What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-30 compared with 2025-05-02 · 141 added, 155 removed, 239 unchanged (55% of the section changed)

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Forward-looking statements include statements, but are not limited to statements such as:

• Financial projections and expectations, including profitability of certain business units, plans to reduce costs and improve efficiencies including through restructuring programs, the effects of seasonality on certain business units, the consolidation of the communication industry and continued reliance on key customers for a significant portion of our revenue, future sources of revenue, competition and pricing pressures, the future impact of certain accounting pronouncements, and our estimation of the potential impact and materiality of litigation;

• Financial projections and expectations, including profitability of certain business units, synergies, benefits and other matters related to the acquisition of the high-speed ethernet, network security and channel emulation testing business of Spirent Communications plc, plans to reduce costs and improve efficiencies including through restructuring programs, the effects of seasonality on certain business units, the consolidation of the communication industry and continued reliance on key customers for a significant portion of our revenue, future sources of revenue, competition and pricing pressures, the future impact of certain accounting pronouncements, and our estimation of the potential impact and materiality of litigation;

• Sufficiency of our sources of funding for working capital, capital expenditures, contractual obligations, acquisitions, stock repurchases, debt repayments and other matters;

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• Our expectations related to our products, including costs associated with the development of new products, product yields, quality and other issues;

• Our latest projections regarding the impact of tariffs and our strategies for mitigating such impact;

• Our expectations regarding the impact of tariffs and our strategies for mitigating such impact;

• Our expectations related to future tax liabilities resulting from future tax legislation;

• Our expectations related to macro-economic conditions, including the impact of inflation, fiscal tightening at central banks, changes in foreign exchange rates, the risk of increased tensions and trade actions, including global tariffs, ongoing geopolitical tensions including the conflict between Russia and Ukraine, the instability in the Middle East and the sustainability of recent cease-fire agreements, on our business, operations and financial results.

• Our expectations related to macro-economic conditions, including the impact of inflation, fiscal tightening at central banks, changes in foreign exchange rates, the risk of increased tensions and trade actions, including global tariffs, ongoing geopolitical tensions including the conflict between Russia and Ukraine, the instability in the Middle East, on our business, operations and financial results.

Management cautions that forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from those projected in such forward-looking statements.

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To serve our markets we operate the following business segments:

• Network Enablement (NE);

• Service Enablement (SE);

• Network and Service Enablement (NSE);

• Optical Security and Performance Products (OSP).

During the third quarter of fiscal 2025, the Network and Service Enablement (NSE) business grew year-over-year driven by recovery and growth across many of our product segments.

OSP performance slightly improved year over year.

We continue to monitor the demand for anti-counterfeiting products and are starting to see a demand supply equilibrium emerge in the anti-counterfeiting business.

During the first quarter of fiscal 2026, the NSE business grew year-over-year as a result of strong demand for lab and production and field products driven by the data center ecosystem as well as growth in aerospace and defense products.

Our acquisition of Inertial Labs contributed $18.7 million of net revenue in the first quarter of fiscal 2026.

OSP performance improved year-over-year primarily as a result of strength in Anti-Counterfeiting and Other products.

Our financial results and long-term growth model will continue to be driven by revenue growth, non-GAAP operating income, non-GAAP operating margin, non-GAAP diluted earnings per share (EPS) and cash flow from operations.

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Looking Ahead

As we look forward to the fourth quarter of fiscal 2025, we continue to see gradual recovery across many of our end markets and expect it to continue despite the evolving macro environment.

As we look forward to the second quarter of fiscal 2026, we expect NSE to be up driven mainly by the data center ecosystem as well as aerospace and defense and the acquisition of Spirent Communications plc’s (Spirent) high-speed ethernet, network security and channel emulation testing business.

Our long-term focus remains on executing against our strategic priorities to drive revenue and earnings growth, capture market share and continue to optimize our capital structure.

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• Invest in secular trends to drive growth and expand total addressable market (TAM);

• Extend VIAVI technologies and platforms into adjacent markets and applications;

• Continue productivity improvements in Operations, Research and Development (R&D) and Selling, General and Administrative (SG&A).

In April 2025, the U.S.

administration announced broad-based, updated global tariffs and the situation continues to be dynamic and evolving.

• Extend VIAVI technologies and platforms into lucrative adjacent markets and applications.

administration has implemented and could implement further broad-based, updated global tariffs and the situation continues to be dynamic and evolving.

As we operate in this challenging environment, we are focused on continuing to deliver our products and services to our customers.

Given our global business, tariffs will result in additional cost for us and our suppliers.

We are analyzing ways to optimize our operations and supply chain and strategies to reduce the impact from tariffs.

Additionally, we are taking measures to control cost and implementing pricing actions to primarily mitigate the remaining impact.

We are analyzing ways to optimize our operations and supply chain strategies, control costs and implement pricing actions to reduce the impact from tariffs.

Financial Highlights

Third quarter fiscal 2025 results included the following notable items:

First quarter fiscal 2026 results included the following notable items:

• Net revenue of $299.1 million, up $60.9 million or 25.6% year-over-year.

• GAAP operating margin of 3.0%, up 780 bps year-over-year.

• GAAP operating margin of 2.5%, down 230 bps year-over-year.

• Non-GAAP operating margin of 15.7%, up 570 bps year-over-year.

• GAAP net income of $19.5 million, up $44.1 million or 179.3% year-over-year.

• GAAP net loss of $21.4 million, up $19.6 million or 1,088.9% year-over-year.

• Non-GAAP net income of $33.1 million, up $20.7 million or 166.9% year-over-year.

• GAAP diluted EPS of $0.09, up $0.20 or 181.8% year-over-year.

• GAAP diluted EPS of $(0.10), down $0.09 or 900.0% year-over-year.

• Non-GAAP diluted EPS of $0.15, up $0.09 or 150.0% year-over-year.

A reconciliation of GAAP financial measures to Non-GAAP financial measures is provided below (in millions, except EPS amounts) :

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Operating Income Operating Margin Operating (Loss) Income Operating Margin Operating Income Operating Margin Operating Income Operating Margin

Three Months Ended

September 27, 2025 September 28, 2024

Operating Income Operating Margin Operating Income Operating Margin

GAAP measures $ 7.6 2.5 % $ 11.5 4.8 %

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Amortization of intangibles 8.4 2.8 % 4.4 1.8 %

Restructuring and related (benefits) charges (0.3) (0.1) % 0.1 — % 0.9 0.1 % (0.8) (0.1) %

Restructuring and related benefits (0.3) (0.1) % — — %

Litigation settlement — — % (1.3) (0.5) %

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Non-GAAP measures $ 47.1 15.7 % $ 23.9 10.0 %

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Net Income Diluted EPS Net (Loss) Income Diluted EPS Net Income Diluted

EPS Net (Loss) Income Diluted

Three Months Ended

September 27, 2025 September 28, 2024

Net (Loss) Income Diluted EPS Net (Loss) Income Diluted EPS

GAAP measures $ (21.4) $ (0.10) $ (1.8) $ (0.01)

Items reconciling GAAP Net Income (Loss) and EPS to Non-GAAP Net Income and EPS:

Items reconciling GAAP Net Loss and EPS to Non-GAAP Net Income and EPS:

Stock-based compensation 13.4 0.06 12.7 0.06

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Acquisition and integration related charges 3.9 0.02 0.6 —

Other charges unrelated to core operating performance (1)

Other charges (benefits) unrelated to core operating performance (1)

0.6 — (0.5) —

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Amortization of intangibles 8.4 0.04 4.4 0.02

Restructuring and related (benefits) charges (0.3) — 0.1 — 0.9 — (0.8) (0.01)

Restructuring and related benefits (0.3) — — —

Litigation settlement — — (1.3) (0.01)

Non-cash interest expense and other expense (2)

(Benefit from) provision for income taxes (26.1) (0.12) 0.9 0.01 (24.4) (0.11) 2.1 0.01

4.8 0.02 1.1 0.01

Provision for income taxes 10.2 0.05 0.7 —

Total related to Net Income and EPS 54.5 0.25 14.2 0.07

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Shares used in per share calculation for Non-GAAP EPS 227.9 224.0

(1) Included in the nine months ended March 29, 2025 is a gain of $0.9 million on the sale of assets previously classified as held for sale and other charges unrelated to core operating performance of $1.1 million.

(1) Included in the three months ended September 28, 2024 is a gain of $0.9 million on the sale of assets previously classified as held for sale and other charges unrelated to core operating performance of $0.4 million.

(2) The Company incurred a loss of $3.8 million for the three months ended September 27, 2025 in connection with the extinguishment of certain 1.625% Senior Convertible Notes.

Use of Non-GAAP (Adjusted) Financial Measures

The Company provides non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP EPS financial measures as supplemental information regarding the Company’s operational performance and believes providing this additional information allows investors to see Company results through the eyes of management, better understand its financial performance and evaluate the efficacy of the methodology used by management to measure such performance.

The Company provides non-GAAP operating income, non-GAAP operating margin, non-GAAP net income and non-GAAP EPS financial measures as supplemental information regarding the Company’s operational performance and believes providing this additional information allows investors to see Company results through the eyes of management, and better to evaluate more clearly and consistently the Company’s core operational performance and expenses and evaluate the efficacy of the methodology used by management to measure such performance.

The Company uses the measures disclosed in this Report to evaluate the Company’s historical and prospective financial performance, as well as its performance relative to its competitors.

Specifically, management uses these items to further its own understanding of the Company’s core operating performance, which the Company believes represents its performance in the ordinary, ongoing and customary course of its operations.

Accordingly, management excludes from core operating performance items such as those relating to certain purchase price accounting adjustments, amortization of acquisition related intangibles, stock-based compensation, legal settlements, restructuring, changes in fair value of contingent consideration liabilities and certain investing and acquisition related expenses and other activities that management believes are not reflective of such ordinary, ongoing and core operating activities.

The non-GAAP adjustments described in this Form 10-Q are excluded by the Company from its GAAP financial measures because the Company believes excluding these items enables investors to evaluate more clearly and consistently the Company’s core operational performance.

Accordingly, management excludes from core operating performance items such as those relating to certain purchase price accounting adjustments, amortization of acquisition related intangibles, amortization expense related to acquisition related inventory step-up, stock-based compensation, legal settlements, restructuring, changes in fair value of contingent consideration liabilities, certain investing and acquisition related expenses and other activities and income tax expenses or benefits that management believes are not reflective of such ordinary, ongoing and core operating activities.

The non-GAAP adjustments are outlined below.

Cost of revenues, costs of research and development and costs of selling, general and administrative :

The Company’s GAAP presentation of gross margin and operating expenses may include (i) additional depreciation and amortization from changes in estimated useful life and the write-down of certain property, equipment and intangibles that have been identified for disposal but remained in use until the date of disposal, (ii) charges such as severance, benefits and outplacement costs related to restructuring plans, (iii) costs for facilities not required for ongoing operations, and costs related to the relocation of certain equipment from these facilities and/or contract manufacturer facilities, (iv) stock-based compensation, (v) amortization expense related to acquired intangibles, (vi) amortization expense related to inventory step-up (vii) changes in fair value of contingent consideration liabilities, (viii) acquisition related transaction and integration costs related to acquired entities, (ix) litigation and legal settlements and (x) other charges unrelated to our core operating performance comprised mainly of other costs and contingencies unrelated to current and future operations, including transformational initiatives such as the implementation of simplified automated processes, site consolidations, and reorganizations.

The Company’s GAAP presentation of gross margin and operating expenses may include (i) additional depreciation and amortization from changes in estimated useful life and the write-down of certain property, plant and equipment and intangibles, (ii) charges such as severance, benefits and outplacement costs related to restructuring plans with a specific and defined term, (iii) costs for facilities not required for ongoing operations, and costs related to the relocation of certain equipment from these facilities and/or contract manufacturer facilities, (iv) stock-based compensation, (v) amortization expense related to acquired intangibles, (vi) amortization expense related to acquisition related inventory step-up, (vii) changes in fair value of contingent consideration liabilities, (viii) acquisition related transaction and integration costs related to acquired entities, (ix) significant legal settlements and other contingencies and (x) other charges unrelated to our core operating performance comprised mainly of other costs and contingencies unrelated to current and future operations, including transformational initiatives such as the implementation of simplified automated processes, site consolidations and reorganizations.

The Company excludes these items in calculating non-GAAP operating margin, non-GAAP net income and non-GAAP EPS.

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Income tax expense or benefit :

The Company excludes certain non-cash tax expense or benefit items, such as the utilization of net operating losses where valuation allowances were released, intra-period tax allocation benefit and the tax effect for amortization of non-tax deductible intangible assets when calculating non-GAAP net income and non-GAAP EPS.

The Company excludes certain non-cash tax expense or benefit items, such as (i) the utilization of net operating losses (NOLs) where valuation allowances were released, (ii) intra-period tax allocation benefit and (iii) the tax effect for amortization of non-tax deductible intangible assets, in calculating non-GAAP net income and non-GAAP EPS.

Non-GAAP financial measures are not in accordance with, preferable to, or an alternative for, generally accepted accounting principles in the United States.

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The GAAP measure most directly comparable to non-GAAP EPS is earnings per share.

The Company believes these GAAP measures alone are not fully indicative of its core operating expenses and performance and that providing non-GAAP financial measures in conjunction with GAAP measures provides valuable supplemental information regarding the Company’s overall performance.

RESULTS OF OPERATIONS

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The following table summarizes selected Consolidated Statements of Operations items ( in millions ):

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 Change Percent Change March 29, 2025 March 30, 2024 Change Percent Change

Three Months Ended

September 27, 2025 September 28, 2024 Change Percent Change

Segment net revenue:

NE $ 188.0 $ 151.7 $ 36.3 23.9 % $ 508.6 $ 457.2 $ 51.4 11.2 %

SE 20.2 18.1 2.1 11.6 % 58.9 62.6 (3.7) (5.9) %

NSE $ 216.0 $ 159.4 $ 56.6 35.5 %

OSP 83.1 78.8 4.3 5.5 %

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Percentage of net revenue 0.5 % 0.5 %

Restructuring and related (benefits) charges $ (0.3) $ 0.1 $ (0.4) (400.0) % $ 0.9 $ (0.8) $ 1.7 (212.5) %

Restructuring and related benefits $ (0.3) $ — $ (0.3) NM

Percentage of net revenue 0.1 % — %

Loss on convertible note extinguishment $ (3.8) $ — $ (3.8) NM

Percentage of net revenue 1.3 % — %

Interest and other income, net $ 1.3 $ 3.2 $ (1.9) (59.4) %

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Percentage of net revenue 2.5 % 3.1 %

(Benefit from) provision for income taxes $ (16.3) $ 9.0 $ (25.3) (281.1) % $ 2.2 $ 25.2 $ (23.0) (91.3) %

Provision for income taxes $ 19.0 $ 9.0 $ 10.0 111.1 %

Percentage of net revenue 6.4 % 3.8 %

Equity investment losses $ (0.1) $ — $ (0.1) NM

Percentage of net revenue — % — %

NM - Percentage change not considered meaningful

Revenue from our service offerings exceeds 10% of our total consolidated net revenue and is presented separately in our Consolidated Statements of Operations.

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Consequently, the following discussion of business segment performance focuses on total net revenue, gross profit and operating income consistent with our approach for managing the business.

Three and Nine Months Ended March 29, 2025 and March 30, 2024

Net revenue increased by $38.8 million, or 15.8%, during the three months ended March 29, 2025 compared to the same period a year ago.

This increase reflects higher spend by Network Equipment Manufacturers (NEMs), and aerospace and defense customers.

Net revenue increased by $45.4 million, or 6.1%, during the nine months ended March 29, 2025 compared to the same period a year ago.

This increase reflects higher spend by NEMs, aerospace and defense customers and service providers, partially offset by lower wireless and 3D sensing revenues.

Product revenues increased by $34.2 million, or 16.5%, during the three months ended March 29, 2025 compared to the same period a year ago, driven by revenue increases in our all segments.

Product revenues increased by $40.9 million, or 6.6%, during the nine months ended March 29, 2025 compared to the same period a year ago, driven by a revenue increase in our NE segment, partially offset by revenue decreases in our SE and OSP segments.

Service revenues increased by $4.6 million, or 11.9% during the three months ended March 29, 2025, compared to the same period a year ago driven by revenue increases in our NE and SE segments.

Service revenues increased by $4.5 million, or 3.6% during the nine months ended March 29, 2025 compared to the same period a year ago, driven by a revenue increase in our NE segment, partially offset by a revenue decrease in our SE segment.

Three Months Ended September 27, 2025 and September 28, 2024

Net revenue increased by $60.9 million, or 25.6%, during the three months ended September 27, 2025 compared to the same period a year ago.

This increase was primarily from lab and production and field products driven by the data center ecosystem, as well as growth in our aerospace and defense products.

Our acquisition of Inertial Labs contributed $18.7 million of net revenue in the first quarter of fiscal 2026.

OSP performance improved year-over-year driven by Anti-Counterfeiting and Other products.

Product revenues increased by $59.9 million, or 30.3%, during the three months ended September 27, 2025 compared to the same period a year ago, driven by volume increases in NSE and OSP.

Service revenues increased by $1.0 million, or 2.5% during the three months ended September 27, 2025, compared to the same period a year ago, driven by a volume increase in NSE.

Going forward, we expect to continue to encounter a number of industry and market risks and uncertainties.

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(d) fluctuations in customer buying patterns, which cause demand, revenue and profitability volatility;

(e) the current trend of communication industry consolidation, which is expected to continue, that directly affects our NE and SE customer bases and adds additional risk and uncertainty to our financial and business projections;

(e) the current trend of communication industry consolidation, which is expected to continue, that directly affects our NSE customer base and adds additional risk and uncertainty to our financial and business projections;

(f) the impact of ongoing global trade policies, tariffs and sanctions;

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Revenue by Region

We operate in three geographic regions:

Americas, Asia-Pacific and Europe, Middle East and Africa (EMEA).

We operate in three geographic regions, including the Americas, Asia-Pacific and Europe Middle East and Africa (EMEA).

Net revenue is assigned to the geographic region and country where our product is initially shipped.

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The following table presents net revenue by the three geographic regions we operate in and net revenue from countries that exceeded 10% of our total net revenue ( in millions ):

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 March 29, 2025 March 30, 2024

Three Months Ended

September 27, 2025 September 28, 2024

United States $ 106.7 35.7 % $ 73.0 30.6 %

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Total net revenue $ 299.1 100.0 % $ 238.2 100.0 %

Net revenue from customers outside the Americas represented 62.0% and 60.6% of net revenue, respectively, during the three and nine months ended March 29, 2025.

Net revenue from customers outside the Americas represented 64.1% and 61.0% of net revenue, respectively, during the three and nine months ended March 30, 2024.

Net revenue from customers outside the Americas represented 56.9% and 62.8% of net revenue, respectively, during the three months ended September 27, 2025 and September 28, 2024.

We expect revenue from customers outside of the United States to continue to be an important part of our overall net revenue and an increasing focus for net revenue growth opportunities.

Amortization of Acquired Technologies (Cost of revenues)

Amortization of acquired technologies within Cost of revenues increased $2.6 million or 74.3% and $2.3 million or 22.1% during the three and nine months ended March 29, 2025, respectively, compared to the same periods a year ago.

This increase is primarily due to the amortization of intangibles acquired through a current year acquisition partially offset by certain intangibles becoming fully amortized.

Gross margin increased by 0.3 percentage points during the three months ended March 29, 2025 from 56.1% in the same period a year ago to 56.4% in the current period.

The increase was primarily due to gross margin increase in NE and OSP, partially offset by gross margin decrease in SE, as discussed below in the Operating Segment Information section.

Gross margin increased by 0.1 percentage points during the nine months ended March 29, 2025 from 57.5% in the same period a year ago to 57.6% in the current period.

The increase was primarily due to gross margin increase in NE and OSP, partially offset by gross margin decrease in SE, as discussed below in the Operating Segment Information section.

Amortization of acquired technologies within Cost of revenues increased $3.6 million or 109.1% during the three months ended September 27, 2025 compared to the same period a year ago.

This increase is primarily due to the amortization of intangibles acquired through Inertial Labs, partially offset by certain intangibles becoming fully amortized.

Gross margin decreased by 0.6 percentage points during the three months ended September 27, 2025 from 57.1% in the same period a year ago to 56.5% in the current period.

The decrease was primarily driven by the increase in amortization of intangibles and amortization of acquisition related inventory step-up, partially offset by higher volume and favorable product mix.

As discussed in more detail under “Net Revenue” above, we sell products in certain markets that are consolidating, undergoing product, architectural and business model transitions, have high customer concentrations, are highly competitive (increasingly due to Asia-Pacific-based competition), are price sensitive and/or are affected by customer seasonal and mix variant buying patterns.

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Research and Development

R&D expense remained flat during the three months ended March 29, 2025 compared to the same period a year ago.

Higher variable expenses and incremental cost from a current year acquisition were offset by a one-time R&D tax credit catch-up.

As a percentage of net revenue, R&D expense decreased by 2.7 percentage points during the three months ended March 29, 2025 compared to the same period a year ago.

R&D expense increased by $2.1 million, or 1.4% during the nine months ended March 29, 2025 compared to the same period a year ago.

This increase was primarily due to higher variable expenses and incremental cost from a current year acquisition offset by a one-time R&D tax credit catch-up.

As a percentage of net revenue, R&D expense decreased by 0.9 percentage points during the nine months ended March 29, 2025 compared to the same period a year ago.

Research and Development (R&D) expense increased by $6.6 million, or 13.4% during the three months ended September 27, 2025 compared to the same period a year ago.

This increase was primarily due to higher variable expenses and incremental cost from the acquisition of Inertial Labs.

As a percentage of net revenue, R&D expense decreased by 2.0 percentage points during the three months ended September 27, 2025 compared to the same period a year ago.

We believe that continuing our investments in R&D is critical to attaining our strategic objectives.

We plan to continue to invest in R&D and new products that will further differentiate us in the marketplace.

One such investment is the VIAVI Automated Lab-as-a-Service for Open RAN (VALOR), which became fully operational in the second quarter of fiscal 2025.

Selling, General and Administrative

SG&A expense increased by $3.1 million, or 3.2%, during the three months ended March 29, 2025 compared to the same period a year ago.

This increase was primarily due to higher variable expenses and the change in fair value of acquisition related contingent consideration, partially offset by lower acquisition and integration related charges.

As a percentage of net revenue, SG&A expense decreased 4.3 percentage points during the three months ended March 29, 2025 compared to the same period a year ago.

SG&A expense increased by $9.5 million, or 3.8%, during the nine months ended March 29, 2025 compared to the same period a year ago.

This increase was primarily due to higher variable expenses, the change in fair value of acquisition related contingent consideration and higher stock-based compensation.

As a percentage of net revenue, SG&A expense decreased 0.7 percentage points during the nine months ended March 29, 2025 compared to the same period a year ago.

Selling, General and Administrative (SG&A) expense increased by $30.1 million, or 40.6%, during the three months ended September 27, 2025 compared to the same period a year ago.

This increase was primarily due to the change in fair value of acquisition related contingent consideration, higher variable expenses and higher acquisition and integration related charges.

As a percentage of net revenue, SG&A expense increased 3.7 percentage points during the three months ended September 27, 2025 compared to the same period a year ago.

Amortization of Intangibles (Operating expenses)

Amortization of intangibles within Operating expenses decreased $0.3 million or 20.0% and $1.7 million or 34.0% during the three and nine months ended March 29, 2025, respectively, compared to the same periods a year ago.

These decreases are primarily due to certain intangibles becoming fully amortized partially offset by amortization of intangibles acquired through a current year acquisition.

Amortization of intangibles within Operating expenses increased $0.4 million or 36.4% during the three months ended September 27, 2025 compared to the same period a year ago.

This increase is primarily due to the amortization of intangibles acquired through Inertial Labs, partially offset by certain intangibles becoming fully amortized.

Restructuring

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During the fourth quarter of fiscal 2024, management approved a restructuring and workforce reduction plan (the Fiscal 2024 Plan) across various functions intended to improve operational efficiencies and better align the Company’s workforce with current business needs.

The Company expects approximately 7% of its global workforce to be affected, impacting all segments and corporate functions.

The Company expects approximately 7% of its global workforce to be affected, impacting both segments and corporate functions.

We estimate annualized gross cost savings of approximately $25.0 million excluding any one-time charges as a result of the restructuring activities initiated under the Fiscal 2024 Plan.

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The Fiscal 2023 Plan affected approximately 5% of the Company's workforce and resulted in an estimated annualized gross cost savings of approximately $25.0 million excluding any one-time charges.

As of March 29, 2025, our total restructuring accrual was $4.5 million.

During the three and nine months ended March 29, 2025, the Company recorded restructuring benefits of $0.3 million and charges of $1.1 million, respectively, related to the Fiscal 2024 Plan.

During the nine months ended March 29, 2025, the Company recorded restructuring benefits of $0.2 million related to the Fiscal 2023 Plan.

During the three and nine months ended March 30, 2024, the Company recorded restructuring charges of $0.1 million and benefits of $0.8 million, respectively, related to the Fiscal 2023 Plan.

As of September 27, 2025, our total restructuring accrual was $2.7 million.

During the three months ended September 27, 2025, the Company recorded restructuring benefits of $0.3 million related to the Fiscal 2024 Plan.

During the three months ended September 28, 2024, the Company recorded restructuring charges of $0.2 million related to the Fiscal 2024 Plan and benefits of $0.2 million related to the Fiscal 2023 Plan.

We estimate future cash payments of $2.7 million under the Fiscal 2024 Plan, funded by operating cash flow.

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Restructuring and Related Charges” for more information.

Loss on Convertible Note Extinguishment

During the three months ended September 27, 2025, the Company issued $100.9 million aggregate principal amount of 0.625% Senior Convertible Notes due 2031 (2031 Notes) to certain holders of the 1.625% Senior Convertible Notes (2026 Notes) in exchange for $97.5 million principal amount of the 2026 Notes.

This exchange transaction was accounted for as an extinguishment which resulted in the write-off of unamortized debt discount and issuance costs of $1.1 million on the extinguished notes.

Accrued interest of $0.7 million on the 2026 Notes was included in the exchange for the 2031 Notes.

The total loss from the exchange was $3.8 million recorded as Loss on convertible note extinguishment in the Consolidated Statements of Operations.

Interest and other income, net

Interest and other income, net, was $2.2 million during the three months ended March 29, 2025 compared to $4.0 million during the same period a year ago.

This $1.8 million decrease was primarily driven by a decrease in interest income due to lower cash balances and lower yields compared to the prior period.

Interest and other income, net, was $9.3 million during the nine months ended March 29, 2025 compared to $18.0 million during the same period a year ago.

This $8.7 million decrease was primarily driven by a legal settlement in our favor in the amount of $7.3 million in the prior period and a decrease in interest income due to lower cash balances and lower yields compared to the prior period.

Interest and other income, net, was $1.3 million during the three months ended September 27, 2025 compared to $3.2 million during the same period a year ago.

This $1.9 million decrease was primarily driven by a decrease in interest income due to lower average cash balances and lower yields compared to the prior period.

Interest Expense

Interest expense decreased by $0.2 million, or 2.6% during the three months ended March 29, 2025 compared to the same period a year ago.

This decrease was primarily driven by lower outstanding debt when compared to the prior period.

Interest expense decreased by $0.9 million, or 3.8% during the nine months ended March 29, 2025 compared to the same period a year ago.

This decrease was primarily driven by lower outstanding debt when compared to the prior period.

Interest expense decreased by $0.1 million, or 1.3% during the three months ended September 27, 2025 compared to the same period a year ago.

This change was primarily driven by a decrease in the accretion of debt discount on the 2026 Notes as a result of the debt extinguishment.

Provision for Income Taxes

We recorded an income tax benefit of $16.3 million and an income tax provision of $2.2 million for the three and nine months ended March 29, 2025, respectively.

We recorded an income tax provision of $9.0 million and $25.2 million for the three and nine months ended March 30, 2024, respectively.

The income tax benefit for the three months and the income tax provision for the nine months ended March 29, 2025 primarily relates to a $25.9 million release of valuation allowance related to our acquisition of Inertial labs and income tax in certain foreign and state jurisdictions based on our forecasted pre-tax income or loss.

The income tax provision for the three and nine months ended March 30, 2024 primarily relates to income tax in certain foreign and state jurisdictions based on our forecasted pre-tax income or loss.

The income tax provision recorded differs from the expected tax provision that would be calculated by applying the federal statutory rate to our income from continuing operations before taxes primarily due to changes in the valuation allowance for deferred tax assets attributable to our domestic and foreign income from continuing operations and our acquisition of Inertial Labs.

As of March 29, 2025, and June 29, 2024, our unrecognized tax benefits (net of Federal benefits) totaled $52.2 million and $50.7 million, respectively, and are included in deferred taxes and other non-current tax liabilities.

We had $4.5 million accrued for the payment of interest and penalties as of March 29, 2025.

We recorded an income tax provision of $19.0 million and $9.0 million for the three months ended September 27, 2025 and September 28, 2024, respectively.

The income tax provision for the three months ended September 27, 2025 primarily relates to income tax in certain foreign jurisdictions based on our forecasted pre-tax income or loss and a $9.7 million provision related to a revaluation of our deferred tax assets due to a change in the German corporate income tax rate.

The income tax provision for the three months ended September 28, 2024, primarily relates to income tax in certain foreign jurisdictions based on our forecasted pre-tax income or loss.

As of September 27, 2025, and June 28, 2025, our unrecognized tax benefits (net of Federal benefits) totaled $42.5 million and $42.4 million, respectively, and are included in deferred taxes and other non-current tax liabilities.

We had $3.4 million accrued for the payment of interest and penalties as of September 27, 2025.

The timing and resolution of income tax examinations are uncertain, and the amounts ultimately paid, if any, upon resolution of issues raised by the taxing authorities may differ from the amounts accrued for each year.

Although we do not expect that our balance of gross unrecognized tax benefits will change materially in the next 12 months, given the uncertainty in the development of ongoing income tax examinations, we are unable to estimate the full range of possible adjustments to this balance.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA), which included a broad range of tax reform provisions, was signed into law in the United States.

We have considered the provisions of OBBBA, which did not have a material impact on our tax provision this quarter.

Operating Segment Information

Information related to our operating segments was as follows (in millions) :

Three Months Ended Nine Months Ended

March 29, 2025 March 30, 2024 Change Percentage Change March 29, 2025 March 30, 2024 Change Percentage Change

Network Enablement

Net revenue $ 188.0 $ 151.7 $ 36.3 23.9 % $ 508.6 $ 457.2 $ 51.4 11.2 %

Gross profit 119.2 93.3 25.9 27.8 % 320.9 285.1 35.8 12.6 %

Gross margin 63.4 % 61.5 % 63.1 % 62.4 %

Service Enablement

Three Months Ended

September 27, 2025 September 28, 2024 Change Percentage Change

Network and Service Enablement

Net revenue $ 216.0 $ 159.4 $ 56.6 35.5 %

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Gross margin 63.0 % 60.9 %

Network and Service Enablement

Net revenue $ 208.2 $ 169.8 $ 38.4 22.6 % $ 567.5 $ 519.8 $ 47.7 9.2 %

Operating income (loss) $ 16.3 $ (7.3) $ 23.6 (323.3) %

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Operating margin 37.1 % 39.6 %

Network Enablement

NE net revenue increased by $36.3 million, or 23.9%, during the three months ended March 29, 2025 compared to the same period a year ago, primarily driven by higher volume in Lab and Production, Aerospace and Defense and Fiber and Access Solutions, partially offset by lower volume in Wireless.

NE net revenue increased by $51.4 million, or 11.2%, during the nine months ended March 29, 2025 compared to the same period a year ago, primarily driven by higher volume in Lab and Production, Aerospace and Defense and Fiber and Access Solutions, partially offset by lower volume in Wireless.

NE gross margin increased by 1.9 percentage points during the three months ended March 29, 2025 to 63.4% from 61.5% in the same period a year ago primarily due to higher volume and favorable product mix.

NE gross margin increased by 0.7 percentage points during the nine months ended March 29, 2025 to 63.1% from 62.4% in the same period a year ago primarily due to higher volume and favorable product mix.

Service Enablement

SE net revenue increased by $2.1 million, or 11.6%, during the three months ended March 29, 2025 compared to the same period a year ago primarily driven by higher volume in Assurance.

SE net revenue decreased by $3.7 million, or 5.9%, during the nine months ended March 29, 2025 compared to the same period a year ago primarily driven by lower volume in Assurance and Data Center, offset in part by higher Wireless Enterprise Solutions revenue.

SE gross margin decreased by 0.9 percentage points during the three months ended March 29, 2025 to 59.9% from 60.8% in the same period a year ago primarily due to lower volume.

SE gross margin decreased by 3.2 percentage points during the nine months ended March 29, 2025 to 62.8% from 66.0% in the same period a year ago primarily due to lower volume.

Network and Service Enablement

NSE operating margin increased by 12.2 percentage points during the three months ended March 29, 2025 to 10.4% from (1.8)% in the same period a year ago primarily due to higher volume and one-time R&D tax credit catch-up.

NSE operating margin increased by 4.7 percentage points during the nine months ended March 29, 2025 to 5.6% from 0.9% in the same period a year ago primarily due to higher volume and one-time R&D tax credit catch-up.

NSE net revenue increased by $56.6 million, or 35.5%, during the three months ended September 27, 2025 compared to the same period a year ago, primarily driven by higher volume in Lab and Production, Aerospace and Defense and Fiber and Access Solutions, partially offset by lower volume in Wireless.

NSE gross margin increased by 2.1 percentage points during the three months ended September 27, 2025 to 63.0% from 60.9% in the same period a year ago primarily due to higher volume and favorable product mix.

NSE operating margin increased by 12.1 percentage points during the three months ended September 27, 2025 to 7.5% from (4.6)% in the same period a year ago primarily due to the aforementioned increase in gross margin.

Optical Security and Performance Products

OSP net revenue increased by $0.4 million, or 0.5%, during the three months ended March 29, 2025 compared to the same period a year ago.

This increase was primarily driven by Anti-Counterfeiting and Other revenues offset in part by a decrease in 3D sensing revenue.

OSP net revenue decreased by $2.3 million, or 1.0%, during the nine months ended March 29, 2025 compared to the same period a year ago.

This decrease was primarily driven by lower 3D sensing revenue offset in part by higher Anti-Counterfeiting and Other revenues.

OSP gross margin increased by 1.5 percentage points during the three months ended March 29, 2025 to 51.6% from 50.1% in the same period a year ago primarily due to higher volume.

OSP gross margin increased by 1.0 percentage points during the nine months ended March 29, 2025 to 52.6% from 51.6% in the same period a year ago primarily due to higher volume.

OSP operating margin decreased by 0.4 percentage points during the three months ended March 29, 2025 to 33.9% from 34.3% in the same period a year ago primarily due to unfavorable product mix and higher operating expense.

OSP operating margin decreased by 0.8 percentage points during the nine months ended March 29, 2025 to 35.4% from 36.2% in the same period a year ago primarily due to unfavorable product mix and higher operating expenses.

OSP net revenue increased by $4.3 million, or 5.5%, during the three months ended September 27, 2025 compared to the same period a year ago.

This increase was primarily driven by Anti-Counterfeiting and Other revenues.

OSP gross margin decreased by 3.0 percentage points during the three months ended September 27, 2025 to 52.3% from 55.3% in the same period a year ago primarily due to unfavorable product mix.

OSP operating margin decreased by 2.5 percentage points during the three months ended September 27, 2025 to 37.1% from 39.6% in the same period a year ago primarily due to the aforementioned decrease in gross margin.

Liquidity and Capital Resources

We believe our existing liquidity and sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our liquidity needs, including but not limited to, contractual obligations, working capital and capital expenditure requirements, financing strategic initiatives, funding debt maturities, and executing purchases under our share repurchase program over the next twelve months and beyond.

We believe our existing liquidity and sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our liquidity needs, including but not limited to, contractual obligations, working capital and capital expenditure requirements, contingent consideration obligations, financing strategic initiatives, funding debt maturities, and executing purchases under our share repurchase program over the next twelve months and beyond.

However, there are a number of factors that could positively or negatively impact our liquidity position, including:

• Global economic conditions that affect demand for our products and services and impact the financial stability of our suppliers and customers;

• Changes in accounts receivable, inventory or other operating assets and liabilities that affect our working capital;

• Global economic conditions which affect demand for our products and services and impact the financial stability of our suppliers and customers;

• Changes in accounts receivable, inventory or other operating assets and liabilities which affect our working capital;

• Increase in capital expenditure to support the revenue growth opportunity of our business;

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• Factoring or sale of accounts receivable;

• Volatility in fixed income and credit markets that impact the liquidity and valuation of our investment portfolios;

• Volatility in fixed income and credit markets which impact the liquidity and valuation of our investment portfolios;

• Volatility in credit markets that impact our ability to obtain additional financing on favorable terms or at all;

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• Possible investments or acquisitions of complementary businesses, products or technologies;

• Principal payment obligations of our 1.625% Senior Convertible Notes due 2026, and our 3.75% Senior Notes due 2029 (together the Notes) and covenants that restrict our debt level and credit facility capacity;

• Issuance or repurchase of debt, which may include open market purchases of our 2026 Notes and/or 2029 Notes prior to their maturity;

• Principal payment obligations of our 1.625% Senior Convertible Notes due 2026, our 3.75% Senior Notes due 2029 and 0.625% Senior Convertible Notes due 2031 (together the “Notes”), Term Loan B Facility maturing in 2032 and covenants that restrict our debt level and credit facility capacity;

• Issuance or repurchase of debt which may include open market purchases of our 2026 Notes, 2029 Notes and/or 2031 Notes prior to their maturity and repayment of Term Loan B facility maturing 2032;

• Issuance or repurchase of our common stock or other equity securities;

• Challenges in repatriating funds from certain foreign jurisdictions;

• Factors beyond our control that may impact timing of and/or appropriation of government funding for certain of our strategic research and development programs;

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Unrealized gains and losses on available-for-sale investments are recorded as Other comprehensive (loss) income and reported as a separate component of stockholders’ equity.

As of March 29, 2025, U.S.

As of September 27, 2025, U.S.

subsidiaries owned approximately 38.2% of our cash and cash equivalents, short-term investments and restricted cash.

As of March 29, 2025, the majority of our cash investments have maturities of 90 days or less and are of high credit quality.

As of September 27, 2025, the majority of our cash investments have maturities of 90 days or less and are of high credit quality.

Nonetheless we could realize investment losses under adverse market conditions.

During the three months ended March 29, 2025, we have not realized material investment losses but we can provide no assurance that the value or liquidity of our investments will not be impacted by adverse conditions in the financial markets.

During the three months ended September 27, 2025, we have not realized material investment losses but we can provide no assurance that the value or liquidity of our investments will not be impacted by adverse conditions in the financial markets.

In addition, we maintain cash balances in operating accounts with third-party financial institutions.

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The Credit Agreement also provides that, under certain circumstances, we may increase the aggregate amount of revolving commitments thereunder by an aggregate amount of up to $100.0 million so long as certain conditions are met.

As of March 29, 2025, we had no borrowings under this facility and our available borrowing capacity was approximately $165.6 million, net of outstanding standby letters of credit of $4.4 million.

On October 16, 2025, we amended the Credit Agreement to reduce the commitment to $200 million to be in line with borrowing base availability and extend the maturity to October 2030.

As of September 27, 2025, we had no borrowings under this facility and our available borrowing capacity was approximately $181.0 million, net of outstanding standby letters of credit of $3.8 million.

Refer to “Note 11.

Debt” for more information.

Cash Flows for the Nine Months Ended March 29, 2025

As of March 29, 2025, our combined balance of cash and cash equivalents and restricted cash decreased by $99.1 million to $382.7 million from $481.8 million as of June 29, 2024.

During the nine months ended March 29, 2025, Cash provided by operating activities was $66.0 million, consisting of net income of $26.8 million adjusted for non-cash charges (e.g., depreciation, amortization, stock-based compensation and other non-cash items) totaling $54.0 million, including changes in deferred tax balances, and changes in operating assets and liabilities that used $14.8 million.

Changes in our operating assets and liabilities related to an increase in accounts receivable of $31.9 million due to billings outpacing collections, a decrease in accrued expenses and other current and non-current liabilities of $8.3 million due primarily to restructuring payments, an increase in other current and non-current assets of $1.5 million, a decrease in deferred revenue of $0.9 million and an increase in inventory of $0.3 million.

These were offset by an increase in accounts payable of $15.7 million driven by timing of purchases and related payments, an increase in accrued payroll and related expenses of $6.8 million due primarily to variable pay and an increase in income taxes payable of $5.6 million.

During the nine months ended March 29, 2025, Cash used in investing activities was $140.7 million, primarily resulting from $117.9 million used for an acquisition, $22.3 million used for capital expenditures, $3.0 million investment in a non-marketable equity security and $2.2 million net purchases of short-term investments offset by $4.7 million in proceeds from the sale of assets.

During the nine months ended March 29, 2025, Cash used in financing activities was $23.5 million, primarily resulting from $16.4 million cash paid to repurchase common stock under our share repurchase program and $13.1 million in withholding tax payments on the vesting of restricted stock and performance-based awards.

These were offset by $6.0 million in proceeds from the issuance of common stock under our employee stock purchase plan.

Convertible Notes

On August 20, 2025, the Company issued $100.9 million aggregate principal amount of the 2031 Notes in exchange for $97.5 million principal amount of the 2026 Notes and issued and sold $149.1 million aggregate principal amount of the 2031 Notes.

The Company intends to use the proceeds to retire the remaining principal amount of the 2026 Notes upon maturity on March 15, 2026.

Concurrent with this transaction, the Company repurchased and subsequently retired 2.7 million shares of its common stock for $30.0 million under the 2022 Repurchase Plan.

Refer to “Note 11.

Debt” for more information.

On October 16, 2025, we entered into a Term Loan Credit Agreement with Wells Fargo, as administrative agent, and certain lender-related parties.

The Term Loan Credit Agreement provides for senior secured $600 million maturing on October 16, 2032.

The proceeds from the Term Loan Credit Agreement were used to finance a portion of the acquisition of Spirent’s high-speed ethernet, network security and channel emulation testing business from Keysight Technologies, Inc., acquisition related expenses and will be used for general corporate purposes.

Refer to “Note 20.

Subsequent Events” for more information.

Cash Flows for the Three Months Ended September 27, 2025

As of September 27, 2025, our combined balance of cash and cash equivalents and restricted cash increased by $120.0 million to $552.1 million from $432.1 million as of June 28, 2025.

During the three months ended September 27, 2025, Cash provided by operating activities was $31.0 million, consisting of net loss of $21.4 million adjusted for non-cash charges (e.g., depreciation, amortization, stock-based compensation and other non-cash items) totaling $62.3 million, including changes in deferred tax balances, and changes in operating assets and liabilities that used $9.9 million.

Changes in our operating assets and liabilities related to an increase in inventory of $11.6 million related to demand changes, a decrease in deferred revenue of $10.7 million due to timing of support billings and project acceptances, a decrease in accrued payroll and related expenses of $9.1 million due primarily to variable pay and timing of payroll, an increase in other current and non-current assets of $0.5 million and a decrease in accounts payable of $0.5 million.

These were partially offset by a decrease in accounts receivable of $17.4 million due to collections outpacing billings, an increase in accrued expenses and other current and non-current liabilities of $4.3 million and an increase in income taxes payable of $0.8 million.

During the three months ended September 27, 2025, Cash used in investing activities was $8.3 million, primarily resulting from $8.5 million used for capital expenditures, $0.7 million used for the acquisition of Inertial Labs partially offset by $0.9 million in proceeds from the sale of assets.

During the three months ended September 27, 2025, Cash provided by financing activities was $97.7 million, primarily resulting from $149.1 million in proceeds from the issuance of the 2031 Notes and $2.7 million in proceeds from the issuance of common stock under our employee stock purchase plan.

These were partially offset by $30.0 million cash paid to repurchase common stock under our share repurchase program, $16.2 million in withholding tax payments on the vesting of restricted stock and performance-based awards and $7.8 million of debt issuance costs paid in the period.

Share Repurchase Program

During the nine months ended March 29, 2025, we repurchased 2.0 million shares of our common stock for $16.4 million pursuant to our 2022 Repurchase Plan.

As of March 29, 2025, the Company had remaining authorization of $198.4 million for future share repurchases under the 2022 Repurchase Plan.

During the three months ended September 27, 2025, we repurchased and subsequently retired 2.7 million shares of our common stock for $30.0 million pursuant to our 2022 Repurchase Plan.

As of September 27, 2025, the Company had remaining authorization of $168.4 million for future share repurchases under the 2022 Repurchase Plan.

Refer to “Note 15.

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Contractual Obligations

There were no material changes to our existing contractual commitments during the third quarter of fiscal 2025.

There were no material changes to our existing contractual commitments during the first quarter of fiscal 2026.

Off-Balance Sheet Arrangements

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We sponsor significant qualified and non-qualified pension plans for certain past and present employees in the U.K.

Most of these plans have been closed to new participants and no additional service costs are being accrued.

plan is fully funded, and the other German plans, which were initially established as “pay-as-you-go” plans, are unfunded.

As of March 29, 2025, our pension plans were under-funded by $48.8 million since the post-retirement benefit obligation (PBO) exceeded the fair value of plan assets.

The Company also is responsible for a defined benefit plan comprising of gratuity payments for present employees in India.

These pension plans, with the exception of India, have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany assumed in connection with an acquisition in fiscal 2010.

and India plans were fully funded while the German plans, which were initially established as “pay-as-you-go” plans, are unfunded.

As of September 27, 2025, our pension plans were under-funded by $51.2 million since the post-retirement benefit obligation (PBO) exceeded the fair value of plan assets.

Pension plan assets are managed by external third parties and we monitor the performance of our investment managers.

As of March 29, 2025, the fair value of plan assets had decreased approximately 3.4% since June 29, 2024, our most recent fiscal year end.

As of September 27, 2025, the fair value of plan assets had decreased approximately 5.0% since June 28, 2025, our most recent fiscal year end.

We are also responsible for the non-pension PBO assumed from a past acquisition of $0.3 million.

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however, actual results may differ from these estimates and such differences may be material.

Contingent Purchase Consideration

For contingent purchase consideration, the fair value of such earn-out liabilities are generally determined using a Monte Carlo Simulation that includes significant unobservable inputs such as the projected revenues of the acquired business over the earn-out period.

The fair value of contingent consideration liabilities is remeasured at each reporting period at the estimated fair value based on the inputs on the date of remeasurement.

The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and given the inherent uncertainties in making these estimates, actual results are likely to differ from the amounts originally recorded and could be materially different.

Post-retirement benefit obligation (PBO)

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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