A10 Networks, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Reports of Independent Registered Public Accounting Firm - Grant Thornton LLP (PCAOB ID: 248 ) 61 Consolidated Balance Sheets as of December 31, 202 5 and 202 4 64 Consolidated Statements of Operations for the years ended December 31, 202 5 , 202 4 and 20 2 3 65 Consolidated Statements of Comprehensive Income for the years ended December 31, 202 5 , 202 4 and 202 3 66 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 5 , 202 4 and 202 3 67 Consolidated Statements of Cash Flows for the years ended December 31, 202 5 , 202 4 and 202 3 68 Notes to Consolidated Financial Statements 69 60 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders A10 Networks, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of A10 Networks, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 25, 2026 expressed an unqualified opinion. Basis for opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition - Determination of standalone selling price for performance obligations not sold separately As described further in note 1 to the consolidated financial statements, most of the Company’s revenue contracts, other than renewals of post contract support, contain multiple performance obligations with a combination of products and post contract support. Products and post contract support generally qualify as distinct performance obligations. For contracts that contain multiple performance obligations, the Company allocates revenue to each distinct performance obligation based on the standalone selling price. Judgment is required to determine the standalone selling price for each distinct performance obligation. The Company uses a range of amounts to estimate standalone selling price for products and post contract support sold together in a contract to determine whether there is a discount to be allocated based on the relative standalone selling price of the various products and post contract support. We identified estimates of standalone selling price as a critical audit matter. 61 The principal consideration for our determination that estimates of standalone selling price is a critical audit matter is that auditing the estimates involved subjective auditor judgment due to the absence of directly observable data which requires the Company to make subjective assumptions used to estimate the standalone selling price for each performance obligation. If the Company does not have an observable standalone selling price, such as when they do not sell a product or service separately, then standalone selling price is estimated using judgment and considering all reasonably available information such as market conditions and information about the size and/or purchase volume of the customer. The Company generally uses a range of amounts to estimate standalone selling price for individual products and services based on multiple factors including, but not limited to the sales channel (reseller, distributor or end-customer), the geographies in which products and services are sold, and the size of the end-customer. Given these factors, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer contracts was extensive and required subjective auditor judgment. We obtained an understanding, evaluated design and tested the operating effectiveness of internal controls related to the determination of the standalone selling price for performance obligations not sold separately. To test management’s estimates of standalone selling price, we performed procedures to evaluate the methodology applied, including evaluating whether management maximized the use of observable inputs. We also inspected the sources of historical data used, evaluated pricing practices, and other observable inputs such as customer grouping, tested the mathematical accuracy of the underlying data and evaluated the accounting policies and practices related to the estimated standalone selling prices by management. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2023. San Jose, California February 25, 2026 62 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders A10 Networks, Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of A10 Networks, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2025, and our report dated February 25, 2026 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP San Jose, California February 25, 2026 63 A10 NETWORKS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except par value) As of December 31, 2025 As of December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 71,139 $ 95,129 Marketable securities 306,714 100,429 Accounts receivable, net of allowances of $66 and $465, respectively 62,069 76,687 Inventory 18,032 22,005 Prepaid expenses and other current assets 18,000 13,038 Total current assets 475,954 307,288 Property and equipment, net 50,221 39,142 Goodwill 15,134 1,307 Intangible assets 6,259 — Deferred tax assets, net 62,109 62,364 Other non-current assets 20,136 22,714 Total assets $ 629,813 $ 432,815 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 11,694 $ 12,542 Accrued and other liabilities 41,132 32,696 Deferred revenue, current 80,824 78,335 Total current liabilities 133,650 123,573 Deferred revenue, non-current 61,982 69,924 Long-term debt 218,787 — Other non-current liabilities 3,848 7,489 Total liabilities 418,267 200,986 Commitments and contingencies (Note 9) Stockholders' equity: Common stock, $0.00001 par value: 500,000 shares authorized; 91,996 and 90,520 shares issued and 71,498 and 73,693 shares outstanding, respectively 1 1 Treasury stock, at cost: 20,498 and 16,827 shares, respectively ( 249,912 ) ( 180,992 ) Additional paid-in-capital 531,790 508,387 Dividends paid ( 72,785 ) ( 55,417 ) Accumulated other comprehensive income 659 194 Retained earnings (accumulated deficit) 1,793 ( 40,344 ) Total stockholders' equity 211,546 231,829 Total liabilities and stockholders' equity $ 629,813 $ 432,815 See accompanying notes to consolidated financial statements. 64 A10 NETWORKS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Years Ended December 31, 2025 2024 2023 Revenue: Products $ 167,086 $ 139,799 $ 141,082 Services 123,471 121,897 110,618 Total revenue 290,557 261,696 251,700 Cost of revenue: Products 33,403 31,218 31,468 Services 26,639 20,201 16,494 Total cost of revenue 60,042 51,419 47,962 Gross profit 230,515 210,277 203,738 Operating expenses: Sales and marketing 84,467 83,300 85,976 Research and development 69,104 57,726 55,229 General and administrative 29,802 25,283 23,885 Total operating expenses 183,373 166,309 165,090 Income from operations 47,142 43,968 38,648 Non-operating income (expense): Interest income 11,628 6,747 5,078 Interest and other income (expense), net ( 6,348 ) 7,384 69 Total non-operating income, net 5,280 14,131 5,147 Income before income taxes 52,422 58,099 43,795 Provision for income taxes 10,285 7,959 3,825 Net income $ 42,137 $ 50,140 $ 39,970 Net income per share: Basic $ 0.58 $ 0.68 $ 0.54 Diluted $ 0.57 $ 0.67 $ 0.53 Weighted-average shares used in computing net income per share: Basic 72,253 74,088 74,210 Diluted 73,590 75,302 75,550 See accompanying notes to consolidated financial statements. 65 A10 NETWORKS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Years Ended December 31, 2025 2024 2023 Net income $ 42,137 $ 50,140 $ 39,970 Other comprehensive income (loss), net of tax: Unrealized gain on marketable securities 367 214 911 Foreign currency translation adjustment 98 51 ( 256 ) Comprehensive income $ 42,602 $ 50,405 $ 40,625 See accompanying notes to consolidated financial statements. 66 A10 NETWORKS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) Common Stock Treasury stock, at cost Additional Paid-in Capital Dividends paid Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity Shares Amount Balance at December 31, 2022 73,738 $ 1 $ ( 134,934 ) $ 466,927 $ ( 19,802 ) $ ( 726 ) $ ( 130,454 ) $ 181,012 Stock-based compensation expense — — — 15,088 — — — 15,088 Common stock issued under employee equity incentive plans 1,881 — — 4,943 — — — 4,943 Repurchase of common stock ( 1,260 ) — ( 15,975 ) — — — — ( 15,975 ) Payments for dividends — — — — ( 17,817 ) — — ( 17,817 ) Unrealized gain on marketable securities, net of tax — — — — — 911 — 911 Other comprehensive loss — — — — — ( 256 ) — ( 256 ) Net Income — — — — — — 39,970 39,970 Balance at December 31, 2023 74,359 $ 1 $ ( 150,909 ) $ 486,958 $ ( 37,619 ) $ ( 71 ) $ ( 90,484 ) $ 207,876 Stock-based compensation expense — — — 17,805 — — — 17,805 Common stock issued under employee equity incentive plans 1,516 — — 3,624 — — — 3,624 Repurchase of common stock ( 2,182 ) — ( 30,083 ) — — — — ( 30,083 ) Payments for dividends — — — — ( 17,798 ) — — ( 17,798 ) Unrealized gain on marketable securities, net of tax — — — — — 214 — 214 Other comprehensive income — — — — — 51 — 51 Net Income — — — — — — 50,140 50,140 Balance at December 31, 2024 73,693 $ 1 $ ( 180,992 ) $ 508,387 $ ( 55,417 ) $ 194 $ ( 40,344 ) $ 231,829 Stock-based compensation expense — — — 20,030 — — — 20,030 Common stock issued under employee equity incentive plans 1,476 — — 3,373 — — — 3,373 Repurchase of common stock ( 3,671 ) — ( 68,920 ) — — — — ( 68,920 ) Payments for dividends — — — — ( 17,369 ) — — ( 17,369 ) Unrealized gain on marketable securities, net of tax — — — — — 367 — 367 Other comprehensive income — — — — — 99 — 99 Net Income — — — — — — 42,137 42,137 Balance at December 31, 2025 71,498 $ 1 $ ( 249,912 ) $ 531,790 $ ( 72,786 ) $ 660 $ 1,793 $ 211,546 See accompanying notes to consolidated financial statements. 67 A10 NETWORKS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 42,137 $ 50,140 $ 39,970 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,859 11,293 9,346 Stock-based compensation 20,030 17,048 14,081 Provision for (recovery from) credit losses and sales returns ( 399 ) 59 ( 699 ) Other non-cash items 3,282 ( 424 ) 117 Changes in operating assets and liabilities: Accounts receivable 14,569 ( 2,555 ) ( 679 ) Inventory 3,659 ( 760 ) ( 6,302 ) Prepaid expenses and other assets ( 8,326 ) ( 67 ) ( 1,862 ) Accounts payable ( 1,516 ) 2,224 ( 2,999 ) Accrued and other liabilities 4,568 6,609 ( 20,801 ) Deferred revenue ( 7,969 ) 6,925 14,342 Net cash provided by operating activities 84,894 90,492 44,514 Cash flows from investing activities: Proceeds from sales of marketable securities 853 25,531 45,420 Proceeds from maturities of marketable securities 136,765 81,146 64,504 Purchases of marketable securities ( 342,028 ) ( 142,759 ) ( 85,420 ) Capital expenditures ( 20,128 ) ( 12,268 ) ( 10,896 ) Acquisition ( 19,100 ) — — Net cash provided by (used in) investing activities ( 243,638 ) ( 48,350 ) 13,608 Cash flows from financing activities: Proceeds from issuance of common stock under employee equity incentive plans 3,373 3,624 4,943 Proceeds from the issuance of convertible debt 225,000 — — Payment of debt issuance costs ( 7,330 ) — — Repurchases of common stock ( 68,920 ) ( 30,084 ) ( 15,975 ) Payments for dividends ( 17,369 ) ( 17,797 ) ( 17,817 ) Net cash provided by (used in) financing activities 134,754 ( 44,257 ) ( 28,849 ) Net increase (decrease) in cash and cash equivalents ( 23,990 ) ( 2,115 ) 29,273 Cash and cash equivalents - beginning of year 95,129 97,244 67,971 Cash and cash equivalents - end of year $ 71,139 $ 95,129 $ 97,244 Supplemental Disclosures: Cash paid for income taxes, net of refunds $ 6,777 $ 6,283 $ 2,409 Cash paid for interest $ 3,334 $ — $ — Non-cash investing and financing activities: Transfers between inventory and property and equipment $ 314 $ 2,277 $ 2,473 Capital expenditures included in accounts payable $ 120 $ 672 $ 3,298 See accompanying notes to consolidated financial statements. 68 Notes to Consolidated Financial Statements 1. Description of Business and Summary of Significant Accounting Policies Description of Business A10 Networks, Inc. (together with our subsidiaries, the “Company”, “we”, “our” or “us”) was incorporated in California in 2004 and reincorporated in Delaware in March 2014. We are headquartered in San Jose, California and have wholly-owned subsidiaries throughout the world including Asia and Europe. We are a leading provider of secure application solutions and services that enable a new generation of intelligently connected companies with the ability to continuously improve cyber protection and digital responsiveness across dynamic Information Technology (“IT”) and network infrastructures. Our product portfolio seeks to address many of the cyber protection challenges and solution requirements. The portfolio consists of network infrastructure and security products. The infrastructure portfolio powers the delivery of internet services and applications while the security products protect applications, APIs, infrastructure and enterprises from cyber-attacks. Our security suite is known as A10 Defend. In addition, we have an intelligent management and automation tool known as A10 Control (formally Harmony Controller), which provides intelligent management, automation and analytics for secure application delivery in multi-cloud environments to help simplify operations. Our secure infrastructure solutions include; Thunder Application Delivery Controller (“ADC”), Thunder Carrier Grade Networking (“CGN”), Thunder SSL Insight (“SSLi”) and Thunder Convergent Firewall (“CFW”). Our security products include; A10 Defend Threat Control, A10 Defend Orchestrator, A10 Defend Detector, A10 Defend Mitigator and A10 Defend ThreatX Protect. Our solutions are available in a variety of form factors, such as optimized hardware appliances, bare metal software, containerized software, virtual appliances and cloud-native software. Our customers include leading service providers (cloud, telecommunications, multiple system operators, cable), government organizations, and enterprises. Basis of Presentation The accompanying consolidated financial statements include those of A10 Networks, Inc. and its subsidiaries, and have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Those estimates and assumptions affect revenue recognition and deferred revenue, the allowance for credit losses for potential uncollectible amounts, the sales return reserve, the valuation of inventory, the fair value of marketable securities, contingencies and litigation, accrued liabilities, deferred commissions, ThreatX Protect purchase price allocation and the determination of fair value of stock-based compensation. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from management’s estimates. Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include bank deposits and short-term, highly liquid investments purchased with an original maturity of 90 days or less. Our cash equivalents consist of money market funds. Marketable Securities We classify our investments in debt securities as available-for-sale and record these investments at fair value. We may sell these investments at any time before their maturity dates. Accordingly, we classify our securities, including those with maturities exceeding twelve months, as current assets and include them in marketable securities in the consolidated balance sheets. Unrealized gains and losses are reported in accumulated other comprehensive income (loss), net of taxes, in the consolidated statements of stockholders’ equity. Realized gains and losses are determined based on the specific identification method. Realized gains and losses and credit allowances and impairments due to credit losses, if any, on marketable securities are reported in interest and other income, net as incurred in the consolidated statements of operations. 69 We regularly review our investment portfolio for impairment. If the estimated fair value of available-for-sale debt securities is less than its amortized cost basis, we determine if the difference, if any, is caused by expected credit losses and write-down the amortized cost basis of the securities if it is more likely than not we will be required or we intend to sell the securities before recovery of its amortized cost basis. Allowances for credit losses and write-downs are recognized in the non-operating income (expense) section of our consolidated statements of operations. The Company also invests in equity securities with readily determinable fair values which consist of investments in publicly traded companies. These investments are measured at fair value with changes in fair value recognized in non-operating income (expense) in our consolidated statements of operations. Fair Value Measurement Our financial instruments consist of cash, cash equivalents, marketable securities, accounts receivable and accounts payable. Our cash equivalents are measured and recorded at fair value on a recurring basis. Marketable securities are typically comprised of certificates of deposit, corporate securities, U.S. Treasury and agency securities, commercial paper, asset-backed securities and publicly trader equity securities and are measured at fair value on a recurring basis. The Company determines whether a credit loss exists for available-for-sale debt securities in an unrealized loss position. When the fair value of a security is below its amortized cost, the amortized cost will be reduced to its fair value and the resulting loss will be recorded in our consolidated statements of operations, if it is more likely than not that we are required to sell the impaired security before recovery of its amortized cost basis, or we have the intention to sell the security. If neither of these conditions are met, the Company considers the extent to which the fair value is less than the amortized cost, any changes to the rating of the security by a rating agency, and review of the issuer's financial statements. If factors indicate a credit loss exists, an allowance for credit loss is recorded through other expense, net, limited by the amount that the fair value is less than the amortized cost basis. For all available-for-sale debt securities, unrealized gains and the amount of unrealized loss relating to factors other than credit loss are reported as a separate component of accumulated other comprehensive loss in our consolidated balance sheets. Realized gains and losses are determined based on the specific identification method and are reported in our consolidated statements of operations. Financial instruments recorded at fair value are measured and classified using the three-level valuation hierarchy as described below: Level 1 — observable inputs for identical assets or liabilities, such as quoted prices in active markets. Level 2 — inputs other than the quoted prices in active markets that are observable either directly or indirectly. Level 3 — unobservable inputs in which there is little or no market data, which requires us to develop our own assumptions when pricing the financial instruments. Accounts receivable and accounts payable are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment. Accounts Receivable and Allowance for Credit Losses Accounts receivable are unsecured and are recorded at invoice amounts, net of allowances for credit losses for any potential uncollectible amounts. We evaluate the collectability of our accounts receivable based on known collection risks and historical experience. We mitigate credit risk in respect to accounts receivable by performing periodic credit evaluations based on a number of factors, including past transaction experience, evaluation of credit history and review of the invoicing terms of the contract. We generally do not require our customers to provide collateral to support accounts receivable. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us (for examples, bankruptcy filings or substantial downgrading of credit ratings), we record a specific allowance for credit losses against amounts due to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we record allowances for credit losses based on the length of time the receivables are past due and our historical experience of collections and write-offs. 70 Inventory Inventory is stated at the lower of cost or net realizable value. Inventory cost is determined using first-in, first-out method. We regularly evaluate inventory for excess and obsolete products. Most of our inventory provisions relate to excess quantities of certain products, based on our inventory levels and future product purchase commitments compared to assumptions based on management’s assessment of future demand and market conditions. Inventory write-downs, once established, are not reversed as they establish a new cost basis for the inventory. Inventory write downs are included as a component of cost of products revenue in the consolidated statements of operations. Property and Equipment, Net Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets. Depreciation and amortization on property and equipment, excluding leasehold improvements, ranges from one to seven years . Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the remaining lease term. Remaining amortization terms on leasehold improvements as of December 31, 2025 ranged from approximately one to three years . Leases The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right-of-use (“ROU”) assets represent the Company’s right to use the underlying asset for the term of the lease and are included within other non-current assets in the consolidated balance sheets, and the lease liabilities represent an obligation to make lease payments arising from the lease and are recorded within accrued liabilities and other non-current liabilities in the consolidated balance sheets. Lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date of the underlying lease arrangement to determine the present value of lease payments. The ROU asset is determined based on the lease liability initially established and reduced for any prepaid lease payments and any lease incentives received. The lease term to calculate the ROU asset and related lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company’s lease agreements generally do not contain any material variable lease payments, residual value guarantees or restrictive covenants. The Company elected the package of practical expedients permitted under the transition guidance, which allowed for the carry-forward of the Company’s historical lease classification and assessment on whether a contract is or contains a lease. The Company elected to not apply the new standard’s recognition requirements to leases with an initial term of 12 months or less and instead elected to recognize lease payments in the consolidated statements of operations on a straight-line basis over the lease term. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while expense for financing leases is recognized as depreciation expense and interest expense using the accelerated interest method of recognition. The Company accounts for lease components and non-lease components as a single lease component. 71 Business Combinations We use our best estimates and assumptions to allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. We apply significant judgment in determining the fair value of the intangible assets acquired, which involves the use of significant estimates and assumptions with respect to revenue growth rates, royalty rate and technology migration curve. While we use our best estimates and judgments, our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. In addition, uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to our preliminary estimates to goodwill provided that we are within the measurement period. Upon the conclusion of the final determination of the fair value of assets acquired or liabilities assumed during the measurement period, any subsequent adjustments are included in our consolidated statements of operations. The results of operations for businesses acquired are included in the financial statements from the acquisition date. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred. Goodwill Goodwill represents the excess of purchase consideration over the fair values of assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but is reviewed for possible impairment annually in the fourth quarter or more frequently if impairment indicators arise. We have identified a single reporting unit for the purpose of our goodwill impairment tests, and the fair value of our reporting unit has been determined by our enterprise value. We may elect to utilize a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting unit is less than its carrying value. If, after assessing the qualitative factors, we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying value, an impairment analysis will be performed. We compare the fair value of our reporting unit with its carrying amount and if the carrying value of the reporting unit exceeds its fair value, an impairment loss will be recognized for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the amount of goodwill. We did not identify impairment of goodwill for any periods presented. Intangible Assets Intangible assets with finite lives consist of acquired developed technology, customer relationships, trademarks and trade names acquired through our acquisition of ThreatX Protect. Intangible assets are recorded at their respective estimated fair values upon acquisition close. The Company determines the estimated useful lives for acquired intangible assets based on the expected future cash flows associated with the respective asset. The Company's intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives, ranging from four to five years. Amortization expense related to acquired developed technology is charged to product cost of revenues. Amortization expense related to customer relationships, trademarks and trade names is charged to sales and marketing activities. Amortization expense related to patents and trademarks is charged to general and administrative activities. The Company evaluates the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired. Impairment of Long-Lived Assets We evaluate our property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of our long-lived assets may not be recoverable. Recoverability of an asset group is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset group is expected to generate. If it is determined that an asset group is not recoverable, an impairment loss is recorded in the amount by which the carrying amount of the asset group exceeds its fair value. In the year ended December 31, 2025, we recorded an impairment charge totaling $ 951 thousand related to an incomplete internally developed software project that will not be completed. Revenue Recognition We recognize revenue, net of applicable taxes, when we transfer control of promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services. 72 We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and software-as-a-service offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and over time once the subscription term has commenced. For our software-as-a-service offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channel partners, such as resellers and distributors. We apply the following five-step revenue recognition model: • Identification of the contract, or contracts, with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, performance obligations are satisfied. Our customers predominantly purchase PCS services in conjunction with purchases of our products. PCS revenue includes arrangements for software support and technical support for our products. PCS is offered under renewable, fee-based contracts, which include technical support, hardware repair and replacement parts, bug fixes, patches, and unspecified upgrades on a when-and-if available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years. Billed but unearned PCS revenue is included in deferred revenue. Professional service revenue primarily consists of the fees we earn related to installation and consulting services. We recognize revenue from professional services upon delivery or completion of performance. Professional service arrangements are typically short term in nature and are largely completed within 30 to 90 days from the start of service. Revenue is recognized for training when the training course is delivered. Contracts with Multiple Performance Obligations Most of our contracts with customers, other than renewals of PCS, contain multiple performance obligations with a combination of products and PCS. Products and PCS generally qualify as distinct performance obligations. Our hardware includes embedded ACOS software, which together deliver the essential functionality of our products. For contracts which contain multiple performance obligations, we allocate revenue to each distinct performance obligation based on the SSP. Judgment is required to determine the SSP for each distinct performance obligation. We use a range of amounts to estimate SSP for products and PCS sold together in a contract to determine whether there is a discount to be allocated based on the relative SSP of the various products and PCS. If we do not have an observable SSP, such as when we do not sell a product or service separately, then SSP is estimated using judgment and considering all reasonably available information such as market conditions and information about the size and/or purchase volume of the customer. We generally use a range of amounts to estimate SSP for individual products and services based on multiple factors including, but not limited to the sales channel (reseller, distributor or end-customer), the geographies in which our products and services are sold, and the size of the end-customer. We account for multiple contracts with a single customer as one arrangement if the contractual terms and/or substance of those agreements indicate that they may be so closely related that they are, in effect, parts of a single contract. We may occasionally accept returns to address customer satisfaction issues even though there is generally no contractual provision for such returns. We estimate returns for sales to customers based on historical return rates applied against current-period shipments. Specific customer returns and allowances are considered when determining our sales return reserve estimate. Consequently, we have chosen to apply the portfolio approach when possible, which we do not believe will happen frequently. Additionally, we will evaluate a portfolio of data, when possible, in various situations, rights of return and transactions with variable consideration. We report revenue net of sales taxes. We include shipping charges billed to customers in revenue and the related shipping costs are included in cost of product revenue. 73 Deferred Contract Acquisition Costs We capitalize certain contract acquisition costs consisting of incremental sales commissions incurred to obtain customer contracts. Deferred commissions related to product revenues are recognized upon transfer of control to customers. Deferred commissions related to services revenue are recognized as the related performance obligations are met. Deferred commissions that will be recognized during the succeeding 12-month period are recorded as prepaid expenses and other current assets in the Company’s consolidated balance sheets, and the remaining portion is recorded as other non-current assets. Amortization of deferred commissions is included in sales and marketing expense in the consolidated statements of operations. Research and Development Costs Research and development efforts are focused on new product development and on developing additional functionality for our existing products. These expenses consist of personnel costs, and to a lesser extent, prototype materials, depreciation and certain allocated facilities and information technology costs. We expense research and development costs as incurred. Capitalization of Internal Use Software The company capitalizes costs incurred during the application development stage associated with the development of internal-use software systems. We account for the capitalization of internal-use software under ASC Topic 350-40, Internal-Use Software . Capitalized costs are included in property and equipment, net on the Company’s consolidated balance sheet. Once a project is available for general release to customers, the accumulated capitalized costs associated with that project will begin to be amortized over the estimated useful life of the software. Capitalization of Internally Developed Software to be Marketed and Sold We capitalize software engineering labor costs related to certain long-term projects that are expected to take more than a year to complete. We account for the capitalization of labor costs under Accounting Standards Codification (“ASC”) Topic 985-20, Software to be Sold, Leased or Marketed . Once a long-term project is available for general release to customers, the accumulated capitalized labor costs associated with that project will begin to be amortized over the expected revenue-generating life of that project and are recorded in cost of sales. If internal-use software that was previously capitalized is abandoned, the cost less the accumulated amortization, if any, is recorded as an operating expense. Stock-Based Compensation Stock-based compensation expense is measured on the grant date based on the fair value of the award and recognized on a straight-line basis over the requisite service period, reduced for actual forfeitures. The fair values of restricted stock units (“RSUs”) are estimated using our stock price at the close of the market on the grant date. The fair value of employee stock purchase rights is estimated using the Black-Scholes model on the grant date. The Black-Scholes model determines the fair value of share-based payment awards based on assumptions including expected term, stock price volatility and risk-free interest rate. Stock-based compensation expense related to shares not purchased due to terminations, or forfeitures, is reversed on the date of forfeiture. The fair values of market performance-based restricted stock units (“PSUs”) are estimated using the Monte Carlo simulation model, which uses the stock price, expected volatility and risk-free interest rate to determine the fair value. Warranty Costs Our appliance hardware and software generally carry a warranty period of 90 days. Estimates of future warranty costs are based on historical returns and the application of the historical return rates to our in-warranty installed base. Warranty costs to repair or replace items sold to customers have been insignificant for the years ended December 31, 2025, 2024 and 2023. Foreign Currency The functional currency of our foreign subsidiaries is the U.S. Dollar. Transactions denominated in non-functional currencies are remeasured to the functional currency at the average exchange rate for the period. Non-functional currency monetary assets and liabilities are remeasured to the functional currency using the exchange rate in effect at the balance sheet date, and non-monetary assets and liabilities are remeasured at historical exchange rates. Gains and losses related to remeasurement are recorded in interest and other income, net in the consolidated statements of operations. 74 Income Taxes We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or in our tax returns. Estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain deferred income tax assets, which arise from temporary differences and carryforwards. Deferred income tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. We regularly assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through an adjustment to income tax expense. The factors used to assess the likelihood of realization of our deferred tax assets include our historical operating performance, our forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Assumptions represent our best estimates and involve inherent uncertainties and the application of our judgment. We account for uncertainty in income taxes recognized in our consolidated financial statements by regularly reviewing our tax positions and benefits to be realized. We recognize tax liabilities based upon our estimate of whether, and the extent to which, additional taxes will be due when such estimates are more-likely-than-not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by taxing authorities. The provision for (benefit from) income taxes excludes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties. Advertising Costs Advertising costs are expensed when incurred. Advertising costs were $ 0.2 million, $ 0.1 million and $ 0.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. Segment Information An operating segment is a component of an enterprise for which its discrete financial information is available and its operating results are regularly reviewed by our chief operating decision maker for resource allocation decisions and performance assessment. Our chief operating decision maker is our Chief Executive Officer. Our Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and assessing performance of the Company. Accordingly, we have one reportable segment and one operating segment. See Note 13 Segment and Geographic Information in the accompanying notes to the consolidated financial statements for further detail. Vendor Business Concentration We rely on third parties to manufacture our hardware appliances and we purchase raw materials from third-party vendors. We outsource substantially all of our manufacturing services to three independent manufacturers. In addition, we purchase certain strategic component inventory which is consigned to our third-party manufacturers. Other hardware components included in our products are sourced from various suppliers by our manufacturers and are principally industry standard parts and components that are available from multiple vendors. Concentration of Credit Risk and Significant Customers Financial instruments that potentially subject us to concentrations of credit risk consist of cash, cash equivalents, marketable securities and accounts receivable. Our cash, cash equivalents and marketable securities are held and invested in high-credit quality financial instruments by recognized financial institutions and are subject to minimum credit risk. Our accounts receivable are unsecured and represent amounts due to us based on contractual obligations of our customers. We mitigate credit risk in respect to accounts receivable by performing periodic credit evaluations based on a number of factors, including past transaction experience, evaluation of credit history and review of the invoicing terms of the contract. We generally do not require our customers to provide collateral to support accounts receivable. 75 Significant customers, including distribution channel partners and direct customers (“end-customers”), are those which represent 10% or more of our total revenue for each period presented or our gross accounts receivable balance as of each respective balance sheet date. A substantial portion of our revenue is from sales of our products and services through distribution channel partners, such as resellers and distributors. In 2025, 2024 and 2023, sales through a single distribution channel partner represented 29 %, 20 % and 19 % of our total revenue, respectively. Revenues from our significant end-customers as a percentage of our total revenue are as follows: Years Ended December 31, 2025 2024 2023 Customer A 26 % 15 % 14 % We report revenue in two customer verticals: service providers, which accounted for 60 %, 57 % and 58 % of our total revenue during the years ended December 31, 2025, 2024 and 2023, respectively, and enterprises, which accounted for 40 %, 43 % and 42 % of our total revenue during years ended December 31, 2025, 2024 and 2023, respectively. A substantial portion of our revenue comes from a limited number of large end-customers and service providers. Purchases from our ten largest end-customers accounted for 40 %, 38 % and 33 % of our total revenue for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025, a single distribution channel partner accounted for 23 % of our total gross accounts receivable. As of December 31, 2024, a single distribution channel partner accounted for 34 % of our total gross accounts receivable. Recent Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU 2024-03 , Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the consolidated financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. Recently Adopted Accounting Standard In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 for its fiscal year ending December 31, 2025. See Note 12 Income Taxes in the accompanying notes to the consolidated financial statements for further detail. There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance during the year ended December 31, 2025 that are of significance or potential significance to us. 76 2. Revenue Contract Balances The following table reflects contract balances with customers (in thousands): Balance Sheet Line Reference As of December 31, 2025 As of December 31, 2024 As of December 31, 2023 Accounts receivable, net $ 62,069 $ 76,687 $ 74,307 Deferred revenue, current 80,824 78,335 82,657 Deferred revenue, non-current 61,982 69,924 58,677 The Company receives payment from customers based upon billing cycles. Invoice payment terms typically range from 30 to 90 days. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to the Company’s contractual right to consideration for performance obligations not yet billed, and are included in prepaid and other current assets in the Company’s consolidated balance sheets. The contract assets amount was immaterial as of December 31, 2025 and 2024. Deferred revenue primarily consists of amounts that have been invoiced but not yet recognized as revenue and consists of performance obligations pertaining to support and subscription services. During the years ended December 31, 2025 and 2024, the Company recognized revenue of $ 77.8 million and $ 80.7 million, respectively, related to deferred revenue at the beginning of the period. Deferred revenue consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 As of December 31, 2023 Deferred revenue: Products $ 2,783 $ 4,405 $ 14,917 Services 140,023 143,854 126,417 Total deferred revenue 142,806 148,259 141,334 Less: current portion ( 80,824 ) ( 78,335 ) ( 82,657 ) Non-current portion $ 61,982 $ 69,924 $ 58,677 Deferred Contract Acquisition Costs As of December 31, 2025 , the current and non-current portions of deferred contract acquisition costs totaled $ 8.3 million and $ 5.7 million, respectively, and the related amortization was $ 7.1 million for the year ended December 31, 2025. As of December 31, 2024, the current and non-current portions of deferred contract acquisition costs totaled $ 6.2 million and $ 4.8 million, respectively, and the related amortization was $ 5.9 million for the year ended December 31, 2024. For the years ended December 31, 2025, 2024 and 2023, the Company had no impairment loss in relation to capitalized deferred contract acquisition costs and no asset impairment charges related to contract assets. Remaining Performance Obligations Remaining performance obligations represent contracted revenues that are non-cancellable and have not yet been recognized due to unsatisfied or partially satisfied performance obligations, which include deferred revenues and amounts that will be invoiced and recognized as revenues in future periods. 77 The Company expects to recognize revenue on the remaining performance obligations as follows (in thousands): As of December 31, 2025 Within 1 year $ 80,824 Next 2 to 3 years 51,628 Thereafter 10,354 Total $ 142,806 3. Marketable Securities and Fair Value Measurements Marketable Securities Marketable securities, classified as available-for-sale, consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate securities $ 184,414 $ 397 $ ( 3 ) $ 184,808 $ 52,311 $ 102 $ ( 12 ) $ 52,401 U.S. Treasury and agency securities 94,148 246 ( 4 ) 94,390 47,865 163 — 48,028 Asset-backed securities 27,419 99 ( 2 ) 27,516 — — — — Total marketable securities $ 305,981 $ 742 $ ( 9 ) $ 306,714 $ 100,176 $ 265 $ ( 12 ) $ 100,429 During the years ended December 31, 2025 and 2024, the Company did not reclassify any amount to earnings from accumulated other comprehensive income (loss) related to unrealized gains or losses. The Company anticipates that it will recover the entire amortized cost basis of its available-for-sale marketable securities and has determined that no allowance for credit losses was required to be recognized during the years ended December 31, 2025 and 2024. The following table summarizes the cost and estimated fair value of debt securities based on stated effective maturities as of December 31, 2025 (in thousands): Amortized Cost Fair Value Less than 1 year $ 182,342 $ 182,721 Mature in 1 - 3 years 123,639 123,993 Total $ 305,981 $ 306,714 All available-for-sale securities are classified as current because they are available for use in current operations. 78 Marketable securities in an unrealized loss position consisted of the following (in thousands): Less Than 12 Months 12 Months or More Total As of December 31, 2025 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate securities $ 12,024 $ ( 3 ) $ — $ — $ 12,024 $ ( 3 ) U.S. Treasury and agency securities 13,194 ( 4 ) — — 13,194 ( 4 ) Asset-backed securities 3,348 ( 2 ) — — 3,348 ( 2 ) Total $ 28,566 $ ( 9 ) $ — $ — $ 28,566 $ ( 9 ) Less Than 12 Months 12 Months or More Total As of December 31, 2024 Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Corporate securities $ 12,516 $ ( 12 ) $ — $ — $ 12,516 $ ( 12 ) Total $ 12,516 $ ( 12 ) $ — $ — $ 12,516 $ ( 12 ) Based on evaluation of securities that have been in a continuous loss position, the Company determined all gross unrealized losses on its marketable securities as of December 31, 2025 were temporary in nature and related primarily to interest rate shifts rather than changes in the underlying credit quality of the securities in a loss position. The Company has the ability to hold these investments until maturity, or for at least the foreseeable future. As such, the Company determined that as of December 31, 2025, there were no credit losses on any securities within its portfolio of marketable securities. Fair Value Measurements The following is a summary of the Company’s cash, cash equivalents and marketable securities. The Company records cash and cash equivalents at cost, which approximates fair value. Marketable securities are measured at fair value on a recurring basis (in thousands): As of December 31, 2025 As of December 31, 2024 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Cash $ 62,348 $ — $ — $ 62,348 $ 89,195 $ — $ — $ 89,195 Cash equivalents 8,791 — — 8,791 5,934 — — 5,934 Corporate securities — 184,808 — 184,808 — 52,401 — 52,401 U.S. Treasury and agency securities 73,458 20,932 — 94,390 38,025 10,003 — 48,028 Asset-backed securities — 27,516 — 27,516 — — — — $ 144,597 $ 233,256 $ — $ 377,853 $ 133,154 $ 62,404 $ — $ 195,558 There were no transfers between Level 1 and Level 2 fair value measurement categories during the years ended December 31, 2025 and 2024. The Company measures the fair value of the 2030 Notes (as defined in Note 8 Long-Term Debt below) using inputs of quoted prices for disclosure purposes on a recurring basis. The fair value of the 2030 Notes was $ 232.7 million as of December 31, 2025. The 2030 Notes are categorized as Level 2 since their fair values is based on Level 2 inputs of quoted prices. 4. Derivatives Foreign Exchange Forward Contracts 79 The Company uses derivative financial instruments to manage exposures to foreign currency that may or may not be designated as hedging instruments. The Company’s objective for holding derivatives is to use the most effective methods to minimize the impact of these exposures. The Company does not enter into derivatives for speculative or trading purposes. The Company enters into foreign exchange forward contracts primarily to mitigate the effect of gains and losses generated by foreign currency transactions related to certain operating expenses and remeasurement of certain assets and liabilities denominated in foreign currencies. For foreign exchange forward contracts not designated as hedging instruments, the fair value of the derivatives in a net gain or net loss position are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Changes in the fair value of derivatives are recorded in other income, net in the accompanying consolidated statements of operations. As of December 31, 2025 and 2024, foreign exchange forward currency contracts not designated as hedging instruments had the total notional amount of $ 2.0 million and $ 7.6 million, respectively. These contracts have maturities of approximately 30 days. For the years ended December 31, 2025 and 2024, the Company recorded unrealized net losses of $ 0.1 million and $ 0.2 million, respectively, in its consolidated statements of operations related to these contracts. For the years ended December 31, 2025 and 2024, the net realized gain recorded in the consolidated statements of operations from these contracts was $ 0.3 million and $ 4.5 million, respectively. For foreign exchange forward contracts designated as hedging instruments, unrealized gains and losses arising from these contracts are recorded as a component of accumulated other comprehensive income (loss) on the consolidated balance sheets. These hedging contracts have 30 day maturities. The hedging gains and losses in accumulated other comprehensive income (loss) in the consolidated balance sheet are subsequently reclassified to expenses, as applicable, in the consolidated statements of operations in the same period in which the underlying transactions affect the Company’s earnings. As of December 31, 2025 and 2024, there were no outstanding foreign exchange forward contracts designated as hedging instruments. 5. Acquisition ThreatX Protect Business In February 2025, we completed an acquisition of the ThreatX Protect business of ThreatX, Inc. for $ 19.1 million in cash. This acquisition has been accounted for as a business combination. The purchase price allocation is as follows: $ 7.6 million to identified intangible assets, $ 2.5 million to deferred revenue assumed and $ 0.2 million to net assets acquired, with the excess $ 13.8 million of the purchase price over the fair value of net assets acquired recorded as goodwill, allocated to our single operating segment. Goodwill is primarily attributable to assembled workforce, future synergies, and other intangible assets that do not qualify for separate recognition. Goodwill is not deductible for tax purposes. The Company applied the fair value measurement requirements within ASC 820 Fair Value Measurements to evaluate the fair value of identifiable assets acquired and liabilities assumed in connection with its acquisition of ThreatX Protect in February 2025. The Company estimated fair value and remaining useful life of the intangible assets acquired based on the price that would be received if the Company were to sell the intangible assets in an orderly transaction between market participants. Intangible assets will be amortized on a straight-line basis over their remaining useful life. The results of operations of the acquired business, which are not material, have been included in our consolidated financial statements from the date of the acquisition. Pro forma results of operations have not been presented because the effect of the acquisition was not material to the consolidated statements of operations. The Company incurred approximately $ 0.3 million of acquisition-related costs, including legal, accounting, and advisory fees. These costs were expensed as incurred and included in general and administrative expenses in the consolidated statements of operations. The cash outflows for these costs are classified as operating activities in the consolidated statements of cash flows. Acquired Intangible Assets The following table sets forth the components of acquired intangible assets and their estimated useful lives as of the date of acquisition (in thousands, except years): 80 Fair Value Useful Life (Years) Developed Technology $ 5,700 5.0 Customer Relationships 1,500 5.0 Trademark / trade name 400 4.0 Total $ 7,600 Intangible assets subject to amortization as of December 31, 2025 are as follows (in thousands, except years): Gross Accumulated Amortization Net Weighted-Average Remaining Useful Life Developed technology $ 5,700 $ ( 993 ) $ 4,707 4.1 years Customer relationships 1,500 ( 261 ) 1,239 4.1 years Trademark / trade name 400 ( 87 ) 313 3.1 years $ 7,600 $ ( 1,341 ) $ 6,259 Amortization expense from acquired intangible assets was $ 1.3 million for the year ended December 31, 2025. The expected future amortization expense for acquired intangible assets as of December 31, 2025 is as follows (in thousands): 2026 $ 1,519 2027 1,519 2028 1,519 2029 1,437 2030 265 Total amortization expense $ 6,259 Goodwill The Company recorded goodwill in the amount of $ 13.8 million. There were no events or changes in circumstances that triggered an impairment review of ThreatX Protect goodwill or intangible assets during the year ended December 31, 2025. 6. Leases The Company leases various facilities in the U.S., Asia and Europe under non-cancellable operating lease arrangements that expire on various dates through April 2028. These arrangements require the Company to pay certain operating expenses, such as taxes, repairs and insurance, and contain renewal and escalation clauses. 81 The table below presents the Company’s right-of-use assets and lease liabilities as of December 31, 2025 (in thousands): As of December 31, 2025 Operating leases Right-of-use assets: Other non-current assets $ 8,858 Total right-of-use assets $ 8,858 Lease liabilities: Accrued liabilities $ 5,562 Other non-current liabilities 3,409 Total operating lease liabilities $ 8,971 The aggregate future lease payments for the Company’s operating leases as of December 31, 2025 were as follows (in thousands): 2026 $ 5,701 2027 3,234 2028 220 Total lease payments 9,155 Less: imputed interest ( 184 ) Present value of lease liabilities $ 8,971 The components of lease costs were as follows (in thousands): Year Ended December 31, 2025 Operating lease costs $ 4,347 Short-term lease costs 592 Total lease costs $ 4,939 Average lease terms and discount rates for the Company’s operating leases were as follows: As of December 31, 2025 Weighted-average remaining term (in years) 1.6 Weighted-average discount rate 3.54 % Supplemental cash flow information for the Company’s operating leases were as follows (in thousands): Year Ended December 31, 2025 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 5,476 Right-of-use assets obtained in exchange for new lease liabilities $ — Corporate Headquarters Lease On May 2, 2019, the Company entered into a sublease agreement (the “Sublease”) with Marvell Semiconductor, Inc. (“Sublandlord”) for its corporate headquarters and research and development space located at 2300 Orchard Parkway, San Jose, 82 California, 95131 (the “Premises”). The term of the Sublease is approximately eight years and began on December 1, 2019, the date the Company commenced business operations at the Premises. The Sublease provides for monthly base rent of approximately $ 262,000 per month for the first year with annual increases thereafter. The total base rent through the end of the term of the Sublease will total approximately $ 33.8 million. In addition to base rent, the Company will also be responsible for operating and other facility expenses. The Company has accounted for the lease under ASC 842 and has a right-of-use asset of $ 8.9 million recorded in other non-current assets and has lease liabilities of $ 5.6 million and $ 3.4 million, recorded in accrued liabilities and other non-current liabilities, respectively, in the consolidated balance sheets as of December 31, 2025. The Company had a right-of-use asset of $ 11.5 million recorded in other non-current assets and has lease liabilities of $ 4.7 million and $ 7.2 million, recorded in accrued liabilities and other non-current liabilities, respectively, in the consolidated balance sheets as of December 31, 2024. 7. Other Balance Sheet Accounts Details Accounts Receivable Allowance for Credit Losses The following table presents the changes in the Company’s accounts receivable allowance for credit losses (in thousands): As of December 31, 2025 As of December 31, 2024 Allowance for credit losses, beginning balance $ 465 $ 405 Increase (decrease) in allowance ( 232 ) 1,067 Write-offs, net of recoveries ( 167 ) ( 1,007 ) Allowance for credit losses, ending balance $ 66 $ 465 Inventory Inventory consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Raw materials $ 10,457 $ 12,883 Finished goods 7,575 9,122 Total inventory $ 18,032 $ 22,005 83 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Prepaid expenses $ 5,899 $ 4,245 Deferred contract acquisition costs 8,332 6,201 Other 3,769 2,592 Prepaid expenses and other current assets $ 18,000 $ 13,038 Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): Useful Life As of December 31, 2025 As of December 31, 2024 (in years) Equipment 1 to 5 $ 46,637 $ 36,615 Software 1 to 6 7,023 5,705 Furniture and fixtures 1 to 7 531 531 Leasehold improvements Lease term 3,560 3,439 Construction in progress 29,307 22,651 Property and equipment, gross 87,058 68,941 Less: accumulated depreciation ( 36,837 ) ( 29,799 ) Property and equipment, net $ 50,221 $ 39,142 Depreciation and amortization expense on property and equipment was $ 9.8 million, $ 6.0 million and $ 4.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Internally Developed Software to be Marketed and Sold During the year ended December 31, 2025, no costs were capitalized associated with internally developed software to be marketed and sold. During the years ended December 31, 2024 and 2023, capitalized costs totaled $ 0.0 million and $ 0.5 million, respectively. During the years ended December 31, 2025 and 2024, amortization cost totaled $ 0.5 million and $ 0.5 million, respectively. During the years ended December 31, 2025, 2024 and 2023, impairment cost totaled $ 1.0 million, $ 0.9 million and $ 3.0 million, respectively. As of December 31, 2025, the unamortized capitalized balance was $ 1.2 million. 84 Other Non-Current Assets Other non-current assets consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Right-of-use assets $ 8,858 $ 11,539 Deferred contract acquisition costs 5,693 4,814 Deposits 2,005 1,667 Other 3,580 4,694 Total other non-current assets $ 20,136 $ 22,714 Accrued Liabilities Accrued liabilities consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Accrued compensation and benefits $ 23,067 $ 19,058 Accrued tax liabilities 3,247 2,687 Lease liability 5,562 4,744 Accrued interest payable 1,553 — Other 7,703 6,207 Total accrued liabilities $ 41,132 $ 32,696 Other Non-Current Liabilities Other non-current liabilities consisted of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Lease liabilities $ 3,409 $ 7,194 Other 439 295 Total other non-current liabilities $ 3,848 $ 7,489 8. Long-Term Debt 2030 Convertible Senior Notes In March 2025, the Company issued $ 225.0 million aggregate principal amount of 2.75 % Convertible Senior Notes due 2030 (the “2030 Notes”). The Company received net proceeds from the offering of approximately $ 217.7 million. The 2030 Notes will mature on April 1, 2030, unless earlier converted, redeemed or repurchased. The 2030 Notes bear interest at the stated rate of 2.75 % per annum, payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2025. The 2030 Notes are convertible into solely cash, or a combination of cash and shares of common stock, at the Company’s election, at an initial conversion rate of 42.6257 shares of common stock per $1,000 principal amount of 2030 Notes, which is equivalent to an initial conversion price of $ 23.46003 per share of common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2030 Notes (the “2030 Notes Indenture”). Special interest and additional interest will accrue on the 2030 Notes in the circumstances and at the rates described in the 2030 Notes Indenture. The debt issuance costs are amortized to interest expense applying the effective interest method. The 2030 Notes do not contain financial maintenance covenants. 85 The holders may convert their 2030 Notes at their option only in the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ended on June 30, 2025, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during five consecutive business days immediately after any ten consecutive trading day period (such ten consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of 2030 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock, as described in the 2030 Notes Indenture; (4) if the Company calls such 2030 Notes for redemption; and (5) at any time from, and including, December 1, 2029 until the close of business on the 2nd scheduled trading day immediately before the maturity date. If the Company undergoes a fundamental change (as defined in the 2030 Notes Indenture), subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their 2030 Notes, at a fundamental change repurchase price equal to 100% of the principal amount of the 2030 Notes to be repurchased, plus any accrued and unpaid special interest and additional interest, if any, up to, but excluding, the fundamental change repurchase date. In addition, following certain corporate events or if the Company issues a notice of redemption, it will, under certain circumstances, increase the conversion rate for holders who elect to convert their 2030 Notes in connection with such corporate event or during the relevant redemption period. The 2030 Notes are redeemable, in whole or in part (subject to certain limitations), for cash at Company’s option at any time, and from time to time, on or after April 5, 2028 and on or before the 60th scheduled trading day immediately before the maturity date, but only if (i) the 2030 Notes are “freely tradable” (as defined in the 2030 Notes Indenture) and all accrued and unpaid additional interest, if any, has been paid in full; and (ii) the last reported sale price per share of common stock is at least 130% of the conversion price for a specified period of time. The redemption price will be equal to the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid special and additional interest, if any, to, but excluding, the redemption date. The 2030 Notes have customary provisions relating to the occurrence of “events of default” (as defined in the 2030 Notes Indenture). The occurrence of such events of default may result in the acceleration of all amounts due under 2030 Notes. The 2030 Notes were not eligible for conversion as of December 31, 2025. No sinking fund is provided for the 2030 Notes. The 2030 Notes are general unsecured obligations of the Company and rank senior in right of payment to all of Company’s existing and future indebtedness that is expressly subordinated in the right of payment to the 2030 Notes; equal in right of payment with all of the Company’s existing and future senior, unsecured indebtedness; effectively subordinated to any of the Company’s existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness; and structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity if any, of the Company’s current or future subsidiaries. As of December 31, 2025, none of the conditions permitting the holders of the 2030 Notes to convert their notes early had been met. Therefore, the 2030 Notes are classified as long-term debt. The Company accounted for the issuance of the 2030 Notes as a single liability measured at its amortized cost, as no embedded features require bifurcation and recognition as derivatives. The carrying value of the 2030 Notes, net of unamortized debt issuance costs of $ 6.2 million, was $ 218.8 million as of December 31, 2025. Interest expense related to the amortization of debt issuance costs was $ 5.9 million for the year ended December 31, 2025. The effective interest rate on the 2030 Notes is 3.43 %. 9. Commitments and Contingencies Legal Proceedings Litigation From time to time, we may be party or subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business. Some of these proceedings involve claims that are subject to substantial uncertainties and unascertainable damages. We make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Unless otherwise specifically disclosed in this note, we have 86 determined that no provision for liability nor disclosure is required related to any claim against us because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. Investigations In January 2023, the Company identified a cybersecurity incident in its corporate IT infrastructure (not related to any of the Company’s products or solutions used by its customers) (the “Cyber Incident”). Upon detecting the incident, the Company launched an investigation and engaged the services of cybersecurity experts and advisors, incident response professionals and external counsel to support the investigation. While this incident did not have a material impact on the Company, it did result in additional expense incurred in connection with the investigation. Lease Commitments The Company leases various operating spaces in the U.S., Asia and Europe under non-cancelable operating lease arrangements that expire on various dates through July 2027. These arrangements require us to pay certain operating expenses, such as taxes, repairs and insurance, and contain renewal and escalation clauses. The Company recognizes rent expense under these arrangements on a straight-line basis over the term of the lease. The Company has open purchase commitments with third-party contract manufacturers with facilities in Taiwan to supply nearly all of our finished goods inventories, spare parts, and accessories. These purchase orders are expected to be paid within one year of the issuance date. The Company had open purchase commitments with manufactures in Taiwan totaling $ 23.6 million as of December 31, 2025. The following table summarizes our non-cancelable operating leases as of December 31, 2025 (in thousands): Years Ending December 31, Operating Leases 2026 $ 5,701 2027 3,234 2028 220 Total $ 9,155 Rent expense was $ 4.9 million for each of the years ended December 31, 2025, 2024 and 2023, respectively. Guarantees and Indemnifications In the normal course of business, we provide indemnifications to customers against claims of intellectual property infringement made by third parties arising from the use of our products. Other guarantees or indemnification arrangements include guarantees of product and service performance, and standby letters of credit for lease facilities and corporate credit cards. We have not recorded a liability related to these indemnifications and guarantee provisions and our guarantees and indemnification arrangements have not had any significant impact on our consolidated financial statements to date. 87 10. Equity Incentive Plans, Stock-Based Compensation and Stock Repurchase Program Equity Incentive Plans 2014 Equity Incentive Plan and 2023 Stock Incentive Plan The 2014 Equity Incentive Plan (the “2014 Plan”) was in effect until it was replaced by the 2023 Stock Incentive Plan (the “2023 Plan”) on April 1, 2023. Both the 2014 Plan and 2023 Plan provide for the granting of stock options, restricted stock awards, restricted stock units (“RSUs”), market performance-based RSUs (“PSUs”), stock appreciation rights, performance units and performance shares to our employees, consultants and members of our Board of Directors. As of December 31, 2025, we had 2,464,605 shares available for future grant under the 2023 Plan. Like the 2014 Plan, the shares authorized for the 2023 Plan increase annually on January 1 by the least of (i) 8,000,000 shares, (ii) 5 % of the outstanding shares of common stock on the last day of our immediately preceding fiscal year, or (iii) such other amount as determined by our Board of Directors. Our Board of Directors determined the current shares authorized under the 2023 Plan were sufficient for the time being and decided not to increase the number of shares authorized on January 1, 2025. To date, the Company has granted stock options, RSUs and PSUs. Stock options expire no more than 10 years from the grant date and generally vest over four years . In the case of an incentive stock option granted to an employee, who at the time of grant, owns stock representing more than 10 % of the total combined voting power of all classes of stock, the per share exercise price will be no less than 110 % of the fair market value per share on the date of grant, and the incentive stock option will expire no later than five years from the date of grant. For incentive stock options granted to any other employees and nonstatutory stock options granted to employees, consultants, or members of our Board of Directors, the per share exercise price will be no less than 100 % of the fair market value per share on the date of grant. RSUs and PSUs generally vest from one to four years . 2014 Employee Stock Purchase Plan In October 2018, the Board of Directors approved amending the 2014 Employee Stock Purchase Plan (the “Amended 2014 Purchase Plan”) in order to, among other things, reduce the maximum contribution participants can make under the plan from 15 % to 10 % of eligible compensation. The Amended 2014 Purchased Plan also reflects revised offering periods, which were changed from 24 months to six months in duration and that begin on or about December 1 and June 1 each year, starting in December 2018. The Amended 2014 Purchase Plan permits eligible employees to purchase shares of our common stock through payroll deductions with up to 10% of their pre-tax eligible earnings subject to certain Internal Revenue Code (“IRC”) limitations. The purchase price of the shares is 85 % of the lower of the fair market value of our common stock on the first day of a six-month offering period or the relevant purchase date. In addition, no participant may purchase more than 1,500 shares of common stock in each purchase period. Employees purchased 230,716 shares at an average price of $ 14.62 per share and with an aggregate intrinsic value of $ 0.6 million during the year ended December 31, 2025. Employees purchased 281,107 shares at an average price of $ 11.69 per share and with an aggregate intrinsic value of $ 1.2 million during the year ended December 31, 2024. Employees purchased 274,937 shares at an average price of $ 12.88 per share and with an aggregate intrinsic value of $ 1.2 million during the year ended December 31, 2023. The intrinsic value is calculated as the difference between the market value on the date of purchase and the purchase price of the shares. As of December 31, 2025, we had 2,800,454 shares available for future issuance under the Amended 2014 Purchase Plan. 88 Stock-Based Compensation A summary of our stock-based compensation expense is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Stock-based compensation by type of award: Stock awards $ 19,012 $ 15,958 $ 12,999 Employee stock purchase rights 1,018 1,090 1,082 Total $ 20,030 $ 17,048 $ 14,081 Stock-based compensation by category of expense: Cost of revenue $ 1,627 $ 2,022 $ 1,702 Sales and marketing 4,435 3,946 3,722 Research and development 5,672 4,199 3,232 General and administrative 8,296 6,881 5,425 Total $ 20,030 $ 17,048 $ 14,081 As of December 31, 2025, the Company had $ 35.2 million of unrecognized stock-based compensation expense related to unvested stock-based awards, including ESPP under the Amended 2014 Purchase Plan, which will be recognized over a weighted-average period of 2.2 years. Fair Value Determination The fair values of employee stock purchase rights were estimated as of the grant date using the Black-Scholes option-pricing model with the following assumptions: Years Ended December 31, 2025 2024 2023 Expected term (in years) 0.5 0.5 0.5 Risk-free interest rate 4.0 % 5.0 % 5.3 % Expected volatility 35 % 32 % 42 % Dividend rate 1.39 % 1.50 % 1.80 % • Expected Term . We estimate the expected life of options based on an analysis of our historical experience of employee exercise and post-vesting termination behavior considered in relation to the contractual life of the option. The expected term for the employee stock purchase rights is based on the term of the purchase period. • Risk-Free Interest Rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected terms of stock options and the employee stock purchase rights. • Expected Volatility . For stock options, due to the limited trading history of our own common stock, we determined the share price volatility factor based on a combination of the historical volatility of our own common stock and the historical volatility of our peer group for the stock options. For employee stock purchase rights, we used the historical volatility of our own common stock. • Dividend Rate . In December 2021, the Company paid its first quarterly cash dividend in the amount of $ 0.05 per share of common stock outstanding and increased the amount to $ 0.06 per share in the three months ended December 31, 2022. For the years ended December 31, 2025, 2024 and 2023, the expected dividend rate assumes cash dividends will total $ 0.24 , $ 0.24 and $ 0.24 per common share outstanding annually, respectively. Stock-based compensation expense related to shares not purchased due to terminations, or forfeitures, is reversed on the date of forfeiture. 89 Stock Options No stock options were granted in years ended December 31, 2025, 2024 and 2023. The intrinsic value of options exercised is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Intrinsic value of options exercised (1) $ — $ 822 $ 1,440 (1) Intrinsic value of options exercised is the difference between the closing price of our common stock at the time of exercise and the exercise price paid. Stock Awards The Company has granted Restricted Stock Units (“RSUs”) to its employees, consultants and members of its Board of Directors, and Performance Stock Units (“PSUs”) to certain executives and employees. RSUs have service-based vesting conditions and PSUs have market performance-based vesting conditions as well as service-based vesting conditions. As of December 31, 2025, there were 2,468,406 RSUs outstanding that were unvested and 618,452 PSUs outstanding that had not yet achieved their market-performance vesting conditions. Our RSUs typically vest over a three or four year service term. We granted 1,135,099 , 1,424,261 and 1,315,210 RSUs in 2025, 2024 and 2023, respectively. The fair value of RSUs is determined to be the fair value of our common stock on the grant date as quoted on the New York Stock Exchange. Our PSUs typically have a four year term. Market performance-based conditions are satisfied upon the achievement of specified 100-day volume weighted average stock price targets for the Company’s common stock. We granted 279,869 , 363,445 and 326,630 PSUs in 2025, 2024 and 2023, respectively. The fair value of our PSUs is determined using a Monte Carlo valuation model which incorporates various assumptions including expected stock price volatility, expected term, expected dividend yield and risk-free interest rates. We estimate the volatility of common stock on the date of grant based on historical volatility of our common stock price. We estimate the expected term based on various exercise scenarios. We estimate the expected dividend yield based on the current annual dividend payment per share divided by our grant date common stock price The risk-free interest rate is based on U.S. Treasury yields in effect at the time of grant. The following table summarizes our restricted stock unit activities and related information: Service-Based Restricted Stock Units (RSUs) Number of Shares (thousands) Weighted-Average Grant Date Fair Value Per Share Weighted-Average Remaining Vesting Term (years) Nonvested as of December 31, 2024 2,496 $ 14.26 Granted 1,135 18.86 Released ( 888 ) 14.31 Canceled ( 275 ) 15.38 Nonvested as of December 31, 2025 2,468 $ 16.23 1.31 90 The following table summarizes our market performance-based restricted stock unit activities and related information: Market Performance-Based Restricted Stock Units (PSUs) Number of Shares (thousands) Weighted-Average Grant Date Fair Value Per Share Weighted-Average Remaining Vesting Term (years) Nonvested as of December 31, 2024 746 $ 11.63 Granted 280 17.86 Released ( 357 ) 11.76 Canceled ( 51 ) 13.51 Nonvested as of December 31, 2025 618 $ 14.22 2.06 The fair values of market performance-based restricted stock units were estimated as of the grant date using a Monte Carlo valuation model with the following assumptions: Years Ended December 31, 2025 2024 2023 Expected term (in years) 4.0 4.0 4.0 Risk-free interest rate 4.2 % 4.0 % 4.3 % Expected volatility 44.75 % 52.01 % 50.20 % Dividend rate 1.17 % 1.77 % 1.63 % Following is additional information pertaining to our stock award activities for both RSUs and PSUs (in thousands, except per share data): Years Ended December 31, 2025 2024 2023 Weighted-average grant date fair value of stock awards granted (per share) $ 18.66 $ 13.57 $ 14.04 Total fair value of stock awards released (vested) during the period $ 16,906 $ 14,044 $ 13,535 Repurchase Agreements In November 2024, the Company entered into a Common Stock Repurchase Agreement with entities affiliated with Summit Partners whereby the Company purchased 330 thousand shares of common stock for $ 15.73 per share, or an aggregate purchase price of $ 5.2 million. The Company’s common shares repurchased are held in treasury and accounted for under the cost method. Stock Repurchase Programs On November 7, 2023, the Company announced its Board of Directors had authorized a stock repurchase program under which the Company may repurchase up to $ 50 million of its outstanding common stock over a period of twelve months. On November 7, 2024, the Company announced its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $ 50 million of its outstanding common stock. On May 1, 2025, the Company announced its Board of Directors had authorized a new, non-expiring stock repurchase program under which the Company may repurchase up to $ 75 million of its outstanding common stock. As of December 31, 2025, the Company had $ 53.4 million available to repurchase shares under this program. Under all of the Company’s stock repurchase programs, repurchased shares are held in treasury at cost. The Company’s stock repurchase programs do not obligate it to acquire any specific number of shares. Shares may be repurchased in privately negotiated and/or open market transactions and by withholding shares in connection with vesting equity awards held by certain employees, including under plans complying with Rule 10b5-1 under the Exchange Act. To date, all repurchases under the Company’s stock repurchase programs have occurred in the open market, in negotiated transactions and from withholding shares in connection with vesting equity awards held by certain employees. During the year ended December 31, 2025, the Company repurchased 3.7 million shares for a total cost of $ 68.9 million. 91 During the year ended December 31, 2024, the Company repurchased 2.2 million shares for a total cost of $ 30.1 million. During the year ended December 31, 2023, the Company repurchased 1.3 million shares for a total cost of $ 16.0 million. 92 11. Net Income Per Share Basic net income per share is computed using the weighted average number of common shares outstanding for the period. Diluted net income per share is computed using the weighted average number of common shares outstanding for the period plus potential dilutive common shares, including stock options, RSUs, PSUs and employee stock purchase rights, unless the potential common shares are anti-dilutive. The following table presents common shares related to potentially dilutive shares excluded from the calculation of diluted net income per share as their effect would have been anti-dilutive (in thousands): Years Ended December 31, 2025 2024 2023 Stock options, stock awards and employee stock purchase rights 30 23 93 2030 Notes 9,591 — — Total 9,621 23 93 93 12. Income Taxes The geographical breakdown of income before income taxes is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Domestic income $ 49,064 $ 56,707 $ 41,105 Foreign income 3,358 1,392 2,690 Income before income taxes $ 52,422 $ 58,099 $ 43,795 The provision for income taxes consisted of the following (in thousands): Years Ended December 31, 2025 2024 2023 Current provision for income taxes: Federal $ 4,096 $ 3,894 $ 329 State 2,416 1,809 2,016 Foreign 2,052 1,959 1,228 Total current 8,564 7,662 3,573 Deferred tax expense (benefit): Federal $ 3,114 $ 975 $ 1,374 State ( 1,512 ) ( 556 ) ( 1,265 ) Foreign 119 ( 122 ) 143 Total deferred 1,721 297 252 Provision for income taxes $ 10,285 $ 7,959 $ 3,825 The reconciliation of the statutory federal income taxes and the provision for income taxes for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09 is as follows (in thousands, except percentages): Year ended December 31, 2025 Amount Percentage Tax at statutory rate $ 11,009 21.0 % State and local income taxes - net of federal income tax effect(1) 904 1.7 Foreign tax effects: Withholding tax 1,420 2.7 Foreign rate differential 128 0.2 Effect of cross-border tax laws: Foreign-derived intangible income deduction ( 3,577 ) ( 6.8 ) Subpart F income and section 78 gross up 99 0.2 Tax credits: R&D tax credits, net of uncertain positions 559 1.1 Foreign tax credits ( 1,540 ) ( 2.9 ) Nontaxable or non deductible items: Stock-based compensation including 162(m) limitation 1,588 3.0 Other 2 — Changes in unrecognized tax benefits ( 307 ) ( 0.6 ) $ 10,285 19.6 % (1) State taxes in Illinois made up the majority (greater than 50%) of the tax effect in this category. 94 The reconciliation of the statutory federal income taxes and the provision for income taxes for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023-09 is as follows (in thousands, except percentages): Years Ended December 31, 2024 2023 Amount Percentage Amount Percentage Tax at statutory rate $ 12,201 21.0 % $ 9,197 21.0 % State tax - net of federal benefits 763 1.3 % 751 1.7 % Foreign rate differential 1,606 2.8 % 954 2.2 % Changes in federal valuation allowance — — % 210 0.5 % Stock-based compensation 108 0.2 % ( 1,083 ) ( 2.5 ) % Non-deductible meals and entertainment expenses 289 0.5 % 398 0.9 % Other permanent items — — % 5 — % Federal tax credits - net of uncertain tax positions ( 3,959 ) ( 6.8 ) % ( 4,047 ) ( 9.2 ) % Return to provision true-up ( 162 ) ( 0.3 ) % ( 8 ) — % Foreign-derived intangible income deduction ( 3,699 ) ( 6.4 ) % ( 3,585 ) ( 8.2 ) % 162(m) limitation on officers compensation 873 1.5 % 1,221 2.8 % Other ( 61 ) ( 0.1 ) % ( 188 ) ( 0.4 ) % Provision for income taxes $ 7,959 13.7 % $ 3,825 8.7 % Cash paid for income taxes (net of refunds) consisted of the following (in thousands): Year Ended December 31, 2025 U.S. Federal $ 3,621 U.S. State and local 2,087 Foreign 1,069 Cash paid for income taxes (net of refunds) $ 6,777 Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include U.S. Federal for $ 3.6 million, Illinois for $ 1.3 million, Japan for $ 0.5 million and India for $ 0.3 million. 95 Deferred tax balances are comprised of the following (in thousands): As of December 31, 2025 As of December 31, 2024 Deferred tax assets: Net operating loss carryforwards $ 3,395 $ 3,561 Research and development credits, net of uncertain tax positions 19,350 29,217 Accruals, reserves and other 24,613 19,086 Stock-based compensation 2,108 2,040 Depreciation and amortization ( 1,760 ) ( 1,293 ) Operating lease liability 1,704 2,728 Capitalized research and development expenses 37,771 30,985 Gross deferred tax assets 87,181 86,324 Valuation allowance ( 19,773 ) ( 18,569 ) Total deferred tax assets 67,408 67,755 Deferred tax liabilities: Deferred contract acquisition costs ( 3,300 ) ( 2,560 ) Operating lease right-of-use asset ( 1,642 ) ( 2,610 ) Other ( 357 ) ( 221 ) Total deferred tax liabilities ( 5,299 ) ( 5,391 ) Net deferred tax assets $ 62,109 $ 62,364 Recognition of deferred tax assets is appropriate when realization of these assets is more likely than not. Primarily based upon a strong earnings history, expectation of future taxable income, with the exception of certain state tax attributes, we believe that a significant amount of the deferred tax assets would be realized on a more likely than not basis. Therefore, we released the valuation allowance on our U.S. deferred tax assets except for state credits in 2021. For the years ended December 31, 2025 and 2024, the valuation allowance increased by $ 1.2 million and $ 1.0 million, respectively. Companies subject to the Global Intangible Low-Taxed Income provision (“GILTI”) have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for outside basis temporary differences expected to reverse as GILTI. We have elected to account for GILTI as a period cost. As of December 31, 2025 and 2024, we had no U.S. federal NOL carryforward balance. As of December 31, 2025 and 2024, we had state NOL carryforwards of $ 48.1 million and $ 51.0 million, respectively. The state NOL carryforwards expire in various years beginning in 2025, if not utilized. Additionally, as of December 31, 2025 and 2024, we had U.S. federal research and development credit carryforwards of $ 2.2 million and $ 14.8 million, respectively, and state research and development credit carryforwards of $ 28.5 million and $ 27.1 million, respectively. The federal credit carryforwards will begin to expire at various dates beginning in 2031 while the state credit carryforwards can be carried over indefinitely. Utilization of the NOL and credit carryforwards may be subject to an annual limitation provided for in IRC Sections 382 and 383 and similar state codes. Any annual limitation could result in the expiration of NOL and credit carryforwards before utilization. The Company believes NOL’s will not expire unused as a result of any Section 382 annual limitations. Additionally, as of December 31, 2025 and 2024, we had no U.S. foreign tax credit carryforwards. With respect to our undistributed foreign subsidiaries’ earnings, we consider those earnings to be indefinitely reinvested and, accordingly, no related provision for U.S. federal and state income taxes has been provided. Our intention has not changed subsequent to the one-time transition tax under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to both U.S. income taxes subject to an adjustment for foreign tax credits and withholding taxes in the various countries. As of December 31, 2025 and 2024, the undistributed earnings approximated $ 21.3 million and $ 18.6 million, respectively. Our undistributed earnings through December 31, 2017, have been taxed under the one-time transition tax under the Tax Act. 96 The Tax Cuts and Jobs Act of 2017 (“TCJA”) amended Section 174 to require research and experimental (“R&E”) expenses incurred in tax years beginning on or after January 1, 2022, to be capitalized and amortized over five years (fifteen years for expenditures attributable to R&E activity performed outside the U.S.) using a half-year convention. Prior to the amendment, Section 174 expenses were allowed to be expensed in the year incurred. In 2025, the Company is capitalizing $ 48.7 million of US R&E expenses (amortizable over 10 years) and $ 15.4 million of R&E expenses performed outside the US (amortizable over 15 years) which results in unfavorable book/tax differences as a temporary adjustment. Since the Section 174 impact is a temporary difference, no material impact to tax expense is expected. Uncertain Tax Positions As of December 31, 2025, 2024 and 2023, we had gross unrecognized tax benefits of $ 8.2 million, $ 8.1 million and $ 7.6 million, respectively. Accrued interest expense related to unrecognized tax benefits is recognized as part of our income tax provision in our consolidated statements of operations and was immaterial for the years ended December 31, 2025, 2024 and 2023. Our policy for classifying interest and penalties associated with unrecognized income tax benefits is to exclude such items in income tax expense. The activity related to the unrecognized tax benefits is as follows (in thousands): Years Ended December 31, 2025 2024 2023 Gross unrecognized tax benefits—beginning balance $ 8,075 $ 7,575 $ 7,077 Increases (decreases) related to tax positions from prior years ( 225 ) — 27 Increases related to tax positions taken during current year 447 576 580 Releases / statute lapses ( 80 ) ( 76 ) ( 109 ) Gross unrecognized tax benefits—ending balance $ 8,217 $ 8,075 $ 7,575 These amounts are related to certain deferred tax assets with a corresponding valuation allowance. As of December 31, 2025, the total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $ 4.0 million. The Company is subject to taxation in the U.S., various states, and several foreign jurisdictions. Because the Company has NOL and credit carryforwards, there are open statutes of limitations in which federal, state and foreign taxing authorities may examine our tax returns for all years from 2005 through the current period. The Company is not currently under examination by any taxing authorities. 97 13. Segment and Geographic Information ASC 280 Segment Reporting , establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker ("CODM") to assess performance and to decide how to allocate resources. The Company manages its business on the basis of one reportable segment and unit and derives revenues from two sources: products revenue and services revenue. See Note 1 Description of Business and Summary of Significant Accounting Policies for additional information. The Company’s CODM is our Chief Executive Officer, Dhrupad Trivedi. Our CODM assesses the performance of the Company and decides how to allocate resources based upon consolidated net income, which is also reported within the consolidated statements of operations. The CODM uses consolidated net income to monitor period-over-period results, to assess financial performance and decide where to allocate additional resources within the business. The CODM does not regularly review significant classifications of expenses outside those shown on the consolidated statements of operations. The following table depicts the disaggregation of revenue by geographic region based on the ship to location of our customers and is consistent with how we evaluate our financial performance (in thousands): Years Ended December 31, 2025 2024 2023 Americas $ 175,181 $ 134,356 $ 132,745 United States 160,528 117,707 113,766 Americas-other 14,653 16,649 18,979 APJ 70,524 87,175 77,606 EMEA 44,852 40,165 41,349 Total $ 290,557 $ 261,696 $ 251,700 The Americas region comprises the U.S. and all other countries in the Americas (excluding the U.S.). The APJ region comprises all countries in the Asia Pacific region including Japan. The EMEA region comprises Europe, Middle East and Africa. The following table is a summary of our long-lived assets which include property and equipment, net and right-of-use assets based on the physical location of the assets (in thousands): As of December 31, 2025 As of December 31, 2024 Americas $ 54,798 $ 48,468 Japan 1,852 363 Other 2,429 1,850 Total $ 59,079 $ 50,681 14. Employee Benefit Plan The Company has a profit sharing plan that qualifies under IRC Section 401(k), which is offered to all of its U.S. employees. Participants in the plan may elect to contribute up to $ 23,500 of their annual compensation to the plan for the 2025 calendar year and $24,500 for the 2026 calendar year. Individuals who are 50 or older may contribute an additional $7,500 of their annual income for the 2025 calendar year and $8,000 for the 2026 calendar year. The Company typically matches 50 % of the first 6 % of the employee’s eligible compensation for a maximum employer contribution of $ 2,500 per participant per year. The Company’s matching contributions totaled $ 1.2 million, $ 1.1 million and $ 1.2 million during the years ended December 31, 2025, 2024 and 2023, respectively. 15. Subsequent Event On February 4, 2026 , the Company announced its Board of Directors declared a quarterly dividend. The dividend, in the amount of $ 0.06 per share of common stock outstanding, will be paid on March 2, 2026 , to stockholders of record on 98 February 16, 2026 . Future dividends will be subject to further review and approval by the Board of Directors in accordance with applicable law. The Board of Directors reserves the right to adjust or withdraw the quarterly dividend in future periods as it reviews the Company’s capital allocation strategy from time to time. 99 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 100