What changed in this filing

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Item 1A. Risk Factors

2026-08-05 compared with 2026-05-06 · 87 added, 90 removed, 899 unchanged (16% of the section changed)

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

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

• we enter 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;

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Risks Related to Supply Chain and Manufacturing

• key component supply chain constraints and inventory management;

• Supply chain constraints and inventory imbalances could adversely affect our revenue and gross margins;

• we are susceptible to manufacturing delays and pricing fluctuations;

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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.

has been and continues to be affected by applicable tariff policies.

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

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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.

has also imposed additional global, country-specific, as well as additional commodity-specific tariffs on certain imported items, pursuant to executive orders issued under various trade authorities, including the International Emergency Economic Powers Act (“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.

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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 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.

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

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.

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.

economies and in global financial markets.

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

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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.

Although we enter 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.

Any of these events could result in the cancellation of orders, lost sales, reduced gross margins or damage to our customer relationships, which would adversely impact our business, financial condition, results of operations and prospects.

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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 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.

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 guaranteed pricing wit h these suppliers, we are susceptible to availability or price fluctuations related to raw materials and components.

Due to volatility in component prices, we expect to experience timing mismatches between when component prices increase and if, or when we are able to pass those costs through to customers.

This potential inability to fully or timely adjust our pricing could adversely impact our gross margins and financial condition.

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

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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, 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.

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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.

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

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.

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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.

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

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.

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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.

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.

Additionally, from time to time, we invest in expansion into adjacent markets, including campus and Wi-Fi networking, AI networking, cloud and enterprise routing markets, network security markets and SD-WAN markets.

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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.

Moreover, large system vendors are increasingly seeking to deliver vertically integrated networking solutions to customers that combine or bundle 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.

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.

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Customers may also increase their adoption of networking solutions based upon open-source network operating systems that may be provided for free and used either on “white box” or proprietary hardware.

As new markets emerge like AI, we expect the field to remain intensely competitive as our competitors have made significant investments in such new markets.

In addition, we have not established broad market awareness or acceptance of our AI Ethernet products that will compete against more established InfiniBand products or against the AI Ethernet products of other competitors.

As new markets emerge like AI, we expect the field to remain

intensely competitive as our competitors have made significant investments in such new markets.

Furthermore, the entrance of new competitors into our markets or the increased adoption of these new technology solutions or consumption models may cause downward pricing pressures, result in lost sales or otherwise have a material adverse effect on our business, prospects, financial condition and operating results.

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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.

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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.

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.

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

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.

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.

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

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If we are unable to increase market awareness or acceptance of our new products and services, our revenue may not continue to grow or may decline.

We have not yet established broad market awareness or acceptance of products and services that we have introduced in the AI Ethernet, campus workspace and network security markets.

We periodically introduce enhanced and/or new products and services that are not yet commercially established.

Market awareness of our value proposition and products and services will be essential to our continued growth and our success, particularly for the service provider and broader enterprise markets.

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End-customer orders often involve the purchase of multiple products.

These orders are complex and difficult to

complete because prospective customers generally consider a number of factors over an extended period of time before committing to purchase the products and solutions we sell.

These orders are complex and difficult to complete because prospective customers generally consider a number of factors over an extended period of time before committing to purchase the products and solutions we sell.

Customers, especially our large customers, often view the purchase of our products as a significant and strategic decision and require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order.

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For example, there may be unexpected delays in a customer’s internal procurement processes, particularly for some of our larger customers for which our products represent a very small percentage of their total procurement activity.

In addition, due to macroeconomic uncertainties, the sales cycle may be extended and there may be delays and reductions of expenditures and cancellations by customers.

due to macroeconomic uncertainties, the sales cycle may be extended and there may be delays and reductions of expenditures and cancellations by customers.

There are many other factors specific to customers that contribute to the timing of their purchases and the variability of our revenue recognition, including acceptance terms contained in such agreements, the strategic importance of a particular project to a customer, budgetary constraints and changes in their personnel.

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Our exposure under these indemnification provisions is frequently limited to the total amount paid by our customer under the agreement.

However, certain agreements include indemnification provisions that could potentially expose us to losses

in excess of the amount received under the agreement.

However, certain agreements include indemnification provisions that could potentially expose us to losses in excess of the amount received under the agreement.

Any of these events, including claims for indemnification, could seriously harm our business, financial condition, results of operations and prospects.

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If we are unable to develop and maintain effective sales incentive programs for our channel partners, we may not be able to incentivize these partners to sell our products to customers.

These partners may have incentives to promote our competitors’ products to the detriment of our own or may cease selling our products altogether.

These partners may have incentives to

promote our competitors’ products to the detriment of our own or may cease selling our products altogether.

One of our channel partners could elect to consolidate or enter into a strategic partnership with one of our competitors, which could reduce or eliminate our future opportunities with that channel partner.

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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.

We are unable to recognize revenue from shipments until the collection of those amounts becomes reasonably assured.

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, liquidity, and delay our ability to recognize revenue.

From time to time, we also grant extended payment terms with certain large customers.

These arrangements may expose us to credit risk and upfront working capital requirements.

Although we monitor individual end-customer payment capability in grantin g such arrangements, we 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.

However, our exposure to credit risks can be negatively impacted by downturns in our customer's business, a global economic downturn, or periods of economic uncertainty.

Any significant delay or default in the collection of receivables 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.

There is no assurance that our customers will be able to pay us and our customers could default on their obligations to us, which could adversely affect our results of operations, financial condition, and liquidity.

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

Some of our distributors, systems integrators and value-added resellers may experience financial difficulties, which could adversely affect our collection of accounts receivable.

Distributors tend to have more limited financial resources than other systems integrators, value-added resellers and customers.

Distributors tend to have more limited financial resources than other systems

integrators, value-added resellers and customers.

Distributors represent potential sources of increased credit risk because they may be less likely to have the reserve resources required to meet payment obligations.

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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.

The success of our new products depends on several factors including, but not limited to, appropriate new product definition, the development of

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.

The success of our new products depends on several factors including, but not limited to, appropriate new product definition, the development of 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 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.

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Our product releases introduced new software products that include the capability for disaggregation of our software operating systems from our hardware.

The success of our strategy to expand our software business is subject to a number of risks and uncertainties including the additional development efforts and costs to create these new products or make them compatible with other technologies, the potential for our strategy to negatively impact revenue and gross margins and additional costs associated with regulatory compliance.

compatible with other technologies, the potential for our strategy to negatively impact revenue and gross margins and additional costs associated with regulatory compliance.

We may not be able to successfully anticipate or adapt to changing technology or end-customer requirements on a timely basis, or at all.

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Risks Related to Supply Chain and Manufacturing

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.

Supply chain constraints 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.

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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.

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.

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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.

In particular, we continue to increase 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.

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In addition, we may be subject to additional significant challenges to ensure that quality, processes and costs, among other issues, are consistent with our expectations and those of our customers.

A new contract manufacturer or manufacturing location may not be able to scale its production of our products at the volumes or quality we require.

A new contract manufacturer or manufacturing

location may not be able to scale its production of our products at the volumes or quality we require.

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.

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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.

We continue 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.

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This disparity may increase the risk that our competitors may sue us for patent infringement and may limit our ability to counterclaim for patent infringement or settle through patent cross-licenses.

In addition, future assertions of patent rights by third parties, and any resulting litigation, may involve patent holding companies or other adverse patent owners who have no relevant product revenue and against whom our own patents may therefore provide little or no deterrence or protection.

own patents may therefore provide little or no deterrence or protection.

We cannot assure you that we are not infringing, misappropriating or otherwise violating any third-party intellectual property rights.

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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.

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Failure to secure those registrations could adversely affect our ability to enforce and defend our trademark rights and result in indemnification claims.

Further, any claim of infringement by a third-party, even those claims without merit, could cause us to incur substantial costs defending against such claim, could divert management attention from our business and could require us to cease use or practice of such intellectual property in certain geographic markets.

Further, any claim of infringement by a third-party, even those claims without merit, could cause us to incur substantial costs defending against such

claim, could divert management attention from our business and could require us to cease use or practice of such intellectual property in certain geographic markets.

Despite our efforts, the steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, and our ability to police such misappropriation or infringement or any other violation is uncertain, particularly in countries outside of the United States.

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This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of product sales for us.

Although we monitor our use of open-source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by U.S.

courts, and these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products.

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

Although we monitor our use of open-source software to avoid subjecting our products to conditions we do not intend, we cannot assure you that our processes for controlling our use of open-source software in our products will be effective.

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.

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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.

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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, 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.

Geopolitical tensions and conflicts may create a greater risk of cyberattacks against our company and our manufacturers, suppliers, logistics providers, banks and other business partners.

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

We may also face increased risks of cybersecurity incidents in connection with personnel working remotely.

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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.

The emergence and maturation of AI capabilities may also lead to security breaches and incidents, and more frequent and intense attacks, owing to new and/or more sophisticated methods of attack, new means of identifying and exploiting vulnerabilities or other new or enhanced capabilities.

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:

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• defects and security vulnerabilities could be introduced into our software, thereby damaging the reputation and perceived reliability and security of our products and potentially making the data systems of our customers vulnerable;

• our managed network solutions and infrastructure for customers could experience outages or security exploits, causing widespread disruption to customer network operations, service unavailability, and potential loss or compromise of customer data;

• our manufacturing process, products, services, supply chain, systems and data could be corrupted or disrupted;

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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.

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

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.

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.

In addition to laws aimed directly at trade, failure of our products to comply with a broader set of evolving industry standards and government regulations may adversely impact our business and in particular our ability to market in particular countries.

Our products must comply with various U.S.

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expanded controls restricting the ability to send certain products and technology related to semiconductors, semiconductor manufacturing, and supercomputing.

Although new regulations introduced in January 2025 further expanding the controls to impose a worldwide licensing requirement on certain ICs 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 prior to the scheduled compliance date the administration announced its intention to rescind, and nonenforcement posture for, new regulations introduced in January 2025 further expanding the controls to impose a worldwide licensing requirement on certain ICs and computing resources that are used for training of AI models.

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

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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.

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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, impact our ability to source components from China, or impact the cost of components or inputs used to produce our products.

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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 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.

On January 5, 2026, the Organization for Economic Cooperation and Development ("OECD") announced its “side-by-side” elective safe harbor package that would exempt U.S.-parented multinational entities from certain provisions of Pillar Two legislation previously enacted across the EU and other OECD member countries for fiscal years beginning on or after January 1, 2026.

And, in June 2026,

California enacted Senate Bill 122, which extends the $5 million limitation on the use of business tax credits through 2029 and establishes a permanent credit cap starting in 2030 at the greater of $5 million or 70% of tax liability.

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

However, we cannot provide any assurance that there will not be a material impact to our effective tax rate in the future because of these developments or other proposed tax law changes.

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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).

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”).

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The continued validity of these new SCCs for cross-border data transfer is uncertain and difficult to predict.

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.

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 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.

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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.

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

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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 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.

Although prior to the enforcement date, the administration announced its intention to rescind the January 2025 regulations and stated that it would not enforce them, those regulations had expanded the export controls by imposing a worldwide licensing requirement on certain integrated circuits and computing resources used for training of AI models.

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

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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.

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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.

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.

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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.

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however, any future decisions to reduce or discontinue repurchasing our common stock pursuant to such stock repurchase programs could cause the market price of our common stock to decline.

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 oblige us to acquire any common stock.

in compliance with all laws and agreements applicable to the repurchase programs.

Our current stock repurchase program does 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.

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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.

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 17.0% of the outstanding shares of our common stock, based on shares outstanding as of June 30, 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.

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• 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, 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;

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;

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In addition, in making employment decisions, particularly in the high-technology industry, job candidates often consider the value of the stock-based compensation they are to receive in connection with their employment.

Declines in the market price of our stock could adversely affect our ability to attract, motivate or retain key employees.

Declines in the market price of our

stock could adversely affect our ability to attract, motivate or retain key employees.

In addition, our future performance also depends on the continued services and continuing contributions of our senior management to execute our business plan and to identify and pursue new opportunities and product innovations.

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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