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Item 7. Management’s Discussion and Analysis

2026-08-10 compared with 2025-08-21 · 121 added, 112 removed, 128 unchanged (65% of the section changed)

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This discussion contains forward-looking statements that involve risks, uncertainties and assumptions.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those set forth elsewhere in this report and under “Item 1A.

Risk Factors.”

In this section, we will discuss the results of our operations and changes in financial condition for fiscal 2025 compared to fiscal 2024.

Discussions of our fiscal 2023 items and year-to-year comparisons between our fiscal 2024 and 2023 that are not included in this Form 10-K can be found in “Part II – Item 7.

In this section, we discuss the results of our operations and changes in financial condition for fiscal 2026 compared to fiscal 2025.

Discussions of our fiscal 2024 items and year-to-year comparisons between our fiscal 2025 and 2024 that are not included in this Annual Report can be found in “Part II – Item 7.

Management’s Discussion and Analysis of Financial Conditions and Results of Operations” in our fiscal 2025 Annual Report on Form 10-K for the fiscal year ended June 28, 2025.

We are a leading worldwide developer and fabless supplier of premium mixed signal semiconductor solutions.

We develop solutions that integrate the audio, touch and vision interfaces with embedded processing capabilities that are paired with wireless connectivity.

We believe our results to date reflect the combination of our customer focus and the strength of our intellectual property and our engineering know-how, which allow us to develop or engineer products and solutions that meet the demanding design specifications of our OEMs.

We design and deliver AI-native edge solutions that bring AI closer to end users and transform how we engage with intelligent, connected devices, whether at home, at work, or on the move.

We are a strategic partner for many global OEMs, offering standard and custom silicon and software platforms for Edge AI, Physical AI, wireless connectivity and human interface technologies.

Our Synaptics Astra™ family of processors and wireless solutions combine embedded compute, connectivity, and multimodal sensing to support intuitive, secure, and seamless experiences.

Our touch, biometrics, AI-enabled wireless connectivity, video, vision, audio, and speech processing solutions support the next generation of intelligent devices that enhance how people live, work and interact with technology.

In fiscal 2026, we achieved revenue growth with net revenue increasing 11.4% to $1,197.2 million compared to $1,074.3 million in fiscal 2025.

The growth was primarily driven by strong execution in our Core IoT product category.

Net revenue from Core IoT of $272.4 million increased by 53% compared to $177.6 million a year ago.

This growth was fueled primarily by strong demand for our wireless connectivity products and the inclusion of sales from our Broadcom transaction.

Enterprise and Automotive net revenue of $610.1 million increased by 7% compared to $570.0 million a year ago.

The net increase was primarily driven by growth across our enterprise product portfolio, partially offset by a decrease in automotive revenue due to softness in the automotive sector.

Mobile net revenue of $191.8 million decreased by 9% compared to $211.8 million a year ago, primarily as a result of the end-of-life shipments to a large U.S.

mobile customer.

During the year, we launched multiple products expanding our product portfolios and accelerated our position in Edge AI and wireless connectivity through partnerships and licensing transactions.

We are collaborating with Google’s research team to build the next-generation platform for Edge AI devices.

We executed an agreement with Broadcom in the third quarter of fiscal 2025 to acquire certain assets and obtain non-exclusive licenses relating to Broadcom’s Wi-Fi technology.

We acquired these set of assets in order to solidify our leadership position for end-to-end AI IoT connectivity.

Acquiring these assets allows us to expand our portfolio of Wi-Fi 8 combination devices that include advanced Bluetooth features, additional Wi-Fi 7 combination devices, ultrawide band intellectual property (which we can integrate into future IoT devices) and combination front-end modules.

This transaction expands our field of use, allowing all our Wi-Fi products to compete in AR/VR, Android smartphones and consumer audio markets and secures our wireless roadmap for the next five years.

We introduced the S3930 touch controller, featuring multi-frequency-region parallel sensing and the industry’s smallest high-performance footprint.

This innovation enables consistent, low-latency touch performance in ultra-thin, bendable devices.

The new solution is more cost-effective for applications such as foldable phones and large screens.

Cash, cash equivalents and short-term investments at the end of fiscal 2025 and fiscal 2024 totaled $391.5 million and $876.9 million, respectively.

Our net total debt outstanding at the end of fiscal 2025 was $834.8 million compared to $972.9 million at the end of fiscal 2024.

We repaid our $582.0 million Term Loan Facility through a combination of a $450.0 million convertible senior note offering and balance sheet cash.

We executed a capped call transaction to mitigate dilution up to a stock price of $150.48.

During fiscal 2025, we returned $128.3 million to shareholders through repurchase of approximately 1.8 million shares.

Our share repurchase program expired in July 2025 and a new repurchase program of $150.0 million was authorized thereafter, with no expiration date.

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The growth was primarily driven by an increase in net revenue in our Core IoT product applications.

Net revenue from Core IoT was $389.7 million, increasing 43.1% compared to $272.4 million a year ago, and included the contribution from our Broadcom transaction.

This growth was fueled primarily by an increase in units sold coupled with an increase in average selling prices due to our product sales mix.

Enterprise and Automotive net revenue was $641.1 million, increasing 5.1% compared to $610.1 million a year ago.

The increase was primarily driven by higher unit sales, a better product mix, and increased license revenue from certain of our IP.

Mobile net revenue was $166.4 million, decreasing 13.2% compared to $191.8 million a year ago, primarily due to lower average selling prices and a decrease in license revenue from certain of our IP.

Cash and cash equivalents at the end of fiscal 2026 and 2025 totaled $442.5 million and $391.5 million, respectively.

During fiscal 2026, we returned $92.7 million to shareholders through repurchase of approximately 1.3 million shares under the share repurchase program.

Pending Merger with ON Semiconductor Corporation

On June 25, 2026, we entered into the Merger Agreement, by and among Synaptics, onsemi and Merger Sub, pursuant to which the Merger will be effected, with Synaptics surviving as a wholly-owned subsidiary of onsemi.

Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, by virtue of the Merger, each share of Synaptics common stock outstanding immediately prior to the Effective Time, subject to limited exceptions in the Merger Agreement, will be converted into the right to receive 1.350 validly issued, fully paid and non-assessable shares of common stock of onsemi.

No fractional shares of onsemi common stock will be issued in connection with the Merger.

Instead, any Synaptics stockholder who would otherwise be entitled to receive a fractional share of onsemi common stock will instead receive a cash payment (without interest) equal to such fraction multiplied by the “Average Parent Stock Price,” which is defined in the Merger Agreement as the average of the volume-weighted average trading prices per share of onsemi common stock on the Nasdaq Global Select Market on each of the five consecutive trading days ending on (and including) the trading day that is three trading days prior to the closing date (as reported by Bloomberg L.P.

or another authoritative source mutually selected by the parties).

The transaction is expected to close in mid-2027, subject to customary closing conditions, including approval by Synaptics stockholders and the receipt of required regulatory approvals.

Trends and Uncertainties

Current Economic Conditions

As a majority of our sales and manufacturing occurs outside of the U.S., we are exposed to and impacted by global macroeconomic factors, U.S.

and foreign government policies and foreign exchange fluctuations.

In particular, a substantial portion of our revenue is derived from customers located in international markets, especially in the Asia-Pacific region, including China, Japan, South Korea and Taiwan, where many of our OEM customers and contract manufacturers are based.

As a result, fluctuations in foreign exchange rates, especially relative to the U.S.

dollar, can materially impact our reported revenue and profitability.

We continue to monitor changes in international trade policies, particularly increased tariffs and other barriers or restrictions between the United States and other countries, including China.

Our current operations suggest limited tariff exposure given our current import and export practices.

However, some of our customers and suppliers may be impacted by evolving tariff regimes depending on their own supply chain strategies and sourcing locations.

We continue to monitor for any potential customer and supplier impacts, ranging from supply chain realignments to changes in end demand.

While the broader implications of these activities remain uncertain, based on our current lead times and order activity, we are not seeing unusual activity that would suggest any acceleration or delays in orders due to tariffs that would be likely to impact our near-term financial performance.

We will continue to assess the short-term and long-term effects of these international trade policies and restrictions on our financial and operational performance.

As a global company, we are exposed to and impacted by global macroeconomic factors and geopolitical conditions including military conflicts (such as the ongoing conflict involving the United States, Israel, Iran and other countries in the Middle East and beyond), U.S.

and foreign government policies, inflation, tariffs, interest rates, foreign exchange fluctuations, potential economic slowdowns, and evolving trade regulations and sanctions.

These factors may affect our operating environment, costs and financial results.

The ongoing conflict in the Middle East has increased geopolitical tensions, including sanctions and restrictions affecting key transportation routes such as the Strait of Hormuz, contributing to volatility in global energy prices.

As a result, we may experience disruptions to transportation routes and supply chains, including those involving third-party vendors, as well as higher transportation and logistics costs and broader inflationary pressures, which could adversely affect our revenue and gross margin.

The extent and duration of these impacts remain uncertain, and further escalation and continued duration could materially and adversely affect our business and financial results.

Given that a significant portion of our sales and supply chain, including outsourced manufacturing, assembly and test operations, occurs outside of the United States, we are also exposed to, and impacted by, changes in international trade policies, particularly increased tariffs and other barriers or restrictions on trade between the United States and other countries, including China.

Based on our current import and export practices, we believe our direct tariff exposure remains limited.

However, some of our customers and suppliers may be affected depending on their own supply chain strategies and sourcing locations.

We continue to monitor for any potential customer and supplier impacts, ranging from supply chain adjustments to changes in end demand.

While the broader implications of these activities remain uncertain, based on our current lead times and order activity, we have not observed material changes in order patterns or timing due to tariffs, the ongoing conflict in the Middle East, or related geopolitical developments that would be likely to impact our near-term financial performance.

We will continue to assess the potential short- and long-term effects of these developments on our financial and operational performance.

Industry Conditions

The continuing constrained availability and elevated pricing of certain memory components across the broader electronics supply chain have, at times, influenced the timing of orders for certain products, particularly for smaller customers.

These conditions did not have a material impact on our results of operations during fiscal 2026;

however, limited visibility into future availability, timing, increased associated costs, and the potential for these conditions to persist, could affect customer development timelines, purchasing behavior, production schedules, booking patterns, and the timing or visibility of orders in future periods.

We continue to monitor these conditions and their potential impact on customer demand and ordering behavior.

Results of Operations

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Total operating expenses 602.5 50.4 % 574.5 53.5 %

Operating (loss)/income (94.1) (8.8 %) (101.6) (10.6 %)

Interest and other income 26.9 2.5 % 42.3 4.4 %

Operating loss (67.1) (5.7 %) (94.1) (8.8 %)

Interest and other income, net 11.1 0.9 % 26.9 2.5 %

Interest expense (23.4) (2.0 %) (39.8) (3.7 %)

Loss on early retirement of debt (6.5) (0.6 %) — — %

(Loss)/income before provision for income taxes (113.5) (10.6 %) (124.6) (13.0 %)

(Benefit)/provision for income taxes (65.7) (6.2 %) (250.2) (26.1 %)

Net (loss)/income $ (47.8) (4.4) % $ 125.6 13.1 %

Loss on early extinguishment of debt — — % (6.5) (0.6 %)

Loss before provision (benefit) for income taxes (79.4) (6.7 %) (113.5) (10.6 %)

Provision (benefit) for income taxes 411.4 34.3 % (65.7) (6.2 %)

Net loss $ (490.8) (41.0) % $ (47.8) (4.4) %

Percentages may not reconcile due to rounding.

Fiscal 2026 Compared with Fiscal 2025

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Revenue increased in most of our product applications in fiscal 2026.

Net revenue from Enterprise and Automotive product applications increased as a result of an increase in units sold (which increased 10.4%) and an increase in average selling prices (which increased 2.4%) due to our product sales mix compared

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to the same period a year ago.

The increase in revenue from Enterprise and Automotive product applications was partially offset by a decrease of $30.0 million in revenue from the licensing of certain of our IP.

The increase in net revenue from Core IoT product applications was driven by an increase in units sold (which increased 40.8%) and an increase in average selling prices (which increased 8.9%) due to our product sales mix compared to the same period a year ago, inclusive of the contribution from the Broadcom transaction.

Net revenue from Mobile product applications decreased due to a decrease in units sold (which decreased 1.8%) and a decrease in average selling prices (which decreased 10.3%) as overall demand decreased for our products in the mobile market compared to the same period a year ago.

The decrease in revenue from Mobile product applications was partially offset by an increase of $4.5 million in revenue from the licensing of certain of our IP.

Net revenue from Enterprise and Automotive product applications increased $31.0 million, primarily driven by higher unit sales (1.9%), a better product mix, and increased license revenue from certain of our IP.

Net revenue from Core IoT product applications increased $117.3 million, driven by an increase in units sold (25.8%) and an increase in average selling prices (8.0%) due to our product sales mix compared to the same period a year ago, inclusive of the contribution from the Broadcom transaction.

Net revenue from Mobile product applications decreased primarily due to a decrease in average selling prices (8.1%) and lower license revenue from certain of our IP.

Gross Margin.

Gross margin as a percentage of net revenue was 44.7% in fiscal 2025 compared with 45.8% in fiscal 2024.

The decrease in gross margin was driven by an increase in amortization expense primarily related to the intangible assets we acquired from Broadcom and a decrease in revenue from the licensing of certain of our IP.

For additional information, see “Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 7.

Goodwill and Acquired Intangible Assets.”

Gross margin as a percentage of net revenue remained flat at 44.7% in fiscal 2026 and fiscal 2025.

Because we sell our technology solutions in designs that are generally unique or specific to an OEM customer’s application, gross margin varies on a product-by-product basis, making our cumulative gross margin a blend of our product specific designs.

As a fabless manufacturer, our gross margin percentage is generally not materially impacted by our shipment volume.

Under most circumstances, revenue from license-based arrangements is fully accretive to our gross margin.

Operating Expenses.

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Research and development expenses increased $35.0 million, to $381.8 million, for fiscal 2026 compared with $346.8 million in fiscal 2025.

The increase in research and development expenses primarily reflected a $19.8 million increase in variable compensation related to bonus accruals and a $7.9 million increase in stock-based compensation charges primarily driven by the charges related to the awards granted to the Broadcom employees we onboarded during the third quarter of fiscal 2025.

These increases were partially offset by a $16.3 million decrease in payroll related costs primarily driven by the restructuring action we initiated in the first quarter of fiscal 2025.

The increase in research and development expenses primarily reflected an $18 million increase in share-based compensation primarily driven by the charges related to the awards granted to the Broadcom employees onboarded during the third quarter of fiscal 2025, a $10.6 million increase in personnel-related costs, and a $3.9 million increase in project specific costs.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased by $18.0 million, to $198.3 million, for fiscal 2026 compared with $180.3 million in fiscal 2025.

The increase in selling, general and administrative expenses primarily reflected a $11.6 million increase in variable compensation related to bonus accruals, a $8.3 million increase in professional service fees primarily related to the Broadcom transaction we executed in the third quarter of fiscal 2025 and the refinancing of our Term Loan Facility in the second quarter of fiscal 2025 and a $4.5 million unfavorable impact from exchange rates on foreign currencies, partially offset by a $8.1 million decrease in stock-based compensation charges primarily related to an increase in net forfeitures from the departure of certain executive officers from the Company compared to fiscal 2024.

The increase in selling, general and administrative expenses primarily reflected a $15.6 million increase in share-based compensation primarily attributable to forfeitures associated with the departures of certain executives in the third quarter of fiscal 2025, which did not recur in fiscal 2026, and $10.9 million in professional service fees primarily related to the pending merger with onsemi.

Selling, general and administrative expenses in fiscal 2025 included professional service fees of $3.3 million related to the Broadcom transaction we executed in the third quarter of fiscal 2025 and a $4.5 million unfavorable impact from exchange rates on foreign currencies recorded in fiscal 2025, which did not recur in fiscal 2026.

Acquired Intangibles Amortization.

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Restructuring Costs.

Restructuring costs primarily reflect employee severance costs and facilities consolidation costs related to the restructuring action we initiated in the first quarter of fiscal 2025.

Restructuring costs primarily reflect employee severance costs and facilities consolidation costs related to the restructuring action we executed in fiscal 2026 and 2025.

These headcount-related costs included personnel in operations, research and development and selling, general and administrative functions.

Restructuring costs incurred in fiscal 2025 and fiscal 2024 were $16.9 million and $10.5 million, respectively.

Restructuring costs incurred in fiscal 2026 and 2025 were $3.3 million and $16.9 million, respectively.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 19.

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Non-Operating Income.

Interest and Other Income.

Interest and other income decreased $15.4 million, to $26.9 million in fiscal 2025 compared with $42.3 million in fiscal 2024.

The decrease was primarily driven by an overall decrease in our invested cash and cash equivalents of approximately $400.0 million.

Interest and Other Income, net.

Interest and other income decreased by $15.8 million, to $11.1 million, in fiscal 2026 compared with $26.9 million in fiscal 2025.

The decrease was primarily driven by a decrease in interest income of $13.2 million due to the overall reduction in invested cash balances following the early repayment of our incremental term loan facility, which was scheduled to mature in December 2028 (“Term Loan Facility”), in November 2024 and the cash paid for the Broadcom acquisition in January 2025.

The decrease also included an impairment charge of $5.0 million from a cost method investment during the fourth quarter of fiscal 2026, partially offset by miscellaneous other income of $2.3 million relating to a refund of amounts we paid previously to a third party recorded during the first quarter of fiscal 2026.

Interest Expense .

Interest expense primarily includes interest on our debt and amortization of debt discount and issuance costs.

Interest expense decreased by $25.5 million to $39.8 million during fiscal 2025 as compared to $65.3 million during

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Interest expense decreased by $16.4 million to $23.4 million during fiscal 2026 as compared to $39.8 million during fiscal 2025.

The decrease was primarily driven by the early repayment of the Term Loan Facility in November 2024.

During fiscal 2025 and 2024, the interest expense on the Term Loan Facility was $18.7 million and $46.1 million, respectively.

During fiscal 2025, the interest expense on the Term Loan Facility was $18.7 million.

The Term Loan Facility was repaid with the net proceeds received from the issuance of the 2031 Notes, which bears a significantly lower interest rate of 0.75%.

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Debt and Revolving Credit Facility.”

(Benefit)/Provision for Income Taxes.

The (benefit)/provision for income taxes of $(65.7) million and $(250.2) million in fiscal 2025 and 2024, respectively, represented estimated federal, foreign and state income taxes.

Provision (Benefit) for Income Taxes .

The provision (benefit) for income taxes of $411.4 million and $(65.7) million in fiscal 2026 and 2025, respectively, represented estimated federal, foreign and state income taxes.

The effective tax rate for fiscal 2026 diverged from the combined U.S.

federal and state statutory tax rate primarily due to a one-time tax benefit related to a U.S.

“check-the-box” election made for our Israel subsidiary, favorable tax effects from the U.S.

inclusion of foreign income, foreign earnings taxed at lower rates and a tax benefit associated with the fiscal 2018 U.S.

transition tax under the Tax Cuts and Jobs Act (“TCJA”) resulting from a recent U.S.

Tax Court decision in Varian Medical Systems, Inc.

Commissioner .

These benefits were partially offset by non-deductible share-based compensation and limitation on the deductibility of a certain officer’s compensation.

federal and state statutory tax rate primarily due to a significant non-cash tax expense associated with the establishment of a full valuation allowance against our U.S.

federal deferred tax assets.

This expense was partially offset by the benefits from research and development tax credits and foreign-derived deduction eligible income.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 16.

Income Taxes.”

On July 4, 2025, subsequent to the end of our fiscal 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law.

This legislation includes a permanent extension and modification of certain provisions under the TCJA.

We are in the process of evaluating the potential impact of the OBBBA on our financial statements for future periods.

On July 4, 2025, the One Big Beautiful Bill Act, or OBBBA, was signed into law.

The legislation includes a permanent extension and modification of certain provisions under the Tax Cuts and Jobs Act of 2017.

Provisions effective for Synaptics beginning June 29, 2025, were reflected in the Company’s income tax provision for fiscal 2026 and did not have a material impact on the effective tax rate or cash flows.

We will continue to monitor forthcoming U.S.

Treasury and Internal Revenue Service guidance related to OBBBA and assess potential implications for future reporting periods.

The Organization for Economic Co-operation and Development, or OECD, introduced Pillar Two model rules for a global minimum tax of 15% applicable to large multinational corporations.

Many countries in which we have business operations, including the United Kingdom, Hong Kong, Switzerland, and Japan, have implemented certain aspects of Pillar Two.

The OECD and the implementing countries are expected to continue issuing guidance and refining their laws.

Based on the latest legislation, Pillar Two had immaterial impact on our effective tax rate or cash flows for fiscal 2026.

We will continue to evaluate the potential impact of these developments as additional guidance is issued and further local enactments occur.

Liquidity and Capital Resources

Our cash and cash equivalents were $391.5 million as of the end of fiscal 2025 compared with $876.9 million as of the end of fiscal 2024, a decrease of $485.4 million.

The decrease in cash and cash equivalents was driven by cash used in financing activities of $331.4 million related to full repayment of our Term Loan Facility and repurchases of our common stock, partially offset by net proceeds from the issuance of the 2031 Notes (as defined below) and cash used in investing activities of $297.9 million primarily related to our asset purchase agreement with Broadcom.

We consider almost all earnings of our foreign subsidiaries as not indefinitely reinvested overseas and have made appropriate provisions for income or withholding taxes that may result from a future repatriation of those earnings.

Our cash and cash equivalents were $442.5 million as of the end of fiscal 2026 compared with $391.5 million as of the end of fiscal 2025, an increase of $51.0 million.

The increase in cash and cash equivalents was driven by cash provided by operating activities of $149.4 million , partially offset by cash used in financing activities of $111.5 million primarily related to repurchases of our common stock during fiscal 2026.

We consider almost all earnings of our foreign subsidiaries as not indefinitely reinvested and have made appropriate provisions for income or withholding taxes that may result from a future repatriation of those earnings.

As of the end of fiscal 2026, $254.8 million of cash and cash equivalents was held by our foreign subsidiaries.

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Operating activities during fiscal 2026 generated $149.4 million compared with $142.0 million net cash generated in fiscal 2025.

In fiscal 2025, net cash provided by operating activities was the primarily driven by our results of operations, adjusted for non-cash charges of $219.0 million, and net cash outflows of $29.2 million from changes in our operating assets and liabilities.

The primary drivers of the change in operating assets and liabilities relate to a decrease in income taxes payable primarily related to net tax payments of approximately $43.3 million made to various tax jurisdictions and an increase in net inventory of $25.1 million, related to the availability of supply and the impact of variations between forecasted and actual demand, offset by a decrease in accounts receivable of $12.3 million, primarily related to the timing of collections and billings, and an increase of $31.5 million in accrued compensation primarily related to the accrual of our annual bonus.

In fiscal 2026, net cash provided by operating activities was primarily driven by our results of operations, adjusted for non-cash charges of $728.3 million primarily related to deferred taxes due to an establishment of valuation allowance against U.S.

deferred tax assets, share-based compensation costs, and acquired intangible amortization, and net cash outflows of $88.1 million from changes in our operating assets and liabilities.

The primary drivers of the change in operating assets and liabilities relate to a decrease of $30.9 million in other accrued liabilities primarily associated with customer related liabilities, an increase in inventories of $17.1 million, related to the availability of supply and the impact of variations between forecasted and actual demand, and an increase in accounts receivable of $33.7 million, primarily related to the timing of collections and billings.

Cash Flows from Investing Activities.

Net cash used in investing activities for fiscal 2025 was $297.9 million compared with cash used in investing activities of $157.7 million during fiscal 2024.

Net cash used in investing activities for fiscal 2025 primarily consisted of $200.3 million we paid to acquire certain assets and obtain non-exclusive licenses relating to Broadcom’s Wi-Fi technology and the purchase of $61.0 million in short-term investments.

Net cash provided by investing activities for fiscal 2026 was $13.0 million compared with cash used in investing activities of $297.9 million during fiscal 2025.

Net cash provided by investing activities for fiscal 2026 primarily consisted of $61.0 million in proceeds from maturities of short-term investments which were not subsequently reinvested in short-term investments, partially offset by purchases of property and equipment of $48.0 million.

Cash Flows from Financing Activities.

Net cash used in financing activities for fiscal 2026 was $111.5 million compared with $331.4 million used in financing activities for fiscal 2025.

Net cash used by financing activities for fiscal 2025 consisted of $583.5 million used to repay the remaining outstanding balance of our Term Loan Facility, $128.3 million used to repurchase our common stock, exclusive of excise taxes, and $49.9 million used for the payment of capped call transactions associated with our 2031 Notes, partially offset by $439.5 million in net proceeds from issuance of our 2031 Notes.

Net cash used in financing activities for fiscal 2026 primarily consisted of $92.7 million used to repurchase our common stock and $48.4 million used for payroll taxes in connection with the delivery of the underlying shares for share-based awards, partially offset by $17.2 million in proceeds from the issuance of our common shares primarily under our employee stock purchase plan and $14.0 million from the refund of a deposit previously paid to a vendor.

We have $350.0 million available under our revolving credit facility with a maturity date to be the earlier of November 2029 or three months prior to any maturity of our Senior Notes.

No funds were drawn from this credit facility during fiscal 2026.

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Our aggregate principal debt obligations were $850.0 million as of June 2026 and mature at various dates through December 2031.

In connection with our issuance of the 2031 Notes, we used a portion of the net proceeds from the 2031 Notes, along with our cash on hand, to repay the outstanding balance of our Term Loan Facility.

The net carrying amount of our 2031 Notes, which have an aggregate principal balance of $450.0 million maturing in 2031, of $439.6 million is presented in the current portion of long-term debt in our consolidated balance sheets as of June 2026.

D uring the fourth quarter of fiscal 2026, the last reported sale pr ice per share of our common stock exceeded 130% of the conversion price for at least 20 trading days during the 30 consecutive trading days of the calendar quarter, which caused the 2031 Notes to be convertible by the holders for the calendar quarter ending September 30, 2026.

The net carrying amount of our Senior Notes, which have an aggregate principal balance of $400.0 million maturing in 2029, of $397.7 million is presented in long-term debt in our consolidated balance sheets as of June 2026.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 8.

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Working Capital Needs.

We believe our existing cash and cash equivalents, anticipated cash flows from operating activities and available credit under our revolving credit facility will be sufficient to meet our working capital and other cash requirements, including small tuck-in acquisitions, and our debt service obligations for at least the next 12 months.

requirements, and our debt service obligations for at least the next 12 months.

Our future capital requirements will depend on many factors, including our revenue, the timing and extent of spending to support product development efforts, costs associated with restructuring activities net of projected savings from those activities, costs related to protecting our intellectual property, the expansion of sales and marketing activities, the timing of introduction of new products and enhancements to existing products, costs to ensure access to adequate manufacturing, costs of maintaining sufficient space for our workforce, the continuing market acceptance of our product solutions, our common stock repurchase program and the amount and timing of our investments in, or acquisitions of, other technologies or companies.

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Although such arrangements occur in limited circumstances, they require judgment to determine the net consideration to which we expect to be entitled.

We estimate variable consideration based on the historical data and experience with returns, rebates and credits.

We estimate variable consideration based on historical data and experience with returns, rebates and credits.

We believe these amounts to be immaterial to total revenue and do not anticipate significant changes to our estimates.

This estimate qualifies as a critical accounting estimate due to the subjective judgments required to assess

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variable consideration and the potential impact on revenue recognition timing and amount, even if the current magnitude of such estimates is limited.

This estimate qualifies as a critical accounting estimate due to the subjective judgments required to assess variable consideration and the potential impact on revenue recognition timing and amount, even if the current magnitude of such estimates is limited.

Inventory Valuation

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We fully reserve for inventories and non-cancellable purchase orders for inventory deemed obsolete.

We perform periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage using recent historical activity as well as anticipated or forecasted demand.

We perform periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances and non-cancellable purchase orders to anticipated usage based on recent historical activity as well as anticipated or forecasted demand.

We also record a charge to cost of revenue for estimated losses for inventory we are obligated to purchase from our contract manufacturers when such losses become probable from customer delays, order cancellations or other factors.

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Due to the subjectivity and reliance on forward-looking inputs, these acquisition-related estimates qualify as critical accounting estimates.

Impairment of Long-Lived Assets and Intangible Assets

We assess the impairment of long-lived assets and definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable.

We assess the impairment of indefinite-lived intangible assets annually, and more frequently, if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

Circumstances which could trigger a review include, but are not limited to the following:

• Significant decreases in the market price of the asset;

• Significant adverse changes in the business climate or legal factors;

• Accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset;

• Current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset;

• Current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.

Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets and intangible assets may not be recoverable, we estimate the future cash flows, undiscounted and without interest charges, expected to be generated by the asset from its use or eventual disposition.

If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

Significant management judgment is required in the forecasts of future operating results that are used in the discounted cash flow method of valuation.

These significant judgments may include future expected revenue, expenses, capital expenditures and other costs, discount rates and whether or not alternative uses are available for impacted long-lived assets.

We estimate our income taxes in each of the jurisdictions in which we operate.

This process involves estimating our actual tax exposure together with assessing temporary differences resulting from the differing treatment of certain items for tax return and financial statement purposes.

We recognize income taxes using an asset and liability approach.

This approach requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

The measurement of current and deferred taxes is based on the provisions of enacted tax law and the effects of future changes in tax laws or rates are not anticipated.

Evaluating the need for a valuation allowance for deferred tax assets requires judgment and analysis of all positive and negative evidence available, including recent earnings history and taxable income in recent years, reversals of deferred tax liabilities, projected future taxable income and tax planning strategies to determine whether all or some portion of the deferred tax assets will not be realized.

Using available evidence and judgment, we establish a valuation allowance for deferred tax assets when it is determined that it is more likely than not that they will not be realized.

Valuation allowances have been provided primarily against state research and development credits and certain capital losses of foreign subsidiaries.

A change in the assessment of the realizability of deferred tax assets may materially impact our tax provision in the period in which a change of assessment occurs.

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The determination of our income tax provision requires significant judgment and estimates, including the amount and timing of taxable income by jurisdiction, the tax treatment of transactions, the realizability of deferred tax assets, uncertain tax positions and the expected resolution of tax examinations.

Our most significant income tax estimate relates to the realizability of deferred tax assets and the related valuation allowance.

Assessing the need for a valuation allowance for deferred tax assets requires judgment and analysis in

evaluating all available positive and negative evidence, including cumulative earnings or losses over the most recent three-year period, recent operating results, the scheduled reversal of existing taxable temporary differences, projected future taxable income, and prudent and feasible tax planning strategies.

We record a valuation allowance when it is more likely than not that some or all of a deferred tax asset will not be realized.

Our projections of future taxable income by jurisdiction are based on management’s estimates of future operating results, the timing and amount of taxable income, reversals of temporary differences and available tax-planning strategies.

These estimates may differ from actual results.

Changes in our projections or in the weight assigned to available evidence could result in a material increase or decrease in the valuation allowance and related income tax expense.

When assessing the need for a valuation allowance all positive and negative evidence is analyzed, including our ability to carry back net operating losses to prior periods, the reversal of deferred tax liabilities, tax planning strategies and projected future taxable income.

Accordingly, as of June 2026, we had recorded a full valuation allowance on our net U.S.

deferred tax assets based on our assessment that it is more likely than not that the deferred tax asset will not be realized.

As a result of the losses incurred in fiscal 2026, we had a three-year cumulative loss, which represents significant negative evidence regarding the ability to realize deferred tax assets.

As a multinational corporation, we conduct our business in many countries and are subject to taxation in many jurisdictions.

The taxation of our business is subject to the application of various and sometimes conflicting tax laws and regulations as well as multinational tax conventions.

Our effective tax rate is highly dependent upon the geographic distribution of our worldwide earnings or losses, tax laws and regulations in various jurisdictions, tax incentives, the availability of tax credits and loss carryforwards and the effectiveness of our tax planning strategies, which includes our estimates of the fair value of our intellectual property.

Our income tax estimates are also affected by the geographic distribution of our worldwide earnings or losses, tax laws and regulations in various jurisdictions, tax incentives, the availability of tax credits and loss carryforwards and the effectiveness of our tax planning strategies, which includes our estimates of the fair value of our intellectual property.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.

Tax laws themselves are subject to change as a result of changes in fiscal policy, changes in legislation and the evolution of regulations, court rulings and tax audits.

The material jurisdictions in which we are subject to potential examination by tax authorities throughout the world include Japan, Hong Kong, United Kingdom, Israel and the United States.

We use judgment to evaluate the technical merits of tax positions and estimate the amount of tax benefits expected to be sustained upon examination.

These estimates may change as a result of new information, changes in tax laws or interpretations, court decisions, audit developments or settlements with tax authorities.

Due to the complexity of international tax laws, reliance on future projections and the significant level of judgment involved, income tax-related estimates qualify as critical accounting estimates and may impact our results of operations and financial position.

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Basis of Presentation and Significant Accounting Policies – Accounting Pronouncements Issued But Not Yet Adopted.”

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What changed 10-K

Item 7. Management’s Discussion and Analysis