What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-30 compared with 2025-07-22 · 91 added, 83 removed, 144 unchanged (55% of the section changed)

16 unchanged sentences

Our customers range from smaller, regional service providers to some of the world’s largest service providers.

Customers are defined into small (less than 250,000 subscribers), medium (250,000 to 2.5 million subscribers) or large (greater than 2.5 million subscribers).

Customers are defined as small (less than 250,000 subscribers), medium (250,000 to 2.5 million subscribers) or large (greater than 2.5 million subscribers).

We have approximately 1,600 active customers that have deployed passive optical, Active Ethernet or point-to-point Ethernet fiber access networks or our subscriber premise systems.

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Cost of revenue is strongly correlated to revenue and tends to fluctuate due to all of the above factors that may cause revenue fluctuations.

Factors that have impacted our cost of revenue for the three and six months ended June 28, 2025 include:

changes in the mix of products delivered, customer location and regional mix, changes in the cost of our inventory, investments to support expansion of cloud and customer support offerings as well as our customer success organization, changes in product warranty, incurrence of retrofit costs, amortization of intangibles, support fees for silicon-related development work for our products, allowances for obligations to our suppliers and inventory write-downs.

Factors that we expect may impact our cost of revenue in future periods include the same factors in the prior quarter and changes in trade policies.

For example, in April 2025, the U.S.

Factors that have impacted our cost of revenue for the three and nine months ended September 27, 2025 include:

changes in the mix of products delivered, customer location and regional mix, changes in the cost of our inventory, investments to support expansion of cloud and customer support offerings as well as our customer success organization, changes in product warranty, incurrence of retrofit costs, amortization of intangibles, allowances for obligations to our suppliers and inventory write-downs.

Factors that we expect may impact our cost of revenue in future periods include the same factors in the prior quarter, changes in trade policies and the transition from DDR4 to DDR5 memory.

Regarding trade policies, in April 2025, the U.S.

President signed an executive order increasing tariffs on imports from numerous countries, including China and other Asian countries where our sole-source or limited-source suppliers are located.

Consequently, absent policy changes, these actions will increase our cost of revenue.

We are currently evaluating the actions we may be able to take to mitigate such costs as we navigate this challenging and dynamic operating environment.

Currently, the majority of our finished goods are exempt from tariffs.

For imported components for domestic manufacturing and certain finished goods, these actions increased our cost of revenue.

We continue to evaluate the actions we may be able to take to mitigate such costs as we monitor and navigate this challenging and dynamic operating environment.

Regarding the DDR4 to DDR5 transition, the exit from DDR4 memory will put upward pricing on memory and will potentially increase the cost of our premises system.

In addition, we periodically ship by air versus by ocean in order to meet delivery commitments to our customers, which is more costly.

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Our critical accounting policies and estimates, which are revenue recognition and inventory valuation and supplier purchase commitments, are described under “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

For the six months ended June 28, 2025, there have been no significant changes in our critical accounting policies and estimates.

For the nine months ended September 27, 2025, there have been no significant changes in our critical accounting policies and estimates.

Recent Accounting Pronouncements

There have been no additional accounting pronouncements or changes in accounting pronouncements during the six months ended June 28, 2025 as compared with the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024 that are significant or expected to be significant to us.

There have been no additional accounting pronouncements or changes in accounting pronouncements during the nine months ended September 27, 2025 as compared with the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2024 that are significant or expected to be significant to us.

Results of Operations

Comparison of the Three and Six Months Ended June 28, 2025 and June 29, 2024

Comparison of the Three and Nine Months Ended September 27, 2025 and September 28, 2024

The following table sets forth our revenue by customer size (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

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$ 265,437 $ 200,945 $ 64,492 32 % $ 727,561 $ 625,394 $ 102,167 16 %

Our revenue increased by $43.7 million and $37.7 million for the three and six months ended June 28, 2025, respectively, as compared to the corresponding periods in 2024.

Our revenue increased by $64.5 million and $102.2 million for the three and nine months ended September 27, 2025, respectively, as compared to the corresponding periods in 2024.

After bottoming in the second quarter last year, we have experienced sequential quarterly revenue growth.

That growth has been broad based.

Specifically, during the second quarter of 2025, the large-customer segment increased $15.8 million primarily due to a North American customer that increased its capital expenditures this year relative to last year and the reclassification of a small customer to the large-customer segment after being acquired by a different large customer.

The medium-customer segment increased $14.9 million primarily due to increased shipments to a European customer.

Specifically, during the third quarter of 2025, the large-customer segment increased $25.0 million primarily due to a North American customer that increased its capital expenditures this year relative to last year and the reclassification of a small customer to the large-customer segment after being acquired by a different large customer.

The medium-customer segment increased $6.2 million primarily due to increased shipments to a few customers.

The small-customer segment increased by $33.3 million as BXPs focused on adding subscribers.

For the three and six months ended June 28, 2025, United States revenue was $219.0 million and $430.2 million, or 91% and 93% of our revenue, compared to $182.7 million and $392.8 million, or 92% and 93% of our revenue for the same periods in 2024.

International revenue was $22.8 million and $31.9 million, or 9% and 7% of our revenue, for the three and six months ended June 28, 2025, as compared to $15.4 million and $31.7 million, or 8% and 7% of our revenue, for the same periods in 2024.

The increase in international revenue for the three and six months ended June 28, 2025, as compared to the same periods in 2024, was mainly due to higher shipments to Europe.

No customer accounted for more than 10% of the Company’s revenue for the three and six months ended June 28, 2025 and June 29, 2024.

For the three and nine months ended September 27, 2025, United States revenue was $249.2 million and $679.4 million, or 94% and 93% of our revenue, respectively, compared to $187.1 million and $579.9 million, or 93% of our revenue for the same periods in 2024.

International revenue was $16.2 million and $48.1 million, or 6% and 7% of our revenue, respectively, for the three and nine months ended September 27, 2025, as compared to $13.9 million and $45.5 million, or 7% of our revenue, for the same periods in 2024.

No customer accounted for more than 10% of our revenue for the three and nine months ended September 27, 2025 or September 28, 2024.

Gross Profit and Gross Margin

The following table sets forth our gross profit and gross margin (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

2 unchanged sentences

Gross margin 57.3 % 54.8 % 56.5 % 54.4 %

Gross profit increased to $136.3 million and $259.0 million for the three and six months ended June 28, 2025, from $107.6 million and $230.2 million during the corresponding periods in 2024.

Gross profit increased to $152.0 million and $411.0 million for the three and nine months ended September 27, 2025, from $110.0 million and $340.2 million during the corresponding periods in 2024.

These increases were mainly due to the corresponding increases in revenue.

Our gross margin increased by 200 and 180 basis points for the three and six months ended June 28, 2025, respectively, compared to the corresponding periods in 2024, primarily related to the continued growth in our platform, cloud and managed services being a greater percentage of our total revenue.

Our gross margin increased by 250 and 210 basis points for the three and nine months ended September 27, 2025, respectively, compared to the corresponding periods in 2024, primarily related to the continued growth in our platform, cloud and managed services offerings.

Operating Expenses

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The following table sets forth our sales and marketing expenses (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

2 unchanged sentences

Percent of revenue 23 % 26 % 25 % 25 %

Sales and marketing expenses for the three months ended June 28, 2025 increased by $11.4 million compared with the corresponding period in 2024 primarily due to increases in stock-based compensation of $6.9 million and personnel expenses of $5.9 million, mostly related to incentive compensation.

Sales and marketing expenses for the three months ended September 27, 2025 increased by $8.0 million compared with the corresponding period in 2024 primarily due to increases in personnel expenses of $6.2 million, mostly related to incentive compensation and increased headcount, stock-based compensation of $1.5 million and travel expenses of $0.5 million.

These increases were partially offset by a decrease in marketing expenses of $0.5 million.

Sales and marketing expenses for the six months ended June 28, 2025 increased by $15.6 million compared with the corresponding period in 2024 primarily due to increases in personnel expenses of $8.7 million, mostly related to incentive compensation, stock-based compensation of $8.5 million and travel expenses of $1.2 million.

Sales and marketing expenses for the nine months ended September 27, 2025 increased by $23.5 million compared with the corresponding period in 2024 primarily due to increases in personnel expenses of $14.9 million, mostly related to incentive compensation and increased headcount, stock-based compensation of $10.0 million and travel expenses of $1.6 million.

These increases were partially offset by a decrease in marketing expenses of $2.0 million.

For the three and six months ended June 28, 2025, sales and marketing expenses as a percentage of revenue was flat.

We expect our investments in sales and marketing will increase slightly in absolute dollars on a year-over-year basis, but decline as a percentage of revenue, as we continue to land new customers and expand our platform, cloud and managed services.

For the three months ended September 27, 2025, sales and marketing expenses as a percentage of revenue declined compared to the year ago period as revenue returned to a record level.

We expect our investments in sales and marketing will increase in absolute dollars on a year-over-year basis, but decline as a percentage of revenue, as we continue to land new customers and expand our platform, cloud and managed services.

Research and Development Expenses

The following table sets forth our research and development expenses (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

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Percentage of gross profit 31 % 41 % 33 % 39 %

Research and development expenses for the three months ended June 28, 2025 increased by $1.7 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $1.5 million, depreciation and amortization of $0.5 million and outside services of $0.3 million.

Research and development expenses for the three months ended September 27, 2025 increased by $1.6 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $1.2 million, depreciation and amortization of $0.7 million, outside services of $0.4 million and prototypes and test equipment expenses of $0.4 million.

These increases were partially offset by a decrease in personnel expenses of $0.8 million.

Research and development expenses for the six months ended June 28, 2025 increased by $1.2 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $2.1 million, depreciation and amortization of $0.9 million and prototypes and test equipment expenses of $0.9 million.

These increases were partially offset by decreases in personnel expenses of $2.2 million and outside services of $0.9 million.

For the three and six months ended June 28, 2025, research and development expenses as a percentage of gross profit decreased to 34% from 41% and 35% from 38%, respectively, due to the increase in revenue and gross margin.

We expect our investments in research and development to remain relatively flat in absolute dollars in the short term, and decline as a percentage of revenue and gross profit, as we continue to expand the functionality and capabilities of our platform, cloud and managed services.

Research and development expenses for the nine months ended September 27, 2025 increased by $2.8 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $3.2 million, depreciation and amortization of $1.6 million and prototypes and test equipment expenses of $1.2 million.

These increases were partially offset by decreases in personnel expenses of $3.0 million.

For the three and nine months ended September 27, 2025, research and development expenses as a percentage of gross profit decreased to 31% from 41% and 33% from 39%, respectively, due to the increase in revenue and gross margin.

We expect our investments in research and development to increase in absolute dollars and as a percentage of gross profit in the short term as we accelerate the development of AI functionality and capabilities of our platform, cloud and managed services.

General and Administrative Expenses

The following table sets forth our general and administrative expenses (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

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Percent of revenue 10 % 12 % 11 % 12 %

General and administrative expenses for the three months ended June 28, 2025 increased by $3.9 million as compared with the corresponding period in 2024 mainly due to increases in stock-based compensation of $1.7 million, personnel expenses of $1.2 million, mostly related to incentive compensation, and professional services expenses of $0.8 million.

General and administrative expenses for the six months ended June 28, 2025 increased by $4.3 million as compared with the corresponding period in 2024 mainly due to increases in personnel expenses of $2.8 million and stock-based compensation of $2.3 million.

General and administrative expenses for the three months ended September 27, 2025 increased by $4.1 million as compared with the corresponding period in 2024 mainly due to increases in personnel expenses of $1.9 million, mostly related to incentive compensation and increased headcount, and stock-based compensation of $1.6 million.

General and administrative expenses for the nine months ended September 27, 2025 increased by $8.4 million as compared with the corresponding period in 2024 mainly due to increases in personnel expenses of $4.7 million and stock-based compensation of $3.9 million.

These increases were partially offset by a decrease in professional services expenses of $0.8 million.

For the three and six months ended June 28, 2025, general and administrative expenses as a percentage of revenue were flat compared to the same periods in 2024.

For the three and nine months ended September 27, 2025, general and administrative expenses as a percentage of revenue were relatively flat compared to the same periods in 2024.

We expect our general and administrative investments to be fairly constant in absolute dollars in the near term and decline as a percentage of revenue.

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The following table sets forth our interest and other expense, net (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

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Percent of revenue 1 % 2 % 1 % 1 %

Interest and other expense, net increased by $0.4 million and $1.0 million as compared with the corresponding periods in 2024 mainly due to a larger cash and marketable securities balance.

For the three months ended September 27, 2025, interest and other expense, net was down slightly compared with the corresponding period in 2024 due to lower accretion of marketable securities.

For the nine months ended September 27, 2025, interest and other expense, net increased by $0.8 million compared with the same period a year ago as we had a larger average cash balance.

The following table sets forth our income taxes (dollars in thousands):

Three Months Ended Six Months Ended

2025 June 29,

Three Months Ended Nine Months Ended

September 27,

2025 September 28,

2024 Variance

Dollars Variance

Percent June 28,

2025 June 29,

Percent September 27,

2025 September 28,

2024 Variance

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Effective tax rate 23.0 % 49.1 % 48.6 % 26.1 %

For the three and six ended June 28, 2025, our income tax expense was $3.6 million for an effective tax rate of 105.8%, which differed from the statutory rate of 21% primarily due to the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S.

federal research tax credits, excess tax benefits from stock-based compensation and the U.S.

tax impact of foreign operations.

The effective tax rates for the three and six months ended June 28, 2025 are higher than the corresponding periods in 2024 primarily as a result of higher pre-tax earnings with a relatively higher level of non-deductible stock-based compensation for executive officers.

For the three and nine months ended September 27, 2025, our income tax expense was $4.7 million and $10.1 million for an effective tax rate of 23.0% and 48.6%, respectively, which differed from the statutory rate of 21% primarily due to the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S.

federal research tax credits and excess tax benefits from stock-based compensation.

The effective tax rate for the three months ended September 27, 2025 is lower than the corresponding period in 2024 primarily due to lower return-to-provision adjustments and higher excess tax benefits from share-based compensation exercises, offset by a relatively higher level of non-deductible stock-based compensation for executive officers.

The effective tax rate for the nine months ended September 27, 2025 is higher than the corresponding period in 2024 primarily as a result of higher pre-tax earnings with a relatively higher level of non-deductible stock-based compensation for executive officers.

Our income taxes may be subject to fluctuation during the year and in future years as new information is obtained.

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We fund our operations and investing activities from cash flow generated from our operations as well as the issuance of common stock under our equity incentive plans.

As of June 28, 2025, we had cash, cash equivalents and marketable securities of $299.0 million, which consisted of deposits held at banks and major financial institutions and highly liquid marketable securities such as U.S.

As of September 27, 2025, we had cash, cash equivalents and marketable securities of $339.6 million, which consisted of deposits held at banks and major financial institutions and highly liquid marketable securities such as U.S.

government and its agency securities, corporate debt securities and commercial paper.

Operating Activities

Net cash provided by operating activities was $56.6 million for the six months ended June 28, 2025 and consisted of a net loss of $5.0 million offset by non-cash charges of $50.5 million and cash flow increases of $11.0 million reflected in the net change in assets and liabilities.

Non-cash charges primarily consisted of stock-based compensation of $45.4 million and depreciation and amortization of $8.6 million partially offset by deferred income taxes of $1.3 million and the net accretion of available-for-sale securities of $2.1 million.

Cash flow increases resulting from the net change in assets and liabilities primarily consisted of a decrease in accounts receivable of $16.2 million due to the linearity of shipments through the quarter and timing of customer payments, a decrease in prepaid expenses and other assets of $13.8 million mainly due to a reduction in our inventory deposits and an increase in accounts payable of $2.3 million due to the timing of inventory receipts.

This was partially offset by an increase in inventory of $7.8 million to support increased revenue, a decrease in accrued liabilities of $11.7 million relating to various factors including a decrease in incentive compensation related accruals and a decrease in deferred revenue of $1.7 million.

Net cash provided by operating activities was $37.0 million for the six months ended June 29, 2024 and consisted of a net loss of $7.9 million offset by non-cash charges of $34.3 million and cash flow increases of $10.6 million reflected in the net change in assets and liabilities.

Net cash provided by operating activities was $88.9 million for the nine months ended September 27, 2025 and consisted of net income of $10.7 million and non-cash charges of $85.1 million partially offset by cash flow decreases of $6.8 million reflected in the net change in assets and liabilities.

Non-cash charges primarily consisted of stock-based compensation of $66.0 million, depreciation and amortization of $13.3 million and deferred income taxes of $8.8 million partially offset by the net accretion of available-for-sale securities of $3.0 million.

Cash flow decreases resulting from the net change in assets and liabilities primarily consisted of an increase in accounts receivable of $8.1 million due to higher revenue, an increase in inventory of $5.3 million to support increased revenue, a

decrease in deferred revenue of $3.7 million and a decrease in accrued liabilities of $1.0 million relating to various factors including a decrease in incentive compensation related accruals.

This was partially offset by a decrease in prepaid expenses and other assets of $11.3 million mainly due to a reduction in our inventory deposits.

Net cash provided by operating activities was $53.0 million for the nine months ended September 28, 2024 and consisted of a net loss of $11.8 million offset by non-cash charges of $49.1 million and cash flow increases of $15.7 million reflected in the net change in assets and liabilities.

Non-cash charges primarily consisted of stock-based compensation of $48.7 million and depreciation and amortization of $14.8 million partially offset by deferred income taxes of $10.4 million and the net accretion of available-for-sale securities of $4.0 million.

Cash flow increases resulting from the net change in assets and liabilities primarily consisted of a decrease in accounts receivable of $44.0 million and inventory of $19.5 million, both in line with our revenue decline.

Cash flow increases resulting from the net change in assets and liabilities primarily consisted of a decrease in accounts receivable of $40.8 million and inventory of $32.4 million, both in line with our revenue decline, and a decrease in prepaid expenses and other assets of $7.7 million mainly due to a decrease in our inventory deposits.

These changes were partially offset by a decrease in accrued liabilities of $42.6 million relating to various factors including a decrease in our liability for components, a decrease in incentive compensation related accruals and the settlement of a legal matter;

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Investing Activity

For the six months ended June 28, 2025, cash provided by investing activities of $25.9 million consisted of net maturities and sales of marketable securities of $33.9 million partially offset by capital expenditures of $8.0 million, consisting primarily of purchases of test and computer equipment.

For the six months ended June 29, 2024, cash used in investing activities of $27.0 million consisted of net purchases of marketable securities of $17.4 million and capital expenditures of $9.7 million, consisting primarily of purchases of test and computer equipment.

For the nine months ended September 27, 2025, cash used in investing activities of $0.9 million consisted of capital expenditures of $13.7 million, consisting primarily of purchases of test equipment, partially offset by net maturities and sales of marketable securities of $12.8 million.

For the nine months ended September 28, 2024, cash used in investing activities of $75.9 million consisted of net purchases of marketable securities of $63.0 million and capital expenditures of $12.9 million, consisting primarily of purchases of test and computer equipment.

Financing Activities

Net cash used in financing activities of $49.3 million for the six months ended June 28, 2025 primarily consisted repurchases of our common stock of $73.5 million partially offset by proceeds from the issuance of common stock related to our equity plans of $24.2 million.

Net cash provided by financing activities of $11.1 million for the six months ended June 29, 2024 primarily consisted of proceeds from the issuance of common stock related to our equity plans of $14.8 million partially offset by repurchases of our common stock of $3.7 million.

Net cash used in financing activities of $36.2 million for the nine months ended September 27, 2025 primarily consisted repurchases of our common stock of $77.0 million partially offset by proceeds from the issuance of common stock related to our equity plans of $40.8 million.

Net cash provided by financing activities of $21.7 million for the nine months ended September 28, 2024 primarily consisted of proceeds from the issuance of common stock related to our equity plans of $25.4 million partially offset by repurchases of our common stock of $3.7 million.

Working Capital and Capital Expenditure Needs

Our material cash commitments include non-cancelable firm purchase commitments, normal recurring trade payables, compensation-related and expense accruals, operating leases and revenue-share obligations.

Our material cash commitments include non-cancelable firm purchase commitments, normal recurring trade payables, compensation-related and expense accruals and operating leases.

We believe that our outsourced approach to manufacturing provides us significant flexibility in both managing inventory levels and financing our inventory.

Furthermore, we have a common stock repurchase program, which had $129.4 million available as of June 28, 2025.

In April 2025, our Board of Directors authorized a $100.0 million increase to this program.

Furthermore, we have a common stock repurchase program, which had $125.9 million available as of September 27, 2025.

Our stock repurchase program does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.

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Contractual Obligations and Commitments

Our principal commitments as of June 28, 2025 consisted of contractual obligations under non-cancelable outstanding purchase obligations and operating lease obligations for office space.

The following table summarizes our contractual obligations as of June 28, 2025 (in thousands):

Our principal commitments as of September 27, 2025 consisted of contractual obligations under non-cancelable outstanding purchase obligations and operating lease obligations for office space.

The following table summarizes our contractual obligations as of September 27, 2025 (in thousands):

Payments Due by Period

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(1) Represents outstanding purchase commitments to be delivered by our third-party manufacturers or other vendors.

See Note 6, “ Commitments and Contingencies ” of the Notes to Condensed Consolidated Financial Statements included in Part I,

Item 1 of this Quarterly Report on Form 10-Q for further discussion regarding our outstanding purchase commitments related to our third-party manufacturers.

(2) Future minimum operating lease obligations in the table above primarily include payments for our office locations, which expire at various dates through 2033, including our new San Jose headquarters lease that will commence in August 2025.

See Note 6, “ Commitments and Contingencies ” of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion regarding our outstanding purchase commitments related to our third-party manufacturers.

(2) Future minimum operating lease obligations in the table above primarily include payments for our office locations, which expire at various dates through 2033.

See Note 6 “ Commitments and Contingencies ” of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion regarding our operating leases.

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