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

We depend on cable, satellitecable and telco, and broadcast and mediatelco industry spending for our revenue and any material decrease or delay in spending in any of these industries would negatively impact our operating results, financial condition and cash flows.

Our revenue has been derived from worldwide sales to broadband service providers and broadcast and media companies, and streaming media companies.providers. We expect that these markets will provide our revenue for the foreseeable future. Demand for our products and solutions will depend on the magnitude and timing of spending by customers in each of these markets for the purpose of creating, expanding or upgrading their systems. These spending patterns are dependent on a variety of factors, including:

•the impact of general economic conditions, actual and projected, including inflation, changing interest rates, lower consumer confidence, volatile capital markets, supply chain disruptions, tariffs,changes in tariffs and trade policies, government shutdowns, uncertainty and volatility in the financial services sector and the impact of the Middle East and Russia-Ukraine conflicts, and government and business responses thereto, on the global economy and regional economies;

•access to financing;

•annual budget cycles of customers in each of the industries we serve;

•the impact of industry consolidation;

•customers suspending, reducing or shifting spending duein order to: (i)transition or adapt to new broadband or video industry standards; (ii)and industry trends andor technology shifts, such as virtualization and cloud-based solutionsshifts; and (iii) new products and solutions, such as products and services based on our cOS software-based broadband access solutions or VOS software platform;

•federal, state, local and foreign government regulation of broadband,the telco,broadband television broadcasting and streaming mediaindustry;

•overall demand for broadband services; and competitive pressures, including pricing pressures, and the impact of fluctuations in currency exchange rates, such as the strengthening of the U.S. dollar; and

•weak or uncertain economic and financial conditions in the United States or one or more international markets;

•uncertainty related to development of industry technology;

•delays in evaluations of new services, new standards and systems architectures by certain customers;

•a reduction in the amount of capital available to finance projects of our customers and potential customers;

•proposed and completed business combinations and divestitures by our customers and the length of regulatory review of each;

•completion of a new system or significant expansion or upgrade to a system; and bankruptcies and financial restructuring of major customers.

In the past, adverse economic conditions in one or more of the geographies in which we offer our products have adversely affected our customers’ spending in those geographies and, as a result, our business. During challenging economic times, such as those caused by the Middle East and Russia-Ukraine conflicts, inflation, currency devaluation, and bank insolvencies and related uncertainty and volatility in the financial services sector and in tight credit markets, many customers have delayed and reduced and may continue to delay or reduce capital expenditures. This has resulted and could continue to result in reductions in revenue from our products, longer sales cycles, difficulties in collection of accounts receivable, slower adoption of new technologies and increased price competition. If global economic and market conditions, or economic conditions in the United States, Europe or other key markets, remain uncertain or deteriorate, we could experience a material and adverse effect on our business, results of operations, financial condition and cash flows. Additionally, since most of our international revenue is denominated in U.S. dollars, global economic and market conditions may impact currency exchange rates and cause our products to become relatively more expensive to customers in a particular country or region, which could lead to delayed or reduced spending in those countries or regions, thereby negatively impacting our business and financial condition.

Historically, a significant portion of our revenue has been derived from relatively few customers, due in part to customer consolidation. Sales to our top 10 customers in the fiscal years ended December 31, 2024,2025, 20232024 and 20222023 accounted for approximately 72%,84%, 66%91% and 67%90% of our net revenue, respectively. Although we continue to seek to broaden our customer base by penetrating new markets and further expanding domestically and internationally, we expect to see continuing industry consolidation activity and customer concentration.

During the fiscal year ended December 31, 2025, one customer accounted for 54% of our net revenue. During the fiscal year ended December 31, 2024, Comcasttwo andof Charterour Communicationscustomers accounted for 44%57% and 18%24% of our net revenuerevenue, respectively. During the fiscal yearsyear ended December 31, 20232023, andone 2022, Comcastcustomer accounted for 44% and 39%64% of our net revenue respectively.revenue. Further consolidation in theamong cable and broadcastoperators and mediatelecommunication industriescompanies could lead to additional revenue concentration for us. The loss of any significant customer, or any material reduction in orders from any other significant customer, or our failure to qualify our new products with any significant customer could materially and adversely affect, either long term or in a particular quarter, our operating results, financial condition and cash flows. If Comcast or otherour significant Broadband customers deploy our solutions slower or at a scale that is lower than we anticipate, our operating results, financial condition and cash flows could be materially and adversely effected.affected.

In addition, in most quarters, we are involved in one or more relatively large individual transactions with respect to our Broadband and/or Video business.transactions. A decrease in the number of the relatively larger individual transactions in which we are involved in any quarter could materially and adversely affect the operating results for that quarter for the applicable business unit or the Company as a whole.

• are not cost effective;

• are not brought to market in a timely manner;

• are not in accordance with evolving industry standards;

• fail to meet market acceptance or customer requirements; or are ahead of the needs of their markets.

Our future growth depends on a number of broadband and video industry trends.

•more consumers with more connected devices and applications;

•convergence, whereby network operators bundle video, voice and data services to consumers, including mobile delivery options;

•continued strong consumer demand for bandwidth-intensive video-on-demand and streaming video services, and interactive cloud applications and AI-driven bandwidth usage;

•the pace of adoption and deployment of high-bandwidth technology, such as DOCSIS 3.x, DOCSIS 4.0, next generation LTE and FTTP, along with virtualized broadband access solutions and distributed multiple access architectures;

•efforts by regulators and governments in the United States and internationally to encourage the adoption of broadband and digital technologies, including 5G broadband networks, as well as to regulate broadband access and delivery;

•the need to develop partnerships with other companies involved in broadband services and infrastructure workflow; and the extent and nature of regulatory attitudes towards issues such as network neutrality, competition between operators, access by third parties to networks of other operators, local franchising requirements for telcos to offer video, and other new services, such as mobile video; If we fail to recognize and respond to these trends, by timely developing products, features and services required by these trends, we are likely to lose revenue opportunities and our operating results, financial condition and cash flows could be materially and adversely affected.

We believe our software-based broadband access solutions will continue to replace and make obsolete current CMTS solutions, which is a market our products have historically not addressed, as well as cable edge-QAM products. If demand for our software-based broadband access solutions is weaker than expected, our near and long-term operating results, financial condition and cash flows could be adversely impacted. Moreover, if competitors adapt new broadband industry technology standards into competing broadband access solutions faster than we do, or if they promulgate a new or competitive architecture for next-generation broadband access solutions that renders our cOS solution obsolete, our business may be adversely impacted.

The sales cycle for our cOS solutions tends to be long. For broadband operators, upgrading or expanding network infrastructure is complex and expensive, and investing in a cOS solution is a significant strategic decision that may require considerable time to evaluate, test and qualify. Potential customers need to ensure our cOS solution will interoperate with the various components of its existing network infrastructure, including third-party equipment, servers and software. In addition, since we are a relatively new entrant into the CMTSbroadband access market, we need to demonstrate significant performance, functionality and/or cost advantages with our cOS solutions that outweigh customer switching costs. If sales cycles are significantly longer than anticipated or we are otherwise unsuccessful in growing our cOS sales, our operating results, financial condition and cash flows could be materially and adversely affected.

TheYou should read the following discussion shouldand beanalysis readof our financial condition and results of operations in conjunction with the consolidated financial statements and the related notes.notes Theincluded followingin this Annual Report on Form 10-K. This discussion contains forward-looking statements that reflectbased ourupon plans,current estimatesexpectations that involve risks and beliefs.uncertainties. Our actual results couldmay differ materially from those discussedanticipated in the forward-looking statements.statements Factorsas thata couldresult causeof orvarious contributefactors, to these differences include,including, but are not limited to, those discussed below and those listed under Item 1A, Risks Factors. For discussion of comparison of our results of operations and cash flows for the fiscal years ended December 31, 2023 and 2022, refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 16, 2024.

Business OverviewOVERVIEW

We are a leading global provider of (i) broadband solutions that enable broadband operators to more efficiently and effectively deploy high-speed internet, for data, voice and video services for their customers and (ii) versatile and high performance video delivery software, products, system solutions and services that enable our customers to efficiently create, prepare, store, playout and deliver a full range of high-quality broadcast and streaming video services to consumer devices, including televisions, personal computers, laptops, tablets and smart phones.customers.

We classify our total revenue in two categories, “Appliance and integration” and “SaaS and service.” The “Appliance and integration” revenue category includes hardware, licenses and professional services and is reflective of non-recurring revenue, while the “SaaS and service” category includes usage fees for our SaaS platform and support service revenue from our appliance-based customers and reflects our recurring revenue stream.

Historically, our revenue has been dependent upon spending in the cable, satellite, telco, broadcastcable and mediatelco industries, including streaming media.industries. Our customers’ spending patterns are dependent on a variety of factors, including but not limited to: economic conditions in the United States and international markets, and impact of factors such as the Middle East and Russia-Ukraine conflicts, inflation, changes in interest rates, potential supply chain disruptions, volatility in capital markets and foreign currency fluctuations; volatility and uncertainty in the banking and financial services sector; access to financing; annual budget cycles of each of the industries we serve; impact of industry consolidations; customer end-market conditions; customers suspending or reducing spending in anticipation of new products or new standards; impact of newheightened, new, or proposed tariffs; and new industry trends and/or technology shifts. If our product portfolio and product development plans do not position us well to capture an increased portion of the spending in the markets in which we compete, our revenue may decline. As we attempt to further diversify our customer base in these markets, we may need to continue to build alliances with other equipment manufacturers and suppliers, cloud service providers, content providers, resellers and system integrators, managed services providers and software developers; adapt our products for new applicationssuppliers; take orders at prices resulting in lower margins; and build internal expertise to handle the particular operational, payment, financing and/or contractual demands of our customers, which could result in higher operating costs for us.margins.

Our Broadband strategy is focused on continuing to develop and deliver software-based broadband access technologies, which we refer to as our cOS solutions, to our broadband operator customers. We believe our cOS software-based broadband access solutions are superior to hardware-based systems and deliver unprecedented scalability, agility and cost savings for our customers. Our cOS solutions, which can be deployed based on a centralized, distributed access architecture (“DAA”) or hybrid architecture, enable our customers to migrate to multi-gigabit broadband capacity and the fast deployment of DOCSIS and/or fiber-to-the-home (“FTTH”) data, video and voice services. We believe our cOS solutions resolve space and power constraints in broadband operator facilities, eliminate dependence on hardware upgrade cycles and significantly reduce total cost of ownership, and are helping us to be a major player in the broadband access market. In the meantime, we believe our Broadband segmentbusiness will continue to experience strong long-term growth as our customers adopt and deploy our virtualized DOCSIS, CMTS and FTTH solutions and distributed access architectures.

We believe that the following accounting estimates involve a greater degree of judgementjudgment or complexity than our other accounting estimates. Accordingly, the critical accounting estimates that we believe have the most significant impact on Harmonic’s consolidated financial statements are set forth below:

•Valuation of inventories; and

•Accounting for income taxes

APACAppliance and integration net revenue decreased by $3.6$131.0 million in 2024,2025, as compared to 2023,2024, primarily due to acustomer declinedeployment intiming Videodelays productassociated sales.with DOCSIS 4.0 and network readiness.

Our gross margins are dependent upon, among other factors, the proportion of software sales, product mix, supply chain impacts, customer mix, product introduction costs, price reductions granted to customers and achievement of cost reductions.

DuringIn the year ended December 31, 2024,2025, we recorded an impairment charge of $1.8 million related to the total capitalized value of internally developed software with no future benefit. We also recorded total lease-related impairment and other charges of $10.9$1.6 million.million, These charges primarilywhich consisted of $3.9$0.4 million inof right-of-use asset impairments, $4.3$0.3 million in leasehold improvement impairments, and $2.7$0.9 million related to the fair value of other unrecoverable facility costs. In 2024, we recorded total lease-related impairment and other charges of $10.9 million. Refer to Note 3, “Leases,Leases” of the Notes to our consolidated financial statements for additional information.

We have implemented several restructuring plans in the past few years. The goal of these plans is to bring operational expenses to appropriate levels relative to our net revenues, while simultaneously implementing appropriate expense control programs. We account for our restructuring plans under the authoritative guidance for exit or disposal activities. The restructuring and related charges are primarily included in “Operating expenses-restructuring and related charges” in the Consolidatedconsolidated Statementsstatement of Operations.operations.

Restructuring and related charges increaseddecreased in 2024,2025, as compared to 2023,2024, primarilymainly drivendue byto higher severance and employee benefit costs recorded in fiscal 2024, in connection with the 2024 restructuring activities. Refer to Note 9, “Restructuring and Related Charges,” of the Notes to our Consolidated Financial Statements for additional information.

Interest expense, net increaseddecreased in 2024,2025, as compared to 2023,2024, primarily due to higherlower interestcosts ratesof forborrowing and lower outstanding principal balance resulting from the borrowingsrepayment and reborrowing activities under the CreditRevolving AgreementFacility comparedin to the interest rate for the 2024 Notes.2025. Refer to Note 10,9, “Debt,” of the Notes to our Consolidatedconsolidated Financialfinancial Statementsstatements for additional information regarding the interest rates applicable to our outstanding loans.

The change in provision for (benefit from) income taxes forincreased in 2024, as compared to 2023, was primarily due to the prior period release of the valuation allowance against U.S. Federal and certain state deferred tax assets.

We expect to continue to manage our cash from operations effectively, together with deploying cash in working capital for growth. The cash we generate from our operations enables us to fund ongoing operations, our research and development projects for new products and technologies, and other business activities. We continually evaluate our cash needs and may decide it is best to raise additional capital or seek alternative financing sources to fund our operations and the growth of our business, to take advantage of unanticipated strategic opportunities, or to strengthen our financial position, including through drawdowns on existing or new debt facilities or new financing (debt and equity) funds.financing. In the future, we may enter into other arrangements for potential investments in, or acquisitions of, complementary businesses, services or technologies, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all. Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early. We believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following December 31, 2024,2025, as well as in the long-term.

Our principal uses of cash will include repayments of debt and related interest, purchases of inventory, stock repurchases, payments for payroll, restructuring expenses, and other operating expenses related to the development and marketing of our products, purchases of property and equipment, facility leases, and other contractual obligations for the foreseeable future.

In February 2025, the Board of Directors authorized us to repurchase, from time to time, up to $200 million of our outstanding shares of common stock through February 2028,2028 (the "Share Repurchase Authorization"), at such time and such prices as management may decide. The program does not obligate us to repurchase any specific number of shares and may be discontinued at any time. As of December 31, 2025, approximately $121.0 million of the Share Repurchase Authorization remained available for repurchases under this program.

As of December 31, 2024,2025, our principal sources of liquidity consisted of cash and cash equivalents of $101.5$124.1 million, net accounts receivable of $178.0$85.9 million, $30.0 million from our Master Receivables Purchase Agreement (described below), and $82.0 million remaining available under the Revolving Facility of our Credit Agreement, and financing from French government agencies.Agreement.

If we are unsuccessful in completing the pending sale of our Video business or executing our business plan and necessary transition activities following the sale of our Video business, our business and results of operations may be adversely affected and our ability to invest and grow our business could be limited.

On MarchJune 20,16, 2026, we enteredcompleted intothe ansale Asset Purchase Agreement to sellof our Video business to Leone Media Inc. (the "Disposition"). We face risks related to the Disposition, including the possibility that the Asset Purchase Agreement may be terminated prior to the completion of the Disposition, diversion of management’s attention,attention related to our continuing obligations under the transition services agreement, disruption of our relationships with third parties and employees, and restrictions on our business activities and potential litigation related to the Disposition. We may experience delays in the anticipated timing of activities related to the Disposition, and higher than expected or unanticipated execution costs. If we do not succeed in executing the Disposition or if these efforts are more costly or time-consuming than expected, our business and results of operations may be adversely affected, which could limit our ability to invest in and grow our business.

The Video business generated approximately 29%37% of our aggregate revenue for fiscal year 2025. Following the first quartercompletion of fiscalthe Disposition on June 16, 2026, and approximately 36%all of our aggregate revenue forwill thebe firstderived quarterfrom ofour fiscalBroadband 2025.business. Accordingly, our future financial results may differ from our previous results since our future financial results will be dependent solely on our Broadband business. Any downturn in our Broadband business could have a material adverse effect on our future operating results and financial condition and could materially and adversely affect the trading price of our common stock.

In the past, adverse economic conditions in one or more of the geographies in which we offer our products have adversely affected our customers’ spending in those geographies and, as a result, our business. During challenging economic times,times in such geographies, such as those caused by the Middle East and Russia-Ukraine conflicts,conflicts in each respective geography, inflation, currency devaluation, and bank insolvencies and related uncertainty and volatility in the financial services sector and in tight credit markets, many customers have delayed and reduced and may continue to delay or reduce capital expenditures. This has resulted and could continue to result in reductions in revenue from our products, longer sales cycles, difficulties in collection of accounts receivable, slower adoption of new technologies and increased price competition. If global economic and market conditions, or economic conditions in the United States, Europe or other key markets, remain uncertain or deteriorate, we could experience a material and adverse effect on our business, results of operations, financial condition and cash flows.

Historically, a significant portion of our revenue has been derived from relatively few customers, due in part to customer consolidation. Sales to our top 10 customers in the three and six months ended AprilJuly 3, 2026 accounted for approximately 88%89% and 87%, respectively, of our net revenue compared to 89%88% and 86% for the corresponding periodperiods in 2025. Although we continue to seek to broaden our customer base by penetrating new markets and further expanding domestically and internationally, we expect to see continuing industry consolidation activity and customer concentration.

During the three months ended AprilJuly 3, 2026, two of our customers accounted for approximately 36%45% and 22%,18%, respectively, of our net revenue.revenue, Forcompared to one customer accounted for approximately 54% of our net revenue during the three months ended MarchJune 28,27, 2025,2025. During the six months ended July 3, 2026, two of our customers accounted for approximately 48%41% and 19%,20%, respectively, of our net revenue.revenue, compared to two customers accounted for approximately 51% and 13%, respectively, of our net revenue during the six months ended June 27, 2025. Further consolidation among cable operators and telecommunication companies could lead to additional revenue concentration for us. The loss of any significant customer, or any material reduction in orders from any other significant customer, or our failure to qualify our new products with any significant customer could materially and adversely affect, either long term or in a particular quarter, our operating results, financial condition and cash flows. If our significant customers deploy our solutions slower or at a scale that is lower than we anticipate, our operating results, financial condition and cash flows could be materially and adversely affected.

In addition, in most quarters, we are involved in one or more relatively large individual transactions. A decrease in the number of the relatively largerlarge individual transactions in which we are involved in any quarter could materially and adversely affect the operating results for that quarter for the applicable business unit or the Company as a whole.

In addition, some of our larger competitors may have more long-standing and established relationships with certain domestic and foreign customers. Many of these large enterprises are in a better position to withstand any significant reduction in spending by customers in oursuch markets and may be better able to navigate periods of market uncertainty, such as the uncertainty caused by the Middle East and the Russia-Ukraine conflicts and related risks of escalation or broader regional conflicts, bank insolvency and related uncertainty and volatility in the financial services sector and inflation. They often have broader product lines and market focus, and may not be as susceptible to downturns in a particular market. These competitors may also be able to bundle their products together to meet the needs of a particular customer, and may be capable of delivering more complete solutions than we are able to provide. To the extent large enterprises that currently do not compete directly with us choose to enter our markets by acquisition or otherwise, competition would likely intensify.

As of AprilJuly 3, 2026, we maintained facilities in Israel with a total of 198195 employees, or approximately 38%36% of our worldwide workforce. Our Chief Executive Officer is also based in Israel. Our employees in Israel engage in a number of activities including research and development, product development, product management, supply chain management for certain product lines and sales activities.

We outsource a portion of our research and development and product support activities to our third-party partner, GlobalLogic, a Hitachi group company. Through GlobalLogic, we have a significant number of engineering resources located in Kyiv, Ukraine. Political, social and economic instability and unrest or violence in Ukraine from the ongoing military conflict with the Russian Federation have caused, and may continue to cause, disruptions to the business and operations of GlobalLogic, which could slow or delay the development work our outsourced engineering teams are undertaking for us. AnyFrom the outset of the Russian invasion of Ukraine, our employees have been restricted from traveling to Ukraine and have directed and coordinated our outsourced engineering teams remotely. While we have not yet experienced any significant disruptions to our development work in Ukraine, any further escalation of military activity, political tensions, military activity, instability, unrest or conflict could disrupt or prevent the work of our outsourced engineering teams; limit or prevent our employees from traveling to, from, or within Ukraine to direct and coordinate our outsourced engineering teams;teams, or cause us to shift all or portions of the development work occurring in Ukraine, and/or cause GlobalLogic to relocate personnel to other locations or countries pursuant to its business continuity plans. Any resulting delays could negatively impact our product development efforts, operating results and our business. In addition, increased costs associated with managing or relocating our outsourced engineering teams in Ukraine, or engaging with alternative engineering resources outside of Ukraine, could negatively impact our operating results and financial condition.

As of AprilJuly 3, 2026, we had 339364 employees in our international operations, representing approximately 65%66% of our worldwide workforce. Our ability to manage our business effectively in the future, including with respect to any future growth, our operation as both a hardware and increasingly software and SaaS-centric business, the integration of any acquisition efforts, and the breadth of our international operations, will require us to train, motivate and manage our employees successfully, to attract and integrate new employees into our overall operations, to retain key employees and to continue to improve and evolve our operational, financial and management systems. There can be no assurance that we will be successful in any of these efforts, and our failure to effectively manage our operations could have a material and adverse effect on our business, operating results, cash flows and financial condition.

Cyber criminals and hackers may attempt to penetrate our network security, or the network security of third parties we work with, including our third-party vendors, service providers, manufacturers, solution providers, partners and consultants, misappropriate our proprietary information or cause business interruptions, or access or misappropriate other sensitive data. Because the techniques used by such computer programmers to access or sabotage networks change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. In the past, we and relevant third parties have faced compromises to our network security, though no prior incidents we have identified to date have materially affected our business, results of operations or financial condition. Companies are facing additional attacks as workforces have become more distributed as a result of remote and hybrid working arrangements, and rapid advances in AIAI-enabled cybersecurity breaching capabilities may increase the likelihood and frequency of our being impacted by security breaches or incidents and the severity of those impacts. Additionally, geopolitical events such as the Iran war, the Middle East and Russia-Ukraine conflicts and heightened tension between Israel and Iran may increase the cybersecurity risks we and the third parties we work with face. Our business operations utilize and rely upon numerous third-party vendors, service providers, manufacturers, solution providers, partners and consultants, and any failure of such third parties’ cybersecurity measures could materially and adversely affect or disrupt our business.

We are monitoring and managing our cash position in light of ongoing market conditions due to general economic and market conditions, volatility and uncertainty in the banking and financial services sector, overall fluctuations in U.S. equity markets, the Middle East and Russia-Ukraine conflicts, and related macroeconomic conditions. We believe that our existing cash of approximately $109.0$231.9 million as of AprilJuly 3, 2026 will satisfy our cash requirements for at least the next twelve months. However, we may need to raise additional funds to take advantage of presently unanticipated strategic opportunities, satisfy our other cash requirements from time to time, or strengthen our financial position. Our ability to raise funds may be adversely affected by a number of factors, including factors beyond our control, such as weakness in the economic conditions in markets in which we sell our products, bank failures and continued uncertainty in financial, capital and credit markets. There can be no assurance that equity or debt financing will be available to us on reasonable terms, if at all, when and if it is needed.

On December 21, 2023, we entered into a Credit Agreement, among the Company, certain subsidiaries of the Company from time to time party thereto, the lenders party thereto from time to time and Citibank, N.A., as administrative agent (the “Credit Agreement”). The obligations under the Credit Agreement and the other loan documents are required to be guaranteed by certain of our material subsidiaries and secured by substantially all of the assets of the Company and such subsidiary guarantors. As amended in December 2024, the Credit Agreement provides for a $160.0 million secured revolving loan facility (the “Revolving Facility”), with a $10.0 million sublimit for the issuance of letters of credit, and a $40.0 million secured delayed draw term loan facility (the “Term Facility”). To finance the settlement of the conversions of the 2024 Notes in connection with our delivery of the notice of redemption for such 2024 Notes, we drew down $75.0 million on the Revolving Facility and $40.0 million on the Term Facility, respectively. As of AprilJuly 3, 2026, we had $82.0$84.7 million remaining available for borrowing under the Revolving Facility and no remaining amounts available for borrowing under the Term Facility.

A breach of any of these covenants could result in an event of default under the Credit Agreement. As of AprilJuly 3, 2026, we were in compliance with all covenants under the Credit Agreement; however, if an event of default occurs, the lenders may terminate their commitments and accelerate our obligations under the Credit Agreement. We might not be able to repay our debt or borrow sufficient funds to refinance it on terms that are acceptable to us.

As of AprilJuly 3, 2026, we had approximately $60.9$61.1 million of goodwill recorded on our balance sheet associated with prior acquisitions. In the event we determine that our goodwill is impaired, we would be required to write down all or a portion of such goodwill, which could result in a material non-cash charge to our results of operations in the period in which such write-down occurs.

United States generally accepted accounting principles (“U.S. GAAP”) are subject to interpretation by the Financial Accounting Standards Accounting Board (“FASB”), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. We are also subject to evolving rules and regulations of the countries in which we do business. Changes to accounting standards or interpretations thereof may result in different accounting principles under U.S. GAAP that have a significant effect on our reported financial results and require us to incur costs and expenses in order to comply with the updated standards or interpretations.

As of AprilJuly 3, 2026, we held 6769 issued U.S. patents and 7 issued foreign patents, and had 3539 patent applications pending. Although we attempt to protect our intellectual property rights through patents, trademarks, copyrights, licensing arrangements, maintaining certain technology as trade secrets and other measures, we can give no assurances that any patent, trademark, copyright or other intellectual property rights owned by us will not be invalidated, circumvented or challenged, that such intellectual property rights will provide competitive advantages to us, or that any of our pending or future patent applications will be issued with the scope of the claims sought by us, if at all. We can give no assurances that others will not develop technologies that are similar or superior to our technologies, duplicate our technologies or design around the patents that we own. In addition, effective patent, copyright and trade secret protection may be unavailable or limited in certain foreign countries in which we do business or may do business in the future.

Revenue derived from customers outside of the United States represented approximately 20%17% and 27%23% of our revenue for the threesix months ended AprilJuly 3, 2026, and MarchJune 28,27, 2025, respectively. Although no assurance can be given with respect to international sales growth in any one or more regions, we expect that international revenue will likely continue to represent, from year to year, a portion of our revenue, and potentially increasing, percentage of our annual revenue for the foreseeable future. Furthermore, the majority of our employees are based in our international offices and locations, and most of our contract manufacturing occurs outside of the United States. In addition, we outsource a portion of our research and development activities to certain third-party partners with development centers located in different countries, particularly Ukraine.

We conduct business in three geographic regions—the Americas, Europe, the Middle East, and Africa (“EMEA”), and Asia-Pacific (“APAC”).Asia-Pacific. We sell broadband solutions and related services, including our cOS™ software-based broadband solutions, to broadband operators globally.

As previously reported, on December 8, 2025, we entered into a Put Option Agreement to sell our Video business to Leone Media Inc. (d/b/a MediaKind) (the “Buyer”). Under the Put Option Agreement, the Buyer irrevocably provided the Company with the right to require the Buyer to purchase our Video business for a purchase price of $145 million in cash, subject to working capital and other adjustments. On March 16, 2026, we delivered a notice of intent to exercise the Put Option to the Buyer requesting that Buyer execute the Asset Purchase Agreement (the “APA”).cash. On March 20, 2026, we executed the APA to complete the transaction. TheOn closingJune 16, 2026, we completed the sale of our Video business to the Buyer pursuant to the APA. Proceeds from the sale were $137.9 million paid at closing, subject to final adjustment under the terms of the transaction is subject to satisfaction of customary closing conditions. The transaction is expected to close in the second quarter of fiscal 2026.APA. The results of the Video business are presented as discontinued operations in the accompanying unaudited condensed consolidated statements of operations for all periods presented. The assets and liabilities of the Video business have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited condensed consolidated balance sheet for all prior periods presented.

Our critical accounting estimates are disclosed in our 2025 Annual Report on Form 10-K, as filed with the SEC on February 24, 2026. There have been no significant changes to these estimates during the threesix months ended AprilJuly 3, 2026.

Appliance and integration net revenue increased by $32.2$44.4 million for the three months ended AprilJuly 3, 2026, compared to the corresponding period in 2025, primarily driven by a $22.6$40.3 million increase from customers ramping up due to new deployments in Norththe America, a $7.5 million increase in outside plant services, and a $3.1 million increase from projects in APAC and LATAM regions.Americas.

SaaSAppliance and serviceintegration net revenue increased by $4.6$76.6 million for the threesix months ended AprilJuly 3, 2026, compared to the samecorresponding period in 2025, primarily driven by a $71.7 million increase from customers ramping up due to increasednew support servicesdeployments in the currentAmericas, period.including a $10.3 million increase in outside plant services.

Our gross margin decreasedimproved by 250660 basis points and 210 basis points in the threethree- monthsand six-months periods ended AprilJuly 3, 2026, respectively, compared to the corresponding periodperiods in 2025, primarily due to ana unfavorablefavorable product mix whichassociated includedwith a higher percentage of outsidenew plantdeployments services.in North America.

Research and development expenses increased by $1.2$3.2 million, orand 6%,$4.4 million, for the threethree- monthsand six-month periods ended AprilJuly 3, 2026, respectively, compared to the corresponding period in 2025, mainly due to higher incentive compensation and increased investment to support business growth.

As discussed previously, the results of the Video business have been classified as discontinued operations for all periods presented. Certain indirect corporate costs, such as IT and facility costs, previously allocated to the Video reporting segment, do not qualify for discontinued operations accounting classification and are now reported within continuing operations. These stranded costs, which are included in research and development expenses, were $0.4$0.2 million and $0.8$0.3 million for the currentthree months ended July 3, 2026, and priorthe periods,corresponding period in 2025, respectively. The stranded costs were $0.6 million and $1.1 million for the six months ended July 3, 2026 and the corresponding period in 2025, respectively.

Selling, general and administrative expenses increased by $2.5$4.1 million, orand 13%,$6.7 million, for the threethree- monthsand six-month periods ended AprilJuly 3, 2026, respectively, compared to the corresponding periodperiods in 2025, primarily due to higher incentive compensation and increased investment to support business growth.

As discussed above, the stranded costs resulting from the disposition of the Video business included in selling, general and administrative expense were $1.6$1.9 million and $0.8$3.5 million for the currentthree- and priorsix-month periods,periods ended July 3, 2026, respectively. The stranded costs were $1.1 million and $1.9 million for the corresponding periods in 2025.

Interest expense, netexpense decreased slightly in the three monthsand six month periods ended AprilJuly 3, 2026, compared to the corresponding periodperiods in 2025, primarily due to lower costs of borrowing anda lower outstanding principal balance resulting from the repayment and reborrowing activities under the Revolving Facility during the current period.periods.

The changechanges in other income (expense), net, in the three and six months ended AprilJuly 3, 2026,2026 compared to the corresponding periodperiods in 2025, was primarily due to fluctuations in the foreign currency exchange rate against the U.S. dollar.

The provision for income taxes increased induring the three months ended AprilJuly 3, 2026, compared to the corresponding period in 2025, primarily due to $4.6 million of withholding taxes on the distribution from a foreign subsidiary and higher pretax income in the current period, compared to the pretax loss in the prior period.

We expect to continue to manage our cash from operations effectively, together with deploying cash in working capital for growth. The cash we generate from our operations enables us to fund ongoing operations, our research and development projects for new products and technologies, and other business activities. We continually evaluate our cash needs and may decide it is best to raise additional capital or seek alternative financing sources to fund our operations and the growth of our business, to take advantage of unanticipated strategic opportunities, or to strengthen our financial position, including through drawdowns on existing or new debt facilities or new debt and equity financing. In the future, we may enter into other arrangements for potential investments in, or acquisitions of, complementary businesses, services or technologies, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all. Conversely, we may also from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early. We believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following AprilJuly 3, 2026, asand well as inover the long-term.longer-term.

As of AprilJuly 3, 2026, we had an outstanding principal amount equal to $111.5$110.8 million under our Credit Agreement, consisting of $75.0 million under our Revolving Facility and $36.5$35.8 million under our Term Facility, of which $3.0 million is scheduled to become due in the 12-month period following AprilJuly 3, 2026. On July 7, we used cash on hand to repay in full the $75.0 million balance outstanding under our Revolving Facility. Refer to Note 13 on the Notes to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details. As of AprilJuly 3, 2026, our total minimum lease payments are $22.3$22.0 million, of which $6.6$6.5 million is due within 12 months of AprilJuly 3, 2026.

In February 2025, the Board of Directors authorized us to repurchase, from time to time, up to $200 million of our outstanding shares of common stock through February 2028 (the “Share Repurchase Authorization”), at such time and such prices as management may decide. The program does not obligate us to repurchase any specific number of shares and may be discontinued at any time. As of AprilJuly 3, 2026, approximately $78.0 million of the Share Repurchase Authorization remained available for repurchases under this program.

As of AprilJuly 3, 2026, our principal sources of liquidity consisted of cash and cash equivalents of $109.0$231.9 million, net accounts receivable of $83.5$89.9 million, and $82.0$84.7 million remaining available under the Revolving Facility of our Credit Agreement.

Our cash and cash equivalents of $109.0$231.9 million as of AprilJuly 3, 2026 consisted of bank deposits held throughout the world and money market funds, of which $46.2$49.7 million was held outside of the United States. At present, such foreign funds are considered to be indefinitely reinvested in foreign countries to the extent of indefinitely reinvested foreign earnings. In the event funds from foreign operations are needed to fund cash needs in the United States and if U.S. taxes have not already been previously accrued, we may be required to accrue and pay additional U.S. and foreign withholding taxes in order to repatriate these funds. TheAs expecteddiscussed above, we plan to use the proceeds from the dispositionsale of ourthe Video business pursuantto support strategic growth initiatives and to the APA will be used tofurther fund ongoing operations and support our capitalshare allocationrepurchase priorities.program. We do not expect the disposition of the Video business to have a material impact on our ongoing liquidity and capital resources.

Net cash provided by operating activities decreased by $51.9$45.6 million during the first threesix months of fiscal 2026, compared to the corresponding period in fiscal 2025, primarily due to an elevated amount of collections in the prior period associated with strong revenue performance in the last quarter of fiscal 2024.

Net cash usedprovided inby investing activities decreasedincreased by $0.5$134.6 million during the first threesix months of fiscal 2026, compared to the corresponding period in 2025, primarily due to lowercash purchasesproceeds received for the sale of propertythe andVideo equipmentbusiness in the current period.

Net cash used in financing activities increaseddecreased by $8.5$2.9 million during the first threesix months of fiscal 2026, compared to the corresponding period in fiscal 2025, primarily due to $6.9$7.2 million of higherlower stock repurchases in the current period, partially offset by a $1.4$3.8 million decreasein proceeds from other loans in withholding tax payments related to the netprior share settlement of restricted stock units.period.

As previously noted, we classified the results of our Video business as discontinued operations in the consolidated statements of operations for all periods presented. The related assets and liabilities associated with the Video business were classified as held for sale in the consolidated balance sheets.sheets for the prior period presented.