POWER INTEGRATIONS INC
For the period ended Mar 31, 2026. Filed May 7, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 7, 2026
POWI$40.26+3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0000833640-25-000190
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0000833640-26-000078
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 75 previous paragraphs and 58 current paragraphs.
11 unchanged; 27 reworded; 19 added; 37 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 13 previous and 41 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements. Factors that could cause actual results to differ materially from those predicted include, but are not limited to:
Current report
Power Integrations is a leading innovator in semiconductor technologies for high-voltage power conversion. Our products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts.
Current report
Our gross margin was 53% for the three months ended March 31, 2026 and 55% in the corresponding period in 2025. The decrease in gross margin was primarily due to the unfavorable impact of the dollar/yen exchange rate and restructuring related costs.
Current report
Total operating expenses were $55.5 million and $51.5 million for the three months ended March 31, 2026 and 2025, respectively. The increase in operating expenses for the three-month period was primarily due to restructuring and related charges of $6.6 million for severance and benefit costs associated with the workforce reduction described in Note 4 of this report herein. These increases were offset in the three months ended March 31, 2026, by a $1.4 million credit in other operating expenses related to stock-based compensation expense associated with the changes in performance criteria measurement as described in Note 7 of this report herein.
Current report
Our management team continuously evaluates operations to better align our organization with market opportunities, increase operational efficiency, decrease costs and increase profitability. In connection with this, a restructuring plan was undertaken in the first quarter of 2026, reducing the Company’s workforce by approximately 7% to better align our expenses with revenue and create flexibility to invest in the products, people, and markets that are expected to drive long-term growth and profitability. As a result, we recognized restructuring charges of $6.6 million
Current report
during the first quarter of 2026, primarily composed of severance costs. The restructuring plan was substantially completed in the first quarter of 2026.
Current report
Capital Return Program. We remain committed to delivering stockholder value through our stock repurchase and dividend programs. Under future programs authorized by our Board of Directors, we may repurchase shares of our common stock in the open-market or through privately negotiated transactions. The extent to which we repurchase our stock and the timing of such repurchases will depend upon market conditions, legal rules and regulations and other corporate considerations, as determined by our management team.
Current report
During the three months ended March 31, 2026, we returned $12.0 million of capital to stockholders through the payment of cash dividends.
Current report
We continue to monitor the environment for potential long-term impact on supply and demand from tariffs.
Current report
The decrease in gross margin was primarily due to the unfavorable impact of the dollar/yen exchange rate and restructuring related costs.
Current report
R&D expenses increased for the three months ended March 31, 2026 as compared to the corresponding period of 2025. As described in Note 4 Restructuring of this report herein, $3.0 million of application engineer project costs have been recognized in the three months ended March 31, 2026 related to customer product development projects. This increase was partially offset bylower stock-based compensation expense and by lower equipment-related expenses.
Current report
SG&A expenses decreased forthe three months ended March 31, 2026 as compared to the corresponding period of 2025 primarily related to the restructuring actions taken in the three-months ended March 31, 2026 as described in Note 4 Restructuring of this report herein.
Current report
Restructuring and related charges. Restructuring and related charges were $6.6 million in the three months ended March 31, 2026. The charges were primarily related to severance and benefit costs associated with the workforce reduction described in Note 4 Restructuring.
Current report
In 2016, we entered into the Prior Credit Agreement with Wells Fargo Bank, National Association, which provided us with a $75.0 million revolving line of credit to use for general corporate purposes and a $20.0 million sub-limit for the issuance of standby and trade letters of credit with an interest rate based on SOFR. The Prior Credit Agreement had a term which originally extended to June 7, 2026; the Prior Credit Agreement was terminated on April 10, 2026. We were compliant with all covenants and had no advances outstanding under the Prior Credit Agreement as of termination of the Prior Credit Agreement.
Current report
On February 24, 2026, we entered into the PNC Loan Agreement to replace the Prior Credit Agreement, which became effective and available for use on April 10, 2026 when we terminated the Prior Credit Agreement. The PNC Loan Agreement provides us with a $100.0 million revolving line of credit with a $25.0 million sub-limit for the issuance of standby and trade letters of credit. The interest rate on outstanding borrowings under the PNC Loan Agreement is based on SOFR plus 1.60%. The Company’s obligations under the PNC Loan Agreement are unsecured. The PNC Loan Agreement term extends through February 24, 2031; all advances under the revolving line of credit, together with all accrued and unpaid interest, fees and other obligations owing thereon, will become due on such date, or earlier upon the occurrence of an Event of Default.
Current report
The PNC Loan Agreement requires us to maintain a Minimum Liquidity of at least $50.0 million as of the last day of each fiscal quarter and a ratio of Funded Indebtedness to Adjusted EBITDA of less than 2.00 to 1.00 as of the last day of each fiscal quarter and determined on a rolling four-quarter basis.
Current report
The PNC Loan Agreement contains representations and warranties, affirmative covenants and conditions precedent to borrowing usual and customary for credit agreements of this type. The PNC Loan Agreement contains negative covenants, including negative covenants that restrict, subject to certain exceptions, our ability to:
Current report
We were compliant with all covenants and had no advances outstanding under the PNC Loan Agreement as of April 10, 2026.
Current report
partially offset by a $4.1 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $3.1 million decrease in other accrued liabilities.
Removed paragraphs (37)
Previous report
We design, develop and market analog and mixed-signal integrated circuits (“ICs”) and other electronic components and circuitry used in high-voltage power conversion. Our products are used in power converters that convert electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa, reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer’s specifications.
Previous report
A large percentage of our products are ICs used in AC-DC power supplies, which convert the high-voltage AC from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating our products are used with all manner of electronic products including appliances, industrial controls, mobile devices such as smartphones, tablets and notebook computers, electronic utility meters, battery-powered tools, and “home-automation,” or “internet of things” applications such as networked thermostats, power strips and security devices. Variations of our power-supply ICs are used for high-voltage power conversion in electric vehicles (“EVs”). We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications.
Previous report
We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors (“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, electric locomotives, EVs and high-voltage DC transmission systems.
Previous report
Our power-conversion products are distinguished by their “system-level” nature; that is, they incorporate into a single product numerous elements of a power-conversion system including a high-voltage transistor, drivers, advanced control circuitry and, in some cases, a communication link connecting the primary (i.e., input) and secondary (i.e., output) sides of the power converter while maintaining safety isolation to protect the end user from exposure to high voltage. Alternatively, a power converter can be designed and assembled using discrete components purchased from a variety of suppliers.
Previous report
Our system-level products offer a number of important benefits compared with discrete designs, including: reduced design complexity; smaller size; lower component count, which in turn results in higher reliability and easier sourcing of components; reduced time-to-market; and more efficient use of engineering resources. Our products also reduce the energy consumption of power converters during normal use and in “standby” operation, when the end product is not in use. In addition to the environmental and economic benefits of reduced energy usage, our energy-saving technologies provide a number of benefits to our customers; these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky, costly heatsinks used to dissipate the heat produced by wasted electricity. By reducing component count, circuit-board size and the need for heatsinks, our products also contribute to a reduction in materials usage and electronic waste.
Previous report
While the size of our addressable market fluctuates with changes in macroeconomic and industry conditions, the market has generally exhibited a modest growth rate over time as growth in the unit volume of power converters has been offset to a large degree by reductions in the average selling price of components in this market. Therefore, the growth of our business depends largely on increasing our penetration of the markets that we serve and on further expanding our addressable market. Our growth strategy includes the following elements:
Previous report
Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address. For example, applications such as “smart” utility meters, battery-powered lawn equipment and bicycles, and USB power receptacles (often installed alongside traditional AC wall outlets) can incorporate our products. The increased use of connectivity, LED lighting and other power-consuming electronic features in consumer appliances has also enhanced our SAM.
Previous report
We have also expanded our SAM through the development of technologies and architectures that increase the value (and therefore the average selling prices) of our products. For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side. Our InnoMux™ IC families provide up to three DC outputs, eliminating the need for additional power-management circuitry in certain end products requiring multiple voltages while significantly increasing efficiency.
Previous report
We are developing additional products incorporating GaN transistors, which we believe will enable us to address higher-power applications than we address with our current range of products, and further expand our SAM as discussed above. We expect such applications to include power supplies used in data centers delivering artificial intelligence (AI) services, in communications network infrastructure equipment and in onboard-charging circuitry for EVs, among others.
Previous report
Additionally, we are developing GaN technologies capable of supporting higher power output than today’s GaN devices, with an aim of developing products to address power-switching modules in EV drivetrains, which currently incorporate SiC and IGBT modules. In July 2024 we acquired the assets of Odyssey Semiconductor, a developer of so-called vertical GaN technology, in an effort to accelerate our development of higher-power GaN devices. We believe the development of such technologies will take several years to complete.
Previous report
We intend to continue expanding our SAM in the years ahead through all of the means described above.
Previous report
Our quarterly operating results are difficult to predict and subject to significant fluctuations. We plan our production and inventory levels based on internal forecasts of projected customer demand, which are highly unpredictable and can fluctuate substantially. Customers typically may cancel or reschedule orders on short notice without significant penalty and, conversely, often place orders with very short lead times to delivery. Changes in trade policies among the United States and other countries, in particular the escalation of trade tensions and higher tariffs as well as the imposition of other barriers to international trade could reduce demand for end products that incorporate our integrated circuits which could adversely affect our business and operating results. See also our risk factor under Part II, Item 1A captioned, “Changes in trade policies among the United States and other countries, in particular the escalation and imposition of new and higher tariffs and additional export controls, could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results. Further, increased tariffs or the imposition of other barriers to international trade could place pressure on our prices as our customers seek to offset the impact of increased tariffs on their own products. Compliance with import and export controls could impair our ability to compete in international markets or subject us to liability if we violate these controls.” Also, external factors such as supply-chain dynamics, widespread health emergencies, and macroeconomic conditions including inflation, fluctuations in interest and exchange rates and bank failures, have caused and can continue to cause our operating results to be volatile. Furthermore, because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate. Because we purchase a large percentage of our silicon wafers from foundries located in Japan, our gross margin is influenced by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen. Changes in the prices of raw materials used in our products, such as copper and gold, can also affect our gross margin. Although our wafer fabrication and assembly operations are outsourced, as are most of our test operations, a portion of our production costs are fixed in nature. As a result, our unit costs and gross margin are impacted by the volume of units we produce.
Previous report
Recent Results
Previous report
Our gross margin was 55% for both the three months ended September 30, 2025 and the corresponding period in 2024. Our gross margin was 55% and 53% for the nine months ended September 30, 2025 and 2024, respectively. The increase in gross margin for the nine-month period was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets.
Previous report
Total operating expenses were $68.8 million and $51.6 million for the three months ended September 30, 2025 and 2024, respectively, and $185.6 million and $153.5 million for the nine months ended September 30, 2025 and 2024, respectively. The increases in operating expenses for the three- and nine-month periods were primarily due to higher stock-based compensation expense as a result of an award modification associated with the retirement of our former chief executive officer (refer to Note 6,Stock-Based Compensation, in our Notes to Unaudited Condensed Consolidated Financial Statements for details) as well as higher expenses for outside engineering services and legal services.
Previous report
Additionally, for the three- and nine-month period, we incurred expenses related to an employee litigation matter (refer to Note 13,Legal Proceedings and Contingencies, in our Notes to Unaudited Condensed Consolidated Financial Statements for details).
Previous report
The following customers represented 10% or more of our net revenues for the respective periods:
Previous report
*Total customer revenue was less than 10% of net revenues.
Previous report
No other customers accounted for 10% or more of our net revenues in these periods.
Previous report
The increase in gross margin in the nine-month period was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets.
Previous report
R&D expenses increased for the three and nine months ended September 30, 2025 as compared to the corresponding periods of 2024. The increases for the three- and nine-month periods were primarily due to higher salaries and related expenses as well as increased outside engineering services. The increase for the nine-month period was partially offsetby lower stock-based compensation expense.
Previous report
*Sales and marketing expenses.*Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as facilities expenses, including expenses associated with our regional sales and support offices. The following table below compares S&M expenses for the three and nine months ended September 30, 2025 and 2024:
Previous report
S&M expenses increased forthe three and nine months ended September 30, 2025 as compared to the corresponding periods of 2024. The increases for the three- and nine-month periods were primarily due to increased employee-related expenses. The increase for the nine-month period was partially offset by lower stock-based compensation expense.
Previous report
G&A expenses increased for the three and nine months ended September 30, 2025 as compared to the corresponding periods of 2024. The increase for the three-month period was primarily due to increased professional and legal services partially offset by lower stock-based compensation expense. In addition, we recognized a credit in the three months ended September 30, 2024 related to the recovery of bad debt. The increase for the nine-month period was primarily due to increased professional and legal services and higher stock-based compensation expense related to performance-based awards.
Previous report
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes provisions modifying the corporate income tax code, including the immediate expensing of domestic research and development expenditures for tax purposes, 100% bonus depreciation for qualified assets, and an increase in the statutory tax rate on foreign earnings from 10.5% to 12.6% (effective in the fiscal year 2026). We have elected to account NCTI, formerly known as Global Intangible Low-Taxed Income, under the deferred method. The deferred tax amounts recorded are based on the evaluation of temporary differences that are expected to reverse as NCTI is incurred in future periods. As a result, we remeasured our estimated deferred tax balances related to NCTI for the changes in the tax rate and recorded an expense of $0.5 million during the third quarter of 2025.
Previous report
We have a Credit Agreement with Wells Fargo Bank, National Association (the “Credit Agreement”) that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit. The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022, to June 7, 2026, with all other terms remaining the same. The Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured Overnight Financing Rates as interest rate benchmark rates, with all other terms remaining the same. Our ability to borrow under the revolving line of credit is conditioned upon our compliance with specified covenants, including reporting and financial covenants, primarily a minimum liquidity measure and a debt to earnings ratio, with which we are currently in compliance. The Credit Agreement terminates on June 7, 2026; all advances under the revolving line of credit will become due on such date, or earlier in the event of a default. As of September 30, 2025, we had no advances outstanding under the Credit Agreement.
Previous report
Dividends
Previous report
In October 2023, our board of directors declared dividends of $0.20 per share to be paid to stockholders of record at the end of each quarter in 2024.
Previous report
In October 2024, our board of directors raised the cash dividend with the declaration of five cash dividends of $0.21 per share to be paid at the end of the fourth quarter in 2024 (in lieu of the previously declared dividend of $0.20 per share announced in October 2023) and at the end of each quarter in 2025.
Previous report
In October 2025, our board of directors raised the quarterly cash dividend with the declaration of four cash dividends of $0.215 per share to be paid at the end of each quarter in 2026.
Previous report
Dividend payouts of $12.0 million, $11.8 million, and $11.8 million occurred on March 31, 2025, June 30, 2025 and September 30, 2025, respectively. The declaration of any future cash dividend is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.
Previous report
Stock Repurchases
Previous report
Over the years, our board of directors has authorized the use of funds to repurchase shares of our common stock. As of December 31, 2024, we had $48.1 million available under a stock-repurchase program announced in November 2024. After this authorization was exhausted in April 2025, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines in compliance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. In the three months ended September 30, 2025, we repurchased 0.9 million of our shares for $42.4 million. In the nine months ended September 30, 2025, we repurchased 2.0 million of our shares for $98.1 million, exhausting our repurchase authorization. Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
Previous report
Contractual Commitments
Previous report
As of September 30, 2025, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2024.
Previous report
Recent Accounting Pronouncements
Previous report
Information with respect to this item may be found in Note 2,Significant Accounting Policies and Recent Accounting Pronouncements, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
Reworded paragraphs (27)
Previous wording
The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of operations. It should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management’s discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 7, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, and in Part II, Item 1A - “Risk Factors” and elsewhere in this report. See also “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report.
Current wording
The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of operations. It should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management’s discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 6, 2026. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the caption “Risk Factors” included in this report. See also “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report.
Previous wording
Our net revenues were $118.9 million and $115.8 million in the three months ended September 30, 2025 and 2024, respectively, and $340.3 million and $313.7 million in the nine months ended September 30, 2025 and 2024, respectively. The increases in net revenues for the three- and nine-month periods were primarily due to higher sales in the industrial end-market.
Current wording
Our net revenue was $108.3 million and $105.5 million in the three months ended March 31, 2026 and 2025, respectively. The increase in net revenue for the three-months period was primarily due to higher sales in the industrial end-market.
Previous wording
Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 81% of our net revenues for each of the three and nine months ended September 30, 2025 and approximately 78% for both of the corresponding periods of 2024. International sales accounted for approximately 98% and 99% of our net revenues for the three and nine months ended September 30, 2025, respectively, and 98% for both of the corresponding periods of 2024.
Current wording
Our top ten customers, including distributors that resell to OEMs and merchant power-supply manufacturers, accounted for approximately 80% of our net revenue for both of the three months ended March 31, 2026 and 2025. International sales accounted for approximately 98% and 99% of our net revenue for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those listed below. We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates.
Current wording
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those listed below. We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates.
Previous wording
The following table sets forth certain operating data as a percentage of net revenues for the periods indicated:
Current wording
The following table sets forth certain operating data as a percentage of net revenue for the periods indicated:
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
*Net revenues.*Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three and nine months ended September 30, 2025 were $118.9 million and $340.3 million, respectively, and $115.8 million and $313.7 million, respectively, in the corresponding periods of 2024. The increases in net revenues for the three- and nine-month periods were due primarily to higher sales in the industrial end-market.
Current wording
*Net revenue.*Net revenue consists of revenue from product sales, net of returns and allowances. Net revenue for the three months ended March 31, 2026 was $108.3 million compared to $105.5 million in the corresponding period of 2025. The increase was due primarily to higher sales in the industrial end-market.
Previous wording
Our revenue mix by end market for the three and nine months ended September 30, 2025 and 2024 was as follows:
Current wording
Our revenue mix by end market for the three months ended March 31, 2026 and 2025 was as follows:
Previous wording
International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $117.1 million and $335.3 million in the three and nine months ended September 30, 2025, respectively, and $114.1 million and $308.7 million, respectively, in the corresponding periods of 2024. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented approximately 83% and 84% of our net revenues in the three and nine months ended September 30, 2025, respectively, and approximately 85% and 84%, respectively, in the corresponding periods of 2024. We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenues in the future.
Current wording
International sales, consisting of sales outside of the United States based on “bill to” customer locations, were $106.5 million in the three months ended March 31, 2026, and $104.2 million in the corresponding period of 2025. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented approximately 80% of our net revenue in the three months ended March 31, 2026, and 84% in the corresponding period of 2025. We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenue in the future.
Previous wording
Sales to distributors accounted for approximately 69% and 70% of our net revenues in the three and nine months ended September 30, 2025, respectively, and approximately 70% in both of the corresponding periods of 2024. Direct sales to OEMs and merchant power supply manufacturers accounted for the remainder.
Current wording
Sales to distributors accounted for approximately 71% of our net revenue in both of the three months ended March 31, 2026 and 2025. Direct sales to OEMs and merchant power-supply manufacturers accounted for the remainder.
Previous wording
*Gross profit.*Gross profit is net revenues less cost of revenues. Our cost of revenues consists primarily of the purchase of wafers from our contracted foundries, the assembly, packaging and testing of our products by sub-contractors, product testing performed in our own facility, overhead associated with the management of our supply chain and the amortization of acquired intangible assets. Gross margin is gross profit divided by net revenues. The following table compares gross profit and gross margin for the three and nine months ended September 30, 2025 and 2024:
Current wording
*Gross profit.*Gross profit is net revenue less cost of revenue. Our cost of revenue consists primarily of the purchase of wafers from our contracted foundries, the assembly, packaging and testing of our products by sub-contractors, product testing performed in our own facility, overhead associated with the management of our supply chain and the amortization of acquired intangible assets. The following table compares gross profit and gross margin for the three months ended March 31, 2026 and 2025:
Previous wording
*Research and development expenses.*Research and development (“R&D”) expenses consist primarily of employee-related expenses including salaries and stock-based compensation, as well as expensed material and facility costs associated with the development of new processes and products. We also record R&D expenses for prototype wafers related to new products until the products are released to production. The following table compares R&D expenses for the three and nine months ended September 30, 2025 and 2024:
Current wording
*Research and development expenses.*Research and development (“R&D”) expenses consist primarily of employee-related expenses including salaries and stock-based compensation, as well as expensed material and facility costs associated with the development of new processes and products. We also record R&D expenses for prototype wafers related to new products until the products are released to production. The following table compares R&D expenses for the three months ended March 31, 2026 and 2025:
Previous wording
*General and administrative expenses.*General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation expenses for administration, finance, human resources and general management, as well as consulting, professional services, legal and auditing expenses. The following table below compares G&A expenses for the three and nine months ended September 30, 2025 and 2024:
Current wording
*Selling, General and Administrative.*Selling, general and administrative (“SG&A”) expenses consist primarily of employee‑related expenses, including salaries, commissions and stock‑based compensation for personnel across our sales representatives, administration, finance, human resources, and general management functions. SG&A expenses also include facilities‑related costs associated with our regional sales and support offices, as well as consulting, professional
Previous wording
Other operating expenses. Other operating expenses were $14.3 million and $23.4 million in the three and nine months ended September 30, 2025, respectively. For the three- and nine-month periods we recognized expenses of $0.7 million and $9.9 million, respectively, stemming from an employee litigation matter (refer to Note 13,Legal Proceedings and Contingencies, in our Notes to Unaudited Condensed Consolidated Financial Statements for details). In addition, for the three-month period, we recognized stock-based compensation expense of $13.6 million as a result of an award modification associated with the retirement of our former chief executive officer (refer to Note 6,Stock-Based Compensation, in our Notes to Unaudited Condensed Consolidated Financial Statements for details).
Current wording
Other operating expenses. Other operating expenses were a credit of $1.4 million in the three months ended March 31, 2026 related to the equity award modification associated with the retirement of our former chief executive officer (refer to Note 7,Stockholders’ Equity, in our Notes to Unaudited Condensed Consolidated Financial Statements for details).
Previous wording
Other income. Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other investments, and the impact of foreign exchange gains or losses. The table below compares other income for the three and nine months ended September 30, 2025 and 2024:
Current wording
Other income. Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other short-term investments, and the impact of foreign exchange gains or losses. The table below compares other income for the three months ended March 31, 2026 and 2025:
Previous wording
Other income decreased for the three and nine months ended September 30, 2025 as compared to the corresponding periods of 2024 primarily due to lower interest income.
Current wording
Other income decreased for the three months ended March 31, 2026 as compared to the corresponding period of 2025 primarily due to lower interest income.
Previous wording
Provision (benefit) for income taxes. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three and nine months ended September 30, 2025 and 2024:
Current wording
Provision for income taxes. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three months ended March 31, 2026 and 2025:
Previous wording
Our effective tax rates for the three and nine months ended September 30, 2025, was (3.0%) and 10.5%, respectively, and in the corresponding periods of 2024 was 0.3% and 1.5%, respectively. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal tax credits. In the three and nine months ended September 30, 2025, our effective tax rate was negatively impacted by the recognition of a tax deficiency or “shortfall” related to share-based payments. Additionally, in the three and nine months ended September 30, 2024, our effective tax rate was favorably impacted by the recognition of excess tax benefits related to share-based payments andby discrete items associated with the release of unrecognized tax benefits. These benefits were partially offset by U.S. tax on foreign income, known as Net Controlled Foreign Corporation Tested Income (“NCTI”). The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction. Income earned in other foreign jurisdictions was not material. We have not been granted any incentivized tax rates and do not operate under any tax holidays in any jurisdiction.
Current wording
Our effective tax rate for the three months ended March 31, 2026, was 15.8%, and 11.1% in the corresponding period of 2025. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal tax credits. In the three months ended March 31, 2026, our effective tax rate was affected by the recognition of a tax accounting shortfall associated with share-based payments. Additionally, in the three months ended March 31, 2025, our effective tax rate was unfavorably impacted by the recognition of share-based payments and foreign income subject to U.S. tax. We have not been granted any incentivized tax rates and do not operate under any tax holidays in any jurisdiction.
Previous wording
As of September 30, 2025, we had $241.9 million in cash, cash equivalents and short-term marketable securities, a decrease of $58.1 million from $300.0 million as of December 31, 2024. As of September 30, 2025, we had working capital, defined as current assets less current liabilities, of $385.0 million, a decrease of approximately $73.7 million from $458.7 million as of December 31, 2024.
Current wording
As of March 31, 2026, we had $257.2 million in cash, cash equivalents and short-term investments, an increase of $7.7 million from $249.5 million as of December 31, 2025. As of March 31, 2026, we had working capital, defined as current assets less current liabilities, of $391.8 million, an increase of approximately $3.8 million from $388.0 million as of December 31, 2025.
Previous wording
Operating activities generated $66.5 million of cash in the nine months ended September 30, 2024. Net income for this period was $23.1 million; we also incurred non-cash stock-based compensation expense, depreciation, increase in deferred tax assets, accretion of discount on marketable securities, and amortization of intangibles of $25.8 million, $25.6 million, $8.7 million, $1.3 million and $1.1 million, respectively. Sources of cash included a $5.6 million decrease in prepaid expenses and other assets and an increase of $1.9 million in accounts payable. These sources of cash were partially offset by a $4.5 million increase in inventories and a $1.5 million increase in accounts receivable due to timing of customer payments.
Current wording
Our operating activities generated $20.0 million of cash in the three months ended March 31, 2026. Net income for this period was $3.3 million; we also incurred non-cash depreciation, stock-based compensation expense, amortization of intangibles and accretion of discount on investments of $6.4 million, $6.3 million, $0.2 million and $0.2 million, respectively. Sources of cash included a $3.9 million decrease in inventories, a $3.8 million decrease in accounts receivable due to timing of receipts and $3.4 million decrease in prepaid expenses and other assets. These sources of cash were
Previous wording
Our operating activities generated $85.3 million of cash in the nine months ended September 30, 2025. Net income for this period was $8.8 million; we also incurred non-cash stock-based compensation expense, depreciation, accretion of discount on marketable securities and an increase in deferred tax assets of $40.0 million, $20.8 million, $0.8 million and $0.9 million, respectively. Sources of cash included a $9.2 million increase in taxes payable and accrued liabilities, a $6.0 million increase in accounts payable, a $5.2 million decrease in prepaid expenses and other assets and a $1.0 million decrease in inventories. These sources of cash were partially offset by $4.0 million increase in accounts receivable.
Current wording
Our operating activities generated $26.4 million of cash in the three months ended March 31, 2025. Net income for this period was $8.8 million; we also incurred non-cash stock-based compensation expense and depreciation of $8.7 million and $7.2 million, respectively. Sources of cash included a $4.7 million decrease in accounts receivable due to timing of receipts, an increase of $4.0 million in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $3.4 million decrease in prepaid expenses and other assets. These sources of cash were partially offset by a $3.9 million decrease in other accrued liabilities and a $3.5 million increase in inventories.
Previous wording
Our investing activities in the nine months ended September 30, 2024 resulted in$17.5 million net use of cash, primarily consisting of $14.2 million used for purchases of property and equipment (primarily production-related machinery and equipment) and $9.5 million for the Odyssey acquisition, partially offset by $6.2 million of proceeds from sales and maturities of marketable securities, net of purchases.
Current wording
Our investing activities in the three months ended March 31, 2026, resulted in a $6.2 million net use of cash, primarily consisting of $4.2 million for purchases of investments, net of sales and maturities and $2.0 million for purchases of property and equipment (primarily production-related machinery and equipment).
Previous wording
Our investing activities in the nine months ended September 30, 2025, generated $40.7 million of cash, primarily consisting of $57.9 million from sales and maturities of marketable securities, net of purchases, offset by $17.3 million for purchases of property and equipment—primarily production-related machinery and equipment.
Current wording
Our investing activities in the three months ended March 31, 2025, generated $4.5 million of cash, primarily consisting of $10.3 million from sales and maturities of investments, net of purchases, offset by $5.7 million for purchases of property and equipment (primarily production-related machinery and equipment).
Previous wording
Our financing activities in the nine months ended September 30, 2024 resulted in a $54.4 million net use of cash, consisting of $34.1 million for the payment of dividends to stockholders and $26.0 million for the repurchase of our common stock, partially offset by proceeds of $5.7 million from the issuance of shares through our employee stock purchase plan.
Current wording
Our financing activities in the three months ended March 31, 2026 resulted in a $9.3 million net use of cash, consisting of $12.0 million for the payment of dividends to stockholders, partially offset by proceeds of $2.7 million from the issuance of shares through our employee stock purchase plan.
Previous wording
Our financing activities in the nine months ended September 30, 2025 resulted in a $128.3 million net use of cash, consisting of $98.1 million for the repurchase of our common stock and $35.6 million for the payment of dividends to stockholders, partially offset by proceeds of $5.3 million from the issuance of shares through our employee stock purchase plan.
Current wording
Our financing activities in the three months ended March 31, 2025 resulted in a $32.3 million net use of cash, consisting of $23.1 million for the repurchase of our common stock and $12.0 million for the payment of dividends to stockholders, partially offset by proceeds of $2.8 million from the issuance of shares through our employee stock purchase plan.
Previous wording
Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions. Current U.S. tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes. Accordingly, as of September 30, 2025, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.
Current wording
Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions. Current U.S. tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes. Accordingly, as of March 31, 2026, our worldwide cash and short-term investments are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.
Previous wording
If our operating results deteriorate in future periods, either as a result of a decrease in customer demand or pricing pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from operations may be jeopardized. In that case, we may be forced to use our cash, cash equivalents and short-term investments, use our current financing or seek additional financing from third parties to fund our operations. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other cash requirements for at least the next 12 months. Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain but include funding our operations and additional capital expenditures.
Current wording
If our operating results deteriorate in future periods, either as a result of a decrease in customer demand or pricing pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from operations may be jeopardized. In that case, we may be forced to use our cash, cash equivalents and short-term investments, use our current financing or seek additional financing from third parties to fund our operations. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other cash requirements for at least the next 12 months. Our uses of cash beyond the next 12 months will depend on many uncertain factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, but include funding our operations and additional capital expenditures.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
services, legal and auditing expenses. The following table below compares SG&A expenses for the three months ended March 31, 2026 and 2025: