What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-08-23 compared with 2023-08-25 · 74 added, 69 removed, 252 unchanged (36% of the section changed)

4 unchanged sentences

We target the enterprise and service provider markets through our highly engaged community of service providers, distributors, value added resellers, webstores, systems integrators and corporate IT professionals, which we refer to as the Ubiquiti Community.

We target consumers through digital marketing, retail

chains and, to a lesser extent, the Ubiquiti Community.

We target consumers through digital marketing, including through our webstores, retail chains and, to a lesser extent, the Ubiquiti Community.

In addition to Mr.

8 unchanged sentences

We distribute our products through a worldwide network of over 100 distributors and online retailers and direct to customers through our webstores.

Supply Constraints and Risks – We have experienced significant supply constraints caused, in part, by the COVID-19 pandemic.

Supply Constraints and Risks – We have experienced significant supply constraints in the past, especially during the COVID-19 pandemic.

Our efforts to mitigate these supply constraints have included, for example, increasing our inventory build in an attempt to secure supply and meet customer demand, paying higher component and shipping costs to secure supply and modifying our product designs to leverage alternate suppliers.

Although these mitigation efforts are intended to optimize our access to the components required to meet customer demand for our products, we have limited visibility into future sales, which makes it difficult to forecast our future results of operations.

These mitigation efforts have increased, and are expected to continue to increase, our inventory and vendor deposit balances.

The increasing balances of inventories and vendor deposits 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.

These mitigation efforts have caused our inventory and vendor deposit balances to increase in the past, and they may cause such increases in the future.

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

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.

While the impact on our operations in Ukraine and its surrounding countries has not been material to our business or results of operations as of the date hereof, the full impact of the military conflict on our business and results of operations remains uncertain.

The extent to which the conflict may impact our business or results of operations in future periods will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions, as well as its impact on surrounding countries, including its impact on our operations in Ukraine and its surrounding countries, and its impact on global supply chains.

The extent to which the conflict may impact our business or results of

operations in future periods will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions, as well as its impact on surrounding countries, including its impact on our operations in Ukraine and its surrounding countries, and its impact on global supply chains.

Refer to “Part I – Item IA.

13 unchanged sentences

Enterprise Technology and Service Provider Technology.

• Enterprise Technology includes our UniFi platforms, including UniFi Gateway Consoles, UniFi WiFi, UniFi Switches, UniFi Protect, UniFi Access, UniFi-Talk 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.

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

• 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, 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 sales through our webstores.

Sales to distributors accounted for 62% and 64% of our revenues during the years ended June 30, 2024 and 2023, respectively.

Direct sales accounted for 36% and 35% of our revenues during the years ended June 30, 2023 and 2022, respectively.

Webstore sales accounted for 38% and 36% of our revenues during the years ended June 30, 2024 and 2023, respectively.

Cost of Revenues

2 unchanged sentences

We currently operate warehouses located in the U.S., Europe and Asia Pacific.

In addition, we outsource other logistics warehousing and order fulfillment functions located in China and to a lesser extent in other countries.

In addition, we outsource other logistics warehousing and order fulfillment functions located in Vietnam and to a lesser extent in other countries.

We also evaluate and utilize other vendors for various portions of our supply chain from time to time.

7 unchanged sentences

from China are currently subject to tariffs that range between 7.5% and 25%.

These tariffs have already affected our operating results and margins.

For so long as such tariffs are in effect, we expect it will continue to affect our operating results and margins.

These tariffs have affected our operating results and margins.

long as such tariffs are in effect, we expect it will continue to affect our operating results and margins.

As a result, our historical and current gross profit margins may not be indicative of our gross profit margins for future periods.

5 unchanged sentences

Over time, we expect our research and development costs to increase as we continue making significant investments in developing new products in addition to new versions of our existing products.

• Sales, general and administrative expenses include salary and benefit expenses, including share-based compensation, for employees and costs for contractors engaged in sales, marketing and general and administrative activities, as well as the costs of legal expenses, trade shows, marketing programs, promotional materials, bad debt expense, professional services, facilities, general liability insurance and travel.

• Sales, general and administrative expenses include salary and benefit expenses, including share-based compensation, for employees and costs for contractors engaged in sales, marketing and general and administrative activities, as well as the costs associated with credit card processing fees, legal expenses, trade shows, marketing programs, promotional materials, bad debt expense, professional services, facilities, general liability insurance and travel.

As our product portfolio and targeted markets expand, we may need to employ different sales models, such as building a traditional direct sales force.

45 unchanged sentences

Transaction prices are typically based on contracted rates.

Although payment terms vary, payment is generally due from customers within 60 days of the invoice date and the contracts do not have significant financing components or include extended payment terms.

Although payment terms vary, payment is generally due from distribution customers within 60 days of the invoice date and the contracts do not have significant financing components or include extended payment terms.

We are directly responsible for fulfilling the performance obligations in contracts with customers and do not rely on another party to fulfill our promise.

6 unchanged sentences

Inventory and Inventory Valuation

Our inventories are primarily finished goods and, to a lesser extent, raw materials.

Our inventories are comprised of finished goods and raw materials.

Inventories are stated at the lower of actual cost, computed using the first-in, first-out method, or net realizable value (NRV).

NRV is based upon an estimated average selling price reduced by the estimated costs of disposal.

The determination of NRV involves numerous judgments including estimating average selling prices based upon recent sales, industry trends, existing customer orders, and seasonal factors.

The determination of NRV involves numerous judgments including estimating average selling prices based upon recent sales.

Should actual market conditions differ from our estimates, future results of operations could be materially affected.

4 unchanged sentences

We also consider the rate at which new products will be accepted in the marketplace and how quickly customers will transition from older products to newer products.

If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required, which would have a negative impact on our gross margin.

If actual market conditions are less favorable than those projected by us, additional inventory write-downs may be required, which would have a negative impact on our gross margin.

If we ultimately sell inventory that has been previously written down, our gross margins in future periods would be positively impacted.

15 unchanged sentences

We reflect changes in recognition or measurement in the period in which our change in judgment occurs.

We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations.

We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the consolidated statement of operations and comprehensive income.

Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.

24 unchanged sentences

Total share-based compensation $ 6,358 $ 4,734

Total revenues increased $248.8 million, or 15%, from $1,691.7 million in fiscal 2022 to $1,940.5 million in fiscal 2023.

The increase in revenue was primarily driven by an increase in revenue in the Enterprise Technology platform.

During fiscal year ended June 30, 2023, there were no material price changes in our products sold.

Overall, our fiscal 2023 revenue benefited from our improved ability to secure components and produce products.

We have also experienced an increase in direct sales through our webstore which has a higher average selling price compared to sales to our distribution partners and we continue to introduce new products which may have average selling prices and margins different than our legacy products.

Total revenues decreased $12.0 million, or 0.6%, from $1,940.5 million in fiscal 2023 to $1,928.5 million in fiscal 2024.

The decrease in revenue was driven by a decrease in revenue from both our Enterprise Technology platform and our Service Provider Technology platform.

During fiscal year ended June 30, 2024, we experienced an increase in direct sales through our webstores compared to fiscal 2023 and a corresponding decline in sales through distributors.

Revenues by Product Type

4 unchanged sentences

Total revenues $ 1,928,490 100 % $ 1,940,512 100 %

Enterprise Technology revenues increased $304.7 million, or 23%, from $1,316.7 million in fiscal 2022, to $1,621.4 million in fiscal 2023 primarily due to increased revenue from our Enterprise Technology platform across all geographic regions.

During fiscal 2023 we were able to procure components and manufacture products at a level far above fiscal 2022.

Service Provider Technology revenues decreased $55.9 million, or 15%, from $375.0 million in fiscal 2022, to $319.1 million in fiscal 2023, primarily due to decreased revenues in our Service Provider Technology platform across all geographic locations.

Enterprise Technology revenues decreased $3.8 million, or 0.2%, from $1,621.4 million in fiscal 2023 to $1,617.7 million in fiscal 2024, primarily due to decline in revenue from our Enterprise Technology platform in the Europe, the Middle East, and Africa (“EMEA”) and Asia Pacific regions.

Service Provider Technology revenues decreased $8.3 million, or 2.6%, from $319.1 million in fiscal 2023 to $310.8 million in fiscal 2024, primarily due to decline in revenue in our Service Provider Technology platform in South America and Asia Pacific regions.

Revenues by Geography

13 unchanged sentences

Revenues in North America increased $24.2 million, or 2.6%, from $922.2 million in fiscal 2023 to $946.4 million in fiscal 2024.

The year-over-year increase was primarily due to increased revenue from Enterprise Technology products, partially offset by decreased revenue from Service Provider Technology products.

The year-over-year increase was due to increased revenue from both our Enterprise Technology products and Service Provider Technology products.

Europe, the Middle East, and Africa (“EMEA”)

Revenues in EMEA increased $84.1 million, or 12.5%, from $675.3 million in fiscal 2022 to $759.4 million in fiscal 2023.

The year-over-year increase was due to increased revenues from Enterprise Technology products, partially offset by decreased revenue from Service Provider Technology products.

Revenues in the Asia Pacific region increased $13.5 million, or 10.0%, from $135.0 million in fiscal 2022 to $148.5 million in fiscal 2023.

The year-over-year increase was due to increased revenues from Enterprise Technology products, partially offset by decreased revenue from Service Provider Technology products.

Revenues in EMEA decreased $19.3 million, or 2.5%, from $759.4 million in fiscal 2023 to $740.1 million in fiscal 2024.

The year-over-year decrease was due to a decline in revenues from our Enterprise Technology products, partially offset by an increase in revenue from our Service Provider Technology products.

Revenues in the Asia Pacific region decreased $20.6 million, or 13.9%, from $148.5 million in fiscal 2023 to $127.9 million in fiscal 2024.

The year-over-year decrease was due to a decline in revenues from both our Enterprise Technology products and Service Provider Technology products.

South America

1 unchanged sentence

The year-over-year increase was due to increased revenues from Enterprise Technology products, partially offset by decreased revenue from Service Provider Technology products.

Gross Profit Margin

Gross profit margin decreased to 38.4% in fiscal 2024 from 39.2% in fiscal 2023.

The decline in gross profit margin for fiscal 2023 as compared to fiscal 2022 was primarily driven by changes in product mix and higher component costs, partially offset by lower shipping costs.

The decline in gross profit margin for fiscal 2024 as compared to fiscal 2023 was primarily driven by incremental excess and obsolete inventory charges and warehouse-related operating expenses, partially offset by lower shipping costs and lower tariffs.

Operating Expenses

1 unchanged sentence

R&D expenses increased $14.6 million, or 10.1%, from $145.2 million in fiscal 2023 to $159.8 million in fiscal 2024.

As a percentage of revenues, R&D expenses decreased from 8% in fiscal 2022 to 7% in fiscal 2023.

The increase in R&D expense for fiscal 2023 versus fiscal 2022 was primarily driven by higher employee-related expenses and facility costs.

As a percentage of revenues, R&D expenses increased from 7% in fiscal 2023 to 8% in fiscal 2024.

The increase in R&D expense for fiscal 2024 versus fiscal 2023 was primarily driven by higher prototype-related expenses and employee-related expenses.

Sales, General and Administrative

1 unchanged sentence

As a percentage of revenues, SG&A expenses remained consistent at 4% for both fiscal 2023 and 2024.

The increase in fiscal 2023 SG&A expenses as compared to fiscal 2022 was primarily driven by increased fees associated with webstore credit card processing, partially offset by lower professional fees and marketing expenses.

The increase in fiscal 2024 SG&A expenses as compared to fiscal 2023 was primarily driven by higher fees associated with webstore credit card processing, marketing expenses, employee-related expenses and professional fees.

Interest Expense and Other, net

1 unchanged sentence

As a percentage of Revenue, I&O expense increased from 3% in fiscal 2023 to 4% in fiscal 2024.

The increase in I&O expense for fiscal 2023 as compared to fiscal 2022 was primarily driven by higher interest expense due to incremental borrowings and increased interest rates.

The increase in I&O expense for fiscal 2024 as compared to fiscal 2023 was primarily driven by higher interest expense due to increased levels of average debt outstanding and higher interest rates.

Provision for Income Taxes

Our provision for income taxes increased 19.6% from $65.8 million for fiscal 2022 to $78.7 million for fiscal 2023.

Our provision for income taxes decreased 6.1% from $78.7 million for fiscal 2023 to $73.9 million for fiscal 2024.

Our effective tax rate increased to 17.4% in fiscal 2024 as compared to 16.2% for fiscal 2023.

The change in effective tax rates for fiscal 2023 as compared to fiscal 2022 was primarily driven by a change in the mix of the income earned in various jurisdictions as well as an increase in current U.S.

taxes as a result of mandatory capitalization and amortization of R&D expenditures incurred in fiscal year 2023, as required by the Tax Cuts and Jobs Act of 2017 ("TCJA"), and its interplay with global intangible low-taxes income ("GILTI").

There is no offsetting deferred benefit due to our election to treat GILTI as a period cost.

The change in effective tax rates for fiscal 2024 as compared to fiscal 2023 was primarily driven by changes in the mix of income earned in various tax jurisdictions.

During 2021 the Organization for Economic Co-operation and Development (OECD) announced an agreed-upon framework for its members to implement a global minimum corporate tax of 15% for multinational enterprises, commonly referred to as Pillar Two.

Many countries have already proposed or enacted legislation to implement elements of the framework which will apply to Ubiquiti beginning in fiscal year 2025.

While we are monitoring developments and evaluating the potential impact on future periods, we do not expect Pillar Two to have a significant impact on our fiscal year 2025 financial results.

As additional jurisdictions enact Pillar Two legislation, transactional rules lapse, and other provisions of the minimum tax legislation become effective in our fiscal year 2026, we anticipate that our effective tax rate and cash tax payments may increase in future years.

Comparison of Year Ended June 30, 2023 and 2022

Pursuant to Regulation S-K item 303, a detailed review of our fiscal 2022 performance compared to our fiscal 2021 performance is set forth in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 under the caption “ Management’s Discussion and Analysis of Financial Condition and Results of Operations” , filed with the SEC on August 26, 2022.

Pursuant to Regulation S-K item 303, a detailed review of our fiscal 2023 performance compared to our fiscal 2022 performance is incorporated by reference from Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 under the caption “ Management’s Discussion and Analysis of Financial Condition and Results of Operations” , filed with the SEC on August 25, 2023.

Liquidity and Capital Resources

Sources and Uses of Cash

Our principal sources of liquidity are cash and cash equivalents, cash generated by operations, the availability of additional funds under the Facilities (as defined herein) and short-term investments.

Our principal sources of liquidity are cash and cash equivalents, cash generated by operations and the availability of additional funds under the Facilities (as defined herein).

We had cash and cash equivalents of $126.3 million and $114.8 million at June 30, 2024 and 2023, respectively.

2 unchanged sentences

Year ended June 30,

Net cash (used in) provided by operating activities $ (145,428) $ 370,259

Net cash provided by (used in) operating activities $ 541,516 $ (145,428)

Net cash used in investing activities (11,975) (20,934)

Net cash provided by (used in) financing activities 144,964 (472,273)

Net cash (used in) provided by financing activities (518,025) 144,964

Net increase (decrease) in cash and cash equivalents $ 11,516 $ (21,398)

Cash Flows from Operating Activities

For fiscal 2024 the net cash provided by operating activities was $541.5 million, primarily due to net income of $350.0 million, and the benefit of decreasing inventories by $250.7 million and non-cash adjustments of $59.5 million.

These cash inflows were partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $118.6 million.

This net change in operating assets and liabilities consisted primarily of a $70.5 million decrease in accounts payable and accrued liabilities, a $17.1 million decrease in income taxes payable, a $18.3 million increase in vendor deposits, a $17.6 million increase in prepaid expenses and other assets partially offset by a $6.6 million increase in deferred revenues.

For fiscal 2023 the net cash used in operating activities was $145.4 million, primarily due to a significant increase in inventory and to a lesser extent, increases in vendor deposits and accounts receivable.

2 unchanged sentences

The increase in account receivable is a result of higher sales.

Net cash provided by operating activities in fiscal 2022 consisted primarily of net income of $378.7 million, partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $38.1 million.

This net change consisted primarily of $29.6 million increase in inventory, $79.0 million increase in vendor deposits, and a $10.3 million decrease in taxes payable due to the timing of federal tax payments, offset by $52.7 million decrease in accounts receivable due to lower revenue for the period, a $1.8 million decrease in prepaid and other assets, and a $29.9 million increase in accounts payable, accrued and other liabilities.

Cash Flows from Investing Activities

We used $12.0 million of cash in investing activities during fiscal 2024.

Our investing activities consisted primarily of $20.9 million of capital expenditures and purchase of intangible assets.

Our investing activities consisted primarily of $12.0 million of capital expenditures.

We used $20.9 million of cash in investing activities during fiscal 2023.

Our investing activities consisted primarily of $13.5 million of capital expenditures and purchase of intangible assets, offset by $2.3 million net proceeds from sales and maturities of our available-for-sale securities.

Our investing activities consisted primarily of $20.9 million of capital expenditures and purchase of intangible assets.

Cash Flows from Financing Activities

We had cash outflows of $518.0 million from financing activities during fiscal 2024, which primarily consisted of repayments of debt and payment of common stock dividends.

During fiscal 2024, we repaid $215.0 million on our Revolving Facility, $157.5 million on our Term Loan Facilities, and paid $145.1 million for dividends on our common stock.

See Note 7 – Debt of the Notes to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information regarding the Facilities.

We had cash inflows of $145.0 million from financing activities during fiscal 2023.

During fiscal 2023, in order to support the increase in inventories we borrowed a net of $291.9 million under our facilities, we also paid $145.0 million for dividends on our common stock and debt issuance costs of $1.2 million.

During fiscal 2023, in order to support the increase in inventories, we borrowed a net of $291.9 million under our facilities.

We also paid $145.0 million for dividends on our common stock and debt issuance costs of $1.2 million.

During fiscal 2023 we increased the size of our facility to include an additional $250.0 million term loan.

1 unchanged sentence

See Note 7 – Debt of the Notes to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information regarding the Facilities.

We used $472.3 million of cash in financing activities during fiscal 2022.

During fiscal 2022, we used $618.1 million related to repurchase of common stock, $148.1 million related to dividends paid on our common stock, and received net proceeds from our borrowings of $295.0 million.

See Note 7 – Debt of the Notes to our Consolidated Financial Statements included in Part IV, Item 15 of this Annual Report on Form 10-K for additional information regarding the Facilities.

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, future stock repurchases, 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.

A key objective for liquidity in the next twelve months is to reduce inventories and debt levels.

However, this estimate is based on a number of assumptions that may prove to be wrong and we could exhaust our available cash and cash equivalents earlier than presently anticipated or need to rely more heavily on the Facilities or other sources of liquidity to

continue to meet our needs.

Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products, the availability of additional funds under the Facilities and overall economic conditions.

The COVID-19 pandemic and resulting global disruptions have caused and may continue to cause significant volatility in financial markets and the domestic and global economy.

This disruption can contribute to potential payment delays or defaults in our accounts receivable, affect asset valuations resulting in impairment charges, and affect the availability of financing credit as well as other segments of the credit markets.

For a further discussion of the uncertainties and business risks associated with the COVID-19 pandemic, refer to “Part I-Item 1A.

Risk Factors – Risks Related to Our Business and Industry - Our contract manufacturers, logistics centers and certain administrative and research and development operations, as well as our customers and suppliers, are located in areas likely to be subject to natural disasters, public health problems, military conflicts and geopolitical tensions, which could adversely affect our business, results of operations and financial condition” for additional information.

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.

Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products, management of inventory and vendor deposits, the availability of additional funds under the Facilities and overall economic conditions.

Inflation and the current geopolitical environment have caused and may continue to cause significant volatility in financial markets and the domestic and global economy.

This volatility can contribute to potential payment delays or defaults in our accounts receivable, affect asset valuations resulting in impairment charges, and affect the availability of financing credit as well as other segments of the credit markets.

See “Part I-Item 1A.

Risk Factors – Risks Related to Our Business and Industry - General global economic downturns and macroeconomic trends, including inflation or slowed economic growth, may negatively affect our customers and their ability to purchase our products.

A downturn or such other trends may decrease our revenues and increase our costs and may increase credit risk with our customers and impact our ability to collect account receivable and recognize revenue," for additional information.

We expect to continue to maintain financing flexibility in the current market conditions.

However, due to the rapidly evolving global situation, it is not possible to predict whether unanticipated consequences of the pandemic are reasonably likely to materially affect our liquidity and capital resources in the future.

However, due to the rapidly evolving global situation, it is not possible to predict whether unanticipated consequences of global economic downturns and macroeconomic trends are reasonably likely to materially affect our liquidity and capital resources in the future.

Warranties and Indemnifications

Our products are generally accompanied by a twelve to twenty-four month warranty from date of purchase, which covers both parts and labor.

Our products are generally accompanied by a twelve to twenty-four month warranty from date of purchase, which covers both parts

Generally, the distributor is responsible for the freight costs associated with warranty returns, and we absorb the freight costs of replacing items under warranty.

22 unchanged sentences

In addition, we may be subject to additional purchase obligations to our contract manufacturers for supply agreements and components ordered by them based on manufacturing forecasts we provide them each month.

See Note 9 – Commitments and Contingencies of the Notes to our Consolidated Financial Statements, included in Part IV, Item 15, of this Annual Report on Form 10-K for future payment

commitments under purchase commitments as of June 30, 2023.

See Note 9 – Commitments and Contingencies of the Notes to our Consolidated Financial Statements, included in Part IV, Item 15, of this Annual Report on Form 10-K for future payment commitments under purchase commitments as of June 30, 2024.

Transition Tax

We have obligations of $67.5 million as of June 30, 2023, related to transition tax.

Payment of these obligations are expected to be $16.9 million for fiscal 2024, $22.5 million for fiscal 2025 and $28.1 million for fiscal 2026.

We have obligations of $50.6 million as of June 30, 2024, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

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.

1 unchanged sentence

As of June 30, 2024, we have other obligations of $6.1 million which consisted primarily of commitments related to research and development projects.

Unrecognized Tax Benefits

As of June 30, 2024, we had $33.0 million of unrecognized tax benefits and an additional $4.8 million of 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.

Recent Accounting Pronouncements

1 unchanged sentence

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-K

Item 7. Management’s Discussion and Analysis