Earnings release
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ADTRAN Holdings, Inc. reports second quarter 2026 financial results Huntsville, Alabama, USA. — August 3, 2026 — ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) (“ADTRAN Holdings” “ADTRAN” or the “Company”) today announced its unaudited financial results for the second quarter ended June 30, 2026. • Revenue: $281.1 million, up 6.1 % year-over-year. • GAAP gross margin of 37.0%; non-GAAP gross margin of 40.7%. • GAAP operating margin of -3.6 %; non-GAAP operating margin of 3.8%. • Net cash provided by operating activities of $25.9 million. • GAAP diluted loss per share of $0.13; non-GAAP diluted earnings per share of $0.04. • Cash and cash equivalents of $79.2 million. ADTRAN Holdings Chairman and Chief Executive Officer Tom Stanton stated, “Demand across our end markets remained strong during the quarter led by the results of our Optical Networking Solutions business. While our second quarter results were affected by a specific set of near-term factors, it does not change the underlying strength or trajectory of our business.” Mr. Stanton added, “Our strategic priorities remain on track. We continue to gain momentum in optical networking while increasing diversity across cloud providers/hyperscalers, enterprise, and government customers, with revenue from these customers growing 47% year-over-year. We remain committed to our long-term operating model and remain confident that our strategy will deliver long-term shareholder value.” Business outlook1 For the third quarter of 2026, the Company expects revenue to be within a range of $275.0 million to $295.0 million. Non-GAAP operating margin is expected to be within a range of 1.5% to 5.5%. 1 Non-GAAP operating margin (which is calculated as non-GAAP operating income (loss) divided by revenue) is a non-GAAP financial measure. The Company has provided guidance for its third quarter 2026 non-GAAP operating margin. This measure excludes from the corresponding GAAP financial measure the effect of adjustments as described below. The Company has not provided a reconciliation of such non-GAAP guidance to guidance presented on a GAAP basis because it cannot predict and quantify without unreasonable effort all of the adjustments that may occur during the period due to the difficulty of predicting the timing and amounts of various items within a reasonable range. In particular, non-GAAP operating margin excludes certain items, such as acquisition related expenses, amortization and adjustments, stock-based compensation expense, deferred compensation adjustments, professional fees and other expenses, amortization of pension actuarial losses, the tax effect of these adjustments to net loss and purchases of property, plant and equipment, and developed technologies, that the Company is unable to quantitatively predict. Depending on the materiality of these items, they could have a significant impact on the Company's GAAP financial results. Conference call The Company will hold a conference call to discuss its second quarter 2026 results on Tuesday , August 4, 2026, at 7:30 a.m. Central Time (2:30 p.m. Central European Time). The Company will webcast this conference call at the events and presentations section of ADTRAN Holdings, Inc. Investor Relations website at https://events.q4inc.com/attendee/977314034 approximately 10 minutes before the start of the call, or you may dial 1-888-330-2391 (Toll-Free US) or 1-240-789-2702, and use Conference ID 8936454. An online replay of the Company’s conference call, as well as the transcript of the call, will be available on the Investor Relations site https://investors.adtran.com/shortly following the call and will remain available for at least 12 months. For more information, visit investors.adtran.com or email investor.relations@adtran.com. Upcoming conference schedule August 17, 2026: Rosenblatt Virtual Technology Summit - Virtual September 10, 2026: B. Riley TMT Conference – New York
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About Adtran ADTRAN Holdings, Inc. (NASDAQ: ADTN and FSE: QH9) is the parent company of Adtran, Inc., a leading global provider of open, disaggregated networking and communications solutions that enable voice, data, video and internet communications across any network infrastructure. From the cloud edge to the subscriber edge, Adtran empowers communications service providers around the world to manage and scale services that connect people, places and things. Adtran solutions are used by service providers , private enterprises, government organizations and millions of individual users worldwide. ADTRAN Holdings, Inc. is also the majority shareholder of Adtran Networks SE, formerly ADVA Optical Networking SE (“Adtran Networks”). Find more at Adtran.com, LinkedIn and X. Cautionary note regarding forward-looking statements Statements and graphics contained in this press release and the accompanying earnings call which are not historical facts, su ch as those relating to market trends, future demand across end markets, future demand driver growth (including with respect to expected hyperscale demand for data center interconnect and next -generation connectivity) and ADTRAN Holdings’ strategy, outlook and financial guidance, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can also generally be identified by the use of words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “may,” “could,” “look forward,” and similar expressions. In addition, ADTRAN Holdings, through its sen ior management, may from time to time make forward -looking public statements concerning the matters described herein. All such projections and other forward -looking information speak only as of the date hereof, and ADTRAN Holdings undertakes no duty to publicly update or revise such forward-looking information, whether as a result of new information, future events, or otherwise, except to the extent as may be required by law. All such forward -looking statements are estimates and reflect management’s best judgment based upon current information. Actual events or results may differ materially from those anticipated in these forward - looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors which have caused and may in the future cause actual events or results to differ materially from those estimated by ADTRAN Holdings include, but ar e not limited to: (i) risks and uncertainties relating to our ability to remain in compliance with the covenants set forth in and satisfy the payment obligations under our credit agreement and convertible notes, to satisfy our payment obligations to Adtran Networks’ minority shareholders under the Domination and Profit and Loss Transfer Agreement between us and Adtran Networks (the “DPLTA”), and to make payments to Adtran Networks in order to absorb its annual net loss pursuant to the DPLTA; (ii) the risk of fluctuations in revenue due to lengthy sales and approval processes required by major and other service providers for ne w products, as well as shifting customer spending patterns; (iii) risks and uncertainties related to our inventory practices and ability to match cu stomer demand; (iv) risks and uncertainties relating to our level of indebtedness and our ability to generate cash; (v) risks and uncertainties relating to ongoing material weaknesses in our internal control over financial reporting; (vi) risks posed by changes in gene ral economic conditions and monetary, fiscal and trade policies, including tariffs; (vii) risks and uncertainties relating to our international operations, including potential exposure to ongoing military conflicts (including the conflicts in Iran, Ukraine, and Israel and the surrounding areas); (viii) risks posed by potential breaches of information systems and cyber-attacks (ix) the risk that we may not be able to effectively compete, including through product improvements and development; and (x) the other risks set forth in our public filings made with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10- K for the year ended December 31, 2025, our Form 10 -Q for the quarterly period ended March 31, 2026, and our Form 10 -Q for the quarterly period ended June 30, 2026 to be filed with the SEC. Explanation of use of non-GAAP financial measures Set forth in the tables below under the heading “Supplemental Information” are reconciliations of cost of revenue, gross profit, gross margin, operating expenses, operating (loss) income, operating margin, other income (expense), net (loss) income inclusive of the non-controlling interest, net loss attributable to the Company, and loss per share - basic and diluted, attributable to the Company, and net cash provided by operating activities, in each case as reported based on generally accepted accounting principles in the United States (“GAAP”), to non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP other expense, non-GAAP net income inclusive of the non-controlling interest, non-GAAP net income (loss) attributable to the Company, non-GAAP net earnings (loss) per share - basic and diluted, attributable to the Company, and free cash flow, respectively. Such non-GAAP measures exclude acquisition-related expenses, amortizations and adjustments (consisting of intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations), stock-based compensation expense, professional fees and other expenses, restructuring expenses, deferred compensation adjustments, amortization of pension actuarial losses, the tax effect of these adjustments to net loss and purchases of property, plant and equipment, and developed technologies. These measures are used by management in our ongoing planning and annual budgeting processes. Additionally, we believe the presentation of these non-GAAP measures, when combined with the presentation of the most directly comparable GAAP financial measure, is beneficial to the overall understanding of ongoing operating performance of the Company. These non-GAAP financial measures are not prepared in accordance with, or an alternative for, GAAP and therefore should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Furthermore, our calculation of non-GAAP measures may not be comparable to similar measures calculated by other companies.
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Published by ADTRAN Holdings, Inc. www.adtran.com Media contact Gareth Spence +44 1904 699 358 public.relations@adtran.com Investor contact Rob Fink investor.relations@adtran.com
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Condensed Consolidated Balance Sheets (Unaudited) (In thousands) June 30, December 31, 2026 2025 Assets Current Assets Cash and cash equivalents $ 79,236 $ 95,696 Accounts receivable, net 205,761 210,687 Other receivables 9,066 7,046 Inventory, net 208,778 215,736 Income tax receivable 3,537 3,667 Prepaid expenses and other current assets 60,432 55,317 Short-term investments - deferred compensation 39,075 35,174 Assets held for sale 11,901 11,901 Total Current Assets 617,786 635,224 Property, plant and equipment, net 123,002 124,384 Goodwill 58,336 59,983 Intangible assets, net 269,488 294,047 Deferred tax assets 16,223 16,481 Other non-current assets 64,110 73,352 Long-term investments 1,016 1,022 Total Assets $ 1,149,961 $ 1,204,493 Liabilities, Redeemable Non-Controlling Interest and Equity Current Liabilities Accounts payable $ 169,322 $ 167,337 Unearned revenue 78,711 87,541 Accrued expenses and other liabilities 24,702 33,690 Accrued wages and benefits 25,613 32,203 Deferred compensation liability 42,653 37,447 Income tax payable 3,804 3,642 Total Current Liabilities 344,805 361,860 Non-current revolving credit agreement 25,000 25,000 Non-current convertible senior notes, net of debt issuance costs 193,822 193,038 Deferred tax liabilities 26,491 27,453 Non-current unearned revenue 24,959 27,143 Non-current pension liability 6,357 6,277 Non-current lease obligations 23,842 27,000 Other non-current liabilities 16,028 17,564 Total Liabilities 661,304 685,335 Redeemable Non-Controlling Interest 359,160 373,328 Equity Common stock 815 802 Additional paid-in capital 805,882 801,269 Accumulated other comprehensive income 64,194 78,877 Retained deficit (736,379 ) (730,010 ) Treasury stock (5,015 ) (5,108 ) Total Equity 129,497 145,830 Total Liabilities, Redeemable Non-Controlling Interest and Equity $ 1,149,961 $ 1,204,493
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Condensed Consolidated Statements of Loss (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Revenue Network Solutions $ 232,898 $ 219,498 $ 470,839 $ 421,715 Services & Support 48,248 45,570 96,393 91,097 Total Revenue 281,146 265,068 567,232 512,812 Cost of Revenue Network Solutions 157,585 147,321 312,233 281,562 Services & Support 19,610 18,823 38,060 37,150 Total Cost of Revenue 177,195 166,144 350,293 318,712 Gross Profit 103,951 98,924 216,939 194,100 Selling, general and administrative expenses 60,243 60,347 116,079 110,632 Research and development expenses 53,779 51,895 104,556 100,754 Operating Loss (10,071 ) (13,318 ) (3,696 ) (17,286 ) Interest and dividend income 397 201 697 327 Interest expense (4,234 ) (4,564 ) (8,475 ) (9,325 ) Net investment loss 5,274 3,075 4,424 1,389 Other income (expense), net 718 (2,636 ) 1,981 (1,692 ) Loss Before Income Taxes (7,916 ) (17,242 ) (5,069 ) (26,587 ) Income tax expense (788 ) (1,016 ) (2,705 ) (619 ) Net Loss $ (8,704 ) $ (18,258 ) $ (7,774 ) $ (27,206 ) Less: Net Income attributable to non-controlling interest (1) 2,201 2,273 4,452 4,592 Net Loss attributable to ADTRAN Holdings, Inc. $ (10,905 ) $ (20,531 ) $ (12,226 ) $ (31,798 ) Weighted average shares outstanding – basic 80,948 79,748 80,639 79,642 Weighted average shares outstanding – diluted 80,948 79,748 80,639 79,642 Loss per common share attributable to ADTRAN Holdings, Inc. – basic (2) $ (0.13 ) $ (0.24 ) $ (0.14 ) $ (0.38 ) Loss per common share attributable to ADTRAN Holdings, Inc. – diluted (2) $ (0.13 ) $ (0.24 ) $ (0.14 ) $ (0.38 ) (1) For the three and six months ended June 30, 2026 we accrued $2.1 million and $4.3 million, respectively, of net income attributable to non-controlling interest, representing the recurring cash compensation earned by non -controlling interest shareholders po st- DPLTA. For the three and six months ended June 30, 2025 we accrued $2.4 million and $4.8 million, respectively, of net income attributable to non -controlling interest, representing the recurring cash compensation earned by non -controlling interest shareholders post-DPLTA. (2) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $0.6 million and $0.9 million effect of redemption of RNCI for the three and six months ended June 30, 2026. Loss per common share attributable to ADTRAN Holdi ngs, Inc. - basic and diluted - reflects a $1.5 million effect of redemption of RNCI for the three and six months ended June 30, 2025.
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Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ (7,774 ) $ (27,206 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 50,478 44,990 Amortization of debt issuance cost 746 639 Amortization of convertible notes issuance costs 784 — Gain on investments, net (4,530 ) (1,506 ) Net loss on disposal of property, plant and equipment 82 24 Stock-based compensation expense 4,670 5,888 Deferred income taxes (413 ) 1,189 Inventory reserves 277 9,176 Changes in operating assets and liabilities: Accounts receivable, net 1,758 25,754 Other receivables (2,872 ) 1,416 Income taxes receivable, net 2,733 (2,349 ) Inventory 3,422 29,594 Prepaid expenses, other current assets and other assets 426 6,095 Accounts payable 10,941 (6,242 ) Accrued expenses and other liabilities (20,468 ) (11,305 ) Income taxes payable (1,675 ) (816 ) Net cash provided by operating activities 38,585 75,341 Cash flows from investing activities: Purchases of property, plant and equipment (16,440 ) (12,084 ) Intangibles - internally developed technology (16,737 ) (20,444 ) Proceeds from sales and maturities of available-for-sale investments 812 727 Purchases of available-for-sale investments (141 ) (243 ) Payments for beneficial interests in securitized accounts receivable (478 ) (49 ) Net cash used in investing activities (32,984 ) (32,093 ) Cash flows from financing activities: Tax withholdings related to stock-based compensation settlements (1,604 ) (1,223 ) Proceeds from stock option exercises 6,612 1,163 Payments on financing agreement (1,400 ) — Redemption of redeemable non-controlling interest (13,766 ) (19,363 ) Payment of annual recurring compensation to non -controlling interest (8,881 ) — Proceeds from draw on revolving credit agreements — 24,000 Repayment of revolving credit agreements — (24,000 ) Payment of debt issuance cost — (64 ) Net cash used in financing activities (19,039 ) (19,487 ) Net (decrease) increase in cash and cash equivalents (13,438 ) 23,761 Effect of exchange rate changes (3,022 ) 6,489 Cash and cash equivalents, beginning of period 95,696 76,021 Cash and cash equivalents, end of period $ 79,236 $ 106,271 Supplemental disclosure of cash financing activities: Cash paid for interest expense $ 5,016 $ 8,049 Cash paid for income taxes, net $ 2,573 $ 4,155 Cash used in operating activities related to operating leases $ 4,819 $ 5,236 Supplemental disclosure of non-cash investing and financing activities: Redemption of redeemable non-controlling interest $ 885 $ 1,491 Right-of-use assets obtained in exchange for lease obligations $ 1,094 $ 3,538 Purchases of property, plant and equipment included in accounts payable $ 436 $ 1,450
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Supplemental Information Reconciliation of Cost of Revenue Gross Profit and Gross Margin to Non-GAAP Cost of Revenue, Non-GAAP Gross Profit and Non-GAAP Gross Margin (Unaudited) (In thousands) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2026 2026 2025 2026 2025 Total Revenue $ 281,146 $ 286,086 $ 265,068 $ 567,232 $ 512,812 Cost of Revenue $ 177,195 $ 173,098 $ 166,144 $ 350,293 $ 318,712 Acquisition-related expenses, amortizations and adjustments (1) (9,949 ) (10,021 ) (10,599 ) (19,970 ) (20,430 ) Stock-based compensation expense (181 ) (140 ) (222 ) (321 ) (489 ) Professional fees and other expenses (2) (438 ) — — (438 ) — Non-GAAP Cost of Revenue $ 166,627 $ 162,937 $ 155,323 $ 329,564 $ 297,793 Gross Profit $ 103,951 $ 112,988 $ 98,924 $ 216,939 $ 194,100 Non-GAAP Gross Profit $ 114,519 $ 123,149 $ 109,745 $ 237,668 $ 215,019 Gross Margin 37.0 % 39.5 % 37.3 % 38.2 % 37.9 % Non-GAAP Gross Margin 40.7 % 43.0 % 41.4 % 41.9 % 41.9 % (1) Includes intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations. We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non -GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure. (2) Included in cost of revenue on the condensed consolidated statements of loss. Includes $0.4 million in related employee e xit costs.
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Supplemental Information Reconciliation of Operating Expenses to Non-GAAP Operating Expenses (Unaudited) (In thousands) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2026 2026 2025 2026 2025 Operating Expenses $ 114,022 $ 106,613 $ 112,242 $ 220,635 $ 211,386 Acquisition-related expenses, amortizations and adjustments (1) (1,630 ) (2) (1,641 ) (6) (2,175 ) (9) (3,271 ) (13) (4,424 ) (16) Stock-based compensation expense (2,675 ) (3) (1,679 ) (7) (2,451 ) (10) (4,354 ) (14) (5,394 ) (17) Restructuring expenses — — 284 (11) — 284 (11) Deferred compensation adjustments (4) (5,494 ) 11 (3,034 ) (5,483 ) (1,487 ) Professional fees and other expenses (307 ) (5) (30 ) (8) (3,153 ) (12) (337 ) (15) (3,153 ) (18) Non-GAAP Operating Expenses $ 103,916 $ 103,274 $ 101,713 $ 207,190 $ 197,212 (1) We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non-GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure. (2) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $1.4 million is included in selling, general and administrative expenses and $0.2 million is included in research and development expenses on the condensed consolidated statements of loss. (3) $2.0 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the condensed consolidated statements of loss. (4) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss. (5) Included in selling, general and administrative and research and development expenses on the condensed consolidated statements of loss. Includes $0.1 million in one-time professional fees and business expenses, $1.6 million in related employee exit costs and offset by a $1.4 million reversal of a provision in connection with a 401(k) plan corrective action which the Company received a compliance statement from the IRS approving a retroactive amendment to correct the matter. (6) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $1.4 million is included in selling, general and administrative expenses and $0.2 million is included in research and development expenses on the condensed consolidated statements of loss. (7) $1.2 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss. (8) Included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes one-time professional fees and business expenses. (9) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $1.7 million is included in selling, general and administrative expenses and $0.5 million is included in research and development expenses on the condensed consolidated statements of loss acquired in connection with business combinations. (10) $1.8 million is included in selling, general and administrative expenses and $0.7 million is included in research and development expenses on the condensed consolidated statements of loss. (11) Includes true-up of expenses for a Business Efficiency Program designed to optimize the assets and business processes following the business combination with Adtran Networks. Other than the Company's aim of selling buildings of its headquarters, the Business Efficiency Program was completed as of December 31, 2024. (12) $3.2 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes professional fees related to an internal investigation and related employee exit costs, fees relating to other one-time professional fees and business expenses. (13) $2.9 million is included in selling, general and administrative expenses and $0.4 million is included in research and development expenses on the condensed consolidated statements of loss. (14) $3.2 million is included in selling, general and administrative expenses and $1.2 million is included in research and development expenses on the condensed consolidated statements of loss.
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(15) Included in selling, general and administrative and research and development expenses on the condensed consolidated statements of loss. Includes $0.1 million in one-time professional fees and business expenses, $1.6 million in related employee exit costs and offset by a $1.4 million reversal of a provision in connection with a 401(k) plan corrective action which the Company received a compliance statement from the IRS approving a retroactive amendment to correct the matter. (16) Includes intangible amortization of developed technology, customer relationships, and trade names acquired in connection with business combinations, of which $3.5 million is included in selling, general and administrative expenses and $0.9 million is included in research and development expenses on the condensed consolidated statements of loss. (17) $3.8 million is included in selling, general and administrative expenses and $1.6 million is included in research and development expenses on the condensed consolidated statements of loss. (18) $3.2 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes professional fees related to an internal investigation and related employee exit costs, fees relating to other one-time professional fees and business expenses.
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Supplemental Information Reconciliation of Operating (Loss) Income and Operating Margin to Non-GAAP Operating Income and Non-GAAP Operating Margin (Unaudited) (In thousands) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2026 2026 2025 2026 2025 Total Revenue $ 281,146 $ 286,086 $ 265,068 $ 567,232 $ 512,812 Operating (Loss) Income $ (10,071 ) $ 6,375 $ (13,318 ) $ (3,696 ) $ (17,286 ) Acquisition related expenses, amortizations and adjustments (1) 11,579 11,662 12,774 23,241 24,854 Stock-based compensation expense 2,856 1,819 2,673 4,675 5,883 Restructuring expenses — — (284 ) — (284 ) Deferred compensation adjustments (2) 5,494 (11 ) 3,034 5,483 1,487 Professional fees and other expenses 745 (3) 30 (4) 3,153 (5) 775 (3) 3,153 (5) Non-GAAP Operating Income $ 10,603 $ 19,875 $ 8,032 $ 30,478 $ 17,807 Operating Margin -3.6 % 2.2 % -5.0 % -0.7 % -3.4 % Non-GAAP Operating Margin 3.8 % 6.9 % 3.0 % 5.4 % 3.5 % (1) Includes intangible amortization of backlog, developed technology, customer relationships, and trade names acquired in connection with business combinations. We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non -GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non-GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure. (2) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for certain employees, all of which is included in selling, general and administrative expenses on the condensed consolidated statement of loss. (3) Included in cost of revenue, selling, general and administrative and research and development expenses on the condensed consolidated statements of loss. Includes $0.1 million in one -time professional fees and business expenses, $2.0 million in related employee exit costs and offset by a $1.4 million reversal of a provision in connection with a 401(k) plan corrective action w hich the Company received a compliance statement from the IRS approving a retroactive amendment to correct the matter. (4) Included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes one-time professional fees and business expenses. (5) Included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes professional fees related to an internal investigation and related employee exit costs, fees relating to other one -time professional fee s and business expenses.
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Supplemental Information Reconciliation of Other Income (Expense) to Non-GAAP Other Expense (Unaudited) (In thousands) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2026 2026 2025 2026 2025 Interest and dividend income $ 397 $ 300 $ 201 $ 697 $ 327 Interest expense (4,234 ) (4,241 ) (4,564 ) (8,475 ) (9,325 ) Net investment gain (loss) 5,274 (850 ) 3,075 4,424 1,389 Other income (expense), net 718 1,263 (2,636 ) 1,981 (1,692 ) Total Other Income (Expense) $ 2,155 $ (3,528 ) $ (3,924 ) $ (1,373 ) $ (9,301 ) Deferred compensation adjustments (1) (5,154 ) 1,012 (2,968 ) (4,142 ) (1,319 ) Pension expense (2) (20 ) (20 ) 11 (40 ) 22 Non-GAAP Other Expense $ (3,019 ) $ (2,536 ) $ (6,881 ) $ (5,555 ) $ (10,598 ) (1) Includes non-cash change in fair value of equity investments held in the ADTRAN Holdings, Inc. Deferred Compensation Program for Employees. (2) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countrie s.
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Supplemental Information Reconciliation of Net (Loss) Income inclusive of Non-Controlling Interest to Non-GAAP Net Income inclusive of Non-Controlling Interest (Unaudited) and Reconciliation of Net Loss attributable to ADTRAN Holdings, Inc. and Loss per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted to Non-GAAP Net Income (Loss) attributable to ADTRAN Holdings, Inc. and Non-GAAP Earnings (Loss) per Common Share attributable to ADTRAN Holdings, Inc. – Basic and Diluted (Unaudited) (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2026 2026 2025 2026 2025 Net Loss attributable to ADTRAN Holdings, Inc. common stockholders $ (10,321 ) $ (1,020 ) $ (19,037 ) $ (11,341 ) $ (30,307 ) Effect of redemption of RNCI (1) (584 ) (301 ) (1,494 ) (885 ) (1,491 ) Net Loss attributable to ADTRAN Holdings, Inc. $ (10,905 ) $ (1,321 ) $ (20,531 ) $ (12,226 ) $ (31,798 ) Net Income attributable to non-controlling interest (2) 2,201 2,251 2,273 4,452 4,592 Net (Loss) Income inclusive of non-controlling interest $ (8,704 ) $ 930 $ (18,258 ) $ (7,774 ) $ (27,206 ) Acquisition related expenses, amortizations and adjustments (3) 11,579 11,662 12,774 23,241 24,854 Stock-based compensation expense 2,856 1,819 2,673 4,675 5,883 Deferred compensation adjustments (4) 340 1,001 66 1,341 168 Pension adjustments (5) (20 ) (20 ) 11 (40 ) 22 Restructuring expenses(6) — — (284 ) — (284 ) Professional fees and other expenses 745 (7) 30 (8) 3,153 (9) 775 (7) 3,153 (9) Tax effect of adjustments to net loss (1,765 ) (2,509 ) 388 (4,274 ) (1,592 ) Non-GAAP Net Income inclusive of non-controlling interest $ 5,031 $ 12,913 $ 523 $ 17,944 $ 4,998 Net Income attributable to non-controlling interest (2) 2,201 2,251 2,273 4,452 4,592 Non-GAAP Net Income (Loss) attributable to ADTRAN Holdings, Inc. $ 2,830 $ 10,662 $ (1,750 ) $ 13,492 $ 406 Effect of redemption of RNCI (1) 584 301 1,494 885 1,491 Non-GAAP Net Income (Loss) attributable to ADTRAN Holdings, Inc. common stockholders $ 3,414 $ 10,963 $ (256 ) $ 14,377 $ 1,897 Weighted average shares outstanding – basic 80,948 80,321 79,748 80,639 79,642 Weighted average shares outstanding – diluted 80,948 80,321 79,748 80,639 79,642 Loss per common share attributable to ADTRAN Holdings, Inc. – basic $ (0.13 ) $ (0.01 ) $ (0.24 ) $ (0.14 ) $ (0.38 ) Loss per common share attributable to ADTRAN Holdings, Inc. – diluted $ (0.13 ) $ (0.01 ) $ (0.24 ) $ (0.14 ) $ (0.38 ) Non-GAAP Earnings (Loss) per common share attributable to ADTRAN – basic $ 0.04 $ 0.14 $ (0.00 ) $ 0.18 $ 0.02 Non-GAAP Earnings (Loss) per common share attributable to ADTRAN – diluted $ 0.04 $ 0.14 $ (0.00 ) $ 0.18 $ 0.02 (1) Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $0.6 million and $0.9 million effect of redemption of RNCI for the three and six months ended June 30, 2026. Loss per common share attributable to ADTRAN Holdi ngs, Inc. - basic and diluted - reflects a $1.5 million effect of redemption of RNCI for the three and six months ended June 30, 2025. Loss per common share attributable to ADTRAN Holdings, Inc. - basic and diluted - reflects a $0.3 million effect of redemption of RNCI for the three months ended March 31, 2026. (2) Represents the non -controlling interest portion of the Company's ownership of Adtran Networks pre -DPLTA and the annual recurring compensation earned by redeemable non-controlling interests and accrued by the Company post-DPLTA. (3) We incur charges relating to the amortization of intangible assets and exclude these charges for purposes of calculating our non-GAAP measures. Such charges are significantly impacted by the timing and magnitude of our acquisitions. We exclude these charges for the purpose of calculating our non -GAAP measures, primarily because they are noncash expenses and our internal benchmarking analyses evidence that many industry participants and peers present non -GAAP financial measures excluding intangible asset amortization. Although this does not directly affect our cash position, the loss in value of intangible assets over time can have a material impact on the equivalent GAAP earnings measure.
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(4) Includes non-cash change in fair value of equity investments held in deferred compensation plans offered to certain employees. (5) Includes amortization of actuarial losses related to the Company's pension plan for employees in certain foreign countries. (6) Includes reduced previously accrued cost for the Company's Business Efficiency Program, which was designed to optimize t he assets and business processes following the business combination with Adtran Networks. The Business Efficiency Program was completed as of December 31, 2024. (7) Included in cost of revenue, selling, general and administrative and research and development expenses on the condensed consolidated statements of loss. Includes $0.1 million in one -time professional fees and business expenses, $2.0 million in related employee exit costs and offset by a $1.4 million reversal of a provision in connection with a 401(k) plan corrective action w hich the Company received a compliance statement from the IRS approving a retroactive amendment to correct the matter. (8) Included in selling, general and administrative expenses on the condensed consolidated statements of loss. Includes one-time professional fees and business expenses. (9) $3.2 million is included in selling, general and administrative expenses on the condensed consolidated statements of loss . Includes professional fees related to an internal investigation and related employee exit costs, fees relating to other one -time professional fees and business expenses. Supplemental Information Reconciliation of Net Cash Provided By Operating Activities to Free Cash Flow (Unaudited) (In thousands) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, June 30, 2026 2026 2025 2026 2025 Net cash provided by operating activities $ 25,915 $ 12,670 $ 32,160 $ 38,585 $ 75,341 Purchases of property, plant and equipment and developed technologies (1) (17,237 ) (15,940 ) (13,833 ) (33,177 ) (32,528 ) Free cash flow (Non-GAAP) $ 8,678 $ (3,270 ) $ 18,327 $ 5,408 $ 42,813 (1) Purchases related to capital expenditures and developed technologies.