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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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27-0291921
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.0001 par value per share
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ACIA
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The Nasdaq Global Select Market
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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☐
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Smaller reporting company
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Emerging growth company
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Item No.
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Page No.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger we have entered into with Cisco Systems, Inc. and Amarone Acquisition Corp. and any inability to complete the proposed merger due to the failure to satisfy conditions to completion of the proposed merger, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the proposed merger;
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our ability to sustain or increase revenue from our larger customers, generate revenues from new customers, or offset the discontinuation of concentrated purchases by our larger customers with purchases by new or existing customers;
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our ability to anticipate the timing and scale of demand for our products, including from our largest customers;
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our expectations regarding our expenses and revenue, our ability to maintain and expand gross profit, the sufficiency of our cash resources and needs for additional financing;
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our ability to produce products free of problems, defects, errors and vulnerabilities;
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our anticipated growth strategies;
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our expectations regarding competition;
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the anticipated trends and challenges in our business and the markets in which we operate;
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our expectations regarding, and the capacity and stability of, our supply chain and manufacturing;
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the size and growth of the potential markets for our products and the ability to serve those markets;
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the scope, progress, expansion, and costs of developing and commercializing our products;
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the timing, rate and degree of introducing any of our products into the market and the market acceptance of any of our products;
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our ability to establish and maintain development partnerships;
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our ability to attract or retain key personnel;
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our expectations regarding federal, state and foreign regulatory requirements, including export controls, tax law changes and interpretations, economic sanctions and anti-corruption regulations;
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regulatory or legislative developments in the United States and foreign countries, including trade policy and tariffs and export control laws or regulations that could impede our ability to sell our products to our customer ZTE Kangxun Telecom Co. Ltd. or any of its affiliates, or that could impede our ability to sell our products to
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our ability to obtain and maintain intellectual property protection for our products.
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Item 1.
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Business
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Increased data and video consumption. Over the last decade, the proliferation of new technologies, applications, Web 2.0-based services and Internet-connected devices has led to increasing levels of Internet traffic and congestion and the need for greater bandwidth. Video traffic, in particular, is growing rapidly, and placing significant strains on network capacity. The VNI Report estimates that by 2022, video traffic will represent 82% of all global consumer IP traffic, forecast to be 293 exabytes per month in 2022, up from 77 exabytes per month in 2017. According to the VNI Report, from 2017 to 2022, video traffic and all global consumer IP traffic are expected to increase by projected 34% and 31% CAGRs, respectively.
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Growth in mobile and 4G/LTE/5G communications. The increasing demand for data- and video-intensive content and applications on mobile devices is driving significant growth in mobile data and video traffic and has led to the proliferation of advanced wireless communication technologies, such as 4G/LTE, which depend on wired networks to function. Next generation 5G network build-outs anticipated over the next few years will drive the need for higher capacity optical interfaces in backhaul and metro networks. According to the VNI Report, global mobile data traffic is expected to increase nearly seven-fold from 2017 to 2022, a projected 46% CAGR, reaching 77.5 exabytes per month by 2022.
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Proliferation of cloud services. Enterprises are increasingly adopting cloud services to reduce IT costs and enable more flexible operating models. Consumers are increasingly relying on cloud services to satisfy video, audio and photo storage and sharing needs. Together, these factors are driving increased Internet traffic as cloud services are accessed and used. According to the Cisco Global Cloud Index, dated November 2018, or the GCI Report, global cloud data center traffic is expected to reach 19.5 zettabytes, or ZB, per year by 2021, up from 6.0 ZB per year in 2016, a projected 27% CAGR, and to represent 95% of total data center traffic by 2021, compared to 88% in 2016.
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Changing traffic patterns. Content service providers and data center operators are increasingly building their own networks of connected data centers to handle the increasing amounts of data generated by today’s modern applications that require more complex processing. The architectures of these connected data centers dramatically increase the amount of data being transmitted within these data center networks. For example, virtual assistants like Amazon’s Alexa and Apple’s Siri require significant processing in the cloud. As a result, the East-West, or E-W, traffic created in response to processing these incoming requests are expected to be greater than the North-South, or N-S, network utilization. As indicated by the GCI Report, it is estimated that by 2021, enterprises will move from an 85/15 mix of N-S/E-W traffic to a 15/85 mix with greater than five times more E-W traffic than that between the servers and the requesting devices, such as desktops, mobile devices and IoT devices, among others.
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Adoption of the “Internet of Things.” Significant consumer, enterprise and governmental adoption of the “Internet of Things,” which refers to the global network of Internet-connected devices embedded with electronics, software and sensors, is anticipated to strain network capacity further and increase demand for bandwidth. The VNI Report estimates that globally, there will be approximately 28.5 billion networked devices in 2022, up from 18 billion such devices in 2017.
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Speed. Speed refers to the rate at which information can be transmitted over an optical channel and is measured in Gbps.
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Density. Density refers to the physical footprint of the optical interconnect technology. Density is primarily a function of the size and power consumption of the technology.
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Robustness. Robustness refers to the ability of an optical interconnect technology to compensate for the signal impairment that accumulates through the fiber network and prevent and correct errors introduced by the network.
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Power Consumption. Power consumption refers to the amount of electricity an optical interconnect technology consumes. Lower power consumption permits improved density and product reliability, and results in lower operating expense for electricity and cooling.
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Automation. Automation refers to the ability of an optical interconnect technology to handle network tasks that historically were required to be performed manually, such as activation and channel provisioning.
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Manageability. Manageability refers to the ability of an optical interconnect technology to monitor network performance and detect and address network issues easily and efficiently, which helps increase reliability and reduce ongoing maintenance and operational needs.
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Industry-leading speed, density and power consumption. We believe that our coherent DSP ASICs, silicon PICs and 100 to 1,200 Gbps optical interconnect modules consume less power and have higher density than comparable optical interconnect products. Our modules perform functions that have traditionally been provided by several discrete pieces of network equipment.
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Breadth of integration. By integrating many photonic functions into our silicon PIC and further integrating our silicon PIC in our modules, we enable simplified network equipment designs and reduce the amount of development
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Software intelligence. Our products incorporate software intelligence that automates tasks, such as channel provisioning, and increases manageability through a high level of software features, including increased monitoring and optimization.
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Cost-efficiency. We are able to offer our products at attractive price points as a result of the scale and process benefits of our CMOS platforms. In addition, the performance capabilities of our products permit greater flexibility and can reduce both design cost for the network equipment manufacturer and network design and ongoing operational cost for the cloud or service provider.
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Ease of deployment. By leveraging industry-standard interfaces, our modules enable cloud and service providers to immediately increase the speed and capacity of their networks by replacing their legacy 10 or 40 Gbps components with our 100 to 1,200 Gbps modules in their existing equipment. Our modules can also easily be deployed in next generation network equipment.
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Leading provider of high-speed integrated optical interconnect modules. We believe we were the first independent vendor to introduce at commercial scale both a coherent DSP ASIC and a silicon PIC integrated into an optical interconnect module capable of transmission speeds of 100 Gbps and above. Our modules solve many of the shortcomings of existing interconnect solutions and meet the majority of a cloud or service provider’s interconnect needs in a standard and compact form factor that can be easily integrated with other network equipment. Our coherent DSP ASICs and silicon PICs enable us to offer advanced optical interconnect products with desirable features such as high density, low power and high performance.
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Track record of rapid innovation driven by advanced design methodologies. We maximize the pace of innovation through a number of measures, including the creation of an expanding tool box of digital signal processing algorithms, ASIC implementations, CMOS-compatible optics subsystems and related intellectual property, which enable us to develop complex products at a competitive pace by reusing and expanding existing solutions. Our development, verification and test infrastructure and methodologies involve extensive automation, which increase the speed and quality of our development. Our ability to innovate at a rapid pace enables us to offer products purpose-built for different applications and based on the newest CMOS technology. We believe these design, innovation and development capabilities have enabled us, and we believe will continue to enable us, to develop and introduce state-of-the-art optical interconnect modules, coherent DSP ASICs and silicon PICs for use in applications across multiple markets, including long-haul, metro and inter-data center.
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Leveraging the strength of CMOS for photonics. The density and cost of high-speed optical interconnect products have traditionally been determined by the photonic components. Implementing the photonic components in CMOS, and using CMOS as the platform for the integration of multiple discrete photonics functions, enables us to significantly reduce the density and cost of our optical interconnect products compared to traditional approaches, which typically rely on complex materials such as lithium niobate, which does not permit the same level of integration, and does not benefit from the ongoing advances in CMOS technology driven by the entire electronics industry.
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Proprietary software framework enables simplified configuration and deployment. We have made substantial investments in the software components of our products, which we believe is key to increasing the performance and reducing the capital expenditures and operating expenses associated with high-speed networks. Our software framework also facilitates the integration of the many complex digital signal processing, ASIC, hardware and optical functions required in high-speed interconnect technologies and enables our customers to integrate our products easily into their existing networks. Through the use of software, we are able to configure the same product to be deployed in various network types with different needs and requirements, without the need to modify or reconfigure the network’s architecture, providing us with significant development and manufacturing efficiencies.
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Customer collaboration provides deep understanding of market needs. We collaborate closely with network equipment manufacturers, as well as directly with many cloud and service providers, and solicit their input as they design their network equipment and as we design our next-generation products. This provides us with deep insights into the current and future needs of our customers and the market, which in turn enables us to develop and deliver products that meet customer demands and anticipate market developments.
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Strong management and engineering teams with significant industry expertise. We have deliberately built our management and engineering teams, of which our founders remain a key part, to include personnel with extensive experience in optical systems and networking, digital signal processing, large-scale ASIC design and verification, silicon photonic integration, system software development, hardware design and high-speed electronics design. As of December 31, 2019, approximately 80% of our employees are engineers or have other technical backgrounds, and approximately 50% of our employees hold a Ph.D. or other advanced degree. Each element of our solution is developed by experts in the relevant field. Our collaborative development culture encourages employees with diverse experiences and expertise to work together to create innovative solutions.
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Continue to innovate and extend our technology leadership. Our coherent DSP ASICs and silicon PICs are at the heart of our products’ abilities to deliver cost-efficient high performance. We intend to continue to invest in our technology to deliver innovative and high-performance products and to identify and solve challenging interconnect needs. We expect that our continued investments in research and development will enable us to expand and enhance the capabilities of our CMOS-based products in order to continue to develop higher-capacity and higher-density software-enabled products. We are also developing a 400ZR module that will expand our pluggable module product group, and enable inter-data center transmission capacity of 400 Gbps in the same compact pluggable form factors used for 400G client optics, including QSFP-DD and OSFP. We also plan to continue to invest in silicon PIC innovation and its optimization with our coherent DSP ASICs in order to serve the growing demand for bandwidth.
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Increase penetration within our existing customer base. We focus heavily on the needs of our customers and frequently innovate in partnership with them to deliver cost-effective products that meet their specific needs. As we continue to enhance and expand our product groups, and as our existing customers seek to expand and improve their network equipment technology, we believe there is potential to generate additional revenue through sales of existing and new products to these customers.
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Continue to expand customer base. We believe there continues to be unmet need for high-speed, cost-efficient interconnect products among cloud and service providers. Historically, our sales were primarily to network equipment manufacturers that did not have internally developed coherent DSP ASICs. More recently, we have had success in marketing and selling our products to network equipment manufacturers that have internally developed their own coherent DSP ASICs. We believe that the benefits of our solution, supported by the success of existing customers as references, will drive more network equipment manufacturers to purchase their interconnect products from us. We plan to continue to acquire new customers through expanded sales and marketing and brand recognition efforts.
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Grow into adjacent markets. We believe that growth in fiber optics-based communications is likely to accelerate, partly driven by the cost and density advantages of our CMOS solution, and that this growth, together with expansion in other markets that depend on high-speed networking capabilities, as well as adjacent markets, such as access aggregation in 5G, Multi-System Operators and Fiber to the x, and intra-data center networking, will result in demand for additional applications for our existing products, as well as non-coherent products that may leverage our silicon PIC in the future. These adjacent markets often place a greater importance on interoperability standards than traditional telecom applications. The purpose of the 400ZR project at the Optical Internetworking Forum, and parallel efforts at CableLabs and the Institute of Electrical and Electronics Engineers, or IEEE, is to address this need for interoperability and, in some cases, consider additional specifications and requirements of these adjacent market applications. We believe our ability to develop compact, pluggable, low-power optical interconnect products will create further opportunities for us to serve new types of customers, including companies that do not have sufficient optical engineering expertise to develop systems using current interconnect technologies.
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Selectively pursue investments, acquisitions or other strategic transactions. Although we are focused on expanding our market share organically, we may pursue investments, acquisitions or other strategic transactions that complement our existing business, represent a strategic fit and are consistent with our overall growth strategy.
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Item 1A.
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Risk Factors
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the market price of our common stock may decline to the extent that the current market price reflects an assumption that the Merger will be consummated;
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if the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, we would be required to pay the Parent a termination fee of $120 million (including under specified circumstances in connection with an alternative acquisition proposal);
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we have incurred, and will continue to incur, significant expenses for professional services in connection with the Merger for which we will have received little or no benefit if the Merger is not consummated; and
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a failed Merger may result in negative publicity and/or give a negative impression of us in the investment community or business community generally.
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the accurate prediction of market requirements, changes in technology and evolving standards;
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the availability of qualified product designers and technologies needed to solve difficult design challenges in a cost-effective, reliable manner;
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our ability to design products that meet customers’ cost, size, acceptance and specification criteria and performance requirements, as well as requirements and specifications established by industry groups or standards bodies;
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our ability to manufacture new products with acceptable quality and manufacturing yields in a sufficient quantity to meet customer demand and according to customer needs;
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our ability to offer new products at competitive prices;
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our dependence on suppliers to deliver in a timely manner materials that are critical components of our products;
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our dependence on single-source supplier and the impact of industry-wide component constraints;
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our dependence on third-party manufacturers to successfully manufacture our products in accordance with the specifications that we and our customers require;
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the identification of and entry into new markets for our products;
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the acceptance of our customers’ products by the market and the lifecycle of such products; and
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our ability to deliver products in a timely manner within our customers’ product planning and deployment cycle.
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U.S. or foreign governmental action, such as export control or import restrictions, that could prevent or significantly hinder our ability to sell our products to certain customers or customers in certain foreign jurisdictions or build our products internationally;
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greater difficulty in enforcing contracts and accounts receivable obligations and longer collection periods;
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difficulties in managing and staffing international offices, and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;
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the impact of general economic and political conditions in economies outside the United States, including the uncertainty related to the withdrawal of the United Kingdom from the European Union, commonly known as Brexit, the terms of the post-Brexit relationship between the United Kingdom and the European Union, and heightened economic and political uncertainty within the United Kingdom, and within and among European Union member states;
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tariff and trade barriers, changes in custom and duties requirements or compliance interpretations and other regulatory requirements or contractual limitations on our ability to sell or develop our products in certain foreign markets and our ability to pass through to our customers any tariff or trade costs imposed on our products;
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heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;
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certification requirements;
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greater difficulty documenting and testing our internal controls;
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reduced protection for intellectual property rights in some countries;
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potentially adverse tax consequences, including further reform to the U.S. tax code and international tax rules such as the base erosion and profit shifting initiative;
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the effects of changes in currency exchange rates;
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changes in service provider and government spending patterns;
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social, political and economic instability;
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higher incidence of corruption or unethical business practices that could expose us to liability or damage our reputation; and
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natural disasters, major public health issues, including pandemics, and acts of war or terrorism.
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develop or respond either directly or in partnership with other market participants to new technologies or technical standards;
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react to changing customer requirements and expectations;
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devote needed resources to the development, production, promotion and sale of products;
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attain high manufacturing yields on new product designs;
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establish and take advantage of operations in lower-cost regions;
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bring relevant products to the market or enable their customers to bring relevant products to the market through a faster integration cycle; and
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deliver competitive products, including products incorporating our DSP ASICs and PICs, at lower prices, with lower gross margins or at lower costs than our products.
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a lack of guaranteed supply of manufactured wafers and other raw and finished components and incorporated products and potential higher wafer, component and incorporated product prices due to limited and, at times, single-source, suppliers and industry-wide component constraints;
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the limited availability of, or potential delays in obtaining access to, key process and leading edge technologies;
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the location of contract manufacturers, foundries and other service providers in regions that are subject to earthquakes, typhoons, tsunamis and other natural disasters;
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the location of contract manufacturers, foundries and other service providers in regions that are and historically have been disproportionately impacted by major public health issues, such as the ongoing outbreak of the novel coronavirus 2019-nCoV, referred to as the Covid-19 Coronavirus Epidemic, or Covid-19;
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competition with our contract manufacturers’, foundries’ and other service providers’ other customers for allocated capacity or supply during periods of capacity constraint or supply shortages; and
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potential regulatory changes, including in the United States, that could in the future prohibit, or increase our costs relating to, the use of contract manufacturers, foundries and other service providers in certain regions.
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sensitive data regarding our related parties or business, including intellectual property and other proprietary data, could be stolen;
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our electronic communications systems, including email and other methods, could be disrupted, and our ability to conduct our business operations could be seriously damaged until such systems can be restored;
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our ability to process customer orders and deliver products could be degraded or disrupted, resulting in delays in revenue recognition; and
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defects and security vulnerabilities could be introduced into the software embedded in or used in the development of our products, thereby damaging the reputation and perceived reliability and security of our products.
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price and volume fluctuations in the overall stock market from time to time;
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volatility in the market price and trading volume of comparable companies, in particular optical industry peer companies;
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actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts covering our industry or issuing market projection reports;
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announcements regarding the pending Merger;
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announcements of technological innovations, new products, strategic alliances or other transactions, or significant agreements by us or by our competitors;
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announcements by our customers regarding significant increases or decreases in capital expenditures and their results of operations;
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failure to accurately predict and interpret market requirements or market demand for our products;
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departure of key personnel;
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litigation involving us or that may be perceived as having an impact on our business;
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changes in general economic, industry and market conditions and trends, including the economic slowdown and delayed deployment and network expansion in China and the uncertainty related to Brexit;
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investors’ general perception of us;
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significant short interest in our stock;
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sales of large blocks of our stock;
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loss of any of our key customers;
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a lack of guaranteed supply of manufactured wafers and other raw and finished components and incorporated products;
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announcements regarding further industry consolidation;
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changes in regulations or legislation in the United States and other jurisdictions in which we do business, including domestic and international tax reform, trade policy and tariffs and export controls that could impede our ability to sell our products to our customers in certain foreign jurisdictions, particularly in China, or that could impede sales by such customers in the United States; and
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actions or announcements by activist shareholders or others.
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the level of demand for our products and our ability to maintain and increase our customer base;
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the timing and success of new product introductions by us or our competitors or any other change in the competitive landscape of our market;
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the mix of products sold in a quarter;
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export control laws, tariffs, developments in trade policy or regulations that could impede our ability to sell our products to certain customers or other customers in certain foreign jurisdictions;
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pricing pressure as a result of competition or otherwise or price discounts negotiated by our customers;
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our ability to ramp production of new products with our contract manufacturers;
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delays or disruptions in our supply or manufacturing chain, including any delays or distributions related to the ongoing Covid-19 outbreak;
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our ability to reduce manufacturing costs;
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errors in our forecasting of the demand for our products, which could lead to lower revenue or increased costs;
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seasonal and period-over-period buying patterns of some of our customers;
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introduction of new products, with initial sales at relatively small volumes with resulting higher product costs;
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increases in and timing of sales and marketing, research and development and other operating expenses that we may incur to grow and expand our operations and to remain competitive;
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insolvency, credit consolidation or other difficulties faced by our customers, affecting their ability to purchase or pay for our products;
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insolvency, credit consolidation, or other difficulties confronting our suppliers and contract manufacturers leading to disruptions in our supply or distribution chain;
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levels of product order rescheduling, cancellations, returns and contractual price protection rights, including the impact of product quality problems on our reputation;
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adverse litigation judgments, settlements or other litigation-related costs;
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the pending Merger;
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product recalls, regulatory proceedings or other adverse publicity about our products;
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fluctuations in foreign exchange rates;
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the impact of the Tax Act and other legislative and regulatory proposals to reform U.S. taxation of international business activities;
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costs related to the acquisition of businesses, talent, technologies or intellectual property, including potentially significant amortization costs and possible write-downs; and
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general economic conditions in either domestic or international markets, particularly the impact of any economic slowdown in China.
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establishing a classified board of directors with staggered three-year terms so that not all members of our board are elected at one time;
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providing that directors may be removed by stockholders only for cause and only with a vote of the holders of at least 75% of the issued and outstanding shares of voting stock;
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limiting the ability of our stockholders to call and bring business before special meetings and to take action by written consent in lieu of a meeting;
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requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors;
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authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and
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limiting the liability of, and providing indemnification to, our directors and officers.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Shares, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Financial Data
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Year Ended December 31,
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2019
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2018
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2017
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2016
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2015
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(in thousands)
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Consolidated Income Statement Data:
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Revenue
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$
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464,663
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$
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339,891
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$
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385,166
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$
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478,412
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$
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239,056
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Cost of revenue(1)
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243,981
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192,771
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217,326
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257,425
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145,350
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Gross profit
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220,682
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147,120
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167,840
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220,987
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93,706
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Operating expenses:
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Research and development(1)
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128,700
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102,406
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92,027
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75,696
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38,645
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Sales, general and administrative(1)
|
80,581
|
|
|
51,864
|
|
|
38,807
|
|
|
27,676
|
|
|
13,124
|
|
|||||
(Gain) loss on disposal of property and equipment
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
25
|
|
|
—
|
|
|||||
Total operating expenses
|
209,281
|
|
|
154,270
|
|
|
130,787
|
|
|
103,397
|
|
|
51,769
|
|
|||||
Income (loss) from operations
|
11,401
|
|
|
(7,150
|
)
|
|
37,053
|
|
|
117,590
|
|
|
41,937
|
|
|||||
Total other income (expense), net
|
10,240
|
|
|
6,746
|
|
|
3,250
|
|
|
(2,969
|
)
|
|
(2,132
|
)
|
|||||
Income (loss) before (benefit) provision for income taxes
|
21,641
|
|
|
(404
|
)
|
|
40,303
|
|
|
114,621
|
|
|
39,805
|
|
|||||
(Benefit) provision for income taxes
|
(11,198
|
)
|
|
(5,320
|
)
|
|
1,795
|
|
|
(16,956
|
)
|
|
(715
|
)
|
|||||
Net income
|
$
|
32,839
|
|
|
$
|
4,916
|
|
|
$
|
38,508
|
|
|
$
|
131,577
|
|
|
$
|
40,520
|
|
Net income per share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.80
|
|
|
$
|
0.12
|
|
|
$
|
0.99
|
|
|
$
|
3.77
|
|
|
$
|
1.18
|
|
Diluted
|
$
|
0.77
|
|
|
$
|
0.12
|
|
|
$
|
0.92
|
|
|
$
|
3.22
|
|
|
$
|
0.91
|
|
(1)
|
Stock-based compensation included in the consolidated income statement data above was as follows:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Cost of revenue
|
$
|
2,047
|
|
|
$
|
2,075
|
|
|
$
|
1,993
|
|
|
$
|
1,629
|
|
|
$
|
75
|
|
Research and development
|
21,383
|
|
|
17,564
|
|
|
14,150
|
|
|
12,347
|
|
|
561
|
|
|||||
Sales, general and administrative
|
11,723
|
|
|
9,975
|
|
|
7,230
|
|
|
6,769
|
|
|
189
|
|
|||||
Total stock-based compensation
|
$
|
35,153
|
|
|
$
|
29,614
|
|
|
$
|
23,373
|
|
|
$
|
20,745
|
|
|
$
|
825
|
|
|
December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
36,617
|
|
|
$
|
60,444
|
|
|
$
|
67,495
|
|
|
$
|
206,402
|
|
|
$
|
27,610
|
|
Marketable securities
|
434,761
|
|
|
339,424
|
|
|
297,115
|
|
|
104,004
|
|
|
—
|
|
|||||
Working capital
|
368,912
|
|
|
370,445
|
|
|
361,621
|
|
|
381,707
|
|
|
55,147
|
|
|||||
Total assets
|
721,415
|
|
|
601,859
|
|
|
611,250
|
|
|
516,936
|
|
|
130,744
|
|
|||||
Total liabilities
|
142,992
|
|
|
99,132
|
|
|
109,200
|
|
|
82,141
|
|
|
51,948
|
|
|||||
Redeemable convertible preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70,780
|
|
|||||
Total stockholders' equity
|
578,423
|
|
|
502,727
|
|
|
502,050
|
|
|
434,795
|
|
|
8,016
|
|
•
|
Research and development expenses consist primarily of salary and benefit expenses, including stock-based compensation, for employees and costs for contractors engaged in research, design and development activities incurred directly, and with support from, external vendors, such as outsourced research and development costs, as well as costs for prototypes, depreciation, purchased intellectual property, facilities and travel. In future periods, we may hedge certain significant outsourced research and development transactions denominated in currencies other than the U.S. dollar. Over time, we expect our research and development costs to increase in absolute dollars as we continue making significant investments in developing new products and new technologies, including with respect to increased performance and smaller industry-standard form factors.
|
•
|
Sales, general and administrative expenses include salary and benefit expenses, including stock-based compensation, for employees and costs for contractors engaged in sales, marketing, customer service, technical support, and general and administrative activities, as well as the costs of legal and other professional services expenses, trade shows, marketing programs, promotional materials, bad debt expense, facilities, general liability insurance and travel. In 2019, this also included acquisition-related costs related to the proposed Merger. Over time, we expect our sales, general and administrative expenses to increase in absolute dollars primarily due to our continued efforts to expand our business.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Consolidated Income Statement Data:
|
|
|
|
|
|
||||||
Revenue
|
$
|
464,663
|
|
|
$
|
339,891
|
|
|
$
|
385,166
|
|
Cost of revenue(1)
|
243,981
|
|
|
192,771
|
|
|
217,326
|
|
|||
Gross profit
|
220,682
|
|
|
147,120
|
|
|
167,840
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Research and development(1)
|
128,700
|
|
|
102,406
|
|
|
92,027
|
|
|||
Sales, general and administrative(1)
|
80,581
|
|
|
51,864
|
|
|
38,807
|
|
|||
Gain on disposal of property and equipment
|
—
|
|
|
—
|
|
|
(47
|
)
|
|||
Total operating expenses
|
209,281
|
|
|
154,270
|
|
|
130,787
|
|
|||
Income (loss) from operations
|
11,401
|
|
|
(7,150
|
)
|
|
37,053
|
|
|||
Total other income, net
|
10,240
|
|
|
6,746
|
|
|
3,250
|
|
|||
Income (loss) before (benefit) provision for income taxes
|
21,641
|
|
|
(404
|
)
|
|
40,303
|
|
|||
(Benefit) provision for income taxes
|
(11,198
|
)
|
|
(5,320
|
)
|
|
1,795
|
|
|||
Net income
|
$
|
32,839
|
|
|
$
|
4,916
|
|
|
$
|
38,508
|
|
(1)
|
Stock-based compensation included in the consolidated income statement data was as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
$
|
2,047
|
|
|
$
|
2,075
|
|
|
$
|
1,993
|
|
Research and development
|
21,383
|
|
|
17,564
|
|
|
14,150
|
|
|||
Sales, general and administrative
|
11,723
|
|
|
9,975
|
|
|
7,230
|
|
|||
Total stock-based compensation
|
$
|
35,153
|
|
|
$
|
29,614
|
|
|
$
|
23,373
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
53
|
%
|
|
57
|
%
|
|
56
|
%
|
Gross profit
|
47
|
%
|
|
43
|
%
|
|
44
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
28
|
%
|
|
30
|
%
|
|
24
|
%
|
Sales, general and administrative
|
17
|
%
|
|
15
|
%
|
|
10
|
%
|
Gain on disposal of property and equipment
|
—
|
|
|
—
|
|
|
—
|
|
Total operating expenses
|
45
|
%
|
|
45
|
%
|
|
34
|
%
|
Income (loss) from operations
|
2
|
%
|
|
(2
|
)%
|
|
10
|
%
|
Total other income, net
|
2
|
%
|
|
2
|
%
|
|
1
|
%
|
Income (loss) before (benefit) provision for income taxes
|
5
|
%
|
|
—
|
%
|
|
10
|
%
|
(Benefit) provision for income taxes
|
(2
|
)%
|
|
(2
|
)%
|
|
—
|
%
|
Net income
|
7
|
%
|
|
1
|
%
|
|
10
|
%
|
|
Year Ended
|
|
As a % of
|
|
Year Ended
|
|
As a % of
|
|
Change in
|
|||||||||||
|
December 31, 2019
|
|
Total Revenue
|
|
December 31, 2018
|
|
Total Revenue
|
|
$
|
|
%
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Embedded Modules
|
$
|
86,932
|
|
|
19
|
%
|
|
$
|
77,286
|
|
|
23
|
%
|
|
$
|
9,646
|
|
|
12
|
%
|
Pluggable Modules
|
217,620
|
|
|
47
|
%
|
|
189,533
|
|
|
56
|
%
|
|
28,087
|
|
|
15
|
%
|
|||
Semiconductors
|
160,111
|
|
|
34
|
%
|
|
73,072
|
|
|
21
|
%
|
|
87,039
|
|
|
119
|
%
|
|||
Total revenue
|
$
|
464,663
|
|
|
100
|
%
|
|
$
|
339,891
|
|
|
100
|
%
|
|
$
|
124,772
|
|
|
37
|
%
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Cost of revenue
|
$
|
243,981
|
|
|
$
|
192,771
|
|
|
$
|
51,210
|
|
|
27
|
%
|
Gross profit percentage
|
47.5
|
%
|
|
43.3
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Research and development
|
$
|
128,700
|
|
|
$
|
102,406
|
|
|
$
|
26,294
|
|
|
26
|
%
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Sales, general and administrative
|
$
|
80,581
|
|
|
$
|
51,864
|
|
|
$
|
28,717
|
|
|
55
|
%
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Benefit from income taxes
|
$
|
(11,198
|
)
|
|
$
|
(5,320
|
)
|
|
$
|
(5,878
|
)
|
|
110
|
%
|
Effective tax rate
|
(52
|
)%
|
|
1,317
|
%
|
|
|
|
(1,369
|
)%
|
|
Year Ended
|
|
As a % of
|
|
Year Ended
|
|
As a % of
|
|
Change in
|
|||||||||||
|
December 31, 2018
|
|
Total Revenue
|
|
December 31, 2017
|
|
Total Revenue
|
|
$
|
|
%
|
|||||||||
|
(dollars in thousands)
|
|||||||||||||||||||
Embedded Modules
|
$
|
77,286
|
|
|
23
|
%
|
|
$
|
113,381
|
|
|
29
|
%
|
|
$
|
(36,095
|
)
|
|
(32
|
)%
|
Pluggable Modules
|
189,533
|
|
|
56
|
%
|
|
210,652
|
|
|
55
|
%
|
|
(21,119
|
)
|
|
(10
|
)%
|
|||
Semiconductors
|
73,072
|
|
|
21
|
%
|
|
61,133
|
|
|
16
|
%
|
|
11,939
|
|
|
20
|
%
|
|||
Total revenue
|
$
|
339,891
|
|
|
100
|
%
|
|
$
|
385,166
|
|
|
100
|
%
|
|
$
|
(45,275
|
)
|
|
(12
|
)%
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Cost of revenue
|
$
|
192,771
|
|
|
$
|
217,326
|
|
|
$
|
(24,555
|
)
|
|
(11
|
)%
|
Gross profit percentage
|
43.3
|
%
|
|
43.6
|
%
|
|
|
|
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Research and development
|
$
|
102,406
|
|
|
$
|
92,027
|
|
|
$
|
10,379
|
|
|
11
|
%
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
Sales, general and administrative
|
$
|
51,864
|
|
|
$
|
38,807
|
|
|
$
|
13,057
|
|
|
34
|
%
|
|
Year Ended December 31,
|
|
Change in
|
|||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
(dollars in thousands)
|
|||||||||||||
(Benefit) provision for income taxes
|
$
|
(5,320
|
)
|
|
$
|
1,795
|
|
|
$
|
(7,115
|
)
|
|
(396
|
)%
|
Effective tax rate
|
1,317
|
%
|
|
4
|
%
|
|
|
|
1,313
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
36,617
|
|
|
$
|
60,444
|
|
|
$
|
67,495
|
|
Marketable securities
|
434,761
|
|
|
339,424
|
|
|
297,115
|
|
|||
Working capital
|
368,912
|
|
|
370,445
|
|
|
361,621
|
|
|||
Net cash provided by operating activities
|
72,819
|
|
|
83,085
|
|
|
61,893
|
|
|||
Net cash used in investing activities
|
(103,579
|
)
|
|
(56,237
|
)
|
|
(207,907
|
)
|
|||
Net cash provided by (used in) financing activities
|
6,933
|
|
|
(33,899
|
)
|
|
5,477
|
|
|
Payments due by period
|
||||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than
5 Years |
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating lease liabilities, including imputed interest (1)
|
$
|
22,703
|
|
|
$
|
4,336
|
|
|
$
|
8,650
|
|
|
$
|
7,684
|
|
|
$
|
2,033
|
|
Purchase obligations (2)
|
54,276
|
|
|
54,276
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|||
Income taxes payable (3)
|
7,744
|
|
|
627
|
|
|
2,407
|
|
|
4,710
|
|
|
—
|
|
|||||
Unrecognized tax benefits (4)
|
3,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
88,308
|
|
|
$
|
59,239
|
|
|
$
|
11,057
|
|
|
$
|
12,394
|
|
|
$
|
2,033
|
|
(1)
|
We lease facilities and equipment under non-cancelable operating lease agreements. Refer to Note 9, Leases, of the “Notes to Consolidated Financial Statements” contained in Part II, Item 8 of this Annual Report on Form 10-K for more information about our leases.
|
(2)
|
Our purchase obligations primarily consist of outstanding purchase orders with our contract manufacturers for inventory and other third parties for the manufacturing of our wafers and ASIC DSPs. Our relationships with these vendors typically allow for the cancellation of outstanding purchase orders, but require payments of all expenses incurred through the date of cancellation. Other obligations include future non-inventory purchases and commitments related to future fixed asset purchases.
|
(3)
|
Income taxes payable relates to taxes owed as a result of the one-time transition tax on earnings of certain foreign subsidiaries that were previously tax-deferred until the enactment of the Tax Act in December 2017. The Tax Act allows
|
(4)
|
We had $6.8 million of uncertain tax positions as of December 31, 2019. Included in the balance of unrecognized tax benefits as of December 31, 2019 are $3.6 million of tax benefits that, if recognized, would impact the effective tax rate, which have been accrued for as a long-term liability on our consolidated balance sheet. We are not able to provide reasonably reliable estimates of future payments relating to these obligations.
|
|
Year Ended December 31,
|
|
2018
|
Risk-free interest rate
|
2.9%
|
Expected dividend yield
|
None
|
Expected volatility
|
53.5%
|
Expected term (in years)
|
6.3
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
|
|
•
|
We tested the effectiveness of controls related to evaluating legal loss contingencies, including those over the review of the ViaSat, Inc. legal matter.
|
•
|
We held discussions with internal and external legal counsel to understand developments in the related legal matters and progression in potential settlement discussions.
|
•
|
We requested and received a written response from internal and external legal counsel as it relates to the lawsuit.
|
•
|
We read Board of Directors’ meeting minutes for evidence of further considerations indicative of unrecorded contingencies.
|
•
|
We evaluated the assumptions used by the Company to estimate the litigation and settlement accrual, including corroborating the assumptions with internal and external legal counsel.
|
•
|
We evaluated the Company’s legal contingency disclosure for consistency with our knowledge of the lawsuit.
|
•
|
We tested the effectiveness of controls relating to the identification, recognition, measurement, and disclosure of uncertain tax positions.
|
•
|
We evaluated the appropriateness and consistency of management’s methods and assumptions used in the identification, recognition, measurement, and disclosure of uncertain tax positions related to certain transfer pricing positions.
|
•
|
With the assistance of tax specialists, we evaluated the reasonableness of management’s estimates by considering how tax law, including statutes, regulations, and case law, affected management’s judgments.
|
•
|
We evaluated the Company’s income tax disclosures for consistency with our knowledge of the Company’s position and exposure to an unfavorable decision in the Altera Case.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
36,617
|
|
|
$
|
60,444
|
|
Marketable securities - short-term
|
300,129
|
|
|
264,660
|
|
||
Accounts receivable
|
97,948
|
|
|
90,831
|
|
||
Inventory
|
40,820
|
|
|
25,511
|
|
||
Prepaid expenses and other current assets
|
6,518
|
|
|
12,598
|
|
||
Total current assets
|
482,032
|
|
|
454,044
|
|
||
Marketable securities - long term
|
134,632
|
|
|
74,764
|
|
||
Property and equipment, net
|
26,801
|
|
|
26,643
|
|
||
Operating lease right-of-use assets
|
25,046
|
|
|
—
|
|
||
Deferred tax asset
|
51,798
|
|
|
38,717
|
|
||
Other assets
|
1,106
|
|
|
7,691
|
|
||
Total assets
|
$
|
721,415
|
|
|
$
|
601,859
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
46,957
|
|
|
$
|
46,650
|
|
Accrued liabilities
|
61,680
|
|
|
31,848
|
|
||
Deferred revenue
|
4,483
|
|
|
5,101
|
|
||
Total current liabilities
|
113,120
|
|
|
83,599
|
|
||
Income taxes payable
|
7,117
|
|
|
8,791
|
|
||
Non-current operating lease liabilities
|
15,726
|
|
|
—
|
|
||
Other long-term liabilities
|
7,029
|
|
|
6,742
|
|
||
Total liabilities
|
142,992
|
|
|
99,132
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.0001 par value; 5,000 shares authorized; none issued and outstanding at December 31, 2019 and 2018
|
—
|
|
|
—
|
|
||
Common stock, $0.0001 par value; 150,000 shares authorized; 42,399 and 41,024 shares issued at December 31, 2019 and 2018, respectively
|
4
|
|
|
4
|
|
||
Treasury stock, at cost; 974 shares at December 31, 2019 and 2018, respectively
|
(39,712
|
)
|
|
(39,712
|
)
|
||
Additional paid-in capital
|
402,032
|
|
|
360,267
|
|
||
Accumulated other comprehensive income (loss)
|
720
|
|
|
(372
|
)
|
||
Retained earnings
|
215,379
|
|
|
182,540
|
|
||
Total stockholders’ equity
|
578,423
|
|
|
502,727
|
|
||
Total liabilities and stockholders’ equity
|
$
|
721,415
|
|
|
$
|
601,859
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
464,663
|
|
|
$
|
339,891
|
|
|
$
|
385,166
|
|
Cost of revenue
|
243,981
|
|
|
192,771
|
|
|
217,326
|
|
|||
Gross profit
|
220,682
|
|
|
147,120
|
|
|
167,840
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Research and development
|
128,700
|
|
|
102,406
|
|
|
92,027
|
|
|||
Sales, general and administrative
|
80,581
|
|
|
51,864
|
|
|
38,807
|
|
|||
Gain on disposal of property and equipment
|
—
|
|
|
—
|
|
|
(47
|
)
|
|||
Total operating expenses
|
209,281
|
|
|
154,270
|
|
|
130,787
|
|
|||
Income (loss) from operations
|
11,401
|
|
|
(7,150
|
)
|
|
37,053
|
|
|||
Other income, net:
|
|
|
|
|
|
|
|
|
|||
Interest income, net
|
10,413
|
|
|
7,209
|
|
|
3,389
|
|
|||
Other expense, net
|
(173
|
)
|
|
(463
|
)
|
|
(139
|
)
|
|||
Total other income, net
|
10,240
|
|
|
6,746
|
|
|
3,250
|
|
|||
Income (loss) before (benefit) provision for income taxes
|
21,641
|
|
|
(404
|
)
|
|
40,303
|
|
|||
(Benefit) provision for income taxes
|
(11,198
|
)
|
|
(5,320
|
)
|
|
1,795
|
|
|||
Net income
|
$
|
32,839
|
|
|
$
|
4,916
|
|
|
$
|
38,508
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
0.80
|
|
|
$
|
0.12
|
|
|
$
|
0.99
|
|
Diluted
|
$
|
0.77
|
|
|
$
|
0.12
|
|
|
$
|
0.92
|
|
Weighted-average shares used to compute earnings per share:
|
|
|
|
|
|
|
|
|
|||
Basic
|
40,883
|
|
|
40,259
|
|
|
38,920
|
|
|||
Diluted
|
42,554
|
|
|
41,997
|
|
|
41,690
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
32,839
|
|
|
$
|
4,916
|
|
|
$
|
38,508
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|||
Changes in unrealized loss on marketable securities, net of income taxes of $(89), $(18) and $118 for the years ended December 31, 2019, 2018 and 2017, respectively
|
1,092
|
|
|
(7
|
)
|
|
(304
|
)
|
|||
Comprehensive income
|
$
|
33,931
|
|
|
$
|
4,909
|
|
|
$
|
38,204
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other Comprehensive (Loss) Income |
|
Retained Earnings
|
|
Total
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance at January 1, 2017
|
37,998
|
|
|
$
|
4
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
295,893
|
|
|
$
|
(16
|
)
|
|
$
|
138,914
|
|
|
$
|
434,795
|
|
Vesting of restricted common stock
|
85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||||||
Exercise of common stock options
|
699
|
|
|
—
|
|
|
|
|
|
|
2,755
|
|
|
|
|
|
|
2,755
|
|
||||||||||
Vesting of restricted stock units
|
745
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||||
Common stock issued under employee stock purchase plan
|
79
|
|
|
—
|
|
|
|
|
|
|
2,923
|
|
|
|
|
|
|
2,923
|
|
||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
23,373
|
|
|
|
|
|
|
23,373
|
|
||||||||||||
Changes in unrealized loss on marketable securities, net of tax of $118
|
|
|
|
|
|
|
|
|
|
|
(304
|
)
|
|
|
|
(304
|
)
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
38,508
|
|
|
38,508
|
|
||||||||||||
Balance at December 31, 2017
|
39,606
|
|
|
$
|
4
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
324,944
|
|
|
$
|
(320
|
)
|
|
$
|
177,422
|
|
|
$
|
502,050
|
|
Effect of adopted accounting standards
|
|
|
|
|
|
|
|
|
|
|
(45
|
)
|
|
202
|
|
|
157
|
|
|||||||||||
Treasury stock acquired
|
|
|
|
|
974
|
|
|
(39,712
|
)
|
|
|
|
|
|
|
|
(39,712
|
)
|
|||||||||||
Vesting of restricted common stock
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
||||||||
Exercise of common stock options
|
489
|
|
|
—
|
|
|
|
|
|
|
2,512
|
|
|
|
|
|
|
|
|
2,512
|
|
||||||||
Vesting of restricted stock units
|
782
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
—
|
|
||||||||
Common stock issued under employee stock purchase plan
|
126
|
|
|
—
|
|
|
|
|
|
|
3,301
|
|
|
|
|
|
|
|
|
3,301
|
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
29,510
|
|
|
|
|
|
|
|
|
29,510
|
|
||||||||
Changes in unrealized loss on marketable securities, net of tax of ($18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
(7
|
)
|
||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,916
|
|
|
4,916
|
|
||||||||
Balance at December 31, 2018
|
41,024
|
|
|
$
|
4
|
|
|
974
|
|
|
$
|
(39,712
|
)
|
|
$
|
360,267
|
|
|
$
|
(372
|
)
|
|
$
|
182,540
|
|
|
$
|
502,727
|
|
Exercise of common stock options
|
382
|
|
|
—
|
|
|
|
|
|
|
2,658
|
|
|
|
|
|
|
2,658
|
|
||||||||||
Vesting of restricted stock units
|
890
|
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||||
Common stock issued under employee stock purchase plan
|
103
|
|
|
—
|
|
|
|
|
|
|
4,275
|
|
|
|
|
|
|
4,275
|
|
||||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
34,832
|
|
|
|
|
|
|
34,832
|
|
||||||||||||
Changes in unrealized loss on marketable securities, net of tax of ($89)
|
|
|
|
|
|
|
|
|
|
|
1,092
|
|
|
|
|
1,092
|
|
||||||||||||
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
32,839
|
|
|
32,839
|
|
||||||||||||
Balance at December 31, 2019
|
42,399
|
|
|
$
|
4
|
|
|
974
|
|
|
$
|
(39,712
|
)
|
|
$
|
402,032
|
|
|
$
|
720
|
|
|
$
|
215,379
|
|
|
$
|
578,423
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Net income
|
$
|
32,839
|
|
|
$
|
4,916
|
|
|
$
|
38,508
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation
|
12,559
|
|
|
13,646
|
|
|
12,280
|
|
|||
Gain on disposal of property and equipment
|
—
|
|
|
—
|
|
|
(47
|
)
|
|||
Stock-based compensation
|
35,153
|
|
|
29,593
|
|
|
23,373
|
|
|||
Deferred income taxes
|
(13,081
|
)
|
|
3,133
|
|
|
(18,368
|
)
|
|||
Non-cash lease expense
|
4,872
|
|
|
—
|
|
|
—
|
|
|||
Other non-cash (benefits) charges
|
(2,244
|
)
|
|
(799
|
)
|
|
446
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(7,117
|
)
|
|
(4,229
|
)
|
|
21,525
|
|
|||
Inventory
|
(15,309
|
)
|
|
36,721
|
|
|
(30,551
|
)
|
|||
Prepaid expenses and other current assets
|
6,080
|
|
|
6,219
|
|
|
(6,540
|
)
|
|||
Other assets
|
(302
|
)
|
|
1,113
|
|
|
(4,618
|
)
|
|||
Accounts payable
|
(835
|
)
|
|
1,377
|
|
|
(2,371
|
)
|
|||
Accrued liabilities
|
26,750
|
|
|
(5,467
|
)
|
|
6,957
|
|
|||
Deferred revenue
|
(881
|
)
|
|
8,357
|
|
|
(548
|
)
|
|||
Income taxes payable
|
(1,674
|
)
|
|
(12,243
|
)
|
|
21,034
|
|
|||
Lease liabilities
|
(4,541
|
)
|
|
—
|
|
|
—
|
|
|||
Other long-term liabilities
|
550
|
|
|
748
|
|
|
813
|
|
|||
Net cash provided by operating activities
|
72,819
|
|
|
83,085
|
|
|
61,893
|
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Purchases of property and equipment
|
(11,837
|
)
|
|
(14,660
|
)
|
|
(14,112
|
)
|
|||
Purchases of marketable securities
|
(476,207
|
)
|
|
(382,438
|
)
|
|
(436,594
|
)
|
|||
Sales and maturities of marketable securities
|
384,467
|
|
|
340,920
|
|
|
242,735
|
|
|||
Deposits
|
(2
|
)
|
|
(59
|
)
|
|
64
|
|
|||
Net cash used in investing activities
|
(103,579
|
)
|
|
(56,237
|
)
|
|
(207,907
|
)
|
|||
|
|
|
|
|
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|||
Payment of public offering costs
|
—
|
|
|
—
|
|
|
(201
|
)
|
|||
Treasury stock acquired
|
—
|
|
|
(39,712
|
)
|
|
—
|
|
|||
Proceeds from the issuance of common stock under stock-based compensation plans
|
6,933
|
|
|
5,813
|
|
|
5,678
|
|
|||
Net cash provided by (used in) financing activities
|
6,933
|
|
|
(33,899
|
)
|
|
5,477
|
|
|||
|
|
|
|
|
|
||||||
Net decrease in cash, cash equivalents and restricted cash
|
(23,827
|
)
|
|
(7,051
|
)
|
|
(140,537
|
)
|
|||
Cash, cash equivalents and restricted cash—Beginning of period
|
60,444
|
|
|
67,495
|
|
|
208,032
|
|
|||
Cash, cash equivalents and restricted cash—End of period
|
$
|
36,617
|
|
|
$
|
60,444
|
|
|
$
|
67,495
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|||
(Refunds received) cash paid for income taxes, net
|
$
|
(129
|
)
|
|
$
|
(5,053
|
)
|
|
$
|
1,465
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|||
Right-of-use assets acquired under operating leases
|
$
|
7,084
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capital expenditures incurred but not yet paid
|
$
|
1,338
|
|
|
$
|
196
|
|
|
$
|
2,742
|
|
Engineering laboratory equipment
|
3-7 years
|
Computer software
|
1-3 years
|
Computer equipment
|
3 years
|
Furniture and fixtures
|
3-7 years
|
Leasehold improvements
|
Lesser of lease term or life of asset
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
United States
|
$
|
18,325
|
|
|
$
|
18,123
|
|
Thailand
|
3,870
|
|
|
4,147
|
|
||
China
|
1,949
|
|
|
1,703
|
|
||
Other
|
2,657
|
|
|
2,670
|
|
||
Total long-lived assets
|
$
|
26,801
|
|
|
$
|
26,643
|
|
|
Balance at Beginning of Period (1/1/19)
|
|
Increase / (Decrease)
|
|
Balance at End of Period
|
||||||
Year Ended December 31, 2019
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
90,831
|
|
|
$
|
7,117
|
|
|
$
|
97,948
|
|
Deferred revenue (current)
|
$
|
5,101
|
|
|
$
|
(618
|
)
|
|
$
|
4,483
|
|
Deferred revenue (non-current)
|
$
|
3,707
|
|
|
$
|
(263
|
)
|
|
$
|
3,444
|
|
|
Year Ended
|
|
Year Ended
|
||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||
|
Revenue ($)
|
|
Revenue (%)
|
|
Revenue ($)
|
|
Revenue (%)
|
||||||
Embedded Modules
|
$
|
86,932
|
|
|
19
|
%
|
|
$
|
77,286
|
|
|
23
|
%
|
Pluggable Modules
|
217,620
|
|
|
47
|
%
|
|
189,533
|
|
|
56
|
%
|
||
Semiconductors
|
160,111
|
|
|
34
|
%
|
|
73,072
|
|
|
21
|
%
|
||
Total revenue
|
$
|
464,663
|
|
|
100
|
%
|
|
$
|
339,891
|
|
|
100
|
%
|
|
December 31, 2019
|
||||||||||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized
|
|
Estimated Fair Value
|
|
Cash and Cash
Equivalents |
|
Marketable
Securities |
||||||||||||||
|
|
Gains
|
|
Losses(1)
|
|
|
|
||||||||||||||||
Cash
|
$
|
29,116
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,116
|
|
|
$
|
29,116
|
|
|
$
|
—
|
|
Money market funds
|
2,010
|
|
|
—
|
|
|
—
|
|
|
2,010
|
|
|
2,010
|
|
|
—
|
|
||||||
U.S. treasury bonds
|
116,710
|
|
|
126
|
|
|
(1
|
)
|
|
116,835
|
|
|
—
|
|
|
116,835
|
|
||||||
Commercial paper
|
44,300
|
|
|
—
|
|
|
—
|
|
|
44,300
|
|
|
5,491
|
|
|
38,809
|
|
||||||
Certificates of deposit
|
24,522
|
|
|
19
|
|
|
(2
|
)
|
|
24,539
|
|
|
—
|
|
|
24,539
|
|
||||||
Asset-backed securities
|
73,370
|
|
|
134
|
|
|
(5
|
)
|
|
73,499
|
|
|
—
|
|
|
73,499
|
|
||||||
Corporate debt securities
|
180,607
|
|
|
475
|
|
|
(3
|
)
|
|
181,079
|
|
|
—
|
|
|
181,079
|
|
||||||
Total
|
$
|
470,635
|
|
|
$
|
754
|
|
|
$
|
(11
|
)
|
|
$
|
471,378
|
|
|
$
|
36,617
|
|
|
$
|
434,761
|
|
|
December 31, 2018
|
||||||||||||||||||||||||||
|
Amortized Cost
|
|
Gross Unrealized
|
|
|
|
Estimated Fair Value
|
|
Cash and Cash
Equivalents |
|
Marketable
Securities |
||||||||||||||||
|
|
Gains
|
|
Losses
|
|
|
|
||||||||||||||||||||
|
|
|
Less than One Year
|
|
Greater than One Year
|
|
|
|
|||||||||||||||||||
Cash
|
$
|
49,650
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
49,650
|
|
|
$
|
49,650
|
|
|
$
|
—
|
|
Money market funds
|
1,563
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,563
|
|
|
1,563
|
|
|
—
|
|
|||||||
U.S. treasury bonds
|
40,367
|
|
|
—
|
|
|
(9
|
)
|
|
(3
|
)
|
|
40,355
|
|
|
—
|
|
|
40,355
|
|
|||||||
Commercial paper
|
60,435
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
60,422
|
|
|
6,668
|
|
|
53,754
|
|
|||||||
Certificates of deposit
|
36,839
|
|
|
13
|
|
|
(12
|
)
|
|
—
|
|
|
36,840
|
|
|
—
|
|
|
36,840
|
|
|||||||
Asset-backed securities
|
47,798
|
|
|
1
|
|
|
(63
|
)
|
|
(22
|
)
|
|
47,714
|
|
|
—
|
|
|
47,714
|
|
|||||||
Corporate debt securities
|
163,654
|
|
|
9
|
|
|
(239
|
)
|
|
(100
|
)
|
|
163,324
|
|
|
2,563
|
|
|
160,761
|
|
|||||||
Total
|
$
|
400,306
|
|
|
$
|
23
|
|
|
$
|
(336
|
)
|
|
$
|
(125
|
)
|
|
$
|
399,868
|
|
|
$
|
60,444
|
|
|
$
|
339,424
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Proceeds from the sales and maturities of marketable securities
|
$
|
384,467
|
|
|
$
|
340,920
|
|
|
$
|
242,735
|
|
Realized gains
|
$
|
67
|
|
|
$
|
18
|
|
|
$
|
16
|
|
Realized losses
|
$
|
(2
|
)
|
|
$
|
(109
|
)
|
|
$
|
(2
|
)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||
|
Amortized Cost Basis
|
|
Aggregate Fair Value
|
|
Amortized Cost Basis
|
|
Aggregate Fair Value
|
||||||||
Due within one year
|
$
|
299,725
|
|
|
$
|
300,129
|
|
|
$
|
264,959
|
|
|
$
|
264,660
|
|
Due after one year through four years
|
134,292
|
|
|
134,632
|
|
|
74,902
|
|
|
74,764
|
|
||||
Total
|
$
|
434,017
|
|
|
$
|
434,761
|
|
|
$
|
339,861
|
|
|
$
|
339,424
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Raw materials
|
$
|
24,777
|
|
|
$
|
18,420
|
|
Work-in-process
|
673
|
|
|
218
|
|
||
Finished goods
|
15,370
|
|
|
6,873
|
|
||
Inventory
|
$
|
40,820
|
|
|
$
|
25,511
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Engineering laboratory equipment
|
$
|
58,320
|
|
|
$
|
50,590
|
|
Computer software
|
3,730
|
|
|
3,132
|
|
||
Computer equipment
|
7,837
|
|
|
6,018
|
|
||
Furniture and fixtures
|
3,641
|
|
|
3,227
|
|
||
Leasehold improvements
|
3,999
|
|
|
3,581
|
|
||
Construction in progress
|
2,449
|
|
|
1,279
|
|
||
Total property and equipment
|
79,976
|
|
|
67,827
|
|
||
Less: Accumulated depreciation
|
(53,175
|
)
|
|
(41,184
|
)
|
||
Property and equipment, net
|
$
|
26,801
|
|
|
$
|
26,643
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Employee-related liabilities
|
$
|
10,816
|
|
|
$
|
8,509
|
|
Current maturities of operating leases
|
4,228
|
|
|
—
|
|
||
Goods and services received not invoiced
|
2,297
|
|
|
3,592
|
|
||
Accrued manufacturing related expenses
|
3,781
|
|
|
2,342
|
|
||
Warranty reserve
|
10,354
|
|
|
8,220
|
|
||
Litigation and settlement accrual
|
20,000
|
|
|
2,500
|
|
||
Other accrued liabilities
|
10,204
|
|
|
6,685
|
|
||
Accrued liabilities
|
$
|
61,680
|
|
|
$
|
31,848
|
|
|
|
Classification on the Balance Sheet
|
|
December 31, 2019
|
||
Assets
|
|
|
|
|
||
Operating lease assets
|
|
Operating lease right-of-use assets
|
|
$
|
25,046
|
|
Liabilities
|
|
|
|
|
||
Current - operating
|
|
Accrued liabilities
|
|
4,228
|
|
|
Noncurrent - operating
|
|
Noncurrent operating lease liabilities
|
|
15,726
|
|
|
Total lease liabilities
|
|
|
|
$
|
19,954
|
|
Weighted-average remaining lease term - operating leases
|
|
5.2 years
|
|
||
Weighted-average discount rate - operating leases(1)
|
|
4.79
|
%
|
|
(1)
|
Upon adoption of ASC 842, discount rates used for existing leases were established at January 1, 2019, which was the date of the Company’s initial adoption of ASC 842.
|
|
|
Operating Leases
|
||
2020
|
|
$
|
4,336
|
|
2021
|
|
4,389
|
|
|
2022
|
|
4,261
|
|
|
2023
|
|
4,414
|
|
|
2024
|
|
3,270
|
|
|
Thereafter
|
|
2,033
|
|
|
Total minimum lease payments
|
|
22,703
|
|
|
Less: amount of lease payments representing interest
|
|
(2,749
|
)
|
|
Present value of future minimum lease payments
|
|
19,954
|
|
|
Less: current obligation under leases
|
|
4,228
|
|
|
Long-term lease obligations
|
|
$
|
15,726
|
|
|
|
Amounts
|
||
2019
|
|
$
|
3,888
|
|
2020
|
|
4,280
|
|
|
2021
|
|
4,394
|
|
|
2022
|
|
4,248
|
|
|
2023
|
|
4,401
|
|
|
Thereafter
|
|
5,252
|
|
|
Total
|
|
$
|
26,463
|
|
|
December 31, 2019
|
||||||||||||||
|
Quoted
Prices in Active Markets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total Fair
Value |
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds
|
$
|
—
|
|
|
$
|
2,010
|
|
|
$
|
—
|
|
|
$
|
2,010
|
|
U.S. treasury bonds
|
—
|
|
|
116,835
|
|
|
—
|
|
|
116,835
|
|
||||
Commercial paper
|
—
|
|
|
44,300
|
|
|
—
|
|
|
44,300
|
|
||||
Certificates of deposit
|
—
|
|
|
24,539
|
|
|
—
|
|
|
24,539
|
|
||||
Asset-backed securities
|
—
|
|
|
73,499
|
|
|
—
|
|
|
73,499
|
|
||||
Corporate debt securities
|
—
|
|
|
181,079
|
|
|
—
|
|
|
181,079
|
|
||||
Total
|
$
|
—
|
|
|
$
|
442,262
|
|
|
$
|
—
|
|
|
$
|
442,262
|
|
|
December 31, 2018
|
||||||||||||||
|
Quoted
Prices in Active Markets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
Total Fair
Value |
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds
|
$
|
—
|
|
|
$
|
1,563
|
|
|
$
|
—
|
|
|
$
|
1,563
|
|
U.S. treasury bonds
|
—
|
|
|
40,355
|
|
|
—
|
|
|
40,355
|
|
||||
Commercial paper
|
—
|
|
|
60,422
|
|
|
—
|
|
|
60,422
|
|
||||
Certificates of deposit
|
—
|
|
|
36,840
|
|
|
—
|
|
|
36,840
|
|
||||
Asset-backed securities
|
—
|
|
|
47,714
|
|
|
—
|
|
|
47,714
|
|
||||
Corporate debt securities
|
—
|
|
|
163,324
|
|
|
—
|
|
|
163,324
|
|
||||
Total
|
$
|
—
|
|
|
$
|
350,218
|
|
|
$
|
—
|
|
|
$
|
350,218
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenue
|
$
|
2,047
|
|
|
$
|
2,075
|
|
|
$
|
1,993
|
|
Research and development
|
21,383
|
|
|
17,564
|
|
|
14,150
|
|
|||
Sales, general and administrative
|
11,723
|
|
|
9,975
|
|
|
7,230
|
|
|||
Total stock-based compensation
|
$
|
35,153
|
|
|
$
|
29,614
|
|
|
$
|
23,373
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Restricted stock units
|
$
|
31,811
|
|
|
$
|
25,864
|
|
|
$
|
19,455
|
|
Stock options
|
1,902
|
|
|
2,343
|
|
|
2,614
|
|
|||
Employee stock purchase plan
|
1,119
|
|
|
1,284
|
|
|
1,188
|
|
|||
Other awards
|
321
|
|
|
123
|
|
|
116
|
|
|||
Total stock-based compensation
|
$
|
35,153
|
|
|
$
|
29,614
|
|
|
$
|
23,373
|
|
|
Year Ended December 31,
|
|
2018
|
Risk-free interest rate
|
2.9%
|
Expected dividend yield
|
None
|
Expected volatility
|
53.5%
|
Expected term (in years)
|
6.3
|
|
Number of
Options
(in thousands)
|
|
Weighted-Average
Exercise Price
|
|
Weighted-Average
Remaining
Contractual Term
(in years)
|
|
Aggregate
Intrinsic Value
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
1,116
|
|
|
$
|
9.78
|
|
|
5.7
|
|
$
|
33,113
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Exercised
|
(382
|
)
|
|
$
|
6.95
|
|
|
|
|
$
|
18,548
|
|
Canceled
|
(19
|
)
|
|
$
|
15.85
|
|
|
|
|
|
|
|
Outstanding at December 31, 2019
|
715
|
|
|
$
|
11.14
|
|
|
4.6
|
|
$
|
41,036
|
|
Vested and expected to vest at:
|
|
|
|
|
|
|
|
|
|
|
||
December 31, 2019
|
715
|
|
|
$
|
11.14
|
|
|
4.6
|
|
$
|
41,036
|
|
Exercisable at:
|
|
|
|
|
|
|
|
|
|
|
||
December 31, 2019
|
671
|
|
|
$
|
9.99
|
|
|
4.4
|
|
$
|
39,212
|
|
Risk-free interest rate
|
1.3%
|
Expected dividend yield
|
None
|
Expected volatility
|
58.3%
|
Expected term (in years)
|
1.8
|
Grant date fair value of underlying shares
|
$40.38 - $55.02
|
Risk-free interest rate
|
2.3%
|
Expected dividend yield
|
None
|
Expected volatility
|
51.4%
|
Expected term (in years)
|
2.9
|
Grant date fair value of underlying shares
|
$34.59 - $39.02
|
Risk-free interest rate
|
2.5%
|
Expected dividend yield
|
None
|
Expected volatility
|
57.3%
|
Expected term (in years)
|
2.9
|
Grant date fair value of underlying shares
|
$44.43
|
|
Restricted Shares
(in thousands)
|
|
Weighted-Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2018
|
2,325
|
|
|
$
|
40.55
|
|
Granted
|
1,007
|
|
|
$
|
55.53
|
|
Vested
|
(890
|
)
|
|
$
|
30.95
|
|
Canceled
|
(491
|
)
|
|
$
|
56.33
|
|
Outstanding at December 31, 2019
|
1,951
|
|
|
$
|
48.69
|
|
|
Year Ended December 31,
|
||||
|
2019
|
|
2018
|
|
2017
|
Risk-free interest rate
|
2.4% - 2.5%
|
|
1.3 % - 2.1%
|
|
0.5% - 1.0%
|
Expected dividend yield
|
None
|
|
None
|
|
None
|
Expected volatility
|
38.9% - 45.5%
|
|
48.6 % - 66.4%
|
|
48.7% - 58.7%
|
Expected term (in years)
|
0.5
|
|
0.5
|
|
0.5
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
|
|
|
|||
Net income
|
$
|
32,839
|
|
|
$
|
4,916
|
|
|
$
|
38,508
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Weighted-average shares used to compute net income per share - basic
|
40,883
|
|
|
40,259
|
|
|
38,920
|
|
|||
Dilutive effect of stock options, unvested restricted stock and restricted stock units, and employee stock purchase plan
|
1,671
|
|
|
1,738
|
|
|
2,770
|
|
|||
Weighted-average shares used to compute net income per share - diluted
|
42,554
|
|
|
41,997
|
|
|
41,690
|
|
|||
Net income per share
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
0.80
|
|
|
$
|
0.12
|
|
|
$
|
0.99
|
|
Diluted
|
$
|
0.77
|
|
|
$
|
0.12
|
|
|
$
|
0.92
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Options to purchase common stock
|
37
|
|
|
91
|
|
|
87
|
|
Unvested restricted stock units
|
86
|
|
|
336
|
|
|
425
|
|
Employee stock purchase plan
|
—
|
|
|
1
|
|
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Warranty reserve, beginning of period
|
$
|
8,220
|
|
|
$
|
8,306
|
|
|
$
|
2,158
|
|
Provisions made to warranty reserve during the period
|
13,708
|
|
|
11,775
|
|
|
16,597
|
|
|||
Charges against warranty reserve during the period
|
(11,574
|
)
|
|
(11,861
|
)
|
|
(10,449
|
)
|
|||
Warranty reserve, end of period
|
$
|
10,354
|
|
|
$
|
8,220
|
|
|
$
|
8,306
|
|
•
|
continue receiving his or her base salary for a specified period following the date of termination (in the case of the Company’s chief executive officer, for 12 months, and, in the case of all other participants, for nine months);
|
•
|
Company contributions to the cost of health care continuation under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), for U.S. based eligible executive officers, or substantially equivalent medical benefits for non-U.S. based eligible executive officers, for up to 12 months following the date of termination of employment (or, to the extent a non-U.S. based eligible executive officer is then receiving a stipend from the Company in lieu of benefits coverage, continued payment of such stipend for up to 12 months following the date of termination of employment); and
|
•
|
the amount of any unpaid annual bonus determined by the Company’s board of directors to be payable to the executive officer for any completed bonus period which ended prior to the date of such executive officer’s termination. In addition, under the terms of the Severance Plan, in the case of an Involuntary Termination, all the executive officer’s outstanding equity awards that vest solely based on the passage of time will be accelerated and become vested to the extent the award would have vested if the executive had remained employed through a specified period following the date of termination (in the case of the Company’s chief executive officer, for 12 months, and, in the case of all other participants, for nine months). The vesting of outstanding performance-based equity awards in connection with an Involuntary Termination is determined by the terms of the applicable award agreements.
|
•
|
a single lump-sum payment in an amount equal to a 100% of his or her annual base salary:
|
•
|
a single lump sum payment in an amount equal to 100% of his or her target annual bonus for the year in which the termination of employment occurs;
|
•
|
Company contributions to the cost of health care continuation under COBRA, for U.S. based eligible executive officers, or substantially equivalent medical benefits for non-U.S. based eligible executive officers, for up to 12 months following the date of termination of employment (or, to the extent a non-U.S. based eligible executive officer is then receiving a stipend from the Company in lieu of benefits coverage, continued payment of such stipend for up to 12 months following the date of termination of employment); and
|
•
|
the amount of any unpaid annual bonus determined by the Company’s board of directors to be payable to the executive officer for any completed bonus period which ended prior to the date of such executive officer’s termination. In addition, under the terms of the Severance Plan, in the case of a Change in Control Termination, all of the executive officer’s outstanding unvested time-based equity awards will immediately vest in full on the date of such termination. The vesting of outstanding performance-based equity awards in connection with a Change in Control Termination is determined in accordance with the terms of the applicable award agreements.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
(62,991
|
)
|
|
$
|
(35,832
|
)
|
|
$
|
(30,030
|
)
|
Foreign
|
84,632
|
|
|
35,428
|
|
|
70,333
|
|
|||
Total
|
$
|
21,641
|
|
|
$
|
(404
|
)
|
|
$
|
40,303
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current income tax provision (benefit)
|
|
|
|
|
|
|
|
|
|||
Federal
|
$
|
135
|
|
|
$
|
(9,417
|
)
|
|
$
|
18,174
|
|
State
|
252
|
|
|
23
|
|
|
52
|
|
|||
Foreign
|
1,667
|
|
|
921
|
|
|
1,849
|
|
|||
Total current income tax provision (benefit)
|
$
|
2,054
|
|
|
$
|
(8,473
|
)
|
|
$
|
20,075
|
|
Deferred income tax (benefit) provision
|
|
|
|
|
|
|
|
|
|||
Federal
|
(7,114
|
)
|
|
2,944
|
|
|
(14,108
|
)
|
|||
State
|
(5,427
|
)
|
|
480
|
|
|
(4,083
|
)
|
|||
Foreign
|
(711
|
)
|
|
(271
|
)
|
|
(89
|
)
|
|||
Total deferred income tax (benefit) provision
|
(13,252
|
)
|
|
3,153
|
|
|
(18,280
|
)
|
|||
Total income tax (benefit) provision
|
$
|
(11,198
|
)
|
|
$
|
(5,320
|
)
|
|
$
|
1,795
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
|
|
||
Accrued expenses
|
$
|
8,748
|
|
|
$
|
3,517
|
|
Net operating loss carryforwards
|
16,624
|
|
|
18,641
|
|
||
Credit carryforwards
|
32,498
|
|
|
21,568
|
|
||
Lease liability
|
4,690
|
|
|
—
|
|
||
Stock-based compensation
|
4,200
|
|
|
3,561
|
|
||
Other
|
808
|
|
|
248
|
|
||
Total deferred tax assets
|
$
|
67,568
|
|
|
$
|
47,535
|
|
Deferred tax liabilities:
|
|
|
|
|
|
||
Depreciation
|
(161
|
)
|
|
(1,567
|
)
|
||
Right-of-use asset
|
(5,930
|
)
|
|
—
|
|
||
Other
|
(758
|
)
|
|
(868
|
)
|
||
Total deferred tax liabilities
|
(6,849
|
)
|
|
(2,435
|
)
|
||
Valuation allowance
|
(8,921
|
)
|
|
(6,383
|
)
|
||
Net deferred tax assets
|
$
|
51,798
|
|
|
$
|
38,717
|
|
Year Ended December 31,
|
|
Beginning
Balance
|
|
Additions
|
|
Reductions
|
|
Ending
Balance
|
||||||
2017
|
|
$
|
734
|
|
|
682
|
|
|
—
|
|
|
$
|
1,416
|
|
2018
|
|
$
|
1,416
|
|
|
4,967
|
|
|
—
|
|
|
$
|
6,383
|
|
2019
|
|
$
|
6,383
|
|
|
2,538
|
|
|
—
|
|
|
$
|
8,921
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Provision for income taxes at statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
(Decreases) increases resulting from:
|
|
|
|
|
|
|
|
|
Federal tax credits
|
(29.9
|
)
|
|
1,304.6
|
|
|
(15.3
|
)
|
Change in valuation allowance
|
11.7
|
|
|
(1,230.7
|
)
|
|
1.7
|
|
State tax expense, net of federal benefit
|
(36.4
|
)
|
|
1,058.0
|
|
|
(8.0
|
)
|
Meals and entertainment
|
0.3
|
|
|
(24.0
|
)
|
|
0.4
|
|
Stock-based compensation expense
|
(26.8
|
)
|
|
384.1
|
|
|
(32.9
|
)
|
Change in uncertain tax positions
|
8.6
|
|
|
(116.5
|
)
|
|
3.5
|
|
Change in federal rate due to tax reform
|
—
|
|
|
—
|
|
|
18.0
|
|
Transition tax
|
—
|
|
|
(9.6
|
)
|
|
57.7
|
|
APB23 state liability
|
(0.7
|
)
|
|
(2.0
|
)
|
|
—
|
|
Foreign rate differential
|
(77.3
|
)
|
|
1,598.6
|
|
|
(55.5
|
)
|
Foreign rate inclusion
|
84.0
|
|
|
(1,990.5
|
)
|
|
2.9
|
|
Other
|
(6.2
|
)
|
|
323.8
|
|
|
(3.0
|
)
|
Effective income tax rate
|
(51.7
|
)%
|
|
1,316.8
|
%
|
|
4.5
|
%
|
Balance at December 31, 2017
|
$
|
4,504
|
|
Increases for the tax positions taken during the year
|
470
|
|
|
Balance at December 31, 2018
|
$
|
4,974
|
|
Increases for the tax positions taken during the year
|
1,857
|
|
|
Balance at December 31, 2019
|
$
|
6,831
|
|
*
|
Less than 10% of revenue in the period indicated
|
(1)
|
Customer A was subject to U.S. Department of Commerce restrictions that prevented sales to this customer from April 15, 2018 through July 13, 2018.
|
(2)
|
Customer C was acquired by one of the Company’s other customers on October 1, 2018. The figures in the table above take into account all revenue for the combined customer for the year ended December 31, 2018 and after. Pro forma revenue for the combined customer would have been 15% for the year ended December 31, 2017.
|
|
December 31, 2019
|
|
December 31, 2018
|
||
A
|
28
|
%
|
|
30
|
%
|
B
|
16
|
%
|
|
13
|
%
|
D
|
*
|
|
|
10
|
%
|
F
|
*
|
|
|
17
|
%
|
G
|
10
|
%
|
|
*
|
|
*
|
Less than 10% of accounts receivable at the date indicated
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
X
|
18
|
%
|
|
18
|
%
|
|
19
|
%
|
Y
|
53
|
%
|
|
53
|
%
|
|
49
|
%
|
Z
|
*
|
|
|
*
|
|
|
10
|
%
|
*
|
Less than 10% of total purchases in the period indicated
|
|
2019
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue
|
$
|
105,216
|
|
|
$
|
111,183
|
|
|
$
|
119,591
|
|
|
$
|
128,673
|
|
Cost of revenue
|
55,374
|
|
|
60,096
|
|
|
60,512
|
|
|
67,999
|
|
||||
Gross profit
|
49,842
|
|
|
51,087
|
|
|
59,079
|
|
|
60,674
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development
|
30,953
|
|
|
28,976
|
|
|
28,649
|
|
|
40,122
|
|
||||
Sales, general and administrative
|
15,787
|
|
|
29,899
|
|
|
20,457
|
|
|
14,438
|
|
||||
Total operating expenses
|
46,740
|
|
|
58,875
|
|
|
49,106
|
|
|
54,560
|
|
||||
Income (loss) from operations
|
3,102
|
|
|
(7,788
|
)
|
|
9,973
|
|
|
6,114
|
|
||||
Total other income, net
|
2,394
|
|
|
2,847
|
|
|
2,490
|
|
|
2,509
|
|
||||
Income (loss) before benefit for income taxes
|
5,496
|
|
|
(4,941
|
)
|
|
12,463
|
|
|
8,623
|
|
||||
Benefit for income taxes
|
(1,481
|
)
|
|
(2,916
|
)
|
|
(2,642
|
)
|
|
(4,159
|
)
|
||||
Net income (loss)
|
$
|
6,977
|
|
|
$
|
(2,025
|
)
|
|
$
|
15,105
|
|
|
$
|
12,782
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
0.17
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.37
|
|
|
$
|
0.31
|
|
Diluted
|
$
|
0.17
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.35
|
|
|
$
|
0.30
|
|
|
2018
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue
|
$
|
72,941
|
|
|
$
|
65,003
|
|
|
$
|
94,814
|
|
|
$
|
107,133
|
|
Cost of revenue
|
48,870
|
|
|
39,798
|
|
|
49,981
|
|
|
54,122
|
|
||||
Gross profit
|
24,071
|
|
|
25,205
|
|
|
44,833
|
|
|
53,011
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development
|
24,445
|
|
|
24,340
|
|
|
24,696
|
|
|
28,925
|
|
||||
Sales, general and administrative
|
14,288
|
|
|
12,984
|
|
|
12,134
|
|
|
12,458
|
|
||||
Total operating expenses
|
38,733
|
|
|
37,324
|
|
|
36,830
|
|
|
41,383
|
|
||||
(Loss) income from operations
|
(14,662
|
)
|
|
(12,119
|
)
|
|
8,003
|
|
|
11,628
|
|
||||
Total other income, net
|
1,283
|
|
|
1,300
|
|
|
2,011
|
|
|
2,152
|
|
||||
(Loss) income before (benefit) provision for income taxes
|
(13,379
|
)
|
|
(10,819
|
)
|
|
10,014
|
|
|
13,780
|
|
||||
(Benefit) provision for income taxes
|
(4,301
|
)
|
|
(7,574
|
)
|
|
1,863
|
|
|
4,692
|
|
||||
Net (loss) income
|
$
|
(9,078
|
)
|
|
$
|
(3,245
|
)
|
|
$
|
8,151
|
|
|
$
|
9,088
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.23
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.20
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
(0.23
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
0.19
|
|
|
$
|
0.22
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
•
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and,
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
Exhibit
|
|
Description
|
|
|
|
2.1†
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3**
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2*
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
10.4*
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
10.12††
|
|
|
|
|
10.13††
|
|
|
|
|
|
10.14††
|
|
|
|
|
|
10.15
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17††
|
|
|
|
|
|
10.18††
|
|
|
|
|
|
10.19††
|
|
|
|
|
|
21.1**
|
|
|
|
|
|
23.1**
|
|
|
|
|
|
31.1**
|
|
|
|
|
|
31.2**
|
|
|
|
|
|
32.1***
|
|
|
|
|
|
32.2***
|
|
|
|
|
|
101.INS**
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
101.SCH**
|
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL**
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF**
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB**
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE**
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
104**
|
|
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
|
*
|
Indicates management contract or compensatory plan or arrangement.
|
**
|
Filed herewith.
|
***
|
Furnished herewith.
|
†
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
|
††
|
Confidential treatment requested as to certain portions, which portions have been omitted and filed separately with the Securities and Exchange Commission.
|
|
|
ACACIA COMMUNICATIONS, INC.
|
|
|
|
By:
|
/s/ Murugesan Shanmugaraj
|
|
Murugesan Shanmugaraj
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Murugesan Shanmugaraj
|
|
|
|
|
Murugesan Shanmugaraj
|
|
President, Chief Executive Officer and
|
|
February 18, 2020
|
|
|
Director (Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ John F. Gavin
|
|
|
|
|
John F. Gavin
|
|
Chief Financial Officer
|
|
February 18, 2020
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Francis J. Murphy
|
|
|
|
|
Francis J. Murphy
|
|
Vice President and Corporate Controller
|
|
February 18, 2020
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Vincent Roche
|
|
|
|
|
Vincent Roche
|
|
Chairman of the Board of Directors
|
|
February 18, 2020
|
|
|
|
|
|
/s/ David Aldrich
|
|
|
|
|
David Aldrich
|
|
Director
|
|
February 18, 2020
|
|
|
|
|
|
/s/ Peter Y. Chung
|
|
|
|
|
Peter Y. Chung
|
|
Director
|
|
February 18, 2020
|
|
|
|
|
|
/s/ Benny P. Mikkelsen
|
|
|
|
|
Benny P. Mikkelsen
|
|
Director
|
|
February 18, 2020
|
|
|
|
|
|
/s/ Stan J. Reiss
|
|
|
|
|
Stan J. Reiss
|
|
Director
|
|
February 18, 2020
|
|
|
|
|
|
/s/ John Ritchie
|
|
|
|
|
John Ritchie
|
|
Director
|
|
February 18, 2020
|
|
|
|
|
|
/s/ Laurinda Y. Pang
|
|
|
|
|
Laurinda Y. Pang
|
|
Director
|
|
February 18, 2020
|
|
|
|
Name of Subsidiary
|
|
Jurisdiction of Organization
|
Acacia Communications (Canada) Limited
|
|
Canada
|
Acacia Communications Europe ApS
|
|
Denmark
|
Acacia Communications Holdings, Ltd.
|
|
Bermuda
|
Acacia Communications (Ireland) Limited
|
|
Ireland
|
Acacia Communications (Germany) GmbH
|
|
Germany
|
Acacia Communications (Shenzhen) Limited
|
|
China
|
ACIA Communications Technology (India) Private Limited
|
|
India
|
Acacia Technologies (UK) Limited
|
|
United Kingdom
|
1.
|
I have reviewed this Annual Report on Form 10-K of Acacia Communications, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
|
5.
|
The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
|
|
|
Acacia Communications, Inc.
|
|
|
|
|
|
Date: February 18, 2020
|
|
By:
|
/s/ Murugesan Shanmugaraj
|
|
|
|
Murugesan Shanmugaraj
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Acacia Communications, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
|
5.
|
The Registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.
|
|
|
Acacia Communications, Inc.
|
|
|
|
|
|
Date: February 18, 2020
|
|
By:
|
/s/ John F. Gavin
|
|
|
|
John F. Gavin
|
|
|
|
Chief Financial Officer
|
|
|
Acacia Communications, Inc.
|
|
|
|
|
|
Date: February 18, 2020
|
|
By:
|
/s/ Murugesan Shanmugaraj
|
|
|
|
Murugesan Shanmugaraj
|
|
|
|
President and Chief Executive Officer
|
|
|
Acacia Communications, Inc.
|
|
|
|
|
|
Date: February 18, 2020
|
|
By:
|
/s/ John F. Gavin
|
|
|
|
John F. Gavin
|
|
|
|
Chief Financial Officer
|