nLIGHT Inc.
02/27/2026 | Press release | Distributed by Public on 02/27/2026 10:21
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the following words: "ability," "anticipate," "attempt," "believe," "can be," "continue," "could," "depend," "enable," "estimate," "expect," "extend," "grow," "if," "intend," "likely," "may,"
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"objective," "ongoing," "plan," "possible," "potential," "predict," "project," "propose," "rely," "should," "target," "will," "would" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.
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 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.
You should refer to the "Risk Factors" section of this report for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, which although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Overview
nLIGHT, Inc. is a leading provider of high-power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications. We design, manufacture, and sell a range of high-power semiconductor lasers and fiber lasers that are typically integrated into laser systems or manufacturing tools built by 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 used in a wide range of defense applications. Our vertical integration enables us to develop products that leverage the same underlying technology, thereby enabling us 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.
We operate in two reportable segments consisting of the Laser Products segment and the Advanced Development segment.
Revenues increased to $261.3 million in the year ended December 31, 2025 compared to $198.5 million in 2024 due to higher sales volumes in the Laser Products segment and continued growth in the Advanced Development segment. We generated a net loss of $23.5 million for the year ended December 31, 2025 compared to a net loss of $60.8 million in 2024.
Factors Affecting Our Performance
Demand for our Products and Solutions
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
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allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future.
Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of ASPs of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature. We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications.
Technology and New Product Development
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.
Manufacturing Costs and Gross Margins
Product gross profit, in absolute dollars and gross margin, may fluctuate from period to period based on product sales mix, sales volumes, changes in ASPs, production volumes, the corresponding absorption of manufacturing overhead expenses, the cost of purchased materials, production costs and manufacturing yields. Product sales mix can affect gross profits due to variations in profitability related to product configurations and cost profiles, customer volume pricing, availability of competitive products in various markets, and new product introductions, among other factors. Even though certain of our products are built offshore by contract manufacturers, capacity utilization affects gross margin because of the fixed cost associated with our U.S.-based manufacturing capabilities. Change in sales and production volumes impact absorption of fixed costs, manufacturing efficiencies and production costs.
Our Development gross profit varies with the type and terms of contracts, contract volume, project mix, changes in the estimated cost of projects at completion, and successful execution on projects during the period. Most of our Development contracts have historically been structured as cost plus fixed fee due to the technical complexity of the research and development services, but we also perform work under fixed price contracts where gross margin can change from period to period based on the estimated cost of the project at completion.
Seasonality
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.
Global Economic Conditions
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.
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 in 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.
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Results of Operations
The following table sets forth our operating results as a percentage of revenues for the periods indicated (which may not add up due to rounding):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenue: | |||||||||||||||||
| Products | 68.6 | % | 68.8 | % | 74.6 | % | |||||||||||
| Development | 31.4 | 31.2 | 25.4 | ||||||||||||||
| Total revenue | 100.0 | 100.0 | 100.0 | ||||||||||||||
| Cost of revenue: | |||||||||||||||||
| Products | 42.6 | 54.4 | 54.4 | ||||||||||||||
| Development | 27.6 | 29.0 | 23.6 | ||||||||||||||
| Total cost of revenue | 70.2 | 83.4 | 78.0 | ||||||||||||||
| Gross profit | 29.8 | 16.6 | 22.0 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 18.4 | 22.7 | 22.0 | ||||||||||||||
| Sales, general and administrative | 20.7 | 24.8 | 21.8 | ||||||||||||||
| Restructuring | 0.9 | 2.2 | 0.4 | ||||||||||||||
| Total operating expenses | 40.0 | 49.7 | 44.2 | ||||||||||||||
| Loss from operations | (10.2) | (33.1) | (22.2) | ||||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest income | 1.9 | 0.9 | 0.5 | ||||||||||||||
| Interest expense | (0.4) | - | - | ||||||||||||||
| Other income, net | - | 1.6 | 1.3 | ||||||||||||||
| Loss before income taxes | (8.7) | (30.6) | (20.4) | ||||||||||||||
| Income tax expense (benefit) | 0.3 | - | (0.5) | ||||||||||||||
| Net loss | (9.0) | % | (30.6) | % | (19.9) | % | |||||||||||
Revenues by End Market
Our revenues by end market were as follows (dollars in thousands):
| Year Ended December 31, | Change | ||||||||||||||||||||||||||||
| 2025 | % of Revenue | 2024 | % of Revenue | Amount | % | ||||||||||||||||||||||||
| Aerospace and Defense | $ | 175,253 | 67.0 | % | $ | 109,540 | 55.2 | % | $ | 65,713 | 60.0 | % | |||||||||||||||||
| Microfabrication | 47,230 | 18.1 | 43,393 | 21.8 | 3,837 | 8.8 | |||||||||||||||||||||||
| Industrial | 38,847 | 14.9 | 45,615 | 23.0 | (6,768) | (14.8) | |||||||||||||||||||||||
| $ | 261,330 | 100.0 | % | $ | 198,548 | 100.0 | % | $ | 62,782 | 31.6 | % | ||||||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||||||||
| 2024 | % of Revenue | 2023 | % of Revenue | Amount | % | ||||||||||||||||||||||||
| Aerospace and Defense | $ | 109,540 | 55.2 | % | $ | 91,394 | 43.6 | % | $ | 18,146 | 19.9 | % | |||||||||||||||||
| Microfabrication | 43,393 | 21.8 | 47,483 | 22.6 | (4,090) | (8.6) | |||||||||||||||||||||||
| Industrial | 45,615 | 23.0 | 71,044 | 33.8 | (25,429) | (35.8) | |||||||||||||||||||||||
| $ | 198,548 | 100.0 | % | $ | 209,921 | 100.0 | % | $ | (11,373) | (5.4) | % | ||||||||||||||||||
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The increase in revenue from the Aerospace and Defense market for 2025 compared to 2024 was driven by increased unit sales of directed energy laser products and progress on existing development contracts. The increase in revenue from the Microfabrication market for 2025 compared to 2024 was primarily attributable to increased unit sales of semiconductor lasers in EMEA and Asia Pacific, partially offset by decreased unit sales in North America. The decrease in revenue from the Industrial market for 2025 compared to 2024 was primarily the result of decreased unit sales of industrial fiber lasers for cutting and welding due to lower customer demand and deteriorating market conditions across all regions.
The increase in revenue from the Aerospace and Defense market for 2024 compared to 2023 was the result of increased unit sales of products due to higher demand, an increase in ASPs, and increased development revenue from development contracts awarded primarily in the second half of 2023. The decrease in revenue from the Microfabrication market for 2024 compared to 2023 was primarily attributable to decreased unit sales of semiconductor lasers in EMEA and Asia Pacific, offset partially by increased unit sales in North America. The decrease in revenue from the Industrial market for 2024 compared to 2023 was primarily the result of decreased unit sales across all regions due to deteriorating market conditions and lower customer demand in cutting and additive manufacturing.
Revenues by Segment
Our revenues by segment were as follows (dollars in thousands):
| Year Ended December 31, | Change | ||||||||||||||||||||||||||||
| 2025 | % of Revenue | 2024 | % of Revenue | Amount | % | ||||||||||||||||||||||||
| Laser Products | $ | 179,236 | 68.6 | % | $ | 136,659 | 68.8 | % | $ | 42,577 | 31.2 | % | |||||||||||||||||
| Advanced Development | 82,094 | 31.4 | 61,889 | 31.2 | 20,205 | 32.6 | |||||||||||||||||||||||
| $ | 261,330 | 100.0 | % | $ | 198,548 | 100.0 | % | $ | 62,782 | 31.6 | % | ||||||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||||||||
| 2024 | % of Revenue | 2023 | % of Revenue | Amount | % | ||||||||||||||||||||||||
| Laser Products | $ | 136,659 | 68.8 | % | $ | 156,666 | 74.6 | % | $ | (20,007) | (12.8) | % | |||||||||||||||||
| Advanced Development | 61,889 | 31.2 | 53,255 | 25.4 | 8,634 | 16.2 | |||||||||||||||||||||||
| $ | 198,548 | 100.0 | % | $ | 209,921 | 100.0 | % | $ | (11,373) | (5.4) | % | ||||||||||||||||||
The increase in Laser Products revenue for 2025 compared to 2024 was the result of increased revenue from the Aerospace and Defense market and Microfabrication market as discussed above, partially offset by decreased revenue from the Industrial market. The increase in Advanced Development revenue for 2025 compared to 2024 was driven by progress on existing research and development contracts.
The decrease in Laser Products revenue for 2024 compared to 2023 was driven by decreased revenue from both the Industrial and Microfabrication markets as discussed above, offset partially by increased revenue from the Aerospace and Defense market. The increase in Advanced Development revenue for 2024 compared to 2023 was the result of increased activity on development contracts awarded primarily in the second half of 2023.
All Advanced Development revenue is included in the Aerospace and Defense market.
Revenues by Geographic Region
Our revenues by geographic region were as follows (dollars in thousands):
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| Year Ended December 31, | Change | ||||||||||||||||||||||||||||
| 2025 | % of Revenue | 2024 | % of Revenue | Amount | % | ||||||||||||||||||||||||
| North America | $ | 185,620 | 71.0 | % | $ | 132,812 | 66.9 | % | $ | 52,808 | 39.8 | % | |||||||||||||||||
| Asia Pacific | 38,422 | 14.7 | 38,137 | 19.2 | 285 | 0.7 | |||||||||||||||||||||||
|
EMEA(1)
|
37,288 | 14.3 | 27,599 | 13.9 | 9,689 | 35.1 | |||||||||||||||||||||||
| $ | 261,330 | 100.0 | % | $ | 198,548 | 100.0 | % | $ | 62,782 | 31.6 | % | ||||||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||||||||
| 2024 | % of Revenue | 2023 | % of Revenue | Amount | % | ||||||||||||||||||||||||
| North America | $ | 132,812 | 66.9 | % | $ | 129,311 | 61.6 | % | $ | 3,501 | 2.7 | % | |||||||||||||||||
| Asia Pacific | 38,137 | 19.2 | 45,765 | 21.8 | (7,628) | (16.7) | |||||||||||||||||||||||
|
EMEA(1)
|
27,599 | 13.9 | 34,845 | 16.6 | (7,246) | (20.8) | |||||||||||||||||||||||
| $ | 198,548 | 100.0 | % | $ | 209,921 | 100.0 | % | $ | (11,373) | (5.4) | % | ||||||||||||||||||
(1) EMEA consists of Europe, the Middle East, and Africa.
Geographic revenue information is based on the location to which we deliver our products and services.
The increase in North America revenue for 2025 compared to 2024 was the result of increased revenue from the Aerospace and Defense market, partially offset by decreased revenue from the Microfabrication and Industrial markets. The increases in Asia Pacific and EMEA revenues for 2025 compared to 2024 were the result of increased revenue from the Aerospace and Defense market and Microfabrication market, partially offset by decreased revenue from the Industrial market.
The increase in North America revenue for 2024 compared to 2023 was the result of increased revenue from the Aerospace and Defense market and Microfabrication market, partially offset by decreased revenue from the Industrial market. The decrease in Asia Pacific revenue for 2024 compared to 2023 was the result of decreased revenue from all end markets. The decrease in EMEA revenue for 2024 compared to 2023 was the result of decreased revenue from the Industrial and Microfabrication markets, offset partially by increased revenue from the Aerospace and Defense market.
Cost of Revenues and Gross Margin
Cost of Laser Products revenue consists primarily of manufacturing materials, labor, shipping and handling costs, tariffs and manufacturing-related overhead. We order materials and supplies based on backlog and forecasted customer orders. We expense all warranty costs and inventory provisions as cost of revenues. Cost of Advanced Development revenue consists of materials, labor, subcontracting costs, and an allocation of indirect costs including overhead and general and administrative.
Our gross profit and gross margin were as follows (dollars in thousands):
| Year Ended December 31, 2025 | |||||||||||||||||||||||
| Laser Products | Advanced Development | Corporate and Other | Total | ||||||||||||||||||||
| Gross profit | $ | 70,252 | $ | 10,181 | $ | (2,470) | $ | 77,963 | |||||||||||||||
| Gross margin | 39.2 | % | 12.4 | % | NM* | 29.8 | % | ||||||||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||||||||
| Laser Products | Advanced Development | Corporate and Other | Total | ||||||||||||||||||||
| Gross profit | $ | 31,094 | $ | 4,363 | $ | (2,438) | $ | 33,019 | |||||||||||||||
| Gross margin | 22.8 | % | 7.0 | % | NM* | 16.6 | % | ||||||||||||||||
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| Year Ended December 31, 2023 | |||||||||||||||||||||||
| Laser Products | Advanced Development | Corporate and Other | Total | ||||||||||||||||||||
| Gross profit | $ | 44,891 | $ | 3,628 | $ | (2,406) | $ | 46,113 | |||||||||||||||
| Gross margin | 28.7 | % | 6.8 | % | NM* | 22.0 | % | ||||||||||||||||
*NM - Not meaningful.
The increase in Laser Products gross margin for 2025 compared to 2024 was driven by primarily by changes in sales mix, which included increased sales of directed energy laser products, the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales as previously discussed, and an increase in duty reclaim and manufacturing yields. In addition, Laser Products gross margin in 2024 was negatively impacted by inventory charges related to products for the Industrial market in the fourth quarter of 2024. The increase in Advanced Development gross margin for 2025 compared to 2024 was primarily the result of an increase in revenue from fixed priced contracts that carried higher average gross margins than cost-plus fixed fee contracts.
The decrease in Laser Products gross margin for 2024 compared to 2023 was driven by the impact of lower sales and production volumes on fixed manufacturing costs due to the decrease in overall customer demand and inventory charges related to products for the Industrial market in the fourth quarter of 2024, offset partially by positive changes in sales mix. The increase in Advanced Development gross margin for 2024 compared to 2023 was not significant and was primarily the result of changes in the composition of development contracts.
Operating Expenses
Our operating expenses were as follows (dollars in thousands):
Research and Development
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Research and development | $ | 47,972 | $ | 45,107 | $ | 2,865 | 6.4 | % | |||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | Amount | % | ||||||||||||||||||||
| Research and development | $ | 45,107 | $ | 46,163 | $ | (1,056) | (2.3) | % | |||||||||||||||
The increase in research and development expense for 2025 compared to 2024 was driven by an increase in stock-based compensation of $1.8 million, and increases in incentive compensation and indirect project-related spending that were partially offset by a decrease in outside services.
The decrease in research and development expense for 2024 compared to 2023 was driven by a decrease in stock-based compensation of $2.4 million, offset partially by increases in other employee compensation costs and project-related spending.
Sales, General and Administrative
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Sales, general, and administrative | $ | 54,193 | $ | 49,257 | $ | 4,936 | 10.0 | % | |||||||||||||||
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| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | Amount | % | ||||||||||||||||||||
| Sales, general, and administrative | $ | 49,257 | $ | 45,899 | $ | 3,358 | 7.3 | % | |||||||||||||||
The increase in sales, general and administrative expense for 2025 compared to 2024 was primarily due to increases in stock-based compensation of $6.6 million and increases in employee and incentive compensation, 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.
The increase in sales, general and administrative expense for 2024 compared to 2023 was primarily due to increases in bad debt expense of $2.3 million and stock-based compensation of $1.5 million. A higher allocation of costs from sales, general and administrative to development projects partially offset the overall increase in sales, general and administrative expense.
Restructuring
Restructuring included the following (in thousands):
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Employee termination costs | $ | 1,141 | $ | 4,228 | $ | (3,087) | (73.0)% | ||||||||||||||||
| Write-off of long-lived assets | 1,207 | - | 1,207 | NM* | |||||||||||||||||||
| Other | - | 63 | (63) | (100.0) | |||||||||||||||||||
| $ | 2,348 | $ | 4,291 | $ | 4,291 | $ | (1,943) | (45.3)% | |||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | $ | % | ||||||||||||||||||||
| Employee termination costs | $ | 4,228 | $ | 737 | $ | 3,491 | 473.7% | ||||||||||||||||
| Other | 63 | 79 | (16) | (20.0) | |||||||||||||||||||
| $ | 4,291 | $ | 817 | $ | 817 | $ | 3,474 | 425.2% | |||||||||||||||
During the third and fourth quarters of 2025, we implemented restructuring plans which included headcount reductions in China, Austria, Germany, and Finland, and the write-down of in-process capital equipment projects related to production capacity that had not been placed into service or redundant capital equipment we intend to sell. We implemented restructuring plans in the fourth quarters of 2024 and 2023 which resulted in reductions of headcount primarily in China, including the discontinuation of all manufacturing activities in China during the fourth quarter of 2024.
Interest Income
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Interest income | $ | 4,906 | $ | 1,773 | $ | 3,133 | 176.7 | % | |||||||||||||||
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| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | Amount | % | ||||||||||||||||||||
| Interest income | $ | 1,773 | $ | 1,409 | $ | 364 | 25.8 | % | |||||||||||||||
The increase in interest income for 2025 compared to 2024, was driven primarily by an increase in income earned from marketable securities and imputed interest on a long-term customer receivable.
Interest income is primarily earned from our marketable securities (U.S. treasuries), recognized using the effective
yield method, and cash equivalents (money market securities).
Beginning with the three months ended March 31, 2025, income earned from marketable securities is classified
within interest income, net, rather than other income, net. This change in presentation more accurately reflects the nature of the income and has no impact on total net income.
The increase in interest income for 2024 compared to 2023 were driven by an increase in interest rates and the average cash and cash equivalents held in interest-bearing accounts.
Interest expense
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Interest expense | $ | (1,084) | $ | (105) | $ | (979) | 932.4 | % | |||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | Amount | % | ||||||||||||||||||||
| Interest expense | $ | (105) | $ | (67) | $ | (38) | 56.7 | % | |||||||||||||||
The increases in interest expense for 2025 compared to 2024, and 2024 compared to 2023, were driven by interest on the outstanding line of credit.
Other Income (Expense), net
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Other income (expense), net | $ | (40) | $ | 3,100 | $ | (3,140) | (101.3) | % | |||||||||||||||
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | Amount | % | ||||||||||||||||||||
| Other income, net | $ | 3,100 | $ | 2,776 | $ | 324 | 11.7 | % | |||||||||||||||
The decrease in other income, net,in 2025 compared to 2024 was primarily attributable to changes in net realized and unrealized foreign exchange transactions resulting from currency rate fluctuations. The change in classification of income earned from marketable securities referenced above is the primary factor contributing to the year-over-year variance for other income, net from the same period in 2024. The increases in other income, net in 2024 compared to 2023 were driven by realized gains on sale of marketable securities.
Income Tax Expense (Benefit)
| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Amount | % | ||||||||||||||||||||
| Income tax expense (benefit) | $ | 699 | $ | (76) | $ | 775 | NM* | ||||||||||||||||
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| Year Ended December 31, | Change | ||||||||||||||||||||||
| 2024 | 2023 | Amount | % | ||||||||||||||||||||
| Income tax expense (benefit) | $ | (76) | $ | (978) | $ | 902 | (92.2) | % | |||||||||||||||
We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, China 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 December 31, 2025. 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.
On July 4, 2025, the OBBBA was signed into law. Some of the tax related provisions of the OBBBA affecting corporations include but are not limited to expensing of domestic research expenses, increasing the limit of the deduction of interest expense deduction to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January 19, 2025. We evaluated the impact of the OBBBA on our financial condition and results of operations in future periods, and we do not anticipate a material change to our effective income tax rate or net deferred federal income tax assets as we maintain a full valuation allowance for all U.S. deferred tax assets.
Income tax expense in 2025 primarily relates to operations in China and Finland, partially offset by income tax reserve reversals. The increase in overall income tax expense for 2025 compared to 2024 was the result of a partial valuation allowance release in China during the fourth quarter of 2024, offset partially by income tax expense from other foreign tax jurisdictions.
The income tax benefit in 2024 was the result of a partial valuation allowance release in China during the fourth quarter of 2024, offset partially by income tax expense from other foreign tax jurisdictions. The decrease in overall income tax benefit for 2024 compared to 2023, was driven by a discrete tax benefit related to expiring statutes of limitations of unrecognized tax positions recorded in the second quarter of 2023.
Liquidity and Capital Resources
We had cash and cash equivalents and restricted cash of $99.0 million and $66.1 million as of December 31, 2025 and December 31, 2024, respectively. In addition, we had marketable securities of $34.9 million and $34.9 million at December 31, 2025 and December 31, 2024, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $33.0 million from December 31, 2024 to December 31, 2025.
For the year ended December 31, 2025, our principal sources of liquidity included the draw of $20 million on our line of credit 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.
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The following table summarizes our cash flows for the periods presented (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net cash provided by (used in) operating activities | $ | 21,330 | $ | (2,359) | $ | 10,091 | |||||||||||
| Net cash (used in) provided by investing activities | (8,771) | 16,690 | (14,100) | ||||||||||||||
| Net cash provided by (used in) financing activities | 20,110 | (1,303) | (859) | ||||||||||||||
| Effect of exchange rate changes on cash | 264 | (406) | 256 | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | 32,933 | $ | 12,622 | $ | (4,612) | |||||||||||
Net Cash Provided By (Used In) Operating Activities
During the year ended December 31, 2025, net cash provided by operating activities was $21.3 million, which was the result of a $23.5 million net loss, offset by cash provided by working capital of $1.1 million and non-cash expenses totaling $43.7 million related primarily to depreciation, amortization, and stock-based compensation. Changes in working capital were driven by a $14.7 million increase in accounts receivable,$4.1 million increase in inventory, offset by a $12 million increase in accounts payable and accrued expenses, $3.9 million increase in lease liabilities, and a $2.1 million decrease in deferred revenue.
During the year ended December 31, 2024, net cash used in operating activities was $2.4 million, which was the result of a $60.8 million net loss, offset by cash provided by working capital of $11.9 million and non-cash expenses totaling $46.5 million related primarily to depreciation, amortization, and stock-based compensation. Changes in working capital were driven by an $11.0 million decrease in inventory and a $2.8 million decrease in accounts receivable.
Net Cash (Used In) Provided By Investing Activities
During the year ended December 31, 2025, net cash used in investing activities was $8.8 million, includingthe net purchase of $0.3 million of marketable securities and $8.5 millionof capital expenditures related to investments in directed energy, manufacturing equipment and facilities.
During the year ended December 31, 2024, net cash provided by investing activities was $16.7 million, includingthe net sale of $24.6 million of marketable securities, partially offset by $7.9 millionof capital expenditures related to investments in directed energy, manufacturing equipment and facilities.
Net Cash Provided By (Used In) Financing Activities
During the year ended December 31, 2025, net cash provided by financing activities was $20.1 million, which was primarily driven by $20 million of proceeds from our line of credit and $3.2 millionof proceeds from stock options exercises and employee stock plan purchases, partially offset by $3.1 millionof withholding tax payments related to the vesting of stock awards.
During the year ended December 31, 2024, net cash used in financing activities was $1.3 million, which was primarily driven by $4.5 millionof withholding tax payments related to the vesting of stock awards, partially offset by $3.2 millionof proceeds from stock options exercises and employee stock plan purchases.
Credit Facilities
We have a $40.0 million revolving line of credit "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 and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 5.75% on the LOC at December 31, 2025 is based on the Prime Rate, minus a margin based on our liquidity levels.
During the year ended December 31, 2025, we drew $20.0 million under the LOC to support working capital and general corporate purposes. There was $20.0 million and $0.0 million outstanding under the LOC at December 31, 2025 and 2024, respectfully, and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.
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Contractual Obligations
The following table sets forth a summary of our significant contractual obligations to make future payments in cash as of December 31, 2025 (in thousands):
| Payments Due by Year | |||||||||||||||||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
| Purchase commitments | $ | 55,692 | $ | 55,692 | |||||||||||||||||||||||||||||||||||||
| Lease obligations | 3,526 | 3,291 | 2,795 | 1,919 | 1,960 | 5,608 | 19,099 | ||||||||||||||||||||||||||||||||||
| Total | $ | 59,218 | $ | 3,291 | $ | 2,795 | $ | 1,919 | $ | 1,960 | $ | 5,608 | $ | 74,791 | |||||||||||||||||||||||||||
Critical Accounting Policies and Significant Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. Our accounting policies are fundamental to understanding our financial condition and results of operations reported in our financial statements and related disclosures. We have identified the following accounting policies as being critical because they require our management to make particularly difficult, subjective and/or complex judgments about the effect of matters that are inherently uncertain.
Revenue Recognition
We recognize revenue upon transferring control of products and services and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of our consideration of the contract, we evaluate certain factors, including the customer's ability to pay (or credit risk). For each contract, we consider the promise to transfer products, each of which is distinct, as the identified performance obligations.
We allocate the transaction price to each distinct product based on its relative standalone selling price. Master sales agreements or purchase orders from customers could include a single product or multiple products. Regardless, the contracted price with the customer is agreed to at the individual product level outlined in the customer contract or purchase order. We do not bundle prices; however, we do negotiate with customers on pricing for the same products based on a variety of factors (e.g., level of contractual volume). We have concluded that the prices negotiated with each individual customer are representative of the stand-alone selling price of the product.
We often receive orders with multiple delivery dates that may extend across several reporting periods. We allocate the transaction price of the contract to each delivery based on the product standalone selling price and invoice for each scheduled delivery upon shipment or delivery and recognize revenues for such delivery at the point when transfer of control has occurred. As scheduled delivery dates are generally within one year, under the optional exemption provided by ASC 606-10-50-14a revenues allocated to future shipments of partially completed contracts are not disclosed as performance obligations for point in time revenue. Further, the Company recognizes over time revenue as per ASC 606-10-55-18 (invoice practical expedient) for its cost plus contracts and, accordingly, elects not to disclose information related to those performance obligations under ASC 606-10-50-14b.
We have elected, per ASC 606-10-25-18B (shipping and handling practical expedient), to recognize shipping and handling services performed after control transfer as fulfillment costs.
Rights of return generally are not included in customer contracts. Accordingly, product revenue is recognized upon transfer of control at shipment or delivery, as applicable. Rights of return are evaluated as they occur.
Revenues recognized at a point in time consist of sales of semiconductor lasers, fiber amplifiers, fiber lasers and other related products. Revenues recognized over time generally consist of development arrangements that are structured based on our costs incurred. For long-term contracts, we estimate the total expected costs to complete the contract and recognize revenue based on the percentage of costs incurred at period end. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials, subcontractors costs, other direct costs, and indirect costs applicable on government and commercial contracts.
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Contract estimates are based on various assumptions to project the outcome of future events that may span several
years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the
cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from
the customer. Billing under these arrangements generally occurs within one month of the costs being incurred or as
milestones are reached.
Inventory Valuation
Inventory is stated at the lower of average cost (principally standard cost, which approximates actual cost on a first-in, first-out basis) and net realizable value. Inventory includes raw materials and components that may be specialized in nature and subject to obsolescence. On a quarterly basis, we review inventory quantities on hand in comparison to our past consumption, recent purchases, and other factors to determine what inventory quantities, if any, may not be sellable. Based on this analysis, we write down the affected inventory value for estimated excess and obsolescence charges. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Recent Accounting Pronouncements
See Note 1 of Notes to Consolidated Financial Statements.
nLIGHT Inc. published this content on February 27, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 27, 2026 at 16:21 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]