Managing Costs and Mitigating Tariff Impact on Gross Margin
MARLBOROUGH, Mass., May 05, 2026 (GLOBE NEWSWIRE) -- IPG Photonics Corporation (NASDAQ:IPGP) today reported financial results for the first quarter ended March 31, 2026.
Three Months Ended March 31,
(In millions, except per share data and percentages)
2026
2025
Change
Revenue
$
265.5
$
227.8
17
%
Gross margin
37.5
%
39.4
%
Operating income (loss)
$
(7.7
)
$
1.8
NM
Operating margin
(2.9)%
0.8
%
Net income
$
1.6
$
3.8
(58)%
Earnings per diluted share
$
0.04
$
0.09
(56)%
Non-GAAP Measures*
Adjusted gross margin
37.8
%
40.0
%
Adjusted EBITDA
$
35.2
$
32.7
8
%
Adjusted earnings per diluted share
$
0.29
$
0.31
(6)%
*Adjusted gross margin, adjusted EBITDA and adjusted earnings per diluted share include non-GAAP adjustments. A reconciliation from GAAP to non-GAAP metrics is provided in this earnings release.
NM - not meaningful.
Management Comments
"I am pleased to share that first-quarter revenue came in above our expectations. The team delivered our second consecutive quarter of double-digit year-over-year revenue growth, driven by disciplined execution of our key strategic initiatives and continued strong demand for our laser solutions," said Dr. Mark Gitin, Chief Executive Officer of IPG Photonics.
Financial Highlights
Beginning in the first quarter, the Company revised its revenue disaggregation by application into two categories: Industrial Solutions and Advanced Solutions. This structure better reflects the Company's strategic growth initiatives and provides a clearer separation between the Company's industrial and non-industrial businesses, giving better visibility into the distinct performance and growth profiles of each.
Three Months Ended March 31,
2026
2025
Change
Sales by Application
Industrial Solutions
$
227,590
$
188,016
21
%
Advanced Solutions
37,907
39,777
(5)%
Total
$
265,497
$
227,793
17
%
First quarter revenue of $265 million increased 17% year over year, driven by growth in Industrial Solutions. Changes in foreign exchange rates increased revenue growth by approximately 4%. Industrial Solutions sales accounted for 86% of total revenue and increased 21% year over year, driven by growth in welding, cutting, marking, and cleaning applications. Advanced Solutions sales decreased 5% year over year due to lower revenue in micromachining and defense applications, partially offset by increased sales in medical and semiconductor applications. Emerging growth products accounted for 53% of total revenue, consistent with the prior quarter. By region, sales increased 14% in Asia, 27% in North America, and 4% in Europe on a year-over-year basis.
GAAP gross margin of 37.5% and adjusted gross margin of 37.8% decreased year over year due to tariffs and higher product cost, partially offset by lower inventory provisions. Adjusted EBITDA was $35.2 million and adjusted earnings per diluted share (EPS) was $0.29 in the first quarter. During the first quarter, IPG spent $16 million on capital expenditures.
Business Outlook and Financial Guidance
"Our book-to-bill was once again firmly above one in the first quarter, reflecting robust demand for our solutions despite elevated macroeconomic uncertainty. We remain focused on executing on our growth strategy supported by operational excellence and an innovation engine that is unlocking areas of significant additional opportunities. This foundation gives us confidence in our ability to achieve above-market growth and deliver lasting value for our customers and shareholders." concluded Dr. Gitin.
For the second quarter of 2026, IPG expects revenue of $260 million to $290 million, adjusted gross margin between 37% and 40% and adjusted operating expenses of $92 million to $95 million. IPG anticipates delivering adjusted earnings per diluted share in the range of $0.25 to $0.55 and adjusted EBITDA in the range of $32 million to $48 million.
As discussed in more detail in the "Safe Harbor" passage of this news release, actual results may differ from this guidance due to various factors including, but not limited to, trade policy changes and trade restrictions, product demand, order cancellations and delays, competition, tariffs and retaliatory tariffs, currency fluctuations and general economic conditions. The current uncertainty related to the trade environment and tariff policies increases the risks to the outlook that we have provided. This guidance is based upon current market conditions and expectations, and is subject to the risks outlined in the Company's reports filed with the SEC, and assumes exchange rates relative to the U.S. dollar of euro 0.87, Japanese yen 159 and Chinese yuan 6.92, respectively.
Supplemental Financial Information
Additional supplemental financial information is provided in the unaudited Financial Data Workbook and First Quarter 2026 Earnings Call Presentation available on the investor relations section of the Company's website at investor.ipgphotonics.com.
Conference Call Reminder
The Company will hold a conference call today, May 5, 2026 at 10:00 am ET. To access the call, please dial 877-407-6184 in the US or 201-389-0877 internationally. A live webcast of the call will also be available and archived on the investor relations section of the Company's website at investor.ipgphotonics.com.
Contact
Eugene FedotoffSenior Director, Investor Relations IPG Photonics Corporation 508-597-4713[email protected]
About IPG Photonics Corporation
IPG Photonics Corporation is the leader in high-power fiber lasers and amplifiers used primarily in materials processing and other diverse applications. The Company's mission is to develop innovative laser solutions, making the world a better place. IPG accomplishes this mission by delivering superior performance, reliability, and usability at a lower total cost of ownership compared with other types of lasers and non-laser tools, allowing end users to increase productivity and decrease costs. IPG is headquartered in Marlborough, Massachusetts and has more than 30 facilities worldwide. For more information, visit www.ipgphotonics.com.
Safe Harbor Statement
Information and statements provided by IPG and its employees, including statements in this press release, that relate to future plans, events or performance are forward-looking statements. These statements involve risks and uncertainties. Any statements in this press release that are not statements of historical fact are forward-looking statements, including those statements related to operational excellence, an innovation engine that is unlocking areas of significant additional opportunities, and the ability to achieve above-market growth and deliver lasting value for our customers and shareholders, and statements related to shares repurchases, revenue, adjusted gross margin and operating expenses outlook, adjusted earnings per diluted share and adjusted EBITDA guidance, including the expected impact of tariffs, and the impact of the U.S. dollar on our guidance for the second quarter of 2026. Factors that could cause actual results to differ materially include risks and uncertainties, including risks associated with the strength or weakness of business conditions in industries and geographic markets that IPG serves, particularly the effect of downturns in the markets IPG serves; uncertainties and adverse changes in the general economic conditions of markets; inability to manage risks associated with international customers and operations; changes in trade controls and tariff policies; IPG's ability to penetrate new applications for fiber lasers and increase market share; the rate of acceptance and penetration of IPG's products; foreign currency fluctuations; high levels of fixed costs from IPG's vertical integration; the appropriateness of IPG's manufacturing capacity for the level of demand; competitive factors, including declining average selling prices; the effect of acquisitions and investments; inventory write-downs; asset impairment charges; intellectual property infringement claims and litigation; interruption in supply of key components; manufacturing risks; government regulations and trade sanctions; and other risks identified in IPG's SEC filings. Readers are encouraged to refer to the risk factors described in IPG's Annual Report on Form 10-K (filed with the SEC on February 23, 2026) and IPG's reports filed with the SEC, as applicable. Actual results, events and performance may differ materially. Readers are cautioned not to rely on the forward-looking statements, which speak only as of the date hereof. IPG undertakes no obligation to update the forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
IPG PHOTONICS CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
Three Months Ended March 31,
2026
2025
(In thousands, except per share data)
Net sales
$
265,497
$
227,793
Cost of sales
165,998
137,981
Gross profit
99,499
89,812
Operating expenses:
Sales and marketing
24,534
24,430
Research and development
33,309
28,336
General and administrative
36,092
32,808
Settlement of litigation matters
13,500
—
(Gain) loss on foreign exchange
(200
)
2,411
Total operating expenses
107,235
87,985
Operating (loss) income
(7,736
)
1,827
Other income, net:
Interest income, net
6,922
7,444
Other income, net
1,833
1,344
Total other income
8,755
8,788
Income before provision for income taxes
1,019
10,615
(Benefit) provision for income taxes
(565
)
6,857
Net income
$
1,584
$
3,758
Net income per common share:
Basic
$
0.04
$
0.09
Diluted
$
0.04
$
0.09
Weighted average common shares outstanding:
Basic
42,245
42,605
Diluted
42,912
42,832
IPG PHOTONICS CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)
March 31,
December 31,
