MAXLINEAR INC

Previous wording

In the three months ended March 31, 2024, net revenue was $95.3 million, which was derived in part from sales of RF receivers and RF receiver SOC and connectivity solutions and intellectual property into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications. Our ability to achieve revenue growth in the future will depend, among other factors, on our ability to further penetrate existing markets; our ability to expand our target addressable markets by developing new and innovative products; changes in government trade policies; changes in export control regulations; and our ability to obtain design wins with device manufacturers, in particular manufacturers of data modems, and gateways for the broadband service provider, storage networking market, cable infrastructure market, industrial and automotive markets, and optical module and telecommunications infrastructure markets.

Current wording

In the six months ended June 30, 2024, net revenue was $187.3 million, which was derived in part from sales of RF receivers and RF receiver SOC and connectivity solutions and intellectual property into broadband operator voice and data modems and gateways and connectivity adapters, global analog and digital RF receiver products, radio and modem solutions into wireless carrier access and backhaul infrastructure platforms, high-speed optical interconnect solutions sold into optical modules for data-center, metro and long-haul networks, and high-performance interface and power management solutions into a broad range of communications, industrial, automotive and multi-market applications. Our ability to achieve revenue growth in the future will depend, among other factors, on our ability to improve revenue in key markets such as the broadband market which has experienced slower than expected recovery; our ability to further penetrate existing markets; our ability to expand our target addressable markets by developing new and innovative products such as researching, developing and designing capabilities for new solutions in advanced semiconductor process nodes such as 16nm and 5nm and beyond, and addressing challenges of capturing and processing high quality broadband communications and high-speed optical interconnect signals; changes in government trade policies; changes in export control regulations; our ability to carry on licensed activities with entities on the Entity List, which have been paused, delayed or halted by the U.S. Department of Commerce Bureau of Industry and Security, or BIS at certain times; and our ability to obtain design wins with device manufacturers, in particular manufacturers of data modems, and gateways for the broadband service provider, storage networking market, cable infrastructure market, industrial and automotive markets, and optical module and telecommunications infrastructure markets.

Previous wording

Products shipped to Asia accounted for 59% and 77% of net revenue during the three months ended March 31, 2024 and 2023, respectively, including 28% from products shipped to Hong Kong during the three months ended March 31, 2024 and 31% from products shipped to Hong Kong and 16% from products shipped to mainland China during three months ended March 31, 2023. Although a large percentage of our products is shipped to Asia, we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outside Asia. For example, revenue generated from sales of our products during the three months ended March 31, 2024 and 2023 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.

Current wording

Products shipped to Asia accounted for 68% and 74% of net revenue during the six months ended June 30, 2024 and 2023, respectively, including 31% from products shipped to Hong Kong during the six months ended June 30, 2024 and 31% from products shipped to Hong Kong and 14% from products shipped to mainland China during three months ended June 30, 2023. Although a large percentage of our products is shipped to Asia, we believe that a significant number of the systems designed by these customers and incorporating our semiconductor products are then sold outside Asia. For example, revenue generated from sales of our products during the six months ended June 30, 2024 and 2023 related principally to sales to Asian ODMs and contract manufacturers delivering products into European and North American markets. To date, all of our sales have been denominated in United States dollars.

Previous wording

A significant portion of our net revenue has historically been generated by a limited number of customers through both sales of our products, and consideration under intellectual property sale agreements. Sales of products to customers comprise both direct sales to customers and indirect sales through distributors. In the three months ended March 31, 2024, two customers accounted for 36% of our net revenue, and our ten largest customers collectively accounted for 75% of our net revenue, of which distributor customers accounted for 19% of our net revenue. For certain customers, we sell multiple products into disparate end user applications such as PON outdoor units, or PON ODUs, Wi-Fi routers, broadband gateways, and cable modems.

Current wording

A significant portion of our net revenue has historically been generated by a limited number of customers through sales of our products, as well as consideration under intellectual property sale agreements. Sales of products to customers comprise both direct sales to customers and indirect sales through distributors. In the three months ended June 30, 2024, one customer accounted for 15% of our net revenue, and our ten largest customers collectively accounted for 62% of our net revenue, of which distributor customers accounted for 19% of our net revenue. In the six months ended June 30, 2024, two customers accounted for 22% of our net revenue, and our ten largest customers collectively accounted for 65% of our net revenue, of which distributor customers accounted for 21% of our net revenue. For certain customers, we sell multiple products into disparate end user applications such as PON outdoor units, or PON ODUs, Wi-Fi routers, broadband gateways, and cable modems.

Previous wording

Inflation and uncertainty in customer demand and the worldwide economy has continued, and we could experience continued decline in our sales and revenues. In particular, we believe an economic slowdown and inventory oversupply in the channel could continue to add to volatility in managing the business. In addition, inventory oversupply could potentially lead to more inventory write-downs, including charges for any excess or obsolete inventory which could negatively impact our gross margins. However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time. As supplier lead times continue to stabilize, we have seen and expect to continue to see a more normalized demand-planning horizon. While we expect inventory to remain elevated in the near term, we expect channel inventory will continue to decline thereafter.

Current wording

Inflation and uncertainty in customer demand and the worldwide economy has continued, and we could experience continued volatility in our sales and revenues. Inventory oversupply could potentially lead to more inventory write-downs, including charges for any excess or obsolete inventory which could negatively impact our gross margins. However, the magnitude of such volatility on our business and its duration is uncertain and cannot be reasonably estimated at this time. As supplier lead times continue to stabilize, we have seen and expect to continue to see a more normalized demand-planning horizon.

Previous wording

During the year ended December 31, 2023, we entered into two plans of restructuring to reduce our workforce, or the Workforce Reductions. The Workforce Reductions were intended to align our operational needs with the changes in macroeconomic conditions and the demand environment while continuing to support the long-term business strategy by reducing our operating expenses. As a result of the Workforce Reductions, in the year ended December 31, 2023, we incurred $19.8 million in restructuring costs primarily related to severance costs and related expenses. During the three months ended March 31, 2024, we completed notification to the remaining affected employees of the Workforce Reductions, and incurred $22.6 million in restructuring costs, or a cumulative total of $42.4 million.

Current wording

During the year ended December 31, 2023, we entered into two plans of restructuring to reduce our workforce, or the 2023 Workforce Reductions. We are initiating a reduction in our workforce in July 2024, or the 2024 Workforce Reduction, which together with the 2023 Workforce Reductions are referred to collectively as the Workforce Reductions. The Workforce Reductions are intended to align our operational needs with the changes in macroeconomic conditions and the demand environment while continuing to support the long-term business strategy by reducing our operating expenses. As a result of the 2023 Workforce Reductions, in the year ended December 31, 2023, we incurred $19.8 million in restructuring costs primarily related to severance costs and related expenses. During the six months ended June 30, 2024, we completed notification to the remaining affected employees of the 2023 Workforce Reductions, and incurred $23.5 million in restructuring costs, or a cumulative total of $43.3 million.

Previous wording

Restructuring costs in the three months ended March 31, 2024 included $19.9 million in severance costs and related expenses, substantially all of which pertained to statutory severance benefits in the jurisdictions in which the terminated employees were employed, and $2.7 million in non-cash charges related to exiting facilities and writing off of assets. As of March 31, 2024, estimated restructuring costs remaining to be incurred for the restructuring plans pertain to write off of certain licenses and exiting of leased office space and are anticipated to occur in the remaining periods of 2024. The remaining restructuring costs are not expected to be material. The estimate of costs that we expect to incur, and the timing thereof, are subject to a number of assumptions and actual results may differ. We may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the Workforce Reductions.

Current wording

Restructuring costs in the six months ended June 30, 2024 included $19.8 million in severance costs and related expenses, substantially all of which pertained to statutory severance benefits in the jurisdictions in which the terminated employees were employed, and $3.7 million in non-cash charges related to exiting facilities and writing off of assets. As of June 30, 2024, we do not expect to incur a material amount of additional restructuring costs pertaining to the 2023 Workforce Reductions, and we estimate we will incur approximately $15 million to $20 million in cash severance and related costs pertaining to the 2024 Workforce Reduction. We expect to complete notifications to employees regarding the 2024 Workforce Reduction by the end of 2024. The estimate of costs that we expect to incur, and the timing thereof, are subject to a number of assumptions and actual results may differ. We may also incur other charges or cash expenditures not currently contemplated due to events that may occur as a result of, or associated with, the Workforce Reductions.

Previous wording

For a summary of our critical accounting policies and estimates, refer to Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the year ended December 31, 2023, which we filed with the Securities and Exchange Commission, or SEC, on January 31, 2024, or our Annual Report. There have been no material changes to our critical accounting policies and estimates during the three months ended March 31, 2024.

Current wording

For a summary of our critical accounting policies and estimates, refer to Management’s Discussion and Analysis section of our Annual Report on Form 10-K for the year ended December 31, 2023, which we filed with the Securities and Exchange

Previous wording

Net revenue decreased $153.2 million to $95.3 million for the three months ended March 31, 2024, as compared to $248.4 million for the three months ended March 31, 2023, primarily as a result of macroeconomic conditions impacting customer demand, including excess inventory in the channel built up following the supply shortages in 2022. The decrease in broadband net revenue of $48.6 million was driven by decreases in the volume of broadband SOC shipments in this category, partially offset by revenue from certain intellectual property sale agreements. The decrease in connectivity net revenue of $56.6 million was driven by decreased volume of shipments of certain products associated with residential broadband market decline, partially offset by revenue from certain intellectual property sale agreements. The decrease in net infrastructure revenues of $13.7 million was driven by a decrease in the volume of wireless backhaul product shipments, partially offset by revenue from certain intellectual property sale agreements. The decrease in industrial and multi-market net revenue of $34.3 million was driven by decreased volume of shipments of high-performance analog and component products. Price changes did not have a material impact to revenues period over period.

Current wording

Net revenue decreased $245.1 million to $187.3 million for the six months ended June 30, 2024, as compared to $432.4 million for the six months ended June 30, 2023, primarily as a result of macroeconomic conditions impacting customer demand, including excess inventory in the channel built up following the supply shortages in 2022. The decrease in broadband net revenue of $80.3 million was driven by decreases in the volume of broadband SOC shipments in this category, partially offset by revenue from certain intellectual property sale agreements. The decrease in connectivity net revenue of $81.2 million was driven by decreased volume of shipments of certain products associated with residential broadband market decline, partially offset by revenue from certain intellectual property sale agreements. The decrease in net infrastructure revenues of $31.2 million was driven by a decrease in the volume of wireless backhaul product shipments, partially offset by revenue from certain intellectual property sale agreements. The decrease in industrial and multi-market net revenue of $52.4 million was driven by decreased volume of shipments of component and high-performance analog products. Price changes did not have a material impact to revenues period over period.

Previous wording

Cost of net revenue decreased $62.1 million to $46.0 million for the three months ended March 31, 2024, as compared to $108.1 million for the three months ended March 31, 2023. The decrease was driven by a decreased volume of shipments as a result of macroeconomic conditions impacting customer demand for our products as described above under “Net Revenue.” Gross profit percentage declined for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, due to reduced absorption of intangible amortization and fixed costs.

Current wording

Cost of net revenue decreased $39.3 million to $41.8 million for the three months ended June 30, 2024, as compared to $81.1 million for the three months ended June 30, 2023. The decrease was driven by a decreased volume of shipments as a result of macroeconomic conditions impacting customer demand for our products as described above under “Net Revenue.” Gross profit percentage declined for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, due to reduced absorption of intangible amortization and fixed costs.

Previous wording

Research and development expense decreased $2.5 million to $64.8 million for the three months ended March 31, 2024, as compared to $67.3 million for the three months ended March 31, 2023. The decrease was driven by decreases in payroll and benefits expense of $6.0 million, CAD design tools expense of $2.1 million, outside services of $1.5 million, stock based compensation of $1.0 million, and depreciation expense of $0.7 million. These decreases were partially offset by a decrease in income from governmental R&D grants and joint R&D projects offsetting our R&D expense of $7.9 million, and increases in bonuses of $1.3 million. The decrease in payroll and benefits, outside services, and stock-based compensation are attributable to the Workforce Reductions and cost reduction measures. The decrease in CAD design tool and consulting expenses are due to timing of project completion. The decrease in depreciation expense is from acquired assets becoming fully amortized as they reached the end of their useful lives. The amount of income from governmental R&D grants and joint R&D projects varies from period to period depending on demand for such projects and availability of governmental R&D programs. The increase in bonus expense is due to improvement in year-to-date achievement against our annual operating plan relative to the prior year.

Current wording

Research and development expense decreased $16.6 million to $121.3 million for the six months ended June 30, 2024, as compared to $137.9 million for the six months ended June 30, 2023. The decrease was driven by decreases in payroll and benefits expense of $10.1 million, CAD design tools expense of $4.2 million, stock based compensation of $3.2 million, consulting expense of $2.1 million, prototype expense of $1.6 million, and depreciation expense of $1.5 million. These decreases were partially offset by the impact of lower governmental R&D grant income of $7.4 million offset against R&D expense. The decrease in payroll and benefits expense and stock-based compensation are attributable to the 2023 Workforce Reductions and cost reduction measures. The decrease in CAD design tool, consulting and prototype expenses are due to timing of project completion. The decrease in depreciation expense is from acquired assets becoming fully amortized as they reached the end of their useful lives. The decrease in R&D grant income is due to timing of governmental R&D grants and termination of certain programs during the first quarter of 2024 as a result of the 2023 Workforce Reductions. The amount of income from governmental R&D grants also varies from period to period depending on availability of governmental R&D programs.

Previous wording

Selling, general and administrative expense decreased $2.2 million to $36.5 million for the three months ended March 31, 2024, as compared to $38.7 million for the three months ended March 31, 2023. The decrease was a result of decreases in payroll and other benefits expense of $1.9 million, professional fees of $1.2 million, depreciation and amortization of $0.6 million and other miscellaneous expense of $0.8 million. These decreases were partially offset by increases in stock-based compensation of $1.7 million and bonuses of $0.7 million. The decreases in payroll and other benefits and other miscellaneous expenses are attributable to recent reductions in workforce and cost reduction measures. The decrease in professional fees is mainly due to decrease in merger and acquisition related fees following the termination of our merger with Silicon Motion. The decrease in depreciation and amortization is from assets becoming fully amortized as they reached the end of their useful lives. The increase in stock-based compensation expense is due to incremental grants to executives for retention purposes, while the increase in bonus expense is due to improvement in year-to-date achievement against our annual operating plan relative to the prior year.

Current wording

Selling, general and administrative expense decreased $2.3 million to $70.1 million for the six months ended June 30, 2024, as compared to $72.4 million for the six months ended June 30, 2023. The decrease was a result of decreases in payroll and other benefits expense of $2.5 million, professional fees of $2.3 million, depreciation and amortization of $1.0 million, and commissions of $0.7 million. These decreases were partially offset by an increase in stock based compensation of $4.0 million. The decreases in payroll and other benefits are attributable to the 2023 Workforce Reductions and other cost reduction measures. The decrease in professional fees is mainly due to decrease in merger and acquisition related fees following the termination of our merger with Silicon Motion. The decrease in depreciation and amortization is from assets becoming fully amortized as they reached the end of their useful lives. The decrease in commissions expense is due to decreased revenues. The increase in stock-based compensation expense is a result of incremental grants made to executives for retention purposes in the first quarter of 2024.

Previous wording

Impairment losses in the three months ended March 31, 2023 related to abandonment of certain intellectual property licenses.

Current wording

Impairment losses in the six months ended June 30, 2023 related to abandonment of certain intellectual property licenses.

Previous wording

Restructuring charges increased $18.0 million to $22.6 million for the three months ended March 31, 2024, compared to $4.6 million for the three months ended March 31, 2023. Restructuring charges for the three months ended March 31, 2024 included $19.9 million in employee severance and related charges related to reductions in our workforce and $2.1 million in charges related to reduction of space leased for office facilities. Substantially all of the employee severance-related charges in this period are estimated statutory severance benefits payable in the jurisdictions in which the terminated employees were employed. Restructuring charges for the three months ended March 31, 2023 included $4.6 million in employee severance and related charges related to reductions in our workforce.

Current wording

Restructuring charges increased $14.4 million to $23.5 million for the six months ended June 30, 2024, compared to $9.1 million for the six months ended June 30, 2023. Restructuring charges for the six months ended June 30, 2024 included $19.8 million in employee severance and related charges related to the 2023 Workforce Reductions and $3.0 million in charges related to reduction of space leased for office facilities. Substantially all of the employee severance-related charges in this period are estimated statutory severance benefits payable in the jurisdictions in which the terminated employees were employed. Restructuring charges for the six months ended June 30, 2023 included $8.9 million in employee severance and related charges related to the 2023 Workforce Reductions.

Previous wording

Interest and other income (expense), net changed by $2.7 million from expense of $2.2 million in the three months ended March 31, 2023 to expense of $0.5 million for the three months ended March 31, 2024. The change in interest and other income (expense), net was due to a foreign currency gain of $1.0 million in first quarter 2024 compared to a currency loss of $40 thousand in first quarter 2023, increase in interest income of $1.2 million on interest-bearing cash equivalents, and income of $0.6 million derived from privately held investments.

Current wording

Interest and other income (expense), net changed by $1.0 million from expense of $1.0 million in the six months ended June 30, 2023 to expense of $39 thousand for the six months ended June 30, 2024. The change in interest and other income (expense), net was due to an increase in interest income of $1.2 million on interest-bearing cash equivalents due to higher interest rates and a currency exchange gain of $1.5 million, partially offset by a decrease in gains on investments of $1.4 million and an increase in interest expense of $0.4 million as a result of higher interest rates.

Previous wording

The income tax benefit for the three months ended March 31, 2024 was $1.8 million compared to an income tax provision of $15.6 million for the three months ended March 31, 2023.

Current wording

The income tax benefit for the three months ended June 30, 2024 was $2.1 million compared to an income tax benefit of $0.4 million for the three months ended June 30, 2023.

Previous wording

The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the three months ended March 31, 2024 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including tax credits, stock based compensation, and tax shortfalls related to stock-based compensation.

Current wording

The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the six months ended June 30, 2024 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items, and stock based compensation, tax shortfalls related to stock-based compensation, and release of uncertain tax positions under ASC 740-10.

Previous wording

The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the three months ended March 31, 2023 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including a tax on global intangible low-taxed income, research and development credits, stock based compensation, excess tax benefits related to stock-based compensation, and the release of certain reserves for uncertain tax positions under ASC 740-10. The permanent tax item related to global intangible low-taxed income in this period also reflected legislative changes requiring the capitalization of research and experimentation costs, as well as limitations on the creditability of certain foreign income taxes.

Current wording

The difference between our effective tax rate and the 21.0% U.S. federal statutory rate for the six months ended June 30, 2023 primarily related to the mix of pre-tax income among jurisdictions, permanent tax items including a tax on global intangible low-taxed income, stock based compensation, excess tax benefits related to stock-based compensation, and the release of uncertain tax positions under ASC 740-10. The permanent tax item related to global intangible low-taxed income also reflected the then recent legislative changes requiring the capitalization of research and experimentation costs, as well as limitations on the creditability of certain foreign income taxes.

Previous wording

Our subsidiary in Singapore operates under certain tax incentives in Singapore, which are effective through March 2027. Under these incentives, qualifying income derived from certain sales of our integrated circuits is taxed at a concessionary rate over the incentive period. We also receive a reduced withholding tax rate on certain intercompany royalty payments made by our Singapore subsidiary during the incentive period. We recorded a tax benefit in the three months ended March 31, 2024 and 2023 at the incentive rate. The incentives are conditional upon our meeting certain minimum employment and investment thresholds within Singapore over time, and we may be required to return certain tax benefits in the event we do not achieve compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.

Current wording

Our subsidiary in Singapore operates under certain tax incentives in Singapore, which are effective through March 2027. Under these incentives, qualifying income derived from certain sales of our integrated circuits is taxed at a concessionary rate over the incentive period. We also receive a reduced withholding tax rate on certain intercompany royalty payments made by our Singapore subsidiary during the incentive period. We recorded income taxes in the six months ended June 30, 2024 and 2023 at the incentive rate. The incentives are conditional upon our meeting certain minimum employment and investment thresholds within Singapore over time, and we may be required to return certain tax benefits in the event we do not achieve compliance related to that incentive period. We currently believe that we will be able to satisfy these conditions without material risk.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $191.9 million, restricted cash of $1.0 million and net accounts receivable of $126.2 million. Additionally, as of March 31, 2024, our working capital, which we define as current assets less current liabilities, was $220.8 million. Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Collateral is generally not required for customer receivables. We limit our exposure to credit loss by placing our cash with high credit quality financial institutions. At times, such deposits may be in excess of insured limits. We have not experienced any losses on our deposits of cash and cash equivalents.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $185.1 million, restricted cash of $1.0 million and net accounts receivable of $84.9 million. Additionally, as of June 30, 2024, our working capital, which we define as current assets less current liabilities, was $207.3 million. Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Collateral is generally not required for customer receivables. We limit our exposure to credit loss by placing our cash with high credit quality financial institutions. At times, such deposits may be in excess of insured limits. We have not experienced any losses on our deposits of cash and cash equivalents.

Previous wording

We also use cash to pay down outstanding debt, repurchase our common stock under our stock repurchase plan, and from time to time, make investments. As of March 31, 2024, $125.0 million of principal was outstanding under a senior secured term B loan facility or the “Initial Term Loan under the June 23, 2021 Credit Agreement.” The Company also has available a senior secured revolving credit facility, in an aggregate principal amount of up to $100.0 million which remained undrawn as of March 31, 2024. The proceeds of the revolving facility may be used to finance the working capital needs and other general corporate purposes of the Company and its subsidiaries.

Current wording

We may also use cash to pay down outstanding debt and from time to time, make investments. As of June 30, 2024, $125.0 million of principal was outstanding under a senior secured term B loan facility or the “Initial Term Loan under the June 23, 2021 Credit Agreement.” The Company also has available a senior secured revolving credit facility, in an aggregate principal amount of up to $100.0 million which remained undrawn as of June 30, 2024. The proceeds of the revolving facility may be used to finance the working capital needs and other general corporate purposes of the Company and its subsidiaries.

Previous wording

Our planned capital expenditures as of March 31, 2024 were not material. Our consolidated balance sheet at March 31, 2024 included $5.5 million in other long-term liabilities for uncertain tax positions, some of which may result in cash payment and $15.0 million received from other parties for jointly funded research and development projects which will be recognized into income when the contingencies associated with the repayment conditions have been resolved. The future payments related to uncertain tax positions recorded as other long-term liabilities have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.

Current wording

$15.0 million received from other parties for jointly funded research and development projects which will be recognized into income when the contingencies associated with the repayment conditions have been resolved. The future payments related to uncertain tax positions recorded as other long-term liabilities have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.

Previous wording

We believe that our $191.9 million of cash and cash equivalents at March 31, 2024 will be sufficient to fund our projected operating requirements for at least the next twelve months. As of March 31, 2024, our indebtedness totaled $125.0 million, which consists of outstanding principal under the Initial Term Loan under the June 23, 2021 Credit Agreement. The June 23, 2021 Credit Agreement also provides the Company with the Revolving Facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of March 31, 2024. The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest, at the Company’s option, at a per annum rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50%, (y) the prime rate then in effect and (z) an adjusted SOFR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus an applicable margin of 1.25% or (ii) an adjusted SOFR rate, subject to a floor of 0.50%, plus an applicable margin of 2.25%. Loans under the Revolving Facility initially bear interest, at a per annum rate equal to either (i) a base rate (as calculated above) plus an applicable margin of 0.00%, or (ii) an adjusted SOFR rate (as calculated above) plus an applicable margin of 1.00%. Following delivery of financial statements for the Company’s fiscal quarter ending June 30, 2021, the applicable margin for loans under the Revolving Facility will range from 0.00% to 0.75% in the case of base rate loans and 1.00% to 1.75% in the case of SOFR rate loans, in each case, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter. The Company is required to pay commitment fees ranging from 0.175% to 0.25% per annum on the daily undrawn commitments under the Revolving Facility, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter. Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity on June 23, 2028. The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement.

Current wording

We believe that our $185.1 million of cash and cash equivalents at June 30, 2024 will be sufficient to fund our projected operating requirements for at least the next twelve months. As of June 30, 2024, our indebtedness totaled $125.0 million, which consists of outstanding principal under the Initial Term Loan under the June 23, 2021 Credit Agreement. The June 23, 2021 Credit Agreement also provides the Company with the Revolving Facility in an aggregate principal amount of up to $100.0 million, which remained undrawn as of June 30, 2024. The Initial Term Loan under the June 23, 2021 Credit Agreement has a seven-year term expiring in June 2028 and bears interest, at the Company’s option, at a per annum rate equal to either (i) a base rate equal to the highest of (x) the federal funds rate, plus 0.50%, (y) the prime rate then in effect and (z) an adjusted SOFR rate determined on the basis of a one-month interest period plus 1.00%, in each case, plus an applicable margin of 1.25% or (ii) an adjusted SOFR rate, subject to a floor of 0.50%, plus an applicable margin of 2.25%. Loans under the Revolving Facility initially bear interest, at a per annum rate equal to either (i) a base rate (as calculated above) plus an applicable margin of 0.00%, or (ii) an adjusted SOFR rate (as calculated above) plus an applicable margin of 1.00%. Following delivery of financial statements for the Company’s fiscal quarter ending June 30, 2021, the applicable margin for loans under the Revolving Facility will range from 0.00% to 0.75% in the case of base rate loans and 1.00% to 1.75% in the case of SOFR rate loans, in each case, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter. The Company is required to pay commitment fees ranging from 0.175% to 0.25% per annum on the daily undrawn commitments under the Revolving Facility, depending on the Company’s secured net leverage ratio as of the most recently ended fiscal quarter. Commencing on September 30, 2021, the Initial Term Loan under the June 23, 2021 Credit Agreement amortizes in equal quarterly installments equal to 0.25% of the original principal amount, with the balance payable at maturity on June 23, 2028. The June 23, 2021 Credit Agreement was amended on June 29, 2023 to implement a benchmark replacement.

Previous wording

Net cash provided by operating activities was $16.0 million for the three months ended March 31, 2024, compared to net cash provided by operating activities of $42.2 million three months ended March 31, 2023. The decline in operating cash flows was driven by a decline in revenue from decreased volume of shipments of our products as a result of macroeconomic conditions impacting customer demand for our products (as discussed under the heading, “Results of Operations,” above). Operating cash flows were also impacted by changes in our working capital, which increased $66.5 million, in particular, in the first quarter of 2024, we collected accounts receivable of $68.3 million, which was partially offset by payments against our price protection liability of $18.6 million and severance payments from the Workforce Reductions of $7.0 million.

Current wording

Net cash provided by operating activities was $13.3 million for the six months ended June 30, 2024, compared to net cash provided by operating activities of $72.7 million six months ended June 30, 2023. The decline in operating cash flows was driven by a decline in revenue from decreased volume of shipments of our products as a result of macroeconomic conditions impacting customer demand for our products (as discussed under the heading, “Results of Operations,” above). Operating cash flows were also impacted by changes in our working capital, which increased $79.2 million, in particular, in the first half of 2024, we collected accounts receivable of $164.2 million, which was partially offset by payments against our price protection liability of $33.3 million and severance payments from the 2023 Workforce Reductions of $17.7 million.

Previous wording

Net cash used in investing activities was $8.7 million for the three months ended March 31, 2024 and consisted of purchases of property and equipment of $8.3 million, and purchases of intangible assets of $0.4 million.

Current wording

Net cash used in investing activities was $14.5 million for the six months ended June 30, 2024 and consisted of purchases of property and equipment of $11.4 million, and purchases of intangible assets of $3.1 million.

Previous wording

Net cash used in investing activities was $15.5 million for the three months ended March 31, 2023 and primarily consisted of cash used in the acquisition of Company Y of $9.7 million and purchases of property and equipment of $5.2 million.

Current wording

Net cash used in investing activities was $28.2 million for the six months ended June 30, 2023 and consisted of cash used in acquisitions of Company X and Y of $12.4 million (including $2.7 million contingent consideration paid to shareholders of Company X), purchases of property and equipment of $10.3 million, and purchases of intangible assets of $5.5 million.

Previous wording

Our use of cash in financing activities, which was substantially comprised of minimum tax withholding paid on behalf of employees for restricted stock units for both periods, declined due to a smaller amount of restricted stock units released for bonuses and a decline in value of other stock-related awards released during the periods.

Current wording

Our use of cash in financing activities, which was comprised of minimum tax withholding paid on behalf of employees for restricted stock units for both periods, partially offset by net proceeds from issuance of common stock for stock-related awards to employees which declined due to a smaller amount of restricted stock units released for bonuses and a decline in value of other stock-related awards released during the periods.