ADTRAN Holdings, Inc. 10-K

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes included in Part II, Item 8 of this report. We have omitted discussion of the earliest of the three years of financial condition and results of operations and this information can be found in Part I, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations”, Part I, Item 1A, “Risk Factors”, and Part I, Item 1, “Business”, included in Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on May 20, 2025 (the "2024 Form 10-K/A"), which is available free of charge on the SEC's website at http://www.sec.gov and on our website at www.adtran.com . This discussion is designed to provide the reader with information that will assist in understanding our consolidated financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our consolidated financial statements. See “Cautionary Note Regarding Forward-Looking Statements” on page 2 of this report for a description of important factors that could cause actual results to differ from expected results. See also Part I, Item 1A, Risk Factors, of this Form 10-K. Overview The Company is a leading global provider of networking and communications platforms, software, systems and services focused on carrier networks, data center interconnect for private enterprise networks and mission critical infrastructure. It is serving a diverse domestic and international customer base in multiple countries that includes Large, Medium and Small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders; cable/MSOs; SMBs; distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications; hyper-scalers, neocloud and content providers and data center companies; and federal, state and local government agencies. Our innovative solutions and services enable voice, data, video and internet-communications across a variety of network infrastructures and are currently in use by millions worldwide. We support our customers through our direct global sales organization and our distribution networks. Our success depends upon our ability to have customers adopt our technology, increase unit volume and market share through the introduction of new products and succeeding generations of products having optimal selling prices and increased functionality as compared to both the prior generation of a product and the products of competitors in order to gain market share. To service our customers and grow revenue, we are continually conducting research and developing new products addressing customer needs and testing those products for the specific requirements of the particular customers. We offer a broad portfolio of flexible software and hardware network solutions and services that enable Service Providers to meet today’s service demands while enabling them to transition to the fully converged, scalable, highly-automated, cloud-controlled voice, data, internet and video network of the future. In addition to our global headquarters in Huntsville, Alabama, and our European headquarters in Munich, Germany, we have sales and research and development facilities in strategic global locations. The Company solely owns ADTRAN, Inc. and is the majority shareholder of Adtran Networks. Adtran is a leading global provider of open, disaggregated networking and communications solutions. Adtran Networks is a global provider of network solutions for data, storage, voice and video services. We believe that the combined technology portfolio can best address current and future customer needs for high-speed connectivity from the network core to the end consumer, especially upon the convergence of solutions at the network edge. The chief operating decision maker regularly reviews the Company’s financial performance based on two reportable segments: (1) Network Solutions and (2) Services & Support. In addition to operating under two reportable segments, the Company also reports revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions. Our Subscriber Solutions portfolio is used by Service Providers to terminate their access services infrastructure at customers' premises while providing an immersive and interactive experience for residential, business and wholesale subscribers. This revenue category includes hardware and software based products and services. These solutions include our Mosaic One SaaS applications featuring AI driven operations, fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers and cloud software solutions covering a mix of subscriber types. Our Access & Aggregation Solutions are solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity. This revenue category includes hardware- and software-based products and services. Our solutions within this category are a mix of fiber access and aggregation platforms, precision network synchronization and timing solutions and access orchestration solutions that ensure highly reliable and efficient network performance. 50 Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber. This revenue category includes hardware and software based products and services. Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems and automation platforms that are used to build high-scale, secure and assured optical networks. Adtran Networks Domination and Profit and Loss Transfer Agreement The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, which was executed on December 1, 2022, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena). Under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will generally absorb the annual net loss incurred by Adtran Networks. The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2025 and it will apply to any net loss generated by Adtran Networks in 2026. Additionally, and subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, the DPLTA provides that Adtran Networks shareholders (other than us) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of €17.21 per share plus guaranteed interest (the "Exit Compensation"), or (ii) to remain Adtran Networks shareholders and receive a recurring compensation in cash of €0.52 per share for each full fiscal year of Adtran Networks (the “Annual Recurring Compensation”). The guaranteed interest component under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid. The guaranteed interest rate is 5.0% plus a variable component that was 1.27% as of December 31, 2025. The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year). With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 28, 2025, and therefore, the Annual Recurring Compensation was paid on July 1, 2025. With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting. The adequacy of both forms of compensation has been challenged by minority shareholders of Adtran Networks via court-led appraisal proceedings under German law, and it is possible that the courts in such appraisal proceedings may adjudicate a higher Exit Compensation (including interest thereon) or Annual Recurring Compensation than agreed upon in the DPLTA. The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023. However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ). Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the trial on the merits of the DPLTA has recommenced. It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved. Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond. For the year ended December 31, 2025, 2.0 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of approximately €40.2 million, or approximately $46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders. For the year ended December 31, 2024, approximately 0.8 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of €15.7 million, or approximately $17.4 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders. In summary, the Company believes that its cash and cash equivalents, working capital management initiatives and availability to access cash under the Wells Fargo credit facility or other future sources of capital will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months, from the issuance of these financial statements. See Note 10, Credit Agreement, for additional information regarding the terms of the Amendments of the Credit Agreement. We currently hold 36,871,784 no-par value bearer shares of Adtran Networks, representing 70.8% of Adtran Networks outstanding shares as of December 31, 2025. 51 The foregoing description of the DPLTA does not purport to be complete and is qualified in its entirety by reference to the DPLTA, a non-binding English translation of which is incorporated by reference to Exhibit 10.14 of this Annual Report on Form 10-K. Financial Performance and Trends We ended 2025 with a year-over-year revenue increase of 17.5%, driven by increased volume of sales activity due to a return of normalized customer spending, increased growth due to fiber expansion brought about by higher service provider spending, vendor consolidation, a continuing shift away from high-risk vendors, increased demand for modernizing and upgrading critical infrastructure within governments, utilities, large enterprises, and bandwidth hungry applications including, AI. During 2025, we had one customer with revenues greater than 10.0% which was an international Service Provider, and our next five largest customers comprised 20.4% of our revenue. Our year-over-year U.S. revenue increased by 20.7% due to a return to normalized customer spending and fiber expansion. Internationally, our year-over-year revenue increased by 15.0%, primarily driven by fiber expansion. For 2025 our Access & Aggregation, Subscriber Solutions and Optical Networking revenue categories all experienced increased volume of sales activity year-over-year due to growth across geographies, most product lines, and the continued expansion of our customer base. Our revenues have fluctuated in recent years and they may continue to fluctuate going forward. However, during the year ended December 31, 2025, our operating results improved due to recovery in end markets, including a decrease in inventories held by customers, improving margins and tight operational cost controls. Additionally, public funding through the Broadband Equity, Access and Deployment Program ("BEAD") is expected to commence in 2026, which provides a positive outlook for the future. We have also taken steps to transform our business into a leaner, more efficient and more profitable company, including the completion of our business efficiency program (the "Business Efficiency Program"). Nevertheless, our operating expenses are relatively fixed in the short term. Our operating results improved due to slowly stabilizing revenues, improving margins and tight operational cost controls. In addition, we continue to support our customer demand for our products by working with our suppliers, contract manufacturers, distributors, and customers to address and to limit potential disruptions to our operations and order fulfillment. Moreover, maintaining sufficient inventory levels to assure prompt delivery of our products increases the amount of inventory that may become obsolete and increases the risk that the obsolescence of this inventory may have an additional adverse effect on our business and operating results beyond the effects of the most recent inventory write-downs. On the other hand, not maintaining sufficient inventory levels to ensure prompt delivery of our products may cause us to incur expediting costs to meet customer delivery requirements, which may negatively impact our operating results. Trade Policy/Tariffs During the year ended December 31, 2025 and continuing to the date of this filing, the U.S. introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, with certain exemptions. On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the IEEPA. The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs (including tariffs on semiconductors, which are expected to increase in June 2027). Furthermore, recent U.S. trade actions have triggered retaliatory actions by certain affected countries, and other foreign governments may impose further trade measures, including reciprocal tariffs, on certain U.S. goods in the future. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business. These changes in U.S. trade policy and subsequent retaliatory actions have the potential to materially alter various input costs for the Company. Moreover, related costs and the uncertainty arising from such changes in trade policy may result in shifts in customer behavior, such as decreased demand. These impacts could have a negative effect on our financial results, including our revenue and profitability. To help mitigate this, we have taken steps to diversify our supply chain, manufacturing locations and relationships with suppliers to give us added flexibility. For example, beginning in the first quarter of 2026 our suppliers will be able to ship products directly to a free trade zone which is set to open at our Huntsville, Alabama facility, which we expect to further mitigate the impact of tariffs. See “Changes in trade policy in the U.S. and other countries, including the imposition of additional tariffs and the resulting consequences, may adversely impact our gross profits, gross margins, results of operations and financial condition,” in Part I, Item 1A “Risk Factors” of this report for further discussion of the risks associated with the changes to U.S. and foreign trade policies. Enactment of the “One Big Beautiful Bill Act” On July 4, 2025, the “One Big Beautiful Bill Act” (OBBBA) was signed into law in the U.S. Key corporate tax provisions include the restoration of 100% bonus depreciation under Section 168(k) for qualified property acquired after January 19, 2025; immediate expensing of domestic research and experimental (R&E) expenditures under new Section 174A (with foreign R&E continuing to be capitalized and amortized over 15 years), effective for tax years beginning after December 31, 2024; restoration of the EBITDA-based limitation on business interest expense under Section 163(j) for taxable years beginning after December 31, 2024; updates to certain international provisions, including Net CFC Tested Income (NCTI, formerly GILTI) and Foreign-Derived Deduction Eligible Income 52 (FDDEI, formerly FDII), with permanent Section 250 deductions effective for tax years beginning after December 31, 2025; amendments to energy credits, including accelerated phase outs or modifications for certain clean energy incentives; and expanded Section 162(m) aggregation requirements that apply the $1 million deduction limitation on an aggregate basis across controlled group members. In accordance with ASC 740, the effects of the new tax law are recognized in the period of enactment. The Company is currently evaluating the impact of the OBBBA; however, it does not currently expect the law to have a material impact on its effective tax rate or cash flows in the current fiscal year. Issuance of Convertible Senior Notes On September 19, 2025, the Company issued $201.3 million principal amount of its 3.75% convertible senior notes due 2030 (the “2030 Notes” or “Notes”). The 2030 Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of September 19, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Pursuant to the purchase agreement between the Company and Evercore Group, L.L.C., as representative of the several initial purchasers of the Notes, the Company granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional approximately $26.3 million principal amount of Notes. The Notes issued on September 19, 2025 include approximately $26.3 million principal amount of Notes issued pursuant to the full exercise by the initial purchasers of such option. See Note 11 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for more details. Capped Call Transactions In connection with the 2030 Notes, the Company has entered into privately negotiated capped call transactions with one of the initial purchasers of the Notes or its affiliate and certain other financial institutions pursuant to capped call confirmations (collectively, the “Capped Calls”). The Capped Calls are generally expected to reduce potential dilution to the Company’s common stock and/or offset any cash payments that the Company is required to make in excess of the principal amount of any converted 2030 Notes, with such reduction and/or offset subject to a cap. See Note 11 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for more details. Foreign Currency We are exposed to changes in foreign currencies relative to the U.S. dollar, which are references to the differences between the foreign-exchanges rates we use to convert the financial results of our international operations from local currencies into U.S. dollars for financial reporting purposes. This impact of foreign-exchange rate changes is calculated based on the difference between the current period’s currency exchange rates and that of the comparable prior period. Our primary exposures to foreign currency exchange rate movements are with the euro and the British pound. As a result of our global operations, our revenue, gross margin, operating expense and operating loss in some international markets has been and may continue to be affected by foreign currency fluctuations. Goodwill Impairment The Company’s policy is to assess the realizability of assets (long-lived assets, intangibles and goodwill) held within our reporting units and to evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. No impairment of goodwill was recognized during the year ended December 31, 2025. During the first quarter of 2024, qualitative factors such as a decrease in the Company’s market capitalization, lower service provider spending and delayed holding patterns of inventory with respect to customers caused us to reduce our forecasts, triggering a quantitative impairment assessment for our reporting units. The Company determined the fair value of the Network Solutions reporting unit using a combination of an income approach and a market-based peer group analysis. The Company determined upon its quantitative impairment assessment to recognize a $297.4 million non-cash goodwill impairment charge for the Network Solutions reporting unit during the year ended December 31, 2024. The quantitative impairment analysis indicated there was no impairment of the Services & Support goodwill during the year ended December 31, 2024. Business Efficiency Program During the fourth quarter of 2023, the Company initiated a Business Efficiency Program designed to optimize the assets, business processes, and information technology systems of the Company in relation to the business combination with Adtran Networks. The Business Efficiency Program included expenses specifically associated with achieving run-rate synergies as well as Business Efficiency Program expenses described below. See Note 19 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information. 53 We did not incur any Business Efficiency Program costs during the year ended December 31, 2025. The Company reduced previously accrued costs related to the Business Efficiency Program by $0.3 million during the year ended December 31, 2025. During the years ended December 31, 2024 and 2023, respectively, we recognized $44.7 million and $25.1 million, respectively, of costs relating to the Business Efficiency Program, respectively. As of December 31, 2025, all expenses related to the Business Efficiency Program have been paid. Our historical financial performance is not necessarily a meaningful indicator of future results, and in general, management expects that our financial results may vary from period to period. For a discussion of risks associated with our operating results, see Part I, Item 1A, Risk Factors of this report. Results of Operations The following table presents selected financial information derived from our Consolidated Statements of Loss expressed as a percentage of revenue for the years indicated. Amounts may not foot due to rounding. Year Ended December 31, 2025 2024 2023 Revenue Network Solutions 82.8 % 80.1 % 84.8 % Services & Support 17.2 19.9 15.2 Total Revenue 100.0 100.0 100.0 Cost of Revenue Network Solutions 54.6 56.1 63.1 Network Solutions - other (credits), charges and inventory write-down — 0.9 2.1 Services & Support 7.1 7.9 6.0 Total Cost of Revenue 61.7 64.9 71.2 Gross Profit 38.3 35.1 28.8 Selling, general and administrative expenses 20.9 25.2 22.5 Research and development expenses 18.8 24.0 22.5 Goodwill impairments — 32.2 3.3 Operating Loss (1.4 ) (46.3 ) (19.5 ) Interest and dividend income 0.2 0.3 0.2 Interest expense (1.8 ) (2.4 ) (1.4 ) Net investment gain 0.3 0.4 0.2 Other (expense) income, net (0.2 ) — 0.1 Loss Before Income Taxes (2.9 ) (48.0 ) (20.3 ) Income tax expense (0.5 ) (0.8 ) (2.5 ) Net Loss (3.3 )% (48.8 )% (22.8 )% Net Income attributable to non-controlling interest 0.9 1.1 0.6 Net Loss attributable to ADTRAN Holdings, Inc. (4.2 )% (49.8 )% (23.4 )% The following discussion and financial information are presented to aid in an understanding of our current consolidated financial position, changes in financial position, results of operations and cash flows and should be read in conjunction with the audited consolidated financial statements and notes thereto included herein. The emphasis of the discussion is a comparison of the years ended December 31, 2025 and December 31, 2024. For a discussion of a comparison of the years ended December 31, 2024 and December 31, 2023, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K/A for the year ended December 31, 2024, filed with the SEC on May 20, 2025. Comparison of Years Ended December 31, 2025 and December 31, 2024 Revenue Our revenue increased 17.5% from $922.7 million for the year ended December 31, 2024 to $1,083.8 million for the year ended December 31, 2025. The increase in revenue for the year ended December 31, 2025 was driven by increased volume of sales activity due to a return of normalized customer spending, increased growth due to fiber expansion brought about by higher service provider spending, vendor consolidation, a continuing shift away from high-risk vendors, increased demand for modernizing and upgrading critical infrastructure within governments, utilities, large enterprises, and bandwidth-hungry applications, including AI, partially offset by a decrease in revenue related to installation/system integration services. The increase in revenue by category for the year ended 54 December 31, 2025, was primarily attributable to a $79.4 million increase in Optical Networking Solutions products and services, a $38.3 million increase in Subscriber Solutions products and services and a $43.4 million increase in Access & Aggregation products and services. All revenue categories for the year ended December 31, 2025 experienced increased volume of sales activity due to growth across geographies, most product lines, and the continued expansion of our customer base. Network Solutions segment revenue increased 21.4% from $739.0 million in 2024 to $896.9 million in 2025, primarily attributable to $71.3 million increase in Optical Networking Solutions products, a $45.9 million increase in Access & Aggregation Solutions and a $40.8 million increase in Subscriber Solutions category. Services & Support revenue increased 1.7% from $183.8 million in 2024 to $186.9 million in 2025. The increase in revenue for 2025 was primarily attributable to $8.1 million increase in revenue for Optical Networking Solutions products partially offset by a $2.5 million decrease in revenue for Access & Aggregation Solutions revenue and a $2.5 million decrease in revenue for Subscriber Solutions services. Domestic revenue increased 20.7% from $398.2 million in 2024 to $480.8 million in 2025, was primarily due to an increase in volume of sales activity due to a return of normalized customer spending and increased growth due to fiber expansion. International revenue, which is defined as revenue generated from the Network Solutions and Services & Support segments provided to a customer outside of the U.S., increased 15.0% from $524.6 million for the year ended December 31, 2024 to $603.1 million for the year ended December 31, 2025. The increase in international revenue in 2025 was primarily due to increased volume of sales activity due to a return of normalized customer spending and, increased growth due to fiber expansion. International revenue, as a percentage of total revenue, decreased from 56.8% for the year ended December 31, 2024 to 55.6% for the year ended December 31, 2025. For the year ended December 31, 2025 as compared to the year ended December 31, 2024, changes in foreign currencies relative to the U.S dollar increased our net revenue by approximately $17.8 million. Our ADTRAN, Inc. international revenue is largely focused on broadband infrastructure and is consequently affected by the decisions of our customers as to timing for installation of new technologies, expansion of their networks and/or network upgrades. Our international customers must make these decisions in the regulatory and political environment in which they operate – both nationally and in some instances, regionally – whether of a multi-country region or a more local region within a country. Consequently, while we expect the global trend towards deployment of more robust broadband speeds and access to continue creating additional market opportunities for us, the factors described above may result in pressure on revenue and operating income. Our Adtran Networks international revenue is largely focused on the manufacture and selling of networking solutions that are based on three core areas of expertise: fiber-optic transmission technology (cloud interconnect), cloud access technology for rapid creation of innovative services around the network edge and solutions for precise timing and synchronization of networks. In addition, Adtran Networks' international operations offers a comprehensive portfolio of network design, implementation and maintenance services to assist operators in the deployment of market-leading networks while reducing their cost to maintain these networks. Cost of Revenue As a percentage of revenue, cost of revenue decreased from 64.9% for the year ended December 31, 2024 to 61.7% for the year ended December 31, 2025. The decrease in cost of revenue as a percentage of revenue for the twelve months ended December 31, 2025, was attributable to a 2.6% decrease in restructuring expense and labor cost expense as a percentage of revenue as a result of our previous Business Efficiency Program, which was completed as of December 31, 2024 and a 1.3% decrease in expense as a percentage of revenue attributable to changes in customer and product mix, partially offset by a 0.7% increase in expense as a percentage of revenue attributable to changes in foreign currencies relative to the U.S. dollar. For the year ended December 31, 2025, changes in foreign currencies relative to the U.S. dollar increased our cost of revenue by approximately $8.9 million. Network Solutions cost of revenue, as a percentage of that segment’s revenue, decreased from 71.2% of revenue in 2024 to 66.0% of revenue in 2025. The decrease in Network Solutions cost of revenue as a percentage of revenue for the twelve months ended December 31, 2025, was attributable to a 3.2% decrease in expense as a percentage of revenue attributable to changes in customer and product mix, and a 2.7% decrease in restructuring expense and labor cost expense as a percentage of revenue as a result of our previous Business Efficiency Program, partially offset by a 0.8% increase in expense as a percentage of revenue attributable to changes in foreign currencies relative to the U.S. dollar. Services & Support cost of revenue, as a percentage of that segment’s revenue, increased from 39.6% of revenue in 2024 to 41.0% of revenue in 2025. Services & Support revenue is comprised of network planning and implementation, maintenance, support and cloud-based management services, with network planning and implementation being the largest and fastest growing component in the long-term. Compared to our other services, such as maintenance, support and cloud-based management services, our network planning and implementation services typically utilize a higher percentage of internal and subcontracted engineers, professionals and contractors to perform the work for customers. The additional costs incurred to perform these infrastructure and labor-intensive services inherently result in lower 55 average gross margins as compared to maintenance and support services. Within the Services & Support segment, we do expect variability in gross margins from quarter-to-quarter based on the mix of the services recognized. Gross Profit As a percentage of revenue, gross profit increased from 35.1% for the year ended December 31, 2024 to 38.3% for the year ended December 31, 2025. The increase in gross profit for the twelve months ended December 31, 2025, was attributable to 2.6% increase in gross profit as a percentage of revenue due to a decrease in restructuring expense and labor cost as a result of our previous Business Efficiency Program, and a 0.5% increase in gross profit as a percentage of revenue due to changes in customer and product mix. As a percentage of that segment's revenue, Network Solutions gross profit increased from 28.8% for the year ended December 31, 2024 to 34.0% for the year ended December 31, 2025. The increase in gross profit for the twelve months ended December 31, 2025, was attributable to a 2.3% increase in gross profit as a percentage of revenue due to changes in customer and product mix and a 2.7% increase in gross profit as a percentage of revenue due to a decrease in restructuring expense and labor cost as a result of our previous Business Efficiency Program. As a percentage of that segment's revenue, Services & Support gross profit decreased from 60.4% for the year ended December 31, 2024 to 59.0% for the year ended December 31, 2025. Selling, General and Administrative Expenses As a percentage of revenue, selling, general and administrative expenses decreased from 25.2% for the year ended December 31, 2024, to 20.9% for the year ended December 31, 2025. Selling, general and administrative expenses as a percentage of revenue will generally fluctuate whenever there is a significant fluctuation in revenue for the periods being compared. We have completed implementation of our Business Efficiency Program as of December 31, 2024. We expect to continue to see lower selling, general and administrative expenses as a percentage of revenue over time. Selling, general and administrative expenses decreased 2.9% from $232.9 million for the year ended December 31, 2024, to $226.3 million for the year ended December 31, 2025. Selling, general and administrative expenses include personnel costs for management, accounting, information technology, human resources, sales and marketing, as well as independent auditor, tax and other professional fees, contract services and legal and litigation related costs. The decrease in selling, general and administrative expenses for the twelve months ended December 31, 2025, compared to the twelve months ended December 31, 2024, was primarily attributable to decreases of $14.7 million for acquisition/integration related expenses, $1.9 million for restructuring expense, and $1.4 million for employee-related costs partially offset by increases of $8.4 million for professional fees and other costs, $2.2 million for travel related costs and $1.4 million for depreciation expense. For the year ended December 31, 2025, as compared to the year ended December 31, 2024, changes in foreign currencies relative to the U.S dollar increased our selling, general and administrative expenses by approximately $3.8 million. Research and Development Expenses As a percentage of revenue, research and development expense decreased from 24.0% for the year ended December 31, 2024, to 18.8% for the year ended December 31, 2025. Research and development expenses as a percentage of revenue will generally fluctuate whenever there are incremental product development activities or significant fluctuations in revenue for the periods being compared. We have completed implementation of our Business Efficiency Program as of December 31, 2024. We expect to continue to see lower research and development expense as a percentage of revenue over time. Research and development expenses decreased 7.8% from $221.5 million for the year ended December 31, 2024, to $204.3 million for the year ended December 31, 2025. The decrease in research and development expenses for the twelve months ended December 31, 2025, was primarily attributable to decreases of $6.2 million for employee-related costs, $6.1 million for restructuring expense, $0.8 million for professional services, $0.6 million for contract services and $2.1 million of additional research and development subsidies. For the year ended December 31, 2025 as compared to the year ended December 31, 2024, changes in foreign currencies relative to the U.S. dollar increased our research and development expenses by approximately $4.2 million. Adtran Networks has arrangements with governmental entities for the purposes of obtaining funding for research and development activities. The Company classifies government grants received under these arrangements as a reduction to research and development expense incurred. For the years ended December 31, 2025 and 2024, the Company recognized $11.8 million and $9.7 million, respectively, as a reduction of research and development expense. We expect to continue to incur research and development expenses in connection with our new and existing products. We continually evaluate new product opportunities and engage in significant research and product development efforts, which provides for new product development, enhancement of existing products and product cost reductions. We may incur significant research and development expenses prior to the receipt of revenue from a major new product group. 56 Goodwill Impairment There was no goodwill impairment recognized during the year ended December 31, 2025. During the first quarter of 2024, qualitative factors such as a decrease in the Company’s market capitalization, cautious service provider spending due to economic uncertainty and continued customer focus on inventory adjustments, triggered a quantitative impairment assessment for our reporting units for goodwill and long-lived assets. The Company determined upon its quantitative impairment assessment to recognize a $297.4 million non-cash goodwill impairment charge for the Network Solutions reporting unit. Interest and Dividend Income Interest and dividend income decreased from $3.1 million for the year ended December 31, 2024 to $2.3 million for the year ended December 31, 2025. The decrease in interest and dividend income is primarily attributable to fluctuations in investment balances and a decrease in the rate of return on those investments due to interest rate movements. Interest Expense Interest expense decreased from $22.1 million for the year ended December 31, 2024 to $19.3 million for the year ended December 31, 2025. The decrease in interest expense was primarily driven by the issuance of the 2030 Notes which accrues interest at 4.7% and the repayment of the majority of the Credit Agreement which accrued interest at 9.0% in 2025 versus the twelve months ending December 31, 2024. See Notes 10 and 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Financing Activities” in “Liquidity and Capital Resources” below. Net Investment Gain We recognized a net investment gain of $3.6 million and $3.0 million for the years ended December 31, 2024 and 2025, respectively. The fluctuations in our net investments were primarily attributable to market driven changes in the fair value of our securities recognized during the period. We expect that any future market volatility could result in continued fluctuations in our investment portfolio. See “Investing Activities” in “Liquidity and Capital Resources” of this report and Note 1 and Note 4 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information. Other (Expense) Income, net Other (expense) income, net, which primarily consisted of gains and losses on foreign currency transactions and income from excess material sales, decreased from income of $0.2 million for the year ended December 31, 2024 to expense of $1.6 million for the year ended December 31, 2025. Income Tax Expense Our effective tax rate changed from an expense of 1.7%, for the year ended December 31, 2024 to an expense of 16.0% for the year ended December 31, 2025. The change in the effective tax rate for the year ended December 31, 2025, was driven primarily by changes in the mix of earnings between jurisdictions with different statutory tax rates and changes in our valuation allowance. See Note 12 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information. Net Loss Attributable to ADTRAN Holdings, Inc. As a result of the above factors, our net loss attributable to ADTRAN Holdings, Inc. decreased from a net loss of $459.9 million for the year ended December 31, 2024 to a net loss of $45.7 million for the year ended December 31, 2025. As a percentage of revenue, net loss was 49.8% for the year ended December 31, 2024 and net loss was 4.2% for the year ended December 31, 2025. Liquidity and Capital Resources Liquidity We generally finance our ongoing business with existing cash, investments, credit arrangements and cash flow from operations to manage our working capital needs. We had a positive cash flow from operating activities of $129.8 million in the twelve months ended December 31, 2025. We have used, and expect to continue to use, existing cash, credit arrangements and cash generated from operations for working capital and other general corporate purposes, including product development activities to enhance our existing products and develop new products, expand our sales and marketing activities and fund capital expenditures. As of December 31, 2025, our cash on hand was $95.7 million of which $87.5 million was held by our foreign subsidiaries. The Company had access to $319.2 million on its Credit Facility for future borrowings, based on debt covenant compliance metrics. Generally, we intend to permanently reinvest funds held outside the U.S., except to the extent that any of these funds can be repatriated without withholding tax. As of December 31, 2024, our cash on hand was $76.0 million, of which $52.6 million was held by our foreign subsidiaries. 57 Under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks. The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2025, and it will apply to any net loss generated by Adtran Networks in 2026. Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) has received an offer to elect either (1) to remain an Adtran Networks shareholder and receive from us an Annual Recurring Compensation payment, or (2) to receive Exit Compensation plus guaranteed interest. The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid. The guaranteed interest rate is 5.0% plus a variable component (according to the German Civil Code) that was 1.27% as of December 31, 2025. Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately €303.9 million or approximately $357.0 million, based on an exchange rate as of December 31, 2025 and reflecting interest accrued through December 31, 2025 during the pendency of the appraisal proceedings discussed below. Shareholders electing the first option of Annual Recurring Compensation may later elect the second option. The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023. However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ). Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the proceeding for the trial on the merits of the DPLTA has recommenced. It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved. Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond. Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately €7.9 million or $9.3 million (based on the current exchange rate) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation. The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany. The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year). With respect to the 2023 fiscal year, Adtran Networks’ ordinary general shareholders’ meeting occurred on June 28, 2024; therefore, the Annual Recurring Compensation was paid on July 3, 2024. With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 28, 2025, and therefore, the Annual Recurring Compensation was paid on July 1, 2025. With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting. During the years ended December 31, 2025 and 2024, we accrued $9.3 million and $9.8 million, respectively, in Annual Recurring Compensation which is reflected as an increase to retained deficit. As of December 31, 2025, and as of the date of issuance of these financial statements, the Company has sufficient liquidity through its operating cash flow and the borrowings available under the Credit Facility to meet a majority of its payment obligations under the DPLTA pertaining to Exit Compensation. For the year ended December 31, 2025, approximately 2.0 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of approximately €40.2 million, or approximately $46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders. For the year ended December 31, 2024, a total of 0.8 million shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of approximately €15.7 million or approximately $17.4 million based on an exchange rate as of December 31, 2024, were paid to Adtran Networks shareholders. We believe the probability that more than a small minority of Adtran Networks shareholders elect to receive Exit Compensation in the next twelve months is remote based on the following factors: (i) the shareholders can exercise their right to receive the Exit Compensation until two months after publication of the final decision in the appraisal proceedings and we do not expect the final decision to be published within the next 12 months; (ii) the diverse base of shareholders that must make this election on an individual shareholder basis; (iii) the fact that the date of a decision by the court on the merits of the case is uncertain, it will likely take a minimum of 12 months for a ruling on the merits and thereafter, an expected appeal process will take a further 12-24 months to resolve; (iv) the current guaranteed Annual Recurring Compensation payment; and (v) the current trading value of Adtran Networks shares. 58 In summary, the Company believes that its cash and cash equivalents, working capital management initiatives and availability to access cash under the Wells Fargo Credit Facility or other future sources of capital, will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the next twelve months, from the issuance of these Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K See Note 10 of Notes to Consolidated Financial Statements included in Part I, Item 8 of this report for additional information regarding the terms of the Wells Fargo Credit Agreement as amended. Debt Obligations Wells Fargo Credit Facility On July 18, 2022, ADTRAN, Inc., as the borrower ("U.S. Borrower"), and the Company entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (the “Original Credit Agreement”), as amended by the First Amendment to Credit Agreement, dated August 9, 2023 (“Amendment No. 1”), the Second Amendment to Credit Agreement, dated January 16, 2024 (“Amendment No. 2”), the Third Amendment to Credit Agreement, dated March 12, 2024 (“Amendment No. 3”), the Fourth Amendment to Credit Amendment, dated June 4, 2024, among Adtran Networks (the "German Borrower") and the parties set forth above ("Amendment No. 4") and the Fifth Amendment to Credit Agreement and Waiver, dated May 6, 2025, among the German Borrower and the parties set forth above (“Amendment No. 5”; the Original Credit Agreement as amended by Amendment No. 1, Amendment No. 2. Amendment No. 3, Amendment No. 4 and Amendment No. 5, the “Existing Credit Agreement”). On September 16, 2025, the U.S. Borrower, the Company, the German Borrower, and the lenders party thereto, including the Administrative Agent, entered into the Sixth Amendment and Consent to Credit Agreement, dated September 16, 2025 (“Amendment No. 6”; the Existing Credit Agreement as amended by Amendment No. 6, the “Amended Credit Agreement”). Amendment No. 6, among other things, (i) provides for a consent from the lenders to the issuance by the Company of new unsecured convertible indebtedness in an amount not to exceed $230.0 million, notwithstanding the cap on the amount of Permitted Convertible Indebtedness (as defined in the Amended Credit Agreement) the Company is permitted to incur, (ii) requires that the net cash proceeds of the new unsecured convertible indebtedness be used to (a) repay outstanding revolving credit loans under the Amended Credit Agreement, (b) pay fees, costs, and expenses related to Amendment No. 6 and the issuance of the new unsecured convertible indebtedness and (c) cash collateralize the obligations of the Company and its subsidiaries under the Amended Credit Agreement (with such cash only being permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Equity Interests (as defined in the Amended Credit Agreement) of the German Borrower that were not owned by the Company and its subsidiaries as of August 9, 2023 pursuant to Section 5, paragraph 1 of the DPLTA), and (iii) after the prepayment contemplated in the foregoing clause (ii)(a) and the provision of cash collateral contemplated in the foregoing clause (ii)(c), amends provisions governing the Subline (as defined below) to provide that future prepayments in respect of borrowings under the Subline will no longer permanently reduce the commitments in respect of the Subline. As of December 31, 2025, the Amended Credit Agreement provided for a secured revolving credit facility of up to $350.0 million of borrowings, $50.0 million of which is solely available to the German Borrower. As of December 31, 2025, the Company’s borrowings under the revolving line of credit were $25.0 million. The credit facilities provided under the Amended Credit Agreement mature in July 2027, but the U.S. Borrower may request extensions subject to customary conditions. In addition, the U.S. Borrower may utilize up to $50.0 million of the $350.0 million total revolving facility for the issuance of letters of credit. As of December 31, 2025, the U.S. Borrower had a total of $5.8 million in letters of credit under the Amended Credit Agreement, leaving a net amount (after giving effect to the $25.0 million of outstanding borrowings described above) of $319.2 million available for future borrowings based on debt covenant compliance metrics. Any future credit extensions under the Amended Credit Agreement are subject to customary conditions precedent. The proceeds of any loans may be used as described above, as well as for working capital and other general corporate purposes. Moreover, the Amended Credit Agreement provides for a sublimit under the existing $350.0 million revolving commitments in an aggregate amount of $50.0 million (“Subline”), which Subline is available for borrowings by the German Borrower. The Company had no borrowings under the Subline as of December 31, 2025. The existing swing line sublimit and letter of credit sublimit under the Amended Credit Agreement remain available to the U.S. Borrower (and not to the German Borrower). Otherwise, the loans under the Subline are subject to substantially the same terms and conditions under the Amended Credit Agreement (including with respect to the interest rate and maturity date) as the other existing revolving commitments. All U.S. borrowings under the Amended Credit Agreement bear interest at a rate tied to the Base Rate (as defined in the Amended Credit Agreement) or SOFR, at the Company’s option, and all E.U. borrowings bear interest at a rate tied to the Euro Interbank Offered Rate as administered by the European Money Markets Institute (or a comparable or successor administrator approved by the Administrative Agent), in each case plus applicable margins which vary based on the consolidated net leverage ratio of the Company and its subsidiaries 59 as determined pursuant to the terms of the Amended Credit Agreement. Default interest is 2.00% per annum in excess of the rate otherwise applicable. As of December 31, 2025, the weighted average interest rate on our revolving credit agreement was 8.98%. The Company made certain representations and warranties to the lenders in the Amended Credit Agreement that are customary for credit arrangements of this type. The Company also agreed to maintain a Consolidated Total Net Leverage Ratio of 5.00x, a Consolidated Senior Secured Net Leverage Ratio of 3.25x (4.0x to 3.5x during a “Springing Covenant Period,” as defined below) and a Consolidated Fixed Charge Coverage Ratio of 1.25x (as such ratios are defined in the Amended Credit Agreement). A “Springing Covenant Event” occurs when at least sixty percent (60.0%) of the outstanding shares of Adtran Networks that were not owned by the Company and its subsidiaries as of August 9, 2023 have been tendered and purchased by the Company. Upon the occurrence of a Springing Covenant Event, the Company will enter a “Springing Covenant Period”, defined as the fiscal quarter in which a Springing Covenant Event occurs and the three (3) consecutive fiscal quarters thereafter. During a Springing Covenant Period, the Company’s leverage ratios are increased. In addition, the cash and cash equivalents of the credit parties must be at least $50.0 million and the cash and cash equivalents of the Company and its subsidiaries must be at least $70.0 million. As of December 31, 2025, the Company was in compliance with all covenants. The Amended Credit Agreement also contains customary events of default, such as misrepresentation and a default in the performance or observance of any covenant (subject to customary cure periods and materiality thresholds). Upon the occurrence and during the continuance of an event of default, the Administrative Agent is entitled to take various actions, including the acceleration of all amounts due under the Amended Credit Agreement. All obligations under the Amended Credit Agreement (including under the Subline) are guaranteed by the U.S. Borrower and certain subsidiaries of the U.S. Borrower (“Full Facility Guarantors”). To secure such guarantees, the U.S. Borrower and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and the U.S. Borrower has granted mortgages in favor of the Administrative Agent over certain owned real estate assets. Certain of the German Borrower' subsidiaries (the “Subline Guarantors”) have also provided a guarantee solely of the obligations in respect of the Subline. Furthermore, to secure such guarantees, the German Borrower and the Subline Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets. Upon repayment in full and termination of the Subline, the guarantees by the Subline Guarantors and the liens granted by the German Borrower and the Subline Guarantors to secure obligations under the Subline will be released. Convertible Senior Notes On September 19, 2025, the Company issued $201.3 million principal amount of 2030 Notes. The 2030 Notes were issued pursuant to, and are governed by, an indenture, dated as of September 19, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee. The proceeds were primarily used to, among other items, pay down certain outstanding indebtedness under the Credit Facility. In connection with the 2030 Notes, the Company has entered into privately negotiated Capped Calls. Interest expense related to the 2030 Notes was $2.6 million for the year ended December 31, 2025. In conjunction with the issuance of the 2030 Notes, the Company recognized $201.3 million of principal and debt issuance costs of $8.7 million, which were capitalized as components of the carrying amount and included in convertible senior notes, net within the Consolidated Balance Sheets. See Note 11 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for more information. Unamortized Discounts and Debt Issuance Costs Unamortized discounts and debt issuance costs totaled $8.2 million as of December 31, 2025. Amortization expense related to unamortized discounts and debt issuance costs (included in interest expense within the consolidated statements of operations) totaled $0.4 million for the year ended December 31, 2025. Operating Activities Net cash provided by operating activities of $129.8 million during the year ended December 31, 2025 increased by $26.2 million compared to $103.6 million of net cash provided by the year ended December 31, 2024. The increase was primarily due to the declining net loss for the years ended December 31, 2025 and 2024, excluding the goodwill impairment charge of $297.4 million, as adjusted primarily for decreased depreciation and amortization, decreased deferred taxes and increased net cash inflows from working capital. Additional details related to our working capital and its drivers are discussed below. Net accounts receivable increased 18.3% from $178.0 million as of December 31, 2024 to $210.7 million as of December 31, 2025. There was an allowance for credit losses of $1.3 million as of December 31, 2025 and December 31, 2024. The increase in net accounts receivable was primarily due to increased revenues. Quarterly accounts receivable DSO decreased from 67 days as of December 31, 2024 to 66 days as of December 31, 2025. Other receivables decreased from $9.8 million as of December 31, 2024 to $7.0 million as of December 31, 2025. The decrease in other receivables was primarily attributable to a decrease in sales of raw materials. 60 Annual inventory turnover increased from 1.92 turns as of December 31, 2024 to 2.80 turns as of December 31, 2025. Inventory decreased 17.5% from $261.6 million as of December 31, 2024 to $215.7 million as of December 31, 2025. The decrease in inventory was primarily due to steps taken in connection with our Business Efficiency Program to improve working capital, a reduction in component purchases due to improved lead time and utilization of buffer stock. We expect inventory levels to fluctuate as we attempt to maintain sufficient inventory for customer demand and improve working capital. Accounts payable increased from $171.8 million as of December 31, 2024 to $167.3 million as of December 31, 2025. The increase in accounts payable was primarily due to the timing of the receipt of inventory, supplies and services. Accounts payable will fluctuate due to variations in the timing of the receipt of inventory, supplies and services and our subsequent payments for these purchases. Investing Activities Capital expenditures, including intangibles totaled approximately $69.3 million and $65.2 million for the years ended December 31, 2025 and 2024, respectively. These expenditures were primarily used to purchase software, computer hardware, manufacturing and test equipment, building improvements and developed technologies. The increase in capital expenditures is primarily attributable to an increase in expenditures related to developed technology. Our deferred compensation plan assets increased 13.5% from $31.0 million as of December 31, 2024 to $35.2 million as of December 31, 2025. See Notes 4 and 13 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information. Our investments include various marketable equity securities with a fair market value of $1.0 million and $1.1 million, as of December 31, 2025 and 2024, respectively. See Note 4 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information. 61 Financing Activities Stock Option Exercises To accommodate employee stock option exercises, the Company issued 0.3 million and 0.1 million shares of common stock which resulted in proceeds of $1.8 million and $0.8 million during the years ended December 31, 2025 and 2024, respectively. Employee Pension Plan We maintain defined benefit pension plans covering employees in certain foreign countries. Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations. Details regarding the pension plans are set forth below. • In Germany, there are two defined benefit pension plans and two defined contribution plans. These plans provide benefits in the event of retirement, death or disability. The plan's benefits are based on age, years of service and salary. The defined benefit plans are financed by contributions paid by the Company and the defined contribution plans are financed by contributions paid by the participants. • In Switzerland, there are two defined benefit pension plans. Both plans provide benefits in the event of retirement, death or disability. The plan's benefits are based on age, years of service, salary and on a participant's old age account. The plans are financed by contributions paid by the participants and by the Company. • In Italy, the post-employment benefit plan is required due to statutory provisions. The plan is financed directly by the Company on a pay-as-you-go basis. Employees receive their pension payments as a function of salary, inflation and a notional account. • In Israel, there is a defined benefit plan that provides benefits in the event of a participant being dismissed involuntarily, retirement or death. The plan's benefits are based on the higher of the severance benefit required by law or the cash surrender value of the severance benefit component of any qualifying insurance policy or long-term employee benefit fund that is registered in the participant's name. The plan is financed by contributions paid by the Company. • In India, the post-employment benefit plan is required due to statutory provisions. The plan is financed directly by the Company on a pay-as-you-go basis. • In Poland, the post-employment benefit plan is required due to statutory provisions. The plan is financed directly by the Company on a pay as you go basis. Our defined benefit plan assets consist of a balanced portfolio of equity funds, bond funds, emerging market funds, real estate funds and balanced funds. Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefits earned by participants and consider a broad range of economic conditions. The objectives of our investment policy are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’ actuarial assumptions and achieve asset returns that are competitive with like institutions employing similar investment strategies. The investment policy is periodically reviewed by us and a designated third-party fiduciary for investment matters. At December 31, 2025, the estimated fair market value of our defined benefit pension plans' assets increased to $64.3 million from $54.5 million at December 31, 2024. The defined benefit pension plan is accounted for on an actuarial basis, which requires the use of various assumptions, including an expected rate of return on plan assets and a discount rate. The expected return on our German plan assets that is utilized in determining the benefit obligation and net periodic benefit cost is derived from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. The discount rate has been derived from the returns of high-quality, corporate bonds denominated in euro currency with durations close to the duration of our pension obligations. The projected benefit obligation for our defined benefit pension plans was $68.7 million and $63.3 million as of December 31, 2025 and 2024, respectively. The components of net periodic pension cost, other than the service cost component, are included in other income, net in the Consolidated Statements of Loss. The components of net periodic pension cost and amounts recognized in other comprehensive income (loss) for the years ended December 31, 2025 and 2024 were $3.3 million and $0.3 million, respectively. Actuarial gains and losses are recorded in accumulated other comprehensive loss. To the extent unamortized gains and losses exceed 10% of the higher of the market-related value of assets or the projected benefit obligation, the excess is amortized as a component of net periodic pension cost over the remaining service period of active participants. We estimate that approximately $0.1 million of net 62 actuarial gains and approximately $0.1 million of net actuarial losses will be amortized from accumulated other comprehensive income into net periodic pension cost in 2026. The net actuarial gain and (loss) recognized in accumulated other comprehensive income as of December 31, 2025 and 2024 was $3.1 million and ($1.0) million, respectively. See Notes 13 and 14 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information. Off-Balance Sheet Arrangements We have exposure to credit losses from off-balance sheet exposures used to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds, where we believe the risk of loss is immaterial to our financial statements as of December 31, 2025. Otherwise, we do not have off-balance sheet financing arrangements and have not engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of or requirements for capital resources. See Note 17 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information. Cash Requirements The following table summarizes the Company’s short- and long-term cash requirements from known obligations pursuant to certain contracts and commitments as of December 31, 2025, as well as an estimate of the timing in which such obligations and payments are expected to be satisfied (but excluding payments that may be made pursuant to the DPLTA and currency hedging arrangements, which are discussed below). Other than operating lease obligations, the cash requirements table excludes interest payments. (In thousands) Total 2026 2027 2028 2029 2030 Thereafter Wells Fargo credit agreement (1) $ 25,000 $ — $ 25,000 $ — $ — $ — $ — Convertible Senior Notes (1) 201,250 — — — — 201,250 — Purchase obligations (2) 205,851 200,733 4,583 535 — — — Operating lease obligations (3) 43,424 9,395 8,376 7,885 3,884 3,236 10,648 Totals $ 475,525 $ 210,128 $ 37,959 $ 8,420 $ 3,884 $ 204,486 $ 10,648 (1) See description below. (2) We have purchase obligations related to open purchase orders to our contract manufacturers, ODMs, component suppliers, service partners and other vendors. The settlement of our purchase obligations will occur at various dates beginning in 2026 and going through 2028. See Note 17 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for more information. (3) We have operating leases for office space, automobiles and various other equipment in the U.S. and in certain international locations. Our operating leases had remaining lease terms ranging from 1 month to 155 months as of December 31, 2025. Wells Fargo Credit Agreement On July 18, 2022, ADTRAN Holdings, Inc. and ADTRAN, Inc., as the borrower, entered into the Credit Agreement with the Administrative Agent and the other lenders named therein. The Credit Agreement was subsequently amended six times. As of December 31, 2025, the Company's borrowings under the revolving line of credit were $25.0 million. As of December 31 2025, the Company had access to $319.2 million on its Credit Facility for future borrowings based on debt covenant compliance metrics. The Credit Facility matures in July 2027; however, the Company may request extensions subject to customary conditions. See Note 10 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Liquidity and Capital Resources” in Part II, Item 7 of this report for additional information. Convertible Senior Notes On September 19, 2025, the Company issued $201.3 million aggregate principal amount of the Notes. The Notes accrue interest at a rate of 3.75% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2026. Unless earlier repurchased, redeemed, or converted, the Notes will mature on September 15, 2030. See Note 11 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report and “Liquidity and Capital Resources - Convertible Senior Notes” in Part II, Item 7 of this report for additional information. 63 Currency Hedging Arrangements On November 3, 2022, the Company entered into a euro/U.S. dollar forward contract arrangement (the "Initial Forward") with Wells Fargo Bank, N.A. (the “Hedge Counterparty”). The Initial Forward, which was governed by the provisions of an ISDA Master Agreement (including schedules thereto and transaction confirmations that supplement such agreement) entered into between the Company and the Hedge Counterparty, enabling the Company to convert a portion of its euro denominated payment obligations under the proposed DPLTA into U.S. Dollars. Under the Initial Forward, the Company agreed to exchange an aggregate notional amount of €160.0 million for U.S. dollars at a daily fixed forward rate ranging from EUR/USD 0.98286 to 1.03290. The aggregate amount of €160.0 million was divided into eight quarterly tranches of €20.0 million, which commenced in the fourth quarter of 2022. During the year ended December 31, 2024, the Company settled four €20.0 million forward contract tranches. On March 21, 2023, the Company entered into a euro/U.S. dollar forward contract arrangement (the “Forward”) with the Hedge Counterparty. Under the Forward, which was governed by the provisions of an ISDA Master Agreement (including schedules thereto and transaction confirmations that supplement such agreement) entered into between the Company and the Hedge Counterparty, the Company exchanged an aggregate notional amount of €160.0 million for U.S. dollars at an average rate of EUR/USD 1.085. During the year ended December 31, 2024, the Company settled four $20.0 million forward contract tranches. As of December 31, 2024, both the Initial Forward and Forward have fully matured and are no longer outstanding. The Company has no outstanding hedges as of December 31, 2025. Receivables Purchase Arrangements On July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution, which accelerates receivable collection and helps to better manage cash flow. Total accounts receivables factored as of the end of December 31, 2025, totaled $25.3 million net of $3.8 million retained pursuant to the Factoring Agreement in the reserve account. Total accounts receivables factored as of the end of December 31, 2024, totaled $18.3 million net of $3.7 million retained pursuant to the Factoring Agreement in the reserve account. The Factoring Agreement provides for up to $40.0 million in factoring capacity, subject to eligible receivables and reserve requirements, secured by the receivables. The balance in the reserve account is included in other assets. The Company at its own expense does have collection and administrative responsibilities for the sold receivables and that is its only continuing involvement with the Factor. The Company is not compensated for the servicing of the factoring program and deems the costs of servicing the receivables sold to be immaterial. During the years ended, December 31, 2025 and 2024, the Company received $169.1 million and $78.4 million, in cash proceeds from the Factoring Agreement, respectively, which are recorded as a component of accounts receivable in operating cash flows on the Consolidated Statement of Cash Flows. The cost of the Factoring Agreement is included in interest expense in the Consolidated Statements of Loss and totaled $1.4 million and $0.6 million for the years ended December 31, 2025 and 2024, respectively. On December 19, 2023, the Company entered into a receivables purchase agreement (the "Prior Factoring Agreement") with a third-party financial institution which qualified for treatment as a secured borrowing with a pledge of collateral under Accounting Standards Codification Topic 810, Consolidation. The Prior Factoring Agreement was terminated on July 1, 2024. See Note 2 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information. Domination and Profit and Loss Transfer Agreement The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, as executed on December 1, 2022, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena). Under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks. The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2025, and it will apply to any net loss generated by Adtran Networks in 2026. Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) has received an offer to elect either (1) to remain an Adtran Networks shareholder and receive from us an Annual Recurring Compensation payment, or (2) to receive Exit Compensation plus guaranteed interest. The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid. The guaranteed interest rate is 5.0% plus a variable component (according to the German Civil Code) that was 1.27% as of December 31, 2025. Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of €303.9 million or approximately $357.0 million, based on an exchange rate as of December 31, 2025 and reflecting interest accrued through December 31, 2025 during the pendency of the appraisal proceedings 64 discussed below. Shareholders electing the first option of Annual Recurring Compensation may later elect the second option. The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023. However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ). Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the proceeding for the trial on the merits of the DPLTA has recommenced. It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved. Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond. Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately €7.9 million (or $9.3 million based on the exchange rate as of December 31, 2025) per year assuming none of the minority Adtran Networks shareholders as of December 31, 2025 were to elect Exit Compensation. The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in the German court. The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year). With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting. With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025. During the years ended December 31, 2025 and 2024, we accrued $9.3 million and $9.8 million, respectively, in Annual Recurring Compensation. The Annual Recurring Compensation is reflected as an increase to retained deficit in the Consolidated Balance Sheets. On October 18, 2022, the Company's Board of Directors authorized the Company to purchase additional shares of Adtran Networks through open market purchases not to exceed 15,346,544 shares. For the year ended December 31, 2025, 2.0 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of €40.2 million, or approximately $46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders. For the year ended December 31, 2024, approximately 0.8 million shares of Adtran Networks stock was tendered to the Company and Exit Compensation payments of €15.7 million or approximately $17.4 million based on an exchange rate as of December 31, 2024, were paid to Adtran Networks shareholders. We currently hold 36,871,784 no-par value bearer shares of Adtran Networks, representing 70.8% of Adtran Networks outstanding shares as of December 31, 2025. The foregoing description of the DPLTA does not purport to be complete and is qualified in its entirety by reference to the DPLTA, a non-binding English translation of which is incorporated by reference to Exhibit 10.14 of this Annual Report on Form 10-K. Business Efficiency Program During the fourth quarter of 2023, the Company initiated a Business Efficiency Program designed to optimize the assets, business processes, and information technology systems of the Company in relation to the business combination with Adtran Networks. The Business Efficiency Program included expenses specifically associated with achieving run-rate synergies as well as Business Efficiency Program expenses described below. See Note 19 of the Notes to Consolidated Financial Statements, included in Part II, Item 8 of this report for additional information. We did not incur any Business Efficiency Program costs during the year ended December 31, 2025. The Company reduced previously accrued costs by $0.3 million during the year ended December 31, 2025. During the years ended December 31, 2024 and 2023, we recognized $44.7 million and $25.1 million, respectively, of costs relating to the Business Efficiency Program, respectively. As of December 31, 2025, all expenses related to the Business Efficiency Program have been paid. Other Cash Requirements During the year ended December 31, 2025, other than the Exit Compensation payments, Annual Recurring Compensation under the DPLTA, and receivables purchase arrangements there have been no other material changes in cash requirements from those discussed in the 2024 Form 10-K/A and our cash requirements table shown in Liquidity and Capital Resources above. Performance Bonds Certain contracts, customers and jurisdictions in which we do business require us to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds. As of December 31, 2025 and 2024, we had commitments related to these bonds totaling $22.4 million and $15.7 million, respectively, which expire at various dates through April 2029. In general, we would only be liable for the amount of these guarantees in the event of default under each contract; the probability of which we believe is remote. 65 Critical Accounting Policies and Estimates Accounting Policies An accounting policy is deemed to be critical if it requires significant judgment, relies on key assumptions, and materially affects our reported financial condition and results of operations. These areas involve complex and subjective assessments, and changes in the underlying estimates or assumptions may have a material impact on our financial statements. Management reviews these policies regularly in light of evolving business conditions, market trends, and regulatory developments. The policies described below represent the accounting areas that we believe require the most significant use of judgment and estimation. Revenue Revenue is recognized upon transfer of control to the customer. For transactions where there are multiple performance obligations, individual products and services are accounted for separately if they are distinct (if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. Stand-alone selling prices are determined based on the prices at which the separate products and services are sold and are allocated based on each item’s relative value to the total value of the products and services in the arrangement. For items not sold separately, we apply an “expected cost plus margin” approach. Judgments include: • identifying distinct performance obligations; • estimating stand‑alone selling prices; • assessing material rights and contract modifications; and • determining the pattern and timing of revenue recognition for service‑based deliverables. We closely monitor customer buying behavior, discounting patterns, and regional economic conditions that may change pricing or delivery cycles. As our product mix changes and begins to shift toward next‑generation virtualized platforms and cloud‑based services, we expect the complexity of revenue arrangements to increase, which may require refinements to our estimation methodologies. Inventory Valuation We carry our inventory at the lower of cost and net realizable value, with cost being determined using the first-in, first-out method. Standard costs for material, labor, and manufacturing overhead are used to value inventory and are updated at least quarterly. Most variances are expensed in the current period; therefore, our inventory costs approximate actual costs at the end of each reporting period. We establish reserves for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which consider historical usage, known trends, inventory age and market conditions. If actual trends and market conditions are less favorable than those projected by management, we may be required to make additional inventory write-downs. Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired. The Company’s annual impairment assessment is done at the reporting unit level, which we determined are generally the same as our operating segments. We review goodwill for impairment annually during the fourth quarter and also test for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting units below their carrying amount. Such events and circumstances may include among others: a significant adverse change in legal factors or in the general business climate; significant decline in our stock price and market capitalization; unanticipated competition; the testing for recoverability of a significant asset within the reporting unit; and an adverse action or assessment by a regulator. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements. Management updates these estimates based on the most recent market data, customer demand expectations, and strategic initiatives. Impairment of Long-Lived Assets and Intangibles Long-lived assets, such as property, plant and equipment, right of use lease assets and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset or asset group. Forecasting future cash flows for asset groups involves uncertainties related to technology adoption rates, product roadmaps, and cost‑efficiency initiatives. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset or asset group. 66 An asset is considered to be held for sale when all the following criteria are met: (i) management commits to a plan to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) actions required to complete the sale of the asset have been initiated; (iv) sale of the asset is probable and the completed sale is expected to occur within one year; (v) it is unlikely that the disposal plan will be significantly modified; and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value. Making this determination is subject to management judgment regarding the facts and circumstances of the assets. Management reviews these factors on at least an annual basis to determine if an asset remains or now should be classified as held for sale. Income Taxes We estimate our income tax provision or benefit in each of the jurisdictions in which we operate, including estimating exposures related to examinations by taxing authorities. We also make judgments regarding the realization of deferred tax assets and establish valuation allowances where we believe it is more likely than not that future taxable income in certain jurisdictions will be insufficient to realize these deferred tax assets. Our estimates regarding future taxable income and income tax provision or benefit may vary due to changes in market conditions, changes in tax laws, or other factors. If our assumptions, and consequently our estimates, change in the future, the valuation allowances we have established may be increased or decreased, impacting future income tax expense. We continually review the adequacy of our valuation allowance and recognize the benefits of deferred tax assets only as the reassessment indicates that it is more likely than not that the deferred tax assets will be realized in accordance with ASC 740, Income Taxes. In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits through interest expense and income tax expense, respectively. Recently Issued Accounting Pronouncements For a discussion of recently issued accounting pronouncements, see Note 1 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this report for additional information. 67 ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK We maintain depository investments with certain financial institutions. As of December 31, 2025, $92.0 million of our cash and cash equivalents, primarily foreign depository accounts, were in excess of government provided insured depository limits. Although these depository investments exceed government insured depository limits, we have evaluated the credit worthiness of these financial institutions and determined the risk of material financial loss due to exposure of such credit risk to be minimal. Interest Rate Risk As of December 31, 2025, approximately $0.6 million of our cash and investments may be directly affected by changes in interest rates. As of December 31, 2025, we held $0.6 million of cash and variable-rate investments where a change in interest rates would impact our interest income. A hypothetical 50 basis point decline in interest rates as of December 31, 2025, assuming all other variables remain constant, would reduce annualized interest income on our cash and investments by less than $0.1 million. As of December 31, 2025, the carrying amounts of our revolving credit agreement totaled $25.0 million where a change in interest rates would impact our interest expense. A hypothetical 50 basis point increase in interest rates as of December 31, 2025, assuming all other variables remain constant, would increase our interest expense by $0.1 million. The analyses cover our debt and investments. The analyses use actual or approximate maturities for the debt and investments. The discount rates used were based on the market interest rates in effect at December 31, 2025. As of December 31, 2025 we have not entered into any derivative instruments to hedge the impact of the changes in variable interest rates under our revolving credit agreement. Foreign Currency Exchange Rate Risk We are exposed to changes in foreign currency exchange rates to the extent that such changes affect our revenue and gross margin on revenue derived from some international customers, operating expenses, and assets and liabilities held in non-functional currencies related to our foreign subsidiaries. Our primary exposures to foreign currency exchange rate movements are with the euro and the British pound. Our revenue is primarily denominated in the respective functional currency of the subsidiary and paid in that subsidiary's functional currency or certain other local currency. The majority of our global supply chain predominately makes payments in U.S. dollars and some of our operating expenses are paid in certain non-USD local currencies (approximately 44.0% of total operating expense for the year ended December 31, 2025, respectively). Therefore, our revenue, gross margins, operating expenses and operating loss are all subject to foreign currency fluctuations. As a result, changes in currency exchange rates could cause variations in our operating loss. A hypothetical 10% movement in foreign exchange rates would result in a before-tax positive or negative impact of approximately $6.3 million for the year ended December 31, 2025. Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analyses performed as of December 31, 2025 due to the inherent limitations associated with predicting the foreign currency exchange rates, and our actual exposures and positions. We have certain customers and suppliers who are invoiced or pay in a non-functional currency. Changes in the monetary exchange rates used to invoice such customers versus the functional currency of the entity billing such customers may adversely affect our results of operations and financial condition. To manage the volatility relating to these typical business exposures, we may enter into various derivative transactions, when appropriate. We do not hold or issue derivative instruments for trading or other speculative purposes. All non-functional currencies billed would result in a combined hypothetical gain or loss of $8.1 million if the U.S. dollar weakened or strengthened 10% against the billing currencies. All non-functional currencies invoiced by suppliers would result in a combined hypothetical gain or loss of $9.2 million if the U.S. dollar weakened or strengthened 10% against the billing currencies. This change represents an increase in the amount of hypothetical gain or loss compared to prior periods and is mainly due to an increase in U.S. dollar denominated billings in a non-U.S. dollar denominated subsidiary. As of December 31, 2025, we had certain material contracts subject to currency revaluation, including accounts receivable, accounts payable and lease liabilities denominated in foreign currencies. For further information about the fair value of our investments as of December 31, 2025, see Note 4 of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this report. 68 ITEM 8. FINANCIAL STATEME NTS AND SUPPLEMENTARY DATA The following consolidated financial statements are contained in this report. Page Report of Independent Registered Public Accounting Firm Financial Statements 72 Consolidated Balance Sheets, As of December 31, 2025 and 2024 72 Consolidated Statements of Loss, Years Ended December 31, 2025, 2024 and 2023 73 Consolidated Statements of Comprehensive Income (Loss), Years Ended December 31, 2025, 2024 and 2023 74 Consolidated Statements of Changes in Equity, Years Ended December 31, 2025, 2024 and 2023 75 Consolidated Statements of Cash Flows, Years Ended December 31, 2025, 2024 and 2023 76 Notes To Consolidated Financial Statements 77 Schedule II - Valuation and Qualifying Accounts, Years Ended December 31, 2025, 2024 and 2023 126 PricewaterhouseCoopers LLP ; PCAOB Firm ID: 238 ; Birmingham, Alabama 69 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of ADTRAN Holdings, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of ADTRAN Holdings, Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of loss, of comprehensive income (loss), of changes in equity and of cash flows for each of the three years in the period ended December 31, 2025, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date as the Company did not design and maintain effective controls (i) in response to the risks of material misstatement and (ii) over financial statement preparation, presentation and disclosure commensurate with its financial reporting requirements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2025 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management's report referred to above. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) provide reasonable assurance regarding 70 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Inventory – Estimate of Certain Excess and Obsolete Reserves As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated net inventory as of December 31, 2025 was $215.7 million, of which certain inventory is subject to certain excess and obsolete reserves. Management establishes reserves for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which consider historical usage, known trends, inventory age, and market conditions. The principal considerations for our determination that performing procedures relating to the valuation of inventory – estimate of certain excess and obsolete reserves is a critical audit matter are (i) the significant judgment by management when developing the estimate of certain excess and obsolete inventory reserves and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the estimated reserve percentages. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to certain excess and obsolete inventory reserves, including controls over the significant assumption related to estimated reserve percentages. These procedures also included, among others (i) testing management’s process for developing the estimate of certain excess and obsolete inventory reserves; (ii) evaluating the appropriateness of management’s estimation methodology; (iii) testing the completeness and accuracy of the underlying data used in developing the estimate of certain excess and obsolete inventory reserves, including historical usage, known trends, and inventory age; and (iv) evaluating the reasonableness of the significant assumption used by management related to the estimated reserve percentages. Evaluating management’s assumption related to the estimated reserve percentages involved considering (i) the current and past results of the Company; (ii) a comparison of the prior year estimate to actual activity in the current year; and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit. /s/PricewaterhouseCoopers LLP Birmingham, Alabama February 26, 2026 We have served as the Company’s auditor since 1986. 71 Financial Statements ADTRAN Holdings, Inc. Consolidated Balance Sheets (In th ousands, except per share amount) December 31, 2025 and 2024 ASSETS 2025 2024 Current Assets Cash and cash equivalents $ 95,696 $ 76,021 Accounts receivable, less allowance for credit losses of $ 1,318 and $ 1,300 as of December 31, 2025 and 2024, respectively 210,687 178,030 Other receivables 7,046 9,775 Inventory, net 215,736 261,557 Income tax receivable 3,667 5,461 Prepaid expenses and other current assets 55,317 56,395 Short-term investments - deferred compensation 35,174 — Assets held for sale 11,901 11,901 Total Current Assets 635,224 599,140 Property, plant and equipment, net 124,384 106,454 Goodwill 59,983 52,918 Intangibles, net 294,047 284,893 Deferred tax assets 16,481 17,826 Other non-current assets 73,352 78,128 Long-term investments 1,022 32,060 Total Assets $ 1,204,493 $ 1,171,419 LIABILITIES AND EQUITY Current Liabilities Accounts payable $ 167,337 $ 171,825 Unearned revenue 87,541 52,701 Accrued expenses and other liabilities 33,690 34,158 Accrued wages and benefits 32,203 32,853 Deferred compensation liability 37,447 — Income tax payable 3,642 1,936 Total Current Liabilities 361,860 293,473 Non-current revolving credit agreement outstanding 25,000 189,576 Non-current convertible senior notes, net of debt issuance costs 193,038 — Deferred tax liabilities 27,453 30,372 Non-current unearned revenue 27,143 22,065 Non-current pension liability 6,277 8,983 Non-current deferred compensation liability — 33,203 Non-current lease obligations 27,000 25,925 Other non-current liabilities 17,564 17,928 Total Liabilities 685,335 621,525 Commitments and contingencies (see Note 17) Redeemable Non-Controlling Interest 373,328 422,943 Equity Common stock, par value $ 0.01 per share; 200,000 shares authorized; 80,188 shares issued and 79,926 outstanding as of December 31, 2025 and 79,483 shares issued and 79,218 outstanding as of December 31, 2024 802 795 Additional paid-in capital 801,269 808,913 Accumulated other comprehensive income 78,877 11,254 Retained deficit ( 730,010 ) ( 688,813 ) Less treasury stock at cost: 262 and 266 shares as of December 31, 2025 and 2024, respectively ( 5,108 ) ( 5,198 ) Total Equity 145,830 126,951 Total Liabilities and Equity $ 1,204,493 $ 1,171,419 See accompanying notes to consolidated financial statements. 72 ADTRAN Holdings, Inc. Consolidated Statements of Loss (In thousands, except per share amounts) Years ended December 31, 2025, 2024 and 2023 2025 2024 2023 Revenue Network Solutions $ 896,911 $ 738,964 $ 974,389 Services & Support 186,896 183,756 174,711 Total Revenue 1,083,807 922,720 1,149,100 Cost of Revenue Network Solutions 592,141 517,220 724,518 Network Solutions - charges and inventory write-down — 8,597 24,313 Services & Support 76,711 72,739 69,142 Total Cost of Revenue 668,852 598,556 817,973 Gross Profit 414,955 324,164 331,127 Selling, general and administrative expenses 226,275 232,918 258,610 Research and development expenses 204,276 221,458 258,311 Goodwill impairment — 297,353 37,874 Operating Loss ( 15,596 ) ( 427,565 ) ( 223,668 ) Interest and dividend income 2,321 3,058 2,340 Interest expense ( 19,344 ) ( 22,053 ) ( 16,299 ) Net investment gain 3,001 3,587 2,754 Other (expense) income, net ( 1,632 ) 246 1,266 Loss Before Income Taxes ( 31,250 ) ( 442,727 ) ( 233,607 ) Income tax expense ( 4,993 ) ( 7,340 ) ( 28,299 ) Net Loss $ ( 36,243 ) $ ( 450,067 ) $ ( 261,906 ) Net Income attributable to non-controlling interest (1) 9,413 9,824 6,946 Net Loss attributable to ADTRAN Holdings, Inc. $ ( 45,656 ) $ ( 459,891 ) $ ( 268,852 ) Weighted average shares outstanding – basic 79,742 78,928 78,416 Weighted average shares outstanding – diluted 79,742 78,928 78,416 Loss per common share attributable to ADTRAN Holdings, Inc. – basic (2) $ ( 0.52 ) $ ( 5.79 ) $ ( 3.43 ) Loss per common share attributable to ADTRAN Holdings, Inc. – diluted (2) $ ( 0.52 ) $ ( 5.79 ) $ ( 3.43 ) (1) For the years ended December 31, 2025 and 2024 we accrued $ 9.3 million and $ 9.8 million, respectively, of net income attributable to non-controlling interest, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA. For the year ended December 31, 2023, we accrued $ 10.1 million, representing the recurring cash compensation earned by non-controlling interest shareholders post-DPLTA, partially offset by a $ 3.2 million net loss attributable to non-controlling interests pre-DPLTA.12-24 (2) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $ 4.1 million, $ 3.0 million and $ 0 effect of redemption of RNCI for the years ended December 31, 2025, 2024 and 2023, respectively. See Note 18 for additional information. See accompanying notes to consolidated financial statements. 73 ADTRAN Holdings, Inc. Consolidated Statements of Compr ehensive Income (Loss) (In thousands) Years ended December 31, 2025, 2024 and 2023 2025 2024 2023 Net Loss $ ( 36,243 ) $ ( 450,067 ) $ ( 261,906 ) Other Comprehensive Income (Loss), net of tax Net unrealized gain on available-for-sale securities — — 454 Defined benefit plan adjustments 4,110 1,479 ( 1,490 ) Foreign currency translation gain (loss) 63,513 ( 37,755 ) 22,822 Other Comprehensive Income (Loss), net of tax 67,623 ( 36,276 ) 21,786 Comprehensive Income (Loss), net of tax 31,380 ( 486,343 ) ( 240,120 ) Less: Comprehensive Income attributable to non-controlling interest 9,413 9,824 7,328 Comprehensive Income (Loss) attributable to ADTRAN Holdings, Inc., net of tax $ 21,967 $ ( 496,167 ) $ ( 247,448 ) See accompanying notes to consolidated financial statements. 74 ADTRAN Holdings, Inc. Consolidated Statements of Changes in Equity (In thousands, except per share amounts) Years ended December 31, 2025, 2024 and 2023 Common Shares Common Stock Additional Paid-In Capital Retained Earnings (Deficit) Treasury Stock Accumulated Other Comprehensive Income Non-controlling interest Total Equity Balance as of December 31, 2022 78,088 $ 781 $ 895,834 $ 55,338 $ ( 4,125 ) $ 26,126 $ 329,659 $ 1,303,613 Net loss — — — ( 258,727 ) — — ( 3,179 ) ( 261,906 ) Annual recurring compensation earned — — — ( 10,125 ) — — — ( 10,125 ) Acquisition of Adtran Networks — — — 3,762 — — — 3,762 Reclassification and remeasurement from equity to mezzanine equity for non-controlling interests in Adtran Networks — — ( 116,895 ) — — — ( 326,862 ) ( 443,757 ) Mezzanine equity for non-controlling interest in Adtran Networks for Adtran Networks stock options exercised ( 1,175 ) — ( 1,175 ) Other comprehensive income, net of tax — — — — — 21,404 382 21,786 Dividend payments ($ 0.09 per share) — — — ( 21,237 ) — — — ( 21,237 ) Dividends accrued on unvested restricted stock units — — — 8 — — — 8 Deferred compensation adjustments, net of tax — — — ( 145 ) ( 1,700 ) — — ( 1,845 ) Adtran RSUs and restricted stock vested 859 9 — ( 1,115 ) — — — ( 1,106 ) Adtran stock options exercised 23 — — 164 — — — 164 Redemption of redeemable non-controlling interest — — — 371 — — — 371 Adtran Networks stock options exercised — — 323 — — — — 323 Modification of stock options — — 339 339 Adtran stock-based compensation expense — — 16,016 — — — — 16,016 Adtran Networks stock-based compensation expense — — 26 — — — — 26 Balance as of December 31, 2023 78,970 790 794,468 ( 231,706 ) ( 5,825 ) 47,530 — 605,257 Net loss — — — ( 450,067 ) — — — ( 450,067 ) Annual recurring compensation earned — — — ( 9,824 ) — — — ( 9,824 ) Reclassification and remeasurement from equity to mezzanine equity for non-controlling interests in Adtran Networks — — ( 1,175 ) — — — — ( 1,175 ) Other comprehensive loss, net of tax — — — — — ( 36,276 ) — ( 36,276 ) Deferred compensation adjustments, net of tax — — ( 368 ) — 627 — — 259 Adtran RSUs and restricted stock vested 374 4 — ( 1,026 ) — — — ( 1,022 ) Adtran stock options exercised 139 1 — 824 — — — 825 Redemption of redeemable non-controlling interest — — — 2,986 — — — 2,986 Modification of stock options — — ( 190 ) — — — — ( 190 ) Adtran stock-based compensation expense — — 14,825 — — — — 14,825 Adtran Networks stock-based compensation expense — — 1,353 — — — — 1,353 Balance as of December 31, 2024 79,483 795 808,913 ( 688,813 ) ( 5,198 ) 11,254 — 126,951 Net loss — — — ( 36,243 ) — — — ( 36,243 ) Annual recurring compensation earned — — — ( 9,413 ) — — — ( 9,413 ) Other comprehensive income, net of tax — — — — — 67,623 — 67,623 Dividends accrued on unvested restricted stock units — — — ( 4 ) — — — ( 4 ) Deferred compensation adjustments, net of tax — — ( 56 ) — 90 — — 34 Adtran RSUs and restricted stock vested 432 4 — ( 1,448 ) — — — ( 1,444 ) Adtran stock options exercised 273 3 — 1,826 — — — 1,829 Purchase of capped calls related to the convertible senior notes — — ( 17,650 ) — — — — ( 17,650 ) Redemption of redeemable non-controlling interest — — — 4,085 — — — 4,085 Adtran stock-based compensation expense — — 10,062 — — — — 10,062 Balance as of December 31, 2025 80,188 $ 802 $ 801,269 $ ( 730,010 ) $ ( 5,108 ) $ 78,877 $ — $ 145,830 See accompanying notes to consolidated financial statements. 75 ADTRAN Holdings, Inc. Consolidated Statements of Cash Flows (In thousands) Years ended December 31, 2025, 2024 and 2023 2025 2024 2023 Cash flows from operating activities: Net Loss $ ( 36,243 ) $ ( 450,067 ) $ ( 261,906 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 92,546 90,529 112,949 Goodwill impairment — 297,353 37,874 Amortization of revolving credit facility issuance costs 1,351 3,950 862 Amortization of convertible notes issuance costs 441 — — Accretion on available-for-sale investments, net — — ( 22 ) Gain on investments ( 4,740 ) ( 5,030 ) ( 2,900 ) Net loss on disposal of property, plant and equipment 228 1,371 458 Stock-based compensation expense 10,062 15,988 16,381 Deferred income taxes ( 3,847 ) 5,576 15,724 Inventory write down - business efficiency program — 4,135 24,313 Inventory reserves ( 2,541 ) 5,316 25,546 Other, net — — ( 2,942 ) Change in operating assets and liabilities: Accounts receivable, net ( 18,301 ) 46,108 72,320 Other receivables 5,767 10,713 10,315 Income taxes receivable 2,034 648 2,098 Inventory 64,494 79,985 22,408 Prepaid expenses, other current assets and other assets 19,223 ( 13,445 ) ( 31,964 ) Accounts payable 17,982 10,238 ( 91,907 ) Accrued expenses and other liabilities ( 17,967 ) 4,873 11,317 Income taxes payable ( 722 ) ( 4,670 ) ( 3,939 ) Net cash provided by (used in) operating activities 129,767 103,571 ( 43,015 ) Cash flows from investing activities: Purchases of property, plant and equipment ( 31,737 ) ( 34,501 ) ( 36,337 ) Purchases of intangibles - developed technology ( 37,528 ) ( 30,671 ) ( 9,438 ) Proceeds from sales and maturities of available-for-sale investments 1,019 1,240 10,567 Purchases of available-for-sale investments ( 383 ) ( 268 ) ( 868 ) (Payments for) proceeds from beneficial interests in securitized accounts receivable ( 539 ) ( 55 ) 1,218 Net cash used in investing activities ( 69,168 ) ( 64,255 ) ( 34,858 ) Cash flows from financing activities: Tax withholdings related to stock-based compensation settlements ( 1,478 ) ( 1,143 ) ( 6,458 ) Proceeds from stock option exercises 1,829 824 540 Dividend payments — — ( 21,237 ) Proceeds from receivables purchase agreement — 68,556 14,099 Repayments on receivables purchase agreement — ( 83,772 ) — Proceeds from draw on revolving credit agreement 49,000 26,000 163,733 Repayment of revolving credit agreement ( 214,000 ) ( 31,000 ) ( 64,987 ) Redemption of redeemable non-controlling interest ( 46,575 ) ( 17,398 ) ( 1,224 ) Payment of annual recurring compensation to non-controlling interest ( 10,053 ) ( 10,084 ) — Payment of debt issuance cost ( 9,003 ) ( 1,994 ) ( 708 ) Proceeds from issuance of senior convertible notes 201,250 — — Payments for capped call transactions related to convertible senior notes ( 17,650 ) — — Repayment of notes payable — — ( 24,891 ) Net cash (used in) provided by financing activities ( 46,680 ) ( 50,011 ) 58,867 Net increase (decrease) in cash and cash equivalents 13,919 ( 10,695 ) ( 19,006 ) Effect of exchange rate changes 5,756 ( 451 ) ( 2,471 ) Cash and cash equivalents, beginning of year 76,021 87,167 108,644 Cash and cash equivalents, end of year $ 95,696 $ 76,021 $ 87,167 Supplemental disclosure of cash financing activities: Cash paid for interest $ 13,273 $ 20,884 $ 12,596 Cash used in operating activities related to operating leases $ 10,216 $ 9,274 $ 9,682 Supplemental disclosure of non-cash investing and financing activities: Right-of-use assets obtained in exchange for lease obligations $ 6,432 $ 5,317 $ 17,865 Purchases of property, plant and equipment included in accounts payable $ 3,716 $ 2,635 $ 1,298 Purchases of property, plant and equipment included in other non-current liabilities $ 5,119 $ — $ — Redemption of redeemable non-controlling interest $ 4,085 $ 2,986 $ 371 See accompanying notes to consolidated financial statements. 76 oADTRAN Holdings, Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GENERAL ADTRAN Holdings, Inc. (“Adtran” or the “Company”) is a leading global provider of networking and communications platforms, software, systems and services focused on the broadband access market, serving a diverse domestic and international customer base in multiple countries that includes large, medium and small Service Providers, alternative Service Providers, such as utilities, municipalities and fiber overbuilders, cable/MSOs, SMBs and distributed enterprises, including Fortune 500 companies with sophisticated business continuity applications; and federal, state and local government agencies. Our innovative solutions and services enable voice, data, video and internet-communications across a variety of network infrastructures and are currently in use by millions worldwide. We support our customers through our direct global sales organization and our distribution networks. Our success depends upon our ability to increase unit volume and market share through the introduction of new products and succeeding generations of products having optimal selling prices and increased functionality as compared to both the prior generation of a product and to the products of competitors in order to gain market share. To service our customers and grow revenue, we are continually conducting research and developing new products addressing customer needs and testing those products for the specific requirements of the particular customers. We offer a broad portfolio of flexible software and hardware network solutions and services that enable Service Providers to meet today’s service demands, while enabling them to transition to the fully converged, scalable, highly-automated, cloud-controlled voice, data, internet and video network of the future. In addition to our global headquarters in Huntsville, Alabama, and our European headquarters in Munich, Germany, we have sales and research and development facilities in strategic global locations. The Company solely owns ADTRAN, Inc. and is the majority shareholder of Adtran Networks SE (“Adtran Networks”). ADTRAN, Inc. is a leading global provider of open, disaggregated networking and communications solutions. Adtran Networks is a global provider of network solutions for data, storage, voice and video services. We believe that the combined technology portfolio can best address current and future customer needs for high-speed connectivity from the network core to the end consumer, especially upon the convergence of solutions at the network edge. Domination and Profit and Loss Transfer Agreement, Liquidity, Credit Facility and Notes Offering The DPLTA between the Company, as the controlling company, and Adtran Networks, as the controlled company, which was executed on December 1, 2022, became effective on January 16, 2023, as a result of its registration with the commercial register ( Handelsregister ) of the local court ( Amtsgericht ) at the registered seat of Adtran Networks (Jena). Under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks. The Company’s payment obligation in satisfaction of the requirement that it absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2025, and it will apply to any net loss generated by Adtran Networks in 2026. Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) has received an offer to elect either (1) to remain an Adtran Networks shareholder and receive from us recurring compensation in cash of € 0.52 per share for each full fiscal year of Adtran Networks (the "Annual Recurring Compensation"), or (2) to put their Adtran Networks shares to the Company in exchange for compensation in cash of € 17.21 per share, plus guaranteed interest (the "Exit Compensation"). The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid. The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that w as 1.27 % as o f December 31, 2025. Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approx imately € 303.9 million or $ 357.0 million, based on an exchange rate as of December 31, 2025 and reflecting interest accrued through December 31, 2025 during the pendency of the appraisal proceedings discussed below. Shareholders electing the first option of Annual Recurring Compensation may later elect the second option. The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023 . However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act ( Aktiengesetz ) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette ( Bundesanzeiger ). Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the trial on the merits of the DPLTA has recommenced. It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved. Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond. 77 Additionally, our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 7.9 million (or $ 9.3 million based on the exchange rate as of December 31, 2025) per year assuming none of the minority Adtran Networks shareholders as of December 31, 2025 were to elect Exit Compensation. The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in the German court. The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year). With respect to the 2023 fiscal year, Adtran Networks’ ordinary general shareholders’ meeting occurred on June 28, 2024 and, therefore, the Annual Recurring Compensation was paid on July 3, 2024. With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholder meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025. With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting. During the years ended December 31, 2025 and 2024, we accrued $ 9.3 million and $ 9.8 million, respectively, in Annual Recurring Compensation. The Annual Recurring Compensation is reflected as an increase to retained deficit in the Consolidated Balance Sheets. On July 18, 2022, ADTRAN, Inc., as the borrower, and ADTRAN Holdings, Inc. entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (“Credit Agreement”), which has since been amended six times. The Company had access to $ 319.2 million on its Credit Facility for future borrowings based on debt c ovenant compliance metrics. The financial covenants under the Credit Agreement, as amended, require the Company to maintain a Consolidated Total Net Leverage Ratio of 5.00 x, a Consolidated Senior Secured Net Leverage Ratio of 3.25 x ( 4.0 x to 3.5 x during a Springing Covenant Period) and a Consolidated Fixed Charge Coverage Ratio of 1.25 x (as such terms are defined in the Credit Agreement). In addition, during a Springing Covenant Period the cash and cash equivalents of the credit parties must be at least $ 50.0 million and the cash and cash equivalents of the Company and its subsidiaries must be at least $ 70.0 million. On October 18, 2022, the Company's Board of Directors authorized the Company to purchase additional shares of Adtran Networks through open market purchases not to exceed 15,346,544 shares. As of December 31, 2025, and as of the date of issuance of these financial statements, the Company has sufficient liquidity to meet the majority of its payment obligations under the DPLTA pertaining to Exit Compensation. For th e year ended December 31, 2025, 2.0 million shares of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of approximately € 40.2 million, or approximately $ 46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders. For the year ended December 31, 2024, approximately 0.8 million shares o f Adtran Networks stock were tendered to the Company and Exit Compensation payments of approximately € 15.7 million or approximately $ 17.4 million based on an exchange rate as of December 31, 2024, were paid to Adtran Networks shareholders. We believe the probability that more than a small minority of Adtran Networks shareholders elect to receive Exit Compensation in the next twelve months is remote based on the following factors: (i) the shareholders can exercise their right to receive the Exit Compensation until two months after publication of the final decision in the appraisal proceedings and we do not expect the final decision to be published within the next 12 months; (ii) the diverse base of shareholders that must make this election on an individual shareholder basis; (iii) the fact the date of a decision by the court on the merits of the case is uncertain, it will most likely take a minimum of 12 months for a ruling and, thereafter, an expected appeal process will take a further 12-24 months to resolve; (iv) the current guaranteed Annual Recurring Compensation payment; and (v) the current trading value of Adtran Networks shares. Moreover, on September 19, 2025, the Company issued $ 201.3 million aggregate principal amount of convertible senior notes due 2030 (the “Notes”). The Notes accrue interest at a rate of 3.75 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2026. Unless repurchased earlier, redeemed, or converted, the Notes will mature on September 15, 2030 . After deducting the initial purchasers’ discounts, commissions, and estimated offering expenses, the Company received net proceeds of $ 192.6 million. The Company experienced revenue declines in the year ended December 31, 2024. However, customers began replenishing their inventories to meet increasing demand, and revenue increased throughout the year ended December 31, 2025. In 2023, the Company suspended dividend payments and effectuated a business efficiency program (the "Business Efficiency Program"), which targeted the reduction of ongoing operating expenses and focused on enhancing capital efficiency. The Business Efficiency Program was completed as of December 31, 2024. In addition, the Company continues to assess the probability that the sale of its headquarters in Huntsville will occur and has determined it is probable of occurring in the next twelve months. In summary, the Company believes that its cash and cash equivalents, working capital management initiatives and availability to access cash under the Wells Fargo credit facility or other future sources of capital will be adequate to meet our business operating requirements, our capital expenditures and our expected obligations under both the Notes and the DPLTA, including anticipated levels of Exit Compensation, as well as to support our ability to continue to comply with our debt covenants under the Credit Facility for at least the 78 next twelve months, from the issuance of these financial statements. See Note 10, Credit Agreement, for additional information regarding the terms of the Amendments of the Wells Fargo Credit Agreement. Note 1 - Summary Of Significant Accounting Policies Basis of Presentation The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and include the financial position, results of operations, comprehensive (loss) income, changes in equity and cash flows of Adtran and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Significant estimates include allowance for credit losses on accounts receivable and contract assets, excess and obsolete inventory reserves, determination and accrual of the deferred revenue related to performance obligations under contracts with customers, estimated costs to complete obligations associated with deferred and accrued revenue and network installations, estimated income tax provision and income tax contingencies, fair value of stock-based compensation, assessment of goodwill and other intangibles for impairment, estimated lives of intangible assets, estimates of intangible assets upon measurement, estimated pension liability and fair value of investments and estimated contingent liabilities. Actual amounts could differ significantly from these estimates. We assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of ongoing inflationary pressures, continued elevated interest rates, instability in the financial services industry, currency fluctuations and political tensions as of December 31, 2025, and through the date of this report. These conditions could result in further impacts to the Company's consolidated financial statements in future reporting periods. The accounting matters assessed included, but were not limited to, the allowance for credit losses, stock-based compensation, carrying value of goodwill, intangibles and other long-lived assets, financial assets, valuation allowances for tax as sets, revenue recognition and costs of revenue. Summary of Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents represent demand deposits, money market funds and short-term investments classified as available-for-sale with original maturities of three months or less. We maintain depository investments with certain financial institutions. As of December 31, 2025, $ 92.0 million of our cash and cash equivalents, primarily certain domestic money market funds and foreign depository accounts, were in excess of government provided insured depository limits. Although these depository investments may exceed government insured depository limits, we have evaluated the credit worthiness of these applicable financial institutions and determined the risk of material financial loss due to the exposure of such credit risk to be minimal. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models may be applied. Assets and liabilities recorded at fair value in our consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. The carrying amounts reported in the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value measurements of our derivative instruments are determined using models that maximize the use of the observable market inputs including interest rate curves and both forward and spot prices for currencies, and are classified as Level II under the fair value hierarchy. Investments with contractual maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Despite the long-term nature of their stated contractual maturities, we routinely buy and sell these securities and we believe we have the ability to quickly sell them to the remarketing agent, tender agent or issuer at par value plus accrued interest in the event we decide to liquidate our investment in a particular variable rate demand note. All income generated from these investments is recorded as interest income. We have not recorded any losses relating to variable rate demand notes. 79 Short-term investments is comprised of our deferred compensation plan assets. Long-term investments is comprised of our marketable equity securities and other equity investments. Marketable equity securities are reported at fair value as determined by the most recently traded price of the securities at the balance sheet date, although the securities may not be readily marketable due to the size of the available market. Any changes in fair value are recognized in net investment gain. Realized gains and losses on sales of debt securities are computed under the specific identification method and are included in other (expense) income, net. See Note 4 fo r additional information. Accounts Receivable The Company records accounts receivable at amortized cost. Prior to establishing payment terms for a new customer, we evaluate the credit risk of the customer. Credit limits and payment terms established for new customers are re-evaluated periodically based on customer collection experience and other financial factors. As of December 31, 2025, no customer comprised more than 10% of our total accounts receivable balance. As of December 31, 2024, no customer comprised more than 10% of our total accounts receivable balance. Accounts receivable balances are considered past due when payment has not been received by the date indicated on the relevant invoice or based on agreed upon terms between the customer and the Company. The Company regularly reviews the need for an allowance for credit losses related to our outstanding accounts receivable balances using the historical loss-rate method, as well as assessing asset-specific risks. The assessment of asset-specific risks included the evaluation of relevant available information, from internal and external sources, relating to current conditions that may affect a customer’s ability to pay, such as the customer’s current financial condition or credit rating by geographic location, as provided by a third party and/or by customer, if needed, and overall macro-economic conditions in which the customer operates. The Company pools assets by geographic location to determine if an allowance should be applied to its accounts receivable balance, assessing the specific country risk rating and overall economics of that particular country. If elevated risk existed, or customer specific risk indicated the accounts receivable balance was at risk, the Company would further analyze the need for an allowance related to specific accounts receivable balances. Additionally, the Company would determine if significant changes to customer country risk rating from period-to-period and from the end of the prior year to the end of the current quarter would require further review and analysis by the Company. Based on these assessments, an allowance for credit losses would be recorded if the Company determined that, based on our historical write-offs, which have been immaterial, and such asset specific risks, there was risk in collectability of the full amount of any accounts receivable. Accounts Receivable Factoring Receivables Purchase Agreement On July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution (the “Factor”), which accelerates receivable collection and helps to better manage cash flow. These transactions are accounted for in accordance with ASC Topic 860 and result in a reduction in accounts receivable because the Factoring Agreement transfers effective control over, and risk related to the receivables to the buyers. Trade accounts receivables balances sold are removed from the Consolidated Balance Sheets and cash received is reflected as cash flows provided by (used in) operating activities in the Consolidated Statements of Cash Flow. Factoring related interest expense is recorded to interest expense on the Consolidated Statements of Loss. On each sale date, the Factor retains from the sale price a default reserve, up to a required balance, which is held by the Factor in a reserve account and pledged to the Company. The Factor is entitled to withdraw from the reserve account the sale price of a defaulted receivable. The balance in the reserve account is included in other assets on the Consolidated Balance Sheets. The Company at its own expense does have collection and administrative responsibilities for the sold receivables and that is its only continuing involvement with the Factor. The Company is not compensated for the servicing of the factoring program and deems the costs of servicing the receivables sold to be immaterial. On December 19, 2023, the Company entered into a factoring agreement with a third-party financial institution to sell, on a revolving basis, undivided interests in the Company’s accounts receivable. The factoring agreement qualified for treatment as a secured borrowing with a pledge of collateral under Accounting Standards Codification ("ASC") Topic 810, Consolidations, as the Company was considered the primary beneficiary in a variable interest entity created to hold the factored receivables and the Company retained a residual claim on reserves related to the factored receivables. The receivables factored were carried in accounts receivable, less allowance for credit losses on the Consolidated Balance Sheets, the secured borrowings were carried on the Company’s Consolidated Balance Sheets as a current liability, in accounts payable, proceeds and repayments of the secured borrowings are reflected as cash flows (used in) provided by financing activities in the Consolidated Statements of Cash Flows and program fees are recorded in interest expense in the Company’s Consolidated Statements of Loss. The short-term liability classification of the secured borrowings was based on the estimated timing of the collection of the accounts receivable which were expected to be received within 12 months. The receivables purchase agreement was terminated on July 1, 2024 and there were no secured borrowings under this agreement as of December 31, 2024. See Note 2 for additional information. Inventory 80 Inventory is carried at the lower of cost and estimated net realizable value, with cost being determined using the first-in, first-out method. Standard costs for material, labor and manufacturing overhead are used to value inventory and are updated at least quarterly. We establish reserves for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which consider historical usage, known trends, inventory age and market conditions. When we dispose of excess and obsolete inventories, the related disposals are charged against the inventory reserve. See Note 5 for additional information. Property, Plant and Equipment Property, plant and equipment, which is stated at cost, is depreciated using the straight-line method over the estimated useful lives of the assets. Generally, we depreciate building and land improvements from 5 to 39 years, office machinery and equipment from three to seven years , engineering machinery and equipment from three to seven years , and computer software from 3 to 5 years . Expenditures for repairs and maintenance are charged to expense as incurred. Major improvements that materially prolong the lives of the assets are capitalized. Gains and losses on the disposal of property, plant and equipment are recorded in operating loss. See Note 6 for additional information. Assets Held for Sale An asset is considered to be held for sale when all the following criteria are met: (i) management commits to a plan to sell the asset; (ii) the asset is available for immediate sale in its present condition; (iii) actions required to complete the sale of the asset have been initiated; (iv) sale of the asset is probable and the completed sale is expected to occur within one year; (v) it is unlikely that the disposal plan will be significantly modified; and (vi) the asset is actively being marketed for sale at a price that is reasonable given its current market value. The Company records assets held for sale at the lower of their carrying value or fair value. Intangible Assets Purchased intangible assets with finite lives are carried at cost less accumulated amortization. Amortization is recorded over the estimated useful lives of the respective assets. See Note 9 for additional information . Impairment of Long-Lived Assets and Intangibles Long-lived assets, such as property, plant and equipment, right of use lease assets and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset or asset group. There were no impairment losses for long-lived assets and intangible assets during the years ended December 31, 2025, 2024 and 2023. See Note 9 for additional information. Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired. The Company’s annual impairment assessment is done at the reporting unit level, which we determined are generally the same as our operating segments, which are identified in Note 16 to the Consolidated Financial Statements. We review goodwill for impairment annually during the fourth quarter and also test for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting units below their carrying amount. Such events and circumstances may include among others: a significant adverse change in legal factors or in the general business climate; significant decline in our stock price and market capitalization; unanticipated competition; the testing for recoverability of a significant asset within the reporting unit; and an adverse action or assessment by a regulator. Any adverse change in these factors could have a significant impact on the recoverability of goodwill and could have a material impact on our consolidated financial statements. See Note 8 for additional information. 81 Convertible Senior Notes We account for our convertible senior notes with embedded conversion features in accordance with ASC 470-20, under which convertible debt instruments would only be separated into multiple components if they were issued at a substantial premium or if embedded derivatives requiring bifurcation were identified. The convertible senior notes (the "2030 Notes" or the “Notes”) were not issued at a substantial premium, and we analyzed the provisions of the 2030 Notes and did not identify any material embedded features which would require bifurcation from the host debt. As such, the 2030 Notes are accounted for entirely as a liability, net of unamortized issuance costs. The carrying amount of the liability is classified as long-term as the instrument does not mature within one year of the balance sheet date and the holder is not permitted to demand repayment of the principal within one year of the balance sheet date. However, if conditions to convertibility are met and holders are expected to convert within one year as described further in Note 11, we may be required to reclassify the carrying amount of the liability to current. Issuance costs are amortized to interest expense using the effective interest rate method. Pension Benefit Plan Obligations The Company maintains a defined benefit pension plans covering employees in certain foreign countries. Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. The pension benefit plan obligation is calculated based on the actuarial present value of expected future payments as of the balance sheet date required to settle the obligation resulting from employee service rendered prior to that date. This amount is known as the projected benefit obligation. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations. See Note 13 for additional information. Lease Obligations The Company has operating leases for office space, automobiles and various other equipment in the U.S. and in certain international locations. Other contracts, such as manufacturing agreements and service agreements, are reviewed to determine if they contain potential embedded leases. These other contracts are specifically reviewed to determine whether we have the right to substantially all of the economic benefit from the use of any specified assets or the right to direct the use of any specified assets, either of which would indicate the existence of a lease. Some of our leases include options to renew. For those leases that are reasonably assured to be renewed, we have included the option to extend as part of our right of use asset and lease liability. The exercise of lease renewal options is at our sole discretion. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, we elected to not separate lease and non-lease components. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Stock-Based Compensation The Company has two stock incentive plans from which stock options, performance stock units (“PSUs”), restricted stock units (“RSUs”) and restricted stock are available for grant to employees and directors. Costs related to these awards are recognized over their vesting periods. See Note 3 fo r additional information. Research and Development Costs Research and development costs include compensation for engineers and support personnel, contracted services, depreciation and material costs associated with new product development, enhancement of current products and product cost reductions. We continually evaluate new product opportunities and engage in intensive research for product and software develop ment efforts. Research and development costs totaled $ 204.3 million, $ 221.5 million and $ 258.3 million for the years ended December 31 , 2025, 2024 and 2023, respectively. Adtran Networks has arrangements with governmental entities for the purposes of obtaining funding for research and development activities. The Company classifies government grants received under these arrangements as a reduction to research and development expense incurred. For the years ended December 31, 2025, 2024 and 2023, the Company recognized $ 11.8 million, $ 9.2 million and $ 5.2 million, respectively, as a reduction of research and development expense. Advertising Costs The Company expenses all advertising costs as incurred. Advertising expenses for the years ended December 31, 2025, 2024 and 2023, totaled $ 0.2 million, $ 0.1 million and $ 0.2 million, respectively. Income Taxes The provision for income taxes has been determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are 82 recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from the difference between financial and tax basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when such changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits through interest expense and income tax expense, respectively. Foreign Currency Transactions with customers that are denominated in foreign currencies are recorded using the appropriate exchange rates from throughout the year. Assets and liabilities denominated in foreign currencies are remeasured at the balance sheet dates using the closing rates of exchange between those foreign currencies and the functional currency with any transaction gains or losses reported in other income, net. Our primary exposures to foreign currency exchange rate movements are with our German and U.K. subsidiaries, whose functional currencies are the euro and the British pound sterling. Adjustments resulting from translating financial statements of international subsidiaries are recorded as a component of accumulated other comprehensive income. Revenue Revenue is measured based on the consideration expected to be received in exchange for transferring goods or providing services to a customer and as performance obligations under the terms of the contract are satisfied. Generally, this occurs with the transfer of control of a product to the customer. For transactions where there are multiple performance obligations, individual products and services are accounted for separately if they are distinct (if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. Stand-alone selling prices are determined based on the prices at which the separate products and services are sold and are allocated based on each item’s relative value to the total value of the products and services in the arrangement. For items that are not sold separately, we estimate stand-alone selling prices primarily using the “expected cost plus a margin” approach. Payment terms are generally 30 days in the U.S. and typically longer in many geographic markets outside the U.S. Shipping fees collected are recorded as revenue and the related cost is included in cost of revenue. Revenue, value-added and other taxes collected concurrently with revenue-producing activities are excluded from revenue. Incremental costs of obtaining a contract, that are recoverable, are capitalized and amortized over the period that the related revenue is recognized if greater than one year. We have elected to account for shipping fees paid as a cost of fulfilling the related contract. We have also elected to apply the practical expedient related to the incremental costs of obtaining contracts and recognize those costs as an expense when incurred if the amortization period of the assets is one year or less. These costs are included in selling, general and administrative expenses. Capitalized costs with an amortization period greater than one year were immaterial. Revenue is generated by two reportable segments: Network Solutions and Services & Support. Network Solutions Segment - Includes hardware products and software defined next-generation virtualized solutions used in Service Provider or business networks, as well as prior generation products. The majority of the revenue from this segment is from hardware revenue. Hardware and Software Revenue Revenue from hardware sales is recognized when control is transferred to the customer, which is generally when the products are shipped. Shipping terms are generally FOB shipping point. Revenue from software license sales is recognized at delivery and transfer of control to the customer. Revenue is recognized net of estimated discounts and rebates using historical trends. Customers are typically invoiced when control is transferred and revenue is recognized. Our products generally include assurance-based warranties of 90 days to five years for product defects, which are accrued at the time products are delivered. Services & Support Segment - Includes a complete portfolio of maintenance, network implementation and solutions integration and managed services, which include hosted cloud services and subscription services to complement our Network Solutions segment. Maintenance Revenue Our maintenance service periods range from one month to five years . Customers are typically invoiced and pay for maintenance services at the beginning of the maintenance period. We recognize revenue for maintenance services on a straight-line basis over the maintenance period as our customers benefit evenly throughout the contract term and deferred revenue, when applicable, are recorded in current and non-current unearned revenue. 83 Network Implementation Revenue The Company recognizes revenue for network implementation, which primarily consists of engineering, execution and enablement services at a point in time when each performance obligation is complete. If we have recognized revenue but have not billed the customer, the right to consideration is recognized as a contract asset that is included in other receivables on the Consolidated Balance Sheet. The contract asset is transferred to accounts receivable when the completed performance obligation is invoiced to the customer. See Notes 2 and 16 for additional information on reportable segments. Unearned Revenue Unearned revenue primarily represents customer billings on maintenance service programs and unearned revenue related to multiple element contracts where we still have contractual obligations to our customers. We currently offer maintenance contracts ranging from one month to five years . Revenue attributable to maintenance contracts is recognized on a straight-line basis over the related contract term. We currently provide software maintenance and a variety of hardware maintenance services to customers ranging from one month to five years . When we defer revenue related to multiple performance obligations where we still have contractual obligations, we also defer the related costs. Current deferred costs are included in prepaid expenses and other current assets on the accompanying Consolidated Balance Sheets and totaled $ 2.0 million and $ 2.2 million as of December 31, 2025 and 2024, respectively. Non-current deferred costs included in other non-current assets on the accompanying Consolidated Balance Sheets were less than $ 0.1 million as of December 31, 2025 and 2024. Redeemable Non-Controlling Interest As of December 31, 2025 and 2024, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approxi mately 29.2 % and 33.0 %, respectively. As a result of the effectiveness of the DPLTA on January 16, 2023, the Adtran Networks shares, representing the equity interest in Adtran Networks held by holders other than the Company, can be tendered at any time and are, therefore, redeemable and must be classified outside stockholders’ equity. Therefore, the permanent equity noncontrolling interest balance was reclassified to redeemable non-controlling interest (RNCI) on January 16, 2023 and was remeasured to fair value based on the trading market price of the Adtran Networks shares. Subsequently, the carrying value of the RNCI is adjusted to its maximum redemption value at each reporting date when the maximum redemption value is greater than the initial carrying amount of the RNCI. For the period of time that the DPLTA is in effect, the RNCI will continue to be presented as RNCI outside of stockholders’ equity in the Consolidated Balance Sheets. See Note 15 for additional information on RNCI . Loss per Share Loss per common share and loss per common share assuming dilution are based on the weighted average number of common shares and, when dilutive, common equivalent shares outstanding during the year. See Note 18 for additional information. Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $ 4.1 mil lion and $ 3.0 million effect of redemption of RNCI for the years ended December 31, 2025 and 2024, respectively. There was no effect of redemption during the year ended December 31, 2023. See Note 18 for additional information. Recent Accounting Pronouncements Not Yet Adopted In September 2025, the Financial Accounting Standards Board (“FASB”) issued ASU 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software," which is intended to modernize the accounting for the costs of internal-use software given the evolution of software development to the incremental and iterative development method. The amendments remove all references to prescriptive and sequential development stages and, instead, require an entity to start capitalizing software costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period with the amendments to be applied using a prospective, modified or retrospective transition approach. The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements. 84 In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as amended by ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which applies to all public business entities and is intended to enhance disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The amendments are effective prospectively in the first annual period beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption and retrospective application are permitted. The Company is currently evaluating the effect that adoption of ASU 2024-03 will have on our disclosures. Recently Adopted Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. T he Company adopted the new standard with prospective application on January 1, 2025 . The adoption of this standard resulted in additional footnote disclosures. The adoption of this standard did not have a material impact on our Consolidated Balance Sheet, Consolidated Statement of Income or Consolidated Statement of Cash Flows. See Note 12 for additional information. There have been no other recently adopted accounting pronouncements that are expected to have a material effect on the Consolidated Financial Statements. Note 2 - Revenue and Receivables The following is a description of the principal activities from which revenue is generated by reportable segment: Network Solutions Segment - Includes hardware and software products that enable a digital future which support the Company's Subscriber, Access and Aggregation, and Optical Networking Solutions. Services & Support Segment - Includes network design, implementation, maintenance and cloud-hosted services supporting the Company's Subscriber, Access and Aggregation, and Optical Networking Solutions. Revenue by Category In addition to operating under two reportable segments, the Company also reports revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions. Our Subscriber Solutions portfolio is used by Service Providers to terminate their access services infrastructure at the customer premises while providing an immersive and interactive experience for residential, business and wholesale subscribers. This revenue category includes hardware- and software-based products and services. These solutions include fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers, and cloud software solutions covering a mix of subscriber types. Our Access & Aggregation Solutions are solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity. This revenue category includes hardware- and software-based products and services. Our solutions within this category are a mix of fiber access and aggregation platforms, precision network synchronization and timing solutions, and access orchestration solutions that ensure highly reliable and efficient network performance. Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber. This revenue category includes hardware- and software-based products and services. Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems, and automation platforms that are used to build high-scale, secure and assured optical networks. 85 The following table disaggregates revenue by reportable segment and revenue category for the year ended December 31, 2025: (In thousands) Network Solutions Services & Support Total Optical Networking Solutions $ 281,771 $ 98,541 $ 380,312 Subscriber Solutions 336,297 32,779 369,076 Access & Aggregation Solutions 278,843 55,576 334,419 Total $ 896,911 $ 186,896 $ 1,083,807 The following table disaggregates revenue by reportable segment and revenue category for the year ended December 31, 2024: (In thousands) Network Solutions Services & Support Total Optical Networking Solutions $ 210,489 $ 90,447 $ 300,936 Subscriber Solutions 295,541 35,237 330,778 Access & Aggregation Solutions 232,934 58,072 291,006 Total $ 738,964 $ 183,756 $ 922,720 The following table disaggregates revenue by reportable segment and revenue category for the year ended December 31, 2023: (In thousands) Network Solutions Services & Support Total Optical Networking Solutions $ 407,123 $ 85,851 $ 492,974 Subscriber Solutions 263,192 34,516 297,708 Access & Aggregation Solutions 304,074 54,344 358,418 Total $ 974,389 $ 174,711 $ 1,149,100 The aggregate amount of transaction price allocated to remaining performance obligations ("RPO") that have not been satisfied as of December 31, 2025 related to non-cancellable contractual maintenance agreements, non-cancellable contractual SaaS and subscription services, and non-cancellable hardware contracts amounted to $ 209.7 million. The Company will generally satisfy the remaining performance obligations as we transfer control of the products ordered or services to our customers, excluding maintenance services, which are satisfied over time. The following table provides information about accounts receivable, contract assets and unearned revenue from contracts with customers: (In thousands) December 31, 2025 December 31, 2024 Accounts receivable $ 210,687 $ 178,030 Contract assets (1) $ 432 $ 631 Unearned revenue $ 87,541 $ 52,701 Non-current unearned revenue $ 27,143 $ 22,065 (1) Included in other receivables on the Consolidated Balance Sheets. Accounts Receivable The allowance for credit losses was $ 1.3 million as of December 31, 2025, and December 31, 2024, related to accounts receivable. Receivables Purchase Agreement On July 1, 2024, the Company entered into a receivables purchase agreement (the “Factoring Agreement”) with a third-party financial institution, which accelerates receivable collection and helps to better manage cash flow. Total accounts receivables factored as of the end of December 31, 2025, totaled $ 25.3 million net of $ 3.8 million retained pursuant to the Factoring Agreement in the reserve account. Total accounts receivables factored as of the end of December 31, 2024, totaled $ 18.3 million net of $ 3.7 million retained pursuant to the Factoring Agreement in the reserve account. The Factoring Agreement provides for up to $ 40.0 million in factoring capacity, subject to eligible receivables and reserve requirements, secured by the receivables. During the years ended, December 31, 2025 and 2024, the Company received $ 169.1 million and $ 78.4 million, in cash proceeds from the Factoring Agreement, respectively. The cost of the F actoring Agreement totaled $ 1.4 million and $ 0.6 million for the years ended December 31, 2025 and 2024, respectively. The Company received $ 103.6 million in cash proceeds and incurred costs of $ 0.9 million from a previous receivables purchase agreement for the year ended December 31, 2023. 86 On December 19, 2023, the Company entered into a receivables purchase agreement (the “Prior Factoring Agreement”) with a third-party financial institution to replace a prior accounts receivable purchase agreement and to sell, on a revolving basis, undivided interests in the Company’s accounts receivable. The Prior Factoring Agreement provided for up to $ 40.0 million in borrowing capacity, subject to eligible receivables and reserve requirements, secured by the receivables. The Prior Factoring Agreement qualified for treatment as a secured borrowing with a pledge of collateral under Accounting Standards Codification ("ASC") Topic 810, Consolidations . The receivables purchase agreement was terminated on July 1, 2024 and there were no secured borrowings under this agreement as of December 31, 2024. For the year ended December 31, 2024, the Company incurred program fee expenses of $ 0.6 million. Contract Assets No allowance for credit losses was recorded for the years ended December 31, 2025 and 2024, respectively, related to contract assets. Unearned Revenue Of the outstanding unearned revenue balances as of December 31, 2024, $ 50.5 million were recognized as revenue during the year ended December 31, 2025. Of the outstanding unearned revenue balances as of December 31, 2023, $ 50.5 million were recognized as revenue during the year ended December 31, 2024. Note 3 – Stock-Based Compensation 2024 Stock Incentive Plans At the annual meeting of stockholders held on May 8, 2024, the Company’s stockholders approved, upon recommendation of the Board of Directors, the adoption of the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (“2024 Employee Plan”) and the ADTRAN Holdings, Inc. 2024 Directors Stock Plan (“2024 Directors Plan”). No additional awards may be granted under the Company’s previous stock incentive plans, including the 2020 Employee Stock Incentive Plan, the 2020 Directors Stock Plan, or the 2015 Employee Stock Incentive Plan. Outstanding awards granted under the Company's prior equity incentive plans will remain subject to the terms of such applicable plans, and shares under such plans that are cancelled or forfeited will be available for issuance under the 2024 Employee Plan or the 2024 Directors Plan, as applicable. Under the 2024 Employee Plan, the Company is authorized to issue 4.0 million shares of common stock to certain employees, key service providers and advisors through incentive stock options, non-qualified stock options, stock appreciation rights, RSUs and restricted stock, any of which may be subject to performance-based conditions. RSUs and restricted stock granted under the 2024 Employee Plan will typically vest pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date. Stock options granted under the 2024 Employee Plan will typically become exercisable beginning after one year of continued employment, normally pursuant to a four-year vesting schedule beginning on the first anniversary of the grant date and have a ten-year contractual term. Stock options, RSUs and restricted stock granted under the 2024 Employee Plan reduce the shares authorized for issuance under the 2024 Employee Plan by one share of common stock for each share underlying the award. Forfeitures, cancellations and expirations of awards granted under the prior employee stock incentive plans increase the shares authorized for issuance under the 2024 Employee Plan by one share of common stock for each share underlying the award. Under the 2024 Directors Plan, the Company is authorized to issue 0.7 million shares of common stock through stock options, restricted stock and RSUs to non-employee directors. Stock awards issued under the 2024 Directors Plan typically will become vested in full on the first anniversary of the grant date. Stock options issued under the 2024 Directors Plan will have a ten-year contractual term. Stock options, restricted stock and RSUs granted under the 2024 Directors Plan reduce the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award. Forfeitures, cancellations and expirations of awards granted under the prior directors stock plan increase the shares authorized for issuance under the 2024 Directors Plan by one share of common stock for each share underlying the award. As of December 3 1, 2025, 4.7 millio n shares were available for issuance pursuant to awards that may be made in the future under stockholder-approved equity plans. For the years ended December 31, 2025, 2024 and 2023, stock-based compensation expense was $ 10.1 milli on, $ 16.0 million and $ 16.4 million respectively. 87 The following table summarizes stock-based compensation expense related to stock options, PSUs, RSUs and restricted stock for the years ended December 31, 2025, 2024 and 2023: (In thousands) 2025 2024 2023 Stock-based compensation expense included in cost of revenue $ 986 $ 1,142 $ 1,293 Selling, general and administrative expenses 5,971 11,058 11,066 Research and development expenses 3,105 3,788 4,022 Stock-based compensation expense included in operating expenses 9,076 14,846 15,088 Total stock-based compensation expense 10,062 15,988 16,381 Tax benefit for expense associated with stock based compensation ( 1,267 ) ( 1,976 ) ( 3,837 ) Total stock-based compensation expense, net of tax $ 8,795 $ 14,012 $ 12,544 PSUs, RSUs and Restricted stock The following table summarizes the activity related to our PSUs, RSUs and restricted stock for the year ended December 31, 2025: Number of shares (In thousands) Weighted Average Grant Date Fair Value (Per Share) Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2024 2,335 $ 13.22 PSUs, RSUs and restricted stock granted 1,308 $ 10.33 PSUs, RSUs and restricted stock vested ( 572 ) $ 12.70 PSUs, RSUs and restricted stock forfeited ( 1,104 ) $ 13.87 Unvested PSUs, RSUs and restricted stock outstanding, December 31, 2025 1,967 $ 10.70 The fair value of PSUs with performance conditions, RSUs and restricted stock is equal to the closing price of the Company's stock on the date of grant. The fair value of PSUs with market conditions is calculated using a Monte Carlo simulation valuation method. The following table details the significant assumptions that impact the fair value estimate of the market-based PSUs: 2025 2024 2023 Estimated fair value per share $ 12.32 $ 8.29 $ 19.26 Expected volatility 55.09 % 51.34 % 51.52 % Risk-free interest rate 4.22 % 4.12 % 3.93 % Expected dividend yield — — 2.55 % For market-based PSUs, the number of shares of common stock earned by a recipient is subject to a market condition based on Adtran’s relative total stockholder return against all companies in the NASDAQ Telecommunications Index at the end of a three-year performance period. Depending on the relative total stockholder return over the performance period, the recipient may earn from 0 % to 150 % of the shares underlying the PSUs, with the shares earned distributed upon the vesting. The fair value of the award is based on the market price of our common stock on the date of grant, adjusted for the expected outcome of the impact of market conditions using a Monte Carlo Simulation valuation method. A portion of the granted PSUs vests and the underlying shares become deliverable upon the death or disability of the recipient or upon a change of control of Adtran, as defined by the 2020 Employee Plan. The recipients of the PSUs receive dividend credits based on the shares of common stock underlying the PSUs. The dividend credits vest and are earned in the same manner as the PSUs and are paid in cash upon the issuance of common stock for the PSUs. The fair value of RSUs and restricted stock is equal to the closing price of our stock on the grant date. RSUs and restricted stock vest ratably over four-year and one-year periods, respectively. We will continue to assess the assumptions and methodologies used to calculate the estimated fair value of stock-based compensation. If circumstances change, and additional data becomes available over time, we may change our assumptions and methodologies, which may materially impact our fair value determination. As of December 31, 2025 , total unrecognized compensation expense related to the non-vested portion of market-based PSUs, RSUs and restricted stock was approximately $ 13.1 million, which is expected to be recognized over an average remaining recognition period of 2.4 years. Unrecognized compensation expense will be adjusted for actual forfeitures as they occur. 88 Stock Options The following table summarizes the activity related to our stock options for the year ended December 31, 2025: Number of Options (In thousands) Weighted Average Exercise Price (Per share) Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value (In thousands) Stock options outstanding, December 31, 2024 2,944 $ 9.86 4.98 $ 3,762 Stock options exercised ( 273 ) $ 6.70 Stock options forfeited ( 233 ) $ 14.65 Stock options expired ( 426 ) $ 14.01 Stock options outstanding, December 31, 2025 2,012 $ 8.86 4.81 $ 3,559 Stock options exercisable, December 31, 2025 1,828 $ 7.83 4.95 $ 3,559 As of December 31, 2025, there was $ 0.1 million of unrecognized compensation expense related to stock options which will be recognized over the remaining weighted-average period of 0.4 years. No stock options were granted during 2025. The determination of the fair value of stock options was estimated using the Monte Carlo method and is affected by the historical volatility of its stock price, as well as assumptions regarding a number of complex and subjective variables that may have a significant impact on the fair value estimate. The stock option pricing model requires the use of several assumptions that impact the fair value estimate. These variables include, but are not limited to, the volatility of the Company's stock price and employee exercise behaviors. All of the options were previously issued at exercise prices that approximated fair market value at the date of grant. The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the quarter and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2025. The amount of aggregate intrinsic value was $ 3.6 million as of December 31, 2025, which will change based on the fair market value of the Company's stock. The total pre-tax intrin sic value of options exercised during the years ended De cember 31, 2025 and 2024 was $ 0.8 million and $ 0.3 million, respectively. The following table further describes our stock options outstanding as of December 31, 2025: Options Outstanding Options Exercisable Range of Exercise Prices (Per Share) Options Outstanding at December 31, 2025 (In thousands) Weighted Average Remaining Contractual Life in Years Weighted Average Exercise Price (Per Share) Options Exercisable at December 31, 2025 (In thousands) Weighted Average Exercise Price $ 5.23 – $ 5.23 959 7.83 $ 5.23 959 $ 5.23 $ 5.24 – $ 8.58 329 1.07 $ 7.95 329 $ 7.95 $ 8.59 – $ 12.17 496 2.02 $ 12.10 496 $ 12.10 $ 12.18 – $ 19.08 228 3.27 $ 18.34 44 $ 15.31 2,012 1,828 The Black-Scholes option pricing model (the “Black-Scholes Model”) is used to determine the estimated fair value of stock option awards on the date of grant. The Black-Scholes Model requires the input of certain assumptions that involve judgment. Because our stock options have characteristics significantly different from those of traded options, and because changes in the input assumptions can materially affect the fair value estimate, existing models may not provide reliable measures of fair value of our stock options. The stock option pricing model requires the use of several assumptions that impact the fair value estimate. These variables include, but are not limited to, the volatility of our stock price and employee exercise behaviors. The stock option pricing model requires the use of several assumptions that impact the fair value estimate. These variables include, but are not limited to, the volatility of our stock price and employee exercise behaviors. 89 Note 4 – Investments The Company’s cash equivalents and investments held at fair value are categorized into this hierarchy as follows: Fair Value Measurements as of December 31, 2025 Using (In thousands) Classification Fair Value Quoted Prices in Active Market for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents Money market funds Cash and cash equivalents $ 245 $ 245 $ — $ — Marketable equity securities Marketable equity securities - various industries Long-term investments 1,022 1,022 — — Deferred compensation plan assets Short-term investments - deferred compensation 35,174 35,174 — — Total $ 36,441 $ 36,441 $ — $ — Fair Value Measurements as of December 31, 2024 Using (In thousands) Classification Fair Value Quoted Prices in Active Market for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents Money market funds Cash and cash equivalents $ 5,538 $ 5,538 $ — $ — Marketable equity securities Marketable equity securities - various industries Long-term investments 1,068 1,068 — — Deferred compensation plan assets Long-term investments 30,991 30,991 — — Total $ 37,597 $ 37,597 $ — $ — Market prices are obtained from a variety of industry standard data providers, large financial institutions and other third-party sources. These multiple market prices are used as inputs into a distribution-curve-based algorithm to determine the daily market value of each security. U.S. GAAP establishes a three-level valuation hierarchy based upon observable and unobservable inputs for fair value measurement of financial instruments: • Level 1 – Observable outputs; values based on unadjusted quoted prices for identical assets or liabilities in an active market; • Level 2 – Significant inputs that are observable; values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly; • Level 3 – Significant unobservable inputs; values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement; inputs could include information supplied by investees. Note 5 – Inventory As of December 31, 2025 and 2024, inventory, net was comprised of the following: (In thousands) 2025 2024 Raw materials $ 78,230 $ 106,384 Work in process 12,801 9,724 Finished goods 124,705 145,449 Total Inventory, net $ 215,736 $ 261,557 Inventory reserves are established for estimated excess and obsolete inventory equal to the difference between the cost of the inventory and the estimated net realizable value of the inventory based on estimated reserve percentages, which consider historical usage, known trends, inventory age and market conditions. 90 During the year ended December 31, 2024, the company recorded an inventory write-down of $ 8.6 million, as a result of a strategy shift which included discontinuance of certain product lines in connection with the Business Efficiency Program of which $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges all of which are included in cost of revenue in the Consolidated Statements of Loss. In connection with the Company’s restructuring efforts, during the year ended December 31, 2023, management determined that there would be a discontinuation of product lines in the Network solutions segment and, as a result, wrote-down related inventories of $ 24.3 million, which is included in cost of revenue in the Consolidated Statements of Loss. Note 6 – Property, Plant and Equipment, net As of December 31, 2025 and 2024, property, plant and equipment, net was comprised of the following: (In thousands) 2025 2024 Engineering and other equipment $ 131,665 $ 184,694 Building 52,586 50,871 Computer hardware and software 109,703 113,241 Building and land improvements 43,271 39,979 Furniture and fixtures 19,287 20,994 Land 3,073 2,989 Total Property, Plant and Equipment 359,585 412,768 Less: accumulated depreciation ( 235,201 ) ( 306,314 ) Total Property, Plant and Equipment, net $ 124,384 $ 106,454 Long-lived assets used in operations are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and the undiscounted cash flows estimated to be generated by the asset are less than the asset’s carrying value. During the years ended December 31, 2025 and 2024, no impairment charges were recognized. Depreciation expense was $ 30.3 million, $ 27.7 million and $ 30.2 million for the years ended December 31, 2025, 2024 and 2023, respectively, which is recorded in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Loss. Assets Held For Sale On December 31, 2025, the Company determined that it continues to meet the held for sale criteria pursuant to ASC 360, "Impairment and Disposal of Long-Live Assets" on a portion of the Company's property located at its Huntsville, Alabama campus and ceased recording depreciation on the assets. The Company continues to assess the probability that the sale of its headquarters in Huntsville will occur and has determined it is probable of occurring in the next twelve months . The total carrying value of assets held for sale was $ 11.9 million as of December 31, 2025 and 2024 and is separately recorded on the balance sheet. Note 7 – Leases We have operating leases for office space, automobiles and various other equipment in the U.S. and in certain international locations. As of December 31, 2025, our operating leases had remaining lease t erms of 1 month to 155 months , some of which included options to extend the leases for up to one year , and some of which included options to terminate the lease s within three months . Supplemental balance sheet information related to operating leases is as follows: December 31, December 31, (In thousands) Classification 2025 2024 Assets Operating lease assets Other non-current assets $ 32,072 $ 30,342 Total lease asset $ 32,072 $ 30,342 Liabilities Current operating lease liability Accrued expenses and other liabilities $ 7,092 $ 7,154 Non-current lease obligations Non-current lease obligations 27,000 25,925 Total lease liability $ 34,092 $ 33,079 Lease expense related to short-term leases was approximately $ 0.1 million, $ 0.2 million and $ 0.1 million for the years ended December 31, 2025, 2024 and 2023, respectively, and is included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Loss. Lease expense related to variable lease payments that do not depend on an index or rate, such as real estate taxes and insurance reimbursements, was $ 0.1 million, $ 0.3 million and $ 0.7 million for the year ended December 31, 2025, 2024 and 2023, respectively. 91 The components of lease expense included in the Consolidated Statements of Loss were as follows: For the Year Ended December 31, (In thousands) 2025 2024 2023 Cost of revenue $ 40 $ 150 $ 163 Research and development expenses 51 412 990 Selling, general and administrative expenses 9,674 9,213 9,708 Total operating lease expense $ 9,765 $ 9,775 $ 10,861 As of December 31, 2025, operating lease liabilities by future maturity, included on the Consolidated Balance Sheet were as follows: (In thousands) Amount 2026 $ 9,395 2027 8,376 2028 7,885 2029 3,884 2030 3,236 Thereafter 10,648 Total lease payments $ 43,424 Less: Interest ( 9,332 ) Present value of lease liabilities $ 34,092 Future operating lease payments include $ 6.4 million related to options to extend lease terms that are reasonably certain of being exercised. There are no legally binding leases that have not yet commenced. An incremental borrowing rate is used based on information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is determined on a portfolio basis by grouping leases with similar terms, as well as grouping leases based on a U.S. dollar or euro functional currency. The following table provides information about our weighted average lease terms and weighted average discount rates: As of December 31, Weighted average remaining lease term (years) 2025 2024 Operating leases with USD functional currency 6.8 7.3 Operating leases with EUR functional currency 6.5 5.9 Weighted average discount rate Operating leases with USD functional currency 3.90 % 3.64 % Operating leases with EUR functional currency 7.11 % 4.50 % Note 8 – Goodwill The changes in the carrying amount of goodwill for the year ended December 31, 2025 and December 31, 2024 are as follows: (In thousands) Network Solutions Services & Support Total As of December 31, 2023 $ 301,766 $ 56,384 $ 358,150 Goodwill impairment ( 295,298 ) — ( 295,298 ) Foreign currency translation adjustments ( 6,468 ) ( 3,466 ) ( 9,934 ) As of December 31, 2024 $ — $ 52,918 $ 52,918 Foreign currency translation adjustments — 7,065 7,065 As of December 31, 2025 $ — $ 59,983 $ 59,983 The Company’s annual impairment test date was October 1, 2025. Based on our analysis, management concluded that there was no impairment of goodwill as of that date. Between the annual impairment date of October 1, 2025 and year-end December 31, 2025, there were no triggering events. 92 During the first quarter of 2024, qualitative factors such as a decrease in the Company’s market capitalization, lower service provider spending and delayed holding patterns of inventory with respect to customers caused us to reduce our forecasts, triggering a quantitative impairment assessment for our reporting units. The Company determined the fair value of each reporting unit using a combination of an income approach and a market approach. The significant inputs and assumptions used in the determination of the fair value of our reporting units, based on future cash flows for the reporting units, requires significant judgment and the use of estimates and assumptions related to revenue growth rates, earnings before interest, taxes, depreciation and amortization ("EBITDA") margins, discount rate, peer group determination, revenue and EBITDA market multiple. The Company determined upon its quantitative impairment assessment to recognize a $ 297.4 million non-cash goodwill impairment charge for the Network Solutions reporting unit. The quantitative impairment analysis indicated there was no impairment of the Services & Support goodwill during the first quarter of 2024. The gross amount of accumulated goodwill impairment losses as of December 31, 2025 and 2024 total $ 297.4 million for our Network Solutions reporting unit and $ 37.9 million for our Services & Support reporting unit . Note 9 – Intangible Assets, net Intangible assets as of December 31, 2025 and 2024, consisted of the following: 2025 2024 (In thousands) Weighted Average Useful Life (in years) Gross Value Accumulated Amortization Net Value Gross Value Accumulated Amortization Net Value Customer relationships 11.0 $ 56,244 $ ( 25,306 ) $ 30,938 $ 51,165 $ ( 18,778 ) $ 32,387 Backlog 1.7 61,081 ( 61,081 ) — 53,839 ( 52,258 ) 1,581 Developed technology 7.5 429,329 ( 168,073 ) 261,256 346,923 ( 99,588 ) 247,335 Licensed technology 9.0 5,900 ( 5,108 ) 792 5,900 ( 4,452 ) 1,448 Licensing agreements 8.5 560 ( 446 ) 114 560 ( 407 ) 153 Trade names 2.8 31,598 ( 30,651 ) 947 27,851 ( 25,862 ) 1,989 Total $ 584,712 $ ( 290,665 ) $ 294,047 $ 486,238 $ ( 201,345 ) $ 284,893 Intangible assets are reviewed for impairment whenever events and circumstances indicate impairment may have occurred. During the first quarter of 2024, qualitative factors such as a decrease in the Company’s market capitalization, cautious service provider spending due to economic uncertainty and continued customer inventory adjustments triggered a quantitative reassessment of our estimated future undiscounted cash flows for the Network Solutions asset group. The significant inputs and assumptions used in the determination of the cash flows expected to be generated by the asset group, requires significant judgment and the use of estimates and assumptions related to revenue growth rates, EBITDA margins, peer group determination, and disposition exit multiple. The Company determined that our estimated future undiscounted cash flows exceeded the carrying value of our asset groups. No impairment losses of intangible assets were recorded during the years ended December 31, 2025, 2024 and 2023. During the year ended December 31, 2025, the Company acquired $ 38.8 million of developed technology assets with a weighted average amortization period of three years and with no expected residual value. Amortization expense was $ 62.9 million, $ 63.0 million and $ 82.8 million for the years ended December 31, 2025, 2024 and 2023, respectively, and was included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statements of Loss. As of December 31, 2025, estimated future amortization expense of intangible assets was as follows: As of (In thousands) December 31, 2025 2026 $ 68,285 2027 63,081 2028 54,148 2029 47,084 2030 45,249 Thereafter 16,200 Total $ 294,047 Note 10 – Credit Agreement The carrying amounts of the Company's revolving credit agreement in its Consolidated Balance Sheets were as follows: 93 As of December 31, (In thousands) 2025 2024 Wells Fargo credit agreement $ 25,000 $ 189,576 Total non-current revolving credit facility $ 25,000 $ 189,576 As of December 31, 2025 and 2024, the estimated fair value of our revolving credit agreement, approximates the carrying value. As of December 31, 2025 and 2024, the weighted average interest rate on our revolving credit agreement was 8.98 % and 8.64 %, respectively. Revolving Credit Agreement On July 18, 2022, ADTRAN, Inc., as the borrower ("U.S. Borrower"), and the Company entered into a credit agreement with a syndicate of banks, including Wells Fargo Bank, National Association, as administrative agent (“Administrative Agent”), and the other lenders named therein (the “Original Credit Agreement”), as amended by the First Amendment to Credit Agreement, dated August 9, 2023 (“Amendment No. 1”), the Second Amendment to Credit Agreement, dated January 16, 2024 (“Amendment No. 2”), the Third Amendment to Credit Agreement, dated March 12, 2024 (“Amendment No. 3”), the Fourth Amendment to Credit Amendment, dated June 4, 2024 among Adtran Networks (the "German Borrower") and the parties set forth above ("Amendment No. 4") and the Fifth Amendment to Credit Agreement and Waiver, dated May 6, 2025, among the German Borrower and the parties set forth above (“Amendment No. 5”; the Original Credit Agreement as amended by Amendment No. 1, Amendment No. 2. Amendment No. 3, Amendment No. 4 and Amendment No. 5, the “Existing Credit Agreement”). On September 16, 2025, the U.S. Borrower, the German Borrower, and the lenders party thereto, including the Administrative Agent, entered into the Sixth Amendment and Consent to Credit Agreement, dated September 16, 2025 (“Amendment No. 6”; the Existing Credit Agreement as amended by Amendment No. 6, the “Amended Credit Agre ement”). Amendment No. 6, among other things, (i) provides for a consent from the lenders to the issuance by the Company of new unsecured convertible indebtedness in an amount not to exceed $ 230.0 million, notwithstanding the cap on the amount of Permitted Convertible Indebtedness (as defined in the Amended Credit Agreement) the Company is permitted to incur, (ii) requires that the net cash proceeds of the new unsecured convertible indebtedness be used to (a) repay outstanding revolving credit loans under the Amended Credit Agreement, (b) pay fees, costs, and expenses related to Amendment No. 6 and the issuance of the new unsecured convertible indebtedness and (c) cash collateralize the obligations of the Company and its subsidiaries under the Amended Credit Agreement (with such cash only being permitted to be withdrawn for the purpose of financing the purchase of additional outstanding shares of Equity Interests (as defined in the Amended Credit Agreement) of the German Borrower that were not owned by the Company and its subsidiaries as of August 9, 2023 pursuant to Section 5, paragraph 1 of the DPLTA), and (iii) after the prepayment contemplated in the foregoing clause (ii)(a) and the provision of cash collateral contemplated in the foregoing clause (ii)(c), amends provisions governing the Subline (as defined below) to provide that future prepayments in respect of borrowings under the Subline will no longer permanently reduce the commitments in respect of the Subline. As of December 31, 2025, the Amended Credit Agreement provided for a secured revolving credit facility of up to $ 350.0 million of borrowings, $ 50.0 million of which is solely available to the German Borrower. As of December 31, 2025, the Company’s borrowings under the revolving line of credit were $ 25.0 million. The credit facilities provided under the Amended Credit Agreement mature in July 2027, but the U.S. Borrower may request extensions subject to customary conditions. In addition, the U.S. Borrower may utilize up to $ 50.0 million of the $ 350.0 million total revolving facility for the issuance of letters of credit. As of December 31, 2025, the U.S. Borrower had a total of $ 5.8 million in letters of credit under the Amended Credit Agreement, leaving a net amount (after giving effect to the $ 25.0 million of outstanding borrowings described above) of $ 319.2 million available for future borrowings, based on debt covenant compliance metrics. Any future credit extensions under the Amended Credit Agreement are subject to customary conditions precedent. The proceeds of any loans may be used as described above, as well as for working capital and other general corporate purposes. Moreover, the Amended Credit Agreement provides for a sublimit under the existing $ 350.0 million revolving commitments in an aggregate amount of $ 50.0 million (“Subline”), which Subline is available for borrowings by th e German Borrower. The Company had no borrowings under the Subline as of December 31, 2025. The existing swing line sublimit and letter of credit sublimit under the Amended Credit Agreement remain available to the U.S. Borrower (and not to the German Borrower). Otherwise, the loans under the Subline are subject to substantially the same terms and conditions under the Amended Credit Agreement (including with respect to the interest rate and maturity date) as the other existing revolving commitments. All U.S. borrowings under the Amended Credit Agreement bear interest at a rate tied to the Base Rate (as defined in the Amended Credit Agreement) or SOFR, at the Company’s option, and all E.U. borrowings bear interest at a rate tied to the Euro Interbank Offered Rate as administered by the European Money Markets Institute (or a comparable or successor administrator approved by the Administrative Agent), in each case plus applicable margins which vary based on the consolidated net leverage ratio of the Company and its subsidiaries as determined pursuant to the terms of the Amended Credit Agreement. Default interest is 2.00 % per annum in excess of the rate otherwise applicable. 94 The Company made certain representations and warranties to the lenders in the Amended Credit Agreement that are customary for credit arrangements of this type. The Company also agreed to maintain a Consolidated Total Net Leverage Ratio of 5.00 x, a Consolidated Senior Secured Net Leverage Ratio of 3.25 x ( 4.0 x to 3.5 x during a “Springing Covenant Period,” as defined below) and a Consolidated Fixed Charge Coverage Ratio of 1.25 x (as such ratios are defined in the Amended Credit Agreement). A “Springing Covenant Event” occurs when at least sixty percent ( 60.0 %) of the outstanding shares of Adtran Networks that were not owned by the Company and its subsidiaries as of August 9, 2023 have been tendered and purchased by the Company. Upon the occurrence of a Springing Covenant Event, the Company will enter a “Springing Covenant Period”, defined as the fiscal quarter in which a Springing Covenant Event occurs and the three (3) consecutive fiscal quarters thereafter. During a Springing Covenant Period, the Company’s leverage ratios are increased. In addition, the cash and cash equivalents of the credit parties must be at least $ 50.0 million and the cash and cash equivalents of the Company and its subsidiaries must be at least $ 70.0 million. As of December 31, 2025, the Company was in compliance with all covenants under the Credit Agreement. The Amended Credit Agreement also contains customary events of default, such as misrepresentation and a default in the performance or observance of any covenant (subject to customary cure periods and materiality thresholds). Upon the occurrence and during the continuance of an event of default, the Administrative Agent is entitled to take various actions, including the acceleration of all amounts due under the Amended Credit Agreement. All obligations under the Amended Credit Agreement (including under the Subline) are guaranteed by the U.S. Borrower and certain subsidiaries of the U.S. Borrower (“Full Facility Guarantors”). To secure such guarantees, the U.S. Borrower and the Full Facility Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets, and the U.S. Borrower has granted mortgages in favor of the Administrative Agent over certain owned real estate assets. Certain of the German Borrower's subsidiaries (the “Subline Guarantors”) have also provided a guarantee solely of the obligations in respect of the Subline. Furthermore, to secure such guarantees, the German Borrower and the Subline Guarantors have granted security interests in favor of the Administrative Agent over substantially all of their tangible and intangible assets. Upon repayment in full and termination of the Subline, the guarantees by the Subline Guarantors and the liens granted by the German Borrower and the Subline Guarantors to secure obligations under the Subline will be released. Note 11 – Convertible Senior Notes and Capped Calls The outstanding principal and carrying value of the convertible senior notes were as follows: As of (In thousands) December 31, 2025 Convertible senior notes $ 201,250 Less: unamortized debt issuance costs ( 8,212 ) Non-current convertible senior notes, net of debt issuance costs $ 193,038 The estimated fair value of the 2030 Notes was $ 217.5 million as of December 31, 2025. The estimated fair value of the 2030 Notes, based on Level 2 inputs of the valuation hierarchy, were determined based on the quoted bid prices of the 2030 Notes in an over-the-counter market on the last trading day of the reporting period. The effective interest rate of the 2030 Notes over their expected life is 4.7 %. The following is a summary of interest expense for the 2030 Notes: For the Year Ended (In thousands) December 31, 2025 Contractual interest $ 2,150 Amortization of issuance costs 441 Total interest expense $ 2,591 On September 19, 2025, the Company issued $ 201.3 million principal amount of its 3.75 % convertible senior notes due September 15, 2030 . The 2030 Notes were issued pursuant to, and are governed by, an indenture (the “Indenture”), dated as of September 19, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The 2030 Notes are the Company’s senior, unsecured obligations and bear interest at a rate of 3.75 % per year payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2026. Each $ 1,000 principal amount of the 2030 Notes will be convertible into 86.8206 shares of the Company’s common stock, which is equivalent to a conversion price of approximately $ 11.52 per share, subject to adjustment upon the occurrence of specified events. In addition, if certain corporate events that constitute a “make-whole fundamental 95 change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The 2030 Notes are convertible at the option of the holders of the 2030 Notes before June 15, 2030, only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on December 31, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $ 1,000 principal amount of the 2030 Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; or (4) if the Company calls (or is deemed to have called) the 2030 Notes for redemption. From and after June 15, 2030, noteholders may convert their 2030 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying cash up to the aggregate principal amount of the 2030 Notes to be converted and paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted, based on the applicable conversion rate. The 2030 Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after September 20, 2028 and on or before the 46th scheduled trading day immediately before the maturity date, but only if (i) the Notes are “Freely Tradable” (as defined in the Indenture) as of the date the Company sends the related redemption notice, and all accrued and unpaid additional interest, if any, has been paid in full as of the most recent interest payment date occurring on or before the date the Company sends the related redemption notice; and (ii) the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such redemption notice. However, the Company may not redeem less than all of the outstanding Notes unless at least $ 70.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends, and after giving effect to, the related redemption notice. The redemption price will be a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling (or the deemed calling of) any Note for redemption will constitute a “make-whole fundamental change” with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted during the related redemption conversion period. No sinking fund is provided for the 2030 Notes, which means the Company is not required to redeem or retire the 2030 Notes periodically. If certain corporate events that constitute a “fundamental change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of “fundamental change” includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. Capped Calls In connection with th e pricing of the 2030 Notes and the exercise of the initial purchasers’ option to purchase additional 2030 Notes, the Company entered into privately negotiated capped call transactions with one of the initial purchasers of the 2030 Notes or its affiliate and certain other financial institutions pursuant to capped call confirmations (collectively, the “Capped Calls”). The premiums paid for the purchases of the Capped Calls were approximately $ 17.6 million. The Capped Calls have an initial strike price of app roximately $ 11.52 per share, subject to certain adjustments substantially similar to those applicable to the corresponding 2030 Notes. The Capped Calls have an initial cap price of approximately $ 15.51 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, approximately 17.5 million shares of the Company’s common stock. The Capped Calls are generally expected to reduce potential dilution to the Company’s common stock and/or offset any cash payments that the Company is required to make in excess of the principal amount of any converted 2030 Notes, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Calls. The Capped Calls are separate transactions and are not part of the terms of the 2030 Notes. The Capped Calls do not meet the criteria for separate accounting as a derivative as they are indexed to the Company's stock and meet the requirements to be classified in equity and, as such, are not remeasured each reporting period. The premiums paid for the Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ equity during the year ended December 31, 2025. Note 12 – Income Taxes The components of income tax expense for the years ended December 31, 2025, 2024 and 2023 are as follows: 96 (In thousands) 2025 2024 2023 Current Federal $ 1,042 $ ( 1,456 ) $ 2,545 State 458 575 26 International 7,340 2,645 10,004 Total Current 8,840 1,764 12,575 Deferred Federal 142 357 46,672 State 17 ( 405 ) 6,607 International ( 4,006 ) 5,624 ( 37,555 ) Total Deferred ( 3,847 ) 5,576 15,724 Total Income Tax Expense $ 4,993 $ 7,340 $ 28,299 As further described in Note 1, Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, or ASU 2023-09. The following table presents the income taxes paid disaggregated by domestic, state and international taxes, with further disaggregation by jurisdiction in accordance with the guidance under ASU 2023-09. (In thousands) 2025 Federal $ ( 436 ) State 515 International United Kingdom 1,607 India 977 Poland 618 Germany 497 Other 1,666 Total cash paid for income taxes, (net of refunds) $ 5,444 During the years ended, December 31, 2024 and 2023, the Company paid cash for income taxes, net of refunds, of $ 6.7 million and $ 18.6 million, respectively. 97 The following table is a reconciliation of the U.S. federal statutory rate of 21 % to the Company's effective rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09. 2025 Amount Percentage United States statutory tax rate $ ( 6,562 ) 21.0 % State and local income taxes, net of federal income tax effect (1) 378 ( 1.2 ) Foreign tax effects: Germany Change in valuation allowance 8,899 ( 28.5 ) Foreign rate differential 2,586 ( 8.3 ) Trade tax ( 6,073 ) 19.5 Adjustment of NOL deferred tax assets 1,548 ( 5.0 ) Adjustment of deferred tax liabilities 441 ( 1.4 ) Tax rate change 385 ( 1.2 ) Other 527 ( 1.7 ) India Withholding tax 559 ( 1.8 ) Other 61 ( 0.2 ) United Kingdom Audit assessment 814 ( 2.6 ) Other 575 ( 1.8 ) Other foreign jurisdictions 193 ( 0.6 ) Effect of cross-border tax laws: Gross GILTI inclusion 6,016 ( 19.3 ) Subpart F income 1,506 ( 4.8 ) Tax credits: R&D credit ( 4,338 ) 13.9 Changes in valuation allowances ( 3,532 ) 11.3 Nontaxable or nondeductible items: Section 162(m) limitation 488 ( 1.6 ) Other ( 167 ) 0.5 Other adjustments: Transfer pricing 590 ( 1.9 ) Other 99 ( 0.3 ) Effective Tax Rate $ 4,993 - 16.0 % (1) State taxes in Texas and Colorado made up the majority (greater than 50%) of the tax effect in this category. 98 The following table is a reconciliation of the U.S. federal statutory tax rate of 21 % to the Company's effective rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09. 2024 2023 Tax provision computed at the federal statutory rate 21.0 % 21.0 % State income tax provision, net of federal benefit 0.1 1.3 Federal research credits 0.7 3.2 Foreign taxes ( 0.0 ) 3.2 Tax-exempt income 0.0 0.1 Change in valuation allowance ( 6.5 ) ( 34.8 ) Foreign tax credits 0.8 2.4 Stock-based compensation ( 0.4 ) ( 0.6 ) Withholding taxes ( 0.1 ) 0.0 Adtran Networks tax exempt income 0.0 1.4 Return to accrual 0.6 0.6 Global intangible low-taxed income ("GILTI") ( 3.1 ) ( 5.8 ) Adtran Networks Goodwill Impairment ( 13.8 ) ( 4.6 ) Other, net ( 1.0 ) 0.4 Effective Tax Rate ( 1.7 )% ( 12.1 )% Loss before income taxes for the years ended December 31, 2025, 2024 and 2023 is as follows: (In thousands) 2025 2024 2023 U.S. entities $ 2,943 $ ( 71,684 ) $ ( 113,951 ) International entities ( 34,193 ) ( 371,043 ) ( 119,656 ) Total $ ( 31,250 ) $ ( 442,727 ) $ ( 233,607 ) Loss before income taxes for international entities reflects loss based on statutory transfer pricing agreements. This amount does not correlate to consolidated international revenue, which occurs in our U.S. entity. 99 Deferred income taxes on t he Consolidated Balance Sheets result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The significant components of current and non-current deferred taxes as of December 31, 2025 and 2024 consist of the following: (In thousands) 2025 2024 Deferred tax assets: Inventory $ 14,025 $ 14,121 Accrued expenses 5,127 845 Deferred compensation 7,964 7,093 Stock-based compensation 1,942 1,770 Uncertain tax positions related to state taxes and related interest — 105 Goodwill 2,971 3,001 Pensions 5,534 5,121 Foreign losses 85,427 73,162 State losses and credit carry-forwards 4,919 4,901 Federal loss and research carry-forwards 23,409 20,874 Lease liabilities 5,706 6,153 Capitalized research and development expenditures 27,441 43,574 Interest expense limitation 10,821 6,815 Valuation allowance ( 124,451 ) ( 115,694 ) Total Deferred Tax Assets 70,835 71,841 Deferred tax liabilities: Property, plant and equipment ( 12,971 ) ( 8,368 ) Intellectual property ( 59,750 ) ( 67,923 ) Right of use lease assets ( 6,424 ) ( 6,175 ) Investments ( 2,662 ) ( 1,921 ) Total Deferred Tax Liabilities ( 81,807 ) ( 84,387 ) Net Deferred Tax Liabilities $ ( 10,972 ) $ ( 12,546 ) As of December 31, 2025 and 2024, non-current deferred taxes reflected deferred taxes on net unrealized gains and losses on available-for-sale investments and deferred taxes on unrealized losses in our pension plan. The net change in non-current deferred taxes associated with these items, which resulted in a deferred tax benefit of $ 0.3 million and $ 0.2 million in 2025 and 2024, respectively, was recorded as an adjustment to other comprehensive income (loss), presented in the Consolidated Statements of Comprehensive Income (Loss). The Company continually reviews the adequacy of our valuation allowance and recognizes the benefits of deferred tax assets only as the reassessment indicates that it is more likely than not that the deferred tax assets will be realized in accordance with ASC 740, Income Taxes . Due to the decrease in revenue and profitability in 2023 and 2024 and all other positive and negative objective evidence considered as part of our analysis, our ability to consider other subjective evidence such as projections for future growth continues to be limited when evaluating whether our deferred tax assets will be realized. As such, the Company maintains its conclusion from 2024 that it is not more likely than not that our domestic deferred tax assets will be realized and a valuation allowance against certain domestic deferred tax assets remains through 2025. Additional valuation allowance was recorded against certain deferred tax assets on our foreign entities as not more likely than not realizable in the fourth quarter of 2024 and remains through 2025. The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods in the event sufficient evidence is present to support a conclusion that it is more likely than not that all or a portion of our deferred tax assets will be realized. As of December 31, 2025 and 2024, the Company had gross deferred tax assets totaling $ 113.5 million offset by a valuation allowance totaling $ 124.5 million and gross deferred tax assets totaling $ 103.1 million offset by a valuation allowance of $ 115.7 million, respectively. Of the current valuation allowance, $ 82.5 million was established against our domestic deferred tax assets and the remaining $ 42.0 million is related to foreign tax assets where we lacked sufficient future source of taxable income to realize those deferred tax assets. The change in our valuation allowance for the year ending December 31, 2025 was an increase of $ 8.8 million. The change in the valuation allowance was primarily related to the decrease in deferred tax liabilities remaining from the step up in book basis from purchase accounting and the increase in deferred tax assets associated with net operating losses and interest expense limitation during the year. 100 Supplemental balance sheet information related to deferred tax assets (liabilities) as of December 31, 2025 and 2024 were as follows: December 31, 2025 (In thousands) Deferred Tax Assets (Liabilities) Valuation Allowance Deferred Tax Assets (Liabilities), net Domestic $ 95,680 $ ( 82,428 ) $ 13,252 International 17,799 ( 42,023 ) ( 24,224 ) Total $ 113,479 $ ( 124,451 ) $ ( 10,972 ) December 31, 2024 (In thousands) Deferred Tax Assets (Liabilities) Valuation Allowance Deferred Tax Assets (Liabilities), net Domestic $ 102,002 $ ( 87,030 ) $ 14,972 International 1,146 ( 28,664 ) ( 27,518 ) Total $ 103,148 $ ( 115,694 ) $ ( 12,546 ) As of December 31, 2025 and 2024, the deferred tax assets for foreign and domestic loss carry-forwards, research and development tax credits, unamortized research and development costs and state credit carry-forwards totaled $ 141.2 million and $ 142.5 million, respectively. As of December 31, 2025, $ 30.1 million of these deferred tax assets will expire at various times betwee n 2026 and 2041 . The remaining deferred tax assets will either amortize through 2040 or carryforward indefinitely. As of December 31, 2025 and 2024, respectively, our cash and cash equivalents were $ 95.7 million and $ 76.0 million. Of these amounts, our foreign subsidiaries held cash of $ 87.5 million and $ 52.6 million, respectively, representing approximately 91 % and 78 % of available short-term liquidity, which is used to fund ongoing liquidity needs of these subsidiaries. As part of our restructuring plan, the Company’s assertion on being indefinitely reinvested changed in a particular jurisdiction in a previous year. The Company has a hypothetical withholding tax liability of $ 0.4 million as of December 31, 2025 and 2024. The Company maintains its assertion in all other jurisdictions that it is indefinitely reinvesting its funds held in foreign jurisdictions outside of the U.S., except to the extent any of these funds can be repatriated without withholding tax. However, if all of these funds were repatriated to the U.S., or used for U.S. operations, certain amounts could be subject to tax. Due to the timing and circumstances of repatriation of such earnings, if any, it is not practicable to determine the amount of funds subject to unrecognized deferred tax liability. During 2025, 2024 and 2023, no income tax benefit or expense was recorded for stock options exercised as an adjustment to equity. The change in the unrecognized income tax benefits for the years ended December 31, 2025, 2024 and 2023 were as follows: (In thousands) 2025 2024 2023 Balance at beginning of period $ 252 $ 989 $ 17,885 Increases for tax position related to: Prior years — — — Current year — — 129 Decreases for tax positions related to: Prior years — ( 121 ) ( 17,025 ) Expiration of applicable statute of limitations — ( 616 ) — Balance at end of period $ 252 $ 252 $ 989 101 As of December 31, 2025, 2024 and 2023, our total liability for unrecognized tax benefits was $ 0.3 million, $ 0.3 million and $ 1.0 million, respectively, of which $ 0.3 million, $ 0.3 million and $ 1.0 million, respectively, would reduce our effective tax rate if we were successful in upholding all of the uncertain positions and recognized the amounts recorded. We classify interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense. There were no accrued interest and penalties as of December 31, 2025 and 2024, and $ 0.1 million in accrued interest and penalties as of December 31, 2023. We do not anticipate a single tax position generating a significant increase or decrease in our liability for unrecognized tax benefits within 12 months of this reporting date. We file income tax returns in the U.S. for federal and various state jurisdictions and several foreign jurisdictions. The Company's 2023 tax return is currently under audit by the Internal Revenue Service. Generally, we are not subject to changes in income taxes by any taxing jurisdiction for the years prior to 2019. Note 13 – Employee Benefit Plans Pension Benefit Plan We maintain defined benefit pension plans covering employees in certain foreign countries. Pension benefit plan obligations are based on various assumptions used by our actuaries in calculating these amounts. These assumptions include discount rates, compensation rate increases, expected return on plan assets, retirement rates and mortality rates. Actual results that differ from the assumptions and changes in assumptions could affect future expenses and obligations. Details regarding the pension plans are set forth below. • In Germany, there are two defined benefit pension plans and two defined contribution plans. These plans provide benefits in the event of retirement, death or disability. The plan's benefits are based on age, years of service and salary. The defined benefit plans are financed by contributions paid by the Company and the defined contribution plans are financed by contributions paid by the participants. • In Switzerland, there are two defined benefit pension plans. Both plans provide benefits in the event of retirement, death or disability. The plan's benefits are based on age, years of service, salary and on a participant's old age account. The plans are financed by contributions paid by the participants and by the Company. • In Italy, the post-employment benefit plan is required due to statutory provisions. The plan is financed directly by the Company on a pay as you go basis. Employees receive their pension payments as a function of salary, inflation and a notional account. • In Israel, there is a defined benefit pension plan that provides benefits in the event of a participant being dismissed involuntarily, retirement or death. The plan's benefits are based on the higher of the severance benefit required by law or the cash surrender value of the severance benefit component of any qualifying insurance policy or long-term employee benefit fund that is registered in the participants name. The plan is financed by contributions paid by the Company. • In India, the post-employment benefit plan is required due to statutory provisions. The plan is financed directly by the Company on a pay as you go basis. • In Poland, the post-employment benefit plan is required due to statutory provisions. The plan is financed directly by the Company on a pay as you go basis. 102 The pension benefit plan obligations and funded status as of December 31, 2025 and 2024, were as follows: (In thousands) 2025 2024 Change in projected benefit obligation: Projected benefit obligation at beginning of period $ 63,259 $ 67,897 Service cost 1,669 1,664 Interest cost 570 1,902 Actuarial gain - experience ( 384 ) ( 238 ) Actuarial (gain) loss - assumptions ( 3,334 ) 860 Benefit payments ( 3,607 ) ( 4,108 ) Plan amendments — ( 874 ) Participant contributions 439 429 Effects of foreign currency exchange rate changes 10,089 ( 4,273 ) Projected benefit obligation at end of period 68,701 63,259 Change in plan assets: Fair value of plan assets at beginning of period 54,490 55,218 Actual gain on plan assets 2,871 3,966 Contributions 1,314 1,288 Benefit payments ( 2,185 ) ( 2,244 ) Effects of foreign currency exchange rate changes 7,853 ( 3,738 ) Fair value of plan assets at end of period 64,343 54,490 Unfunded status at end of period $ ( 4,358 ) $ ( 8,769 ) The accumulated benefit obligation was $ 67.9 million and $ 62.8 million as of December 31, 2025 and 2024, respectively. The increase in the accumulated benefit obligation, projected benefit obligation and the actuarial (gain)/loss was primarily attributable to the effect of exchange rates during the year partially offset by benefit payments to retirees. The net amounts recognized in the Consolidated Balance Sheets for the unfunded pension liability as of December 31, 2025 and 2024 were as follows: (In thousands) Balance Sheet Location 2025 2024 Non-current pension asset Other non-current assets $ 2,291 $ 517 Current pension liability Accrued wages and benefits ( 372 ) ( 303 ) Non-current pension liability Non-current pension liability ( 6,277 ) ( 8,983 ) Total $ ( 4,358 ) $ ( 8,769 ) The components of net periodic pension cost, other than the service cost component, are included in other income, net in the Consolidated Statements of Loss. The components of net periodic pension cost and amounts recognized in other comprehensive (loss) income for the years ended December 31, 2025, 2024 and 2023 were as follows: (In thousands) 2025 2024 2023 Net periodic benefit cost: Service cost $ 1,669 $ 1,664 $ 1,579 Interest cost 570 1,902 1,851 Expected return on plan assets ( 1,486 ) ( 2,529 ) ( 1,750 ) Amortization of actuarial losses 11 28 26 Net periodic benefit cost 764 1,065 1,706 Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss): Net actuarial (gain) loss ( 3,631 ) ( 1,640 ) 2,304 Amortization of actuarial gains (losses) ( 419 ) 233 ( 145 ) Amount recognized in other comprehensive (income) loss ( 4,050 ) ( 1,407 ) 2,159 Total recognized in net periodic benefit cost and other comprehensive (income) loss $ ( 3,286 ) $ ( 342 ) $ 3,865 103 The amounts recognized in accumulated other comprehensive income as of December 31, 2025 and 2024 were as follows: (In thousands) 2025 2024 Net actuarial gain (loss) $ 2,226 $ ( 1,824 ) The defined benefit pension plans are accounted for on an actuarial basis, which requires the use of various assumptions, including an expected rate of return on plan assets and a discount rate. The expected return on our plan's assets is utilized in determining the benefit obligation and net periodic benefit cost is derived from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes that comprise the plans' asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. The discount rate has been derived from the returns of high-quality, corporate bonds denominated in euro currency with durations close to the duration of our pension obligations. The weighted-average assumptions that were used to determine the net periodic benefit cost for the years ended December 31, 2025, 2024 and 2023 were as follows: 2025 2024 2023 Discount rate 2.7 % 2.8 % 3.2 % Rate of compensation increase 1.7 % 1.5 % 2.2 % Expected long-term rates of return 4.8 % 4.9 % 4.8 % The weighted-average assumptions that were used to determine the benefit obligation as of December 31, 2025 and 2024: 2025 2024 Discount rate 3.1 % 2.7 % Rate of compensation increase 1.7 % 1.5 % Actuarial gains and losses are recorded in accumulated other comprehensive income. To the extent unamortized gains and losses exceed 10 % of the higher of the market-related value of assets or the projected benefit obligation, the excess is amortized as a component of net periodic pension cost over the remaining service period of active participants. The Company anticipates making approximately $ 2.7 million in contributions to the pension plans in 2026. The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid to participants: (In thousands) 2026 $ 3,839 2027 4,192 2028 3,697 2029 4,037 2030 3,481 2031 - 2035 19,368 Total $ 38,614 U.S. GAAP establishes a three-level valuation hierarchy based upon observable and unobservable inputs for fair value measurement of financial instruments: • Level 1 – Observable outputs; values based on unadjusted quoted prices for identical assets or liabilities in an active market; • Level 2 – Significant inputs that are observable; values based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly; • Level 3 – Significant unobservable inputs; values based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs could include information supplied by investees. 104 We have categorized our cash equivalents and our investments held at fair value into this hierarchy as follows: Fair Value Measurements at December 31, 2025 Using (In thousands) Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 1,757 $ 1,757 $ — $ — Available-for-sale securities Bond funds 20,826 19,431 1,394 — Equity funds 25,333 25,016 317 — Other funds 8,538 7,313 1,225 — Real estate funds 7,889 1,382 2,636 3,872 Available-for-sale securities 62,586 53,142 5,572 3,872 Total $ 64,343 $ 54,899 $ 5,572 $ 3,872 Fair Value Measurements at December 31, 2024 Using (In thousands) Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash and cash equivalents $ 753 $ 753 $ — $ — Available-for-sale securities Bond funds 18,058 16,867 1,191 — Equity funds 21,376 21,183 193 — Other funds 7,406 6,089 1,317 — Real estate funds 6,897 1,737 2,106 3,054 Available-for-sale securities 53,737 45,876 4,807 3,054 Total $ 54,490 $ 46,629 $ 4,807 $ 3,054 Our investment policy includes various guidelines and procedures designed to ensure assets are invested in a manner necessary to meet expected future benefits earned by participants and consider a broad range of economic conditions. The objectives of the target allocations are to maintain investment portfolios that diversify risk through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’ actuarial assumptions and achieve asset returns that are competitive with like institutions employing similar investment strategies. The investment policy is periodically reviewed by the Company and a designated third-party fiduciary for investment matters. The policy is established and administered in a manner that is compliant at all times with applicable government regulations. 401(k) Savings Plans We maintain the Adtran, Inc. 401(k) Retirement plan and the Adtran Networks 401(k) Retirement Plan (the “Savings Plans”) for the benefit of eligible employees. The Savings Plans are intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), and is intended to be a “safe harbor” 401(k) plan under Code Section 401(k)(12). The Savings Plans allows employees to save for retirement by contributing part of their compensation to the plan on a tax-deferred basis. The Savings Plans also requires us to contribute a “safe harbor” amount each year. In our legacy ADTRAN, Inc. plan, we match up to 4 % of employee contributions ( 100 % of an employee’s first 3 % of contributions and 50 % of their next 2 % of contributions ), beginning on the employee’s one-year anniversary date. All matching contributions under the legacy ADTRAN, Inc. Savings Plan vest im mediately. In our legacy Adtran Networks plan, we match up to 1.5 % of employee contributions ( 25 % of an employee's first 6 % of contributions ). All matching contributions under the legacy Adtran Networks Savings Plan vest ratably over five years beginning on the employee's one-year anniversary date. In addition, under the legacy Adtran Networks plan, an annual matching employer contribution is made which is based on the Company's achievement against a yearly relative Pro-forma EBIT target which can range from no additional match up to an additional 50 % match. In calculating our matching contributions, compensation up to the statutory maximum under the Code is used ($ 350,000 for 2025). Em ployer contribution expense and plan administration costs for both Savings Plans amounted to approximately $ 3.6 million, $ 3.5 million and $ 4.2 million in 2025, 2024 and 2023, respectively. 105 In June 2024, the Company identified that within our Adtran, Inc. 401(k) plan for the year ended December 31, 2023, that deferrals and matching contributions should have been applied to vested equity award amounts in accordance with the plan documents. As such, we filed a voluntary correction program (“VCP”) application with the IRS and the Company is still in negotiations with the IRS regarding the appropriate corrective actions for this failure. Nonetheless, based on the current facts and circumstances surrounding the VCP negotiations, it appears likely that any corrective action to be approved by the IRS are reasonably estimated to total $ 1.4 million and have been accrued during the period ended December 31, 2025. Deferred Compensation Plans We have maintained two deferred compensation programs for certain executive management employees. On November 3, 2025 (the “Termination Date”), in an effort to streamline the benefits offered to members of management and other key employees, the Company terminated its Deferred Compensation Program for Employees (the “Deferred Compensation Plan”) and its Equity Deferral Program for Employees (the "Equity Deferral Program") together with the Deferred Compensation Plan, (the “Plans”). The Company has also terminated its deferred compensation plans for its non-employee directors. The payment of all benefits to each Plan’s participants and beneficiaries will be in the form of lump sum or installment distributions which are expected to occur prior to December 31, 2026, but can occur no earlier than twelve (12) months and no later than twenty-four (24) months following the Termination Date (the “Liquidation Date”). Distributions of amounts that are set to occur prior to the Liquidation Date will be made as scheduled under the terms of each Plan. Until the Liquidation Date, each of the Plans will continue to operate in the ordinary course, except that no new deferrals will be credited to the participants for compensation earned after the Termination Date. The Deferred Compensation Plan was offered as a supplement to our tax-qualified 401(k) plan and was available to certain executive management employees who have been designated by our Board of Directors. The Equity Deferral Program allowed participants to elect to defer all or a portion of their vested PSUs and RSUs to the plan. Such deferrals continue to be held and deemed to be invested in shares of Adtran stock unless and until the amounts are distributed or such deferrals are moved to another deemed investment pursuant to an election made by the participant. The Company has set aside the plan assets for all plans in a rabbi trust (the “Trust”) and all contributions are credited to bookkeeping accounts for the participants. The Trust assets are subject to the claims of our creditors in the event of bankruptcy or insolvency. The assets of the Trust are deemed to be invested in pre-approved mutual funds as directed by each participant and the participant’s bookkeeping account is credited with the earnings and losses attributable to those investments. The fair value of the assets held by the Trust and the amounts payable to the plan participants as of December 31, 2025 and 2024 were as follows: (In thousands) 2025 2024 Fair Value of Plan Assets Short term investments - deferred compensation plans $ 35,174 $ — Long-term investments — 30,991 Total Fair Value of Plan Assets $ 35,174 $ 30,991 Amounts Payable to Plan Participants Deferred compensation liability $ 37,447 $ — Non-current deferred compensation liability — 33,203 Total Amounts Payable to Plan Participants $ 37,447 $ 33,203 106 Because the plans have been terminated and all assets will be liquidated or distributed to the plan participants within one year, the plan assets and liabilities have been reclassified to short-term as of December 31, 2025. The Trust held $ 2.3 million of common stock in the Company as of December 31, 2025 and 2024. Shares of the Company held by the Trust are recorded at cost and classified as treasury stock on the Consolidated Balance Sheet. Interest and dividend income of the Trust are included in interest and dividend income in the accompanying 2025, 2024 and 2023 Consolidated Statements of Loss. Changes in the fair value of the plan assets held by the Trust have been included in other income, net in the accompanying 2025, 2024 and 2022 Consolidated Statements of Loss. Changes in the fair value of the deferred compensation liability are included as selling, general and administrative expense in the accompanying 2025, 2024 and 2023 Consolidated Statements of Loss. Based on the changes in the total fair value of the Trust’s assets, the Company recorded deferred compensation income in 2025, 2024 and 2023 of $ 3.0 million, $ 3.4 million and $ 3.0 million, respectively. Note 14 – Equity The following table presents changes in accumulated other comprehensive income (loss), net of tax, by components of accumulated other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023: (In thousands) Unrealized Gains (Losses) on Available- for-Sale Securities Defined Benefit Plan Adjustments Foreign Currency Adjustments ASU 2018-02 Adoption (1) Total Balance as of December 31, 2022 $ ( 836 ) $ ( 1,016 ) $ 27,593 $ 385 $ 26,126 Other comprehensive (loss) income before reclassifications 734 ( 1,590 ) 22,822 — 21,966 Amounts reclassified from accumulated other comprehensive (loss) income ( 280 ) 100 — — ( 180 ) Net current period other comprehensive income (loss) 454 ( 1,490 ) 22,822 — 21,786 Less: Other comprehensive income attributable to non-controlling interest, net of tax — — 382 — 382 Balance as of December 31, 2023 ( 382 ) ( 2,506 ) 50,033 385 47,530 Other comprehensive (loss) income before reclassifications ( 160 ) 1,640 ( 37,755 ) — ( 36,275 ) Amounts reclassified from accumulated other comprehensive income (loss) 160 ( 161 ) — — ( 1 ) Net current period other comprehensive income (loss) — 1,479 ( 37,755 ) — ( 36,276 ) Balance as of December 31, 2024 ( 382 ) ( 1,027 ) 12,278 385 11,254 Other comprehensive income (loss) before reclassifications 1 3,691 63,513 — 67,205 Amounts reclassified from accumulated other comprehensive (loss) income ( 1 ) 419 — — 418 Net current period other comprehensive income — 4,110 63,513 — 67,623 Balance as of December 31, 2025 $ ( 382 ) $ 3,083 $ 75,791 $ 385 $ 78,877 (1) With the adoption of ASU 2018-02 on January 1, 2019, stranded tax effects related to the Tax Cuts and Jobs Act of 2017- were reclassified to retained earnings. 107 The following tables present the details of reclassifications out of accumulated other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023: (In thousands) For the year ended December 31, Details about Accumulated Other Comprehensive (Loss) Income Components 2025 2024 2023 Affected Line Item in the Statement Where Net Loss Is Presented Unrealized gains (loss) on available-for-sale securities: Net realized (loss) gain on sales of securities $ ( 1 ) $ 216 $ ( 378 ) Net investment gain Defined benefit plan adjustments – actuarial gain (loss) 419 ( 233 ) 145 Other (expense) income Total reclassifications for the period, before tax 418 ( 17 ) ( 233 ) Tax expense — 16 53 Total reclassifications for the period, net of tax $ 418 $ ( 1 ) $ ( 180 ) The following tables present the tax effects related to the change in each component of other comprehensive income (loss) for the years ended December 31, 2025, 2024 and 2023: 2025 (In thousands) Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Unrealized gains on available-for-sale securities $ 1 $ — $ 1 Reclassification adjustment for amounts related to available-for-sale investments included in net loss ( 1 ) — ( 1 ) Defined benefit plan adjustments 3,631 60 3,691 Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income 419 — 419 Foreign currency translation adjustment 63,513 — 63,513 Total Other Comprehensive Income $ 67,563 $ 60 $ 67,623 2024 (In thousands) Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Unrealized (loss) gains on available-for-sale securities $ ( 216 ) $ 56 $ ( 160 ) Reclassification adjustment for amounts related to available-for-sale investments included in net income (loss) 216 ( 56 ) 160 Defined benefit plan adjustments 1,640 — 1,640 Reclassification adjustment for amounts related to defined benefit plan adjustments included in net (loss) income ( 233 ) 72 ( 161 ) Foreign currency translation adjustment ( 37,755 ) — ( 37,755 ) Total Other Comprehensive Loss $ ( 36,348 ) $ 72 $ ( 36,276 ) 2023 (In thousands) Before-Tax Amount Tax (Expense) Benefit Net-of-Tax Amount Unrealized gains (loss) on available-for-sale securities $ 992 $ ( 258 ) $ 734 Reclassification adjustment for amounts related to available-for-sale investments included in net (loss) income ( 378 ) 98 ( 280 ) Defined benefit plan adjustments ( 2,304 ) 714 ( 1,590 ) Reclassification adjustment for amounts related to defined benefit plan adjustments included in net income (loss) 145 ( 45 ) 100 Foreign currency translation adjustment 22,822 — 22,822 Total Other Comprehensive Income $ 21,277 $ 509 $ 21,786 108 Note 15 – Redeemable Non-Controlling Interest As of Decembe r 31, 2025 and 2024, the non-controlling Adtran Networks stockholders’ equity ownership percentage in Adtran Networks was approximately 29.2 % and 33.0 %, respectively. The following table summarizes the redeemable non-controlling interest activity for the year ended December 31, 2025 and 2024: For the year ended December 31, (In thousands) 2025 2024 Balance at beginning of period $ 422,943 $ 443,327 Redemption of redeemable non-controlling interests ( 49,615 ) ( 20,384 ) Net income attributable to redeemable non-controlling interests 9,413 9,824 Annual recurring compensation earned ( 9,413 ) ( 9,824 ) Balance at end of period $ 373,328 $ 422,943 Annual Recurring Compensation payable on untendered outstanding shares under the DPLTA must be recognized as it is accrued. For the years ended December 31, 2025 and 2024, we a ccrued $ 9.3 million and $ 9.8 million, respectively, representing the portion of the annual recurring cash compensation cash to the non-controlling shar eholders during such periods. On July 1, 2025, the Company paid the Annual Recurring Compensation with respect to the 2024 fiscal year, which is paid annually after the ordinary general shareholders' meeting of Adtran Networks which was held on June 27, 2025. The 2025 Annual Recurring Compensation accrual will be paid after the ordinary general shareholders' meeting of Adtran Networks in 2026. See Note 1 for additional information on RNCI and the Annual Recurring Compensation . Note 16 – Segment Information and Major Customers The chief operating decision maker is the Company's Chief Executive Officer who regularly reviews the Company’s financial performance based on two reportable segments: (1) Network Solutions and (2) Services & Support. The Network Solutions segment includes hardware and software products that enable a digital future which support the Company's Subscriber, Access and Aggregation, and Optical Networking Solutions. The Company's cloud-managed Wi-Fi gateways, virtualization software, and switches provide a mix of wired and wireless connectivity at the customer premises. In addition, its Carrier Ethernet products support a variety of applications at the network edge ranging from mobile backhaul to connecting enterprise customers (“Subscriber Solutions"). The Company's portfolio includes products for multi-gigabit service delivery over fiber or alternative media to homes and businesses. The Services & Support segment offers a comprehensive portfolio of network design, implementation, maintenance and cloud-hosted services supporting its Subscriber, Access and Aggregation, and Optical Networking Solutions. These services assist operators in the deployment of multi-vendor networks while reducing their cost to maintain these networks. The cloud-hosted services include a suite of SaaS applications under the Company's Mosaic One platform that manages end-to-end network and service optimization for both fiber access infrastructure and mesh Wi-Fi connectivity. The Company backs these services with a global support organization that offers on-site and off-site support services with varying SLAs. The performance of these segments is evaluated based on revenue, gross profit and gross margin; therefore, selling, general and administrative expenses, research and development expenses, interest and dividend income, interest expense, net investment gain, other (expense) income, net and income tax expense are reported on a Company-wide basis only. There is no inter-segment revenue. Asset information by reportable segment is not produced and, therefore, is not reported. Revenue and Gross Profit The following table presents information about revenue and gross profit of our reportable segments for each of the years ended December 31, 2025, 2024 and 2023: 2025 2024 2023 (In thousands) Revenue Cost of Revenue Gross Profit Revenue Cost of Revenue Gross Profit Revenue Cost of Revenue Gross Profit Network Solutions $ 896,911 $ 592,141 $ 304,770 $ 738,964 $ 525,817 $ 213,147 $ 974,389 $ 748,831 $ 225,558 Services & Support 186,896 76,711 110,185 183,756 72,739 111,017 174,711 69,142 105,569 Total $ 1,083,807 $ 668,852 $ 414,955 $ 922,720 $ 598,556 $ 324,164 $ 1,149,100 $ 817,973 $ 331,127 109 For the yea rs ended December 31, 2025, 2024 and 2023, $ 5.7 million, $ 6.1 million and $ 6.5 million, respectively, of depreciation expense was included in gross profit for our Network Solutions segment. For the years ended December 31, 2025, 2024 and 2023, $ 0.1 million, $ 0.1 mill ion and $ 20 thousand, respectively, of depreciation expense was included in gross profit for our Services & Support segment. Revenue by Category In addition to operating under two reportable segments, the Company also reports revenue across three categories – Subscriber Solutions, Access & Aggregation Solutions and Optical Networking Solutions. Our Subscriber Solutions portfolio is used by Service Providers to terminate their access services infrastructure at customers' premises while providing an immersive and interactive experience for residential, business and wholesale subscribers. This revenue category includes hardware and software based products and services. These solutions include fiber termination solutions for residential, business and wholesale subscribers, Wi-Fi access solutions for residential and business subscribers, Ethernet switching and network edge virtualization solutions for business subscribers, and cloud software solutions covering a mix of subscriber types. Our Access & Aggregation Solutions are solutions that are used by communications Service Providers to connect residential subscribers, business subscribers and mobile radio networks to the Service Providers’ metro network, primarily through fiber-based connectivity. This revenue category includes hardware and software based products and services. Our solutions within this category are a mix of fiber access and aggregation platforms, precision network synchronization and timing solutions, and access orchestration solutions that ensure highly reliable and efficient network performance. Our Optical Networking Solutions are used by communications Service Providers, internet content providers and large-scale enterprises to securely interconnect metro and regional networks over fiber. This revenue category includes hardware and software based products and services. Our solutions within this category include open optical terminals, open line systems, optical subsystems and modules, network infrastructure assurance systems, and automation platforms that are used to build high-scale, secure and assured optical networks. The following tables disaggregate our revenue by category for the years ended December 31, 2025, 2024 and 2023: 2025 (In thousands) Network Solutions Services & Support Total Optical Networking Solutions $ 281,771 $ 98,541 $ 380,312 Subscriber Solutions 336,297 32,779 369,076 Access & Aggregation Solutions 278,843 55,576 334,419 Total $ 896,911 $ 186,896 $ 1,083,807 2024 (In thousands) Network Solutions Services & Support Total Optical Networking Solutions $ 210,489 $ 90,447 $ 300,936 Subscriber Solutions 295,541 35,237 330,778 Access & Aggregation Solutions 232,934 58,072 291,006 Total $ 738,964 $ 183,756 $ 922,720 2023 (In thousands) Network Solutions Services & Support Total Optical Networking Solutions $ 407,123 $ 85,851 $ 492,974 Subscriber Solutions 263,192 34,516 297,708 Access & Aggregation Solutions 304,074 54,344 358,418 Total $ 974,389 $ 174,711 $ 1,149,100 110 Additional Information The following table presents revenue information by geographic area for the years ended December 31, 2025, 2024 and 2023: (In thousands) 2025 2024 2023 United States $ 480,750 $ 398,170 $ 460,985 United Kingdom 213,113 196,064 214,655 Germany 129,734 119,976 230,922 Other international 260,210 208,510 242,538 Total $ 1,083,807 $ 922,720 $ 1,149,100 Customers comprising more than 10% of revenue can change from year to year. The Company h ad one cust omer comprising more than 10% of revenue in 2025 , 2024 and 2023, respectively, at 14.2 %, 12.1 % and 10.4 % and was included in both our Network Solutions and Services & Support segments. This customer accounted for $ 153.7 million, $ 111.8 million and $ 126.0 million in revenues for the years ended December 31, 2025, 2024 and 2023, respectively. Other than those with more than 10% of revenue disclosed above, our next five largest customers can change, and have historically changed, from year-to-year. The next five largest customers combined represented 20 %, 22 % and 28 % of total revenue in 2025, 2024 and 2023, respectively. As of December 31, 2025, property, plant and equipment, net totaled $ 124.4 million, which included $ 49.3 million held in the U.S. and $ 75.1 million held outside the U.S. As of December 31, 2024, property, plant and equipm ent, net totaled $ 106.5 million, which included $ 46.3 million held in the U.S. and $ 60.2 million held outside the U.S. Property, plant and equipment, net is reported on a Company-wide, functional basis only. Note 17 – Commitments and Contingencies Legal Matters From time to time, the Company is subject to or otherwise involved in various lawsuits, claims, investigations and legal proceedings that arise out of or are incidental to the conduct of our business (collectively, “Legal Matters”), including those relating to employment matters, patent rights, regulatory compliance matters, stockholder claims, and contractual and other commercial disputes. Such Legal Matters, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Additionally, an unfavorable outcome in a legal matter, including in a patent dispute, could require the Company to pay damages, entitle claimants to other relief, such as royalties, or could prevent the Company from selling some of its products in certain jurisdictions. The Company records an accrual for any Legal Matters that arise whenever it considers that it is probable that it is exposed to a loss contingency and the amount of the loss contingency can be reasonably estimated. Although the ultimate disposition of asserted claims cannot be predicted with certainty, it is our belief that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position. As disclosed in Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on May 20, 2025, we identified errors in our previously issued financial statements related to the historical accounting for certain inventory and cost of goods sold transactions (“Adjustment”). The affected periods included the annual periods ended December 31, 2023 and 2024 and the interim periods ended March 31, 2024, June 30, 2024 and September 30, 2024. In connection with the identification of the Adjustment, the Audit Committee oversaw an internal investigation into the circumstances surrounding the Adjustment and its impact on the Company’s historical financial statements. Based on the findings of the internal investigation, it was determined that the underlying errors giving rise to the Adjustment were not properly addressed in the Company’s previously filed financial statements as of and for the years ended December 31, 2024 and 2023 and were not communicated to the Audit Committee or the independent auditors prior to the filing of the initial Annual Report on Form 10-K for the year ended December 31, 2024. The Company has taken certain remedial actions to address the material weaknesses in its internal controls associated with these findings. On August 4, 2025, the Company received a letter from the Atlanta regional office of the SEC in connection with a non-public, fact-finding inquiry, requesting that we voluntarily provide information regarding the internal investigation. The Company is cooperating in response to the SEC’s inquiry and cannot predict the timing or outcome of the inquiry. 111 DPLTA Appraisal Proceedings In addition to such Legal Matters, the Company is a party to appraisal proceedings relating to the DPLTA which were originally filed with the Landgericht Meiningen (Meiningen Regional Court) on February 3, 2023. The DPLTA provides that Adtran Networks shareholders (other than the Company) be offered, at their election, (i) to put their Adtran Networks shares to the Company in exchange for compensation in cash of € 17.21 per share, plus guaranteed interest or (ii) to remain Adtran Networks shareholders and receive recurring cash compensation of € 0.52 per share for each full fiscal year of Adtran Networks. The appraisal proceedings, which were initiated by certain minority shareholders of Adtran Networks, challenge the adequacy of both forms of compensation. While the Company believes that the compensation offered in connection with the DPLTA is fair, it notes that German courts often adjudicate increases of the cash compensation to plaintiffs in varying amounts in connection with German appraisal proceedings. Therefore, the Company cannot rule out that the court or an appellate court may increase the cash compensation owed to the minority Adtran Networks shareholders. Given the stage of the appraisal proceedings, the Company is currently unable to predict the likely outcome or estimate the potential financial impact, if any, of the appraisal proceedings. If a ruling were to occur and be upheld upon appeal that required the Company to pay significant additional cash compensation to the Adtran Networks minority shareholders, there exists the possibility of a material adverse effect on our financial position and results of operations for the period in which the ruling occurs or future periods. DPLTA Exit and Recurring Compensation Costs and the Absorption of Adtran Network's Annual Net Loss Pursuant to the terms of the DPLTA, each Adtran Networks shareholder (other than the Company) has received an offer to elect either (1) to remain an Adtran Networks shareholder and receive from us an Annual Recurring Compensation payment, or (2) to receive Exit Compensation plus guaranteed interest. The guaranteed interest under the Exit Compensation is calculated from the effective date of the DPLTA to the date the shares are tendered, less any Annual Recurring Compensation paid. The guaranteed interest rate is 5.0 % plus a variable component (according to the German Civil Code) that was 1.27 % as of December 31, 2025. Assuming all the minority holders of currently outstanding Adtran Networks shares were to elect the second option, we would be obligated to make aggregate Exit Compensation payments, including guaranteed interest, of approximately € 303.9 million or approximately $ 357.0 million, based on an exchange rate as of December 31, 2025 and reflecting interest accrued through December 31, 2025 during the pendency of the appraisal proceedings discussed below. Shareholders electing the first option of Annual Recurring Compensation may later elect the second option. The opportunity for outside Adtran Networks shareholders to tender Adtran Networks shares in exchange for Exit Compensation had been scheduled to expire on March 16, 2023 . However, due to the appraisal proceedings that were initiated in 2023 in accordance with applicable German law, this time period for tendering shares has been extended pursuant to the German Stock Corporation Act (Aktiengesetz) and will end two months after the date on which a final decision in such appraisal proceedings has been published in the Federal Gazette (Bundesanzeiger). Following the court's decision on a procedural matter in the DPLTA appraisal proceedings on July 14, 2025, the proceeding for the trial on the merits of the DPLTA has recommenced. It is expected to take a minimum of 12 months for a ruling of the court on the merits and such ruling will most likely be appealed, which would be expected to take an additional 12-24 months to be resolved. Accordingly, the Company does not expect a final decision on the DPLTA appraisal proceedings to be rendered and published prior to 2027, and most likely not until 2028 or beyond. Our obligation to pay Annual Recurring Compensation under the DPLTA is a continuing payment obligation, which will amount to approximately € 7.9 million (or $ 9.3 million based on the exchange rate as of December 31, 2025) per year assuming none of the minority Adtran Networks shareholders were to elect Exit Compensation. The foregoing amounts do not reflect any potential increase in payment obligations that we may have depending on the outcome of ongoing appraisal proceedings in Germany. The Annual Recurring Compensation is due on the third banking day following the ordinary general shareholders’ meeting of Adtran Networks for the respective preceding fiscal year (but in any event within eight months following expiration of the fiscal year). With respect to the 2024 fiscal year, Adtran Networks’ ordinary general shareholders' meeting occurred on June 27, 2025 and, therefore, the Annual Recurring Compensation was paid on July 1, 2025. With respect to the 2025 fiscal year, Adtran Networks’ ordinary general shareholder meeting is scheduled for the second quarter of 2026, and the Annual Recurring Compensation will be due on the third banking day following the meeting. During the years ended December 31, 2025 and 2024, we accrued $ 9.3 million and $ 9.8 million, respectively, in Annual Recurring Compensation, which was reflected as an increase to retained deficit. For the year ended December 31, 2025, 2.0 million shares, of Adtran Networks stock were tendered to the Company. This resulted in total Exit Compensation payments of € 40.2 million, or $ 46.6 million, based on exchange rates at the time of the transactions, being paid to Adtran Networks shareholders. For the year ended December 31, 2024, 0.8 million shares of Adtran Networks shares were tendered to the Company. This resulted in Exit Compensation payments of € 15.7 million or $ 17.4 million, based on an exchange rate as of December 31, 2024, being paid to Adtran Networks shareholders. In addition, under the DPLTA, subject to certain limitations pursuant to applicable law and the specific terms of the DPLTA, (i) the Company is entitled to issue binding instructions to the management board of Adtran Networks, (ii) Adtran Networks will transfer its annual profit to the Company, subject to, among other things, the creation or dissolution of certain reserves, and (iii) the Company will absorb the annual net loss incurred by Adtran Networks. The Company’s payment obligation in satisfaction of the requirement that it 112 absorb Adtran Networks’ annual net loss applies to the net loss generated by Adtran Networks in 2025, and it will apply to any net loss generated by Adtran Networks in 2026. Performance Bonds Certain contracts, customers and jurisdictions in which the Company operates require us to provide various guarantees of performance such as bid bonds, performance bonds and customs bonds. As of December 31, 2025 and December 31, 2024, the Company had commitments related to these bonds totaling $ 22.4 million and $ 15.7 million, respectively, which expire at various dates through April 2029 . In ge neral the Company would only be liable for the amount of these guarantees in the event of default under each contract, the probability of which the Company believes is remote. Purchase Obligations The Company purchases components from a variety of suppliers and use contract manufacturers to provide manufacturing services for our products. Our inventory purchase obligations are for short-term product manufacturing requirements, as well as for obligations to suppliers to secure manufacturing capacity. Certain of our inventory purchase obligations with contract manufacturers and suppliers relate to arrangements to secure supply and pricing for certain product components for multi-year periods. As of December 31, 2025, purchase obligations totaled $ 205.9 million. Note 18 – Loss per Share The calculations of basic and diluted loss per share for the years ended December 31, 2025, 2024 and 2023 are as follows: (In thousands, except for per share amounts) 2025 2024 2023 Numerator Net loss attributable to ADTRAN Holdings, Inc. $ ( 45,656 ) $ ( 459,891 ) $ ( 268,852 ) Effect of redemption of RNCI 4,085 2,981 — Net loss attributable to ADTRAN Holdings, Inc. common stockholders $ ( 41,571 ) $ ( 456,910 ) $ ( 268,852 ) Denominator Weighted average number of shares – basic 79,742 78,928 78,416 Effect of dilutive securities: Stock options — — — PSUs, RSUs and restricted stock — — — Weighted average number of shares – diluted 79,742 78,928 78,416 Loss per share attributable to ADTRAN Holdings, Inc. – basic $ ( 0.52 ) $ ( 5.79 ) $ ( 3.43 ) Loss per share attributable to ADTRAN Holdings, Inc. – diluted $ ( 0.52 ) $ ( 5.79 ) $ ( 3.43 ) The following potentially dilutive shares were excluded from the calculation of the diluted weighted average number of shares outstanding as the effect would have been anti-dilutive: (In thousands) 2025 2024 2023 Convertible senior notes 4,931 — — Stock options 882 3,410 1,761 PSUs, RSUs and restricted stock 911 834 514 Note 19 – Restructuring On November 6, 2023, due to the uncertainty around the then-current macroeconomic environment and its impact on customer spending levels, the Company’s management decided to implement a Business Efficiency Program targeting the reduction of ongoing operating expenses and focusing on capital efficiency. This included certain salary reductions, an early retirement program, a site consolidation plan to include lease impairments, inventory write downs from product discontinuances, and the suspension of the quarterly dividend. The Business Efficiency Program was completed as of December 31, 2024. During the years ended December 31, 2024 and 2023, we recognized $ 44.7 million and $ 25.1 million, respectively, of costs related to the Business Efficiency Program. The costs recognized during the year ended December 31, 2024, included total other renegotiated charges and inventory write-down of $ 8.6 million as a result of a strategy shift which included discontinuance of certain items in connection with the Business Efficiency Program, of which, $ 4.1 million relates to inventory write-downs and $ 4.5 million relates to other charges, and are included in cost of revenue in the Consolidated Statements of Loss. 113 For the year ended December 31, 2023, we recognized $ 21.5 million of restructuring costs relating to the Business Combination under the multi-year integration program and synergy realization, respectively, that are included in cost of revenue, selling, general and administrative expenses and research and development expenses in the Consolidated Statement of Loss. A reconciliation of the beginning and ending restructuring liability, which is included in accrued wages and benefits and accrued expenses and other liabilities in the Consolidated Balance Sheets as of December 31, 2025 and 2024, is as follows: (In thousands) 2025 2024 Balance at beginning of period $ 10,336 $ 8,309 Plus: Amounts charged to cost and expense ( 284 ) 40,545 Less: Amounts paid ( 10,052 ) ( 38,518 ) Balance at end of period $ — $ 10,336 Restructuring expenses included in the Consolidated Statements of Loss are for the years ended December 31, 2025, 2024 and 2023: (In thousands) 2025 2024 2023 Network solutions - cost of revenue $ — $ 3,693 $ 2,910 Network solutions - inventory write-down — 8,597 24,313 Services & support - cost of revenue — 2,289 — Cost of revenue $ — $ 14,579 $ 27,223 Selling, general and administrative expenses — 9,128 11,603 Research and development expenses ( 284 ) 20,973 7,728 Total restructuring expenses $ ( 284 ) $ 44,680 $ 46,554 The following table represents the components of restructuring expense by geographic area for the years ended December 31, 2025, 2024 and 2023: (In thousands) 2025 2024 2023 United States $ — $ 18,422 $ 34,629 International ( 284 ) 26,258 11,925 Total restructuring expenses $ ( 284 ) $ 44,680 $ 46,554 Note 20 – Subsequent Events U.S. Tariff Update On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA"). The ultimate availability, timing, and amount of any potential refunds of such tariffs remain highly uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on the Company's business. The Company continues to monitor and evaluate these developments and assess their potential impact on the Company’s business, financial condition, and results of operations. 114 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCO UNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROL S AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms promulgated by the SEC, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, an evaluation was carried out by management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of December 31, 2025. Management’s Report on Internal Control over Financial Reporting Management of ADTRAN Holdings, Inc. (“Adtran”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Adtran’s internal control over financial reporting is a process designed 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. Adtran’s internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Adtran; • 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 Adtran are being made only in accordance with authorizations of management and directors of Adtran; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Adtran’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Adtran’s internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in “Internal Control-Integrated Framework” (2013). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Management determined the following material weaknesses existed as of December 31, 2025: • Adtran did not design and maintain effective controls in response to the risks of material misstatement. Specifically, changes to existing controls or the implementation of new controls have not been sufficient to respond to changes to the risks of material misstatement to financial reporting. This material weakness contributed to the following additional material weakness. • Adtran did not design and maintain effective controls over financial statement preparation, presentation and disclosure commensurate with its financial reporting requirements. Specifically, Adtran did not design and maintain effective controls over the presentation and disclosure of transactions, including non-controlling interest. The material weaknesses resulted in the restatements and revisions to our consolidated financial statements for the years ended December 31, 2022, 2023, and 2024, as well as the condensed consolidated financial statements for the quarterly and year-to-date periods ended September 30, 2022, March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024, and September 30, 2024. The material weaknesses also resulted in material adjustments that were corrected prior to the issuance of the condensed consolidated 115 financial statements for the quarterly period ended March 31, 2025. Additionally, these material weaknesses could result in misstatements of Adtran’s accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. Because of these material weaknesses, management has concluded that Adtran did not maintain effective internal control over financial reporting as of December 31, 2025. The effectiveness of Adtran's internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears in Part II, Item 8 of this report. Remediation of Previously Identified Material Weaknesses As previously reported in our 2024 Form 10-K/A, management identified the following material weaknesses in our internal control over financial reporting, which have been remediated as of December 31, 2025: • Adtran did not design and maintain effective controls relating to communicating accurate information internally and with those charged with governance. This includes providing information pursuant to objectives, responsibilities and functions of internal control. • Adtran did not design and maintain effective controls to address the initial application of complex accounting standards and accounting of non-routine, unusual or complex events and transactions. Specifically, Adtran did not design and maintain effective controls to timely analyze and account for (i) non-controlling interest and (ii) a receivable purchase and servicing agreement. • Adtran did not design and maintain effective controls over an inventory suspense account. Specifically, certain inventory activity was not reviewed at a sufficient level of precision to identify the nature and aging of the individual inventory suspense account activity. Following the identification of the material weaknesses and continuing throughout the year ended December 31, 2025, management executed its remediation plan through the following actions: • Adtran implemented and enhanced key internal controls and communication policies, training sessions for personnel on internal control expectations, a quarterly sub-certification process, and redesigned controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation to remediate the material weakness relating to the communication of accurate information internally and with those charged with governance. • Adtran implemented redesigned controls over the identification and review of contracts, transactions or arrangements that may result in a financial obligation including the use of an accounting or reporting third-party advisor as needed to ensure proper presentation of these items within its consolidated financial statements to remediate the material weaknesses relating to accounting for non-routine, unusual or complex events and transactions for non-controlling interest and the receivable purchase and servicing agreement. • Adtran redesigned the reconciliation control specific to the inventory suspense account and enhanced its review procedures (including review of aged items and training sessions for personnel on reconciliation procedures) to remediate the material weakness relating to maintaining effective controls over that account. As a result of the actions taken above, management has determined that the controls were effectively designed and demonstrated effective operation for a sufficient period of time to enable the Company to conclude that these material weaknesses in internal control over financial reporting have been remediated as of December 31, 2025. Management’s On-Going Remediation Efforts As previously reported in our 2024 Form 10-K/A, management identified material weaknesses in our internal control over financial reporting, two of which continue to exist as of December 31, 2025, as disclosed above. Management has made and continues to make progress towards remediating these material weaknesses. Remediation of the material weaknesses and strengthening our internal control environment is a top priority. To remediate the material weaknesses in Adtran’s internal control over financial reporting related to the risks of material misstatement and financial statement preparation, presentation and disclosure of transactions, including non-controlling interest, Adtran completed the following activities during the second half of 2025: • The global identification and reassessment of all key risks, processes and controls. • Increased training and awareness of control activities, and increased scrutiny of control performance and documentation standards. 116 • Hired additional resources, enhancing global leadership in the Accounting function, and strengthening the overall technical skill set and capacity. • Adtran enhanced existing controls over the review of Adtran’s consolidated financial statements, and in the fourth quarter of 2025 completed the implementation of additional financial statement review controls. Adtran’s management believes that the continued operation of the activities outlined above in subsequent reporting periods will be effective in remediating such material weaknesses. The material weaknesses cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded that, through testing, these controls are operating effectively. Changes in Internal Control over Financial Reporting The fourth quarter remediation activities described above are the only changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTH ER INFORMATION (a) None. (b) Dr. Christoph Glingener , our Chief Technology Officer , adopted a Rule 10b5-1 trading arrangement (as defined in Item 408 of Regulation S-K) on December 12, 2025 . Dr. Glingener’s trading arrangement covers the exercise of 148,392 stock options and the sale of the underlying shares of the Company’s common stock, and it is scheduled to terminate on the earlier of (i) December 31, 2026 and (ii) the date that all such options are exercised and the underlying shares are sold. Other than as disclosed above, during the fiscal quarter ended December 31, 2025, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408 of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 117 PART III ITEM 10. DIRECTORS, EXECUTIVE O FFICERS AND CORPORATE GOVERNANCE Code of Ethics We have adopted a Code of Business Conduct and Ethics, which applies to all employees, officers and directors of Adtran. The Code of Business Conduct and Ethics meets the requirements of a "code of ethics" as defined by Item 406 of Regulation S-K, and applies to our Chief Executive Officer, Chief Financial Officer (who is both our principal financial and principal accounting officer), as well as all other employees, as indicated above. The Code of Business Conduct and Ethics also meets the requirements of a code of conduct under NASDAQ listing standards. The Code of Business Conduct and Ethics is posted on our website at www.adtran.com under the links "About – Investor Relations – Corporate Governance – Charters and Documents." We intend to disclose any amendments to the Code of Business Conduct and Ethics, as well as any waivers for executive officers or directors, on our website at www.adtran.com. The information found on our website is not incorporated by reference in this report or any other report that we file or furnish to the SEC. Certain information required by this Item regarding Adtran’s executive officers is included in Part I of this report under the caption “Information about our Executive Officers” in accordance with the Instructions to Item 401 of Regulation S-K. Other information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Adtran’s definitive Proxy Statement for the 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”) to be filed with the SEC pursuant to Regulation 14A. Insider Trading Policy We have adopted the ADTRAN Holdings, Inc. Insider Trading Policy (the “Insider Trading Policy”), which governs the purchase, sale and other disposition of our securities by our directors, officers, managers, employees, independent contractors, and consultants, and by the Company. The Insider Trading Policy is designed to promote compliance with U.S. federal and state securities laws, rules and regulations, as well as European Regulation No. 596/2014 and the applicable rules and regulations of The Nasdaq Stock Market, LLC, with respect to the purchase, sale and/or disposition of the Company’s securities (and the securities of other companies in certain circumstances). The Insider Trading Policy addresses the implementation of certain trading blackout periods in the Company’s securities for Company insiders. A copy of the Insider Trading Policy is filed as Exhibit 19 to this 2025 Form 10-K. ITEM 11. EXECUT IVE COMPENSATION The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2026 Proxy Statement to be filed with the SEC pursuant to Regulation 14A. 118 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL O WNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table provides information about our common stock that may be issued under all of our existing equity compensation plans as of December 31, 2025, including the 2015 Employee Plan and the 2020 Employee Plan (collectively, the “Prior Plans”), the 2024 Employee Stock Incentive Plan (“2024 Employee Plan”) and the 2024 Directors Stock Plan (“2024 Directors Plan”) (collectively, the “Plans”). Each of the Plans has been approved by our stockholders. (In thousands) Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)(1) Weighted average exercise price of outstanding options, warrants and rights (b)(1) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)(2) Plan Category Equity compensation plans approved by stockholders 2,012 $ 8.86 4,733 Equity compensation plans not approved by stockholders — — — Total 2,012 $ 8.86 4,733 (1) Excludes 0.4 million of target PSUs and 1.5 million of time-based RSUs outstanding under our 2024 Employee Plan. The outstanding stock options have a weighted average remaining term of 4.8 years. (2) Represents 4.2 million shares of common stock available for future issuance pursuant to the 2024 Employee Plan and 0.5 million shares of common stock available for future issuance pursuant to the 2024 Directors Plan. Following the stockholders’ approval of the 2024 Employee Plan and the 2024 Directors Plan were approved by the stockholders, we are no longer making any future grants under the Prior Plans, but certain shares underlying awards that are forfeited, cancelled or terminated under the Prior Plans will again be available for issuance under the 2024 Employee Plan and the 2024 Directors Plan, as applicable. The other information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2026 Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A. ITEM 13. CERTAIN RELATIONSHIPS AND RELAT ED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2026 Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A. ITEM 14. PRINCIPAL ACCOU NTANT FEES AND SERVICES The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from the 2026 Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A. 119 PART IV ITEM 15. EXHIBITS AND FINA NCIAL STATEMENT SCHEDULES Documents Filed as Part of This Report. 1. Consolidated Financial Statements The consolidated financial statements of Adtran and the report of independent registered public accounting firm thereon are set forth under Part II, Item 8 of this report. Consolidated Balance Sheets as of December 31, 2025 and 2024 Consolidated Statements of Loss for the years ended December 31, 2025, 2024 and 2023 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2025, 2024 and 2023 Consolidated Statements of Changes in Equity for the years ended December 31, 2025, 2024 and 2023 Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 Notes to Consolidated Financial Statements 2. Consolidated Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts 3. Exhibits The following exhibits are filed with or incorporated by reference in this report. Where such filing is made by incorporation by reference to a previously filed registration statement or report, such registration statement or report is identified in parentheses. We will furnish any exhibit upon request to: ADTRAN Holdings, Inc., Attn: Investor Relations, 901 Explorer Boulevard, Huntsville, Alabama 35806. There is a charge of $0.50 per page to cover expenses for copying and mailing. Effective as of July 8 2022, ADTRAN Holdings, Inc. became the successor to ADTRAN, Inc. Any reference to "ADTRAN, Inc." in these exhibits should be read as "ADTRAN Holdings, Inc." as set forth in the Exhibit List below. Furthermore, effective June 8, 2023, ADVA Optical Networking SE (“ADVA”), a subsidiary of ADTRAN Holdings, Inc., changed its name to Adtran Networks SE. By operation of law, any reference to ADVA Optical Networking SE in these exhibits should be read as Adtran Networks SE as set forth in the Exhibit List below. Exhibit Number Description 2.1 Business Combination Agreement, dated August 30, 2021, by and among ADTRAN Holdings, Inc., Acorn HoldCo, Inc., Acorn MergeCo, Inc. and Adtran Networks SE (incorporated by reference to Exhibit 2.1 to the Company's Form 8-K filed August 30, 2021) 3.1 Amended and Restated Certificate of Incorporation of ADTRAN Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed July 8, 2022) 3.2 Second Amended and Restated Bylaws of ADTRAN Holdings, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed October 24, 2023) 4.1 Description of Securities (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K filed March 3, 2025) 4.2 Indenture, dated as of September 19, 2025, between ADTRAN Holdings, Inc. and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed September 22, 2025) 4.3 Form of certificate representing the 3.75% convertible senior notes due 2030 (included as Exhibit A to Exhibit 4.2, which is incorporated by reference to Exhibit 4.1 to the Company's Form 8-K filed September 22, 2025) 120 10.1 Management Contracts and Compensatory Plans: (a) ADTRAN Holdings, Inc. 2015 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed May 15, 2015) (b) Summary of Terms of Assumed Options (incorporated by reference to Exhibit 4.1 to the Company’s Form S-8 filed July 11, 2022) (c)* ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, as amended and restated, effective as of July 15, 2022 (d)* ADTRAN Holdings, Inc. Deferred Compensation Program for Directors, as amended and restated, effective as of July 15, 2022 (e)* ADTRAN Holdings, Inc. Equity Deferral Program for Employees, as amended and restated, effective as of July 15, 2022 (f)* ADTRAN Holdings, Inc. Equity Deferral Program for Directors, as amended and restated, effective as of July 15, 2022 (g) Amended and Restated ADTRAN Holdings, Inc. 2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1(t) to the Company's Form 10-K filed March 1, 2023) (h) Form of Notice Letter with respect to RSU and PSU awards under the ADTRAN Holdings, Inc. 2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3 (ae) to the Company's Form 10-K filed February 26, 2021) (i) Form of Stock Option Award Agreement under the ADTRAN, Inc. 2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed December 5, 2023) (j) Form of Market-Based Performance Stock Unit Agreement under the ADTRAN Holdings, Inc. 2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed May 6, 2021) (k) Form of Restricted Stock Unit Agreement under the ADTRAN Holdings, Inc. 2020 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed May 6, 2021) (l) ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 9, 2024) (m) ADTRAN Holdings, Inc. 2024 Directors Stock Plan (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed May 9, 2024) (n) Form of Market-Based Performance Stock Unit Agreement under the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan incorporated by reference to Exhibit 10.1(y) to the Company's Form 10-K filed March 3, 2025) (o) Form of Restricted Stock Unit Agreement under the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1(z) to the Company's Form 10-K/A filed May 20, 2025) (p) Form of Restricted Stock Unit Agreement for CEO under the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed on August 5, 2025) (q) Form of Market-Based Performance Stock Unit Agreement for CEO under the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed August 5, 2025) (r) Form of Performance Share Agreement for CEO under the ADTRAN Holdings, Inc. 2024 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed August 5, 2025) (s) Form of Adtran Sales Incentive Compensation Program – General Terms (participants include James D. Wilson) (incorporated by reference to Exhibit 10.3(ad) to the Company’s Form 10-K filed February 26, 2021) 121 (t) Amended and Restated Variable Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed January 26, 2023) (u)† Form of 2025 Variable Incentive Compensation Plan Award Letter (incorporated by reference to Exhibit 10.1(u) to the Company's Form 10-K filed March 3, 2025) (v)†* Form of 2026 Variable Incentive Compensation Plan Award Letter (w) (i) Employment Agreement, dated July 13, 2022, by and between Thomas R. Stanton and ADTRAN Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed July 15, 2022) (“CEO Employment Agreement”) (w) (ii) First Amendment to the CEO Employment Agreement dated March 29, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed April 3, 2023). (x) (i) Employment Agreement, dated January 28, 2015, and Amendment Nos. 1-9, by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed March 30, 2023) (x) (ii) † Eighth Amendment, dated May 26, 2023 including Exhibit 1 thereto, to the Employment Agreement by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed June 1, 2023) (x) (iii) Ninth Amendment, dated December 4, 2023, to the Employment Agreement by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed December 5, 2023) (x) (iv) † Tenth Amendment Employment Agreement, dated August 27, 2024, by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed August 30, 2024) (x) (v) Settlement Agreement, dated May 12, 2025, by and between Adtran Networks SE and Ulrich Dopfer (incorporated by reference to Exhibit 10.1 to the Company's Form 10-Q filed August 5, 2025) (y)(i) Service Agreement, dated September 29, 2006 and Amendment Nos. 1-16, by and between Adtran Networks and Christoph Glingener (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed April 3, 2023) (y)(ii) Seventeenth Amendment, dated March 28, 2023, to Service Agreement by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed April 3, 2023) (y)(iii) † Exhibit 1 to the Seventeenth Amendment, dated March 28, 2023 and executed May 31, 2023, to the Service Agreement by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed June 1, 2023) (y)(iv) Eighteenth Amendment, dated December 4, 2023, to the Service Agreement by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed December 5, 2023 (y) (v) † Nineteenth Amendment to Service Agreement, dated August 27, 2024, by and between Adtran Networks SE and Christoph Glingener (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 30, 2024) (y) (vi) †* Twentieth Amendment to Employment Agreement, dated December 9, 2025, by and between Adtran Networks SE and Christoph Glingener (z) Offer Letter, dated February 28, 2025, by and between ADTRAN Holdings, Inc. and Timothy Santo (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed March 7, 2025) (aa) ADTRAN Holdings, Inc. Amended and Restated Clawback Policy (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed October 24, 2023) 122 10.2 Form of Confirmation for Capped Call Transactions (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed September 22, 2025) 10.3+ Credit Agreement dated July 18, 2022, by and among ADTRAN Holdings, Inc. and ADTRAN, Inc. as borrowers, in favor of Wells Fargo Bank, National Association as lender (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed July 22, 2022) 10.4+ First Amendment to Credit Agreement, dated August 9, 2023, by and between ADTRAN Holdings, Inc. and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.7 to the Company's Form 10-Q filed August 14, 2023) 10.5+ Second Amendment to Credit Agreement and First Amendment to Collateral Agreement, dated as of January 16, 2024, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., Wells Fargo Bank, National Association, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 22, 2024) 10.6 Third Amendment to Credit Agreement, dated as of March 12, 2024, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., Wells Fargo Bank, National Association, and the lenders party thereto (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K filed March 15, 2024) 10.7+ Fourth Amendment to Credit Agreement, dated as of June 4, 2024, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., Adtran Networks SE, Wells Fargo Bank, National Association, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed June 10, 2024) 10.8 Fifth Amendment to Credit Agreement and Waiver, by and between ADTRAN, Inc., Adtran Networks, SE and Wells Fargo Bank, National Association, dated May 6, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed May 12, 2025) 10.9 Sixth Amendment and Consent to Credit Agreement, dated as of September 16, 2025 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed September 17, 2025) 10.10+ Collateral Agreement dated July 18, 2022, by and among ADTRAN Holdings, Inc., ADTRAN, Inc., and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed July 22, 2022) 10.11 ADVA Domestic Collateral Agreement, dated as of June 4, 2024, by and among ADVA NA Holdings, Inc., Adtran Networks North America, Inc., and Adtran Networks SE, in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.6 to the Company's Form 8-K filed June 10, 2024) 10.12 Guaranty Agreement dated July 18, 2022, by and between ADTRAN Holdings, Inc. and ADTRAN, Inc. in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed July 22, 2022) 10.13 ADVA Guaranty Agreement, dated as of June 4, 2024 by and between ADVA NA Holdings, Inc., Adtran Networks North America, Inc., Adtran Networks (UK) Limited, in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed June 10, 2024) 10.14 Domination and Profit and Loss Transfer Agreement between ADTRAN Holdings, Inc. and Adtran Networks SE, dated November 30, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed December 5, 2022) 19* ADTRAN Holdings, Inc. Insider Trading Policy 21* Subsidiaries of Adtran Holdings, Inc. 23* Consent of PricewaterhouseCoopers LLP. 31.1* Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 123 32* Section 1350 Certifications. 97 ADTRAN Holdings, Inc. Policy for the Recovery of Erroneously Awarded Incentive Based Compensation (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed October 24, 2023) 101 The following financial statements from the Company's Annual Report on Form 10-K for the year ended December 31, 2025, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Loss, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flows, (vi) Notes to Consolidated Financial Statements, and (vii) Schedule II – Valuation and Qualifying Accounts 104 Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) * Furnished or filed herewith, as applicable + Schedules and exhibits omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon request. † Certain identified information has been excluded from these exhibits because it is not material and is the type of information that the Company customarily and actually treats as private and confidential. Redacted information is indicated by [ ] or [***]. 124 ITEM 16. FORM 10-K SUMMARY ADTRAN has elected not to provide a summary of the information contained in this report at this time. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 26th day of February 2026. ADTRAN Holdings, Inc. (Registrant) By: /s/ Timothy Santo Timothy Santo Senior Vice President of Finance and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 26, 2026. Signature Title /s/ Thomas R. Stanton Chief Executive Officer and Chairman of the Board (Principal Executive Officer) Thomas R. Stanton /s/ Timothy Santo Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Timothy Santo /s/ H. Fenwick Huss Director H. Fenwick Huss /s/ Gregory McCray Director Gregory McCray /s/ Balan Nair Director Balan Nair /s/ Jacqueline H. Rice Director Jacqueline H. Rice /s/ Nikos Theodosopoulos Director Nikos Theodosopoulos /s/ Kathryn A. Walker Director Kathryn A. Walker 125 ADTRAN Holdings, Inc. SCHE DULE II VALUATION AND QUALIFYING ACCOUNTS (In thousands) Balance at Beginning of Period Charged to Costs & Expenses Deductions Balance at End of Period Year ended December 31, 2025 Allowance for Credit Losses $ 1,300 18 — $ 1,318 Deferred Tax Asset Valuation Allowance $ 115,694 13,463 4,706 $ 124,451 Year ended December 31, 2024 Allowance for Credit Losses $ 400 900 — $ 1,300 Deferred Tax Asset Valuation Allowance $ 86,567 29,217 90 $ 115,694 Year ended December 31, 2023 Allowance for Credit Losses $ 49 351 — $ 400 Deferred Tax Asset Valuation Allowance $ 5,201 81,590 224 $ 86,567 126