CALX 10-K & 10-Q changes, risk factors and insider trading

•If we do not successfully execute our business strategy to increase our sales tothrough newadoption of our platform, cloud and existingmanaged Broadbandservice Experience Providers, or BEPs,offerings, our operating results, financial condition, cash flows and long-term growth may be negatively impacted.

Our growth depends upon our ability to increase sales to existing and new service providers of all types and sizes, and the execution of our strategy to increase sales to BEPsCXPs involves significant risk. The majority of our revenue is not recurring, and our customers generally have no committed purchase requirements, may cancel orders or cease purchasing our products at any time. If our customers stop purchasing our products for any reason, our business and results of operations would be harmed. If we are unable to increase our sales to new and existing BEPs,CXPs, our operating results, financial condition, cash flows and long-term growth may be negatively impacted. Our strategy includes investing in regional sales teams and select channel partners to sell to smaller regional broadband service providers. A large portion of our current sales are to customers with smaller regional networks and limited capital expenditure budgets. The spending patterns of many of these customers are generally less formal than larger service providers and often characterized by small and sporadic purchases, and the potential revenue from any one of these customers is limited. We rely primarily on channel partners, including value added resellers, internationally and for certain U.S. markets. We face fierce competition for business with key channel partners. If we are unable to engage channel partners, we may fail to grow our sales, or our sales may be reduced. Furthermore, we rely on our channel partners to promote and sell our products. The loss of a key channel partner or the failure of our partners to provide adequate services could have a negative effect on customer satisfaction and could cause harm to our business.

We face risks associated with being materially dependent upon third-party vendors; certain factors such as component shortages that affect our business as a result of those dependencies have and could continue to disrupt our business and adversely impact our gross margin and results of operations.

Particular risks associated with management of our global supply chainsupply-chain operations include the following:

•Manufacturing constraints, shortages and other disruptions. We do not have internal manufacturing capabilities and we rely solely on a small number of CMs and ODMs to manufacture and supply our products. Our business operations and ability to supply our products are highly dependent upon our ability to secure adequate third-party manufacturing capabilities and capacity and to effectively manage those third parties to meet our business needs. Our dependence solely on third-party manufacturers makes us vulnerable to possible supply and capacity constraints and reduces our control over manufacturing disruptions due to component availability, extended lead times delivery schedules, quality, manufacturing yields and increased costs. Some of these risks occur from time to time in our business. If these disruptions and constraints are prolonged, or if these manufacturers do not have the ability or business continuity plans to fulfill their obligations to us, our business could be disrupted. If we cannot effectively manage our vendors or if we fail to invest adequate resources to manage our supply chain operations, our ability to meet customer orders and generate revenue may be negatively impacted. A substantial portion of our manufacturing is done at facilities outside of the U.S., largely in Asia, which presents increased supply risk, including the risk of supply interruptions, delays, shortages or reductions in manufacturing quality or controls. In addition, these supply interruptions, delays and shortages could impair our ability to meet our customer requirements, require us to pay higher prices or incur expedite fees, which would harm our business and negatively impact our gross margin and results of operations. Our international manufacturing also creates risks and uncertainties associated with regulatory changes or government actions such as local business requirements, trade restrictions and tariffs, economic sanctions or related legislation, which may complicate our export and import activities, be disruptive to the operations of our manufacturers and logistics partners or result in higher product and shipping costs and variability of supply. Manufacturing in Asia further heightens our risk of meeting customer delivery requirements as we rely upon third-party logistics companies to transport and import significant volumes of products to the U.S. where we generate a substantial majority of our revenue. These supply chain risks are further increased by periodic shipping backlogs at ports and similar disruptions to transportation infrastructure.

•Limited sources and sole-sourced supply. We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets andchipsets, certain of our application-specific integrated circuit processors and memory and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries. Any of these suppliers could stop producing our components, raise the prices they charge us, be subject to higher product tariffs, epidemics or other conditions that disrupt their operations, cease operations or enter into exclusive arrangements with our competitors, consequently affecting our operations and results. For example, wethe technology industry is currently experiencing significant supply constraints for memory components, driven in part by the reallocation of manufacturing capacity towards the global AI infrastructure build, which constraints may continue for years until new manufacturing capacity is built. These constraints have experiencedresulted disruptions in our supply of certain components that we source from suppliers in Chinain, and otherare Asian countries dueexpected to productioncontinue disruptions,to factoryresult closuresin, increased costs and longerextended lead times for the components and from uncertainty around trade and tariff policies between the U.S. and China, which has caused delaysused in our product supply.products. Being dependent upon a limited number of suppliers constrains our ability to mitigate these disruptions in our supply chain, particularly if such disruptions are prolonged. This may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices in a timely fashion, or at all. These risks would adversely affect our ability to meet scheduled product deliveries to our customers, increase costs and in turn harm our business and results of operations.

•Limitations on ability to manage third-party risks. Our business with certain third-party manufacturers may represent a relatively small percentage of their revenue. Consequently, our orders may not be given adequate priority if such manufacturers have to allocate limited capacity among competing customers. This could delay supplies of product to us or limit our ability to ramp product volumes within desired timeframes. If any of our manufacturing partners are unable or unwilling to continue manufacturing our products in required volumes and at high quality levels, we would have to identify, qualify and select acceptable alternative manufacturers. The time it takes to qualify new third-party manufacturers could disrupt our ability to maintain continuous supply of product to meet customer requirements. An alternative manufacturer may not be available to us when needed or may not be in a position to satisfy our production requirements at commercially reasonable prices and quality. In addition, we and/or our manufacturers may not be able to negotiate commercially reasonable terms and sufficient quantities of component supplies with component and materials suppliers to meet our manufacturing needs because our purchase volumes may be too low for us to be considered a priority customer for securing supplies, particularly when there are shortages or limited availability of key components and materials. As a result, suppliers could stop selling to us and our manufacturers at commercially reasonable prices, or at all. While we have worked to mitigate the cost impact from historical price increases, our efforts may not be successful with respect to increases arising from product tariffs recently announced by the U.S. Any such interruption or delay may force us and our manufacturers to seek components or materials from alternative sources, which may not be available, or result in higher prices. Switching suppliers could also force us to redesign our products to accommodate new components and could require us to re-qualify our products with our customers, which would be costly and time consuming. A significant interruption in manufacturing or supply availability for any of these reasons would reduce supply to our customers, which would result in lost revenue and harm our customer relationships.

•Ability to forecast and manage inventory liability with vendors. We have experienced increases in demand from many customers, in part as a result of higher consumer demand for better internet services and improved Wi-Fi. If we underestimate product demand from our customers, our manufacturers may have inadequate component inventory to meet our demand. If we are not ableunable to adequately anticipate demand, this could interrupt our product manufacturing, increase our cost of revenue associated with expedite fees and air freight and/or result in delays or cancellation of customer orders. If we are unable to deliver products timely to our customers, we may lose customer goodwill or our customers may choose to purchase from other vendors, all of which may have a material negative impact on our revenue and operating results. If we overestimate our product demand, our third-party manufacturers may purchase excess components and build excess inventory, and we could be required to pay for these excess parts or products and their storage costs. For example, as of December 31, 2024, we had inventory deposits totaling $62.6 million to address excess components owned by our CMs and ODMs. Long lead times for component supply, which may be exacerbated by higher demand for certain components, and demand for our products has and is expected to continue to impact our ability to accurately forecast our production requirements. We may incur liabilities for certain component inventory purchases that have been rendered excess or obsolete, which may have an adverse effect on our gross margin, financial condition and results of operations.

We market our platformplatform, cloud and managed services to communication service providersCSPs globally through our direct sales force as well as select resellers. Our customers range from smaller, regional service providers to some of the world’s largest service providers. Customers are defined into small (less than 250,000 subscribers), medium (250,000 to 2.5 million subscribers) or large (greater than 2.5 million subscribers). We have approximately 1,600 active customers that have deployed passive optical, Active Ethernet or point-to-point Ethernet fiber access networks or our subscriber premise systems.appliances.

Our revenue and potential revenue growth will depend onon, among other things, our ability to develop, market and sell our platform and managed services to strategically aligned customers of all types such as WISPs,MSPs, fiberlocal overbuilders,and competitive exchange carriers, cable MSOs, municipalitiesWISPs, fiber overbuilders such as municipalities, electric cooperatives, tribal communities, multiple dwelling units (“MDU”) and electrichospitality cooperativesproviders in the U.S. and internationally. Our growth is also highly dependent on the speed and willingness of customers to adopt our platform and managed services.

Revenue fluctuations result from many factors, including, but not limited to: increases or decreases in customer orders for our products and services, global economic and geopolitical events and conditions, including tariffs, trade controls, inflation, economic downturns and market, financial or other factors such as government stimulus or shutdowns that may delay or materially impact customer purchasing decisions, non-availability of products due to supply chain challenges, including component and labor shortages and increasing lead times as well as disruptions as a result of pandemics or natural disasters, contractual terms with customers that result in delayed revenue recognition and varying budget cycles and seasonal buying patterns of our customers. More specifically, our customers have in the past spent less in the first quarter as they are finalizing their annual budgets, and in certain regions, customers are challenged by winter weather conditions that inhibit fiber deployment in outside infrastructure. In recent years, as our revenue from our large customers decreased, we have experienced less year-end volatility due to capital budgetary spending or freezing. This, combined with an increase in recurring revenue, has resulted in smaller seasonal fluctuations, and we expect this trend to continue. Our revenue is also dependent upon our customers’ success in growing their subscribers, timing of purchases, capital expenditure plans and decisions to upgrade their networks or adopt new technologies, including adoption of our software and cloud platform solutions, as well as our ability to grow our customer base.

Cost of revenue is strongly correlated to revenue and tends to fluctuate due to all of the above factors that may cause revenue fluctuations. Factors that have impacted our cost of revenue, or that we expect may impact cost of revenue in future periods, also include: changes in the mix of products delivered, customer location and regional mix, changes in the cost of our inventory, investments to support expansion of cloud and customer support offerings as well as our customer success organization, changes in product warranty, incurrence of retrofit costs, amortization of intangibles, support fees for silicon-related development work for our products, changes in trade policies, allowances for obligations to our suppliers and inventory write-downs. Factors that we expect may impact our cost of revenue in future periods include the same factors in the prior quarter, changes in trade policies and the transition from DDR4 to DDR5 memory. Regarding trade policies, in April 2025, the U.S. President signed an executive order increasing tariffs on imports from numerous countries, including China and other Asian countries where our sole-source or limited-source suppliers are located. Currently, the majority of our finished goods are exempt from tariffs. For imported components for domestic manufacturing and certain finished goods, these actions increased our cost of revenue. We continue to evaluate the actions we may be able to take to mitigate such costs as we monitor and navigate this challenging and dynamic operating environment. Regarding the DDR4 to DDR5 transition, the reduction in manufacturing capacity of DDR4 memory has resulted in increased DDR4 memory prices and will increase the cost of our products. In addition, we periodically ship by air versus by ocean in order to meet delivery commitments to our customers, which is more costly. Cost of revenue also includes fixed expenses related to our internal operations, which could increase our cost of revenue as a percentage of revenue if our revenue declines.

Critical Accounting Policies and Estimates

Revenue is recognized when a performance obligation is satisfied, which occurs when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenue from sales of access and premises systemsappliances is recognized when control is transferred to the customer, which is generally when the products are shipped. Revenue from software platform licenses, which provides the customer with a right to use the software as it exists, is generally recognized upfront when the license is made available to the customer. Revenue from cloud-based software subscriptions, customer support, maintenance, extended warranty subscriptions and managed services is generally recognized ratably over the contract term. Revenue from professional services and training is recognized as the services are delivered.

Inventory, which primarily consists of finished goods purchased from CMs or ODMs, is stated at the lower of cost (determined by the first-in, first-out method) and net realizable value. Inbound shipping costs and tariffs are included in the cost of inventory. In addition, from time to time, we procure component inventory primarily asdue ato result of manufacturingthe discontinuation of critical components by suppliers orsuppliers, a change in suppliers.suppliers Furthermore,or asin aconnection resultwith of the global pandemic-induced supply chain challenges andour supply assurance plans,plans. weThis havecomponent purchased,inventory andis maythen continue to purchase, excess components from our suppliers and consign componentsconsigned back to our suppliers to be consumed on future finished good builds.

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, which requires additional disclosure of certain costs and expenses within the notes to the financial statements. The updated standard is effective for our annual periods beginning in 2027 and interim periods beginning in the first quarter of 2028. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our financial statement disclosures.

The following table sets forth our revenue by customer size (dollars in thousands):

Our revenue is principally derived in the U.S.U.S., Revenue generated in the U.S.which represented 92%93% of revenue in 20242025 and 91%92% in 2023.2024. Our primary focus has been, and in the near term will continue to be, the U.S. and Canada given our large, direct sales and marketing presence and the amount of government stimulus being invested into underserved and not-served areas of these countries. TheWith decreasethe inintroduction of our third-generation platform, we will increase our attention on international revenue for 2024, as compared to 2023, was mainly due to lower shipments to Europe and to a lesser extent the Americas outside the U.S.markets.

Sales and marketing expenses increased by $3.3$30.8 million during 20242025 compared to 20232024 primarily due to increases in personnel expenses of $20.6 million, mostly related to incentive compensation and increased headcount, stock-based compensation of $3.9 million, marketing expenses of $0.8$9.9 million and travel expenses of $0.6$2.3 million. These increases were partially offset by decreasesa ofdecrease outsidein services of $1.2 million and personnelmarketing expenses of $0.7$1.7 million.

During 2024,2025, sales and marketing expenses as a percentage of revenue increaseddecreased to 26%25% from 21%26% due to lowerhigher revenue compared to 2023.2024. We expect our investments in sales and marketing will be relatively flatincrease in absolute dollars inon thea nearyear-over-year term.basis, but decline as a percentage of revenue, as we continue to land new customers and expand our platform, cloud and managed services.

The increase in research and development expenses of $2.1$10.5 million during 20242025 compared with 20232024 was mainly due to increases in depreciation and amortization of $3.0 million, stock-based compensation of $2.1$4.3 million, softwareoutside subscriptionsservices of $3.7 million, depreciation and amortization of $1.9 million and personnelprototypes and test equipment expenses of $1.2$1.7 million. These increases were partially offset by decreases in prototypes and test equipmentfacility expenses of $3.7$1.2 million and outside services of $3.5 million as we transition projects from consultants to our own employees.million.

During 2024,2025, research and development expenses as a percentage of revenue increaseddecreased to 22%19% from 17%22% due to lowerthe revenueincrease comparedin revenue, and research and development expenses as a percentage of gross profit decreased to 2023.33% from 40% due to the increase in gross profit. We expect our investments in research and development to remain relatively flatincrease in absolute dollars and as a percentage of gross profit in the short term as we seek to expandaccelerate the development of AI functionality and capabilities of our platform, cloud and managed services.

The decreaseincrease in general and administrative expenses of $1.5$9.5 million in 20242025 compared to 20232024 was mainly due to a decreaseincreases in legal costs due to a settlement in 2023 of $3.3 million and lower outside servicespersonnel expenses of $2.9$6.1 million.million These decreases were partially offset by increases inand stock-based compensation of $2.0 million and personnel expenses of $1.6$2.9 million.

During 2024,2025, general and administrative expenses as a percentage of revenue increaseddecreased to 12%11% from 10%12% due to lowerhigher revenue compared to 2023.2024. We expect our general and administrative investments to be fairly constantincrease in absolute dollars in the near term and potentiallybut decline as a percentage of revenue over time in relation to anticipated longer-term increased revenue.

Interest income and other expense, net increased by $2.2$1.8 million in 20242025 compared with 20232024 mainly due to a higherlarger rateaverage ofcash balance offset partially by a decrease in interest earned on our cash, cash equivalents and marketable securities as well as a larger cash and marketable securities balance.rates.

Income TaxesTax (Benefit)

The following table sets forth our income taxestax (benefit) (dollars in thousands):

We continue to maintain a valuation allowance of $30.6$32.3 million on certain U.S. federal and California state deferred tax assets that we believe are not more likely than not to be realized in future periods.

We fund our operations and investing activities primarily through cash flow generated from operations and sales of our common stock. As of December 31, 2024,2025, we had cash, cash equivalents and marketable securities of $297.1$388.1 million, which consisted of deposits held at banks and major financial institutions and highly liquid marketable securities such as U.S. government securities and commercial paper. This includes $9.1$12.4 million of cash primarily held by our foreign subsidiaries. As of December 31, 2024,2025, our liability for taxes that would be payable because of repatriation of undistributed earnings of our foreign subsidiaries to the U.S. was not significant and limited to foreign withholding taxes consideringas ourthe existingfuture netdistribution operatingis lossnot carryovers.expected to be taxable in the U.S.

Our operating activities provided cash of $135.0 million in 2025 and $68.4 million in 2024 and $56.3 million in 2023.2024. The increase in net cash provided by operating activities during 20242025 as compared to 20232024 was due primarily to an increase in our net operating results after adjustment of non-cash charges of $87.4 million partially offset by a decrease in our net cash inflow resulting from changes in operating assets and liabilities of $70.7 million partially offset by a decrease in our net operating results after adjustment of non-cash charges of $58.6$20.9 million. Non-cash charges consisted of stock-based compensation of $70.8$87.9 million andmillion, depreciation and amortization of $19.6$17.7 million partially offset byand deferred income taxes of $10.0$12.9 million andpartially offset by net accretion of available-for-sale securities of $5.3$3.7 million.

In 2024,2025, cash inflows from changes in operating assets and liabilities primarily consisted of decreasesan increase in accounts receivablepayable of $46.7$21.5 million and inventory of $30.3 million, both due to lowerincreased revenue,inventory andpurchases, a decrease in prepaid expenses and other assets of $11.2$17.3 million due to a reduction in our inventory deposits, an increase in accrued liabilities of $11.8 million mainly due to incentive compensation related accruals and an increase in deferred revenue of $2.6 million. These changes were partially offset by a decreaseincreases in accrued liabilitiesinventory of $36.0$31.0 million,million a decrease inand accounts payablereceivable of $15.1$20.0 million due to thesupport lowerincreased inventory purchases and a decrease in deferred revenue of $13.9 million due to a change in billing practices towards monthly versus annual.revenue.

In 2024,2025, net cash used in investing activities of $109.5$6.4 million consisted of net purchases of marketable securities of $91.4 million and capital expenditures of $18.1$19.4 million, primarily consisting of purchases of test and computer equipment.equipment, partially offset by net maturities and sales of marketable securities of $13.0 million.

In 2024,2025, net cash providedused byin financing activities of $20.9$28.4 million consisted of purchases of our common stock of $93.6 million partially offset by the issuance of common stock related to our equity plans of $31.6 million partially offset by purchases of our common stock of $10.7$65.2 million.

Our material cash commitments include non-cancelable firm purchase commitments, normal recurring trade payables, compensation-related and expense accruals and operating leases. We believe that our outsourced approach to manufacturing provides us significant flexibility in both managing inventory levels and financing our inventory. Furthermore, we maintainhave a common stock repurchase program of which $102.9had $109.3 million was available as of December 31, 2024.2025. In January 2026, our Board of Directors authorized a $125.0 million increase to this program. In 2026 to date, we repurchased $148.7 million of our common stock. Our stock repurchase program does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.

We believe, based on our current operating plan and expected operating cash flows, that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next twelve months. If we are unable to generate sufficient cash flows or obtain other sources of liquidity, we will be forced to limit or terminate our stock repurchase program, limit our development activities, reduce our investment in growth initiatives and/or institute cost-cutting measures, all of which may adversely impact our business and potential growth.

(1) Represents outstanding purchase commitments to be delivered by our third-party manufacturers orand other vendors such as enterprise software vendors. See Note 5 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our outstanding purchase commitments related to our third-party manufacturers.commitments.

(2) Future minimum operating lease obligations in the table above primarily include payments for our office locations, which expire at various dates through 2033, including our new San Jose headquarters lease that will commence in August 2025.2033. See Note 5 “Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion regarding our operating leases.

•We face risks associated with beingdependence materially dependent uponon third-party vendors; certaincomponent factorsprices suchvolatility as componentand shortages thathave affectin ourthe businesspast, ascurrently a result of those dependencies haveare, and couldmay continuein tothe disrupt our business andfuture adversely impactaffect our gross margin and results of operations.operations; and our mitigation strategies may be of limited or temporary value.

•The imposition of new duties, tariffs,tariffs (and uncertainty related to the enforceability thereof), trade barriers and retaliatory countermeasures implemented by the U.S. and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations.

•We have a history of fluctuations in our gross margin and operating results, and we expect continued fluctuations as memory component costs, advance-purchased supply depletion, surcharge recovery, customer and product mix, and cloud costs evolve, which can make it difficult to predict our future performance and could cause the market price of our stock to decline.

•Actual or perceived failure to comply with applicable data privacy, security and platform and technology regulation laws, regulationsregulations, rules and industry standards and other requirements relating to the processing of personal information could impact our business, operations, and expose us to increased liability.

We face risks associated with beingdependence materially dependent uponon third-party vendors; certaincomponent factorsprices suchvolatility as componentand shortages thathave affectin ourthe businesspast, ascurrently a result of those dependencies haveare, and couldmay continuein tothe disrupt our business andfuture adversely impactaffect our gross margin and results of operations.operations; and our mitigation strategies may be of limited or temporary value.

We materially depend upon third-party vendors for our complex global supply-chain operations, including for services to develop, design and source components and materials as well as manufacture, transport and deliver our products. If any of these vendors stop providing their services, for any reason, we would have to obtain similar services from other sources, which may not be available on commercially reasonable terms, if at all. We also have limited control over disruptions that may occur at the facilities of those providers, such as supply interruptions, labor shortages, strikes, shipping backlogs at ports and similar disruptions to transportation infrastructure, design and manufacturing failures, quality control issues, systems failures or facility closures arising from pandemics, natural disasters, terrorist attacks or acts of war. In addition, switching development firms or manufacturers could delay the manufacture and availability of products and/or require us to re-qualify our products with our customers, which would be costly and time-consuming. Any interruption in the development, supply or distribution of our products would adversely affect our ability to meet scheduled product deliveries to our customers and could result in lost revenue or higher costs, which would negatively impact our gross margin and operating results and harm our business.

•Manufacturing constraints, shortages and other disruptions. We do not have internal manufacturing capabilities and we rely solely on a small number of contract manufacturers, or CMs, and original design manufacturers, or ODMs, to manufacture and supply our products. Our business operations and ability to supply our products are highly dependent upon our ability to secure adequate third-party manufacturing capabilities and capacity and to effectively manage those third parties to meet our business needs. Our dependence solely on third-party manufacturers makeshas made us in the past and continues to make us vulnerable to possible supply and capacity constraints and reduceshas reduced in the past and continues to reduce our control over manufacturing disruptions due to component availability, extended lead times, delivery schedules, quality, manufacturing yields and increased costs. Some of these risks occur from time to time in our business. If these disruptions and constraints are prolonged, or if these manufacturers do not have the ability or business continuity plans to fulfill their obligations to us, our business could be disrupted. If we cannot effectively manage our vendors or if we fail to invest adequate resources to manage our supply chain operations, our ability to meet customer orders and generate revenue may be negatively impacted. A substantial portion of our manufacturing is done at facilities outside of the U.S., largely in Asia, which presents increased supply risk, including the risk of supply interruptions, delays, shortages or reductions in manufacturing quality or controls. In addition, these supply interruptions, delays and shortages could impair our ability to meet our customer requirements,requirements or require us to pay higher prices or incur expedite fees, which would harm our business and negatively impact our gross margin and results of operations. Our international manufacturing also creates risks and uncertainties associated with regulatory changes or government actions such as local business requirements, trade restrictions and tariffs, economic sanctions or related legislation, which may complicate our export and import activities, be disruptive to the operations of our manufacturers and logistics partners or result in higher product and shipping costs and variability of supply. Manufacturing in Asia further heightens our risk of meeting customer delivery requirements as we rely upon third-party logistics companies to transport and import significant volumes of products to the U.S. where we generate a substantial majority of our revenue. These supply chain risks are further increased by periodic shipping backlogs at ports and similar disruptions to transportation infrastructure.

•Limited sources and sole-sourced supply. We are dependent upon sole-source or limited-source suppliers for some key product components such as chipsets, certain of our application-specific integrated circuit processors and memory and resistor components, including certain components sourced solely through suppliers located in China and other Asian countries. Any of these suppliers could stop producing our components, raise the prices they charge us, be subject to higher product tariffs, epidemics or other conditions that disrupt their operations, cease operations or enter into exclusive arrangements with our competitors, consequently affecting our operations and results. For example, the technology industry is currently experiencing significant supply constraints for memory components, driven in part by the reallocation of manufacturing capacity towards the global AI infrastructure build, which constraints may continue for years until new manufacturing capacity is built. These constraints have contributed to elevated and volatile DDR memory and other memory component prices in the past, currently are contributing to elevated and volatile DDR memory and other memory component prices and may do so in the future, as a result, the impact on our gross margin may vary based on inventory timing, supply availability, and the effectiveness of surcharges or other pricing actions. These constraints have resulted in, and are expected to continue to result in, increased costs and extended lead times for the components used in our products. Being dependent upon a limited number of suppliers constrains our ability to mitigate these disruptions in our supply chain, particularly if such disruptions are prolonged. This may adversely affect our ability to obtain components and materials needed to manufacture our products at acceptable prices in a timely fashion, or at all.all, These riskswhich would adversely affect our ability to meet scheduled product deliveries to our customers, increase costs and in turn harm our business and results of operations.

In particular, if the models underlying our AI Technologies are: incorrectly designed or implemented; trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures; used without sufficient oversight and governance to ensure their responsible use; and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threatsthreats, data privacy concerns, or material performance issues, the performance of our products, services and business, as well as our reputation and the reputations of our customers, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.

With respect to our products or services that incorporate AI Technologies, including agentic AI, the market for such products and services is rapidly evolving and unproven in many industries, including our own, and important assumptions about the characteristics of targeted markets, pricing, sales cycles, cost, performance, and perceived value associated with our services or products may be inaccurate. We cannot be sure that the market will continue to grow or that it will grow in ways we anticipate. In addition, market acceptance and consumer perceptions of products and services that incorporate AI Technologies is uncertain. Our failure to successfully develop and commercialize our products or services involving AI Technologies could depress the market price of our stock and impair our ability to: raise capital; expand our business; provide, improve and diversify our product offerings; continue our operations and efficiently manage our operating expenses; and respond effectively to competitive developments.

In addition, the revised EU Product Liability Directive, to be implemented into EU member state national law by December 2026, extends the EU’s existing strict product liability regime to AI Technologies and AI-enabled products, and facilitates civil claims in respect of harm caused by AI. Once fully applicable, the EU AI Act and the EU Product Liability Directive, together with developing guidance and/or decisions in this area, will have a material impact on the way AI is regulated in the EU. TheIt is possible that further new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including competition, antitrust, data privacy and consumer protection laws, may be interpreted or enforced in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our products, services, and business and the way in which we use AI Technologies. We may need to expend resources to adjust our products or services in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions. Further, the cost to comply with such laws, regulations, decisions and/or guidance interpreting existing laws, or to adjust our business plans based on changes to how such laws are enforced, including adapting to loosened regulation to remain competitive, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI Technologies) or impact our ability to use, procure or commercialize AI Technologies. Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations,expenses could adversely affect our business, financial condition and results of operations. In addition, if we fail or are perceived to fail to comply with these laws and regulations, we may face lawsuits (including class actions), investigations, enforcement actions, negative reputational impacts, and other penalties that materially impact our business.

The imposition of new duties, tariffs,tariffs (and uncertainty related to the enforceability thereof), trade barriers and retaliatory countermeasures implemented by the U.S. and other governments and resulting impact on customer demand may have a material adverse effect on our business, financial condition and results of operations.

The implementation of significant changes to U.S. trade policies, sanctions, legislation, treaties and tariffs, including, but not limited to, significant new tariffs on goods imported into the U.S.,U.S.(and uncertainty related to the enforceability thereof), have introduced uncertainty to our business and will increase the cost of our U.S. manufactured products and components sourced outside of the U.S., which will result in an increase to our cost of revenue and may cause a reduction in our gross margin. In response, China announced additional tariffs on U.S. goods and new export control restrictions. The imposition of additional tariffs or other trade barriers by countries outside of the U.S may increase our costs in these markets, and to the extent these increased costs result in increased prices for our customers, the demand for our products may decrease as our customers seek alternative sourcing, making it more difficult for us to sell our products in some markets.

We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including from diverse threat actors such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors such as social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error and, as a result of malicious code embedded in open-source software, bugs, misconfigurations or exploited vulnerabilities in software or hardware that is integrated into our (or our suppliers’ or service providers’) IT Systems, products or services. Threat actors could steal Confidential Information related to our business, products, employees, customers and our customers’ subscribers; hold data ransom; and/or disrupt our systems and services or those of our supply chain partners, vendors, customers or others. We expect cybersecurity attacks and security breaches to accelerate in the future, including sophisticated supply chain attacks. As we and our third-party providers continue to increase our reliance on virtual environments and communications systems and cloud-based solutions to support our work-from-anywhere culture and overall business needs, our exposures to third-party vulnerabilities and security risks also increase. Because threat actors are increasingly sophisticated and aggressive, our efforts may be inadequate to prevent, detect or recover from future attacks due, for example, to the increased use by attackers of tools and techniques (including artificial intelligence) that are specifically designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence. In addition, artificial intelligence-enabled products and technologies have enabled threat actors to perpetrate attacks at a speed, scale and complexity that was previously beyond their capabilities. As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact on our IT Systems, Confidential Information, or business. We may also experience security breaches that may remain undetected for an extended period.

We and certain of our third-party providers have been subject to cyberattacks and other security incidents, and we expect such attacks and incidents to continue in varying degrees. There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Accordingly, while to date no cybersecurity incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. A cyberattack or incident that affects the confidentiality, integrity or availability of our IT Systems or Confidential Information could result in legal claims or proceedings (such as class actions), regulatory investigations and enforcement actions, fines and penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs. Even if we and our third-party providers allocate, implement and manage reasonable security and data protection measures, we could still experience significant data loss, unauthorized data disclosure or a breach of our IT Systems, products or those of our third-party providers (for example, data centers) that materially impact our business. The continued growth of our cloud-based platform and managed services portfolio and increased reliance on third-party development partners and third-party software and cloud-based solutions increases the likely risks arising from security breaches or data loss. Any data loss or compromise of our systems that collect and process personal information (including personal information of our customers’ subscribers), or third-party data centers where that personal information is stored, could result in loss of confidence in the security of our offerings and loss of customers or customer goodwill. Further, security incidents could subject us to obligations under privacy and data security laws and regulations around the world (including to notify governmental authorities, regulatory bodies and/or affected individuals), lead to liability given the increasing development of such strict laws and regulations, increase the risk of litigation and governmental or regulatory investigation, require us to notify our customers or other counterparties in relation to such incidents, and damage our reputationreputation. Any or all of the foregoing could materially and adversely affect our business, financial condition, operating results and cash flows. Although we maintain insurance that may apply to cybersecurity risks and liabilities, there can be no guarantee that any or all costs or losses incurred in relation to a cyberattack or security incident will be partially or fully insured by our existing policies or that we will be able to procure applicable insurance in the future on economically reasonable terms or at all.

In the ordinary course of business, we are subject to legal claims, litigation and regulatory proceedings related to disputes over commercial, securities class action litigation, competition, IP, labor and employment and other matters. Regardless of the merits of any such claims, litigation and regulatory proceedings are inherently uncertain, and can be costly, disruptive to our business and operations, harmful to our reputation and distracting to management. In particular, as a technology company, we are subject to IP claims asserting patent, copyright, trademark and/or other infringement claims that are costly to defend and could limit our ability to use some technologies in the future. The risk of such claims is heightened as we expand our products and services and rely on more technologies, including third-party IP rights that we license and incorporate into our products and services. Third parties from whom we license IP may be unable or unwilling to indemnify us for such claims or offer any other remedy to us. Patent infringement claims may be asserted by patent assertion entities and non-practicing entities (“NPEs”) that do not conduct business as an operating company and hold and own patents only for the purpose of aggressively pursuing royalties through infringement assertions or patent infringement litigation. Further, in our industry, the number of assertions by NPEs has continued to increase due in part to patent sales by operating companies to NPEs and availability of litigation financing. We have received and expect to continue to receive assertions from NPEs and other third parties alleging that we may be infringing their patents or other IP rights; offering licenses to such IP; and/or threatening litigation. If our products are found to infringe, these claims could also result in the suspension of our ability to import, market and sell our products and services, product shipment delays or requirements to modify our products or enter into costly settlements or licensing agreements. Such royalty or licensing agreements, if required, may not be available to us on acceptable terms, if at all. Furthermore, we may additionally be financially responsible for claims made against our customers, including costs of litigation and damages awarded, under indemnity obligations which could further negatively impact our results of operations. Protracted litigation could cause us to incur significant defense costs, which would negatively impact our results of operations.

We have a history of fluctuations in our gross margin and operating results, and we expect continued fluctuations as memory component costs, advance-purchased supply depletion, surcharge recovery, customer and product mix, and cloud costs evolve, which can make it difficult to predict our future performance and could cause the market price of our stock to decline.

We have a history of fluctuations in our quarterly and annual gross margin and operating results, including fluctuations due to factors outside of our control. Factors that impact variability of our operating results include our ability to predict our revenue and reduce and control our costs, our ability to predict product functions and features desired by our customers, the impact of global economic and geopolitical events and conditions, including tariffs, trade controls, inflation, government shutdowns, market instability and economic downturns, our ability to effectively manage our global supply chain operations, our ability to effectively manage third parties upon whom we depend to conduct our business, our customers’ spending patterns and purchasing decisions, the impact of competition, customer adoption of our products, our ability to manage our legal, contractual and regulatory obligations and liabilities and other risk factors identified in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in this “Risk Factors” section. Our gross margin is further impacted by customer, geographic and product mix, the impact of competition on our prices, our ability to manage our costs associated with components and materials, excess and obsolescence, expedite fees and logistics-related activities, contractual commitments and other product costs. Fluctuating results make it difficult to predict our future performance and could cause the market price of our stock to decline. We expect to continue to incur significant expenses and cash outlays as we seek to expand our business and operations and target new customer opportunities. Given our growth objectives and the intense competitive pressures we face, our operating expenses may increase at unexpected levels, and we may be unable to maintain positive operating income. Comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our expectations and guidance are based on assumptions regarding component costs, supply availability, inventory consumption, and pricing actions that are inherently uncertain and subject to change. If our revenue or operating results fall below the expectations of investors or securities analysts, or below any guidance we may provide to the market, the market price of our stock would likely decline.

Geopolitical issues such as armed conflicts, relations between the U.S. and China, tariff and trade policy changes (and uncertainty related to the enforceability thereof) and increasing potential of conflict involving countries in Asia that are critical to our supply-chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce. New or increased tariffs and other changes in U.S. trade policy, including new sanctions, have triggered and may continue to trigger retaliatory actions by affected countries or changes in demand from customers displeased with U.S. tariff and trade policy changes. U.S. executive orders have resulted in tariffs on imports from numerous countries, including China and other Asian countries where our sole-source or limited-source suppliers are located. Consequently, absent policy changes, these actions will increase our cost of revenue. To the extent dissatisfaction with U.S. government policy results in U.S.-based suppliers being disfavored over foreign-based alternatives, it may diminish demand for our products with such customers and cause them to find alternative sourcing or otherwise make it more difficult for us to sell more products to these customers. The imposition of additional tariffs or other trade barriers by countries other than the U.S., including China and other Asian countries, will increase our costs in these markets, and to the extent these increased costs result in increased prices for our customers, we expect the demand for products in these markets to decrease as some of our customers seek alternative sources, making it more difficult for us to sell our products in these markets. In addition, inflation in the U.S. has affected businesses across many industries, including ours, by increasing the costs of labor, employee healthcare, components and freight and shipping, which may further constrain our customers’ or prospective customers’ budgets. To the extent there is a sustained general economic downturn, and our platform and services are perceived by customers or potential customers as costly, or too difficult to deploy or migrate to, our revenue may be disproportionately affected by delays or reductions in spending. Sustained or worsening of global economic conditions and geopolitical issues may increase our cost of doing business, materially disrupt our supply chain operations, cause our customers to reduce or delay spending and intensify pricing pressures. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions of the general economy or markets in which we operate worsen from present levels, demand for our products, and our business, financial condition and results of operations, could be adversely affected.

Although we have not had a greater-than-10%-of-revenuegreater-than-10%-of-annual revenue customer since 2020, a large portion of our sales has been, and in the future may be, to a limited number of customers. Changes in the broadband service provider market, such as financial difficulties, spending cuts or corporate consolidations that impact purchasing decisions by these customers have and may again negatively impact our revenue, and as a result, revenue from such customers may remain flat or decline. There are no assurances that the demand for our products will remain strong from our key customers, and any decrease or delay in purchases of any of our key customers, particularly if prolonged or sustained, or our inability to grow our sales with them, may have a material negative impact on our revenue and results of operations.

Actual or perceived failure to comply with applicable data privacy, security and platform and technology regulation laws, regulationsregulations, rules, industry standards, and standardsother requirements related to the processing of personal information could impact our business, operations, and expose us to increased liability.

Government authorities in the U.S. and around the world have implemented and are continuing to implement broader and more stringent lawslaws, rules, regulations, industry standards and regulationsother requirements concerning data protection.protection, privacy, security and the processing of personal information, many of which we are subject to. The interpretationinterpretation, application and applicationamendment of these datalaws, protection lawsregulations and regulationsother requirements are often uncertain and constantly changing, and it is possible that they may be interpreted and applied in a manner that is inconsistent with our data practices.practices or that new laws, regulations and other requirements require us to incur significant costs, implement new processes, or change our processing of information and business operations.

For example, in the U.S., certain states have adopted or modified privacy and security laws and regulations which govern the privacy, processing and protection of personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. For example, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete and correct their personal information or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf. Additional compliance investment and potential business process changes may also be required. Similar laws have been passed in other states, creating a patchwork of overlapping but different state laws, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the U.S. MostMany of the new or proposedthese laws include restrictions on processing consumer information for targeted advertising, which could negatively affect our marketing cloud products. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. If we are subject to or affected by the CCPA, or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

In 2024, the National Security Division of the U.S. Department of Justice (“DOJ”) issued a new rule—referred to as the “Data Security Program” (“DSP”) to implement Executive Order 14117, aimed at preventing access to “bulk U.S. sensitive personal data” and “government-related data” by “countries of concern” (including China, Russia, Iran, North Korea, Cuba, and Venezuela) and “covered persons” (as all such terms are defined in the DSP). Effective as of April 8, 2025, and fully enforceable as of July 9, 2025, the DSP imposes stringent obligations on companies within its scope and prohibits or restricts “covered data transactions” that grant countries of concern or covered persons access to bulk U.S. sensitive personal data or any amount of government-related data. The DSP is new, complex and has yet to be enforced, and as such, there is a risk that our interpretation of its applicability, scope and requirements is incorrect, incomplete or misapplied.

Complying with new and changing laws could cause us to incur substantial costs in order to market and sell our cloud-based solutions in the U.S. and internationally, deter customers from adopting our cloud-based solutions or require us to redesign our platform in order to meet customer requirements related to such laws. Regulatory actions or claims involving our practices in the collection, storage, processing, use or disclosure of consumer information or other personal data, even if unfounded, could damage our reputation and adversely affect our operating results. The failure or perceived failure to comply with such laws, rules, regulations, industry standards and other requirements relating to data privacy, security or the processing of personal information may result in government or civil proceedings or actions against us, by individuals, consumer rights groups, government agencies or others, could cause us to incur significant costs in investigations and defending such claims, or could cause us to incur significant costs in investigations and defending such claims, pay significant damages or fines or be required to make changes to our business if found liable, lose customers,customers and subject us to significant negative publicity and an erosion of trust, all of which could have an adverse effect on our business.business, results of operations and financial condition.

We have a common stock repurchase program of which $63.4$94.1 million was available as of MarchJune 28, 2026. Furthermore, our Board of Directors authorized a $100.0 million increase to our common stock repurchase program in April27, 2026. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of the purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations consistent with our capital allocation strategy. Stock repurchases could have an impact on our common stock trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations. The repurchase program does not obligate us to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.

We develop, market and sell platform, cloud and managed services, which are powered by agentic AI, that enable communicationcommunications service providers (“CSPs”) providers of all types and sizes to innovate and transform their businesses to focus on delivering outstanding subscriber experiences and become communication experience providers’ (“CXPs”). The platform combines the Calix Agent Workforce™ with intelligent appliances, software, cloud and fully integrated SmartLife™ managed services to enable simplified business models that acquire, retain and grow subscribers and revenue. Calix Customer Success guides service providers through every stage of their transformation journey with expertise across technology, business and market insights. Our partner community extends innovation so customers can grow their businesses across markets at scale. With deep broadband expertise and an end-to-end approach from the datacenters’ access edge to every residential, business and municipal subscriber location, Calix enables any service provider to simplify operations, engagement and service; innovate for their subscribers; and grow value for members, investors and the communities they serve. This focus on subscriber experience allows CXPs to expand their brand through increased subscriber acquisition, loyalty and revenue while reducing their operating costs.

Revenue fluctuations result from many factors, including, but not limited to: increases or decreases in customer orders for our products and services, global economic and geopolitical events and conditions, including tariffs,tariffs (and certainty related to the enforceability thereof), trade controls, inflation, economic downturns and market, financial or other factors such as government stimulus or shutdowns that may delay or materially impact customer purchasing decisions, non-availability of products due to supply chain challenges, including component and labor shortages and increasing lead times as well as disruptions as a result of pandemics or natural disasters, contractual terms with customers that result in delayed revenue recognition and varying budget cycles and seasonal buying patterns of our customers. More specifically, our customers have in the past spent less in the first quarter as they are finalizing their annual budgets, and in certain regions, customers are challenged by winter weather conditions that inhibit fiber deployment in outside infrastructure. Our revenue is also dependent upon our customers’ success in growing their subscribers, timing of purchases, capital expenditure plans and decisions to upgrade their networks or adopt new technologies, including adoption of our software and cloud platform solutions, as well as our ability to grow our customer base.

Cost of revenue is strongly correlated to revenue and tends to fluctuate due to all the above factors that may cause revenue fluctuations. Factors that have impacted our cost of revenue, or that we expect may impact cost of revenue in future periods, also include: changes in the mix of products delivered, customer location and regional mix, changes in the cost of our inventory, investments to support expansion of cloud and customer support offerings as well as our customer success organization, changes in product warranty, incurrence of retrofit costs, amortization of intangibles, allowances for obligations to our suppliers and inventory write-downs. Factors that we expect may impact our cost of revenue in future periods include the same factors in the prior quarter, changes in trade policies and increased memory component prices due to shortages caused by the large scale build out of AI infrastructure. Regarding trade policies, in February 2026, The U.S. Supreme Court ruled that the broad tariffs implemented under International Emergency Economic Powers Act (“IEEPA”) exceeded the administration’s authority and eliminated those tariffs. The impact of the rulingWe did not haveexperience a significant financial impact as a result of the ruling because the majority of our finished goods are exempt from tariffs. For imported components for domestic manufacturing and certain finished goods, the original tariff increased our cost of revenue but have since abated. We continue to evaluate the actions we may be able to take to mitigate such costs as we monitor and navigate this challenging and dynamic operating environment. In addition, we periodically ship by air versus by ocean to meet delivery commitments to our customers, which is more costly. Cost of revenue also includes fixed expenses related to our internal operations, which could increase our cost of revenue as a percentage of revenue if our revenue declines.

Our critical accounting policies and estimates, which are revenue recognition and inventory valuation and supplier purchase commitments, are described under “Critical Accounting Policies and Estimates” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2025. For the threesix months ended MarchJune 28,27, 2026, there have been no significant changes in our critical accounting policies and estimates.

There have been no additional accounting pronouncements or changes in accounting pronouncements during the threesix months ended MarchJune 28,27, 2026 as compared with the recent accounting pronouncements described in our Annual Report on Form 10-K for the year ended December 31, 2025 that are significant or expected to be significant to us.

Comparison of the Three and Six Months Ended MarchJune 28,27, 2026 and MarchJune 29,28, 2025

The following table sets forth our revenue by customer size (dollars in thousands):

Our revenue increased by $59.7$51.4 million and $111.2 million during the three and six months ended MarchJune 28,27, 20262026, respectively, compared to the corresponding periodperiods in 2025. The increase in appliance revenue was primarily due to the adoption of our platform, cloud and managed services by new customers as we continue to take footprint from legacy box vendors and the continued robust expansion of our appliances within our existing customer base. The increase in software and service revenue iswas primarily due to our CXP customers adding new subscribers. Our software is sold on a per-subscriber basis. CXPs use our platform, cloud and managed services to deliver better subscriber experiences as evidenced by best-in-class Net Promoter ScoresSM, thereby allowing them to take market share.

For the three months ended March 28, 2026, United States revenue was $265.3$277.7 million,million and $543.1 million during the three and six months ended June 27, 2026, respectively, or 95% of our revenue,revenue for both periods, compared to $211.2$219.0 million and $430.2 million, or 96%91% and 93% of our revenue, respectively, for the samecorresponding periodperiods in 2025. International revenue was $14.6$15.6 million,million and $30.3 million during the three and six months ended June 27, 2026, or 5% of our revenue,revenue for both periods, as compared to $9.1$22.8 million and $31.9 million, or 4%9% and 7% of our revenue, respectively, for the samecorresponding periodperiods in 2025. Our primary focus has been, and in the near term willis continueexpected to be, the U.S. and Canada given our large, direct sales and marketing presence and the amount of government stimulus being invested into underserved and not-served areas of these countries. WithHowever, with the introduction of our third-generation platform, we willplan to increase our attention on international markets.

One customer accounted for 12% of our revenue for the three months ended June 27, 2026. No customer accounted for more than 10% of our revenue for the threesix months ended MarchJune 28,27, 2026 or Marchthe 29,three and six months ended June 28, 2025.

Gross profit increased to $159.3$160.1 million and $319.4 million for the three and six months ended MarchJune 28,27, 2026 from $122.7$136.3 million fromand $259.0 million for the corresponding periodperiods in 2025. This increase was mainly due to the corresponding increase in revenue. Our gross margin increaseddecreased by 120170 basis points for the three months ended MarchJune 28,27, 2026,2026 compared to the corresponding period in 2025, primarily related to increased component memory costs. Our gross margin decreased by 30 basis points for the continuedsix growthmonths ended June 27, 2026 compared to the corresponding period in 2025, primarily related to a decline in our appliance offerings. Our software and service gross marginmargin, which declined by 920550 basis points,points which relateddue to the transition from our second-generation platform to our third-generation platform during which timewhere we operated in a dual cloud environment to successfully support customer migrations.migrations during a portion of the respective periods.

Sales and marketing expenses for the three months ended MarchJune 28,27, 2026 increaseddecreased by $5.4$1.3 million compared with the corresponding period in 2025 primarily due to a decrease in stock-based compensation expense of $5.4 million. This decrease was partially offset by increases in personnel expenses of $4.7$1.6 million, mostly related to incentive compensation and increased headcount, marketing expenses of $1.4 million, outside services of $0.5 million and software expenses of $0.3$0.4 million.

For the three and six months ended MarchJune 28,27, 2026, sales and marketing expenses as a percentage of revenue declined compareddecreased to the21% yearfrom ago26% periodand 22% from 26%, respectively, mainly due to increased revenue. We expect our investments in sales and marketing will increase in absolute dollars on a year-over-year basis, but decline as a percentage of revenue as we continue to land new customers and expand our platform, cloud and managed services.

Research and development expenses for the three months ended MarchJune 28,27, 2026 increased by $10.7$7.0 million as compared with the corresponding period in 2025 mainly due to increases in personnel expenses of $5.1$4.3 million mostly related to increased headcount, allocated shared services expenses of $1.0 million, outside services of $3.7 million, stock-based compensation expense of $0.8$0.7 million, depreciation and amortization of $0.8$0.7 million and allocated shared servicesfacilities expenses of $0.5$0.6 million. This increase was partially offset by a decrease in stock-based compensation expense of $0.6 million.

For the three and six months ended MarchJune 28,27, 2026, research and development expenses as a percentage of gross profit decreased to 33% from 34% and 34% from 36%35%, respectively, primarily due to the increase in revenue and gross margin and we expect our investments in research and development to increase in absolute dollars and as a percentage of gross profit in the short term as we accelerate the development of artificial intelligence (“AI”) functionality and capabilities of our platform, cloud and managed services.

General and administrative expenses for the three months ended MarchJune 28,27, 2026 increaseddecreased by $1.7$3.3 million as compared with the corresponding period in 2025 mainly due to increasesdecreases in personnelstock-based compensation expense of $2.7 million and allocated shared services expenses of $1.0$1.5 million,million. mostlyThis relateddecrease towas incentivepartially compensationoffset by an increase in depreciation and increasedamortization headcount.of $0.8 million.

For the three and six months ended MarchJune 28,27, 2026, general and administrative expenses as a percentage of revenue decreased to 10%8% from 12%11% and 9% from 12%, respectively, mainly due to the increase in revenue. We expect our general and administrative investments to increase in absolute dollars but decline as a percentage of revenue.

Interest and Other Expense,Income (Expense), net

For the three and six months ended MarchJune 28,27, 2026, interest and other expense,income (expense), net wasdecreased downby $1.3 million and $1.9 million, respectively, as compared with the corresponding periodperiods in 2025 primarily due to a lower balance of marketable securities. We repurchased 3.35.0 million shares of common stock for $170.9$240.2 million using proceeds from the sale of marketable securities during the first quarterhalf of 2026.

For the three and six months ended MarchJune 28,27, 2026, our income tax expense was $4.0$6.5 million and $10.5 million, respectively, for an effective tax rate of 26.4%,27.5% and 27.1%, respectively, which differed from the statutory rate of 21% primarily due to state taxes, the effect of non-deductible stock-based compensation for executive officers offset by the favorable impact of U.S. federal research tax credits and excess tax benefits from stock-based compensation. The effective tax rate for the three and six months ended MarchJune 28,27, 2026 is higherlower than the corresponding period in 2025 primarily due to higher pre-tax earnings with a relatively lowersimilar level of non-deductible expenses.expenses, compared to break-even pre-tax results in the corresponding period in 2025.

We fund our operations and investing activities from cash flow generated from our operations as well as the issuance of common stock under our equity incentive plans. As of MarchJune 28,27, 2026, we had cash, cash equivalents and marketable securities of $243.3$194.3 million, which consisted of deposits held at banks and major financial institutions and highly liquid marketable securities such as U.S. government and its agency securities, corporate debt securities and commercial paper.

Net cash provided by operating activities was $14.6$31.1 million for the threesix months ended MarchJune 28,27, 2026 and consisted of net income of $11.2$28.3 million and non-cash charges of $25.8$49.7 million partially offset by cash flow decreases of $22.4$46.8 million reflected in the net change in assets and liabilities. Non-cash charges primarily consisted of stock-based compensation of $20.6$37.3 million, depreciation and amortization of $4.4$8.8 million and deferred income taxes of $1.3$4.3 million partially offset by the net accretion of available-for-sale securities of $0.4$0.7 million.

Cash flow decreases resulting from the net change in assets and liabilities primarily consisted of an increase in inventory of $20.9$46.7 million to support increasedfuture revenue, an increase in accounts receivable of $17.4$37.0 million due to higher revenuerevenue, an increase in prepaid expenses and other assets of $10.1 million mainly due to an increase in inventory deposits and a decrease in accrued liabilities of $11.4$9.6 million relating to various factors including a decrease in incentive compensation relatedcompensation-related accruals. This was partially offset by an increase in accounts payable of $26.2$50.9 million due to increased inventory purchases and aan decreaseincrease in prepaiddeferred expenses and other assetsrevenue of $0.8$5.8 million.million primarily related to an increase in our remaining performance obligations on appliances.

Net cash provided by operating activities was $17.2$56.6 million for the threesix months ended MarchJune 29,28, 2025 and consisted of a net loss of $4.8$5.0 million offset by non-cash charges of $21.4$50.5 million and cash flow increases of $0.6$11.0 million reflected in the net change in assets and liabilities. Non-cash charges primarily consisted of stock-based compensation of $19.7$45.4 million and depreciation and amortization of $4.3$8.6 million partially offset by deferred income taxes of $1.5$1.3 million and the net accretion of available-for-sale securities of $1.1$2.1 million. Cash flow increases resulting from the net change in assets and liabilities primarily consisted of a decrease in accounts receivable of $3.8$16.2 million due to the linearity of shipments through the quarter and timing of customer payments, an increase in deferred revenue of $3.2 million driven by support contract renewals, a decrease in prepaid expenses and other assets of $2.8$13.8 million mainly due to a reduction in our inventory deposits and an increase in accounts payable of $3.5$2.3 million due to the timing of inventory receipts. This was partially offset by an increase in inventory of $7.8 million to support increased revenue, a decrease in accrued liabilities of $14.6$11.7 million relating to various factors including a decrease in incentive compensationcompensation-related relatedaccruals accruals.and a decrease in deferred revenue of $1.7 million.

For the threesix months ended MarchJune 28,27, 2026, cash provided by investing activities consisted of net maturities and sales of marketable securities of $56.0$119.6 million partially offset by capital expenditures of $8.1$12.7 million, consisting primarily of purchases of test equipment.

For the threesix months ended MarchJune 29,28, 2025, cash provided by investing activities of $11.0$25.9 million consisted of net purchasesmaturities and sales of marketable securities of $15.3$33.9 million and partially offset by capital expenditures of $4.3$8.0 million, consisting primarily of purchases of test and computer equipment.

Net cash used in financing activities of $150.9$212.2 million for the threesix months ended MarchJune 28,27, 2026 primarily consisted repurchases of our common stock of $170.9$240.2 million partially offset by proceeds from the issuance of common stock related to our equity plans of $20.0$28.1 million.

Net cash used in financing activities of $29.1$49.3 million for the threesix months ended MarchJune 29,28, 2025 primarily consisted repurchases of our common stock of $40.0$73.5 million partially offset by proceeds from the issuance of common stock related to our equity plans of $10.8$24.2 million.

Our material cash commitments include non-cancelable firm purchase commitments, normal recurring trade payables, compensation-related and expense accruals and operating leases. We believe that our outsourced approach to manufacturing provides us significant flexibility in both managing inventory levels and financing our inventory. Furthermore, we have a common stock repurchase program, which had $63.4$94.1 million available as of MarchJune 28,27, 2026. Our stock repurchase program does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. In April 2026, our Board of Directors authorized a $100.0 million increase to our common stock repurchase program.

Our principal commitments as of MarchJune 28,27, 2026 consisted of contractual obligations under non-cancelable outstanding purchase obligations and operating lease obligations for office space. The following table summarizes our contractual obligations as of MarchJune 28,27, 2026 (in thousands):