What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-04 compared with 2025-05-09 · 100 added, 53 removed, 142 unchanged (52% of the section changed)

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In support of our technology leadership, we have formed relationships with numerous Tier 1 manufacturers and suppliers over the past eight years, gaining significant traction in mobile and consumer charging applications.

Navitas GaN is now in mass production with 10 of the top 10 world-wide mobile OEMs across smartphone and laptops in development with 10 out of 10.

Navitas GaN is now in mass production with 10 of the top 10 worldwide mobile OEMs across smartphone and laptops in development with 10 out of 10.

In addition, our supply chain partners have committed manufacturing capacity in excess of what we consider to be necessary to support our continued growth and expansion.

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In addition to our comprehensive patent portfolio, our biggest proprietary advantage is our process design kit (PDK), the ‘how-to’ guide for Navitas designers to create new GaN based devices and circuits.

Our GaN power IC inventions and intellectual property translate across all of our target markets from mobile, consumer, EV, enterprise, and renewables.

Our GaN power IC inventions and intellectual property translate across all of our target markets from mobile, consumer, data centers, and new energy sectors, which include EV, renewables and energy storage.

We evaluate various complementary technologies and look to improve our PDK, in order to keep introducing newer generations of GaN technology.

In the three months ended March 31, 2025 and 2024, we spent approximatel y 90% and 87% , respectively, of our revenue on research and development.

In the three and six months ended June 30, 2025, we spent approximatel y 79% and 85%, resp ectively, of our revenue on research and development.

Navitas’ research and development activities are located primarily in the US and China.

In the three and six months ended June 30, 2024, we spent approximately 93% and 90%, respectively, of our revenue on research and development.

Execution of At-The-Market Agreement

On March 19, 2025, the Company entered into an At-The-Market Offering Agreement (the "ATM Agreement") with Jefferies LLC ("Jefferies") for the sale of shares of its Class A common stock, par value $0.0001 per share.

Under the terms of the ATM Agreement, the Company may offer and sell shares of its Class A common stock having an aggregate offering price of up to $50,000,000 from time to time through Jefferies, acting as the sales agent.

As of March 31, 2025, the Company has not sold any shares under the ATM agreement.

In connection with establishing the ATM program, the Company incurred offering-related costs of approximately $0.3 million.

On March 19, 2025, we entered into an Open Market Sale Agreement SM (the “Sale Agreement”) with Jefferies LLC (“Jefferies”).

We subsequently completed two ATM offerings referred to as ATM One and ATM Two, respectively.

Pursuant to each agreement, we may offer and sell, from time to time, shares of its Class A common stock, par value $0.0001 per share, having an aggregate offering price of up to $50.0 million through Jefferies as sales agent.

As of June 30, 2025, we completed the sale of shares under both ATM One and ATM Two resulting in approximately 11.1 million shares under ATM One and 8.7 million shares under ATM Two, with gross proceeds of approximately $100.0 million and offering-related costs of $3.3 million in total.

Results of Operations

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• the global and regional economic cycles.

• declines in average selling prices due product advances and market competition;

• changes in customer and distributor relationships including the impact of the Q4 2024 disengagement with a significant distributor and the ability to replace the associated volumes with a combination existing and new distributors;

• declines in average selling prices due to product advances and market competition;

• seasonal demand patterns particularly in mobile and consumer markets.

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We consider the domicile of our end customers, rather than the distributors we sell to directly to be the basis of attributing revenues from external customers to individual countries.

Revenue for the three months ended March 31, 2025 and 2024, excluding channel inventories, were attributable to end customers in the following countries:

Three Months Ended March 31,

Revenue for the three and six months ended June 30, 2025 and 2024, excluding channel inventories, were attributable to end customers in the following countries:

Three Months Ended June 30, Six Months Ended June 30,

Country 2025 2024 2025 2024

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Asia excluding China 9 12 12 10

All others — 1

Europe* 7 8 10 9

Total 100 % 100 % 100 % 100 %

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Dividend Income

Dividend income consist of income earned on money market treasury funds that are recorded as cash equivalents.

Dividend income consists of income earned on money market treasury funds that are recorded as cash equivalents.

Legacy Navitas is a dual domesticated corporation for Ireland and U.S.

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Results of Operations

The tables and discussion below present our results for the three months ended March 31, 2025 and 2024 (in thousands):

Three Months Ended

March 31, Change

The tables and discussion below present our results for the three months ended June 30, 2025 and 2024 (in thousands):

Three Months Ended June 30, Change

Net revenues $ 14,490 $ 20,468 $ (5,978) (29) %

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Amortization of intangible assets 4,734 4,774 (40) (1) %

Total operating expenses 23,981 39,127 (15,146) (39) %

Loss from operations (21,653) (31,137) 9,484 (30) %

Other income (expense), net:

Interest income (expense), net 131 (72) 203 (282) %

Dividend income 647 1,361 (714) (52) %

(Loss) Gain from change in fair value of earnout liabilities (27,964) 7,550 (35,514) (470) %

Other income 37 31 6 19 %

Total other income (expense), net (27,149) 8,870 (36,019) (406) %

Loss before income taxes (48,802) (22,267) (26,535) 119 %

Income tax provision 48 61 (13) (21) %

Equity method investment loss (225) — (225) — %

Net loss $ (49,075) $ (22,328) $ (26,747) 120 %

Six Months Ended June 30, Change

(dollars in thousands) 2025 2024

Net revenues $ 28,508 $ 43,643 $ (15,135) (35) %

Cost of revenues (exclusive of amortization of intangible assets included below) 20,873 26,138 (5,265) (20) %

Operating expenses:

Research and development 24,164 39,200 (15,036) (38) %

Selling, general and administrative 19,491 31,469 (11,978) (38) %

Amortization of intangible assets 9,468 9,548 (80) (1) %

Restructuring expense 1,469 — 1,469 — %

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Dividend income 1,391 3,041 (1,650) (54) %

Gain from change in fair value of earnout liabilities 8,113 26,199 (18,086) (69) %

(Loss) Gain from change in fair value of earnout liabilities (19,851) 33,749 (53,600) (159) %

Other income 55 114 (59) (52) %

Total other income, net 8,837 27,964 (19,127) (68) %

Total other income (expense), net (18,312) 36,834 (55,146) (150) %

Loss before income taxes (65,269) (25,878) (39,391) 152 %

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Net loss $ (65,904) $ (26,009) $ (39,895) 153 %

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

Revenue for the three months ended March 31, 2025 was $14.0 million compared to $23.2 million for the three months ended March 31, 2024, a decrease of $9.2 million, or 40%.

The decline in sales was due to the decline in mobile, EV, and industrial markets.

Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

Revenue for the three months ended June 30, 2025 was $14.5 million compared to $20.5 million for the three months ended June 30, 2024, a decrease of $6.0 million, or 29%.

The decline in sales was due to the decline in industrial China markets.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2025 was $8.7 million compared to $13.7 million for the three months ended March 31, 2024, a decrease of $4.9 million or 36%.

Cost of revenues for the three months ended June 30, 2025 was $12.2 million compared to $12.5 million for the three months ended June 30, 2024, a decrease of $0.3 million or 3%.

The change was primarily driven by a decline in sales offset by a $3.2 million inventory reserve due to demand softness in the China region.

Research and Development Expense

Research and development expense for the three months ended June 30, 2025 of $11.5 million decreased by $7.5 million, or 39%, when compared to the three months ended June 30, 2024.

This is primarily driven by a decrease in stock-based compensation of approximately $6.8 million, of which $4.2 million resulted from the reversal of expense following the resignation of a senior management member who participated in the our 2021 LTIP, coupled with a decrease in headcount and employee costs of $2.7 million as a result of the Company’s reduction in forces, which was partially offset by an expense of $2.2 million due to a NRE impairment.

Selling, General and Administrative Expense

Selling, general and administrative expense for the three months ended June 30, 2025 of $7.8 million decreased by $7.6 million, or 50%, when compared to the three months ended June 30, 2024.

This was primarily driven by a decrease in

stock-based compensation of approximately $7.0 million largely resulting from the $4.2 million reversal of expense following the resignation of a senior management member who held 2021 LTIP Options, coupled with a decrease in headcount and employee costs of $1.1 million as a result of the Company’s reduction in forces, which was partially offset by approximately $1.6 million related to governance costs.

Amortization of Intangible Assets

Amortization of intangible assets remained fairly unchanged as we did not acquire new intangible assets.

Other Income (Expense), net

Dividend income consists of income earned on our money market treasury funds that are recorded as cash equivalents on our consolidated balance sheet.

Decrease of $0.7 million is primarily due to decreases in our investment balances in June 30, 2025 compared to June 30, 2024.

During the three months ended June 30, 2025, we recognized a $28.0 million loss from the change in fair value of our earn-out liabilities.

The change of $35.5 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq, resulting in the increase in the estimated fair value of the earnout shares from $1.53 as of June 30, 2024 to $3.31 as of June 30, 2025.

Income Tax Provision

Income tax provision for the three months ended June 30, 2025 remained relatively flat when compared to the income tax provision of $0.1 million for the three months ended June 30, 2024.

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 October 2024, we began applying the equity method to account for our joint venture investment.

We recognized our proportionate share of the joint venture’s loss from the quarter, resulting in a net loss of $0.2 million for the quarter ended June 30, 2025.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

Revenue for the six months ended June 30, 2025 was $28.5 million compared to $43.6 million for the six months ended June 30, 2024, a decrease of $15.1 million, or 35%.

The decline in sales was due to the decline in mobile and industrial markets.

Cost of Revenues

Cost of revenues for the six months ended June 30, 2025 was $20.9 million compared to $26.1 million for the six months ended June 30, 2024, a decrease of $5.3 million or 20%.

The decrease was primarily driven by a decline in sales coupled with product mix.

Research and Development Expense

Research and development expense for the three months ended March 31, 2025 of $12.7 million decreased by $7.6 million, or 37%, when compared to the three months ended March 31, 2024.

This is primarily driven by a decrease in stock-based compensation of approximately $3.5 million, coupled with a decrease in headcount and employee costs as a result of the Company’s 2024 reduction in force (“2024 Restructuring Plan”) announced in Q4 of fiscal year 2024.

Additionally, decline of approximately $1.9 million related to decreases in R&D product development costs.

Research and development expense for the six months ended June 30, 2025 of $24.2 million decreased by $15.0 million, or 38%, when compared to the six months ended June 30, 2024.

This is primarily driven by a decrease in stock-based compensation of approximately $10.3 million largely resulting from the reversal of expense following the resignation of a senior management member who held 2021 LTIP Options, coupled with a decrease in headcount and employee costs of $4.5 million as a result of the Company’s reduction in forces, and a decline of approximately $2.7 million related to decreases in R&D product development costs, which was partially offset by a $2.2 million NRE impairment.

Selling, General and Administrative Expense

Selling, general and administrative expense for the three months ended March 31, 2025 of $11.7 million decreased by $4.3 million, or 27%, when compared to the three months ended March 31, 2024.

This was primarily driven by a decrease in stock-based compensation of approximately $3.0 million, coupled with a decrease in headcount and employee costs as a result of the Company’s 2024 reduction in force (“2024 Restructuring Plan”) announced in Q4 of fiscal year 2024.

Selling, general and administrative expense for the six months ended June 30, 2025 of $19.5 million decreased by $12.0 million, or 38%, when compared to the six months ended June 30, 2024.

This is primarily driven by a decrease in stock-based compensation of approximately $10.1 million largely resulting from the reversal of expense following the resignation of a senior management member who held 2021 LTIP Options, coupled with a decrease in headcount and employee costs of $2.1 million as a result of the Company’s reduction in forces, which was partially offset by approximately $1.6 million related to governance costs.

Amortization of Intangible Assets

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Restructuring Expenses

We announced cost-reduction plans (“2024 Restructuring Plan” and “2025 Restructuring Plan”).

The plans include a reduction in headcount with the majority of the costs consisting of employee severance and benefits.

We incurred $1.5 million related to this plan for the three months ended March 31, 2025.

We announced cost-reduction plans that include a reduction in headcount with the majority of the costs consisting of employee severance and benefits.

We incurred $1.5 million related to this plan for the six months ended June 30, 2025.

Other Income (Expense), net

Dividend income consists of income earned on our money market treasury funds that are recorded as cash equivalents on our consolidated balance sheet.

Decrease of $0.9 million is primarily due to decreases in our investment balances in March 31, 2025 compared to March 31, 2024.

During the three months ended March 31, 2025, we recognized a $8.1 million gain from the change in fair value of our earn-out liabilities.

The decrease in the gain of our earn-out liabilities of $18.1 million was primarily a result of the decrease of the closing price of our Class A common stock listed on the Nasdaq, resulting in the decrease in the estimated fair value of the earnout shares from $2.42 as of March 31, 2024 to $0.24 as of March 31, 2025.

Decrease of $1.7 million is primarily due to decreases in our investment balances in June 30, 2025 compared to June 30, 2024.

During the six months ended June 30, 2024, we recognized a $19.9 million loss from the change in fair value of our earn-out liabilities.

The change of $53.6 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq, resulting in the decrease in the estimated fair value of the earnout shares from $1.53 as of June 30, 2024 to $3.31 as of June 30, 2025.

Income Tax Provision

Income tax provision for the three months ended March 31, 2025 remained relatively flat when compared to the income tax benefit of $0.1 million for the three months ended March 31, 2024.

Income tax provision for the six months ended June 30, 2025 remained relatively flat when compared to the income tax provision of $0.1 million for the six months ended June 30, 2024.

We expect our tax rate to remain close to zero in the near term due to full valuation allowances against deferred tax assets.

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In October 2024, we began applying the equity method to account for our joint venture investment.

We recognized our proportionate share of the joint venture’s loss from the quarter, resulting in a net loss of $0.3 million for the quarter ended March 31, 2025.

We recognized our proportionate share of the joint venture’s loss from the quarter, resulting in a net loss of $0.5 million for the six months ended June 30, 2025.

Liquidity and Capital Resources

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In addition, we use cash to conduct research and development, incur capital expenditures, and fund our debt service obligations.

On March 19, 2025, the Company entered into an At-The-Market Offering Agreement (the "ATM Agreement") with Jefferies LLC for the sale of up to $50,000,000 of its Class A common stock.

Under the agreement, the Company may sell shares from time to time through Jefferies as the sales agent.

As of March 31, 2025, the Company has not sold any shares related to the ATM Agreement.

We entered into an Open Market Sale Agreement SM (the “Sale Agreement”) with Jefferies LLC (“Jefferies”) on March 19, 2025.

We subsequently completed ATM One and ATM Two.

Each agreement permits us to sell, from time to time, shares of its Class A common stock, par value $0.0001 per share, with an aggregate offering capacity of up to $50.0 million, through Jefferies acting as sales agent.

As of June 30, 2025, we had sold approximately 11.1 million shares under ATM One and 8.7 million shares under ATM Two, resulting in gross proceeds of approximately $100.0 million and offering-related costs of $3.3 million in total.

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 continue to increase.

We expect our expenses and capital requirements to increase in connection with our ongoing initiatives to expand our operations, product offerings and end customer base.

As of March 31, 2025, we had cash and cash equiva lents of $75.1 million.

As of June 30, 2025, we had cash and cash equiva lents of $161.2 million.

We currently expect to fund our cash requirements through the use of cash 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.

We expect our operating and capital expenditures to increase as we increase headcount, expand our operations and grow our end customer base.

We expect our operating and capital expenditures to increase and expand our operations and grow our end customer base.

If additional funds are required to support our working capital requirements, acquisitions or other purposes, we may seek to raise funds through additional equity or debt financing or from other sources.

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We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us.

The following table summarizes our consolidated cash flows for the three months ended March 31, 2025 and 2024 (in thousands):

March 31, 2025 March 31, 2024

The following table summarizes our consolidated cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

June 30, 2025 June 30, 2024

Consolidated Statements of Cash Flow Data:

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We derive liquidity primarily from cash on hand and equity financing activities.

As of March 31, 2025, our balance of cash and cash equivalents was $75.1 million, which is a decrease of $11.6 million or 13% compared to December 31, 2024.

As of June 30, 2025, our balance of cash and cash equivalents was $161.2 million, which is a increase of $74.5 million or 86% compared to December 31, 2024.

Operating Activities

For the three months ended March 31, 2025, net cash used in operating activities was $13.5 million, which primarily reflects a net loss of $16.8 million, adjusted for a non-cash gain of $8.1 million related to changes in the fair value of our earnout liability, non-cash stock-based compensation of $7.0 million, amortization of intangible assets of $4.7 million, depreciation of $0.8 million and an aggregate cash used in operating assets and liabilities of $2.2 million.

Specifically, operating cash flow was mainly impacted by increases in inventories of $0.6 million, increases in prepaid expenses and other current assets of $0.6 million, decreases in lease liabilities of $0.5 million, a decrease in accounts payable, accrued compensation, and other accrued expenses of $1.7 million, partially offset with decreases in accounts receivables of $1.2 million.

For the three months ended March 31, 2024, net cash used in operating activities was $19.8 million, which primarily reflects a net loss of $3.7 million offset by adjustments for non-cash stock-based compensation of $13.5 million, non-cash gains of $26.2 million in earnout liabilities, amortization of intangible assets of $4.8 million, and an aggregate cash used in operating assets and liabilities of $7.8 million.

Specifically, increases in inventories of $10 million due to wafer purchases, decreases in customer deposits of $2.9 million partially offset by a $3.7 million decrease in accounts receivable and a decrease in accounts payable, accrued compensation and other expenses of $0.5 million.

For the six months ended June 30, 2025, net cash used in operating activities was $24.8 million, which primarily reflects a net loss of $65.9 million, adjusted for a non-cash loss of $19.9 million related to changes in the fair value of our earnout liability, amortization of intangible assets of $9.5 million, non-cash stock-based compensation of $6.1 million, depreciation and amortization of $1.7 million offset by aggregate cash inflows from changes in operating assets and liabilities of $2.0 million.

Specifically, operating cash flow was mainly impacted by decreases in other assets of $1.0 million, decreases in accounts receivable of $0.8 million, increases in accounts payable of $0.7 million , decreases in inventories of $0.4 million, partially offset with decreases in lease liabilities related to lease payments of $0.8 million.

For the six months ended June 30, 2024, net cash used in operating activities was $34.9 million, which primarily reflects a net loss of $26.0 million.

This decrease to operating cash flows is partially offset by adjustments for non-cash share-based compensation of $26.6 million, depreciation of $1.4 million, non-cash gains of $33.7 million in earnout liabilities, amortization of intangible assets of $9.5 million, and an aggregate cash used in operating assets and liabilities of $14.0 million.

Specifically, increases in inventories of $3.0 million due to sales increases coupled with decreases in accounts payable, accrued compensation and other expenses of $10.4 million and customer deposits and deferred revenue of $4.7 million, partially offset by decreases in accounts receivable of $3.2 million and prepaid expenses and other current assets of $1.4 million.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2025 was primarily attributable to minimal fixed asset purchases.

Net cash used in investing activities for the three months ended March 31, 2024 of $5.4 million was primarily due to $2.5 million cash funding of a joint venture and $2.9 million for purchases of fixed assets.

Net cash used in investing activities for the six months ended June 30, 2025 was primarily attributable to fixed asset purchases of $0.7 million.

Net cash used in investing activities for the six months ended June 30, 2024 of $8.1 million was primarily due to $2.5 million cash funding of a joint venture and $5.6 million for purchases of fixed assets.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2025 of $0.9 million was primarily due to proceeds from stock option exercises of $0.1 million and proceeds from our employee stock purchase plan of $0.8 million.

Net cash provided by financing activities for the three months ended March 31, 2024 of $2.0 million was primarily due to proceeds from stock option exercises of $0.2 million and proceeds from our employee stock purchase plan of $1.8 million.

Net cash provided by financing activities for the six months ended June 30, 2025 of $98.5 million was primarily due to proceeds from stock option exercises related to our ATM offering of $100.0 million, proceeds from stock option exercises of $1.0 million, and proceeds from our employee stock purchase plan of $0.8 million.

This was partially offset by the cost of our ATM offerings of $3.3 million.

Net cash provided by financing activities for the six months ended June 30, 2024 of $2.2 million was primarily due to proceeds from stock option exercises of $0.4 million and proceeds from our employee stock purchase plan of $1.8 million.

Contractual Obligations, Commitments and Contingencies

In the ordinary course of business, we enter into contractual arrangements that may require future cash payments.

As of March 31, 2025, our non-cancellable contractual arrangements consisted of lease obligations and an agreement for the purchase of equipment.

As of June 30, 2025, our non-cancellable contractual arrangements consisted of lease obligations and an agreement for the purchase of equipment.

Refer to Note 8 - “Leases” for further information on our minimum future payments related to lease obligations.

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Off-Balance Sheet Commitments and Arrangements

As of March 31, 2025, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of June 30, 2025, 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

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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