Penguin Solutions, Inc.

Previous wording

Macro-Economic Demand Factors: Our business segments each have their own unique set of demand factors. Our Advanced Computing business is driven by demand for our High Performance Computing (HPC) and AI products, as well as traditional workload optimization and efficiency applications. We expect increased AI adoption and broader implementation by enterprises within but not limited to verticals such as financial services, oil and gas, telecommunications, manufacturing and education, as well as increased neocloud and sovereign AI adoption, as organizations seek scalable infrastructure solutions, though the extent and timing of such adoption and implementation may vary and may affect our results of operations. Demand in our Integrated Memory segment is driven by end-market demand from OEMs for customer-specific solutions in vertical markets such as industrial, government, networking, HPC and enterprise storage, as well as emerging demand for higher density and greater bandwidth solutions for AI deployments, and we anticipate growing demand for higher performance and reliability memory solutions, such as our CXL family of products, to support both traditional use cases and increasingly complex AI applications, although there can be no assurance that such demand will materialize as expected or at all. Finally, demand for our Optimized LED products is derived from targeted end-market applications, such as general high-power and mid-power lighting and specialty lighting, including video display and horticulture applications. However, broader macro-economic trends, including regional market demand and the global macro-economic environment, including those related to global conflicts, such as those in the Middle East and Ukraine, and the global effects thereof on international relations, transport and trade, recessionary indicators, high inflation rates, uncertainty and costs associated with trade policies and tariffs, and interest rates, can adversely affect all three segments concurrently.

Current wording

Macro-Economic Demand Factors: Our business segments each have their own unique set of demand factors. Our Advanced Computing business is driven by demand for our High Performance Computing (HPC) and AI products, as well as traditional workload optimization and efficiency applications. We expect increased AI adoption and broader implementation by enterprises within but not limited to verticals such as financial services, oil and gas, telecommunications, government, manufacturing and education, as well as increased neocloud and sovereign AI adoption, as organizations seek scalable infrastructure solutions, though the extent and timing of such adoption and implementation may vary and may affect our results of operations. Demand in our Integrated Memory segment is driven by end-market demand from OEMs for customer-specific solutions in vertical markets such as industrial, government, networking, HPC and enterprise storage, as well as emerging demand for higher density and greater bandwidth solutions for AI deployments, and we anticipate growing demand for higher performance and reliability memory solutions, such as our CXL family of products, to support both traditional use cases and increasingly complex AI applications, although there can be no assurance that such demand will materialize as expected or at all. Finally, demand for our Optimized LED products is derived from targeted end-market applications, such as general high-power and mid-power lighting and specialty lighting, including video display and horticulture applications. However, broader macro-economic trends, including regional market demand and the global macro-economic environment, including those related to global conflicts, such as those in the Middle East and Ukraine, and the global effects thereof on international relations, transport and trade, recessionary indicators, high inflation rates, uncertainty and costs associated with trade policies and tariffs, and interest rates, can adversely affect all three segments concurrently.

Previous wording

Shifts in the Mix and Timing of Our Net Sales: Shifts in the mix of net sales from our operating segments, and in the timing of net sales, which can vary significantly from period to period, have impacted and can continue to impact our business and results of operations, including gross and operating margins. For example, our Advanced Computing segment has shown solid growth, but is subject to variability in its sales and margin profile from period to period due to factors such as the following: recognition of revenue sometimes being tied to customer decisions as to the completion of delivery and system go-live events; certain sales being affected by the timing of customer deployments and shipments or customer budget considerations; changes in customer spending on our products and services (including as a result of the macro-economic demand factors discussed above); the impact of

Current wording

Shifts in the Mix and Timing of Our Net Sales: Shifts in the mix of net sales from our operating segments, and in the timing of net sales, which can vary significantly from period to period, have impacted and can continue to impact our business and results of operations, including gross and operating margins. For example, our Advanced Computing segment is subject to variability in its sales and margin profile from period to period due to factors such as the following: recognition of revenue sometimes being tied to customer decisions as to the completion of delivery and system go-live events; certain sales being affected by the timing of customer deployments and shipments or customer budget considerations; changes in customer spending on our products and services (including as a result of the macro-economic demand factors discussed above); the impact of customer churn

Previous wording

customer churn rates (including discounting and churn of significant customers from whom we derive a significant percentage of our net sales); discontinuation of certain of our products from time to time; shifts in our customer mix, including expected trends with respect to growth in demand from non-hyperscaler customers for HPC and AI solutions; and margin being driven by the proportion of higher margin software and managed services within our Advanced Computing sales. In particular, our AI infrastructure business is transitioning from a hyperscaler concentration toward a more diversified non-hyperscaler customer base across enterprise, neocloud, and sovereign AI, which may negatively impact our net sales during the transition. Additionally, our net sales and margins will be negatively impacted by the winding down of our Penguin Edge business, which we expect to wind down and discontinue prior to the end of fiscal 2026. The comparability of our results of operations against prior periods will also be affected following the wind down of our Penguin Edge business. Our resource commitments and planning for each segment are relatively fixed in the short term, and as such, variability in expected net sales mix may have direct implications for our operating income and margins. Our Integrated Memory business has gross margins which are lower than the Company average and if net sales from this business grows faster than net sales for the Company overall, it may negatively impact total Company gross margins.

Current wording

rates (including discounting and churn of significant customers from whom we derive a significant percentage of our net sales); discontinuation of certain of our products from time to time; shifts in our customer mix, including expected trends with respect to growth in demand from non-hyperscaler customers for HPC and AI solutions; and margin being driven by the proportion of higher margin software and managed services within our Advanced Computing sales. Within our Advanced Computing segment, our “AI infrastructure business” refers to customer engagements focused on AI workloads, including designing, building, deploying, and managing AI infrastructure hardware, software, and services. When we refer to our non-hyperscale AI infrastructure business, we are referring to our AI infrastructure business excluding sales to hyperscaler customers. Our AI infrastructure business is transitioning from a hyperscaler concentration toward a more diversified non-hyperscaler customer base across enterprise, neocloud, and sovereign AI, which may negatively impact our net sales during the transition. Additionally, our net sales and margins have been negatively impacted by the winding down of our Penguin Edge business, which we expect to wind down and discontinue by the end of fiscal 2026. The comparability of our results of operations against prior periods will also be affected following the wind down of our Penguin Edge business. Our resource commitments and planning for each segment are relatively fixed in the short term, and as such, variability in expected net sales mix may have direct implications for our operating income and margins. Our Integrated Memory business has gross margins which are lower than the Company average and if net sales from this business grow faster than net sales for the Company overall, it may negatively impact total Company gross margins.

Previous wording

Net sales decreased by $22.5 million, or 6.2%, and $20.6 million, or 2.9%, in the second quarter and first six months of 2026, respectively, compared to the same periods in the prior year, primarily driven by lower hardware sales for our Advanced Computing segment, partially offset by strong growth for our Integrated Memory segment. Integrated Memory net sales increased by $66.4 million, or 63.1%, and $106.2 million, or 52.6%, in the second quarter and first six months of 2026, respectively, compared to the same periods in the prior year, primarily due to higher sales volumes of Flash and DRAM products stemming from improved market demand and higher pricing. Advanced Computing net sales decreased by $84.4 million, or 42.2%, and $110.4 million, or 29.2%, in the second quarter and first six months of 2026, respectively, compared to the same periods in the prior year, reflecting the ongoing wind down of our Penguin Edge business and hyperscale hardware sales in 2025 that did not occur in 2026. Optimized LED net sales decreased by $4.4 million, or 7.4%, and $16.3 million, or 12.8%, in the second quarter and first six months of 2026, respectively, compared to the same periods in the prior year, reflecting a broad-based decline in demand across the business.

Current wording

Net sales increased by $154.5 million, or 47.6%, and $133.9 million, or 13.0%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, primarily driven by strong growth for our Integrated Memory segment. Integrated Memory net sales increased by $144.9 million, or 111.4%, and $251.1 million, or 75.6%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, primarily driven by strong momentum across DRAM and Flash, as accelerating AI-driven demand drove favorable pricing and increased volume. Advanced Computing net sales increased by $5.1 million, or 3.8%, and decreased by $105.3 million, or 20.6%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, with the third-quarter increase driven by strength in our non-hyperscale AI infrastructure business, partially offset by the wind down of our Penguin Edge business, and the nine-month decrease reflecting both the ongoing Penguin Edge wind down and hyperscale hardware sales in 2025 that did not recur in 2026. Optimized LED net sales increased by $4.4 million, or 7.2%, and decreased by $11.9 million, or 6.3%, in the third quarter and first nine months of 2026, respectively, compared to the same periods in the prior year, with the third quarter increase primarily attributable to stronger channel demand and higher direct sales, while the decrease for the nine-month period reflects a broad-based decline in demand across the business.

Previous wording

Gross margin decreased to 27.3% in the second quarter of 2026 compared to 28.6% in the same period in 2025, and to 27.7% in the first six months of 2026 compared to 28.7% in the same period in 2025, primarily attributable to the ongoing wind down of our Penguin Edge business, a shift in the overall mix of sales across our business units, along with inventory write-off noted above.

Current wording

Gross margin decreased to 27.8% in the third quarter of 2026 compared to 29.3% in the same period in 2025, and to 27.7% in the first nine months of 2026 compared to 28.9% in the same period in 2025, primarily attributable to the ongoing wind down of our Penguin Edge business and a shift in the overall mix of sales across our business units.

Previous wording

Below is a table of our operating income, measured on a non-GAAP basis, which Penguin Solutions management uses to supplement Penguin Solutions’ financial results under GAAP to analyze its operations and make decisions as to future operational plans and which management believes provides supplemental non-GAAP information that is useful to investors in analyzing and assessing our past and future operating performance. These non-GAAP measures exclude certain items, such as stock-based compensation expense; amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships, trademarks/trade names and backlog acquired in connection with business combinations); acquisition-related inventory adjustments; inventory write-off, stolen in transit shipment; cost of sales-related restructuring; diligence, acquisition and integration expense; restructuring charges; impairment of goodwill; changes in the fair value of contingent consideration; redomiciliation costs; and other infrequent or unusual items. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in our non-GAAP measures and these intangible assets contribute to revenue generation. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Segment and Other Information.”

Current wording

Below is a table of our operating income, measured on a non-GAAP basis, which Penguin Solutions management uses to supplement Penguin Solutions’ financial results under GAAP to analyze its operations and make decisions as to future operational plans and which management believes provides supplemental non-GAAP information that is useful to investors in analyzing and assessing our past and future operating performance. These non-GAAP measures exclude certain items, such as stock-based compensation expense; amortization of acquisition-related intangible assets (consisting of amortization of developed technology, customer relationships, trademarks/trade names and backlog acquired in connection with business combinations); acquisition-related inventory adjustments; inventory write-off, stolen in transit shipment, net of insurance recovery; cost of sales-related restructuring; diligence, acquisition and integration expense; restructuring charges; impairment of goodwill; changes in the fair value of contingent consideration; redomiciliation costs; and other infrequent or unusual items. While amortization of acquisition-related intangible assets is excluded, the revenues from acquired companies is reflected in our non-GAAP measures and these intangible assets contribute to revenue generation. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Segment and Other Information.”

Previous wording

Advanced Computing operating income decreased by $23.9 million, or 64.6%, and $31.9 million, or 47.5%, in the second quarter and first six months of 2026, respectively, as compared to the same periods in the prior year, primarily driven by the continued wind down of our Penguin Edge business and hyperscale hardware sales recognized in 2025 that did not recur in 2026.

Current wording

Advanced Computing operating income on a non-GAAP basis decreased by $26.6 million, or 107.6%, and $58.4 million, or 63.7%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, with the third-quarter decrease primarily driven by the ongoing wind down of our Penguin Edge business, while the nine-month decrease reflects both the ongoing wind down of our Penguin Edge business and the absence of hyperscale hardware sales in 2025 that did not recur in 2026.

Previous wording

Optimized LED operating income increased by $3.3 million, or 281.0%, and $3.1 million, or 64.2%, in the second quarter and first six months of 2026, respectively, as compared to the same periods in the prior year, primarily due to lower personnel-related expenses due to headcount reductions and improved gross profit, stemming from more favorable product mix and tariff recoveries.

Current wording

Optimized LED operating income on a non-GAAP basis increased by $2.7 million, or 205.8%, and $5.9 million, or 94.6%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, primarily attributable to lower personnel-related expenses resulting from headcount reductions, together with improved gross profit driven by a more favorable product mix and tariff recoveries.

Previous wording

Selling, general and administrative expense decreased by $11.3 million, or 19.1%, and $18.8 million, or 15.7%, in the second quarter and first six months of 2026, respectively, as compared to the same periods in the prior year, primarily due to lower personnel-related expenses mainly driven by headcount reductions as well as lower subcontract services following the completion of our U.S. Domestication in 2025.

Current wording

Selling, general and administrative expense decreased by $0.3 million, or 0.5%, and $19.1 million, or 10.6%, in the third quarter and first nine months of 2026, respectively, as compared to the same periods in the prior year, primarily due to lower personnel-related expenses mainly driven by headcount reductions as well as lower subcontract services following the completion of our U.S. Domestication in 2025.

Previous wording

Other operating expenses in the first six months of 2026 and 2025 included restructuring charges of $5.8 million and $1.0 million, respectively, primarily for employee severance costs and other benefits resulting from workforce reductions, the elimination of certain projects across our businesses and other costs associated with the ongoing

Current wording

Other operating expenses in the first nine months of 2026 and 2025 included restructuring charges of $6.8 million and $1.0 million, respectively, primarily for employee severance costs and other benefits resulting from workforce reductions, the elimination of certain projects across our businesses and other costs associated with the ongoing wind down of our Penguin Edge business. We anticipate that such activities will continue into future quarters, for which we expect to record additional restructuring charges.

Previous wording

Net interest expense decreased by $5.8 million in the first six months of 2026 compared to the same period in the prior year, primarily due to the full repayment of the Amended 2022 TLA (as defined below) in the fourth quarter of 2025.

Current wording

Net interest expense decreased by $5.7 million in the first nine months of 2026 compared to the same period in the prior year, primarily due to the full repayment of the Amended 2022 TLA (as defined below) in the fourth quarter of 2025.

Previous wording

Other non-operating (income) expense in the first six months of 2026 includes a net gain of $27.0 million from the disposition of equity investments, partially offset by a $10.0 million charge on impairment of a non-marketable equity investment. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Cash and Investments – Non-Marketable Equity Investments.”

Current wording

Other non-operating (income) expense in the first nine months of 2026 includes a net gain of $30.9 million from the disposition of equity investments, partially offset by a $10.0 million charge on impairment of a non-marketable equity investment. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Cash and Investments – Non-Marketable Equity Investments.”

Previous wording

In addition, other non-operating (income) expense in the first six months of 2026 and 2025 included foreign currency gains (losses). See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Other Non-operating (Income) Expense.”

Current wording

In addition, other non-operating (income) expense in the first nine months of 2026 and 2025 included foreign currency gains (losses). See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Other Non-operating (Income) Expense.”

Previous wording

Income tax provision in the second quarter and first six months of 2026 increased by $6.8 million and by $2.2 million, respectively, as compared to the same periods in the prior year, primarily due to an increase in profit before tax partially offset by the benefits from the U.S. Domestication.

Current wording

Income tax provision in the third quarter and first nine months of 2026 increased by $0.3 million and by $2.5 million, respectively, as compared to the same periods in the prior year, primarily attributable to higher income before income taxes driven by improved operating performance, partially offset by benefits associated with the U.S. Domestication.

Previous wording

Our effective tax rate was 27.2% and 26.7% in the second quarter and first six months of 2026, respectively, and was higher than the U.S. statutory tax rate of 21.0%, primarily due to cross border tax costs, state income taxes, and foreign withholding tax partially offset by tax credits. The effective tax rate was 46.3% and 48.6% in the second quarter and first six months of 2025, respectively, and differed from the U.S. statutory rate primarily due to losses generated in a jurisdiction where no tax benefit can be recognized, withholding taxes, state income taxes, and nondeductible compensation paid to officers, partially offset by research and development tax credits.

Current wording

Our effective tax rate was 14.0% and 20.7% in the third quarter and first nine months of 2026, respectively, and was lower than the U.S. statutory tax rate of 21.0%, primarily due to return-to-provision true-ups and certain tax credits, partially offset by cross border tax costs, state income taxes, and foreign withholding tax. The effective tax rate was 67.8% and 53.8% in the third quarter and first nine months of 2025, respectively, and differed from the U.S. statutory rate primarily due to losses generated in a jurisdiction where no tax benefit can be recognized, withholding taxes, state income taxes, and nondeductible compensation paid to officers, partially offset by research and development tax credits.

Previous wording

As of February 27, 2026, we had cash, cash equivalents and short-term investments of $489.2 million, of which $269.4 million was held by subsidiaries outside of the United States. Our principal uses of cash and capital resources have been acquisitions, debt service requirements, capital expenditures, investments in working capital, research and development expenditures, and other operation expenses. We expect that future capital expenditures will focus on expansion of our research and development activities, manufacturing equipment upgrades, acquisitions and IT infrastructure and software upgrades. Cash and cash equivalents generally consist of funds held in demand deposit accounts, money market funds and time deposits. We do not acquire investments for trading or speculative purposes.

Current wording

As of May 29, 2026, we had cash and cash equivalents of $440.3 million, of which $312.4 million was held by subsidiaries outside of the United States. Our principal uses of cash and capital resources have been acquisitions, repurchases of our common stock, debt service requirements, capital expenditures, investments in working capital, research and development expenditures, and other operating expenses. We expect that future capital expenditures will focus on expansion of our research and development activities, manufacturing equipment upgrades, acquisitions and IT infrastructure and software upgrades. Cash and cash equivalents generally consist of funds held in demand deposit accounts, money market funds and time deposits. We do not acquire investments for trading or speculative purposes.

Previous wording

We may from time to time seek additional equity or debt financing. Any future equity or debt financing may be dilutive to our existing investors and may include debt service requirements and financial and other restrictive covenants that may constrain our operations and growth strategies. In the event that we seek additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.

Current wording

covenants that may constrain our operations and growth strategies. In the event that we seek additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.

Previous wording

We expect that our existing cash and cash equivalents, short-term investments, borrowings available under our credit facilities and cash generated by operating activities will be sufficient to fund our operations for at least the next 12 months.

Current wording

We expect that our existing cash and cash equivalents, borrowings available under our credit facilities and cash generated by operating activities will be sufficient to fund our operations for at least the next 12 months.

Previous wording

On January 18, 2023, we exchanged $150.0 million principal amount of 2026 Notes for $150.0 million principal amount of new 2029 Notes (as defined below). On August 6, 2024, we repurchased $80.0 million aggregate principal amount of our 2026 Notes for $100.6 million cash (including payment for accrued interest) in privately-

Current wording

On January 18, 2023, we exchanged $150.0 million principal amount of 2026 Notes for $150.0 million principal amount of new 2029 Notes (as defined below). On August 6, 2024, we repurchased $80.0 million aggregate principal amount of our 2026 Notes for $100.6 million cash (including payment for accrued interest) in privately-negotiated transactions. In the second quarter of 2026, the 2026 Notes matured and we paid the remaining principal balance of $20.0 million, plus $0.3 million of accrued and unpaid interest. As of May 29, 2026, there were no 2026 Notes outstanding.

Previous wording

For additional details of the terms of our Convertible Senior Notes, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes” in the 2025 Annual Report and “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes” in this Quarterly Report.

Current wording

For additional details of the terms of our Convertible Senior Notes, refer to “PART II – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt – Convertible Senior

Previous wording

holder of Issued CPS may convert such holder’s Issued CPS into shares of common stock at any time, provided that the Issued CPS may, at our option, automatically be converted into shares of common stock on any date following the second anniversary of the closing upon certain conditions. The Issued CPS entitles the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option. Shares of Issued CPS are not redeemable upon or repurchased upon the election of the holders of Issued CPS. Refer to the CPS Delaware Certificate of Designation of Penguin Solutions, Inc., effective as of June 27, 2025, filed hereto as Exhibit 3.3, and to the section entitled “Comparison of Rights of Cayman Islands Shareholders and Delaware Stockholders” contained in Penguin Solutions Cayman’s definitive proxy statement filed with the SEC on May 2, 2025.

Current wording

On June 27, 2025, in connection with the U.S. Domestication, Penguin Solutions Delaware executed and adopted a Certificate of Designation of Convertible Preferred Stock (the “CPS Delaware Certificate of Designation”) that sets forth the terms, rights and obligations of a series of 200,000 shares of preferred stock of Penguin Solutions Delaware having a par value of $0.03 per share, designated as convertible preferred stock (the “Issued CPS”), which principal attributes remain substantially the same as prior to the U.S. Domestication, subject to changes to give effect to requirements of Delaware law. The shares of Issued CPS are convertible into shares of common stock at an initial conversion price of $32.81, subject to adjustment upon the occurrence of certain events, have an initial liquidation preference of 1x and are only redeemable at our option, subject to certain conditions. The holder of Issued CPS may convert such holder’s Issued CPS into shares of common stock at any time, provided that the Issued CPS may, at our option, automatically be converted into shares of common stock on any date following the second anniversary of the closing upon certain conditions. The Issued CPS entitles the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option. Shares of Issued CPS are not redeemable upon or repurchased upon the election of the holders of Issued CPS. Refer to the CPS Delaware Certificate of Designation of Penguin Solutions, Inc., effective as of June 27, 2025, filed hereto as Exhibit 3.3, and to the section entitled “Comparison of Rights of Cayman Islands Shareholders and Delaware Stockholders” contained in Penguin Solutions Cayman’s definitive proxy statement filed with the SEC on May 2, 2025.

Previous wording

Net cash provided by operating activities in the first six months of 2026 consisted primarily of net income of $44.6 million, adjusted for non-cash and non-operating items of $26.0 million. Operating cash flows were positively affected by a $15.4 million net change in our operating assets and liabilities, primarily from the effects of an increase of $148.1 million in accounts payable and accrued expenses and other liabilities primarily due to an increase in trade purchasing activities as well as an increase in deferred revenue from customer services, partially offset by an increase of $62.7 million in accounts receivable, driven by increased Integrated Memory sales, and $67.2 million in inventories to support future demand across all business units.

Current wording

Net cash provided by operating activities in the first nine months of 2026 consisted primarily of net income of $90.8 million, adjusted for non-cash and non-operating items of $44.9 million. Operating cash flows were negatively affected by a $124.4 million net change in our operating assets and liabilities, primarily from the effects of an increase of $396.4 million in accounts receivable, driven by increased Integrated Memory sales, and $243.1 million in inventories to support future demand across all business units, partially offset by an increase of $505.2 million in accounts payable and accrued expenses and other liabilities primarily due to an increase in trade purchasing activities as well as an increase in deferred revenue from customer services.

Previous wording

Net cash provided by operating activities in the first six months of 2025 consisted primarily of net income of $14.8 million, adjusted for non-cash items of $58.8 million. Operating cash flows were positively affected by a $13.0 million net change in our operating assets and liabilities, primarily from the effects of an increase of $122.1 million in accounts payable and accrued expenses and other liabilities primarily due to an increase in deferred revenue from customer services and higher accounts payable related to the timing of trade purchases, and a decrease of $15.7 million in other assets, partially offset by an increase of $46.2 million in inventories, primarily to support future demand across both Advanced Computing and Integrated Memory, and an increase of $78.6 million in accounts receivable primarily due to increased sales.

Current wording

Net cash provided by operating activities in the first nine months of 2025 consisted primarily of net income of $18.3 million, adjusted for non-cash items of $89.2 million. Operating cash flows were positively affected by a $76.1 million net change in our operating assets and liabilities, primarily from the effects of an increase of $133.9 million in accounts payable and accrued expenses and other liabilities primarily due to an increase in deferred revenue from customer services and higher accounts payable related to the timing of trade purchases, and a decrease of $13.7 million in other assets, partially offset by an increase of $30.8 million in inventories, primarily to support future demand across both Advanced Computing and Integrated Memory, and an increase of $40.8 million in accounts receivable primarily due to increased sales.

Previous wording

Investing Activities: Net cash provided by investing activities in the first six months of 2026 consisted primarily of $32.2 million from proceeds from the disposition of equity investments partially offset by $4.5 million for capital expenditures and deposits on equipment.

Current wording

Investing Activities: Net cash provided by investing activities in the first nine months of 2026 consisted primarily of $71.7 million from proceeds from the disposition of equity investments, partially offset by $7.3 million for capital expenditures and deposits on equipment.

Previous wording

Net cash used for investing activities in the first six months of 2025 consisted primarily of $18.6 million net purchase of marketable investment securities and $4.2 million for capital expenditures and deposits on equipment.

Current wording

Net cash used for investing activities in the first nine months of 2025 consisted primarily of $18.6 million net purchase of marketable investment securities and $6.1 million for capital expenditures and deposits on equipment.

Previous wording

Financing Activities: Net cash used for financing activities in the first six months of 2026 consisted primarily of $57.1 million of payments to acquire our common stock (including $47.0 million under our stock repurchase program), $20.0 million of repayments on our 2026 Notes, and $6.2 million in payments of preferred stock cash dividends, partially offset by $5.9 million in proceeds from the issuance of common stock from our equity plans.

Current wording

Financing Activities: Net cash used for financing activities in the first nine months of 2026 consisted primarily of $68.9 million of payments to acquire our common stock (including $55.7 million under our stock repurchase program), $20.0 million of repayments on our 2026 Notes, and $9.1 million in payments of preferred stock cash dividends, partially offset by $38.0 million in proceeds from restricted cash advances and $10.2 million in proceeds from the issuance of common stock from our equity plans.

Previous wording

Net cash provided by financing activities in the first six months of 2025 consisted primarily of $191.2 million of proceeds from the issuance of preferred shares, net of issuance costs of $8.8 million, and $3.7 million in proceeds from the issuance of ordinary shares from our equity plans, partially offset by $17.6 million of payments to acquire our ordinary shares (including $11.1 million under our share repurchase program).

Current wording

Net cash provided by financing activities in the first nine months of 2025 consisted primarily of $191.2 million of proceeds from the issuance of preferred shares, net of issuance costs of $8.8 million, and $7.7 million in proceeds from the issuance of ordinary shares from our equity plans, partially offset by $49.2 million of payments to acquire our ordinary shares (including $40.9 million under our share repurchase program).

Previous wording

The preparation of these financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that we believe to be reasonable under the circumstances; however, actual results could differ from those estimates. Our management believes our critical accounting estimates require management’s most difficult, subjective or complex judgments and are critical in the portrayal of our financial condition and results of operations. Our discussion of critical accounting estimates is intended to supplement our summary of significant accounting policies so that readers will have greater insight into the uncertainties involved in applying our critical accounting policies and estimates.

Current wording

The preparation of these financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. Estimates and judgments are based on historical experience, forecasted events and various other assumptions that we believe to be reasonable under the circumstances; however, actual results could differ from those estimates. Our management believes our critical accounting estimates require management’s most difficult, subjective or