Ribbon Communications Inc.

Previous wording

Tariffs. The global trade landscape continues to be highly volatile. In 2025, the U.S. government implemented a series of trade tariffs on goods imported into the U.S. from various countries. In many cases, these tariffs resulted in reciprocal tariffs and other actions on goods being exported from the U.S. These associated tariffs are complex and continue to evolve as negotiations occur. In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”), which the U.S. government relied on to impose certain tariffs, does not authorize the administration to impose tariffs. On March 4, 2026, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, although the Court immediately suspended the order while the CBP determines a refund process. The IEEPA tariffs remain subject to ongoing litigation between the administration and other parties. In response to the U.S. Supreme Court ruling mentioned above, the administration announced plans to implement new tariffs under alternative statutory authority and recently announced its intention not to renew the existing U.S.-Mexico-Canada Agreement (“USMCA”) on which we rely for the importation of many of our products from our contract manufacturer in Mexico. The full impact of the U.S. Supreme Court’s ruling and the administration’s response, including the timing and extent of any refunds and the impact of the new tariffs or the proposed termination of the USMCA, remain uncertain. While the announced tariffs have not had a material impact on our business to date, new or proposed tariffs, including exemptions under existing trade agreements or otherwise, could result in additional expenses for products we import into the United States. In addition, the economic uncertainty caused by the tariffs may result in customers delaying planned purchases of products and services.* *

Current wording

Tariffs. The global trade landscape continues to be highly volatile. In 2025, the U.S. government implemented a series of trade tariffs on goods imported into the U.S. from various countries. In many cases, these tariffs resulted in reciprocal tariffs and other actions on goods being exported from the U.S. These associated tariffs are complex and continue to evolve as negotiations occur. In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”), which the U.S. government relied on to impose certain tariffs, does not authorize the administration to impose tariffs. Following the ruling, the U.S. Court of International Trade ordered the U.S. Customs and Border Protection (“CBP”) to refund the IEEPA tariffs, and CBP has since established a phased process for importers to request refunds, which began accepting claims in April 2026 and was expanded in October 2026 to include certain finally liquidated entries. In October 2026, the U.S. Court of International Trade also certified a class of importers seeking IEEPA refunds; that decision may be appealed, and the IEEPA tariffs and refunds remain subject to ongoing litigation. In response to the U.S. Supreme Court ruling, the administration imposed a temporary 10% tariff on most imports under Section 122 of the Trade Act of 1974, which expired on July 24, 2026, and has since imposed or proposed additional tariffs under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, some of which are also being challenged in court. In addition, at the July 2026 joint review of the U.S.-Mexico-Canada Agreement (“USMCA”), on which we rely for the importation of many of our products from our contract manufacturer in Mexico, the United States declined to renew the USMCA in its current form. Although the USMCA remains in effect and is scheduled to expire in 2036 unless extended, the United States may seek to modify the agreement or impose tariffs on goods from Mexico or Canada, including goods that currently qualify for USMCA treatment. The full impact of these developments, including the timing and extent of any refunds, the impact of new tariffs and the future of the USMCA, remains uncertain. While the announced tariffs have not had a material impact on our business to date, new or proposed tariffs, including the loss of exemptions under existing trade agreements or otherwise, could result in additional expenses for products we import into the United States. In addition, the economic uncertainty caused by the tariffs may result in customers delaying planned purchases of products and services.* *

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 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.

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. Recently, the Federal Reserve increased the federal funds rate to its current target range of 3.75% to 4.00% as a result of indicators that inflation was increasing. 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

Our Chief Operating Decision Maker (“CODM”) assesses our performance based on the performance of two separate organizations within Ribbon: the Cloud and Edge operating segment ("Cloud and Edge") and the IP Optical Networks operating segment ("IP Optical Networks"). For additional details regarding our operating segments, see Note 13 - Operating Segment Information to our condensed consolidated financial statements.

Current wording

Our Chief Operating Decision Maker (“CODM”) assesses our performance based on the performance of two separate organizations within Ribbon: the Cloud and Edge operating segment ("Cloud and Edge") and the IP Optical

Previous wording

We reported a loss from operations of $12.2 million and income from operations of $4.2 million for the three months ended June 30, 2026 and 2025, respectively. We reported a loss from operations of $43.9 million and $15.4 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

We reported income from operations of $5.6 million and $2.8 million for the three months ended September 30, 2026 and 2025, respectively. We reported a loss from operations of $38.3 million and $12.6 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Our revenue was $192.3 million and $220.6 million in the three months ended June 30, 2026 and 2025, respectively. Our gross profit and gross margin were $90.3 million and 47.0%, respectively, in the three months ended June 30, 2026, and $109.3 million and 49.6%, respectively, in the three months ended June 30, 2025. The lower revenue in the three months ended June 30, 2026 compared to 2025 is due to $26.5 million lower Cloud and Edge revenue and $1.7 million lower IP Optical Networks revenue. The IP Optical Networks revenue was lower primarily due to $1.1 million of lower product sales, and lower professional services sales and maintenance revenue of $0.6 million. The lower Cloud and Edge revenue was attributable to $18.4 million of lower product sales and $8.1 million of lower professional services sales and maintenance revenue. Our revenue was $354.9 million and $401.9 million in the six months ended June 30, 2026 and 2025, respectively. Our gross profit and gross margin were $160.0 million and 45.1%, respectively, in the six months ended June 30, 2026, and $191.7 million and 47.7%, respectively, in the six months ended June 30, 2025. The lower revenue in the six months ended June 30, 2026 compared to 2025 is due to $34.6 million of lower Cloud and Edge revenue, and $12.3 million of IP Optical Networks revenue. The lower Cloud and Edge revenue was attributable to $24.0 million of lower product sales and $10.6 million of lower professional services and maintenance revenue. The lower IP Optical Networks revenue was due to $9.4 million of lower product sales plus $2.9 million of lower maintenance and professional services revenue.

Current wording

Our revenue was $218.7 million and $215.4 million in the three months ended September 30, 2026 and 2025, respectively. Our gross profit and gross margin were $105.5 million and 48.2%, respectively, in the three months ended September 30, 2026, and $108.0 million and 50.1%, respectively, in the three months ended September 30, 2025. The higher revenue in the three months ended September 30, 2026 compared to 2025 is due to $4.9 million higher IP Optical Networks revenue offset by $1.6 million lower Cloud and Edge revenue. IP Optical Networks revenue was higher primarily due to $8.5 million of higher product sales and $3.6 million of lower services revenue. The lower Cloud and Edge revenue was attributable to $4.4 million of lower services revenue offset by $2.8 million of higher product sales. Our revenue was $573.7 million and $617.2 million in the nine months ended September 30, 2026 and 2025, respectively. Our gross profit and gross margin were $265.6 million and 46.3%, respectively, in the nine months ended September 30, 2026, and $299.6 million and 48.5%, respectively, in the nine months ended September 30, 2025. The lower revenue in the nine months ended September 30, 2026 compared to 2025 is due to $36.2 million of lower Cloud and Edge revenue, and $7.4 million of lower IP Optical Networks revenue. The lower Cloud and Edge revenue was attributable to $21.2 million of lower product sales and $15.0 million of lower services revenue. The lower IP Optical Networks revenue was due to $6.6 million of lower services revenue plus $0.8 million of lower product sales.

Previous wording

Revenue from our Cloud and Edge segment was $110.5 million and $137.0 million in the three months ended June 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $65.7 million and 59.5%, respectively, in the three months ended June 30, 2026, and $83.7 million and 61.1%, respectively, in the three months ended June 30, 2025. Revenue from our Cloud and Edge segment was $210.0 million and $244.6 million in the six months ended June 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $121.9 million and 58.0%, respectively, in the six months ended June 30, 2026, and $149.8 million and 61.2%, respectively, in the six months ended June 30, 2025.

Current wording

Revenue from our Cloud and Edge segment was $122.9 million and $124.5 million in the three months ended September 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $75.8 million and 61.7%, respectively, in the three months ended September 30, 2026, and $76.5 million and 61.5%, respectively, in the three months ended September 30, 2025. Revenue from our Cloud and Edge segment was $332.9 million and $369.1 million in the nine months ended September 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $197.7 million and 59.4%, respectively, in the nine months ended September 30, 2026, and $226.3 million and 61.3%, respectively, in the nine months ended September 30, 2025.

Previous wording

Revenue from our IP Optical Networks segment was $81.8 million and $83.5 million in the three months ended June 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $24.6 million and 30.1%, respectively, in the three months ended June 30, 2026, and $25.6 million and 30.6%, respectively, in the three months ended June 30, 2025. Revenue from our IP Optical Networks segment was $144.9 million and $157.2 million in the six months ended June 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $38.1 million and 26.3%, respectively, in the six months ended June 30, 2026, and $41.8 million and 26.6%, respectively, in the six months ended June 30, 2025.

Current wording

Revenue from our IP Optical Networks segment was $95.8 million and $90.9 million in the three months ended September 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $29.7 million and 31.1%, respectively, in the three months ended September 30, 2026, and $31.5 million and 34.6%, respectively, in the three months ended September 30, 2025. Revenue from our IP Optical Networks segment was $240.7 million and $248.1 million in the nine months ended September 30, 2026 and 2025, respectively. Gross profit and gross margin for this segment were $67.9 million and 28.2%, respectively, in the nine months ended September 30, 2026, and $73.3 million and 29.5%, respectively, in the nine months ended September 30, 2025.

Previous wording

Our operating expenses were $102.6 million and $105.1 million in the three months ended June 30, 2026 and 2025, respectively, and $203.9 million and $207.1 million in the six months ended June 30, 2026 and 2025, respectively. The decreased operating expenses in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, were primarily attributable to $3.9 million lower acquisition-, disposal- and integration-related expense, $2.0 million lower general and administrative expense, partially offset by $3.1 million higher restructuring and related expense. The decreased operating expenses in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, were primarily attributable to $3.9 million lower acquisition-, disposal- and integration-related expense, $1.0 million lower amortization of acquired intangible assets, partially offset by $1.1 million higher sales and marketing expense and $1.0 million higher research and development expense. Operating expenses for the three months ended June 30, 2026 included $5.5 million of amortization of acquired intangible assets and $4.4 million of restructuring and related expense. Operating expenses for the three months ended June 30, 2025 included $6.0 million of amortization of acquired intangible assets, $3.9 million of acquisition-, disposal- and integration-related expense and $1.3 million of restructuring and related expense. Operating expenses for the six months ended June 30, 2026 included $11.2 million of amortization of acquired intangible assets and $6.5 million of restructuring and related expense. Operating expenses for

Current wording

Our operating expenses were $99.9 million and $105.2 million in the three months ended September 30, 2026 and 2025, respectively, and $303.9 million and $312.3 million in the nine months ended September 30, 2026 and 2025, respectively. The decreased operating expenses in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025, were primarily attributable to $2.1 million lower restructuring and related expense, $1.5 million lower research and development expense and $1.1 million lower general and administrative expense. The decreased operating expenses in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025, were primarily attributable to $4.3 million lower acquisition-, disposal- and integration-related expense, $2.3 million lower restructuring and related expense, $1.5 million lower amortization of acquired intangible assets and $1.3 million lower general and administrative expense partially offset by $1.4 million higher sales and marketing expense. Operating expenses for the three months ended September 30, 2026 included $5.5 million of amortization of acquired intangible assets and $1.4 million of restructuring and related expense. Operating expenses for the three months ended September 30, 2025 included $5.9 million of amortization of acquired intangible assets and $3.5

Previous wording

We recorded stock-based compensation expense of $4.8 million and $4.5 million in the three months ended June 30, 2026 and 2025, respectively and $10.8 million and $8.8 million in the six months ended June 30, 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.

Current wording

We recorded stock-based compensation expense of $5.7 million and $5.8 million in the three months ended September 30, 2026 and 2025, respectively and $16.5 million and $14.6 million in the nine months ended September 30, 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 six months ended June 30, 2026 compared to three and six months ended June 30, 2025.

Current 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, 2026 compared to three and nine months ended September 30, 2025.

Previous wording

During the fourth quarter of 2025, our President and CEO approved a strategic restructuring program (the "2026 Restructuring Plan") that consists of workforce reductions in certain of the Company’s operating locations to correspond with current sales levels in those areas. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2026 Restructuring Plan, we recorded restructuring and related expense of $3.8 million and $5.1 million in the three and six months ended June 30, 2026, respectively. We anticipate that we will record additional expense of approximately $5 million in 2026 related to the 2026 Restructuring Plan.

Current wording

During the fourth quarter of 2025, our President and CEO approved a strategic restructuring program (the "2026 Restructuring Plan") that consists of workforce reductions in certain of the Company’s operating locations to correspond with current sales levels in those areas. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2026 Restructuring Plan, we recorded restructuring and related expense of $0.9 million and $6.0 million in the three and nine months ended September 30, 2026, respectively. We anticipate that we will record additional expense of approximately $1 million in 2026 related to the 2026 Restructuring Plan.

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 did not incur any restructuring and related expense in the three months ended June 30, 2026, but did incur nominal expense in the six months ended June 30, 2026. We recorded restructuring and related expense of $0.2 million and $2.6 million in the three and six months ended June 30, 2025, respectively. We anticipate that we will record nominal additional expense in 2026 for workforce reductions in connection with the 2025 Restructuring Plan.

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 Restructuring Plan, the Company incurred nominal restructuring and related expense in the three and nine months ended September 30, 2026. We recorded restructuring and related expense of $2.5 million and $5.1 million in the three and nine months ended September 30, 2025, respectively. We anticipate that we will record nominal additional expense in 2026 for workforce reductions related to 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 $0.6 million and $1.2 million in the three months ended June 30, 2026 and 2025, respectively and $1.3 million and $4.3 million in the six months ended June 30, 2026 and 2025, respectively, for variable and other facilities-related costs. We anticipate that we will record approximately $1 million of expense in the remainder of 2026 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 $0.6 million and $0.9 million in the three months ended September 30, 2026 and 2025, respectively and $1.9 million and $5.2 million in the nine months ended September 30, 2026 and 2025, respectively, for variable and other facilities-related costs. We anticipate that we will record additional expense of approximately $1 million in 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 six months ended June 30, 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.

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 and nine months ended September 30, 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

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 June 30, 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.

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 September 30, 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

The decrease in our product revenue in the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was the result of $18.4 million of lower sales of our Cloud and Edge products and $1.1 million of lower sales of IP Optical Networks products. The decrease in our product revenue in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was the result of $24.0 million of lower sales of our Cloud and Edge products plus a $9.4 million decrease in sales of IP Optical Networks products. The decrease in revenue from the sale of Cloud and Edge products was primarily attributable to sales to a Tier 1 service provider and U.S. Federal agencies due to lower customer demand and delayed purchasing. These were partially offset by higher sales to global enterprise customers. IP Optical Networks revenue in the three months ended June 30, 2026 remained consistent with the previous year, growing modestly after accounting for the completion of a long-term support and maintenance contract.

Current wording

The higher product revenue in the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was the result of $8.5 million of higher sales of IP Optical Networks products and $2.8 million of higher sales of our Cloud and Edge products, primarily due to sales to our enterprise customers. The lower product revenue in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was primarily the result of $21.2 million of lower sales of our Cloud and Edge products. The decrease in revenue from the sale of Cloud and Edge products was primarily attributable to sales to a Tier 1 service provider due to lower customer demand and delayed purchasing.

Previous wording

Revenue from sales to enterprise customers was 33% and 29% of our total revenue in the three months ended June 30, 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 June 30, 2026 primarily reflects higher sales to IP Optical Networks enterprise customers. Revenue from sales to enterprise customers was 31% and 28% of our total revenue in the six months ended June 30, 2026 and 2025, respectively. The increase in enterprise sales primarily reflects higher Cloud and Edge revenue to the banking, financial and insurance industries, and other enterprise customers.

Current wording

Revenue from sales to enterprise customers was 31% and 29% of our total revenue in the three months ended September 30, 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 September 30, 2026 primarily reflects higher sales to Cloud and Edge enterprise customers. Revenue from sales to enterprise customers was 31% and 28% of our total revenue in the nine months ended September 30, 2026 and 2025, respectively. The increase in enterprise sales primarily reflects higher IP Optical Networks revenue to the governmental, banking, financial and insurance industries, and other enterprise customers.

Previous wording

Revenue from indirect sales through our channel partner program was 34% of our product revenue in each of the three months ended June 30, 2026 and 2025, and 32% and 31% of our product revenue in the six months ended June 30, 2026 and 2025, respectively. Channel sales increased in the six months ended June 30, 2026 reflecting higher sales of products to enterprise customers.

Current wording

Revenue from indirect sales through our channel partner program was 30% and 26% of our product revenue in the three months ended September 30, 2026 and 2025, and 31% and 29% of our product revenue in the nine months ended September 30, 2026 and 2025, respectively. Channel sales as a percentage of product revenue increased in the nine months ended September 30, 2026 reflecting higher sales of products to enterprise customers.

Previous wording

Service revenue for the three and six months ended June 30, 2026 and 2025 was comprised of the following (in thousands, except percentages):

Current wording

Service revenue for the three and nine months ended September 30, 2026 and 2025 was comprised of the following (in thousands, except percentages):

Previous wording

Segment service revenue for the three and six months ended June 30, 2026 and 2025 was comprised of the following (in thousands):

Current wording

Segment service revenue for the three and nine months ended September 30, 2026 and 2025 was comprised of the following (in thousands):

Previous wording

Total service revenue was lower by $8.7 million and $13.5 million in the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 due to lower maintenance revenue and lower professional services revenue.

Current wording

Total service revenue was lower by $8.0 million and $21.5 million in the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025 due to lower maintenance revenue and lower professional services revenue.

Previous wording

relatively flat revenue in our Cloud and Edge segment. The decrease in our IP Optical Networks maintenance revenue is due to the completion of a legacy access maintenance contract with a European customer that completed in the fourth quarter of 2025.

Current wording

Maintenance revenue decreased $3.8 million and $8.8 million in the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025 due to lower revenue in our IP Optical Networks segment and relatively flat revenue in our Cloud and Edge segment. The decrease in our IP Optical Networks maintenance revenue is due to the completion of a legacy access maintenance contract with a European customer that completed in the fourth quarter of 2025.

Previous wording

Professional services revenue decreased $6.5 million and $8.5 million in the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 primarily driven from our Cloud and Edge segment. Our Cloud and Edge segment decrease was due to lower deployment services associated with a voice modernization project with one of our U.S. service providers, which we expect to increase in the upcoming quarters.

Current wording

Professional services revenue decreased $4.2 million and $12.8 million in the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025 primarily driven from our Cloud and Edge segment. Our Cloud and Edge segment decrease was due to lower deployment services associated with a voice modernization project with one of our U.S. service providers, which we expect to increase in the upcoming quarters.

Previous wording

The following customers contributed 10% or more of our revenue in the three and six months ended June 30, 2026 and 2025:

Current wording

The following customers contributed 10% or more of our revenue in the three and nine months ended September 30, 2026 and 2025:

Previous wording

Revenue earned from customers domiciled outside the United States was 54% and 47% in the three months ended June 30, 2026 and 2025, respectively, and 54% and 51% in the six months ended June 30, 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.

Current wording

Revenue earned from customers domiciled outside the United States was 54% and 55% in the three months ended September 30, 2026 and 2025, respectively, and 54% and 52% in the nine months ended September 30, 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 $7 million at June 30, 2026 and December 31, 2025, respectively. Our deferred service revenue was $145 million and $149 million at June 30, 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.

Current wording

Our deferred product revenue was $6 million and $7 million at September 30, 2026 and December 31, 2025, respectively. Our deferred service revenue was $143 million and $149 million at September 30, 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 six months ended June 30, 2026 and 2025 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 and nine months ended September 30, 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 six months ended June 30, 2026 and 2025 were as follows (in thousands, except percentages):

Current wording

Our segment cost of revenue, gross profit and gross margin for the three and nine months ended September 30, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

Our overall gross margin decreased by 2.6 percentage points in each of the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025.

Current wording

Our overall gross margin decreased by 1.9 percentage points in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 and by 2.2 percentage points in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025.

Previous wording

Gross margin for our Cloud and Edge segment was lower in the three months ended June 30, 2026 as compared to the three months ended June 30, 2025 by 160 basis points and was attributable to lower product and professional services sales, as well as the effect of lower fixed cost absorption and unfavorable mix. Gross margin for our Cloud and Edge segment was lower in the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 by 320 basis points and was attributable to lower product and professional services sales, as well as the effect of lower fixed cost absorption and unfavorable mix. We expect Cloud and Edge gross margin to rebound as the deployment of services associated with a voice modernization project with one of our U.S. service providers returns to higher activity levels in the upcoming quarters. Gross margin for IP Optical Network remained relatively flat in the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025.

Current wording

Gross margin for our Cloud and Edge segment was higher in the three months ended September 30, 2026 as compared to the three months ended September 30, 2025 by 20 basis points and was attributable to higher margins on product sales from higher software sales offset by lower professional services sales. Gross margin for our Cloud and Edge segment was lower in the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 by 190 basis points due to lower product software sales. We expect Cloud and Edge gross margin to rebound as the deployment of services associated with a voice modernization project with one of our U.S. service providers returns to higher activity levels in the upcoming quarters. Gross margin for IP Optical Networks was lower in the three and nine months ended September 30, 2026, compared to the three and nine months ended September 30, 2025, primarily due to geographic and product mix.

Previous 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 and six months ended June 30, 2026 and 2025 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 and nine months ended September 30, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

Our IP Optical Networks R&D investment is focused on expanding our portfolio of IP Routing solutions, adding additional features and capabilities to our Optical Transport portfolio, and supporting features in our next generation SDN management and orchestration platform.

Current wording

Our IP Optical Networks R&D investment is focused on expanding our portfolio of IP Routing solutions, adding additional features and capabilities to our Optical Transport portfolio, and supporting features in our next generation SDN management and orchestration platform. Our Cloud and Edge R&D investment is focused on advancing our cloud-native communications solutions, enhancing our analytics, automation and security capabilities, and supporting our next-generation cloud operations platform.

Previous wording

We expect that our R&D expenses will remain moderately flat in 2026 as compared to 2025, primarily due to higher employee-related compensation, including the impact of increased non-U.S. expenses associated with a weakening dollar, offset by continued cost efficiencies.

Current wording

We expect that our R&D expenses will remain moderately flat in 2026 as compared to 2025, primarily due to continued cost efficiencies offsetting the weakening dollar.

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 six months ended June 30, 2026 and 2025 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 and nine months ended September 30, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

Sales and marketing expenses in the three and six months ended June 30, 2026 were relatively flat as compared to the three and six months ended June 30, 2025.

Current wording

Sales and marketing expenses in the three and nine months ended September 30, 2026 were relatively flat as compared to the three and nine months ended September 30, 2025.

Previous wording

We expect sales and marketing expenses will remain moderately flat in 2026 compared to 2025, primarily due to higher employee-related compensation, including the impact of increased non-U.S. expenses associated with a weakening dollar, offset by continued cost efficiencies.

Current wording

We expect sales and marketing expenses will increase slightly in 2026 compared to 2025, primarily due to higher employee-related compensation.

Previous 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 and six months ended June 30, 2026 and 2025 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 and nine months ended September 30, 2026 and 2025 were as follows (in thousands, except percentages):

Previous wording

The decrease in general and administrative expenses in the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025 was primarily attributable to lower litigation expense offset by higher stock compensation expense.

Current wording

The decrease in general and administrative expenses in the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025 was primarily attributable to lower litigation expense offset by 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 six months ended June 30, 2026 and 2025 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 and nine months ended September 30, 2026 and 2025 was as follows (in thousands, except percentages):

Previous wording

Opex Amortization was lower for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 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.

Current wording

Opex Amortization was lower for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 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.