SILICON LABORATORIES INC. 10-Q

Item 1. Financial Statements Silicon Laboratories Inc. Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) July 5, 2025 December 28, 2024 Assets Current assets: Cash and cash equivalents $ 314,459 $ 281,607 Short-term investments 101,081 100,554 Accounts receivable, net 56,496 54,479 Inventories 80,871 105,639 Prepaid expenses and other current assets 64,841 59,754 Total current assets 617,748 602,033 Property and equipment, net 131,283 132,136 Goodwill 376,389 376,389 Other intangible assets, net 27,719 36,499 Other assets, net 67,926 75,617 Total assets $ 1,221,065 $ 1,222,674 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 58,161 $ 42,448 Deferred revenue and returns liability 3,856 3,073 Other current liabilities 58,657 52,362 Total current liabilities 120,674 97,883 Other non-current liabilities 39,311 44,770 Total liabilities 159,985 142,653 Commitments and contingencies Stockholders’ equity: Preferred stock – $ 0.0001 par value; 10,000 shares authorized; no shares issued — — Common stock – $ 0.0001 par value; 250,000 shares authorized; 32,815 and 32,458 shares issued and outstanding at July 5, 2025 and December 28, 2024, respectively 3 3 Additional paid-in capital 111,562 78,227 Retained earnings 949,434 1,001,721 Accumulated other comprehensive income 81 70 Total stockholders’ equity 1,061,080 1,080,021 Total liabilities and stockholders’ equity $ 1,221,065 $ 1,222,674 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 Table of Contents Silicon Laboratories Inc. Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Revenues $ 192,845 $ 145,367 $ 370,559 $ 251,742 Cost of revenues 84,736 68,784 164,673 120,090 Gross profit 108,109 76,583 205,886 131,652 Operating expenses: Research and development 87,821 85,909 176,040 166,559 Selling, general and administrative 43,155 38,695 84,793 72,248 Operating expenses 130,976 124,604 260,833 238,807 Operating loss ( 22,867 ) ( 48,021 ) ( 54,947 ) ( 107,155 ) Other income (expense): Interest income and other, net 3,833 2,790 7,626 5,522 Interest expense ( 251 ) ( 263 ) ( 535 ) ( 772 ) Loss before income taxes ( 19,285 ) ( 45,494 ) ( 47,856 ) ( 102,405 ) Provision for income taxes 2,532 36,663 4,431 36,278 Net loss $ ( 21,817 ) $ ( 82,157 ) $ ( 52,287 ) $ ( 138,683 ) Loss per share: Basic $ ( 0.67 ) $ ( 2.56 ) $ ( 1.61 ) $ ( 4.33 ) Diluted $ ( 0.67 ) $ ( 2.56 ) $ ( 1.61 ) $ ( 4.33 ) Weighted-average common shares outstanding: Basic 32,682 32,124 32,570 32,018 Diluted 32,682 32,124 32,570 32,018 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 Table of Contents Silicon Laboratories Inc. Condensed Consolidated Statements of Comprehensive Loss (In thousands) (Unaudited) Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Net loss $ ( 21,817 ) $ ( 82,157 ) $ ( 52,287 ) $ ( 138,683 ) Other comprehensive income (loss), before tax: Net changes to available-for-sale securities: Unrealized gains (losses) arising during the period ( 295 ) 247 49 871 Reclassification for losses (gains) included in net loss ( 5 ) 26 ( 25 ) 41 Net changes to cash flow hedges: Unrealized gains arising during the period 269 — 269 275 Reclassification for gains included in net loss ( 279 ) — ( 279 ) ( 234 ) Other comprehensive income (loss), before tax ( 310 ) 273 14 953 Provision (benefit) for income taxes related to items of other comprehensive income (loss) ( 64 ) 50 3 182 Other comprehensive income (loss) ( 246 ) 223 11 771 Comprehensive loss $ ( 22,063 ) $ ( 81,934 ) $ ( 52,276 ) $ ( 137,912 ) The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 Table of Contents Silicon Laboratories Inc. Condensed Consolidated Statements of Changes in Stockholders’ Equity (In thousands) (Unaudited) Three Months Ended July 5, 2025 Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance as of April 5, 2025 32,473 $ 3 $ 96,838 $ 971,251 $ 327 $ 1,068,419 Net loss — — — ( 21,817 ) — ( 21,817 ) Other comprehensive loss — — — — ( 246 ) ( 246 ) Stock issuances, net of shares withheld for taxes 342 — ( 5,175 ) — — ( 5,175 ) Stock-based compensation — — 19,899 — — 19,899 Balance as of July 5, 2025 32,815 $ 3 $ 111,562 $ 949,434 $ 81 $ 1,061,080 Three Months Ended June 29, 2024 Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance as of March 30, 2024 31,924 $ 3 $ 29,830 $ 1,136,205 $ ( 477 ) $ 1,165,561 Net loss — — — ( 82,157 ) — ( 82,157 ) Other comprehensive income — — — — 223 223 Stock issuances, net of shares withheld for taxes 365 — ( 6,397 ) — — ( 6,397 ) Stock-based compensation — — 15,799 — — 15,799 Balance as of June 29, 2024 32,289 $ 3 $ 39,232 $ 1,054,048 $ ( 254 ) $ 1,093,029 Six Months Ended July 5, 2025 Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance as of December 28, 2024 32,458 $ 3 $ 78,227 $ 1,001,721 $ 70 $ 1,080,021 Net loss — — — ( 52,287 ) — ( 52,287 ) Other comprehensive income — — — — 11 11 Stock issuances, net of shares withheld for taxes 357 — ( 6,133 ) — — ( 6,133 ) Stock-based compensation — — 39,468 — — 39,468 Balance as of July 5, 2025 32,815 $ 3 $ 111,562 $ 949,434 $ 81 $ 1,061,080 Six Months Ended June 29, 2024 Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Balance as of December 30, 2023 31,897 $ 3 $ 16,973 $ 1,192,731 $ ( 1,025 ) $ 1,208,682 Net loss — — — ( 138,683 ) — ( 138,683 ) Other comprehensive income — — — — 771 771 Stock issuances, net of shares withheld for taxes 392 — ( 7,105 ) — — ( 7,105 ) Stock-based compensation — — 29,364 — — 29,364 Balance as of June 29, 2024 32,289 $ 3 $ 39,232 $ 1,054,048 $ ( 254 ) $ 1,093,029 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 6 Table of Contents Silicon Laboratories Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended July 5, 2025 June 29, 2024 Operating Activities Net loss $ ( 52,287 ) $ ( 138,683 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation of property and equipment 12,701 13,152 Amortization of other intangible assets 8,780 12,160 Stock-based compensation expense 39,605 29,455 Deferred income taxes 1,504 29,784 Changes in operating assets and liabilities: Accounts receivable ( 2,017 ) ( 11,918 ) Inventories 24,631 28,123 Prepaid expenses and other assets 5,112 20,723 Accounts payable 12,812 ( 19,341 ) Other current liabilities and income taxes 8,377 ( 13,624 ) Deferred revenue and returns liability 783 1,206 Other non-current liabilities ( 6,965 ) ( 6,703 ) Net cash provided by (used in) operating activities 53,036 ( 55,666 ) Investing Activities Purchases of marketable securities ( 32,507 ) ( 17,700 ) Sales of marketable securities 14,986 34,538 Maturities of marketable securities 17,019 97,458 Purchases of property and equipment ( 13,549 ) ( 5,577 ) Proceeds from sale of equity investment — 12,382 Net cash provided by (used in) investing activities ( 14,051 ) 121,101 Financing Activities Payments on debt — ( 45,000 ) Payment of taxes withheld for vested stock awards ( 13,752 ) ( 15,213 ) Proceeds from the issuance of common stock 7,619 8,108 Net cash used in financing activities ( 6,133 ) ( 52,105 ) Increase in cash and cash equivalents 32,852 13,330 Cash and cash equivalents at beginning of period 281,607 227,504 Cash and cash equivalents at end of period $ 314,459 $ 240,834 The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 7 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. The information included herein contains all normal recurring accruals and adjustments which, in the opinion of management, are necessary to present fairly Silicon Laboratories Inc.’s (the “Company”) financial position, results of its operations, comprehensive loss, stockholders’ equity, and cash flows. The Condensed Consolidated Balance Sheet as of December 28, 2024 was derived from the Company’s audited Consolidated Financial Statements. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated results of operations for the three and six months ended July 5, 2025 are not necessarily indicative of the results to be expected for the full year. These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 28, 2024, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 4, 2025. The Company prepares financial statements on a 52- or 53-week fiscal year that ends on the Saturday closest to December 31. Fiscal 2025 will have 53 weeks with the extra week occurring in the first quarter of the year. Fiscal 2024 had 52 weeks. In a 52-week year, each fiscal quarter consists of 13 weeks. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Among the significant estimates affecting the financial statements are those related to inventories, goodwill, acquired intangible assets, other long-lived assets, revenue recognition, stock-based compensation, and income taxes. Actual results could differ from those estimates, and such differences could be material to the financial statements. The Company periodically reviews the assumptions used in its financial statement estimates. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures . This ASU requires that reporting entities disclose specific categories in the effective tax rate reconciliation as well as information about income taxes paid. The authoritative guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. As the requirements of this ASU are disclosure-related, the adoption will not have an impact on the Company’s consolidated financial position and results of operations. The Company is currently evaluating the impact of this update on its income tax disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) . This ASU requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. This authoritative guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements. 8 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 2. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Net loss $ ( 21,817 ) $ ( 82,157 ) $ ( 52,287 ) $ ( 138,683 ) Shares used in computing basic earnings per share 32,682 32,124 32,570 32,018 Effect of dilutive securities: Stock-based awards — — — — Shares used in computing diluted earnings per share 32,682 32,124 32,570 32,018 Loss per share: Basic $ ( 0.67 ) $ ( 2.56 ) $ ( 1.61 ) $ ( 4.33 ) Diluted $ ( 0.67 ) $ ( 2.56 ) $ ( 1.61 ) $ ( 4.33 ) Diluted shares for the three and six months ended July 5, 2025 excluded 0.2 million and 0.3 million shares, respectively, and for the three and six months ended June 29, 2024 excluded 0.3 million, and 0.3 million shares, respectively, as they were anti-dilutive due to the Company’s net loss for the periods. Securities that were anti-dilutive due to the Company’s stock price and were excluded from the computation of diluted earnings per share for the three and six months ended July 5, 2025 were 0.8 million and 0.5 million, respectively, and for the three and six months ended June 29, 2024 were 0.6 million, and 0.5 million, respectively. 3. Fair Value of Financial Instruments The fair values of the Company’s financial instruments are recorded using a hierarchical disclosure framework based upon the level of subjectivity of the inputs used in measuring assets and liabilities. The three levels are described below: Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs other than Level 1 that are directly or indirectly observable, such as quoted prices for similar assets or liabilities and quoted prices in less active markets. Level 3 - Inputs are unobservable for the asset or liability and are developed based on the best information available in the circumstances, which might include the Company’s own data. 9 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 3. Fair Value of Financial Instruments (Continued) The following summarizes the valuation of the Company’s financial instruments (in thousands). The tables do not include either cash on hand or assets and liabilities that are measured at historical cost or any basis other than fair value. Fair Value Measurements at July 5, 2025 Using Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Total Cash equivalents: Money market funds $ 235,405 $ — $ 235,405 Total cash equivalents $ 235,405 $ — $ 235,405 Short-term investments: Corporate debt securities $ — $ 405 $ 405 Government debt securities — 100,676 100,676 Total short-term investments $ — $ 101,081 $ 101,081 Total $ 235,405 $ 101,081 $ 336,486 Fair Value Measurements at December 28, 2024 Using Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Total Cash equivalents: Money market funds $ 188,057 $ — $ 188,057 Total cash equivalents $ 188,057 $ — $ 188,057 Short-term investments: Corporate debt securities $ — $ 13,514 $ 13,514 Government debt securities — 87,040 87,040 Total short-term investments $ — $ 100,554 $ 100,554 Total $ 188,057 $ 100,554 $ 288,611 Valuation methodology The Company’s short-term investments that are classified as Level 2 are valued using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments in active markets; quoted prices in less active markets; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. 10 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 3. Fair Value of Financial Instruments (Continued) The following summarizes the components of available-for-sale investments (in thousands): Reported As As of July 5, 2025 Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalent Marketable Securities Corporate debt securities $ 407 $ — $ ( 2 ) $ 405 $ — $ 405 Government debt securities 100,561 146 ( 31 ) 100,676 — 100,676 Money market funds 235,405 — — 235,405 235,405 — Total $ 336,373 $ 146 $ ( 33 ) $ 336,486 $ 235,405 $ 101,081 Reported As As of December 28, 2024 Amortized Cost Basis Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalent Marketable Securities Corporate debt securities $ 13,517 $ 12 $ ( 15 ) $ 13,514 $ — $ 13,514 Government debt securities 86,949 141 ( 49 ) 87,040 — 87,040 Money market funds 188,057 — — 188,057 188,057 — Total $ 288,523 $ 153 $ ( 64 ) $ 288,611 $ 188,057 $ 100,554 Contractual maturities of investments The Company’s available-for-sale investments are reported at fair value, with unrealized gains and losses, net of tax, recorded as a component of accumulated other comprehensive income in the Condensed Consolidated Balance Sheet. The following summarizes the contractual underlying maturities of the Company’s available-for-sale investments at July 5, 2025 (in thousands): Cost Fair Value Due in one year or less $ 66,128 $ 66,163 Due after one year through five years 34,840 34,918 $ 100,968 $ 101,081 Unrealized Gains and Losses The available-for-sale investments that were in a continuous unrealized loss position, aggregated by length of time that individual securities have been in a continuous loss position, were as follows (in thousands): Less Than 12 Months 12 Months or Greater Total As of July 5, 2025 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate debt securities $ — $ — $ 291 $ ( 2 ) $ 291 $ ( 2 ) Government debt securities 35,456 ( 31 ) — — 35,456 ( 31 ) $ 35,456 $ ( 31 ) $ 291 $ ( 2 ) $ 35,747 $ ( 33 ) 11 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 3. Fair Value of Financial Instruments (Continued) Less Than 12 Months 12 Months or Greater Total As of December 28, 2024 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate debt securities $ — $ — $ 4,187 $ ( 15 ) $ 4,187 $ ( 15 ) Government debt securities 26,318 ( 49 ) — — 26,318 ( 49 ) $ 26,318 $ ( 49 ) $ 4,187 $ ( 15 ) $ 30,505 $ ( 64 ) The gross unrealized losses as of July 5, 2025 and December 28, 2024 were due primarily to changes in market interest rates. At July 5, 2025 and December 28, 2024, there were no material unrealized gains associated with the Company’s available-for-sale investments. The Company records an allowance for credit loss when a decline in investment market value is due to credit-related factors. When evaluating an investment for impairment, the Company reviews factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, the Company’s intent to sell or the likelihood that it would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. As of July 5, 2025, there were no material declines in the market value of available-for-sale investments due to credit-related factors. Fair values of other financial instruments The Company’s other financial instruments, including cash, accounts receivable and accounts payable, are recorded at amounts that approximate their fair values due to their short maturities. 4. Derivative Financial Instruments The Company may use derivative financial instruments to manage certain exposures to the variability of foreign currency exchange rates. The Company’s objective is to offset increases and decreases in expenses resulting from these exposures with gains and losses on the derivative contracts, thereby reducing volatility of earnings. The Company does not use derivative contracts for speculative or trading purposes. The Company recognizes derivatives, on a gross basis, in the Condensed Consolidated Balance Sheet at fair value. Cash flows from derivatives are classified according to the nature of the cash receipt or payment in the Condensed Consolidated Statement of Cash Flows. Cash Flow Hedges Foreign Currency Forward Contracts The Company may use foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on operating expenses denominated in currencies other than the U.S. dollar. Changes in the fair value of the contracts are recorded in accumulated other comprehensive income in the Condensed Consolidated Balance Sheet and subsequently reclassified into earnings in the period during which the hedged transaction was recognized. The reclassified amount is reported in the same financial statement line item as the hedged item. If the foreign currency forward contracts are terminated or can no longer qualify as hedging instruments prior to maturity, the fair value of the contracts recorded in accumulated other comprehensive income may be recognized in the Condensed Consolidated Statement of Operations based on an assessment of the contracts at the time of termination. The Company has entered into various foreign currency forward contracts for a portion of its forecasted operating expenses for the quarter ended July 5, 2025. As of July 5, 2025, the foreign currency forward contracts denominated in the Norwegian Krone had maturities of one to two months and an aggregate notional value of $ 1.6 million. The fair value of the contracts, contract gains or losses recognized in other comprehensive income (loss) and amounts reclassified from accumulated other comprehensive income into earnings were not material for any of the periods presented and are not expected to be material in the next twelve months. 12 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 4. Derivative Financial Instruments (Continued) Non-designated Hedges Foreign Currency Forward Contracts The Company may use foreign currency forward contracts to reduce the earnings impact that exchange rate fluctuations have on non-U.S. dollar balance sheet exposures. The Company recognizes gains and losses on the foreign currency forward contracts in interest income and other, net in the Condensed Consolidated Statement of Operations. The Company does not apply hedge accounting to these foreign currency forward contracts. As of July 5, 2025, the Company held foreign currency forward contracts denominated in Hungarian Forint with an aggregate notional value of $ 3.7 million. The fair value of the foreign currency forward contracts and contract gains and losses recognized in income were not material for any of the periods presented. All foreign currency forward contracts, both designated and not designated as hedging instruments, are classified within Level 2 as the valuation inputs include foreign exchange rates, forward and spot prices for currencies, and market observable data of similar instruments. 5. Supplemental Information The following table shows the details of selected Condensed Consolidated Balance Sheet items (in thousands): Inventories July 5, 2025 December 28, 2024 Work in progress $ 64,922 $ 83,562 Finished goods 15,949 22,077 $ 80,871 $ 105,639 Lease income The Company leases a portion of its headquarter facilities to other tenants. Lease income from operating leases was $ 0.5 million and $ 0.7 million during the three months ended July 5, 2025 and June 29, 2024, respectively, and $ 1.1 million and $ 1.5 million during the six months ended July 5, 2025 and June 29, 2024, respectively. 6. Debt Credit Facility The Company and certain of its domestic subsidiaries (the “Guarantors”) have a $ 400 million revolving credit facility, as amended on June 30, 2023, with a maturity date of June 30, 2028. The credit facility includes a $ 25 million letter of credit sublimit and a $ 10 million swingline loan sublimit. The Company also has an option to increase the size of the borrowing capacity by up to the greater of an aggregate of $ 250 million and 100 % of EBITDA of the last four fiscal quarters, plus an amount that would not cause a secured net leverage ratio (funded debt secured by assets/EBITDA) to exceed 3.50 to 1.00, subject to certain conditions. The credit facility, other than swingline loans, will bear interest at the Adjusted Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin or, at the option of the Company, a base rate (defined as the highest of the Wells Fargo prime rate, the Federal Funds rate plus 0.50 % and the Adjusted Term SOFR plus 1.00 %) plus an applicable margin. Swingline loans accrue interest at the base rate plus the applicable margin for base rate loans. The applicable margins for the Adjusted Term SOFR loans range from 1.00 % to 1.75 % and for base rate loans range from 0.00 % to 0.75 %, depending in each case, on the leverage ratio as defined in the credit facility. 13 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 6. Debt (Continued) The credit facility contains various conditions, covenants and representations with which the Company must be in compliance in order to borrow funds and to avoid an event of default, including financial covenants that the Company must maintain a consolidated net leverage ratio (funded indebtedness less cash and cash equivalents up to $ 750 million and divided by EBITDA) of no more than 4.25 to 1, and a minimum interest coverage ratio (EBITDA/interest payments) of no less than 2.50 to 1. The Company was granted a waiver of compliance for the minimum interest coverage ratio through October 4, 2025. As of July 5, 2025, the Company was in compliance with all covenants of the credit facility, including the minimum interest coverage ratio. The Company’s obligations under the credit facility are guaranteed by the Guarantors and are secured by a security interest in substantially all assets of the Company and the Guarantors. As of July 5, 2025, no amounts were outstanding on the credit facility. 7. Commitments and Contingencies Litigation The Company is involved in various legal proceedings that have arisen in the normal course of business. While the ultimate results cannot be predicted with certainty, the Company does not expect them to have a material adverse effect on its Condensed Consolidated Financial Statements. 8. Revenues The Company groups its products as Industrial & Commercial or Home & Life based on the target markets they address. The following represents revenue by product category (in thousands): Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Industrial & Commercial $ 109,787 $ 88,083 $ 205,763 $ 153,345 Home & Life 83,058 57,284 164,796 98,397 $ 192,845 $ 145,367 $ 370,559 $ 251,742 A portion of the Company’s sales are made to distributors under agreements allowing certain rights of return and/or price protection related to the final selling price to the end customers. These factors impact the timing and uncertainty of revenues and cash flows. During the three and six months ended July 5, 2025 and June 29, 2024, the impact of revenue related to performance obligations that were satisfied in previous reporting periods was insignificant. The following disaggregates the Company’s revenue by sales channel (in thousands): Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Distributors $ 133,437 $ 99,931 $ 250,627 $ 170,290 Direct customers 59,408 45,436 119,932 81,452 $ 192,845 $ 145,367 $ 370,559 $ 251,742 9. Stock-Based Compensation Stock-based compensation costs are based on the fair values on the date of grant for stock awards and stock options and on the date of enrollment for the employee stock purchase plans. The fair values of stock awards (such as restricted stock units (“RSUs”) and performance stock units (“PSUs”)) are estimated based on their intrinsic values. The fair values of market stock awards (“MSUs”) are estimated using a Monte Carlo simulation. The fair values of stock options and rights under the Company’s Employee Stock Purchase Plan are estimated using the Black-Scholes option-pricing model. 14 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) 9. Stock-Based Compensation (Continued) The following table presents details of stock-based compensation costs recognized in the Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Cost of revenues $ 457 $ 412 $ 1,070 $ 824 Research and development 12,101 10,217 24,109 19,939 Selling, general and administrative 7,333 5,215 14,427 8,692 19,891 15,844 39,606 29,455 Income tax benefit 2,462 2,075 4,964 3,802 Total $ 17,429 $ 13,769 $ 34,642 $ 25,653 The Company had approximately $ 131.3 million of total unrecognized compensation cost related to equity grants as of July 5, 2025 that is expected to be recognized over a weighted-average period of approximately 2.3 years. 10. Income Taxes Provision for income taxes includes both domestic and foreign income taxes at the applicable tax rates adjusted for non-deductible expenses, research and development tax credits, deemed foreign income inclusions, change in the valuation allowance, and other permanent differences. Income tax expense was $ 2.5 million and $ 36.7 million for the three months ended July 5, 2025 and June 29, 2024, resulting in effective tax rates of ( 13.1 )% and ( 80.6 )%, respectively. Income tax expense was $ 4.4 million and $ 36.3 million for the six months ended July 5, 2025 and June 29, 2024, resulting in effective tax rates of ( 9.3 )% and ( 35.4 )%, respectively. The decrease in the provision for income taxes for the three and six months ended July 5, 2025 is primarily due to a decrease in tax expense related to the valuation allowance in the three and six months ended July 5, 2025 in comparison with the three and six months ended June 29, 2024. During the three months ended June 29, 2024, the Company incurred significant tax expense to record a valuation allowance in the U.S. and Singapore due to a three-year cumulative pre-tax loss in conjunction with the downturn in the semiconductor industry. The Company intends to maintain the valuation allowance until its ability to forecast sufficient future sources of taxable income is reestablished. On July 4, 2025, the U.S. government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”). The OBBBA extends and/or modifies many provisions first enacted via the Tax Cuts and Jobs Act (“TCJA”) in 2017, as well as introduces new modifications to U.S. federal tax law. Beginning with the 2025 tax year, the OBBBA permanently restores current deductibility for U.S. research and experimental (“R&E”) expenditures. A number of other provisions of the OBBBA will not take effect until the 2026 tax year, including various changes to existing international tax provisions. In connection with its initial analysis of the OBBBA, the Company determined that its forecasted annual effective tax rate for the current year decreased, primarily due to U.S. R&E expenditures no longer being capitalized within net controlled foreign corporation tested income (formerly known as global intangible low-taxed income or “GILTI”), which the Company has elected to treat as a period cost. The Company did not identify any material discrete tax impacts related to beginning-of-the-year deferred tax assets and liabilities or valuation allowances due to the enactment of the OBBBA. Uncertain Tax Positions As of July 5, 2025, the Company had gross unrecognized tax benefits, inclusive of interest, of $ 5.7 million, of which $ 3.6 million would affect the effective tax rate if recognized. During the six months ended July 5, 2025, the Company did not release any unrecognized tax benefits. Tax years 2019 through 2025 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company’s 2022 tax year is currently under examination in the U.S., and the Company’s 2021 through 2023 15 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) tax years are currently under examination in India. Although the outcome of tax audits is always uncertain, the Company believes that the results of these examinations will not materially impact its financial position or results of operations. The Company is not currently under audit in any other major taxing jurisdiction. The Company’s gross unrecognized tax benefits will decrease by approximately $ 1.8 million, inclusive of interest, in the next 12 months due to the lapse of the statute of limitations. 11. Segment Information The Company has one operating segment, mixed-signal analog intensive products, consisting of numerous product areas. The Company’s chief operating decision maker (“CODM”) assesses performance for the operating segment and decides how to allocate resources based on net income (loss) that is also reported on the Condensed Consolidated Statement of Operations as Net loss. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as Total assets. Revenue is attributed to a geographic area based on the shipped-to location. The following summarizes the Company’s revenue by geographic area (in thousands): Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 United States $ 24,555 $ 11,125 $ 41,239 $ 16,069 China 61,133 47,343 119,902 75,540 Taiwan 30,456 15,388 60,288 30,755 Rest of world 76,701 71,511 149,130 129,378 Total $ 192,845 $ 145,367 $ 370,559 $ 251,742 The significant expense categories regularly provided to the CODM, in addition to the expense categories included within net loss presented on the Company’s Condensed Consolidated Statement of Operations, are as follows (in thousands): Three Months Ended Six Months Ended July 5, 2025 June 29, 2024 July 5, 2025 June 29, 2024 Research and development: Employee base compensation $ 32,434 $ 31,044 $ 65,406 $ 60,414 Other research and development expenses (1) 55,387 54,865 110,634 106,145 Total research and development $ 87,821 $ 85,909 $ 176,040 $ 166,559 Selling, general and administrative: Employee base compensation $ 13,740 $ 13,260 $ 27,847 $ 25,767 Other selling, general and administrative expenses (1) 29,415 25,435 56,946 46,481 Total selling, general and administrative $ 43,155 $ 38,695 $ 84,793 $ 72,248 16 Table of Contents Silicon Laboratories Inc. Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (1) Other research and development and selling, general and administrative expenses include other personnel-related expenses, outside services, software expense, depreciation and amortization of intangible assets, and other expenses. The following summarizes the Company’s property and equipment, net by geographic area (in thousands): July 5, 2025 December 28, 2024 United States $ 108,658 $ 107,612 Rest of world 22,625 24,524 Total $ 131,283 $ 132,136 17 Table of Contents