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What changed in SEMTECH CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of SEMTECH CORP'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.

+399 added−426 removedSource: 10-K (2025-03-25) vs 10-K (2024-03-28)

Top changes in SEMTECH CORP's 2025 10-K

399 paragraphs added · 426 removed · 331 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeConcentration of Accounts Receivable - Significant Customers The following table shows customers that had an outstanding receivable balance that represented at least 10% of our total net receivables as of one or more of the dates indicated: (percentage of net receivables) (1) January 28, 2024 January 29, 2023 Frontek Technology Corporation (and affiliates) 15 % * (1) In each period with an asterisk, the customer represented less than 10% of the Company's net receivables.
Biggest changeConcentration of Net Sales - Significant Customers The following table sets forth the concentration of sales among the customers that accounted for more than 10% of our net sales in one or more of the periods indicated: Fiscal Years (percentage of net sales) (1) 2025 2024 2023 Customer A 10% * 16% Customer B 13% 10% 13% Customer C * * 11% (1) In each period with an asterisk, the customer represented less than 10% of the Company's net sales. 9 Concentration of Accounts Receivable - Significant Customers The following table shows customers that had an outstanding receivable balance that represented at least 10% of our total net receivables as of one or more of the dates indicated: (percentage of net receivables) (1) January 26, 2025 January 28, 2024 Customer D 12% * Customer B 12% 15% (1) In each period with an asterisk, the customer represented less than 10% of the Company's net receivables.
Current key trends in IoT include: (i) the increasing adoption of edge computing, spurred by the need for real-time data processing and the desire to reduce latency and improve access to information; and (ii) the focus on security and data privacy as more devices become connected, the risk of cybersecurity incidents and data breaches increases, resulting in needed implementation of robust security measures across the entire IoT ecosystem.
Current key trends in IoT include: (i) the increasing adoption of edge computing, spurred by the need for real-time data processing and the desire to reduce latency and improve access to information; and (ii) as the focus on security and data privacy as more devices become connected, the risk of cybersecurity incidents and data breaches increases, resulting in needed implementation of robust security measures across the entire IoT ecosystem.
Our high-speed interfaces range from 100Mbps to 1.6Tbps and support key industry standards such as Fibre Channel, Infiniband, 7 Ethernet, PON and synchronous optical networks. Our video products offer advanced solutions for next generation high-definition broadcast applications. Analog Mixed Signal and Wireless.
Our high- 7 speed interfaces range from 100Mbps to 1.6Tbps and support key industry standards such as Fibre Channel, InfiniBand, Ethernet, PON and synchronous optical networks. Our video products offer advanced solutions for next generation high-definition broadcast applications. Analog Mixed Signal and Wireless.
Our gateways and routers are designed to provide reliable and secure connectivity for IoT devices, while our connected services enable businesses to manage devices and connectivity so businesses can navigate the complex IoT landscape and realize the full potential of connected devices. IoT Connected Services.
Our gateways and routers are designed to provide reliable and secure connectivity for IoT devices, while our connected services enable businesses to manage devices and connectivity so businesses can navigate the complex IoT landscape and realize the full potential of connected devices.
We believe we compete effectively based upon our ability to capitalize on efficiencies and economies of scale in production and sales, and our ability to maintain or improve our productivity and product yields to reduce manufacturing costs. The semiconductor industry is also characterized by rapid technological change, and design and other technological obsolescence.
We believe we compete effectively based upon our ability to capitalize on efficiencies and economies of scale in production and sales, and our ability to maintain or improve our productivity and product yields to reduce manufacturing costs. The semiconductor industry is also characterized by rapid technological change, design and other technological obsolescence.
We make available free of charge, either by direct access on our website or a link to the SEC website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
We make available free of charge, either by direct access on our website or a link to the SEC website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as 13 reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.
Risk Factors - Risks Relating to Production Operations and Services - We rely on a limited number of suppliers and subcontractors, many of which are based outside the U.S., for many essential components and materials and certain critical manufacturing services and any interruption or loss of supplies or services from these entities could significantly interrupt our business operations and the production of our products." and "Item 1A.
Risk Factors - Risks Relating to Production Operations and Services - We rely on a limited number of suppliers and subcontractors, 10 many of which are based outside the U.S., for many essential components and materials and certain critical manufacturing services and any interruption or loss of supplies or services from these entities could significantly interrupt our business operations and the production of our products." and "Item 1A.
Additionally, there has been a 11 trend toward consolidation in the semiconductor industry as companies attempt to strengthen or hold their market positions in an evolving industry. Such consolidations may make it more difficult for us to compete effectively, including on the basis of price, sales and marketing programs, channel coverage, technology or product functionality.
Additionally, there has been a trend toward consolidation in the semiconductor industry as companies attempt to strengthen or hold their market positions in an evolving industry. Such consolidations may make it more difficult for us to compete effectively, including on the basis of price, sales and marketing programs, channel coverage, technology or product functionality.
This framework ensures that feedback provided in these performance discussions supports leadership growth and long-term development. Our development programs include an extensive library suite of professional third-party trainings and courses. In addition, Semtech offers a comprehensive annual and new hire compliance training that focuses on diversity, anti-harassment and code of conduct, among others.
This framework ensures that feedback provided in these performance discussions supports leadership growth and long-term development. Our development programs 12 include an extensive library suite of professional third-party trainings and courses. In addition, Semtech offers a comprehensive annual and new hire compliance training that focuses on diversity, anti-harassment and code of conduct, among others.
We have operations offices located in Canada, China, Malaysia and Vietnam that support and coordinate some of the worldwide shipment of products. We have installed our own test equipment at some of our packaging and testing subcontractors in order to ensure a certain level of capacity, assuming the subcontractor has ample employees to operate the equipment.
We have operations offices located in Canada, China, Malaysia, Taiwan and Vietnam that support and coordinate some of the worldwide shipment of products. We have installed our own test equipment at some of our packaging and testing subcontractors in order to ensure a certain level of capacity, assuming the subcontractor has ample employees to operate the equipment.
While our various intellectual property ("IP") rights are important to our success, we do not believe any individual patent, group of patents, or the expiration thereof would materially affect our business operations. We have registered many of our trademarks in the U.S. and in various foreign jurisdictions.
While our various intellectual property ("IP") rights are important to our success, we do not believe any individual patent, group of patents, or the expiration thereof would materially affect our business operations. 11 We have registered many of our trademarks in the U.S. and in various foreign jurisdictions.
We believe this outsourcing permits us to take advantage of the best available technology, leverage the capital investment of others and reduce our operating costs associated with manufacturing assets. 10 In keeping with our "fabless" business model, we have no wafer fabrication facilities.
We believe this outsourcing permits us to take advantage of the best available technology, leverage the capital investment of others and reduce our operating costs associated with manufacturing assets. In keeping with our "fabless" business model, we have no wafer fabrication facilities.
All of these markets are characterized by their need for leading-edge, high-performance analog and mixed-signal semiconductor technologies. The infrastructure, high-end consumer and industrial end markets we supply are characterized by several trends that we believe drive demand for our products.
All these markets are characterized by their need for leading-edge, high-performance analog and mixed-signal semiconductor technologies. The infrastructure, high-end consumer and industrial end markets we supply are characterized by several trends that we believe drive demand for our products.
We intend to leverage our pool of skilled technical personnel to develop new products 6 or, where appropriate, use strategic acquisitions or small strategic investments to either accelerate our position in the fastest growing areas or to gain entry into these areas.
We intend to leverage our pool of skilled technical personnel to develop new products or, where appropriate, use strategic acquisitions or small strategic investments to either accelerate our position in the fastest growing areas or to gain entry into these areas.
In order to capitalize on our strengths in design, development and marketing, we intend to pursue the following strategies: Leverage our rare analog and mixed-signal design expertise We invest heavily in the human resources needed to define, design and market high-performance analog and mixed-signal platform products.
To capitalize on our strengths in design, development and marketing, we intend to pursue the following strategies: Leverage our rare analog and mixed-signal design expertise We invest heavily in the human resources needed to define, design and market high-performance analog and mixed-signal platform products.
We design, develop, operate and market a portfolio of connected services used in a wide variety of industrial, medical and communications applications. Our connected services include wireless connectivity and cloud-based services for customers to deploy, connect, and operate their end applications.
We also design, develop, operate and market a portfolio of connected services used in a wide variety of industrial, medical and communications applications. Our connected services include wireless connectivity and cloud-based services for customers to deploy, connect, and operate their end applications.
Customers, Sales Data and Backlog As a result of the breadth of our products and markets, we have a broad and balanced range of customers. Our customers include major OEMs, Solution Providers, and their subcontractors in the infrastructure, high-end consumer and industrial end markets.
Customers, Sales Data and Backlog As a result of the breadth of our products and markets, we have a broad range of customers. Our customers include major OEMs, Solution Providers, and their subcontractors in the infrastructure, high-end consumer and industrial end markets.
In order to strengthen our share position, we have launched new next generation products and increased our investments in sales capacity and other go-to-market initiatives. Our competitors in this line of business vary by market segment.
To strengthen our share position, we have launched new next generation products and increased our investments in sales capacity and other go-to-market initiatives. Our competitors in this line of business vary by market segment.
We use various manufacturing processes, including Bipolar, CMOS, RF-CMOS and Silicon Germanium BiCMOS processes. Our IoT Systems products designs are managed internally. We maintain management of design engineering, software engineering, manufacturing engineering and manufacturing test development.
We use various manufacturing processes, including Bipolar, CMOS, RF-CMOS and Silicon Germanium BiCMOS processes. Our IoT Systems products designs are primarily managed internally. We maintain management of design engineering, software engineering, manufacturing engineering and manufacturing test development.
A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in the United States ("U.S."), China, Taiwan and Vietnam .
A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are in the United States ("U.S."), China, Taiwan and Vietnam .
In markets where the end system life cycles are relatively short, customers typically request delivery in four to eight weeks. We do not have any significant backlog with deliveries beyond 18 months. Manufacturing Capabilities Our strategy is to outsource most of our manufacturing functions to third-party foundries, assembly and test contractors and electronics manufacturing services ("EMS") partners.
In markets where the end system life cycles are relatively short, customers typically request delivery in four to thirteen weeks. We do not have any significant backlog with deliveries beyond 18 months. Manufacturing Capabilities Our strategy is to outsource most of our manufacturing functions to third-party foundries, assembly and test contractors and electronics manufacturing services ("EMS") partners.
These activities accommodate situations in which tight coupling with product design is desirable or where there are unique requirements. We use third-party subcontractors to perform almost all of our other assembly and test operations and a majority of our assembly and test activity is conducted by third-party subcontractors located in China, Malaysia, Mexico, Taiwan and Vietnam.
These activities accommodate situations in which tight coupling with product design is desirable or where there are unique requirements. We use third-party subcontractors to perform almost all of our other assembly and test operations and a majority of our assembly and test activity is conducted by third-party subcontractors located in Canada, China, Malaysia, Taiwan and Vietnam.
IoT interoperability and standardization are important as the number of connected devices continues to grow, and it is essential that these devices are able to communicate with each other seamlessly, regardless of the underlying technology or platform. We see substantial potential in the IoT market, particularly in verticals such as metering, connected places and asset tracking.
IoT interoperability and standardization are important as the number of connected devices continues to grow, and it is essential that these devices can communicate with each other seamlessly, regardless of the underlying technology or platform. We see substantial potential in the IoT market, particularly in verticals such as metering, connected places and asset tracking.
Our talent acquisition processes focus on the increasingly complex talent market and building our pipeline for an even more diverse and inclusive workforce. The health and well-being of our employees and their families remains our highest priority, and supporting and improving the local communities in which our employees are located is an important part of our culture.
Our talent acquisition processes focus on the increasingly complex talent market and building our pipeline for a more inclusive workforce. The health and well-being of our employees and their families remains our highest priority, and supporting and improving the local communities in which our employees are located is an important part of our culture.
We also employ a number of software engineers and systems engineers 12 that specialize in the development of software and systems architecture, who enable us to develop systems oriented products in select markets. Our IoT business employs specialized engineering teams skilled in the areas of radio design, hardware design, embedded software design cloud-based application development and cellular network design.
We also employ several software engineers and systems engineers that specialize in the development of software and systems architecture, who enable us to develop systems-oriented products in select markets. Our IoT business employs specialized engineering teams skilled in the areas of radio design, hardware design, embedded software design, cloud-based application development and cellular network design.
Our products are typically purchased by these customers for their performance, price and/or technical support, as compared to our competitors. In fiscal years 2024, 2023 and 2022, net sales in the U.S. represented 24%, 13% and 10% of our net sales .
Our products are typically purchased by these customers for their performance, price and/or technical support, as compared to our competitors. In fiscal years 2025, 2024 and 2023, net sales in the U.S. represented 21%, 24% and 13% of our net sales .
As of the end of fiscal year 2024, our average employee tenure is 8 years, reflecting the strong engagement of our employees. As new employees continue to join Semtech, we expect their contributions to bring fresh ideas to help drive innovation and continuous improvement.
As of the end of fiscal year 2025, our average employee tenure is eight years, reflecting the strong engagement of our employees. As new employees continue to join Semtech, we expect their contributions to bring fresh ideas to help drive innovation and continuous improvement.
We operate internationally through certain of our wholly-owned direct and indirect subsidiaries and their branch offices. Independent representatives and distributors are also used to serve customers throughout the world. Some of our distributors and sales representatives also offer products from our competitors, as is customary in the industry.
We are a global business with customers and suppliers around the world. We operate internationally through certain of our wholly-owned direct and indirect subsidiaries and their branch offices. Independent representatives and distributors are also used to serve customers throughout the world. Some of our distributors and sales representatives also offer products from our competitors, as is customary in the industry.
Our net sales by major end market as a percentage of total net sales are detailed below: Fiscal Years (percentage of net sales) 2024 2023 2022 Infrastructure 19 % 38 % 35 % High-End Consumer 14 % 21 % 30 % Industrial 67 % 41 % 35 % Total 100 % 100 % 100 % We believe that our diversity in end markets provides stability to our business and opportunity for growth.
Our net sales by major end market as a percentage of total net sales are detailed below: Fiscal Years (percentage of net sales) 2025 2024 2023 Infrastructure 27 % 19 % 38 % High-End Consumer 16 % 14 % 21 % Industrial 57 % 67 % 41 % Total 100 % 100 % 100 % We believe that our diversity in end markets provides stability to our business and opportunity for growth.
We operate and account for results in four reportable segments—Signal Integrity, Analog Mixed Signal and Wireless, IoT Systems, and IoT Connected Services—that represent four separate operating segments (see Note 16, Segment Information, to our Consolidated Financial Statements). Signal Integrity.
We operate and account for results in three reportable segments—Signal Integrity, Analog Mixed Signal and Wireless, and IoT Systems and Connectivity—that represent three separate operating segments (see Note 16, Segment Information, to our Consolidated Financial Statements). Signal Integrity.
Our net sales also have been affected by the cyclical nature of the semiconductor industry, and typically the fourth fiscal quarter tends to be softer in demand as compared to our other fiscal 9 quarters.
Seasonality Our net sales are subject to some seasonal variation. Our net sales also have been affected by the cyclical nature of the semiconductor industry, and typically the fourth fiscal quarter tends to be softer in demand as compared to our other fiscal quarters.
Intellectual Property and Licenses We have been granted 292 U.S. patents and 493 foreign patents and have numerous patent applications pending with respect to our products and to technologies associated with our business. The expiration dates of issued patents range from 2024 to 2042.
Intellectual Property and Licenses We have been granted 304 U.S. patents and 515 foreign patents and have numerous patent applications pending with respect to our products and to technologies associated with our business. The expiration dates of issued patents range from 2025 to 2044.
As described in Note 16, Segment Information, to our Consolidated Financial Statements, our segment results reflect changes in our operating segments that went into effect following organizational restructurings in the fourth quarter of fiscal year 2024 and the fourth quarter of fiscal year 2023. We currently have four reportable segments.
As described in Note 16, Segment Information, to our Consolidated Financial Statements, our segment results reflect changes in our operating segments that went into effect following organizational restructurings in the first quarter of fiscal 2025. We currently have three reportable segments.
Item 1. Business General We are a high-performance semiconductor, Internet of Things ("IoT") systems and cloud connectivity service provider and were incorporated in Delaware in 1960. We design, develop, manufacture and market a wide range of products and services for commercial applications, the majority of which are sold into the infrastructure, high-end consumer and industrial end markets.
Item 1. Business General We are a leading provider of high-performance semiconductor, Internet of Things ("IoT") systems and cloud connectivity service solutions and were incorporated in Delaware in 1960. We design, develop, manufacture and market a diverse portfolio of products for commercial applications, addressing the global infrastructure, high-end consumer and industrial end markets.
The end-product markets for analog and mixed-signal semiconductors are more varied and more specialized than the relatively standardized digital semiconductor product markets. Another difference between the analog and digital markets is the amount of available talented labor. The analog industry relies more heavily than the digital industry on design and applications talent to distinguish its products from one another.
Another difference between the analog and digital markets is the amount of available talented labor. The analog industry relies more heavily than the digital industry on design and applications talent to distinguish its products from one another.
The analog and mixed-signal industry is typically characterized by longer product life cycles than the digital industry. In addition, analog semiconductor manufacturers tend to have lower capital investment requirements for manufacturing because their facilities tend to be less dependent than digital producers on state-of-the-art production equipment to manufacture leading edge process technologies.
In addition, analog semiconductor manufacturers tend to have lower capital investment requirements for manufacturing because their facilities tend to be less dependent than digital producers on state-of-the-art production equipment to manufacture leading edge process technologies. The end-product markets for analog and mixed-signal semiconductors are more varied and more specialized than the relatively standardized digital semiconductor product markets.
Net sales to customers located in China (including Hong Kong), Japan, Taiwan, Singapore and Australia comprised 32%, 6%, 6%, 5% and 5% of our net sales, respectively, in fiscal year 2024. No other geography outside the U.S. comprised more than 5% of our sales in fiscal year 2024.
Net sales to customers located in China (including Hong Kong) comprised 43% of our net sales in fiscal year 2025. No other geography outside the U.S. comprised more than 5% of our sales in fiscal year 2025.
Diversity and Inclusion We are committed in our efforts to increase diversity and foster an inclusive work environment that supports our global workforce and helps us provide innovative solutions for our customers.
Diversity and Inclusion We are committed to our efforts to increase diversity and foster an inclusive work environment that supports our global workforce and helps us provide innovative solutions for our customers. We continue our focus on improving our hiring, development, advancement and retention of diverse talent and our overall diversity representation.
We offer our employees the opportunity to give back to their local communities, contribute to charities and participate in corporate-sponsored initiatives. Government Regulations As a global company, we market and sell our products both inside and outside the U.S. Certain products are subject to the Export Administration Regulations, administered by the U.S.
Government Regulations As a global company, we market and sell our products both inside and outside the U.S. Certain products are subject to the Export Administration Regulations, administered by the U.S.
Digital semiconductors process binary information, such as that used by computers. Mixed-signal devices incorporate both analog and digital functions into a single chip and provide the ability for digital electronics to interface with the outside world. The market for analog and mixed-signal semiconductors differs from the market for digital semiconductors.
Mixed-signal devices incorporate both analog and digital functions into a single chip and provide the ability for digital electronics to interface with the outside world. The market for analog and mixed-signal semiconductors differs from the market for digital semiconductors. The analog and mixed-signal industry is typically characterized by longer product life cycles than the digital industry.
All prior year information in the tables below has been revised retrospectively to reflect the change to the Company's reportable segments: Fiscal Years (in thousands) 2024 2023 2022 Signal Integrity $ 177,033 $ 298,290 $ 286,259 Analog Mixed Signal and Wireless 260,264 443,239 454,599 IoT Systems 334,904 9,811 — IoT Connected Services 96,557 5,193 — Total $ 868,758 $ 756,533 $ 740,858 Recent Acquisition and Divestiture Acquisition of Sierra Wireless, Inc.
All prior year information in the tables below has been revised retrospectively to reflect the change to the Company's reportable segments: Fiscal Years (in thousands) 2025 2024 2023 Signal Integrity $ 261,747 $ 177,033 $ 298,290 Analog Mixed Signal and Wireless 322,899 260,264 443,239 IoT Systems and Connectivity 324,641 431,461 15,004 Total $ 909,287 $ 868,758 $ 756,533 Recent Acquisition and Divestiture Acquisition of Sierra Wireless, Inc.
With our extensive portfolio of IoT solutions, including modules, routers, gateways and connected services, we believe we are well positioned to capitalize on the growing demand for connected devices and to help our customers navigate the complex IoT landscape.
With our extensive portfolio of IoT solutions, including modules, routers, gateways (together "IoT Hardware") and connected services, we believe we are well positioned to capitalize on the growing demand for connected devices and to help our customers navigate the complex IoT landscape. 6 Business Strategy Our objective is to be a high-performance semiconductor, IoT systems and cloud connectivity service provider to the fastest growing segments of our target markets.
The portfolio includes a wide range of modules, gateways, routers, and connected services that are designed to meet the specific needs of different industries and applications. Our modules are available in a variety of form factors and connectivity options, including LTE-M, NB-IoT and 5G, and can be integrated into an array of devices and systems.
Our modules are available in a variety of form factors and connectivity options, including LTE-M, NB-IoT and 5G, and can be integrated into an array of devices and systems.
While we do have some redundancy of fabrication, assembly and test and EMS processes by using multiple sources, any interruption by one or more of these outsource providers could materially impact us.
While we do have some redundancy of fabrication, assembly and test and EMS processes by using multiple sources, any interruption by one or more of these outsource providers could materially impact us. We maintain some amount of business interruption insurance to reduce the financial risk associated with supply or service interruption, but we are not fully insured against this risk.
We continue our focus on improving our hiring, development, advancement and retention of diverse talent and our overall diversity representation. 13 We continuously promote inclusion through our stated core values and principles. We provide training to all employees to improve their understanding of behaviors that can be perceived as discriminatory, exclusionary, and/or harassing.
We continuously promote inclusion through our stated core values and principles. We provide training to all employees to improve their understanding of behaviors that can be perceived as discriminatory, exclusionary, and/or harassing. Employees are encouraged to report such behaviors to management or via anonymous hotline.
Our wireless products, which include our LoRa® devices and wireless radio frequency technology ("LoRa Technology"), feature industry leading and longest range industrial, scientific and medical radio, enabling a lower total cost of ownership and increased reliability. These features make these products particularly suitable for machine-to-machine and IoT applications.
We also design, develop, manufacture and market a portfolio of specialized radio frequency products used in a wide variety of industrial, medical and communications applications. Our wireless products, which include our LoRa® devices and wireless radio frequency technology ("LoRa Technology"), feature industry leading and longest-range industrial, scientific and medical radio, enabling a lower total cost of ownership and increased reliability.
We have direct sales personnel located throughout North America, Europe and Asia-Pacific who manage the sales activities of independent sales representative firms and independent distributors. We expense our advertising costs as they are incurred. We are a global business with customers and suppliers around the world.
Sales and Marketing Net sales made through independent distributors during fiscal years 2025, 2024 and 2023 were 72%, 66% and 85%, respectively. We have direct sales personnel located throughout North America, Europe and Asia-Pacific who manage the sales activities of independent sales representative firms and independent distributors. We expense our advertising costs as they are incurred.
Employees are encouraged to report such behaviors to management or via an anonymous hotline. Community Involvement As good corporate citizens, we aim to contribute to the communities where we live and work, and believe that this commitment helps in our efforts to attract and retain employees.
Community Involvement As good corporate citizens, we aim to contribute to the communities where we live and work, and believe that this commitment helps in our efforts to attract and retain employees. We offer our employees the opportunity to give back to their local communities, contribute to charities and participate in corporate-sponsored initiatives.
Our IoT module, router, gateways and managed connectivity solutions ship to IoT device makers, enterprises and solution providers to provide IoT connectivity to end devices. Overview of the Semiconductor and IoT Industries The semiconductor industry is broadly divided into analog and digital semiconductor products. Analog semiconductors condition and regulate "real world" functions such as temperature, speed, sound and electrical current.
Overview of the Semiconductor and IoT Industries The semiconductor industry is broadly divided into analog, digital, and mixed-signal semiconductor products. Analog semiconductors condition and regulate "real world" functions such as temperature, speed, sound and electrical current. Digital semiconductors process binary information, such as that used by computers.
Human Capital As of January 28, 2024, our year-over-year headcount decreased from 2,248 to 1,917 full-time employees worldwide, of whom 1,457 employees were based outside of the U.S.
Human Capital As of January 26, 2025, our year-over-year headcount decreased from 1,917 to 1,838 full-time employees worldwide, of whom 1,390 employees were based outside of the U.S. The decrease was primarily related to a combination of normal voluntary turnover and managing our overall labor cost investments.
We also design, develop, and market power product devices that control, alter, regulate, and condition the power within electronic systems focused on the LoRa® and IoT infrastructure segment. The highest volume product types within this category are switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging.
These features make these products particularly suitable for machine-to-machine and IoT applications. We also design, develop, and market power product devices that control, alter, regulate, and condition the power within electronic systems focused on the LoRa and IoT infrastructure segment.
Infrastructure: data centers, passive optical networks ("PON"), base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless local area network ("LAN") and other communication infrastructure equipment. High-End Consumer: smartphones, tablets, wearables, desktops, notebooks, and other handheld products, wireless charging, set-top boxes, digital televisions, monitors and displays, digital video recorders and other consumer equipment.
High-End Consumer: smartphones, tablets, smart glasses, wearables, desktops, notebooks, wireless charging, set-top boxes, digital televisions, monitors and displays, digital video recorders and other consumer equipment.
Our video products offer advanced solutions for highly differentiated audio video-over-IP technology for professional audio video ("Pro AV") applications. IoT Systems. We design, develop, operate and market a comprehensive product portfolio of IoT solutions that enable businesses to connect and manage their devices, collect and analyze data, and improve decision-making.
We design, develop, operate and market a comprehensive product portfolio of IoT solutions that enable businesses to connect and manage their devices, collect and analyze data, and improve decision-making. The portfolio includes a wide range of modules, gateways, routers, and connected services that are designed to meet the specific needs of different industries and applications.
As of January 28, 2024, we had 952 employees in research and development, 255 employees in operations, and 710 employees in selling, general and administrative, including functions that support operational activities. Our focus on innovation gives us a unique appreciation to the importance of recruitment, retention and the professional development of our employees.
As of January 26, 2025, we had 921 employees in research and development, 296 employees in operations, and 621 employees in selling, general and administrative, including functions that support operational activities. As of January 26, 2025, we also had 33 independent contractors.
Industrial: IoT applications, analog and digital video broadcast equipment, video-over-IP solutions, automated meter reading, smart grid, wireless charging, medical, security systems, automotive, industrial and home automation and other industrial equipment. Our end customers for our silicon solutions are primarily original equipment manufacturers ("OEMs") that produce and sell technology solutions.
Industrial: IoT applications such as connected spaces (smart cities, buildings, factories, facilities and commercial buildings), smart utilities (electricity, water, gas and smart grid), wireless charging, medical, security systems, automotive, industrial and home automation, supply chain management, asset tracking and logistics, analog and digital video broadcast equipment, video-over-IP solutions and other industrial equipment.
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Business Strategy Our objective is to be a high-performance semiconductor, IoT systems and cloud connectivity service provider to the fastest growing segments of our target markets.
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Infrastructure: data centers, passive optical networks ("PON"), base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless local area network ("LAN") and other communication infrastructure equipment. This market has expanded to support artificial intelligence-driven applications and general compute data center applications.
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We also design, develop, manufacture and market a portfolio of specialized radio frequency products used in a wide variety of industrial, medical and communications applications.
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Our end customers for our silicon solutions are primarily original equipment manufacturers ("OEMs") that produce and sell technology solutions. Our IoT module, router, gateways and managed connectivity solutions ship to IoT device makers, enterprises and solution providers to provide IoT connectivity to end devices.
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The increase in percentage of net sales in our industrial end market is largely attributable to the Sierra Wireless Acquisition, partially offset by lower LoRa-enabled and TVS industrial product sales.
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The highest volume product types within this category are switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging. Our video products offer advanced solutions for highly differentiated audio video-over-IP technology for professional audio video applications. IoT Systems and Connectivity.
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The following table depicts our main product lines and their end market and product applications: Typical End Product Applications Product Groups Infrastructure High-End Consumer Industrial Signal Integrity Optical and copper module ICs supporting up to 1.6Tb/s for Ethernet, Fibre Channel protocols in data center and broadband access applications, and 4G/5G/LTE wireless applications Serial Digital Interconnect interface ICs for Broadcast Video Analog Mixed Signal and Wireless Servers, workstations, desktop PC/notebooks, ultrabooks, optical modules, printers, copiers, 4G/5G/LTE base stations, 1/10 Gb/s Ethernet Smartphones, media players, tablets, wearables, cameras, TVs, set top boxes and high end audio Industrial automation, measurement & instrumentation, automotive, hearing aids, IoT, Industrial Asset Monitoring, Tracking & Logistics, Smart Metering, Smart Home, Smart Building, Smart City, Smart Agriculture, and Power Management, Audio Video over IP for Pro AV applications IoT Systems IoT, Industrial Asset Monitoring, Tracking & Logistics, Smart Metering, Smart Home, Smart Building, Smart City, Smart Agriculture, and Power Management IoT Connected Services IoT, Industrial Asset Monitoring and Control, Tracking & Logistics, Smart Metering, Smart Home, Smart Building, Smart City, Smart Agriculture, and Healthcare Seasonality Our net sales are subject to some seasonal variation.
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None of our employees or contract workers are represented by a labor union except for our employees in France who are represented by work counsels. Our focus on innovation gives us a unique appreciation for the importance of recruitment, retention and the professional development of our employees.
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Sales and Marketing Net sales made through independent distributors during fiscal years 2024, 2023 and 2022 were 66%, 85% and 87%, respectively, and the remainder were made directly to customers. The lower percentage of distributor sales in fiscal year 2024 primarily relates to sales channels associated with the Sierra Wireless business, which we acquired in January 2023.
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Concentration of Net Sales - Significant Customers The following table sets forth the concentration of sales among the customers that accounted for more than 10% of our net sales in one or more of the periods indicated: Fiscal Years (percentage of net sales) (1) 2024 2023 2022 Trend-tek Technology Ltd.
Removed
(and affiliates) * 16 % 17 % Frontek Technology Corporation (and affiliates) 10 % 13 % 18 % CEAC International Ltd. (and affiliates) * 11 % 11 % Arrow Electronics (and affiliates) * * 10 % (1) In each period with an asterisk, the customer represented less than 10% of the Company's net sales.
Removed
While we maintain some amount of business interruption insurance to reduce the financial risk associated with supply or service interruption, but we are not fully insured against this risk.
Removed
The decrease in headcount was primarily related to structural reorganization actions to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

131 edited+29 added−18 removed227 unchanged
Biggest changeWe may experience intense competition on our businesses, including: • competition from more established and larger companies with strong brands and greater financial, technical and marketing resources or companies with different business models; • competition from companies that operate in lower cost jurisdictions than we do, or who receive government support or subsidies that we do not; • business combinations or strategic alliances by our competitors which could weaken our competitive position; • introduction of new products or services by us that put us in direct competition with major new competitors; • existing or future competitors who may be able to respond more quickly to technological developments and changes and introduce new products or services before we do; and • competitors who may independently develop and patent technologies and products that are superior to ours or achieve greater acceptance due to factors such as more favorable pricing, more desired or better-quality features or more efficient sales channels. 24 If we are unable to compete effectively with our competitors' pricing strategies, technological advances and other initiatives, we may lose customer orders and market share and we may need to reduce the price of our products and services, resulting in reduced revenue and gross margins.
Biggest changeWe may experience intense competition on our businesses, including: • competition from more established and larger companies with strong brands and greater financial, technical and marketing resources or companies with different business models; 24 • competition from companies that operate in lower cost jurisdictions than we do, or who receive government support or subsidies that we do not; • business combinations or strategic alliances by our competitors which could weaken our competitive position; • introduction of new products or services by us that put us in direct competition with major new competitors; • existing or future competitors who may be able to respond more quickly to technological developments and changes, including the integration and use of AI and machine learning technologies, and introduce new products or services before we do; and • competitors who may independently develop and patent technologies and products that are superior to ours or achieve greater acceptance due to factors such as more favorable pricing, more desired or better-quality features or more efficient sales channels.
In addition, the impact of general 16 economic conditions, including recessions or inflationary pressures, bank failures and uncertainty in the banking system, geopolitical turmoil and supply chain disruptions, could adversely impact our suppliers and third-party subcontractors, and we may be unable to prevent or mitigate the effect of these conditions on our suppliers or find alternate sources of supply, which may impact our operations.
In addition, the impact of general economic conditions, including recessions or inflationary pressures, bank failures and uncertainty in the banking system, geopolitical turmoil and supply chain disruptions, could adversely impact our suppliers and third-party subcontractors, 16 and we may be unable to prevent or mitigate the effect of these conditions on our suppliers or find alternate sources of supply, which may impact our operations.
Our increased indebtedness as a result of this financing has had, and likely will continue to have, important consequences to us and our stockholders, including: increasing our vulnerability to general adverse economic and industry conditions; limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements; with respect to variable rate indebtedness, risks associated with increases in interest rates; requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, future acquisitions, capital expenditures, stock repurchases and general corporate requirements; limiting our flexibility in planning for, or reacting to, 29 changes in our business and our industry; and putting us at a disadvantage compared to our competitors with less indebtedness.
Our increased indebtedness as a result of this financing has had, and likely will continue to have, important consequences to us and our stockholders, including: increasing our vulnerability to general adverse economic and industry conditions; limiting our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements; with respect to variable rate indebtedness, risks associated with increases in interest rates; requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, future acquisitions, capital expenditures, stock repurchases and general corporate requirements; limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and putting us at a disadvantage compared to our competitors with less indebtedness.
The Credit Agreement includes covenants restricting, among other things, our and our subsidiaries’ ability to: incur or guarantee additional debt or issue certain preferred stock; pay dividends or make distributions on our capital stock or redeem, repurchase or retire our capital stock; make certain investments and acquisitions; create liens on our or our subsidiaries’ assets; enter into transactions with affiliates; merge or consolidate—with another person or sell or otherwise dispose of substantially all of our assets; make certain payments in respect of other material indebtedness; and alter the business that we conduct.
The Credit Agreement includes covenants restricting, among other things, our and our subsidiaries’ ability to: incur or guarantee additional debt or issue certain 33 preferred stock; pay dividends or make distributions on our capital stock or redeem, repurchase or retire our capital stock; make certain investments and acquisitions; create liens on our or our subsidiaries’ assets; enter into transactions with affiliates; merge or consolidate with another person or sell or otherwise dispose of substantially all of our assets; make certain payments in respect of other material indebtedness; and alter the business that we conduct.
Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that us, the financial institutions with which we have credit agreements or arrangements directly, or the financial services industry or economy in general.
Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have credit agreements or arrangements directly, or the financial services industry or economy in general.
If our products are not in compliance with prevailing industry standards or requirements, we could miss opportunities to achieve crucial design wins which in turn could have a material adverse effect on our business, operating results and financial conditions. Unfavorable or uncertain conditions in the 5G infrastructure market may cause fluctuations in our rate of revenue growth or financial results.
If our products are not in compliance with prevailing industry standards or requirements, we could miss opportunities to achieve crucial design wins which in turn could have a material adverse effect on our business, operating results and financial conditions. 19 Unfavorable or uncertain conditions in the 5G infrastructure market may cause fluctuations in our rate of revenue growth or financial results.
In addition, as regulatory and private sector stakeholders have expressed concerns about the 19 negative effects and dangers posed to others by the deployment of 5G technology, unfavorable developments with evolving laws and regulations worldwide related to 5G or 5G suppliers may limit global adoption, impede our strategy, and negatively impact our long-term expectations in this area.
In addition, as regulatory and private sector stakeholders have expressed concerns about the negative effects and dangers posed to others by the deployment of 5G technology, unfavorable developments with evolving laws and regulations worldwide related to 5G or 5G suppliers may limit global adoption, impede our strategy, and negatively impact our long-term expectations in this area.
Complying 26 with these varying state, federal and international requirements could cause us to incur additional costs and change our business practices. In addition, because our products and services are sold and used worldwide, we may be required to comply with laws and regulations in countries or states where we have no local entity, employees, or infrastructure.
Complying with these varying state, federal and international requirements could cause us to incur additional costs and change our business practices. In addition, because our products and services are sold and used worldwide, we may be required to comply with laws and regulations in countries or states where we have no local entity, employees, or infrastructure.
Risk Factors - Risks Relating to Our Indebtedness - Covenants in the Credit Agreement (as defined below) may restrict our ability to pursue our business strategies and any violation of one or more of the covenants could have a material adverse effect on our financial condition and results of operations,” below for further discussion on the impact of our increased indebtedness.
Risk Factors - Risks Relating to Our Indebtedness - Covenants in the Credit Agreement (as defined below) may restrict our ability to pursue our business strategies and any violation of one or more of the covenants could have a material adverse effect on our financial condition and results of operations," below for further discussion on the impact of our increased indebtedness.
We will continue to monitor countries’ laws with respect to the OECD model rules and the Pillar Two 27 global minimum tax. Future tax law changes resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities.
We will continue to monitor countries’ laws with respect to the OECD model rules and the Pillar Two global minimum tax. Future tax law changes resulting from these developments may result in changes to long-standing tax principles, which could adversely affect our effective tax rate or result in higher cash tax liabilities.
In addition, some customers restrict how far back the date of manufacture for our products can be, which can render our products obsolete. In addition, certain customers may stop ordering products from us and go out of business due to adverse economic conditions or otherwise, thereby causing some of our product inventory to become obsolete.
Further, some customers restrict how far back the date of manufacture for our products can be, which can render our products obsolete. In addition, certain customers may stop ordering products from us and go out of business due to adverse economic conditions or otherwise, thereby causing some of our product inventory to become obsolete.
These obligations typically arise pursuant to contracts under which we agree to hold the other party harmless 31 against losses arising from a breach of representations and covenants related to certain matters, such as acts or omissions of our employees, infringement of third-party intellectual property rights, and certain environmental matters.
These obligations typically arise pursuant to contracts under which we agree to hold the other party harmless against losses arising from a breach of representations and covenants related to certain matters, such as acts or omissions of our employees, infringement of third-party intellectual property rights, and certain environmental matters.
In certain cases, our mobile network operator partners may also offer services that compete with our IoT services business. 18 Risks Relating to Research and Development, Engineering, Intellectual Property and New Technologies We may be unsuccessful in developing and selling new products, which is central to our objective of maintaining and expanding our business.
In certain cases, our mobile network operator partners may also offer services that compete with our IoT services business. Risks Relating to Research and Development, Engineering, Intellectual Property and New Technologies We may be unsuccessful in developing and selling new products, which is central to our objective of maintaining and expanding our business.
Conversely, when circumstances create longer lead times customers may order in excess of what they need to ensure availability, then cancel orders if lead times are reduced. A rapid and sudden decline in customer demand for products or 23 cancellation of orders can result in excess quantities of certain products relative to demand.
Conversely, when circumstances create longer lead times customers may order in excess of what they need to ensure availability, then cancel orders if lead times are reduced. A rapid and sudden decline in customer demand for products or cancellation of orders can result in excess quantities of certain products relative to demand.
We also depend on successful strategic relationships with our mobile network operator partners to provide direct or indirect roaming services onto their networks and our operating results and financial condition could be harmed if they increase the price of their services or experience operational issues with their networks.
We also depend on successful strategic relationships with our mobile network operator partners to provide direct or indirect roaming services onto their networks and our operating results and financial condition could be harmed if they increase the price of their services or experience 18 operational issues with their networks.
The loss of a major customer, a reduction in sales to any major customer or our inability to attract new significant customers could seriously impact our revenue and materially and adversely affect our business, financial condition and results of operations. The volatility of customer demand limits our ability to predict future levels of sales and profitability.
The loss of a major customer, a reduction in sales to any major 23 customer or our inability to attract new significant customers could seriously impact our revenue and materially and adversely affect our business, financial condition and results of operations. The volatility of customer demand limits our ability to predict future levels of sales and profitability.
If we elect to settle the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Notes being converted in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
If we elect to settle the remainder, if any, of our conversion obligation in excess of the 34 aggregate principal amount of the Notes being converted in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
As smaller geometry processes become more prevalent, we expect to continue to integrate 21 greater levels of functionality into our products. However, we may not be able to achieve higher levels of design integration or deliver new integrated products on a timely basis or at all.
As smaller geometry processes become more prevalent, we expect to continue to integrate greater levels of functionality into our products. However, we may not be able to achieve higher levels of design integration or deliver new integrated products on a timely basis or at all.
For example, the indentures governing the Notes generally require us, at the option of the holders, to repurchase the Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Notes in connection with a make-whole fundamental change, as defined in the indenture for the Notes.
For example, the indentures governing the Notes generally require us, at the option of the holders, to repurchase the Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Notes in connection with a make-whole fundamental change, as defined in the indentures for the Notes.
In addition, many laws and regulations are still evolving and being tested in courts and by regulatory authorities and could be interpreted in ways that could harm our business. The application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate.
In addition, many laws and regulations are still evolving and being tested in courts and by regulatory authorities and could be interpreted in ways that could harm our business. 25 The application and interpretation of these laws and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate.
If we fail to remediate the material weaknesses and maintain effective disclosure controls and procedures or internal control over financial reporting, our ability to accurately record, process, and report financial information and, consequently, our ability to prepare financial statements within required time periods could be adversely affected.
If we fail to remediate material weaknesses and maintain effective disclosure controls and procedures or internal control over financial reporting, our ability to accurately record, process, and report financial information and, consequently, our ability to prepare financial statements within required time periods could be adversely affected.
From time to time, there have been claims challenging the ownership of open source software against companies that incorporate open source software into their products or services or alleging that these companies have violated the terms of an open source license.
From time to time, there have been claims challenging the ownership of open source software 21 against companies that incorporate open source software into their products or services or alleging that these companies have violated the terms of an open source license.
Certain of our products and services as well as the operation of our businesses involves the collection, use, processing, disclosure, transmission and storage (“Processing”) of a large volume of data (including personal information).
Certain of our products and services as well as the operation of our businesses involves the collection, use, processing, disclosure, transmission and storage ("Processing") of a large volume of data (including personal information).
If these taxes are not properly collected and paid, our operating results could be materially adversely affected. Corporate responsibility, specifically related to environmental, social and governance (“ESG”) matters, may impose additional costs and expose us to new risks. Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders and other third parties.
If these taxes are not properly collected and paid, our operating results could be materially adversely affected. Corporate responsibility, specifically related to environmental, social and governance ("ESG") matters, may impose additional costs and expose us to new risks. Public ESG and sustainability reporting is becoming more broadly expected by certain investors, shareholders and other third parties.
Adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”), Signature Bank and Silvergate Capital Corp. were each swept into receivership.
Adverse developments that affect financial institutions, such as events involving liquidity that are rumored or actual, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank ("SVB"), Signature Bank and Silvergate Capital Corp. were each swept into receivership.
We may be subject to increased tax liabilities and an increased effective tax rate if we need to remit funds held by our subsidiaries outside the U.S. With the enactment of the Tax Cuts and Jobs Act (“Tax Act”), all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax.
We may be subject to increased tax liabilities and an increased effective tax rate if we need to remit funds held by our subsidiaries outside the U.S. With the enactment of the Tax Cuts and Jobs Act ("Tax Act"), all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax.
We also have a significant number of employees that are paid in foreign currency, including Australia, Canada, France, India, Mexico, Switzerland, Taiwan, and United Kingdom. If the value of the U.S. dollar weakens relative to these specific currencies, the cost of doing business in terms of U.S. dollars rises.
We also have a significant number of employees that are paid in foreign currency, including those based in Australia, Canada, France, India, Mexico, Switzerland, Taiwan, and United Kingdom. If the value of the U.S. dollar weakens relative to these specific currencies, the cost of doing business in terms of U.S. dollars rises.
In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable.
In addition, certain of our investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable.
In addition, under the Credit Agreement, we are required to maintain a maximum consolidated leverage ratio, a minimum interest expense coverage ratio and minimum liquidity.
In addition, under the Credit Agreement, we are required to maintain a maximum consolidated leverage ratio and a minimum interest expense coverage ratio.
The terms of our indebtedness, including under our Credit Agreement (as defined below), could have significant consequences on our future operations, including: • making it more difficult for us to satisfy our debt obligations and our other ongoing business obligations, which may result in defaults; • sensitivity to interest rate increases on our variable rate outstanding indebtedness, which could result in increased interest under our credit facilities which could cause our debt service obligations to increase significantly; • reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy; • placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged; • increasing our vulnerability to the impact of adverse economic and industry conditions; and • if we receive a downgrade of our credit ratings, our cost of borrowing could increase, negatively affecting our ability to access the capital markets on advantageous terms, or at all.
The terms of our indebtedness, including under our Credit Agreement (as defined below), could have significant consequences on our future operations, including: • making it more difficult for us to satisfy our debt obligations and our other ongoing business obligations, which may result in defaults; • sensitivity to interest rate increases on our variable rate outstanding indebtedness, which could result in increased interest under our credit facilities which could cause our debt service obligations to increase significantly; • reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy; • placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged; and • if we receive a downgrade of our credit ratings, our cost of borrowing could increase, negatively affecting our ability to access the capital markets on advantageous terms, or at all.
This public health crisis or any further political developments or health concerns in markets in which our third-party contractors and suppliers are based could result in social, economic and labor instability, adversely affecting the supply of our products and, in turn, our business, financial condition and results of operations.
A public health crisis or any further political developments or health concerns in markets in which our third-party contractors and suppliers are based could result in social, economic and labor instability, adversely affecting the supply of our products and, in turn, our business, financial condition and results of operations.
Internal controls related to our financial reporting systems are important to accurately reflect our financial position and results of operations in our financial reports.
Further, internal controls related to our financial reporting systems are important to accurately reflect our financial position and results of operations in our financial reports.
Regardless of whether these infringement claims have merit or not, we may be subject to the following: • we may be found to be liable for substantial damages, liabilities and litigation costs, including attorneys' fees; • we may be prohibited from further use of intellectual property because of an injunction and may be required to cease selling our products that are subject to the claim; • we may have to license third party intellectual property, incurring royalty fees that may or may not be on commercially reasonable terms; in addition, there is no assurance that we will be able to successfully negotiate and obtain such a license from the third party; • we may have to develop a non-infringing alternative, which could be costly and delay or result in the loss of sales; in addition, there is no assurance that we will be able to develop such a non-infringing alternative; • management attention and resources may be diverted; • our relationships with customers may be adversely affected; 20 • we may be required to indemnify our customers for certain costs and damages they incur in respect of such a claim; and • we may decide to cease selling certain product lines or not launch certain product lines to avoid infringement claims.
Regardless of whether these infringement claims have merit or not, we may be subject to the following: • we may be found to be liable for substantial damages, liabilities and litigation costs, including attorneys' fees; • we may be prohibited from further use of intellectual property because of an injunction and may be required to cease selling our products that are subject to the claim; • we may have to license third party intellectual property, incurring royalty fees that may or may not be on commercially reasonable terms; in addition, we may not be able to successfully negotiate and obtain such a license from the third party; • we may have to develop a non-infringing alternative, which could be costly and delay or result in the loss of sales; in addition, we may not be able to develop such a non-infringing alternative; 20 • management attention and resources may be diverted; • our relationships with customers may be adversely affected; • we may be required to indemnify our customers for certain costs and damages they incur in respect of such a claim; and • we may decide to cease selling certain product lines or not launch certain product lines to avoid infringement claims.
For fiscal year 2024, our largest distributors were based in Asia. The termination of any of our distributor relationships could impact our net sales and limit our access to certain end-customers. It could also result in the return of excess inventory of our product held by that distributor.
For fiscal year 2025, our largest distributors were based in Asia. The termination of any of our distributor relationships could impact our net sales and limit our access to certain end-customers. It could also result in the return of excess inventory of our product held by that distributor.
Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics.
Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or "sustainability" metrics.
Additionally, the California Privacy Rights and Enforcement Act of 2020 (“CPRA”) further expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements.
Additionally, the California Privacy Rights and Enforcement Act of 2020 ("CPRA") further expands the CCPA with additional data privacy compliance requirements that may impact our business, and establishes a regulatory agency dedicated to enforcing those requirements.
In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
In addition, even if holders do not elect to convert their Notes, we are required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.
As a result, our 1.625% Convertible Senior Notes due 2027 (the “2027 Notes”) and 4.00% Convertible Senior Notes due 2028 (the “2028 Notes” and, together with the 2027 Notes, the "Notes"), are recorded on our balance sheet at face value less unamortized debt issuance costs, with interest expense reflecting the cash coupon plus the amortization of the capitalized issuance costs.
As a result, our 1.625% Convertible Senior Notes due 2027 (the "2027 Notes") and 4.00% Convertible Senior Notes due 2028 (the "2028 Notes" and, together with the 2027 Notes, the "Notes"), are recorded on our balance sheet at face value less unamortized debt issuance costs, with interest expense reflecting the cash coupon plus the amortization of the capitalized issuance costs.
If we find it necessary to transition the goods and services received from our existing suppliers or subcontractors to other firms, we would likely experience an increase in production costs and a delay in production associated with such a transition, both of which could have a significant negative effect on our operating results, as these risks are substantially uninsured.
If we find it necessary to transition the goods and services received from our existing suppliers or subcontractors to other firms, we would likely experience an increase in production costs, including additional costs on supply transitions, and a delay in production associated with such a transition, both of which could have a significant negative effect on our operating results, as these risks are substantially uninsured.
In addition, although the Creating Helpful Incentives to Produce Semiconductors and Science Act (“CHIPS Act”) provides various incentives and tax credits to U.S. companies in connection with semiconductor manufacturing, we may be unsuccessful (including, relative to the efforts of our competitors) in any efforts to obtain such incentives and tax credits.
In addition, although the Creating Helpful Incentives to Produce Semiconductors and Science Act ("CHIPS Act") provides various incentives and tax credits to U.S. companies in connection with semiconductor manufacturing, we may be unsuccessful (including, relative to the efforts of our competitors) in any efforts to obtain such incentives and tax credits.
The termination of a distributor could negatively impact our business, including net sales and accounts receivable. In fiscal year 2024, authorized distributors accounted for approximately 66% of our net sales. We generally do not have long-term contracts with our distributors and most can terminate their agreement with us with little or no notice.
The termination of a distributor could negatively impact our business, including net sales and accounts receivable. In fiscal year 2025, authorized distributors accounted for approximately 72% of our net sales. We generally do not have long-term contracts with our distributors and most can terminate their agreement with us with little or no notice.
In addition, work from home or continuing macroeconomic related uncertainty may result in significant psychological, emotional or financial burdens for some of our employees, which may impact their productivity and morale and may lead to higher employee absences and higher attrition rates.
In addition, continuing macroeconomic related uncertainty may result in significant psychological, emotional or financial burdens for some of our employees, which may impact their productivity and morale and may lead to higher employee absences and higher attrition rates.
Earthquakes and other natural disasters, terrorist attacks, armed conflicts, wars and other acts of violence, and other national or international crisis, calamity or emergency, including the outbreak of pandemic or contagious disease, such as COVID-19, may result in interruption to the business activities of us, our suppliers and our customers and overall disruption of the economy at many levels.
Earthquakes and other natural disasters, terrorist attacks, armed conflicts, wars and other acts of violence, and other national or international crisis, calamity or emergency, including the outbreak of pandemic or contagious disease may result in interruption to the business activities of us, our suppliers and our customers and overall disruption of the economy at many levels.
Any such reputational harm could result in the loss of investors, suppliers or customers, which could harm our business, financial condition, operating results or prospects. We sell and trade with customers outside the U.S., which subjects our business to increased risks. Sales to customers outside the U.S. accounted for approximately 76% of net sales for fiscal year 2024.
Any such reputational harm could result in the loss of investors, suppliers or customers, which could harm our business, financial condition, operating results or prospects. We sell and trade with customers outside the U.S., which subjects our business to increased risks. Sales to customers outside the U.S. accounted for approximately 79% of net sales for fiscal year 2025.
Risks related to our ability to successfully complete the integration of the Sierra Wireless business and realize the benefits we anticipated from the Sierra Wireless Acquisition include, but are not limited to the following: • continuation or worsening of adverse macroeconomic conditions in regions in which we and Sierra Wireless operate; • difficulties entering new markets and integrating new technologies in which we have no or limited direct prior experience; • failure to leverage the increased scale of the combined businesses quickly and effectively; • successfully managing relationships with our combined customer, supplier and distributor base; • coordinating and integrating independent research and development and engineering teams across technologies and product platforms to enhance product development while reducing costs; • consolidating and integrating corporate, finance and administrative infrastructures and integrating and harmonizing business systems, including remediating the material weaknesses described in Part II, Item 9A, "Controls and Procedures"; • challenges identifying and assessing changes in the business that could impact our system of internal controls, which resulted in a material weakness and contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level; • coordinating sales and marketing efforts to effectively position our capabilities and the direction of product development; • unanticipated costs or liabilities associated with the integration; • the increased scale and complexity of our operations; • potential litigation associated with the Sierra Wireless Acquisition; • difficulties in the assimilation of employees and culture and the impact on the business from the loss of employees due to workforce reductions or other departures; • obligations to counterparties of Sierra Wireless that arise as a result of the change in control of Sierra Wireless, including with respect to limitations or restrictions that may be imposed on our ability to integrate products or technology used or produced by Sierra Wireless into our new or existing products; and • diversion of capital and other resources, including management’s attention from other important business objectives.
Risks related to our ability to successfully complete the integration of the Sierra Wireless business and realize the benefits we anticipated from the Sierra Wireless Acquisition include, but are not limited to the following: • continuation or worsening of adverse macroeconomic conditions in regions in which we and Sierra Wireless operate; • difficulties entering new markets and integrating new technologies in which we have no or limited direct prior experience; • failure to leverage the increased scale of the combined businesses quickly and effectively; • successfully managing relationships with our combined customer, supplier and distributor base; • coordinating and integrating independent research and development and engineering teams across technologies and product platforms to enhance product development while reducing costs; • challenges identifying and assessing changes in the business that could impact our system of internal controls, which resulted in a material weakness and contributed to other material weaknesses within our system of internal control over financial reporting at the control activity level; 30 • coordinating sales and marketing efforts to effectively position our capabilities and the direction of product development; • unanticipated costs or liabilities associated with the integration; • the increased scale and complexity of our operations; • potential litigation associated with the Sierra Wireless Acquisition; • difficulties in the assimilation of employees and culture and the impact on the business from the loss of employees due to workforce reductions or other departures; • obligations to counterparties of Sierra Wireless that arise as a result of the change in control of Sierra Wireless, including with respect to limitations or restrictions that may be imposed on our ability to integrate products or technology used or produced by Sierra Wireless into our new or existing products; and • diversion of capital and other resources, including management’s attention from other important business objectives.
Based on our net sales for fiscal year 2024, we expect that we will initially be subject only to the Climate-Related 28 Financial Risk Act, which will require biennial reporting of climate-related financial risks.
Based on our net sales for fiscal year 2025, we expect that we will initially be subject only to the Climate-Related Financial Risk Act, which will require biennial reporting of climate-related financial risks.
If one or more holders elect to convert their Notes, we would be required to settle any converted principal amount of such Notes through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their Notes, we are required to settle any converted principal amount of such Notes through the payment of cash, which could adversely affect our liquidity.
In response to adverse market demand conditions, management has taken actions to reduce expenses and maintain compliance with the financial covenants.
In response to adverse market demand conditions, management has taken actions to reduce expenses and maintain compliance with these financial covenants.
In 2021, the OECD announced that more than 140 member jurisdictions have politically committed to potential changes to the international corporate tax system, including enacting a minimum tax rate of at least 15% as part of the OECD’s “Pillar Two” initiative.
In 2021, the OECD announced that more than 140 member jurisdictions have politically committed to potential changes to the international corporate tax system, including enacting a minimum tax rate of at least 15% as part of the OECD’s "Pillar Two" initiative.
The semiconductor industry has in the past experienced periods of oversupply and that has resulted in significantly reduced prices for semiconductor devices and components, including our products, both as a result of general economic changes and overcapacity. Oversupply causes greater price competition and can cause our revenue, gross margins and net income to decline.
The semiconductor industry has in the past experienced, and may continue to experience, periods of oversupply which has resulted in significantly reduced prices for semiconductor devices and components, including our products, both as a result of general economic changes and overcapacity. Oversupply causes greater price competition and can cause our revenue, gross margins and net income to decline.
Risks Relating to Macroeconomic and Industry Conditions Our future results may fluctuate, fail to match past performance or fail to meet expectations as a result of conditions beyond our control, such as general economic conditions in the markets we compete, conditions unique to our industry and the financial health and viability of our suppliers and customers.
Risks Relating to Macroeconomic and Industry Conditions Our future results may fluctuate, fail to match past performance or fail to meet expectations as a result of conditions beyond our control, such as general economic conditions in the markets we compete, conditions unique to our industry and the financial health and viability of our suppliers and customers, which may cause our may cause our stock price to be volatile.
Our integration of certain business processes related to the Sierra Wireless business has also resulted in material weaknesses in our internal control over financial reporting as further described in Part II, Item 9A, “Controls and Procedures.” See “Risks Relating to Compliance” below. It is not certain that we will be successful in integrating Sierra Wireless’ business with our business.
Our integration of certain business processes related to the Sierra Wireless business has also resulted in material weaknesses in our internal control over financial reporting as further described in Part II, Item 9A, "Controls and Procedures." See "Risks Relating to Compliance" below. It is not certain that we will be successful in integrating Sierra Wireless’ business with our business.
In fiscal year 2024, sales to customers in China comprised 32% of our net sales. The continuing economic slowdown in China could adversely affect our sales to customers in China and consequently, our business, operating results and financial condition.
In fiscal year 2025, sales to customers in China comprised 43% of our net sales. The continuing economic slowdown in China could adversely affect our sales to customers in China and consequently, our business, operating results and financial condition.
Risks Relating to Governmental Regulations Changes in government trade policies could have an adverse impact on our business or the business of our customers, which may materially adversely affect our business operations, sales or gross margins.
Risks Relating to Governmental Regulations Changes in government trade policies, including the imposition of new or higher tariffs, could have an adverse impact on our business or the business of our customers, which may materially adversely affect our business operations, sales or gross margins.
We cannot guarantee that we will be able to retain our executive officers or key employees in the future. Additionally, lack of effective leadership may lead to low morale, higher turnover, and decreased ability to execute our strategy.
We may not be able to retain our executive officers or key employees in the future. Additionally, lack of effective leadership may lead to low morale, higher turnover, and decreased ability to execute our strategy.
In the fourth quarter of fiscal year 2023, we borrowed term loans in an aggregate principal amount of $895.0 million under the Term Loan Facility in order to fund a portion of the consideration for the Sierra Wireless Acquisition and related fees and expenses.
In the fourth quarter of fiscal year 2023, we borrowed term loans in an aggregate principal amount of $895.0 million under the Term Loan Facility in order to fund a portion of the consideration for the Sierra Wireless Acquisition and related fees and expenses. We have since repaid a significant portion of this debt.
Some licensors have instituted policies limiting the products they will cover under their licenses to end products only, which limits our ability to obtain licenses from such licensors, where required, for our wireless embedded module products. There is no assurance that we will be able to maintain our third-party licenses or obtain new licenses when required.
Some licensors have instituted policies limiting the products they will cover under their licenses to end products only, which limits our ability to obtain licenses from such licensors, where required, for our wireless embedded module products. We may not be able to maintain our third-party licenses or obtain new licenses when required.
See also “Special Note Regarding Forward Looking and Cautionary Statements and Summary Risk Factors” at the beginning of this Annual Report on Form 10-K.
See also "Special Note Regarding Forward Looking and Cautionary Statements and Summary Risk Factors" at the beginning of this Annual Report on Form 10-K.
In addition, there are risks that the Chinese government may, among other things, require the use of local suppliers, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, operating results and financial condition.
In addition, there are risks that the Chinese government may, among other things, require the use of local suppliers, impose or propose new or higher tariffs on U.S. products, compel companies that do business in China to partner with local companies to conduct business, or provide incentives to government-backed local customers to buy from local suppliers rather than companies like ours, all of which could adversely impact our business, operating results and financial condition.
After our products are qualified, it can take an additional six months or more before the customer commences volume production of components or devices that incorporate our products. Despite these uncertainties, we devote substantial resources, including design, engineering, sales, marketing and management efforts, toward qualifying our products with customers in anticipation of sales.
After our products are qualified, it can take an additional six months or more before the customer commences volume production of components or devices that incorporate our products. We devote substantial resources, including design, engineering, sales, marketing and management efforts, toward qualifying our products with customers in anticipation of sales, and such costs may increase in the future.
There can be no assurance as to the outcome of these examinations. If our effective tax rates were to increase, particularly in the U.S., Canada or Switzerland, or if the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.
We cannot predict the outcome of these examinations. If our effective tax rates were to increase, particularly in the U.S., Canada or Switzerland, or if the ultimate determination of taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows, and financial condition could be adversely affected.
Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. There is no guarantee that the U.S.
Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. The U.S.
Department of Treasury, Federal Deposit Insurance Corporation and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.
Department of Treasury, Federal Deposit Insurance Corporation and Federal Reserve Board may not provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or may not do so in a timely fashion.
We may not be able to maintain or increase sales to some of our top customers for a variety of reasons, including that our agreements with our customers do not require them to purchase a minimum quantity of our products; some of our customers can stop incorporating our products into their own products with limited notice to us and suffer little or no penalty; and many of our customers have pre-existing or concurrent relationships with our current or potential competitors that may affect the customers’ decisions to purchase our products.
We may not be able to maintain or increase sales to some of our top customers for a variety of reasons, including that our agreements with our customers do not require them to purchase a minimum quantity of our products; rapid technological changes in our customers' product portfolios, particularly in AI and data center end markets; some of our customers can stop incorporating our products into their own products with limited notice to us and suffer little or no penalty; and many of our customers have pre-existing or concurrent relationships with our current or potential competitors that may affect the customers’ decisions to purchase our products.
In addition, new market entrants or alliances between customers and suppliers could emerge to disrupt the markets in which we operate through disintermediation of our modules business or other means. There can be no assurance that we will be able to compete successfully and withstand competitive pressures.
In addition, new market entrants or alliances between customers and suppliers could emerge to disrupt the markets in which we operate through disintermediation of our modules business or other means. We may not be able to compete successfully or withstand competitive pressures.
In addition, there can be no assurance that such remediation efforts will be successful, that our internal control over financial reporting will be effective as a result of these efforts or that any such future significant deficiencies identified may not be material weaknesses that would be required to be reported in future periods.
In addition, such remediation efforts may not be successful, our internal control over financial 32 reporting may not be effective as a result of these efforts and any such future significant deficiencies identified may be material weaknesses that would be required to be reported in future periods.
Our results may fluctuate in the future, may fail to match our past performance or fail to meet our expectations and the expectations of analysts and investors as a result of conditions beyond our control.
Our results may fluctuate in the future, may fail to match our past performance or fail to meet our expectations and the expectations of analysts and investors as a result of conditions beyond our control which may trigger volatile changes in our stock price.
We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under our existing or any future credit facilities or otherwise, in an amount sufficient to enable us to meet our debt obligations and to fund other liquidity needs.
Our business may not generate cash flow from operations, and future borrowings may not be available to us under our existing or any future credit facilities or otherwise, in an amount sufficient to enable us to meet our debt obligations and to fund other liquidity needs.
We pursue patents for select products and unique technologies, and we also rely on trade secret protections through a combination of nondisclosure agreements and other contractual provisions, as well as our employees’ commitment to confidentiality and loyalty, to protect our know-how and processes. We intend to continue protecting our proprietary technology, including through trademark and copyright registrations and patents.
We pursue patents for select products and unique technologies, and we also rely on trade secret protections through a combination of nondisclosure agreements and other contractual provisions, as well as our employees’ commitment to confidentiality and loyalty, to protect our know-how and processes.
These information systems are subject to attacks, failures, and access denials from a number of potential sources including viruses, destructive or inadequate code, insider threats, power failures, and physical damage to computers, hard drives, communication lines and networking equipment.
These information systems are subject to attacks, failures, and access denials from a number of potential sources including viruses, destructive or inadequate code, insider threats, power failures, and physical damage to computers, hard drives, communication lines and networking equipment. These cybersecurity threats evolve rapidly, including through emerging technologies such as AI.
Legislation and related regulations in the U.K. under that country’s Bribery Act could have extra-territorial application of compliance standards that may be inconsistent with comparable U.S. law, requiring us to re-evaluate and amend our compliance programs, policies and initiatives. The SEC and The Nasdaq Stock Market LLC ("Nasdaq") have revised, and continue to revise, their regulations and listing standards.
Legislation and related regulations in the U.K. under that country’s Bribery Act could have extra-territorial application of compliance standards that may be inconsistent with comparable U.S. law, requiring us to re-evaluate and amend our compliance programs, policies and initiatives.
If we are required to allocate significant resources to modify our products, services or our existing security procedures for the personal information that our products and services process, our business, results of operations and financial condition may be adversely affected.
If we are required to allocate significant resources to modify our products, services or our existing security procedures for the personal information that our products and services process, our business, results of operations and financial condition may be adversely affected. In addition, our efforts to protect our systems and the data (including personal information) processed may be unsuccessful.
There can be no assurances that we will not incur significant expense under these indemnification provisions in the future. We have also entered into agreements with our current and former directors and certain of our current and former executives indemnifying them against certain liabilities incurred in connection with their duties.
We may incur significant expense under these indemnification provisions in the future. We have also entered into agreements with our current and former directors and certain of our current and former executives indemnifying them against certain liabilities incurred in connection with their duties.
As disclosed in more detail in Part II, Item 9A, “Controls and Procedures” below, we identified material weaknesses as of January 28, 2024, in our internal control over financial reporting.
As disclosed in more detail in Part II, Item 9A, "Controls and Procedures" below, we previously identified material weaknesses that existed as of January 28, 2024, in our internal control over financial reporting.
If we are unsuccessful in integrating acquired companies into our operations or if integration is more difficult than anticipated, then we may not achieve anticipated cost savings or synergies and may experience disruptions that could harm our business.
Any acquisition may not have a positive impact on our future performance. If we are unsuccessful in integrating acquired companies into our operations or if integration is more difficult than anticipated, then we may not achieve anticipated cost savings or synergies and may experience disruptions that could harm our business.
There can be no assurance that the steps we take will be adequate to protect our proprietary rights, that our patent applications will lead to issued patents, that others will not develop or patent similar or superior products or technologies, or that our patents will not be challenged, invalidated, or circumvented by others.
The steps we take may not be adequate to protect our proprietary rights, our patent applications may not lead to issued patents, others may develop or patent similar or superior products or technologies, and our patents may be challenged, invalidated, or circumvented by others.
The U.S. government has made statements and taken certain actions that have led to, and may lead to, further changes to U.S. and international trade policies, including tariffs affecting certain products exported by a number of U.S. trading partners, including China. In response, many U.S. trading partners, including China, have imposed or proposed new or higher tariffs on U.S. products.
The U.S. government has made statements and taken certain actions that have led to, and may lead to, further changes to U.S. and international trade policies, including the imposition of new or higher tariffs affecting certain products exported by a number of U.S. trading partners, including Canada, China, the European Union, and Mexico.
There can be no assurance that we will be able to retain key employees or that we will be successful in attracting, integrating or retaining other highly qualified personnel in the future. If we are unable to retain the services of key employees or are unsuccessful in attracting new highly qualified employees, our business could be harmed.
We may not be able to retain key employees and we may not be successful in attracting, integrating or retaining other highly qualified personnel in the future. If we are unable to retain the services of key employees or are unsuccessful in attracting new highly qualified employees, our business could be harmed.
If we cannot successfully integrate our and Sierra Wireless’ businesses and operations, or if there are further delays in completing the integration, it could further negatively impact our ability to realize the anticipated benefits of the Sierra Wireless Acquisition, which in turn could adversely affect our financial condition and operating results. 30 We face risks associated with companies we have acquired in the past and may acquire in the future.
If we cannot successfully integrate our and Sierra Wireless’ businesses and operations, or if there are further delays in completing the integration, it could further negatively impact our ability to realize the anticipated benefits of the Sierra Wireless Acquisition, which in turn could adversely affect our financial condition and operating results.
In addition, we cannot provide assurance that our independent registered public accounting firm will be able to attest that such internal controls are effective when they are required to do so.
In addition, our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Consistent with our overall risk management governance structure, the Vice President of IT Security is responsible for the day-to-day management of cybersecurity risk, while our Board and its Audit Committee play an active, ongoing oversight role. The Audit Committee or the full Board receive quarterly cybersecurity updates, which are prepared by our Vice President of IT Security.
Biggest changeGovernance Consistent with our overall risk management governance structure, the Vice President of IT Infrastructure and Security ("VP of IT Security") is responsible for the day-to-day management of cybersecurity risk, while our Board of Directors and its Audit Committee play an active, ongoing oversight role.
Key aspects of our cybersecurity risk management and threat mitigation strategy include: • Maintaining our ISO/IEC 27001:2022 certification and using it along with other common security frameworks to help assess, identify, and manage material risks from cybersecurity; • Utilizing dedicated IT Security Operations and Product Security teams focused on monitoring, enforcing and improving cybersecurity throughout the enterprise; • Engaging and training internal stakeholders from representative aspects of the business (product and functional teams) on our Incident Response and Reporting plan on a quarterly basis; • Maintaining and regularly testing our disaster recovery and business continuity plans; and • Creating information security awareness among our employees and partners through the use of phishing exercises and regular cyber-awareness articles & newsletter campaigns.
Key aspects of our cybersecurity risk management and threat mitigation strategy include: • Maintaining our ISO/IEC 27001:2022 certification and using it along with other common security frameworks to help assess, identify, and manage material risks from cybersecurity; 35 • Utilizing dedicated IT Security Operations and Product Security teams focused on monitoring, enforcing and improving cybersecurity throughout the enterprise; • Engaging and training internal stakeholders from representative aspects of the business (product and functional teams) on our Incident Response and Reporting plan on a quarterly basis; • Maintaining and regularly testing our disaster recovery and business continuity plans; and • Creating information security awareness among our employees and partners through the use of phishing exercises and regular cyber-awareness articles & newsletter campaigns.
Risk Factors – We rely on certain critical information systems for the operation of our business and a disruption in our information systems, including those related to cybersecurity, could adversely affect our business operations.” 36
Risk Factors – We rely on certain critical information systems for the operation of our business and a disruption in our information systems, including those related to cybersecurity, could adversely affect our business operations." 36
However, we can give no assurance that we have detected or protected against all cybersecurity threats or incidents. For additional information on our cybersecurity risks, see “Item 1A.
However, we can give no assurance that we have detected or protected against all cybersecurity threats or incidents. For additional information on our cybersecurity risks, see "Item 1A.
To that end, as part of the onboarding process, our internal IT Security Operations team: • Collects and evaluates self-certification information about each vendor’s cybersecurity program and external certifications; • Reviews independent security reports that inform us about each vendor’s security posture and historical incidents; and 35 • Provides a timely evaluation of whether to continue the vendor’s engagement based on their cybersecurity risk profile.
To that end, as part of the onboarding process, our internal IT Security Operations team: • Collects and evaluates self-certification information about each vendor’s cybersecurity program and external certifications; • Reviews independent security reports that inform us about each vendor’s security posture and historical incidents; and • Provides a timely evaluation of whether to move forward with the vendor’s engagement based on their cybersecurity risk profile.
The Vice President of IT Security works directly with the IT Security Operation Team and the Product Security Team to ensure effective and timely monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents.
The VP of IT Security works directly with the IT Security Operation Team and the Product Security Team to ensure effective and timely monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents.
Our Vice President of IT Security has held IT security and leadership roles at the Company for over 23 years and maintains a wide range of industry certifications including Certified Information Systems Security Professional.
Our VP of IT Security has held IT security and leadership roles at the Company for over 24 years and maintains a wide range of industry certifications including Certified Information Systems Security Professional.
In line with our incident response plan, the Vice President of IT Security provides regular updates about cybersecurity incidents to the Audit Committee, the Chief Operating Officer and other members of the executive management team.
In line with our incident response plan, the VP of IT Security informs executive management regarding cybersecurity risks and incidents and provides regular updates about cybersecurity incidents to the Board, the Chief Operating Officer and other members of the executive management team as well as to the Audit Committee and the Board of Directors, as appropriate.
The report provides comprehensive cybersecurity updates, including topics such as security incidents, our threat landscape, compliance, key performance metrics and material risks, along with updates on general cybersecurity project execution.
The Audit Committee or the full Board of Directors receive quarterly cybersecurity updates, which are prepared by our VP of IT Security. The report provides comprehensive cybersecurity updates, including topics such as security incidents, our threat landscape, compliance, key performance metrics and material risks, along with updates on general cybersecurity project execution.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in Camarillo, California where we own an approximately 88,000 square foot facility. The parcel on which our headquarters is located can accommodate substantial expansion. As of January 28, 2024, we owned or leased multiple properties.
Biggest changeItem 2. Properties Our corporate headquarters is located in Camarillo, California where we own an approximately 88,000 square foot facility. The parcel on which our headquarters is located can accommodate substantial expansion. As of January 26, 2025, we owned or leased multiple properties.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFiscal Year 2019 2020 2021 2022 2023 2024 Semtech $ 100 $ 106 $ 143 $ 136 $ 67 $ 41 Nasdaq Composite $ 100 $ 130 $ 182 $ 192 $ 162 $ 216 PHLX SEMICONDUCTOR SECTOR $ 100 $ 150 $ 225 $ 258 $ 230 $ 339 The information contained in this Item 5 under the heading "Performance Graph" (i) is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and (ii) shall not be incorporated by reference into any registration statement or other document pursuant to the Exchange Act, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing to this Item 5 Performance Graph information.
Biggest changeFiscal Year 2020 2021 2022 2023 2024 2025 Semtech $ 100 $ 135 $ 129 $ 63 $ 39 $ 139 Nasdaq Composite $ 100 $ 140 $ 148 $ 125 $ 166 $ 214 PHLX SEMICONDUCTOR SECTOR $ 100 $ 150 $ 172 $ 153 $ 226 $ 278 The information contained in this Item 5 under the heading "Performance Graph" (i) is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and (ii) shall not be incorporated by reference into any registration statement or other document pursuant to the Exchange Act, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing to this Item 5 Performance Graph information.
Performance Graph This chart and graph show the value of a $100 cash investment at the close of market on the last trading day of fiscal year 2019 in (i) our common stock, (ii) the Nasdaq Composite Index, and (iii) the Philadelphia ("PHLX") Semiconductor Index, and assumes that all dividends are reinvested.
Performance Graph This chart and graph show the value of a $100 cash investment at the close of market on the last trading day of fiscal year 2020 in (i) our common stock, (ii) the Nasdaq Composite Index, and (iii) the Philadelphia ("PHLX") Semiconductor Index, and assumes that all dividends are reinvested.
Currently, we intend to retain earnings to finance the growth of our business. We did not pay cash dividends on our common stock during fiscal years 2024, 2023 or 2022, and our Board of Directors has not indicated an intent to declare a cash dividend on our common stock in the foreseeable future.
Currently, we intend to retain earnings to finance the growth of our business. We did not pay cash dividends on our common stock during fiscal years 2025, 2024 or 2023, and our Board of Directors has not indicated an intent to declare a cash dividend on our common stock in the foreseeable future.
On March 11, 2021, our Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. We did not repurchase any shares of our common stock under the program during fiscal year 2024 . As of January 28, 2024, the remaining authorization under the program was $209.4 million.
On March 11, 2021, our Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. We did not repurchase any shares of our common stock under the program during fiscal year 2025 . As of January 26, 2025, the remaining authorization under the program was $209.4 million.
Sales of Unregistered Securities We did not make any sales of unregistered securities during fiscal year 2024 that have not been previously reported.
Sales of Unregistered Securities We did not make any sales of unregistered securities during fiscal year 2025 that have not been previously reported.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol "SMTC." Holders As of March 22, 2024, we had 171 hold ers of record of our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol "SMTC." Holders As of March 21, 2025, we had 174 hold ers of record of our common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeOperating Costs and Expenses, net Fiscal Years (in thousands, except percentages) 2024 2023 Cost/Exp. % Net Sales Cost/Exp. % Net Sales Change Selling, general and administrative $ 220,220 25 % $ 224,812 30 % (2) % Product development and engineering 186,450 21 % 166,948 21 % 12 % Intangible amortization 14,913 2 % 821 — % 1,716 % Restructuring 23,775 3 % 11,491 2 % 107 % Gain on sale of business — — % (18,313) (2) % (100) % Intangible impairments 39,593 5 % — — % 100 % Goodwill impairment 755,621 87 % — — % 100 % Total operating costs and expenses, net $ 1,240,572 143 % $ 385,759 51 % 222 % Selling, General & Administrative (“SG&A”) Expenses Selling, general and administrative expenses decrease d $4.6 million for fiscal year 2024 compared to fiscal year 2023 primarily as a result of a $34 million decrease in share-based compensation acceleration expense, offset by a $26 million net increase in staffing-related costs and a $5 million increase in consulting expenses, all of which related to the Sierra Wireless Acquisition.
Biggest changeOperating Expenses, net Fiscal Years (in thousands, except percentages) 2025 2024 Cost/Exp. % Net Sales Cost/Exp. % Net Sales Change Product development and engineering $ 170,908 19 % $ 186,450 21 % (8) % Selling, general and administrative 222,368 24 % 220,220 25 % 1 % Intangible amortization 884 — % 14,913 2 % (94) % Restructuring 4,944 1 % 23,775 3 % (79) % Intangible impairments — — % 39,593 5 % (100) % Goodwill impairment 7,490 1 % 755,621 87 % (99) % Total operating expenses, net $ 406,594 45 % $ 1,240,572 143 % (67) % Product Development and Engineering Expenses Product development and engineering expenses decreased $15.5 million for fiscal year 2025 compared to fiscal year 2024 primarily as a result of the full-year effect of cost reduction, including staffing-related and project costs, initiated during fiscal year 2024.
Operating Costs and expenses, net Our operating costs and expenses generally consist of selling, general and administrative, product development and engineering costs, costs associated with acquisitions, restructuring charges, and other operating related charges.
Operating Costs and expenses, net Our operating costs and expenses generally consist of product development and engineering costs, selling, general and administrative, costs associated with acquisitions, restructuring charges, and other operating related charges.
Investment Impairments and Credit Loss Reserves In fiscal year 2024, investment impairments and credit loss reserves totaled a loss of $3.9 million primarily due to $2.6 million of other-than-temporary impairments on certain non-marketable equity investments and adjustments to our credit loss reserve for our available-for-sale debt securities.
In fiscal year 2024, investment impairments and credit loss reserves totaled a loss of $3.9 million primarily due to $2.6 million of other-than-temporary impairments on certain non-marketable equity investments and adjustments to our credit loss reserve for our available-for-sale debt securities.
In addition, the Company must comply with financial covenants which, after effectiveness of the Third Amendment are as follows (in each case, during the covenant relief period): 50 • maintaining a maximum consolidated leverage ratio, determined as of the last day of each fiscal quarter, of (i) 8.17 to 1.00 for the fiscal quarter ending on or around October 31, 2023, (ii) 10.27 to 1.00 for the fiscal quarter ending on or around January 31, 2024, (iii) 10.21 to 1.00 for the fiscal quarter ending on or around April 30, 2024, (iv) 9.93 to 1.00 for the fiscal quarter ending on or around July 31, 2024, (v) 8.42 to 1.00 for the fiscal quarter ending on or around October 31, 2024, (vi) 7.68 to 1.00 for the fiscal quarter ending on or around January 31, 2025, (vii) ) 6.75 to 1.00 for the fiscal quarter ending on or around April 30, 2025, (viii) 6.28 to 1.00 for the fiscal quarter ending on or around July 31, 2025, (ix) 5.81 to 1.00 for the fiscal quarter ending on or around October 31, 2025, (x) 5.30 to 1.00 for the fiscal quarter ending on or around January 31, 2026, and (xi) 3.75 to 1.00 for the fiscal quarter ending on or around April 30, 2026 and each fiscal quarter thereafter, subject to increase to 4.25 to 1.00 for the four full consecutive fiscal quarters ending on or after the date of consummation of a permitted acquisition that constitutes a "Material Acquisition" under the Credit Agreement, subject to the satisfaction of certain conditions; • maintaining a minimum consolidated interest expense coverage ratio, determined as of the last day of each fiscal quarter, of (i) 1.66 to 1.00 for the fiscal quarter ending on or around October 31, 2023, (ii) 1.40 to 1.00 for the fiscal quarter ending on or around January 31, 2024, (iii) 1.37 to 1.00 for the fiscal quarter ending on or around April 30, 2024, (iv) 1.41 to 1.00 for the fiscal quarter ending on or around July 31, 2024, (v) 1.73 to 1.00 for the fiscal quarter ending on or around October 31, 2024, (vi) 1.90 to 1.00 for the fiscal quarter ending on or around January 31, 2025, (vii) 2.14 to 1.00 for the fiscal quarter ending on or around April 30, 2025, (viii) 2.37 to 1.00 for the fiscal quarter ending on or around July 31, 2025, (ix) 2.68 to 1.00 for the fiscal quarter ending on or around October 31, 2025, (x) 3.01 to 1.00 for the fiscal quarter ending on or around January 31, 2026, and (xi) 3.50 to 1.00 for the fiscal quarter ending on or around April 30, 2026 and each fiscal quarter thereafter; and • until January 31, 2025, maintaining a minimum consolidated liquidity (as further defined in the Credit Agreement but excluding revolving credit commitments scheduled to expire in 2024) of $150 million as of the last day of each monthly accounting period of the Company.
In addition, the Company must comply with financial covenants which, after effectiveness of the Third Amendment are as follows (in each case, during the covenant relief period): • maintaining a maximum consolidated leverage ratio, determined as of the last day of each fiscal quarter, of (i) 8.17 to 1.00 for the fiscal quarter ended on or around October 31, 2023, (ii) 10.27 to 1.00 for the fiscal quarter ended on or around January 31, 2024, (iii) 10.21 to 1.00 for the fiscal quarter ended on or around April 30, 2024, (iv) 9.93 to 1.00 for the fiscal quarter ended on or around July 31, 2024, (v) 8.42 to 1.00 for the fiscal quarter ended on or around October 31, 2024, (vi) 7.68 to 1.00 for the fiscal quarter ended on or around January 31, 2025, (vii) ) 6.75 to 1.00 for the fiscal quarter ending on or around April 30, 2025, (viii) 6.28 to 1.00 for the fiscal quarter ending on or around July 31, 2025, (ix) 5.81 to 1.00 for the fiscal quarter ending on or around October 31, 2025, (x) 5.30 to 1.00 for the fiscal quarter ending on or around January 31, 2026, and (xi) 3.75 to 1.00 for the fiscal quarter ending on or around April 30, 2026 and each fiscal quarter thereafter, subject to increase to 4.25 to 1.00 for the four full consecutive fiscal quarters ending on or after the date of consummation of a permitted acquisition that constitutes a "Material Acquisition" under the Credit Agreement, subject to the satisfaction of certain conditions; • maintaining a minimum consolidated interest expense coverage ratio, determined as of the last day of each fiscal quarter, of (i) 1.66 to 1.00 for the fiscal quarter ended on or around October 31, 2023, (ii) 1.40 to 1.00 for the fiscal quarter ended on or around January 31, 2024, (iii) 1.37 to 1.00 for the fiscal quarter ended on or around April 30, 2024, (iv) 1.41 to 1.00 for the fiscal quarter ended on or around July 31, 2024, (v) 1.73 to 1.00 for the fiscal quarter ended on or around October 31, 2024, (vi) 1.90 to 1.00 for the fiscal quarter ended on or around January 31, 2025, (vii) 2.14 to 1.00 for the fiscal quarter ending on or around April 30, 2025, (viii) 2.37 to 1.00 for the fiscal quarter ending on or around July 31, 2025, (ix) 2.68 to 1.00 for the fiscal quarter ending on or around October 31, 2025, (x) 3.01 to 1.00 for the fiscal quarter ending on or around January 31, 2026, and (xi) 3.50 to 1.00 for the fiscal quarter ending on or around April 30, 2026 and each fiscal quarter thereafter; and • until January 31, 2025, maintaining a minimum consolidated liquidity (as further defined in the Credit Agreement but excluding revolving credit commitments scheduled to expire in 2024) of $150 million as of the last day of each monthly accounting period of the Company.
Dollars accrues, at the Company's option, at a rate per annum equal to (1) (x) the Base Rate (as defined in the Credit Agreement) plus (y) a margin ranging from 0.25% to 2.75% depending upon the Company’s consolidated leverage ratio (except that, during the period that financial covenant relief is in effect (including during the extended covenant relief period provided pursuant to the Third Amendment), the margin will not be less than 2.25% per annum) or (2) (x) Term SOFR Rate (as defined in the Credit Agreement) plus (y) a credit spread adjustment of (i) for term loans, 0.10% and (ii) for revolving credit borrowings, 0.11%, 0.26% or 0.43% for one, three and six month interest periods, respectively, plus (z) a margin ranging from 1.25% to 3.75% depending upon the Company's consolidated leverage ratio (except that, during the period that financial covenant relief pursuant to the Third Amendment is in effect, the margin will not be less than 3.25% per annum) (such margin, the "Applicable Margin").
Dollars accrues, at the Company's option, at a rate per annum equal to (1) (x) the Base Rate (as defined in the Credit Agreement) plus (y) a margin ranging from 0.25% to 2.75% depending upon the Company’s consolidated leverage 47 ratio (except that, during the period that financial covenant relief is in effect (including during the extended covenant relief period provided pursuant to the Third Amendment), the margin will not be less than 2.25% per annum) or (2) (x) Term SOFR Rate (as defined in the Credit Agreement) plus (y) a credit spread adjustment of (i) for term loans, 0.10% and (ii) for revolving credit borrowings, 0.11%, 0.26% or 0.43% for one, three and six month interest periods, respectively, plus (z) a margin ranging from 1.25% to 3.75% depending upon the Company's consolidated leverage ratio (except that, during the period that financial covenant relief pursuant to the Third Amendment is in effect, the margin will not be less than 3.25% per annum) (such margin, the "Applicable Margin").
Fiscal Year 2024 Compared with Fiscal Year 2023 Net Sales The following table summarizes our net sales by major end market: Fiscal Years (in thousands, except percentages) 2024 2023 Net Sales % Net Sales Net Sales % Net Sales Change Infrastructure $ 163,947 19 % $ 287,270 38 % (43) % High-End Consumer 125,222 14 % 158,416 21 % (21) % Industrial 579,589 67 % 310,847 41 % 86 % Total $ 868,758 100 % $ 756,533 100 % 15 % Net sales for fiscal year 2024 were $868.8 million, an increase of 15% compared to $756.5 million for fiscal year 2023 driven by the Sierra Wireless Acquisition, which contributed $431.5 million of net sales from our industrial end market, partially offset by softer demand resulting in lower volume across all end markets.
Net Sales The following table summarizes our net sales by major end market: Fiscal Years (in thousands, except percentages) 2024 2023 Net Sales % Net Sales Net Sales % Net Sales Change Infrastructure $ 163,947 19 % $ 287,270 38 % (43) % High-End Consumer 125,222 14 % 158,416 21 % (21) % Industrial 579,589 67 % 310,847 41 % 86 % Total $ 868,758 100 % $ 756,533 100 % 15 % Net sales for fiscal year 2024 were $868.8 million, an increase of 15% compared to $756.5 million for fiscal year 2023 driven by the Sierra Wireless Acquisition, which contributed $431.5 million of net sales from our industrial end market, partially offset by softer demand resulting in lower volume across all end markets.
Convertible Senior Notes due 2028 On October 26, 2023, we issued and sold $250.0 million in aggregate principal amount of the 2028 Notes in a private placement. The 2028 Notes were issued pursuant to an indenture, dated October 26, 2023, by and among the Company, the 51 subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee.
Convertible Senior Notes due 2028 On October 26, 2023, we issued and sold $250.0 million in aggregate principal amount of the 2028 Notes in a private placement. The 2028 Notes were issued pursuant to an indenture, dated October 26, 2023, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee.
For those tax positions where it is more likely than not that a tax position will be sustained, we have recorded the tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant 54 information.
For those tax positions where it is more likely than not that a tax position will be sustained, we have recorded the tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.
There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. While we believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting units, it is possible a material change could occur.
There are inherent uncertainties related to these assumptions and management’s judgment in applying them to the analysis of goodwill impairment. While we believe we have made reasonable estimates and assumptions to calculate the fair value of our reporting units, it is possible a 53 material change could occur.
In reaching our conclusion, we evaluate certain relevant criteria including the existence of deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years.
In reaching our conclusion, we evaluate certain relevant criteria including the existence of 52 deferred tax liabilities that can be used to realize deferred tax assets, the taxable income in prior carryback years in the impacted state and international jurisdictions that can be used to absorb net operating losses and taxable income in future years.
On June 6, 2023, we entered into the second amendment (the "Second Amendment") to the Credit Agreement, in order to, among other things, (i) increase the maximum consolidated leverage ratio covenant for certain test periods as set forth therein and described below, (ii) reduce the minimum consolidated interest coverage ratio covenant for certain test periods as set forth therein and described below, (iii) modify the pricing grid applicable to loans under the Credit Agreement during the covenant relief period as set forth therein and described below, (iv) impose a minimum liquidity covenant for certain periods during the covenant relief period as set forth therein and described below, (v) increase the annual amortization in respect of the term loans thereunder to 7.5% per annum for certain periods as set forth therein, (vi) impose an “anti-cash hoarding” condition to the borrowing of revolving loans as set forth therein, (vii) provide that the maturity date for the Term Loans and revolving loans shall be the day that is 91 days prior to the stated maturity date of the Notes if the Notes have not otherwise been refinanced or extended to at least 91 days after the stated maturity date of the Term Loans and revolving loans, the aggregate principal amount of non-extended outstanding Notes and certain replacement debt exceeds $50 million and a minimum liquidity condition is not satisfied, (viii) provide for the reduction of the aggregate revolving commitments thereunder by $100 million, (ix) require that we appoint a financial advisor and (x) make certain other modifications to the mandatory prepayments (including the imposition of an excess cash flow mandatory prepayment), collateral provisions and covenants (including additional limitations on debt, liens, investments and restricted payments such as dividends) as set forth therein.
On June 6, 2023, we entered into the second amendment (the "Second Amendment") to the Credit Agreement, in order to, among other things, (i) increase the maximum consolidated leverage ratio covenant for certain test periods as set forth therein and described below, (ii) reduce the minimum consolidated interest coverage ratio covenant for certain test periods as set forth therein and described below, (iii) modify the pricing grid applicable to loans under the Credit Agreement during the covenant relief period as set forth therein and described below, (iv) impose a minimum liquidity covenant for certain periods during the covenant relief period as set forth therein and described below, (v) increase the annual amortization in respect of the term loans thereunder to 7.5% per annum for certain periods as set forth therein, (vi) impose an "anti-cash hoarding" condition to the borrowing of revolving loans as set forth therein, (vii) provide that the maturity date for the Term Loans and revolving loans shall be the day that is 91 days prior to the stated maturity date of the Notes if the Notes have not otherwise been refinanced or extended to at least 91 days after the stated maturity date of the Term Loans and revolving loans, the aggregate principal amount of non-extended outstanding Notes and certain replacement debt exceeds $50 million and a minimum liquidity condition is not satisfied, (viii) provide for the reduction of the aggregate revolving commitments thereunder by $100 million, (ix) require that we appoint a financial advisor and (x) make certain other modifications to the mandatory prepayments (including the imposition of an excess cash flow mandatory prepayment), collateral provisions and covenants (including additional limitations on debt, liens, investments and restricted payments such as dividends) as set forth therein.
Revenue We derive our revenue primarily from the sale of our products into various end markets. Revenue is recognized when control of these products is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for these products.
Revenue We derive our revenue primarily from the sale of our products into various end markets. Revenue is recognized when control of these products is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in 40 exchange for these products.
Recoverability of intangible assets with finite lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to 55 future undiscounted cash flows expected to be generated by the asset or asset group.
Recoverability of intangible assets with finite lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group.
Convertible Senior Notes due 2027 On October 12, 2022 and October 21, 2022, we issued and sold $300 million and $19.5 million, respectively, in aggregate principal amount of 1.625% Convertible Senior Notes due 2027 (the "2027 Notes") in a private placement.
Convertible Senior Notes due 2027 On October 12, 2022 and October 21, 2022, we issued and sold $300 million and $19.5 million, respectively, in aggregate principal amount of 1.625% Convertible Senior Notes due 2027 in a private placement.
Though network capacities have normalized to accommodate remote environments, industry demand within hyperscale data centers expanded to support artificial intelligence-driven applications, as well as general compute data center applications. The trend towards adoption of finer silicon geometries has accelerated across all categories of end systems, making them increasingly vulnerable to electrical and electromagnetic threats.
Though network capacities have normalized to accommodate remote environments, industry demand within hyperscale data centers have expanded to support artificial intelligence-driven applications, as well as general compute data center applications. The trend toward adoption of finer silicon geometries has accelerated across all categories of end systems, making them increasingly vulnerable to electrical and electromagnetic threats.
On February 24, 2023, we entered into the first amendment (the “First Amendment”) to the Credit Agreement, in order to, among other things, (i) increase the maximum consolidated leverage ratio covenant for certain test periods as set forth therein, (ii) reduce the minimum consolidated interest coverage ratio covenant for certain test periods as set forth therein, (iii) provide that, during the period that financial covenant relief pursuant to the First Amendment is in effect, the interest rate margin for (1) 49 Term SOFR loans is deemed to be 2.50% and (2) Base Rate (as defined below) loans is deemed to be 1.50% per annum and (iv) make certain other changes as set forth therein.
On February 24, 2023, we entered into the first amendment (the "First Amendment") to the Credit Agreement, in order to, among other things, (i) increase the maximum consolidated leverage ratio covenant for certain test periods as set forth therein, (ii) reduce the minimum consolidated interest coverage ratio covenant for certain test periods as set forth therein, (iii) provide that, during the period that financial covenant relief pursuant to the First Amendment is in effect, the interest rate margin for (1) Term SOFR loans is deemed to be 2.50% and (2) Base Rate (as defined below) loans is deemed to be 1.50% per annum and (iv) make certain other changes as set forth therein.
We believe that our cash on hand, cash available from future operations and available borrowing capacity under the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements.
We believe that our cash on hand, expected cash generation from future operations and available borrowing capacity under the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements.
We account for uncertain tax positions by first determining if it is “more likely than not” that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained.
We account for uncertain tax positions by first determining if it is "more likely than not" that a tax position will be sustained by the appropriate taxing authorities prior to recording any benefit in the financial statements. An uncertain income tax position is not recognized if it has less than a 50% likelihood of being sustained.
In fiscal year 2023 , we borrowed $10.0 million and repaid $33.0 million on our Revolving Credit Facility and received proceeds of $895.0 million on the Term Loans. In fiscal year 2024 , we borrowed $70.0 million and repaid $5.0 million on our Revolving Credit Facility and repaid $272.4 million on the Term Loans.
In fiscal year 2023, we borrowed $10.0 million and repaid $33.0 million on our Revolving Credit Facility and received proceeds of $895.0 million on the Term Loans. In fiscal year 2024 , we borrowed $70.0 million and repaid $5.0 million on our Revolving Credit Facility.
Notwithstanding the U.S. taxation of these amounts, we have determined that none of our foreign earnings for fiscal years 2023 and 2024 will be permanently reinvested.
Notwithstanding the U.S. taxation of these amounts, we have determined that none of our foreign earnings for fiscal years 2025 and 2024 will be permanently reinvested.
Control is generally transferred when products are shipped and, to a lesser extent, when the products are delivered. Cloud and connectivity services, primarily reported in our IoT Connected Services segment, are provided on either a subscription or consumption basis. Revenue related to cloud and connectivity services provided on a subscription basis is recognized ratably over the contract period.
Control is generally transferred when products are shipped and, to a lesser extent, when the products are delivered. Cloud and connectivity services, reported in our IoT Systems and Connectivity segment, are provided on either a subscription or consumption basis. Revenue related to cloud and connectivity services provided on a subscription basis is recognized ratably over the contract period.
G ross margin in Analog Mixed Signal and Wireless was 56.3% in fiscal year 2024 , compared to 61.9% in fiscal year 2023 primarily due to an unfavorable product mix driven by lower LoRa-enabled product sales, as well as pricing pressures and lower overhead absorption.
Gross margin in Analog Mixed Signal and Wireless was 56.3% in fiscal year 2024 , compared to 61.9% in fiscal year 2023 primarily due to an unfavorable product mix driven by lower LoRa-enabled product sales, as well as pricing pressures and lower overhead absorption.
Gross Profit Gross profit is equal to our net sales less our cost of sales. Our cost of sales includes materials, depreciation on fixed assets used in the manufacturing process, shipping costs, direct labor and overhead, as well as amortization of acquired technology and acquired technology impairments.
Gross Profit Gross profit is equal to our net sales less our cost of sales. Our cost of sales includes materials, depreciation on fixed assets used in the manufacturing process, shipping costs, direct labor and overhead, cellular carrier charges, as well as amortization of acquired technology and acquired technology impairments.
Based on fiscal year 2024 ending inventory, an increase in the write-down by one percent of gross inventory would decrease net inventory and increase cost of goods sold by $2.3 million. • Revenue recognition - Net sales reflect the transaction prices for contracts, which include units shipped at selling prices reduced by variable consideration.
Based on fiscal year 2025 ending inventory, an increase in the write-down by one percent of gross inventory would decrease net inventory and increase cost of goods sold by $2.5 million. • Revenue recognition - Net sales reflect the transaction prices for contracts, which include units shipped at selling prices reduced by variable consideration.
As of January 28, 2024, our historical undistributed earnings prior to fiscal year 2023 of our foreign subsidiaries are intended to be permanently reinvested outside of the U.S. With the enactment of the Tax Act, all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax.
As of January 26, 2025, our historical undistributed earnings prior to fiscal year 2023 of our foreign subsidiaries are intended to be permanently reinvested outside of the U.S. With the enactment of the Tax Act, all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax.
These technologies primarily include 3G standards such as UMTS (including HSPDA and HSUPA) and EV-DO; 4G standards such as HSPA+, LTE, LTE-A; 5G standards such as fifth generation new radio (“5G NR”) standards (both millimeter wave and sub-6 Gigahertz frequencies); Low Power Wide Area ("LPWA") standards such as LTE-M and NB-IoT; and wireless local area network technologies such as Wi-Fi and Bluetooth; and Global Navigation Satellite System (“GNSS”) positioning.
These technologies primarily include 3G standards such as UMTS (including HSPDA and HSUPA) and EV-DO; 4G standards such as HSPA+, LTE, LTE-A; 5G standards such as fifth generation new radio ("5G NR") standards (both millimeter wave and sub-6 Gigahertz frequencies); Low Power Wide Area ("LPWA") standards such as LTE-M and NB-IoT; and wireless local area network technologies such as Wi-Fi and Bluetooth; and Global Navigation Satellite System ("GNSS") positioning.
Compensation and Defined Benefit Plans We maintain a deferred compensation plan for certain officers and key executives that allow participants to defer a portion of their compensation for future distribution at various times permitted by the plan.
Compensation and Defined Benefit Plans We maintain a deferred compensation plan for certain key employees that allow participants to defer a portion of their compensation for future distribution at various times permitted by the plan.
If variable consideration were estimated to be one percent higher, fiscal year 2024 revenue would have decreased by $9.2 million. • Income taxes - We make certain estimates and judgements in determining income tax expense for financial statement purposes.
If variable consideration were estimated to be one percent higher, fiscal year 2025 revenue would have decreased by $9.6 million. • Income taxes - We make certain estimates and judgements in determining income tax expense for financial statement purposes.
Net sales from Analog Mixed Signal and Wireless decreased $183.0 million in fiscal year 2024 versus fiscal year 2023 primarily driven by an approximately $121 million decrease in LoRa-enabled product sales and an approximately $54 million decrease in total TVS product sales both driven by softer demand.
Net sales from Analog Mixed Signal and Wireless decreased $183.0 million in fiscal year 2024 versus fiscal year 2023 primarily driven by an approximately $120.9 million decrease in LoRa-enabled product sales and an approximately $54.5 million decrease in total TVS product sales both driven by softer demand.
On September 26, 2022 (the “Third Restatement Effective Date”), we entered into a third amended and restated credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, swing line lender and letter of credit issuer.
On September 26, 2022 (the "Third Restatement Effective Date"), we entered into a third amended and restated credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, swing line lender and letter of credit issuer.
Net sales outside the United States for fiscal years 2024, 2023 and 2022 constituted appro ximately 76%, 87% and 90%, respectively, of our net sales. Approximately 58%, 72% and 79% of net sales in fiscal years 2024, 2023 and 2022 , respectively, were to customers located in the Asia-Pacific region.
Net sales outside the United States for fiscal years 2025, 2024 and 2023 constituted appro ximately 79%, 76% and 87%, respectively, of our net sales. Approximately 64%, 58% and 72% of net sales in fiscal years 2025, 2024 and 2023 , respectively, were to customers located in the Asia-Pacific region.
Net sales from our high-end consumer end market decreased $33.2 million primarily driven by an approximately $30 million decrease in consumer TVS product sales.
Net sales from our high-end consumer end market decreased $33.2 million primarily driven by an approximately $29.6 million decrease in consumer TVS product sales.
The estimation of customer demand requires management to evaluate and make assumptions of the impact of changes in demand or changes in product life cycles on current sales levels. Our write-down to net realizable value at the end of fiscal year 2024 and 2023 represented 35.7% and 25.8% of gross inventory, respectively.
The estimation of customer demand requires management to evaluate and make assumptions of the impact of changes in demand or changes in product life cycles on current sales levels. Our write-down to net realizable value at the end of fiscal year 2025 and 2024 represented 34.5% and 35.7% of gross inventory, respectively.
This decrease was primarily due to $91.8 million of acquired technology impairments, a $28.1 million increase in the amortization of acquired technology intangible assets related to the Sierra Wireless Acquisition, $3.3 million of inventory step-up related to the Sierra Wireless Acquisition, a $107.3 million decrease from Signal Integrity primarily driven by lower PON sales and lower wireless sales due to softer demand and a $127.9 million decrease from Analog Mixed Signal and Wireless primarily driven by lower LoRa-enabled product sales due to softer demand, partially offset by a $131.0 million increase from IoT Systems due to the Sierra Wireless Acquisition and a $44.7 million increase from IoT Connected Services due to the Sierra Wireless Acquisition.
This decrease was primarily due to $91.8 million of acquired technology impairments, a $28.1 million increase in the amortization of acquired technology intangible assets related to the Sierra Wireless Acquisition, $3.3 million of inventory step-up related to the Sierra Wireless Acquisition, a $107.3 million decrease from Signal Integrity primarily driven by lower PON sales and lower wireless sales due to softer demand and a $127.9 million decrease from Analog Mixed Signal and Wireless primarily driven by lower LoRa-enabled product sales due to softer demand, partially offset by a $175.8 million increase from IoT Systems and Connectivity due to the Sierra Wireless Acquisition.
Finally, the increasing demand for smaller, lower-powered higher performance mobile platforms with more enjoyable organic light-emitting diode displays has benefited our protection and proximity sensing solutions that protect these mobile devices and help our customers comply with radio frequency absorption regulations. Through our acquisition of Sierra Wireless, Inc.
Finally, the increasing demand for smaller, lower-powered higher performance mobile platforms with more enjoyable organic light-emitting diode displays has benefited our protection and proximity sensing solutions that protect these mobile devices and help our customers comply with radio frequency absorption regulations.
Our liabilities for deferred compensation under this plan were $39.7 million and $42.3 million as of January 28, 2024 and January 29, 2023, respectively, and are included in "accrued liabilities" and "other long-term liabilities" in the Consolidated Balance Sheets.
Our liabilities for deferred compensation under this plan were $39.3 million and $39.7 million as of January 26, 2025 and January 28, 2024, respectively, and are included in "accrued liabilities" and "other long-term liabilities" in the Consolidated Balance Sheets.
See also “Special Note Regarding Forward Looking and Cautionary Statements” at the beginning of this Annual Report on Form 10-K. Overview We are a high-performance semiconductor, IoT systems and cloud connectivity service provider and were incorporated in Delaware in 1960.
See also "Special Note Regarding Forward Looking and Cautionary Statements" at the beginning of this Annual Report on Form 10-K. Overview We are a leading provider of high-performance semiconductor, IoT systems and cloud connectivity service solutions and were incorporated in Delaware in 1960.
For additional information on the 2028 Notes, see Note 10, Long-Term Debt, to our Consolidated Financial Statements. Impact of Macroeconomic Conditions Macroeconomic factors such as market volatility, inflationary pressures, elevated interest rates, geopolitical tensions and recessionary concerns have caused uncertainty in end customer demand and have resulted in elevated channel inventories.
For additional information, see Note 10, Long-Term Debt, to our Consolidated Financial Statements. Impact of Macroeconomic Conditions In recent periods, macroeconomic factors such as market volatility, inflationary pressures, elevated interest rates, geopolitical tensions and recessionary concerns have caused uncertainty in end customer demand, which resulted in elevated channel inventories.
The liability associated with vested, but unsettled restricted stock awards that are to be settled in cash totaled $4.4 million as of January 28, 2024, of which $2.6 million was included in "other long-term liabilities" and $1.8 million was included in "accrued liabilities" in the Balance Sheets , compared to $6.1 million as of January 29, 2023 , which was included in "other long-term liabilities" in the Balance Sheets.
The liability associated with vested, but unsettled restricted stock awards that are to be settled in cash totaled $14.5 million as of January 26, 2025, of which $6.2 million was included in "other long-term liabilities" and $8.3 million was included in "accrued liabilities" in the Balance Sheets , compared to $4.4 million as of January 28, 2024 , of which $2.6 million was included in "other long-term liabilities" and $1.8 million was included in "accrued liabilities" in the Balance Sheets.
As of January 28, 2024 , the Company was in compliance with the financial covenants in the Credit Agreement. See “Liquidity” in Note 1, Organization and Basis of Presentation, to our Consolidated Financial Statements for additional information about compliance with the financial covenants. The Credit Agreement also contains customary provisions pertaining to events of default.
As of January 26, 2025 , the Company was in compliance with the financial covenants in the Credit Agreement. See "Liquidity" in Note 1, Organization and Basis of Presentation, to our Consolidated Financial Statements for additional information about compliance with the financial covenants. The Credit Agreement also contains customary provisions pertaining to events of default.
Net sales from our industrial end market increased $268.7 million versus the prior year primarily due to an approximately $235 million increase in module sales, an approximately $90 million increase in router sales and an approximately $88 million increase in managed connectivity sales all of which were driven by the Sierra Wireless Acquisition, partially offset by an approximately $118 million decrease in LoRa-enabled industrial product sales, an approximately $14 million decrease in industrial TVS product sales and an approximately $10 million decrease in broadcast sales, all of which were driven by softer demand.
Net sales from our industrial end market increased $268.7 million versus the prior year primarily due to an approximately $235.4 million increase in module sales, an approximately $89.7 million increase in router sales and an approximately $87.6 million increase in managed connectivity sales all of which were driven by the Sierra Wireless Acquisition, partially offset by an approximately $118.4 million decrease in LoRa-enabled industrial product sales, an approximately $14.4 million decrease in industrial TVS product sales and an approximately $9.8 million decrease in broadcast sales, all of which were driven by softer demand.
We believe that we can continue to take appropriate actions to align our inventory levels with anticipated customer demand profiles. 40 Our Segments We have four operating segments—Signal Integrity, Analog Mixed Signal and Wireless, IoT Systems, and IoT Connected Services—that represent four separate reportable segments.
We believe that we can continue to take appropriate actions to align our inventory levels with anticipated customer demand profiles. Our Segments We have three operating segments—Signal Integrity, Analog Mixed Signal and Wireless, and IoT Systems and Connectivity—that represent three separate reportable segments.
Historically, these recoveries have not exceeded the cost of the related development efforts. We include revenue related to granted technology licenses as part of "Net sales" in the Statements of Operations. Historically, revenue from these arrangements has not been significant though it is part of our recurring ordinary business.
We include revenue related to granted technology licenses as part of "Net sales" in the Statements of Operations. Historically, revenue from these arrangements has not been significant though it is part of our recurring ordinary business.
If these comparisons indicate that an asset is not recoverable, we will recognize an impairment loss for the amount by which the carrying value of the asset or asset group exceeds the related estimated fair value. During fiscal year 2024, we had six reporting units for goodwill impairment testing. A quantitative test was performed for all of the reporting units.
If these comparisons indicate that an asset is not recoverable, we will recognize an impairment loss for the amount by which the carrying value of the asset or asset group exceeds the related estimated fair value. During fiscal year 2025, we had six reporting units for goodwill impairment testing.
Provision for Income Taxes We recorded income tax expense of $50.5 million for fiscal year 2024 compared to income tax expense of $17.3 million for fiscal year 2023. The effective tax rates for fiscal years 2024 and 2023 were (4.9%) and 22.0%, respectively.
Provision for Income Taxes We recorded income tax benefit of $22.0 million for fiscal year 2025 compared to income tax expense of $50.5 million for fiscal year 2024. The effective tax rates for fiscal years 2025 and 2024 were 12.0% and 4.9%, respectively.
Expected Sources and Uses of Liquidity Operating Cash Flows Our operating cash flows are driven by our ability to value price for the differentiated technology that we provide, as well as our fabless business model, which is highly flexible to changes in customer demand.
We expect to fund these cash requirements through cash flows from operating activities. 46 Expected Sources and Uses of Liquidity Operating Cash Flows Our operating cash flows are driven by our ability to value price for the differentiated technology that we provide, as well as our fabless business model, which is highly flexible to changes in customer demand.
Results of Operations A discussion of our results of operations for the fiscal years ended January 28, 2024 and January 29, 2023 and year-over-year comparisons between these fiscal years appears below . In the fourth quarter of fiscal year 2024, we made certain changes in our reportable segments due to organizational restructuring. See “―Our Segments” above.
Results of Operations A discussion of our results of operations for the fiscal years ended January 26, 2025 and January 28, 2024 and year-over-year comparisons between these fiscal years appears below . In the first quarter of fiscal year 2025, we made certain changes in our reportable segments due to organizational restructuring. See "Our Segments" above.
Our operating lease liabilities totaled $28.6 million and $32.7 million as of January 28, 2024 and January 29, 2023, respectively, and are included in "accrued liabilities" and "other long-term liabilities" in our Consolidated Balance Sheets. Purchase Commitments Capital purchase commitments and other open purchase commitments are for the purchase of plant, equipment, raw materials, supplies and services.
Our operating lease liabilities totaled $24.5 million and $28.6 million as of January 26, 2025 and January 28, 2024, respectively, and are included in "accrued liabilities" and "other long-term liabilities" in our Consolidated Balance Sheets. Purchase Commitments Capital purchase commitments and other open purchase commitments are for the purchase of plant, equipment, raw materials, supplies and services.
In fiscal year 2023 , we paid $14.2 million for employee share-based compensation payroll taxes and received proceeds of $0.6 million from the exercise of stock options. We do not directly control the timing of the exercise of stock options.
In fiscal year 2025 , we paid $14.0 million for employee share-based compensation payroll taxes and received proceeds of $4.3 million from the exercise of stock options. In fiscal year 2024 , we paid $6.7 million for employee share-based compensation payroll taxes. We do not directly control the timing of the exercise of stock options.
The 2028 Notes were offered and sold only to eligible purchasers who are both “qualified institutional buyers” within the meaning of Rule 144A under the Securities Act and “accredited investors” within the meaning of Rule 501(a) under the Securities Act, in reliance on Section 4(a)(2) under the Securities Act.
The 2028 Notes were offered and sold only to eligible purchasers who are both "qualified institutional buyers" within the meaning of Rule 144A under the Securities Act and "accredited investors" within the meaning of Rule 501(a) under the Securities Act, in reliance on Section 4(a)(2) under the Securities Act.
They are not recorded liabilities in our Consolidated Balance Sheets as of January 28, 2024, as we have not yet received the related goods or taken title to the goods or received services. As of January 28, 2024, we had $5.5 million in open capital purchase commitments and $265.1 million in other open purchase commitments.
They are not recorded liabilities in our Consolidated Balance Sheets as of January 26, 2025, as we have not yet received the related goods or taken title to the goods or received services. As of January 26, 2025, we had $1.3 million 50 in open capital purchase commitments and $332.3 million in other open purchase commitments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 29, 2023 , filed with the SEC on March 30, 2023, to reflect the changes to our reportable segments and the Reclassification.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 , filed with the SEC on March 28, 2024, to reflect the changes to our reportable segments.
("Sierra Wireless") in January 2023, we supply cellular wireless devices and provide services in the wireless communications and information technology industry, enabling connectivity for IoT solutions through cellular and short range wireless technologies.
Following our acquisition of Sierra Wireless, Inc. in January 2023, we supply cellular wireless devices and provide services in the wireless communications and information technology industries, enabling connectivity for IoT solutions through cellular and short-range wireless technologies.
Net sales from our infrastructure end market decreased $123.3 million driven by an approximately $85 million decrease in PON sales, an approximately $19 million decrease in wireless infrastructure sales, an approximately $10 million decrease in infrastructure TVS product sales and an approximately $6 million decrease in data center sales.
Net sales from our infrastructure end market decreased $123.3 million driven by an approximately $84.8 million decrease in PON sales, an approximately $18.8 million decrease in wireless infrastructure sales, an approximately $10.5 million decrease in infrastructure TVS product sales and an approximately $5.5 million decrease in data center sales.
This program represents one of our principal efforts to return value to our stockholders. Under the program, subject to the terms of the Credit Agreement, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations.
Under the program, subject to the terms of the Credit Agreement, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations.
We design, develop, manufacture and market a wide range of products for commercial applications, the majority of which are sold into the infrastructure, high-end consumer and industrial end markets. Infrastructure end market includes data centers, PON, base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless LAN and other communication infrastructure equipment.
We design, develop, manufacture and market a diverse portfolio of products for commercial applications, addressing the global infrastructure, high-end consumer and industrial end markets. Infrastructure end market includes data centers, PON, base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless LAN and other communication infrastructure equipment.
As a result of these changes, the Company has four reportable segments. All prior year information in the tables below has been revised retrospectively to reflect the change to the Company's reportable segments. See Note 16, Segment Information, to our Consolidated Financial Statements for segment information.
All prior year information in the tables below has been revised retrospectively to reflect the change to the Company's reportable segments. See Note 16, Segment Information, to our Consolidated Financial Statements for segment information.
Such exercises are independent decisions made by grantees and are influenced most directly by the stock price and the expiration dates of stock option awards. Such proceeds are difficult to forecast, resulting from several factors which are outside our control. We believe that such proceeds will remain a nominal source of cash in the future.
Such exercises are independent decisions made by grantees and are influenced most directly by the stock price and the expiration dates of stock option awards. Proceeds from the exercise of stock options are difficult to forecast and we expect that such proceeds will remain a nominal source of cash in the future.
As of January 28, 2024, we had $128.6 million in cash and cash equivalents and $282.2 million of available undrawn borrowing capacity on our Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
As of January 26, 2025, we had $151.7 million in cash and cash equivalents and $334.7 million of available undrawn borrowing capacity on our Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
Revenue from software maintenance, unspecified upgrades and technical support contracts are recognized over the period such items are delivered or services are provided.
Revenue from software maintenance, unspecified upgrades and technical support contracts are recognized over the period such items are delivered or services are provided. Revenue from technical support contracts extending beyond the current period is deferred and is recognized over the applicable earning period.
Net sales from IoT Connected Services increased $91.4 million in fiscal year 2024 versus fiscal year 2023 primarily due to an approximately $88 million increase in managed connectivity sales driven by the Sierra Wireless Acquisition. 43 Gross Profit The following table summarizes our gross profit and gross margin by reportable segment: Fiscal Years (in thousands, except percentages) 2024 2023 Gross Profit Gross Margin Gross Profit Gross Margin Signal Integrity $ 101,245 57.2 % $ 208,510 69.9 % Analog Mixed Signal and Wireless 146,598 56.3 % 274,515 61.9 % IoT Systems 134,277 40.1 % 3,245 33.1 % IoT Connected Services 47,228 48.9 % 2,489 47.9 % Unallocated costs, including share-based compensation, amortization of acquired technology and acquired technology impairments (133,098) (10,201) Total $ 296,250 34.1 % $ 478,558 63.3 % In fiscal year 2024, gross profit decreased to $296.3 million from $478.6 million in fiscal year 2023.
Net sales from IoT Systems and Connectivity increased $416.5 million in fiscal year 2024 versus fiscal year 2023 primarily due to an approximately $325.1 million increase in IoT Hardware sales and a $87.6 million increase in managed connectivity sales all driven by the Sierra Wireless Acquisition. 45 Gross Profit The following table summarizes our gross profit and gross margin by reportable segment: Fiscal Years (in thousands, except percentages) 2024 2023 Gross Profit Gross Margin Gross Profit Gross Margin Signal Integrity $ 101,245 57.2 % $ 208,510 69.9 % Analog Mixed Signal and Wireless 146,598 56.3 % 274,515 61.9 % IoT Systems and Connectivity 181,505 42.1 % 5,734 38.2 % Unallocated costs, including share-based compensation and amortization of acquired technology (133,098) (10,201) Total $ 296,250 34.1 % $ 478,558 63.3 % In fiscal year 2024, gross profit decreased to $296.3 million from $478.6 million in fiscal year 2023.
In fiscal year 2024 , net sales were reduced by $55.2 million in estimated variable consideration, or 6.0% of gross revenue. In fiscal year 2023 , net sales were reduced by $24.2 million in estimated variable consideration, or 3.1% of gross revenue.
In fiscal year 2025 , net sales were reduced by $54.2 million in estimated variable consideration, or 5.6% of gross revenue. In fiscal year 2024 , net sales were reduced by $55.2 million in estimated variable consideration, or 6.0% of gross revenue.
The following table summarizes our net sales by reportable segment: Fiscal Years (in thousands, except percentages) 2024 2023 Net Sales % Net Sales Net Sales % Net Sales Change Signal Integrity $ 177,033 20 % $ 298,290 39 % (41) % Analog Mixed Signal and Wireless 260,264 30 % 443,239 59 % (41) % IoT Systems 334,904 39 % 9,811 1 % 3,314 % IoT Connected Services 96,557 11 % 5,193 1 % 1,759 % Total $ 868,758 100 % $ 756,533 100 % 15 % Net sales from Signal Integrity decreased $121.3 million in fiscal year 2024 versus fiscal year 2023 primarily due to an approximately $85 million decrease in PON sales, a $19 million decrease in wireless infrastructure sales, a $10 million decrease in broadcast sales and a $6 million decrease in data center sales, all of which were driven by softer demand.
The following table summarizes our net sales by reportable segment: Fiscal Years (in thousands, except percentages) 2024 2023 Net Sales % Net Sales Net Sales % Net Sales Change Signal Integrity $ 177,033 20 % $ 298,290 39 % (41) % Analog Mixed Signal and Wireless 260,264 30 % 443,239 59 % (41) % IoT Systems and Connectivity $ 431,461 50 % $ 15,004 2 % 2,776 % Total $ 868,758 100 % $ 756,533 100 % 15 % Net sales from Signal Integrity decreased $121.3 million in fiscal year 2024 versus fiscal year 2023 primarily due to an approximately $84.8 million decrease in PON sales, a $18.8 million decrease in wireless infrastructure sales, a $9.8 million decrease in broadcast sales and a $5.5 million decrease in data center sales, all of which were driven by softer demand.
Cash Flows In summary, our cash flows for each period were as follows: Fiscal Years (in thousands) 2024 2023 Net cash (used in) provided by operating activities $ (93,920) $ 126,711 Net cash used in investing activities (22,697) (1,247,322) Net cash provided by financing activities 10,550 1,076,520 Effect of foreign exchange rate changes on cash and cash equivalents (858) — Net decrease in cash and cash equivalents $ (106,925) $ (44,091) Operating Activities Net cash provided by or used in operating activities is driven by net income or loss adjusted for non-cash items and fluctuations in operating assets and liabilities.
Cash Flows In summary, our cash flows for each period were as follows: Fiscal Years (in thousands) 2025 2024 Net cash provided by (used in) operating activities $ 57,987 $ (93,920) Net cash used in investing activities (11,887) (22,697) Net cash (used in) provided by financing activities (21,660) 10,550 Effect of foreign exchange rate changes on cash and cash equivalents (1,282) (858) Net increase (decrease) in cash and cash equivalents $ 23,158 $ (106,925) Operating Activities Net cash provided by or used in operating activities is driven by net income or loss adjusted for non-cash items and fluctuations in operating assets and liabilities.
To the extent that an audit, or the closure of a statute of limitations results in adjusting our reserves for uncertain tax positions, our effective tax rate could experience extreme volatility since any adjustment would be recorded as a discrete item in the period of adjustment.
To the extent that an audit, or the closure of a statute of limitations results in adjusting our reserves for uncertain tax positions, our effective tax rate could experience extreme volatility since any adjustment would be recorded as a discrete item in the period of adjustment. 44 For further information on the effective tax rate and the Tax Act’s impact, see Note 12, Income Taxes, to our Consolidated Financial Statements.
Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions. We did not repurchase any shares of our common stock under the program during fiscal year 2024, compared to $50.0 million of repurchases of our common stock under the program during fiscal year 2023.
Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions. We did not repurchase any shares of our common stock under the program during fiscal years 2025 and 2024. As of January 26, 2025, the remaining authorization under the program was $209.4 million .
With the exception of net sales, gross profit and operating expenses, which are discussed below to reflect the changes to our reportable segments and reclassification of restructuring costs (see "Reclassification" below), a discussion of our results of operations for the fiscal year ended January 30, 2022 and year-over-year comparisons between fiscal years 2023 and 2022 have been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
See also Note 16, Segment Information, to our Consolidated Financial Statements for additional segment information. 41 With the exception of net sales and gross profit, which are discussed below to reflect the changes to our reportable segments, a discussion of our results of operations for the fiscal year ended January 29, 2023 and year-over-year comparisons between fiscal years 2024 and 2023 have been omitted from this Annual Report on Form 10-K, but may be found in "Item 7.
Gross margin in IoT Systems was 40.1% in fiscal year 2024, compared to 33.1% in fiscal year 2023 due to higher router and module sales driven by the Sierra Wireless Acquisition.
Gross margin in IoT Systems and Connectivity was 42.1% in fiscal year 2024, compared to 38.2% in fiscal year 2023 due to higher IoT Hardware and managed connectivity sales driven by the Sierra Wireless Acquisition.
As of January 28, 2024, we had $622.6 million outstanding under the Term Loans and $215.0 million outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $282.2 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
As of January 26, 2025, the Company had $181.2 million outstanding under the Term Loans and no Revolving Loans outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $334.7 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
The cash surrender value of our corporate-owned life insurance was $29.6 million as of January 28, 2024, of which $25.1 million was included in "other assets" and $4.5 million was included in "other current assets" in the Consolidated Balance Sheets, compared to $33.7 million as of January 29, 2023, which was included in "other assets" in the Consolidated Balance Sheets.
The cash surrender value of our corporate-owned life insurance was $34.9 million as of January 26, 2025 and was included in "other assets" in the Consolidated Balance Sheets, compared to $29.6 million as of January 28, 2024 included in "other assets" in the Consolidated Balance Sheets.
We expect our future non-operating uses of cash will be for capital expenditures and debt repayment . We expect to fund these cash requirements through cash flows from operating activities.
We expect our future non-operating uses of cash will be for capital expenditures and debt repayment .
Upon the termination of the covenant relief period under the Third Amendment, the ratio levels set forth above with respect to the leverage and interest expense coverage financial covenants are subject to step-up as set forth in the Credit Agreement, and the liquidity covenant shall no longer apply.
Upon the termination of the covenant relief period under the Third Amendment, the ratio levels set forth above with respect to the leverage and interest expense coverage financial covenants are subject to step-up as set forth in the Credit Agreement, and the liquidity covenant shall no longer apply. 48 Compliance with the leverage and interest expense coverage financial covenants is measured quarterly based upon the Company’s performance over the most recent four quarters, and compliance with the liquidity covenant is measured as of the last day of each monthly accounting period.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 29, 2023 , filed with the Securities and Exchange Commission (“SEC”) on March 30, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended January 28, 2024 , filed with the SEC on March 28, 2024.
Amortization of acquired technology intangibles is reflected in cost of sales. Restructuring Expenses Restructuring expenses increased $12.3 million for fiscal year 2024 compared to fiscal year 2023 primarily due to structural reorganization actions to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
Restructuring Expenses Restructuring expenses decreased $18.8 million for fiscal year 2025 compared to fiscal year 2024 due to the reorganization actions primarily taken in the prior fiscal year to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
We have elected to treat global intangible low-taxed income ("GILTI") as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes. We receive a tax benefit from a tax holiday that was granted in Switzerland. The tax holiday commenced on January 30, 2017, and was effective for five years (the “Initial Term”).
We have elected to treat global intangible low-taxed income ("GILTI") as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes. We historically benefited from a Swiss tax holiday that commenced on January 30, 2017. However, Switzerland implemented the OECD Pillar Two rules effective from January 1, 2024.
All $5.1 million of the proceeds were re-invested into our corporate-owned life insurance policy in order to provide substantive coverage for our deferred compensation liability. 53 Financing Activities Net cash provided by or used in financing activities is primarily attributable to proceeds from our Revolving Credit Facility, the Term Loans, the 2028 Notes, the 2027 Notes, the sale of the Warrants and stock option exercises, offset by the purchase of the Convertible Note Hedge Transactions, repurchases of outstanding common stock, payments on the Revolving Credit Facility and the Term Loans, deferred financing costs and payments related to employee share-based compensation payroll taxes.
Financing Activities Net cash provided by or used in financing activities is primarily attributable to proceeds from our Revolving Credit Facility, the Term Loans, the 2028 Notes, the 2027 Notes, issuance of common stock, the sale of the Warrants, interest rate swap termination and stock option exercises, offset by the purchase of the Convertible Note Hedge Transactions, repurchases of outstanding common stock, payments on the Revolving Credit Facility and the Term Loans, deferred financing costs, payments related to employee share-based compensation payroll taxes and distributions to noncontrolling interest.
In fiscal years 2024 and 2023 , we paid $25.4 million and $21.8 million, respectively, in deferred financing costs related to the Revolving Credit Facility, the Term Loans, the 2028 Notes and the 2027 Notes. In fiscal year 2024 , we paid $6.7 million for employee share-based compensation payroll taxes.
In fiscal years 2025 and 2024 , we paid $0.8 million and $25.4 million, respectively, in deferred financing costs related to the Revolving Credit Facility, the Term Loans, the 2028 Notes and the 2027 Notes.
We are subject to export restrictions and trade regulations, which have limited our ability to sell to certain customers. We use several metrics as indicators of future potential growth. The indicators that we believe best correlate to potential future sales growth are design wins and new product releases.
We use several metrics as indicators of future potential growth. The indicators that we believe best correlate to potential future sales growth are design wins and new product releases.
The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period-over-period volatility, by the number of new product tape-outs and by the timing of recoveries from non-recurring engineering services, which are typically recorded as a reduction to product development and engineering expense. 44 Intangible Amortization Intangible amortization for fiscal year 2024 increased $14.1 million for fiscal year 2024 compared to fiscal year 2023 due to intangibles acquired in the Sierra Wireless Acquisition related to customer relationships and trade name.
The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period-over-period volatility, by the number of new product tape-outs and by the timing of recoveries from non-recurring engineering services, which are typically recorded as a reduction to product development and engineering expense.
We are a global business with customers and suppliers around the world. A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China, Taiwan and Vietnam .
A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China, Taiwan and Vietnam . A significant amount of our assembly and test operations are conducted by third-party contractors located outside the United States, including Canada, China, Malaysia, Taiwan and Vietnam .

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+3 added−0 removed14 unchanged
Biggest changeThese restrictions are intended to limit risk by restricting our investments to high quality debt instruments with relatively short-term durations. Our investment strategy limits investment of new funds and maturing securities to U.S. Treasury, Federal agency securities, high quality money market funds and time deposits with our principal commercial banks.
Biggest changeOur investment strategy limits investment of new funds and maturing securities to U.S. Treasury, Federal agency securities, high quality money market funds and time deposits with our principal commercial banks. Outside of these investment guidelines, we also invest in a limited amount of debt securities in privately held companies that we view as strategic to our business.
There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or any applicable foreign government in the future or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a future failure or liquidity crisis.
There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or any applicable foreign government in the future or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event 55 of a future failure or liquidity crisis.
We do not enter into formal hedging arrangements to mitigate against commodity risk. 56 Foreign Currency Risk Our foreign operations expose us to the risk of fluctuations in foreign currency exchange rates against our functional currencies and we may economically hedge this risk with foreign currency contracts (such as currency forward contracts).
We do not enter into formal hedging arrangements to mitigate against commodity risk. 54 Foreign Currency Risk Our foreign operations expose us to the risk of fluctuations in foreign currency exchange rates against our functional currencies and we may economically hedge this risk with foreign currency contracts (such as currency forward contracts).
To date, we have not experienced any losses associated with this credit risk and continue to believe that this exposure is not significant. 57
To date, we have not experienced any losses associated with this credit risk and continue to believe that this exposure is not significant. 56
Interest Rate and Credit Risk We are subject to interest rate risk in connection with the portion of the outstanding debt under our Credit Agreement that bears interest at a variable rate as of January 28, 2024 .
Interest Rate and Credit Risk We are subject to interest rate risk in connection with the portion of the outstanding debt under our Credit Agreement that bears interest at a variable rate as of January 26, 2025 .
Gains or losses on these balances are generally offset by corresponding losses or gains on the related hedging instruments. As of January 28, 2024 , our largest foreign currency exposures were from the Canadian Dollar, Swiss Franc and Great British Pound.
Gains or losses on these balances are generally offset by corresponding losses or gains on the related hedging instruments. As of January 26, 2025 , our largest foreign currency exposures were from the Australian Dollar, Canadian Dollar, Euro, Great British Pound, and Swiss Franc.
These reasonably possible adverse changes were applied to our total monetary assets and liabilities denominated in currencies other than our functional currency as of January 28, 2024. The adverse impact these changes would have had (after taking into account balance sheet hedges only) on our income before taxes is $1.9 million.
These reasonably possible adverse changes were applied to our total monetary assets and liabilities denominated in currencies other than our functional currency as of January 26, 2025. The adverse impact these changes would have had (after taking into account balance sheet hedges only) on our income before taxes is $0.3 million.
This interest rate swap agreement matured during the first quarter of fiscal year 2024. Based upon our $237.6 million of unhedged floating-rate outstanding indebtedness as of January 28, 2024, the adverse impact a one percentage point increase in Term SOFR would have on our interest expense is $2.4 million. Interest rates also affect our return on excess cash and investments.
Based upon our $31.2 million of unhedged floating-rate outstanding indebtedness as of January 26, 2025, the adverse impact a one percentage point increase in Term SOFR would have on our interest expense is $0.3 million. Interest rates also affect our return on excess cash and investments. As of January 26, 2025, we had $151.7 million of cash and cash equivalents.
As of January 28, 2024, we had $128.6 million of cash and cash equivalents. A majority of our cash and cash equivalents generate interest income based on prevailing interest rates. Interest income, net of reserves, generated by our investments and cash and cash equivalents was $3.1 million in fiscal year 2024.
A majority of our cash and cash equivalents generate interest income based on prevailing interest rates. Interest income, net of reserves, generated by our investments and cash and cash equivalents was $2.3 million in fiscal year 2025. A significant change in interest rates would impact the amount of interest income generated from our cash and investments.
A significant change in interest rates would impact the amount of interest income generated from our cash and investments. It would also impact the market value of our investments. Our investments are primarily subject to credit risk. Our investment guidelines prescribe credit quality, permissible investments, diversification, and duration restrictions.
It would also impact the market value of our investments. Our investments are primarily subject to credit risk. Our investment guidelines prescribe credit quality, permissible investments, diversification, and duration restrictions. These restrictions are intended to limit risk by restricting our investments to high quality debt instruments with relatively short-term durations.
Outside of these investment guidelines, we also invest in a limited amount of debt securities in privately held companies that we view as strategic to our business. For example, many of these investments are in companies that are enabling the LoRa®- and LoRaWAN®-based ecosystem.
For example, many of these investments are in companies that are enabling the LoRa and LoRaWAN based ecosystem.
Added
This interest rate swap agreement matured during the first quarter of fiscal year 2024.
Added
In the fourth quarter of fiscal year 2025, due to the partial repayment of the Term Loan, the Company terminated the interest rate swap agreement with a 5 year term to hedge the variability of interest payments on $450.0 million of debt outstanding on the Term Loans at a Term SOFR rate of 3.44%, plus a variable margin and spread based on the Company’s consolidated leverage ratio.
Added
As a result of the interest rate swap termination, the Company accelerated the reclassification of amounts in other comprehensive income to earnings. The accelerated amount was a gain of $3.6 million. The Company also received proceeds of $4.8 million upon the interest rate swap termination.

Other SMTC 10-K year-over-year comparisons