Image source: IPG Photonics.

What: Shares of IPG Photonics (IPGP 0.66%) tumbled on Thursday following the company's first-quarter earnings report. IPG Photonics missed analyst estimates for both revenue and EPS, sending the stock down about 16.5% by 11 a.m. ET.

So what: IPG Photonics reported quarterly revenue of $207.2 million, up 4% year over year but about $2.3 million short of the average analyst estimate. Material processing sales rose by 3% year over year, driven by cutting applications, while declines in automotive welding, marking, and engraving partially offset that increase. IPG Photonics also pointed to a one-time order for a novel surface patterning application as the source of several million dollars in revenue during the quarter.

IPG Photonics reported EPS of $0.92, down 15% year over year and $0.06 below analyst expectations. The drop in earnings was driven by higher operating expenses, with R&D spending rising 23% year over year, as well as a $13.7 million unfavorable swing in foreign exchange losses. Adjusted for foreign exchange losses, EPS would have been $0.99, up from an adjusted EPS of $0.97 during the prior-year period.

The company expects revenue in the range of $235 million to $250 million during the second quarter, compared to $235 million during the second quarter of 2015. EPS is expected between $1.10 and $1.25, compared to $1.15 in the prior-year period.

Now what: This is a clear-cut case of a stock falling on lower-than-expected results. The company did suffer from currency headwinds, which knocked down its earnings, but even on an adjusted basis, EPS grew by just 2% year over year. IPG Photonics' guidance was also nothing special, with the low end calling for flat revenue and an earnings decline.

Despite the lackluster results, CEO Dr. Valentin Gapontsev pointed to opportunities to grow the business going forward. "We continue to see large opportunities to expand our business through both existing and new OEMs and end-users as we develop innovative products to address applications beyond our core markets. We are making significant progress on the testing and development of these new product lines and we look forward to their launch."