Item 1. Financial Statements

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Item 1. Financial Statements

MONOLITHIC POWER SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)


	June 30, 2026		December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	1,005,587	$	1,099,302
Short-term investments	408,174		157,243
Accounts receivable, net	343,620		255,626
Inventories	675,849		564,649
Other current assets	44,156		106,982
Total current assets	2,477,386		2,183,802
Property and equipment, net	774,549		627,689
Acquisition-related intangible assets, net	8,216		8,790
Goodwill	25,944		25,944
Deferred tax assets, net	1,182,833		1,182,883
Other long-term assets	217,279		165,091
Total assets	$	4,686,207	$	4,194,199

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	182,224	$	138,272
Accrued compensation and related benefits	93,635		85,963
Other accrued liabilities	222,075		145,130
Total current liabilities	497,934		369,365
Income tax liabilities	75,022		75,022
Deferred tax liabilities	90,316		90,480
Other long-term liabilities	127,511		127,835
Total liabilities	790,783		662,702
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock and additional paid-in capital: $0.001 par value; shares authorized: 150,000; shares issued and outstanding: 49,142 and 48,709, respectively	1,033,062		936,998
Retained earnings	2,861,853		2,609,651
Accumulated other comprehensive income (loss)	509		(15,152)
Total stockholders’ equity	3,895,424		3,531,497
Total liabilities and stockholders’ equity	$	4,686,207	$	4,194,199

See accompanying notes to unaudited condensed consolidated financial statements.

MONOLITHIC POWER SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per-share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenue	$	980,642	$	664,574	$	1,784,827	$	1,302,128
Cost of revenue	439,572		298,558		798,692		582,882
Gross profit	541,070		366,016		986,135		719,246
Operating expenses:
Research and development	118,618		96,266		219,184		188,493
Selling, general and administrative	118,558		104,992		221,905		197,236
Total operating expenses	237,176		201,258		441,089		385,729
Operating income	303,894		164,758		545,046		333,517
Other income, net	17,835		12,220		23,865		17,351
Income before income taxes	321,729		176,978		568,911		350,868
Income tax expense	64,431		41,969		118,387		80,807
Net income	$	257,298	$	135,009	$	450,524	$	270,061

Net income per share:
Basic	$	5.24	$	2.82	$	9.17	$	5.64
Diluted	$	5.22	$	2.81	$	9.15	$	5.62
Weighted-average shares outstanding:
Basic	49,138		47,887		49,118		47,869
Diluted	49,260		48,019		49,251		48,012

See accompanying notes to unaudited condensed consolidated financial statements.

MONOLITHIC POWER SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net income	$	257,298	$	135,009	$	450,524	$	270,061
Other comprehensive income, net of tax
Foreign currency translation adjustments	10,656		19,634		15,695		24,773
Net change in unrealized gains and losses on available-for-sale securities	(35)		(1)		(34)		47
Other comprehensive income, net of tax	10,621		19,633		15,661		24,820
Comprehensive income	$	267,919	$	154,642	$	466,185	$	294,881

See accompanying notes to unaudited condensed consolidated financial statements.

MONOLITHIC POWER SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per-share amounts)

(Unaudited)


	Common Stock and Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Three Months Ended June 30, 2026	Shares	Amount
Balance as of April 1, 2026	49,129	$	983,926	$	2,703,596	$	(10,112)	$	3,677,410
Net income	-	-		257,298		-		257,298
Other comprehensive income	-	-		-		10,621		10,621
Dividends and dividend equivalents declared ($2.00 per share)	-	-		(99,041)		-		(99,041)
Common stock issued	16	-		-		-		-
Repurchases of common stock	(3)	(4,048)		-		-		(4,048)
Stock-based compensation expense	-	53,184		-		-		53,184
Balance as of June 30, 2026	49,142	$	1,033,062	$	2,861,853	$	509	$	3,895,424


	Common Stock and Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Three Months Ended June 30, 2025	Shares	Amount
Balance as of April 1, 2025	47,877	$	764,959	$	2,351,994	$	(43,324)	$	3,073,629
Net income	-	-		135,009		-		135,009
Other comprehensive income	-	-		-		19,633		19,633
Dividends and dividend equivalents declared ($1.56 per share)	-	-		(75,924)		-		(75,924)
Common stock issued	19	-		-		-		-
Repurchases of common stock	(4)	(2,484)		-		-		(2,484)
Stock-based compensation expense	-	60,107		-		-		60,107
Balance as of June 30, 2025	47,892	$	822,582	$	2,411,079	$	(23,691)	$	3,209,970


	Common Stock and Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
Six Months Ended June 30, 2026	Shares	Amount
Balance as of January 1, 2026	48,709	$	936,998	$	2,609,651	$	(15,152)	$	3,531,497
Net income	-	-		450,524		-		450,524
Other comprehensive income	-	-		-		15,661		15,661
Dividends and dividend equivalents declared ($4.00 per share)	-	-		(198,322)		-		(198,322)
Common stock issued	436	5,830		-		-		5,830
Repurchases of common stock	(3)	(4,048)		-		-		(4,048)
Stock-based compensation expense	-	94,282		-		-		94,282
Balance as of June 30, 2026	49,142	$	1,033,062	$	2,861,853	$	509	$	3,895,424


	Common Stock and Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Six Months Ended June 30, 2025	Shares	Amount
Balance as of January 1, 2025	47,823	$	706,817	$	2,292,819	$	(48,511)	$	2,951,125
Net income	-	-		270,061		-		270,061
Other comprehensive income	-	-		-		24,820		24,820
Dividends and dividend equivalents declared ($3.12 per share)	-	-		(151,801)		-		(151,801)
Common stock issued	73	5,335		-		-		5,335
Repurchases of common stock	(4)	(2,484)		-		-		(2,484)
Stock-based compensation expense	-	112,914		-		-		112,914
Balance as of June 30, 2025	47,892	$	822,582	$	2,411,079	$	(23,691)	$	3,209,970

See accompanying notes to unaudited condensed consolidated financial statements.

MONOLITHIC POWER SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2026		2025
Cash flows from operating activities:
Net income	$	450,524	$	270,061
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	32,173		24,569
Amortization of discount on available-for-sale securities	(484)		(2,885)
Gain on deferred compensation plan investments	(7,343)		(4,230)
Deferred taxes, net	(125)		14,496
Stock-based compensation expense	94,282		112,904
Other	(1,102)		29
Changes in operating assets and liabilities:
Accounts receivable	(88,002)		(22,264)
Inventories	(111,194)		(71,018)
Other assets	17,320		83,395
Accounts payable	33,276		36,627
Accrued compensation and related benefits	6,983		15,584
Income tax liabilities	32,640		33,798
Other accrued liabilities	19,211		2,958
Net cash provided by operating activities	478,159		494,024
Cash flows from investing activities:
Purchases of property and equipment	(153,272)		(88,485)
Purchases of investments	(263,797)		(393,010)
Maturities and sales of investments	14,591		211,227
Other	5,621		(3,015)
Net cash used in investing activities	(396,857)		(273,283)
Cash flows from financing activities:
Property and equipment purchased on extended payment terms	(897)		(1,902)
Proceeds from common stock issued	5,830		5,335
Repurchases of common stock	(4,048)		(3,687)
Dividends and dividend equivalents paid	(179,496)		(135,073)
Net cash used in financing activities	(178,611)		(135,327)
Effect of change in exchange rates	3,591		10,169
Net increase (decrease) in cash, cash equivalents and restricted cash	(93,718)		95,583
Cash, cash equivalents and restricted cash, beginning of period	1,099,521		691,941
Cash, cash equivalents and restricted cash, end of period	$	1,005,803	$	787,524
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	1,005,587	$	787,382
Restricted cash included in other long-term assets	216		142
Total cash, cash equivalents, and restricted cash	$	1,005,803	$	787,524
Supplemental disclosures for cash flow information:
Cash paid for income taxes, net	$	88,705	$	17,007
Non-cash investing and financing activities:
Liability accrued for property and equipment purchases	$	26,997	$	6,108
Liability accrued for dividends and dividend equivalents	$	100,326	$	77,193

See accompanying notes to unaudited condensed consolidated financial statements.

MONOLITHIC POWER SYSTEMS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Monolithic Power Systems, Inc., a Delaware corporation, and its wholly owned subsidiaries (the “Company” or “MPS”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted in accordance with these accounting principles, rules and regulations. All intercompany accounts and transactions have been eliminated. The information in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 27, 2026.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The financial statements contained in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or for any other future periods.

Summary of Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies during the three and six months ended June 30, 2026 from those described in the Company’s audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

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

New Accounting Pronouncements Not Yet Adopted as of June 30, 2026

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which aims to provide more detailed information about the types of expenses in commonly presented expense captions. The Company will adopt this standard in its Form 10-K for the fiscal year ending December 31, 2027. The Company is evaluating the impact of adoption on its Consolidated Financial Statements.

2. REVENUE RECOGNITION

Revenue from Product Sales

The Company generates revenue primarily from product sales, which include assembled and tested integrated circuits (“ICs”), power modules as well as dies in wafer form. The remaining revenue, which primarily consists of royalty revenue from licensing arrangements with value-added resellers and revenue from wafer testing services performed for third parties, was not significant in any of the periods presented.

The following is a summary of revenue by geographic region based on the direct customers’ ship-to locations for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Country or Region	2026		2025		2026		2025
China	$	501,973	$	397,951	$	913,126	$	761,671
Taiwan	260,487		104,970		442,103		221,311
South Korea	87,887		63,501		169,693		127,865
Southeast Asia	48,960		34,867		89,709		67,573
Europe	34,832		26,497		70,631		51,489
U.S.	26,212		18,127		55,986		33,376
Japan	20,171		18,536		43,355		38,637
Other	120		125		224		206
Total	$	980,642	$	664,574	$	1,784,827	$	1,302,128

The Company’s direct customers are primarily third-party distributors and value-added resellers. For each of the three and six months ended June 30, 2026, 88% of the Company’s total sales were made through distribution arrangements. For each of the three and six months ended June 30, 2025, 83% of the Company’s total sales were made through distribution arrangements. These distribution arrangements contain enforceable rights and obligations specific to those distributors and value-added resellers and not the end customers.

The following table summarizes the direct customers with sales equal to 10% or more of the Company’s total revenue for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
Customer	2026		2025		2026		2025
Distributor A	28	%	25	%	27	%	25	%
Distributor B	15	%	17	%	15	%	18	%
Distributor C	*		11	%	*		11	%
Distributor D	10	%	*		*		*

*Represents less than 10%.

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

Purchase orders, which are generally governed by sales agreements or the Company’s standard terms of sale, set the final terms for unit price, quantity, shipping and payment agreed upon between the Company and the customer. The Company considers purchase orders to be contracts with the customers. The unit price as stated on the purchase orders is considered the observable, stand-alone selling price for the contracts.

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

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

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

Variable Consideration

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

Contract Balances

Accounts Receivable:

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

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


Customer	June 30, 2026		December 31, 2025
Distributor A	33	%	35	%
Value-added reseller A	20	%	*
Distributor B	15	%	14	%

*Represents less than 10%.

Practical Expedients

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

The Company’s standard payment terms generally require customers to pay 30 to 90 days after the Company satisfies the performance obligations. For this reason, the Company has elected not to determine whether contracts with customers contain significant financing components.

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

3. STOCK-BASED COMPENSATION

2014 Equity Incentive Plan

In April 2013, the Board of Directors adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013. In October 2014, the Board of Directors approved certain amendments to the 2014 Plan. The amended 2014 Plan became effective on November 13, 2014 and provided for the issuance of up to 5.5 million shares. In April 2020, the Board of Directors further amended and restated the amended 2014 Plan (the “Amended and Restated 2014 Plan”), which the Company’s stockholders approved in June 2020. The Amended and Restated 2014 Plan became effective on June 11, 2020 and provides for the issuance of up to 10.5 million shares. The Amended and Restated 2014 Plan will cease being available for new awards on June 11, 2030. As of June 30, 2026, 3.4 million shares remained available for future issuance under the Amended and Restated 2014 Plan.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expense as follows for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Cost of revenue	$	1,764	$	1,913	$	3,238	$	3,586
Research and development (“R&D”)	12,483		12,469		23,758		24,147
Selling, general and administrative (“SG&A”)	38,937		45,716		67,286		85,171
Total stock-based compensation expense	$	53,184	$	60,098	$	94,282	$	112,904
Tax benefit related to stock-based compensation (1)	$	606	$	703	$	1,364	$	1,163

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

Restricted Stock Units (“RSUs”)

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

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


	Total Time-based RSUs, PSUs and MSUs
	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Outstanding at January 1, 2026	771		$	535.78
Granted	251	(1)	$	1,005.72
Vested	(80)		$	430.30
Forfeited	(50)		$	571.38
Outstanding at June 30, 2026	892		$	687.48

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

The fair value related to vested RSUs, as of their respective vesting dates, was $25.2 million and $11.5 million for the three months ended June 30, 2026 and 2025, respectively. The fair value related to vested RSUs, as of their respective vesting dates, was $100.3 million and $42.6 million for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, unamortized compensation expense related to all outstanding RSUs was $350.0 million with a weighted-average remaining recognition period of approximately two years. RSUs generally vest over four years for non-executive employees, three years for executives, and one year for directors serving on the Board of Directors, all subject to continued service to the Company.

2026 Executive PSUs:

In February 2026, the Compensation Committee granted 42,000 PSUs to the executive officers, which represent the target number of shares that can be earned based on the degree of achievement of two sets of independent performance goals (the “2026 Executive PSUs”). For the first goal, the executive officers can earn up to 300% of the target number of the 2026 Executive PSUs based on the achievement of the Company’s three-year (2026 through 2028) average revenue growth rate in excess of the analog industry’s three-year average revenue growth rate as published by the Semiconductor Industry Association (the “SIA”). For the second goal, the executive officers can earn up to 200% of the target number of the 2026 Executive PSUs if the Company secures manufacturing capacity that can support a specified level of annual revenue at the end of the three-year performance period. For both goals, a percentage of the 2026 Executive PSUs will fully vest on December 31, 2028, depending on the degree to which the pre-determined goals are met during the performance period. Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2026 Executive PSUs will be $208.2 million.

The 2026 Executive PSUs contain a purchase price feature, which requires the executives to pay the Company up to $300 per share upon vesting of the shares. The $300 purchase price requirement for executives is deemed satisfied and fully waived if the Company’s stock price on the last trading day of the applicable performance period is $300 or more higher than the grant date stock price of $1,164.83. The Company determined the grant date fair value of the 2026 Executive PSUs using a Monte Carlo simulation model with the following assumptions: stock price of $1,164.83, simulation term of three years, expected volatility of 53.39%, risk-free interest rate of 3.60%, and expected dividend yield of 0.69%. There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

4. BALANCE SHEET COMPONENTS

Inventories

Inventories consisted of the following (in thousands):


	June 30, 2026		December 31, 2025
Raw materials	$	86,874	$	107,801
Work in process	306,554		220,410
Finished goods	282,421		236,438
Total	$	675,849	$	564,649

Other Current Assets

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


	June 30, 2026		December 31, 2025
Prepaids and other	$	44,156	$	46,982
Other receivables (1)	-		60,000
Total	$	44,156	$	106,982

(1)Other receivables related to an annually refundable deposit made to a supplier under a long-term wafer supply agreement. The deposit was received in the quarter ended March 31, 2026.

Other Long-Term Assets

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


	June 30, 2026		December 31, 2025
Deferred compensation plan assets	$	115,366	$	107,096
Refundable deposit (1)	40,000		-
Operating lease right-of-use (“ROU”) assets	23,867		24,886
Other	38,046		33,109
Total	$	217,279	$	165,091

(1)The refundable deposit as of June 30, 2026 was for a long-term assembly service agreement.

Other Accrued Liabilities

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


	June 30, 2026		December 31, 2025
Dividends and dividend equivalents	$	101,683	$	81,510
Stock rotation and sales returns	19,197		17,150
Income tax payable	35,606		2,920
Other	65,589		43,550
Total	$	222,075	$	145,130

Other Long-Term Liabilities

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


	June 30, 2026		December 31, 2025
Deferred compensation plan liabilities	$	106,014	$	103,954
Operating lease liabilities	18,934		19,972
Dividend equivalents	2,563		3,909
Total	$	127,511	$	127,835

5. NET INCOME PER SHARE

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

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Numerator:
Net income	$	257,298	$	135,009	$	450,524	$	270,061

Denominator:
Weighted-average outstanding shares—basic	49,138		47,887		49,118		47,869
Effect of dilutive securities	122		132		133		143
Weighted-average outstanding shares—diluted	49,260		48,019		49,251		48,012

Net income per share:
Basic	$	5.24	$	2.82	$	9.17	$	5.64
Diluted	$	5.22	$	2.81	$	9.15	$	5.62

Anti-dilutive common stock equivalents were not material for the periods presented.

6. SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronics solutions for the storage and computing, enterprise data, automotive, industrial, communications, and consumer end markets. The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for the purposes of allocating resources and evaluating financial performance. Specifically, the CODM uses net income that is reported on the Condensed Consolidated Statements of Operations, and cash provided by operating activities reported in the Condensed Consolidated Statements of Cash Flows, to decide whether and how much to reinvest profits into core business operations or to return to stockholders in the form of stock repurchases and dividends.

All significant segment expenses have been captured on the face of the Condensed Consolidated Statements of Operations.

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


Country	June 30, 2026		December 31, 2025
China	$	432,821	$	332,506
U.S.	204,655		165,107
Taiwan	68,477		65,081
Other	68,596		64,995
Total	$	774,549	$	627,689

7. COMMITMENTS AND CONTINGENCIES

Product Warranties and Rework

The Company generally provides either a one- or two-year warranty against defects in materials and workmanship and will repair the products, provide replacements at no charge to customers or issue a refund. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. The Company accrues for warranty and rework costs upon evaluation of customer specific claims. Historically, the Company’s warranty obligations and rework costs associated with product-related claims have not been material. The estimated amount of product warranty and rework liabilities was $14.0 million and $10.1 million as of June 30, 2026 and December 31, 2025, respectively.

Purchase Commitments

The Company has outstanding purchase obligations with its suppliers and other parties that require the purchases of goods or services. The purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements.

Total estimated future unconditional purchase commitments to all suppliers and other parties as of June 30, 2026 were as follows (in thousands):


2026 (remaining six months)	$	256,444
2027	313,075
2028	1,031
2029	486
Total	$	571,036

Litigation

The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters. The Company is also subject to litigation initiated by its stockholders. These proceedings often involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to prosecute and defend. The Company defends itself vigorously against any such claims. Based on current information, the Company does not believe that a material loss from known matters is probable as of June 30, 2026.

8. CASH, CASH EQUIVALENTS AND INVESTMENTS

The following is a summary of the Company’s cash, cash equivalents and debt investments (in thousands):


	June 30, 2026		December 31, 2025
Cash	$	771,683	$	969,628
Money market funds	233,904		129,674
Certificates of deposit	309,162		157,243
U.S. treasuries and government agency bonds	99,012		-
Auction-rate securities backed by student-loan notes	25		49
Total	$	1,413,786	$	1,256,594


	June 30, 2026		December 31, 2025
Reported as:
Cash and cash equivalents	$	1,005,587	$	1,099,302
Short-term investments	408,174		157,243
Investment within other long-term assets	25		49
Total	$	1,413,786	$	1,256,594

The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of June 30, 2026 (in thousands):


	Amortized Cost		Fair Value
Due in less than 1 year	$	305,167	$	305,120
Due in 1 - 5 years	103,054		103,054
Due in greater than 5 years	25		25
Total	$	408,246	$	408,199

Gross realized gains and losses recognized on the sales of available-for-sale investments were not material for the periods presented.

9. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

The Company has estimated the fair value of its financial assets by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1—includes instruments with quoted prices in active markets for identical assets.
Level 2—includes instruments for which the valuations are based upon quoted market prices in active markets involving similar assets or inputs other than quoted prices that are observable for the assets. The market inputs used to value these instruments generally consist of market yields, recently executed transactions, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third-party sources used to determine a daily market value.
Level 3—includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

Financial Assets Measured at Fair Value on a Recurring Basis

The following tables detail the fair value of the Company’s financial assets measured on a recurring basis (in thousands):


	June 30, 2026
	Total		Level 1		Level 2		Level 3
Money market funds	$	233,904	$	233,904	$	-	$	-
Certificates of deposit	309,162		-		309,162		-
U.S. treasuries and government agency bonds	99,012		-		99,012		-
Auction-rate securities backed by student-loan notes	25		-		-		25
Mutual funds and money market funds under deferred compensation plan	80,083		80,083		-		-
Total	$	722,186	$	313,987	$	408,174	$	25


	December 31, 2025
	Total		Level 1		Level 2		Level 3
Money market funds	$	129,674	$	129,674	$	-	$	-
Certificates of deposit	157,243		-		157,243		-
Auction-rate securities backed by student-loan notes	49		-		-		49
Mutual funds and money market funds under deferred compensation plan	75,484		75,484		-		-
Total	$	362,450	$	205,158	$	157,243	$	49

10. DEFERRED COMPENSATION PLAN

The following table summarizes the deferred compensation plan balances on the Condensed Consolidated Balance Sheets (in thousands):


	June 30, 2026		December 31, 2025
Deferred compensation plan asset components:
Cash surrender value of corporate-owned life insurance policies	$	35,283	$	31,612
Fair value of mutual funds and money market funds	80,083		75,484
Total	$	115,366	$	107,096

Deferred compensation plan assets reported in:
Other long-term assets	$	115,366	$	107,096

Deferred compensation plan liabilities reported in:
Accrued compensation and related benefits	$	6,795	$	3,707
Other long-term liabilities	106,014		103,954
Total	$	112,809	$	107,661

11. OTHER INCOME, NET

The components of other income, net, were as follows for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Interest income	$	8,322	$	6,043	$	16,263	$	11,740
Gain on deferred compensation plan investments	8,931		5,580		7,343		4,230
Amortization of discount on available-for-sale securities	484		2,117		484		2,885
Charitable commitments	-		(900)		(900)		(900)
Other	98		(620)		675		(604)
Total	$	17,835	$	12,220	$	23,865	$	17,351

12. INCOME TAXES

The income tax expense for the three and six months ended June 30, 2026 was $64.4 million and $118.4 million, respectively, or an effective tax rate of 20.0% and 20.8%, respectively. The income tax expense for the three and six months ended June 30, 2025 was $42.0 million and $80.8 million, respectively, or an effective tax rate of 23.7% and 23.0%, respectively. The reduction in rates from the comparable periods was primarily due to the impact of higher non-deductible stock-based compensation reported in the periods in 2025 than in 2026.

13. STOCKHOLDERS’ EQUITY

Cash Dividend Program

The Company has a dividend program approved by its Board of Directors, pursuant to which the Company intends to pay quarterly cash dividends on its common stock. The Board of Directors declared the following cash dividends for the periods presented (in thousands, except per-share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Dividend declared per share	$	2.00	$	1.56	$	4.00	$	3.12
Total amount	$	98,285	$	74,711	$	196,543	$	149,399

As of June 30, 2026 and December 31, 2025, accrued dividends totaled $98.3 million and $76.0 million, respectively.

The declaration of any future cash dividends is at the discretion of the Board of Directors and will depend on, among other things, the Company’s financial condition, results of operations, capital requirements, business conditions, and other factors that the Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the Company’s stockholders.

The Company anticipates that cash used for future dividend payments will come from its domestic cash, cash generated from ongoing U.S. operations, and cash repatriated from certain foreign subsidiaries. The Company also anticipates that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

Cash Dividend Equivalent Rights

The Company’s RSUs contain rights to receive cash dividend equivalents, which entitle employees who hold RSUs to the same dividend value per share as holders of common stock. The dividend equivalents are accumulated and paid to the employees after the underlying RSUs vest. Dividend equivalents accumulated on the underlying RSUs are forfeited if the underlying RSUs do not vest. As of June 30, 2026 and December 31, 2025*,* accrued dividend equivalents totaled $6.0 million and $9.4 million, respectively.

Stock Repurchase Program

In February 2025, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $500.0 million of its common stock through February 2028. Shares are retired upon repurchase. The Company repurchased 3,000 shares of its

common stock for an aggregate purchase price of $4.0 million during the three and six months ended June 30, 2026. The Company repurchased 4,000 shares of its common stock for an aggregate purchase price of $2.6 million during the three and six months ended June 30, 2025.

Stock repurchased under the program may be made through open market repurchases, privately negotiated transactions, or other structures, in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate. The timing and the number of shares of any repurchased common stock will be determined by the Company’s management based on its evaluation of market conditions, legal requirements, share price, and other factors. The repurchase program does not obligate the Company to purchase any particular number of shares, and may be suspended, modified, or discontinued at any time without prior notice.

14. SUBSEQUENT EVENTS

MPSU Awards

In July 2026, the Compensation Committee approved MPSU grants to the Company’s executive officers and over 2,000 non-executive employees. The employees and executive officers can earn up to approximately 697,000 shares based on achievement of certain performance and market conditions as measured through July 2029. The MPSUs granted to executive officers include a holding period in the event the vesting conditions are met prior to July 2029. The MPSUs granted to non-executive employees include a time-based vesting condition of up to three years after July 2029. The fair value of the MPSUs will be estimated using the Monte Carlo valuation simulation model that incorporates various assumptions, including expected volatility, risk-free interest rate, expected dividend yield, illiquidity discount rate, and probability assessment results of the performance conditions. The Company will perform the probability assessment on a quarterly basis beginning with the quarter ending September 30, 2026.

Share Repurchase Program

In July 2026, the Board of Directors approved an additional $500.0 million to the stock repurchase program initially approved in 2025.

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