10-Q – 2025-11-25 – smtc-20251026.htm

Overview
Semtech Corporation (together with its consolidated subsidiaries, the "Company," "we," "our" or "us") is a leading provider of high-performance semiconductor, Internet of Things ("IoT") systems and cloud connectivity service solutions and was incorporated in Delaware in 1960. We have three operating segments—Signal Integrity, Analog Mixed Signal and Wireless, and IoT Systems and Connectivity—that represent three separate reportable segments. See Part I, Item 1, Note 14, Segment Information, to our interim unaudited condensed consolidated financial statements for additional information on our reportable segments.
Signal Integrity. We design, develop, manufacture and market a portfolio of optical and copper data communications and video transport products used in a wide variety of infrastructure and industrial applications. Our comprehensive portfolio includes integrated circuits ("ICs") for data centers, enterprise networks, passive optical networks ("PON"), and wireless base station optical transceivers. Our high-speed interfaces range from 100Mbps to 1.6Tbps and support key industry standards such as Fibre Channel, InfiniBand, Ethernet, PON and synchronous optical networks. Our video products offer advanced solutions for next generation high-definition broadcast applications.
Analog Mixed Signal and Wireless. We design, develop, manufacture and market high-performance protection devices, which are often referred to as transient voltage suppressors ("TVS") and specialized sensing products. TVS devices provide protection for electronic systems where voltage spikes (called transients), such as electrostatic discharge, electrical over stress or secondary lightning surge energy, can permanently damage sensitive ICs. Our portfolio of protection solutions include filter and termination devices that are integrated with the TVS device. Our products provide robust protection while preserving signal integrity in high-speed communications, networking and video interfaces. These products also operate at very low voltage. Our protection products can be found in a broad range of applications including smart phones, LCD and organic light-emitting diode TVs and displays, set-top boxes, monitors and displays, tablets, computers, notebooks, base stations, routers, automobile and industrial systems. Our unique sensing technology enables proximity sensing and advanced user interface solutions for our mobile and consumer products. We also design, develop, manufacture and market a portfolio of specialized radio frequency products used in a wide variety of industrial, medical and communications applications. Our wireless products, which include our LoRa® devices and wireless radio frequency technology, feature industry leading and longest-range industrial, scientific and medical radio, enabling a lower total cost of ownership and increased reliability. These features make these products particularly suitable for machine-to-machine and IoT applications. We also design, develop, and market power product devices that control, alter, regulate, and condition the power within electronic systems focused on the LoRa and IoT infrastructure segment. The highest volume product types within this category are switching voltage regulators, combination switching and linear regulators, smart regulators, isolated switches, and wireless charging. Our video products offer advanced solutions for highly differentiated audio video-over-IP technology for professional audio video applications.
IoT Systems and Connectivity. We design, develop, operate and market a comprehensive product portfolio of IoT solutions that enable businesses to connect and manage their devices, collect and analyze data, and improve decision-making. The portfolio includes a wide range of modules, gateways, routers (together "IoT Hardware"), and connected services that are designed to meet the specific needs of different industries and applications. Our modules are available in a variety of form factors and connectivity options, including LTE-M, NB-IoT and 5G, and can be integrated into an array of devices and systems. Our gateways and routers are designed to provide reliable and secure connectivity for IoT devices, while our connected services enable businesses to manage devices and connectivity so businesses can navigate the complex IoT landscape and realize the full potential of connected devices. We also design, develop, operate and market a portfolio of connected services used in a wide variety of industrial, medical and communications applications. Our connected services include wireless connectivity and cloud-based services for customers to deploy, connect, and operate their end applications. Our services have been purpose-built for IoT applications and include features such as SIM and subscription management, device and data management, geolocation support, as well as reporting and alerting that can be configured or tailored to a variety of IoT use cases.
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Our net sales by reportable segment were as follows:

  Three Months Ended Nine Months Ended
(in thousands) October 26, 2025 October 27, 2024 October 26, 2025 October 27, 2024
Signal Integrity $ 81,614  $ 71,509  $ 231,893  $ 189,242 
Analog Mixed Signal and Wireless
97,037  82,829  279,702  237,484 

IoT Systems and Connectivity 88,320  82,487  264,025  231,559 
Total $ 266,971  $ 236,825  $ 775,620  $ 658,285 

We design, develop, manufacture and market a diverse portfolio of products for commercial applications, addressing the global infrastructure, high-end consumer and industrial end markets.
Infrastructure: data centers, PON, base stations, optical networks, servers, carrier networks, switches and routers, cable modems, wireless local area network ("LAN") and other communication infrastructure equipment. This market has expanded to support artificial intelligence-driven applications and general compute data center applications.
High-End Consumer: smartphones, tablets, smart glasses, wearables, desktops, notebooks, wireless charging, set-top boxes, digital televisions, monitors and displays, digital video recorders and other consumer equipment.
Industrial: IoT applications such as connected spaces (smart cities, buildings, factories, facilities and commercial buildings), smart utilities (electricity, water, gas and smart grid), wireless charging, medical, security systems, automotive, industrial and home automation, supply chain management, asset tracking and logistics, analog and digital video broadcast equipment, video-over-IP solutions and other industrial equipment.
Our end customers for our silicon solutions are primarily original equipment manufacturers ("OEMs") that produce and sell technology solutions. Our IoT module, router, gateway and managed connectivity solutions ship to IoT device makers, enterprises and solution providers to provide IoT connectivity to end devices.
Recent Developments
Financing
On October 10, 2025, the Company issued and sold $402.5 million in aggregate principal amount of 0% Convertible Senior Notes due 2030 (the "2030 Notes") in a private placement. The 2030 Notes were issued pursuant to an indenture, dated October 10, 2025, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee (the "2030 Indenture"). The 2030 Notes are jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guarantee its borrowings under its Credit Agreement (defined below). The 2030 Notes do not bear any interest and will mature on October 15, 2030, unless earlier converted, redeemed or repurchased. See Note 8, Long-Term Debt to our interim unaudited condensed consolidated financial statements for additional information regarding the 2030 Notes.
On October 7, 2025, the Company entered into separate, privately-negotiated exchange agreements (the "2025 Exchange of 2027 Notes") with certain holders of our 1.625% Convertible Senior Notes due 2027 (the "2027 Notes"). Pursuant to the 2025 Exchange of 2027 Notes, on October 14, 2025, the Company used approximately $220.6 million of the net proceeds from the 2030 Notes, together with the issuance of 3,036,192 shares of the Company's common stock as consideration for the exchange of approximately $219.0 million aggregate principal amount of the 2027 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In the three and nine months ended October 26, 2025, in connection with the exchange transactions, the Company recognized an induced conversion expense of $17.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $14.3 million on the Balance Sheets, which included $3.3 million from the write-off of deferred financing costs.
In connection with the 2025 Exchange of 2027 Notes, the Company also terminated the Convertible Note Hedges and Warrants corresponding to the number of 2027 Notes exchanged. The Company received approximately $24.5 million in connection with the termination, which was recorded as an increase to additional paid-in capital on the Balance Sheets.
On October 7, 2025, the Company entered into separate, privately-negotiated exchange agreements (the "2025 Exchange of 2028 Notes") with holders of our 4.00% Convertible Senior Notes due 2028 (the "2028 Notes"). Pursuant to the 2025 Exchange of 2028 Notes, on October 14, 2025, the Company used approximately $63.1 million of the net proceeds from the 2030 Notes, together with the issuance of 2,217,394 shares of the Company's common stock as consideration for the exchange of the remaining $62.0 million aggregate principal amount of the 2028 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In the three and nine months ended October 26, 2025, in connection with the exchange transactions, the Company recognized an induced conversion expense of $3.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $2.2 million on the Balance Sheets, which included $1.3 million from the write-off of deferred financing costs.
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Impact of Macroeconomic Conditions
As disclosed in Part I, Item 1A: Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended January 26, 2025, the Company’s business is subject to risks related to, among other factors, tariffs and other trade barriers put in the place by government authorities. The imposition of tariffs and other trade barriers by government authorities on imported goods, including raw materials and components essential to our manufacturing processes, could have significant adverse effects on our business, financial condition, and results of operations. Beginning in the first quarter of fiscal year 2026, the U.S. government imposed additional tariffs on goods imported into the U.S. from numerous countries ("U.S. Tariffs") and multiple countries and groups of countries imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other retaliatory measures. Various modifications and delays to the U.S. Tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures. The ultimate impact remains uncertain and will depend on several factors, including whether additional or incremental U.S. Tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, and the overall magnitude and duration of these measures. The Company continues to monitor and analyze the impacts of these measures and actions that can be taken to moderate and/or minimize their effects.
In recent periods, macroeconomic factors such as market volatility, inflationary pressures, elevated interest rates, geopolitical tensions and recessionary concerns have caused uncertainty in end customer demand, which resulted in elevated channel inventories. We believe that we can continue to take appropriate actions to align our inventory levels with anticipated customer demand profiles.
Factors Affecting Our Performance
Most of our sales to customers are made on the basis of individual customer purchase orders and many customers include cancellation provisions in their purchase orders. We rely on orders received and shipped within the same quarter for a meaningful portion of our sales. Net sales made through independent distributors during the third quarters of fiscal years 2026 and 2025 were 76% and 72%, respectively, of net sales and the remainder were made directly to customers.
We are a global business with customers and suppliers around the world. A significant amount of our third-party subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located outside the United States, including China, Israel, Japan, Taiwan and Vietnam. A significant amount of our assembly and test operations are conducted by third-party contractors located outside the United States, including China, Malaysia, Taiwan and Vietnam. Net sales outside the United States constituted 81% and 79% during the third quarters of fiscal years 2026 and 2025, respectively. Approximately 68% and 63% of our net sales during the third quarters of fiscal years 2026 and 2025, respectively, were to customers located in the Asia-Pacific region. We are subject to export restrictions and trade regulations, which have limited our ability to sell to certain customers in certain regions. In addition, changes in tariffs or the imposition of retaliatory tariffs may impact our net sales, gross profit, and gross margin if we are unable to pass higher costs on to our customers.
We use several metrics as indicators of future potential growth. The indicators that we believe best correlate to potential future sales growth are design wins and new product releases. There are many factors that may cause a design win or new product release to not result in sales, including a customer decision not to go to system production, a change in a customer’s perspective regarding a product’s value or a customer’s product failing in the end market. As a result, although a design win or new product release is an important step towards generating future sales, it does not necessarily result in us being awarded business or receiving a purchase commitment.
Further, inflationary factors have in the past affected, and could continue to affect, our future performance if we are unable to pass higher costs on to our customers.
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Results of Operations
Comparisons of the Three and Nine Months Ended October 26, 2025 and October 27, 2024
Net Sales
The following table summarizes our net sales by major end markets:

Three Months Ended Nine Months Ended
October 26, 2025 October 27, 2024 October 26, 2025 October 27, 2024
(in thousands, except percentages) Net Sales Net Sales Change Net Sales Net Sales Change
Infrastructure $ 77,901  $ 65,801  18  % $ 224,085  $ 174,720  28  %
High-End Consumer 41,860  40,019  5  % 118,470  111,638  6  %
Industrial 147,210  131,005  12  % 433,065  371,927  16  %
Total $ 266,971  $ 236,825  13  % $ 775,620  $ 658,285  18  %

Net sales in the third quarter of fiscal year 2026 were $267.0 million, an increase of 12.7% compared to $236.8 million in the third quarter of fiscal year 2025, which was primarily driven by higher net sales from our industrial and infrastructure end markets due to stronger demand and increased sales volume. Net sales from our industrial end market increased $16.2 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, primarily driven by an approximately $11.5 million increase in LoRa-enabled sales in industrial applications and approximately $7.3 million increase in IoT Hardware sales, partially offset by an approximately $1.5 million decrease in managed connectivity sales and approximately $1.1 million decrease in broadcast sales. Net sales from our infrastructure end market increased $12.1 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, primarily driven by an approximately $13.1 million increase in data center sales, partially offset by an approximately $1.9 million decrease in telecommunications sales. Net sales from our high-end consumer end market increased $1.8 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, primarily driven by an approximately $1.3 million increase in consumer TVS product sales.
Net sales for the first nine months of fiscal year 2026 were $775.6 million, an increase of 17.8% compared to $658.3 million for the first nine months of fiscal year 2025, which was primarily driven by higher net sales from our industrial and infrastructure end markets due to stronger demand and increased sales volume. Net sales from our industrial end market increased $61.1 million for the first nine months of fiscal year 2026 versus the same prior year period, primarily driven by an approximately $37.1 million increase in LoRa-enabled sales in industrial applications and approximately $35.0 million increase in IoT Hardware sales, partially offset by an approximately $8.1 million decrease in other wireless and sensing products sales and approximately $3.4 million decrease in broadcast sales. Net sales from our infrastructure end market increased $49.4 million for the first nine months of fiscal year 2026 versus the same prior year period, primarily driven by an approximately $68.5 million increase in data center sales, partially offset by an approximately $21.8 million decrease in telecommunications sales. Net sales from our high-end consumer end market increased $6.8 million during the first nine months of fiscal year 2026 versus the same prior year period, primarily driven by a $4.5 million increase in consumer TVS product sales and approximately $2.4 million increase in proximity sensing product sales.
The following table summarizes our net sales by reportable segment:

Three Months Ended Nine Months Ended
October 26, 2025 October 27, 2024 October 26, 2025 October 27, 2024
(in thousands, except percentages) Net Sales Net Sales Change Net Sales Net Sales Change
Signal Integrity $ 81,614  $ 71,509  14  % $ 231,893  $ 189,242  23  %
Analog Mixed Signal and Wireless 97,037  82,829  17  % 279,702  237,484  18  %
IoT Systems and Connectivity 88,320  82,487  7  % 264,025  231,559  14  %
Total $ 266,971  $ 236,825  13  % $ 775,620  $ 658,285  18  %

Net sales in the third quarter of fiscal year 2026, as compared to the third quarter of fiscal year 2025, benefited from stronger demand and increased sales volumes in all the reportable segments. Net sales from Analog Mixed Signal and Wireless increased $14.2 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, primarily driven by an approximately $11.8 million increase in LoRa-enabled product sales and approximately $2.5 million increase in total TVS product sales. Net sales from Signal Integrity increased $10.1 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, primarily driven by an approximately $13.1 million increase in data center sales, partially offset by an approximately $1.9 million decrease in telecommunications sales and approximately $1.1 million decrease in broadcast sales. Net sales from IoT Systems and Connectivity increased $5.8 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, primarily driven by an approximately $7.3 million increase in IoT
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Hardware sales, partially offset by an approximately $1.5 million decrease in managed connectivity sales.
Net sales from Signal Integrity increased $42.7 million in the first nine months of fiscal year 2026 versus the same prior year period, primarily driven by an approximately $68.5 million increase in data center sales, partially offset by an approximately $21.8 million decrease in telecommunications sales and approximately $3.4 million decrease in broadcast sales. Net sales from Analog Mixed Signal and Wireless increased $42.2 million in the first nine months of fiscal year 2026 versus the same prior year period, primarily driven by an approximately $37.4 million increase in LoRa-enabled product sales and approximately $9.9 million increase in total TVS product sales, partially offset by an approximately $8.1 million decrease in other wireless and sensing product sales. Net sales from IoT Systems and Connectivity increased $32.5 million in the first nine months of fiscal year 2026 versus the same prior year period, primarily driven by an approximately $35.0 million increase in IoT Hardware sales, partially offset by an approximately $2.5 million decrease in managed connectivity sales.
Gross Profit
The following table summarizes our gross profit and gross margin by reportable segment:

Three Months Ended Nine Months Ended
October 26, 2025 October 27, 2024 October 26, 2025 October 27, 2024
(in thousands, except percentages) Gross Profit Gross Margin Gross Profit Gross Margin Gross Profit Gross Margin Gross Profit Gross Margin
Signal Integrity $ 53,157  65.1  % $ 45,123  63.1  % $ 149,180  64.3  % $ 116,652  61.6  %
Analog Mixed Signal and Wireless
56,287  58.0  % 47,355  57.2  % 167,292  59.8  % 133,458  56.2  %
IoT Systems and Connectivity 32,364  36.6  % 33,831  41.0  % 97,341  36.9  % 88,036  38.0  %
Unallocated costs 1
(3,330) (5,341) (9,941) (12,122)
Total $ 138,478  51.9  % $ 120,968  51.1  % $ 403,872  52.1  % $ 326,024  49.5  %
1 Unallocated costs includes share-based compensation and amortization of acquired technology

In the third quarter of fiscal year 2026, gross profit increased $17.5 million to $138.5 million from $121.0 million in the third quarter of fiscal year 2025. This increase was primarily driven by an approximately $8.9 million increase from Analog Mixed Signal and Wireless, which experienced higher sales led by LoRa-enabled products due to stronger demand, an approximately $8.0 million increase from Signal Integrity, which experienced higher sales led by data center sales due to stronger demand, partially offset by lower telecommunications sales, and an approximately $1.5 million decrease from IoT Systems and Connectivity, primarily driven by higher overhead costs, partially offset by higher IoT Hardware sales due to stronger demand.
Our gross margin was 51.9% in the third quarter of fiscal year 2026, compared to 51.1% in the third quarter of fiscal year 2025. Gross margin for our Signal Integrity segment was 65.1% in the third quarter of fiscal year 2026, compared to 63.1% in the third quarter of fiscal year 2025, primarily due to favorable product mix. Gross margin for our Analog Mixed Signal and Wireless segment was 58.0% in the third quarter of fiscal year 2026, compared to 57.2% in the third quarter of fiscal year 2025, primarily due to favorable product mix. Gross margin for our IoT Systems and Connectivity segment was 36.6% in the third quarter of fiscal year 2026, compared to 41.0% in the third quarter of fiscal year 2025, primarily due to higher overhead costs.
In the first nine months of fiscal year 2026, gross profit increased $77.8 million to $403.9 million from $326.0 million in the first nine months of fiscal year 2025. This increase was primarily due to an approximately $33.8 million increase from Analog Mixed Signal, an approximately $32.5 million increase from Signal Integrity, and an approximately $9.3 million increase from IoT Systems and Connectivity, all of which experienced higher sales due to stronger demand.
Our gross margin was 52.1% in the first nine months of fiscal year 2026, compared to 49.5% in the first nine months of fiscal year 2025 . Gross margin from Signal Integrity was 64.3% in the first nine months of fiscal year 2026 , compared to 61.6% in the first nine months of fiscal year 2025, primarily due to favorable product mix . Gross margin from Analog Mixed Signal and Wireless was 59.8% in the first nine months of fiscal year 2026 , compared to 56.2% in the first nine months of fiscal year 2025, primarily due to favorable product mix . Gross margin from IoT Systems and Connectivity was 36.9% in the first nine months of fiscal year 2026, compared to 38.0% in the first nine months of fiscal year 2025, primarily due to higher overhead costs.
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Operating Expenses, net
The following table summarizes our operating expenses, net:

Three Months Ended Change Nine Months Ended Change
(in thousands, except percentages) October 26, 2025 October 27, 2024 October 26, 2025 October 27, 2024
Product development and engineering $ 49,404  $ 42,563  16  % $ 145,131  $ 124,251  17  %
Selling, general and administrative 57,113  59,777  (4) % 162,029  167,835  (3) %
Intangible amortization 148  148  —  % 443  737  (40) %
Restructuring 756  695  9  % 3,446  4,505  (24) %

Goodwill impairment —  —  100  % 41,991  —  100  %
Total operating expenses, net $ 107,421  $ 103,183  4  % $ 353,040  $ 297,328  19  %

Product Development and Engineering Expenses
Product development and engineering expenses increased $6.8 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025 primarily as a result of a $4.1 million increase from new product introduction expenses, a $1.3 million net increase in staffing-related costs from higher salaries, and a $0.8 million increase in facilities expenses.
Product development and engineering expenses increased $20.9 million in the first nine months of fiscal year 2026 compared to the first nine months of fiscal year 2025 primarily as a result of a $12.4 million net increase in staffing-related costs, including higher salaries and supplemental compensation, a $6.2 million increase from new product introduction expenses, and a $2.0 million increase in facilities expenses.
The levels of product development and engineering expenses reported in a fiscal period can be significantly impacted, and therefore experience period over period volatility, by the number of new product tape-outs and by the timing of recoveries from engineering services, which are typically recorded as a reduction to product development and engineering expense.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased $2.7 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025 primarily as a result of a $4.5 million net decrease in staffing-related costs from lower supplemental compensation and share-based compensation, partially offset by a $1.5 million increase in consulting expenses, and a $0.8 million increase in bad debt expense.
Selling, general and administrative expenses decreased $5.8 million in the first nine months of fiscal year 2026 compared to the first nine months of fiscal year 2025 primarily as a result of a $10.0 million net decrease in staffing-related costs driven by lower share-based compensation caused by remeasurement of the cash-settled awards liability, partially offset by a $4.3 million increase in consulting expenses.
Intangible Amortization
Intangible amortization was $0.1 million and $0.1 million for the third quarters of fiscal years 2026 and 2025, respectively, and $0.4 million and $0.7 million for the first nine months of fiscal years 2026 and 2025, respectively. The amortization of acquired technology intangible assets is reflected in cost of sales.
Restructuring
Restructuring expenses increased by $0.1 million in the third quarter of fiscal year 2026 compared to the third quarter of fiscal year 2025, and decreased by $1.1 million for the first nine months of fiscal year 2026 compared to the same period in fiscal year 2025 primarily due to structural reorganization actions in the prior year periods to reduce our workforce as a result of cost-saving measures and internal resource alignment including from the realization of synergies of the Sierra Wireless Acquisition.
Goodwill Impairment
Goodwill impairment was $42.0 million for the first nine months of fiscal year 2026 primarily due to reduced earnings forecasts associated with the IoT Connected Services reporting unit, included in the IoT Systems and Connectivity operating segment, compared to no goodwill impairment recorded in the first nine months of fiscal year 2025. There was no goodwill impairment at any of the Company's other reporting units in the first nine months of fiscal year 2026. There was no goodwill impairment recorded in the third quarters of fiscal years 2026 and 2025.
See Note 7, Goodwill and Intangible Assets, to our interim unaudited condensed consolidated financial statements for additional information.
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Interest Expense
Interest expense, including amortization and a write-off of deferred financing costs, increased by $6.2 million to $27.0 million from $20.8 million for the third quarter of fiscal year 2026 compared to the same period in fiscal year 2025, primarily due to the induced conversion expense of $21.2 million in connection with the 2025 Exchange of 2027 Notes and 2025 Exchange of 2028 Notes, partially offset by interest savings as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025, and the full repayment of the Revolving Credit Facility (as defined below) and Term Loans (as defined below) from the fourth quarter of fiscal year 2025 through the third quarter of fiscal year 2026.
Interest expense, including amortization and a write-off of deferred financing costs, decreased by $33.8 million to $38.8 million from $72.6 million for the first nine months of fiscal year 2026 compared to the same period in fiscal year 2025, primarily due to interest savings as a result of approximately $188.1 million of 2028 Notes extinguished in exchange for common stock in the second quarter of fiscal year 2025, and the full repayment of the Revolving Credit Facility (as defined below) and Term Loans (as defined below) from the fourth quarter of fiscal year 2025 through the third quarter of fiscal year 2026, partially offset by the induced conversion expense of $21.2 million in connection with the 2025 Exchange of 2027 Notes and 2025 Exchange of 2028 Notes.
Investment Impairments and Credit Loss Reserves, Net
During the third quarter and first nine months of fiscal year 2026 and third quarter of fiscal year 2025, we did not record any investment impairments and credit loss reserves. During the first nine months of 2025, investment impairments and credit loss reserves, net totaled a loss of $1.1 million due to an other-than-temporary impairment on one of our non-marketable equity investments.
Provision for Income Taxes
We recorded income tax expense of $7.3 million in the third quarter of fiscal year 2026, compared to income tax expense of $4.0 million in the third quarter of fiscal year 2025. The change in our tax provision for the three months ended October 26, 2025, compared to the three months ended October 27, 2024 was primarily due to a regional mix of income and changes in valuation allowance. The effective tax rates in the third quarters of fiscal years 2026 and 2025 differ from the statutory federal income tax rate of 21% primarily due to regional mix of income, changes in valuation allowance, impact of global intangible low-taxed income ("GILTI") and research and development ("R&D") credits. The Tax Cuts and Jobs Act ("TCJA") requires R&D costs incurred for tax years beginning after December 31, 2021 to be capitalized and amortized ratably over five or fifteen years for tax purposes, depending on where the research activities are conducted. We have elected to treat GILTI as a period cost and the additional capitalization of R&D costs within GILTI increases our provision for income taxes. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the TCJA. The OBBBA permanently changes the limitation on the deduction of business interest expense, as well as makes permanent the immediate deduction for domestic R&D expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact on our income tax provision for the three and nine months ended October 26, 2025. This legislation may be subject to further clarification and the issuance of interpretive guidance; however, we do not expect a material impact to our effective tax rate for fiscal year 2026 at this time.
In the first nine months of fiscal year 2026, we recorded income tax expense of $20.8 million, compared to income tax expense of $11.2 million in the first nine months of fiscal year 2025. The change in our tax provision for the nine months ended October 26, 2025, compared to the nine months ended October 27, 2024 was primarily due to a regional mix of income, changes in valuation allowance, non-deductibility of goodwill impairment, impact of GILTI and R&D credits. The effective tax rates in the first nine months of fiscal years 2026 and 2025 differ from the statutory federal income tax rate of 21% primarily due to a regional mix of income, changes in valuation allowance, non-deductibility of goodwill impairment, impact of GILTI and R&D credits.
As a global organization, we are subject to audit by taxing authorities in various jurisdictions. To the extent that an audit, or the closure of a statute of limitations, results in adjusting our reserves for uncertain tax positions, our effective tax rate could experience extreme volatility since any adjustment would be recorded as a discrete item in the period of adjustment.
For further information on the effective tax rate and the TCJA's and OBBBA's impacts, see Note 9, Income Taxes, to our interim unaudited condensed consolidated financial statements.

Liquidity and Capital Resources
Our capital requirements depend on a variety of factors including, but not limited to, the rate of increase or decrease in our existing business base; the success, timing and amount of investment required to bring new products to market; sales growth or decline; potential acquisitions or divestitures; the general economic environment in which we operate; and our ability to generate cash flows from operating activities.
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We believe that our cash on hand, expected cash generation from future operations and available borrowing capacity under the Revolving Credit Facility are sufficient to meet liquidity requirements for at least the next 12 months, including funds needed for our material cash requirements. As of October 26, 2025, we had $164.7 million in cash and cash equivalents and $451.6 million of available undrawn borrowing capacity on our Revolving Credit Facility, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults. Over the longer-term, we expect to fund our business using cash flows from operating activities.
As of October 26, 2025 and January 26, 2025, there was $3.4 million and $2.9 million, respectively, outstanding under the letters of credit under the Revolving Credit Facility.
A meaningful portion of our capital resources, and the liquidity they represent, are held by our subsidiaries outside of the U.S. As of October 26, 2025, our foreign subsidiaries held $123.3 million of cash and cash equivalents, compared to $139.1 million at January 26, 2025. Our liquidity may be impacted by fluctuating exchange rates. For additional information on exchange rates, see Item 3–Quantitative and Qualitative Disclosures About Market Risk.
In connection with the enactment of the TCJA, all historic and current foreign earnings are taxed in the U.S. Depending on the jurisdiction, these foreign earnings are potentially subject to a withholding tax, if repatriated. As of October 26, 2025, our historical undistributed earnings prior to fiscal year 2023 of our foreign subsidiaries are intended to be permanently reinvested outside of the U.S. With the enactment of the TCJA, which amended the Internal Revenue Code of 1986, all post-1986 previously unremitted earnings for which no U.S. deferred tax liability had been accrued were subject to U.S. tax. As a result of the U.S. taxation of these amounts, we have determined that none of the foreign earnings from fiscal year 2023 onward will be permanently reinvested outside of the U.S. If we needed to remit all or a portion of our historical undistributed earnings to the U.S. for investment in our domestic operations, any such remittance could result in increased tax liabilities and a higher effective tax rate. Determination of the amount of the unrecognized potential deferred tax liability on these unremitted earnings is not practicable.
We expect our future non-operating uses of cash will be for capital expenditures and debt repayment . We expect to fund these cash requirements through cash flows from operating activities.
Credit Agreement
On September 26, 2022, we entered into a third amendment and restatement credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement") with the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, swing line lender and letter of credit issuer.
On April 24, 2025, we entered into the fourth amendment (the "Fourth Amendment") to the Credit Agreement, in order to, among other things, increase the total available borrowing capacity under the revolving credit facility under the Credit Agreement (the "Revolving Credit Facility") by $117.5 million, increasing the total facility size to $455.0 million. The increase partially replaces borrowing capacity that matured on November 7, 2024. Other than the foregoing, the material terms of the Credit Agreement remain unchanged.
After effectiveness of the Fourth Amendment, the borrowing capacity on the Revolving Credit Facility is $455.0 million, which is scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity), and the term loans thereunder (the "Term Loans") were scheduled to mature on January 12, 2028 (subject to, in certain circumstances, an earlier springing maturity).
As of October 26, 2025, the Company had no amounts outstanding under the Term Loans and no revolving loans outstanding under the Revolving Credit Facility, which had available undrawn borrowing capacity of $451.6 million, subject to net leverage limitations and customary conditions precedent, including the accuracy of representations and warranties and the absence of defaults.
Up to $40.0 million of the Revolving Credit Facility may be used to obtain letters of credit, up to $25.0 million of the Revolving Credit Facility may be used to obtain swing line loans, and up to $75.0 million of the Revolving Credit Facility may be used to obtain revolving loans and letters of credit in certain currencies other than U.S. Dollars. The proceeds of the Revolving Credit Facility may be used by us for capital expenditures, permitted acquisitions, permitted dividends, working capital and general corporate purposes.
As of October 26, 2025, we were in compliance with the financial covenants in our Credit Agreement. The Credit Agreement also contains customary provisions pertaining to events of default. If any event of default occurs, the obligations under the Credit Agreement may be declared due and payable, terminated upon written notice to us and existing letters of credit may be required to be cash collateralized.
See Note 8, Long-Term Debt to our interim unaudited condensed consolidated financial statements for additional information regarding the terms of the Credit Agreement.
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We had entered into interest rate swap agreements to hedge the variability of interest payments on debt outstanding under the Term Loans. As of October 26, 2025, there were no interest rate swap agreements outstanding. See Note 16, Derivatives and Hedging Activities, to our interim unaudited condensed consolidated financial statements for additional information.
Convertible Senior Notes Due 2027
On October 12, 2022 and October 21, 2022, we issued and sold $300.0 million and $19.5 million, respectively, in aggregate principal amount of the 2027 Notes in a private placement. The 2027 Notes were issued pursuant to an indenture dated October 12, 2022, by and among us, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2027 Notes bear interest at a rate of 1.625% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2023. The 2027 Notes will mature on November 1, 2027, unless earlier converted, redeemed or repurchased. The 2027 Notes are not currently redeemable and, as of October 26, 2025, one of the conditions allowing holders of the 2027 Notes to convert had been met. The trading price of our common stock remained above 130% of the applicable conversion price for at least 20 trading days during the 30 consecutive trading-day period ending on, and including, October 24, 2025 (the last trading day of the quarter ended October 26, 2025), resulting in the right of the holders of the 2027 Notes to convert their 2027 Notes beginning October 27, 2025 through January 23, 2026 (the last trading day of the quarter ending January 25, 2026). Should the holders of the 2027 Notes elect to convert some or all of the outstanding 2027 Notes, the Company intends to draw on its Revolving Credit Facility to settle the obligation. The 2027 Notes were initially issued pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act.
We used approximately $72.6 million of the net proceeds from the 2027 Notes to pay for the cost of the Convertible Note Hedges, after such cost was partially offset by approximately $42.9 million of proceeds to us from the sale of Warrants in connection with the issuance of the 2027 Notes, all as defined and described in Note 8, Long-Term Debt to our interim unaudited condensed consolidated financial statements. The Convertible Note Hedges and Warrants transactions are indexed to, and potentially settled in, our common stock and the net cost of $29.7 million has been recorded as a reduction to additional paid-in capital in the consolidated statement of stockholders' equity (deficit). We used the remaining net proceeds to fund a portion of the consideration in the Sierra Wireless Acquisition and to pay related fees and expenses. For additional information on the 2027 Notes, Convertible Note Hedges and the Warrants, see Note 8, Long-Term Debt to our interim unaudited condensed consolidated financial statements.
On October 7, 2025, the Company entered into the 2025 Exchange of 2027 Notes with certain holders of the 2027 Notes. Pursuant to the 2025 Exchange of 2027 Notes, on October 14, 2025, the Company used approximately $220.6 million of the net proceeds from the 2030 Notes (discussed below), together with the issuance of 3,036,192 shares of the Company's common stock as consideration for the exchange of approximately $219.0 million aggregate principal amount of the 2027 Notes and accrued interest. The Company accounted for these exchange transactions as an induced conversion. In the three and nine months ended October 26, 2025, in connection with the exchange transactions, the Company recognized an induced conversion expense of $17.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $14.3 million on the Balance Sheets, which included $3.3 million from the write-off of deferred financing costs.
In connection with the 2025 Exchange of 2027 Notes, the Company also terminated the Convertible Note Hedges and the Warrants corresponding to the number of 2027 Notes exchanged. The Company received approximately $24.5 million in connection with the termination, which was recorded as an increase to additional paid-in capital on the Balance Sheets.
Convertible Senior Notes Due 2028
On October 26, 2023, we issued and sold $250.0 million in aggregate principal amount of 2028 Notes in a private placement. The 2028 Notes were issued pursuant to an indenture, dated October 26, 2023, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2028 Notes bore interest at a rate of 4.00% per year, payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2024. The 2028 Notes were scheduled to mature on November 1, 2028, unless earlier converted, redeemed or repurchased. The 2028 Notes were offered and sold only to eligible purchasers who are both "qualified institutional buyers" within the meaning of Rule 144A under the Securities Act and "accredited investors" within the meaning of Rule 501(a) under the Securities Act, in reliance on Section 4(a)(2) under the Securities Act.
On July 11, 2024 and July 15, 2024, we entered into separate, privately negotiated exchange agreements (the "2024 Exchange of 2028 Notes") with certain holders of the 2028 Notes. Pursuant to the 2024 Exchange of 2028 Notes, certain holders of the 2028 Notes exchanged with us approximately $188.1 million in aggregate principal amount of 2028 Notes held by them for an aggregate of 10,378,431 shares of our common stock, which number of shares was determined over an averaging period that commenced on July 12, 2024.
On October 7, 2025, the Company entered into the 2025 Exchange of 2028 Notes with holders of the 2028 Notes. Pursuant to the 2025 Exchange of 2028 Notes, on October 14, 2025, the Company used approximately $63.1 million of the net proceeds from the 2030 Notes (discussed below), together with the issuance of 2,217,394 shares of the Company's common stock as consideration for the exchange of the remaining $62.0 million aggregate principal amount of the 2028 Notes and accrued
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interest. The Company accounted for these exchange transactions as an induced conversion. In the three and nine months ended October 26, 2025, in connection with the exchange transactions, the Company recognized an induced conversion expense of $3.6 million recorded in "Interest expense" on the Statements of Operations and an increase to "Additional paid-in capital" of $2.2 million on the Balance Sheets, which included $1.3 million from the write-off of deferred financing costs.
For additional information on the 2028 Notes, see Note 8, Long-Term Debt to our interim unaudited condensed consolidated financial statements.
Convertible Senior Notes Due 2030
On October 10, 2025, the Company issued and sold $402.5 million in aggregate principal amount of 2030 Notes in a private placement. The 2030 Notes were issued pursuant to an indenture, dated October 10, 2025, by and among the Company, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee. The 2030 Notes are jointly and severally and fully and unconditionally guaranteed by each of the Company's current and future direct and indirect wholly-owned domestic subsidiaries that guarantee its borrowings under its Credit Agreement. The 2030 Notes do not bear any interest and will mature on October 15, 2030, unless earlier converted, redeemed or repurchased. As of October 26, 2025, $402.5 million of the 2030 Notes remained outstanding.
Capital Expenditures and Research and Development
We incur significant expenditures in order to fund the development, design and manufacture of new products. We intend to continue to focus on those areas that have shown potential for viable and profitable market opportunities, which may require additional investment in equipment and the hiring of additional design and application engineers aimed at developing new products. Certain of these expenditures, particularly the addition of design engineers, do not generate significant payback in the short-term. We plan to finance these expenditures with cash generated by our operating activities, our existing cash balances and additional draws on our Revolving Credit Facility, as needed. Borrowings under our Revolving Credit Facility are subject to customary conditions precedent, including the accuracy of representations and warranties and the absence of any defaults under the facility.
Portfolio Rationalization
We are continuing to conduct a portfolio rationalization review, which has included identifying non-core assets in an effort to align our portfolio with our strategic vision and preferred margin profile. As part of the portfolio rationalization review, we are reviewing potential strategic alternatives for certain of our non-core assets. No decision has been made regarding any strategic alternative or any particular asset, and there is no assurance that the exploration of strategic alternatives will result in any transactions, nor any specified timeline.
Purchases under our Stock Repurchase Program
We currently have in effect a stock repurchase program that was initially approved by our Board of Directors in March 2008. On March 11, 2021, the Board of Directors approved the expansion of the stock repurchase program by an additional $350.0 million. Under the program, subject to the terms of the Credit Agreement, we may repurchase our common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations. Our repurchases may be made through Rule 10b5-1 and/or Rule 10b-18 or other trading plans, open market purchases, privately negotiated transactions, block purchases or other transactions.
We did not repurchase any shares of our common stock under the program in the first nine months of fiscal year 2026 or in the first nine months of fiscal year 2025. As of October 26, 2025, the remaining authorization under the program was $209.4 million. To the extent we repurchase any shares of our common stock under the program in the future, we expect to fund such repurchases from cash on hand and borrowings on our Revolving Credit Facility. We have no obligation to repurchase any shares under the program and may suspend or discontinue it at any time.
Working Capital
Working capital, defined as total current assets less total current liabilities including the current portion of long-term debt, fluctuates depending on end-market demand and our effective management of certain items such as receivables, inventory and payables. In times of escalating demand, our working capital requirements may increase as we purchase additional manufacturing materials and increase production. In addition, our working capital may be affected by potential acquisitions and transactions involving our debt instruments. Although investments made to fund working capital will reduce our cash balances, these investments are necessary to support business and operating initiatives.
Material Cash Requirements
Except as disclosed above, there have been no material changes to our cash requirements from those disclosed in our Annual Report on Form 10-K for the fiscal year ended January 26, 2025.
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Cash Flows
In summary, our cash flows for each period were as follows:

Nine Months Ended
(in thousands) October 26, 2025 October 27, 2024
Net cash provided by operating activities $ 119,681  $ 24,491 
Net cash used in investing activities (14,256) (4,085)
Net cash used in financing activities (94,104) (12,057)
Effect of foreign exchange rate changes on cash and cash equivalents 1,606  (430)
Net increase in cash and cash equivalents $ 12,927  $ 7,919 

Operating Activities
Net cash provided by or used in operating activities is driven by net income or loss adjusted for non-cash items and fluctuations in operating assets and liabilities.
Operating cash flows for the first nine months of fiscal year 2026 compared to the first nine months of fiscal year 2025 were favorably impacted by a 17.8% increase in net sales, significantly lower interest payments on debt, and lower restructuring payments related to employee termination benefits, and were unfavorably impacted by an increase in annual bonus payments and an incremental increase in inventory spend.
Investing Activities
Net cash provided by or used in investing activities is primarily driven by capital expenditures, purchases and sales of investments, purchases of intangibles, and proceeds from or premiums paid for corporate-owned life insurance.
Capital expenditures were $7.4 million for the first nine months of fiscal year 2026 compared to $5.2 million for the first nine months of fiscal year 2025.
In the first nine months of fiscal year 2026, we sold investments for proceeds of $1.9 million compared to $2.7 million for the first nine months of fiscal year 2025. In the first nine months of fiscal year 2025, we paid $0.4 million for strategic investments in companies that are enabling the LoRa and LoRaWAN®-based ecosystem. No similar investments were made in the first nine months of fiscal year 2026.
Purchases of intangibles were $5.4 million for the first nine months of fiscal year 2026, compared to $5.9 million for the first nine months of fiscal year 2025, which included capitalized development costs and software licenses.
In the first nine months of fiscal year 2026, we paid $3.4 million in premiums into our corporate-owned life insurance policy in order to provide substantive coverage for our deferred compensation liability. In the first nine months of fiscal year 2025, we received $4.8 million of proceeds from corporate-owned life insurance, which were used to pay deferred compensation distributions.
Financing Activities
Net cash provided by or used in financing activities is primarily attributable to payments on our Term Loans, proceeds from and payments of convertible senior notes, repurchase of warrants, proceeds from unwind of bond hedge, purchase of capped calls, payments related to deferred financing costs, payments related to employee share-based compensation payroll taxes and proceeds from the exercise of stock options.
In the first nine months of fiscal year 2026, we made prepayments of $181.2 million on our Term Loans. No such prepayments were made in the first nine months of fiscal year 2025.
In the first nine months of fiscal year 2026, we collected proceeds of $402.5 million from and made prepayments of $281.0 million on our convertible senior notes, as discussed above. No such proceeds were collected or no such prepayments were made in the first nine months of fiscal year 2025.
In the first nine months of fiscal year 2026, we paid $10.6 million for deferred financing costs, compared to $0.8 million for the first nine months of fiscal year 2025.
In the first nine months of fiscal year 2026, we paid $18.7 million for employee share-based compensation payroll taxes and received $1.5 million in proceeds from the exercise of stock options. In the first nine months of fiscal year 2025, we paid $7.3 million for employee share-based compensation payroll taxes and received $1.2 million in proceeds from the exercise of stock options.
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Critical Accounting Estimates
Our critical accounting policies and estimates are disclosed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of our Annual Report on Form 10-K for the fiscal year ended January 26, 2025. While, there have been no significant changes to our policies during the three and nine months ended October 26, 2025, we revised certain assumptions within one of our critical accounting estimates to reflect developments during the first nine months of fiscal year 2026.
Goodwill
During the first nine months of fiscal year 2026, the Company determined that the fair value of its IoT Connectivity Services reporting unit, which is part of the IoT Systems and Connectivity segment, exceeded its carrying amount due to reduced earnings forecasts. As a result, the Company recorded $42.0 million of total pre-tax non-cash goodwill impairment charges for the first nine months of fiscal year 2026 to write down the carrying value of the IoT Connected Services reporting unit to its fair value. The Fair value of the reporting unit was determined based on a discounted cash flow model (an income approach) and earnings multiples (a market approach). Significant inputs to the reporting unit fair value measurements included forecasted cash flows, discount rates, terminal growth rates and earnings multiples, which were determined by management estimates and assumptions. While we believe the judgments and assumptions are reasonable, different assumptions could change the estimated fair value and, therefore, additional impairments could be required.
For further discussion of goodwill and intangible assets, see Note 7, Goodwill and Intangible Assets to our interim unaudited condensed consolidated financial statements.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 1, Organization and Basis of Presentation to our interim unaudited condensed consolidated financial statements.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to a variety of market risks, including commodity risk and the risks related to foreign currency, interest rates and market performance that are discussed in Item 7A of our Annual Report on Form 10-K for the fiscal year ended January 26, 2025. Many of the factors that can have an impact on our market risk are external to us, and so we are unable to fully predict them.
Commodity Risk
We are subject to risk from fluctuating market prices of certain commodity raw materials, particularly gold, that are incorporated into our end products or used by our suppliers to process our end products. Increased commodity prices are passed on to us in the form of higher prices from our suppliers, either in the form of general price increases or a commodity surcharge. Although we generally deal with our suppliers on a purchase order basis rather than on a long-term contract basis, we generally attempt to obtain firm pricing for volumes consistent with planned production. Our gross margins may decline if we are not able to increase selling prices of our products or obtain manufacturing efficiencies to offset the increased cost. We do not enter into formal hedging arrangements to mitigate against commodity risk.
Foreign Currency Risk
Our foreign operations expose us to the risk of fluctuations in foreign currency exchange rates against our functional currencies and we may economically hedge this risk with foreign currency contracts (such as currency forward contracts). Gains or losses on these balances are generally offset by corresponding losses or gains on the related hedging instruments. As of October 26, 2025, our largest foreign currency exposures were from the Australian Dollar, Canadian Dollar, Euro, Great British Pound, Swiss Franc and Mexican Peso.
We considered the historical trends in foreign currency exchange rates and determined that it is reasonably possible that adverse changes in foreign exchange rates of 10% for all currencies could be experienced in the near-term. These reasonably possible adverse changes were applied to our total monetary assets and liabilities denominated in currencies other than our functional currency as of the end of our third quarter of fiscal year 2026. The adverse impact these changes would have had (after taking into account balance sheet hedges only) on our income before taxes is $2.6 million for the quarter ended October 26, 2025.
Interest rate and credit risk
While we had no revolving loans outstanding under the Revolving Credit Facility as of October 26, 2025, future borrowing under our Credit Agreement is subject to variable interest rates.
In the first quarter of fiscal year 2024, we entered into an interest rate swap agreement with a 2.75 year term to hedge the variability of interest payments on $150.0 million of debt outstanding on the Term Loans at a Term SOFR rate of 3.58%, plus a variable margin and spread based on our consolidated leverage ratio. This interest rate swap agreement was partially terminated in the second quarter of fiscal year 2026 and fully terminated in the third quarter of fiscal year 2026.
Interest rates also affect our return on excess cash and investments. As of October 26, 2025, we had $164.7 million of cash and cash equivalents. A majority of our cash and cash equivalents generate interest income based on prevailing interest rates. Interest income, net of reserves, generated by our investments and cash and cash equivalents was not material in the third quarter of fiscal year 2026. A significant change in interest rates would impact the amount of interest income generated from our cash and investments. It would also impact the market value of our investments.
Our investments are primarily subject to credit risk. Our investment guidelines prescribe credit quality, permissible investments, diversification, and duration restrictions. These restrictions are intended to limit risk by restricting our investments to high quality debt instruments with relatively short-term durations. Our investment strategy limits investment of new funds and maturing securities to U.S. Treasury, Federal agency securities, high quality money market funds and time deposits with our principal commercial banks. Outside of these investment guidelines, we also invest in a limited amount of debt securities in privately held companies that we view as strategic to our business. For example, many of these investments are in companies that are enabling the LoRa®- and LoRaWAN® -based ecosystem.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. We maintain cash held in deposit at financial institutions in the U.S. These deposits are insured by the FDIC in an amount up to $250,000 for any depositor. To the extent we hold cash deposits in amounts that exceed the FDIC insurance limitation, we may incur a loss in the event of a failure of any of the financial institutions where we maintain deposits. There can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or any applicable foreign government in the future or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event
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of a future failure or liquidity crisis. In addition, if any of our partners or parties with whom we conduct business are unable to access funds due to the status of their financial institution, such parties' ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. Management believes we are not exposed to significant risk due to the financial position of the depository institution, but will continue to monitor regularly and adjust, if needed, to mitigate risk. We have established guidelines regarding diversification of our investments and their maturities, which are designed to maintain principal and maximize liquidity. To date, we have not experienced any losses associated with this credit risk and continue to believe that this exposure is not significant.

ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate to allow timely decisions regarding required disclosure. Our management, with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of October 26, 2025.
Changes in Internal Controls
As of October 26, 2025, there were no changes to our internal control over financial reporting that occurred during the fiscal quarter then ended that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
 

ITEM 1. Legal Proceedings
Information about our material legal proceedings is set forth in Note 11, Commitments and Contingencies to the interim unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report and incorporated by reference herein.
We have elected to disclose environmental proceedings described in Item 103(c)(3)(iii) of Regulation S-K unless we reasonably believe that such proceeding will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $1,000,000.

ITEM 1A. Risk Factors
Please carefully consider and evaluate all of the information in this Quarterly Report and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended January 26, 2025. If any of these risks actually occur, our business could be materially harmed. If our business is harmed, the trading price of our common stock could decline.
The risk factors associated with our business have not materially changed as compared to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended January 26, 2025.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
As previously disclosed in our Current Report on Form 8-K filed on October 6, 2025 and October 10, 2025, we entered into separate, privately negotiated exchange agreements with certain holders of our 2027 Notes and 2028 Notes. Pursuant to the 2025 Exchange of 2027 Notes and the 2025 Exchange of 2028 Notes, on October 14, 2025, certain holders exchanged approximately $219.0 million and $62.0 million, respectively, in aggregate principal amount of the 2027 Notes and 2028 Notes and accrued interest for proceeds of $220.6 million and $63.1 million, respectively, and an aggregate of 3,036,192 and 2,217,394 newly issued shares of our common stock, respectively, which were exempt from registration under Section 3(a)(9) and 4(a)(2) of the Securities Act of 1933, as amended, and Rule 144, as amended, promulgated thereunder.
Issuer Purchase of Equity Securities
None.

ITEM 3. Defaults Upon Senior Securities
None.

ITEM 4. Mine Safety Disclosures
Not applicable.
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ITEM 5. Other Information
Insider Trading Arrangements
Securities Trading Arrangements of Directors and Executive Officers
The following table sets forth certain information regarding any "Rule 10b5-1 trading arrangements" (a "trading plan") or "non-Rule 10b5-1 trading arrangements," each as defined in Item 408 of Regulation S-K, adopted or terminated by the Company's directors and executive officers during the fiscal quarter ended October 26, 2025. All of these trading plans were adopted during the Company's quarterly open trading window in accordance with the Company's Stock Trading Guidelines for Semtech Stock for All Directors, Officers and Employees.

Date of Action Trading Arrangements
Name and Title Action Rule 10b5-1(a) Non-Rule 10b5-1(b) Total Shares to be Purchased or Sold (c) Duration (d)
Asaf Silberstein Terminate 9/3/2025 X 15,500 December 6, 2024 through September 30, 2025
EVP and Chief Operating Officer
Asaf Silberstein Adopt 9/5/2025 X 35,500 December 5, 2025 through September 4, 2026

EVP and Chief Operating Officer

(a) Intended to satisfy the affirmative defense of Rule 10b5-1(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(b) Not intended to satisfy the affirmative defense of 10b5-1(c) promulgated under the Exchange Act.
(c) The numbers in this column represent the maximum number of shares of our common stock that may be sold pursuant to each trading plan.
(d) Transactions under the trading plan may occur during the specified plan duration period and will expire the earlier of the end of the specified plan duration period or the completion of all sales under such trading plan.

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ITEM 6. Exhibits
Documents that are not physically filed with this report are incorporated herein by reference to the location indicated.

Exhibit No. Description Location

3.1 Restated Certificate of Incorporation of Semtech Corporation Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 26, 2003

3.2 Amended and Restated Bylaws of Semtech Corporation, adopted on June 3, 2025 Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 9, 2025

4.1 Indenture, dated as of October 10, 2025, between Semtech Corporation, the subsidiary guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 10, 2025

4.2 Form of 0% Convertible Senior Notes due 2030 Exhibit 4.2 to the Company's Current Report on Form 8-K filed on October 10, 2025

10.1 Form of Capped Call Confirmation Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 10, 2025

31.1 Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended Filed herewith

31.2 Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended Filed herewith

32 Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Exhibit 32 is being furnished and shall not be deemed "filed") Furnished herewith

101 The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended October 26, 2025, formatted in Inline XBRL: (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income and Loss, (iii) Consolidated Balance Sheets (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flow and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

104 The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended October 26, 2025, formatted in Inline XBRL (included as Exhibit 101).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

SEMTECH CORPORATION
Registrant

Date: November 25, 2025 /s/ Mark Lin
Mark Lin
Executive Vice President and Chief Financial Officer
(Principal Accounting and Financial Officer)

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