CALIX, INC 10-Q

ITEM 1. Financial Statements CALIX, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) September 27, 2025 December 31, 2024 (Unaudited) (See Note 1) ASSETS Current assets: Cash and cash equivalents $ 95,012 $ 43,162 Marketable securities 244,611 253,929 Accounts receivable, net 87,465 79,321 Inventory 107,981 102,727 Prepaid expenses and other current assets 80,448 105,596 Total current assets 615,517 584,735 Property and equipment, net 32,722 31,153 Right-of-use operating leases 10,822 6,216 Deferred tax assets 168,712 177,601 Goodwill 116,175 116,175 Other assets 32,421 23,387 $ 976,369 $ 939,267 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 20,138 $ 20,226 Accrued liabilities 78,511 84,167 Deferred revenue 23,992 26,750 Total current liabilities 122,641 131,143 Long-term portion of deferred revenue 19,939 20,883 Operating leases 9,271 3,720 Other long-term liabilities 2,012 2,581 Total liabilities 153,863 158,327 Commitments and contingencies (See Note 6) Stockholders’ equity: Preferred stock, $ 0.025 par value; 5,000 shares authorized; no shares issued and outstanding as of September 27, 2025 and December 31, 2024 — — Common stock, $ 0.025 par value; 100,000 shares authorized; 66,250 shares issued and outstanding as of September 27, 2025, and 66,434 shares issued and outstanding as of December 31, 2024 1,657 1,661 Additional paid-in capital 1,200,506 1,170,017 Accumulated other comprehensive loss ( 203 ) ( 612 ) Accumulated deficit ( 379,454 ) ( 390,126 ) Total stockholders’ equity 822,506 780,940 $ 976,369 $ 939,267 See accompanying notes to condensed consolidated financial statements. 4 Table of Contents CALIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Revenue $ 265,437 $ 200,945 $ 727,561 $ 625,394 Cost of revenue 113,427 90,898 316,548 285,167 Gross profit 152,010 110,047 411,013 340,227 Operating expenses: Sales and marketing 60,257 52,301 181,969 158,436 Research and development 47,055 45,467 136,822 134,012 General and administrative 27,293 23,175 80,507 72,063 Total operating expenses 134,605 120,943 399,298 364,511 Operating income (loss) 17,405 ( 10,896 ) 11,715 ( 24,284 ) Interest income and other expense, net: Interest income, net 3,264 3,282 9,510 8,877 Other expense, net ( 335 ) ( 178 ) ( 454 ) ( 599 ) Total interest income and other expense, net 2,929 3,104 9,056 8,278 Income (loss) before income taxes 20,334 ( 7,792 ) 20,771 ( 16,006 ) Income taxes (benefit) 4,676 ( 3,824 ) 10,099 ( 4,183 ) Net income (loss) $ 15,658 $ ( 3,968 ) $ 10,672 $ ( 11,823 ) Net income (loss) per common share: Basic $ 0.24 $ ( 0.06 ) $ 0.16 $ ( 0.18 ) Diluted $ 0.22 $ ( 0.06 ) $ 0.15 $ ( 0.18 ) Weighted-average number of shares used to compute net income (loss) per common share: Basic 65,753 66,078 65,771 65,700 Diluted 69,789 66,078 68,973 65,700 Net income (loss) $ 15,658 $ ( 3,968 ) $ 10,672 $ ( 11,823 ) Other comprehensive income (loss), net of tax: Unrealized gain on available-for-sale marketable securities, net 134 1,190 347 983 Foreign currency translation adjustments, net ( 222 ) 273 62 166 Total other comprehensive income (loss), net of tax ( 88 ) 1,463 409 1,149 Comprehensive income (loss) $ 15,570 $ ( 2,505 ) $ 11,081 $ ( 10,674 ) See accompanying notes to condensed consolidated financial statements. 5 Table of Contents CALIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of June 28, 2025 65,294 $ 1,633 $ 1,166,266 $ ( 115 ) $ ( 395,112 ) $ 772,672 Stock-based compensation — — 20,802 — — 20,802 Issuance of common stock under equity incentive plans, net of forfeitures 1,015 25 16,600 — — 16,625 Repurchases of common stock ( 59 ) ( 1 ) ( 3,162 ) — — ( 3,163 ) Net income — — — — 15,658 15,658 Other comprehensive loss — — — ( 88 ) — ( 88 ) Balance as of September 27, 2025 66,250 $ 1,657 $ 1,200,506 $ ( 203 ) $ ( 379,454 ) $ 822,506 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of June 29, 2024 65,800 $ 1,645 $ 1,121,786 $ ( 973 ) $ ( 368,234 ) $ 754,224 Stock-based compensation — — 16,371 — — 16,371 Issuance of common stock under equity incentive plans, net of forfeitures 518 13 10,585 — — 10,598 Net loss — — — — ( 3,968 ) ( 3,968 ) Other comprehensive income — — — 1,463 — 1,463 Balance as of September 28, 2024 66,318 $ 1,658 $ 1,148,742 $ 490 $ ( 372,202 ) $ 778,688 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2024 66,434 $ 1,661 $ 1,170,017 $ ( 612 ) $ ( 390,126 ) $ 780,940 Stock-based compensation — — 66,672 — — 66,672 Issuance of common stock under equity incentive plans, net of forfeitures 2,041 52 40,771 — — 40,823 Repurchases of common stock ( 2,225 ) ( 56 ) ( 76,954 ) — — ( 77,010 ) Net income — — — — 10,672 10,672 Other comprehensive income — — — 409 — 409 Balance as of September 27, 2025 66,250 $ 1,657 $ 1,200,506 $ ( 203 ) $ ( 379,454 ) $ 822,506 Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2023 65,052 $ 1,627 $ 1,078,393 $ ( 659 ) $ ( 360,379 ) $ 718,982 Stock-based compensation — — 48,686 — — 48,686 Issuance of common stock under equity incentive plans, net of forfeitures 1,380 34 25,398 — — 25,432 Repurchases of common stock ( 114 ) ( 3 ) ( 3,735 ) — — ( 3,738 ) Net loss — — — — ( 11,823 ) ( 11,823 ) Other comprehensive income — — — 1,149 — 1,149 Balance as of September 28, 2024 66,318 $ 1,658 $ 1,148,742 $ 490 $ ( 372,202 ) $ 778,688 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents CALIX, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Nine Months Ended September 27, 2025 September 28, 2024 Operating activities: Net income (loss) $ 10,672 $ ( 11,823 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Stock-based compensation 65,976 48,686 Depreciation and amortization 13,310 14,805 Deferred income taxes 8,778 ( 10,420 ) Net accretion of available-for-sale securities ( 3,001 ) ( 3,958 ) Changes in operating assets and liabilities: Accounts receivable, net ( 8,144 ) 40,755 Inventory ( 5,255 ) 32,376 Prepaid expenses and other assets 11,297 7,659 Accounts payable ( 71 ) ( 11,809 ) Accrued liabilities ( 5,936 ) ( 39,768 ) Deferred revenue ( 3,702 ) ( 10,636 ) Other long-term liabilities 4,983 ( 2,830 ) Net cash provided by operating activities 88,907 53,037 Investing activities Purchases of property and equipment ( 13,670 ) ( 12,905 ) Purchases of marketable securities ( 166,936 ) ( 228,456 ) Sales of marketable securities 11,362 49,905 Maturities of marketable securities 168,350 115,529 Net cash used in investing activities ( 894 ) ( 75,927 ) Financing activities: Proceeds from common stock issuances related to employee benefit plans 40,821 25,433 Repurchases of common stock ( 77,010 ) ( 3,738 ) Net cash provided by (used in) financing activities ( 36,189 ) 21,695 Effect of exchange rate changes on cash and cash equivalents 26 147 Net increase (decrease) in cash and cash equivalents 51,850 ( 1,048 ) Cash and cash equivalents at beginning of period 43,162 63,409 Cash and cash equivalents at end of period $ 95,012 $ 62,361 See accompanying notes to condensed consolidated financial statements. 7 Table of Contents CALIX, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Company and Basis of Presentation Company Calix, Inc. (together with its subsidiaries, “Calix” or the “Company”) was incorporated in August 1999 and is a Delaware corporation. The Company develops, markets and sells an appliance-based platform, cloud and managed services that focus on the subscriber-facing network, the portion of the network that governs available bandwidth and determines the range and quality of services that can be offered to subscribers. These platform, cloud and managed services enable broadband experience providers (“BXPs”) of all sizes to innovate and transform their businesses. The Company’s BXP customers are empowered to utilize real-time data and insights from the Calix platform to simplify their businesses and deliver experiences that excite their subscribers. These insights enable BXPs to grow their businesses through increased subscriber acquisition, loyalty and revenue, thereby increasing the value of their businesses and contributions to their communities. Basis of Presentation The accompanying unaudited condensed consolidated financial statements, including the accounts of Calix, Inc. and its wholly-owned subsidiaries, have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. generally accepted accounting principles (“GAAP”) can be condensed or omitted. In the opinion of management, the financial statements include all normal and recurring adjustments that are considered necessary for the fair presentation of the Company’s financial position and operating results. All intercompany balances and transactions have been eliminated in consolidation. The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the audited financial statements at that date. The results of the Company’s operations can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year or any future periods. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The Company’s fiscal year begins on January 1 st and ends on December 31 st . Quarterly periods are based on a 4-4-5 calendar with the first quarter ending on the Saturday closest to March 31 st . As a result, the Company had one less day in the nine months ended September 27, 2025 than for the nine months ended September 28, 2024. The preparation of financial statements in conformity with GAAP for interim financial reporting requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. 2. Significant Accounting Policies The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024. The Company’s significant accounting policies did not change during the nine months ended September 27, 2025. Newly Adopted Accounting Standard The Company did not adopt any new accounting standards during the nine months ended September 27, 2025 that were significant to the Company. Recent Accounting Pronouncements Not Yet Adopted 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, that are significant or expected to be significant to the Company. 8 Table of Contents 3. Cash, Cash Equivalents and Marketable Securities The Company has invested its excess cash primarily in money market funds and highly liquid marketable securities such as U.S. treasury securities, corporate debt instruments, commercial paper and U.S. government securities. The Company considers all investments with maturities of three months or less when purchased to be cash equivalents. Marketable securities represent highly liquid U.S. treasury securities, corporate debt instruments, commercial paper and U.S. government securities with maturities greater than 90 days at date of purchase. Cash equivalents are stated at amounts that approximate fair value based on quoted market prices. Marketable securities are recorded at their fair values. Marketable securities with maturities greater than one year are classified as current because management considers all marketable securities to be available for current operations. The Company’s investments have been classified and accounted for as available-for-sale. Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of accumulated other comprehensive loss in stockholders’ equity until realized. Realized gains and losses on sales of marketable securities, if any, are determined on the specific identification method and are reclassified from accumulated other comprehensive loss to results of operations as other expense, net. Realized gains and losses were not significant for the three and nine months ended September 27, 2025 and September 28, 2024. Cash, cash equivalents and marketable securities consisted of the following (in thousands): September 27, 2025 December 31, 2024 Cash and cash equivalents: Cash $ 33,861 $ 20,664 Commercial paper 47,526 10,058 Money market funds 12,378 4,890 U.S. government securities 1,247 7,550 Total cash and cash equivalents 95,012 43,162 Marketable securities: Corporate debt securities 145,350 123,701 U.S. government securities 56,554 66,582 Commercial paper 21,180 22,715 U.S. government agency securities 14,502 24,411 Certificates of deposit 7,025 16,520 Total marketable securities 244,611 253,929 $ 339,623 $ 297,091 The carrying amounts of the Company’s money market funds approximate their fair values due to their nature, duration and short maturities. The amortized cost and fair value of marketable securities were as follows (in thousands): As of September 27, 2025 Amortized Cost Unrealized Gains (Losses), net Fair Value Corporate debt securities $ 144,834 $ 516 $ 145,350 Commercial paper 68,721 ( 15 ) 68,706 U.S. government securities 57,620 181 57,801 U.S. government agency securities 14,481 21 14,502 Certificates of deposit 7,020 5 7,025 $ 292,676 $ 708 $ 293,384 As of December 31, 2024 Amortized Cost Unrealized Gains, net Fair Value Corporate debt securities $ 123,519 $ 182 $ 123,701 U.S. government securities 74,118 14 74,132 Commercial paper 32,766 7 32,773 U.S. government agency securities 24,380 31 24,411 Certificates of deposit 16,505 15 16,520 $ 271,288 $ 249 $ 271,537 9 Table of Contents 4. Fair Value Measurements The Company measures its cash equivalents and marketable securities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company utilizes the following three-tier value hierarchy, which prioritizes the inputs used in measuring fair value: Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – Observable inputs other than quoted prices included in Level 1 for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-driven valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 – Unobservable inputs to the valuation derived from fair valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The fair value hierarchy also requires the Company to maximize the use of observable inputs, when available, and to minimize the use of unobservable inputs when determining inputs and determining fair value. The following tables sets forth the Company’s financial assets measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands): As of September 27, 2025 Level 1 Level 2 Total Money market funds $ 12,378 $ — $ 12,378 U.S. government securities 57,801 — 57,801 Corporate debt securities — 145,350 145,350 Commercial paper — 68,706 68,706 U.S. government agency securities — 14,502 14,502 Certificates of deposit — 7,025 7,025 $ 70,179 $ 235,583 $ 305,762 As of December 31, 2024 Level 1 Level 2 Total Money market funds $ 4,890 $ — $ 4,890 U.S. government securities 74,132 — 74,132 Corporate debt securities — 123,701 123,701 Commercial paper — 32,773 32,773 U.S. government agency securities — 24,411 24,411 Certificates of deposit — 16,520 16,520 $ 79,022 $ 197,405 $ 276,427 5. Balance Sheet Details Accounts receivable, net consisted of the following (in thousands): September 27, 2025 December 31, 2024 Accounts receivable $ 87,784 $ 79,632 Allowance for doubtful accounts ( 319 ) ( 311 ) $ 87,465 $ 79,321 Inventory consisted of the following (in thousands): September 27, 2025 December 31, 2024 Components $ 2,511 $ 21,735 Finished goods 105,470 80,992 $ 107,981 $ 102,727 10 Table of Contents Prepaid expenses and other current assets consisted of the following (in thousands): September 27, 2025 December 31, 2024 Supplier deposits $ 24,342 $ 62,620 Prepaid expenses and other current assets 56,106 42,976 $ 80,448 $ 105,596 Property and equipment, net consisted of the following (in thousands): September 27, 2025 December 31, 2024 Test equipment $ 64,080 $ 57,595 Computer equipment 13,096 14,561 Software 11,069 11,146 Leasehold improvements 2,691 2,173 Furniture and fixtures 2,106 1,268 Total 93,042 86,743 Accumulated depreciation and amortization ( 60,320 ) ( 55,590 ) $ 32,722 $ 31,153 Accrued liabilities consisted of the following (in thousands): September 27, 2025 December 31, 2024 Compensation and related benefits $ 30,410 $ 36,004 Component inventory held by suppliers 9,351 8,855 Taxes payable 8,750 5,048 Professional and consulting fees 5,625 5,385 Current portion of warranty 3,368 5,288 Travel and event expenses 3,270 518 Customer advances or rebates 3,090 4,882 Operating leases 2,046 4,303 Insurance 1,783 2,019 Operations 1,263 1,735 Product returns 1,202 2,428 Freight 924 1,640 Other 7,429 6,062 $ 78,511 $ 84,167 Changes in the Company’s accrued warranty liability were as follows (in thousands): Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Balance at beginning of period $ 4,893 $ 7,371 $ 7,287 $ 8,029 Accruals for product warranty 998 1,057 ( 205 ) 1,789 Cost of warranty claims ( 990 ) ( 876 ) ( 2,181 ) ( 2,266 ) Balance at end of period $ 4,901 $ 7,552 $ 4,901 $ 7,552 11 Table of Contents 6. Commitments and Contingencies Lease Commitments The Company leases office space under non-cancelable operating leases. Certain of the Company’s operating leases contain renewal options and rent acceleration clauses. Future minimum payments under the non-cancelable operating leases consisted of the following as of September 27, 2025 (in thousands): Period Future Minimum Lease Payments Remainder of 2025 $ 445 2026 2,781 2027 2,457 2028 1,939 2029 1,606 Thereafter 4,150 Total future minimum lease payments 13,378 Less imputed interest ( 2,061 ) $ 11,317 As of September 27, 2025, the operating lease liability consisted of the following (in thousands): Accrued liabilities - current portion of operating leases $ 2,046 Operating leases 9,271 $ 11,317 In December 2024, the Company entered into a new headquarters office lease agreement for 23,000 square feet in San Jose, California. The lease commenced in August 2025 for a term of 90 months. The future minimum lease payments of $ 8.9 million are included in the table above. The Company recorded a right-of-use operating lease asset and operating lease liability of $ 7.0 million in the third quarter of 2025. The Company’s previous lease in San Jose, California expires in October 2025. The weighted average discount rate for the Company’s operating leases as of September 27, 2025 was 5.1 %. The weighted average remaining lease term as of September 27, 2025 was 5.9 years. For the three and nine months ended September 27, 2025, rent expense was $ 1.3 million and $ 3.5 million, respectively. For the three and nine months ended September 28, 2024, rent expense was $ 1.2 million and $ 3.5 million, respectively. Cash paid within operating cash flows for operating leases was $ 3.5 million and $ 3.4 million for the nine months ended September 27, 2025 and September 28, 2024, respectively. Purchase Commitments The Company’s contract manufacturers (“CMs”) and original design manufacturers (“ODMs”) place orders for component inventory based upon the Company’s build forecasts and pursuant to stated component lead times to ensure adequate component supply. The components are used by the CMs and ODMs to build the products included in the build forecasts. The Company generally does not take ownership of the components held by CMs and ODMs. The Company places purchase orders with its CMs and ODMs in order to fulfill its monthly finished product inventory requirements. The Company incurs a liability when the CMs and ODMs convert the component inventory to a finished product and takes ownership of the finished goods inventory. The Company has from time to time, and subject to certain conditions, reimbursed certain suppliers for component inventory purchases when this inventory has been rendered excess or obsolete, for example due to manufacturing and engineering change orders resulting from design changes, manufacturing discontinuation of products by its suppliers, or in cases where the Company has committed inventory levels that exceed projected demand. In the event of termination of services with a manufacturing partner, the Company has purchased, and may be required to purchase in the future, certain of the remaining components inventory held by the CM or ODM as well as any outstanding orders pursuant to the contractual provisions with such CM or ODM. The estimated excess and obsolete component liabilities related to manufacturing and engineering change orders, termination of manufacturing partners and other factors are recorded against Supplier Deposits in “Prepaid expenses and other current assets” or included in “Accrued liabilities” in the accompanying Condensed Consolidated Balance Sheets, because the corresponding component parts have not been received or paid for by the Company. The Company records the related charges in “Cost of revenue” in its Condensed Consolidated Statements of Comprehensive Income (Loss). 12 Table of Contents As of September 27, 2025 and December 31, 2024, the Company had approximately $ 192.4 million and $ 138.8 million, respectively, of outstanding purchase commitments for inventories to be delivered by its suppliers, including CMs and ODMs. Litigation From time to time, the Company is involved in various legal proceedings arising from the normal course of business activities. The Company is not currently a party to any legal proceeding that, if determined adversely to the Company, in management’s opinion, is currently expected to individually or in the aggregate have a material adverse effect on the Company’s business, operating results or financial condition taken as a whole. 7. Stockholders’ Equity 2019 Equity Incentive Award Plan Employees and consultants of the Company, its subsidiaries and affiliates, as well as members of the Company’s Board of Directors, are eligible to receive awards under the Fourth Amended and Restated 2019 Equity Incentive Award Plan (the “2019 Plan”). The 2019 Plan provides for the grant of stock options, including incentive stock options and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, other stock or cash-based awards and dividend equivalents to eligible individuals. At the Company’s 2025 annual meeting of stockholders, the stockholders approved an increase in the number of shares of common stock issuable under the 2019 Plan by 4.0 million shares. As of September 27, 2025, there were 3.8 million shares available for issuance under the 2019 Plan. In February 2025, stock option awards exercisable for up to an aggregate of 3.1 million shares of common stock were granted to certain members of the Company’s leadership team with a grant date exercise price of $ 39.68 per share. The actual number of shares earned is contingent upon achievement of annual corporate financial targets for bookings and non-GAAP net operating income for 2025 (collectively, the “2025 Performance Targets”) during the one-year performance period. The stock option awards will vest, subject to certification by the Compensation Committee of the Company’s Board of Directors upon the achievement of the 2025 Performance Targets, as to 25 % of the shares of common stock earned on the one year anniversary of the date of grant, and as to the remaining 75 % of the shares of common stock earned, in substantially equal quarterly installments over the subsequent 36 months, subject to the executive’s continuous service with the Company through the respective vesting dates. If the combined non-GAAP net operating income target and the bookings target are achieved below 50 % of target, 50 % of the shares would be awarded, and the balance would be forfeited. If the combined target is achieved at the minimum threshold of 50 % of target, then 75 % of the shares would be awarded, with an increasing percentage of shares awarded above the minimum thresholds up to 100 % of the granted shares for each target. Each target result is then weighted by 50 % and the combined total determines the percent of target shares. The maximum combined award is 100 %. The probability of meeting the performance conditions was assessed to be probable as of September 27, 2025, and stock-based compensation expense of $ 6.6 million was recognized for the three months ended September 27, 2025. For the nine months ended September 27, 2025, stock-based compensation expense of $ 17.4 million was recognized. During the three months ended September 27, 2025, stock option awards exercisable for up to an aggregate of 0.4 million shares of common stock were granted with a grant date weighted-average exercise price of $ 56.67 per share. During the nine months ended September 27, 2025, stock option awards exercisable for up to an aggregate of 1.0 million shares of common stock were granted with a grant date weighted-average exercise price of $ 47.39 per share. These stock option awards generally vest 25 % on the first anniversary of the vesting commencement date and on a quarterly basis thereafter over an additional three years . During the three months ended September 27, 2025, 0.7 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 11.09 per share. During the nine months ended September 27, 2025, 1.1 million shares of common stock were issued pursuant to the exercise of stock options at a weighted-average exercise price of $ 15.85 per share. As of September 27, 2025, unrecognized stock-based compensation expense of $ 89.0 million related to stock options, net of estimated forfeitures, is expected to be recognized over a weighted-average period of 2.3 years. During the nine months ended September 27, 2025, 38,000 restricted stock awards, with a one-year vesting period, were granted to the Company’s Board of Directors with a grant date fair value of $ 42.65 per share. As of September 27, 2025, unrecognized stock-based compensation expense of $ 1.0 million related to restricted stock awards is expected to be recognized over a weighted-average period of 0.6 years. Employee Stock Purchase Plans The Company maintains two plans under which employees can purchase Company common stock - the Amended and Restated Employee Stock Purchase Plan (the “ESPP”) and the non-executive Stock Purchase and Matching Plan (“SPMP”). In March 2025, the Company’s Board of Directors approved amending and restating the Third Amended and Restated 2017 Nonqualified 13 Table of Contents Employee Stock Purchase Plan (the “NQ ESPP”) as the SPMP, which better describes the nature of the plan whereby when a non-executive employee buys a share, the Company matches it. The Company’s Board of Directors approval included reserving 2.9 million shares of Company common stock under each of the purchase component and the matching component of the SPMP, including 1.25 million shares for the matching component subject to stockholder approval, with a corresponding decrease in shares authorized in the ESPP of 2.5 million shares. At the Company’s 2025 annual meeting of stockholders, the stockholders approved an increase to the authorized shares to the SPMP of 1.25 million shares of Common Stock under the matching component, resulting in a corresponding decrease in the shares authorized for issuance under the ESPP of 2.5 million shares. Shares will be issued from the SPMP starting with the August 8, 2025 purchase period. The ESPP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 15 % of their eligible compensation subject to certain Internal Revenue Code limitations. The offering periods under the ESPP are two six-month offering periods from August 15 th through February 14 th and February 15 th through August 14 th of each year. The price of common stock purchased under the ESPP is 85 % of the lower of the fair market value of the common stock on the commencement date and the end date of each six-month offering period. As of September 27, 2025, there were 1.5 million shares available for issuance under the ESPP. During the nine months ended September 27, 2025, 0.3 million shares were purchased under the ESPP. As of September 27, 2025, unrecognized stock-based compensation expense of $ 1.2 million related to the ESPP is expected to be recognized over a remaining service period of 0.4 years. The SPMP allows eligible employees to purchase shares of the Company’s common stock through payroll deductions of up to 25 % of their eligible compensation. Eligible employees have the right to (a) purchase the maximum number of whole shares of common stock that can be purchased with the elected payroll deductions during each offering period for which the employee is enrolled at a purchase price equal to the closing price of the Company’s common stock on the last day of such offering period and (b) receive an equal number of shares of the Company’s common stock that are subject to a risk of forfeiture in the event the employee terminates employment within the one year period immediately following the purchase date. The SPMP provides quarterly offering periods from February 8 th through May 7 th , May 8 th through August 7 th , August 8 th through November 7 th and November 8 th through February 7 th of each year, with a maximum of 0.35 million shares allocated per purchase period for the combination of the purchase and matching components. As of September 27, 2025, there were 2.9 million shares and 2.8 million shares available for issuance under the SPMP purchase and matching components, respectively. During the nine months ended September 27, 2025, 0.7 million shares were purchased and issued. As of September 27, 2025, unrecognized stock-based compensation expense of $ 12.9 million related to the NQ ESPP is expected to be recognized over a remaining weighted-average service period of 0.8 years. Stock-Based Compensation The following table summarizes stock-based compensation expense (in thousands): Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Cost of revenue $ 753 $ 770 $ 2,297 $ 2,113 Sales and marketing 6,158 4,630 23,674 13,672 Research and development 5,965 4,783 16,935 13,695 General and administrative 7,742 6,188 23,069 19,206 $ 20,618 $ 16,371 $ 65,975 $ 48,686 Income tax benefit recognized $ 1,584 $ 2,688 $ 7,071 $ 8,114 14 Table of Contents Stock Repurchase Program The Company maintains a common stock repurchase program. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of the purchases depends on prevailing stock prices, general economic and market conditions and other considerations consistent with the Company’s capital allocation strategy. The repurchase program does not obligate the Company to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. In April 2025, the Company’s Board of Directors authorized a $ 100.0 million increase to this program. During the three months ended September 27, 2025, the Company purchased 0.1 million shares of common stock for an aggregate purchase price of $ 3.5 million at an average price per share of $ 59.20 . During the nine months ended September 27, 2025, the Company purchased 2.2 million shares of common stock for an aggregate purchase price of $ 77.0 million at an average price per share of $ 34.61 . As of September 27, 2025, the remaining authorized balance under this program was $ 125.9 million. 8. Revenue from Contracts with Customers Contract Asset Contract assets include amounts recognized as revenue prior to the Company’s contractual right to bill the customer. Amounts are billed in accordance with the agreed-upon contractual terms. Contract assets were $ 4.5 million as of September 27, 2025 as compared to $ 2.8 million as of December 31, 2024, and are included in prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. The Company expects to bill 23 % of the September 27, 2025 balance during 2025. Contract Liability Deferred revenue was $ 43.9 million, $ 45.9 million and $ 47.6 million as of September 27, 2025, June 28, 2025 and December 31, 2024, respectively. The decrease in the deferred revenue balance for the three and nine months ended September 27, 2025 was driven by $ 10.9 million and $ 20.2 million of revenue recognized that was included in the deferred revenue balance at the beginning of each respective period, partially offset by cash payments received or due in advance of satisfying the Company’s performance obligations. Remaining performance obligations (“RPOs”) represent contractual commitments that have not yet been fulfilled, which include deferred revenue and amounts that will be invoiced and recognized as revenue in future periods but exclude variable consideration where the monthly invoicing is based on usage or where actual usage exceeds the minimum commitment. RPOs were $ 354.6 million as of September 27, 2025, and the Company expects to recognize as revenue 40 % of this amount over the next 12 months and nearly all of the remainder over the two years thereafter. Contract Costs The Company capitalizes certain sales commissions related primarily to multi-year subscriptions and extended warranty support for which the expected amortization period is greater than one year. As of September 27, 2025 and December 31, 2024, the unamortized balance of deferred commissions was $ 17.8 million and $ 17.9 million, respectively, and were included in prepaid expenses and other current assets, and other long-term assets on the Condensed Consolidated Balance Sheets. For the three and nine months ended September 27, 2025 the amount of amortization was $ 2.9 million and $ 8.2 million, respectively, compared to $ 2.3 million and $ 6.4 million for the three and nine months ended September 28, 2024, respectively. There was no impairment loss in relation to the costs capitalized for these periods. Concentration of Customer Risk No customer accounted for more than 10% of the Company’s revenue for the three and nine months ended September 27, 2025 and September 28, 2024. No customer represented 10% of the Company’s total receivables as of September 27, 2025 and one customer represented 21 % of the Company’s total receivables as of December 31, 2024. 9. Segment Information The Company develops, markets and sells an appliance-based broadband platform, cloud and managed services. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the Company unit level. Accordingly, the Company is a single reporting segment and operating unit structure. The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer, who reviews financial information 15 Table of Contents presented on a Company-wide basis, for purposes of allocating resources and evaluating financial performance. The CODM assesses the performance of the single segment and allocates resources based on revenue and measures derived from gross margin and operating loss that is reported in the Condensed Consolidated Statements of Comprehensive Income (Loss). In addition, the CODM uses a measure derived from operating expenses in the Condensed Consolidated Statements of Comprehensive Income (Loss) to monitor budget versus actual results to determine the Company’s and management’s performance. The Company does not have intra-entity sales or transfers. The measure of the single segment assets is the consolidated assets in the Condensed Consolidated Balance Sheet. The accounting policies of the single segment are the same as described in the significant accounting policies. Geographic Information: A summary of revenue disaggregated by geographic region based upon the location of the customers was as follows (in thousands): Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 United States $ 249,213 $ 187,080 $ 679,432 $ 579,873 Europe 7,247 5,588 25,341 19,161 Americas ex U.S. 6,964 6,573 18,313 20,760 Rest of world 2,013 1,704 4,475 5,600 $ 265,437 $ 200,945 $ 727,561 $ 625,394 The Company’s property and equipment, net of accumulated depreciation, were located in the following geographical areas (in thousands): September 27, 2025 December 31, 2024 United States $ 29,292 $ 27,601 China 2,575 2,818 India 855 734 $ 32,722 $ 31,153 Selected Financial Information: The following table presents selected financial information with respect to the Company’s single operating segment (in thousands): Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Revenue $ 265,437 $ 200,945 $ 727,561 $ 625,394 Adjusted cost of revenue (1) ( 112,293 ) ( 89,524 ) ( 313,343 ) ( 280,538 ) Adjusted sales and marketing operating expenses (2) ( 54,099 ) ( 47,671 ) ( 158,295 ) ( 144,764 ) Adjusted research and development operating expenses (3) ( 41,090 ) ( 40,684 ) ( 119,887 ) ( 120,317 ) Adjusted general and administrative operating expenses (4) ( 19,551 ) ( 16,987 ) ( 57,438 ) ( 52,857 ) Other segment items (5) ( 20,999 ) ( 16,975 ) ( 66,883 ) ( 51,202 ) Interest income and other expenses, net 2,929 3,104 9,056 8,278 Income taxes ( 4,676 ) 3,824 ( 10,099 ) 4,183 Net income (loss) $ 15,658 $ ( 3,968 ) $ 10,672 $ ( 11,823 ) (1) GAAP cost of revenue adjusted for stock-based compensation and intangible asset amortization. (2) GAAP sales and marketing operating expenses adjusted for stock-based compensation. (3) GAAP research and development operating expenses adjusted for stock-based compensation. (4) GAAP general and administrative operating expenses adjusted for stock-based compensation. (5) Other segment items consisted of stock-based compensation expense and intangible asset amortization. 16 Table of Contents 10. Income Taxes The following table presents income taxes and the effective tax rates for the periods indicated (in thousands, except percentages): Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Income (loss) before income taxes $ 20,334 $ ( 7,792 ) $ 20,771 $ ( 16,006 ) Income taxes (benefit) $ 4,676 $ ( 3,824 ) $ 10,099 $ ( 4,183 ) Effective tax rate 23.0 % 49.1 % 48.6 % 26.1 % The Company’s income taxes for the three and nine months ended September 27, 2025 and September 28, 2024 were determined using an estimated effective tax rate adjusted for discrete items that occurred during respective periods. The Company’s effective tax rate for the three and nine months ended September 27, 2025 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, 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 Company’s effective tax rate for the three and nine months ended September 28, 2024 differed from the statutory federal corporate tax rate of 21% primarily due to state taxes, 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 Company maintained a valuation allowance of $ 30.6 million for the three and nine months ended September 27, 2025, compared to $ 29.3 million for the three and nine months ended September 28, 2024, on certain state deferred tax assets that the Company believes are not more likely than not to be realized in future periods. The Company considered scheduled reversals of deferred tax liabilities, historic profitability, projected future taxable income, ongoing tax planning strategies and other matters, including the period over which its deferred tax assets will be recoverable, in assessing the need for and the amount of the valuation allowance. In the event that actual results differ from these estimates, or if the Company decides to adjust these estimates in the future periods, further adjustments to its valuation allowance may be recorded, which could materially impact the Company’s financial position and net income in the period of the adjustment. In December 2021, the Organization for Economic Cooperation and Development enacted model rules for a new global minimum tax framework (“Pillar Two”), and certain governments in countries in which the Company operates have enacted local Pillar Two legislation, with an effective date from January 1, 2024. The Company currently does not expect Pillar Two to have a material impact on its financial statements. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act ("OB3"), which includes a broad range of tax reform provisions affecting businesses. The OB3 includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. Additionally, the OB3 permanently eliminates the requirement to capitalize and amortize U.S.-based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. The Company has accounted for the effects of the OB3 in the interim financial statements for the period ended September 27, 2025, of which the primary impact is a reduction of current tax liabilities and a corresponding reduction in deferred tax assets. The Company will continue to evaluate the impacts of OB3 including the potential impacts on future periods and tax planning strategies. 17 Table of Contents 11. Net Income (Loss) Per Common Share The following table sets forth the computation of basic and diluted net income (loss) per common share for the periods indicated (in thousands, except per share data): Three Months Ended Nine Months Ended September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Numerator: Net income (loss) $ 15,658 $ ( 3,968 ) $ 10,672 $ ( 11,823 ) Denominator: Weighted-average common shares outstanding used to compute basic net income (loss) per share 65,753 66,078 65,771 65,700 Effect of dilutive common stock equivalents 4,036 — 3,202 — Weighted-average common shares outstanding used to compute diluted net income (loss) per share 69,789 66,078 68,973 65,700 Net income (loss) per common share: Basic net income (loss) per common share $ 0.24 $ ( 0.06 ) $ 0.16 $ ( 0.18 ) Diluted net income (loss) per common share $ 0.22 $ ( 0.06 ) $ 0.15 $ ( 0.18 ) Potentially dilutive shares excluded, weighted average 3,874 12,294 7,028 12,004 Potentially dilutive shares have been excluded from the computation of diluted net income (loss) per common share when their effect is antidilutive. These antidilutive shares were primarily from stock options. 18 Table of Contents