Navitas Semiconductor Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us,” or “our” refer to the business of Navitas and its subsidiaries. Throughout this section, unless otherwise noted, “Navitas” refers to Navitas Semiconductor Corporation and its consolidated subsidiaries. This quarterly report includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are attempts to predict or indicate future events or trends or similar statements that are not a reflection of historical fact. Forward-looking statements may be identified by the use of words such as “we expect” or “are expected to be,” “estimate,” “plan,” “project,” “forecast,” “intend,” “anticipate,” “believe,” “seek,” or other similar expressions. Forward-looking statements are made based on estimates and forecasts of financial and performance metrics, projections of market opportunity and market share and current indications of customer interest, all of which are based on various assumptions, whether or not identified in this quarterly report. All such statements are based on current expectations of the management of the Company and are not predictions of actual future performance. Forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions and expectations. Many actual events and circumstances that affect performance are beyond the control of the Company, and forward-looking statements are subject to a number of uncertainties. Our business is subject to certain risks that could materially and adversely affect our business, financial condition, results of operations, or the value of our securities. These and other risk factors are discussed in the Risk Factors section beginning on p. 13 of our annual report on Form 10-K for the year ended December 31, 2025, as updated in the Risk Factors section in this quarterly report on Form 10-Q, and in other documents we file. If any of these risks materialize or if our assumptions underlying forward-looking statements prove to be incorrect, actual results could differ materially from the results implied by these forward-looking statements. Overview Navitas Semiconductor Corporation designs, develops and markets next-generation power semiconductors, including gallium nitride (“GaN”) power integrated circuits (“ICs”), high-voltage silicon carbide (“SiC”) devices, associated high-speed silicon system controllers, and digital isolators used in power conversion and charging applications. We focus primarily on high-power markets, including AI data centers, energy and grid infrastructure, performance computing, and industrial electrification. Our products are designed to improve system efficiency, increase power density, enhance thermal performance, and reduce overall system size and cost compared to traditional silicon-based technologies. By leveraging the electrical properties of wide-bandgap (“WBG”) materials such as GaN and SiC, our solutions enable higher switching frequencies, higher voltage operation, and improved energy efficiency. These capabilities are increasingly important in applications such as hyperscale data centers, renewable energy systems, grid modernization infrastructure, and industrial automation. We operate as a fabless semiconductor design company and outsource wafer fabrication, assembly, and testing to qualified third-party manufacturing partners. This business model allows us to operate with relatively low capital expenditure requirements; however, our results depend on the capacity, cost structure, yield performance, and operational execution of our manufacturing partners. We maintain operations around the world, including the United States, Philippines, China, Taiwan, and South Korea , with principal executive offices in Torrance, California. Execution of At-The-Market Sales Agreements On May 11, 2026, we entered into a Sales Agreement with Craig-Hallum Capital Group LLC and UBS Securities LLC (the “First Sales Agreement”) pursuant to which we could offer and sell, from time to time, shares of our Class A common stock having an aggregate offering price of up to $125.0 million. The First Sales Agreement terminated in accordance with its terms on May 12, 2026 in accordance with its terms upon completion of the offering. On June 8, 2026, we entered into an additional Sales Agreement with UBS Securities LLC, Morgan Stanley & Co. LLC and Needham & Company, LLC (the “Second Sales Agreement”). Pursuant to the Second Sales Agreement, we may offer and sell, from 24 TABLE OF CONTENTS time to time, shares of our Class A common stock having an aggregate offering price of up to $500.0 million. During the six months ended June 30, 2026, we sold approximately 6.5 million shares of our Class A common stock and completed our $125.0 million at-the-market offering program in its entirety. We also sold approximately 10.9 million shares of our Class A common stock for gross proceeds of $255.8 million of common stock under our $500.0 million at-the-market offering program. Navitas 2.0 Restructuring Plan We continue to execute the Navitas 2.0 Restructuring Plan, which was initiated in the fourth quarter of 2025 to reposition the Company as a focused high-power semiconductor provider serving large, durable, higher-margin markets. The plan remains centered on portfolio and organizational realignment, technology roadmap execution, go-to-market optimization, and disciplined investment in strategic end markets. As of June 30, 2026, the actions under the Restructuring Plan were substantially complete, with remaining costs expected to be recognized by the end of fiscal year 2026. Results of Operations The tables and discussion below present our results for the three months ended June 30, 2026 and 2025 (in thousands): Three Months Ended June 30, Change $ Change % 2026 2025 Net revenues $ 10,529 $ 14,490 $ (3,961) (27) % Cost of revenues (exclusive of amortization of intangible assets included below) 6,451 12,162 (5,711) (47) % Operating expenses: Research and development 13,152 11,496 1,656 14 % Selling, general and administrative 13,038 7,751 5,287 68 % Amortization of intangible assets 4,734 4,734 — — % Restructuring expense 344 — 344 — % Total operating expenses 31,268 23,981 7,287 30 % Loss from operations $ (27,190) $ (21,653) (5,537) 26 % Six Months Ended June 30, Change $ Change % 2026 2025 Net revenues $ 19,127 $ 28,508 $ (9,381) (33) % Cost of revenues (exclusive of amortization of intangible assets included below) 11,813 20,873 (9,060) (43) % Operating expenses: Research and development 27,719 24,164 3,555 15 % Selling, general and administrative 24,290 19,491 4,799 25 % Amortization of intangible assets 9,468 9,468 — — % Restructuring expense 794 1,469 (675) (46) % Total operating expenses 62,271 54,592 7,679 14 % Loss from operations $ (54,957) $ (46,957) (8,000) 17 % Revenue We design, develop and manufacture GaN FETs, GaN ICs, SiC MOSFETs and modules, and Schottky diodes that deliver best-in-class performance, ruggedness, and quality. Our revenue represents the sale of semiconductors through specialized distributors to original equipment manufacturers (“OEMs”), their suppliers, and other end customers. We consider the domicile of our end customers, rather than the distributors we sell to directly, to be the basis of attributing 25 TABLE OF CONTENTS revenues from external customers to individual countries. Revenues for the three and six months ended June 30, 2026 and 2025 (in thousands) were attributable to end customers in the following countries: Three Months Ended June 30, Three Months Ended June 30, Country 2026 2025 China $ 3,637 35 % $ 8,984 62 % United States 4,018 38 3,188 22 Asia excluding China 1,637 15 1,304 9 Europe 1,237 12 1,014 7 Total $ 10,529 100 % $ 14,490 100 % Six Months Ended June 30, Six Months Ended June 30, Country 2026 2025 China $ 6,746 35 % $ 14,824 52 % United States 7,531 40 7,412 26 Asia excluding China 2,541 13 3,421 12 Europe 2,308 12 2,851 10 Total $ 19,127 100 % $ 28,508 100 % The decline in sales of $4.0 million or 27% for the three months ended June 30, 2026, and $9.4 million or 33% for the six months ended June 30, 2026, was primarily due to the decrease in sales of mobile in the Asia region, primarily China, and consumer markets. Cost of Revenues Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Cost of revenues (exclusive of amortization of intangible assets) 6,451 12,162 11,813 20,873 (43) % Percentage of revenue 61 % 84 % 62 % 73 % For the three and six months ended June 30, 2026, cost of revenue decreased by $5.7 million or 47% and $9.1 million or 43% respectively. This was primarily driven by a decline in sales as well as a shift in sales mix toward high-power products. Research and Development Expense Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Research and development 13,152 11,496 27,719 24,164 15 % Percentage of revenue 125 % 79 % 145 % 85 % For the three and six months ended June 30, 2026, the increase of $1.7 million or 14% and $3.6 million or 15% respectively, was primarily driven by an increase in stock-based compensation as well as research and development materials, partially offset by a decrease in headcount related cost as a result of the Company’s reductions in force. 26 TABLE OF CONTENTS Selling, General and Administrative Expense Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Selling, general and administrative 13,038 7,751 24,290 19,491 25 % Percentage of revenue 124 % 53 % 127 % 68 % For the three and six months ended June 30, 2026, the increase of $5.3 million, or 68% and $4.8 million, or 25%, respectively, was primarily driven by increases in stock-based compensation and legal and professional fees, partially offset by lower sales commissions and headcount-related costs. Amortization of Intangible Assets Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Amortization of intangible assets 4,734 4,734 9,468 9,468 — % Percentage of revenue 45 % 33 % 50 % 33 % For the three and six months ended June 30, 2026, amortization of intangible assets remained relatively consistent compared to the corresponding periods. Restructuring Expense Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Restructuring expense 344 — 794 1,469 (46) % Percentage of revenue 3 % — % 4 % 5 % Restructuring expense increased $0.3 million for the three months ended June 30, 2026 and decreased $0.7 million, or 46%, for the six months ended June 30, 2026, primarily due to the January 2025 restructuring plan and fourth quarter 2025 Navitas 2.0 restructuring plan. Other Income (Expense), net Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Other income (expense), net (200,957) (27,149) (206,908) (18,312) 1030 % Percentage of revenue (1909) % (187) % (1082) % (64) % The decrease in other income (expense) of approximately $173.8 million and $188.6 million for the three and six months ended June 30, 2026, respectively, is primarily due to the change in fair value of our earnout liabilities (losses of $203.1 million and $211.0 million in the 2026 periods, compared to losses of $28.0 million and $19.9 million in the corresponding 2025 periods), partially offset by higher interest and dividend income. 27 TABLE OF CONTENTS Income Tax Provision Three Months Ended June 30, Six Months Ended June 30, $ in thousands 2026 2025 2026 2025 % Change Income tax provision 71 48 138 130 6 % Percentage of revenue 0.7 % 0.3 % 0.7 % 0.5 % Income tax provision was flat primarily due to our large loss from operations. We expect our tax rate to remain close to zero in the near term due to full valuation allowances against deferred tax assets. Equity method investment loss In the first quarter of 2026, the Company discontinued application of the equity method of accounting following the loss of significant influence. No further equity method investment losses were recognized during the three and six months ended June 30, 2026. Liquidity and Capital Resources Our primary use of cash is to fund operating expenses, working capital requirements, research and development, and capital expenditures. In addition, we use cash for strategic investments and acquisitions. We expect to continue to incur net operating losses and negative cash flows from operations and we expect our research and development expenses, general and administrative expenses, and capital expenditures will increase as we continue to grow. We currently expect to fund our cash requirements through the use of cash and cash equivalents on hand. We believe that our current levels of cash and cash equivalents are sufficient to finance our operations, working capital requirements, and capital expenditures for the foreseeable future. Cash Flows The following table summarizes our consolidated cash flows for the six months ended June 30, 2026 and 2025 (in thousands): June 30, 2026 June 30, 2025 Consolidated Statements of Cash Flow Data: Net cash used in operating activities $ (48,348) $ (24,765) Net cash used in investing activities (2,043) (674) Net cash provided by financing activities 370,061 98,540 Net increase in cash, cash equivalents and restricted cash 319,670 73,101 June 30, 2026 December 31, 2025 $ Change % Change Cash, cash equivalents and restricted cash $ 558,272 $ 238,602 $ 319,670 134 % We derive liquidity primarily from cash on hand and equity financing activities. The changes in our cash flows for the six months ended June 30, 2026, compared to the same period in 2025, were primarily driven by the following: 28 TABLE OF CONTENTS Operating Activities Net cash used in operating activities for the six months ended June 30, 2026 was $48.3 million compared to $24.8 million for the six months ended June 30, 2025. The increase was driven primarily by the higher net loss, including the unfavorable change in fair value of the earnout liability, as well as unfavorable working capital changes which includes higher inventory related purchases partially offset by higher non-cash stock-based compensation. Investing Activities Net cash used in investing activities increased during the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an investment in preferred shares. Financing Activities Net cash provided by financing activities for the six months ended June 30, 2026 increased $271.5 million, primarily driven by $373.2 million of net proceeds from our at-the-market offerings (compared to $96.8 million of net proceeds in 2025), partially offset by the $3.8 million cash settlement of earnout shares and lower proceeds from stock option exercises. Contractual Obligations, Commitments and Contingencies In the ordinary course of business, we enter into contractual arrangements that may require future cash payments. As of June 30, 2026, our non-cancellable contractual arrangements consisted of lease obligations and an agreement for the purchase of equipment. Refer to Note 9 - “Leases” for further information on our minimum future payments related to lease obligations. Off-Balance Sheet Commitments and Arrangements As of June 30, 2026, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K. Critical Accounting Policies and Estimates The preparation of our financial statements and related disclosures in accordance with U.S. GAAP requires our management to make judgments, assumptions and estimates that affect the amounts reported in our accompanying condensed consolidated financial statements and the accompanying notes included elsewhere in this quarterly report. Our management bases its estimates and judgments on historical experience, current economic and industry conditions and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results that we report in our condensed consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. As a result of the settlement of our earnout liabilities during the second quarter of 2026, the related critical accounting estimate described in our 2025 annual report on Form 10-K is no longer applicable. Other than this change, there have been no material changes to our critical accounting policies and estimates from the information in 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 year ended December 31, 2025.