What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-04-23 compared with 2024-10-23 · 91 added, 195 removed, 191 unchanged (60% of the section changed)

10 unchanged sentences

• our business model, strategic plans and product-development plans;

• the impact of any future health outbreak or pandemic, including a potential resurgence of Covid-19 on our business, operations and financial condition as well as on macroeconomic conditions;

• our future financial performance, including our average selling prices, or ASPs, gross margins and the dependency of our future financial performance on macroeconomic conditions;

• the impact of tariffs, trade measures and other macroeconomic conditions;

• our future financial performance, including our average selling prices, or ASPs, gross margins and the dependency of our future financial performance on macroeconomic conditions or industry trends, including tariffs;

• the performance of third parties on which we rely for product development, manufacturing, assembly and testing;

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We call our expansive vision a Boundless Internet of Things, or IoT.

We design and sell a platform that enables that wireless item-to-cloud connectivity and with which we and our partners innovate Internet of Things, or IoT, solutions.

We design and sell a platform that enables that wireless item-to-cloud connectivity and with which we and our partners innovate IoT solutions.

Our mission is to connect every thing.

We have enabled connectivity for more than 120 billion items to date, delivering item visibility and improving operational efficiencies for retailers, supply chain and logistics, or SC&L providers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.

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We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon RAIN radios;

manufacturing, test, encoding and reading systems, software and cloud services that encapsulate our solutions know-how and intellectual property.

manufacturing, test, encoding and reading systems;

software and cloud services that encapsulate our solutions know-how;

and intellectual property.

We sell two types of silicon integrated circuit, or IC, radios.

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The second are reader ICs that our partners use in finished readers to wirelessly discover, inventory and engage the endpoint ICs.

Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password.

Those readers may also protect an item or consumer, for example by authenticating

the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password.

Our manufacturing, test and encoding systems enable partner products and facilitate enterprise deployments.

systems comprise high-performance finished readers and gateways for autonomous reading solutions.

Our reading systems comprise high-performance finished readers and gateways for autonomous reading solutions.

Our software and cloud services focus on solutions enablement.

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That ecosystem comprises original equipment manufacturers, or OEMs, tag service bureaus, original device manufacturers, or ODMs, systems integrators, or SIs, value-added resellers, or VARs, independent software vendors, or ISVs, and other solution partners.

Our silicon radios follow the RAIN industry’s air-interface standard for their core functionality.

We create partner and enterprise preference for our radios and solutions by adding differentiated features into our products, and supporting or licensing those features across our platform, to deliver solutions capabilities and performance that surpasses mix-and-match solutions built from competitor products.

Our radios follow the RAIN industry’s air-interface standard for their core reading functionality.

We create partner and enterprise preference for our radios and solutions by adding differentiated features into them, supporting those features across our platform and licensing them where appropriate, to deliver solutions capabilities and performance that surpasses mix-and-match solutions built from competitor products.

We have also introduced a set of compatible extensions to the RAIN industry’s air-interface standard, which we call Gen2X, that enhance the performance and protection of our solutions.

The RAIN industry, on the reader and solutions side, has broadly embraced Gen2X.

Factors Affecting Our Performance

Macroeconomic Factors

We are subject to impacts from the evolving macroeconomic environment, including uncertainty and volatility in trade measures and tariffs.

Because most of our revenue derives from endpoint ICs that our partners embed into or onto items, to the extent that those items are impacted, positively or negatively, by trade measure and tariffs, we are impacted as well.

While the impact that recent trade measures will have on our business and financial results is difficult to predict, they could negatively affect our business and financial results.

We continue to monitor the broader impacts of these measures on our business, our supply chain and our results of operations.

See risk factor "Changes in global trade policies could have a material adverse effect on us." in Part II, Item 1A.

of this report for further information.

Inventory Supply

Most of our revenue derives from endpoint ICs that our partners embed into or onto enterprise items and is therefore affected by macroeconomic trends.

Further, we sell most of our products, both endpoint ICs and systems, through partners and distributors, limiting our visibility to enterprise demand.

We sell most of our products, both endpoint ICs and systems, through partners and distributors, limiting our visibility to actual enterprise demand.

We work closely with those partners and distributors to gain as accurate a view as possible, however, correctly forecasting demand for our products and identifying market shifts in a timely manner remains a challenge.

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From 2010 to 2024, our overall endpoint IC sales volumes increased at a 27% compounded annual growth rate;

however, we have experienced uneven growth rates in various periods.

however, we have experienced declines in endpoint IC sales volumes during various periods.

Regardless of the uneven pace of retail, SC&L and other industry adoption and growth rates, we believe the long-term trend is continued RAIN adoption and growth and we intend to continue investing in developing new products and expanding our product offerings for the foreseeable future.

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Similarly, in second-quarter 2021, we generated 13% of our revenue from a project-based gateway deployment for RAIN-based self-checkout and loss prevention at a large Europe-based global retailer.

We did not have comparable project-based revenue in 2022, 2023 or in the first three quarters of 2024.

While we continue generating project-based revenue, we have not seen it at a comparable scale in 2022 to 2024, or in first-quarter 2025.

Seasonality and Pricing

We typically negotiate pricing with most of our endpoint IC OEMs with an effective date of the first quarter of the calendar year.

In the past, this negotiation typically resulted in reduced revenue and gross margins in the first quarter compared to prior periods, which then normalized in subsequent quarters as we reduced costs and adjust product mix by migrating those OEMs and end users to newer, lower-cost products.

In the past, this negotiation typically resulted in reduced revenue and gross margins in the first quarter compared to prior periods,

which then normalized in subsequent quarters as we reduced costs and adjust product mix by migrating those OEMs and end users to newer, lower-cost products.

Endpoint IC volumes tend to be lower in the fourth quarter than in the third quarter.

System sales tend to be higher in the fourth quarter and lower in the first quarter, we believe due to the availability of residual funding for capital expenditures prior to the end of many end users’ fiscal years.

We did not see these seasonal trends in 2023.

We do expect continued quarter-to-quarter revenue variability due to changing macroeconomic conditions and timing of program launches that could impact seasonal trends in the future.

Quarter-to-quarter revenue variability due to macroeconomic conditions and program-launch timing may impact these seasonal trends in the future.

In light of the 2025 macroeconomic environment, we are uncertain whether we will see these trends in 2025.

Results of Operations

The following table presents our results of operations for the periods indicated:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except percentages)

Loss from operations

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Revenue and gross profit increased, due primarily to higher endpoint IC revenue partially offset by lower systems revenue.

The endpoint IC revenue increase was driven primarily by higher endpoint IC shipment volumes when compared to the prior-year period.

Systems revenue decreased, due primarily to lower shipment volumes.

Gross margin increased, due primarily to lower excess and obsolescence charges in the current-year period compared to the prior-year period.

Loss from operations decreased, due primarily to increased gross profit, partially offset by increased operating expenses.

The operating expense increase was due to higher research and development costs, partially offset by lower general and administrative costs, sales and marketing costs and amortization of intangibles.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Revenue and gross profit increased, due primarily to higher endpoint IC revenue partially offset by lower systems revenue.

The endpoint IC revenue increase was driven primarily by licensing revenue as well as higher endpoint IC shipment volumes when compared to the prior-year period.

Systems revenue decreased, due primarily to lower shipment volumes.

Gross margin increased, due primarily to the high-margin licensing revenue contribution.

Loss from operations decreased, due primarily to increased gross profit and a slight decrease in operating expenses.

The operating expense decrease was due primarily to lower general and administrative costs, sales and marketing costs, and amortization of intangibles, partially offset by higher research and development and restructuring costs.

Three Months Ended September 30,

Nine Months Ended September 30,

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Revenue and gross profit decreased, due primarily to lower systems revenue on lower shipment volumes compared to the prior-year period.

Gross margin increased, due primarily to lower indirect costs in the current-year period, partially offset by a decrease in direct product margin.

Loss from operations decreased, due primarily to decreased operating expenses, partially offset by decreased gross profit.

The operating expense decrease was due to lower sales and marketing costs, restructuring costs, general and administrative costs and amortization of intangibles, partially offset by increased research and development costs.

Three Months Ended March 31,

(in thousands)

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We expect endpoint IC sales to represent the majority of our revenue for the foreseeable future.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Endpoint IC revenue increased $32.4 million, due to a $38.2 million increase in shipment volumes, partially offset by a $5.8 million decrease from lower ASP due primarily to product mix, and to a lesser extent, short-term pricing incentives on legacy products.

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Endpoint IC revenue decreased $0.3 million, due to a $9.3 million decrease from lower ASP due to product mix and new customer pricing that went into effect at the beginning of the year, offset by a $9.0 million increase in shipment volumes.

Systems revenue decreased $2.3 million due primarily to a decrease in shipment volumes.

Reader and gateway revenues decreased $1.0 million and $2.9 million, respectively and nonrecurring engineering revenue decreased by $0.4 million.

These decreases were partially offset by increases of $1.5 million and $0.6 million in reader IC and test and measurement solution revenue, respectively.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Endpoint IC revenue increased $51.3 million due to a $54.5 million increase in shipment volumes and a $15.0 million increase in licensing revenue that did not occur in the prior-year period, partially offset by a $18.2 million decrease in ASP due primarily to product mix shift, and to a lesser extent, short-term pricing incentives on legacy products.

Systems revenue decreased by $13.7 million due primarily to a decrease in shipment volumes.

Reader and gateway revenues decreased $7.9 million and $8.2 million, respectively, and nonrecurring engineering revenue decreased $0.8 million.

These decreases were partially offset by an increase of $3.5 million from test and measurement solutions revenue.

Gateway revenue decreased $2.8 million and test and measurement solution revenue decreased by $1.0 million.

These decreases were partially offset by increases of $1.1 million and $0.6 million in reader and reader IC revenue, respectively.

Gross Profit and Gross Margin

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands, except percentages)

Cost of revenue

Cost of revenue includes costs associated with manufacturing our endpoint ICs, reader ICs, readers, gateways and test and measurement solutions, including direct materials and outsourced manufacturing costs as well as associated overhead costs such as logistics, quality control, planning and procurement.

logistics, quality control, planning and procurement.

Cost of revenue also includes charges for excess and obsolescence and warranty costs.

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as well as from inventory excess and obsolescence charges.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Gross profit increased, due primarily to increased endpoint IC revenue, partially offset by decreased systems revenue.

Gross margin increased, due primarily to lower excess and obsolescence charges compared to the prior-year period.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Gross profit increased, due primarily to increased endpoint IC revenue partially offset by decreased systems revenue.

Gross margin increased, due primarily to high-margin licensing revenue recognized in the year that did not occur in the prior year.

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Gross profit decreased, due primarily to decreased systems revenue.

Gross margin increased, due primarily to lower indirect costs in the current-year period, partially offset by a decrease in direct product margin, due to mix of endpoint IC and systems as well as product mix within endpoint IC.

Operating Expenses

Research and Development

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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We expect research and development expense to increase in absolute dollars in future periods as we continue to focus on new product development and introductions.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Research and development expense increased $3.9 million, due primarily to increases of $2.8 million in personnel expenses related to higher bonus achievement;

$1.4 million in stock-based compensation expense primarily related to increased outstanding equity grants;

and $0.3 million in infrastructure costs;

partially offset by a decrease of $0.6 million in product development costs due to timing.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Research and development expense increased $5.5 million, due primarily to increases of $6.1 million in personnel expenses from higher bonus achievement and higher headcount;

$2.7 million in stock-based compensation expense primarily related to increased outstanding equity grants;

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Research and development expense increased $2.8 million, due primarily to increases of $1.8 million in stock-based compensation expense, primarily related to increased outstanding equity grants;

$0.6 million in product development costs due to timing;

and $0.5 million in infrastructure costs.

partially offset by a decrease of $4.1 million in product development costs due to timing.

Sales and Marketing

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Sales and marketing expense was comparable for the periods with offsetting fluctuations.

Personnel expenses decreased resulting from a decrease in headcount, which was offset by higher bonus achievement and commissions.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Sales and marketing expense decreased $0.8 million, due primarily to decreases of $0.6 million in personnel expenses resulting from a decrease in headcount, partially offset by higher bonus achievement and commissions.

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Sales and marketing expense decreased $2.1 million, due primarily to a decrease of $2.1 million in stock-based compensation expense.

This decrease is due primarily to forfeitures related to the company's Chief Revenue Officer retiring in the period.

General and Administrative

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Three months ended March 31, 2025 compared with three months ended March 31, 2024

General and administrative expense decreased $1.0 million, due primarily to a decrease of $2.2 million in professional services related to legal fees.

This decrease was partially offset by increases of $1.5 million in personnel expenses related to higher bonus achievement and $1.0 million in stock compensation expense related to increased outstanding equity grants.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

General and administrative expense decreased $6.1 million, due primarily to a decrease of $12.3 million in professional services related to legal fees and transaction expenses in the current year.

This decrease was offset by an increase of $3.5 million in personnel expenses from higher bonus achievement, higher headcount and higher taxes associated with equity vesting, and an increase of $2.4 million in stock-based compensation expense, from increased outstanding equity grants.

This decrease was partially offset by increases of $1.0 million in stock compensation expense related to increased outstanding equity grants.

Amortization of Intangibles

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Amortization of intangibles

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Amortization of intangibles decreased $0.9 million.

The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy.

Certain intangible assets acquired had a useful life of less than 1 year, resulting in a higher amortization expense in the prior-year period.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Amortization of intangibles decreased $0.9 million.

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Restructuring Costs

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Restructuring costs

Three months ended September 30, 2024 compared with three months ended September 30, 2023

There were no restructuring costs for the three months ended September 30, 2024 and 2023.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

The increase in restructuring costs relates to the restructuring we initiated on February 7, 2024.

See Note 12, Restructuring for further details.

Three months ended March 31, 2025 compared with three months ended March 31, 2024

The decrease in restructuring costs relates to the restructuring we initiated on February 7, 2024.

There were no restructuring costs for the three months ended March 31, 2025.

See note 11 Restructuring for further information.

Other Income, net

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Other income, net, comprises primarily interest income on our short-term investments.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Other income, net increased from the prior period due to increased interest income given higher invested balances and higher interest rates.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Other income, net, increased from the prior period due to increased interest income given higher invested balances and higher interest rates.

Income From Settlement of Litigation

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Income from settlement of litigation

Three months ended September 30, 2024 compared with three months ended September 30, 2023

There was no income from litigation for the three months ended September 30, 2024 and 2023.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

The increase in income from settlement of litigation relates to the Settlement Agreement with NXP on March 13, 2024.

See Note 6, Commitments and Contingencies for further details.

Three months ended March 31, 2025 compared with three months ended March 31, 2024

The decrease in income from settlement of litigation is related to the litigation settlement we reached with NXP on March 13, 2024.

There was no income from litigation for the three months ended March 31, 2025.

See note 6 Commitments and Contingencies for further information.

Interest Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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Interest expense comprises primarily cash interest and amortization of debt issuance costs on our debt.

Three months ended September 30, 2024 compared with three months ended September 30, 2023

Interest expense was comparable for the periods.

Nine months ended September 30, 2024 compared with nine months ended September 30, 2023

Three months ended March 31, 2025 compared with three months ended March 31, 2024

Interest expense was comparable for the periods.

Income Tax Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Income tax benefit (expense)

Income tax benefit

We are subject to federal and state income taxes in the United States and foreign jurisdictions.

Income tax expense increased $0.4 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, compared to the prior-year periods due to changes in our estimated effective tax rate.

Non-GAAP Financial Measures

Our key non-GAAP performance measures include adjusted EBITDA and non-GAAP net income (loss), as defined below.

We use adjusted EBITDA and non-GAAP net income (loss) as key measures to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operating plans.

We believe these measures provide useful information for period-to-period comparisons of our business to allow investors and others to understand and evaluate our operating results in the same manner as our management and board of directors.

Our presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from similarly termed non-GAAP measures used by other companies.

Adjusted EBITDA

We define adjusted EBITDA as net income (loss) determined in accordance with GAAP, excluding, if applicable for the periods presented, the effects of stock-based compensation;

depreciation and amortization;

restructuring costs;

settlement income and related costs;

induced conversion expense;

other income, net;

interest expense;

acquisition related expense and related purchase accounting adjustments;

and income tax benefit (expense).

During the year ended December 31, 2023, we revised our definition of adjusted EBITDA to exclude acquisition related expenses, related purchase accounting adjustments and amortization of intangibles in connection with our Voyantic Oy acquisition.

During the three months ended March 31, 2024, we further revised our definition of adjusted EBITDA to exclude settlement income.

We have excluded these items because we do not believe they reflect our core operations and us excluding them enables more consistent evaluation of our operating performance.

The revision to our definition of adjusted EBITDA did not impact adjusted EBITDA for any previously reported periods because there was no impact of a similar nature in such prior periods affecting comparability.

The following table presents a reconciliation of net loss to adjusted EBITDA:

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Net income (loss)

Other income, net

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Stock-based compensation

Restructuring costs

Acquisition related expense

Purchase accounting adjustments

Income on settlement of litigation

Adjusted EBITDA

Non-GAAP Net Income (Loss)

We define non-GAAP net income as net income (loss), excluding, if applicable for the periods presented, the effects of stock-based compensation;

depreciation and amortization;

restructuring costs;

settlement income and related costs;

induced conversion expense;

acquisition related expense and related purchase accounting adjustments;

and the corresponding income tax impacts of adjustments to net income (loss).

During the year ended December 31, 2023, we revised our definition of non-GAAP net income to adjust for acquisition related expenses, related purchase accounting adjustments and amortization of intangibles in connection with our Voyantic Oy acquisition.

During the three months ended March 31, 2024, we further revised our definition of non-GAAP net income to exclude settlement income.

The revisions to our definition of non-GAAP net income did not impact non-GAAP net income for any previously reported periods because there was no impact of a similar nature in such prior periods affecting comparability.

Additionally, during the year ended December 31, 2023, we revised our definition of non-GAAP net income (loss) to adjust for income tax effects of adjustments to net income (loss), calculated at the statutory rate for current and historical periods.

We have revised the prior period amounts to conform to our current period presentation.

The following table presents a reconciliation of net loss to non-GAAP net income (loss):

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Net income (loss)

Depreciation and amortization

Stock-based compensation

Restructuring costs

Acquisition related expense

Purchase accounting adjustments

Income on settlement of litigation

Income tax effects of adjustments (1)

Non-GAAP net income

(1) The tax effects of the adjustments are calculated using the statutory rate, taking into consideration the nature of the item and relevant taxing jurisdiction.

Income tax benefit increased $0.3 million for the three months ended March 31, 2025, compared to the prior-year period due to changes in income (loss).

Liquidity and Capital Resources

As of September 30, 2024, we had cash, cash equivalents and short-term investments of $170.3 million, comprising cash deposits held at major financial institutions and short-term investments in a variety of securities, including U.S.

As of March 31, 2025, we had cash, cash equivalents and short-term investments of $147.9 million, comprising cash deposits held at major financial institutions and short-term investments in a variety of securities, including U.S.

government securities, treasury bills, corporate notes and bonds, commercial paper and money market funds.

As of September 30, 2024, we had working capital of $(2.0) million, down from $39.4 million as of June 30, 2024.

The decrease was driven by purchases of long-term investments in third-quarter 2024.

As of March 31, 2025, we had working capital of $280.4 million.

Historically, we have funded our operations primarily through cash generated from operations and by issuing equity securities, convertible-debt offerings and/or borrowing under our prior senior credit facility.

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The following table shows a summary of our cash flows for the periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Net cash provided by (used in) operating activities

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Net cash provided by financing activities

Operating Cash Flows

For the nine months ended September 30, 2024, we generated $115.7 million of net cash from operating activities.

These net cash proceeds were due primarily to $96.9 million of net income adjusted for non-cash items and $18.8 million in working capital due primarily to higher accounts payable, accrued compensation and lower inventory, partially offset by higher accounts receivable.

For the nine months ended September 30, 2023, we used $50.8 million of net cash from operating activities.

This net cash usage was due primarily to $67.0 million in working capital due primarily to higher inventory and lower accounts payable and $16.2 million of net loss adjusted for non-cash items.

For the three months ended March 31, 2025, we used $11.1 million of net cash in operating activities.

This net cash usage was due primarily to $18.5 million in working capital due primarily to lower accrued compensation and accounts payable.

The usage was partially offset by $7.3 million of net income adjusted for non-cash items.

Investing Cash Flows

For the nine months ended September 30, 2024, we used $148.7 million of net cash from investing activities.

This net cash usage was due to purchases of investments of $154.3 million, cash paid for equipment purchases of $13.0 million, partially offset by cash generated by investment maturities of $18.6 million.

For the nine months ended September 30, 2023, we generated $101.5 million of net cash from investing activities.

These net cash proceeds were due primarily to investment maturities of $127.5 million and investment sales of $13.4 million, partially offset by cash paid for the Voyantic Oy acquisition of $23.4 million and net property and equipment purchases of $16.0 million.

For the three months ended March 31, 2025, we generated $21.2 million of net cash proceeds from investing activities.

These net cash proceeds were due to investment maturities of $49.0 million, partially offset by purchases of investments of $25.9 million and cash paid for equipment purchases of $1.9 million.

Financing Cash Flows

For the nine months ended September 30, 2024, we generated $11.9 million of net cash from financing activities.

These net cash proceeds were due to stock-option exercises and our employee stock purchase plan, offset by $4.6 million of cash paid for the earnout payment related to the Voyantic Oy acquisition.

For the nine months ended September 30, 2023, we generated $7.9 million of net cash from financing activities.

These net cash proceeds were due primarily to $7.9 million from stock-option exercises and our employee stock purchase plan.

For the three months ended March 31, 2025, we generated $5.1 million of net cash from financing activities.

These net cash proceeds were due to stock-option exercises and our employee stock purchase plan, offset by $0.8 million taxes paid to cover RSU vesting.

Cash Requirements and Contractual Obligations

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Our operating expenses have generally increased as we invest in developing products and technologies that we believe have the potential to drive long-term business growth.

Convertible Notes – As of September 30, 2024 the principal balance outstanding on the 2021 Notes is $287.5 million.

Convertible Notes – As of March 31, 2025, the principal balance outstanding on the 2021 Notes is $287.5 million.

Refer to Note 7 of our Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for maturity date, stated interest rate and additional information on our 2021 Notes.

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For additional information regarding our operating leases, see Note 11 of our Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2024.

Purchase Commitments – Purchase commitments as of September 30, 2024 total $32.9 million and comprise noncancelable commitments to purchase inventory.

Purchase Commitments – Purchase commitments as of March 31, 2025 total $31.3 million and comprise noncancelable commitments to purchase inventory.

Off-Balance-Sheet Arrangements

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We have prepared our condensed consolidated financial statements in accordance with GAAP.

Our preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue,

expenses and related disclosures.

Our preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.

We evaluate our estimates and assumptions on an ongoing basis.

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We do not enter into investments for trading or speculative purposes.

We had cash, cash equivalents and short-term investments of $170.3 million as of September 30, 2024.

We had cash, cash equivalents and short-term investments of $147.9 million as of March 31, 2025.

Our investments are exposed to market risk due to fluctuations in prevailing interest rates, which may reduce the yield on our investments or their fair value.

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dollars are included in other income, net, on the consolidated statements of operations.

One of our European subsidiaries utilize Euros as their functional currency, which results in a translation adjustment that we include as a component of accumulated other comprehensive income.

Our Voyantic subsidiary uses Euros as their functional currency, which results in a translation adjustment that we include as a component of accumulated other comprehensive income.

For any of the periods presented, we did not have material impact from exposure to foreign currency fluctuation.

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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