Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 30, 2018,~~October 26, 2021, the registrant had ~~82,373,785~~86,006,357 shares of common stock, $0.001 par value per share, ~~issued and~~ outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “should,” “expects,” “plans,” “anticipates,” “would,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations include:

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

	March 31,			December 31,			September 30,			December 31,
	2018			2017			2021			2020
Assets
Current assets:
Cash and cash equivalents	$	307,095		$	260,820		$	156,460		$	157,455
Accounts receivable, net of provision for doubtful accounts of $692 as of March 31, 2018 and December 31, 2017		88,866			122,634
Accounts receivable, net of provision for doubtful accounts of $121 and $58 as of September 30, 2021 and December 31, 2020, respectively								80,863			94,124
Inventory		29,354			36,148			91,853			101,204
Prepaid expenses and other current assets		3,920			5,151			4,485			3,864
Prepaid income taxes		1,811			538			19,956			14,087
Total current assets		431,046			425,291			353,617			370,734
Property and equipment, net		29,166			29,363			24,647			28,880
Accounts receivable, net of current portion		4,326			4,710			—			143
Deferred tax assets		8,719			9,718			1,704			1,150
Goodwill								50,177			50,177
Intangible assets, net								32,661			35,844
Other assets		612			615			7,435			6,038
Total assets	$	473,869		$	469,697		$	470,241		$	492,966
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,741		$	15,833		$	22,841		$	41,203
Accrued expenses and other current liabilities		34,920			48,250			33,368			39,793
Accrued income taxes		1,818			118			4,020			7,463
Deferred revenue		27,820			34,224			15,857			15,531
Current portion of long-term debt, net of unamortized debt issuance costs		2,161			2,156			8,421			15,171
Total current liabilities		81,460			100,581			84,507			119,161
Accrued income taxes, net of current portion		9,085			8,810			11,359			9,520
Deferred tax liabilities								6,504			7,282
Deferred revenue, net of current portion		16,576			14,691			5,072			3,520
Long-term debt, net of current portion and unamortized debt issuance costs		294,915			295,459			274,672			276,085
Other liabilities, net of current portion								1,582			1,024
Total liabilities		402,036			419,541			383,696			416,592
Commitments and contingencies (Note 15)
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000 shares authorized as of March 31, 2018 and December 31, 2017; no shares issued and outstanding as of March 31, 2018 and December 31, 2017		—			—
Common stock, $0.001 par value; 500,000 shares authorized as of March 31, 2018 and December 31, 2017; 81,801 and 81,043 shares issued and outstanding as of March 31, 2018 and December 31, 2017, respectively		82			81
Preferred stock, $0.001 par value; 5,000 shares authorized as of September 30, 2021 and December 31, 2020; 0shares issued and outstanding as of September 30, 2021 and December 31, 2020								—			—
Common stock, $0.001 par value; 500,000 shares authorized; 87,678 and 85,329 shares issued as of September 30, 2021 and December 31, 2020, respectively; 85,956 and 83,607 shares outstanding as of September 30, 2021 and December 31, 2020, respectively								88			85
Treasury stock, at cost; 1,722 shares								(4,826	)		(4,826	)
Additional paid-in capital		131,536			128,798			191,399			183,041
Accumulated other comprehensive income		1,356			194			467			337
Accumulated deficit		(61,141	)		(78,917	)		(100,583	)		(102,263	)
Total stockholders’ equity		71,833			50,156			86,545			76,374
Total liabilities and stockholders’ equity	$	473,869		$	469,697		$	470,241		$	492,966

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

Three Months Ended March 31,

2018

2017

Revenue:

Product

$
80,189

$
65,209

Service

8,885

7,520

Total revenue

89,074

72,729

Cost of revenue:

Product

25,780

19,132

Service

1,339

1,257

Total cost of revenue

27,119

20,389

Gross profit

61,955

52,340

Operating expenses:

Research and development

20,530

14,468

Sales and marketing

11,268

10,080

General and administrative

7,188

4,995

Total operating expenses

38,986

29,543

Income from operations

22,969

22,797

Other income (expense):

Interest income

1,095

504

Interest expense

(4,672
)

(4,193
)
Gain (loss) on foreign currency, net

(24
)

30

Other income, net

201

119

Total other income (expense), net

(3,400
)

(3,540
)
Income before provision for income taxes

19,569

19,257

Provision for income taxes

1,793

1,103

Net income

17,776

18,154

Other comprehensive income—foreign currency translation adjustment

1,162

239

Comprehensive income

$
18,938

$
18,393

Net income attributable to common stockholders:

Basic

$
17,776

$
7,588

Diluted

$
17,776

$
8,643

Net income per share attributable to common stockholders:

Basic

$
0.22

$
0.23

Diluted

$
0.19

$
0.20

Weighted-average shares used to compute net income per share attributable
to common stockholders:

Basic

81,629

33,618

Diluted

93,594

43,299

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

Common Stock

Additional
Paid-in

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders’

Shares

Amount

Capital

Income

Deficit

Equity

Balances at January 1, 2018

81,043

$
81

$
128,798

$
194

$
(78,917
)

$
50,156

Exercise of stock options and common stock issued
upon vesting of equity awards

758

1

674

—

—

675

Foreign currency translation adjustment, net
of tax of $0

—

—

—

1,162

—

1,162

Stock-based compensation

—

—

2,064

—

—

2,064

Net income

—

—

—

—

17,776

17,776

Balances at March 31, 2018

81,801

$
82

$
131,536

$
1,356

$
(61,141
)

$
71,833

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Revenue:
Product	$	87,752		$	93,741		$	262,019		$	239,627
Service		11,467			12,006			34,207			33,093
Total revenue		99,219			105,747			296,226			272,720
Cost of revenue:
Product		57,372			51,947			150,515			130,602
Service		1,223			1,206			3,532			3,741
Total cost of revenue		58,595			53,153			154,047			134,343
Gross profit		40,624			52,594			142,179			138,377
Operating expenses:
Research and development		21,578			21,823			63,479			63,722
Selling, general and administrative		21,029			21,630			64,492			67,731
Total operating expenses		42,607			43,453			127,971			131,453
(Loss) income from operations		(1,983	)		9,141			14,208			6,924
Other income (expense):
Interest income		80			170			297			847
Interest expense		(3,969	)		(3,771	)		(11,886	)		(12,706	)
(Loss) gain on foreign currency, net		(375	)		(6	)		(1,353	)		674
Other income, net		83			338			634			435
Total other income (expense), net		(4,181	)		(3,269	)		(12,308	)		(10,750	)
(Loss) income before (benefit from) provision for income taxes		(6,164	)		5,872			1,900			(3,826	)
(Benefit from) provision for income taxes		(5,288	)		2,399			220			(5,433	)
Net (loss) income		(876	)		3,473			1,680			1,607
Other comprehensive (loss) income—foreign currency translation adjustment, net of tax		(127	)		1,334			130			916
Other comprehensive loss—gain on foreign currency hedge net of tax		—			(527	)		—			—
Comprehensive (loss) income	$	(1,003	)	$	4,280		$	1,810		$	2,523
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.01	)	$	0.04		$	0.02		$	0.02
Diluted	$	(0.01	)	$	0.04		$	0.02		$	0.02
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders:
Basic		85,660			83,302			84,985			83,437
Diluted		85,660			85,466			88,948			85,370

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

	Common Stock				Treasury Stock					Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount			Capital		Income			Deficit			Equity
Balances at June 30, 2021		87,116	$	87		1,722	$	(4,826	)	$	185,809	$	594		$	(99,707	)	$	81,957
Exercise of stock options and common stock issued upon vesting of equity awards, net of shares withheld for employee taxes		562		1		—		—			1,704		—			—			1,705
Foreign currency translation adjustment		—		—		—		—			—		(127	)		—			(127	)
Stock-based compensation		—		—		—		—			3,886		—			—			3,886
Net loss		—		—		—		—			—		—			(876	)		(876	)
Balances at September 30, 2021		87,678	$	88		1,722	$	(4,826	)	$	191,399	$	467		$	(100,583	)	$	86,545

	Common Stock				Treasury Stock					Additional Paid-in			Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount			Capital			Income		Deficit			Equity
Balances at January 1, 2021		85,329	$	85		1,722	$	(4,826	)	$	183,041		$	337	$	(102,263	)	$	76,374
Exercise of stock options and common stock issued upon vesting of equity awards, net of shares withheld for employee taxes		2,349		3		—		—			(2,787	)		—		—			(2,784	)
Foreign currency translation adjustment		—		—		—		—			—			130		—			130
Stock-based compensation		—		—		—		—			11,145			—		—			11,145
Net income		—		—		—		—			—			—		1,680			1,680
Balances at September 30, 2021		87,678	$	88		1,722	$	(4,826	)	$	191,399		$	467	$	(100,583	)	$	86,545

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

	Common Stock				Treasury Stock					Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount			Capital		Loss			Deficit			Equity
Balances at June 30, 2020		84,856	$	85		1,722	$	(4,826	)	$	175,496	$	(2,113	)	$	(128,930	)	$	39,712
Exercise of stock options and common stock issued upon vesting of equity awards, net of shares withheld for employee taxes		389		—		—		—			390		—			—			390
Cash flow hedges		—		—		—		—			—		(527	)		—			(527	)
Foreign currency translation adjustment		—		—		—		—			—		1,334			—			1,334
Stock-based compensation		—		—		—		—			3,496		—			—			3,496
Net income		—		—		—		—			—		—			3,473			3,473
Balances at September 30, 2020		85,245	$	85		1,722	$	(4,826	)	$	179,382	$	(1,306	)	$	(125,457	)	$	47,878

	Common Stock				Treasury Stock					Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount			Capital		Loss			Deficit			Equity
Balances at January 1, 2020		84,333	$	84		495	$	(1,795	)	$	169,561	$	(2,222	)	$	(127,064	)	$	38,564
Exercise of stock options and common stock issued upon vesting of equity awards, net of shares withheld for employee taxes		912		1		—		—			316		—			—			317
Foreign currency translation adjustment		—		—		—		—			—		916			—			916
Repurchases of treasury shares		—		—		1,227		(3,031	)		—		—			—			(3,031	)
Stock-based compensation		—		—		—		—			9,505		—			—			9,505
Net income		—		—		—		—			—		—			1,607			1,607
Balances at September 30, 2020		85,245	$	85		1,722	$	(4,826	)	$	179,382	$	(1,306	)	$	(125,457	)	$	47,878

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

	Three Months Ended March 31,						Nine Months Ended September 30,
	2018			2017			2021			2020
Cash flows from operating activities:
Cash flows provided by operating activities:
Net income	$	17,776		$	18,154		$	1,680		$	1,607
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,302			1,728			11,986			13,660
Stock-based compensation		4,230			1,900			11,245			9,498
Deferred income taxes		1,040			1,815			(1,322	)		(1,834	)
Excess and obsolete inventory valuation adjustment		(1,043	)		162
Increase in provision for doubtful accounts								63			18
Change in provision for excess and obsolete inventory								(98	)		1,290
Gain on disposal of assets								29			11
Changes in operating assets and liabilities:
Accounts receivable		28,470			53,134			13,194			27,537
Inventory		7,713			(7,495	)		9,302			(6,617	)
Prepaid expenses and other assets		103			2,090			(1,648	)		3,004
Prepaid income taxes		(1,273	)		(4,441	)		(5,873	)		(9,763	)
Accounts payable		1,644			(12,743	)		(17,553	)		13,764
Accrued expenses and other current liabilities		(7,162	)		(10,000	)		(6,074	)		973
Accrued income taxes		1,969			(10,746	)		(1,601	)		2,467
Deferred revenue		(4,626	)		(20,142	)		1,867			(3,971	)
Net cash provided by operating activities		51,143			13,416			15,197			51,644
Cash flows used in investing activities:
Purchases of property and equipment		(2,539	)		(1,858	)		(2,979	)		(4,102	)
Purchases of software licenses								(1,425	)		—
Net cash used in investing activities		(2,539	)		(1,858	)		(4,404	)		(4,102	)
Cash flows used in financing activities:
Principal repayments of debt		(826	)		(823	)		(9,025	)		(8,893	)
Borrowings on revolving credit facility								—			6,500
Proceeds from exercise of stock options		675			40			3,532			957
Employee taxes paid related to net share settlement of equity awards								(6,315	)		(639	)
Payments of dividends and equitable adjustments		(2,241	)		(96,739	)		(97	)		(661	)
Payments of initial public offering costs		(976	)		(1,245	)
Employee taxes paid related to net share settlement of equity awards		—			(3,788	)
Repurchases of treasury stock								—			(3,031	)
Net cash used in financing activities		(3,368	)		(102,555	)		(11,905	)		(5,767	)
Effect of exchange rate changes on cash and cash equivalents		1,039			65			111			763
Net increase (decrease) in cash and cash equivalents		46,275			(90,932	)
Cash and cash equivalents at beginning of period		260,820			329,554
Cash and cash equivalents at end of period	$	307,095		$	238,622
Net (decrease) increase in cash, cash equivalents and restricted cash								(1,001	)		42,538
Cash, cash equivalents and restricted cash at beginning of period								158,461			114,657
Cash, cash equivalents and restricted cash at end of period ⁽¹⁾							$	157,460		$	157,195
Supplemental disclosures of cash flow information:
Cash paid for interest	$	4,291		$	4,274		$	12,167		$	9,226
Cash paid for income taxes	$	53		$	14,320		$	8,288		$	2,306
Supplemental disclosures of non-cash operating, investing and financing activities:
Purchases of property and equipment included in accounts payable	$	287		$	783		$	179		$	673
Prepaid expenses and other current assets included in accounts payable	$	241		$	77
Deferred offering costs included in accounts payable and accrued expenses and other current liabilities	$	171		$	375
Unpaid equitable adjustments included in accrued expenses and other current liabilities	$	8,420		$	10,770		$	1		$	85
Release of customer incentives included in accounts receivable and accrued expenses and other current liabilities	$	5,754		$	12,619

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Casa Systems, Inc. (the “Company”) was incorporated under the laws of the State of Delaware on February 28, 2003. The Company is a global communications technology company headquartered in Andover, Massachusetts and has wholly owned subsidiaries in China, France, Canada, Ireland, Spain, Colombia, the Netherlands, Hong Kong, Australia, Germany, the United Kingdom and ~~the Netherlands.~~New Zealand.

The Company offers ~~solutions for next-generation centralized, distributed~~physical, virtual and ~~virtualized architectures for cable broadband, fixed-line~~cloud-native 5G broadband and ~~wireless~~customer premise networking equipment for public and private high-speed data and multi-service communications networks. The Company’s ~~solutions enable customers~~core and edge broadband technology enables communications service providers and enterprises to cost-effectively and dynamically increase data network speed, add bandwidth capacity and new services, ~~for consumers and enterprises,~~ reduce network complexity, and reduce operating and capital expenditures.

The Company is subject to a number of risks similar to other companies of comparable size and other companies selling and providing services to the communications service provider (“CSP”) industry. These risks include, but are not limited to, the level of capital spending by the ~~communications industry,~~CSPs, a lengthy sales cycle, dependence on the development of new products and services, unfavorable economic and market conditions, competition from larger and more established companies, limited management resources, dependence on a limited number of contract manufacturers and suppliers, the rapidly changing nature of the technology used by the ~~communications industry~~CSPs and reliance on resellers and sales agents. Failure by the Company to anticipate or to respond adequately to technological developments in its industry, changes in customer or supplier requirements, changes in regulatory requirements or industry standards, or any significant delays in the development or introduction of products could have a material adverse effect on the Company’s operating results, financial condition and cash flows.

In December 2017, the Company closed its initial public offering (“IPO”) of 6,900 shares of its common stock at an offering price of $13.00 per share, including 900 shares pursuant to the underwriters’ option to purchase additional shares of the Company’s common stock. The Company received net proceeds of $79,327, after deducting underwriting discounts and commissions of $6,279 and offering costs of $4,094. Upon the closing of the IPO, all 4,038 shares of the Company’s then-outstanding preferred stock automatically converted on a ten-for-one basis into an aggregate of 40,382 shares of the Company’s common stock. Upon conversion of the preferred stock, the Company reclassified $97,439 from temporary equity to additional paid-in capital and $40 from temporary equity to common stock.

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the Company’s initial public offering, subject to specified conditions. The JOBS Act provides that an emerging growth company can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company ~~will~~is required to adopt the new or revised standard at or prior to the time private companies are required to adopt the new or revised standard, provided that the Company continues to be an emerging growth company. The JOBS Act provides that the decision to take advantage of the extended transition period for complying with new or revised accounting standards is irrevocable.

The accompanying condensed consolidated balance sheet as of ~~March 31, 2018,~~September 30, 2021, the condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, the condensed consolidated statements of cash flows for the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020 and the condensed consolidated statements of stockholders’ equity for the three and nine months ended ~~March 31, 2018~~September 30, 2021 and 2020 are unaudited. The financial data and other information disclosed in these notes related to the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020 are also unaudited. The accompanying condensed consolidated balance sheet as of December 31, ~~2017~~2020 was derived from the Company’s audited consolidated financial statements for the year ended December 31, ~~2017.~~2020 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2021 (the “Annual Report on Form 10-K”). The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) regarding interim financial reporting. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the ~~Company’s~~ Annual Report on Form ~~10-K filed with the Securities and Exchange Commission (“SEC”) on March 7, 2018 (the “Annual Report on Form 10-K”).~~10-K. There have been no ~~material~~ changes to the Company’s accounting policies from those disclosed in the Annual Report on Form 10-K that would have a material impact on the Company’s condensed consolidated financial statements.

The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and, in the opinion of management, include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations and cash flows to be anticipated for the full year ending December 31, ~~2018~~2021 or any future period.

The accompanying condensed consolidated financial statements include the accounts and results of operations of the Company and its ~~wholly owned~~wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates and judgments relied upon by management in preparing these condensed consolidated financial statements include revenue recognition, provision for doubtful accounts, reserves for excess and obsolete inventory, valuation of inventory and deferred inventory costs, the expensing and capitalization of software-related research and development costs, amortization and depreciation periods, the recoverability of net deferred tax assets, valuations of uncertain tax positions, ~~provision for income taxes,~~ warranty allowances, the valuation of ~~the Company’s common stock and other~~ equity instruments and stock-based compensation expense.

Although the Company regularly reassesses the assumptions underlying these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances existing at the time such estimates are made.

The COVID-19 pandemic presents various risks to the Company, not all of which the Company is able to fully evaluate or even to foresee at the current time, and which could have a material effect upon the estimates and judgments relied upon by management in preparing these condensed consolidated financial statements. While the Company remains fully operational, during the three and nine months ended September 30, 2021, the effects of the COVID-19 pandemic on the global supply chain had a significant adverse effect on the Company’s financial results. In particular, certain of the Company’s products utilize components, for which there has been increased global demand. As a result, throughout 2021, and increasingly during the three months ended September 30, 2021, the Company began to see shortages of supply that resulted in the Company’s inability to fulfill certain customer orders within normal lead times. This adversely impacted the Company’s revenue and operating results for the three and nine months ended September 30, 2021. While the Company continues to work with its supply chain, contract manufacturers, and customers to minimize the extent of such impacts, the Company expects the effects of global supply chain issues to continue and cannot predict when such effects will subside. This may prevent the Company from being able to fulfill its customers’ orders in a timely manner or at all, which could lead to one or more of its customers cancelling their orders. At this time the Company is neither able to estimate the extent of these impacts nor predict whether its efforts to minimize or contain them will be successful. The Company intends to continue to monitor its business very closely for any effects of COVID-19 for as long as necessary.

Cash and cash equivalents include all highly liquid investments maturing within three months from the date of purchase. As of September 30, 2021 and December 31, 2020, the Company’s cash and cash equivalents consisted of investments in certificates of deposit and money market mutual funds.

Restricted cash as of September 30, 2021 and December 31, 2020 consisted of a certificate of deposit of $1,000 and $1,006, respectively, pledged as collateral for a stand-by letter of credit required to support a contractual obligation.

The following table is a reconciliation of cash, cash equivalents and restricted cash included in the accompanying condensed consolidated balance sheets that sum to the total cash, cash equivalents and restricted cash included in the accompanying condensed consolidated statements of cash flows:

Accounts receivable are presented net of a provision for doubtful accounts, which is an estimate of amounts that may not be collectible. Accounts receivable for ~~arrangements~~customer contracts with customary payment terms, which are one year or less, are recorded at invoiced amounts and do not bear interest. The Company may, in limited circumstances, grant payment terms longer than one year. Payments due beyond 12 months from the balance sheet date are recorded as non-current assets. The Company generally does not require collateral, but the Company may, in certain instances based on its credit assessment, require full or partial prepayment prior to shipment.

For certain customers and/or for certain transactions, the Company provides extended payment arrangements to allow the customer to pay for the purchased equipment in monthly, other periodic or lump-sum payments over a period of one to five years. Certain of these arrangements are collateralized by the underlying assets during the term of the arrangement. Payments due beyond 12 months from the balance sheet date are recorded as non-current assets. In addition, amounts recorded as current and non-current accounts receivable for extended payment term arrangements at any balance sheet date have a corresponding amount recorded as deferred revenue because the Company defers the recognition of revenue for all extended payment term arrangements and only recognizes revenue to the extent of the payment amounts that become due from the customer.

Although there is no contractual interest rate for customer arrangements with extended payment terms, the Company imputes interest on the accounts receivable related to these arrangements and reduces the arrangement fee that will be recognized as revenue for the amount of the imputed interest, which is recorded as interest income over the payment term using the effective interest method. For the periods presented in the accompanying condensed consolidated financial statements, the impact of imputing interest on revenue and interest income was insignificant.

Accounts receivable as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 consisted of the following:

The Company performs ongoing credit evaluations of its customers and, if necessary, provides a provision for doubtful accounts and expected losses. When assessing and recording its provision for doubtful accounts, the Company evaluates the age of its accounts receivable, current economic trends, creditworthiness of the ~~customers,~~customer, customer payment history, and other specific customer and transaction information. The Company writes off accounts receivable against the provision when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. Adjustments to the provision for doubtful accounts are recorded as selling, general and administrative expenses in the condensed consolidated statements of operations and comprehensive (loss) income.

As of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017,~~2020, the Company concluded that all amounts due under extended payment ~~term arrangements~~terms were collectible and no0 reserve for credit losses was recorded. During the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, the Company did ~~not~~0t provide a reserve for credit losses and did ~~not~~0t write off any uncollectible receivables due under extended payment ~~term arrangements.~~terms.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. Cash and cash equivalents consist of demand deposits, savings accounts, ~~commercial paper,~~ money market mutual funds, and certificates of deposit with financial institutions, which may exceed Federal Deposit Insurance Corporation limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Significant customers are those that represent 10% or more of revenue or accounts receivable asand are set forth in the following ~~table:~~tables:

Certain of the components and subassemblies included in the Company’s products are obtained from a single source or a limited group of suppliers. ~~In addition, the Company primarily relies on two third parties to manufacture certain components of its products.~~ Although the Company seeks to reduce dependence on those single or limited ~~sources of~~source suppliers, ~~and manufacturers,~~ the partial or complete loss of certain of these sources could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships.

The Company measures stock options and other stock-based awards granted to employees and directors based on the fair value on the date of grant and recognizes compensation expense of those awards, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. Generally, the Company issues stock options with only service-based vesting conditions and records the expense for these awards using the straight-line method.

The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive (loss) income in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The Company recognizes compensation expense for only the portion of awards that are expected to vest. In developing a forfeiture rate estimate, the Company has considered its historical experience to estimate pre-vesting forfeitures for service-based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially different from the Company’s estimate, the Company may be required to record adjustments to stock-based compensation expense in future periods.

The Company estimates the fair value of each stock option grant on the date of grant using the Black-Scholes option pricing model. The Company was a private company until December 14, 2017 and lacks sufficient company-specific historical and implied volatility information for its stock. Therefore, for all options granted in 2020 or before, the Company estimated its expected stock volatility based on the historical volatility of publicly traded peer companies. Beginning with options granted in 2021, the Company estimates its expected stock volatility using a weighted-average calculation based on the historical volatility of the Company and publicly traded peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company does not have a history of declaring or paying cash dividends, except for the special cash dividends declared in November 2014, June 2016, December 2016, May 2017 and November 2017, and in those circumstances the board of directors approved cash dividends to be paid to holders of the Company’s stock options, stock appreciation rights (“SARs”) and restricted stock units (“RSUs”) upon vesting as an equitable adjustment to the holders of such instruments.

The Company has also granted SARs to certain employees, which require the Company to pay in cash upon exercise an amount equal to the product of the excess of the per share fair market value of the Company’s common stock on the date of exercise over the exercise price, multiplied by the number of shares of common stock with respect to which the SAR is exercised. Because these awards may require the Company to settle the awards in cash, the Company accounts for them as a liability in the Company’s consolidated balance sheets. The Company recognizes the liability related to these awards, as well as related compensation expense over the period during which services are rendered until completed. As all SARs are now fully vested, the Company continues to remeasure the fair market value of the liability until the award is either exercised or canceled, with changes in the fair value of the liability recorded in the consolidated statements of operations and comprehensive (loss) income.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This guidance simplifies the guidance on certain financial instruments with characteristics of liability and equity, including convertible debt instruments. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. The ASU also simplifies the diluted earnings per share calculation in certain areas. The guidance will become effective for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company has elected to early adopt this ASU and the adoption did not have a material impact on the Company’s condensed consolidated financial statements and the accompanying notes thereto.

In ~~May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”), which supersedes existing revenue recognition guidance under GAAP. The core principle of this standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015,February 2016, the FASB issued ASU ~~2015-14,~~ ~~Revenue from Contracts with Customers~~2016-02, Leases (Topic ~~606)~~842): ~~Deferral~~Amendments to FASB Accounting Standards Codification (“ASU 2016-02”), which replaces the existing guidance for leases. ASU 2016-02 requires the identification of arrangements that should be accounted for as leases by lessees. In general, for lease arrangements exceeding a twelve-month term, the arrangements must now be recognized as assets and liabilities on the balance sheet of the ~~Effective Date, which delays~~lessee. Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing, while the ~~effective~~income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. The balance sheet amount recorded for existing leases at the date of adoption of ASU ~~2014-09 such that~~2016-02 must be calculated using the ~~standard is effective for public companies for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years. The standard is~~applicable incremental borrowing rate at the date of adoption. This guidance will become effective for private companies, and emerging growth companies that choose to take advantage of the extended transition periods, for annual reporting periods beginning after December 15, ~~2018. Entities are not permitted~~2021, and interim periods within fiscal years beginning after December 15, 2022. The Company has begun planning for adoption by implementing a new lease accounting software and by working to ~~adopt~~establish additional changes to internal processes to comply with all requirements upon adoption. The standard allows for, and the ~~standard earlier than the original effective date for public entities. This standard can be adopted either retrospectively to each prior reporting period presented or as~~Company plans on using, a modified retrospective approach with comparatives under ASC 840, where entities would recognize a cumulative effect ~~adjustment as of~~to retained earnings at the date of ~~adoption. In March 2016, the FASB issued ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations~~ ~~(“ASU 2016-08”), which further clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. In April 2016, the FASB issued ASU No. 2016-10,~~ ~~Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing~~ ~~(“ASU 2016-10”), clarifying the implementation guidance on identifying performance obligations and licensing. In May 2016, the FASB issued ASU No. 2016-12,~~ ~~Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients~~ (“ASU 2016-12”), which clarifies the objective of the collectibility criterion, presentation of taxes collected from customers, non-cash consideration, contract modifications at transition, completed contracts at transition and how guidance in ASU 2014-09 is retrospectively applied. ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective dates and transition requirements as ASU 2014-09. The Company continues to assess the potential impact that the adoption of ASU 2014-09, ASU 2016-08, ASU 2016-10 and ASU 2016-12 will have on its consolidated financial statements. Based on its assessment to date, the Company does expect that the adoption of this new accounting standard will impact the timing and amount of assets, liabilities, revenue and/without restating prior period balances or expenses recorded and the financial statement disclosures related to the Company’s revenue from contracts with its customers. For example, the treatment of extended payment terms, contingent revenue elements, commissions and costs to obtain customer contracts may change under the new accounting standard. The Companydisclosure. Management is continuing to assess the impact of ~~this new accounting standard~~ASU 2016-02 on the Company’s condensed consolidated financial statements and the ~~expected adoption method. This assessment is subject to change, and the Company may identify other impacts on its consolidated financial statements.~~accompanying notes thereto.

In ~~February~~June 2016, the FASB issued ASU ~~2016-02,~~ ~~Leases~~2016-13, Measurement of Credit Losses on Financial Instruments (“ASU ~~2016-02”~~2016-13”), which will require lessees to recognize most leases on their balance sheets as a right-of-use asset with a corresponding lease liability, and lessors to recognize a net lease investment. Additional qualitative and quantitative disclosures will also be required. The new. This guidance is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The main provisions include presenting financial assets measured at amortized cost at the amount expected to be collected, which is net of an allowance for expected credit losses, and recording credit losses related to available-for-sale securities through an allowance for credit losses. The effective dates for ~~public companies for annual reporting periods beginning after December 15, 2018~~the amendments in ASU 2016-13 were updated in ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and ~~for interim periods within those fiscal years. The new guidance is~~Hedging (Topic 815), and Leases (Topic 842), and as such ASU 2016-13 will become effective for private companies, and emerging growth companies that choose to take advantage of the extended transition periods, for ~~annual reporting periods beginning after December 15, 2019, and interim periods within~~ fiscal years beginning after December 15, ~~2020. Early application is permitted. The Company is currently assessing the potential impact that the adoption of ASU 2016-02 will have on its consolidated financial statements.~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Measurement of Credit Losses on Financial Instruments~~ (“ASU 2016-13”). This guidance requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectibility. ~~This guidance is effective for public companies for annual reporting periods beginning after December 15, 2019 and for~~2022, including interim periods within those fiscal ~~years. This guidance is effective for private companies,~~periods, and emerging growth companies that choose to take advantage of the extended transition periods, for annual reporting periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. must be applied using a modified retrospective approach. The Company is currently ~~assessing~~evaluating the ~~potential~~ impact ~~that the adoption of~~ ASU 2016-13 will have on its consolidated financial statements.

Other than the ~~FASB issued ASU 2016-15,~~ ~~Statement~~disclosures above, there have been no changes to the significant accounting policies disclosed in Note 2 “Summary of ~~Cash Flows: Classification of Certain Cash Receipts and Cash Payments~~ ~~(“ASU 2016-15”),~~Significant Accounting Policies” to ~~address diversity in practice in how certain cash receipts and cash payments are presented and classified~~the Company’s consolidated financial statements included in the ~~statement of cash flows. The standard is effective~~Annual Report on Form 10-K for ~~public companies for annual periods beginning after~~the fiscal year ended December ~~15, 2017, including interim periods within those fiscal years. The standard is effective for private companies,~~31, 2020.

3. Goodwill and ~~emerging growth companies that choose to take advantage~~Intangible Assets

Intangible assets, net consisted of the ~~extended transition periods,~~following at September 30, 2021 and December 31, 2020, respectively:

As of September 30, 2021, amortization expense on existing intangible assets for ~~annual periods beginning after December 15, 2018,~~the next five years and ~~interim periods within fiscal years beginning after December 15, 2019.~~ beyond is as follows:

A summary of amortization expense recorded during the three and nine months ended September 30, 2021 and 2020 is as follows:

The ~~Company~~Company’s goodwill is ~~currently assessing~~ the ~~potential impact that the adoption~~result of ~~ASU 2016-15 will have~~its acquisition of NetComm on ~~its consolidated financial statements.~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory~~ (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The standard is effective for public companies for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The standard is effective for private companies, and emerging growth companies that choose to take advantage of the extended transition periods, for annual periods beginning after December 15, 2018, and interim reporting periods within annual periods beginning after December 15, 2019. The Company is currently assessing the potential impact that the adoption of ASU 2016-16 will have on its consolidated financial statements.

~~In August 2017, the FASB issued ASU 2017-12,~~ ~~Derivatives and Hedging—Targeted Improvements to Accounting for Hedging Activities~~ (“ASU 2017-12”), which aims to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The standard is effective for public companies for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The standard is effective for private companies, and emerging growth companies that choose to take advantage of the extended transition periods, for annual periods beginning after December 15,July 1, 2019 and ~~interim reporting periods within annual periods beginning after~~represents the excess of purchase price over the estimated fair value of net assets acquired. There has been no change to the $50,177 carrying amount of goodwill since December ~~15,~~31, 2020. ~~The Company is currently assessing the potential impact that the adoption of ASU 2017-12 will have on its consolidated financial statements.~~

Inventory as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 consisted of the following:

Property and equipment as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 consisted of the following:

During the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, the Company transferred trial systems ~~from~~into inventory ~~into~~from property and equipment with values of ~~($65)~~$1,145 and ~~$435,~~$690, respectively, net of transfers of trial systems to cost of revenue. In addition, the Company transferred ~~$65~~$325 and ~~$495~~$766 of equipment ~~from~~into inventory ~~into~~from property and equipment during the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, respectively.

~~Total depreciation~~Depreciation and amortization expense ~~was $2,302~~on property and ~~$1,728~~equipment totaled $2,258 and $2,968 for the three months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, respectively, and $7,418 and $9,370 for the nine months ended September 30, 2021 and 2020, respectively.

Accrued expenses and other current liabilities as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 consisted of the following:

Substantially all of the Company’s products are covered by warranties for software and hardware for periods ranging from 90 days to one year. In addition, in conjunction with customers’ renewals of maintenance and support contracts, the Company offers an extended warranty for periods typically of one to three years for agreed-upon fees. In the event of a failure of a hardware product or software covered by these warranties, the Company must repair or replace the software or hardware or, if those remedies are insufficient, and at the discretion of the Company, provide a refund. The Company’s warranty reserve, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheets, reflects estimated material, labor and other costs related to potential or actual software and hardware warranty claims for which the Company expects to incur an obligation. The Company’s estimates of anticipated rates of warranty claims and the costs associated therewith are primarily based on historical information and future forecasts. The Company periodically assesses the adequacy of the warranty reserve and adjusts the amount as necessary. If the historical data used to calculate the adequacy of the warranty reserve are not indicative of future requirements, additional or reduced warranty reserves may be required.

A summary of changes in the amount reserved for warranty costs for the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020 is as follows:

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

The following tables present information about the fair value of the Company’s financial assets and liabilities as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 and indicate the level of the fair value hierarchy utilized to determine such fair values:

	Fair Value Measurements as of March 31, 2018 Using:								Fair Value Measurements as of September 30, 2021 Using:
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Certificates of deposit	$	—	$	23,826	$	—	$	23,826
Commercial paper		—		48,392		—		48,392
Certificates of deposit—restricted cash									$	—	$	1,000	$	—	$	1,000
Money market mutual funds		223,111		—		—		223,111		127,221		—		—		127,221
Foreign currency forward contracts										—		24		—		24
	$	223,111	$	72,218	$	—	$	295,329	$	127,221	$	1,024	$	—	$	128,245
Liabilities:
SARs	$	—	$	—	$	4,321	$	4,321	$	—	$	—	$	458	$	458
Foreign currency forward contracts		—		217		—		217
	$	—	$	217	$	4,321	$	4,538	$	—	$	—	$	458	$	458

	Fair Value Measurements as of December 31, 2017 Using:								Fair Value Measurements as of December 31, 2020 Using:
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Certificates of deposit	$	—	$	18,905	$	—	$	18,905
Commercial paper		—		11,483		—		11,483
Certificates of deposit—restricted cash									$	—	$	1,006	$	—	$	1,006
Money market mutual funds		224,555		—		—		224,555		114,404		—		—		114,404
	$	224,555	$	30,388	$	—	$	254,943	$	114,404	$	1,006	$	—	$	115,410
Liabilities:
SARs	$	—	$	—	$	2,155	$	2,155	$	—	$	—	$	493	$	493
Foreign currency forward contracts		—		150		—		150
	$	—	$	150	$	2,155	$	2,305	$	—	$	—	$	493	$	493

During the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020, there were no 0 transfers between Level 1, Level 2 and Level 3.

There were no changes to the valuation techniques used to measure asset and liability fair values on a recurring basis during the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 from those included in the Company’s ~~audited~~ consolidated financial statements for the year ended December 31, ~~2017.~~2020. The following table provides a summary of changes in the fair values of the Company’s SARs liability, for which fair value is determined by Level 3 inputs:

The Company has certain international customers that are billed in foreign currencies. To mitigate the volatility related to fluctuations in the foreign exchange rates for accounts receivable denominated in foreign currencies, the Company enters into foreign currency forward contracts. As of ~~March 31, 2018,~~September 30, 2021, the Company had foreign currency forward contracts outstanding with notional amounts totaling ~~10,611 euros~~1,379 Euros maturing in the ~~second, third~~fourth quarter of 2021 and ~~fourth quarters~~the first quarter of ~~2018.~~2022. As of December 31, ~~2017, the Company had~~2020,0 foreign currency forward contracts ~~outstanding with notional amounts totaling 5,924 euros maturing in the first and second quarters of 2018.~~were outstanding.

The Company’s foreign currency forward contracts described above economically ~~hedge~~hedged certain ~~risk~~risks but ~~are~~were not designated as hedges for financial reporting purposes, and accordingly, all changes in the fair value of ~~these~~the derivative instruments ~~are~~were recorded as unrealized foreign currency transaction gains or losses and ~~are~~were included in the condensed consolidated statements of operations and comprehensive (loss) income as a component of other income (expense). The Company records ~~all~~ derivative instruments in the condensed consolidated balance sheet at their fair values. As of ~~March 31, 2018 and December 31, 2017,~~September 30, 2021, the Company recorded ~~a liability~~an asset of ~~$217 and $150, respectively, related~~$24relating to outstanding foreign currency forward contracts. As of December 31, 2020 the Company recorded 0 asset relating to outstanding foreign currency forward contracts. As of September 30, 2021 and December 31, 2020, the Company recorded 0 liability relating to outstanding foreign currency forward contracts.

The Company also faces exposure to foreign currency exchange rate fluctuations, as a certain portion of its expenses are denominated in currencies other than U.S. dollars. In certain instances, the Company utilizes forward contracts ~~which were included~~to hedge against foreign currency fluctuations. These contracts are used to minimize foreign gains or losses, as the gains or losses on the derivative are intended to offset the losses or gains on the underlying exposure. The Company does not engage in ~~accrued expenses and other current liabilities~~foreign currency speculation.

The Company designed its foreign currency risk management strategy principally to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. The Company may enter into cash flow hedges that utilize foreign currency forward contracts to hedge specific forecasted transactions of its foreign subsidiaries with the goal of protecting its budgeted expenses against foreign currency exchange rate changes compared to its budgeted rates.

During the three months ended September 30, 2020, the Company settled one cash flow hedge with a notional amount of 5,000 AUD to hedge certain Australian dollar cash flows incurred during the period. The amount of gain reclassified from other comprehensive (loss) income for the three months ended September 30, 2020 was $527. The full amount of the fair value of the derivatives on the settlement date of $725 was recognized as $57 cost of goods sold, $353 research and development expense and $315 selling, general and administrative expense in the condensed consolidated ~~balance sheets.~~statement of comprehensive (loss) income for the three months ended September 30, 2020.

8.During the nine months ended September 30, 2020, the Company settled two cash flow hedges with notional amounts of 8,500 AUD and 5,000 AUD to hedge certain Australian dollar cash flows incurred during the period. The amount of gain reclassified from other comprehensive (loss) income for the nine months ended September 30, 2020 was $752. The full amount of the fair value of the derivatives on the settlement date of $1,613 was recognized as $124 cost of goods sold, $890 research and development expense and $599 selling, general and administrative expense in the condensed consolidated statement of comprehensive (loss) income for the nine months ended September 30, 2020.

The Company did 0t have any cash flow hedges outstanding as of September 30, 2021 and December 31, 2020.

The Company’s effective income tax rate was ~~9.2%~~85.8% and ~~5.7%~~40.9% for the three months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, respectively. The ~~effective income tax rate is based on the estimated annual effective tax rate, adjusted for discrete tax items recorded in the period. The~~(benefit from) provision for income taxes was ~~$1,793~~$(5,288) and ~~$1,103~~$2,399 for the three months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, respectively. The change in the (benefit from) provision for income taxes was primarily due to a discrete benefit of ($7,097) recorded in the three months ended September 30, 2021 related to a change in estimate of the Company’s prior year net operating loss that is able to be carried back as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The change in the (benefit from) provision for income taxes was also impacted by changes in the jurisdictional mix of earnings period over period.

The Company determines its estimated annual effective tax rate at the end of each interim period based on estimated pre-tax income and facts known at that time. The estimated annual effective tax rate is applied to the year-to-date pre-tax income at the end of each interim period with certain adjustments. The tax effects of significant unusual or extraordinary items are discretely reflected in the periods in which they occur. The Company’s ~~estimated annual effective tax rate can change based on the mix of jurisdictional pre-tax income and other factors.~~

~~The~~ effective income tax rate was 11.6% and 142.0% for the nine months ended September 30, 2021 and 2020, respectively. The provision for (benefit from) income taxes was $220 and $(5,433) for the nine months ended September 30, 2021 and 2020, respectively. The change in the provision for (benefit from) income taxes was primarily due to a discrete tax benefit of $ (9,310) recorded during the nine months ended September 30, 2020 associated with the enactment of the CARES Act, partially offset by a discrete benefit of ($7,097) recorded during the nine months ended September 30, 2021 associated with a change in estimate of the Company’s prior year net operating loss that is able to be carried back as part of the CARES Act. The change in the provision for (benefit from) income taxes was also impacted by changes in the jurisdictional mix of earnings period over period.

The (benefit from) provision for income taxes for the three and nine months ended ~~March 31, 2018~~September 30, 2021 and 2020 differed from the federal statutory rate primarily due to the geographical mix of earnings and related foreign tax rate differential, permanent differences, research and development tax credits, ~~excess~~foreign tax ~~benefit from stock-based transactions, state taxes and impacts of~~credits, the ~~Tax Cuts and Jobs Act (the “TCJA”). Permanent differences primarily included the nondeductible stock-based compensation expense.~~

As of December 31, 2017, the Company has accounted for the impacts of the TCJA to the extent a reasonable estimate could be made and recognized provisional amounts related to the deemed repatriation tax, offset by the remeasurement ofvaluation allowance maintained against certain deferred tax assets and liabilities to record the effects of the tax law change in the period of enactment. This treatment is provided for in Staff Accounting Bulletin 118, which allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law during the measurement period. The measurement period ends when the company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. During the first quarter of 2018, the Internal Revenue Service issued additional guidance providing clarification on certain aspects of the deemed repatriation tax calculation. The additional guidance did not result in an adjustment to the provisional amounts recorded as of December 31, 2017. The Company will continue to monitor for new guidance related to provisional amounts recorded. The change in the provision for income taxes for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was primarily due to a decrease in tax benefits from stock-based transactions.withholding taxes.

The aggregate principal amount of debt outstanding as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 consisted of the following:

Current and non-current debt obligations reflected in the condensed consolidated balance sheets as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 consisted of the following:

	March 31,			December 31,			September 30,			December 31,
	2018			2017			2021			2020
Current liabilities:
Term loans	$	3,000		$	3,000
Mortgage loan		306			303
Term loan							$	3,000		$	9,775
Revolving credit facility								6,500			6,500
Current portion of principal payment obligations		3,306			3,303			9,500			16,275
Unamortized debt issuance costs, current portion		(1,145	)		(1,147	)		(1,079	)		(1,104	)
Current portion of long-term debt, net of unamortized debt issuance costs	$	2,161		$	2,156		$	8,421		$	15,171
Non-current liabilities:
Term loans	$	293,250		$	294,000
Mortgage loan		6,880			6,958
Non-current portion of principal payment obligations		300,130			300,958
Term loan							$	275,975		$	278,225
Unamortized debt issuance costs, non-current portion		(5,215	)		(5,499	)		(1,303	)		(2,140	)
Long-term debt, net of current portion and unamortized debt issuance costs	$	294,915		$	295,459		$	274,672		$	276,085

As of September 30, 2021, aggregate minimum future principal payments of the Company’s debt are summarized as follows:

On December 20, 2016, the Company entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, various lenders and JPMorgan Chase Bank, N.A. and Barclays Bank PLC providing for (i) a term loan facility of $300,000 and (ii) a revolving credit facility of up to $25,000 in revolving credit loans and letters of credit.

As of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017, $296,250~~2020, $278,975 and ~~$297,000~~$288,000 in principal amount, respectively, ~~was~~were outstanding under the term loan facility (the “Term ~~Loans”~~Loan”). As of September 30, 2021 and December 31, 2020, the Company ~~did not have any~~had outstanding borrowings under the revolving credit ~~facility; however,~~facility of $6,500, which were repaid in full on October 25, 2021 using cash and cash equivalents in the condensed consolidated balance sheets as of September 30, 2021. See Note 18, Subsequent Events below for further discussion. As of September 30, 2021 and December 31, 2020, the Company had also used ~~$1,000~~$1,450 and $1,454 of available credit under the revolving credit facility for atwo stand-by ~~letter~~letters of credit, ~~that~~one which serves as collateral ~~for a stand-by letter of credit issued by Bank of America~~ to one of the Company’s customers pursuant to a contractual performance ~~guarantee.~~guarantee and one which serves as collateral for operating leases in Australia. In addition, the Company may, subject to certain conditions, including the consent of the administrative agent and the institutions providing such increases, increase the facilities by an unlimited amount so long as the Company is in compliance with specified leverage ratios, or otherwise by up to $70,000.

Borrowings under the facilities bear interest at a floating rate, which can be either a Eurodollar rate plus an applicable margin or, at the Company’s option, a base rate (defined as the highest of (x) the JPMorgan Chase, N.A. prime rate, (y) the federal funds effective rate, plus one-half percent (0.50%) per annum and (z) a one-month Eurodollar rate plus 1.00% per annum) plus an applicable margin. The applicable margin for borrowings under the term loan facility is 4.00% per annum for Eurodollar rate loans (subject to a 1.00% per annum interest rate floor) and 3.00% per annum for base rate loans. ~~As a result of the completion of the Company’s IPO in December 2017, the~~The applicable margin for borrowings under the revolving credit facility is 1.75% per annum for Eurodollar rate loans and 0.75% per annum for base rate loans, subject to reduction based on the Company’s maintaining of specified net leverage ratios. The interest rates payable under the facilities are subject to an increase of 2.00% per annum during the continuance of any payment default.

For Eurodollar rate loans, the Company may select interest periods of one, ~~two,~~ three or six months or, with the consent of all relevant affected lenders, twelve months. Interest will be payable at the end of the selected interest period, but no less frequently than every three months within the selected interest period. Interest on any base rate loan is not set for any specified period and is payable quarterly. The Company has the right to convert Eurodollar rate loans into base rate loans and the right to convert base rate loans into Eurodollar rate loans at its option, subject, in the case of Eurodollar rate loans, to ~~prepayment penalties~~breakage costs if the conversion is effected prior to the end of the applicable interest period. As of ~~March~~September 30, 2021 and December 31, ~~2018,~~2020, the interest rate on the Term Loans was ~~5.88%~~5.00% per annum, which was based on a one-month and six-month Eurodollar rate, respectively, at the applicable floor of ~~1.88%~~1.00% per annum plus the applicable margin of 4.00% per annum for Eurodollar rate loans. As of ~~December 31, 2017,~~September 30, 2021, the interest rate on the ~~Term Loans~~revolving credit facility was ~~5.69%~~1.83% per annum, which was based on a ~~three-month~~one-month Eurodollar rate of ~~1.69%~~0.08% per annum plus the applicable margin of ~~4.00%~~1.75% per annum for Eurodollar rate loans. As of December 31, 2020, the interest rate on the revolving credit facility was 2.12% per annum, which was based on the six-month Eurodollar rate of 0.37% per annum plus the applicable margin of 1.75% per annum for Eurodollar rate loans.

Upon entering into the term loan facility, the Company incurred debt issuance costs of $7,811, which were initially recorded as a reduction of the debt liability and are amortized to interest expense using the effective interest method from the issuance date of the Term Loan until the maturity date. ~~Principal~~The Company made principal payments of $750 ~~were made under the term loan facility~~ during each of the three months ended ~~March 31, 2018~~September 30, 2021 and ~~2017.~~2020, and $9,025 and $2,250 during the nine months ended September 30, 2021 and 2020, respectively, under the term loan facility. No principal payments were made under the revolving credit facility during the three and nine months ended September 30, 2021 and 2020. Interest expense for the Term Loan and revolving credit facility, including the amortization of debt issuance costs, totaled ~~$4,516~~$3,870 and ~~$4,039~~$3,892 for the three months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, respectively, and totaled $11,672 and $12,366 for the nine months ended September 30, 2021 and 2020, respectively.

The revolving credit facility also requires payment of quarterly commitment fees at a rate of 0.25% per annum on the difference between committed amounts and amounts actually borrowed under the facility and customary letter of credit fees. For each of the three months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, interest expense related to the fee for the unused amount of the revolving credit facility totaled ~~$15.~~$11 and for the nine months ended September 30, 2021 and 2020, interest expense related to the fee for the unused amount of the revolving credit facility totaled $33 and $41, respectively.

The Term ~~Loans mature~~Loan matures on December 20, 2023, and the revolving credit facility matures on December 20, 2021. The Term Loans are subject to amortization in equal quarterly installments, which commenced on March 31, 2017, of principal in an annual aggregate amount equal to 1.0% of the original principal amount of the Term Loans of $300,000, with the remaining outstanding balance payable at the date of maturity.

Voluntary prepayments of principal amounts outstanding under the term loan facility are permitted at any time; however, if a prepayment of principal is made with respect to a Eurodollar loan on a date other than the last day of the applicable interest period, the Company is required to compensate the lenders for any funding losses and expenses incurred as a result of the prepayment. Prior to the revolving credit facility maturity date, funds borrowed under the revolving credit facility may be borrowed, repaid and reborrowed, without premium or penalty.

In addition, the Company is required to make mandatory prepayments under the facilities with respect to (i) 100% of the net cash proceeds from certain asset dispositions (including casualty and condemnation events) by the Company or certain of its subsidiaries, subject to certain exceptions and reinvestment provisions, (ii) 100% of the net cash proceeds from the issuance or incurrence of any additional debt by the Company or certain of its subsidiaries, subject to certain exceptions, and (iii) 50% of the Company’s excess cash flow, as defined in the credit agreement, subject to reduction upon its achievement of specified performance targets. In accordance with these provisions, a mandatory early prepayment of $6,775 was paid by the Company on April 2, 2021. This amount was included in the current portion of long-term debt, net of unamortized debt issuance costs on the condensed consolidated balance sheet as of December 31, 2020.

The facilities are secured by, among other things, a first priority security interest, subject to permitted liens, in substantially all of the Company’s assets and all of the assets of certain of its subsidiaries and a pledge of certain of the stock of certain of its subsidiaries, in each case subject to specified exceptions. The facilities contain customary affirmative and negative covenants, including certain restrictions on the Company’s ability to pay dividends, and with respect to the revolving credit facility, a financial covenant requiring the Company to maintain a specified total net leverage ratio in the event that on the last day of any fiscal quarter the Company has utilized more than 30% of its borrowing capacity under the facility. AsThe Company was in compliance with all covenants as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017, the Company had not utilized more than 30% of its borrowing capacity under the revolving credit facility and compliance with the financial covenant was not applicable.~~2020.

On July 1, 2015, the Company entered into a commercial mortgage loan agreement in the amount of $7,950 (the “Mortgage Loan”). Borrowings under the Mortgage Loan ~~bear~~bore interest at a rate of 3.5% per annum and ~~are~~were repayable in 60 monthly installments of $46, consisting of principal and interest based on a 20-year amortization schedule. The remaining amount of unpaid principal under the Mortgage Loan ~~is due~~was paid on the maturity date of July 1, ~~2020.~~2020 utilizing the Company’s revolving credit facility. Upon entering into the Mortgage Loan, the Company incurred debt issuance ~~costs~~cost of $45, which was initially recorded as a direct deduction from the debt liability and ~~are~~was amortized to interest expense using the effective interest method from the issuance date of the loan until the maturity date.

The Mortgage Loan was paid on the maturity date of July 1, 2020, utilizing the Company’s revolving credit facility. The Company made principal payments under the Mortgage Loan of ~~$76~~$6,483 and ~~$73~~$6,643 during the three and nine months ended September 30, 2020, respectively. NaN interest expense was incurred during the three months ended ~~March 31, 2018 and 2017, respectively.~~September 30, 2020. Interest expense, including the amortization of debt issuance costs, totaled ~~$65 and $68 for~~$120 during the ~~three~~nine months ended ~~March 31, 2018 and 2017, respectively.~~

The Mortgage Loan is secured by the land and building purchased in March 2015 and subjects the Company to various affirmative, negative and financial covenants, including maintenance of a minimum debt service ratio. The Company was in compliance with all covenants of the Mortgage Loan as of March 31, 2018 and December 31, 2017.

~~As of March 31, 2018, aggregate minimum future principal payments of the Company’s debt are summarized as follows:~~September 30, 2020.

On November 30, 2017, the board of directors declared a special dividend to the holders of common stock and preferred stock of record on that date, contingent upon the closing of the Company’s IPO. The cash dividend declared to stockholders was $0.5802 per share of common stock, $5.8020 per share of Series B convertible preferred stock (the “Series B Preferred Stock”) and $5.8020 per share of Series C convertible preferred stock (the “Series C Preferred Stock”). Related to this special dividend declared in November 2017, the Company paid $865 of dividends to the common and preferred stockholders during the three months ended March 31, 2018, and as of December 31, 2017, dividend payments to be made totaled $865 and were included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet. No dividend payments with respect to this special dividend were payable as of March 31, 2018.

In connection with ~~this~~ special ~~dividend~~dividends previously declared, in November 2017, the board of directors also approved, contingent upon the payment of the November 2017 special dividend, cash payments to be made to holders of the Company’s stock options, SARs and RSUs as an equitable adjustment to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. The equitable adjustment payments to the holders of the stock options, SARs and RSUs are equal to $0.5802 per share multiplied by the net number of shares subject to outstanding equity awards after applying the treasury stock method. The cash payments to such holders will be made as their equity awards vest through fiscal year 2021. During the three months ended March 31, 2018, the Company paid $387 to the holders of such vested equity awards. As of March 31, 2018 and December 31, 2017, equitable adjustment payments to be made as equity awards vest through fiscal year 2021, net of estimated forfeitures, totaled $1,348 and $1,735, respectively, and were included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

The cash dividends declared to the holders of common stock, Series B Preferred Stock and Series C Preferred Stock totaled $19,572, $1,039 and $22,391, respectively, and the equitable adjustment to the holders of stock options, SARs and RSUs, net of estimated forfeitures, totaled $6,928. The $49,930 aggregate amount of such dividends and equitable adjustments was recorded as a charge to additional paid-in capital during the year ended December 31, 2017.

On May 10, 2017, the board of directors declared and the stockholders approved a special dividend to the holders of common stock and preferred stock of record on that date. The cash dividend declared to stockholders was $1.1774 per share of common stock, $11.7744 per share of Series B Preferred Stock and $11.7744 per share of Series C Preferred Stock. No dividend payments with respect to this special dividend were payable as of March 31, 2018 and December 31, 2017.

~~In connection with the special dividend declared in May 2017,~~ the board of directors also approved cash payments to be made to holders of the Company’s stock options, SARs and RSUs as an equitable ~~adjustment~~adjustments to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. ~~The~~These equitable adjustment payments ~~to the holders of the stock options, SARs and RSUs~~ are equal to ~~$1.1774~~

an amount per share multiplied by the net number of shares subject to outstanding equity awards after applying the treasury stock method. The ~~cash payments~~below table provides details of these equitable adjustment payments:

				Equitable Adjustment Payments
				Nine Months Ended				Equitable Adjustment Liability(1)
Dividend Declaration Dates	Equitable Adjustment per share		Year of Final Vesting	September 30, 2021		September 30, 2020		As of September 30, 2021		As of December 31, 2020
November 30, 2017	$	0.5802	2021	$	42	$	136	$	1	$	30	��
May 10, 2017		1.1774	2021		53		176		—		31
December 27, 2016		2.3306	2020		2		295		—		2
June 17, 2016		0.5891	2020		—		54		—		—
Total				$	97	$	661	$	1	$	63

On February 21, 2019, the Company announced a stock repurchase program authorizing it to ~~such holders will be~~repurchase up to $75,000 of the Company’s common stock. There were 0 repurchases made ~~as their equity awards vest through fiscal year 2021. During~~during the three and nine months ended March 31, 2018, the Company paid $262 to the holders of such vested equity awards. As of March 31, 2018 and December 31, 2017, equitable adjustment payments to be made as equity awards vest through fiscal year 2021, net of estimated forfeitures, totaled $2,030 and $2,292, respectively, andSeptember 30, 2021. There were ~~included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.~~

The cash dividends declared to the holders of common stock, Series B Preferred Stock and Series C Preferred Stock totaled $39,585, $2,108 and $45,440, respectively, and the equitable adjustment to the holders of stock options, SARs and RSUs, net of estimated forfeitures, totaled $12,723. The $99,856 aggregate amount of such dividends and equitable adjustments was recorded as a charge to additional paid-in capital (until reduced to zero) and a charge to accumulated deficit during the year ended December 31, 2017.

On December 21, 2016, the board of directors declared, and on December 29, 2016 the stockholders approved, a special dividend to the holders of common stock and preferred stock of record on December 27, 2016. The cash dividend declared to stockholders was $2.3306 per share of common stock, $23.3058 per share of Series B Preferred Stock and $23.3058 per share of Series C Preferred Stock. Related to this special dividend declared in December 2016, the Company paid $77,153 of dividends to the common and preferred stockholders0 repurchases during the three months ended ~~March 31, 2017 and no dividend payments with respect to this special dividend were payable as~~September 30, 2020. During the nine months ended September 30, 2020, the Company repurchased 1,227 shares, at a cost of ~~December 31, 2017.~~

~~In connection with the special dividend declared in December 2016, the board~~$3,031, including commissions. As of ~~directors also approved cash payments to be made to holders~~September 30, 2021, $70,208 remained authorized for repurchases of the Company’s common stock ~~options, SARs~~under the stock repurchase program. The stock repurchase program has no expiration date and ~~RSUs as an equitable adjustment~~does not require the Company to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. The equitable adjustment payments to the holders of stock options, SARs and RSUs are equal to $2.3306 per share multiplied by the netpurchase a minimum number of shares, subject to outstanding equity awards after applying the treasury stock method. The cash payments to such holders will be made as their equity awards vest through fiscal year 2020. During the three months ended March 31, 2018 and ~~2017,~~ the Company ~~paid $592 and $19,369 to~~may suspend, modify or discontinue the holders of such vested equity awards. As of March 31, 2018 and December 31, 2017, equitable adjustment payments to be made as equity awards vest through fiscal year 2020, net of estimated forfeitures, totaled $4,134 and $4,726, respectively, and were included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet.stock repurchase program at any time without prior notice.

On June 17, 2016, the board of directors declared and the stockholders approved a special dividend to the holders of common stock and preferred stock of record on that date. The cash dividend declared to stockholders was $0.5891 per share of common stock, $5.8910 per share of Series B Preferred Stock, and $5.8910 per share of Series C Preferred Stock. Related to this special dividend declared in June 2016, the Company paid no dividends to the common and preferred stockholders during the three months ended March 31, 2018 and 2017, and, as of March 31, 2018 and December 31, 2017, no dividend payments with respect to this special dividend were payable.

In connection with the special dividend declared in June 2016, the board of directors also approved cash payments to be made to holders of the Company’s stock options, SARs and RSUs as an equitable adjustment to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. The equitable adjustment payments to the holders of stock options, SARs and RSUs are equal to $0.5891 per share multiplied by the net number of shares subject to outstanding equity awards after applying the treasury stock method. The cash payments to such holders will be made as their equity awards vest through fiscal year 2020. During the three months ended March 31, 2018 and 2017, the Company paid $119 and $177, respectively to the holders of such vested equity awards. As of March 31, 2018 and December 31, 2017, equitable adjustment payments to be made as equity awards vest through fiscal year 2020, net of estimated forfeitures, totaled $861 and $980 and were included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet.

On November 30, 2014, the board of directors declared and the stockholders approved a special dividend to the holders of common stock and preferred stock of record on that date. The cash dividend declared to stockholders was $0.3835 per share of common stock, $3.8346 per share of Series B Preferred Stock and $3.8346 per share of Series C Preferred Stock. Related to this special dividend declared in November 2014, the Company paid no dividends to the common and preferred stockholders during the three months ended March 31, 2018 and 2017, and, as of March 31, 2018 and December 31, 2017, no dividend payments with respect to this special dividend were payable.

In connection with the special dividend declared in November 2014, the board of directors also approved cash payments to be made to holders of the Company’s stock options and SARs as an equitable adjustment to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. The equitable adjustment payments

to the holders of stock options and SARs are equal to $0.3835 per share multiplied by the net number of shares subject to outstanding equity awards after applying the treasury stock method. The cash payments to the holders of stock options and SARs will be made as equity awards vest through fiscal year 2018. During the three months ended March 31, 2018 and 2017, the Company paid $16 and $40, respectively, to the holders of stock options and SARs for vested equity awards. As of March 31, 2018 and December 31, 2017, equitable adjustment payments to be made as equity awards vest through fiscal year 2018, net of estimated forfeitures, totaled $47 and $63, respectively, and were included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

The Company’s 2017 Stock Incentive Plan (the “2017 Plan”) provides for the Company to sell or issue common stock or restricted common stock, or to grant qualified incentive stock options, nonqualified stock options, SARs, performance-based restricted stock units (“PSUs”), RSUs or other stock-based awards to the Company’s employees, officers, directors, ~~advisers~~advisors and outside consultants. The total number of shares authorized for issuance under the 2017 Plan was ~~10,062~~20,617 shares as of ~~March 31, 2018,~~September 30, 2021, of which ~~8,857~~9,755 shares remained available for future grant.

The following table summarizes the outstanding stock option activity and a summary of information related to stock options as of and for the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021:

Number
of
Shares

Weighted-
Average
Exercise
Price

Weighted-
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

(in years)

Outstanding at January 1, 2018

15,579

$
4.55

6.18

$
205,717

Granted

462

24.28

Exercised

(266
)

2.53

Forfeited

(59
)

11.40

Outstanding at March 31, 2018

15,716

$
5.14

6.06

$
380,263

Options exercisable at March 31, 2018

11,868

$
3.14

5.27

$
310,894

Vested or expected to vest at March 31, 2018

15,479

$
5.02

6.01

$
376,463

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding at January 1, 2021		7,120		$	8.01		4.88	$	9,367
Granted		116			8.23
Exercised		(904	)		2.26
Forfeited		(292	)		10.70
Outstanding at September 30, 2021		6,040		$	8.74		4.53	$	7,200
Options exercisable at September 30, 2021		5,665		$	8.69		4.28	$	6,924
Vested or expected to vest at September 30, 2021		6,032		$	8.74		4.52	$	7,182

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model using the following assumptions:

The weighted-average grant-date fair value of options granted during the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020 was ~~$8.88~~$3.15 and ~~$4.92~~$0.98 per share, respectively. Cash proceeds received upon the exercise of options were ~~$675~~$3,532 and ~~$40~~$955 during the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, respectively. The intrinsic value of stock options exercised during the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020 was ~~$5,873~~$5,182 and ~~$181,~~$1,480, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

A summary of RSU activity under the Company’s 2011 Stock Incentive Plan (the “2011 Plan”) and the 2017 Plan for the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 is as follows:

The Company withheld ~~310~~779 and 150 shares of common stock in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs during the ~~three~~nine months ended ~~March 31, 2017.~~ September 30, 2021 and 2020, respectively.

During the ~~three~~nine months ended ~~March 31, 2018,~~September 30, 2021 and 2020, the Company ~~withheld no shares~~granted PSUs to certain employees that vest over a three-year period based on the achievement of ~~common~~performance goals and continued performance of services. The performance goals consist solely of market-based vesting conditions, determined by the Company’s level of achievement of pre-established parameters relating to the performance of the Company’s stock ~~in settlement~~price as set by the Board of ~~employee tax withholding obligations due upon~~Directors. Vesting may occur at any time during the three-year period.

Compensation expense is based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest dates of each vesting condition, both of ~~RSUs.~~which were estimated based on a Monte Carlo simulation model applying the following key assumptions:

A summary of PSU activity for the nine months ended September 30, 2021 is as follows:

~~In January 2017,~~Over time, the Company has granted ~~110 stock appreciation rights (“SARs”)~~SARs that allow the holder the right, upon exercise, to receive in cash the amount of the difference between the fair value of the Company’s common stock at the date of exercise and the price of the underlying common stock at the date of grant of each SAR. The ~~price of the underlying common stock on the date of grant was $12.24 per share and the grant-date fair value was $4.52 per SAR. The~~ SARs ~~vest~~vested over a four-year period from the date of grant and expire ten years from the date of grant. During the nine months ended September 30, 2021, 20 SARs were exercised with a fair value of $6.75 per share. As of ~~March 31, 2018, 240~~September 30, 2021, 200 outstanding andfully vested SARs were ~~outstanding and 60 were unvested. As of March 31, 2018, there were 180 SARs~~ exercisable ~~and the~~with a weighted-average fair value ~~was $24.07~~of $2.29 per SAR. The fair value of the SAR liability as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017~~2020 was ~~$4,321~~$458 and ~~$2,155,~~$493, respectively (see Note 6)7), and was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

Stock-based compensation expense related to stock options, RSUs, SARs and ~~SARs~~PSUs for the three and nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017~~2020 was classified in the condensed consolidated statements of operations and comprehensive (loss) income as follows:

The Company recognized stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 in the condensed consolidated balance sheet as follows:

As of ~~March 31, 2018,~~September 30, 2021, there was ~~$21,337~~$25,442 of unrecognized compensation cost related to outstanding stock options, RSUs, SARs and ~~SARs,~~PSUs, which is expected to be recognized over a weighted-average period of ~~2.79~~2.67 years.

Basic and diluted net (loss) income per share attributable to common stockholders was calculated as follows:

Three Months Ended March 31,

2018

2017

Numerator:

Net income

$
17,776

$
18,154

Cumulative dividends on convertible preferred stock

—

(1,451
)
Undistributed earnings allocated to participating securities

—

(9,115
)
Net income attributable to common
   stockholders, basic

17,776

7,588

Undistributed earnings reallocated to
   dilutive potential common shares

—

1,055

Net income attributable to common
   stockholders, diluted

$
17,776

$
8,643

Denominator:

Weighted-average shares used to compute net
   income per share attributable to common
   stockholders, basic

81,629

33,618

Dilutive effect of stock options

11,713

9,279

Dilutive effect of restricted stock units

252

402

Weighted-average shares used to compute net
   income per share attributable to common
   stockholders, diluted

93,594

43,299

Net income per share attributable to common stockholders:

Basic

$
0.22

$
0.23

Diluted

$
0.19

$
0.20

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021		2020
Numerator:
Net (loss) income attributable to common stockholders, basic and diluted	$	(876	)	$	3,473	$	1,680	$	1,607
Denominator:
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders, basic		85,660			83,302		84,985		83,437
Dilutive effect of stock options		—			1,125		1,765		1,207
Dilutive effect of restricted stock units		—			1,039		2,198		726
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders, diluted		85,660			85,466		88,948		85,370
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.01	)	$	0.04	$	0.02	$	0.02
Diluted	$	(0.01	)	$	0.04	$	0.02	$	0.02

The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the computation of diluted net (loss) income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive:

The Company disaggregates its revenue by product and service in the condensed consolidated statements of operations and comprehensive (loss) income. Performance obligations related to product revenue are recognized at a point in time, while performance obligations related to service revenue are recognized over time. The Company also disaggregates its revenue based on geographic locations of its customers, as determined by the customer’s shipping address, summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
North America:
United States	$	40,671	$	32,036	$	101,534	$	90,825
Canada		11,087		6,428		61,875		15,170
Total North America		51,758		38,464		163,409		105,995
Europe, Middle East and Africa:		6,547		6,047		19,478		27,493
Asia-Pacific:
Australia		24,329		38,889		68,527		86,848
Other		8,832		10,014		24,526		31,884
Total Asia-Pacific		33,161		48,903		93,053		118,732
Latin America		7,753		12,333		20,286		20,500
Total revenue⁽¹⁾	$	99,219	$	105,747	$	296,226	$	272,720

The Company also disaggregates its revenue based on product line summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Product revenue:
Wireless	$	43,070	$	26,825	$	116,081	$	62,992
Fixed telco		20,187		34,005		51,209		75,756
Cable		24,495		32,911		94,729		100,879
Total product revenue		87,752		93,741		262,019		239,627
Service revenue:
Wireless		1,141		2,396		3,416		5,244
Fixed telco		825		441		3,474		992
Cable		9,501		9,169		27,317		26,857
Total service revenue		11,467		12,006		34,207		33,093
Total revenue	$	99,219	$	105,747	$	296,226	$	272,720

As of September 30, 2021 and December 31, 2020, the Company had short-term capitalized contract costs of $96 and $95, respectively, which are included in prepaid expenses and other current assets and had long-term capitalized contract costs of $67 and $70, respectively, which are included in other assets in the accompanying condensed consolidated balance sheets. During the three months ended September 30, 2021 and 2020, amortization expense associated with capitalized contract costs was $23 and $76, respectively,and during the nine months ended September 30, 2021 and 2020 was $75 and $524, respectively, all of which was recorded to selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive (loss) income.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue when the Company satisfies its performance obligations, consistent with the above methodology. For the three and nine months ended September 30, 2021, the Company recognized $1,726and $13,706, respectively, of revenue that was included in deferred revenue as of December 31, 2020. For the three and nine months ended September 30, 2020, the Company recognized $9,857and $20,194, respectively, of revenue that was included in deferred revenue as of December 31, 2019.

The Company receives payments from customers based upon contractual billing terms. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to the Company’s contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced. As of September 30, 2021 and December 31, 2020, the Company included contract assets of $781 and $771, respectively, which is netted with deferred revenue in the accompanying condensed consolidated balance sheets.

As of September 30, 2021, the aggregate remaining amount of revenue expected to be recognized related to unsatisfied or partially unsatisfied performance obligations was $20,929, which consists of deferred revenue. The Company expects approximately 76% of this amount to be recognized in the next twelve months with the remaining amount to be recognized over the next two to five years.

The Company’s customary payment terms are generally 90 days or less. If the Company provides extended payment terms that represent a significant financing component, the Company adjusts the amount of promised consideration for the time value of money using an appropriate discount rate and recognizes interest income separate from the revenue recognized on contracts with customers. During the three months ended September 30, 2021 and 2020, the Company recorded interest income of $6 and $10,respectively, and during the nine months ended September 30, 2021 and 2020, the Company recorded interest income of $14 and $57, respectively, all of which were recorded in the condensed consolidated statements of operations and comprehensive (loss) income.

The Company operates as ~~one~~1 operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company has determined that its chief operating decision maker is its President and Chief Executive Officer. The Company’s chief operating decision maker reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and assessing financial performance. Since the Company operates as one operating segment, all required financial segment information can be found in these condensed consolidated financial statements.

~~The following table summarizes the Company’s revenue based on the customer’s location, as determined by the customer’s shipping address:~~

~~Transactions Involving Liberty Global Ventures Holding B.V. and its Affiliates~~

Liberty Global Ventures Holding B.V. is a principal stockholder of the Company through its ownership of common stock. Affiliates of Liberty Global Ventures Holding B.V. (“Liberty Global Affiliates”) are customers of the Company. During the three months ended March 31, 2018 and 2017, the Company recognized revenue of $15,731 and $14,953, respectively, from transactions with Liberty Global Affiliates and amounts received in cash from Liberty Global Affiliates totaled $13,892 and $12,431, respectively. As of March 31, 2018 and December 31, 2017, amounts due from Liberty Global Affiliates totaled $15,067 and $13,367, respectively.

In March 2012, the Company entered into a consulting agreement with Bill Styslinger, a member of its board of directors, for the provision of sales management, corporate strategy and advisory services, which was initially scheduled to expire on January 31, 2014. The Company extended the term of the consulting agreement on two occasions, and the consulting agreement expired on December 31, 2016. In connection with Mr. Styslinger’s services as a consultant, in May 2012, the Company granted Mr. Styslinger stock options for the purchase of 600 shares of common stock, at an exercise price of $1.69 per share, which vested as to one-third of the shares under the award on February 1, 2013 and in equal monthly installments thereafter for the following two years. The grant-date fair value of the award totaled $527, which was recorded by the Company as stock-based compensation expense over the vesting period of the award.

In connection with special dividends declared by the Company’s board of directors in November 2014, June 2016, December 2016, May 2017 and November 2017 (see Note 10), the board of directors also approved cash payments to be made to holders of the Company’s stock options, SARs and RSUs in accordance with the provisions of the Company’s equity incentive plans. In connection with the special dividends declared in December 2016, the Company paid Mr. Styslinger $616 as equitable adjustments in the three months ended March 31, 2017. The Company made no payments to Mr. Styslinger as equitable adjustments in the three months ended March 31, 2018.

In addition, during the three months ended March 31, 2018 and 2017, the Company recognized general and administrative expenses of $51 and $50, respectively, for Mr. Styslinger’s services as a non-employee director. As of March 31, 2018, $51 was due to Mr. Styslinger for his services as a non-employee director. No amount was due to Mr. Styslinger for his services as a non-employee director as of December 31, 2017.

On July 1, 2015, the Company entered into a commercial mortgage loan agreement in the amount of ~~Rongke Xie~~

~~Rongke Xie, who serves~~$7,950 (the “Mortgage Loan”). Borrowings under the Mortgage Loan bore interest at a rate of 3.5% per annum and were repayable in 60 monthly installments of $46, consisting of principal and interest based on a 20-year amortization schedule. The remaining amount of unpaid principal under the Mortgage Loan was paid on the maturity date of July 1, 2020 utilizing the Company’s revolving credit facility. Upon entering into the Mortgage Loan, the Company incurred debt issuance cost of $45, which was initially recorded as ~~Deputy General Manager of Guangzhou Casa Communication Technology LTD (“Casa China”),~~ a ~~subsidiary~~direct deduction from the debt liability and was amortized to interest expense using the effective interest method from the issuance date of the ~~Company, is~~loan until the ~~sister~~maturity date.

The Mortgage Loan was paid on the maturity date of ~~Lucy Xie,~~July 1, 2020, utilizing the Company’s ~~Senior Vice President~~revolving credit facility. The Company made principal payments under the Mortgage Loan of ~~Operations~~$6,483 and ~~a member of~~$6,643 during the ~~Company’s board of directors. Casa China paid Rongke Xie $79~~three and ~~$100 in total compensation in~~nine months ended September 30, 2020, respectively. NaN interest expense was incurred during the three months ended ~~March 31, 2018~~September 30, 2020. Interest expense, including the amortization of debt issuance costs, totaled $120 during the nine months ended September 30, 2020.

In connection with special dividends previously declared, the board of directors also approved cash payments to be made to holders of the Company’s stock options, SARs and ~~2017, respectively, for her services~~RSUs as equitable adjustments to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. These equitable adjustment payments are equal to

an ~~employee.~~amount per share multiplied by the net number of shares subject to outstanding equity awards after applying the treasury stock method. The below table provides details of these equitable adjustment payments:

				Equitable Adjustment Payments
				Nine Months Ended				Equitable Adjustment Liability(1)
Dividend Declaration Dates	Equitable Adjustment per share		Year of Final Vesting	September 30, 2021		September 30, 2020		As of September 30, 2021		As of December 31, 2020
November 30, 2017	$	0.5802	2021	$	42	$	136	$	1	$	30	��
May 10, 2017		1.1774	2021		53		176		—		31
December 27, 2016		2.3306	2020		2		295		—		2
June 17, 2016		0.5891	2020		—		54		—		—
Total				$	97	$	661	$	1	$	63

~~The Company leases manufacturing, warehouse and office space in the United States, China, Spain and Ireland under non-cancelable operating leases that expire in 2021,~~On February 21, 2019, ~~2023 and 2026, respectively. The Ireland lease provides~~ the Company announced a stock repurchase program authorizing it to repurchase up to $75,000 of the ~~right to terminate in~~Company’s common stock. There were 0 repurchases made during the three and nine months ended September 30, 2021. ~~Rent expense for~~There were 0 repurchases during the three months ended ~~March 31, 2018~~September 30, 2020. During the nine months ended September 30, 2020, the Company repurchased 1,227 shares, at a cost of $3,031, including commissions. As of September 30, 2021, $70,208 remained authorized for repurchases of the Company’s common stock under the stock repurchase program. The stock repurchase program has no expiration date and does not require the Company to purchase a minimum number of shares, and the Company may suspend, modify or discontinue the stock repurchase program at any time without prior notice.

The Company’s 2017 Stock Incentive Plan (the “2017 Plan”) provides for the Company to sell or issue common stock or restricted common stock, or to grant qualified incentive stock options, nonqualified stock options, SARs, performance-based restricted stock units (“PSUs”), RSUs or other stock-based awards to the Company’s employees, officers, directors, advisors and outside consultants. The total number of shares authorized for issuance under the 2017 Plan was ~~$253~~20,617 shares as of September 30, 2021, of which 9,755 shares remained available for future grant.

The following table summarizes the outstanding stock option activity and ~~$210,~~a summary of information related to stock options as of and for the nine months ended September 30, 2021:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding at January 1, 2021		7,120		$	8.01		4.88	$	9,367
Granted		116			8.23
Exercised		(904	)		2.26
Forfeited		(292	)		10.70
Outstanding at September 30, 2021		6,040		$	8.74		4.53	$	7,200
Options exercisable at September 30, 2021		5,665		$	8.69		4.28	$	6,924
Vested or expected to vest at September 30, 2021		6,032		$	8.74		4.52	$	7,182

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model using the following assumptions:

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2021 and 2020 was $3.15 and $0.98 per share, respectively. ~~Rent~~Cash proceeds received upon the exercise of options were $3,532 and $955 during the nine months ended September 30, 2021 and 2020, respectively. The intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $5,182 and $1,480, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

A summary of RSU activity under the Company’s 2011 Stock Incentive Plan (the “2011 Plan”) and the 2017 Plan for the nine months ended September 30, 2021 is as follows:

The Company withheld 779 and 150 shares of common stock in settlement of employee tax withholding obligations due upon the vesting of RSUs and PSUs during the nine months ended September 30, 2021 and 2020, respectively.

During the nine months ended September 30, 2021 and 2020, the Company granted PSUs to certain employees that vest over a three-year period based on the achievement of performance goals and continued performance of services. The performance goals consist solely of market-based vesting conditions, determined by the Company’s level of achievement of pre-established parameters relating to the performance of the Company’s stock price as set by the Board of Directors. Vesting may occur at any time during the three-year period.

Compensation expense is ~~recorded~~based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest dates of each vesting condition, both of which were estimated based on a ~~straight-line basis,~~Monte Carlo simulation model applying the following key assumptions:

A summary of PSU activity for the nine months ended September 30, 2021 is as follows:

Over time, the Company has granted SARs that allow the holder the right, upon exercise, to receive in cash the amount of the difference between the fair value of the Company’s common stock at the date of exercise and asthe price of the underlying common stock at the date of grant of each SAR. The SARs vested over a ~~result,~~four-year period from the date of grant and expire ten years from the date of grant. During the nine months ended September 30, 2021, 20 SARs were exercised with a fair value of $6.75 per share. As of September 30, 2021, 200 outstanding andfully vested SARs were exercisable with a weighted-average fair value of $2.29 per SAR. The fair value of the SAR liability as of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017, the Company had a deferred rent liability of $251~~2020 was $458 and ~~$258,~~$493, respectively ~~which is~~(see Note 7), and was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

~~Future minimum lease payments under non-cancelable operating leases~~Stock-Based Compensation Expense

Stock-based compensation expense related to stock options, RSUs, SARs and PSUs for the three and nine months ended September 30, 2021 and 2020 was classified in the condensed consolidated statements of operations and comprehensive (loss) income as follows:

The Company recognized stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 in the condensed consolidated balance sheet as follows:

As of ~~March 31, 2018~~September 30, 2021, there was $25,442 of unrecognized compensation cost related to outstanding stock options, RSUs, SARs and PSUs, which is expected to be recognized over a weighted-average period of 2.67 years.

Basic and diluted net (loss) income per share attributable to common stockholders was calculated as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021		2020
Numerator:
Net (loss) income attributable to common stockholders, basic and diluted	$	(876	)	$	3,473	$	1,680	$	1,607
Denominator:
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders, basic		85,660			83,302		84,985		83,437
Dilutive effect of stock options		—			1,125		1,765		1,207
Dilutive effect of restricted stock units		—			1,039		2,198		726
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders, diluted		85,660			85,466		88,948		85,370
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.01	)	$	0.04	$	0.02	$	0.02
Diluted	$	(0.01	)	$	0.04	$	0.02	$	0.02

The Company has, in the ordinary course of business, agreed to defend and indemnify certain customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets.

As permitted under Delaware law, the Company indemnifies its officers, directors and employees for certain events or occurrences that happen by reason of their relationship with or position held at the Company.

As of March 31, 2018 and December 31, 2017, the Company had not experienced any losses related to these indemnification obligations and no material claims were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related liabilities were recorded in its consolidated financial statements.

From time to time, and in the ordinary course of business, the Company may be subject to various claims, charges and litigation. As of March 31, 2018, the Company did not have any pending claims, charges or litigation that it expects would have a material adverse effect on its consolidated financial position, results of operations or cash flows.

On April 30, 2018, the Company closed a follow-on offering in which certain selling stockholders sold 7,350 shares of common stock at a price to the public of $25.00 per share, before deducting underwriting discounts and commissions. The underwriters were granted a 30-day option to purchase up to an additional 1,103 shares from the selling stockholders. The Company did not sell any common stock in this offering and did not receive any of the proceeds from the sale of shares by the selling stockholders. In connection with the sale of shares by the selling stockholders, certain of the selling stockholders disgorged $3,811 to the Company in accordance with Section 16(b) of the Securities Exchange Act of 1934 and the Company incurred approximately $825 in transaction costs related to the offering.

~~Item 2. Management’s Discussion and Analysis of~~ ~~Financial Condition and Results of Operations.~~

The following discussion of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the section titled “Risk Factors.”

We offer solutions for next-generation centralized, distributed and virtualized architectures in cable broadband, fixed-line broadband and wireless networks. Our innovative solutions enable customers to cost-effectively and dynamically increase network speed, add bandwidth capacity and new services for consumers and enterprises, reduce network complexity and reduce operating and capital expenditures.

We have created a software-centric, multi-service portfolio that enables a broad range of core and access network functions for fixed and wireless networks. These networks share a common set of core and access network functions that enable network services such as subscriber management, session management, transport security and radio frequency, or RF, management. Our Axyom software architecture allows each of these network functions to be provided and controlled by a distinct segment of software, which can be integrated or combined together in a building block-style fashion with the segments of software responsible for each other network function. This allows us to offer network architectures that can be efficiently tailored to meet each customer’s specific requirements, both as they exist at the time of initial implementation and as they evolve over time.

~~The following tables set forth our consolidated results of operations in dollar amounts and as percentage of total revenue for the periods shown:~~

Three Months Ended March 31,

2018

2017

(in thousands)

Revenue:

Product

$
80,189

$
65,209

Service

8,885

7,520

Total revenue

89,074

72,729

Cost of revenue⁽¹⁾:

Product

25,780

19,132

Service

1,339

1,257

Total cost of revenue

27,119

20,389

Gross profit

61,955

52,340

Operating expenses:

Research and development⁽¹⁾

20,530

14,468

Sales and marketing⁽¹⁾

11,268

10,080

General and administrative⁽¹⁾

7,188

4,995

Total operating expenses

38,986

29,543

Income from operations

22,969

22,797

Other income (expense), net

(3,400
)

(3,540
)
Income before provision for income taxes

19,569

19,257

Provision for income taxes

1,793

1,103

Net income

$
17,776

$
18,154

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
North America:
United States	$	40,671	$	32,036	$	101,534	$	90,825
Canada		11,087		6,428		61,875		15,170
Total North America		51,758		38,464		163,409		105,995
Europe, Middle East and Africa:		6,547		6,047		19,478		27,493
Asia-Pacific:
Australia		24,329		38,889		68,527		86,848
Other		8,832		10,014		24,526		31,884
Total Asia-Pacific		33,161		48,903		93,053		118,732
Latin America		7,753		12,333		20,286		20,500
Total revenue⁽¹⁾	$	99,219	$	105,747	$	296,226	$	272,720

Three Months Ended March 31,

2018

2017

(as a percentage of total revenue)

Revenue:

Product

90
%

90
%
Service

10

10

Total revenue

100

100

Cost of revenue:

Product

29

26

Service

2

2

Total cost of revenue

30

28

Gross profit

70

72

Operating expenses:

Research and development

23

20

Sales and marketing

13

14

General and administrative

8

7

Total operating expenses

44

41

Income from operations

26

31

Other income (expense), net

(4
)

(5
)
Income before provision for income taxes

22

26

Provision for income taxes

2

1

Net income

20
%

25
%

~~Percentages in the table above are based on actual values. As a result, some totals may not sum due to rounding.~~

~~Three Months Ended March 31, 2018 Compared to the Three Months Ended March 31, 2017~~

Three Months Ended March 31,

2018

2017

Change

Amount

% of Total

Amount

% of Total

Amount

%

(dollars in thousands)

Revenue:

Product

$
80,189

90.0
%

$
65,209

89.7
%

$
14,980

23.0
%
Service

8,885

10.0
%

7,520

10.3
%

1,365

18.2
%
Total revenue

$
89,074

100.0
%

$
72,729

100.0
%

$
16,345

22.5
%
Revenue by geographic region:

North America

$
46,163

51.8
%

$
29,807

41.0
%

$
16,356

54.9
%
Latin America

9,402

10.6
%

11,967

16.4
%

(2,565
)

(21.4
)%
Europe, Middle East and Africa

24,157

27.1
%

21,073

29.0
%

3,084

14.6
%
Asia-Pacific

9,352

10.5
%

9,882

13.6
%

(530
)

(5.4
)%
Total revenue

$
89,074

100.0
%

$
72,729

100.0
%

$
16,345

22.5
%

The increase in product revenue was primarily due to an increase in sales of our products to existing customers in North America and Europe, Middle East and Africa as a result of an increase in the deployment of our software-centric broadband products in their networks and increased sales of software-enabled capacity expansions to provide their subscribers with greater bandwidth capacity. These increases were partially offset by a decrease in sales of our software-centric broadband products in Latin America and Asia-Pacific, which we believe was primarily due to the timing of customer expenditures on network upgrades.

The increase in service revenue was primarily due to a $1.3 million increase in maintenance and support services revenue due to an increase in our installed base of customers from product purchases and from customers renewing their maintenance and support service contracts in addition to a $0.1 million increase in professional services revenue due to an increase in customer projects requiring our assistance.

The ~~increase in cost of~~Company also disaggregates its revenue based on product ~~revenue was primarily due to an increase in sales of our hardware-based broadband products for customer network upgrades.~~

~~The increase in cost of service revenue was primarily due to an increase in subcontracted professional services.~~line summarized as follows:

Three Months Ended March 31,

2018

2017

Change

Amount

Gross
Margin

Amount

Gross
Margin

Amount

Gross
Margin (bps)

(dollars in thousands)

Gross profit:

Product

$
54,409

67.9
%

$
46,077

70.7
%

$
8,332

(280
)
Service

7,546

84.9
%

6,263

83.3
%

1,283

160

Total gross profit

$
61,955

69.6
%

$
52,340

72.0
%

$
9,615

(240
)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Product revenue:
Wireless	$	43,070	$	26,825	$	116,081	$	62,992
Fixed telco		20,187		34,005		51,209		75,756
Cable		24,495		32,911		94,729		100,879
Total product revenue		87,752		93,741		262,019		239,627
Service revenue:
Wireless		1,141		2,396		3,416		5,244
Fixed telco		825		441		3,474		992
Cable		9,501		9,169		27,317		26,857
Total service revenue		11,467		12,006		34,207		33,093
Total revenue	$	99,219	$	105,747	$	296,226	$	272,720

As of September 30, 2021 and December 31, 2020, the Company had short-term capitalized contract costs of $96 and $95, respectively, which are included in ~~product gross margin was primarily due to an increase~~prepaid expenses and other current assets and had long-term capitalized contract costs of $67 and $70, respectively, which are included in ~~sales of our hardware-based broadband products for customer network upgrades.~~other assets in the accompanying condensed consolidated balance sheets. During the three months ended ~~March~~September 30, 2021 and 2020, amortization expense associated with capitalized contract costs was $23 and $76, respectively,and during the nine months ended September 30, 2021 and 2020 was $75 and $524, respectively, all of which was recorded to selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive (loss) income.

Contract liabilities consist of deferred revenue and include payments received in advance of performance under the contract. Such amounts are recognized as revenue when the Company satisfies its performance obligations, consistent with the above methodology. For the three and nine months ended September 30, 2021, the Company recognized $1,726and $13,706, respectively, of revenue that was included in deferred revenue as of December 31, ~~2017, we~~2020. For the three and nine months ended September 30, 2020, the Company recognized ~~$8.5 million~~$9,857and $20,194, respectively, of ~~product~~ revenue ~~upon the expiration~~that was included in deferred revenue as of ~~trade-in rights for which there were no product costs.~~

~~The increase in service gross margin was due to an increase in maintenance and support services revenue.~~

The ~~increase in research and development expense was primarily due~~Company receives payments from customers based upon contractual billing terms. Accounts receivable are recorded when the right to a $1.9 million increase in personnel-related costs as a result of the increase in the headcount of our research and development personnel from 358 to 405 to support the development of our new wireless and software-centric broadband products and to enhance our existing software-centric broadband products, a $1.8 million increase in development costs for new broadband products, a $1.5 million increase in stock-based compensation expense primarilyconsideration becomes unconditional. Contract assets include amounts related to the ~~revaluation~~Company’s contractual right to consideration for both completed and partially completed performance obligations that may not have been invoiced. As of ~~stock appreciation rights, a $0.5 million increase in depreciation expense for research and development related assets, and a $0.1 million increase in facilities and infrastructure expenses.~~

The increase in sales and marketing expense was due to a $1.8 million increase in personnel-related costs due to an increase in headcount, which was partially offset by a $0.6 million decrease in sales agent commissions and a $0.1 million decrease in marketing costs related to a reduction in trade show and event expenses.

The increase in general and administrative expense was primarily due to a $1.4 million increase in personnel-related costs due to an increase in headcount to support the continued growth in our business and $0.8 million of expense to support the requirements of being a public company.

The change from a net other expense of $3.5 million to $3.4 million was primarily due to a $0.6 million increase in interest income due to an increase in interest rates and an increase in our portfolio of cash equivalents, partially offset by a $0.5 million increase in interest expense attributable to our term loan facility due to an increase in interest rates.

~~The 3.5% increase in our effective tax rate primarily resulted from a 3.7% decrease in tax benefits of certain employee stock-based compensation transactions.~~

Since our inception, we have primarily funded our operations through issuances of shares of our convertible preferred stock and cash flows from operations. In addition, in December 2016, we entered into a credit agreement that included a term loan facility under which we borrowed $300.0 million, and in December 2017, we closed our initial public offering, or IPO, of 6,900,000 shares and received net proceeds of $79.3 million, after deducting underwriting discounts and commissions and offering costs. The following tables set forth our cash and cash equivalents and working capital as of March 31, 2018September 30, 2021 and December 31, ~~2017 as well as our net cash flows for~~2020, the ~~three months ended March 31, 2018~~Company included contract assets of $781 and ~~2017:~~$771, respectively, which is netted with deferred revenue in the accompanying condensed consolidated balance sheets.

As of ~~March 31, 2018, we had cash and cash equivalents~~September 30, 2021, the aggregate remaining amount of $307.1 million and net accounts receivable of $93.2 million. We maintain a $25.0 million revolving credit facility under which $24.0 million was available and $1.0 million was used as collateral for a stand-by letter of credit as of March 31, 2018.

Of our total cash and cash equivalents of $307.1 million as of March 31, 2018, $60.8 million was held by our foreign subsidiaries. The TCJA established a modified territorial system requiring a mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries. In December 2017, we recorded a provisional charge related to a one-time deemed repatriation of accumulated earnings of foreign subsidiaries and related withholding taxes. As a result, applicable U.S. corporate and foreign income taxes have been provided on substantially all of our accumulated earnings of foreign subsidiaries previously considered indefinitely reinvested. Beginning in 2018, the TCJA also requires a minimum tax on certain future earnings generated by foreign subsidiaries while providing future tax-free repatriation of such earnings through a 100% dividends-received deduction. We are still evaluating whether to change our indefinite reinvestment assertion in light of the TCJA and consider that conclusion to be incomplete under guidance issued by the SEC. If we subsequently change our assertion during the measurement period, such changes will be accounted for through an adjustment to the provisional income tax charge during 2018, which isrevenue expected to be ~~finalized no later than the fourth quarter~~recognized related to unsatisfied or partially unsatisfied performance obligations was $20,929, which consists of ~~2018.~~

~~We believe our existing cash and cash equivalents, anticipated cash flows from future operations and liquidity available from our revolving credit facility will~~deferred revenue. The Company expects approximately 76% of this amount to be ~~sufficient to meet our working capital and capital expenditure needs and debt service obligations for at least~~recognized in the next ~~12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth,~~twelve months with the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, expansion of our business through acquisitions or our investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

From our inception through March 31, 2018, our board of directors has declared a special dividend on five separate occasions and has approved cash payments to the holders of our stock options, stock appreciation rights, or SARs, and restricted stock units, or RSUs, as equitable adjustments in connection with these special dividends. The dividend payments totaled $0.9 million, $206.4 million, $137.4 million and $0.3 million in the three months ended March 31, 2018 and the years ended December 31, 2017, 2016 and 2015, respectively. The equitable adjustment payments totaled $1.4 million, $40.2 million, $4.9 million and $0.4 million in the three months ended March 31, 2018 and the years ended December 31, 2017, 2016 and 2015, respectively. As of March 31, 2018, there were $8.4 million of equitable adjustment payments that had

been approved by our board of directors that had not yet been paid to the holders of our stock options, SARs and RSUs. These equitable adjustment payments will be paid to the holders of the applicable equity awards as they vest through 2021. We do not anticipate declaring cash dividends in the foreseeable future. Any future determination to declare dividends will be subject to the discretion of our board of directors and applicable law, and will depend on various factors, including our results of operations, financial condition, prospects and any other factors deemed relevant by our board of directors.

~~Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash inflows from operating activities~~remaining amount to be ~~affected by increases in sales~~recognized over the next two to five years.

The Company’s customary payment terms are generally 90 days or less. If the Company provides extended payment terms that represent a significant financing component, the Company adjusts the amount of promised consideration for the time value of money using an appropriate discount rate and ~~timing of collections and by purchases and shipments of inventory. Our primary uses of cash~~recognizes interest income separate from operating activities have been for personnel costs and investment in sales and marketing and research and development. We expect cash outflows from operating activities to increase as a result of further investment in research and development and sales and marketing and increases in personnel costs as we continue to enhance our products and introduce new products in an effort to continue to expand our business.

the revenue recognized on contracts with customers. During the three months ended ~~March 31, 2018, cash provided by operating activities was $51.1 million, primarily resulting from our net~~September 30, 2021 and 2020, the Company recorded interest income of ~~$17.8 million, net non-cash charges of $6.5 million~~$6 and ~~net cash provided by changes in our operating assets~~$10,respectively, and ~~liabilities of $26.8 million. The net cash provided by changes in our operating assets and liabilities~~ during the ~~three~~nine months ended ~~March 31, 2018 was primarily due to a $28.5 million decrease~~September 30, 2021 and 2020, the Company recorded interest income of $14 and $57, respectively, all of which were recorded in ~~accounts receivable due to~~ the ~~timing~~condensed consolidated statements of ~~billings~~operations and collections during the period and a $7.7 million decrease in inventory due to shipments of products to customers. These sources of cash were partially offset by a $7.2 million decrease in accrued expenses and other current liabilities, which included a decrease of $9.2 million for personnel-related accrued liabilities, suchcomprehensive (loss) income.

The Company operates as ~~accrued salaries and bonuses, and a $4.6 million decrease in deferred revenue primarily due to recognition of $4.0 million of revenue upon the product acceptance~~1 operating segment. Operating segments are defined as components of an ~~existing customer in the Asia-Pacific region and the recognition of $3.9 million of deferred revenue~~enterprise for ~~an existing customer in Europe, partially offset~~which separate financial information is regularly evaluated by the ~~deferral~~Company’s chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company has determined that its chief operating decision maker is its President and Chief Executive Officer. The Company’s chief operating decision maker reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and assessing financial performance. Since the revenue recognition for certain sales transactions resulting from future obligations to deliver products and services to existing customers in North America and Europe and maintenance and support service contract renewals.

~~During the three months ended March 31, 2017, cash provided by~~Company operates as one operating activities was $13.4 million, primarily resulting from our net income of $18.2 million, net non-cash charges of $5.6 million and net cash used by changes in our operating assets and liabilities of $10.4 million. The net cash used by changes in our operating assets and liabilities during the three months ended March 31, 2017 was primarily due to a $20.1 million decrease in deferred revenue primarily due to recognition of $8.5 million of revenue upon the expiration of trade-in rights for an existing customer in North America and the recognition of $6.3 million and $2.2 million of revenue upon the product acceptance of existing customers in the Asia-Pacific region and in North America, respectively; a $12.7 million decrease in accounts payables primarily attributable to timing of our payments for purchases of inventory; a $10.8 million decrease in accrued income taxes due to the timing of tax payments; a $10.0 million decrease in accrued expenses and other current liabilities, which included a decrease of $7.4 million for personnel-related accrued liabilities, such as accrued salaries and bonuses; and a $7.5 million increase in inventory due to anticipated growth in our business. These uses of cash were partially offset by a $53.1 million decrease in accounts receivable due to the timing of billings and collections during the period.

Our investing activities have consisted primarily of expenditures for lab and computer equipment and software to support the development of new products and increase our manufacturing capacity to meet customer demand for our products. In addition, our investing activities include expansion of and improvements to our facilities. As our business expands, we expect that we will continue to investsegment, all required financial segment information can be found in these ~~areas.~~condensed consolidated financial statements.

~~Net cash used in investing activities during the three months ended March 31, 2018 was $2.5 million and consisted of purchases of~~The Company’s property and ~~equipment.~~equipment, net by location was as follows:

~~Net cash used in investing activities during the three months ended March 31, 2017 was $1.9 million and consisted of purchases of property and equipment.~~

Net cash used in financing activities during the three months ended March 31, 2018 was $3.4 million and consisted of dividend and equitable adjustment payments of $2.2 million, initial public offering costs of $1.0 million and principal repayments of debt of $0.8 million, partially offset by proceeds from exercise of stock options of $0.7 million.16. Related Parties

Net cash used in financing activities during the three months ended March 31, 2017 was $102.6 million and consisted of dividend and equitable adjustment payments of $96.7 million, employee taxes paid related to net share settlement of restricted stock units of $3.8 million, initial public offering costs of $1.2 million and principal repayments of debt of $0.8 million.

On July 1, 2015, the Company entered into a commercial mortgage loan agreement in the amount of $7,950 (the “Mortgage Loan”). Borrowings under the Mortgage Loan bore interest at a rate of 3.5% per annum and were repayable in 60 monthly installments of $46, consisting of principal and interest based on a 20-year amortization schedule. The remaining amount of unpaid principal under the Mortgage Loan was paid on the maturity date of July 1, 2020 utilizing the Company’s revolving credit facility. Upon entering into the Mortgage Loan, the Company incurred debt issuance cost of $45, which was initially recorded as a direct deduction from the debt liability and was amortized to interest expense using the effective interest method from the issuance date of the loan until the maturity date.

The Mortgage Loan was paid on the maturity date of July 1, 2020, utilizing the Company’s revolving credit facility. The Company made principal payments under the Mortgage Loan of$6,483 and $6,643 during the three and nine months ended September 30, 2020, respectively. NaN interest expense was incurred during the three months ended September 30, 2020. Interest expense, including the amortization of debt issuance costs, totaled $120 during the nine months ended September 30, 2020.

In connection with special dividends previously declared, the board of directors also approved cash payments to be made to holders of the Company’s stock options, SARs and RSUs as equitable adjustments to the holders of such instruments in accordance with the provisions of the Company’s equity incentive plans. These equitable adjustment payments are equal to

an amount per share multiplied by the net number of shares subject to outstanding equity awards after applying the treasury stock method. The below table provides details of these equitable adjustment payments:

				Equitable Adjustment Payments
				Nine Months Ended				Equitable Adjustment Liability(1)
Dividend Declaration Dates	Equitable Adjustment per share		Year of Final Vesting	September 30, 2021		September 30, 2020		As of September 30, 2021		As of December 31, 2020
November 30, 2017	$	0.5802	2021	$	42	$	136	$	1	$	30	��
May 10, 2017		1.1774	2021		53		176		—		31
December 27, 2016		2.3306	2020		2		295		—		2
June 17, 2016		0.5891	2020		—		54		—		—
Total				$	97	$	661	$	1	$	63

On February 21, 2019, the Company announced a stock repurchase program authorizing it to repurchase up to $75,000 of the Company’s common stock. There were 0 repurchases made during the three and nine months ended September 30, 2021. There were 0 repurchases during the three months ended September 30, 2020. During the nine months ended September 30, 2020, the Company repurchased 1,227 shares, at a cost of $3,031, including commissions. As of September 30, 2021, $70,208 remained authorized for repurchases of the Company’s common stock under the stock repurchase program. The stock repurchase program has no expiration date and does not require the Company to purchase a minimum number of shares, and the Company may suspend, modify or discontinue the stock repurchase program at any time without prior notice.

The Company’s 2017 Stock Incentive Plan (the “2017 Plan”) provides for the Company to sell or issue common stock or restricted common stock, or to grant qualified incentive stock options, nonqualified stock options, SARs, performance-based restricted stock units (“PSUs”), RSUs or other stock-based awards to the Company’s employees, officers, directors, advisors and outside consultants. The total number of shares authorized for issuance under the 2017 Plan was 20,617 shares as of September 30, 2021, of which 9,755 shares remained available for future grant.

The following table summarizes the outstanding stock option activity and a summary of information related to stock options as of and for the nine months ended September 30, 2021:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)
Outstanding at January 1, 2021		7,120		$	8.01		4.88	$	9,367
Granted		116			8.23
Exercised		(904	)		2.26
Forfeited		(292	)		10.70
Outstanding at September 30, 2021		6,040		$	8.74		4.53	$	7,200
Options exercisable at September 30, 2021		5,665		$	8.69		4.28	$	6,924
Vested or expected to vest at September 30, 2021		6,032		$	8.74		4.52	$	7,182

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model using the following assumptions:

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2021 and 2020 was $3.15 and $0.98 per share, respectively. Cash proceeds received upon the exercise of options were $3,532 and $955 during the nine months ended September 30, 2021 and 2020, respectively. The intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $5,182 and $1,480, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

A summary of RSU activity under the Company’s 2011 Stock Incentive Plan (the “2011 Plan”) and the 2017 Plan for the nine months ended September 30, 2021 is as follows:

Compensation expense is based on the estimated value of the awards on the grant date, and is recognized over the period from the grant date through the expected vest dates of each vesting condition, both of which were estimated based on a Monte Carlo simulation model applying the following key assumptions:

A summary of PSU activity for the nine months ended September 30, 2021 is as follows:

Over time, the Company has granted SARs that allow the holder the right, upon exercise, to receive in cash the amount of the difference between the fair value of the Company’s common stock at the date of exercise and the price of the underlying common stock at the date of grant of each SAR. The SARs vested over a four-year period from the date of grant and expire ten years from the date of grant. During the nine months ended September 30, 2021, 20 SARs were exercised with a fair value of $6.75 per share. As of September 30, 2021, 200 outstanding andfully vested SARs were exercisable with a weighted-average fair value of $2.29 per SAR. The fair value of the SAR liability as of September 30, 2021 and December 31, 2020 was $458 and $493, respectively (see Note 7), and was included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets.

The Company recognized stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 in the condensed consolidated balance sheet as follows:

As of September 30, 2021, there was $25,442 of unrecognized compensation cost related to outstanding stock options, RSUs, SARs and PSUs, which is expected to be recognized over a weighted-average period of 2.67 years.

Basic and diluted net (loss) income per share attributable to common stockholders was calculated as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021		2020
Numerator:
Net (loss) income attributable to common stockholders, basic and diluted	$	(876	)	$	3,473	$	1,680	$	1,607
Denominator:
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders, basic		85,660			83,302		84,985		83,437
Dilutive effect of stock options		—			1,125		1,765		1,207
Dilutive effect of restricted stock units		—			1,039		2,198		726
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders, diluted		85,660			85,466		88,948		85,370
Net (loss) income per share attributable to common stockholders:
Basic	$	(0.01	)	$	0.04	$	0.02	$	0.02
Diluted	$	(0.01	)	$	0.04	$	0.02	$	0.02

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
North America:
United States	$	40,671	$	32,036	$	101,534	$	90,825
Canada		11,087		6,428		61,875		15,170
Total North America		51,758		38,464		163,409		105,995
Europe, Middle East and Africa:		6,547		6,047		19,478		27,493
Asia-Pacific:
Australia		24,329		38,889		68,527		86,848
Other		8,832		10,014		24,526		31,884
Total Asia-Pacific		33,161		48,903		93,053		118,732
Latin America		7,753		12,333		20,286		20,500
Total revenue⁽¹⁾	$	99,219	$	105,747	$	296,226	$	272,720

The Company also disaggregates its revenue based on product line summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Product revenue:
Wireless	$	43,070	$	26,825	$	116,081	$	62,992
Fixed telco		20,187		34,005		51,209		75,756
Cable		24,495		32,911		94,729		100,879
Total product revenue		87,752		93,741		262,019		239,627
Service revenue:
Wireless		1,141		2,396		3,416		5,244
Fixed telco		825		441		3,474		992
Cable		9,501		9,169		27,317		26,857
Total service revenue		11,467		12,006		34,207		33,093
Total revenue	$	99,219	$	105,747	$	296,226	$	272,720

The Company operates as 1 operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company has determined that its chief operating decision maker is its President and Chief Executive Officer. The Company’s chief operating decision maker reviews the Company’s financial information on a consolidated basis for purposes of allocating resources and assessing financial performance. Since the Company operates as one operating segment, all required financial segment information can be found in these condensed consolidated financial statements.

Rongke Xie, who serves as Deputy General Manager of Guangzhou Casa Communication Technology LTD (“Casa China”), a subsidiary of the Company, is the sister of Lucy Xie, the Company’s Senior Vice President of Operations and a member of the Company’s board of directors. Casa China paid Rongke Xie $187 and $153 in total compensation during the nine months ended September 30, 2021 and 2020, respectively, for her services as an employee.

To date, the Company has granted to Rongke Xie 116 RSUs which vest over four annual periods. The grant-date fair value of the awards totaled $500, which is recorded as stock-based compensation expense over the vesting period of the awards. During the three months ended September 30, 2021 and 2020, the Company recognized selling, general and administrative expenses of $28and $25 related to these awards, and during the nine months ended September 30, 2021 and 2020, the Company recognized selling, general and administrative expenses of $78 and $62 related to these awards.

The Company has, in the ordinary course of business, agreed to defend and indemnify certain customers against third-party claims asserting (i) infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and (ii) certain other harms caused by the acts or omissions of the Company.

As of September 30, 2021 and December 31, 2020, the Company had not experienced any material losses related to these indemnification obligations and 0 material claims were outstanding where a contingent loss was considered to be probable or reasonably estimable. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible, and no related liabilities were recorded in its condensed consolidated financial statements.

The complete response to this section regarding legal proceedings is incorporated by reference herein to Part II Item I in this 10-Q.

On October 25, 2021, the Company repaid all outstanding borrowings under the revolving credit facility utilizing funds held in cash and cash equivalents in the condensed consolidated balance sheets as of September 30, 2021. Repayment of the revolving credit facility included $6,500 of outstanding principal and $7 of outstanding interest on the payoff date. As noted in Note 10, Debt, the full $6,500 outstanding balance was included in current portion of long-term debt, net of unamortized debt issuance costs on the condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Our solutions are conceived, designed and built to enable our CSP customers to offer high bandwidth data services to their subscribers, and to transform their networks to meet the growing demand for bandwidth and to enable the introduction of new revenue-generating services. We offer physical, virtual and cloud-native 5G broadband and customer premise networking equipment for public and private high-speed data and multi-service communications networks. Our core and edge broadband technology enables CSPs and enterprises to cost-effectively and dynamically increase data network speed for their subscribers, add bandwidth capacity and new services, reduce network complexity, and reduce operating and capital expenditures.

We offer scalable solutions that can meet the evolving bandwidth needs of our customers and their subscribers. Our first installation in a service provider’s network frequently involves deploying our broadband products in only a portion of the provider’s network and, for our cable products, with only a fraction of the capacity of our products enabled at the time of initial installation. Over time, our customers have generally expanded the use of our solutions to other areas of their networks to extend network coverage or increase network capacity.

Our solutions are commercially deployed in over 70 countries by more than 475 customers, including regional service providers as well as some of the world’s largest Tier 1 CSPs, serving millions of subscribers.

The COVID-19 pandemic presents various risks to us, not all of which we are able to fully evaluate or even to foresee at the current time, and which could have a material effect upon the estimates and judgments relied upon by management in preparing these condensed consolidated financial statements. While we remain fully operational, during the three and nine months ended September 30, 2021, the effects of the COVID-19 pandemic on the global supply chain had a significant adverse effect on our financial results. In particular, certain of our products utilize components, for which there has been increased global demand. As a result, throughout 2021, and increasingly during the three months ended September 30, 2021, we began to see shortages of supply that resulted in our inability to fulfill certain customer orders within normal lead times. This adversely impacted our revenue and operating results for the three and nine months ended September 30, 2021. While we continue to work with our supply chain, contract manufacturers, and customers to minimize the extent of such impacts, we expect the effects of global supply chain issues to continue and cannot predict when such effects will subside. This may prevent us from being able to fulfill our customers’ orders in a timely manner or at all, which could lead to one or more of our customers cancelling their orders. At this time, we are neither able to estimate the extent of these impacts nor predict whether our efforts to minimize or contain them will be successful. We intend to continue to monitor our business very closely for any effects of COVID-19 for as long as necessary.

In addition to the negative impact on our business from global supply chain constraints related to COVID-19, we saw certain benefits that included decreases in certain operating expenses, such as travel and trade show expense, and benefited from certain U.S. government tax relief measures, discussed further below, during the year ended December 31, 2020, and the three and nine months ended September 30, 2021. We expect these benefits to gradually diminish as the various geographies in which we operate begin to recover from the pandemic.

For the nine months ended September 30, 2021, we were able to benefit from the CARES Act that was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s Social Security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP). For the nine months ended September 30, 2021, we recognized a reduction to cost of goods sold of $0.6 million and a

reduction in operating expenses of $4.3 million, in connection with a payroll tax credit under the CARES Act. For the nine months ended September 30, 2021 and 2020, we recognized an income tax benefit of $7.1 million and $9.3 million, respectively (see Note 9 to our accompanying financial statements). We will continue to evaluate the impact of the CARES Act on our financial position, results of operations, and cash flows.

Due to the above circumstances and as described generally in this Quarterly Report on Form 10-Q, our results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected in future periods. Management cannot predict the full impact of the COVID-19 pandemic on our sales channels, supply chain, manufacturing and distribution, or on economic conditions generally, including the effects on our current and potential customers, who may curtail spending on investments in current and/or new technologies, delay new equipment evaluations and trials, cancel orders, and possibly delay payments based on liquidity concerns, all of which could have a material impact on our business in the future. Similarly, our supply chain and our contract manufacturers could be affected, which could cause disruptions to our ability to meet customer demand or delivery schedules. For the three and nine months ended September 30, 2021, we did see certain delays in our supply chain that adversely impacted delivery schedules to our customers. If COVID-19 were to have such effects in the future, there would likely be a material adverse impact on our financial results, liquidity and capital resource needs. This uncertainty makes it challenging for management to estimate the future performance of our business, particularly in the near to medium term and the impact of COVID-19 could have a material adverse impact on our results of operations in the near to medium term.

The following tables set forth our consolidated results of operations in dollar amounts and as percentages of total revenue for the periods shown:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)						(in thousands)
Revenue:
Product	$	87,752		$	93,741		$	262,019		$	239,627
Service		11,467			12,006			34,207			33,093
Total revenue		99,219			105,747			296,226			272,720
Cost of revenue⁽¹⁾:
Product		57,372			51,947			150,515			130,602
Service		1,223			1,206			3,532			3,741
Total cost of revenue		58,595			53,153			154,047			134,343
Gross profit		40,624			52,594			142,179			138,377
Operating expenses:
Research and development⁽¹⁾		21,578			21,823			63,479			63,722
Selling, general and administrative⁽¹⁾		21,029			21,630			64,492			67,731
Total operating expenses		42,607			43,453			127,971			131,453
(Loss) income from operations		(1,983	)		9,141			14,208			6,924
Other income (expense), net		(4,181	)		(3,269	)		(12,308	)		(10,750	)
(Loss) income before (benefit from) provision for income taxes		(6,164	)		5,872			1,900			(3,826	)
(Benefit from) provision for income taxes		(5,288	)		2,399			220			(5,433	)
Net (loss) income	$	(876	)	$	3,473		$	1,680		$	1,607

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(as a percentage of total revenue)						(as a percentage of total revenue)
Revenue:
Product		88.4	%		88.6	%		88.5	%		87.9	%
Service		11.6			11.4			11.5			12.1
Total revenue		100.0			100.0			100.0			100.0
Cost of revenue:
Product		57.8			49.1			50.8			47.9
Service		1.2			1.1			1.2			1.4
Total cost of revenue		59.1			50.3			52.0			49.3
Gross profit		40.9			49.7			48.0			50.7
Operating expenses:
Research and development		21.7			20.6			21.4			23.4
Selling, general and administrative		21.2			20.5			21.8			24.8
Total operating expenses		42.9			41.1			43.2			48.2
(Loss) income from operations		(2.0	)		8.6			4.8			2.5
Other income (expense), net		(4.2	)		(3.1	)		(4.2	)		(3.9	)
(Loss) income before (benefit from) provision for income taxes		(6.2	)		5.6			0.6			(1.4	)
(Benefit from) provision for income taxes		(5.3	)		2.3			0.1			(2.0	)
Net (loss) income		(0.9	)%		3.3	%		0.6	%		0.6	%

Percentages in the table above are based on actual values. As a result, some totals may not sum due to rounding.

Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020

	Three Months Ended September 30,
	2021					2020					Change
	Amount		% of Total			Amount		% of Total			Amount			%
	(dollars in thousands)
Revenue:
Product	$	87,752		88.4	%	$	93,741		88.6	%	$	(5,989	)		(6.4	)%
Service		11,467		11.6	%		12,006		11.4	%		(539	)		(4.5	)%
Total revenue	$	99,219		100.0	%	$	105,747		100.0	%	$	(6,528	)		(6.2	)%
Revenue by geographic region:
North America	$	51,758		52.2	%	$	38,464		36.4	%	$	13,294			34.6	%
Europe, Middle East and Africa		6,547		6.6	%		6,047		5.7	%		500			8.3	%
Asia-Pacific		33,161		33.4	%		48,903		46.2	%		(15,742	)		(32.2	)%
Latin America		7,753		7.8	%		12,333		11.7	%		(4,580	)		(37.1	)%
Total revenue	$	99,219		100.0	%	$	105,747		100.0	%	$	(6,528	)		(6.2	)%

	Three Months Ended September 30,				Change
	2021		2020		Amount			%
Product revenue:
Wireless	$	43,070	$	26,825	$	16,245			60.6	%
Fixed telco		20,187		34,005		(13,818	)		(40.6	)%
Cable		24,495		32,911		(8,416	)		(25.6	)%
Total product revenue		87,752		93,741		(5,989	)		(6.4	)%
Service revenue:
Wireless		1,141		2,396		(1,255	)		(52.4	)%
Fixed telco		825		441		384			87.1	%
Cable		9,501		9,169		332			3.6	%
Total service revenue		11,467		12,006		(539	)		(4.5	)%
Total revenue	$	99,219	$	105,747	$	(6,528	)		(6.2	)%

Product revenues during the three months ended September 30, 2021 were adversely affected by supply chain delays across all of our markets. Wireless revenues increased despite such delays, due to increased revenues from certain Tier 1 customers in the period, including increased sales of certain end of life products that are not expected to derive significant revenues in future periods. In addition to the impact of supply chain delays, our fixed telco revenue declined due to decreased revenues from one Tier 1 customer, whose planned network buildout is nearing its completion. The decline in cable revenue was primarily the result of the aforementioned supply chain delays.

The decrease in service revenue was primarily due to decreased sales of services in the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.

The increase in cost of product revenue and the decrease in gross margin was due to product mix, with a lower proportion of higher margin software products and increased lower margin wireless customer premise equipment product sales.

Cost of service revenue and service gross margin remained relatively consistent period over period.

The decrease in research and development expense was primarily due to a $1.0 million decrease in purchases of research and development materials. This decrease was partially offset by a $0.8 million increase in personnel costs, driven by the impact of a cash flow hedge in 2020 and a pension benefit relief in China during the three months ended September 30, 2020, which did not repeat in 2021.

The decrease in selling, general and administrative expense was primarily driven by a $0.5 million decrease in personnel costs, due to a $1.4 million decrease in commissions, which was partially offset by an increase of $0.4 million in salaries and benefits mainly due to the impact of a cash flow hedge in 2020, an increase in travel expenses of $0.2 million and an increase in stock-based compensation of $0.3 million. In addition, depreciation expense and professional fees decreased $0.4 million and $0.2 million, respectively, partially offset by an increase in other taxes of $0.5 million during the three months ended September 30, 2021.

The change in other income (expense), net was primarily due to a $0.4 million increase in foreign exchange losses due to fluctuations in the Australian dollar and the China Renminbi exchange rates, a $0.3 million decrease in other income due to a non-recurring research and development grant received in the three months ended September 30, 2021 and an increase of $0.2 million in interest expense due to increased interest rates.

The (benefit from) income taxes for the three months ended September 30, 2021 compared to the provision for income taxes for the three months ended September 30, 2020 was primarily due to a discrete benefit of $7.1 million recorded in the three months ended September 30, 2021 associated with a change in estimate of our prior year taxable net operating loss that is able to be carried back as part of the CARES Act. The change in the (benefit from) provision for income taxes was also impacted by changes in the jurisdictional mix of earnings period over period.

Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020

	Nine Months Ended September 30,
	2021					2020					Change
	Amount		% of Total			Amount		% of Total			Amount			%
	(dollars in thousands)
Revenue:
Product	$	262,019		88.5	%	$	239,627		87.9	%	$	22,392			9.3	%
Service		34,207		11.5	%		33,093		12.1	%		1,114			3.4	%
Total revenue	$	296,226		100.0	%	$	272,720		100.0	%	$	23,506			8.6	%
Revenue by geographic region:
North America	$	163,409		55.2	%	$	105,995		38.9	%	$	57,414			54.2	%
Europe, Middle East and Africa		19,478		6.6	%		27,493		10.1	%		(8,015	)		(29.2	)%
Asia-Pacific		93,053		31.4	%		118,732		43.5	%		(25,679	)		(21.6	)%
Latin America		20,286		6.8	%		20,500		7.5	%		(214	)		(1.0	)%
Total revenue	$	296,226		100.0	%	$	272,720		100.0	%	$	23,506			8.6	%

	Nine Months Ended September 30,				Change
	2021		2020		Amount			%
Product revenue:
Wireless	$	116,081	$	62,992	$	53,089			84.3	%
Fixed telco		51,209		75,756		(24,547	)		(32.4	)%
Cable		94,729		100,879		(6,150	)		(6.1	)%
Total product revenue		262,019		239,627		22,392			9.3	%
Service revenue:
Wireless		3,416		5,244		(1,828	)		(34.9	)%
Fixed telco		3,474		992		2,482			250.2	%
Cable		27,317		26,857		460			1.7	%
Total service revenue		34,207		33,093		1,114			3.4	%
Total revenue	$	296,226	$	272,720	$	23,506			8.6	%

The increase in product revenue was primarily attributable to continued increased demand for our wireless products. The increase in wireless revenue was partially offset by decreased revenue from our fixed telco products, which is due to decreased demand from a Tier 1 customer that is completing its network buildout, and decreased revenue from our cable products, which have been adversely affected by supply chain delays.

The overall increase in service revenue was primarily due to increased support renewals and sales of services in cable and fixed telco, which was partially offset by a decline in wireless service revenue that was due to an increase in sales of certain wireless customer premise equipment products, for which we do not sell service contracts.

The increase in cost of product revenue was attributable to increased revenue. The overall product gross margin decline for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020 was due to product mix, with lower margin wireless customer premise equipment products comprising a larger percentage of total revenue.

The decrease in cost of service revenue and increase in service gross margin were primarily due to a decrease in utilization of third-party professional services in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

The decrease in research and development expense was mainly due to a $1.6 million decrease in purchases of research and development materials. This decrease was partially offset by increased personnel costs of $0.7 million, caused primarily by increased salaries and benefits of $3.3 million during the nine months ended September 30, 2021 due to the impact of a cash flow hedge in 2020 and an increase in average headcount, partially offset by a reduction in payroll taxes due to a CARES Act credit of $2.6 million during the nine months ended September 30, 2021. Professional services increased $0.3 million in the nine months ended September 30, 2021. Allocated facilities and depreciation costs increased by $0.3 million driven by increased average headcount.

The decrease in selling, general and administrative expense was primarily driven by a decrease of $1.2 million in professional services and a $1.9 million decrease in depreciation expense as assets that became fully depreciated were not replaced. Personnel costs decreased by $0.5 million for the nine months ended September 30, 2021, driven by a $3.7 million decrease in commissions, a $0.7 million decrease in travel due to COVID-19, and a $1.6 million decrease in payroll taxes due to a CARES Act credit during the nine months ended September 30, 2021, partially offset by increases in salaries and benefits of $4.0 million, driven by the impact of a cash flow hedge in 2020, increased average headcount, and increased stock-based compensation of $1.5 million. These decreases were partially offset by an increase in other taxes of $0.5 million during the three months ended September 30, 2021.

The change in other income (expense), net was primarily due to a $2.0 million increase in foreign exchange losses due to fluctuations in the Australian dollar and the China Renminbi exchange rates and a $0.6 million decrease in interest income due to lower interest rates, partially offset by a $0.8 million decrease in interest expense due to decreases in both the outstanding principal balance and the interest rate on our term loan facility.

The change in the (benefit from) provision for income taxes was primarily due to a discrete tax benefit of $9.3 million recorded during the nine months ended September 30, 2020 associated with the enactment of the CARES Act, partially offset by a discrete benefit of $7.1 million recorded during the nine months ended September 30, 2021 associated with a change in estimate of our prior year taxable net operating loss that is able to be carried back as part of the CARES Act. The change in the (benefit from) provision for income taxes was also impacted by changes in the jurisdictional mix of earnings period over period.

Our principal sources of liquidity have been and continue to be our cash and cash equivalents and cash flows from operations. The following tables set forth our cash and cash equivalents and working capital as of September 30, 2021 and December 31, 2020 and our cash flows for the nine months ended September 30, 2021 and 2020:

As of September 30, 2021, we had cash, cash equivalents and restricted cash of $157.5 million and net accounts receivable of $80.9 million. We maintain a $25.0 million revolving credit facility, under which we have drawn $6.5 million and utilized $1.5 million of available credit, which we used as collateral for two stand-by letters of credit, leaving $17.0 million of available credit as of September 30, 2021.

Our primary source of cash from operating activities has been cash collections from our customers. We expect cash flows from operating activities to be affected by increases and decreases in sales volumes and timing of collections, and by purchases and shipments of inventory. Our primary uses of cash from operating activities have been for personnel costs and investment in our selling, general and administrative departments and research and development. Future cash outflows from operating activities may increase as a result of further investment in research and development and selling, general and administrative requirements, and increases in personnel costs as we continue to grow our business by enhancing our existing products and introducing new products.

During the nine months ended September 30, 2021, cash provided by operating activities was $15.2 million, primarily resulting from our net income of $1.7 million, net non-cash adjustments of $21.9 million and net cash used by changes in our operating assets and liabilities of $8.4 million. The net cash used by changes in our operating assets and liabilities during the nine months ended September 30, 2021 was primarily due to a $17.6 million decrease in accounts payable due to timing of vendor payments; a $6.1 million decrease in accrued expenses; a $5.9 million increase in prepaid income taxes; a $1.6 million increase in prepaid expenses and other assets; and a $1.6 million decrease in accrued income taxes. These uses were partially offset by a $13.2 million decrease in accounts receivable due to collections during the period; a $9.3 million net decrease in inventory; and a $1.9 million increase in deferred revenue due to the timing of revenue recognition.

Our investing activities have consisted primarily of expenditures for lab and computer equipment and software to support the development of new products. In addition, our investing activities include expansion of and improvements to our facilities. As our business expands, we expect that we will continue to invest in these areas.

Net cash used in investing activities during the nine months ended September 30, 2021 was $4.4 million, consisting of purchases of property and equipment and software licenses.

Net cash used in financing activities during the nine months ended September 30, 2021 was $11.9 million, consisting primarily of debt principal repayments of $9.0 million and employee taxes paid related to net share settlement of equity awards of $6.3 million, primarily due to PSUs that vested during the nine months ended September 30, 2021. These payments were partially offset by proceeds from the exercise of stock options of $3.5 million.

In July 2015, we entered into an $8.0 million commercial mortgage loan ~~agreement.~~agreement, which matured on July 1, 2020. On July 1, 2020, we paid in full the remaining $6.5 million in unpaid principal and accrued interest under the mortgage loan with funds drawn upon our revolving credit facility. The annual interest rate on the loan iswas 3.5%, and the loan iswas repayable in 60 monthly installments of principal and interest based on a 20-year amortization schedule. The loan is secured by the land and building, which are our corporate offices, purchased in March 2015, and contains annual affirmative, negative and financial covenants, including maintenance of a minimum debt service ratio. We were in compliance with all the covenants of the mortgage loan as of March 31, 2018 and December 31, 2017. As of March 31, 2018 and December 31, 2017, the outstanding principal amount under the mortgage loan was $7.2 million and $7.3 million, respectively.

On December 20, 2016, we entered into a credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, various lenders and JPMorgan Chase Bank, N.A. and Barclays Bank PLC, as joint lead arrangers and joint bookrunners, providing for:

As of ~~March 31, 2018~~September 30, 2021 and December 31, ~~2017,~~2020, we had borrowings of ~~$296.3~~$279.0 million and ~~$297.0~~$288.0 million, respectively, outstanding under the term loan facility. As of September 30, 2021 and December 31, 2020 we had borrowings of $6.5 million under the revolving credit facility, ~~and~~which were drawn down to fund the repayment of our commercial mortgage loan. However, on October 25, 2021, we ~~did not have any~~repaid the full balance of outstanding borrowings under the revolving credit ~~facility; however,~~facility with cash and cash equivalents in the condensed consolidated balance sheets as of September 30, 2021. As of September 30, 2021 and December 31, 2020, we had also used ~~$1.0~~$1.5 million of available credit under the revolving credit facility for atwo stand-by ~~letter~~letters of credit, ~~that~~one which serves as collateral ~~for a stand-by letter of credit issued by Bank of America~~ to one of our customers pursuant to a contractual ~~performance guarantee.~~obligation and one which is used as collateral for operating leases in Australia. In addition, we may, subject to certain conditions, including the consent of the administrative agent and the institutions providing such increases, increase the facilities by an unlimited amount so long as we are in compliance with specified leverage ratios, or otherwise by up to $70.0 million.

Borrowings under the facilities bear interest at a floating rate, which can be either a Eurodollar rate plus an applicable margin or, at our option, a base rate (defined as the highest of (x) the JPMorgan Chase, N.A. prime rate, (y) the federal funds effective rate, plus one-half percent (0.50%) per annum and (z) a one-month Eurodollar rate plus 1.00% per annum) plus an applicable margin. The applicable margin for borrowings under the term loan facility is 4.00% per annum for Eurodollar rate loans (subject to a 1.00% per annum interest rate floor) and 3.00% per annum for base rate loans. ~~As a result of the completion of our initial public offering in December 2017, the~~The applicable margin for borrowings under the revolving credit facility is 1.75% per annum for Eurodollar rate loans and 0.75% per annum for base rate loans, subject to reduction based on our maintaining of specified net leverage ratios. The interest rates payable under the facilities are subject to an increase of 2.00% per annum during the continuance of any payment default.

For Eurodollar rate loans, we may select interest periods of one, ~~two,~~ three or six months or, with the consent of all relevant affected lenders, twelve months. Interest will be payable at the end of the selected interest period, but no less frequently than every three months within the selected interest period. Interest on any base rate loan is not set for any specified period and is payable quarterly. We have the right to convert Eurodollar rate loans into base rate loans and the right to convert base rate loans into Eurodollar rate loans at our option, subject, in the case of Eurodollar rate loans, to ~~prepayment penalties~~breakage costs if the conversion is effected prior to the end of the applicable interest period. As of ~~March~~September 30, 2021 and December 31, ~~2018,~~2020, the interest rate on the term loans was ~~5.88%~~5.00% per annum, which was based on a ~~one-month~~three-month and six-month Eurodollar rate, respectively, at the applicable floor of ~~1.88%~~1.00% per annum plus the applicable margin of 4.00% per annum for Eurodollar rate loans. As of ~~December 31, 2017,~~September 30, 2021, the interest rate on ~~our borrowings under~~ the ~~term loan~~revolving credit facility was ~~5.69%~~1.83% per annum, which was based on a ~~three-month~~one-month Eurodollar rate of ~~1.69%~~0.08% per annum plus the applicable margin of ~~4.00%~~1.75% per annum for Eurodollar rate loans. As of December 31, 2020, the interest rate on the revolving credit facility was 2.12% per annum, which was based on the six-month Eurodollar rate of 0.37% per annum plus the applicable margin of 1.75% per annum for Eurodollar rate loans.

The term loan ~~facility~~ matures on December 20, 2023 and the revolving credit facility matures on December 20, 2021. The term loan facility is subject to amortization in equal quarterly installments, which commenced on March 31, 2017, of principal in an annual aggregate amount equal to 1.0% of the original principal amount of the term loans of $300.0 million, with the remaining outstanding balance payable at the date of maturity.

Voluntary prepayments of principal amounts outstanding under the term loan facility are permitted at any time; however, if a prepayment of principal is made with respect to a Eurodollar loan on a date other than the last day of the applicable interest period, we are required to compensate the lenders for any funding losses and expenses incurred as a result of the prepayment. Prior to the revolving credit facility maturity date, funds borrowed under the revolving credit facility may be borrowed, repaid and reborrowed, without premium or penalty.

In addition, we are required to make mandatory prepayments under the facilities with respect to (i) 100% of the net cash proceeds from certain asset dispositions (including casualty and condemnation events) by us or certain of our subsidiaries, subject to certain exceptions and reinvestment provisions, (ii) 100% of the net cash proceeds from the issuance or incurrence of any additional debt by us or certain of our subsidiaries, subject to certain exceptions, and (iii) 50% of our excess cash flow, as defined in the credit agreement, subject to reduction upon our achievement of specified performance targets. In accordance with these provisions, a mandatory prepayment of $6.8 million was paid on April 2, 2021.

The facilities are secured by, among other things, a first priority security interest, subject to permitted liens, in substantially all of our assets and all of the assets of certain of our subsidiaries and a pledge of certain of the stock of certain of our subsidiaries, in each case subject to specified exceptions. The facilities contain customary affirmative and negative covenants, including certain restrictions on our ability to pay dividends, and, with respect only to the revolving credit facility, a financial covenant requiring us to maintain a specified total net leverage ratio, in the event that on the last day of any fiscal quarter, we have utilized more than 30% of our borrowing capacity under the ~~facility. We were in compliance with all~~revolving credit facility (subject to certain exceptions). The term loan facility contains a cross-default provision, whereby, if repayment of borrowings under the revolving credit facility are accelerated due to a default of the ~~applicable covenants~~net leverage ratio covenant, repayment of the ~~facilities as~~outstanding term loan balance could also be accelerated. Because the financial covenant under the revolving credit facility only applies if outstanding utilization thereunder exceeds 30% of ~~March 31, 2018 and December 31, 2017. As~~the total borrowing capacity on the last day of ~~March 31, 2018 and December 31, 2017, we had not utilized~~each fiscal quarter, this cross-default provision has the effect of limiting our ability to utilize more than 30% of our total borrowing capacity under the revolving credit facility of $25.0 million if both our net leverage ratio exceeds the maximum permitted by the agreement and ~~compliance with~~we would not otherwise be able to reduce our outstanding utilization of the ~~financial covenant was not applicable.~~

~~In connection with entering into the facilities in December 2016, we terminated our~~ revolving credit facility to below the 30% testing threshold prior to the last day of any quarter. As of September 30, 2021 and December 31, 2020, we were in compliance with ~~Bank~~all applicable covenants of ~~America.~~the facilities. We ~~did~~do not ~~have any outstanding borrowings under~~expect to require the ~~Bank~~use of ~~America~~the revolving credit facility atto fund operations during the ~~time~~next 12 months.

~~The following table summarizes our contractual obligations and commitments~~$156.5 million as of ~~March 31, 2018.~~

~~We enter into purchase agreements with~~September 30, 2021, $143.6 million was held by our ~~contract manufacturers~~foreign subsidiaries. The Tax Cuts and ~~suppliers, generally with terms of~~Jobs Act, or TCJA, established a ~~year or more. We have no minimum purchase requirements under these agreements.~~

~~The contractual obligations table above excludes $7.5 million of long term taxes payable recorded as part of~~modified territorial system requiring a ~~provisional charge in the fourth quarter of 2017 for the~~ mandatory deemed repatriation tax on undistributed earnings of foreign subsidiaries. As of September 30, 2021, we had $25.5 million of undistributed earnings in China that are not indefinitely reinvested. The remaining unremitted earnings of our foreign subsidiaries are either indefinitely reinvested or could be remitted with an immaterial tax cost.

We believe our existing cash and cash equivalents, anticipated cash flows from future operations and liquidity available from our revolving credit facility will be sufficient to meet our working capital and capital expenditure needs and debt service obligations for at least the next 12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, the timing and extent of spending on research and development efforts and other business initiatives, purchases of capital equipment to support our growth, the expansion of sales and marketing activities, expansion of our business through acquisitions or our investments in complementary products, technologies or businesses, the use of working capital to purchase additional inventory, the timing of new product introductions, market acceptance of our products and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

On February 21, 2019, we announced a stock repurchase program under which we were authorized to repurchase up to $75.0 million of our common stock. During the nine months ended September 30, 2020, we repurchased approximately 1.2 million shares for a total cost of approximately $3.0 million. During the nine months ended September 30, 2021 we did not repurchase any shares. As of September 30, 2021, approximately $70.2 million remained authorized for repurchases of our common stock under the ~~TCJA.~~ stock repurchase program. The ~~deemed repatriation was estimated based~~stock repurchase program has no expiration date and does not require us to purchase a minimum number of shares, and we may suspend, modify or discontinue the stock repurchase program at any time without prior notice.

Our material contractual obligations include our term loan facility, revolving credit facility, operating leases and purchase agreements with our contract manufacturers and suppliers. There have been no material changes to our contractual obligations and commitments from those disclosed in our Annual Report on ~~our initial analysis in accordance with~~

~~ASC Topic 740,~~ ~~Income Taxes, and Staff Accounting Bulletin 118 and is expected to be paid over~~Form 10-K for the next eight years. Given the significant complexity of the TCJA, anticipated guidance from the U.S. Treasury Department about implementing the TCJA and the potential for additional guidance from the SEC or the FASB related to the TCJA or additional information becoming available, our provisional charge may be adjusted during 2018 and is expected to be finalized no later than the fourth quarter of 2018.fiscal year ended December 31, 2020.

We prepare our condensed consolidated financial statements in accordance with generally accepted accounting principles in the United States. The preparation of condensed consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related

disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management.

~~There~~Other than our policies related to stock-based compensation and our adoption of ASU 2020-06, as described in Note 2 of the above notes to the condensed consolidated financial statements, there have been no material changes to our critical accounting policies and estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017.~~

As of March 31, 2018 and December 31, 2017, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.2020.

Refer to the “Summary of Significant Accounting Policies” footnote within our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for our analysis of recent accounting pronouncements that are applicable to our business.

Market risk is the risk of loss to future earnings, values or future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. We are exposed to market risk related to changes in foreign currency exchange rates and interest rates. We ~~do not use~~currently mitigate certain foreign currency exchange rate risks with derivative ~~financial~~ instruments ~~for speculative or trading purposes. However, we have entered into,~~ and ~~in the future expect to continue to~~ enter into exchange rate hedging arrangements to manage certain of the risks described below. We do not engage in foreign currency speculation.

We have accounts receivables denominated in foreign currencies, and our operations outside of the United States incur their operating expenses in foreign currencies. To date, the majority of our product sales and inventory purchases have been denominated in U.S. dollars. For our ~~subsidiary~~subsidiaries in Ireland and Australia, the U.S. dollar is the functional currency. For each of our other foreign subsidiaries, the functional currency is the local currency. During the ~~three~~nine months ended ~~March 31, 2018~~September 30, 2021 and ~~2017,~~2020, we incurred foreign currency transaction (losses) gains of ~~$(23,677)~~$(1.4) million and ~~$29,650,~~$0.7 million, respectively, primarily related to unrealized and realized foreign currency (losses) ~~gain~~gains for accounts ~~receivables~~receivable denominated in foreign currencies and operating expenses that are denominated in local currencies. ~~These~~We recorded these foreign currency transaction (losses) gains ~~were recorded~~ as a component of other income (expense), net in our condensed consolidated statements of operations and comprehensive (loss) income. We believe that a 5%10% change in the exchange rate between either the U.S. dollar and ~~euro~~Euro or the U.S. dollar and Australian dollar would not materially impact our operating results or financial position.

Our foreign currency risk management practices are principally intended to mitigate the potential financial impact of changes in the value of transactions and balances denominated in foreign currencies resulting from changes in foreign currency exchange rates. From time to time we enter into cash flow hedges, which utilize foreign currency forward contracts to hedge specific forecasted transactions of our foreign subsidiaries with the goal of protecting our budgeted revenues and expenses against foreign currency exchange rate changes compared to our budgeted rates. During the three and nine months ended September 30, 2020, we settled two cash flow hedges which were used to hedge specific operating cash flows denominated in Australian dollars. No cash flow hedges were settled or outstanding during the three or nine months ended September 30, 2021.

Additionally, from time to time, we enter into other foreign currency forward contracts with the goal of protecting outstanding receivables denominated in currencies other than the U.S. dollar. As of ~~March 31, 2018,~~September 30, 2021 we had ~~foreign~~two currency forward contracts outstanding with notional amounts totaling ~~10.6~~1.4 million ~~euros~~Euros that will mature in the ~~second, third~~fourth quarter of 2021 and ~~fourth quarters~~first quarter of ~~2018,~~2022 and we expect to continue to hedge certain significant transactions denominated in currencies other than the U.S. dollar in the future.

The success of our foreign currency risk management program depends upon forecasts of transaction activity denominated in various currencies. To the extent that these forecasts are overstated or understated during periods of currency volatility, we could experience unanticipated foreign currency gains or losses that could have a material impact on our results of operations. Furthermore, our failure to identify new exposures and hedge against them in an effective manner may result in material foreign currency gains or losses.

Our cash and cash equivalents as of ~~March~~September 30, 2021 and December 31, ~~2018~~2020 consisted of cash maintained in FDIC-insured operating accounts as well as investments in money market mutual funds ~~commercial paper~~ and certificates of deposit. We also

have policies requiring ~~us to~~that we invest in high-quality issuers, limit our exposure to any individual issuer, and ensure adequate liquidity. Our

primary exposure to market risk for our ~~cash and~~ cash equivalents is interest income sensitivity, which is primarily affected by changes in the general level of U.S. interest rates. However, we do not believe a sudden change in the interest rates for our cash ~~and cash~~ equivalents would have a material impact on our financial condition, results of operations or cash flows.

We have a credit agreement that provides us with a term loan facility of $300.0 million and a revolving credit facility of up to $25.0 million in revolving credit loans and letters of credit. Borrowings under the facilities bear interest at a floating rate, which can be either a Eurodollar rate plus an applicable margin or, at our option, a base rate (defined as the highest of (x) the JPMorgan Chase, N.A. prime rate, (y) the federal funds effective rate, plus one-half percent (0.50%) per annum and (z) a one-month Eurodollar rate plus 1.00% per annum) plus an applicable margin. The applicable margin for borrowings under the term loan facility is 4.00% per annum for Eurodollar rate loans (subject to a 1.00% per annum interest rate floor) and 3.00% per annum for base rate loans. ~~As a result of the completion of our initial public offering in December 2017, the~~The applicable margin for borrowings under the revolving credit facility is 1.75% per annum for Eurodollar rate loans and 0.75% per annum for base rate loans, subject to reduction based on our maintaining of specified net leverage ratios.

As of ~~March 31, 2018,~~September 30, 2021, we had borrowings of ~~$296.3~~$279.0 million outstanding under the term loan facility, bearing interest at a rate of ~~5.88%~~5.00% per annum, which was based on a ~~one-month~~three-month Eurodollar rate at the applicable floor of ~~1.88%~~1.00% per annum plus the applicable margin of 4.00% per annum for Eurodollar rate loans. Changes in interest rates could cause interest charges on our term loan facility to fluctuate. Based on the amount of borrowings outstanding as of ~~March 31, 2018,~~September 30, 2021, an increase or decrease of 10% in the Eurodollar rate would have no impact on our earnings and cash flows, as the interest rate in effect at September 30, 2021 on the term loan facility was at the applicable floor of 1.00% per annum and would continue to be in effect with a change of 10%.

On July 1, 2020, we drew down upon our revolving credit facility under our term loan agreement in the amount of $6.5 million. As noted in Note 10, Debt, borrowings under the revolving credit facility mature on December 21, 2021 and the applicable margin for borrowings under the revolving credit facility is 1.75% per annum for Eurodollar rate loans. The interest rate on the outstanding borrowings as of September 30, 2021 was 1.83%, which was based on a one-month Eurodollar rate of 0.08% per annum plus the applicable margin of 1.75% per annum for Eurodollar rate loans. An increase or ~~approximately 19 basis points,~~decrease of 10% in the one-month Eurodollar rate ~~as of March 31, 2018~~ would ~~cause~~result in a pre-tax ~~decreases~~change to our earnings and cash flows of ~~approximately $0.5~~less than $0.1 million per year, assuming that such rate ~~were~~was to remain in effect for a year. A decrease of 10%, or approximately 19 basis points, in the one-month Eurodollar rate as of March 31, 2018 would cause pre-tax increases to our earnings and cash flows of approximately $0.5 million, assuming that such rate were to remain in effect for a year.

~~As of March 31, 2018, we were not exposed to interest rate risk under the revolving credit facility as a result of having no outstanding borrowings under the facility.~~

We do not believe that inflation has had a material effect on our ~~business.~~business to date. However, ifas more fully described in Item 2 above, global demand for the base materials utilized by our suppliers and supply chain risks could result in ~~our suppliers’ components were to significantly increase for~~significant increases in the costs of the components we purchase, ~~from our suppliers to manufacture our products, our costs could become subject to significant inflationary pressures,~~ and we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ~~the company’s~~our management, including ~~its~~our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer~~Chief Financial Officer have concluded that as of such date, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we are a party to various litigation matters and subject to claims that arise in the ordinary course of business including, for example, patent infringement lawsuits by non-practicing entities. In addition, third parties may from time to time assert claims against us in the form of letters and other communications. ~~There is no pending~~

On May 29, 2019, John Shen filed a putative shareholder class action complaint in the Massachusetts Superior Court of Essex County, John Shen v. Casa Systems, Inc, et al., Civil Action No. 1977CV00787, against us; certain of our current and former executive officers and directors; Summit Partners, our largest investor; and the underwriters from our December 15, 2017, initial public offering, or ~~threatened legal proceeding~~IPO. On July 3, 2019, Mirza R. Baig filed a similar putative shareholder class action complaint in the Massachusetts Superior Court of Essex County, Mirza R. Baig v. Casa Systems, Inc., Civil Action No.1977CV00961, against the same defendants. The two matters were subsequently consolidated and transferred to the Business Litigation Session of the Massachusetts Superior Court, Suffolk County, John Shen v. Casa Systems, Inc, et al.,Civil Action No. 19-CV-03203-BLS2 andMirza R. Baig v. Casa Systems, Inc., Civil Action No. 19-CV-03204-BLS2. The complaints, as later amended on November 12, 2019, purported to be brought on behalf of all purchasers of our common stock in and/or traceable to the IPO. The complaints generally alleged that (i) each of the defendants violated Section 11 and/or Section 12(a)(2) of the Securities Act of 1933, as amended, or the Securities Act, because documents related to the IPO, including our registration statement and prospectus were materially misleading by containing untrue statements of material fact and/or omitting to state material facts necessary to make such statements not misleading and (ii) the individual defendants and Summit Partners acted as controlling persons within the meaning and in violation of Section 15 of the Securities Act. Plaintiffs sought, among other things, compensatory damages, costs and expenses, including counsel and expert fees, rescission or a rescissory measure of damages, and equitable and injunctive relief. On January 12, 2021, the court granted motions to dismiss filed by the defendants. On February 22, 2021, plaintiffs filed notice of appeal.

On August 9, 2019, Donald Hook filed a putative shareholder class action lawsuit in the Supreme Court of the State of New York, County of New York, Donald Hook, et al., v. Casa Systems, Inc. et al., Index No. 654548/2019, against the same defendants named in the Shen and Baig matters. The complaint, as later amended on November 22, 2019, purports to be brought on behalf of all purchasers of our common stock in and/or traceable to our IPO and generally alleges that (i) each of the defendants violated Section 11 and/or Section 12(a)(2) of the Securities Act because documents related to our IPO including our registration statement and prospectus were materially misleading by containing untrue statements of material fact and/or omitting to state material facts necessary to make such statements not misleading and (ii) the individual defendants and Summit Partners acted as controlling persons within the meaning and in violation of Section 15 of the Securities Act. Plaintiff sought, among other things, compensatory damages, costs and expenses, including counsel and expert fees, rescission or a rescissory measure of damages, disgorgement, and equitable and injunctive relief. On August 30, 2021, the court granted motions to dismiss filed by the defendants. On September 30, 2021, plaintiff filed notice of appeal.

On August 13, 2019, Panther Partners, Inc. filed a putative shareholder class action lawsuit in the Supreme Court of the State of New York, New York County, Panther Partners, Inc., et al., v. Jerry Guo et al., Index No 654585/2019, against us, certain of our current and former executive officers and directors, and the underwriters from our April 30, 2018 follow-on offering of common stock, which we ~~are a party that,~~refer to as our “Follow-on Offering.” The complaint, as later amended on November 22, 2019, purports to be brought on behalf of all purchasers of our common stock in our ~~opinion,~~Follow-on Offering and generally alleges that (i) each of the defendants, other than Abraham Pucheril, violated Section 11 of the Securities Act, and each of the defendants violated Section 12(a)(2) of the Securities Act, because documents related to our Follow-on Offering, including our registration statement and prospectus, were materially misleading by containing untrue statements of material fact and/or omitting to state material facts necessary to make such statements not misleading and (ii) the individual defendants acted as controlling persons within the meaning and in violation of Section 15 of the Securities Act. Plaintiff sought, among other things, compensatory damages, costs and expenses, including counsel and expert fees, rescission or a rescissory measure of damages, and equitable and injunctive relief. On October 4, 2021, the court granted motions to dismiss filed by the defendants.

No amounts have been accrued for any of the putative class action lawsuits referenced above as of September 30, 2021, as we do not believe the likelihood of a material loss is ~~likely to~~probable. Although the ultimate outcome of these matters cannot be predicted with certainty, the resolution of any of these matters could have a material ~~adverse effect~~impact on our ~~financial condition or~~ results of ~~operations. However, litigation~~operations in the period in which such matter is ~~inherently unpredictable. Regardless of the outcome, litigation can adversely affect us because of defense and settlement costs, diversion of management resources and other factors.~~resolved.

~~Our business is subject~~In addition to ~~numerous risks. The following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf~~the other information set forth in this Quarterly Report on Form 10-Q, ~~and other filings with~~you should carefully consider the ~~Securities and Exchange Commission,~~factors discussed in “Part I, Item 1A Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or the ~~SEC, press releases, communications with investors, and oral statements. Actual future results may differ~~2020 10-K, which could materially ~~from those anticipated in our forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.~~

If we do not successfully anticipate technological shifts, market needs and opportunities, and develop new products and product enhancements that meet those technological shifts, needs and opportunities, we may not be able to compete effectively.

The broadband service provider market, including fixed and wireless, is characterized by rapid technological shifts and increasingly complex customer requirements to achieve scalable networks that accommodate rapidly increasing consumer demand for bandwidth. To compete effectively, we must continue to develop new technologies and products that address emerging technological trends and changing customer needs. The process of developing new technology is complex and uncertain, and the development of new offerings requires significant upfront investment that may not result in material improvements to existing products or result in marketable new products or costs savings or revenue for an extended period of time, if at all.

We believe that our culture of innovation is a significant factor in our ability to develop new products. If we are not able to attract and retain employees that are able to contribute to our culture of innovation, our ability to identify emerging technological trends and changing customer needs and successfully develop new products to address them could be adversely impacted.

The success of new products and enhancements also depends on many other factors, including timely completion and introduction, differentiation from products offered by competitors and previous versions of our own products and, ultimately, market acceptance of these new products and enhancements. In addition, new technologies or standards could render our existing products obsolete or less attractive to customers. If we are unable to successfully introduce new products and enhancements, we would not be able to compete effectively andaffect our business, financial condition ~~results of~~or future results. Other than the updated risk factors described below, there have been no material changes from the risk factors previously disclosed in the 2020 10-K.

The coronavirus outbreak could negatively impact our operations and ~~prospects could be materially adversely affected.~~

~~Our success depends in large part on broadband service providers’ continued deployment of, and investment in, ultra-broadband network capabilities that make use of our solutions.~~

A significant portion of our product and solution suite is dedicated to enabling cable service providers to deliver voice, video and data services over newer and faster ultra-broadband networks. As a result, our success depends significantly on these cable service providers’ continued deployment of, and investment in, their networks, which depends on a number of factors outside of our control. These factors include capital constraints, the presence of available capacity on legacy networks, perceived subscriber demand for ultra-broadband networks, competitive conditions within the broadband service provider industry and regulatory issues. If broadband service providers do not continue deploying and investing in their ultra-broadband networks in ways that involve our solutions, for these or other reasons, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~We expect certain of our customers will continue to represent a substantial portion of our revenue.~~

~~Historically, certain of our customers~~ have accounted for a significant portion of our revenue. For example, sales to Charter, which purchased Time Warner Cable in 2016, accounted for 27%, 13%, 37%, 23% and 14% of our revenue for the three months ended March 31, 2018 and 2017 and the years ended December 31, 2017, 2016 and 2015, respectively; sales to Liberty Global accounted for 18%, 21%, 11%, 10% and 17% of our revenue for the three months ended March 31, 2018 and 2017 and the years ended December 31, 2017, 2016 and 2015, respectively; sales to Mediacom accounted for 12% of our revenue for the three months ended March 31, 2018; and sales to Videotron accounted for 14% of our revenue for the three months ended March 31, 2017. Based on their historical purchasing patterns, we expect that our large customers will continue to account for a substantial portion of our revenue in future periods. However, our customers generally make purchases from us on a purchase-order basis rather than pursuant to long-term contracts, and those that do enter long-term contracts typically have the right to terminate their contracts for convenience. As a result, we generally have no assurances that these large customers will continue to purchase our solutions. We may also see consolidation of our customer base, which could result in loss of customers. In addition, some of our large customers have used, and may in the future use, the sizes and relative importance of their orders to our business to require that we enter into agreements with more favorable terms than we would otherwise agree to and obtain price concessions. The loss of a significant customer, a significant delay or reduction in purchases by large customers or significant price concessions to one or more large customers, could have a materialan adverse effect on our ~~business, financial condition,~~revenues and/or results of ~~operations and prospects.~~operations.

~~Timing of large orders and seasonality in our revenue may cause our quarterly revenue and results of operations~~The COVID-19 pandemic presents various risks to ~~fluctuate and possibly decline materially from quarter to quarter.~~

~~Our customers tend to make large purchases from~~ us, when initiating or upgrading services based on our solutions, followed by smaller purchases for maintenance and ongoing support. In addition, purchases by existing customers of capacity expansions can also involve large individual orders that may represent a significant portion of our revenue for a fiscal quarter, which may also have a significant impact on our quarterly gross margin due to these capacity expansions generating higher gross margins than our initial hardware-based deployments. As a result of all of these factors, our quarterly revenue and results of operations, including our gross margin, may be significantly impacted by one or a small number of large individual orders. For example, any cancellation of orders or any acceleration or delay in anticipated product purchases or the acceptance of shipped products by a large customer could materially affect our revenue and results of operations in any quarterly period. We may be unable to sustain or increase our revenue from other new or existing customers to offset the discontinuation of purchases by one of our larger customers. As a result, our quarterly revenue and results of operations are difficult to estimate and may fluctuate or decline materially from quarter to quarter.

In addition, we believe that there are significant seasonal factors which may cause revenue to be greater for the first and fourth quarters of our fiscal year as compared to the second and third quarters. We believe that this seasonality results from a number of factors, including the procurement, budgeting and deployment cycles of many of our customers. These seasonal variations may cause our quarterly revenue and results of operations to fluctuate or decline materially from quarter to quarter.

Our sales to the broadband service provider market are volatile and our sales cycles can be long and unpredictable. As a result, our sales and revenue are difficult to predict and may vary substantially from period to period, which may cause our revenue and results of operations to fluctuate and possibly decline significantly.

Our sales to the broadband service provider market have been characterized by large and sporadic purchases and long sales cycles. Sales activity often depends upon the stage of completion of expanding network infrastructures, the availability of funding and the extent to which broadband service providers are affected by regulatory, economic and business conditions in the countries in which they operate.

In addition, the timing of our sales and revenue recognition is difficult to forecast because of the unpredictability of our products’ sales cycles. A sales cycle is the period between initial contact with a prospective customer and the sale of our products to that customer. Customer orders often involve the purchase of multiple products. These orders are complex and difficult to obtain because prospective customers generally consider a number of factors over an extended period of time before committing to purchase the products and solutions we sell. Customers, especially in the case of our large customers, often view the purchase of our products as a significant and strategic decision and require considerable time to evaluate, test and qualify our products prior to making a purchase decision and placing an order. The length of time that customers devote to their evaluation, contract negotiation and budgeting processes varies significantly, but can often exceed 24 months. During the sales cycle, we expend significant time and money on sales and marketing activities and make investments in evaluation equipment,not all of which we are ~~included in our sales~~able to fully evaluate or even to foresee at the current time, and ~~marketing expenses and lower our operating margins, particularly if no sale occurs.~~

Even if a customer decides to purchase our products, there are many factors affecting the timing of our recognition of revenue, which makes our revenue difficult to forecast. For example, the sale of our products may be subject to acceptance testing or there may be unexpected delays in a customer’s internal procurement processes, particularly for some of our larger customers, for whom our products represent a very small percentage of their total procurement activity. These factors may result in our inability to recognize revenue for months or years following a sale. In addition, other factors that are specific to particular customers can affect the timing of their purchases and the variability of our revenue recognition, including the strategic importance of a particular project to a customer, budgetary constraints and changes in their personnel. For all of these reasons, it is difficult to predict whether a sale will be completed, the particular period in which a sale will be completed and the period in which revenue from a sale will be recognized. If our sales cycles lengthen, our revenue could be lower than expected, which could have a material effect upon the estimates and judgments relied upon by management in preparing these condensed consolidated financial statements. While we remain fully operational, during the three and nine months ended September 30, 2021, the effects of the COVID-19 pandemic on the global supply chain had a significant adverse effect on our ~~business,~~ financial ~~condition, results~~results. In particular, certain of ~~operations and prospects.~~

~~We may not generate positive returns on our research and development investments.~~

~~Developing~~ our products ~~is expensive,~~utilize components, for which there has been increased global demand. As a result, throughout 2021, and ~~the investment in product development may involve a long payback cycle or may result in investments in technologies or standards that do not get adopted in the timeframe we anticipate, or at all. For~~increasingly during the three months ended ~~March 31, 2018 and 2017 and the years ended December 31, 2017, 2016 and 2015,~~September 30, 2021, we began to see shortages of supply that resulted in our research and development expenses were $20.5 million, or approximately 23.0% of our revenue, $14.5 million, or approximately 19.9% of our revenue, $60.7 million, or approximately 17.3% of our revenue, $49.2 million, or approximately 15.6% ofinability to fulfill certain customer orders within normal lead times. This adversely impacted our revenue and ~~$37.2 million, or approximately 13.6%~~operating results for the three and nine months ended September 30, 2021. While we continue to work with our supply chain, contract manufacturers, and customers to minimize the extent of ~~our revenue, respectively. We~~such impacts, we expect the effects of global supply chain issues to continue and cannot predict when such effects will subside. This may prevent us from being able to ~~invest heavily in software development in order to expand the capabilities of~~fulfill our broadband and wireless infrastructure solutions, introduce new products and features and build upon our technology leadership, and we expect that our research and development expenses will continue to increase in absolute dollars and as a percentage of revenue from 2017 to 2018. Our investments in research and development may not generate positive returnscustomers’ orders in a timely ~~fashion~~manner or at ~~all.~~

~~Our converged cable access platform, or CCAP, solutions currently represent a significant majority of our product sales; this concentration may limit our ability~~all, which could lead to ~~increase our revenue, and our business would be adversely affected in the event we are unable to sell~~ one or more of our ~~products.~~

~~We are heavily dependent upon the sales of our CCAP solutions. In the event~~customers cancelling their orders. At this time, we are ~~unable~~neither able to ~~market and sell~~estimate the extent of these ~~products~~impacts nor predict whether our efforts to minimize or ~~any future product that represents a substantial amount of our revenue,~~contain them will be successful. We intend to continue to monitor our business ~~financial condition,~~very closely for any effects of COVID-19 for as long as necessary.

Due to the above circumstances and as described generally in our 2020 Annual Report on Form 10-K, our results of operations for the three and ~~prospects could be materially adversely affected.~~

~~We have invested heavily in developing wireless solutions, and we face risks in seeking to expand our platform into the wireless market.~~

We have invested heavily in developing wireless solutions that have yet to generate any significant revenue. We cannot guarantee that these investments, or any of our other investments in research and development, will ever generate material revenue or become profitable for us, and the failure of these investments to generate positive returns may adversely impact our business, financial condition, results of operations and prospects. The wireless market makes up a substantial portion of our total potential addressable market. In addition, expanding our offerings into the wireless market presents other significant risks and uncertainties, including potential distraction of management from other business operations that generate more substantial revenue, the dedication of significant research and development, sales and marketing, and other resources to this new business line at the expense of our other business operations and other risks that we may not have adequately anticipated.

We believe the broadband service provider industry is in the early stages of a major architectural shift toward the virtualization of networks and the use of networks with distributed architectures. If the architectural shift does not occur, if it does not occur at the pace we predict, or if the products and services we have developednine months ended September 30, 2021 are not ~~attractive~~necessarily indicative of the results to be expected in future periods. Management cannot predict the full impact of the COVID-19 pandemic on our ~~customers after such shift takes place,~~sales channels, supply chain, manufacturing and distribution, or on economic conditions generally, including the effects on our ~~revenues could decline.~~

~~We believe the broadband service provider industry is in the early stages of transitioning to the virtualization of networks and the use of networks with distributed architectures~~. ~~We are developing products and services that we believe will be attractive to our customers~~current and potential customers, who ~~make that shift. Our strategy depends in part~~may curtail spending on our belief that the industry shift to a software-centric cloud-based architecture and increasing densification will continue. In our experience, fundamental changes like this often take time to accelerate and the adoption rates of our customers may vary. As our customers determine their future network architectures and how to implement them, we may encounter delayed timing of orders, deferred purchasing decisions and reduced expenditures. These longer decision cycles and reduced expenditures may

negatively impact our revenues, or make it difficult for us to accurately predict our revenues, either of which could materially adversely affect our business, financial condition, results of operations and prospects. Moreover, it is possible that our customers may reverse or fail to expand upon current trends toward virtualization and distributed architectures, which could result in significantly reduced demand for the products that we have developed and currently plan to develop.

~~We face intense competition, including from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position.~~

The market for broadband infrastructure solutions is intensely competitive, and we expect competition to increase in the future from established competitors and new market entrants. This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses and our failure to increase, or the loss of, market share, any of which could materially adversely affect our business, financial condition, results of operations and prospects.

~~In the broadband service provider market, we primarily compete with larger and more established companies, such as Arris, Cisco, Ericsson and Nokia.~~

~~Many of our existing and potential competitors enjoy substantial competitive advantages, such as:~~

~~Our ability to compete will depend upon our ability to provide a better solution than our competitors at a price that offers superior value. We may be required to make substantial additional~~ investments in ~~research, development, sales~~current and/or new technologies, delay new equipment evaluations and ~~marketing in order to respond to competition.~~

~~We also expect increased competition if our market continues to expand. Conditions in our market could change rapidly~~trials, cancel orders, and ~~significantly as a result~~possibly delay payments based on liquidity concerns, all of technological advancements or other factors. Current or potential competitors may be acquired by third parties that have greater resources available than we do. Our current or potential competitors might take advantage of the greater resources of the larger organizations resulting from these acquisitions to compete more vigorously or broadly with us. In addition, continued industry consolidation might adversely affect customers’ perceptions of the viability of smaller and even medium-sized companies, such as us, and, consequently, customers’ willingness to purchase from us. Further, certain large customers may develop broadband infrastructure solutions for internal use and/or to broaden their portfolios of internally developed resources, which ~~could allow these customers to become new competitors in our market.~~

~~If we are unable to sell additional products to our existing customers, our revenue growth will be adversely affected and our revenue could decline.~~

To increase our revenue, we must sell additional products to our existing customers and add new customers. We expect that a substantial portion of our future sales will be follow-on sales to existing customers. For example, one of our sales strategies is to target sales of capacity expansions and implementation of wireless solutions at our current cable customers because they are familiar with the operational and economic benefits of our solutions. However, our existing customers may choose to use other providers for their infrastructure needs. If we fail to sell additional products to our existing customers, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~We may have difficulty attracting new large customers or acquiring new customers due to the high costs of switching broadband equipment.~~

Broadband service providers typically need to make substantial investments when deploying network infrastructure, which can delay a purchasing decision. Once a broadband service provider has deployed infrastructure for a particular portion of its network, it is often difficult and costly to switch to another vendor’s infrastructure. Unless we are able to demonstrate that our products offer significant performance, functionality or cost advantages that outweigh a customer’s expense of switching from a competitor’s product, it will be difficult for us to generate sales once that competitor’s equipment has been deployed. Accordingly, if a customer has already deployed a competitor’s product for its broadband infrastructure, it may be difficult for us to sell our products to that customer. If we fail to attract new large customers or acquire new customers, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~We are exposed to the credit risk of some of our customers and to credit exposures in the event of turmoil in the credit markets, which could result in material losses.~~

Due to our reliance on significant customers, we are dependent on the continued financial strength of these customers. If one or more of our significant customers experience financial difficulties, it could result in uncollectable accounts receivable and our loss of such customers and anticipated revenue.

The majority of our sales are on an open credit basis, with typical payment terms of one year or less. We monitor individual customer payment capability in granting such open credit arrangements, seeking to limit such open credit to amounts we believe our customers can pay and maintain reserves we believe are adequate to cover exposure for doubtful accounts. However, there can be no assurance that our open credit customers will pay the amounts they owe to us or that the reserves we maintain will be adequate to cover such credit exposure. Our customers’ failure to pay and/or our failure to maintain sufficient reserves could have a material ~~adverse effect~~impact on our ~~consolidated financial statements. In addition,~~business in the ~~event~~future. Similarly, our supply chain and our contract manufacturers could be affected, which could cause disruptions to our ability to meet customer demand or delivery schedules. For the three and nine months ended September 30, 2021, we did see certain delays in our supply chain that ~~turmoil~~adversely impacted delivery schedules to our customers. If COVID-19 were to have such effects in the ~~credit markets~~future, there would likely be a material adverse impact on our financial results, liquidity and capital resource needs. This uncertainty makes it ~~more difficult~~challenging for ~~some customers~~management to ~~obtain financing, those customers’ ability~~estimate the future performance of our business, particularly in the near to ~~pay could be adversely impacted, which in turn~~medium term and the impact of COVID-19 could have a material adverse impact on our ~~business and operations.~~

A portion of our sales is also derived through our resellers, which tend to have more limited financial resources than other customers and to present increased credit risk. Our resellers also typically have the ability to terminate their agreements with us for any reason upon advance written notice.

~~We are exposed to fluctuations in currency exchange rates, which could adversely affect our business, financial condition,~~ results of operations ~~and prospects.~~

Our sales agreements are primarily denominated in U.S. dollars. Therefore, a strengthening U.S. dollar could increase the real cost of our products to our customers outside of the U.S., and alternatively a decrease in the ~~value of the U.S. dollar relative~~near to ~~foreign currencies could~~medium term.

The coronavirus outbreak has resulted in an increase ~~our product and operating costs~~ in foreign locations. If we are not able to successfully hedge against the risks associated with the currency fluctuations, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~We generate a significant amount of revenue from sales to customers outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations.~~

We have extensive international operations and generate a significant amount of revenue from sales to customers in Asia-Pacific, Europe and the Latin America. Our ability to grow our business and our future success will depend to a significant extent on our ability to continue to expand our operations and customer base worldwide.

As a result of our international reach, we must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining an international staff, and specifically staff related to sales management and sales personnel, we may experience difficulties in sales productivity in foreign markets. We also enter into strategic relationships with resellers and sales agents in certain international markets where we do not have a local presence. If we are not able to maintain these relationships or to recruit additional companies to enter into reseller and sales agent relationships, our future success in these international markets could be limited. Business practices in the international markets that we serve may differ from those in the U.S. and may require us in the future to include terms other than our standard terms in customer contracts. To the extent that we may enter into customer contracts in the future that include non-standard terms related to payment, warranties or performance obligations, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~Our international sales and operations are subject to a number of risks, including the following:~~

These and other factors could harm our ability to gain future international revenue and, consequently, materially adversely affect our business, financial condition, results of operations and prospects. Expanding our existing international operations and entering into additional international markets will require significant management attention and financial commitments. Our failure to successfully manage our international operations and the associated risks effectively could limit our future growth or materially adversely affect our business, financial condition, results of operations and prospects.

~~We are subject to anti-corruption laws such as the U.S. Foreign Corrupt Practices Act of 1977, as amended.~~

We are subject to anti-corruption laws such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, which generally prohibits U.S. companies and their employees and intermediaries from making corrupt payments to foreign officials for the purpose of obtaining or keeping business, securing an advantage or directing business to another individual or entity, and requires companies to maintain accurate books and records. Under the FCPA, U.S. companies may be held liable for the corrupt actions taken by directors, officers, employees, agents, or other strategic or local partners or representatives. We rely on non-employee third-party representatives and other intermediaries to develop international sales opportunities, and generally have less direct control over such third parties’ actions taken on our behalf. If we or our

intermediaries fail to comply with the requirements of the FCPA or similar legislation, governmental authorities in the United States and elsewhere could seek to impose civil and/or criminal fines and penalties, which could have a material adverse effect on our business, reputation, results of operations and financial condition. We intend to increase our international sales and business and, as such, the cost of complying with such laws, and the potential harm from our noncompliance, are likely to increase.

Failure to comply with anti-corruption laws, such as the FCPA and the United Kingdom Bribery Act 2010, or the Bribery Act, and similar laws associated with our activities outside the U.S., could subject us to penalties and other adverse consequences. Any violation of the FCPA, Bribery Act or similar laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions suspension or debarment from U.S. government contracts, all of which could have a material adverse effect on our reputation, business, results of operations and prospects. In addition, responding to any enforcement action or related investigation may result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

~~We are subject to governmental export and import controls that could impair our ability to compete in international markets or subject us to liability if we violate these controls.~~

~~Our products may be subject to various export controls and because we incorporate encryption technology into~~ certain of our ~~products,~~solutions, which may subside or decrease when the pandemic ends.

The pandemic and resulting lockdowns have resulted in an increase in demand for residential broadband services, which has in turn led to an increase in demand for certain of our ~~products may be exported~~solutions, including our fiber extension home network connection devices and our Fixed Wireless Access CPE devices. We also saw a shift in demand from ~~various countries only with~~our cable customers toward more I-CCAP chassis each quarter. That increase in demand contributed to our strong revenue performance in 2020 and has continued into 2021. We cannot guarantee that the ~~required export license or through an export license exception. Furthermore, certain export control and economic sanctions laws prohibit~~heightened demand for residential broadband services will continue for the shipment of certain products, technology, software and services to embargoed countries and sanctioned governments, entities, and persons. If we fail to comply with the applicable export control laws, customs regulations, economic sanctions or other applicable laws, we could be subject to monetary damages or the imposition of restrictions which could materially adversely affect our business, financial condition, results of operations and prospects and could also harm our reputation. Further, there could be criminal penalties for knowing or willful violations, including incarceration for culpable employees and managers. Obtaining the necessary export license or other authorization for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities. We previously disclosed that we may have inadvertently violated certain technical provisionsduration of the ~~U.S. export control laws and regulations by failing to inform customers of their export control obligations and failing to make certain submissions~~pandemic or after the pandemic ends. We similarly cannot guarantee that even to the ~~Commerce Department’s Bureau of Industry and Security, or BIS, in a timely and complete manner. However,~~extent the heightened demand for residential broadband services continues that we believe that the exports of our products were all to destinations and end users that would not have required licensing under the U.S. export control and sanctions laws. We voluntarily disclosed the potential technical violations to BIS, and on March 27, 2018, we were notified by BIS that it would not be imposing a penalty regarding this matter.

In addition, various countries regulate the import of certain encryption technology and products, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our products or could limit our customers’ ability to implement our products in those countries. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations or change in the countries, governments, persons or technologies targeted by such regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations or create delays in the introduction of our products into international markets. Any decreased use of our products or limitation on our ability to export or sell our products could materially adversely affect our business, financial condition, results of operations and prospects.

~~Our revenue growth rate in recent periods may not be indicative of our future performance.~~

Our revenue growth rate in recent periods may not be indicative of our future performance. Our revenue grew 16.0% from the year ended December 31, 2015 to the year ended December 31, 2016, grew 11.2% from the year ended December 31, 2016 to the year ended December 31, 2017 and grew 22.5% from the three months ended March 31, 2017 to the three months ended March 31, 2018. We may not achieve similar revenue growth rates in future periods. You should not rely on our revenue for any prior quarterly or annual period as any indication of our future revenue or revenue growth. If we are unable to maintain consistent revenue or revenue growth, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~As the majority of the growth in our revenue and income from operations has occurred since 2013, it is difficult to evaluate our future prospects.~~

We were founded in 2003 and booked our first revenue in 2006. The majority of the growth in our revenue and income from operations has occurred since 2013, and it is difficult to evaluate our future prospects, including our ability to plan for and manage future growth. We have encountered and will continue to encounter risks and difficulties frequently experienced by rapidly growing companies in constantly evolving industries, including the risks described in this Quarterly Report on Form 10-Q. If we do not address these risks successfully, our business, financial condition, results of operations and prospects could be materially adversely affected, and the market price of our common stock could decline.

Our products are necessary for the operation of our customers’ broadband service operations. Product quality problems, warranty claims, services disruptions, or other defects, errors or vulnerabilities in our products or services could harm our reputation and materially adversely affect our business, financial condition, results of operations and prospects.

We assist our customers in the operation of their broadband service operations. Failures of our products could result in significant interruptions in our customers’ capabilities to maintain their networks and operations. Further, unsatisfactory performance could cause us to lose revenue or market share, increase our service costs, cause us to incur substantial costs in analyzing, correcting or redesigning our products, cause us to lose significant customers, subject us to liability for damages and divert our resources from other tasks, any one of which could materially adversely affect our business, financial condition, results of operations and prospects.

In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of our networks, system, or products. Such defects could result in warranty claims or claims by customers for losses that they sustain or, in some cases, could allow customers to claim damages. In the past, we have had to replace certain components of products that we had shipped or provide remediation in response to the discovery of defects or bugs from failures in software protocols.

Limitation of liability provisions in our standard terms and conditions of sale, and those of our resellers and sales agents, may not be enforceable under some circumstances or may not fully or effectively protect us from end-customer claims and related liabilities and costs. In some cases, including with respect to indemnification obligations under many of our agreements with customers and resellers, our contractual liability may be uncapped. The sale and support of our products also entail the risk of product liability claims. We maintain insurance to protect against certain types of claims associated with the use of our products, but our insurance coverage may not adequately cover any such claims. In addition, even claims that ultimately are unsuccessful could result in expenditures of funds in connection with litigation and divert management’s time and other resources.

Our products must interoperate with operating systems, software applications and hardware, and comply with industry standards, that are developed by others, and if we are unable to devote the necessary resources for our products to interoperate with such software and hardware and comply with such standards, we may lose or fail to increase market share and experience a weakeningsee heightened demand for our ~~products.~~

Generally, our products comprise only a part of and must interoperate with our customers’ existing infrastructure, specifically their networks, servers, software and operating systems, which may be manufactured by a wide variety of vendors and original equipment manufacturers. Our products must also comply with industry standards, such as Data Over Cable Service Interface Specification, or DOCSIS, 3.0 and 3.1, which are established by third parties, in order to interoperate with such servers, storage, software and other networking equipment such that all systems function efficiently together. We may depend on other vendors to support prevailing industry standards. Also, some industry standards may not be widely adopted or implemented uniformly, and competing standards and other approaches may emerge that may be preferred by our customers.

In addition, when new or updated versions of these industry standards, software systems or applications are introduced, we must sometimes develop updated versions of our software so that our products will interoperate properly. We may not accomplish these development efforts quickly, cost-effectively or at all. These development efforts require capital investment and the devotion of engineering resources. If we fail to maintain compatibility with these systems and applications, our customers may not be able to adequately utilize our products, and we may lose or fail to increase market share and experience a weakeningsolutions. A decrease in demand for our ~~products, among other consequences, which could materially adversely affect our business, financial condition, results of operations and prospects.~~

Our ability to sell our products is highly dependent on the quality of our support and services offerings, and our failure to offer high-quality support and services could have a material adverse effect on our business, financial condition, results of operations and prospects.

Once our products are deployed within our customers’ networks, our customers depend on our support organization to resolve any issues relating to our products. Our provision of high-quality support is critical for the successful marketing and sale of our products. If we do not assist our customers in deploying our products effectively, do not succeed in helping our customers resolve post-deployment issues quickly or do not provide adequate ongoing support, it could adversely affect our ability to sell our products to existing customers and could harm our reputation with potential customers. In addition, our standard sales contracts require us to provide minimum service requirements to our customers on an ongoing basis and our failure to satisfy these requirements could expose us to claims under these contracts. Our failure to maintain high-quality support and services, including compliance with our contractual minimum service obligations, could have a material adverse effect on our business, financial condition, results of operations and prospects.

~~We base our inventory requirements on our forecasts of future sales. If these forecasts are materially inaccurate, we may procure inventory that we may be unable to use in a timely manner or at all.~~

We and our contract manufacturers procure components and build our products based on our forecasts. These forecasts are based on estimates of future demand for our products, which are in turn based on historical trends and analyses from our sales and marketing organizations, adjusted for overall market conditions. To the extent our forecasts are materially inaccurate or if we otherwise do not need such inventory, we may under- or over-procure inventory, and such inaccuracies in our forecasts could subject us to contractual damages and otherwise materially adversely affect our business, financial condition, results of operations and prospects.

Because we depend on third-party manufacturers to build our hardware, we are susceptible to manufacturing delays and pricing fluctuations that could prevent us from delivering customer orders on time, if at all, or on a cost-effective basis, which may result in the loss of sales and customers.

We depend on third-party contract manufacturers to manufacture our product hardware. A significant portion of our cost of revenue consists of payments to these third-party contract manufacturers. Our reliance on these third-party contract manufacturers reduces our control over the manufacturing process, quality assurance, product costs and product supply and timing, which exposes us to risk. To the extent that our products are manufactured at facilities in foreign countries, we may be subject to additional risks associated with complying with local rules and regulations in those jurisdictions. If we are unable to manage our relationships with our third-party contract manufacturers effectively, or if these third-party manufacturers suffer delays or disruptions for any reason, experience increased manufacturing lead times, capacity constraints or quality control problems in their manufacturing operations or fail to meet our future requirements for timely delivery, our ability to ship products to our customers would be severely impaired, and our business, financial condition, results of operations and prospects could be materially adversely affected.

Our contract manufacturers typically fulfill our supply requirements on the basis of individual orders. We do not have long-term contracts with our third-party manufacturers that guarantee capacity, the continuation of particular pricing terms or the extension of credit limits. Accordingly, they are not obligated to continue to fulfill our supply requirements, which could result in supply shortages, and increases in the prices for manufacturing services on short notice. We may not be able to develop alternate contract manufacturers in a timely manner, or at all. If we add or change contract manufacturers, or change any manufacturing plant locations within a contract manufacturer network, we would add additional complexity and risk to our supply chain management.

In addition, we may be subject to significant challenges in ensuring that quality, processes and costs, among other issues, are consistent with our expectations and those of our customers. A new contract manufacturer or manufacturing location may not be able to scale its production of our products at the volumes or quality we require. This could also adversely affect our ability to meet our scheduled product deliveries to our customers, which could damage our customer relationships and cause the loss of sales to existing or potential customers, late delivery penalties, delayed revenue or an increase in our costs which could adversely affect our gross margins. This could also result in increased levels of inventory subjecting us to increased excess and obsolete charges that could have a negative impact on our results of operations.

Because some of the key components in our products come from limited sources of supply, we are susceptible to supply shortages or supply changes, which could disrupt or delay our scheduled product deliveries to our customers and may result in the loss of sales and customers.

Our products rely on key components that our contract manufacturers purchase on our behalf from a limited number of suppliers, including Altera, Analog Devices, Bell Power, Broadcom, Maxim, Mini-Circuits, Qorvo, TTM Technologies and Xilinx. We do not have guaranteed supply contracts with any of our component suppliers, and our suppliers could delay shipments or cease manufacturing such products or selling them to us at any time. The development of alternate sources for those components is time-consuming, difficult and costly. If we are unable to obtain a sufficient quantity of these components on commercially reasonable terms or in a timely manner, sales of our products could be delayed or halted entirely or we may be required to redesign our products. Any of these events could result in lost sales and damage to our customer relationships, which would adversely impact our business, financial condition, results of operations and prospects. In the event of a shortage or supply interruption from our component suppliers, we may not be able to develop alternate or second sources in a timely manner, on commercially reasonable terms or at all. In addition, certain of our customer contracts require us to notify our customers of any discontinuation of the products that we supply to them and to provide support for discontinued products, and lack of supply from our suppliers could leave us unable to fulfill our customer support obligations. Adverse changes to our relationships with our sole suppliers could result in lost sales and damage to our customer relationships, which would adversely impact our business, financial condition, results of operations and prospects.

We rely on resellers and sales agents to sell our products into certain international markets, and the loss of such resellers and sales agents could delay or harm our ability to deliver our products to our customers.

We rely upon resellers and sales agents to coordinate sales and distribution of our products in certain international markets. We provide our resellers and sales agents with specific training and programs to assist them in selling our products, but these steps may not be effective. In addition, our resellers and sales agents may be unsuccessful in marketing, selling and supporting our products and services. If we are unable to develop and maintain effective sales incentive programs for our resellers and sales agents, we may not be able to incentivize these resellers and sales agents to sell our products to customers. Any of our resellers and sales agents could elect to consolidate or enter into a strategic partnership with one of our competitors, which could reduce or eliminate our future opportunities with that reseller or sales agent. Our agreements with our resellers and sales agents may generally be terminated for any reason by either party with advance notice. We may be unable to retain these resellers and sales agents or secure additional or replacement resellers and sales agents. The replacement of one or more of our significant resellers or sales agents requires extensive training, and any new or expanded relationship with a reseller or sales agent may take several months or more to achieve productivity. Any of these events could materially adversely affect our business, financial condition, results of operations and prospects.

Our business and operations have experienced rapid growth in recent years, and if we do not appropriately manage any future growth or are unable to improve our systems and processes, our business, financial condition, results of operations and prospects will be adversely affected.

We have experienced rapid growth and increased demand for our products in recent years, which have placed a strain on our management, administrative, operational and financial infrastructure. For example, our revenue increased from $272.5 million for the year ended December 31, 2015 to $316.1 million for the year ended December 31, 2016 and to $351.6 million for the year ended December 31, 2017 and from $72.7 million for the three months ended March 31, 2017 to $89.1 million for the three months ended March 31, 2018. To handle this growth and increase in demand, we have significantly expanded our headcount, from 481 as of December 31, 2015 to 604 as of December 31, 2016 to 680 as of December 31, 2017 and to 698 as of March 31, 2018, and we expect to continue to increase our headcount. As we have grown, we have had to manage an increasingly larger and more complex array of internal systems and processes to scale with all aspects of our business, including our software development, contract manufacturing and purchasing, logistics and fulfillment and sales, maintenance and support. Our success will depend in part upon our ability to manage our growth effectively. To do so, we must continue to increase the productivity of our existing employees and continue to hire, train and manage new employees as needed. To manage domestic and international growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting processes and procedures and implement more extensive and integrated financial and business information systems. We may not be able to successfully implement these or other improvements to our systems and processes in an efficient or timely manner, and we may discover deficiencies in their capabilities or effectiveness. Our failure to improve our systems and processes, or their failure to operate effectively and in the intended manner, may result in disruption of our current operations and customer relationships, our inability to manage the growth of our business and our inability to accurately forecast our revenue, expenses and earnings.

If we are unable to hire, retain, train and motivate qualified personnel and senior management, including in particular our founders, our business, financial condition, results of operations and prospects could be adversely affected.

Our future success depends, in part, on our ability to continue to attract and retain highly skilled personnel, particularly software engineering and sales personnel. Competition for highly skilled personnel is often intense, particularly in the greater Boston region where we are headquartered, and we may not be able to attract and retain the highly skilled employees that we need to support our business. Many of the companies with which we compete for experienced personnel have greater resources than we have to provide more attractive compensation packages and other amenities. Research and development personnel are aggressively recruited by startup and growth companies, which are especially active in many of the technical areas and geographic regions in which we conduct product development. In addition, in making employment decisions, particularly in the high-technology industry, job candidates often consider the value of the stock-based compensation they are to receive in connection with their employment. Declines in the market price of our stock could adversely affect our ability to attract, motivate or retain key employees. If we are unable to attract or retain qualified personnel, or if there are delays in hiring required personnel, our business, financial condition, results of operations and prospects could be materially adversely affected.

Also, to the extent we hire personnel from competitors, or from certain customers or other third parties whose employees we have agreed not to solicit, we may be subject to allegations that such personnel have been improperly solicited, that such personnel have divulged proprietary or other confidential information or that former employers own certain inventions or other work product. Such claims could result in litigation.

Our future performance also depends on the continued services and continuing contributions of our founders and senior management to execute our business plan and to identify and pursue new opportunities and product innovations. Our employment arrangements with our employees do not require that they continue to work for us for any specified period, and therefore, they could terminate their employment with us at any time. In particular, the loss of Jerry Guo, our President and Chief Executive Officer, and Weidong Chen, our Chief Technology Officer,solutions could have a material adverse impact on our business. Further, the loss of other members of our senior management team, sales and marketing team or engineering team, or any difficulty attracting or retaining other highly qualified personnel in the future, could significantly delay or prevent the achievement of our development and strategic objectives, which could materially adversely affect our business, financial condition, results of operations and prospects. Except with respect to Mr. Guo, we do not maintain “key person” life insurance on our officers, directors or key employees.

~~If we do not effectively expand and train our direct sales force, we may be unable to increase sales to our existing customers or add new customers, and our business will be adversely affected.~~

We depend on our direct sales force to increase sales with existing customers and to obtain new customers. As such, we have invested and will continue to invest substantially in our sales organization. In recent periods, we have been adding personnel to our sales function as we focus on growing our business, entering new markets and increasing our market share, and we expect to incur significant additional expenses in expanding our sales personnel in order to achieve revenue growth. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training, retaining and integrating sufficient numbers of sales personnel to support our growth, particularly in international markets. In addition, we have significantly increased the number of personnel in our sales and marketing departments in recent periods, with headcount growing from 94 as of December 31, 2015 to 114 as of December 31, 2016, to 122 as of December 31, 2017 and to 130 as of March 31, 2018. New hires require significant training and may take significant time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire, retain or integrate into our corporate culture sufficient numbers of qualified individuals in the markets where we do business or plan to do business. If we are unable to hire, integrate and train a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business, financial condition, results of operations and prospects could be materially adversely affected.

~~Adverse economic conditions or reduced broadband infrastructure spending may adversely affect our business, financial condition, results of operations and prospects.~~

Our business depends on the overall demand for broadband connectivity. Weak domestic or global economic conditions, fear or anticipation of such conditions or a reduction in broadband infrastructure spending even if economic conditions improve, could materially adversely affect our business, financial condition, results of operations and prospects in a number of ways, including longer sales cycles, lower prices for our products and services, reduced sales and lower or no growth. Continued turmoil in the geopolitical environment in many parts of the world may also affect the overall demand for

our products and services. Deterioration in global economic or political conditions could materially adversely affect our business, financial condition, results of operations and prospects in the future. A prolonged period of economic uncertainty or a downturn may also significantly affect the availability of capital and the terms and conditions of financing arrangements, including the overall cost of financing as well as the financial health or creditworthiness of our customers. Circumstances may arise in which we need, or desire, to raise additional capital, and such capital may not be available on commercially reasonable terms, or at all.

Breaches of our cybersecurity systems and measures could degrade our ability to conduct our business operations and deliver products and services to our customers, delay our ability to recognize revenue, compromise the integrity of our products, result in significant data losses and the theft of our intellectual property, damage our reputation, expose us to liability to third parties and require us to incur significant additional costs to maintain the security of our networks and data.

We increasingly depend upon our IT systems to conduct virtually all of our business operations, ranging from our internal operations and product development activities to our marketing and sales efforts and communications with our customers and business partners. Certain persons and entities may attempt to penetrate our network and systems, or of the systems hosting our website, and may otherwise seek to misappropriate our proprietary or confidential information or cause interruptions of our service. Because the techniques used by such persons and entities to access or sabotage networks and systems change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques. We have also outsourced a number of our business functions to third-parties, including our manufacturers and logistics providers, and our business operations also depend, in part, on the success of these third parties’ own cybersecurity measures. Additionally, we depend upon our employees and independent contractors to appropriately handle confidential data and deploy our IT resources in a safe and secure fashion that does not expose our network systems to security breaches and the loss of data. Accordingly, if any of our cybersecurity systems, processes or policies, or those of any of our manufacturers, logistics providers, customers or independent contractors fail to protect against unauthorized access, sophisticated hacking or terrorism and the mishandling, misuse, or misappropriation of data by employees, contractors or other persons or entities, our ability to conduct our business effectively could be damaged in a number of ways, including:

Should any of the above events occur, we could be subject to significant claims for liability from our customers, employees or others and regulatory investigations or actions from governmental agencies. In addition, our ability to protect our intellectual property rights could be compromised and our reputation and competitive position could be significantly harmed. Any regulatory, contractual or other actions, litigations, investigations, fines, penalties and liabilities relating to any actual or alleged misuse or misappropriation of personal data or other confidential or proprietary information could be significant in terms of monetary exposure and reputational impact and necessitate changes to our business operations that may be disruptive to us. Additionally, we could incur significant costs in order to upgrade our cybersecurity systems, processes, policies and procedures and remediate damages. Consequently, our financial performance and results of ~~operations could be materially adversely affected.~~

~~If we are unable to obtain, maintain or protect our intellectual property rights, our competitive position could be harmed or we could be required to incur significant expenses to enforce our rights.~~

Our success depends, in part, on our ability to protect our proprietary technology. We rely on trade secret, patent, copyright and trademark laws and confidentiality agreements with employees and third parties to protect and enforce our rights to our proprietary technology, all of which offer only limited protection.

In order to protect our proprietary information, we rely in significant part on confidentiality arrangements with our employees, licensees, independent contractors, advisers and customers. These arrangements may not be effective to prevent disclosure of confidential information, including trade secrets, and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, if others independently discover our trade secrets, we would not be able to assert trade secret rights against such parties. Effective trade secret protection may not be available in every country in which our services are available or where we have employees or independent contractors. The loss or unavailability of trade secret protection could make it easier for third parties to compete with our products by copying functionality. In addition, any changes in, or unexpected interpretations of, the trade secret and employment laws in any country in which we operate may compromise our ability to enforce our intellectual property rights. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

We also rely on patents to protect certain aspects of our proprietary technology in the United States. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. Further, we cannot guarantee that any of our pending patent applications will result in the issuance of patents or that any patents that do issue from such applications will have adequate scope to provide us with a competitive advantage. There is no assurance that all potentially relevant prior art relating to our patents and patent applications has been found. To the extent that additional patents are issued from our patent applications, which is not certain, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. If third parties have prepared and filed patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the United States Patent and Trademark Office to determine priority of invention for patent applications filed before March 16, 2013, or in derivation proceedings to determine inventorship for patent applications filed after such date. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after its effective filing date. Even if patents covering our products are obtained by us or by our licensors, once such patents expire, we may be vulnerable to competition from similar products. Moreover, the rights granted under any issued patents may not provide us with adequate protection or competitive advantages, and, as with any technology, competitors may be able to develop similar or superior technologies to our own now or in the future.

Despite our efforts, the steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, and our ability to police such misappropriation or infringement is uncertain, particularly in countries outside of the United States. Competitors may use our technologies in jurisdictions where we have not obtained or are unable to adequately enforce intellectual property protection to develop their own products. We are also restricted from asserting our intellectual property rights against certain customers under our contracts with them.

Detecting and protecting against the unauthorized use of our products, technology and proprietary rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could materially adversely affect our business, financial condition, results of operations and prospects, and there is no guarantee that we would be successful. Furthermore, many of our current and potential competitors have the ability to dedicate substantially greater resources to protecting their technology or intellectual property rights than we do. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property, which could result in a substantial loss of our market share. Even if we did succeed in enforcing our intellectual property through litigation, this may be costly and divert management resources.

Finally, certain of our license agreements with our third-party licensors provide for joint ownership of developments or inventions that we create that are related to the subject matter of the license. Other agreements to which we are subject, including member agreements with standards bodies and research and development consortia, may require us to disclose and/or grant licenses to technology that is related to the subject matter of the standards body or the consortium and included in our contributions to specifications established by these bodies. These agreements could result in third parties having ownership or license rights to important intellectual property that we otherwise may have elected to maintain exclusive ownership of.

~~If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.~~

We have not applied for trademark registration for our name and logo in all geographic markets. In those markets where we have applied for trademark registration, failure to secure those registrations could adversely affect our ability to enforce and defend our trademark rights and result in indemnification claims. Our registered or unregistered trademarks or trade names, as well as the registered or unregistered trademarks or trade names used by our resellers or distributors associated with our products, may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Any claim of infringement by a third party, even those claims without merit, could cause us to incur substantial costs defending against such claim, could divert management attention from our business and could require us to cease use of such intellectual property in certain geographic markets. Over the long term, if we, or our resellers or distributors, are unable to establish name recognition based on our trademarks and trade names, then our business may be adversely affected.

Assertions by third parties of infringement or other violations by us of their intellectual property rights, or other lawsuits asserted against us, could result in significant costs and materially adversely affect our business, financial condition, results of operations and prospects.

Patent and other intellectual property disputes are common in the broadband infrastructure industry and have resulted in protracted and expensive litigation for many companies. Many companies in the broadband infrastructure industry, including our competitors and other third parties, as well as non-practicing entities, own large numbers of patents, copyrights, trademarks and trade secrets, which they may use to assert claims of patent infringement, misappropriation or other violations of intellectual property rights against us. From time to time, they have or may in the future also assert such claims against our customers whom we typically indemnify against claims that our products infringe, misappropriate or otherwise violate the intellectual property rights of third parties.

As the number of products and competitors in our market increases and overlaps occur, claims of infringement, misappropriation and other violations of intellectual property rights may increase. Any claim of infringement, misappropriation or other violations of intellectual property rights by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, distract our management from our business and require us to cease use of such intellectual property, which may impact important elements of our business. In addition, some claims for patent infringement may relate to subcomponents that we purchase from third parties. If these third parties are unable or unwilling to indemnify us for these claims, we could be substantially harmed.

The patent portfolios of most of our competitors are larger than ours. This disparity may increase the risk that our competitors may sue us for patent infringement and may limit our ability to counterclaim for patent infringement or settle through patent cross-licenses. In addition, future assertions of patent rights by third parties, and any resulting litigation, may involve patent holding companies or other adverse patent owners who have no relevant product revenue and against whom our own patents may therefore provide little or no deterrence or protection. We cannot guarantee that we are not infringing or otherwise violating any third-party intellectual property rights.

The third-party asserters of intellectual property claims may be unreasonable in their demands, or may simply refuse to settle, which could lead to expensive settlement payments, prolonged periods of litigation and related expenses, additional burdens on employees or other resources, distraction from our business, supply stoppages and lost sales. Moreover, in recent years, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements. In the past, we have received threatening letters or notices and have been the subject of claims that our solutions and underlying technology infringe or violate the intellectual property rights of others. Responding to such claims, regardless of their merit, can be time-consuming, costly to defend in litigation, divert management’s attention and resources, damage our reputation and brand, and cause us to incur significant expenses.

An adverse outcome of a dispute may require us to pay substantial damages including treble damages if we are found to have willfully infringed a third party’s patents; cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to attempt to redesign our products or services or otherwise to develop non-infringing technology, which may not be successful; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; and indemnify our partners and other third parties. Any damages or royalty obligations we may become subject to as a result of an adverse outcome, and any third-party indemnity we may need to provide, could materially adversely affect our business, financial condition, results of operations and prospects. Royalty or licensing agreements, if required or desirable,

may be unavailable on terms acceptable to us, or at all, and may require significant royalty payments and other expenditures. Further, there is little or no information publicly available concerning market or fair values for license fees, which can lead to overpayment of license or settlement fees. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Suppliers subject to third-party intellectual property claims also may choose or be forced to discontinue or alter their arrangements with us, with little or no advance notice to us. Any of these events could materially adversely affect our business, financial condition, results of operations and prospects.

~~Unavailability, termination or breach of licenses to third-party software and other intellectual property could materially harm our business.~~

Many of our products and services include software or other intellectual property licensed from third parties, and we otherwise use software and other intellectual property licensed from third parties in our business. We exercise no control over our third-party licensors, and the failure or unsuitability of their software or other intellectual property exposes us to risks that we will have little ability to control. For example, a licensor may have difficulties keeping up with technological changes or may stop supporting the software or other intellectual property that it licenses to us; our licensors may also have the ability to terminate our licenses if the licensed technology becomes the subject of a claim of intellectual property infringement. Also, it will be necessary in the future to renew licenses, expand the scope of existing licenses or seek new licenses, relating to various aspects of these products and services or otherwise relating to our business, which may result in increased license fees. Any new licenses may not be available on acceptable terms, if at all. In addition, a third party may assert that we or our customers are in breach of the terms of a license, which could, among other things, give such third party the right to terminate a license or seek damages from us, or both. The inability to obtain or maintain certain licenses or other rights or to obtain or maintain such licenses or rights on favorable terms, or the need to engage in litigation regarding these matters, could result in delays in releases of products and services and could otherwise disrupt our business, until equivalent technology can be identified, licensed or developed, if at all, and integrated into our products and services or otherwise in the conduct of our business. Moreover, the inclusion in our products and services of software or other intellectual property licensed from third parties on a nonexclusive basis may limit our ability to differentiate our products from those of our competitors. Any of these events could have a material adverse effect on our business, financial condition, results of operations and prospects.

~~Our products contain third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could restrict our ability to sell our products.~~

Our products contain software modules licensed to us by third-party authors under “open source” licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software that we use. If we combine our software with open source software in a certain manner, we could, under certain open source licenses, be required to release portions of the source code of our software to the public. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of product sales for us.

Although we monitor our use of open source software to avoid subjecting our products to undesirable conditions, we do not have a formal open source policy in place that gives our developers written guidance on what open source licenses we deem “safe.” Further, even where we believe an open source license may have acceptable conditions, the terms of many open source licenses have not been interpreted by U.S. courts, and these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products. Moreover, we cannot assure you that our informal processes for controlling our use of open source software in our products will be effective or that our compliance with open source licenses, including notice and attribution requirements, are adequate. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely or commercially reasonable basis or to make generally available, in source code form, our proprietary code. We also could face infringement claims. Any of the foregoing could materially adversely affect our business, financial condition, results of operations and prospects.

~~Our failure to adequately protect personal data and to comply with related laws and regulations could result in material liability.~~

A wide variety of provincial, state, national, foreign, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer (including across national boundaries), and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.

Any failure by us to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including fines, imprisonment of company officials, public censure, claims for damages by end customers and other affected persons and entities, damage to our reputation and loss of goodwill, and other forms of injunctive or operations-limiting relief, any of which could have a material adverse effect on our operations, financial performance, and business.

Definitions of personal data and personal information, and requirements relating to the same under applicable laws and regulations within the European Union, the United States, and elsewhere, change frequently and are subject to new and different interpretations by courts and regulators. Because the interpretation and application of laws and other obligations relating to privacy and data protection are uncertain, it is possible that existing or future laws, regulations, and other obligations may be interpreted and applied in a manner that is inconsistent with our data management practices. We may be required to expend significant resources to modify our products and otherwise adapt to these changes, which we may be unable to do on commercially reasonable terms or at all, and our ability to develop new products and features could be limited. These developments could harm our business, financial condition and results of operations. ~~Even if not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our products by current and prospective customers.~~

~~Failure to comply with governmental laws and regulations could materially adversely affect our business, financial condition, results of operations and prospects.~~

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, product safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States. From time to time, we may receive inquiries from such governmental agencies or we may make voluntary disclosures regarding our compliance with applicable governmental regulations or requirements. Noncompliance with applicable government regulations or requirements could subject us to sanctions, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions. If any governmental sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, results of operations and prospects could be materially adversely affected. In addition, responding to any action will likely result in a significant diversion of management’s attention and resources and an increase in professional fees. Enforcement actions and sanctions could materially adversely affect our business, financial condition, results of operations and prospects.

We may invest in or acquire other businesses, which could require significant management attention, disrupt our business, dilute stockholder value and adversely affect our business, financial condition, results of operations and prospects.

As part of our growth strategy, we may make investments in or acquire complementary companies, products or technologies. We do not have experience in making investments in other companies nor have we made any acquisitions to date, and as a result, our ability as an organization to evaluate and/or complete investments or acquire and integrate other companies, products or technologies in a successful manner is unproven. We may not be able to find suitable investment or acquisition candidates, and we may not be able to complete such investments or acquisitions on favorable terms, if at all. If we do complete investments or acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any investments or acquisitions we complete could be viewed negatively by our customers, investors and securities analysts.

In addition, investments and acquisitions may result in unforeseen operating difficulties and expenditures. For example, if we are unsuccessful at integrating any acquisitions or retaining key talent from those acquisitions, or the technologies associated with such acquisitions, into our company, the business, financial condition, results of operations and prospects of the combined company could be materially adversely affected. Any integration process may require significant time and resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired technology or personnel or accurately forecast the financial effects of an acquisition transaction, including accounting charges. We may have to pay cash, incur debt or issue equity securities to pay for any such investment or acquisition, each of which could adversely affect our financial condition or the market price of our common stock. The sale of equity or issuance of debt to finance any such acquisitions could result in dilution to our stockholders. The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions that would impede our ability to manage our operations. Moreover, if the investment or acquisition becomes impaired, we may be required to take an impairment charge, which could adversely affect our financial condition or the market price of our common stock.

~~Our international operations may give rise to potentially adverse tax consequences.~~

We are expanding our international operations and staff to better support our growth into the international markets. We generally conduct our international operations through wholly owned subsidiaries and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our corporate structure and associated transfer pricing policies contemplate the business flows and future growth into the international markets, and consider the functions, risks and assets of the various entities involved in the intercompany transactions. The amount of taxes we pay in different jurisdictions may depend on the application of the tax laws of the various jurisdictions, including the United States, to our international business activities, changes in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions, which are required to be computed on an arm’s-length basis pursuant to the intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial statements could fail to reflect adequate reserves to cover such a contingency.

On December 22, 2017, the President signed into law new U.S. federal income tax legislation that contains significant changes to corporate taxation, including the transition of U.S. international taxation to a modified territorial system and the imposition of a one-time transition tax on a deemed repatriation of certain foreign earnings and profits. The overall impact of this new legislation is uncertain, and our business and financial condition could be adversely affected. In addition, further changes in the tax laws of foreign jurisdictions could arise, including as a result of the base erosion and profit shifting project undertaken by the Organisation for Economic Co-operation and Development, or the OECD. The OECD, which represents a coalition of member countries, has issued recommendations that, in some cases, make substantial changes to numerous long-standing tax positions and principles; many of these changes have been adopted or are under active consideration by OECD members and/or other countries.

Recent changes to the U.S. tax laws impact the tax treatment of foreign earnings by, among other things, creating limits on the ability of taxpayers to claim and utilize foreign tax credits, imposing minimum effective rates of current tax on certain classes of foreign income, and imposing additional taxes in connection with specified payments to related foreign recipients. We are unable to determine at this time what effect such changes, or others that may be enacted in the future, may have on our business. Due to our existing, and anticipated expansion of, our international business activities, any changes in the U.S. or foreign taxation of such activities may increase our worldwide effective tax rate and adversely affect our financial condition and operating results.

Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating results.

We do not collect sales and use, value added or similar taxes in all jurisdictions in which we have sales, and we have been advised that such taxes are not applicable to our products and services in certain jurisdictions. Sales and use, value added and similar tax laws and rates vary greatly by jurisdiction. Certain jurisdictions in which we do not collect such taxes may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, to us or our end-customers for the past amounts, and we may be required to collect such taxes in the future. If we are unsuccessful in collecting such taxes from our end-customers, we could be held liable for such costs. Such tax assessments, penalties and interest, or future requirements may adversely affect our operating results.

If we needed to raise additional capital to expand our operations and invest in new products, our failure to do so on favorable terms could reduce our ability to compete and could materially adversely affect our business, financial condition, results of operations and prospects.

We expect that our existing cash and cash equivalents will be sufficient to meet our anticipated cash needs for at least the next 12 months. However, if we need to raise additional funds to expand our operations and invest in new products, we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the market price of our common stock could decline.

~~Our business is subject to the risks of fire, power outages, floods and other catastrophic events and to interruption by manmade problems such as terrorism.~~

Our corporate headquarters and the operations of our key manufacturing vendors, as well as many of our customers, are located in areas exposed to risks of natural disasters such as fires and floods. A significant natural disaster, such as a fire, flood or other catastrophic events such as a disease outbreak, could have a material adverse effect on our or their business, which could in turn materially adversely affect our business, financial condition, results of operations and prospects. For example, in the event our manufacturing or logistics abilities are hindered by any of the events discussed above, shipments could be delayed, which could result in missed financial targets, such as revenue and shipment targets, for a particular quarter. Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenue, customers in that region may delay or forego purchases of our products, which could materially adversely affect our business, financial condition, results of operations and prospects. In addition, acts of terrorism could cause disruptions in our business or the business of our manufacturers, logistics providers, partners or customers or the economy as a whole. All of the aforementioned risks may be compounded if our disaster recovery plans and those of our manufacturers, logistics providers or partners prove to be inadequate. To the extent that any of the above results in delays or cancellations of customer orders, or delays in the manufacture, deployment or shipment of our products, our business, financial condition, results of operations and prospects would be adversely affected.

~~Regulations affecting broadband infrastructure could reduce demand for our products.~~

Laws and regulations governing the Internet and electronic commerce are emerging but remain largely unsettled, even in the areas where there has been some legislative action. Regulations may focus on, among other things, assessing access or settlement charges, or imposing tariffs or regulations based on the characteristics and quality of products, either of which could restrict our business or increase our cost of doing business. Government regulatory policies are likely to continue to have a major impact on the pricing of existing and new network services and, therefore, are expected to affect demand for those services and the communications products, including our products, supporting those services.

Any changes to existing laws or the adoption of new regulations by federal or state regulatory authorities or any legal challenges to existing laws or regulations affecting IP networks could materially adversely affect the market for our products. Moreover, customers may require us, or we may otherwise deem it necessary or advisable, to alter our products to address actual or anticipated changes in the regulatory environment. Our inability to alter our products or address any regulatory changes could have a material adverse effect on our consolidated financial position, results of operations or cash flows.

~~We have outstanding debt that could limit our ability to make expenditures and investments in the conduct of our business and adversely impact our ability to obtain future financing.~~

We have outstanding debt. We may be unable to generate cash sufficient to pay when due the principal of, interest on or other amounts due in respect of our indebtedness. We may be required to dedicate significant cash flows from operations to make such payments, which could limit our ability to make other expenditures and investments in the conduct of our business. Our indebtedness may also reduce our flexibility in planning for or reacting to changes in our business and market conditions. Our indebtedness also exposes us to interest rate risk, since our debt obligations generally bear interest at variable rates. In addition, we may incur additional indebtedness in the future to meet future financing needs. If we add new debt, the risks described above could increase.

~~Our credit facility contains restrictive and financial covenants that may limit our operating flexibility.~~

Our credit facility contains certain restrictive covenants that either limit our ability to, or require a mandatory prepayment in the event we, incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, change business locations, make certain investments, make any payments on any subordinated debt, transfer or dispose of assets, amend certain material agreements, and enter into various specified transactions. We, therefore, may not be able to engage in any of the foregoing transactions unless we obtain the consent of our lender or prepay the outstanding amount under the credit facility. The credit facility also contains certain financial covenants and financial reporting requirements. Our obligations under the credit facility are secured by substantially all of our assets, excluding intellectual property and investments in foreign subsidiaries. We may not be able to generate or sustain sufficient cash flow or sales to meet the financial covenants or pay the principal and interest under the credit facility. Furthermore, our future working capital, borrowings or equity financing could be unavailable to repay or refinance the amounts outstanding under the credit facility. In the event of a liquidation, our lender would be repaid all outstanding principal and interest prior to distribution of assets to unsecured creditors, and the holders of our common stock would receive a portion of any liquidation proceeds only if all of our creditors, including our lender, were first repaid in full.

Our results of operations are likely to vary significantly from period to period and be unpredictable. If we fail to meet the expectations of analysts or investors, the market price of our common stock could decline substantially.

Our results of operations have historically varied from period to period, and we expect that this trend will continue. As a result, you should not rely upon our past financial results for any period as indicators of future performance. Our results of operations in any given period can be influenced by a number of factors, many of which are outside of our control and may be difficult to predict, including the factors described above as well as:

Any one of the factors above or the cumulative effect of several of the factors described above may result in significant fluctuations in our financial and other results of operations. This variability and unpredictability could result in our failure to meet expectations of securities analysts or investors for a particular period. If we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action suits.

Our common stock began trading on the Nasdaq Global Select Market on December 15, 2017. Given the limited trading history of our common stock, there is a risk that an active trading market for our shares may not be sustained, which could put downward pressure on the market price of our common stock and thereby affect the ability of our stockholders to sell their shares at attractive prices, at the times that they would like to sell them, or at all.

~~The market price of our common stock may be volatile, which could result in substantial losses for investors.~~

~~The market price of our common stock could be subject to significant fluctuations. Some of the factors that may cause the market price of our common stock to fluctuate include:~~

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Because of the potential volatility of our stock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and resources from our business.

~~We have broad discretion in the use of our cash reserves and may not use them effectively.~~

Subject to restrictions in the agreements governing our indebtedness, our management has broad discretion to use our cash reserves and could use our cash reserves in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could adversely affect our ability to operate and grow our business. Pending their use, we may invest our cash reserves in a manner that does not produce income or that loses value.

~~If securities or industry analysts cease publishing research~~ or reports about us, our business or our market, or if they publish negative evaluations of our stock or the stock of other companies in our industry, the price of our stock and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If one or more of the industry analysts covering our business downgrade their evaluations of our stock or the stock of other companies in our industry, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price to decline.

~~Because we do not expect to declare any dividends on our common stock for the foreseeable future, investors in our common stock may never receive a return on their investment.~~

Although we declared special dividends on five occasions prior to our initial public offering, we do not anticipate that we will declare any cash dividends to holders of our common stock in the foreseeable future, and investors should not rely on an investment in our common stock to provide dividend income. Instead, we plan to retain any earnings to maintain and expand our existing operations. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock.

~~Insiders have substantial control over us, which could limit your ability to influence the outcome of key transactions, including a change of control.~~

As of April 30, 2018, our directors, executive officers and 10% stockholders beneficially owned, in the aggregate, approximately 63.6% of our outstanding common stock. As a result, these stockholders could have significant influence over the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets, and over the management and affairs of our company. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock.

A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a significant number of shares of our common stock in the public market could occur at any time after the expiration on June 13, 2018 of the lock-up agreements that were executed in connection with the initial public offering of our common stock and the expiration on July 25, 2018 of the lock-up agreements that were executed in connection with the public offering by certain selling stockholders of shares of our common stock in April 2018, which we refer to as the Follow-On Offering. These sales, or the market perception that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. As of April 30, 2018, 66,794,804 shares of our common stock, or 81.1% of our outstanding shares, will be restricted from sale as a result of lock-up agreements through June 12, 2018 and 56,839,445 of these shares of our common stock, or 69.0% of our outstanding shares, will be further restricted from sale as a result of lock-up agreements through July 24, 2018, except in each case that if the underwriters for the Follow-On Offering exercise their option to purchase additional shares from the selling stockholders such shares will be released from the restrictions under these lock-up agreements so that they may be sold in the Follow-On Offering.

In addition, as of April 30, 2018, there were 15,122,072 shares subject to outstanding options, 507,578 shares subject to outstanding restricted stock unit awards, or RSUs, and an additional 8,877,488 shares reserved for future issuance under our equity incentive plans. Because we registered all shares of common stock that may be issued under our equity incentive plans pursuant to a Registration Statement on Form S-8 on December 15, 2017, any such shares that we issue can be freely sold in the public market upon issuance, subject to the lock-up agreements and the restrictions imposed on our affiliates under Rule 144.

Moreover, holders of an aggregate of approximately 38,557,350 shares of our common stock as of April 30, 2018, will have rights, subject to expiration of the lock-up agreements described above and certain other conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. Upon registration, such shares would be able to freely sold in the public market, subject to the lock-up agreements described above.

Anti-takeover provisions in our restated certificate of incorporation and our amended and restated bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Our restated certificate of incorporation and amended and restated bylaws and Delaware law contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or delay attempts by our stockholders to replace or remove our management. Our corporate governance documents include provisions:

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations with us. Any provision of our restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders. Our restated certificate of incorporation further provides that the federal district courts of the United States are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions could limit our stockholders’ ability to obtain a more favorable judicial forum for disputes with us or our directors, officers or employees.

Our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. Our restated certificate of incorporation further provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provisions contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, results of operations and prospects.

~~We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.~~

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company until the last day of our fiscal year following the fifth anniversary of our initial public offering, subject to specified conditions. For so long as we remain an emerging growth company, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include being permitted to provide reduced disclosure regarding executive compensation and exemptions from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 related to our internal control over financial reporting, and not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding a supplement to the auditor’s report providing additional information about the audit and the financial statements. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, companies that have not filed a pending registration statement under the Securities Act, had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard, provided that we continue to be an emerging growth company. This may make comparison of our financial statements with the financial statements of another public company that is not an emerging growth company, or an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

We will remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenue, we have more than $700 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one Annual Report on Form 10-K) or we issue more than $1 billion of non-convertible debt securities over a three-year period.

We have elected to rely on certain phase-in provisions of the Nasdaq Stock Market rules, and, as a result, we are not yet subject to certain corporate governance requirements otherwise required of Nasdaq-listed companies.

~~We are currently relying on the phase-in provisions of the Nasdaq rules for certain corporate governance requirements, including the requirements that we have:~~

Under the phase-in provisions of the Nasdaq rules, a majority of the members of our board of directors must be independent within one year of the date of our initial public offering, and we must comply with the following independence requirements with respect to our audit committee and our compensation committee: (1) one independent member of each committee beginning at the time of our initial public offering, (2) a majority of independent members of each committee within 90 days following the date of our initial public offering and (3) all independent members of each committee within one year of the date of our initial public offering. As of March 8, 2018, three members of our board of directors had been determined to be independent, two members of our audit committee had been determined to be independent and two members of our compensation committee had been determined to be independent. During the phase-in periods, our stockholders will not have the same protections afforded to stockholders of companies that comply with Nasdaq’s independence requirements without reliance on the phase-in periods. We will be required to recruit new directors in order to comply with Nasdaq’s independence requirements, and the resultant changes in our board and committee membership may influence our future corporate strategy and operating philosophies and may result in deviations from our current strategy. Additionally, if, during the phase-in periods, we are unable to recruit a sufficient number of new directors who qualify as independent or otherwise comply with Nasdaq rules, we may be subject to delisting by Nasdaq.

Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could materially adversely affect our business, financial condition, results of operations and prospects.

~~The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.~~

As a public company, we are subject to the reporting requirements of the Exchange Act, the listing requirements of the Nasdaq Stock Market and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on our systems and resources, particularly after we are no longer an emerging growth company. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could harm our business and results of operations. Although we have already hired additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses.

We are currently evaluating our internal controls, including to identify and remediate any deficiencies in those internal controls. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting that we are unable to remediate before the end of the same fiscal year in which the material weakness is identified, we will be unable to assert that our internal controls are effective. If we are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to attest to management’s report on the effectiveness of our internal controls, which will be required after we are no longer an emerging growth company, we could lose investor confidence in the accuracy and completeness of our financial reports, which would cause the price of our common stock to decline.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are increasing legal and financial compliance costs and making some activities more time-consuming. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expense and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies, regulatory authorities may initiate legal proceedings against us and our business may be harmed.

We also expect that being a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors and qualified executive officers.

We estimate that we will incur approximately $2.0 to $3.0 million of incremental annual costs associated with being a publicly traded company, which we expect will be included in general and administrative expenses. However, it is possible that our actual incremental costs of being a publicly traded company will be higher than we currently estimate. In estimating these costs, we took into account expenses related to insurance, legal, accounting and compliance activities.

On December 14, 2017, the Securities and Exchange Commission, or the SEC, declared our registration statement on Form S-1 (File No. 333-221658) for our initial public offering, or IPO, effective. The net offering proceeds to us from the ~~offering,~~IPO, after deducting underwriting discounts of $6.3 million and offering expenses payable by us totaling $4.1 million, were approximately $79.3 million. No offering discounts, commissions or expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10.0% or more of any class of our equity securities or to any other affiliates. There has been no material change in the planned use of proceeds from our ~~initial public offering~~IPO as described in our final prospectus filed with the SEC on December 15, 2017 pursuant to Rule 424(b)(4). As of ~~March 31, 2018,~~September 30, 2021, we had not used any of the net offering proceeds and we have invested the proceeds into an investment portfolio with the primary objective of preserving principal and providing liquidity without significantly increasing risk.

The following table sets forth information with respect to repurchases of shares of our common stock during the three-month period ended September 30, 2021:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Delaware		75-3108867
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
100 Old River Road Andover, Massachusetts		01810
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value per share	CASA	The Nasdaq Stock Market LLC

Large accelerated filer	☐	Accelerated filer	☐☒
Non-accelerated filer	☒ ~~(Do not check if a smaller reporting company)~~☐	Smaller reporting company	☐
		Emerging growth company	☒

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	~~Condensed Consolidated~~ Financial Statements ~~(Unaudited)~~	3
	Condensed Consolidated ~~Balance Sheets as of March 31, 2018 and December 31, 2017~~Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three ~~Months Ended March 31, 2018~~ and ~~2017~~Nine months ended September 30, 2021 and 2020	4
	Condensed Consolidated Statements of Stockholders' Equity for the Three ~~Months Ended March 31, 2018~~and Nine months ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Cash Flows for the ~~Three Months Ended March 31, 2018~~Nine months ended September 30, 2021 and ~~2017~~2020	6
	~~Notes to Unaudited Condensed Consolidated Financial Statements~~	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2427
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3238
Item 4.	Controls and Procedures	3340
PART II.	OTHER INFORMATION	3441
Item 1.	Legal Proceedings	3441
Item 1A.	Risk Factors	3442
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5743
Item 6.	Exhibits	5744
Signatures		5845

	Cost		Accumulated Amortization			Net Balance
Developed Technology	$	25,000	$	(8,037	)	$	16,963
Customer Relationships		18,000		(4,050	)		13,950
Trade Name		1,000		(747	)		253
Purchased software		1,817		(322	)		1,495
Totals as of September 30, 2021	$	45,817	$	(13,156	)	$	32,661

	March 31, 2018		December 31, 2017		September 30, 2021		December 31, 2020
Current portion of accounts receivable, net:
Accounts receivable, net	$	71,164	$	106,114	$	80,719	$	93,480
Amounts due from related party (see Note 14)		15,067		13,367
Accounts receivable, extended payment arrangements		2,635		3,153
Accounts receivable, extended payment terms						144		644
		88,866		122,634		80,863		94,124
Accounts receivable, net of current portion:
Accounts receivable, extended payment arrangements		4,326		4,710
Accounts receivable, extended payment terms						—		143
	$	93,192	$	127,344	$	80,863	$	94,267

	Revenue						Accounts Receivable, Net						Revenue						Revenue
	Three Months Ended March 31,						March 31,			December 31,			Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017			2021			2020			2021			2020
Customer A		27	%		13	%		25	%		44	%		24	%		13	%		20	%	*
Customer B		18	%		21	%		16	%		10	%	*				27	%	*				23	%
Customer C		12	%	*				11	%	*			*			*				11	%	*
Customer D	*			*			*				17	%
Customer E	*				14	%	*			*

	Accounts Receivable, Net
	September 30, 2021			December 31, 2020
Customer A		21	%	*
Customer D	*				17	%

Year Ending December 31,
Remainder of 2021	$	1,532
2022		5,958
2023		5,760
2024		5,656
2025		5,651
Thereafter		8,104
	$	32,661

~~Level 1—~~	~~Quoted prices in active markets for identical assets and liabilities.~~

~~Level 2—~~	Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities at the measurement date; quoted prices in markets that are not active for identical or similar assets and liabilities; or other inputs that are observable or can be corroborated by observable market data.

~~Level 3—~~	~~Unobservable inputs that involve management judgment and are supported by little or no market activity, including pricing models, discounted cash flow methodologies and similar techniques.~~

Year Ending December 31,
Remainder of 2021	$	7,250
2022		3,000
2023		275,225
Thereafter		—
	$	285,475

Year Ending December 31,
2018	$	2,478
2019		3,314
2020		9,644
2021		3,000
2022		3,000
Thereafter		282,000
	$	303,436

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Fair Value		Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Fair Value
Unvested balance at January 1, 2018		896		$	7.09
Unvested balance at January 1, 2021									4,231		$	5.43
Granted		103			24.87				1,660			8.26
Vested		(491	)		5.46	$	8,735		(1,241	)		6.15	$	10,149
Unvested balance at March 31, 2018		508		$	12.27
Forfeited									(270	)		4.68
Unvested balance at September 30, 2021									4,380		$	6.34

	Payments Due by Period
	Total		Less than 1 Year		1 to 3 Years		4 to 5 Years		More than 5 Years
	(in thousands)
Debt obligations—Term loans⁽¹⁾	$	395,078	$	15,564	$	40,770	$	40,008	$	298,736
Debt obligations—Commercial mortgage⁽²⁾		7,753		417		7,336		—		—
Operating leases⁽³⁾		2,609		708		1,352		544		5
Total	$	405,440	$	16,689	$	49,458	$	40,552	$	298,741

Period	Total Number of Shares Purchased		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
	(In thousands)				(In thousands)		(In thousands)
July 1 - July 31, 2021		—	$	—		—	$	70,208
August 1 - August 31, 2021		—	$	—		—	$	70,208
September 1 - September 30, 2021		—	$	—		—	$	70,208

Exhibit Number		Description

~~31.1~~ 3.1		Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38324) filed on December 19, 2017)

3.2		By-laws of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-38324) filed on December 19, 2017)

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~31.2~~ 31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

~~32.1~~ 32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~32.2~~ 32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
~~101.SCH~~
101.SCH		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~
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104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

	CASA SYSTEMS, INC.

Date: ~~May 11, 2018~~November 2, 2021	By:	/s/ Jerry Guo
		Jerry Guo
		President, Chief Executive Officer and Chairman (Principal Executive Officer)

Date: ~~May 11, 2018~~November 2, 2021	By:	/s/ ~~Gary Hall~~Scott Bruckner
		~~Gary Hall~~Scott Bruckner
		Chief Financial Officer (Principal Financial ~~and Accounting~~ Officer)