10-Q 1 mpwr20240930_10q.htm FORM 10-Q mpwr20240930_10q.htm
0001280452 MONOLITHIC POWER SYSTEMS INC false --12-31 Q3 2024 0.001 0.001 150,000 150,000 48,779 48,779 48,028 48,028 37 156 161 625 1.25 1.00 3.75 3.00 99 99 99 2 2 4 1 3 0 33,204 1 5 http://fasb.org/us-gaap/2024#OtherAssetsNoncurrent http://fasb.org/us-gaap/2024#OtherAssetsNoncurrent http://fasb.org/us-gaap/2024#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2024#AccruedLiabilitiesCurrent http://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrent http://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrent 0 1 5 5 1 1 2 Victor K. Lee Director August 21, 2024 true August 21, 2025 true Maurice Sciammas Executive Vice President of Worldwide Sales and Marketing August 22, 2024 true August 29, 2025 true Michael Hsing President, Chief Executive Officer and Director August 30, 2024 true December 31, 2025 true Saria Tseng Executive Vice President, Strategic Corporate Development, General Counsel and Corporate Secretary August 30, 2024 true December 31, 2025 true false false The Company held $60 million in prepaid wafer purchases as of September 30, 2024 related to deposits made to a supplier under a long-term wafer supply agreement. The Company held $50 million in other receivables as of December 31, 2023 associated with those deposits. See Note 9 for details about the supply agreement. The restricted cash included in other current assets as of December 31, 2023 was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign and was paid in January 2024. The restricted cash included in other current assets as of December 31, 2023 was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign and was paid in January 2024. See Note 4 for further details. The operating lease ROU and related assets as of September 30, 2024 includes a fair value measurement related to favorable market terms on a building lease. Amount reflects the tax benefit related to stock-based compensation recorded for equity awards that are expected to generate tax deductions when they vest in future periods. Equity awards granted to the Company’s executive officers are subject to the tax deduction limitations set by Section 162(m) of the Internal Revenue Code. Amount reflects the number of awards that may ultimately be earned based on management's probability assessment of the achievement of performance conditions at each reporting period. Prepaid wafer purchases relate to a deposit made to a supplier under a long-term wafer supply agreement. See Note 9 for details about the supply agreement. The restricted cash included in other long-term assets as of September 30, 2024 and December 31, 2023 was related to a security deposit that is set aside in a bank account and cannot be withdrawn by the Company under the terms of a lease agreement. 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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

 

FORM 10-Q

 

 

 

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

OR

 

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 000-51026

 

 

 

 

Monolithic Power Systems, Inc.

(Exact name of registrant

as specified in its charter)

 

 

 

Delaware

77-0466789

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

 

5808 Lake Washington Blvd. NE, Kirkland, Washington 98033

(Address of principal executive offices)(Zip Code)

 

(425) 296-9956

(Registrant’s telephone number, including area code)

 


Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

 

Trading Symbol

 

Name of each exchange on which

registered

Common Stock, par value $0.001

per share

 

MPWR

 

The NASDAQ Global Select Market

 

 

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

There were 48,780,000 shares of the registrant’s common stock issued and outstanding as of October 30, 2024.

  

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MONOLITHIC POWER SYSTEMS, INC.

 

 

Form 10-Q

For the Quarter Ended September 30, 2024

 

TABLE OF CONTENTS

 

 

PAGE

PART I. FINANCIAL INFORMATION

4

Item 1.

Financial Statements (unaudited)

4

 

Condensed Consolidated Balance Sheets

4

 

Condensed Consolidated Statements of Operations 

5

 

Condensed Consolidated Statements of Comprehensive Income

6

 

Condensed Consolidated Statements of Stockholders’ Equity

7

 

Condensed Consolidated Statements of Cash Flows

8

 

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

 

 

PART II. OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults Upon Senior Securities

37

Item 4.

Mine Safety Disclosures

37

Item 5.

Other Information

37

Item 6.

Exhibits

38

 

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PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

MONOLITHIC POWER SYSTEMS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

 

  

September 30,

  

December 31,

 
  

2024

  

2023

 

ASSETS

        

Current assets:

        

Cash and cash equivalents

 $700,347  $527,843 

Short-term investments

  762,003   580,633 

Accounts receivable, net

  164,704   179,858 

Inventories

  424,942   383,702 

Other current assets

  108,454   147,463 

Total current assets

  2,160,450   1,819,499 

Property and equipment, net

  436,265   368,952 

Acquisition-related intangible assets, net

  10,225   - 

Goodwill

  26,080   6,571 

Deferred tax assets, net

  30,697   28,054 

Other long-term assets

  191,023   211,277 

Total assets

 $2,854,740  $2,434,353 
         

LIABILITIES AND STOCKHOLDERS’ EQUITY

        

Current liabilities:

        

Accounts payable

 $115,865  $62,958 

Accrued compensation and related benefits

  81,292   56,286 

Other accrued liabilities

  139,431   115,791 

Total current liabilities

  336,588   235,035 

Income tax liabilities

  64,656   60,724 

Other long-term liabilities

  101,806   88,655 

Total liabilities

  503,050   384,414 

Commitments and contingencies

          

Stockholders’ equity:

        

Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 48,779 and 48,028, respectively

  1,274,127   1,129,937 

Retained earnings

  1,098,759   947,064 

Accumulated other comprehensive loss

  (21,196)  (27,062)

Total stockholders’ equity

  2,351,690   2,049,939 

Total liabilities and stockholders’ equity

 $2,854,740  $2,434,353 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per-share amounts)

(Unaudited)

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Revenue

   $ 620,119     $ 474,867     $ 1,585,435     $ 1,367,060  

Cost of revenue

     276,676       211,326       708,973       597,064  

Gross profit

     343,443       263,541       876,462       769,996  

Operating expenses:

                                

Research and development

     85,051       64,787       238,986       192,184  

Selling, general and administrative

     94,364       63,188       261,425       205,645  

Total operating expenses

     179,415       127,975       500,411       397,829  

Operating income

     164,028       135,566       376,051       372,167  

Other income, net

     10,278       2,289       27,330       14,129  

Income before income taxes

     174,306       137,855       403,381       386,296  

Income tax expense

     29,876       16,692       66,044       55,827  

Net income

   $ 144,430     $ 121,163     $ 337,337     $ 330,469  
                                 

Net income per share:

                                

Basic

   $ 2.96     $ 2.54     $ 6.93     $ 6.96  

Diluted

   $ 2.95     $ 2.48     $ 6.89     $ 6.78  

Weighted-average shares outstanding:

                                

Basic

     48,757       47,780       48,692       47,501  

Diluted

     48,964       48,792       48,945       48,734  

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2024

  

2023

  

2024

  

2023

 

Net income

 $144,430  $121,163  $337,337  $330,469 

Other comprehensive income (loss), net of tax:

                

Foreign currency translation adjustments

  22,321   (4,838)  4,186   (28,099)

Changes in unrealized gains and losses on available-for-sale securities, net of tax of $37, $156, $(161) and $625, respectively

  977   1,132   1,680   4,073 

Other comprehensive income (loss), net of tax:

  23,298   (3,706)  5,866   (24,026)

Comprehensive income

 $167,728  $117,457  $343,203  $306,443 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per-share amounts)

(Unaudited)

 

              

Accumulated

     
  

Common Stock and

      

Other

  

Total

 
  

Additional Paid-in Capital

  

Retained

  

Comprehensive

  

Stockholders’

 

Three Months Ended September 30, 2024

 

Shares

  

Amount

  

Earnings

  

Loss

  

Equity

 

Balance as of July 1, 2024

  48,698  $1,224,144  $1,016,208  $(44,494) $2,195,858 

Net income

  -   -   144,430   -   144,430 

Other comprehensive income

  -   -   -   23,298   23,298 

Dividends and dividend equivalents declared ($1.25 per share)

  -   -   (61,879)  -   (61,879)

Common stock issued under the employee equity incentive plan

  81   -   -   -   - 

Common stock issued under the employee stock purchase plan

  7   4,121         4,121 

Repurchases of common stock

  (7)  (5,534)  -   -   (5,534)

Stock-based compensation expense

  -   51,396   -   -   51,396 

Balance as of September 30, 2024

  48,779  $1,274,127  $1,098,759  $(21,196) $2,351,690 

 

              

Accumulated

     
  

Common Stock and

      

Other

  

Total

 
  

Additional Paid-in Capital

  

Retained

  

Comprehensive

  

Stockholders’

 

Three Months Ended September 30, 2023

 

Shares

  

Amount

  

Earnings

  

Loss

  

Equity

 

Balance as of July 1, 2023

  47,611  $1,055,130  $827,356  $(43,397) $1,839,089 

Net income

  -   -   121,163   -   121,163 

Other comprehensive loss

  -   -   -   (3,706)  (3,706)

Dividends and dividend equivalents declared ($1.00 per share)

  -   -   (49,121)  -   (49,121)

Common stock issued under the employee equity incentive plan

  291   4   -   -   4 

Common stock issued under the employee stock purchase plan

  9   3,831   -   -   3,831 

Stock-based compensation expense

  -   33,604   -   -   33,604 

Balance as of September 30, 2023

  47,911  $1,092,569  $899,398  $(47,103) $1,944,864 

 

              

Accumulated

     
  

Common Stock and

      

Other

  

Total

 
  

Additional Paid-in Capital

  

Retained

  

Comprehensive

  

Stockholders’

 

Nine Months Ended September 30, 2024

 

Shares

  

Amount

  

Earnings

  

Loss

  

Equity

 

Balance as of January 1, 2024

  48,028  $1,129,937  $947,064  $(27,062) $2,049,939 

Net income

  -   -   337,337   -   337,337 

Other comprehensive income

  -   -   -   5,866   5,866 

Dividends and dividend equivalents declared ($3.75 per share)

  -   -   (185,642)  -   (185,642)

Common stock issued under the employee equity incentive plan

  752   -   -   -   - 

Common stock issued under the employee stock purchase plan

  18   8,727   -   -   8,727 

Repurchases of common stock

  (19)  (14,160)  -   -   (14,160)

Stock-based compensation expense

  -   149,623   -   -   149,623 

Balance as of September 30, 2024

  48,779  $1,274,127  $1,098,759  $(21,196) $2,351,690 

 

              

Accumulated

     
  

Common Stock and

      

Other

  

Total

 
  

Additional Paid-in Capital

  

Retained

  

Comprehensive

  

Stockholders’

 

Nine Months Ended September 30, 2023

 

Shares

  

Amount

  

Earnings

  

Loss

  

Equity

 

Balance as of January 1, 2023

  47,107  $975,276  $716,403  $(23,077) $1,668,602 

Net income

  -   -   330,469   -   330,469 

Other comprehensive loss

  -   -   -   (24,026)  (24,026)

Dividends and dividend equivalents declared ($3.00 per share)

  -   -   (147,474)  -   (147,474)

Common stock issued under the employee equity incentive plan

  786   1,118   -   -   1,118 

Common stock issued under the employee stock purchase plan

  18   7,568   -   -   7,568 

Stock-based compensation expense

  -   108,607   -   -   108,607 

Balance as of September 30, 2023

  47,911  $1,092,569  $899,398  $(47,103) $1,944,864 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

   

Nine Months Ended September 30,

  
   

2024

    

2023

  

Cash flows from operating activities:

                

Net income

   $ 337,337     $ 330,469  

Adjustments to reconcile net income to net cash provided by operating activities:

                

Depreciation and amortization

     26,387       29,940  

Amortization of discount on available-for-sale securities

     (16,684 )     (1,591 )

Gain on deferred compensation plan investments

     (9,180 )     (3,411 )

Deferred taxes, net

     (6,598 )     10,927  

Stock-based compensation expense

     149,630       108,603  

Other

     50       (1,447 )

Changes in operating assets and liabilities:

                

Accounts receivable

     15,148       (3,103 )

Inventories

     (40,535 )     49,989  

Other assets

     57,781       (21,423 )

Accounts payable

     44,210       6,915  

Accrued compensation and related benefits

     24,450       (22,355 )

Income tax liabilities

     13,345       (12,797 )

Other accrued liabilities

     25,388       14,184  

Net cash provided by operating activities

     620,729       484,900  

Cash flows from investing activities:

                

Purchases of property and equipment

     (81,316 )     (43,772 )

Cash paid for an assumed lease

     (18,175 )     -  

Purchases of investments

     (941,451 )     (492,638 )

Maturities and sales of investments

     779,861       328,181  

Cash paid for acquisition, net of cash acquired

     (33,283 )     -  

Contributions to deferred compensation plan, net

     (1,764 )     (4,466 )

Net cash used in investing activities

     (296,128 )     (212,695 )

Cash flows from financing activities:

                

Property and equipment purchased on extended payment terms

     (2,654 )     (2,732 )

Proceeds from common stock issued under the employee equity incentive plan

     -       1,118  

Proceeds from common stock issued under the employee stock purchase plan

     8,727       7,568  

Repurchases of common stock

     (14,160 )     -  

Dividends and dividend equivalents paid

     (178,766 )     (135,265 )

Net cash used in financing activities

     (186,853 )     (129,311 )

Effect of change in exchange rates

     1,552       (10,323 )

Net increase in cash, cash equivalents and restricted cash

     139,300       132,571  

Cash, cash equivalents and restricted cash, beginning of period

     561,181       288,729  

Cash, cash equivalents and restricted cash, end of period

   $ 700,481     $ 421,300  

Supplemental disclosures for cash flow information:

                

Cash paid for income taxes, net

   $ 58,614     $ 73,678  

Non-cash investing and financing activities:

                

Liability accrued for property and equipment purchases

   $ 9,577     $ 2,893  

Liability accrued for dividends and dividend equivalents

   $ 63,922     $ 52,509  

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

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MONOLITHIC POWER SYSTEMS, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1. BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared by Monolithic Power Systems, Inc. (the “Company” or “MPS”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with these accounting principles, rules and regulations. The information in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 29, 2024.

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The financial statements contained in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future periods.

 

Summary of Significant Accounting Policies 
 
There have been no changes to the Company’s significant accounting policies during the three and nine months ended September 30, 2024. In addition to those described in the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023, the Company is subject to the following significant accounting policy due to its recent acquisition.
 

Goodwill and Acquisition-Related Intangible Assets 
 
Goodwill represents the excess of fair value of purchase consideration over fair value of net tangible and identifiable intangible assets acquired as of the date of an acquisition. In-process research and development (“IPR&D”) assets represent the fair value of incomplete research and development (“R&D”) projects that had not reached technological feasibility as of the date of acquisition. IPR&D assets are initially capitalized at fair value as intangible assets with indefinite lives. When IPR&D projects are completed, they are reclassified as amortizable intangible assets and are amortized over their estimated useful lives. Alternatively, if IPR&D projects are abandoned, they are impaired and expensed as R&D costs. Acquisition-related intangible assets with finite lives consist of developed technologies, which are amortized on a straight-line basis over their estimated remaining useful lives. The amortization expense is recorded in cost of revenue in the Condensed Consolidated Statements of Operations.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions used in these condensed consolidated financial statements primarily include those related to revenue recognition, inventory valuation, valuation of share-based awards, contingencies and income tax valuation allowances. Actual results could differ from these estimates and assumptions, and any such differences may be material to the Company’s condensed consolidated financial statements.

 

New Accounting Pronouncements Not Yet Adopted as of September 30, 2024

 

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which aims to improve disclosures regarding a public entity’s reportable segments, primarily through more comprehensive disclosures around significant segment expenses. The standard is effective for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025, and should be applied retroactively to all prior periods presented. The Company is evaluating the potential effect that the updated standard will have on its financial statement disclosures.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which aims to improve an entity’s income tax disclosures around its effective rate reconciliation, income taxes paid, disaggregation of income before income taxes and income tax expense. The guidance will be effective for annual periods beginning January 1, 2025. The standard should be applied prospectively but retrospective application is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

 
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2. REVENUE RECOGNITION

 

Revenue from Product Sales

 

The Company generates revenue primarily from product sales, which include assembled and tested integrated circuits (“ICs”), power modules as well as dies in wafer form. These product sales accounted for 99% of the Company’s total revenue for each of the three and nine months ended September 30, 2024 and 2023. The remaining revenue primarily includes royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties. See Note 8 for the disaggregation of the Company’s revenue by geographic region and by product family.

 

The Company sells its products primarily through third-party distributors, value-added resellers, original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”) and electronic manufacturing service (“EMS”) providers. For the three months ended September 30, 2024 and 2023, 88% and 77%, respectively, of the Company’s product sales were made through distribution arrangements. For the nine months ended September 30, 2024 and 2023, 87% and 79%, respectively, of the Company’s product sales were made through distribution arrangements. These distribution arrangements contain enforceable rights and obligations specific to those distributors and not the end customers. Purchase orders, which are generally governed by sales agreements or the Company’s standard terms of sale, set the final terms for unit price, quantity, shipping and payment agreed between the Company and the customer. The Company considers purchase orders to be the contracts with customers. The unit price as stated on the purchase orders is considered the observable, stand-alone selling price for the arrangements.

 

The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company excludes taxes assessed by government authorities, such as sales taxes, from revenue.

 

Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue from distributors and direct end customers when the following events have occurred: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. In accordance with the shipping terms specified in the contracts, these criteria are generally met when the products are shipped from the Company’s facilities (such as the “Ex Works” shipping term) or delivered to the customers’ locations (such as the “Delivered Duty Paid” shipping term).

 

Under certain consignment agreements, the Company recognizes revenue when the customers consume the products from the consigned inventory locations, at which time control transfers to the customers and the Company issues invoices.

 
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Variable Consideration

 

The Company accounts for price adjustments and stock rotation rights as variable consideration that reduces the transaction price and recognizes that reduction in the same period the associated revenue is recognized. Certain U.S.-based distributors have price adjustment rights when they sell the Company’s products to their end customers at a price that is lower than the distribution price invoiced by the Company. When the Company receives claims from the distributors that products have been sold to the end customers at the lower price, the Company issues the distributors credit memos for the price adjustments. The Company estimates the price adjustments using the expected value method based on an analysis of historical claims, at both the distributor and product level, as well as an assessment of any known trends of product sales mix. Other U.S. distributors and non-U.S. distributors do not have price adjustment rights. The Company records a credit against accounts receivable for the estimated price adjustments, with a corresponding reduction to revenue.

 

Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous nine months’ purchases in accordance with the contract terms. The Company estimates the stock rotation returns using the expected value method based on an analysis of historical returns, and the current level of inventory in the distribution channel. The Company records a liability for the stock rotation reserve, with a corresponding reduction to revenue. In addition, the Company recognizes an asset for product returns which represents the right to recover products from the customers related to stock rotations, with a corresponding reduction to cost of revenue.

 

Contract Balances

 

Accounts Receivable:

 

The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. The Company’s accounts receivables are short-term, with standard payment terms generally ranging from 30 to 90 days. The Company does not require its customers to provide collateral to support accounts receivable. The Company assesses collectability by reviewing accounts receivable on a customer-by-customer basis. To manage credit risk, management performs ongoing credit evaluations of the customers’ financial condition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables. For certain customers, the Company requires standby letters of credit or advance payments prior to shipments of goods. The Company did not recognize any write-offs of accounts receivable or record any allowance for credit losses for the periods presented.

 

Contract Liabilities:

 

For customers without credit terms, the Company requires cash payments two weeks before the products are scheduled to be shipped to the customers. The Company records these payments received in advance of performance as customer prepayments within current accrued liabilities. As of September 30, 2024 and December 31, 2023, customer prepayments totaled $6.3 million and $2.8 million, respectively. The increase in the customer prepayment balance for the nine months ended September 30, 2024 resulted from an increase in unfulfilled customer orders for which the Company had received payments. 

 

Practical Expedients

 

The Company has elected the practical expedient to expense sales commissions as incurred because the amortization period would have been one year or less.

 

The Company’s standard payment terms generally require customers to pay 30 to 90 days after the Company satisfies the performance obligations. For those customers who are required to pay in advance, the Company satisfies the performance obligations generally within a quarter. For these reasons, the Company has elected not to determine whether contracts with customers contain significant financing components.

 

The Company’s unsatisfied performance obligations primarily include products held in consignment arrangements and customer purchase orders for products that the Company has not yet shipped. Because the Company expects to fulfill these performance obligations within one year, the Company has elected not to disclose the amount of these remaining performance obligations.

 
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3. STOCK-BASED COMPENSATION

 

2014 Equity Incentive Plan

 

In April 2013, the Board of Directors adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013. In October 2014, the Board of Directors approved certain amendments to the 2014 Plan. The amended 2014 Plan became effective on November 13, 2014, and provided for the issuance of up to 5.5 million shares. In April 2020, the Board of Directors further amended and restated the amended 2014 Plan (the “Amended and Restated 2014 Plan”), which the Company’s stockholders approved in June 2020. The Amended and Restated 2014 Plan became effective on June 11, 2020, and provides for the issuance of up to 10.5 million shares. The Amended and Restated 2014 Plan will cease being available for new awards on June 11, 2030. As of September 30, 2024, 3.9 million shares remained available for future issuance under the Amended and Restated 2014 Plan.

 

Stock-Based Compensation Expense

 

The Company recognized stock-based compensation expenses as follows (in thousands):

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Cost of revenue

   $ 1,576     $ 1,020     $ 4,585     $ 3,317  

Research and development

     11,331       8,479       33,460       26,406  

Selling, general and administrative (“SG&A”)

     38,491       24,103       111,585       78,880  

Total stock-based compensation expense

   $ 51,398     $ 33,602     $ 149,630     $ 108,603  

Tax benefit related to stock-based compensation (1)

   $ 766     $ 667     $ 2,272     $ 1,753  

 

(1)

Amount reflects the tax benefit related to stock-based compensation recorded for equity awards that are expected to generate tax deductions when they vest in future periods. Equity awards granted to the Company’s executive officers are subject to the tax deduction limitations set by Section 162(m) of the Internal Revenue Code.

 

Restricted Stock Units (“RSUs”)

 

The Company’s RSUs include time-based RSUs, RSUs with performance conditions (“PSUs”), RSUs with market conditions (“MSUs”), and RSUs with both market and performance conditions (“MPSUs”). Vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance or market goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”). All awards include service conditions which require continued employment with or services to the Company. 

 

A summary of RSU activity is presented in the table below (in thousands, except per-share amounts):

 

   

Time-Based RSUs

    

PSUs and MPSUs

    

MSUs

    

Total

  
           

Weighted-

              

Weighted-

            

Weighted-

            

Weighted-

  
           

Average

              

Average

            

Average

            

Average

  
           

Grant Date

              

Grant Date

            

Grant Date

            

Grant Date

  
   

Number of

    

Fair Value

    

Number of

      

Fair Value

    

Number of

    

Fair Value

    

Number of

    

Fair Value

  
   

Shares

    

Per Share

    

Shares

      

Per Share

    

Shares

    

Per Share

    

Shares

    

Per Share

  

Outstanding at January 1, 2024

     102     $ 411.11       482       $ 397.77       1,502     $ 152.89       2,086     $ 222.04  

Granted

     31     $ 643.98       344  

(1)

   $ 593.33       -     $ -       375     $ 597.56  

Vested

     (39 )   $ 374.15       (150 )     $ 272.21       (563 )   $ 68.48       (752 )   $ 125.04  

Forfeited

     (4 )   $ 471.15       (1 )     $ 400.96       (1 )   $ 270.15       (6 )   $ 419.22  

Outstanding at September 30, 2024

     90     $ 505.64       675       $ 525.43       938     $ 203.32       1,703     $ 346.88  

 

(1)

Amount reflects the number of awards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period.

 
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The intrinsic value related to vested RSUs was $65.7 million and $148.9 million for the three months ended September 30, 2024 and 2023, respectively. The intrinsic value related to vested RSUs was $494.4 million and $388.6 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the total intrinsic value of all outstanding RSUs was $1.6 billion, based on the closing stock price of $924.50. As of September 30, 2024, unamortized compensation expense related to all outstanding RSUs was $299.6 million with a weighted-average remaining recognition period of approximately two years.

 

Time-Based RSUs:

 

For the nine months ended September 30, 2024, the Compensation Committee granted 31,000 RSUs with service conditions to non-executive employees and non-employee directors. The RSUs generally vest over four years for employees and one year for directors, subject to continued service with the Company.

 

2024 PSUs:

 

In February 2024, the Compensation Committee granted 50,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of three sets of independent performance goals (“2024 Executive PSUs”). For the first goal, the executive officers can earn up to 300% of the target number of the 2024 Executive PSUs based on the achievement of the Company’s average three-year (2024 through 2026) revenue growth rate in excess of the analog industry’s average three-year revenue growth rate as published by the Semiconductor Industry Association (the “SIA”). For the second goal, the executive officers can earn 100% of the target number of the 2024 Executive PSUs if the Company achieves a reduction in 2026 of 25% global combined Scope 1 and Scope 2 greenhouse gas emissions against the 2022 baseline. For the third goal, the executive officers can earn 50% of the target number of the 2024 Executive PSUs if more than one-third of the Company’s total 2026 revenue in the automotive market is generated from Electronic Vehicle (“EV”) automakers. In addition, for the third goal, the executive officers can earn 50% of the target number of the 2024 Executive PSUs if total 2026 revenue from products enabling EV powertrains and EV 48V systems grows to 200% of the 2023 baseline. For the first goal, a percentage of the 2024 Executive PSUs will fully vest on December 31, 2026, depending on the degree to which the pre-determined goal is met during the performance period. The 2024 Executive PSUs related to the second and the third goal will fully vest on December 31, 2026 if the pre-determined goals are met during the performance period. Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2024 Executive PSUs will be $154.3 million. 
 
In February 2024, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represent the target number of shares that can be earned based on the degree of achievement of the Company’s 2025 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two-year (2024 and 2025) revenue growth rate compared against the analog industry’s average two-year revenue growth rate as published by the SIA (“2024 Non-Executive PSUs”). The maximum number of shares that an employee can earn is either 200% or 300% of the target number of the 2024 Non-Executive PSUs, depending on the job classification of the employee. 50% of the 2024 Non-Executive PSUs will vest in the first quarter of 2026 depending on the degree to which the pre-determined goals are met during the performance period. The remaining 2024 Non-Executive PSUs will vest over the following two years on a quarterly basis. Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2024 Non-Executive PSUs will be $17.7 million. 
 
The 2024 Executive PSUs and the 2024 Non-Executive PSUs contain a purchase price feature, which requires the employees to pay the Company $30 per share upon vesting of the shares. The $30 purchase price requirement is deemed satisfied and waived if the Company’s stock price on the last trading day of the performance period is $30 higher than the grant date stock price of $632.98. The Company determined the grant date fair value of the 2024 Executive PSUs and the 2024 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $632.98, simulation term of three years, expected volatility of 49.4%, risk-free interest rate of 4.1%, and expected dividend yield of 0.8%. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions. 

 
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2004 Employee Stock Purchase Plan (as amended and restated, the “2004 ESPP”)

 

On August 16, 2023, the 2004 ESPP was amended and restated to, among other changes, provide for the issuance of up to 4.4 million shares of the Company’s common stock. The 2004 ESPP will expire on August 16, 2038.

 

For the three months ended September 30, 2024 and 2023, 7,000 and 9,000 shares were issued under the 2004 ESPP, respectively. For the nine months ended September 30, 2024 and 2023, 18,000 and 18,000 shares were issued under the 2004 ESPP, respectively. As of September 30, 2024, 4.4 million shares were available for future issuance under the 2004 ESPP.

 

The intrinsic value of the shares issued was $2.0 million and $0.7 million for the three months ended September 30, 2024 and 2023, respectively. The intrinsic value of the shares issued was $5.4 million and $1.4 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the unamortized expense was $1.4 million, which will be recognized through the first quarter of 2025. The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:

 

  

Three Months Ended September 30,

 

Nine Months Ended September 30,

  

2024

 

2023

 

2024

 

2023

Expected term (in years)

  0.5   0.5   0.5   0.5 

Expected volatility

  47.8%  50.8%  45.1%  53.3%

Risk-free interest rate

  5.0%  5.5%  5.2%  5.3%

Dividend yield

  0.6%  0.8%  0.6%  0.8%

 

Cash proceeds from the shares issued under the 2004 ESPP were $8.7 million and $7.6 million for the nine months ended September 30, 2024 and 2023, respectively.

 
 

4. ACQUISITION

 

On January 3, 2024 (the “Acquisition Date”), the Company acquired 100% of the outstanding capital stock of Axign B.V. (“Axign”), a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems. Commencing on the Acquisition Date, Axign became a wholly-owned subsidiary of the Company and its results of operations have been included in the Company’s consolidated financial statements.

 

Purchase Consideration

 

The purchase consideration was $33.4 million in cash. Cash paid at the Acquisition Date included $3.8 million that is being held in an escrow account for a one-year period as recourse in the event of a breach of Axign’s representations and warranties. 

 

In connection with the acquisition, the Company incurred $0.4 million in transaction costs that were expensed as incurred and included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

 

Purchase Price Allocation

 

The purchase price allocation for Axign is as follows (in thousands):

 

Inventory

   $ 720  

Other tangible assets acquired, net of liabilities assumed

     1,487  

Intangible assets:

        

Developed technology

     9,184  

IPR&D

     2,147  

Total identifiable net assets acquired

     13,538  

Goodwill

     19,860  

Total net assets acquired

   $ 33,398  

 

The intangible asset acquired with a finite life includes the core developed technology with an estimated remaining useful life of eight years. The acquired intangible asset with an indefinite life includes an incomplete R&D project that had not reached technological feasibility as of the Acquisition Date. The fair values of the developed technology and the IPR&D were determined using the income approach.

 

The goodwill arising from the acquisition was primarily attributed to the assembled workforce and synergies that are anticipated to enable the Company to develop solutions with lower power consumption in the consumer and automotive markets using Axign’s digital feedback technology. The goodwill is not expected to be deductible for tax purposes.

 
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5. BALANCE SHEET COMPONENTS

 

Inventories

 

Inventories consist of the following (in thousands):

 

   

September 30,

    

December 31,

  
   

2024

    

2023

  

Raw materials

   $ 70,567     $ 118,917  

Work in process

     182,312       112,750  

Finished goods

     172,063       152,035  

Total

   $ 424,942     $ 383,702  

 

Other Current Assets

 

Other current assets consist of the following (in thousands):

 

   

September 30,

    

December 31,

  
   

2024

    

2023

  

Prepaid wafer purchases (1)

   $ 60,000     $ -  

Prepaid expenses

     31,379       28,964  

RSU tax withholding proceeds receivable

     54       20,141  

Other receivables (1)

     -       50,000  

Restricted cash (2)

    

-

      

33,204

  

Other

     17,021       15,154  

Total

   $ 108,454     $ 147,463  

 

(1)

 The Company held $60 million in prepaid wafer purchases as of September 30, 2024 related to deposits made to a supplier under a long-term wafer supply agreement. The Company held $50 million in other receivables as of December 31, 2023 associated with those deposits. See Note 9 for details about the supply agreement.

(2)

 The restricted cash included in other current assets as of December 31, 2023 was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign and was paid in January 2024. See Note 4 for further details.

 
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Other Long-Term Assets

 

Other long-term assets consist of the following (in thousands):

 

   

September 30,

    

December 31,

  
   

2024

    

2023

  

Deferred compensation plan assets

   $ 89,324     $ 78,381  

Prepaid wafer purchases (1)

     60,000       120,000  

Operating lease right-of-use (“ROU”) and related assets (2)

     35,026       8,355  

Other

     6,673       4,541  

Total

   $ 191,023     $ 211,277  

 

(1)

 Prepaid wafer purchases relate to a deposit made to a supplier under a long-term wafer supply agreement. See Note 9 for details about the supply agreement.

(2)

 The operating lease ROU and related assets as of September 30, 2024 includes a fair value measurement related to favorable market terms on a building lease.    

 

Other Accrued Liabilities

 

Other accrued liabilities consist of the following (in thousands):

 

   

September 30,

    

December 31,

  
   

2024

    

2023

  

Dividends and dividend equivalents

   $ 62,564     $ 57,697  

Stock rotation and sales returns

     24,033       18,843  

Warranty

     14,344       16,906  

Customer prepayments

     6,315       2,792  

Income tax payable

     11,407       8,063  

Other

     20,768       11,490  

Total

   $ 139,431     $ 115,791  

 

Other Long-Term Liabilities

 

Other long-term liabilities consist of the following (in thousands):

 

   

September 30,

    

December 31,

  
   

2024

    

2023

  

Deferred compensation plan liabilities

   $ 84,128     $ 80,903  

Operating lease liabilities

     13,482       5,565  

Dividend equivalents

     4,196       2,187  

Total

   $ 101,806     $ 88,655  

 

 
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6. LEASES

 

Lessee

 

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, employee housing units and certain equipment. These leases have remaining lease terms from less than one year to 20 years. Some of these leases include options to renew the lease term for up to five years or on a month-to-month basis. The Company does not have finance lease arrangements.

 

The following table summarizes the balances of operating lease ROU assets and liabilities (in thousands):

 

   

September 30,

  

December 31,

 
 

Financial Statement Line Item

 

2024

  

2023

 

Operating lease ROU assets

Other long-term assets

 $17,522  $8,355 
          

Operating lease liabilities

Other accrued liabilities

 $2,814  $2,303 
 

Other long-term liabilities

 $13,482  $5,565 

 

The following tables summarize certain information related to the leases (in thousands, except percentages and years):

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Lease costs:

                                

Operating lease costs

   $ 948     $ 852     $ 2,859     $ 2,327  

Other

     822       480       2,020       1,572  

Total lease costs

   $ 1,770     $ 1,332     $ 4,879     $ 3,899  

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Cash paid for amounts included in the measurement of lease liabilities:

                                

Operating cash flows for operating leases

   $ 1,704     $ 629     $ 3,404     $ 2,267  

ROU assets obtained in exchange for new operating lease liabilities

   $ 2,339     $ 2,086     $ 11,610     $ 6,921  

 

   

September 30,

  

December 31,
   

2024

  

2023

Weighted-average remaining lease term (in years)

     11.3       4.7  

Weighted-average discount rate

     5.4 %     4.3 %

 

As of September 30, 2024, the maturities of the lease liabilities were as follows (in thousands):

 

2024 (remaining three months)

   $ 958  

2025

     3,326  

2026

     2,787  

2027

     2,298  

2028

     1,550  

Thereafter

     12,639  

Total remaining lease payments

     23,558  

Less: imputed interest

     (7,262 )

Total lease liabilities

   $ 16,296  

 

As of September 30, 2024, operating leases that have not yet commenced are not material.

 

 
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Lessor

 

The Company owns certain office buildings and leases a portion of these properties to third parties under arrangements that are classified as operating leases. These leases have remaining lease terms ranging from less than one year to five years. Some of these leases include a tenant option to renew the lease term for up to five years.

 

For the three months ended September 30, 2024 and 2023, income related to lease payments was $0.3 million and $0.4 million, respectively. For the nine months ended September 30, 2024 and 2023, income related to lease payments was $0.7 million and $1.2 million, respectively. As of September 30, 2024, future income related to lease payments was as follows (in thousands):

 

2024 (remaining three months)

   $ 264  

2025

     583  

2026

     403  

2027

     373  

2028

     384  

Thereafter

     129  

Total

   $ 2,136  

  
 

7. NET INCOME PER SHARE

 

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share reflects the potential dilution that would occur if outstanding securities or other contracts to issue common stock were exercised or converted into shares of common stock, and calculated using the treasury stock method. Contingently issuable shares, including equity awards with performance conditions or market conditions, are considered outstanding shares of common stock and included in the basic net income per share as of the date that all necessary conditions to earn the awards have been satisfied. Prior to the end of the contingency period, the number of contingently issuable shares included in the diluted net income per share is based on the number of shares, if any, that would be issuable under the terms of the arrangement at the end of the reporting period.

 

The Company’s RSUs contain forfeitable rights to receive cash dividend equivalents, which are accumulated and paid to the employees when the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill the requisite service requirement and, as a result, the awards do not vest. Accordingly, these awards are not treated as participating securities in the net income per share calculation.

 

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per-share amounts):

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Numerator:

                                

Net income

   $ 144,430     $ 121,163     $ 337,337     $ 330,469  
                                 

Denominator:

                                

Weighted-average outstanding shares — basic

     48,757       47,780       48,692       47,501  

Effect of dilutive securities

     207       1,012       253       1,233  

Weighted-average outstanding shares — diluted

     48,964       48,792       48,945       48,734  
                                 

Net income per share:

                                

Basic

   $ 2.96     $ 2.54     $ 6.93     $ 6.96  

Diluted

   $ 2.95     $ 2.48     $ 6.89     $ 6.78  

 

Anti-dilutive common stock equivalents were not material in any of the periods presented.

 

Stock Repurchase Program
 
In October 2023, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $640.0 million in the aggregate of its common stock through October 29, 2026. Shares are retired upon repurchase. The Company repurchased 6,000 and 19,000 shares of its common stock for an aggregate purchase price of $5.5 million and $14.2 million during the three and nine months ended September 30, 2024, respectively.
 
Stock repurchased under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate. The timing and the number of any repurchased common stock will be determined by the Company’s management based on its evaluation of market conditions, legal requirements, share price, and other factors. The repurchase program does not obligate the Company to purchase any particular number of shares, and may be suspended, modified, or discontinued at any time without prior notice.
 
The U.S. Inflation Reduction Act of 2022 requires a 1% excise tax based on the value of certain stock repurchases in excess of stock issued for employee compensation made after December 31, 2022. This provision did not have an impact on the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2024.

 

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8. SEGMENT, SIGNIFICANT CUSTOMERS AND GEOGRAPHIC INFORMATION

 

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronics solutions for the enterprise data, storage and computing, automotive, communications, consumer and industrial markets. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’ ship-to locations.

 

The Company sells its products primarily to third-party distributors and value-added resellers, and directly to OEMs, ODMs and EMS providers. The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue:

 

  

Three Months Ended September 30,

 

Nine Months Ended September 30,

Customer

 

2024

 

2023

 

2024

 

2023

Distributor A

  24%  27%  33%  23%

Distributor B

  25%  21%  19%  21%

Distributor C

  *   11%  *   10%

 

* Represents less than 10%

 

The Company’s agreements with these third-party customers were made in the ordinary course of business and may be terminated with or without cause by these customers with advance notice. Although the Company may experience a short-term disruption in the distribution of its products and a short-term decline in revenue if its agreement with any of the distributors were terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a short period following any termination of the agreement with a distributor.

 

The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable:

 

   

September 30,

  

December 31,

Customer

  

2024

  

2023

Distributor A

     25 %     42 %

Distributor B

     25 %     13 %

Distributor C

     10 %     10 %

 

The following is a summary of revenue by geographic region (in thousands):

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  

Country or Region

  

2024

    

2023

    

2024

    

2023

  

China

   $ 310,472     $ 234,924     $ 856,026     $ 676,148  

Taiwan

     179,747       103,537       407,593       222,582  

South Korea

     51,815       41,698       126,865       128,047  

Europe

     25,145       29,827       61,992       109,278  

United States

     13,797       23,565       42,544       82,153  

Southeast Asia

     22,772       22,538       47,363       70,678  

Japan

     16,286       18,605       42,786       77,708  

Other

     85       173       266       466  

Total

   $ 620,119     $ 474,867     $ 1,585,435     $ 1,367,060  

 
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In the second quarter of 2024, the Company reclassified certain products in its product families. The prior periods in the table below have been updated to conform with the new methodology.

 

The following is a summary of revenue by product family (in thousands):

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  

Product Family

  

2024

    

2023

    

2024

    

2023

  

Direct Current (“DC”) to DC

   $ 616,105     $ 447,394     $ 1,563,472     $ 1,290,750  

Lighting Control

     4,014       27,473       21,963       76,310  

Total

   $ 620,119     $ 474,867     $ 1,585,435     $ 1,367,060  

 

The following is a summary of long-lived assets by geographic region (in thousands):

 

   

September 30,

    

December 31,

  

Country

  

2024

    

2023

  

China

   $ 237,113     $ 184,685  

United States

     125,952       119,430  

Taiwan

     39,929       39,419  

Other

     33,271       25,418  

Total

   $ 436,265     $ 368,952  

  
 

9. COMMITMENTS AND CONTINGENCIES

 

Product Warranties

 

The Company generally provides either a one- or two-year warranty against defects in materials and workmanship and will repair the products, provide replacements at no charge to customers or issue a refund. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. Warranty reserve requirements are generally based on a specific assessment of the products sold with warranties when a customer asserts a claim for warranty or for a product defect.

 

The changes in warranty reserves are as follows (in thousands):

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2024

    

2023

    

2024

    

2023

  

Balance at beginning of period

   $ 14,702     $ 17,654     $ 16,906     $ 24,082  

Warranties issued

     570       1,858       2,895       2,800  

Repairs, replacement and refund

     (849 )     (367 )     (4,979 )     (2,619 )

Changes in liability for pre-existing warranties

     (79 )     (2,102 )     (478 )     (7,220 )