What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-05 compared with 2025-11-06 · 88 added, 122 removed, 111 unchanged (65% of the section changed)

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• our manufacturing practices and ability to deliver both products and services consistent with our customers’ demands and expectations and to strengthen our market position, including our ability to source components, materials, and equipment due to supply chain delays or shortages;

• the proposed acquisition of Semilab USA LLC (“Semilab USA”);

• the integration of Semilab USA LLC (“Semilab USA”);

• our expectations of the semiconductor market outlook;

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its ability to open new market opportunities and target high-margin markets;

the strength/weakness of the back-end and/or front-end semiconductor

market segments;

the strength/weakness of the back-end and/or front-end semiconductor market segments;

fluctuations in customer capital spending;

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the effects of political, economic, legal, and regulatory changes or uncertainties, changes in U.S.

tariff and trade policy and related retaliatory actions, the U.S.

government shutdown] and geopolitical conflicts on the Company’s global operations;

tariff and trade policy and related retaliatory actions, and geopolitical conflicts, including the ongoing conflict involving Israel, the U.S., Iran and other actors, on the Company’s global operations;

the Company’s ability to adequately protect its intellectual property rights and maintain data security;

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the Company’s ability to maintain relationships with its customers and manage appropriate levels of inventory to meet customer demands;

failure to consummate or a delay in consummating the acquisition of Semilab USA, including as a result of any failure to obtain the necessary regulatory approvals or to satisfy any of the other conditions to the proposed transaction on a timely basis or at all;

the Company’s ability to realize the anticipated benefits of the proposed investment in and strategic partnership with Rigaku;

the Company’s ability to complete the proposed transaction on the timing expected or at all;

the ability to obtain required regulatory approvals for the proposed transaction on the timing expected or at all;

the availability of debt financing for the transaction;

the Company’s timing and ability to repay its debt;

and the Company’s ability to successfully integrate acquired businesses and technologies, including the business of Semilab USA and to realize the anticipated benefits of such acquisitions.

Additional information and considerations regarding the risks faced by Onto Innovation are available in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 (the “2024 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2025, in Part II, Item 1A.

Additional information and considerations regarding the risks faced by Onto Innovation are available in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 (the “2025 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2026, in Part II, Item 1A.

“Risk Factors” and elsewhere in this Form 10-Q, and in the other filings that we make with the SEC from time to time.

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Executive Summary

We are a worldwide leader in the design, development, manufacture and support of metrology and inspection tools for the semiconductor industry, including process control tools that perform optical metrology on patterned and unpatterned wafers, wafer macro-defect inspection, including macro-inspection of both 2D and 3D wafer features, wafer substrate and panel substrate lithography systems, and process control analytical software.

Our products are primarily used by silicon wafer manufacturers, semiconductor integrated circuit fabricators, and advanced packaging manufacturers operating in the semiconductor market.

Our products are also used for process control in a number of other specialty device manufacturing markets, including light emitting diodes (“LED”), vertical-cavity surface-emitting lasers (“VCSEL”), micro-electromechanical systems (“MEMS”), CMOS image sensors (“CIS”), silicon and compound semiconductor (SiC and GaN) power devices, analog devices, RF filters, data storage, and certain industrial and scientific applications.

We provide process and yield management solutions used in bare silicon wafer production and wafer processing facilities, often referred to as “front-end” manufacturing, and advanced packaging of chips and test facilities, or “back-end” manufacturing, through a portfolio of standalone systems for optical metrology, macro-defect inspection, packaging lithography, as well as transparent and opaque thin film measurements.

Our automated and integrated metrology systems measure critical dimensions, device structures, topography, shape, and various thin film compositions, including three-dimensional features and film thickness, as well as optical and material properties.

Our primary areas of focus include products that provide critical yield-enhancing and actionable information, which is used by microelectronic device manufacturers to improve yield and time to market of their next-generation devices.

Our systems feature sophisticated software and production-worthy automation.

In addition, our advanced process control software portfolio includes powerful solutions for standalone tools, groups of tools, and factory-wide and

enterprise-wide suites to enhance productivity and achieve significant cost savings.

Our systems are backed by worldwide customer service and applications support.

The semiconductor and electronics industries have been characterized by constant technological innovations.

We are a worldwide leader in the design, development, manufacture and support of process control tools that perform macro-defect inspection and metrology, lithography systems, and process control analytical software used by semiconductor and advanced packaging device manufacturers.

We deliver comprehensive solutions throughout the semiconductor fabrication process with our families of proprietary products that provide critical yield-enhancing information, enabling microelectronic device manufacturers to drive down costs and time to market of their devices.

We provide process and yield management solutions

used in both wafer processing facilities, often referred to as “front-end” manufacturing, and in device packaging and test facilities, commonly referred to as “back-end” manufacturing.

Our advanced process control software portfolio includes powerful solutions for standalone tools, groups of tools, or factory-wide suites to enhance productivity and achieve significant cost savings.

Our principal market is semiconductor capital equipment.

Semiconductors packaged as ICs, or “chips,” are used in consumer electronics, server and enterprise systems, mobile computing (including smart phones and tablets), data storage devices, and embedded automotive and control systems.

Our core focus is the measurement and control of the structure, composition, and geometry of semiconductor devices as they are fabricated on silicon wafers to improve device performance and manufacturing yields.

Our products and services are used by our customers who manufacture many types of ICs for a multitude of applications, each having unique manufacturing challenges.

This includes ICs to enable information processing and management (logic ICs), memory storage (NAND, 3D-NAND, NOR, and DRAM), analog devices (e.g., Wi-Fi and 5G radio ICs, power devices), MEMS sensor devices (accelerometers, pressure sensors, microphones), image sensors, and other end markets including components for AI, hard disk drives, LEDs, and power management.

The semiconductor and electronics industries have also been characterized by constant technological innovation.

We believe that, over the long term, our customers will continue to invest in advanced technologies and new materials to enable smaller design rules and higher density applications that fuel demand for process control equipment.

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Three Months Ended

September 27,

(in thousands, except for percentages and per share data)

Gross profit as a percent of revenue

Gross profit as a percentage of revenue

Total operating expenses

Diluted earnings per share

• In the fiscal quarter ended September 27, 2025 (the “September 2025 quarter”), revenue decreased 14% compared to the fiscal quarter ended June 28, 2025 (the “June 2025 quarter”), primarily due to lower sales to DRAM and NAND customers in the advanced node market as well as lower sales to DRAM and foundry customers in the specialty devices and advanced packaging markets.

• Gross profit as a percentage of revenue for the September 2025 quarter increased by 3% compared to the June 2025 quarter primarily due to the write down of excess and obsolete inventory recorded in the June 2025 quarter.

• Operating expenses for the September 2025 quarter decreased by 3% compared to the June 2025 quarter primarily due to decreased restructuring expenses, research and development project costs, and compensation cost in the September 2025 quarter.

Our cash, cash equivalents and marketable securities balance increased to $983.9 million at September 27, 2025, compared to $852.3 million at December 28, 2024.

This increase was primarily the result of $233.3 million of cash generated from operating activities and $9.7 million of cash from issuance of shares through share-based compensation plans, partially offset by cash used for purchases of our common stock of $75.0 million, capital expenditures of $23.4 million, $12.6 million for tax payments related to net share settlement of employee stock-based compensation plans and purchases of non-marketable equity securities of $8.0 million.

Employee headcount at September 27, 2025 was approximately 1,593.

On June 27, 2025, we entered into an Equity Purchase Agreement (the “Purchase Agreement”) to acquire all the outstanding membership interests of Semilab USA from Semilab International Zrt.

(“Semilab”), for $475.0 million in cash (subject to certain customary purchase price adjustments) and 706,215 shares of our common stock (the “Transaction”).

On September 25, 2025, each of the Company and Semilab received a request for additional information and documentary material (a “Second Request”) from the U.S.

Department of Justice in connection with the Transaction.

In response to the Second Request, and in order to increase the likelihood of a timely closing for the Transaction, on October 9, 2025, the parties entered into an amendment to the Purchase Agreement (the “Purchase Agreement Amendment”), pursuant to which the parties agreed that the Fourier-Transform infrared spectroscopy reflectometry systems business conducted by Semilab and its affiliates would not be included in the transaction and would instead be retained by Semilab.

The Purchase Agreement Amendment amends the purchase price that the Company will pay to Semilab in the Transaction to $432.3 million in cash (subject to certain customary purchase price adjustments) and 641,771 shares of the Company’s common stock, par value $0.001 per share.

This represents a reduction of approximately $50.0 million in total Transaction value to approximately $495.0 million based upon the closing value of the Company’s common stock on June 27, 2025.

The Company continues to anticipate that the Transaction will be completed in 2025.

See Note 2, “Acquisitions,” in the Notes to the Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

government has implemented export regulations for U.S.

semiconductor technology sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, over the past several years.

government continues to issue new export licensing requirements, and additional updates and other

requirements that have had the effect of further limiting our ability to provide certain products and services to customers outside the United States, including in China.

The recent imposition of tariffs by the U.S.

government, and countermeasures taken by foreign countries, has had and will likely continue to have an adverse impact on our business in the near-term.

The full extent of the impact is currently uncertain and will depend both on future developments in global trade policy and the extent to which our efforts to mitigate tariff impacts are successful.

We are continuously assessing the impact of tariffs and related governmental actions on our business.

• In the fiscal quarter ended March 31, 2026 (the “March 2026 quarter”), revenue increased 9.4% compared to the fiscal quarter ended January 3, 2026 (the “January 2026 quarter”), primarily due to revenue attributed to the acquired Semilab USA business of $16.8 million and higher sales to logic and memory customers in advanced nodes.

• Gross profit as a percentage of revenue for the March 2026 quarter increased by 3.7% compared to the January 2026 quarter.

This margin increase was primarily driven by reductions in inventory write downs, restructuring costs related to infrastructure transition, and reductions in costs related to contract manufacturing set-up.

In addition, during the March 2026 quarter $2.2 million of additional inventory step-up amortization was recognized compared to the January 2026 quarter.

• Operating expenses for the March 2026 quarter increased by 2.7% compared to the January 2026 quarter.

This increase was driven by an increase in intangible amortization expense, offset by reductions in transaction costs related to the acquisition of Semilab USA.

Our cash, cash equivalents and marketable securities balance increased to $654.2 million at March 31, 2026, compared to $639.6 million at January 3, 2026.

This increase was primarily the result of $26.3 million of cash generated from operating activities partially offset by capital expenditures of $3.6 million and $6.7 million for tax payments related to net share settlement of employee stock-based compensation plans.

Employee headcount at March 31, 2026 was approximately 1,790.

On April 20, 2026, we entered into a definitive share purchase agreement (the “Transaction”) with Atom Investment, L.P., an affiliate of The Carlyle Group, to acquire 27% of the outstanding common stock of Rigaku Holdings Corporation (“Rigaku”) for approximately $710 million.

The Transaction is expected to close in the second half of 2026.

Also on April 20, 2026, we entered into a commitment letter with Goldman Sachs Bank USA, which provides for a senior secured 364-day $500 million bridge term loan credit facility.

The bridge term loan is intended to be available to the Company to finance, together with other sources of funds, the Transaction and related fees and expenses on or prior to the closing of the Transaction.

For a discussion of the risks related to our business and operations, see Part I, Item 1A - Risk Factors of the 2025 Form 10-K and Part II, Item 1A - Risk Factors of this Form 10-Q.

Results of Operations for the Three and Nine Months Ended September 27, 2025 and September 28, 2024

Results of Operations for the Three-Months ended March 31, 2026 and March 29, 2025

Our revenue is primarily derived from the sale of our systems, software licensing, services and spare parts.

Our revenue of $218.2 million decreased 14% for the three months ended September 27, 2025 as compared to the three months ended September 28, 2024, for which revenue totaled $252.2 million.

For the nine-months ended September 27, 2025 and September 28, 2024, our revenue totaled $738.4 million and $723.4 million, respectively, representing a year-over-year increase of 2%.

Our revenue of $291.9 million increased 9.5% for the three months ended March 31, 2026 as compared to the three months ended March 29, 2025, for which revenue totaled $266.6 million.

The following table lists, for the periods indicated, the different sources of our revenue in dollars and as percentages of our total revenue:

Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

(in thousands, except for percentages)

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Total revenue

Total systems and software revenue decreased $43.3 million and $2.9 million for the three and nine months ended September 27, 2025, respectively, as compared to the three and nine months ended September 28, 2024.

The decreases for the three and nine months ended September 27, 2025 were primarily attributable to lower sales to DRAM, foundry and power customers in the specialty device and advanced packaging market.

These year over year decreases in systems and software revenue were partially offset by increased sales to OSAT customers in the specialty device and advanced packaging market and increased sales to foundry and DRAM customers in the advanced node market.

The increase in total parts and services revenue for the three and nine months ended September 27, 2025, as compared to the three and nine months ended September 28, 2024, was primarily due to higher parts sales and service contract revenue.

Total systems and software revenue increased $16.0 million for the three months ended March 31, 2026, as compared to the three months ended March 29, 2025.

The increase was attributable to Semilab USA revenues of $24.0 million, as well as higher sales to advanced packaging customers, partially offset by a decline in sales to advanced node customers.

The increase in total parts and services revenue for the three months ended March 31, 2026, as compared to the three months ended March 29, 2025, was primarily due to increased spending by our customers on system upgrades and repairs of existing systems.

Gross Profit.

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Three Months Ended

Nine Months Ended

September 27,

September 28,

September 27,

September 28,

(in thousands, except for percentages)

Gross profit as a percentage of revenue

The decrease in gross profit as a percentage of revenue for the three and nine months ended September 27, 2025 as compared to the three and nine months ended September 28, 2024 was primarily due to restructuring and other expenses for the write down of excess and obsolete inventory.

The decrease in gross profit as a percentage of revenue for the three months ended March 31, 2026 as compared to the three months ended March 29, 2025 was primarily due to higher restructuring and other expenses for the write down of excess and obsolete inventory in the 2026 period.

In addition, $6.1 million of inventory step-up amortization attributed to Semilab USA was recognized during the three months ended March 31, 2026.

Operating Expenses.

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These expenditures also include consulting fees, the cost of related supplies and legal costs to defend our patents.

Our research and development expenses were $32.5 million and $95.8 million for the three and nine-month periods ended September 27, 2025, respectively, as compared to $28.3 million and $81.9 million for the three and nine-month periods ended September 28, 2024, respectively.

The increase in research and development expenses of $4.2 million for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024 was primarily due to increases in compensation costs and depreciation.

The increase in research and development expenses of $13.9 million for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024 was primarily due to increases in compensation costs, hardware and software project costs, production expenses, travel expenses, outside service costs and depreciation.

Our research and development expenses were $35.1 million for the

three-month period ended March 31, 2026, as compared to $28.0 million for the three-month period ended March 29, 2025.

The increase in research and development expenses for the three-month period ended March 31, 2026, as compared to the three-month period ended March 29, 2025 was primarily due to increases in headcount, as well as increased materials and supplies expensed.

• Sales and Marketing .

Sales and marketing expenses are primarily comprised of salaries, commissions and related costs for sales and marketing personnel, as well as other non-personnel related expenses.

Our sales and marketing expenses were $17.1 million and $51.7 million for the three and nine-month periods ended September 27, 2025, respectively, compared to $19.5 million and $56.6 million for the three and nine-month periods ended September 28, 2024, respectively.

The decrease in sales and marketing expenses of $2.4 million for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, was primarily due to decreases in compensation costs and production expenses.

The decrease in sales and marketing expenses of $4.9 million for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024, was primarily due to decreases in compensation costs and outside services and fees.

Our sales and marketing expenses were $21.5 million for the three-month period ended March 31, 2026, compared to $19.7 million for the three-month period ended March 29, 2025.

The increase in sales and marketing expenses for the three-month period ended March 31, 2026, as compared to the three-month period ended March 29, 2025, was primarily driven by increases in headcount.

• General and Administrative .

General and administrative expenses are primarily comprised of salaries and related costs for corporate and administrative personnel, as well as other non-personnel related expenses.

Our general and administrative expenses were $24.8 million and $72.6 million for the three and nine-month periods ended September 27, 2025, respectively, as compared to $20.3 million and $57.4 million for the three and nine-month periods ended September 28, 2024, respectively.

The increase in general and administrative expenses of $4.5 million for the three-month period ended September 27, 2025, as compared to the three-month period ended September 28, 2024, was primarily due to increases in compensation costs, outside service costs and depreciation.

The increase in general and administrative expenses of $15.2 million for the nine-month period ended September 27, 2025, as compared to the nine-month period ended September 28, 2024, was primarily due to increases in compensation costs and outside service costs.

Our general and administrative expenses were $31.4 million for the three-month period ended March 31, 2026, as compared to $22.8 million for the three-month period ended March 29, 2025.

The increase in general and administrative expenses for the three-month period ended March 31, 2026, as compared to the three-month period ended March 29, 2025, was primarily driven by higher headcount-related compensation costs, expenses associated with the Semilab USA integration, ERP integration costs, related outside services and fees and other general corporate expenses.

• Amortization of Identifiable Intangible Assets .

Amortization of identifiable intangible assets was $8.4 million and $25.3 million for the three and nine-month periods ended September 27, 2025, respectively, compared to $13.1 million and $39.3 million for the three and nine-month periods ended September 28, 2024, respectively.

The decreases in amortization of identifiable intangible assets of $4.7 million and $14.0 million for the three and nine-month periods ended September 27, 2025, as compared to the three and nine-month periods ended September 28, 2024, was primarily due to certain assets becoming fully amortized.

Amortization of identifiable intangible assets was $19.7 million for the three-month period ended March 31, 2026, compared to $8.4 million for the three-month period ended March 29, 2025.

The increase in amortization of identifiable intangible assets for the three months ended March 31, 2026, as compared to the three months ended March 29, 2025, was due to recognition of a full quarter of Semilab USA amortization in the 2026 period.

• Restructuring and Other .

Restructuring and other expenses were $4.1 million and $11.4 million for the three and nine-month periods ended September 27, 2025, respectively, compared to $2.2 million and $3.0 million for the three and nine-month periods ended September 28, 2024, respectively.

The increases in restructuring and other expenses of $1.9 million and $8.4 million for the three and nine-month periods ended September 27, 2025, as compared to the three and nine-month periods ended September 28, 2024, were primarily due to business transformation projects that includes the streamlining of various operating activities.

Interest income, net .

Net interest income was $9.3 million and $27.2 million for the three and nine-month periods ended September 27, 2025, respectively, as compared to $8.7 million and $24.5 million for the three and nine-month periods ended September 28, 2024, respectively.

The increases in net interest income for the three and nine-month periods ended September 27, 2025, as compared to the three and nine-month periods ended September 28, 2024, were due to higher cash and marketable securities balances, partially offset by lower interest rates during the 2025 period.

Other (expense) income, net .

Other expense, net was $1.0 million and $0.7 for the three-month period ended September 27, 2025 and the three-month period ended September 28, 2024, respectively.

Other expense, net was $2.9 million for the nine-month period ended September 27, 2025, as compared to other income, net of $10 thousand for the nine-month period ended September 28, 2024.

Foreign exchange losses during the 2025 period versus foreign exchange gains in the 2024 period were the primary drivers contributing to the period over period changes.

Restructuring and other expenses were $5.2 million for the three-month period ended March 31, 2026, compared to $1.1 million for the three-month period ended March 29, 2025.

The increase in restructuring and other expenses for the three-month period ended March 31, 2026, as compared to the three-month period ended March 29, 2025, was primarily due to an increase in employee severance costs and business transformation projects that includes the streamlining of various operating activities.

Total other income, net .

Total other income, net was $4.5 million for the three-month period ended March 31, 2026, as compared to $8.5 million for the three-month period ended March 29, 2025.

The decrease in total other income, net for the three months ended March 31, 2026, as compared to the three months ended March 29, 2025, was attributable to interest on lower cash and marketable securities balances in the 2026 period following the use of cash for the acquisition of Semilab USA in the fourth quarter of 2025, partially offset by lower foreign currency exchange losses recognized in the 2026 period.

Income Taxes .

We recorded an income tax provision of $3.8 million and $17.1 million for the three and nine-month periods ended September 27, 2025, respectively, as compared to $8.0 million and $16.3 million for the three and nine-month periods ended September 28, 2024, respectively.

Our effective tax rate of 12% for both the three and nine-month periods ended September 27, 2025, differed from the statutory rate of 21%, primarily due to research and development tax credits and the deduction related to foreign derived intangible income (“FDII”) for the three month period ended September 27, 2025.

For the nine month period ended September 27, 2025, research and development tax credits, the deduction related to FDII and excess tax benefits associated with equity compensation contributed to the difference with the statutory rate.

Our effective tax rate of 13% and 10% for the three and nine-month periods ended September 28, 2024, respectively, each differed from the statutory rate of 21%, primarily due to research and development tax credits, the deduction related to FDII, and excess tax benefits associated with equity compensation.

We recorded an income tax provision of $4.3 million for the three-month period ended March 31, 2026, as compared to $7.6 million for the three-month period ended March 29, 2025.

Our effective tax rate of 11.3% and 10.6% for the three-month period ended March 31, 2026 and the three-month period ended March 29, 2025, respectively, differed from the statutory rate of 21.0%, primarily due to the tax benefit associated with the Foreign Derived Intangible Income (“FDII”) deductions, federal research and development tax credits, and excess tax benefits associated with equity compensation.

Our future effective income tax rate depends on various factors, such as possible changes in tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with business combinations, and research and development tax credits as a percentage of aggregate pre-tax income.

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We continue to monitor available evidence and may reverse some or all of the valuation allowance in future periods, if appropriate.

The Organization for Economic Co-operation and Development (“OECD”) has been working on a Base Erosion and Profits Shifting project that, upon implementation, would change various aspects of the existing framework under which our tax obligations are determined in many of the countries in which we operate.

In this regard, the OECD has proposed policies aiming to modernize global tax systems, including a country-by-country 15% minimum effective tax rate (“Pillar Two”) for multinational companies.

Numerous countries have enacted, or are in the process of enacting, legislation to implement the Pillar Two model rules with a subset of the rules becoming effective during the current year, and the remaining rules becoming effective in later periods.

In June 2025, the Group of Seven (“G7”) countries (Canada, France, Germany, Italy, Japan, the U.K.

and the United States) agreed to exclude U.S.

Multi-National entities (MNEs) from certain aspects of Pillar Two (the “G7 Statement”) in exchange for the United States not imposing retaliatory taxes through the One Big Beautiful Bill Act.

We will continue to monitor the G7 Statement, which has not yet been incorporated into the OECD framework.

At this point in time, we do not expect any material tax impact associated with Pillar Two rules in the countries where we operate.

As these rules continue to evolve with new legislation and guidance, we will continue to monitor and account for the enactment of Pillar Two and the potential impacts such rules may have on our effective tax rate and cash flows in future years.

The Organization for Economic Co-operation and Development (“OECD”) has released guidance covering various topics, including country-by-country reporting, definitional changes to permanent establishment and Base Erosion and Profit Shifting (“BEPS”), an initiative that aims to standardize and modernize global tax policy.

The guidance also established a global minimum tax of 15%.

This guidance has been implemented by several jurisdictions, including jurisdictions in which we operate, and many other jurisdictions are in the process of implementing it.

Depending on the final form of legislation ultimately enacted, there may be significant consequences for us due to our international business activities, including, but not limited to, an increase in our tax uncertainty and adverse effects on our provision for income taxes.

On January 5, 2026, the OECD announced that the Inclusive Framework on Base Erosion and Profit Shifting agreed to a new package of administrative guidance under the Pillar Two global minimum tax rules.

The new administrative guidance allows for U.S.

multinationals to provide for a Side-by-Side Safe Harbor that would exclude U.S.-parented multinational groups from the global minimum tax rule’s Income Inclusion Rule and Undertaxed Profits Rule on the grounds that the existing U.S.

law is sufficiently robust in its taxation of domestic and foreign profits.

Although we will continue to monitor U.S.

and international legislative developments in this area, we cannot predict whether such protective measures or legislation will be adopted by non-U.S.

countries, if any, and whether the U.S.

would have any responsive measures.

On July 4, 2025, the United States enacted tax reform legislation through the One Big Beautiful Bill Act.

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taxation of profits derived from foreign operations.

The impact of the Act has been accounted for in the provision for taxes for the quarter ended September 27, 2025 and the amount is determined to be immaterial.

The Company continues to evaluate the impact the new legislation will have on the Consolidated Financial Statements for future years.

However, as the assessment is ongoing, the Company is not able to quantify the impact at this time.

The impact of the Act has been accounted for in the provision for taxes for the quarter ended March 31, 2026.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities consist of the following in dollars for the periods indicated:

September 27,

December 28, 2024

(in thousands)

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A summary of net cash and cash equivalents provided by (used in) operating, investing, and financing activities is as follows in dollars for the periods indicated:

Nine Months Ended

September 27,

September 28,

Three Months Ended

(in thousands)

Net cash and cash equivalents provided by operating activities

Net cash and cash equivalents provided by (used in) investing activities

Net cash and cash equivalents used in investing activities

Net cash and cash equivalents used in financing activities

Operating Activities

Net cash and cash equivalents provided by operating activities for the nine months ended September 27, 2025 were $233.3 million.

The net cash and cash equivalents provided by operating activities during the nine months ended September 27, 2025 resulted primarily from net income, adjusted to exclude the effect of non-cash operating charges, of $193.3 million.

Significant non-cash operating charges included depreciation, amortization, share-based compensation, provision for inventory valuation and deferred income taxes.

Cash provided by operating activities for the first nine months of fiscal 2025 increased compared to the corresponding period in fiscal 2024 primarily due to higher cash collections.

Our working capital was $1,382.1 million at September 27, 2025 and $1,307.4 million at December 28, 2024.

Net cash and cash equivalents provided by operating activities for the three months ended March 31, 2026 was $26.3 million.

The net cash and cash equivalents provided by operating activities during the three months ended March 31, 2026 resulted primarily from net income, adjusted to exclude the effect of non-cash operating charges, of $67.9 million.

Significant non-cash operating charges included depreciation, amortization, share-based compensation and provision for inventory valuation.

Cash provided by operating activities for the first three months of 2026 decreased compared to the corresponding period in fiscal 2025, primarily due to timing of accounts receivable payments and higher inventory levels due to revenue growth.

Investing Activities

Net cash and cash equivalents provided by investing activities for the nine months ended September 27, 2025 were $231.9 million.

During the nine months ended September 27, 2025, net cash and cash equivalents provided by investing activities included proceeds from maturities and sales of marketable securities of $684.5 million, partially offset by purchases of marketable securities of $421.2 million, capital expenditures of $23.4 million and purchases of non-marketable equity securities of $8.0 million.

Net cash and cash equivalents used in investing activities for the three months ended March 31, 2026 was $112.6 million.

During the three months ended March 31, 2026, net cash and cash equivalents used in investing activities included purchases of

marketable securities of $179.5 million and capital expenditures of $3.6 million, partially offset by proceeds from maturities and sales of marketable securities of $70.5 million.

From time to time, we evaluate whether to acquire new or complementary businesses, products or technologies.

We may fund all of or a portion of the price of these investments or acquisitions in cash, stock, or a combination of cash and stock.

Our proposed acquisition of Semilab will cost $432.3 million in cash (subject to certain customary purchase price adjustments) and 641,771 shares of our common stock, par value $0.001 per share.

See Note 2 of the Condensed Consolidated Financial Statements for further discussion regarding this proposed acquisition.

Financing Activities

Net cash and cash equivalents used in financing activities for the nine months ended September 27, 2025 were $77.9 million.

During the nine months ended September 27, 2025, financing activities used cash primarily for purchases of common stock of $75.0 million and tax payments related to shares withheld to satisfy employee tax obligations in connection with the vesting of awards under share-based compensation plans of $12.6 million, partially offset by proceeds from sales of shares through share-based compensation plans of $9.7 million.

Net cash and cash equivalents used in financing activities for the three months ended March 31, 2026 was $6.7 million.

During the three months ended March 31, 2026, financing activities used cash for tax payments related to shares withheld to satisfy employee tax obligations in connection with the vesting of awards under share-based compensation plans.

In February 2024, our Board of Directors approved a share repurchase authorization, which allows the Company to repurchase up to $200 million worth of shares of its common stock.

Repurchases may be made through both public market and private transactions from time to time.

During the three and nine months ended September 27, 2025, we repurchased 0 and 492 thousand shares of common stock under this repurchase authorization, respectively.

As of September 27, 2025, there was $99.9 million available for future share repurchases under this share repurchase authorization.

We have a credit agreement with a bank that provides for a variable-rate line of credit that is secured by the marketable securities we have with the bank.

We are permitted to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed, up to a maximum of $100.0 million.

As of September 27, 2025, the available line of credit was $100.0 million with an available interest rate of 4.8%.

The credit agreement is available to us until such time that either party terminates the arrangement at its discretion.

As of the date of this filing, we have not utilized the line of credit.

During the three months ended March 31, 2026, the Company repurchased no shares of common stock under this repurchase authorization.

As of March 31, 2026, there was $99.9 million available for future share repurchases under this share repurchase authorization.

The Company had a credit agreement with a bank that provides for a variable-rate line of credit which was secured by the marketable securities the Company has with the bank.

At January 3, 2026 the Company was permitted to borrow up to 70.0% of the value of eligible securities held at the time the line of credit would be accessed, up to a maximum of $100.0 million.

The available line of credit as of January 3, 2026 was $100.0 million with an available interest rate of 4.3%.

The Company terminated this line of credit during the three months ended March 31, 2026, and did not utilize the line of credit while it was active.

Our future capital requirements will depend on many factors, including the timing and amount of our revenue and our investment decisions, which will affect our ability to generate additional cash.

We expect that our existing cash, cash equivalents, marketable securities and availability under our line of credit will be sufficient to meet our anticipated cash requirements for working capital, capital expenditures, and other cash needs for the next 12 months following the filing of this Form 10-Q.

We expect that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash requirements for working capital, capital expenditures, and other cash needs for the next 12 months following the filing of this Form 10-Q.

Thereafter, if cash generated from operations and financing activities is insufficient to satisfy our working capital requirements, we may seek additional funding through bank borrowings, sales of securities or other means.

5 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis