What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2024-11-06 · 365 added, 418 removed, 549 unchanged (59% of the section changed)

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(In thousands, except par value)

September 30,

Current assets:

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Acquisition-related intangible assets, net

25,944 25,944

Deferred tax assets, net

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(In thousands, except per-share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 637,554 $ 457,885

Cost of revenue

284,324 205,444

353,230 252,441

Operating expenses:

Research and development

92,227 75,990

Selling, general and administrative

92,244 80,964

Total operating expenses

184,471 156,954

Operating income

168,759 95,487

Other income, net

Income before income taxes

173,890 105,027

Income tax expense

40,099 12,486

$ 133,791 $ 92,541

Net income per share:

$ 2.80 $ 1.90

$ 2.79 $ 1.89

Weighted-average shares outstanding:

47,851 48,635

48,006 48,928

See accompanying notes to unaudited condensed consolidated financial statements.

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(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 133,791 $ 92,541

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5,139 ( 13,822 )

Changes in unrealized gains and losses on available-for-sale securities, net of tax of $ 37 , $ 156 , $( 161 ) and $ 625 , respectively

977 1,132 1,680 4,073

Change in unrealized gains and losses on available-for-sale securities, net of tax of $ 0 and $ (248) , respectively

Other comprehensive income (loss), net of tax

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Stockholders’

Three Months Ended September 30, 2024

Balance as of July 1, 2024

48,698 $ 1,224,144 $ 1,016,208 $ ( 44,494 ) $ 2,195,858

- - 144,430 - 144,430

Other comprehensive income

- - - 23,298 23,298

Dividends and dividend equivalents declared ($ 1.25 per share)

- - ( 61,879 ) - ( 61,879 )

Common stock issued under the employee equity incentive plan

Common stock issued under the employee stock purchase plan

7 4,121 4,121

Repurchases of common stock

( 7 ) ( 5,534 ) - - ( 5,534 )

Stock-based compensation expense

- 51,396 - - 51,396

Balance as of September 30, 2024

48,779 $ 1,274,127 $ 1,098,759 $ ( 21,196 ) $ 2,351,690

Common Stock and

Additional Paid-in Capital

Comprehensive

Stockholders’

Three Months Ended September 30, 2023

Balance as of July 1, 2023

47,611 $ 1,055,130 $ 827,356 $ ( 43,397 ) $ 1,839,089

- - 121,163 - 121,163

Other comprehensive loss

- - - ( 3,706 ) ( 3,706 )

Dividends and dividend equivalents declared ($ 1.00 per share)

- - ( 49,121 ) - ( 49,121 )

Common stock issued under the employee equity incentive plan

Common stock issued under the employee stock purchase plan

9 3,831 - - 3,831

Stock-based compensation expense

- 33,604 - - 33,604

Balance as of September 30, 2023

47,911 $ 1,092,569 $ 899,398 $ ( 47,103 ) $ 1,944,864

Common Stock and

Additional Paid-in Capital

Comprehensive

Stockholders’

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Balance as of January 1, 2025

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- - ( 75,877 ) - ( 75,877 )

Common stock issued under the employee equity incentive plan

Common stock issued under the employee stock purchase plan

18 8,727 - - 8,727

Repurchases of common stock

Common stock issued

54 5,335 - - 5,335

1 unchanged sentence

- 52,807 - - 52,807

Balance as of September 30, 2024

Balance as of March 31, 2025

47,877 $ 764,959 $ 2,545,375 $ ( 43,324 ) $ 3,267,010

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Stockholders’

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance as of January 1, 2024

5 unchanged sentences

- - ( 61,881 ) - ( 61,881 )

Common stock issued under the employee equity incentive plan

Common stock issued

645 4,606 - - 4,606

Common stock issued under the employee stock purchase plan

Repurchases of common stock

( 6 ) ( 4,076 ) - - ( 4,076 )

1 unchanged sentence

- 45,915 - - 45,915

Balance as of September 30, 2023

Balance as of March 31, 2024

48,667 $ 1,176,382 $ 977,724 $ ( 40,549 ) $ 2,113,557

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(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

$ 133,791 $ 92,541

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

1 unchanged sentence

Amortization of discount on available-for-sale securities

Gain on deferred compensation plan investments

( 768 ) ( 4,123 )

Loss (gain) on deferred compensation plan investments

1,350 ( 4,019 )

Deferred taxes, net

Stock-based compensation expense

52,806 45,926

Changes in operating assets and liabilities:

Accounts receivable

( 42,338 ) ( 14,578 )

( 35,180 ) ( 11,596 )

78,005 74,477

Accounts payable

21,296 35,934

Accrued compensation and related benefits

10,609 14,698

Income tax liabilities

Other accrued liabilities

( 4,555 ) 7,344

Net cash provided by operating activities

256,387 248,051

Cash flows from investing activities:

Purchases of property and equipment

Cash paid for an assumed lease

( 40,342 ) ( 15,991 )

Purchases of investments

( 357,633 ) ( 365,856 )

Maturities and sales of investments

141,065 149,766

Cash paid for acquisition, net of cash acquired

Contributions to deferred compensation plan, net

Contributions to deferred compensation plan

( 575 ) ( 650 )

Net cash used in investing activities

( 257,485 ) ( 266,015 )

Cash flows from financing activities:

Property and equipment purchased on extended payment terms

Proceeds from common stock issued under the employee equity incentive plan

( 1,243 ) ( 978 )

Proceeds from common stock issued under the employee stock purchase plan

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Dividends and dividend equivalents paid

( 60,008 ) ( 49,553 )

Net cash used in financing activities

( 55,916 ) ( 50,001 )

Effect of change in exchange rates

Net increase in cash, cash equivalents and restricted cash

2,555 ( 4,818 )

Net decrease in cash, cash equivalents and restricted cash

( 54,459 ) ( 72,783 )

Cash, cash equivalents and restricted cash, beginning of period

691,941 561,181

Cash, cash equivalents and restricted cash, end of period

$ 637,482 $ 488,398

Supplemental disclosures for cash flow information:

Cash paid for income taxes, net

Cash paid (refunded) for income taxes, net

$ ( 218 ) $ 725

Non-cash investing and financing activities:

Liability accrued for property and equipment purchases

$ 14,611 $ 5,995

Liability accrued for dividends and dividend equivalents

$ 75,939 $ 61,892

See accompanying notes to unaudited condensed consolidated financial statements.

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generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with these accounting principles, rules and regulations.

The information in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented.

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Summary of Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2024.

In addition to those described in the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023, the Company is subject to the following significant accounting policy due to its recent acquisition.

Goodwill and Acquisition-Related Intangible Assets

Goodwill represents the excess of fair value of purchase consideration over fair value of net tangible and identifiable intangible assets acquired as of the date of an acquisition.

In-process research and development (“IPR&D”) assets represent the fair value of incomplete research and development (“R&D”) projects that had not reached technological feasibility as of the date of acquisition.

IPR&D assets are initially capitalized at fair value as intangible assets with indefinite lives.

When IPR&D projects are completed, they are reclassified as amortizable intangible assets and are amortized over their estimated useful lives.

Alternatively, if IPR&D projects are abandoned, they are impaired and expensed as R&D costs.

Acquisition-related intangible assets with finite lives consist of developed technologies, which are amortized on a straight-line basis over their estimated remaining useful lives.

The amortization expense is recorded in cost of revenue in the Condensed Consolidated Statements of Operations.

There have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2025 to those described in the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period.

Significant estimates and assumptions used in these condensed consolidated financial statements primarily include those related to revenue recognition, inventory valuation, valuation of share-based awards, contingencies and income tax valuation allowances.

Significant estimates and assumptions used in these condensed consolidated financial statements primarily include those related to income tax valuation allowances, inventory valuation and stock-based compensation.

Actual results could differ from these estimates and assumptions, and any such differences may be material to the Company’s condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted as of September 30, 2024

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which aims to improve disclosures regarding a public entity’s reportable segments, primarily through more comprehensive disclosures around significant segment expenses.

The standard is effective for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025, and should be applied retroactively to all prior periods presented.

The Company is evaluating the potential effect that the updated standard will have on its financial statement disclosures.

New Accounting Pronouncements Not Yet Adopted as of March 31, 2025

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which aims to improve an entity’s income tax disclosures around its effective rate reconciliation, income taxes paid, disaggregation of income before income taxes and income tax expense.

The guidance will be effective for annual periods beginning January 1, 2025.

The guidance is effective for annual periods beginning January 1, 2025.

The standard should be applied prospectively but retrospective application is permitted.

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

Adoption of this new guidance will result in increased disclosures in the Notes to Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which aims to provide more detailed information about the types of expenses in commonly presented expense captions.

The guidance will be effective for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028.

The standard can be applied prospectively or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the impact of adoption on its Consolidated Financial Statements.

REVENUE RECOGNITION

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The Company generates revenue primarily from product sales, which include assembled and tested integrated circuits (“ICs”), power modules as well as dies in wafer form.

These product sales accounted for 99 % of the Company’s total revenue for each of the three and nine months ended September 30, 2024 and 2023.

The remaining revenue primarily includes royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties.

See Note 8 for the disaggregation of the Company’s revenue by geographic region and by product family.

The Company sells its products primarily through third-party distributors, value-added resellers, original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”) and electronic manufacturing service (“EMS”) providers.

For the three months ended September 30, 2024 and 2023, 88 % and 77 %, respectively, of the Company’s product sales were made through distribution arrangements.

For the nine months ended September 30, 2024 and 2023, 87 % and 79 %, respectively, of the Company’s product sales were made through distribution arrangements.

The remaining revenue, which primarily consists of royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties, was not significant in any of the periods presented.

See Note 7 for the disaggregation of the Company’s revenue by geographic region.

The Company sells its products to end customers primarily through third-party distributors and value-added resellers.

For the three months ended March 31, 2025 and 2024, 83 % and 90 %, respectively, of the Company’s total sales were made through distribution arrangements.

These distribution arrangements contain enforceable rights and obligations specific to those distributors and not the end customers.

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The Company accounts for price adjustments and stock rotation rights as variable consideration that reduces the transaction price and recognizes that reduction in the same period the associated revenue is recognized.

Certain U.S.-based distributors have price adjustment rights when they sell the Company’s products to their end customers at a price that is lower than the distribution price invoiced by the Company.

When the Company receives claims from the distributors that products have been sold to the end customers at the lower price, the Company issues the distributors credit memos for the price adjustments.

Certain U.S.-based distributors have price adjustment rights when they sell the Company’s products to their customers at a price that is lower than the distribution price invoiced by the Company.

When the Company receives claims from the distributors that products have been sold to the end customers at the lower prices, the Company issues the distributors credit memos for the price adjustments.

The Company estimates the price adjustments using the expected value method based on an analysis of historical claims, at both the distributor and product level, as well as an assessment of any known trends of product sales mix.

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The Company records a credit against accounts receivable for the estimated price adjustments, with a corresponding reduction to revenue.

Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous nine months’ purchases in accordance with the contract terms.

Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases in accordance with the contract terms.

The Company estimates the stock rotation returns using the expected value method based on an analysis of historical returns, and the current level of inventory in the distribution channel.

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For customers without credit terms, the Company requires cash payments two weeks before the products are scheduled to be shipped to the customers.

The Company records these payments received in advance of performance as customer prepayments within current accrued liabilities.

As of September 30, 2024 and December 31, 2023, customer prepayments totaled $ 6.3 million and $ 2.8 million, respectively.

The increase in the customer prepayment balance for the nine months ended September 30, 2024 resulted from an increase in unfulfilled customer orders for which the Company had received payments.

The Company records these payments received in advance of performance as customer prepayments within other accrued liabilities.

As of March 31, 2025 and December 31, 2024, customer prepayments totaled $ 7.1 million and $ 6.9 million, respectively.

For the three months ended March 31, 2025, substantially all of the customer prepayment balance as of December 31, 2024 was fulfilled by the Company.

Practical Expedients

The Company has elected the practical expedient to expense sales commissions as incurred because the amortization period would have been one year or less.

The Company has elected the practical expedient to expense sales and sales representative commissions as incurred because the amortization period would have been one year or less.

The Company’s standard payment terms generally require customers to pay 30 to 90 days after the Company satisfies the performance obligations.

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The Amended and Restated 2014 Plan will cease being available for new awards on June 11, 2030.

As of September 30, 2024, 3.9 million shares remained available for future issuance under the Amended and Restated 2014 Plan.

As of March 31, 2025, 3.6 million shares remained available for future issuance under the Amended and Restated 2014 Plan.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expenses as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The Company recognized stock-based compensation expense as follows (in thousands):

Three Months Ended March 31,

Cost of revenue

Research and development

$ 1,673 $ 1,398

Research and development (“R&D”)

11,678 10,447

Selling, general and administrative (“SG&A”)

39,455 34,081

Total stock-based compensation expense

$ 52,806 $ 45,926

Tax benefit related to stock-based compensation (1)

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Vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance or market goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”).

All awards include service conditions which require continued employment with or services to the Company.

All awards include service conditions which require continued employment with or service to the Company.

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

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Outstanding at January 1, 2025

Outstanding at September 30, 2024

85 $ 516.12 681 $ 524.08 938 $ 203.32 1,704 $ 347.01

23 $ 656.29 247 (1)

$ 571.17 - $ - 270 $ 576.99

( 11 ) $ 490.40 ( 34 ) $ 399.40 - $ - ( 45 ) $ 422.57

( 2 ) $ 566.81 ( 3 ) $ 525.65 ( 8 ) $ 304.25 ( 13 ) $ 391.01

Outstanding at March 31, 2025

95 $ 552.28 891 $ 537.35 930 $ 202.40 1,916 $ 375.42

Amount reflects the number of awards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period.

The intrinsic value related to vested RSUs was $ 65.7 million and $ 148.9 million for the three months ended September 30, 2024 and 2023, respectively.

The intrinsic value related to vested RSUs was $ 494.4 million and $ 388.6 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the total intrinsic value of all outstanding RSUs was $ 1.6 billion, based on the closing stock price of $ 924.50 .

As of September 30, 2024, unamortized compensation expense related to all outstanding RSUs was $ 299.6 million with a weighted-average remaining recognition period of approximately two years.

The intrinsic value related to vested RSUs was $ 31.0 million and $ 403.0 million for the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, the total intrinsic value of all outstanding RSUs was $ 1.1 billion, based on the closing stock price of $ 579.98 .

As of March 31, 2025, unamortized compensation expense related to all outstanding RSUs was $ 355.9 million with a weighted-average remaining recognition period of approximately two years.

Time-Based RSUs:

For the nine months ended September 30, 2024, the Compensation Committee granted 31,000 RSUs with service conditions to non-executive employees and non-employee directors.

For the three months ended March 31, 2025, the Compensation Committee granted 23,000 RSUs with service conditions to non-executive employees and non-employee directors.

The RSUs generally vest over four years for employees and one year for directors, subject to continued service with the Company.

In February 2024, the Compensation Committee granted 50,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of three sets of independent performance goals (“2024 Executive PSUs”).

For the first goal, the executive officers can earn up to 300 % of the target number of the 2024 Executive PSUs based on the achievement of the Company’s average three-year (2024 through 2026) revenue growth rate in excess of the analog industry’s average three-year revenue growth rate as published by the Semiconductor Industry Association (the “SIA”).

For the second goal, the executive officers can earn 100 % of the target number of the 2024 Executive PSUs if the Company achieves a reduction in 2026 of 25% global combined Scope 1 and Scope 2 greenhouse gas emissions against the 2022 baseline.

For the third goal, the executive officers can earn 50 % of the target number of the 2024 Executive PSUs if more than one-third of the Company’s total 2026 revenue in the automotive market is generated from Electronic Vehicle (“EV”) automakers.

In addition, for the third goal, the executive officers can earn 50 % of the target number of the 2024 Executive PSUs if total 2026 revenue from products enabling EV powertrains and EV 48V systems grows to 200% of the 2023 baseline.

For the first goal, a percentage of the 2024 Executive PSUs will fully vest on December 31, 2026, depending on the degree to which the pre-determined goal is met during the performance period.

The 2024 Executive PSUs related to the second and the third goal will fully vest on December 31, 2026 if the pre-determined goals are met during the performance period.

In February 2025, the Compensation Committee granted 50,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of two sets of independent performance goals (“2025 Executive PSUs”).

For the first goal, the executive officers can earn up to 300 % of the target number of the 2025 Executive PSUs based on the achievement of the Company’s three-year (2025 through 2027) average revenue growth rate in excess of the analog industry’s three-year average revenue growth rate as published by the Semiconductor Industry Association (the “SIA”).

For the second goal, the executive officers can earn up to 200 % of the target number of the 2025 Executive PSUs based on the achievement of the Company’s three-year (2025 through 2027) total stockholder return percentile ranking relative to the constituent entities in the Philadelphia Semiconductor Sector Index (the “PHLX Index”).

For both goals, a percentage of the 2025 Executive PSUs will fully vest on December 31, 2027, depending on the degree to which the pre-determined goals are met during the performance period.

Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2025 Executive PSUs will be $ 138.5 million.

In February 2024, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represent the target number of shares that can be earned based on the degree of achievement of the Company’s 2025 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two-year (2024 and 2025) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA (“2024 Non-Executive PSUs”).

In February 2025, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represent the target number of shares that can be earned based on the degree of achievement of the Company’s 2026 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s two-year (2025 and 2026) average revenue growth rate compared against the analog industry’s two-year average revenue growth rate as published by the SIA (“2025 Non-Executive PSUs”).

The maximum number of shares that an employee can earn is either 200 % or 300 % of the target number of the 2025 Non-Executive PSUs, depending on the job classification of the employee.

50 % of the 2025 Non-Executive PSUs will vest in the first quarter of 2027 depending on the degree to which the pre-determined goals are met during the performance period.

The remaining 2024 Non-Executive PSUs will vest over the following two years on a quarterly basis.

The remaining 2025 Non-Executive PSUs will vest over the following two years on a quarterly or annual basis.

Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2025 Non-Executive PSUs will be $ 16.7 million.

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stock price of $ 656.29 , simulation term of three years, expected volatility of 54.42 %, risk-free interest rate of 4.20 %, and expected dividend yield of 0.95 %.

The Monte Carlo simulation model for the 2025 Executive PSUs further utilized correlation coefficients of peer companies of 0.46 to 0.76 .

The correlation coefficients were based on peer companies in the PHLX Index as an aggregate benchmark for determining the market-based total stockholder return component.

There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

2004 Employee Stock Purchase Plan (as amended and restated, the “ 2004 ESPP ” )

On August 16, 2023, the 2004 ESPP was amended and restated to, among other changes, provide for the issuance of up to 4.4 million shares of the Company’s common stock.

The 2004 ESPP will expire on August 16, 2038.

For the three months ended September 30, 2024 and 2023, 7,000 and 9,000 shares were issued under the 2004 ESPP, respectively.

For the nine months ended September 30, 2024 and 2023, 18,000 and 18,000 shares were issued under the 2004 ESPP, respectively.

As of September 30, 2024, 4.4 million shares were available for future issuance under the 2004 ESPP.

The intrinsic value of the shares issued was $ 2.0 million and $ 0.7 million for the three months ended September 30, 2024 and 2023, respectively.

The intrinsic value of the shares issued was $ 5.4 million and $ 1.4 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the unamortized expense was $ 1.4 million, which will be recognized through the first quarter of 2025.

The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:

Three Months Ended September 30,

Nine Months Ended September 30,

Expected term (in years)

0.5 0.5 0.5 0.5

Expected volatility

47.8 % 50.8 % 45.1 % 53.3 %

Risk-free interest rate

5.0 % 5.5 % 5.2 % 5.3 %

Dividend yield

0.6 % 0.8 % 0.6 % 0.8 %

Cash proceeds from the shares issued under the 2004 ESPP were $ 8.7 million and $ 7.6 million for the nine months ended September 30, 2024 and 2023, respectively.

On January 3, 2024 (the “Acquisition Date”), the Company acquired 100 % of the outstanding capital stock of Axign B.V.

(“Axign”), a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems.

Commencing on the Acquisition Date, Axign became a wholly-owned subsidiary of the Company and its results of operations have been included in the Company’s consolidated financial statements.

Purchase Consideration

The purchase consideration was $ 33.4 million in cash.

Cash paid at the Acquisition Date included $ 3.8 million that is being held in an escrow account for a one-year period as recourse in the event of a breach of Axign’s representations and warranties.

In connection with the acquisition, the Company incurred $ 0.4 million in transaction costs that were expensed as incurred and included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Purchase Price Allocation

The purchase price allocation for Axign is as follows (in thousands):

Other tangible assets acquired, net of liabilities assumed

Intangible assets:

Developed technology

Total identifiable net assets acquired

Total net assets acquired

The intangible asset acquired with a finite life includes the core developed technology with an estimated remaining useful life of eight years.

The acquired intangible asset with an indefinite life includes an incomplete R&D project that had not reached technological feasibility as of the Acquisition Date.

The fair values of the developed technology and the IPR&D were determined using the income approach.

The goodwill arising from the acquisition was primarily attributed to the assembled workforce and synergies that are anticipated to enable the Company to develop solutions with lower power consumption in the consumer and automotive markets using Axign’s digital feedback technology.

The goodwill is not expected to be deductible for tax purposes.

BALANCE SHEET COMPONENTS

Inventories consist of the following (in thousands):

September 30,

Raw materials

$ 85,658 $ 91,851

Work in process

206,607 169,982

Finished goods

162,528 157,778

$ 454,793 $ 419,611

Other Current Assets

Other current assets consist of the following (in thousands):

September 30,

Prepaid wafer purchases (1)

Prepaid wafer expenses (1)

Prepaid expenses

RSU tax withholding proceeds receivable

24,038 36,083

Other receivables (1)

Restricted cash (2)

The Company held $ 60 million in prepaid wafer purchases as of September 30, 2024 related to deposits made to a supplier under a long-term wafer supply agreement.

The Company held $ 50 million in other receivables as of December 31, 2023 associated with those deposits.

$ 92,063 $ 109,978

Prepaid wafer expenses and other receivables relate to a deposit made to a supplier under a long-term wafer supply agreement.

See Note 8 for details about the supply agreement.

The restricted cash included in other current assets as of December 31, 2023 was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign and was paid in January 2024.

See Note 4 for further details.

Other Long-Term Assets

Other long-term assets consist of the following (in thousands):

September 30,

Deferred compensation plan assets

Prepaid wafer purchases (1)

$ 91,811 $ 92,586

Operating lease right-of-use (“ROU”) and related assets (1)

35,856 34,198

Prepaid wafer purchases (2)

$ 135,974 $ 194,377

The operating lease ROU and related assets include a fair value measurement related to favorable market terms on a facility lease.

Prepaid wafer purchases relate to a deposit made to a supplier under a long-term wafer supply agreement.

See Note 8 for details about the supply agreement.

The operating lease ROU and related assets as of September 30, 2024 includes a fair value measurement related to favorable market terms on a building lease.

Other Accrued Liabilities

Other accrued liabilities consist of the following (in thousands):

September 30,

Dividends and dividend equivalents

Stock rotation and sales returns

Customer prepayments

$ 78,692 $ 60,622

Income tax payable

27,771 10,534

Stock rotation and sales returns

21,700 20,799

33,143 36,168

$ 161,306 $ 128,123

Other Long-Term Liabilities

Other long-term liabilities consist of the following (in thousands):

September 30,

Deferred compensation plan liabilities

$ 88,598 $ 93,653

Operating lease liabilities

14,473 12,974

Dividend equivalents

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, employee housing units and certain equipment.

$ 105,814 $ 111,570

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, and employee housing units.

These leases have remaining lease terms from less than one year to 19 years.

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The following table summarizes the balances of operating lease ROU assets and liabilities (in thousands):

September 30,

Financial Statement Line Item

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The following tables summarize certain information related to the leases (in thousands, except percentages and years):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating lease costs

$ 1,108 $ 897

Total lease costs

Three Months Ended September 30,

Nine Months Ended September 30,

$ 1,877 $ 1,447

Three Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for operating leases

$ 1,000 $ 673

ROU assets obtained in exchange for new operating lease liabilities

September 30,

$ 2,644 $ 1,462

Weighted-average remaining lease term (in years)

Weighted-average discount rate

As of September 30, 2024, the maturities of the lease liabilities were as follows (in thousands):

2024 (remaining three months)

As of March 31, 2025, the maturities of the lease liabilities were as follows (in thousands):

2025 (remaining nine months)

Total remaining lease payments

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Total lease liabilities

As of September 30, 2024 , operating leases that have not yet commenced are not material.

The Company owns certain office buildings and leases a portion of these properties to third parties under arrangements that are classified as operating leases.

These leases have remaining lease terms ranging from less than one year to five years.

Some of these leases include a tenant option to renew the lease term for up to five years.

For the three months ended September 30, 2024 and 2023, income related to lease payments was $ 0.3 million and $ 0.4 million, respectively.

For the nine months ended September 30, 2024 and 2023, income related to lease payments was $ 0.7 million and $ 1.2 million, respectively.

As of September 30, 2024, future income related to lease payments was as follows (in thousands):

2024 (remaining three months)

As of March 31, 2025 , operating leases that had not yet commenced were not material.

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period.

Diluted net income per share reflects the potential dilution that would occur if outstanding securities or other contracts to issue common stock were exercised or converted into shares of common stock, and calculated using the treasury stock method.

Contingently issuable shares, including equity awards with performance conditions or market conditions, are considered outstanding shares of common stock and included in the basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied.

Diluted net income per share reflects the potential dilution from contingently issuable shares and calculated using the treasury stock method.

Contingently issuable shares, including all types of equity awards, are considered outstanding shares of common stock and included in the basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied.

Prior to the end of the contingency period, the number of contingently issuable shares included in the diluted net income per share is based on the number of shares, if any, that would be issuable under the terms of the arrangement at the end of the reporting period.

The Company’s RSUs contain forfeitable rights to receive cash dividend equivalents, which are accumulated and paid to the employees when the underlying RSUs vest.

Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill the requisite service requirement and, as a result, the awards do not vest.

Accordingly, these awards are not treated as participating securities in the net income per share calculation.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 133,791 $ 92,541

Weighted-average outstanding shares—basic

47,851 48,635

Effect of dilutive securities

Weighted-average outstanding shares—diluted

48,006 48,928

Net income per share:

Anti-dilutive common stock equivalents were not material in any of the periods presented.

Stock Repurchase Program

In October 2023, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $ 640.0 million in the aggregate of its common stock through October 29, 2026.

Shares are retired upon repurchase.

The Company repurchased 6,000 and 19,000 shares of its common stock for an aggregate purchase price of $ 5.5 million and $ 14.2 million during the three and nine months ended September 30, 2024, respectively.

Stock repurchased under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate.

The timing and the number of any repurchased common stock will be determined by the Company’s management based on its evaluation of market conditions, legal requirements, share price, and other factors.

The repurchase program does not obligate the Company to purchase any particular number of shares, and may be suspended, modified, or discontinued at any time without prior notice.

Inflation Reduction Act of 2022 requires a 1% excise tax based on the value of certain stock repurchases in excess of stock issued for employee compensation made after December 31, 2022.

This provision did not have an impact on the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2024.

$ 2.80 $ 1.90

$ 2.79 $ 1.89

Anti-dilutive common stock equivalents were not material for the periods presented.

SEGMENT, SIGNIFICANT CUSTOMERS AND GEOGRAPHIC INFORMATION

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronics solutions for the enterprise data, storage and computing, automotive, communications, consumer and industrial markets.

The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’ ship-to locations.

The Company sells its products primarily to third-party distributors and value-added resellers, and directly to OEMs, ODMs and EMS providers.

The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance.

Specifically, the CODM uses net income that is reported on the Condensed Consolidated Statements of Operations and cash provided by operating activities reported in the Condensed Consolidated Statements of Cash Flows to decide whether and how much to reinvest profits into core business operations or to return to stockholders in the form of stock repurchases and dividends.

All significant segment expenses have been captured on the face of the Condensed Consolidated Statements of Operations.

The Company sells its products to end customers primarily through third-party distributors and value-added resellers.

The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue for the periods presented:

Three Months Ended March 31,

Distributor A

24 % 27 % 33 % 23 %

Distributor B

25 % 21 % 19 % 21 %

Distributor C

* 11 % * 10 %

*Represents less than 10%

The Company’s agreements with these third-party customers were made in the ordinary course of business and may be terminated with or without cause by these customers with advance notice.

The Company’s agreements with these third-party distributors were made in the ordinary course of business and may be terminated with or without cause by either party with advance notice.

Although the Company may experience a short-term disruption in the distribution of its products and a short-term decline in revenue if its agreement with any of the distributors were terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a short period following any termination of the agreement with a distributor.

The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable:

September 30,

The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total net accounts receivable:

Distributor A

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Distributor C

The following is a summary of revenue by geographic region (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

*Represents less than 10%

The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’ ship-to locations.

The following is a summary of revenue by geographic region (in thousands) for the periods presented:

Three Months Ended March 31,

Country or Region

United States

$ 363,720 $ 263,040

116,341 100,450

64,364 35,537

Southeast Asia

In the second quarter of 2024, the Company reclassified certain products in its product families.

The prior periods in the table below have been updated to conform with the new methodology.

The following is a summary of revenue by product family (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Product Family

Direct Current (“DC”) to DC

Lighting Control

32,706 13,239

24,992 17,742

20,101 12,948

15,249 14,820

$ 637,554 $ 457,885

The following is a summary of long-lived assets by geographic region (in thousands):

September 30,

United States

$ 265,590 $ 237,649

171,133 171,514

43,999 42,388

46,626 43,394

$ 527,348 $ 494,945

COMMITMENTS AND CONTINGENCIES

Product Warranties

Product Warranties and Rework

The Company generally provides either a one - or two -year warranty against defects in materials and workmanship and will repair the products, provide replacements at no charge to customers or issue a refund.

As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations.

Warranty reserve requirements are generally based on a specific assessment of the products sold with warranties when a customer asserts a claim for warranty or for a product defect.

The changes in warranty reserves are as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Historically, our warranty obligations have not been material.

The Company may also incur rework costs associated with product-related claims.

We accrue for warranty and rework costs upon evaluation of customer specific claims.

The changes in warranty reserves were as follows (in thousands):

Three Months Ended March 31,

Balance at beginning of period

$ 5,401 $ 16,906

Warranties issued

Repairs, replacement and refund

( 799 ) ( 4,015 )

Changes in liability for pre-existing warranties

( 1,167 ) ( 118 )

Balance at end of period

$ 3,525 $ 12,873

Changes in liability for pre-existing warranties result from changes in estimates for warranties issued in prior periods.

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In May 2022, the Company entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four-year period.

As of September 30, 2024, the Company had remaining prepayments under this agreement of $ 120.0 million, of which $ 60.0 million was classified as short-term.

Total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $120.0 million prepayment, as of September 30, 2024 were as follows (in thousands):

2024 (remaining three months)

As of March 31, 2025, the Company had remaining prepayments under this agreement of $ 60.0 million reported in other current assets on the Condensed Consolidated Balance Sheets.

Total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $60.0 million prepayment, as of March 31, 2025 were as follows (in thousands):

The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters.

The Company may also be subject to litigation initiated by its stockholders.

The Company has also been subject to litigation initiated by its stockholders.

These proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend.

The Company defends itself vigorously against any such claims.

As of September 30, 2024 , there were no material pending legal proceedings to which the Company was a party.

As of March 31, 2025 , there were no material pending legal proceedings to which the Company was a party.

CASH, CASH EQUIVALENTS, INVESTMENTS AND RESTRICTED CASH

The following is a summary of the Company’s cash, cash equivalents and debt investments (in thousands):

September 30,

$ 377,051 $ 679,949

Money market funds

260,303 11,867

treasuries and government agency bonds

Certificates of deposit

179,117 164,418

Corporate debt securities

treasuries and government agency bonds

Auction-rate securities backed by student-loan notes

September 30,

$ 1,026,763 $ 863,094

Cash and cash equivalents

$ 637,354 $ 691,816

Short-term investments

389,310 171,130

Investment within other long-term assets

The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of September 30, 2024 (in thousands):

$ 1,026,763 $ 863,094

The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of March 31, 2025 (in thousands):

Amortized Cost

Due in less than 1 year

$ 292,883 $ 292,863

Due in 1 - 5 years

96,447 96,447

Due in greater than 5 years

$ 389,430 $ 389,409

Gross realized gains and losses recognized on the sales of available-for-sale investments were not material for the periods presented.

The following tables summarize the unrealized gain and loss positions related to the available-for-sale investments (in thousands):

September 30, 2024

March 31, 2025

Amortized Cost

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Money market funds

$ 260,303 $ - $ - $ 260,303

Certificates of deposit

179,117 - - 179,117

Corporate debt securities

3,263 - ( 16 ) 3,247

treasuries and government agency bonds

206,950 9 ( 13 ) 206,946

Auction-rate securities backed by student-loan notes

100 - ( 1 ) 99

$ 649,733 $ 9 $ ( 30 ) $ 649,712

December 31, 2024

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Money market funds

$ 11,867 $ - $ - $ 11,867

Certificates of deposit

164,418 - - 164,418

Corporate debt securities

treasuries and government agency bonds

6,779 - ( 67 ) 6,712

Auction-rate securities backed by student-loan notes

150 - ( 2 ) 148

$ 183,214 $ - $ ( 69 ) $ 183,145

The following tables present information about the available-for-sale investments that had been in a continuous unrealized loss position for less than 12 months and for greater than 12 months (in thousands):

September 30, 2024

March 31, 2025

Less than 12 Months

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Corporate debt securities

$ - $ - $ 3,247 $ ( 16 ) $ 3,247 $ ( 16 )

treasuries and government agency bonds

100,408 ( 13 ) - - 100,408 ( 13 )

Auction-rate securities backed by student-loan notes

- - 99 ( 1 ) 99 ( 1 )

$ 100,408 $ ( 13 ) $ 3,346 $ ( 17 ) $ 103,754 $ ( 30 )

December 31, 2024

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Corporate debt securities

treasuries and government agency bonds

$ - $ - $ 6,712 $ ( 67 ) $ 6,712 $ ( 67 )

Auction-rate securities backed by student-loan notes

- - 148 ( 2 ) 148 ( 2 )

$ - $ - $ 6,860 $ ( 69 ) $ 6,860 $ ( 69 )

An impairment exists when the fair value of an investment is less than its amortized cost basis.

As of September 30, 2024 and December 31, 2023, the Company did not consider the impairment of its investments to be a result of credit losses.

As of March 31, 2025 and December 31, 2024, the Company did not consider the impairment of its investments to be a result of credit losses.

The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss.

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The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Condensed Consolidated Balance Sheets to the amounts reported on the Condensed Consolidated Statements of Cash Flows (in thousands):

September 30,

Cash and cash equivalents

Restricted cash included in other current assets (1)

$ 637,354 $ 691,816

Restricted cash included in other long-term assets

Total cash, cash equivalents and restricted cash reported on the Condensed Consolidated Statements of Cash Flows

The restricted cash included in other long-term assets as of September 30, 2024 and December 31, 2023 was related to a security deposit that is set aside in a bank account and cannot be withdrawn by the Company under the terms of a lease agreement.

The restriction will end upon the expiration of the lease.

$ 637,482 $ 691,941

FAIR VALUE MEASUREMENTS

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Financial Assets Measured at Fair Value on a Recurring Basis

The following tables summarize the fair value of the Company’s financial assets measured on a recurring basis (in thousands):

September 30, 2024

The following tables detail the fair value of the Company’s financial assets measured on a recurring basis (in thousands):

March 31, 2025

Money market funds

$ 260,303 $ 260,303 $ - $ -

Certificates of deposit

179,117 - 179,117 -

Corporate debt securities

3,247 - 3,247 -

treasuries and government agency bonds

206,946 - 206,946 -

Auction-rate securities backed by student-loan notes

Mutual funds and money market funds under deferred compensation plan

65,777 65,777 - -

$ 715,489 $ 326,080 $ 389,310 $ 99

December 31, 2024

Money market funds

$ 11,867 $ 11,867 $ - $ -

Certificates of deposit

164,418 - 164,418 -

Corporate debt securities

treasuries and government agency bonds

6,712 - 6,712 -

Auction-rate securities backed by student-loan notes

Mutual funds and money market funds under deferred compensation plan

65,337 65,337 - -

$ 248,482 $ 77,204 $ 171,130 $ 148

Redemptions and changes in the fair value of the auction-rate securities classified as Level 3 assets were not material for the periods presented.

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The following table summarizes the deferred compensation plan balances on the Condensed Consolidated Balance Sheets (in thousands):

September 30,

Deferred compensation plan asset components:

Cash surrender value of corporate-owned life insurance policies

$ 26,034 $ 27,249

Fair value of mutual funds and money market funds

65,777 65,337

$ 91,811 $ 92,586

Deferred compensation plan assets reported in:

Other long-term assets

$ 91,811 $ 92,586

Deferred compensation plan liabilities reported in:

Accrued compensation and related benefits (short-term)

Accrued compensation and related benefits

$ 3,240 $ 2,323

Other long-term liabilities

88,598 93,653

$ 91,838 $ 95,976

OTHER INCOME, NET

The components of other income, net, are as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The components of other income, net, were as follows (in thousands):

Three Months Ended March 31,

Interest income

$ 5,697 $ 6,914

Amortization of discount on available-for-sale securities

Gain (loss) on deferred compensation plan investments

Charitable contributions

( 1,350 ) 4,019

Charitable commitments

$ 5,131 $ 9,540

The income tax provision or benefit for interim periods is generally determined using an estimate of the Company’s annual effective tax rate and adjusted for discrete items, if any, in the relevant period.

Each quarter the estimate of the annual effective tax rate is updated, and if the Company’s estimated tax rate changes, a cumulative adjustment is made.

The income tax expense for the three months ended September 30, 2024 was $ 29.9 million, or 17.1 % of pre-tax income.

The income tax expense for the nine months ended September 30, 2024 was $ 66.0 million, or 16.4 % of pre-tax income.

The effective tax rates were lower than the federal statutory rate of 21 % primarily due to foreign income from the Company’s subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax .

The income tax expense for the three months ended September 30, 2023 was $ 16.7 million, or 12.1 % of pre-tax income.

The income tax expense for the nine months ended September 30, 2023 was $ 55.8 million, or 14.5 % of pre-tax income.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

On December 27, 2023, the Bermuda Corporate Income Tax Act of 2023 (the “Bermuda CIT Act”) was enacted and signed into law.

It includes a 15% CIT applicable to Bermuda businesses that are multinational enterprises (“MNE”) with annual revenue of €750M or more beginning in 2025.

The Bermuda CIT Act also includes an Economic Transition Adjustment ( “ ETA ” ) that requires MNEs to revalue their assets and liabilities, excluding goodwill, at their fair value as of September 30, 2023.

There is an election to opt out of the ETA.

As the Bermuda CIT Act is not effective until January 1, 2025, the Company is evaluating whether or not to adopt this ETA.

Based on the information available, the Company has not recorded any changes to income tax expense related to the Bermuda CIT Act as of September 30, 2024.

In September 2024, a subsidiary of the Company was granted a tax credit with a ten-year life by a foreign jurisdiction.

The tax credit may be utilized beginning in tax year 2025 to offset income tax liabilities in that jurisdiction, subject to various criteria as outlined by the granting authorities.

As of September 30, 2024, the Company has evaluated the sources of income necessary to benefit from the tax credit and has determined that it currently does not meet the more likely than not criteria for realization of this deferred tax asset.

As a result, the Company has recorded a full valuation allowance on this deferred tax asset.

The Company is evaluating the steps necessary, some of which are not within its immediate control, to generate sufficient future taxable income in the required jurisdiction and will reassess the realizability of this deferred tax asset each reporting period.

The income tax expense for the three months ended March 31, 2025 was $ 40.1 million, or 23.1 % of pre-tax income.

The effective tax rate was higher than the federal statutory rate of 21 % primarily due to the U.S.

impact of foreign earnings and non-deductible stock-based compensation.

The higher effective tax rate relative to the federal statutory rate was partially offset by income generated by the Company’s subsidiaries in lower tax jurisdictions, foreign tax credits, and U.S.

The income tax expense for the three months ended March 31, 2024 was $ 12.5 million, or 11.9 % of pre-tax income.

The effective tax rate was lower than the federal statutory rate of 21 % primarily due to lower statutory tax rates at certain of the Company’s foreign subsidiaries, and excess tax benefits from stock-based compensation.

The lower effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax.

In January 2025, the Organization for Economic Co-operation and Development (“OECD”) released new Administrative Guidance on the application of the Global Anti-Base Erosion (“GLoBE”) Model Rules.

The Company will continue to evaluate the impact of this release and of other future guidance on the Company’s future global tax provision.

In December 2023, the Bermuda Corporate Income Tax Act of 2023 (the “Bermuda CIT Act”) was enacted and signed into law.

The Bermuda CIT Act includes a 15% corporate income tax applicable to Bermuda businesses that are multinational enterprises with annual revenue of €750M or more beginning in 2025.

As the Company did not realize material taxable income in Bermuda in the three months ended March 31, 2025, no material changes to income tax expense related to the Bermuda CIT Act have been recorded as of March 31, 2025.

ACCUMULATED OTHER COMPREHENSIVE LOSS

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Balance as of January 1, 2025

Other comprehensive income (loss) before reclassifications

Net current period other comprehensive income (loss)

Balance as of March 31, 2024

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss

Net current period other comprehensive income (loss)

Balance as of June 30, 2024

$ ( 790 ) $ ( 47,721 ) $ ( 48,511 )

Other comprehensive income before reclassifications

43 5,139 5,182

Amounts reclassified from accumulated other comprehensive income

Net current period other comprehensive income

Balance as of September 30, 2024

The amount reclassified from accumulated other comprehensive loss for the period presented was recorded in other income, net, on the Condensed Consolidated Statements of Operations.

DIVIDENDS AND DIVIDEND EQUIVALENTS

48 5,139 5,187

Balance as of March 31, 2025

$ ( 742 ) $ ( 42,582 ) $ ( 43,324 )

The amount reclassified from accumulated other comprehensive income for the period presented was recorded in other income, net, on the Condensed Consolidated Statements of Operations.

STOCKHOLDERS’ EQUITY

Cash Dividend Program

The Company has a dividend program approved by its Board of Directors, pursuant to which the Company intends to pay quarterly cash dividends on its common stock.

Based on the Company’s historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month.

The Board of Directors declared the following cash dividends (in thousands, except per-share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Dividend declared per share

As of September 30, 2024 and December 31, 2023, accrued dividends totaled $ 61.0 million and $ 47.9 million, respectively.

$ 1.56 $ 1.25

$ 74,688 $ 60,834

As of March 31, 2025 and December 31, 2024, accrued cash dividends totaled $ 74.7 million and $ 59.8 million, respectively.

The declaration of any future cash dividends is at the discretion of the Board of Directors and will depend on, among other things, the Company’s financial condition, results of operations, capital requirements, business conditions, and other factors that the Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the Company’s stockholders.

The Company anticipates that cash used for future dividend payments will come from its domestic cash, cash generated from ongoing U.S.

operations, and cash repatriated from its Bermuda subsidiary.

operations, and cash repatriated from certain foreign subsidiaries.

The Company also anticipates that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

2 unchanged sentences

The dividend equivalents are accumulated and paid to the employees when the underlying RSUs vest.

Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill the requisite service requirement and, as a result, the awards do not vest.

As of September 30, 2024 and December 31, 2023 , accrued dividend equivalents totaled $ 5.8 million and $ 11.9 million, respectively.

Dividend equivalents accumulated on the underlying RSUs are forfeited if the underlying RSUs do not vest.

As of March 31, 2025 and December 31, 2024 , accrued dividend equivalents totaled $ 6.7 million and $ 5.8 million, respectively.

Stock Repurchase Programs

In October 2023, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $ 640.0 million of its common stock, which was fully utilized as of December 31, 2024.

In February 2025, the Board of Directors approved another stock repurchase program authorizing the Company to repurchase up to $ 500.0 million of its common stock through February 2028.

Shares are retired upon repurchase.

The Company did not make any repurchases under this program during the three months ended March 31, 2025.

The repurchase program does not obligate the Company to purchase any particular number of shares, and may be suspended, modified, or discontinued at any time without prior notice.

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

2 unchanged sentences

the above-average industry growth of product and market areas that we have targeted;

our plan to increase our revenue through the introduction of new products within our existing product families as well as in new product categories and families;

our plans to grow revenue in a diversified way across regions and increase revenue through the introduction of new products within our existing product families as well as in new product categories, families and segments;

our mission statement to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future;

the effects of macroeconomic factors, including global economic uncertainties, the Russia-Ukraine conflict and the Middle East conflict on the semiconductor industry and our business;

the effects of macroeconomic factors, global economic uncertainties, geopolitical tensions and global tariffs and retaliatory measures on the semiconductor industry and our business;

the effect that liquidity of our investments has on our capital resources;

the continuing application of our products in the enterprise data, storage and computing, automotive, communications, consumer and industrial markets;

the continuing application of our products in the storage and computing, enterprise data, automotive, industrial, communications and consumer end markets;

estimates of our future liquidity requirements;

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expectations regarding protection of our proprietary technology;

business outlook for the remainder of 2024 and beyond;

the business outlook for the remainder of 2025 and beyond;

the factors that we believe will impact our business, operations and financial condition, as well as our ability to achieve revenue growth;

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and international tax laws and regulations on our income tax provision, financial position and cash flows;

our plan to repatriate cash from our subsidiary in Bermuda;

our intention and ability to continue our stock repurchase program and pay cash dividends and dividend equivalents;

our plan to repatriate cash from our foreign subsidiaries;

our intention and ability to execute our stock repurchase program and pay cash dividends and dividend equivalents;

the factors that differentiate us from our competitors.

our ability to adequately remediate our material weakness.

In some cases, words such as “would,” “could,” “may,” “should,” “predict,” “potential,” “targets,” “continue,” “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “will,” the negative of these terms or other variations of such terms and similar expressions relating to the future identify forward-looking statements.

All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, such as global economic uncertainties, the Russia-Ukraine conflict and the Middle East conflict on the semiconductor industry and our business.

These forward-looking statements generally are identified by the words “would,” “could,” “may,” “should,” “predict,” “potential,” “targets,” “continue,” “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “will,” and similar expressions.

All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, global economic uncertainties, including tariffs and retaliatory measures, and geopolitical tensions on the semiconductor industry and our business.

These statements are not guarantees of future performance and are subject to significant risks and uncertainties.

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Readers should carefully review future reports and documents that we file from time to time with the SEC, such as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

Unless stated otherwise or the context otherwise requires, references to “we,” “our,” and “us” mean Monolithic Power Systems, Inc.

and its consolidated subsidiaries.

We are a fabless global company that provides high-performance, semiconductor-based power electronics solutions.

MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future.

Founded in 1997 by our CEO Michael Hsing, MPS has three core strengths:

Our mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future.

Founded in 1997 by our CEO Michael Hsing, we have three core strengths:

deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.

These combined advantages are designed to enable MPS to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders.

These combined advantages are designed to enable us to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders.

We operate in the cyclical semiconductor industry.

We are subject to industry downturns, but we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.

We are subject to industry downturns, but we have targeted product and market areas that we believe allow us to operate at above average industry performance levels over the long term.

Historically, our revenue has generally been higher in the second half of the year than in the first half although various factors, such as market conditions and the timing of key product introductions, could impact this trend.

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Typical supply chain lead times for orders are generally 16 to 26 weeks.

These factors, combined with the fact that our customers can cancel or reschedule orders without significant penalty to the customer, make the forecasting of our orders, revenue and expenses difficult.

These factors, combined with the fact that our customers can cancel or reschedule orders without incurring a significant penalty, make the forecasting of our orders, revenue and expenses difficult.

We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products.

Our revenue from sales to customers in Asia was 94% and 89% of our total revenue for the three months ended September 30, 2024 and 2023, respectively, and 93% and 86% of our total revenue for the nine months ended September 30, 2024 and 2023, respectively.

Our revenue from indirect sales to one customer, which primarily comprised power management solutions for artificial intelligence (“AI”) applications, was 15% and 12% of our total revenue for the three months ended September 30, 2024 and 2023, respectively, and 18% and 7% of our total revenue for the nine months ended September 30, 2024 and 2023, respectively.

We derive a majority of our revenue from the sales of our DC to DC converter products which serve the enterprise data, storage and computing, automotive, communications, consumer and industrial markets.

Our revenue from sales to customers in Asia was 94% and 93% of our total revenue for the three months ended March 31, 2025 and 2024, respectively.

We believe our ability to achieve revenue growth will depend, in part, on our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and continue to secure manufacturing capacity.

Macroeconomic Conditions and Regulations

The semiconductor industry has historically been impacted by various macro-economic challenges including fluctuations in consumer spending, fluctuations in demand for semiconductors, rising inflation, increased interest rates, and fluctuations in currency rates.

The semiconductor industry has historically been impacted by various macroeconomic challenges including fluctuations in consumer spending, fluctuations in demand for semiconductors, rising inflation, increased interest rates, and fluctuations in currency rates.

We remain cautious in light of continued challenging macroeconomic conditions and will continue to monitor the potential impact on our operations.

The extent and duration of the direct and indirect impact of macroeconomic events on our business, results of operations and overall financial position remain uncertain and depend on future developments.

We closely monitor changes to export control laws, trade regulations and other trade requirements.

To date, no restrictions have had a material impact on our revenue and operations.

We will continue to monitor any changes to export control laws, trade regulations and other trade requirements and are committed to complying with all applicable trade laws, regulations and other requirements.

Critical Accounting Policies and Estimates

We closely monitor changes to export control laws, tariffs, trade regulations and other trade requirements.

To date, no restrictions or requirements have had a material impact on our revenue and operations.

We believe that our diverse, agile and resilient supply chain is structured in a way to minimize the impact of tariffs;

however, such restrictions or requirements can be enacted quickly and unexpectedly and could impact our business in the future.

To the extent tariffs or trade regulations affecting us are implemented, we will seek to take mitigating actions in the near- and medium-term, as necessary, and are committed to complying with all applicable trade laws, regulations and other requirements.

Critical Accounting Estimates

In preparing our condensed consolidated financial statements in accordance with GAAP, we are required to make estimates, assumptions and judgments that affect the amounts reported in our financial statements and the accompanying disclosures.

Estimates and judgments used in the preparation of our condensed consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, including the impact of global economic uncertainties, Russia-Ukraine conflict and the Middle East conflict.

Estimates and judgments used in the preparation of our financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, global economic uncertainties, geopolitical tensions and global tariffs and counter measures.

Actual results could differ from these estimates and assumptions, and any such differences may be material to our condensed consolidated financial statements.

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The table below sets forth the data on the Condensed Consolidated Statements of Operations as a percentage of revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

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The following table summarizes our revenue by end market:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

Enterprise Data

Storage and Computing

Enterprise Data

Communications

Revenue for the three months ended September 30, 2024 was $620.1 million, an increase of $145.2 million, or 30.6%, from $474.9 million for the three months ended September 30, 2023.

Revenue for the three months ended March 31, 2025 was $637.6 million, an increase of $179.7 million, or 39.2%, from $457.9 million for the three months ended March 31, 2024.

The increase in revenue was primarily due to higher shipment volume.

For the three months ended September 30, 2024, revenue from the enterprise data market increased $85.5 million, or 86.4%, from the same period in 2023.

This increase was primarily due to higher sales of our power management solutions for AI applications.

Revenue from the storage and computing market for the three months ended September 30, 2024 increased $14.5 million, or 11.2%, from the same period in 2023.

This increase was primarily due to higher sales of commercial notebook and storage applications.

Third quarter 2024 automotive revenue increased $16.2 million, or 17.0%, from the same period in 2023.

This increase was primarily due to higher sales of applications supporting advanced driver assistance systems and lighting, partially offset by lower sales of applications supporting infotainment.

For the three months ended March 31, 2025, revenue from the storage and computing market increased $82.4 million, or 77.6%, from the same period in 2024.

This increase was primarily due to higher sales of storage applications and products for notebooks.

Revenue from the automotive market increased $57.8 million, or 66.4%, from the same period in 2024.

This increase was primarily due to higher sales of applications supporting advanced driver assistance systems, infotainment and USB connectors.

Revenue from the enterprise data market decreased $16.8 million, or 11.2%, from the same period in 2024.

This decrease was primarily due to lower sales of our power management solutions for AI applications, partially offset by higher sales of our cloud-based and on-premises CPU server and workstation applications.

Revenue from the communications market increased $25.0 million, or 53.7%, from the same period in 2024.

This increase was primarily driven by higher demand for infrastructure related products and wireless applications.

Third quarter 2024 revenue from the consumer market increased $2.0 million, or 3.3%, from the same period in 2023.

This increase was primarily driven by higher sales of power solutions for optical modules and routers.

Revenue from the consumer market increased $18.9 million, or 49.6%, from the same period in 2024.

This increase was primarily driven by higher sales in home appliances and smart TVs.

Revenue from the industrial market increased $12.4 million, or 40.9%, from the same period in 2024.

Revenue for the nine months ended September 30, 2024 was $1,585.4 million, an increase of $218.3 million, or 16.0%, from $1,367.1 million for the nine months ended September 30, 2023.

The increase in revenue was primarily due to higher average selling prices resulting primarily from product mix.

For the nine months ended September 30, 2024, revenue from the enterprise data market increased $327.3 million, or 168.6%, from the same period in 2023.

This increase was primarily due to higher sales of our power management solutions for AI applications.

Revenue from the storage and computing market for the first nine months of 2024 decreased $8.8 million, or 2.3%, from the same period in 2023.

This decrease was primarily due to lower sales of storage, graphic card and other applications, partially offset by higher sales of commercial notebooks.

Revenue from the automotive market for the first nine months of 2024 decreased $19.3 million, or 6.3%, from the same period in 2023.

This decrease was primarily due to lower sales of applications supporting infotainment, body electronics and USB connectors, partially offset by higher sales of applications supporting advanced driver assistance systems.

Revenue from the communications market decreased $1.9 million, or 1.2%, from the same period in 2023.

For the nine months ended September 30, 2024, consumer revenue decreased $46.2 million, or 24.2%, from the same period in 2023.

This decrease was broad-based and primarily driven by lower sales of products for gaming, home appliances and mobile devices.

Revenue from the industrial market decreased $32.8 million, or 23.5%, from the same period in 2023.

This decrease was mainly driven by lower sales of products related to industrial meter, security and instrumentation applications.

This increase was broad-based and primarily due to higher sales for power sources.

Cost of Revenue and Gross Margin

Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

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As a percentage of revenue

Cost of revenue was $276.7 million, or 44.6% of revenue, for the three months ended September 30, 2024, and $211.3 million, or 44.5% of revenue, for the three months ended September 30, 2023.

The $65.4 million increase in cost of revenue was primarily driven by higher shipment volume, particularly of power management solutions for AI applications.

Gross margin was 55.4% for the three months ended September 30, 2024, compared with 55.5% for the three months ended September 30, 2023.

The decrease in gross margin was mainly driven by an increase in inventory write-downs as a percentage of revenue, partially offset by lower warranty expenses as a percentage of revenue and product mix.

Cost of revenue was $709.0 million, or 44.7% of revenue, for the nine months ended September 30, 2024, and $597.1 million, or 43.7% of revenue, for the nine months ended September 30, 2023.

The $111.9 million increase in cost of revenue was primarily driven by higher average costs due to product mix.

Gross margin was 55.3% for the nine months ended September 30, 2024, compared with 56.3% for the nine months ended September 30, 2023.

The decrease in gross margin was mainly driven by an increase in inventory write-downs and warranty expenses as a percentage of revenue, partially offset by lower manufacturing overhead costs.

Cost of revenue was $284.3 million, or 44.6% of revenue, for the three months ended March 31, 2025, and $205.4 million, or 44.9% of revenue, for the three months ended March 31, 2024.

The $78.9 million increase in cost of revenue was primarily driven by higher shipment volume.

Gross margin was 55.4% for the three months ended March 31, 2025, compared with 55.1% for the three months ended March 31, 2024.

The increase in gross margin was mainly driven by lower inventory write-downs and warranty expenses as a percentage of revenue, partially offset by product mix and higher manufacturing overhead costs as a percentage of revenue.

Research and Development

R&D expenses primarily consist of cash compensation and benefits, stock-based compensation and deferred compensation for design and product engineers, expenses related to new product development and supplies, and facility costs.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

As a percentage of revenue

R&D expenses were $85.1 million, or 13.7% of revenue, for the three months ended September 30, 2024, and $64.8 million, or 13.6% of revenue, for the three months ended September 30, 2023.

The $20.3 million increase in R&D expenses was primarily due to a $6.9 million increase in cash compensation and benefits, a $3.5 million increase in new product development expenses, a $3.0 million increase in stock-based compensation expenses and related payroll taxes, a $1.9 million increase in expense related to changes in the value of deferred compensation plan liabilities, and a $0.9 million increase in laboratory supplies.

R&D expenses were $239.0 million, or 15.1% of revenue, for the nine months ended September 30, 2024, and $192.2 million, or 14.1% of revenue, for the nine months ended September 30, 2023.

The $46.8 million increase in R&D expenses was primarily due to a $22.2 million increase in cash compensation and benefits, a $9.0 million increase in stock-based compensation expenses and related payroll taxes, a $3.2 million increase in new product development expenses, a $1.9 million increase in expense related to changes in the value of deferred compensation plan liabilities, and $1.9 million increase in laboratory supplies.

R&D expenses were $92.2 million, or 14.4% of revenue, for the three months ended March 31, 2025, and $76.0 million, or 16.6% of revenue, for the three months ended March 31, 2024.

The $16.2 million increase in R&D expenses was primarily due to a $10.4 million increase in cash compensation expenses and benefits, a $4.1 million increase in new product development expenses, and a $1.5 million increase in laboratory and other supplies, partially offset by a $1.9 million benefit related to changes in the value of deferred compensation plan liabilities.

Selling, General and Administrative

SG&A expenses primarily include cash compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, sales commissions, travel expenses, facilities costs, third party service fees and legal expenses.

Three Months Ended September 30,

Nine Months Ended September 30,

SG&A expenses primarily include cash compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, sales and sales representative commissions, travel expenses, facilities costs, third party service fees and legal expenses.

Three Months Ended March 31,

(In thousands, except percentages)

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As a percentage of revenue

SG&A expenses were $94.4 million, or 15.2% of revenue, for the three months ended September 30, 2024, and $63.2 million, or 13.3% of revenue, for the three months ended September 30, 2023.

The $31.2 million increase in SG&A expenses was primarily driven by a $14.4 million increase in stock-based compensation expenses, a $5.5 million increase in cash compensation and benefits, a $2.8 million increase in expense related to changes in the value of deferred compensation plan liabilities, a $2.6 million increase in sales commissions, and a $2.2 million increase in legal expenses.

SG&A expenses were $261.4 million, or 16.5% of revenue, for the nine months ended September 30, 2024, and $205.6 million, or 15.0% of revenue, for the nine months ended September 30, 2023.

The $55.8 million increase in SG&A expenses was primarily driven by a $32.7 million increase in stock-based compensation expenses, a $6.9 million increase in cash compensation and benefits, a $3.9 million increase in professional services, and a $2.7 million increase in expense related to changes in the value of deferred compensation plan liabilities.

SG&A expenses were $92.2 million, or 14.5% of revenue, for the three months ended March 31, 2025, and $81.0 million, or 17.7% of revenue, for the three months ended March 31, 2024.

The $11.3 million increase in SG&A expenses was primarily driven by a $5.9 million increase in cash compensation and benefits, a $3.6 million increase in sales and sales representative commissions, a $2.2 million increase in stock-based compensation expenses, and a $1.0 million increase consisting of software licensing fees and advertising expenses, partially offset by a $2.9 million benefit related to changes in the value of deferred compensation plan liabilities.

Other Income, Net

Other income, net, was $10.3 million for the three months ended September 30, 2024, compared with $2.3 million for the three months ended September 30, 2023.

The increase in other income was primarily due to an increase in amortization of discount on available-for-sale securities, and an increase in income related to changes in the value of deferred compensation plan investments.

Other income, net, was $27.3 million for the nine months ended September 30, 2024, compared with $14.1 million for the nine months ended September 30, 2023.

Other income, net, was $5.1 million for the three months ended March 31, 2025, compared with $9.5 million for the three months ended March 31, 2024.

The decrease in other income, net was primarily due to an increase of $5.4 million in expense related to changes in the value of the deferred compensation plan investments and a decrease of $3.4 million in amortization of the discount on available-for-sale securities, partially offset by a decrease in charitable commitments.

Income Tax Expense

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Each quarter the estimate of the annual effective tax rate is updated, and if our estimated tax rate changes, a cumulative adjustment is made.

The income tax expense for the three months ended September 30, 2024 was $29.9 million, or 17.1% of pre-tax income.

The income tax expense for the nine months ended September 30, 2024 was $66.0 million, or 16.4% of pre-tax income.

The effective tax rates were lower than the federal statutory rate of 21% primarily due to foreign income from our subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax .

The income tax expense for the three months ended September 30, 2023 was $16.7 million, or 12.1% of pre-tax income.

The income tax expense for the nine months ended September 30, 2023 was $55.8 million, or 14.5% of pre-tax income.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

The Organization for Economic Co-operation and Development enacted model rules for a new global minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or are in the process of enacting, legislation considering these model rules.

These rules did not have a material impact on our taxes for the three and nine months ended September 30, 2024.

The income tax expense for the three months ended March 31, 2025 was $40.1 million, or 23.1% of pre-tax income.

The effective tax rate was higher than the federal statutory rate of 21% primarily due to the U.S.

impact of foreign earnings and non-deductible stock-based compensation.

The higher effective tax rate relative to the federal statutory rate was partially offset by income generated by our subsidiaries in lower tax jurisdictions, foreign tax credits, and U.S.

The income tax expense for the three months ended March 31, 2024 was $12.5 million, or 11.9% of pre-tax income.

The effective tax rate was lower than the federal statutory rate of 21% primarily due to lower statutory tax rates at certain of our foreign subsidiaries, and excess tax benefits from stock-based compensation.

The lower effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

In January 2025, the OECD released new Administrative Guidance on the application of the GLoBE Model Rules.

We will continue to evaluate the impact of this release and of other future guidance on our future global tax provision.

In December 2023, the Bermuda CIT Act was enacted and signed into law.

See Note 13 for further details.

In September 2024, one of our subsidiaries was granted a tax credit with a ten-year life by a foreign jurisdiction.

The tax credit may be utilized beginning in tax year 2025 to offset income tax liabilities in that jurisdiction, subject to various criteria as outlined by the granting authorities.

As of September 30, 2024, we have evaluated the sources of income necessary to benefit from the tax credit and have determined that we currently do not meet the more likely than not criteria for realization of this deferred tax asset.

As a result, we have recorded a full valuation allowance on this deferred tax asset.

We are evaluating the steps necessary, some of which are not within our immediate control, to generate sufficient future taxable income in the required jurisdiction and will reassess the realizability of this deferred tax asset each reporting period.

A release of the valuation allowance could result in a significant one-time noncash tax benefit.

Liquidity and Capital Resources

September 30,

(In thousands, except percentages)

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Working capital

As of September 30, 2024, we had cash and cash equivalents of $700.3 million and short-term investments of $762.0 million, compared with cash and cash equivalents of $527.8 million and short-term investments of $580.6 million as of December 31, 2023.

As of September 30, 2024, $506.5 million of cash and cash equivalents and $725.5 million of short-term investments were held by our international subsidiaries.

We have repatriated and will likely repatriate cash from our Bermuda subsidiary to fund our expenditures.

As of March 31, 2025, we had cash and cash equivalents of $637.4 million and short-term investments of $389.3 million, compared with cash and cash equivalents of $691.8 million and short-term investments of $171.1 million as of December 31, 2024.

As of March 31, 2025, $521.0 million of cash and cash equivalents and $179.1 million of short-term investments were held by our foreign subsidiaries.

For the three months ended March 31, 2025, we repatriated $275 million of cash from certain of our foreign subsidiaries to the U.S.

with minimal tax impact.

We may repatriate additional cash from certain of our foreign subsidiaries in future periods to fund our expenditures.

We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

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The following table summarizes our cash flow activities:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Effect of change in exchange rates

Net increase in cash, cash equivalents and restricted cash

For the nine months ended September 30, 2024, the $135.8 million increase in cash provided by operating activities compared to the same period in 2023 was primarily due to increased accounts receivable collections and the collection of $50.0 million of other receivables related to a long-term wafer supply agreement, partially offset by increased inventory purchases.

This increase was also affected by changes in other working capital.

For the nine months ended September 30, 2024, the $83.4 million increase in cash used in investing activities compared to the same period in 2023 was primarily due to an increase of $37.2 million in purchases of property and equipment and the $33.3 million acquisition in the nine months ended September 30, 2024.

For the nine months ended September 30, 2024, the $57.5 million increase in cash used in financing activities compared to the same period in 2023 was primarily due to an increase of $43.5 million in dividend and dividend equivalent payments.

Net decrease in cash, cash equivalents and restricted cash

For the three months ended March 31, 2025, the $8.3 million increase in net cash provided by operating activities compared to the same period in 2024 was primarily due to increased accounts receivable collections, partially offset by increased inventory purchases and changes in other working capital.

For the three months ended March 31, 2025, the $8.5 million decrease in net cash used in investing activities compared to the same period in 2024 was primarily due to a $33.3 million acquisition made in 2024, partially offset by an increase of $24.4 million in purchases of property and equipment.

For the three months ended March 31, 2025, the $5.9 million increase in net cash used in financing activities compared to the same period in 2024 was primarily due to an increase of $10.5 million in dividend and dividend equivalent payments, partially offset by repurchases of common stock made only in 2024.

Cash Requirements

Although consequences of economic uncertainties and macroeconomic conditions and other factors could adversely affect our liquidity and capital resources in the future, and our cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,462.4 million as of September 30, 2024, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.

Although consequences of economic uncertainties and macroeconomic conditions, including tariffs and retaliatory measures, and other factors could adversely affect our liquidity and capital resources in the future, and cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,026.7 million as of March 31, 2025, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.

Our material cash requirements include the following contractual and other obligations:

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In May 2022, we entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four-year period.

As of September 30, 2024, we had remaining prepayments under this agreement of $120.0 million, of which $60.0 million was classified as short-term.

As of September 30, 2024, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $120.0 million prepayment, were $586.9 million, of which $470.9 million was classified as short-term.

As of March 31, 2025, we had remaining prepayments under this agreement of $60.0 million reported in other current assets on the Condensed Consolidated Balance Sheets.

As of March 31, 2025, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $60.0 million prepayment, were $546.5 million, of which $497.7 million was due within a year.

Transition Tax Liability

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As permitted by the 2017 Tax Act, we have elected to pay the tax liability in installments on an interest-free basis through 2025.

As of September 30, 2024, the remaining liability totaled $6.2 million, all of which was classified as short-term.

As of March 31, 2025, the remaining liability totaled $6.2 million, all of which was short-term.

Operating Leases

Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities and equipment.

As of September 30, 2024, these obligations totaled $16.3 million, of which $2.8 million was classified as short-term.

Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities.

As of March 31, 2025, these obligations totaled $17.8 million, of which $3.3 million was short-term.

Capital Return to Stockholders

In October 2023, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026.

Shares are retired upon repurchase.

We repurchased 6,000 and 19,000 shares of our common stock for an aggregate purchase price of $5.5 million and $14.2 million during the three and nine months ended September 30, 2024, respectively.

As of September 30, 2024, $622.1 million remained available for future repurchases under the program.

In February 2025, our Board of Directors approved a stock repurchase program authorizing us to repurchase up to $500.0 million of our common stock through February 2028.

As of March 31, 2025, $500.0 million remained available for future repurchases under the program.

We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.

Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month.

As of September 30, 2024, accrued dividends totaled $61.0 million.

As of March 31, 2025, accrued cash dividends totaled $74.7 million.

The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders.

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Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents.

As of September 30, 2024, these obligations totaled $88.3 million.

As of March 31, 2025, these obligations totaled $91.3 million.

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