Astera Labs, Inc.

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 $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.

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$351.4 million for the six months ended June 30, 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

Gross margin decreased 250 bpsto 74.9%for the three months ended March 31, 2025 compared to 77.4% for the three months ended March 31, 2024. The decrease was primarily driven by product mix as we shipped more hardware modules.

Current wording

Gross margin decreased by 210 basis points (“bps”) and 230 bpsto 75.8% and 75.4%for the three and six months ended June 30, 2025, respectively, compared to 77.9% and 77.7%, respectively, for the same periods in 2024. The decrease for both periods was primarily driven by product mix as we shipped more hardware modules.

Previous wording

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

Current wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Previous 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.

Current wording

Total revenue increased $115.1 million, or 150%, and$209.3 million, or 147%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increase was primarily due to an increase in overall unit shipments driven by higher demand for our Aries, Scorpio, and Taurus products, as well as higher overall average selling prices resulting from an incremental mix of hardware modules and Scorpio products.

Previous 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.

Current wording

Total cost of revenue increased $29.4 million, or 173%, and$54.7 million, or 172%, for the three and six months ended June 30, 2025, respectively, compared to the same periods in 2024. The increase was primarily due to higher overall unit shipments and a shift in product mix, resulting from an incremental mix of hardware modules and Scorpio products.

Previous 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.

Current wording

Research and development expense increased $37.6 million, or 40%, for the six months ended June 30, 2025, compared to the same period in 2024. The increase was primarily due to a $26.2 million increase in personnel-related expenses resulting from a 96%increase in headcount, a $12.0 million in overall spending to support our R&D initiatives, a $1.0 million increase in professional service fees, and a $0.7 million increase in depreciation and amortization expense. The increase was partially offset by a decrease of$5.9 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

General and administrative expense decreased $2.5 million, or 10%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was primarily due to a$7.0 million decrease 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. The decrease was partially offset by a $3.0 million increase in personnel-related expenses as a result of a 59% increase in headcount, a $0.7 million increase in operating expenses primarily related to director and officer insurance premium in connection with becoming a publicly traded company, and a $0.5 million increase in professional services fees associated with the continued development of our public company infrastructure.

Current wording

General and administrative expense decreased $4.1 million, or 9%, for the six months ended June 30, 2025, compared tothe same period in 2024. The decrease was primarily due to a$13.2 million decrease 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. The decrease was partially offset by a $4.8 million increase in personnel-related expenses resulting froma 60% increase in headcount, a $2.7 million increase in other operating costs to support our business expansion primarily related to our new headquarters relocation, and a $1.1 million increase in professional services fees associated with the continued development of our public company infrastructure.

Previous 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.

Current wording

For the three and six months ended June 30, 2025, interest income increased $0.6 million, or 6%, and $8.5 million, or 66%, compared tothe same periods in 2024. The increase was primarily due to higher average balances of short-term investments and cash equivalents as a result of our IPO and cash flow from operations.

Previous 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.

Current wording

The benefit from income tax increased$16.7 million, or 276%, for the six months ended June 30, 2025, compared to the same period in 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, partially offset by capitalized research and development expenditures in accordance with Section 174 of the Internal Revenue Code.

Previous 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.

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 define non-GAAP operating margin as non-GAAP operating income divided by revenue. We have presented non-GAAP operating income and non-GAAP operating margin because we consider they are useful metrics 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. These metrics also provide 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 income (loss), the most directly comparable GAAP financial measure, to non-GAAP operating incomeis presented below:

Current wording

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

Previous 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.

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 June 30, 2025 and 2024, the non-GAAP tax rate was approximately 9% and 23%, respectively. For the six months ended June 30, 2025 and 2024, the non-GAAP tax rate was approximately 8% and 23%, respectively.

Previous 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.

Current wording

Since our inception, we have financed our operations primarily through proceeds from equity issuances including net proceeds from our IPO, and cash generated from the sale of our products. As of June 30, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1,065.1 million. Our principal use of cash is to fund our operations, invest in research and development, fund production equipment capital expenditures, and to support our overall growth.

Previous 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.

Current wording

While we have generated$145.9 million in cash flow from operating activities for the six months ended June 30, 2025, in prior years we generated significant losses from operations and negative cash flows from operating activities as reflected in our accumulated deficit of $125.8 millionas of June 30, 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 equipment, 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 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.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2025 of $145.9 million resulted primarily from a net income of $83.0 million and non-cash charges of $80.3 million primarily related to $77.9 million in stock-based compensation expense, partially offset by cash used in operating assets and liabilities of $17.5 million. Cash used in operating assets and liabilities during the period was primarily from a $18.5 million increase in prepaid expenses and other assets primarily related to tax receivable and accrued interest receivable on short-term investments, a $14.6 million increase in inventory primarily due to build up for anticipated demand, a $2.0 million decrease in operating lease liability, and a $1.6 million decrease in accrued expenses and other liabilities primarily due to accrued customer deposits and the timing of payments. The net cash flow used in operating assets and liabilities was partially offset by an increase of $14.5 million in accounts receivable due to higher product sales and the timing of customer payments and a $4.6 million increase in accounts payable mainly due to the timing of payments.

Previous 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.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2024 of $33.5 million resulted from non-cash charges of $143.6 million primarily related to $140.8 million in stock-based compensation expense, partially offset by a net loss of $100.5 million and cash used in operating assets and liabilities of $9.6 million. Cash used in operating assets and liabilities during the period was primarily from an increase of $13.9 million in accounts receivable due to higher product sales and the timing of customer payments, a $6.0 million increase in inventory primarily due to build up for anticipated demand, and a $5.4 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 $10.9 million increase in accrued expenses and other liabilities primarily due to accrued customer deposits and the timing of payments, and a $5.8 million increase in accounts payable primarily due to the timing of payments.

Previous 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.

Current wording

Net cash used ininvesting activities for the six months ended June 30, 2025 of $67.6 millionwas the result of $404.7 millionin purchases of marketable securities and $6.6 millionin purchases of property and equipment, partially offset by$343.6 million in proceeds from sales and maturities of marketable securities.

Previous 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.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 of$306.7 million was the result of$345.8 millionin purchases of marketable securities and$2.1 million in purchases of property and equipment. This was partially offset by$41.1 millionin proceeds from sales and maturities of marketable securities.

Previous 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.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 of $5.1 million was the result of $4.3 million in proceeds from the employee stock purchase plan and $0.8 million in proceeds from stock option exercises.

Previous 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.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024 of $649.2 million was the result of $672.2 million in proceeds from our IPO, net of underwriting discounts and commissions, and $1.9 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.

Previous 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.

Current wording

Operating lease commitments. Our operating lease commitments primarily include corporate offices. For additional discussion of our operating lease commitments, see Note 6 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous 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.

Current wording

Purchase commitments. Our purchase commitments are primarily related to software licenses, cloud hosting services, or performance of certain services. For additional discussion of our purchase commitments, see Note 7 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

For an additional discussion on our Material Cash Requirements, see “Note 6 - Commitments and Contingencies” in the Notes to the Unaudited Condensed Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

For additional discussion of our Material Cash Requirements, see Note 7 in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Previous wording

For more information, see Note 1 to our Unaudited Condensed Consolidated Financial Statementsset forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Current wording

For more information, see Note 1 in the notesto the unaudited condensed consolidated financial statementsset forth in Part I, Item 1 of this Quarterly Report on Form 10-Q.