Astera Labs Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023 included in our final prospectus, dated March 19, 2024, filed with the SEC on March 21, 2024, pursuant to Rule 424(b) (the “Prospectus”) under the Securities Act of 1933, as amended (the “Securities Act”). As discussed in the section titled “Special Note about Forward-Look Statements,” this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” and included elsewhere in this Quarterly Report on Form 10-Q and our Prospectus.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 included in our Annual Report on Form 10-K filed with the SEC on February 14, 2025. As discussed in the section titled “Special Note about Forward-Look Statements,” this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” and included elsewhere in this Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed with the SEC on February 14, 2025.

Previous wording

Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units (“GPUs”) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules, shipping millions of devices across all of the major hyperscalers. Our products, which include Aries PCIe®/CXL®Smart DSP Retimers, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripherals Component Interconnect Express (“PCIe”), Ethernet, and Computer Express Link (“CXL”), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.

Current wording

Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units (“GPUs”) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules. Our products, which include Aries PCIe®/CXL®Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express (“PCIe”), Ethernet, and Computer Express Link (“CXL”), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.

Previous wording

Since our inception, we have created and commercialized first-to-market PCIe, Ethernet, and CXL products. We have become a trusted partner and a proven supplier to our hyperscaler and system OEM customers. We have experienced strong growth since the commercial launch of Aries in 2020. Our revenue grew from $34.8 million in 2021, $79.9 million in 2022, and$115.8 million in 2023 to$255.2 million for the nine months ended September 30, 2024, driven by a sizable increase in demand for our products. We have made significant investments in the design and development of new products and platform enhancements, and, as a result, we have not yet achieved profitability on an annual basis.

Current wording

Since our inception, we have created and commercialized first-to-market PCIe, Ethernet, and CXL products. We have become a trusted partner and a proven supplier to our hyperscaler and system OEM customers. We have experienced strong growth since the commercial launch of Aries in 2020. Our revenue grew from $34.8 million in 2021, $79.9 million in 2022, and$115.8 million in 2023 to $396.3 million in 2024. Our revenue was$159.4 million for the three months ended March 31, 2025, driven by a sizable increase in demand for our products. We have made significant investments in the design and development of new products and platform enhancements. Although we have recently recorded quarterly net income, we have not yet achieved profitability on an annual basis.

Previous wording

Our revenue for the three months ended September 30, 2024 increased by 206% compared tothe three months ended September 30, 2023, primarily due to an increase in overall unit shipments driven by higher demand for our Aries products. Gross margin increased by 160 basis points (“bps”) to 77.7% for the three months ended September 30, 2024 from 76.1% for the three months ended September 30, 2023, primarily driven by an increase in product mix and lower average unit cost.

Current wording

Our revenue for the three months ended March 31, 2025 increased by 144% compared tothe three months ended March 31, 2024, primarily due to an increase in overall unit shipments driven by higher demand for our Aries and Taurus products. Gross margin decreased by 250 basis points (“bps”) to 74.9% for the three months ended March 31, 2025 from 77.4% for the three months ended March 31, 2024, primarily driven by product mix.

Previous wording

The vast majority of our revenue consists of product sales and a small portion is derived from engineering services. Product sales consists primarily of shipments of our Intelligent Connectivity Platform solutions. Engineering services revenue consists of engineering fees associated with customer-defined engineering services. Engineering services revenue accounted for an immaterial percentage of total revenue for each of the nine months ended September 30, 2024 and 2023.

Current wording

The vast majority of our revenue consists of product sales with a small portion, if any, derived from engineering services. Product sales consist primarily of shipments of our Intelligent Connectivity Platform solutions. Engineering services revenue consists of engineering fees associated with customer-defined engineering services.

Previous wording

Cost of revenue includes cost of product sales and cost of engineering services. Cost of product sales includes the cost of materials, such as wafers processed by third-party foundries, cost associated with packaging, assembly, shipping, depreciation of equipment associated with manufacturing, cost of logistics and quality assurance, warranty cost, amortization of capitalized production masks, cost of personnel including salaries, stock-based compensation, employee benefits, write-down of inventories, and allocation of general corporate expenses.

Current wording

Cost of revenue includes cost of product sales and cost of engineering services. Cost of product sales includes the cost of materials, such as wafers processed by third-party foundries, costs associated with packaging, assembly, shipping, depreciation of equipment associated with manufacturing, cost of logistics and quality assurance, warranty cost, amortization of capitalized production masks, personnel-related costs including salaries, stock-based compensation, employee benefits, write-down of inventories, and allocation of general corporate expenses.

Previous wording

Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross profit has been, and may in the future be, influenced by several factors, including sales volume, pricing of our products and services, changes in product costs, contract manufacturing supplier pricing, personnel costs, shipping, logistics costs, and inventory write-downs.

Current wording

Gross profit represents revenue less cost of revenue. Gross margin is gross profit expressed as a percentage of revenue. Our gross profit has been, and may in the future be, primarily influenced by several factors, including sales volumes, pricing of our products and services, changes in product costs, contract manufacturing supplier pricing, personnel costs, shipping and logistics costs, and inventory write-downs.

Previous wording

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, stock-based compensation expense, employee benefits, and bonuses. Operating expenses also include software license costs, pre-production engineering mask costs, professional and consulting services fees, and overhead costs for facilities and other shared expenses, including depreciation expense.

Current wording

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel-related costs are the most significant component of operating expenses and consist of salaries, stock-based compensation expense, employee benefits, and bonuses. Operating expenses also include software license and cloud hosting services costs, prototype costs, pre-production engineering mask costs, professional services fees, insurance costs, and overhead costs for facilities and other shared expenses, including depreciation expense.

Previous wording

Research and development expenses consist of costs incurred in performing research and development activities and include salaries, stock-based compensation expense, employee benefits, bonuses, pre-production engineering mask costs, software license costs, prototype wafer, packaging and test costs, and allocated facilities expenses. Research and development costs are expensed as incurred.

Current wording

Research and development expenses consist of costs incurred in performing research and development activities and include salaries, stock-based compensation expense, employee benefits, bonuses, pre-production engineering mask costs, software license and cloud hosting services costs, prototype costs, packaging and test costs, professional services fees, and allocated shared expenses. Research and development costs are expensed as incurred.

Previous wording

Pre-production engineering mask costs are expensed. We capitalize the costs of production masks with alternative future use and amortize these costs on a straight line basis over the useful lives. To determine if a production mask has alternative future use or benefits, we evaluate risks associated with developing new technologies and capabilities, and the related risks associated with entering new markets. Production masks that do not meet the criteria for capitalization are expensed as research and development costs.

Current wording

Pre-production engineering mask costs are expensed. We capitalize the costs of production masks with alternative future use and amortize these costs on a straight-line basis over the useful lives of the production masks. To determine if a production mask has alternative future use or benefits, we evaluate risks associated with developing new technologies and capabilities, and the related risks associated with entering new markets. Production masks that do not meet the criteria for capitalization are expensed as research and development costs.

Previous wording

Sales and marketing expenses consist of personnel costs including salaries, stock-based compensation expense, employee benefits, bonuses, samples to potential customers, travel and entertainment costs, and allocated facilities expenses.

Current wording

Sales and marketing expenses consist of personnel-related costs including salaries, stock-based compensation expense, employee benefits, bonuses, samples to potential customers, product marketing and conferences, travel and entertainment costs, and allocated shared expenses.

Previous wording

General and administrative expenses consist primarily of personnel costs including salaries, stock-based compensation expense, employee benefits and bonuses related to corporate, finance, legal and human resource functions, professional services fees, audit and compliance expenses, insurance costs, and general corporate expenses including allocated facilities expenses.

Current wording

General and administrative expenses consist primarily of personnel-related costs including salaries, stock-based compensation expense, employee benefits and bonuses related to corporate, finance, information technology, legal, and human resource functions, professional services fees, audit and compliance expenses, insurance costs, and general corporate expenses including allocated shared expenses.

Previous wording

We expect general and administrative expenses to increase in absolute dollars as we grow our operations and incur additional expenses associated with operating as a public company and moderately decline as a percentage of revenue over time as our revenue increases. These expenses as a result of operating as a public company include expenses necessary to comply with the rules and regulations applicable to companies listed on a national securities exchange and related compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for general and director and officer insurance, investor relations, and other professional services.

Current wording

We expect general and administrative expenses to increase in absolute dollars as we grow our operations and continue to incur additional expenses associated with operating as a public company and moderately decline as a percentage of revenue over time as our revenue increases.

Previous wording

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

Current wording

Comparison of the Three Months Ended March 31, 2025 and 2024

Previous wording

Total revenue increased $76.2 million, or 206%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a 197% increase in overall unit shipments driven by higher demand for our Aries products. The increase in revenue was also attributable to higher overall average selling prices resulting from an increased mix of our second-generation Aries retimers, which have a higher average selling price than our first-generation products.

Current wording

Total revenue increased $94.2 million, or 144%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in overall unit shipments driven by higher demand for our Aries and Taurus products. The increase in revenue was also attributable to higher overall average selling prices resulting from an increased mix of hardware modules.

Previous wording

Total cost of revenue increased $16.4 million, or 186%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a 197% increase in overall unit shipments, partially offset by lower average unit cost.

Current wording

Total cost of revenue increased $25.3 million, or 172%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to an increase in overall unit shipments.

Previous wording

Research and development expense increased $30.0 million, or 146%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to a$12.9 million increase in non-cash stock-based compensation expense resulting from the time-based vesting of RSUs after the liquidity event vesting condition was satisfied in connection with our IPO, a $7.3 million increase in personnel-related expenses as a result of a 70%increase in headcount, and a $8.5 million increase in software licenses and cloud hosting services related to our development projects.

Current wording

Research and development expense increased $11.0 million, or 21%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to a $12.6 million increase in personnel-related expenses as a result of a 96%increase in headcount, a $5.2 million increase in software licenses costs related to our development projects, a $1.6 million increase related to hardware design, a $0.5 million increase in professional services fees, and a $0.4 million increase in depreciation and amortization expense. The increase was partially offset by a decrease of$10.8 million in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs following the satisfaction of the liquidity event vesting condition in connection with our IPO in the prior period.

Previous wording

For the three and nine months ended September 30, 2024, interest income increased $9.2 million, or 533%, and $18.9 million, or 387%, compared to the three and nine months ended September 30, 2023, respectively. The increase was primarily due to higher average short-term investments and cash equivalents balances primarily as a result of our IPO.

Current wording

For the three months ended March 31, 2025, interest income increased $7.9 million, or 308%, compared to the three months ended March 31, 2024, primarily due to higher average balances of short-term investments and cash equivalents as a result of our IPO.

Previous wording

Income tax provision increased $6.7 million, or 235%, for the three months ended September 30, 2024 compared tothree months ended September 30, 2023, primarily due to an increase in taxable income partially offset by excess tax benefits from the foreign-derived intangible income deduction, a significant increase in stock-based compensation tax deduction, and the U.S. research and development credits.

Current wording

Income tax provision decreased $22.7 million, or 180%, for the three months ended March 31, 2025 compared to thethree months ended March 31, 2024, primarily due to an increase in benefits from the excess tax benefits related to equity compensation, the foreign derived intangible income deduction and the U.S. research and development credits.

Previous wording

This Quarterly Report on Form 10-Q contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), which we use to supplement the performance measures in our consolidated financial statements, which are presented in accordance with GAAP. We refer to these measures as “non-GAAP financial measures.” These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), and non-GAAP net income (loss). We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income (loss), and non-GAAP net income (loss) provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

Current wording

This Quarterly Report on Form 10-Q contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States (“GAAP”), which we use to supplement the performance measures in our condensed consolidated financial statements, which are presented in accordance with GAAP. We refer to these measures as “non-GAAP financial measures.” These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.

Previous wording

We define non-GAAP operating income (loss) as operating loss presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses and employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with the IPO. We have presented non-GAAP operating income(loss) because we consider non-GAAP operating income (loss) to be a useful metric for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of stock-based compensation expense and employer payroll taxes related to the time-based vesting and net settlement of restricted stock units in connection with our IPO, a charge that can vary from period to period for reasons that are unrelated to our core operating performance. This metric also provides investors and other users of our financial information with an additional toolto eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance.

Current wording

We define non-GAAP operating income as operating income (loss) presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses, and employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with the IPO. We have presented non-GAAP operating income because we consider non-GAAP operating income to be a useful metric for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of stock-based compensation expense, and employer payroll taxes related to the time-based vesting and net settlement of restricted stock units in connection with our IPO, a charge that can vary from period to period for reasons that are unrelated to our core operating performance. This metric also provides investors and other users of our financial information with an additional toolto eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance.

Previous wording

A reconciliation of our GAAP operating loss, the most directly comparable GAAP financial measure, to non-GAAP operating income (loss) is presented below:

Current wording

A reconciliation of our GAAP operating income (loss), the most directly comparable GAAP financial measure, to non-GAAP operating incomeis presented below:

Previous wording

We monitor non-GAAP net income (loss) for planning and performance measurement purposes. We define non-GAAP net income (loss) as net loss reported on our condensed consolidated statements of operations, excluding the impact of stock-based compensation expenses, employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, and the related tax impact on the adjustments. We have presented non-GAAP net income (loss) because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance.

Current wording

We monitor non-GAAP net income for planning and performance measurement purposes. We define non-GAAP net income as net income (loss) presented in accordance with GAAP on our condensed consolidated statements of operations, excluding the impact of stock-based compensation expenses, employer payroll taxes related to the time-based vesting and net settlement of RSUs with a liquidity event-based vesting condition that was satisfied in connection with our IPO, and the related tax impact on the adjustments. We have presented non-GAAP net income because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance.

Previous wording

A reconciliation of our GAAP net loss, the most directly comparable GAAP financial measure, to our non-GAAP net income (loss) is presented below:

Current wording

A reconciliation of our GAAP net income (loss), the most directly comparable GAAP financial measure, to our non-GAAP net incomeis presented below:

Previous wording

(3) The non-GAAP tax rate is calculated based on the tax laws in the jurisdictions in which we operate and excludes the impact of stock-based compensation expense, employer payroll taxes relate to stock-based compensation from our IPO, and one-off discrete tax adjustments that are unrelated to our core operating performance. Forthe three and nine months ended September 30, 2024, the non-GAAP tax rate was approximately 15% and 19%, respectively. Tax adjustments for the three and nine months ended September 30, 2023 were not material.

Current wording

(3) Incometax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. We no longer maintain valuation allowance for non-GAAP purposes due to our profitability on a non-GAAP basis. For the three months ended March 31, 2025 and 2024, the non-GAAP tax rate was approximately 7% and 22%, respectively.

Previous wording

Since our inception, we have financed our operations primarily through proceeds from theissuance of our redeemable convertible preferred stock, our IPO, and cash generated from the sale of our products. As of September 30, 2024, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $886.8 million and working capital of $857.5 million. Our principal use of cash is to fund our operations, invest in research and development, fund production mask capital expenditures and to support our overall growth.

Current wording

Since our inception, we have financed our operations primarily through proceeds from theissuance of our redeemable convertible preferred stock, net proceeds from our IPO, and cash generated from the sale of our products. As of March 31, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $924.7 million. Our principal use of cash is to fund our operations, invest in research and development, fund production mask capital expenditures, and to support our overall growth.

Previous wording

We have generated significant losses from operations and negative cash flows from operating activities in the past as reflected in our accumulated deficit of $233.5 millionas of September 30, 2024. We believe that our current cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least the next 12 months and beyond. Our future capital requirements, however, will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, capital expenditures for production masks, the continuing market acceptance of our products, and the use of cash to fund potential mergers or acquisitions. In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected.

Current wording

While we have generated$10.5 million in cash flow from operating activities for the three months ended March 31, 2025, in prior years we generated significant losses from operations and negative cash flows from operating activities as reflected in our accumulated deficit of $177.0 millionas of March 31, 2025. We believe that our current cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least the next 12 months and beyond. Our future capital requirements, however, will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, capital expenditures for production masks, the continuing market acceptance of our products, and the use of cash to fund potential mergers or acquisitions. In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected.

Previous wording

Net cash provided by operating activities for the nine months ended September 30, 2024 of $97.0 million resulted primarily from non-cash charges of $187.3 million primarily related to $186.4 million in stock-based compensation expense and cash provided by operating assets and liabilities of $17.8 million offset by a net loss of $108.1 million. Cash provided by operating assets and liabilities during the period was primarily from $31.1 million increase in accrued expenses and other liabilities primarily due to accrued customer deposits and timing of payments, and a $11.7 million increase in accounts payable primarily due to timing of payments. The net cash flow provided by operating assets and liabilities were partially offset by an increase of $17.1 million in accounts receivable due to higher product sales and timing of customer payments, a $5.0 million increase in prepaid expenses and other assets primarily related to accrued interest receivable on our short-term investments, $1.7 million decrease in operating lease liability, and a $1.3 million increase in inventory.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2025 of $10.5 million resulted primarily from a net income of $31.8 million and non-cash charges of $41.1 million primarily related to $42.4 million in stock-based compensation expense, partially offset by cash used in operating assets and liabilities of $62.4 million. Cash used in operating assets and liabilities during the period was primarily from an increase of $31.0 million in accounts receivable due to higher product sales and the timing of customer payments, a $14.5 million increase in prepaid expenses and other assets primarily related excess tax benefit from equity compensation, a $11.7 million decrease in accrued expenses and other liabilities primarily due to accrued customer deposits and the timing of payments, and a $6.8 million increase in inventory primarily due to build up for anticipated demand. The net cash flow used in operating assets and liabilities were partially offset by a $2.2 million increase in accounts payable mainly due to the timing of payments.

Previous wording

Net cash used in operating activities for the nine months ended September 30, 2023 of$27.1 million resulted primarily a net loss of $40.6 million and cash used in operating assets and liabilities of $5.6 million offset by non-cash charges of $19.1 million. Cash used in operating assets and liabilities during the period was primarily from a $6.5 million increase in accounts receivable due to timing of customer payments and $1.0 million of lower operating lease liabilities due to timing. These cash flow uses were partially offset by a $2.2 million increase accrued expenses and other liabilities related to growth in our operations.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2024 of $3.7 million resulted from non-cash charges of $98.9 million primarily related to $97.8 million in stock-based compensation expense, partially offset by a net loss of $93.0 million and cash used in operating assets and liabilities of $2.2 million. Cash used in operating assets and liabilities during the period was primarily from an increase of $8.4 million in accounts receivable due to higher product sales and the timing of customer payments, a $5.9 million increase in inventory primarily due to build up for anticipated demand, and a $2.7 million increase in prepaid expenses and other assets related to prepaid insurance. The net cash flow used in operating assets and liabilities were partially offset by a $10.2 million increase in accrued expenses and other liabilities primarily due to accrued income taxes, higher accrued pre-production engineering mask costs and the timing of payments, and a $5.0 million increase in accounts payable primarily due to the timing of payments.

Previous wording

Net cash used ininvesting activities for the nine months ended September 30, 2024 of $666.1 millionwas the result of $724.9 millionin purchases of marketable securities and $18.8 millionin purchases of property and equipment, partially offset by$77.6 million in proceeds from sales and maturities of marketable securities.

Current wording

Net cash used ininvesting activities for the three months ended March 31, 2025 of $3.9 millionwas the result of $190.8 millionin purchases of marketable securities and $4.5 millionin purchases of property and equipment, partially offset by$191.4 million in proceeds from sales and maturities of marketable securities.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2023 of$11.8 million was the result of$102.8 million in purchases of marketable securities and$1.8 million in purchases of property and equipment. This was partially offset by$92.8 million in proceeds from sales and maturities of marketable securities.

Current wording

Net cash used in investing activities for the three months ended March 31, 2024 of$4.3 million was the result of$23.3 million in purchases of marketable securities and$3.4 million in purchases of property and equipment. This was partially offset by$22.5 million in proceeds from sales and maturities of marketable securities.

Previous wording

Net cash provided byfinancing activities for the nine months ended September 30, 2023 of$0.6 millionwas the result of$0.7 millionin proceeds from exercises of stock options net of repurchases, partially offset by$0.1 million payments of deferred offering costs.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2025 of $0.4 million was the result of proceeds from exercises of stock options.

Previous wording

Net cash provided by financing activities for the nine months ended September 30, 2024 of $650.2 million was the result of $672.2 million in proceeds from our IPO, net of underwriting discounts and commissions, and $2.9 million in proceeds from exercises of stock options net of repurchases. This was partially offset by $20.1 million in tax withholding related to net share settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO, and $4.8 million in payments of deferred offering costs.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2024 of $651.6 million was the result of $672.2 million in proceeds from our IPO, net of underwriting discounts and commissions, and $1.2 million in proceeds from exercises of stock options net of repurchases. This was partially offset by $20.1 million in tax withholding related to net share settlement of RSUs that had previously met the time-based vesting condition and for which the liquidity event vesting condition was satisfied in connection with our IPO, and $1.8 million in payments of deferred offering costs.

Previous wording

Operating lease commitments. Our operating lease commitments primarily include corporate offices. As of September 30, 2024, there have been no material changes to our contractual obligations as previously disclosed in our Prospectus.

Current wording

Operating lease commitments. Our operating lease commitments primarily include corporate offices. As of March 31, 2025, there have been no material changes to our contractual obligations since previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

Purchase commitments. Our purchase commitments are primarily related to software licenses and engineering services. As of September 30, 2024, there have been no material changes to our contractual obligations as previously disclosed in our Prospectus.

Current wording

Purchase commitments. Our purchase commitments are primarily related to software licenses, cloud hosting services, or performance of certain services. As of March 31, 2025, there have been no material changes to our contractual obligations since previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

There have been no material changes to our critical accounting policies and estimates as described in our Prospectus.

Current wording

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2024.