AVIAT NETWORKS, INC.

Previous wording

This Quarterly Report on Form 10-Q, including “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including without limitation statements of, about, concerning or regarding: our ability to maintain effective internal control over financial reporting and management systems and remediate material weaknesses; our plans, strategies and objectives for future operations, including with respect to growing our business and sustaining profitability; our restructuring efforts; our research and development efforts and new product releases and services; trends in revenue; drivers of our business and the markets in which we operate; future economic conditions, performance or outlook, and changes in our industry and the markets we serve; the outcome of contingencies; the value of our contract awards; beliefs or expectations; the sufficiency of our cash and our capital needs and expenditures; our intellectual property protection; our compliance with regulatory requirements and the associated expenses; expectations regarding litigation; our intention not to pay cash dividends; seasonality of our business; the impact of foreign exchange and inflation; taxes; the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology, such as “anticipates,” “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “strategy,” “projects,” “targets,” “goals,” “seeing,” “delivering,” “continues,” “forecasts,” “future,” “predict,” “might,” “could,” “potential,” or the negative of these terms, and similar words or expressions.

Current wording

This Quarterly Report on Form 10-Q, including “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including without limitation statements of, about, concerning or regarding: our ability to maintain effective internal control over financial reporting and management systems; our plans, strategies and objectives for future operations, including with respect to growing our business and sustaining profitability; our restructuring efforts; our research and development efforts and new product releases and services; trends in revenue; drivers of our business and the markets in which we operate; future economic conditions, performance or outlook, and changes in our industry and the markets we serve; geopolitical tensions and conflicts; the outcome of contingencies; the value of our contract awards; beliefs or expectations; the sufficiency of our cash and our capital needs and expenditures; development and usage of artificial intelligence (“AI”) and machine learning (“ML”); our intellectual property protection; our compliance with regulatory requirements and the associated expenses; expectations regarding litigation; our intention not to pay cash dividends; seasonality of our business; the impact of foreign exchange, inflation and economic uncertainty; taxes; the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology, such as “anticipates,” “believes,” “expects,” “may,” “should,” “would,” “will,” “intends,” “plans,” “estimates,” “strategy,” “projects,” “targets,” “goals,” “seeing,” “delivering,” “continues,” “forecasts,” “future,” “predict,” “might,” “could,” “potential,” or the negative of these terms, and similar words or expressions.

Previous wording

Aviat is a global supplier of microwave networking and access networking solutions, backed by an extensive suite of professional services and support. Aviat sells radios, routers, software and services integral to the functioning of data transport networks. Aviat has more than 3,000 customers and significant relationships with global service providers and private network operators. Aviat’s North America manufacturing base consists of a combination of contract manufacturing and assembly and testing operated in Austin, Texas by Aviat. Additionally, Aviat utilizes a contract manufacturer based in Asia for much of its international equipment demand. Aviat’s technology is underpinned by more than 400 patents. Aviat competes on the basis of total cost of ownership, microwave radio expertise and solutions for mission critical communications. Aviat has a global presence.

Current wording

Aviat is a global supplier of microwave networking and access networking solutions, backed by an extensive suite of professional services and support. Aviat designs and sells wireless transport and access networking solutions and services that enable mission-critical and business-critical communications networks. Aviat has more than 3,000 customers and significant relationships with global service providers and private network operators. Aviat’s North America manufacturing base consists of a combination of contract manufacturing and assembly and testing operated in Austin, Texas by Aviat. Additionally, Aviat utilizes contract manufacturers based in Asia for much of its international equipment demand. Aviat’s technology is underpinned by more than 370 patents. Aviat competes on the basis of Total Cost of Ownership (“TCO”), microwave radio expertise and solutions for mission critical communications.

Previous wording

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first nine months of fiscal 2026. In North America, the Company supported 5G and long-term evolution (“LTE”) deployments of its mobile operator customers, public safety network deployments for state and local governments, and private network implementations for utilities and other customers. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large LTE and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce platform that provides low-cost services, simple experience, and fast delivery to mobile operators and private network customers. In early 2025, U.S. tariffs on foreign imports were introduced. Aviat will attempt to mitigate these tariffs; however, as disclosed below and in the “Risk Factors” section in Item 1A of its Annual Report on Form 10-K filed with the SEC on September 10, 2025, a number of factors could prevent the Company from achieving its objectives, including ongoing pricing pressures attributable to competition and macroeconomic conditions in the geographic markets that it serves.

Current wording

The market for mobile backhaul continued to be the Company’s primary addressable market segment globally in the first three months of fiscal 2027. In international markets, the Company’s business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large long-term evolution (“LTE”) and 5G deployments. Aviat’s position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat’s strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce on-line platform, Aviat Store, that provides low-cost services, a simple experience, and fast delivery to mobile operators and private network customers.

Previous wording

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three and nine months ended March 27, 2026 and March 28, 2025 and the related changes were as follows:

Current wording

The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three months ended October 2, 2026 and September 26, 2025 and the related changes were as follows:

Previous wording

Revenue in Latin America and Asia Pacific decreased by $11.7 million during the third quarter of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for software offerings, services, and products of 64%, 25% and 18%, respectively. Revenue in Latin America and Asia Pacific decreased by $14.2 million during the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower demand for services and products of 29% and 11% respectively, partially offset by an increase of 12% on software offerings.

Current wording

Revenue in Latin America and Asia Pacific decreased by $3.8 million during the first quarter of fiscal 2027 compared with the same period of fiscal 2026 primarily due to lower demand for software and licenses and field services of 47% and 28%, respectively, partially offset by an increase in equipment sales of 19%.

Previous wording

Gross margin for the third quarter of fiscal 2026 decreased by $10.0 million compared with the same quarter of fiscal 2025 primarily due to sales volumes and the mix of product and service offerings. Gross margin for the first nine months of fiscal 2026 increased by $1.1 million due to sales volumes and the mix of product and service offerings.

Current wording

Gross margin for the first quarter of fiscal 2027 decreased by $5.5 million compared with the same quarter of fiscal 2026 primarily due to sales volumes and the mix of product and service offerings.

Previous wording

Research and development expenses decreased by $48 thousand and $7.2 million for the three and nine months ended March 27, 2026, respectively, compared with the same periods in fiscal 2025, primarily due to cost management initiatives.

Current wording

Research and development expenses remained relatively consistent for the three months ended October 2, 2026 compared with the same period in fiscal 2026.

Previous wording

Selling and administrative expenses decreased by $1.8 million for the third quarter of fiscal 2026 compared with the same quarter of fiscal 2025 primarily due to lower administrative costs and cost management initiatives. Selling and administrative expenses decreased by $2.2 million for the first nine months of fiscal 2026 compared with the same period of fiscal 2025 primarily due to lower administrative costs and cost management initiatives.

Current wording

Selling and administrative expenses decreased by $1.2 million for the first quarter of fiscal 2027 compared with the same quarter of fiscal 2026 primarily due to lower administrative costs and cost management initiatives.

Previous wording

Other expense (income), net decreased by $1.7 million and $4.4 million for the three and nine months ended March 27, 2026, respectively, compared with the same quarter of fiscal 2025 primarily as a result of fluctuation in foreign currencies.

Current wording

Other expense, net increased by $0.3 million for the first quarter of fiscal 2027 compared with the same quarter of fiscal 2026 primarily as a result of foreign exchange movement.

Previous wording

The tax expense for the first nine months of fiscal 2026 was primarily attributable to tax expense related to U.S. and profitable foreign subsidiaries. The tax benefit for the first nine months of fiscal 2025 was primarily resulting from year-to-date losses.

Current wording

The tax expense for the first three months of fiscal 2027 and fiscal 2026 were primarily attributable to U.S. and profitable foreign subsidiaries.

Previous wording

As of March 27, 2026, the Company’s total cash and cash equivalents were $78.1 million. Approximately $16.2 million was held in the United States. The remaining balance of $61.9 million, or 79%, was held outside the United States.

Current wording

As of October 2, 2026, the Company’s total cash and cash equivalents were $55.4 million. Approximately $8.9 million was held in the United States. The remaining balance of $46.5 million, or 84%, was held outside the United States.

Previous wording

Operating cash flows are presented as net income (loss) adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash provided by (used in) operating activities was $10.5 million for the first nine months of fiscal 2026, compared with $(4.8) million in the prior year. The $15.3 million increase is primarily attributable to increased earnings and increases in working capital compared to the prior year.

Current wording

Operating cash flows are presented as net (loss) income adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash used in operating activities was $6.3 million for the first three months of fiscal 2027, compared with $11.7 million in the prior year. The $5.4 million increase is primarily attributable to favorable changes in working capital, including collections of accounts receivable and decreases in unbilled receivables, partially offset by the timing of accounts payable payments.

Previous wording

Net cash used in investing activities was $7.8 million for the first nine months of fiscal 2026, compared to $26.3 million in the prior year. The $18.4 million decrease is primarily due to the absence of prior year acquisition payments associated with the NEC Transaction in the current year.

Current wording

Net cash used in investing activities was $0.9 million for the first three months of fiscal 2027, compared to $1.7 million in the prior year. The $0.8 million decrease is primarily due to lower purchases of property, plant and equipment in the current year.

Previous wording

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash provided by financing activities was $15.8 million for the first nine months of fiscal 2026, compared with $17.6 million in the prior year. The $1.8 million decrease is primarily due to reduced net Term Loan borrowings of $16.8 million compared to $25.3 million in the prior year and the absence of prior year payments of deferred consideration for acquisitions of $5.8 million.

Current wording

Financing cash flows consist primarily of borrowings and repayments under the Company’s Credit Facility and proceeds from the exercise of employee stock options. Net cash used in financing activities was $11.7 million for the first three months of fiscal 2027, compared with net cash provided by financing activities of $18.5 million in the prior year. The $30.2 million decrease is primarily due to the absence of $20.0 million of term loan borrowings received in the prior year and net repayments under the revolving credit facility of $10.0 million in the current year.

Previous wording

As of March 27, 2026, the Company’s principal sources of liquidity consisted of $78.1 million in cash and cash equivalents, $76.4 million of available credit under its Credit Facility, and future collections of receivables from customers. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20 million for each instrument. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

Current wording

As of October 2, 2026, the Company’s principal sources of liquidity consisted of $55.4 million in cash and cash equivalents, $96.7 million of available credit under its Credit Facility, and future collections of receivables from customers. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20.0 million for each instrument. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company’s primary sources of liquidity have been cash flows from operations and credit facilities.

Previous wording

The Company borrowed and repaid $75.0 million against the Revolver during the first nine months of fiscal 2026 and had $15.0 million borrowings outstanding under the Revolver. As of March 27, 2026, the Company had $89.9 million outstanding under its Term Loan and during the first nine months of fiscal 2026 borrowed $20.0 million and repaid $3.2 million against the Term Loan. As of March 27, 2026, the Company was in compliance with all financial covenants contained in the Credit Facility.

Current wording

The Company borrowed $30.0 million and repaid $40.0 million against the Revolver during the first three months of fiscal 2027. There were no outstanding borrowings under the Revolver as of October 2, 2026. As of October 2, 2026, the Company had $86.4 million outstanding under its Term Loan. During the first three months of fiscal 2027, the Company repaid $1.2 million against the Term Loan. As of October 2, 2026, the Company was in compliance with all financial covenants contained in the Credit Facility.