What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-06 compared with 2025-11-07 · 102 added, 77 removed, 205 unchanged (47% 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 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 on Form 10-Q, particularly in Note 9, “Commitments and Contingencies” to our consolidated financial statements and Part II.

Legal Proceedings and Item 1A.

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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 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.

The magnitude and scope of the recent changes have increased 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 product costs, 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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however, we recognize the associated risks.

Russia-Ukraine Military Conflict – We are monitoring the ongoing 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, associated 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.

The extent to which the conflict may impact our business or results of operations in future periods will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions, as well as its impact on surrounding countries, including its impact on our operations in Ukraine and its surrounding countries, and its impact on global supply chains.

Refer to “Part II – Item IA.

Refer to “Part II – Item 1A.

Risk Factors” for a discussion of these factors and other risks.

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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 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.

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, 2025.

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

Cost of Revenues

Our cost of revenues is comprised primarily of the costs of procuring finished goods from our contract manufacturers and certain key components that we consign to certain of our contract manufacturers.

Our cost of revenues is comprised primarily of the costs of procuring finished goods from our contract manufacturers and certain key

components that we consign to certain of our contract manufacturers.

In addition, cost of revenues includes labor and other costs w hich include salary, benefits and share-based compensation, in addition to costs associated with tooling, testing and quality assurance, warranty costs, logistics costs, tariffs and excess and obsolete inventory write-downs.

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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

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.

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.

We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations and comprehensive income.

We recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations.

Refer to “Part II—Item 1A.

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Results of Operations

Comparison of Three Months Ended September 30, 2025 and 2024

Comparison of Three and Six Months Ended December 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 September 30,

% of Revenues % of Revenues

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

2025 2024 2025 2024

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

Revenues $ 814,867 100 % $ 599,879 100 % $ 1,548,640 100 % $ 1,150,223 100 %

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Total share-based compensation $ 1,904 $ 1,793 $ 3,788 $ 3,489

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.

Total revenues increased $215.0 million, or 36%, from $599.9 million in the three months ended December 31, 2024 to $814.9 million in the three months ended December 31, 2025.

Total revenues increased $398.4 million, or 35%, from $1,150.2 million in the six months ended December 31, 2024 to $1,548.6 million in the six months ended December 31, 2025.

The increase in revenues for the three months and six months ended December 31, 2025, 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.

Revenues by Product Type

Three Months Ended September 30,

(in thousands, except percentages)

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

2025 2024 2025 2024

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

Enterprise technology $ 728,991 89 % $ 518,202 86 % $ 1,386,137 90 % $ 988,385 86 %

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Total revenues $ 814,867 100 % $ 599,879 100 % $ 1,548,640 100 % $ 1,150,223 100 %

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.

Enterprise Technology revenue increased $210.8 million, or 41%, from $518.2 million in the three months ended December 31, 2024 to $729.0 million in the three months ended December 31, 2025.

Enterprise Technology revenue increased $397.8 million, or 40%,

from $988.4 million in the six months ended December 31, 2024 to $1,386.1 million in the six months ended December 31, 2025.

The increase in Enterprise Technology revenue during the three months and six months ended December 31, 2025, 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.

Service Provider Technology revenue increased $4.2 million, or 5%, from $81.7 million in the three months ended December 31, 2024 to $85.9 million in the three months ended December 31, 2025.

Service Provider Technology revenue increased $0.7 million, or 0.4%, from $161.8 million in the six months ended December 31, 2024 to $162.5 million in the six months ended December 31, 2025.

The increase in Service Provider Technology in the three months ended December 31, 2025, as compared to the same period in the prior year, was due to an increase in revenues across all regions except South America.

The increase in Service Provider Technology in the six months ended December 31, 2025, as compared to the same period in the prior year, was due to an increase in revenues in the North America and EMEA 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 months ended September 30, 2025 and 2024 (in thousands, except percentages):

Three Months Ended September 30,

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

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

2025 2024 2025 2024

(in thousands, except percentages)

North America (1)

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Total revenues $ 814,867 100 % $ 599,879 100 % $ 1,548,640 100 % $ 1,150,223 100 %

(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.

(1) Revenue for the United States was $388.3 million and $296.1 million for the three months ended December 31, 2025 and 2024, respectively.

Revenue for the United States was $739.6 million and $544.8 million for the six months ended December 31, 2025 and 2024, respectively.

North America

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.

Revenues in North America increased by $121.9 million, or 38%, from $321.6 million in the three months ended December 31, 2024 to $443.6 million in the three months ended December 31, 2025 and increased by $233.5 million, or 39%, from $592.9 million in the six months ended December 31, 2024 to $826.4 million in the six months ended December 31, 2025.

The increase in North America revenues during the three months and six months ended December 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.

Europe, the Middle East, and Africa (EMEA)

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.

Revenues in EMEA increased by $72.1 million, or 35%, from $208.6 million in the three months ended December 31, 2024 to $280.7 million in the three months ended December 31, 2025 and increased by $130.4 million, or 32%, from $413.5 million in the six months ended December 31, 2024 to $543.8 million in the six months ended December 31, 2025.

The increase in EMEA revenues during the three months and six months ended December 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 $11.4 million, or 26%, from $43.1 million in the three months ended December 31, 2024 to $54.5 million in the three months ended December 31, 2025 and increased by $23.6 million, or 28%, from $84.0 million in the six months ended December 31, 2024 to $107.6 million in the six months ended December 31, 2025.

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

The increase in Asia Pacific revenues during the six months ended December 31, 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.

South America

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.

Revenues in South America increased by $9.5 million, or 36%, from $26.6 million in the three months ended December 31, 2024 to $36.1 million in the three months ended December 31, 2025 and increased by $11.0 million, or 18%, from $59.8 million in the six months ended December 31, 2024 to $70.8 million in the six months ended December 31, 2025.

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

Gross profit margin increased to 46% in the three months ended December 31, 2025, compared to 41% in the three months ended December 31, 2024 and increased to 46% in the six months ended December 31, 2025, compared to 42% in the six months ended December 31, 2024.

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

The increase in gross profit margin for the six months ended December 31, 2025, as compared to the comparable prior year period, was primarily driven by favorable product mix, lower shipping costs, excess and obsolete inventory charges, and warehouse-related expenses, offset in part by higher tariff costs.

Operating Expenses

Research and Development

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.

Research and development (“R&D”) expenses increased by $10.9 million, or 27%, from $40.0 million in the three months ended December 31, 2024 to $50.8 million in the three months ended December 31, 2025.

As a percentage of revenues, R&D expenses decreased from 7% for the three months ended December 31, 2024 to 6% for the three months ended December 31, 2025.

R&D expenses increased by $21.4 million, or 27%, from $78.0 million in the six months ended December 31, 2024 to $99.4 million in the six months ended December 31, 2025.

As a percentage of revenues, R&D expenses decreased from 7% for the six months ended December 31, 2024 to 6% for the six months ended December 31, 2025.

The increase in R&D expenses during the three and six months ended December 31, 2025, as compared to the comparable prior year periods, was primarily driven by higher employee-related expenses and prototype-related expenses.

Sales, General and Administrative

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.

Sales, general and administrative (“SG&A”) expenses increased by $1.8 million, or 6%, from $28.5 million in the three months ended December 31, 2024 to $30.3 million in the three months ended December 31, 2025.

As a percentage of revenues, SG&A expenses decreased from 5% for the three months ended December 31, 2024 to 4%, for the three months ended December 31, 2025.

SG&A expenses increased by $4.5 million, or 9%, from $52.9 million in the six months ended December 31, 2024 to $57.4 million in the six months ended December 31, 2025.

As a percentage of revenues, SG&A expenses decreased from 5% for the six months ended December 31, 2024 to 4%, for the six months ended December 31, 2025.

The increase in SG&A for the three months ended December 31, 2025, as compared to the comparable prior year period, was primarily due to higher marketing expenses and credit card processing fees arising from increased webstore sales, offset in part by lower bad debt expenses relating to a customer default.

The increase in SG&A for the six months ended December 31, 2025, as compared to the comparable prior year period, was primarily due to higher fees associated with webstore credit card processing, driven by higher webstore sales, marketing expenses, professional fees, and payroll expenses, offset in part by lower bad debt expenses relating to a customer default.

Interest Expense and Other, net

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.

Interest expense and other, net ("I&O") expenses decreased $9.9 million, or 86% from $11.4 million in the three months ended December 31, 2024 to $1.6 million in the three months ended December 31, 2025.

As a percentage of revenue, I&O decreased from 2% for the three months ended December 31, 2024 to 0% for the three months ended December 31, 2025.

I&O expenses decreased $17.2 million, or 78% from $22.0 million in the six months ended December 31, 2024 to $4.8 million in the six months ended December 31, 2025.

As a percentage of revenue, I&O decreased from 2% for the six months ended December 31, 2024 to 0% for the six months ended December 31, 2025.

The decrease in I&O expenses during both the three and six months ended December 31, 2025, 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, and lower foreign exchange losses.

Provision for Income Taxes

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.

Our provision for income taxes increased $27.1 million, or 89%, from $30.6 million for the three months ended December 31, 2024 to $57.7 million for the three months ended December 31, 2025.

Our effective tax rate increased to 19.8% for the three months ended December 31, 2025 as compared to 18.3% for the three months ended December 31, 2024.

Our provision for income taxes increased $47.2 million, or 77%, from $61.2 million for the six months ended December 31, 2024 to $108.4 million for the six months ended December 31, 2025.

Our effective tax rate increased from 18.8% for the six months ended December 31, 2024 to 19.7% for the six months ended December 31, 2025.

The change in effective tax rates for the three and six months ended December 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 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

Sources and Uses of Cash

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 $177.2 million and $149.7 million as of September 30, 2025 and June 30, 2025, respectively.

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

We had cash and cash equivalents of $302.8 million and $149.7 million as of December 31, 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:

Three Months Ended

September 30,

Six Months Ended

(in thousands)

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Cash Flows from Operating Activities

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.

Net cash provided by operating activities during the six months ended December 31, 2025 consisted primarily of net income of $441.5 million, the benefit of decreasing vendor deposits of $7.2 million and non-cash adjustments of $23.9 million, partially offset by other changes in operating assets and liabilities that resulted in net cash outflows of $10.2 million.

This net change in operating assets and liabilities consisted primarily of a $39.7 million decrease in taxes payable, a $11.3 million increase in prepaid expenses and other assets, $3.7 million increase in inventory and $2.2 million decrease in net accounts payable and accrued liabilities, partially offset by a $30.3 million decrease in accounts receivable and $16.5 million increase in deferred revenue.

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.

Cash Flows from Investing Activities

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

We used $8.8 million of cash in investing activities during the six months ended December 31, 2025.

Our investing activities consisted primarily of $8.8 million of capital expenditures.

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

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

Our investing activities consisted primarily of $4.6 million of capital expenditures.

Cash Flows from Financing Activities

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 used $300.5 million of cash in financing activities during the six months ended December 31, 2025.

During the six months ended December 31, 2025, we repaid $202.5 million under the Company's credit Facilities and used $96.8 million related to dividends paid on our common stock.

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 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 meet 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.

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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 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.

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 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.

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.

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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 September 30, 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 September 30, 2025.

We have not recorded any liabilities for these agreements as of December 31, 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 September 30, 2025, we had $1,249.8 million of purchase commitments with these third parties.

As of December 31, 2025, we had $1,263.8 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 September 30, 2025.

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

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

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Other Obligations

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

development projects.

We had other obligations of $4.9 million as of December 31, 2025, which consisted primarily of commitments related to research and development projects.

Unrecognized Tax Benefits

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.

As of December 31, 2025, we had $34.7 million of unrecognized tax benefits and an additional $6.6 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.

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.

These are statements that relate to future periods and include statements about our future results, sources of revenue, our dividend, our continued growth, 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, 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 and supply chain constraints, associated therewith, the impact of U.S.

These risks and uncertainties include, but are not limited to, our limited visibility into end customer demand and channel inventory levels, 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 dependence on our senior management, our ability to safeguard our intellectual property, our dependence on and concentration of our distributors, our ability to compete in the markets we serve, our ability to comply with applicable law and regulations, our employee relations, current and potential litigation, current or potential indemnification liabilities, 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:

“Other Information”, Item 1, “Legal Proceedings” and under Item 1A, “Risk Factors.” These forward-looking statements speak only as of the date hereof.

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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