VEECO INSTRUMENTS INC._September 30, 2026

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-16244

VEECO INSTRUMENTS INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		11-2989601
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Terminal Drive Plainview, New York		11803
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code:

(516) 677-0200

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	VECO	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒				Accelerated filer ☐
Non-accelerated filer ☐				Smaller reporting company ☐
				Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2026, there were 61,140,157 shares of the registrant’s common stock outstanding.

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VEECO INSTRUMENTS INC.

INDEX


Safe Harbor Statement	1

PART I—FINANCIAL INFORMATION	4

Item 1. Financial Statements	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3. Quantitative and Qualitative Disclosures about Market Risk	35

Item 4. Controls and Procedures	36

PART II—OTHER INFORMATION	36

Item 1. Legal Proceedings	36

Item 1A. Risk Factors	36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36

Item 3. Defaults Upon Senior Securities	36

Item 4. Mine Safety Disclosures	36

Item 5. Other Information	36

Item 6. Exhibits	37

SIGNATURES	38

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Safe Harbor Statement

This quarterly report on Form 10-Q (the “Report”) 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, relating to Veeco Instruments Inc. (together with its consolidated subsidiaries, “Veeco,” the “Company,” “Registrant,” “we,” “our,” or “us,” unless the context indicates otherwise) that are based on management’s expectations, estimates, projections, and assumptions. When used in this Report, the words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates,” and variations of these words and similar expressions are intended to identify forward-looking statements. Discussions containing such forward-looking statements may be found in Part I - Items 1, 2, and 3 hereof, as well as within this Report generally.

In addition, the preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates and assumptions are based on knowledge of current events and planned actions to be undertaken in the future, they may ultimately differ from actual results. Operating results for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. All estimates and assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from these estimates and assumptions.

Forward-looking statements in this discussion include, but are not limited to, those regarding anticipated growth and trends in our business and markets, including trends related to artificial intelligence and high-performance computing, industry outlooks and demand drivers, our investment and growth strategies, our development of new products and technologies, our business outlook for the current and future periods, and other statements that are not historical facts. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation, those set forth under the heading “Risk Factors” in Part 1, Item 1A of our 2025 Form 10-K, and the following:

●

Unfavorable market conditions;

●

Risks associated with operating a global business;

●

Changes in trade policies, export controls, and the ongoing trade dispute between the U.S. and China;

●

An inability to obtain required export licenses for the sale of our products;

●

Risks associated with uncertainties related to changes in global trade policies, global trade disputes, and increased tariffs;

●

The timing of our orders, shipments, and revenue recognition;

●

Significant third party competition;

●

Risks associated with operating in industries characterized by rapid technological change;

●

Risks associated with use of artificial intelligence by us and by our competitors, including operational risks, the unintended release of proprietary information, compliance costs, privacy concerns, risks related to intellectual property rights, and risks related to AI’s impact on the workforce;

●

Our dependency on the demand for consumer electronic products and automobiles;

●

Our concentrated customer base;

●

The cyclicality of the industries we serve;

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●

A failure to estimate customer demand accurately;

●

Our reliance on a limited number of suppliers, some of whom are our sole source for particular components;

●

A failure to successfully manage our outsourcing activities or a failure of our outsourcing partners to perform as anticipated;

●

Our long and unpredictable sales cycles;

●

Customer order cancellations or modifications;

●

Risks associated with business combinations, acquisitions, strategic investments and divestitures;

●

Risks associated with global regulatory requirements;

●

Disruptions in our information technology systems or data security incidents, including risks associated with increasingly sophisticated cybersecurity attacks;

●

An inability to effectively enforce and protect our intellectual property rights;

●

Claims of intellectual property infringement by others;

●

Tightening credit markets;

●

Foreign currency exchange risks;

●

Asset impairment charges;

●

Changes in accounting pronouncements or taxation rules, practices, or rates;

●

Restrictions, covenants and repurchase provisions appearing in our current debt facilities;

●

Possible impairment to our ability to utilize our research and development credits carryforwards caused by the issuance of common stock upon the conversion of the Notes (as defined herein);

●

Delays in or failure to complete the Merger (as defined herein), whether due to an inability by either party to satisfy one or more conditions to closing, including an inability to obtain certain required regulatory approvals, the occurrence of events or changes in circumstances that give rise to the termination of the Merger Agreement (as defined herein) by either party, or otherwise;

●

Risks related to the pendency of the Merger and its effect on our business, financial condition, results of operations, cash flows and stock price;

●

Value our stockholders will receive due to fluctuation of Axcelis’ common stock market price;

●

Delaware law not entitling stockholders to an appraisal of the fair value of their shares;

●

Our stockholders having a reduced ownership and voting rights in the combined company;

●

Risks associated with an adverse judgement challenging the Merger;

●

Significant costs in connection with the Merger and integration of the two companies;

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●

Limited ability to pursue alternatives to the Merger;

●

Diversion of management time and attention from ordinary course business operations to the Merger and other potential disruptions to our business relating thereto;

●

Volatility of our common share price;

●

Inability to attract, retain, and motivate employees could have a material adverse effect;

●

Risks associated with non-compliance with environmental, health, and safety regulations;

●

Environmental, social and governance goals, strategies and requirements which could be costly to implement and which expose us to risks associated with failures to comply;

●

Measures adopted by Veeco which may have anti-takeover effects or which may make an acquisition of our Company by another company more difficult; and

●

Other risks and uncertainties described in our SEC filings on Forms 10-K, 10-Q, and 8-K, and from time-to-time in our other SEC reports.

All forward-looking statements speak only to management’s expectations, estimates, projections and assumptions as of the date of this filing or, in the case of any document referenced herein or incorporated by reference, the date of that document. The Company does not undertake any obligation to update or publicly revise any forward-looking statements to reflect events, circumstances or changes in expectations after the date of this filing.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Veeco Instruments Inc. and Subsidiaries

Consolidated Balance Sheets

(in thousands, except share amounts)


		September 30,			December 31,
		2026			2025
Assets		(unaudited)
Current assets:
Cash and cash equivalents		$	205,321		$	163,466
Short-term investments			277,184			226,763
Accounts receivable, net			154,064			110,685
Contract assets			26,884			34,838
Inventories			308,265			275,298
Prepaid expenses and other current assets			43,875			34,286
Total current assets			1,015,593			845,336
Property, plant, and equipment, net			116,163			108,646
Operating lease right-of-use assets			24,715			24,606
Intangible assets, net			3,973			5,696
Goodwill			214,964			214,964
Deferred income taxes			123,538			122,935
Other assets			6,714			3,612
Total assets		$	1,505,660		$	1,325,795

Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	68,474		$	55,344
Accrued expenses and other current liabilities			60,628			45,503
Contract liabilities			132,351			74,161
Income taxes payable			1,041			3,048
Total current liabilities			262,494			178,056
Deferred income taxes			458			532
Long-term debt			226,835			226,009
Long-term operating lease liabilities			31,480			31,837
Other liabilities			60,471			3,852
Total liabilities			581,738			440,286
Stockholders' equity:
Preferred stock, $0.01 par value; 500,000 shares authorized; no shares issued and outstanding.			—			—
Common stock, $0.01 par value; 120,000,000 shares authorized; 61,135,594 shares issued and outstanding at September 30, 2026 and 60,388,539 shares issued and outstanding at December 31, 2025			611			604
Additional paid-in capital			1,320,705			1,306,176
Accumulated deficit			(397,897)			(423,065)
Accumulated other comprehensive income			503			1,794
Total stockholders' equity			923,922			885,509
Total liabilities and stockholders' equity		$	1,505,660		$	1,325,795

See accompanying Notes to the Consolidated Financial Statements.

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Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)


		Three months ended September 30,						Nine months ended September 30,
		2026			2025			2026			2025
Net sales		$	209,384		$	165,881		$	561,206		$	499,277
Cost of sales			128,995			98,178			350,157			294,380
Gross profit			80,389			67,703			211,049			204,897
Operating expenses, net:
Research and development			35,059			28,988			98,277			89,062
Selling, general, and administrative			28,534			24,654			82,179			73,609
Amortization of intangible assets			411			771			1,723			2,413
Merger costs			2,260			2,609			5,736			2,609
Other operating expense (income), net			26			127			(160)			132
Total operating expenses, net			66,290			57,149			187,755			167,825
Operating income			14,099			10,554			23,294			37,072
Interest income			3,948			3,485			10,557			10,022
Interest expense			(2,163)			(2,164)			(6,426)			(6,960)
Other income (expense), net			—			—			—			(653)
Income before income taxes			15,884			11,875			27,425			39,481
Income tax expense (benefit)			2,249			1,279			2,257			5,205
Net income		$	13,635		$	10,596		$	25,168		$	34,276

Income per common share:
Basic		$	0.22		$	0.18		$	0.41		$	0.58
Diluted		$	0.21		$	0.17		$	0.39		$	0.57

Weighted average number of shares:
Basic			61,109			60,077			60,889			58,993
Diluted			66,154			60,950			65,207			60,436

See accompanying Notes to the Consolidated Financial Statements.

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Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

(unaudited)


		Three months ended September 30,						Nine months ended September 30,
		2026			2025			2026			2025
Net income		$	13,635		$	10,596		$	25,168		$	34,276
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities			(713)			140			(1,271)			231
Change in currency translation adjustments			4			4			(20)			51
Total other comprehensive income (loss), net of tax			(709)			144			(1,291)			282

Total comprehensive income (loss)		$	12,926		$	10,740		$	23,877		$	34,558

See accompanying Notes to the Consolidated Financial Statements.

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Veeco Instruments Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


		Nine months ended September 30,
		2026			2025
Cash Flows from Operating Activities
Net income		$	25,168		$	34,276
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			14,850			15,038
Non-cash interest expense			826			833
Deferred income taxes			(302)			427
Share-based compensation expense			26,140			28,004
Provision for bad debts			14			—
Changes in operating assets and liabilities:
Accounts receivable and contract assets			(35,439)			(13,607)
Inventories			(46,634)			(16,576)
Prepaid expenses and other current assets			(6,068)			4,826
Accounts payable and accrued expenses			27,886			(2,586)
Contract liabilities			112,577			(7,932)
Income taxes receivable and payable, net			(2,511)			3,401
Other, net			785			(1,537)
Net cash provided by (used in) operating activities			117,292			44,567

Cash Flows from Investing Activities
Capital expenditures			(13,142)			(12,928)
Proceeds from the sale of investments			124,453			155,343
Payments for purchases of investments			(175,117)			(130,483)
Net cash provided by (used in) investing activities			(63,806)			11,932

Cash Flows from Financing Activities
Restricted stock tax withholdings			(13,083)			(6,858)
Proceeds (net of tax withholdings) from option exercises and employee stock purchase plan			1,478			3,810
Repayment of convertible debt			—			(5,229)
Debt issuance costs			—			(885)
Net cash provided by (used in) financing activities			(11,605)			(9,162)
Effect of exchange rate changes on cash and cash equivalents			(26)			66
Net increase (decrease) in cash and cash equivalents			41,855			47,403
Cash and cash equivalents - beginning of period			163,466			145,819
Cash and cash equivalents - end of period		$	205,321		$	193,222

Supplemental Disclosure of Cash Flow Information
Interest paid		$	3,737		$	4,767
Income taxes paid (refunded)			2,027			70
Non-cash activities
Capital expenditures included in accounts payable and accrued expenses			2,303			720
Net transfer of inventory to property, plant and equipment			10,197			—
Net transfer of inventory to other noncurrent assets			3,470			—
Right-of-use assets obtained in exchange for lease obligations			2,168			944

See accompanying Notes to the Consolidated Financial Statements.

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Note 1 — Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Veeco have been prepared in accordance with U.S. GAAP as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 270 for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements as the interim information is an update of the information that was presented in Veeco’s most recent annual financial statements. For further information, refer to Veeco’s Consolidated Financial Statements and Notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature. Certain prior period amounts have been reclassified to conform to the current period presentation.

Veeco reports interim quarters on a 13-week basis ending on the last Sunday of each quarter. The fourth quarter always ends on the last day of the calendar year, December 31. The 2026 interim quarters end on March 29, June 28, and September 27, and the 2025 interim quarters end on March 30, June 29, and September 28. These interim quarters are reported as March 31, June 30, and September 30 in Veeco’s interim consolidated financial statements.

The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management’s knowledge of current events and actions it may undertake in the future, actual results may differ from these estimates.

Recent Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statements Expenses (Subtopic 220-40),” to improve income statement expenses disclosure. The standard requires more detailed information related to the types of expenses, including (among other items) the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each interim and annual income statement’s expense caption, as applicable. This authoritative guidance can be applied prospectively or retrospectively and will be effective for financial statements issued for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently in the process of evaluating the impact of adoption on its consolidated financial statements.

Pending Merger with Axcelis Technologies, Inc.

On September 30, 2025, the Company 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 will merge with and into Veeco (the “Merger”), with Veeco surviving as a wholly-owned subsidiary of Axcelis. See Note 10 Merger for additional information.

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Note 2 — Income Per Common Share

Basic income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period. Diluted income per share is calculated by dividing net income available to common shareholders by the weighted average number of shares used to calculate basic income per share plus the weighted average number of common share equivalents outstanding during the period. The dilutive effect of outstanding options to purchase common stock and share-based awards is considered in diluted income per share by application of the treasury stock method. The dilutive effect of performance share units is included in diluted income per common share if the performance targets have been achieved, or would have been achieved if the reporting date was the end of the contingency period. Finally, the Company includes the dilutive effect of shares issuable upon conversion of its Notes in the calculation of diluted income per share using the if-converted method. The Company must settle the principal amount of the 2029 Notes in cash, and has the option to settle any excess of the conversion value over the principal amount in any combination of cash or shares. As such, the Company only includes the excess shares that may be issuable above the principal amount of the 2029 Notes in the dilutive share count, if the effect would be dilutive.

The computations of basic and diluted income per share for the three and nine months ended September 30, 2026 and 2025 are as follows:


		Three months ended September 30,						Nine months ended September 30,
		2026			2025			2026			2025

		(in thousands, except per share amounts)
Numerator:
Net income		$	13,635		$	10,596		$	25,168		$	34,276
Interest expense associated with convertible notes			—			—			—			378
Net income available to common shareholders		$	13,635		$	10,596		$	25,168		$	34,654

Denominator:
Basic weighted average shares outstanding			61,109			60,077			60,889			58,993
Effect of potentially dilutive share-based awards			1,756			873			1,428			552
Dilutive effect of convertible notes			3,289			—			2,890			891
Diluted weighted average shares outstanding			66,154			60,950			65,207			60,436

Net income per common share:
Basic		$	0.22		$	0.18		$	0.41		$	0.58
Diluted		$	0.21		$	0.17		$	0.39		$	0.57

Potentially dilutive shares excluded from the diluted calculation as their effect would be antidilutive			2			612			18			643
Maximum potential shares to be issued for settlement of convertible senior notes excluded from the diluted calculation as their effect would be antidilutive			N/A			N/A			N/A			61

Note 3 — Assets

Investments

Short-term investments are generally classified as available-for-sale and reported at fair value, with unrealized gains and losses, net of tax, presented as a separate component of stockholders’ equity under the caption “Accumulated other comprehensive income” in the Consolidated Balance Sheets. These securities may include U.S. treasuries, government agency securities, corporate debt, and commercial paper, all with maturities of greater than three months when purchased. All realized gains and losses and unrealized losses resulting from declines in fair value that are other than temporary are included in “Other operating expense (income), net” in the Consolidated Statements of Operations.

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Fair value is the price that would be received for an asset or the amount paid to transfer a liability in an orderly transaction between market participants. Veeco classifies certain assets based on the following fair value hierarchy:

Level 1: Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Veeco has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

The following table presents the portion of Veeco’s assets that were measured at fair value on a recurring basis at

September 30, 2026 and December 31, 2025:


		Level 1			Level 2			Level 3			Total

		(in thousands)
September 30, 2026
Cash equivalents
Certificate of deposits and time deposits		$	98,997		$	—		$	—		$	98,997
Money market cash			27,122			—			—			27,122
Total		$	126,119		$	—		$	—		$	126,119
Short-term investments
U.S. treasuries		$	86,796		$	—		$	—		$	86,796
Government agency securities			—			72,886			—			72,886
Corporate debt			—			61,062			—			61,062
Commercial paper			—			56,440			—			56,440
Total		$	86,796		$	190,388		$	—		$	277,184

December 31, 2025
Cash equivalents
Certificate of deposits and time deposits		$	63,893		$	—		$	—		$	63,893
Money market cash			15,327			—			—			15,327
Total		$	79,220		$	—		$	—		$	79,220
Short-term investments
U.S. treasuries		$	77,110		$	—		$	—		$	77,110
Government agency securities			—			53,488			—			53,488
Corporate debt			—			96,165			—			96,165
Total		$	77,110		$	149,653		$	—		$	226,763

There were no transfers between fair value measurement levels during the three and nine months ended September 30, 2026.

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At September 30, 2026 and December 31, 2025, the amortized cost and fair value of available-for-sale securities consist of:


					Gross			Gross
		Amortized			Unrealized			Unrealized			Estimated
		Cost			Gains			Losses			Fair Value

		(in thousands)
September 30, 2026
U.S. treasuries		$	87,399		$	—		$	(603)		$	86,796
Government agency securities			73,398			—			(512)			72,886
Corporate debt			61,548			—			(486)			61,062
Commercial paper			56,440			—			—			56,440
Total		$	278,785		$	—		$	(1,601)		$	277,184

December 31, 2025
U.S. treasuries		$	77,106		$	52		$	(48)		$	77,110
Government agency securities			53,473			50			(35)			53,488
Corporate debt			96,144			86			(65)			96,165
Total		$	226,723		$	188		$	(148)		$	226,763

Available-for-sale securities in a loss position at September 30, 2026 and December 31, 2025 consist of:


		Continuous Loss Position
		for Less than 12 Months
					Gross
		Estimated			Unrealized
		Fair Value			Losses

			(in thousands)
September 30, 2026
U.S. treasuries		$	86,796		$	(603)
Government agency securities			71,315			(512)
Corporate debt			61,062			(486)
Total		$	219,173		$	(1,601)

December 31, 2025
U.S. treasuries		$	37,609		$	(48)
Government agency securities			24,028			(35)
Corporate debt			45,675			(65)
Total		$	107,312		$	(148)

The contractual maturities of securities classified as available-for-sale at September 30, 2026 were as follows:


	September 30, 2026
	Amortized		Estimated
	Cost		Fair Value

		(in thousands)
Due in one year or less	$	165,781	$	165,358
Due after one year through two years		113,004		111,826
Total	$	278,785	$	277,184

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. There were no realized gains or losses, or unrealized losses from declines in fair value that are other than temporary, for the nine months ended September 30, 2026 and 2025.

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Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts of $0.9 million and $1.0 million at September 30, 2026 and December 31, 2025, respectively. The Company considers its current expectations of future economic conditions when estimating its allowance for doubtful accounts.

Inventories

Inventories at September 30, 2026 and December 31, 2025 consist of the following:


		September 30,			December 31,
		2026			2025

		(in thousands)
Materials		$	186,436		$	156,385
Work-in-process			92,053			80,947
Finished goods			2,919			7,017
Evaluation inventory			26,857			30,949
Total		$	308,265		$	275,298

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets primarily consist of supplier deposits, prepaid value-added tax, lease deposits, prepaid insurance, prepaid software and maintenance, and other receivables. The Company had deposits with its suppliers of $25.4 million and $9.8 million for September 30, 2026 and December 31, 2025, respectively.

Property, Plant, and Equipment

Property, plant, and equipment at September 30, 2026 and December 31, 2025 consist of the following:


		September 30,			December 31,
		2026			2025

		(in thousands)
Land		$	5,061		$	5,061
Building and improvements			62,109			61,749
Machinery and equipment ⁽¹⁾			217,352			198,898
Leasehold improvements			56,766			55,210
Gross property, plant, and equipment			341,288			320,918
Less: accumulated depreciation and amortization			225,125			212,272
Property, plant, and equipment, net		$	116,163		$	108,646

(1)	Machinery and equipment also includes software, furniture, and fixtures

For the three and nine months ended September 30, 2026, depreciation expense was $4.5 million and $13.1 million, respectively and $4.1 million and $12.6 million, respectively, for the comparable 2025 period.

Goodwill

Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. There were no changes to goodwill during the nine months ended September 30, 2026.

Intangible Assets

Intangible assets consist of purchased technology, customer relationships, patents, trademarks and tradenames, licenses, and backlog, and are initially recorded at fair value. Long-lived intangible assets are amortized over their estimated useful lives in a method reflecting the pattern in which the economic benefits are consumed or amortized on a straight-line basis if such pattern cannot be reliably determined.

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The components of purchased intangible assets were as follows:


		September 30, 2026									December 31, 2025
					Accumulated									Accumulated
		Gross			Amortization						Gross			Amortization
		Carrying			and			Net			Carrying			and			Net
		Amount			Impairment			Amount			Amount			Impairment			Amount

		(in thousands)
Technology		$	355,928		$	355,928		$	—		$	355,928		$	355,437		$	491
Customer relationships			146,925			142,952			3,973			146,925			141,720			5,205
Trademarks and tradenames			30,910			30,910			—			30,910			30,910			—
Other			3,746			3,746			—			3,746			3,746			—
Total		$	537,509		$	533,536		$	3,973		$	537,509		$	531,813		$	5,696

Other intangible assets primarily consist of patents, licenses, and backlog.

Note 4 — Liabilities

Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities at September 30, 2026 and December 31, 2025 consist of:


		September 30,			December 31,
		2026			2025

		(in thousands)
Payroll and related benefits		$	29,166		$	21,772
Warranty			10,634			10,348
Operating lease liabilities			4,204			4,164
Interest			2,332			680
Professional fees			2,060			1,315
Sales, use, and other taxes			1,059			958
Merger costs			1,740			727
Contingent consideration			275			275
Other			9,158			5,264
Total		$	60,628		$	45,503

Warranty

Warranties are typically valid for one year from the date of system final acceptance. The Company estimates the costs that may be incurred under the warranty which are determined by analyzing specific product and historical configuration statistics and regional warranty support costs and are affected by product failure rates, material usage, and labor costs incurred in correcting product failures during the warranty period. Unforeseen component failures or exceptional component performance can also result in changes to warranty costs. Changes in product warranty reserves for the nine months ended September 30, 2026 include:


		September 30,
		2026
			(in thousands)
Balance - beginning of the year		$	10,348
Warranties issued			5,841
Consumption of reserves			(4,863)
Changes in estimate			(692)
Balance - September 30, 2026		$	10,634

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Contract Liabilities and Performance Obligations

Contract liabilities consist of unsatisfied performance obligations related to advanced payments received and billing in excess of revenue recognized. The contract liability balance as of December 31, 2025 was approximately $74.2 million, of which the Company recognized approximately $52.6 million in revenue during the nine months ended September 30, 2026.

This reduction in contract liabilities was offset in part by new billings for products and services which were unsatisfied performance obligations to customers and revenue had not yet been recognized as of September 30, 2026. Additionally, at September 30, 2026, the Company had approximately $54.4 million of long-term contract liabilities included within “Other Liabilities” on the Consolidated Balance Sheets related to customer orders scheduled to ship beyond the next twelve months.

As of September 30, 2026, the Company has approximately $425.6 million of remaining performance obligations on contracts with an original estimated duration of one year or more, of which approximately 38% is expected to be recognized within one year, with the remaining amounts expected to be recognized between one to three years. The Company has elected to exclude disclosures regarding remaining performance obligations that have an original expected duration of one year or less.

Convertible Senior Notes

2025 Notes

On November 17, 2020, as part of the privately negotiated exchange agreement, the Company issued $132.5 million of 3.50% convertible senior notes due 2025 (the “2025 Notes”). The 2025 Notes bear interest at a rate of 3.50% per year, payable semiannually in arrears on January 15 and July 15 of each year, commencing on July 15, 2021. On May 19, 2023, in connection with the completion of a private offering of $230.0 million aggregate principal amount of 2.875% convertible senior notes due 2029 described below, the Company repurchased and retired approximately $106.0 million in aggregate principal amount of its outstanding 2025 Notes. The remaining principal amount of $26.5 million 2025 Notes matured on January 15, 2025 and were settled through the issuance of 1.1 million shares of the Company’s common stock to the noteholders.

2027 Notes

On May 18, 2020, the Company completed a private offering of $125.0 million of 3.75% convertible senior notes due 2027 (the “2027 Notes”). The Company received net proceeds of approximately $121.9 million, after deducting underwriting discounts and fees and expenses payable by the Company. Additionally, the Company used approximately $10.3 million of cash to purchase capped calls, discussed below. The 2027 Notes bore interest at a rate of 3.75% per year, payable semiannually in arrears on June 1 and December 1 of each year, commencing on December 1, 2020. The 2027 Notes were scheduled to mature on June 1, 2027, unless earlier purchased by the Company, redeemed, or converted. On May 19, 2023, in connection with the completion of a private offering of $230.0 million aggregate principal amount of 2.875% convertible senior notes due 2029 described below, the Company repurchased and retired approximately $100.0 million in aggregate principal amount of its outstanding 2027 Notes. The remaining principal amount of $25.0 million 2027 Notes were settled on May 15, 2025 in a private transaction with all remaining 2027 Note holders for 1.6 million shares of the Company’s common stock and $5.4 million in cash. The settlement was accounted for as an induced conversion resulting in an inducement expense of approximately $0.7 million and a decrease to additional paid-in capital of $20.2 million on the Consolidated Balance Sheets.

2029 Notes

On May 19, 2023, the Company completed a private offering of $230.0 million of 2.875% convertible senior notes due 2029 (the “2029 Notes”). The Company received net proceeds of approximately $223.2 million, after deducting underwriting discounts and fees and expenses payable by the Company. Additionally, the Company used approximately $198.8 million of net proceeds from the offering to fund the cash portion of the 2025 Notes and 2027 Notes

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extinguishments described above and the remainder for general corporate purposes. The 2029 Notes bear interest at a rate of 2.875% per year, payable semiannually in arrears on June 1 and December 1 of each year, commencing on December 1, 2023. The 2029 Notes mature on June 1, 2029, unless earlier purchased by the Company, redeemed, or converted. The Company will settle any conversions of the 2029 Notes by paying cash up to the aggregate principal amount of the 2029 Notes to be converted, and paying or delivering either cash, shares of Company’s common stock, or a combination of cash and shares of common stock at the Company’s election, in respect of the remainder, if any, of the conversion obligation in excess of the aggregate principal amount of the 2029 Notes being converted.

The 2029 Notes are unsecured senior obligations of Veeco and rank senior in right of payment to any of Veeco’s subordinated indebtedness; equal in right of payment to all of Veeco’s unsecured indebtedness that is not subordinated; effectively subordinated in right of payment to any of Veeco’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally subordinated to all indebtedness and other liabilities (including trade payables) of Veeco’s subsidiaries.

The Company may redeem for cash, at its option, all or any portion of the outstanding 2029 Notes at any time on or after June 8, 2026, at a redemption price equal to 100% of the principal amount of such 2029 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date, if the last reported sale price of the common stock has been at least 130% of the conversion price for the applicable series of 2029 Notes then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides the redemption notice. Upon the Company’s notice of redemption, holders may elect to convert their 2029 Notes based on the conversion rates and criteria outlined below. Based on the criteria outlined here, the 2029 Notes were callable by the Company as of September 30, 2026.

The 2029 Notes are convertible at the option of the holders upon the satisfaction of specified conditions and during certain periods as described below. The initial conversion rate is 34.21852 shares of the Company’s common stock per $1,000 principal amount, representing an initial effective conversion price of $29.22 per share of common stock. The conversion rate may be subject to adjustment upon the occurrence of certain specified events.

Holders may convert all or any portion of their 2029 Notes, in multiples of one thousand dollar principal amount, at their option at any time prior to the close of business on the business day immediately preceding February 1, 2029, only under the following circumstances:

(i)

During any calendar quarter (and only during such calendar quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(ii)

During the five consecutive business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per one thousand dollar principal amount of 2029 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Veeco’s common stock and the conversion rate on each such trading day;

(iii)

If the Company calls any or all of applicable series of the 2029 Notes for redemption at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

(iv)

Upon the occurrence of specified corporate events.

For the calendar quarter ended September 30, 2026, the last reported sales price of the common stock during the 30 consecutive trading days, based on the criteria outlined in (i) above, was greater than 130% of the conversion price of the 2029 Notes, and as such the 2029 Notes are convertible by the holders until December 31, 2026. The Company is required to pay the aggregate principal amount of the 2029 Notes in cash upon settlement. However, the Company has the ability and intent to refinance the 2029 Notes on a long-term basis through available capacity under its Revolving

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Credit Facility, and as such, the 2029 Notes will remain classified as long-term debt on the Consolidated Balance Sheet as of September 30, 2026.

Holders may convert their 2029 Notes at any time, regardless of the foregoing circumstances, on February 1, 2029, until the close of business on the business day immediately preceding the maturity date.

The 2025, 2027, and 2029 Notes were recorded as a single unit within liabilities in the consolidated balance sheets as the conversion features within the Notes were not derivatives that require bifurcation and the Notes did not involve a substantial premium. Transaction costs of $1.9 million, $3.1 million, and $6.8 million incurred in connection with the issuance of the 2025 Notes, 2027 Notes, and 2029 Notes, respectively, were recorded as direct deductions from the related debt liabilities and recognized as non-cash interest expense using the effective interest method over the expected terms of the Notes.

The carrying value of the 2029 Notes is as follows:


		September 30, 2026						December 31, 2025
		Principal Amount		Unamortized transaction costs		Net carrying value		Principal Amount		Unamortized transaction costs		Net carrying value

		(in thousands)
2029 Notes	$	230,000	$	(3,165)	$	226,835	$	230,000	$	(3,991)	$	226,009
Net carrying value	$	230,000	$	(3,165)	$	226,835	$	230,000	$	(3,991)	$	226,009

Total interest expense related to the 2025 Notes, 2027 Notes, and 2029 Notes is as follows:


		Three months ended September 30,						Nine months ended September 30,
		2026			2025			2026			2025

		(in thousands)
Cash Interest Expense
Coupon interest expense - 2025 Notes		$	—		$	—		$	—		$	39
Coupon interest expense - 2027 Notes			—			—			—			347
Coupon interest expense - 2029 Notes			1,653			1,653			4,959			4,959
Non-cash Interest Expense
Amortization of debt discount/transaction costs- 2025 Notes			—			—			—			4
Amortization of debt discount/transaction costs- 2027 Notes			—			—			—			30
Amortization of debt discount/transaction costs- 2029 Notes			292			283			826			799
Total Interest Expense		$	1,945		$	1,936		$	5,785		$	6,178

The Company determined the 2029 Notes are Level 2 liabilities in the fair value hierarchy and had an estimated fair value at September 30, 2026 of $390.7 million.

Capped Call Transactions

In connection with the offering of the 2027 Notes, on May 13, 2020, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”), pursuant to capped call confirmations, covering the initial underlying shares of the 2027 Notes of approximately 8.9 million shares, for an aggregate premium of $10.3 million. The Capped Call Transactions feature a $13.98 exercise price and a capped price of approximately $18.46 per share, and mature on June 1, 2027. The Capped Call Transactions are subject to certain adjustments under the terms of the capped call confirmations.

The Capped Call Transactions are separate transactions entered into by the Company with the capped call counterparties, are not part of the terms of the 2027 Notes and did not change the previous holders’ rights under the 2027 Notes.

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Previous holders of the 2027 Notes did not have any rights with respect to the Capped Call Transactions. The cost of the Capped Call Transactions is not expected to be tax-deductible as the Company did not elect to integrate the Capped Call Transactions into the 2027 Notes for tax purposes. The Company used a portion of the net proceeds from the offering of the 2027 Notes to pay for the Capped Call Transactions, and the cost of the Capped Call Transactions was recorded as a reduction of the Company’s additional paid-in capital in the accompanying consolidated financial statements.

Revolving Credit Facility

On December 16, 2021, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) providing for a senior secured revolving credit facility in an aggregate principal amount of $150 million including a $15 million letter of credit sublimit. The Loan and Security Agreement was subsequently amended to increase the aggregate principal amount to $225 million on August 2, 2024 (the “Third Amendment”), and $250 million on June 16, 2025 (the “Fourth Amendment”). On September 30, 2025, the Loan and Security Agreement was subsequently amended to make certain amendments to the definition of “Changes of Control” and “Merger, Consolidation and Sale of Assets” covenant in the Loan and Security Agreement following the announcement of the Company’s Merger Agreement with Axcelis (the “Fifth Amendment”) (as amended to date, the “Credit Facility”). The Credit Facility matures on June 16, 2030, subject to a springing maturity date of March 2, 2029 upon the occurrence of certain liquidity events described in the Fourth Amendment. The Credit Facility is guaranteed by the Company’s direct material U.S. subsidiaries, subject to customary exceptions. Borrowings under the Credit Facility are secured by a first-priority lien on substantially all of the assets of the Company, subject to customary exceptions. Subject to certain conditions and the receipt of commitments from the lenders, the Loan and Security Agreement allows for revolving commitments under the Credit Facility to be increased by up to $100 million, with additional amounts available so long as the Secured Net Leverage Ratio (as defined in the Loan and Security Agreement) does not exceed 2.50 to 1.00. The existing lenders under the Credit Facility, are entitled, but not obligated, to provide such incremental commitments.

Borrowings will bear interest at a floating rate which can be, at the Company’s option based on certain conditions in the Loan and Security Agreement, either (a) an alternate base rate plus an applicable rate ranging from 0.25% to 1.00% or (b) a Secured Overnight Financing Rate (“SOFR”) (with a floor of 0.00%) for the specified interest period plus an applicable rate ranging from 1.25% to 2.00%, in each case, depending on the Company’s Secured Net Leverage Ratio (as defined in the Loan and Security Agreement). The Company will pay an unused commitment fee ranging from 0.20% to 0.30% based on unused capacity under the Credit Facility and the Company’s Secured Net Leverage Ratio. The Company may use the proceeds of borrowings under the Credit Facility to pay transaction fees and expenses, provide for its working capital needs and reimburse drawings under letters of credit and for other general corporate purposes.

The Loan and Security Agreement, contains customary affirmative covenants for transactions of this type, including, among others, the provision of financial and other information to the administrative agent, notice to the administrative agent upon the occurrence of certain material events, preservation of existence, maintenance of properties and insurance, compliance with laws, including environmental laws, the provision of additional guarantees, and an affiliate transactions covenant, subject to certain exceptions. The Loan and Security Agreement, contains customary negative covenants, including, among others, restrictions on the ability to merge and consolidate with other companies, incur indebtedness, refinance our existing convertible notes, grant liens or security interests on assets, make investments, acquisitions, loans, or advances, pay dividends, and sell or otherwise transfer assets.

The Loan and Security Agreement, contains financial maintenance covenants that require the Borrower to maintain an Interest Coverage Ratio (as defined in the Loan and Security Agreement) of not less than 3.00 to 1.00, a Total Net Leverage Ratio (as defined in the Loan and Security Agreement) of not more than 4.50 to 1.00, and a Secured Net Leverage Ratio (as defined in the Loan and Security Agreement) of not more than 3.00 to 1.00, in each case, tested at the end of each fiscal quarter. The Loan and Security Agreement, also provides for a number of customary events of default, including, among others: payment defaults to the lenders; voluntary and involuntary bankruptcy proceedings; covenant defaults; material inaccuracies of representations and warranties; certain change of control events; material money judgments; and other customary events of default. The occurrence of an event of default could result in the acceleration of obligations and the termination of lending commitments under the Loan and Security Agreement.

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No amounts were outstanding under the Credit Facility as of September 30, 2026 or December 31, 2025.

Other Liabilities

Other Liabilities at September 30, 2026 and December 31, 2025 was approximately $60.5 million and $3.9 million, respectively. Included within Other Liabilities at September 30, 2026 were customer deposits of $54.4 million related to customer orders scheduled to ship beyond the next twelve months, as well as merger costs, medical and dental benefits for former executives, asset retirement obligations, and tax liabilities.

Note 5 — Commitments and Contingencies

Leases

The Company’s operating leases primarily include real estate leases for properties used for manufacturing, R&D activities, sales and service, and administration, as well as certain equipment leases. Some leases may include options to renew for a period of up to 5 years, while others may include options to terminate the lease. The weighted average remaining lease term of the Company’s operating leases as of September 30, 2026 was 9 years, and the weighted average discount rate used in determining the present value of future lease payments was 5.5%.

The following table provides the maturities of lease liabilities at September 30, 2026:


		Operating
		Leases
		(in thousands)
Payments due by period:
2026		$	896
2027			5,568
2028			5,122
2029			4,903
2030			4,389
Thereafter			26,897
Total future minimum lease payments			47,775
Less: Imputed interest			(12,091)
Total		$	35,684

Reported as of September 30, 2026
Accrued expenses and other current liabilities		$	4,204
Long-term operating lease liabilities			31,480
Total		$	35,684

Operating lease costs for the three and nine months ended September 30, 2026 were $1.3 million and $3.8 million, respectively, and $1.2 million and $3.8 million, respectively for the comparable 2025 period. Variable lease costs for the three and nine months ended September 30, 2026 were $0.3 million and $0.7 million, respectively and $0.3 million and $0.9 million, respectively for the comparable 2025 period. Additionally, the Company has an immaterial amount of short-term leases. Cash outflows from operating leases for the nine months ended September 30, 2026 and 2025 were $5.8 million and $5.4 million, respectively.

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Receivable Purchase Agreement

The Company entered into a receivable purchase agreement with a financial institution to sell certain of its trade receivables from customers without recourse, up to $30.0 million at any point in time. Pursuant to this agreement, the Company sold no receivables for the three and nine months ended September 30, 2026, and $30.0 million was available under the agreement for additional sales of receivables as of September 30, 2026. The Company sold no receivables for the three and nine months ended September 30, 2025.

Purchase Commitments

Veeco has purchase commitments of $411.0 million at September 30, 2026 to secure the rights to various assets and services to be used in the future in the normal course of business, substantially all of which become due within one year.

Bank Guarantees

Veeco has bank guarantees and letters of credit issued by a financial institution on its behalf as needed. At September 30, 2026, outstanding bank guarantees and standby letters of credit totaled $6.9 million, and unused bank guarantees and letters of credit of $35.1 million were available to be drawn upon.

Legal Proceedings

The Company is involved in various legal proceedings arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

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Note 6 — Equity

Statement of Stockholders’ Equity

The following tables present the changes in Stockholders’ Equity:


													Accumulated
							Additional						Other
		Common Stock					Paid-in			Accumulated			Comprehensive
		Shares		Amount			Capital			Deficit			Income			Total

		(in thousands)
Balance at December 31, 2025		60,389		$	604		$	1,306,176		$	(423,065)		$	1,794		$	885,509
Net income (loss)		—			—			—			(324)			—			(324)
Other comprehensive income (loss), net of tax		—			—			—			—			(472)			(472)
Share-based compensation expense		—			—			8,511			—			—			8,511
Net issuance under employee stock plans		643			6			(9,568)			—			—			(9,562)
Balance at March 31, 2026		61,032		$	610		$	1,305,119		$	(423,389)		$	1,322		$	883,662
Net income		—			—			—			11,857			—			11,857
Other comprehensive income (loss), net of tax		—			—			—			—			(110)			(110)
Share-based compensation expense		—			—			9,215			—			—			9,215
Net issuance under employee stock plans		97			1			(1,843)			—			—			(1,842)
Balance at June 30, 2026		61,129		$	611		$	1,312,491		$	(411,532)		$	1,212		$	902,782
Net income		—			—			—			13,635			—			13,635
Other comprehensive income (loss), net of tax		—			—			—			—			(709)			(709)
Share-based compensation expense		—			—			8,414			—			—			8,414
Net issuance under employee stock plans		7			—			(200)			—			—			(200)
Balance at September 30, 2026		61,136		$	611		$	1,320,705		$	(397,897)		$	503		$	923,922


													Accumulated
							Additional						Other
		Common Stock					Paid-in			Accumulated			Comprehensive
		Shares		Amount			Capital			Deficit			Income			Total

		(in thousands)
Balance at December 31, 2024		56,828		$	569		$	1,227,134		$	(458,455)		$	1,522		$	770,770
Net income		—			—			—			11,947			—			11,947
Other comprehensive income (loss), net of tax		—			—			—			—			108			108
Share-based compensation expense		—			—			9,208			—			—			9,208
Settlement of the 2025 Notes		1,104			11			26,489			—			—			26,500
Net issuance under employee stock plans		360			3			(6,678)			—			—			(6,675)
Balance at March 31, 2025		58,292		$	583		$	1,256,153		$	(446,508)		$	1,630		$	811,858
Net income		—			—			—			11,733			—			11,733
Other comprehensive income (loss), net of tax		—			—			—			—			30			30
Share-based compensation expense		—			—			9,651			—			—			9,651
Settlement of the 2027 Notes		1,643			16			20,215									20,231
Net issuance under employee stock plans		226			3			2,690			—			—			2,693
Balance at June 30, 2025		60,161		$	602		$	1,288,709		$	(434,775)		$	1,660		$	856,196
Net income		—			—			—			10,596			—			10,596
Other comprehensive income (loss), net of tax		—			—			—			—			144			144
Share-based compensation expense		—			—			9,145			—			—			9,145
Net issuance under employee stock plans		(2)			—			(111)			—			—			(111)
Balance at September 30, 2025		60,159		$	602		$	1,297,743		$	(424,179)		$	1,804		$	875,970

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Accumulated Other Comprehensive Income (“AOCI”)

The following table presents the changes in the balances of each component of AOCI, net of tax:


					Unrealized
					Gains (Losses)
		Foreign			on Available-
		Currency			for-Sale
		Translation			Securities			Total

		(in thousands)
Balance - December 31, 2025		$	1,855		$	(61)		$	1,794
Other comprehensive income (loss)			(20)			(1,271)			(1,291)
Balance - September 30, 2026		$	1,835		$	(1,332)		$	503

There were immaterial reclassifications from AOCI into net income for the three and nine months ended September 30, 2026 and 2025.

Note 7 — Share-based Compensation

Restricted share awards are issued to employees and to members of our board of directors that are subject to specified restrictions and a risk of forfeiture. The restrictions typically lapse over one to four years and may entitle holders to dividends and voting rights. Other types of share-based compensation include performance share awards, performance share units, and restricted share units (collectively with restricted share awards, “restricted shares”), as well as options to purchase common stock.

Share-based compensation expense was recognized in the following line items in the Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025:


		Three months ended September 30,						Nine months ended September 30,
		2026			2025			2026			2025

		(in thousands)
Cost of sales		$	1,411		$	1,771		$	4,522		$	5,105
Research and development			2,656			2,840			7,938			8,902
Selling, general, and administrative			4,347			4,534			13,680			13,997
Total		$	8,414		$	9,145		$	26,140		$	28,004

For the nine months ended September 30, 2026, equity activity related to non-vested restricted shares and performance shares was as follows:


		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
	(in thousands)
Balance - December 31, 2025	2,551	$	28.89
Granted	1,262		32.84
Performance award adjustments	117		32.25
Vested	(1,126)		28.30
Forfeited	(121)		29.80
Balance - September 30, 2026	2,683	$	31.10

Note 8 — Income Taxes

Income taxes are estimated for each of the jurisdictions in which the Company operates. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting

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purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Realization of net deferred tax assets is dependent on future taxable income.

At the end of each interim reporting period, the effective tax rate is aligned with expectations for the full year. This estimate is used to determine the income tax provision on a year-to-date basis and may change in subsequent interim periods.

Income before income taxes and income tax expense for the three and nine months ended September 30, 2026 and 2025 were as follows:


	Three months ended September 30,				Nine months ended September 30,
	2026		2025		2026		2025

	(in thousands, except percentages)
Income before income taxes	$	15,884	$	11,875	$	27,425	$	39,481
Income tax expense	$	2,249	$	1,279	$	2,257	$	5,205
Effective tax rate		14.16%		10.77%		8.23%		13.18%

The Company’s income tax expense was $2.2 million and $2.3 million, respectively, for the three and nine months ended September 30, 2026, compared to $1.3 million and $5.2 million, respectively, for the comparable prior periods.

For the three and nine months ended September 30, 2026, and 2025, the effective tax rates were favorably impacted by the tax benefits related to Foreign-Derived Deduction Eligible Income and research and development tax credits. Additionally, for the three and nine months ended September 30, 2026, the effective tax rate was also favorably impacted by a discrete income tax benefit resulting from share-based compensation windfall, while for the comparable prior year periods, the effective tax rate was negatively impacted by a discrete income tax expense resulting from the share-based compensation shortfall.

Note 9 — Segment Reporting and Geographic Information

The Company operates and measures its results in one operating segment and therefore has one reportable segment: the development, manufacture, sales, and support of semiconductor and thin film process equipment primarily sold to make electronic devices. The accounting policies of this one operating segment are the same as those described in the Company’s 2025 Form 10-K. The Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, assesses segment performance and decides how to allocate resources based on net income that is reported on the Consolidated Statements of Operations. The measure of segment assets is reported on the Consolidated Balance Sheet as total assets. The Company does not have intra-entity sales or transfers. The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the segment or into other parts of the Company, such as for acquisitions. Net income is used to monitor forecast versus actual results. The CODM also uses net income in competitive analysis by benchmarking the Company’s competitors. The competitive analysis along with the monitoring of forecasted versus actual results are used in assessing performance of the segment. The Company regularly provides management reports to the CODM on a consolidated expense basis which includes actuals, forecasted, and budgeted information. These reports are similar to the Company’s consolidated financial statements.

There are no additional expenses categories and amounts that meet the definition of significant expense items that are regularly provided to the CODM and included in the reported measure of net income.

Veeco serves the following four end-markets:

Semiconductor

The Semiconductor market refers to early process steps in logic and memory applications where silicon wafers are processed. There are many different process steps in forming patterned wafers, such as deposition, etching, masking, and doping, where the microchips are created but remain on the silicon wafer. This market includes mask blank production for extreme ultraviolet (“EUV”) lithography, as well as Advanced Packaging, which refers to a portfolio of wafer-level

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assembly technologies that enable improved performance of electronic products, such as smartphones, high-end servers, and graphical processors.

Compound Semiconductor

The Compound Semiconductor market includes Photonics, Power Electronics, RF Filters and Amplifiers, and Solar applications. Photonics refers to light source technologies and laser-based solutions for 3D sensing, datacom and telecom applications. This includes micro-LED, laser diodes, edge emitting lasers and vertical cavity surface emitting lasers (“VCSELs”). Power Electronics refers to semiconductor devices such as rectifiers, inverters and converters for the control and conversion of electric power in applications such as fast or wireless charging of consumer electronics and automotive applications. RF power amplifiers and filters (including surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) filters) are used in 5G communications infrastructure, smartphones, tablets, and mobile devices. They make use of radio waves for wireless broadcasting and/or communications. Solar refers to power obtained by harnessing the energy of the sun through the use of compound semiconductor devices such as photovoltaics.

Data Storage

Data Storage refers to the Hard Disk Drive (“HDD”) market, for which our systems enable customers to manufacture thin film magnetic heads for hard disk drives as part of large capacity storage applications.

Scientific & Other

Scientific & Other refers to advanced materials research and a range of manufacturing applications including optical coatings (laser mirrors, optical filters, and anti-reflective coatings).

Sales by end-market and geographic region for the three and nine months ended September 30, 2026 and 2025 were as follows:


		Three months ended September 30,					Nine months ended September 30,
		2026		2025			2026		2025

		(in thousands)
Sales by end-market
Semiconductor		$	135,254	$	118,322		$	374,974	$	366,019
Compound Semiconductor			40,202		10,912			79,537		39,506
Data Storage			20,006		9,971			52,420		29,030
Scientific & Other			13,922		26,676			54,275		64,722
Total		$	209,384	$	165,881		$	561,206	$	499,277
Sales by geographic region
United States		$	65,006	$	26,513		$	156,299	$	72,427
EMEA⁽¹⁾			24,653		11,581			56,440		42,451
China			24,581		45,650			92,622		144,032
Rest of APAC			95,125		82,100			255,287		240,262
Rest of World			19		37			558		105
Total		$	209,384	$	165,881		$	561,206	$	499,277

(1)	EMEA consists of Europe, the Middle East, and Africa

For geographic reporting, sales are attributed to the location in which the customer facility is located.

Note 10 — Merger

Merger Agreement with Axcelis Technologies, Inc.

On September 30, 2025, the Company entered into Merger Agreement with Axcelis, and Merger Sub. Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub will merge

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with and into Veeco, with Veeco surviving as a wholly-owned subsidiary of Axcelis. The Merger Agreement was approved by Veeco’s board of directors (except for one (1) independent director who serves on the Axcelis board of directors as well and thus 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, and is currently expected to close by the end of the first quarter of 2027.

Under the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of Company common stock issued and outstanding immediately prior to the Effective Time (other than shares owned by Axcelis, the Company, Merger Sub, or their wholly-owned subsidiaries) will be converted into the right to receive 0.3575 newly issued shares of Axcelis common stock (the “Axcelis Common Stock”). No fractional shares of Axcelis will be issued in the Merger, and the Company stockholders will receive cash in lieu of fractional shares as part of the merger consideration. Following the Merger, Axcelis’ common stockholders are expected to own approximately 58.4% of the shares of Axcelis Common Stock on a fully diluted basis, and the Company’s common stockholders will own approximately 41.6%.

The Merger Agreement contains customary representations, warranties, and covenants, including restrictions on the conduct of business prior to closing and provisions regarding the treatment of the Company’s outstanding equity awards and employee benefits. The Merger Agreement may be terminated under certain circumstances, including by mutual consent of the Company and Axcelis or if the Merger is not consummated by September 30, 2026 (subject to automatic extensions until as late as June 30, 2027 under certain conditions with respect to the receipt of regulatory approvals).

If the board of directors of either party makes an Adverse Recommendation Change, as defined in the Merger Agreement, the other party shall have the right to terminate the Merger Agreement, and the non-terminating party will be required to pay the other party the following termination fee: (i) if the non-terminating party is Axcelis, a termination fee of $108,700,000; and (ii) if the non-terminating party is Veeco, a termination fee of $77,500,000. Each party may also be required to pay such termination fee if such party enters into a competing proposal within twelve months of termination of the Merger Agreement under certain circumstances. In addition, if the Merger Agreement is terminated by a party due to the other party’s breach of the Merger Agreement that would result in a failure of an applicable closing condition (subject to the applicable cure period set forth in the Merger Agreement), then the non-terminating party will be required to pay a fixed expense reimbursement amount of $15,000,000.

Additional information regarding the Merger Agreement and the proposed Merger is included in the Company’s Current Report on Form 8-K filed with the SEC on October 1, 2025.

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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 September 30, 2025, filed on November 5, 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, and is currently expected to close by the end of the first quarter of 2027.

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

The Semiconductor industry experienced robust growth in 2025 and continues to benefit from strong investment in artificial intelligence (“AI”) infrastructure in 2026. Looking ahead, industry analysts are forecasting long-term growth driven by secular trends including AI, high-performance computing, and advanced connectivity.

Growth in the Semiconductor industry driven by AI investments, 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, leading Semiconductor manufacturers are shrinking device geometries, transitioning to more complex transistor architectures such as Gate-All-Around, increasing memory bandwidth and adopting advanced packaging and 3D integration technologies. As a result, growth of the WFE

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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 technologies are at the forefront of enabling new technical innovations in the manufacturing of high-performance AI chips, advanced connectivity and High-Bandwidth Memory (“HBM”), as well as advanced logic and advanced packaging applications. We continue to invest in new technologies to expand our Serviceable Available Market (“SAM”) across a broad range of new applications.

Semiconductor Market

Semiconductor revenue comprised 65% of third quarter total revenue primarily driven by system shipments of our Laser Spike Annealing (“LSA”) technology, and our Advanced Packaging technology, particularly for our wet processing products. Semiconductor revenue increased by 14% from the comparable prior year period due to increase in sales to our leading-edge foundry/logic and memory customers. This increase does not include a laser annealing system that we shipped to a customer in China in the third quarter of 2026, which was detained and is pending review by U.S. Customs and Border Protection and the Bureau of Industry and Security. Title, risk of loss, and control had transferred to the customer. Despite satisfying the conditions to seek payment for this product under the applicable letter of credit, as a customer accommodation, Veeco has not sought payment for this shipment while the product is held by CBP and may not seek collection if the product is ultimately not cleared for export. As a result, given the uncertainty, Veeco has not recognized this related approximately $8 million in revenue in the third quarter of 2026 because Veeco cannot make the determination that it is probable that no significant reversal of revenue will occur when the uncertainty is subsequently resolved, which adversely affected our operating results for the third quarter.

In logic and foundry, we have long-standing and trusted customer relations, and 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, driving repeat business. Additionally, our next-generation Nanosecond Annealing (“NSA”) system addresses critical low-thermal budget applications such as contact annealing, 3D device integration and materials modification. We have successfully engaged all three Tier 1 logic customers and made significant progress advancing NSA over the past several months. One customer has completed its evaluation and placed a revenue order, a second continues to make progress toward completing its evaluation, and we recently shipped an evaluation system to the third customer. Customers are seeing great results and are accelerating their adoption of our NSA system. We see potential for additional orders in the coming months supporting their pilot-lines and high-volume manufacturing needs.

In the memory market, we continue to expand our presence as there is significant long-term opportunity as AI-driven computing architecture accelerates demand for Dynamic Random Access Memory (“DRAM”) and NAND technologies. These technology transitions are creating new thermal processing and material requirements that align well with our differentiated annealing capabilities. The memory industry is at the early stages of adopting laser-based technologies for annealing applications. We continue to make solid progress with leading memory customers, including serving as the production tool of record at a Tier 1 HBM customer, which is accelerating their investments in 2026. We are also advancing an LSA evaluation system at a second Tier 1 DRAM customer, with potential for follow-on orders in 2027 and 2028. Customer engagement continues to expand with a third DRAM customer, with potential to enter an evaluation agreement in 2027. Furthermore, we are encouraged by several NAND customers who are exploring applications for our LSA and NSA platforms, which are continuing to advance well.

We also have two Ion Beam Deposition 300 (“IBD300”) systems under evaluation at leading DRAM memory customers. Our IBD300 system provides our company 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 logic and memory semiconductor manufacturing continues to drive demand for our Ion Beam Deposition (“IBD”) systems used in the production of EUV mask blanks. Demand is being supported by AI-driven scaling, increasing EUV layer counts at leading-edge logic nodes, and the expanding use of EUV in advanced DRAM and HBM applications. Leading logic and memory manufacturers expect High Numerical Aperture (“High-NA”) EUV lithography to be integral to their future roadmaps. Our IBD technology is a key enabler of

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the multilayer mirrors used in EUV mask blanks, and our product roadmap is well positioned to support evolving High-NA requirements and the industry’s development of larger-format masks. We are also expanding our EUV related business into pellicle applications, which are increasingly being used to protect defect-free masks and improve productivity as EUV utilization scales. We continue to win production business at a Tier 1 foundry and engage new customers for EUV pellicles.

In Advanced Packaging (“AP”), which includes our wet processing and lithography systems, we continue to experience increased demand as AI-related investments accelerate adoption of heterogenous integration of advanced 2.5D and 3D architectures. Throughout the year, we received significant orders for our wet processing and lithography systems from leading Outsourced Semiconductor Assembly and Test, foundry and memory customers. We are also engaged with a Tier 1 foundry on the qualification of a next-generation wet processing panel tool. AP continues to provide meaningful momentum with customer demand and our order pipeline providing increased visibility into 2027. To support anticipated customer requirements, we are expanding our manufacturing capacity, including through contract manufacturing partners. Continued customer engagement and demand for solutions that enable increasingly complex advanced packaging architectures support our confidence in the long-term outlook for the business.

We anticipate growth in the semiconductor market in leading-edge driven by AI investments.

Compound Semiconductor Market

Compound Semiconductor revenue increased by 268% in the third quarter from the comparable prior year period, comprising 19% of total revenue. In the Compound Semiconductor market, our broad portfolio of ion beam deposition, wet processing, and MOCVD technologies are gaining momentum as investments in AI data center infrastructure drive demand for higher-speed optical connectivity and more power efficient semiconductor devices.

We continue to benefit from demand tied to AI infrastructure, particularly through our exposure to Silicon Photonics and the Indium Phosphide (“InP”) lasers used in optical connectivity applications. Increasing bandwidth requirements and larger AI computing architectures are driving greater use of optical connectivity as traditional copper interconnects become less effective at higher speeds and distances. Hyperscalers and their suppliers are advancing higher-speed pluggable transceivers and, over the longer term, near-package and co-packaged optics. These architectures increasingly rely on advanced InP laser technologies, supporting demand for InP epitaxy and related manufacturing equipment as the industry transitions to higher transmission speeds.

Our SAM is expanding through two primary technology trends. First, higher optical connectivity requirements are increasing demand for InP lasers and the epitaxial layers used to manufacture them. Second, the transition toward higher-power lasers is creating more demanding performance and reliability requirements for laser-facet coatings. We believe these trends expand the opportunity for our technologies across multiple stages of the laser manufacturing process.

Our portfolio includes our Spector IBD for the laser diode facet coatings, WaferEtch and WaferStorm systems for etching, cleaning, surface preparation and metal lift-off; and our Lumina and Lumina+ MOCVD arsenide phosphide batch platform for the epitaxy.

We are a market leader with our ion beam deposition technology, and within the Silicon Photonics space our Spector systems address the critical laser-facet coating process. Based on ongoing customer engagements, we believe our ion beam deposition technology is differentiated from traditional approaches as the industry transitions toward higher-power lasers that require increasingly stringent film quality and reliability.

In wet processing, we maintain a strong position with our WaferEtch and WaferStorm technologies for critical etching, cleaning and surface-preparation applications.

For MOCVD, we are gaining momentum in the InP market as leading optical and photonics customers add capacity and evaluate our technology for next-generation applications. As of year to date, we have received multiple orders for our

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Lumina and Lumina+ systems from leading photonics customers. We are installing systems at existing customers, pursuing additional expansion opportunities and engaging with prospective customers on epitaxy applications.

Additional Compound Semiconductor market opportunities include MOCVD systems used to manufacture specialized devices for space-based solar applications, microLED displays and other photonics applications. We are also engaged in emerging applications involving blue microLEDs for short-distance optical connectivity, although these applications remain at an early stage of development. The industry is evaluating microLED and micro-vertical-cavity surface-emitting laser technologies as potential alternatives for certain short-distance scale-up and scale-in interconnect applications. These emerging architectures could create additional opportunities for our GaN and arsenide phosphide MOCVD technologies.

In power electronics, our Propel 300-millimeter GaN-on-silicon platform represents a long-term opportunity associated with AI data center power efficiency, electrification and other high-power-density applications. Our evaluation system at a leading power semiconductor customer continues to support process development and pilot-line preparation. We continue to work with this leading customer to complete the remaining technical qualifications required to support potential future capacity expansion.

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 101% in the third quarter from the comparable prior year period, comprising 10% 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 expect full-year 2026 revenue in this market to approximately double compared to 2025 and have order visibility extending into 2027. We remain engaged with customers on their technology roadmaps, including the adoption of heat-assisted magnetic recording, which is contributing to renewed investment and demand for our technologies.

Scientific & Other Market

Scientific & Other market revenue decreased by 48% in the third quarter from the comparable prior year period, comprising 6% of total revenue. Demand in this market is primarily project-driven and includes sales to government-funded laboratories, universities, research institutions and customers developing emerging technologies. We address the Scientific & Other market with several technologies, including Molecular Beam Epitaxy (“MBE”), Atomic Layer Deposition (“ALD”), MOCVD, Wet Processing, and ion beam deposition and etch systems. These technologies support research, development and specialized production applications across areas such as quantum computing and other advanced materials.

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Results of Operations

For the three months ended September 30, 2026 and 2025

The following table presents revenue and expense line items reported in our Consolidated Statements of Operations for the indicated periods in 2026 and 2025 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.


	Three Months Ended September 30,						Change
	2026			2025			Period to Period

	(dollars in thousands)
Net sales	$	209,384	100%	$	165,881	100%	$	43,503	26%
Cost of sales		128,995	62%		98,178	59%		30,817	31%
Gross profit		80,389	38%		67,703	41%		12,686	19%
Operating expenses, net:
Research and development		35,059	17%		28,988	17%		6,071	21%
Selling, general, and administrative		28,534	14%		24,654	15%		3,880	16%
Amortization of intangible assets		411	0%		771	0%		(360)	(47)%
Merger costs		2,260	1%		2,609	2%		(349)	(13)%
Other operating expense (income), net		26	0%		127	0%		(101)	(80)%
Total operating expenses, net		66,290	32%		57,149	34%		9,141	16%
Operating income		14,099	7%		10,554	6%		3,545	34%
Interest income, net		1,785	1%		1,321	1%		464	35%
Income before income taxes		15,884	8%		11,875	7%		4,009	34%
Income tax expense (benefit)		2,249	1%		1,279	1%		970	76%
Net income	$	13,635	7%	$	10,596	6%	$	3,039	29%

Net Sales

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


		Three Months Ended September 30,								Change
		2026				2025				Period to Period

		(dollars in thousands)
Sales by end-market
Semiconductor		$	135,254		65%	$	118,322		71%	$	16,932		14%
Compound Semiconductor			40,202		19%		10,912		7%		29,290		268%
Data Storage			20,006		10%		9,971		6%		10,035		101%
Scientific & Other			13,922		6%		26,676		16%		(12,754)		(48)%
Total		$	209,384		100%	$	165,881		100%	$	43,503		26%
Sales by geographic region
United States		$	65,006		31%	$	26,513		16%	$	38,493		145%
EMEA			24,653		12%		11,581		7%		13,072		113%
China			24,581		12%		45,650		28%		(21,069)		(46)%
Rest of APAC			95,125		45%		82,100		49%		13,025		16%
Rest of World			19		-		37		-		(18)		*
Total		$	209,384		100%	$	165,881		100%	$	43,503		26%

* Not meaningful

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Sales increased for the three months ended September 30, 2026 against the comparable prior year period in the Compound Semiconductor, Semiconductor, and Data Storage markets, partially offset by a decrease in sales in the Scientific & Other market. By geography, sales increased in the United States, EMEA, and Rest of APAC regions, partially offset by decreased sales in the China region. Sales in the Rest of APAC region for the three months ended September 30, 2026 included sales in Taiwan and Singapore of $53.0 million and $17.2 million, respectively. Sales in the Rest of APAC region for the three months ended September 30, 2025 included sales in Taiwan and Japan of $54.9 million and $10.3 million, respectively. 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. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies.

Gross Profit

For the three months ended September 30, 2026, gross profit increased against the comparable prior period primarily due to an increase in sales volume, partially offset by a decrease in gross margins. Gross margins decreased principally due to unfavorable product mix and higher spending, including logistics costs and spending to increase capacity and supply chain to ensure we are well positioned to meet customers increasing demand for our products. Additionally other factors will cause our gross margins to fluctuate each period, including the impact of the evolving tariffs landscape, which includes refunds on previously paid tariffs, newly implemented tariffs, or changes to existing tariffs. The Company has recognized approximately $2.8 million of tariff refunds for the three months ended September 30, 2026 as a reduction to Cost of Sales.

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 increased for the three months ended September 30, 2026 against the comparable prior period due to an increase in personnel-related and operating-related expenses.

Selling, General, and Administrative

Selling, general, and administrative expenses increased for the three months ended September 30, 2026 against the comparable prior period due to variable incentive related compensation and commission expenses based on increased order volume.

Merger Costs

During the three months ended September 30, 2026 and 2025, we incurred $2.3 million and $2.6 million, respectively, in legal, accounting, and consulting fees, as well as employee-related costs in connection with the proposed Merger.

Interest Income (Expense)

We recorded net interest income of $1.8 million for the three months ended September 30, 2026, compared to net interest income of $1.3 million for the comparable prior year period. The increase in net interest income was primarily due to higher interest bearing balances compared to the prior year period.

Income Taxes

Our tax expense for the three months ended September 30, 2026, was $2.2 million, compared to $1.3 million of tax expense for the comparable prior period. For the three months ended September 30, 2026, the effective tax rate was lower than the U.S. statutory tax rate primarily relating to tax benefits related to Foreign-Derived Deduction Eligible Income and research and development tax credits. For the three months ended September 30, 2025, the effective tax rate was lower than the U.S. statutory tax rate primarily relating to tax benefits related to Foreign-Derived Intangible Income and research and development tax credits.

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For the nine months ended September 30, 2026 and 2025


	Nine Months Ended September 30,						Change
	2026			2025			Period to Period

	(dollars in thousands)
Net sales	$	561,206	100%	$	499,277	100%	$	61,929	12%
Cost of sales		350,157	62%		294,380	59%		55,777	19%
Gross profit		211,049	38%		204,897	41%		6,152	3%
Operating expenses, net:
Research and development		98,277	18%		89,062	18%		9,215	10%
Selling, general, and administrative		82,179	15%		73,609	15%		8,570	12%
Amortization of intangible assets		1,723	0%		2,413	0%		(690)	(29)%
Merger costs		5,736	1%		2,609	1%		3,127	120%
Other operating expense (income), net		(160)	(0)%		132	0%		(292)	(221)%
Total operating expenses, net		187,755	33%		167,825	34%		19,930	12%
Operating income		23,294	4%		37,072	7%		(13,778)	(37)%
Interest income (expense), net		4,131	1%		3,062	1%		1,069	35%
Other income (expense), net		—	0%		(653)	(0)%		653	*
Income before income taxes		27,425	5%		39,481	8%		(12,056)	(31)%
Income tax expense (benefit)		2,257	0%		5,205	1%		(2,948)	(57)%
Net income	$	25,168	4%	$	34,276	7%	$	(9,108)	(27)%

* Not meaningful

Net Sales

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


		Nine Months Ended September 30,								Change
		2026				2025				Period to Period

		(dollars in thousands)
Sales by end-market
Semiconductor		$	374,974		67%	$	366,019		73%	$	8,955		2%
Compound Semiconductor			79,537		14%		39,506		8%		40,031		101%
Data Storage			52,420		9%		29,030		6%		23,390		81%
Scientific & Other			54,275		10%		64,722		13%		(10,447)		(16)%
Total		$	561,206		100%	$	499,277		100%	$	61,929		12%
Sales by geographic region
United States		$	156,299		28%	$	72,427		15%	$	83,872		116%
EMEA			56,440		10%		42,451		9%		13,989		33%
China			92,622		17%		144,032		29%		(51,410)		(36)%
Rest of APAC			255,287		45%		240,262		48%		15,025		6%
Rest of World			558		-		105		-		453		*
Total		$	561,206		100%	$	499,277		100%	$	61,929		12%

* Not meaningful

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Sales increased for the nine months ended September 30, 2026 against the comparable prior year period driven by an increase in sales in the Compound Semiconductor, Data Storage and Semiconductor markets, partially offset by a decrease in sales in the Scientific & Other market. By geography, sales increased in the United States, Rest of APAC, and EMEA regions, partially offset by decreased sales in the China region. Sales in the Rest of APAC region for the nine months ended September 30, 2026 included sales in Taiwan, Singapore, and Japan of $162.0 million, $31.2 million, and $23.0 million, respectively. Sales in the Rest of APAC region for the nine months ended September 30, 2025 included sales in Taiwan, Japan, and Singapore of $132.9 million, $39.0 million, and $33.1 million, respectively. 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. We expect there will continue to be year-to-year variations in our future sales distribution across markets and geographies.

Gross Profit

For the nine months ended September 30, 2026, gross profit increased against the comparable prior period primarily due to an increase in sales volume, partially offset by a decrease in gross margins. Gross margins decreased principally due to unfavorable product mix and higher spending, including logistics costs and spending to increase capacity and supply chain to ensure we are well positioned to meet customers increasing demand for our products. Additionally other factors will cause our gross margins to fluctuate each period, including the impact of the evolving tariffs landscape, which includes refunds on previously paid tariffs, newly implemented tariffs, or changes to existing tariffs. The Company has recognized approximately $3.3 million of tariff refunds for the nine months ended September 30, 2026 as a reduction to Cost of Sales.

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 increased for the nine months ended September 30, 2026 against the comparable prior period due to an increase in personnel-related expenses.

Selling, General, and Administrative

Selling, general, and administrative expenses increased for the nine months ended September 30, 2026 against the comparable prior period due variable incentive related compensation and commission expenses based on increased order volume.

Merger Costs

During the nine months ended September 30, 2026 and 2025, we incurred $5.7 million and $2.6 million, respectively, in legal, accounting, and consulting fees, as well as employee-related costs in connection with the proposed Merger.

Interest Income (Expense)

We recorded net interest income of $4.1 million for the nine months ended September 30, 2026, compared to net interest income of $3.1 million for the comparable prior year period. The increase in net interest income was primarily due to higher balances in interest bearing accounts and a reduction of interest expense on the 2025 Notes as they matured on January 15, 2025 and the 2027 Notes that were settled on May 15, 2025.

Income Taxes

Our tax expense for the nine months ended September 30, 2026 was $2.3 million, compared to $5.2 million of tax expense for the comparable prior period. For the nine months ended September 30, 2026, the effective tax rate was favorably impacted by the tax benefits related to Foreign-Derived Deduction Eligible Income and research and development tax credits. Additionally, the effective tax rate was also impacted by a discrete income tax benefit resulting

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from share-based compensation windfall. For the nine months ended September 30, 2025, the effective tax rate was favorably impacted by tax benefits related to Foreign-Derived Intangible Income and research and development tax credits, partially offset by a discrete income tax expense resulting from the share-based compensation shortfall.

Liquidity and Capital Resources

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


		September 30,			December 31,
		2026			2025

		(in thousands)
Cash and cash equivalents		$	205,321		$	163,466
Short-term investments			277,184			226,763
Total		$	482,505		$	390,229

At September 30, 2026 and December 31, 2025, cash and cash equivalents of $59.4 million and $23.6 million, respectively, were held outside the United States. As of September 30, 2026, we had $31.2 million of accumulated undistributed earnings generated by our non-U.S. subsidiaries for which the U.S. tax has previously been provided. Approximately $15.0 million of undistributed earnings will be subject to foreign withholding taxes if distributed back to the United States and we have accrued $1.5 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 principal and interest payments on our convertible senior notes, purchase commitments, and payments required under our operating leases.

A summary of the cash flow activity for the nine months ended September 30, 2026 and 2025 is as follows:

Cash Flows from Operating Activities


		Nine Months Ended September 30,
		2026			2025

		(in thousands)
Net income		$	25,168		$	34,276
Non-cash items:
Depreciation and amortization			14,850			15,038
Non-cash interest expense			826			833
Deferred income taxes			(302)			427
Share-based compensation expense			26,140			28,004
Provision for bad debts			14			—
Changes in operating assets and liabilities			50,596			(34,011)
Net cash provided by (used in) operating activities		$	117,292		$	44,567

Net cash provided by operating activities was $117.3 million for the nine months ended September 30, 2026 and was due to net income of $25.2 million, adjustments for non-cash items of $41.5 million, and an increase in cash flow from changes in operating assets and liabilities of $50.6 million. The changes in operating assets and liabilities were largely attributable to an increase in contract liabilities, accrued expenses, and accounts payable, partially offset by an increase in accounts receivables, and inventories. Net cash provided by operating activities was $44.6 million for the nine months ended September 30, 2025 and was due to net income of $34.3 million and adjustments for non-cash items of $44.3 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $34.0 million. The changes in operating assets and liabilities were largely attributable to a decrease in contract liabilities and increases in accounts receivables, and inventories, partially offset by a decrease in prepaid expenses and other current assets.

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Cash Flows from Investing Activities


		Nine Months Ended September 30,
		2026			2025

		(in thousands)
Capital expenditures		$	(13,142)		$	(12,928)
Changes in investments, net			(50,664)			24,860
Net cash provided by (used in) investing activities		$	(63,806)		$	11,932

The cash used by investing activities during the nine months ended September 30, 2026 was primarily attributable to net cash used for investment activity and capital expenditures. The cash provided by investing activities during the nine months ended September 30, 2025 was primarily attributable to net cash provided for investment activity, partially offset by capital expenditures.

Cash Flows from Financing Activities


		Nine Months Ended September 30,
		2026			2025

		(in thousands)
Settlement of equity awards, net of withholding taxes		$	(11,605)		$	(3,048)
Debt issuance costs			—			(885)
Repayment of convertible debt			—			(5,229)
Net cash provided by (used in) financing activities		$	(11,605)		$	(9,162)

The cash used in financing activities for the nine months ended September 30, 2026 was related to cash used to settle taxes related to employee equity programs, offset by cash received under the Employee Stock Purchase Plan. The cash used in financing activities for the nine months ended September 30, 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.

Convertible Senior Notes

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. The 2029 Notes are currently convertible by noteholders until December 31, 2026.

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. This provides the Company with ability to meet any cash requirements that may arise as a result of potential conversions of the 2029 Notes, which are convertible by noteholders until December 31, 2026, the principal of which is required to be settled in cash. 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. These contractual arrangements secure the rights to various assets and services to be used in the future in the normal course of

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business. We expect to fund these contractual arrangements with cash generated from operations in the normal course of business.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates primarily relates to our investment portfolio. We centrally manage our investment portfolios considering investment opportunities and risks, tax consequences, and overall financing strategies. Our investment portfolio includes fixed-income securities with a fair value of approximately $277.2 million at September 30, 2026. These securities are subject to interest rate risk and, based on our investment portfolio at September 30, 2026, a 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio of $2.4 million. While an increase in interest rates may reduce the fair value of the investment portfolio, we will not realize the losses in the Consolidated Statements of Operations unless the individual fixed-income securities are sold prior to recovery or the loss is determined to be other-than-temporary.

Currency Exchange Risk

We conduct business on a worldwide basis and, as such, a portion of our revenues, earnings, and net investments in foreign affiliates is exposed to changes in currency exchange rates. The economic impact of currency exchange rate movements is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions, and other factors. These changes, if material, could cause us to adjust our financing and operating strategies. Consequently, isolating the effect of changes in currency does not incorporate these other important economic factors.

Changes in currency exchange rates could affect our foreign currency denominated monetary assets and liabilities and forecasted cash flows. We may enter into monthly forward derivative contracts from time to time with the intent of mitigating a portion of this risk. We only use derivative financial instruments in the context of hedging and not for speculative purposes and have not historically designated our foreign exchange derivatives as hedges. Accordingly, changes in fair value from these contracts are recorded as “Other, net” in our Consolidated Statements of Operations. We execute derivative transactions with highly rated financial institutions to mitigate counterparty risk.

Our net sales to customers located outside of the United States represented approximately 69% and 72% of our total net sales for the three and nine months ended September 30, 2026, respectively, 84% and 85% for the comparable 2025 period. We expect that net sales to customers outside the United States will continue to represent a large percentage of our total net sales. Our sales denominated in currencies other than the U.S. dollar represented approximately 5% and 3% of total net sales for both the three and nine months ended September 30, 2026, and 3% and 5% for the comparable 2025 period.

A 10% change in foreign exchange rates would have an immaterial impact on the consolidated results of operations since most of our sales outside the United States are denominated in U.S. dollars.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our principal executive and financial officers have evaluated and concluded that our disclosure controls and procedures are effective as of September 30, 2026. The disclosure controls and procedures are designed to ensure that the information required to be disclosed in this report filed under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the quarter ended September 30, 2026, there were no changes in internal control that have materially affected or are reasonably likely to materially affect internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Information regarding risk factors appears in the Safe Harbor Statement at the beginning of this quarterly report on Form 10-Q, in Part I — Item 1A of our 2025 Form 10-K. There have been no material changes from the risk factors previously disclosed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

During the fiscal quarter ended September 30, 2026, the following directors and Section 16 officers, as applicable, adopted, modified or terminated “Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K):

● On August 25, 2026, John Kiernan, our Chief Financial Officer, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Mr. Kiernan’s plan covers the sale of 20,000 shares of our common stock, between November 24, 2026 and May 21, 2027. Transactions under the plan are based upon pre-established dates and a stock price threshold.

There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K) adopted, modified or terminated during the fiscal quarter ended September 30, 2026 by our directors and Section 16 officers. Each of the Rule

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10b5-1 trading arrangements are in accordance with our Securities Trading Policy and actual sale transactions made pursuant to such trading arrangements will be disclosed publicly in Section 16 filings with the SEC in accordance with applicable securities laws, rules and regulations.

Item 6. Exhibits

Unless otherwise indicated, each of the following exhibits has been filed with the Securities and Exchange Commission by Veeco under File No. 0-16244.


Exhibit				Incorporated by Reference						Filed or Furnished
Number		Exhibit Description		Form		Exhibit		Filing Date		Herewith

31.1		Certification of Chief Executive Officer pursuant to Rule 13a—14(a) or Rule 15d—14(a) of the Securities and Exchange Act of 1934.								*
31.2		Certification of Chief Financial Officer pursuant to Rule 13a—14(a) or Rule 15d—14(a) of the Securities and Exchange Act of 1934.								*
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.								*
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.								*
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.								**
101.XSD		XBRL Schema.								**
101.PRE		XBRL Presentation.								**
101.CAL		XBRL Calculation.								**
101.DEF		XBRL Definition.								**
101.LAB		XBRL Label.								**
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).								**

* Filed herewith

** Filed herewith electronically

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 4, 2026.


	Veeco Instruments Inc.

	By:	/s/ WILLIAM J. MILLER, Ph.D.
		William J. Miller, Ph.D.
		Chief Executive Officer

	By:	/s/ JOHN P. KIERNAN
		John P. Kiernan
		Senior Vice President and Chief Financial Officer