What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-20 compared with 2026-02-18 · 84 added, 58 removed, 142 unchanged (50% of the section changed)

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These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management.

Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “potential,” “may,” “could” and “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors.

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manufacturing delays, product and raw materials availability and supply chain disruptions;

products that may be diverted from our authorized distribution channels;

products may be diverted from our authorized distribution channels;

our development of technologies and research and development investments;

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risks related to acquisitions or other strategic transactions;

unanticipated difficulties or expenditures relating to integrating acquired businesses;

security breaches or other cyber incidents;

risks related to the use of artificial intelligence in our business operations, products and services;

adverse results in litigation and regulatory matters;

adverse results in litigation;

the outcome of any regulatory actions, including governmental inquiries, investigations or enforcement proceedings in the event of noncompliance or alleged noncompliance with laws or regulations;

reputational damage;

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Results of Operations

Amounts in the table below are reflected in thousands except per share amounts and percentages.

Amounts in the tables below are reflected in thousands except per share amounts and percentages.

Three Months Ended

January 31, 2026 February 1, 2025 $ Change % Change

May 2, 2026 May 3, 2025 $ Change % Change

Revenue $ 3,623,465 $ 2,640,068 $ 983,397 37 %

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Diluted EPS $ 2.40 $ 1.14 $ 1.26 111 %

Six Months Ended

May 2, 2026 May 3, 2025 $ Change % Change

Revenue $ 6,783,728 $ 5,063,242 $ 1,720,486 34 %

Gross margin % 66.1 % 60.1 %

Net income $ 2,007,176 $ 961,086 $ 1,046,090 109 %

Net income as a % of revenue 29.6 % 19.0 %

Diluted EPS $ 4.09 $ 1.93 $ 2.16 112 %

Revenue Trends by End Market

The following table summarizes revenue by end market.

The following tables summarize revenue by end market.

The categorization of revenue by end market is determined using a variety of data points including the technical characteristics of the product, the “sold to” customer information, the “ship to” customer information and the end customer product or application into which our product will be incorporated.

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Three Months Ended

January 31, 2026 February 1, 2025

May 2, 2026 May 3, 2025

Revenue* Y/Y% Revenue % of

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Total revenue $ 3,623,465 100 % 37 % $ 2,640,068 100 %

Six Months Ended

May 2, 2026 May 3, 2025

Revenue* Y/Y% Revenue % of

Industrial $ 3,296,449 49 % 48 % $ 2,220,569 44 %

Automotive 1,681,709 25 % 5 % 1,596,349 32 %

Communications 1,009,911 15 % 65 % 610,905 12 %

Consumer 795,659 12 % 25 % 635,419 13 %

Total revenue $ 6,783,728 100 % 34 % $ 5,063,242 100 %

* The sum of the individual percentages may not equal the total due to rounding.

Revenue increased 30% in the three-month period ended January 31, 2026 as compared to the same period of the prior fiscal year as a result of a broad-based increase in demand for our products, notably within the wireline sub-markets of the Communications end market that supports datacenter expansion, within the test equipment sub-market of the Industrial end market and within portable consumer products sub-market of the Consumer end market.

Revenue increased 37% and 34% in the three- and six-month periods ended May 2, 2026 as compared to the same periods of the prior fiscal year as a result of a broad-based increase in demand for our products, notably within all Industrial

sub-markets with the highest growth coming from our test equipment and aerospace and defense sub-markets.

Revenue also increased in the data center portion of the Communications end market related to artificial intelligence-driven infrastructure investments.

Revenue by Sales Channel

The following table summarizes revenue by sales channel.

The following tables summarize revenue by sales channel.

We sell our products globally through a direct sales force, third-party distributors, independent sales representatives and via our website.

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Three Months Ended

January 31, 2026 February 1, 2025

May 2, 2026 May 3, 2025

Revenue % of Revenue* Revenue % of Revenue*

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Total revenue $ 3,623,465 100 % $ 2,640,068 100 %

Six Months Ended

May 2, 2026 May 3, 2025

Revenue % of Revenue* Revenue % of Revenue*

Distributors $ 3,813,606 56 % $ 2,855,552 56 %

Direct customers 2,897,220 43 % 2,145,647 42 %

Other 72,902 1 % 62,043 1 %

Total revenue $ 6,783,728 100 % $ 5,063,242 100 %

* The sum of the individual percentages may not equal the total due to rounding.

As indicated in the table above, the percentage of total revenue sold via each channel has remained relatively consistent in the periods presented, but can fluctuate from time to time based on end market revenue trends.

Three Months Ended

January 31, 2026 February 1, 2025 $ Change % Change

As indicated in the tables above, the percentage of total revenue sold via each channel has remained relatively consistent in the periods presented, but can fluctuate from time to time based on end market revenue trends.

Three Months Ended Six Months Ended

May 2, 2026 May 3, 2025 $ Change % Change May 2, 2026 May 3, 2025 $ Change % Change

Gross margin $ 2,439,798 $ 1,611,610 $ 828,188 51 % $ 4,484,773 $ 3,041,913 $ 1,442,860 47 %

Gross margin % 67.3 % 61.0 % 66.1 % 60.1 %

Gross margin percentage increased by 570 basis points in the three-month period ended January 31, 2026 as compared to the same period of the prior fiscal year, primarily due to higher utilization of our factories as a result of increased customer demand and favorable mix of products sold into our end markets.

Gross margin percentage increased by 630 and 600 basis points in the three- and six-month periods ended May 2, 2026 as compared to the same periods of the prior fiscal year, primarily due to higher utilization of our manufacturing fixed costs as a result of increased customer demand and favorable mix of products sold into our end markets.

Research and Development (R&D)

Three Months Ended

January 31, 2026 February 1, 2025 $ Change % Change

Three Months Ended Six Months Ended

May 2, 2026 May 3, 2025 $ Change % Change May 2, 2026 May 3, 2025 $ Change % Change

R&D expenses $ 509,323 $ 441,837 $ 67,486 15 % $ 976,723 $ 844,729 $ 131,994 16 %

R&D expenses as a % of revenue 14 % 17 % 14 % 17 %

R&D expenses increased in the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, primarily as a result of higher R&D employee-related variable compensation expenses .

R&D expenses as a percentage of revenue will fluctuate from year-to-year depending on the amount of revenue and the success of new product development efforts, which we view as critical to our future growth.

We expect to continue the development of innovative technologies and processes for new products.

R&D expenses increased in the three- and six-month periods ended May 2, 2026, as compared to the same periods of the prior fiscal year, primarily as a result of higher R&D employee-related variable compensation expenses.

R&D expenses declined as a percentage of revenue, primarily reflecting higher revenue levels and improved operating leverage.

We expect to continue the development of innovative technologies and processes for new products, which we view as critical to our future growth.

We believe that a continued commitment to R&D is essential to maintain product leadership with our existing products as well as to provide innovative new product offerings.

Selling, Marketing, General and Administrative (SMG&A)

Three Months Ended

January 31, 2026 February 1, 2025 $ Change % Change

Three Months Ended Six Months Ended

May 2, 2026 May 3, 2025 $ Change % Change May 2, 2026 May 3, 2025 $ Change % Change

SMG&A expenses $ 362,810 $ 302,669 $ 60,141 20 % $ 708,063 $ 587,465 $ 120,598 21 %

SMG&A expenses as a % of revenue 10 % 11 % 10 % 12 %

SMG&A expenses increased in the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, primarily as a result of higher SMG&A employee-related variable compensation expenses and higher salary and benefit expenses.

SMG&A expenses increased in the three- and six-month periods ended May 2, 2026, as compared to the same periods of the prior fiscal year, primarily as a result of higher SMG&A employee-related variable compensation expenses and higher salary and benefit expenses.

SMG&A expenses declined as a percentage of revenue, primarily reflecting higher revenue levels and improved operating leverage.

Special Charges, Net

Three Months Ended

January 31, 2026 February 1, 2025 $ Change % Change

Three Months Ended Six Months Ended

May 2, 2026 May 3, 2025 $ Change % Change May 2, 2026 May 3, 2025 $ Change % Change

Special charges, net $ — $ 1,745 $ (1,745) (100) % $ 47,982 $ 65,632 $ (17,650) (27) %

Special charges, net decreased in the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, primarily due to decreased charges related to our Global Repositioning Actions, partially offset by a $15.6 million impairment charge related to our asset group in our leased facilities in San Jose, California.

Nonoperating Expense (Income)

Three Months Ended

January 31, 2026 February 1, 2025 $ Change

Total nonoperating expense (income) $ 51,155 $ 55,737 $ (4,582)

The year-over-year decrease in nonoperating expense (income) in the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, was primarily due to gains on our other investments.

Special charges, net decreased in the three- and six-month periods ended May 2, 2026, as compared to the same periods of the prior fiscal year, primarily due to decreased charges related to our Global Repositioning Actions.

The decrease in the six-month period was partially offset by a $15.6 million impairment charge recorded in the first quarter of fiscal 2026 related to the asset group in our leased facilities in San Jose, California.

Provision for Income Taxes

Three Months Ended

January 31, 2026 February 1, 2025 $ Change

Three Months Ended Six Months Ended

May 2, 2026 May 3, 2025 $ Change May 2, 2026 May 3, 2025 $ Change

Provision for income taxes $ 148,478 $ 56,158 $ 92,320 $ 263,523 $ 100,418 $ 163,105

Effective income tax rate 11.2 % 9.0 % 11.6 % 9.5 %

The primary driver for our increased tax rate is the increase in taxes paid on our international profits.

The primary driver for our increased tax rate in the three- and six-month periods ended May 2, 2026, as compared to the same periods of the prior fiscal year, is the increase in taxes paid on our international profits.

This results in higher non-deductible foreign tax expense under the global intangible low-taxed income (GILTI) regime, which has the effect of increasing our effective tax rate.

Three Months Ended

January 31, 2026 February 1, 2025 $ Change % Change

Three Months Ended Six Months Ended

May 2, 2026 May 3, 2025 $ Change % Change May 2, 2026 May 3, 2025 $ Change % Change

Net income $ 1,176,350 $ 569,770 $ 606,580 106 % $ 2,007,176 $ 961,086 $ 1,046,090 109 %

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Diluted EPS $ 2.40 $ 1.14 $ 4.09 $ 1.93

Net income increased in the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, as the result of a $505.7 million increase in operating income and a $4.6 million decrease in nonoperating expense (income), partially offset by a $70.8 million increase in provision for income taxes.

Net income increased in the three-month period ended May 2, 2026, as compared to the same period of the prior fiscal year, as the result of a $701.7 million increase in operating income, partially offset by a $92.3 million increase in provision for income taxes.

Net income increased in the six-month period ended May 2, 2026, as compared to the same period of the prior fiscal year, as the result of a $1,207.4 million increase in operating income, partially offset by a $163.1 million increase in provision for income taxes.

Liquidity and Capital Resources

At January 31, 2026, our principal source of liquidity was $4.0 billion of cash, cash equivalents and short-term investments, of which approximately $2.3 billion was held in the United States, and the balance of which was held outside the United States in various foreign subsidiaries.

At May 2, 2026, our principal source of liquidity was $3.4 billion of cash, cash equivalents and short-term investments, of which approximately $2.2 billion was held in the United States, and the balance of which was held outside the United States in various foreign subsidiaries.

We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States.

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We maintain these balances with counterparties with high credit ratings, and continually monitor the amount of credit exposure to any one issuer and diversify our investments in order to minimize our credit risk.

We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, research and development efforts and dividend payments (if any) in the immediate future and for at least the next twelve months.

Three Months Ended

January 31, 2026 February 1, 2025

We believe that our existing sources of liquidity and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing, will be sufficient to fund operations, capital expenditures, acquisitions, research and development efforts and dividend payments in the immediate future and for at least the next twelve months.

Six Months Ended

May 2, 2026 May 3, 2025

Net cash provided by operating activities $ 2,240,556 $ 1,946,287

Net cash provided by operations as a % of revenue 33 % 38 %

Net cash used for investing activities $ (107,029) $ (194,301)

Net cash (used for) provided by investing activities $ (158,955) $ 133,892

Net cash used for financing activities $ (2,144,091) $ (1,695,286)

The following changes contributed to the net change in cash and cash equivalents in the three-month period ended January 31, 2026 as compared to the same period in fiscal 2025.

The following changes contributed to the net change in cash and cash equivalents in the six-month period ended May 2, 2026 as compared to the same period in fiscal 2025.

Operating Activities

Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities.

The increase in cash provided by operating activities during the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, was mainly the result of higher net income adjusted for non-cash items.

The increase in cash provided by operating activities during the six-month period ended May 2, 2026, as compared to the same period of the prior fiscal year, was mainly the result of higher net income adjusted for non-cash items.

Investing Activities

Investing cash flows generally consist of purchases of property, plant and equipment, available-for-sale investments and acquisitions of other businesses.

The change in investing cash flows during the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, was primarily the result of a decrease in cash used for capital expenditures.

The change in investing cash flows also included cash paid for an acquisition in the first quarter of fiscal 2025.

Investing cash flows generally consist of purchases and sales of property, plant and equipment, purchases, sales and maturities of available-for-sale investments;

and acquisitions of other businesses.

The change in investing cash flows during the six-month period ended May 2, 2026, as compared to the same period of the prior fiscal year, was primarily the result of a decrease in maturities of our available-for-sale investments.

The change in investing cash flows also included the sale of property, plant and equipment during fiscal 2025.

Financing Activities

Financing cash flows generally consist of payments of dividends to stockholders, repurchases of common stock, issuances and repayments of debt and proceeds from the sale of shares of common stock pursuant to employee equity incentive plans.

The change in cash used for financing activities during the three-month period ended January 31, 2026, as compared to the same period of the prior fiscal year, was primarily the result of higher common stock repurchases.

The change in cash used for financing activities during the six-month period ended May 2, 2026, as compared to the same

period of the prior fiscal year, was primarily the result of higher common stock repurchases partially offset by debt repayments during fiscal 2025.

Working Capital

January 31, 2026 November 1, 2025 $ Change % Change

May 2, 2026 November 1, 2025 $ Change % Change

Accounts receivable $ 2,051,733 $ 1,436,075 $ 615,658 43 %

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* We use the average of the current quarter and prior quarter ending net accounts receivable and ending inventory balance in our calculation of days sales outstanding and days cost of sales in inventory, respectively.

The decrease in accounts receivable in dollars was primarily the result of variations in the timing of collections and billings.

The increase in accounts receivable in dollars was primarily the result of increased sales levels and variations in the timing of collections and billings.

Inventory increased primarily as a result of building inventory levels to support increased demand.

Current liabilities increased to $4.3 billion at January 31, 2026 as compared to $3.2 billion at the end of fiscal 2025 primarily due to the reclassification of $0.9 billion of debt due in December 2026 to current liabilities as well as an increase in income taxes payable.

As of January 31, 2026, our debt obligations consisted of the following:

Current liabilities increased to $4.5 billion at May 2, 2026 as compared to $3.2 billion at the end of fiscal 2025 primarily due to the reclassification of $0.9 billion of debt due in December 2026 to current liabilities as well as an increase in accrued liabilities, partially offset by a decrease in income taxes payable.

As of May 2, 2026, our debt obligations consisted of the following:

Principal Amount Outstanding

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and consolidate with or merge into, or transfer or lease all or substantially all of our assets to, any other party.

As of January 31, 2026, we were in compliance with these covenants.

As of May 2, 2026, we were in compliance with these covenants.

Under our commercial paper program, we may issue short-term, unsecured commercial paper notes in amounts up to a maximum aggregate face amount of $3.0 billion outstanding at any time, with maturities of up to 397 days from the date of issuance.

As of January 31, 2026, we had $543.0 million of outstanding borrowings under the commercial paper program recorded in the Condensed Consolidated Balance Sheet.

As of May 2, 2026, we had $0.6 billion of outstanding borrowings under the commercial paper program recorded in the Condensed Consolidated Balance Sheet.

We intend to use the net proceeds of the commercial paper program for general corporate purposes, including without limitation, repayment of indebtedness, stock repurchases, acquisitions, capital expenditures and working capital.

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In addition, the Revolving Credit Agreement contains an interest coverage covenant which requires the ratio of consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) to consolidated interest charges to be greater than 3.0 to 1.0.

As of January 31, 2026, we were in compliance with these covenants.

As of May 2, 2026, we were in compliance with these covenants.

Stock Repurchase Program

As of January 31, 2026, our Board of Directors had authorized us to repurchase an aggregate of $26.7 billion of our common stock under our common stock repurchase program and $9.1 billion remained available for repurchases under the current authorized program.

As of May 2, 2026, our Board of Directors had authorized us to repurchase an aggregate of $26.7 billion of our common stock under our common stock repurchase program and $8.5 billion remained available for repurchases under the current authorized program.

Repurchased shares are held as authorized but unissued shares of common stock.

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Capital Expenditures

Net additions to property, plant and equipment were $109.3 million in the first three months of fiscal 2026.

Net additions to property, plant and equipment were $247.0 million in the first six months of fiscal 2026.

We expect capital expenditures for fiscal 2026 to be between approximately 4% and 6% of fiscal 2026 revenue.

These capital expenditures will be funded with a combination of cash on hand and cash expected to be generated from future operations, together with existing and anticipated available short- and long-term financing.

On February 17, 2026, our Board of Directors declared a cash dividend of $1.10 per outstanding share of common stock.

The dividend will be paid on March 17, 2026 to all shareholders of record at the close of business on March 3, 2026 and is expected to total approximately $537.0 million.

On May 19, 2026, our Board of Directors declared a cash dividend of $1.10 per outstanding share of common stock.

The dividend will be paid on June 16, 2026 to all shareholders of record at the close of business on June 2, 2026 and is expected to total approximately $535.8 million.

We currently expect quarterly dividends to continue in future periods, although they remain subject to determination and declaration by our Board of Directors.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis