VEECO INSTRUMENTS INC (VECO)

CIK: 0000103145. SIC: 3559 Special Industry Machinery, NEC. Latest 10-K as of: 2026-02-25.

SIC breadcrumb: Manufacturing > Industrial And Commercial Machinery And Computer Equipment > SIC 3559 Special Industry Machinery, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=103145. Latest filing source: 0001104659-26-019711.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000103145.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-05. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000103145.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001104659-26-055672.

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high. Filing date: 2026-05-05. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

Cautionary Statement Regarding Forward Looking Statements

​

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to facilitate an understanding of our business and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this Form 10-Q. The following discussion contains forward-looking statements and should also be read in conjunction with the cautionary statement set forth at the beginning of this Form 10-Q.

​

The following section generally discusses 2026 and 2025 items and year-to-year comparisons between 2026 and 2025. Discussions of 2025 items that are not included in this Form 10-Q can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of our Quarterly Report on Form 10-Q for the interim period ended March 31, 2025, filed on May 7, 2025.

​

Executive Summary

​

We are an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer wet processing technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

​

Merger with Axcelis Technologies, Inc.

​

On September 30, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Axcelis Technologies, Inc., a Delaware corporation (“Axcelis”), and Victory Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Axcelis (“Merger Sub”). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub shall be merged with and into Veeco (the “Merger”), with Veeco surviving as a wholly-owned subsidiary of Axcelis. The Merger Agreement was approved by our board of directors (except for one (1) independent director who serves on the Axcelis’ board of directors as well who recused himself) and, on February 6, 2026, by the stockholders of each company. The completion of the Merger remains subject to the satisfaction or (to the extent permissible) waiver of customary closing conditions, including the final pending regulatory approval from the State Administration for Market Regulation of the People’s Republic of China.

​

For more information regarding the Merger, see Note 10 “Merger” to the accompanying Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

​

Business Update

​

Overview

​

Sales in the Semiconductor industry are estimated to have increased year-over-year in 2025 to approximately $770 billion dollars, according to Gartner. Looking ahead, industry analysts are forecasting long-term growth of the industry, driven by secular growth trends such as artificial intelligence, high-performance computing, mobile connectivity, and the electrification of the automotive industry. Additionally, government investments in the Semiconductor industry are projected to accelerate global spending in next-generation technologies.

​

Growth in the Semiconductor industry, coupled with increasing technological complexity of Semiconductor chips, are expected to drive long-term growth in Wafer Fab Equipment (“WFE”) spending. In an effort to improve chip performance, optimize power consumption, and reduce costs, today’s most advanced Semiconductor manufacturers are shrinking device geometries, investing in more complex transistor designs such as Gate-All-Around and exploring 3D

24

Table of Contents

architectures. As a result, growth of the WFE market is forecasted to keep pace with long-term growth of the Semiconductor industry, which we believe should benefit semiconductor capital equipment providers, including Veeco.

​

Veeco’s technologies are at the forefront of enabling new technical innovations in the manufacturing of high-performance AI chips and High-Bandwidth Memory (“HBM”). We continue to invest in new technologies to expand our Serviceable Available Market (“SAM”) to a broad range of new applications.

​

Semiconductor Market

​

Semiconductor revenue comprised 69% of first quarter total revenue primarily driven by system shipments of our Laser Spike Annealing (“LSA”), and our Advanced Packaging, wet processing and lithography products. Semiconductor revenue decreased 12% from the comparable prior period due to a reduction in China revenue of 74% partially offset by increases in Rest of APAC revenue of 38% and United States revenue of 69%.

​

In the logic market, our annealing solutions continue to gain traction at advanced node customers. Our LSA platform is production tool of record at all three Tier 1 logic customers. Our next-generation Nanosecond Annealing (“NSA”) system is progressing through evaluations at Tier 1 logic customers. Our NSA tool addresses critical low-thermal budget applications such as contact annealing, 3D device integration and materials modification. These evaluations are advancing well, and we are anticipating an additional evaluation shipment to a third Tier 1 logic customer in the coming months.

​

In the memory market, we continue to expand our presence as current and future roadmap requirements for Dynamic-Random-Access Memory (“DRAM”) drive the need for low-thermal-budget anneals used in high-band-width memory and vertical DRAM devices. We are the production tool of record at a leading high-bandwidth memory customer, and we continue to make progress with another LSA evaluation system at a second Tier 1 DRAM customer, with potential for pilot line orders in the second half of 2026.

​

We also have two Ion Beam Deposition “IBD300” systems under evaluation at leading DRAM memory customers. Our IBD300 system provides Veeco with another opportunity to expand our SAM to advanced node applications where low resistance films are critical. These initial systems are being evaluated for advanced memory applications, such as DRAM bitline metallization.

​

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam Deposition EUV system for mask blanks. Leading logic and memory customers expect EUV and High Numerical Aperture (“High-NA”) lithography to be integral to their future roadmaps. Our Ion Beam Deposition technology is a key enabler of the EUV mask blank Multiple Layer Mirror deposition. Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography, and we are expanding our EUV related business to EUV pellicles which are increasingly being used to improve the productivity of EUV steps. Our IBD-EUV system is also used to form the high-transparency membrane used in pellicles.

​

In Advanced Packaging (“AP”), our wet processing systems are used for several applications, and we continue to see strong demand driven by Heterogenous Integration and 2.5D and 3D Packaging for AI and high-performance computing. In the first quarter, we had an increase in orders for our wet processing systems from leading OSAT customers, supporting high-volume manufacturing of next-generation AI accelerators using 2.5D AP architectures.

​

Looking ahead, we anticipate growth in the semiconductor market in leading-edge investment driven by AI and high-performance computing.

​

Compound Semiconductor Market

​

Compound Semiconductor revenue increased by 31% in the first quarter from the comparable prior year period, comprising 12% of total revenue. In the Compound Semiconductor market, we have a broad portfolio of products which are gaining momentum due to a significant inflection point within the industry with AI data center infrastructure build-out.

25

Table of Contents

​

The AI build-out is impacting interconnects where there is a shift from copper wiring to pluggables and co-packaged optics as data centers demand higher-speed and lower-power communication. Within this space, Indium Phosphide (“InP”) lasers are a major component as the light-source for pluggables and co-packaged optics for next-generation AI infrastructure. As the industry transitions toward future capacity requirements, we believe this represents growth opportunity of approximately $2.0 billion dollars over the next several years. Our technology plays a critical role within the manufacturing of InP lasers and order demand is greatly accelerating across multiple of our products. These products include Lumina MOCVD Arsenide Phosphide batch platform, Wafer Etch and Wafer Storm for etching and metal lift-off, and importantly our Spector ion beam deposition for the laser diode facet coatings. Our Spector ion beam deposition system, designed for the critical laser facet coating step, is essential to the process. Veeco is the market leader in ion beam deposition and is highly differentiated from traditional approaches such as E-beam evaporation, ion assisted deposition or physical vapor deposition (“PVD”). Compared with other approaches, the Spector Ion Beam Deposition (“IBD”) tool delivers low-loss optical films with tight control of thickness, uniformity, and reflectivity – precision that is required for anti-reflective and high-reflective facet coatings on InP. We received orders over $250 million dollars from multiple customers for our MOCVD, wet processing and ion beam deposition tools to support the manufacturing of InP lasers with deliveries starting in 2026 and significantly accelerating in 2027. A large portion of these orders is from a leading supplier of next-generation 800-gig and 1.6-terabit optical transceivers for hyperscale customers, for our Spector IBD systems. This significant order activity underscores the long-term value of our ion beam deposition technology leadership and our expanding role in this rapidly growing market. We have long-standing partnerships with our customers, spanning more than two decades, and we are well positioned across our multiple differentiated products to meet their growing needs in silicon photonics.

​

Additionally, there are other photonics applications driving growth for our products in this space, including red MircoLEDs, low earth orbit solar cells and augmented / virtual reality applications.

​

Lastly, our Propel300mm GaN on Si product continues to be a strong long-term driver tied to AI data center power efficiency, electrification, and high-power density applications. At a leading power IDM customer, we have an evaluation for our Propel300 system in place, and we received a pilot-line order for a multi-chamber system at the end of 2025. As this leading customer ramps and finalizes long-term capacity plans, there is potential for additional system orders in the second half of 2026 for delivery in 2027.

​

We expect our compound semiconductor market to grow as AI, power efficiency and advanced connectivity continue to reshape the industry.

​

​

Data Storage Market

​

Data Storage market revenue increased by 52% in the first quarter from the comparable prior year period, comprising 6% of total revenue. We address the Data Storage market with sales of our Ion Beam technology and wet process systems driven by demand for cloud and AI data centers. We have seen increase in order activity in the back-half of 2025 and increased customer utilization rates as customers gain traction in new technologies like Heat Assisted-Magnetic-Recording (“HAMR”). Orders received in the third and fourth quarter of 2025 for our ion beam and wet processing equipment from demand for cloud and AI data centers, will drive revenue growth in 2026, principally in the second half. Customer engagement

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-25. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

Introduction

​

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to facilitate an understanding of our business and results of operations. This MD&A should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this Form 10-K. The following discussion contains forward-looking statements and should also be read in conjunction with the cautionary statement set forth at the beginning of this Form 10-K.

​

The following section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 14, 2025.

​

Merger with Axcelis Technologies, Inc.

​

On September 30, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Axcelis Technologies, Inc., a Delaware corporation (“Axcelis”), and Victory Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Axcelis (“Merger Sub”). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub shall be merged with and into Veeco (the “Merger”), with Veeco surviving as a wholly-owned subsidiary of Axcelis. The Merger Agreement was approved by our board of directors (except for one (1) independent director who serves on the Axcelis’ board of directors as well who recused himself) and, on February 6, 2026, by the stockholders of each company, but is still pending regulatory approvals and other customary mutual closing conditions.  For more information regarding the previously announced merger with Axcelis, see Note 17 “Merger” to the accompanying Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

​

Executive Summary

​

We are an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer wet processing technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

​

Veeco executed well during 2025, and accomplished a number of milestones, including:

​

●

Accomplished year-on-year revenue semiconductor market growth, accounting for 72% of total Company revenue

●

Shipped a Laser Spike Annealing (“LSA”) system to a second Tier 1 memory customer for evaluation in its advanced DRAM R&D group. Penetrating the annealing market in the memory space, with our LSA system is an important growth opportunity.

●

Achieved steady growth in our Advanced Packaging business year-over-year driven by AI-related demand. Won multiple orders for advanced wet processing and lithography systems from leading foundries, supporting critical end markets through AI, automotive, aerospace, defense, and communications.

●

Received multiple orders in the Compound Semiconductor market for our Propel 300mm GaN on Silicon and Lumina+ Arsenide Phosphide new platforms, supporting end markets for AI data centers and low earth orbit space grade solar cells; these are revenue growth opportunities for 2026, principally in the second half.

38

Table of Contents

●

Received several orders in the Data Storage market for our ion beam and wet processing equipment from demand for cloud and AI data centers; these are revenue growth opportunities for 2026, principally in the second half.

●

Continued investments in next-generation technologies with our Nanosecond Annealing (“NSA”) system being evaluated at two Tier 1 logic customers and our Ion Beam Deposition 300 (“IBD300”) system being evaluated at two DRAM customers.

We believe these inflection points position us well to capture our largest SAM growth opportunities in 2026 and beyond.

​

Business Update

​

Sales in the Semiconductor industry are estimated to have increased year-over-year in 2025 to approximately $770 billion dollars, according to Gartner. Looking ahead, industry analysts are forecasting long-term growth of the industry, driven by secular growth trends such as artificial intelligence, high-performance computing, mobile connectivity, and the electrification of the automotive industry. Additionally, government investments in the Semiconductor industry are projected to accelerate global spending in next-generation technologies.

​

Growth in the Semiconductor industry, coupled with increasing technological complexity of Semiconductor chips, are expected to drive long-term growth in WFE spending. In an effort to improve chip performance, optimize power consumption, and reduce costs, today’s most advanced Semiconductor manufacturers are shrinking device geometries, investing in more complex transistor designs such as Gate-All-Around and exploring 3D architectures. As a result, growth of the WFE market is forecasted to keep pace with long-term growth of the Semiconductor industry, which we believe should benefit semiconductor capital equipment providers, including Veeco.

​

Our strategy of investing in advanced logic and memory has enabled our Semiconductor business to continue to grow. Veeco’s technologies are at the forefront of enabling new technical innovations in the manufacture of high-performance AI chips and High-Bandwidth Memory (“HBM”). We continue to invest in new technologies to expand our SAM to a broad range of new applications.

​

Semiconductor revenue increased by 2% in 2025 from the prior year, comprising 72% of total revenue. This increase was driven by our Laser Annealing business with both leading and mature node customers. Our laser annealing solutions continue to gain acceptance at advanced logic nodes, highlighted by recent order activity involving both new and existing customers. In 2025, we received laser annealing orders from, and shipped systems to several leading-edge logic customers and had multiple repeat orders from a DRAM customer. In the memory market, we continue to ship systems to Tier 1 customers for high volume production of HBM and advanced DRAM devices. We also shipped a LSA evaluation system to a second leading memory customer in the fourth quarter of 2025. While we continue to ship LSA systems to mature node customers in China, as anticipated this business has moderated and we expect to continue to see a decline heading into 2026. Our growth strategy remains predominately focused on advanced node logic and memory customers.

​

We have two next generation laser annealing systems under evaluation at Tier 1 foundry and logic customers. We also shipped and recognized revenue on our NSA500 tool to a logic customer in 2025. This next generation system, the NSA500, covers the nano-second annealing regime and complements our LSA product. This new system is part of our continued effort to enable our customers’ product roadmap by providing innovative annealing solutions. Nanosecond annealing provides Veeco with an opportunity to expand our laser annealing SAM for new advanced node logic and memory applications, including low thermal budget anneals for Gate-All-Around transistors and advanced 3D devices.

​

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam Deposition EUV system for mask blanks. Leading logic and memory customers expect EUV and High Numerical Aperture (“High-NA”) lithography to be integral to their future roadmaps, with our Ion Beam Deposition technology serving as a key enabler. Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography, and we are expanding our EUV related business to EUV pellicles which are increasingly

39

Table of Contents

being used to improve the productivity of EUV steps. Our IBD-EUV system is used to form the high transparency membrane used in pellicles.

​

We have two Ion Beam Deposition (“IBD300”) systems under evaluation at leading DRAM memory customers, which we have extended the evaluation into 2026. Our IBD300 system provides Veeco with another opportunity to expand our SAM to advanced node applications where low resistance films are critical. These initial systems are being evaluated for advanced memory applications, such as DRAM bitline.

​

In Advanced Packaging, we have seen significant growth in our business year-over-year. Our Wet Processing systems are used for several applications, and we continue to see strong demand driven by Heterogenous Integration and 3D Packaging for AI and high-performance computing. Our Advanced Packaging lithography systems are used for packaging steps such Cu pillar and microbumps used in fan out wafer level packaging and other 2.5 and 3D advanced packaging solutions. We are seeing an uptick in the order activity from several OSAT customers driven by AI and consumer markets recovery.

​

Looking ahead, we anticipate seeing growth in the semiconductor market in leading-edge investment driven by new nodes and AI-related demand, including investment in Gate-All-Around nodes, High-Bandwidth Memory, and 3D packaging for AI.

​

Veeco also serves the Compound Semiconductor market with a broad portfolio of technologies, including Wet Processing, MOCVD, MBE and Ion Beam, for Power Electronics, Photonics, and 5G RF applications. Sales in the Compound Semiconductor market for 2025 declined from the prior year. However, we had significant order activity in the second half of 2025 for our new Propel 300 millimeter GaN on Silicon and Lumina+ arsenide phosphide platforms supporting GaN power, photonics and solar, which will drive revenue growth for 2026, principally in the second half.

​

Lastly, Veeco also addresses the Data Storage and Scientific & Other markets. In the Data Storage market we experienced a decline in revenue from 2025 compared to the prior year. However, we have seen new order activity and increased customer utilization rates driven by growth in end-market demand in data centers (AI and cloud) and as customers gain traction in new technologies like Heat Assisted-Magnetic-Recording (“HAMR”). Orders received in the third and fourth quarter of 2025 for our ion beam and wet processing equipment from demand for cloud and AI Data Centers, will drive revenue growth in 2026, principally in the second half.

​

Sales in the Scientific & Other market are largely driven by sales to governments, universities, and research institutions. We address the Scientific & Other market with several technologies, including MBE, ALD, MOCVD, Wet Processing, and IBD/IBE, which support scientific, optical coating and other applications, and sales in this market increased slightly in 2025 from the prior year.

​

40

Table of Contents

Results of Operations

​

Years Ended December 31, 2025 and 2024

​

The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for 2025 and 2024 and the period-over-period dollar and percentage changes for those line items. Our results of operations are reported as one business segment, represented by our single operating segment.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the year ended December 31,

​

Change

​

​

2025

​

2024

​

Period to Period

​

​

(dollars in thousands)

Net sales

  ​ ​ ​

$

664,294

100

%  

$

717,301

100

%  

$

(53,007)

(7)

%

Cost of sales

​

398,885

60

%  

413,296

58

%  

(14,411)

(3)

%

Gross profit

​

265,409

40

%  

304,005

42

%  

(38,596)

(13)

%

Operating expenses, net:

​

  ​

  ​

​

  ​

​

​

  ​

​

​

Research and development

​

119,641

18

%  

124,507

17

%  

(4,866)

(4)

%

Selling, general, and administrative

​

98,906

15

%  

99,663

14

%  

(757)

(1)

%

Amortization of intangible assets

​

3,136

0

%  

6,983

1

%  

(3,847)

(55)

%

Merger costs

​

8,908

1

%

—

—

%  

8,908

*

​

Asset impairment

​

—

—

%  

28,131

4

%  

(28,131)

*

​

Other operating expense (income), net

​

(889)

(0)

%  

(22,260)

(3)

%  

21,371

(96)

%

Total operating expenses, net

​

229,702

35

%  

237,024

33

%  

(7,322)

(3)

%

Operating income

​

35,707

5

%  

66,981

9

%  

(31,274)

(47)

%

Interest income, net

​

4,333

1

%  

1,853

0

%  

2,480

*

​

Other income (expense), net

​

​

(653)

(0)

%  

​

—

—

%  

​

(653)

*

​

Income before income taxes

​

39,387

6

%  

68,834

10

%  

(29,447)

*

​

Income tax expense (benefit)

​

3,997

1

%  

(4,880)

(1)

%  

8,877

*

​

Net income

​

$

35,390

5

%  

$

73,714

10

%  

$

(38,324)

*

​

*

Not meaningful

​

Net Sales

​

The following is an analysis of sales by end-market and by region:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year ended December 31,

​

Change

​

​

2025

​

2024

​

Period to Period

​

​

(dollars in thousands)

Sales by end-market

  ​ ​ ​

​

  ​

  ​

  ​ ​ ​

​

  ​

  ​

  ​ ​ ​

​

  ​

  ​

​

Semiconductor

​

$

476,559

72

%  

$

466,611

65

%  

$

9,948

2

%

Compound Semiconductor

​

59,557

9

%  

77,591

11

%  

(18,034)

(23)

%

Data Storage

​

39,238

6

%  

98,852

14

%  

(59,614)

(60)

%

Scientific & Other

​

88,940

13

%  

74,247

10

%  

14,693

20

%

Total

​

$

664,294

100

%  

$

717,301

100

%  

$

(53,007)

(7)

%

Sales by geographic region

​

  ​

  ​

​

  ​

  ​

​

  ​

  ​

​

United States

​

$

101,387

15

%  

$

164,564

23

%  

$

(63,177)

(38)

%

EMEA

​

50,794

8

%  

61,730

9

%  

(10,936)

(18)

%

China

​

​

181,812

27

%  

​

255,619

36

%  

​

(73,807)

(29)

%

Rest of APAC

​

330,183

50

%  

234,591

32

%  

95,592

41

%

Rest of World

​

118

—

%  

797

—

%  

(679)

(85)

%

Total

​

$

664,294

100

%  

$

717,301

100

%  

$

(53,007)

(7)

%

​

41

Table of Contents

Total sales decreased for the year ended December 31, 2025 against the comparable prior year period in the Data Storage and Compound Semiconductor markets, partially offset by increases in the Scientific & Other and Semiconductor markets. By geography, sales decreased in the China, U.S., and EMEA regions, partially offset by an increase in the Rest of APAC Region. Included within the Rest of APAC region for the year ended December 31, 2025 were sales in Taiwan and Japan of $178.8 million and $69.0 million, respectively, while sales within Rest of APAC region for the year ended December 31, 2024 included sales in Taiwan and Japan of $115.3 million and $67.4 million, respectively. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies. In light of the global nature of our business, we are impacted by conditions in the various countries in which we and our customers operate, including the recent tariff and trade dynamics.

​

Gross Profit

​

In 2025, gross profit decreased compared to 2024 primarily due to a decrease in sales volume and gross margins. Gross margins decreased principally due to unfavorable product mix of sales and higher production and tariff related costs. We expect our gross margins to fluctuate each period due to product mix and other factors. Additionally, other factors will cause our gross margins to fluctuate each period. We expect higher costs in future periods as we incur tariffs on imported materials from overseas suppliers, as well as higher costs from domestic suppliers incurring tariffs on their imports.

​

Research and Development

​

The markets we serve are characterized by continuous technological development and product innovation, and we invest in various research and development initiatives to maintain our competitive advantage and achieve our growth objectives. Research and development expenses decreased in 2025 compared to 2024 primarily due to personnel-related and operating-related expenses as part of our efforts to manage costs.

​

Selling, General, and Administrative

​

Selling, general, and administrative expenses remained consistent for the year ended December 31, 2025 against the comparable prior period.

​

Amortization Expense

​

Amortization expense decreased in 2025 compared to 2024 primarily due to changes in amortization expense to reflect expected cash flows of certain intangible assets, as well as certain other intangible assets becoming fully amortized and the full impairment of the Epiluvac related intangibles in 2024.

​

Merger Costs

​

During the year ended December 31, 2025, we incurred approximately $8.9 million in legal, accounting, consulting fees and employee-related costs in connection with the proposed Merger.

​

Asset Impairment

​

During 2024, we recorded a non-cash impairment charge of $28.1 million related to intangible assets of our SiC technology acquired from Epiluvac in 2023, due to our market penetration not meeting expectations.

​

Other Operating Expense (Income), Net

​

Other operating income for the year ended December 31, 2025 was $0.9 million, primarily comprised of a reduction in the expected earn-out payment to the previous shareholders of Epiluvac. Other operating income for the year ended December 31, 2024 was $22.3 million, primarily comprised of a reduction in the expected earn-out payments to the previous shareholders of Epiluvac, as well as proceeds from the sale of productive assets.

42

Table of Contents

​

Interest Income, net

​

For the year ended December 31, 2025, we recorded net interest income of $4.3 million, compared to $1.9 million of net interest income for the prior year. The increase in net interest income was primarily related to a decrease of interest expense of approximately $1.9 million due to a reduction in convertible note and bank guarantee interest expenses. Additionally, the company had an increase of approximately $0.6 million of interest income due to a higher average cash balances for 2025 compared to 2024.

​

Income Taxes

​

Our income tax expense for the year ended December 31, 2025, was $4.0 million, compared to income tax benefit of $4.9 million for the prior year. The 2025 income tax expense was primarily attributed to 1) a $8.3 million income tax expense associated with pre-tax income from operations, 2) a $3.1 million income tax expense related to adjustments made for share-based compensation, and 3) a $1.4 million income tax expense related to non-deductible merger costs, partially offset by 4) a $5.7 million income tax benefit related to foreign-derived intangible income, and 5) a $3.6 million tax benefit associated with research and development tax credits. The 2024 income tax benefit was primarily attributed to 1) $12.2 million of income tax benefits associated with asset impairments, 2) a $7.9 million income tax benefit related to research and development tax credits, and 3) a $5.1 million income tax benefit related to Foreign-Derived Intangible Income, partially offset by 4) a $20.3 million income tax expense related to pre-tax income from operations.

​

Liquidity and Capital Resources

​

Our cash and cash equivalents, restricted cash, and short-term investments are as follows:

​

​

​

​

​

​

​

​

​

​

December 31,

​

December 31,

​

  ​ ​ ​

2025

  ​ ​ ​

2024

​

​

(in thousands)

Cash and cash equivalents

​

$

163,466

​

$

145,595

Restricted cash

​

—

​

224

Short-term investments

​

226,763

​

198,719

Total

​

$

390,229

​

$

344,538

​

A portion of our cash and cash equivalents is held by our subsidiaries throughout the world, frequently in each subsidiary’s respective functional currency, which is typically the U.S. dollar. At December 31, 2025 and 2024, cash and cash equivalents of $23.6 million and $45.1 million, respectively, were held outside the United States. As of December 31, 2025, we had $25.6 million of accumulated undistributed earnings generated by our non-U.S. subsidiaries for which the U.S. repatriation tax has been provided. Approximately $12.3 million of undistributed earnings would be subject to foreign withholding taxes if distributed back to the United States and we accrued $1.1 million for foreign withholding taxes for the undistributed earnings.

​

We believe that our projected cash flow from operations, combined with our cash and short-term investments, will be sufficient to meet our projected working capital requirements, contractual obligations, and other cash flow needs for the next twelve months, including scheduled interest payments on our convertible senior notes, purchase commitments, and payments required under our operating leases.

​

43

Table of Contents

A summary of the cash flow activity for the year ended December 31, 2025 and 2024 is as follows:

​

Cash Flows from Operating Activities

​

​

​

​

​

​

​

​

​

  ​ ​ ​

For the year ended December 31,

​

  ​ ​ ​

2025

  ​ ​ ​

2024

​

​

(in thousands)

Net income

​

$

35,390

​

$

73,714

Non-cash items:

​

​

​

​

​

​

Depreciation and amortization

​

20,020

​

25,143

Non-cash interest expense

​

1,118

​

1,257

Deferred income taxes

​

(2,982)

​

(8,729)

Share-based compensation expense

​

37,047

​

35,879

Asset impairment

​

—

​

28,131

Impairment of equity investment

​

​

—

​

​

404

Change in contingent consideration

​

(925)

​

(21,242)

Changes in operating assets and liabilities

​

(20,175)

​

(70,742)

Net cash provided by (used in) operating activities

​

$

69,493

​

$

63,815

​

Net cash provided by operating activities was $69.5 million for the year ended December 31, 2025 and was due to net income of $35.4 million and adjustments for non-cash items of $54.3 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $20.2 million. The changes in operating assets and liabilities were largely attributable to an increase in inventories and accounts receivable, partially offset by an increase in contract liabilities.

​

Net cash provided by operating activities was $63.8 million for the year ended December 31, 2024 and was due to net income of $73.7 million and adjustments for non-cash items of $60.8 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $70.7 million. The changes in operating assets and liabilities were largely attributable to an increase in inventories largely related to higher work-in-process and evaluation systems at customer facilities, an increase in contract assets, and a decrease in contract liabilities.

​

Cash Flows from Investing Activities

​

​

​

​

​

​

​

​

​

​

For the year ended December 31,

​

  ​ ​ ​

2025

  ​ ​ ​

2024

​

​

(in thousands)

Capital expenditures

​

$

(16,200)

​

$

(18,113)

Changes in investments, net

​

(25,278)

​

(48,467)

Proceeds from the sale of productive assets

​

​

—

​

​

2,033

Net cash provided by (used in) investing activities

​

$

(41,478)

​

$

(64,547)

​

The cash used in investing activities during the year ended December 31, 2025 was primarily attributable to net cash used for capital expenditures and net investment activity. The cash used in investing activities during the year ended December 31, 2024 was primarily attributable to net cash used for capital expenditures, and net investment activity, partially offset by proceeds from the sale of productive assets.

​

44

Table of Contents

Cash Flows from Financing Activities

​

​

​

​

​

​

​

​

​

​

For the year ended December 31,

​

  ​ ​ ​

2025

  ​ ​ ​

2024

​

​

(in thousands)

Settlement of equity awards, net of withholding taxes

​

$

(4,355)

​

$

(10,761)

Debt issuance costs

​

​

(885)

​

​

—

Repayment of convertible debt

​

​

(5,229)

​

​

—

Contingent consideration payment

​

​

—

​

​

(1,818)

Net cash provided by (used in) financing activities

​

$

(10,469)

​

$

(12,579)

​

The cash used in financing activities for the year ended December 31, 2025 was related to cash used to settle taxes related to employee equity programs, settlement of the 2027 Notes, and debt issuance costs associated with the execution of the Fourth Amendment of the Loan and Security Agreement, partially offset by cash received under the Employee Stock Purchase Plan. The cash used in financing activities for the year ended December 31, 2024 was related to cash used to settle taxes related to employee equity programs and a contingent consideration payment related to the Epiluvac acquisition, partially offset by cash received under the Employee Stock Purchase Plan.

​

Convertible Senior Notes and Revolving Credit Facility

​

We have $230.0 million outstanding principal balance of convertible senior notes that bear interest at a rate of 2.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, and mature on June 1, 2029, unless earlier purchased by the Company, redeemed, or converted.

​

We believe that we have sufficient capital resources and cash flows from operations to support scheduled interest payments on this debt. In addition, in June 2025, we increased the total funds available to us through our revolving credit facility from $225 million to $250 million and extended the maturity until June 16, 2030, subject to a springing maturity date of March 2, 2029. The Company has no immediate plans to draw down on the facility. Interest under the facility is variable based on the Company’s secured net leverage ratio and is expected to bear interest based on SOFR plus a range of 125 to 200 basis points, if drawn. There is a yearly commitment fee of 20 to 30 basis points, based on the Company’s secured net leverage ratio, charged on the unused portion of the Facility.

​

In connection with the Merger, the convertible senior notes will be assumed by Axcelis.

​

Contractual Obligations and Commitments

​

We have commitments under certain contractual arrangements to make future payments for goods and services, including purchase obligations of $150.8 million as of December 31, 2025 for inventory used in the manufacture of our products, as well as equipment and project materials used to support research and development activities. We generally do not enter into purchase commitments extending beyond one year. At December 31, 2025, we have $9.8 million of offsetting supplier deposits that will be applied against these purchase commitments. We expect to fund these contractual arrangements with cash generated from operations in the normal course of business, as well as existing cash and cash equivalents and short-term investments. In addition, we have bank guarantees and letters of credit issued by a financial institution on our behalf as needed. At December 31, 2025, outstanding bank guarantees and letters of credit totaled $2.4 million and unused bank guarantees and letters of credit of $40.6 million were available to be drawn upon.

​

Lease Obligations

​

As of December 31, 2025, our future minimum lease payments was $48.9 million relating to various operating lease arrangements for certain facilities. Refer to Note 10, “Commitments and Contingencies”, of the Notes to the Consolidated Financial Statements for further discussion related to our lease obligations.

​

We believe that we have sufficient capital resources and cash flows from operations to support the above mentioned short-term obligations.

45

Table of Contents

Critical Accounting 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 accounting principles generally accepted in the United States. The preparation of these financial statements requires a high degree of judgment, either in the application and interpretation of existing accounting literature or in the development of estimates that affect the reported amounts of assets, liabilities, revenues, and expenses. We continuously evaluate our estimates and judgments based on historical experience, as well as other factors that we believe to be reasonable under the circumstances. The results of our evaluation form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. These estimates may change in the future if underlying assumptions or factors change, and actual results may differ from these estimates.

​

We consider the following estimates within our significant accounting policies to be critical because of their complexity and the high degree of judgment involved in maintaining them. See Note 1 Significant Accounting Policies of our Consolidated Financial Statements for additional information regarding our accounting policies.

​

Revenue Recognition

​

We recognize revenue upon the transfer of control of the promised product or service to the customer in an amount that reflects the consideration we expect to receive in exchange for such product or service. We perform the following five steps to determine when to recognize revenue: (1) identification of the contract(s) with customers, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract, and (5) recognition of revenue when, or as, a performance obligation is satisfied. Management uses judgements in identifying performance obligations, determining stand-alone selling price (“SSP”) for each distinct performance obligation, allocating consideration from an arrangement to the individual performance obligations based on the SSP, determining when transfer of control occurs to the customer, and estimating potential variable consideration including the probability that a significant reversal in the amount of cumulative revenue recognized will not occur. The SSPs are determined based on the prices at which we separately sell systems, upgrades, components, spare parts, installation, maintenance, and service plans. For items that are not sold separately, we estimate SSPs generally using an expected cost plus margin approach. Any material changes in the identification of performance obligations, determination and allocation of the transaction price to performance obligations, and determination of when transfer of control occurs to the customer, could impact the timing and amount of revenue recognition, which could have a material effect on our financial condition and results of operations.

​

Inventory Valuation

​

Inventories are stated at the lower of cost and net realizable value, with cost determined on a first-in, first-out basis. Each quarter we assess the valuation and recoverability of all inventories: materials (raw materials, spare parts, and service inventory); work-in-process; finished goods; and evaluation inventory at customer facilities. Obsolete inventory or inventory in excess of our estimated usage requirements is written down to its estimated net realizable value if less than cost. We evaluate usage requirements by analyzing historical usage, anticipated demand, alternative uses of materials, and other qualitative factors. Unanticipated changes in demand for our products may require a write down of inventory that could materially affect our operating results.

​

Income Taxes

​

We estimate our income taxes in each of the jurisdictions in which we operate. The calculation of our provision for income taxes and effective tax rate involves significant judgment in estimating the impact of uncertainties in the application of complex and evolving tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial condition. Deferred income taxes reflect the net tax effect of temporary differences between the asset and liability balances recognized for financial reporting purposes and the balances used for income tax purposes, as well as the tax effect of carry forwards. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. These estimates consider future operational results including realizability of our deferred tax assets. Deferred tax assets and

46

Table of Contents

liabilities are adjusted to reflect the effects of enacted changes in tax rates, laws and status, including changes in tax incentives.

​

Recent Accounting Pronouncements

​

We adopted ASU 2020-06 Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity effective January 1, 2022, ASU 2023-09 Improvements to Income Tax Disclosures (Topic 740) effective December 31, 2024, ASU 2024-04 Debt – Debt with Conversion and Other Options (Subtopic 470-20) effective June 30, 2025. We are also evaluating other pronouncements recently issued but not yet adopted, including ASU 2024-03. The adoption of these pronouncements is not expected to have a material impact on our consolidated financial statements. Refer to Note 1, “Significant Accounting Policies,” for additional information.

​