alab ALAB reported better-than-expected third-quarter EPS and sales on Monday.Astera Labs reported quarterly earnings of 23 cents per share which beat the analyst consensus estimate of 17 cents per share. The company reported quarterly sales of $113.09 million which beat the analyst consensus estimate of $97.44 million.“Astera Labs delivered strong Q3 results, setting our fifth consecutive quarterly revenue record and grew 47% versus the previous quarter,” said Jitendra Mohan, Astera Labs’ Chief Executive O ...

KEY TAKEAWAYSAstera Labs shares are jumping around 30% Tuesday morning, after the Nvidia supplier reported strong third-quarter earnings results on the back of demand for its artificial intelligence (AI) products.The company reported quarterly revenue of $113.1 million, up 47% from the prior quarter and 206% year-over-year, while showing a net loss of $7.6 million, or 5 cents a share.Astera Labs makes chip-based connectivity products to boost the efficiency of AI. Astera Labs (ALAB) shares are jumping aroun ...

Financial Data and Key Metrics - Q3 2024 revenue reached a record $113 million, up 47% sequentially and 206% year-over-year [9] - Non-GAAP operating margin expanded to over 32%, with non-GAAP EPS of $0.23 [9] - Q4 2024 revenue guidance is between $126 million and $130 million, representing an 11% to 15% sequential increase [32] - Non-GAAP gross margin for Q4 is expected to be approximately 75%, with operating expenses projected between $54 million and $55 million [33] - Cash flow from operating activities in Q3 was $63.5 million, with cash, cash equivalents, and marketable securities totaling $887 million at the end of the quarter [31] Business Line Data and Key Metrics - Aries product family remains the largest revenue contributor, driven by third-party GPU-based AI platforms and internally developed AI accelerators [28] - Taurus revenue diversified beyond 200-gig applications, with initial production ramp of 400-gig Ethernet-based systems [29] - Leo CXL revenues are driven by preproduction volumes for next-generation CXL-capable compute platforms [29] - Scorpio Smart Fabric Switch family began shipping in preproduction volumes during Q3, with design wins for both P-Series and X-Series [29][13] Market Data and Key Metrics - The Scorpio Smart Fabric Switch family is expected to expand the total market opportunity for the company's four product families to over $12 billion by 2028 [11] - Scorpio P-Series addresses a multibillion-dollar opportunity with a ground-up architecture designed for AI data flows [20] - The X-Series is expected to have a larger total addressable market (TAM) over the long term, with a current TAM of nearly zero [50] Company Strategy and Industry Competition - The company has joined the Ultra Accelerator Link (UALink) Consortium, positioning itself at the forefront of developing high-speed, low-latency interconnects for scale-up connectivity between accelerators [14] - The Scorpio Smart Fabric Switch family is designed to address the increasing complexity of connectivity challenges within AI infrastructure, both for scale-out and scale-up networks [11][12] - The company's COSMOS software stack provides hyperscaler customers with tools to monitor and optimize their infrastructure, enhancing the value of its hardware solutions [15][38] Management Commentary on Operating Environment and Future Outlook - Management highlighted the criticality of connectivity in modern AI clusters, driven by trillion-parameter model sizes and faster, more complex AI accelerators [10] - The company expects to benefit from shorter AI platform refresh cycles and increased reliance on trusted partners by hyperscalers [15] - Management is optimistic about the market opportunity for internally developed AI accelerator platforms, which could be larger than third-party GPU-based systems [21] Other Important Information - The company demonstrated the industry's first PCIe Gen 6 fabric switch at the 2024 OCP Global Summit, with preproduction volumes already shipping [13] - Non-GAAP financial measures are used to evaluate performance, with reconciliations provided in the earnings release [6] Q&A Session Summary Question: Confidence in sequential growth and visibility for the first half of next year [35] - The company has strong visibility due to a diversified revenue stream, with Taurus and Aries product lines expected to grow into 2025 [36] Question: Differentiators for Scorpio switch portfolio, particularly the COSMOS software stack [37] - The Scorpio family is purpose-built for AI applications, with a software-first approach and integration with COSMOS providing a holistic view of AI infrastructure [38] Question: Ramp timeline for Scorpio business and potential size in 2025 [40] - Scorpio is expected to exceed 10% of revenues in 2025, with production volumes ramping throughout the year [41] Question: Leo CXL memory controller applications and potential impact in 2025 [42] - Leo CXL is transitioning from the "crawl" to "walk" stage, with production volumes expected to begin in 2025 [42] Question: Product mix and strength in Q3 revenue [44] - Aries revenue, driven by third-party GPUs and internally developed AI accelerators, was the primary driver of Q3 upside [45] Question: Margin impact of Scorpio product line [46] - Scorpio is not expected to impact long-term gross margin targets of 70%, with a wide range of margin profiles across the product portfolio [46] Question: Competitive positioning and opportunity for Scorpio X-Series [49] - The X-Series is expected to have a larger TAM over time, with customization capabilities through the company's software-defined architecture [50] Question: Diversification of Taurus product family across customers [51] - The Taurus business is expected to broaden in 2025, with increased diversification as data rates go higher [52] Question: Timeline for PCIe Gen 6 volume production [53] - Volume production for PCIe Gen 6 will depend on customer timelines, with opportunities growing across Gen 5 and Gen 6 implementations [53] Question: Relationship between Scorpio and PCIe Retimer business [54] - The company's software-based architecture and COSMOS integration provide a unique advantage in optimizing system-level configurations [54] Question: Inflection point for ASIC business growth [56] - Hyperscalers are increasing investments in internal ASIC programs, driving growth for the company's product lines [57] Question: Average content per GPU and impact of Scorpio [59] - The average content per GPU is increasing due to ASP uplifts with new protocol generations and the introduction of Scorpio [60] Question: Revenue contribution from Scorpio P-Series and X-Series in 2025 [62] - Both P-Series and X-Series are expected to contribute to revenues in 2025, with X-Series ramping in the back half of the year [63] Question: Attach rates for Scorpio P-Series and X-Series [64] - P-Series attach rate is 1:1 per GPU, while X-Series attach rate depends on the configuration of the back-end fabric [65] Question: Long-term diversification between merchant GPU and custom AI accelerator players [68] - The company expects to see a diversified revenue stream across merchant GPU and custom AI accelerator platforms, with multiple product lines contributing to growth [68]

Revenue Growth - Revenue for the three months ended September 30, 2024, increased by 206% to $113.1 million compared to $36.9 million for the same period in 2023, driven by a 197% increase in unit shipments of Aries products [86][102]. - Revenue for the nine months ended September 30, 2024, increased by 291% to $255.2 million compared to $65.3 million for the same period in 2023, primarily due to a 285% increase in unit shipments of Aries products [87][103]. - The increase in revenue was also attributed to higher average selling prices due to a greater mix of second-generation Aries retimers [102][103]. Gross Margin - Gross margin for the three months ended September 30, 2024, improved by 160 basis points to 77.7% from 76.1% in the same period of 2023 [86]. - Gross margin for the nine months ended September 30, 2024, increased by 1,520 basis points to 77.7% from 62.5% in the same period of 2023 [87]. - Non-GAAP gross profit for the three months ended September 30, 2024, was $87.979 million, compared to $28.114 million for the same period in 2023 [119]. - Non-GAAP gross margin for the three months ended September 30, 2024, was 77.8%, compared to 76.1% for the same period in 2023 [119]. Operating Expenses - Operating expenses for the three months ended September 30, 2024, rose by 222% to $97.5 million compared to the same period in 2023, primarily due to a $42.7 million increase in non-cash stock-based compensation [88]. - Operating expenses for the nine months ended September 30, 2024, increased by 296% to $315.5 million compared to the same period in 2023, driven by a $178.3 million rise in non-cash stock-based compensation [89]. - Research and development expense increased by $90.6 million, or 168%, for the nine months ended September 30, 2024, driven by a $52.6 million increase in non-cash stock-based compensation [109]. - Sales and marketing expense increased by $85.8 million, or 572%, for the nine months ended September 30, 2024, primarily due to a $79.8 million increase in non-cash stock-based compensation [111]. - General and administrative expense increased by $58.8 million, or 556%, for the nine months ended September 30, 2024, largely due to a $45.9 million increase in non-cash stock-based compensation [113]. Cash Flow and Financing - Cash, cash equivalents, and marketable securities totaled $886.8 million as of September 30, 2024 [125]. - Net cash provided by operating activities for the nine months ended September 30, 2024, was $97.0 million, compared to cash used of $27.1 million in the same period of 2023 [126]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $666.1 million, primarily due to $724.9 million in purchases of marketable securities [129]. - Net cash provided by financing activities for the nine months ended September 30, 2024, was $650.2 million, mainly from $672.2 million in proceeds from the IPO [131]. - The company completed its IPO on March 22, 2024, raising net proceeds of $672.2 million from the sale of 22,770,000 shares at $36.00 per share [90]. Tax and Income - Income tax provision increased by $6.7 million, or 235%, for the three months ended September 30, 2024, primarily due to an increase in taxable income [115]. - GAAP net loss for the nine months ended September 30, 2024, was $108.1 million, compared to a loss of $40.6 million for the same period in 2023 [124]. - Non-GAAP operating income for the three months ended September 30, 2024, was $36.6 million, compared to a loss of $1.0 million for the same period in 2023 [121]. - Non-GAAP net income for the three months ended September 30, 2024, was $40.3 million, compared to a loss of $0.4 million for the same period in 2023 [124]. - The non-GAAP tax rate for the three months ended September 30, 2024, was approximately 15% [124]. Headcount and Personnel Expenses - The company experienced a 70% increase in headcount, contributing to higher personnel-related expenses across various departments [109]. Foreign Currency Risk - The reporting currency and functional currency of the company's wholly owned foreign subsidiaries is the U.S. dollar [141]. - All sales and operating expenses are transacted in U.S. dollars, minimizing foreign currency risk [141]. - The company has not entered into any hedging arrangements for foreign currency risk to date [141]. - A hypothetical 100 basis point change in the U.S. dollar's value would not materially affect the company's operating results [141]. Future Outlook - The company expects continued investments in research and development to drive future growth, with R&D expenses anticipated to increase in absolute dollars [97]. - Company believes current cash and marketable securities will be sufficient to fund operations for at least the next 12 months [125].

Financial Performance - Record quarterly revenue of $113.1 million, up 47% QoQ and up 206% YoY[1] - GAAP gross margin of 77.7% and GAAP operating loss of $8.9 million[3] - Non-GAAP operating income of $36.6 million with a non-GAAP operating margin of 32.4%[3] - Revenue for the three months ended September 30, 2024, was $113,086 thousand, a 206% increase from $36,928 thousand in the same period last year[17] - Gross profit for the nine months ended September 30, 2024, was $198,251 thousand, compared to $40,802 thousand for the same period in 2023, representing a 386% increase[17] - Operating loss for the three months ended September 30, 2024, was $(8,896) thousand, an improvement from $(24,347) thousand in the previous quarter[19] - Net loss for the nine months ended September 30, 2024, was $(108,134) thousand, compared to $(40,582) thousand for the same period in 2023[18] - Non-GAAP gross profit for the three months ended September 30, 2024, was $87,979 thousand, up from $28,114 thousand in the same period last year[19] - Non-GAAP operating income for the nine months ended September 30, 2024, was $71,232 thousand, compared to a loss of $(31,137) thousand in the same period last year[19] Cash and Assets - Total current assets increased to $945.6 million from $185.8 million year-over-year[14] - Cash and cash equivalents rose to $126.1 million from $45.1 million[14] - Cash and cash equivalents at the end of the period were $126,117 thousand, up from $37,722 thousand at the end of the same period last year[18] - Cash flows from operating activities for the nine months ended September 30, 2024, provided $96,973 thousand, a significant recovery from $(27,115) thousand in the same period last year[18] - The company raised $672,198 thousand from the issuance of common stock in connection with its initial public offering[18] Expenses - The company reported stock-based compensation expense of $186,370 thousand for the nine months ended September 30, 2024, compared to $7,380 thousand in the same period last year[18] - Research and development expenses for the three months ended September 30, 2024, were $14.64 million, up from $1.71 million in the same period last year[22] - Sales and marketing expenses for the nine months ended September 30, 2024, totaled $81.22 million, compared to $1.39 million for the same period in 2023[22] - General and administrative expenses for the nine months ended September 30, 2024, were $46.82 million, compared to $0.92 million for the same period in 2023[22] - The total stock-based compensation expense for the nine months ended September 30, 2024, was $186.37 million, an increase from $7.38 million for the same period in 2023[22] - The total stock-based compensation expense for the three months ended September 30, 2024, included $16.20 million in sales and marketing expenses[22] Future Outlook - Fourth quarter revenue outlook estimated between $126 million to $130 million[5] - Non-GAAP diluted earnings per share projected between $0.25 to $0.26[5] - For the three months ended September 30, 2024, the non-GAAP tax rate was approximately 15%, compared to 23% for the three months ended June 30, 2024[20] Shares and Stock - The weighted average shares used to compute non-GAAP pro forma net income per share for September 30, 2024, were 173.83 million, compared to 128.36 million for September 30, 2023[21] - The weighted average effect of the assumed conversion of redeemable convertible preferred stock for the nine months ended September 30, 2024, was 25.81 million shares[21] - The shares used to compute GAAP net loss per share attributable to common stockholders for September 30, 2024, were 156.83 million, compared to 37.47 million for September 30, 2023[21] Strategic Initiatives - Introduced Scorpio Smart Fabric Switches, enhancing AI infrastructure connectivity[4] - Joined the Ultra Accelerator Link (UALink) Consortium to advance high-speed connectivity for AI workloads[4]

Part I - Financial Information Comprehensive financial data including statements, management's analysis, market risks, and internal controls [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents Astera Labs' unaudited financial statements and notes, detailing revenue growth, operating expenses, and post-IPO liquidity [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, highlighting assets, liabilities, and equity at specific dates | Metric | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (YoY) | | :---------------------------------- | :----------------------------- | :------------------------------- | :----------- | | Cash and cash equivalents | $421,076 | $45,098 | +$375,978 | | Marketable securities | $409,919 | $104,215 | +$305,704 | | Total current assets | $891,245 | $185,807 | +$705,438 | | Total assets | $915,515 | $196,292 | +$719,223 | | Total current liabilities | $64,073 | $35,079 | +$28,994 | | Total liabilities | $70,263 | $38,866 | +$31,397 | | Total Stockholders' Equity (Deficit) | $845,252 | $(97,701) | +$942,953 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Details the company's revenues, expenses, and net loss over specific reporting periods | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :---------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenue | $76,850 | $10,688 | $142,108 | $28,352 | | Gross profit | $59,854 | $8,439 | $110,374 | $12,697 | | Total operating expenses | $84,201 | $26,052 | $217,688 | $49,237 | | Operating loss | $(24,347) | $(17,613) | $(107,314) | $(36,540) | | Net loss | $(7,546) | $(20,004) | $(100,541) | $(37,458) | | Basic and diluted net loss per share | $(0.05) | $(0.55) | $(0.97) | $(1.03) | [Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20%28Deficit%29) Outlines changes in equity, including preferred stock conversion and stock-based compensation impacts - Conversion of **90,891 thousand shares** of redeemable convertible preferred stock into common stock, eliminating preferred stock, and issuance of **19,759 thousand shares** of common stock in connection with IPO, resulting in **$665,990 thousand** in additional paid-in capital[19](index=19&type=chunk) - Total Stockholders' Equity (Deficit) shifted from **$(97,701) thousand** as of December 31, 2023, to **$845,252 thousand** as of June 30, 2024[19](index=19&type=chunk) - Recognized **$140,835 thousand** in stock-based compensation for the six months ended June 30, 2024[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities | Metric | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | Change (YoY) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :----------- | | Net cash provided by (used in) operating activities | $33,465 | $(26,781) | +$60,246 | | Net cash (used in) provided by investing activities | $(306,722) | $44,461 | $(351,183) | | Net cash provided by (used in) financing activities | $649,235 | $(87) | +$649,322 | | Net increase in cash and cash equivalents | $375,978 | $17,593 | +$358,385 | | Cash and cash equivalents, End of period | $421,076 | $93,681 | +$327,395 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the financial statements [1. Nature of Business and Summary of Significant Accounting Policies](index=11&type=section&id=1.%20Nature%20of%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes Astera Labs' business, its Intelligent Connectivity Platform, and significant accounting policies, including IPO details - Astera Labs, Inc. offers an Intelligent Connectivity Platform, comprising semiconductor-based, high-speed, mixed-signal connectivity products and the COSMOS software suite, embedded in its products and integrated into customer systems[23](index=23&type=chunk) - The platform addresses data, network, and memory bottlenecks, scalability, and infrastructure requirements for hyperscalers and system OEMs[23](index=23&type=chunk) - On March 22, 2024, the Company completed its IPO, selling **19,758,903 shares** of common stock at **$36.00 per share**, generating net proceeds of **$672.2 million**[28](index=28&type=chunk) - Immediately prior to the IPO, all **90,890,650** outstanding shares of Preferred Stock were converted into common stock and cancelled[29](index=29&type=chunk) [2. Segment and Geographical Information](index=13&type=section&id=2.%20Segment%20and%20Geographical%20Information) Provides insights into the company's operating segments, geographical revenue distribution, and asset locations - The CEO reviews financial information on a consolidated basis, and the company manages operations as a single operating segment[33](index=33&type=chunk) | Region | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :-------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Taiwan | $63,955 | $569 | $123,528 | $10,303 | | United States | $4,499 | $6,222 | $5,356 | $11,592 | | Netherlands | $- | $2,412 | $- | $4,919 | | Other | $8,396 | $1,485 | $13,224 | $1,538 | | Total | $76,850 | $10,688 | $142,108 | $28,352 | | Customer | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :----------------------------- | | Customer A | **41%** | **44%** | | Customer B | **24%** | **30%** | | Customer C | **18%** | **13%** | - As of June 30, 2024, **25%** of property and equipment was located in the United States and **73%** in Taiwan, a shift from substantially all in the US as of December 31, 2023[38](index=38&type=chunk) [3. Marketable Securities](index=15&type=section&id=3.%20Marketable%20Securities) Details the composition, fair value, and maturity profile of the company's marketable securities portfolio | Security Type | Amortized Cost (June 30, 2024) | Fair Value (June 30, 2024) | Amortized Cost (Dec 31, 2023) | Fair Value (Dec 31, 2023) | | :--------------------------- | :----------------------------- | :------------------------- | :---------------------------- | :-------------------------- | | Money market funds | $141,349 | $141,349 | $757 | $757 | | U.S. treasury & agency securities | $268,000 | $267,988 | $60,328 | $60,475 | | Corporate debt securities | $239,793 | $239,678 | $23,552 | $23,639 | | Commercial paper | $145,161 | $145,069 | $8,763 | $8,758 | | Foreign government bonds | $498 | $498 | - | - | | Asset-backed securities | $21,822 | $21,803 | $12,059 | $12,065 | | **Total Marketable Securities** | **$816,737** | **$816,385** | **$105,459** | **$105,694** | - The majority of marketable securities mature within **one year** (**$554.5 million** fair value as of June 30, 2024)[42](index=42&type=chunk) - The company uses a three-level fair value hierarchy, with most assets valued using Level **1** (money market funds) and Level **2** (other marketable securities) inputs[44](index=44&type=chunk)[46](index=46&type=chunk) [4. Condensed Consolidated Balance Sheet Components](index=18&type=section&id=4.%20Condensed%20Consolidated%20Balance%20Sheet%20Components) Breaks down key balance sheet items, including inventory, property and equipment, and various liabilities [Inventory](index=18&type=section&id=Inventory) Details the composition and changes in raw materials, work-in-progress, and finished goods inventory | Inventory Type | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change | | :--------------- | :----------------------------- | :------------------------------- | :----- | | Raw materials | $1,664 | $2,247 | $(583) | | Work-in-progress | $10,915 | $11,780 | $(865) | | Finished goods | $15,993 | $10,068 | +$5,925 | | **Total inventory** | **$28,572** | **$24,095** | **+$4,477** | [Property and Equipment, Net](index=19&type=section&id=Property%20and%20Equipment%2C%20Net) Outlines the company's fixed assets, including construction in progress and laboratory equipment | Asset Type | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change | | :-------------------------- | :----------------------------- | :------------------------------- | :----- | | Construction in progress | $16,013 | $0 | +$16,013 | | Laboratory equipment | $8,367 | $6,470 | +$1,897 | | **Total property and equipment, net** | **$21,821** | **$4,712** | **+$17,109** | - Construction in progress primarily includes capitalized production mask costs, which will depreciate upon manufacturing commencement[48](index=48&type=chunk) [Accrued Expenses and Other Current Liabilities](index=19&type=section&id=Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Presents short-term obligations such as compensation, production mask costs, and customer deposits | Liability Type | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change | | :---------------------------------- | :----------------------------- | :------------------------------- | :----- | | Accrued compensation and benefits | $16,325 | $14,923 | +$1,402 | | Production mask costs | $13,509 | $0 | +$13,509 | | Customer deposits | $5,000 | $0 | +$5,000 | | **Total accrued expenses and other current liabilities** | **$49,478** | **$28,742** | **+$20,736** | [Other Liabilities](index=19&type=section&id=Other%20Liabilities) Details non-current liabilities, including income taxes and other long-term obligations | Liability Type | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change | | :--------------- | :----------------------------- | :------------------------------- | :----- | | Income taxes | $4,890 | $1,394 | +$3,496 | | Other | $1,300 | $2,393 | $(1,093) | | **Total other liabilities** | **$6,190** | **$3,787** | **+$2,403** | [5. Commitments and Contingencies](index=19&type=section&id=5.%20Commitments%20and%20Contingencies) Covers the company's contractual obligations, legal proceedings, and indemnification agreements [Purchase Commitments](index=19&type=section&id=Purchase%20Commitments) Summarizes future contractual obligations for purchases and cloud services | Year | Purchase Commitments (in thousands) | | :----------- | :-------------------------------- | | Remainder of 2024 | $600 | | 2025 | $4,341 | | **Total** | **$4,941** | - The company has a cloud service agreement with a vendor for **$2.0 million** annually from **2024** through **2025** for R&D cloud hosting services[52](index=52&type=chunk) [Legal Proceedings](index=21&type=section&id=Legal%20Proceedings) Confirms the absence of material legal proceedings or claims against the company - The company is not currently a party to any material legal proceedings or claims that could have a material adverse effect on its business[53](index=53&type=chunk) [Indemnification Obligations](index=21&type=section&id=Indemnification%20Obligations) Describes the company's standard indemnification provisions and historical experience - The company includes standard indemnification provisions in agreements but has not incurred significant expenses from these obligations in the past[54](index=54&type=chunk) [6. Redeemable Convertible Preferred Stock, Undesignated Preferred Stock, and Common Stock](index=21&type=section&id=6.%20Redeemable%20Convertible%20Preferred%20Stock%2C%20Undesignated%20Preferred%20Stock%2C%20and%20Common%20Stock) Details changes in the company's capital structure, including preferred stock conversion and common stock authorization [Redeemable Convertible Preferred Stock](index=21&type=section&id=Redeemable%20Convertible%20Preferred%20Stock) Details the conversion of all outstanding preferred stock into common stock prior to the IPO - All **90.9 million** outstanding shares of convertible Preferred Stock were automatically converted into common stock and cancelled immediately prior to the IPO[55](index=55&type=chunk) [Undesignated Preferred Stock](index=21&type=section&id=Undesignated%20Preferred%20Stock) Reports the authorization of undesignated preferred stock with no shares issued - **100,000,000 shares** of undesignated preferred stock were authorized in connection with the IPO, with no shares issued as of June 30, 2024[56](index=56&type=chunk) [Common Stock](index=21&type=section&id=Common%20Stock) Describes the increase in authorized common stock in connection with the IPO - Authorized common stock increased from **162.6 million shares** to **1 billion shares** in connection with the IPO[57](index=57&type=chunk) [7. Common Stock Warrants](index=22&type=section&id=7.%20Common%20Stock%20Warrants) Provides information on warrants issued to a customer, including vesting conditions and revenue impact - Warrants were issued to a customer in October **2022** (**1,484,230 shares**) and October **2023** (**831,945 shares**) at an exercise price of **$20.34 per share**, vesting contingent on global payments by the customer[58](index=58&type=chunk) - As of June 30, 2024, **290,355 shares** underlying the warrants were vested and exercisable, with an additional **42,693 shares** probable of vesting[58](index=58&type=chunk) - The company recognized **$0.3 million** and **$0.4 million** as a reduction of revenue for the three and six months ended June 30, 2024, respectively, related to these warrants[58](index=58&type=chunk) [8. Stock-Based Compensation](index=22&type=section&id=8.%20Stock-Based%20Compensation) Details the company's equity incentive plans, stock options, restricted stock units, and related compensation expenses | Expense Category | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Cost of revenue | $84 | $2 | $612 | $7 | | Research and development | $12,971 | $1,672 | $42,978 | $3,351 | | Sales and marketing | $15,758 | $694 | $65,016 | $695 | | General and administrative | $14,254 | $304 | $32,229 | $616 | | **Total** | **$43,067** | **$2,672** | **$140,835** | **$4,669** | - Stock-based compensation expense for the six months ended June 30, 2024, included **$88.9 million** related to the cumulative vesting and settlement of RSUs upon the IPO[65](index=65&type=chunk) [Amended and Restated 2018 Equity Incentive Plan](index=22&type=section&id=Amended%20and%20Restated%202018%20Equity%20Incentive%20Plan) Details the termination of the 2018 plan and transition to the 2024 plan - The **2018** Plan, which granted stock options and RSUs, was terminated in March **2024**, with future grants under the **2024** Plan[59](index=59&type=chunk)[60](index=60&type=chunk) [2024 Stock Option and Incentive Plan](index=22&type=section&id=2024%20Stock%20Option%20and%20Incentive%20Plan) Outlines the new equity incentive plan, including reserved shares and effective date - The **2024** Plan, effective March **19**, **2024**, initially reserved **12,362,662 shares** of common stock for issuance, with annual automatic increases[61](index=61&type=chunk) [2024 Employee Stock Purchase Plan](index=22&type=section&id=2024%20Employee%20Stock%20Purchase%20Plan) Describes the ESPP, including reserved shares and participant purchase terms - The ESPP, effective March **19**, **2024**, initially reserved **3,090,666 shares**, with annual automatic increases[62](index=62&type=chunk) - Participants can purchase shares at **85%** of the lesser of the fair market value on the first or last trading day of the offering period[64](index=64&type=chunk) [Stock Option](index=23&type=section&id=Stock%20Option) Provides details on outstanding stock options, exercise prices, and unrecognized compensation costs | Metric | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :---------------------------------- | :----------------------------- | :------------------------------- | | Number of Shares Outstanding | 9,182 | 10,059 | | Weighted Average Exercise Price | $0.86 | $0.84 | | Aggregate Intrinsic Value | $547,676 | $175,790 | - Unrecognized compensation cost for unvested options was **$14.1 million** as of June 30, 2024, to be recognized over **1.2 years**[66](index=66&type=chunk) [Restricted Stock Units](index=24&type=section&id=Restricted%20Stock%20Units) Presents information on outstanding RSUs, their fair value, and unrecognized compensation expense | Metric | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :---------------------------------- | :----------------------------- | :------------------------------- | | Number of Restricted Stock Units Outstanding | 12,782 | 8,583 | | Weighted Average Grant Date Fair Value | $24.30 | $13.34 | - The aggregate fair value of RSUs that vested and settled during the six months ended June 30, 2024, was **$128.1 million**[67](index=67&type=chunk) - Unrecognized stock-based compensation expense for unvested awards was **$222.1 million** as of June 30, 2024, to be recognized over **1.7 years**[68](index=68&type=chunk) [9. Net Loss per Common Share](index=24&type=section&id=9.%20Net%20Loss%20per%20Common%20Share) Calculates basic and diluted net loss per common share, considering potentially dilutive securities | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------------------------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to common stockholders (in thousands) | $(7,546) | $(20,004) | $(100,541) | $(37,458) | | Weighted-average shares used in computing net loss per share, basic and diluted (in thousands) | 155,199 | 36,567 | 103,865 | 36,199 | | Net loss per share, basic and diluted | $(0.05) | $(0.55) | $(0.97) | $(1.03) | - Potentially dilutive securities (options, RSUs, warrants, ESPP) were excluded from diluted EPS calculations as they were anti-dilutive due to the net loss position[69](index=69&type=chunk)[70](index=70&type=chunk) [10. Income Taxes](index=25&type=section&id=10.%20Income%20Taxes) Analyzes the company's income tax provision, effective tax rate, and deferred tax assets | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Income tax (benefit) provision | $(6,537) | $3,946 | $6,045 | $4,069 | | Effective tax rate | **46.4%** | **(24.6)%** | **(6.4)%** | **(12.19)%** | - The effective tax rate differs from the statutory rate due to a valuation allowance on federal and state deferred tax assets and the capitalization of R&D expenditures under Section **174**, which results in current tax expense despite pre-tax losses[71](index=71&type=chunk)[72](index=72&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Astera Labs' financial performance, focusing on revenue growth, IPO impact, R&D, liquidity, and non-GAAP measures [Overview](index=26&type=section&id=Overview) Introduces Astera Labs' mission, Intelligent Connectivity Platform, key products, and financial performance trends - Astera Labs' mission is to innovate and deliver semiconductor-based connectivity solutions for cloud and AI infrastructure, addressing data, network, and memory bottlenecks[76](index=76&type=chunk)[79](index=79&type=chunk) - The company's Intelligent Connectivity Platform includes semiconductor products (ICs, boards, modules) and the COSMOS software suite, supporting high-performance cloud and AI infrastructure[77](index=77&type=chunk)[78](index=78&type=chunk)[80](index=80&type=chunk) - Products like Aries PCIe/CXL Smart DSP Retimers, Taurus Ethernet Smart Cable Modules, and Leo CXL Memory Connectivity Controllers are at the heart of major AI platforms[81](index=81&type=chunk) - Revenue grew significantly from **$34.8 million** in **2021** to **$115.8 million** in **2023**, driven by demand for products like Aries, but the company has not yet achieved annual profitability due to R&D investments[81](index=81&type=chunk) [Summary of Financial Highlights](index=28&type=section&id=Summary%20of%20Financial%20Highlights) Summarizes key financial performance metrics, including revenue growth, gross margin, and operating expense changes - Revenue for Q2 **2024** increased by **619%** YoY, and for the six months ended June 30, 2024, by **401%** YoY, primarily due to higher demand for Aries products[83](index=83&type=chunk)[84](index=84&type=chunk) - Gross margin decreased by **110 bps** to **77.9%** for Q2 **2024** due to inventory write-downs, but increased by **3,290 bps** to **77.7%** for the six months ended June 30, 2024, due to increased shipments, product mix, and reduced inventory write-downs[83](index=83&type=chunk)[84](index=84&type=chunk) - Operating expenses increased by **223%** for Q2 **2024** and **342%** for the six months ended June 30, 2024, largely driven by **$40.3 million** and **$135.6 million**, respectively, in non-cash stock-based compensation expense from RSU vesting and increased personnel-related expenses[85](index=85&type=chunk)[86](index=86&type=chunk) [Initial Public Offering](index=28&type=section&id=Initial%20Public%20Offering) Details the net proceeds from the IPO and its impact on stock-based compensation and tax obligations - The IPO on March 22, 2024, generated net proceeds of **$672.2 million** for the company[87](index=87&type=chunk) - In connection with the IPO, **$88.9 million** of cumulative stock-based compensation expense was recognized due to RSU vesting, and a **$20.1 million** tax withholding obligation was paid[87](index=87&type=chunk) [Key Components of Results of Operations](index=28&type=section&id=Key%20Components%20of%20Results%20of%20Operations) Explains the primary components influencing the company's financial results, including revenue and various expenses [Revenue](index=28&type=section&id=Revenue) Explains the primary sources of revenue, mainly product sales - The vast majority of revenue comes from product sales (Intelligent Connectivity Platform solutions), with a small portion from engineering services[88](index=88&type=chunk) [Cost of Revenue](index=29&type=section&id=Cost%20of%20Revenue) Details the components contributing to the cost of goods sold - Cost of revenue includes materials (wafers), packaging, assembly, shipping, depreciation, logistics, quality assurance, warranty, amortization of production masks, personnel costs (including stock-based compensation), and inventory write-downs[90](index=90&type=chunk) [Gross Profit and Gross Margin](index=29&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Defines gross profit and factors influencing gross margin - Gross profit is revenue less cost of revenue, and gross margin is influenced by sales volume, pricing, product costs, contract manufacturing, personnel, shipping, and inventory write-downs[91](index=91&type=chunk) [Operating Expenses](index=29&type=section&id=Operating%20Expenses) Describes the categories of operating expenses, with personnel costs as a key component - Operating expenses comprise research and development, sales and marketing, and general and administrative expenses, with personnel costs (salaries, stock-based compensation, benefits, bonuses) being the most significant component[92](index=92&type=chunk) [Research and Development](index=29&type=section&id=Research%20and%20Development) Outlines R&D expenditures and future expectations - R&D expenses include personnel costs, pre-production engineering mask costs, software licenses, prototype costs, and allocated facilities[93](index=93&type=chunk) - These costs are expensed as incurred, except for production masks with alternative future use[93](index=93&type=chunk) - The company expects R&D expenses to increase in absolute dollars but moderately decline as a percentage of revenue over time[94](index=94&type=chunk) [Sales and Marketing](index=29&type=section&id=Sales%20and%20Marketing) Details S&M expenses and anticipated trends - S&M expenses include personnel costs, samples, travel, and allocated facilities[95](index=95&type=chunk) - S&M expenses are expected to increase in absolute dollars with expanded personnel and customer engagement but moderately decline as a percentage of revenue[95](index=95&type=chunk) [General and Administrative](index=30&type=section&id=General%20and%20Administrative) Explains G&A expenses and expected changes as a public company - G&A expenses include personnel costs for corporate, finance, legal, and HR, professional services, audit, compliance, insurance, and allocated facilities[96](index=96&type=chunk) - G&A expenses are expected to increase in absolute dollars due to public company operations but moderately decline as a percentage of revenue[97](index=97&type=chunk) [Interest Income](index=30&type=section&id=Interest%20Income) Describes income generated from short-term investments and cash balances - Interest income is earned on short-term investments, cash, and cash equivalents[98](index=98&type=chunk) [Income Tax Provision](index=30&type=section&id=Income%20Tax%20Provision) Covers U.S. federal, state, and foreign income taxes and valuation allowances - Income tax provision includes U.S. federal, state, and foreign income taxes[99](index=99&type=chunk) - A full valuation allowance is maintained on federal and state deferred tax assets[99](index=99&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Provides a detailed analysis of the company's financial performance for the reported periods [Revenue](index=30&type=section&id=Revenue) Analyzes the drivers of revenue changes for the reported periods | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :------ | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | Revenue | $76,850 | $10,688 | $66,162 | 619% | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | Revenue | $142,108 | $28,352 | $113,756 | 401% | - Revenue increases were primarily due to a **555%** (three months) and **399%** (six months) increase in overall shipments, driven by higher demand for Aries products and an increased mix of second-generation Aries retimers with higher average selling prices[100](index=100&type=chunk)[101](index=101&type=chunk) [Cost of Revenue](index=30&type=section&id=Cost%20of%20Revenue) Examines the factors contributing to changes in cost of revenue | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :-------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | Cost of revenue | $16,996 | $2,249 | $14,747 | 656% | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | Cost of revenue | $31,734 | $15,655 | $16,079 | 103% | - Cost of revenue increased due to higher shipments and inventory write-downs (three months), partially offset by lower average unit cost[102](index=102&type=chunk) - For the six months, the increase was also offset by an **$8.2 million** decrease in inventory write-downs compared to the prior year[104](index=104&type=chunk) [Gross Profit and Gross Margin](index=32&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Discusses the trends and reasons for changes in gross profit and margin | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change (Amount) | Change (%) | | :----------- | :------------------------------- | :------------------------------- | :-------------- | :--------- | | Gross profit | $59,854 | $8,439 | $51,415 | 609% | | Gross margin | **77.9%** | **79.0%** | **(110) bps** | | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | Gross profit | $110,374 | $12,697 | $97,677 | 769% | | Gross margin | **77.7%** | **44.8%** | **3,290 bps** | | - Gross margin decreased for the three months due to inventory write-downs but increased significantly for the six months due to increased shipments, product mix, and reduced inventory write-downs[107](index=107&type=chunk)[108](index=108&type=chunk) [Research and Development](index=32&type=section&id=Research%20and%20Development) Analyzes the increases in R&D expenses, including stock-based compensation | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | R&D expense | $40,089 | $17,860 | $22,229 | 124% | | Percentage of revenue | **52%** | **167%** | | | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | R&D expense | $93,647 | $33,127 | $60,520 | 183% | | Percentage of revenue | **66%** | **117%** | | | - R&D expense increases were driven by **$11.3 million** (three months) and **$39.6 million** (six months) in non-cash stock-based compensation from RSU vesting, higher personnel costs due to headcount increases (**54%** for three months, **47%** for six months), and increased software licenses/cloud hosting[109](index=109&type=chunk)[110](index=110&type=chunk) [Sales and Marketing](index=33&type=section&id=Sales%20and%20Marketing) Examines the increases in S&M expenses, including stock-based compensation | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | S&M expense | $22,076 | $5,097 | $16,979 | 333% | | Percentage of revenue | **29%** | **48%** | | | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | S&M expense | $77,586 | $9,490 | $68,096 | 718% | | Percentage of revenue | **55%** | **33%** | | | - S&M expense increases were primarily due to **$15.1 million** (three months) and **$64.3 million** (six months) in non-cash stock-based compensation from RSU vesting, and higher personnel costs due to headcount increases (**32%** for three months, **17%** for six months)[111](index=111&type=chunk)[112](index=112&type=chunk) [General and Administrative](index=33&type=section&id=General%20and%20Administrative) Analyzes the increases in G&A expenses, including stock-based compensation and public company costs | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | G&A expense | $22,036 | $3,095 | $18,941 | 612% | | Percentage of revenue | **29%** | **29%** | | | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | G&A expense | $46,455 | $6,620 | $39,835 | 602% | | Percentage of revenue | **33%** | **23%** | | | - G&A expense increases were mainly due to **$14.0 million** (three months) and **$31.6 million** (six months) in non-cash stock-based compensation from RSU vesting, higher personnel costs due to headcount increases (**108%** for three months, **72%** for six months), and increased professional services fees for public company infrastructure[113](index=113&type=chunk)[114](index=114&type=chunk) [Interest Income](index=33&type=section&id=Interest%20Income) Discusses the significant increase in interest income due to IPO proceeds and rates | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :-------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | Interest income | $10,264 | $1,555 | $8,709 | 560% | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | Interest income | $12,818 | $3,151 | $9,667 | 307% | - Interest income increased significantly due to higher average short-term investments and cash equivalents balances, primarily resulting from the IPO proceeds, and higher interest rates[116](index=116&type=chunk) [Income Tax (Benefit) Provision](index=34&type=section&id=Income%20Tax%20%28Benefit%29%20Provision) Explains the changes in income tax benefit/provision and effective tax rates | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Change (Amount) | Change (%) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------- | :--------- | | Income tax (benefit) provision | $(6,537) | $3,946 | $(10,483) | (266)% | | **Six Months Ended June 30, 2024 vs 2023** | | | | | | Income tax (benefit) provision | $6,045 | $4,069 | $1,976 | 49% | - The three-month period saw an income tax benefit due to increased excess tax benefits from exercised stock options, foreign derived intangible income deduction, and U.S. R&D credits[117](index=117&type=chunk) - The six-month period's increase was due to higher revenue and capitalized R&D expenditures under Section **174**[118](index=118&type=chunk) [Non-GAAP Financial Measures](index=34&type=section&id=Non-GAAP%20Financial%20Measures) Presents non-GAAP financial metrics to provide a clearer view of core operating performance - The company uses non-GAAP financial measures (gross profit, gross margin, operating income/loss, net income/loss) to supplement GAAP results, excluding stock-based compensation and related payroll taxes, to provide a clearer view of core operating performance and facilitate period-to-period comparisons[119](index=119&type=chunk) [Non-GAAP Gross Profit and Non-GAAP Gross Margin](index=34&type=section&id=Non-GAAP%20Gross%20Profit%20and%20Non-GAAP%20Gross%20Margin) Reconciles GAAP and Non-GAAP gross profit and margin, excluding stock-based compensation - Non-GAAP gross profit excludes stock-based compensation expenses from GAAP gross profit[120](index=120&type=chunk) | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | GAAP gross profit | $59,854 | $8,439 | $110,374 | $12,697 | | Stock-based compensation expense | $84 | $2 | $96 | $7 | | IPO Stock-based compensation expense | - | - | $516 | - | | **Non-GAAP gross profit** | **$59,938** | **$8,441** | **$110,986** | **$12,704** | | GAAP gross margin | **77.9%** | **79.0%** | **77.7%** | **44.8%** | | **Non-GAAP gross margin** | **78.0%** | **79.0%** | **78.1%** | **44.8%** | [Non-GAAP Operating Income (Loss)](index=35&type=section&id=Non-GAAP%20Operating%20Income%20%28Loss%29) Reconciles GAAP and Non-GAAP operating income (loss), adjusting for stock-based compensation and payroll taxes - Non-GAAP operating income (loss) excludes stock-based compensation expenses and employer payroll taxes related to RSU vesting from GAAP operating loss[122](index=122&type=chunk) | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | GAAP operating loss | $(24,347) | $(17,613) | $(107,314) | $(36,540) | | IPO Stock-based compensation | - | - | $88,873 | - | | Stock-based compensation | $43,067 | $2,672 | $51,962 | $4,669 | | Employer payroll tax related to IPO stock-based compensation | - | - | $1,072 | - | | **Non-GAAP operating income (loss)** | **$18,720** | **$(14,941)** | **$34,593** | **$(31,871)** | [Non-GAAP Net Income (Loss)](index=36&type=section&id=Non-GAAP%20Net%20Income%20%28Loss%29) Reconciles GAAP and Non-GAAP net income (loss), adjusting for stock-based compensation, payroll taxes, and tax effects - Non-GAAP net income (loss) excludes stock-based compensation, related employer payroll taxes from IPO RSU vesting, and the related tax impact from GAAP net loss[125](index=125&type=chunk) | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :------------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | GAAP net loss | $(7,546) | $(20,004) | $(100,541) | $(37,458) | | IPO Stock-based compensation expense | - | - | $88,873 | - | | Stock-based compensation expense | $43,067 | $2,672 | $51,962 | $4,669 | | Employer payroll tax related to IPO stock-based compensation | - | - | $1,072 | - | | Income tax effect | $(13,296) | - | $(4,811) | - | | **Non-GAAP net income (loss)** | **$22,225** | **$(17,332)** | **$36,555** | **$(32,789)** | - The non-GAAP tax rate for both the three and six months ended June 30, 2024, was approximately **23%**[126](index=126&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet short-term and long-term obligations, including cash flows and capital structure - As of June 30, 2024, principal liquidity sources were **$831.0 million** in cash, cash equivalents, and marketable securities, and **$827.2 million** in working capital[127](index=127&type=chunk) - The company has an accumulated deficit of **$225.9 million** as of June 30, 2024, but believes current liquidity is sufficient for at least the next **12 months**[127](index=127&type=chunk) [Cash Flows](index=38&type=section&id=Cash%20Flows) Summarizes the net cash provided by or used in operating, investing, and financing activities | Cash Flow Type | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by (used in) operating activities | $33,465 | $(26,781) | | Net cash (used in) provided by investing activities | $(306,722) | $44,461 | | Net cash provided by (used in) financing activities | $649,235 | $(87) | [Operating Activities](index=38&type=section&id=Operating%20Activities) Details the components and drivers of cash flow from operating activities - Net cash provided by operating activities for the six months ended June 30, 2024, was **$33.5 million**, driven by non-cash charges (stock-based compensation) and increases in accrued expenses and accounts payable, partially offset by increases in accounts receivable, inventory, and prepaid expenses[129](index=129&type=chunk) - Net cash used in operating activities for the six months ended June 30, 2023, was **$26.8 million**, primarily due to net loss and decreases in accounts payable and accrued liabilities, partially offset by non-cash charges and a decrease in accounts receivable[130](index=130&type=chunk) [Investing Activities](index=38&type=section&id=Investing%20Activities) Explains the cash flows related to purchases and sales of marketable securities and property and equipment - Net cash used in investing activities for the six months ended June 30, 2024, was **$306.7 million**, mainly due to **$345.8 million** in purchases of marketable securities and **$2.1 million** in property and equipment, partially offset by maturities and sales of marketable securities[131](index=131&type=chunk) - Net cash provided by investing activities for the six months ended June 30, 2023, was **$44.5 million**, primarily from sales and maturities of marketable securities, partially offset by purchases of marketable securities and property and equipment[132](index=132&type=chunk)[133](index=133&type=chunk) [Financing Activities](index=39&type=section&id=Financing%20Activities) Describes cash flows from financing, primarily IPO proceeds and stock option exercises - Net cash provided by financing activities for the six months ended June 30, 2024, was **$649.2 million**, primarily from **$672.2 million** in IPO proceeds, net of underwriting discounts and commissions, and stock option exercises, partially offset by tax withholding for RSU settlements and deferred offering costs[134](index=134&type=chunk) - Net cash used in financing activities for the six months ended June 30, 2023, was immaterial[135](index=135&type=chunk) [Contractual Obligations and Commitments](index=39&type=section&id=Contractual%20Obligations%20and%20Commitments) Notes the absence of material changes to previously disclosed contractual obligations - No material changes to contractual obligations (operating lease commitments, purchase commitments for software licenses and engineering services) since the Prospectus[136](index=136&type=chunk)[137](index=137&type=chunk) [Indemnification Agreements](index=39&type=section&id=Indemnification%20Agreements) Refer to Note **5** for details on indemnification obligations[138](index=138&type=chunk) [Critical Accounting Estimates](index=39&type=section&id=Critical%20Accounting%20Estimates) States no material changes to critical accounting policies and estimates - No material changes to critical accounting policies and estimates since the Prospectus[140](index=140&type=chunk) [Recent Accounting Pronouncements](index=39&type=section&id=Recent%20Accounting%20Pronouncements) Refer to Note **1** for information on recent accounting pronouncements[141](index=141&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate and foreign currency fluctuations, holding short-term cash and marketable securities [Interest Rate Risk](index=39&type=section&id=Interest%20Rate%20Risk) Assesses the company's exposure to interest rate fluctuations on its cash and marketable securities - As of June 30, 2024, the company held **$421.1 million** in cash and cash equivalents and **$409.9 million** in marketable securities[143](index=143&type=chunk) - A hypothetical **100 basis point** change in interest rates would change the fair value of marketable securities by **$4.7 million** as of June 30, 2024, and **$0.9 million** as of December 31, 2023[144](index=144&type=chunk) - The company does not use derivative financial instruments to manage interest rate risk and does not anticipate material risks due to the short-term nature of investments[144](index=144&type=chunk) [Foreign Currency Exchange Risk](index=40&type=section&id=Foreign%20Currency%20Exchange%20Risk) Evaluates the company's exposure to foreign currency exchange rate fluctuations, noting limited impact - The company's reporting and functional currency is the U.S. dollar, and all sales and operating expenses are transacted in U.S. dollars, limiting foreign currency risk[145](index=145&type=chunk) - A hypothetical **100 basis point** change in the U.S. dollar's value is not expected to have a material effect on operating results[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management found disclosure controls ineffective due to material weaknesses in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Reports on the effectiveness of disclosure controls and procedures, noting material weaknesses - As of June 30, 2024, the CEO and CFO concluded that disclosure controls and procedures were not effective at a reasonable assurance level due to material weaknesses in internal control over financial reporting[146](index=146&type=chunk) - Despite weaknesses, management believes the interim condensed financial statements fairly present the company's financial condition, results of operations, and cash flows[147](index=147&type=chunk) [Previously Reported Material Weaknesses in Internal Control Over Financial Reporting](index=40&type=section&id=Previously%20Reported%20Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) Details specific material weaknesses identified in internal controls - Identified material weaknesses include inadequate design and maintenance of an effective risk assessment process, particularly regarding segregation of duties over journal entries and account reconciliations[148](index=148&type=chunk) - Ineffective IT general controls for financial reporting systems were also identified, specifically concerning program change management, user access, computer operations, and program development controls[150](index=150&type=chunk) [Remediation Efforts to Address Previously Identified Material Weaknesses](index=41&type=section&id=Remediation%20Efforts%20to%20Address%20Previously%20Identified%20Material%20Weaknesses) Outlines the steps taken to address and remediate identified material weaknesses - Remediation efforts include engaging external consultants, formalizing accounting policies, hiring additional staff for segregation of duties, and designing controls for significant accounts and disclosures[153](index=153&type=chunk) - A formal Disclosure Committee has been formed for oversight[153](index=153&type=chunk) - Material weaknesses are not yet remediated as of June 30, 2024, as controls need to be effectively designed, operational, and tested for a sufficient period[154](index=154&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) Confirms no material changes to internal control over financial reporting during the quarter - No changes in internal control over financial reporting materially affected or are reasonably likely to materially affect internal control during the quarter ended June 30, 2024[155](index=155&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=42&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Acknowledges inherent limitations in the effectiveness of control systems - Control systems provide reasonable, not absolute, assurance and can be subject to inherent limitations such as faulty judgments, simple errors, circumvention by individuals, collusion, or management override[156](index=156&type=chunk) Part II - Other Information Additional disclosures covering legal proceedings, risk factors, equity sales, and insider trading arrangements [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material pending legal proceedings - The company is not currently a party to any material pending legal proceedings[158](index=158&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Prospectus - No material changes to risk factors disclosed in the Prospectus as of the date of this report[159](index=159&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There has been no material change in the expected use of net proceeds from the IPO as described in the final prospectus - No material change in the expected use of net proceeds from the IPO[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities - None[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[161](index=161&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) Directors and officers adopted Rule 10b5-1 trading arrangements in May 2024, covering shares for RSU tax withholding [Insider Adoption or Termination of Trading Arrangements](index=43&type=section&id=Insider%20Adoption%20or%20Termination%20of%20Trading%20Arrangements) Details the adoption of Rule 10b5-1 trading arrangements by directors and officers | Name | Title | Action | Date Adopted | Character of Trading Arrangement | Aggregate Number of Shares | Expiration Date | | :---------------- | :----------------------- | :------- | :----------- | :------------------------------- | :------------------------- | :-------------- | | Jitendra Mohan | CEO, Director | Adoption | 5/31/2024 | Rule 10b5-1 Trading Arrangement | 900,000 | 8/29/2025 | | Sanjay Gajendra | President, COO, Director | Adoption | 5/31/2024 | Rule 10b5-1 Trading Arrangement | 1,000,000 | 7/31/2025 | | Manuel Alba | Director | Adoption | 5/31/2024 | Rule 10b5-1 Trading Arrangement | 1,040,000 | 8/30/2025 | | Jack Lazar | Director | Adoption | 5/22/2024 | Rule 10b5-1 Trading Arrangement | 52,500 | 5/22/2025 | | Michael Tate | CFO | Adoption | 5/30/2024 | Rule 10b5-1 Trading Arrangement | 500,000 | 7/31/2025 | | Philip Mazzara | General Counsel | Adoption | 5/24/2024 | Rule 10b5-1 Trading Arrangement | 125,000 | 5/24/2025 | - Shares subject to these arrangements include those for tax withholding obligations upon RSU vesting, with the exact number varying based on market price and withholding taxes[166](index=166&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications, amended corporate documents, and XBRL interactive data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits **31.1**, **31.2**, **32.1**, **32.2**), amended corporate documents (**3.1**, **3.2**), and Inline XBRL documents (**101.INS**, SCH, CAL, DEF, LAB, PRE, **104**)[169](index=169&type=chunk) - Certifications under Exhibits **32.1** and **32.2** are "furnished" not "filed" for Section **18** of the Exchange Act[170](index=170&type=chunk)

Exhibit 99.1 IR CONTACT: Leslie Green leslie.green@asteralabs.com Astera Labs Announces Financial Results for the Second Quarter of Fiscal Year 2024 • Record quarterly revenue of $76.9 million, up 18% QoQ and up 619% YoY • Multiple secular trends, design wins across diverse AI platform architectures, and increasing average dollar content position the Company to outpace industry growth SANTA CLARA, CA, U.S. – August 6, 2024 – Astera Labs, Inc. (Nasdaq: ALAB), a global leader in semiconductor-based connectivi ...

Table of Contents Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.0001 per share ALAB Nasdaq Global Select Market UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 1 ...

Exhibit 99.1 IR CONTACT: Leslie Green leslie.green@asteralabs.com Astera Labs Announces Financial Results for the First Quarter of Fiscal Year 2024 • Record quarterly revenue of $65.3 million driven by expanding AI infrastructure build-out, up 29% QoQ and up 269% YoY • Sampling third generation Aries Smart DSP Retimers for PCIe 6.x connectivity to leading AI platform providers to support next-generation cloud infrastructure SANTA CLARA, CA, U.S. – May 7, 2024 – Astera Labs (Nasdaq: ALAB), a global leader in ...

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Table of Contents As filed with the Securities and Exchange Commission on March 18, 2024. Registration No. 333-277205 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 3 TO FORM S-1 Astera Labs, Inc. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) Delaware 3674 82-3437062 (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Ide ...