What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-28 compared with 2026-05-28 · 108 added, 63 removed, 187 unchanged (48% of the section changed)

7 unchanged sentences

• risks related to our dependence on a few customers for a significant portion of our revenue, particularly as our major customers comprise an increasing percentage of our revenue, as well as risks related to a significant portion of our sales being concentrated in the data center end market, and risks related to the gain or loss of design wins with our key customers;

• risks related to our dependence on a limited number of suppliers of critical materials, including components, within our supply chain, and potential inability to obtain sufficient advance node wafers from Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) as well as to obtain other critical components from other suppliers, to meet customer demand and our forecasts;

• risks related to changes in general macroeconomic conditions such as economic slowdowns, inflation, stagflation, high or rising interest rates, financial institution instability, and recessions;

as well as risks related to global economic conditions such as the current armed conflict in Israel and the Middle East;

• risks related to the extension of lead time due to supply chain disruptions, component shortages that impact the costs and production of our products, and constrained availability from other electronic suppliers impacting our customers’ ability to ship their products, which in turn may adversely impact our sales to those customers;

• risks related to tariffs and trade restrictions with China and other foreign nations including risks related to the ability of our customers, particularly in jurisdictions such as China that may be subject to trade restrictions (including the need to obtain export licenses) to develop their own solutions, vertically integrate which may reduce the need for our products, or acquire fully developed solutions from third parties;

• risks related to the potential impact of AI on our business model and products;

1 unchanged sentence

• risks related to our ability to successfully integrate and to realize anticipated benefits or synergies, on a timely basis or at all, in connection with our past, current, or any future acquisitions, divestitures, significant investments or strategic transactions;

• risks related to the extension of lead time due to supply chain disruptions, component shortages that impact the costs and production of our products and kitting process, and constrained availability from other electronic suppliers impacting our customers’ ability to ship their products, which in turn may adversely impact our sales to those customers;

• risks related to our ability to execute on changes in strategy and realize the expected benefits from restructuring activities;

20 unchanged sentences

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 and communications and other end markets.

Net revenue in the first quarter of fiscal 2027 was $2.4 billion and was 28% higher than net revenue in the first quarter of fiscal 2026.

Net revenue in the second quarter of fiscal 2027 was $2.7 billion and was 37% higher than net revenue in the second quarter of fiscal 2026.

This was due to increases in sales from the data center end market by 46%, and from the communications and other end market by 10%.

6 unchanged sentences

The acquisition of XConn expands our switching portfolio and augments our UALink TM scale-up switch team.

The unaudited condensed consolidated financial statements include the operating results of Celestial and XConn for the period from the dates of acquisition through our first quarter ended May 2, 2026.

The unaudited condensed consolidated financial statements include the operating results of Celestial and XConn for the period from the dates of acquisition through our second quarter ended August 1, 2026.

See “Note 4 – Business Combinations” and “Note 5 – Goodwill and Acquired Intangible Assets, Net” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

2 unchanged sentences

See “Note 10 – Stockholders’ Equity” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

Subsequent to quarter end, we issued a warrant to a customer to purchase an aggregate of up to 59.0 million of our common stock at an exercise price of $206.58 per share over a seven year term expiring in August 2033.

The warrant is eligible for vesting from our third quarter of fiscal 2027 through the end of fiscal 2033, upon meeting certain revenue milestone conditions or time-based conditions.

We continue to monitor the environment for potential impacts on supply and demand from tariffs and other geo-political events.

5 unchanged sentences

We have entered into agreements with governmental agencies to secure such incentives and we record the benefit associated with these incentives as earned when there is reasonable assurance that we will meet the conditions of the incentive agreements and that the incentives will ultimately be received.

Ultimate realization of the incentives is subject to satisfying certain minimum investment levels over the course of the incentive period and government agency reviews and audits of qualifying expenditures.

We cannot guarantee that we will achieve the agreed upon investment levels over the incentive period and any failure to meet these investment levels or any change in the current law or government regulations may result in a clawback of some or all of the incentives and a corresponding reversal of any benefit recognized.

Ultimate realization of the incentives is subject to satisfying certain criteria over the course of the incentive periods and government agency reviews and audits of qualifying activities.

We cannot guarantee that we will meet the criteria over the relevant incentive periods, and any failure to meet these criteria, or any change in the current law or government regulations may result in a clawback of some or all of the incentives and a corresponding reversal of any benefit recognized.

Capital Return Program.

2 unchanged sentences

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.

During the three months ended May 2, 2026, we repurchased 1.4 million shares of our common stock for $200.0 million.

As of May 2, 2026, $5.3 billion remained available for future stock repurchases.

Subsequent to quarter end through May 26, 2026, we repurchased 1.1 million shares of our common stock for $200.0 million pursuant to a 10b5-1 trading plan.

We returned $253.8 million to stockholders in the three months ended May 2, 2026 through $200.0 million in repurchases of shares of our common stock and $53.8 million in cash dividends.

During the six months ended August 1, 2026, we repurchased 2.5 million shares of our common stock for $400.0 million.

As of August 1, 2026, $5.1 billion remained available for future stock repurchases.

We returned $507.7 million to stockholders in the six months ended August 1, 2026 through $400.0 million in repurchases of shares of our common stock and $107.7 million in cash dividends.

Cash and Short-Term Investments.

Our cash and cash equivalents were $3.8 billion at May 2, 2026, which were $1.2 billion higher than our balance at January 31, 2026 of $2.6 billion.

Our cash and cash equivalents were $3.9 billion at August 1, 2026, which were $1.3 billion higher than our balance at January 31, 2026 of $2.6 billion.

Sales and Customer Composition.

Our accounts receivable were concentrated with three customers at May 2, 2026, who represented a total of 75% of gross accounts receivable, compared with five customers at May 3, 2025, who represented a total of 72% of gross accounts receivable.

Our accounts receivable were concentrated with four customers at August 1, 2026, who represented a total of 72% of gross accounts receivable, compared with five customers at August 2, 2025, who represented a total of 73% of gross accounts receivable.

Net revenue attributable to significant customers including both distributor and direct customers whose revenues represented 10% or more of total net revenue is presented in the following table:

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

2025 August 1,

2026 August 2,

Direct Customer:

16% 16% 16% 16%

Distributor A 44% 34% 45% 35%

1 unchanged sentence

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 83% and 74% of our net revenue in the three months ended May 2, 2026 and May 3, 2025, respectively.

Sales shipped to customers with operations in Asia represented approximately 84% of our net revenue in the three and six months ended August 1, 2026, and approximately 76% and 75% of our net revenue in the three and six months ended August 2, 2025, 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.

9 unchanged sentences

Critical Accounting Policies and Estimates

There have been no material changes during the three months ended May 2, 2026 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 January 31, 2026.

There have been no material changes during the three months ended August 1, 2026 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 January 31, 2026.

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

Three Months Ended Six Months Ended

2026 August 2,

2025 August 1,

2026 August 2,

Net revenue 100.0 % 100.0 % 100.0 % 100.0 %

4 unchanged sentences

Selling, general and administrative 9.4 9.6 10.0 9.7

Restructuring related charges, net 0.4 (0.6)

Restructuring related charges (gain), net (0.1) 0.4 0.2 (0.1)

Total operating expenses 36.3 35.9 37.2 35.9

4 unchanged sentences

Net income 11.2 % 9.7 % 6.7 % 9.6 %

Three months ended May 2, 2026 and May 3, 2025

Three Months Ended

Three and six months ended August 1, 2026 and August 2, 2025

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

Net revenue $ 2,739.3 $ 2,006.1 36.5% $ 5,157.1 $ 3,901.4 32.2%

Our net revenue for the three months ended May 2, 2026 increased by $522.5 million, or 28%, compared to net revenue for the three months ended May 3, 2025.

Our net revenue for the three months ended August 1, 2026 increased by $733.2 million, or 37%, compared to net revenue for the three months ended August 2, 2025.

This was primarily due to a 46% increase in sales from the data center end market which benefited from strong AI-related demand.

Sales from the communications and other end market also increased by 10%, which has continued to recover due to normalizing customer inventory levels, partially offset by a decrease in sales from our automotive ethernet product portfolio due to the divestiture of our automotive ethernet business at the beginning of the third quarter of fiscal 2026.

Our net revenue for the six months ended August 1, 2026 increased by $1.3 billion, or 32%, compared to net revenue for the six months ended August 2, 2025.

This was primarily due to a 37% increase in sales from the data center end market which benefited from strong AI-related demand.

Sales from the communications and other end market also increased by 19%, which has continued to recover due to normalizing customer inventory levels, partially offset by a decrease in sales from our automotive ethernet product portfolio due to the divestiture of our automotive ethernet business at the beginning of the third quarter of fiscal 2026.

Cost of Goods Sold and Gross Profit

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

3 unchanged sentences

% of net revenue 53.1 % 50.4 % 52.7 % 50.3 %

Cost of goods sold as a percentage of net revenue decreased for the three months ended May 2, 2026 compared to the three months ended May 3, 2025, which was primarily due to better cost absorption driven by higher revenues, partially offset by a shift in product mix.

As a result, gross margin for the three months ended May 2, 2026 increased by 1.8 percentage points, compared to the three months ended May 3, 2025.

Cost of goods sold as a percentage of net revenue decreased for the three and six months ended August 1, 2026, compared to the three and six months ended August 2, 2025, which was primarily due to better cost absorption driven by higher revenues and better product mix.

As a result, gross margin for the three and six months ended August 1, 2026, increased by 2.7 and 2.4 percentage points, respectively compared to the three and six months ended August 2, 2025.

Research and Development

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

1 unchanged sentence

% of net revenue 27.0 % 25.9 % 27.0 % 26.3 %

Research and development expense increased by $144.6 million in the three months ended May 2, 2026 compared to the three months ended May 3, 2025.

Research and development expense increased by $222.1 million in the three months ended August 1, 2026 compared to the three months ended August 2, 2025.

The increase was primarily due to higher overall spending to support our R&D initiatives, including increased employee compensation and related costs, primarily driven by growth in headcount including the addition of new employees from our recent acquisitions.

Research and development expense increased by $366.7 million in the six months ended August 1, 2026 compared to the six months ended August 2, 2025.

The increase is also due to higher acquisition related costs of $21.9 million.

Selling, General and Administrative

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

1 unchanged sentence

% of net revenue 9.4 % 9.6 % 10.0 % 9.7 %

Selling, general and administrative expense increased by $72.0 million in the three months ended May 2, 2026 compared to the three months ended May 3, 2025.

The increase was primarily due to higher acquisition related costs of $42.6 million, as well as an increase in employee compensation and related costs, primarily driven by increased headcount including the addition of new employees from our recent acquisitions.

Selling, general and administrative expense increased by $64.8 million in the three months ended August 1, 2026 compared to the three months ended August 2, 2025.

The increase was primarily due to an increase in employee compensation and related costs.

Selling, general and administrative expense increased by $136.8 million in the six months ended August 1, 2026 compared to the six months ended August 2, 2025.

The increase was primarily due to higher acquisition related costs of $44.8 million, as well as an increase in employee compensation and related costs.

Restructuring Related Charges (Gains), Net

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

2 unchanged sentences

*Not meaningful.

We recognized net restructuring related charges of $10.7 million in the three months ended May 2, 2026 as we continued to evaluate our existing operations to increase operational efficiency, decrease costs and increase profitability.

We recognized net restructuring related gain of $2.8 million in the three months ended August 1, 2026 and net restructuring related charges of $7.9 million in the six months ended August 1, 2026 as we continued to evaluate our existing operations to increase operational efficiency, decrease costs and increase profitability.

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

Interest and Other Loss, Net

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

4 unchanged sentences

*Not meaningful.

Interest and other loss, net increased by $201.4 million in the three months ended May 2, 2026 compared to the three months ended May 3, 2025.

The increase was primarily due to a $331.8 million increase in fair value of the contingent consideration liability associated with the Celestial acquisition, partially offset by an unrealized gain of $81.1 million from the forward stock purchase contract and higher net unrealized gains from equity investments in the three months ended May 2, 2026.

Interest and other loss, net increased by $25.0 million in the three months ended August 1, 2026 compared to the three months ended August 2, 2025.

The increase was primarily due to a $101.9 million increase in fair value of the contingent consideration liability associated with the Celestial acquisition, partially offset by an unrealized gain of $49.9 million from the forward stock purchase contract and higher interest income in the three months ended August 1, 2026.

Interest and other loss, net increased by $226.4 million in the six months ended August 1, 2026 compared to the six months ended August 2, 2025.

The increase was primarily due to a $433.7 million increase in fair value of the contingent consideration liability associated with the Celestial acquisition, partially offset by an unrealized gain of $131.0 million from the forward stock purchase contract and higher net unrealized gains from equity investments and higher interest income in the six months ended August 1, 2026.

Provision for income taxes

Three Months Ended

Three Months Ended Six Months Ended

2026 August 2,

Change August 1,

2026 August 2,

(in millions, except percentage)

Provision for income taxes $ 70.3 $ 38.9 80.7% $ 119.1 $ 76.9 54.9%

Our income tax expense for the three months ended May 2, 2026 was $48.8 million compared to a tax expense of $38.0 million for the three months ended May 3, 2025.

T hese amounts 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.

Our income tax expense for the three months ended August 1, 2026 was $70.3 million compared to a tax expense of $38.9 million for the three months ended August 2, 2025.

The increase in our tax provision was primarily driven by an increase in our pre-tax earnings.

Our estimated effective tax rate for the year differs from the U.S.

statutory rate of 21% primarily due to a substantial portion of our earnings taxed at rates lower than the U.S.

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

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.

Income tax expense for the three months ended May 2, 2026 also differs from the U.S.

statutory rate of 21% due to non-deductible adjustments to contingent consideration liability, net of the tax impacts of our forward stock purchase contract.

taxation of foreign operations, benefits from tax credits, non-deductible adjustments to contingent consideration liability, (net of the tax impacts of our forward stock purchase contract), valuation allowance releases as well as discrete tax benefits and expenses for excess deductions and deficiencies on stock-based compensation.

The recorded tax expense is based on year-to-date pre-tax results, forecasted pre-tax results, forecasted annual tax expense and discrete adjustments for the respective periods.

Our income tax expense for the six months ended August 1, 2026 was $119.1 million compared to a tax expense of $76.9 million for the six months ended August 2, 2025.

The increase in our tax provision was primarily driven by an increase in our pre-tax earnings.

These amounts differed from the U.S.

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

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

taxation of foreign operations, benefits from tax credits, non-deductible adjustments to contingent consideration liability, (net of the tax impacts of the Company’s forward stock purchase contract), valuation allowance releases as well as discrete tax benefits and expenses for excess deductions and deficiencies on stock-based compensation.

The recorded tax expense is based on year-to-date pre-tax results, forecasted pre-tax results, forecasted annual tax expense and discrete adjustments for the respective periods.

The One Big Beautiful Bill Act of 2025 (the “2025 Tax Act”) was signed into law on July 4, 2025.

1 unchanged sentence

International tax framework.

Certain provisions of the 2025 Tax Act become effective in fiscal year 2027.

Our tax provision for the May 2, 2026 period includes the impact of the 2025 Tax Act.

Certain provisions of the 2025 Tax Act became effective in fiscal year 2027.

Our tax provision for the August 1, 2026 period includes the impact of the 2025 Tax Act.

We will continue to evaluate the impact of the 2025 Tax Act on our income taxes.

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The OECD guidance provides that the side-by-side system will be effective for fiscal years beginning on or after January 1, 2026.

In certain jurisdictions, local legislative action is needed to effectuate “side by side system” and cannot be considered in our accounting estimate until enactment.

In certain jurisdictions, local legislative action is needed to effectuate the “side by side system” and cannot be considered in our accounting estimate until enactment.

The effects of any future legislation in this area are not yet reasonably estimable, but if such legislation is enacted in the future could have a significant effect on our provision for income taxes, our financial results, and our earnings and cash flows.

11 unchanged sentences

Liquidity and Capital Resources

Our principal source of liquidity as of May 2, 2026 consisted of approximately $3.8 billion of cash and cash equivalents, of which approximately $1.6 billion 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 1, 2026 consisted of approximately $3.9 billion of cash and cash equivalents, of which approximately $1.7 billion 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.

5 unchanged sentences

See “Note 10 – Stockholders’ Equity” in the Notes to Unaudited Condensed Consolidated Financial Statements for additional information.

As of May 2, 2026, we had total borrowings outstanding of $5.0 billion, consisting of senior notes outstanding.

As of August 1, 2026, we had total borrowings outstanding of $5.0 billion, consisting of senior notes outstanding.

On April 15, 2026, we completed a debt offering and issued $1.0 billion Senior Notes with a 10-year term due in 2036 (“2036 Senior Notes”).

1 unchanged sentence

We have a revolving credit facility with a borrowing capacity of up to $1.5 billion and a 5-year term (“2025 Revolving Credit Facility”).

As of May 2, 2026, the 2025 Revolving Credit Facility was undrawn and is available for draw down through June 30, 2030.

Subsequent to quarter end, we entered into agreements to secure long-term wafer and substrate manufacturing capacity, in which we committed to pay deposits totaling $870.0 million, payable in quarterly installments from the second quarter of fiscal 2027 through the second quarter of fiscal 2028.

As of August 1, 2026, the 2025 Revolving Credit Facility was undrawn and is available for draw down through June 30, 2030.

For a description of our contractual obligations including debt and purchase commitments, see “Note 7 – Debt,” and “Note 9 – Commitments and Contingencies” in the Notes to Unaudited Condensed Consolidated Financial Statements.

1 unchanged sentence

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 2, 2026, 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 1, 2026, 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 14 – 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 2, 2026 was $638.8 million.

Net cash provided by operating activities for the six months ended August 1, 2026 was $1.2 billion.

We had a net income of $342.5 million adjusted for the following non-cash items:

change in fair value of contingent consideration liability of $331.8 million, amortization of acquired intangible assets of $225.2 million, stock-based compensation expense of $207.6 million, depreciation and amortization of $95.4 million, unrealized gain on forward stock purchase contract of $81.1 million, deferred income tax of $13.8 million, and $23.2 million of net loss from other non-cash items.

Cash outflow from working capital of $211.6 million for the three months ended May 2, 2026 was primarily driven by decreases in accounts payable, accrued employee compensation, and accrued liabilities and other non-current liabilities, partially offset by a decrease in accounts receivable.

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

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

The decrease in accrued liabilities and other non-current liabilities was primarily driven by decreases in income tax payable and stock rotation accruals, partially offset by higher ship and debit claims accrual.

The decrease in accounts receivable was primarily due to increased factoring of receivables and more ratable billings and collections during the quarter.

Net cash provided by operating activities for the three months ended May 3, 2025 was $332.9 million.

stock-based compensation expense of $533.8 million, amortization of acquired intangible assets of $440.1 million, change in fair value of contingent consideration liability of $433.7 million, depreciation and amortization of $188.5 million, unrealized gain on forward stock purchase contract of $131.0 million, deferred income tax of $38.7 million, and $58.3 million of net loss from other non-cash items.

Cash outflow from working capital of $660.3 million for the six months ended August 1, 2026 was primarily driven by an increases in prepaid expenses and other assets, and a decrease in accounts payable.

The increase in prepaid expenses and other assets was primarily due to payments made for capacity fees .

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

Net cash provided by operating activities for the six months ended August 2, 2025 was $794.5 million.

We had a net income of $372.7 million adjusted for the following non-cash items:

amortization of acquired intangible assets of $489.4 million, stock-based compensation expense of $295.7 million, depreciation and amortization of $168.3 million, restructuring related gains of $14.0 million, deferred income tax benefit of $9.2 million, and $80.8 million of net loss from other non-cash items.

Cash outflow from working capital of $342.8 million for the three months ended May 3, 2025 was primarily driven by a decrease in accrued employee compensation, and increases in accounts receivable and inventories.

Cash outflow from working capital of $589.2 million for the six months ended August 2, 2025 was primarily driven by increases in accounts receivable, prepaid expenses and other assets, and inventories, and decreases in accrued employee compensation and accounts payable, partially offset by an increase in accrued liabilities and other non-current liabilities.

The increase in accounts receivable was primarily due to higher sales and the impact of factoring of receivables.

The increase in prepaid expenses and other assets was primarily due to receivables for government incentives earned.

Inventories increased in support of expected revenue growth.

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

The increase in accounts receivable was primarily due to higher sales and lower distribution sales reserves, partially offset by higher factored receivables.

Inventories grew sequentially in support of expected revenue growth.

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

The increase in accrued liabilities and other non-current liabilities was primarily driven by higher ship and debit claims accrual.

Cash Flows from Investing Activities

For the three months ended May 2, 2026, net cash used in investing activities of $1.4 billion was primarily driven by acquisitions, net of cash acquired of $1.3 billion, and purchases of property and equipment of $155.7 million.

For the three months ended May 3, 2025, net cash used in investing activities of $94.1 million was primarily driven by purchases of property and equipment of $118.8 million, partially offset by proceeds from sales of property and equipment of $25.9 million.

For the six months ended August 1, 2026, net cash used in investing activities of $1.6 billion was primarily driven by acquisitions, net of cash acquired of $1.3 billion, and purchases of property and equipment of $282.4 million.

For the six months ended August 2, 2025, net cash used in investing activities of $171.3 million was primarily driven by purchases of property and equipment of $166.3 million, partially offset by proceeds from sales of property and equipment of $27.3 million.

Cash Flows from Financing Activities

For the three months ended May 2, 2026, net cash provided by financing activities of $2.0 billion was primarily attributable to $2.0 billion proceeds from issuance of preferred stock, and $1.0 billion proceeds from borrowings, partially offset by $500.0 million repayment of debt principal, $227.2 million for tax withholding payments on behalf of employees for net share settlements, $200.0 million repurchases of common stock, $53.8 million for payment of our quarterly dividends, and $27.2 million payments on technology license obligations.

For the three months ended May 3, 2025, net cash used in financing activities of $301.2 million was primarily attributable to $340.0 million repurchases of common stock, $51.8 million for payment of our quarterly dividends, $50.2 million for tax withholding payments on behalf of employees for net share settlements, $32.8 million repayment of debt principal, and $26.8 million payments on technology license obligations, partially offset by $200.0 million proceeds from borrowings.

For the six months ended August 1, 2026, net cash provided by financing activities of $1.6 billion was primarily attributable to $2.0 billion proceeds from issuance of preferred stock, and $1.0 billion proceeds from borrowings, partially offset by $500.0 million repayment of debt principal, $400.0 million repurchases of common stock, $365.2 million for tax withholding payments on behalf of employees for net share settlements, $107.7 million for payment of our quarterly dividends, and $56.6 million payments on technology license obligations.

For the six months ended August 2, 2025, net cash used in financing activities of $347.1 million was primarily attributable to $790.6 million repayment of debt principal, $540.0 million repurchases of common stock, $103.5 million for payment of our quarterly dividends, $100.9 million for tax withholding payments on behalf of employees for net share settlements, and $54.3 million payments on technology license obligations, partially offset by $1.2 billion proceeds from borrowings, and $51.1 million in proceeds from the issuance of common stock under our employee stock plans.

Indemnification Obligations

1 unchanged sentence

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