Ribbon Communications Inc.

Previous wording

We are a leading global provider of communications technology to service providers and enterprises. We provide a broad range of software and high-performance hardware products, network solutions, and services that enable the secure delivery of data and voice communications, and high-bandwidth networking and connectivity for residential consumers and for small, medium, and large enterprises and industry verticals such as finance, education, government, utilities, and transportation. Our mission is to create a recognized global technology leader providing cloud-centric solutions that enable the secure exchange of information, with unparalleled scale, performance and elasticity. We are headquartered in Plano, Texas, and have a global presence with research and development or sales and support locations in over thirty countries around the world.

Current wording

We are a leading global provider of communications technology to service providers and enterprises. We provide a broad range of software and high-performance hardware products, network solutions, and services that enable the secure delivery of data and voice communications, and high-bandwidth networking and connectivity for residential consumers and for small, medium, and large enterprises and industry verticals such as finance, education, government, utilities, and transportation. Our mission is to create a recognized global technology leader providing cloud-centric solutions that enable the secure exchange of information, with unparalleled scale, performance and elasticity. We are at the intersection of the adoption of Artificial Intelligence (“AI”) by service providers and enterprises addressing the rapid growth in fiber connectivity and integration of voice capabilities into agentic AI platforms. We are headquartered in Plano, Texas, and have a global presence with research and development or sales and support locations in over thirty countries around the world.

Previous wording

*Supplier Disruptions.*Ongoing uncertainty in the global economy due to proposed and enacted tariffs and trade restrictions, inflation, the wars in Israel and Ukraine, national security concerns and other factors, continue to disrupt various manufacturing, commodity and financial markets, increase volatility, and impede global supply chains. Our ability to deliver our solutions as agreed upon with our customers depends in part on the ability of our global contract manufacturers, vendors, licensors and other business partners to deliver products or perform services we have procured from them.

Current wording

*Supplier Disruptions.*Ongoing uncertainty in the global economy due to tariffs, inflation, global military conflicts, including in the Middle East and Ukraine, rising fuel prices, national security concerns and other factors, continue to disrupt various manufacturing, commodity and financial markets, increase volatility, and impede global supply chains. Our ability to deliver our solutions as agreed upon with our customers depends in part on the ability of our global contract manufacturers, vendors, licensors and other business partners to deliver products or perform services we have procured from them.

Previous wording

Continued uncertain global economic conditions may cause our customers to restrict spending or delay purchases for an indeterminate period of time and consequently cause our revenues to decline. Further, such factors may negatively impact our operating costs resulting in a reduction in net income. The degree to which the ongoing wars in Israel and Ukraine, the inflationary and high interest rate environment and tariffs impacts our future business, financial position and results of operations will depend on developments beyond our control.

Current wording

Continued uncertain global economic conditions may cause our customers to restrict spending or delay purchases for an indeterminate period of time and consequently cause our revenues to decline. Further, such factors may negatively impact our operating costs resulting in a reduction in net income. The degree to which the ongoing wars in the Middle East and Ukraine, and the high interest rate environment impacts our future business, financial position and results of operations will depend on developments beyond our control.

Previous wording

The Ongoing Wars in Israel and Ukraine. The uncertainty resulting from the ongoing wars in Israel and Ukraine, and the threat for expansion of one or both of these wars, could result in some of our customers delaying purchases from us. Further, a number of our employees in Israel are members of the military reserves and subject to immediate call-up in response to the war in Israel. Following the terrorist attacks in Israel in October 2023, a number of our employees have been activated for military duty and we expect that additional employees will also be activated if the war in Israel continues. While we have business continuity plans in place to address the military call-ups, it could affect the timing of projects in the short-term as the work is shifted to other team members both inside and outside of Israel.

Current wording

The Ongoing War in Ukraine and the Middle East. The uncertainty resulting from the recent war in the Middle East and ongoing war in Ukraine, and the threat for expansion of one or both of these wars, could result in some of our customers delaying purchases from us. The conflict in the Middle East has significantly reduced the export of oil and natural gas from the Persian Gulf, creating upward pressure on oil and natural gas prices, and has also disrupted and increased the costs of certain other supplies. Further, a number of our employees in Israel are members of the military reserves and subject to immediate call-up in response to the war in the Middle East. Following the terrorist attacks in Israel in October 2023, a number of our employees have been activated for military duty and we expect that additional employees will also be activated if the war in Israel continues. While we have business continuity plans in place to address the military call-ups, it could affect the timing of projects in the short-term as the work is shifted to other team members both inside and outside of Israel.

Previous wording

The U.S. and other European countries have imposed sanctions and trade restrictions against Russia in connection with the war in Ukraine. These sanctions and restrictions currently prohibit our ability to sell hardware products in Russia or provide any replacement parts in Russia. The sanctions continue to evolve and further changes in the current sanctions or trade restrictions could further limit our ability to sell products and services to customers in Russia, our ability to collect on outstanding accounts receivable from such customers, and our ability to repatriate funds.

Current wording

The U.S. and other European countries have imposed sanctions and trade restrictions against Russia in connection with the war in Ukraine. These sanctions and restrictions currently prohibit our ability to sell hardware products in Russia or provide any replacement parts in Russia. The sanctions continue to evolve and further changes in the current sanctions or trade restrictions could further limit our ability to sell products and services to customers in Russia, our ability to collect on outstanding accounts receivable from such customers, and our ability to repatriate funds. If we are further limited in our ability to sell products and services to Russia and other countries for an extended period, it could have a material impact on our financial results.

Previous wording

Inflation and Interest Rates. We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures resulting in higher energy prices, component costs, freight premiums, and other operating costs above normal rates. Although headline inflation in the United States and Europe appears to be easing, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households. Interest rates remain high as central banks in developed countries attempt to subdue inflation while government deficits and debt remain at high levels in many global markets. However, since its peak in 2024, the Federal Reserve lowered the federal funds rate to its current target range of 4.00% to 4.25% as a result of indicators that inflation had made progress toward the Federal Reserve’s objective and labor market conditions had generally eased. Yet, the economic outlook remains uncertain, and the implications of current and future tariffs, higher government deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.

Current wording

Inflation and Interest Rates. We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures resulting in higher energy prices, component costs, freight premiums, and other operating costs above normal rates. Although headline inflation in the United States and Europe appears to be easing, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households. Interest rates remain high as central banks in developed countries attempt to subdue inflation while government deficits and debt remain at high levels in many global markets. However, since its peak in 2024, the Federal Reserve lowered the federal funds rate to its current target range of 3.50% to 3.75% as a result of indicators that inflation had made progress toward the Federal Reserve’s objective and labor market conditions had generally eased. Yet, the economic outlook remains uncertain, and the implications of current and future tariffs, higher government deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for our business.

Previous wording

*Foreign currency.*As a portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates. A weakened U.S. dollar could increase the cost of local operating expenses and procurement of raw materials from sources outside the United States. Therefore, changes in the value of the U.S. dollar against other currencies will affect our revenue, income from operations, net income and the value of balance sheet items originally denominated in other currencies. There is no guarantee that our financial results will not be adversely affected by currency exchange rate fluctuations.

Current wording

*Foreign currency.*As a portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates. A weakened U.S. dollar could increase the cost of local operating expenses and procurement of raw materials from sources outside the United States. Therefore, changes in the value of the U.S. dollar against other currencies would affect our revenue, income from operations, net income and the value of balance sheet items originally denominated in other currencies. There is no guarantee that our financial results will not be adversely affected by currency exchange rate fluctuations.

Previous wording

We reported income from operations of $2.8 million and a loss from operations of $0.9 million for the three months ended September 30, 2025 and 2024, respectively. We reported a loss from operations of $12.6 million and $16.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

We reported a loss from operations of $31.7 million and $19.6 million for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Our revenue was $215.4 million and $210.2 million in the three months ended September 30, 2025 and 2024, respectively. Our gross profit and gross margin were $108.0 million and 50.1%, respectively, in the three months ended September 30, 2025, and $109.6 million and 52.1%, respectively, in the three months ended September 30, 2024. The higher revenue in the three months ended September 30, 2025 compared to 2024 is due to $8.7 million of higher IP Optical Networks sales, partially offset by $3.6 million of overall lower Cloud and Edge revenue. The IP Optical Networks revenue was higher primarily due to $5.2 million of higher product sales, and higher professional services sales and maintenance revenue of $1.8 million and $1.7 million, respectively. The lower Cloud and Edge revenue was attributable to $7.3 million of lower product sales and $1.3 million of lower maintenance revenue, partially offset by

Current wording

Our revenue was $162.6 million and $181.3 million in the three months ended March 31, 2026 and 2025, respectively. Our gross profit and gross margin were $69.7 million and 42.9%, respectively, in the three months ended March 31, 2026, and $82.4 million and 45.4%, respectively, in the three months ended March 31, 2025. The lower revenue in the three months ended March 31, 2026 compared to 2025 is due to $10.6 million of lower IP Optical Networks sales plus $8.1 million of lower Cloud and Edge revenue. The IP Optical Networks revenue was lower primarily due to $8.3 million of lower product sales, and lower professional services sales and maintenance revenue of $2.3 million. The lower Cloud and Edge revenue was attributable to $5.6 million of lower product sales and $2.5 million of lower professional services sales and maintenance revenue.

Previous wording

Revenue from our Cloud and Edge segment was $124.5 million and $128.1 million in the three months ended September 30, 2025 and 2024, respectively. Gross profit and gross margin for this segment were $76.5 million and 61.5%, respectively, in the three months ended September 30, 2025, and $84.3 million and 65.9%, respectively, in the three months ended September 30, 2024. Revenue from our Cloud and Edge segment was $369.1 million and $340.3 million in the nine months ended September 30, 2025 and 2024, respectively. Gross profit and gross margin for this segment were $226.3 million and 61.3%, respectively, in the nine months ended September 30, 2025, and $219.2 million and 64.4%, respectively, in the nine months ended September 30, 2024.

Current wording

Revenue from our Cloud and Edge segment was $99.5 million and $107.6 million in the three months ended March 31, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $56.1 million and 56.4%, respectively, in the three months ended March 31, 2026, and $66.1 million and 61.5%, respectively, in the three months ended March 31, 2025.

Previous wording

Our operating expenses were $105.2 million and $110.5 million in the three months ended September 30, 2025 and 2024, respectively, and $312.3 million and $315.8 million in the nine months ended September 30, 2025 and 2024, respectively. The decreased operating expenses are primarily attributable to lower general and administrative expenses. Operating expenses for the three months ended September 30, 2025 included $5.9 million of amortization of acquired intangible assets, $0.4 million of acquisition-, disposal- and integration-related expense, and $3.5 million of restructuring and related expense. Operating expenses for the three months ended September 30, 2024 included $6.5 million of amortization of acquired intangible assets and $3.8 million of restructuring and related expense. Operating expenses for the nine months ended September 30, 2025 included $18.1 million of amortization of acquired intangible assets, $4.3 million of acquisition-, disposal- and integration-related expense, and $10.2 million of restructuring and related expense. Operating expenses for the nine months ended September 30, 2024 included $19.7 million of amortization of acquired intangible assets, and $8.8 million of restructuring and related expense.

Current wording

Our operating expenses were $101.4 million and $102.0 million in the three months ended March 31, 2026 and 2025, respectively. The decreased operating expenses are primarily attributable to lower restructuring and related expense, offset by higher general and administrative expense. Operating expenses for the three months ended March 31, 2026 included $5.7 million of amortization of acquired intangible assets and $2.0 million of restructuring and related expense. Operating expenses for the three months ended March 31, 2025 included $6.2 million of amortization of acquired intangible assets and $5.3 million of restructuring and related expense.

Previous wording

We recorded stock-based compensation expense of $5.8 million and $4.0 million in the three months ended September 30, 2025 and 2024, respectively, and $14.6 million and $12.1 million in the nine months ended September 30, 2025 and 2024, respectively. These amounts are included as components of both Cost of revenue and Operating expenses in our condensed consolidated statements of operations.

Current wording

We recorded stock-based compensation expense of $6.0 million and $4.3 million in the three months ended March 31, 2026 and 2025, respectively. These amounts are included as components of both Cost of revenue and Operating expenses in our condensed consolidated statements of operations.

Previous wording

See "Results of Operations" in this MD&A for a discussion of the changes in our revenue and expenses for three and nine months ended September 30, 2025 compared to three and nine months ended September 30, 2024.

Current wording

See "Results of Operations" in this MD&A for a discussion of the changes in our revenue and expenses for three months ended March 31, 2026 compared to three months ended March 31, 2025.

Previous wording

During the first quarter of 2025, our President and CEO approved a strategic restructuring program (as subsequently amended, the "2025 Restructuring Plan") that consists of workforce reductions in certain of our operating locations to correspond with current sales levels in those areas. The 2025 Restructuring Plan was amended in the third quarter of 2025 to reflect an increase in the scope of the proposed reductions. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2025 Restructuring Plan, we recorded restructuring and related expense of $2.5 million and $5.1 million in three and nine

Current wording

During the first quarter of 2025, our President and CEO approved a strategic restructuring program (as subsequently amended, the "2025 Restructuring Plan") that consists of workforce reductions in certain of our operating locations to correspond with current sales levels in those areas. The 2025 Restructuring Plan was amended in the third quarter of 2025 to reflect an increase in the scope of the proposed reductions. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2025

Previous wording

months ended September 30, 2025. We anticipate that we will record nominal additional expense in 2025 for workforce reductions in connection with the 2025 Restructuring Plan.

Current wording

Restructuring Plan, we recorded nominal restructuring and related expense in the three months ended March 31, 2026 and $2.4 million in the three months ended March 31, 2025, respectively. We anticipate that we will record nominal additional expense in 2025 for workforce reductions in connection with the 2025 Restructuring Plan.

Previous wording

In February 2022, our Board of Directors approved a strategic restructuring program (the "2022 Restructuring Plan") to streamline our operations in order to support our investment in critical growth areas. The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2022 Restructuring Plan, we recorded restructuring and related expense of $0.9 million and $5.2 million in the three and nine months ended September 30, 2025, respectively, for variable and other facilities-related costs. We anticipate that we will record approximately $1 million of expense in the remainder of 2025 related to the 2022 Restructuring Plan.

Current wording

In February 2022, our Board of Directors approved a strategic restructuring program (the "2022 Restructuring Plan") to streamline our operations in order to support our investment in critical growth areas. The 2022 Restructuring Plan includes, among other things, charges related to a consolidation of facilities and a workforce reduction. Any positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2022 Restructuring Plan, we recorded restructuring and related expense of $0.7 million and $3.1 million in the three months ended March 31, 2026 and 2025, respectively, for variable and other facilities-related costs. We anticipate that we will record approximately $2 million of expense in the remainder of 2026 related to the 2022 Restructuring Plan.

Previous wording

For facilities that are part of a restructuring plan, for which we have no intent or ability to enter into a sublease, we recognize accelerated rent amortization over the period from the date that we commence the plan to fully or partially vacate a facility through the final vacate date. We did not record accelerated rent amortization in the three and nine months ended September 30, 2025 or 2024. We continue to evaluate our properties included in our restructuring plans for accelerated amortization and/or right-of-use asset impairment. We may incur additional expense in the future if we are unable to sublease other locations included in these initiatives.

Current wording

For facilities that are part of a restructuring plan, for which we have no intent or ability to enter into a sublease, we recognize accelerated rent amortization over the period from the date that we commence the plan to fully or partially vacate a facility through the final vacate date. We did not record accelerated rent amortization in the three months ended March 31, 2026 or 2025. We continue to evaluate our properties included in our restructuring plans for accelerated amortization and/or right-of-use asset impairment. We may incur additional expense in the future if we are unable to sublease other locations included in these initiatives.

Previous wording

This MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future given available information. We consider certain accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment. The significant accounting policies that we believe are the most critical include revenue recognition, the valuation of inventory, warranty accruals, loss contingencies and reserves, stock-based compensation, the Preferred Stock and Warrants, business combinations, goodwill and intangible assets, accounting for leases, and accounting for income taxes. If actual results differ significantly from management’s estimates and projections, there could be a material effect on our condensed consolidated financial statements. There were no significant changes to our critical accounting policies from January 1, 2025 through September 30, 2025. For a further discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

This MD&A is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future given available information. We consider certain accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment. The significant accounting policies that we believe are the most critical include revenue recognition, the valuation of inventory, warranty accruals, loss contingencies and reserves, stock-based compensation, the warrants, business combinations, goodwill and intangible assets, accounting for leases, and accounting for income taxes. If actual results differ significantly from management’s estimates and projections, there could be a material effect on our condensed consolidated financial statements. There were no significant changes to our critical accounting policies from January 1, 2026 through March 31, 2026. For a further discussion of our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Revenue. Revenue for three and nine months ended September 30, 2025 and 2024 was as follows (in thousands, except percentages):

Current wording

Revenue. Revenue for the three months ended March 31, 2026 and 2025 was as follows (in thousands, except percentages):

Previous wording

Segment revenue for the three and nine months ended September 30, 2025 and 2024 was as follows (in thousands):

Current wording

Segment revenue for the three months ended March 31, 2026 and 2025 was as follows (in thousands):

Previous wording

The decrease in our product revenue in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was the result of $7 million of lower sales of our Cloud and Edge products, partially offset by $5 million of higher sales of IP Optical Networks products. The increase in our product revenue in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was the result of $9 million of higher sales of our Cloud and Edge products, partially offset by a $1 million decrease in sales of IP Optical Networks products. For the three months ended September 30, 2025 compared to the prior year, the decrease in sales of Cloud and Edge products was primarily attributable to lower sales to enterprise customers, including Federal agencies. The increase in sales of IP Optical Networks products for the three months ended September 30, 2025 compared to the prior year was primarily due to higher sales in India and the region of Europe, the Middle East and Africa (“EMEA”), partially offset by lower sales in the United States. For the nine months ended September 30, 2025 compared to the prior year, the increase in revenue from the sale of Cloud and Edge products was primarily attributable to U.S. service providers and enterprise customers. The increase in sales of IP Optical Networks products for the nine months ended September 30, 2025 compared to the prior year was primarily due to higher sales in India and EMEA, partially offset by lower sales in the United States and Eastern Europe.

Current wording

The decrease in our product revenue in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was the result of $5.6 million of lower sales of our Cloud and Edge products and $8.3 million of lower sales of IP Optical Networks products. The decrease in revenue from the sale of Cloud and Edge products was primarily attributable to sales to Tier 1 and other service providers, U.S. Federal agencies and global enterprise customers due to lower customer demand and delayed purchasing. The decrease in revenue from the sale of IP Optical products was primarily attributable to lower sales in Asia, Europe and the Americas.

Previous wording

Revenue from sales to enterprise customers was 34% and 36% of our product revenue in the three months ended September 30, 2025 and 2024, respectively. These sales were made through both our direct sales team and indirect sales channel partners. Revenue from sales to enterprise customers was 32% and 39% of our product revenue in the nine months ended September 30, 2025 and 2024, respectively. The decrease in enterprise sales primarily reflects lower sales of our products to Federal agencies and other enterprise customers.

Current wording

Revenue from sales to enterprise customers was 32% and 28% of our product revenue in the three months ended March 31, 2026 and 2025, respectively. These sales were made through both our direct sales team and indirect sales channel partners. The increase in enterprise sales in the three months ended March 31, 2026 primarily reflects higher sales of our products to IP Optical Networks enterprise customers.

Previous wording

Revenue from indirect sales through our channel partner program was 26% and 34% of our product revenue in the three months ended September 30, 2025 and 2024 and 29% and 38% of our product revenue in the nine months ended September 30, 2025 and 2024, respectively. The decrease in channel sales in the nine months ended September 30, 2025 primarily reflects lower sales of products to Federal agencies and other enterprise customers.

Current wording

Revenue from indirect sales through our channel partner program was 28% of our product revenue in the three months ended March 31, 2026 and 2025, respectively. Channel sales remained unchanged in the three months ended March 31, 2026 reflecting constant sales of products to enterprise customers.

Previous wording

Service revenue for the three and nine months ended September 30, 2025 and 2024 was comprised of the following (in thousands, except percentages):

Current wording

Service revenue for the three months ended March 31, 2026 and 2025 was comprised of the following (in thousands, except percentages):

Previous wording

Segment service revenue for the three and nine months ended September 30, 2025 and 2024 was comprised of the following (in thousands):

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Segment service revenue for the three months ended March 31, 2026 and 2025 was comprised of the following (in thousands):

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The following customers contributed 10% or more of our revenue in the three and nine months ended September 30, 2025 and 2024:

Current wording

The following customers contributed 10% or more of our revenue in the three months ended March 31, 2026 and 2025:

Previous wording

Revenue earned from customers domiciled outside the United States was 55% and 48% in the three months ended September 30, 2025 and 2024, respectively, and 52% and 55% of revenue in the nine months ended September 30, 2025 and 2024, respectively. Our U.S. revenue is increasing due to higher sales into the U.S. market from our Cloud & Edge segment. Due to the timing of project completions, we expect that the domestic and international components as a percentage of our revenue may fluctuate from quarter to quarter and year to year.

Current wording

Revenue earned from customers domiciled outside the United States was 55% and 54% in the three months ended March 31, 2026 and 2025, respectively. Due to the timing of project completions, we expect that the domestic and international components as a percentage of our revenue may fluctuate from quarter to quarter and year to year.

Previous wording

Our deferred product revenue was $8 million and $14 million at September 30, 2025 and December 31, 2024, respectively. Our deferred service revenue was $128 million and $126 million at September 30, 2025 and December 31, 2024, respectively. Our deferred revenue balance may fluctuate as a result of the timing of revenue recognition, customer payments, maintenance contract renewals, contractual billing rights and maintenance revenue deferrals included in multiple element arrangements.

Current wording

Our deferred product revenue was $8 million and $7 million at March 31, 2026 and December 31, 2025, respectively. Our deferred service revenue was $147 million and $149 million at March 31, 2026 and December 31, 2025, respectively. Our deferred revenue balance may fluctuate as a result of the timing of revenue recognition, customer payments, maintenance contract renewals, contractual billing rights and maintenance revenue deferrals included in multiple element arrangements.

Previous wording

Cost of Revenue/Gross Margin. Our cost of revenue consists primarily of amounts paid to third-party manufacturers for purchased materials and services, royalties, amortization of acquired technology, inventory valuation adjustments, warranty costs, and manufacturing and services personnel and related costs. Our cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Current wording

Cost of Revenue/Gross Margin. Our cost of revenue consists primarily of amounts paid to third-party manufacturers for purchased materials and services, royalties, amortization of acquired technology, inventory valuation adjustments, warranty costs, and manufacturing and services personnel and related costs. Our cost of revenue, gross profit and gross margin for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

Our segment cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Current wording

Our segment cost of revenue, gross profit and gross margin for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

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Research and Development. R&D expenses consist primarily of salaries and related personnel expenses and prototype costs for the design, development, testing, and enhancement of our products. R&D expenses for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Current wording

Research and Development. R&D expenses consist primarily of salaries and related personnel expenses and prototype costs for the design, development, testing, and enhancement of our products. R&D expenses for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

Some aspects of our R&D efforts require significant short-term expenditures, the timing of which may cause variability in our expenses. We believe that rapid technological innovation is critical to our long-term success, and we are tailoring our investments to meet the requirements of our customers and market. We believe that our R&D expenses will increase modestly in 2025 primarily due to higher employee and consulting costs related to modifying certain legacy products and certain of our cloud native solutions.

Current wording

Some aspects of our R&D efforts require significant short-term expenditures, the timing of which may cause significant variability in our expenses. We believe that rapid technological innovation is critical to our long-term success, and we are tailoring our investments to meet the requirements of our customers and market.

Previous wording

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of salaries and related personnel costs, commissions, travel and entertainment expenses, promotions, customer trial and evaluations inventory and other marketing and sales support expenses. Sales and marketing expenses for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Current wording

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of salaries and related personnel costs, commissions, travel and entertainment expenses, promotions, customer trial and evaluations inventory and other marketing and sales support expenses. Sales and marketing expenses for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

Our R&D expenses in the three and nine months ended September 30, 2025 were relatively flat compared to the same periods in 2024 with slight increases in our Cloud and Edge segment and slight decreases in our IP Optical segment.

Current wording

Sales and marketing expenses in the three months ended March 31, 2026 were relatively flat as compared to the three months ended March 31, 2025.

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General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related personnel costs for executive and administrative personnel, and audit, legal and other professional fees. General and administrative expenses for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Current wording

General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related personnel costs for executive and administrative personnel, and audit, legal and other professional fees. General and administrative expenses for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

The decrease in general and administrative expenses in the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024 was primarily attributable to lower litigation expenses, partially offset by higher employee related costs.

Current wording

The increase in general and administrative expenses in the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily attributable to higher stock compensation expense.

Previous wording

Amortization of Acquired Intangible Assets included in Operating expenses. Amortization of acquired intangible assets included in Operating expenses ("Opex Amortization") for the three and nine months ended September 30, 2025 and 2024 was as follows (in thousands, except percentages):

Current wording

Amortization of Acquired Intangible Assets included in Operating expenses. Amortization of acquired intangible assets included in Operating expenses ("Opex Amortization") for the three months ended March 31, 2026 and 2025 was as follows (in thousands, except percentages):

Previous wording

Opex Amortization was lower for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024. We record our amortization in relation to expected future cash flows rather than on a straight-line basis. Accordingly, such expense may vary from one period to the next.

Current wording

Opex Amortization was lower for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. We record our amortization in relation to expected future cash flows rather than on a straight-line basis. Accordingly, such expense may vary from one period to the next.

Previous wording

We recorded restructuring and related expense of $3.5 million and $3.8 million in the three months ended September 30, 2025 and 2024, respectively and $10.2 million and $8.8 million in the nine months ended September 30, 2025 and 2024, respectively. Although we have eliminated positions as part of our restructuring initiatives, we continue to hire in certain areas that we believe are important to our future growth.

Current wording

We recorded restructuring and related expense of $2.0 million and $5.3 million in the three months ended March 31, 2026 and 2025, respectively. Although we have eliminated positions as part of our restructuring initiatives, we continue to hire in certain areas that we believe are important to our future growth.

Previous wording

Interest Expense, Net. Interest expense and interest income for the three and nine months ended September 30, 2025 and 2024 were as follows (in thousands, except percentages):

Current wording

Interest Expense, Net. Interest expense and interest income for the three months ended March 31, 2026 and 2025 were as follows (in thousands, except percentages):