What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-30 compared with 2024-05-31 · 116 added, 71 removed, 169 unchanged (53% of the section changed)

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• risks related to seasonality or volatility related to sales into the infrastructure, semiconductor and related industries and end markets;

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• risks related to failures to qualify our products or our suppliers’ manufacturing lines;

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Leveraging leading intellectual property and deep system-level expertise, as well as highly innovative security firmware, our solutions are empowering the data economy and enabling the data center, enterprise networking, carrier infrastructure, consumer, and automotive/industrial end markets.

Net revenue in the first quarter of fiscal 2025 was $1.2 billion and was 12% lower than net revenue of $1.3 billion in the first quarter of fiscal 2024.

Net revenue in the second quarter of fiscal 2025 was $1.3 billion and was 5% lower than net revenue in the second quarter of fiscal 2024.

This was due to a decrease in sales from a majority of our end markets.

Sales decreased from the carrier infrastructure end market by 72%, from the enterprise networking end market by 54%, from the consumer end market by 47% and from the automotive/industrial end market by 31%.

The decreases were partially offset by an increase in sales from the data center end market by 87% compared to the three months ended April 29, 2023.

The decreases were partially offset by a 92% increase in sales from the data center end market compared to the three months ended July 29, 2023.

We have seen strong revenue growth from our data center end market, driven by demand for our electro-optics products from AI applications.

In addition, starting in the first quarter of fiscal 2025, we have also started to benefit from initial shipments of our custom AI compute products.

In our enterprise networking and carrier infrastructure end markets, in response to a period of inventory correction and soft industry demand, customers have decreased their demand for our products.

In addition, we have continued to see low demand from our OEM customers in China.

To secure capacity over the long term, we have entered into and expect to continue to enter into capacity reservation arrangements with certain foundries and partners for substrates.

In addition, we have also started to benefit from initial shipments of our custom AI compute products.

In our enterprise networking and carrier infrastructure end markets, following a period of inventory correction, we have seen demand stabilize in the second quarter of fiscal 2025.

We continue to see low demand from our OEM customers in China.

To secure capacity over the long term, we have entered into capacity reservation arrangements with certain foundries and partners.

See “Note 5 – Commitments and Contingencies” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

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See also Part II, Item IA, “Risk Factors,” including, but not limited to, the risk detailed under the caption “Adverse changes in the political, regulatory and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business.”

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Capital Return Program.

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The extent to which we repurchase our stock and the timing of such repurchases will depend upon market conditions, legal rules and regulations, and other corporate considerations, as determined by our management team.

On March 7, 2024, we announced that our Board of Directors authorized a $3.0 billion addition to the balance of its existing stock repurchase program.

During the three months ended May 4, 2024, we repurchased 2.2 million shares of our common stock for $150.0 million.

As of May 4, 2024, $3.1 billion remained available for future stock repurchases.

As of May 4, 2024, a total of 315.0 million shares have been repurchased since inception of our current and previous stock repurchase programs for an aggregate total of $4.7 billion in cash.

We returned $201.8 million to stockholders in the three months ended May 4, 2024 through $150.0 million in repurchases of shares of our common stock and $51.8 million in cash dividends.

On March 7, 2024, we announced that our Board of Directors authorized a $3.0 billion addition to the balance of our existing stock repurchase program.

During the six months ended August 3, 2024, we repurchased 4.7 million shares of our common stock for $325.0 million.

As of August 3, 2024, $3.0 billion remained available for future stock repurchases.

We returned $428.7 million to stockholders in the six months ended August 3, 2024 through $325.0 million in repurchases of shares of our common stock and $103.7 million in cash dividends.

Cash and Short-Term Investments.

Our cash and cash equivalents were $847.7 million at May 4, 2024, which were $103.1 million lower than our balance at February 3, 2024 of $950.8 million.

Our cash and cash equivalents were $808.7 million at August 3, 2024, which were $142.1 million lower than our balance at February 3, 2024 of $950.8 million.

Sales and Customer Composition.

Our accounts receivable was concentrated with two customers at May 4, 2024, who represented a total of 70% of gross accounts receivable, compared with four customers at April 29, 2023, who represented 55% of gross accounts receivable.

During the three months ended May 4, 2024, there were two customers in addition to one distributor, whose revenue as a percentage of net revenue was 10% or greater of total net revenue.

During the three months ended April 29, 2023, there was one customer, in addition to two distributors, whose revenue as a percentage of net revenue was 10% or greater of total net revenue.

Our accounts receivable was concentrated with four customers at August 3, 2024 and July 29, 2023, who represented a total of 70% of gross accounts receivable.

During the three and six months ended August 3, 2024, there were two customers in addition to one distributor, whose revenue as a percentage of net revenue was 10% or greater of total net revenue.

During the three months ended July 29, 2023, there was no net revenue attributable to a customer, other than one distributor, whose revenue as a percentage of net revenue was 10% or greater of total net revenue.

During the six months ended July 29, 2023, there was one customer, in addition to two distributors, whose revenue as a percentage of net revenue was 10% or greater of total net revenue.

Net revenue attributable to significant customers and distributors whose revenue as a percentage of net revenue was 10% or greater of total net revenue is presented in the following table:

Three Months Ended

2024 April 29,

Customer A * 15%

Three Months Ended Six Months Ended

2024 July 29,

2023 August 3,

2024 July 29,

Distributor A 35% 21% 37% 19%

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Most of our sales are made to customers with operations located outside of the United States, primarily in Asia, and a majority of our products are manufactured outside the United States.

Sales shipped to customers with operations in Asia represented approximately 73% of our net revenue in the three months ended May 4, 2024, and approximately 69% of our net revenue in the three months ended April 29, 2023.

Sales shipped to customers with operations in Asia represented approximately 77% and 75% of our net revenue in the three and six months ended August 3, 2024, respectively, and approximately 68% and 69% of our net revenue in the three and six months ended July 29, 2023, respectively.

Because many manufacturers and manufacturing subcontractors of our customers are located in Asia, we expect that most of our net revenue will continue to be represented by sales to our customers in that region.

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Conversely, we may have insufficient inventory or be unable to obtain the supplies or contract manufacturing capacity to meet demand, which would result in lost revenue opportunities and potential loss of market share as well as damaged customer relationships.”

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Critical Accounting Policies and Estimates

There have been no material changes during the three months ended May 4, 2024 to our critical accounting policies and estimates from the information provided in the “Critical Accounting Policies and Estimates” section of Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

There have been no material changes during the three months ended August 3, 2024 to our critical accounting policies and estimates from the information provided in the “Critical Accounting Policies and Estimates” section of Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

In the current macroeconomic environment, our estimates could require increased judgment and carry a higher degree of variability and volatility.

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The following table sets forth information derived from our Unaudited Condensed Consolidated Statements of Operations expressed as a percentage of net revenue:

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

2023 August 3,

2024 July 29,

Net revenue 100.0 % 100.0 % 100.0 % 100.0 %

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Net loss (15.2) % (15.4) % (16.8) % (14.2) %

Three months ended May 4, 2024 and April 29, 2023

Three Months Ended

2024 April 29,

Three and six months ended August 3, 2024 and July 29, 2023

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

Net revenue $ 1,272.9 $ 1,340.9 (5.1)% $ 2,433.8 $ 2,662.6 (8.6)%

Our net revenue for the three months ended May 4, 2024 decreased by $160.8 million compared to net revenue for the three months ended April 29, 2023.

Our net revenue for the three months ended August 3, 2024 decreased by $68.0 million compared to net revenue for the three months ended July 29, 2023.

This was due to a decrease in sales from a majority of our end markets.

The decreases were partially offset by an increase in sales from the data center end market by 87% compared to the three months ended April 29, 2023.

The overall decreases in net revenue of 12% for the three months ended May 4, 2024 was primarily driven by lower unit shipments across all of our end markets except the data center end market, partially offset by higher average selling prices for certain products as well as an increase in demand for our optical products, driven by AI applications.

The decreases were partially offset by a 92% increase in sales from the data center end market compared to the three months ended July 29, 2023.

Our net revenue for the six months ended August 3, 2024 decreased by $228.8 million compared to net revenue for the six months ended July 29, 2023.

This was due to a decrease in sales from a majority of our end markets.

Sales decreased from the carrier infrastructure end market by 74%, from the enterprise networking end market by 56%, from the consumer end market by 58% and from the automotive/industrial end market by 23%.

The decreases were partially offset by a 90% increase in sales from the data center end market compared to the six months ended July 29, 2023.

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The overall decreases in net revenue of 5% and 9%, respectively, for the three and six months ended August 3, 2024 compared to the three and six months ended July 29, 2023, were primarily driven by lower unit shipments across all of our end markets except the data center end market, partially offset by higher average selling prices for certain products as well as an increase in demand for our optical products, driven by AI applications.

Cost of Goods Sold and Gross Profit

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

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% of net revenue 46.2 % 38.9 % 45.8 % 40.5 %

Cost of goods sold as a percentage of net revenue decreased for the three months ended May 4, 2024 compared to the three months ended April 29, 2023, which was primarily due to a shift in product mix.

As a result, gross margin for the three months ended May 4, 2024 increased by 3.3 percentage points compared to the three months ended April 29, 2023.

Cost of goods sold as a percentage of net revenue decreased for the three and six months ended August 3, 2024 compared to the three and six months ended July 29, 2023, which was primarily due to a shift in product mix, as well as charges for product related claim matters in the second quarter of fiscal 2024, that were fully resolved in the fourth quarter of fiscal 2024.

As a result, gross margin for the three and six months ended August 3, 2024 increased by 7.3 and 5.3 percentage points, respectively, compared to the three and six months ended July 29, 2023.

Research and Development

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

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% of net revenue 38.2 % 35.4 % 39.6 % 35.9 %

Research and development expense was relatively flat in the three months ended May 4, 2024, compared to the three months ended April 29, 2023.

Research and development expense increased by $11.9 million in the three months ended August 3, 2024 compared to the three months ended July 29, 2023.

The increase was primarily due to higher engineering design costs, depreciation and amortization expense, and employee compensation related costs.

Research and development expense was relatively flat in the six months ended August 3, 2024 compared to the six months ended July 29, 2023.

Selling, General and Administrative

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

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% of net revenue 15.5 % 15.7 % 16.3 % 15.4 %

Selling, general and administrative expense was relatively flat in the three months ended May 4, 2024, compared to the three months ended April 29, 2023.

Selling, general and administrative expense decreased by $12.7 million and $11.8 million, respectively, in the three and six months ended August 3, 2024 compared to the three and six months ended July 29, 2023.

The decreases were primarily due to lower acquisition related costs, as well as lower depreciation and amortization expense.

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Restructuring Related Charges

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

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% of net revenue 0.4 % 3.1 % 0.3 % 3.8 %

We recognized $4.1 million of total restructuring related charges in the three months ended May 4, 2024 as a result of our restructuring plan to streamline our organization and optimize resources.

We recognized $4.0 million and $8.1 million of total restructuring related charges in the three and six months ended August 3, 2024, respectively, as a result of our restructuring plan to streamline our organization and optimize resources.

Refer to “Note 8 – Restructuring” in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

Interest and Other Loss, Net

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

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% of net revenue (3.6) % (3.4) % (3.7) % (3.6) %

Interest and other loss, net decreased by $4.4 million in the three months ended May 4, 2024, compared to the three months ended April 29, 2023.

Interest and other loss, net was relatively flat in the three months ended August 3, 2024 compared to the three months ended July 29, 2023.

Interest and other loss, net decreased by $4.5 million in the six months ended August 3, 2024 compared to the six months ended July 29, 2023.

The decrease was primarily due to a decrease in interest expense driven by lower outstanding term loan balances, partially offset by interest expense associated with the 2029 and 2033 Senior Notes issued during the third quarter of fiscal 2024.

In addition, we incurred factoring fees for the sales of receivables in the six months ended August 3, 2024 that were not applicable in the six months ended July 29, 2023.

Provision (Benefit) for Income Taxes

Three Months Ended

2024 April 29,

Three Months Ended Six Months Ended

2024 July 29,

Change August 3,

2024 July 29,

(in millions, except percentage)

Provision (benefit) for income taxes $ 47.1 $ (44.1) (206.8)% $ 64.9 $ (107.5) (160.4)%

Our income tax expense for the three months ended May 4, 2024 was $17.8 million compared to a tax benefit of $63.4 million for the three months ended April 29, 2023.

Our income tax expense of $17.8 million for the three months ended May 4, 2024 differed from the U.S.

Our income tax expense for the three months ended August 3, 2024 was $47.1 million compared to a tax benefit of $44.1 million for the three months ended July 29, 2023.

Our income tax expense of $47.1 million for the three months ended August 3, 2024 differed from the U.S.

federal statutory tax rate of 21%, primarily due to a substantial portion of earnings or losses being taxed or benefited at rates lower than the U.S.

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taxation of foreign operations, benefits from tax credits, valuation allowance releases, and discrete tax benefits and expenses for excess deductions and deficiencies on stock-based compensation, respectively.

Our income tax benefit for the three months ended April 29, 2023 differed from the U.S.

Our income tax benefit of $44.1 million for the three months ended July 29, 2023 differed from the U.S.

federal statutory tax rate of 21%, primarily due to a substantial portion of earnings or losses being taxed or benefited at rates lower than the U.S.

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Our income tax expense for the six months ended August 3, 2024, was $64.9 million compared to a tax benefit of $107.5 million for the six months ended July 29, 2023.

Our income tax expense of $64.9 million for the six months ended August 3, 2024 differed from the U.S.

federal statutory tax rate of 21%, primarily due to a substantial portion of earnings or losses being taxed or benefited at rates lower than the U.S.

statutory rate, net of the impact of U.S.

Our income tax benefit of $107.5 million for the six months ended July 29, 2023 differed from the U.S.

federal statutory tax rate of 21%, primarily due to a substantial portion of earnings or losses being taxed or benefited at rates lower than the U.S.

statutory rate, net of the impact of U.S.

Through the third quarter of fiscal 2024, prior to the issuance of IRS guidance in December of 2023, certain R&D costs were treated as subject to capitalization which resulted in utilization of R&D tax credits and a corresponding release of valuation allowances associated with those credits.

As a result of the IRS guidance, as of the fourth quarter of fiscal 2024 we treated these R&D costs as currently deductible rather than subject to capitalization, which resulted in a reduction to our income tax payable and reinstatement of our deferred tax assets for R&D tax credits, and the corresponding full valuation allowance on such credits.

Our provision for incomes taxes may be affected by changes in the geographic mix of earnings with different applicable tax rates, acquisitions, changes in the realizability of deferred tax assets, accruals related to contingent tax liabilities and period-to-period changes in such accruals, the results of income tax audits, the expiration of statutes of limitations, the implementation of tax planning strategies, tax rulings, court decisions, settlements with tax authorities and changes in tax laws and regulations.

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Liquidity and Capital Resources

Our principal source of liquidity as of May 4, 2024 consisted of approximately $847.7 million of cash and cash equivalents, of which approximately $603.1 million was held by subsidiaries outside of the United States, a portion of which are deemed to be indefinitely reinvested.

Our principal source of liquidity as of August 3, 2024 consisted of approximately $808.7 million of cash and cash equivalents, of which approximately $580.5 million was held by subsidiaries outside of the United States, a portion of which are deemed to be indefinitely reinvested.

We manage our worldwide cash requirements by, among other things, reviewing available funds held by our foreign subsidiaries and the cost effectiveness by which those funds can be accessed in the United States.

As of May 4, 2024, we had total borrowings outstanding of $4.2 billion, consisting of $3.5 billion of senior notes outstanding and $678.1 million outstanding under our 5-Year Tranche Loan (“2026 Term Loan”).

During the three months ended May 4, 2024, we repaid $21.9 million of the principal outstanding of the 2026 Term Loan.

As of August 3, 2024, we had total borrowings outstanding of $4.2 billion, consisting of $3.5 billion of senior notes outstanding and $656.2 million outstanding under our 5-Year Tranche Loan (“2026 Term Loan”).

During the three and six months ended August 3, 2024, we repaid $21.9 million and $43.8 million of the principal outstanding of the 2026 Term Loan.

We have a revolving credit facility with a borrowing capacity of up to $1.0 billion and a 5-year term (“2023 Revolving Credit Facility”).

As of May 4, 2024, the 2023 Revolving Credit Facility is undrawn and will be available for draw down through April 14, 2028.

As of August 3, 2024, the 2023 Revolving Credit Facility is undrawn and will be available for draw down through April 14, 2028.

For a description of our contractual obligations including debt and purchase commitments, see “Note 4 – Debt,” and “Note 5 – Commitments and Contingencies” in the Notes to Unaudited Condensed Consolidated Financial Statements.

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We generally expect to satisfy these commitments with cash on hand and cash provided by operating activities.

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We may elect to factor trade accounts receivable from time to time as part of our overall liquidity and working capital management strategy.

During the three months ended May 4, 2024, we generated cash from operations from the sale of certain trade accounts receivable on a non-recourse basis to a third-party financial institution pursuant to a factoring arrangement.

During the three and six months ended August 3, 2024, we generated cash from operations from the sale of certain trade accounts receivable on a non-recourse basis to a third-party financial institution pursuant to a factoring arrangement.

See “Note 11 – Supplemental Financial Information” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

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Cash Flows from Operating Activities

Net cash provided by operating activities for the three months ended May 4, 2024 was $324.5 million.

Net cash provided by operating activities for the six months ended August 3, 2024 was $630.9 million.

We had a net loss of $408.9 million adjusted for the following non-cash items:

amortization of acquired intangible assets of $540.6 million, stock-based compensation expense of $291.4 million, depreciation and amortization of $148.9 million, deferred income tax benefit of $58.3 million, and $33.1 million of net loss from other non-cash items.

Cash inflow from working capital of $65.8 million for the three months ended May 4, 2024 was primarily driven by decreases in accounts receivable, prepaid expenses and other assets, and inventory, partially offset by decreases in accrued liabilities and other non-current liabilities, accrued employee compensation, and accounts payable.

Cash inflow from working capital of $81.8 million for the six months ended August 3, 2024 was primarily driven by decreases in accounts receivable, prepaid expenses and other assets, and inventories, and an increase in accounts payable, partially offset by decreases in accrued liabilities and other non-current liabilities, and accrued employee compensation.

The decrease in accounts receivable was primarily due to decreased sales.

The decrease in prepaid expenses and other assets was primarily driven by a decrease in prepaid ship and debits due to lower inventory balances at distributors, a decrease in prepaid corporate income tax, partially offset by payments on supply capacity reservation agreements, net of refunds.

The decrease in inventory was primarily a result of managing the supply chain in a slower demand environment.

The decrease in accrued liabilities and other non-current liabilities was primarily driven by lower ship and debit claims accrual due to lower inventory balances at distributors, interest payments net of accruals, and a decrease in stock rotation accruals.

The decrease in prepaid expenses and other assets was primarily driven by a decrease in prepaid ship and debits due to lower inventory balances at distributors, and a decrease in prepaid corporate income tax, partially offset by payments on supply capacity reservation agreements, net of refunds.

The decrease in inventories was primarily due to an increase in demand and focused effort on supply chain efficiency as demand improves.

The increase in accounts payable was primarily due to the timing of payments.

The decrease in accrued liabilities and other non-current liabilities was primarily driven by lower ship and debit claims accrual due to lower inventory balances at distributors, partially offset by increases in income tax payable, interest accruals, and stock rotation accruals.

The decrease in accrued employee compensation was due to bonus payout of our annual employee bonus plan.

The decrease in accounts payable was primarily due to the timing of payments.

Net cash provided by operating activities for the three months ended April 29, 2023 was $208.4 million.

Net cash provided by operating activities for the six months ended July 29, 2023 was $320.9 million.

We had a net loss of $376.4 million adjusted for the following non-cash items:

amortization of acquired intangible assets of $541.8 million, stock-based compensation expense of $296.0 million, deferred income tax benefit of $226.7 million, depreciation and amortization of $153.9 million, restructuring related impairment charges of $31.4 million, and $21.7 million of net loss from other non-cash items.

Cash inflow from working capital of $1.9 million for the three months ended April 29, 2023 was primarily driven by decreases in accounts receivable, inventory, and prepaid expenses and other assets, partially offset by decreases in accounts payable, accrued liabilities and other non-current liabilities and accrued employee compensation.

The decrease in accounts receivable was primarily due to timing of shipments and a reduction of revenue due to higher customer inventories.

The decrease in inventory was primarily a result of managing the supply chain in a slower demand environment.

The decrease in prepaid expenses and other assets was primarily driven by a decrease in prepaid ship and debits due to lower inventory balance at distributors resulting from lower shipments to and higher sales at distributors, partially offset by prepayments on supply capacity reservation agreements.

Cash outflow from working capital of $120.8 million for the six months ended July 29, 2023 was primarily driven by decreases in accounts payable and accrued employee compensation, and increases in prepaid expenses and other assets and accounts receivable, partially offset by decreases in inventories and accrued liabilities and other non-current liabilities.

The decrease in accounts payable was primarily due to the timing of payments.

The decrease in accrued liabilities and other non-current liabilities was primarily driven by lower ship and debit claims accrual due to lower inventory balance at distributors resulting from lower shipments to and higher sales at distributors, partially offset by increases in restructuring accruals and income tax payable.

The decrease in accrued employee compensation was due to bonus payout.

The increase in prepaid expenses and other assets was primarily driven by an increase in prepaid ship and debits due to increased inventory at distributors, partially offset by refunds on supply capacity reservation agreements.

The increase in accounts receivable was primarily due to increased sales, as well as timing of shipments.

The decrease in inventories was primarily a result of managing the supply chain in a slower demand environment.

The increase in accrued liabilities and other non-current liabilities was primarily driven by higher ship and debit claims accrual due to increased inventory at distributors, and increases in restructuring accruals and income tax payable.

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Cash Flows from Investing Activities

For the three months ended May 4, 2024, net cash used in investing activities of $101.9 million was primarily driven by purchases of property and equipment of $91.5 million.

For the three months ended April 29, 2023, net cash used in investing activities of $102.7 million was primarily driven by purchases of property and equipment of $99.8 million.

For the six months ended August 3, 2024, net cash used in investing activities of $154.9 million was primarily driven by purchases of property and equipment of $139.7 million.

For the six months ended July 29, 2023, net cash used in investing activities of $219.7 million was primarily driven by purchases of property and equipment of $210.9 million.

Cash Flows from Financing Activities

For the three months ended May 4, 2024, net cash used in financing activities of $325.7 million was primarily attributable to $150.0 million repurchases of common stock, $74.1 million for tax withholding payments on behalf of employees for net share settlements, $51.8 million for payment of our quarterly dividends, $30.2 million payments on technology license obligations, and $21.9 million repayment of debt principal, partially offset by $2.3 million in proceeds from the issuance of common stock under our employee stock plans.

For the three months ended April 29, 2023, net cash provided by financing activities of $11.6 million was primarily attributable to $200.0 million drawdown from our 2023 Revolving Credit Facility and $7.5 million in proceeds from the issuance of common stock under our employee stock plans, partially offset by $72.6 million for tax withholding payments on behalf of employees for net share settlements, $51.4 million for payment of our quarterly dividends, $50.0 million payments on technology license obligations, and $21.9 million repayment of debt principal.

For the six months ended August 3, 2024, net cash used in financing activities of $618.1 million was primarily attributable to $325.0 million repurchases of common stock, $131.7 million for tax withholding payments on behalf of employees for net share settlements, $103.7 million for payment of our quarterly dividends, $65.5 million payments on technology license obligations, and $43.8 million repayment of debt principal, partially offset by $51.6 million in proceeds from the issuance of common stock under our employee stock plans.

For the six months ended July 29, 2023, net cash used in financing activities of $588.8 million was primarily attributable to $593.7 million repayment of debt, $123.8 million for tax withholding payments on behalf of employees for net share settlements, $103.1 million for payment of our quarterly dividends, and $78.6 million payments on technology license obligations, partially offset by $250.0 million drawdown from our 2023 Revolving Credit Facility and $60.4 million in proceeds from our employee stock plans.

Capital Resources and Material Cash Requirements

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We also discuss updates of our significant commitments in “Note 5 – Commitments and Contingencies” in the Notes to Unaudited Condensed Consolidated Financial Statements.

Other than as described above, there were no material changes to our capital resources and material cash requirements during the three months ended May 4, 2024.

Other than as described above, there were no material changes to our capital resources and material cash requirements during the six months ended August 3, 2024.

Indemnification Obligations

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis