growth in the semiconductor manufacturing landscape. But again, short lead times, you know, it's typically less than a quarter's worth of turnaround. So, you know, tough for us to get long-term visibility there. But the demand signals are very, very strong. And it's a very sticky business for us because we're typically designed in to our customers' products, right? So, you know, it's a very good business to have. It leverages our overall infrastructure. It uses the same chipsets. That semiconductor laser that we build with a third-party contract manufacturer internationally is pretty much the same semiconductor laser that we're building domestically that then feeds into my amplifier business for the defense business.

Clarke Jeffries, Analyst — Piper Sandler

Yeah, and then just from a manufacturing standpoint and a capacity standpoint, very amusing to me to hear about how much you have based where I'm based in the Pacific Northwest, but what are the investments required to support these investments on the defense side? something like the joint laser weapon system and the idea of multi-hundred kilowatt systems, where are you at in just having the capacity to produce at that level?

John Marchetti, Head of Investor Relations

So again, I think if you go through that sort of vertical integration stack for us, we have our own fab in the Pacific Northwest, a gallium arsenide fab. We make our own chips. We have more than enough capacity in that fab. Other than some maintenance capex and things like that, we don't need a lot of investment there. You move up to that packaging line, that semiconductor laser. Our commercial business, like I said, we rely on a third-party contract manufacturer to do that for us. The defense business, we have our own automated line in the Pacific Northwest. If we needed, I mean, that line today, probably in the 60% range, you know, in terms of utilized. If we needed to add another line, you know, $10 million, $12 million of CapEx to do that, it's nothing that is Herculean to get done there, relatively standard off-the-shelf manufacturing equipment. you go to our, you know, sort of staying with the defense piece, then you go to the fiber amplifier business. That's really what we spent the bulk of 2025 optimizing. We had moved the new amplifiers into production, if you will, for the first time in 2025, spent a lot of time optimizing that. And that's more of an assembly process than it is a big manufacturing process. I'm not sure we're running two full shifts today, so we could double that capacity relatively easy just by adding more shifts. And then if we had to do another line there, again, hiring is probably the biggest component of that as opposed to real capital outlays. Then you kind of get to that high energy laser manufacturing. And that's really what the capital raise that we did back in February is designed to support. Today, there is no production line for high energy lasers for defense. So we're putting in the capability in Colorado really to do multiple versions of these lasers concurrently, right? Today it's very bespoke. It's still kind of one-offish in nature, if you will. But what we're putting in place now in Colorado is the ability to do multiple versions across different power levels all at the same time up through and including the beam directors. And so, you know, we've started that process now. We took that facility on late in the winter. We're starting some production out of that facility. It'll be probably fully kitted out early next year. And then we'll optimize that as we're going through 27 and early 28. But the goal is to be able to do one a quarter, let's say, by the end of 27. It doesn't necessarily mean the demand is there for that yet, but have that capability in place. And as we get into 28, be able to do multiple units a quarter, and then you'll continue to expand that out as we kind of dial that manufacturing in.

Clarke Jeffries, Analyst — Piper Sandler

And where does Hades, like a sort of a tactical system, fit into that capacity infrastructure?

John Marchetti, Head of Investor Relations

So Hades really, I mean, we started with the Hades 70, if you will, which is a 70-kilowatt CBC system. But Hades is really a family of products. When you get to it, it's, you know, what we built that first, you know, the first 300-kilowatt laser on Is the same thing we built the 50-kilowatt DEM-Shorad? Is the same thing we'll build these JLWS units on? Is the same platform that we're building the one-megawatt laser on? So really the Hades architecture, if you will, is how we go about building these systems. And the reason we kind of launched it, if you will, when we did it, we were really trying to show, particularly the DOW but other partners as well, we're ready to build these systems. We can move faster than we're being asked to move today. but understanding that the services have to do their diligence on these systems as well.

Clarke Jeffries, Analyst — Piper Sandler

Yeah. Well, any questions for the room before I...

John Marchetti, Head of Investor Relations

So as you're scaling up in power, again, if you think about it, the amplifiers are the biggest building block in that. So in a medium power system, let's say from 50 to 100 kilowatts, the biggest change is going to be how much amplifier content is in that system, right? So it's really just that component of it. you're targeting a lot of the same threats at 50 that you're targeting at 100 so then if you go then let's say from a 150 to a 300 relative to those medium power systems not only do you have the added content if you will have more and more amplifiers to do that but now you're talking about having to target and track and do a different threat so again from 300 to 150 there's probably only the difference of the amplifiers but the difference of a 300 or a 150 to a 50 is also some of the, you know, the added work that you have to do around being able to target and track a different threat, you know, profile. So that's where it kind of changes, you know, it step functions up as you go from medium to high, but then within a high or within a medium, it's really just the amount of amplifier power that you're shipping into the system.

Clarke Jeffries, Analyst — Piper Sandler

Well, then, you know, for me, what do you make of the international opportunity at this I mean, we saw our first production award at the e-health program, and then pretty much immediately we had an international order that we saw. If I were a betting man, I'd say that the international market will see the same advantages that the domestic defense market has created that is all the same things. And so is there active interest from the international markets? Do you have sort of initial investments in terms of international capacity that are on the horizon?

John Marchetti, Head of Investor Relations

So I think if you look at the international market for us, what's different about us at, say, medium or high power, those are ITAR restricted. It was only late last year, early this year, that we've started to get the ITAR licenses to even market in some of our allied countries. Right. So that'll take a little bit of time. But I do think there's opportunities there for us to ship internationally over time. Right. We're in the private. There's certainly demand there. I'll put it that way. A lot of our allies are at that same sort of point that the U.S. is in. They want to see a few units that they can get out and test. We sell a lot of components to our international allies on the directed energy side. So our amplifiers are in increasing demand internationally. Those are not ITAR restricted. Those are commercial items. but the 50 kilowatt and above beam combined lasers are ITAR restricted. So we're just kind of getting that order book growing now. There certainly is interest out there, and I'm not worried about that, but it will take us a little bit of time, I think, to get the licenses that are required to ship some of those systems.

Clarke Jeffries, Analyst — Piper Sandler

Well, John, I think that's all we have time for. Really appreciate you making it to Nashville. Look forward to hearing more.

John Marchetti, Head of Investor Relations

Thanks very much. Thank you for the time.