Qnity Electronics, Inc.

NOTE 3 -REVENUE

Revenue Recognition

Products

Substantially all of Qnity’s revenue is derived from product sales. Product sales consist of sales of Qnity’s products to supply manufacturers and distributors. Qnity considers purchase orders, which in some cases are governed by master supply agreements, to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year.

Net sales to Samsung Electronics Co., Ltd accounted for 11% and 10% of total net sales for each of the three months ended March 31, 2026 and 2025, respectively. Additionally, net sales to Taiwan Semiconductor Manufacturing Company Limited (TSMC) accounted for 8% of total net sales for the three months ended March 31, 2026 and 2025. The majority of revenues for both customers relate to the Semiconductor Technologies segment.

Disaggregation of Revenue

The Company disaggregates its revenue from contracts with customers by segment and geographic region, as the Company believes it best depicts the nature, amount, timing and uncertainty of its revenue and cash flows.

1. Includes Canada and Latin America.

2. Europe, Middle East and Africa.

Contract Balances

From time to time, the Company enters into arrangements in which it receives payments from customers based upon contractual billing schedules. The Company records accounts receivables when the right to consideration becomes unconditional. Contract liabilities primarily reflect deferred revenue from advance payment for product that the Company has received from customers. The Company classifies deferred revenue as current or noncurrent based on the timing of when the Company expects to recognize revenue.

Revenue recognized from amounts included in contract liabilities at the beginning of the period were insignificant for the three months ended March 31, 2026 and 2025. The Company did not recognize any asset impairment charges related to contract assets during the periods. The Company will begin recognizing its deferred revenue when the project associated with the revenue that was deferred is completed and commercial production begins, currently expected in 2027.

1. Included in "Accounts and notes receivable - net" in the interim Condensed Consolidated Balance Sheets.

2. Included in "Accrued and other current liabilities" in the interim Condensed Consolidated Balance Sheets.

3. Included in "Other noncurrent obligations" in the interim Condensed Consolidated Balance Sheets.