Astera Labs, Inc.

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. Our products, which include Aries PCIe®/CXL®Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express (“PCIe”), Ethernet, and Compute Express Link (“CXL”), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.

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, shipping millions of devices across leading hyperscalers. Our products, which include Aries PCIe®/CXL®Smart DSP Retimers, Aries PCIe®/CXL® Smart Cable Modules™, Taurus Ethernet Smart Cable Modules™, Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express (“PCIe”), Ethernet, and Compute Express Link (“CXL”), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure.

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$581.9 million for the nine months ended September 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.

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, $115.8 million in 2023, $396.3 million in 2024, and to $852.5 million in 2025. Our revenue was$308.4 million for the three months ended March 31, 2026, driven by a sizable increase in demand for our products.

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

Total revenue increased $117.5 million, or 104%, and$326.7 million, or 128%, for the three and nine months ended September 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 increased mix of hardware modulesand Scorpio products.

Current wording

Total revenue increased $148.9 million, or 93%, for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to an increase in overall unit shipments driven by higher demand for our Scorpio, Aries, and Taurus products, as well as higher overall average selling prices resulting from an increased mix of hardware modulesand Scorpio products.

Previous wording

Total cost of revenue increased $29.6 million, or 117%, and$84.2 million, or 148%, for the three and nine months ended September 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 increased mix of hardware modulesand Scorpio products.

Current wording

Total cost of revenue increased $33.2 million, or 83%, for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to higher overall unit shipments and a favorable shift in product mix.

Previous wording

Research and development expense increased $65.9 million, or 46%, for the nine months ended September 30, 2025, compared to the same period in 2024. The increase was primarily due to a $46.1 million increase in personnel-related costs including $1.1 million of non-cash stock-based compensation expenses resulting from a 99%increase in headcount, a $12.1 million increase in overall spending to support our R&D initiatives, and a $4.4 million increase in other operating costs to support our business expansion.

Current wording

Research and development expense increased $61.1 million, or 95%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to a $29.3 million increase in overall spending to support our R&D initiatives, which includes hardware design, software license, and cloud hosting services costs, a $17.1 million increase in personnel-related costs and$10.2 million of non-cash stock-based compensation expenses resulting froma 90%increase in headcount, and $3.1 million increase in other operating costs to support our business expansion.

Previous wording

General and administrative expense decreased $0.7 million, or 3%, for the three months ended September 30, 2025, compared to the same period in 2024. The decrease was primarily due to a$5.3 million decrease in non-cash stock-based compensation expense, which resulted primarily from the recognition of time-based vesting of RSUs granted prior to our IPO. The decrease was partially offset by a $2.4 million increase in personnel-related expenses resulting froma 43% increase in headcount, a $1.2 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $0.7 million increase in other operating costs to support our business expansion.

Current wording

General and administrative expense increased $3.9 million, or 18%, for the three months ended March 31, 2026 compared to the same period in 2025. The increase was primarily due to a $2.5 million increase in professional services fees associated with the continued development of our public company infrastructure, a $1.8 million increase in personnel-related costs resulting froma 57%increase in headcount, a $1.5 million increase in other operating costs to support our business expansion. The increase was partially offset bya$1.9 million decrease in non-cash stock-based compensation expenses.

Previous wording

For the three months ended September 30, 2025, interest income increased $0.5 million, or 5%, compared tothe same period in 2024. The increase was primarily due to higher average balances of short-term investments and cash equivalents as a result of cash flow from operations.

Current wording

For the three months ended March 31, 2026, interest income increased $1.1 million, or 11%, compared tothe same period in 2025, primarily due to higher average balances of short-term investments and cash equivalents as a result of cash flow from operations.

Previous wording

The benefit from income tax increased$50.6 million, or 323%, for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to excess tax benefits related to equity compensation. The increase was partially offset by the decreased foreign-derived intangible income deduction and U.S. research and development credits from indirect effects of the OBBBA.

Current wording

The benefit from income tax decreased $3.2 million, or 32%, for the three months ended March 31, 2026 compared to the same period in 2025, primarily due to a decrease in excess tax benefits related to equity compensation.

Previous wording

We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude stock-based compensation expenses. The non-GAAP gross margin is non-GAAP gross profit divided by revenue. We have presented non-GAAP gross profit because we consider non-GAAP gross profit to be a useful metric for investors and other users of our financial information in evaluating our operating performance asit excludes the impact of stock-based compensation, acharge 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 tool to eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance.

Current wording

We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude non-cash stock-based compensation expenses. The non-GAAP gross margin is non-GAAP gross profit divided by revenue. We have presented non-GAAP gross profit because we consider non-GAAP gross profit to be a useful metric for investors and other users of our financial information in evaluating our operating performance asit excludes the impact of non-cash stock-based compensation, acharge 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 tool to 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 gross profit and gross margin, the most directly comparable GAAP financial measure, to non-GAAP gross profit and non-GAAP gross marginis presented below:

Current wording

A reconciliation of our GAAP gross profit and GAAP gross margin, the most directly comparable GAAP financial measures, to non-GAAP gross profit and non-GAAP gross marginis presented below:

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 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 them 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 RSUs 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.

Current wording

We define non-GAAP operating income as operating income presented in accordance with GAAP, adjusted to exclude non-cash stock-based compensation expenses and acquisition-related costs. 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 them useful metrics for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation expense and acquisition-related costs, a charge that can vary from period to period or are one time charges 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) and operating margin, the most directly comparable GAAP financial measure, to non-GAAP operating income and non-GAAP operating margin is presented below:

Current wording

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

Previous 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.

Current wording

We monitor non-GAAP net income for planning and performance measurement purposes. We define non-GAAP net income as net income presented in accordance with GAAP on our condensed consolidated statements of operations, excluding the impact of non-cash stock-based compensation expenses, acquisition-related costs, 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 income (loss), the most directly comparable GAAP financial measure, to our non-GAAP net incomeis presented below:

Current wording

A reconciliation of our GAAP net income, the most directly comparable GAAP financial measure, to our non-GAAP net incomeis 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 September 30, 2025 and 2024, the non-GAAP tax rate was approximately 18% and 15%, respectively. For the nine months ended September 30, 2025 and 2024, the non-GAAP tax rate was approximately 12% and 19%, respectively.

Current wording

(2) Incometax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of non-cash 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 cumulative tax profits on a non-GAAP basis. For the three months ended March 31, 2026 and 2025, the non-GAAP tax rate was approximately 11% and 7%, respectively.

Previous 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 September 30, 2025, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1,134.4 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.

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 March 31, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1.2 billion. Our principal use of cash is to fund our operations, invest in research and development, fund capital expenditures for production equipment, acquisitions of businesses or technologies, and to support our overall growth.

Previous wording

While we have generated$224.0 million in cash flow from operating activities for the nine months ended September 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 $34.6 millionas of September 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.

Current wording

We generated$74.6 million in cash flow from operating activities for the three months ended March 31, 2026 and a retained earnings of $90.6 million as of March 31, 2026. 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 nine months ended September 30, 2025 was $224.0 million, compared to$97.0 million for the comparable period in 2024. The $127.1 million increase in operating cash inflows was a result of a $282.3 million increase in net income, partially offset by both unfavorable change of $90.9 million from changes in operating assets and liabilities and lower non-cash charges of $64.4 million, primarily due to a $67.7 million decrease in stock-based compensation expense, partially offset by increased warrants contra revenue of $3.1 million. The $90.9 million of unfavorable changes in operating assets and liabilities was predominantly attributable to (i) a $51.8 million increase in the changes of the prepaid expenses and other assets primarily due to a higher income tax receivable from excess of tax benefits related to equity compensation and prepayment for a research and development vendor, (ii) a $44.5 million in unfavorable changes in accounts payables and accrued other liabilities primarily due to the timing of payments, and (iii) a $5.8 million increase in inventory primarily due to build up for anticipated demand. These unfavorable changes were partially offset by favorable changes of $13.0 million in accounts receivable due to higher product sales and the timing of customer payments.

Current wording

Net cash provided by operating activities for the three months ended March 31, 2026 was $74.6 million, compared to$10.5 million for the comparable period in 2025. The $64.1 million increase in operating cash inflows was a result of a $48.5 million increase in net income, higher non-cash charges of $12.3 million, and a favorable change of $3.3 million from changes in operating assets and liabilities. The higher non-cash charges of $12.3 million were primarily due to a $6.5 million increase in stock-based compensation expense, $2.6 million increase in depreciation and amortization, a $1.7 million increase in warrants contra revenue, and $1.3 million increase in accretion of discounts on marketable securities. The favorable change of $3.3 million in operating assets and liabilities was predominantly attributable to a $28.4 million favorable change in the prepaid expenses and other assets, and a $7.1 million favorable change in inventory. The favorable change was partially offset by (i) a $20.8 million unfavorable changes in accounts receivable due to higher product sales and the timing of customer payments, and (ii) a $11.4 million unfavorable change in accounts payables and accrued other liabilities primarily due to the timing of payments.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 was $168.7 million, compared to$666.1 million for the comparable period in 2024. The $497.5 million decrease in cash used in investing activities was primarily due to a $437.5 million increase in proceeds from sales and maturities of marketable securities, and a$60.5 million decrease inpurchases of marketable securities.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026 was $94.0 million, compared to$3.9 million for the comparable period in 2025. The $90.1 million increase in cash used in investing activities was primarily due to a $65.0 million increase associated with the acquisition of a business, a $53.7 million decrease in proceeds from sales and maturities of marketable securities, and a$3.0 million increase in proceeds used in purchase of property and equipment, partially offset by a$34.2 million decrease inpurchases of marketable securities.

Previous wording

Net cash provided by financing activities for the nine months ended September 30, 2025 was $6.1 million, compared to$650.2 million for the comparable period in 2024. The $644.1 million decrease in cash provided by financing activities was primarily due to a decrease of $667.4 million related to proceeds received from the IPO net of underwriting discounts and commissions and deferred offering costs, partially offset by a $20.1 million increase in tax withholding related to net share settlement of RSUs.

Current wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $0.1 million, compared to$0.4 million for the comparable period in 2025. The $0.3 million decrease in cash provided by financing activities was primarily due to a decrease related to proceeds received from exercises of stock options.

Previous 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.

Current wording

Operating lease commitments. Our operating lease commitments primarily include corporate offices. For an additional discussion of our operating lease commitments, see Note 7 - Leases 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. 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.

Current wording

Purchase commitments. Our purchase commitments are primarily related to software licenses, cloud hosting services, or performance of certain services. For an additional discussion of our purchase commitments, see Note 8 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 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.

Current wording

For an additional discussion of our Material Cash Requirements, see Note 8 - 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.

Previous 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.

Current wording

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