SITIME Corp

Previous wording

Our Precision Timing solutions are designed to be resilient to harsh environmental stressors. For the communications, datacenter and enterprise market, our products provide high performance and resilience in dense, less-controlled environments that experience extreme conditions. The resilience of our products becomes an increasing advantage as equipment is placed in dense, harsh environments and moves closer to the customer with the rollout of 5G, the rapid expansion in cloudification, and deployment of hyperscale datacenters. For the automotive market, our solutions can be utilized in automotive electronics, including advanced driver assistance systems (“ADAS”) for self-driving cars, which require increased timing accuracy. For the industrial market, our products offer programmability and high reliability for the diverse operating conditions of industrial equipment, including high temperatures, mechanical shock, and vibration. For the aerospace market, our solutions provide lower acceleration sensitivity for end products that operate in rugged conditions. For the mobile, IoT and consumer market, our timing solutions have the advantage of offering high performance at optimal power consumption and size, as our customers fit more functionality into smaller devices.

Current wording

Our Precision Timing solutions are designed to be resilient to harsh environmental stressors. For the communications, datacenter and enterprise market, our products provide high performance and resilience in dense, less-controlled environments that experience extreme conditions. The resilience of our products becomes an increasing advantage as equipment is placed in dense, harsh environments and moves closer to the customer with the rollout of 5G, the rapid expansion in cloudification, and deployment of hyperscale datacenters. For the automotive market, our solutions can be utilized in automotive electronics, including advanced driver assistance systems for self-driving cars, which require increased timing accuracy. For the industrial market, our products offer programmability and high reliability for the diverse operating conditions of industrial equipment, including high temperatures, mechanical shock, and vibration. For the aerospace market, our solutions provide lower acceleration sensitivity for end products that operate in rugged conditions. For the mobile, IoT and consumer market, our timing solutions have the advantage of offering high performance at optimal power consumption and size, as our customers fit more functionality into smaller devices.

Previous wording

We believe that the total timing market is approximately $10 billion in size. Since our founding, we have focused on transforming this market with compelling solutions that solve difficult timing problems. Historically, our revenue has been substantially delivered from sales of oscillator systems across our target end markets. Since our initial public offering ("IPO") in November 2019, we’ve grown from 60 to 150 unique products and the price of our highest-value oscillator has grown manyfold. In addition to oscillators, we have expanded our product portfolio to include clock IC and timing synchronization solutions.

Current wording

We believe that the total timing market is approximately $10 billion in size. Since our founding, we have focused on transforming this market with compelling solutions that solve difficult timing problems. Historically, our revenue has been substantially delivered from sales of oscillator systems across our target end markets. Since our initial public offering ("IPO") in November 2019, we have grown from 60 to 150 unique products and the price of our highest-value oscillator has grown manyfold. In addition to oscillators, we have expanded our product portfolio to include clock IC and timing synchronization solutions.

Previous wording

Since our IPO in November 2019, while our revenue has grown, gross margins have improved, and new opportunities for growth for our business have emerged, adverse macroeconomic events including geopolitical tensions and conflicts have substantially increased. In 2020 and 2021, there were a number of industry-wide supply constraints affecting the supply of analog circuits manufactured by certain foundries, including Taiwan Semiconductor Manufacturing Company ("TSMC"), and affecting outsourced semiconductor assembly and test providers. We believe that the effects of the industry-wide supply constraints on other timing device suppliers contributed in part to our revenue and gross margin growth in 2021 and the first half of 2022. In 2022 and 2023 macroeconomic events such as rising inflation, fear of recession, equity market volatility, geopolitical tensions, war, decreased consumer spending, lower demand for electronic products following a period of strong demand during the COVID-19 pandemic, supply chain disruptions, and the COVID-19 pandemic measures implemented in China, harmed sales of our products and results of operations. We believe that some of our customers built up inventory of our products in 2022 to overcome the industry-wide supply constraints that occurred in the previous periods and that the macroeconomic events in the second half of 2022 and through 2023 led to reduced demand for our customers' products, which led to an inventory buildup at some of our customers and their affiliates, partners and contract manufacturers, which has adversely affected sales of our products. We believe that while this inventory buildup has reduced through the second half of 2023 and in 2024, any further increase could negatively impact the sales of our products and could result in decreases in our sales and margins, and could materially harm our results of operations. The future effects of macroeconomic events on our business and results of operations, including inventory levels at our customer and their affiliates, partners, and contract manufacturers as well as demand for our products, are uncertain and difficult to predict. For additional discussion please see Part II, Item 1A "Risk Factors" of this report, especially the risk factor titled “Global macroeconomic conditions have harmed and may continue to harm our business” and “Our revenue and operating results may fluctuate from period to period, which could cause our stock price to fluctuate.”

Current wording

Since our IPO in November 2019, while our revenue has grown, gross margins have improved, and new opportunities for growth for our business have emerged, adverse macroeconomic events including geopolitical tensions and conflicts have substantially increased. In 2020 and 2021, there were a number of industry-wide supply constraints affecting the supply of analog circuits manufactured by certain foundries, including Taiwan Semiconductor Manufacturing Company ("TSMC"), and affecting outsourced semiconductor assembly and test providers. We believe that the effects of the industry-wide supply constraints on other timing device suppliers contributed in part to our revenue and gross margin growth in 2021 and the first half of 2022. In 2022 and 2023, macroeconomic events such as rising inflation, fear of recession, equity market volatility, geopolitical tensions, war, decreased consumer spending, lower demand for electronic products following a period of strong demand during the COVID-19 pandemic, supply chain disruptions, and the COVID-19 pandemic measures implemented in China, harmed sales of our products and results of operations. We believe that some of our customers built up inventory of our products in 2022 to overcome the industry-wide supply constraints that occurred in the previous periods and that the macroeconomic events in the second half of 2022 and through 2023 led to reduced demand for our customers' products, which led to an inventory buildup at some of our customers and their affiliates, partners and contract manufacturers, which has adversely affected sales of our products. We believe that while this inventory buildup has reduced through the second half of 2023 and in 2024, any further increase could negatively impact the sales of our products and could result in decreases in our sales and margins, and could materially harm our results of operations. The future effects of macroeconomic events on our business and results of operations, including inventory levels at our customers and their affiliates, partners, and contract manufacturers as well as demand for our products, are uncertain and difficult to predict. For additional discussion please see Part II, Item 1A "Risk Factors" of this report, especially the risk factor titled “Global macroeconomic conditions have harmed and may continue to harm our business” and “Our revenue and operating results may fluctuate from period to period, which could cause our stock price to fluctuate.”

Previous wording

Revenue increased by $16.1 million, or 58%, for the three months ended June 30, 2024 compared to the same period in the prior year. The increase was primarily related to an increase in sales volume as well as increase in average selling prices ("ASPs") of our products due to change in mix of the products we shipped. Lower sales volume in the prior year was driven by excess inventory buildup at many of our customers, including our largest end customer, distributors and their affiliates, partners, and contract manufacturers, and lower demand for our products due to macroeconomic conditions.

Current wording

Revenue increased by $22.2 million, or 62%, for the three months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily related to an increase in sales volume as well as increase in average selling prices ("ASPs") of our products due to change in mix of the products we shipped. Lower sales volume in the prior year was driven by excess inventory buildup at many of our customers, distributors and their affiliates, partners, and contract manufacturers, and lower demand for our products due to macroeconomic conditions.

Previous wording

Revenue increased by $10.8 million, or 16.4%, for the six months ended June 30, 2024 compared to the same period in the prior year. The increase was primarily related to an increase in sales volume, partially offset by a decrease in ASPs. Lower sales volume in the prior year was driven by excess inventory buildup at many of our customers, including our largest end customer, distributors and their affiliates, partners, and contract manufacturers, and lower demand for our products due to macroeconomic conditions. Lower ASPs of our products were related to change in mix of the products we shipped.

Current wording

Revenue increased by $33.0 million, or 32%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily related to an increase in sales volume. Lower sales volume in the prior year was driven by excess inventory buildup at many of our customers, distributors and their affiliates, partners, and contract manufacturers, and lower demand for our products due to macroeconomic conditions.

Previous wording

Sales attributable to our largest end customer through multiple distributors accounted for 18% and 16% of our revenue for the three months ended June 30, 2024 and 2023, respectively, and 18% and 9% of our revenue for the six months ended June 30, 2024 and 2023, respectively. Our end customers predominantly purchase our products from distributors. Our top three customers by revenue, which are distributors, together accounted for approximately 55% and 45% of our revenue for the three months ended June 30, 2024 and 2023, respectively, and 54% and 44% of our revenues for the six months ended June 30, 2024 and 2023, respectively. Revenue attributable to our largest ten end customers accounted for 59% and 42% for the three months ended June 30, 2024 and 2023, respectively, and 57% and 40% of our revenues for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Sales attributable to our largest end customer through multiple distributors accounted for 23% and 37% of our revenue for the three months ended September 30, 2024 and 2023, respectively, and 20% and 19% of our revenue for the nine months ended September 30, 2024 and 2023, respectively. Our end customers predominantly purchase our products from distributors. Our top three customers by revenue, which are distributors, together accounted for approximately 55% and 61% of our revenue for the three months ended September 30, 2024 and 2023, respectively, and 55% and 50% of our revenues for the nine months ended September 30, 2024 and 2023, respectively. Revenue attributable to our largest ten end customers accounted for 63% and 60% for the three months ended September 30, 2024 and 2023, respectively, and 59% and 46% of our revenues for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Cost of revenue consists of wafers acquired from third-party foundries, assembly, packaging, and test cost of our products paid to third-party contract manufacturers, amortization of acquired intangibles and personnel and other costs associated with our manufacturing operations. Cost of revenue also includes depreciation of production equipment, inventory write-downs, amortization of internally developed software, shipping and handling costs, and allocation of overhead and facility costs. We also include credits for rebates received from foundries to cost of revenue.

Current wording

Cost of revenue consists of wafers acquired from third-party foundries, assembly, packaging, and test cost of our products paid to third-party contract manufacturers, amortization of acquired intangibles and personnel and other costs associated with our manufacturing operations. Cost of revenue also includes depreciation of production equipment, inventory write-downs, shipping and handling costs, and allocation of overhead and facility costs. We also include credits for rebates received from third-party contract manufacturers to cost of revenue.

Previous wording

Gross profit increased by $6.1 million in the three months ended June 30, 2024 compared to the same period in the prior year. Gross profit increased $11.6 million mainly from higher revenue. This increase was partially offset by higher stock-based compensation expense of $3.4 million due to new grants, and higher other manufacturing and overhead costs of $2.1 million, which primarily consists of depreciation and amortization, freight outwards and inventory reserves.

Current wording

Gross profit increased by $9.6 million in the three months ended September 30, 2024 compared to the same period in the prior year. Gross profit increased $15.9 million mainly from higher revenue. This increase was partially offset by higher amortization from acquired intangibles of $3.6 million, and higher other manufacturing and overhead costs of $3.0 million, which primarily consists of depreciation and amortization, freight outwards and inventory reserves.

Previous wording

Gross profit increased by $0.7 million in the six months ended June 30, 2024 compared to the same period in the prior year. Gross profit increased $7.1 million mainly from higher revenue. This increase was partially offset by higher stock-based compensation expense of $4.6 million and higher other manufacturing and overhead costs of $1.8 million.

Current wording

Gross profit increased by $10.3 million in the nine months ended September 30, 2024 compared to the same period in the prior year. Gross profit increased $23.0 million mainly from higher revenue and $1.1 million due to lower stock-based compensation expense. This increase was partially offset by higher amortization from acquired intangibles of $8.3 million, and higher other manufacturing and overhead costs of $5.5 million.

Previous wording

Gross margin was lower by 7% in the three months ended June 30, 2024 compared to the same period in the prior year. The decrease was primarily due to an increase in stock-based compensation expense by 8%. This increase was partially offset by the positive impact of higher sales resulting in a favorable absorption of our manufacturing overhead costs by 1%.

Current wording

Gross margin was lower by 5% in the three months ended September 30, 2024 compared to the same period in the prior year. The decrease was primarily due to higher amortization from acquired intangibles by 6%. This increase was partially offset by 1% due to the positive impact of sales at higher ASPs.

Previous wording

Gross margin was lower by 7% in the six months ended June 30, 2024 compared to the same period in the prior year. Of the decrease, 6% was mainly due to higher stock-based compensation expense and the additional 1% decline was due to lower ASP for the six months ended June 30, 2024.

Current wording

Gross margin was lower by 6% in the nine months ended September 30, 2024 compared to the same period in the prior year. The decrease was mainly due to higher amortization from acquired intangibles by 6%.

Previous wording

Our research and development efforts are focused on the design and development of Precision Timing solutions. Our research and development expense consists primarily of personnel costs, pre-production engineering mask costs, software license expenses, design tools and prototype-related expenses, facility costs, supplies, professional and consulting fees, and allocated overhead costs, which may be offset by non-recurring engineering contra-expenses recorded in certain periods. There is no assurance that we will have non-recurring engineering contra-expense from period to period. We expense research and development costs as incurred. We believe that continued investment in our products and services is important for our future growth and acquisition of new customers and, as a result, we expect our research and development expenses to continue to increase in absolute dollars. However, we expect our research and development expenses to fluctuate as a percentage of revenue from period to period depending on the timing of these expenses.

Current wording

There is no assurance that we will have non-recurring engineering contra-expense from period to period. We expense research and development costs as incurred. We believe that continued investment in our products and services is important for our future growth and acquisition of new customers and, as a result, we expect our research and development expenses to continue to increase in absolute dollars. However, we expect our research and development expenses to fluctuate as a percentage of revenue from period to period depending on the timing of these expenses.

Previous wording

Research and development expense decreased by $1.1 million, or 4%, for the three months ended June 30, 2024 compared to the same period in the prior year, primarily due to a decrease in stock-based compensation expense of $0.6 million and lower engineering spend towards ongoing new product development of $0.4 million.

Current wording

Research and development expense increased by $2.8 million, or 12%, for the three months ended September 30, 2024, compared to the same period in the prior year, primarily due to an increase in stock-based compensation expense of $1.6 million and higher engineering spend towards ongoing new product development of $1.1 million.

Previous wording

Research and development expense increased by an immaterial amount for the six months ended June 30, 2024 compared to the same period in the prior year. The change in the current year was primarily due to an increase in stock-based compensation expense of $0.6 million, a reduction in non-recurring engineering contra-expense recognized of $0.8 million, and an increase in depreciation and amortization of lab equipment and licenses of $0.4 million, and offset by lower engineering spend towards ongoing new product development of $1.0 million and lower personnel costs of $0.7 million.

Current wording

Research and development expense increased by $2.9 million, or 4% for the nine months ended September 30, 2024, compared to the same period in the prior year. The change in the current year was primarily due to an increase in stock-based compensation expense of $2.2 million, and a reduction in non-recurring engineering contra-expense recognized of $0.6 million.

Previous wording

Selling, general and administrative expense increased by $3.9 million, or 18%, for the three months ended June 30, 2024 compared to the same period in the prior year, primarily due to higher stock-based compensation expense of $2.7 million due to new grants, higher other personnel costs of $1.1 million, and higher sales commission payouts due to higher sales of $0.5 million, partially offset by reduction in consulting fees of $0.6 million.

Current wording

Selling, general and administrative expense increased by $3.9 million, or 18%, for the three months ended September 30, 2024 compared to the same period in the prior year, primarily due to higher stock-based compensation expense of $2.0 million due to new grants, higher other personnel costs of $1.2 million, higher sales commission payouts due to higher sales of $0.3 million, and higher consulting fees of $0.3 million.

Previous wording

Selling, general and administrative expense increased by $7.1 million, or 17%, for the six months ended June 30, 2024 compared to the same period in the prior year, primarily due to higher stock-based compensation expense of $5.2 million due to new grants, higher other personnel costs of $1.7 million, higher advertising spend of $0.2 million and higher sales commission payouts due to higher sales of $0.2 million, offset by reduction in consulting fees of $0.8 million.

Current wording

Selling, general and administrative expense increased by $11.0 million, or 17%, for the nine months ended September 30, 2024 compared to the same period in the prior year, primarily due to higher stock-based compensation expense of $7.2 million due to new grants, higher other personnel costs of $3.0 million, higher sales commission payouts due to higher sales of $0.5 million, and higher advertising spend of $0.2 million.

Previous wording

Acquisition related costs include legal, regulatory, consulting, and other costs incurred towards the acquisition closed during the year ended December 31, 2023 and changes in the fair value of the sales based earnout liability and acquisition consideration payable. The acquisition related costs incurred for the three and six months ended June 30, 2024 were related to the Aura transaction. We will incur incremental costs in 2024 and beyond related to the Aura transaction arising from changes in the fair value of the sales based earnout liability and acquisition consideration payable.

Current wording

Acquisition related costs include legal, regulatory, consulting, and other costs incurred towards the acquisition closed during the year ended December 31, 2023 and changes in the fair value of the sales-based earnout liability and interest accretion related to the acquisition consideration payable. The acquisition related costs incurred for the three and nine months ended September 30, 2024 were related to the Aura transaction. We will incur incremental costs in 2024 and beyond related to the Aura transaction arising from changes in the fair value of the sales-based earnout liability and acquisition consideration payable.

Previous wording

Interest income decreased by $0.9 million for the three months ended June 30, 2024, compared to the same period in the prior year due to a decrease in investment balances upon payment of acquisition consideration and earnout in the current quarter.

Current wording

Interest income decreased by $1.8 million or 25% for the three months ended September 30, 2024, compared to the same period in the prior year due to a decrease in investment balances arising from acquisition related payments in the current quarter as well as lower interest rates.

Previous wording

Other expense, net consists primarily of foreign exchange gains and losses.

Current wording

Other income (expense), net consists primarily of foreign exchange gains and losses.

Previous wording

Other expense, net, increased by $0.4 million for the six months ended June 30, 2024, compared to the same period in the prior year, primarily due to an increase in net unrealized loss on foreign exchange rates due to increased activities in our foreign subsidiaries and unfavorable exchange rate fluctuations.

Current wording

Other income (expense), net, increased by $0.4 million for the three months ended September 30, 2024, compared to the same period in the prior year primarily due to an increase in net unrealized gain on foreign exchange rates from activities in our foreign subsidiaries resulting from favorable exchange rate fluctuations.

Previous wording

Other expense, net, increased by an immaterial amount for the three months ended June 30, 2024, compared to the same period in the prior year.

Current wording

Other income (expense), net, increased by an immaterial amount for the nine months ended September 30, 2024, compared to the same period in the prior year.

Previous wording

Income tax benefit (expense) consists primarily of state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We have a full valuation allowance for deferred tax assets as the realization of the full amount of our deferred tax asset is uncertain, including NOL carryforwards, and tax credits related primarily to research and development. We expect to maintain this full valuation allowance until realization of the deferred tax assets becomes more likely than not.

Current wording

Income tax benefit (expense) consists primarily of state income taxes and income taxes in certain foreign jurisdictions in which we conduct business. We have a full valuation allowance for deferred tax assets as the realization of the full amount of our deferred tax asset is uncertain, including net operating loss ("NOL") carryforwards, and tax credits related primarily to research and development. We expect to maintain this full valuation allowance until realization of the deferred tax assets becomes more likely than not.

Previous wording

As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents of $16.6 million and $9.5 million, respectively. As of June 30, 2024 and December 31, 2023 we also held $435.9 million and $518.7 million of short-term investments, respectively in held-to-maturity securities which consisted of treasury bills. Our principal use of cash is to fund our operations, to support growth through capital investments, and to acquire complementary businesses, products, services or technologies in the future.

Current wording

As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $8.5 million and $9.5 million, respectively. As of September 30, 2024 and December 31, 2023, we also held $426.3 million and $518.7 million of short-term investments, respectively, in held-to-maturity securities that consisted of treasury bills. Our principal use of cash is to fund our operations, to support growth through capital investments, and to acquire complementary businesses, products, services or technologies in the future.

Previous wording

In February 2024, we entered into a Sales Agreement ("Sales Agreement") with Stifel, Nicolaus & Company, Incorporated ("Stifel"), under which we may offer and sell from time to time at our sole discretion, up to an aggregate of 1,200,000 shares of our common stock, par value $0.0001 per share, through Stifel as our sales agent. During the six months ended June 30, 2024, we sold 132,500 shares of our common stock under the Sales Agreement at a weighted average price of $118.69 per share resulting in net proceeds to us of $15.0 million, after deducting underwriting discounts and commissions and offering costs. The Company used the net proceeds from the shares of common stock offered and sold to replenish funds expended to satisfy anticipated tax withholding and remittance obligations related to the net settlement upon vesting of restricted stock unit awards (“RSU”) granted to employees under the equity incentive plans.

Current wording

In February 2024, we entered into a Sales Agreement with Stifel, under which we may offer and sell from time to time at our sole discretion, up to an aggregate of 1,200,000 shares of our common stock, par value $0.0001 per share, through Stifel as our sales agent. During the nine months ended September 30, 2024, we sold 232,500 shares of our common stock under the Sales Agreement at a weighted average price of $126.93 per share resulting in net proceeds to us of $28.4 million, after deducting underwriting discounts and commissions and offering costs. The Company used the net proceeds from the shares of common stock offered and sold to replenish funds expended to satisfy anticipated tax withholding and remittance obligations related to the net settlement upon vesting of restricted stock unit awards (“RSU”) granted to employees under the equity incentive plans.

Previous wording

Our purchase obligations primarily include design and simulation licenses and non-cancelable purchase commitments from agreements with our contract manufacturers as well as a multi-year purchase agreement with commitment to purchase minimum quantities of MEMS wafers and research and development, tooling and sample cost under the agreement. For information about our contractual obligations refer to "Note 5 - Leases" and "Note 9 - Commitments and Contingencies" of the Notes to Condensed Consolidated Financial Statements for the period ending June 30, 2024.

Current wording

Our purchase obligations primarily include non-cancelable purchase commitments from agreements with our contract manufacturers as well as a multi-year purchase agreement with commitment to purchase minimum quantities of MEMS wafers and research and development, tooling and sample cost under the agreement, and design and simulation licenses. For information about our contractual obligations refer to "Note 5 - Leases" and "Note 9 - Commitments and Contingencies" of the Notes to Condensed Consolidated Financial Statements for the period ending September 30, 2024.

Previous wording

We believe that our existing cash and cash equivalents and our short-term investments will be sufficient to meet our cash needs for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, costs to acquire or invest in complementary businesses and technologies, payment obligations associated with our completed acquisitions based on achievement of certain milestones, and the continuing market acceptance of our solutions. In the event that we need to borrow funds or issue additional equity, we cannot provide any assurance that any such additional financing will be available on terms acceptable to us, if at all. If we are unable to raise additional capital when we need it, it would harm our business, results of operations and financial condition.

Current wording

We believe that our existing cash and cash equivalents and our short-term investments will be sufficient to meet our cash needs for at least the next 12 months. Over the longer term, our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, costs to acquire or invest in complementary businesses and technologies, payment obligations associated with our completed acquisitions based on achievement of certain milestones, and the continuing market acceptance of our solutions.

Previous wording

In the six months ended June 30, 2024, net cash provided by operating activities of $1.5 million was primarily due to a net loss of $55.5 million, payments towards the Aura transaction of $1.1 million and a change in operating assets and liabilities of $6.6 million, offset by non-cash expenses of $64.7 million. Non-cash expenses were mainly related to stock-based compensation expense, depreciation and amortization, change in fair value of sales based earnout liability and acquisition consideration payable, inventory write-down and net change in unrealized interest on held to maturity investments. The changes in operating assets and liabilities resulted in cash used primarily due to an increase in inventories as we built our wafer inventory levels, and an increase in prepaid expenses and other assets due to timing of payments, lower accounts payable and accrued expenses primarily due to timing of accrued payroll and related benefit payments, partially offset by lower accounts receivable due to timing of payments.

Current wording

In the nine months ended September 30, 2024, net cash provided by operating activities of $9.7 million was primarily due to a net loss of $74.8 million, and a change in operating assets and liabilities of $14.1 million, offset by non-cash expenses of $98.6 million. Non-cash expenses were mainly related to stock-based compensation expense, depreciation and amortization, change in fair value of sales based earnout liability and acquisition consideration payable, inventory write-down and net change in unrealized interest on held to maturity investments. The changes in operating assets and liabilities resulted in cash used primarily due to an increase in inventories as we built our wafer inventory levels, an increase in our accounts receivables due to timing of shipments and an increase in prepaid expenses and other assets due to timing of payments, partially offset by higher accounts payable and accrued expenses primarily due to timing of accrued payroll and related benefit payments.

Previous wording

Our investing activities consist primarily of purchase and maturities of short-term investments and capital expenditures for property and equipment purchases. Our short-term investments were primarily in treasury bills to earn interest. Our capital expenditures for property and equipment have primarily been for general business purposes, including machinery and equipment, leasehold improvements, acquired software, computer equipment used internally, and production masks to manufacture our products.

Current wording

Our investing activities consist primarily of purchase and maturities of short-term investments as well as capital expenditures for property and equipment purchases. Our short-term investments were primarily in treasury bills to earn interest. Our capital expenditures for property and equipment have primarily been for general business purposes, including machinery and equipment, leasehold improvements, acquired software, computer equipment used internally, and production masks to manufacture our products.

Previous wording

In the six months ended June 30, 2024, net cash provided by investing activities was $78.4 million. We paid $344.0 million to purchase short-term investments in held-to-maturity securities. We paid $5.6 million largely to purchase test and other manufacturing equipment and intangibles to support the general business operations. All such payments were offset by $428.0 million proceeds from the maturity of held to maturity investments.

Current wording

In the nine months ended September 30, 2024, net cash provided by investing activities was $73.8 million. We paid $516.5 million to purchase short-term investments in held-to-maturity securities. We paid $20.7 million largely to purchase manufacturing equipment and intangibles to support the general business operations. All such payments were offset by $610.9 million proceeds from the maturity of held to maturity investments.

Previous wording

Our financing activities have primarily consisted of proceeds from issuance of shares, payments of withholding taxes on restricted stock units and payment of acquisition related consideration and earnouts. During the six months ended June 30, 2024, we sold 132,500 shares of our common stock under the Sales Agreement resulting in net proceeds to us of $15.0 million, after deducting underwriting discounts and commissions of $0.3 million and offering costs of $0.4 million. The net proceeds from the Sales Agreement were offset by tax withholdings paid on behalf of employees for net share settlement of $20.4 million, payment towards the Aura transaction of $61.9 million and related payment of earnouts of $5.6 million.

Current wording

Our financing activities have primarily consisted of proceeds from issuance of shares, payments of withholding taxes on restricted stock units and payment of acquisition related consideration and earnouts. During the nine months ended September 30, 2024, we sold 232,500 shares of our common stock under the Sales Agreement resulting in net proceeds to us of $28.4 million, after deducting underwriting discounts and commissions of $0.6 million and offering costs of $0.5 million. The net proceeds from the Sales Agreement were offset by tax withholdings paid on behalf of employees for net share settlement of $32.6 million, payment towards the Aura transaction of $71.7 million and related payment of earnouts of $8.6 million.