VISN

Divestiture and Capital Return

• On July 1, 2026, VISTA closed the sale of its Ruckus business to Belden for $1.846 billion, generating approximately $1.75 billion in net all-cash proceeds. Management noted the transaction delivers significant immediate value to shareholders.
• The company's board of directors approved a $5 per share special cash distribution, to be paid by the end of August 2026, funded by Ruckus sale proceeds. It is expected to be treated as a return of capital for tax purposes.
• Combined with distributions from the prior CCS divestiture, VISTA will have returned $15 per share to shareholders, paid off all outstanding debt, and redeemed all preferred equity. The board also approved a $100 million open market share repurchase program in the second quarter of 2026.
• Post-distribution, VISTA expects to end 2026 with $700-$750 million in cash on its balance sheet, plus an expected $160 million IRS tax refund in the second half of 2027 from divestiture tax planning, giving the company a fully unlevered, strong cash position.

Core Aurora Networks (DOCSIS 4.0) Operations

• VISTA will now focus on growing Aurora, leveraging the multi-year DOCSIS 4.0 network upgrade cycle from North American cable operators. The company is well-positioned in the amplifier market, the largest product segment of the upgrade cycle.
• In the second quarter of 2026, VISTA shipped its first unified nodes (which support both ESD and FDX technology in a single device). Unified amplifiers have entered lab testing, with commercial shipments expected to start in early 2027.
• The company secured a significant three-year deployment win for its remote PHY VC-CAP solution with key European customers, and expanded shipments of next-generation ESD amplifiers to multiple large North American MSOs, with shipments expected to ramp over the next two quarters.
• VISTA expanded its partnership with dbSUM for an AI-powered version of its Aurora ServiceSure NXT network monitoring platform, securing its first commercial win for the solution in Latin America for monitoring both HFC and PON networks.

Non-Core Diversification Growth Strategy

• The unlevered balance sheet and strong cash position allow VISTA to pursue disciplined organic and inorganic growth investments, including expansion outside its traditional cable market.
• The company has existing underinvested technology portfolios with growth potential in three key non-DOCSIS areas:
  1. PON (fiber-to-the-home): VISTA holds a commercial partnership with Altice Labs to offer a full portfolio of GPON, XGS PON, and 50G PON solutions.
  2. Virtual Broadband Network Gateway (VBBNG): A cloud-native software solution that supports multi-access network scaling and mobile data offload; VISTA signed a new partnership agreement with the now-divested Ruckus in Q2 2026 to deliver mobile offload products to major U.S. wireless carriers.
  3. Security Solutions (PKI): End-to-end device security, digital certificate provisioning, and software licensing for IoT devices and smart networks, with existing customer agreements with major technology firms. PKI as a service offers significant diversification upside at attractive valuation multiples.

• Full year 2026 adjusted EBITDA guidance for Aurora Networks was lowered to a range of $200 million to $225 million, a $25 million downward revision from prior guidance. The revision reflects worse-than-expected memory chip pricing and availability, higher projected total memory-related costs of approximately $40 million for the full year, and reported customer upgrade delays.
• Management cautioned that full year 2026 results could fall to the lower end of or even below the guided range if memory market conditions deteriorate further. However, management reaffirmed confidence in underlying demand for the company's core DOCSIS 4.0 products.
• Stranded corporate costs from the CCS and Ruckus divestitures are projected to total approximately $20 million in 2026. Most stranded costs are expected to be eliminated by 2027, with all stranded costs eliminated by 2028.

VISTA Networks only has one reportable operating segment, Aurora Networks, for continuing operations:

• Second quarter 2026 net sales: $319 million, representing 99.7% of total continuing operations net sales, a 1% year-over-year decrease. The slight decline occurred because increased shipments of new DOCSIS 4.0 products were offset by falling legacy product sales, driven by an unusually high volume of high-margin legacy license sales in the second quarter of 2025 that did not repeat in 2026.
• Second quarter 2026 adjusted EBITDA: $46 million, a 43% year-over-year decrease. This decline was driven by the loss of high-margin legacy license sales, elevated memory chip pricing, and stranded corporate costs from recent divestitures, with a total year-over-year negative impact of approximately $15 million from memory and stranded costs. The adjusted EBITDA result was in line with management's prior expectations.
• Second quarter 2026 order rates were down 55% year-over-year due to order timing, with approximately $200 million in orders received in July 2026 after quarter end. End-of-quarter backlog totaled $470 million, a 15% year-over-year decrease.
• Total company continuing operations (including all shared corporate activity) reported second quarter 2026 net sales of $320 million (1% year-over-year decrease), and adjusted EBITDA of $36 million (32% year-over-year decrease). Including the now-divested Ruckus business for year-over-year comparison, total company adjusted EBITDA was $76 million, a 40% year-over-year decrease.

• Persistent memory chip supply tightness and elevated pricing: Memory market conditions have deteriorated faster and further than management expected at the start of 2026, with limited visibility into future improvements. Higher memory costs have hurt margins and contributed to customer investment delays.
• Quarterly volatility: Aurora is a project-driven business, leading to meaningful volatility in quarterly revenue and earnings based on project timing, as seen in the 2026 second quarter results from the 2025 high base of legacy license sales.
• Customer concentration: The top three customers represent approximately 70% of total VISTA revenue, leaving the company exposed to significant revenue swings if any major customer delays or reduces investment.
• Legacy business decline: VISTA's legacy cable hardware and license business, which generates higher margins than newer product lines, is expected to continue declining year-over-year as it is replaced by newer DOCSIS 4.0 products.
• Execution risk for new growth: Diversification into non-cable markets requires new investment in R&D and go-to-market resources for underdeveloped product lines, with uncertain returns on investment.

Q: An analyst asked for an update on customer concentration levels and current revenue mix across Aurora's product lines. / A: Management confirmed the top three customers represent 70% of total revenue, the same concentration level as the prior year. By revenue, legacy products (old headend hardware and licenses) make up 15% of total Aurora revenue, DOCSIS 4.0 products (amplifiers, nodes, virtual CMTS) account for 70% of revenue, and the remaining 15% is split between video infrastructure, PON, and PKI security solutions. Legacy generates a disproportionate 25% of current adjusted EBITDA due to its higher margins, and is expected to see gradual annual decline rather than the sharp 2025 to 2026 drop that occurred this year.

Q: An analyst asked VISTA to clarify its strategic priorities for its non-DOCSIS product lines, given the new available cash for investment. / A: Management explained that PON, VBBNG, and PKI security solutions were underinvested in prior years as the company focused on deleveraging and completing divestitures. Now that the balance sheet is strong, these are the three core non-DOCSIS areas the company will prioritize for incremental organic investment, with disciplined evaluation of potential inorganic acquisitions that can expand product scope or end markets, including opportunities outside the traditional cable sector.

Q: An analyst asked what factors are driving the recently reported customer upgrade delays. / A: Management clarified that upgrade delays are not broad-based across the industry, but are isolated to specific customer cases, where customers are taking additional time to decide on technology choices and upgrade timelines. The overall DOCSIS 4.0 upgrade cycle remains on track, with customers continuing to invest, though some projects have been pushed back by one or two quarters.