Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward-looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global provider of automated test equipment and robotics products. Our automated test systems are used to test semiconductors, wireless products, data storage, silicon photonics, and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics product offerings consist primarily of collaborative robotic arms and autonomous mobile robots used by global manufacturing, logistics and industrial customers to improve quality and increase manufacturing and material handling efficiency, while reducing costs. In the first quarter of 2025, we identified opportunities for operational synergies amongst our production board test, defense and aerospace, and wireless test businesses leading to the creation of the Product Test division as a new segment effective March 2025. Our automated test equipment and robotics products and services include:

semiconductor test (“Semiconductor Test”) systems;

robotics (“Robotics”) products; and

product test ("Product Test") systems, which includes defense/aerospace ("Defense/Aerospace") test instrumentation and systems, circuit-board test and inspection ("Production Board Test") systems, wireless test systems ("Wireless Test"), and photonic integrated circuit ("PIC") test solutions.

The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our products both through direct sales and sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

Artificial Intelligence applications and data center power demand drove strong third quarter performance with our customers accelerating development and ramping production for a wide range of devices. We expect this acceleration to continue and even expand into the fourth quarter and into 2026 and are currently investing in sales, engineering, and support to pursue these, and additional, market opportunities in Semiconductor Test. Robotics revenue in the third quarter was flat with second quarter sales due to ongoing business environment challenges. Our focus in the Robotics segment remains on operating expense management and our channel transformation strategy as we transition toward serving large direct customers and building a Robotics organization that can grow profitably over the mid-term.

On May 31, 2025, we acquired privately held Quantifi Photonics ("Quantifi"), a leader in PIC test solutions for a total purchase price of approximately $127.2 million. This acquisition enables the delivery of scalable PIC test solutions and is included in our Product Test segment. Over time, we also intend to leverage the engineering expertise and technology to enhance functionality and create additional differentiation in our Semiconductor Test business, specifically with integration into our UltraFlexPlus platform.

On January 31, 2025, we acquired Infineon Technologies AG's ("Infineon") automated test equipment technology and associated development team ("AET") based in Regensburg, Germany for a total purchase price of 17.6 million Euros, equivalent to $18.3 million. AET adds resources and expertise to our company and strengthens the relationship between Teradyne and this key customer. AET is included in our Semiconductor Test segment.

While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar has, and will continue to, negatively affect Robotics revenue throughout 2025.

Our capital allocation plan will continue to be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends. During the first nine months of 2025 we completed the acquisitions of Quantifi and AET and additionally, we returned $576.3 million to shareholders through $518.7 million of share buybacks and $57.6 million of dividend payments.

On July 4, 2025, H.R. 1, commonly referred to as the "One Big Beautiful Bill Act" (“OBBBA”), was signed into law, enacting significant changes to U.S. corporate tax law. The OBBBA modified and made permanent several provisions of the Tax Cuts and Jobs Act, including reductions in scheduled increases for the rate of taxation of foreign income, immediate deductibility of U.S. research and development expenses, and reinstatement of 100% bonus depreciation for qualified property. As of September 28, 2025, the condensed consolidated financial statements were not materially impacted by the OBBBA. Teradyne continues to evaluate the provisions of the OBBBA and will incorporate any necessary adjustments as further guidance becomes available.

While it is difficult to quantify the exact impact, current trade restrictions are limiting our ability to be competitive particularly in certain markets, where other companies are not subjected to the same restrictions. Current tariffs have not had a material impact on our business operations or financial results, however, the global trade environment remains dynamic and subject to change. We continue to monitor developments in international trade policy, including potential changes to tariffs, further export controls, and other regulatory measures that could affect our supply chain, cost structure, or market access.

For information regarding risks associated with import-export control regulations and similar applicable laws and regulations, see Part II - Item 1A "Risk Factors- Risks Related to Legal and Regulatory Compliance" included elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the nine months ended September 28, 2025, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions.

SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

		For the Three Months Ended								For the Nine Months Ended
		September 28, 2025				September 29, 2024				September 28, 2025				September 29, 2024
Percentage of revenues:
Revenues:
Products			82	%			83	%			81	%			81	%
Services			18				17				19				19
Total revenues			100				100				100				100
Cost of revenues:
Cost of products			35				34				35				34
Cost of services			6				6				7				8
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)			42				41				41				42
Gross profit			58				59				59				58
Operating expenses:
Selling and administrative			22				21				23				22
Engineering and development			16				16				17				16
Acquired intangible assets amortization			—				1				1				1
Restructuring and other			1				1				1				1
Gain on sale of business			—				—				—				(3	)
Total operating expenses			40				39				42				37
Income from operations			19				21				17				21
Non-operating (income) expense:
Interest income			—				(1	)			(1	)			(1	)
Interest expense			—				—				—				—
Other (income) expense, net			—				—				—				1
Income before income taxes and equity in net earnings of affiliate			19				22				17				22
Income tax provision			3				2				2				3
Income before equity in net earnings of affiliate			16				20				15				19
Equity in net earnings of affiliate			(1	)			(0	)			(1	)			(0	)
Net income			16	%			20	%			14	%			19	%

Results of Operations

Third Quarter 2025 Compared to Third Quarter 2024

Revenues

Revenues by our reportable segments were as follows:

		For the Three Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Semiconductor Test		$	605.9			$	568.5			$	37.4
Product Test			88.3				80.1				8.2
Robotics			75.1				88.7				(13.6	)
		$	769.2			$	737.3			$	31.9

The increase in Semiconductor Test revenues of $37.4 million, or 6.6%, was driven primarily by higher sales in compute related to artificial intelligence applications. The increase in Product Test revenues of $8.2 million, or 10.2%, was driven by higher Defense/Aerospace sales. The decrease in Robotics revenues of $13.6 million, or 15.3%, was primarily due to lower sales of collaborative robotic arms.

Revenues by country as a percentage of total revenues were as follows (1):

		For the Three Months Ended
		September 28, 2025				September 29, 2024
Taiwan			37	%			26	%
China			17				13
United States			12				12
Korea			12				26
Europe			7				8
Malaysia			5				2
Philippines			3				2
Thailand			3				2
Japan			1				2
Singapore			1				2
Rest of World			2				5
			100	%			100	%

(1)

Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

		For the Three Months Ended
		September 28, 2025				September 29, 2024				Dollar/Point Change
		(in millions)
Gross profit		$	449.3			$	436.5			$	12.8
Percent of total revenues			58.4	%			59.2	%			(0.8	)

Gross profit as a percent of revenue decreased by 0.8 points, primarily due to product mix in Semiconductor Test.

Selling and Administrative

Selling and administrative expenses were as follows:

		For the Three Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Selling and administrative		$	169.1			$	157.6			$	11.5
Percent of total revenues			22.0	%			21.4	%

The increase of $11.5 million in selling and administrative expenses was primarily driven by strategic investments in Semiconductor Test.

Engineering and Development

Engineering and development expenses were as follows:

		For the Three Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Engineering and development		$	124.8			$	117.5			$	7.3
Percent of total revenues			16.2	%			15.9	%

The increase of $7.3 million in engineering and development expenses was primarily driven by strategic investments in Semiconductor Test.

Restructuring and Other

During the three months ended September 28, 2025, we recorded $4.8 million of severance charges, $3.6 million of which is related to headcount reductions in Robotics. During the three months ended September 28, 2025, we made $1.1 million of Robotics severance payments. We expect all Robotics severance payments to be made prior to the end of the third quarter of 2026.

During the three months ended September 29, 2024, we recorded restructuring and other charges primarily related to $1.3 million of severance charges related to headcount reductions principally in Robotics.

Interest and Other

		For the Three Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Interest income		$	(3.2	)		$	(5.1	)		$	1.9
Interest expense			1.3				0.8			$	0.5
Other (income) expense, net			(0.9	)			(2.7	)		$	1.8

The decrease in interest income was driven primarily by lower cash balances in the current period.

Income (Loss) Before Income Taxes and Equity in Net Earnings of Affiliate

		For the Three Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Semiconductor Test		$	150.8			$	167.4			$	(16.6	)
Product Test			15.9				13.2				2.7
Robotics			(17.6	)			(24.2	)			6.6
Corporate and Eliminations (1)			(1.1	)			2.6				(3.7	)
		$	148.1			$	159.0			$	(10.9	)

(1)

Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related expenses, and gain on sale of business.

The decrease in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by product mix and investments in strategic projects partially offset by higher volume. The increase in income before income taxes and equity in net earnings of affiliate in Robotics was primarily due to lower operating expenses primarily as a result of restructuring actions.

Income Taxes

The effective tax rate for the three months ended September 28, 2025, and September 29, 2024, was 15.8% and 7.8%, respectively. The increase in the effective tax rate from the three months ended September 29, 2024, to the three months ended September 28, 2025, is primarily attributable to decreases in benefits related to reserves for uncertain tax positions, tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017. These were partially offset by an increase in benefit from a projected shift in the geographic distribution of income.

Nine Months 2025 Compared to Nine Months 2024

Revenues

Revenues by our reportable segments were as follows:

		For the Nine Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Semiconductor Test		$	1,640.2			$	1,563.2			$	77.0
Product Test			247.5				237.2				10.3
Robotics			218.9				266.6				(47.7	)
		$	2,106.7			$	2,067.0			$	39.7

The increase in Semiconductor Test revenues of $77.0 million, or 4.9%, was driven primarily by higher sales in mobility and compute related to artificial intelligence applications. The decrease in Robotics revenues of $47.7 million, or 17.9%, was primarily due to lower sales of collaborative robotic arms. The increase in Product Test revenues of $10.3 million, or 4.3%, was primarily due to higher sales in Wireless Test.

Revenues by country as a percentage of total revenues were as follows (1):

		For the Nine Months Ended
		September 28, 2025				September 29, 2024
Taiwan			33	%			20	%
China			17				11
United States			12				13
Korea			10				28
Europe			7				9
Malaysia			4				2
Philippines			4				2
Singapore			4				2
Japan			2				7
Thailand			2				2
Rest of World			5				4
			100	%			100	%

(1)

Revenues attributable to a country are based on location of customer site.

Gross Profit

Our gross profit was as follows:

		For the Nine Months Ended
		September 28, 2025				September 29, 2024				Dollar/Point Change
		(in millions)
Gross profit		$	1,237.7			$	1,201.6			$	36.1
Percent of total revenues			58.7	%			58.1	%			0.6

Gross profit as a percent of revenue increased by 0.6 points, primarily due to product mix in Semiconductor Test.

Selling and Administrative

Selling and administrative expenses were as follows:

		For the Nine Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Selling and administrative		$	484.2			$	461.3			$	22.9
Percent of total revenues			23.0	%			22.3	%

The increase of $22.9 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test partially offset by lower spending in Robotics.

Engineering and Development

Engineering and development expenses were as follows:

		For the Nine Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Engineering and development		$	361.3			$	332.5			$	28.8
Percent of total revenues			17.2	%			16.1	%

The increase of $28.8 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test partially offset by lower spending in Robotics.

Restructuring and Other

During the nine months ended September 28, 2025, we recorded $18.5 million of severance charges, $13.5 million of which is related to the Robotics restructuring which impacted approximately 150 employees, $2.2 million of which is related to Product Test and $1.4 million of which is related to Semiconductor Test. During the nine months ended September 28, 2025, we made $9.2 million of Robotics severance payments. We expect all Robotics severance payments to be made prior to the end of the third quarter of 2026. Additionally, we recorded $2.0 million of acquisition and divestiture expenses related primarily to the Quantifi Acquisition and $1.5 million of charges related to lease terminations.

During the nine months ended September 29, 2024, we recorded restructuring and other charges primarily related to $5.3 million of severance and other charges, related to headcount reductions of 87 people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for employees meeting certain conditions, and $2.2 million of acquisition and divestiture expenses related to the Technoprobe transactions.

Gain on Sale of Business

During the nine months ended September 29, 2024, we recorded a gain of $57.5 million associated with the sale of DIS to Technoprobe.

Interest and Other

		For the Nine Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Interest income		$	(12.6	)		$	(19.7	)		$	7.1
Interest expense			2.9				3.0				(0.1	)
Other (income) expense, net			2.9				5.6				(2.7	)

Interest income decreased by $7.1 million primarily due to lower cash balances. In the period ended September 29, 2024, other (income) expense, net included the change in value of our call option purchased in connection with the acquisition of Technoprobe. The call option expired on May 23, 2024.

Income (Loss) Before Income Taxes and Equity in Net Earnings of Affiliate

		For the Nine Months Ended
		September 28, 2025				September 29, 2024				Dollar Change
		(in millions)
Semiconductor Test		$	402.4			$	408.0			$	(5.6	)
Product Test			40.1				42.9				(2.8	)
Robotics			(73.3	)			(56.1	)			(17.2	)
Corporate and Eliminations (1)			(5.5	)			56.4				(61.9	)
		$	363.7			$	451.3			$	(87.6	)

(1)

Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related expenses, and gain on sale of business.

The decrease in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by higher spending in selling and administrative and engineering and development, partially offset by higher sales in mobility and compute for artificial intelligence applications. The decrease in income before income taxes and equity in net earnings of affiliate in Robotics was primarily due to lower sales of collaborative robotic arms, partially offset by lower operating expenses. The decrease in income before income taxes and equity in net earnings of affiliate in Product Test was primarily due to strategic investments.

Income Taxes

The effective tax rate for the nine months ended September 28, 2025, and September 29, 2024, was 13.8% and 12.0%, respectively. The increase in the effective tax rate from the nine months ended September 29, 2024, to the nine months ended September 28, 2025, is primarily attributable to decreases in benefits related to reserves for uncertain tax positions and tax credits partially offset by an increase in benefit from a projected shift in the geographic distribution of income.

Contractual Obligations

There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balances decreased by $296.4 million in the nine months ended September 28, 2025, to $427.4 million.

Operating activities during the nine months ended September 28, 2025, provided cash of $392.8 million. Changes in operating assets and liabilities used cash of $48.6 million due to a $169.0 million increase in operating assets and a $120.5 million increase in operating liabilities.

The increase in operating assets was primarily due to increases in accounts receivable, inventories, and prepayments and other assets of $111.8 million, $34.6 million, and $22.6 million, respectively.

The increase in operating liabilities was due to increases in accounts payable and other liabilities and in deferred revenue and customer advances of $121.4 million and $25.7 million, respectively, partially offset by decreases in income taxes and retirement plans of $19.7 million and $7.0 million, respectively.

Investing activities during the nine months ended September 28, 2025, used cash of $307.7 million due to $161.1 million used for the purchase of property, plant & equipment, $144.4 million used for the acquisition of businesses, $27.5 million used for the purchase of marketable securities, and $25.5 million used for the purchase of investments in businesses, partially offset by $41.6 million and $9.2 million in proceeds from the maturities and sales of marketable securities, respectively.

Financing activities during the nine months ended September 28, 2025, consumed cash of $361.4 million due to $518.7 million used for the repurchase of 5.1 million shares of common stock at an average price of $102.01 per share, $57.6 million utilized for dividend payments and $15.3 million used for payment related to net settlements of employee stock compensation awards, partially offset by $200.0 million from borrowings on our revolving credit facility and $30.1 million from the issuance of common stock under employee stock purchase and stock option plans.

Operating activities during the nine months ended September 29, 2024, provided cash of $389.6 million. Changes in operating assets and liabilities used cash of $75.8 million due to a $7.3 million decrease in operating assets and a $83.1 million decrease in operating liabilities.

The decrease in operating assets was primarily due to decreases in other assets and inventory of $61.4 million and $11.1 million, respectively, partially offset by a $65.3 million increase in accounts receivable, driven by higher sales in the third quarter.

The decrease in operating liabilities was due to a $32.3 million decrease in accrued employee compensation, $25.9 million decrease in accounts payable, $18.9 million decrease in income taxes, $4.2 million decrease in retirement plans, and $5.5 million decrease in accrued other, partially offset by a $3.6 million increase in deferred revenue and customer advances.

Investing activities during the nine months ended September 29, 2024, used cash of $554.9 million due to $527.1 million used for the purchases of investment, $140.7 million used for the purchase of property, plant and equipment, $35.1 million used for the purchase of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $23.6 million and $33.2 million in proceeds from the sales and maturities and marketable securities, respectively, and $0.9 million in proceeds from life insurance.

Financing activities during the nine months ended September 29, 2024, used cash of $88.6 million due to $185.0 million used for proceeds from borrowings on revolving credit facility of which $185.0 million in payments were paid back in full during the quarter, $56.9 million used for dividend payment, $55.1 million used for the repurchase of 0.5 million shares of common stock at an

average price of $111.32 per share and $13.8 million used for payment related to net settlements of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.

In January 2025, May 2025 and August 2025, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Dividend payments for the three and nine months ended September 28, 2025, were $19.0 million and $57.6 million, respectively.

In January 2024, May 2024, and August 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Dividend payments for the three and nine months ended September 29, 2024, were $19.6 million and $57.0 million, respectively.

During the nine months ended September 28, 2025, we repurchased 5.1 million shares of common stock for $518.7 million, which excludes related excise tax, at an average price of $102.01 per share. We intend to repurchase up to $1.0 billion of common stock in 2025 and 2026, subject to market conditions. The cumulative repurchases under the 2023 repurchase program as of September 28, 2025, were 10.8 million shares of common stock for $1,113.8 million, which excludes related excise tax, at an average price per share of $104.21. During the nine months ended September 29, 2024, we repurchased 0.5 million shares of common stock for $55.1 million, which excludes related excise tax, at an average price of $111.32 per share.

While we have previously declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.

On May 1, 2020, we entered into a credit agreement (the "Credit Agreement") providing a three-year, senior secured revolving credit facility of $400.0 million. On December 10, 2021, the Credit Agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the Credit Agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. On November 7, 2023, the Credit Agreement was amended to allow for the purchase of the shares of Technoprobe. On September 4, 2025, and September 19, 2025, we borrowed a combined $200.0 million under the Credit Agreement to fund out capital allocation strategy. As of October 30, 2025, there is $250.0 million outstanding from the Credit Facility.

We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings. As of September 28, 2025, we were in compliance with all covenants under the Credit Agreement.

Equity Compensation Plans

In addition to our 1996 Employee Stock Purchase Program as discussed in Note M: “Stock-Based Compensation” in our 2024 Annual Report on Form 10-K, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”).

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. We will apply the amendments in this update on a prospective basis. This ASU will have no impact on results of operations, cash flows or financial condition.

In November 2024, the FASB issued ASU 2024-03-"Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires disclosure of additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee compensation, depreciation and intangible amortization included within each income statement expense caption. This standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact of this new standard.

In July 2025, the FASB issued ASU 2025-05 - "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets", which introduces a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The practical expedient permits all entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This standard is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the impact of this new standard and do not expect a material impact on the financial statements and related disclosures.