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What changed in IPG PHOTONICS CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of IPG PHOTONICS CORP's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+327 added−281 removedSource: 10-K (2026-02-23) vs 10-K (2025-02-20)

Top changes in IPG PHOTONICS CORP's 2025 10-K

327 paragraphs added · 281 removed · 249 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

63 edited+15 added−7 removed70 unchanged
Biggest changeOur principal end markets and representative applications within those markets include: 4 Table of Contents Materials Processing Markets End Market Applications Principal Products General Manufacturing Welding, brazing, hardening and cladding Continuous Wave ("CW") lasers (1-125 kW) and IPG systems Flat sheet, tube and 3D cutting CW lasers (1-50 kW) and IPG systems Marking, engraving and printing NS pulsed lasers (10-1,000 W) and Quasi-CW ("QCW") lasers (100-2,000 W) Surface cleaning and texturing, paint and coating stripping Nanosecond ("NS") pulsed lasers (100-3,000 W), single-mode CW lasers (1-5 kW) and IPG systems Heating and drying Diode lasers (1-40 kW) Additive Manufacturing CW lasers (200-6,000 W) Automotive (including Electric Vehicles) Welding, cleaning, drying, and cutting, including foil cutting CW and QCW lasers, NS pulsed lasers and IPG systems Cutting of high-strength steel and aluminum CW lasers (1-20 kW) Welding tailored blanks, frames and auto parts CW lasers (1-50 kW) Seam welding and brazing CW lasers( 1-20 kW) and IPG systems Consumer Goods Micro welding, cutting and marking QCW and NS pulsed lasers Marking of polymers and other non-metals Infrared ("IR"), green and ultraviolet ("UV") pulsed lasers Medical Devices Stent, pacemaker and other medical device manufacturing CW, NS, Picosecond ("PS") and Femtosecond ("FS") pulsed lasers and IPG systems Energy/Renewable Energy Hardening and welding of tubes and pipes CW lasers (4-50 kW) and IPG systems Cladding of turbine blades and drill bits CW lasers (1-20 kW) Solar cell processing Green NS pulsed lasers Aerospace, Rail and Shipbuilding Welding/cutting thick steel plates, titanium CW lasers (1-50 kW) and IPG systems Percussion drilling of aerospace parts QCW lasers (1-2 kW) Surface cleaning and texturing, paint and coating stripping and drying NS pulsed lasers (100-3,000 W), single-mode CW lasers (1-5 kW), diode lasers (1-40 kW) and IPG systems Micro Electronics Wafer inspection and annealing, disk mastering, flat panel display, LED lift-off Ultraviolet CW and NS pulsed lasers Processing of glass, ceramics, sapphire, silicon, diamond, Teflon, PCB, CFRP and other non-metals IR, green and UV NS pulsed lasers, PS and FS pulsed lasers, QCW lasers Other Markets End Market Applications Principal Products Aerospace and Defense Directed energy Single-mode CW lasers, amplifiers and diode lasers IR countermeasures, thermal imaging Mid-IR NS pulsed lasers Medical Procedures Surgery, urology and soft tissue Mid-infrared, thulium, FS and laser systems Therapeutic procedures Diode lasers Aesthetic procedures - skin, wrinkle/hair/tattoo removal Erbium, thulium, green lasers Dental procedures Diode lasers Diagnostic procedures Mid-infrared and FS OEM Instrument Manufacturing Biomedical analytical instruments, metrology, disinfection/sterilization, environmental and security monitoring, quantum computing FS, PS, NS and CW lasers, Mid-infrared, IR, visible and UV lasers Scientific Academic research: sensing, imaging, microscopy, spectroscopy, quantum optics Mid-infrared, IR, visible and UV lasers; diode, FS, PS, NS and CW lasers, linearly polarized and single frequency lasers and amplifiers 5 Table of Contents Products We design and manufacture a broad range of high-performance fiber lasers and amplifiers.
Biggest changeOur principal end markets and representative applications for lasers within those markets include: 4 Table of Contents Materials Processing Markets End Market Applications Principal Products General Manufacturing Welding, brazing and soldering Continuous Wave ("CW") lasers (1-125 kW), Quasi-CW ("QCW") lasers (100-1,200 W), diode lasers (50-2,000 W), and IPG systems Hardening and cladding CW Lasers (1-125 kW) and IPG systems Flat sheet, tube and 3D cutting and drilling CW lasers (1-60 kW), QCW lasers (100-2,400 W), and IPG systems Marking, engraving and printing Nanosecond ("NS") pulsed lasers (10-1,000 W) and QCW lasers (100-2,400 W) Surface cleaning and texturing, paint and coating stripping NS pulsed lasers (100-3,000 W), single-mode CW and QCW lasers (1-6 kW), and IPG systems Heating and drying Diode lasers (1-100 kW) Additive manufacturing (3D printing and selective laser sintering) Single-mode CW lasers (200-8,000 W), green NS pulsed laser (500 W), diode lasers (1-6 kW) Automotive (including Electric Vehicles) EV battery: welding, cleaning, slurry drying, ablation and texturing, cutting, including foil cutting CW and QCW lasers (1-10 kW), NS pulsed lasers (100-3,000 W), diode lasers (1-100 kW), and IPG systems Welding EV power train components: stators, inverters, electrical connections CW and QCW lasers (1-10 kW), and IPG systems Cutting of high-strength steel and aluminum CW lasers (1-30 kW) Welding tailored blanks, frames and auto parts CW lasers (1-50 kW) Seam welding and brazing CW lasers( 1-20 kW) and IPG systems Consumer Goods Metal micro welding, cutting, drilling, texturing, ablation and marking QCW, NS, Picosecond ("PS") and Femtosecond ("FS") pulsed lasers, and IPG systems Cutting, drilling, welding and marking of polymers and other non-metals Infrared ("IR"), CW and pulsed lasers, diode lasers, green and ultraviolet ("UV") pulsed lasers, and IPG systems Medical Devices Stent, pacemaker and other medical device manufacturing CW, NS, PS and FS pulsed lasers and IPG systems Energy/Renewable Energy Hardening and welding of tubes and pipes CW lasers (4-50 kW) and IPG systems Cladding of turbine blades and drill bits CW lasers (1-20 kW) Solar cell processing Green NS pulsed lasers Energy storage battery: welding, cleaning, slurry drying, ablation and texturing, cutting, including foil cutting CW and QCW lasers (1-10 kW), NS pulsed lasers (100-3,000 W), diode lasers (1-100 kW), and IPG systems Aerospace, Rail and Shipbuilding Welding/cutting thick steel plates, titanium CW lasers (1-60 kW) and IPG systems Percussion drilling of aerospace parts QCW lasers (1-2.4 kW) Surface cleaning and texturing, paint and coating stripping and powder coat curing NS pulsed lasers (100-3,000 W), single-mode CW lasers (1-6 kW), diode lasers (1-100 kW), and IPG systems Micro Electronics Wafer inspection and annealing, disk mastering, flat panel display, LED lift-off Green, ultraviolet CW and NS pulsed lasers Processing of glass, ceramics, sapphire, silicon, diamond, Teflon, PCB, CFRP, parylene and other non-metals IR, green and UV NS pulsed lasers, PS and FS pulsed lasers, QCW lasers, and IPG systems 5 Table of Contents Other Markets End Market Applications Principal Products Aerospace and Defense Directed energy Single-mode CW lasers (1-8 kW), CW "low order" lasers (10-30 kW), narrow line amplifiers (3-4 kW), diode lasers, and IPG systems Target designation Erbium CW lasers Dazzlers Green pulsed laser (1 kW) IR countermeasures, thermal imaging Mid-IR NS pulsed lasers Medical Procedures Surgery, urology and soft tissue Mid-infrared, thulium, FS lasers and laser systems Therapeutic procedures Diode lasers Aesthetic procedures - skin, wrinkle/hair/tattoo removal Erbium, thulium, green lasers Dental procedures Diode lasers Diagnostic procedures Mid-infrared and FS lasers OEM Instrument Manufacturing Biomedical analytical instruments, metrology, disinfection/sterilization, environmental and security monitoring, quantum computing FS, PS, NS and CW lasers, Mid-infrared, IR, visible and UV lasers, linearly polarized and single frequency CW lasers and amplifiers Scientific Academic research: sensing, imaging, microscopy, spectroscopy, quantum optics Mid-infrared, IR, visible and UV lasers; diode, FS, PS, NS and CW lasers, linearly polarized and single frequency CW lasers and amplifiers Products We design and manufacture a broad range of high-performance fiber lasers and amplifiers.
As a result, the average cost per watt of output power has decreased dramatically and our fiber lasers effectively compete in many applications that used other laser technologies and non-laser solutions historically.
As a result, the average cost per watt of output power has decreased dramatically and our fiber lasers effectively compete in many applications that historically used other laser technologies and non-laser solutions.
We operate our own semiconductor foundry for the production of multi-mode single-emitter diodes used as pump sources in our lasers. We also process, package and extensively test all of our diodes.
We operate our own semiconductor foundry for the production of multi-mode single-emitter diodes used as pump sources in our lasers. We also process, package and extensively test all our diodes.
The success and growth of IPG’s business is dependent in large part on our ability to attract, retain and develop a diverse population of talented and high-performing employees at all levels of our organization. For our research, engineering and production management positions, we require employees with university and graduate-level degrees in physics, optics, electrical, mechanical and software engineering.
The success and growth of IPG’s business is dependent in large part on our ability to attract, retain and develop a population of talented and high-performing employees at all levels of our organization. For our research, engineering and production management positions, we require employees with university and graduate-level degrees in physics, optics, electrical, mechanical and software engineering.
Our vertically integrated manufacturing operations include the manufacturing or assembly of optical preforms, specialty fiber, semiconductor wafers, semiconductor diode chips and packaged semiconductor diodes, specialty optical components, fiber blocks, fiber laser modules, power supplies, circuit boards, electronics and control systems and software, crystals, chillers, housings and cabinets and final assembly of finished product.
Our vertically integrated manufacturing operations currently include the manufacturing or assembly of optical preforms, specialty fiber, semiconductor wafers, semiconductor diode chips and packaged semiconductor diodes, specialty optical components, fiber blocks, fiber laser modules, power supplies, circuit boards, electronics and control systems and software, crystals, chillers, housings and cabinets and final assembly of finished product.
IPG sponsors formal apprentice and internship programs to build leadership capabilities for the future. IPG has a strong employee value proposition with a culture of innovation, driven by entrepreneurial spirit and embraced within an environment of individual respect, dignity and caring.
IPG sponsors formal apprentice and internship programs to build leadership capabilities for the future. IPG has a strong employee value proposition with a culture of innovation, driven by entrepreneurial spirit and collaboration embraced within an environment of individual respect, dignity and caring.
Our business activities are subject to various export controls and trade and economic sanctions laws and regulations, including, without limitation, the U.S. Commerce Department’s Export Administration Regulations, the U.S. Treasury Department’s Office of Foreign Assets Control’s trade and economic sanctions programs, the U.S.
Our business activities are subject to various export controls and trade and economic sanctions laws and regulations, including, without limitation, the U.S. Commerce Department’s Export Administration Regulations ("EAR"), the U.S. Treasury Department’s Office of Foreign Assets Control’s trade and economic sanctions programs, the U.S.
In the event of an accident involving such materials, we could be liable for damages and such liability could exceed the amount of our liability insurance coverage and the resources of our business. 12 Table of Contents We face increasing complexity in our product design and procurement operations due to the evolving nature of environmental compliance regulations and standards, as well as specific customer compliance requirements.
In the event of an accident involving such materials, we could be liable for damages and such liability could exceed the amount of our liability insurance coverage and the resources of our business. 13 Table of Contents We face increasing complexity in our product design and procurement operations due to the evolving nature of environmental compliance regulations and standards, as well as specific customer compliance requirements.
For example, the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD), which will introduce additional due diligence and disclosure requirements addressing sustainability that we expect will apply to us in the coming years. These and future laws, regulations or policies could significantly increase our operational and compliance burdens and costs.
For example, the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD), which introduced additional due diligence and disclosure requirements addressing sustainability that we expect will apply to us in the coming years. These and future laws, regulations or policies could significantly increase our operational and compliance burdens and costs.
Frame agreements are non-binding indications of customer pricing and volume levels but are not firm customer purchase obligations with delivery dates. Orders used to compute backlog are generally cancellable without substantial penalties or any penalties. We anticipate shipping a substantial majority of the present backlog during fiscal year 2025.
Frame agreements are non-binding indications of customer pricing and volume levels but are not firm customer purchase obligations with delivery dates. Orders used to compute backlog are generally cancellable without substantial penalties or any penalties. We anticipate shipping a substantial majority of the present backlog during fiscal year 2026.
High electrical efficiency, low maintenance and operating cost, excellent beam quality, wide operating power range, power stability and small spot size are some of the qualities offered by IPG fiber lasers for many cutting applications, which enable customers to cut a variety of materials faster.
High electrical efficiency, low maintenance and operating cost, excellent beam quality, wide operating power range, power stability and small spot size are some of the qualities offered by IPG fiber lasers for many cutting applications, which enable customers to cut a variety of materials faster. Marking and Engraving Applications.
Laser cutting technology is a non-contact process that is easy to integrate into an automated production line and is not subject to wear of the cutting medium. We sell mid and high power ytterbium fiber lasers for laser cutting. Our high power pulsed lasers are used in thin foil cutting applications in electric vehicle battery production.
Laser cutting technology is a non-contact process that is easy to integrate into an automated production line and is not subject to wear of the cutting medium. We sell mid and high power 7 Table of Contents ytterbium fiber lasers for laser cutting. Our high power pulsed lasers are used in thin foil cutting applications in electric vehicle battery production.
Globally, the demand for employees with such levels of education is high and competitive. 10 Table of Contents To succeed in these conditions, IPG implements key recruitment and retention strategies, objectives and effectiveness measures as part of the overall management of our business. These core strategies are advanced through the following programs, policies and initiatives: Competitive Pay and Benefits .
Globally, the demand for employees with such levels of education is high and competitive. To succeed in these conditions, IPG implements key recruitment and retention strategies, objectives and effectiveness measures as part of the overall management of our business. These core strategies are advanced through the following programs, policies and initiatives: Competitive Pay and Benefits .
We successfully increased output power levels, efficiency and reliability by improving optical components such as diodes and active fibers that increased their power capacities and improved their performance. Fiber lasers now offer output powers that exceed those of other laser technologies in many categories.
We successfully increased output power levels, efficiency and reliability by improving optical components such as diodes and active fibers that increased 3 Table of Contents their power capacities and improved their performance. Fiber lasers now offer output powers that exceed those of other laser technologies in many categories.
Our diverse customer base, end markets and applications provide us with many growth opportunities. In 2024, we shipped products to thousands of customers worldwide.
Our diverse customer base, end markets and applications provide us with many growth opportunities. In 2025, we shipped products to thousands of customers worldwide.
In addition to our cladding-pumped specialty fiber platform, we have core competencies in high power multi-mode and single-mode semiconductor diodes, diode packaging, specialty active and passive optical fibers, high-performance optical components, crystal growth and processing, fiber gain blocks and fiber modules, thin film optical coatings, as well as splicing and combining techniques and high-stress test 8 Table of Contents methods.
In addition to our cladding-pumped specialty fiber platform, we have core competencies in high power multi-mode and single-mode semiconductor diodes, diode packaging, specialty active and passive optical fibers, high-performance optical components, crystal growth and processing, fiber gain blocks and fiber modules, thin film optical coatings, as well as splicing and combining techniques and high-stress test methods.
We have sales and service offices and 9 Table of Contents application development centers in the Americas, Europe and Asia. To a lesser extent, we market through agreements with independent sales representatives and distributors, but we do use such channels more widely for our LightWELD product. In 2023, we entered into a strategic partnership with Miller Electric Mfg.
We have sales and service offices and application development centers in the Americas, Europe and Asia. To a lesser extent, we market through agreements with independent sales representatives and distributors, but we do use such channels more widely for our LightWELD product. In 2023, we entered into a strategic partnership with Miller Electric Mfg.
We also make single-mode and low-mode output ytterbium fiber lasers with power levels of up to 20,000 watts and single-mode, erbium and thulium fiber lasers with power levels of up to 4,000 watts. For 2024 fiscal year, high power continuous wave ("CW") lasers accounted for 34% of revenue and were 41% and 43% of revenue, in 2023 and 2022, respectively.
We also make single-mode and low-mode output ytterbium fiber lasers with power levels of up to 20,000 watts and single-mode, erbium and thulium fiber lasers with power levels of up to 4,000 watts. For 2025 fiscal year, high power continuous wave ("CW") lasers accounted for 31% of revenue and were 34% and 41% of revenue, in 2024 and 2023, respectively.
We also manufacture certain complementary products that are used with our lasers, such as optical delivery cables, fiber couplers, beam switches, optical processing heads, process measuring and monitoring technologies and chillers. Lasers Our laser products include medium (1 to 999 watts) and high (1,000 watts and above) output power lasers from 0.3 to 5.2 microns in wavelength.
We also manufacture certain complementary products that are used with our lasers, such as optical delivery cables, fiber couplers, beam switches, optical processing heads, process measuring and monitoring technologies and chillers. Lasers Our laser products include medium (1 to 999 watts) and high (1,000 watts and above) output power lasers from 0.148 to 20 microns in wavelength.
" and " Risk Factors — Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results ." Manufacturing Vertical integration is one of our core business strategies through which we control our proprietary processes and technologies as well as the supply of key components and assemblies.
" and " Risk Factors — Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results ." Manufacturing Vertical integration is one of our core business strategies through which we control our proprietary processes and technologies as well as the supply of critical high-value specialty components and assemblies.
Our substantial advancements in diode technology, packaging design and other optical components together with increased production volumes over the last two decades reduced the cost and increased the reliability 3 Table of Contents of our products.
Our substantial advancements in diode technology, packaging design and other optical components together with increased production volumes over the last two decades reduced the cost and increased the reliability of our products.
Lopresti was a partner at the law firm of 11 Table of Contents Winston & Strawn LLP from 1999 to 2001. He was a partner at the law firm of Hertzog, Calamari & Gleason from 1998 to 1999 and an associate there from 1991 to 1998.
Lopresti was a partner at the law firm of Winston & Strawn LLP from 1999 to 2001. He was a partner at the law firm of Hertzog, Calamari & Gleason from 1998 to 1999 and an associate there from 1991 to 1998.
Our team of experienced scientists and engineers works closely with many of our customers to develop and introduce custom products and laser processing that address specific applications and performance requirements. We incurred research and development costs of approximately $109.8 million, $98.7 million and $116.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Our team of experienced scientists and engineers works closely with many of our customers to develop and introduce custom products and laser processing that address specific applications and performance requirements. We incurred research and development costs of approximately $117.4 million, $109.8 million and $98.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Of our total full-time employees, approximately 1,940 were in the United States and 1,630 were in Germany. We have never experienced a work stoppage, and none of our employees at our principal manufacturing facilities are subject to a collective bargaining agreement.
Of our total full-time employees, approximately 2,070 were in the United States and 1,650 were in Germany. We have never experienced a work stoppage, and none of our employees at our principal manufacturing facilities are subject to a collective bargaining agreement.
Pulsed lasers accounted for 15%, 14%, and 18% of revenue in 2024, 2023 and 2022, respectively. Accessories We manufacture and sell accessories that include high power optical fiber delivery cables, fiber couplers, beam switches, chillers and scanners for our fiber lasers.
Pulsed lasers accounted for 14%, 15%, and 14% of revenue in 2025, 2024 and 2023, respectively. Accessories 6 Table of Contents We manufacture and sell accessories that include high power optical fiber delivery cables, fiber couplers, beam switches, chillers and scanners for our fiber lasers.
Medical Procedures We sell our commercial fiber and diode laser modules, subassemblies and complete systems to medical device manufacturers that incorporate our products into their devices.
Medical Procedures We sell our complete medical laser systems, and commercial fiber and diode laser modules, subassemblies and delivery fibers to medical device manufacturers that sell our medical laser systems under their brand or incorporate our products into their devices.
Backlog At December 31, 2024, our backlog of orders (generally scheduled for shipment within one year) was approximately $636.2 million compared to $691.4 million at December 31, 2023.
Backlog At December 31, 2025, our backlog of orders (generally scheduled for shipment within one year) was approximately $631.5 million compared to $636.2 million at December 31, 2024.
Government Regulation Regulatory Compliance The majority of our laser and amplifier products sold in the United States are classified as Class IV Laser Products under the applicable rules and regulations of the Center for Devices and Radiological Health ("CDRH") of the U.S. Food and Drug Administration ("FDA"). The same classification system is applied in the European markets.
Government Regulation Regulatory Compliance The majority of our laser and amplifier products sold in the United States are classified as Class IV Laser Products under the applicable rules and regulations of the Center for Devices and Radiological Health ("CDRH") of the U.S. Food and Drug Administration ("FDA"). A similar classification framework applies in the European Union and other international markets.
We are expanding our line of cutting and welding optical processing heads for use with our fiber lasers and sell devices for in-line coherent monitoring for welding. Systems In addition to selling laser sources, we also offer integrated laser systems for particular geographic markets or custom-developed for a customer's manufacturing requirements.
We are expanding our line of cutting and welding optical processing heads for use with our fiber lasers and sell devices for in-line coherent monitoring for welding. Systems In addition to selling laser sources, we also offer a range of integrated and custom-developed laser systems designed to meet specific customer manufacturing requirements.
As of December 31, 2024, we had approximately 4,740 full-time employees, including 410 in research and development, 3,550 in manufacturing and service operations, 380 in sales and marketing, and 400 in general and administrative functions. As a global company, our employees are distributed throughout our more than thirty locations in twenty-four countries.
As of December 31, 2025, we had approximately 4,840 full-time employees, including 440 in research and development, 3,590 in manufacturing and service operations, 390 in sales and marketing, and 420 in general and administrative functions. As a global company, our employees are distributed throughout our more than thirty locations in twenty-four countries.
At December 31, 2024, our backlog included $371.1 million of orders with firm shipment dates and $265.1 million of frame agreements that we expect to ship within one year, compared to $401.1 million of orders with firm shipment dates and $290.3 million of frame agreements at December 31, 2023.
At December 31, 2025, our backlog included $399.0 million of orders with firm shipment dates and $232.5 million of frame agreements that we expect to ship within one year, compared to $371.1 million of orders with firm shipment dates and $265.1 million of frame agreements at December 31, 2024.
Mammen was Finance Director and General Manager of United Partners Plc, a commodities trading firm, from 1995 to 1999 and, prior to that, he worked in the finance department of E.I. du Pont de Nemours and Company. Mr. Mammen holds an Upper Second B.Sc. Honours degree in International Trade and Development from the London School of Economics and Political Science.
Mammen was Finance 12 Table of Contents Director and General Manager of United Partners Plc, a commodities trading firm, from 1995 to 1999 and, prior to that, he worked in the finance department of E.I. du Pont de Nemours and Company. Mr. Mammen holds an Upper Second B.Sc.
The following table shows the allocation of our net sales (in thousands) among our principal markets: Year Ended December 31, 2024 2023 2022 % of Total % of Total % of Total Materials processing $ 857,336 87.7 % $ 1,152,804 89.5 % $ 1,291,262 90.3 % Medical procedures 61,040 6.3 % 71,571 5.6 % 70,402 4.9 % Advanced applications 53,778 5.5 % 55,576 4.3 % 54,308 3.8 % Communications 4,980 0.5 % 7,488 0.6 % 13,575 1.0 % Total $ 977,134 100.0 % $ 1,287,439 100.0 % $ 1,429,547 100.0 % These estimates are based upon customer information and when customer information has not been provided, upon our best information and belief.
The following table shows the allocation of our net sales (in thousands) among our principal markets: Year Ended December 31, 2025 2024 2023 % of Total % of Total % of Total Materials processing $ 860,191 85.7 % $ 857,336 87.7 % $ 1,152,804 89.5 % Medical procedures 73,974 7.4 % 61,040 6.3 % 71,571 5.6 % Advanced applications 69,594 6.9 % 53,778 5.5 % 55,576 4.3 % Communications 18 — % 4,980 0.5 % 7,488 0.6 % Total $ 1,003,777 100.0 % $ 977,134 100.0 % $ 1,287,439 100.0 % These estimates are based upon customer information and when customer information has not been provided, upon our best information and belief.
The high beam quality of our fiber lasers coupled with high CW power offer deep penetration welding as well as shallow conduction mode welding. Adjustable mode beam (AMB) lasers allow beam tunability for spatterless, precise high-quality welding required in electric vehicle battery manufacturing.
The high beam quality of our fiber lasers coupled with high CW power offer deep penetration welding as well as shallow conduction mode welding. Adjustable mode beam (AMB) lasers allow for spatterless, precise high-quality welding and cutting.
We offer a LightWELD product line, which is a handheld laser welding system to provide fabricators a laser-based solution for welding. We also offer 2D compact flat sheet cutter systems and multi-axis systems for fine welding, cutting and drilling. We produce high precision laser systems for the medical technology industry.
These systems include our LightWELD product line, which is a handheld laser welding system to provide fabricators a laser-based solution for welding, as well as high precision laser systems for the medical technology industry, multi‑axis Cartesian systems for fine welding, cutting, and drilling applications and 2D compact flat sheet cutting systems.
These programs further align our employees’ financial interests with the performance of the business and the interests of our stockholders. • We generally provide annual increases and incentive compensation based on merit. • We purchase compensation data from a compensation and benefits consulting firm to allow us to ensure we provide competitive compensation in each of the geographic locations in which we operate. • We align our executives’ annual and long-term equity compensation with our stockholders’ interests by linking realizable pay with operating metrics and stock performance. • We provide comprehensive benefit options designed to retain our employees and support their families in living healthier and more secure lives.
Specifically: • We provide employee wages that are competitive and consistent with employee’s positions, skill levels, experience, knowledge and geographic location. • We provide competitive compensation programs designed to further align our employees' financial interests with the performance of the business and long-term value creation, including an annual cash bonus program, equity-based awards and an employee stock purchase program. 11 Table of Contents • We generally provide annual increases and incentive compensation based on merit. • We purchase compensation data from a compensation and benefits consulting firm to allow us to ensure we provide competitive compensation in the geographic locations in which we operate. • We align our executives’ annual and long-term equity compensation with our stockholders’ interests by linking realizable pay with operating metrics and stock performance. • We provide comprehensive benefit options designed to retain our employees and support their families in living healthier and more secure lives.
Our ultrafast, CW and QCW ytterbium, erbium, thulium fiber and hybrid lasers with avera ge power from 1 to 200 watts, and dio de laser systems can be used in various medical and biomedical applications.
Our ultrafast, CW and QCW ytterbium, erbium, thulium fiber and hybrid lasers with avera ge power from 1 to 200 watts, and dio de laser systems can be used in various medical and biomedical applications. Aesthetic applications addressed by IPG laser modules include skin rejuvenation, hair removal, and treatment of pigmented and vascular lesions.
Ness performed a variety of roles in the UK, including Service and Aftersales Management. Mr. Ness holds a B.S. in Geology from Imperial College, a H.N.C. from Bournemouth University and an M.B.A. from The Open University. Igor Samartsev, Ph.D. has served as our Senior Vice President, Chief Scientist since February 2022.
Ness holds a B.S. in Geology from Imperial College London, a Higher National Certificate from Bournemouth University, and an M.B.A. (Technology Management) from The Open University. Igor Samartsev, Ph.D. has served as our Senior Vice President, Chief Scientist since February 2022.
Executive Officers of the Registrant The following table sets forth certain information regarding our executive officers as of February 20, 2025: Name Age Position with the Company Mark M. Gitin, Ph.D. 58 Chief Executive Officer Angelo P. Lopresti 61 General Counsel, Secretary and Senior Vice President Timothy P.V. Mammen 55 Chief Financial Officer and Senior Vice President Trevor D.
Executive Officers of the Registrant The following table sets forth certain information regarding our executive officers as of February 23, 2026: Name Age Position with the Company Mark Gitin, Ph.D. 59 Chief Executive Officer Paulus Bucher, Ph.D. 59 Senior Vice President, Global Operations Angelo Lopresti 62 General Counsel, Secretary and Senior Vice President Timothy Mammen 56 Chief Financial Officer and Senior Vice President Trevor Ness 53 Senior Vice President, Chief Revenue Officer Igor Samartsev, Ph.D. 62 Senior Vice President, Chief Scientist Mark M.
Advanced Applications Our fiber lasers and amplifiers are utilized by commercial firms and by academic and government institutions worldwide for advanced and scientific applications. These markets may sell specialty products developed by us or our commercial products.
Advanced Applications Our fiber lasers and amplifiers are utilized by commercial firms and by academic and government institutions worldwide for advanced and scientific applications. These markets may sell specialty products developed by us or our commercial products. Representative applications include directed energy, spectroscopy, optical trapping, remote sensing, LIDAR, semiconductor metrology and inspection, and materials characterization.
Our strategy is to target new applications where fiber lasers provide benefits compared to use of other laser technologies and non-laser solutions. There remain applications and processes where other laser and non-laser technologies may provide superior performance with respect to particular features or applications notwithstanding the benefits offered by fiber lasers.
Our strategy is to target new applications where fiber lasers provide benefits compared to use of other laser technologies and non-laser solutions. Despite the benefits of fiber lasers, certain applications and processes continue to rely on other laser and non-laser technologies that deliver superior performance for particular features or uses.
Our Markets We broadly classify our principal end markets as material processing, medical procedures, advanced applications and communications . With the sale of our telecom transmission product lines in August 2022, we no longer intend to target 6 Table of Contents communications as a principal market.
With the sale of our telecom transmission product lines in August 2022, we no longer intend to target communications as a principal market.
Customers We sell our products globally to OEMs, system integrators and end users in a wide range of diverse markets who have the in-house engineering capability to integrate our products into their own systems. We also sell complete laser and non-laser solutions to end users for their production needs. We have thousands of customers worldwide.
Most of the Company's sales offices provide support to customers in their respective geographic areas. Customers We sell our products globally to OEMs, system integrators and end users in a wide range of diverse markets who have the in-house engineering capability to integrate our products into their own systems.
Gitin served in a number of positions at MKS Instruments, including Executive Vice President and General Manager of MKS's Photonics Solutions Division since 2023.
Gitin, Ph.D. has served as the Chief Executive Officer of the company since June 2024. Previously, Dr. Gitin served in a number of positions at MKS Inc., including Executive Vice President and General Manager of MKS's Photonics Solutions Division since 2023.
CDRH regulations generally require a self-certification procedure pursuant to which a manufacturer must submit a filing to the CDRH with respect to each product incorporating a laser device, make periodic reports of sales and purchases and comply with product labeling standards, product safety and design features and informational requirements.
CDRH regulations generally require a self-certification process, including submission of product reports for each product incorporating a laser device, periodic reporting of sales and purchases and compliance with product labeling standards, product safety and design features and informational requirements.
LLC, a leading worldwide manufacturer of arc welding products, to further promote laser solutions for handheld welding applications. We typically provide one to five-year parts and service warranties on lasers. Most of the Company's sales offices provide support to customers in their respective geographic areas.
LLC, a leading worldwide manufacturer of arc welding products, to further promote laser solutions for handheld welding applications. We also sell complete medical laser systems and fibers to medical technology companies that sell and support our products under their names. We typically provide one to five-year parts and service warranties on lasers.
KG and Wuhan Raycus Fiber Laser Technologies Co. Ltd., as well as other smaller competitors. Some of our customers have developed products for their own use which are competitive to our products. Such vertical integration by our customers could reduce the market opportunity for our products.
Some of our customers have developed products for their own use which are competitive to our products. Such vertical integration by our customers could reduce the market opportunity for our products. Many of our fiber laser competitors are increasing the output powers of their fiber lasers and reducing sales prices to compete with our products.
As of December 31, 2024, we have over 850 patents issued and over 350 pending patent applications worldwide. Intellectual property rights, including those that we own, those that we license and those of others, involve significant risks. See Item 1A, " Risk Factors — We are subject to litigation alleging that we infringe third-party intellectual property rights.
As of December 31, 2025, we have over 900 patents issued and over 450 pending patent applications worldwide. Intellectual property rights, including those that we own, those that we license and those of others, involve significant risks.
We also developed special methods and expertise in splicing fibers together with low optical energy loss and on-line loss testing. We believe that our internal development and manufacturing of key optical components allows us to lower our manufacturing costs and improve product performance and reliability.
We believe that our internal development and manufacturing of key optical components allows us to lower our manufacturing costs and improve product performance and reliability.
They contribute to IPG’s success and, in particular, the skilled and experienced employees within our manufacturing, sales, service, research and development and quality assurance departments are instrumental in driving operational execution and strong financial performance, advancing innovation and maintaining a strong quality and compliance program.
However, our backlog at any given date is not necessarily indicative of actual sales for any future period. Employees and Human Capital Management Our skilled and experienced employees within our manufacturing, sales, service, research and development and quality assurance departments are instrumental in driving operational execution and strong financial performance, advancing innovation and maintaining a strong quality and compliance program.
We further discuss the impact of such Trade Controls under " Risk Factors " in Item 1A " — We must comply with and could be impacted by various export controls and trade and economic sanctions laws and regulations that could negatively affect our business and may change due to diplomatic and political considerations outside of our control." Environmental Regulation Our operations are subject to various federal, state, local and international laws governing the environment, including those relating to the storage, use, discharge, disposal, product composition and labeling of, human exposure to and hazardous and toxic materials.
We further discuss the impact of such Trade Controls under " Risk Factors " in Item 1A " — We must comply with and could be impacted by various export controls and trade and economic sanctions laws and regulations that could negatively affect our business and may change due to diplomatic and political considerations outside of our control." Our CROSSBOW™ products are also subject to additional regulatory regimes applicable to counter-unmanned aircraft systems (“counter-UAS”) and related sensing, tracking, or mitigation technologies.
Gitin holds a B.S. in Electrical Engineering from University of California, Davis and an M.Eng. and Ph.D. in Electrical Engineering from Cornell University. Angelo P. Lopresti has served as our General Counsel, Secretary and Vice President since February 2001. He was promoted to Senior Vice President in February 2013. Prior to joining us, Mr.
(FH) from Fachhochschule Wiesbaden and earned his Fachhochschulreife at Waldorfschule Wahlwies in Germany. Angelo P. Lopresti has served as our General Counsel, Secretary and Vice President since February 2001. He was promoted to Senior Vice President in February 2013. Prior to joining us, Mr.
In addition, we have developed numerous proprietary wafer processes and testing and qualification procedures in order to create a high energy output in a reliable and high power diode. Our diode is packaged to dissipate heat produced by the diode and withstands vibration, shock, high temperature, humidity and other environmental conditions, enabling world-class reliability and efficiency of the products.
In addition, we have developed numerous proprietary wafer processes and testing and qualification procedures in order to create a high energy output in a reliable and high power diode.
Department of State’s Nonproliferation Sanctions and International Traffic in Arms Regulations, as well as those of the European Community and Germany, which we collectively refer to as Trade Controls.
Department of State’s Nonproliferation Sanctions and International Traffic in Arms Regulations ("ITAR"), as well as comparable laws of the European Union, Germany and other jurisdictions, which we collectively refer to as Trade Controls. These requirements govern, among other things, the export, re‑export, transfer, sale, and provision of certain hardware, software, technology, and services.
We develop and manufacture most of our key high-volume specialty components, along with optical heads and other products used in conjunction with our lasers, which we believe enhances our ability to meet customer requirements and accelerate product development. Manufacturing Scale.
We develop and manufacture most of the critical high-value specialty components used in our lasers, as well as laser subsystems and systems, and certain complementary products such as optical heads and process measuring and monitoring technologies. We believe this vertically integrated approach enhances our ability to meet customer requirements, control quality and supply, and accelerate product development. Manufacturing Scale.
In addition, we make some of the automated production systems, tools and fixtures and testing systems that we use in our own manufacturing processes.
We nonetheless may utilize third‑party suppliers for certain components and subassemblies that we determine are not strategically critical or cost‑effective to manufacture internally. In addition, we make some of the automated production systems, tools and fixtures and testing systems that we use in our own manufacturing processes.
Competition Our markets are highly competitive and characterized by rapidly changing technology, continuously evolving customer requirements and reduced average selling prices over time. In the materials processing market, we compete with makers of fiber lasers and other lasers, such as Coherent, Inc., Laserline GmbH, Lumentum Holdings Inc., Maxphotonics Co., Ltd., MKS Instruments, Inc., nLight, Inc., Trumpf GmbH + Co.
In the materials processing market, we compete with makers of fiber lasers and other lasers, such as Coherent, Inc., JPT Opto-Electronics Co. Ltd., Laserline GmbH, Lumentum Holdings Inc., Maxphotonics Co., Ltd., MKS Instruments, Inc., nLight, Inc., Trumpf GmbH + Co. KG and Wuhan Raycus Fiber Laser Technologies Co. Ltd., as well as other smaller competitors.
Specialty Components and Combining Techniques We developed a wide range of advanced optical components that are capable of handling high optical power levels and contribute to the superior performance, efficiency and reliability of our products. In addition to fibers and diodes, our optical component portfolio includes fiber gratings, couplers, isolators, combiners, and crystals.
Our diode is packaged to dissipate heat produced by the diode and withstands vibration, shock, high temperature, humidity and other environmental conditions, enabling world-class reliability and efficiency of the products. 8 Table of Contents Specialty Components and Combining Techniques We developed a wide range of advanced optical components that are capable of handling high optical power levels and contribute to the superior performance, efficiency and reliability of our products.
IPG also develops and sells specialized fiber laser systems for unique material processing applications as requested by customers desiring complete laser-based solutions. For the 2024, 2023 and 2022 fiscal years, laser and non-laser systems accounted for 14%, 13%, and 11%, respectively, of revenues.
Fo r the 2025, 2024 and 2023 fiscal years, laser and non-laser systems accounted for 15%, 14%, and 13%, respectively, of revenues. Our Markets We broadly classify our principal end markets as material processing, medical procedures and advanced applications.
Intellectual property claims could result in costly litigation and harm our business.
See Item 1A, " Risk Factors — We are subject to litigation alleging that we infringe third-party intellectual property rights. 9 Table of Contents Intellectual property claims could result in costly litigation and harm our business.
Representative applications include directed energy, spectroscopy, optical trapping, remote sensing, LIDAR and materials characterization. 7 Table of Contents Technology Our products are based on our proprietary technology platform that we have developed and refined since our formation. The following technologies are key elements in our products.
Separately, we have developed and launched CROSSBOW™, a counter-unmanned aircraft system (counter‑UAS) solution offered to government and other authorized parties as part of our advanced application offerings. Technology Our products are based on our proprietary technology platform that we have developed and refined since our formation. The following technologies are key elements in our products.
We also offer a welding seam stepper and picker, which is an automated fiber laser welding tool providing customers increased processing speeds, better quality and the elimination of certain clamping tools. Our subsidiary Genesis Systems Group, LLC provides laser and non-laser robotic welding and automation solutions.
Our subsidiary Genesis Systems Group, LLC also provides laser and non-laser robotic welding and automation solutions. We also develop and sell specialized laser systems for unique material processing applications for customers seeking complete, laser-based solutions.
From January 2011 until February 2013, he served as our Vice President-Asian Operations. Prior to joining us, Mr. Ness was Director of GSI Precision Technologies China from May 2005 to December 2010 and prior to that he held technical sales management roles with GSI Group, Inc. and Cobham Plc, located in UK, Japan and Taiwan. Through 2000, Mr.
From February 2013 until February 2022, Mr. Ness held the role of Senior Vice President, Worldwide Sales, and from January 2011 until February 2013, he served as Vice President, Asian Operations. Before joining IPG, Mr.
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We have also developed and are now selling medical laser systems and consumable fibers for applications, including benign prostatic hyperplasia and lithotripsy, as an OEM and, in certain territories, as an IPG-branded product. Aesthetic applications addressed by IPG lasers include skin rejuvenation, hair removal, and treatment of pigmented and vascular lesions.
Added
With the addition of our cleanLASER product line, we have expanded our system offerings to include laser-based surface preparation and cleaning systems, which provide a dry, media-free alternative to traditional abrasive or chemical-based cleaning methods for surface preparation and coating or contaminant removal. These surface cleaning and preparation solutions represent an complementary systems segment to our welding and cutting offerings.
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Many of our fiber laser competitors are increasing the output powers of their fiber lasers and reducing sales prices to compete with our products.
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Laser marking is a non-contact process that uses a focused beam of light to create a long lasting or permanent mark on a surface by transferring heat energy to the target material to generate visible markings on or just under the surface via controlled burning. ablation or photochemical changes.
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However, our backlog at any given date is not necessarily indicative of actual sales for any future period. Employees and Human Capital Management Our employees are our most valuable assets.
Added
The high-precision and small spot size of focused laser beams enables the creation of complex and high-resolution marks which are often used for labeling, product tracking, machine vision, and regulatory compliance. Lasers can mark a wide variety of materials including metals and non-metals like polymers, ceramics, and glass.
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Specifically: • We provide employee wages that are competitive and consistent with employee’s positions, skill levels, experience, knowledge and geographic location. • All employees participate in our annual cash bonus program, allowing them to share in the profitability and business performance of IPG.
Added
Our fiber lasers provide a fast, reliable, and cost‑effective source for marking and engraving across industries such as automotive, electronics, aerospace, semiconductor, and medical devices. Additive Manufacturing. Laser additive manufacturing encompasses a range of processes, including selective laser melting and sintering, laser metal fusion and laser metal deposition.
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We also generally provide equity grants and an employee stock purchase plan to salaried employees consistent with geographic compensation practices and subject to regulatory compliance.
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These technologies enable flexible, high-speed production and are used for both rapid prototyping and industrial manufacturing. Our lasers enable manufacturers to efficiently produce complete parts or add features to existing components.
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Ness 52 Senior Vice President, Sales and Strategic Business Development Igor Samartsev, Ph.D. 61 Senior Vice President, Chief Scientist Mark M. Gitin, Ph.D. has served as the Chief Executive Officer of the company since June 2024. Previously, Dr.
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We manufacture complete medical laser systems and consumable fibers primarily for urology applications, including benign prostatic hyperplasia and lithotripsy, based on our thulium fiber laser technology.
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He is a Chartered Accountant and a member of the Institute of Chartered Accountants of Scotland. Trevor D. Ness has served as our Senior Vice President, Sales and Strategic Business Development since February 18, 2022. Prior to that, he was Senior Vice President, World Wide Sales and Marketing, from February 2013 to 2022.
Added
In addition to fibers and diodes, our optical component portfolio includes fiber gratings, couplers, isolators, combiners, and crystals. We also developed special methods and expertise in splicing fibers together with low optical energy loss and on-line loss testing.
Added
We also sell complete laser and non-laser solutions to end users for their production needs. We have thousands of customers worldwide. 10 Table of Contents Competition Our markets are highly competitive and characterized by rapidly changing technology, continuously evolving customer requirements and reduced average selling prices over time.
Added
Gitin holds a B.S. in Electrical Engineering from University of California, Davis and an M.Eng. and Ph.D. in Electrical Engineering from Cornell University. Paulus Bucher, Ph.D. joined as Senior Vice President of Global Operations in June 2025. Prior to joining IPG, Dr. Bucher served as Senior Vice President of Global Operations at Adtran Holdings Inc.
Added
Earlier in his career, he held senior operations roles at ADVA, CommScope, and Ericsson. Dr. Bucher holds a Ph.D. in Aerospace Engineering from Princeton University and a Master of Science in Mechanical Engineering from Virginia Tech, where he studied under a Fulbright Scholarship. He also holds a Dipl.-Ing.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMany of our fiber laser competitors are increasing the output powers, improving the quality of their fiber lasers and decreasing prices to compete with our products. Many of our competitors in Asia are beginning to export their fiber lasers and fiber laser-based systems to non-Asia markets, which may impact our pricing and sales in such markets.
Biggest changeMany of our competitors in Asia are beginning to export their fiber lasers and fiber laser-based systems to non-Asia markets, which may impact our pricing and sales in such markets. Our current or potential customers may decide to develop and produce products for their own use which are competitive to our products.
Intellectual property litigation commenced against us could force us to take actions that could be harmful to our business, including the following: • stop selling our products or using the technology that contains the allegedly infringing intellectual property; • pay actual monetary damages, royalties, lost profits or increased damages and the plaintiff's attorneys' fees; and • attempt to license the relevant intellectual property which may not be available on reasonable terms.
Intellectual property litigation commenced against us, including the Trumpf litigation, could force us to take actions that could be harmful to our business, including the following: • stop selling our products or using the technology that contains the allegedly infringing intellectual property; • pay actual monetary damages, royalties, lost profits or increased damages and the plaintiff's attorneys' fees; and • attempt to license the relevant intellectual property which may not be available on reasonable terms.
Also, we purchase certain raw materials used to manufacture our products and other components, such as semiconductor wafer substrates, diode packages, modulators, micro-optics, bulk optics and high power beam delivery products, from single or limited-source suppliers.
We purchase certain raw materials used to manufacture our products and other components, such as semiconductor wafer substrates, diode packages, modulators, micro-optics, bulk optics and high power beam delivery products, from single or limited-source suppliers.
Our operations and sales in these markets are subject to risks inherent in international business activities, including the following and others mentioned in the Risk Factors: • fluctuations in the values of foreign currencies; • changes, including recession, and other general economic uncertainties affecting the macroeconomic and local economic communities in which we and our customers operate or serve; • longer accounts receivable collection periods and less developed credit assessment and collection procedures; • compliance with domestic and foreign laws and regulations, unexpected changes in those laws and regulatory requirements, including uncertainties regarding taxes, tariffs, quotas, export controls, export licenses, trade sanctions and other trade barriers, and any corresponding retaliatory actions by affected countries, including China and Russia; • certification requirements; • less effective protection of intellectual property rights in some countries; • potentially adverse tax consequences; • different capital expenditure and budget cycles for our customers, which affect the timing of their spending; • political, legal and economic instability, foreign conflicts, labor unrest and the impact of regional and global infectious illnesses in the countries in which we and our customers, suppliers, manufacturers and subcontractors are located; • preference for locally produced products; • difficulties and costs of staffing and managing international operations across different geographic areas and cultures; • seasonal reductions in business activities; • fluctuations in freight rates and transportation disruptions; • investment restrictions or requirements; • repatriation restrictions or requirements; • export and import restrictions; and • limitations on the ability of our employees to travel without restriction to certain countries in which we operate.
Our operations and sales in these markets are subject to risks inherent in international business activities, including the following and others mentioned in the Risk Factors: • fluctuations in the values of foreign currencies; • changes, including recession, and other general economic uncertainties affecting the macroeconomic and local economic communities in which we and our customers operate or serve; • longer accounts receivable collection periods and less developed credit assessment and collection procedures; • compliance with domestic and foreign laws and regulations, unexpected changes in those laws and regulatory requirements, including uncertainties regarding taxes including transfer pricing, tariffs, quotas, export controls, export licenses, trade sanctions and other trade barriers, and any corresponding retaliatory actions by affected countries, including China and Russia; • certification requirements; • less effective protection of intellectual property rights in some countries; • potentially adverse tax and transfer pricing consequences; • different capital expenditure and budget cycles for our customers, which affect the timing of their spending; • political, legal and economic instability, foreign conflicts, labor unrest and the impact of regional and global infectious illnesses in the countries in which we and our customers, suppliers, manufacturers and subcontractors are located; • preference for locally produced products; • difficulties and costs of staffing and managing international operations across different geographic areas and cultures; 26 Table of Contents • seasonal reductions in business activities; • fluctuations in freight rates and transportation disruptions; • investment restrictions or requirements; • repatriation restrictions or requirements; • export and import restrictions; and • limitations on the ability of our employees to travel without restriction to certain countries in which we operate.
It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the materials processing, medical procedures and advanced applications in which we participate.
It is even more difficult to estimate growth or contraction in various parts, sectors and regions of the economy, including the materials processing, medical procedures and advanced applications markets in which we participate.
If the global financial markets continue to experience volatility or deteriorate, our investment portfolio and cash balances may be impacted and some or all of our investments may become illiquid or otherwise experience loss which could adversely impact our financial results and position. 26 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If the global financial markets continue to experience volatility or deteriorate, our investment portfolio and cash balances may be impacted and some or all of our investments may become illiquid or otherwise experience loss which could adversely impact our financial results and position. 29 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Provisions in our charter documents and Delaware law, and our severance arrangements, could prevent or delay a change in control of our company, even if a change in control would be beneficial to our stockholders. Provisions of our certificate of incorporation and by-laws, including certain provisions that will take effect when founder of the Company, the late Dr. Valentin P.
Provisions in our charter documents and Delaware law, and our severance arrangements, could prevent or delay a change in control of our company, even if a change in control would be beneficial to our stockholders. Provisions of our certificate of incorporation and by-laws, including certain provisions that will take effect when the founder of the Company, the late Dr.
("IPFD"), together with trusts created by the late founder of the Company, Dr. Valentin P. Gapontsev, beneficially own approximately 37% of our common stock. Dr. Scherbakov, our former CEO and current director, is the sole managing director of IPFD. Trustees of the trusts include an executive officer of the Company, a third-party corporate trustee, and Dr. Scherbakov. Dr.
("IPFD"), together with trusts created by the late founder of the Company, Dr. Valentin P. Gapontsev, beneficially own approximately 36% of our common stock. Dr. Scherbakov, our former CEO and current director, is the sole managing director of IPFD. Trustees of the trusts include an executive officer of the Company, a third-party corporate trustee, and Dr. Scherbakov. Dr.
In recent years, the U.S. instituted 21 Table of Contents changes in trade policies that included the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the United States, including, in particular, on Russian and Chinese-made goods, economic sanctions on individuals, corporations or countries and other government regulations affecting trade between the United States and other countries where we conduct our business.
In recent years, the U.S. instituted changes in trade policies that included the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the United States, including, in particular, on Russian and Chinese-made goods, economic sanctions on individuals, corporations or countries and other government regulations affecting trade between the United States and other countries where we conduct our business.
Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Our short-term investment portfolio and certain cash balances could experience a decline in market value or otherwise become illiquid, which could materially and adversely affect our financial results.
Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Our short-term and long-term investment portfolios and certain cash balances could experience a decline in market value or otherwise become illiquid, which could materially and adversely affect our financial results.
Factors which may have an influence on our operating results in a particular quarter include those below and others included in the Risk Factors: • the increase, decrease, cancellation or rescheduling of significant customer orders; • the timing of revenue recognition based on the installation or acceptance of certain products shipped to our customers; • the timing of customer qualification of our products and commencement of volume sales of systems that include our products; • the gain or loss of a key customer; • product or customer mix; • competitive pricing pressures and new market entrants; • our ability to design, manufacture and introduce new products on a cost-effective and timely basis; • our ability to manage our inventory levels and any provisions for excess or obsolete inventory; • our ability to collect outstanding accounts receivable balances; • incurring expenses to develop and improve application and support capabilities, the benefits of which may not be realized until future periods, if at all; • incurring expenses related to impairment of values for goodwill, intangibles and other long-lived assets; • different capital expenditure and budget cycles for our customers, which affect the timing of their spending; • expenses associated with acquisition-related activities; • regional epidemics or a global pandemic, such as COVID-19; and • our ability to control expenses. 23 Table of Contents These factors make it difficult for us to accurately predict our operating results.
Factors which may have an influence on our operating results in a particular quarter include those below and others included in the Risk Factors: • the increase, decrease, cancellation or rescheduling of significant customer orders; • the timing of revenue recognition based on the installation or acceptance of certain products shipped to our customers; • the timing of customer qualification of our products and commencement of volume sales of systems that include our products; 25 Table of Contents • the gain or loss of a key customer; • product or customer mix; • competitive pricing pressures and new market entrants; • our ability to design, manufacture and introduce new products on a cost-effective and timely basis; • our ability to manage our inventory levels and any provisions for excess or obsolete inventory; • our ability to collect outstanding accounts receivable balances; • incurring expenses to develop and improve application and support capabilities, the benefits of which may not be realized until future periods, if at all; • incurring expenses related to impairment of values for goodwill, intangibles and other long-lived assets; • different capital expenditure and budget cycles for our customers, which affect the timing of their spending; • expenses associated with acquisition-related activities; • regional epidemics or a global pandemic, such as COVID-19; and • our ability to control expenses.
We compete with makers of fiber lasers, solid-state lasers, direct diode lasers, high power CO 2, YAG and disc lasers. These include public and private companies such as Coherent, Inc., Laserline GmbH, Lumentum Holdings Inc., Maxphotonics Co., Ltd., MKS Instruments, Inc., nLight, Inc., Trumpf GmbH + Co. KG, and Wuhan Raycus Fiber Laser Technologies Co.
We compete with makers of fiber lasers, solid-state lasers, direct diode lasers, high power CO 2, YAG and disc lasers. These include public and private companies such as Coherent, Inc., JPT Opto-Electronics Co. Ltd., Laserline GmbH, Lumentum Holdings Inc., Maxphotonics Co., Ltd., MKS Instruments, Inc., nLight, Inc., Trumpf GmbH + Co. KG, and Wuhan Raycus Fiber Laser Technologies Co.
IPFD and the trusts may vote their shares of our common stock in ways that other stockholders may consider would be adverse to the interests of the other stockholders. These significant ownership interests could delay, prevent or cause a change in control of the Company and might affect the market price of our common stock.
IPFD and the trusts may vote their shares of our common stock in ways that other stockholders may consider would be adverse to the interests of the other stockholders. These significant ownership 24 Table of Contents interests could delay, prevent or cause a change in control of the Company and might affect the market price of our common stock.
We conduct our business and incur costs in the local currency of most countries in which we operate. In 2024 our net sales outside the United States represented a substantial majority of our total sales.
We conduct our business and incur costs in the local currency of most countries in which we operate. In 2025 our net sales outside the United States represented a substantial majority of our total sales.
If the ASPs of our products decline further and we are unable to increase our unit volumes, introduce new or enhanced products with higher margins or reduce manufacturing costs to offset anticipated decreases in the prices of our existing products, our operating results may be adversely affected.
If the ASPs of our products decline further and we are unable to increase our unit volumes, introduce new or enhanced products with higher margins or reduce manufacturing costs to offset anticipated decreases 15 Table of Contents in the prices of our existing products, our operating results may be adversely affected.
In addition, provisions have been recorded as a result of changes in market prices of certain components, the value of those inventories that was realizable through finished product sales due to declines in certain end market demand and uncertainties related to the recoverability of the value of inventories due to technological and product changes, and excess quantities.
In addition, provisions have been recorded as a result of changes in 17 Table of Contents market prices of certain components, the value of those inventories that was realizable through finished product sales due to declines in certain end market demand and uncertainties related to the recoverability of the value of inventories due to technological and product changes, and excess quantities.
Many of the tools and equipment we use are custom-designed, and it could take a significant period of time to repair or replace them. Our primary manufacturing facilities are 16 Table of Contents located in the United States and Germany, and we have added production in Italy and Poland.
Many of the tools and equipment we use are custom-designed, and it could take a significant period of time to repair or replace them. Our primary manufacturing facilities are located in the United States and Germany, and we have added production in Italy and Poland.
Additionally, such actions could result in significant costs associated with loss of our intellectual property, impairment of our ability to conduct our 19 Table of Contents operations, rebuilding our network and systems, prosecuting and defending litigation, responding to regulatory inquiries or actions, paying damages or taking other remedial steps.
Additionally, such actions could result in significant costs associated with loss of our intellectual property, impairment of our ability to conduct our operations, rebuilding our network and systems, prosecuting and defending litigation, responding to regulatory inquiries or actions, paying damages or taking other remedial steps.
Future sales of our common stock by our existing shareholders could cause our stock price to decline. Sales of a substantial number of shares of our common stock by our existing stockholders (including the trusts established by Dr.
Future sales of our common stock by our existing shareholders could cause our stock price to decline. Sales of a substantial number of shares of our common stock by our existing stockholders (including the trusts established by our late founder, Dr.
FDA enforcement actions, which include seizure, injunction, criminal prosecution, and civil penalties, could result in total or partial suspension of a facility’s production and/or distribution, product recalls, fines, suspension of the FDA’s review of product applications, and/or the FDA’s issuance of adverse publicity.
FDA enforcement actions, which include the FDA's issuance of a Warning Letter, seizure, injunction, criminal prosecution, and civil penalties, could result in total or partial suspension of a facility’s production and/or distribution, product recalls, fines, suspension or delay of the FDA’s review of product applications, and/or the FDA’s issuance of adverse publicity.
These changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, increase the risk of loss on investments, or increase costs associated with manufacturing and distributing products.
These changes may negatively affect the sales of our products, increase exposure to losses from bad debts, increase the cost and decrease the availability of financing, increase the risk of loss on 14 Table of Contents investments, or increase costs associated with manufacturing and distributing products.
As a result of the rapid pace of technological change in our industry, we may misjudge the long-term potential of an acquired business, product, patent or technology, or the acquisition may not be complementary to our existing business.
As a result of the rapid pace of technological change in our industry, we may misjudge the long-term potential of an acquired business, product, patent or technology, or the 27 Table of Contents acquisition may not be complementary to our existing business.
A significant portion of our sales are to customers in China, which accounted for 25%, 28% and 34% of net sales in 2024, 2023 and 2022, respectively. Slowing economic growth or recession, tariff-trade wars or other adverse economic developments or uncertainty in any of our key markets, including in China, may result in a decrease in our sales.
A significant portion of our sales are to customers in China, which accounted for 29%, 25% and 28% of net sales in 2025, 2024 and 2023, respectively. Slowing economic growth or recession, tariff-trade wars or other adverse economic developments or uncertainty in any of our key markets, including in China, may result in a decrease in our sales.
In connection with these projects, we may incur cost overruns, construction delays, project cancellations, labor difficulties or regulatory issues which could cause our capital expenditures to be higher than what we currently anticipate, possibly by a material amount, which would in turn adversely impact our operating results.
In connection with expansion projects, we may incur cost overruns, construction delays, project cancellations or regulatory issues which could cause our capital expenditures to be higher than what we currently anticipate, possibly by a material amount, which would in turn adversely impact our operating results.
Given our reliance on trade secret laws, others may independently develop similar or alternative technologies or duplicate our technologies and commercialize discoveries that we have made. Therefore, our intellectual property efforts may be insufficient to maintain our competitive advantage or to stop other parties from commercializing similar products or technologies.
Given our reliance on trade secret laws, others may independently develop similar or alternative technologies or duplicate our technologies and commercialize discoveries that we have made. Therefore, our intellectual property efforts may be 20 Table of Contents insufficient to maintain our competitive advantage or to stop other parties from commercializing similar products or technologies.
An economic downturn could have a material adverse effect on our business, financial condition and results of operations. 13 Table of Contents Downturns in the markets we serve, particularly materials processing, could have a material adverse effect on our sales and profitability.
An economic downturn could have a material adverse effect on our business, financial condition and results of operations. Downturns in the markets we serve, particularly materials processing, could have a material adverse effect on our sales and profitability.
Although we have implemented compliance measures designed to prevent transactions prohibited by current or future Trade Controls, we have previously identified, and may continue to identify, instances in which we exported products without obtaining the required export authorizations and/or submitting the required requests.
Although we have implemented compliance measures designed to prevent transactions prohibited by current or future Trade Controls, we have previously identified, and may continue to identify, instances in which 18 Table of Contents we exported products without obtaining the required export authorizations and/or submitting the required requests.
We are a multinational corporation, with manufacturing located both in the United States and internationally and with approximately 75% of our net sales arising from foreign customers. As such, we may be more susceptible to negative impacts from these tariffs or change in trade policies than other less internationally focused enterprises.
We are a multinational corporation, with manufacturing located both in the United States and internationally and with approximately 23 Table of Contents 74% of our net sales arising from foreign customers. As such, we may be more susceptible to negative impacts from these tariffs or change in trade policies than other less internationally focused enterprises.
Our business depends substantially upon capital expenditures by manufacturers in the materials processing market, which includes general manufacturing, automotive, aerospace, other transportation, heavy industry, electronics and photovoltaic industries. Approximately 88% of our revenues in 2024 were from customers in the materials processing market.
Our business depends substantially upon capital expenditures by manufacturers in the materials processing market, which includes general manufacturing, automotive, aerospace, other transportation, heavy industry, electronics and photovoltaic industries. Approximately 86% of our revenues in 2025 were from customers in the materials processing market.
Our gross profit, in absolute dollars and as 15 Table of Contents a percentage of net sales, is impacted by our sales volume, the corresponding absorption of fixed manufacturing overhead expenses and manufacturing yields.
Our gross profit, in absolute dollars and as a percentage of net sales, is impacted by our sales volume, the corresponding absorption of fixed manufacturing overhead expenses and manufacturing yields.
Gapontsev, together with his affiliates and associates, ceases to beneficially own an 22 Table of Contents aggregate of 25% or more of our outstanding voting securities, may discourage, delay or prevent a merger, acquisition or change of control, even if it would be beneficial to our stockholders.
Valentin P. Gapontsev, together with his affiliates and associates, ceases to beneficially own an aggregate of 25% or more of our outstanding voting securities, may discourage, delay or prevent a merger, acquisition or change of control, even if it would be beneficial to our stockholders.
We incurred a foreign exchange loss of $5.5 million in 2024 and a gain of $1.4 million in 2023. We pursue acquisitions and investments in new businesses, products, patents or technologies. These involve risks which could disrupt our business and may harm our financial results and condition.
We incurred a foreign exchange loss of $9.4 million in 2025 and a loss of $5.5 million in 2024. We pursue acquisitions and investments in new businesses, products, patents or technologies. These involve risks which could disrupt our business and may harm our financial results and condition.
We operate in a highly competitive environment and projections of future operating results and cash flows may vary significantly from actual 25 Table of Contents results.
We operate in a highly competitive environment and projections of future operating results and cash flows may vary significantly from actual results.
At December 31, 2024, 70% of our cash, cash equivalents and marketable securities were in the United States and 30% were outside the United States. Credit ratings and pricing of our investments can be negatively affected by liquidity, credit deterioration, prevailing interest rates, financial results, economic risk, political risk, sovereign risk or other factors.
At December 31, 2025, 78% of our cash, cash equivalents and marketable securities were in the United States and 22% were outside the United States. Credit ratings and pricing of our investments can be negatively affected by liquidity, credit deterioration, prevailing interest rates, financial results, economic risk, political risk, sovereign risk or other factors.
Some of our suppliers may not be able to meet demand from our because of global demand for their components. As a result, we experienced and may in the future experience longer lead times or delays in fulfillment of our orders.
Some of our suppliers may not be able to meet our requirements due to global demand for their components. As a result, we have experienced and may in the future experience longer lead times or delays in fulfillment of our orders.
In addition, sanctions targeting the banking sector have and may impact the transfer of cash to and from countries in which we operate, including our ability to fund operations or repatriate surplus liquidity. At December 31, 2024, we had $4.7 million cash in Belarus.
In addition, sanctions targeting the banking sector have and may impact the transfer of cash to and from countries in which we operate, including our ability to fund operations or repatriate surplus liquidity. At December 31, 2025, we had $1.5 million cash in Belarus.
Several laws similar to the CCPA have been approved in the United States at the state level and more are being proposed at the federal and state levels.
Several laws similar to the CCPA have been approved in the United States at 21 Table of Contents the state level and more are being proposed at the federal and state levels.
In order to maintain or increase market demand for our products, we will need to devote substantial resources to: • demonstrate the effectiveness of fiber lasers in new applications for materials processing, medical and advanced applications; • successfully develop new product lines, such as the handheld welder, UV, visible and ultrafast fiber lasers with competitive features that extend our product line; • increase our direct and indirect sales efforts; • effectively meet growing competition and pricing pressures; and • continue to reduce our manufacturing costs and enhance our competitive position.
In order to maintain or increase market demand for our products, we will need to devote substantial resources to: • demonstrate the effectiveness of fiber lasers in new applications for materials processing, medical and advanced applications; • successfully develop new product lines with competitive features; • increase our direct and indirect sales efforts; • effectively meet growing competition and pricing pressures; and • continue to reduce our manufacturing costs and enhance our competitive position.
If in conducting an inspection of our manufacturing facilities, or the manufacturing facilities of any of our third-party component manufacturers or critical suppliers, an investigator from the FDA or another regulatory agency observes conditions or practices believed to violate the QSR, the investigator may document their observations on a Form FDA 483 that is issued at the conclusion of the inspection.
If in conducting an inspection of our manufacturing facilities, or the manufacturing facilities of any of our third-party component manufacturers or critical suppliers, an investigator from the FDA or another regulatory agency observes conditions or practices believed to violate the QSR, MDR or other applicable regulatory requirements, the investigator may document their observations on a Form FDA 483 which may be issued at the conclusion of the inspection.
Approximately 75% of our approximately 4,740 employees as of December 31, 2024 were employed in our manufacturing operations. We may not adjust these fixed costs quickly enough or sufficiently to adapt to rapidly changing market conditions.
Approximately 74% of our approximately 4,840 employees as of December 31, 2025 were employed in our manufacturing operations. We may not adjust these fixed costs quickly enough or sufficiently to adapt to rapidly changing market conditions.
A manufacturer that receives an FDA 483 may respond in writing and explain any corrective actions taken in response to the inspectional observations. The FDA will typically review the facility’s written response and may re-inspect to determine the facility’s compliance with the QSR and other applicable regulatory requirements.
A manufacturer that receives an FDA 483 may respond in writing and explain or describe any corrective actions taken or planned to address the inspectional observations. The FDA will typically review the facility’s written response and may re-inspect or otherwise follow-up to determine the facility’s compliance with the QSR, MDR and other applicable regulatory requirements.
Thus, an adverse inspection could force a shutdown of our manufacturing operations for products servicing the medical industry or a recall of such products. Adverse inspections could also delay FDA approval of our products for the medical industry.
Thus, an adverse inspection could force a shutdown of our manufacturing operations for products servicing the medical industry or a recall of such products. Enforcement actions could also delay FDA clearance or approval of our products for use in the medical industry.
In addition, our ability to accurately predict our operating results is complicated by the fact that many of our products have long sales cycles, some lasting as long as twelve months or more.
These factors make it difficult for us to accurately predict our operating results. In addition, our ability to accurately predict our operating results is complicated by the fact that many of our products have long sales cycles, some lasting as long as twelve months or more.
Trade Controls and other governmental responses to political escalations may require us to take certain actions, including increasing costs and abandoning operations or writing-down asset values, or respond to nationalization or expropriation of assets abroad, adversely affect prevailing market prices of our common stock, have a reputational impact, or otherwise have a material adverse impact on us, our business and financial results. 17 Table of Contents We may experience lower than expected manufacturing yields, which would adversely affect our gross margins.
Trade Controls and other governmental responses to political escalations may require us to take certain actions, including increasing costs and abandoning operations or writing-down asset values, or respond to nationalization or expropriation of assets abroad, adversely affect prevailing market prices of our common stock, have a reputational impact, or otherwise have a material adverse impact on us, our business and financial results.
If we or our third-party vendors fail to comply with FDA regulations or similar legal requirements in foreign jurisdictions relating to the manufacturing, labeling or marketing of our products or any component part, we may be subject to fines, injunctions and penalties, and our ability to commercially distribute and sell our products may be negatively impacted.
If we or our third-party vendors fail to comply with FDA regulations or similar legal requirements in foreign jurisdictions relating to the design, manufacture, labeling, marketing, distribution or post-market surveillance of our products or any component part, we may be subject to fines, injunctions, product recalls, penalties or other enforcement actions, and our ability to commercially distribute and sell our products may be negatively impacted.
As of December 31, 2024, we had approximately $620 million of cash and cash equivalents and $310 million in short-term investments. See Note 3, "Fair Value Measurements" in the Notes to Consolidated Financial Statements in Part IV, Annual Report for further information about our cash equivalents and short-term investments.
As of December 31, 2025, we had approximately $404 million of cash and cash equivalents, $436 million in short-term investments and $77 million in long-term investments. See Note 3, "Fair Value Measurements" in the Notes to Consolidated 28 Table of Contents Financial Statements in Part IV, Annual Report for further information about our cash equivalents, short-term investments and long-term investments.
With respect to such products, some of our manufacturing facilities, and the manufacturing facilities of any of our third-party component manufacturers or critical suppliers, are required to comply with the FDA’s Quality System Regulation and those of other countries (“QSR”), which sets forth minimum standards for the procedures, execution and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping of the 20 Table of Contents products we sell in the medical industry, and related regulations, including Medical Device Reporting (“MDR”) regulations regarding reporting of certain malfunctions and adverse events potentially associated with our products.
As a medical device manufacturer, we and certain of our facilities, as well as critical suppliers, are required to comply with the FDA’s Quality System Regulation and those of other countries (“QSR”), which sets forth minimum standards for the procedures, execution and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage, and shipping of the products we sell in the medical industry, and related regulations, including Medical Device Reporting (“MDR”) requirements regarding the reporting of certain malfunctions and adverse events potentially associated with our products.
If we do not prevail in any intellectual property litigation brought against us, it could affect our ability to sell our products and materially harm our business, financial condition and results of operations. These developments could adversely affect our ability to compete for customers and increase our revenues. Plaintiffs in intellectual property cases often seek, and sometimes obtain, injunctive relief.
If we do not prevail in any intellectual property litigation brought against us, it could affect our ability to sell our products and materially harm our business, financial condition and results of operations. These developments could adversely affect our ability to compete for customers and increase our revenues, or could decrease our revenues or profits or increase our costs.
We occasionally borrow under our existing credit facilities to fund operations, including working capital investments. Our major credit line in the United States expires in April 2025.
We occasionally borrow under our existing credit facilities to fund operations, including working capital investments. Our major credit line expires in 2030.
Our future success is substantially dependent on the continued service and performance of our executive officers. Although the board engages in executive succession planning, our inability to effectively and immediately transition knowledge or responsibilities to successors in the event of an unexpected absence or departure could harm our business and disrupt our operations.
Although the board engages in executive succession planning, our inability to effectively and immediately transition knowledge or responsibilities to successors in the event of an unexpected absence or departure could harm our business and disrupt our operations.
Furthermore, if our OEM customers or third-party system integrators experience financial or other difficulties that adversely affect their operations, our financial condition or results of operations may also be adversely affected.
Furthermore, if our OEM customers or third-party system integrators experience financial or other difficulties that adversely affect their operations, our financial condition or results of operations may also be adversely affected. We may not successfully commercialize our CROSSBOW™ counter‑UAS laser systems.
KG filed two different patent lawsuits in two different Unified Patent Courts located in Germany against IPG Laser GmbH & Co. KG, our German subsidiary, alleging infringement of two patents granted by the European Patent Office by our adjustable mode beam lasers.
KG filed two different patent lawsuits in two different Unified Patent Courts ("UPC") located in Germany against IPG Laser GmbH & Co. KG, our German subsidiary, alleging infringement of two patents granted by the European Patent Office by our adjustable mode beam lasers. These lasers are used in certain welding and 19 Table of Contents cutting applications.
If the demand for fiber lasers or amplifiers does not increase or if our revenue decreases from current levels, we may have significant excess manufacturing capacity and under-absorption of our fixed costs, which could in turn adversely affect our gross margins and profitability.
If our sales do not increase or if our revenue decreases from current levels, we may have significant excess manufacturing capacity and under-absorption of our fixed costs, which has adversely impacted and could adversely affect our gross margins and profitability.
Our manufacturing capacity and operations may not be appropriate for future levels of demand and may adversely affect our gross margins. We have added and are continuing to add substantial manufacturing capacity at our facilities in the United States, Germany, Italy and Poland.
Our manufacturing capacity and operations may not be appropriate for future levels of demand and may adversely affect our gross margins. We have added manufacturing capacity at our facilities in the United States, Germany, Italy and Poland. Expansion of capacity was required to offset the loss of capacity at the factories we operated in Russia and Belarus due to sanctions.
Current and future conditions in the economy have an inherent degree of uncertainty. As a result, it is difficult to estimate the level of growth or contraction for the economy as a whole.
Risks Relating to Economic Conditions Uncertainty and adverse changes in the general economic conditions of markets in which we participate negatively affect our business. Current and future conditions in the economy have an inherent degree of uncertainty. As a result, it is difficult to estimate the level of growth or contraction for the economy as a whole.
The manufacture of semiconductor diodes and the packaging of them is a highly complex process. Manufacturers often encounter difficulties in achieving acceptable product yields from diode and packaging operations. We have from time to time experienced lower than anticipated manufacturing yields for our diodes and packaged diodes.
We may experience lower than expected manufacturing yields, which would adversely affect our gross margins. The manufacture of semiconductor diodes and the packaging of them is a highly complex process. Manufacturers often encounter difficulties in achieving acceptable product yields from diode and packaging operations.
We now make fiber laser systems and accessories targeted at specific medical applications. In addition, we sell our commercial fiber and diode laser modules, subassemblies and systems to OEMs that incorporate them into their medical products.
We also continue to sell our commercial fiber and diode laser modules, subassemblies and systems to OEMs that incorporate them into their medical products.
Moreover, we may experience higher costs due to yield loss, production inefficiencies, equipment problems and lower margins until any operational issues associated with the opening of new manufacturing facilities are resolved.
A significant portion of our manufacturing facilities and production equipment, such as our semiconductor production and processing equipment, diode packaging equipment and diode burn-in stations, are special-purpose in nature. We may experience higher costs due to yield loss, production inefficiencies, equipment problems and lower margins until any operational issues associated with the opening of new manufacturing facilities are resolved.
There can be no assurance that we will be able to dispose of any claims or other allegations made or asserted against us without them having a material impact on our results of operations.
The patents also have counterparts in the U.S., China and elsewhere, and there can be no assurance that Trumpf will not assert such patents in other jurisdictions. There can be no assurance that we will be able to resolve any claims or other allegations made or asserted against us without them having a material impact on our results of operations.
We are highly dependent on the significant experience and specialized expertise of our senior management and scientific staff. The unavailability or loss of one or more of these key employees or our failure to attract other highly skilled personnel necessary to compete successfully could harm our business and results of operations.
The unavailability or loss of one or more of these key employees or our failure to attract other highly skilled personnel necessary to compete successfully could harm our business and results of operations. Our future success is substantially dependent on the continued service and performance of our executive officers.
Because of these factors, we have experienced and we may experience in the future material adverse fluctuations in our operating results on a quarterly or annual basis if the ASPs of our products continue to decline. 14 Table of Contents Our ability to maintain or increase sales depends upon our ability to develop new products, penetrate new applications and end markets for fiber lasers and maintain or increase our market share in existing applications.
Because of these factors, we have experienced and we may experience in the future material adverse fluctuations in our operating results on a quarterly or annual basis if the ASPs of our products continue to decline.
We are subject to risks of doing business in Belarus, which historically provided mechanical parts to our German subsidiary and former Russian subsidiary and which does not currently provide parts to our affiliates outside of Belarus. We are also subject to risks of doing business in China, as approximately 25% of our sales in 2024 were to Chinese customers.
We are subject to risks of doing business in Belarus, where our Belarusian subsidiary historically provided mechanical parts to our German subsidiary and former Russian subsidiary, but does not currently provide parts to our current subsidiaries outside of Belarus.
The results of our operations, business prospects and facilities in China and Belarus are subject to the economic and political 24 Table of Contents environment there and global geopolitical conditions.
We are also subject to risks of doing business in China, as approximately 29% of our sales in 2025 were to Chinese customers. The results of our operations, business prospects and facilities in China and Belarus are subject to the economic and political environment there and global geopolitical conditions.
In some cases, we indemnify OEMs against third-party infringement claims relating to 18 Table of Contents our products and we often make representations affirming, among other things, that our products do not infringe the intellectual property rights of others. As a result, we may incur liabilities in connection with lawsuits against our customers.
In addition, intellectual property lawsuits can be brought by third parties against OEMs and end users that incorporate our products into their systems or processes. In some cases, we indemnify OEMs against third-party infringement claims relating to our products and we often make representations affirming, among other things, that our products do not infringe the intellectual property rights of others.
The existence of these provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock.
The existence of these provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock. These provisions include: • authorizing the issuance of "blank check" preferred stock; • establishing a classified board effective at the next annual meeting of stockholders after Dr.
We are subject to various environmental laws and regulations that could impose substantial costs upon us and may adversely affect our business, operating results and financial condition.
Any of the foregoing regulatory developments, enforcement actions, or compliance challenges could restrict our ability to advance the CROSSBOW product line and limit its potential future contribution to our business. We are subject to various environmental laws and regulations that could impose substantial costs upon us and may adversely affect our business, operating results and financial condition.
This occurs during the production of new designs and the installation and start-up of new process technologies and new equipment. If we do not achieve planned yields, our product costs could increase resulting in lower gross margins, and key component availability would decrease.
If we do not achieve planned yields, our product costs could increase resulting in lower gross margins, and key component availability would decrease. We are highly dependent on the significant experience and specialized expertise of our senior management and scientific staff.
These provisions include: • authorizing the issuance of "blank check" preferred stock; • establishing a classified board and providing that directors thereon may only be removed for cause; • providing that directors fill board vacancies; • prohibiting stockholder action by written consent; • limiting the ability of stockholders to call a special meeting of stockholders; • establishing advance notice requirements for nominations for election to the board of directors and for proposing matters to be submitted to a stockholder vote; • supermajority stockholder approval to change certificate of incorporation and by-laws and • lack of cumulative voting for director elections.
Gapontsev, together with his affiliates and associates, ceases to beneficially own an aggregate of 25% or more of our outstanding voting securities; • limiting the ability of stockholders to call a special meeting of stockholders; • establishing advance notice requirements for nominations for election to the board of directors and for proposing matters to be submitted to a stockholder vote; • supermajority stockholder approval to change certificate of incorporation and by-laws and • lack of cumulative voting for director elections.
Any such lawsuits, whether or not they have merit, could be time-consuming to defend, damage our reputation or result in substantial and unanticipated costs. Our inability to protect our intellectual property and proprietary technologies could result in the unauthorized use of our technologies by third parties, hurt our competitive position and adversely affect our operating results.
As a result, we may incur liabilities in connection with lawsuits against our customers. Any such lawsuits, whether or not they have merit, could be time-consuming to defend, damage our reputation or result in substantial and unanticipated costs.
Our current or potential customers may decide to develop and produce products for their own use which are competitive to our products. Such vertical integration could reduce the market opportunity for our products.
Such vertical integration could reduce the market opportunity for our products.
In addition, new risks may emerge at any time and we cannot predict those risks or estimate the extent to which they may affect us. Risks Relating to Economic Conditions Uncertainty and adverse changes in the general economic conditions of markets in which we participate negatively affect our business.
In addition, new risks may emerge at any time and we cannot predict those risks or estimate the extent to which they may affect us. You should carefully consider these factors, as well as the other information contained in this Annual Report on Form 10-K, when evaluating an investment in our securities.
In addition, the new presidential administration has articulated that it may impose substantial new or increased tariffs on foreign imports into the U.S.
In addition, the U.S. presidential administration has implemented new tariff policies that substantially increased tariffs on foreign imports into the U.S. Other countries have responded with increased tariffs on U.S. goods. Additional tariffs will be considered and may be adopted by the U.S. government from time to time.
Removed
A significant portion of our manufacturing facilities and production equipment, such as our semiconductor production and processing equipment, diode packaging equipment and diode burn-in stations, are special-purpose in nature and cannot be adapted easily to make other products.
Added
New tariffs may have the effect of increasing our costs, reducing our sales, as well as slowing general economic activity.
Removed
To maintain our competitive position and to meet anticipated demand for our products, we invest significantly in the expansion of our manufacturing and operations throughout the world and may do so in the future. Recent expansions of capacity were required to offset the loss of capacity at our factories in Russia and Belarus due to sanctions.
Added
Many of our fiber laser competitors are increasing the output powers, improving the quality of their fiber lasers and decreasing prices. Certain of our major global competitors are expanding their manufacturing, research and development, and sales capabilities in China, which may increase competitive pricing pressure, accelerate product innovation cycles, and strengthen their local customer relationships in that market.
Removed
In addition, intellectual property lawsuits can be brought by third parties against OEMs and end users that incorporate our products into their systems or processes.
Added
Our ability to maintain or increase sales depends upon our ability to develop new products, penetrate new applications and end markets for fiber lasers and maintain or increase our market share in existing applications.
Added
We recently introduced integrated high‑energy laser systems designed to counter small unmanned aerial systems (UAS) under our CROSSBOW™ product line. These offerings differ from our historical participation in directed‑energy programs as a 16 Table of Contents component supplier, as they are complete operational systems and represent a new area of potential growth for us.
Added
The commercial viability of this product line is uncertain, and it may not develop as we anticipate. Adoption of counter‑UAS laser systems is still emerging. Defense and security procurement cycles can be long, unpredictable, and dependent on successful demonstrations, evaluations, and integration with existing architectures.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−0 removed12 unchanged
Biggest changeHe reports to the Company’s Global Director of Information Technologies (IT Director), who reports to the Chief Executive Officer of the Company.
Biggest changeHe reports to the Company’s Global Director of Information Technologies (IT Senior Director), who reports to the Senior Vice President, Global Operations.
The ITSC is comprised of certain members of the Company’s senior management. The IT Director and Security Director attend each ITSC meeting.
The ITSC is comprised of certain members of the Company’s senior management. The IT Senior Director and Security Director attend each ITSC meeting.
The ITSC generally meets quarterly during the year with the IT Director and Security Director to review risk mitigation activities as well as updated status of global security operations and metrics, including the prevention, detection, mitigation and remediation of cyber incidents.
The ITSC generally meets quarterly during the year with the IT Senior Director and Security Director to review risk mitigation activities as well as updated status of global security operations and metrics, including the prevention, detection, mitigation and remediation of cyber incidents.
Our Security Director is a Certified Information Systems Security Professional (CISSP) and has over 20 years of experience in cybersecurity in a broad range of industries. Our IT Director has a master’s degree in information systems and has prior experience managing global security efforts.
Our Security Director is a Certified Information Systems Security Professional (CISSP) and has over 20 years of experience in cybersecurity in a broad range of industries. Our IT Senior Director has a master’s degree in information systems and has prior experience managing global security efforts.
The IT Director, Security Director and ITSC monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management of, and participation in the cybersecurity risk management and strategy processes, including the operation of the Company’s incident response plan.
The IT Senior Director, Security Director and ITSC monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management of, and participation in the cybersecurity risk management and strategy processes, including the operation of the Company’s incident response plan.
The full Board receives an update on the Company’s risks, risk management process and the risk trends related to cybersecurity at least annually, which includes a 27 Table of Contents review of key performance indicators, recent threats and the Company’s management of such threats. The Audit Committee specifically assists the Board in its oversight of risks related to cybersecurity.
The full Board receives an update on the Company’s risks, risk management process and the risk trends related to cybersecurity at least annually, which includes a 30 Table of Contents review of key performance indicators, recent threats and the Company’s management of such threats. The Audit Committee specifically assists the Board in its oversight of risks related to cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changePROPERTIES Our significant facilities at December 31, 2024 include the following: Location Owned or Leased Lease Expiration Approximate Size (sq. ft.) Primary Activity Burbach, Germany Owned 581,600 Optical fiber, components, final assembly, complete device manufacturing, R&D, administration Oxford, Massachusetts Owned 550,300 Diodes, components, complete device manufacturing, R&D, administration Minsk, Belarus Owned 410,900 Manufacturing Marlborough, Massachusetts Owned 402,800 Components, manufacturing, applications, sales, R&D, administration Davenport, Iowa Owned 99,300 Systems integration, sales, administration Davenport, Iowa Leased January 2026 9,600 Systems integration, sales, administration Our corporate headquarters is in Marlborough, Massachusetts.
Biggest changePROPERTIES Our significant facilities at December 31, 2025 include the following: Location Owned or Leased Lease Expiration Approximate Size (sq. ft.) Primary Activity Burbach, Germany Owned 586,800 Optical fiber, components, final assembly, complete device manufacturing, R&D, administration Oxford, Massachusetts Owned 550,300 Diodes, components, complete device manufacturing, R&D, administration Minsk, Belarus Owned 410,900 Manufacturing Marlborough, Massachusetts Owned 402,800 Components, manufacturing, applications, sales, R&D, administration Davenport, Iowa Owned 99,300 Systems integration, sales, administration Davenport, Iowa Leased January 2027 9,600 Systems integration, sales, administration Our corporate headquarters is in Marlborough, Massachusetts.
As of December 31, 2024, we occupied more than 2.8 million square feet of facilities worldwide. Of this we own 2.4 million square feet and lease 0.4 million square feet of building space, of which the majority is used for manufacturing. Our major manufacturing facilities are located in the United States and Germany.
As of December 31, 2025, we occupied more than 2.8 million square feet of facilities worldwide. Of this we own 2.4 million square feet and lease 0.4 million square feet of building space, of which the majority is used for manufacturing. Our major manufacturing facilities are located in the United States and Germany.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−0 removed5 unchanged
Biggest changeWe include the S&P Composite 1500 - Electronic Equipment, Instruments & Components Index because outstanding performance stock units awarded to executive officers and outstanding at December 31, 2024 use this index when comparing total shareholder return and due to our being an index member, industry similarities, our internal use to monitor executive compensation, and the fact that it contains several direct competitors.
Biggest changeWe include the S&P Composite 1500 - Electronic Equipment, Instruments & Components Index due to our being an index member, industry similarities and the fact that it contains several direct competitors.
The above graph represents and compares the value, through December 31, 2024, of a hypothetical investment of $100 made at the closing price on December 31, 2019 in each of (i) our common stock, (ii) Russell 3000 Index, and (iii) the S&P Composite 1500 - Electronic Equipment, Instruments & Components Index, in each case assuming the reinvestment of dividends.
The above graph represents and compares the value, through December 31, 2025, of a hypothetical investment of $100 made at the closing price on December 31, 2020 in each of (i) our common stock, (ii) Russell 3000 Index, and (iii) the S&P Composite 1500 - Electronic Equipment, Instruments & Components Index, in each case assuming the reinvestment of dividends.
For the fourth quarter of 2024, a total of 1,214 shares were withheld to cover at an average price of $81.45. (2) On February 13, 2024, we announced that our Board of Directors authorized the purchase of up to $300 million of IPG common stock (the "February 2024 authorization"), exclusive of any fees, commissions or other expenses.
For the fourth quarter of 2025, a total of 1,363 shares were withheld to cover at an average price of $85.42. (2) On February 13, 2024, we announced that our Board of Directors authorized the purchase of up to $300 million of IPG common stock (the "February 2024 authorization"), exclusive of any fees, commissions or other expenses.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on the Nasdaq Global Select Market under the symbol "IPGP." As of February 18, 2025, there were 42,548,561 shares of our common stock outstanding held by 30 holders of record, which does not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is quoted on the Nasdaq Global Select Market under the symbol "IPGP." As of February 20, 2026, there were 42,191,353 shares of our common stock outstanding held by 29 holders of record, which does not include beneficial owners of common stock whose shares are held in the names of various securities brokers, dealers and registered clearing agencies.
Share repurchases under these purchase authorization were made periodically in open-market transactions using our working capital, and were subject to market conditions, legal requirements and other factors. The share purchase program authorizations did not obligate us to repurchase any dollar amount or number of our shares, and repurchases could be commenced or suspended from time to time without prior notice.
Share repurchases under the February 2026 authorization may be made periodically in open-market transactions, and are subject to market conditions, legal requirements and other factors. The share purchase program authorizations do not obligate us to repurchase any dollar amount or number of our shares, and repurchases could be commenced or suspended from time to time without prior notice.
We repurchased 741,412 shares in the fourth quarter of 2024 under the February 2024 authorization. ITEM 6. RESERVED
We repurchased 48,069 shares in the fourth quarter of 2025 under the February 2024 authorization. ITEM 6. RESERVED
Issuer Purchases of Equity Securities The following table shows repurchases of our common stock in the fiscal quarter ended December 31, 2024: Date Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1, 2024 — October 31, 2024 651,392 $ 75.68 651,392 $ 57,487 November 1, 2024 — November 30, 2024 91,234 83.14 90,020 50,000 December 1, 2024 — December 31, 2024 — — — 50,000 Total 742,626 $ 76.60 741,412 $ 50,000 (1) Total number of shares (or units) purchased includes shares repurchased as part of publicly announced plans or programs and "withhold to cover" tax liabilities upon vesting of restricted stock awards.
Issuer Purchases of Equity Securities The following table shows repurchases of our common stock in the fiscal quarter ended December 31, 2025: Date Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs October 1, 2025 — October 31, 2025 7,928 $ 79.57 7,928 $ 3,077 November 1, 2025 — November 30, 2025 41,504 76.95 40,141 — December 1, 2025 — December 31, 2025 — — — — Total 49,432 $ 77.37 48,069 $ — (1) Total number of shares (or units) purchased includes shares repurchased as part of publicly announced plans or programs and "withhold to cover" tax liabilities upon vesting of restricted stock units and performance stock units.
Base Period 5-Year Cumulative Total Return 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 IPG Photonics Corporation $ 100.00 $ 154.42 $ 118.78 $ 65.33 $ 74.90 $ 50.18 Russell 3000 Index $ 100.00 $ 118.82 $ 147.35 $ 117.17 $ 145.24 $ 177.40 S&P Composite 1500 - Electronic Equipment, Instruments & Components Index $ 100.00 $ 123.86 $ 160.00 $ 125.15 $ 150.70 $ 175.92 29 Table of Contents Dividends We do not anticipate paying cash dividends in the foreseeable future.
Base Period 5-Year Cumulative Total Return 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 IPG Photonics Corporation $ 100.00 $ 76.92 $ 42.30 $ 48.50 $ 32.49 $ 31.99 Russell 3000 Index $ 100.00 $ 124.00 $ 98.61 $ 122.23 $ 149.30 $ 172.69 S&P Composite 1500 - Electronic Equipment, Instruments & Components Index $ 100.00 $ 129.18 $ 101.05 $ 121.68 $ 142.03 $ 205.05 32 Table of Contents Dividends We do not anticipate paying cash dividends in the foreseeable future.
Added
Share repurchases under this purchase authorization were made periodically in open-market transactions using our working capital. The February 2024 authorization was completed in 2025. On February 12, 2026, we announced that our Board of Directors authorized the purchase of up to $100 million of IPG common stock (the "February 2026 authorization"), exclusive of any fees, commissions, and other expenses.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

91 edited+29 added−21 removed64 unchanged
Biggest changeThe table below sets forth sales by application: Year Ended December 31, 2024 2023 Change (In thousands, except for percentages) Sales by Application % of Total % of Total Materials Processing $ 857,336 87.7 % $ 1,152,804 89.5 % $ (295,468) (25.6) % Other Applications 119,798 12.3 % 134,635 10.5 % (14,837) (11.0) % Total $ 977,134 100.0 % $ 1,287,439 100.0 % $ (310,305) (24.1) % 37 Table of Contents The table below sets forth sales by type of product and other revenue: Year Ended December 31, 2024 2023 Change (In thousands, except for percentages) Sales by Product % of Total % of Total High Power Continuous Wave ("CW") Lasers $ 332,743 34.1 % $ 524,981 40.8 % $ (192,238) (36.6) % Medium Power CW Lasers 63,685 6.5 % 71,672 5.6 % (7,987) (11.1) % Pulsed Lasers 146,759 15.0 % 185,581 14.4 % (38,822) (20.9) % Quasi-Continuous Wave ("QCW") Lasers 48,016 4.9 % 48,648 3.8 % (632) (1.3) % Laser and Non-Laser Systems 139,145 14.3 % 161,177 12.5 % (22,032) (13.7) % Other Revenue including Other Lasers, Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue 246,786 25.2 % 295,380 22.9 % (48,594) (16.5) % Total $ 977,134 100.0 % $ 1,287,439 100.0 % $ (310,305) (24.1) % Materials Processing Sales for materials processing applications decreased primarily due to lower sales of high power CW lasers, pulsed lasers, and other laser products and services. • High power CW laser sales decreased due to lower sales for cutting and welding applications, and were primarily impacted by softer industrial demand and a decrease in e-mobility investments.
Biggest changeThe table below sets forth sales by application: Year Ended December 31, 2025 2024 Change (In thousands, except for percentages) Sales by Application % of Total % of Total Materials Processing $ 860,191 85.7 % $ 857,336 87.7 % $ 2,855 0.3 % Other Applications 143,586 14.3 % 119,798 12.3 % 23,788 19.9 % Total $ 1,003,777 100.0 % $ 977,134 100.0 % $ 26,643 2.7 % The table below sets forth sales by type of product and other revenue: Year Ended December 31, 2025 2024 Change (In thousands, except for percentages) Sales by Product % of Total % of Total High Power Continuous Wave ("CW") Lasers $ 308,825 30.8 % $ 332,743 34.1 % $ (23,918) (7.2) % Medium Power CW Lasers 88,178 8.8 % 63,685 6.5 % 24,493 38.5 % Pulsed Lasers 143,251 14.3 % 146,759 15.0 % (3,508) (2.4) % Quasi-Continuous Wave ("QCW") Lasers 51,772 5.2 % 48,016 4.9 % 3,756 7.8 % Laser and Non-Laser Systems 147,243 14.6 % 139,145 14.3 % 8,098 5.8 % Other Revenue including Other Lasers, Amplifiers, Service, Parts, Accessories and Change in Deferred Revenue 264,508 26.3 % 246,786 25.2 % 17,722 7.2 % Total $ 1,003,777 100.0 % $ 977,134 100.0 % $ 26,643 2.7 % Our net sales were derived from customers in the following geographic regions: Year Ended December 31, 2025 2024 Change (In thousands, except for percentages) Sales by Geography % of Total % of Total North America (1) $ 267,183 26.6 % $ 258,888 26.5 % $ 8,295 3.2 % Europe: Germany 105,160 10.5 % 87,800 9.0 % 17,360 19.8 % Other Europe 138,543 13.8 % 197,152 20.1 % (58,609) (29.7) % Total Europe (2) 243,703 24.3 % 284,952 29.1 % (41,249) (14.5) % Asia: China 291,905 29.1 % 244,996 25.1 % 46,909 19.1 % Japan 66,369 6.6 % 62,352 6.4 % 4,017 6.4 % Other Asia 121,805 12.1 % 113,232 11.6 % 8,573 7.6 % Total Asia 480,079 47.8 % 420,580 43.1 % 59,499 14.1 % Rest of World 12,812 1.3 % 12,714 1.3 % 98 0.8 % Total $ 1,003,777 100.0 % $ 977,134 100.0 % $ 26,643 2.7 % (1) The substantial majority of sales in North America are to customers in the United States.
Items such as accounts payable to third parties, prepaid expenses and other current assets and accrued expenses and other liabilities are not as significant as our working capital investment in accounts receivable and inventory because of the amount of value added within IPG due to our vertically integrated structure.
Items such as accounts payable to third parties, prepaid expenses and other current assets and accrued expenses and other current liabilities are not as significant as our working capital investment in accounts receivable and inventory because of the amount of value added within IPG due to our vertically integrated structure.
The cash provided by investing activities in 2024 primarily related to $370.3 million of net proceeds of short-term investments and $28.6 million of proceeds from the sale of property, plant and equipment, partially offset by $98.5 million of cash used for property, plant and equipment, $66.7 million of cash used for the acquisition of cleanLASER and $25.3 million of net cash outflow from the divestiture of our Russian operation.
The cash provided by investing activities in 2024 primarily related to $370.3 million of net proceeds from the net maturities of short-term investments and $28.6 million of proceeds from the sale of property, plant and equipment, partially offset by $98.5 million of cash used for property, plant and equipment, $66.7 million of cash used for the acquisition of cleanLASER and $25.3 million of net cash outflow from the divestiture of our Russian operation.
As a result of the sanctions and their impact on our Belarus operations, we completed an impairment analysis of our Belarus assets during the third quarter of 2024 and recorded $26.6 million of impairment of long-lived asset in our Consolidated Statements of Operations.
As a result of the sanctions and their impact on our Belarus operations, we completed an impairment analysis of our Belarus assets during the third quarter of 2024 and recorded $26.6 million of impairment of long-lived assets in our Consolidated Statements of Operations.
We recorded a loss on divestiture of $197.7 million for the quarter ended September 30, 2024, which was included in Net loss (gain) from divestiture and sale of assets in our Consolidated Statements of Operations.
We recorded a loss on divestiture of $197.7 million for the quarter ended September 30, 2024, which was included in Net loss from divestiture and sale of assets in our Consolidated Statements of Operations.
Liquidity and Capital Resources We believe that our existing cash and cash equivalents, short-term investments, our cash flows from operations and our existing lines of credit provide us with the financial flexibility to meet our liquidity and capital needs.
Liquidity and Capital Resources We believe that our existing cash and cash equivalents, short and long-term investments, our cash flows from operations and our existing lines of credit provide us with the financial flexibility to meet our liquidity and capital needs.
In addition, our fixed costs increase as we expand our capacity. If we expand capacity faster than is required by sales growth, gross margins could be negatively affected. Gross margins generally decline if production volumes are lower as a result of a decrease in sales or a reduction in inventory because the absorption of fixed manufacturing costs will be reduced.
In addition, our fixed costs increase as we expand our capacity. If we expand capacity faster than is required by sales growth, gross margins could be negatively affected. Gross margins generally decline if production volumes are lower as a result of a decrease in sales or a reduction in inventory because the absorption of fixed manufacturing costs would be reduced.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed under Item 1A, "Risk Factors." The following analysis generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including, but not limited to, those discussed under Item 1A, "Risk Factors." The following analysis generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Our cost of sales consists primarily of the cost of raw materials and components, direct labor expenses and manufacturing overhead. We are vertically integrated and currently manufacture all critical components for our products as well as assemble finished products. We believe our vertical integration allows us to increase efficiencies, leverage our scale and lower our cost of sales.
Our cost of sales consists primarily of the cost of raw materials and components, direct labor expenses and manufacturing overhead. We are vertically integrated and currently manufacture all critical components for our products and assemble finished products. We believe our vertical integration allows us to increase efficiencies, leverage our scale and lower our cost of sales.
We are also susceptible to global or regional disruptions such as political instability, geopolitical conflicts, acts of terrorism, significant fluctuations in currency values, natural disasters and pandemics to the extent that they affect macroeconomic conditions, global supply chains or individual IPG locations. The average selling prices of our products generally decrease as the products mature.
We are also susceptible to global or regional disruptions such as political instability, geopolitical conflicts, acts of terrorism, significant fluctuations in currency values, natural disasters and pandemics to the extent that they affect macroeconomic conditions, global supply chains or individual IPG locations. 35 Table of Contents The average selling prices of our products generally decrease as the products mature.
Our future long-term capital requirements will depend on many factors including our level of sales, the impact of the economic environment on our growth, the timing and extent of spending to support development efforts, expansion of global sales and marketing activities, government regulation including trade sanctions, the timing and introductions of new products, the need to ensure access to adequate manufacturing capacity and the market acceptance of our current and future products.
Our future long-term capital requirements will depend on many factors including our level of sales, the impact of the economic environment on our growth, the timing and extent of spending to support development efforts, expansion of global sales and marketing activities, government regulation including trade sanctions and tariffs, the timing and introductions of new products, the need to ensure access to adequate manufacturing capacity and the continuing market acceptance of our products.
The decision to establish a valuation allowance or reverse it is based on management’s judgment based on the weight of available evidence including forecasts of future taxable income and the future reversal of existing taxable temporary differences.
The decision to establish a valuation allowance or reverse it is based on management’s judgment, which considers the weight of available evidence, including forecasts of future taxable income and the future reversal of existing taxable temporary differences.
Reserves recorded are based on a determination of tax benefits claimed in our tax filings and whether these positions are more likely than not to be realized following the resolution of any potential tax audits related to the tax benefit, assuming that the matter in question will be reviewed by the tax authorities.
Reserves recorded are based on a determination of tax benefits claimed in our tax filings and whether these positions are more likely than not to be realized following the resolution of any potential tax audits related to the tax benefit, assuming that the matter in question will be reviewed by the tax autho rities.
On August 29, 2024, we completed the sale of our Russian subsidiary, Scientific and Technical Association “IRE-Polus”, pursuant to a share purchase agreement with a purchaser entity associated with Softline 31 Table of Contents Projects LLC and existing management of IRE-Polus for $51.1 million.
On August 29, 2024, we completed the sale of our Russian subsidiary, Scientific and Technical Association “IRE-Polus”, pursuant to a share purchase agreement with a purchaser entity associated with Softline Projects LLC and existing management of IRE-Polus for $51.1 million.
If we experience a decline in sales that reduces absorption of our fixed costs, or if we have production issues, our gross margins will be negatively affected. 33 Table of Contents We also regularly review our inventory for items that are slow-moving, have been rendered obsolete or are determined to be excess.
If we experience a decline in sales that reduces absorption of our fixed costs, or if we have production issues, our gross margins will be negatively affected. We also regularly review our inventory for items that are slow-moving, have been rendered obsolete or are determined to be excess.
Certain currencies experiencing significant exchange rate fluctuations like the euro, the Russian ruble, the Chinese yuan and Japanese yen have had and could have an additional significant impact on our sales, costs and earnings.
Certain currencies experiencing significant exchange rate fluctuations like the euro, the Chinese yuan, and the Japanese yen have had and could have an additional significant impact on our sales, costs and earnings.
In general, lower selling prices to high unit volume customers reduce gross margin although this may be partially offset by improved absorption of fixed overhead costs associated with larger product volumes, which drive economies of scale; • Gross margin on systems can be lower than gross margin for our lasers and sub-systems, depending on the configuration, volume and competitive forces, among other factors; • Persistent inflation leading to increases in average manufacturing salaries as well as an increase in the purchase price of components including, but not limited to, electronic components and metal parts could negatively impact gross margin if we are not able to pass those increases on to customers by increasing the selling price of our products; • Changes in relative exchange rates between currencies we receive when selling our products and currencies we use to pay our manufacturing expenses; and finally, • Our gross margin from products on new manufacturing lines can be lower due to production inefficiencies, lower yields and high scrap costs.
In general, lower selling prices to high unit volume customers reduce gross margin although this may be partially offset by improved absorption of fixed overhead costs associated with larger product volumes, which drive economies of scale; • Gross margin on systems can be lower than gross margin for our lasers and sub-systems, depending on the configuration, volume and competitive forces, among other factors; • Persistent inflation leading to increases in average manufacturing salaries as well as an increase in the purchase price of components including, but not limited to, electronic components and metal parts could negatively impact gross margin if we are not able to pass those increases on to customers by increasing the selling price of our products; • Tariffs and counter-tariffs added, increased, reduced or eliminated in any period; • Changes in relative exchange rates between currencies we receive when selling our products and currencies we use to pay our manufacturing expenses; and finally, • Our gross margin from products on new manufacturing lines can be lower due to production inefficiencies, lower yields and high scrap costs.
We intend to use our existing cash, cash equivalents and short term investments as well as cash generated from operations as sources of funds for these material commitments.
We intend to use our existing cash, cash equivalents and investments as well as cash generated from operations as sources of funds for these material commitments.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 21, 2024.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 20, 2025.
Overview We develop, manufacture and sell high-performance fiber lasers, fiber amplifiers, diode lasers and laser-based systems that are used for diverse applications, primarily in materials processing, medical and advanced applications. We also manufacture and sell complementary products used with our lasers including optical delivery cables, fiber couplers, beam switches, optical processing heads, in-line sensors and chillers.
Overview We develop, manufacture and sell high-performance fiber lasers, fiber amplifiers, diode lasers and laser-based systems that are used for diverse applications, primarily in materials processing, medical and advanced applications. We also 33 Table of Contents manufacture and sell complementary products used with our lasers including optical delivery cables, fiber couplers, beam switches, optical processing heads, in-line sensors and chillers.
While we have historically depended on a few customers for a large percentage of our annual net sales, the composition of this group can change from year to year. Net sales derived from our five largest customers as a percentage of our annual net sales were 13%, 13% and 15% in 2024, 2023 and 2022, respectively.
While we have historically depended on a few customers for a large percentage of our annual net sales, the composition of this group can change from year to year. Net sales derived from our five largest customers as a percentage of our annual net sales were 16%, 13% and 13% in 2025, 2024 and 2023, respectively.
The net asset value of our Belarus subsidiary has been reduced by $18.6 million due to the cumulative translation effect of the Belarusian ruble compared to the U.S. dollar, which is included in the accumulated other comprehensive loss component of stockholders' equity.
The net asset value of our Belarus subsidiary has been reduced by $17.4 million due to the cumulative translation effect of the Belarusian ruble compared to the U.S. dollar, which is included in the accumulated other comprehensive loss component of stockholders' equity.
As we continue to expand globally, there is a risk that, due to complexity within and diversity among the various jurisdictions in which we do business, a governmental agency may disagree with the manner in which we have computed our taxes.
As we continue to expand globally, there is a risk that, due to complexity within 39 Table of Contents and diversity among the various jurisdictions in which we do business, a governmental agency may disagree with the manner in which we have computed our taxes.
We incurred a net loss of $190.2 million in 2024 as compared to no loss or gain in 2023.
We incurred a net loss of $190.2 million in 2024 as compared to no loss or gain in 2025.
We sell our products globally to original equipment manufacturers ("OEMs"), system integrators and end users. We market our products internationally, primarily through our 30 Table of Contents direct sales force. Our major manufacturing facilities are located in the United States and Germany.
We sell our products globally to original equipment manufacturers ("OEMs"), system integrators and end users. We market our products internationally, primarily through our direct sales force. Our major manufacturing facilities are located in the United States and Germany.
In addition, if we increase the selling price of our products in local currencies, this could have a negative impact on the demand for our products. Income taxes.
In addition, if we increase the selling price of our products in local currencies, this could have a negative impact on the demand for our products. 37 Table of Contents Income taxes.
We recorded long-lived asset impairment charge of $27.0 million, $1.2 million, and $79.9 million in 2024, 2023 and 2022, respectively. Impairment charges in 2022 and 2024 primarily related to the impairment of our Russian and Belarus long-lived assets, respectively, as a result of new sanctions that impacted our business there.
We recorded long-lived asset impairment charges of $27.0 million, and $1.2 million in 2024 and 2023, respectively. Impairment charges in 2024 primarily related to the impairment of our Belarus long-lived assets as a result of new sanctions that impacted our business there.
Many of these factors are not under our control. The following are examples of factors affecting gross margin: • As our products mature, we can experience additional competition, which tends to decrease average selling prices and affects gross margin; • Our gross margin can be significantly affected by product mix.
The following are examples of factors affecting gross margin: • As our products mature, we can experience additional competition, which tends to decrease average selling prices and affects gross margin; • Our gross margin can be significantly affected by product mix.
Total discrete adjustments in 2024 increased tax expense by $46.0 million. Discrete items include an increase in tax expense of $43.2 million related the loss on divestiture of Russian operations that had no tax benefit. Other discrete items for 2024 included a $3.2 million benefit related to a decrease in uncertain tax positions and the results of tax audits.
Discrete items include an increase in tax expense of $43.2 million related to the loss on divestiture of Russian operations that had no tax benefit. Other discrete items for 2024 included a $3.2 million benefit related to a decrease in uncertain tax positions and the results of tax audits.
We received $28.6 million, $31.2 million and $26.9 million in proceeds from the sale of property, plant and equipment in 2024, 2023 and 2022, respectively. A high proportion of our costs is fixed so costs are generally difficult to adjust or may take time to adjust in response to changes in demand.
We received $0.9 million, $28.6 million and $31.2 million in proceeds from the sale of property, plant and equipment in 2025, 2024 and 2023, respectively. 36 Table of Contents A high proportion of our costs is fixed, so costs are generally difficult to adjust or may take time to adjust in response to changes in demand.
See Note 12, "Financing Arrangements" in the notes to the consolidated financial statements for further information about our facilities. The following table summarizes our material cash commitments at December 31, 2024 and the effect such commitments are expected to have on our liquidity and cash flows in future periods.
See Note 11, "Financing Arrangements" in the notes to the consolidated financial statements for further information about our facilities. 44 Table of Contents The following table summarizes our material cash commitments at December 31, 2025 and the effect such commitments are expected to have on our liquidity and cash flows in future periods.
We invested $98.5 million, $110.5 million and $110.1 million in capital expenditures in 2024, 2023 and 2022, respectively. Most of this investment relates to expansion of our manufacturing capacity and, to a lesser extent, research and development and sales-related facilities.
We invested $78.8 million, $98.5 million and $110.5 million in capital expenditures in 2025, 2024 and 2023, respectively. Most of this investment relates to the expansion of our manufacturing capacity and, to a lesser extent, research and development and sales-related facilities.
Any provision for such slow-moving, obsolete or excess inventory affects our gross margins. For example, we recorded provisions for slow-moving, obsolete or excess inventory and other inventory related charges totaling $82.5 million, $45.5 million and $128.0 million in 2024, 2023 and 2022, respectively.
Any provision for such slow-moving, obsolete or excess inventory affects our gross margins. For example, we recorded provisions for slow-moving, obsolete or excess inventory and other inventory related charges totaling $30.1 million, $82.5 million and $45.5 million in 2025, 2024 and 2023, respectively.
Our research and development expense consists primarily of compensation, development expenses related to the design of our products and certain components, the cost of materials and components to build prototype devices for testing, facilities costs and depreciation of equipment and facilities that have an alternative future use used for research and development purposes.
Our research and development expense consists primarily of compensation, development expenses related to the design of our products and certain components, the cost of materials and components to build prototype devices for testing, facilities costs and depreciation of equipment and facilities used for research and development purposes.
As the secular shift to fiber laser technology matures in such applications, our sales trends are more susceptible to economic cycles, which can broadly affect the demand for capital 32 Table of Contents equipment including machine tools and industrial lasers, and competition from other fiber laser manufacturers.
As the secular shift to fiber laser technology matures in such applications, our sales trends are more susceptible to economic cycles, which can broadly affect the demand for capital equipment including machine tools and industrial lasers, and competition from other fiber laser manufacturers. Additionally, as our technology matures, we become subject to more competition which can affect sales trends.
One of our customers accounted for 12% and 14% of our net accounts receivable as of December 31, 2024 and 2023, respectively. We seek to add new customers and to 34 Table of Contents expand our relationships with existing customers. We anticipate that the composition of our significant customers will continue to change.
One of our customers accounted for 11% and 12% of our net accounts receivable as of December 31, 2025 and 2024, respectively. We seek to add new customers and to expand our relationships with existing customers. We anticipate that the composition of our significant customers will continue to change.
Potential interest and penalties associated with such uncertain tax positions are recorded as a component of income tax expense. As of December 31, 2024, we had $13.9 million of unrecognized tax benefits, excluding interest and penalties, recorded in other long-term liabilities and deferred income taxes on our Consolidated Balance Sheets.
Potential interest and penalties a ssociated with such uncertain tax positions are recorded as a component of income tax expense. As of December 31, 2025, we had $15.1 million of unrecognized tax benefits, excluding interest and penalties, recorded in other long-term liabilities and deferred income taxes on our Consolidated Balance Sheets.
These estimates assume constant exchange rates between fiscal year 2024 and fiscal year 2023 and are calculated using the average exchange rates for the twelve-month period ended December 31, 2023 for the respective currencies, which were US$1=Euro 0.92, US$1=Japanese yen 141, US$1=Chinese yuan 7.08 and US$1=Russian ruble 85. Net loss (gain) from divestiture and sale of assets.
These estimates assume constant exchange rates between fiscal year 2025 and fiscal year 2024 and are calculated using the average exchange rates for the twelve-month period ended December 31, 2024 for the respective currencies, which were US$1=euro 0.92, US$1=Japanese yen 151, and US$1=Chinese yuan 7.19. Net loss from divestiture and sale of assets.
As a percentage of sales, sales and marketing expense was 9.2% and 6.7% of sales in 2024 and 2023, respectively. Research and development expense. Research and development expense increased by $11.1 million, or 11.2%, to $109.8 million in 2024 from $98.7 million in 2023.
As a percentage of sales, sales and marketing expense was 9.7% and 9.2% of sales in 2025 and 2024, respectively. Research and development expense. Research and development expense increased by $7.6 million, or 6.9%, to $117.4 million in 2025 from $109.8 million in 2024.
We expect to continue making investments in capital expenditures, assess acquisition opportunities, carry out research and development and investment in resources to strengthen our organization. The extent and timing of such expenditures may vary from period to period.
We expect to continue making investments in capital expenditures, evaluate acquisition opportunities, repurchase shares of our stock in accordance with our repurchase program, carry out research and development and invest in resources to strengthen our organization. The extent and timing of such expenditures may vary from period to period.
Net cash provided by investing activities was $208.7 million in 2024 as compared to cash used in investing activities of $237.6 million in 2023.
Investing activities. Net cash used in investing activities was $265.2 million in 2025 as compared to cash provided by investing activities of $208.7 million in 2024.
Net cash provided by operating activities decreased by $48.1 million to $247.9 million in 2024 from $296.0 million in 2023 primarily due to a decrease in net income after adding back non-cash expenses, partially offset by an increase in cash provided by working capital. Our largest working capital items are inventory and accounts receivable.
Net cash provided by operating activities decreased by $172.6 million to $75.3 million in 2025 from $247.9 million in 2024 primarily due to a decrease in net income after adding back non-cash expenses and an increase in cash used by working capital. Our largest working capital items are inventory and accounts receivable.
Expenses related to provisions for excess or obsolete inventory and other valuation adjustments increased by $37.0 million to $82.5 million, or 38 Table of Contents 8.4% of sales, for the year ended December 31, 2024, as compared to $45.5 million, or 3.5% of sales, for the year ended December 31, 2023. Sales and marketing expense.
Expenses related to provisions for excess or obsolete inventory and other valuation adjustments decreased by $52.4 million to $30.1 million, or 3.0% of sales, for the year ended December 31, 2025, as compared to $82.5 million, or 8.4% of sales, for the year ended December 31, 2024. Sales and marketing expense.
As of December 31, 2024, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.
In the near term, we will incur capital expenditures related to the expansion of capacity outside of Russia and Belarus. As of December 31, 2025, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.
We have qualified third party vendors to supply components previously supplied from Belarus and have begun purchasing from them. Our Board of Directors monitors and continues to assess risks associated with our Belarusian operations. Supply Chain .
We have qualified third party vendors to supply components previously supplied from Belarus and have begun purchasing from them. Our Board of Directors monitors and continues to assess risks associated with our Belarusian operations. Net sales. Net sales increased by 3% in 2025, decreased by 24% in 2024, and decreased by 10% in 2023.
See Note 17, "Income Taxes" to the consolidated financial statements. The following table presents cash flow activities: As of December 31, 2024 2023 (In thousands) Cash provided by operating activities $ 247,896 $ 295,986 Cash provided by (used in) investing activities 208,732 (237,554) Cash used in financing activities (339,621) (236,380) Operating activities.
See Note 16, "Income Taxes" to the consolidated financial statements. The following table presents cash flow activities: As of December 31, 2025 2024 (In thousands) Cash provided by operating activities $ 75,344 $ 247,896 Cash (used in) provided by investing activities (265,230) 208,732 Cash used in financing activities (54,192) (339,621) Operating activities.
Our general and administrative expense consists primarily of compensation and associated costs for executive management, finance, legal, human resources, information technology and other administrative personnel, outside legal and professional fees, insurance premiums and fees, allocated facilities costs, depreciation of facilities and other corporate expenses such as charges and benefits related to the change in allowance for credit losses.
Our general and administrative expense consists primarily of compensation and associated costs for executive management, finance, legal, human resources, information technology and other administrative personnel, outside legal and professional fees, insurance premiums and fees, allocated facilities costs, depreciation of facilities and other corporate expenses such as charges and benefits related to the change in allowance for credit losses. 34 Table of Contents Factors and Trends That Affect Our Operations and Financial Results In reading our financial statements, you should be aware of the following factors and trends that our management believes are important in understanding our financial performance.
At December 31, 2024, the remaining value of the long-lived assets in Belarus was $3.8 million, net working capital excluding cash was immaterial and cash was $4.7 million.
At December 31, 2025, the remaining value of the long-lived assets in Belarus was $4.4 million, net working capital deficit excluding cash was $0.8 million and cash on hand was $1.5 million.
In recent years, our net sales and margins have been negatively impacted by tariffs and trade policy. New tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments.
New tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, and certain foreign governments.
Effect of exchange rates on sales, gross margin and operating expenses. We estimate that if exchange rates had been the same as one year ago, sales in 2024 would have been $15.6 million higher, gross margin would have been $9.2 million higher and sales and marketing, research and development and general and administrative expenses would have been $3.8 million higher.
We estimate that if exchange rates had been the same as one year ago, sales in 2025 would have been $8.1 million lower, gross margin would have been $1.5 million lower and sales and marketing, research and development and general and administrative expenses would have been $2.7 million lower.
Provision for income taxes was $19.6 million in 2024 compared to $56.0 million in 2023, representing an effective tax rate of (12.1)% in 2024 and 20.4% in 2023. The decrease in tax expense was due primarily to a reduction in taxable income. In 2024 we had tax expense on a loss before income due to the effect of discrete items.
Provision for income taxes was $14.0 million in 2025 compared to $19.6 million in 2024, representing an effective tax rate of 31.0% in 2025 and (12.1)% in 2024. The decrease in tax expense was due primarily to a reduction in taxable income.
This benefit was offset by an increase in tax expense of $5.4 million for equity-based compensation deductions reflected in book income in excess of the deductions allowed for tax purposes.
This benefit was offset by an increase in tax expense of $5.4 million for equity-based compensation deductions reflected in book income in excess of the deductions allowed for tax purposes. Net income (loss). Net income (loss) increased by $212.6 million to a net income of $31.1 million in 2025 from a net loss of $181.5 million in 2024.
At December 31, 2024, there were no amounts drawn on this line, however, there were $1.5 million of guarantees issued against the line which reduces total availability. (3) At December 31, 2024, there were no drawings.
At December 31, 2025, there were no amounts drawn on this line; however, there were $3.1 million of guarantees issued against the lines which reduces total availability. (4) At December 31, 2025, there were no drawings and no guarantees issued. (5) The facility does not have a stated maturity date.
Payments Due in Total Less Than 1 Year (In thousands) Operating lease obligations $ 19,925 $ 5,515 Purchase obligations 71,238 69,576 Total (1) $ 91,163 $ 75,091 (1) Excludes obligations related to ASC 740, reserves for uncertain tax positions, because we are unable to provide a reasonable estimate of the timing of future payments relating to the remainder of these obligations.
Payments Due in Total Less Than 1 Year (In thousands) Operating lease obligations $ 18,994 $ 5,692 Purchase obligations 65,245 64,026 Total (1) $ 84,239 $ 69,718 (1) Excludes obligations related to ASC 740, reserves for uncertain tax positions, because we are unable to provide a reasonable estimate of the timing of future payments relating to the remainder of these obligations.
Additionally, as our technology matures, we become subject to more competition which can affect sales trends. Gross margin. Our total gross margin in any period can be significantly affected by a number of factors, including net sales, production volumes, competitive factors, product mix, and by other factors such as changes in foreign exchange rates relative to the U.S. dollar.
Gross margin. Our total gross margin in any period can be significantly affected by a number of factors, including net sales, production volumes, competitive factors, product mix, and by other factors such as changes in foreign exchange rates relative to the U.S. dollar, tariffs and shipping costs. Many of these factors are not under our control.
This tax liability increased by $0.2 million for tax positions taken in the current year offset by reductions of $3.4 million for changes in prior period positions. 36 Table of Contents Results of Operations The following table sets forth selected statement of operations data for the periods indicated in dollar amounts and expressed as a percentage of net sales: Year Ended December 31, 2024 2023 2022 (In thousands, except percentages and per share data) Net sales $ 977,134 100.0 % $ 1,287,439 100.0 % $ 1,429,547 100.0 % Cost of sales 638,979 65.4 745,741 57.9 874,134 61.1 Gross profit 338,155 34.6 541,698 42.1 555,413 38.9 Operating expenses: Sales and marketing 89,582 9.2 85,679 6.7 76,643 5.3 Research and development 109,783 11.2 98,704 7.7 116,114 8.1 General and administrative 124,313 12.7 125,749 9.7 131,253 9.2 Net loss (gain) from divestitures and sale of assets 190,201 19.5 — — (31,846) (2.2) Impairment of long-lived assets 27,006 2.7 1,237 0.1 79,949 5.6 Restructuring charges (recoveries), net — — (288) — 9,697 0.7 Loss (gain) on foreign exchange 5,524 0.6 (1,356) (0.1) 4,103 0.3 Total operating expenses 546,409 55.9 309,725 24.1 385,913 27.0 Operating (loss) income (208,254) (21.3) 231,973 18.0 169,500 11.8 Interest income, net 45,467 4.7 41,735 3.2 12,620 0.9 Other income, net 899 0.1 1,167 0.1 1,231 0.1 (Loss) income before provision for income taxes (161,888) (16.5) 274,875 21.3 183,351 12.8 Provision for income taxes 19,638 2.0 55,997 4.3 72,589 5.1 Net (loss) income (181,526) (18.5) 218,878 17.0 110,762 7.7 Less: net income attributable to non-controlling interest — — — — 853 0.1 Net (loss) income attributable to IPG Photonics Corporation common stockholders $ (181,526) (18.5) % $ 218,878 17.0 % $ 109,909 7.6 % Net (loss) income attributable to IPG Photonics Corporation per common share: Basic $ (4.09) $ 4.64 $ 2.17 Diluted $ (4.09) $ 4.63 $ 2.16 Weighted average common shares outstanding: Basic 44,336 47,154 50,761 Diluted 44,336 47,320 50,925 Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023 Net sales.
Results of Operations The following table sets forth selected statement of operations data for the periods indicated in dollar amounts and expressed as a percentage of net sales: Year Ended December 31, 2025 2024 2023 (In thousands, except percentages and per share data) Net sales $ 1,003,777 100.0 % $ 977,134 100.0 % $ 1,287,439 100.0 % Cost of sales 622,314 62.0 638,979 65.4 745,741 57.9 Gross profit 381,463 38.0 338,155 34.6 541,698 42.1 Operating expenses: Sales and marketing 97,862 9.7 89,582 9.2 85,679 6.7 Research and development 117,402 11.7 109,783 11.2 98,704 7.7 General and administrative 143,140 14.3 124,313 12.7 125,749 9.7 Net loss from divestitures and sale of assets — — 190,201 19.5 — — Impairment of long-lived assets — — 27,006 2.7 1,237 0.1 Restructuring charges (recoveries), net 601 0.1 — — (288) — Loss (gain) on foreign exchange 9,354 0.9 5,524 0.6 (1,356) (0.1) Total operating expenses 368,359 36.7 546,409 55.9 309,725 24.1 Operating income (loss) 13,104 1.3 (208,254) (21.3) 231,973 18.0 Interest income, net 29,857 3.0 45,467 4.7 41,735 3.2 Other income, net 2,135 0.2 899 0.1 1,167 0.1 Income (loss) before provision for income taxes 45,096 4.5 (161,888) (16.5) 274,875 21.3 Provision for income taxes 14,000 1.4 19,638 2.0 55,997 4.3 Net income (loss) 31,096 3.1 % $ (181,526) (18.5) % $ 218,878 17.0 % Net income (loss) per common share: Basic $ 0.73 $ (4.09) $ 4.64 Diluted $ 0.73 $ (4.09) $ 4.63 Weighted average common shares outstanding: Basic 42,345 44,336 47,154 Diluted 42,650 44,336 47,320 40 Table of Contents Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024 Net sales.
Our business depends substantially upon capital expenditures by end users, particularly by manufacturers using our products for materials processing, which includes general manufacturing, automotive including electric vehicles ("EV"), other transportation, aerospace, heavy industry, consumer, semiconductor and electronics. Approximately 88% of our revenues in 2024 were from customers using our products for materials processing.
Our growth rates are subject to several factors, many of which are not under our control. Our business depends substantially upon capital expenditures by end users, particularly by manufacturers using our products for materials processing, which includes general manufacturing, automotive including electric vehicles ("EV"), other transportation, aerospace, heavy industry, consumer, semiconductor and electronics.
In the past, we invested in selling and general and administrative costs in order to support continued growth in the Company. As the secular shift to fiber laser technology matures, our sales growth becomes more susceptible to the cyclical trends typical of capital equipment manufacturers.
As the secular shift to fiber laser technology matures, our sales growth becomes more susceptible to the cyclical trends typical of capital equipment manufacturers.
A change in the projected cost of a project will affect the estimated percentage of completion, the amount of revenue recognized and estimated gross margin. Inventory. We maintain a reserve for excess or obsolete inventory items. The reserve is based upon a review of inventory materials on hand, which we compare with historic usage, estimated future usage and age.
A change in the projected cost of a project will affect the estimated percentage of completion, the amount of revenue recognized and estimated gross margin. 38 Table of Contents Inventory. We maintain a reserve for excess or obsolete inventory items.
The following table presents our principal sources of liquidity: As of December 31, 2024 2023 (In thousands) Cash and cash equivalents $ 620,040 $ 514,674 Short-term investments 310,152 662,807 Unused credit lines and overdraft facilities 78,115 78,506 Working capital (excluding cash and cash equivalents and short-term investments) 295,784 522,312 Included in cash and cash equivalents is $4.7 million of cash located in Belarus, as of December 31, 2024.
The following table presents our principal sources of liquidity: As of December 31, 2025 2024 (In thousands) Cash and cash equivalents $ 403,790 $ 620,040 Short-term investments 435,538 310,152 Unused credit lines and overdraft facilities 224,432 78,115 Working capital (defined as current assets, excluding cash and cash equivalents and short-term investments, minus current liabilities) 350,075 295,784 Included in cash and cash equivalents is $1.5 million of cash located in Belarus, as of December 31, 2025.
The impairment of long-lived assets in 2024 was primarily related to an impairment of the assets in Belarus of $26.6 million as a result of new EU sanctions that will limit our ability to supply laser cabinets and other mechanical components from our factory in Belarus.
During the during the year ended December 31, 2024, we completed an impairment analysis of the assets located in Belarus as a result of new EU sanctions that limited our ability to supply laser cabinets and other mechanical components from that facility. Based on this analysis, we recorded $26.6 million of impairment of long-lived assets.
Short-term investments at December 31, 2024 consist of liquid investments including commercial paper, corporate bonds, U.S. Treasury and agency obligations, and term deposits with original maturities of greater than three months but less than one year. See Note 3, "Fair Value Measurements" in the notes to the consolidated financial statements for further information about our short-term investments.
Short-term investments at December 31, 2025 consist of liquid investments including commercial paper, corporate bonds, U.S. Treasury and agency obligations, and term deposits with original maturities of greater than three months but less than one 43 Table of Contents year.
As noted above, we recorded $26.6 million impairment of long-lived assets included in Impairment of long-lived assets in our Consolidated Statements of Operations. After impairment, the remaining carrying value of the long-lived assets in Belarus is $3.8 million.
Based on this analysis, we recorded a $26.6 million impairment of long-lived assets included in Impairment of long-lived assets in our Consolidated Statements of Operations. At December 31, 2025, the remaining carrying value of the long-lived assets in Belarus is $4.4 million.
The cash used in financing activities in 2023 was primarily related to the purchase of $223.5 million of treasury stock, $16.0 million of principal payments on our long-term borrowings; partially offset by net proceeds of $3.1 million from the exercise of stock options net of amounts disbursed in relation to shares withheld to cover employee income taxes due upon the vesting and release of restricted stock units and shares issued under our employee stock purchase plan.
The cash used in financing activities in 2025 was primarily related to the purchase of $53.1 million of treasury stock and the net cash outflow from amounts disbursed in relation to shares withheld to cover employee income taxes due upon the vesting and release of restricted stock units of $1.1 million.
At December 31, 2024, there were no amounts drawn on this line, however, there were $2.1 million of guarantees issued against the line which reduces total availability. (2) This facility is available to certain foreign subsidiaries in their respective local currencies.
(2) Other lines of credit available to certain foreign subsidiaries in U.S. dollars and their respective local currencies. At December 31, 2025, there was $1.1 million drawn on these lines; and there were $1.8 million of guarantees issued against the lines which reduces total availability. (3) The facilities are available to certain foreign subsidiaries in their respective local currencies.
Inventory provisions of $29.5 million in 2024 were attributed to items previously considered safety stock and items that became technologically obsolete. Inventory provision and related charges of $74.1 million in 2022 were attributable to Russian operations. Selling and general and administrative expenses.
Inventory provisions of $29.5 million in 2024 were attributed to items previously considered safety stock and items that became technologically obsolete. Selling and general and administrative expenses. In the past, we invested in selling and general and administrative costs in order to support continued growth in the Company.
The cash proceeds from the sale of our Russian operation were lower than the cash and cash equivalents on hand, resulting in a cash outflow from divestiture.
The cash proceeds from the sale of our Russian operation were lower than the cash and cash equivalents on hand, resulting in a cash outflow from divestiture. 45 Table of Contents Financing activities. Net cash used in financing activities was $54.2 million and $339.6 million in 2025 and 2024, respectively.
These covenants, tested quarterly, include an interest coverage ratio and a funded debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio. The interest coverage covenant requires that we maintain a trailing twelve-month ratio of EBITDA to interest on all obligations that is at least 3.0:1.0.
Under the credit agreement, we are required to meet certain financial covenants, which are tested quarterly and include an interest coverage ratio and a net leverage ratio. The interest coverage covenant requires we maintain a trailing twelve-month ratio of consolidated EBITDA to consolidated interest expense on all obligations that is at least 3.0 times.
Gross margin decreased mainly due to increased provisions for excess and obsolete inventory, specifically additional inventory provisions of $29.5 million attributed to items previously considered safety stock and items that became technologically obsolete.
The prior year costs of sales included additional inventory provisions of $29.5 million attributed to items previously considered safety stock and items that became technologically obsolete.
Net loss attributable to IPG Photonics Corporation as a percentage of our net sales decreased by 35.6% to (18.6)% in 2024 from 17.0% in 2023 due to the factors described above.
Net income (loss) as a percentage of our net sales increased by 21.6% to 3.1% in 2025 from (18.5)% in 2024 due to the factors described above.
The cash used in investing activities in 2023 primarily related to $158.9 million of net cash used for purchases of short-term investments, and $110.5 million of proceeds from the sale of property, plant and equipment, partially offset by $31.2 million of proceeds from the sale of property, plant and equipment.
The cash used in investing activities in 2025 primarily related to $187.9 million of net purchases of investments and $78.8 million of cash used for property, plant and equipment, partially offset by $0.9 million of proceeds from the sale of property, plant and equipment, and a $0.5 million inflow from the final net working capital settlement in connection with the cleanLASER acquisition.
Sales and marketing expense increased by $3.9 million, or 4.6%, to $89.6 million in 2024 from $85.7 million in 2023. This change was primarily a result of an increase of $3.5 million in personnel and related costs and $2.3 million in premises expense, partially offset by $2.2 million in lower depreciation and amortization expense.
Sales and marketing expense increased by $8.3 million, or 9.3%, to $97.9 million in 2025 from $89.6 million in 2024. This change was primarily a result of an increase of $5.8 million in personnel and related costs, reflecting higher performance-based compensation associated with improved financials results.
We determine the valuation of excess and obsolete inventory by making our best estimate considering the current quantities of inventory on hand and our forecast of the need for this inventory to support future sales of our products. We often have limited information on which to base our forecasts.
Judgments and Uncertainties: Estimating demand and net realizable value is inherently difficult, particularly given that we make highly specialized components and products. We determine the valuation of excess and obsolete inventory by making our best estimate considering the current quantities of inventory on hand and our forecast of the need for this inventory to support future sales of our products.
If future sales differ from these forecasts, the valuation of excess and obsolete inventory may change and additional inventory provisions may be required. Sensitivity of Estimate to Change: Because of our vertical integration, a significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventory valuation.
Sensitivity of Estimate to Change: Because of our vertical integration, a significant or sudden decrease in sales could result in a significant change in the estimates of excess or obsolete inventory valuation. Because our calculation of slow-moving, excess or obsolete inventory is based on historical and estimated future use of inventory items, the calculation is affected by sales trends.
The EU effective dates were January 1, 2024, and January 1, 2025, for different aspects of the directive. The impact of the Pillar Two Framework on our income tax provision in 2024 was not material. We are continuing to evaluate the potential impact of the Pillar Two Framework on future periods, pending legislative adoption by additional individual countries. Major customers.
The EU effective dates were January 1, 2024, and January 1, 2025, for different aspects of the directive. The impact of the Pillar Two Framework on our income tax provision in 2024 and 2025 was not material. On January 5, 2026, the OECD released a comprehensive package introducing a “side-by-side arrangement” in relation to Pillar Two.
The following table details our line-of-credit facilities as of December 31, 2024: Description Total Facility/ Note Interest Rate Maturity Security U.S.
See Note 3, "Fair Value Measurements" in the notes to the consolidated financial statements for further information about our short-term investments. The following table details our line-of-credit facilities as of December 31, 2025: Description Total Facility/ Note Interest Rate Maturity Security U.S.
In addition, we review the inventory and compare recorded costs with estimates of current market value. Write-downs are recorded to reduce the carrying value to the net realizable value with respect to any part with costs in excess of current market value.
Write-downs are recorded to reduce the carrying value to the net realizable value with respect to any part with costs in excess of current market value. In the third quarter of 2024, we recorded $29.5 million of additional inventory provision that was attributed to items previously considered safety stock and items that became technologically obsolete.
Although applications within materials processing are broad, the capital equipment market in general is cyclical and historically has experienced sudden and severe downturns. For the foreseeable future, our operations will continue to depend upon capital expenditures by end users of materials processing equipment and will be subject to the broader fluctuations of capital equipment spending.
For the foreseeable future, our operations will continue to depend upon capital expenditures by end users of materials processing equipment and will be subject to the broader fluctuations of capital equipment spending. In recent years, our net sales and margins have been negatively impacted by tariffs and trade policy.
In addition to provisions for inventory reserves, gross margin declined due to an increase in unabsorbed manufacturing costs, partially offset by a decrease in cost of product sold from inventory and shipping costs and tariffs, as a percentage of sales.
Additionally, the increase in gross margin was due to a decrease in unabsorbed manufacturing costs of $20.9 million, partially offset by an increase in cost of products sold of $4.3 million, primarily as a result of higher product costs due to product and geographic mix, and import duties driven by tariffs, partially offset by lower inventory provisions.
The impairment of long-lived assets in 2023 was related to the right-of-use ("ROU") asset for a leased building associated with our Submarine Network Division business that was previously divested. Attempts to sublease the space have been unsuccessful. As of December 31, 2023, the ROU asset related to this lease has been reduced to zero. Restructuring charges (recoveries), net.
The 2023 impairment related to the right‑of‑use asset for a leased building associated with our Submarine Network Division that was previously divested. There was no impairment during the year ended December 31, 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+5 added−1 removed14 unchanged
Biggest changeAs our Chinese and South Korean subsidiaries have net U.S. dollar denominated liabilities, the depreciation of the Chinese yuan and South Korean won relative to the U.S. dollar contributed to most of the foreign exchange loss in 2024, partially offset by gain 42 Table of Contents on the depreciation of the Euro as our German subsidiary has net U.S. dollar denominated assets.
Biggest changeIn 2025, we incurred a loss on foreign exchange transactions of $9.4 million as compared to a loss of $5.5 million in 2024. As our German and Italian subsidiaries have net U.S. dollar denominated assets, the appreciation of the euro relative to the U.S. dollar contributed to a significant portion of the foreign exchange loss in 2025.
Changes in the translated value of assets and liabilities due to changes in functional currency exchange rates relative to the U.S. dollar result in foreign currency translation adjustments that are a component of other comprehensive income or loss on the Consolidated Statements of Comprehensive (Loss) Income.
Changes in the translated value of assets and liabilities due to changes in functional currency exchange rates relative to the U.S. dollar result in foreign currency translation adjustments that are a component of other comprehensive income or loss on the Consolidated Statements of Comprehensive Income (Loss).
Foreign currency derivative instruments can also be used to hedge exposures and reduce the risks of certain foreign currency transactions; however, these instruments provide only limited protection and can carry significant cost. We have no foreign currency derivative instrument hedges as of December 31, 2024.
Foreign currency derivative instruments can also be used to hedge exposures and reduce the risks of certain foreign currency transactions; however, these instruments provide only limited protection and can carry significant cost. We have no foreign currency derivative instrument hedges as of December 31, 2025.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk in the ordinary course of business, which consists primarily of interest rate risk associated with our cash and cash equivalents and foreign exchange rate risk. Interest rate risk . Certain interest rates are variable and fluctuate with current market conditions.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk in the ordinary course of business, which consists primarily of interest rate risk associated with our cash and cash equivalents and foreign exchange rate risk. Interest rate risk .
However, it is difficult to predict foreign currency movements accurately. At December 31, 2024, our material foreign currency exposure is net U.S. dollar denominated assets at subsidiaries where the Euro is the functional currency and U.S. dollar denominated liabilities where the Chinese yuan and the South Korean won is the functional currency.
However, it is difficult to predict foreign currency movements accurately. At December 31, 2025, our material foreign currency exposure consists of net U.S. dollar denominated assets at subsidiaries where the euro is the functional currency, and U.S. dollar denominated liabilities where the Chinese yuan and Indian rupee is the functional currency.
Because of the short-term nature of these instruments, a sudden change in market interest rates would not be expected to have a material impact on our financial condition or results of operations.
Due to the short-term to intermediate-term nature of these instruments, we do not expect that a sudden change in market interest rates would have a material impact on our financial condition or results of operations.
Our investments have limited exposure to market risk. We maintain a portfolio of cash, cash equivalents and short-term investments, consisting primarily of money market funds and term deposits, commercial paper, U.S. government and agency securities, term deposits, and corporate bonds. None of these investments have a maturity date in excess of one year.
We maintain a portfolio of cash, cash equivalents, and short-term and long-term investments, which primarily includes bank deposits, money market funds, certificates of deposit, commercial paper, corporate bonds, and U.S. Treasury and agency securities. The majority of these investments mature within one year, although some corporate bonds have maturities approaching, but not exceeding, two years.
Removed
In 2024 we incurred a loss on foreign exchange transactions of $5.5 million as compared to a gain of $1.4 million in 2023.
Added
Certain of our financial instruments are subject to interest rate risk due to variable interest rates that fluctuate with market conditions. However, our exposure to market risk from interest rate fluctuations is limited.
Added
In addition, our Indian and Chinese subsidiaries have U.S. dollar-denominated liabilities, and the strengthening of the U.S. dollar relative to the Indian rupee and Chinese yuan at certain times during the year also contributed to the foreign exchange loss during the year, though to a lesser extent.
Added
A 5% change in the relative exchange rate of the U.S. dollar to the euro applied to the net U.S. dollar asset balances as of December 31, 2025, would result in a foreign exchange gain of $0.5 million if the U.S. dollar appreciated and a $0.5 million foreign exchange loss if the U.S. dollar depreciated.
Added
A 5% change in the relative exchange rate of the U.S. dollar to the Chinese 46 Table of Contents yuan applied to the net U.S. dollar liability balances as of December 31, 2025, would result in a foreign exchange loss of $0.7 million if the U.S. dollar appreciated and a $0.8 million foreign exchange gain if the U.S. dollar depreciated.
Added
A 5% change in the relative exchange rate of the U.S. dollar to the Indian rupee applied to the net U.S. dollar liability balances as of December 31, 2025, would result in a foreign exchange loss of $0.2 million if the U.S. dollar appreciated and a $0.2 million foreign exchange gain if the U.S. dollar depreciated.

Other IPGP 10-K year-over-year comparisons