ADTRAN Holdings, Inc.

Below are certain acronyms, concepts and defined terms commonly used in our industry and in this Quarterly Report on Form 10-Q, along with their meanings:

GENERAL

Unless the context otherwise indicates or requires, references in this Quarterly Report on Form 10-Q to “Adtran,” the “Company,” “we”, “us” and “our” refer to ADTRAN Holdings, Inc. and its consolidated subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of Adtran. Adtran and its representatives may from time to time make written or oral forward-looking statements, including statements contained in this report, our other filings with the SEC and other communications with our stockholders. Any statement that does not directly relate to a historical or current fact is a forward-looking statement. Generally, the words “believe”, “expect”, “intend”, “estimate”, “anticipate”, “would”, “will”, “may”, “might”, “could”, “should”, “can”, “future”, “assume”, “plan”, “seek”, “predict”, “potential”, “objective”, “expect”, “target”, “project”, “outlook”, “forecast” and similar expressions identify forward-looking statements. We caution you that any forward-looking statements made by us or on our behalf are subject to uncertainties and other factors that could affect the accuracy of such statements. Forward-looking statements are based on management’s current expectations, as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Those statements are based on general assumptions and are subject to various risks, and because they also relate to the future, they are likewise subject to inherent uncertainties and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. The following are some of the risks that could affect our financial performance or could cause actual results to differ materially from those expressed or implied in our forward-looking statements:

Risks related to our financial results and Company success

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We are obligated to comply with covenants related to our JPMorgan Chase Bank Credit Agreement (the "New Credit Agreement") that restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate our debt obligations.

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We have experienced significant fluctuations in revenue and such fluctuations may continue. Fluctuations in revenue can cause our operating results in a given reporting period to be higher or lower than expected.

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Accurately matching necessary inventory levels to customer demand is challenging, and we may incur additional costs or be required to write off significant inventory that could adversely impact our results of operations.

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The lengthy sales and approval process required by Service Providers for new products has resulted in fluctuations in our revenue and may result in future revenue fluctuations.

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We require a significant amount of cash to service our indebtedness, our payment obligations to Adtran Networks shareholders under the DPLTA, and other obligations.

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The terms of the DPLTA may have a material adverse effect on our financial results and condition.

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Our significant indebtedness exposes us to various risks.

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We depend heavily on sales to certain customers; the loss of any of these customers or a significant project would significantly reduce our revenue and net income.

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Our exposure to the credit risks of our customers and distributors may make it difficult to collect accounts receivable and could adversely affect our operating results, financial condition and cash flows.

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We expect gross margins to continue to vary over time, and our levels of product and services gross margins may not be sustainable.

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Our dependence on a limited number of suppliers for certain raw materials, key components and ODM products, combined with supply shortages, has prevented and may continue to prevent us from delivering our products on a timely basis, which has had and may continue to have a material adverse effect on operating results and could have a material adverse effect on customer relations.

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We compete in markets that have become increasingly competitive, which may result in reduced gross profit margins and market share.

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Our estimates regarding future warranty obligations may change due to product failure rates, installation and shipment volumes, field service repair obligations and other rework costs incurred in correcting product failures. If our estimates materially change, our liability for warranty obligations may increase or decrease, impacting future cost of revenue.

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Managing our inventory is complex and has included and may continue to include write downs of excess or obsolete inventory.

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Our international operations have exposed and may continue to expose us to additional risks, increase our costs and adversely affect our operating results, financial condition and cash flows. (including risks relating to the recent escalation and broadening of the conflict involving the United States, Iran, Israel, and Lebanon)

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Our success depends on attracting and retaining key personnel.

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We are exposed to currency exchange rate fluctuations in jurisdictions where we transact in local currency, which could harm our financial results and cash flows.

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We have recognized impairment charges related to goodwill and other intangible assets in the past and may be required to do so in the future.

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We may be unable to successfully and effectively manage and integrate acquisitions, divestitures and other significant transactions, which could harm our operating results, business and prospects.

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Ongoing inflationary pressures have negatively impacted our revenue and profitability.

Risks related to our control environment

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We have had to restate our previously issued consolidated financial statements and, as part of that process, have identified material weaknesses in our internal control over financial reporting. If we are unable to develop and maintain effective internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and may adversely affect our business, financial condition and results of operations.

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We may face litigation and other risks as a result of our material weaknesses in our internal control over financial reporting and any resulting restatement of our previously issued financial statements.

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Breaches of our information systems and cyberattacks could compromise our intellectual property and cause significant damage to our business and reputation.

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Emerging issues related to the development and use of AI could give rise to legal or regulatory action, damage our reputation, or otherwise materially harm our business.

Risks related to the telecommunications industry

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We must continue to update and improve our products and develop new products to compete and to keep pace with improvements in communications technology.

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Our failure or the failure of our contract manufacturers to comply with applicable environmental regulations could adversely impact our results of operations.

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If our products do not interoperate with our customers’ networks, installations may be delayed or canceled, which could harm our business.

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We engage in research and development activities to develop new, innovative solutions and to improve the application of developed technologies, and as a consequence may miss certain market opportunities enjoyed by larger companies with substantially greater research and development efforts and which may focus on more leading-edge development.

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Our strategy of outsourcing a portion of our manufacturing requirements to subcontractors located in various international regions may result in us not meeting our cost, quality or performance standards.

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Our failure to maintain rights to intellectual property used in our business could adversely affect the development, functionality and commercial value of our products.

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Third party hardware or software that is used with our portfolios may not continue to be available or at commercially reasonable terms.

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Our use of open source software could impose limitations on our ability to commercialize our products.

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We may incur liabilities or become subject to litigation that would have a material effect on our business.

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If we are unable to successfully develop and maintain relationships with System Integrators, Service Providers and enterprise value-added resellers, our revenue may be negatively affected.

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We depend on a third-party cloud platform provider to host our Mosaic One SaaS network and other operating platforms, and if we were to experience a material disruption or interference in service, our business and reputation could suffer.

Risks related to the Company's stock price

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Our financial performance and operating results historically have fluctuated and could fluctuate in future periods, which has affected and may in the future affect our stock price.

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Future issuances of additional equity securities could result in dilution of existing stockholders’ equity ownership.

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The price of our common stock has been volatile and may continue to fluctuate significantly.

Risks related to our Convertible Senior Notes (the “2030 Notes” or the “Notes”) and Capped Call Transactions (the “Capped Calls”)

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Our indebtedness and liabilities could limit the cash flow available for our operations and expose us to risks that could adversely affect our business, financial condition and results of operations. In addition, if we are unable to raise additional capital and/or restructure some of our existing indebtedness, we may be unable to meet our obligations as they come due, including with respect to the 2030 Notes.

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We may be unable to raise the funds necessary to repurchase the 2030 Notes for cash following a fundamental change or to pay any cash amounts due upon maturity or conversion of the 2030 Notes, and our other indebtedness may limit our ability to repurchase the 2030 Notes or to pay any cash amounts due upon their maturity or conversion.

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Provisions in the Indenture (as defined below) could delay or prevent an otherwise beneficial takeover of us.

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The accounting method for the 2030 Notes has affected and may continue to adversely affect our reported financial condition and results.

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Transactions relating to our 2030 Notes may affect the value of our common stock.

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We are subject to counterparty risk with respect to the Capped Calls, and the Capped Calls may not operate as planned.

Risks related to the regulatory environments in which we do business

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We are subject to complex and evolving U.S. and foreign laws, regulations and standards governing the conduct of our business. Violations of these laws and regulations may harm our business, subject us to penalties and to other adverse consequences.

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Changes in trade policy in the U.S. and other countries, including the imposition of additional tariffs and the resulting consequences, may adversely impact our gross profits, gross margins, results of operations and financial condition.

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New or revised tax regulations, changes in our effective tax rate, recognition of a valuation allowance or assessments arising from tax audits may have an adverse impact on our results.

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Interest rate fluctuations could increase our costs of borrowing money and negatively impact our financial condition and future operations.

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Expectations relating to sustainability and governance matters expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.

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Further downgrades of the U.S. credit rating, automatic spending cuts, the recent government shutdown or a future government shutdown could negatively impact our liquidity, financial condition and earnings.

The foregoing list of risks is not exclusive. For a more detailed description of the risk factors associated with our business, see Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026 (the "2025 Form 10-K"), as well as the risk factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q. We caution investors that other factors may prove to be important in the future in affecting our operating results. New factors emerge from time to time, and it is not possible for us to predict all of these factors, nor can we assess the impact each factor, or a combination of factors, may have on our business.

You are further cautioned not to place undue reliance on these forward-looking statements because they speak only of our views as of the date that the statements were made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.