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Item 1A. Risk Factors

2026-04-22 compared with 2025-10-30 · 154 added, 114 removed, 489 unchanged (35% of the section changed)

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Business and Operational Risks

• If we do not successfully increase our sales through adoption of our platform, cloud and managed service offerings, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

• If we do not successfully execute our business strategy to increase our sales to new and existing CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

• We face risks associated with being materially dependent upon third-party vendors;

certain factors such as component shortages that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations.

• If we fail to properly develop, invest in, and manage AI Technologies used in our products and services, our business, financial condition, and results of operations could be materially adversely affected.

• The imposition of new duties, tariffs, trade barriers and retaliatory countermeasures implemented by the U.S.

and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations.

• If we do not successfully execute our business strategy to increase our sales to new and existing BXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

• We face risks associated with being materially dependent upon third-party vendors;

certain factors that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations.

• Cyberattacks or other security incidents that disrupt our or our third-party providers’ operations or compromise data, may expose us to liability, harm our reputation or otherwise adversely affect our business.

• Changing market and customer requirements may adversely affect the valuation of our inventory as well as our supplier purchase commitments.

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Macroeconomic and Industry Risks

• Our business depends upon the capital spending patterns and decisions of BXPs, and any decrease or delay in capital spending by BXPs due to the timing and availability of capital and other causes would reduce our revenue and harm our business.

• Our business depends upon the capital spending patterns and decisions of CXPs, and any decrease or delay in capital spending by CXPs due to the timing and availability of capital and other causes would reduce our revenue and harm our business.

• Government-sponsored programs and U.S.

federal government shutdowns could impact the timing and buying patterns of BXPs, which may cause fluctuations in our operating results.

federal government shutdowns could impact the timing and buying patterns of CXPs, which may cause fluctuations in our operating results.

• Adverse global economic, market and industry conditions, geopolitical issues and other conditions that impact our increasingly global operations could have a negative effect on our business, results of operations and financial condition and liquidity.

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• Historically, our customer base has been concentrated, and the loss of any of our key customers may adversely impact our revenue and results of operations, and any delays in payment by a key customer could negatively impact our cash flows and working capital.

• Our industry is characterized by rapid technological advancements, and if we fail to develop new products or enhancements that meet changing BXP requirements, we could experience lower sales.

• Our industry is characterized by rapid technological advancements, and if we fail to develop new products or enhancements that meet changing CXP requirements, we could experience lower sales.

• Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.

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Government and Regulatory Risks

• Actual or perceived failure to comply with applicable data privacy and security laws, regulations and standards could impact our business, operations, and expose us to increased liability.

• Actual or perceived failure to comply with applicable data privacy, security and platform and technology regulation laws, regulations and standards could impact our business, operations, and expose us to increased liability.

• Failure to obtain or maintain necessary regulatory approvals from the FCC or other governmental agencies, or limitations put on on-going support of certain foreign-produced products, could significantly restrict our ability to offer and maintain certain products in the U.S.

• If we fail to comply with evolving industry standards, sales of our products would be adversely affected.

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Business and Operational Risks

The imposition of new duties, tariffs, trade barriers and retaliatory countermeasures implemented by the U.S.

and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations.

The implementation of significant changes to U.S.

trade policies, sanctions, legislation, treaties and tariffs, including, but not limited to, significant new tariffs on goods imported into the U.S., have introduced uncertainty to our business and will increase the cost of our manufactured products and components sourced outside of the U.S., which will result in an increase to our cost of revenue and a reduction in our gross margin.

In response, China announced additional tariffs on U.S.

goods and new export control restrictions.

The imposition of additional tariffs or other trade barriers by countries outside of the U.S may increase our costs in these markets, and to the extent these increased costs result in increased prices for our customers, the demand for our products may decrease as our customers seek alternative sourcing, making it more difficult for us to sell our products in some markets.

The extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S.

and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of supply, and demand for our products in affected markets.

Other countries where we operate or sell our products may themselves change their own policies on trade as well, which may affect future business and foreign investment in their respective countries.

and foreign policy changes and uncertainty about such changes has resulted in increased market volatility and currency exchange rate fluctuations.

To the extent dissatisfaction with U.S.

government policy results in U.S.-based suppliers being disfavored over foreign-based alternatives, it may diminish demand for our products with such customers and cause them to find alternative sourcing or otherwise make it more difficult for us to sell more products to these customers.

As a result of these dynamics, we may find it difficult to predict the impact to our business of these and future changes to the trading relationships between the U.S.

or other countries or the impact on our business of new laws or regulations adopted by the U.S.

or other countries.

If we do not successfully execute our business strategy to increase our sales to new and existing BXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

Our growth depends upon our ability to increase sales to existing and new service providers of all types and sizes, and the execution of our strategy to increase sales to BXPs involves significant risk.

If we do not successfully increase our sales through adoption of our platform, cloud and managed service offerings, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

We have platform, cloud and managed service offerings, including new AI-enabled “agentic” capabilities, which are early in their product life cycles and subject to uncertain market demand.

If our customers are unwilling to adopt these new offerings, install our new products or deploy our new services, or if we are unable to achieve market acceptance of our products and platform, our business and financial results may be harmed.

Moreover, adoption of our platform, cloud and managed service offerings is dependent upon the success of our customers in investing, marketing, selling and deploying broader services to their subscribers, and our ability to differentiate our products from competing or substitutive product and service offerings.

For example, our SmartLife managed services include AI-driven managed Wi-Fi, network security, parental controls and an ecosystem of services from partners, including Arlo and Bark.

However, if subscriber demand for such services does not grow as expected or declines, or our customers are unable or unwilling to invest in our platform to deploy and market these services, demand for our products may not grow at rates as we anticipate, negatively impacting our revenue and long-term growth.

If we do not successfully execute our business strategy to increase our sales to new and existing CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

Our growth depends upon our ability to increase sales to existing and new service providers of all types and sizes, and the execution of our strategy to increase sales to CXPs involves significant risk.

The majority of our revenue is not recurring, and our customers generally have no committed purchase requirements, may cancel orders or cease purchasing our products at any time.

If our customers stop purchasing our products for any reason, our business and results of operations would be harmed.

If we are unable to increase our sales to new and existing BXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

If we are unable to increase our sales to new and existing CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

Our strategy includes investing in regional sales teams and select channel partners to sell to smaller regional broadband service providers.

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We face risks associated with being materially dependent upon third-party vendors;

certain factors that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations.

We materially depend upon third-party vendors for our complex global supply-chain operations, including for services to develop, design and source components and materials as well as manufacture, transport and deliver our products.

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• Limited sources and sole-sourced supply.

We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets and certain of our application-specific integrated circuit processors and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries.

We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets, certain of our application-specific integrated circuit processors and memory and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries.

Any of these suppliers could stop producing our components, raise the prices they charge us, be subject to higher product tariffs, epidemics or other conditions that disrupt their operations, cease operations or enter into exclusive arrangements with our competitors, consequently affecting our operations and results.

For example, we have experienced disruptions in our supply of certain components that we source from suppliers in China and other Asian countries due to production disruptions, factory closures and longer lead times for components and from uncertainty around trade and tariff policies between the U.S.

and these countries, which has caused delays in our product supply.

Being dependent upon a limited number of suppliers constrains our ability to mitigate these disruptions in our supply

chain, particularly if such disruptions are prolonged.

This may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices or at all.

For example, the technology industry is currently experiencing significant supply constraints for memory components, driven in part by the reallocation of manufacturing capacity towards the global AI infrastructure build, which constraints may continue for years until new manufacturing capacity is built.

These constraints have resulted in, and are expected to continue to result in, increased costs and extended lead times for the components used in our products.

Being dependent upon a limited number of suppliers constrains our ability to mitigate these disruptions in our supply chain, particularly if such disruptions are prolonged.

This may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices in a timely fashion, or at all.

These risks would adversely affect our ability to meet scheduled product deliveries to our customers, increase costs and in turn harm our business and results of operations.

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Consequently, our orders may not be given adequate priority if such manufacturers have to allocate limited capacity among competing customers.

This could delay supplies of product to us or limit our ability to ramp product volumes within desired timeframes.

This could delay supplies of product to

us or limit our ability to ramp product volumes within desired timeframes.

If any of our manufacturing partners are unable or unwilling to continue manufacturing our products in required volumes and at high quality levels, we would have to identify, qualify and select acceptable alternative manufacturers.

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If we underestimate product demand from our customers, our manufacturers may have inadequate component inventory to meet our demand.

If we are not able to adequately anticipate demand, this could interrupt our product manufacturing, increase our cost of revenue associated with expedite fees and air freight and/or result in delays or cancellation of customer orders.

If we are unable to adequately anticipate demand, this could interrupt our product manufacturing, increase our cost of revenue associated with expedite fees and air freight and/or result in delays or cancellation of customer orders.

If we are unable to deliver products timely to our customers, we may lose customer goodwill or our customers may choose to purchase from other vendors, all of which may have a material negative impact on our revenue and operating results.

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We may incur liabilities for certain component inventory purchases that have been rendered excess or obsolete, which may have an adverse effect on our gross margin, financial condition and results of operations.

If we fail to properly develop, invest in, and manage AI Technologies used in our products and services, our business, financial condition, and results of operations could be materially adversely affected.

We use AI, machine learning, and automated decision-making technologies, including proprietary AI and machine learning algorithms and models (collectively, “AI Technologies”) throughout our business, and are making significant investments in this area.

For example, with the implementation of our agentic workflows within our platform, we will aim to provide both our customer success team and CXP customers with advanced automated tools to augment their operations, accelerate transformation initiatives and expand their impact independent of traditional resource constraints.

We expect that increased investment will be required in the future to continuously improve our use of AI Technologies.

As with many technological innovations, there are significant risks involved in developing, maintaining and deploying these technologies, and there can be no assurance that the usage of, or our investments in, such technologies will always enhance our products or services or be beneficial to our business, including our efficiency or profitability.

In particular, if the models underlying our AI Technologies are:

incorrectly designed or implemented;

trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures;

used without sufficient oversight and governance to ensure their responsible use;

and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material performance issues, the performance of our products, services and business, as well as our reputation and the reputations of our customers, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.

With respect to our products or services that incorporate AI Technologies, including agentic AI, the market for such products and services is rapidly evolving and unproven in many industries, including our own, and important assumptions about the characteristics of targeted markets, pricing, sales cycles, cost, performance, and perceived value associated with our services or products may be inaccurate.

We cannot be sure that the market will continue to grow or that it will grow in ways we anticipate.

In addition, market acceptance and consumer perceptions of products and services that incorporate AI Technologies is uncertain.

Additionally, the regulatory framework for AI Technologies is rapidly evolving.

Existing laws and regulations may be interpreted in ways that could affect the operation of our AI Technologies, and federal, state and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations applicable to AI Technologies.

For example, in the U.S., legislation related to AI Technologies has been introduced at the federal level and enacted or proposed by various states, including California, Colorado, Connecticut and Texas.

Some enacted or proposed frameworks include requirements focused on transparency, risk-management and accountability for AI Technologies, while others focus on high-risk uses of AI or the use of automated decision-making.

Collectively, these developments signal an emerging trend towards a patchwork of state-level governance of AI in the U.S.

Furthermore, the Trump administration’s approach to investment in and regulation of AI technologies has and is expected to continue to deviate from that of the previous administration, and we will need to adapt to any changes that may result from such approach, including as the result of new or changing executive orders.

For instance, the U.S.

federal government may seek to pre-empt state laws when they seek to govern certain topics as evidenced by the Trump administration’s “Ensuring a National Policy Framework for Artificial Intelligence” Executive Order signed on December 11, 2025.

This order calls for federal standards and legislation that would preempt conflicting state AI regulations and create a federal litigation task force focused on challenging state AI laws in court.

In Europe, the EU Artificial Intelligence Act (“EU AI Act”) establishes a comprehensive, risk-based governance framework for AI in the European Union (“EU”) market.

The majority of the substantive requirements will apply from August 2, 2026.

The EU AI Act applies to companies that develop, use and/or provide AI in the EU, with specific requirements based on the relevant AI use cases.

For example, in relation to our use of generative AI, we may be subject to certain disclosure and transparency obligations, with fines up to the greater of €15 million or 3% of global revenue.

In addition, the revised EU Product Liability Directive, to be implemented into EU member state national law by December 2026, extends the EU’s existing strict product liability regime to AI and facilitates civil claims in respect of harm caused by AI.

Once fully applicable, the EU AI Act and the EU Product Liability Directive, together with developing guidance and/or decisions in this area, will have a material impact on the way AI is regulated in the EU.

The cost to comply with such laws, regulations, decisions and/or guidance interpreting existing laws, or to adjust our business plans based on changes to how such laws are enforced, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI Technologies) or impact our ability to use, procure or commercialize AI Technologies.

Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations.

The imposition of new duties, tariffs, trade barriers and retaliatory countermeasures implemented by the U.S.

and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations.

The implementation of significant changes to U.S.

manufactured products and components sourced outside of the U.S., which will result in an increase to our cost of revenue and may cause a reduction in our gross margin.

In response, China announced additional tariffs on U.S.

goods and new export control restrictions.

Other countries where we operate or sell our products may themselves change their own policies on trade as well, which may affect future business and foreign investment in their respective countries.

and foreign policy changes and uncertainty about such changes has resulted in increased market volatility and currency exchange rate fluctuations.

To the extent dissatisfaction with U.S.

As a result of these dynamics, we may find it difficult to predict the impact to our business of these and future changes to the trading relationships between the U.S.

or other countries or the impact on our business of new laws or regulations adopted by the U.S.

or other countries.

Cyberattacks or other security incidents that disrupt our or our third-party providers’ operations or compromise data, may expose us to liability, harm our reputation or otherwise adversely affect our business.

We rely on our own and third-party hardware, software, technology infrastructure, data centers, digital networks and online sites and services for both internal and customer-facing operations that are critical to our business, or collectively, IT Systems.

In addition, as part of our business operations, we collect, store, process, use and/or disclose information, including sensitive data relating to our business, our business partners and our customers, and personal information about individuals such as our employees and our customers’ subscribers, or collectively, Confidential Information.

We process Confidential Information to operate our business, including in connection with the provision of our cloud services and by relying on our and our providers’ IT Systems.

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Our cloud-based solutions enable us to host our customers’ subscriber data in third-party data centers.

malfeasance by insiders, human or technological error and, as a result of malicious code embedded in open-source software, bugs, misconfigurations or exploited vulnerabilities in software or hardware that is integrated into our (or our suppliers’ or service providers’) IT Systems, products or services.

We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error and, as a result of malicious code embedded in open-source software, bugs, misconfigurations or exploited vulnerabilities in software or hardware that is integrated into our (or our suppliers’ or service providers’) IT Systems, products or services.

Threat actors could steal Confidential Information related to our business, products, employees, customers and our customers’ subscribers;

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Although we maintain insurance that may apply to cybersecurity risks and liabilities, there can be no guarantee that any or all costs or losses incurred will be partially or fully insured or that we will be able to procure applicable insurance in the future on reasonable terms or at all.

We use artificial intelligence, or AI, machine learning, and automated decision-making technologies, including proprietary AI and machine learning algorithms and models (collectively, AI Technologies) throughout our business, and are making significant investments in this area.

For example, with the implementation of our platform-based agentic AI, we will aim to provide both our customer success team and BXP customers with advanced automated tools to augment their operations, accelerate transformation initiatives, and expand their impact independent of traditional resource constraints.

We expect that increased investment will be required in the future to continuously improve our use of AI Technologies.

As with many technological innovations, there are significant risks involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of or our investments in such technologies will always enhance our products or services or be beneficial to our business, including our efficiency or profitability.

In particular, if the models underlying our AI Technologies are:

incorrectly designed or implemented;

used without sufficient oversight and governance to ensure their responsible use;

characteristics of targeted markets, pricing, sales cycles, cost, performance, and perceived value associated with our services or products may be inaccurate.

We cannot be sure that the market will continue to grow or that it will grow in ways we anticipate.

In addition, market acceptance and consumer perceptions of products and services that incorporate AI Technologies is uncertain.

We have platform, cloud and managed service offerings that are early in their product life cycles and subject to uncertain market demand.

For example, our SmartLife TM managed services include managed Wi-Fi, network security, parental controls and an ecosystem of services from partners, including Arlo and Bark.

Changing market and customer requirements may adversely affect the valuation of our inventory as well as our supplier purchase commitments.

Customer demand for our products can change rapidly in response to market and technology developments.

We may, from time to time, adjust inventory valuations downward or end of life certain of our products in response to our assessment of our business strategy as well as consideration of demand from our customers for specific products or product lines.

We also periodically evaluate our supplier purchase commitments, which increased significantly due to extended lead-times during the global pandemic.

While our purchase commitments have normalized, the effect of those purchase decisions are still impacting our balance sheet through component inventory and inventory deposits with suppliers.

From time to time, we adjust inventory valuations downward or end of life certain of our products in response to our assessment of our business

strategy as well as consideration of demand from our customers for specific products or product lines.

We also evaluate our supplier purchase commitments, which fluctuate based on lead-times, demand environment and perceived component availability.

We record a liability for excess and obsolete components based on our estimated future demand for our products, potential obsolescence of technology and product life cycles.

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effects of inflation, currency controls and/or fluctuations in currency exchange rates;

limited, inadequate or non-existent intellectual property, or IP, protection;

limited, inadequate or non-existent intellectual property (“IP”) protection;

and uncertainties associated with political conflicts and instabilities, variable economic conditions, terrorist attacks or acts of war.

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Third parties from whom we license IP may be unable or unwilling to indemnify us for such claims or offer any other remedy to us.

Patent infringement claims may be asserted by patent assertion entities and non-practicing entities, or NPEs, that do not conduct business as an operating company and hold and own patents only for the purpose of aggressively pursuing royalties through infringement assertions or patent infringement litigation.

Patent infringement claims may be asserted by patent assertion entities and non-practicing entities (“NPEs”) that do not conduct business as an operating company and hold and own patents only for the purpose of aggressively pursuing royalties through infringement assertions or patent infringement litigation.

Further, in our industry, the number of assertions by NPEs has continued to increase due in part to patent sales by operating companies to NPEs and availability of litigation financing.

We have received and expect to continue to receive assertions from NPEs and other third parties alleging that we may be infringing their patents or other IP rights;

have received and expect to continue to receive assertions from NPEs and other third parties alleging that we may be infringing their patents or other IP rights;

offering licenses to such IP;

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If we are unable to collect our accounts receivable balances as anticipated, our operating results and financial condition will be harmed.

A number of factors

contribute to this risk, including our ability to adequately assess a customer’s creditworthiness and financial condition, changes in a customer’s financial condition and/or liquidity, our ability to timely collect our accounts receivable from customers, disagreements with customers on invoiced balances and economic downturns or other unanticipated events impacting a customer’s ability to pay.

A number of factors contribute to this risk, including our ability to adequately assess a customer’s creditworthiness and financial condition, changes in a customer’s financial condition and/or liquidity, our ability to timely collect our accounts receivable from customers, disagreements with customers on invoiced balances and economic downturns or other unanticipated events impacting a customer’s ability to pay.

Furthermore, some of our international customers operate in countries with developing economies, volatile financial markets or currency regulations that impact their ability to make payments in U.S.

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If we experience disruptions with our enterprise resource planning system, we may not be able to effectively transact business or produce financial statements, which would adversely affect our business, results of operations and cash flows.

We operate our Oracle enterprise resource planning, or ERP, system on Oracle’s cloud platform and our software billing application on Salesforce.com.

We operate our Oracle enterprise resource planning (“ERP”) system on Oracle’s cloud platform and our software billing application on Salesforce.com.

With these implementations, we are highly dependent upon Oracle and Saleforce.com to host, manage and maintain our ERP system and supporting applications.

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Our products are highly technical and may contain undetected hardware or software defects or software bugs, which could harm our reputation and adversely affect our business.

Our products, including our platform (cloud, software and systems) and SmartLife TM managed services, are highly technical and, when deployed, are critical to the operation of many networks.

Our products, including our platform (agentic AI, cloud, software and appliances) and SmartLife managed services, are highly technical and, when deployed, are critical to the operation of many networks.

Our products have contained and are subject to defects, bugs or security vulnerabilities, which risks may be exacerbated as we continue to expand our cloud and software portfolio and include services from third-party partners.

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The development and production of new products with high complexity often involves problems with software, components and manufacturing methods.

Any significant warranty or other product obligations due to reliability or quality issues arising from defects in software, faulty components or improper manufacturing methods could negatively impact our operating results and financial position due to costs associated with fixing software or hardware defects;

Any significant warranty or other product obligations due to reliability or quality issues arising from defects in software, faulty components or improper manufacturing methods could

negatively impact our operating results and financial position due to costs associated with fixing software or hardware defects;

high service and warranty expenses;

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We may not be able to secure or maintain necessary technology licenses from these third parties on commercially reasonable terms or at all.

Third parties may also choose to not renew licenses with us, demand unreasonable license fees or cease to offer technologies that we require.

Third parties may also choose not to renew licenses with us, demand unreasonable license fees or cease to offer technologies that we require.

The inability to obtain necessary third-party licenses or to secure reasonable license terms at a cost acceptable to us could harm the competitiveness of our products and solutions, result in lost revenue and adversely affect our operating results.

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Macroeconomic and Industry Risks

Our business depends upon the capital spending patterns and decisions of BXPs, and any decrease or delay in capital spending by BXPs due to the timing and availability of capital and other causes would reduce our revenue and harm our business.

Demand for our products depends on the magnitude and timing of capital spending by BXPs as they construct, expand, upgrade and maintain their access networks as well as BXPs’ adoption of our platform and managed services.

Capital spending is cyclical in our industry, sporadic among individual BXPs and can change on short notice, which gives us little visibility into changes in spending behavior in any particular quarter.

Our business depends upon the capital spending patterns and decisions of CXPs, and any decrease or delay in capital spending by CXPs due to the timing and availability of capital and other causes would reduce our revenue and harm our business.

Demand for our products depends on the magnitude and timing of capital spending by CXPs as they construct, expand, upgrade and maintain their access networks as well as CXPs’ adoption of our platform and managed services.

Capital spending is cyclical in our industry, sporadic among individual CXPs and can change on short notice, which gives us little visibility into changes in spending behavior in any particular quarter.

Capital spending for network infrastructure projects could be delayed or canceled in response to factors outside our control, such as reduced consumer spending, challenging capital markets or declining liquidity trends.

BXP spending is also affected by reductions in budgets, including as a result of a general economic downturn, delays in purchasing cycles, access to or timing of government funding programs or capital markets, government shutdowns, and seasonality and delays in capital allocation decisions.

Historically, our customers may spend less or have less deployments in the first quarter due to pending annual budgets or, in certain regions, due to weather conditions that inhibit outside fiber deployment, resulting in weaker demand for our products in the first quarter.

CXP spending is also affected by reductions in budgets, including as a result of a general economic downturn, delays in purchasing cycles, access to or timing of government funding programs or capital markets, government shutdowns and seasonality and delays in capital allocation decisions.

Historically, our customers may spend less or have less deployments in the first quarter due to pending annual budgets or, in certain regions, due to weather conditions that inhibit

outside fiber deployment, resulting in weaker demand for our products in the first quarter.

Softness in demand in any of our customer markets, including due to macroeconomic conditions beyond our control or uncertainties associated with regulatory reforms, has and could in the future lead to unexpected decline or slowdown in customer capital expenditures.

Further, BXPs may pursue capital investment in network technologies other than those offered by us or may choose not to adopt our products and platform solutions in their networks.

Reductions in capital expenditures by BXPs would have a material negative impact on our revenue and results of operations and slow our rate of revenue growth.

Further, CXPs may pursue capital investment in network technologies other than those offered by us or may choose not to adopt our products and platform solutions in their networks.

Reductions in capital expenditures by CXPs would have a material negative impact on our revenue and results of operations and slow our rate of revenue growth.

As a consequence, our results for a particular period may be difficult to predict, and our prior results are not necessarily indicative of results in future periods.

Government-sponsored programs and U.S.

federal government shutdowns could impact the timing and buying patterns of BXPs, which may cause fluctuations in our operating results.

We sell to broadband service providers and BXPs, including U.S.-based independent operating companies, or IOCs, which rely significantly upon interstate and intrastate access charges and federal and state subsidies in the form of grants and other funding, such as the Federal Communications Commission’s, or FCC’s, Rural Digital Opportunity Fund, the CARES Act Enhanced Alternative Connect America Cost Model, or the American Rescue Plan Act.

federal government shutdowns could impact the timing and buying patterns of CXPs, which may cause fluctuations in our operating results.

We sell to broadband service providers and CXPs, including U.S.-based independent operating companies (“IOCs”) which rely significantly upon interstate and intrastate access charges and federal and state subsidies in the form of grants and other funding, such as the Federal Communications Commission’s (“FCC”) Rural Digital Opportunity Fund, the CARES Act Enhanced Alternative Connect America Cost Model, or the American Rescue Plan Act.

The FCC and some states may change such payments and subsidies, which could reduce IOC revenue.

Furthermore, many IOCs use or expect to use government-supported loan programs or grants, such as U.S.

Department of Agriculture’s Rural Utility Service or National Telecommunications and Information Administration’s, or NTAI, BEAD program loans and grants, to finance capital spending.

Department of Agriculture’s Rural Utility Service or National Telecommunications and Information Administration’s (“NTAI”) Broadband Equity, Access and Deployment (“BEAD”) program loans and grants, to finance capital spending.

These government-supported loan programs and grants generally include conditions such as deployment criteria, domestic preference provisions and other requirements that apply to the project and selected equipment as conditions for funding.

For example, the U.S.

government passed The Infrastructure Investment Jobs Act, which charged the NTIA with establishing the BEAD Program and ensuring that BEAD-funded infrastructure projects comply with the Buy America Domestic Content Procurement Preference, or Buy America Preference, of the Build America, Buy America Act, or BABA.

government passed The Infrastructure Investment Jobs Act, which charged the NTIA with establishing the BEAD Program and ensuring that BEAD-funded infrastructure projects comply with the Buy America Domestic Content Procurement Preference (“Buy America Preference”) of the Build America, Buy America Act (“BABA”).

In accordance with BABA, the U.S.

Department of Commerce has issued a limited, general applicability, nonavailability waiver of the Buy

America Preference to recipients of Federal financial assistance under the NTIA’s BEAD Program.

Department of Commerce has issued a limited, general applicability, nonavailability waiver of the Buy America Preference to recipients of Federal financial assistance under the NTIA’s BEAD Program.

Notwithstanding this waiver, certain of our products will be required to meet BABA domestic content requirements to enable certain customers to qualify for grant funding under the BEAD Program.

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To the extent dissatisfaction with U.S.

government policy results in U.S.-based suppliers being disfavored over foreign-based alternatives, it

may diminish demand for our products with such customers and cause them to find alternative sourcing or otherwise make it more difficult for us to sell more products to these customers.

The imposition of additional tariffs or other trade barriers by countries other than the U.S., including China and other Asian countries, will increase our costs in these markets, and to the extent these increased costs result in increased prices for our customers, we expect the demand for products in these markets to decrease as some of our customers seek alternative sources, making it more difficult for us to sell our products in these markets.

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The market for our products is highly competitive, and we expect competition from both established and new companies to increase.

Our ability to compete successfully depends on a number of factors, including our ability to successfully develop new products and solutions that anticipate BXP and market requirements and changes in technology and industry standards;

BXP acceptance and adoption of our products and solutions;

Our ability to compete successfully depends on a number of factors, including our ability to successfully develop new products and solutions that anticipate CXP and market requirements and changes in technology and industry standards;

CXP acceptance and adoption of our products and solutions;

our ability to differentiate our products from our competitors’ offerings based on performance, features, cost-effectiveness or other factors;

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Historically, our customer base has been concentrated, and the loss of any of our key customers may adversely impact our revenue and results of operations, and any delays in payment by a key customer could negatively impact our cash flows and working capital.

Although we have not had a greater-than-10%-of-revenue customer in the past four years, a large portion of our sales has been, and in the future may be, to a limited number of customers.

Although we have not had a greater-than-10%-of-revenue customer since 2020, a large portion of our sales has been, and in the future may be, to a limited number of customers.

Changes in the broadband service provider market, such as financial difficulties, spending cuts or corporate consolidations that impact purchasing decisions by these customers have and may again negatively impact our revenue, and as a result, revenue from such customers may remain flat or decline.

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Furthermore, delays in payment and/or extended payment terms from any of our larger customers could have a material negative impact on our cash flows and working capital to support our business operations.

Our industry is characterized by rapid technological advancements, and if we fail to develop new products or enhancements that meet changing BXP requirements, we could experience lower sales.

Our industry is characterized by rapid technological change, changing needs of BXPs, evolving industry standards and frequent introductions of new products and platform offerings.

We invest significant amounts to pursue innovative technologies that we believe will be adopted by BXPs.

For example, we have invested and plan to continue to invest resources in our platform offerings.

In addition, on an ongoing basis, we expect to reposition our product and service offerings and introduce new offerings as we encounter rapidly changing BXP requirements and increasing competitive pressures.

Our industry is characterized by rapid technological advancements, and if we fail to develop new products or enhancements that meet changing CXP requirements, we could experience lower sales.

Our industry is characterized by rapid technological change, changing needs of CXPs, evolving industry standards and frequent introductions of new products and platform offerings.

We invest significant amounts to pursue innovative technologies that we believe will be adopted by CXPs.

For example, we have invested and plan to continue to invest resources in our platform offerings and agentic AI.

In addition, on an ongoing basis, we expect to reposition our product and service offerings and introduce new offerings as we encounter rapidly changing CXP requirements and increasing competitive pressures.

If we cannot increase sales of our new platform and services, keep pace with rapid technological developments to meet customer needs and compete with evolving standards or if the technologies we choose to invest in fail to meet customer needs or are not adopted by customers in the timeframes that we expect, our financial condition and results of operations would be adversely affected.

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The timing of our revenue is difficult to predict.

Our sales efforts often involve educating broadband service providers about the use and benefits of our platform (cloud, software and systems) and managed services, and the desirability of transforming into a BXP.

BXPs typically undertake a significant evaluation process, which frequently involves not only our platform and managed services, but also those of our competitors and results in a lengthy sales cycle.

Our sales efforts often involve educating broadband service providers about the use and benefits of our platform (agentic AI, cloud, software and appliances) and managed services, and the desirability of transforming into a CXP.

CXPs typically undertake a significant evaluation process, which frequently involves not only our platform and managed services, but also those of our competitors and results in a lengthy sales cycle.

Sales cycles for larger customers are relatively longer and require considerably more time and expense.

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Government and Regulatory Risks

Actual or perceived failure to comply with applicable data privacy and security laws, regulations and standards could impact our business, operations, and expose us to increased liability.

Actual or perceived failure to comply with applicable data privacy, security and platform and technology regulation laws, regulations and standards could impact our business, operations, and expose us to increased liability.

Government authorities in the U.S.

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The interpretation and application of these data protection laws and regulations are often uncertain and changing, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our data practices.

For example, in the U.S., certain states have adopted privacy and security laws and regulations which govern the privacy, processing and protection of personal information.

For example, in the U.S., certain states have adopted or modified privacy and security laws and regulations which govern the privacy, processing and protection of personal information.

Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.

For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things:

(i) provide certain disclosures to California residents regarding the business’s collection, use and disclosure of their personal information;

(i) provide certain disclosures to California residents regarding the business’s collection, use

and disclosure of their personal information;

(ii) receive and respond to requests from California residents to access, delete and correct their personal information or to opt out of certain disclosures of their personal information;

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In 2024, the National Security Division of the U.S.

Department of Justice (DOJ) issued a new rule—referred to as the “Data Security Program”, or DSP, aimed at preventing access to “bulk U.S.

Department of Justice (“DOJ”) issued a new rule—referred to as the “Data Security Program” (“DSP”) aimed at preventing access to “bulk U.S.

sensitive personal data” and “government-related data” by “countries of concern” (including China, Russia, Iran, North Korea, Cuba, and Venezuela) and “covered persons” (as all such terms are defined in the DSP).

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Finally, non-compliance with the DSP could result in significant civil or criminal penalties, which could materially adversely affect our business, results of operations and financial condition.

Furthermore, the Federal Trade Commission, or FTC, and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.

Furthermore, the Federal Trade Commission (“FTC”) and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive.

For example, according to the FTC, failing to take appropriate steps to keep consumers’ personal information secure can constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

The General Data Protection Regulation, or EU GDPR, adopted by the European Union, or EU, and the UK General Data Protection Regulation, or UK GDPR, adopted by the United Kingdom, or UK, (the EU GDPR and UK GDPR hereinafter referred to as the GDPR) and national data protection supplementing laws in these jurisdictions impose specific duties and requirements upon companies that are subject to their provisions and collect, process or control personal data of individuals.

The General Data Protection Regulation (“EU GDPR”) adopted by the European Union (“EU”) and the UK General Data Protection Regulation (“UK GDPR”) adopted by the United Kingdom (“UK”) (the EU GDPR and UK GDPR hereinafter referred to as the “GDPR”) and national data protection supplementing laws in these jurisdictions impose specific duties and requirements upon companies that are subject to their provisions and collect, process or control personal data of individuals.

Although we currently do not have material operations or business in the EU or the UK, we are in the process of expanding in these jurisdictions, and we have incurred and will continue to incur substantial costs in this respect.

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thus, any non-compliance with the GDPR could result in a material adverse effect on our business, financial condition and results of operations.

The EU GDPR and UK GDPR regulate cross-border transfers of personal data out of the European Economic Area, or the EEA, and the UK.

The GDPR regulate cross-border transfers of personal data out of the European Economic Area (the “EEA”) and the UK.

There is currently legal complexity and uncertainty regarding international personal data transfers, and we expect this to continue.

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Further, our customers may not use our services in a manner that is compliant with applicable data privacy laws and regulations and our services may not be competitive in certain markets.

We may also become subject to new laws that regulate non-personal data.

For example, the European Union’s Data Act imposes certain data and cloud service interoperability and switching obligations to enable users to switch between cloud service providers without undue delay or cost, which may lead to the exercise of early termination rights.

Depending on how this Act and any similar laws are implemented and interpreted, we may have to adapt our business practices, contractual arrangements, and solutions to comply with such laws.

We may also become subject to new laws that regulate both personal and non-personal data.

For example, the Data Act came into effect on September 12, 2025, establishing new requirements for providers of data processing services (including cloud, SaaS) into the EU.

The Data Act requires providers to facilitate customers switching to other providers/ on-premise solutions and porting their data within certain timeframes;

remove technical, contractual, and commercial obstacles to service switching (including switching charges);

and include certain mandatory terms in customer contracts.

Failure to comply with the Data Act can result in regulatory enforcement and fines, civil claims, and reputational damage.

The Data Act, together with developing guidance in this area, may require changes to our

customer contracts, products, operations and business practices, increase our compliance costs, require adjustments to our revenue recognition practices and adversely affect our financial condition, business and operations.

In addition, security regulations such as the EU’s Network and Information Security 2 Directive (“NIS2”) and its EU Member State transpositions, and the UK’s Telecommunications (Security) Act 2021 together with its implementing regulations impose further security obligations, including on electronic communications networks and services.

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The failure or perceived failure to comply may result in government or civil proceedings or actions against us, or could cause us to lose customers, which could have an adverse effect on our business.

Failure to obtain or maintain necessary regulatory approvals from the FCC or other governmental agencies, or limitations put on on-going support of certain foreign-produced products, could significantly restrict our ability to offer and maintain certain products in the U.S.

regulatory environment for foreign-produced telecommunications equipment is undergoing rapid and significant changes that could restrict our ability to sell or support certain products.

On March 23, 2026, the FCC updated its “Covered List” under Section 2 of the Secure and Trusted Communications Networks Act of 2019 to include consumer-grade routers produced outside of the U.S.

This action effectively bars the future importation, sale, or use of these products in the U.S.

absent regulatory approval or waiver.

While we primarily market systems to CSPs, there is a risk that regulators may interpret “consumer-grade routers” broadly enough to encompass some of our residential-facing hardware.

This would not affect the importation and sale of our current models, which already have the necessary FCC authorizations.

However, absent regulatory approval or waivers, we may be restricted from providing critical security patches, firmware updates, or functionality enhancements to the affected hardware products after early 2027.

Our future product roadmap may be impacted unless we can obtain the necessary “Conditional Approvals” from the Department of War (“DoW”) or Department of Homeland Security (“DHS”).

Securing such approvals or waivers may require us to disclose sensitive supply chain data to U.S.

regulators and implement time-bound U.S.

manufacturing or “onshoring” plans, which would likely involve significant capital expenditures and higher unit costs which we may be unable to pass on to customers.

Uncertainty regarding our ability to provide long-term support for affected products may cause customers to delay capital spending or transition to competitors perceived as having lower regulatory risk.

Our failure to navigate these requirements or secure necessary approvals or waivers could materially and adversely affect our business, financial condition, and results of operations.

If we fail to comply with evolving industry standards, sales of our products would be adversely affected.

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For example, our ability to maintain Operations System Modification for Intelligent Network Elements certification for our products will affect our ongoing ability to continue to sell our products to large broadband service providers.

In addition, our ability to expand our international operations may be limited by standards in countries or may require us to redesign our products or develop new

products to meet local standards.

In addition, our ability to expand our international operations may be limited by standards in countries or may require us to redesign our products or develop new products to meet local standards.

We may not be able to design our products to comply with local requirements, which would impede or prevent our ability to grow our business in those locations.

Moreover, as we expand our business and operations globally, we must increase investments to maintain compliance with evolving standards across all of our markets.

The costs of complying with evolving standards or failure to obtain timely authorizations or certification could prevent us from selling our products where these standards or regulations apply, which would result in lower revenue and lost market share.

complying with evolving standards or failure to obtain timely authorizations or certification could prevent us from selling our products where these standards or regulations apply, which would result in lower revenue and lost market share.

Our failure or the failure of our manufacturers to comply with environmental and other legal regulations could adversely impact our results of operations.

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developments with respect to IP rights;

our ability to develop and market new and enhanced products on a timely basis;

our ability to develop and market new and enhanced products on

a timely basis;

our commencement of, or involvement in, litigation and developments relating to such litigation;

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We have evaluated and expect to continue to evaluate a wide array of potential strategic transactions.

investments may involve significant risks and uncertainties, including distraction of management from current operations, unanticipated costs, and legal and regulatory challenges, all of which could have a material adverse impact on our financial condition and results of operations.

Such investments may involve significant risks and uncertainties, including distraction of management from current operations, unanticipated costs, and legal and regulatory challenges, all of which could have a material adverse impact on our financial

condition and results of operations.

In addition, the anticipated benefit of any acquisition may never materialize or the process of integrating acquired businesses, products or technologies may create unforeseen operating difficulties and expenditures.

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Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.

We have a common stock repurchase program of which $125.9 million was available as of September 27, 2025.

We have a common stock repurchase program of which $63.4 million was available as of March 28, 2026.

Furthermore, our Board of Directors authorized a $100.0 million increase to our common stock repurchase program in April 2026.

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.

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our failure to comply with these requirements may adversely affect our operating results and financial condition.

We are subject to significant accounting, legal and regulatory requirements, including requirements and rules under the Sarbanes-Oxley Act, or SOX, and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, among other rules and regulations implemented by the SEC, as well as listing requirements of the New York Stock Exchange, or NYSE.

We are subject to significant accounting, legal and regulatory requirements, including requirements and rules under the Sarbanes-Oxley Act (“SOX”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) among other rules and regulations implemented by the SEC as well as listing requirements of the New York Stock Exchange (“NYSE”).

We incur significant accounting, legal and other expenses and must invest substantial time and resources to comply with public company reporting and compliance requirements, including costs to ensure we have adequate internal controls over accounting and financial reporting, proper documentation and testing procedures among other requirements.

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

What changed 10-Q

Item 1A. Risk Factors