What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-04 compared with 2026-02-03 · 48 added, 57 removed, 96 unchanged (52% of the section changed)

45 unchanged sentences

Operations Review

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first six months of fiscal 2026.

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first nine months of fiscal 2026.

In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers.

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Aviat will attempt to mitigate these tariffs;

however, as disclosed above and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on September 10, 2025, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

however, as disclosed below and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on September 10, 2025, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions:

(1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific.

Revenue by region for the three and six months ended December 26, 2025 and December 27, 2024 and the related changes were as follows:

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Revenue by region for the three and nine months ended March 27, 2026 and March 28, 2025 and the related changes were as follows:

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

North America $ 46,165 $ 49,402 $ (3,237) (6.6) % $ 151,713 $ 149,589 $ 2,124 1.4 %

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Total revenue $ 100,003 $ 112,640 $ (12,637) (11.2) % $ 318,795 $ 319,266 $ (471) (0.1) %

Revenue in North America decreased by $5.1 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for products of 19%, partially offset by higher demand of services by 12%, across mobile network operators and private network customers.

Revenue in North America increased by $5.4 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025, primarily due to higher demand for service and product offerings of 13% and 3%, respectively, across private network customers and mobile networks operators.

Revenue in Africa and the Middle East increased by $2.0 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for products and services of 20% and 7%, respectively, across mobile network operators and private network customers.

Additionally, demand for software offerings increased by 15% compared with the same period of fiscal 2025.

Revenue in Africa and the Middle East increased by $4.3 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025, primarily due to increases in demand for services and products of 36% and 17%, respectively, for mobile network operators and private network customers.

Revenue in Europe increased by $3.1 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand of services of 56% from project timing, increase in product demand of 35% for mobile network operators, and a 20% increase in demand of software offerings.

Revenue in Europe increased by $5.0 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025.

The increase for the first six months of fiscal 2026 was primarily due to increases in demand for product and software offerings of 54% and 46%, respectively, for mobile network operators.

Revenue in Latin America and Asia Pacific decreased by $6.7 million during the second quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for services of 61%, partially offset by an increase of 36% on software offerings.

Revenue in Latin America and Asia Pacific decreased by $2.5 million during the first six months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to due to lower demand for services and products of 31% and 14% respectively, partially offset by an increase of 139% on software offerings.

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Product sales $ 81,210 $ 82,312 $ (1,102) (1.3) % $ 156,294 $ 143,428 $ 12,866 9.0 %

Services 30,262 35,885 (5,623) (15.7) % 62,498 63,198 (700) (1.1) %

Total revenue $ 111,472 $ 118,197 $ (6,725) (5.7) % $ 218,792 $ 206,626 $ 12,166 5.9 %

Revenue from product sales decreased by 1.3% and revenue from services decreased by 15.7% for the second quarter of fiscal 2026 compared with the same quarter of fiscal 2025.

Revenue from product sales increased by 9.0% and revenue from services decreased by 1.1% for the first six months of fiscal 2026 compared with the same period of fiscal 2025.

The changes were primarily due to the factors discussed above.

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Revenue in North America decreased by $3.2 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for products of 17%.

Revenue in North America increased by $2.1 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for services and software offerings of 10% and 5% respectively, partially offset by a decrease in demand for products of 4%.

Revenue in Africa and the Middle East increased by $1.4 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for software offerings and products of 133% and 13%, respectively, partially offset by a decrease in demand of 35% for services.

Revenue in Africa and the Middle East increased by $5.7 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025, primarily due to increases in demand for software offerings and products of 36% and 15%, respectively.

Revenue in Europe increased by $0.9 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to increases in demand for software offerings and services of 52% and 16%, respectively.

Revenue in Europe increased by $5.9 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025.

The increase for the first nine months of fiscal 2026 was primarily due to increases in demand for software offerings and products of 48% and 31%, respectively.

Revenue in Latin America and Asia Pacific decreased by $11.7 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for software offerings, services, and products of 64%, 25% and 18%, respectively.

Revenue in Latin America and Asia Pacific decreased by $14.2 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for services and products of 29% and 11% respectively, partially offset by an increase of 12% on software offerings.

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

Revenue $ 100,003 $ 112,640 $ (12,637) (11.2) % $ 318,795 $ 319,266 $ (471) (0.1) %

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Service margin % 37.6 % 38.6 % 36.7 % 38.6 %

Gross margin for the second quarter of fiscal 2026 decreased by $4.8 million compared with the same quarter of fiscal 2025 primarily due to higher volumes on lower margin products.

Gross margin for the first six months of fiscal 2026 increased by $11.1 million due to higher sales volumes on higher margin products, specifically software offerings.

Gross margin for the third quarter of fiscal 2026 decreased by $10.0 million compared with the same quarter of fiscal 2025 primarily due to sales volumes and the mix of product and service offerings.

Gross margin for the first nine months of fiscal 2026 increased by $1.1 million due to sales volumes and the mix of product and service offerings.

Research and Development

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

Research and development $ 7,656 $ 7,704 $ (48) (0.6) % $ 21,163 $ 28,334 $ (7,171) (25.3) %

% of revenue 7.7 % 6.8 % 6.6 % 8.9 %

Research and development expenses decreased by $3.8 million and $7.1 million for the three and six months ended December 26, 2025, respectively, compared with the same periods in fiscal 2025, primarily due to cost management initiatives and synergies related to acquisitions.

Research and development expenses decreased by $48 thousand and $7.2 million for the three and nine months ended March 27, 2026, respectively, compared with the same periods in fiscal 2025, primarily due to cost management initiatives.

Selling and Administrative

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

Selling and administrative $ 20,365 $ 22,121 $ (1,756) (7.9) % $ 66,125 $ 68,348 $ (2,223) (3.3) %

% of revenue 20.4 % 19.6 % 20.7 % 21.4 %

Selling and administrative expenses increased by $1.1 million for the second quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to higher administrative costs.

Selling and administrative expenses decreased by $0.5 million for the first six months of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to cost management initiatives.

Selling and administrative expenses decreased by $1.8 million for the third quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to lower administrative costs and cost management initiatives.

Selling and administrative expenses decreased by $2.2 million for the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower administrative costs and cost management initiatives.

Interest Expense, net

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

Interest expense, net $ 1,848 $ 1,557 $ 291 18.7 % $ 5,468 $ 4,252 $ 1,216 28.6 %

Interest expense, net increased by $0.3 million and $0.9 million for the three and six months ended December 26, 2025, respectively, primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year period.

Interest expense, net increased by $0.3 million and $1.2 million for the three and nine months ended March 27, 2026, respectively, primarily due to interest expense incurred on incremental Term Loan borrowings compared to the prior year period.

Other Expense, net

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Other (income) expense, net $ (2,744) $ 269 $ (3,013) (1,120.1) % $ (1,771) $ 979 $ (2,750) (280.9) %

Other (income) expense, net decreased by $3.0 million and $2.8 million for the three and six months ended December 26, 2025, respectively, compared with the same quarter of fiscal 2025 primarily as a result of foreign exchange rate movement.

Three Months Ended Six Months Ended

(In thousands, except percentages) December 26, 2025 December 27, 2024 $ Change % Change December 26, 2025 December 27, 2024 $ Change % Change

Income (loss) before income taxes $ 8,123 $ 6,121 $ 2,002 32.7 % $ 10,627 $ (11,272) $ 21,899 (194.3) %

Provision for (benefit from) income taxes $ 2,405 $ 1,626 $ 779 47.9 % $ 4,747 $ (3,888) $ 8,635 (222.1) %

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

Other expense (income), net $ 1,400 $ 3,068 $ (1,668) (54.4) % $ (371) $ 4,047 $ (4,418) (109.2) %

Other expense (income), net decreased by $1.7 million and $4.4 million for the three and nine months ended March 27, 2026, respectively, compared with the same quarter of fiscal 2025 primarily as a result of fluctuation in foreign currencies.

Three Months Ended Nine Months Ended

(In thousands, except percentages) March 27, 2026 March 28, 2025 $ Change % Change March 27, 2026 March 28, 2025 $ Change % Change

(Loss) income before income taxes $ (2,309) $ 4,669 $ (6,978) (149.5) % $ 8,318 $ (6,603) $ 14,921 (226.0) %

(Benefit from) provision for income taxes $ (244) $ 1,141 $ (1,385) (121.4) % $ 4,503 $ (2,747) $ 7,250 (263.9) %

The Company estimates its annual effective tax rate at the end of each quarterly period and records the tax effect of certain discrete items in the interim period in which they occur, including changes in judgment about uncertain tax positions and deferred tax valuation allowances.

The tax expense for the first six months of fiscal 2026 was primarily attributable to tax expense related to U.S.

The tax expense for the first nine months of fiscal 2026 was primarily attributable to tax expense related to U.S.

and profitable foreign subsidiaries.

The tax benefit for the first six months of fiscal 2025 was primarily resulting from year-to-date losses.

The tax benefit for the first nine months of fiscal 2025 was primarily resulting from year-to-date losses.

Liquidity, Capital Resources, and Financial Strategies

Sources of Cash

As of December 26, 2025, the Company’s total cash and cash equivalents were $86.5 million.

As of March 27, 2026, the Company’s total cash and cash equivalents were $78.1 million.

Approximately $16.2 million was held in the United States.

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Operating Activities

Operating cash flows is presented as net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash provided by (used in) operating activities was $12.2 million for the first six months of fiscal 2026, compared with $(6.4) million in the prior year.

The $18.6 million increase is primarily attributable to net income along with decreases in inventory, unbilled, and deferred taxes which was partially offset by an increase in accounts receivable and a decrease in accounts payable.

Operating cash flows are presented as net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities.

Net cash provided by (used in) operating activities was $10.5 million for the first nine months of fiscal 2026, compared with $(4.8) million in the prior year.

The $15.3 million increase is primarily attributable to increased earnings and increases in working capital compared to the prior year.

Investing Activities

Net cash used in investing activities was $3.2 million for the first six months of fiscal 2026, compared to $23.5 million in the prior year.

Net cash used in investing activities was $7.8 million for the first nine months of fiscal 2026, compared to $26.3 million in the prior year.

The $18.4 million decrease is primarily due to the absence of prior year acquisition payments associated with the NEC Transaction in the current year.

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Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options.

Net cash provided by financing activities was $17.1 million for the first six months of fiscal 2026, compared with $18.6 million in the prior year.

Net cash provided by financing activities was $15.8 million for the first nine months of fiscal 2026, compared with $17.6 million in the prior year.

The $1.8 million decrease is primarily due to reduced net Term Loan borrowings of $16.8 million compared to $25.3 million in the prior year and the absence of prior year payments of deferred consideration for acquisitions of $5.8 million.

As of December 26, 2025, the Company’s principal sources of liquidity consisted of $86.5 million in cash and cash equivalents, $74.4 million of available credit under its Credit Facility, and future collections of receivables from customers.

As of March 27, 2026, the Company’s principal sources of liquidity consisted of $78.1 million in cash and cash equivalents, $76.4 million of available credit under its Credit Facility, and future collections of receivables from customers.

On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20 million for each instrument.

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In addition, the Company believes these sources of liquidity will be sufficient to provide for its anticipated requirements and plans for cash beyond the next 12 months.

The Company borrowed and repaid $50.0 million against the Revolver during the first six months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver.

As of December 26, 2025, the Company had $91.0 million outstanding under its Term Loan and during the first six months of fiscal 2026 borrowed $20.0 million and repaid $2.1 million against the Term Loan.

As of December 26, 2025, the Company was in compliance with all financial covenants contained in the Credit Facility.

The Company borrowed and repaid $75.0 million against the Revolver during the first nine months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver.

As of March 27, 2026, the Company had $89.9 million outstanding under its Term Loan and during the first nine months of fiscal 2026 borrowed $20.0 million and repaid $3.2 million against the Term Loan.

As of March 27, 2026, the Company was in compliance with all financial covenants contained in the Credit Facility.

Critical Accounting Estimates

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis