Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Part III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Part IV
Exhibit and Financial Statement Schedules
Form 10-K Summary
Exhibit Index
Signatures
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements the effect of U.S. tariffs and the response from other countries, future expenses and restructuring activities and the anticipated benefits thereof, results of operations and financial position, capital structure, impacts from the war in Israel, beliefs about our business strategy, availability of components for the manufacturing of our products, ongoing litigation, plans and objectives of management for future operations and manufacturing are forward-looking statements. Without limiting the foregoing, the words “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “seeks” and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are unknown and/or difficult to predict and that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, but are not limited to, unpredictable fluctuations in quarterly revenue and operating results; the impact of restructuring and cost-containment activities; delayed purchases by U.S. federal customers as a result of a new or prolonged U.S. government shutdown; increases in tariffs, trade restrictions or taxes on our products; supply chain disruptions resulting from component availability and/or geopolitical instabilities and disputes (including those related to the wars in Israel and Ukraine); material litigation; the impact of fluctuations in interest rates; material cybersecurity and data intrusion incidents, including any security breaches resulting in the theft, transfer, or unauthorized disclosure of customer, employee, or company information such as the incident that occurred in 2025 related to a nation-state actor gaining access to the Company’s IT network, which was subsequently contained and remediated successfully; our ability to comply with applicable domestic and foreign information security and privacy laws, regulations and technology platform rules or other obligations related to data privacy and security; failure to compete successfully against telecommunications equipment and networking companies; failure to grow our customer base or generate recurring business from our existing customers; credit risks; the timing of customer purchasing decisions and our recognition of revenues; macroeconomic conditions, including inflation; our ability to adapt to rapid technological and market changes; our ability to generate positive returns on our research and development; our ability to protect our intellectual property rights and obtain necessary licenses; our ability to maintain partner, reseller, distribution and vendor support and supply relationships; the potential for defects in our products; risks related to the terms of our credit agreement; higher risks in international operations and markets; currency fluctuations; unanticipated adverse changes in legal, regulatory or tax laws; future accounting pronouncements or changes in our accounting policies; and/or failure or circumvention of our controls and procedures. We therefore caution you against relying on any of these forward-looking statements. Additional important factors that could cause actual results to differ materially from those in these forward-looking statements are discussed in this Annual Report, including in Item 1A., “Risk Factors” of Part I of this Annual Report on Form 10-K. Any forward-looking statement made by us in this Annual Report speaks only as of the date on which this report was first filed. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
PART I
Item 1. Business
Company Overview
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 that provides network solutions that are scalable, elastic and cloud-centric, enabling the secure exchange of information. 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 30 countries around the world.
Company History
The Ribbon name was created by the merger of Sonus Networks, Inc. and GENBAND US LLC (“GENBAND”) in October 2017, with both companies specializing in secure high-performance Voice Over Internet Protocol (“VoIP”) technology and solutions. Prior to that, GENBAND acquired assets of Nortel’s Carrier division in 2010, which included a world-class engineering and sales team, a broad deployment base of products and technology, and a recognized industry reputation and pedigree with customers around the world.
Since our formation in 2017, we have completed several acquisitions to strengthen and expand our portfolio of product offerings to service providers and enterprises. Recent notable acquisitions include:
Edgewater Networks Inc. (August 2018): Expanded our portfolio of security and signaling solutions for the enterprise network edge.
Anova Data, Inc. (February 2019): Expanded our portfolio with additional network optimization, security, and data monetization applications, enabled by an advanced Big Data Analytics and Machine Learning platform.
ECI Telecom Group Ltd. (“ECI”) (March 2020) (the “ECI Acquisition”): Further expanded our focus and strategy to include optical transport and Internet Protocol (“IP”) networking, switching, and routing products and solutions, and helped us create an industry-leading communications software and networking company with a comprehensive portfolio of advanced voice, security, data and IP optical networking and transport solutions.
Industry Background
Today’s communications service providers (“CSPs”) and enterprises are investing in their networks to compete in an ever-changing technology and customer experience landscape driven largely by cloud computing, mobile workforces requiring hyper-connectivity, new high-performance applications and use cases, and an insatiable demand for bandwidth by end-customers and the applications they use. The exponential growth in traffic has largely been driven by video consumption, and over the next several years, new applications leveraging large language model (“LLM”) AI are expected to dramatically increase network bandwidth usage. As a result, service providers and enterprises must constantly seek out new technologies to refresh their networks and provide greater flexibility, automation, programmability, scalability, and reliability, enabling these new applications and services with expedited time-to-market. These investments provide a competitive advantage and deliver value-added services that improve network efficiency, increase customer satisfaction, and generate new revenue streams. Within this broad industry context, investment in our products and services is driven by several key industry trends and strategic priorities.
Modernization of Communications Service Provider Networks to Reduce Total Cost of Ownership
CSPs of all types operate in a hyper-competitive environment as consumers and businesses have an increasing number of choices for their communication needs. It is imperative that providers invest to capture new revenue streams while reducing network operating costs. Legacy services such as IP Multiprotocol Label Switching (“MPLS”) circuits, Centrex business
services, and TDM phone lines are increasingly expensive to operate, and providers need to migrate customers to new offerings or risk high-margin revenue streams. All these factors are causing service providers to rethink and evolve, or even overhaul, the way networks are designed, architected, managed, and optimized to deliver services to their customers with disruptive economics. They are migrating services to new software platforms that can be deployed in both private and/or public cloud environments (referred to as the “Telco Cloud”) using cloud-native technologies, architectures, and operational processes with automation and concepts such as Continuous Integration and Continuous Delivery (“CI/CD”). Increasingly, network operators are also pursuing open, multi-layer optimized and disaggregated IP and Optical networking solutions, where they have the flexibility to assemble networks based on transport and control subsystems from different vendors using software-defined networking.
Service providers in some global regions, as mandated by governments or voluntarily, are also replacing certain incumbent vendor communications equipment and technology in their networks because of concerns for security. This presents significant growth and market share opportunity.
This technology evolution challenge extends beyond service providers to many enterprises, as well as Federal, State, and Local governments. In particular, U.S. Federal agencies including Department of War and other civilian agencies have a significant need to modernize their voice communications infrastructure by replacing legacy on-premises systems with cloud-based voice and video solutions. However, the unique requirements regarding security and survivability are not easily met by off-the-shelf enterprise applications, creating significant opportunities for companies that specialize in this area.
Deployment of 5G Mobile Technology
One of the most significant investments being made by mobile carriers across the world is the deployment of 5G broadband cellular technology. This architecture shift impacts the entire ecosystem, from handsets and Radio Access Network through the metro and core network and back-office systems. The ultimate goal is a step-function improvement in capacity and coverage, as well as to unlock new revenue-generating applications for consumers and businesses. The increased bandwidth unlocked by the higher capacity radio infrastructure enables new use cases such as Fixed Wireless Access, displacing lower capacity wired internet access solutions, and we believe new mobile applications will emerge, such as Reality/Virtual Reality, cloud gaming, telehealth, Internet of Things, and Industry 4.0, all made possible by the massive bandwidth increases, low latency and highly secure infrastructure that 5G provides.
As deployments increase, the access and aggregation layers of the mobile network also require significant upgrades and investment, driving fiber and IP Networking to the very edges of the network. This investment cycle and technology disruption is an opportunity for new innovative suppliers to be selected.
Demand for Hyper-Connectivity and Bandwidth Driving Fiber Access Deployment
Our global information society is overflowing with telecommunications data traffic, for business, entertainment, education, surveillance, industrial control, online retail, and many other applications. These applications, increasingly delivered from the cloud, generate a huge amount of data driven largely by the video and image components. This exponential growth in data traffic is expected to continue and even accelerate, straining existing broadband and mobile networks. While 5G and next-generation WiFi are the technologies of choice for the wireless network, there is also a surge of investment to address the bottleneck in the broadband access network through higher-capacity fiber connections.
Governments in many countries around the world are investing to address and help close the “Digital Divide” and extend ultra-broadband services and connectivity to underserved communities. As an example, in the United States, the Broadband Equity, Access and Deployment (BEAD) Program, the FCC Rural Digital Opportunity Fund, the 5G Fund for Rural America, and the USDA Rural Development Broadband ReConnect Program expect to provide billions of dollars in funding to deliver broadband connectivity to rural communities in the U.S. Whether working or learning from home, streaming 4K television, or playing the latest online video games, rural subscribers require dependable, high-speed Internet access to participate and thrive in the digital world. Forward-looking service providers are taking advantage of government funding programs to expand network capacity and transform the communities they serve. Next-generation rural broadband networks help service providers grow their revenues by extending service reach and diversity, and by satisfying the massive pent-up demand for high-speed Internet connectivity. Next-generation broadband networks will also leverage new technologies such as fixed-wireless access, while laying the foundation for future revenue opportunities, such as 5G backhaul transport services.
At the foundation, high-performance optical connections and advanced IP networking are needed to keep pace with advancements in communications. This hyper-connectivity will be a key enabler and deliver disruptive ultra-low cost-per-bit communications within and between networks and the cloud, while also delivering on the promise of latency-sensitive networking demanded by many of the applications.
Increased Adoption of Cloud Communications and Collaboration
The shift to cloud-based communications began several years ago driven largely by the advantages of running applications in a virtual cloud environment and reducing dependency on on-premises computing and communications technologies. The Coronavirus Disease 2019 (“COVID-19”) pandemic accelerated this trend significantly, driven by the need for more remote working and commerce for many businesses and industries. As a result, businesses and consumers rapidly shifted from brick-and-mortar facilities and travel to work-from-home, or hybrid work-in-the-office and work-from-home, using cloud communications and collaboration platforms such as Microsoft Teams, Zoom Phone, and others, and require these communications platforms to be highly secure and scalable. New applications enabled by LLM AI will dramatically increase traffic from subscriber devices to the data center.
Need for Reliable, Secure, High-Bandwidth Enterprise and Critical Infrastructure Communications
The “critical infrastructure” market vertical is defined as those companies whose assets, systems, and networks, whether physical or virtual, are considered vital to a country’s national interest. Critical infrastructure providers are under increasing pressure to support new services, reduce carbon emissions, improve security, expand automation, and increase safety. Achieving these goals requires a transition to a modernized, secure communications network that provides seamless IP connectivity and services, as well as very high-capacity optical transport. With an integrated IP and optical transport solution, a critical infrastructure network operator can provide a highly reliable, secure, future-proof communications solution optimized for critical industries.
Data is the lifeblood of any business, and it must be easily accessible across the enterprise to power business applications and to support services to end-customers. It must also be replicated across multiple locations for business continuity and disaster recovery and must be protected from inappropriate access, theft, and corruption. Enterprises deploy optical networking, secured by optical encryption, to attain the needed performance and security. Similarly, command and control groups within today’s defense forces have a need for high-performance secure networks as their strategic sensors and assault systems are becoming more integrated. In this ecosystem, effective decision-making requires pooling and analyzing data from a vast array of sensors and other information sources. The data must be delivered securely, in real-time, to wherever it is required. These solutions integrate intelligent optical transport with agile IP networking to provide a converged, secure, communication network that can be rapidly configured and deployed in challenging environmental conditions.
Global demand for fiber connectivity
Across the globe, nations are investing in fiber-optic infrastructure, driven by a desire to gain a competitive economic advantage and enhance national security. The European Union has set a goal for universal gigabit connectivity by 2030 through its Digital Decade initiative. India’s BharatNet project aims to connect 250,000 village councils with fiber, and the USA’s $42 billion BEAD fund prioritizes rural broadband in unserved regions.
Many of these programs were well underway before the potential for additional exponential growth in data driven by AI training and inference applications. Accommodating this level of growth represents a significant long-term undertaking and investment from fiber infrastructure providers. To manage the increasing traffic volumes from both AI & expanded broadband access, data center operators and communication service providers will require high-density optical networking and IP routing platforms.
Using Artificial Intelligence to reduce network operating costs
AIOps (Artificial Intelligence for IT Operations) uses AI, machine learning (ML), and data analytics to automate, enhance, and streamline IT operations. Large network environments inherently generate vast, disparate datasets. Exacerbating the issue, communications service providers often have multiple generations of infrastructure that deliver vastly different types of data. AIOps solutions are uniquely capable of analyzing disparate datasets in real-time, reducing operational noise, enabling proactive anomaly detection, and accelerating problem resolution. AIOps tools can also reduce staffing constraints by
automating common operational tasks such as performance monitoring, workload scheduling, and data backups. As older staff exit the workforce, AIOps can also fill a critical skills gap.
Networks continue to grow in scale and complexity. AIOps services will become increasingly important to network operators as they are driven to minimize operational costs without sacrificing performance or customer experience.
Enhancing access to voice-enabled agents
Personal assistants such as Alexa or Siri introduced us to Natural Language Processing (NLP). Voice-enabled agents offer a similar level of ease of use but operate at a far different skill level. Agentic AI-based agents can mimic human-like decision-making and manage complex conversations in real time. Agentic AI-based agents provide the natural dialogue required for customer service applications in contact centers.
Voice-enabled agents are not local to your personal device; they rely on high-quality network connectivity (across phone, web, and mobile) to deliver a natural experience. When an end user connects via phone, the voice quality is critical because advanced Natural Language Processing relies on the caller's intonation. Modern IP-based voice networks, including 4G/5G voice, deliver higher fidelity voice than traditional analog or TDM connections. Likewise, the data network between the end user and the voice-enabled agent is equally critical for web or mobile app-based interactions. This has to be a low-latency connection, or the engagement will seem unnatural.
Agentic AI-based agents have the potential to disrupt the traditional contact center business model in a significant way. Unlike human agents, they can be deployed in the cloud, including sovereign clouds. That means they can elastically scale to meet changing demand, operating at low or no cost when idle and instantly available to serve an unlimited number of customers. The only limitations are the scale of the cloud infrastructure and the availability of high-quality voice or data connectivity to the end user.
Strategy Overview
Our mission is to create a recognized global technology leader that provides scalable, elastic, and cloud-centric networking solutions that enable the secure exchange of information. These voice and data solutions leverage the latest AI and automation technology to reduce operational costs and enhance business performance. Our transformative acquisition of ECI in 2020 dramatically expanded our addressable market beyond secure voice communications into IP Networking, Optical Transport, and Software-Defined Networking (“SDN”) Management and Automation. We are implementing a focused strategy to target our broad global base of service providers and enterprise customers to establish ourselves as a key supplier of networking solutions.
Key elements of the strategy include:
Operational Integration – Initially adopting a business-unit model post-acquisition, we evolved the organization in 2023 by integrating the two business units under a single leader, establishing a Chief Operating Officer position. In 2024, we further tightened alignment by integrating several software R&D teams and an integrated customer support and services organization. Our go-to-market team is similarly combined under a single Global Sales Leader supported by an integrated marketing organization focused on increasing brand awareness, targeted marketing campaigns, and lead generation.
Network Modernization – Substantial ‘technology debt’ exists across both Service Provider and Enterprise networks with increasing support costs and reliability challenges. Ribbon has extensive experience across multiple generations of voice and data technologies to support our customers’ efforts to implement modern cloud-centric services with minimal disruption to customers and revenue streams.
Cross-Selling and Tier One Service Provider Growth – We are laser-focused on marketing and selling our combined portfolio to our global base of service providers, critical infrastructure providers, and enterprise customers to expand our presence and gain market share in the larger IP routing and optical networking segment.
North American IP Optical Networks Market Share – We expect to continue to unlock the value of our routing and optical networking portfolio by growing market share in North America by leveraging the extensive deployment base and ongoing business that we have with service providers, critical infrastructure, and enterprise customers. In particular, we have a growing presence with regional service providers in the U.S., bolstered by federal funding
programs to improve internet access in underserved markets. We have also identified opportunities to combine technology from both our voice and IP routing portfolios to address a clear customer need and differentiate our offering.
AI Growth Vectors – We are aggressively pursuing multiple paths to derive value from the explosive investment in Artificial Intelligence:
We have launched a new AIOps and Automation platform called Acumen that delivers operational savings for network operators by using AI to automate network operations and accelerate trouble resolution. Acumen offers multiple points of differentiation, including true multi-vendor and multi-layer support, as well as a low-code/no-code application builder to accelerate app development.
We are partnering with other AI application providers and enabling them to interface their AI platform with existing voice networks. Ribbon voice and data solutions are critical to delivering high-quality voice and low-latency data for the voice-enabled AI agent platforms seeking to disrupt the traditional contact center market.
Ribbon’s optical networking solutions are being deployed to meet the growing demand for data center interconnect, particularly as data center developers look to rural areas for power and space.
Participate in the 5G Opportunity – Significant R&D investments in our IP Optical product portfolio have positioned us to address opportunities tied to the deployment of 5G mobile networks. We focus on the access and aggregation layer of the network, including cell-site routers, optical transport, and IP aggregation and routing. We believe 5G represents a multi-year opportunity as global service providers roll out the new technology and build the necessary network infrastructure.
Software-Centric and Cloud-Native Offerings – The industry is in the early stages of a major migration of network functions from on-premise hardware platforms to private and public cloud networks. This is a significant technology and operational paradigm shift, and an area where Ribbon has substantial industry leadership. We believe this transition is instrumental in continuing to improve our profitability and competitiveness, and in growing the recurring revenue portion of our business.
Enterprise Offerings – Our solution portfolio includes secure Unified Communications, software-centric applications, and IP and Optical network connectivity solutions. Together, these solutions address various critical infrastructure, federal defense, large enterprise, and medium-sized businesses. We leverage partnerships with key go-to-market channels and solutions providers such as Dell and Microsoft, as well as other popular unified communications and collaboration platforms such as Zoom Phone and Webex Calling.
Partnerships – We continually look to expand our partnership ecosystem to form strategic relationships that will enhance our current solution offerings to our customers.
Customers
Our customers are comprised of a diverse set of service providers and enterprises located in over 140 countries around the world. Service provider customers include telephone companies (“telcos”) offering fixed and wireless communications services, cable Multi-System Operators (“MSOs”) and Communications as a service provider. Our service provider customers include many of the largest CSPs globally. Enterprise customers include small, medium, and large businesses and industry verticals such as transportation, utilities, government/public sector, finance, and education.
Customers trust us to solve their most challenging communications requirements, enabling people and devices to connect anytime, anywhere. Our customer-centric culture shapes all of our activities and inspires our team members to make a positive impact with our clients, investors, and communities.
In the year ended December 31, 2025, Verizon Communications Inc. (“Verizon”) accounted for approximately 17% of our revenue. Verizon is a service provider that offers interconnect, fixed line and mobile communications services, and our software solutions are sold across their business divisions supporting their large enterprises, SMB and consumer telecommunications and cable-related offerings. Our top five customers represented approximately 41% of our revenue in the year ended December 31, 2025.
Segment Information
Our Chief Operating Decision Maker (“CODM”) assesses our performance based on the performance of two separate lines of our business: the Cloud and Edge segment (“Cloud and Edge”) and the IP Optical Networks segment (“IP Optical Networks”).
Cloud and Edge Business Segment
The Cloud and Edge segment provides secure and reliable software and hardware products, solutions, and services for VoIP communications, Voice Over LTE (“VoLTE”) and Voice Over 5G (“VoNR”) communications, as well as unified communications-related (“UC”) services to both service provider and enterprise customers. Our Cloud and Edge products are increasingly software-centric and cloud-native, with deployments across private, public, and hybrid cloud infrastructures, in data centers, on enterprise premises, and within service provider private networks.
Cloud and Edge Products and Solutions
Our Cloud and Edge portfolio delivers multiple solutions for enabling VoIP, VoLTE, VoNR, and UC&C in network, on-premises, or via the Telco Cloud for a broad range of service provider and enterprise customers. The solutions provided with this portfolio include those for:
Network transformation of fixed service provider voice services networks to help evolve, consolidate, and modernize legacy networks to VoIP and onto virtualized network environments or the Telco Cloud.
Securing and implementing IP Multimedia Subsystem (“IMS”) networks required by mobile service providers for VoLTE and VoNR (5G) voice services.
Securing network interconnects between communications service providers as well as protecting VoIP communications infrastructures.
Securing and providing resilient connectivity for cloud-based unified communications solutions such as Microsoft Teams, Zoom Phone, Webex Calling, as well as service provider—hosted and managed UC.
Securing premises and cloud-based contact center applications such as Five9, NICE CXone, Genesys, and similar services.
Modernizing and evolving unified communications for large enterprises, government (both civilian and military), and key industry verticals, supporting both on-premises and cloud-based deployments.
Helping mitigate robocalls and prevent fraud by determining phone caller identity, intent, and the caller’s reputation.
Enabling Agentic AI platforms to interface with traditional voice communication services thru secure Cloud APIs.
Analytics and AI-driven automation to provide visibility, security, manageability, and service assurance for optimizing communication network operations, reducing costs, and improving customer experiences.
Our Cloud and Edge market-leading product portfolio consists of three main categories – Session Border Controller (“SBC”) products, Network Transformation products, and the Acumen AIOps and Automation products:
Our SBC product portfolio encompasses a full range of deployment platforms including:
Fully cloud-native software implementations (“CNF”) that leverage an industry-leading microservices architecture with Kubernetes orchestration to deliver continuous integration (“CI”) and continuous delivery (“CD”) to automate and coordinate the software delivery pipeline. These elements can be deployed in both private and public cloud environments, such as Red Hat OpenShift, Amazon Web Services (“AWS”), Microsoft Azure, and Google Cloud Platform.
Feature-rich virtualized software products (“VNF”) that can run on Commercial Off-The-Shelf (“COTS”) hardware or in private or public cloud environments.
On-premises dedicated appliances (“PNF”) that scale up and down to meet the most demanding performance and security requirements.
Our SBC portfolio consists of the following categories of products:
Core network SBCs that are deployable by customers in their core networks, or on private or public clouds, and used to identify, manage, and protect voice communications traffic as it moves through and between communication networks. SBCs secure and interwork different voice communications protocols at IP network boundaries, both within and between service provider and enterprise networks. The portfolio also includes Policy and Routing products that work across heterogeneous voice networks to intelligently manage communications sessions based on multiple policies such as least-cost and Quality of Service routing, media type, source or destination, and time of day or week.
Enterprise Session Border Controllers and Edge products, deployable on premises or in the cloud, enable organizations to gracefully migrate legacy premises assets to secure cloud-based UC and contact center applications. These include prominent offerings such as Teams Phone, Zoom Phone, Webex Calling, Five9, NICE CxOne, Genesys, and a multitude of service-provider offerings. Enterprise SBCs provide voice security, protection against Telephony Denial of Service (“TDoS”) attacks, and help resolve a variety of interoperability issues between an enterprise’s existing communication assets and its service provider or cloud communications provider. In addition, the Edge 8000 and EdgeMarc multi-service gateway portfolio provides voice gateway support for legacy TDM and analog interfaces, including T1/E1 and FXO/FXS ports. These are critical in geographies where SIP trunks are unavailable or unreliable. They also provide integration with installed analog devices, such as elevator phones, paging equipment, and fax machines.
Our Network Transformation product portfolio is deployed in the most demanding environments and enables the modernization of fixed, mobile, and enterprise voice communications networks to support network and Telco Cloud-based services and the next generation of IP-based voice communications services, and includes multiple software-centric platforms and products, including:
Call Controllers that provide call processing within networks for voice communications services and applications.
Media Gateways that perform the interworking or translation of media, or voice sessions, and the corresponding network protocols both within and across VoIP and legacy communications networks, and use codecs (coder-decoder) and digital signal processors to do so.
A multi-tenant and highly scalable Application Server that enables the deployment of VoIP and UC services and applications.
Ribbon Acumen is a network-agnostic, cloud-native AIOps and Automation platform that enables communications service providers and enterprises to accelerate their path to an autonomous network. By combining real-time data observability, analytics, AIOps, and agentic orchestration capabilities, Acumen enables customers to automate the operation of their multi-vendor networks, reducing management complexity and costs and improving customer experiences.
Ribbon Acumen comprises a series of ready-made, established applications, including Ribbon’s existing Analytics, MUSE, LEAP, and RAMP applications. It then adds a low-code/no-code Builder that enables organizations to integrate, analyze, and respond to data from any network device or application, and to leverage AI, ML, and Agentic AI to automate operational workflows. Acumen Builder can easily thread together a diverse set of actions to create a solution tailored to one customer’s unique requirements. By combining AIOps, SecOps, and DevOps capabilities, Acumen can help network operators achieve a range of business outcomes by automating network lifecycle tasks, from deployment and optimization to rapid issue resolution. Users can interact with Acumen via natural language (chat or voice) to request information or give instructions. Acumen is an open and multi-vendor solution that integrates with multiple generations of both Ribbon and third-party products, including automation and operational support system (OSS) platforms.
Customers start on their path to autonomous networks with Ribbon Analytics as a standalone platform, deploying applications that aid customers in gathering actionable intelligence from their communications network elements, including SBCs in the core and edge of their networks, to provide them with network performance visibility, service assurance, security, and fraud mitigation.
Ribbon Call TrustTM combines information from deployed network elements, including SBCs and Ribbon Analytics, as well as third-party databases, to determine phone caller identity, intent, and reputation. With this information, it is possible to help determine if a call is from a legitimate person, for a legitimate purpose, and without malicious intent, ultimately helping to detect and mitigate robocalls and prevent fraud. Our customers use these capabilities to deliver a better call experience to their end customers. We are an industry leader in the development and deployment of the STIR (Secure Telephone Identity Revisited) and SHAKEN (Signature-based Handling of Asserted information using toKENS) standards, with deployments throughout North America and select countries in Europe.
Cloud and Edge Competition
Competition in the market for the Cloud and Edge portfolio remains strong. The market is shifting from an environment dominated by a few large telecommunications legacy hardware equipment companies, such as Ericsson LM Telephone Company (“Ericsson”), Huawei Technologies Co. Ltd. (“Huawei”), and Nokia Corporation (“Nokia”), to a market that is
characterized by cloud-native software, hybrid private public cloud compute environments, and open interoperable interfaces. We believe this shift creates opportunities for us to differentiate and gain share from competitors such as:
Huawei, Ericsson, Nokia, Oracle Corporation, Cisco Systems, and AudioCodes for our SBCs and enterprise gateway offerings.
TransUnion, Alianza (acquired Metaswitch assets), First Orion Corp., SecureLogix, TransNexus, and Transaction Network Services, for our Ribbon Call Trust offerings.
NetScout Systems, Mobileum, Infovista (Hammer), SecureLogix, and Elisa Industriq (Polystar) for our Analytics offerings.
Nokia, Ericsson, Ciena/Blue Planet, Cisco/Splunk, Netcracker, and Amdocs for our AIOps and Automation offerings.
Huawei, Alianza (acquired Metaswitch assets), NetSapiens, Nokia, and Ericsson for our Network Transformation offerings.
Other smaller private and public companies are also focusing on similar market opportunities. Mergers among any of the above companies or other competitors, as well as additional competitors with significant financial resources entering our markets, could further intensify competition. Mergers between service providers may also increase competition for a smaller number of more concentrated customers and channels for products and solutions.
IP Optical Networks Business Segment
The global information society is generating a very high volume of telecommunications traffic for business, entertainment, education, surveillance, industrial control, and other applications. Technologies like 5G, distributed cloud computing and corresponding applications are predicted to continue this exponential traffic growth. IP and Optical networks are at the foundation of this information economy, and indeed are one of its key enablers, delivering ultra-low cost-per-bit transport and multi-service flexibility. Our IP Optical Networks segment provides high-performance, secure, and reliable hardware and software products and solutions for IP networking, switching, and routing, and optical transport. This portfolio is offered to service providers, enterprises and industry verticals with critical transport network infrastructures requirements including utilities, government, defense, transportation and education and research.
IP Optical Networks Products and Solutions
Our IP Optical Networks portfolio delivers multiple solutions spanning access, metro, regional, and long-haul geographies, and using ring, mesh, and point-to-point topologies. MPLS and other protocols provide a broad range of networking services for our customers. Our solutions for optical and IP transport and networking include 5G-native solutions for mobile-backhaul, metro and edge aggregation, core networking, data center interconnect, multi-service access, and transport solutions for wholesale carriers. High availability and security also make the solutions ideal for critical infrastructure delivering mission-critical services.
Our IP Optical Networks multi-layer product portfolio includes:
The Apollo product line provides programmable and open Optical Transport Network (“OTN”) capabilities over Dense Wavelength Division Multiplexing (“DWDM”) support. The OTN layer maps Ethernet and other services into OTN bit streams for transparent optical transmission, and DWDM routes wavelengths of light containing the OTN-encapsulated bit streams across wide areas, greatly increasing the efficiency and capacity of fiber facilities. Our Apollo hardware and software products deliver reconfigurable and programmable low-latency optical transport that simultaneously speeds up provisioning of new services while maximizing traffic throughput at the lowest cost per bit. Apollo offers customers two transmission optimization options. Capacity-reach optimization uses industry-leading 5nm-140Gbaud technology that maximizes channel capacity for any given distance. It supports optical transmission speeds ranging from 400 gigabits per second for ultra-long-haul applications to 1.2 terabits per second for short-haul applications. Power-cost optimization uses low power consumption and cost-effective 400 gigabit per second technology, which delivers strong enough performance for metro applications. The Apollo product line provides state-of-the-art transparent and flexible DWDM and OTN transport with integrated packet switching capabilities. A modular architecture allows optimized solutions across access, metro, regional, and long-haul networks. Apollo combines high-performance, low-latency OTN transport and OTN switching with software-configurable optical routing for maximum efficiency. Apollo can dynamically reconfigure optimal links in the event of fiber failures to
maintain service availability. Apollo is “self-aware,” with intelligent reporting to enable efficient, SDN-ready operations. Apollo also provides deployment options, whether as an integrated solution or as standalone subsystems for disaggregated, open-architecture, multivendor solutions. A key security feature of Apollo that is used broadly in critical infrastructure and enterprise deployments is Layer 1 Optical Encryption. This uses AES-256 encryption, which is the strongest and most robust encryption standard commercially available today, and also supports a choice of standard, Post-Quantum Computing, and Quantum Key Distribution key exchange mechanisms.
The Neptune product line of high-performance switching and routing solutions are optimized to provide the converged multi-service, service-aware aggregation needed for cost/performance optimized connectivity between consumers and the applications and services they are using. Neptune supports multiple services delivered over multiple access network technologies. Ethernet interfaces ranging from Gigabit Ethernet (“GbE”) through to 100GbE allow all IP/MPLS and Ethernet access networks to be supported, and pluggables providing XGS-PON, EPON, and TDM circuit emulation allow PON access networks and legacy TDM access networks to be supported. Traffic from the access networks is aggregated and connected to the services, applications, and compute platforms, meeting the specific service-level agreements required for each service, including guaranteed latency, jitter, capacity, or reliability. To achieve this, Neptune uses a range of protocols such as IP/MPLS, MPLS-TP, and segment routing traffic engineered (“SR-TE”). As services, applications, and compute platforms become increasingly distributed across the network, located in local data centers and multi-access Edge compute platforms, Neptune, in conjunction with MUSE, can dynamically route the connectivity wherever it is required, whilst still meeting the performance requirements. In addition, Neptune provides a 800G ZR+ pluggable capability, allowing it to support both single layer IP over DWDM connectivity or multi-layer optimized IPoOTN/DWDM connectivity, whichever best meets the network operator’s needs. With these capabilities, Neptune is ideally suited for residential broadband backhaul, business services, MSOs, and private enterprise networks. With Flexible Ethernet, enhanced timing and synchronization capabilities, 25GbE and 50GbE interfaces, and high-capacity, high-density platforms, Neptune is also ideal for 5G deployments. These capabilities and unique form factors such as DIN-rail mounting, street cabinet deployment and environmental capabilities also make Neptune a compelling solution for mission-critical enterprises.
The Muse SDN multi-layer Domain Orchestrator and cognitive software is a suite of cloud-native applications that deliver SDN domain orchestration for underlying multi-layer Neptune IP and Apollo Optical networks. This covers complete lifecycle management and automation to speed up time-to-revenue, reduce total cost of ownership, and facilitate integration into wider ecosystems. It is powered by a carrier-grade, cloud-native Platform-as-a-Service and works in conjunction with our LightSOFT TM network management system. Built for a 5G services world, Muse enables network operators to programmatically configure and combine hard and soft slicing technologies to create slices appropriate to different sets of 5G-enabled services and customer sub-networks. Then, using a rich set of tools, operators can design, provision, and assure a broad array of services on top of the slices. Muse’s suite of advanced service and network control applications empowers service providers to do more, through simple service creation and lifecycle management, proactive network assurance, network optimization, and automation. Muse ensures that people and systems receive the right tools to monetize the network effectively through intuitive graphical user interfaces or industry-standard Application Programming Interfaces.
IP Optical Networks Competition
Competition in the markets addressed by our IP Optical Networks products is strong. The market is shifting from an ecosystem dominated by a few large telecommunications legacy hardware equipment companies with proprietary solutions such as Ciena Corporation (“Ciena”), Cisco, and Nokia, to a market that is characterized by a combination of closed and open solutions, software-defined networking, and dis-aggregation ready for next generation networks, services and applications including 5G, leveraging merchant silicon technology. We believe this shift creates opportunities for us to increase our market share relative to direct competitors such as Cisco, Juniper Networks, Inc., Huawei, Nokia, Ciena, Adtran Networks, and Fujitsu Limited. We believe a key differentiator from these competitors is our optimized and integrated multi-layer IP optical solutions. These solutions leverage our SDN, IP routing, and optical networking and control plane technologies for both IP and Optical networking layers to create a truly integrated IP Optical Network that optimizes resource utilization in real time, and provides the best overall economics to customers, differentiating us from our competitors. Advanced planning algorithms design multi-layer IP and Optical networks that maximize traffic handling with failure resiliency by looking holistically at all network layers, providing the best return on capital expenditures. These multi-layer optimized networks can then meet specific customer and service needs on a case-by-case basis.
Services and Support
As communication networks continue to grow increasingly vital to society and business, and complexity grows with every new technology introduction cycle, service providers are increasingly challenged to control costs and find the expertise to operate, maintain, and repair these platforms. We have a rich history of providing service-based solutions to complement our products and to help service providers and enterprises grow revenues, serve their customers, reduce costs, and improve productivity. Our Global Services organization provides a wide range of services to enable our customers to achieve those goals. Our Professional Services team includes hundreds of VoIP, IMS, IP and Optical networking specialists offering technical depth, network breadth and proprietary tools to assist customers in all aspects of network modernization, design, operation and deployment. Our Maintenance Support offerings deliver a comprehensive support strategy for all of our products, applications, and solutions sold. Our Managed Services offer proactive monitoring to keep customers’ production communications running smoothly so they can concentrate on operating their business. In addition, our Education Services are designed to equip customers with the technical knowledge and skills needed to accelerate service readiness and delivery goals and to help customers get the most out of our products and solutions.
Sales and Marketing
We sell our portfolio of products and solutions to service provider and enterprise customers around the globe through both direct sales and indirectly through channel partners, including independent resellers, distributors, service providers and system integrators. Most of our sales to service providers are done directly and most sales to enterprises are done through channel partners. To support our customers’ requirements, our direct sales team is organized geographically and by major customers. Our sales teams sell our full portfolio of products and solutions from both segments to customers in each salesperson’s assigned region. Our direct sales teams and resellers are supported by a highly trained technical sales engineering staff who work closely with our customers to develop technical proposals and design systems to optimize system performance and economic benefits for our customers.
Our marketing organization is responsible for building awareness of our brand in the markets served and driving engagement with our strategies, solutions, and products. It promotes our brand and portfolio value propositions to key stakeholders, including our customers, channel partners, and prospects globally. The organization develops all of our corporate and portfolio messaging for different target audiences, and manages all customer and industry communication channels, including public relations, digital content (including for the web and social media), events, and trade shows, as well as demand generation and account-based marketing campaigns in conjunction with our sales force.
Manufacturing
We rely on global contract manufacturers and original design manufacturers to manufacture, assemble, test and ship our products. We typically utilize long-term relationships with our contract manufacturers and regularly review business relationships in an attempt to reduce cost of goods and supply risks. We employ formal quality, environmental and ethics management programs with all of our contract manufacturers.
Our leading manufacturers have presence in multiple international locations. This enables us to implement a flexible manufacturing and logistics landscape for each product line and target markets. This structure also facilitates redundancy and business continuity to mitigate risks related to adverse trade tariffs, taxation, and natural disasters. Moreover, we wholly own the intellectual property related to fabrication files, assembly, testing algorithms and manufacturing operating procedures, thus reducing sole dependency on a specific contract manufacturer.
Inventory Suppliers and Sourcing
We work with strategic global suppliers for our key integrated circuit components, systems, and software. Certain of our networking products use third-party optical modules embedded on board or configured as pluggable units. These modules are designed and manufactured by leading optical technology vendors and supplied to us based on agreed-upon controlled performance specifications.
Our policy is to purchase major components directly from original suppliers or from authorized distributors. We regularly review market trends and volume demand for newly introduced products with our suppliers and distributors to negotiate reduced component pricing as the products mature. We carefully manage end-of-sale and end-of-life transitions to maximize
return on investment and minimize wasted material, while maximizing customer satisfaction. When we must source such end-of-life components from distributors and brokers, we typically encounter increased component pricing. In some cases, when such parts cannot be sourced reliably any longer in the open market, we undertake redesign efforts with alternative components.
In order to maintain competitive lead time for our customers, we employ sophisticated demand and supply management systems. We also utilize agility and safety stock processes to help meet higher-than-forecasted customer demand to stock raw material and sub-assembly inventory. Occasionally, we experience unforeseen demand drops of certain products or sub-assemblies due to technology evolution, customer consumption behavior, or shortened product lifecycle. We regularly review current inventory levels to ensure adequate reserves for excess and obsolete inventory arising from shortened product life cycle or demand drops.
The ongoing unrest and conflict in the Middle East has caused some disruption to material supply chain and production operations in that region. We have successfully avoided any significant impacts thus far by carefully managing the flow of material and enacting our established business continuity processes with alternate suppliers and production operation centers.
Research and Development
Our global R&D workforce is geographically distributed across a balanced set of centers of excellence. This allows us to distribute work in a cost-effective manner and provide time-zone sensitive support to our global sales team and customers. We supplement our deep in-house expertise with a small set of long-term contracting partners, allowing us to flex up and down as required to match customer demand.
To maintain our position as a leader in product and solution development, we continue to invest in our development methodologies, leveraging and adopting industry best practices in the domains of DevOPs, Continuous Integration and Continuous Delivery (“CI/CD”), cloud-native software, and Security and Test Automation.
In addition to delivering product-specific feature requests from our customers, our R&D resources that are focused on our Cloud and Edge business segment continue to focus on leading edge technology that will allow our customers to move from purpose-built appliances to fully virtualized and cloud-native solutions, including private, public, hybrid and multi-cloud deployment models as they modernize their networks. We are also investing in aaS variants of our products, fully integrated with cloud-native operational models.
Our IP Optical Networks R&D team continues to focus on empowering our customers with better performance and cost-efficient solutions, improved cost-per-bit, and reduced power and space requirements to lower operating costs. We create innovative solutions that address the exponential increases in bandwidth consumption with improving operational efficiency. Our unique value-add is demonstrated by advanced well-integrated optical and packet solutions managed by state-of-the-art cross platform SDN management system.
We leverage modern technologies and industry best practices across all of our products and solutions to provide security at each layer of the solution, enabling end to end security of the overall system. We continue to invest in analytics and automation using the latest artificial intelligence and machine learning (“AI/ML”) technology, to allow our customers to operate our solutions at scale with end-to-end visibility and control over the robustness, security, and efficiency of the solution.
Intellectual Property
We believe intellectual property is fundamental to our business and success, and we depend upon our ability to develop, maintain and protect our technology. We seek to safeguard our investments in technology and rely on a combination of U.S. and foreign patent, trademark, trade secret and copyright law and contractual restrictions to protect the proprietary aspects of our technology. As of December 31, 2025, we had 804 issued patents in the U.S., 723 of which are active, 578 which expire between 2026 and 2042, and we had 26 in-process patent applications in the U.S. As of such date, we also had 375 issued patents in foreign jurisdictions, 238 of which expire between 2026 and 2042, and we had 6 in-process patent applications in foreign jurisdictions. As of December 31, 2025, we had 27 trademarks registered or pending in the U.S. and 171 trademarks registered or pending in foreign jurisdictions.
In addition to the protections described above, we seek to safeguard our intellectual property by employing measures to protect against the unauthorized use or disclosure of the source and object code for our software, documentation and other
written materials; licensing our software pursuant to signed license agreements, which impose restrictions on others’ ability to use our software; and seeking to limit disclosure of our intellectual property by requiring employees and consultants with access to our proprietary information to execute confidentiality agreements.
We have incorporated third-party licensed technology into certain of our products and may be required to license additional technology from third parties to develop new products or to enhance existing products. Although many companies are often willing to enter into such licensing agreements, no assurance can be provided that such licenses can be negotiated on reasonable terms, or at all. The failure to enter into technology development or licensing agreements, when necessary, could limit our ability to develop new products and could harm our business.
Despite our efforts to protect our technology and proprietary rights as discussed above, unauthorized parties may still obtain and use our technology and software. We have defended, and intend to vigorously defend when necessary, our intellectual property from infringement. Other companies in the communications and technology industries frequently threaten litigation or file suit against us (directly or indirectly through customers to whom we could owe indemnification) based on allegations of infringement or other violations of intellectual property rights. We are currently subject to, and expect to face in the future, allegations that we have infringed the intellectual property rights of third parties, including those of our competitors and non-practicing entities.
Regulatory Considerations
As a company with global operations, we are subject to complex U.S. and foreign laws and regulations, including trade regulations, tariffs, import and export regulations, anti-bribery and corruption laws, antitrust or competition laws, cybersecurity, privacy and data protection, among others. In addition, our operations are also subject to a number of environmental regulations such as the Waste Electrical and Electronic Equipment Directive (“WEEE”) and the Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (“RoHS”). We have developed policies and procedures to assist us in complying with these laws and regulations. Our historical compliance costs, including those related to environmental regulations, have not resulted in a material adverse effect on our business, results of operations or financial condition. We expect the laws and regulations to which we are subject will continue to increase and the future costs of compliance with existing or new regulations could materially impact our business in the future.
Our Employees
As a global company with employees in over 30 countries, we focus on creating an inclusive community, aligning our resources, processes, and platforms to build a work culture that reflects and expresses our core values. This enables us to work efficiently across borders and functions. Our aim is to create a workplace that is engaging, inspiring, challenging, and inclusive. We strive to be a great employer for our current employees and for future employees who are seeking an opportunity to join our dynamic business, positioned at the nexus of global communications technology and social transformation.
As of December 31, 2025, we had a total of 3,080 employees worldwide, located geographically as follows:
Number of
Percentage of
employees
total
Asia
North America
EMEA
LATAM
Approximately 590 employees are covered by collective bargaining agreements or works councils. We believe that in general we have good relationships with these various labor organizations.
Ribbon takes pride in conducting business in accordance with the highest ethical standards. Our Code of Conduct outlines the importance of employees acting in an honest and ethical manner. Ribbon employees are informed and aware of this policy. The principles of integrity, accountability and fair dealing are the cornerstone of our business and are critical to our future success. Our employees understand that adherence to proper conduct helps us improve our competitive positioning and business outcomes. To assist in this, we are deliberate in making sure that each employee is aware that they play a role in fostering a work environment that encourages mutual respect and congenial relationships among employees.
We believe that a culture which encourages all employees to take pride in their individual contributions and work together as a team is key to our success. This year our Women’s Leadership Series continued with a variety of offerings ranging from a spotlight series to quarterly online networking sessions. Educational posts and/or webinars were made on a variety of topics including National Hispanic Heritage Month, Juneteenth, and Pride Month. Ribbon is committed to fostering and maintaining a culture of inclusion for employees.
Employee Hiring, Turnover and Engagement . Our turnover and hiring metrics are refreshed on a weekly basis and formally presented monthly. This up-to-date information allows us to quantify our success with employee retention, implement timely and selective retention initiatives, and measure the speed at which we attract and onboard qualified candidates. In 2025, our voluntary turnover rate was 5.5%, a slight decrease from the 6.6% voluntary turnover rate we experienced in 2024.
Our employee management process includes conducting exit interviews with all employees that leave us voluntarily. The data obtained from our exit questionnaire and one-on-one interviews are referenced when creating and updating benefit plans and other employee initiatives/offerings.
For the year ended December 31, 2025, we hired 316 employees globally. We have a formalized employee referral program in place as we have found that employees who join us through employee referrals are a good cultural fit and remain with us longer than those who have no personal connection. Approximately 28% of our hires in 2025 came from employee referrals. Over half of the 2025 hires were in entry to mid-level roles, reflecting our continued focus on strengthening our talent pipeline along with longer-term workforce development.
Our recognition program, “Real Time Rewards,” is an online platform which enables employees to recognize and express appreciation to their colleagues’ contributions. In 2025, approximately 3,000 awards were distributed, whereby 46% of our employees were rewarded for their contributions. These rewards are comprised of both monetary and non-monetary awards and are also used to recognize service anniversaries, birthdays, and other notable events.
Learning and Development (L&D) . At Ribbon we believe that investing in our employees’ personal and professional growth is essential for both individual success and organizational excellence. By providing robust learning opportunities, we enable employees to perform their current roles with maximum effectiveness while preparing them for future responsibilities.
Our comprehensive L&D programs are designed to: empower employees through knowledge and skill-building, boost engagement and collaboration across teams and enhance talent retention by fostering career development. These programs combine in-person sessions and online learning modules, covering both mandatory and elective topics. Core modules include essential areas such as ethical conduct, products and services, cybersecurity, workplace safety, human rights and anti-corruption.
Beyond the core curriculum, we offer tailored programs to meet diverse development needs that range from leadership development to personal effectiveness. In 2025 the L&D team delivered 27 live training webinars, 8 leadership development programs and 8 orientation programs for new hires. Approximately 12 training hours per employee was dedicated to training. Our commitment to continuous learning is not just an investment in skills, it’s an investment in our people and our future. By fostering a culture of growth and adaptability we ensure that our workforce remains innovative, resilient, and ready to lead in an ever-changing business landscape.
Safety, Health and Well-being. Our objective is to provide a safe and hazard-free work environment for all employees. Compliance with applicable safety regulations is a top priority and we strive to maintain our strong record for safety, which continues to be reinforced through regular training modules at all of our locations.
Ribbon continues to prioritize the well-being of our employees and their families worldwide. One of the key resources available is our Employee Assistance Program (“EAP”), a confidential service offered at no cost to employees and their dependents, providing support for a wide range of personal and professional needs.
To help employees understand how to access these resources, we host several EAP orientation sessions throughout the year. In 2025, we observed a notable increase in EAP utilization, highlighting the importance of these services in supporting overall wellness. In addition, as a company consistently advocating for a healthy, balanced lifestyle, we offer a wellness program, which is available to all employees and their families. This program includes a variety of wellness related topics delivered quarterly through activities such as webinars, exercise sessions, and engaging challenges.
In 2025, we continued with our hybrid work model. Under this policy, which was introduced in 2023, employees spend a minimum of two days per week working from one of our offices. Consistent in-office presence remains a key component in fostering team collaboration, strengthening our company culture, and promoting a unified employee experience.
Community Investment . We value the communities in which we work. We encourage a service mindset among our employees wherever they are and support community involvement and engagement. Our Employee Engagement committees have developed ongoing relationships with local non-profit organizations where Ribbon and our employees are contributing both time and funds to provide needed support. Ribbon also sponsors events and campaigns that support organizations such as the American Heart Association, Make a Wish Foundation, and the United Way. Once again, in 2025 we provided a day of paid time off for all employees to participate in our Global Day of Service, during which employees are encouraged to volunteer and contribute to local charitable organizations in their communities. In 2025, 1,283 employees across the globe donated an aggregate of approximately 5,000 hours to support charitable organizations.
For additional information on Ribbon’s talent and our current engagement activities, please see our most recent sustainability report, which is available at https://ribboncommunications.com/company/sustainability-report.
Corporate Governance and Social Responsibility
We are committed to operating ethically, efficiently and inclusively. We aim to help improve the quality of the lives of people, society and the health of the planet through leveraging our expertise in transforming networks, enhancing security and delivering world-class solutions. We believe that communications technology and continuous innovation form the backbone upon which sustainable development largely depends. Major technology trends supported by our solutions include the accelerated adoption of collaboration platforms such as Microsoft Teams and Zoom; the 5G revolution; accelerating customers’ ability to transfer carbon-intensive data storage from using local physical environments to the cloud; supporting service providers’ increased network demands to allow more people to work from home; and using our analytics solutions to maximize network efficiencies. In addition, we believe we contribute to the communities in which we operate through the mitigation of climate change and other global sustainable development priorities.
We have taken a more strategic position to our environmental, social and governance (“ESG”) practices. Our ESG materiality study reviewed the expectations and requirements of both our stakeholders and our competitors to focus on the ESG practices that are most critical to our business and those where we believe we can make the largest positive impact. From this materiality study, we published a strategy, which we review with the Board of Directors from time to time, which we believe will positively impact our future environmental performance, and deliver social benefits for our customers, employees and society at large. Additionally, we believe the governance improvements made as a result of our strategy will result in enhancements in our accountability and that of our suppliers and partners.
We are committed to protecting the environment and reducing the impact on the environment within a product’s lifecycle through responsible product design and requiring suppliers to adhere to sustainable practices. An example of this is our focus on continuously improving the power and space efficiency of our products to reduce overall energy consumption. We align our compliance goals with component directives such as RoHS legislation in the European Union and China and with the European WEEE directive. We also hold a host of internationally recognized certifications for our global offerings, including ISO 9001: 2015 - Quality Management Systems; ISO 14001: 2015 - Environmental Management Systems; and SI 10000: 2013 - Social Responsibility (covering our sites in Israel).
It has always been paramount to our way of doing business to act with the utmost integrity, honesty and transparency. Our commitment to ethical business practices guide us in our compliance with national and international laws and regulations, including anti-corruption, anti-bribery and unfair competition, antitrust and human rights. We maintain a Code of Conduct that applies to all of our directors, employees, contractors and suppliers. We are committed to strong corporate governance practices, which include building long-term value and assuring success for our stockholders and other stakeholders, including employees, customers and the communities in which we operate.
For additional information regarding our corporate governance and our social responsibility goals and initiatives, please see “Corporate Governance” on our investor relations website (https://investors.ribboncommunications.com/) and our most recent sustainability report, which is available at ribboncommunications.com/company/company-policies/sustainability-report.
Seasonality
We have experienced quarterly fluctuations in customer activity due to seasonal considerations. We typically experience increases in order volume in the fourth quarter due to greater spending on operating and capital expenditures by our service provider customers. We typically experience reductions in order volume toward the beginning of the calendar year, when our service provider customers are operationalizing their annual budgets and plans, which may result in lower revenue in the first quarter. These typical seasonal effects may vary. Accordingly, they should not be considered a reliable indicator of our future operating results.
Additional Information
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with or furnished to the United States Securities and Exchange Commission (the “SEC”), are available free of charge through the SEC’s Internet site ( https://www.sec.gov/ ) or our Internet site ( http://www.ribboncommunications.com ) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained on, or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein.
Item 1A. Risk Factors
Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition and results of operations, and they should be carefully considered. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors in its entirety in addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the SEC. These are factors which, individually or in the aggregate, we think could cause our actual results to differ significantly from anticipated or historical results. In addition to understanding the key risks described below, investors should understand that it is not possible to predict or identify all risk factors, and consequently, the following is not a complete discussion of all potential risks or uncertainties. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations. Additionally, investors should not interpret the disclosure of a risk to imply that the risk has not already materialized.
Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, operations and financial results:
Risks Related to Our Business and Industry
Our quarterly revenue and operating results are unpredictable and may fluctuate significantly quarter to quarter.
Failure to compete successfully could impair our ability to increase revenues and/or remain profitable.
Our future success is dependent on growing our base of customers and expanding our recurring revenue.
Consolidation in the telecommunications industry could harm our business.
Restructuring activities could adversely affect our ability to execute our business strategy.
Exposure to the credit risk of some of our customers and to credit exposures in fragile financial markets could result in material losses.
Disruptions to relationships with distributors, resellers, system integrators and other channel partners could adversely affect our revenues.
Failure to align our strategic plan with our customers’ investments, or failure of products and services to meet customers’ demands, could impact our revenues.
Failure of our products to interoperate with our customers’ existing networks could result in customer losses.
Failure for customers to adopt our new products and services focused on virtualized networks, could reduce our revenues.
Failure by our strategic partners or by us in integrating products could harm our business.
We rely on contract manufacturers.
We rely on single or limited sources for supply of some components of our products.
Failure to correctly estimate future requirements for end-of-production products purchased from third parties could harm our operating results or business.
Products may have errors or defects that we find only after full deployment.
Government sales are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations.
Future investments, mergers or acquisitions could be difficult to integrate, disrupt our business, dilute shareholder value and harm our financial condition.
Failure to hire and retain key personnel could negatively impact our ability to meet our business objectives and impair future growth.
Man-made problems, such as terrorism, and natural catastrophic events may disrupt our operations and harm our operating results.
We may not be successful in our artificial intelligence initiatives and such initiatives may expose us to greater litigation and regulatory risk.
Risks Related to Our International Operations
Worldwide global economic conditions and uncertainties may have a material adverse impact on our business.
Increases in tariffs, trade restrictions or taxes on our products could have an adverse impact on our operations.
The war in Ukraine and military action in Israel could materially impact our sales to customers in that region.
Conditions in Israel may materially and adversely affect our business.
Risks associated with our international operations could impair our ability to grow our international revenue.
Fluctuations in currency exchange rates could negatively impact our financial results and cash flows.
Use and reliance upon research and development resources in global locations may expose us to unanticipated costs and/or liabilities.
Risks Related to Intellectual Property
Our business could be jeopardized if we are unable to protect our intellectual property.
Failure to obtain necessary licenses or ongoing maintenance and support of third-party technology at acceptable prices on acceptable terms, or at all, could harm our operating results or business.
A breach of the security of our information systems or those of our third-party providers could adversely affect our operating results.
The increasing use of AI tools, both internally and by third parties, creates risks of potential financial and reputational harm.
Risks Related to Regulation
Data privacy issues, including evolving laws, regulations and associated compliance, may adversely impact our business and financial results.
Failure to comply with the Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act (“UKBA”) and similar regulations could subject us to significant civil or criminal penalties.
Governmental export and import controls could subject us to liability, require a license from the U.S. government or impair our ability to compete in international markets.
Changes in governmental regulation, especially with respect to the telecommunications industry, could harm our operating results and future prospects.
Risks Related to Our Indebtedness and Accounting Matters
The terms of our credit agreement could adversely affect our operating flexibility and pose risks of default, which would negatively impact our liquidity and operations.
Impairment of our goodwill or intangible assets may require us to record a significant charge to earnings.
Failure to maintain appropriate internal controls in the future may adversely affect our stock price and our business.
Risks Related to Ownership of our Common Stock and Warrants
The choice of forum provision in our Certificate of Incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock.
The outstanding warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders.
We may issue debt and equity securities that are senior to our common stock, which could negatively affect the value of our common stock.
The outstanding warrants are speculative in nature and may not have any value.
Holders of our warrants will have no rights as a common stockholder until they acquire our common stock.
The market price of shares of our common stock may experience volatility, which could cause holders of the warrants to incur substantial losses.
An active trading market for the warrants does not exist and may not develop.
General Risk Factors
Litigation and government investigations could result in significant legal expenses and settlement payments, fines or damage awards.
Our stock price has been and may continue to be volatile.
We are party to a stockholders’ agreement with certain stockholders which provides such stockholders with certain rights that may differ from the rights of our other stockholders.
Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover.
For a more complete discussion of the material risks facing our business, see below.
Risks Related to our Business and Industry
Our quarterly revenue and operating results are unpredictable and may fluctuate significantly from quarter to quarter, which could adversely affect our business, results of operations and the trading price of our common stock.
Our revenue and operating results may vary significantly from quarter to quarter due to a number of factors, many of which are outside of our control and any of which may cause our stock price to fluctuate. Material factors that may affect our revenue and operating results include those discussed below under “Risks Related to our Business and Industry.”
Equipment purchases by CSPs and enterprises continue to be unpredictable. As with other telecommunications product suppliers, we typically recognize a portion of our revenue in a given quarter from sales booked and shipped in the last weeks of that quarter. As a result, delays in customer orders may result in delays in shipments and recognition of revenue beyond the end of a given quarter. Additionally, we rely on the revenue provided by certain large customers. It can be difficult for us to predict the timing of receipt of major customer orders, and we are unable to control their timing decisions. We have experienced significant variability in the spending patterns and purchasing practices of our customers on a quarterly and annual basis, and we expect that this variability will continue. Consequently, our quarterly operating results are difficult to predict, even in the short term, and a delay in an anticipated sale past the end of a particular quarter may negatively impact our results of operations for that quarter, or in some cases, that year. Therefore, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. If our revenue or operating results fall below the expectations of investors or securities analysts or below any guidance we may provide to the market, the price of our common stock could decline substantially. Such a stock price decline could also occur even if we meet our publicly stated revenue and/or earnings guidance.
A significant portion of our operating expenses is fixed in the short term. If revenue for a particular quarter is below expectations, we may not be able to reduce costs and expenses proportionally for that quarter. Any such revenue shortfall would, therefore, have a significant effect on our operating results for that quarter.
If we fail to compete successfully against telecommunications equipment and networking companies, our ability to increase our revenue and remain profitable will be impaired.
Competition in the telecommunications market is intense. The market is shifting from an ecosystem dominated by a few large incumbent telecommunications equipment companies, such as Ericsson LM Telephone Company, Huawei Technologies Co. Ltd., Nokia Corporation, Ciena Corporation and Cisco Systems, Inc., to a market with competitors that are characterized by network virtualization, migration to the cloud, and open interfaces. The market is also seeing the growing use of AI in many areas of the network. We believe these shifts create opportunities for us, as well as our direct competitors in telecommunications and networking. The shift also creates opportunities for new entrants, including some that may currently be our strategic partners, that could become competitors in the industry. See Item 1. “ Business – Competition ”. Mergers among any of these or other competitors could strengthen their ability to compete against us, and additional competitors with significant financial resources entering our markets could further intensify competition.
To compete effectively, we must deliver innovative products that provide extremely high reliability and quality; deploy and scale easily and efficiently; interoperate with existing network infrastructures and multivendor solutions; provide effective network management, as well as comprehensive customer support and professional services; provide a cost-effective and space-efficient solution for enterprises and service providers; meet price competition from low cost equipment providers; and offer solutions that are timely for the market and support where the industry is heading.
Many of our current and potential competitors have significantly greater selling and marketing, technical, manufacturing, financial and other resources than we have. Further, some of our competitors sell significant amounts of other products to our current and prospective customers and have the ability to offer lower prices to win business. Our competitors’ broad product portfolios, coupled with already existing relationships, may cause our customers to buy our competitors’ products or harm our ability to attract new customers.
If we are unable to compete successfully against our current and future competitors, we could experience price reductions, order cancellations and loss of customers and revenue, and our operating results could be adversely affected.
Our future success is dependent on growing our base of customers and expanding our recurring revenue from our existing customers.
We rely on certain key customers, and our future success will depend on our ability to generate recurring business from our existing customers and to attract additional customers beyond our current customer base. One customer, Verizon, contributed approximately 17% of our revenue in the year ended December 31, 2025. Our top five customers contributed approximately 41% of our revenue in 2025. Factors that may affect our ability to grow our customer base include, but are not limited to, economic conditions that discourage potential new customers from making the capital investments required to adopt new technologies; deterioration in the general financial condition of service providers and enterprises, or their ability to raise capital or access lending sources; new product introductions by our competitors; and the success of our channel partner program. If we are unable to expand our customer base, the loss of any significant customer, or any substantial reduction in purchase orders or deferral of purchasing decisions from these customers, could materially adversely affect our results of operations and financial condition.
Consolidation in the telecommunications industry could harm our business.
The telecommunications industry, including many of our customers, has experienced consolidation, including, in the carrier space, the proposed acquisition of Cox Communications by Charter Communications (2025), the recently completed acquisition of Frontier Communications by Verizon (2026) and the acquisition of Lumen’s Mass Markets Fiber business by AT&T, the merger between Rogers Communications Inc. and Shaw Communications Inc. (April 2023), and the acquisition of certain Lumen Technologies assets by Brightspeed (2022). Further, consolidation has also occurred in the telecommunications supplier and vendor space, including the acquisition by Alianza of the Metaswitch business held by Microsoft (2024), the acquisition of Infinera by Nokia (2025), the acquisition of Juniper Networks by Hewlett Packard Enterprises (2025), and the combination of ADTRAN, Inc. and ADVA (2022).
We expect this trend to continue. Consolidation among our customers may cause delays or reductions in capital expenditure plans by such customers and/or increased competitive pricing pressures as the number of available customers declines and the relative bargaining power of customers increases in relation to suppliers. Any of these factors could materially
adversely affect our business. Further consolidation among our competitors may create additional opportunities for us as customers look to maintain multiple vendors in their networks, but it could also provide those competitors with much larger scale making it more difficult for us to compete against them.
Restructuring activities could adversely affect our ability to execute our business strategy.
We recorded restructuring expense of $19.7 million and $10.2 million in 2025 and 2024, respectively, including severance and related costs, facilities restructuring and accelerated amortization of lease assets. In 2026, we expect to record additional restructuring expense of approximately $8 million as we look to further streamline operations and consolidate our global footprint.
Our current restructuring and any future restructuring, should it become necessary for us to further restructure our business due to market conditions or other factors that reduce the demand for our products and services, could adversely affect our ability to execute our business strategy in a number of ways, including through loss of key employees; potential work stoppages by our unionized employees; diversion of management’s attention from normal daily operations of the business; diminished ability to respond to customer requirements related to both products and services; disruption of our engineering and manufacturing processes, which could adversely affect our ability to introduce new products and to deliver products both on a timely basis and in accordance with the highest quality standards; and/or reduced ability to execute effectively internal administrative processes, including the implementation of key information technology programs.
There can be no assurance that any restructuring actions we have taken in the past, or may take in the future, will improve our financial condition or results of operations.
We are exposed to the credit risk of some of our customers and to credit exposures in fragile financial markets, which could result in material losses.
Due to our reliance on significant customers, we are dependent on the continued financial strength of our customers. If one or more of our significant customers experience financial difficulties, it could result in uncollectible accounts receivable and our loss of significant customers and anticipated revenue.
Most of our sales are on an open credit basis, with typical payment terms of 30 to 90 days. In our IP Optical Networks segment, some payment terms may be as long as 180 days or, in limited circumstances, even longer. We evaluate and monitor individual customer payment capability in granting such open credit arrangements, maintain reserves that we believe are adequate to cover exposure for doubtful accounts, and in some cases, insure credit risk. However, there can be no assurance that our open credit customers will pay the amounts they owe us or that the reserves we maintain will be adequate to cover such credit exposure. Our sales derived through distributors, in particular, represent sources of increased credit risk as distributors tend to have more limited financial resources than other resellers and end-user customers.
Our customers’ failure to pay and/or our failure to maintain sufficient reserves could have a material adverse effect on our results of operations and financial condition. Additionally, in the event that turmoil in the credit markets makes it more difficult for some customers to obtain financing, those customers’ ability to pay could be adversely impacted, which in turn could have a material adverse impact on our business, results of operations and financial condition.
Disruptions to, or our failure to effectively develop relationships with and manage, distributors, resellers, system integrators and other channel partners, and the processes and procedures that support them, could adversely affect our ability to generate revenue from the sale of our products and services.
We continue to enhance our sales strategy, which we expect will include more partner sales engagements to resell our products and services through authorized distributors, value-added resellers (“VARs”), system integrators and other channel partners. Our future success is dependent upon establishing and maintaining successful relationships with a variety of distributors, VARs, system integrators and other channel partners. We may also need to pursue strategic partnerships with vendors that have broader technology or product offerings in order to compete with end-to-end solution providers. In addition, many of the enterprise markets we are pursuing require a broad network of resale partners in order to achieve effective distribution.
Many of our distribution and channel partners sell competitive products and services, and the loss of, or reduction in sales by, these partners could materially reduce our revenue. Our sales through channel partners typically involve the use of our products as components of a larger solution being implemented by systems integrators. In these instances, the purchase and sale of our products are dependent on the channel partners, who typically control the timing, prioritization and implementation of projects. If we fail to maintain relationships with our distribution, VAR and systems integration partners, fail to develop new relationships with other partners in new markets, fail to manage, train or provide incentives to our existing partners effectively, or if these partners are not successful in their sales efforts, sales of our products and services may decrease and our operating results could suffer. Moreover, if we do not have adequate personnel, experience and resources to manage the relationships with our partners and to fulfill our responsibilities under such arrangements, any such shortcomings could have a material adverse impact on our business and results of operations.
If our strategic plan, including our research and development of innovative new products and the improvement of existing products, is not aligned with our customers’ investments in the evolution of their networks, or if our products and services do not meet customers’ demands, customers may not buy our products or use our services.
We spend a significant amount of time, money and resources developing new technology, products and solutions to help keep up with rapid technology and market changes. Our strategic plan includes a continued shift in our investments from mature technologies that previously generated significant revenue for us toward certain networking technologies and the use of AI to assist in network management. Our choices of specific technologies to pursue, and those to de-emphasize, may prove to be inconsistent with our customers’ investment spending. Moreover, if we invest in the development of technologies, products and solutions that do not function as expected, are not adopted by the industry, are not ready in time, are not accepted by our customers as quickly as anticipated or at all, mature more quickly than we anticipated or are not successful in the marketplace, our sales and earnings may suffer and, as a result, our stock price could decline.
To achieve market acceptance for our products, we must effectively anticipate, and adapt in a timely manner to, customer requirements and offer products and services that meet changing customer demands. Prospective customers may require product features and capabilities that our current products do not have. The introduction of new or enhanced products also requires that we carefully manage the transition from older products in order to minimize disruption in customer ordering patterns and ensure that adequate supplies of new products can be delivered to meet anticipated customer demand. If we fail to develop products and offer services that satisfy customer requirements or if we fail to effectively manage the transition from older products, our ability to create or increase demand for our products and services could be seriously harmed, we may lose current and prospective customers and our results of operations and financial condition could be materially adversely affected.
If our products do not interoperate with our customers’ existing networks, we may not retain current customers or attract new customers.
Many of our customers will require that our products be designed to interface with their existing networks, each of which may have different specifications. Issues caused by an unanticipated lack of interoperability may result in significant warranty, support and repair costs, divert the attention of our engineering personnel from our hardware and software development efforts and cause significant customer relations problems. If our products do not interoperate with those of our customers’ networks, installations could be delayed or orders for our products could be canceled, which would seriously harm our gross margins and result in loss of revenue or customers.
We believe the telecommunications industry is in a major architectural shift to the virtualization of networks. If the architectural shift does not occur at the pace we predict, or if the products and services we have developed are not attractive to our customers after such shift takes place, our revenue could decline.
We believe the telecommunications industry continues to transition to the virtualization of networks. However, our customers may adapt to such changes at varying rates. As our customers take time to determine their future network architectures, we may encounter delayed timing of orders, deferred purchasing decisions and reduced expenditures by our customers. These longer decision cycles and reduced expenditures may negatively impact our revenue or make it difficult for us to accurately predict our revenue, either of which could materially adversely affect our results of operations and cause our stock price to decline.
Virtualization of our product portfolio, particularly in our Cloud and Edge segment, to increasingly focus on more software-based products could also adversely impact our revenue growth. As we virtualize our product portfolio, we expect our
margins to improve due to decreased costs tied to production and sales of our appliance products, however, our revenue may decline as a result of the decreases in sales of appliance products, many of which have generated higher revenue on a per-unit basis than certain of our software products.
Failure by our strategic partners or by us in integrating products provided by our strategic partners could harm our business.
Our solutions include the integration of products supplied by strategic partners. We rely on these strategic partners in the timely and successful deployment of our solutions to our customers. If the products provided by these partners have defects or do not operate as expected, if the services provided by these partners are not completed in a timely manner, if our partners have organizational or supply issues, or if we do not effectively integrate and support products supplied by these strategic partners, then we may have difficulty with the deployment of our solutions that may result in loss of, or delay in, revenue; increased service, support and warranty costs and a diversion of development resources; and/or network performance penalties.
In addition to cooperating with our strategic partners, such as Dell, on specific customer projects, we also may compete in some areas with these same partners. If these strategic partners fail to perform or choose not to cooperate with us on certain projects, in addition to the effects described above, we could experience loss of customers and market share, or fail to attract new customers.
If our contract manufacturers fail to perform, or if we change or consolidate manufacturers, we may fail to meet the demands of our customers and damage our customer relationships, which could materially adversely affect our business.
We currently rely on a small number of large global contract manufacturers to assemble our products according to our specifications and to fulfill orders on a timely basis. Reliance on a third-party manufacturer involves a number of risks, including a lack of control over the manufacturing process, inventory management and the potential absence or unavailability of adequate capacity. These risks are amplified by any global supply chain disruptions, including, as a result of tariffs. As we do not have internal manufacturing capabilities, any difficulties or failures to perform by our contract manufacturers could cause delays in customer product shipments, which could negatively affect our relationships with customers and result in delayed revenue.
In addition, any future changes to or consolidations of our current contract manufacturers could lead to material shortages or delays in the supply of our products. Qualifying a new contract manufacturer to commence commercial scale production or consolidating to a reduced number of contract manufacturers are expensive and time-consuming activities and could result in a significant delay in the supply of our products, which could negatively affect our relationships with customers and result in delayed revenue.
We and our contract manufacturers rely on single or limited sources for supply of some components of our products and if we fail to adequately predict our manufacturing requirements or if our supply of any of these components is disrupted, we will be unable to ship our products in a timely manner, or at all.
We and our contract manufacturers both purchase several key components of our products. Depending upon the component, there may or may not be alternative sources of substitutes. If we overestimate our component and finished goods requirements, we could have excess inventory, which would increase our costs. If we or our contract manufacturers underestimate our requirements, we may not have an adequate supply, which could interrupt manufacturing of our products and result in delays in shipments and revenue. The imposition of tariffs on components or the countries where our contract manufacturers are located could also result in increased costs that we may not be able to pass on, partially or in full, to our customers. If any of our sole or limited source suppliers experience capacity constraints, work stoppages or other reductions or disruptions in output, it may not be able to meet, or may choose not to meet, our delivery schedules. Moreover, we have agreed to compensate our contract manufacturers in the event of termination or cancellation of orders, discontinuance of product or excess material.
We generally do not have long-term supply contracts with our component suppliers and they are not required to supply us with components for any specified periods, in any specified quantities or at any set price, except as may be specified in a particular purchase order. In the event of a disruption or delay in supply or our inability to obtain components, we may not be able to develop an alternate source in a timely manner or at favorable prices, or at all. While we regularly monitor our inventory
of supplies, a failure to find acceptable alternative sources could hurt our ability to deliver high-quality products to our customers and negatively affect our operating margins.
Reliance on our suppliers also exposes us to potential quality variations and unforeseen price increases. Any disruption in the supply of key components would seriously adversely affect our ability to meet committed delivery dates and could result in loss of customers, harm to our ability to attract new customers, the payment of contractual liquidated damages or legal action. Additionally, any unforeseen increases in the prices of components could reduce our profitability or force us to increase our prices, which could result in a loss of customers or harm our ability to attract new customers and could have a material adverse effect on our results of operations.
Our customer contracts may allow customers to reschedule delivery dates or cancel orders within certain time frames before shipment without penalty and outside those times frames with a penalty. Because of these and other factors, there are risks of excess or inadequate inventory that could negatively affect our expenses and results of operations.
If we are unable to correctly estimate future requirements for products and components that we purchase from our third-party vendors that have reached the end of their production cycle, it could harm our operating results or business.
Some of the products and components that we purchase from our third-party vendors have reached the end of their new production availability. It may be difficult for us to maintain appropriate levels of the discontinued products or components to adequately ensure that we do not have a shortage or surplus of inventory of these products. If we do not correctly forecast the demand for such products that utilize third-party components, we could have excess inventory and may need to write off the costs related to such purchases and such write-offs could materially adversely affect our operating results. However, if we underestimate our forecast and our customers place orders to purchase more products than are available, we may not have sufficient inventory to support their needs. If we are unable to provide our customers with enough of these products, it could make it difficult to retain certain customers, which could have a material and adverse effect on our business.
Our products may have errors or defects that we find only after full deployment.
Many of our products are sophisticated and are designed to be deployed in large and complex networks around the world. Because of the nature of our products, they can only be fully tested when substantially deployed in these networks. Some of our customers may discover errors or defects in the software or hardware, or the products may not operate as expected only after full deployment. Our customers expect us to establish a support infrastructure and maintain demanding support standards to ensure that their networks maintain high levels of availability and performance. As we continue to expand our distribution channel through distributors and resellers, we will need to rely on and support their service and support organizations. If we, or our distributors and resellers, are unable to fix errors or other performance problems that may be identified after full deployment of our products, or provide the expected level of support and service to our customers, we could experience increased service, support and warranty costs and a diversion of development resources, loss of customers, network performance penalties and/or legal actions by our customers, which could materially adversely affect our business and results of operations.
Disruptions to, or our failure to effectively develop, manage and maintain our government customer relationships could adversely affect our ability to generate revenue from these customers. Further, sales to government customers are subject to potential delays and cutbacks, may require specific testing efforts, or impose significant compliance obligations.
A portion of our total revenue from product sales comes from sales to government agencies in the U.S. and other foreign countries. Disruptions to or our failure to effectively develop, manage and maintain our government customer relationships could adversely affect our ability to generate revenue from sales to such customers. Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in a government refusing to continue buying our products and services, a reduction of revenue or fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could materially adversely impact our operating results.
Factors that could impact federal government spending on our products and services include a significant decline in, or reapportioning of, spending by the federal government customers, changes, delays or cancellations of government programs or requirements, the adoption of new laws or regulations, new or prolonged government shutdowns or other delays in the government budget and/or appropriations process, changes in the political climate and general economic conditions. The loss or significant curtailment of any government contracts or subcontracts, whether due to our performance or due to interruptions or
changes in governmental funding, could have a material adverse effect on our business, results of operations and financial condition.
Further, sales to government customers may require specific testing efforts or impose significant compliance or certification obligations. While certain of our products are have received the required certifications, if we are unable to obtain future certification as needed, our U.S. federal sales and results of operations may suffer.
Any future investments, mergers or acquisitions we make or enter into, as applicable, could be difficult to integrate, disrupt our business, dilute shareholder value and seriously harm our financial condition.
We have a history of significant acquisitions and we may merge with or acquire additional businesses, products or technologies in the future or sell a portion of our business. No assurance can be given that any future merger, acquisition or disposition will be successful or will not materially adversely affect our business, operating results or financial condition. We continue to review opportunities to merge with or acquire other businesses or technologies that would add to our existing product line, complement and enhance our current products, expand the breadth of our product and service offerings, enhance our technical capabilities or otherwise offer growth opportunities. If we enter into a merger or make acquisitions in the future, we could, among other things, issue stock that would dilute existing stockholders’ percentage ownership; incur significant debt or assume significant liabilities; materially reduce our cash; incur significant amortization expenses related to intangible assets; and/or incur large and immediate write-offs for in-process research and development and stock-based compensation.
Mergers, acquisitions and dispositions are inherently risky and subject to many factors outside of our control. Therefore, we cannot be certain that we would be successful in overcoming problems in connection with our past or future acquisitions. Our inability to do so could significantly harm our business, revenue, and results of operations.
Failure to hire and retain key personnel could negatively impact our ability to meet our business objectives and impair our future growth.
Our business depends upon highly skilled technical, managerial, engineering, sales, marketing and customer support personnel. Competition for these personnel is intense, especially during times of economic recovery or growth. In addition, for certain mature technologies, the availability of qualified personnel necessary to provide maintenance and professional services is smaller and such personnel may be difficult to find. Any failure to hire, assimilate in a timely manner and retain key qualified personnel, particularly engineering and sales personnel, could impair our growth and make it difficult to meet key objectives, such as timely and effective product introductions. In addition, our ability to attract and retain key employees could be adversely impacted if we do not have a sufficient number of shares available under the 2025 Stock Incentive Plan to issue to our employees. We may not be able to locate suitable employees for any key employee who leaves or offer employment to potential replacements on reasonable terms.
Our future success also depends upon the continued services of our executive officers who have critical industry experience and relationships that we rely on to implement our business plan. None of our officers or key employees is bound by an employment agreement for any specific term. The loss of the services of any of our executive officers or key employees could delay the development and introduction of, and negatively impact our ability to sell, our products and achieve our business objectives.
Man-made problems, such as war and terrorism, and natural catastrophic events may disrupt our operations and harm our operating results.
The ongoing war in Ukraine and military action in Israel, as well as the continued threat of terrorism and heightened security and military action in response to this threat, or any future acts of terrorism, may cause disruptions to the economies of the United States and other countries. Events such as work stoppages or widespread blackouts could have similar negative impacts. Such disruptions or uncertainties could result in delays or cancellations of customer orders or the manufacture or shipment of our products and have a material adverse effect on our business and results of operations.
Natural catastrophic events, such as earthquakes, fires, floods, tornadoes, or pandemics (such as the COVID-19 pandemic) may also affect our or our customers’ operations. For example, we have offices located in Mexico City, Mexico; and Tokyo, Japan, regions known for seismic activity, which could be impacted in the event of an earthquake and we operate a facility in
Ft. Lauderdale, Florida that is subject to the impact of hurricanes. A significant natural disaster, such as wildfires, earthquakes or floods, could have a material adverse effect on our business in these locations.
We may not be successful in our artificial intelligence (“AI”) initiatives, which could adversely affect our business, reputation, or financial results.
We are developing AI solutions, including generative AI, such as our Acumen AIOps and Automation platform, to, among other things, enhance our features for new and existing products, and create greater operation efficiencies for us.
There are significant risks involved in developing and deploying AI, and there can be no assurance that the usage of AI will enhance our products or services or be beneficial to our business, including our efficiency or profitability. For example, our AI-related efforts, particularly those related to generative AI, subject us to risks related to harmful content, inaccuracies, bias, discrimination, toxicity, intellectual property infringement or misappropriation, defamation, data privacy, cybersecurity, and sanctions and export controls, among others. It is also uncertain how various laws will apply to content generated by AI. We are subject to the risks of new or enhanced governmental or regulatory scrutiny, litigation, or other legal liability, ethical concerns, negative consumer perceptions as to automation and AI, or other complications that could adversely affect our business, reputation, or financial results. In addition, if our competitors use AI tools to optimize operations and we fail to utilize AI tools in a comparable manner, we may be competitively disadvantaged.
As a result of the complexity and rapid development of AI, it is the subject of evolving review by various U.S. governmental and regulatory agencies, and other foreign jurisdictions are applying, or are considering applying, their intellectual property, cybersecurity, data protection and other laws to AI and/or are considering general legal frameworks on AI. We may not always be able to anticipate how to respond to these frameworks, given that they are still rapidly evolving. We may also have to expend resources to adjust our use of AI in certain jurisdictions if the legal frameworks on AI are not consistent across jurisdictions.
It is not possible to predict all of the risks related to the use of AI, and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability.
Risks Related to our International Operations
Worldwide economic conditions and uncertainties in the geopolitical environment have been and may continue to be materially adverse to our business.
A factor that significantly affects our operating results is the impact of economic conditions on the willingness of our current and potential customers to make capital investments. Given the general uncertainty regarding global economic conditions and other factors, such as tariffs, trade barriers, inflation, high interest rates and foreign exchange rate fluctuations, we believe that customers have tried to maintain or improve profitability through cost control and constrained capital spending, which places additional pressure to demonstrate acceptable return on investment. Some of our customers have canceled or delayed, and current and prospective customers may continue to cancel and delay, spending on the development or roll-out of capital and technology projects with us due to economic uncertainty and, consequently, our results of operations have been, and may continue to be, adversely affected. In addition, current uncertain worldwide economic and political environments make it increasingly difficult for us, our customers, and our suppliers to accurately forecast future product demand, which could result in an inability to satisfy demand for our products and a loss of market share. Our revenue is likely to decline in such circumstances, which may result in erosion of our profit margins and significant losses.
Moreover, economic conditions worldwide may contribute to slowdowns in the communications and networking industries, as well as to specific segments and markets in which we operate, particularly the telecom sector, resulting in, among other things, reduced demand for our products and services as a result of our customers choosing to refrain from building or upgrading capital intensive networks; increased price competition for our products, not only from our competitors, but also as a consequence of customers disposing of unutilized products; and risk of excess and obsolete inventories. Continuing turmoil in the geopolitical environment in many parts of the world may continue to put pressure on global economic conditions, which in turn could materially adversely affect our operating results. For example, following border clashes with China, India has enacted bans on the import of some goods manufactured in China and separately will require certain products be manufactured in India. These requirements include our products that are currently manufactured outside of India and, as a result, we are working to identify local manufacturing for such products. While we are developing plans to relocate our manufacturing sites,
the timing required for relocation could impact our ability to sell such products or timely deliver the products and could result in lower or lost sales in India. The need to move the manufacturing of such products could also negatively impact the margin earned on the sale of such products. If these restrictions or other sanctions are enacted, they may limit our ability to provide products and services in an important country or region for our business.
The war between Russia and Ukraine, and the sanctions imposed as a result, could materially impact our sales to customers in that region.
In 2025, approximately 1% of our sales were to customers in Eastern European countries, including Ukraine, Russia, and the surrounding countries. In February 2022, Russia commenced a military action in Ukraine. The uncertainty and the threat of an expansion of the war has resulted in some of our customers delaying purchases from us. Further, the U.S. and other European countries have imposed sanctions against Russia in connection with the war. These sanctions currently prohibit our ability to sell our hardware products and certain services to customers in Russia. The sanctions continue to evolve and further changes in the sanctions could further limit our ability to sell products and services to customers in Russia and our ability to collect on outstanding accounts receivable from such customers. If we are further limited in our ability to sell products and services to customers in Russia and other countries for an extended period, it could have a material impact on our financial results.
Conditions in Israel may materially and adversely affect our business.
We have a significant number of employees located in Israel. As a result, political, economic and military conditions in Israel may directly affect our business. In October 2023, Hamas conducted several terrorist attacks in Israel resulting in ongoing war across the country. In addition, there continue to be hostilities between Israel and Hezbollah in Lebanon, as well as groups in Syria and Iran which resulted in rockets being fired into Israel, causing casualties and disruption of economic activities. Popular uprisings in various countries in the Middle East over the last few years, including in Iran in January 2026 and Syria in December 2024, have also affected the political stability of those countries and have led to a decline in the regional security situation. Such instability may also lead to deterioration in the political and trade relationships that exist between Israel and these countries. The ongoing war against Hamas and any additional conflicts, terrorist activities or political instability involving Israel or other countries in the region could adversely affect our business, results of operations, financial condition, cash flows and prospects. Although the Israeli Government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot ensure stockholders that this coverage will be maintained or will be adequate in the event we submit a claim.
A number of countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continue or increase. In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli Government policies. Such actions, particularly if they become more widespread, may adversely impact our ability to sell our products.
Our operations could also be disrupted by the absence for significant periods of one or more key employees or a significant number of other employees because of military service. Some of our employees in Israel are obliged to perform military reserve duty, which generally accumulates over a period of three years from several days to up to a maximum of 84 days (and up to 108 days, in special circumstances specified under applicable law) and, in certain emergency circumstances, employees may be called to immediate and unlimited active duty. While we have business continuity plans in place to address the military call-ups of our employees, any of these circumstances could have a material adverse effect on our business, results of operations, financial condition, cash flows and prospects.
We may face risks associated with our international operations that could impair our ability to grow our international revenue.
We have expanded, and expect to continue to expand, our operations in international and emerging markets. International operations are a significant part of our business, accounting for approximately 52% of total revenues in 2025. We expect such operations to continue to require significant management attention and financial resources to successfully grow. In addition, our international operations are subject to other inherent risks, including:
greater reliance on channel partners;
difficulties collecting accounts receivable and longer collection cycles;
difficulties and costs of staffing and managing international operations;
impacts of differing technical standards;
compliance with international trade, customs and export control regulations;
foreign government regulations limiting or prohibiting potential sales or increasing the cost of doing business in such markets, including adverse tax policies, tariffs, customs regulations, trade protection measures, export quotas and qualifications to transact business;
foreign currency exchange controls, restrictions on repatriation of cash and changes in currency exchange rates;
any need to adapt and localize our products for specific countries;
tariffs and other trade barriers;
our ability to effectively price our products in competitive international markets; and
political, social and economic instability, including as a result of the fragility of global financial markets, health pandemics or epidemics and/or acts of war or terrorism.
Our international revenue, both as a percentage of total revenue and absolute dollars, may vary from one period to the next, and accordingly, current data may not be indicative of future periods. If we are unable to support our business operations in international and emerging markets, or their further expansion, while balancing the higher operational and financial risks associated with these markets, our business and results of operations could be harmed.
In addition, we may not be able to develop international market demand for our products, which could impair our ability to grow our revenue. In many international markets, long-standing relationships between potential customers and their local suppliers and protective regulations, including local content requirements and approvals, create barriers to entry. We have limited experience marketing, distributing and supporting our products in certain international locations and, to do so, we expect that we will need to develop versions of our products that comply with local standards. Moreover, difficulties in foreign financial markets and economies and of foreign financial institutions, particularly in emerging markets, could adversely affect demand from customers in the affected countries.
Increases in tariffs, trade restrictions or taxes on our products, as well as other risks of international operations, could have an adverse impact on our operations.
We manufacture certain of our appliance products and purchase a portion of our raw materials and components from suppliers in Mexico, Malaysia, Thailand, Israel, China and other foreign countries. The commerce we conduct in the international marketplace makes us subject to tariffs, trade restrictions and other taxes when the raw materials or components we purchase, and the products we ship, cross international borders. Import tariffs and/or other mandates recently imposed or threatened by the United States, have led to and could in the future lead to retaliatory actions by affected countries, including Canada, Mexico and China, resulting in “trade wars,” and could significantly increase the prices on raw materials, the manufacturing of our equipment, and/or increased costs for goods imported into the United States, all of which are critical to our business. While some of the tariffs have been temporarily stayed, we continue to develop plans to adjust manufacturing locations, if necessary, to avoid tariffs or other restrictions, any such tariffs could reduce customer demand for our products if our customers have to pay increased prices for our products as a result of such tariffs. In addition, tariff increases may have a similar impact on other suppliers and certain other customers, which could increase the negative impact on our operating results or future cash flows.
We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
Because a portion of our business is conducted outside the United States, we face exposure to adverse movements in foreign currency exchange rates. These exposures may change over time as business practices evolve, and they could have a material adverse impact on our financial results and cash flows. An increase in the value of the U.S. dollar could increase the real cost to our customers of our products in those markets outside the United States where we often sell in dollars, and 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, while we do engage in some currency hedging to reduce potential risks, 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.
Our use and reliance upon R&D resources in global locations may expose us to unanticipated costs and/or liabilities.
We have R&D offices in various global locations, including the United States, Canada, India and Israel. Our development efforts and other operations in these locations could involve significant risks, including, among others, difficulty hiring and retaining appropriate engineering and management resources due to intense competition for such resources and resulting wage inflation; knowledge transfer related to our technology and resulting exposure to misappropriation of intellectual property or information that is proprietary to us, our customers and other third parties; and heightened exposure to changes in economic, security and global political conditions.
Difficulties resulting from the factors noted above and other risks related to our global operations could increase our expenses, impair our development efforts, harm our competitive position and damage our reputation.
Risks Related to Intellectual Property
Our business could be jeopardized if we are unable to protect our intellectual property. Additionally, in some jurisdictions, our rights may not be as strong as those we currently enjoy in the United States.
We rely on a combination of security countermeasures within our deployed products, as well as patent, copyright, trademark and trade secret laws and contractual restrictions on disclosure to protect our intellectual property rights. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise misappropriate our products or technology. Monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. The legal systems of many foreign countries do not protect or honor intellectual property rights to the same extent as the legal system of the United States. It may be very difficult, time-consuming and costly for us to attempt to enforce our intellectual property rights, especially in these foreign jurisdictions. If competitors are able to use our technology, our ability to compete effectively could be harmed, which could have a material adverse effect on our business.
If we are unable to obtain necessary licenses or on-going maintenance and support of third-party technology at acceptable prices, on acceptable terms, or at all, it could harm our operating results or business.
We have incorporated third-party licensed technology, including open-source software, into our current products. From time to time, we may be required to license additional technology from third parties to develop new products or product enhancements. Third-party licenses and on-going maintenance and support may not be available or continue to be available to us on commercially reasonable terms or may be available to us but only at significantly escalated pricing. Additionally, we may not be able to replace the functionality provided by third-party software currently offered with our products if that software becomes obsolete, defective or incompatible with future versions of our products or is not adequately maintained or updated. If we are unable to maintain or re-license any third-party licenses required in our current products or obtain any new third-party licenses to develop new products and product enhancements, or in the case of any defects in these third-party software products, we could be required to obtain substitute technology of lower quality or performance standards or at greater cost, and we may be delayed or prevented from making these products or enhancements, any of which could seriously harm our sales and the competitiveness of our products unless and until we can secure an alternative source.
A breach of the security of our information systems or those of our third-party providers could adversely affect our operating results.
We rely upon our information systems and, in certain circumstances, those of our third-party providers, such as vendors, consultants and contract manufacturers, to protect our sensitive or proprietary information and information of or about our customers, to develop and provide our products and services to customers, and to otherwise operate our business. Our information systems and those of our third-party providers are vulnerable to threats such as computer hacking, cyber-terrorism or other unauthorized activity that may result in third party access to or modification, corruption or deletion of our or our customers’ sensitive or proprietary information or other disruptions to our business. Such cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving, are becoming more sophisticated and can take many forms. While we believe that we leverage appropriate detection and prevention systems and services and that we focus on continuous improvement based upon the latest attack vectors in the industry, we have previously experienced information technology system failures and cannot guarantee that there will not be additional incidents in the future, including future breaches of our or our third-party providers’ data security measures through a cyberattack, other cyber incident or otherwise, or the theft or loss of
laptops, other mobile devices or electronic records used to back up our systems or our third-party providers’ systems, which could result in a disclosure of customer, employee, or our information or otherwise disrupt our ability to function in the normal course of business by potentially causing, among other things, delays in the fulfillment or cancellation of customer orders or disruptions in the manufacture or shipment of products or delivery of services, any of which could have a material adverse effect on our operating results. For example, in early September 2025, we became aware that unauthorized persons, reportedly associated with a nation-state actor, had gained access to our IT network. We promptly initiated our incident response plan and began an investigation, containment and remediation effort using multiple third-party cybersecurity experts, including federal law enforcement. While we are not aware of evidence indicating that the threat actor accessed or exfiltrated any material information, several customer files saved outside of the main network do appear to have been accessed by the threat actor and those customers have been notified by us.
Additionally, the compromise of our information systems, or the information systems of the U.S. government, financial markets, financial institutions, our third-party providers or our customers, could disrupt our normal business operations, and in some cases lead to unauthorized tampering with our products. Unauthorized tampering may result in, among other things, the disruption of our customers’ businesses, errors or defects occurring in the software due to such unauthorized tampering, and our products not operating as expected after such unauthorized tampering. These types of security breaches could also create exposure to lawsuits, regulatory investigations, and increased legal liability. As a provider of secure real-time communications solutions, the reputational harm of any actual or perceived breach, compromise, defect or error relating to the security of our information systems and the products and services we provide may result in substantial harm to our reputation, even if the legal or regulatory impact is minimal. In addition, the costs to remediate any cyberattack could be significant. Such consequences could be exacerbated if we or our third-party providers are unable to adequately recover critical systems in a timely manner following a systems failure. Our insurance coverage may be insufficient to cover all losses related to cyberattacks.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. Additionally, proprietary, confidential, and/or sensitive information of the Company could be leaked, disclosed, or revealed as a result of or in connection with the use of generative artificial intelligence technologies.
The increasing use of AI tools, both internally and by third parties, creates risks of potential financial and reputational harm.
A growing number of threat actors are utilizing AI tools that could automate and enhance cybersecurity attacks against us. We utilize software and platforms designed to detect such cybersecurity threats, including AI-based tools, but these threats could become more sophisticated and harder to detect and counteract, which may pose significant risks to our data security and systems. Such future cybersecurity attacks, if successful, could lead to data breaches, loss of confidential or sensitive information, and financial or reputational harm.
If we, or other third parties we conduct business with, experience an actual or perceived breach of privacy or security incident due to the use of AI, we may be adversely impacted, lose confidential information, and incur harm to our reputation and the public perception of the effectiveness of our security measures.
In addition, investors, analysts, and other market participants may use AI tools to process, summarize or interpret our financial information or other data about us. The use of AI tools in financial and market analysis may introduce risks similar to those described above, including an inaccurate interpretation of our financial or operational performance or market trends or conditions, which in turn could result in inaccurate conclusions or investment recommendations.
Risks Related to Regulation
Risks associated with data privacy issues, including evolving laws, regulations and associated compliance efforts, may adversely impact our business and financial results.
Legislation in various countries around the world with regard to cybersecurity, privacy, use of AI and data protection is rapidly expanding and creating a complex compliance environment. We are subject to many privacy and data protection laws and regulations in the U.S. and around the world, some of which place restrictions on our ability to process personal data across our business. For example, the General Data Protection Regulation has caused more stringent data protection requirements in the U.K. and the European Union, which has adopted similar regulations. These privacy laws impose onerous accountability obligations requiring data controllers and processors to maintain a record of their data processing and implement policies as part of its mandated privacy governance framework. It also requires data controllers to be transparent and disclose to data subjects how their personal information is to be used; imposes limitations on retention of personal data; introduces mandatory data breach notification requirements; and sets higher standards for data controllers to demonstrate that they have obtained valid consent for certain data processing activities. We are subject to the supervision of local data protection authorities in those E.U. jurisdictions where we are established or otherwise subject to these privacy regulations. Certain breaches of the privacy requirements could result in substantial fines. In addition to the foregoing, a breach of privacy regulations could result in regulatory investigations, reputational damage, orders to cease/change our use of data, enforcement notices, as well potential civil claims including class action type litigation where individuals suffered harm.
Similarly, California and other states have enacted privacy laws that purport to create individual privacy rights for consumers and increase the privacy and security obligations of entities handling certain personal data. These laws also provide for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. These laws may increase our compliance costs and potential liability. Many similar laws have been proposed at the federal level and in other states. Any liability from our failure to comply with the requirements of these laws could adversely affect our financial condition.
We have invested, and continue to invest, human and technology resources in our privacy regulation compliance efforts and our data privacy compliance efforts. These compliance efforts may be time-intensive and costly. Despite those efforts, there is a risk that we may be subject to fines and penalties, litigation and reputational harm if we fail to protect the privacy of third party data or comply with the applicable regimes.
Failure to comply with the FCPA, the UKBA and similar regulations could subject us to significant civil or criminal penalties.
We earn a significant portion of our total revenue from international sales generated through our foreign direct and indirect operations. As a result, we are subject to the FCPA and the UKBA, which prohibit bribery in the conduct of business. The FCPA generally prohibits U.S. companies and their intermediaries from making corrupt payments to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment and requires companies to maintain adequate record-keeping and internal accounting practices to accurately reflect the transactions of the company. The UKBA is much broader and prohibits all bribery, in both the public and private sectors. Under the FCPA and the UKBA, U.S. companies, their subsidiaries, employees, senior officers and/or directors may be held liable for actions taken by strategic or local partners or representatives. In addition, the U.S. government or the U.K. government, as applicable, may seek to hold us liable for successor liability violations committed by companies we have acquired or may in the future acquire. If we or our intermediaries fail to comply with the requirements of the FCPA and the UKBA, governmental authorities in the United States and the United Kingdom, as applicable, could seek to impose civil and/or criminal penalties, which could have a material adverse effect on our reputation, results of operations and the trading price of our common stock.
We are subject to governmental export and import controls that could subject us to liability, require a license from the U.S. government or impair our ability to compete in international markets.
Certain of our products with encryption technology are subject to export controls and may be exported only with the required level of export license or through an export license exception. Under these laws and regulations, we are responsible for obtaining all necessary licenses or other approvals, if required, for exports. If we were to fail to comply with existing or future export licensing, customs regulations, economic sanctions and other laws, we could be subject to substantial civil and criminal penalties, including fines and incarceration for responsible employees and managers, and the possible loss of export or import
privileges. Similarly, various countries regulate the import of certain encryption technology and have enacted laws that could limit our ability to distribute our products or our customers’ ability to implement our products in those countries.
In addition, if our distributors fail to obtain appropriate import, export or re-export licenses or permits, we may also be adversely affected through reputational harm and penalties. Obtaining export licenses can be difficult and time-consuming, and in some cases a license may not be available on a timely basis or at all. Changes in import/export regulations could also lead to delays in new product introductions or limit our ability to sell existing or future products in certain locations, which could adversely impact our business.
Export control laws and economic sanctions prohibit the shipment of certain products to embargoed or sanctioned countries, governments and persons, including Russia as a result of its military action against Ukraine. We cannot assure that a violation of these regulations will not occur, whether knowingly or inadvertently. Any such shipment could have negative consequences including government investigations, penalties, fines, civil and criminal sanctions, and reputational harm.
Regulation of the telecommunications industry, or changes in governmental regulation, interpretation or legislative reform could harm our operating results and future prospects.
The telecommunications industry is highly regulated and our business and financial condition could be adversely affected by changes in the regulations relating to the telecommunications industry. Currently, there are few laws or regulations that apply directly to access to or delivery of voice services on IP networks. We could be adversely affected by regulation of IP networks and commerce in any country where we operate, including the United States. Such regulations could include matters such as VoIP or using Internet Protocol, encryption technology, and access charges for service providers. The adoption of such regulations could decrease demand for our products, and at the same time increase the cost of selling our products, which could have a material adverse effect on our business and results of operations.
Risks Related to Our Indebtedness and Accounting Matters
The terms of our credit agreement could adversely affect our operating flexibility and pose risks of default, which would negatively impact our liquidity and operations.
Our Senior Secured Credit Facilities Credit Agreement, provides $385 million of commitments, comprised of a $350 million term loan and a $35 million revolving facility (the “2024 Credit Facility”). Terms in the 2024 Credit Facility impose limitations on our ability to, among other things, incur additional indebtedness, create liens, make acquisitions or engage in mergers, enter into transactions with affiliates, dispose of assets, make certain investments and amend or repay certain junior debt. These terms could adversely affect our operating flexibility and pose risks of default which would negatively impact our liquidity and operations. In addition, we may not be able to refinance our debt or obtain additional financing on favorable terms, or at all.
In addition, we are required to comply with a maximum Consolidated Net Leverage Ratio (as defined in the 2024 Credit Facility) which is tested on a quarterly basis. The maximum Consolidated Net Leverage Ratio covenant uses our EBITDA (calculated in accordance with the 2024 Credit Facility) for the last 12 months (as of the testing date) to determine compliance. We were in compliance with this covenant at December 31, 2025. However, if we should fail to comply with this covenant in future periods, it may result in the declaration of an event of default, which could cause us to be unable to borrow or result in the acceleration of the maturity of indebtedness outstanding under the 2024 Credit Facility at such time.
If we are prevented from borrowing or if we are unable to extend, renew or replace the credit facilities under the 2024 Credit Facility by the maturity dates, on favorable terms, or at all, this could have a material adverse effect on our liquidity and cause our business, operations and financial condition to suffer. In addition, we may not have sufficient funds available for repayment or we may not have the ability to borrow or obtain sufficient funds to replace the indebtedness on terms acceptable to us, or at all.
We cannot be sure that our current cash and available borrowings under our 2024 Credit Facility will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows in the future, and if availability under our current facility is not sufficient to support our operations, we may need to refinance our debt or obtain additional financing.
If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings.
As of December 31, 2025, we had $300.9 million of goodwill and $143.3 million of intangible assets. Goodwill is tested annually for impairment and, along with our intangible assets, is also reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or intangible assets may not be recoverable include significant underperformance relative to plan or long-term projections, strategic changes in business strategy, significant negative industry or economic trends, significant change in circumstances relative to a large customer, significant decline in our stock price for a sustained period and decline in our market capitalization to below net book value. Any additional material impairment of goodwill or intangible assets could adversely affect our results of operations.
If we fail to maintain appropriate internal controls in the future, we may not be able to report our financial results accurately, which may adversely affect our stock price and our business.
Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations require our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. We have committed and will be required to continue to commit significant financial and managerial resources in order to comply with these requirements.
Further, we are required to integrate any acquired businesses into our system of disclosure controls and procedures and internal control over financial reporting. Such companies may not have previously been required to implement or maintain the disclosure controls and procedures or internal control over financial reporting that are required of U.S. public companies. We cannot provide assurance as to the effectiveness of those integrations.
Internal control over financial reporting has inherent limitations, including human error, the possibility that controls could be circumvented or become inadequate because of changed conditions, and fraud. If we are unable to maintain effective internal controls, we may not have adequate or timely financial information, and we may be unable to meet our reporting obligations as a publicly traded company or comply with the requirements of the SEC or the Sarbanes-Oxley Act of 2002. This could result in a restatement of our financial statements, the imposition of sanctions, or investigation by regulatory authorities, and could cause investors to lose confidence in our reported financial information. Any such consequence or other negative effect of our inability to meet our reporting requirements or comply with legal and regulatory requirements, as well as any disclosure of an accounting, reporting or control issue, could adversely affect the trading price of our common stock and our business.
Risks Related to the Ownership of our Common Stock and Warrants
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and may negatively affect the market price of our common stock.
Provisions of our Certificate of Incorporation and By-laws may have the effect of delaying or preventing a change of control or changes in our management, including, generally, provisions that:
do not provide cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
allow only the Board to fill a vacancy on the Board, however occurring, including a vacancy resulting from an enlargement of the Board;
require advance notice for stockholder proposals to be brought before a meeting of stockholders, including proposed nominations of persons for election to the board of directors;
only allow stockholder action to be taken at an annual or special meeting;
require a vote of holders of at least 66 2/3% of the voting power of our outstanding voting stock entitled to vote thereon to amend or repeal certain provisions of our Certificate of Incorporation or its By-laws;
limit the ability of stockholders to call a special meeting; and
authorize blank check preferred stock.
These provisions may make it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, pursuant to our Certificate of Incorporation, we have expressly elected not to be governed by Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”), which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with a stockholder owning 15% or more of our outstanding voting stock, unless the stockholder has held the stock for a period of at least three years. Instead, the Certificate of Incorporation provides that, notwithstanding any other provisions of the DGCL or Certificate of Incorporation, and subject to limited exceptions, we shall not engage in any business combination with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder unless: (i) the Board has approved, before the acquisition time, either the business combination or the transaction that resulted in the person becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owns at least 85% of the corporation’s voting stock at the time the transaction commenced (excluding for such purposes any shares owned by directors who are officers and shares owned by employee stock plans in which participants do not have the right to determine confidentially whether shares will be tendered in a tender or exchange offer) or (iii) at or after the person or entity becomes an interested stockholder, the business combination is approved by two-thirds of the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships, and by a majority of the independent directors (as defined in the Stockholders Agreement (as defined below)). This could delay or prevent a change of control transaction or discourage a potential acquirer from pursuing such a transaction, which transaction might have otherwise been of benefit to the other stockholders.
The choice of forum provision in our Certificate of Incorporation could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or agents.
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (the “Court of Chancery”) is, to the fullest extent permitted by law, the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of ours, to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim arising pursuant to any provision of our Certificate of Incorporation or our By-laws or governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or agents, which may discourage such lawsuits against us and our directors, officers and agents. Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
The warrants are exercisable for common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to stockholders.
The warrants to purchase an aggregate of 4,681,432 shares of our common stock are currently exercisable. Each such warrant entitles the holder thereof to purchase one share of common stock at a price of $3.77 per whole share, subject to adjustment. To the extent such warrants are exercised, additional shares of common stock will be issued, which will result in dilution to the then existing holders of common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of our common stock.
We may issue debt and equity securities that are senior to our common stock as to distributions and in liquidation, which could negatively affect the value of our common stock.
In the future, we may increase our capital resources by entering into debt or debt-like financing or issuing debt or equity securities, which could include issuances of senior notes, subordinated notes or preferred stock. In the event of our liquidation, our lenders and holders of our debt or preferred securities would receive a distribution of our available assets before distributions to the holders of our common stock. Our decision to incur debt and issue other securities in future offerings will depend on market conditions and other factors beyond our control. We cannot predict or estimate the amount, timing or nature of our future offerings and debt financings. Future offerings could reduce the value of our common stock and dilute the interests of our stockholders.
The warrants are speculative in nature and may not have any value.
The outstanding warrants to purchase shares of our common stock will have value only if price of our common stock exceeds the exercise price of the warrants. There can be no assurance that the market price of our common stock will equal or exceed the exercise price of the warrants. In the event that the price of our common stock does not exceed the exercise price of the warrants, the warrants will not have any value. Holders of the warrants may exercise their right to acquire the shares of common stock and pay an exercise price of $3.77 per share prior to four years from the date of issuance, after which date any unexercised warrants will expire and have no further value.
Holders of the warrants will have no rights as a common stockholder until they acquire our common stock.
Until holders of the warrants acquire shares of our common stock upon exercise of the warrants, the holders will have no rights with respect to the common stock underlying the warrants. Upon exercise of the warrants, the holder will be entitled to exercise the rights of a common stockholder as to our common stock only as to matters for which the record date occurs after the exercise.
The market price of shares of our common stock may experience volatility, which could cause holders of the warrants to incur substantial losses.
Volatility in the trading price of our common stock could significantly affect the value or trading price, if any, of the warrants. This could result in significant volatility in the value or trading price, if any, of the warrants. The warrants will have value only if the price of our common stock exceeds the exercise price of the warrant. There can be no assurance that the market price of our common stock will equal or exceed the exercise price of the warrants. In the event that the price of our common stock does not exceed the exercise price of the warrants, or if the price of our common stock falls below the exercise price of the warrants after a holder exercises its option, the warrants will not have any value and the holders of our warrants may incur substantial losses.
An active trading market for the warrants does not exist and may not develop.
The warrants have no established trading market and are not listed on any securities exchange, and we do not intend to list the warrants on any securities exchange. We cannot assure you that an active trading market in the warrants will develop and, even if it develops, we cannot assure you that it will last. In either case, the trading prices of the warrants could be adversely affected and holders’ ability to transfer the warrants will be limited.
General Risk Factors
Litigation and government investigations could result in significant legal expenses and settlement payments, fines or damage awards.
From time to time, we are subject to litigation regarding intellectual property rights or other claims and have indemnification clauses in most of our customer contracts that may require us to indemnify customers against similar claims. We have also previously been named as a defendant in securities class action and stockholder derivative lawsuits and have also been subject to investigations by the government. For more information on currently pending litigation, please see “Part I, Item 3. Legal Proceedings.” We are generally obliged, to the extent permitted by law, to indemnify our current and former directors and officers who are named as defendants in these lawsuits. Defending against litigation or government investigation may require significant attention and resources of management. Regardless of the outcome, such litigation or investigation could result in significant legal expenses. At this time, it is not possible to predict the outcome of the ongoing lawsuits, including whether or not any proceedings will continue, and when or how these matters will be resolved or whether we will ultimately receive, and in what sum, amounts previously awarded as a result of these proceedings. Regardless of whether we are ultimately successful in these lawsuits, we will likely elect to continue to incur substantial legal fees in connection with these matters.
If the defenses we claim in our material litigation matters are ultimately unsuccessful, or if we are unable to achieve a favorable settlement with an adverse party or a government agency, we could be liable for large settlement payments, damage awards or fines that could have a material adverse effect on our business and results of operations.
Our stock price has been and may continue to be volatile.
Our common stock price has experienced substantial volatility in the past and may remain volatile in the future. Volatility in our stock price can arise as a result of a number of the factors discussed in this “Risk Factors” section. During 2025, our closing stock price ranged from a high of $5.14 per share to a low of $2.75 per share. The stock market has experienced significant price and volume fluctuation with such volatility often unrelated to the operating performance of these companies. Actual or perceived divergence between our actual results and our forward-looking guidance for such results, the published expectations of investment analysts, or the expectations of the market generally, can cause significant swings in our stock price. Our stock price can also be affected by market conditions in our industry as well as announcements that we, our competitors, vendors or our customers may make. These may include announcements by us or our competitors of financial results or changes in estimated financial results, technological innovations, the gain or loss of customers, or other strategic initiatives. These and other factors affecting global economic conditions or financial markets may materially adversely affect the market price of our common stock in the future.
We are party to a stockholders’ agreement with certain stockholders which provides such stockholders with certain rights that may differ from the rights of our other stockholders.
In connection with the ECI Acquisition, we entered into a First Amended and Restated Stockholders Agreement (the “Stockholders Agreement”) with JPMC Heritage Parent LLC, Heritage PE (OEP) III, L.P. (together with JPMC, the “JPM Stockholders”), and ECI Holding (Hungary) Kft (“Swarth”). The Stockholders Agreement sets forth certain arrangements and contains various provisions relating to board size, board representation, standstill restrictions and transfer restrictions as further described therein, including the right of the JPM Stockholders and Swarth to each designate up to three directors for nomination to our nine-member board of directors, subject to the JPM Stockholders and Swarth maintaining certain levels of beneficial ownership of our common stock. Therefore, the JPM Stockholders and Swarth will be able to exert significant influence over matters requiring board approval, and our stockholders other than the JPM Stockholders and Swarth will have limited or no ability to influence the outcome of certain key transactions. The interests of the parties to the Stockholders Agreement may differ from those of other holders of our common stock.
Additionally, we are party to a Second Amended and Restated Registration Rights Agreement, dated as of August 12, 2022, with the JPM Stockholders, Swarth and certain other stockholders. The JPM Stockholders and Swarth collectively own approximately 45% of our common stock as of December 31, 2025, and may decide to sell their shares in bulk or from time to time, except as provided under the Stockholders Agreement, which timing we cannot control. The sale of shares by these stockholders may increase the volatility of our stock price, and our stock price could decline as a result.
Delaware law and our charter documents contain provisions that could discourage or prevent a potential takeover, even if such a transaction would be beneficial to our stockholders.
Some provisions in our Certificate of Incorporation, our By-Laws, as well as provisions of Delaware law, may discourage, delay or prevent a merger or acquisition that may be deemed undesirable by our Board of Directors but that a stockholder may consider favorable. These include provisions, among others,
authorizing the Board of Directors to issue shares of preferred stock;
limiting the persons who may call special meetings of stockholders;
prohibiting stockholder actions by written consent;
permitting the Board of Directors to increase the size of the Board and to fill vacancies;
requiring a super-majority vote of our stockholders to amend our amended and restated by-laws and certain provisions of our amended and restated certificate of incorporation; and
establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law, which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock.
These provisions of our Certificate of Incorporation, our By-Laws or Delaware law could have the effect of delaying or deterring a change in control that some stockholders may consider beneficial and therefore could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Cybersecurity Risk Strategy
We drive an aggressive cybersecurity roadmap aligned to internationally recognized cybersecurity frameworks and focused on evolving global threats, new cybersecurity insurance requirements and continuous improvement of incident response. Our cybersecurity program is aligned with the NIST Cybersecurity Framework and we also maintain ISO 27001 certification. Pursuant to the framework, we utilize industry leading cyber solutions and techniques to prevent, detect, and respond to incidents using a layered security model. We conduct an annual gap assessment against the NIST Cybersecurity Framework, the results of which are used to establish goals and measure progress against our cybersecurity roadmap. Based on the gap assessment, for example, we have taken a number of actions intended to reduce our cybersecurity risk, including enhancing our email and end-point security programs, implementing a single dashboard for security monitoring and improving our web application filtering programs. We are focused on the continuous improvement of key processes such as data security, asset management, information protection processes and procedures, protective technologies, and continuous monitoring. We also maintain business continuity management certification to ensure the ongoing review of our business continuity, disaster recovery and incident management processes.
Our Information Technology (IT) team is responsible for our cybersecurity monitoring and leverages a 24x7 Managed Detection & Response (MDR) third-party vendor to provide real-time cybersecurity threat monitoring and incident response, as well as to conduct a quarterly risk assessment. Pursuant to our incident response policy, any identified cybersecurity threats are immediately evaluated for the level of potential risk to us, with our response and remediation plan based on the potential severity of the incident. This incident risk assessment is continuously updated as we become aware of any new information regarding an identified incident. Pursuant to this plan, we will also utilize third-party experts to help identify, contain and remediate any incident that could have a significant impact on us. In addition, we use third-party experts to assist us in performing annual penetration testing and red team exercises to verify implementation of security tools, mitigating controls, and our ability to respond to real-world scenarios pursuant to our incident response policy.
As part of our cybersecurity roadmap, we also assess third-party risks, and we perform third-party risk management to identify and mitigate risks from third parties such as vendors, suppliers and other business partners associated with our use of third-party service providers. Cybersecurity risks are evaluated when determining the selection and oversight of applicable third-party service providers. In addition, we perform risk management during third-party cybersecurity compromise incidents to identify and mitigate risks to us from third-party incidents.
We are highly focused on cybersecurity awareness and perform annual certification of our employees, execute ongoing phishing campaigns, intervene with phish-prone individuals, publish monthly cybersecurity newsletters, and participate in Cybersecurity Awareness Month, in October each year.
In early September 2025, we became aware that unauthorized persons, reportedly associated with a nation-state actor, had gained access to our IT network. We promptly initiated our incident response plan and began an investigation, containment and remediation effort using multiple third-party cybersecurity experts, including federal law enforcement. We are not aware of evidence indicating that the threat actor accessed or exfiltrated any material information. Several customer files saved outside of the main network appear to have been accessed by the threat actor and those customers have been notified by us. The September 2025 incident, including the costs of our remediation activities, did not have a material adverse effect on our business strategy, results of operations or financial condition. Further, as of the date of this Annual Report, we are not aware of any other risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us , including our business strategy, results of operations and financial condition.
Cybersecurity Risk Governance
Our Board of Directors has overall responsibility for risk oversight, with its committees assisting the Board of Directors in performing this function based on their respective areas of expertise. Our Board of Directors has delegated oversight of cybersecurity risk to the Audit Committee and the Audit Committee reports on its activities and findings to the full Board of Directors. Key cybersecurity topics are presented regularly to the Audit Committee. In addition, if any cybersecurity incident is determined under our incident response policy to pose a risk in excess of an identified threshold (as set forth in the policy), our Chief Legal Officer will promptly notify the Audit Committee regarding the incident. The notification to the Audit Committee will include management’s determination regarding whether or not the incident is material to us.
On an operating level, our cybersecurity program is managed by a dedicated Chief Information Security Officer (CISO), reporting to our Chief Information Officer (CIO) , who together lead a geographically dispersed team comprised of our employees, highly skilled contractors and other key functional third-party resources. Our CISO holds a Masters of MIS in Information Security and prior to joining Ribbon, served as the Director of Information Security & Privacy at Ericsson for the Americas. Prior to Ericsson, she held cybersecurity positions at Walgreens, Fortunes Brands Home & Security, and W.W. Granger. She is a Certified Information Security Manager, has operated her own security firm, and has over 20 years of cybersecurity experience, including her time as a U.S. Navy Operations and Training Manager. Our CIO has held that position (or Head of IT) at Ribbon for over seven years. He has over 25 years of experience in the IT area including over nine years overseeing IT cybersecurity, cybersecurity roadmaps and IT general controls. During his career he has overseen initial ISO 27001 certifications, as well as the implementation of over 30 cybersecurity platforms. The CIO and CISO are part of our cybersecurity council, which also includes our CEO, CFO and other key leaders. The cybersecurity council meets monthly to review the cybersecurity metrics, new potential threats, and progress against the cybersecurity roadmap. Key matters from these monthly council meetings are presented to the Audit Committee.
Item 2. Properties
We continue to consolidate and reduce the number of facilities we operate worldwide. As of December 31, 2025, we maintained the following principal facilities:
Location
Location
Lease expiration
Plano, Texas (a)
Corporate headquarters, sales, marketing, research and development/engineering, customer support, general and administrative
September 2032
Westford, Massachusetts (a)
Research and development, customer support, general and administrative
August 2028
Ottawa, Canada (b)
Research and development/engineering, customer support, general and administrative
December 2029
Petah Tikva, Israel
Research and development/engineering, sales and marketing, customer support, general and administrative
February 2031
Bangalore, India (Delta)
Research and development/engineering, customer support, general and administrative
December 2034
Bangalore, India (Alpha)
Research and development/engineering, customer support, general and administrative
December 2028
A portion of this facility was not in use at December 31, 2025 and is being marketed for sublease.
A portion of this facility was not in use at December 31, 2025 and some of the unused space is being subleased.
We also lease smaller spaces that are each under 50,000 square feet for our staff in various countries around the world in sales, marketing, R&D/engineering, customer services and support, as well as for warehouse purposes. We believe our remaining facilities will be adequate for our current needs and that suitable additional space will be available as needed.
Item 3. Legal Proceedings
We are subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. Our material legal proceedings are described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial Statements in Note 26, “ Commitments and Contingencies ” under the heading “Contingencies”.
The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, our financial condition and operating results for that reporting period could be materially adversely affected. We settled certain matters during the fourth quarter of 2025 that did not individually or in the aggregate have a material impact on our financial condition or operating results.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is traded on The Nasdaq Global Select Market under the symbol “RBBN.”
Holders
At February 23, 2026, there were approximately 350 holders of record of our common stock.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table summarizes repurchases of our common stock during the fourth quarter of 2025:
Approximate Dollar
Total Number of
Value of Shares
Shares Purchased
that May
as Part of
Yet be Purchased
Total Number
Average
Publicly
Under
of Shares
Price Paid
Announced Plans
the Plans
Period
Purchased (1)
per Share
or Programs (2)
or Programs (3)
October 1, 2025 to October 31, 2025
November 1, 2025 to November 30, 2025
December 1, 2025 to December 31, 2025
Total
Upon vesting of restricted stock awards, certain of our employees may return to us a portion of the newly vested shares to satisfy the tax withholding obligations that arise in connection with such vesting. During the fourth quarter of 2025, 140,536 shares of restricted stock were returned to us by employees to satisfy tax withholding obligations arising in connection with vesting of restricted stock, which shares are included in this column.
In June 2025, we announced a stock repurchase program for the period beginning June 5, 2025 through December 31, 2027, under which our Board of Directors authorized the repurchase of up to $50 million of our common stock at management’s discretion in the open market, in privately negotiated transactions structured through investment banking institutions, or a combination of the foregoing, (the "2025 Repurchase Program" or the “Repurchase Program”). We used $3.2 million to repurchase 972,239 shares of our common stock under the Repurchase Program during the fourth quarter of 2025. At December 31, 2025, we had $41.0 million remaining under the Repurchase Program for future repurchases. The amount and timing of repurchases are subject to a variety of factors including liquidity, cash flow, stock price, compliance with our credit facility and general business and market conditions. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization. The Repurchase Program may be modified, increased, suspended, or discontinued at any time. The Repurchase Program is being funded using cash on hand and cash from operations.
Represents amounts available for repurchases under the Repurchase Program.
Performance Graph
The following performance graph compares the cumulative total return to stockholders for our common stock for the period from December 31, 2020 through December 31, 2025 with the cumulative total return over the same period on the Nasdaq Composite Index, the Nasdaq Telecommunications Index and the Russell 2000. The comparison assumes an investment
of $100 on December 31, 2020 in our common stock and in each of the indices and, in each case, assumes reinvestment of all dividends, if any. The performance shown is not necessarily indicative of future performance.
This graph is not deemed to be “filed” with the SEC or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and should not be deemed to be incorporated by reference into any of our prior or subsequent filings under the Securities Act of 1933, as amended, or the Exchange Act.
December 31,
Ribbon Communications Inc.
Nasdaq Composite
Russell 2000
Nasdaq Telecommunications
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our financial statements and the related notes included in Item 8, “Financial Statements and Supplementary Data” in this Annual Report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those disclosed in Item 1A, “Risk Factors”, elsewhere in this Annual Report, in other documents filed with the SEC and otherwise publicly disclosed. Please refer to “Cautionary Note Regarding Forward-Looking Statements” above for additional information. For a complete description of our business and other important information, please refer to Item 1 of Part I of this Annual Report .
Overview
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.
Key Trends and Economic Factors Affecting Ribbon
Supplier Disruptions. Ongoing uncertainty in the global economy due to inflation, global military actions, including 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.
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 and the inflationary and high interest rate environment impacts our future business, financial position and results of operations will depend on developments beyond our control.
The Ongoing War in Ukraine and military action in Israel . The uncertainty resulting from the recent war in Israel 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. 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.
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.
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, after peaking in 2024, the Federal Reserve reduced the federal funds target range to 3.50% - 3.75% by December 2025. The effective federal funds rate averaged 3.64%, consistent with the Federal Reserve’s view that inflation is decelerating. 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.
Tariffs . We manufacture certain of our appliance products and purchase a portion of our raw materials and components from suppliers in Mexico, Malaysia, Thailand, Israel, China and other foreign countries. The commerce we conduct in the international marketplace makes us subject to tariffs, trade restrictions and other taxes when the raw materials or components we purchase, and the products we ship, cross international borders. Import tariffs and/or other mandates recently imposed or threatened by the United States, have led to and could in the future lead to retaliatory actions by affected countries, including Canada, Mexico and China, resulting in “trade wars,” and could significantly increase the prices on raw materials, the manufacturing of our equipment, and/or increased costs for goods imported into the United States, all of which are critical to our business. While some of the tariffs have been temporarily stayed, we continue to develop plans to adjust manufacturing locations, if necessary, to avoid tariffs or other restrictions, any such tariffs could reduce customer demand for our products if our customers have to pay increased prices for our products as a result of such tariffs. In addition, tariff increases may have a similar impact on other suppliers and certain other customers, which could increase the negative impact on our operating results or future cash flows.
Presentation
Unless otherwise noted, all financial amounts, excluding tabular information, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are rounded to the nearest million dollar amount, and all percentages, excluding tabular information, are rounded to the nearest percentage point.
Private Placement
On March 28, 2023, we issued 55,000 shares of newly designated Series A Preferred Stock (the “Preferred Stock”) to investors in a private placement offering at a price of $970 per share, along with 4.9 million warrants (the “Warrants”) to purchase shares of our common stock, par value $0.0001 per share (the “Private Placement”), at an exercise price of $3.77 per share. The proceeds from the Private Placement were approximately $53.4 million, including approximately $10 million from existing related party stockholders. On June 25, 2024, we redeemed the Preferred Stock with a portion of the proceeds from the refinancing of the 2020 Credit Facility at a rate of 103% for a total of approximately $63.5 million. The Warrants remain outstanding and without modification. For additional detail on the Private Placement, see Note 15 - Preferred Stock and Warrants to our consolidated financial statements.
Common Stock Repurchases
In the second quarter of 2025, the Company's Board of Directors approved a program to repurchase up to $50 million of the Company’s common stock (the “2025 Repurchase Program” or the “Repurchase Program”). Commencing on June 5,2025 and continuing through December 31, 2027, the Repurchase Program is being funded with cash on hand or cash generated from operations. During the year ended December 31, 2025, the Company used $9.0 million, including transaction fees, to repurchase and retire 2.5 million shares of its common stock under the Repurchase Program, with $41.0 million remaining for future repurchases as of December 31, 2025.
Operating Segments
Our 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 17 - Operating Segment Information to our consolidated financial statements.
Financial Overview
Financial Results
We reported a loss from operations of $3.3 million for 2025 and income from operations of $16.9 million for 2024. We reported net income of $39.6 million for 2025 and a net loss of $54.2 million for 2024.
Our revenue was $844.6 million in 2025, comprised of $511.4 million attributable to Cloud and Edge and $333.2 million attributable to IP Optical Networks. Our revenue was $833.9 million in 2024, comprised of $505.2 million attributable to Cloud and Edge and $328.7 million attributable to IP Optical Networks. Our gross profit was $420.7 million in 2025, comprised of $323.1 million attributable to Cloud and Edge and $97.6 million attributable to IP Optical Networks. Our gross profit was $439.5 million in 2024, comprised of $329.2 million attributable to Cloud and Edge and $110.3 million attributable to IP Optical Networks. Our gross margin was 49.8% in 2025 and 52.7% in 2024. In 2025, our Cloud and Edge gross margin was 63.2% and our IP Optical Networks gross margin was 29.3%. In 2024, our Cloud and Edge gross margin was 65.2% and our IP Optical Networks gross margin was 33.6%. The revenue increase in 2025 compared to 2024 was primarily driven by a $6.3 million rise in Cloud and Edge sales, largely attributable to higher demand from U.S. service providers, partially offset by lower sales to Federal customers. In addition, IP Optical Networks revenue increased by $4.4 million, led by strong sales in India, though this growth was partially offset by declines in the Eastern European region.
Our operating expenses were $424.0 million in 2025 and $422.6 million in 2024. Our 2025 operating expenses included $23.8 million of amortization of acquired intangible assets, $19.7 million of restructuring and related expense and $4.3 million of acquisition-, disposal- and integration-related expenses. The following section provides information on our restructuring and cost-reduction initiatives. Our 2024 operating expenses included $26.0 million of amortization of acquired intangible assets and $10.2 million of restructuring and related expense.
We recorded stock-based compensation expense of $19.4 million in 2025 and $16.1 million in 2024. These amounts are included as components of both Cost of revenue and Operating expenses in our consolidated statements of operations.
See “Results of Operations” in this MD&A for additional discussion of our results of operations for the years ended December 31, 2025 and 2024.
Restructuring and Cost Reduction Initiatives
During the fourth quarter of 2025, the Company’s 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 $8.6 million in 2025. We anticipate that we will expense approximately $5 million in 2026 related to the 2026 Restructuring Plan.
During the first quarter of 2025, the Company’s President and CEO approved a strategic restructuring program (as subsequently amended, the "2025 Restructuring Plan") that consists of workforce reductions in certain of the Company’s 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 $5.0 million in 2025. We anticipate no future expense in 2026 related to the 2025 Restructuring Plan.
In February 2023, our Board of Directors approved a strategic restructuring program (the “2023 Restructuring Plan”) to streamline our operations in order to support our investment in critical growth areas. The 2023 Restructuring Plan includes, among other things, charges related to a workforce reduction. Any potential positions eliminated in countries outside the United States are subject to local law and consultation requirements. In connection with the 2023 Restructuring Plan, we recorded restructuring and related expense for severance related costs of $0.2 million and $2.0 million in 2025 and 2024, respectively. We anticipate no future expense in 2026 related to the 2023 Restructuring Plan.
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 $5.9 million and $6.1 million in 2025 and 2024 for variable and other facilities-related costs. In 2023, we recorded $6.3 million of expense for the 2022 Restructuring Plan, comprised of $5.3 million for variable and other facilities-related costs, and $1.0 million for accelerated amortization of lease assets no longer being used with no ability or intent to sublease. We anticipate that we will expense approximately $3 million of facilities-related costs in 2026 related to the 2022 Restructuring Plan.
For facilities that are part of a restructuring plan, and 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 2025 and 2024. We recorded $1.0 million for accelerated rent amortization in the year ended December 31, 2023. 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.
Critical Accounting Policies and Estimates
This MD&A is based upon our 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, revenue 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 the following 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, debentures and warrants received as sale consideration, 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 consolidated financial statements.
Revenue Recognition . We derive revenue from two primary sources: products and services. Product revenue is generated from sales of our stand-alone software, as well as our proprietary hardware and software that function together to deliver the products’ essential functionality. Both software and hardware are also sold on a standalone basis. Services include customer support (software updates and technical support), consulting, design services, installation services and training. A typical contract includes both product and services. Generally, contracts with customers contain multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price (“SSP”) basis.
The software licenses typically provide a perpetual right to use our software. However, we also sell term-based software licenses that expire and Software-as-as-Service (“SaaS”)-based software, which are referred to as subscription arrangements. We do not customize our software nor are installation services required, as the customer has a right to utilize internal resources or a third-party service company. The software and hardware are delivered before related services are provided and are functional without professional services or customer support. We have concluded that our software licenses are functional intellectual property that are distinct, as the user can benefit from the software on its own. The product revenue related to our perpetual licenses is typically recognized when the software is made available for download, as this is the point that the user of the software can direct the use of and obtain substantially all of the remaining benefits from the functional intellectual property. The product revenue related to our term-based software licenses is recognized over the license period. We begin to recognize revenue related to the renewal of term-based software licenses at the start of the renewal period. Revenue related to our SaaS-based software is recognized ratably over the service period as the customer does not take possession of the software or have the ability to take possession of the software.
Service revenue includes revenue from customer support and other professional services. We offer warranties on our products. Certain of our warranties are considered to be assurance-type in nature, ensuring that the product is functioning as intended. Assurance-type warranties do not represent separate performance obligations. We also sell separately-priced
maintenance service contracts which qualify as service-type warranties and represent separate performance obligations. We do not allow and have no history of accepting product returns.
Customer support includes software updates on a when-and-if-available basis, telephone support, integrated web-based support and bug fixes or patches. We sell our customer support contracts at a percentage of list or net product price related to the support. Customer support revenue is recognized ratably over the term of the customer support agreement, which is typically one year.
Our professional services include consulting, technical support, resident engineer services, design services and installation services. Because control transfers over time, revenue is recognized based on progress toward completion of the performance obligation. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided.
We generally use the input method to measure progress for our contracts and to recognize revenue because we believe this method, in general, best depicts the transfer of assets to the customer. The input method measures costs we have incurred in the period for the contracts. In some infrequent instances, we may engage a third-party to perform services for us and in those cases, we use the output method to recognize revenue because it best depicts the transfer of assets to the customer. Under the output method, there is a cost-to-cost measure of progress. The progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. When the measure of progress is based upon expended labor, progress toward completion is measured as the ratio of labor time expended to date versus the total estimated labor time required to complete the performance obligation. Revenue is recorded proportionally as costs are incurred or as labor is expended. Costs to fulfill these obligations can include internal labor as well as subcontractor costs.
We offer customer training courses, for which the related revenue is typically recognized over the period the training services are performed, typically over one to five days.
Our contracts with customers often include promises to transfer multiple products and services to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.
Judgment is required to determine the SSP for each distinct performance obligation. SSPs are typically estimated using observable historical transactions of our products and services sold in comparable circumstances to similar customers, including when products and services are sold on a standalone basis. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services.
In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions, current pricing practices, product specific business objectives, the cost to provide the performance obligation, and other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. As our go-to-market strategies evolve, we may modify our pricing practices in the future, which could result in changes to SSP. However, historically, w e have not had any material changes to our SSP, nor do we expect any material changes to our SSP estimates in the future.
Valuation of Inventory. We review inventory for both potential obsolescence and potential loss of value periodically. In this review, we make assumptions about the future demand for and market value of the inventory and, based on these assumptions, estimate the amount of any excess, obsolete or slow-moving inventory.
We write down our inventories if they are considered to be obsolete or at levels in excess of forecasted demand. In these cases, inventory is written down to estimated realizable value based on historical usage and expected demand. Inherent in our estimates of market value in determining inventory valuation are estimates related to economic trends, future demand for our products and technical obsolescence of our products. If future demand or market conditions are less favorable than our projections, additional inventory write-downs could be required and would be reflected in the cost of revenue in the period the
revision is made. To date, we have not been required to revise any of our assumptions or estimates used in determining our inventory valuations.
We write down our evaluation equipment at the time of shipment to our customers, as it is not probable that the inventory value will be realizable.
Loss Contingencies and Reserves. We are subject to ongoing business risks arising in the ordinary course of business that affect the estimation process of the carrying value of assets, the recording of liabilities and the possibility of various loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We regularly evaluate current information available to determine whether such amounts should be adjusted and record changes in estimates in the period they become known. We are subject to various legal claims. We reserve for legal contingencies and legal fees when the amounts are probable and reasonably estimable.
Stock-Based Compensation. Our stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period.
We use the Black-Scholes valuation model for estimating the fair value on the date of grant of employee stock options. Determining the fair value of stock option awards at the grant date requires judgment regarding certain valuation assumptions, including the volatility of our stock price, expected term of the option, risk-free interest rate and expected dividends. Changes in such assumptions and estimates could result in different fair values and could therefore impact our earnings. Such changes, however, would not impact our cash flows. The fair value of restricted stock awards, restricted stock units and performance-based awards is based upon our stock price on the grant date.
We grant performance-based stock units, some of which include a market condition, to certain of our executives and certain other employees. We use a Monte Carlo simulation approach to model future stock price movements based upon the risk-free rate of return, the volatility of each entity, and the pair-wise covariance between each entity. These results are then used to calculate the grant date fair values. We are required to record expense through the respective final vesting dates regardless of the number of shares that are ultimately earned. Once the grant date criteria have been met for a fiscal year performance period, we record stock-based compensation expense based on our assessment of the probability that the respective performance condition will be achieved and the level, if any, of such achievement. The Compensation Committee determines the number of shares earned, if any, after our financial results for each fiscal year performance period are finalized. Upon determination by the Compensation Committee of the number of shares that will be received upon vesting, such number of shares becomes fixed and the unamortized expense is recorded through the remainder of the service period, at which time any performance-based stock units earned will vest pending each employee’s continuing employment with us through that date.
The amount of stock-based compensation expense recorded in any period for unvested awards requires estimates of the amount of stock-based awards that are expected to be forfeited prior to vesting, as well as assumptions regarding the probability that performance-based stock awards without market conditions will be earned.
Goodwill and Intangible Assets. Goodwill is not amortized, but instead is tested for impairment annually, or more frequently if indicators of potential impairment exist. Intangible assets with estimated lives and other long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of intangible assets with estimated lives and other long-lived assets is measured by comparing the carrying amount of the asset to future net undiscounted pretax cash flows expected to be generated by the asset. If these comparisons indicate that an asset is not recoverable, we will recognize an impairment loss for the amount by which the carrying value of the asset exceeds the related estimated fair value.
We perform a fair value analysis for each reporting unit using both an income and market approach, which encompasses a discounted cash flow analysis and a guideline public company analysis using selected multiples. We assess each valuation methodology based upon the relevance and availability of the data at the time the valuation is performed and the methodologies are weighted appropriately. Any impairment charges are reported separately in our consolidated statements of operations.
Judgment is required in determining whether an event has occurred that may impair the value of goodwill, identifiable intangible assets or other long-lived assets. Factors that could indicate an impairment may exist include significant underperformance relative to plan or long-term projections, strategic changes in business strategy, significant negative industry
or economic trends, a significant change in circumstances relative to a large customer, a significant decline in our stock price for a sustained period and a decline in our market capitalization to below net book value. We must make assumptions about future control premiums, market comparables, cash flows, operating plans, discount rates and other factors to determine recoverability.
Our annual testing for impairment of goodwill is completed as of October 1. For the purpose of testing goodwill for impairment, all goodwill is assigned to a reporting unit, which may be either an operating segment or a portion of an operating segment. Our reporting units are our two operating segments, Cloud and Edge and IP Optical Networks. For our annual impairment testing, we perform a fair value analysis using both an Income and Market approach, which encompasses a discounted cash flow analysis and a guideline public company analysis using selected multiples. We assess each valuation methodology based upon the relevance and availability of the data at the time the valuation is performed and the methodologies are weighted appropriately.
Based upon the completion of our 2025, 2024, and 2023 annual tests for goodwill impairment, we determined that there was no impairment of goodwill for either of our reporting units.
Accounting for Income Taxes. Our provision for income taxes is comprised of both current taxes and deferred taxes. The current income tax provision is generally calculated as the estimated taxes payable or refundable on tax returns to be filed for the year ended December 31, 2025. We provide for deferred income taxes based on temporary differences between financial and taxable income, net operating loss carryforwards, tax credit carryforwards and any required valuation allowances.
We assess the recoverability of all deferred tax assets recorded on the balance sheet and provide any necessary valuation allowances as required. In evaluating our ability to realize our deferred tax assets, we consider all available positive and negative evidence, including our past operating results, the existence of cumulative income in the most recent years, changes in our business operations, and our forecast of future taxable income. In determining future taxable income, we make assumptions, including the amount of state, federal and international pre-tax income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage our underlying businesses. Such assessment is completed on a jurisdiction-by-jurisdiction basis.
We have provided for income taxes on the undistributed earnings of our non-U.S. subsidiaries as of December 31, 2025, excluding Ireland and Israel, which are indefinitely reinvested. Accordingly, we are required to recognize deferred taxes for 2025 on the outside basis differences related to the foreign subsidiaries, the largest of these differences being undistributed earnings.
We assess all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and we determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of recognized tax benefit is still appropriate. The recognition and measurement of tax benefits require significant judgment. Judgments concerning the recognition and measurement of a tax benefit might change as new information becomes available.
Results of Operations
Years Ended December 31, 2025 and 2024
Revenue. Revenue for the years ended December 31, 2025 and 2024 was as follows (in thousands, except percentages):
Year ended
Increase/(decrease)
December 31,
from prior year
Product
Service
Total revenue
Segment revenue for the years ended December 31, 2025 and 2024 was as follows (in thousands):
Year ended
Year ended
December 31, 2025
December 31, 2024
Cloud and
IP Optical
Cloud and
IP Optical
Edge
Networks
Total
Edge
Networks
Total
Product
Service
Total revenue
The decrease in our product revenue in 2025 compared to 2024 was primarily the result of $13 million of lower sales of our Cloud and Edge products, while IP Optical sales remained flat. The decrease in revenue from the sale of Cloud and Edge products was primarily attributable to lower sales to enterprise customers, including U.S. Federal agencies.
Revenue from sales to enterprise customers was 34% and 39% of our product revenue in 2025 and 2024, respectively. These sales were made through both our direct sales team and indirect sales channel partners. The decrease in enterprise sales reflects lower sales of our products to customers in U.S. Federal agencies.
Revenue from indirect sales through our channel partner program was 31% and 38% of our product revenue in 2025 and 2024, respectively. The decrease in channel sales in 2025 reflects fewer IP Optical Networks deployments through systems integrators as well as sell-through service provider channel partners in Eastern Europe.
The timing of the completion of customer projects and revenue recognition criteria satisfaction may cause our product revenue to fluctuate from one period to the next.
Service revenue is primarily comprised of software and hardware maintenance and support (“maintenance revenue”) and network design, installation and other professional services (“professional services revenue”).
Service revenue for the years ended December 31, 2025 and 2024 was comprised of the following (in thousands, except percentages):
Year ended
Increase/(decrease)
December 31,
from prior year
Maintenance
Professional services
Total service revenue
Segment service revenue for the years ended December 31, 2025 and 2024 was comprised of the following (in thousands):
Year ended
Year ended
December 31, 2025
December 31, 2024
Cloud and
IP Optical
Cloud and
IP Optical
Edge
Networks
Total
Edge
Networks
Total
Maintenance
Professional services
Total service revenue
Total service revenue was $23 million higher in 2025 compared to 2024 due to increased revenue in both of our segments. Total service revenue increased by $19 million and $4 million in our Cloud and Edge and IP Optical Networks segments, respectively due to increased demand from service providers.
Maintenance revenue was $4 million lower in 2025 compared to 2024 primarily due to modestly lower renewal rates from decommissioning of older legacy equipment with several Cloud and Edge customers.
Professional services revenue was $27 million higher in 2025 compared to 2024, with increases of $25 million and $2 million in our Cloud and Edge and IP Optical Networks segments, respectively. The higher revenue in Cloud and Edge is due to the growth in services to U.S. service providers, primarily for voice modernization projects. Our IP Optical Networks segment experienced growth in sales of services primarily in EMEA and India.
The following customer contributed 10% or more of our revenue in the years ended December 31, 2025 and 2024:
Year ended
December 31,
December 31,
Customer
Verizon Communications Inc.
Revenue earned from customers domiciled outside the United States was 52% and 53% of total revenue in 2025 and 2024, respectively. U.S. revenue grew slightly year over year, increasing approximately $7 million across the Cloud and Edge and IP Optical Networks segments. 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. Our total revenue for the years ended December 31, 2025 and 2024 was disaggregated geographically as follows (in thousands):
Service
Service
revenue
Product
revenue
(professional
Year ended December 31, 2025
revenue
(maintenance)
services)
Total revenue
United States
Europe, Middle East and Africa
Asia Pacific
Other
Service
Service
revenue
Product
revenue
(professional
Year ended December 31, 2024
revenue
(maintenance)
services)
Total revenue
United States
Europe, Middle East and Africa
Asia Pacific
Other
Our deferred product revenue was $7 million at December 31, 2025 and $14 million at December 31, 2024. Our deferred service revenue was $149 million at December 31, 2025 and $126 million at December 31, 2024. 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.
We expect our total revenue in 2026 to increase compared to 2025, driven by growth in the Cloud and Edge segment, particularly from increased purchases by service providers as part of voice modernization projects and by enterprise customers. In our IP Optical segment, we anticipate continued revenue growth in 2026 from North America, partially offset by moderation in APAC.
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 years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year ended
Increase/(decrease)
December 31,
from prior year
Cost of revenue:
Product
Service
Amortization of acquired technology
Total cost of revenue
Gross profit
Gross margin
Our segment cost of revenue, gross profit and gross margin for the years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year ended
Year ended
December 31, 2025
December 31, 2024
Cloud and
IP Optical
Cloud and
IP Optical
Edge
Networks
Total
Edge
Networks
Total
Product
Service
Amortization of acquired technology
Total cost of revenue
Gross profit
Gross margin
Our gross margin was 2.9 percentage points lower in 2025 compared to 2024. This decrease was the result of lower margins in both of our segments, particularly due to higher professional services revenue related to voice Network Transformation programs. The lower margin in our IP Optical segment was due to regional mix. The lower margin in our Cloud and Edge segment was primarily attributable to product mix and a decrease in software sales.
We expect our consolidated gross margin to increase in 2026 due to revenue growth in our Cloud and Edge segment, which has higher margins due to the higher software content in its products. Improvements in our IP Optical segment gross margin are expected related to the projected product and geography mix.
Research and Development. 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 years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year ended
Decrease
December 31,
from prior year
The decrease in our research and development expenses in 2025 compared to 2024 was primarily attributable to approximately $2 million of lower expenses in our IP Optical Networks segment and approximately $1 million of higher expenses in our Cloud and Edge segment. The reduced expenses are a combination of lower employee expenses offset by higher non-US costs due to a weakening dollar.
Our IP Optical Networks R&D investment is focused on significantly 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.
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.
We believe that our R&D expenses will increase modestly in 2026 primarily due to higher employee and consulting costs related to supporting certain legacy products and development of our cloud native solutions.
Sales and Marketing. 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 years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year ended
Decrease
December 31,
from prior year
The decrease in our sales and marketing expenses in 2025 compared to 2024 was primarily attributable to lower commissions, partially offset by higher travel expenses and non-US costs due to a weakening dollar.
We believe our sales and marketing expenses will be relatively flat in 2026 as compared to 2025 with increases for employee-related variable compensation expenses offset by continued cost efficiencies.
General and Administrative. 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 years ended December 31, 2025 and 2024 were as follows (in thousands, except percentages):
Year ended
Decrease
December 31,
from prior year
The decrease in general and administrative expenses in 2025 compared to 2024 was primarily attributable to lower litigation expenses and variable employee costs, partially offset by higher stock compensation expense.
We believe that our general and administrative expenses will be relatively flat in 2026 as compared to 2025 with increases for employee-related variable compensation expenses offset by continued cost efficiencies.
Amortization of Acquired Intangible Assets included in Operating expenses. Amortization of acquired intangible assets included in Operating expenses (“Opex Amortization”) for the years ended December 31, 2025 and 2024 was as follows (in thousands, except percentages):
Year ended
Decrease
December 31,
from prior year
Opex Amortization was lower in 2025 compared to 2024 due to our method of amortization. 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.
Acquisition-, Disposal- and Integration-Related. Acquisition-, disposal- and integration-related expenses include those expenses related to acquisitions and disposals that we would otherwise not have incurred. Acquisition- and disposal-related
expenses include professional and services fees, such as legal, audit, consulting, paying agent and other fees. Integration-related expenses represent incremental costs related to combining our systems and processes with those of acquired businesses, such as third-party consulting and other third-party services.
We recorded $4.3 million in 2025 consisting of legal and professional fees associated with contemplated corporate development activities. We recorded no such costs in 2024.
Restructuring and Related. We have been committed to streamlining operations and reducing operating costs by closing and consolidating certain facilities and reducing our worldwide workforce. Please see the additional discussion of our restructuring initiatives in the “Restructuring and Cost Reduction Initiatives” section of the Overview of this MD&A.
We recorded restructuring and related expense of $19.7 million in 2025, comprised of $13.7 million of severance and related costs, and $6.0 million for variable and other facilities-related costs. In 2024, we recorded restructuring and related expense of $10.2 million, comprised of $4.1 million for severance and related costs, and $6.1 million for variable and other facilities-related costs. 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.
Interest Expense, net. Interest expense and interest income for the years ended December 31, 2025 and 2024 were as follows (in millions, except percentages):
Year ended
Increase
December 31,
from prior year
Interest income
Interest expense
Interest expense, net
We had an increase in interest income in 2025 due to a cash investment account established in late 2024. Our interest expense in 2025 primarily represents term debt interest, amortization of debt issuance costs and original issue discount and interest associated with factoring arrangements. Our interest expense in 2024 primarily represents term debt interest, amortization of debt issuance costs and original issue discount, interest associated with factoring arrangements and the amortization of gains in accumulated other comprehensive income (loss) (“AOCI”) from the sales of our interest rate swap. Interest expense in 2025 was higher than 2024 primarily due to higher margins under our 2024 Term Loan as compared to our 2020 Term Loan, and higher interest in 2025 due to our interest rate swap no longer being in place, partially offset by write-offs related to the refinancing of the 2020 Credit Facility with a portion of the proceeds from the 2024 Credit Facility on June 21, 2024. The write-offs related to the refinancing consisted of the remaining unamortized gains in AOCI from the sales of our interest rate swap totaling $4.9 million, partially offset by the write-off of debt issuance costs from the 2020 Credit Facility totaling $2.0 million. See Note 14 to our consolidated financial statements for a discussion of the sale of our interest rate swap.
Other Income (Expense), Net . Our other income, net in 2025 was $2.2 million and was primarily comprised of $6.0 million fair value adjustments to the Warrants offset by approximately $3.7 million foreign currency exchange losses. Our other expense, net in 2024 was $29.1 million and was primarily comprised of $9.1 million of fair value adjustments to the Preferred Stock and Warrants, $2.7 million of accrued dividends and the $1.8 million call premium on our Preferred Stock that we redeemed on June 25, 2024, $6.3 million write-off of an expired tax indemnity asset associated with the ECI Acquisition, and foreign currency exchange losses of $5.7 million.
Income Taxes. We recorded an income tax benefit of $84.7 million and an income tax provision of $8.2 million in 2025 and 2024, respectively. The increase in the income tax benefit is due to the tax benefit recognized on the tax-basis loss related to the Company’s investment in a subsidiary, which is not expected to recur in future periods.
During 2025 and 2024, we performed an analysis to determine if, based on all available evidence, we considered it more likely than not that some portion or all of the recorded deferred tax assets will not be realized in a future period. As a result of our evaluations, in 2025, for the U.S. deferred tax assets, we concluded that deferred tax assets are generally realizable, with the exception of certain federal and state net operating loss carryforwards, as well as certain tax credits, that are not anticipated to be utilized. Accordingly, we have maintained a valuation allowance on our U.S. deferred tax assets of $21.5 million, which
increased slightly over the prior year. As a result of our evaluations for Israel, we maintained a full valuation allowance against our net deferred tax assets in Israel.
In October 2021, the Organization for Economic Co-operation and Development (the "OECD") announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges arising from digitalization of the economy. In December 2021, the OECD released Pillar Two Model Rules defining the global minimum tax rules, which contemplate a minimum tax rate of 15% (“Pillar Two”). In addition, the OECD issued administrative guidance providing transition and safe harbor rules that could delay the impact of the minimum tax directive. Certain countries in which we operate have enacted legislation consistent with the OECD model rules effective beginning in 2024. We considered the applicable tax laws in relevant jurisdictions and concluded there was no material effect on our tax provision for the year ended December 31, 2025. We will continue to evaluate the potential effect of Pillar Two rules on our future reporting periods, but we do not expect Pillar Two to have a significant impact on our results of operations, financial position, or cash flows.
Years Ended December 31, 2024 and 2023
For a comparison of our results of operations for the fiscal years ended December 31, 2024 and 2023, see “Part II, Item 7. MD&A” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial position, changes in financial position, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Liquidity and Capital Resources
Our consolidated statements of cash flows are summarized as follows (in thousands):
Year ended
December 31,
December 31,
Change
Net income (loss)
Adjustments to reconcile net income (loss) to cash flows provided by operating activities
Changes in operating assets and liabilities
Net cash provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by financing activities
We had cash, cash equivalents, and restricted cash aggregating $98 million and $90 million at December 31, 2025 and 2024, respectively. We had cash held by our non-U.S. subsidiaries aggregating approximately $50 million and $18 million at December 31, 2025 and 2024, respectively. If we elect to repatriate all of the funds held by our non-U.S. subsidiaries as of December 31, 2025, we do not believe that the amounts of potential withholding taxes that would arise from the repatriation would have a material effect on our liquidity.
On June 21, 2024, we entered into a Senior Secured Credit Facilities Credit Agreement (the “2024 Credit Facility” or “2024 Credit Agreement”) as guarantor, with our wholly-owned subsidiary, Ribbon Communications Operating Company, Inc., as the borrower (“Borrower”), HPS Investment Partners, LLC ("HPS"), as administrative agent, and HPS and WhiteHorse Capital Management, LLC ("WhiteHorse" and, together with HPS, the "Lenders"), pursuant to which the Lenders provided us with a $385 million Credit Agreement comprised of (i) a $350 million term loan (the “2024 Term Loan”) and (ii) a $35 million revolving credit facility (the “2024 Revolver”), including a $20 million sublimit for letters of credit. The proceeds received from the 2024 Term Loan were used to (a) repay 100% of the amounts outstanding under the 2020 Credit Facility, (b) redeem in full the Preferred Stock and (c) pay fees and expenses related to the 2024 Credit Facility.
The 2024 Term Loan and the 2024 Revolver bear interest, at the Borrower’s option, at either the Alternate Base Rate (“ABR”) or Term Secured Overnight Financing Rate ("SOFR") with an Applicable Margin for each (all as defined in the 2024 Credit Facility). Margins for the first six months were 5.25% per annum for ABR Loans and 6.25% per annum for SOFR Loans. Thereafter, margins vary based on our Consolidated Net Leverage Ratio, ranging from 4.75% to 5.25% per annum for ABR Loans and 5.75% to 6.25% per annum for SOFR Loans. The 2024 Term Loan and the 2024 Revolver will both mature on June 21, 2029. The 2024 Term Loan is being repaid in equal quarterly installments: approximately $0.9 million beginning with the third quarter of 2024 through the second quarter of 2025; approximately $2.2 million beginning with the third quarter of 2025 and ending with the second quarter of 2027; and approximately $4.4 million quarterly thereafter, with the remaining principal balance of approximately $298.4 million due on the maturity date of June 21, 2029. In connection with the establishment of the 2024 Credit Facility, $7.7 million of original issue discount was withheld by the Lenders and we incurred $6.3 million of debt issuance costs for a total of $14.0 million that is being amortized to Interest expense, net over the term of the agreement.
Our previous credit facility was the Senior Secured Credit Facilities Credit Agreement (as amended, the "2020 Credit Facility"), which we entered into on March 3, 2020, by and among us, as a guarantor, Ribbon Communications Operating Company, Inc., as the borrower (the "Borrower"), Citizens Bank, N.A., Santander Bank, N.A., and others as lenders, ("2020 Credit Facility Lenders"). For additional details regarding the terms of the 2024 Credit Facility and 2020 Credit Facility, see Note 13 to our consolidated financial statements.
Quarterly principal payments were required on the 2020 Term Loan aggregating approximately $5.0 million per quarter through March 31, 2024, and if the refinancing had not occurred, $10.0 million would have been required in each of the three quarters thereafter, with the remaining and final payment due on the maturity date in March 2025.
At December 31, 2025, we had an outstanding balance under the 2024 Term Loan of $342.1 million at an average interest rate of 10.3%, with no revolver balance and no letters of credit outstanding under our 2024 Credit Facility. We were in compliance with all covenants of the 2024 Credit Facility at December 31, 2025 and 2024, respectively.
In the course of our business, we use letters of credit, bank guarantees and surety bonds (collectively, “Guarantees”). We had $11.1 million and $10.9 million of Guarantees under various uncommitted facilities as of December 31, 2025 and 2024, respectively. We had no letters of credit outstanding under the 2024 Credit Facility at December 31, 2025 and 2024. At December 31, 2025 and 2024, we had cash collateral of $1.7 million and $2.7 million, respectively, supporting the Guarantees, which are reported in Restricted cash in our consolidated balance sheets.
We are exposed to financial market risk related to foreign currency fluctuations and changes in interest rates. These exposures are actively monitored by management. To manage the volatility related to the exposure to changes in interest rates, we may enter into a derivative financial instrument. Management’s objective has been to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates. Our policies and practices are to use derivative financial instruments only to the extent necessary to manage exposures. We do not hold or issue derivative financial instruments for trading or speculative purposes.
As a result of exposure to interest rate movements, during March 2020, we entered into an interest rate swap arrangement, which effectively converted our $400 million term loan with its variable interest rate based upon one-month LIBOR to an aggregate fixed rate of 0.904%, plus a leverage-based margin as defined in the 2020 Credit Facility. On July 22, 2022, we sold $30 million of the notional amount of our interest rate swap back to our counterparty for $1.5 million, reducing the notional amount of this swap to $370 million. On August 16, 2022, we sold another $30 million of the notional amount of our interest rate swap back to our counterparty for $1.6 million, reducing the notional amount to $340 million, which approximated the term loan debt then outstanding. The gain in accumulated other comprehensive income (loss) related to the $60 million notional amount sold of $3.1 million was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense, the amortization of which totaled $0.4 million and $0.9 million for the year ended December 31, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive income (loss) of approximately $0.5 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024. On March 24, 2023, we received $9.4 million, consisting of $0.4 million of interest and $9.0 million for the sale of $170 million of our $340 million notional amount interest rate swap back to our counterparty, reducing the notional amount to $170 million. On March 27, 2023, we received $9.8 million, consisting of $0.4 million of interest and $9.4 million for the sale of the remaining $170 million of our interest rate swap back to our counterparty. The portion of the gain in accumulated other comprehensive income (loss) related to the term loan debt prepaid on the date of the final sale of our swap
totaled $7.3 million and was released into earnings immediately as Other expense, net. The portion of the gain in accumulated other comprehensive income (loss) related to our remaining term loan debt balance totaled $12.0 million and was being released into earnings on a straight line basis over the remaining term of the 2020 Credit Facility as a decrease to interest expense beginning in the second quarter of 2023, the amortization of which was $3.0 million and $4.7 million for the years ended December 31, 2024 and 2023, respectively. The remaining unamortized gain in accumulated other comprehensive income (loss) of $4.4 million was written off to interest expense in conjunction with the refinancing of the 2020 Credit Facility on June 21, 2024.
Our objectives in using interest rate derivatives have been to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we have used an interest rate swap as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of an agreement without exchange of the underlying notional amount.
The effective portion of changes in the fair value of designated derivatives that qualify as cash flow hedges is recorded in Accumulated other comprehensive income in the consolidated balance sheet and is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings. During the year ended December 31, 2023, such a derivative was used to hedge the variable cash flows associated with the outstanding borrowings under the 2020 Credit Facility and we accounted for this derivative as an effective hedge until the final portion of the swap was sold on March 27, 2023. Any ineffective portion of the change in fair value of the derivative would be recognized directly in earnings. However, we recorded no hedge ineffectiveness over the life of our swap. In the year ended December 31, 2023, we recorded $7.3 million of Other expense, net due to the sale of our interest rate swap arrangement.
In the second quarter of 2025, our Board approved a share repurchase program (the "2025 Repurchase Program" or the “Repurchase Program”) pursuant to which we are authorized to repurchase up to $50 million of our common stock prior to December 31, 2027. We repurchased 2.5 million shares in the year ended December 31, 2025, using $9.0 million with $41.0 million remaining for future repurchases as of December 31, 2025.
Cash Flows from Operating Activities
Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash flows from operating activities to be affected by increases and decreases in sales volumes and timing of collections, and by purchases and shipments of inventory. Our primary uses of cash from operating activities have been for personnel costs and investment in our research and development and in our sales and marketing, and general and administrative departments.
Our operating activities provided cash of $51.4 million in 2025, primarily a result of lower accounts receivable of $20.0 million and deferred revenue of $15.8 million. These amounts were partially offset by decreases in accrued expenses and other long-term liabilities, and accounts payable. Our net income of $39.6 million included adjustments for certain non-cash expenses, such as $44.2 million of amortization of intangible assets and $19.4 million of stock-based compensation. These adjustments were partially offset by deferred tax benefit of $85.6 million and a $6.0 million change in fair value of warrant liability. Higher revenue and lower operating expenses company-wide due to our various cost-saving initiatives, including lower employee and facilities expenses, continue to positively impact our operating cash flow.
Our operating activities provided cash of $50.2 million in 2024, primarily as a result of lower other operating assets and accounts receivable, the increase in the fair value of our preferred stock and warrant liabilities, and higher deferred revenue. These amounts were partially offset by lower accounts payable, accrued expenses and other long-term liabilities, and higher inventory. Our net loss was more than offset by adjustments for certain non-cash expenses, such as amortization of intangible assets and stock-based compensation. These adjustments were partially offset by a $6.7 million one-time payment of accumulated dividends as a result of our redemption of our Preferred Stock liability on June 25, 2024, $8.2 million of amortization of an accumulated other comprehensive gain related to our interest rate swap, and $16.9 million of deferred income tax expense. Higher revenue in our Cloud and Edge segment and lower operating expenses company-wide due to our various cost saving initiatives, including lower employee and facilities expenses, continue to positively affect our operating cash flow.
Cash Flows from Investing Activities
Our investing activities used cash of $25.3 million and $22.9 million in 2025 and 2024, respectively. Our investing activities were primarily used to purchase property and equipment. The increase in purchases of property and equipment in 2025 and 2024 is primarily due to the build out of a new facility in Israel.
Cash Flows from Financing Activities
Our financing activities used cash of $19.4 million in 2025 primarily due to $6.1 million of principal payments on our 2024 Term Debt and $9.0 million for the repurchase and retirement of our common stock under the 2025 Repurchase Program. In addition, we paid $4.4 million of tax obligations related to the vesting of stock awards and units.
Our financing activities provided cash of $37.7 million in 2024. We received $342.3 million of proceeds, net of $7.7 million of original issue discount, from the issuance of term debt under the 2024 Credit Facility that was established on June 21, 2024 to refinance the 2020 Credit Facility. Also, we had $44.1 million of both borrowings and principal payments under the 2020 Revolving Credit Facility. In conjunction with the establishment of the 2024 Credit Facility, we repaid the 2020 Term Debt amounting to $235.4 million, redeemed all of the outstanding Preferred Stock totaling $56.9 million, and paid $6.3 million in debt issuance costs. Also, we paid $1.8 million in principal payments on our 2024 Term Debt. In addition, we paid $4.3 million of tax obligations related to the vesting of stock awards and units.
The rate at which we consume cash is dependent upon the cash needs of our future operations, including our contractual obligations at December 31, 2025, primarily comprised of our debt principal and interest obligations as described above, and our operating lease and purchase obligations. Our operating lease obligations totaled $100.3 million at December 31, 2025, with payments to be made aggregating $18.0 million in 2026, $16.7 million in 2027, $14.0 million in 2028 and $51.6 million thereafter. Our purchase obligations totaled $105.8 million at December 31, 2025, with estimated payments aggregating $102.3 million in 2026 and $3.5 million thereafter. We anticipate devoting substantial capital resources to continue our R&D efforts, to maintain our sales, support and marketing, and for other general corporate activities. We believe that our financial resources, along with managing discretionary expenses, will allow us to manage the ongoing impact of inflation on our business operations. Looking ahead, we have developed contingency plans to reduce costs further if the situation deteriorates.
Based on our current expectations, we believe our current cash balances and available borrowings under the 2024 Credit Facility will be sufficient to meet our anticipated cash needs for working capital and capital expenditures for at least twelve months from the date of issuance of these financial statements.
Recent Accounting Pronouncements
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”), to clarify the appropriate accounting, reduce diversity in practice, and increase consistency across business entities. ASU 2025-10 will be effective for the Company beginning with our 2029 interim and annual financial statements, with early adoption permitted. The Company believes this ASU will have no material impact on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025‑09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025‑09”), to enhance hedge accounting guidance and better align it with entities’ risk management activities. The amendments expand eligibility for hedge accounting, simplify certain requirements, and address issues related to reference rate reform. Key changes include allowing cash flow hedge accounting for “choose‑your‑rate” debt instruments, introducing a principles‑based “similar risk exposure” criterion for grouping forecasted transactions, permitting component hedging for nonfinancial forecasted transactions, and clarifying the treatment of certain derivative structures. ASU 2025‑09 will be effective for the Company beginning with its 2027 interim and annual financial statements, with early adoption permitted. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). To clarify how the accounting guidance applies to both linear and nonlinear software development, this standard removes all references to “developments stages” from ASC 350-40. ASU 2025-06 will be effective for the Company beginning with its 2028 interim and annual
financial statements, with early adoption permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. ASU 2025-06 will be effective for the Company beginning with its 2026 interim and annual financial statements, with early adoption permitted. The Company believes this ASU will have no material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement, Reporting Comprehensive Income: Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The objective of this standard is to provide investors with information to better understand a public entity’s performance and prospects for future cash flows, and to compare their performance over time with that of other entities. ASU 2024-03 will be effective for us beginning with our 2027 annual financial statements and interim financial statements thereafter, with early adoption permitted. The adoption of ASU 2024-03 will require us to provide new footnote disclosure about the types of expenses that are included in certain captions on our Statements of Operations, such as Cost of revenue, Research and development, Sales and marketing, and General and administrative.
In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which increases the disclosures requirements around rate reconciliation information and certain types of income taxes companies are required to pay. ASU 2023-09, which the Company applied on a prospective basis, became effective beginning with this Annual Report on Form 10-K and includes the required additional income tax disclosures.
