IPG Photonics' Q1 Earnings Beat Estimates, Revenues Decline Y/Y

IPG Photonics IPGP reported first-quarter 2025 adjusted earnings of 31 cents per share, which beat the Zacks Consensus Estimate by 47.62% but plunged 38% year over year.

Revenues of $227.8 million declined 10% on a year-over-year basis but beat the consensus mark by 2.99%. Unfavorable forex hurt revenue growth by 2%. 

The year-over-year decline was primarily due to lower Materials processing sales.

Emerging growth product sales accounted for 51% of revenues, which improved 48% sequentially.

IPGP’s Q1 Quarterly Details

Materials processing (86% of total revenues) fell 14% year over year. The downside was mainly due to lower sales in welding and cutting applications.

Revenues from other applications increased 25% year over year, primarily due to higher revenues in medical and advanced applications.

Sales dropped 12% in North America and 28% year over year in Europe, while increasing 8% in Asia.

IPG Photonics reported a gross margin of 39.4%, up 70 basis points (bps) on a year-over-year basis. The upside was driven by lower inventory provisions and a decrease in unabsorbed expenses.

IPGP’s Balance Sheet & Cash Flow Details

As of March 31, 2025, IPG Photonics had $926.9 million in cash & cash equivalents.

In first-quarter 2025, the company generated $13 million in cash from operations and spent $25 million on capital expenditures.

Guidance

For second-quarter 2025, IPG Photonics anticipates sales to be $210-$240 million, reflecting a roughly $15 million negative impact from shipment delays due to higher tariffs. 

IPG Photonics expects second-quarter 2025 adjusted gross margin between 36% and 38%, including a 150 to 200 bps negative impact from tariffs, and operating expenses of $86 to $88 million.

IPG Photonics expects a second-quarter 2025 loss between 5 cents per share and earnings of 25 cents per share. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Zacks Rank & Stocks to Consider

IPG Photonics currently has a Zacks Rank #3 (Hold).

Affirm AFRM, Compass COMP, and StoneCo STNE are some better-ranked stocks in the broader Zacks Computer & Technology sector. While Affirm and StoneCo sport a Zacks Rank #1 (Strong Buy) each, Compass carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Affirm, Compass and StoneCo are scheduled to report their respective first-quarter 2025 results on May 8.

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This article originally published on Zacks Investment Research (zacks.com).

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