Lumentum Holdings Inc.

The results of operations for the periods presented are not necessarily indicative of results to be expected for future periods. The following table summarizes selected unaudited condensed consolidated statements of operations items as a percentage of net revenue:

Financial data for the three and nine months ended March 29, 2025

The following table summarizes selected unaudited condensed consolidated statements of operations items for the periods presented (in millions, except for percentages):

Net Revenue

Net revenue increased by $58.7 million, or 16.0%, during the three months ended March 29, 2025 compared to the three months ended March 30, 2024, driven by a $51.4 million increase in Cloud & Networking revenue and a $7.3 million increase in Industrial Tech revenue. The increase in Cloud & Networking net revenue is primarily driven by $40.9 million of higher revenue from network equipment manufacturers due to the continued market recovery and related inventory normalization. In addition, we recognized an increase in revenue of $10.5 million from cloud and AI/ML customers. The increase in Industrial Tech net revenue is primarily due to a $12.8 million increase in our laser products driven by higher market demand offset by a $5.6 million decrease for our imaging and sensing products due to higher market competition in the consumer end-market.

Net revenue increased by $113.4 million, or 10.8%, during the nine months ended March 29, 2025 compared to the nine months ended March 30, 2024, driven by a $156.5 million increase in Cloud & Networking revenue offset by a $43.1 million decrease in Industrial Tech revenue. The increase in Cloud & Networking net revenue is primarily due to higher revenue from cloud and AI/ML customers, which increased by $115.6 million, inclusive of revenue from Cloud Light, which we acquired in the second quarter of fiscal 2024. In addition, we recognized an increase in revenue of $40.9 million from network equipment manufacturers as a result of ongoing market recovery and the related inventory normalization. The decrease in Industrial Tech net revenue is primarily due to a decline in sales of our imaging and sensing products due to higher market competition in the consumer end-market for these products, which is partially offset by an $11.8 million increase in our laser products due to higher market demand.

During the three months ended March 29, 2025, two customers individually accounted for 17%, and 15% of our total revenue, respectively. During the nine months ended March 29, 2025, three customers individually accounted for 16%, 14% and 10% of our total net revenue, respectively. We had no other customers that represented 10% or greater of our total net revenue.

During the three months ended March 30, 2024, one customer individually accounted for 29% of our total revenue. During the nine months ended March 30, 2024, two customers individually accounted for 19% and 12% of our total net revenue, respectively. We had no other customers that represented 10% or greater of our total net revenue.

Revenue by Region

We operate in three geographic regions: Americas, Asia-Pacific, and EMEA (Europe, Middle East, and Africa). Net revenue is assigned to the geographic region and country where our product is initially shipped. For example, certain customers may request shipment of our product to a contract manufacturer in one country, which may differ from the location of their end customers.

The following table presents net revenue by the three geographic regions we operate in and net revenue from countries that generally represented 10% or more of our total net revenue(in millions, except percentage data):

For the three and nine months ended March 29, 2025, net revenue from customers outside the United States, based on customer shipping location, represented 83.4% and 81.7% of net revenue, respectively.

For the three and nine months ended March 30, 2024, net revenue from customers outside the United States, based on customer shipping location, represented 64.7% and 73.9% of net revenue, respectively.

Our net revenue is primarily denominated in U.S. dollars, including our net revenue from customers outside the United States as presented above. We expect revenue from customers outside of the United States to continue to be an important part of our overall net revenue and an increasing focus for net revenue growth opportunities. However, regulatory and enforcement actions by the United States and other governmental agencies, as well as changes in tax and trade policies and tariffs, have impacted and may continue to impact net revenue from customers outside the United States.

Gross Margin

Gross margin for the three months ended March 29, 2025 increased to 28.8% from 16.2% for the three months ended March 30, 2024. Within our segments, our Cloud & Networking segment gross margin increased by 3.1% during the three months ended March 29, 2025 due primarily to a mix shift to our higher margin products (for cloud and AI/ML applications as well as our transport products). Industrial Tech segment gross margin was approximately flat during the three months ended March 29, 2025 as compared to the three months ended March 30, 2024. In addition to the positive impact of higher revenue, during the three months ended March 29, 2025, charges related to acquisitions, including integration costs, manufacturing consolidations, and amortization of inventory fair value adjustments decreased by $16.0 million compared to the prior period.

There were also abnormal excess capacity charges of $11.9 million during the three months ended March 30, 2024, which we did not incur during the three months ended March 29, 2025.

Gross margin for the nine months ended March 29, 2025 increased to 25.8% from 19.1% for the nine months ended March 30, 2024. The increase was driven by a $14.0 million reduction in excess and obsolete inventory charges during the nine months ended March 29, 2025 primarily as a result of the U.S. trade restrictions imposed during the three months ended March 30, 2024 whereby we were no longer able to sell certain products to one of our customers. In addition, costs incurred during the nine months ended March 29, 2025 related to the acquisition of Cloud Light, including integration costs and amortization of inventory fair value adjustments were $22.2 million lower compared to the prior year period. Our Cloud & Networking as well as Industrial Tech segment gross margin were both approximately flat year over year.

The markets in which we sell products are undergoing product, architectural and business model transitions, have high customer concentrations, are highly competitive, are price sensitive and/or are affected by customer seasonal and variants in buying patterns. We expect these factors to result in variability of our gross margin and our gross margin may be subject to increasing downward pressure due to these factors.

Segment Profit (Loss)

The following table summarizes segment profit (loss) for each of our operating segments for the periods presented(in millions):

Cloud & Networking segment profit increased by $27.2 million, or 59.3%, during the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 primarily due to higher sales of our products for cloud and AI/ML applications as well as our transport products. Industrial Tech segment profit increased by $5.3 million, or 196.3%, during the three months ended March 29, 2025 as compared to the three months ended March 30, 2024 primarily due to higher revenue from our laser products slightly offset by lower revenue from sales of imaging and sensing products to consumer electronics customers.

Cloud & Networking segment profit increased by $65.6 million, or 66.3%, during the nine months ended March 29, 2025 as compared to the nine months ended March 30, 2024 primarily due to higher sales of our products for both cloud and AI/ML applications. Industrial Tech segment profit decreased by $16.6 million, or 65.6%, during the nine months ended March 29, 2025 as compared to the nine months ended March 30, 2024 primarily due to lower revenue, mainly from sales of imaging and sensing products.

Research and Development (“R&D”)

R&D expense decreased by $1.3 million, or 1.7% for the three months ended March 29, 2025 compared to the three months ended March 30, 2024, primarily due to $2.4 million of lower payroll and other compensation related expenses. These lower compensation expenses were driven by lower headcount as a result of restructuring actions primarily due to the discontinuation of our in-house development of coherent Digital Signal Processors (“DSPs”) and Radio Frequency Integrated Circuits (“RFICs”). This was partially offset by higher spending in software and computer supplies used for R&D purposes.

R&D expense decreased by $4.6 million, or 2.0% for the nine months ended March 29, 2025 compared to the nine months ended March 30, 2024. The decrease in R&D expense for the nine months ended March 30, 2024 was primarily driven by $7.1 million of lower payroll and other compensation related expenses due to lower headcount as a result of restructuring actions primarily due to the discontinuation of our in-house development of coherent DSPs and RFICs. This was partially offset by $2.7 million and $1.7 million of higher depreciation expense and stock-based compensation expense, respectively.

We believe that continuing our investments in R&D is critical to attaining our strategic objectives. We plan to continue to invest in R&D and new products that we believe will further differentiate us in the marketplace.

Selling, General and Administrative (“SG&A”)

SG&A expense increased by $34.3 million, or 44.1%, during the three months ended March 29, 2025 compared to the three months ended March 30, 2024. This is primarily driven by an increase of $29.1 million in stock-based compensation driven by equity award modifications as well as $5.2 million of severance and sign-on payments, all related to executive employee transitions. This was partially offset by a $4.4 million of reduction in amortization of intangible assets as it was fully amortized.

SG&A expense increased by $28.8 million, or 12.2%, during the nine months ended March 29, 2025 compared to the nine months ended March 30, 2024. This is primarily driven by an increase of $32.5 million in stock-based compensation driven by equity award modifications as well as $5.2 million of severance and sign-on payments, all related to executive employee transitions, and a $5.2 million of incremental amortization of intangible assets associated with the Cloud Light acquisition. This was partially offset by $12.6 million of lower acquisition costs related to Cloud Light, which we acquired in second quarter of fiscal year 2024, as well as a reduction in payroll related expenses as a result of restructuring actions in the prior periods.

From time-to-time, we incur expenses that are not part of our ordinary operations, such as mergers and acquisition-related and litigation expenses, which generally increase our SG&A expenses and potentially impact our profitability expectations in any particular period.

Restructuring and Related Charges

We have initiated various strategic restructuring events primarily intended to reduce costs, consolidate our operations, rationalize the manufacturing of our products, and align our business in response to market conditions and as a result of recent acquisitions.

During the three and nine months ended March 29, 2025, we recorded restructuring and related charges of $7.2 million and $17.6 million, respectively mainly due to our integration efforts and cost reduction initiatives. Restructuring charges for the three months ended March 29, 2025 primarily related to $5.7 million of assets written-off including property, plant and equipment, prepayments and other current assets as well as $1.4 million of charges for other contractual commitments associated with site closures driven by restructuring initiatives announced in April 2025 that will allow us to focus on other market opportunities including cloud and AI markets. The Company expects to incur further restructuring charges in the fourth quarter of fiscal year 2025 for employee severance and other personnel-related costs as a result of these actions, which we estimate to be less than $5.0 million.

Restructuring charges for the nine months ended March 29, 2025 include $12.4 million of assets written-off including property, plant and equipment, prepayments and other current assets primarily due to efforts to consolidate our sites and focus on other market opportunities including cloud and AI markets. In addition, we also recorded $3.0 million of charges related to the discontinuation of our in-house development of coherent Digital Signal Processors (“DSPs”) and Radio Frequency Integrated Circuits (“RFICs”).

During the three and nine months ended March 30, 2024, we recorded restructuring and related charges of $19.2 million and $36.0 million, respectively, primarily due to company-wide cost reduction initiatives, as well as our integration efforts as a result of the NeoPhotonics acquisition in August 2022.

Gain on Sale of Facility

On December 17, 2024, we entered into an agreement to sell our net assets in an entity in Shenzhen, China. On March 5, 2025, we completed the sale and received net proceeds of $47.8 million, which was net of cash of $17.6 million and direct selling costs of $1.1 million. The net assets sold consist primarily of building, building improvements and land rights as of December 17, 2024 with a net carrying value of $12.9 million, and were used by the Cloud and Networking segment for manufacturing and research and development activities. As a result, we recognized a gain on sale of facility of $34.9 million, which was recorded in our condensed consolidated statements of operations for the three and nine months ended March 29, 2025. We paid $4.4 million of withholding taxes on this sale transaction, which is recorded as part of the income tax provision for the three and nine months ended March 29, 2025. We also incurred $0.4 million and $0.7 million of indirect selling expenses related to this transaction, which was recorded as part of selling, general and administrative expenses in our condensed consolidated statements of operations for the three and nine months ended March 29, 2025.

Interest Expense

For the three months ended March 29, 2025 and March 30, 2024, we recorded interest expense of $5.7 million and $9.0 million, respectively. For the nine months ended March 29, 2025 and March 30, 2024, we recorded interest expense of $16.8 million and $28.4 million, respectively. The decrease in interest expense for the three and nine months ended March 29, 2025 is mainly due to the repayment of our 0.25% convertible senior notes due in 2024 (the “2024 Notes”) upon maturity in March 2024.

Other Income, Net

The components of other income, net are as follows (in millions):

Other income, net for the three months ended March 29, 2025 decreased by $12.0 million compared to the three months ended March 30, 2024 primarily due to an increase in net foreign exchange losses of $7.3 million. During the three months ended March 30, 2024, the Company had a net foreign exchange gain of $3.7 million as a result of strengthening other foreign currencies relative to the U.S. dollar as compared to a $3.6 million net foreign exchange loss during the three months ended March 29, 2025 mainly driven by the Japan term loans denominated in Japanese Yen. In addition, interest and investment income decreased by $4.8 million driven by lower short term investment balances primarily due to repayment of the 2024 Notes in March 2024.

Other income, net for the nine months ended March 29, 2025 decreased by $23.0 million from the nine months ended March 30, 2024 due to $25.2 million of decrease in interest and investment income driven by lower short term investment balances, as we used cash to purchase Cloud Light as well as the repayment of the 2024 Notes in March 2024, offset by an increase in net foreign exchange gain of $2.1 million mainly driven by strengthening of other foreign currencies relative to the U.S. dollar during the nine months ended March 29, 2025.

Provision (Benefit) for Income Taxes

The following table summarizes provision (benefit) for income taxes for the periods presented (in millions):

We recorded a tax provisionof $4.9 million and $26.7 million forthe three and nine months ended March 29, 2025, respectively. Our tax provision for the three months ended March 29, 2025 is primarily attributable to the income tax expense from uncertain tax positions and withholding taxes, partially offset by the tax benefit from prior year changes in uncertain tax positions. Our tax provision for the nine months ended March 29, 2025 is primarily attributable to the income tax expense from pre-tax earnings, uncertain tax positions, interest on uncertain tax positions, foreign return to provision differences and withholding taxes, partially offset by the tax benefit from prior year changes in uncertain tax positions.

We recorded a tax provision of $19.6 million and $15.8 million for the three and nine months ended March 30, 2024, respectively. Our tax provision for the three months ended March 30, 2024 includes a discrete tax expense of $17.6 million primarily related to the establishment of a partial valuation allowance against certain deferred tax assets, withholding taxes, and changes in prior year uncertain tax positions, partially offset by the tax benefit of tax rate changes. Our tax provision for the nine months ended March 30, 2024 includes a discrete tax expense of $19.2 million, primarily related the establishment of a partial valuation allowance against certain deferred tax assets, withholding taxes, a shortfall in connection with stock-based compensation vested during the period, and interest on uncertain tax positions, partially offset by the tax benefit from tax rate changes.

Our estimated effective tax rate for the nine months ended March 29, 2025 differs from the 21% U.S. statutory rate primarily due to the income tax expense from foreign rate differential, non-deductible stock-based compensation, current year valuation allowance change, and foreign income inclusions in the U.S., partially offset by the income tax benefit from permanent items and U.S. tax credits.

We regularly assess our ability to realize our deferred tax assets on a quarterly basis and will establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. As of March 29, 2025, we maintain a full valuation allowance on U.S. federal and state and certain foreign deferred tax assets. We will continue to assess the need for a valuation allowance against our remaining deferred tax assets and may increase or decrease our valuation allowance materially in the future.

Our provision for incomes taxes may be impacted by changes in the geographic mix of earnings, acquisitions, changes in the realizability of deferred tax assets, changes in our uncertain tax positions, the results of income tax audits, settlements with tax authorities, the expiration of statutes of limitations, the implementation of tax planning strategies, tax rulings, court decisions, and changes in tax laws and regulations. It is also possible that significant negative or positive evidence may become available that causes us to change our conclusion regarding whether a valuation allowance is needed on certain of our deferred tax assets, which would affect our income tax provision in the period of such change.

We also evaluate changes to regulations and requirements in the international jurisdictions where we conduct our business. For additional information, refer to Part II Item 1A “Risk Factors”.

Financial Condition

Liquidity and Capital Resources

As of March 29, 2025 and June 29, 2024, our cash and cash equivalents were $516.4 million and $436.7 million, respectively. As of March 29, 2025 and June 29, 2024, our short-term investments of $350.3 million and $450.3 million, respectively, were all held in the United States. Cash equivalents and short-term investments are primarily comprised of money market funds, treasuries, agencies, high quality investment grade fixed income securities, certificates of deposit and commercial paper. Our investment policy and strategy provide for diversification of investments and is focused on the preservation of capital and supporting our liquidity requirements.

The total amount of cash held by the non-United States entities as of March 29, 2025 and June 29, 2024 was $314.5 million and $306.9 million, respectively, which was primarily held by entities incorporated in the United Kingdom, Japan, Hong Kong, China, Switzerland, China and Thailand. Although cash currently held in the United States, as well as cash generated in the United States from future operations, is expected to cover our normal operating requirements, a substantial amount of additional cash could be required for other purposes, such as capital expenditures to support our business and growth, including costs associated with increasing internal manufacturing capabilities, strategic transactions and partnerships, and future acquisitions.

Our intent is to indefinitely reinvest funds held outside the United States. Except for the funds held in the Cayman Islands, the British Virgin Islands, and Hong Kong, as well as certain subsidiaries in China and Japan, our current plans do not demonstrate a need to repatriate them to fund our domestic operations. However, if in the future, we encounter a significant need for liquidity domestically or at a particular location that we cannot fulfill through borrowings, equity offerings, or other internal or external sources, or the cost to bring back the money is not significant from a tax perspective, we may determine that cash repatriations are necessary or desirable. Repatriation could result in additional material taxes. These factors may cause us to have an overall tax rate higher than other companies or higher than our tax rates in the past. Additionally, if conditions warrant, we may seek to obtain additional financing through debt or equity sources. To the extent we issue additional shares, it may create dilution to our existing stockholders. However, any such financing may not be available on terms favorable to us or may not be available at all.

Liquidity and Capital Resources Requirements

We believe that our cash and cash equivalents as of March 29, 2025 and cash flows from our operating activities will be sufficient to meet our liquidity and capital spending requirements for at least the next 12 months.

There are a number of factors that could positively or negatively impact our liquidity position, including:

•global economic conditions which affect demand for our products and services and impact the financial stability of our suppliers and customers, including the impact of trade wars, tariffs, trade restrictions including for certain rare earth minerals, and uncertainty in the banking and financial services industries;

•fluctuations in demand for our products as a result of changes in regulations, tariffs or other trade barriers, and trade relations in general;

•changes in accounts receivable, inventory or other operating assets and liabilities, which affect our working capital;

•increase in capital expenditures to support our business and growth, including increases in manufacturing capacity;

•the tendency of customers to delay payments or to negotiate favorable payment terms to manage their own liquidity positions;

•timing of payments to our suppliers;

•volatility in fixed income and credit, which impact the liquidity and valuation of our investment portfolios;

•cost and availability of credit, which may impact available financing for us, our customers or others with whom we do business;

•volatility in foreign exchange markets, which impacts our financial results;

•possible investments or acquisitions of complementary businesses, products or technologies, or other strategic transactions or partnerships;

•issuance of debt or equity securities, or other financing transactions, including bank debt;

•potential funding of pension liabilities either voluntarily or as required by law or regulation;

•acquisitions or strategic transactions;

•the settlement of any conversion or redemption of our convertible notes in cash;

•the timing of settlement or other resolution of legal contingencies; and

•common stock repurchases under the share buyback program.

Contractual Obligations

The following table summarizes our contractual obligations as of March 29, 2025, and the effect such obligations are expected to have on our liquidity and cash flow (in millions):

(1) The amounts of operating lease liabilitiesdo not include any sublease income amounts nor do they include payments for short-term leases or variable lease payments. As of March 29, 2025, we expect to receive sublease income of approximately $2.4 million over the sublease periods.

(2)The amount of pension plan contributions represents planned contributions to our defined benefit plans. Although additional future contributions will be required, the amount and timing of these contributions will be affected by actuarial assumptions, the actual rate of returns on plan assets, the level of market interest rates, legislative changes, and the amount of voluntary contributions to the plan. Any contributions for the following fiscal year and later will depend on the value of the plan assets in the future and thus are uncertain. As such, we have not included any amounts beyond one year in the table above.

(3) Purchase obligations represent legally binding commitments to purchase inventory and other commitments made in the normal course of business to meet operational requirements. Refer to “Note 14. Commitments and Contingencies” in the notes to condensed consolidated financial statements.

(4) The amounts related to convertible notes include principal and interest on our 0.50% Convertible Senior Notes due 2026 (the “2026 Notes”), principal and interest on our 0.50% Convertible Senior Notes due 2028 (the “2028 Notes”), and principal and interest on our 1.50% Convertible Senior Notes due 2029 (the “2029 Notes”). The 2026 Notes have a maturity date of December 15, 2026, the 2028 Notes have a maturity date of June 15, 2028, and the 2029 Notes have a maturity date of December 15, 2029. The principal balances of our convertible notes are reflected in the payment periods in the table above based on their respective contractual maturities assuming no conversions.

(5) The amounts related to term loans include principal and interest on our Sumitomo Mitsui Banking Corporation (“SMBC”) term loan with a fixed annual interest rate of 0.88% and Mizuho Bank, Ltd. (“Mizuho”) term loan with a fixed annual interest rate of 0.90%. The SMBC term loan requires monthly principal payments with the remaining principal due on the loan maturity date of July 31, 2029 while the Mizuho term loan requires quarterly principal payments with the final payment due on September 20, 2029.

We do not have any off-balance sheet arrangements, as such term is defined in rules promulgated by the SEC, which have or are reasonably likely to have a current or future effect on our liquidity or capital resources that are material to investors.

Indebtedness

As of March 29, 2025, the net carrying amount of our 2029 Notes of $600.1 million (principal balance of$603.7 million maturing in 2029) is presented in non-current liabilities. If the closing price of our stock exceeds$90.40 (or 130% of the conversion price of$69.54) for 20 of the last 30 trading days of any future quarter, our 2029 Notes would become convertible at the option of the holders during the subsequent fiscal quarter and the debt would be reclassified to current liabilities in our consolidated balance sheets.

As of March 29, 2025, the net carrying amount of our 2028 Notes of $857.4 million (which have an aggregate principal amount of$861.0 million outstanding that matures in 2028) is presented in non-current liabilities in our condensed consolidated balance sheets. If the closing price of our stock exceeds$170.34 (or 130% ofthe conversion price of$131.03)for 20 of the last 30 trading days of any future fiscal quarter, our 2028 Notes would become convertible at the option of the holders during the subsequent fiscal quarter and the debt would be reclassified to current liabilities in our condensed consolidated balance sheet.

As of March 29, 2025, the net carrying amount of our 2026 Notes of $1,048.0 million (which have an aggregate principal amount of $1,050.0 million outstanding that matures in 2026) is presented in non-current liabilities in our condensed consolidated balance sheets. If the closing price of our stock exceeds $129.08 (or 130% ofthe conversion price of $99.29)for 20 of the last 30 trading days of any future fiscal quarter, our 2026 Notes would become convertible at the option of the holders during the subsequent fiscal quarter and the debt would be reclassified to current liabilities in our condensed consolidated balance sheet.

As of March 29, 2025, the Company had $40.2 million in principal amount outstanding on our SMBC term loan, of which the short-term portion of $4.3 million is recorded as current liabilities while the long-term portion of $35.9 million is recorded as long-term debt in the Company’s condensed consolidated balance sheets.

As of March 29, 2025, the Company had $27.0 million in principal amount outstanding on our Mizuho term loan, of which the short-term portion of $6.0 million is recorded as current liabilities while the long-term portion of $21.0 million is recorded as long-term debt in the Company’s condensed consolidated balance sheets.

Share Buyback Program

We have ashare buyback program that authorizes us to utilize up to an aggregate amount of $1.2 billion to purchase our own shares of common stock through May 2025. During the nine months ended March 29, 2025, we did not repurchase any shares of our common stock. Since the board of directors initially approved the share buyback program, we have repurchased 7.7 million shares in aggregate at an average price of $81.66 per share for a total purchase price of $630.4 million. We recorded the $630.4 million aggregate purchase price as a reduction of retained earnings within our condensed consolidated balance sheet. All repurchased shares were retired immediately. As of March 29, 2025, we have $569.6 million remaining under the share buyback program.

The price, timing, amount, and method of future repurchases will be determined based on our evaluation of business and market conditions, alternative investment opportunities, and other factors, at prices determined to be attractive and in the best interests of both the Company and our stockholders. The stock repurchase program may be suspended or terminated at any time.

Unrecognized Tax Benefits

As of March 29, 2025 and June 29, 2024, our other non-current liabilities include unrecognized tax benefit for uncertain tax positions of $76.1 million and$83.0 million, respectively. We are unable to reliably estimate the timing of future payments related to uncertain tax positions.

Cash Flows

Our balance of cash and cash equivalents increased by $79.7 million from $436.7 million as of June 29, 2024 to $516.4 million as of March 29, 2025. The increase in cash and cash equivalents during the nine months ended March 29, 2025 was due to cash from operating activities of $62.3 million and cash from financing activities of $42.1 million, offset by cash used in investing activities of $24.7 million.

Operating Cash Flow

Cash from operating activities was $62.3 million during the nine months ended March 29, 2025, which reflects a net loss of $187.4 million, offset by non-cash items of $309.4 million and changes in operating assets and liabilities of $59.7 million. Changes in operating assets and liabilities were primarily driven by an increase in accounts payable of $44.9 million primarily due to higher inventory purchases and capital expenditures, an increase of $6.9 million in accrued payroll and related expenses mainly driven by our accrual on employee annual incentive plan, and an increase in income tax liabilities of $16.8 million primarily due to income tax provision for the nine months ended March 29, 2025, offset by an increase in accounts receivable of $64.4 million mainly driven by higher revenue, an increase of $25.7 million in inventories driven by inventory builds to support market demand, an increase of $21.7 million in prepayments and other current and non-current assets related mainly to value-added-tax receivables driven by higher recent capital expenditures and inventory purchases and a decrease of $15.3 million in accrued expenses and other current and non-current liabilities driven by payment of the net settlement amount of the Oclaro merger litigation and restructuring related payments.

Cash used in operating activities was $10.8 million during the nine months ended March 30, 2024, which reflects a net loss of $294.0 million and changes in operating assets and liabilities of $19.1 million, offset by non-cash items of $302.3 million. Changes in operating assets and liabilities were primarily driven by a decrease in accounts payable of $82.8 million primarily due to lower inventory purchases and linearity of payments, and a decrease in income tax liabilities of $37.3 million primarily due to annual income tax payments in Japan, offset by a decrease in accounts receivable of $37.2 million due to lower revenue and a decrease in inventories of $52.5 million primarily due to reduced inventory level in our Cloud & Networking business.

Investing Cash Flow

Cash used in investing activities of $24.7 million during the nine months ended March 29, 2025 was attributable to capital expenditures of $177.1 million, offset by net proceeds from sales or maturities of short-term investments of $104.3 million, $47.8 million of proceeds from sale of facility, net of cash transferred and selling costs, and proceeds from sales of property and equipment of $0.3 million.

Cash used in investing activities of $86.8 million during the nine months ended March 30, 2024 was attributable to cash used in the acquisition of Cloud Light of $700.9 million, net of cash acquired, capital expenditures of $108.4 million, and an intangible asset acquisition of $4.0 million, offset by net proceeds from sales or maturities of short-term investments of $727.5 million and proceeds from sales of property and equipment of $0.8 million.

Financing Cash Flow

Cash from financing activities of $42.1 million during the nine months ended March 29, 2025 was attributable to $76.5 million of proceeds from SMBC and Mizuho term loans and $8.3 million of proceeds from employee stock plans, offset by tax payments related to net share settlement of restricted stock of $36.3 million, payment for an intangible asset acquisition holdback of $1.0 million and $5.4 million of principal payments on term loans.

Cash used in financing activities of $336.4 million during the nine months ended March 30, 2024 was attributable to$323.1 million of repayment of the principal amount of 2024 Notes upon maturity, tax payments related to net share settlement of restricted stock of $20.6 million, offset by $7.3 million of proceeds from employee stock plans.