Aviat Networks(AVNW) - 2025 Q4 - Annual Report

PART I Cautionary Statement Regarding Forward-Looking Statements The 10-K contains forward-looking statements subject to risks and uncertainties, advising against undue reliance - The report contains forward-looking statements that are subject to risks and uncertainties, potentially causing actual results to differ materially from projections[14][15] - Readers are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of the filing date[17] - Key factors that may cause results to differ are detailed in 'Item 1A. Risk Factors'[16] Item 1. Business Aviat Networks is a global supplier of microwave and wireless access networking solutions, serving CSPs and private networks - Aviat Networks is a global supplier of microwave and wireless access networking solutions and services[19] - The company serves two principal customer types: Communications Service Providers (CSPs) and private network operators (e.g., government, utilities, public safety)[26] - Aviat's strategy focuses on three main elements: expanding its portfolio of wireless transport and access products, investing in software applications and services for network management, and investing in e-commerce through the 'Aviat Store' for lower costs and faster lead times[36][37][39] Overview and Description of the Business Aviat Networks designs and sells wireless transport and access networking products using microwave and millimeter wave technologies - Aviat Networks designs, manufactures, and sells wireless transport and access networking products, solutions, and services[22] - Products use microwave and millimeter wave technologies for point-to-point and point-to-multipoint wireless links, complemented by routers and cloud-based software for network management[24] - Wireless systems offer advantages over fiber optics in terms of faster deployment, lower cost in dense areas, suitability for rugged terrain or water crossings, and lower latency for time-sensitive applications[25] Market Overview Future demand for microwave and millimeter wave systems is driven by mobile/5G networks, rural broadband, and private network growth - Future demand for microwave and millimeter wave systems is influenced by mobile/5G networks, rural broadband, and private networks[28][29][32] - Mobile/5G Networks: Driven by 5G deployments, subscriber growth, connected devices (IoT), network densification, and geographic coverage expansion - Rural Broadband: Aviat equipment is used for middle-mile infrastructure builds to deliver broadband connectivity to rural and suburban communities - Private Networks: Demand from utility, public safety, energy and mining, government, financial institutions, and broadcast sectors for mission-critical applications Strategy Aviat's strategy focuses on sustainable, profitable growth by enhancing products, investing in software/services, and expanding e-commerce - Aviat aims for sustainable and profitable growth by addressing 5G market needs and strengthening its product/services portfolio[34][35] - Product Portfolio: Increase data-carrying capacity, reduce energy consumption, and lower TCO through R&D in wireless transport and access products - Software & Services: Invest in applications, tools, and services for network planning, deployment, operation, optimization, and performance assurance - E-commerce: Expand through the 'Aviat Store' and supporting supply chain for lower costs, faster lead times, and simpler purchasing for customers Products and Solutions Aviat offers a comprehensive portfolio of microwave and millimeter wave transport and access systems, designed for low TCO and future-proof networking - Aviat's product portfolio includes wireless transport and access systems for microwave and millimeter wave networking, supporting a wide range of frequencies (450 MHz to 90 GHz) and capacities (up to 20 Gbps)[42] - Key Product Families: CTR 8000 (routers for wireless transport), WTM 4000 (high-capacity, all-outdoor microwave radio, including Multi-Band solutions like WTM 4800, MB-XD, MB-MAX, MB-VA), RDL 3000 (ruggedized fixed/nomadic wireless access), Aprisa (hardened narrowband SCADA, LTE/5G modems), IRU 600 (ultra-high power indoor microwave radio), Pasolink (split-mount microwave), ProVision Plus (management software), and AviatCloud (hosted software/services) - Focus on Low TCO: Achieved through reduced rack space, lower power consumption, fewer stations, software-configurable upgrades, and advanced wireless features like Multi-Band - Future-proof Network: Solutions designed for smooth migration to Carrier Ethernet and IP/MPLS, protecting customer investments Business Operations Aviat uses direct and indirect sales, outsources manufacturing, manages a $323 million backlog, faces intense competition, and invests in R&D - Aviat's primary route to market is direct sales, supplemented by OEMs, system integrators, and indirect channels, including the 'Aviat Store' for online sales[43][44][45][46] - Manufacturing follows an outsourced model with partners in Asia and the U.S., certified to ISO 9001 and TL 9000 quality standards[50][51] Backlog (Fiscal 2024-2025) | Date | Backlog (Millions) | | :------------- | :----------------- | | June 27, 2025 | $323 | | June 28, 2024 | $292 | - Competition is strong from large mobile and IP network infrastructure manufacturers (e.g., Ericsson, Huawei, Nokia) and smaller specialist companies[56] Research and Development Expenditures (Fiscal 2023-2025) | Fiscal Year | R&D Expenditure (Millions) | % of Revenue | | :---------- | :------------------------- | :----------- | | 2025 | $35.8 | 8.2% | | 2024 | $36.4 | 8.9% | | 2023 | $24.9 | 7.2% | - As of June 27, 2025, Aviat owns approximately 244 U.S. patents and 159 international patents[65] - As of June 27, 2025, the Company had 923 employees globally, with 250 in the U.S., and focuses on attracting and retaining diverse talent through competitive compensation and benefits[21][75][76] Information about our Executive Officers This section provides biographical information for Aviat Networks' executive officers, including the President and CEO, CFO, and other key leaders - Peter A. Smith (59): President and CEO since January 2020, with prior leadership roles at JELD-WEN, Polypore International, and Voltaix Inc - Michael C. Connaway (44): CFO, responsible for worldwide finance. Notified resignation effective after fiscal 2025 10-K filing - Andrew M. Fredrickson (35): VP of Corporate Finance, appointed Interim CFO effective after fiscal 2025 10-K filing - Erin R. Boase (46): General Counsel, with experience in privacy, employment, compliance, and M&A from Lifesize, Cisco, Dell, and Thomson Reuters - Gary G. Croke (53): SVP, Product and Innovation, responsible for global marketing and product development, with over 25 years of experience in data and mobile communications Item 1A. Risk Factors This section outlines material risks to Aviat Networks' business, operations, and financial results, covering business, financial, legal, and general factors - Aviat Networks faces significant business risks that could materially and adversely affect its financial condition and results of operations, potentially leading to a decline in stock price[84] - Business and Operational Risks: Lengthy sales cycles, dependence on new product introductions, reliance on third-party service partners and contract manufacturers, intense competition, and challenges in attracting and retaining key personnel - Financial and Macroeconomic Risks: Susceptibility to political, economic, and geographic risks from international sales, foreign currency fluctuations, limitations on internal controls, and global economic conditions affecting customers and suppliers - Legal and Regulatory Risks: Inability to protect intellectual property, regulatory approvals for products, changing corporate governance and anti-bribery measures, potential liability claims, and evolving data privacy and cybersecurity laws - General Risk Factors: Exposure to natural disasters, catastrophic events, and system security risks like data breaches and cyberattacks Risk Factors Summary This summary overviews Aviat Networks' principal risks, categorized into business, financial, legal, and general factors - The company's principal risks are summarized across business and operational, financial and macroeconomic, legal and regulatory, and general categories[85] - Business and Operational: Lengthy sales cycles, new product acceptance, third-party service/manufacturing reliance, competition, and personnel retention - Financial and Macroeconomic: International sales risks, internal control limitations, capital access, global economic conditions, and tax law changes - Legal and Regulatory: Intellectual property protection, regulatory approvals, corporate governance, product liability, data privacy, and environmental regulations - General: Natural disasters, catastrophic events, and cybersecurity risks Item 1B. Unresolved Staff Comments Aviat Networks reported no unresolved staff comments from the SEC - There are no unresolved staff comments[176]