What changed in this filing

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Item 1A. Risk Factors

2026-08-13 compared with 2025-08-11 · 61 added, 43 removed, 344 unchanged (23% of the section changed)

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We operate globally and sell our products in countries throughout the world.

Recent escalation in regional conflicts, including the Russian invasion of Ukraine, resulting in ongoing and expanding economic sanctions, conflict in the Middle East, and the risk of increased tensions between the U.S.

Escalations in regional conflicts, including the ongoing conflicts between Russia and Ukraine and in the Middle East, ongoing and expanding economic sanctions, political instability and economic uncertainty in the Middle East, and the risk of increased tensions between the U.S.

and China, could curtail or prohibit our ability to transfer certain technologies, to sell our products and solutions, or to continue to operate in certain locations.

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Further, it is possible that the U.S.-Chinese geopolitical tensions could result in government measures that could adversely impact our business.

In September 2023, a bill was introduced by the House Financial Services Committee that would authorize sanctions on certain Chinese entities in China’s defense and surveillance technology sectors.

This could have an adverse impact on our revenues in this region.

Further, the U.S.

administration has implemented and could implement further broad-based global tariffs that could adversely impact trade relations and result in higher costs.

The final timing and amount of tariff rates continues to evolve and therefore the impact, including those of any potential retaliatory tariffs, is difficult to forecast.

International conflict has contributed to (i) increased pressure on the supply chain and could further result in increased energy costs, which could increase the cost of manufacturing, selling and delivering products and solutions (ii) inflation, which could result in increases in the cost of manufacturing products, reduced customer purchasing power, increased price pressure, and reduced or cancelled orders (iii) increased risk of cybersecurity attacks and (iv) general market instability, all of which could adversely impact our financial results.

Tariff rates continue to evolve and therefore the impact, including those of any potential retaliatory tariffs, is difficult to forecast.

International conflict has contributed to (i) increased pressure on the supply chain and increased energy and fuel costs, which could increase the cost of manufacturing, selling and delivering products and solutions (ii) inflation, which could result in increases in the cost of manufacturing products, reduced customer purchasing power, increased price pressure, and reduced or cancelled orders (iii) increases in cybersecurity attacks and (iv) general market instability, all of which could adversely impact our financial results.

Risks Related to Our Business Strategy and Industry

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• Our OSP segment operating margin may experience some downward pressure as a result of a higher mix of 3D sensing products and increased operating expenses;

• Limited availability of components and resources for our products which leads to higher component prices;

• Longer lead times for components and resources for our products, for example, recent memory chip shortages which leads to higher component prices;

• Resource rationing, including rationing of utilities like electricity by governments and/or service providers;

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• Cyclical demand for our currency products;

• Changing market and economic conditions, including impacts due to tariffs, economic sanctions and export restrictions, the ongoing conflict between Russia and Ukraine, conflict in the Middle East, tensions and trade sanctions between the U.S.

• Changing market and economic conditions, including impacts due to tariffs, economic sanctions and export restrictions, the ongoing conflicts between Russia and Ukraine and in the Middle East, ongoing and expanding economic sanctions, political instability and economic uncertainty in the Middle East, tensions and trade sanctions between the U.S.

and China, supply chain constraints, pricing and inflationary pressures;

• A limited number of customers may account for a substantial portion of our revenue in any given period and our operating results may be adversely affected by the timing, size, and concentration of large customer orders, including orders from government entities;

• The impact of any prolonged government shutdown on our business, particularly in the aerospace and defense sectors, along with any governmental actions impacting the defense sector;

• Ability of our customers, partners, manufacturers and suppliers to purchase, market, sell, manufacture and/or supply our products and services, including as a result of disruptions arising from supply chain constraints;

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• Acquire, assume, or become subject to litigation related to the acquired businesses or assets.

VIAVI is subject to risks associated with its recent and proposed acquisitions, including completion of proposed acquisitions in the anticipated timeframes or at all, and any failure to realize anticipated benefits of such acquisitions.

In January 2025, VIAVI completed the acquisition of Inertial Labs, Inc.

(the Inertial Labs Acquisition).

VIAVI also previously announced its proposed acquisition of Spirent Communications plc’s (Spirent) high-speed ethernet and network security business lines from Keysight Technologies, Inc., (the Proposed Acquisition), which is currently estimated to close by the end of September 2025, subject to customary closing conditions.

VIAVI is subject to risks and uncertainties associated with the Proposed Acquisition, including the risk that a condition to closing may not be satisfied or waived, the possibility of failure to obtain any outstanding necessary regulatory approvals, which may be outside the control of VIAVI or Keysight Technologies, Inc., or the possibility that the Proposed Acquisition does not close in the anticipated timeframe or at all.

VIAVI may not be able to realize the anticipated benefits of the Inertial Labs Acquisition or the Proposed Acquisition, including synergies, value creation or other benefits of such acquisitions, fully or at all, or on the timeline VIAVI expects.

VIAVI is subject to risks associated with its acquisitions, and any failure to realize anticipated benefits of such acquisitions.

VIAVI may not be able to realize the benefits of any completed or contemplated acquisitions and strategic transactions, including synergies, value creation or other benefits of such acquisitions, fully or at all, or on the timeline VIAVI expects.

At times, the resources of VIAVI and the acquired businesses or the attention of certain members of their management may be focused on completion and integration of the acquisition and diverted from day-to-day business operations, which may disrupt ongoing business.

In addition, the process of integrating the acquired businesses may have an adverse impact on the Company, including from risks related to significant transaction and integration costs, unknown liabilities, employee turnover, divergence of management attention, litigation and/or regulatory actions related to the acquisition or if the acquired business does not perform as expected, which may cause an adverse financial impact on the Company.

In addition, the process of integrating, and any failure to successfully integrate, the acquired businesses may have an adverse impact on the Company, including from risks related to significant transaction and integration costs, unknown liabilities, employee turnover, divergence of management attention, litigation and/or regulatory actions related to the acquisition or if the acquired business does not perform as expected, which may cause an adverse financial impact on the Company.

We may not generate positive returns on our research and development strategy.

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• Political, legal and economic instability in foreign markets, particularly in those markets in which we maintain manufacturing and product development facilities;

• Strained or worsening relations between the U.S., Russia and China and related impacts on other countries;

• Strained or worsening relations between the U.S., Russia, China and the Middle East and related impacts on other countries;

• Difficulties in staffing and management;

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• Potential adverse tax consequences.

Global and regional health pandemics have affected and may in the future affect the manufacturing and shipment of goods globally.

International conflicts and global and regional health pandemics have affected and may in the future affect the manufacturing and shipment of goods globally.

Any delay in production or delivery of our products due to an extended closure of our suppliers’ plants could adversely impact our business, along with delays in shipment of our products as well as increased logistics costs.

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In the event future iterations of open-source software are made available under a revised license, such license revisions may adversely affect our ability to use such future iterations.

Similarly, GenAI technology has proliferated including as a feature in existing commercially available products, some of which we use.

Similarly, GenAI technology and, more recently, Agentic AI have proliferated including as a feature in existing commercially available products, some of which we use.

GenAI is a type of machine-learning model capable of generating various types of content, including data, text and images.

Use of GenAI tools could expose us to data and network security risks.

Agentic AI refers to autonomous or semi-autonomous AI systems that can reason, plan, and take actions to achieve complex, multi-step goals with minimal human supervision.

Use of these tools could expose us to data and network security risks.

These risks include the exposure of our intellectual property, confidential and proprietary information (including customer information) to unknown recipients;

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and the creation of content subject to copyright, trademark, or other intellectual property protection of an unknown third party.

Furthermore, AI, including those used by us or our vendors are subject to evolving laws and regulations and increased scrutiny, including with respect to data privacy, cybersecurity and intellectual property.

Any legislation or regulatory requirements concerning AI adopted domestically or globally may require us to expend significant resources to comply, or require changes to our products, services, or business practices, or prevent or limit our use of AI.

Legal, Regulatory and Compliance Risks

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government trade actions and restrictions could have an adverse impact on our business, financial position, and results of operation.

and China have been engaged in protracted negotiations over the Chinese government’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.

Trade tensions between the U.S.

and China have continued to escalate, with the U.S.

and China both imposing a variety of trade barriers against the other, including various export control restrictions and tariffs.

Huawei Technologies Co.

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affiliates (collectively, Huawei) are on the Entity List of the Bureau of Industry and Security of the U.S.

Department of Commerce (BIS), which imposes limitations on the supply of certain U.S.

Department of Commerce (BIS), which imposes limitations on the supply of most U.S.

items and product support to Huawei.

BIS issued final rules that further restrict access by Huawei to items produced domestically and abroad from U.S.

technology and software.

Certain products of VIAVI are subject to the restrictions;

however, the ongoing impact is not expected to be material to our overall operations.

Moreover, the additional tariffs announced by the U.S.

administration in 2025, or other trade actions that may be implemented, may increase the cost of certain materials and/or products, thereby adversely affecting our profitability.

export controls also restrict all persons from sharing many items produced domestically and abroad from U.S.

technology and software with Huawei.

Certain VIAVI products are subject to the restrictions.

Additionally, the BIS "Affiliates Rule" (50% Rule) automatically extends export restrictions to any non-U.S.

entity owned 50% or more (directly or indirectly) by restricted parties.

It is currently suspended until November 9, 2026, after which it will permanently reimpose strict compliance and licensing obligations on global supply chains.

The BIS Affiliates Rule represents a significant shift in export compliance expectations.

Historically, Entity List and Military End-User (MEU) List screening focused primarily on identifying parties that were expressly named on a BIS restricted party list.

Under the Affiliates Rule, companies must also assess whether a counterparty is owned, directly or indirectly, by listed entities.

If the rule is reinstated, VIAVI will have to perform enhanced due diligence and beneficial ownership screenings and it could further impact our business with Huawei and potentially other customers.

Moreover, the additional tariffs imposed by the U.S.

administration in 2025 (and, following the U.S.

Supreme Court striking down such tariffs as unconstitutional, the temporary replacement tariffs imposed in 2026), and any other tariffs or other trade actions that may be implemented targeting China or other jurisdictions relevant to VIAVI, may increase the cost of certain materials and/or products, thereby adversely affecting our profitability.

These actions could require us to pass these costs to our customers, which could decrease demand for our products, and could adversely impact our business.

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Hence, greater restrictions and/or disruptions of our suppliers’ ability to operate facilities and/or do business in these jurisdictions may increase the cost of certain materials and/or limit the supply of products and may result in deterioration of our profit margins, a potential need to increase our pricing and, in so doing, may decrease demand for our products and thereby adversely impact our revenue or profitability.

Due to the ongoing conflict between Russia and Ukraine, the U.S., European Union (E.U.), and United Kingdom (U.K.) have broadened restrictions on supply to Russia, thereby blocking shipments of technology, telecommunications and consumer electronics products to Russia.

Due to the ongoing conflict between Russia and Ukraine, the U.S., European Union (E.U.), and United Kingdom (U.K.) have broadened restrictions on supply to Russia of various items, including shipments of many technology, telecommunications and consumer electronics products.

We suspended transactions in the region effective February 2022 which negatively impacted our business in the region.

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For example, in December 2021, we entered into a $300 million asset-based secured credit facility (Senior Secured Asset-Based Revolving Credit Facility), maturing in December 2026, which has certain limitations based on our borrowing base capacity.

The Company is currently considering reducing the commitment under the Senior Secured Asset-Based Revolving Credit Facility to $200 million to be in line with borrowing base capacity and extend the maturity.

The Company reduced the commitment under the Senior Secured Asset-Based Revolving Credit Facility to $200 million to be in line with borrowing base capacity and extended the maturity to October 2030.

Our access to the financial markets and the pricing and terms we receive in the financial markets could be adversely impacted by various factors, including changes in financial markets and interest rates.

In addition, if we do access the capital or credit markets, agreements governing any borrowing arrangement could contain covenants restricting our operations.

Our term notes increased our overall leverage and our convertible notes could dilute our existing stockholders and lower our reported earnings per share.

The issuance of our 1.625% Senior Convertible Notes due 2026 and our 3.75% Senior Notes due 2029 (together the “Notes”) substantially increased our principal payment obligations.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt.

We and our subsidiaries may be able to incur significant additional indebtedness in the future.

The indentures that govern the Notes and the agreements that govern our secured credit facility contain restrictions on the incurrence of additional indebtedness, which are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial.

These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness under the agreements governing our existing debt.

Our notes increase our overall leverage and our convertible notes could dilute our existing stockholders and lower our reported earnings per share.

The issuance of our 3.75% Senior Notes due 2029 and our 0.625% Senior Convertible Notes due 2031 (together the “Notes”) substantially increased our principal payment obligations.

The degree to which we are leveraged could materially and adversely affect our ability to successfully obtain financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures.

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• Making us more vulnerable if a general economic downturn occurs or if our business experiences difficulties;

• Resulting in an event of default if we fail to satisfy our obligations under the Notes or our other debt or fail to comply with the financial and other restrictive covenants contained in the indentures governing the Notes, or any other debt instruments, which event of default could result in all of our debt becoming immediately due and payable and could permit certain of our lenders to foreclose on our assets securing such debt.

• Resulting in an event of default if we fail to satisfy our obligations under the Notes or our other debt or fail to comply with the financial and other restrictive covenants contained in the indentures governing the Notes or any other debt instruments, which event of default, if not cured or waived, could result in all of our debt becoming immediately due and payable and could permit certain of our lenders to foreclose on our assets securing such debt.

This could have a material adverse effect on our business, operating results or financial condition.

We may not generate sufficient cash flow to meet our debt service and working capital requirements, which may expose us to the risk of default under our debt obligations.

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Any insufficient cash flow may make it more difficult for us to obtain financing on terms that are acceptable to us, or at all.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt.

We and our subsidiaries may be able to incur significant additional indebtedness in the future.

The indentures that govern the Notes and the agreement that governs our secured credit facility contain restrictions on the incurrence of additional indebtedness, which are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial.

These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness under the agreements governing our existing debt.

For example, in March 2025, we obtained commitments for a $425 million 7-year term loan facility the proceeds of which would be available, subject to customary conditions, in connection with our pending acquisition of Spirent’s high-speed ethernet and network security business from Keysight Technologies, Inc.

We subsequently marketed and upsized to a $600 million 7-year term loan facility and successfully allocated the loan to prospective lenders at an initial interest rate of SOFR+2.50% and an original issue price of 99.75%.

The incremental $175 million is intended for general corporate purposes.

The term loan funding, as upsized, remains subject to customary closing conditions and the satisfaction or waiver of all closing conditions to the pending acquisition.

The terms of the indentures that govern the Notes and the agreement that governs our secured credit facility restrict our current and future operations.

The indentures governing the Notes and the agreement governing the secured credit facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:

The terms of the indentures that govern the Notes and the agreements that govern our secured credit facility restrict our current and future operations.

The indentures governing the Notes and the agreements governing the secured credit facility contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability to:

• Incur or guarantee additional indebtedness;

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companies or citizens.

The G7-US agreement has not yet been enacted into law, and we continue to evaluate our Pillar Two position based on legislation currently in force.

agreement has not yet been enacted into law, and we continue to evaluate our Pillar Two position based on legislation currently in force.

We will monitor tax developments for any future implications with respect to our tax burden, net income, and cash flow.

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These provisions may have the effect of deterring hostile takeovers or delaying changes in control or change in our management.

Our stock price has experienced significant volatility and may continue to fluctuate, which could adversely affect the value of an investment in our common stock.

The trading price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

• actual or anticipated fluctuations in our financial results or guidance;

• the timing and magnitude of customer orders, particularly in our data center, telecommunications, aerospace and defense end markets;

• our ability to successfully integrate acquired businesses and realize anticipated synergies;

• changes in investor sentiment regarding AI infrastructure spending, cloud investment cycles, optical networking, or defense spending;

• changes in analyst estimates, recommendations or coverage;

• announcements by us or our competitors regarding new products, technologies, acquisitions, strategic relationships or other developments;

• changes in macroeconomic conditions, interest rates, inflation, tariffs, geopolitical events or supply chain disruptions;

• general market conditions affecting technology companies or equity markets more broadly;

• sales of our common stock by existing stockholders or perceptions that such sales may occur.

In addition, securities of technology companies have historically experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to their operating performance.

As investor expectations surrounding AI infrastructure, high-speed networking and related technologies evolve, our stock price may experience increased volatility as market participants reassess growth prospects for our business and the broader industry.

Even if our operating results meet our expectations, our stock price may decline if investors perceive that our future growth opportunities have moderated or if valuations across the technology sector contract.

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-K

Item 1A. Risk Factors