What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-29 compared with 2025-10-29 · 103 added, 175 removed, 179 unchanged (61% of the section changed)

10 unchanged sentences

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

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

• the impact of tariffs, trade measures, geopolitical, inflationary 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;

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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.

We are today focused on extending item connectivity from tens of billions to trillions of items, and delivering item data not just to enterprises but to people, so they too can derive value from their connected items.

We believe the Boundless IoT we are enabling will, in the not-too-distant future, give people ubiquitous access to cloud-based digital twins of every item, each storing the item’s history and linked information and helping people explore and learn about the item.

We have enabled connectivity for more than 150 billion items to date, delivering item visibility, traceability and improved 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.

We are today focused on extending item connectivity from tens of billions to trillions of items and delivering item data not just to enterprises but to people, so they too can benefit from their connected items.

We believe the Boundless IoT we are enabling will, in the not-too-distant future, give people ubiquitous access to cloud-based digital twins of every item, each storing the item’s history, location and linked information and helping people explore and learn about the item.

We believe that that connectivity will transform the world.

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 services that encapsulate our solutions know-how;

and intellectual property.

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

The first are endpoint ICs that store a serialized number to wirelessly identify an item.

We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon radios, reading systems, tag production systems and intellectual property.

We also offer software and cloud services, and while nascent from a standalone revenue perspective, they enable our other product offerings and we intend to expand them as a part of our growth strategy.

We sell two types of silicon radios.

The first are endpoint ICs that store a serialized number to wirelessly identify an

Our partners embed endpoint ICs into an item or its packaging.

The ICs may also contain a cryptographic key to authenticate the item.

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.

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

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

Our software and services focus on solutions enablement.

These ICs may also contain a cryptographic key to authenticate the item.

The second are reader ICs that our partners use in embedded or 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.

Our reading systems comprise high-performance finished readers and gateways used primarily in autonomous reading solutions.

Our tag production systems enable partner products and facilitate enterprise deployments.

Our software and cloud service offerings focus on solutions enablement, particularly for key enterprise customers.

We sell our products, individually or as a whole platform offering, primarily with or through our partner ecosystem.

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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.

The RAIN industry, on both 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 are subject to impacts from the evolving macroeconomic environment, including uncertainty and volatility in trade measures and tariffs, as well as military conflicts or blockades, inflation and geopolitical tensions.

While the impact that recent trade measures, military conflicts or blockades, inflation and geopolitical tensions 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.

See risk factors “Changes in global trade policies could have a material adverse effect on us.” and “Instability or deterioration in the political, legal, social, business or economic conditions in the U.S.

or in key jurisdictions could harm our business.” in Part II, Item 1A.

of this report for further information.

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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.

As a result, we sometimes experience inventory overages or shortages.

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

This challenge can be exacerbated when major end users adjust the mix of inlay providers from which they procure inlays incorporating our endpoint ICs.

We also sometimes experience inventory overages or shortages.

Inventory overages can increase expenses, expose us to product obsolescence and/or increased reserves and negatively affect our business.

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We did not have comparable project-based revenue in 2020.

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.

While we continue generating project-based revenue, we have not seen it at a comparable scale in 2022 to 2024, or in the first three quarters of fiscal year 2025.

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.

While we continue generating project-based revenue, we did not see it at a comparable percentage in 2022 to 2025, or in the first quarter of fiscal year 2026.

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 but began to see them in second half 2024 and into 2025.

We do expect continued quarter-to-quarter revenue and gross margin variability due to macroeconomic conditions, program-launch timing and our ability to migrate OEMs and end users to newer, lower cost products.

These variables, among others, may impact seasonal trends in the near term, given current retail uncertainty and other market dynamics, and in the future.

We saw these seasonal trends in second-half 2024 and in 2025.

We expect continued quarter-to-quarter revenue and gross margin variability due to macroeconomic conditions, program-launch timing and our ability to migrate OEMs and end users to newer, lower cost products.

These factors, among others, may impact seasonal trends.

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)

Income (loss) from operations

Three months ended September 30, 2025 compared with three months ended September 30, 2024

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

The systems revenue increase was driven primarily by increased shipment volumes while the endpoint IC revenue decrease was driven primarily by lower ASP when compared to the prior-year period.

Gross margin was comparable to the prior-year period.

Income from operations increased, due primarily to increased revenue and decreased operating expenses.

The operating expense decrease was due to lower general and administrative and sales and marketing costs.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

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

The endpoint IC revenue decrease was driven primarily by lower ASP when compared to the prior-year period and the systems revenue increase was driven primarily by increased shipment volumes when compared to the prior-year period.

Gross margin increased, due primarily to lower indirect costs in the current year compared to the prior-year period.

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

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

Three Months Ended September 30,

Nine Months Ended September 30,

Loss from operations

Three months ended March 31, 2026 compared with three months ended March 31, 2025

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

The systems revenue decrease was driven primarily by decreased shipment volumes while the endpoint IC revenue increase was driven primarily by increased shipment volumes.

Gross margin decreased due to high indirect costs in the period partially offset by higher endpoint IC gross margin due to product mix.

Loss from operations increased, due primarily to decreased revenue and increased operating expenses.

The operating expense increase was due primarily to higher research and development and sales and marketing costs.

Three Months Ended March 31,

(in thousands)

Total revenue

We currently derive substantially all our revenue from sales of endpoint ICs, reader ICs, readers, gateways, test and measurement solutions and licensing.

We sell our endpoint ICs and test and measurement solutions primarily to inlay manufacturers;

We currently derive substantially all our revenue from sales of endpoint ICs, reader ICs, readers, gateways, tag production systems and licensing.

We sell our endpoint ICs and tag production systems primarily to inlay manufacturers;

our reader ICs primarily to OEMs and ODMs through distributors;

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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, 2025 compared with three months ended September 30, 2024

Endpoint IC revenue decreased $2.2 million, due to a $7.5 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 $5.3 million increase in shipment volumes.

Systems revenue increased $3.0 million due primarily to an increase in shipment volumes.

Reader revenue increased by $3.5 million and gateway revenue increased $0.9 million.

These increases were partially offset by a decrease of $1.6 million in reader IC revenue.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Endpoint IC revenue decreased $7.2 million, due to a $24.6 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 $16.3 million increase in shipment volumes and a $1.0 million increase in licensing revenue.

Systems revenue increased $1.0 million due primarily to an increase in shipment volumes.

Reader revenue increased by $5.5 million.

This increase was partially offset by decreases of $3.2 million in reader IC revenue, $0.9 million in gateway revenue and $0.7 million in test and measurement solutions revenue.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Endpoint IC revenue increased $2.0 million, due to a $7.9 million increase in shipment volumes offset by a $5.9 million decrease from lower ASP due to product mix and new customer pricing that went into effect at the beginning of the year.

Systems revenue decreased $2.0 million due primarily to a decrease in shipment volumes.

Reader IC revenue decreased $2.6 million and gateway revenue decreased $1.1 million.

These decreases were partially offset by an increase of $0.8 million in reader revenue and $0.6 million in tag production systems revenue.

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.

Cost of revenue includes costs associated with manufacturing our endpoint ICs, reader ICs, readers, gateways and tag production systems, including direct materials and outsourced manufacturing costs as well as associated overhead costs such as 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, 2025 compared with three months ended September 30, 2024

Gross profit increased, due primarily to increased systems revenue.

Gross margin increased, due primarily to lower indirect costs in the current year compared to the prior-year period.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Gross profit decreased, due primarily to decreased endpoint IC revenue.

Gross margin increased, due primarily to lower indirect costs in the current year compared to the prior-year period.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Gross profit and gross margin decreased, due primarily to higher indirect costs in the current year compared to the prior-year period and revenue mix, partially offset by higher endpoint IC gross margin due to product mix.

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, 2025 compared with three months ended September 30, 2024

Research and development expense increased $0.2 million, due primarily to increases of $1.2 million in product development costs due to timing and an increase $0.8 million in infrastructure costs, partially offset by a decrease of $1.9 million in personnel expenses related to lower bonus achievement compared to the prior-year period.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Research and development expense increased $2.8 million, due primarily to increases of $2.6 million in product development costs due to timing;

$1.7 million in infrastructure costs;

and $1.2 million in stock-based compensation expense, primarily related to increased outstanding equity grants.

These increases were partially offset by a decrease of $2.9 million in personnel expenses related to lower bonus achievement compared to the prior-year period.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Research and development expense increased $3.4 million, due primarily to increases of $2.6 million in personnel expenses due to higher headcount, an increase of $0.6 million in infrastructure costs and an increase of $0.2 million in stock-based compensation expense, primarily related to increased outstanding equity grants.

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, 2025 compared with three months ended September 30, 2024

Sales and marketing expense decreased $0.5 million, due primarily to a decrease of $0.5 million in stock-based compensation expense related to timing of annual equity grants and lower expense resulting from the retirement of our Chief Revenue Officer in the first quarter of fiscal year 2025.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Sales and marketing expense decreased $3.7 million, due primarily to a decrease of $3.4 million in stock-based compensation expense, driven by forfeitures related to the retirement of our Chief Revenue Officer in the first quarter of fiscal year 2025 and the resulting lower ongoing expense, and a decrease of $0.5 million in personnel expenses related to lower bonus achievement compared to the prior-year period.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Sales and marketing expense increased $1.7 million, due primarily to an increase of $2.1 million in stock-based compensation expense related to lower expense in the prior-year period from the retirement of our Chief Revenue Officer.

This increase is partially offset by a decrease of $0.4 million in personnel expenses.

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, 2025 compared with three months ended September 30, 2024

General and administrative expense decreased $0.4 million, due primarily to a decrease of $1.0 million in personnel expenses related to lower bonus achievement compared to the prior-year period, partially offset by an increase of $0.2 million in stock-based compensation expense related to timing of annual equity grants and an increase of $0.2 million in professional services related to consulting fees.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

General and administrative expense decreased $2.8 million, due primarily to a decrease of $2.0 million in professional services related to legal fees and a decrease of $2.0 million in personnel expenses related to lower bonus achievement compared to the prior-year period.

This decrease was partially offset by an increase of $0.9 million in stock compensation expense related to increased outstanding equity grants.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

General and administrative expense was comparable for the periods.

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, 2025 compared with three months ended September 30, 2024

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Amortization of intangibles was comparable for the periods.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

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.

Restructuring Costs

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Restructuring costs

Three months ended September 30, 2025 compared with three months ended September 30, 2024

There were no restructuring costs for the periods.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

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

There were no restructuring costs for the nine months ended September 30, 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, 2025 compared with three months ended September 30, 2024

Other income, net, was comparable for the periods.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

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

Income From Settlement of Litigation

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)

Income from settlement of litigation

Three months ended September 30, 2025 compared with three months ended September 30, 2024

There was no income from settlement of litigation for the periods.

Nine months ended September 30, 2025 compared with nine months ended September 30, 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 nine months ended September 30, 2025.

See Note 6 Commitments and Contingencies for further information.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Other income, net, increased $0.6 million, due to increased interest income given higher invested balances.

Induced Conversion Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Induced conversion expense

Three and nine months ended September 30, 2025 compared with three and nine months ended September 30, 2024

In September 2025, we completed a privately negotiated exchange of $190.0 million principal amount of the 2021 Convertible Notes, or the 2021 Note Exchange.

The 2021 Note Exchange transaction was accounted for as an induced conversion in accordance with Accounting Standards Codification 470-20, Debt with Conversion and Other Options (ASC 470-20), as amended for ASU 2024-04.

As a result of the induced conversion, we recorded $15.0 million in induced conversion expense which is included in the Consolidated Statements of Operations for the three and nine months ended September 30, 2025.

The induced conversion expense represents the fair value of the consideration issued upon conversion in excess of the fair value of the securities issuable under the original terms of the 2021 Convertible Notes.

See Note 7 Long-term Debt for further information.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

In March 2026, we completed a privately negotiated induced conversion of $40.2 million principal amount of the 2021 Notes.

We accounted for the 2021 Note Repurchase as an induced conversion in accordance with Accounting Standards Codification 470-20, Debt with Conversion and Other Options (ASC 470-20) as amended for ASU 2024-04.

As a result of the induced conversion, we recorded $11.9 million in induced conversion expense, which is included in the Condensed Consolidated Statements of Operations.

The induced conversion expense represents the fair value of the consideration issued upon conversion in excess of the fair value of the securities issuable under the original terms of the 2021 Notes.

See Note 7 to our Condensed Consolidated financial statements included elsewhere in this report 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, 2025 compared with three months ended September 30, 2024

Interest expense was comparable for the periods.

Nine months ended September 30, 2025 compared with nine months ended September 30, 2024

Interest expense was comparable for the periods.

Three months ended March 31, 2026 compared with three months ended March 31, 2025

Interest expense decreased by $0.5 million, due primarily to decreased interest on our convertible debt, primarily from the 2021 Note Exchange transaction, which was completed in September 2025.

Income Tax Expense

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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

Income tax benefit increased $0.3 million for the three months ended September 30, 2025 and income tax benefit increased $0.4 million for the nine months ended September 30, 2025, each compared to the prior-year periods, due to changes in income (loss).

On July 4, 2025, President Trump signed H.R.

1, the “One Big Beautiful Bill Act”, into law.

One key provision, applicable to us, is the treatment of domestic research and experimental expenditures, which can now be capitalized or expensed currently.

We are currently evaluating the available implementation options and expect to finalize our approach in the fourth quarter of calendar year 2025.

In accordance with U.S.

GAAP, we have also assessed the impact of the OBBBA on our annual consolidated financial statements and related disclosures and do not expect a material impact given we have a full valuation allowance on our U.S.

deferred tax assets.

Income tax expense increased $0.3 million for the three months ended March 31, 2026, compared to the prior-year period, due to changes in effective tax rates for each period.

On July 4, 2025, President Trump signed Public Law No.

119-21 - An Act to Provide for Reconciliation Pursuant to Title II of H.

14, or “H.R.1”, into law.

One key provision, applicable to us, is the treatment of domestic research and experimental expenditures, which can now be capitalized or expensed.

As previously required under the Tax Cuts and Jobs Act, we capitalized research and development expenditures in the years ended December 31, 2022 through December 31, 2024.

With the enactment of H.R.1, we began deducting domestic Section 174 costs in 2025.

Liquidity and Capital Resources

As of September 30, 2025, we had cash, cash equivalents and short-term investments of $190.1 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, 2026, we had cash, cash equivalents and short-term investments of $131.8 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, 2025, we had working capital of $220.0 million.

As of March 31, 2026, we had working capital of $266.5 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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In November 2021, we issued convertible notes due 2027 in an aggregate principal amount of $287.5 million, or the 2021 Notes.

The 2021 Notes are our senior unsecured obligation, bearing interest at a fixed rate of 1.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2022.

The 2021 Notes are convertible into cash, shares of our common stock or a combination thereof, at our election, and will mature on May 15, 2027 unless earlier repurchased, redeemed or converted in accordance with the terms of the terms of the Indenture governing the 2021 Notes.

The net proceeds from the 2021 Notes were approximately $278.4 million after initial debt issuance costs, fees and expenses.

We used approximately $183.6 million of the net proceeds to repurchase approximately $76.4 million aggregate principal amount of convertible notes due 2026, or the 2019 Notes, through individual privately negotiated transactions concurrent with the 2021 Notes offering.

We used $17.6 million to repurchase the remaining $9.85 million aggregate principal of the 2019 Notes through individual privately negotiated transactions in June 2022.

We will use the rest of the net proceeds for general corporate purposes.

In September 2025, we completed a privately negotiated exchange of $190.0 million principal amount of the 2021 Convertible Notes, or the 2021 Note Exchange.

The 2021 Note Exchange was accounted for as an induced conversion in accordance with Accounting Standards Codification 470-20, Debt with Conversion and Other Options (ASC 470-20) and in accordance with ASU 2024-04:

In September 2025, we completed the 2021 Note Exchange, and in March 2026, we completed the 2021 Note Repurchase.

We accounted for the 2021 Note Exchange and the 2021 Note Repurchase as induced conversions in accordance with Accounting Standards Codification 470-20, Debt with Conversion and Other Options (ASC 470-20) and in accordance with ASU 2024-04:

Debt—Debt with Conversion and Other Options (Subtopic 470-20) - Induced Conversions of Convertible Debt Instruments, which we early adopted as of January 1, 2025.

In connection with the induced conversion, we paid $190.0 million in cash, representing the principal amount exchanged, issued approximately 811,000 shares of our common stock, representing the exchange value in excess thereof, and also paid accrued and unpaid interest thereon.

Refer to below discussion of 2025 Notes for further information.

For further information on the terms of this debt, please refer to Note 7 to our Condensed Consolidated Financial Statements included elsewhere in this report.

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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 operating activities

Net cash used in investing activities

Net cash provided by (used in) operating activities

Net cash provided by investing activities

Net cash provided by (used in) financing activities

Operating Cash Flows

For the nine months ended September 30, 2025, we generated $43.6 million of net cash proceeds from operating activities.

These net cash proceeds were due primarily to $55.6 million of net income adjusted for non-cash items, partially offset by a $12.0 million decrease in working capital due primarily to lower accrued compensation.

For the three months ended March 31, 2026, we generated $4.0 million of net cash proceeds from operating activities.

These net cash proceeds were due primarily to $5.4 million of net income adjusted for non-cash items, partially offset by a $1.5 million decrease in working capital due primarily to higher inventory and accounts receivable, partially offset by higher accounts payable.

Investing Cash Flows

For the nine months ended September 30, 2025, we used $29.2 million of net cash for investing activities.

This net cash was used for purchases of investments of $146.3 million and equipment purchases of $11.3 million, partially offset by cash generated from investment maturities and sales of $128.4 million.

For the three months ended March 31, 2026, we generated $25.7 million of net cash proceeds from investing activities.

These net cash proceeds were due to investment maturities of $48.7 million, partially offset by investment purchases of $21.2 million and equipment purchases of $1.7 million.

Financing Cash Flows

For the nine months ended September 30, 2025, we used $9.1 million of net cash from financing activities.

This net cash was used for payment of our 2021 Notes of $190 million, premiums paid for capped call transactions of $11.2 million and $2.6 million in taxes paid to cover RSU vesting.

This net cash usage was offset by $183.7 million of net proceeds from issuance of our 2025 Notes and $11.0 million of proceeds from stock-option exercises and our employee stock purchase plan.

For the three months ended March 31, 2026, we used $45.6 million of net cash from financing activities to purchase a portion of our 2021 Notes for $47.0 million and pay $1.6 million in taxes to cover RSU vesting, partially offset by proceeds of $3.0 million from stock-option exercises and our employee stock purchase plan.

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, 2025, the principal balance outstanding on the 2021 Notes and 2025 Notes is $97.5 million and $190.0 million, respectively.

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 the Notes.

Convertible Notes – As of March 31, 2026, the principal balance outstanding on the 2021 Notes and 2025 Notes is $57.3 million and $190.0 million, respectively.

Refer to Note 7 to our Condensed Consolidated Financial Statements included elsewhere in this report for maturity date, stated interest rate and additional information on the Notes.

Operating Lease Obligations – Our lease portfolio comprises primarily operating leases for our office space.

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, 2025.

Purchase Commitments – Purchase commitments as of September 30, 2025 total $24.6 million and comprise noncancelable commitments to purchase inventory.

Purchase Commitments – Purchase commitments as of March 31, 2026 total $41.7 million and consist primarily of noncancelable commitments to purchase inventory.

Off-Balance-Sheet Arrangements

14 unchanged sentences

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

We had cash, cash equivalents and short-term investments of $190.1 million as of September 30, 2025.

We had cash, cash equivalents and short-term investments of $131.8 million as of March 31, 2026.

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.

11 unchanged sentences

Accordingly, gains and losses resulting from remeasuring transactions denominated in currencies other than U.S.

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

dollars are included in other income, net, on the Condensed Consolidated Statements of Operations.

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.

2 unchanged sentences

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