What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-05-06 compared with 2025-11-05 · 283 added, 263 removed, 706 unchanged (44% of the section changed)

6 unchanged sentences

Risks Related to Our Business and Industry

• escalated or escalating United States (the "U.S.") tariffs as well as countermeasures taken by affected countries, may have a negative effect on global economic conditions, financial markets and our business, as may retaliatory actions by other countries, including China, in response to these U.S.

• large purchases by a limited number of customers represent a substantial portion of our revenue;

• some of the key components in our products come from sole or limited sour ces of supply, which increases the risk of supply shortages, extended lead times or supply changes;

• we expect large purchases by a limited number of customers to continue to represent a substantial portion of our revenue;

• escalated or escalating United States (the "U.S.") tariffs as well as countermeasures and retaliatory actions taken by other countries, may have a negative effect on global economic conditions, financial markets and our business;

• adverse economic conditions, continuing uncertain economic conditions or reduced information technology and network infrastructure spending may adversely affect our business;

• Some key components in our products come from sole or limited sources of supply and increases the risk of supply shortages, extended lead times or supply changes;

• we have entered into significant purchase commitments and are susceptible to supply shortages, extended lead times or supply changes;

• our revenue and revenue growth rates are volatile and may decline or not meet our or our investor's expectations;

• our results of operations may vary significantly from period to period and can be unpredictable;

• we expect our gross margins to vary over time and may be adversely affected by numerous factors;

• our results of operations have varied significantly from period to period and are unpredictable;

• the networking market is rapidly evolving;

• failure to successfully carry out new product and service offerings and expand into adjacent markets could adversely impact our business;

• we expect our gross margins to vary over time and may be adversely affected by numerous factors;

• we face intense competition and industry consolidation;

• we face intense competition and industry consolidation may lead to increased competition;

• we are subject to risks associated with the expansion of our international sales and operations;

• we face risks associated with the investments in and acquisitions of complementary companies, products or technologies;

• seasonality and industry cyclicality may cause fluctuations in our revenue;

• we face risks associated with the investments in and acquisitions of other businesses;

• industry cyclicality may cause fluctuations in our revenue;

• fluctuations in currency exchange rates could adversely affect our business;

2 unchanged sentences

• inability to attract new large customers or sell additional products and services to our existing customers could adversely affect our revenue growth;

• sales of our switches generate most of our product revenue;

• inability to maintain the growth of our switching and routing platform sales, which generate most of our product revenue;

• inability to increase market awareness or acceptance of our new products and services may adversely affect our revenue;

6 unchanged sentences

• sales to government entities are subject to a number of challenges and risks;

• we are exposed to the credit risk of our channel partners and some of our end customers.

• we are exposed to the credit risk of our channel partners and some of our customers.

Risks Related to Products and Services

• product quality problems, defects, errors or vulnerabilities could harm our business;

• product or service quality problems, defects, errors or vulnerabilities could harm our business;

• failure to anticipate technological shifts could harm our business;

• our products must interoperate with operating systems, software applications and hardware that is developed by others.

• inability to ensure that our products interoperate with operating systems, software applications and hardware that are developed by others.

Risks Related to Supply Chain and Manufacturing

• insufficient component supply and inventory management;

• primarily reliant upon a predominant merchant silicon vendor;

• we depend on third-party manufacturers to build our products;

• future sales forecasts may materially change, which could result in incorrect levels of inventory and purchase commitments;

• key component supply chain constraints and inventory management;

• we are susceptible to manufacturing delays and pricing fluctuations;

• if demand forecasts materially change from our initial projections, we may under-or over-procure inventory that we may be unable to use in a timely manner or at all;

• shipment interruptions or delays could cause our revenue to fall.

1 unchanged sentence

• assertions by third parties of intellectual property rights infringement, misappropriation or other violation could harm our business;

• failure or inability to protect or assert our intellectual property rights could harm our competitive position;

• inability to protect or assert our intellectual property rights could harm our competitive position;

• we rely on the availability of licenses to third-party software and other intellectual property;

1 unchanged sentence

• our competitors could develop products that are similar to or better than ours because we provide access to our software and selected source code to certain partners.

Risks Related to Litigation

• we may become involved in litigation that may materially adversely affect us.

Risks Related to Cybersecurity and Data Privacy

• our products, services and external facing or internal network systems, or those of third parties on which we rely, could experience cybersecurity incidents, and defects, errors or vulnerabilities in our products, or the misuse of our products or services, could lead to cybersecurity incidents or a failure to detect cybersecurity incidents, create product liability risks, damage our reputation, adversely impact our operating results, or otherwise negatively impact our business;

• we, or third parties on which we rely, could experience cybersecurity incidents relating to our information systems, or our products, services, or data, which could disrupt our operations or our ability to provide services, cause vulnerabilities or perceived vulnerabilities in our products or services, compromise intellectual property or other sensitive data, harm our reputation, damage customer or other relationships, delay our ability to recognize revenue, lead to significant costs, legal proceedings, legal liability, or enforcement actions, or otherwise negatively impact our business.

• defects, errors or vulnerabilities in our products, services and external facing or internal network systems, or the misuse of our products or services, or those of third parties on which we rely, could lead to cybersecurity incidents or a failure to detect cybersecurity incidents, or otherwise negatively impact our business;

• we, or third parties on which we rely, could experience cybersecurity incidents, which could disrupt our operations, cause vulnerabilities in our products or services, compromise intellectual property or other sensitive data, or otherwise negatively impact our business.

Risks Related to Accounting, Compliance, Regulation and Tax

• foreign investment laws and regulations, and other trade or regulatory barriers, may have a negative effect on global economic conditions, financial markets and our business;

• enhanced import/export restrictions, such as enhanced export controls the U.S.

has adopted targeting trade with China, as well as countermeasures taken by affected countries may negatively affect our business;

• enhanced U.S.

trade restrictions, affecting China and other countries, as well as countermeasures taken by affected countries may negatively affect our business;

• failure to maintain effective internal control over financial reporting could adversely affect the accuracy and timing of our financial reporting;

1 unchanged sentence

• changes in our income taxes, effective tax rate or tax laws could adversely affect our results;

• failure to comply with government laws and regulations could harm our business;

• failure to comply with government laws and regulations, including privacy laws, environmental laws and export controls could harm our business;

• issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations;

• we are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability for violations;

• failure to comply with anti-bribery and anti-corruption laws and anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.

Risks Related to Ownership of Our Common Stock

4 unchanged sentences

General Risks

• we may become involved in litigation that may materially adversely affect us;

• inability to hire, retain, train and motivate qualified personnel and senior management could cause our business to suffer;

• earthquakes, fire, power outages, floods, health epidemics and other catastrophic events could harm our business;

• natural disasters, social unrest, violent conflicts, systemic failures, and other catastrophic events could harm our business;

• we have not paid dividends in the past and do not intend to pay dividends for the foreseeable future.

Risks Related to Our Business and Industry

Some of the key components in our products come from sole or limited sour ces of supply, which increases the risk of supply shortages, extended lead times or supply changes.

Our products rely on components that we purchase, or our contract manufacturers purchase on our behalf from a limited number of suppliers, including certain sole source providers.

In particular, we are primarily reliant upon our predominant merchant silicon vendor, Broadcom, for our switching chips.

Our reliance on component suppliers yields the potential for the infringement, misappropriation or other violation of third-party intellectual property rights due to the incorporation of such components into our products.

We may not be indemnified by such component suppliers for such infringement, misappropriation or other violation claims.

Any litigation for which we do not receive indemnification could require us to incur significant legal expenses in defending against such claims or require us to pay substantial royalty payments or settlement amounts that would not be reimbursed by our component suppliers.

Our product development efforts are also dependent upon the success of our continued collaboration with our key merchant silicon vendors such as Broadcom.

As we develop our product roadmap, we select specific merchant silicon from these vendors for each new product.

It is critical that w e work in tandem with these vendors to ensure that their silicon includes improved features, that our products take advantage of such improved features, and that such vendors are able to supply us with sufficient quantities on commercially reasonable terms to meet customer demand.

Reliance on these relationships allows us to focus our research and development resources on our software core competencies while leveraging their investments and expertise.

The merchant silicon vendors may not be successful in continuing to innovate, develop products that outperform their competitors or meet the requirements of our customers, meet deadlines for the release of their products or produce a sufficient supply of their products.

Moreover, these vendors may not collaborate with us or may become competitive with us by selling merchant silicon for “white boxes” with open-source network operating systems or other products to our customers.

If our key merchant silicon vendors fail to innovate, meet customer requirements, or experience supply shortages and product delays, our products may become less competitive.

Such failures, or the absence of commercially reasonable supply terms could force us to redesign our products, resulting in delays of our own product launches, extended lead times, lost sales

and reduced gross margins.

Any of these factors could materially affect our business, financial condition and results of operations.

We expect large purchases by a limited number of customers to continue to represent a substantial p ortion of our revenue, and any loss, delay, decline or other change in expected purchases could result in material quarter-to-quarter fluctuations of our revenue or otherwise adversely affect our results of operations.

Large purchases by a relatively limited number of customers have accounted for a significant portion of our revenue.

For example, sales to one end customer represented 16%, 15%, and 21% of our total revenue, and sales to the other end customer represented 26%, 20%, and 18% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.

We have experienced unpredictability in t he timing of orders from our high-volume customers primarily due to the overall complexity of large-scale orders and changes in demand specific to these customers, including reductions in or changes in the mix of capital expenditures by these customers and the impact of cost reduction and other efficiency efforts by these customers.

Volatility and uncertainty in the demand for AI models underlying network systems could increase this unpredictability from our large customers.

In addition, the variability in customer concentration is linked to the timing of new product deployments, and spending cycles with these customers, as well as the time it takes these customers to evaluate, test, qualify and accept our products and services, and we expect continued variability in our customer concentration and timing of sales on a quarterly and annual basis.

In addition, we typically provide more favorable terms and conditions to large customers, than we typically do to other customers, including pricing discounts, bundled upgrades, acceptance terms, indemnification terms, and other rights, which negatively impacts our gross margins.

Changes in the business requirements or focus, upgrade cycles, vendor selection, project prioritization, assignment of spending allocations among vendors based upon specific network roles or projects, financial prospects, lack of growth of our large customers, capital resources and expenditures or purchasing behavior and deceleration in spending of these customers could significantly decrease our sale s to such customers or could lead to delays, reductions or cancellations of planned purchases of our products or services.

I n addition, an increased focus on the deployment of AI-enabled solutions by these customers has accelerated the need for advanced technology offerings, including some offerings from potential new market entrants.

This prioritization of AI related infrastructure investment has at times come in conjunction with the announcement of various cost reduction measures by such customers, including optimization and increased efficiency in non-AI related capital expenditures, which could negatively impact our revenue.

In addition, although the focus on deployment of AI-enabled solutions has driven increased demand for networking, the long-term trajectory remains unknown.

As such, demand estimates for our new products are difficult to forecast and can create volatility in our revenue.

In some instances, such factors have had, and may continue to have, an impact on certain current or future projects and reduce our visibility to customer demand and may result in a reduction or uncertainty in the timing of orders from these large customers, which may negatively impact our revenue and increase the risk of excess and obsolete inventory charges on our products.

Moreover, because our sales are based prim arily on purchase orders, some of our customers have previously and could continue to cancel, delay, reduce or otherwise modify their purchase commitments with little or no notice to us.

These customers may decide to delay or cancel such orders for any reason.

This limited visibility requires us to rely on estimated demand forecasts to determine how much material to purchase and product to manufacture.

Further, extended supplier lead times on some newer technologies can create greater pressure on our ability to forecast future demand, which can lead to excess inventory or product shortages and to delays in fulfilling current and future purchase orders that can impede production by our customers and harm our customer relationships.

For example, constrained availability for memory and silicon markets could prevent us from shipping end-customer orders on time, which may result in the loss of sales and customers and negatively impact our revenue.

If any of the factors discussed above drive some of our large customers to cancel all or portion of their business relationships with us, the growth in our business and the ability to meet our current and long-term financial forecasts may be materially impacted.

As a result, we may be unable to sustain or increase our revenue from our large customers, grow revenue with new or other existing customers at the rate we anticipate or at all, or offset a decline or discontinuation of concentrated purchases by our larger customers with purchases by new or existing customers.

We expect that such concentrated purchases will continue to contribute materially to our revenue for the foreseeable future and that our results of operations may fluctuate on a quarterly basis as a result of such larger customers’ buying patterns.

In addition, we may see consolidation of our customer base, such as among Internet companies and cloud service providers, which could result in the loss of customers.

The loss of such customers, or a significant delay or reduction in their purchases, including reductions or delays due to customer departures from recent buying patterns, or an unfavorable change in competitive or economic conditions could materially harm our business, financial condition, results of operations and prospects.

Escalated or escalating U.S.

tariffs, as well as countermeasures taken by affected countries, may have a negative effect on global economic conditions, financial markets and our business, as may retaliatory actions by other countries, including China, in response to these U.S.

tariffs, as well as countermeasures and retaliatory actions taken by other countries, may have a negative effect on global economic conditions, financial markets and our business.

Our products are primarily manufactured in Malaysia, Vietnam, and Mexico, and we also procure a limited number of products originating from China, Taiwan, Thailand and the Philippines.

In addition, our contract manufacturing partners procure some components from China for use in the manufacturing of our products.

Because our products are primarily manufactured internationally, the import of our products into the United States may be affected by applicable tariff policies.

Over the last decade, and especially in the last year, the U.S.

Because our products are primarily manufactured internationally, the import of our products into the U.S.

has been and may continue to be affected by applicable tariff policies.

Over the last decade, and especially under the current administration, the U.S.

government has enacted various new and increased tariffs affecting the import of various items from various countries.

For example, since 2018, the U.S.

government has enacted various tariffs on products of China under Section 301 trade authorities, including on communications equipment products and components manufactured and imported from China.

Since February 2025, the United States has imposed additional tariffs on most products of China, Mexico and other trading partners pursuant to separate executive orders issued under the authorities of the International Emergency Economic Powers Act, including reciprocal tariffs and tariffs imposed in response to fentanyl-related concerns.

has also increased use of Section 232 trade authorities to impose tariffs on certain commodities, including certain articles of steel, aluminum and copper.

Some of these tariffs may affect the cost of producing, or affect our ability to procure certain items in our supply chain.

government may also place additional tariffs on these or other items, which could result in higher costs to us and negatively affect our gross margins.

government has enacted various tariffs on products from China under Section 301 trade authorities, including on communications equipment products and components manufactured and imported from China.

Since February 2025, the U.S.

has also imposed additional country-specific tariffs on most trading partners, including China, as well as additional commodity-specific tariffs on certain imported items, in both instances pursuant to executive orders issued under various trade authorities, including the International Emergency Economic Powers Act and Section 232 of the Trade Expansion Act of 1962 (“IEEPA”), Sections 122 and 301 of the Trade Act of 1974, and Section 232 of the Trade Expansion Act of 1962.

In February 2026, the U.S.

Supreme Court held that the tariffs imposed under IEEPA were invalid.

Subsequently, in April 2026, Customs and Border Protection ("CBP") launched the Consolidated Administration and Processing of Entries ("CAPE") system to allow parties who paid tariffs under IEEPA to submit claims for refunds.

CBP has stated that following a valid request repayment will be made in 60-90 days if CBP does not raise objections.

However, the CAPE system is new and there is still open litigation concerning the IEEPA refund process, as a result, the ultimate timing and availability of refunds remain uncertain.

In response to these and other U.S.

measures, China, Canada, and other countries have taken a range of retaliatory measures.

measures, China, Mexico and other countries have taken or threatened to take a range of retaliatory measures.

These include the imposition of retaliatory tariffs on certain U.S.-origin goods;

2 unchanged sentences

and other actions that may affect us directly or indirectly.

The situation regarding these tariffs and trade policies has been fluid.

There is currently significant uncertainty about the future relationship between the United States, and various other countries, most significantly China, with respect to tariffs and trade policies.

An increase in trade-related costs associated with these tariff actions may impair the profitability of such international production, may strain our suppliers’ ability to provide inputs necessary to produce these items, and may otherwise affect our manufacturing partners’ ability to provide our products at previously contracted prices.

The situation regarding these tariffs and trade policies has been and continues to be fluid and may change significantly as a result of the outcome of trade negotiations such as those related to the United States-Mexico-Canada Agreement , leading to significant uncertainty about the future relationship between the U.S., and other countries, with respect to tariffs and trade policies.

The U.S., China, Malaysia, Vietnam, Mexico, Taiwan, Thailand, the Philippines and other governments may place additional tariffs and non-tariff trade barriers on communication equipment products, our products and services, our inputs, or other items, which could result in higher costs to us and negatively affect our gross margins.

An increase in trade-related costs associated with these tariff actions may affect our cost of production, impair the profitability of our international production, affect our ability to procure certain items, strain our suppliers’ ability to provide inputs necessary to produce certain items, and otherwise affect our manufacturing partners’ ability to provide our products at previously contracted prices.

We also may not be able to pass on the full burden of the increase in trade-related costs to our partners and/or customers which could impact our profitability and/or our competitiveness.

We are adjusting our supply chain and manufacturing practices to minimize the impact of the tariffs and any impact on the supply chain of components sourced from affected countries, but our efforts may not be successful.

We are leveraging exclusion, participating in government refund programs and adjusting our supply chain and manufacturing practices to minimize the impact of the tariffs and any impact on the supply chain of components sourced from affected countries, but these efforts may not be sufficient.

In addition, there can be no assurance that we will not experience a disruption in our business related to these or other changes in trade practices, and the process of changing suppliers in order to mitigate any such tariff costs could be complicated, time-consuming, and costly.

2 unchanged sentences

Current or future tariffs may also negatively impact our customers' sales, thereby causing an indirect negative impact on our own sales.

Even in the absence of further tariffs, the related uncertainty and the market's fear of an escalating trade tensions and related macroeconomic effects might cause our distributors and customers to place fewer orders for our products, which could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

Historically, large purchases by a relatively limited number of customers have accounted for a significant portion of our revenue.

For example, sales to our end customer Microsoft represented 20%, 18% and 16% of our total revenue for the years ended 2024, 2023 and 2022 respectively.

And sales to our end customer Meta Platforms represented 15%, 21% and 26% of our total revenue, respectively for the years ended 2024, 2023 and 2022.

We have experienced unpredictability in t he timing of orders from these large customers primarily due to the overall complexity of these large orders and changes in demand specific to these customers, including reductions in or changes in the mix of capital expenditures by these customers and the impact of cost reduction and other efficiency efforts by these customers.

In addition, we typically provide more favorable terms and conditions to large customers, than we typically provide to other customers, including pricing discounts, bundled upgrades,

extended warranties, acceptance terms, indemnification terms, and other rights, any of which reduces gross margins for the period in which such sales occur.

In addition, although the focus on deployment of AI-enabled solutions has driven increased demand for networking, the long-term trajectory is unknown.

As such, demand estimates for our new products are difficult to forecast and can create volatility in our revenue.

These customers may decide to delay or cancel such orders for any reason.

This limited visibility requires us to rely on estimated demand forecasts to determine how much material to purchase and product to manufacture.

We expect that such concentrated purchases will continue to contribute materially to our revenue for the foreseeable future and that our results of operations may fluctuate materially as a result of such larger customers’ buying patterns.

In addition, we may see consolidation of our customer base, such as among Internet companies and cloud service providers, which could result in the loss of customers.

Even in the absence of further tariffs, the related uncertainty and the market's fear of escalating trade tensions and related macroeconomic effects might cause our distributors and customers to place fewer orders for our products, which could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

Adverse economic conditions, continuing uncertain economic conditions or reduced information technology and network infrastructure spending may adversely affect our business, financial condition, results of operations and prospects.

Our business depends on the overall demand for information technology, network connectivity and access to data and applications.

Weak domestic or global economic conditions and continuing economic uncertainty, fear or anticipation of such conditions, a recession, geopolitical pressures, including international trade disputes, changes in tariff policies, global pandemics, a reduction in information technology and network infrastructure spending or a deterioration of the financial performance, condition or prospects of our customers, could adversely affect our business, financial condition, results of operations and prospects in a number of ways, including longer sales cycles, reduced demand or lower prices for our products and services, higher default rates among our channel partners, reduced unit sales and lower or no growth.

In addition, the global macroeconomic environment has been negatively affected by, among other things, the uncertainty in the global banking and financial services markets, epidemics, instability in global economic markets, changes in government administration and policy positions, increased uncertainty associated with recent scheduled, threatened and/or anticipated increases in trade tariffs, inflationary pressures, higher interest rates, instability in the global credit markets, the impact and uncertainty regarding global central bank monetary policy, instability in the geopolitical environment, the Russia-Ukraine and Israel-Hamas conflicts, political tensions between Taiwan and China, and among the U.S., China, Iran, Israel, Lebanon, Russia, Ukraine and other countries, political demonstrations, and foreign governmental debt concerns which have caused, and are likely to continue to cause, uncertainty and instability in local economies and in global financial markets.

While some of our customers may be adversely affected by negative macroeconomic conditions, the impact may be particularly significant in our enterprise market where we are seeking to increase our penetration into this market.

A government shutdown or a default by the U.S.

performance, condition or prospects of our customers, could adversely affect our business, financial condition, results of operations and prospects in a number of ways, including longer sales cycles, reduced demand or lower prices for our products and services, higher default rates among our channel partners, reduced unit sales and lower or no growth.

In addition, the global macroeconomic environment has been negatively affected by, among other things, the uncertainty in the global banking and financial services markets, epidemics, instability in global economic markets, changes in government administration and policy positions, increased uncertainty associated with recent scheduled, threatened and/or anticipated increases in tariffs and other trade barriers, inflationary pressures, higher interest rates, instability in the global credit markets, the impact and uncertainty regarding global central bank monetary policy, instability, tension and conflict in the geopolitical environment, and foreign governmental debt concerns which have caused, and are likely to continue to cause, uncertainty and instability in local economies and in global financial markets.

In addition, a government shutdown or a default by the U.S.

government on its debt obligations, or related credit-rating downgrades could also have adverse effects on the broader global economy and contribute to, or worsen, an economic recession.

We believe that any extended or renewed economic disruptions or

deterioration in the global economy could have an adverse impact to our liquidity or to our current and projected business operations, financial condition or results of operations.

For example, if banks or other financial institutions with whom we have banking relationships or whose corporate bonds are held in our marketable securities investment portfolio, enter receivership or become insolvent in the future, we may be unable to access, and we may lose some of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.

We believe that any extended or renewed economic disruptions or deterioration in the global economy could have an adverse impact to our liquidity or to our current and projected business operations, financial condition or results of operations.

In addition, in such circumstances we might not be able to timely pay key vendors and others.

1 unchanged sentence

Any delay in our ability to access our cash, cash equivalents and investments (or the loss of such funds) or to timely pay key vendors and others could have a material adverse effect on our operations and cause us to need to seek additional capital sooner than planned.

Furthermore, a downturn or a recession may also significantly affect financing markets, the availability of capital and the terms and conditions of any financing arrangements, including the overall cost of financing as well as the financial health or creditworthiness of our customers.

Circumstances may arise in which we need, or desire, to raise additional capital, and such capital may not be available on commercially reasonable terms, or at all.

In addition, business disruptions and supply chain and manufacturing disruptions may result in customers delaying or canceling or reprioritizing capital expenditures on information technology and network infrastructure, which may affect the overall demand for our products.

1 unchanged sentence

Continuing or worsening economic instability or the deterioration of the financial performance, condition or prospects of our customers could result in a cancellation of, or defaults in the payments for, such orders or otherwise adversely affect spending for IT, network infrastructure, systems and tools, and limit our ability to forecast future demand for our products, which could reduce expected revenue or result in a write-down of excess or obsolete inventory.

A downturn or a recession may also significantly affect financing markets, the availability of capital and the terms and conditions of any financing arrangements, including the overall cost of financing as well as the financial health or creditworthiness of our customers.

Circumstances may arise in which we need, or desire, to raise additional capital, and such capital may not be available on commercially reasonable terms, or at all.

Some of the key components in our products come from sole or limited sour ces of supply.

Our products rely on components that we purchase, or our contract manufacturers purchase on our behalf from a limited number of suppliers, including certain sole source providers.

In particular, we are primarily reliant upon our predominant merchant silicon vendor, Broadcom, for our switching chips.

We may not be indemnified by such component suppliers for such infringement, misappropriation or other violation claims.

Our product development efforts are also dependent upon the success of our continued collaboration with our key merchant silicon vendors such as Broadcom.

As we develop our product roadmap, we select specific merchant silicon from these vendors for each new product.

Reliance on these relationships allows us to focus our research and development resources on our software core competencies while leveraging their investments and expertise.

If our key merchant silicon vendors do not continue to innovate, develop products that outperform their competitors or fail to meet the requirements of our customers, if there are delays in the release of their products or supply shortages, if they no longer collaborate in such fashion or if such merchant silicon is not offered to us on commercially reasonable terms, our products may become less competitive, our own product launches could be delayed or we may be required to redesign our products to incorporate alternative merchant silicon, which could result in lost sales, reduce gross margins, damage to our customer relationships or otherwise have a material effect on revenue and business, financial condition, results of operations and prospects.

We have entered into significant purchase commitments and are susceptible to supply shortages, extended lead times or supply changes, which could disrupt or delay our scheduled product deliveries to our customers and may result in the loss of sales and customers.

1 unchanged sentence

Our suppliers have, or in the future could continue to, suffer shortages, require longer lead times, delay shipments, prioritize shipments to other vendors, reject, or decommit orders, increase prices, impose expedite fees or cease manufacturing their products or selling them to us at any time.

Supply of these components worldwide was and could continue to be adversely affected by supply constraints, including as a result of industry consolidation and geopolitical conditions such as international trade restrictions and increased

political tensions.

Such shortages, increased lead times, reduced allocations of components and rejections or decommitments of orders have impacted and may in the future adversely impact our revenue and gross margins.

For example, there have been tightening supply conditions in memory and silicon markets due to rising demand for AI infrastructure and advanced automotive systems.

Despite our mitigation efforts, supply shortages, increased lead times, reduced component allocations, or order decommitments may still prevent us from shipping customer orders on time, cost-effectively, or at all, which could adversely impact our revenue and gross margins.

Although we have entered into significant purchase commitments to support long-term customer demand, if we are unable to obtain sufficient quantities of any of these components on commercially reasonable terms or in a timely manner, or if we are unable to obtain alternative sources for these components, shipments of our products could be delayed or halted entirely, or we may be required to redesign our products.

1 unchanged sentence

Additionally, if our suppliers do not meet their commitments, customers cancel orders or actual demand is less than our demand forecasts, it could result in excess or obsolete inventory, which we would be required to write down to its estimated realizable value, which in turn could impact our cash flows and result in lower gross margins and operating income.

In the event of a shortage or supply interruption from our component suppliers, we may not be able to develop alternate or second sources in a timely manner.

In the event of an ongoing shortage or supply constraints from our component suppliers, we may not be able to develop alternate or second sources in a timely manner.

Further, long-term supply and maintenance obligations to customers increase the duration for which specific components are required, which may increase the risk of component shortages or the cost of carrying inventory.

In addition, our component suppliers change their selling prices frequently in response to market trends, including industry-wide increases in demand, or charge additional fees to expedite orders, and because we do not have contracts wit h these suppliers or guaranteed pricing, we are susceptible to availability or price fluctuations related to raw materials and components.

In addition, our component suppliers change their selling prices frequently in response to market trends, including industry-wide increases in demand such as has occurred in the market for memory and silicon, or charge additional fees to expedite orders, and because we do not have contracts wit h these suppliers or guaranteed pricing, we are susceptible to availability or price fluctuations related to raw materials and components.

If we are unable to pass component price increases along to our customers or maintain stable pricing, our gross margins could be adversely affected and our business, financial condition, results of operations and prospects could suffer.

Our revenue and our revenue growth rates are volatile and may decline or not meet our or our investors' expectations.

Our revenue and revenue growth rates are volatile and may decline or not meet our or our investors' expectations.

Our revenue growth rates in previous periods may not be indicative of our future performance.

We have experienced annual revenue growth rates of 28.6%, 19.5% and 33.8% in 2025, 2024 and 2023, respectively.

In the future, our revenue growth rates will continue to be volatile due to cyclical trends in our business, and as we become more penetrated in our existing customer base and product markets and look to enter and expand into new markets.

In addition, we have experienced supply constraints that have resulted in manufacturing and shipment delays, which have negatively affected the timing of revenue recognition.

In the future, our revenue growth rates will continue to be volatile due to cyclical trends in our business, and as we become more embedded with our existing customer base and product markets and look to enter and expand into new markets.

Our growth strategy relies on maintaining our agility and increasing our investment in research and development to deliver market-leading features to enhance the functionality of existing cloud networking platform, expand our product offerings and build upon our technology leadership.

We must continue to expand our product offerings and build upon our technology leadership.

In addition we must continue to expand our global sales force and deepen our channel partnerships to reach new customers more effectively and increase sales to existing customers.

An increase in customer trials and contracts with acceptance provisions, and an increase in the volatility and magnitude of our evaluation inventory and product deferred revenue balances, have created and could continue to create variability in our revenue.

Any delays in acceptance, or rejection, or any return, of those products could further negatively impact our revenue.

We have also experienced supply constraints that have and may continue to result in manufacturing and shipment delays, which would negatively affected the timing of revenue recognition and /or a reduction in revenue if our customers cancel their orders due to shipping delays.

If these manufacturing and supply chain disruptions recur and/or if we are unable to reduce our lead times it could also result in the cancellation of orders by customers, reduce demand from existing customers in future periods, and increase difficulty in adding new customers.

Other factors may also contribute to declines in our growth rates, including changes in demand for our products and services, particularly from our large customers, the deterioration of the financial performance, condition or prospects of our large customers, changes in capital spending by our large customers, increased competition, price sensitivities from our customers to increases in our pricing, our ability to successfully manage our expansion or continue to capitalize on growth opportunities, the maturation of our business, geopolitical pressures, macroeconomic conditions, recession risks and monetary policy shifts, and our ability to be successful in the AI market and adjacent markets, such as campus switching, Wi-Fi networking markets and network security markets.

Recent technologies, such as generative AI models, have emerged, and while they have driven increased demand for networking, the long-term trajectory of such technologies is unknown and it is difficult for us to predict the demand for such new technologies.

Other factors may also contribute to declines in our revenue growth rates, including changes in demand for our products and services, particularly from our large customers, the deterioration of the financial performance, condition or prospects of our large customers, changes in capital spending by our large customers, increased competition, price sensitivities from our customers to increases in our pricing, our ability to successfully manage our expansion or continue to capitalize on growth opportunities, the maturation of our business, geopolitical pressures, macroeconomic conditions, recession risks and monetary policy shifts, and our ability to be successful in the AI market and adjacent markets, such as campus switching, Wi-Fi networking markets and network security markets.

Recent technologies, such as generative and agentic AI models, have emerged, and while they have driven increased demand for networking, the long-term trajectory of such technologies is unknown and it is difficult for us to predict the demand for such new technologies.

Customers may overestimate demand for their AI build outs and cancel, delay, reduce or otherwise modify their purchase commitments with little or no notice to us.

In addition, customers may implement changes to their network architecture to improve efficiencies and reduce demand for our products.

Customers may also implement changes to their network architecture to improve efficiencies and reduce demand for our products.

As such, demand estimates for our new products are difficult to forecast and create volatility in our revenue.

In addition, given the timing and prioritization of customer orders and shipment patterns, near term revenue trends may not be reflective of current demand levels.

Furthermore, any prolonged economic disruptions or deterioration in the global economy could have a negative impact on demand from our customers in future periods, particularly in the enterprise market where we are continuing to expand our penetration.

In addition, given the timing and prioritization of customer orders and shipment patterns, as well as the timing and outcome of customer trials and contracts with acceptance periods, near-term revenue trends may not be reflective of current demand levels.

Furthermore, any prolonged economic disruptions or deterioration in the global economy could have a negative impact on demand from our customers in future periods.

which may result in reductions in overall demand from these customers in future periods and negatively impact our revenue, financial condition, business or prospects.

1 unchanged sentence

If we are unable to maintain consistent revenue or revenue growth, our business, financial condition, results of operations and prospects could be materially adversely affected, and our stock price could be volatile.

We expect our gross margins to vary over time and may be adversely affected by numerous factors.

We expect our gross margins to vary over time and the gross margins we have achieved in recent years may not be sustainable and may be ad versely affected in the future by numerous factors, including but not limited to pricing pressure on our products and services due to competition, the ability of more fully integrated competitors to bundle their networking products with other products, or utilize proprietary silicon in their products, the mix of sales to large customers who generally receive lower pricing, the mix of products sold, manufacturing-related costs, including costs associated with sourcing key components from sole or limited suppliers and potential changes to our manufacturing and supply chain to respond to international trade tensions, supply chain sourcing activities, merchant silicon costs, excess/obsolete inventory and supplier liability charges, and fees to expedite supplier components and costs related to tariffs from our products that are manufactured internationally.

If tariff or non-tariff measures escalate, and/or if supply conditions worsen and we are unable to pass on these costs to customers, our gross margins could be further impacted.

In addition, other factors that may impact our gross margins

over time include the introduction of new products and new business models including the sale and delivery of more software and subscription solutions, entry into new markets or growth in lower margin markets, entry in markets with different pricing and cost structures, pricing discounts given to customers, costs associated with defending intellectual property rights infringement, misappropriation or other violation claims and the potential outcomes of such disputes, increased costs arising from epidemics, changes in distribution channels, increased warranty costs, and our ability to execute our operating plans.

In addition, inflationary pressures and supply constraints, such as the tightening of supply conditions in the memory and silicon markets, have increased and may continue to increase costs for certain materials, components, supplies and services.

A s a result of cost inflation in our supply chain, we have implemented targeted price increases from time to time.

However, these price increases could result in a decrease in demand for our products which would decrease revenue.

In addition, if our business were subject to sustained economic stress or recession, many of the risk factors identified in this risk factors section could be heightened.

We determine our operating expenses largely on the basis of anticipated revenue and a high percentage of our expenses are fixed in the short and medium term.

As a result, a failure or delay in generating or recognizing revenue could cause significant variations in our operating results and operating margin from quarter to quarter.

Failure to sustain or improve our gross margins reduces our profitability and may have a material adverse effect on our business and stock prices.

Our results of operations have varied significantly from period to period and are unpredictable and if we fail to meet the expectations of analysts or investors or our previously issued financial guidance, or if any forward-looking financial guidance does not meet the expectation of analysts or investors, the market price of our common stock could decline substantially.

1 unchanged sentence

As a result, you should not rely upon our past financial results for any period as indicators of future performance.

Our results of operations in any given period have been and could

continue to be influenced by a number of factors, many of which are outside of our control and may be difficult to predict, including:

Our results of operations in any given period have been and could continue to be influenced by a number of factors, many of which are outside of our control and may be difficult to predict, including:

• disruptions in our business due to general economic and market conditions, such as recessionary risks and a global economic downturn, international trade tensions and tariff policies, higher interest rates, monetary policy shifts, inflationary pressures, supply chain and labor shortages, changes in government administration, and geopolitical pressures;

• our reliance on a predominant merchant silicon vendor;

• our inability to fulfill our customers’ orders or the deferral, reduction or cancellation of orders due to the delays in shipment of our products for any reason;

• the reduction in future demand for our products by our customers or increased difficulty in adding new customers due to the unavailability or unpredictable supply of inventory, supply chain delays, access to key commodities or technologies, manufacturing disruptions or other events that impact our manufacturers or their suppliers;

• the reduction in future demand for our products by our customers or increased difficulty in adding new customers due to the unavailability or unpredictable supply of inventory, including in the memory and silicon markets, supply chain delays, access to key commodities or technologies, manufacturing disruptions or other events that impact our manufacturers or their suppliers;

• a reduction, or uncertainty in the timing, of orders from our large customers;

• any changes in the amount of our purchase commitments;

• announcements by us or other competitors of new products or product enhancements, warranty returns, general economic conditions or other factors;

3 unchanged sentences

• the inclusion of any acceptance provisions in our customer contracts and increased customer trials, and any delays in acceptance, or rejection, or any return, of those products;

• the cost and potential outcomes of existing and future litigation;

• increased expenses resulting from increases in component, production and logistics costs resulting from factors such as global inflationary pressures, or the tariffs imposed by the U.S.

1 unchanged sentence

• changes in our pricing policies, whether initiated by us or as a result of competition;

• the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business;

• the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business such as those expenses related to construction of a new building in Santa Clara, California;

• difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers;

4 unchanged sentences

• decisions by potential customers to purchase our networking solutions from larger, more established vendors, white box vendors with open-source network operating systems or their primary network equipment vendors;

• disruptions caused by pandemics, and the government restrictions in response to pandemics;

• insolvency or credit difficulties confronting our customers, which could adversely affect their ability to purchase or pay for our products and services, or confronting our key suppliers, including our sole source suppliers, which could disrupt our supply chain;

• seasonality or cyclical fluctuations in our markets;

• future accounting pronouncements or changes in our accounting policies;

• our overall effective tax rate and any new legislation or regulatory developments;

• increases or decreases in our expenses caused by fluctuations in foreign currency exchange rates, as an increasing portion of our expenses are incurred and paid in currencies other than the U.S.

• increases in cybersecurity threats, including security threats from state sponsors;

• other risk factors described in this Quarterly Report on Form 10-Q.

• cyclical fluctuations in our markets;

• other risk factors described in this filing.

Any one of the factors above or the cumulative effect of several of the factors described above may result in significant fluctuations in our financial and other results of operations and may cause the market price of our common stock to decline.

6 unchanged sentences

The market demand for networking solutions has increased in recent years as customers have deployed larger, more sophisticated networks and have increased the use of virtualization and cloud computing.

The continued growth of this market will be dependent upon many factors including but not limited to the demand for our customers’ products and services, the expansion, of our customers’ networks, the capacity utilization of existing network infrastructures, changes in the technological requirements for the products and services to be deployed in these networks, the amount and mix of capital spending by our customers, including any changing technology priorities such as the deployment of AI and related technologies, the development of network switches and cloud service solutions by our large customers for internal use, the financial performance and prospects of our customers, the availability of capital resources to our customers, changes in government regulation that could impact networking business models including those regulations related to AI, cybersecurity, privacy, data protection and net neutrality, our ability to provide networking solutions that address the needs of our customers more effectively and economically than those of other competitors or existing technologies and general economic conditions.

In particular, recent technologies, such as generative AI models, have emerged, and while they have driven increased demand for networking, the market is rapidly changing, and the long-term trajectory is unknown.

The continued growth of this market will be dependent upon many factors including but not limited to the demand for our customers’ products and services, the expansion, of our customers’ networks, the capacity utilization of existing network infrastructures, changes in the technological requirements for the products and services to be deployed in these networks, the amount and mix of capital spending by our customers, including any changing technology priorities such as the deployment of AI and related technologies, the development of network switches/routers and cloud service solutions by our large customers for internal use, the financial performance and prospects of our customers, the availability of capital resources to our customers, changes in government regulation that could impact networking business models including those regulations related to AI, cybersecurity, privacy, data protection and net neutrality, our ability to provide networking solutions that address the needs of our customers more effectively and economically than those of other competitors or existing technologies and general economic conditions.

In particular, recent technologies, such as generative and agentic AI models, have emerged, and while they have driven increased demand for networking, the market is rapidly changing, and the long-term trajectory is unknown and could be volatile.

Customers may overestimate demand for their AI build outs and cancel, delay, reduce or otherwise modify their purchase commitments with little or no notice to us.

1 unchanged sentence

As such, demand estimates for our new products are difficult to forecast and create volatility in our revenue and inventory levels.

If the AI market does not develop as anticipated or at all, then the potential demand for AI Ethernet switches may not be realized.

If the AI market does not develop as anticipated or at all, then the potential demand for AI infrastructure may not be realized.

Moreover, even if the market for AI applications does develop, the successful adoption of AI Ethernet products will be dependent upon their ability to compete against more established InfiniBand products or against the AI Ethernet products of other competitors to address AI networking clusters.

1 unchanged sentence

We pursue new product and service offerings and expand into adjacent markets, and if we fail to successfully carry out these initiatives, our business, financial condition, or results of operations could be adversely impacted.

We have made substantial investments to develop new products and services and enhancements to existing products through our acquisitions and internal research and development efforts to expand our product offerings and maintain our revenue growth.

If we are unable to anticipate technological changes in our industry by introducing new or enhanced products and services in a timely and cost-effective manner or if we fail to introduce products and services that meet market demand or gain market share, we may lose our competitive position, our products may become obsolete, and our business, financial condition or results of operations could be adversely affected.

We have made substantial investments to develop new products and services, make enhancements to existing products, and expand our product offerings through our acquisitions and internal research and development efforts.

If we are unable to anticipate technological changes in our industry by introducing new, enhanced or expanded products and services in a timely and cost-effective manner or if we fail to introduce products and services that meet market demand or gain market share, we

may lose our competitive position, our products may become obsolete, and our business, financial condition or results of operations could be adversely affected.

For example, with our most recently introduced 800 GbE, AI focused Ethernet products and AI-Driven Campus and Branch Networking Offerings, our ability to maintain our competitive position with our customers will depend on our ability to deliver these new products in a timely manner, our customers' acceptance of these products and the growth of the markets that these products serve.

In addition, the evaluation, testing and qualification of our new products by our customers may be lengthy and may require increased customer trials and contracts with acceptance clauses, which delay revenue recognition may negatively impact our revenue.

We remain in a period of new product introductions and expanded use cases, particularly in the AI Ethernet market.

This has resulted in increased customer trials and contracts with acceptance periods, and an increase in the volatility and magnitude of our product deferred revenue balances, which in turn may create variability in our revenue results on a quarterly and annual basis.

We remain in a period of new product introductions, adding new customers and expanded use cases, particularly in the AI Ethernet market.

This has resulted in increased customer trials and contracts with acceptance periods, and an increase in the volatility and magnitude of our evaluation inventory and product deferred revenue balances, which in turn may create variability in our revenue results on a quarterly and annual basis.

In addition, if we are not able to satisfy the requirements under customer trials or contracts with acceptance periods, we may be required to accept product returns from our customers, which would prevent us from recognizing revenue on such transactions and may result in the write-down of inventory.

2 unchanged sentences

Expanding our services in existing and new markets and increasing the depth and breadth of our presence imposes significant burdens on our marketing, compliance, and other administrative and managerial resources.

In addition, the markets for our products, particularly in the AI Ethernet market, are rapidly changing and such markets may experience a slowdown.

Our plan to expand and deepen our market share in our

existing markets and possibly expand into additional markets is subject to a variety of risks and challenges.

In addition, the markets for our products, particularly the AI Ethernet segment, are characterized by rapid evolution and volatility;

consequently, these markets may experience significant fluctuations, including prolonged slowdowns, cyclical contractions, or the correction of speculative bubbles that could adversely affect demand.

Our plan to expand and deepen our market share in our existing markets and possibly expand into additional markets is subject to a variety of risks and challenges.

Our success in these new markets depends on a variety of factors, including but not limited to our ability to develop new products, product features and services that address the customer requirements for these markets, attract a customer base in markets in which we have less experience, compete with new and existing competitors in these adjacent markets, and gain market acceptance of our new products.

1 unchanged sentence

Developing our products is expensive, and the investment in product development typically involves a long payback cycle.

We expect to continue to make substantial investments to introduce new products and services and enhance the functionality of our existing cloud networking platform through investments in our research and development organization, and investments in or acquisitions of complementary companies, products and technologies to expand our product offerings and build upon our technology leadership.

We expect to continue to make substantial investments to introduce new products and services and enhance the functionality of our existing AI, Cloud and Data Center Networking platform through investments in our research and development organization, and investments in or acquisitions of complementary companies, products and technologies to expand our product offerings and build upon our technology leadership.

We expect that our results of operations will be impacted by the timing and size of these investments.

3 unchanged sentences

Difficulties in any of our new product development efforts or our efforts to enter adjacent markets could adversely affect our operating results and financial condition.

We expect our gross margins to vary over time and may be adversely affected by numerous factors.

In addition, other factors that may impact our gross margins over time include the introduction of new products and new business models including the sale and delivery of more software and subscription solutions, entry into new markets or growth in lower margin markets, entry in markets with different pricing and cost structures, pricing discounts given to customers, costs associated with defending intellectual property rights infringement, misappropriation or other violation claims and the potential outcomes of such disputes, increased costs arising from epidemics, changes in distribution channels, increased warranty costs, and our ability to execute our operating plans.

In addition, inflationary pressures and shortages have increased and may continue to increase costs for certain materials, components, supplies and services.

A s a result of cost inflation in our supply chain, we have implemented targeted price increases from time to time.

However, these price increases could result in a decrease in demand for our products which would decrease revenue.

In addition, if business were subject to sustained economic stress or recession, many of the risk factors identified in this risk factors section could be heightened.

We determine our operating expenses largely on the basis of anticipated revenue and a high percentage of our expenses are fixed in the short and medium term.

As a result, a failure or delay in generating or recognizing revenue could cause significant variations in our operating results and operating margin from quarter to quarter.

Failure to sustain or improve our gross margins reduces our profitability and may have a material adverse effect on our business and stock price.

We face intense competition, especially from larger, well-established companies and industry consolidation may lead to increased competition, which may harm our business, financial condition, results of operations and prospects.

1 unchanged sentence

This competition has resulted in increased pricing pressure, which could result in reduced profit margins, increased sales and marketing expenses and the loss of market share, any of which would likely harm our business, financial condition, results of operations and prospects.

The data center and campus networking markets have been historically dominated by Cisco, with competition also coming from other large network equipment and system vendors, including Dell/EMC, Extreme Networks, Hewlett Packard Enterprise, Huawei, Juniper Networks, Nvidia and white box networking vendors utilizing open-source operating systems.

The data center and campus networking markets have been historically dominated by Cisco, with competition also coming from other large network equipment and system vendors, including Dell/EMC, Extreme Networks, Hewlett Packard Enterprise, Huawei, Nvidia and white box networking vendors utilizing open-source operating systems.

Most of our competitors and some strategic alliance partners have made acquisitions and/or have entered into, or extended, partnerships or other strategic relationships to offer more comprehensive product lines, including cloud networking solutions and network security.

For example, Cisco acquired Acacia Communications, Broadcom acquired Brocade Communications and VMware, Dell acquired Force10 Networks, and Hewlett Packard Enterprise acquired Juniper Networks.

For example, Cisco acquired Acacia Communications, Broadcom acquired Brocade Communications and VMware, Dell acquired Force10 Networks, Hewlett Packard Enterprise acquired Juniper Networks, and Nvidia has made significant investment in several AI Neoclouds.

Moreover, large system vendors are increasingly seeking to deliver vertically integrated cloud networking solutions to customers that combine cloud-focused hardware and software solutions as an alternative to our products.

We expect this trend to continue as companies

attempt to strengthen their market positions in an evolving industry and as companies are acquired or are unable to continue operations.

We expect this trend to continue as companies attempt to strengthen their market positions in an evolving industry

and as companies are acquired or are unable to continue operations.

Industry consolidation may result in stronger competitors that are better able to compete with us, and this could lead to more variability i n our results of operations and could have a material adverse effect on our business, the pricing of our solutions, financial condition, results of operations and prospects.

8 unchanged sentences

Many of our existing and potential competitors enjoy substantial competitive advantages, such as greater name recognition and longer operating histories, larger sales and marketing budgets and resources, broader distribution and established relationships with channel partners and end customers, the ability to leverage their sales efforts across a broader portfolio of products, the ability to bundle competitive offerings with other products and services or to reduce the price of products and services that compete with ours in order to promote the sale of other products or services, the ability to develop their own silicon chips, the ability to set more aggressive pricing policies, lower labor and development costs, greater resources to make acquisitions, larger intellectual property rights portfolio, and substantially greater financial, technical, research and development or other resources.

In addition, large competitors may have more extensive relationships with and within existing and potential customers that provide them with an advantage in competing for business with those customers or may have a dominant market position in certain markets that they can utilize to leverage sales of their Ethernet switching products.

For example, certain large competitors encourage customers of their other products and services to adopt their data networking solutions through discounted bundled product packages.

15 unchanged sentences

• deterioration of political relations between the U.S.

and China, Canada, Mexico, Russia and the EU including increased trade and tariff related disputes between the U.S.

and these and other countries or regions, which could have a material adverse effect on our sales as well as our manufacturing operations and supply chain in these countries;

and China, Canada, Mexico, Russia and the European Union ("EU"), including increased trade and tariff related disputes changes in trade controls, economic sanctions, foreign investment laws and regulations, or other international trade regulations, all of which have generally recently trended toward increasing breadth and complexity, and which may affect our ability to import or export our products to and from various countries;

• fluctuations in exchange rates between the U.S.

4 unchanged sentences

• government trade restrictions and compliance, related to the exportation, re-exportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons;

• changes in trade controls, economic sanctions, foreign investment laws and regulations, or other international trade regulations, which have in general recently trended toward increasing breadth and complexity of controls, and which may affect our ability to import or export our products to and from various countries;

• unexpected changes in regulatory practices, tariffs and tax laws and treaties;

10 unchanged sentences

For example, we completed the acquisition of VeloCloud in June 2025 which required management to focus efforts on integrating the VeloCloud business with the Company.

In addition, the privately-held companies in which we invested are in the startup or development stages.

In addition, the privately held companies in which we invest are in the startup or development stages.

These investments are inherently risky because the markets for the technologies or products these companies are developing are typically in the early stages and may never materialize, and we could lose our entire investment in these companies.

5 unchanged sentences

Any integration process may require significant time and resources, and we may not be able to manage the process successfully.

Acquisitions may also disrupt our ongoing business, divert our resources and require

significant management attention that would otherwise be available for development of our business.

We may not successfully evaluate or utilize the acquired technology or personnel or accurately forecast the financial effects of an acquisition transaction, including accounting charges.

Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for development of our business.

We may not successfully evaluate or utilize the acquired technology or personnel or accurately forecast the financial effects of an acquisition transaction.

Any acquisition or investment could expose us to unknown liabilities.

Moreover, we cannot assure you that the anticipated benefits of any acquisition or investment would be realized or that we would not be exposed to unknown liabilities.

Moreover, we cannot assure you that the anticipated

benefits of any acquisition or investment would be realized or that we would not be exposed to unknown liabilities.

We may not be successful in retaining or expanding the customers and sales activities of any acquired business or in realizing the expected operational and cost efficiencies anticipated with the acquisition.

3 unchanged sentences

Moreover, if the investment or acquisition becomes impaired, we may be required to take an impairment charge, which could adversely affect our financial condition or the market price of our common stock.

Seasonality and industry cyclicality may cause fluctuations in our revenue and results of operations.

We operate on December 31st year end and typically have lower sequential quarter over quarter revenue growth in the first quarter of each fiscal year, often followed by stronger sequential revenue growth in the ensuing quarters.

We believe that this seasonality results from a number of factors, including the procurement, budgeting and deployment cycles of many of our customers.

The effects of supply chain disruptions and our rapid growth may have reduced the impact of seasonal or cyclical factors that might otherwise have influenced our business and broader industry performance.

If our growth rates slow, seasonal or cyclical variations in our operations may become more pronounced over time and may materially affect our business, financial condition, results of operations and prospects.

In addition, any supply chain shortages and manufacturing disruptions that result in extended lead times may impact our ability to manufacture and ship products to our customers in a timely manner, which may disrupt typical seasonal trends.

Industry cyclicality may cause fluctuations in our revenue and results of operations.

Our business is reliant on demand for network infrastructure, which rises and falls in cycles.

Moreover, business cycles vary somewhat in different geographical regions and by customer type.

Our customers’ demand is driven by, among other factors, the development of new network infrastructure and the refreshment of existing network infrastructure.

Cyclical changes in our customers’ demand for our products and services, particularly changes in the demand of our largest customers, could result in fluctuations in our revenue, revenue growth and results of operations.

We believe that this cyclicality results from a number of factors, including the specific procurement, budgeting and deployment cycles of our customers as well as the impact of general economic conditions on business operations and investment.

The effects of supply chain disruptions and our rapid growth may have reduced the impact of cyclical factors that might otherwise have influenced our business and broader industry performance.

If our growth rates slow, cyclical variations in our operations may become more pronounced over time and may materially affect our business, financial condition, results of operations and prospects.

We are exposed to fluctuations in currency exchange rates, which could adversely affect our business, financial condition, results of operations and prospects.

18 unchanged sentences

To increase our revenue, we must add new customers, especially large customers, and sell additional products and services to existing customers.

For example, one of our sales strategies is to expand our current footprint by targeting our

current customers for specific projects as opportunity with current customers is significant given their existing infrastructure and expected future spend.

For example, one of our sales strategies is to expand our current footprint by targeting our current customers for specific projects as opportunity with current customers is significant given their existing infrastructure and expected future spend.

We are also focused on increasing penetration in the enterprise, campus and AI markets.

However, sales strategies focused on expansion to adjacent markets can require more time and effort since enterprise and campus customers typically start with small purchases, and in the case of new markets such as AI where we are introducing new products there are often longer testing and qualification periods.

sales strategies focused on expansion to adjacent markets can require more time and effort since enterprise and campus customers typically start with small purchases, and in the case of new markets such as AI where we are introducing new products there are often longer testing and qualification periods.

For this reason, in order to grow our revenue, it is important for us to attract new large customers.

Some factors that may limit our ability to attract new large customers include, but are not limited to, saturation with certain large cloud networking customers, customers priorities and initiatives to invest in new technology, competition, decreased capital spending by such customers, a limited number of such customers, and a decline in growth at such customers.

Additionally, from time to time we update our sales structure, systems, procedures and policies, and the failure of any of these updates to perform as expected or our inability to successfully manage such updates could adversely impact our business, financial condition, results of operations and prospects.

If we fail to attract new large customers, including enterprise, campus and AI customers, fail to reduce the sales cycle and sell additional products to our existing customers or if our products are not accepted by these customers, our business, financial condition, results of operations and prospects will be harmed.

Sales of our switches generate most of our product revenue, and if we are unable to continue to grow sales of these products, our business, financial condition, results of operations and prospects will suffer.

Sales of our switches and routing platforms generate most of our product revenue, and if we are unable to continue to grow sales of these products, our business, financial condition, results of operations and prospects will suffer.

Historically, we have derived substantially all of our product revenue from sales of our switching and routing platforms, and we expect to continue to do so for the foreseeable future.

10 unchanged sentences

The sales prices for our products and services may decline for a variety of reasons, including competitive pricing pressures, discounts, a change in our mix of products and services, the introduction of new products and services by us or by our competitors including the adoption of “white box” solutions, promotional programs, or broader macroeconomic factors.

In addition, we have provided, and plan to continue to provide in the future, pricing discounts to large customers, which may result in lower margins for the period in which such sales occur.

In addition, we have provided, and plan to continue to provide in the future, pricing discounts to large customers, which adversely impacts gross margins.

Our gross margins may also fluctuate as a result of the timing of such sales to large customers.

73 unchanged sentences

We are exposed to the credit risk of our channel partners and some of our customers, which could result in material losses.

Most of our contracts with customers are on an open credit basis, with standard payment term s payment terms of 30 to 90 days .

Most of our contracts with customers are on an open credit basis, with standard payment terms of 30 to 90 days .

We monitor individual end-customer payment capability in grantin g such open credit arrangements, seek to limit such open credit to amounts we believe the customers can pay and maintain reserves we believe are adequate to cover exposure for doubtful accounts.

1 unchanged sentence

Any significant delay or default in the collection of significant accounts receivable could result in an increased need for us to obtain working capital from other sources, possibly on worse terms than we could have negotiated if we had established such working capital resources prior to such delays or defaults.

Any significant default could adversely affect our results of operations and delay our ability to recognize revenue.

Any significant default could adversely affect our results of operations, liquidity, and delay our ability to recognize revenue.

A material portion of our sales is derived through our distributors, systems integrators and value-added resellers.

18 unchanged sentences

For example, customers may prefer to address their network switch requirements by licensing software operating systems separately and placing them on “white box” hardware rather than purchasing integrated hardware products as has occurred in the server industry.

Additionally, customers may require product upgrades including higher Ethernet speeds and additional functionality to address the increasing demands of the cloud computing environments.

Additionally, customers may require product upgrades including higher Ethernet speeds and additional functionality to address the increasing demands of cloud computing environments.

In the past several years, we have announced a number of new products and enhancements to our products and services, including new products in the AI Ethernet, campus workspace and network security markets.

1 unchanged sentence

product features that sufficiently meet end-user requirements, our ability to manage the risks associated with new product production ramp-up issues, component costs, availability of components, timely completion and introduction of these products, prompt solution of any defects or bugs in these products, our ability to support these products, differentiation of new products from those of our competitors and market acceptance of these products.

For example, our new product releases will require strong execution from our third-party merchant silicon chip suppliers to develop and release new merchant silicon chips that satisfy end-customer requirements, to meet expected release schedules and to provide sufficient quantities of these components.

For example, our new product releases require strong execution from our third-party merchant silicon chip suppliers to develop and release new merchant silicon chips that satisfy end-customer requirements, to meet expected release schedules and to provide sufficient quantities of these components.

If we are unable to successfully manage our product introductions or transitions, or if we fail to penetrate new markets, as a result of any of these or other factors, our business, financial condition, results of operations and prospects could be adversely affected.

3 unchanged sentences

If we fail to keep up with technology changes or to convince our customers and potential customers of the value of our solutions even in light of new technologies, we may lose customers, decrease or delay market acceptance and sales of our present and future products and services and materially and adversely affect our business, financial condition, results of operations and prospects.

If we are unable to devote the necessary resources to ensure that our products interoperate with operating systems, software applications and hardware that is developed by others, we may lose or fail to increase market share and experience a weakening demand for our products.

If we are unable to ensure that our products interoperate with operating systems, software applications and hardware that are developed by others, we may lose or fail to increase market share and experience a weakening demand for our products.

Generally, our products comprise only a part of the network infrastructure and must interoperate with our customers’ existing infrastructure, specifically their networks, servers, software and operating systems, any of which may be manufactured by a wide variety of vendors and OEMs.

8 unchanged sentences

Risks Related to Supply Chain and Manufacturing

Insufficient component supply and inventory management and the time to manufacture our products may result in los t sales opportunities or delayed revenue, while excess inventory may harm our gross margins.

Key component supply chain constraints and inventory management and the time to manufacture our products may result in los t sales opportunities or delayed revenue, while excess inventory may harm our gross margins.

Managing our manufacturing capacity and extended supply chain is complex, and our inventory management systems and related supply-chain visibility tools may not enable us to effectively manage the supply of our products and product components.

Our ability to manage our supply chain has also and could continue to be adversely affected by other factors including geopolitical conditions such as international trade tensions between the U.S.

and China, Canada, Mexico and other countries where we manufacture our products including Malaysia and Vietnam, the Russia-Ukraine conflict and related economic sanctions against Russia, the Israel-Hamas conflict, and political tensions between China and Taiwan.

and China, Canada, Mexico and other countries where we manufacture our products including Malaysia and Vietnam, the war in Iran, the Russia-Ukraine conflict and related economic sanctions against Russia, and political tensions between China and Taiwan.

Global geopolitical and macroeconomic uncertainties have resulted in prolonged manufacturing and supply chain disruptions, including temporary closures of certain manufacturing and supplier facilities particularly within China and controls on certain supplies including China's restrictions on the use of certain U.S.

products and its export controls on metals used in semiconductor manufacturing such as gallium and germanium which, in turn, have caused and may continue to cause shortages of, and extended lead times for, components used to manufacture our products, increases in the prices for such components, a reduction, unpredictability or interruption of supply, prioritization of component shipments to other vendors and decommitments of orders.

result in increased cancellation of orders or loss of future sales opportunities altogether as potential customers turn to competitors’ products that are readily available.

Insufficient component supply, and increases in the time required to manufacture our products could lead to prolonged inventory shortages, manufacturing disruptions and increased customer lead times for our products, and could result in increased cancellation of orders or loss of future sales opportunities altogether as potential customers turn to competitors’ products that are readily

In addition, in order to meet customer lead times, we have had to, and may continue to expedite the supply of components and make incremental investments in our supply chain to increase our capacity for manufacturing products, which increases our product costs and negatively affects our gross margin.

1 unchanged sentence

Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

We expect that our inventory and purchase commitments will remain volatile as we ramp new product introductions.

In particular, we have increased our purchase commitments to respond to the rapid deployment of AI networks and reduce overall lead times which will increase our working capital requirements.

We expect inventory and purchase commitments to remain elevated and subject to volatility.

This variability is driven by new product introductions, shifts in customer demand, and fluctuations in supplier lead times.

In particular, we have increased our purchase commitments to respond to the rapid deployment of AI networks and to navigate the tightening supply within the memory and silicon markets and reduce overall lead times, which will increase our working capital requirements .

These constraints, in addition to supply chain inflation and material scarcity, may prevent us from shipping customer orders on time, cost-effectively, or at all, which could result in the loss of sales, damage customer relationships, negatively impact our revenue and continue to put pressure on our gross margins.

There is no guarantee that suppliers will meet their commit ments or that actual customer demand will not be lower than our demand forecasts.

10 unchanged sentences

A significant portion of our cost of revenue consists of payments to these third-party contract manufacturers.

Our reliance on these third-party contract manufacturers reduces our control over the manufacturing process, quality assurance, product costs and product supply and timing, which exposes us to operational risks including their ability to obtain in a timely manner sufficient components for our products and to ramp manufacturing sufficiently to meet our customer demand.

Our reliance on these third-party contract manufacturers reduces our control over the manufacturing process, quality assurance, product costs and product supply and timing, which exposes us to operational risks including their ability to obtain sufficient components for our products in a timely manner and to ramp manufacturing sufficiently to meet our customer demand.

Ou r reliance on contract manufacturers also yields the potential for their infringement, misappropriation or other violation of third-party intellectual property rights in the manufacturing of our products or their infringement, misappropriation or other violation of our intellectual property rights in the manufacturing of other customers’ products.

7 unchanged sentences

Accordingly, they are not obligated to continue to fulfill our supply requirements, which could result in supply shortages, and the prices we are charged for manufacturing services could be increased on short notice.

Our contract with one of our contract manufacturers permits it to terminate the agreement for convenience, subject to prior notice requirements.

For example, our contract with one of our contract manufacturers permits it to terminate the agreement for convenience, subject to prior notice requirements.

We may not be able to develop alternate or second contract manufacturers in a timely manner.

If we add or change contract manufacturers or change any manufacturing plant locations within a contract manufacturer network, we would add additional complexity and risk to our supply chain management and may increase our

working capital require ments.

Ensuring a new contract manufacturer or new plant location is qualified and has sufficient manufacturing capacity to manufacture our products to our standards and industry requirements could take significant effort and be time consuming and expensive, and any delays or failures to adequately ramp production to meet our customer demand could negatively impact our business, financial condition, results of operations and prospects.

4 unchanged sentences

This could also adversely affect our ability to meet our scheduled product deliveries to our customers, which could damage our customer relationships and cause the loss of sales to existing or potential customers, late delivery penalties, delayed revenue or an increase in our costs which could adversely affect our gross margins.

This could also result in increased levels of inventory subjecting us to increased risk of excess and obsolete charges that could have a negative impact on our operating results.

This could also result in increased levels of inventory subjecting us to increased risk of excess and obsolete inventory charges that could have a negative impact on our operating results.

Any production interruptions, labor shortages or disruptions for any reason, including those noted above, as well as a natural disaster, epidemic, war, capacity shortages, adverse results from intellectual property litigation or quality problems, at one of our manufacturing partners would adversely affect sales of our product lines manufactured by that manufacturing partner and adversely affect our business, financial condition, results of operations and prospects.

We base our inventory requirements on our forecasts of future sales.

If these demand forecasts materially change from our initial projections, we may procure inventory that we may be unable to use in a timely manner or at all.

We base our inventory requirements on our forecasts for future sales.

If these demand forecasts materially change from our initial projections, we may under- or over- procure inventory.

We and our contract manufacturers procure components and build our products based on our forecasts.

1 unchanged sentence

In order to address customer demand and extended lead times, we have entered, and may continue to enter, into significant purchase commitments with our contract manufacturers and suppliers, with issuance of non-cancellable purchase orders for such commitments.

In particular, we have increased our purchase commitments to respond to the rapid deployment of AI networks and reduce overall lead times which will increase our working capital requirements.

We may also need to increase our purchase commitments in response to the tightening of supply conditions in the memory and silicon markets.

There is no guarantee that suppliers will meet their commitments or that actual customer demand will directly match our demand forecasts.

If our forecasts materially change from our initial projections, customers' orders are cancelled or if we otherwise do not need such inventory, we may under- or over-procure inventory, which could materially adversely affect our business, financial condition and results of operations.

If our forecasts materially change from our initial projections, customers' orders are cancelled or if we otherwise do not need such inventory, we may under- or over-procure inventory, which could materially and adversely affect our business, financial condition and results of operations.

Interruptions or delays in shipments could cause our revenue for the applicable period to fall below expected levels.

10 unchanged sentences

Any claim of infringement, misappropriation or other violations of intellectual property rights by a third-party, even those without merit, could cause us to incur substantial costs defending against the claim, distract our management from our business and require us to cease use or practice of such intellectual property.

In addition, some claims for patent infringement may relate to

subcomponents that we purchase from third parties.

In addition, some claims for patent infringement may relate to subcomponents that we purchase from third parties.

If these third parties are unable or unwilling to indemnify us for these claims, we could be substantially harmed.

32 unchanged sentences

We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions.

Further, we do not know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims.

Further, we do not

know whether any of our pending patent applications will result in the issuance of patents or whether the examination process will require us to narrow our claims.

To the extent that additional patents are issued from our patent applications, which is not certain, they may be contested, circumvented or invalidated in the future.

Moreover, the rights granted under any issued patents may not provide us with proprietary protection or competitive advantages, and, as with any technology, competitors may be able to develop similar or superior technologies to our own now or in the future.

In addition, we rely on confidentiality or

license agreements with third parties in connection with their use of our products and technology.

In addition, we rely on confidentiality or license agreements with third parties in connection with their use of our products and technology.

There is no guarantee that such parties will abide by the terms of such agreements or that we will be able to adequately enforce our rights, in part because we rely on “shrink-wrap” or other unsigned licenses in some instances.

23 unchanged sentences

Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software that we use.

Furthermore, many terms used in open source licenses have not yet been interpreted by courts in the U.S.

so there is a risk that the terms of such licenses could be construed to impose unanticipated obligations on us or unanticipated conditions or restrictions on our ability to market our products and services.

If we combine our software with open source software in a certain manner, we could, under certain open source licenses, be required to release portions of the source code of our software to our customers or the public more generally.

3 unchanged sentences

Moreover, we cannot assure you that our processes for controlling our use of open-source software in our products will be effective.

products if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition, results of operations and prospects.

If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition, results of operations and prospects.

We provide access to our software and other selected source code to certain partners, which creates additional risk that our competitors could develop products that are similar to or better than ours.

5 unchanged sentences

Improper disclosure or use of our source code could help competitors develop products similar to or better than ours.

Risks Related to Litigation

We may become involved in litigation that may materially adversely affect us.

From time to time, we are involved in legal proceedings relating to matters incidental to the ordinary course of our business, including patent, copyright, commercial, product liability, employment, class action, whistleblower and other litigation, in addition to governmental and other regulatory investigations and proceedings.

Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability and/or require us to change our business practices.

Because of the pot ential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses.

Although we have insurance which may provide coverage for some kinds of claims we may face, that insurance may not cover some kinds of claims or types of relief and may not be adequate in a particular case.

Because litigation is inherently unpredictable, we cannot assure you that the results of any of these actions will not have a material adverse effect on our business, financial condition, results of operations and prospects.

For more information regarding the litigation in which we have been involved, see the “Legal Proceedings” subheading in Note 5.

Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

Risks Related to Cybersecurity and Data Privacy

10 unchanged sentences

We, like all technology companies, depend upon information technology systems to conduct virtually all business operations, ranging from internal operations and product development activities to marketing and sales efforts and communications with customers and business partners.

We could experience cybersecurity incidents relating to our information systems, or our products, services, or data.

We could experience disruptions, cybersecurity breaches, and other cybersecurity incidents relating to our information systems, or our products, services, or data.

We could also be impacted by cybersecurity incidents through third parties on which we rely.

We have outsourced some business functions to third parties, including our manufacturers, logistics providers, and cloud service providers.

We also rely upon distributors, resellers and system integrators to sell our products.

We also rely upon distributors, resellers and

system integrators to sell our products.

We also depend upon our employees, and the technology our employees use to comply with the security measures we have instituted to prevent and mitigate cybersecurity incidents.

We, or third parties on which we rely, could experience cybersecurity incidents with many different types of causes, including phishing schemes and other social engineering methods, fraud and other malfeasance, denial of service attacks, vulnerabilities or defects in design or manufacture, unintended technical errors, “bugs,” viruses, ransomware and other malware, mishandling of data or other mistakes by employees or other insiders, and attacks by insiders or external parties.

We, or third parties on which we rely, could experience disruptions, cybersecurity breaches, and other cybersecurity incidents with many different types of causes, including phishing schemes and other social engineering methods, fraud and other malfeasance, denial of service attacks, vulnerabilities or defects in design or manufacture, unintended technical errors, misconfigurations, “bugs,” viruses, ransomware and other malware, mishandling of data or other mistakes by employees or other insiders, and attacks by insiders or external parties.

Sophisticated, or even unsophisticated, persons or organizations may attempt to compromise our systems, or third party systems on which we rely, and access, use, destroy, impair, or obtain confidential, personal, or otherwise sensitive or proprietary information and could compromise our systems, products, services and networks, or those of third parties on which we rely.

Geopolitical tensions and conflicts, such as the Russia-Ukraine conflict, the Israel-Hamas hostilities and deteriorating relations with China, may create a greater risk of cyberattacks against our company and our manufacturers, suppliers, logistics providers, banks and other business partners.

Geopolitical tensions and conflicts, such as the Russia-Ukraine conflict, and deteriorating U.S.-China relations, may create a greater risk of cyberattacks against our company and our manufacturers, suppliers, logistics providers, banks and other business partners.

Our acquisition of Awake Security and our provision of its NDR platform may result in us being a more attractive target for such attacks.

2 unchanged sentences

The techniques used to carry out attacks are constantly evolving, and it may be more difficult to detect attacks involving techniques that we are not aware of or have not anticipated.

The emergence and maturation of AI capabilities may also lead to new and/or more sophisticated methods of attack.

If we, or any of the aforementioned third parties, or any other third parties capable of introducing risks to our system or operations, experience a cyberattack or any other kind of cybersecurity incident, our ability to conduct our business effectively could be damaged in a number of ways, including:

10 unchanged sentences

Even the perception of inadequate security may damage our reputation and negatively impact our ability to win new customers and retain existing customers.

Consequently, our

financial performance and results of operations could be adversely affected by any of the foregoing types of incidents or perceived incidents.

Consequently, our financial performance and results of operations could be adversely affected by any of the foregoing types of incidents or perceived incidents.

We cannot assure that any limitation of liability provisions in our customer agreements, contracts with third-party vendors and service providers or other contracts would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim relating to a security breach or other security-related matter.

We also cannot be certain that our insurance coverage will be adequate for liabilities incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any future claim will not be excluded or otherwise be denied coverage by any insurer.

The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our reputation, financial condition and operating results.

deductible or co-insurance requirements, could have a material adverse effect on our business, including our reputation, financial condition and operating results.

Risks Related to Accounting, Compliance, Regulation and Tax

17 unchanged sentences

government may issue new controls on similar technologies in the future.

government also continues to expand the scope of restrictions on the development or production of advanced ICs and certain semiconductor manufacturing equipment, and the restrictions on supercomputing, though certain U.S.

government also expanded the scope of restrictions on the development or production of advanced ICs and certain semiconductor manufacturing equipment, and the restrictions on supercomputing, though certain U.S.

export controls have been partially relaxed pursuant to the bilateral trade negotiations between the U.S.

15 unchanged sentences

These controls or any additional restrictions may impact our ability to export certain products to China or other countries, prohibit us from selling our products to certain of our customers, restrict our ability to use certain ICs in our products, impact our suppliers who may utilize facilities or equipment described in these controls, or impact the cost of components or inputs used to produce our products.

These measures may also increase in response to certain geopolitical events, such as the recently shifted international trade landscape, or if the relationship between the U.S.

These measures may also increase in response to certain geopolitical events, such as the

recently shifted international trade landscape, or if the relationship between the U.S.

and China or between China and Taiwan otherwise deteriorates.

18 unchanged sentences

These processes include, but are not limited to, calculating revenue, inventory costs and the preparation of our statement of cash flows.

Although we continue to automate our processes and enhance our review controls to reduce the likelihood for errors, in the future we may not be able to assert that our internal controls over financial reporting are effective under Section 404 of the Sarbanes-Oxley Act, which may adversely affect the reliability of our financial statements.

Although we continue to automate our processes and enhance our review controls to reduce the likelihood of errors, in the future we may not be able to assert that our internal controls over financial reporting are effective under Section 404 of the Sarbanes-Oxley Act, which may adversely affect the reliability of our financial statements.

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect or if there is a change in accounting principles, our results of operations could fall below expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

2 unchanged sentences

In addition, we base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as described in "Management’s Discussion and Analysis of Financial Condition and Results of Operations", in Part I, Item 2, of this Quarterly Report on Form 10-Q, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses.

Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, inventory valuation and contract manufacturer/supplier liabilities, income taxes and loss contingencies.

Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, inventory valuation and supplier liabilities, income taxes and loss contingencies.

If our assumptions change or if actual circumstances differ from those in our assumptions, our results of operations may be adversely affected and may fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.

Changes in our income taxes or our effective tax rate, enactment of new tax laws or changes in the application of existing tax laws of various jurisdictions or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.

Our income taxes are subject to volatility and could be adversely affected by several factors, some of which are outside of our control, including the manner in which we structure our international operations, and any transfer pricing adjustments from tax authorities as a result thereof tax effects of nondeductible compensation, including certain stock-based compensation;

Our income taxes are subject to volatility and could be adversely affected by several factors, some of which are outside of our control, including the manner in which we structure our international operations, any transfer pricing adjustments from tax authorities as a result of the structure of our international operations;

tax effects of nondeductible compensation, including certain stock-based compensation;

changes in accounting principles;

4 unchanged sentences

The accounting guidance for uncertainty in income taxes applies to all income tax positions, including the potential recovery of previously paid taxes, which if settled unfavorably could adversely affect income taxes.

Taxation of earnings outside of the U.S.

Taxation of earnings inside and outside of the U.S.

may have adverse effects on our operating results and could impact the tax treatment of our earnings and cash and cash equivalent balances we currently maintain.

For example, on July 4, 2025, the U.S.

enacted tax legislation commonly referred to as the OBBB Act, which includes changes to the deductibility of certain domestic expenses effective for tax years starting after December 31, 2024 and modifications to the international tax framework effective for tax years starting on or after December 31, 2025.

The Organization for Economic Cooperation and Development (“OECD”), has introduced a global minimum tax initiative (“Pillar Two”), which many countries, including members of the European Union ("EU"), have adopted or are considering implementing through domestic legislation.

On June 28, 2025, the G7 released a joint statement announcing an understanding regarding a proposed “side-by-side” solution that would exempt U.S.-parented multinational businesses from certain provisions of Pillar Two;

however, no agreement regarding implementation of the proposal has yet been reached.

enacted tax legislation commonly referred to as the One Big Beautiful Bill Act ("OBBB Act"), which includes changes to the deductibility of certain domestic expenses effective for tax years starting after December 31, 2024 and modifications to the international tax framework effective for tax years starting on or after December 31, 2025.

The Organization for Economic Cooperation and Development (“OECD”), has introduced a global minimum tax initiative (“Pillar Two”), which many countries, including members of the EU, have adopted or are considering implementing through domestic legislation.

On January 5, 2026, the OECD announced its “side-by-side” elective safe harbor package that would exempt U.S.-parented multinational entities from certain provisions of Pillar Two for fiscal years beginning on or after January 1, 2026.

We have assessed the impacts of these new laws on countries that we operate in and do not currently anticipate any material impacts on our effective tax rate.

5 unchanged sentences

We cannot assure you that fluctuations in our provision for income taxes or our effective tax rate, the enactment of new tax laws or changes in the application or interpretation of existing tax laws or adverse outcomes resulting from examination of our tax returns by tax authorities will not have an adverse effect on our business, financial condition, results of operations and prospects.

Failure to comply with governmental laws and regulations could harm our business, financial condition, results of operations and prospects.

Failure to comply with governmental laws and regulations, including privacy laws, environmental laws and export controls, could harm our business.

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws (including new laws related to climate change), consumer protection laws, privacy, data protection, telecommunications, anti-bribery laws such as the U.S.

Foreign Corrupt Practices Act, import/export controls and sanctions, conflict minerals, federal securities laws and tax laws and regulations.

In addition, emerging tools and technologies we utilize in providing our products, like AI and machine learning, may also become subject to regulation under new laws or new applications of existing laws.

Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our officers or our employees, prohibitions on the conduct of our business, and damage to our reputation.

From time to time, we may receive inquiries from governmental agencies, or we may make voluntary disclosures regarding our compliance with applicable governmental regulations or requirements relating to various matters, including import/export controls, federal securities laws and tax laws and regulations which could lead to formal investigations.

Actual or alleged noncompliance with applicable laws, regulations or other governmental requirements could lead to regulatory investigations, enforcement actions, and other proceedings, private claims and litigation against our customers or us, and potentially may subject our customer or us to sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.

If any governmental fines, penalties, or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, results of operations and prospects could be materially adversely affected.

In addition, responding to any investigation, action or other proceeding will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.

Enforcement actions, investigations, fines, penalties, and other sanctions could harm our business, financial condition, results of operations and prospects.

Many jurisdictions have passed new laws and regulations relating to privacy, data protection, and other matters, and other jurisdictions are considering imposing additional restrictions.

These laws continue to develop and may be inconsistent.

For example, the California Consumer Privacy Act (“CCPA”) became operative on January 1, 2020 and was amended by the California Privacy Rights Act (“CPRA”) going into effect over time through July 1, 2023.

Aspects of the CCPA/CPRA and its interpretation remain uncertain and are likely to remain uncertain for an extended period and may require us to incur additional costs and expenses in an effort to comply.

In addition to the CCPA/CPRA, numerous other states have enacted or are considering similar laws that will require ongoing compliance efforts and investment.

More recently, the Department of Justice

issued a final rule that places limitations, and in some cases prohibitions, on access to, or certain transfers of, sensitive personal data to business partners located in China or with other specified links to China (and other designated countries).

In addition, in certain jurisdictions, these regulatory requirements may be more stringent than those in the United States, such as the EU's General Data Protection Regulation (“GDPR”).

8 unchanged sentences

Among other effects, we may experience additional costs associated with increased compliance burdens and new contract negotiations with third parties that process data on our behalf.

Further, the UK has implemented legislation that substantially mirrors the GDPR, and provides for fines of up to the greater of 17.5 million British Pounds or four percent of the previous year’s annual revenue, whichever is higher.

The relationship between the UK and the EU in relation to certain aspects of data protection law remains unclear following the UK’s exit from the EU, including with respect to regulation of data transfers between EU

member states and the UK.

Further, the United Kingdom ("UK") has implemented legislation that substantially mirrors the GDPR, and provides for fines of up to the greater of 17.5 million British Pounds or four percent of the previous year’s annual revenue, whichever is higher.

The UK has issued new standard contractual clauses that, like the SCCs, are required to be implemented.

3 unchanged sentences

Any such enforcement actions could result in substantial costs and diversion of resources, distract management and technical personnel and negatively affect our business, operating results, and financial condition.

Many jurisdictions have passed new laws and regulations relating to privacy, data protection, and other matters, and other jurisdictions are considering imposing additional restrictions.

These laws continue to develop and may be inconsistent.

In addition to the CCPA/CPRA, numerous other states have enacted or are considering similar laws that will require ongoing compliance efforts and investment.

Among other emerging laws relating to privacy and data protection globally, India has released its Digital Personal Data Protection Act 2023, India’s Ministry of Electronics and Information Technology has published Draft Digital Personal Data Protection Rules for public comment on January 3, 2025, addressing various matters under this law, but the full scope of the implementation remains uncertain.

Among other emerging laws relating to privacy and data protection globally, India has released its Digital Personal Data Protection Act 2023, and India’s Ministry of Electronics and Information Technology released finalized Digital Personal Data Protection Rules on November 13, 2025, addressing various matters under this law, with phased compliance deadlines between 2025 and 2027.

We maintain an employee and operational presence in India, and this act may require us to modify our policies and practices and incur increased costs in our efforts to comply.

4 unchanged sentences

however, several EU member states have not finalized their respective legislation and guidance.

Additionally, the Digital Operational Resiliency Act, or DORA, became effective in January 2025, and aims to establish a universal framework for managing and mitigating information and communication technology risk that will apply to entities in the financial sector and their third-party cloud service providers.

Additionally, the Digital Operational Resiliency Act, or DORA, became effective in January 2025, and aims to establish a universal framework for managing and mitigating information and communication technology risks that will apply to entities in the financial sector and their third-party cloud service providers.

In addition, some countries are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our services.

1 unchanged sentence

Complying with emerging and changing legal and regulatory requirements relating to privacy, data protection and other matters may cause us to incur costs or require us to change our business practices, which could harm our business, financial condition, results of operations and prospects.

Environmental Laws

We are also subject to environmental laws and regulations governing the management and disposal of hazardous materials and wastes, including the hazardous material content of our products and laws relating to the collection, recycling and disposal of electrical and electronic equipment.

1 unchanged sentence

We also expect that our business will be affected by new environmental laws and regulations on an ongoing basis applicable to us and our partners, including our contract manufacturers.

To date, our expenditures for environmental compliance have not had a material effect on our results of operations or cash flows.

Although we cannot predict the future effect of such laws or regulations, they will likely result in additional costs or require us to change the content or manufacturing of our products, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

From time to time, we may receive inquiries from governmental agencies or we may make voluntary disclosures regarding our compliance with applicable governmental regulations or requirements relating to various matters, including import/export controls, federal securities laws and tax laws and regulations which could lead to formal investigations.

Actual or alleged noncompliance with applicable laws, regulations or other governmental requirements could lead to regulatory investigations, enforcement actions, and other proceedings, private claims and litigation, and potentially may subject us to sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.

If any governmental fines, penalties, or other sanctions are imposed, or if we do not prevail in any possible civil

or criminal litigation, our business, financial condition, results of operations and prospects could be materially adversely affected.

In addition, responding to any investigation, action or other proceeding will likely result in a significant diversion of management’s attention and resources and an increase in professional fees.

Enforcement actions, investigations, and fines, penalties, and other sanctions could harm our business, financial condition, results of operations and prospects.

Issues in the development and use of artificial intelligence, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.

We use machine learning and AI technologies in our offerings and business, including in our Arista Guardian for Network Identity offering, and we are making investments in expanding our AI capabilities in our products, services, and tools, including ongoing deployment and improvement of existing machine learning and AI technologies, as well as developing new product features using AI technologies.

We may rely on third party AI technologies and our ability to continue to use those technologies and provide our applicable products, services and tools are subject to the continued availability and improvement of those technologies.

The protectability of the intellectual property in AI - generated or assisted works and inventions is unclear.

To the extent we use AI to create any valuable IP, we may not be able to protect it to the same extent that we would have, had we not used AI.

Uncertainty around new and emerging AI technologies may require additional investment in the obtaining, developing and maintaining of proprietary datasets and machine learning models, development of new approaches and processes to provide attribution or remuneration to creators of training data, and development of appropriate protections, safeguards, and policies for handling the processing of data with AI technologies, which may be costly and could impact our expenses.

AI technologies also present emerging legal, ethical and social issues, including with respect to potential or actual bias reflected in, or flawed outputs of, models.

AI technologies that we make use of may produce or create outputs that appear correct but are factually inaccurate or otherwise flawed, which may expose us to brand or reputational harm, competitive harm, regulatory scrutiny, and/or legal liability.

We may also fail to adopt or implement certain AI technologies which could leave us at a competitive disadvantage.

We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate these controls.

To date, our expenditures for environmental compliance has not had a material effect on our results of operations or cash flows.

Although we cannot predict the future effect of such laws or regulations, they will likely result in

additional costs or require us to change the content or manufacturing of our products, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Export Controls

Our products are subject to various export controls and because we incorporate encryption technology into certain of our products, certain of our products may be exported from various countries only with government authorization.

7 unchanged sentences

government continues to expand controls enacted in October 2022 restricting the ability to export, reexport and transfer certain products and technology related to semiconductors, semiconductor manufacturing, and supercomputing.

Although new regulations introduced in January 2025 further expanded the controls to impose a worldwide licensing requirement on certain integrated circuits and computing resources that are used for training of AI models were rescinded prior to the scheduled compliance date, we expect the U.S.

Although new regulations introduced in January 2025 which further expanded the controls to impose a worldwide licensing requirement on certain integrated circuits and computing resources that are used for training of AI models were rescinded prior to the scheduled compliance date, we expect the U.S.

government may issue new controls on similar technologies in the future.

government also continues to expand the scope of restrictions on the development or production of advanced integrated circuits and certain semiconductor manufacturing equipment, and the restrictions on supercomputing, in China and other countries.

government also expanded the scope of restrictions on the development or production of advanced integrated circuits and certain semiconductor manufacturing equipment and the restrictions on supercomputing in China and other countries.

Other foreign governments may in turn impose similar or more restrictive controls.

9 unchanged sentences

actions by adding U.S.

entities to an unreliable entity list, which limits the ability of

companies on the list to engage in business with Chinese customers.

entities to an unreliable entity list, which limits the ability of companies on the list to engage in business with Chinese customers.

These restrictions could disrupt the ability of China to procure or produce semiconductors and other electronics and impact our ability to source components from China and could impact the cost of components or inputs used to produce our products.

5 unchanged sentences

In addition, economic sanctions that are vague and not subject to guidance by regulators lead to heightened compliance risk.

Although we have developed policies and procedures to comply with export control and other applicable laws, historically, we have had some instances where we, or a business that we acquired, inadvertently did not fully comply with certain trade laws, but we made relevant disclosures to the appropriate government agencies government agencies and implemented corrective actions.

Although we have developed policies, procedures and internal controls to comply with export control and other applicable laws, historically, we have had some instances where we, or a business that we acquired, inadvertently did not fully comply with certain trade laws, but we made relevant disclosures to the appropriate government agencies and implemented corrective actions.

In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries.

Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations or change in the countries, governments, persons or technologies targeted by such regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations or create delays in the introduction of our products into international markets.

Any change in export or import regulations, economic

sanctions or related legislation, shift in the enforcement or scope of existing regulations or change in the countries, governments, persons or technologies targeted by such regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations or create delays in the introduction of our products into international markets.

Any decreased use of our products or limitation on our ability to export or sell our products could adversely affect our business, financial condition, results of operations and prospects.

We use machine learning and artificial intelligence ("AI") technologies in our offerings and business operations, including in our Arista Guardian for Network Identity offering, and our research and development of such technology remains ongoing.

We are making significant investments to expand our AI capabilities, which requires obtaining, developing, and maintaining proprietary datasets and machine learning models.

However, AI technologies are complex and rapidly evolving, and we face significant competition in the market.

If we fail to successfully adopt or implement certain AI technologies, we could be left at a competitive disadvantage.

Furthermore, we may rely on third-party AI technologies, making our products and services vulnerable to the continued availability and improvement of those external tools.

Leveraging AI capabilities to improve our internal functions and operations also presents further risks, costs, and challenges.

The integration of AI presents inherent operational and ethical risks and may result in unintended consequences, including the inadvertent disclosure or misuse of intellectual property, confidential, personal, or competitive information.

AI algorithms and training methodologies may be flawed, and the technologies we use may produce outputs that appear correct but are factually inaccurate or biased.

These deficiencies, even if inadvertent, could expose us to brand or reputational harm and competitive disadvantage.

Additionally, the protectability of intellectual property in AI-generated or assisted works remains unclear.

To the extent we use AI to create valuable intellectual property, we may not be able to protect it to the same extent as non-AI-generated works.

We may also face increased costs associated with developing new processes to provide attribution or remuneration to creators of training data.

The AI-related legal and regulatory landscape remains highly uncertain and may be inconsistent from jurisdiction to jurisdiction.

Our obligations to comply with this evolving landscape, including proposed and enacted legislation regulating AI in jurisdictions such as the EU and certain states within the United States and new applications of existing data protection, privacy, and intellectual property laws, could entail significant compliance costs.

Implementing appropriate protections, safeguards, and policies for processing data with AI may also materially increase our expenses.

Ultimately, AI-related issues, regulatory deficiencies, or compliance failures could give rise to legal action, limit our ability to incorporate certain AI capabilities into our offerings, damage our reputation, and materially harm our business.

Risks Related to Ownership of Our Common Stock

3 unchanged sentences

In addition, although the trading price of our common stock has increased significantly in recent years, it is uncertain to continue to increase at the same rate and it may decrease in the future.

Factors that could cause fluctuations in the market price of our common stock include, but are not limited to, forward-looking statements related to future revenue, gross margins and earnings per share, changes or decreases in our growth rate, manufacturing, supply or distribution shortages or constraints, the decline in purchases from any of our large customers or the degradation in our relationships with any of our material vendors or partners, ratings changes by securities analysts, actual or anticipated announcements of new products by our company or our competitors, developments in the markets in which we operate, both in the U.S.

and globally, litigation, actual or anticipated changes or fluctuations in our results of operations, regulatory developments, repurchases of our common stock, departures of key executives, the financial results or financial projections of our large customers, major catastrophic events, macroeconomic factors including changes in government administration, international trade tensions, inflation and interest rate fluctuations and other broad market and industry fluctuations.

Factors that have previously and could in the future cause fluctuations in the market price of our common stock include, but are not limited to, forward-looking statements related to future revenue, gross margins and earnings per share, changes or decreases in our growth rate, manufacturing, supply or distribution shortages or constraints, the decline in purchases from any of our large customers or the degradation in our relationships with any of our material vendors or partners, ratings changes by securities analysts, actual or anticipated announcements of new products by our company or our competitors, developments in the markets in which we operate, both in the U.S.

and globally, litigation, actual or anticipated changes or fluctuations in our results of operations, sales of our common stock by our insiders, regulatory developments, repurchases of our common stock, departures of key executives, the financial results or financial projections of our large customers, major catastrophic events, macroeconomic factors including changes in government administration, international trade tensions, inflation and interest rate fluctuations and other broad market and industry fluctuations.

In addition, technology stocks have historically experienced high levels of volatility and, if the market for technology stocks or the stock market in general experiences a loss of investor confidence, the market price of our common stock could decline for reasons unrelated to our business, financial condition, results of operations and prospects.

1 unchanged sentence

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company.

If the market price of our common stock is volatile, we may become the target of securities litigation.

If the market price of our common stock is volatile, we may become the

target of securities litigation.

Securities litigation could result in substantial costs and divert our management’s attention and resources from our business and prospects.

3 unchanged sentences

Although our board of directors has authorized stock repurchase programs, any determination to execute stock repurchases will be subject to, among other things, our financial position and results of operations, available cash and cash flow, capital requirements, market and business conditions, stock price, acquisition opportunities and other factors, as well as our board of director’s continuing determination that the repurchase programs are in the best interests of our shareholders and is in compliance with all laws and agreements applicable to the repurchase programs.

Our stock repurchase programs do not obligate us to acquire any common stock.

Our stock repurchase programs do not oblige us to acquire any common stock.

If we fail to meet any expectations related to stock repurchases, the market price of our common stock could decline, and could have a material adverse impact on investor confidence.

9 unchanged sentences

If holders, by exercising their registration rights, sell large numbers of shares, it could adversely affect the market price of our common stock.

Insiders have substantial control over us, which could limit your ability to influence the outcome of key transactions, including a change of control.

Our directors, executive officers and each of our stockholders who own greater than 10% of our outstanding common stock together with their affiliates, in the aggregate, beneficially own approximately 17.3% of the outstanding shares of our common stock, based on shares outstanding as of September 30, 2025.

Insiders have substantial control over us, which could affect our stock price and limit your ability to influence the outcome of key transactions, including a change of control.

Our directors, executive officers and each of our stockholders who own greater than 10% of our outstanding common stock together with their affiliates, in the aggregate, beneficially own approximately 17.2% of the outstanding shares of our common stock, based on shares outstanding as of March 31, 2026.

As a result, these stockholders, if acting together, could exercise a significant level of influence over matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions.

They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests.

They may also have interests that differ from yours and may vote in a way with which you disagree and which may be averse to your interests.

This concentration of ownership may also discourage a potential investor from acquiring our common stock due to the limited voting power of such stock or otherwise may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

In addition, sales by such stockholders could negatively affect our stock price.

Our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.

6 unchanged sentences

• a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

• the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, our chief executive officer, our president (in the absence of our chief executive officer) or our board of directors, by a vote of a majority of the total number of authorized directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

• the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, our chief executive officer, one of our presidents (in the absence of our chief executive officer) or our board of directors, by a vote of a majority of the total number of authorized directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

• the requirement that a director may be removed from office by our stockholders only for cause and only by the affirmative vote of holders of at least 66 2/3% of the voting power of our capital stock entitled to vote thereon;

6 unchanged sentences

General Risks

We may become involved in litigation that may materially adversely affect us.

Such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability and/or require us to change our business practices.

Because of the pot ential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we have meritorious claims or defenses.

For more information regarding the litigation in which we have been involved, see the “Legal Proceedings” subheading in Note 5.

Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.

If we are unable to hire, retain, train and motivate qualified personnel and senior management, our business, financial condition, results of operations and prospects could suffer.

10 unchanged sentences

If we are unable to attract or retain qualified personnel, or if there are delays in hiring required personnel, our business, financial condition, results of operations and prospects may be seriously harmed.

Our business is subject to the risks of earthquakes, fire, power outages, floods, health epidemics and other catastrophic events including as a result of climate change and to interruption by man-made problems such as terrorism and war.

Our corporate headquarters and the operations of our key manufacturing vendors, logistics providers and partners, as well as many of our customers, are located in areas exposed to risks of natural disasters such as earthquakes and tsunamis,

including the San Francisco Bay Area, Japan and Taiwan.

In addition, climate change may result in greater frequency and severity of natural disasters.

A significant natural disaster, such as an earthquake, tsunami, fire or a flood, or other catastrophic event or disease outbreak, could have a material adverse effect on our or their business, which could in turn materially affect our financial condition, results of operations and prospects.

Our business is subject to the risks of natural disasters, social unrest, violent conflicts, systemic failures and other catastrophic events.

Our corporate headquarters and the operations of our key manufacturing vendors, logistics providers and partners, as well as many of our customers, are located in areas, such as the San Francisco Bay Area, Asia and Mexico, that are exposed to risks of natural disasters and threats, such as fires, earthquakes, tsunamis, extreme precipitation or winds, high heat or outbreaks of disease, and systemic failures, or other catastrophic events, such as widespread power outages or transportation network malfunctions.

In addition, climate change may result in greater frequency and severity of such natural disasters and systemic failures.

A significant natural disaster, epidemic or pandemic, systemic failure, flood or other similar event, could have a material adverse effect on our or their business, which could in turn materially affect our financial condition, results of operations and prospects.

These events could result in manufacturing and supply chain disruptions, shipment delays, order cancellations, and sales delays which could result in missed financial targets.

Any health epidemic could have a material adverse effect on our ability to obtain components for our products that are supplied from Asia or to manufacture our products in Asia.

Any such disruption of our suppliers, our contract manufacturers or our service providers would likely impact our sales and operating results.

In addition, a health epidemic could adversely affect the economies of many countries, resulting in an economic downturn that could affect demand for our products and likely impact our operating results.

In addition, acts of terrorism and war could cause disruptions in our business or the business of our manufacturers, logistics providers, partners or customers or the economy as a whole.

Any such disruption of our suppliers, our contract manufacturers or our service providers would likely impact our supply chain, sales and operating results.

These events could also have a material adverse effect on the demand for our products, which could in turn materially affect our financial condition, results of operations and prospects.

In addition, acts of terrorism, war, and other social unrest, violent or otherwise, could cause disruptions in our business or the business of our manufacturers, logistics providers, partners or customers or the economy as a whole.

Given our typical concentration of sales at each quarter end, any disruption in the business of our manufacturers, logistics providers, partners or customers that affects sales at the end of our quarter could have a particularly significant adverse effect on our quarterly results.

We have not paid dividends in the past and do not intend to pay dividends for the foreseeable future.

We have never declared nor paid any dividends on our common stock, and we do not anticipate paying any cash dividends in the future.

We have never declared nor paid any dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.

As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors