What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-10 compared with 2024-02-09 · 88 added, 85 removed, 202 unchanged (46% of the section changed)

14 unchanged sentences

We offer a broad and expanding portfolio of networking products and solutions for operator-owners of wireless internet services (“WISPs”), enterprises and smart homes.

Our operator-owner service-provider-product platforms provide carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing and the related software for WISPs to easily

control, track and bill their customers.

Our enterprise product platforms provide wireless LAN (“WLAN”) infrastructure, video surveillance products, switching and routing solutions, security gateways, door access systems, and other complimentary WLAN products along with a unique software platform, which enables users to control their network from one simple, easy to use software interface.

Our enterprise product platforms provide wireless LAN (“WLAN”) infrastructure, video

surveillance products, switching and routing solutions, security gateways, door access systems, and other complimentary WLAN products along with a unique software platform, which enables users to control their network from one simple, easy to use software interface.

Our consumer products are targeted to the smart home and highly connected consumers.

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These mitigation efforts therefore significantly increase the risks of future material excess, obsolete inventory and related losses.

We believe that we are taking the right actions to mitigate these continuing supply constraints, however, we recognize the associated risks.

We believe that we have taken the right actions to mitigate these supply constraints, however, we recognize the associated risks.

Russia-Ukraine Military Conflict – We are monitoring the military conflict between Russia and Ukraine, escalating tensions in surrounding countries, and associated economic sanctions.

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• Enterprise Technology includes our UniFi platforms, including UniFi Cloud Gateways, UniFi WiFi, UniFi Switches, UniFi Protect, UniFi Access, UniFi Talk, UniFi Connect and our AmpliFi platform.

• Service Provider Technology includes our airMAX, EdgeMAX, UFiber, Wave, GPON and airFiber platforms, as well as embedded radio products and other 802.11 standard products including base stations, radios, backhaul equipment and CPE.

• Service Provider Technology includes our airMAX, UISP, EdgeMAX, UFiber, Wave, GPON and airFiber platforms, as well as embedded radio products and other 802.11 standard products including base stations, radios, backhaul equipment and CPE.

We sell our products and solutions globally to enterprises and service providers primarily through our extensive network of distributors, and, to a lesser extent, through direct sales through our webstores.

Sales to distributors accounted for 64% of our revenues during the six months ended December 31, 2023.

Direct sales accounted for 36% of our revenue during the six months ended December 31, 2023.

Sales to distributors accounted for 63% of our revenues during the nine months ended March 31, 2024.

Direct sales accounted for 37% of our revenue during the nine months ended March 31, 2024.

Cost of Revenues

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Results of Operations

Comparison of Three and Six Months Ended December 31, 2023 and 2022

Comparison of Three and Nine Months Ended March 31, 2024 and 2023

The following table summarizes our consolidated results of operations for the periods indicated, expressed in dollars and as a percentage of total revenues (in thousands, except percentages):

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

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Total share-based compensation $ 1,664 $ 1,246 $ 4,671 $ 3,394

Total revenues decreased $28.6 million, or 6%, from $493.6 million in the three months ended December 31, 2022 to $465.0 million in the three months ended December 31, 2023.

Total revenues decreased $63.6 million, or 6%, from $991.7 million in the six months ended December 31, 2022 to $928.0 million in the six months ended December 31, 2023.

The decline in revenues for the three months ended December 31, 2023 as compared to the same period in the prior year was primarily driven by a decrease in revenue from both our Enterprise Technology platform and Service Provider Technology platform.

The decline in revenue for the six months ended December 31, 2023 as compared to the same period in the prior year was primarily driven by a decrease in revenue from our Enterprise Technology platform, partially offset by an increase in revenue from our Service Provider Technology platform.

Total revenues increased $35.2 million, or 8%, from $457.8 million in the three months ended March 31, 2023 to $493.0 million in the three months ended March 31, 2024.

Total revenues decreased $28.4 million, or 2%, from $1,449.4 million in the nine months ended March 31, 2023 to $1,421.0 million in the nine months ended March 31, 2024.

The increase in revenues for the three months ended March 31, 2024 as compared to the same period in the prior year was primarily driven by an increase in revenue from our Enterprise Technology platform, offset in part by a decrease in revenue from our Service Provider Technology platform.

The decline in revenue for the nine months ended March 31, 2024 as compared to the same period in the prior year was primarily driven by a decrease in revenue from our Enterprise Technology platform, partially offset by an increase in revenue from our Service Provider Technology platform.

Revenues by Product Type

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

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Total revenues $ 492,997 100 % $ 457,773 100 % $ 1,421,029 100 % $ 1,449,427 100 %

Enterprise Technology revenue decreased $25.9 million, or 6%, from $417.4 million in the three months ended December 31, 2022 to

$391.5 million in the three months ended December 31, 2023.

Enterprise Technology revenue decreased $72.1 million, or 9%, from $843.7 million in the six months ended December 31, 2022 to $771.6 million in the six months ended December 31, 2023.

The decrease in Enterprise Technology revenue during the three months ended December 31, 2023, as compared to the same period in the prior year, was primarily due to decline in revenue from our Enterprise Technology platform in the EMEA and Asia Pacific regions.

The decrease in Enterprise Technology revenue during the six months ended December 31, 2023 as compared to the same period in the prior year, was primarily due to decline in revenue across all regions except South America.

Service Provider Technology revenue decreased $2.7 million, or 4%, from $76.2 million in the three months ended December 31, 2022 to $73.5 million in the three months ended December 31, 2023.

Service Provider Technology revenue increased $8.5 million, or 6%, from $147.9 million in the six months ended December 31, 2022 to $156.4 million in the six months ended December 31, 2023.

The decrease in Service Provider Technology in the three months ended December 31, 2023 as compared to the same period in the prior year was primarily due to decline in revenues in North and South America.

The increase in Service Provider Technology revenue during the six months ended December 31, 2023 as compared to the same period in the prior year, was primarily due to increased revenue in all regions except South America.

Enterprise Technology revenue increased $40.8 million, or 11%, from $373.6 million in the three months ended March 31, 2023 to

$414.3 million in the three months ended March 31, 2024.

Enterprise Technology revenue decreased $31.3 million, or 3%, from $1,217.3 million in the nine months ended March 31, 2023 to $1,185.9 million in the nine months ended March 31, 2024.

The increase in Enterprise Technology revenue during the three months ended March 31, 2024, as compared to the same period in the prior year, was primarily due to an increase in revenue from our Enterprise Technology platform across all regions.

The decrease in Enterprise Technology revenue during the nine months ended March 31, 2024 as compared to the same period in the prior year, was primarily due to decline in revenue in the EMEA and Asia Pacific regions.

Service Provider Technology revenue decreased $5.5 million, or 7%, from $84.2 million in the three months ended March 31, 2023 to $78.7 million in the three months ended March 31, 2024.

Service Provider Technology revenue increased $2.9 million, or 1%, from $232.1 million in the nine months ended March 31, 2023 to $235.1 million in the nine months ended March 31, 2024.

The decrease in Service Provider Technology in the three months ended March 31, 2024 as compared to the same period in the prior year was primarily due to decline in revenues in all regions except North America.

The increase in Service Provider Technology revenue during the nine months ended March 31, 2024 as compared to the same period in the prior year, was primarily due to increased revenue in the EMEA and North America regions.

Revenues by Geography

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A majority of our sales are to distributors who either sell to resellers or directly to end customers, who may be located in different countries than the initial ship-to destination.

The following are our revenues by geography for the three and six months ended December 31, 2023 and 2022 (in thousands, except percentages):

Three Months Ended December 31, Six Months Ended December 31,

The following are our revenues by geography for the three and nine months ended March 31, 2024 and 2023 (in thousands, except percentages):

Three Months Ended March 31, Nine Months Ended March 31,

2024 2023 2024 2023

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Total revenues $ 492,997 100 % $ 457,773 100 % $ 1,421,029 100 % $ 1,449,427 100 %

(1) Revenue for the United States was $210.4 million and $209.4 million for the three months ended December 31, 2023 and 2022, respectively.

Revenue for the United States was $419.6 million and $419.7 million for the six months ended December 31, 2023 and 2022, respectively.

(1) Revenue for the United States was $226.2 million and $214.3 million for the three months ended March 31, 2024 and 2023, respectively.

Revenue for the United States was $645.8 million and $634.0 million for the nine months ended March 31, 2024 and 2023, respectively.

North America

Revenues in North America decreased $1.6 million, or 1%, from $227.5 million in the three months ended December 31, 2022 to $225.9 million in the three months ended December 31, 2023 and decreased $2.5 million, or 1%, from $453.2 million in the six months ended December 31, 2022 to $450.6 million in the six months ended December 31, 2023.

The decrease in North America revenues during the three months ended December 31, 2023 as compared to the same period in the prior year, was primarily due to decreased revenue from our Service Provider Technology products, offset in part by increased revenue from our Enterprise Technology products.

The decrease in North America revenues during the six months ended December 31, 2023, as compared to the same period in the prior year, was primarily due to decreased revenue from our Enterprise Technology products partially offset by increased revenue from our Service Provider Technology products.

Revenues in North America increased $11.8 million, or 5%, from $230.7 million in the three months ended March 31, 2023 to $242.5 million in the three months ended March 31, 2024 and increased $9.2 million, or 1%, from $683.9 million in the nine months ended March 31, 2023 to $693.2 million in the nine months ended March 31, 2024.

The increase in North America revenues during the three and nine months ended March 31, 2024 as compared to the same periods in the prior year, was due to increased revenue from both our Enterprise Technology products and our Service Provider Technology products.

Europe, the Middle East, and Africa (EMEA)

Revenues in EMEA decreased $22.1 million, or 11%, from $195.1 million in the three months ended December 31, 2022 to $173.0 million in the three months ended December 31, 2023 and decreased $49.9 million, or 13%, from $395.2 million in the six months ended December 31, 2022 to $345.3 million in the six months ended December 31, 2023.

The decrease in EMEA revenues during the three and six months ended December 31, 2023 as compared to the same periods in the prior year, was primarily due to decreased revenue from our Enterprise Technology products, offset in part by increased revenue from our Service Provider Technology products.

Revenues in the Asia Pacific region decreased $10.7 million, or 24%, from $43.9 million in the three months ended December 31, 2022 to $33.3 million in the three months ended December 31, 2023 and decreased $19.9 million, or 22%, from $89.3 million in the six months ended December 31, 2022 to $69.4 million in the six months ended December 31, 2023.

The decrease in Asia Pacific revenues during the three and six months ended December 31, 2023 as compared to the same periods in the prior year was primarily due to decreased revenue from our Enterprise Technology products, offset in part by increased revenue from our Service Provider Technology products.

Revenues in EMEA increased $27.4 million, or 16%, from $173.3 million in the three months ended March 31, 2023 to $200.7 million in the three months ended March 31, 2024 and decreased $22.5 million, or 4%, from $568.5 million in the nine months ended March 31, 2023 to $546.0 million in the nine months ended March 31, 2024.

The increase in EMEA revenues during the three months ended March 31, 2024 as compared to the same period in the prior year, was primarily due to increased revenue from our Enterprise Technology products, offset in part by decreased revenue from our Service Provider Technology products.

The decrease in EMEA revenues during the nine months ended March 31, 2024 as compared to the same period in the prior year, was primarily due to decreased revenue from our Enterprise Technology products offset in part by an increase in revenue from our Service Provider Technology products.

Revenues in the Asia Pacific region decreased $0.4 million, or 2%, from $26.9 million in the three months ended March 31, 2023 to $26.5 million in the three months ended March 31, 2024 and decreased $20.3 million, or 18%, from $116.2 million in the nine months ended March 31, 2023 to $95.8 million in the nine months ended March 31, 2024.

The decrease in Asia Pacific revenues during the three months ended March 31, 2024 as compared to the same period in the prior year was primarily due to decreased revenue from our Service Provider Technology products, offset in part by increased revenue from our Enterprise Technology products.

The decrease in Asia Pacific revenues during the nine months ended March 31, 2024 as compared to the same period in the prior year was due to a decrease in revenue from both our Enterprise Technology products and our Service Provider Technology products.

South America

Revenues in South America increased $5.8 million, or 21%, from $27.1 million in the three months ended December 31, 2022 to $32.9 million in the three months ended December 31, 2023 and increased $8.7 million, or 16%, from $54.0 million in the six months ended December 31, 2022 to $62.7 million in the six months ended December 31, 2023.

The increase in South America revenues during the three and six months ended December 31, 2023 as compared to the same periods in the prior year was due to increased revenue from our Enterprise Technology products, partially offset by a decrease in revenue from our Service Provider Technology products.

Gross profit margin decreased to 38.2% in the three months ended December 31, 2023, compared to 40.0% in the three months ended December 31, 2022 and increased to 39.0% in the six months ended December 31, 2023, compared to 37.2% in the six months ended December 31, 2022.

The decrease in gross profit margin for the three months ended December 31, 2023, as compared to the comparable prior year period was driven by product mix and product-related costs, offset in part by lower shipping costs.

The increase in gross profit margin for the six months ended December 31, 2023, as compared to the comparable prior year period was driven by lower shipping costs, offset in part by product mix.

Revenues in South America decreased $3.5 million, or 13%, from $26.9 million in the three months ended March 31, 2023 to $23.4 million in the three months ended March 31, 2024 and increased $5.2 million, or 6%, from $80.9 million in the nine months ended March 31, 2023 to $86.1 million in the nine months ended March 31, 2024.

The decrease in South America revenues during the three months ended March 31, 2024 as compared to the same period in the prior year was due to decreased revenue from our Service Provider Technology products, partially offset by an increase in revenue from our Enterprise Technology products.

The increase in South America revenues during the nine months ended March 31, 2024 as compared to the same period in the prior year was due to increased revenue from our Enterprise Technology products, partially offset by a decrease in revenue from our Service Provider Technology products.

Gross profit margin decreased to 35.3% in the three months ended March 31, 2024, compared to 41.2% in the three months ended March 31, 2023 and decreased to 37.7% in the nine months ended March 31, 2024, compared to 38.5% in the nine months ended March 31, 2023.

The decrease in gross profit margin for the three months ended March 31, 2024, as compared to the comparable prior year period was driven by incremental excess and obsolete inventory charges, unfavorable product mix and higher shipping costs, offset in part by lower tariffs.

The decrease in gross profit margin for the nine months ended March 31, 2024, as compared to the comparable prior year period was driven by incremental excess and obsolete inventory charges and unfavorable product mix, partially offset by lower shipping costs and lower tariffs.

Operating Expenses

Research and Development

Research and development (“R&D”) expenses increased by $3.1 million, or 9%, from $33.8 million in the three months ended December 31, 2022 to $36.9 million in the three months ended December 31, 2023.

As a percentage of revenues, R&D expenses increased from 7% for the three months ended December 31, 2022 to 8% for the three months ended December 31, 2023.

R&D expenses increased by $6.8 million, or 10%, from $66.4 million in the six months ended December 31, 2022 to $73.2 million in the six months ended December 31, 2023.

As a percentage of revenues, R&D expenses increased from 7.0% for the six months ended December 31, 2022 to 8.0% for the six months ended December 31, 2023

The increase in R&D expenses during the three and six months ended December 31, 2023 as compared to the comparable prior year periods was primarily driven by higher employee-related expenses and prototype-related expenses.

Research and development (“R&D”) expenses increased by $4.3 million, or 11%, from $38.2 million in the three months ended March 31, 2023 to $42.5 million in the three months ended March 31, 2024.

As a percentage of revenues, R&D expenses increased from 8% for the three months ended March 31, 2023 to 9% for the three months ended March 31, 2024.

R&D expenses increased by $11.1 million, or 11%, from $104.6 million in the nine months ended March 31, 2023 to $115.7 million in the nine months ended March 31, 2024.

As a percentage of revenues, R&D expenses increased from 7% for the nine months ended March 31, 2023 to 8% for the nine months ended March 31, 2024

The increase in R&D expenses during the three and nine months ended March 31, 2024 as compared to the comparable prior year periods was primarily driven by higher employee-related expenses and prototype-related expenses.

Sales, General and Administrative

Sales, general and administrative (“SG&A”) expenses increased $1.0 million, or 5%, from $18.6 million in the three months ended December 31, 2022 to $19.6 million in the three months ended December 31, 2023.

As a percentage of revenues, SG&A expenses remained flat at 4% for the three months ended December 31, 2022 compared to the three months ended December 31, 2023.

SG&A expenses increased $3.6 million, or 10%, from $35.3 million in the six months ended December 31, 2022 to $38.9 million in the six months ended December 31, 2023.

As a percentage of revenues, SG&A expenses remained flat at 4% for the six months ended December 31, 2022 compared to the six months ended December 31, 2023.

The increase in SG&A costs as compared to the comparable prior year periods was primarily due to higher employee-related expenses, marketing expenses and professional fees.

Sales, general and administrative (“SG&A”) expenses increased $3.6 million, or 22%, from $16.7 million in the three months ended March 31, 2023 to $20.4 million in the three months ended March 31, 2024.

As a percentage of revenues, SG&A expenses remained flat at 4% for the three months ended March 31, 2023 compared to the three months ended March 31, 2024.

SG&A expenses increased $7.2 million, or 14%, from $52.1 million in the nine months ended March 31, 2023 to $59.3 million in the nine months ended March 31, 2024.

As a percentage of revenues, SG&A expenses increased from 3% for the nine months ended March 31, 2023 to 4% for the nine months ended March 31, 2024.

The increase in SG&A costs for the three months ended March 31, 2024 as compared to the comparable prior year period was primarily due to higher fees associated with webstore credit card processing, higher travel expenses, professional fees, higher

employee-related expenses, and marketing expenses.

The increase in SG&A for the nine months ended March 31, 2024 as compared to the comparable prior year period was primarily due to higher marketing expenses, higher employee-related expenses, professional fees, and higher fees associated with webstore credit card processing.

Interest Expense and Other, net

Interest expense and other, net ("I&O") expenses increased $7.0 million, or 62% from $11.3 million in the three months ended December 31, 2022 to $18.3 million in the three months ended December 31, 2023.

As a percentage of revenue, I&O increased from

2% for the three months ended December 31, 2022 to 4% for the three months ended December 31, 2023.

I&O expenses increased $17.6 million, or 80%, from $21.9 million in the six months ended December 31, 2022 to $39.5 million in the six months ended December 31, 2023.

As a percentage of revenues, I&O expenses increased from 2% for the six months ended December 31, 2022 to 4% for the six months ended December 31, 2023.

The increase in I&O expenses during the three and six months ended December 31, 2023 as compared to the same periods in the prior year, was primarily due to higher interest expense due to incremental borrowings and increased interest rates.

Interest expense and other, net ("I&O") expenses increased $2.4 million, or 14% from $16.5 million in the three months ended March 31, 2023 to $18.9 million in the three months ended March 31, 2024.

As a percentage of revenue, I&O increased from 3% for the three months ended March 31, 2023 to 4% for the three months ended March 31, 2024.

I&O expenses increased $20 million, or 52%, from $38.4 million in the nine months ended March 31, 2023 to $58.4 million in the nine months ended March 31, 2024.

As a percentage of revenues, I&O expenses increased from 3% for the nine months ended March 31, 2023 to 4% for the nine months ended March 31, 2024.

The increase in I&O expenses during the three and nine months ended March 31, 2024 as compared to the comparable prior year periods was primarily due to higher interest expense driven by increased interest rates.

Provision for Income Taxes

Our provision for income taxes decreased $1.0 million, or 4%, from $21.7 million for the three months ended December 31, 2022 to $20.7 million for the three months ended December 31, 2023.

Our effective tax rate increased to 20.2% for the three months ended December 31, 2023 as compared to 16.2% for the three months ended December 31, 2022.

Our provision for income taxes increased $0.2 million, or 0.5%, from $39.9 million in the six months ended December 31, 2022 to $40.1 million in the six months ended December 31, 2023.

Our effective tax rate increased from 16.3% for the six months ended December 31, 2022 to 19.1% for the six months ended December 31, 2023.

The change in effective tax rates for the three and six months ended December 31, 2023, as compared to the same period in the prior year, was primarily driven by a combination of changes in the mix of the income earned in various tax jurisdictions and a one-time release of a reserve for unrecognized tax benefit due to statute of limitation during the three and six months ended December 31, 2022.

Our provision for income taxes decreased $2.4 million, or 13%, from $18.5 million for the three months ended March 31, 2023 to $16.1 million for the three months ended March 31, 2024.

Our effective tax rate increased to 17.4% for the three months ended March 31, 2024 as compared to 15.8% for the three months ended March 31, 2023.

Our provision for income taxes decreased $2.2 million, or 4%, from $58.3 million in the nine months ended March 31, 2023 to $56.1 million in the nine months ended March 31, 2024.

Our effective tax rate increased from 16.1% for the nine months ended March 31, 2023 to 18.6% for the nine months ended March 31, 2024.

The change in effective tax rates for the three and nine months ended March 31, 2024, as compared to the same periods in the prior year, was primarily driven by a combination of changes in the mix of income earned in various tax jurisdictions as well as varying one time discrete benefits during the three and nine months ended March 31, 2024 and 2023.

Liquidity and Capital Resources

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Our principal source of liquidity are cash and cash equivalents, cash generated by operations, the availability of additional funds under the Facilities and short-term investments.

We had cash and cash equivalents of $97.6 million and $114.8 million as of December 31, 2023 and June 30, 2023, respectively.

We had cash and cash equivalents of $102.5 million and $114.8 million as of March 31, 2024 and June 30, 2023, respectively.

Consolidated Cash Flow Data

The following table sets forth the major components of our consolidated statements of cash flows data for the periods presented:

Six Months Ended

Nine Months Ended

(in thousands)

Net cash provided by operating activities $ 146,263 $ 2,333

Net cash provided by (used in) operating activities $ 310,115 $ (159,872)

Net cash used in investing activities (10,109) (15,650)

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Cash Flows from Operating Activities

Net cash provided by operating activities in the six months ended December 31, 2023 consisted primarily of net income of $169.9 million, a $50.1 million decrease in inventory, partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $48.6 million.

This net change consisted primarily of a $53.6 million decrease in net accounts payable and accrued liabilities, a $29.3 million decrease in taxes payable, and a $17.0 million increase in vendor deposits.

Net cash provided by operating activities in the six months ended December 31, 2022 consisted primarily of net income of $205.4 million, partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $219.1 million.

This net change consisted primarily of a $388.1 million increase in inventory, a $32.3 million increase in accounts receivable, a $8.9 million increase in prepaid expense and other assets, a $221.5 million increase in net accounts payable and accrued liabilities, a $24.4 million decrease in taxes payable due to the timing of federal tax payments and a $15.0 million decrease in vendor deposits.

Net cash provided by operating activities during the nine months ended March 31, 2024 consisted primarily of net income of $246.2 million, a $181.7 million decrease in inventory, non-cash adjustments of $59.9 million partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $177.7 million.

This net change in operating assets and liabilities consisted primarily of a $86.0 million decrease in net accounts payable and accrued liabilities, a $28.5 million decrease in taxes payable, and a $41.7 million increase in vendor deposits.

Net cash used in operating activities during the nine months ended March 31, 2023 consisted primarily of net income of $304.0 million, partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $487.7 million.

This net change consisted primarily of a $489.5 million increase in inventory, a $26.7 million increase in accounts receivable, a $8.7 million increase in prepaid expense and other assets, a $73.5 million increase in net accounts payable and accrued liabilities, a $28.7 million decrease in taxes payable due to the timing of federal tax payments and a $5.0 million increase in vendor deposits.

Cash Flows from Investing Activities

We used $6.9 million of cash in investing activities during the six months ended December 31, 2023.

We used $10.1 million of cash in investing activities during the nine months ended March 31, 2024.

Our investing activities consisted primarily of $10.1 million of capital expenditures.

We used $13.5 million of cash in investing activities during the six months ended December 31, 2022.

We used $15.7 million of cash in investing activities during the nine months ended March 31, 2023.

Our investing activities consisted primarily of $15.7 million of capital expenditures.

Cash Flows from Financing Activities

We used $156.6 million of cash in financing activities during the six months ended December 31, 2023.

During the six months ended December 31, 2023, we repaid $83.8 million under the Company's credit Facilities and used $72.5 million related to dividends paid on our common stock.

We used $34.4 million of cash in financing activities during the six months ended December 31, 2022.

During the six months ended December 31, 2022, we used $72.5 million related to dividends paid on our common stock and received $107.5 million (net) of funds under the Company’s credit Facilities.

We used $312.3 million of cash in financing activities during the nine months ended March 31, 2024.

During the nine months ended March 31, 2024, we repaid $203.1 million under the Company's credit Facilities and used $108.8 million related to dividends paid on our common stock.

We received $191.8 million of cash from financing activities during the nine months ended March 31, 2023.

During the nine months ended March 31, 2023, we received $301.3 million (net) of funds under the Company’s credit Facilities and used $108.8 million related to dividends paid on our common stock.

We believe our existing cash and cash equivalents, in addition to the ability to draw cash under the Revolving Facility, if needed, will be sufficient to meet our near-term working capital requirements, dividends, and capital expenditure needs for the next twelve months, as well as long-term liquidity requirements in the event that the cash from operations is not adequate to meet our cash needs.

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We believe the fair value of these indemnification agreements is minimal.

We have not recorded any liabilities for these agreements as of December 31, 2023.

Based upon our historical experience and information known as of the date of this Quarterly Report on Form 10-Q, we do not believe it is likely that we will have material liability for the above indemnities as of December 31, 2023.

We have not recorded any liabilities for these agreements as of March 31, 2024.

Contractual Obligations and Off-Balance Sheet Arrangements

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We subcontract with third parties to manufacture our products and supply key components.

As of December 31, 2023, we had $1,045.0 million of purchase commitments with these third parties.

As of March 31, 2024, we had $949.5 million of purchase commitments with these third parties.

If we cancel all or part of the orders, we may still be liable to the contract manufacturers for the cost of the components purchased by the subcontractors to manufacture our products.

There have been no significant liabilities for current or anticipated cancellations recorded as of December 31, 2023.

There have been no significant liabilities for current or anticipated cancellations recorded as of March 31, 2024.

Our consolidated financial position and results of operations could be negatively impacted if we were required to compensate these third parties.

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Transition Tax

We have obligations of $50.6 million as of December 31, 2023, related to transition tax.

Payment of these obligations are expected to be $22.5 million for fiscal 2025 and $28.1 million for fiscal 2026.

These obligations are included within Income tax payable and Long-term taxes payable on our consolidated balance sheets.

We have an obligation of $50.6 million as of March 31, 2024, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

We expect to make payments of $22.5 million and $28.1 million in the first quarter of fiscal 2025 and 2026, respectively, in relation to this obligation.

This obligation is included within Income tax payable and Long-term taxes payable on our consolidated balance sheets.

Other Obligations

We had other obligations of $5.5 million as of December 31, 2023, which consisted primarily of commitments related to research and development projects.

We had other obligations of $5.8 million as of March 31, 2024, which consisted primarily of commitments related to research and development projects.

Unrecognized Tax Benefits

As of December 31, 2023, we had $34.7 million of unrecognized tax benefits and an additional $4.3 million for accrued interest classified as non-current liabilities.

As of March 31, 2024, we had $35.9 million of unrecognized tax benefits and an additional $5.0 million for accrued interest classified as non-current liabilities.

At this time, we are unable to make a reasonably reliable estimate of timing of payments in individual years in connection with these tax liabilities.

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Note About Forward-Looking Statements

When used in this Report, the words “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and negatives of those terms are intended to identify forward-looking statements.

liabilities, the effects of government regulations, the impact of tariffs, the expected impact of taxes on our liquidity and results of operations, our compliance with laws and regulations, our expected future operating costs and expenses and expenditure levels for research and development, selling, general and administrative expenses, fluctuations in operating results, fluctuations in our stock price, our payment of dividends, our future liquidity and cash needs, and the adequacy of and our reliance on our source of liquidity to meet such needs, the Facilities (as defined herein), future acquisitions of and investments in complimentary businesses, the expected impact of various accounting policies and rules adopted by the Financial Accounting Standards Board ,the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan on our business and results of operations.

When used in this Report, the words “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,”

“plans” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and negatives of those terms are intended to identify forward-looking statements.

These are statements that relate to future periods and include statements about our future results, sources of revenue, our dividend, our continued growth, our gross margins, market trends, our product development, our introduction of new products, technological developments, the features, benefits and performance of our current and future products, the ability of our products to address a variety of markets, the anticipated growth of demand for connectivity worldwide, our growth strategies, future prices, our competitive status, our efforts to mitigate shortages of components (including chipsets) used to manufacture our products, our dependence on our senior management and our ability to attract and retain key personnel, dependency on and concentration of our distributors, our employee relations, current and potential litigation, current or potential indemnification liabilities, the effects of government regulations, the impact of tariffs, the expected impact of taxes on our liquidity and results of operations, our compliance with laws and regulations, our expected future operating costs and expenses and expenditure levels for research and development, selling, general and administrative expenses, fluctuations in operating results, fluctuations in our stock price, our payment of dividends, our future liquidity and cash needs, and the adequacy of and our reliance on our source of liquidity to meet such needs, the Facilities (as defined herein), future acquisitions of and investments in complimentary businesses, the expected impact of various accounting policies and rules adopted by the Financial Accounting Standards Board ,the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan on our business and results of operations.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis