IPG Photonics (NASDAQ:IPGP) Posts Better-Than-Expected Sales In Q1 But Stock Drops

IPGP Cover Image — IPG Photonics (NASDAQ:IPGP) Posts Better-Than-Expected Sales In Q1 But Stock Drops

Radek Strnad

Tue, May 6, 2025, 6:11 AM 4 min read

Fiber laser manufacturer IPG Photonics (NASDAQ:IPGP) beat Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 9.6% year on year to $227.8 million. On the other hand, next quarter’s revenue guidance of $225 million was less impressive, coming in 6.2% below analysts’ estimates. Its non-GAAP profit of $0.31 per share was 40.9% above analysts’ consensus estimates.

Is now the time to buy IPG Photonics? Find out in our full research report.

IPG Photonics (IPGP) Q1 CY2025 Highlights:

Revenue: $227.8 million vs analyst estimates of $225.1 million (9.6% year-on-year decline, 1.2% beat)
Adjusted EPS: $0.31 vs analyst estimates of $0.22 (40.9% beat)
Adjusted EBITDA: $32.68 million vs analyst estimates of $23.42 million (14.3% margin, 39.6% beat)
Revenue Guidance for Q2 CY2025 is $225 million at the midpoint, below analyst estimates of $239.9 million
Adjusted EPS guidance for Q2 CY2025 is $0.10 at the midpoint, below analyst estimates of $0.33
EBITDA guidance for Q2 CY2025 is $23.5 million at the midpoint, below analyst estimates of $29.81 million
Operating Margin: 0.8%, down from 7.6% in the same quarter last year
Free Cash Flow was -$11.37 million, down from $26.54 million in the same quarter last year
Inventory Days Outstanding: 190, up from 180 in the previous quarter
Market Capitalization: $2.70 billion

“IPG had a strong start to the year, delivering revenue, adjusted earnings per share and adjusted EBITDA above the midpoint of our guidance and gaining early traction in key areas that are central to our strategy, including medical, micromachining, and advanced applications,” said Dr. Mark Gitin, Chief Executive Officer of IPG Photonics.

Company Overview

Both a designer and manufacturer of its products, IPG Photonics (NASDAQ:IPGP) is a provider of high-performance fiber lasers used for cutting, welding, and processing raw materials.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, IPG Photonics’s demand was weak and its revenue declined by 5.3% per year. This wasn’t a great result and is a sign of poor business quality. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. IPG Photonics’s recent performance shows its demand remained suppressed as its revenue has declined by 17.7% annually over the last two years.

IPG Photonics Year-On-Year Revenue Growth

This quarter, IPG Photonics’s revenue fell by 9.6% year on year to $227.8 million but beat Wall Street’s estimates by 1.2%. Despite the beat, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 12.7% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.9% over the next 12 months. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector.

Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.

This quarter, IPG Photonics’s DIO came in at 190, which is 22 days below its five-year average. These numbers show that despite the recent increase, there’s no indication of an excessive inventory buildup.

IPG Photonics Inventory Days Outstanding

Key Takeaways from IPG Photonics’s Q1 Results

We liked that IPG Photonics beat analysts’ adjusted operating income and EPS expectations this quarter. On the other hand, its revenue and EPS guidance for next quarter missed and its inventory levels increased. Overall, this print was on the weaker side, and the stock traded down 6.5% to $59 immediately following the results.

Is IPG Photonics an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

Terms and Privacy Policy

Your Privacy Choices

Utah Privacy Notice

More Info