What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-09 compared with 2025-02-07 · 111 added, 88 removed, 198 unchanged (50% of the section changed)

15 unchanged sentences

Our operator-owner service-provider-product platforms provide carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing and the related software for WISPs to easily control, track and bill their customers.

Our enterprise product platforms provide wireless LAN (“WLAN”) infrastructure, video

surveillance products, switching and routing solutions, security gateways, door access systems, and other complimentary WLAN products along with a unique software platform, which enables users to control their network from one simple, easy to use software interface.

Our enterprise product platforms provide wireless LAN (“WLAN”) infrastructure, video surveillance products, switching and routing solutions, security gateways, door access systems, and other complimentary WLAN products along with a unique software platform, which enables users to control their network from one simple, easy to use software interface.

Our consumer products are targeted to the smart home and highly connected consumers.

1 unchanged sentence

We distribute our products through a worldwide network of over 100 distributors and online retailers and direct to customers through our webstores.

Tariff and Trade Tensions – Recently, the U.S.

government has issued several executive orders imposing significant tariffs on imports from China, and tariffs on most imports from other counties, including Vietnam.

The U.S government has made numerous changes to the tariff rates including temporary pauses with a reduction in rates and product exclusions.

In addition, the U.S.

government may in the future propose and implement additional changes to international trade agreements and tariffs.

These actions have increased the cost of importing products containing certain raw materials and have affected our operating results and margins.

The magnitude and scope of the recent changes will significantly increase our product costs.

For so long as such tariffs are in effect, we expect it will continue to affect our operating results and margins.

As a result, our historical and current gross profit margins may not be indicative of our gross profit margins for future periods.

Refer to “Part II—Item 1A.

Risk Factors—Risks Related to Our International Operations—Our business may be negatively affected by geopolitical events and foreign policy responses” for additional information.

Supply Constraints and Risks – We have experienced significant supply constraints in the past, especially during the COVID-19 pandemic.

Our efforts to mitigate these supply constraints have included, for example, increasing our inventory build in an attempt to secure supply and meet customer demand, paying higher component and shipping costs to secure supply and modifying our product designs to leverage alternate suppliers.

designs to leverage alternate suppliers.

Although these mitigation efforts are intended to optimize our access to the components required to meet customer demand for our products, we have limited visibility into future sales, which makes it difficult to forecast our future results of operations.

24 unchanged sentences

We sell our products and solutions globally to enterprises and service providers primarily through our extensive network of distributors and through direct sales through our webstores.

Sales to distributors accounted for 55% of our revenues during the six months ended December 31, 2024.

Direct sales accounted for 45% of our revenue during the six months ended December 31, 2024.

Sales to distributors accounted for 55% of our revenues during the nine months ended March 31, 2025.

Direct sales accounted for 45% of our revenue during the nine months ended March 31, 2025.

Cost of Revenues

5 unchanged sentences

Our operations organization consists of employees and consultants engaged in the management of our contract manufacturers, new product introduction activities, logistical support and engineering.

Our gross profit has been, and may in the future be, influenced by several factors including changes in product mix, target end markets for our products, channel inventory levels, tariffs, pricing due to competitive pressure, production costs and global demand for electronic components.

Our gross profit has been, and may in the future be, influenced by several factors including changes in product mix, target end markets for our products, channel inventory levels, tariffs and trade disputes, pricing due to competitive pressure, production costs and global demand for electronic components.

Although we procure and sell our products mostly in U.S.

1 unchanged sentence

To the extent that the exchange rates move unfavorably for our contract manufacturers, they may try to pass these additional costs on to us, which could have a material impact on our future average selling prices and unit costs.

In February 2025, the Office of the United States Customs and Border Protection, Department of Homeland Security announced an incremental 10% tariff for products imported into the U.S.

This will result in the products that are imported into the U.S.

from China after the effective date having additional tariffs imposed on them between 10% and 35%.

These tariffs have affected our operating results and margins.

Recently, the U.S.

government has issued several executive orders imposing significant tariffs on imports from China, and tariffs on most imports from other counties, including Vietnam.

The U.S government has made numerous changes to the tariff rates including temporary pauses with a reduction in rates and product exclusions.

In addition, the U.S.

government may in the future propose and implement additional changes to international trade agreements and tariffs.

These actions have increased the cost of importing products containing certain raw materials and have affected our operating results and margins.

The magnitude and scope of the recent changes will significantly increase our product costs.

For so long as such tariffs are in effect, we expect it will continue to affect our operating results and margins.

1 unchanged sentence

Refer to “Part II—Item 1A.

Risk Factors—Risks Related to Our International Operations—Our business may be negatively affected by political events and foreign policy responses” for additional information.

Risk Factors—Risks Related to Our International Operations—Our business may be negatively affected by geopolitical events and foreign policy responses” for additional information.

Operating Expenses

2 unchanged sentences

Over time, we expect our research and development costs to increase as we continue making significant investments in developing new products in addition to new versions of our existing products.

• Sales, general and administrative expenses include salary and benefit expenses, including share-based compensation, for employees and costs for contractors engaged in sales, marketing and general and administrative activities, as well as the costs associated with credit card processing fees, legal expenses, trade shows, marketing programs, promotional materials, bad debt expense, professional services, facilities, general liability insurance and travel.

• Sales, general and administrative expenses include salary and benefit expenses, including share-based compensation, for employees and costs for contractors engaged in sales, marketing and general and administrative activities, credit card processing fees, legal expenses, trade shows, marketing programs, promotional materials, bad debt expense, professional services, facilities, general liability insurance and travel.

As our product portfolio and targeted markets expand, we may need to employ different sales models, such as building a traditional direct sales force.

20 unchanged sentences

Accordingly, our actual results could differ significantly from the estimates made by our management.

To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

To the extent that there are

differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

Our critical accounting policies are discussed in our Annual Report, filed with the SEC on August 23, 2024, and there have been no material changes other than that have been disclosed in Note 2, "Summary of Significant Accounting Policies" to our consolidated financial statements herein.

2 unchanged sentences

Results of Operations

Comparison of Three and Six Months Ended December 31, 2024 and 2023

Comparison of Three and Nine Months Ended March 31, 2025 and 2024

The following table summarizes our consolidated results of operations for the periods indicated, expressed in dollars and as a percentage of total revenues (in thousands, except percentages):

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

20 unchanged sentences

Total share-based compensation $ 1,848 $ 1,664 $ 5,337 $ 4,671

Total revenues increased $134.9 million, or 29%, from $465.0 million in the three months ended December 31, 2023 to $599.9 million in the three months ended December 31, 2024.

Total revenues increased $222.2 million, or 24%, from $928.0 million in the six months ended December 31, 2023 to $1,150.2 million in the six months ended December 31, 2024.

The increase in revenues for the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was driven by an increase in revenue from both our Enterprise Technology platform and our Service Provider Technology platform.

Total revenues increased $171.2 million, or 35%, from $493.0 million in the three months ended March 31, 2024 to $664.2 million in the three months ended March 31, 2025.

Total revenues increased $393.4 million, or 28%, from $1,421.0 million in the nine months ended March 31, 2024 to $1,814.4 million in the nine months ended March 31, 2025.

The increase in revenues for the three months ended March 31, 2025, as compared to the same period in the prior year, was driven by an increase in revenue from our Enterprise Technology platform offset in part by a decline in Revenue from our Service Provider Technology platform.

The increase in revenues for the nine months ended March 31, 2025, as compared to the same period in the prior year, was driven by an increase in revenue from both our Enterprise Technology platform and our Service Provider Technology platform.

Revenues by Product Type

Three Months Ended December 31, Six Months Ended December 31,

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

3 unchanged sentences

Total revenues $ 664,170 100 % $ 492,997 100 % $ 1,814,393 100 % $ 1,421,029 100 %

Enterprise Technology revenue increased $126.7 million, or 32%, from $391.5 million in the three months ended December 31, 2023 to $518.2 million in the three months ended December 31, 2024.

Enterprise Technology revenue increased $216.8 million, or 28%, from $771.6 million in the six months ended December 31, 2023 to $988.4 million in the six months ended December 31, 2024.

The increase in Enterprise Technology revenue during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to an increase in revenue from our Enterprise Technology platform across all regions except South America.

Service Provider Technology revenue increased $8.2 million, or 11%, from $73.5 million in the three months ended December 31, 2023 to $81.7 million in the three months ended December 31, 2024.

Service Provider Technology revenue increased $5.4 million, or 3%, from $156.4 million in the six months ended December 31, 2023 to $161.8 million in the six months ended December 31, 2024.

The increase in Service Provider Technology in the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to an increase in revenues in the North America and South America regions.

Enterprise Technology revenue increased $171.4 million, or 41%, from $414.3 million in the three months ended March 31, 2024 to $585.7 million in the three months ended March 31, 2025.

Enterprise Technology revenue increased $388.2 million, or 33%, from

$1,185.9 million in the nine months ended March 31, 2024 to $1,574.1 million in the nine months ended March 31, 2025.

The increase in Enterprise Technology revenue during the three months ended March 31, 2025, as compared to the same period in the prior year, was due to an increase in revenue from our Enterprise Technology platform across all regions.

The increase in Enterprise Technology revenue during the nine months ended March 31, 2025, as compared to the same period in the prior year, was due to an increase in revenue from our Enterprise Technology platform across all regions except South America.

Service Provider Technology revenue decreased marginally by $0.2 million, or 0.3%, from $78.7 million in the three months ended March 31, 2024 to $78.4 million in the three months ended March 31, 2025.

Service Provider Technology revenue increased $5.2 million, or 2%, from $235.1 million in the nine months ended March 31, 2024 to $240.3 million in the nine months ended March 31, 2025.

The decrease in Service Provider Technology in the three months ended March 31, 2025, as compared to the same period in the prior year, was due to a decrease in revenues in all regions except EMEA.

The increase in Service Provider Technology in the nine months ended March 31, 2025, as compared to the same period in the prior year, was due to an increase in revenues in the EMEA and South America regions offset by a decline in revenues in the North America and Asia Pacific regions.

Revenues by Geography

1 unchanged sentence

A majority of our sales are to distributors who either sell to resellers or directly to end customers, who may be located in different countries than the initial ship-to destination.

The following are our revenues by geography for the three and six months ended December 31, 2024 and 2023 (in thousands, except percentages):

Three Months Ended December 31, Six Months Ended December 31,

The following are our revenues by geography for the three and nine months ended March 31, 2025 and 2024 (in thousands, except percentages):

Three Months Ended March 31, Nine Months Ended March 31,

2025 2024 2025 2024

7 unchanged sentences

Total revenues $ 664,170 100 % $ 492,997 100 % $ 1,814,393 100 % $ 1,421,029 100 %

(1) Revenue for the United States was $296.1 million and $210.4 million for the three months ended December 31, 2024 and 2023, respectively.

Revenue for the United States was $544.8 million and $419.6 million for the six months ended December 31, 2024 and 2023, respectively.

(1) Revenue for the United States was $298.5 million and $226.2 million for the three months ended March 31, 2025 and 2024, respectively.

Revenue for the United States was $843.3 million and $645.8 million for the nine months ended March 31, 2025 and 2024, respectively.

North America

Revenues in North America increased by $95.8 million, or 42%, from $225.9 million in the three months ended December 31, 2023 to $321.6 million in the three months ended December 31, 2024 and increased by $142.2 million, or 32%, from $450.6 million in the six months ended December 31, 2023 to $592.9 million in the six months ended December 31, 2024.

The increase in North America revenues during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to increased revenue from both our Enterprise Technology products and our Service Provider Technology products.

Revenues in North America increased by $80.2 million, or 33%, from $242.5 million in the three months ended March 31, 2024 to $322.7 million in the three months ended March 31, 2025 and increased by $222.5 million, or 32%, from $693.2 million in the nine months ended March 31, 2024 to $915.6 million in the nine months ended March 31, 2025.

The increase in North America revenues during the three months and nine months ended March 31, 2025, as compared to the same periods in the prior year, was due to increased revenue from our Enterprise Technology products offset in part by decreased revenue from our Service Provider Technology products.

Europe, the Middle East, and Africa (EMEA)

Revenues in EMEA increased by $35.6 million, or 21%, from $173.0 million in the three months ended December 31, 2023 to $208.6 million in the three months ended December 31, 2024 and increased by $68.1 million, or 20%, from $345.3 million in the six months ended December 31, 2023 to $413.5 million in the six months ended December 31, 2024.

The increase in EMEA revenues during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to increased revenue from our Enterprise Technology products, offset in part by decreased revenue from our Service Provider Technology products.

Revenues in the Asia Pacific region increased by $9.8 million, or 29%, from $33.3 million in the three months ended December 31, 2023 to $43.1 million in the three months ended December 31, 2024 and increased by $14.7 million, or 21%, from $69.4 million in the six months ended December 31, 2023 to $84.0 million in the six months ended December 31, 2024.

The increase in Asia Pacific revenues during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to increased revenue from our Enterprise Technology products, offset in part by decreased revenue from our Service Provider Technology products.

Revenues in EMEA increased by $81.5 million, or 41%, from $200.7 million in the three months ended March 31, 2024 to $282.1 million in the three months ended March 31, 2025 and increased by $149.6 million, or 27%, from $546.0 million in the nine months ended March 31, 2024 to $695.6 million in the nine months ended March 31, 2025.

The increase in EMEA revenues during the three months and nine months ended March 31, 2025, as compared to the same periods in the prior year, was due to increased revenue from both our Enterprise Technology products and our Service Provider Technology products.

Revenues in the Asia Pacific region increased by $11.0 million, or 42%, from $26.5 million in the three months ended March 31, 2024

to $37.5 million in the three months ended March 31, 2025 and increased by $25.7 million, or 27%, from $95.8 million in the nine months ended March 31, 2024 to $121.5 million in the nine months ended March 31, 2025.

The increase in Asia Pacific revenues during the three months and nine months ended March 31, 2025, as compared to the same periods in the prior year, was due to increased revenue from our Enterprise Technology products, offset in part by decreased revenue from our Service Provider Technology products.

South America

Revenues in South America decreased by $6.3 million, or 19%, from $32.9 million in the three months ended December 31, 2023 to $26.6 million in the three months ended December 31, 2024 and decreased by $2.8 million, or 5%, from $62.7 million in the six months ended December 31, 2023 to $59.8 million in the six months ended December 31, 2024.

The decrease in South America revenues during the three months and six months ended December 31, 2024, as compared to the same periods in the prior year, was due to a decrease in revenue from our Enterprise Technology products, offset in part by increased revenue from our Service Provider Technology products.

Gross profit margin increased to 41% in the three months ended December 31, 2024, compared to 38% in the three months ended December 31, 2023 and increased to 42% in the six months ended December 31, 2024, compared to 39% in the six months ended December 31, 2023.

The increase in gross profit margin for the three months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by favorable product mix, lower warehouse related expenses and excess and obsolete inventory charges, offset in part by higher shipping and tariff costs.

The increase in gross profit margin for the six months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by favorable product mix, lower warehouse-related expenses, excess and obsolete inventory charges and tariff costs, offset in part by higher shipping costs.

Revenues in South America decreased by $1.5 million, or 6%, from $23.4 million in the three months ended March 31, 2024 to $21.8 million in the three months ended March 31, 2025 and decreased by $4.4 million, or 5%, from $86.1 million in the nine months ended March 31, 2024 to $81.7 million in the nine months ended March 31, 2025.

The decrease in South America revenues during the three months ended March 31, 2025, as compared to the same period in the prior year, was due to a decrease in revenue from our Service Provider Technology products offset in part by increased revenue from our Enterprise Technology products.

The decrease in South America revenues during the nine months ended March 31, 2025, as compared to the same period in the prior year, was due to a decrease in revenue from our Enterprise Technology products, offset in part by increased revenue from our Service Provider Technology products.

Gross profit margin increased to 45% in the three months ended March 31, 2025, compared to 35% in the three months ended March 31, 2024 and increased to 43% in the nine months ended March 31, 2025, compared to 38% in the nine months ended March 31, 2024.

The increase in gross profit margin for the three months ended March 31, 2025, as compared to the comparable prior year period, was primarily driven by lower excess and obsolete inventory charges, favorable product mix and lower tariffs, offset in part by higher shipping costs.

The increase in gross profit margin for the nine months ended March 31, 2025, as compared to the comparable prior year period, was primarily driven by favorable product mix and lower excess and obsolete inventory charges.

Operating Expenses

Research and Development

Research and development (“R&D”) expenses increased by $3.0 million, or 8%, from $36.9 million in the three months ended December 31, 2023 to $40.0 million in the three months ended December 31, 2024.

As a percentage of revenues, R&D expenses decreased from 8% for the three months ended December 31, 2023 to 7% for the three months ended December 31, 2024.

R&D expenses increased by $4.8 million, or 7%, from $73.2 million in the six months ended December 31, 2023 to $78.0 million in the six months ended December 31, 2024.

As a percentage of revenues, R&D expenses decreased from 8% for the six months ended December 31, 2023 to 7% for the six months ended December 31, 2024.

The increase in R&D expenses during the three months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by higher prototype-related expenses and employee-related expenses.

The increase in R&D expenses during the six months ended December 31, 2024, as compared to the comparable prior year period, was primarily driven by higher employee-related expenses, assets written off, software costs, and prototype-related expenses.

Research and development (“R&D”) expenses increased by $1.8 million, or 4%, from $42.5 million in the three months ended March 31, 2024 to $44.3 million in the three months ended March 31, 2025.

As a percentage of revenues, R&D expenses decreased from 9% for the three months ended March 31, 2024 to 7% for the three months ended March 31, 2025.

R&D expenses increased by $6.5 million, or 6%, from $115.7 million in the nine months ended March 31, 2024 to $122.2 million in the nine months ended March 31, 2025.

As a percentage of revenues, R&D expenses decreased from 8% for the nine months ended March 31, 2024 to 7% for the nine months ended March 31, 2025.

The increase in R&D expenses during the three months ended March 31, 2025, as compared to the comparable prior year period, was primarily driven by higher employee-related expenses and software expenses offset in part by lower prototype-related expenses.

The increase in R&D expenses during the nine months ended March 31, 2025, as compared to the comparable prior year period, was primarily driven by higher employee-related expenses, assets written off and software expenses.

Sales, General and Administrative

Sales, general and administrative (“SG&A”) expenses increased by $8.8 million, or 45%, from $19.6 million in the three months ended December 31, 2023 to $28.5 million in the three months ended December 31, 2024.

As a percentage of revenues, SG&A expenses increased from 4% for the three months ended December 31, 2023 to 5%, for the three months ended December 31, 2024.

SG&A expenses increased by $14.0 million, or 36%, from $38.9 million in the six months ended December 31, 2023 to $52.9 million in the six months ended December 31, 2024.

As a percentage of revenues, SG&A expenses increased from 4% for the six months ended December 31, 2023 to 5%, for the six months ended December 31, 2024.

The increase in SG&A for the three months ended December 31, 2024, as compared to the comparable prior year period, was primarily due to higher bad debt expenses relating to a customer default and higher fees associated with webstore credit card processing.

The increase in SG&A for the six months ended December 31, 2024, as compared to the comparable prior year period, was primarily due to higher bad debt expenses relating to a customer default, higher fees associated with webstore credit card processing, professional fees, marketing expenses and payroll expenses driven primarily by increase in number of employees.

Sales, general and administrative (“SG&A”) expenses increased by $4.4 million, or 21%, from $20.4 million in the three months ended March 31, 2024 to $24.8 million in the three months ended March 31, 2025.

As a percentage of revenues, SG&A expenses remained consistent at 4% for both periods.

SG&A expenses increased by $18.3 million, or 31%, from $59.3 million in the nine months ended March 31, 2024 to $77.6 million in the nine months ended March 31, 2025.

As a percentage of revenues, SG&A expenses remained consistent at 4% for both periods.

The increase in SG&A for the three months ended March 31, 2025, as compared to the comparable prior year period, was primarily due to an increase in webstore sales and their corresponding credit card processing fees, marketing expenses, and employee-related expenses.

The increase in SG&A for the nine months ended March 31, 2025, as compared to the comparable prior year period, was primarily due to an increase in webstore sales and their corresponding credit card processing fees, higher bad debt expenses relating to a customer default, professional fees, marketing expenses and payroll expenses driven primarily by an increase in number of employees.

Interest Expense and Other, net

Interest expense and other, net ("I&O") expenses decreased $6.8 million, or 37% from $18.3 million in the three months ended December 31, 2023 to $11.4 million in the three months ended December 31, 2024.

As a percentage of revenue, I&O decreased from 4% for the three months ended December 31, 2023 to 2% for the three months ended December 31, 2024.

I&O expenses decreased $17.5 million, or 44% from $39.5 million in the six months ended December 31, 2023 to $22.0 million in the six months ended December 31, 2024.

As a percentage of revenue, I&O decreased from 4% for the six months ended December 31,

2023 to 2% for the six months ended December 31, 2024.

The decrease in I&O expenses during both the three and six months ended December 31, 2024, as compared to the comparable prior year periods, was primarily due to lower interest expense driven by a decrease in borrowings and lower interest rates, partly offset by higher foreign exchange losses.

Interest expense and other, net ("I&O") expenses decreased $13.5 million, or 71% from $18.9 million in the three months ended March 31, 2024 to $5.4 million in the three months ended March 31, 2025.

As a percentage of revenue, I&O decreased from 4% for the three months ended March 31, 2024 to 1% for the three months ended March 31, 2025.

I&O expenses decreased $30.9 million, or 53% from $58.4 million in the nine months ended March 31, 2024 to $27.4 million in the nine months ended March 31, 2025.

As a percentage of revenue, I&O decreased from 4% for the nine months ended March 31, 2024 to 2% for the nine months ended March 31, 2025.

The decrease in I&O expenses during the three months ended March 31, 2025, as compared to the comparable prior year period, was primarily due to lower interest expense driven by a decrease in borrowings and lower interest rates, and foreign exchange gains in the three months ended March 31, 2025 compared to foreign exchange losses in the comparable prior year period.

The decrease in I&O expenses during the nine months ended March 31, 2025, as compared to the comparable prior year period, was primarily due to lower interest expense driven by a decrease in borrowings and lower interest rates.

Provision for Income Taxes

Our provision for income taxes increased $9.9 million, or 48%, from $20.7 million for the three months ended December 31, 2023 to $30.6 million for the three months ended December 31, 2024.

Our effective tax rate decreased to 18.3% for the three months ended December 31, 2024 as compared to 20.2% for the three months ended December 31, 2023.

Our provision for income taxes increased $21.2 million, or 53%, from $40.1 million for the six months ended December 31, 2023 to $61.2 million for the six months ended December 31, 2024.

Our effective tax rate decreased from 19.1% for the six months ended December 31, 2023 to 18.8% for the six months ended December 31, 2024.

The change in effective tax rates for the three and six months ended December 31, 2024, as compared to the same periods in the prior year, was primarily driven by a change in the mix of income earned in various tax jurisdictions as well as a U.S.

state adjustment recorded in the three months ended December 31, 2023.

Our provision for income taxes increased $24.9 million, or 155%, from $16.1 million for the three months ended March 31, 2024 to $41.0 million for the three months ended March 31, 2025.

Our effective tax rate increased to 18.5% for the three months ended March 31, 2025 as compared to 17.4% for the three months ended March 31, 2024.

Our provision for income taxes increased $46.1 million, or 82%, from $56.1 million for the nine months ended March 31, 2024 to $102.2 million for the nine months ended March 31, 2025.

Our effective tax rate increased from 18.6% for the nine months ended March 31, 2024 to 18.7% for the nine months ended March 31, 2025.

The change in effective tax rates for the three and nine months ended March 31, 2025, as compared to the same periods in the prior year, was primarily driven by a change in the mix of income earned in various tax jurisdictions as well as a one-time benefit for U.S.

state income taxes recorded in the three months ended March 31, 2024.

Liquidity and Capital Resources

1 unchanged sentence

Our principal source of liquidity are cash and cash equivalents, cash generated by operations, the availability of additional funds under the Facilities and short-term investments.

We had cash and cash equivalents of $133.1 million and $126.3 million as of December 31, 2024 and June 30, 2024, respectively.

We had cash and cash equivalents of $151.0 million and $126.3 million as of March 31, 2025 and June 30, 2024, respectively.

Consolidated Cash Flow Data

The following table sets forth the major components of our consolidated statements of cash flows data for the periods presented:

Six Months Ended

Nine Months Ended

(in thousands)

4 unchanged sentences

Cash Flows from Operating Activities

Net cash provided by operating activities during the six months ended December 31, 2024 consisted primarily of net income of $264.8 million, the benefit of decreasing vendor deposits of $42.9 million and non-cash adjustments of $30.1 million, further augmented by other changes in operating assets and liabilities that resulted in net cash inflows of $48.4 million.

This net change in operating assets and liabilities consisted primarily of a $149.3 million increase in net accounts payable and accrued liabilities and $9.0 million increase in deferred revenue, partially offset by a $78.6 million increase in inventory, a $16.7 million decrease in taxes payable, a $10.3 million increase in prepaid expenses and other assets and a $4.3 million increase in accounts receivable.

Net cash provided by operating activities during the six months ended December 31, 2023 consisted primarily of net income of $169.9 million, a $50.1 million decrease in inventory, partially offset by changes in operating assets and liabilities that resulted in net cash outflows of $48.6 million.

This net change consisted primarily of a $53.6 million decrease in net accounts payable and accrued liabilities, 29.3 million decrease in taxes payable, and a $17.0 million increase in vendor deposits.

Net cash provided by operating activities during the nine months ended March 31, 2025 consisted primarily of net income of $445.2 million, the benefit of decreasing vendor deposits of $51.5 million and non-cash adjustments of $44.2 million, partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $31.3 million.

This net change in operating assets and liabilities consisted primarily of a $135.4 million increase in inventory, $58.6 million increase in accounts receivable, a $23.3 million decrease in taxes payable, and a $15.6 million increase in prepaid expenses and other assets, partially offset by a $181.2 million increase in net accounts payable and accrued liabilities and $20.4 million increase in deferred revenue.

Net cash provided by operating activities during the nine months ended March 31, 2024 consisted primarily of net income of $246.2 million, a $181.7 million decrease in inventory, non-cash adjustments of $59.9 million partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $177.7 million.

This net change in operating assets and liabilities consisted primarily of a $86.0 million decrease in net accounts payable and accrued liabilities, a $28.5 million decrease in taxes payable, and a $41.7 million increase in vendor deposits.

Cash Flows from Investing Activities

We used $4.6 million of cash in investing activities during the six months ended December 31, 2024.

We used $7.4 million of cash in investing activities during the nine months ended March 31, 2025.

Our investing activities consisted primarily of $7.4 million of capital expenditures.

We used $6.9 million of cash in investing activities during the six months ended December 31, 2023.

We used $10.1 million of cash in investing activities during the nine months ended March 31, 2024.

Our investing activities consisted primarily of $10.1 million of capital expenditures.

Cash Flows from Financing Activities

We used $374.8 million of cash in financing activities during the six months ended December 31, 2024.

During the six months ended December 31, 2024, we repaid $301.9 million under the Company's credit Facilities and used $72.6 million related to dividends paid on our common stock.

We used $156.6 million of cash in financing activities during the six months ended December 31, 2023.

During the six months ended December 31, 2023, we repaid $83.8 million under the Company’s credit Facilities and used $72.5 million related to dividends paid on our common stock.

We believe our existing cash and cash equivalents, in addition to the ability to draw cash under the Revolving Facility, if needed, will be sufficient to meet our near-term working capital requirements, dividends, and capital expenditure needs for the next twelve months, as well as long-term liquidity requirements in the event that the cash from operations is not adequate to meet our cash needs.

We used $477.6 million of cash in financing activities during the nine months ended March 31, 2025.

During the nine months ended March 31, 2025, we repaid $368.1 million under the Company's Facilities and used $108.9 million related to dividends paid on our common stock.

We used $312.3 million of cash in financing activities during the nine months ended March 31, 2024.

During the nine months ended March 31, 2024, we repaid $203.1 million under the Company’s Facilities and used $108.8 million related to dividends paid on our common stock.

We believe that we have sufficient track record of managing working capital that we will be able to establish a new credit facility in the next twelve months which meets our long-term liquidity requirements in the event that the cash from operations is not adequate to meet our cash needs.

However, this estimate is based on a number of assumptions that may prove to be wrong and we could exhaust our available cash and cash equivalents earlier than presently anticipated or need to rely more heavily on the Facilities or other sources of liquidity to continue to meet our needs.

14 unchanged sentences

We have entered and may in the future enter into standard indemnification agreements with certain distributors as well as other business partners in the ordinary course of business.

These agreements may include provisions for indemnifying the distributor, OEM or other business partner against any claim brought by a third-party to the extent any such claim alleges that a Ubiquiti product infringes a patent, copyright or trademark or violates any other proprietary rights of that third-party.

These agreements may include provisions for indemnifying the distributor, OEM

or other business partner against any claim brought by a third-party to the extent any such claim alleges that a Ubiquiti product infringes a patent, copyright or trademark or violates any other proprietary rights of that third-party.

The maximum amount of potential future indemnification is unlimited.

5 unchanged sentences

We believe the fair value of these indemnification agreements is minimal.

We have not recorded any liabilities for these agreements as of December 31, 2024.

Based upon our historical experience and information known as of the date of this Quarterly Report on Form 10-Q, we do not believe it is likely that we will have material liability for the above indemnities as of December 31, 2024.

We have not recorded any liabilities for these agreements as of March 31, 2025.

Contractual Obligations and Off-Balance Sheet Arrangements

3 unchanged sentences

We subcontract with third parties to manufacture our products and supply key components.

As of December 31, 2024, we had $1,150.2 million of purchase commitments with these third parties.

As of March 31, 2025, we had $1,264.5 million of purchase commitments with these third parties.

If we cancel all or part of the orders, we may still be liable to the contract manufacturers for the cost of the components purchased by the subcontractors to manufacture our products.

There have been no significant liabilities for current or anticipated cancellations recorded as of December 31, 2024.

There have been no significant liabilities for current or anticipated cancellations recorded as of March 31, 2025.

Our consolidated financial position and results of operations could be negatively impacted if we were required to compensate these third parties.

1 unchanged sentence

Transition Tax

We have an obligation of $28.1 million as of December 31, 2024, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

We had an obligation of $28.1 million as of March 31, 2025, related to the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act.

We expect to make a payment to fully settle this obligation in the first quarter of fiscal 2026.

1 unchanged sentence

Other Obligations

We had other obligations of $6.9 million as of December 31, 2024, which consisted primarily of commitments related to research and development projects.

We had other obligations of $5.2 million as of March 31, 2025, which consisted primarily of commitments related to research and development projects.

Unrecognized Tax Benefits

As of December 31, 2024, we had $36.1 million of unrecognized tax benefits and an additional $5.9 million for accrued interest classified as non-current liabilities.

As of March 31, 2025, we had $37.9 million of unrecognized tax benefits and an additional $5.9 million for accrued interest classified as non-current liabilities.

At this time, we are unable to make a reasonably reliable estimate of timing of payments in individual years in connection with these tax liabilities.

3 unchanged sentences

When used in this Report, the words “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and negatives of those terms are intended to identify forward-looking statements.

These are statements that relate to future periods and include statements about our future results, sources of revenue, our dividend, our continued growth, our gross margins, market trends, our product development, our introduction of new products, technological developments, the features, benefits and performance of our current and future products, the ability of our products to address a variety of markets, our growth strategies, future prices, our competitive status, our efforts to mitigate shortages of components used to manufacture our products, our dependence on our senior management and our ability to attract and retain key personnel, dependency on and concentration of our distributors, our employee relations, current and potential litigation, current or potential indemnification liabilities, the effects of government regulations, the impact of tariffs, the expected impact of taxes on our liquidity and results of operations, our compliance with laws and regulations, our expected future operating costs and expenses and expenditure levels for research and development, selling, general and administrative expenses, fluctuations in operating results, fluctuations in our stock price, our payment of dividends, our future liquidity and cash needs, and the adequacy of and our reliance on our source of liquidity to meet such needs, the Facilities (as defined herein), future acquisitions of and investments in complimentary businesses, the expected impact of various accounting policies and rules adopted by the Financial Accounting Standards Board ,the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan on our business and results of operations.

products, the ability of our products to address a variety of markets, our growth strategies, future prices, our competitive status, our efforts to mitigate shortages of components used to manufacture our products, our dependence on our senior management and our ability to attract and retain key personnel, dependency on and concentration of our distributors, our employee relations, current and potential litigation, current or potential indemnification liabilities, the effects of government regulations, the impact of tariffs, the expected impact of taxes on our liquidity and results of operations, our compliance with laws and regulations, our expected future operating costs and expenses and expenditure levels for research and development, selling, general and administrative expenses, fluctuations in operating results, fluctuations in our stock price, our payment of dividends, our future liquidity and cash needs, and the adequacy of and our reliance on our source of liquidity to meet such needs, the Facilities (as defined herein), future acquisitions of and investments in complimentary businesses, the expected impact of various accounting policies and rules adopted by the Financial Accounting Standards Board ,the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan on our business and results of operations.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks and uncertainties include, but are not limited to, the impact of the

global shortage of components and pricing inflation associated therewith, the impact of U.S.

These risks and uncertainties include, but are not limited to, the impact of the global shortage of components and pricing inflation associated therewith, the impact of U.S.

tariffs on results of operations, our ability to procure products, our ability to manage our growth, our ability to sustain or increase profitability, demand for our products, our ability to compete, our ability to rapidly develop new technology and introduce new products, our ability to safeguard our intellectual property, trends in the markets that we compete and fluctuations in general economic conditions, the military conflict between Russia and Ukraine and the escalating tensions between China and Taiwan on our business, results and liquidity, and the risks set forth throughout this Report, including under Part II:

2 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis