Veeco Instruments VECO Form 10-Q filing Q2 FY2026

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

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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)

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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)

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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)

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See accompanying Notes to the Consolidated Financial Statements*.*

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Note 1 — Basis of Presentation

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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.

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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.

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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.

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Recent Accounting Standards Not Yet Adopted

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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.

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Pending Merger with Axcelis Technologies, Inc.

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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

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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.

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

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Note 3 — Assets

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Investments

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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:

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

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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

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

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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.

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

June 30, 2026 and December 31, 2025:

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

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

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

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

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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 six months ended June 30, 2026 and 2025.

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Accounts Receivable

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

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Inventories

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

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Prepaid Expenses and Other Current Assets

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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 $15.1 million and $9.8 million for June 30, 2026 and December 31, 2025, respectively.

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Property, Plant, and Equipment

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

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

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For the three and six months ended June 30, 2026, depreciation expense was $4.3 million and $8.6 million, respectively and $4.3 million and $8.5 million, respectively, for the comparable 2025 period.

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Goodwill

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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 six months ended June 30, 2026.

Intangible Assets

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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:

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

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Note 4 — Liabilities

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Accrued Expenses and Other Current Liabilities

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

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Warranty

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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 six months ended June 30, 2026 include:

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Contract Liabilities and Performance Obligations

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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 $33.6 million in revenue during the six months ended June 30, 2026.

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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 June 30, 2026. Additionally, at June 30, 2026, the Company had approximately $11.8 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 12 months.

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As of June 30, 2026, the Company has approximately $376.5 million of remaining performance obligations on contracts with an original estimated duration of one year or more, of which approximately 37% 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.

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Convertible Senior Notes

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2025 Notes

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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.

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2027 Notes

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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.

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2029 Notes

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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 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.

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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.

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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 June 30, 2026.

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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.

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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:

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(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;

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(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;

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(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

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(iv) Upon the occurrence of specified corporate events.

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For the calendar quarter ended June 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 September 30, 2026.

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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.

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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.

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The carrying value of the 2029 Notes is as follows:

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

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The Company determined the 2029 Notes are Level 2 liabilities in the fair value hierarchy and had an estimated fair value at June 30, 2026 of $611.2 million.

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Capped Call Transactions

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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.

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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. 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.

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Revolving Credit Facility

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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.

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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.

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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.

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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 June 30, 2026 or December 31, 2025.

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Other Liabilities

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Other Liabilities at June 30, 2026 and December 31, 2025 was approximately $17.2 million and $3.9 million, respectively, which included customer deposits, merger costs, medical and dental benefits for former executives, asset retirement obligations, and tax liabilities.

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Note 5 — Commitments and Contingencies

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Leases

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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 June 30, 2026 was 10 years, and the weighted average discount rate used in determining the present value of future lease payments was 5.6%.

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

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Operating lease costs for the three and six months ended June 30, 2026 were $1.2 million and $2.5 million, respectively, and $1.3 million and $2.5 million, respectively for the comparable 2025 period. Variable lease costs for the three and six months ended June 30, 2026 were $0.2 million and $0.4 million, respectively and $0.3 million and $0.6 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 six months ended June 30, 2026 and 2025 were $4.0 million and $3.7 million, respectively.

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Receivable Purchase Agreement

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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 six months ended June 30, 2026, and $30.0 million was available under the agreement for additional sales of receivables as of June 30, 2026. The Company sold no receivables for the three and six months ended June 30, 2025.

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Purchase Commitments

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Veeco has purchase commitments of $331.0 million at June 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.

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Bank Guarantees

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Veeco has bank guarantees and letters of credit issued by a financial institution on its behalf as needed. At June 30, 2026, outstanding bank guarantees and standby letters of credit totaled $5.7 million, and unused bank guarantees and letters of credit of $36.3 million were available to be drawn upon.

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Legal Proceedings

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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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Tariffs

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On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act. The Company is continuing to evaluate the impact of these developments on its business and financial statements, and has initiated various processes and procedures to file claims for refunds for these previously paid duties. However, as the tariff landscape continues to shift and evolve, there remains uncertainty as to additional amounts that will ultimately be refunded, the Company’s ability to collect such refunds, and the timing of such refunds. The Company has elected to recognize the tariff refunds when all contingencies have been resolved and the gain is realized or realizable. For the three and six months ended June 30, 2026 the Company has received approximately $0.4 million of refunds, which has been included within “Cost of Sales” in the Consolidated Statements of Operations. Subsequent to June 30, 2026, the Company has collected an additional $2.8 million of tariff refunds. While the Company continues to implement measures to mitigate tariff-related cost pressures, these actions may not fully offset increased costs in future periods.

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Note 6 — Equity

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Statement of Stockholders’ Equity

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The following tables present the changes in Stockholders’ Equity:

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Accumulated Other Comprehensive Income (“AOCI”)

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

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

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Note 7 — Share-based Compensation

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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.

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

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

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Note 8 — Income Taxes

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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 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.

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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.

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

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The Company’s income tax expense for the three ended June 30, 2026 was $1.2 million and was immaterial for the six months ended June 30, 2026, compared to $0.9 million and $3.9 million, respectively, for the comparable prior period.

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

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Note 9 — Segment Reporting and Geographic Information

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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.

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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:

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

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Compound Semiconductor

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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.

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Data Storage

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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.

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Scientific & Other

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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 six months ended June 30, 2026 and 2025 were as follows:

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(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.

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Note 10 — Merger

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Merger Agreement with Axcelis Technologies, Inc.

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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 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 in the second half of 2026.

​

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).

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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

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​

​

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Executive Summary

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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.

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Merger with Axcelis Technologies, Inc.

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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 in the second half of 2026.

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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.

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Business Update

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Overview

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The Semiconductor industry experienced robust growth in 2025 and, looking ahead, industry analysts are forecasting long-term growth of the industry, driven by secular growth trends such as artificial intelligence (“AI”), high-performance computing, advanced connectivity, and the electrification of the automotive industry. Additionally, government investments in the Semiconductor industry are projected to accelerate global spending in next-generation technologies.

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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, today’s most advanced Semiconductor manufacturers are shrinking device geometries, investing in more complex transistor designs such as Gate-All-Around and exploring 3D architectures. As a result, growth of the WFE market is forecasted to keep pace with long-term growth

of the Semiconductor industry, which we believe should benefit semiconductor capital equipment providers, including Veeco.

​

Veeco’s 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”). We continue to invest in new technologies to expand our Serviceable Available Market (“SAM”) to a broad range of new applications.

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Semiconductor Market

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Semiconductor revenue comprised 68% of second 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 5% from the comparable prior period due to increase in sales to our leading-edge foundry/logic and memory customers.

​

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 tool addresses critical low-thermal budget applications such as contact annealing, 3D device integration and materials modification. In the second quarter, for our NSA system we announced that a Tier 1 customer successfully completed their evaluation and placed a follow-on order for a second system to ship in the second half of 2026. We also announced in the second quarter, that the third Tier 1 logic customer received an NSA evaluation tool. We have now successfully engaged all three Tier 1 logic and foundry customers with our NSA technology, and we continue working closely with them to support high-volume manufacturing.

​

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, that 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 over the coming quarters. 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 Veeco with another opportunity to expand our SAM to advanced node applications where low resistance films are critical. These initial systems are being evaluated for advanced memory applications, such as DRAM bitline metallization.

​

The ongoing adoption of EUV Lithography for advanced node semiconductor manufacturing continues to drive demand for our Ion Beam Deposition (“IBD”) EUV system for mask blanks. Leading logic and memory manufacturers expect EUV and High Numerical Aperture (“High-NA”) lithography to be integral to their future roadmaps. Our IBD technology is a key enabler of the EUV mask blank Multiple Layer Mirror deposition. Our product roadmap is well positioned as the industry adopts next-generation High-NA EUV lithography, and we are expanding our EUV related business to EUV pellicles, which are increasingly being used to 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. In the second quarter, we had an increase in orders for our wet processing and lithography systems from leading OSAT customers. We are also working with a Tier 1 foundry on a panel wet processing tool opportunity, and we are encouraged by our engagement. AP continues to provide meaningful momentum to Veeco, as we progress through

the year, bringing increased visibility through 2027. The sustained interest from leading customers in our ability to enable their extreme ramp and AP roadmap supports our confidence in the outlook for the business.

​

Looking ahead, we anticipate growth in the semiconductor market in leading-edge investment driven by AI investments.

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Compound Semiconductor Market

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Compound Semiconductor revenue increased by 45% in the second quarter from the comparable prior year period, comprising 11% of total revenue. In the Compound Semiconductor market, we have a broad portfolio of products which are gaining momentum due to a significant inflection point within the industry due to the AI data center infrastructure build-out.

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We continue to benefit from the growing demand tied to AI, particularly through our exposure to Silicon Photonics and the Indium Phosphide (“InP”) lasers used for optical connectivity applications. Industry investment remains focused on hyperscalers' need for higher bandwidth and optical connectivity across increasingly large AI data clusters. As bandwidth requirements continue to accelerate, the industry is increasingly focused on overcoming the "copper wall," where traditional electrical interconnects become less efficient at supporting higher-speed data transmission. At the same time, hyperscalers continue to advance optical networking architectures, including evolution of EML pluggables, Silicon Photonics pluggables, as well as the longer-term solutions of near-package and co-packaged optics. Collectively, these trends are driving broader adoption of optical connectivity throughout the AI infrastructure ecosystem. These architectures increasingly rely on InP laser technologies, which are critical to next-generation AI networking and optical interconnect solutions.

​

Overall, our SAM expansion is driven by two key market inflections. First, the exponential growth of optical connectivity bandwidth requirement due to agentic AI, leading to a corresponding growth in high-power InP Continuous Wave laser demand and thus InP epitaxy. Second, the exponential growth in power demand is simultaneously driving the number of laser diodes, but more importantly power required per laser diode, leading to higher reliability requirements from laser facet coating solutions.

​

Our portfolio spans multiple steps of the laser manufacturing process, including Lumina MOCVD Arsenide Phosphide batch platform for the epitaxy steps, Wafer Etch and Wafer Storm for etching and metal lift-off, and our Spector IBD for the laser diode facet coatings.

​

First, the MOCVD epitaxy steps play a crucial role and we are continuing to penetrate the market with our Lumina MOCVD InP Platform as leading photonics customers expand capacity. In the second quarter, a global leader in optical and photonic technologies selected our Lumina+ MOCVD system to fabricate InP lasers for innovative communication solutions in the datacom industry. Second, we are a market leader with our WaferEtch and WaferStorm wet processing technologies for advanced etching and surface preparation. Third, we remain a market leader with our Spector IBD tool for the critical laser facet coating step. From ongoing customer engagements, we believe our IBD technology remains differentiated from traditional approaches, as the industry transitions to higher powered lasers which demand stricter film specifications.

​

Additionally, in the Compound Semiconductor market there are Other Photonics applications driving growth for our products, including red MircoLEDs, low earth orbit solar cells and augmented/virtual reality applications.

​

Lastly, our Propel300mm GaN on Si product continues to be a strong long-term driver tied to AI data center power efficiency, electrification, and high-power density applications. At a leading power IDM customer, we have an evaluation for our Propel300 system in place, and we received a pilot-line order for a multi-chamber system at the end of 2025. We believe we are well positioned to participate in future capacity expansions.

​

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

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Data Storage Market

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Data Storage market revenue increased by 80% in the second quarter from the comparable prior year period, comprising 11% 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 to more than double and continue to be booked well into 2027. We are engaged with our customers on their roadmaps, including for Heat Assisted-Magnetic-Recording (“HAMR”) technology, giving us strong momentum in this market.

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Scientific & Other Market

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Scientific & Other market revenue increased by 28% in the second quarter from the comparable prior year period, comprising 10% of total revenue. Sales in the Scientific & Other market are largely driven by sales to government-funded laboratories, universities, and research institutions. We address the Scientific & Other market with several technologies, including MBE, ALD, MOCVD, Wet Processing, and IBD/IBE, which support diverse R&D and niche low-volume production applications.

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​

Results of Operations

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For the three months ended June 30, 2026 and 2025

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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.

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• Not meaningful

Net Sales

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

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• Not meaningful

Sales increased for the three months ended June 30, 2026 against the comparable prior year period across all markets. By geography, sales increased in the United States, and China regions, partially offset by decreased sales in the Rest of APAC, and EMEA regions. Sales in the Rest of APAC region for the three months ended June 30, 2026 included sales in Taiwan, Singapore, and Japan of $43.4 million, $10.5 million, and $9.8 million, respectively. Sales in the Rest of APAC region for the three months ended June 30, 2025 included sales in Taiwan, Singapore, and Japan of $45.5 million, $23.4 million, and $14.8 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.

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Gross Profit

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For the three months ended June 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. 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.

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Research and Development

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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 June 30, 2026 against the comparable prior period due to an increase in personnel-related expenses.

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Selling, General, and Administrative

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

Merger Costs

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During the three months ended June 30, 2026, we incurred an additional $1.5 million in legal, accounting, consulting fees and employee-related costs in connection with the proposed Merger.

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Interest Income (Expense)

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We recorded net interest income of $1.2 million for the three months ended June 30, 2026, compared to net interest income of $0.9 million for the comparable prior year period. The increase in net interest income was primarily due to reduced interest expense on the 2025 Notes as they matured on January 15, 2025 and the 2027 Notes that were settled on May 15, 2025.

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Income Taxes

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Our tax expense for the three months ended June 30, 2026, was $1.2 million, compared to $0.9 million of tax expense for the comparable prior period. For the three months ended June 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 from share-based compensation windfall. For the three months ended June 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 six months ended June 30, 2026 and 2025

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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.

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• Not meaningful

Net Sales

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

• Not meaningful

Sales increased for the six months ended June 30, 2026 against the comparable prior year period driven by an increase in sales in the Data Storage, Compound Semiconductor, and Scientific & Other markets, partially offset by a decrease in sales in the Semiconductor 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 six months ended June 30, 2026 included sales in Taiwan, Japan, and Singapore of $109.0 million, $19.1 million, and $14.0 million, respectively. Sales in the Rest of APAC region for the six months ended June 30, 2025 included sales in Taiwan, Singapore, and Japan of $78.0 million, $29.4 million, and $28.7 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.

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Gross Profit

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For the six months ended June 30, 2026, gross profit decreased against the comparable prior period due to a decrease in gross margins, partially offset by an increase in sales volume. Gross margins decreased principally due to unfavorable product mix and higher spending, including logistics costs. 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.

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Research and Development

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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 six months ended June 30, 2026 against the comparable prior period due to an increase in personnel-related expenses.

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Selling, General, and Administrative

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

Merger Costs

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During the six months ended June 30, 2026, we incurred an additional $3.5 million in legal, accounting, consulting fees and employee-related costs in connection with the proposed Merger.

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Interest Income (Expense)

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We recorded net interest income of $2.3 million for the six months ended June 30, 2026, compared to net interest income of $1.7 million for the comparable prior year period. The increase in net interest income was primarily due to reduced interest expense on the 2025 Notes as they matured on January 15, 2025 and the 2027 Notes that were settled on May 15, 2025.

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Income Taxes

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Our tax expense for the six months ended June 30, 2026 was immaterial, compared to $3.9 million of tax expense for the comparable prior period. For the six months ended June 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 from share-based compensation windfall. For the six months ended June 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.

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Liquidity and Capital Resources

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

​

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At June 30, 2026 and December 31, 2025, cash and cash equivalents of $46.6 million and $23.6 million, respectively, were held outside the United States. As of June 30, 2026, we had $29.2 million of accumulated undistributed earnings generated by our non-U.S. subsidiaries for which the U.S. tax has previously been provided. Approximately $14.2 million of undistributed earnings will be subject to foreign withholding taxes if distributed back to the United States and we have accrued $1.4 million for foreign withholding taxes for the undistributed earnings.

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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.

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

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Cash Flows from Operating Activities

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Net cash provided by operating activities was $59.4 million for the six months ended June 30, 2026 and was due to net income of $11.5 million, adjustments for non-cash items of $27.2 million, and an increase in cash flow from changes in operating assets and liabilities of $20.6 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 $29.0 million for the six months ended June 30, 2025 and was due to net income of $23.7 million and adjustments for non-cash items of $30.2 million, partially offset by a decrease in cash flow from changes in operating assets and liabilities of $24.9 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 accrued expenses.

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Cash Flows from Investing Activities

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​

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

Cash Flows from Financing Activities

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The cash used in financing activities for the six months ended June 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 six months ended June 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.

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Convertible Senior Notes

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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 September 30, 2026.

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

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

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Contractual Obligations and Commitments

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

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

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Interest Rate Risk

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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 $214.9 million at June 30, 2026. These securities are subject to interest rate risk and, based on our investment portfolio at June 30, 2026, a 100 basis point increase in interest rates would result in a decrease in the fair value of the portfolio of $1.7 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.

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Currency Exchange Risk

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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.

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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.

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Our net sales to customers located outside of the United States represented approximately 69% and 74% of our total net sales for the three and six months ended June 30, 2026, respectively, 87% and 86% 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 2% of total net sales for both the three and six months ended June 30, 2026, and 5% and 6% for the comparable 2025 period.

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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

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Evaluation of Disclosure Controls and Procedures

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Our principal executive and financial officers have evaluated and concluded that our disclosure controls and procedures are effective as of June 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.

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Changes in Internal Control Over Financial Reporting

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During the quarter ended June 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.

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PART II—OTHER INFORMATION

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Item 1. Legal Proceedings

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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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Item 1A. Risk Factors

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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.

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

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None.

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Item 3. Defaults Upon Senior Securities

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None.

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Item 4. Mine Safety Disclosures

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Not Applicable.

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Item 5. Other Information

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During the fiscal quarter ended June 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 May 11, 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 35,000 shares of our common stock, between August 10, 2026 and August 6, 2027. Transactions under the plan are based upon pre-established dates and stock price thresholds.
• On May 14, 2026, William J. Miller, Ph.D., our Chief Executive Officer, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Dr. Miller’s plan covers the sale of 200,000 shares of our common stock, between August 17, 2026 and December 31, 2026. Transactions under the plan are based upon pre-established dates and stock price thresholds.

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• On June 1, 2026, Adrian Devasahayam, Ph.D., our Senior Vice President, Product Line Management, entered into a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). Dr. Devasahayam’s plan covers the sale of 20,000 shares of our common stock, between September 1, 2026 and June 2, 2027. Transactions under the plan are based upon pre-established dates and stock price thresholds.

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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 June 30, 2026 by our directors and Section 16 officers. Each of the Rule 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.

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Item 6. Exhibits

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

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​ ​​ ​​ ​​

• Filed herewith

** Filed herewith electronically

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​

​

​

​ 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

​

​

​

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