What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-07 compared with 2024-11-08 · 89 added, 70 removed, 197 unchanged (45% of the section changed)

3 unchanged sentences

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include

those discussed below and elsewhere in this quarterly report, particularly in Note 9, “Commitments and Contingencies” to our consolidated financial statements and Part II “Other Information”, Item 1-Legal Proceedings and 1A-Risk Factors, in this report.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this quarterly report, particularly in Note 9, “Commitments and Contingencies” to our consolidated financial statements and Part II “Other Information”, Item 1-Legal Proceedings and 1A-Risk Factors, in this report.

We develop technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home and personal use.

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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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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.

Sales to distributors accounted for 57% of our revenues during the three months ended September 30, 2024.

Direct sales accounted for 43% of our revenue during the three months ended September 30, 2024.

Sales to distributors accounted for 55% of our revenues during the six months ended December 31, 2024.

Direct sales accounted for 45% of our revenue during the six months ended December 31, 2024.

Cost of Revenues

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To the extent that the exchange rates move unfavorably for our contract manufacturers, they may try to pass these additional costs on to us, which could have a material impact on our future average selling prices and unit costs.

In June 2018, the Office of the United States Trade Representative announced new proposed tariffs for certain products imported into the U.S.

The vast majority of our products that are imported into the U.S.

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

In February 2025, the Office of the United States Customs and Border Protection, Department of Homeland Security announced an incremental 10% tariff for products imported into the U.S.

This will result in the products that are imported into the U.S.

from China after the effective date having additional tariffs imposed on them between 10% and 35%.

These tariffs have affected our operating results and margins.

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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.

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.

• 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.

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Results of Operations

Comparison of Three Months Ended September 30, 2024 and 2023

Comparison of Three and Six Months Ended December 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 September 30,

% of Revenues % of Revenues

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

2024 2023 2024 2023

% of Revenues % of Revenues % of Revenues % of Revenues

Revenues $ 599,879 100 % $ 464,954 100 % $ 1,150,223 100 % $ 928,032 100 %

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Total share-based compensation $ 1,793 $ 1,506 $ 3,489 $ 3,006

Total revenues increased $87.3 million, or 19%, from $463.1 million in the three months ended September 30, 2023 to $550.3 million in the three months ended September 30, 2024.

The increase in revenues for the three months ended September 30, 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.

Total revenues increased $134.9 million, or 29%, from $465.0 million in the three months ended December 31, 2023 to $599.9 million in the three months ended December 31, 2024.

Total revenues increased $222.2 million, or 24%, from $928.0 million in the six months ended December 31, 2023 to $1,150.2 million in the six months ended December 31, 2024.

The increase in revenues for the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was driven by an increase in revenue from both our Enterprise Technology platform and our Service Provider Technology platform.

Revenues by Product Type

Three Months Ended September 30,

(in thousands, except percentages)

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

2024 2023 2024 2023

(in thousands, except percentages) (in thousands, except percentages)

Enterprise technology $ 518,202 86 % $ 391,492 84 % $ 988,385 86 % $ 771,586 83 %

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Total revenues $ 599,879 100 % $ 464,954 100 % $ 1,150,223 100 % $ 928,032 100 %

Enterprise Technology revenue increased $90.1 million, or 24%, from $380.1 million in the three months ended September 30, 2023 to $470.2 million in the three months ended September 30, 2024.

The increase in Enterprise Technology revenue during the three months ended September 30, 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 except South America.

Service Provider Technology revenue decreased $2.8 million, or 3%, from $83.0 million in the three months ended September 30, 2023 to $80.2 million in the three months ended September 30, 2024.

The decrease in Service Provider Technology in the three months ended September 30, 2024, as compared to the same period in the prior year, was primarily due to decline in revenues in the North America and EMEA regions.

Enterprise Technology revenue increased $126.7 million, or 32%, from $391.5 million in the three months ended December 31, 2023 to $518.2 million in the three months ended December 31, 2024.

Enterprise Technology revenue increased $216.8 million, or 28%, from $771.6 million in the six months ended December 31, 2023 to $988.4 million in the six months ended December 31, 2024.

The increase in Enterprise Technology revenue during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to an increase in revenue from our Enterprise Technology platform across all regions except South America.

Service Provider Technology revenue increased $8.2 million, or 11%, from $73.5 million in the three months ended December 31, 2023 to $81.7 million in the three months ended December 31, 2024.

Service Provider Technology revenue increased $5.4 million, or 3%, from $156.4 million in the six months ended December 31, 2023 to $161.8 million in the six months ended December 31, 2024.

The increase in Service Provider Technology in the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to an increase in revenues in the North America and South 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 months ended September 30, 2024 and 2023 (in thousands, except percentages):

Three Months Ended September 30,

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

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

2024 2023 2024 2023

(in thousands, except percentages)

North America (1)

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Total revenues $ 599,879 100 % $ 464,954 100 % $ 1,150,223 100 % $ 928,032 100 %

(1) Revenue for the United States was $248.7 million and $209.2 million for the three months ended September 30, 2024 and 2023, respectively.

(1) Revenue for the United States was $296.1 million and $210.4 million for the three months ended December 31, 2024 and 2023, respectively.

Revenue for the United States was $544.8 million and $419.6 million for the six months ended December 31, 2024 and 2023, respectively.

North America

Revenues in North America increased by $46.5 million, or 21%, from $224.8 million in the three months ended September 30, 2023 to $271.2 million in the three months ended September 30, 2024.

The increase in North America revenues during the three months ended September 30, 2024, as compared to the same period in the prior year, was due to increased revenue from our Enterprise Technology products, offset in part by decreased revenue from our Service Provider Technology products.

Revenues in North America increased by $95.8 million, or 42%, from $225.9 million in the three months ended December 31, 2023 to $321.6 million in the three months ended December 31, 2024 and increased by $142.2 million, or 32%, from $450.6 million in the six months ended December 31, 2023 to $592.9 million in the six months ended December 31, 2024.

The increase in North America revenues during the three months and six months ended December 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 increased by $32.5 million, or 19%, from $172.4 million in the three months ended September 30, 2023 to $204.9 million in the three months ended September 30, 2024.

The increase in EMEA revenues during the three months ended September 30, 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.

Revenues in the Asia Pacific region increased by $4.9 million, or 13%, from $36.1 million in the three months ended September 30, 2023 to $40.9 million in the three months ended September 30, 2024.

The increase in Asia Pacific revenues during the three months ended September 30, 2024, as compared to the same period in the prior year, was due to increased revenue from both our Enterprise Technology products and our Service Provider Technology products.

Revenues in EMEA increased by $35.6 million, or 21%, from $173.0 million in the three months ended December 31, 2023 to $208.6 million in the three months ended December 31, 2024 and increased by $68.1 million, or 20%, from $345.3 million in the six months ended December 31, 2023 to $413.5 million in the six months ended December 31, 2024.

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

Revenues in the Asia Pacific region increased by $9.8 million, or 29%, from $33.3 million in the three months ended December 31, 2023 to $43.1 million in the three months ended December 31, 2024 and increased by $14.7 million, or 21%, from $69.4 million in the six months ended December 31, 2023 to $84.0 million in the six months ended December 31, 2024.

The increase in Asia Pacific revenues during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to increased revenue from our Enterprise Technology products, offset in part by decreased revenue from our Service Provider Technology products.

South America

Revenues in South America increased by $3.5 million, or 12%, from $29.8 million in the three months ended September 30, 2023 to $33.3 million in the three months ended September 30, 2024.

The increase in South America revenues during the three months ended September 30, 2024, as compared to the same period in the prior year, was due to increased revenue from our Service Provider Technology products, partially offset by a decrease in revenue from our Enterprise Technology products.

Gross profit margin increased to 42.1% in the three months ended September 30, 2024, compared to 39.7% in the three months ended September 30, 2023.

The increase in gross profit margin for the three months ended September 30, 2024, as compared to the comparable prior year period, was primarily driven by favorable product mix and lower tariffs, offset in part by higher shipping costs, warehouse related expenses and incremental excess and obsolete inventory charges.

Revenues in South America decreased by $6.3 million, or 19%, from $32.9 million in the three months ended December 31, 2023 to $26.6 million in the three months ended December 31, 2024 and decreased by $2.8 million, or 5%, from $62.7 million in the six months ended December 31, 2023 to $59.8 million in the six months ended December 31, 2024.

The decrease in South America revenues during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to a decrease in revenue from our Enterprise Technology products, offset in part by increased revenue from our Service Provider Technology products.

Gross profit margin increased to 41% in the three months ended December 31, 2024, compared to 38% in the three months ended December 31, 2023 and increased to 42% in the six months ended December 31, 2024, compared to 39% in the six months ended December 31, 2023.

The increase in gross profit margin for the three months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by favorable product mix, lower warehouse related expenses and excess and obsolete inventory charges, offset in part by higher shipping and tariff costs.

The increase in gross profit margin for the six months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by favorable product mix, lower warehouse-related expenses, excess and obsolete inventory charges and tariff costs, offset in part by higher shipping costs.

Operating Expenses

Research and Development

Research and development (“R&D”) expenses increased by $1.7 million, or 5%, from $36.3 million in the three months ended September 30, 2023 to $38.0 million in the three months ended September 30, 2024.

As a percentage of revenues, R&D expenses decreased from 8% for the three months ended September 30, 2023 to 7% for the three months ended September 30, 2024.

The increase in R&D expenses during the three months ended September 30, 2024, as compared to the comparable prior year period, was primarily driven by higher employee-related expenses, depreciation and software costs, offset in part by lower prototype-related expenses.

Research and development (“R&D”) expenses increased by $3.0 million, or 8%, from $36.9 million in the three months ended December 31, 2023 to $40.0 million in the three months ended December 31, 2024.

As a percentage of revenues, R&D expenses decreased from 8% for the three months ended December 31, 2023 to 7% for the three months ended December 31, 2024.

R&D expenses increased by $4.8 million, or 7%, from $73.2 million in the six months ended December 31, 2023 to $78.0 million in the six months ended December 31, 2024.

As a percentage of revenues, R&D expenses decreased from 8% for the six months ended December 31, 2023 to 7% for the six months ended December 31, 2024.

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

The increase in R&D expenses during the six months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by higher employee-related expenses, assets written off, software costs, and prototype-related expenses.

Sales, General and Administrative

Sales, general and administrative (“SG&A”) expenses increased by $5.1 million, or 27%, from $19.3 million in the three months ended September 30, 2023 to $24.4 million in the three months ended September 30, 2024.

As a percentage of revenues, SG&A expenses remained consistent at 4% for the three months ended September 30, 2023, compared to the three months ended September 30, 2024.

The increase in SG&A for the three months ended September 30, 2024, as compared to the comparable prior year period, was primarily due to higher fees associated with webstore credit card processing, professional fees and marketing expenses.

Sales, general and administrative (“SG&A”) expenses increased by $8.8 million, or 45%, from $19.6 million in the three months ended December 31, 2023 to $28.5 million in the three months ended December 31, 2024.

As a percentage of revenues, SG&A expenses increased from 4% for the three months ended December 31, 2023 to 5%, for the three months ended December 31, 2024.

SG&A expenses increased by $14.0 million, or 36%, from $38.9 million in the six months ended December 31, 2023 to $52.9 million in the six months ended December 31, 2024.

As a percentage of revenues, SG&A expenses increased from 4% for the six months ended December 31, 2023 to 5%, for the six months ended December 31, 2024.

The increase in SG&A for the three months ended December 31, 2024, as compared to the comparable prior year period, was primarily due to higher bad debt expenses relating to a customer default and higher fees associated with webstore credit card processing.

The increase in SG&A for the six months ended December 31, 2024, as compared to the comparable prior year period, was primarily due to higher bad debt expenses relating to a customer default, higher fees associated with webstore credit card processing, professional fees, marketing expenses and payroll expenses driven primarily by increase in number of employees.

Interest Expense and Other, net

Interest expense and other, net ("I&O") expenses decreased $10.6 million, or 50% from $21.2 million in the three months ended September 30, 2023 to $10.6 million in the three months ended September 30, 2024.

As a percentage of revenue, I&O decreased from 5% for the three months ended September 30, 2023 to 2% for the three months ended September 30, 2024.

The decrease in I&O expenses during the three months ended September 30, 2024, as compared to the comparable prior year period, was primarily due to lower interest expense driven by a decrease in borrowings and lower interest rates and foreign exchange gains.

Interest expense and other, net ("I&O") expenses decreased $6.8 million, or 37% from $18.3 million in the three months ended December 31, 2023 to $11.4 million in the three months ended December 31, 2024.

As a percentage of revenue, I&O decreased from 4% for the three months ended December 31, 2023 to 2% for the three months ended December 31, 2024.

I&O expenses decreased $17.5 million, or 44% from $39.5 million in the six months ended December 31, 2023 to $22.0 million in the six months ended December 31, 2024.

As a percentage of revenue, I&O decreased from 4% for the six months ended December 31,

2023 to 2% for the six months ended December 31, 2024.

The decrease in I&O expenses during both the three and six months ended December 31, 2024, as compared to the comparable prior year periods, was primarily due to lower interest expense driven by a decrease in borrowings and lower interest rates, partly offset by higher foreign exchange losses.

Provision for Income Taxes

Our provision for income taxes increased $11.3 million, or 59%, from $19.3 million for the three months ended September 30, 2023 to $30.6 million for the three months ended September 30, 2024.

Our effective tax rate increased to 19.3% for the three months ended September 30, 2024 as compared to 18.1% for the three months ended September 30, 2023.

The change in effective tax rates for the three months ended September 30, 2024, as compared to the same period in the prior year, was primarily driven by a change in the mix of income earned in various tax jurisdictions.

Our provision for income taxes increased $9.9 million, or 48%, from $20.7 million for the three months ended December 31, 2023 to $30.6 million for the three months ended December 31, 2024.

Our effective tax rate decreased to 18.3% for the three months ended December 31, 2024 as compared to 20.2% for the three months ended December 31, 2023.

Our provision for income taxes increased $21.2 million, or 53%, from $40.1 million for the six months ended December 31, 2023 to $61.2 million for the six months ended December 31, 2024.

Our effective tax rate decreased from 19.1% for the six months ended December 31, 2023 to 18.8% for the six months ended December 31, 2024.

The change in effective tax rates for the three and six months ended December 31, 2024, as compared to the same periods in the prior year, was primarily driven by a change in the mix of income earned in various tax jurisdictions as well as a U.S.

state adjustment recorded in the three months ended December 31, 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 $165.2 million and $126.3 million as of September 30, 2024 and June 30, 2024, respectively.

We had cash and cash equivalents of $133.1 million and $126.3 million as of December 31, 2024 and June 30, 2024, 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:

Three Months Ended

September 30,

Six Months Ended

(in thousands)

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Cash Flows from Operating Activities

Net cash provided by operating activities during the three months ended September 30, 2024 consisted primarily of net income of $128.0 million, and the benefit of decreasing vendor deposits of $21.7 million, decreasing inventories of $8.5 million and non-cash adjustments of $15.9 million, further augmented by other changes in operating assets and liabilities that resulted in net cash inflows of $59.7 million.

This net change in operating assets and liabilities consisted primarily of a $58.7 million increase in net accounts payable and accrued liabilities, a $6.2 million increase in taxes payable and $5.4 million decrease in accounts receivable.

Net cash provided by operating activities during the three months ended September 30, 2023 consisted primarily of net income of $87.8 million, partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $31.2 million.

This net change consisted primarily of a $33.5 million decrease in net accounts payable and accrued liabilities, a $25.7 million increase in vendor deposits, partially offset by a $28.6 million decrease in inventory.

Net cash provided by operating activities during the six months ended December 31, 2024 consisted primarily of net income of $264.8 million, the benefit of decreasing vendor deposits of $42.9 million and non-cash adjustments of $30.1 million, further augmented by other changes in operating assets and liabilities that resulted in net cash inflows of $48.4 million.

This net change in operating assets and liabilities consisted primarily of a $149.3 million increase in net accounts payable and accrued liabilities and $9.0 million increase in deferred revenue, partially offset by a $78.6 million increase in inventory, a $16.7 million decrease in taxes payable, a $10.3 million increase in prepaid expenses and other assets and a $4.3 million increase in accounts receivable.

Net cash provided by operating activities during 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 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, 29.3 million decrease in taxes payable, and a $17.0 million increase in vendor deposits.

Cash Flows from Investing Activities

We used $2.6 million of cash in investing activities during the three months ended September 30, 2024.

We used $4.6 million of cash in investing activities during the six months ended December 31, 2024.

Our investing activities consisted primarily of $4.6 million of capital expenditures.

We used $3.0 million of cash in investing activities during the three months ended September 30, 2023.

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

Our investing activities consisted primarily of $6.9 million of capital expenditures.

Cash Flows from Financing Activities

We used $192.2 million of cash in financing activities during the three months ended September 30, 2024.

During the three months ended September 30, 2024, we repaid $155.6 million under the Company's credit Facilities and used $36.3 million related to dividends paid on our common stock.

We used $71.0 million of cash in financing activities during the three months ended September 30, 2023.

During the three months ended September 30, 2023, we repaid $34.4 million under the Company’s credit Facilities and used $36.3 million related to dividends paid on our common stock.

We used $374.8 million of cash in financing activities during the six months ended December 31, 2024.

During the six months ended December 31, 2024, we repaid $301.9 million under the Company's credit Facilities and used $72.6 million related to dividends paid on our common stock.

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 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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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.

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.

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

In accordance with the Financial Accounting Standards Board’s ("FASB's"), Accounting Standards Codification ("ASC"), 450-20, Loss Contingencies, we record an accrual when we believe it is reasonably estimable and probable based upon historical experience.

In accordance with FASB's, Accounting Standards Codification ("ASC"), 450-20, Loss Contingencies, we record an accrual when we believe it is reasonably estimable and probable based upon historical experience.

We record a provision for estimated future warranty work in cost of goods sold upon recognition of revenues, and we review the resulting accrual regularly and periodically adjust it to reflect changes in warranty estimates.

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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 September 30, 2024.

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 September 30, 2024.

We have not recorded any liabilities for these agreements as of December 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 September 30, 2024, we had $1,134.3 million of purchase commitments with these third parties.

As of December 31, 2024, we had $1,150.2 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 September 30, 2024.

There have been no significant liabilities for current or anticipated cancellations recorded as of December 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 an obligation of $28.1 million as of September 30, 2024, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

We have an obligation of $28.1 million as of December 31, 2024, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

We expect to make a payment to fully settle this obligation in the first quarter of fiscal 2026.

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Other Obligations

We had other obligations of $6.2 million as of September 30, 2024, which consisted primarily of commitments related to research and development projects.

We had other obligations of $6.9 million as of December 31, 2024, which consisted primarily of commitments related to research and development projects.

Unrecognized Tax Benefits

As of September 30, 2024, we had $34.6 million of unrecognized tax benefits and an additional $5.4 million for accrued interest classified as non-current liabilities.

As of December 31, 2024, we had $36.1 million of unrecognized tax benefits and an additional $5.9 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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Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include, but are not limited to, the impact of the global shortage of components and pricing inflation associated therewith, the impact of U.S.

These risks and uncertainties include, but are not limited to, the impact of the

global shortage of components and pricing inflation associated therewith, the impact of U.S.

tariffs on results of operations, our ability to procure products, our ability to manage our growth, our ability to sustain or increase profitability, demand for our products, our ability to compete, our ability to rapidly develop new technology and introduce new products, our ability to safeguard our intellectual property, trends in the markets that we compete and fluctuations in general economic conditions, the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan on our business, results and liquidity, and the risks set forth throughout this Report, including under Part II:

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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