Aviat Networks Inc.

11/10/2026 | Press release | Distributed by Public on 11/10/2026 07:09

Quarterly Report for Quarter Ending October 2, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q, including "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including without limitation statements of, about, concerning or regarding: our ability to maintain effective internal control over financial reporting and management systems; our plans, strategies and objectives for future operations, including with respect to growing our business and sustaining profitability; our restructuring efforts; our research and development efforts and new product releases and services; trends in revenue; drivers of our business and the markets in which we operate; future economic conditions, performance or outlook, and changes in our industry and the markets we serve; geopolitical tensions and conflicts; the outcome of contingencies; the value of our contract awards; beliefs or expectations; the sufficiency of our cash and our capital needs and expenditures; development and usage of artificial intelligence ("AI") and machine learning ("ML"); our intellectual property protection; our compliance with regulatory requirements and the associated expenses; expectations regarding litigation; our intention not to pay cash dividends; seasonality of our business; the impact of foreign exchange, inflation and economic uncertainty; taxes; the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; and assumptions underlying any of the foregoing. Forward-looking statements may be identified by the use of forward-looking terminology, such as "anticipates," "believes," "expects," "may," "should," "would," "will," "intends," "plans," "estimates," "strategy," "projects," "targets," "goals," "seeing," "delivering," "continues," "forecasts," "future," "predict," "might," "could," "potential," or the negative of these terms, and similar words or expressions.
These forward-looking statements are based on estimates reflecting the current beliefs of the senior management of Aviat Networks, Inc. ("Aviat," the "Company," "we," "us," and "our"). These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various important factors, including those set forth in this Quarterly Report on Form 10-Q.
See "Item 1A. Risk Factors" in the Company's fiscal 2026 Annual Report on Form 10-K filed with the SEC on August 27, 2026 for more information regarding factors that may cause its results to differ materially from those expressed or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q.
You should not place undue reliance on these forward-looking statements, which reflect our management's opinions only as of the date of the filing of this Quarterly Report on Form 10-Q. Forward-looking statements are made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), along with provisions of the Private Securities Litigation Reform Act of 1995, and we expressly disclaim any obligation, other than as required by law, to update any forward-looking statements to reflect further developments or information obtained after the date of filing of this Quarterly Report on Form 10-Q or, in the case of any document incorporated by reference, the date of that document.
Overview of Business; Operating Environment and Key Factors Impacting Fiscal 2027 and 2026 Results
The following Management's Discussion and Analysis ("MD&A") is intended to help the reader understand Aviat's results of operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, the Company's unaudited condensed consolidated financial statements and accompanying notes. In the discussion herein, the fiscal year ending July 2, 2027 is referred to as "fiscal 2027" or "2027" and the fiscal year ended July 3, 2026 is referred to as "fiscal 2026" or "2026."
Overview
Aviat is a global supplier of microwave networking and access networking solutions, backed by an extensive suite of professional services and support. Aviat designs and sells wireless transport and access networking solutions and services that enable mission-critical and business-critical communications networks. Aviat has more than 3,000 customers and significant relationships with global service providers and private network operators. Aviat's North America manufacturing base consists of a combination of contract manufacturing and assembly and testing operated in Austin, Texas by Aviat. Additionally, Aviat utilizes contract manufacturers based in Asia for much of its international equipment demand. Aviat's technology is underpinned by more than 370 patents. Aviat competes on the basis of Total Cost of Ownership ("TCO"), microwave radio expertise and solutions for mission critical communications.
Operations Review
The market for mobile backhaul continued to be the Company's primary addressable market segment globally in the first three months of fiscal 2027. In international markets, the Company's business continued to rely on a combination of customers increasing their capacity to handle subscriber growth and the ongoing build-out of some large long-term evolution ("LTE") and 5G deployments. Aviat's position continues to be to support its customers for 5G and LTE readiness and ensure that its technology roadmap is well aligned with evolving market requirements. Aviat's strength in turnkey and after-sale support services is a differentiating factor that wins business for the Company and enables it to expand its business with existing customers. Additionally, Aviat operates an e-commerce on-line platform, Aviat Store, that provides low-cost services, a simple experience, and fast delivery to mobile operators and private network customers.
Revenue
The Company manages its sales activities primarily on a geographic basis in North America and three international geographic regions: (1) Africa and the Middle East, (2) Europe, and (3) Latin America and Asia Pacific. Revenue by region for the three months ended October 2, 2026 and September 26, 2025 and the related changes were as follows:
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
North America $ 49,227 $ 52,647 $ (3,420) (6.5) %
Africa and the Middle East 14,387 12,796 1,591 12.4 %
Europe 7,807 7,560 247 3.3 %
Latin America and Asia Pacific 30,548 34,317 (3,769) (11.0) %
Total revenue $ 101,969 $ 107,320 $ (5,351) (5.0) %
Revenue in North America decreased by $3.4 million during the first quarter of fiscal 2027 compared with the same period of fiscal 2026 primarily due to a 9% decrease in equipment sales, partially offset by a 21% increase in software and licenses.
Revenue in Africa and the Middle East increased by $1.6 million during the first quarter of fiscal 2027 compared with the same period of fiscal 2026 primarily due to increases in software & licenses and field services, which increased 85% and 39%, respectively.
Revenue in Europe increased by $0.2 million during the first quarter of fiscal 2027 compared with the same period of fiscal 2026 primarily due to increases in field services of $1.0 million, partially offset by decreases in equipment sales of $0.8 million.
Revenue in Latin America and Asia Pacific decreased by $3.8 million during the first quarter of fiscal 2027 compared with the same period of fiscal 2026 primarily due to lower demand for software and licenses and field services of 47% and 28%, respectively, partially offset by an increase in equipment sales of 19%.
Gross Margin
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
Revenue $ 101,969 $ 107,320 $ (5,351) (5.0) %
Cost of revenue 71,811 71,657 154 0.2 %
Gross margin $ 30,158 $ 35,663 $ (5,505) (15.4) %
% of revenue 29.6 % 33.2 %
Product margin % 25.1 % 29.8 %
Service margin % 40.2 % 41.2 %
Gross margin for the first quarter of fiscal 2027 decreased by $5.5 million compared with the same quarter of fiscal 2026 primarily due to sales volumes and the mix of product and service offerings.
Research and Development
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
Research and development $ 7,143 $ 7,098 $ 45 0.6 %
% of revenue 7.0 % 6.6 %
Research and development expenses remained relatively consistent for the three months ended October 2, 2026 compared with the same period in fiscal 2026.
Selling and Administrative
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
Selling and administrative $ 22,136 $ 23,376 $ (1,240) (5.3) %
% of revenue 21.7 % 21.8 %
Selling and administrative expenses decreased by $1.2 million for the first quarter of fiscal 2027 compared with the same quarter of fiscal 2026 primarily due to lower administrative costs and cost management initiatives.
Interest Expense, net
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
Interest expense, net $ 1,878 $ 1,712 $ 166 9.7 %
Interest expense, net increased by $0.2 million for the first quarter of fiscal 2027 compared with the same quarter of fiscal 2026 primarily due to interest incurred on term loan borrowings obtained during fiscal 2026.
Other Expense, net
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
Other expense, net $ 1,304 $ 973 $ 331 34.0 %
Other expense, net increased by $0.3 million for the first quarter of fiscal 2027 compared with the same quarter of fiscal 2026 primarily as a result of foreign exchange movement.
Income Taxes
Three Months Ended
(In thousands, except percentages) October 2, 2026 September 26, 2025 $ Change % Change
(Loss) income before income taxes $ (2,303) $ 2,504 $ (4,807) (192.0) %
Provision for income taxes $ 512 $ 2,342 $ (1,830) (78.1) %
The Company estimates its annual effective tax rate at the end of each quarterly period and records the tax effect of certain discrete items in the interim period in which they occur, including changes in judgment about uncertain tax positions and deferred tax valuation allowances.
The tax expense for the first three months of fiscal 2027 and fiscal 2026 were primarily attributable to U.S. and profitable foreign subsidiaries.
Liquidity, Capital Resources, and Financial Strategies
Sources of Cash
As of October 2, 2026, the Company's total cash and cash equivalents were $55.4 million. Approximately $8.9 million was held in the United States. The remaining balance of $46.5 million, or 84%, was held outside the United States.
Operating Activities
Operating cash flows are presented as net (loss) income adjusted for certain non-cash items and changes in operating assets and liabilities. Net cash used in operating activities was $6.3 million for the first three months of fiscal 2027, compared with $11.7 million in the prior year. The $5.4 million increase is primarily attributable to favorable changes in working capital, including collections of accounts receivable and decreases in unbilled receivables, partially offset by the timing of accounts payable payments.
Investing Activities
Net cash used in investing activities was $0.9 million for the first three months of fiscal 2027, compared to $1.7 million in the prior year. The $0.8 million decrease is primarily due to lower purchases of property, plant and equipment in the current year.
Financing Activities
Financing cash flows consist primarily of borrowings and repayments under the Company's Credit Facility and proceeds from the exercise of employee stock options. Net cash used in financing activities was $11.7 million for the first three months of fiscal 2027, compared with net cash provided by financing activities of $18.5 million in the prior year. The $30.2 million decrease is primarily due to the absence of $20.0 million of term loan borrowings received in the prior year and net repayments under the revolving credit facility of $10.0 million in the current year.
As of October 2, 2026, the Company's principal sources of liquidity consisted of $55.4 million in cash and cash equivalents, $96.7 million of available credit under its Credit Facility, and future collections of receivables from customers. On August 28, 2025, the Company entered into an amendment under the Credit Facility to increase the Term Loan and Revolver commitments by $20.0 million for each instrument. The Company regularly requires letters of credit from certain customers, and, from time to time, these letters of credit are discounted without recourse shortly after shipment occurs in order to meet immediate liquidity requirements and to reduce its credit and sovereign risk. Historically, the Company's primary sources of liquidity have been cash flows from operations and credit facilities.
The Company believes that its existing cash and cash equivalents, the available borrowings under its Credit Facility and future cash collections from customers will be sufficient to provide for its anticipated requirements and plans for cash for at least the next 12 months. In addition, the Company believes these sources of liquidity will be sufficient to provide for its anticipated requirements and plans for cash beyond the next 12 months.
The Company borrowed $30.0 million and repaid $40.0 million against the Revolver during the first three months of fiscal 2027. There were no outstanding borrowings under the Revolver as of October 2, 2026. As of October 2, 2026, the Company had $86.4 million outstanding under its Term Loan. During the first three months of fiscal 2027, the Company repaid $1.2 million against the Term Loan. As of October 2, 2026, the Company was in compliance with all financial covenants contained in the Credit Facility.
Critical Accounting Estimates
For information about the Company's critical accounting estimates, see the "Critical Accounting Estimates" section of "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in its fiscal 2026 Annual Report on Form 10-K.
Aviat Networks Inc. published this content on November 10, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on November 10, 2026 at 13:13 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]