Viavi Solutions (VIAV) risk factors, FY2025 10-K

Other

1. 01Geopolitical conditions, including political turmoil and volatility, regional conflicts, terrorism and war could result in market instability, which could negatively impact our business results

Risks Related to Our Business Strategy and Industry

1. 02Our profitability in a particular period will be impacted by revenue, product mix and operational costs that vary significantly across our product portfolio and business segments
2. 03Rapid technological change in our industry presents us with significant risks and challenges, and if we are unable to keep up with the rapid changes, our customers may purchase less of our products
3. 04Unfavorable, uncertain or unexpected conditions in the transition to new technologies may cause our growth forecasts to be inaccurate and/or cause fluctuations in our financial results
4. 05We may experience increased pressure on our pricing and contract terms due to our reliance on a limited number of customers for a significant portion of our sales
5. 06Movement towards virtualized networks and software solutions may result in lower demand for our hardware products and increased competition
6. 07We face a number of risks related to our strategic transactions
7. 08VIAVI is subject to risks associated with its recent and proposed acquisitions, including completion of proposed acquisitions in the anticipated timeframes or at all, and any failure to realize anticipated benefits of such acquisitions
8. 09We may not generate positive returns on our research and development strategy

Operational Risks

1. 10Our restructuring activities could adversely affect our business and results of operations
2. 11Management transitions and talent retention create uncertainties that could harm our business
3. 12Our customers are located throughout the world. In addition, we have significant operations outside North America, including product development, manufacturing, sales and customer support operations
4. 13Our business and operations could be adversely impacted in the event of a failure of information technology infrastructure
5. 14If we have insufficient proprietary rights or if we fail to protect those we have, our business would be materially harmed
6. 15Our products may be subject to claims that they infringe the intellectual property rights of others
7. 16The use of open-source software and generative artificial intelligence may expose us to risks and harm our intellectual property position

Legal, Regulatory and Compliance Risks

1. 17Certain of our products are subject to governmental and industry regulations, certifications and approvals
2. 18We receive formal and informal government inquiries or audits related to our products, practices or services from time to time
3. 19The U.S. and China have been engaged in protracted negotiations over the Chinese government’s acts, policies, and practices related to technology transfer, intellectual property, and innovation
4. 20Failure to maintain satisfactory compliance with certain privacy and data protections laws and regulations may harm our business
5. 21We may be subject to environmental liabilities
6. 22Our business is subject to evolving regulations and expectations with respect to sustainability matters that could expose us to numerous risks
7. 23We may be subject to risks related to climate change, natural disasters and catastrophic events

Risks Related to our Liquidity and Indebtedness

1. 24Any deterioration or disruption of the capital and credit markets may adversely affect our access to sources of funding
2. 25Our term notes increased our overall leverage and our convertible notes could dilute our existing stockholders and lower our reported earnings per share
3. 26Our outstanding indebtedness may limit our operational and financial flexibility
4. 27We may not generate sufficient cash flow to meet our debt service and working capital requirements, which may expose us to the risk of default under our debt obligations
5. 28Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt
6. 29The terms of the indentures that govern the Notes and the agreement that governs our secured credit facility restrict our current and future operations

Tax Risks

1. 30Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations and/or changes in regulations
2. 31Changes in tax legislation or policies could materially impact our financial position and results of operations
3. 32The Pillar Two rules generally became effective starting with VIAVI’s fiscal 2025. We consider these laws when recording our income tax provision under ASC 740

General Risks

1. 33Certain provisions in our charter and under Delaware laws could hinder a takeover attempt