IPG Photonics (NASDAQ:IPGP) reported third-quarter revenue growth of 15% year over year to $288 million, marking its fourth consecutive quarter of double-digit growth as industrial and advanced solutions both contributed to the increase.
CEO Mark Gitin said demand strengthened across most markets, with particular momentum in welding, additive manufacturing, semiconductor and defense applications. The company reported a book-to-bill ratio of approximately one and said its strategic focus remains on technology leadership, product innovation, operational execution and disciplined capital allocation.
Industrial Solutions Growth Led by Welding
Industrial solutions revenue rose 12% from a year earlier and 1% sequentially, supported by welding and additive manufacturing. Gitin said welding demand increased in battery manufacturing, general industrial markets and consumer electronics.
The company said its laser technology, beam delivery, process monitoring and applications expertise support battery-production requirements for electric vehicles and stationary energy-storage systems. While IPG expects long-term battery demand to remain attractive, management said it is seeing some near-term moderation in battery-capacity additions in China following several strong quarters.
Gitin said the company has incorporated that moderation into its fourth-quarter outlook but continues to see growth opportunities tied to electric vehicles, stationary storage, grid electrification and data-center-related energy infrastructure.
Additive manufacturing also gained momentum, according to the company, as customers expanded adoption in aerospace, medical-device manufacturing and consumer electronics. IPG said its beam-shaping and multi-beam technologies are designed to improve throughput and reduce cost per part. During the quarter, the company secured new European business that it expects will meaningfully contribute to additive-manufacturing revenue in 2027.
CFO Tim Mammen said welding is now the principal application driving industrial solutions. Cutting remains part of the business but was less than 20% of total company revenue last year, he said, and the company does not expect meaningful growth from cutting. Management also cited progress in cleaning, marking and engraving applications.
Advanced Solutions Accelerate on Semiconductor and Defense Demand
Advanced solutions revenue increased 33% year over year and 15% sequentially. Semiconductor and defense applications were the primary contributors to the growth.
Semiconductor-related revenue more than doubled from the prior-year period. Gitin said IPG is qualified with several top-tier wafer-equipment manufacturers for next-generation lithography, metrology and inspection tools. He attributed demand trends in part to rising investment in technologies supporting GPUs, high-performance computing and high-bandwidth memory.
Management said semiconductor remains a relatively small business but could become a more meaningful contributor over time as existing design wins grow and new programs develop.
Defense revenue also rose as the company shipped most of a Lockheed Martin order for its CROSSBOW directed-energy system during the third quarter. Remaining shipments are expected in the fourth quarter. Gitin described the defense market as early-stage and potentially lumpy in the near term, but said customer engagement and the opportunity pipeline remain strong.
IPG also introduced an extension to the CROSSBOW product line, called the SE, which the company said offers longer range and addresses larger drones. Gitin said the company is shipping the products from production and is pursuing additional opportunities.
Medical revenue increased slightly year over year but improved significantly sequentially, Mammen said. The company cited new product shipments, a new customer and continuing demand for consumables. IPG expects medical to be a growth driver for advanced solutions next year.
Margins, Cash Flow and Lumibird Medical Acquisition
GAAP gross margin was 40.7%, while adjusted gross margin was 41%, above the company’s guidance range. Results included a $5 million net benefit from tariff refunds, which increased gross margin by about 170 basis points.
GAAP operating income was $21 million and GAAP net income was $20 million, or $0.47 per diluted share. Adjusted operating income totaled $27 million, while adjusted net income was $26 million, or $0.61 per diluted share. Adjusted EBITDA was $52 million.
Mammen said that excluding the tariff refund, adjusted EBITDA and adjusted earnings per share improved both year over year and sequentially. He said the company expects operating expenses to rise modestly as it continues to invest in growth opportunities.
IPG ended the quarter with $926 million in cash equivalents and short-term investments and no debt. Operating cash flow reached $46 million, while capital expenditures were $17 million during the quarter and $54 million year to date. The company said spending remains elevated because of investments in a major fiber-manufacturing facility in Germany; excluding that project, it expects capital expenditures to be about 5% of revenue going forward.
The company expects its acquisition of Lumibird Medical to close in the fourth quarter. Gitin said the transaction will expand IPG’s medical platform in ophthalmology and urology, increase its medical addressable market to more than $2 billion, and strengthen its advanced-solutions portfolio. The company’s fourth-quarter guidance does not include any contribution from the acquisition.
Fourth-Quarter Outlook
For the fourth quarter, IPG forecast revenue of $265 million to $295 million. The company expects adjusted gross margin of 37% to 40%, reflecting the absence of a meaningful expected benefit from tariff refunds.
- Adjusted operating expenses are projected at $91 million to $94 million.
- Adjusted earnings per diluted share are expected to range from $0.30 to $0.60, based on approximately 43 million diluted shares outstanding.
- Adjusted EBITDA is forecast between $33 million and $50 million.
IPG also announced plans to host an investor day on March 2, 2027, in New York City, where it expects to provide further detail on its strategy and long-term financial targets.
About IPG Photonics (NASDAQ:IPGP)
IPG Photonics Corporation (NASDAQ:IPGP) develops and manufactures high-performance fiber lasers, laser systems, optical amplifiers and related components. Its product portfolio includes single-mode and multi-mode fiber lasers, pulsed lasers, diode lasers, beam-delivery systems and other specialized photonics products.
The company’s technologies are used primarily for industrial materials processing applications, including cutting, welding, marking, drilling, cladding and additive manufacturing.
