NLIGHT, INC.

Previous wording

These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements include, but are not limited to, statements about: our business model and strategic plans; our expectations regarding manufacturing; our future financial performance; demand for our semiconductor and fiber laser solutions; our ability to develop innovative products; our expectations regarding product volumes and the introduction of new products; our technology and new product research and development activities; the impact of new import and export controls; the impact of changes in regulations and customs, tariffs and trade barriers, or the perception that any of them could occur; the impact of ongoing supply chain disruptions; the impact of inflation; the impact of seasonality; the effect on our business of litigation to which we are or may become a party; and the sufficiency of our existing liquidity sources to meet our cash needs.

Current wording

These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements include, but are not limited to, statements about: our business model and strategic plans; our expectations regarding manufacturing; our future financial performance; demand for our semiconductor and fiber laser solutions; our ability to develop innovative products; our expectations regarding product volumes and the introduction of new products; our technology and new product research and development activities; the impact of U.S. government budget and appropriations processes, including continuing resolutions and potential government shutdowns; the impact of new import and export controls; the impact of changes in regulations and customs, tariffs and trade barriers, or the perception that any of them could occur; the impact of ongoing supply chain disruptions; our restructuring of China operations; the impact of inflation; the impact of seasonality; the effect on our business of litigation to which we are or may become a party; and the sufficiency of our existing liquidity sources to meet our cash needs.

Previous wording

nLIGHT, Inc. is a leading provider of high‑power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications. We design, develop, manufacture, integrate and sell a range of high-power semiconductor lasers and fiber lasers and related components, modules and subsystems that are typically integrated into laser systems or manufacturing tools built by us or our customers. We also make high energy pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser systems for directed energy and laser sensing systems for use in a wide range of commercial and defense applications. Our long history of commercial technology development and vertical integration enables us to develop products that leverage the same underlying technology across a variety of applications and markets, thereby enabling us to leverage the development of shared technologies in unique combinations to offer innovative and reliable products to customers in each of our end markets. We sell our products into three primary end markets: Aerospace and Defense, Industrial, and Microfabrication.

Current wording

nLIGHT, Inc. is a leading provider of high‑power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications. We design, develop, manufacture, integrate and sell a range of high-power semiconductor and fiber lasers that are typically integrated into laser systems or manufacturing tools built by us or our customers. We also make high energy pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser systems for directed energy and laser sensing systems for use in a wide range of commercial and defense applications. Our long history of commercial technology development and vertical integration enables us to develop products that leverage the same underlying technology across a variety of applications and markets, thereby enabling us to deliver innovative and reliable products to customers in each of our end markets.

Previous wording

Revenues increased to $162.8 million in the six months ended June 30, 2026 compared to $113.4 million in the same period in 2025 due primarily to an increase in both product and development revenue from the Aerospace and Defense end market. We generated net loss of $0.7 million for the six months ended June 30, 2026 compared to a net loss of $11.7 million for the same period in 2025.

Current wording

Revenues increased to $236.5 million in the nine months ended September 30, 2026 compared to $180.1 million in the same period in 2025 due primarily to an increase in both product and development revenue from the Defense & Space end market. We incurred a net loss of $7.9 million for the nine months ended September 30, 2026 compared to a net loss of $18.6 million for the same period in 2025.

Previous wording

Our revenue depends largely on market conditions, competitive pressure, and achievement of design wins. We consider a design win to occur when a customer notifies us that it has selected one of our products to be incorporated into a product or system under development by such customer. In the Aerospace and Defense market, our business also depends in large part on continued investment in laser technology by the U.S. government and its allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future.

Current wording

Our revenue depends largely on market conditions, competitive pressure, and achievement of design wins. We consider a design win to occur when a customer notifies us that it has selected one of our products to be incorporated into a product or system under development by such customer. In the Defense & Space market, our business also depends in large part on continued investment in laser technology by the U.S. government and its allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future. Certain of our U.S. government programs are currently funded under a continuing resolution that expires on December 11, 2026. A further lapse in appropriations, or an extended period of funding under continuing resolutions, could delay U.S. government procurements, contract awards, deliveries and payments and adversely affect our results of operations.

Previous wording

Our quarterly revenues can fluctuate with general economic trends, the timing of capital expenditures by our customers, holidays, and general economic trends. In addition, as is typical in our industry, we tend to recognize a larger percentage of our quarterly revenues in the last month of the quarter, which may impact our working capital trends.

Current wording

Our quarterly revenues can fluctuate with general economic trends, the timing of capital expenditures by our customers and holidays. In addition, as is typical in our industry, we tend to recognize a larger percentage of our quarterly revenues in the last month of the quarter, which may impact our working capital trends.

Previous wording

For example, in February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). In March 2026, the U.S. Court of International Trade Court issued an additional ruling stating that importers that have paid tariffs under IEEPA are due refunds. In addition, in June 2026, China implemented enhanced export declaration requirements for certain machine tools, unmanned aerial systems, and related components. These new requirements impose more stringent documentation, classification, and reporting obligations on exporters that have resulted in increased compliance costs and longer customs clearance times.

Current wording

For example, in February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). In March 2026, the U.S. Court of International Trade issued an additional ruling stating that importers that have paid tariffs under IEEPA are due refunds. In addition, in June 2026, China implemented enhanced export declaration requirements for certain machine tools, unmanned aerial systems, and related components. These new requirements impose more stringent documentation, classification, and reporting obligations on exporters that have resulted in increased compliance costs and longer customs clearance times.

Previous wording

Changes in global economic conditions and international trade uncertainty did not have a material impact on our financial results in the three and six months ended June 30, 2026, but components from certain key suppliers outside the United States have been held in customs in China along with shipments from nLIGHT, Inc. to certain customers outside the United States. If we are unable to mitigate these supply chain disruptions, we expect them to increase our operational complexity, continue to disrupt our production and have a material negative impact on our revenue and profitability in future periods.

Current wording

Changes in global economic conditions and international trade negatively impacted our revenue and operating results in the three and nine months ended September 30, 2026, as components from certain key suppliers in China were held in customs in China along with shipments from nLIGHT, Inc. to certain customers in China. During the third quarter of 2026 we initiated a variety of mitigation strategies to secure the components and materials needed to manufacture our products, all of which are ongoing. If we are unable to effectively mitigate these supply chain disruptions, we expect them to increase our operational complexity, continue to disrupt our production and have a material negative impact on our revenue, cost, and profitability in future periods.

Previous wording

The increases in revenue from the Aerospace and Defense end market for the three and six months ended June 30, 2026, compared to the same periods in 2025, were driven primarily by increased unit sales of directed energy laser products, increased unit sales of laser components for defense programs, and progress on existing research and development contracts. The increases in revenue from the Microfabrication end market for the three and six months ended June 30, 2026 compared to the same periods in 2025 were primarily attributable to increased unit sales of semiconductor lasers in all regions. The increases in revenue from the Industrial end market for the three and six months ended June 30, 2026, compared to the same periods in 2025, were the result of increased unit sales of additive fiber lasers in North America, partially offset by decreased unit sales of other industrial laser products.

Current wording

The increases in revenue from the Defense & Space end market for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were driven primarily by increased unit sales of directed energy laser products, increased unit sales of laser components for defense programs, and progress on both new and existing research and development contracts. The increase in revenue from the Advanced Manufacturing end market for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was primarily attributable to increased unit sales of semiconductor lasers and fiber lasers to additive manufacturing customers, partially offset by decreased unit sales of fiber lasers to cutting and welding customers.

Previous wording

The increases in Laser Products revenue for the three and six months ended June 30, 2026 compared to the same periods in 2025 were the result of increased unit sales across all end markets. The increases in Advanced Development revenue for the three and six months ended June 30, 2026, compared to the same periods in 2025, 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, 2026 compared to the same periods in 2025 were the result of increased unit sales across all end markets. The increases in Advanced Development revenue for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were driven by progress on new and existing research and development contracts. All Advanced Development revenue is included in the Defense & Space market.

Previous wording

Geographic revenue information is based on the location to which we ship our products. The increases in North America revenues for the three and six months ended June 30, 2026 compared to the same periods in 2025, were due to increased revenue across all end markets, with revenue from the Aerospace and Defense end market representing most of the increase.

Current wording

Geographic revenue information is based on the location to which we ship our products.

Previous wording

The increase in Asia Pacific revenue for the three months ended June 30, 2026 compared to the same period in 2025 was driven by increased revenue from the Industrial and Microfabrication end markets, while the increase in Asia Pacific revenue for the six months ended June 30, 2026 was driven by increased revenue from the Aerospace and Defense and Microfabrication end markets, partially offset by decreased revenue from the Industrial end market.

Current wording

The increase in Asia Pacific revenues for the three months ended September 30, 2026 compared to the same period in 2025, was due to increased revenue from the Advanced Manufacturing end market, partially offset by a decrease from the Defense & Space end market. The increase in Asia Pacific revenues for the nine months ended September 30, 2026 compared to the same period in 2025, was due to increased revenue across all end markets.

Previous wording

The increases in EMEA revenues for the three and six months ended June 30, 2026 compared to the same periods in 2025, were due to increased revenue from the Aerospace and Defense and Microfabrication end markets, partially offset by decreased revenue from the Industrial end market.

Current wording

The increases in EMEA revenues for the three and nine months ended September 30, 2026 compared to the same periods in 2025, were due to increased revenue across all end markets.

Previous wording

The increase in Laser Products gross margin for the three and six months ended June 30, 2026 compared to the same periods in 2025 were driven primarily by sales mix and the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales. The decrease in development gross margin for the three and six months ended June 30, 2026 compared to the same periods in 2025 was primarily the result of an increase in revenue from cost-plus fixed fee (CPFF) contracts relative to firm fixed price (FFP) contracts. CPFF contracts generally have a lower average gross margin than FFP contracts.

Current wording

The increase in Laser Products gross margin for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was driven primarily by product sales mix, decreased inventory and warranty reserve charges, and the impact of increased production volumes on fixed manufacturing costs driven by demand. The increase in development gross margin for the three months ended September 30, 2026 compared to the same period in 2025 is attributable to changes in the mix of research and development contracts. The decrease in development gross margin for the nine months ended September 30, 2026 compared to the same period in 2025 was primarily the result of an increase in revenue from cost-plus fixed fee (CPFF) contracts relative to firm fixed price (FFP) contracts. Our CPFF contracts generally have a lower average gross margin than our FFP contracts.

Previous wording

The increases in research and development expense for the three and six months ended June 30, 2026 compared to the same periods in 2025 were primarily attributable to increases in employee and incentive compensation and increases in stock-based compensation of $0.8 million and $1.3 million for the three and six months ended June 30, 2026, respectively.

Current wording

The increases in research and development expense for the three and nine months ended September 30, 2026 compared to the same periods in 2025 were primarily attributable to increased employee compensation driven by higher headcount. The increase in research and development expense for the nine months ended September 30, 2026 is also attributable to an increase in stock-based compensation of $1.3 million.

Previous wording

The increases in sales, general and administrative expense for the three and six months ended June 30, 2026, compared to the same periods in 2025, were driven primarily by increases in employee and incentive compensation, and increases in stock-based compensation of $3.1 million and $7.0 million, respectively, partially offset by decreases in bad debt recoveries and a higher allocation of costs from sales, general and administrative to development projects.

Current wording

The decrease in sales, general and administrative expense for the three months ended September 30, 2026, compared to the same period in 2025, was driven primarily by a higher allocation of costs from sales, general and administrative to development projects. The increase in sales, general and administrative expense for the nine months ended September 30, 2026, compared to the same period in 2025, was driven primarily by an increase in stock-based compensation of $7.1 million, increased employee compensation, and decreased bad debt recoveries, partially offset by 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, 2026, compared to the same periods in 2025, were driven primarily by an increase in the average balance of cash, cash equivalents and marketable securities.

Current wording

The increases in interest income for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were driven primarily by an increase in the average balance of cash, cash equivalents and marketable securities.

Previous wording

The changes in interest expense for the three and six months ended June 30, 2026, compared to the same periods in 2025, were primarily driven by the timing of our borrowing and repayment of $20.0 million under the line of credit (LOC). During the three months ended March 31, 2025, we drew $20.0 million under the LOC. During the three months ended June 30, 2026, we repaid the $20.0 million LOC balance. Interest expense on the LOC was $0.2 million and $0.5 million for the three and six months ended June 30, 2026, respectively.

Current wording

The decreases in interest expense for the three and nine months ended September 30, 2026, compared to the same periods in 2025, were primarily driven by the timing of our borrowing and repayment of $20.0 million under the line of credit (LOC). During the three months ended March 31, 2025, we drew $20.0 million under the LOC. During the three months ended June 30, 2026, we repaid the $20.0 million LOC balance. Interest expense on the LOC was immaterial and $0.5 million for the three and nine months ended September 30, 2026, respectively.

Previous wording

We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, and South Korea. While our tax expense is largely dependent on the geographic mix of earnings related to our foreign operations, we also record tax expense for uncertain tax positions taken and associated penalties and interest. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States, and a partial valuation allowance in China as of June 30, 2026. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates and deductibility of certain costs and expenses by jurisdiction.

Current wording

We record income tax expense for taxes in our foreign jurisdictions including China, Finland, Italy, and South Korea. While our tax expense is largely dependent on the geographic mix of earnings related to our foreign operations, we also record tax expense for uncertain tax positions taken and associated penalties and interest. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States (U.S.), and a partial valuation allowance in China as of September 30, 2026. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates and deductibility of certain costs and expenses by jurisdiction.

Previous wording

The decrease in income tax expense for the six months ended June 30, 2026 compared to the same period in 2025 was driven by a decrease in income in foreign jurisdictions and discrete tax benefits for expiring statutes of limitations on unrecognized tax positions that were partially reduced by an increase in valuation allowance in China in the second quarter of 2026. Our tax expense is dependent on the geographic mix of earnings and primarily related to our foreign operations.

Current wording

Our tax expense is dependent on the geographic mix of earnings and primarily related to our foreign operations. The increase in income tax expense for the three and nine months ended September 30, 2026 compared to the same periods in 2025 was driven by an increase in foreign income. The second quarter of 2026 includes an increase in the valuation allowance for China that was partially offset by discrete tax benefits for expiring statutes of limitations on unrecognized tax positions.

Previous wording

We had cash and cash equivalents and restricted cash of $296.1 million and $99.0 million as of June 30, 2026 and December 31, 2025, respectively. In addition, we had marketable securities of $34.7 million and $34.9 million at June 30, 2026 and December 31, 2025, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $196.8 million from December 31, 2025 to June 30, 2026.

Current wording

We had cash and cash equivalents and restricted cash of $279.7 million and $99.0 million as of September 30, 2026 and December 31, 2025, respectively. In addition, we had marketable securities of $34.8 million and $34.9 million at September 30, 2026 and December 31, 2025, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $180.6 million from December 31, 2025 to September 30, 2026.

Previous wording

For the six months ended June 30, 2026, our principal sources of liquidity were from our public offering 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, 2026, our principal sources of liquidity were from our public offering 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

During the six months ended June 30, 2026, net cash provided by operating activities was $30.4 million, which was the result of cash provided by net working capital of $1.6 million and by non-cash expenses totaling $29.5 million related primarily to depreciation, amortization, and stock-based compensation, offset by net loss of $0.7 million. The cash provided by net working capital in the six months ended June 30, 2026 was driven by a $9.2 million increase in deferred revenues, $4.0 million decrease in accounts receivable, $3.0 million increase in accounts payable, and $0.5 million decrease in other assets, net. The cash provided by working capital was offset by a $8.5 million increase in prepaid expenses and other current assets, $3.0 million increase in inventory, $2.2 million decrease in accrued and other long-term liabilities, $1.3 million decrease in lease liabilities, and $0.2 million decrease in non-current income taxes payable.

Current wording

During the nine months ended September 30, 2026, net cash provided by operating activities was $17.3 million, which was the result of an $7.9 million net loss and cash used in net working capital of $17.6 million, offset by non-cash expenses totaling $42.8 million related primarily to depreciation, amortization, stock-based compensation, and restructuring charges. The cash used in net working capital in the nine months ended September 30, 2026 was driven by a $21.8 million increase in prepaid expenses and other current assets and a $15.1 million increase in inventory. The cash used in working capital was offset by an $8.4 million increase in deferred revenues, $3.6 million decrease in accounts receivable, net, $3.1 million increase in lease liabilities, $2.3 million increase in accounts payable, $1.5 million increase in accrued and other long-term liabilities, and $0.4 million decrease in other assets, net.

Previous wording

During the six months ended June 30, 2026, net cash used in investing activities was $6.2 million, which was driven by net capital expenditures of $7.0 million, offset by the net proceeds from maturities and sales of marketable securities of $0.7 million.

Current wording

During the nine months ended September 30, 2026, net cash used in investing activities was $10.3 million, which was driven by net capital expenditures of $11.4 million, offset by the net proceeds from maturities and sales of marketable securities of $0.7 million and proceeds from the sale of a subsidiary of $0.4 million.

Previous wording

During the six months ended June 30, 2026, net cash provided by financing activities was $173.0 million, which consisted of proceeds from our public offering, net of underwriting discounts and offering costs, of $191.3 million and proceeds from stock option exercises and employee stock plan purchases of $1.9 million, offset by repayment of $20.0 million of the LOC and tax payments related to stock award issuances of $0.2 million.

Current wording

During the nine months ended September 30, 2026, net cash provided by financing activities was $173.6 million, which consisted of proceeds from our public offering, net of underwriting discounts and offering costs, of $191.3 million and proceeds from stock option exercises and employee stock plan purchases of $2.5 million, offset by repayment of $20.0 million of the LOC and tax payments related to stock award issuances of $0.2 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 5.75% on the LOC at June 30, 2026 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 6.0% on the LOC at September 30, 2026 is based on the Prime Rate, minus a margin based on our liquidity levels.

Previous wording

As of June 30, 2026, no amounts were outstanding on the LOC and we were in compliance with all covenants. The remaining $40.0 million unused portion of the LOC is available for borrowing.

Current wording

As of September 30, 2026, no amounts were outstanding on the LOC and we were in compliance with all covenants. The full $40.0 million unused portion of the LOC is available for borrowing.