What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-06-08 compared with 2021-12-10 · 87 added, 106 removed, 205 unchanged (48% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, and the consolidated financial statements and notes thereto for the fiscal year ended January 31, 2021 and management’s discussion and analysis of our financial condition and results of operations included in our Annual Report on Form 10-K for the 2021 fiscal year filed with the Securities and Exchange Commission, or SEC, on March 31, 2021.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, and the consolidated financial statements and notes thereto for the fiscal year ended January 31, 2022 and management’s discussion and analysis of our financial condition and results of operations included in our Annual Report on Form 10-K for the 2022 fiscal year filed with the Securities and Exchange Commission, or SEC, on April 1, 2022.

This Quarterly Report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, includes a number of forward-looking statements that involve many risks and uncertainties.

Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “outlook,” “if,” “future,” “intend,” “plan,” “estimate,” “predict,” “potential,” “target,” “seek,” “project,” “forecast,” “continue” or “foreseeable” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events.

Such statements include, but are not limited to, statements concerning our market opportunity and our ability to compete in such markets, our product strategy, our ability to develop and introduce new solutions, our future financial and operating performance, our sales and marketing strategy, our investment strategy, research and development, our customer and supplier relationships and inventory levels, industry trends, our cash needs and capital requirements, our repurchase programs, our expectations about taxes and operating expenses, the availability of third-party components and economic and political conditions.

Such statements include, but are not limited to, statements concerning our market opportunity and our ability to compete in such markets, our product strategy, our ability to develop and introduce new solutions, our future financial and operating performance, our sales and marketing strategy, our investment strategy, research and development, our customer and supplier relationships and inventory levels, industry trends, our cash needs and capital requirements, our repurchase programs, our expectations about taxes, operating expenses, and cost recognition, the availability of third-party components and economic and political conditions.

These statements reflect our current views with respect to future events and our potential financial performance, and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and adversely from what is projected or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q.

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the potential for intellectual property disputes or other litigation;

the risks described under Item 1A of Part II — “Risk Factors,” and Item 2 of Part I — “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

the risks described elsewhere in this Quarterly Report on Form 10-Q and those discussed in other documents we file with the SEC.

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Since inception, we have primarily served human viewing applications with video and image processors for enterprise, public infrastructure and home applications, such as internet protocol, or IP, security cameras, sports cameras, wearables, aerial drones, and aftermarket automotive video recorders.

In the last several years, our development efforts have focused on creating advanced AI technology that enables edge devices to visually perceive the environment and make decisions based on the data collected from cameras and, most recently, other types of sensors.

Our recent development efforts have focused on creating advanced AI technology that enables edge devices to visually perceive the environment and make decisions based on the data collected from cameras and, most recently, other types of sensors.

This category of AI technology is known as computer vision, or CV, and our CV SoCs integrate our state-of-the-art video processor technology together with our deep learning neural network processing technology, which we refer to as CVflow™.

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These CV-based technologies are allowing us to address a broader range of markets and applications requiring AI video features, including IP security cameras, a variety of automotive cameras, consumer cameras, and industrial and robotic markets and applications.

We anticipate that our CV technology will also enable us to capture more content per electronic system.

We anticipate that our CV technology will also enable us to capture more content per electronic system and increase our average selling price.

O ur development efforts are focused on SoCs that provide both human viewing and computer vision functionality.

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We anticipate that product lifecycles will typically be longer than 24 months in the OEM automotive and industrial and robotics markets, as new product introductions occur less frequently in these markets.

Financial Highlights and Trends

We recorded revenue of $92.2 million and $241.6 million for the three and nine months ended October 31, 2021, respectively.

This represented increases of 64.3% and 50.2% for the three and nine months ended October 31, 2021, respectively, as compared to the same periods in the prior fiscal year.

The increases in revenue were primarily attributable to continued adoption of our CV-based solutions in the IP security and automotive camera markets.

In the professional IP security camera market, strong growth in the Asia and North America regions, together with continued sales penetration into the Europe region, resulted in a significant revenue increase in this market.

In the home IP security camera market, revenue growth continued to be led by the North America region.

A recovery in the automotive OEM and aftermarket applications in the Asia region, as well as continued adoption of our SoCs in the automotive fleet market, contributed an increase in revenue in the automotive markets.

The increased revenues from the IP security and automotive camera markets were partially offset by decreased revenues in the consumer camera markets.

We recorded operating losses of $1.2 million and $17.3 million for the three and nine months ended October 31, 2021, respectively, as compared to operating losses of $16.2 million and $47.2 million for the three and nine months ended October 31, 2020, respectively .

The decreased operating losses were primarily due to increases in revenue and gross profit, partially offset by increased operating expenses.

The increased operating expenses, mainly in support of automotive markets and applications for our computer vision-based solutions, related primarily to increased personnel costs associated with headcount growth and benefit programs as well as increased engineering related costs, partially offset by decreased chip tape-out costs due to the timing, complexity and number of chips in development.

We generated cash flows from operating activities of $18.2 million for the nine months ended October 31, 2021, as compared to $18.3 million for the nine months ended October 31, 2020.

The decreased cash flows from operating activities were primarily due to increased inventory purchases associated with longer supply chain lead times, increased accounts receivable associated with the timing of sales and decreased liabilities associated with the timing of payments to our suppliers.

The decreased cash flows from operating activities were partially offset by a lower net loss for the nine months ended October 31, 2021.

During the three months ended O ctober 31, 2021, we liquidated all of our marketable debt security investments for total cash consideration of $215.1 million to partially finance the acquisition of Oculii Corporation, or Oculii Corp., which was completed on November 5, 2021 .

F inancial Highlights and Trends

We recorded revenue of $90.3 million for the three months ended April 30, 2022, an increase of 28.8% as compared to the same period in the prior fiscal year.

The increase was primarily attributable to higher revenue in the professional IP security and automotive OEM sensing and fleet markets.

In the professional IP security market, strong growth in the North America and Asia regions other than China, together with continued sales penetration into the Europe region, resulted in a significant revenue increase in this market.

In the automotive markets, continued demand for our SoCs and applications in the automotive OEM sensing and fleet markets contributed to an increase in revenue.

The increased revenue was partially offset by decreased revenue in consumer-related markets, including home IP security, automotive aftermarket and consumer markets, primarily due to decreased consumer demand from the impact of pandemic lockdowns in China.

Despite lower demand from the China region, our computer vision-based solutions demonstrated a strong revenue growth in the first quarter of fiscal year 2023, representing continued adoption of our CV-based solutions by customers.

We recorded an operating loss of $10.5 million for the three months ended April 30, 2022, as compared to an operating loss of $10.1 million for the three months ended April 30, 2021.

The increased operating loss was primarily due to increased operating expenses, partially offset by increased revenue and gross profit.

The increased operating expenses primarily related to increased personnel costs associated with headcount growth and benefit programs, as well as increased engineering-related costs for supporting automotive, robotic and industrial applications of our CV-based solutions, partially offset by decreased chip tape-out costs due to the timing and number of chips in development.

We generated cash inflows from operating activities of $33.6 million for the three months ended April 30, 2022, as compared to cash outflows from operating activities of $4.5 million for the three months ended April 30, 2021.

The increased cash flows from operating activities were primarily related to decreased accounts receivable associated with the timing of sales and lower inventory purchases due to pandemic lockdowns in China resulting in disrupted orders and shipments throughout the Asia supply chain, partially offset by decreased liabilities associated with employee benefit payments and the timing of payments to our suppliers.

Factors Affecting Our Performance

Spread of COVID-19 Could Adversely Affect our Business in a Material Way.

The COVID-19 pandemic has resulted in significant governmental measures being implemented to control the spread of the virus, including, among others, restrictions on travel and the imposition of remote or work from home conditions in many of the locations where we have offices.

While we have not yet experienced a significant disruption of our operations as a result of the COVID-19 pandemic, if the remote or work from home conditions in any of our offices continues for an extended period of time, we may experience delays in product development, a decreased ability to support our customers, reduced design win activity, and overall lack of productivity.

Similarly, while we have not yet experienced a major disruption in our supply chain as a result of the COVID-19 pandemic, we are experiencing significantly longer manufacturing times that, if they persist or worsen, could impact our ability to meet our customers’ demand for our solutions and negatively impact our revenue.

As a result of these factors we have increased our inventory levels in the near term.

Impact of COVID-19 on our Business.

We have experienced a significant disruption of orders and logistics throughout the Asia supply chain as a result of the COVID-19 pandemic, and if the remote or work from home conditions in any of our locations continues for an extended period of time, we may experience delays in product development, a decreased ability to support our customers, reduced design win activity, and overall lack of productivity.

We are also experiencing significantly longer manufacturing times that, if they persist or worsen, could impact our ability to meet our customers’ demand for our solutions and negatively impact our revenue.

As a result of these factors we have reduced our inventory purchases in the near term.

Moreover, if there is a significant COVID-19 outbreak that impacts Samsung Electronic Corporation’s ability to manufacture our SoCs or our third-party contractors’ ability to assemble, test and ship our products, we could experience delays or reductions in our ability to ship products to our customers.

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Our ability to capitalize on these trends by supporting our end customers in the development of connected peripherals that seamlessly cooperate with other connected devices and allow consumers to distribute and share video and images with online media platforms is critical for our success.

We have added wireless communication functionality into our solutions for wearable, IP security, aerial drone and automotive video recorder cameras.

We incorporate wireless communication functionality into our solutions for wearable, IP security, aerial drone and automotive video recorder cameras.

The combination of our compression technology with wireless connectivity enables wireless video streaming and uploading of videos and images to the Internet.

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The following table sets forth a summary of our statement of operations for the periods indicated:

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(dollars in thousands)

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Loss before income taxes

Provision (benefit) for income taxes

Net income (loss)

Provision for income taxes

The following table sets forth operating results as a percentage of revenue of each line item for the periods indicated:

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

Cost of revenue

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Loss before income taxes

Provision (benefit) for income taxes

Net income (loss)

We derive substantially all of our revenue from the sale of HD and Ultra HD video and image processing SoC solutions to IP security camera OEMs, IP security camera ODMs, OEM automotive or Tier-1 automotive suppliers, and consumer camera OEMs, either directly or through our distributors.

Provision for income taxes

We derive substantially all of our revenue from the sale of HD and Ultra HD video and image processing SoC solutions to IP security camera OEMs, IP security camera ODMs, OEM or Tier-1 automotive suppliers, and consumer camera OEMs, either directly or through our distributors.

In recent years, our SoC solutions have been primarily used in camera markets, such as IP security, automotive video recorder, drone and wearable cameras.

Although we expect these camera markets, in particular the IP security and automotive video recorder markets, to continue to generate revenue for the foreseeable future, we have recently introduced new SoCs targeting emerging AI and computer vision applications in the IP security camera, OEM automotive, industrial and robotics markets.

We derive a substantial portion of our revenue from sales made indirectly through one of our distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or Wintech, and directly to one of our ODM customers, Chicony Electronics Co., Ltd., or Chicony.

We have historically experienced seasonal fluctuations in our quarterly revenue with our third fiscal quarter normally being the higher revenue quarter.

Although we expect these human viewing camera markets, in particular the IP security and automotive video recorder markets, to continue to generate revenue for the foreseeable future, we have recently introduced new SoCs targeting emerging AI and computer vision applications in the IP security camera, OEM automotive, industrial and robotics markets.

We derive a substantial portion of our revenue from sales made indirectly through our two major distributors, WT Microelectronics Co., Ltd., formerly Wintech Microelectronics Co., Ltd., or WT, and Hakuto Co., Ltd., or Hakuto, a Japan distributor, and directly to one of our ODM customers, Chicony Electronics Co., Ltd., or Chicony.

We have historically experienced seasonal fluctuations in our quarterly revenue with our third fiscal quarter normally being a higher revenue quarter.

This fluctuation has been driven primarily by increased sales in IP security and consumer camera markets as our customers build inventories in preparation for the holiday shopping season.

As we transition away from consumer markets, seasonal impact has decreased.

In addition, the continued effects of the COVID-19 pandemic and persistent supply chain challenges may negatively affect our normal seasonality this year.

Our average selling prices fluctuate based on the mix of our solutions sold in a period which reflects the impact of both changes in unit sales of existing solutions as well as the introduction and sales of new solutions.

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Cost of revenue includes the cost of materials, such as wafers processed by third-party foundries, costs associated with packaging, assembly and testing, and our manufacturing support operations, such as logistics, planning and quality assurance.

Cost of revenue also includes indirect costs such as warranty, inventory valuation reserves and other general overhead costs.

Cost of revenue also includes indirect costs, such as warranty, inventory valuation reserves, amortization of developed technology and other general overhead costs.

We expect that our gross margin may fluctuate from period to period as a result of changes in customer mix, average selling price, product mix and the introduction of new products by us or our competitors.

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Research and development expense consists primarily of personnel costs, including salaries, stock-based compensation and employee benefits.

The expense also includes costs of development incurred in connection with our collaborations with our foundry vendors, costs of licensing intellectual property from third parties for product development, costs of development for software and hardware tools, cost of fabrication of mask sets for prototype products, equipment expenses, outside services and allocated depreciation and facility expenses, net of any research and development grants.

The expense also includes costs of development incurred in connection with our collaborations with our foundry vendors, costs of licensing intellectual property from third parties for product development, costs of development for software and hardware tools, costs of fabrication of mask sets for prototype products, equipment expenses, outside services and allocated depreciation and facility expenses, net of any research and development grants.

All research and development costs are expensed as incurred.

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Selling, general and administrative expense consists primarily of personnel costs, including salaries, stock-based compensation and employee benefits for our sales, marketing, finance, human resources, information technology and administrative personnel.

The expense also includes professional service costs related to accounting, tax, legal services, and allocated depreciation and facility expenses.

The expense also includes amortization of trade name and customer relationships, professional service costs related to accounting, tax, legal services, and allocated depreciation and facility expenses.

We expect our selling, general and administrative expense to increase in absolute dollars as we continue to maintain the infrastructure and expand the size of our sales and marketing organization to support our business strategy of addressing new opportunities with our computer vision technology.

Other Income, Net

Other income, net, consists primarily of interest and other income from debt security investments and cash deposits with financial institutions.

Other income, net, consists primarily of interests and yields from debt security investments and cash deposits with financial institutions, as well as miscellaneous subsidies granted from a foreign government.

Provision for Income Taxes

We are incorporated and domiciled in the Cayman Islands and also conduct business in several countries such as the United States, China, Taiwan, Hong Kong, Italy, Germany, South Korea and Japan, and we are subject to taxation in those jurisdictions.

We are incorporated and domiciled in the Cayman Islands and our operations are subject to income taxes in the United States, China, Hong Kong, Germany, Italy, Japan, South Korea, Taiwan and other jurisdictions in which we do business.

Our worldwide operating income is subject to varying tax rates, and our effective tax rate is highly dependent upon the geographic distribution of our earnings or losses and the tax laws and regulations in each geographical region.

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We have historically had lower effective tax rates as a substantial percentage of our operations are conducted in lower-tax jurisdictions.

If our operational structure was to change in such a manner that would increase the amount of operating income subject to taxation in higher-tax jurisdictions, or if we were to commence operations in jurisdictions assessing relatively higher tax rates, our effective tax rate could fluctuate significantly on a quarterly basis and/or be adversely affected.

If our operational structure were to change in such a manner that would increase the amount of operating income subject to taxation in higher-tax jurisdictions, or if we were to commence operations in jurisdictions assessing relatively higher tax rates, our effective tax rate could fluctuate significantly on a quarterly basis and/or be adversely affected.

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes.

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In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

Comparison of the Three and Nine Months Ended October 31, 2021 and 2020

Three Months Ended October 31,

Nine Months Ended October 31,

Comparison of the Three Months Ended April 30, 2022 and 2021

Three Months Ended April 30,

(dollars in thousands)

The increased revenue for the three and nine months ended October 31, 2021, as compared to the same periods in the prior fiscal year, was primarily attributable to continued adoption of our CV-based solutions in the IP security and automotive camera markets.

In the home IP security camera market, revenue growth continued to be led by the North America region.

The increased revenues from the IP security and automotive camera markets were partially offset by decreased revenues in the consumer camera markets.

The increased revenue for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, was primarily attributable to higher revenue in the professional IP security and automotive OEM sensing and fleet markets.

In the automotive markets, continued demand for our SoCs and applications in the automotive OEM sensing and fleet markets contributed to an increase in revenue.

Cost of Revenue and Gross Margin

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(dollars in thousands)

Cost of revenue

Cost of revenue increased for the three and nine months ended October 31, 2021, as compared to the same periods in the prior fiscal year, primarily due to increased revenue, partially offset by favorable product mix.

Gross margin increased for the three and nine months ended October 31, 2021, as compared to the same periods in the prior fiscal year, primarily due to an increase in the percentage of our total revenue that was derived from the higher gross margin automotive markets.

Customer concentration shift from the China region to Asia regions other than China and to North America in the professional IP security camera market also contributed an improvement to the gross margin for the three and nine months ended October 31, 2021.

Cost of revenue increased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to increased revenue.

Gross margin increased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to an increase in the percentage of our total revenue that was derived from higher gross margin CV-based solutions and automotive markets.

A customer concentration shift from the China region to the North America and Asia regions other than China in the professional IP security camera market also contributed an improvement in gross margin for the three months ended April 30, 2022.

The increased gross margin was partially offset by an increase in inventory reserves due to a decrease in demand in the China region.

Research and Development

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(dollars in thousands)

Research and development

Research and development expense increased for the three and nine months ended October 31, 2021, as compared to the same periods in the prior fiscal year, primarily due to increased personnel costs and engineering related costs.

For the three and nine months ended October 31, 2021, personnel costs increased by approximately $4.8 million and $13.0 million, respectively, as a result of issuance of stock awards, employee benefit programs and an increase in headcount.

Our engineering headcount was 618 at October 31, 2021 compared to 568 at October 31, 2020.

Engineering related costs, including equipment expense, outside service and facility related expenses associated with the support of new SoCs and related software, increased by approximately $2.3 million and $5.5 million for the three and nine months ended October 31, 2021, respectively.

The increase was partially offset by decreased SoC development costs due to the timing, complexity and number of chips in development.

For the three and nine months ended October 31, 2021, SoC development costs decreased by approximately $2.3 million and $3.2 million, respectively.

Research and development expense increased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to increased personnel costs and engineering-related expenses.

Personnel costs increased by approximately $8.5 million as a result of issuance of stock awards, employee benefit programs and an increase of 93 in headcount, including 44 engineering headcount added from our acquisition of Oculii Corp, or Oculii, in the fourth quarter of fiscal year 2022.

Engineering-related expenses, including equipment and tool cost, outside services and facility related expenses in support of new SoCs and related applications, increased by approximately $1.4 million.

The increase was partially offset by decreased SoC development cost due to the timing and number of chips in development.

During the three months ended April 30, 2022, SoC development cost decreased by approximately $1.1 million .

Selling, General and Administrative

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(dollars in thousands)

Selling, general and administrative

Selling, general and administrative expense increased for the three and nine months ended October 31, 2021, as compared to the same periods in the prior fiscal year, primarily due to increased personnel costs and professional services in support of business development in the IP security, automotive and robotics markets.

For the three and nine months ended October 31, 2021, personnel costs increased by approximately $2.0 million and $8.1 million, respectively, as a result of issuance of stock awards, employee benefit programs and an increase in headcount.

Our selling, general and administrative headcount increased from 178 at October 31, 2020 to 188 at October 31, 2021.

The increase was also attributable to approximately $1.6 million of additional expense from professional services associated with the acquisition of Oculii Corp., for the three and nine months ended October 31, 2021, respectively.

The increase was partially offset by a reduction in facility related expenses of approximately $0.5 million and $1.5 million for the three and nine months ended October 31, 2021, respectively, caused by additional facility allocation to engineering in support of new SoCs and related software for the automotive markets as well as the development of computer vision-based solutions .

Selling, general and administrative expense increased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to increased personnel costs and professional service expenses.

Personnel costs increased by approximately $3.5 million as a result of issuance of stock awards, stock acceleration and employee benefit programs.

The increase was also attributable to approximately $0.6 million of additional professional service expenses to support our business development in the IP security, automotive and robotics markets.

Other Income, Net

Three Months Ended October 31,

Nine Months Ended October 31,

Three Months Ended April 30,

(dollars in thousands)

Other income, net

The decrease in other income, net, for the three and nine months ended October 31, 2021, as compared to the same periods in the prior fiscal year, was primarily due to lower yields from our debt security investments and losses from foreign currency transactions and remeasurements, partially offset by increased realized gains from the liquidation of our debt security investments.

For the nine months ended October 31, 2021, the decrease was also attributable to lower interest from our cash deposits with financial institutions.

Provision (benefit) for Income Taxes

Three Months Ended October 31,

Nine Months Ended October 31,

The decrease in other income, net, for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, was primarily due to the full liquidation of our debt security investments in fiscal year 2022 to finance the acquisition of Oculii, resulting in reduced yields from investments.

Provision for Income Taxes

Three Months Ended April 30,

(dollars in thousands)

Provision (benefit) for income taxes

Provision for income taxes

Effective tax rate

The quarterly income taxes reflect an estimate of the corresponding fiscal year’s annual effective tax rate and include, when applicable, adjustments from discrete tax items arising in that quarter.

The Company updates its estimate of the annual effective tax rate each quarter, and if the estimated annual tax rate changes, a cumulative adjustment is made in that quarter.

We update our estimate of the annual effective tax rate each quarter, and if the estimated annual tax rate changes, a cumulative adjustment is made in that quarter.

This could result in a higher or lower effective tax rate during a particular quarter, based on the mix and timing of actual earnings or losses versus annual projections.

The change from an income tax provision to an income tax benefit for the three months ended October 31, 2021, as compared to the same period in the prior fiscal year, was primarily due to changes in the amounts of pre-tax income, changes to the Company’s estimated annual effective tax rate, and an increase in tax benefits from excess stock-based compensation deductions.

The decrease in income tax expense for the nine months ended October 31, 2021, as compared to the same period in the prior fiscal year, was primarily due to an increase in the U.S.

federal research tax credit, and an increase in tax benefits from excess stock-based compensation deductions .

The decrease in income tax expense for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, was primarily due to an increase in the proportion of profits generated in lower-tax jurisdictions.

Liquidity and Capital Resources

As of October 31, 2021 and January 31, 2021, we had cash, cash equivalents and marketable debt securities of approximately $457.8 million and $440.7 million, respectively.

During the three months ended October 31, 2021, we liquidated all of our marketable debt security investments for total cash consideration of $215.1 million in anticipation of our acquisition of Oculii Corp.

As of April 30, 2022 and January 31, 2022, we had cash and cash equivalents of approximately $200.6 million and $171.0 million, respectively.

After a full liquidation of our debt security investments in fiscal year 2022 to finance the acquisition of Oculii, there were no debt security investments as of April 30, 2022.

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended October 31,

Three Months Ended April 30,

(in thousands)

Net cash provided by operating activities

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted cash

Net Cash Provided by Operating Activities

Net cash provided by operating activities decreased for the nine months ended October 31, 2021, as compared to the same period in the prior fiscal year, primarily due to increased inventory purchases associated with longer supply chain lead times, increased accounts receivable due to the timing of sales and decreased liabilities associated with the timing of payments to our suppliers.

The decrease was partially offset by a lower net loss for the nine months ended October 31, 2021.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities increased for the nine months ended October 31, 2021, as compared to net cash used in investing activities for the same period in the prior fiscal year, primarily due to an additional $165.1 million of cash receipts from sale and maturity of debt securities, as well as $56.5 million of less expenditure on investment of debt securities.

The increase was partially offset by approximately $4.7 million of additional payments for tangible and intangible assets purchase.

Net Cash Provided by Financing Activities

Net cash provided by financing activities increased for the nine months ended October 31, 2021, as compared to the same period in the prior fiscal year, primarily due to approximately $4.6 million of additional cash proceeds from option exercises and employee stock purchase withholding and $1.0 million of cash used for repurchasing our ordinary shares under the stock repurchase program in the prior fiscal year that did not recur in the current fiscal period.

Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities increased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily related to decreased accounts receivable associated with the timing of sales and lower inventory purchases due to pandemic lockdowns in China resulting in disrupted orders and shipments throughout the Asia supply chain, partially offset by decreased liabilities associated with employee benefit payments and the timing of payments to our suppliers.

Net Cash Used in Investing Activities

Net cash used in investing activities decreased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to approximately $9.3 million less of net investments in debt securities as a result of the full liquidation of investments in fiscal year 2022 as well as an approximately $0.7 million claim from an escrow account associated with the acquisition of Oculii, partially offset by approximately $2.7 million of net cash payments for long-lived assets.

Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities decreased for the three months ended April 30, 2022, as compared to the same period in the prior fiscal year, primarily due to approximately $2.0 million less cash proceeds from option exercises and employee stock purchase withholdings.

Stock Repurchase Program

No ordinary shares were repurchased in the nine months ended October 31, 2021.

During the second quarter of fiscal year 2022, our Board of Directors approved an extension of the prior $50.0 million repurchase program for an additional twelve months ending June 30, 2022.

As of October 31, 2021, $49.0 million remained available for repurchases under the current repurchase program through June 30, 2022.

No ordinary shares were repurchased in the three months ended April 30, 2022.

As of April 30, 2022, $49.0 million remained available for repurchases under the current repurchase program.

In May 2022, the Company’s Board of Directors approved an extension of this repurchase program through June 30, 2023.

Repurchases under the program may be made from time-to-time through open market purchases, 10b5-1 plans or privately negotiated transactions subject to market conditions, applicable legal requirements and other relevant factors.

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Operating and Capital Expenditure Requirements

As of October 31, 2021, we had cash and cash equivalents of approximately $457.8 million.

On November 5, 2021, we completed our acquisition of Oculii Corp., for $307.5 million in cash.

As of April 30, 2022, we had cash and cash equivalents of approximately $200.6 million.

We believe that our existing cash balances will be sufficient to meet our anticipated cash requirements through at least the next 12 months.

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the expansion of our research and development of new technologies and products to address new markets and applications;

the magnitude and duration of COVID-19 impact;

the magnitude and duration of COVID-19 impact, as well as measures implemented to control the spread of the virus;

the emergence of competing or complementary technologies or products;

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Manufacturing Purchase Obligations

As of October 31, 2021, we had purchase obligations with our independent contract manufacturers of $66.0 million.

As of April 30, 2022, we had purchase obligations with our independent contract manufacturers of $66.3 million.

Except as described above with respect to the manufacturing purchase obligations, there were no other material changes in our contractual obligations, commitments and contingencies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022.

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Off-Balance Sheet Arrangements

As of October 31, 2021, we did not engage in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

As of April 30, 2022, we did not engage in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Recent Authoritative Accounting Guidance

1 unchanged sentence

Critical Accounting Policies and Significant Management Estimates

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the 2021 fiscal year filed with the SEC on March 31, 2021 .

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the 2022 fiscal year filed with the SEC on April 1, 2022 .

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