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What changed in Astera Labs, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Astera Labs, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+289 added−313 removedSource: 10-K (2026-02-20) vs 10-K (2025-02-14)

Top changes in Astera Labs, Inc.'s 2025 10-K

289 paragraphs added · 313 removed · 232 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

25 edited+0 added−1 removed38 unchanged
Biggest changeAs of December 31, 2024, we owned one trademark registration for the “ASTERA LABS” mark in the United States, a trademark application for “ASTERA LABS” in the United States and 12 related foreign trademark applications. Competition We offer a differentiated and holistic Intelligent Connectivity Platform purpose-built for cloud and AI infrastructure workloads.
Biggest changeWe also have related foreign trademark applications that are pending. Competition We offer a differentiated and holistic Intelligent Connectivity Platform purpose-built for cloud and AI infrastructure workloads. Our competitors typically compete with us with respect to some, but not all, of our solutions.
Because of the global deployment of our products, we maintain a field applications engineering (“FAE”) team, which provides customers with on-site technical resources as required. Our FAE teams are located near customer research and development sites in North America, Asia, and Israel.
Because of the global deployment of our products, we maintain a field applications engineering (“FAE”) team, which provides customers with on-site technical resources as required. Our FAE teams are located near customer research and development sites in North America and Asia, including Israel.
Our field teams are internally supported by product applications engineers, marketing, and business development teams in North America, Asia, and Israel. Manufacturing and Suppliers We use third parties to manufacture our products which include ICs, boards, and modules. The manufacturing process is subject to extensive testing and verification.
Our field teams are internally supported by product applications engineers, marketing, and business development teams in North America and Asia, including Israel. Manufacturing and Suppliers We use third parties to manufacture our products, which include ICs, boards, and modules. The manufacturing process is subject to extensive testing and verification.
They often engage third party contract manufacturers and design partners to manufacture their systems. Our customers is defined as our end customers, our end customers’ manufacturing partners, and our distributors. When the context requires, we may use “end customers,” which are primarily hyperscalers and System OEMs, to distinguish from our end customers’ manufacturing partners and our distributors.
They often engage third party contract manufacturers and design partners to manufacture their systems. Our customers are defined as our end customers, our end customers’ manufacturing partners, and our distributors. When the context requires, we may use “end customers,” which are primarily hyperscalers and System OEMs, to distinguish from our end customers’ manufacturing partners and our distributors.
Industry Overview Astera Labs is a global semiconductor company which provides hardware and software solutions for AI and cloud infrastructure applications to solve data, memory, and networking bottlenecks. We believe we are well-positioned to benefit from the AI and cloud infrastructures positive trends by addressing the industry’s next generation of connectivity challenges driven by increasing speed requirements and system complexity.
Industry Overview Astera Labs is a global semiconductor company that provides hardware and software solutions for AI and cloud infrastructure applications to solve data, memory, and networking bottlenecks. We believe we are well-positioned to benefit from the AI and cloud infrastructures positive trends by addressing the industry’s next generation of connectivity challenges driven by increasing speed requirements and system complexity.
The scope, nature, and severity of such controls varies widely across different countries and may change frequently over time. Such laws, rules, and regulations may delay the introduction of some of our products or impact our competitiveness through restricting our ability to do business in certain places or with certain entities and individuals. For example, the U.S.
The scope, nature, and severity of such controls vary widely across different countries and may change frequently over time. Such laws, rules, and regulations may delay the introduction of some of our products or impact our competitiveness through restricting our ability to do business in certain places or with certain entities and individuals. For example, the U.S.
Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic processing Units (“GPUs”) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules, shipping millions of devices across all of the major hyperscalers.
Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units (“GPUs”) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules, shipping millions of devices across leading hyperscalers.
Our software suite provides three distinct capabilities to our customers which include Link Management, Fleet Management, and Reliability, Availability, Serviceability (“RAS”). Ecosystem and Customers Our customers include major hyperscalers, leading AI accelerator vendors (including GPU vendors), and system OEMs. We collaborate closely with our customers’ manufacturing and design partners, our ecosystem partners, and, importantly, directly with our customers.
Our software suite provides three distinct capabilities to our customers that include Link Management, Fleet Management, and Reliability, Availability, Serviceability (“RAS”). Ecosystem and Customers Our customers include major hyperscalers, leading AI accelerator vendors (including GPU vendors), and system OEMs. We collaborate closely with our customers’ manufacturing and design partners, our ecosystem partners, and, importantly, directly with our customers.
Our issued patents and pending patent applications generally relate to interconnect and memory control technology, and printed circuit board and package designs. These issued patents, and any patents granted from our pending patent applications, are expected to expire between 2039 and 2043, without taking potential patent term extensions or adjustments into account.
Our issued patents and pending patent applications generally relate to interconnect and memory control technology, and printed circuit board and package designs. These issued patents, and any patents granted from our pending patent applications, are expected to expire between 2039 and 2044, without taking potential patent term extensions or adjustments into account.
While we take 3 Table of Contents commercially reasonable steps to protect and maintain our trade secrets, including by entering into confidentiality agreements with our employees, consultants, and contractors and by maintaining physical security of our premises and physical and electronic security of our information technology systems, such measures may not prove to be adequate and there may not be any available remedies.
While we take commercially reasonable steps to protect and maintain our trade secrets, including by entering into confidentiality agreements with our employees, consultants, and contractors and by maintaining physical security of our premises and physical and electronic security of our information technology systems, such measures may not prove to be adequate and there may not be any available remedies.
Our products, which include Aries PCIe®/CXL® Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches are built upon industry standard connectivity protocols such as peripherals Component Interconnect Express (“PCIe”), Ethernet, and Computer Express Link (“CXL”) to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.
Our products, which include Aries PCIe®/CXL® Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express (“PCIe”), Ethernet, and Compute Express Link (“CXL”) to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.
We routinely review our development efforts to assess the existence and patentability of new inventions. Moreover, we rely, in part, on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. However, trade secrets can be difficult to protect.
We routinely review our development efforts to assess the existence and patentability of new inventions. 3 Table of Contents Moreover, we rely, in part, on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. However, trade secrets can be difficult to protect.
Although there is no assurance that existing or future governmental laws and regulations applicable to our operations and the sale of our products will not have a material adverse effect on our capital expenditures, results of operations, and competitive position, we do not currently anticipate material expenditures for 4 Table of Contents government regulations.
Although there is no assurance that existing or future governmental laws and regulations applicable to our operations and the sale of our products will not have a material adverse effect on our capital expenditures, results of operations, and competitive position, we do not currently anticipate material expenditures for government regulations.
Scorpio Smart Fabric Switches. Our Scorpio products are purpose-built to enable our hyperscaler customers to deploy AI platforms at rapid pace and scale by improving energy efficiency, optimizing performance per watt, increasing AI accelerator utilization, reducing time to market, and maximizing uptime with our COSMOS software suite.
Our Scorpio products are purpose-built to enable our hyperscaler customers to deploy AI platforms at rapid pace and scale by improving energy efficiency, optimizing performance per watt, increasing AI accelerator utilization, reducing time to market, and maximizing uptime with our COSMOS software suite.
Our Leo products allow our customers to overcome processor memory bandwidth bottlenecks and capacity limitations, while leveraging our COSMOS software suite’s built-in memory management and deep diagnostic capabilities. Leo ICs and boards enable expanding, sharing, and pooling of industry standard DRAM memory over high-speed serial links to support memory- intensive workloads running on AI accelerators and CPUs.
Our Leo products allow our customers to overcome processor memory bandwidth bottlenecks and capacity limitations, while leveraging our COSMOS software suite’s built-in memory management and deep diagnostic capabilities. Leo ICs and boards enable expanding, sharing, and pooling of industry standard DRAM memory over high-speed serial links to support memory-intensive workloads running on AI accelerators and CPUs. Scorpio Smart Fabric Switches.
We have committed, and intend to continue to commit, significant financial and other resources to technology and product innovation and development. We invest heavily in a global team of highly skilled engineers, with dedicated research and development offices in United States, Canada, India, and Israel.
We have committed, and intend to continue to commit, significant financial and other resources to technology and product innovation and development. We invest heavily in a global team of highly skilled engineers, with dedicated research and development offices in United States, Canada, Germany, India, Israel, Singapore, and Vietnam.
For example, in 2 Table of Contents 2024, our top three end customers represented an aggregate of approximately 80% of our revenue. Our arrangements with our customers are typically effected via purchase orders for specific products. These purchase orders dictate the material terms of the arrangement, such as purchase price, purchase quantity, delivery date, and delivery destination.
For example, in 2 Table of Contents 2025, our top three end customers represented an aggregate of approximately 86% of our revenue. Our arrangements with our customers are typically effected via purchase orders for specific products. These purchase orders dictate the material terms of the arrangement, such as purchase price, purchase quantity, delivery date, and delivery destination.
Our patented software-defined platform approach delivers critical connectivity performance, enable flexibility and customization, and support observability and predictive analytics. This approach aims to efficiently address the data, network, and memory bottlenecks, scalability, and other unique infrastructure requirements of our hyperscaler and system OEM customers.
Our patented software-defined platform approach delivers critical connectivity performance, enables flexibility and customization, and supports observability and predictive analytics. This approach aims to efficiently address the data, network, and memory bottlenecks, scalability, and other unique infrastructure requirements of our hyperscaler and system OEM customers.
Our Products and Solutions In the last five years, we have successfully introduced four revenue-generating product families across multiple form factors including ICs, boards, and modules that are built upon our software-defined IC architecture. Additionally, we have developed a software suite which is embedded in our connectivity products and integrated into our customers’ systems.
Our Products and Solutions In recent years, we have successfully introduced four revenue-generating product families across multiple form factors including ICs, boards, and modules that are built upon our software-defined IC architecture. Additionally, we have developed a software suite that is embedded in our connectivity products and integrated into our customers’ systems.
We rely on a combination of intellectual property rights, including patents, copyrights, trademarks, trade secrets, and contractual protections, to protect our core technology. As of December 31, 2024, we owned 18 issued patents and 28 pending patent applications in the United States, and four pending foreign patent applications.
We rely on a combination of intellectual property rights, including patents, copyrights, trademarks, trade secrets, and contractual protections, to protect our core technology. As of December 31, 2025, we owned 26 issued patents and 35 pending patent applications in the United States, and one issued patent and five pending patent applications in foreign jurisdictions.
Government Regulation We are subject to the laws and regulations of various jurisdictions and governmental agencies affecting our operations and the sale of our products in areas including, but not limited to: intellectual property; tax; import and export requirements; anti-corruption; economic and trade sanctions; national security and foreign investment; foreign exchange controls and cash repatriation restrictions; data privacy and security requirements (such as the CCPA); competition; advertising; employment; product regulations; environment, health and safety requirements; and consumer laws.
Government Regulation We are subject to the laws and regulations of various jurisdictions and governmental agencies affecting our operations and the sale of our products in areas including, but not limited to: intellectual property; tax; import and export requirements; anti-corruption; economic and trade sanctions; national security and foreign investment; foreign exchange controls and cash repatriation restrictions; data privacy and security requirements (such as the California Consumer Privacy Act of 2018 (the “CCPA”) and the European Union General Data Protection Regulation with respect to the European Economic Area, and the United Kingdom (“UK”) General Data Protection Regulation, with respect to the UK, (collectively, the “GDPR”) ) ; competition; advertising; employment; product regulations; environment, health and safety 4 Table of Contents requirements; and consumer laws.
Our competitors typically compete with us with respect to some, but not all, of our solutions. Our principal competitors include Broadcom, Inc., Credo Technology Group Holding Ltd., Marvell Technology, Inc., Microchip Technology Inc., Montage Technology, Parade Technologies, Ltd, and Rambus, Inc.
Our principal competitors include Broadcom, Inc., Credo Technology Group Holding Ltd., Marvell Technology, Inc., Microchip Technology Inc., Montage Technology, Parade Technologies, Ltd., and Rambus, Inc.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors or others. We also protect our brand through common law trademark protections and trademark registrations.
In addition, our trade secrets may otherwise become known or be independently discovered by competitors or others. We also protect our brand through common law trademark protections and trademark registrations. As of December 31, 2025, we owned trademark registrations for “ASTERA LABS” in the United States, European Union, Japan, Singapore, Taiwan, United Kingdom, and Vietnam.
Our human capital resource objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees.
We have not experienced any work stoppages, and we consider our relations with our employees to be good. Our human capital resource objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and new employees.
We also supplement our workforce with additional contractors and consultants. To our knowledge, none of our employees are represented by a labor union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relations with our employees to be good.
Human Capital As of December 31, 2025, we had a total of 756 full-time employees globally, with 527 in North America, 208 in Asia, and 21 in Europe. We also supplement our workforce with additional contractors and consultants. To our knowledge, none of our employees are represented by a labor union or covered by a collective bargaining agreement.
Removed
Human Capital As of December 31, 2024, we had a total of 440 full-time employees located in six countries, 331 of our employees are located in the United States, 50 are located in Canada, 25 are located in Taiwan, 17 are located in China, 9 are located in India, and 8 are located in Israel.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

122 edited+35 added−34 removed336 unchanged
Biggest changeIf we are unsuccessful or delayed in qualifying any of our products with a customer, our business and operating results would suffer; • Pricing for the current generation of our existing products often decreases over time, which could negatively impact our revenue and gross margins; • We generally do not maintain long-term supply contracts with our third-party manufacturing partners, and any disruption in our supply of products could have a material adverse effect on our business, financial condition, and results of operations; • The complexity of our products could result in unforeseen delays or expense or undetected defects, bugs, or security vulnerabilities, which could adversely affect the market acceptance of new products, damage our reputation with current or prospective customers, and materially and adversely affect our operating costs; 6 Table of Contents • Adverse changes in the political, regulatory, and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business; • Our business would be adversely affected by the departure of existing members of our senior management team. • Cybersecurity risks, including cyber-attacks, data breaches, and system vulnerabilities could adversely affect our business and disrupt our operations; • We may be subject to warranty claims and product liability; • Litigation and other legal proceedings may adversely affect our business; • The occurrence of events for which we are self-insured, or which exceed our insurance limits, may adversely affect our profitability and liquidity; • We may pursue acquisitions, joint ventures, and dispositions, which could adversely affect our results of operations, and any acquisitions we do make could disrupt our business and harm our financial condition; • Our global operations expose us to numerous legal and regulatory requirements and failure to comply with such requirements, including unexpected changes to such requirements, could adversely affect our results of operations; and • Changes in existing tax laws, tax rules, or tax practices may adversely affect our financial results.
Biggest changeIf we are unsuccessful or delayed in qualifying any of our products with a customer, our business and operating results would suffer; • Pricing for the current generation of our existing products often decreases over time, which could negatively impact our revenue and gross margins; • We may pursue acquisitions, investments, joint ventures, and dispositions, which could adversely affect our results of operations, and any acquisitions we do make could disrupt our business and harm our financial condition; • We generally do not maintain long-term supply contracts with our third-party manufacturing partners, and any disruption in our supply of products could have a material adverse effect on our business, financial condition, and results of operations; 6 Table of Contents • The complexity of our products could result in unforeseen delays or expense or undetected defects, bugs, or security vulnerabilities, which could adversely affect the market acceptance of new products, damage our reputation with current or prospective customers, and materially and adversely affect our operating costs; • Adverse changes in the political, regulatory, and economic policies of governments in connection with trade with China and Chinese customers have reduced the demand for our products and damaged our business; • Our business would be adversely affected by the departure of existing members of our senior management team; • Cybersecurity risks, including cyber-attacks, cybersecurity incidents, data breaches, and system vulnerabilities could adversely affect our business and disrupt our operations; • We may be subject to warranty claims and product liability; • Litigation and other legal proceedings may adversely affect our business; • Our business, financial condition, and results of operations could be adversely affected by worldwide economic conditions, as well as political and economic conditions in the countries in which we conduct business; • The occurrence of events for which we are self-insured, or which exceed our insurance limits, may adversely affect our profitability and liquidity; • Our global operations expose us to numerous legal and regulatory requirements and failure to comply with such requirements, including unexpected changes to such requirements, could adversely affect our results of operations; and • Changes in existing tax laws, tax rules, or tax practices may adversely affect our financial results.
Relying on third-party manufacturing partners presents significant risks, including: • failure by us, our customers, or their customers to qualify a selected supplier; • capacity shortages during periods of high demand; • reduced control over delivery schedules and quality; • shortages of materials; • third parties infringing, misappropriating, or otherwise violating our intellectual property rights; • impairment of the operation of our products if errors or other defects occur in the third-party technologies we use, and difficulties correcting such errors or defects because the development and maintenance of those technologies is not within our control; • limited warranties on products supplied to us; and 11 Table of Contents • potential increases in prices or reduced yields.
Relying on third-party manufacturing partners presents significant risks, including: • failure by us, our customers, or their customers to qualify a selected supplier; 11 Table of Contents • capacity shortages during periods of high demand; • reduced control over delivery schedules and quality; • shortages of materials; • third parties infringing, misappropriating, or otherwise violating our intellectual property rights; • impairment of the operation of our products if errors or other defects occur in the third-party technologies we use, and difficulties correcting such errors or defects because the development and maintenance of those technologies is not within our control; • limited warranties on products supplied to us; and • potential increases in prices or reduced yields.
Additionally, trade tensions between the United States and China may lead to restrictions on our ability to use our third-party manufacturing partners or distributors located in China or may impose restrictions such that our use of such manufacturing partners or distributors may no longer be practical or on terms favorable to us.
Additionally, trade tensions between the United States and China may lead to restrictions on our ability to use our third-party manufacturing partners or distributors located in China may impose restrictions such that our use of such manufacturing partners or distributors may no longer be practical or on terms favorable to us.
Further, determination by a government that we have failed to comply with trade sanctions, investment, anti-bribery, or other regulations can result in penalties which may include denial of export privileges, fines, penalties, and seizure of products, or loss of reputation, any of which could have a material adverse effect on our business, sales, and earnings.
Further, determination by a government that we have failed to comply with trade sanctions, investment, anti-bribery, or other regulations can result in penalties that may include denial of export privileges, fines, penalties, and seizure of products, or loss of reputation, any of which could have a material adverse effect on our business, sales, and earnings.
As part of our business strategy, we may acquire or make investments 32 Table of Contents in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or investment.
As part of our business strategy, we may acquire or make investments in complementary companies, products, or technologies and issue equity securities to pay for any such acquisition or 32 Table of Contents investment.
In addition, current and future changes to the U.S. and foreign regulatory approval process and requirements related to acquisitions may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent the transaction or jeopardize, delay or reduce the anticipated benefits of the transaction, and impede the execution of our business strategy.
In addition, current and future changes to the U.S. and foreign regulatory approval process and requirements related to investments or acquisitions may cause approvals to take longer than anticipated, not be forthcoming or contain burdensome conditions, which may prevent the transaction or jeopardize, delay or reduce the anticipated benefits of the transaction, and impede the execution of our business strategy.
As such, there has only been a public market for our common stock for a short period of time. The market price of our common stock may continue to be volatile, which could cause the value of your investment to decline, and we may not be able to meet investor or analyst expectations.
As such, there has only been a public market for our common stock for a relatively short period of time. The market price of our common stock may continue to be volatile, which could cause the value of your investment to decline, and we may not be able to meet investor or analyst expectations.
Further, we continue to devote resources to protect our systems and data from unauthorized access or misuse, and we will likely be required to expend greater resources in the future. However, we cannot guarantee that our risk management processes will be effective at mitigating the risk to our information technology systems.
Further, we continue to devote resources to protect our systems and data from unauthorized access or misuse, and we will be required to expend greater resources in the future. However, we cannot guarantee that our risk management processes will be effective at mitigating the risk to our information technology systems.
Such dispositions involve risks and uncertainties, including our ability to sell such businesses on terms acceptable to us, or at all, disruption to other parts of our business, potential loss of employees or customers, or exposure to unanticipated liabilities or ongoing obligations to us following any such dispositions.
Such dispositions involve risks and uncertainties, including our ability to sell such assets or businesses on terms acceptable to us, or at all, disruption to other parts of our business, potential loss of employees or customers, or exposure to unanticipated liabilities or ongoing obligations to us following any such dispositions.
Any acquisitions we may undertake and their integration involve risks and uncertainties, such as: • unexpected delays, challenges and related expenses, and disruption of our business; • diversion of management’s attention from daily operations and the pursuit of other opportunities; • incurring significant restructuring charges and amortization expense, assuming liabilities (some of which may be unexpected) and ongoing or new lawsuits, potential impairment of acquired goodwill, acquired in-process research and development charges and other intangible assets, amortization expense, and increasing our expenses and working capital requirements; • the potential for deficiencies in internal controls at the acquired business, or other security vulnerabilities or issues, as well as implementing our own management information systems, operating systems, and internal controls for the acquired operations; • our due diligence process may fail to identify significant issues with the acquired business’ products, financial disclosures, accounting practices, legal, tax, and other contingencies, intellectual property rights, compliance with local laws and regulations (and interpretations thereof) in the United States, and multiple international jurisdictions; • additional acquisition-related debt and contingent liabilities, which could increase our leverage and potentially negatively affect our credit ratings resulting in more restrictive borrowing terms or increased borrowing costs thereby limiting our ability to borrow; 22 Table of Contents • the use of a significant portion of our available cash; • dilution of stock ownership of existing stockholders; • difficulties integrating the acquired business or company and in managing and retaining acquired employees, third-party manufacturing partners, and customers; and • inaccuracies in our original estimates and assumptions used to assess a transaction, which may result in us not realizing the expected financial or strategic benefits of any such transaction.
Any investments, joint ventures or acquisitions we may undertake and their integration involve risks and uncertainties, such as: • unexpected delays, challenges and related expenses, and disruption of our business; • diversion of management’s attention from daily operations and the pursuit of other opportunities; • incurring significant restructuring charges and amortization expense, assuming liabilities (some of which may be unexpected) and ongoing or new lawsuits, potential impairment of acquired goodwill, acquired in-process research and development charges and other intangible assets, amortization expense, and increasing our expenses and working capital requirements; 14 Table of Contents • the potential for deficiencies in internal controls at the acquired business, or other security vulnerabilities or issues, as well as implementing our own management information systems, operating systems, and internal controls for the acquired operations; • our due diligence process may fail to identify significant issues with the acquired business’ products, financial disclosures, accounting practices, legal, tax, and other contingencies, intellectual property rights, compliance with local laws and regulations (and interpretations thereof) in the United States, and multiple international jurisdictions; • additional acquisition-related debt and contingent liabilities, which could increase our leverage and potentially negatively affect our credit ratings resulting in more restrictive borrowing terms or increased borrowing costs thereby limiting our ability to borrow; • the use of a significant portion of our available cash; • dilution of stock ownership of existing stockholders; • difficulties integrating the acquired assets, business or company and in managing and retaining acquired employees, third-party manufacturing partners, and customers; and • inaccuracies in our original estimates and assumptions used to assess a transaction, which may result in us not realizing the expected financial or strategic benefits of any such transaction.
Geopolitical instability may increase the likelihood that we will experience direct or collateral consequences from cyber conflicts between nation-states or other politically motivated actors targeting critical technology infrastructure.
Geopolitical instability may also increase the likelihood that we will experience direct or collateral consequences from cyber conflicts between nation-states or other politically motivated actors targeting critical technology infrastructure.
From time to time, we may also seek to divest or wind down portions of our business, either acquired or otherwise, any of which could materially affect our cash flows and results of operations.
From time to time, we may also seek to divest or wind down assets or portions of our business, either acquired or otherwise, any of which could materially affect our cash flows and results of operations.
Furthermore, if any of these problems are not discovered until after we have commenced commercial production or deployment of a new product, we may be required to incur additional development costs, as well as costs to repair or replace our products, and expense previously capitalized production mask costs, all of which could materially adversely affect our reputation, business, results of operations, and/or financial condition.
Furthermore, if any of these problems are not discovered until after we have commenced commercial production or deployment of a new product, we may be required to incur additional development costs, as well as costs to repair or replace our products, and expense previously capitalized production equipment costs, all of which could materially adversely affect our reputation, business, results of operations, and/or financial condition.
Pursuant to our second amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for state law claims for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of, or a claim based on, a breach of a fiduciary duty owed by any current or former director, officer or other employee of ours to us or our stockholders; (iii) any action asserting a claim pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our second amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the 34 Table of Contents State of Delaware; or (iv) any action asserting a claim governed by the internal affairs doctrine (collectively, the “Delaware Forum Provision”).
Pursuant to our second amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for state law claims for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of, or a claim based on, a breach of a fiduciary duty owed by any current or former director, officer or other employee of ours to us or our stockholders; (iii) any action asserting a claim pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our second amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; or (iv) any action asserting a claim governed by the internal affairs doctrine (collectively, the “Delaware Forum Provision”).
We may pursue acquisitions, joint ventures, and dispositions, which could adversely affect our results of operations, and any acquisitions we do make could disrupt our business and harm our financial condition.
We may pursue acquisitions, investments, joint ventures, and dispositions, which could adversely affect our results of operations, and any acquisitions we do make could disrupt our business and harm our financial condition.
We cannot forecast the number, timing or size of future acquisitions, or the effect that any such acquisitions might have on our operating or financial results.
We cannot forecast the number, timing or size of future investments or acquisitions, or the effect that any such investments or acquisitions might have on our operating or financial results.
We routinely collect, receive, process, and store personal information (which may also be referred to as “personal data” or “personally identifiable data”) and sensitive data via our information systems, including intellectual property and other proprietary information about our business and that of our customers, employees, suppliers, business partners, and others.
We routinely collect, receive, process, and store personal information (which may also be referred to as “personal data” or “personally identifiable data”) and sensitive data via our information systems, including intellectual property and other proprietary information about our business and that of our customers, as well as personal data regarding our employees, suppliers, business partners, and others.
These factors include: • actual or anticipated changes in our results of operations, and variations between our actual results of operations and the expectations of securities analysts, investors, and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates, or the expectations of investors; • changes in operating the performance and stock market valuations of companies in our industry, including our competitors; • general economic conditions and slow or negative growth of related markets; • announcements by us or our competitors of design wins, acquisitions, new products, significant contracts, commercial relationships, or capital commitments; • our ability to develop and market new and enhanced products on a timely basis; • expectations of securities analysts, investors, and the financial community about the size or rate of growth of the cloud and AI infrastructure markets; • commencement of, or our involvement in, litigation; • disruption to our operations; • the emergence of new sales channels in which we are unable to compete effectively; • any major change in our board of directors or management; • changes in governmental regulations; and • other events or factors, including those resulting from political conditions, election cycles, war or incidents of terrorism, increased tariffs, or responses to these events.
These factors include: • actual or anticipated changes in our results of operations, and variations between our actual or forecasted results of operations and the expectations of securities analysts, investors, and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information, or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates, or the expectations of investors; • changes in operating the performance and stock market valuations of companies in our industry, including our competitors; • general economic conditions and slow or negative growth of related markets; • announcements by us or our competitors of design wins, acquisitions, new products, significant contracts, commercial relationships, or capital commitments; • our ability to develop and market new and enhanced products on a timely basis; • expectations of securities analysts, investors, and the financial community about the size or rate of growth of the cloud and AI infrastructure markets; • commencement of, or our involvement in, litigation; • disruption to our operations; • the emergence of new sales channels in which we are unable to compete effectively; • any major change in our board of directors or management; • changes in governmental regulations; and • other events or factors, including those resulting from political conditions, election cycles, government shutdowns, international or armed conflicts, war or incidents of terrorism, increased tariffs, or responses to these events.
Our customers may also become subject to such upcoming AI regulations, which could cause a delay or impediment to the commercialization of AI technology and could lead to a decrease in demand for our customers’ AI systems, and may adversely affect our business, financial condition, and results of operations.
Our customers may also become subject to such existing or upcoming AI laws and regulations, which could cause a delay or impediment to the commercialization of AI technology and could lead to a decrease in demand for our customers’ AI systems, and may adversely affect our business, financial condition, and results of operations.
The resources devoted to product development and sales and marketing may not generate material revenue for us, and we have needed in the past, and may need in the future, to write off excess and obsolete inventory if we have produced a product in excess of forecasted demand which does not materialize.
The resources devoted to product development and sales and marketing may not generate material revenue for us, and we have needed in the past, and may need in the future, to write off excess and obsolete inventory if we have produced a product in excess of forecasted demand that does not materialize.
Our third-party manufacturing partners and distributors, and the majority of our revenue, are concentrated primarily in Taiwan, China, and South Korea, areas that are or may be subject to geopolitical uncertainty, trade disputes and restrictions, environmental disasters, and other risks.
Our third-party manufacturing partners and distributors, and the majority of our revenue, are concentrated primarily in Singapore, China, Taiwan, South Korea, and other countries, areas that are or may be subject to geopolitical uncertainty, trade disputes and restrictions, environmental disasters, and other risks.
Risk Factors Summary Risks Related to Our Business • We may not sustain our growth rate, and we may not be able to manage future growth effectively; • We have a history of generating net losses, and if we are unable to achieve adequate revenue growth while our expenses increase, we may not maintain profitability in the future; • We have a limited operating history, and we may have difficulty accurately predicting our future revenue for the purpose of appropriately budgeting and adjusting our expenses; • We may be unsuccessful in anticipating and responding to new market trends and evolving industry standards, developing and selling new products, or penetrating new markets; • A substantial portion of our revenue is driven by a limited number of our end customers, and the loss of, or a significant reduction in, demand from one or a few of our top end customers would adversely affect our operations and financial condition; • If we fail to achieve design wins for our products, we may lose the opportunity for sales to customers for a significant period of time and be unable to recoup our investments in our products; • We may experience difficulties demonstrating to customers the value of our new products or newer generations of our existing products; • The adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain.
Risk Factors Summary Risks Related to Our Business • We may not sustain our growth rate, and we may not be able to manage future growth effectively; • We have a limited history of generating net income, and if we are unable to achieve adequate revenue growth while our expenses increase, we may not maintain profitability in the future; • We have rapidly grown as a business in dynamic and rapidly evolving markets , and we may have difficulty accurately predicting our future revenue for the purpose of appropriately budgeting and adjusting our expenses; • We may be unsuccessful in anticipating and responding to new market trends and evolving industry standards, developing and selling new products, or penetrating new markets; • A substantial portion of our revenue is driven by a limited number of our end customers, and the loss of, or a significant reduction in, demand from one or a few of our top end customers would adversely affect our operations and financial condition; • If we fail to achieve design wins for our products, we may lose the opportunity for sales to customers for a significant period of time and be unable to recoup our investments in our products; • We may experience difficulties demonstrating to customers the value of our new products or newer generations of our existing products; • The adoption, use, and commercialization of AI technology, and the continued rapid pace of developments in the AI field, are inherently uncertain.
Accidental or willful security breaches, data breaches, or other unauthorized access to our information systems or the systems of our third-party service providers, or the existence of computer viruses, malware (such as ransomware), or vulnerabilities in our or their data or software could expose us to a risk of information loss, business disruption, or misappropriation of proprietary and confidential information, including information relating to our products or customers or the personal information of our employees or third parties.
Accidental or willful cybersecurity incidents, data breaches, or other unauthorized access to our information systems or the systems of our third-party service providers, or the existence of computer viruses, malware (such as ransomware), or vulnerabilities in our or their data or software could expose us to a risk of information loss, business disruption, or the misappropriation of proprietary and confidential information, including information relating to our products or customers or the personal information of our employees or third parties.
Additionally, if the new ERP system does not ultimately operate as intended, the effectiveness of our internal control over financial reporting could be harmed. We may be subject to warranty claims and product liability.
Additionally, if the ERP system we implement does not ultimately operate as intended, the effectiveness of our internal control over financial reporting could be harmed. We may be subject to warranty claims and product liability.
To the extent that weak or volatile economic conditions, including due to a pandemic or health epidemic, labor shortages, supply chain disruptions, inflation, geopolitical developments (such as the implementation of, or changes to or further expansions of, trade sanctions, export restrictions, tariffs, and embargoes), deterioration of the financial services industry, and other events outside of our control, result in a reduced volume of business for our customers and prospective customers, demand for, and use of, our products has in the past and may in the future decline.
To the extent that weak or volatile economic conditions, including due to a pandemic or health epidemic, labor shortages, supply chain disruptions, inflation, government shutdowns, geopolitical developments (such as international conflicts and the implementation of, or changes to or further expansions of, trade sanctions, export restrictions, tariffs, and embargoes), deterioration of the financial services industry, and other events outside of our control, result in a reduced volume of business for our customers and prospective customers, demand for, and use of, our products has in the past and may in the future decline.
To the extent future pandemics, epidemics, outbreaks of infectious diseases, or public health crisis adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described herein.
To the extent future pandemics, epidemics, outbreaks of infectious diseases, or public health crises adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described herein.
Any unplanned production downtime or other operational problems and delays, if significant, could have a material adverse effect on our business, financial condition, and results of operations. 12 Table of Contents Our customers require our products and our third-party manufacturing partners to undergo a lengthy and expensive qualification process which does not assure volume product sales.
Any unplanned production downtime or other operational problems and delays, if significant, could have a material adverse effect on our business, financial condition, and results of operations. Our customers require our products and our third-party manufacturing partners to undergo a lengthy and expensive qualification process, which does not assure volume product sales.
We are dependent on the availability of this capacity to manufacture and assemble our products, and our third-party manufacturing partners have not provided assurances that adequate capacity will be available to us in the future. In periods when broad fluctuations or changes in business conditions occur, it is difficult to assess the impact on our business.
We are dependent on the availability of this capacity to manufacture and assemble our products, 17 Table of Contents and our third-party manufacturing partners have not provided assurances that adequate capacity will be available to us in the future. In periods when broad fluctuations or changes in business conditions occur, it is difficult to assess the impact on our business.
Our business is subject to complex and evolving laws and regulations regarding privacy, data protection, and cybersecurity, any actual or perceived failure to comply with such laws and regulations could have a material adverse effect on our business.
Our business is subject to complex and evolving laws and regulations regarding privacy, data protection, artificial intelligence and cybersecurity, any actual or perceived failure to comply with such laws and regulations could have a material adverse effect on our business.
We or such future third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities, and we can be held liable for the corrupt or other illegal activities of such future third-party intermediaries and our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
We or such future third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities, and we can be held liable for the corrupt or other illegal activities of such future third-party 24 Table of Contents intermediaries and our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.
We have implemented an anti-corruption compliance program, but cannot guarantee that all our employees and agents, as well as those companies we outsource certain of our business operations to, will not take actions in violation 24 Table of Contents of our policies and applicable law, for which we may be ultimately held responsible.
We have implemented an anti-corruption compliance program, but cannot guarantee that all our employees and agents, as well as those companies we outsource certain of our business operations to, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible.
If one or more of these analysts cease coverage of us or fail to publish reports on us on a regular basis, demand for our common stock could decrease, potentially causing our common stock trading price and trading volume to decline. We do not expect to declare or pay any dividends on our common stock for the foreseeable future.
If one or more of these analysts cease coverage of us or fail to publish reports on us on a regular basis, demand for our common stock could decrease, potentially causing our common stock trading price and trading volume to decline. 33 Table of Contents We do not expect to declare or pay any dividends on our common stock for the foreseeable future.
Moreover, while AI-adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain. Additionally, we expect to see increasing government and supranational regulation related to artificial intelligence use and ethics, which may also significantly increase the burden and cost of research, development, and compliance in this area.
Moreover, while AI-adoption is likely to continue and may accelerate, the long-term trajectory of this technological trend is uncertain. Additionally, we expect to see increasing government and supranational legislation and regulation related to AI use and ethics, which may also significantly increase the burden and cost of research, development, and compliance in this area.
Changes in current laws or regulations applicable to us or the imposition of new laws and regulations in the United States or other jurisdictions in which we do business, such as Canada, China, India, Israel, and Taiwan, could materially and adversely affect our business, financial condition, and results of operations. See “Item 2.
Changes in current laws or regulations applicable to us or the imposition of new laws and regulations in the United States or other jurisdictions in which we do business, such as Canada, China, Germany, India, Israel, Singapore, Taiwan and Vietnam, could materially and adversely affect our business, financial condition, and results of operations. See “Item 2.
Accordingly, we may have to devote a substantial amount of our resources to our strategic relationships, which could detract from or delay our completion of other important development projects. Delays in development could impair our relationships with our end customers and negatively impact forecasted sales of the products under development.
Accordingly, we may have to devote a substantial amount of our resources to our strategic relationships, which could detract from or delay our completion of other important development projects. Delays in development could impair 9 Table of Contents our relationships with our end customers and negatively impact forecasted sales of the products under development.
Although the governments of certain countries, including the United States, have taken actions to make their countries more attractive for chip manufacturing operations, there can be no assurances that the current geographic concentration of chip manufacturing will be meaningfully changed in the near term or at all.
Although the governments of certain countries, including the United States, have taken actions to make their countries more attractive for chip manufacturing 12 Table of Contents operations, there can be no assurances that the current geographic concentration of chip manufacturing will be meaningfully changed in the near term or at all.
Cybersecurity risks, including cyber-attacks, data breaches, and system vulnerabilities could adversely affect our business and disrupt our operations. We depend heavily on our technology infrastructure and cloud partners and maintain and rely upon certain critical information systems for the effective operation of our business.
Cybersecurity risks, including cyber-attacks, cybersecurity incidents, data breaches, and system vulnerabilities could adversely affect our business and disrupt our operations. We depend heavily on our technology infrastructure and cloud partners as well as maintain and rely upon certain critical information systems for the effective operation of our business.
In addition, many of our competitors have longer operating histories, greater name recognition, larger customer bases, and greater sales, marketing, and distribution resources than we do and some operate and maintain their own fabrication facilities. 26 Table of Contents Additionally, customer expectations and requirements have been evolving rapidly.
In addition, many of our competitors have longer operating histories, greater name recognition, larger customer bases, and greater sales, marketing, and distribution resources than we do and some operate and maintain their own fabrication facilities. Additionally, customer expectations and requirements have been evolving rapidly.
These information technology systems are subject to damage or interruption from a number of potential sources, including, but not limited to, natural disasters, destructive or inadequate code, computer malware, ransomware attacks, bugs, viruses, system vulnerabilities, social engineering, including phishing attacks, denial-of-service attacks, other malicious internet-based activity, online and offline fraud, wrongful conduct by insider employees or vendors, as well as data breaches, power failures, internal negligence, malfeasance, natural disasters or other events.
Our information technology systems are subject to damage or interruption from a number of potential sources, including, but not limited to, natural disasters, destructive or inadequate code, computer malware, ransomware attacks, bugs, viruses, system vulnerabilities, social engineering (including phishing attacks), denial-of-service attacks, other malicious internet-based activity, online and offline fraud, wrongful conduct by insider employees or vendors, as well as cybersecurity incidents, data breaches, power failures, internal negligence, malfeasance, and natural disasters.
We have experienced significant growth in a short period of time. Our revenue increased from $115.8 million for the year ended December 31, 2023 to $396.3 million for the year ended December 31, 2024 . We may not achieve similar growth rates in future periods.
We have experienced significant growth in a short period of time. Our revenue increased from $115.8 million for the year ended December 31, 2023 to $396.3 million for the year ended December 31, 2024 to $852.5 million for the year ended December 31, 2025 . We may not achieve similar growth rates in future periods.
Because of the extensive time and resources that we invest in researching and developing new products and new generations of our existing products, if we are unable to sell new products or new 10 Table of Contents generations of our existing products, our revenue could decline and our business, financial condition, and results of operations would be negatively affected.
Because of the extensive time and resources that we invest in researching and developing new products and new generations of our existing products, if we are unable to sell new products or new generations of our existing products, our revenue could decline and our business, financial condition, and results of operations would be negatively affected.
Further, although we plan to conduct extensive testing in an effort to ensure that the new ERP system is operating as intended, post-implementation disruptions to or difficulties in use of the new ERP could require us to incur additional costs, or could impair, among other things, our ability to record sales, process transactions, collect receivables, and produce timely and accurate historical and forecasted financial information, which could adversely impact our business, financial condition, and results of operations.
Further, although we will need to conduct extensive testing in an effort to ensure that the new ERP system is operating as intended, post-implementation disruptions to or difficulties in use of any such system could require us to incur additional costs, or could impair, among other things, our ability to record sales, process transactions, collect receivables, and produce timely and accurate historical and forecasted financial information, which could adversely impact our business, financial condition, and results of operations.
The Export Administration Regulations also effectively prohibits sales of items for a “military end use,” to a “military end-user,” or for a “military intelligence end-user,” or end-use to certain countries, such as Belarus, Burma, Cambodia, Cuba, China, Iran, North Korea, Russia, Syria, and Venezuela.
The Export Administration Regulations also effectively prohibits sales of items for a “military end use,” to a “military end-user,” or for a “military intelligence end- 25 Table of Contents user,” or end-use to certain countries, such as Belarus, Burma, Cambodia, Cuba, China, Iran, North Korea, Russia, Syria, and Venezuela.
Any litigation against our customers could trigger 30 Table of Contents indemnification obligations under some of our agreements, which could result in substantial expense to us, and which could materially and adversely affect our financial results. Risks Related to the Ownership of Our Common Stock Our IPO occurred in March 2024.
Any litigation against our customers could trigger indemnification obligations under some of our agreements, which could result in substantial expense to us, and which could materially and adversely affect our financial results. Risks Related to the Ownership of Our Common Stock Our IPO occurred in March 2024.
If we or any of our partners experience significant delays in a future transition or fail to efficiently implement a transition, we could experience reduced manufacturing yields, delays in product deliveries, and increased expenses, all of which could harm our relationships with our customers and our results of operations.
If we or any of our partners experience significant delays in a future transition or fail to efficiently 18 Table of Contents implement a transition, we could experience reduced manufacturing yields, delays in product deliveries, and increased expenses, all of which could harm our relationships with our customers and our results of operations.
In addition, job candidates and 18 Table of Contents existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived value of our stock awards declines, it may adversely affect our ability to recruit and retain highly skilled employees.
In addition, job candidates and existing employees often consider the value of the stock awards they receive in connection with their employment. If the perceived value of our stock awards declines, it may adversely affect our ability to recruit and retain highly skilled employees.
This process is a complex project with broad scope, in which we will invest significant financial and human capital. Despite our efforts, we may experience delays, unexpected costs, or other difficulties throughout the design and implementation process.
This process is a complex project with broad scope, in which we have and will continue to invest significant financial and human capital. Despite our efforts, we may experience delays, unexpected costs, or other difficulties throughout the design and implementation process.
Our gross margins may decline due to a number of factors, including customer and product mix, revenue mix between various offerings, market acceptance of our new products, yield, pricing, packaging and testing costs, competitive pricing dynamics, and geographic and market pricing strategies.
Our gross margins may decline due to a number of factors, including customer and product mix, revenue mix between various offerings, market acceptance of our new products, yield, pricing, packaging and testing costs, competitive 13 Table of Contents pricing dynamics, and geographic and market pricing strategies.
If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations may be adversely affected and may fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.
If our assumptions change or if actual circumstances differ 23 Table of Contents from those in our assumptions, our results of operations may be adversely affected and may fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.
If we are unable to continue to use or license these technologies on reasonable terms, or if these technologies become unreliable, unavailable or fail to operate properly, we may not be able to secure adequate alternatives in a timely manner or at all, and our ability to offer our products and remain competitive in our market would be harmed.
If we are unable to continue to use or license these technologies on reasonable terms, or if these technologies become unreliable, unavailable or fail to operate 29 Table of Contents properly, we may not be able to secure adequate alternatives in a timely manner or at all, and our ability to offer our products and remain competitive in our market would be harmed.
Any one or more of 25 Table of Contents these sanctions, future sanctions, a change in laws or regulations, or a prohibition on shipment of our products to significant customers could have a material adverse effect on our business, financial condition, and results of operations.
Any one or more of these sanctions, future sanctions, a change in laws or regulations, or a prohibition on shipment of our products to significant customers could have a material adverse effect on our business, financial condition, and results of operations.
If we overestimate end customer demand, or end customer demand is otherwise impacted by other factors impacting our assumptions, we might produce significant excess inventory, which would reduce our gross margin and adversely affect our financial results.
If we overestimate end customer demand, or end customer demand is otherwise impacted by other factors impacting our assumptions, we might produce significant excess inventory and consequently inventory write-off, which would reduce our gross margin and adversely affect our financial results.
Certain holders of our common stock have rights, subject to some conditions, to require us to file registration statements for the public resale of the common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file for us or other stockholders.
Certain holders of our common stock have rights, subject to some conditions, to require us to file registration statements for the public resale of the common stock or to include such shares in registration statements that we may file for us or other stockholders.
Moreover, TSMC has increased and may increase in the future the wafer prices we pay. Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies. Due to these cross dependencies, any supply chain disruptions could impact the demand for our products in 14 Table of Contents the short term.
Moreover, TSMC has increased and may increase in the future the wafer prices we pay. Our products are incorporated into complex devices and systems, which creates supply chain cross-dependencies. Due to these cross dependencies, any supply chain disruptions could impact the demand for our products in the short term.
This process requires us to make multiple demand forecast assumptions with respect to our customers’ demands in advance of actual purchase orders, each of which may introduce error into our estimates.
This process requires us to make multiple demand forecast assumptions with respect to our customers’ demands in advance of actual purchase orders, each of which may introduce 15 Table of Contents error into our estimates.
We have in the past, and may in the future choose to acquire companies that are complementary to our business, including for the purpose of expanding our new product design capacity, introducing new design, market, or application skills, enhancing, and expanding our existing product lines or grow the number of engineers.
We have in the past, and may in the future choose to acquire or make investments in companies, businesses and/or assets that are complementary to our business, including for the purpose of expanding our new product design capacity, introducing new design, market, or application skills, enhancing, and expanding our existing product lines or grow the number of engineers.
In particular, we may experience difficulties with product design, manufacturing, assembly, test, and qualification or marketing that could delay or prevent our development, introduction, or marketing of new or enhanced products.
In particular, we may experience difficulties with product design, manufacturing, assembly, test, and qualification or marketing that could delay or prevent our development, introduction, or marketing of new or enhanced 8 Table of Contents products.
Regardless of the improved features or superior performance of the newer generations of our existing products, customers may be unwilling to adopt our new products due to design or pricing constraints, among other reasons.
Regardless of the improved features or superior 10 Table of Contents performance of the newer generations of our existing products, customers may be unwilling to adopt our new products due to design or pricing constraints, among other reasons.
Our growth strategy includes acquiring businesses that offer complementary products, services, and technologies, enhance our market coverage or technological capabilities or enables us to increase the number of engineering employees.
Our growth strategy includes acquiring businesses and/or assets that offer complementary products, services, and technologies, enhance our market coverage or technological capabilities or enable us to increase the number of engineering employees.
Although we normally contractually limit our liability with respect to such obligations, certain of our customer agreements may not include maximum loss clauses, which may result in substantial liability.
Although we normally contractually limit our liability with respect to such obligations, certain of our customer agreements may not include 30 Table of Contents maximum loss clauses, which may result in substantial liability.
To manage our growth successfully and handle the responsibilities of being a public company, we believe we must effectively, among other things: • recruit, hire, train, and manage additional qualified personnel for our research and development activities; • continue to make significant investments in our new and existing products; • add additional sales personnel; and 7 Table of Contents • implement and improve our administrative, financial and operational systems, procedures, and controls.
To manage our growth successfully and handle the responsibilities of being a public company, we believe we must effectively, among other things: 7 Table of Contents • recruit, hire, onboard / integrate, train, and manage additional qualified personnel for our research and development activities; • continue to make significant investments in our new and existing products; • add additional sales personnel; and • continue implementing and improving our administrative, financial and operational systems, procedures, and controls.
Such proceedings could result in (among other things) unfavorable publicity, damage to our reputation, possible 19 Table of Contents financial obligations for liabilities, and government orders to implement additional protective measures or adopt new protocols, which could result in additional material expense.
Such proceedings could result in (among other things) unfavorable publicity, damage to our reputation, possible financial obligations for liabilities, and government orders to implement additional protective measures or adopt new protocols, which could result in additional material expense.
Our principal competitors include Broadcom, Inc., Credo Technology Group Holding Ltd., Marvell Technology, Inc., Microchip Technology Inc., Montage Technology, Parade Technologies, Ltd., and Rambus Inc,. Our efforts to introduce new products into markets with entrenched competitors will expose us to additional competitive pressures.
Our principal competitors include Broadcom, Inc., Credo Technology Group Holding Ltd., Marvell Technology, Inc., Microchip Technology Inc., 26 Table of Contents Montage Technology, Parade Technologies, Ltd., and Rambus Inc,. Our efforts to introduce new products into markets with entrenched competitors will expose us to additional competitive pressures.
Our results of operations currently depend, in part, on the demand for our products, which in turn are influenced 21 Table of Contents by the amount of business that our customers conduct.
Our results of operations currently depend, in part, on the demand for our products, which in turn are influenced by the amount of business that our customers conduct.
Although these systems and services are designed to protect and secure our customers’, suppliers’, and employees’ confidential information, as well as our own proprietary information, we are dependent on our vendors and providers to adequately address cybersecurity threats to their systems and services.
Although these systems and services are designed to protect and secure our customers’, suppliers’, and employees’ confidential information, as well as our own proprietary information, we are dependent on our 20 Table of Contents vendors and providers to adequately address cybersecurity threats to their systems and services.
In addition, even if we are unable to successfully license 29 Table of Contents technology from third-parties to develop future products, we may not be able to develop such products in a timely manner or at all.
In addition, even if we are unable to successfully license technology from third-parties to develop future products, we may not be able to develop such products in a timely manner or at all.
Our limited operating experience, a dynamic and rapidly evolving market in which we sell our products, our dependence on a limited number of customers, as well as numerous other factors beyond our control, could impede our ability to forecast quarterly and annual revenue accurately.
We have a rapidly growing business, a dynamic and rapidly evolving market in which we sell our products, our dependence on a limited number of customers, as well as numerous other factors beyond our control, could impede our ability to forecast quarterly and annual revenue accurately.
As of December 31, 2024, our executive officers, directors, and greater than 5% stockholders, in the aggregate, beneficially owned approximately 55.8% of our outstanding common stock (assuming no exercise of outstanding options warrants or settlement of RSUs in shares upon vesting).
As of December 31, 2025, our executive officers, directors, and greater than 5% stockholders, in the aggregate, beneficially owned approximately 37.9% of our outstanding common stock (assuming no exercise of outstanding options warrants or settlement of RSUs in shares upon vesting).
In choosing products to develop, we also make certain assumptions 8 Table of Contents about which industry standards we believe will be adopted by industry leaders. For example, CXL connectivity solutions are in the early stages of market adoption.
In choosing products to develop, we also make certain assumptions about which industry standards we believe will be adopted by industry leaders. For example, CXL connectivity solutions and UALink TM are in the early stages of market adoption.
If our remediation of the material weaknesses is not effective, or we fail to develop and maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which could harm our business and negatively impact the value of our common stock.
Although these material weaknesses have been remediated, if we fail to develop and maintain effective internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired, which could harm our business and negatively impact the value of our common stock .
Any failure to remediate our material weaknesses and to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports with the SEC.
Some of the software used within our products, as well as that of some of our customers, may be derived from and/or incorporate so-called “open source” software that is generally made available to the public by its authors and/or other third parties under open source licenses, which in some instances may subject us to certain unfavorable conditions, including requirements that we offer our proprietary software, which incorporates or links to such open source software, for no cost or that we make such proprietary software publicly available for free. 28 Table of Contents On occasion, companies that use open source software have faced claims challenging their use of open source software or compliance with open source license terms.
Some of the software used within our products, as well as that of some of our customers, may be derived from and/or incorporate so-called “open source” software that is generally made available to the public by its authors and/or other third parties under open source licenses, which in some instances may subject us to certain unfavorable conditions, including 28 Table of Contents requirements that we offer our proprietary software, which incorporates or links to such open source software, for no cost or that we make such proprietary software publicly available for free.
In 2024, no end customer represented more than 40% of our revenue; the top three end customers represented an aggregate of approximately 80% of our revenue. Our distributors and end customers’ manufacturing partners provide us with information in their purchase orders about which end customer will receive the products purchased.
In 2025, one end customer represented more than 70% of our revenue; the top three end customers represented an aggregate of approximately 86% of our revenue. Our distributors and end customers’ manufacturing partners provide us with information in their purchase orders about which end customer will receive the products purchased.
Further, in the last year as a result of inflation, we have seen labor costs, product supply costs, and other operating expenses rise due to high rates of inflation, but have not been able to offset these costs with higher prices of our products.
Further, in recent years, we have seen labor costs, product supply costs, and other operating expenses rise due to high rates of inflation, but have not been able to offset these costs with higher prices of our products.
If future pandemics, epidemics or other global health crises have a substantial impact on the productivity of our employees and partners, or a continued substantial impact on the ability of our employees to execute responsibilities, or a continued and substantial impact on the ability of our customers to purchase our products, our results of operations, and overall financial performance may be harmed.
If future pandemics, epidemics or other global health crises have a substantial impact on the productivity of our employees and partners, or materially impair our ability to operate our business or our customers’ ability to purchase our products, our results of operations and overall financial performance may be harmed.
If we cannot successfully grow our revenue at a rate that exceeds the costs associated with our business, we will not be able to maintain profitability, and the trading price of our common stock could decline.
We will need to generate and sustain increased revenue levels in future periods in order to maintain profitability. If we cannot successfully grow our revenue at a rate that exceeds the costs associated with our business, we will not be able to maintain profitability, and the trading price of our common stock could decline.
In addition, to attract new customers or retain existing end customers, we may offer (in some cases through distributors) certain customers favorable prices for our products.
In addition, to attract new customers or retain existing end customers, we may offer (in some cases through distributors) certain customers favorable prices for our products. In that event, our revenue and gross margins may decline.
We intend to transition to a new enterprise resource planning system (“ERP”) and any delays or difficulties associated with the design, implementation, or post-implementation use of our new ERP system could adversely impact our business, financial condition, and results of operations.
We are in the process of transitioning to a new enterprise resource planning system (“ERP”), and our assessment of readiness, prioritization of resources, and any delays or difficulties associated with the design, implementation, or post-implementation use of our new ERP system could adversely impact our business, financial condition, and results of operations.
Cyber-attacks are increasing in number and sophistication, are well-financed, in some cases supported by state actors, and are designed to not only attack, but also to evade detection.
Cyber-attacks are increasing in number and sophistication, are well-financed, in some cases supported by state actors, and are designed to not only attack, but also to evade detection, and are being facilitated or enhanced by evolving technologies, including AI.
In that event, our revenue and gross margins may decline. 9 Table of Contents The loss of a top end customer, a reduction in sales to any top end customer, or our inability to attract new end customers could impact our revenue and materially and adversely affect our results of operations.
The loss of a top end customer, a reduction in sales to any top end customer, or our inability to attract new end customers could impact our revenue and materially and adversely affect our results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Information Security Officer (“CISO”), in connection with our IT personnel, is responsible for day-to-day implementation, management and evaluation of our cybersecurity risk assessment and management processes.
Biggest changeOur Chief Executive Officer is currently serving as interim Chief Information Security Officer (“CISO”) while we conduct a search for a successor following the departure of our CISO in January 2026. Our CISO, in connection with our IT personnel, is responsible for day-to-day implementation, management and evaluation of our cybersecurity risk assessment and management processes.
The incident response team will also work under the oversight of legal counsel and the Audit Committee to determine whether an incident is material for disclosure purposes under applicable law.
The incident response team will also work under the oversight of legal counsel and the Audit Committee to determine whether an incident is material for disclosure purposes under applicable law. 36 Table of Contents
Our CISO has served in various roles in information technology and information security for over 30 years. Our cybersecurity incident response process is designed to escalate significant cybersecurity incidents to a team of business leaders, including, but not limited to, our Chief Financial Officer and General Counsel.
Our cybersecurity incident response process is designed to escalate significant cybersecurity incidents to a team of business leaders, including, but not limited to, our Chief Financial Officer and General Counsel.
Added
Our interim CISO has over two decades of engineering and general management experience in various technical roles, including oversight of functions into which the CISO reported. Our interim CISO was also previously responsible for setting up our IT and our IT security from its founding until June 2022.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease 36 Table of Contents additional facilities in Texas in United States for research and development, Canada and India for research and development, in China for local customer support and sales, in Israel for research and development and local customer support, and in Taiwan for customer support and sales.
Biggest changeWe also lease additional facilities in Irvine and Texas in United States, Canada, Germany, India, Singapore, and Vietnam for research and development, in China and Taiwan for local customer support and sales, and in Israel for research and development and local customer support. We believe that our facilities are suitable to meet our current needs.
Item 2. Properties Our corporate headquarters is located in Santa Clara, California, where we currently lease approximately 51,320 square feet for office space, research and development, and testing, pursuant to a lease agreement that expires in May 2025. We will relocate our corporate office from Santa Clara to San Jose upon termination of the current lease.
Item 2. Properties Our corporate headquarters is located in San Jose, California, where we currently lease approximately 154,231 square feet for office space, research and development, and testing, pursuant to a lease agreement that expires in November 2032.
Removed
We believe that our facilities are suitable to meet our current needs.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders On January 31, 2025, there were 562 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock repressed by these record holders.
Biggest changeHolders On January 31, 2026, there were 1,057 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock repressed by these record holders.
The graph below compares the cumulative total return on our common stock with the cumulative total return of the NASDAQ Composite Index and the Philadelphia Semiconductor Index (PHLX) during the period from March 20, 2024 to December 31, 2024.
The graph below compares the cumulative total return on our common stock with the cumulative total return of the NASDAQ Composite Index and the Philadelphia Semiconductor Index (PHLX) during the period from March 20, 2024 to December 31, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

72 edited+21 added−45 removed26 unchanged
Biggest changeWe maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized. 42 Table of Contents Results of Operations Comparison of Years Ended December 31, 2024 and 2023 Revenue Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Revenue $ 396,290 $ 115,794 $ 280,496 242 % Total revenue increased $280.5 million , or 242% , for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a 217% increase in overall unit shipments driven by higher demand for our Aries products.
Biggest changeIncome Tax (Benefit) Provision Income tax (benefit) provision consists primarily of U.S. federal, state, and foreign income taxes. We maintain a full valuation allowance on our federal and state deferred tax assets as we have concluded that it is more likely than not that the deferred tax assets will not be realized.
Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures. Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses.
Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures. Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude non-cash stock-based compensation expenses.
For an additional discussion on our purchase commitments, see Note 6 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K. 48 Table of Contents Indemnification Agreements See Note 6 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.
For an additional discussion on our purchase commitments, see Note 8 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K. 48 Table of Contents Indemnification Agreements See Note 8 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report on Form 10-K.
We refer to these measures as “non-GAAP financial measures.” These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), and non-GAAP net income (loss). We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons.
We refer to these measures as “non-GAAP financial measures.” These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons.
By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), and non-GAAP net income (loss) provide meaningful supplemental information regarding our performance.
By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income provide meaningful supplemental information regarding our performance.
Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units (“GPUs”) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules, shipping millions of devices across all of the major hyperscalers.
Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units (“GPUs”) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules, shipping millions of devices across leading hyperscalers.
Our future capital requirements, however, will depend on many factor s , including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, capital expenditures for production masks, the continuing market acceptance of our product s , and the use of cash to fund potential mergers or acquisitions.
Our future capital requirements, however, will depend on many factor s , including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, capital expenditures for production equipment, the continuing market acceptance of our product s , and the use of cash to fund potential mergers or acquisitions.
General and Administrative General and administrative expenses consist primarily of personnel costs including salaries, stock-based compensation expense, employee benefits and bonuses related to corporate, finance, information technology, legal, and human resource functions, professional services fees, audit and compliance expenses, insurance costs, and general corporate expenses including allocated shared expenses.
General and Administrative General and administrative expenses consist primarily of personnel-related costs including salaries, non-cash stock-based compensation expense, employee benefits and bonuses related to corporate, finance, information technology, legal, and human resource functions, professional services fees, audit and compliance expenses, insurance costs, and general corporate expenses including allocated shared expenses.
We have presented non-GAAP gross profit because we consider non-GAAP gross profit to be a useful metric for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation, a charge that can vary from period to period for reasons that are unrelated to our core operating performance.
We have presented non-GAAP gross profit because we consider non-GAAP gross profit to be a useful metric for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation, a charge that can vary from period to period for reasons that are unrelated to our core operating 44 Table of Contents performance.
(2) Employer payroll taxes related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
(3) Employer payroll taxes related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
Our products, which include Aries PCIe®/CXL® Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripherals Component Interconnect Express (“PCIe”), Ethernet, and Computer Express Link (“CXL”), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.
Our products, which include Aries PCIe®/CXL® Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express (“PCIe”), Ethernet, and Compute Express Link (“CXL”), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.
(2) Employer payroll taxes related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO. Non-GAAP Net Income (Loss) We monitor non-GAAP net income (loss) for planning and performance measurement purposes.
(3) Employer payroll taxes related to the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO. Non-GAAP Net Income We monitor non-GAAP net income for planning and performance measurement purposes.
Our patented software-defined platform approach delivers critical connectivity performance, enables flexibility and customization, and supports observability and predictive analytics. This approach aims to efficiently address the data, network, and memory bottlenecks, scalability, and other unique infrastructure requirements of our hyperscaler and system OEM customers.
Our patented software-defined platform approach delivers critical connectivity performance, enables flexibility and customization, and supports observability and predictive analytics. This approach is designed to efficiently address the data, network, and memory bottlenecks, scalability, and other unique infrastructure requirements of our hyperscaler and system OEM customers.
However, because of the inherent nature of estimates, there is always a risk that there could be 49 Table of Contents significant differences between actual amounts and our estimates. We also consider the constraint on estimates of variable consideration when estimating the total transaction price.
However, because of the inherent nature of estimates, there is always a risk that there could be significant differences between actual amounts and our estimates. We also consider the constraint on estimates of variable consideration when estimating the total transaction price.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below.
To determine if a production mask has alternative future use or benefits, we evaluate risks associated with developing new technologies and capabilities, and the related risks associated with entering new markets. Production masks that do not meet the criteria for capitalization are expensed as research and development costs.
To determine if production equipment has alternative future use or benefits, we evaluate the risks associated with developing new technologies and capabilities, and the related risks associated with entering new markets. Production equipment that do not meet the criteria for capitalization are expensed as research and development costs.
Our revenue grew from $34.8 million in 2021, $79.9 million in 2022, $115.8 million in 2023, and to $396.3 million in 2024, driven by a sizable increase in demand for our products.
Our revenue grew from $34.8 million in 2021, $79.9 million in 2022, $115.8 million in 2023, $396.3 million in 2024, and to $852.5 million in 2025, driven by a sizable increase in demand for our products.
Sales and Marketing Sales and marketing expenses consist of personnel costs including salaries, stock-based compensation expense, employee benefits, bonuses, samples to potential customers, product marketing and conferences, travel and entertainment costs, and allocated shared expenses.
Sales and Marketing Sales and marketing expenses consist of personnel-related costs including salaries, non-cash stock-based compensation expense, employee benefits, bonuses, samples to potential customers, product marketing and conferences, travel and entertainment costs, and allocated shared expenses.
For product sales, we transact with customers primarily pursuant to standard purchase orders for delivery of products and generally do not allow customers to cancel or change purchase orders within limited notice periods.
We transact with customers primarily pursuant to standard purchase orders for delivery of products and do not allow customers to cancel or change purchase orders within limited notice periods.
Stock-based compensation expense will be recognized equal to the grant date fair value in the period in which vesting becomes probable using the accelerated attribution method over the requisite service period for each separately vesting portion of the award. We measure and recognize our stock-based compensation expense for our Employee Stock Purchase Plan (“ESPP”) based on the estimated fair value.
Stock-based compensation expense is recognized based on the grant date fair value in the period in which vesting becomes probable, using the accelerated attribution method over the requisite service period for each separately vesting portion of the award. We measure and recognize our stock-based compensation expense for our Employee Stock Purchase Plan (“ESPP”) based on the estimated fair value.
While amortization of capitalized production masks has historically not been material, we expect to incur significant amortization costs in the future as we continue to increase the number of additional products. Gross Profit and Gross Margin Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
While amortization of capitalized production equipment has historically not been material, we expect to incur significant amortization costs in the future as we continue to increase the number of additional products and place them into production. Gross Profit and Gross Margin Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue.
We define non-GAAP net income (loss) as net loss reported on our consolidated statements of operations, excluding the impact of stock-based compensation expenses, employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, and the related tax impact on the adjustments.
We define non-GAAP net income as net income (loss) presented in accordance with GAAP on our consolidated statements of operations, excluding the impact of non-cash stock-based compensation expenses, acquisition-related costs, employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, and the related tax impact on the adjustments.
Our principal use of cash is t o fund our operations, invest in research and development, fund production mask capital expenditures, and to support our overall growth.
Our principal use of cash is t o fund our operations, invest in research and development, fund capital expenditures for production equipment, and to support our overall growth.
For an additional discussion on our operating leases, see Note 5 - Leases in the Notes to the Consolidated F inancial S tatements set forth in Part II, Item 8 of this annual report on Form 10-K. Purchase commitments. Our purchase commitments are primarily related to software licenses and cloud hosting services.
For an additional discussion on our operating leases, see Note 7 - Leases in the Notes to the Consolidated F inancial S tatements set forth in Part II, Item 8 of this annual report on Form 10-K. Purchase commitments. Our purchase commitments are primarily related to software licenses, cloud hosting services, or performance of certain services.
We use the Black-Scholes-Merton pricing model to determine the grant date fair value of purchase rights granted under the ESPP. Stock-based compensation expense is recognized on a straight-line basis over the term of each ESPP offering period, which was seven months for the first ESPP offering and six months for the second offering and prospectively.
We use the Black-Scholes-Merton pricing model to determine the grant date fair value of purchase rights granted under the ESPP. Stock-based compensation expense is recognized on a straight-line basis over the term of each ESPP offering period, which was six months.
We have presented non-GAAP operating income (loss) because we consider non-GAAP operating income (loss) to be a useful metric for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation expense and employer payroll taxes related to the time-based vesting and net settlement of RSUs in connection with our IPO, charges that can vary from period to period or are one time charges for reasons that are unrelated to our core operating performance.
We have presented non-GAAP operating income and non-GAAP operating margin because we consider them useful metrics for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation expense, acquisition-related costs, and employer payroll taxes related to the time-based vesting and net settlement of RSUs in connection with our IPO, a charge that can vary from period to period or are one time charges for reasons that are unrelated to our core operating performance.
Cost of product sales includes the cost of materials, such as wafers processed by third-party foundries, costs associated with packaging, assembly, shipping, depreciation of equipment associated with manufacturing, cost of logistics and quality assurance, warranty costs, amortization of capitalized production masks, cost of personnel including salaries, stock-based compensation, employee benefits, write-down of inventories, and allocation of general corporate expenses.
Cost of product sales includes the cost of materials, such as wafers processed by third-party foundries, costs associated with packaging, assembly, shipping, depreciation of equipment associated with manufacturing, cost of logistics and quality assurance, warranty cost, amortization of capitalized production equipment, royalties on our production products, personnel-related costs including salaries, non-cash stock-based compensation, employee benefits, write-down of inventories, and allocation of general corporate expenses.
We measure and recognize our stock-based compensation expense for performance stock units (“PSUs”) based on the fair value of the underlying common stock on the date of grant for PSUs granted post IPO.
We measure and recognize our stock-based compensation expense for performance stock units (“PSUs”) based on the fair value of the underlying common stock on the date of grant.
Our gross profit has been, and may in the future be, primarily influenced by several factors, including sales 41 Table of Contents volumes, pricing of our products and services, changes in product costs, contract manufacturing supplier pricing, personnel costs, shipping and logistics costs, and inventory write-downs.
Our gross profit has been, and may in the future be, primarily influenced by several factors, including sales volumes, pricing of our products and services, changes in product costs, contract manufacturing supplier pricing, amortization of capitalized production equipment, personnel costs, shipping and logistics costs, and inventory write-downs.
We have presented non-GAAP net income (loss) because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance. 46 Table of Contents A reconciliation of our GAAP net loss, the most directly comparable GAAP financial measure, to our non-GAAP net income ( loss) is presented below: Years Ended December 31, 2024 2023 (in thousands) GAAP net loss $ (83,421) $ (26,257) Stock-based compensation expense upon IPO (1) 88,873 — Stock-based compensation expense 145,715 10,679 Employer payroll tax related to stock-based compensation from IPO (2) 1,072 — Income tax effect (3) (8,910) — Non-GAAP net income (loss) $ 143,329 $ (15,578) (1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
We have presented non-GAAP net income because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance. 46 Table of Contents A reconciliation of our GAAP net income (loss), the most directly comparable GAAP financial measure, to our non-GAAP net income is presented below: Years Ended December 31, 2025 2024 (in thousands) GAAP net income ( loss) $ 219,134 $ (83,421) Stock-based compensation expense upon IPO (1) — 88,873 Stock-based compensation expense (2) 160,033 145,715 Acquisition-related costs 950 — Employer payroll tax related to stock-based compensation from IPO (3) — 1,072 Income tax effect (4) (49,102) (8,910) Non-GAAP net income $ 331,015 $ 143,329 (1) Non-cash stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
(3) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance.
(4) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of non-cash s tock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance.
While we have generated $136.7 million in cash flow from operating activities for the year ended December 31, 2024, in prior years significant losses from operations and negative cash flows from operating activities have resulted in our accumulated deficit of $208.8 million a s of December 31, 2024 .
While we have generated $319.3 million in cash flow from operating activities for the year ended December 31, 2025, in prior years we generated significant losses from operations and negative cash flows from operating activities as reflected in our accumulated deficit a s of December 31, 2024 .
We believe that continued investments in our products are important to our future growth and, as a result, we expect our research and development expenses to continue to increase in absolute dollars and moderately decline as a percentage of revenue over time as our revenue increases.
We believe that continued investments in our products are important to our future growth and, as a result, we expect our research and development expenses to continue to increase in absolute dollars.
We expect that our sales and marketing expenses will increase in absolute dollars as we increase our sales and marketing personnel and continue to expand our customer engagement with more design activities and increased product offerings and moderately decline as a percentage of revenue over time as our revenue increases.
We expect that our sales and marketing expenses will increase in absolute dollars as we increase our sales and marketing personnel and continue to expand our customer engagement with more design activities and increased product offerings.
Our policy is to estimate such price adjustments based on our historical prices and contractual terms using the expected value method. To date, actual DPAs have been materially consistent with the provisions we have made, based on our historical estimates.
In determining the transaction price, DPAs are considered variable consideration that reduce the amount of revenue recognized. Our policy is to estimate such price adjustments based on our historical prices and contractual terms using the expected value method. To date, actual DPAs have been materially consistent with the provisions we have made, based on our historical estimates.
Treasury yield for our risk-free interest rate that corresponds with the expected term. • Dividend yield – We utilize a dividend yield of zero, as we do not currently issue dividends, nor do we expect to do so in the future. • Fair value of common stock – Prior to our IPO, we estimated the fair value of common stock, see Common Stock Valuations below.
Treasury yield for our risk-free interest rate that corresponds with the expected term. • Dividend yield – We utilize a dividend yield of zero, as we do not currently issue dividends, nor do we expect to do so in the future. We account for forfeitures as they occur.
Research and Development Research and development expenses consist of costs incurred in performing research and development activities and include salaries, stock-based compensation expense, employee benefits, bonuses, pre-production engineering mask costs, software license and cloud hosting services costs, prototype wafer, packaging and test costs, and allocated shared expenses. Research and development costs are expensed as incurred.
Research and Development Research and development expenses consist of personnel-related costs including salaries, non-cash stock-based compensation expense, employee benefits, bonuses, pre-production engineering mask costs, software license and cloud 41 Table of Contents hosting services costs, prototype costs, packaging and test costs, professional services fees, and allocated shared expenses. Research and development costs are expensed as incurred.
Revenue Recognition We recognize revenue upon transfer of control of promised goods and services in an amount that reflects the consideration we expect to receive in exchange for those goods and services.
Revenue Recognition We recognize revenue upon transfer of control of promised goods and services in an amount that reflects the consideration we expect to receive in exchange for those goods and services. Our policy is to record revenue net of any applicable sales, use or excise taxes.
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through proceeds from the issuance of our redeemable convertible preferred stock, net proceeds from IPO, and cash generated from the sale of our products. As of December 31, 2024 , our principal sources of liquidity were cash, cash equivalents, and marketable securities of $914.3 million .
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through proceeds from equity issuances including net proceeds from our IPO, and cash generated from the sale of our products. As of December 31, 2025 , our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1.2 billion .
Our operating lease commitments primarily include corporate offices. As of December 31, 2024 , we had fixed lease payment obligations of $39.9 million including our commitment for our future corporate headquarters office , with approximately $5.0 million t o be paid within 12 months and the remainder thereafter.
Material Cash Requirements Operating lease commitments. Our operating lease commitments primarily include corporate offices. As of December 31, 2025 , we had fixed lease payment obligations of $31.0 million , with approximately $6.2 million t o be paid within 12 months and the remainder thereafter.
Pre-production engineering mask costs are expensed. We capitalize the costs of production masks with alternative future use and amortize these costs on a straight-line basis over the useful lives of the production masks.
We capitalize the costs of production equipment, which includes mask cost with alternative future use, and amortize these costs on a straight-line basis over the useful lives of the production equipment and include them in cost of revenue.
A reconciliation of our GAAP gross profit and gross margin, the most directly comparable GAAP financial measure, to non-GAAP gross profit and non-GAAP gross margin is presented below: Years Ended December 31, 2024 2023 (in thousands, except percentages) GAAP gross profit $ 302,699 $ 79,827 Stock-based compensation expense upon IPO (1) 516 — Stock-based compensation expense 329 24 Non-GAAP gross profit $ 303,544 $ 79,851 GAAP gross margin 76.4 % 68.9 % Stock-based compensation expense upon IPO (1) 0.1 — Stock-based compensation expense 0.1 0.1 Non-GAAP gross margin 76.6 % 69.0 % (1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO. 45 Table of Contents Non-GAAP Operating Income (Loss) We define non-GAAP operating income (loss) as operating loss presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses and employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with the IPO.
A reconciliation of our GAAP gross profit and GAAP gross margin, the most directly comparable GAAP financial measures, to non-GAAP gross profit and non-GAAP gross margin is presented below: Years Ended December 31, 2025 2024 (in thousands, except percentages) GAAP gross profit $ 645,261 $ 302,699 Stock-based compensation expense upon IPO (1) — 516 Stock-based compensation expense 1,123 329 Non-GAAP gross profit $ 646,384 $ 303,544 GAAP gross margin 75.7 % 76.4 % Stock-based compensation expense upon IPO (1) — 0.1 Stock-based compensation expense 0.1 0.1 Non-GAAP gross margin 75.8 % 76.6 % (1) Non-cash stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
Research and Development Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Research and development $ 200,830 $ 73,407 $ 127,423 174 % Percentage of revenue 51 % 63 % Research and development expense increased $127.4 million , or 174% , for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Research and Development Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Research and development $ 303,998 $ 200,830 $ 103,168 51 % Percentage of revenue 36 % 51 % Research and development expense increased $103.2 million , or 51% , for the year ended December 31, 2025 compared to the same period in 2024 .
A reconciliation of our GAAP operating loss, the most directly comparable GAAP financial measure, to non-GAAP operating income ( loss) is presented below: Years Ended December 31, 2024 2023 (in thousands, except percentages) GAAP operating loss $ (116,066) $ (29,497) Stock-based compensation expense upon IPO (1) 88,873 — Stock-based compensation expense 145,715 10,679 Employer payroll tax related to stock-based compensation from IPO (2) 1,072 — Non-GAAP operating income (loss) $ 119,594 $ (18,818) GAAP operating margin (29.3) % (25.5) % Stock-based compensation expense upon IPO (1) 22.4 — Stock-based compensation expense 36.8 9.2 Employer payroll tax related to stock-based compensation from IPO (2) 0.3 — Non-GAAP operating margin 30.2 % (16.3) % (1) Stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
These metrics also provide investors and other users of our financial information with an additional tool to eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performanc e . 45 Table of Contents A reconciliation of our GAAP operating income (loss) and GAAP operating margin, the most directly comparable GAAP financial measures, to non-GAAP operating income and non-GAAP operating margin is presented below: Years Ended December 31, 2025 2024 (in thousands, except percentages) GAAP operating income ( loss) $ 173,423 $ (116,066) Stock-based compensation expense upon IPO (1) — 88,873 Stock-based compensation expense 160,033 145,715 Acquisition-related costs (2) 950 — Employer payroll tax related to stock-based compensation from IPO (3) — 1,072 Non-GAAP operating income $ 334,406 $ 119,594 GAAP operating margin 20.3 % (29.3) % Stock-based compensation expense upon IPO (1) — 22.4 Stock-based compensation expense 18.8 36.8 Acquisition-related costs 0.1 — Employer payroll tax related to stock-based compensation from IPO (3) — 0.3 Non-GAAP operating margin 39.2 % 30.2 % (1) Non-cash stock-based compensation expense recognized in connection with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
Income Tax Provision Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Income tax provision $ 1,643 $ 3,309 $ (1,666) (50) % Income tax provision decreased $1.7 million , or 50% , for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Income Tax (Benefit) Provision Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Income tax (benefit) provision $ (981) $ 1,643 $ (2,624) (160) % Income tax (benefit) provision decreased $2.6 million , or 160% , for the year ended December 31, 2025 compared to the same period in 2024.
Interest Income Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Interest income $ 34,288 $ 6,549 $ 27,739 424 % Fo r th e year ended December 31, 2024, interest income increased $27.7 million , o r 424%, compared to the year ended December 31, 2023 , respectively.
Interest Income Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Interest income $ 44,730 $ 34,288 $ 10,442 30 % Fo r th e year ended December 31, 2025, interest income increased $10.4 million , o r 30%, compared to the same period in 2024.
Th e increase wa s primaril y du e t o higher average short-term investments and cash equivalents balances primarily as a result of our IPO.
The increase in interest income was primaril y du e t o higher average balances of short-term investments and cash equivalents as a result of our IPO in the prior period and net cash inflow from operations.
These programs may include credits granted to distributors or price protection credits when our standard published prices are lowered from the price the distributor paid for product still in its inventory. In determining the transaction price, DPAs are considered variable consideration that reduce the amount of revenue recognized.
Sales to most distributors are made under programs common in the semiconductor industry whereby distributors receive DPAs to meet individual competitive opportunities. These programs may include credits granted to distributors or price protection credits when our standard published prices are lowered from the price the distributor paid for product still in its inventory.
We expect general and administrative expenses to increase in absolute dollars as we grow our operations and continue to incur additional expenses associated with operating as a public company and moderately decline as a percentage of revenue over time as our revenue increases.
We expect general and administrative expenses to increase in absolute dollars as we grow our operations and continue to incur additional expenses associated with operating as a public company. Interest Income Interest income primarily consists of interest income earned on our short-term investments included in cash and cash equivalents and marketable securities.
We capitalize the costs of fabrication masks that are reasonably expected to be used during production manufacturing. These amounts are included within property and equipment and are depreciated over a period of five years to cost of revenue.
These amounts are included within property and equipment and are depreciated over a period of five years to cost of revenue. If we do not reasonably expect to use the fabrication mask during production manufacturing, we expense the related mask costs to research and development in the period in which such determination is made.
In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected.
In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our final prospectus, dated March 19, 2024 and filed with the SEC on March 21, 2024 pursuant to Rule 424(b) of the Securities Act.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on February 14, 2025.
General and Administrative Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) General and administrative $ 94,283 $ 15,925 $ 78,358 492 % Percentage of revenue 24 % 14 % General and administrative expense increased $78.4 million , or 492% , for the year ended December 31, 2024 compared to the year ended December 31, 2023.
General and Administrative Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) General and administrative $ 88,066 $ 94,283 $ (6,217) (7) % Percentage of revenue 10 % 24 % 43 Table of Contents General and administrative expense de creased $6.2 million , or 7% , for the year ended December 31, 2025 compared to the same period in 2024 .
We have made significant investments in the design and development of new products and platform enhancements, and, as a result, we have not yet achieved profitability on an annual basis. 40 Table of Contents Summary of Financial Highlights Our revenue for the year ended December 31, 2024 , increased by 242% compared to the year ended December 31, 2023 , primarily due to an increase in overall unit shipments driven by higher demand for our Aries products and higher overall average selling prices resulting from a more favorable product mix.
Summary of Financial Highlights Our revenue for the year ended December 31, 2025, increased by 115% compared to the same period in 2024, primarily due to an increase in overall unit shipments driven by higher demand for our Aries, Scorpio, and Taurus products, as well as higher overall average selling prices resulting from an increased mix of hardware modules and Scorpio products. 40 Table of Contents Gross margin decreased 70 bps to 75.7% for the year ended December 31, 2025 from 76.4% for the same period in 2024, primarily driven by product mix as we shipped more hardware modules.
The change was p primarily due to a significant increase in stock-based compensation tax deductions post our IPO, and U.S. research and development credits, partially offset by an increase in taxable income, and the foreign-derived intangible income deduction. 44 Table of Contents Non-GAAP Financial Measures This Annual Report on Form 10-K contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), which we use to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP.
Non-GAAP Financial Measures This Annual Report on Form 10-K contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), which we use to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP.
As of December 31, 2024 , we had purchase commitments of $27.5 million , with $12.0 million to be paid within 12 months and the remainder thereafter. In January 2025, the Company entered into an agreement for a non-cancellable purchase commitment of $14.9 million with a three year term.
As of December 31, 2025 , we had purchase commitments of $74.9 million , with $29.6 million to be paid within 12 months and the remainder thereafter.
The increase was attributable to a $69.1 million increase in non-cash stock-based compensation expense primarily due to both RSUs that had previously met the time-based and liquidity event vesting conditions in connection with our IPO as well as RSUs with time-based vesting after the liquidity event.
The de crease was primarily due to a $24.3 million de crease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs and the satisfaction of the liquidity event vesting condition in connection with our IPO in the prior period.
If we do not reasonably expect to use the fabrication mask during production manufacturing, we expense the related mask costs to research and development in the period in which such determination is made. Recent Accounting Pronouncements For more information, see Note 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report.
Recent Accounting Pronouncements For more information, see Note - 1 to our consolidated financial statements included in Part II, Item 8 of this Annual Report. 50 Table of Contents
From time to time, we have contracts with initial terms that include performance obligations that extend beyond one year. We transact with customers primarily pursuant to standard purchase orders for delivery of products and do not allow customers to cancel or change purchase orders within limited notice periods.
Product sales consist primarily of shipments of our Intelligent Connectivity Platform solutions. Engineering services revenue consists of engineering fees associated with customer-defined engineering services. For product sales, we transact with customers primarily pursuant to standard purchase orders for delivery of products and generally do not allow customers to cancel or change purchase orders within limited notice periods.
For the year ended December 31, 2024, the non-GAAP tax expense rate was 6.9%, compared to a tax benefit rate of 27.0% for the year ended December 31, 2023. The reduction of the rate was due to the realization in deferred tax asset related to the release of valuation allowance, on a non-GAAP basis.
We no longer maintain valuation allowance for non-GAAP purposes due to our profitability on a non-GAAP basis. For the years ended December 31, 2025, and 2024, the non-GAAP tax expense rate was 12.7% and 6.9%, respectively.
Increases and decreases in the market price of our common stocks increase and decrease the fair value of our stock-based awards granted in future periods . 51 Table of Contents Capitalized Production Masks We incur costs for the fabrication of masks used by our contract manufacturers to manufacture wafers that incorporate our products.
Capitalized Production Equipment We incur costs for the fabrication of masks used by our contract manufacturers to manufacture wafers that incorporate our products. We capitalize the costs of fabrication masks that are reasonably expected to be used during production manufacturing.
Net cash used in investing activities for the year ended December 31, 2023 of $17.8 million resulted primarily from $126.2 million in purchases of marketable securities and $2.8 million in purchases of property and equipment, offset by $111.2 million in proceeds from sales and maturities of marketable securities.
The $516.1 million decrease in cash used in investing activities was primarily due to a $474.4 million increase in proceeds from sales and maturities of marketable securities, and a $72.8 million decrease in purchases of marketable securities, partially offset by a $28.8 million increase associated with acquisition of a business, and an increase of $3.3 million in purchase of property and equipment.
Cash Flows The following table summarizes our cash flows for the periods presented: Years Ended December 31, 2024 2023 (in thousands) Net cash provided by ( used in) operating activities $ 136,676 $ (12,716) Net cash used in investing activities $ (757,568) $ (17,772) Net cash provided by (used in) financing activities $ 655,838 $ (502) 47 Table of Contents Operating Activities Net cash provided by operating activities for the year ended December 31, 2024 of $136.7 million resulted primarily from non-cash charges of $233.4 million primarily related to $234.6 million in stock-based compensation expense partially offset by a net loss of $83.4 million and cash used by operating assets and liabilities of $13.3 million.
If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected. 47 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Years Ended December 31, 2025 2024 (in thousands) Net cash provided by operating activities $ 319,306 $ 136,676 Net cash used in investing activities $ (241,469) $ (757,568) Net cash provided by financing activities $ 9,803 $ 655,838 Change in Cash Flows from Operating Activities Net cash provided by operating activities for the year ended December 31, 2025 was $319.3 million, compared to $136.7 million for the comparable period in 2024.
The incr ease was attributable to a $93.8 million increase in non-cash stock-based compensation expense primarily due to both RSUs that had previously met the time-based and liquidity event vesting conditions in connection with our IPO as well as RSUs with time-based vesting after the liquidity event, and a $8.2 million increase in personnel-related expenses as a result of a 29 % increase in average headcount.
T he de crease was primarily due to a $56.0 million d ecrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs and the satisfaction of the liquidity event vesting condition in connection with our IPO in the prior period.
Cost of Revenue, Gross Profit, and Gross Margin Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages and bps) Cost of revenue $ 93,591 $ 35,967 $ 57,624 160 % Gross profit $ 302,699 $ 79,827 $ 222,872 279 % Gross margin 76.4 % 68.9 % 750 bps Total cost of revenue increased $57.6 million , or 160% , for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to a 217% increase in overall unit shipments partially offset by a $10.2 million decrease in inventory write-downs .
The increase was primarily due to an increase in overall unit shipments driven by higher demand for our Aries, Scorpio, and Taurus products, as well as higher overall average selling prices resulting from an increased mix of hardware modules and Scorpio products . 42 Table of Contents Cost of Revenue, Gross Profit, and Gross Margin Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages and bps) Cost of revenue $ 207,264 $ 93,591 $ 113,673 121 % Gross profit $ 645,261 $ 302,699 $ 342,562 113 % Gross margin 75.7 % 76.4 % (70) bps Total cost of revenue increased $113.7 million , or 121% , for the year ended December 31, 2025 compared to the same period in 2024.
Cash used in operating assets and liabilities during the period was primarily from an increase of $30.5 million in accounts receivable due to higher product sales and timing of customer payments, $19.3 million increase in inventory for anticipated future demand, a $13.0 million increase in prepaid expenses and other assets primarily related to accrued interest receivable on our short-term investments, and $2.4 million decrease in operating lease liability.
The unfavorable change of $52.7 million from changes in operating assets and liabilities was primarily attributable to (i) a $21.9 million unfavorable change in accounts payables and accrued other liabilities primarily due to the timing of payments, (ii) a $20.7 million increase in the changes of the prepaid expenses and other assets primarily due to prepayment for a research and development vendor and a higher income tax receivable from excess tax benefits related to equity compensation, and (iii) a $13.9 million unfavorable change in accounts receivable due to higher product sales and the timing of customer payments.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2024 of $655.8 million resulted primarily from $672.2 million in proceeds from our IPO, net of underwriting discounts and commissions, $5.5 million in proceeds from exercises of stock options, and $4.2 million in proceeds from the employee stock purchase plan.
The $646.0 million decrease in cash provided by financing activities was primarily due to a decrease of $667.4 million related to proceeds received from the IPO net of underwriting discounts and commissions and deferred offering costs, a decrease of $3.6 million in proceeds from exercise of stock options, partially offset by a lower tax withholding related to net share settlement of RSUs of $20.1 million, and a $3.8 million increase in proceeds from employee stock purchase plan.
Additionally, there were $33.9 million higher personnel-related expenses as a result of a 63% increase in average headcount and a $21.2 million increase in software licenses and cloud hosting services related to our development projects. 43 Table of Contents Sales and Marketing Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Sales and marketing $ 123,652 $ 19,992 $ 103,660 519 % Percentage of revenue 31 % 17 % Sales and marketing expense increased $103.7 million , or 519% , for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Sales and Marketing Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Sales and marketing $ 79,774 $ 123,652 $ (43,878) (35) % Percentage of revenue 9 % 31 % Sales and marketing expense de creased $43.9 million , or 35% , for the year ended December 31, 2025 compared to the same period in 2024 .
Investing Activities Net cash used in investing activities for the year ended December 31, 2024 of $757.6 million resulted primarily from $930.6 million in purchases of marketable securities, and $34.2 million in purchases of property and equipment, partially offset by $208.7 million in proceeds from sales and maturities of marketable securities.
These unfavorable changes were partially offset by a reduced inventory balance of $6.3 million. Change in Cash Flows from Investing Activities Net cash used in investing activities for the year ended December 31, 2025 was $241.5 million, compared to $757.6 million for the comparable period in 2024.
This was partially offset by $20.1 million in tax withholding related to net share settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO, $4.8 million in payments of deferred offering costs and $1.1 million from our repurchase of our common stock.
The increase was partially offset by a $74.8 million decrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs and the satisfaction of the liquidity event vesting condition in connection with our initial public offering (“IPO”) in the prior period.
We recognized $88.9 million of cumulative stock-based compensation expense associated with the time-based vesting and settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO.
Non-GAAP Operating Income and Non-GAAP Operating Margin We define non-GAAP operating income as operating income ( loss) presented in accordance with GAAP, adjusted to exclude non-cash stock-based compensation expenses, acquisition-related costs, and employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with the IPO.
The inventory write-downs during the year ended December 31, 2023 were primarily due to inventory in excess of our sales forecast for a legacy customer product. Gross margin increased 750 bps to 76.4% for the year ended December 31, 2024 compared to 68.9% for the year ended December 31, 2023.
The increase was primarily due to higher overall unit shipments and a shift in product mix, resulting from an increased mix of hardware modules and Scorpio products . Gross margin decreased 70 bps to 75.7% for the year ended December 31, 2025 compared to 76.4% for the same period in 2024.
Removed
Gross margin increased 750 bps to 76.4% for the year ended December 31, 2024 from 68.9% for t he year ended December 31, 2023 , primarily driven by a net decrease of $10.2 million in inventory write-downs, partially offset by higher average unit cost as a result of product mix.
Added
Operating expenses increased by $53.1 million or 13%, for the year ended December 31, 2025 compared to the same period in 2024, primarily driven by a $75.6 million increase in personnel-related expenses resulting from a 75% increase in average headcount, a $31.4 million increase in expenses related to our R&D initiatives, a $10.8 million increase in other operating costs to support our business growth including expenses associated with additional office space, a $5.1 million increase in professional services fees primarily associated with the continued development of our public company infrastructure , and a $2.2 million increase in depreciation and amortization expenses.
Removed
The inventory write-downs during the year ended December 31, 2023 were due primarily to inventory in excess of our sales forecast for a legacy customer product.
Added
Net income was $219.1 million for the year ended December 31, 2025 compared to a net loss of $83.4 million for the year ended December 31, 2024, representing a $302.6 million year-over-year increase. Key Components of Results of Operations Revenue The vast majority of our revenue consists of product sales with an immaterial portion derived from engineering services.
Removed
Operating expenses increased by $309.4 million or 283%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 , primarily driven by an increase of $223.1 million in non-cash stock-based compensation expense primarily due to both RSUs that had previously met the time-based and liquidity event vesting conditions in connection with our IPO as well as RSUs with time-based vesting after the liquidity event, and a $52.0 million increase in personnel-related expenses as a result of a 57% increase in average headcount.
Added
Results of Operations Comparison of Years Ended December 31, 2025 and 2024 Revenue Years Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Revenue $ 852,525 $ 396,290 $ 456,235 115 % Total revenue increased $456.2 million , or 115% , for the year ended December 31, 2025 compared to the same period in 2024.
Removed
Initial Public Offering On March 22, 2024, we completed our initial public offering (the “IPO”) of 22,770,000 shares of our common stock, par value $0.0001 per share (our “Common Stock”), at a price to the public of $36.00 per share, which included 19,758,903 shares of Common Stock sold by us, inclusive of 2,970,000 shares sold by us pursuant to the full exercise of the underwriters’ over-allotment option, as well as 3,011,097 shares of Common Stock sold by certain of our existing stockholders.
Added
The decrease was primarily driven by product mix as we shipped more hardware modules.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Exchange Risk Our reporting currency and the functional currency of our wholly owned foreign subsidiaries in Taiwan, Canada, China, India, and Israel is the U.S. dollar. All of our sales and operating expenses are transacted in U.S. dollars, and therefore our revenue and expenses are not currently subject to significant foreign currency risk.
Biggest changeAll of our sales and the majority of our operating expenses are transacted in U.S. dollars, and therefore our revenue and expenses are not currently subject to significant foreign currency risk. Foreign exchange gains and losses were not material for the years ended December 31, 2025, 2024, and 2023.
We do not believe that a hypothetical 100 basis point increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on our operating results. 52 Table of Contents
We do not believe that a hypothetical 100 basis point increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on our operating results. 51 Table of Contents
The cash and cash equivalents are held primarily for working capital purposes. Such interest earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income are primarily driven by increases in investment balances. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
Such interest earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income are primarily driven by increases in investment balances. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
Foreign exchange gains and losses were not material for the years ended December 31, 2024, 2023, and 2022. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future.
To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative financial instruments, although we may choose to do so in the future.
Interest Rate Risk As of December 31, 2024, we had cash and cash equivalents of $79.6 million and marketable securities of $834.8 million, which consisted of cash held in sweep accounts, checking accounts, money market funds, U.S. treasury and agency securities, commercial paper, corporate debt securities, foreign government bonds, and asset-backed securities.
Interest Rate Risk As of December 31, 2025, we had cash and cash equivalents of $167.6 million and marketable securities of $1,021.2 million, which consisted of cash held in sweep accounts, checking accounts, money market funds, U.S. treasury and agency securities, commercial paper, and corporate debt securities. The cash and cash equivalents are held primarily for working capital purposes.
A hypothetical 100 basis point change in interest rates would change the fair value of our investments in marketable securities by $8.7 million and $0.9 million as of December 31, 2024 and 2023, respectively.
A hypothetical 100 basis point change in interest rates would change the fair value of our investments in marketable securities by $11.0 m illion and $8.7 million as of December 31, 2025 and 2024, respectively. Foreign Currency Exchange Risk Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar.