Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $215 million, a 2% increase year over year, within the guidance range [24] - Year-to-date revenue increased by 6%, and EBITDA rose by 5% compared to the same period in 2024 [9][24] - Non-GAAP gross margin for Q3 was 52.6%, lower than expected due to reduced software sales to U.S. government customers [24] - Non-GAAP net income for the quarter was $7 million, down from $8 million in the prior year, resulting in a diluted EPS of $0.04 [27] Business Line Data and Key Metrics Changes - IP Optical Networks revenue for Q3 was $91 million, an 11% increase year over year, driven by strong sales in India and EMEA [28] - Cloud and Edge segment revenue was $124 million, a decrease of 3% year over year, primarily due to lower U.S. Federal sales [30] - Sales to service providers increased by 5% year over year, with Verizon's revenue growing approximately 20% [20][44] Market Data and Key Metrics Changes - Sales in Europe, Middle East, and Africa grew by 26% year over year, while Asia Pacific sales increased by 13%, led by India [13] - North American sales declined approximately 10% year over year, impacted by lower U.S. Federal sales due to the government shutdown [14][22] - IP Optical sales in North America were lower, but Europe and the Middle East saw significant growth, particularly in critical infrastructure projects [16][17] Company Strategy and Development Direction - The company is focusing on the convergence of AI and voice technologies, with the launch of the Acumen AIOps automation platform [5][6] - There is a strategic emphasis on modernizing voice and data networks for service providers and enterprises, with ongoing investments in cloud and edge solutions [13][20] - The company aims to expand its presence in the U.S. Federal market, despite current delays due to the government shutdown [12][90] 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 [10][12] - The outlook for Q4 is expected to be strong, with continued momentum in enterprise and service provider segments, despite the impact of the government shutdown [33][35] - The company anticipates revenue in Q4 to range from $230 million to $250 million, with adjusted EBITDA between $42 million and $48 million [37] Other Important Information - The company repurchased approximately 900,000 shares for a total cost of $3.5 million during the quarter [31] - The cash balance at the end of the quarter was $77 million, up $14 million from the previous quarter [31] Q&A Session Summary Question: Is AI a driver for future growth in Cloud and Edge? - Management views AI as a new category that will drive growth, particularly through AIOps and the convergence of voice and AI technologies [40][42] Question: How did Verizon perform in Q3 and what is the outlook? - Verizon grew about 20% year over year in Q3, with expectations for continued strong performance in Q4 [43][44] Question: What was the impact of the government shutdown on Q3 and Q4? - The shutdown impacted Q3 results, with management estimating a potential $10 million to $15 million effect on revenue for Q4 [79][82] Question: What is the expected growth rate for government business in 2026? - Management anticipates solid growth in government business as new projects are initiated, but specific growth rates are uncertain due to the current budget situation [90] Question: What is the impact of foreign exchange and tariffs? - Foreign exchange headwinds were approximately $3 million year over year, primarily due to the shekel's performance [54][56]