What changed in this filing

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Item 1. Financial Statements

2024-11-08 compared with 2024-07-31 · 121 added, 118 removed, 435 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except par value)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

CURRENT ASSETS:

6 unchanged sentences

Property and equipment, net 93,034 101,580

Acquisition-related intangible assets, net 75,388 88,768

Goodwill 268,531 268,531

Goodwill and acquisition-related intangible assets, net 337,230 357,299

Deferred tax assets 1,318,224 945,792

14 unchanged sentences

STOCKHOLDERS’ EQUITY:

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of June 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of June 30, 2024 and December 31, 2023;

314,086 and 312,245 shares issued and outstanding as of June 30, 2024 and December 31, 2023

Preferred stock, $ 0.0001 par value— 100,000 shares authorized and no shares issued and outstanding as of September 30, 2024 and December 31, 2023

Common stock, $ 0.0001 par value— 1,000,000 shares authorized as of September 30, 2024 and December 31, 2023;

314,847 and 312,245 shares issued and outstanding as of September 30, 2024 and December 31, 2023

Additional paid-in capital 2,371,010 2,108,331

7 unchanged sentences

(Unaudited, in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

2024 2023 2024 2023

27 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

11 unchanged sentences

(Unaudited, in thousands)

Three Months Ended June 30, 2024 Six Months Ended June 30, 2024

Three Months Ended September 30, 2024 Nine Months Ended September 30, 2024

Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Total

Stockholders’ Equity Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Total

Stockholders’

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Net income — — — 747,938 — 747,938 — — — 2,051,058 — 2,051,058

Other comprehensive loss, net of tax — — — — ( 3,129 ) ( 3,129 ) — — — — ( 11,730 ) ( 11,730 )

Other comprehensive income, net of tax — — — — 24,646 24,646 — — — — 12,916 12,916

Stock-based compensation — — 98,123 — — 98,123 — — 254,630 — — 254,630

3 unchanged sentences

Balance at end of period 314,847 $ 31 $ 2,371,010 $ 6,865,260 $ 9,588 $ 9,245,889 314,847 $ 31 $ 2,371,010 $ 6,865,260 $ 9,588 $ 9,245,889

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

Common Stock Additional

2 unchanged sentences

Comprehensive

Income (Loss) Total

Stockholders’ Equity Common Stock Additional

7 unchanged sentences

Net income — — — 545,327 — 545,327 — — — 1,473,685 — 1,473,685

Other comprehensive income (loss), net of tax — — — — ( 3,703 ) ( 3,703 ) — — — — 8,700 8,700

Other comprehensive income, net of tax — — — — 2,042 2,042 — — — — 10,742 10,742

Stock-based compensation — — 85,390 — — 85,390 — — 215,398 — — 215,398

8 unchanged sentences

(Unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and other 31,112 39,227

Depreciation and amortization 46,650 56,233

Stock-based compensation 254,630 215,398

Noncash lease expense 9,292 9,154

Deferred income taxes ( 376,726 ) ( 217,489 )

Gain on strategic investments — ( 19,172 )

Amortization (accretion) of investment premiums (discounts) ( 44,609 ) ( 22,389 )

Other 1,921 ( 5,084 )

Changes in operating assets and liabilities:

10 unchanged sentences

Proceeds from maturities of marketable securities 1,427,348 1,564,950

Proceeds from sale of marketable securities 36,750 21,725

Proceeds from sales of marketable securities 44,865 49,584

Purchases of marketable securities ( 2,593,418 ) ( 1,934,156 )

Purchases of property and equipment ( 19,580 ) ( 28,424 )

Cash paid for business combinations, net of cash acquired — 1,799

Investments in notes and privately-held companies ( 1,000 ) ( 4,250 )

Other investing activities ( 6,628 ) ( 2,451 )

Net cash used in investing activities ( 1,147,413 ) ( 350,497 )

8 unchanged sentences

CASH, CASH EQUIVALENTS AND RESTRICTED CASH —End of period $ 3,176,538 $ 1,749,676

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION:

Right-of-use assets obtained in exchange for lease obligations $ 1,665 $ 17,010

Property and equipment included in accounts payable and accrued liabilities 4,391 5,653

Common stock issued for business acquisition — 2,331

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited).

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In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of our financial information.

The results for the three and six months ended June 30, 2024, are not necessarily indicative of the results expected for the full fiscal year.

The results for the three and nine months ended September 30, 2024, are not necessarily indicative of the results expected for the full fiscal year.

The condensed consolidated balance sheet as of December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by GAAP for complete financial statements.

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The preparation of the accompanying consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes.

Those estimates and assumptions include, but are not limited to, valuation of inventory and contract manufacturer/supplier liabilities, accounting for income taxes, including the recognition of deferred tax assets and liabilities, valuation allowance on deferred tax assets and reserves for uncertain tax positions, revenue recognition and deferred revenue, allowance for doubtful accounts, sales rebates and return reserves, valuation of goodwill and acquisition-related intangible assets, estimate of useful lives of long-lived assets including intangible assets, and the recognition and measurement of contingent liabilities.

Those estimates and assumptions include, but are not limited to, valuation of inventory and contract manufacturer/supplier liabilities, accounting for income taxes, including the recognition of deferred tax assets and liabilities, valuation allowance on deferred tax assets and reserves for uncertain tax positions, revenue recognition and deferred revenue, valuation of goodwill and acquisition-related intangible assets, estimate of useful lives of long-lived assets including intangible assets, and the recognition and measurement of contingent liabilities.

We evaluate our estimates and assumptions based on historical experience and other factors and adjust these estimates and assumptions when facts and circumstances dictate.

1 unchanged sentence

Risks and Uncertainties

Global economic and business activities continue to face widespread macroeconomic uncertainties, including inflation, monetary policy shifts, recession risks, and potential supply chain and other disruptions such as the Russia-Ukraine and Israel-Hamas conflicts, the Houthi attacks on marine vessels in the Red Sea, the U.S.

trade war with China and the outcome of the upcoming U.S.

presidential election.

Global economic and business activities continue to face widespread macroeconomic uncertainties, including the effects of, among other things, inflation, monetary policy shifts, recession risks, potential supply chain disruptions, and geopolitical pressures.

Our business is emerging from a period of unprecedented global supply chain disruptions.

1 unchanged sentence

We have worked closely with our contract manufacturers and supply chain partners to ramp production following a period of delayed component sourcing and workforce disruptions.

Increased capacity has allowed us to ship products against previously committed demand/deployment plans and accelerate some deployments where needed, while trying to limit building customer inventory, and to some extent balancing customer lead times with those currently experienced from our key suppliers.

Increased capacity has allowed us to ship products against previously committed demand/deployment plans and accelerate some deployments where needed, while trying to minimize building customer inventory, and to some extent balancing customer lead times with those currently experienced from our key suppliers.

As a result, some shipments against these previously committed demand/deployment plans have extended into 2024.

As the global supply chain has experienced some improvements and as customer lead times have been reduced from their peak, we have seen and expect to continue to see a commensurate reduction in visibility to customer demand and a gradual

return to shorter demand-planning horizons.

Given these shipment and order patterns, near term revenue trends may not be solely reflective of current demand levels, but as discussed above will benefit from demand/deployment plans that had been previously committed.

We expect that inventory and purchase commitments will begin to stabilize in the near term, but will remain volatile as we ramp new product introductions.

Given these shipment and order patterns, near term revenue trends may not be solely reflective of current demand levels, but as discussed above will benefit from demand/deployment plans that had been

previously committed.

We expect that our inventory and purchase commitments will remain volatile as we ramp new product introductions.

The magnitude of these balances, combined with a reduction in customer demand-planning horizons and shifting customer product priorities, has resulted in increased risk that we may not be able to sell all of this inventory, which in turn has resulted in additional excess and obsolete inventory and supplier liability charges.

1 unchanged sentence

While we have seen improvements in our supply chain and manufacturing operations, any remaining or new supply chain and manufacturing related constraints could negatively impact our business in future periods.

In addition, although our business has experienced limited disruption as a result of the Russia-Ukraine conflict, continued escalation of this conflict as well as the Israeli-Hamas conflict and Houthi movement in the Red Sea may negatively impact the global economy and our future operating results and financial condition.

Management continues to actively monitor the impact of macroeconomic factors on the Company's financial condition, liquidity, operations, suppliers, industry, and workforce.

1 unchanged sentence

In addition, any continued or renewed disruption in manufacturing and supply resulting from these factors could negatively impact our business.

We also believe that some of our customers must now consider changing technology roadmaps and priorities, including the need for the deployment of AI and related technologies, resulting in some uncertainty as to future investment plans and a more constrained approach to some forecasts and orders in the near term.

In addition, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods, particularly in the enterprise market where we are continuing to expand our penetration.

Recent technologies, such as generative AI models, have emerged, and while they have driven increased demand for networking, the long-term trajectory is unknown.

As such, demand estimates for our new products may be inaccurate and create volatility in our revenue and inventory levels.

Furthermore, any prolonged economic disruptions or further deterioration in the global economy could have a negative impact on demand from our customers in future periods, particularly in the enterprise market where we are continuing to expand our penetration.

Accordingly, current results and financial conditions discussed herein may not be indicative of future operating results and trends.

6 unchanged sentences

The amendments should be applied on a prospective basis although retrospective application is permitted.

As of June 30, 2024 , we have not early adopted ASU 2023-09 and we are currently evaluating the impact of future adoption on our financial disclosures.

As of September 30, 2024 , we have not early adopted ASU 2023-09 and we are currently evaluating the impact of future adoption on our financial disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)-Improvements to Reportable Segment Disclosures.

3 unchanged sentences

Early adoption is permitted.

As of June 30, 2024, we have not early adopted ASU 2023-07 and we are currently evaluating the impact of future adoption on our financial disclosures.

As of September 30, 2024, we have not early adopted ASU 2023-07 and we are currently evaluating the impact of future adoption on our financial disclosures.

Fair Value Measurements

2 unchanged sentences

The following tables summarize the fair value of these financial assets by significant investment category and their levels within the fair value hierarchy (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Level I Level II Level III Total Level I Level II Level III Total

3 unchanged sentences

Commercial paper — 2,994 — 2,994 — 1,999 — 1,999

Corporate bonds — 2,132 — 2,132 — — — —

government notes 54,889 — — 54,889 — — — —

14 unchanged sentences

(1) As of December 31, 2023, all of our certificates of deposits were domestic deposits.

During the three and six months ended June 30, 2024, the Company did not make any transfers between the levels of the fair value hierarchy.

During the three and nine months ended September 30, 2024, the Company did not make any transfers between the levels of the fair value hierarchy.

The following table summarizes the amortized cost, unrealized gains and losses, and fair value of our debt securities measured at fair value on a recurring basis (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Amortized Cost Unrealized Gains Unrealized Losses Fair Value Amortized Cost Unrealized Gains Unrealized Losses Fair Value

8 unchanged sentences

Given the short-term and conservative nature of our portfolio, our debt securities are generally not subject to credit risk;

therefore, we did not recognize any credit losses or non-credit-related impairments related to

such securities for the three and six months ended June 30, 2024.

All unrealized losses were recognized in other comprehensive income (loss).

Realized gains or losses were immaterial for the three and six months ended June 30, 2024.

therefore, we did not recognize any credit losses or non-credit-related impairments related to such securities for the three and nine months ended September 30, 2024.

All unrealized losses were recognized in other

comprehensive income (loss).

Realized gains or losses were immaterial for the three and nine months ended September 30, 2024.

The following table is an analysis of our debt securities in unrealized loss positions (in thousands):

June 30, 2024

September 30, 2024

Unrealized Losses within 12 months Unrealized Losses 12 months or greater Total

4 unchanged sentences

Total $ 414,411 $ ( 396 ) $ 332,655 $ ( 301 ) $ 747,066 $ ( 697 )

As of June 30, 2024, we had no marketable securities with contractual maturities that exceeded 24 months.

As of September 30, 2024, we had no marketable securities with contractual maturities that exceeded 24 months.

The fair values of marketable securities by remaining contractual maturities, are as follows (in thousands):

June 30, 2024

September 30, 2024

Due in 1 year or less $ 2,591,487

1 unchanged sentence

Total debt securities $ 4,253,249

The weighted-average remaining duration of our marketable securities is approximately 0.9 years as of June 30, 2024.

The weighted-average remaining duration of our marketable securities is approximately 0.9 years as of September 30, 2024.

As we view these marketable securities as available to support current operations, we classify marketable securities with maturities beyond 12 months as current assets under the caption "Marketable securities" on the condensed consolidated balance sheets.

2 unchanged sentences

We have non-marketable equity securities in privately-held companies that do not have readily-determinable fair values.

These equity securities are included in Investments on the condensed consolidated balance sheets.

These equity securities are included in Other Assets on the condensed consolidated balance sheets.

Their initial cost is adjusted to fair value on a non-recurring basis based on observable price changes from orderly transactions of identical or similar securities of the same issuer, or for impairment.

1 unchanged sentence

In addition, the valuation requires management judgment due to the absence of market price and lack of liquidity.

We did not record any realized gains or losses for our non-marketable equity securities during the three and six months ended June 30, 2024 and June 30, 2023, and w e recorded nil and immaterial amounts of unrealized gains or losses for the three and six months ended June 30, 2024 and June 30, 2023, respectively .

We did not record any realized gains or losses on our non-marketable equity securities during the three and nine months ended September 30, 2024 and September 30, 2023, and w e recorded immaterial amounts of unrealized gains or losses for the three and nine months ended September 30, 2024 and September 30, 2023, respectively .

We evaluate our non-marketable equity securities for impairment at each reporting period via a qualitative assessment with various potential impairment indicators, including, but not limited to, an assessment of a significant adverse change in the economic environment, significant adverse changes in the general market condition of the geographies and industries in which our investees operate, and other publicly-available information that affected the value of the non-marketable equity securities .

The following table summarizes the activity related to our non-marketable equity securities as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The following table summarizes the activity related to our non-marketable equity securities as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Cost of investments $ 38,284 $ 31,656

3 unchanged sentences

Financial Statements Details

Cash, Cash Equivalents and Restricted Cash

The reconciliation of cash, cash equivalents and restricted cash reported on the unaudited condensed consolidated balance sheets to the total of the same such amounts in the unaudited condensed consolidated statements of cash flows is as follows (in thousands):

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 2,429,031 $ 1,938,606

Restricted cash included in other assets 868 858

Total cash, cash equivalents and restricted cash $ 2,429,899 $ 1,939,464

Accounts Receivable, net

Accounts receivable, net consists of the following (in thousands):

June 30, 2024 December 31, 2023

Accounts receivable $ 1,237,629 $ 1,034,480

Product sales rebate and returns reserve ( 10,834 ) ( 9,911 )

Accounts receivable, net $ 1,226,795 $ 1,024,569

Inventories consist of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials $ 652,213 $ 930,777

1 unchanged sentence

Total inventories $ 1,769,962 $ 1,945,180

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following (in thousands):

September 30, 2024 December 31, 2023

Inventory deposits $ 113,705 $ 130,509

Other current assets 434,988 282,009

Total prepaid expenses and other current assets $ 548,693 $ 412,518

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Land $ 46,866 $ 44,645

4 unchanged sentences

Furniture and fixtures 3,563 3,576

Construction-in-process 3,391 4,242

Property and equipment, gross 305,157 289,658

1 unchanged sentence

Property and equipment, net $ 93,034 $ 101,580

Depreciation expense was $ 8.5 million and $ 7.8 million for the three months ended June 30, 2024 and 2023, respectively, and $ 17.1 million and $ 14.9 million for the six months ended June 30, 2024 and 2023, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Accrued compensation-related costs $ 107,545 $ 134,225

Accrued supplier liability 90,053 167,878

Accrued manufacturing costs 56,693 61,491

Accrued product development costs 36,802 1,041

Accrued manufacturing and product development costs 77,574 62,532

Other 48,818 42,667

4 unchanged sentences

The following table summarizes the activity related to our contract liabilities (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

Contract liabilities, ending balance $ 146,960 $ 120,281 $ 146,960 $ 120,281

As of June 30, 2024 and December 31, 2023, contract liabilities included in "Other current liabilities" were $ 59.2 million for each period, with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

As of September 30, 2024 and December 31, 2023, contract liabilities included in "Other current liabilities" were $ 60.0 million for each period, with the remaining balances included in "Other long-term liabilities" on the condensed consolidated balance sheets.

Deferred Revenue

1 unchanged sentence

The following table summarizes the activity related to our deferred revenue (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

Other Performance Obligations

Other performance obligations totaling $ 688.1 million as of June 30, 2024 include unbilled multi-year PCS and service contract amounts of $ 513.0 million and $ 175.1 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Other performance obligations totaling $ 626.3 million as of September 30, 2024 include unbilled multi-year PCS and service contract amounts of $ 514.0 million and $ 112.3 million of binding contractual agreements with certain customers that are primarily related to future product shipments.

Revenue from Total Remaining Performance Obligations

T otal revenue from our contract liabilities, deferred revenue and other performance obligations that is expected to be recognized in future periods was $ 3.0 billion as of June 30, 2024 .

T otal revenue from our contract liabilities, deferred revenue and other performance obligations that is expected to be recognized in future periods was $ 3.3 billion as of September 30, 2024 .

A pproximately 83 % of this future revenue is expected to be recognized over the next two years and the remaining 17 % is expected to be recognized during the third to the fifth year.

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Other income (expense), net consists of the following (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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December 31, 2023

Additions June 30, 2024 December 31, 2023

Amortization June 30, 2024 December 31, 2023

June 30, 2024

Additions September 30, 2024 December 31, 2023

Amortization September 30, 2024 December 31, 2023

September 30, 2024

Developed technology $ 154,930 $ — $ 154,930 $ ( 102,493 ) $ ( 12,583 ) $ ( 115,076 ) $ 52,437 $ 39,854 3.5

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Total $ 221,940 $ — $ 221,940 $ ( 133,172 ) $ ( 20,070 ) $ ( 153,242 ) $ 88,768 $ 68,698 3.7

Amortization expense related to acquisition-related intangible assets was $ 6.7 million and $ 9.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 13.4 million and $ 18.6 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, future estimated amortization expense related to the acquisition-related intangible assets is as follows (in thousands):

Amortization expense related to acquisition-related intangible assets was $ 6.7 million and $ 8.1 million for the three months ended September 30, 2024 and 2023, respectively, and $ 20.1 million and $ 26.7 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, future estimated amortization expense related to acquisition-related intangible assets is as follows (in thousands):

Future Amortization Expense

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Total $ 68,698

There was no change to goodwill for the three and nine months ended September 30, 2024.

Commitments and Contingencies

We have operating lease arrangements for office space, data center, equipment and other corporate assets.

As of June 30, 2024, we had lease payment obligations, net of immaterial sublease income, of $ 61.6 million, with $ 23.5 million payable within one year.

As of September 30, 2024, we had lease payment obligations, net of immaterial sublease income, of $ 69.8 million, with $ 24.1 million payable within one year.

Purchase Commitments

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In addition, we purchase strategic component inventory from certain suppliers under non-cancellable purchase commitments, including integrated circuits, which are consigned to our contract manufacturers.

As of June 30, 2024, we had non-cancellable purchase commitments not recorded on our balance sheet of $ 2.1 billion, of which $ 1.7 billion have expected receipt dates within 12 months, and $ 0.4 billion have expected receipt dates greater than 12 months.

As of September 30, 2024, we had non-cancellable purchase commitments not recorded on our balance sheet of $ 2.4 billion, of which $ 2.0 billion have expected receipt dates within 12 months, and $ 0.4 billion have expected receipt dates greater than 12 months.

These open purchase orders are considered enforceable and legally binding, and while we may have some limited ability to reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services, this can only occur with the agreement of the related supplier.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $ 128.0 million and $ 133.3 million as of June 30, 2024 and December 31, 2023, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

We also had deposits to our contract manufacturers to secure our purchase commitments in the amount of $ 116.5 million and $ 133.3 million as of September 30, 2024 and December 31, 2023, respectively, which were recorded within prepaid expenses and other current assets, as well as other assets in the condensed consolidated balance sheets.

We have entered into agreements with some of our direct customers and channel partners that contain indemnification provisions relating to potential situations where claims could be alleged that our products infringe the intellectual property rights of a third party.

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We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As of June 30, 2024, provisions recorded for contingent losses related to other claims

and matters have not been significant.

As of September 30, 2024, provisions recorded for contingent losses related to other

claims and matters have not been significant.

Based on currently-available information, management does not believe that any additional liabilities relating to other unresolved matters are probable or that the amount of any resulting loss is estimable, and believes these other matters are not likely, individually and in the aggregate, to have a material adverse effect on our financial position, results of operations or cash flows;

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Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, transactions structured through investment banking institutions, block purchases, trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or a combination of the foregoing.

The New Repurchase Program does not obligate us to acquire any of our common stock, and may be suspended or discontinued by the company at any time without prior notice.

During the three months ended June 30, 2024, we repurchase d a total of $ 82.0 million of our common stock under our Prior Repurchase Program and $ 90.0 million of our common stock under our New Repurchase Program.

As of June 30, 2024, the remaining authorized amount for stock repurchases under the New Repurchase Program was approximately $ 1.1 billion.

A summary of the stock repurchase activity under the Repurchase Programs for the three and six months ended June 30, 2024 is as follows (in thousands, except per share amounts):

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2024

The Repurchase Programs do not obligate us to acquire any of our common stock, and may be suspended or discontinued by the company at any time without prior notice.

During the three months ended September 30, 2024 , we repurchase d a total of $ 65.2 million of our common stock under our New Repurchase Program.

D uring the nine months ended September 30, 2024 , we repurchase d a total of $ 155.2 million of our common stock under our New Repurchase Program and $ 144.6 million of our common stock under our Prior Repurchase Program.

As of September 30, 2024, the remaining authorized amount for stock repurchases under the New Repurchase Program was approximately $ 1.0 billion.

A summary of the stock repurchase activity for the three and nine months ended September 30, 2024 is as follows (in thousands, except per share amounts):

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2024

Aggregate purchase price $ 65,157 $ 299,823

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The Restated Plan’s terms are substantially similar to the Prior Plan’s terms, including with respect to treatment of equity awards in the event of a “change in control” as defined under the Restated Plan, but with certain modifications, including the elimination of the automatic “evergreen” share reserve increase provided for under the Prior Plan.

As of June 30, 2024, there remained approximately 13.1 million shares available for grant under the Restated Plan.

As of September 30, 2024, there remained approximately 13.1 million shares available for grant under the Restated Plan.

2014 Employee Stock Purchase Plan

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The ESPP became effective on the first day that our common stock was publicly traded.

The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1 % of our shares outstanding on the immediately preceding December 31, but not to exceed 10 million shares, unless our board of

directors, in its discretion, determines to make a smaller increase.

The number of shares reserved for issuance under the ESPP increases automatically on January 1 of each year by the number of shares equal to 1 % of

our shares outstanding on the immediately preceding December 31, but not to exceed 10 million shares, unless our board of directors, in its discretion, determines to make a smaller increase.

Effective January 1, 2024, our board of directors authorized an increase of 3.1 million shares to the shares available for issuance under the ESPP.

During the six months ended June 30, 2024, we issued 140,162 shares at a weighted-average purchase price of $ 114.40 per share under the ESPP.

As of June 30, 2024, there remained approximately 26.4 million shares available for issuance under the ESPP.

During the nine months ended September 30, 2024, we issued 280,843 shares at a weighted-average purchase price of $ 116.31 per share under the ESPP.

As of September 30, 2024, there remained approximately 26.2 million shares available for issuance under the ESPP.

Stock Option Activities

The following table summarizes the option activity under our stock plans and related information (in thousands, except years and per share amounts):

The following table summarizes the option activity under our stock plans and related information (in thousands, except per share amounts):

Outstanding Options Weighted-

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Options canceled ( 24 ) 20.07

Balance—June 30, 2024 1,281 $ 23.24 1.6 $ 419,222

Vested and exercisable—June 30, 2024 1,202 $ 22.04 1.5 $ 394,687

Balance—September 30, 2024 1,042 $ 24.39 1.5 $ 374,471

Vested and exercisable—September 30, 2024 997 $ 23.26 1.4 $ 359,633

Restricted Stock Unit (RSU) Activities

A summary of the RSU activity is presented below (in thousands, except years and per share amounts):

A summary of the RSU activity is presented below (in thousands, except per share amounts):

Shares Weighted-

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RSUs and PRSUs forfeited/canceled ( 412 ) 134.80

Unvested balance—June 30, 2024 8,249 $ 157.18

Unvested balance—September 30, 2024 7,678 $ 168.28

Stock-Based Compensation Expense

The following table summarizes the stock-based compensation expense related to our equity awards (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

Total stock-based compensation $ 98,123 $ 85,390 $ 254,630 $ 215,398

As of June 30, 2024, there were $ 1,083.3 million of unamortized compensation costs related to all unvested awards.

As of September 30, 2024, there were $ 1.1 billion of unamortized compensation costs related to all unvested awards.

The unamortized compensation costs are expected to be recognized over a weighted-average period of approximately 4.5 years.

1 unchanged sentence

Basic net income per share is computed using the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed using the weighted-average number of shares of common stock outstanding during the period, including potential common shares assuming the dilutive effect of outstanding stock options, restricted stock units, and the employee stock purchase plan using the treasury stock method.

Potential common shares whose

effect would have been antidilutive are excluded from the computation of diluted net income per share.

restricted stock units, and the employee stock purchase plan using the treasury stock method.

Potential common shares whose effect would have been antidilutive are excluded from the computation of diluted net income per share.

The following table sets forth the computation of our basic and diluted net income per share (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

8 unchanged sentences

The following weighted-average outstanding shares of common stock equivalents were excluded from the computation of diluted net income per share for the periods presented because their effect would have been anti-dilutive for the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

Income Taxes (in thousands, except percentages)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

2 unchanged sentences

Effective tax rate 15.3 % 15.4 % 13.7 % 14.7 %

The decrease in the effective tax rates in the three and six months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to an increase in tax benefits attributable to stock-based compensation.

The decrease in the effective tax rates in the three and nine months ended September 30, 2024, as compared to the same periods in 2023, was primarily due to a change in the jurisdictional mix of earnings.

Geographical Information

1 unchanged sentence

The following table represents revenue based on customers’ shipping addresses (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

4 unchanged sentences

(1) Includes $ 1,465.3 million and $ 1,150.5 million revenue generated from the U.S.

for the three months ended June 30, 2024 and June 30, 2023, respectively, and $ 2,595.5 million and $ 2,216.3 million for the six months ended June 30, 2024 and June 30, 2023, respectively.

for the three months ended September 30, 2024 and September 30, 2023, respectively, and $ 4,060.8 million and $ 3,366.8 million for the nine months ended September 30, 2024 and September 30, 2023, respectively.

Long-lived assets, net, excluding intercompany receivables, investments in subsidiaries, privately-held equity investments and deferred tax assets, by location are summarized as follows (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

United States $ 75,556 $ 79,728

1 unchanged sentence

Total $ 93,034 $ 101,580

Subsequent event

Arista’s board of directors has approved a four -for-one forward stock split to make Arista’s common stock more accessible to a broader base of investors.

The four -for-one forward stock split will be effected through the filing of an amendment to Arista’s Amended and Restated Certificate of Incorporation that will proportionately increase the authorized shares of common stock.

Our stockholders will receive an additional three shares of common stock for each share held as of the effective time of the filing of the amendment on December 3, 2024.

Prior to market open on December 4, 2024, trading is expected to commence on a split-adjusted basis.

The following table reflects basic and diluted weighted average shares and net income per share on an unaudited pro forma basis giving effect to the stock split as if it had been effective for all periods presented (in thousands, except per share amounts).

Pro Forma (Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Net income $ 747,938 $ 545,327 $ 2,051,058 $ 1,473,685

Basic weighted-average shares outstanding 1,257,928 1,240,740 1,254,968 1,234,408

Add weighted-average effect of dilutive securities:

Employee equity awards 23,864 29,784 25,344 31,848

Diluted weighted-average shares outstanding 1,281,792 1,270,524 1,280,312 1,266,256

Net income per share:

Basic $ 0.59 $ 0.44 $ 1.63 $ 1.19

Diluted $ 0.58 $ 0.43 $ 1.60 $ 1.16

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 1. Financial Statements