What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-05-09 · 90 added, 117 removed, 192 unchanged (52% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read together with the financial statements and related notes that are included elsewhere in this quarterly report.

The following discussion of our financial condition and results of operations should be read together with the Consolidated Financial Statements (unaudited) and related notes that are included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes for the fiscal year ended June 30, 2025 contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (the “2025 Annual Report”).

In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this quarterly report, particularly in Note 9, “Commitments and Contingencies” to our consolidated financial statements and Part II “Other Information”, Item 1-Legal Proceedings and 1A-Risk Factors, in this report.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in Note 9, “Commitments and Contingencies” to our consolidated financial statements and Part II.

Legal Proceedings and Item 1A.

Risk Factors, in this Quarterly Report on Form 10-Q.

We assume no obligation to update any of these forward-looking statements.

We develop technology platforms for high-capacity distributed Internet access, unified information technology, and consumer electronics for professional, home and personal use.

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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.

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.

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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.

The magnitude and scope of the recent changes have increased and we expect will significantly increase our product costs.

For so long as such tariffs are in effect, we expect such tariffs and related trade policy uncertainty 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.

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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.

Supply Constraints and Risks – We have experienced in the past, particularly from 2020 to 2023, and may experience in the future, periodic volatility in the supply of components used to manufacture our products.

This volatility has resulted in supply constraints and corresponding increases in component delivery lead times and costs to obtain components, and resulted in delays in product production.

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.

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however, we recognize the associated risks.

Russia-Ukraine Military Conflict – We are monitoring the military conflict between Russia and Ukraine, escalating tensions in surrounding countries, and associated economic sanctions.

Russia-Ukraine Military Conflict – We are monitoring the ongoing military conflict between Russia and Ukraine, escalating tensions in surrounding countries, and associated economic sanctions.

While the impact on our operations in Ukraine and its surrounding countries has not been material to our business or results of operations as of the date hereof, the full impact of the military conflict on our business and results of operations remains uncertain.

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Our revenues are derived principally from the sale of networking hardware.

Because we have historically included implied post-contract customer support (“PCS”) free of charge in many of our arrangements, we attribute a portion of our systems revenues to this implied PCS.

Because we have historically included implied post-contract customer support (“PCS”) free of charge in many of our arrangements, we attribute a portion of our revenues to this implied PCS.

We classify our revenues into two primary product categories:

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• Service Provider Technology includes our airMAX, UISP, EdgeMAX, UFiber, Wave, GPON and airFiber platforms, as well as embedded radio products and other 802.11 standard products including base stations, radios, backhaul equipment and CPE.

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 nine months ended March 31, 2025.

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

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 57% of our revenues during the three months ended September 30, 2025.

Direct sales accounted for 43% of our revenue during the three months ended September 30, 2025.

Cost of Revenues

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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.

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.

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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.

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

For so long as such tariffs are in effect, we expect such tariffs, and related trade policy uncertainty, 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.

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To the extent that we establish a reserve, the provision for income taxes would be increased.

If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary.

If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer

We record an additional charge in our provision for taxes in the period in which we determine that tax liability is greater than our original estimate.

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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.

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.

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 2025 Annual Report, 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.

As events continue to evolve our estimates may change materially in future periods.

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Results of Operations

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

Comparison of Three Months Ended September 30, 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 March 31, Nine Months Ended March 31,

2025 2024 2025 2024

% of Revenues % of Revenues % of Revenues % of Revenues

Three Months Ended September 30,

% of Revenues % of Revenues

Revenues $ 733,773 100 % $ 550,344 100 %

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Total share-based compensation $ 1,884 $ 1,696

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.

Total revenues increased by $183.4 million, or 33%, from $550.3 million in the three months ended September 30, 2024 to $733.8 million in the three months ended September 30, 2025.

The increase in revenues for the three months ended September 30, 2025, as compared to the same period in the prior year, was primarily driven by an increase in revenue from our Enterprise Technology platform, partially offset by a decrease in revenue from our Service Provider Technology platform.

Revenues by Product Type

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

2025 2024 2025 2024

(in thousands, except percentages) (in thousands, except percentages)

Three Months Ended September 30,

(in thousands, except percentages)

Enterprise technology $ 657,147 90 % $ 470,184 85 %

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Total revenues $ 733,773 100 % $ 550,344 100 %

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.

Enterprise Technology revenue increased by $187.0 million, or 40%, from $470.2 million in the three months ended September 30, 2024 to $657.1 million in the three months ended September 30, 2025.

The increase in Enterprise Technology revenue during the three months ended September 30, 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.

Service Provider Technology revenue decreased by $3.5 million, or 4%, from $80.2 million in the three months ended September 30, 2024 to $76.6 million in the three months ended September 30, 2025.

The decrease in Service Provider Technology in the three months ended September 30, 2025, as compared to the same period in the prior year, was primarily due to a decline in revenues in the South America, Asia Pacific and North America regions.

Revenues by Geography

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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 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

(in thousands, except percentages)

The following are our revenues by geography for the three months ended September 30, 2025 and 2024 (in thousands, except percentages):

Three Months Ended September 30,

(in thousands, except percentages)

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Total revenues $ 733,773 100 % $ 550,344 100 %

(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.

(1) Revenue for the United States was $351.3 million and $248.7 million for the three months ended September 30, 2025 and 2024, respectively.

North America

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.

Revenues in North America increased by $111.6 million, or 41%, from $271.2 million in the three months ended September 30, 2024 to $382.8 million in the three months ended September 30, 2025.

The increase in North America revenues during the three months ended September 30, 2025, as compared to the same period 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 $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.

Revenues in EMEA increased by $58.2 million, or 28%, from $204.9 million in the three months ended September 30, 2024 to $263.1 million in the three months ended September 30, 2025.

The increase in EMEA revenues during the three months ended September 30, 2025, as compared to the same period in the prior year, was due to increased revenue from both our Enterprise Technology products as well as our Service Provider Technology products.

Revenues in the Asia Pacific region increased by $12.2 million, or 30%, from $40.9 million in the three months ended September 30, 2024 to $53.1 million in the three months ended September 30, 2025.

The increase in Asia Pacific revenues during the three months ended September 30, 2025, as compared to the same period in the prior year, was due to increased revenue from our Enterprise Technology products, partially offset by decreased revenue from our Service Provider Technology products.

South America

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.

Revenues in South America increased by $1.4 million, or 4%, from $33.3 million in the three months ended September 30, 2024 to $34.7 million in the three months ended September 30, 2025.

The increase in South America revenues during the three months ended September 30, 2025, as compared to the same period in the prior year, was due to increased revenue from our Enterprise Technology products, partially offset by a decrease in revenue from our Service Provider Technology products.

Gross profit margin increased to 46.0% in the three months ended September 30, 2025, compared to 42.1% in the three months ended September 30, 2024.

The increase in gross profit margin for the three months ended September 30, 2025, as compared to the comparable prior year period, was primarily driven by favorable product mix and, as a percentage of revenue, lower shipping costs, indirect operating expenses, and excess and obsolete inventory charges, offset in part by higher tariff costs.

Operating Expenses

Research and Development

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.

Research and development (“R&D”) expenses increased by $10.5 million, or 28%, from $38.0 million in the three months ended September 30, 2024 to $48.5 million in the three months ended September 30, 2025.

As a percentage of revenues, R&D expenses remained consistent at 7% for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The increase in R&D expenses during the three months ended September 30, 2025, as compared to the comparable prior year period, was primarily driven by higher employee-related expenses, higher prototype-related expenses and software costs.

Sales, General and Administrative

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.

Sales, general and administrative (“SG&A”) expenses increased by $2.7 million, or 11%, from $24.4 million in the three months ended September 30, 2024 to $27.1 million in the three months ended September 30, 2025.

As a percentage of revenues, SG&A expenses remained consistent at 4% for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

The increase in SG&A for the three months ended September 30, 2025, as compared to the comparable prior year period, was primarily due to higher fees associated with webstore credit card processing, higher employee-related expenses, professional fees, and software expenses, partially offset by lower marketing expenses.

Interest Expense and Other, net

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.

Interest expense and other, net ("I&O") expenses decreased by $7.4 million, or 70%, from $10.6 million in the three months ended September 30, 2024 to $3.2 million in the three months ended September 30, 2025.

As a percentage of revenue, I&O expenses decreased from 2% for the three months ended September 30, 2024 to 0.4% for the three months ended September 30, 2025.

The decrease in I&O expenses during the three months ended September 30, 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 losses in the first quarter of fiscal 2026 compared to foreign exchange gains in the comparable prior year period.

Provision for Income Taxes

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.

Our provision for income taxes increased by $20.0 million, or 65%, from $30.6 million for the three months ended September 30, 2024 to $50.7 million for the three months ended September 30, 2025.

Our effective tax rate increased to 19.6% for the three months ended September 30, 2025 as compared to 19.3% for the three months ended September 30, 2024.

The change in effective tax rates for the three months ended September 30, 2025, as compared to the same period in the prior year, was primarily driven by a change in the mix of income earned in various tax jurisdictions as well as in the mix of income eligible for the Foreign-Derived Intangible Income (“FDII”) rules and subject to the Global Intangible Low-Taxes Income ("GILTI") and Pillar Two rules.

Liquidity and Capital Resources

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

We had cash and cash equivalents of $177.2 million and $149.7 million as of September 30, 2025 and June 30, 2025, 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:

Nine Months Ended

Three Months Ended

September 30,

(in thousands)

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Net cash used in financing activities (165,826) (192,230)

Net increase (decrease) in cash and cash equivalents $ 24,625 $ (12,339)

Net increase in cash and cash equivalents $ 27,468 $ 38,833

Cash Flows from Operating Activities

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.

Net cash provided by operating activities during the three months ended September 30, 2025 consisted primarily of net income of $207.9 million, and non-cash adjustments of $12.3 million, partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $21.7 million.

This net change in operating assets and liabilities consisted primarily of a $32.5 million decrease in net accounts payable and accrued liabilities, a $6.6 million increase in inventories, partially offset by a $8.3 million increase in taxes payable, a $8.1 million increase in deferred revenue, and a $1.8 million decrease in vendor deposits.

Net cash provided by operating activities during the three months ended September 30, 2024 consisted primarily of net income of $128.0 million, and the benefit of decreasing vendor deposits of $21.7 million, decreasing inventories of $8.5 million and non-cash adjustments of $15.9 million, further augmented by other changes in operating assets and liabilities that resulted in net cash inflows of $59.7 million.

This net change in operating assets and liabilities consisted primarily of a $58.7 million increase in net accounts payable and accrued liabilities, a $6.2 million increase in taxes payable and $5.4 million decrease in accounts receivable.

Cash Flows from Investing Activities

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

We used $5.2 million of cash in investing activities during the three months ended September 30, 2025.

Our investing activities consisted primarily of $5.2 million of capital expenditures.

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

We used $2.6 million of cash in investing activities during the three months ended September 30, 2024.

Our investing activities consisted primarily of $2.6 million of capital expenditures.

Cash Flows from Financing Activities

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 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.

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.

Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support development efforts, the timing of new product introductions, market acceptance of our products, management of inventory and vendor deposits, the availability of additional funds under the Facilities and overall economic conditions.

We used $165.8 million of cash in financing activities during the three months ended September 30, 2025.

During the three months ended September 30, 2025, we repaid $116.3 million under the Company's Facilities and used $48.4 million related to dividends paid on our common stock.

We used $192.2 million of cash in financing activities during the three months ended September 30, 2024.

During the three months ended September 30, 2024, we repaid $155.6 million under the Company’s Facilities and used $36.3 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 existing Revolving Facility, and our intention to enter into a new credit facility before the existing one matures in March 2026,if needed, will be sufficient to meet our near-term working capital requirements, pay quarterly dividends, make repurchases of our common stock and capital expenditure needs for the next twelve months.

We believe that we have sufficient track record of managing working capital that we will be able to establish a new credit facility prior to the maturity of our existing credit facility satisfying 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 credit facilities or other sources of liquidity to continue to meet our needs.

Inflation and the current geopolitical environment have caused and may continue to cause significant volatility in financial markets and the domestic and global economy.

This volatility can contribute to potential payment delays or defaults in our accounts receivable, affect asset valuations resulting in impairment charges, and affect the availability of financing credit as well as other segments of the credit markets.

This volatility may contribute to potential payment delays or defaults in our accounts receivable, affect asset valuations resulting in impairment charges, and affect the availability of financing

credit as well as other segments of the credit markets.

For a further discussion of the uncertainties and business risks, refer to "Part II-Item 1A.

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Generally, the distributor is responsible for the freight costs associated with warranty returns, and we absorb the freight costs of replacing items under warranty.

In accordance with FASB's, Accounting Standards Codification ("ASC"), 450-20, Loss Contingencies, we record an accrual when we believe it is reasonably estimable and probable based upon historical experience.

In accordance with the Financial Accounting Standard Board’s (“FASB's”), Accounting Standards Codification ("ASC"), 450-20, Loss Contingencies, we record an accrual when we believe it is reasonably estimable and probable based upon historical experience.

We record a provision for estimated future warranty work in cost of goods sold upon recognition of revenues, and we review the resulting accrual regularly and periodically adjust it to reflect changes in warranty estimates.

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.

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

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

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 March 31, 2025.

We have not recorded any liabilities for these agreements as of September 30, 2025.

Contractual Obligations and Off-Balance Sheet Arrangements

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

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

As of September 30, 2025, we had $1,249.8 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 March 31, 2025.

There have been no significant liabilities for current or anticipated cancellations recorded as of September 30, 2025.

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

In addition, we may be subject to additional purchase obligations to our contract manufacturers for supply agreements and components ordered by them based on manufacturing forecasts we provide them each month.

Transition Tax

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.

This obligation is included within Income tax payable on our consolidated balance sheets.

Other Obligations

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

We had other obligations of $4.9 million as of September 30, 2025, which consisted primarily of commitments related to research and

development projects.

Unrecognized Tax Benefits

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.

As of September 30, 2025, we had $34.7 million of unrecognized tax benefits and an additional $6.0 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.

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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.

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.

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 sources of liquidity to meet such needs, our ability to access new sources of liquidity, 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 and supply chain constraints, 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:

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis