Earnings release
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NEWS RELEASE Power Integrations Reports Third-Quarter Financial Results 2026-11-04 Revenue increased ve percent sequentially to $125.5 million; GAAP earnings were $0.32 per diluted share; non- GAAP earnings were $0.46 per diluted share Cash ow from operations was $42.6 million; quarterly dividend to increase to $0.22 per share in 2027 SAN JOSE, Calif.--(BUSINESS WIRE)-- Power Integrations (NASDAQ: POWI) today announced nancial results for the quarter ended September 30, 2026. Revenue for the third quarter was $125.5 million, up ve percent from the prior quarter and up six percent from the third quarter of 2025. GAAP net income for the third quarter was $18.3 million or $0.32 per diluted share compared to $0.17 per diluted share in the prior quarter and a net loss of $0.02 per diluted share in the third quarter of 2025. Cash ow from operations for the third quarter was $42.6 million. In addition to its GAAP results, the company provided certain measures not calculated according to GAAP. Non- GAAP results exclude stock-based compensation under ASC 718-10, amortization of acquisition-related intangible assets, an accrual for a judgment in a legal matter, a restructuring charge recognized in the rst quarter of 2026, and the tax e ects of these items. Non-GAAP net income for the third quarter of 2026 was $26.1 million or $0.46 per diluted share compared to $0.37 per diluted share in the prior quarter and $0.36 per diluted share in the third quarter of 2025. A reconciliation of GAAP to non-GAAP nancial results and outlook is included with the tables accompanying this press release. Power Integrations CEO Jen Lloyd commented: "Revenue grew ve percent over the prior quarter driven by PowiGaN™ products as well as continued strength in the industrial market, where revenue is up 13 percent year-to- date. We also delivered strong earnings growth in the quarter re ecting our continued focus on expense discipline 1
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and pro tability. Power is becoming a critical constraint thanks to AI and electri cation, calling for dramatic advances in e ciency and power density. Our high-voltage technology and system expertise are well aligned with these challenges, and we are excited about our product roadmap and the opportunities ahead to drive shareholder value." Power Integrations paid a dividend of $0.215 per share on September 30, 2026 to stockholders of record as of August 31, 2026. A dividend of $0.215 per share will be paid on December 31, 2026, to stockholders of record as of November 30, 2026. The company expects to pay quarterly dividends of $0.22 per share for each of the four quarters of 2027. Financial Outlook The company issued the following outlook for the fourth quarter of 2026: Revenue is expected to be in a range of $118.0 million to $126.0 million. GAAP gross margin is expected to be between 54.0 percent and 55.0 percent, and non-GAAP gross margin is expected to be between 54.5 percent and 55.5 percent. GAAP operating expenses are expected to be between $53.0 million and $54.0 million, and non-GAAP operating expenses are expected to be between $42.5 million and $43.5 million. GAAP operating margin is expected to be between 10.0 percent and 12.0 percent, and non-GAAP operating margin is expected to be between 19.0 percent and 21.0 percent. Conference Call Information and Supplemental Materials Power Integrations management will hold a conference call today at 1:30 p.m. Paci c time. A live webcast of the call will be available on the company's investor web page, https://investors.power.com, along with supplemental materials related to today’s earnings release. About Power Integrations Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion. The company’s products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the e cient transmission, conversion and consumption of power in applications ranging from milliwatts to megawatts in applications such as AI data centers, EVs and high-voltage DC infrastructure. For more information, please visit www.power.com. Note Regarding Use of Non-GAAP Financial Measures 2
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The non-GAAP measures provided in this press release, including non-GAAP earnings per diluted share, non-GAAP net income, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP operating margin, should not be considered a substitute for, or superior to, measures of nancial performance prepared in accordance with generally accepted accounting principles (GAAP) in the United States. The non-GAAP nancial measures are presented only as supplemental information to understand the Company’s operating results. In addition to the Company's consolidated nancial statements, which are presented according to GAAP, the Company provides certain non-GAAP nancial information that excludes stock-based compensation expenses recorded under ASC 718-10, amortization of acquisition-related intangible assets, an accrual for a judgment in a legal matter, a restructuring charge recognized in the rst quarter of 2026, and the tax e ects of these items. The Company considers these non-GAAP nancial measures to be important because they provide additional insight into the Company’s on-going performance; the Company uses these measures in its nancial and operational decision- making and, with respect to non-GAAP operating income, in setting performance targets for compensation purposes. The Company believes that these non-GAAP measures o er important analytical tools to help investors understand its operating results, to enable more meaningful and consistent period-to-period comparisons, and to facilitate comparability with the results of companies that provide similar measures. Non-GAAP measures have limitations as analytical tools, do not have any standardized meanings and are therefore unlikely to be comparable to similarly titled measures presented by other companies, and are not meant to be considered in isolation or as a substitute for GAAP nancial information. For example, stock-based compensation is an important component of the Company’s compensation mix and will continue to result in signi cant expenses in the Company’s GAAP results for the foreseeable future but is not re ected in the non-GAAP measures. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release. Note Regarding Forward-Looking Statements Certain statements included in this press release that are not historical facts are forward-looking statements within the meaning of the federal securities laws, including the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or the Company’s future nancial or operating performance and are sometimes accompanied by words such as “believe,” “continue,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “predict,” “plan,” “may,” “should,” “will,” “would,” “potential,” “seem,” “seek,” “outlook,” and similar expressions that concern the Company’s expectations, strategy, priorities, plans, or intentions, predict or indicate future events or trends, or that are not statements of historical matters. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Forward-looking statements in this press release include, without limitation, the Company’s nancial and operating performance outlook for the fourth quarter of 2026, the Company's expectations regarding GaN products in development and the markets these products are intended to serve, as 3
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well as the Company’s anticipated upcoming dividends, including the timing and amount of such dividends, among others. These statements are based on various assumptions, whether or not identi ed in this press release. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as a guarantee, an assurance, a prediction, or a de nitive statement of fact or probability. Actual events and circumstances are very di cult or impossible to predict and will di er from the assumptions. Many actual events and circumstances are beyond the control of the Company. The Company’s expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to di er materially from the forward-looking statements in this press release, including but not limited to: (i) the risks that the revenue growth driven by PowiGaN™ products as well as continued strength in the industrial market may not continue to the extent or in the time frame anticipated, or at all; (ii) the risks that the strong earnings growth and continued focus on expense discipline and pro tability may not continue to the extent anticipated, or at all; (iii) the risks that the critical constraints to power, due to AI, electri cation, or otherwise, and the associated call for dramatic advances in e ciency and power density may not continue to the extent or in the time frame anticipated, or at all; (iv) the risks that the Company’s high-voltage technology and system expertise may not be well aligned with these challenges to the extent anticipated, and that the product roadmap and opportunities may not drive shareholder value to the extent or in the time frame anticipated, or at all; (v) the risks that the Company may not be in a position to pay the $0.215 per share dividend on December 31, 2026, or a dividend of $0.22 for each of the quarters in 2027, as currently anticipated, due to unforeseen circumstances; (vi) the risks that the Company may be unable to meet one or more of the elements of the nancial outlook for the fourth quarter of 2026, including expected revenue, GAAP and non-GAAP gross margins, GAAP and non-GAAP operating expenses, and GAAP and non-GAAP operating margins due to unforeseen circumstances; (vii) the Company’s ability to forecast its performance; (viii) changes in trade policies, in particular the escalation and imposition of new and higher tari s, which could reduce demand for end products that incorporate the Company's integrated circuits and/or place pressure on the Company's prices as the Company's customers seek to o set the impact of increased tari s on their own products; (ix) the Company’s ability to supply products and its ability to conduct other aspects of its business, such as competing for new design wins; (x) changes in global economic and geopolitical conditions, including such factors as in ation, armed con icts, and trade negotiations, which may impact the level of demand for the Company’s products; (xi) potential changes and shifts in customer demand away from end products that utilize the Company's integrated circuits to end products that do not incorporate the Company's products; (xii) the e ects of competition, which may cause the Company’s revenue to decrease or cause the Company to decrease its selling prices for its products; (xiii) unforeseen costs and expenses, and unfavorable uctuations in component costs or operating expenses resulting from changes in commodity prices and/or exchange rates; and (xiv) product development delays and defects and market acceptance of the new products. These risks and uncertainties may be ampli ed by current or future global con icts and current and potential trade restrictions, trade tensions, and tari s, all of which continue to cause economic uncertainty. You should carefully consider the foregoing factors and the other risks and uncertainties, 4
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including those more fully described in the "Risk Factors" section of the Company’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q that the Company has caused to be led with the U.S. Securities and Exchange Commission, or the SEC, and other documents led by the Company or that will be led by the Company from time to time with the SEC. These lings identify and address other important risks and uncertainties that could cause actual events and results to di er materially from those contained in the forward- looking statements. Forward-looking statements in this press release are based only on information currently available to the Company and speak only as of the date they are made. Investors are cautioned not to put undue reliance on forward-looking statements, and the Company disclaims any obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. The Company gives no assurance that the Company will achieve any of its expectations. Power Integrations, PowiGaN, and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners. POWER INTEGRATIONS, INC.CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)(in thousands, except per-share amounts)Three months endedNine months ended September 30, 2026June 30, 2026September 30, 2025September 30, 2026September30, 2025 Net revenue $ 125,476$ 118,939$ 118,919$ 352,723$ 340,300 Cost of revenue 55,759 54,30254,068 161,431153,260 Gross pro t 69,717 64,63764,851 191,292187,040 Operating expenses:Research and development25,089 27,16326,696 78,507 76,782Selling, general and administrative27,515 28,05227,829 80,011 85,408Other operating expenses (income)(2,012) 522 14,279 (2,909) 23,430 Restructuring and related charges— — — 6,204 — Total operating expenses50,592 55,73768,804 161,813185,620 Income (loss) from operations19,125 8,900 (3,953) 29,479 1,420 Other income 2,077 2,333 2,555 6,876 8,412 Income (loss) before income taxes21,202 11,233(1,398) 36,355 9,832 Provision for (bene t from) income taxes2,885 1,400 (42) 4,905 1,029 NET INCOME (LOSS) $ 18,317$ 9,833$ (1,356) $ 31,450$ 8,803 Earnings (loss) per share: Basic $ 0.33$ 0.18$ (0.02) $ 0.56$ 0.16 Diluted $ 0.32$ 0.17$ (0.02) $ 0.56$ 0.16 Shares used in per share calculation: Basic 55,850 55,74855,796 55,702 56,310 Diluted 56,608 56,69655,796 56,448 56,586 5
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POWER INTEGRATIONS, INC.CONSOLIDATED BALANCE SHEETS (Unaudited)(in thousands)September 30, 2026 December 31, 2025ASSETS Current assets:Cash and cash equivalents $ 96,835$ 58,755Short-term investments 191,278 190,755Accounts receivable, net 27,921 18,254Inventories 150,293 166,887 Prepaid expenses and other current assets21,032 23,678 Total current assets 487,359 458,329Property and equipment, net 139,973 146,536Intangible assets, net 6,726 7,244Goodwill 95,271 95,271 Other non-current assets 60,100 64,827 TOTAL ASSETS $ 789,429$ 772,207 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:Accounts payable $ 27,309$ 33,963Accrued payroll and related expenses 13,686 13,840 Other accrued liabilities 20,857 22,558 Total current liabilities 61,852 70,361Long-term liabilities Other liabilities 30,293 29,001 TOTAL LIABILITIES 92,145 99,362Stockholders' equity:Common stock 20 20Additional paid-in capital 31,987 —Accumulated other comprehensive loss(4,255) (1,105) Retained earnings 669,532 673,930 TOTAL STOCKHOLDERS' EQUITY 697,284 672,845 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$ 789,429$ 772,207 POWER INTEGRATIONS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)(in thousands)Three Months EndedNine Months Ended September30, 2026 September30, 2025 September30, 2026 September30, 2025 CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss) $ 18,317$ (1,356) $ 31,450$ 8,803Adjustments to reconcile net income to net cash provided by operatingactivities:Depreciation 6,175 6,542 18,79420,788Amortization of intangible assets167 208 518 623Loss (gain) on disposal of property and equipment87 (108) 582 (108)Stock-based compensation expense9,363 21,20526,92839,965Accretion of discount on investments(123) (198) (423) (919)Deferred income taxes 523 (7) 2,281 (861)Decrease in accounts receivable allowance for credit losses— — — (381)Change in operating assets and liabilities:Accounts receivable (2,387) (3,932) (10,911) (3,962)Inventories 7,497 3,778 16,594 994Prepaid expenses and other assets4,272 (1,204) 8,197 5,201Accounts payable 2,455 5,767 (4,755) 6,015 Other accrued liabilities (3,777) (841) (4,661) 9,154 Net cash provided by operating activities42,56929,85484,59485,312 CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment(6,070) (5,694) (12,370) (17,346)Proceeds from sale of property and equipment— 150 — 150Purchases of investments (14,583) (11,079) (38,659) (58,775) Proceeds from sales and maturities of investments13,92420,16635,279116,658 Net cash provided by (used in) investing activities(6,729) 3,543 (15,750) 40,687 CASH FLOWS FROM FINANCING ACTIVITIES:I f k d l kl 2394 2539 5084 5326 6
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Issuance of common stock under employee stock plans2,394 2,539 5,084 5,326Repurchase of common stock — (42,440) — (98,098)Payments of dividends to stockholders(12,011) (11,785) (35,848) (35,553)Proceeds from borrowings on line of credit— — — 13,000 Repayments on line of credit — — — (13,000) Net cash used in nancing activities(9,617) (51,686) (30,764) (128,325) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS26,223(18,289) 38,080(2,326) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD70,61266,93558,75550,972 CASH AND CASH EQUIVALENTS AT END OF PERIOD$ 96,835$ 48,646$ 96,835$ 48,646 POWER INTEGRATIONS, INC.SUPPLEMENTAL INFORMATION (Unaudited)(in thousands)Three months endedNine months ended September30, 2026June 30, 2026September30, 2025September30, 2026September30, 2025 Stock-based compensation expense included in:Cost of revenue $ (555) $ 707$ 517$ 621$ 1,766Research and development3,014 3,036 2,850 7,954 8,290Selling, general and administrative7,164 6,993 4,284 17,68316,355Other operating expenses (income)(260) 522 13,554(1,157) 13,554 Restructuring and related charges— — — 1,827 — Total stock-based compensation expense$ 9,363$ 11,258$ 21,205$ 26,928$ 39,965 Cost of revenue includes: Amortization of acquisition-related intangible assets$ 147$ 147$ 147$ 440$ 440 Three months endedNine months ended September30, 2026June 30, 2026September30, 2025September30, 2026September30, 2025 Revenue Mix by End MarketCommunications 12% 10% 11% 11% 11%Computer 13% 11% 13% 12% 13%Consumer 32% 36% 34% 35% 37%Industrial 43% 43% 42% 42% 39% Nine Months EndedSeptember 30, 2026RECONCILIATION OF FREE CASH FLOW Cash ows from operations $ 84,594 Purchases of property and equipment (12,370) Free cash ow $ 72,224 POWER INTEGRATIONS, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS (Unaudited)(in thousands, except per-share amounts)Three Months EndedNine Months Ended September30, 2026June 30, 2026 September30, 2025 September30, 2026 September30, 2025RECONCILIATION OF GROSS PROFIT GAAP gross pro t $ 69,717$ 64,637$ 64,851$ 191,292$ 187,040GAAP gross margin 55.6% 54.3% 54.5% 54.2% 55.0%L 7
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Less:Stock-based compensation included in cost of revenue(555) 707 517 621 1,766Amortization of acquisition-related intangible assets147 147 147 440 440 Restructuring and related charges in cost of revenue (c)— — — 365 — Total (408) 854 664 1,426 2,206 Non-GAAP gross pro t$ 69,309$ 65,491$ 65,515$ 192,718$ 189,246 Non-GAAP gross margin55.2% 55.1% 55.1% 54.6% 55.6% Three Months EndedNine Months Ended September30, 2026June 30, 2026 September30, 2025 September30, 2026 September30, 2025RECONCILIATION OF OPERATING EXPENSES GAAP operating expenses$ 50,592$ 55,737$ 68,804$ 161,813$ 185,620Less:Stock-based compensation unrelated to restructuring10,178 10,029 7,134 25,637 24,645Other operating expenses (income) - stock-basedcompensation related to former CEO (a)(260) 522 13,554(1,157) 13,554Other operating expenses (income) - litigation related(b) (1,752) — 725 (1,752) 9,876Restructuring and related charges (c)— — — 6,204 — Total 8,166 10,55121,41328,932 48,075Non-GAAP operating expenses$ 42,426$ 45,186$ 47,391$ 132,881$ 137,545 POWER INTEGRATIONS, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS (Unaudited)(in thousands, except per-share amounts)Three Months EndedNine Months Ended September30, 2026June 30, 2026 September30, 2025 September30, 2026 September30, 2025RECONCILIATION OF INCOME (LOSS) FROMOPERATIONS GAAP income (loss) from operations$ 19,125$ 8,900$ (3,953) $ 29,479$ 1,420GAAP operating margin15.2% 7.5% (3.3%) 8.4% 0.4%Add:Stock-based compensation unrelated to restructuring9,623 10,736 7,651 26,25826,411Amortization of acquisition-related intangible assets147 147 147 440 440Other operating expenses (income) - stock-basedcompensation related to former CEO (a)(260) 522 13,554(1,157) 13,554Other operating expenses (income) - litigation related (b)(1,752) — 725 (1,752) 9,876Restructuring and related charges (c)— — — 6,569 — Total 7,758 11,40522,07730,35850,281Non-GAAP income from operations$ 26,883$ 20,305$ 18,124$ 59,837$ 51,701 Non-GAAP operating margin21.4% 17.1% 15.2% 17.0% 15.2% Three Months EndedNine Months Ended September30, 2026June 30, 2026 September30, 2025 September30, 2026 September30, 2025RECONCILIATION OF PROVISION FOR (BENEFITFROM) INCOME TAXES GAAP provision for (bene t from) income taxes$ 2,885$ 1,400$ (42) $ 4,905$ 1,029GAAP e ective tax rate 13.6% 12.5% (3.0%) 13.5% 10.5%Tax e ect of adjustments to GAAP results (d)24 (363) (527) (946) (1,159) 8
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Non-GAAP provision for income taxes$ 2,861$ 1,763$ 485$ 5,851$ 2,188 Non-GAAP e ective tax rate9.9% 7.8% 2.3% 8.8% 3.6% POWER INTEGRATIONS, INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS (Unaudited)(in thousands, except per-share amounts)Three Months EndedNine Months Ended September30, 2026June 30, 2026 September30, 2025 September30, 2026 September30, 2025RECONCILIATION OF NET INCOME (LOSS) PERSHARE (DILUTED) GAAP net income (loss)$ 18,317$ 9,833$ (1,356) $ 31,450$ 8,803Adjustments to GAAP net income (loss):Stock-based compensation unrelated to restructuring9,623 10,736 7,651 26,25826,411Amortization of acquisition-related intangible assets147 147 147 440 440Other operating expenses (income) - stock-basedcompensation related to former CEO (a)(260) 522 13,554(1,157) 13,554Other operating expenses (income) - litigation related (b)(1,752) — 725 (1,752) 9,876Restructuring and related charges (c)— — — 6,569 —Tax e ect of adjustments to GAAP results (d)24 (363) (527) (946) (1,159) Total 7,782 11,04221,55029,41249,122Non-GAAP net income $ 26,099$ 20,875$ 20,194$ 60,862$ 57,925 Average shares outstanding for calculation of non-GAAP netincome per share (diluted)56,60856,69656,16256,44856,586 GAAP net income (loss) per share (diluted)$ 0.32$ 0.17$ (0.02) $ 0.56$ 0.16 Non-GAAP net income per share (diluted)$ 0.46$ 0.37$ 0.36$ 1.08$ 1.02 _____________________________________(a)Other operating expenses (income) consists of stock-based compensation expense (bene t) resulting from the initial 2025 modi cation of equityawards associated with an executive's employment transition and retirement arrangements and subsequent quarterly revised estimates of theportion of the awards that may ultimately vest subject to continuous service and based on the Company's forecasted performance.(b)Other operating expenses (income) also consists of a judgment in a legal matter which was settled in the quarter ended September 30, 2026,resulting in a reduction of the reserve previously established for the judgment.(c)Restructuring and related charges are associated with the Company's February 2026 restructuring action and consist primarily of employeeseverance.(d)Tax e ect of items excluded from non-GAAP results relate to the tax e ect of non-GAAP adjustments using a non-GAAP e ective tax rate of 9.9%and 8.8% for the three and nine months ended September 30, 2026, respectively. POWER INTEGRATIONS, INC.RECONCILIATION OF NON-GAAP MEASURES TO GAAP IN FOURTH-QUARTER 2026 OUTLOOK(dollar amounts in millions) RECONCILIATION OF GROSS MARGIN OUTLOOKLOW HIGH GAAP gross margin outlook 54.0% 55.0%Adjustments to reconcile GAAP to non-GAAPStock-based compensation included in cost of revenue0.4% 0.4% Amortization of acquisition-related intangible assets0.1% 0.1% Non-GAAP gross margin outlook 54.5% 55.5% RECONCILIATION OF OPERATING EXPENSE OUTLOOKLOW HIGH GAAP operating-expense outlook $ 53.0 $ 54.0Adjustments to reconcile GAAP to non-GAAP Stock-based compensation 10.5 10.5 Non-GAAP operating-expense outlook $ 42.5 $ 43.5 9
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RECONCILIATION OF OPERATING MARGIN OUTLOOKLOW HIGH GAAP operating margin outlook 10.0% 12.0%Adjustments to reconcile GAAP to non-GAAPStock-based compensation 8.9% 8.9% Amortization of acquisition-related intangible assets0.1% 0.1% Non-GAAP operating margin outlook 19.0% 21.0% Joe Shi er Power Integrations, Inc. (408) 414-8528 joe@power.com Source: Power Integrations, Inc. 10