Astera Labs, Inc. (ALAB) · Quarterly Report (10-Q) SEC Filing

Part I - Financial Information ITEM 1. Financial Statements (Unaudited) ASTERA LABS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par values) (unaudited) As of June 30, 2026December 31, 2025 Assets Current assets Cash and cash equivalents$111,453 $167,611 Marketable securities1,141,505 1,021,205 Accounts receivable, net192,469 83,202 Inventory113,781 58,979 Prepaid expenses and other current assets92,687 31,033 Total current assets1,651,895 1,362,030 Property and equipment, net119,284 92,038 Goodwill 91,557 19,015 Other assets68,765 58,740 Total assets$1,931,501 $1,531,823 Liabilities and Stockholders Equity Current liabilities Accounts payable$53,930 $42,362 110,377 90,680 Total current liabilities164,307 133,042 Other liabilities41,490 35,147 Total liabilities205,797 168,189 Commitments and contingencies (Note 8) Stockholders equity Common stock, $0.0001 par value; 1,000,000 shares authorized as of June 30, 2026 and December 31, 2025; 173,485 and 170,186 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 17 17 Additional paid-in capital1,485,320 1,348,969 Accumulated other comprehensive (loss) income (3,369)4,310 Retained earnings243,736 10,338 Total stockholders equity1,725,704 1,363,634 Total liabilities and stockholders equity$1,931,501 $1,531,823 The accompanying notes are an integral part of these condensed consolidated financial statements. 1 Table of Content ASTERA LABS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (In thousands, except per share amounts) (unaudited) Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 Revenue$392,400 $191,925 $700,761 $351,367 Cost of revenue104,833 46,362 178,053 86,393 Gross profit287,567 145,563 522,708 264,974 Operating expenses Research and development135,898 66,724 261,532 131,278 Sales and marketing26,372 18,609 48,271 40,311 General and administrative36,049 20,456 61,824 42,326 Total operating expenses198,319 105,789 371,627 213,915 Operating income89,248 39,774 151,081 51,059 Interest and other income13,577 10,885 25,158 21,317 Income before income taxes102,825 50,659 176,239 72,376 Income tax benefit50,263 560 57,159 10,662 Net income$153,088 $51,219 $233,398 $83,038 Basic $0.89 $0.31 $1.36 $0.51 Diluted$0.83 $0.29 $1.28 $0.47 Weighted-average shares used in calculating net income per share attributable to common stockholders: Basic 172,378165,428171,557164,316 Diluted183,340178,100182,254178,281 Other comprehensive (loss) income Unrealized (loss) gain on marketable securities, net of taxes$(2,589)$846 $(7,679)$2,448 Total other comprehensive (loss) gain(2,589)846 (7,679)2,448 Total comprehensive income$150,499 $52,065 $225,719 $85,486 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Table of Contents ASTERA LABS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (In thousands) (unaudited) Three Months Ended June 30, 2026 Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Stockholders Equity SharesAmount Balances as of March 31, 2026171,277$17 $1,404,063 $(780)$90,648 $1,493,948 Issuance of common stock upon exercise of stock options 930 755 755 Issuance of common stock upon vesting of restricted and performance stock units1,100 Issuance of common stock upon exercise of warrants126 Shares issued under employee stock purchase plan52 6,294 6,294 Stock-based compensation 63,992 63,992 10,216 10,216 Unrealized loss on marketable securities (2,589) (2,589) Net income 153,088 153,088 Balances as of June 30, 2026173,485$17 $1,485,320 $(3,369)$243,736 $1,725,704 Three Months Ended June 30, 2025 Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income Accumulated DeficitTotal Stockholders Equity SharesAmount Balances as of March 31, 2025164,907$16 $1,216,495 $2,028 $(176,977)$1,041,562 Issuance of common stock upon exercise of stock options and vesting of early exercised stock options321 506 506 Issuance of common stock upon vesting of restricted stock units9241 1 Shares issued under employee stock purchase plan594,345 4,345 Stock-based compensation 35,474 35,474 Warrants contra revenue 1,761 1,761 Unrealized gains on marketable securities 846 846 Net income 51,219 51,219 Balances as of June 30, 2025166,211$17 $1,258,581 $2,874 $(125,758)$1,135,714 Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Stockholders Equity SharesAmount Balances as of December 31, 2025170,186$17 $1,348,969 $4,310 $10,338 $1,363,634 Issuance of common stock upon exercise of stock options and vesting of early exercised stock options1,028 869 869 Issuance of common stock upon vesting of restricted and performance stock units2,093 Issuance of common stock upon exercise of warrants126 Shares issued under employee stock purchase plan52 6,294 6,294 Stock-based compensation 116,875 116,875 Warrants contra revenue 12,313 12,313 Unrealized loss on marketable securities (7,679) (7,679) Net income 233,398 233,398 Balances as of June 30, 2026173,485$17 $1,485,320 $(3,369)$243,736 $1,725,704 Six Months Ended June 30, 2025 Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income Accumulated DeficitTotal Stockholders Equity SharesAmount Balances as of December 31, 2024162,018$16 $1,173,153 $426 $(208,796)$964,799 Issuance of common stock upon exercise of stock options and vesting of early exercised stock options896 1,028 1,028 Issuance of common stock upon vesting of restricted stock units3,2381 1 Shares issued under employee stock purchase plan59 4,345 4,345 Stock-based compensation 77,920 77,920 Warrants contra revenue 2,135 2,135 Unrealized gains on marketable securities 2,448 2,448 Net income 83,038 83,038 Balances as of June 30, 2025166,211$17 $1,258,581 $2,874 $(125,758)$1,135,714 2025$233,398 $83,038 112,905 77,920 7,639 2,517 2,718 1,522 12,313 2,136 (2,180)(4,489)(2,961)734 (109,461)14,491 (53,127)(14,577)(41,422)(18,474)2,811 4,607 (357)(3,555)162,276 145,870 (28,054)(6,562)(359,732)(404,682)233,933 343,611 (69,214) (2,500) (225,567)(67,633)836 778 6,294 4,345 7,130 5,123 (56,161)83,360 167,684 80,044 $111,523 $163,404 Six Months Ended June 30, 2026202520262025 Revenue$392,400 $191,925 $700,761 $351,367 Less: Cost of revenue104,833 46,362178,05386,393 Stock-based compensation (1) 62,300 35,121110,71477,605 Personnel-related expenses (1) 87,003 43,843150,30886,282 Other segment items (2) (14,824)15,38028,28818,049 Consolidated net income $153,088 $51,219 $233,398 $83,038 (1) Stock-based compensation and personnel-related expenses presented in the above table are related to operating expenses and exclude amounts included in the cost of revenue. (2) Other segment items included are primarily related to income tax benefit, interest income, engineering related costs such as hardware design, software license, and cloud hosting services costs, and professional and consulting services fees. Revenue by location is determined by the billing address of the Company s customers, which includes the Company s end customers manufacturing partners and the Company s distributors. The following table sets forth revenue by geographic area (in thousands): Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 China$152,696 $59,056 $242,267 $103,694 Singapore113,734 66,447 204,872 97,868 Taiwan105,768 56,644 198,923 133,462 United States5,531 2,218 20,498 5,519 Other14,671 7,560 34,201 10,824 Total$392,400 $191,925 $700,761 $351,367 The Company had the following customers that individually comprised 10% or more of its revenue: Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 Customer A 29 %27 %29 %20 % Customer B25 %*21 %* Customer C15 %13 %17 %19 % Customer D13 %24 %13 %23 % Customer E *11 %** Customer F *12 %*15 % *Less than 10% of total revenue Certain of the customers listed above are manufacturing partners that purchase the Company's products on behalf of the Company s end customers. As end customers may shift production volumes among their manufacturing partners from period to period, the revenue concentration percentages attributable to individual direct customers may fluctuate in a manner that is not necessarily representative of changes in underlying end-customer demand. 8 Table of Contents The Company had the following customers that individually comprised 10% or more of its accounts receivable, net: As of June 30, 2026December 31, 2025 Customer A30 %* Customer B 17 %14 % Customer D12 %* Customer E10 %28 % Customer C*27 % Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value Cash equivalents Money market funds$84,575 $ $ $84,575 $84,575 $ $ $84,575 Marketable securities U.S. treasury and agency securities$228,121 $54 $(1,003)$227,172 Commercial paper19,371 (27)19,344 Corporate debt securities897,382 634 (3,027)894,989 $1,144,874 $688 $(4,057)$1,141,505 As of December 31, 2025 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value Cash equivalents Money market funds$142,772 $ $ $142,772 5,496 (1)5,495 Total cash equivalents$148,268 $ $(1)$148,267 Marketable securities U.S. treasury and agency securities$203,175 $630 $(11)$203,794 Commercial paper11,459 4 (1)11,462 Corporate debt securities802,261 3,800 (112)805,949 $1,016,895 $4,434 $(124)$1,021,205 As of June 30, 2026 and December 31, 2025, the Company s marketable securities that were in a continuous loss position for 12 months or more, as well as the unrealized losses on those marketable securities, were not material. Unrealized 9 Table of Contents losses have not been recognized into income as the Company neither intends to sell, nor anticipates that it is more likely than not that the Company will be required to sell, the securities before recovery of their amortized cost basis. The decline in fair value is due primarily to changes in market interest rates, rather than credit losses. The contractual maturities of cash equivalents and marketable securities classified as available-for-sale are as follows (in thousands): As of June 30, 2026As of December 31, 2025 Amortized CostEstimated Fair ValueAmortized CostEstimated Fair Value Due within one year$458,030 $458,109 $463,417 $464,282 Due after one year through five years771,419 767,971 701,746 705,190 Total available-for-sale securities $1,229,449 $1,226,080 $1,165,163 $1,169,472 Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The Company did not recognize any material allowance for credit losses as of June 30, 2026 and December 31, 2025 or impairment charges for the three and six months ended June 30, 2026 and 2025. There were no material realized gains or losses from available-for-sale securities that were reclassified out of accumulated other comprehensive income for the three and six months ended June 30, 2026 and 2025. 4. Fair Value Measurements The following table presents information about the Company s financial assets measured at fair value on a recurring basis based on the fair value hierarchy as follows (in thousands): Level 1Level 2 Cash equivalents$84,575 $ 84,575 $84,575 $ 84,575 Marketable securities$ $227,172 227,172 Commercial paper 19,344 Corporate debt securities 894,989 $ $1,141,505 1,141,505 Level 1Level 2 Cash equivalents$142,772 $ 142,772 5,495 Total cash equivalents$142,772 $5,495 148,267 Marketable securities$ $203,794 203,794 Commercial paper 11,462 Corporate debt securities 805,949 $ $1,021,205 1,021,205 10 Table of Contents As of June 30, 2026 and December 31, 2025, there were no marketable securities with Level 3 fair value hierarchy measurement. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Goodwill, intangible assets, property, plant and equipment, and certain equity investments without readily determinable fair values are not required to be measured at fair value on a recurring basis. However, if the Company is required to evaluate these assets for impairment, whether due to certain triggering events or because of the required annual impairment test, and a resulting impairment is recorded to reduce the carrying value to the fair value, these assets are measured at fair value during such period. There was no impairment on these assets during the three and six months ended June 30, 2026 and 2025. In addition, when the Company identifies observable price changes in orderly transactions for the equity investments without readily determinable fair values, it shall measure the equity security at fair value as of the date that the observable transaction occurred. During the three months ended June 30, 2026, the Company recorded an increase in fair value of $1.5 million related to its equity investments and recorded in interest and other income within the condensed consolidated statement of operations and comprehensive income. As of June 30, 2026 and December 31, 2025, the Company had no liabilities required to be measured at fair value on a nonrecurring basis. Assets and Liabilities Not Measured at Fair Value The carrying amount of the Company s financial instruments, including cash equivalents, accounts receivable, and accounts payable, approximates their respective fair values because of their short maturities. 5. Condensed Consolidated Balance Sheet Components Inventory Inventory consists of the following (in thousands): As of June 30, 2026December 31, 2025 Raw materials$52 $84 Work-in-progress98,694 35,752 Finished goods15,035 23,143 Total inventory$113,781 $58,979 11 Table of Contents Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following (in thousands): As of June 30, 2026December 31, 2025 Income tax receivable$60,256 $7,450 Other 32,431 23,583 $92,687 $31,033 Property and Equipment, Net Property and equipment, net consists of the following (in thousands): As of June 30, 2026December 31, 2025 Construction in progress$48,365 $40,510 Laboratory equipment36,047 21,603 Production and manufacturing equipment35,000 28,171 Leasehold improvements15,491 11,439 3,742 2,037 Property and equipment, gross138,645 103,760 Less: accumulated depreciation(19,361)(11,722) Total property and equipment, net$119,284 $92,038 Depreciation and amortization expense for the three months ended June 30, 2026 and 2025 was $3.9 million and $1.4 million, respectively, and $7.6 million and $2.5 million for the six months ended June 30, 2026 and 2025, respectively. Construction in progress primarily consists of capitalized costs for production equipment related to the Company s future products. These assets will be placed into service and begin to depreciate when related manufacturing commences. Production and manufacturing equipment included production equipment has been placed into service and are being used in the manufacture of the Company s released products. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): As of June 30, 2026December 31, 2025 Accrued compensation and benefits$42,254 $46,510 Accrued software license costs11,068 7,632 Holdback in connection with acquisitions 6,559 1,559 Accrued production equipment13,509 13,500 Other current liabilities36,987 21,479 $110,377 $90,680 Supplemental Cash Flow Information The following table provides supplemental non-cash investing and financing activities (in thousands): Six Months Ended June 30, 20262025 Right-of-use ( ROU ) assets obtained in exchange for lease obligations$15,980 $20,968 Purchases of property and equipment in accounts payable, accrued expenses and other current liabilities$27,266 $14,159 June 30, 2026December 31, 2025 Assets Operating lease ROU assets, net $36,098 $22,810 Liabilities Operating lease liabilities, current$6,238 $4,146 Operating lease liabilities, noncurrent38,175 26,828 Total lease liabilities$44,413 $30,974 Operating lease ROU assets, net are included in other assets; operating lease liabilities, current are included in accrued expenses and other current liabilities; and operating lease liabilities, non-current are included in other liabilities, on the condensed consolidated balance sheets. The weighted-average remaining lease term and discount rates were as follows: December 31, 20256.26.46.7%7.1%Operating Leases Remainder of 2026$4,057 20279,595 20289,514 20298,931 20305,945 Thereafter16,262 Total future minimum lease payments54,304 Less: Imputed interest(9,891) Total operating lease liabilities$44,413 In February 2026, the Company entered into lease agreements associated with the exercise of an existing expansion option at its headquarters in San Jose, California (the HQ Expansions ). The lease terms commence at various dates between April 2026 and January 2027 and expire in November 2032. As of June 30, 2026, the HQ Expansions that have not yet commenced result in total estimated future undiscounted lease obligations of $11.7 million. 8. Commitments and Contingencies Purchase Commitments The Company depends upon third-party subcontractors to manufacture wafers and other inventory parts. The Company s subcontractor relationships typically allow for the cancellation of outstanding purchase orders but require payment of all expenses incurred through the date of cancellation. The Company s purchase commitments also include payments for software licenses and cloud services when there is a fixed, non-cancellable payment schedule or when minimum payments are due according to a delivery schedule. The Company is committed to make the following minimum payments under its purchase commitments as of June 30, 2026 (in thousands): Purchase Commitments Remainder of 2026$24,661 202766,189 202845,340 202930,437 203015,042 Total purchase commitments$181,669 Legal Proceedings From time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. The Company is not currently a party to any material legal proceedings or claims, nor is the Company aware of any other pending or threatened legal proceedings or claims that could reasonably be expected to have a material adverse effect on the Company s business, operating results, cash flows or financial condition should such legal proceedings or claims be resolved unfavorably. Indemnification Obligations In the ordinary course of business, the Company often includes standard indemnification provisions in its arrangements with its members, partners, suppliers and vendors. Pursuant to these provisions, the Company may be obligated to indemnify such parties for losses or claims suffered or incurred in connection with its service, breach of representations or covenants, intellectual property infringement or other claims made against such parties. These provisions may limit the time within which an indemnification claim can be made. It is not possible to determine the maximum potential amount under 14 Table of Contents these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. The Company has not in the past incurred significant expense defending its licensees against third party claims, nor has it incurred significant expense under its standard service warranties or arrangements with its members, partners, suppliers, and vendors. Accordingly, the Company had no liabilities recorded for these provisions as of June 30, 2026 and December 31, 2025. 9. Common Stock Warrants In April 2021, in connection with a legacy loan agreement that expired in January 2022, the Company issued to Silicon Valley Bank a warrant to purchase up to an aggregate of 126,185 shares of our common stock at an exercise price of $0.30 per share. During the three and six months ended June 30, 2026, the Company issued 125,987 shares of common stock in connection with the cashless exercise of warrants. In October 2022, the Company issued a warrant to a customer ( Holder ) to purchase an aggregate of up to 1,484,230 shares of Common Stock (the Customer Warrant ). The exercise period of the Customer Warrant is through the seventh anniversary of the issue date. In October 2023, the Company amended the Customer Warrant and issued an additional warrant to the Holder to purchase an aggregate of up to 831,945 shares of Common Stock (the 2023 Warrant ), with the same exercise period as the Customer Warrant. The 2023 Warrant will vest and become exercisable over the contract term, contingent upon the achievement of performance conditions, comprised of specified tranches of purchases by the Holder and its affiliates to the Company. In February 2026, the Company issued a warrant to the Holder to acquire up to an aggregate of 3,262,299 shares of common stock at an exercise price of $142.82 per share (the 2026 Warrant , and together with the Customer Warrant and the 2023 Warrant, the Warrants ). The 2026 Warrant will vest and become exercisable over the contract term, contingent upon the achievement of performance conditions, comprised of specified tranches of purchases by the Holder and its affiliates to the Company. The grant date fair value of the 2026 Warrant was determined to be $85.83 per share, using the Black-Scholes-Merton option pricing model, for maximum total 2026 Warrant fair value of $280.0 million. The per share grant date fair values of the 2026 Warrant were estimated using the following assumptions: 2026 Warrant Expected dividend yield % Risk-free interest rate 4.3% Expected volatility54.8% Expected term (in years) 7.0 Per share fair value of common stock$142.82 As of June 30, 2026 and December 31, 2025, an aggregate of 1,663,042 shares and 1,165,513 shares, respectively, of the underlying Warrants were vested and exercisable. Additionally, an aggregate of 24,722 and 30,589 shares were probable of vesting as of June 30, 2026 and December 31, 2025, respectively. There were no Warrants exercised by the Holder as of June 30, 2026. The Company recognized $10.2 million and $1.8 million for the three months ended June 30, 2026 and 2025, respectively, and $12.3 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively, as a reduction of revenue in the condensed consolidated statements of operations and comprehensive income related to the Warrants. The remaining grant date fair values of the Warrants that are probable of vesting will be recognized as a reduction of revenue in proportion to the amount of related product sales, which could occur until January 2, 2033. 15 Table of Contents 10. Stock-Based Compensation A summary of stock-based compensation expense recognized in the condensed consolidated statements of operations and comprehensive income is as follows (in thousands): Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 Cost of revenue$1,692 $353 $2,191 $315 Research and development36,413 17,852 65,817 37,038 Sales and marketing11,419 9,194 21,311 21,513 General and administrative14,468 8,075 23,586 19,054 Total(1) $63,992 $35,474 $112,905 $77,920 (1) Stock-based compensation expense for the three and six months ended June 30, 2026 did not include the $4.0 million in share-based consideration related to acquisitions, see Note 6 - Business Combinations for further details. Stock Options A summary of stock option activity under the 2018 Plan and 2024 Plan is as follows (in thousands, except years and per share data): Number of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (in years)Aggregate Intrinsic Value Outstanding as of December 31, 20252,721$0.86 5.5$450,336 (1,028)0.81 1,693$0.89 5.0$816,380 Vested and expected to vest as of June 30, 20261,693$0.89 5.0 $816,380 Exercisable as of June 30, 20261,668$0.90 5.0$804,240 As of June 30, 2026, there was approximately $0.5 million of total unrecognized compensation cost, related to unvested stock options, which is expected to be recognized over a weighted-average remaining requisite service period of 1.0 years, using the straight-line method. Restricted Stock Units ( RSUs ) A summary of RSU activity under the 2018 Plan and 2024 Plan is as follows (in thousands, except per share data): Weighted Average Grant Date Fair Value (per share)9,354$51.39 2,240182.89 (2,089)36.79 (325)94.55 9,180$85.27 Weighted Average Grant Date Fair Value ( per share)177$126.64 220154.08 (4)152.44 (18)126.16 375$142.44 Six Months Ended June 30, 2026202520262025 $153,088 $51,219 $233,398 $83,038 Shares used in net income per share computations: Weighted-average shares used in computing net income per share attributable to common stockholders, basic172,378165,428171,557164,316 Effect of potentially dilutive equivalent shares10,96212,67210,69713,965 Weighted-average shares used in computing net income per share attributable to common stockholders, diluted183,340178,100182,254178,281 Net income per share attributable to common stockholders, basic$0.89 $0.31 $1.36 $0.51 Net income per share attributable to common stockholders, diluted$0.83 $0.29 $1.28 $0.47 Potentially dilutive securities include dilutive common stock from assumed exercise of stock options, RSUs, Warrants, and Employee Stock Purchase Plan ( ESPP ) shares using the treasury stock method. Under the treasury stock method, potential shares outstanding are not included in the computation of diluted net income per share if their effect is anti-dilutive. Anti-dilutive potential shares are as follows (in thousands): Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 RSUs43 1,030 212 1,009 13 26 8 13 Total56 1,056 220 1,022 17 Table of Contents 12. Income Taxes The Company's income tax benefit recognized for the three and six months ended June 30, 2026 and 2025 is as follows (in thousands, except percentages): Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 Income tax benefit$50,263 $560 $57,159 $10,662 Effective tax rate(48.9)%(1.1)%(32.4)%(14.7)% The Company accrues for income taxes during interim periods based on the estimated effective tax rate for the year. The effective tax rate for the three and six months ended June 30, 2026 is different than the statutory federal tax rate primarily due to the valuation allowance in the United States and the excess tax benefits related to equity compensation, foreign derived intangible income deduction and U.S. research and development credits, which results in current tax benefits. The determination of the realizability of deferred tax assets requires significant judgment in assessing if there is sufficient positive evidence to support a conclusion that it is more likely than not the deferred tax assets will be realized. A significant piece of negative evidence in this assessment is the Company s three-year cumulative loss, which is driven primarily by continued excess tax benefits related to equity compensation. If the Company continues to achieve positive operating results such that it could overcome this negative evidence, it may release the valuation allowance associated with its U.S. deferred tax assets in future periods. A release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and may result in a material decrease to income tax expense for the period the release is recorded. The effective tax rate for the three and six months ended June 30, 2025 is different than the statutory federal tax rate primarily due to the valuation allowance in the United States and the excess tax benefits related to equity compensation, foreign derived intangible income deduction, and U.S. research and development credits, which result in current tax benefits. This is offset by the current tax expense from the capitalization of research and development expenditures under Section 174 of the Internal Revenue Code. 18 Table of Contents Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management s discussion and analysis of financial condition and results of operations for the year ended December 31, 2025 included in our Annual Report on Form 10-K filed with the SEC on February 20, 2026. As discussed in the section titled Special Note about Forward-Looking Statements, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled Risk Factors and included elsewhere in this Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed with the SEC on February 20, 2026. Overview Our mission is to innovate, design, and deliver semiconductor-based connectivity solutions that are purpose-built to unleash the full potential of cloud and AI infrastructure. Building on years of experience with a singular focus on addressing connectivity challenges in data-centric systems, we have developed and deployed our Intelligent Connectivity Platform built from the ground up for cloud and AI infrastructure. Our Intelligent Connectivity Platform is comprised of semiconductor-based, high-speed, mixed-signal connectivity products that integrate a matrix of microcontrollers and sensors, and COSMOS, our software suite, which is embedded in our connectivity products and integrated into our customers systems. Our Intelligent Connectivity Platform provides our customers with the ability to deploy and operate high-performance cloud and AI infrastructure at scale, addressing an increasingly diverse set of requirements. We provide our connectivity products in various form factors, including Integrated Circuits ( ICs ), boards, and modules. Our patented software-defined platform approach delivers critical connectivity performance, enables flexibility and customization, and supports observability and predictive analytics. This approach is designed to efficiently address the data, network, and memory bottlenecks, scalability, and other unique infrastructure requirements of our hyperscaler and system OEM customers. Based on trusted relationships with the leading hyperscalers and collaboration with data center infrastructure suppliers, our platform is designed to meet our customers unique cloud scale requirements. Our COSMOS software suite is foundational to our Intelligent Connectivity Platform and is designed to enable our customers to seamlessly configure, manage, monitor, optimize, troubleshoot, and customize functions in our IC, board, and module products. Today, our connectivity solutions are at the heart of major AI platforms deployed worldwide featuring both commercially available Graphic Processing Units ( GPUs ) and proprietary AI accelerators. We offer our customers four product families across multiple form factors including ICs, boards, and modules, shipping millions of devices across leading hyperscalers. Our products, which include Aries PCIe /CXL Smart DSP Retimers, Aries PCIe /CXL Smart Cable Modules , Taurus Ethernet Smart Cable Modules , Leo CXL Memory Connectivity Controllers, and Scorpio Smart Fabric Switches, are built upon industry standard connectivity protocols such as Peripheral Component Interconnect Express ( PCIe ), Ethernet, and Compute Express Link ( CXL ), to address the growing demand for purpose-built connectivity solutions that solve critical data, network, and memory bottlenecks inherent in cloud and AI infrastructure. Since our inception, we have created and commercialized first-to-market PCIe, Ethernet, and CXL products. We have become a trusted partner and a proven supplier to our hyperscaler and system OEM customers. We have experienced strong growth since the commercial launch of Aries in 2020. Our revenue grew from $34.8 million in 2021, $79.9 million in 2022, $115.8 million in 2023, and $396.3 million in 2024, to $852.5 million in 2025. Our revenue was $700.8 million for the six months ended June 30, 2026, driven by a sizable increase in demand for our products. 19 Table of Contents Summary of Financial Highlights Our revenue was $392.4 million for the three months ended June 30, 2026, compared to $191.9 million for the same period in 2025, representing an increase of 104% year over year. Our revenue was $700.8 million for the six months ended June 30, 2026 compared to $351.4 million for the same period in 2025, representing an increase of 99% year over year. Gross margin decreased by 250 basis points ( bps ) to 73.3% for the three months ended June 30, 2026, compared to 75.8% for the same period in 2025. Gross margin decreased by 80 bps to 74.6% for the six months ended June 30, 2026 compared to 75.4% for the same period in 2025. Operating income was $89.2 million and $151.1 million for the three and six months ended June 30, 2026, respectively, compared to $39.8 million and $51.1 million for the same periods in 2025, respectively, representing an increase of 124% and 196% year over year, respectively. Net income was $153.1 million and $233.4 million for the three and six months ended June 30, 2026 respectively, compared to $51.2 million and $83.0 million for the same periods in 2025, respectively, representing an increase of 199% and 181% year over year, respectively. Results of Operations Comparison of the Three and Six Months Ended June 30, 2026 and 2025 Revenue Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount% 20262025Amount% (in thousands, except percentages) Revenue$392,400 $191,925 $200,475 104 %$700,761 $351,367 $349,394 99 % Total revenue increased $200.5 million, or 104%, and $349.4 million, or 99%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to an increase in overall unit shipments driven by higher demand for our Aries, Scorpio, and Taurus products, as well as higher overall average selling prices resulting from an increased mix of hardware modules and Scorpio products. Cost of Revenue, Gross Profit, and Gross Margin Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount%20262025Amount% (in thousands, except percentages and bps) Cost of revenue$104,833 $46,362 $58,471 126 %$178,053 $86,393 $91,660 106 % Gross profit287,567 145,563 142,004 98 %522,708 264,974 257,734 97 % Gross margin73.3 %75.8 %(250) bps74.6 %75.4 %(80) bps Total cost of revenue increased $58.5 million, or 126%, and $91.7 million, or 106%, for the three and six months ended June 30, 2026, compared to the same periods in 2025, respectively, primarily due to higher unit shipments and shift in product mix cost. 20 Table of Contents Gross margin decreased 250 bps to 73.3% for the three months ended June 30, 2026 compared to 75.8% for the same period in 2025. The decrease was primarily driven by a shift in product mix towards lower margin hardware modules, as well as the impact of the Warrants. Gross margin decreased 80 bps to 74.6% for the six months ended June 30, 2026 compared to 75.4% for the same period in 2025. The decrease was primarily driven by a shift in product mix towards lower margin hardware modules, as well as the impact of the Warrants. For an additional discussion of Warrants, see Note 9 - Common Stock Warrants in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. Research and Development Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount%20262025Amount% (in thousands, except percentages) Research and development $135,898 $66,724 $69,174 104 %$261,532 $131,278 $130,254 99 % Percentage of revenue 35 %35 %37 %37 % Research and development expense increased $69.2 million, or 104%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $32.7 million increase in personnel-related costs resulting from an 118% increase in headcount, an $18.6 million increase in non-cash stock-based compensation expenses, and a $12.1 million increase in overall spending to support our R&D initiatives, which includes hardware design, software licensing, and cloud hosting services costs. Research and development expense increased $130.3 million, or 99%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $49.8 million increase in personnel-related costs resulting from a 102% increase in headcount, a $28.8 million increase in non-cash stock-based compensation expenses, and a $41.4 million increase in overall spending to support our R&D initiatives, which includes hardware design, software licensing, and cloud hosting services costs. Sales and Marketing Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount%20262025Amount% (in thousands, except percentages) Sales and marketing $26,372 $18,609 $7,763 42 %$48,271 $40,311 $7,960 20 % Percentage of revenue 7 %10 %7 %11 % Sales and marketing expense increased by $7.8 million, or 42%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $4.9 million increase in personnel-related costs resulting from a 47% increase in headcount, and a $2.2 million increase in non-cash stock-based compensation expenses. Sales and marketing expense increased by $8.0 million, or 20%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $6.9 million increase in personnel-related costs resulting from a 113% increase in headcount. 21 Table of Contents General and Administrative Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount%20262025Amount% (in thousands, except percentages) General and administrative $36,049 $20,456 $15,593 76 %$61,824 $42,326 $19,498 46 % Percentage of revenue 9 %11 %9 %12 % General and administrative expense increased $15.6 million, or 76%, for the three months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $6.4 million increase in non-cash stock-based compensation expenses, a $5.6 million increase in personnel-related costs resulting from a 79% increase in headcount, a $1.8 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $1.8 million increase in other operating costs to support our business expansion. General and administrative expense increased $19.5 million, or 46%, for the six months ended June 30, 2026 compared to the same period in 2025. The increase was primarily due to a $7.3 million increase in personnel-related costs resulting from a 58% increase in headcount, a $4.5 million increase in non-cash stock-based compensation expense, a $4.3 million increase in professional services fees associated with the continued development of our public company infrastructure, and a $3.0 million increase in other operating costs to support our business expansion. Interest and Other Income Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount%20262025Amount% (in thousands, except percentages) Interest and other income $13,577 $10,885 $2,692 25 %$25,158 $21,317 $3,841 18 % For the three and six months ended June 30, 2026, interest and other income increased $2.7 million, or 25%, and $3.8 million, or 18%, compared to the same periods in 2025, respectively, primarily due to higher average balances of short-term investments and cash equivalents as a result of cash flow from operations, partially offset by lower interest rates. Income Tax Benefit Three Months Ended June 30,ChangeSix Months Ended June 30,Change 20262025Amount%20262025Amount% (in thousands, except percentages) Income tax benefit $50,263 $560 $49,703 8,876 %$57,159 $10,662 $46,497 436 % The benefit from income tax increased $49.7 million, or 8,876%, and $46.5 million, or 436%, for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025, primarily due to an increase in excess tax benefits related to equity compensation. Non-GAAP Financial Measures This Quarterly Report on Form 10-Q contains certain financial measures that are not presented in accordance with generally accepted accounting principles in the United States ( GAAP ), which we use to supplement the performance measures in our condensed consolidated financial statements, which are presented in accordance with GAAP. We refer to these measures as non-GAAP financial measures. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income. We use these non-GAAP financial measures for financial and operational decision-making and as a means to assist us in evaluating period-to-period 22 Table of Contents comparisons. By excluding certain items that may not be indicative of our recurring core operating results, we believe that non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, and non-GAAP net income provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow for additional information with respect to financial measures used by management in its financial and operational decision-making and they may be used by our institutional investors and the analyst community to help them analyze the health of our business. However, there are a number of limitations related to the use of non-GAAP financial measures, and these non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures. Non-GAAP Gross Profit and Non-GAAP Gross Margin We define non-GAAP gross profit as gross profit presented in accordance with GAAP, adjusted to exclude non-cash stock-based compensation expenses. The non-GAAP gross margin is non-GAAP gross profit divided by revenue. We have presented non-GAAP gross profit because we consider non-GAAP gross profit to be a useful metric for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation, a charge that can vary from period to period for reasons that are unrelated to our core operating performance. This metric also provides investors and other users of our financial information with an additional tool to eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance. A reconciliation of our GAAP gross profit and GAAP gross margin, the most directly comparable GAAP financial measures, to non-GAAP gross profit and non-GAAP gross margin is presented below: Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 (in thousands, except percentages) GAAP gross profit $287,567 $145,563 $522,708 $264,974 Stock-based compensation expense 1,692 353 2,191 315 Non-GAAP gross profit$289,259 $145,916 $524,899 $265,289 GAAP gross margin 73.3 %75.8 %74.6 %75.4 % Stock-based compensation expense0.4 0.2 0.3 0.1 Non-GAAP gross margin 73.7 %76.0 %74.9 %75.5 % Non-GAAP Operating Income and Non-GAAP Operating Margin We define non-GAAP operating income as operating income presented in accordance with GAAP, adjusted to exclude non-cash stock-based compensation expenses and acquisition-related costs. We define non-GAAP operating margin as non-GAAP operating income divided by revenue. We have presented non-GAAP operating income and non-GAAP operating margin because we consider them useful metrics for investors and other users of our financial information in evaluating our operating performance as it excludes the impact of non-cash stock-based compensation expense and acquisition-related costs, charges that can vary from period to period or are one time charges for reasons that are unrelated to our core operating performance. These metrics also provide investors and other users of our financial information with an additional tool to eliminate the effects of items that may vary for different companies for reasons unrelated to core operating performance. 23 Table of Contents A reconciliation of our GAAP operating income and GAAP operating margin, the most directly comparable GAAP financial measures, to non-GAAP operating income and non-GAAP operating margin is presented below: Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 (in thousands, except percentages) GAAP operating income $89,248 $39,774 $151,081 $51,059 Stock-based compensation expense 63,992 35,474 112,905 77,920 Acquisition-related costs (1) 232 1,213 Non-GAAP operating income $153,472 $75,248 $265,199 $128,979 GAAP operating margin 22.7 %20.7 %21.6 %14.5 % Stock-based compensation expense 16.3 18.5 16.1 22.2 Acquisition-related costs (1) 0.1 0.2 Non-GAAP operating margin (2) 39.1 %39.2 %37.8 %36.7 % (1) Acquisition-related costs include certain incremental expenses incurred to effect a business combination such as third-party costs: advisory, legal, accounting, valuation, and other professional fees. (2) Total may not sum due to rounding. Non-GAAP Net Income We monitor non-GAAP net income for planning and performance measurement purposes. We define non-GAAP net income as net income presented in accordance with GAAP on our condensed consolidated statements of operations, excluding the impact of non-cash stock-based compensation expenses, acquisition-related costs, non-cash fair value adjustments on equity investments without readily determinable fair values, and the related tax impact on the adjustments. We have presented non-GAAP net income because we believe that the exclusion of these charges allows for a more relevant comparison of our results of operations to other companies in our industry and facilitates period-to-period comparisons as it eliminates the effect of certain factors unrelated to our overall operating performance. 24 Table of Contents A reconciliation of our GAAP net income, the most directly comparable GAAP financial measure, to our non-GAAP net income is presented below: Three Months Ended June 30,Six Months Ended June 30, 2026202520262025 (in thousands) GAAP net income $153,088 $51,219 $233,398 $83,038 Stock-based compensation expense63,992 35,474 112,905 77,920 Acquisition-related costs (1) 232 1,213 Other (2) (1,500) (1,500) Income tax effect (3) (69,996)(8,670)(90,133)(23,308) Non-GAAP net income$145,816 $78,023 $255,883 $137,650 (1) Acquisition-related costs include certain incremental expenses incurred to effect a business combination such as third-party costs: advisory, legal, accounting, valuation, and other professional fees. (2) Other is comprised of non-cash fair value adjustments related to equity investments without readily determinable fair values. These investments are measured at cost and adjusted for observable price changes or impairment on a nonrecurring basis only upon the occurrence of certain events. Accordingly, these adjustments are not indicative of our core operating performance. (3) Income tax effect is calculated based on the tax laws in the jurisdictions in which we operate and is calculated to exclude the impact of non-cash stock-based compensation expense and one-off discrete tax adjustments that are unrelated to our core operating performance. While we maintain a valuation allowance for GAAP purposes, we no longer maintain valuation allowance for non-GAAP purposes due to our cumulative tax profits on a non-GAAP basis. For the three months ended June 30, 2026 and 2025, the non-GAAP tax rate was approximately 12% and 9%, respectively. For the six months ended June 30, 2026 and 2025, the non-GAAP tax rate was approximately 11% and 8%, respectively. Liquidity and Capital Resources Since our inception, we have financed our operations primarily through proceeds from equity issuances including net proceeds from our IPO, and cash generated from the sale of our products. As of June 30, 2026, our principal sources of liquidity were cash, cash equivalents, and marketable securities of $1.3 billion. Our principal use of cash is to fund our operations, invest in research and development, fund capital expenditures for production equipment, acquisitions of businesses or technologies, and to support our overall growth. We generated $162.3 million in cash flow from operating activities for the six months ended June 30, 2026 and retained earnings of $243.7 million as of June 30, 2026. We believe that our current cash, cash equivalents, and marketable securities will be sufficient to fund our operations for at least the next 12 months and beyond. Our future capital requirements, however, will depend on many factors, including our growth rate, the timing and extent of our sales and marketing and research and development expenditures, capital expenditures for production equipment, the continuing market acceptance of our products, and the use of cash to fund potential mergers or acquisitions. In the event that additional financing is required from outside sources, we may seek to raise additional funds through equity, equity-linked arrangements, and debt. If we are unable to raise additional capital when desired and at reasonable rates, our business, results of operations, and financial condition could be adversely affected. 25 Table of Contents Cash Flows The following table summarizes our cash flows for the periods presented: Six Months Ended June 30, 20262025Change (in thousands) Net cash provided by operating activities$162,276 $145,870 $16,406 Net cash used in investing activities$(225,567)$(67,633)$(157,934) Net cash provided by financing activities$7,130 $5,123 $2,007 Change in Cash Flows from Operating Activities Net cash provided by operating activities was $162.3 million for the six months ended June 30, 2026, compared to $145.9 million for the comparable period in 2025. The $16.4 million increase in operating cash inflows was a result of a $150.4 million increase in net income, higher non-cash charges of $50.1 million, partially offset by an unfavorable change of $184.0 million from changes in operating assets and liabilities. The higher non-cash charges of $50.1 million were primarily due to a $35.0 million increase in stock-based compensation expense, a $10.2 million increase in warrants contra revenue, and a $5.1 million increase in depreciation and amortization. The unfavorable change of $184.0 million in operating assets and liabilities was predominantly attributable to (i) a $124.0 million unfavorable change in accounts receivable due to higher product sales and the timing of customer payments, (ii) a $38.6 million unfavorable change in inventory primarily resulting from per-unit inventory costs and inventory build up to support anticipated demand, and (iii) a $22.9 million unfavorable change in the prepaid expenses and other assets. These unfavorable changes were partially offset by a $1.4 million favorable change in accounts payable and accrued other liabilities primarily due to the timing of payments. Change in Cash Flows from Investing Activities Net cash used in investing activities was $225.6 million for the six months ended June 30, 2026, compared to $67.6 million for the comparable period in 2025. The increase in cash used in investing activities of $157.9 million was primarily due to a $109.7 million decrease in proceeds from sales and maturities of marketable securities, a $69.2 million increase in payments related to business acquisitions, and a $21.5 million increase in purchases of property and equipment. These increases were partially offset by a $45.0 million decrease in purchases of marketable securities. Change in Cash Flows from Financing Activities Net cash provided by financing activities was $7.1 million for the six months ended June 30, 2026, compared to $5.1 million for the comparable period in 2025. The increase in cash provided by financing activities of $2.0 million was primarily due to a $1.9 million increase in proceeds received from the employee stock purchase plan. Material Cash Requirements Operating lease commitments. Our operating lease commitments primarily include corporate offices. For an additional discussion of our operating lease commitments, see Note 7 - Leases in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. Purchase commitments. Our purchase commitments are primarily related to software licenses and cloud hosting. For an additional discussion of our purchase commitments, see Note 8 - Commitments and Contingencies in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. For an additional discussion of our Material Cash Requirements, see Note 8 - Commitments and Contingencies in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. 26 Table of Contents Indemnification Agreements See Note 8 - Commitments and Contingencies in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. Critical Accounting Estimates Our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with GAAP. The preparation of unaudited condensed consolidated financial statements in accordance with GAAP requires us to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the related disclosures as of the date of the financial statements, as well as the reported amounts of revenue and expenses during the period presented. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows could be affected. There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2025. Recent Accounting Pronouncements For more information, see Note 1 - Nature of Business and Summary of Significant Accounting Policies in the notes to the unaudited condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. Item 3. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk and foreign currency exchange risk are described in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2025. As of June 30, 2026, there have been no material changes to the interest rate and foreign currency exchange risk described as of December 31, 2025. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, our disclosure controls and procedures were effective at a reasonable assurance level. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 27 Table of Contents Limitations on Effectiveness of Controls and Procedures A control system, no matter how well designed and operated, can provide only reasonable, not absolute assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. 28 Table of Contents Part II - Other Information Item 1. Legal Proceedings We are not currently a party to any material pending legal proceedings. From time to time, we may be subject to legal proceedings and claims arising in the ordinary course of business. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 1A. Risk Factors For a discussion of potential risks and uncertainties, see the information in the section titled Risk Factors in the Annual Report on Form 10-K for the year ended December 31, 2025. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Use of Proceeds from our IPO On March 19, 2024, our registration statement on Form S-1, as amended (File No. 333-277205), was declared effective by the SEC for our initial public offering. There has been no material change in the expected use of the net proceeds from our IPO as described in the final prospectus, dated March 19, 2024 and filed with the SEC on March 21, 2024 pursuant to Rule 424(b) of the Securities Act. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information Insider Adoption or Termination of Trading Arrangements Our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified the amount, pricing, timing or provisions in a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading agreement (each as defined in Item 408 of Regulation S-K) during the quarterly period covered by this report as described in the table below: NameTitleActionDate Adopted Character of Trading Arrangement (1) Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to a Trading ArrangementExpiration Date (2) Manuel Alba (3) Chair of the BoardAdoption5/22/2026Rule 10b5-1 Trading Arrangement1,412,0008/31/2027 Exhibit Title FormFile No.Exhibit No.Filing DateFiled Herewith Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 101. INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101. SCHInline XBRL Schema Document 101. CA:Inline XBRL Calculation Linkbase Document 101 DEFInline XBRL Definition Linkbase Document 101. LABInline XBRL Labels Linkbase Document 101. PREInline XBRL Presentation Linkbase Document 104Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101). By:/s/ Desmond LynchDesmond LynchChief Financial Officer 31