Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $215 million, a 2% increase year over year, within the guidance range [17] - Year-to-date revenue increased by 6%, and EBITDA rose by 5% compared to the same period in 2024 [6][17] - Non-GAAP gross margin was 52.6%, lower than expected due to reduced software sales to U.S. government customers [17] - Adjusted EBITDA for Q3 was $29 million, a $1 million decrease from the prior year [18] Business Line Data and Key Metrics Changes - IP Optical Networks revenue was $91 million, an 11% increase year over year, with a positive EBITDA contribution of $1 million [19] - Cloud and Edge revenue decreased by 3% year over year to $124 million, with adjusted EBITDA down $10 million year over year [20] - Sales to service providers increased by 5% year over year, while enterprise sales were down approximately 3% year over year [7][14] Market Data and Key Metrics Changes - Sales in Europe, Middle East, and Africa grew 26% year over year, while Asia-Pacific sales increased by 13% [9] - North American sales declined approximately 10% year over year, primarily due to lower U.S. federal sales [9] - Sales to India increased by 31% year over year, contributing to strong growth in the Asia-Pacific region [11] Company Strategy and Development Direction - The company is focusing on AI ops and automation through its new Acumen platform, which aims to help customers transition to autonomous networks [4][5] - Continued investment in voice and data network modernization is expected to drive growth across service provider and enterprise customers [8][24] - The company anticipates strong demand for its Cloud and Edge and IP Optical Networks businesses, despite short-term disruptions [8][26] Management's Comments on Operating Environment and Future Outlook - Management noted that the U.S. government shutdown has delayed procurement processes but emphasized that no business has been lost [8][34] - The outlook for Q4 is expected to be strong, with a projected revenue range of $230 to $250 million and non-GAAP adjusted EBITDA of $42 to $48 million [26] - Management remains optimistic about the growth potential in data centers and critical infrastructure investments [26] Other Important Information - The company repurchased approximately 900,000 shares for a total cost of $3.5 million during the quarter [21] - The company is experiencing foreign exchange headwinds of approximately $3 million year over year, primarily due to the shekel [38] Q&A Session Summary Question: Impact of AI on Cloud and Edge growth - Management views AI as a new category that will drive growth in Cloud and Edge, allowing customers to build their own smart agents [30][31] Question: Performance of Verizon and U.S. IP Optical business - Verizon grew about 20% year over year in Q3, with a focus on services rather than products [32] - U.S. IP Optical business is expected to be lumpy, with revenue fluctuating based on project timing [33] Question: Shutdown impact on Q3 and Q4 - Management indicated that the shutdown impacted Q3 results, and they would have comfortably met guidance without it [34][54] Question: Foreign exchange and tariff impacts - Foreign exchange impacts were approximately $3 million, while tariffs posed a smaller headwind of about $0.5 million per quarter [37][39] Question: Government business growth expectations - Management expects solid growth in government business as new projects are initiated, despite current uncertainties [56][58] Question: BEAD funding and outlook - Management is cautiously optimistic about BEAD funding but has not factored it significantly into the outlook yet [62] Question: New product innovation with Acumen - The Acumen platform is generating significant interest, and management is exploring how to categorize it within their business segments [66][67]