PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents the unaudited condensed consolidated financial statements and related notes for Power Integrations, Inc Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (In thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ASSETS | | | | Cash and cash equivalents | $66,935 | $50,972 | | Short-term marketable securities | 201,801 | 249,023 | | Accounts receivable, net | 27,583 | 27,172 | | Inventories | 168,396 | 165,612 | | Prepaid expenses and other current assets | 18,188 | 21,260 | | Total current assets | 482,903 | 514,039 | | PROPERTY AND EQUIPMENT, net | 147,955 | 149,562 | | INTANGIBLE ASSETS, net | 7,660 | 8,075 | | GOODWILL | 95,271 | 95,271 | | DEFERRED TAX ASSETS | 37,174 | 36,485 | | OTHER ASSETS | 26,574 | 25,394 | | Total assets | $797,537 | $828,826 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | CURRENT LIABILITIES: | | | | Accounts payable | $31,044 | $29,789 | | Accrued payroll and related expenses | 14,881 | 13,987 | | Taxes payable | 751 | 961 | | Other accrued liabilities | 18,323 | 10,580 | | Total current liabilities | 64,999 | 55,317 | | LONG-TERM INCOME TAXES PAYABLE | 4,063 | 3,871 | | OTHER LIABILITIES | 24,687 | 19,866 | | Total liabilities | 93,749 | 79,054 | | STOCKHOLDERS' EQUITY: | | | | Total stockholders' equity | 703,788 | 749,772 | | Total liabilities and stockholders' equity | $797,537 | $828,826 | - Total assets decreased from $828.8 million at December 31, 2024, to $797.5 million at June 30, 202510 - Total liabilities increased from $79.1 million at December 31, 2024, to $93.7 million at June 30, 202510 Condensed Consolidated Statements of Income Condensed Consolidated Statements of Income (In thousands, except per share amounts) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | NET REVENUES | $115,852 | $106,198 | $221,381 | $197,886 | | GROSS PROFIT | 63,954 | 56,533 | 122,189 | 104,313 | | INCOME (LOSS) FROM OPERATIONS | (1,345) | 1,958 | 5,373 | 2,428 | | NET INCOME | $1,369 | $4,849 | $10,159 | $8,803 | | EARNINGS PER SHARE: Basic | $0.02 | $0.09 | $0.18 | $0.15 | | EARNINGS PER SHARE: Diluted | $0.02 | $0.09 | $0.18 | $0.15 | - Net revenues increased by 9.1% for the three months ended June 30, 2025, compared to the same period in 2024, and by 11.9% for the six months ended June 30, 2025, compared to 202411 - Net income decreased significantly for the three months ended June 30, 2025, to $1.369 million from $4.849 million in 2024, but increased for the six months ended June 30, 2025, to $10.159 million from $8.803 million in 202411 Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (In thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $1,369 | $4,849 | $10,159 | $8,803 | | Total other comprehensive income (loss) | 896 | (630) | 1,736 | (1,727) | | TOTAL COMPREHENSIVE INCOME | $2,265 | $4,219 | $11,895 | $7,076 | - Total comprehensive income for the three months ended June 30, 2025, was $2.265 million, a decrease from $4.219 million in the prior year, primarily due to lower net income14 - For the six months ended June 30, 2025, total comprehensive income increased to $11.895 million from $7.076 million in 2024, driven by higher net income and positive other comprehensive income14 Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (In thousands) | | June 30, 2025 (3 Months) | June 30, 2024 (3 Months) | June 30, 2025 (6 Months) | June 30, 2024 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | Common stock (Ending balance) | $21 | $22 | $21 | $22 | | Additional paid-in capital (Ending balance) | $0 | $0 | $0 | $0 | | Accumulated other comprehensive income (loss) (Ending balance) | $(1,287) | $(3,189) | $(1,287) | $(3,189) | | Retained earnings (Ending balance) | $705,054 | $733,909 | $705,054 | $733,909 | | Total stockholders' equity | $703,788 | $730,742 | $703,788 | $730,742 | - Total stockholders' equity decreased from $749.772 million at December 31, 2024, to $703.788 million at June 30, 2025, primarily due to common stock repurchases and dividend payments1017 Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (In thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $55,458 | $33,536 | | Net cash provided by (used in) investing activities | $37,144 | $(948) | | Net cash used in financing activities | $(76,639) | $(46,024) | | NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $15,963 | $(13,436) | | CASH AND CASH EQUIVALENTS AT END OF PERIOD | $66,935 | $50,493 | - Net cash provided by operating activities increased to $55.5 million for the six months ended June 30, 2025, from $33.5 million in the prior year19 - Investing activities generated $37.1 million in cash for the six months ended June 30, 2025, a significant improvement from a net use of $0.9 million in the prior year19 - Financing activities resulted in a higher net cash use of $76.6 million for the six months ended June 30, 2025, compared to $46.0 million in 2024, primarily due to increased stock repurchases and dividend payments19 Notes to Unaudited Condensed Consolidated Financial Statements 1. Basis of Presentation - The condensed consolidated financial statements include Power Integrations, Inc. and its wholly-owned subsidiaries, with intercompany accounts and transactions eliminated21 - The financial information is unaudited and includes normal recurring adjustments necessary for fair presentation in accordance with U.S. GAAP, but interim results are not indicative of the full year22 2. Significant Accounting Policies and Recent Accounting Pronouncements - No material changes were made to the Company's significant accounting policies as disclosed in its Annual Report on Form 10-K for the year ended December 31, 202423 - ASU 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, requiring enhanced income tax disclosures, but is not expected to have a material impact on consolidated financial statements upon adoption in fiscal year 202524 - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and the Company is currently evaluating its impact on financial statement disclosures25 3. Components of the Company's Condensed Consolidated Balance Sheets Accounts Receivable, Net (In thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable trade | $60,121 | $57,308 | | Allowance for ship and debit | (30,077) | (26,446) | | Allowance for stock rotation and rebate | (2,406) | (3,254) | | Allowance for credit losses | (55) | (436) | | Total | $27,583 | $27,172 | Inventories (In thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | $105,566 | $101,414 | | Work-in-process | 31,680 | 27,271 | | Finished goods | 31,150 | 36,927 | | Total | $168,396 | $165,612 | Intangible Assets, Net (In thousands) | | June 30, 2025 Net | December 31, 2024 Net | | :--- | :--- | :--- | | Domain name | $1,261 | $1,261 | | In-process research and development | 4,930 | 4,930 | | Developed technology | 1,173 | 1,468 | | Technology licenses | 296 | 416 | | Total intangible assets | $7,660 | $8,075 | - Accumulated other comprehensive income (loss) improved from $(3,023) thousand at December 31, 2024, to $(1,287) thousand at June 30, 2025, primarily due to unrealized gains on marketable securities and foreign currency translation adjustments1033 4. Fair Value Measurements - The Company classifies cash equivalents and short-term marketable securities within Level 1 or Level 2 of the fair-value hierarchy, valued using quoted market prices or broker/dealer quotations37 Fair Value Measurement at June 30, 2025 (In thousands) | | Total Fair Value | Level 1 | Level 2 | | :--- | :--- | :--- | :--- | | Commercial paper | $8,206 | $0 | $8,206 | | Corporate securities | 201,801 | $0 | 201,801 | | Money market funds | 989 | $989 | $0 | | Total | $210,996 | $989 | $210,007 | 5. Marketable Securities Marketable Securities at June 30, 2025 (In thousands) | | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Market Value | | :--- | :--- | :--- | :--- | :--- | | Investments due in 3 months or less | $15,661 | $7 | $(10) | $15,658 | | Investments due in 4-12 months | 25,976 | 94 | (6) | 26,064 | | Investments due in 12 months or greater | 158,421 | 1,663 | (5) | 160,079 | | Total marketable securities | $200,058 | $1,764 | $(21) | $201,801 | - The Company does not intend to sell and is unlikely to be required to sell securities with unrealized losses prior to recovery, as issuers are high quality and declines are due to interest rate changes42 6. Stock-Based Compensation Total Stock-Based Compensation Expense (In thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cost of revenues | $592 | $707 | $1,249 | $1,053 | | Research and development | 3,190 | 3,885 | 5,440 | 6,310 | | Sales and marketing | 1,922 | 2,510 | 3,508 | 4,114 | | General and administrative | 4,373 | 3,933 | 8,563 | 5,972 | | Total stock-based compensation expense | $10,077 | $11,035 | $18,760 | $17,449 | - Stock-based compensation expense for the three months ended June 30, 2025, was $10.1 million, down from $11.0 million in 2024, while for the six months, it increased to $18.8 million from $17.4 million434546 - PSU awards granted in 2024 resulted in approximately 66,000 shares vesting in Q1 2025, based on performance metrics including net revenue, non-GAAP operating income, and strategic goals4749 - No shares subject to PRSUs granted in 2022 vested in February 2025, as performance conditions were not met54 7. Significant Customers and Geographic Net Revenues - The top ten customers accounted for approximately 81% of net revenues for both the three and six months ended June 30, 202557 Customers Representing 10% or More of Net Revenues | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Avnet | 33 % | 28 % | 32 % | 29 % | | Salcomp Group | 11 % | * | * | * | | Honestar Technologies Co., Ltd. | * | 12 % | * | 12 % | Geographic Net Revenues (by 'bill to' customer location) (In thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Americas | $5,850 | $5,281 | $11,567 | $10,286 | | EMEA | 12,756 | 11,005 | 24,047 | 23,208 | | APAC | 96,566 | 83,712 | 185,767 | 159,092 | | Total net revenues | $115,852 | $106,198 | $221,381 | $197,886 | - APAC region accounted for approximately 84% of net revenues for both the three and six months ended June 30, 2025, reflecting the concentration of manufacturing in Asia63128 8. Stockholders' Equity Common Stock Shares Outstanding (In thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Beginning balance | 56,692 | 56,759 | 56,837 | 56,738 | | Common stock issued under employee stock plans | 171 | 183 | 430 | 411 | | Repurchased | (705) | (164) | (1,109) | (371) | | Ending balance | 56,158 | 56,778 | 56,158 | 56,778 | - The Company repurchased 0.7 million shares for $32.6 million in Q2 2025 and 1.1 million shares for $55.7 million in H1 2025, with $42.4 million remaining on the repurchase authorization as of June 30, 202566 - Quarterly cash dividends were raised to $0.21 per share for 2025, up from $0.20 per share in 202468 9. Earnings Per Share Earnings Per Share Summary (In thousands, except per share amounts) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $1,369 | $4,849 | $10,159 | $8,803 | | Basic earnings per share | $0.02 | $0.09 | $0.18 | $0.15 | | Diluted earnings per share | $0.02 | $0.09 | $0.18 | $0.15 | - Basic and diluted EPS for the three months ended June 30, 2025, decreased to $0.02 from $0.09 in 2024, while for the six months, it increased to $0.18 from $0.15 in 202471 10. Provision for Income Taxes - The effective tax rate for the three months ended June 30, 2025, was (1.8%), negatively impacted by a tax deficiency related to share-based payments, compared to 5.8% in 202474 - For the six months ended June 30, 2025, the effective tax rate was 9.5%, compared to 3.5% in 2024, with the 2024 period favorably impacted by excess tax benefits and release of unrecognized tax benefits74 - The recently enacted One Big Beautiful Bill Act (OBBBA) in the U.S. is expected to increase the Company's effective tax rate in fiscal year 2026 due to changes in corporate income tax code, including an increase in the statutory tax rate on foreign earnings76 11. Commitments - Wafer-supply agreements with Seiko Epson Corporation and ROHM Lapis Semiconductor Co., Ltd. include mutual sharing of exchange rate fluctuations between Japanese yen and U.S. dollar on future purchases79 12. Segment Reporting - The Company operates as one operating and reportable segment, focusing on the design, development, manufacture, and marketing of integrated circuits for high-voltage power conversion80 - The Chief Executive Officer, as the Chief Operating Decision Maker (CODM), reviews financial information on a consolidated basis, using net income to allocate resources and assess performance81 13. Legal Proceedings and Contingencies - The Company is involved in an ongoing patent infringement lawsuit filed by CogniPower LLC, with a trial scheduled for August 2025, and intends to vigorously defend itself87 - In June 2025, a jury ruled against the Company in an employee litigation matter, awarding $3.2 million in compensatory damages and $6.0 million in punitive damages for harassment based on disability and retaliation91 - The Company recognized a $9.2 million charge in other operating expenses in Q2 2025 related to the employee litigation and plans to file post-trial motions and appeals91 14. Indemnifications - The Company provides customer indemnification against patent, copyright, trademark, or other proprietary right infringements, with limitations on scope and remedies93 - To date, the Company has not reimbursed any distributors or customers for indemnification claims, and no material claims were outstanding as of June 30, 202594 15. Acquisition - On July 1, 2024, the Company acquired the assets of Odyssey Semiconductor Technologies for $9.52 million in cash to augment its development of high-power GaN switching technology95 - The acquisition was accounted for using the acquisition method, with the excess purchase consideration recorded as goodwill, representing expected benefits from future technology and experienced employees9699 - In-process research and development from the acquisition is recorded as an intangible asset with an indefinite life, to be amortized upon completion of development100 16. Subsequent Events - Jennifer A. Lloyd, PhD, was elected President and CEO, effective July 21, 2025, succeeding Balu Balakrishnan, who will transition to Executive Chairman until February 2026103104 - The Company expects to record approximately $15 million in net stock-based compensation expense in Q3 2025 due to the modification and accelerated vesting of Mr. Balakrishnan's equity awards upon his transition105 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results of operations for the periods ended June 30, 2025 and 2024 Overview - Power Integrations designs, develops, and markets analog and mixed-signal integrated circuits (ICs) and other electronic components for high-voltage power conversion107 - Products are used in AC-DC power supplies for various electronic devices, electric vehicles (EVs), LED drivers, and motor-driver ICs for BLDC motors108 - The Company's system-level products offer benefits like reduced design complexity, smaller size, lower component count, higher reliability, and improved energy efficiency compared to discrete designs111 Growth Strategy - Increase the size of addressable market (SAM) from $1.5 billion to approximately $4 billion by addressing higher-power AC-DC applications, LED drivers, gate drivers, and new applications like smart utility meters and USB power receptacles - Expand SAM through new products targeting the EV market and developing technologies like InnoSwitch™ and InnoMux™ ICs that increase product value and integration - Develop additional products incorporating GaN transistors to address higher-power applications, including data centers for AI services, communications network infrastructure, and EV onboard charging circuitry - Increase market penetration by introducing more advanced products with higher integration and performance, expanding sales and application-engineering staff, and offering technical support tools like PI Expert™ and PowerPros℠ - Leverage proprietary PowiGaN™ gallium-nitride technology for higher energy efficiency, with new generations supporting up to 1700 volts and approaching cost parity with silicon MOSFETs - Capitalize on carbon emission reduction efforts by providing energy-efficient products (EcoSmart™, PowiGaN™, BridgeSwitch™) and critical components for renewable energy systems and low-emissions transportation Recent Results Net Revenues and Gross Margin (dollars in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $115.9 | $106.2 | $221.4 | $197.9 | | Gross Margin | 55% | 53% | 55% | 53% | - Net revenues increased for both the three-month (primarily industrial end-market) and six-month periods (all four end-market categories, most significantly industrial)118120 - Gross margin increased due to a favorable end-market mix (higher-margin markets) and the favorable impact of the dollar/yen exchange rate on wafer costs122 - Total operating expenses increased due to an employee litigation expense ($9.2 million), higher employee-related costs, and increased professional/legal services, partially offset by decreased product-development expenses and a bad debt recovery credit123 Critical Accounting Policies and Estimates - No material changes to critical accounting policies and estimates, which primarily relate to revenue recognition and estimating write-downs for excess and obsolete inventory125 Results of Operations Net Revenues Net Revenues by Period (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $115.9 | $106.2 | $221.4 | $197.9 | Revenue Mix by End Market | End Market | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Communications | 11 % | 11 % | 10 % | 11 % | | Computer | 12 % | 14 % | 12 % | 13 % | | Consumer | 37 % | 42 % | 41 % | 41 % | | Industrial | 40 % | 33 % | 37 % | 35 % | - International sales accounted for approximately 98% and 99% of net revenues for the three and six months ended June 30, 2025, respectively, with Asia representing about 84% of total net revenues128 Gross Profit Gross Profit and Margin (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $115.9 | $106.2 | $221.4 | $197.9 | | Gross profit | $64.0 | $56.5 | $122.2 | $104.3 | | Gross margin | 55.2 % | 53.2 % | 55.2 % | 52.7 % | - Gross margin increased by 2.0 percentage points for the three-month period and 2.5 percentage points for the six-month period, driven by favorable end-market mix and the dollar/yen exchange rate132 Research and Development Expenses R&D Expenses (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | R&D expenses | $26.0 | $26.0 | $50.1 | $49.3 | | Headcount (at period end) | 298 | 305 | 298 | 305 | - R&D expenses were flat for the three-month period but increased for the six-month period due to higher employee-related expenses (health insurance, benefits) and equipment costs, partially offset by lower stock-based compensation and product-development expenses133 Sales and Marketing Expenses S&M Expenses (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales and marketing expenses | $18.3 | $18.1 | $34.7 | $33.8 | | Headcount (at period end) | 334 | 328 | 334 | 328 | - S&M expenses increased for both periods due to higher employee-related expenses and increased travel/tradeshow costs, partially offset by lower stock-based compensation135 General and Administrative Expenses G&A Expenses (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | G&A expenses | $11.8 | $10.5 | $22.9 | $18.8 | | Headcount (at period end) | 81 | 80 | 81 | 80 | - G&A expenses increased for both periods due to higher stock-based compensation, increased salaries, and higher professional/legal services, partially offset by a bad debt recovery credit136 Other Operating Expenses - Other operating expenses were $9.2 million for both the three and six months ended June 30, 2025, entirely due to an employee litigation matter137 Other Income Other Income (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Other income | $2.7 | $3.2 | $5.9 | $6.7 | - Other income decreased for both periods primarily due to lower interest income and losses on foreign currency exchange138 Provision (Benefit) for Income Taxes Income Tax Expense and Effective Tax Rate (dollars in millions) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Provision (benefit) for income taxes | $0.0 | $0.3 | $1.1 | $0.3 | | Effective tax rate | (1.8)% | 5.8 % | 9.5 % | 3.5 % | - The effective tax rate for Q2 2025 was (1.8%), negatively impacted by a tax deficiency from share-based payments, while H1 2025 was 9.5%140141 - The OBBBA, enacted July 4, 2025, is expected to increase the effective tax rate in fiscal year 2026 due to changes in corporate income tax, including an increase in the statutory tax rate on foreign earnings143 Liquidity and Capital Resources - Cash, cash equivalents, and short-term marketable securities decreased by $31.3 million to $268.7 million as of June 30, 2025, from $300.0 million at December 31, 2024144 - Working capital decreased by $40.8 million to $417.9 million as of June 30, 2025, from $458.7 million at December 31, 2024144 - The Company has a $75.0 million revolving line of credit with Wells Fargo, with no outstanding advances as of June 30, 2025, and is in compliance with all covenants145 Cash from Operating Activities - Operating activities generated $55.5 million in cash for the six months ended June 30, 2025, up from $33.5 million in 2024146147 - 2025 sources: Net income ($10.2M), non-cash stock-based compensation ($18.8M), depreciation ($14.2M), increase in taxes payable and accrued liabilities ($10.0M), decrease in prepaid expenses and other assets ($6.4M) - 2024 sources: Net income ($8.8M), depreciation ($17.1M), non-cash stock-based compensation ($17.4M), decrease in prepaid expenses and other assets ($2.1M) Cash from Investing Activities - Investing activities generated $37.1 million in cash for the six months ended June 30, 2025, a significant improvement from a net use of $0.9 million in 2024148149 - 2025 cash generation: $48.8 million from sales and maturities of marketable securities, net of purchases, offset by $11.7 million for property and equipment purchases - 2024 cash use: $8.5 million for property and equipment purchases, partially offset by $7.6 million from sales and maturities of marketable securities, net of purchases Cash from Financing Activities - Financing activities resulted in a net cash use of $76.6 million for the six months ended June 30, 2025, compared to $46.0 million in 2024150151 - 2025 cash use: $55.7 million for common stock repurchases and $23.8 million for dividend payments, partially offset by $2.8 million from employee stock plan issuances - 2024 cash use: $26.0 million for common stock repurchases and $22.7 million for dividend payments, partially offset by $2.7 million from employee stock plan issuances Dividends - The board of directors raised the quarterly cash dividend to $0.21 per share for 2025, up from $0.20 per share in 2024153 - Dividend payouts were $12.0 million on March 31, 2025, and $11.8 million on June 30, 2025153 Stock Repurchases - The Company repurchased approximately 0.7 million shares for $32.6 million in Q2 2025 and 1.1 million shares for $55.7 million in H1 2025154 - An additional $50.0 million was authorized for stock repurchases in April 2025, with $42.4 million remaining on the authorization as of June 30, 2025154 Contractual Commitments - No material changes in contractual commitments from those reported in the Annual Report on Form 10-K for the year ended December 31, 2024155 Other Information - Worldwide cash and marketable securities are available to fund capital allocation needs without significant U.S. federal income taxes156 - The Company believes cash generated from operations and existing liquidity sources will satisfy projected working capital and cash requirements for at least the next 12 months158 Recent Accounting Pronouncements - Information regarding recent accounting pronouncements is incorporated by reference from Note 2 of the financial statements159 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to interest rate and foreign currency exchange risk during the first six months of 2025, with details in the 2024 Form 10-K - No material changes to interest rate risk and foreign currency exchange risk during the first six months of 2025160 Item 4. Controls and Procedures Discusses control system limitations, evaluates disclosure controls, and confirms no material changes in internal control over financial reporting Limitation on Effectiveness of Controls - Any control system provides only reasonable assurance and is subject to inherent limitations, including faulty judgments and simple errors, which may lead to undetected misstatements161 Evaluation of Disclosure Controls and Procedures - Management, with the participation of the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025162 Changes in Internal Control over Financial Reporting - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect internal control over financial reporting163 PART II. OTHER INFORMATION Item 1. Legal Proceedings Incorporates legal proceedings and contingencies information by reference from Note 13 of the financial statements - Legal proceedings information is incorporated by reference from Note 13 of the financial statements164 Item 1A. Risk Factors Highlights risks from trade policies, tariffs, export controls, and macroeconomic conditions, potentially impacting demand, pricing, and operating results Risks Related to the Operation and Growth of Our Business - Changes in trade policies, tariffs, and export controls, especially between the U.S. and other countries, could reduce demand for end products incorporating the Company's ICs, materially affecting revenues and operating results - Increased tariffs or trade barriers could pressure selling prices as customers seek to offset impacts on their own products, and compliance with controls may impair international competition or lead to liability - Trade disputes and macroeconomic uncertainty (inflation, foreign exchange volatility) may negatively impact customer demand, delay purchases, limit expansion, and contribute to stock price volatility Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details the Company's common stock repurchase program, including additional fund authorization and shares repurchased during Q2 fiscal 2025 Issuer Purchases of Equity Securities - The board authorized an additional $50.0 million for common stock repurchases in April 2025, after exhausting a previous $48.1 million authorization174 Common Stock Repurchases (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value that May Yet be Repurchased (In millions) | | :--- | :--- | :--- | :--- | | April 1, 2025 to April 30, 2025 | 560,409 | $44.61 | $50.0 | | May 1, 2025 to May 31, 2025 | 77,268 | $51.13 | $46.0 | | June 1, 2025 to June 30, 2025 | 68,100 | $53.00 | $42.4 | | Total | 705,777 | | | - As of June 30, 2025, $42.4 million remained on the Company's stock repurchase authorization, which has no expiration date174175 Item 5. Other Information Reports the upcoming retirement of a Vice President of Technology and confirms no Rule 10b5-1 trading plan adoptions or terminations by directors or executive officers Departure of Certain Officers - Radu Barsan, Vice President, Technology, informed the Company of his intention to retire on or about September 24, 2025176 Rule 10b5-1 Trading Plans - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended June 30, 2025177 Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including organizational documents, compensation plans, supply agreements, employment agreements, certifications, and XBRL data - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, various incentive award and compensation plans, a wafer supply agreement amendment, and employment/transition agreements related to the CEO change178 - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included178181 - XBRL Instance Document and Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents are provided for interactive data178179 SIGNATURES Contains the signature of Sandeep Nayyar, Chief Financial Officer, affirming the filing of the Quarterly Report on Form 10-Q on behalf of Power Integrations, Inc - The report is signed by Sandeep Nayyar, Chief Financial Officer, as the duly authorized officer, Principal Financial Officer, and Principal Accounting Officer186
Power Integrations(POWI) - 2025 Q2 - Quarterly Report