NLIGHT, INC.

Previous wording

Revenues increased to $113.4 million in the six months ended June 30, 2025 compared to $95.0 million in the same period in 2024 due primarily to an increase in both product and development revenue from the Aerospace and Defense end market. We generated a net loss of $11.7 million for the six months ended June 30, 2025 compared to a net loss of $25.5 million for the same period in 2024.

Current wording

Revenues increased to $180.1 million in the nine months ended September 30, 2025 compared to $151.2 million in the same period in 2024 due primarily to an increase in both product and development revenue from the Aerospace and Defense end market. We generated a net loss of $18.6 million for the nine months ended September 30, 2025 compared to a net loss of $35.8 million for the same period in 2024.

Previous wording

We invest heavily in the development of our semiconductor, fiber laser, directed energy, and laser-sensing technologies to provide solutions to our current and future customers. We anticipate that we will continue to invest in research and development to achieve our technology and product roadmap. Our product development is targeted to specific sectors of the market where we believe the performance of our products provides a significant benefit to our customers. We believe our close coordination with our customers regarding their future product requirements enhances the efficiency of our research and development expenditures.

Current wording

We invest heavily in research and development to provide solutions to our current and future customers, and anticipate that we will continue to invest in research and development to achieve our technology and product roadmap. Our product development is targeted to specific sectors of the market where we believe the performance of our products provides a significant benefit to our customers. We believe our close coordination with our customers regarding their future product requirements enhances the efficiency of our research and development expenditures.

Previous wording

We continue to monitor macroeconomic trends, global inflationary pressures, and uncertainties related to international trade policy, including tariff actions and regulatory shifts. The U.S. government implemented a new series of tariffs on imported goods during the first six months of 2025, prompting retaliatory tariffs by other countries. We currently procure components from China, which are utilized in our U.S. manufacturing operations as well as in products assembled by our contract manufacturer in Thailand.

Current wording

We continue to monitor macroeconomic trends, global inflationary pressures, and uncertainties related to international trade policy, including tariff actions and regulatory shifts. The U.S. government implemented a new series of tariffs on imported goods during 2025, prompting retaliatory tariffs by other countries. We currently procure components from China, which are utilized in our U.S. manufacturing operations as well as in products assembled by our contract manufacturer in Thailand.

Previous wording

A portion of our sales are generated from products manufactured outside the United States and we sell our products globally. Changing trade dynamics, including newly imposed or proposed tariffs and export controls, could disrupt our supply chain and increase input costs. These trade policy developments did not have a material impact on our financial results for the first six months of 2025. However, if current trends continue or intensify, we may experience increased cost volatility, operational complexity, and broader economic pressures on our customer base that could have a negative impact on revenue and profitability in the future.

Current wording

A portion of our sales are generated from products manufactured outside the United States and we sell our products globally. Changing trade dynamics, including newly imposed or proposed tariffs and export controls, could disrupt our supply chain and increase input costs. These trade policy developments did not have a material impact on our financial results for the first nine months of 2025. However, if current trends continue or intensify, we may experience increased cost volatility, operational complexity, and broader economic pressures on our customer base that could have a negative impact on revenue and profitability in the future.

Previous wording

The increases in revenue from the Aerospace and Defense market for the three and six months ended June 30, 2025, compared to the same periods in 2024, were driven primarily by increased unit sales of directed energy laser products and progress on existing research and development contracts. The decreases in revenue from the Industrial market for the three and six months ended June 30, 2025, compared to the same periods in 2024, were primarily the result of decreased unit sales due to lower customer demand and deteriorating market conditions across all regions. The increases in revenue from the Microfabrication market for the three and six months ended June 30, 2025 compared to the same periods in 2024 were primarily attributable to an increase in unit sales of semiconductor lasers and the timing of customer shipments.

Current wording

The increases in revenue from the Aerospace and Defense market for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven primarily by increased unit sales of directed energy laser products and progress on existing research and development contracts. The decreases in revenue from the Industrial market for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were primarily the result of decreased unit sales due to lower customer demand and deteriorating market conditions across all regions. The decreases in revenue from the Microfabrication market for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily attributable to a decrease in unit sales of semiconductor lasers.

Previous wording

The increases in Laser Products revenue for the three and six months ended June 30, 2025 compared to the same periods in 2024 were the result of increased revenue from the Aerospace and Defense market and the Microfabrication market, as discussed above, partially offset by decreases in revenue from the Industrial market. The increases in Advanced Development revenue for the three and six months ended June 30, 2025, compared to the same periods in 2024, were driven by progress on existing research and development contracts. All Advanced Development revenue is included in the Aerospace and Defense market.

Current wording

The increases in Laser Products revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were the result of increased revenue from the Aerospace and Defense market as discussed above, partially offset by decreases in revenue from the Industrial and the Microfabrication markets. The increases in Advanced Development revenue for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven by progress on existing research and development contracts. All Advanced Development revenue is included in the Aerospace and Defense market.

Previous wording

Geographic revenue information is based on the location to which we ship our products. The increases in North America revenue for the three and six months ended June 30, 2025 compared to the same periods in 2024, were due to increased revenue from the Aerospace and Defense market, partially offset by decreased revenue from the Industrial and Microfabrication markets. The decreases in Asia Pacific revenue for the three and six months ended June 30, 2025 compared to the same periods in 2024 were primarily the result of decreased revenue from the Industrial market, partially offset by increased revenue from the Microfabrication market. The increases in EMEA revenue for the three and six months ended June 30, 2025 compared to the same periods in 2024 were primarily due to increased revenue from the Microfabrication market and Aerospace and Defense market, partially offset by decreased revenue from the Industrial market.

Current wording

Geographic revenue information is based on the location to which we ship our products. The increases in North America revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024, were due to increased revenue from the Aerospace and Defense market, partially offset by decreased revenue from the Industrial and Microfabrication markets. The decreases in Asia Pacific revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were the result of decreased revenue from the Industrial and Microfabrication markets, which was partially offset by increased revenue from the Aerospace and Defense market. The increases in EMEA revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily due to increased revenue from the Microfabrication market and Aerospace and Defense market, partially offset by decreased revenue from the Industrial market.

Previous wording

The increase in Laser Products gross margin for the three and six months ended June 30, 2025 compared to the same periods in 2024 were driven primarily by product sales mix and the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales as previously discussed. The first six months of 2025 also benefited from an increase in duty reclaim and manufacturing yields. The increase in Advanced Development gross margin for the three and six months ended June 30, 2025 compared to the same periods in 2024 were primarily the result of an increase in revenue from fixed priced contracts that carried higher average gross margins than cost-plus fixed fee contracts.

Current wording

The increase in Laser Products gross margin for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were driven primarily by product sales mix including increased sales of directed energy laser products, and the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales as previously discussed. The first nine months of 2025 also benefited from an increase in duty reclaim and manufacturing yields.

Previous wording

The decreases in research and development expense for the three and six months ended June 30, 2025 compared to the same periods in 2024 were primarily attributable to decreases in employee compensation due to reductions in headcount, decreases in outside services and decreases in stock-based compensation of $0.3 million and $0.2 million for the three and six months ended June 30, 2025, respectively, partially offset by increases in incentive compensation and project related expenses.

Current wording

The increases in research and development expense for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily attributable to increases in incentive compensation and increases in stock-based compensation of $0.5 million and $0.3 million for the three and nine months ended September 30, 2025, respectively, partially offset by decreases in employee compensation due to reductions in headcount and decreases in outside services.

Previous wording

The decreases in sales, general and administrative expense for the three and six months ended June 30, 2025, compared to the same periods in 2024, were driven by decreases in bad debt expense, increases in bad debt recoveries, and a higher allocation of costs from sales, general and administrative to development projects, partially offset by an increase in incentive compensation. The three and six months ended June 30, 2025 also included a (decrease) increase in stock-based compensation of $(0.2) million and $0.2 million, respectively.

Current wording

The increases in sales, general and administrative expense for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven primarily by increases in employee and incentive compensation, and increases in stock-based compensation of $2.3 million and $2.5 million, respectively, partially offset by decreases in bad debt expense, increases in bad debt recoveries, and a higher allocation of costs from sales, general and administrative to development projects.

Previous wording

The increases in interest income for the three and six months ended June 30, 2025, compared to the same periods in 2024, were driven primarily by an increase in income earned from marketable securities and imputed interest on a long-term customer receivable.

Current wording

The increases in interest income for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven primarily by an increase in income earned from marketable securities and imputed interest on a long-term customer receivable.

Previous wording

The increases in interest expense for the three and six months ended June 30, 2025, compared to the same periods in 2024, were driven by interest on the outstanding LOC balance.

Current wording

The increases in interest expense for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven by interest on the outstanding LOC balance. Interest expense on the line of credit (LOC) was $0.3 million and $0.8 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

The decreases in income tax expense for the three and six months ended June 30, 2025 compared to the same periods in 2024 were driven by expiring statutes of limitations on unrecognized tax positions in the three months ended June 30, 2025.

Current wording

The increase in income tax expense for the three months ended September 30, 2025 compared to the same period in 2024 was driven by an increase in foreign income. The decrease in income tax expense for the nine months ended September 30, 2025 compared to the same period in 2024 was driven by expiring statutes of limitations on unrecognized tax positions in the three months ended June 30, 2025.

Previous wording

We had cash and cash equivalents and restricted cash of $79.1 million and $66.1 million as of June 30, 2025 and December 31, 2024, respectively. In addition, we had marketable securities of $34.9 million and $34.9 million at June 30, 2025 and December 31, 2024, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $13.0 million from December 31, 2024 to June 30, 2025.

Current wording

We had cash and cash equivalents and restricted cash of $81.4 million and $66.1 million as of September 30, 2025 and December 31, 2024, respectively. In addition, we had marketable securities of $34.7 million and $34.9 million at September 30, 2025 and December 31, 2024, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $15.2 million from December 31, 2024 to September 30, 2025.

Previous wording

For the six months ended June 30, 2025, our principal sources of liquidity included the draw of $20 million on our LOC and cash collected from customers. We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from period to period and will depend on many factors, including the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our products and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements.

Current wording

For the nine months ended September 30, 2025, our principal sources of liquidity included the draw of $20 million on our LOC and cash collected from customers. We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from period to period and will depend on many factors, including the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our products and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements.

Previous wording

Net Cash (Used in) Provided by Operating Activities

Current wording

Net Cash Provided by Operating Activities

Previous wording

During the six months ended June 30, 2025, net cash used in operating activities was $1.4 million, which was the result of an $11.7 million net loss and cash used in net working capital of $8.0 million, offset by non-cash expenses totaling $18.3 million related primarily to depreciation, amortization, and stock-based compensation. The cash used in net working capital in the six months ended June 30, 2025 was driven by a $6.9 million increase in inventory, a $8.5 million increase in accounts receivable and a $1.1 million decrease in deferred revenues. These uses of cash were offset by a $3.5 million increase in accounts payable, a $3.1 million increase in accrued and other long-term liabilities, a $1.3 million decrease in prepaid expense and other assets, net and a $0.2 million decrease in lease liabilities.

Current wording

During the nine months ended September 30, 2025, net cash provided by operating activities was $3.8 million, which was the result of an $18.6 million net loss and cash used in net working capital of $10.7 million, offset by non-cash expenses totaling $33.1 million related primarily to depreciation, amortization, and stock-based compensation. The cash used in net working capital in the nine months ended September 30, 2025 was driven by a $10.2 million increase in inventory, a $13.2 million increase in accounts receivable and a $1.2 million decrease in deferred revenues. These uses of cash were offset by a $1.9 million increase in accounts payable, a $5.8 million increase in accrued and other long-term liabilities, a $5.9 million decrease in prepaid expense and other assets, net and a $0.9 million decrease in lease liabilities.

Previous wording

During the six months ended June 30, 2025, net cash used in investing activities was $4.4 million, which was driven by the net purchase of marketable securities of $0.2 million and net capital expenditures of $4.2 million.

Current wording

During the nine months ended September 30, 2025, net cash used in investing activities was $7.3 million, which was driven by the net purchase of marketable securities of $0.3 million and net capital expenditures of $7.0 million.

Previous wording

During the six months ended June 30, 2025, net cash provided by financing activities was $18.5 million, which consisted of a draw of $20.0 million from our LOC and proceeds from stock option exercises and employee stock plan purchases of $1.5 million, partially offset by taxes paid on the net settlement of stock awards of $3.1 million.

Current wording

During the nine months ended September 30, 2025, net cash provided by financing activities was $18.5 million, which consisted of a draw of $20.0 million from our LOC and proceeds from stock option exercises and employee stock plan purchases of $1.6 million, partially offset by taxes paid on the net settlement of stock awards of $3.1 million.

Previous wording

We have a $40.0 million revolving LOC with Banc of California dated September 24, 2018, which is secured by our assets and matures on September 24, 2027. The LOC agreement contains restrictive and financial covenants, including a minimum total cash covenant, and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 7.0% on the LOC at June 30, 2025 is based on the Prime Rate, minus a margin based on our liquidity levels.

Current wording

We have a $40.0 million revolving LOC with Banc of California dated September 24, 2018, which is secured by our assets and matures on September 24, 2027. The LOC agreement contains restrictive and financial covenants, including a minimum total cash covenant, and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 6.25% on the LOC at September 30, 2025 is based on the Prime Rate, minus a margin based on our liquidity levels.

Previous wording

During the six months ended June 30, 2025, we drew $20.0 million under the LOC to support working capital and general corporate purposes. As of June 30, 2025, $20.0 million was outstanding on the LOC and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.

Current wording

During the nine months ended September 30, 2025, we drew $20.0 million under the LOC to support working capital and general corporate purposes. As of September 30, 2025, $20.0 million was outstanding on the LOC and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.

Previous wording

We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three and six months ended June 30, 2025. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could materially adversely affect our business, financial condition and results of operations.

Current wording

We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three and nine months ended September 30, 2025. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could materially adversely affect our business, financial condition and results of operations.