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, $115.8 million in 2023, and $396.3 million in 2024, to $852.5 million in 2025. Our revenue was$700.8 million for the six months ended June 30, 2026, driven by a sizable increase in demand for our products.

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 $396.3 million in 2024 to $852.5 million in 2025. Our revenue was$1,285.7 million for the nine months ended September 30, 2026, driven by a sizable increase in demand for our products.

Previous wording

Gross margin decreased by 250 basis points (“bps”)to 73.3%for the three months ended June 30, 2026, compared to 75.8% for the same period in 2025.

Current wording

Gross margin decreased by 390 basis points (“bps”)to 72.3% and decreased by 220 bpsto 73.5%for the three and nine months ended September 30, 2026, respectively, compared to 76.2% and 75.7%for the same periods in 2025, respectively.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

Total revenue increased $200.5 million, or 104%, and $349.4 million, or 99%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, 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 $354.3 million, or 154%, and $703.7 million, or 121%, for the three and nine months ended September 30, 2026, compared to the same periods 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 an increase in overall average selling prices resulting from an increased mix of hardware modulesand Scorpio products, partially offset by lower average selling prices within certain other product families.

Previous wording

Total cost of revenue increased $58.5 million, or 126%, and$91.7 million, or 106%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, respectively, primarily due to higher unit shipments and shift in product mix cost.

Current wording

Total cost of revenue increased $107.4 million, or 196%, and$199.0 million, or 141%, for the three and nine months ended September 30, 2026, compared to the same periods in 2025, respectively, primarily due to higher unit shipments and shift in product mix cost.

Previous wording

Research and development expense increased $69.2 million, or 104%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $32.7 million increase in personnel-related costs resulting froman 118%increase in headcount, an $18.6 million increase in non-cash stock-based compensation expenses, and a $12.1 million increase in overall spending to support our R&D initiatives, which includes hardware design, software licensing, and cloud hosting services costs.

Current wording

Research and development expense increased $92.0 million, or 117%, for the three months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $32.6 million increase in personnel-related costs resulting froman 105%increase in headcount, a $27.7 million increase in non-cash stock-based compensation expenses, and a $24.3 million increase in overall spending to support our R&D initiatives, which includes hardware design, software licensing, and cloud hosting services costs.

Previous wording

Research and development expense increased $130.3 million, or 99%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $49.8 million increase in personnel-related costs resulting froma 102%increase in headcount, a $28.8 million increase in non-cash stock-based compensation expenses, and a $41.4 million increase in overall spending to support our R&D initiatives, which includes hardware design, software licensing, and cloud hosting services costs.

Current wording

Research and development expense increased $222.3 million, or 106%, for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $82.4 million increase in personnel-related costs resulting froma 103%increase in headcount, a $56.5 million increase in non-cash stock-based compensation expenses, and a $65.7 million increase in overall spending to support our R&D initiatives, which includes hardware design, software licensing, and cloud hosting services costs.

Previous wording

Sales and marketing expense increased by$7.8 million, or 42%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $4.9 million increase in personnel-related costs resulting from a 47% increase in headcount, and a $2.2 million increase in non-cash stock-based compensation expenses.

Current wording

Sales and marketing expense increased by$18.1 million, or 93%, for the three months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $10.3 million increase in non-cash stock-based compensation expenses and a $6.2 million increase in personnel-related costs resulting from a 63% increase in headcount.

Previous wording

Sales and marketing expense increased by$8.0 million, or 20%, for thesix months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $6.9 million increase in personnel-related costs resulting from a 113% increase in headcount.

Current wording

Sales and marketing expense increased by$26.0 million, or 44%, for thenine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $13.1 million increase in personnel-related costs resulting from a 47% increase in headcount and a $10.1 million increase in non-cash stock-based compensation expenses.

Previous wording

General and administrative expense increased $15.6 million, or 76%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due toa$6.4 million increasein non-cash stock-based compensation expenses, a $5.6 million increase in personnel-related costs resulting froma 79%increase in headcount, a $1.8 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $1.8 million increase in other operating costs to support our business expansion.

Current wording

General and administrative expense increased $13.2 million, or 60%, for the three months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $6.4 million increase in personnel-related costs resulting froma 84%increase in headcount, a$3.3 million increasein non-cash stock-based compensation expenses, a $1.1 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $1.5 million increase in other operating costs to support our business expansion.

Previous wording

General and administrative expense increased $19.5 million, or 46%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $7.3 million increase in personnel-related costs resulting froma 58%increase in headcount, a $4.5 million increase in non-cash stock-based compensation expense, a $4.3 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $3.0 million increase in other operating costs to support our business expansion.

Current wording

General and administrative expense increased $32.7 million, or 51%, for the nine months ended September 30, 2026 compared to the same period in 2025. The increase was primarily due to a $13.8 million increase in personnel-related costs resulting froma 65%increase in headcount, a $7.9 million increase in non-cash stock-based compensation expense, a $5.4 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $4.5 million increase in other operating costs to support our business expansion.

Previous wording

For the three and six months ended June 30, 2026, interest and other income increased $2.7 million, or 25%, and $3.8 million, or 18%, compared tothe same periods in 2025, respectively, primarily due to higher average balances of short-term investments and cash equivalents as a result of cash flow from operations, partially offset by lower interest rates.

Current wording

For the three and nine months ended September 30, 2026, interest and other income increased $1.5 million, or 13%, and $5.4 million, or 16%, compared tothe same periods in 2025, respectively, primarily due to higher average balances of short-term investments and cash equivalents as a result of cash flow from operations, partially offset by lower interest rates.

Previous wording

The benefit from income tax increased $49.7 million, or 8,876%, and$46.5 million, or 436%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to an increase in excess tax benefits related to equity compensation.

Current wording

The benefit from income tax increased $13.2 million, or 38%, for the nine months ended September 30, 2026, ascompared to the same period in 2025, primarily due to an increase in excess tax benefits related to equity compensation.

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 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.

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, non-GAAP operating margin, non-GAAP tax rate, 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, non-GAAP operating margin, non-GAAP tax rate, 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 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, charges 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.

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 they exclude the impact of non-cash stock-based compensation expense and acquisition-related costs, charges 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

(3) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of non-cash stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. While we maintain a valuation allowance for GAAP purposes, 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 June 30, 2026 and 2025, the non-GAAP tax rate was approximately 12% and 9%, respectively. For the six months ended June 30, 2026 and 2025, the non-GAAP tax rate was approximately 11% and 8%, respectively.

Current wording

(3) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of non-cash stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. While we maintain a valuation allowance for GAAP purposes, we no longer maintain a valuation allowance for non-GAAP purposes due to our cumulative tax profits on a non-GAAP basis. For the three months ended September 30, 2026 and 2025, the non-GAAP tax rate was approximately 11% and 18%, respectively. For the nine months ended September 30, 2026 and 2025, the non-GAAP tax rate was approximately 11% and 12%, 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 June 30, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1.3 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.

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 September 30, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1.4 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

We generated$162.3 million in cash flow from operating activities for the six months ended June 30, 2026 and retained earnings of $243.7 million as of June 30, 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.

Current wording

We generated$341.5 million in cash flow from operating activities for the nine months ended September 30, 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 was $162.3 million for the six months ended June 30, 2026, compared to$145.9 million for the comparable period in 2025. The $16.4 million increase in operating cash inflows was a result of a $150.4 million increase in net income, higher non-cash charges of $50.1 million, partially offset by an unfavorable change of $184.0 million from changes in operating assets and liabilities. The higher non-cash charges of $50.1 million were primarily due to a $35.0 million increase in stock-based compensation expense, a $10.2 million increase in warrants contra revenue, and a $5.1 million increase in depreciation and amortization. The unfavorable change of $184.0 million in operating assets and liabilities was predominantly attributable to (i) a $124.0 million unfavorable change in accounts receivable due to higher product sales and the timing of customer payments, (ii) a $38.6 million unfavorable change in inventory primarily resulting from per-unit inventory costs and inventory build up to support anticipated demand, and (iii) a $22.9 million unfavorable change in the prepaid expenses and other assets. These unfavorable changes were partially offset by a $1.4 million favorable change in accounts payable and accrued other liabilities primarily due to the timing of payments.

Current wording

Net cash provided by operating activities was $341.5 million for the nine months ended September 30, 2026, compared to$224.0 million for the comparable period in 2025. The $117.4 million increase in operating cash inflows was a result of a $242.2 million increase in net income, higher non-cash charges of $119.6 million, partially offset by a decrease of $244.3 million from changes in operating assets and liabilities. The higher non-cash charges of $119.6 million were primarily due to a $76.8 million increase in stock-based compensation expense, a $26.4 million increase in warrants contra revenue, and a $8.7 million increase in depreciation and amortization. The decrease of $244.3 million in operating assets and liabilities was predominantly attributable to (i) a $197.2 million increase in accounts receivable due to higher product sales and the timing of customer payments, and (ii) a $139.1 million increase in inventory primarily resulting from inventory build up to support anticipated demand. These increases were partially offset by a $91.9 million increase in accounts payable, accrued other liabilities, and prepaid expense primarily due to the timing of payments.

Previous wording

Net cash used in investing activities was $225.6 million for the six months ended June 30, 2026, compared to$67.6 million for the comparable period in 2025. The increase in cash used in investing activities of $157.9 million was primarily due to a $109.7 million decrease in proceeds from sales and maturities of marketable securities, a $69.2 million increase in payments related to business acquisitions, and a$21.5 million increase in purchases of property and equipment. These increases were partially offset by a$45.0 million decrease inpurchases of marketable securities.

Current wording

Net cash used in investing activities was $306.8 million for the nine months ended September 30, 2026, compared to$168.7 million for the comparable period in 2025. The increase in cash used in investing activities of $138.1 million was primarily due to a $166.9 million decrease in proceeds from sales and maturities of marketable securities, a $69.2 million increase in payments related to business acquisitions, and a$54.5 million increase in purchases of property and equipment. These increases were partially offset by a$154.5 million decrease inpurchases of marketable securities.

Previous wording

Net cash provided by financing activities was $7.1 million for the six months ended June 30, 2026, compared to$5.1 million for the comparable period in 2025. The increase in cash provided by financing activities of $2.0 million was primarily due to a $1.9 million increase in proceeds received from the employee stock purchase plan.

Current wording

Net cash provided by financing activities was $7.1 million for the nine months ended September 30, 2026, compared to$6.1 million for the comparable period in 2025. The increase in cash provided by financing activities of $1.0 million was primarily due to a $1.9 million increase in proceeds received from the employee stock purchase plan, partially offset by a $0.9 million decrease in stock option exercises.