Item 1. Financial Statements
ITEM 1. Financial Statements
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except par value per share)
September 30,
2025 June 30,
2025
ASSETS
Current assets:
Cash and cash equivalents $ 223,509 $ 153,079
Restricted cash 421 419
Accounts receivable, net 37,099 34,772
Receivable from sale of equity interest in the JV Company 56,410 —
Inventories 196,156 189,677
Other current assets 17,689 18,215
Total current assets 531,284 396,162
Property, plant and equipment, net 309,677 314,097
Operating lease right-of-use assets 24,212 21,288
Intangible assets, net 1,380 269
Equity method investment 140,825 279,122
Deferred income tax assets 7,981 599
Other long-term assets 22,190 22,766
Total assets $ 1,037,549 $ 1,034,303
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 49,136 $ 60,044
Accrued liabilities 68,176 59,027
Payable related to equity investee, net 21,157 15,809
Income taxes payable 13,115 1,790
Short-term debt 2,925 11,852
Finance lease liabilities 1,026 1,007
Operating lease liabilities 5,782 4,978
Total current liabilities 161,317 154,507
Long-term debt 2,879 14,872
Income taxes payable - long-term 4,276 4,201
Deferred income tax liabilities 12,309 13,192
Finance lease liabilities - long-term 1,011 1,274
Operating lease liabilities - long-term 19,149 16,925
Other long-term liabilities 2,504 7,000
Total liabilities 203,445 211,971
Commitments and contingencies (Note 12)
Shareholders' Equity:
Preferred shares, par value $ 0.002 per share:
Authorized: 10,000 shares; issued and outstanding: none at September 30, 2025 and June 30, 2025
— —
Common shares, par value $ 0.002 per share:
Authorized: 100,000 shares; issued and outstanding: 37,171 shares and 30,053 shares, respectively at September 30, 2025 and 37,127 shares and 30,009 shares, respectively at June 30, 2025
74 74
Treasury shares at cost: 7,118 shares at September 30, 2025 and 7,118 shares at June 30, 2025
( 79,058 ) ( 79,058 )
Additional paid-in capital 386,470 379,779
Accumulated other comprehensive loss ( 5,187 ) ( 12,390 )
Retained earnings 531,805 533,927
Total shareholders' equity 834,104 822,332
Total liabilities and shareholders' equity $ 1,037,549 $ 1,034,303
See accompanying notes to these condensed consolidated financial statements.
1
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF LOSS
(Unaudited, in thousands except per share data)
Three Months Ended September 30,
2025 2024
Revenue $ 182,501 $ 181,887
Cost of goods sold 1
139,656 137,361
Gross profit 42,845 44,526
Operating expenses
Research and development 24,145 22,478
Selling, general and administrative 23,284 22,300
Total operating expenses 47,429 44,778
Operating loss ( 4,584 ) ( 252 )
Other income (loss), net 1
2,468 ( 650 )
Interest income 892 1,265
Interest expenses ( 360 ) ( 812 )
Net loss before income taxes and equity method investment income (loss) ( 1,584 ) ( 449 )
Income tax expense 1,927 1,040
Net loss before equity method investment income (loss) ( 3,511 ) ( 1,489 )
Equity method investment income (loss) 1,389 ( 1,007 )
Net loss $ ( 2,122 ) $ ( 2,496 )
Net loss per common share
Basic $ ( 0.07 ) $ ( 0.09 )
Diluted $ ( 0.07 ) $ ( 0.09 )
Weighted average number of common shares used to compute net loss per share
Basic 30,036 29,004
Diluted 30,036 29,004
(1) - Amounts include related party transactions. Refer to Note 3, Related Party Transaction.
See accompanying notes to these condensed consolidated financial statements.
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Table of Contents
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
Three Months Ended September 30,
2025 2024
Net loss $ ( 2,122 ) $ ( 2,496 )
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of $( 476 ) and $ 103 tax in each of the three months ended September 30, 2025 and 2024, respectively
( 789 ) ( 159 )
Cumulative translation adjustment release from sale of equity interest in the JV Company, net of tax $( 1,209 )
7,992 —
Comprehensive income (loss)
$ 5,081 $ ( 2,655 )
See accompanying notes to these condensed consolidated financial statements.
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited, in thousands)
Common Shares Treasury Shares Additional Paid-In Capital Accumulated Other Comprehensive Loss
Retained Earnings Total Shareholders' Equity
Shares
Amount
Shares
Amount
Balance, June 30, 2024 36,107 $ 72 ( 7,138 ) $ ( 79,213 ) $ 353,109 $ ( 13,419 ) $ 631,058 $ 891,607
Exercise of common stock options and release of restricted stock units 73 — — — 91 — — 91
Withholding tax on restricted stock units ( 18 ) — — — ( 673 ) — — ( 673 )
Share-based compensation — — — — 6,902 — — 6,902
Net loss
— — — — — — ( 2,496 ) ( 2,496 )
Foreign currency translation adjustment, net of tax — — — — — ( 159 ) — ( 159 )
Balance, September 30, 2024 36,162 $ 72 ( 7,138 ) $ ( 79,213 ) $ 359,429 $ ( 13,578 ) $ 628,562 $ 895,272
Common Shares Treasury Shares Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss)
Retained Earnings Total Shareholders' Equity
Shares
Amount
Shares
Amount
Balance, June 30, 2025
37,127 $ 74 ( 7,118 ) $ ( 79,058 ) $ 379,779 $ ( 12,390 ) $ 533,927 $ 822,332
Release of restricted stock units
60 — — — — — — —
Withholding tax on restricted stock units ( 16 ) — — — ( 441 ) — — ( 441 )
Share-based compensation — — — — 7,132 — — 7,132
Net loss
— — — — — — ( 2,122 ) ( 2,122 )
Foreign currency translation adjustment, net of tax — — — — — 7,203 — 7,203
Balance, September 30, 2025
37,171 $ 74 ( 7,118 ) $ ( 79,058 ) $ 386,470 $ ( 5,187 ) $ 531,805 $ 834,104
See accompanying notes to these condensed consolidated financial statements.
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Table of Contents
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended September 30,
2025 2024
Cash flows from operating activities
Net loss $ ( 2,122 ) $ ( 2,496 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 14,341 14,562
Equity method investment (gain) loss ( 1,389 ) 1,007
Share-based compensation expense 7,132 6,902
Deferred income taxes, net ( 8,265 ) ( 221 )
Loss on disposal of property and equipment — 15
Impairment of property and equipment 7 —
Impairment of privately-held investment — 100
Changes in operating assets and liabilities
Accounts receivable ( 2,327 ) ( 12,045 )
Inventories ( 6,480 ) 10,782
Contract assets — ( 3,050 )
Other current and long-term assets 840 137
Accounts payable ( 9,182 ) ( 1,519 )
Net payable, equity investee 5,348 3,513
Income taxes payable 11,400 641
Deferred revenue — ( 2,591 )
Accrued and other liabilities 884 ( 4,716 )
Net cash provided by operating activities 10,187 11,021
Cash flows from investing activities
Proceeds from sale of equity interest in the JV Company 92,100 —
Purchases of property and equipment ( 9,767 ) ( 6,918 )
Purchase of intangible assets ( 388 ) —
Government grant related to equipment — 180
Net cash provided by (used in) investing activities 81,945 ( 6,738 )
Cash flows from financing activities
Withholding tax on restricted stock units ( 441 ) ( 673 )
Proceeds from exercise of stock options — 91
Repayments of borrowings ( 20,948 ) ( 2,897 )
Principal payments on finance leases ( 245 ) ( 227 )
Net cash used in financing activities ( 21,634 ) ( 3,706 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 66 ) 105
Net increase in cash, cash equivalents and restricted cash 70,432 682
Cash, cash equivalents and restricted cash at beginning of period 153,498 175,540
Cash, cash equivalents and restricted cash at end of period $ 223,930 $ 176,222
Supplemental disclosures of non-cash investing and financing information:
Property and equipment purchased but not yet paid $ 4,738 $ 2,507
Reconciliation of cash, cash equivalents, and restricted cash:
Cash and cash equivalents $ 223,509 $ 176,008
Restricted cash 421 214
Total cash, cash equivalents, and restricted cash $ 223,930 $ 176,222
See accompanying notes to these condensed consolidated financial statements.
5
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The Company and Significant Accounting Policies
The Company
Alpha and Omega Semiconductor Limited and its subsidiaries (the “Company”, “AOS”, “we” or “us”) design, develop and supply a broad range of power semiconductors. The Company's portfolio of products targets high-volume applications, including personal computers, graphic cards, game consoles, home appliances, power tools, smart phones, battery packs, consumer and industrial motor controls and power supplies for computers, servers and telecommunications equipment. The Company conducts its operations primarily in the United States, Hong Kong, China, and South Korea.
Basis of Preparation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Securities and Exchange Commission Regulation S-X, as amended. They do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP for complete financial statements. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025. For a complete discussion of the Company's accounting policies, refer to Part II, Item 8, Note 1 — Significant Accounting Policies in our 2025 Form 10-K. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair presentation of the results of operations for the periods presented have been included in the interim periods. Operating results for the three months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2026 or any other interim period. The consolidated balance sheet at June 30, 2025 is derived from the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. To the extent there are material differences between these estimates and actual results, the Company's consolidated financial statements will be affected. On an ongoing basis, the Company evaluates the estimates, judgments and assumptions including those related to reserve of stock rotation returns, allowance for price adjustments, allowance for expected credit loss, inventory reserves, warranty accrual, income taxes, leases, share-based compensation, and recoverability of and useful lives for property, plant and equipment.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, “Income Taxes (Topic 740) – Improvements to Income Tax Disclosures”, which enhances the transparency, effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid. This will impact only the Company's disclosures for the annual reporting period ending June 30, 2026, with no impacts to its financial condition or results of operations.
Recently Issued Accounting Standards not yet adopted
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures”, which improves disclosure requirements and provides more detailed information about an entity’s expenses, specifically amounts related to purchases of inventory, employee compensation, depreciation, intangible asset amortization, and selling expenses, along with qualitative descriptions of certain other types of expenses. This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December
6
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which provides an optional practical expedient for estimating future credit losses based on current conditions as of the balance sheet date and assuming those conditions do not change over the remaining life of the accounts receivable. The guidance will be effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company does not expect this ASU to have a material impact on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. The ASU removes references to prescriptive software development stages and includes an updated framework for capitalizing internal software costs. The guidance will be effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the ASU on its consolidated financial statements.
7
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. Equity Method Investment in Equity Investee
The Company has accounted for its investment in the JV Company using the equity method of accounting . For details of its equity method investment, please refer to Part II, Item 8, Note 2 — Equity Method Investment in Equity Investee in its 2025 Form 10-K.
On July 14, 2025, the Company entered into an equity transfer agreement to sell approximately 20.3 % of outstanding equity interest in the JV Company for an aggregate cash consideration of $ 150 million. On August 29, 2025, the amended shareholders’ agreement for the JV Company was signed, which reduced the Company’s equity interest in the JV Company by 20.3 % to an ownership percentage of 18.9 %. As a result, the Company received its first installment of RMB 676 million (or $ 94.5 million based on the currency exchange rate between RMB and U.S. Dollar on August 29, 2025), and paid transaction costs related to this sale of approximately $ 2.4 million. In addition, the Company recorded a receivable of $ 56.4 million for the remaining installments, which is included in the receivable from sale of equity interest in the JV Company line on the Condensed Consolidated Balance Sheets. The remaining installments will be received subject to satisfaction of certain conditions, which require the Company's continuing involvement, including voting in shareholder meetings to complete the transaction in accordance with the equity transfer agreement, plus other administrative actions. As a result of the sales transaction, the Company evaluated the factors that indicate the ability to exercise its significant influence to the JV Company, including but not limited to representation on the board, material intra-entity transactions, and participation in policy making process. The Company concluded that it continues to have the ability to exercise significant influence over the operating and financial policies of the JV Company and accordingly accounts for the investment using the equity method of accounting.
The Company reports its equity in earnings or loss of the JV Company on a three-month lag due to an inability to timely obtain financial information of the JV Company. During the three months ended September 30, 2025 and 2024, the Company recorded a $ 1.4 million gain, including the $ 1.1 million on the related sale of a portion of its interest in the equity method investment and $ 1.0 million loss of its equity share of the JV Company, respectively, using lag reporting.
8
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
3. Related Party Transactions
As of September 30, 2025, the Company owned approximately 18.9 % equity interest in the JV Company, which, by definition, is a related party to the Company. The JV Company supplies 12-inch wafers and provides assembly and testing services to AOS. The JV Company reimbursed AOS for purchases made on its behalf of $ 0.1 million and $ 2.2 million for the three months ended September 30, 2025 and 2024, respectively. The purchases by AOS for the three months ended September 30, 2025 and 2024 were $ 30.4 million and $ 28.3 million, respectively. Due to the right of offset of receivables and payables with the JV Company, as of September 30, 2025 and June 30, 2025, AOS recorded the net amount of $ 21.2 million and $ 15.8 million, respectively, as a payable related to equity investee, net, on the Condensed Consolidated Balance Sheet. During the three months ended September 30, 2025, the Company also recorded approximately $ 1.9 million other income for certain service the Company provided to the JV Company.
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Net Loss Per Common Share
The following table presents the calculation of basic and diluted net loss per share attributable to common shareholders:
Three Months Ended September 30,
2025 2024
(in thousands, except per share data)
Numerator:
Net loss $ ( 2,122 ) $ ( 2,496 )
Denominator:
Basic:
Weighted average number of common shares used to compute basic net loss per share 30,036 29,004
Diluted:
Weighted average number of common shares used to compute diluted net loss per share 30,036 29,004
Net loss per common share:
Basic $ ( 0.07 ) $ ( 0.09 )
Diluted $ ( 0.07 ) $ ( 0.09 )
The following potential dilutive securities were excluded from the computation of diluted net loss per common share as their effect would have been anti-dilutive:
Three Months Ended September 30,
2025 2024
(in thousands)
Employee stock options and RSUs 2,420 2,583
ESPP 327 704
Total potential dilutive securities 2,747 3,287
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. Concentration of Credit Risk and Significant Customers
The Company manages its credit risk associated with exposure to distributors and direct customers on outstanding accounts receivable through the application and review of credit approvals, credit ratings and other monitoring procedures. In some instances, the Company also obtains letters of credit from certain customers.
Credit sales, which are mainly on credit terms of 30 to 60 days, are only made to customers who meet the Company’s credit requirements, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis. The Company considers its trade accounts receivable to be of good credit quality because its key distributors and direct customers have long-standing business relationships with the Company and the Company has not experienced any significant bad debt write-offs of accounts receivable in the past. The Company closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, where available.
Summarized below are individual customers whose revenue or accounts receivable balances were 10% or higher than the respective total consolidated amounts:
Three Months Ended September 30,
Percentage of revenue 2025 2024
Customer A 21.8 % 22.5 %
Customer B 53.8 % 51.5 %
September 30,
2025 June 30,
2025
Percentage of accounts receivable
Customer A * 14.9 %
Customer B 72.9 % 52.3 %
* Less than 10%
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. Balance Sheet Components
Accounts receivable, net:
September 30,
2025 June 30,
2025
(in thousands)
Accounts receivable $ 75,851 $ 75,604
Less: Allowance for price adjustments ( 38,722 ) ( 40,802 )
Less: Allowance for credit losses ( 30 ) ( 30 )
Accounts receivable, net $ 37,099 $ 34,772
Inventories:
September 30,
2025 June 30,
2025
(in thousands)
Raw materials $ 80,522 $ 81,341
Work-in-process 96,373 91,591
Finished goods 19,261 16,745
$ 196,156 $ 189,677
Other current assets:
September 30,
2025 June 30,
2025
(in thousands)
Value-added tax receivable $ 454 $ 339
Other prepaid expenses 2,154 2,383
Prepaid insurance 3,992 3,669
Prepaid maintenance 1,904 1,990
Deposit with supplier 5,521 7,073
Prepaid income tax 826 336
Interest receivable 234 191
Short term deposit 971 534
Other receivables 1,633 1,700
$ 17,689 $ 18,215
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Property, plant and equipment, net:
September 30,
2025 June 30,
2025
(in thousands)
Land $ 4,877 $ 4,877
Building and building improvements 72,029 71,961
Manufacturing machinery and equipment 451,443 442,462
Equipment and tooling 38,551 37,918
Computer equipment and software 53,528 53,509
Office furniture and equipment 3,255 3,267
Leasehold improvements 43,857 43,901
667,540 657,895
Less: accumulated depreciation and amortization ( 384,135 ) ( 371,836 )
283,405 286,059
Equipment and construction in progress 26,272 28,038
Property, plant and equipment, net $ 309,677 $ 314,097
Intangible assets, net:
September 30,
2025 June 30,
2025
(in thousands)
Patents and technology rights $ 18,037 $ 18,037
Software license 1,181 —
Trade name 268 268
Customer relationships 1,150 1,150
20,636 19,455
Less: accumulated amortization ( 19,525 ) ( 19,455 )
1,111 —
Goodwill 269 269
Intangible assets, net $ 1,380 $ 269
F uture amortization expense of intangible assets is as follows (in thousands):
Year ending June 30,
2026 (Remaining) $ 295
2027 406
2028 406
2029 4
$ 1,111
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Other long-term assets:
September 30,
2025 June 30,
2025
(in thousands)
Prepayments for property and equipment $ 1,844 $ 1,973
Customs deposit 824 814
Deposit with supplier 18,080 18,080
Office leases deposits 971 1,358
Other 471 541
$ 22,190 $ 22,766
Accrued liabilities:
September 30,
2025 June 30,
2025
(in thousands)
Accrued compensation and benefits $ 22,999 $ 17,766
Warranty accrual 2,082 2,118
Stock rotation accrual 5,659 6,184
Accrued professional fees 3,315 3,399
Accrued inventory 465 1,465
Accrued facilities related expenses 2,793 2,184
Accrued property, plant and equipment 2,839 2,704
Other accrued expenses 4,871 4,755
Customer deposits 19,625 17,030
ESPP payable 3,528 1,422
$ 68,176 $ 59,027
Short-term customer deposits are payments received from customers for securing future product shipments. As of September 30, 2025, $ 7.0 million for such deposits were from Customer A, $ 2.0 million were from Customer B, and $ 10.6 million were from other customers. As of June 30, 2025, $ 7.0 million were from Customer A, $ 2.0 million were from Customer B, and $ 8.0 million were from other customers.
The activities in the warranty accrual, included in accrued liabilities, are as follows:
Three Months Ended September 30,
2025 2024
(in thousands)
Beginning balance $ 2,118 $ 2,407
Additions 163 341
Released — ( 700 )
Utilization ( 199 ) ( 200 )
Ending balance $ 2,082 $ 1,848
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The activities in the stock rotation accrual, included in accrued liabilities, are as follows:
Three Months Ended September 30,
2025 2024
(in thousands)
Beginning balance $ 6,184 $ 4,660
Additions 3,598 2,251
Utilization ( 4,123 ) ( 2,459 )
Ending balance $ 5,659 $ 4,452
Other long-term liabilities:
September 30,
2025 June 30,
2025
(in thousands)
Customer deposits $ 2,000 $ 7,000
Other 504 —
Other long-term liabilities $ 2,504 $ 7,000
Customer deposits are payments received from customers for securing future product shipments. As of September 30, 2025, $ 1.0 million for such deposits were from Customer A, and $ 1.0 million were from other customers. As of June 30, 2025, $ 5.0 million were from Customer A and $ 2.0 million were from other customers.
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ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. Bank Borrowings
Accounts Receivable Factoring Agreement
On August 9, 2019, one of the Company's wholly-owned subsidiaries (the "Borrower") entered into a factoring agreement with the Hongkong and Shanghai Banking Corporation Limited (“HSBC”), whereby the Borrower assigns certain of its accounts receivable with recourse. This factoring agreement allows the Borrower to borrow up to 70 % of the net amount of its eligible accounts receivable of the Borrower with a maximum amount of $ 30.0 million. The interest rate is based on the Secured Overnight Financing Rate ("SOFR)", plus 2.01 % per annum. The Company is the guarantor for this agreement. The Company is accounting for this transaction as a secured borrowing under the Transfers and Servicing of Financial Assets guidance. In addition, any cash held in the restricted bank account controlled by HSBC has a legal right of offset against the borrowing. This agreement, with certain financial covenants required, has no expiration date. On August 11, 2021, the Borrower signed an agreement with HSBC to decrease the borrowing maximum amount to $ 8.0 million with certain financial covenants required. Other terms remain the same. In August 2025, this factoring agreement was terminated with no outstanding balance.
Debt financing
In September 2021, Jireh Semiconductor Incorporated (“Jireh”), one of the wholly-owned subsidiaries, entered into a financing arrangement agreement with a company (“Lender”) for the lease and purchase of a machinery equipment manufactured by a supplier. This agreement includes a payment term of five (5) years, pursuant to which Jireh commenced payments of interests and principal to the Lender in September 2022 when the final installation and acceptance of the equipment were completed. After the end of such payment term, Jireh has the option to purchase the equipment for $ 1 . The implied interest rate was 4.75 % per annum which was adjustable based on every five basis point increase in 60-month U.S. Treasury Notes. The total purchase price of this equipment was euro 12.0 million. In April 2021, Jireh made a down payment of euro 6.0 million, representing 50 % of the total purchase price of the equipment, to the supplier. In June 2022, the equipment was delivered to Jireh after Lender paid 40 % of the total purchase price, for euro 4.8 million, to the supplier on behalf of Jireh. In September 2022, Lender paid the remaining 10 % payment for the total purchase price and reimbursed Jireh for the 50 % down payment, after the installation and configuration of the equipment. The title of the equipment was transferred to Lender following such payment. The agreement was amended with fixed implied interest rate of 7.51 % and monthly payment of principal and interest effective in October 2022. Other terms remain the same. In addition, Jireh purchased hardware for the machine under this financing arrangement. The purchase price of this hardware was $ 0.2 million. The financing arrangement is secured by this equipment and other equipment at Jireh, which had the net book value of $ 11.7 million as of September 30, 2025. As of September 30, 2025, the outstanding balance of this debt financing was $ 5.8 million.
Long-term bank borrowings
On August 18, 2021, Jireh entered into a term loan agreement with a financial institution (the “Bank”) in an amount up to $ 45.0 million for the purpose of expanding and upgrading the Company’s fabrication facility located in Oregon. The obligation under the loan agreement is secured by substantially all assets of Jireh and guaranteed by the Company. The agreement has a 5.5 year term and matures on February 16, 2027. Jireh is required to make consecutive quarterly payments of principal and interest. The loan accrues interest based on adjusted SOFR plus the applicable margin based on the outstanding balance of the loan. This agreement contains customary restrictive covenants and includes certain financial covenants that the Company is required to maintain. Jireh drew down $ 45.0 million on February 16, 2022 with the first payment of principal beginning in October 2022. As of June 30, 2025, Jireh was in compliance with these covenants and the outstanding balance of this loan was $ 20.3 million. In August 2025, the Company paid the outstanding balance in full. As of August 2025, this agreement was terminated with no outstanding balance.
16
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Maturities of short-term debt and long-term debt were as follows (in thousands):
Year ending June 30,
2026 (Remaining)
$ 2,173
2027
3,095
2028
536
Total principal $ 5,804
Short-term Debt Long-term Debt Total
Principal amount $ 2,925 $ 2,879 $ 5,804
8. Leases
The Company evaluates contracts for lease accounting at contract inception and assesses lease classification at the lease commencement date. The finance lease is related to the $ 5.1 million of a machinery lease financing with a vendor. The Company does not record leases on the Condensed Consolidated Balance Sheets with a term of one year or less.
The components of the Company’s operating and finance lease expenses are as follows for the periods presented (in thousands):
Three Months Ended September 30,
2025 2024
Operating leases:
Fixed rent expense $ 1,629 $ 1,737
Variable rent expense 270 270
Finance lease:
Amortization of equipment 128 128
Interest 41 59
Short-term leases
Short-term lease expenses 46 32
Total lease expenses $ 2,114 $ 2,226
17
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Supplemental balance sheet information related to the Company’s operating and finance leases is as follows (in thousands, except lease term and discount rate):
September 30, 2025 June 30, 2025
Operating Leases :
Right-of-use assets associated with operating leases
$ 24,212 $ 21,288
Finance Lease:
Property, plant and equipment, gross $ 5,133 $ 5,133
Accumulated depreciation ( 1,812 ) ( 1,684 )
Property, plant and equipment, net $ 3,321 $ 3,449
Weighted average remaining lease term (in years)
Operating leases 4.59 5.00
Finance lease 2.00 2.25
Weighted average discount rate
Operating leases 4.91 % 4.88 %
Finance lease 7.51 % 7.51 %
Supplemental cash flow information related to the Company’s operating and finance leases is as follows (in thousands):
Three Months Ended September 30,
2025 2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 1,557 $ 1,607
Operating cash flows from finance lease $ 41 $ 59
Financing cash flows from finance lease $ 245 $ 227
Non-cash investing and financing information:
Operating lease right-of-use assets obtained in exchange for lease obligations $ 4,430 $ 832
Future minimum lease payments are as follows as of September 30, 2025 (in thousands):
Year ending June 30, Operating Leases Finance Leases
The remainder of fiscal 2026
$ 5,186 $ 858
2027
6,660 1,144
2028
6,161 191
2029
4,519 —
2030
3,472 —
Thereafter 1,878 —
Total minimum lease payments 27,876 2,193
Less amount representing interest ( 2,945 ) ( 156 )
Total lease liabilities $ 24,931 $ 2,037
18
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
9. Shareholders’ Equity and Share-based Compensation
Time-based Restric ted Stock Units ( “ TRSUs ” )
The following table summarizes the Company’ TRSU activities for the three months ended September 30, 2025:
Number of Time-based Restricted Stock
Units
Weighted Average
Grant Date Fair
Value Per Share Weighted Average
Remaining
Contractual
Term (Years) Aggregate Intrinsic Value
Nonvested at June 30, 2025 1,491,926 $ 28.50 1.66 $ 38,282,821
Granted 92,084 $ 27.93
Vested ( 59,873 ) $ 33.09
Forfeited ( 32,165 ) $ 26.77
Nonvested at September 30, 2025 1,491,972 $ 28.31 1.52 $ 41,715,537
Market-based Restricted Stock Units ( “ MSUs ” )
In December 2021, the Company granted 1.0 million market-based restricted stock units (“MSUs”) to certain personnel. The number of shares to be earned at the end of performance period was determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2022 to December 31, 2024 as well as the recipients remaining in continuous service with the Company through such period. The MSUs vest in four equal annual installments after the end of performance period. The Company estimated the grant date fair values of its MSUs using a Monte-Carlo simulation model. In September 2023, the Company determined it was no longer probable that it would achieve the minimum revenue threshold specified in the awards. Therefore, the Company reversed all of the previously recognized expenses of $ 6.4 million for these MSUs. In addition, on September 19, 2023, the Compensation Committee of the Board approved a modification of the terms of MSUs to extend the performance period through December 31, 2025, changed the commencement date for the four-year time-based service period to January 1, 2026, and reduced the achievement of specified stock prices and revenue thresholds. The fair value of these MSUs was revalued to reflect the change using a Monte-Carlo simulation model. In June 2024, the Company determined it was no longer probable that the revenue thresholds for the modified MSU would be achieved. Therefore, the Company reversed $ 2.4 million in the June 2024 quarter that was recorded during the fiscal year 2024 related to the modification on September 19, 2023. On August 8, 2024, the Compensation Committee of the Board approved a modification of the terms of MSUs to extend the performance period through December 31, 2026, change the commencement date for the four-year time-based service period to January 1, 2027, and reduce the revenue thresholds. The fair value of these MSUs was revalued to reflect the change using a Monte-Carlo simulation model with the following assumptions: risk-free interest rate of 3.93 %, expected term of 2.40 years, expected volatility of 57.81 % and dividend yield of 0 %. The Company recorded $ 1.4 million and $ 0.8 million of expenses for the three months ended September 30, 2025 and 2024, respectively.
During the quarter ended September 30, 2018, the Company granted 1.3 million MSUs to certain personnel. The number of shares to be earned at the end of performance period is determined based on the Company’s achievement of specified stock prices and revenue thresholds during the performance period from January 1, 2019 to December 31, 2021 as well as the recipients remaining in continuous service with the Company through such period. The MSUs vest in four equal annual installments after the end of the performance period. The Company estimated the grant date fair values of its MSUs using a Monte-Carlo simulation model. On August 31, 2020, the Compensation Committee of the Board approved a modification of the terms of MSU to (i) extend the performance period through December 31, 2022 and (ii) change the commencement date for the four-year time-based service period to January 1, 2023. The fair value of these MSUs was recalculated to reflect the change as of August 31, 2020 and the unrecognized compensation amount was adjusted to reflect the increase in fair value. The Company recorded $ 0.1 million and $ 0.2 million of expenses for MSUs during the three months ended September 30, 2025 and 2024, respectively.
19
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the Company’ MSUs activities for the three months ended September 30, 2025:
Number of Market-based Restricted Stock
Units
Weighted Average
Grant Date Fair
Value Per Share Weighted Average
Remaining
Contractual Term
(Years) Aggregate Intrinsic Value
Nonvested at June 30, 2025 1,436,000 $ 32.32 2.89 $ 36,847,760
Forfeited ( 43,000 ) $ 48.44
Nonvested at September 30, 2025 1,393,000 $ 31.82 2.60 $ 38,948,280
Performance-based Restricted Stock Units (“PRSUs”)
In March of each year since year 2017, the Company granted PRSUs to certain personnel. The number of shares to be earned under the PRSUs is determined based on the level of attainment of predetermined financial goals. The PRSUs vest in four equal annual installments from the first anniversary date after the grant date if certain predetermined financial goals were met. The Company recorded approximately $ 1.2 million and $ 0.9 million of expe ns es, using the accelerated attribution method, for these PRSUs during the three months ended September 30, 2025 and 2024, respectively.
The following table summarizes the Company’s PRSUs activities for the three months ended September 30, 2025:
Number of Performance-based Restricted Stock
Units Weighted Average
Grant Date Fair
Value Per Share Weighted Average
Remaining
Contractual Term
(Years) Aggregate Intrinsic Value
Nonvested at June 30, 2025 409,563 $ 27.71 1.85 $ 10,509,387
Nonvested at September 30, 2025 409,563 $ 27.71 1.59 $ 11,451,381
Employee Share Purchase Plan (“ESPP”)
The assumptions used to estimate the fair values of common shares issued under the ESPP were as follows:
Three Months Ended September 30,
2025
Volatility rate 71.0 %
Risk-free interest rate 4.1 %
Expected term 1.3 years
Dividend yield — %
Share-based Compensation Expense
The total share-based compensation expense recognized in the Condensed Consolidated Statements of Loss for the periods presented was as follows:
Three Months Ended September 30,
2025 2024
(in thousands)
Cost of goods sold $ 1,065 $ 1,015
Research and development 1,859 1,935
Selling, general and administrative 4,208 3,952
$ 7,132 $ 6,902
As of September 30, 2025, total unrecognized compensation cost under the Company’s share-based compensation plans was $ 45.7 million, which is expected to be recognized over a weighted-average period of 2.4 years.
20
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
10. Income Taxes
The Company recognized income tax expense of approximately $ 1.9 million and $ 1.0 million for the three months ended September 30, 2025 and 2024, respectively. The income tax expense of $ 1.9 million for the three months ended September 30, 2025 included a $ 0.1 million discrete tax expense. The income tax expense of $ 1.0 million for the three months ended September 30, 2024 included a $ 0.1 million discrete tax expense. Excluding the discrete income tax items, the income tax expense for the three months ended September 30, 2025 and 2024 was $ 1.9 million and $ 1.0 million, respectively, and the effective tax rate for the three months ended September 30, 2025 and 2024 was ( 952.4 )% and ( 65.8 )%, respectively. The changes in the tax expense and effective tax rate between the periods resulted primarily from changes in the mix of earnings in various geographic jurisdictions between the current period and the same period of last year, including reporting $ 0.6 million of income tax expense related to the Company’s income from its investment in CQJV for the three months ended September 30, 2025 versus an $ 0.2 million tax benefit for the three months ended September 30, 2024. In addition, income tax payable increased by 10.4 million and deferred tax liability decreased by 10.5 million as a result of the sale of approximately 20.3 % of the Company’s equity interest in the JV company for $ 150 million during the three month ended September 30, 2025.
The Company files its income tax returns in the United States and in various foreign jurisdictions. The tax years 2004 to 2025 remain open to examination by U.S. federal and state tax authorities. The tax years 2019 to 2025 remain open to examination by foreign tax authorities.
The Company’s income tax returns are subject to examinations by the Internal Revenue Service and other tax authorities in various jurisdictions. In accordance with the guidance on the accounting for uncertainty in income taxes, the Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of its provision for income taxes. These assessments can require considerable estimates and judgments. As of September 30, 2025, the gross amount of unrecognized tax benefits was approximately $ 10.8 million, of which $ 7.4 million, if recognized, would reduce the effective income tax rate in future periods. If the Company’s estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. The Company does not anticipate any material changes to its uncertain tax positions during the next twelve months.
One Big Beautiful Bill Act, Enacted July 4, 2025
On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (the “OBBB”), was signed into law. This includes significant changes to the federal corporate tax provisions and extends certain otherwise expiring provisions of the 2017 Tax Cuts and Jobs Act. The key provisions include allowing immediate expensing of domestic research and experimental expenditures, new limitations on interest expense deductibility, reinstatement of 100% bonus depreciation for qualified assets placed in service in the United States after January 19, 2025 as well as changes to the calculation of taxable income resulting from the foreign derived intangible income deduction. ASC 740 Income Taxes requires the effects of changes in tax rates and laws to be recognized in the period in which the relevant legislation is enacted. The Company has concluded that the impact of OBBB for the current quarter is immaterial.
21
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
11. Segment and Geographic Information
The Company is organized as, and operates in, one operating segment: the design, development and supply of power semiconductor products for computing, consumer electronics, communication and industrial applications. The chief operating decision-maker is the Chief Executive Officer. The financial information presented to the Company’s Chief Executive Officer is on a consolidated basis, accompanied by information about revenue by customer and geographic region, for purposes of evaluating financial performance and allocating resources. The Chief Executive Officer assesses performance of the Company, monitors budget versus actual results and determines how to allocate resources based on the consolidated net income or loss as reported on the Company’s Condensed Consolidated Statements of Income (Loss). There are no other expense categories regularly provided to the Chief Executive Officer that are not already included in the Condensed Consolidated Statements of Income (Loss). The Company has one business segment, and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports as a single operating segment.
The Company sells its products primarily to distributors in the Asia Pacific region, who in turn sell these products to end customers. Because the Company’s distributors sell their products to end customers which may have a global presence, revenue by geographical location is not necessarily representative of the geographical distribution of sales to end user markets.
The revenue by geographical location in the following tables is based on the country or region in which the products were shipped to:
Three Months Ended September 30,
2025 2024
(in thousands)
Hong Kong $ 178,411 $ 153,495
China 2,357 21,255
South Korea 479 290
United States 1,125 1,073
Other countries 129 5,774
$ 182,501 $ 181,887
The following is a summary of revenue by product type:
Three Months Ended September 30,
2025 2024
(in thousands)
Power discrete $ 108,506 $ 122,454
Power IC 72,708 52,940
Packaging and testing services and other 1,287 852
License and development services — 5,641
$ 182,501 $ 181,887
22
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Long-lived assets, net consisting of property, plant and equipment and operating lease right-of-use assets, net by geographical area are as follows:
September 30,
2025 June 30,
2025
(in thousands)
China $ 100,334 $ 99,389
United States 227,245 230,518
Other countries 5,426 5,478
$ 333,005 $ 335,385
23
ALPHA AND OMEGA SEMICONDUCTOR LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
12. Commitments and Contingencies
Purchase Commitments
As of September 30, 2025, the Company had approximately $ 77.8 million of outstanding purchase commitments primarily for purchases of semiconductor raw materials, wafers, spare parts, packaging and testing services and others, as well as $ 21.5 million of capital commitments for the purchase of property and equipment. Purchase commitments are generally restricted to a purchase forecast as mutually agreed between the parties. This purchase forecast can vary among different suppliers.
Other Commitments
See Note 7 and Note 8 of the Notes to the Condensed Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q for descriptions of commitments including bank borrowings and leases.
Contingencies and Indemnities
The Company has in the past, and may from time to time in the future, become involved in legal proceedings arising from the normal course of business activities. The semiconductor industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. Irrespective of the validity of such claims, the Company could incur significant costs in the defense of such claims and suffer adverse effects on its operations.
The Company is a party to a variety of agreements contracted with various third parties. Pursuant to these agreements, the Company may be obligated to indemnify another party to such an agreement with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the Company, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants related to such matters as title to assets sold, certain intellectual property rights, specified environmental matters and certain income taxes. In these circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party’s claim. Further, the Company's obligations under these agreements may be limited in time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by it under these agreements. The Company has not historically paid or recorded any material indemnifications, and no accrual was made at September 30, 2025 and June 30, 2025.
The Company has agreed to indemnify its directors and certain employees as permitted by law and pursuant to its By-laws, and has entered into indemnification agreements with its directors and executive officers. The Company has not recorded a liability associated with these indemnification arrangements, as it historically has not incurred any material costs associated with such indemnification obligations. Costs associated with such indemnification obligations may be mitigated by insurance coverage that the Company maintains. However, such insurance may not cover any, or may cover only a portion of, the amounts the Company may be required to pay. In addition, the Company may not be able to maintain such insurance coverage at a reasonable cost, if at all, in the future.
24
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.