lasr-20240331

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 March 31, 2024

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

For the transition period from to

Commission File Number 001-38462

________________________________________________________

NLIGHT, INC.

(Exact name of Registrant as specified in its charter)

________________________________________________________

Delaware

91-2066376

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

4637 NW 18th Avenue

Camas, Washington 98607

(Address of principal executive office, including zip code)

(360) 566-4460

(Registrant's telephone number, including area code)

__________________________________________

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


Title of Each Class	Trading Symbol	Name of Exchange on which Registered
Common Stock, par value $0.0001 per share	LASR	The Nasdaq Stock Market LLC

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, a 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 April 30, 2024, the Registrant had 47,565,204 shares of common stock outstanding.


TABLE OF CONTENTS
			Page

Part I. Financial Information			1
Item 1. Unaudited Interim Financial Statements			1
Consolidated Balance Sheets: March 3 1 , 202 4 and December 31, 202 3 (unaudited)			1
Consolidated Statements of Operations: Three Months Ended Mar ch 31 , 202 4 and 202 3 (unaudited)			2
Consolidated Statements of Comprehensive Loss: Three Months Ended March 3 1 , 202 4 and 202 3 (unaudited)			3
Consolidated Statements of Stockholders' Equity: Three Months Ended March 3 1 , 202 4 and 202 3 (unaudited)			4
Consolidated Statements of Cash Flows: Three Months Ended March 3 1 , 202 4 and 202 3 (unaudited)			5
Notes to Consolidated Financial Statements (unaudited)			6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			22
Item 4. Controls and Procedures			23
Part II. Other Information			23
Item 1. Legal Proceedings			24
Item 1A. Risk Factors			24
Item 5. Other Information			24
Item 6. Exhibits			25
Signatures			26

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

nLIGHT, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)


	As of
	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	61,306	$	53,210
Marketable securities	59,775		59,672
Accounts receivable, net of allowances of $410 and $315	27,545		39,585
Inventory	53,013		52,160
Prepaid expenses and other current assets	17,564		15,927
Total current assets	219,203		220,554
Restricted cash	257		256
Lease right-of-use assets	12,675		12,616
Property, plant and equipment, net	50,290		52,300
Intangible assets, net	1,278		1,652
Goodwill	12,382		12,399
Other assets, net	6,746		7,026
Total assets	$	302,831	$	306,803

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	13,911	$	12,166
Accrued liabilities	13,599		12,556
Deferred revenues	7,583		4,849
Current portion of lease liabilities	3,171		3,181

Total current liabilities	38,264		32,752
Non-current income taxes payable	5,485		5,391
Long-term lease liabilities	10,993		10,978

Other long-term liabilities	3,732		3,263
Total liabilities	58,474		52,384
Stockholders' equity:

Common stock - $0.0001 par value; 190,000 shares authorized, 47,552 and 47,266 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	16		16
Additional paid-in capital	525,000		521,184
Accumulated other comprehensive loss	(2,589)		(2,477)
Accumulated deficit	(278,070)		(264,304)
Total stockholders’ equity	244,357		254,419
Total liabilities and stockholders’ equity	$	302,831	$	306,803

See accompanying notes to consolidated financial statements.

nLIGHT, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
		2024		2023
Revenue:
Products		$	29,370	$	41,107
Development		15,157		12,984
Total revenue		44,527		54,091
Cost of revenue:
Products		23,231		27,526
Development		13,808		12,302
Total cost of revenue		37,039		39,828
Gross profit		7,488		14,263
Operating expenses:
Research and development		10,659		11,301
Sales, general, and administrative		11,547		11,169

Total operating expenses		22,206		22,470
Loss from operations		(14,718)		(8,207)
Other income:
Interest income, net		455		337
Other income, net		641		404
Loss before income taxes		(13,622)		(7,466)
Income tax expense		144		264
Net loss		$	(13,766)	$	(7,730)


Net loss per share, basic and diluted		$	(0.29)	$	(0.17)


Shares used in per share calculations, basic and diluted		47,242		45,706

See accompanying notes to consolidated financial statements.

nLIGHT, Inc.

Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)


	Three Months Ended March 31,
		2024		2023
Net loss		$	(13,766)	$	(7,730)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(223)		369
Unrealized gains on available-for-sale securities		111		214
Comprehensive loss		$	(13,878)	$	(7,147)

See accompanying notes to consolidated financial statements.

nLIGHT, Inc.

Consolidated Statements of Stockholders' Equity

(In thousands)

(Unaudited)


		Three Months Ended March 31, 2024
	Common stock		Additional paid-in capital			Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
		Shares			Amount
Balance, December 31, 2023		47,266	$	16		$	521,184	$	(2,477)	$	(264,304)	$	254,419
Net loss		—	—			—		—		(13,766)		(13,766)

Issuance of common stock pursuant to exercise of stock options		11	—			10		—		—		10
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax		275	—			(1,625)		—		—		(1,625)




Stock-based compensation		—	—			5,431		—		—		5,431
Unrealized gains on available-for-sale securities		—	—			—		111		—		111
Cumulative translation adjustment, net of tax		—	—			—		(223)		—		(223)
Balance, March 31, 2024		47,552	$	16		$	525,000	$	(2,589)	$	(278,070)	$	244,357


		Three Months Ended March 31, 2023
	Common stock		Additional paid-in capital			Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
		Shares			Amount
Balance, December 31, 2022		45,629	$	16		$	496,211	$	(2,748)	$	(222,634)	$	270,845
Net loss		—	—			—		—		(7,730)		(7,730)

Issuance of common stock pursuant to exercise of stock options		117	—			143		—		—		143
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax		39	—			(182)		—		—		(182)
Stock-based compensation		—	—			5,503		—		—		5,503
Unrealized gains on available-for-sale securities		—	—			—		214		—		214
Cumulative translation adjustment, net of tax		—	—			—		369		—		369
Balance, March 31, 2023		45,785	$	16		$	501,675	$	(2,165)	$	(230,364)	$	269,162

See accompanying notes to consolidated financial statements.

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nLIGHT, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(13,766)	$	(7,730)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	3,135		3,105
Amortization	1,258		872
(Increase) reduction in carrying amount of right-of-use assets	(70)		6
Provision for losses on (recoveries of) accounts receivable	95		(2)
Stock-based compensation	5,431		5,503

Loss on disposal of property, plant and equipment	35		—
Changes in operating assets and liabilities:
Accounts receivable, net	11,892		1,905
Inventory	(888)		662
Prepaid expenses and other current assets	(1,646)		(4,549)
Other assets, net	(616)		(540)
Accounts payable	2,099		(411)
Accrued and other long-term liabilities	1,555		1,855
Deferred revenues	2,745		(142)
Lease liabilities	15		(45)
Non-current income taxes payable	101		155
Net cash provided by operating activities	11,375		644
Cash flows from investing activities:

Purchases of property, plant and equipment	(1,556)		(684)

Purchase of marketable securities	(24,357)		(34,359)
Proceeds from maturities and sales of marketable securities	24,365		24,998
Net cash used in investing activities	(1,548)		(10,045)
Cash flows from financing activities:








Proceeds from stock option exercises	10		143
Tax payments related to stock award issuances	(1,625)		(182)
Net cash used in financing activities	(1,615)		(39)
Effect of exchange rate changes on cash	(115)		17
Net increase (decrease) in cash, cash equivalents, and restricted cash	8,097		(9,423)
Cash, cash equivalents, and restricted cash, beginning of period	53,466		58,078
Cash, cash equivalents, and restricted cash, end of period	$	61,563	$	48,655
Supplemental disclosures:

Cash paid for income taxes	$	210	$	144
Operating cash outflows from operating leases	1,034		923
Right-of-use assets obtained in exchange for lease liabilities	831		731
Accrued purchases of property, equipment and patents	422		697

See accompanying notes to consolidated financial statements.

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nLIGHT, Inc.

Notes to Consolidated Financial Statements

Note 1 - Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying unaudited consolidated financial statements of nLIGHT, Inc. and our wholly-owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The unaudited financial information reflects, in the opinion of management, all adjustments necessary for a fair presentation of financial position, results of operations, stockholders’ equity, and cash flows for the interim periods presented. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Critical Accounting Policies

Our critical accounting policies have not materially changed during the three months ended March 31, 2024, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

New Accounting Pronouncements

ASU 2023-07

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Improvements to Reportable Segment Disclosures. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We will adopt ASU 2023-07 in the fourth quarter of 2024 using a retrospective transition method. We are

currently evaluating the impact of this guidance on our consolidated financial statements.

ASU 2023-09

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU requires enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. This ASU requires additional disclosures and, accordingly, we do not expect the adoption of ASU 2023-09 to have a material effect on our financial position, results of operations or cash flows.

Note 2 - Revenue

We recognize revenue upon transferring control of products and services and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of our consideration of the contract, we evaluate certain factors, including the customer's ability to pay (or credit risk). For each contract, we consider the promise to transfer products, each of which is distinct, as the identified performance obligations.

We allocate the transaction price to each distinct product based on its relative standalone selling price. Master sales agreements or purchase orders from customers could include a single product or multiple products. Regardless, the contracted price with the customer is agreed to at the individual product level outlined in the customer contract or purchase order. We do not bundle prices; however, we do negotiate with customers on pricing for the same products based on a variety of factors (e.g., level of contractual volume). We have concluded that the prices negotiated with each individual customer are representative of the stand-alone selling price of the product.

We often receive orders with multiple delivery dates that may extend across several reporting periods. We allocate the transaction price of the contract to each delivery based on the product standalone selling price and invoice for each scheduled delivery upon shipment or delivery and recognize revenues for such delivery at that point, when transfer of control has occurred. As scheduled delivery dates are generally within one year, under the optional exemption provided by ASC 606-10-50-14a, revenues allocated to future shipments of partially completed contracts are not disclosed as performance obligations for point in time revenue. Further, we recognize, over time, revenue as per ASC 606-10-55-18 (invoice practical expedient) for our cost plus contracts and, accordingly, elect not to disclose

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information related to those performance obligations under ASC 606-10-50-14b. As of March 31, 2024, we had $25 million of performance obligations relating to firm fixed price contracts that did not qualify for the aforementioned disclosure exemptions. We expect to recognize 75% of these performance obligations by the end of 2024 and the remainder by the end of 2025.

Rights of return generally are not included in customer contracts. Accordingly, product revenue is recognized upon transfer of control at shipment or delivery, as applicable. Rights of return are evaluated as they occur.

Revenues recognized at a point in time consist of sales of semiconductor lasers, fiber lasers and other related products. Revenues recognized over time generally consist of development arrangements that are structured based on our costs incurred. For long-term contracts, we estimate the total expected costs to complete the contract and recognize revenue based on the percentage of costs incurred at period end. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials, subcontractors costs, other direct costs, and indirect costs applicable on government and commercial contracts.

Contract estimates are based on various assumptions to project the outcome of future events that may span several

years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer. Billing under these arrangements generally occurs within one month of the costs being incurred or as milestones are reached.

The following tables represent a disaggregation of revenue from contracts with customers for the periods presented (in thousands):

Sales by End Market


	Three Months Ended March 31,
		2024		2023
Industrial		$	11,985	$	19,902
Microfabrication		10,797		13,058
Aerospace and Defense		21,745		21,131
		$	44,527	$	54,091

Sales by Geography


	Three Months Ended March 31,
		2024		2023
North America		$	28,724	$	29,103
China		3,411		3,646
Rest of World		12,392		21,342
		$	44,527	$	54,091

Sales by Timing of Revenue


	Three Months Ended March 31,
		2024		2023
Point in time		$	29,356	$	40,272
Over time		15,171		13,819
		$	44,527	$	54,091

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Our contract assets and liabilities were as follows (in thousands):


	Balance Sheet Classification	As of
		March 31, 2024		December 31, 2023
Contract assets	Prepaid expenses and other current assets	$	9,735	$	7,298
Contract liabilities	Deferred revenues and other long-term liabilities	10,027		6,368

Contract assets generally consist of revenue recognized on an over-time basis where revenue recognition has been met, but the amounts are subsequently billed and collected in a subsequent period. In our services contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, which is generally monthly, or upon the achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets recorded in prepaid expenses and other current assets on the Consolidated Balance Sheets. However, we sometimes receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities recorded in deferred revenues on the Consolidated Balance Sheets. Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. For our product revenue, we generally receive cash payments subsequent to satisfying the performance obligation via delivery of the product, resulting in billed accounts receivable. For our contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

During the three months ended March 31, 2024, we recognized revenue of $0.5 million that was included in the deferred revenues balance at the beginning of the period as the performance obligations under the associated agreements were satisfied.

Note 3 - Concentrations of Credit and Other Risks

The following customers accounted for 10% or more of our revenues for the periods presented:


	Three Months Ended March 31,
		2024	2023
U.S. Government*		19%	16%
Raytheon Technologies		11%	(1)
KORD Technologies		10%	(1)

*Excludes sales to customers who sell our products and services exclusively to the U.S. Government

(1) Represents less than 10% of total revenues.

Financial instruments that potentially expose us to concentrations of credit risk consist principally of receivables from customers. As of March 31, 2024 and December 31, 2023, two customers accounted for a total of 30% and 24%, respectively, of net customer receivables. No other customers accounted for 10% or more of net customer receivables at either date.

Note 4 - Marketable Securities

Marketable securities consist primarily of highly liquid investments with original maturities of greater than 90 days when purchased. Our marketable securities are considered available-for-sale as they represent investments that are available to be sold for current operations. As such, they are included as current assets on our Consolidated Balance Sheets at fair value with unrealized gains and losses included in accumulated other comprehensive loss. Any unrealized gains and losses that are considered to be other-than-temporary are recorded in other income, net on our Consolidated Statements of Operations. Realized gains and losses on the sale of marketable securities are determined using the specific-identification method and recorded in other income, net on our Consolidated Statements of Operations.

Realized gains were $0.7 million and unrealized gains were $0.1 million for the three months ended March 31, 2024. Realized gains were $0.4 million and unrealized gains were $0.2 million for the three months ended March

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31, 2023. These unrealized gains are considered temporary and are reflected in the Consolidated Statements of Comprehensive Loss.

See Note 5 for additional information.

Note 5 - Fair Value of Financial Instruments

The carrying amounts of certain of our financial instruments, including cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities are shown at cost which approximates fair value due to the short-term nature of these instruments. The fair value of our term and revolving loans approximates the carrying value due to the variable market rate used to calculate interest payments.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

•Level 1 Inputs: Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

•Level 2 Inputs: Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 Inputs: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our financial instruments that are carried at fair value consist of Level 1 assets which include highly liquid investments and bank drafts classified as cash equivalents and marketable securities.

Our fair value hierarchy for our financial instruments was as follows (in thousands):


	March 31, 2024
	Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market securities	$	23,382	$	—	$	—	$	23,382
Commercial paper	2,343		—		—		2,343
	25,725		—		—		25,725
Marketable Securities:
U.S. treasuries	59,775		—		—		59,775
Total	$	85,500	$	—	$	—	$	85,500


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash Equivalents:
Money market securities	$	22,441	$	—	$	—	$	22,441
Commercial paper	1,995		—		—		1,995
	24,436		—		—		24,436
Marketable Securities:
U.S. treasuries	59,672		—		—		59,672
Total	$	84,108	$	—	$	—	$	84,108

Cash Equivalents

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The fair value of cash equivalents is determined based on quoted market prices for similar or identical securities.

Marketable Securities

We classify our marketable securities as available-for-sale and value them utilizing a market approach that uses observable inputs without applying significant judgment.

Note 6 - Inventory

Inventory is stated at the lower of average cost (principally standard cost, which approximates actual cost on a first-in, first-out basis) and net realizable value. Inventory includes raw materials and components that may be specialized in nature and subject to obsolescence. On a quarterly basis, we review inventory quantities on hand in comparison to our past consumption, recent purchases, and other factors to determine what inventory quantities, if any, may not be sellable. Based on this analysis, we write down the affected inventory value for estimated excess and obsolescence charges. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Inventory consisted of the following (in thousands):


	As of
	March 31, 2024		December 31, 2023
Raw materials	$	20,931	$	23,426
Work in process and semi-finished goods	22,512		19,640
Finished goods	9,570		9,094
	$	53,013	$	52,160

Note 7 - Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):


	Useful life	As of
	(years)	March 31, 2024		December 31, 2023
Automobiles	3	$	109	$	109
Computer hardware and software	3 - 5	9,150		9,145
Manufacturing and lab equipment	2 - 7	91,289		91,050
Office equipment and furniture	5 - 7	2,601		2,634
Leasehold and building improvements	2 - 12	32,761		31,988
Buildings	30	9,392		9,392
Land	N/A	3,399		3,399
		148,701		147,717
Accumulated depreciation		(98,411)		(95,417)
		$	50,290	$	52,300

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Note 8 - Intangible Assets and Goodwill

Intangible Assets

The details of definite lived intangible assets were as follows (in thousands):


	Estimated useful life (in years)	As of
		March 31, 2024		December 31, 2023
Patents	3 - 5	$	6,345	$	6,345
Development programs	2 - 4	7,200		7,200
Developed technology	5	2,959		2,959
		16,504		16,504
Accumulated amortization		(15,226)		(14,852)
		$	1,278	$	1,652

Amortization related to intangible assets was as follows (in thousands):


	Three Months Ended March 31,
		2024		2023
Amortization expense		$	373	$	654

Estimated amortization expense for future years is as follows (in thousands):


2024	$	445
2025	484
2026	349
Thereafter	—
	$	1,278

Goodwill

The carrying amount of goodwill by segment was as follows (in thousands):


	Laser Products		Advanced Development		Totals


Balance, December 31, 2023	2,151		10,248		12,399
Currency exchange rate adjustment	(17)		—		(17)
Balance, March 31, 2024	$	2,134	$	10,248	$	12,382

Note 9 - Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	As of
	March 31, 2024		December 31, 2023
Accrued payroll and benefits	$	9,386	$	7,898
Product warranty, current	2,868		3,339



Other accrued expenses	1,345		1,319
	$	13,599	$	12,556

Note 10 - Product Warranties

We provide warranties on certain products and record a liability for the estimated future costs associated with warranty claims at the time revenue is recognized. The warranty liability is based on historical experience, any specifically identified failures, and our estimate of future costs. The current portion of our product warranty liability is

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included in the accrued liabilities and the long-term portion is included in Other long-term liabilities in our Consolidated Balance Sheets.

Product warranty liability activity was as follows for the periods presented (in thousands):


	Three Months Ended March 31,
		2024		2023
Product warranty liability, beginning		$	4,469	$	5,441
Warranty charges incurred, net		(760)		(782)
Provision for warranty charges, net of adjustments		203		572

Product warranty liability, ending		3,912		5,231
Less: current portion of product warranty liability		(2,868)		(2,540)
Non-current portion of product warranty liability		$	1,044	$	2,691

Note 11 - Stockholders' Equity and Stock-Based Compensation

Restricted Stock Awards and Units

Restricted stock unit ("RSU") and restricted stock awards ("RSA") activity under our equity incentive plan was as follows:


		Number of Restricted Stock Units (Thousands)	Weighted-Average Grant Date Fair Value
Balance, December 31, 2023		2,817	$	13.27
	Granted	15	13.20
	Vested	(399)	10.37
	Forfeited	(13)	14.25
Balance, March 31, 2024		2,420	13.75


	Number of Restricted Stock Awards (Thousands)	Weighted-Average Grant Date Fair Value
Balance, December 31, 2023 and March 31, 2024	133	$	30.44

The total fair value of RSUs vested during the three months ended March 31, 2024, was $4.1 million. Awards outstanding as of March 31, 2024 include 0.8 million performance-based awards that will vest upon meeting certain performance criteria. No performance-based awards were granted during the three months ended March 31, 2024.

Table of Contents

Stock Options

The following table summarizes our stock option activity during the three months ended March 31, 2024:


	Number of Options (Thousands)	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (Thousands)
Outstanding, December 31, 2023	1,398	$1.24	2.5	$17,142

Options exercised	(11)	0.95

Outstanding, March 31, 2024	1,387

SEC Form 10-Q filed by nLIGHT Inc.