What changed in this filing

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Item 1. Financial Statements

2023-10-24 compared with 2023-07-24 · 117 added, 81 removed, 375 unchanged (35% of the section changed)

2 unchanged sentences

(In thousands, except par value)

September 30,

2023 December 31,

27 unchanged sentences

5,000 shares authorized;

no shares issued and outstanding as of July 1, 2023 and December 31, 2022

no shares issued and outstanding as of September 30, 2023 and December 31, 2022

Common stock, $ 0.025 par value;

100,000 shares authorized;

66,320 shares issued and outstanding as of July 1, 2023, and 65,735 shares issued and outstanding as of December 31, 2022

65,950 shares issued and outstanding as of September 30, 2023, and 65,735 shares issued and outstanding as of December 31, 2022

Additional paid-in capital 1,104,435 1,070,100

6 unchanged sentences

(In thousands, except per share data)

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Revenue $ 263,835 $ 236,334 $ 774,859 $ 623,324

7 unchanged sentences

Operating income 15,929 20,005 37,676 39,559

Interest income and other income (expense), net:

Interest income and other expense, net:

Interest income, net 2,658 595 6,553 870

Other income (expense), net 163 ( 272 ) ( 4 ) ( 340 )

Total interest income and other income (expense), net 2,418 ( 32 ) 3,891 ( 65 )

Other expense, net ( 444 ) ( 134 ) ( 448 ) ( 474 )

Total interest income and other expense, net 2,214 461 6,105 396

Income before income taxes 18,143 20,466 43,781 39,955

19 unchanged sentences

Shares Amount

Balance as of April 1, 2023 66,244 $ 1,656 $ 1,097,596 $ ( 1,307 ) $ ( 380,106 ) $ 717,839

Balance as of July 1, 2023 66,320 $ 1,658 $ 1,112,434 $ ( 1,589 ) $ ( 370,733 ) $ 741,770

Stock-based compensation — — 16,026 — — 16,026

2 unchanged sentences

Net income — — — — 16,953 16,953

Other comprehensive loss — — — ( 282 ) — ( 282 )

Balance as of July 1, 2023 66,320 $ 1,658 $ 1,112,434 $ ( 1,589 ) $ ( 370,733 ) $ 741,770

Other comprehensive income — — — 230 — 230

Balance as of September 30, 2023 65,950 $ 1,649 $ 1,104,435 $ ( 1,359 ) $ ( 353,780 ) $ 750,945

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Shares Amount

Balance as of April 2, 2022 64,612 $ 1,616 $ 1,014,336 $ ( 1,552 ) $ ( 422,595 ) $ 591,805

Balance as of July 2, 2022 65,241 $ 1,631 $ 1,032,833 $ ( 2,261 ) $ ( 415,074 ) $ 617,129

Stock-based compensation

3 unchanged sentences

Other comprehensive loss — — — ( 823 ) — ( 823 )

Balance as of July 2, 2022 65,241 $ 1,631 $ 1,032,833 $ ( 2,261 ) $ ( 415,074 ) $ 617,129

Balance as of October 1, 2022 65,442 $ 1,636 $ 1,050,826 $ ( 3,084 ) $ ( 401,631 ) $ 647,747

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

7 unchanged sentences

Other comprehensive income — — — 1,114 1,114

Balance as of July 1, 2023 66,320 $ 1,658 $ 1,112,434 $ ( 1,589 ) $ ( 370,733 ) $ 741,770

Balance as of September 30, 2023 65,950 $ 1,649 $ 1,104,435 $ ( 1,359 ) $ ( 353,780 ) $ 750,945

Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

6 unchanged sentences

Other comprehensive loss — — — ( 2,764 ) — ( 2,764 )

Balance as of July 2, 2022 65,241 $ 1,631 $ 1,032,833 $ ( 2,261 ) $ ( 415,074 ) $ 617,129

Balance as of October 1, 2022 65,442 $ 1,636 $ 1,050,826 $ ( 3,084 ) $ ( 401,631 ) $ 647,747

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(In thousands, unaudited)

Six Months Ended

Nine Months Ended

September 30,

2023 October 1,

Operating activities:

18 unchanged sentences

Maturities of marketable securities 185,888 134,325

Net cash used in investing activities ( 18,772 ) ( 27,700 )

Net cash provided by (used in) investing activities 38,484 ( 17,215 )

Financing activities:

2 unchanged sentences

Payments related to financing arrangements ( 7,560 ) ( 995 )

Net cash provided by financing activities 4,196 13,895

Net cash provided by (used in) financing activities ( 23,310 ) 20,503

Effect of exchange rate changes on cash and cash equivalents 101 ( 527 )

24 unchanged sentences

Quarterly periods are based on a 4-4-5 calendar with the first quarter ending on the Saturday closest to March 31 st .

As a result, the Company had one less day in the six months ended July 1, 2023 than for the six months ended July 2, 2022.

As a result, the Company had one less day in the nine months ended September 30, 2023 than for the nine months ended October 1, 2022.

The preparation of financial statements in conformity with GAAP for interim financial reporting requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

2 unchanged sentences

The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022.

The Company’s significant accounting policies did not change during the six months ended July 1, 2023.

The Company’s significant accounting policies did not change during the nine months ended September 30, 2023.

Newly Adopted Accounting Standard

The Company did not adopt any new accounting standards during the six months ended July 1, 2023 that were significant to the Company.

The Company did not adopt any new accounting standards during the nine months ended September 30, 2023 that were significant to the Company.

Recent Accounting Pronouncements Not Yet Adopted

There have been no additional accounting pronouncements or changes in accounting pronouncements during the six months ended July 1, 2023 as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that are significant or expected to be significant to the Company.

There have been no additional accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2023 as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, that are significant or expected to be significant to the Company.

Cash, Cash Equivalents and Marketable Securities

9 unchanged sentences

The Company’s investments have been classified and accounted for as available-for-sale.

Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of accumulated other comprehensive loss in the stockholders’ equity until realized.

Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of accumulated other comprehensive loss in stockholders’ equity until realized.

Realized gains and losses on sales of marketable securities, if any, are determined on the specific identification method and are reclassified from accumulated other comprehensive loss to results of operations as other expense, net.

There were no realized gains and losses for the three and six months ended July 1, 2023 and July 2, 2022, respectively.

There were no realized gains and losses for the three and nine months ended September 30, 2023 and October 1, 2022, respectively.

Cash, cash equivalents and marketable securities consisted of the following (in thousands):

September 30,

2023 December 31,

2 unchanged sentences

Commercial paper 38,093 33,199

government securities 14,914 5,990

government agency securities 2,954 —

Money market funds 35,720 555

government securities 31,598 5,990

Corporate debt securities — 140

10 unchanged sentences

The amortized cost and fair value of marketable securities were as follows (in thousands):

As of July 1, 2023 Amortized Cost Unrealized Losses Fair Value

As of September 30, 2023 Amortized Cost Unrealized Losses Fair Value

government securities $ 88,922 $ ( 190 ) $ 88,732

20 unchanged sentences

The following tables sets forth the Company’s financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands):

As of July 1, 2023 Level 1 Level 2 Total

As of September 30, 2023 Level 1 Level 2 Total

Money market funds $ 35,720 $ — $ 35,720

14 unchanged sentences

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

September 30,

2023 December 31,

3 unchanged sentences

Inventory consisted of the following (in thousands):

September 30,

2023 December 31,

3 unchanged sentences

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

September 30,

2023 December 31,

2 unchanged sentences

$ 106,839 $ 62,691

Notes Receivable

The Company has notes receivable with one customer related to the sale of hardware.

The notes receivable are secured by the underlying hardware and have original terms of three years at interest rates ranging from 5 % to 8 %.

The Company assesses the credit worthiness of this customer on a periodic basis and did no t have an allowance for credit losses against these notes as of September 30, 2023.

As of September 30, 2023, there was $ 13.0 million outstanding, of which $ 5.2 million is included in “Prepaid expenses and other current assets” and $ 7.8 million in “Other assets” in the accompanying Condensed Consolidated Balance Sheets.

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

September 30,

2023 December 31,

8 unchanged sentences

Accrued liabilities consisted of the following (in thousands):

September 30,

2023 December 31,

2 unchanged sentences

Professional and consulting fees 6,977 7,307

Customer advances or rebates 7,888 5,653

Revenue share payments 7,585 7,210

Current portion of warranty and retrofit 5,795 6,377

Customer advances or rebates 5,449 5,653

Taxes payable 4,742 4,581

Revenue share payments 4,186 7,210

Operating leases 3,996 3,949

Product returns 2,723 2,961

Freight 995 3,649

Business events 1,967 3,167

Insurance 1,698 1,785

Freight 1,146 3,649

Other 5,305 5,742

$ 82,078 $ 90,474

In March 2018, and as amended in December 2020, the Company entered into an agreement with a vendor to develop a certain software product and related enhancements pursuant to which the Company is obligated to make revenue-share payments under the program, subject to aggregate fixed revenue-share payments of $ 15.8 million.

The payments are based on a revenue-share rate applied to revenue from the developed-product and the corresponding hardware sales through March 2024.

If the minimum revenue-share payments are not achieved by the end of that period, a true-up payment will be due.

As of July 1, 2023, the liability, including accrued interest, was $ 7.6 million, which is included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheet.

As of December 31, 2022, the liability, including accrued interest, was $ 11.4 million, of which $ 7.2 million was included in “Accrued liabilities” and $ 4.2 million in “Other long-term liabilities.”

Changes in the Company’s accrued warranty and retrofit liability were as follows (in thousands):

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Balance at beginning of period $ 8,306 $ 8,654 $ 8,386 $ 9,594

4 unchanged sentences

Balance at end of period $ 8,392 $ 8,307 $ 8,392 $ 8,307

The payments are based on a revenue-share rate applied to revenue from the developed-product and the corresponding hardware sales through March 2024.

If the minimum revenue-share payments are not achieved by the end of that period, a true-up payment will be due.

As of September 30, 2023, the liability, including accrued interest, was $ 4.2 million, which is included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheet.

Commitments and Contingencies

2 unchanged sentences

Certain of the Company’s operating leases contain renewal options and rent acceleration clauses.

Future minimum payments under the non-cancelable operating leases consisted of the following as of July 1, 2023 (in thousands):

Future minimum payments under the non-cancelable operating leases consisted of the following as of September 30, 2023 (in thousands):

Period Future Minimum Lease Payments

3 unchanged sentences

Less imputed interest ( 1,066 )

As of July 1, 2023, the operating lease liability consisted of the following (in thousands):

As of September 30, 2023, the operating lease liability consisted of the following (in thousands):

Accrued liabilities - current portion of operating leases $ 3,996

2 unchanged sentences

The future minimum lease payments under the lease are $ 5.5 million and are included in the table above.

The weighted average discount rate for the Company’s operating leases as of July 1, 2023 was 5.4 %.

The weighted average remaining lease term as of July 1, 2023 was 3.5 years.

For the three and six months ended July 1, 2023, total rent expense of the Company was $ 1.2 million and $ 2.4 million, respectively.

For the three and six months ended July 2, 2022, total rent expense of the Company was $ 1.1 million and $ 2.2 million, respectively.

Cash paid within operating cash flows for operating leases was $ 2.3 million for the six months ended July 1, 2023 and July 2, 2022 for each respective period.

The weighted average discount rate for the Company’s operating leases as of September 30, 2023 was 5.4 %.

The weighted average remaining lease term as of September 30, 2023 was 3.3 years.

For the three and nine months ended September 30, 2023, total rent expense of the Company was $ 1.2 million and $ 3.6 million, respectively.

For the three and nine months ended October 1, 2022, total rent expense of the Company was $ 1.2 million and $ 3.4 million, respectively.

Cash paid within operating cash flows for operating leases was $ 3.4 million for the nine months ended September 30, 2023 and October 1, 2022 for each respective period.

Purchase Commitments

5 unchanged sentences

In the event of termination of services with a manufacturing partner, the Company has purchased, and may be required to purchase in the future, certain of the remaining components inventory held by the CM or ODM as well as any outstanding orders pursuant to the contractual provisions with such CM or ODM.

As of July 1, 2023 and December 31, 2022, the Company had approximately $ 253.9 million and $ 340.6 million, respectively, of outstanding purchase commitments for inventories to be delivered by its suppliers, including CMs and ODMs, within two years .

As of September 30, 2023 and December 31, 2022, the Company had approximately $ 227.2 million and $ 340.6 million, respectively, of outstanding purchase commitments for inventories to be delivered by its suppliers, including CMs and ODMs, within two years .

The Company has from time to time, and subject to certain conditions, reimbursed certain suppliers for component inventory purchases when this inventory has been rendered excess or obsolete, for example due to manufacturing and engineering change orders resulting from design changes, manufacturing discontinuation of products by its suppliers, or in cases where the Company has committed inventory levels that greatly exceed projected demand.

The estimated excess and obsolete inventory liabilities related to such manufacturing and engineering change orders and other factors, which are included in accrued liabilities in the accompanying balance sheets, were $ 11.5 million and $ 10.3 million as of July 1, 2023 and December 31, 2022, respectively.

The estimated excess and obsolete inventory liabilities related to such manufacturing and engineering change orders and other factors, which are included in accrued liabilities in the accompanying balance sheets, were $ 13.4 million and $ 10.3 million as of September 30, 2023 and December 31, 2022, respectively.

The Company records the related charges in cost of revenue in its Condensed Consolidated Statements of Comprehensive Income.

6 unchanged sentences

At the Company’s 2023 annual meeting of stockholders, the stockholders approved an increase in the number of shares of common stock issuable under the 2019 Plan by 1.5 million shares.

As of July 1, 2023, there were 5.7 million shares available for issuance under the 2019 Plan.

During the three months ended July 1, 2023, stock option awards exercisable for up to an aggregate of 0.2 million shares of common stock were granted with a grant date weighted-average exercise price of $ 42.79 per share.

During the six months ended July 1, 2023, stock option awards exercisable for up to an aggregate of 0.6 million shares of common stock were granted with a grant date weighted-average exercise price of $ 48.75 per share.

As of September 30, 2023, there were 5.4 million shares available for issuance under the 2019 Plan.

During the three months ended September 30, 2023, stock option awards exercisable for up to an aggregate of 0.3 million shares of common stock were granted with a grant date weighted-average exercise price of $ 41.18 per share.

During the nine months ended September 30, 2023, stock option awards exercisable for up to an aggregate of 0.9 million shares of common stock were granted with a grant date weighted-average exercise price of $ 46.25 per share.

These stock option awards vest 25 % on the first anniversary of the vesting commencement date and on a quarterly basis thereafter over an additional three years .

6 unchanged sentences

The maximum combined award is 100 %.

The probability of meeting the performance conditions related to these performance-based stock option awards was assessed to be probable as of July 1, 2023 based on adjusted targets, and stock-based compensation expense of $ 4.5 million was recognized for the three months ended July 1, 2023.

For the six months ended July 1, 2023, stock-based compensation expense of $ 6.9 million was recognized.

During the three months ended July 1, 2023, 31,000 shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 16.30 per share.

During the six months ended July 1, 2023, 0.3 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 12.56 per share.

As of July 1, 2023, unrecognized stock-based compensation expense of $ 95.0 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.2 years.

The probability of meeting a portion of the performance conditions related to these performance-based stock option awards was assessed to be probable as of September 30, 2023 based on adjusted targets, and stock-based compensation expense of $ 2.8 million was recognized for the three months ended September 30, 2023.

For the nine months ended September 30, 2023, stock-based compensation expense of $ 9.7 million was recognized.

During the three months ended September 30, 2023, 61,000 shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 9.01 per share.

During the nine months ended September 30, 2023, 0.3 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 11.93 per share.

As of September 30, 2023, unrecognized stock-based compensation expense of $ 84.6 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.1 years.

Employee Stock Purchase Plans

3 unchanged sentences

The price of common stock purchased under the ESPP is 85 % of the lower of the fair market value of the common stock on the commencement date and the end date of each six-month offering period.

As of July 1, 2023, there were 4.6 million shares available for issuance under the ESPP.

During the six months ended July 1, 2023, 0.1 million shares were purchased under the ESPP.

As of July 1, 2023, unrecognized stock-based compensation expense of $ 0.3 million related to the ESPP is expected to be recognized over a remaining service period of 0.1 years.

As of September 30, 2023, there were 4.5 million shares available for issuance under the ESPP.

During the nine months ended September 30, 2023, 0.2 million shares were purchased under the ESPP.

As of September 30, 2023, unrecognized stock-based

compensation expense of $ 1.2 million related to the ESPP is expected to be recognized over a remaining service period of 0.4 years.

The NQ ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 25 % of their eligible recurring compensation.

3 unchanged sentences

The maximum number of shares of common stock currently authorized for issuance under the NQ ESPP is 7.5 million shares.

As of July 1, 2023, there were 3.8 million shares available for issuance under the NQ ESPP.

During the six months ended July 1, 2023, 0.4 million shares were purchased and issued.

As of July 1, 2023, unrecognized stock-based compensation expense of $ 10.9 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 0.8 years.

As of September 30, 2023, there were 3.6 million shares available for issuance under the NQ ESPP.

During the nine months ended September 30, 2023, 0.6 million shares were purchased and issued.

As of September 30, 2023, unrecognized stock-based compensation expense of $ 11.4 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 0.8 years.

Stock-Based Compensation

The following table summarizes stock-based compensation expense (in thousands):

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Cost of revenue $ 734 $ 698 $ 2,314 $ 1,964

5 unchanged sentences

Stock Repurchase Program

In July 2022, the Company’s Board of Directors authorized a one-year stock repurchase program for up to $ 100 million of the Company’s common stock.

The Company has in place a stock repurchase program for up to $ 100 million of the Company’s common stock.

Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements.

1 unchanged sentence

The repurchase program does not obligate the Company to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

In May 2023, the Company’s Board of Directors amended the repurchase program to remove the one-year end date.

As of July 1, 2023, the remaining authorized amount for stock repurchases under this program was $ 90.0 million.

For the six months ended July 1, 2023, the Company purchased 0.2 million shares of common stock for $ 10.0 million at an average price per share of $ 44.53 .

For the nine months ended September 30, 2023, the Company purchased 1.0 million shares of common stock for $ 42.4 million at an average price per share of $ 44.47 .

As of September 30, 2023, the remaining balance under this authorization was $ 57.6 million.

Revenue from Contracts with Customers

3 unchanged sentences

The following is a summary of revenue disaggregated by geographic region based upon the location of the customers (in thousands):

Three Months Ended Six Months Ended

July 1, 2023 July 2, 2022 July 1, 2023 July 2, 2022

Three Months Ended Nine Months Ended

September 30, 2023 October 1, 2022 September 30, 2023 October 1, 2022

United States $ 235,128 $ 215,857 $ 695,491 $ 565,420

8 unchanged sentences

Amounts are billed in accordance with the agreed-upon contractual terms.

The closing balance as of July 1, 2023 was $ 4.3 million of which the Company expects to bill 54 % of the balance during the remainder of 2023.

The closing balance as of September 30, 2023 was $ 5.5 million of which the Company expects to bill 47 % of the balance during the remainder of 2023.

The contract asset balance may fluctuate depending on the timing of fulfilling the related performance obligations with the Company's customers.

Contract Liability

Deferred revenue was $ 67.2 million, $ 69.6 million and $ 58.6 million as of July 1, 2023, April 1, 2023 and December 31, 2022, respectively.

The decrease in the deferred revenue balance for the three months ended July 1, 2023 was the result of revenue recognized of $ 11.3 million that was included in the deferred revenue balance at the beginning the period offset by cash payments received or due in advance of satisfying the Company’s performance obligations.

The increase in the deferred revenue balance for the six months ended July 1, 2023 was driven by cash payments received or due in advance of satisfying

the Company’s performance obligations and balances reclassified to contract assets during the period offset by $ 20.0 million of revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Deferred revenue was $ 60.4 million, $ 67.2 million and $ 58.6 million as of September 30, 2023, July 1, 2023 and December 31, 2022, respectively.

The decrease in the deferred revenue balance for the three months ended September 30, 2023 was the result of revenue recognized of $ 16.7 million that was included in the deferred revenue balance at the beginning the period offset by cash payments received or due in advance of satisfying the Company’s performance obligations.

The increase in the deferred revenue balance for the nine months ended September 30, 2023 was driven by cash payments received or due in advance of satisfying the Company’s performance obligations and balances reclassified to contract assets during the period offset by $ 26.1 million of revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Revenue allocated to remaining performance obligations (“RPOs”) represents contract revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods but excludes variable consideration where the monthly invoicing is based on usage or where actual usage exceeds the minimum commitment.

RPOs were $ 213.0 million as of July 1, 2023, and the Company expects to recognize as revenue 38 % of this amount over the next 12 months and the remainder thereafter.

RPOs were $ 219.5 million as of September 30, 2023, and the Company expects to recognize as revenue 39 % of this amount over the next 12 months and the remainder thereafter.

Contract Costs

The Company capitalizes certain sales commissions related primarily to multi-year subscriptions and extended warranty support for which the expected amortization period is greater than one year.

As of July 1, 2023 and December 31, 2022, the unamortized balance of deferred commissions was $ 10.4 million and $ 11.2 million, respectively.

For the three and six months ended July 1, 2023, the amount of amortization was $ 1.5 million and $ 2.9 million, respectively, compared to $ 0.9 million and $ 1.6 million for the three and six months ended July 2, 2022, respectively.

As of September 30, 2023 and December 31, 2022, the unamortized balance of deferred commissions was $ 10.9 million and $ 11.2 million, respectively.

For the three and nine months ended September 30, 2023, the amount of amortization was $ 1.7 million and $ 4.6 million, respectively, compared to $ 1.0 million and $ 2.6 million for the three and nine months ended October 1, 2022, respectively.

There was no impairment loss in relation to the costs capitalized for either period.

Concentration of Customer Risk

No customer accounted for more than 10% of the Company’s revenue for the three or six months ended July 1, 2023 and July 2, 2022.

One customer represented 14 % of the Company’s accounts receivable as of July 1, 2023.

No customer accounted for more than 10% of the Company’s revenue for the three or nine months ended September 30, 2023 and October 1, 2022.

Two customers represented 16 % and 13 %, respectively, of the Company’s accounts receivable as of September 30, 2023.

One customer represented 11 % of the Company’s accounts receivable as of December 31, 2022.

The following table presents income taxes and the effective tax rates for the periods indicated (in thousands, except percentages):

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Income before income taxes $ 18,143 $ 20,466 $ 43,781 $ 39,955

1 unchanged sentence

Effective tax rate 6.6 % 34.3 % 17.9 % 27.2 %

The Company’s income taxes for the three and six months ended July 1, 2023 and July 2, 2022 were determined using an estimated effective tax rate adjusted for discrete items that occurred during the respective periods.

The Company’s effective tax rate for the three and six months ended July 1, 2023 and July 2, 2022 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, the inclusion of income from certain foreign operations and the effect of non-deductible stock-based compensation for executive officers offset by U.S.

federal research tax credits and excess tax benefits from stock-based compensation.

The Company’s income taxes for the three and nine months ended September 30, 2023 and October 1, 2022 were determined using an estimated effective tax rate adjusted for discrete items that occurred during the respective periods.

The Company’s

effective tax rate for the three and nine months ended September 30, 2023 and October 1, 2022 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S.

federal research tax credits, excess tax benefits from stock-based compensation and the U.S.

tax impact of foreign operations.

For the three and nine months ended September 30, 2023, the Company recognized a tax benefit of $ 3.6 million related to the finalization of its 2022 tax returns.

The Company has net deferred tax assets that have arisen primarily as a result of temporary differences, net operating loss carryforwards, capitalized research and development costs and tax credits.

1 unchanged sentence

Management believes that it is more likely than not that the Company will utilize a significant portion of its deferred tax assets.

The Company maintained a valuation allowance for the three and six months ended July 1, 2023 and July 2, 2022 of $ 29.9 million on certain U.S.

The Company maintained a valuation allowance for the three and nine months ended September 30, 2023 and October 1, 2022 of $ 29.9 million and $ 30.9 million, respectively, on certain U.S.

federal and state deferred tax assets that the Company believes are not more likely than not to be realized in future periods.

3 unchanged sentences

The following table sets forth the computation of basic and diluted net income per common share for the periods indicated (in thousands, except per share data):

Three Months Ended Six Months Ended

Three Months Ended Nine Months Ended

September 30,

2023 October 1,

2022 September 30,

2023 October 1,

Net income $ 16,953 $ 13,443 $ 35,924 $ 29,083

9 unchanged sentences

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