The following discussion and analysis of our financial condition and results of operations (“MD&A”) should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this document. In addition to historical information, the MD&A contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Note Regarding Forward-Looking Statements” and other risk factors contained in Part I, Item 1A “Risk Factors” in the 2025 Annual Report. Overview We are a global provider of secure application and network solutions that protect, optimize, and scale business-critical systems across on-premises, hybrid cloud, and edge environments. Our network infrastructure and security products are designed to enable large enterprises, service providers, and cloud platforms worldwide to deliver performance, reliability, and protection against cyber threats, while preparing their networks for the demands of AI and next-generation applications. We sell our solutions globally to service providers and enterprises who are looking to modernize and secure their digital infrastructure. Our service provider customers rely on scalable, efficient, and secure networks to deliver connectivity, cloud and other services that may generate revenue to their customers. Our enterprise customers require secure application delivery, AI-ready infrastructure, and are increasingly concerned about the landscape of cybersecurity threats across their complex networks. Our end-customers operate in a variety of industries, including telecommunications, technology, industrial, retail, financial, gaming, education and government. Since inception, our customer base has grown significantly. In February 2025, we acquired the assets and key personnel of ThreatX Protect, which expanded our cybersecurity portfolio with WAAP protection (web application and application programming interfaces). We offer protection under A10 Defend ThreatX Protect. In March 2025, the Company issued the 2030 Notes and received net proceeds from the offering of approximately $217.7 million. In June 2026, we acquired TrojAI, an AI security company focused on helping organizations secure, test and govern AI applications and agentic workflows. The acquisition strengthens the Company’s ability to deliver sovereign AI security, helping customers control how and where their AI models, data and agents are protected. On August 3, 2026, the Company issued a warrant to Microsoft Corporation in connection with the parties' commercial relationship. The warrant is designed to vest based on purchases by Microsoft and its affiliates of the Company’s products and services during measurement periods ending June 30, 2027 and June 30, 2028, and is intended to further align the parties' commercial interests. A10’s portfolio brings together secure application delivery, DDoS and API protection, and unified management into a cohesive platform that integrates with existing network architectures and leading public cloud environments. We deliver these capabilities through flexible deployment models, including software, cloud-native, and hardware form factors that are tailored to the scale and requirements of our customers. We generate revenue primarily from the sale of our secure networking and cybersecurity solutions and related support services. These offerings are delivered through a combination of direct and channel-based sales, with most customers purchasing maintenance and support alongside their initial deployment and renewing that support as contracts expire. We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software licenses and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and SaaS offerings. Revenue for term-based license agreements is recognized at a point in time when the Company delivers the software license to the customer and over time once the subscription term has commenced. For our SaaS offerings, our customers do not take possession of the Company’s software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized over time as the services are provided. A substantial portion of our revenue is from sales of our products and services through distribution channels, such as resellers and distributors. Our customers predominantly purchase PCS services in conjunction with purchases of our products. 29 We operate worldwide across the Americas, EMEA, and Asia Pacific, supported by a hybrid go-to-market model that combines a direct, high-touch sales organization with a broad ecosystem of distributors, resellers, and system integrators. We believe this sales approach allows us to obtain the benefits of channel distribution, such as expanding our market coverage, while still maintaining face-to-face relationships with our end-customers. We outsource the manufacturing of our hardware products to original design manufacturers. We perform quality assurance and testing at our San Jose, Taiwan and Japan distribution centers, as well as at our manufacturers’ locations. During the three months ended June 30, 2026, (i) 68% of our total revenue was generated from the Americas region, of which 65% was generated from the United States and 4% was generated from the Americas-other, (ii) 21% of our total revenue was generated from the APJ region and (iii) 11% of our total revenue was generated from the EMEA region. During the three months ended June 30, 2025, (i) 59% of our total revenue was generated from the Americas region, of which 55% was generated from the United States and 4% was generated from the Americas-other, (ii) 26% of our total revenue was generated from the APJ region and (iii) 15% of our total revenue was generated from the EMEA region. One of our priorities is to strengthen our sales efforts in North America. During the three months ended June 30, 2026 and 2025, our enterprise customers accounted for 60% and 40% of our total revenue, respectively, and our service provider customers accounted for 40% and 60% of our total revenue, respectively. During the six months ended June 30, 2026, (i) 68% of our total revenue was generated from the Americas region, of which 64% was generated from the United States and 4% was generated from the Americas-other, (ii) 20% of our total revenue was generated from the APJ region and (iii) 12% of our total revenue was generated from the EMEA region. During the six months ended June 30, 2025, (i) 55% of our total revenue was generated from the Americas region, of which 50% was generated from the United States and 5% was generated from the Americas-other, (ii) 27% of our total revenue was generated from the APJ region and (iii) 18% of our total revenue was generated from the EMEA region. One of our priorities is to strengthen our sales efforts in North America. During the six months ended June 30, 2026 and 2025, our enterprise customers accounted for 58% and 41% of our total revenue, respectively, and our service provider customers accounted for 42% and 59% of our total revenue, respectively. As a result of the nature of our target market and the current stage of our development, a substantial portion of our revenue comes from a limited number of large customers, including service providers and enterprise customers, in any period. Purchases by our ten largest end-customers accounted for 58% and 46% of our total revenue for the three months ended June 30, 2026 and 2025, respectively, and accounted for 55% and 42% of our total revenue for the six months ended June 30, 2026 and 2025, respectively. Sales to these large end-customers have typically been characterized by large but irregular purchases with long sales cycles. The timing of these purchases and the delivery of the purchased products are difficult to predict. Consequently, any acceleration or delay in anticipated product purchases by or deliveries to our largest customers could materially impact our revenue and operating results in any quarterly period. This may cause our quarterly revenue and operating results to fluctuate from quarter to quarter and make them difficult to predict. As of June 30, 2026, we had $54.7 million of cash and cash equivalents and $302.7 million of marketable securities. Cash provided by operating activities was $31.3 million during the six months ended June 30, 2026, compared to $39.4 million in the same period of 2025. We continue to invest in innovation that strengthens our leadership in secure infrastructure, expands our cybersecurity capabilities, and positions A10 at the intersection of network performance, protection, and AI-driven workloads. Our strategy is grounded in disciplined capital allocation and a commitment to deliver durable revenue growth, expanding recurring revenue, and strong cash flow generation. Enhanced U.S. tariffs, import/export restrictions and countermeasures taken by affected countries are contributing to macroeconomic volatility which in turn is impacting demand and our cost inputs. Spending patterns remain uneven due to the unpredictable impact of trade policies, and we may need to implement tariff-related input cost increases. 30 Results of Operations A summary of our condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025 is as follows (dollars in thousands): Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Net revenue: Products $ 49,024 61.2 % $ 39,173 56.5 % $ 9,851 25.1 % Services 31,113 38.8 30,210 43.5 903 3.0 Total net revenue 80,137 100.0 69,383 100.0 10,754 15.5 Cost of net revenue: Products 10,079 12.6 8,197 11.8 1,882 23.0 Services 6,677 8.3 6,475 9.3 202 3.1 Total cost of net revenue 16,756 20.9 14,672 21.1 2,084 14.2 Gross profit 63,381 79.1 54,711 78.9 8,670 15.8 Operating expenses: Sales and marketing 21,905 27.3 20,964 30.2 941 4.5 Research and development 21,153 26.4 16,256 23.4 4,897 30.1 General and administrative 11,299 14.1 7,180 10.3 4,119 57.4 Total operating expenses 54,357 67.8 44,400 64.0 9,957 22.4 Income from operations 9,024 11.3 10,311 14.9 (1,287) (12.5) Non-operating income (expense): Interest income 3,320 4.1 2,994 4.3 326 10.9 Interest and other income (expense), net (2,421) (3.0) (1,376) (2.0) (1,045) 75.9 Non-operating income, net 899 1.1 1,618 2.3 (719) (44.4) Income before provision for income taxes 9,923 12.4 11,929 17.2 (2,006) (16.8) Provision for income taxes 1,041 1.3 1,391 2.0 (350) (25.2) Net income $ 8,882 11.1 % $ 10,538 15.2 % $ (1,656) (15.7) % 31 Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Revenue: Products $ 93,010 60.0 % $ 75,152 55.5 % $ 17,858 23.8 % Services 62,127 40.0 60,368 44.5 1,759 2.9 Total revenue 155,137 100.0 135,520 100.0 19,617 14.5 Cost of revenue: Products 19,009 12.3 15,460 11.4 3,549 23.0 Services 13,023 8.4 12,654 9.3 369 2.9 Total cost of revenue 32,032 20.6 28,114 20.7 3,918 13.9 Gross profit 123,105 79.4 107,406 79.3 15,699 14.6 Operating expenses: Sales and marketing 41,919 27.0 40,509 29.9 1,410 3.5 Research and development 40,171 25.9 32,156 23.7 8,015 24.9 General and administrative 18,992 12.2 15,652 11.5 3,340 21.3 Total operating expenses 101,082 65.2 88,317 65.2 12,765 14.5 Income from operations 22,023 14.2 19,089 14.1 2,934 15.4 Non-operating income (expense): Interest income 6,704 4.3 4,784 3.5 1,920 40.1 Interest and other income (expense), net (4,580) (3.0) (1,466) (1.1) (3,114) 212.4 Total non-operating income, net 2,124 1.4 3,318 2.4 (1,194) (36.0) Income before provision for income taxes 24,147 15.6 22,407 16.5 1,740 7.8 Provision for income taxes 3,233 2.1 2,326 1.7 907 39.0 Net income $ 20,914 13.5 % $ 20,081 14.8 % $ 833 4.1 % Net Revenue We derive revenue from two sources: (i) products revenue, which includes hardware, perpetual software license and subscription offerings, which include term-based license agreements; and (ii) services revenue, which includes PCS, professional services, training and SaaS offerings. Our products revenue primarily consists of revenue from sales of our hardware appliances upon which our software is installed. Such software includes our ACOS software platform plus one or more of our ADC, CGN, TPS, SSLi or CFW solutions. Purchase of a hardware appliance includes a perpetual license to the included software. Additionally, a small portion of our products revenue comes from subscription revenue. We offer several products by subscription, primarily through either term-based license agreements or as a service through our cloud-based platform. With respect to sales of our hardware appliances, we recognize products revenue upon transfer of control, generally at the time of shipment, provided that all other revenue recognition criteria have been met. Revenue for term-based license agreements is recognized at a point in time when we deliver the software license to the customer and the subscription term has commenced. For our SaaS offerings, our customers do not take possession of our software but rather we provide access to the service via a hosting arrangement. Revenue in these arrangements is recognized ratably as the services are provided. As a percentage of revenue, our products revenue may vary from quarter to quarter based on, among other things, the timing of orders and delivery of products, cyclicality and seasonality, changes in currency exchange rates and the impact of significant transactions with unique terms and conditions. We generate services revenue from sales of PCS, which is bundled with sales of products and technical services. We offer tiered PCS services under renewable, fee-based PCS contracts, primarily including technical support, hardware repair and replacement parts, and software upgrades on a when-and-if-available basis. We recognize services revenue ratably over the term of the PCS contract, which is typically one year, but can be up to seven years. 32 A summary of our total revenue is as follows (dollars in thousands): Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Net revenue: Products $ 49,024 61 % $ 39,173 56 % $ 9,851 25 % Services 31,113 39 30,210 44 903 3 Total net revenue $ 80,137 100 % $ 69,383 100 % $ 10,754 15 % Net revenue by geographic region: Americas $ 54,764 68 % $ 41,192 59 % $ 13,572 33 % United States 51,763 64 % 38,318 55 % 13,445 35 % Americas-other 3,001 4 % 2,874 4 % 127 4 % APJ 16,734 21 % 17,939 26 % (1,205) (7) % EMEA 8,639 11 % 10,252 15 % (1,613) (16) % Total net revenue $ 80,137 100 % $ 69,383 100 % $ 10,754 15 % Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount Percent of Total Revenue Amount Percent of Total Revenue Amount Percent Net revenue: Products $ 93,010 60 % $ 75,152 55 % $ 17,858 24 % Services 62,127 40 60,368 45 1,759 3 Total net revenue $ 155,137 100 % $ 135,520 100 % $ 19,617 14 % Net revenue by geographic region: Americas $ 105,260 68 % $ 74,688 55 % $ 30,572 41 % United States 98,592 64 % 68,435 50 % 30,157 44 % Americas-other 6,668 4 % 6,253 5 % 415 7 % APJ 30,937 20 % 36,558 27 % (5,621) (15) % EMEA 18,940 12 % 24,274 18 % (5,334) (22) % Total revenue $ 155,137 100 % $ 135,520 100 % $ 19,617 14 % Three Months Ended June 30, 2026 and 2025 Total net revenue increased $10.8 million, or 15%, during the three months ended June 30, 2026, compared to the same period of 2025. Changes in revenue were due primarily to (i) an increase of $13.6 million in the Americas region, comprised of increases of $13.5 million in the United States and $0.1 million in Americas-other, (ii) a decrease of $1.2 million in the APJ region, and (iii) a decrease of $1.6 million in the EMEA region. The overall increase in revenue was attributable to a $20.2 million increase in revenue from enterprise customers, partially offset by a $9.5 million decrease in revenue from service provider customers during the three months ended June 30, 2026 compared to the same period of 2025. Products revenue increased $9.9 million, of which the Americas region increased $11.5 million, partially offset by decreases of $1.0 million in the APJ region and $0.7 million in the EMEA region for the three months ended June 30, 2026, compared to the same period of 2025. Services revenue increased $0.9 million, of which the Americas region increased $2.1 million, partially offset by decreases of $0.3 million in the APJ region and $0.9 million in the EMEA region for the three months ended June 30, 2026, compared to the same period of 2025. 33 Products revenue increased $9.9 million, or 25%, during the three months ended June 30, 2026 compared to the same period of 2025, as a result of an increase in demand from our enterprise customers in the Americas region. Services revenue increased $0.9 million, or 3%, during the three months ended June 30, 2026, compared to the same period of 2025, as a result of an increase in demand from our enterprise and service provider customers in the Americas region. During the three months ended June 30, 2026, $54.8 million, or 68% of total revenue, was generated from the Americas region, which represents a 33% increase in revenue compared to the same period of 2025. The increase was primarily due to higher products and services revenue due to an increase in demand from our enterprise customers in the Americas region. During the three months ended June 30, 2026, $16.7 million, or 21% of total revenue, was generated from the APJ region, which represents a 7% decrease compared to the same period of 2025. The decrease was primarily due to lower products and services revenue due to a decrease in demand from our enterprise and service provider customers in the APJ region. During the three months ended June 30, 2026, $8.6 million, or 11% of total revenue, was generated from the EMEA region, which represents a 16% decrease compared to the same period of 2025. The decrease was primarily due to lower products and services revenue due to a decrease in demand from our service provider customers in the EMEA region. Six Months Ended June 30, 2026 and 2025 Total net revenue increased $19.6 million, or 14%, during the six months ended June 30, 2026 and 2025, compared to the same period of 2025. Changes in revenue were due primarily to (i) an increase of $30.6 million in the Americas region, comprised of increases of $30.2 million in the United States and $0.4 million in Americas-other, (ii) a decrease of $5.6 million in the APJ region, and (iii) a decrease of $5.3 million in the EMEA region. The overall increase in revenue was attributable to a $35.3 million increase in revenue from enterprise customers, partially offset by a $15.7 million decrease in revenue from service provider customers during the six months ended June 30, 2026 and 2025 compared to the same period of 2025. Products revenue increased $17.9 million, of which the Americas region increased $26.9 million, partially offset by decreases of $4.6 million in the APJ region and $4.4 million in the EMEA region for the six months ended June 30, 2026 and 2025, compared to the same period of 2025. Services revenue increased $1.8 million, of which the Americas region increased $3.7 million, partially offset by decreases of $1.0 million in the APJ region and $0.9 million in the EMEA region for the six months ended June 30, 2026 and 2025, compared to the same period of 2025. Products revenue increased $17.9 million, or 24%, during the six months ended June 30, 2026 and 2025 compared to the same period of 2025, as a result of an increase in demand from our enterprise customers in the Americas region. Services revenue increased $1.8 million, or 3%, during the six months ended June 30, 2026 and 2025, compared to the same period of 2025, as a result of an increase in demand from our enterprise and service provider customers in the Americas region. During the six months ended June 30, 2026 and 2025, $105.3 million, or 68% of total revenue, was generated from the Americas region, which represents a 41% increase in revenue compared to the same period of 2025. The increase was primarily due to higher products and services revenue due to an increase in demand from our enterprise customers in the Americas region. During the six months ended June 30, 2026 and 2025, $30.9 million, or 20% of total revenue, was generated from the APJ region, which represents a 15% decrease compared to the same period of 2025. The decrease was primarily due to lower products and services revenue due to a decrease in demand from our enterprise and service provider customers in the APJ region. During the six months ended June 30, 2026 and 2025, $18.9 million, or 12% of total revenue, was generated from the EMEA region, which represents a 22% decrease compared to the same period of 2025. The decrease was primarily due to lower products and services revenue due to a decrease in demand from our service provider customers in the EMEA region. 34 Cost of Net Revenue, Gross Margin and Gross Profit Cost of Net Revenue Cost of products revenue is primarily comprised of cost of third-party manufacturing services and cost of inventory for the hardware component of our products. Our component suppliers change their selling prices frequently in response to market trends, including industry-wide increases in demand. Cost of products revenue also includes warehouse personnel costs, shipping costs, inventory write-downs, certain allocated facilities and information technology infrastructure costs, and expenses associated with logistics and quality control. Cost of services revenue is primarily comprised of personnel costs for our technical support, training and professional service teams. Cost of services revenue also includes the costs of inventory used to provide hardware replacements to end- customers under PCS contracts and certain allocated facilities and information technology infrastructure costs. A summary of our cost of net revenue is as follows (dollars in thousands): Three Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent Cost of net revenue: Products $ 10,079 $ 8,197 $ 1,882 23.0 % Services 6,677 6,475 202 3.1 Total cost of net revenue $ 16,756 $ 14,672 $ 2,084 14.2 % Six Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent Cost of net revenue: Products $ 19,009 $ 15,460 $ 3,549 23.0 % Services 13,023 12,654 369 2.9 Total cost of net revenue $ 32,032 $ 28,114 $ 3,918 13.9 % Products cost of revenue increased 23.0% during the three and six months ended June 30, 2026, compared to the same periods of 2025, primarily due product and regional mix. Services cost of revenue increased 3.1% during the three and six months ended June 30, 2026, and increased 2.9% during the six months ended June 30, 2026, compared to the same periods of 2025, primarily driven by an increase in personnel-related support costs and the mix of services delivered, which include technical support, training and service costs. Gross Margin Gross margin may vary and be unpredictable from period to period due to a variety of factors. These may include the mix of revenue from each of our regions, the mix of our products sold within a period, discounts provided to customers, cost of inventory for the hardware component of our products, inventory write-downs and foreign currency exchange rates. Our sales are generally denominated in U.S. Dollars; however, in Japan, our sales are denominated in Japanese Yen. Any of the factors noted above can generate either a favorable or unfavorable impact on gross margin. A summary of our gross profit and gross margin is as follows (dollars in thousands): 35 Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount Gross Margin Amount Gross Margin Amount Gross Margin Gross profit: Products $ 38,945 79.4 % $ 30,976 79.1 % $ 7,969 0.3 % Services 24,436 78.5 23,735 78.6 701 (0.1) Total gross profit $ 63,381 79.1 % $ 54,711 78.9 % $ 8,670 0.2 % Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount Gross Margin Amount Gross Margin Amount Gross Margin Gross profit: Products $ 74,001 79.6 % $ 59,692 79.4 % $ 14,309 0.2 % Services 49,104 79.0 47,714 79.0 1,390 — Total gross profit $ 123,105 79.4 % $ 107,406 79.3 % $ 15,699 0.1 % Products gross margin increased 0.3% to 79.4% during the three months ended June 30, 2026, and increased 0.2% to 79.6% during the six months ended June 30, 2026, compared to the same periods of 2025, primarily due to product and regional mix. Services gross margin decreased 0.1% to 78.5% for the three months ended June 30, 2026, and remained consistent at 79.0% during the six months ended June 30, 2026 compared to the same periods of 2025. Changes in services gross margin is primarily due to the mix of services delivered, which include technical support, training and service costs. Operating Expenses Our operating expenses consist of sales and marketing, research and development, general and administrative and restructuring expenses. The largest component of our operating expenses is personnel costs which consist of wages, benefits, 36 bonuses, and, with respect to sales and marketing expenses, sales commissions. Personnel costs also include stock-based compensation. A summary of our operating expenses is as follows (dollars in thousands): Three Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent Operating expenses: Sales and marketing $ 21,905 $ 20,964 $ 941 4.5 % Research and development 21,153 16,256 4,897 30.1 General and administrative 11,299 7,180 4,119 57.4 Total operating expenses $ 54,357 $ 44,400 $ 9,957 22.4 % Six Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent Operating expenses: Sales and marketing $ 41,919 $ 40,509 $ 1,410 3.5 % Research and development 40,171 32,156 8,015 24.9 General and administrative 18,992 15,652 3,340 21.3 Total operating expenses $ 101,082 $ 88,317 $ 12,765 14.5 % Sales and Marketing Sales and marketing expenses are our largest functional category of operating expenses and primarily consist of personnel costs. Sales and marketing expenses also include the cost of marketing programs, trade shows, consulting services, promotional materials, demonstration equipment, depreciation and certain allocated facilities and information technology infrastructure costs. Sales and marketing operating expenses increased $0.9 million, or 4.5%, in the three months ended June 30, 2026, and increased $1.4 million, or 3.5%, in the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in personnel costs. For the full year 2026, we expect sales and marketing expenses to increase modestly from 2025 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities. Research and Development Research and development efforts are focused on new product development and on developing additional functionality for our existing products. These expenses primarily consist of personnel costs, and, to a lesser extent, prototype materials, depreciation and certain allocated facilities and information technology infrastructure costs. We expense research and development costs as incurred. Research and development operating expenses increased $4.9 million, or 30.1%, in the three months ended June 30, 2026, and increased $8.0 million, or 24.9%, in the six months ended June 30, 2026, compared to the same periods in 2025, primarily due to an increase in personnel costs. For the full year 2026, we expect research and development expenses to increase from 2025 levels reflecting strategic investments in our growth priorities, including cybersecurity technology and AI technologies. General and Administrative General and administrative expenses primarily consist of personnel costs, professional services and office expenses. General and administrative personnel costs include executive, finance, human resources, information technology, facility and 37 legal related expenses. Professional services primarily consist of fees for outside accounting, tax, legal, recruiting and other administrative services. General and administrative operating expenses increased $4.1 million, or 57.4%, in the three months ended June 30, 2026, and increased $3.3 million, or 21.3%, in the six months ended June 30, 2026, compared to the same periods in 2025, primarily due to an increase in personnel costs. For the full year 2026, we expect general and administrative expenses to increase from 2025 levels as we continue to apply a disciplined approach to focus our investments in areas that offer the greatest opportunities. Non-Operating Income (Expense) Non-Operating income, net, consists primarily of interest income earned on our cash and cash equivalents and marketable securities, interest expense on the 2030 Notes, foreign currency exchange gains and losses and fair value adjustments on investments in publicly held equity securities. Foreign currency exchange gains and losses are primarily a result of fluctuations in the Japanese Yen versus the U.S. Dollar. Interest Income Interest income was $3.3 million and $3.0 million in the three months ended June 30, 2026 and 2025, respectively, and was $6.7 million and $4.8 million in the six months ended June 30, 2026 and 2025, respectively. Interest Expense Interest expense was $1.9 million and $1.9 million in the three months ended June 30, 2026 and 2025, respectively, and was $3.8 million and $2.2 million in the six months ended June 30, 2026 and 2025, respectively, and was related to our outstanding 2030 Notes that were issued in March 2025. Other Income (Expense) The Company recorded $0.6 million of net losses and $0.5 million of net gains in other income (expense) in the three months ended June 30, 2026 and 2025, respectively, and recorded $0.8 million of net losses and $0.7 million of net gains in other income (expense) in the six months ended June 30, 2026 and 2025, respectively, primarily from foreign currency exchange gains and losses from fluctuations in the Japanese Yen versus the U.S. Dollar. Provision for Income Taxes We recorded a provision for income taxes of $1.0 million and $1.4 million for the three months ended June 30, 2026 and 2025, respectively, and we recorded a provision for income taxes of $3.2 million and $2.3 million for the six months ended June 30, 2026 and 2025, respectively. The Company’s income tax provisions for the three and six months ended June 30, 2026 and 2025 primarily consisted of U.S. federal and state taxes. Liquidity and Capital Resources As of June 30, 2026, we had cash and cash equivalents of $54.7 million, including $3.5 million held outside the United States in our foreign subsidiaries, and $302.7 million of marketable securities. We currently do not have any plans to repatriate our earnings from our foreign operations. As of June 30, 2026, we had working capital of $108.7 million, retained earnings of $22.7 million and total stockholders’ equity of $238.0 million. Our marketable securities are highly liquid and are classified as available for sale should the Company decide to quickly raise cash at any time in the future. We plan to continue to invest for long-term growth, and our investment may increase. We believe that our existing cash and cash equivalents and marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months and beyond. Our future capital requirements will depend on many factors, including our growth rate, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the introduction of new and enhanced product and service offerings and the continuing market acceptance of our products. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected. We may also elect to raise additional financing to help us pursue our business and strategic objectives. Any additional financing could be dilutive to our existing stockholders. 38 In March 2025, the Company issued the 2030 Notes and received net proceeds from the offering of approximately $217.7 million. As described in Note 7 to the condensed consolidated financial statements included elsewhere in this Quarterly Report, the 2030 Notes are convertible into cash or a combination of cash and shares of common stock, at our election, upon the occurrence of certain circumstances specified in the indenture governing the 2030 Notes. One such circumstance was satisfied during the second quarter of 2026: for at least 20 trading days during the 30 consecutive trading days ending on the last trading day of such quarter, the last reported sale price of our common stock exceeded 130% of the applicable conversion price. As a result, holders of the 2030 Notes have the right, at their option, to convert their notes at any time during the third quarter of 2026 (from July 1, 2026 through September 30, 2026), and we reclassified the $219.5 million carrying amount of the 2030 Notes from long-term debt to a current liability on our condensed consolidated balance sheet as of June 30, 2026. Whether the 2030 Notes will become convertible again following the current conversion period and prior to December 1, 2029 (on and after which date they will become freely convertible) will depend on our common stock price or other conditions specified in the indenture in future periods, and we cannot predict whether, or to what extent, holders will elect to convert their 2030 Notes during the current or any future conversion period. If holders elect to convert their 2030 Notes, we may settle our conversion obligation in cash or a combination thereof, at our election. If holders elect to convert their 2030 Notes and we elect to settle all or a portion of our conversion obligation in cash, we would be required to use a portion of our cash, cash equivalents and marketable securities, which totaled $54.7 million and $302.7 million, respectively, as of June 30, 2026, or seek additional financing, to fund that obligation, and if we elect to settle any portion in shares of our common stock, such issuance would dilute the ownership interests of our existing stockholders. We believe our existing cash, cash equivalents and marketable securities, together with cash expected to be generated from operating activities, would be sufficient to satisfy a cash settlement obligation with respect to the 2030 Notes if holders were to elect to convert their notes during the current conversion period. However, the extent and timing of any such elections are outside of our control, and satisfying a significant cash settlement obligation could reduce the cash resources available to fund our other liquidity needs, including our stock repurchase programs and quarterly cash dividend, and could require us to seek additional financing on terms that may not be favorable to us, or at all. The Board of Directors has authorized various stock repurchase programs from time to time, including most recently, a twelve-month $50 million program approved November 7, 2023 (the “2023 Program”), a $50 million program approved November 7, 2024 (the “2024 Program”) and a $75 million program approved May 1, 2025 (the “2025 Program”). Under all programs, repurchased shares are held in treasury at cost. The Company’s stock repurchase programs do not obligate us to acquire any specific number of shares. Shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. During the year ended December 31, 2025, the Company repurchased 3.7 million shares for a total cost of $68.9 million under the 2024 and 2025 Programs. During the three months ended June 30, 2026, the Company did not repurchase any shares and during the six months ended June 30, 2026, the Company repurchased $17 thousand shares for a total cost of $317 thousand under the 2025 Program. In October 2021, the Board of Directors approved the initiation of a regular quarterly cash dividend on our common stock. The Company paid cash dividends of $0.06 per share outstanding, for a total of $4.3 million and $8.6 million in the three and six months ended June 30, 2026. The next dividend, in the amount of $0.06 per share, will be paid on September 1, 2026 to stockholders of record on August 17, 2026. We currently anticipate that we will continue to pay comparable quarterly cash dividends in the future. However, the payment, amount and timing of future dividends remain within the discretion of the Board of Directors and will depend upon our results of operations, financial condition, cash requirements, and other factors. As described in Part II – Item 1, “Legal Proceedings” of this Quarterly Report on Form 10-Q, from time to time we are involved in ongoing litigation. Any adverse settlements or judgments in any litigation could have a material adverse impact on our results of operations, cash balances and cash flows in the period in which such events occur. 39 Statements of Cash Flows The following table summarizes our cash flow related activities (in thousands): Six Months Ended June 30, 2026 2025 Cash provided by (used in): Operating activities $ 31,346 $ 39,384 Investing activities (36,015) (41,241) Financing activities (11,791) 159,652 Net increase (decrease) in cash and cash equivalents $ (16,460) $ 157,795 Cash Flows from Operating Activities Our cash provided by operating activities is driven primarily by sales of our products and management of working capital investments. Our primary uses of cash from operating activities have been for personnel-related expenditures, manufacturing costs, marketing and promotional expenses and costs related to our facilities. Our cash flows from operating activities will continue to be affected principally by the extent to which we increase spending on our business and our working capital requirements. During the six months ended June 30, 2026, cash provided by operating activities was $31.3 million, consisting of net income of $20.9 million, non-cash charges of $24.3 million and a decrease in cash resulting from the net change in operating assets and liabilities of $13.9 million. Our non-cash charges consisted primarily of depreciation and amortization expenses of $8.4 million and stock-based compensation expense of $13.8 million. The net change in our operating assets and liabilities primarily reflects cash outflows from the changes in inventory of $13.9 million, accounts receivable of $10.1 million, accrued and other liabilities of $8.0 million and prepaid expenses and other assets of $6.1 million, partially offset by cash inflows from accounts payable of $12.3 million and deferred revenue of $11.8 million. The unfavorable change in inventory was attributable to the timing of product shipments. The unfavorable change in accounts receivable was attributable to timing of billing and cash collections. The unfavorable change in accrued and other liabilities was primarily due to payments for variable compensation. The unfavorable change in prepaid expenses and other assets was attributable to an increase in prepaid accounting and marketing expenses. The favorable change in accounts payable was attributable to the timing of payments to vendors. The favorable change in deferred revenue was attributable to the timing of service contract bookings. During the six months ended June 30, 2025, cash provided by operating activities was $39.4 million, consisting of net income of $20.1 million, non-cash charges of $18.2 million and an increase in cash resulting from the net change in operating assets and liabilities of $1.1 million. Our non-cash charges consisted primarily of depreciation and amortization expenses of $7.1 million and stock-based compensation expense of $10.4 million. The net change in our operating assets and liabilities primarily reflects cash inflows from the changes in accounts receivable of $24.0 million and inventory of $1.6 million, partially offset by cash outflows from accounts payable of $6.4 million, deferred revenue of $6.3 million, accrued and other liabilities of $5.9 million and prepaid expenses and other current assets of $5.9 million. The favorable change in accounts receivable was attributable to timing of billing and cash collections. The favorable change in inventory was attributable to the timing of product shipments. The unfavorable change in accounts payable was attributable to the timing of payments to vendors. The unfavorable change in deferred revenue was attributable to the timing of service contract bookings. The unfavorable change in accrued and other liabilities was primarily due to a decrease in accrued variable compensation. The unfavorable change in prepaid expenses and other current assets was attributable to an increase in prepaid accounting and marketing expenses. Cash Flows from Investing Activities During the six months ended June 30, 2026, cash used in investing activities was $36.0 million, consisting of purchases of marketable securities of $112.2 million, cash paid for the acquisition of TrojAI of $34.7 million and capital expenditures of 40 $4.5 million, partially offset by sales and maturities of marketable securities of $115.4 million. See Note 5 for additional information regarding our acquisitions. During the six months ended June 30, 2025, cash used in investing activities was $41.2 million, consisting of purchases of marketable securities of $68.1 million, cash paid for the acquisition of ThreatX Protect of $19.1 million and capital expenditures of $8.7 million, partially offset by maturities of marketable securities of $54.7 million. See Note 5 for additional information regarding our acquisitions. Cash Flows from Financing Activities During the six months ended June 30, 2026, cash used in financing activities was $11.8 million, consisting of cash dividend payments of $8.6 million, the repurchase of common stock, including the withholding of shares to satisfy income tax withholding and remittance obligations resulting from the vesting of certain awards, of $4.9 million, partially offset by proceeds from issuance of common stock under employee equity incentive plans of $1.7 million. During the six months ended June 30, 2025, cash provided by financing activities was $159.7 million, consisting of proceeds from the sale on the Company’s 2030 Notes of $217.7 million, proceeds from common stock issued under the Company’s equity plans of $1.7 million, partially offset by repurchases of common stock, including the withholding of shares to satisfy income tax withholding and remittance obligations resulting from the vesting of certain awards, of $51.0 million and cash dividend payments of $8.8 million. Contractual Obligations Our contractual obligations consist of non-cancellable operating lease arrangements and totaled $6.6 million as of June 30, 2026. Our operating lease arrangements expire on various dates through April 2029. These arrangements require us to pay certain operating expenses, such as taxes, repairs and insurance, and contain renewal and escalation clauses. Critical Accounting Policies and Estimates Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. The Company’s critical accounting policies and estimates are disclosed in Part II – Item 7, “Critical Accounting Estimates” of the 2025 Annual Report. There have been no material changes to the Company’s critical accounting policies and estimates during the six months ended June 30, 2026.