What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 79 added, 74 removed, 124 unchanged (55% of the section changed)

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Headquartered in Silicon Valley with operations around the world, we have approximately 1,700 employees and more than 35 years of operating experience.

In December 2023, we entered into a definitive agreement with Tobii AB, an eye tracking and attention computing company, pursuant to which we agreed to sell our AutoSense in-cabin safety business and related imaging solutions (the “Divestiture”).

The Divestiture was completed in January 2024, which has streamlined our business and further enhanced our focus on entertainment markets.

In December 2023, we entered into a definitive agreement with Tobii AB (“Tobii”), an eye tracking and attention computing company, pursuant to which we agreed to sell our AutoSense in-cabin safety business and related imaging solutions (the “Auto-Sense Divestiture”).

The AutoSense Divestiture was completed in January 2024, which has streamlined our business and further enhanced our focus on entertainment markets.

In August 2024, we entered into an Asset Purchase Agreement with Amazon.com Services LLC (the “Buyer”) to sell substantially all of the assets and certain liabilities of Perceive Corporation (now known as Xperi Pylon Corporation) (the “Seller”), a subsidiary focused on edge inference hardware and software technologies, for a gross amount of $80.0 million in cash, including a holdback of $12.0 million to be held for 18 months after the closing of the transaction (the “Perceive Transaction”) to secure our and the Seller’s indemnification obligations.

The Perceive Transaction was completed on October 2, 2024.

We expect net proceeds from the Perceive Transaction to be approximately $60.0 million after taxes, closing costs, and fees, inclusive of the holdback described above.

Refer to Note 14— Subsequent Events for additional information.

Results of Operations

The following table presents our historical operating results for the periods indicated as a percentage of revenue:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

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Provision for income taxes

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

We derive the majority of our revenue from licensing our technologies and solutions to customers.

For our revenue recognition policy including descriptions of revenue-generating activities, refer to Note 2— Revenue of the Notes to the Condensed Consolidated Financial Statements (Unaudited).

Three Months Ended June 30,

Three Months Ended September 30,

(dollars in thousands)

Revenue decreased by $7.3 million, or 6%, for the three months ended June 30, 2024 compared to the same period in the prior year.

The decrease was primarily attributable to a decline of $14.6 million in Consumer Electronics revenue as a result of a decline in minimum guarantee (“MG”) revenue driven by the timing and duration of MG contracts that were renewed as well as the Divestiture, and a decrease of $3.4 million in Media Platform revenue driven principally by a decline in advertising revenue from a unique initial ad buy that occurred in 2023.

These decreases were partially offset by an increase of $8.0 million in Connected Car revenue due to an increase in MG revenue in audio solutions, which was partially offset by the Divestiture, and an increase of $2.7 million in Pay-TV revenue, driven largely by continued increase in IPTV Solutions revenue and by higher core guide product revenue due to the timing and duration of MG contracts that were renewed, offset by declines in consumer hardware and subscription revenue in the second quarter of 2024.

Six Months Ended June 30,

Revenue increased by $2.5 million, or 2%, for the three months ended September 30, 2024 compared to the same period in the prior year.

The increase was primarily attributable to an increase of $21.4 million in Pay-TV revenue, driven largely by higher core guide product revenue due to the timing and duration of minimum guarantee (“MG”) contracts that were executed and continued growth in IPTV Solutions revenue, partially offset by declines in consumer hardware and subscription revenue, and an increase of $2.1 million in Connected Car revenue driven principally by increases in Audio Solutions and AutoStage revenue, partially offset by the impact of the AutoSense Divestiture.

These increases were partially offset by a decrease of $15.4 million in Consumer Electronics revenue resulting from declines in MG contract revenue and market-based softness in certain end products, and a decrease of $5.6 million in Media Platform middleware solutions revenue primarily due to the timing and duration of MG contracts that were renewed in the third quarter of 2023.

Nine Months Ended September 30,

(dollars in thousands)

Revenue decreased by $15.3 million, or 6%, for the six months ended June 30, 2024 compared to the same period in the prior year.

The decrease was primarily attributable to a decline of $25.2 million in Consumer Electronics revenue due to the Divestiture as well as a decline in MG revenue contracts due to the timing and duration of MG contracts up for renewal and executed, and a decrease of $1.1 million in Media Platform revenue driven principally by lower advertising revenue, which was partially offset by growth in our smart TV application software and middleware platform.

These decreases were partially offset by an increase of $11.8 million in Connected Car revenue as the result of MG revenue coupled with settlements executed which was partially offset by the Divestiture, during the first six months of 2024.

Revenue decreased by $12.8 million, or 3%, for the nine months ended September 30, 2024 compared to the same period in the prior year.

The decrease was primarily attributable to a decline of $40.6 million in Consumer Electronics revenue due to the AutoSense Divestiture as well as fewer MG revenue contracts due to the timing and duration of MG contracts up for renewal, and a decrease of $6.8 million in Media Platform revenue driven principally by lower advertising revenue associated with our core Pay-TV products and lower MG revenue from our middleware solutions platform.

These decreases were partially offset by an increase of $20.6 million in Pay-TV revenue driven largely by higher MG revenue in core guide products and continued growth in IPTV Solutions revenue, and an increase of $14.0 million in Connected Car revenue as a result of higher Audio Solutions and AutoStage revenue, coupled with settlements executed, all of which was partially offset by the impact of the AutoSense Divestiture, during the first nine months of 2024.

Operating Expenses

Three Months Ended June 30,

Three Months Ended September 30,

(dollars in thousands)

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Total operating expenses

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in thousands)

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Cost of Revenue, Excluding Depreciation and Amortization of Intangible Assets

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings and non-recurring engineering (“NRE”) services.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended June 30, 2024 was $29.0 million, as compared to $30.9 million in the same period of the prior year, a decrease of $1.9 million, or 6%.

The decrease was primarily attributable to lower costs incurred in connection with advertising revenue in the second quarter of 2024.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the six months ended June 30, 2024 was $58.7 million, as compared to $58.6 million in the same period of the prior year, an increase of $0.1 million, or 0%.

The increase was primarily attributable to higher delivery costs related to an increase in NRE revenue, mostly offset by lower costs incurred in connection with advertising revenue in the first six months of 2024.

Cost of revenue, excluding depreciation and amortization of intangible assets, consists primarily of employee-related costs, royalties paid to third parties, hardware product-related costs, content costs, hosting fees, maintenance costs and an allocation of facilities costs, as well as service center and other expenses related to providing our offerings, and non-recurring engineering (“NRE”) services.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the three months ended September 30, 2024 was $27.5 million, as compared to $26.4 million in the same period of the prior year, an increase of $1.1 million, or 4%.

The increase was primarily attributable to increases in Media Platform costs in the third quarter of 2024.

Cost of revenue, excluding depreciation and amortization of intangible assets, for the nine months ended September 30, 2024 was $86.2 million, as compared to $85.1 million in the same period of the prior year, an increase of $1.1 million, or 1%.

The increase was primarily attributable to higher delivery costs related to an increase in NRE revenue as well as an increase in Media Platform costs, partially offset by lower costs incurred in connection with advertising revenue in the first nine months of 2024.

Research and Development

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Other than certain software development costs that are capitalized, all research and development costs are expensed as incurred.

Research and development expense for the three months ended June 30, 2024 was $45.1 million, as compared to $55.7 million in the same period of the prior year, a decrease of $10.6 million, or 19%.

The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the Divestiture, a reduction in expenses in the Perceive subsidiary, decreases in bonuses and contractor expenses, and an increase in capitalized costs for internal-use software in the second quarter of 2024.

Research and development expense for the six months ended June 30, 2024 was $95.6 million, as compared to $110.6 million in the same period of the prior year, a decrease of $15.0 million, or 14%.

Research and development expense for the three months ended September 30, 2024 was $53.6 million, as compared to $56.4 million in the same period of the prior year, a decrease of $2.8 million, or 5%.

The decrease was primarily driven by lower research and development spend in the AutoSense in-cabin safety business and related imaging solutions following the AutoSense Divestiture, a reduction in expenses related to the Perceive subsidiary, decreases in stock-based compensation and bonus expenses, and an increase in capitalized costs for internal-use software in the third quarter of 2024.

These decreases were partially offset by certain one-time compensation and retention expenses associated with the Perceive Transaction as well as severance charges incurred during the third quarter of 2024.

Research and development expense for the nine months ended September 30, 2024 was $149.2 million, as compared to $167.0 million in the same period of the prior year, a decrease of $17.8 million, or 11%.

These decreases were partially offset by certain one-time compensation and retention expenses associated with the Perceive Transaction and severance charges incurred during the first nine months of 2024.

Selling, General and Administrative

Selling expenses consist primarily of compensation and related costs (including stock-based compensation expense) for sales and marketing personnel engaged in sales and licensee support, marketing programs, public relations, promotional materials, travel, and trade show expenses.

General and administrative expenses consist primarily of compensation and related costs (including stock-based compensation expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services.

General and administrative expenses consist primarily of compensation and related costs

(including stock-based compensation expense) for management, information technology, finance and legal personnel, legal fees and related expenses, facilities costs, and professional services.

Our general and administrative expenses, other than facilities-related expenses and fringe benefits, are not allocated to other expense line items.

Selling, general and administrative expenses for the three months ended June 30, 2024 were $53.1 million, as compared to $56.5 million in the same period of the prior year, a decrease of $3.4 million, or 6%.

The decrease was primarily attributable to

reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs in the second quarter of 2024.

Selling, general and administrative expenses for the six months ended June 30, 2024 were $109.5 million, as compared to $114.3 million in the same period of the prior year, a decrease of $4.8 million, or 4%.

The decrease was primarily attributable to reduced employee headcount as well as decreases in stock-based compensation and bonus expenses, partially offset by an increase in certain one-time transaction costs in the first six months of 2024.

Selling, general and administrative expenses for the three months ended September 30, 2024 were $56.5 million, as compared to $59.6 million in the same period of the prior year, a decrease of $3.1 million, or 5%.

Selling, general and administrative expenses for the nine months ended September 30, 2024 were $165.9 million, as compared to $173.9 million in the same period of the prior year, a decrease of $8.0 million, or 5%.

Stock-based Compensation

The following table sets forth our stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The following table sets forth our stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue, excluding depreciation and amortization of intangible assets

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We recognized stock-based compensation expense from restricted stock units and purchases made under our employee stock purchase plan.

Stock-based compensation expense decreased by $2.8 million and $4.0 million, or 15% and 12%, for the three and six months ended June 30, 2024 compared to the same periods of the prior year, respectively.

The decreases were primarily driven by a lower PSU expense, and reduced employee headcount during the first six months of 2024.

Stock-based compensation expense decreased by $2.4 million and $6.4 million, or 13% and 12%, for the three and nine months ended September 30, 2024 compared to the same periods of the prior year, respectively.

The decreases were primarily driven by lower expense for performance-based restricted stock units, and reduced employee headcount during each of the three and nine months ended September 30, 2024.

Depreciation Expense

We recognized depreciation expense for certain equipment, capitalized internal-use software, leasehold improvements, and buildings and improvements.

Depreciation expense for the three months ended June 30, 2024 was $3.3 million, as compared to $4.2 million in the same period of the prior year, a decrease of $0.9 million, or 22%.

Depreciation expense for the three months ended September 30, 2024 was $2.9 million, as compared to $4.2 million in the same period of the prior year, a decrease of $1.3 million, or 31%.

The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.

Depreciation expense for the six months ended June 30, 2024 was $6.9 million, as compared to $8.3 million in the same period of the prior year, a decrease of $1.4 million, or 17%.

Depreciation expense for the nine months ended September 30, 2024 was $9.8 million, as compared to $12.5 million in the same period of the prior year, a decrease of $2.7 million, or 22%.

The decrease was primarily due to certain fixed assets becoming fully depreciated over the past 12 months.

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We recognized amortization expense for certain intangible assets we acquired in business combinations that are recognized separately from goodwill.

Amortization expense for the three months ended June 30, 2024 was $11.0 million, as compared to $14.8 million in the same period of the prior year, a decrease of $3.8 million, or 25%.

Amortization expense for the three months ended September 30, 2024 was $10.9 million, as compared to $14.7 million in the same period of the prior year, a decrease of $3.8 million, or 26%.

The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

Amortization expense for the six months ended June 30, 2024 was $22.1 million, as compared to $29.6 million in the same period of the prior year, a decrease of $7.5 million, or 25%.

Amortization expense for the nine months ended September 30, 2024 was $33.0 million, as compared to $44.3 million in the same period of the prior year, a decrease of $11.3 million, or 26%.

The decrease was primarily due to certain intangible assets becoming fully amortized over the past 12 months.

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Impairment of Long-Lived Assets

As a result of optimizing our global real estate footprint and subleasing certain offices following the Spin-Off (as defined in Note 1— Description Of Business And Summary Of Significant Accounting Policies ), we recorded non-cash impairment charges of $1.1 million to reduce the carrying amount of certain operating lease ROU assets and property and equipment, including related leasehold improvements, during the six months ended June 30, 2023.

We determined that we may not be able to fully

recover the carrying amount of the leased offices due to how the offices were being used, a significant decrease in the expected market price of the ROU assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate leasing market.

We did not record any asset impairment charge for the six months ended June 30, 2024.

As a result of optimizing our global real estate footprint and subleasing certain offices following the Spin-Off (as defined in Note 1— Description Of Business And Summary Of Significant Accounting Policies ), we recorded non-cash impairment charges of $0 and $1.1 million to reduce the carrying amount of certain operating lease right-of-use (“ROU”) assets and property and equipment, including related leasehold improvements, during the three and nine months ended September 30, 2023, respectively.

We determined that we may not be able to fully recover the carrying amount of the leased offices due to how the offices were being used, a significant decrease in the expected market price of the ROU assets, and expected delays in subleasing the office facilities based on the condition of the commercial real estate leasing market.

We did not record any asset impairment charge for the three and nine months ended September 30, 2024.

Gain on Divestiture

As previously disclosed, we completed the Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets.

Upon the completion of the Divestiture, we recognized a gain of $22.9 million in the six months ended June 30, 2024.

Refer to Note 6— Divestiture of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

As previously disclosed, we completed the AutoSense Divestiture on January 31, 2024 and streamlined our business, further enhancing our focus on entertainment markets.

Upon the completion of the AutoSense Divestiture, we recognized a gain of $22.9 million in the nine months ended September 30, 2024.

Refer to Note 6— Divestitures of the Notes to Condensed Consolidated Financial Statements (Unaudited) for additional information.

We did not recognize any gain on divestiture in the nine months ended September 30, 2023.

Provision for Income Taxes

For the three and six months ended June 30, 2024, we recorded an income tax expense of $9.3 million and $13.6 million on a pretax loss of $21.4 million and $30.5 million, respectively;

which resulted in an effective tax rate of (43.4)% and (44.4)%, respectively.

The income tax expense for the three and six months ended June 30, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

For the three and nine months ended September 30, 2024, we recorded an income tax expense of $2.9 million and $16.4 million on a pretax loss of $16.9 million and $47.4 million, respectively, which resulted in an effective tax rate of (17.1)% and (34.7)%, respectively.

The income tax expense for the three and nine months ended September 30, 2024 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

federal income taxes, and state income taxes.

For the three and six months ended June 30, 2023, we recorded an income tax expense of $5.1 million and $4.8 million on a pretax loss of $34.3 million and $67.5 million, respectively;

which resulted in an effective tax rate of (14.9)% and (7.1)%, respectively.

The income tax benefit three and six months ended June 30, 2023 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

For the three and nine months ended September 30, 2023, we recorded an income tax expense of $9.7 million and $14.5 million on a pretax loss of $32.4 million and $99.9 million, respectively, which resulted in an effective tax rate of (29.9)% and (14.5)%, respectively.

The income tax expense for the three and nine months ended September 30, 2023 was primarily related to foreign withholding taxes, foreign income taxes, U.S.

federal income taxes, and state income taxes.

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The following table presents selected financial information related to our liquidity and significant sources and uses of cash and cash equivalents as of and for the periods presented:

June 30, 2024

September 30, 2024

December 31, 2023

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The ratio is calculated by dividing current assets by current liabilities.

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Our primary liquidity and capital resources are our cash and cash equivalents on hand.

Cash and cash equivalents were $92.5 million at June 30, 2024, a decrease of $61.9 million from $154.4 million, including $12.3 million classified as held for sale in connection with the Divestiture, as of December 31, 2023.

This decrease resulted primarily from cash used in operations of $51.9 million, $5.9 million in payments of withholding taxes on net share settlement of equity awards and $8.1 million of capital expenditures and capitalized internal-use software costs, offset by $4.3 million in proceeds from the issuance of common stock under our employee stock purchase plan (“ESPP”).

Cash and cash equivalents were $72.7 million at September 30, 2024, a decrease of $81.7 million from $154.4 million, including $12.3 million classified as held for sale in connection with the AutoSense Divestiture, as of December 31, 2023.

This decrease resulted primarily from cash used in operations of $56.6 million, $10.0 million in repurchases of common stock, $6.6 million in payments of withholding taxes on net share settlement of equity awards and $12.4 million of capital expenditures, including capitalized internal-use software costs, offset by $4.3 million in proceeds from the issuance of common stock under our employee stock purchase plan (“ESPP”).

In addition, in October 2024, we completed the Perceive Transaction and received a cash payment of $68.0 million from the Buyer.

For information about our material cash requirements, see “Liquidity and Capital Resources” in Part II, Item 7 of our Form 10-K.

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We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases under the Program.

Since the inception of the Program, we have not repurchased any shares of our common stock.

The volume, timing, and manner of any repurchases will be determined at our discretion, subject to general market conditions, as well as our management of capital, general business conditions, other investment opportunities, regulatory requirements, and other factors.

We currently expect to fund the repurchase program from cash and cash equivalents and/or future cash flows.

The repurchase program does not obligate us to repurchase any specific number of shares of common stock, has no time limit, and may be modified, suspended, or discontinued at any time without notice at the discretion of the Board.

Any repurchases under the Program may not enhance the value of our common stock.

During the three months ended September 30, 2024, we repurchased a total of approximately 1.1 million shares of common stock at an average price of $8.92 per share for a total cost of $10.0 million.

As of September 30, 2024, the total remaining amount available for repurchase was $90.0 million.

We expect to continue to fund the repurchase program from cash and cash equivalents, including from the net proceeds of the Perceive Transaction.

Repurchases under the Program may not enhance the value of our common stock.

Cash Flows from Operating Activities

Net cash used in operating activities was $51.9 million for the six months ended June 30, 2024, primarily due to our net loss of $44.0 million being further adjusted by $42.2 million of changes in operating assets and liabilities, including payment of employee annual bonuses for 2023 performance, and $22.9 million of a non-cash gain recognized from the Divestiture, partially offset by non-cash items such as stock-based compensation expense of $30.1 million, amortization of intangible assets of $22.1 million, and depreciation expense of $6.9 million.

Net cash used in operating activities was $44.6 million for the six months ended June 30, 2023, primarily due to our net loss of $72.3 million being further adjusted by $44.6 million of changes in operating assets and liabilities, partially offset by non-cash items such as depreciation expense of $8.3 million, amortization of intangible assets of $29.6 million, stock-based compensation expense of $34.1 million, an asset impairment charge of $1.1 million, and change in deferred income taxes of $0.7 million.

Net cash used in operating activities was $56.6 million for the nine months ended September 30, 2024, primarily due to our net loss of $63.8 million being further adjusted by $55.6 million of changes in operating assets and liabilities driven principally by an increase of $43.5 million in unbilled contracts receivable, and $22.9 million of a non-cash gain recognized from the AutoSense Divestiture, partially offset by non-cash items such as stock-based compensation expense of $45.3 million, amortization of intangible assets of $33.0 million, and depreciation expense of $9.8 million.

Net cash used in operating activities was $20.6 million for the nine months ended September 30, 2023, primarily due to our net loss of $114.4 million being further adjusted by $14.7 million of changes in operating assets and liabilities, partially offset by non-cash items such as depreciation expense of $12.5 million, amortization of intangible assets of $44.3 million, stock-based compensation expense of $51.7 million, and an asset impairment charge of $1.1 million.

Cash Flows from Investing Activities

Net cash used in investing activities was $8.4 million and $6.2 million for six months ended June 30, 2024 and 2023, respectively, which was primarily related to capital expenditures and capitalized internal-use software.

Net cash used in investing activities was $12.9 million and $9.6 million for nine months ended September 30, 2024 and 2023, respectively, which was primarily related to capital expenditures, including capitalized internal-use software.

Capital Expenditures

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Cash Flows from Financing Activities

Net cash used in financing activities was $1.6 million for the six months ended June 30, 2024, due to $5.9 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $4.3 million in proceeds from the issuance of common stock under our ESPP.

Net cash provided by financing activities was $2.7 million for the six months ended June 30, 2023, primarily due to $5.9 million in proceeds from the issuance of common stock under our ESPP, partially offset by the payment of $3.2 million in withholding taxes related to net share settlement of equity awards.

Long-Term Debt

In connection with the acquisition of Vewd Software Holdings Limited (“Vewd”) on July 1, 2022, we issued a senior unsecured promissory note (the “Promissory Note”) to the sellers of Vewd in the principal amount of $50.0 million, of which $50.0 million was outstanding at June 30, 2024.

Net cash used in financing activities was $12.3 million for the nine months ended September 30, 2024, due to $10.0 million in repurchases of common stock under the Program and $6.6 million in payment of withholding taxes related to net share settlement of equity awards, partially offset by $4.3 million in proceeds from the issuance of common stock under our ESPP.

Net cash provided by financing activities was $1.5 million for the nine months ended September 30, 2023, due to $5.9 million in proceeds from the issuance of common stock under our ESPP, partially offset by the payment of $4.4 million in withholding taxes related to net share settlement of equity awards.

Short-Term Debt

Indebtedness outstanding under the Promissory Note bears an interest rate of 6.00% per annum, subject to potential adjustments as described in Note 8— Debt to the Condensed Consolidated Financial Statements included in this Quarterly Report.

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Short-Term Liquidity/Financings

We believe our current cash and cash equivalents will be sufficient to meet our needs for at least the next 12 months from the issuance date of these financial statements.

As the Promissory Note (see “Long-Term Debt”) matures on July 1, 2025, we may access the capital markets for additional funding.

We believe our current cash and cash equivalents will be sufficient to meet our needs for at least the next 12 months from the issuance date of the Condensed Consolidated Financial Statements included in this Quarterly Report.

As the Promissory Note (see “Short-Term Debt”) matures on July 1, 2025, we expect to use a portion of the proceeds from the Perceive asset sale and may also access the capital markets for additional funding to make full payment on the maturity date.

As we assess growth strategies, we may need to supplement our cash and cash equivalents with outside sources.

As part of our liquidity strategy, we will continue to monitor our current level of earnings and cash flow as well as our ability to access the capital markets in light of those levels.

As part of our liquidity strategy, we will continue to monitor our earnings and cash flow as well as our ability to access the capital markets in light of those levels.

Poor financial results, unanticipated expenses, unanticipated acquisitions of technologies or businesses or unanticipated strategic investments could give rise to additional financing requirements sooner than we expect.

Equity or debt financing may not be available when needed or, if available, equity financing may not be on terms satisfactory to us.

Equity or debt financing may not be available when needed or, if available, equity or debt financing may not be on terms satisfactory to us.

We may supplement our short-term liquidity needs with access to capital markets, if necessary, and strategic cost savings initiatives.

Our access to capital markets may be constrained and our cost of borrowing may increase under certain business and market conditions, and our liquidity is subject to various risks including the risks identified in “Risk Factors” included in Item 1A of our Form 10-K.

Critical Accounting Estimates

During the six months ended June 30, 2024, there were no significant changes in our critical accounting estimates.

During the nine months ended September 30, 2024, there were no significant changes in our critical accounting estimates.

For a discussion of our critical accounting estimates, see Part II, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K.

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Quantitative and Qualitati ve Disclosures About Market Risk.

There have been no material changes to our exposure to market risk since December 31, 2023.

For a discussion of our market risk, see Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk in our Form 10-K.

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