Business Update
Strategic Pivot to AI Networking. UTStarcom recognizes AI Networking as a major market opportunity and is shifting its primary innovation and development efforts toward this sector, leveraging its deep heritage in cutting-edge optical networking technologies and intelligent network automation to address the infrastructure demands of the AI era. Amid the explosive growth of AI processing requirements, the need for highly efficient, low-latency backend networking has become a critical bottleneck. UTStarcom is addressing this challenge by focusing on the development of a comprehensive Optical Circuit Switching (OCS) solution designed for both scale-up and scale-out AI Data Center (AI DC) architectures. By utilizing a purely optical path and eliminating optical-electrical-optical (O-E-O) conversions in suitable AI DC network applications, UTStarcom's OCS technology is engineered to deliver massive bandwidth, lower latency, deterministic network behavior, reduced power consumption and cooling requirements, and optimized AI network cost. The Company initiated the development work in 2H 2025, with a functional prototype expected to debut in 2H 2026.
Carrier-grade disaggregated routers hardware supply. Following the award of the China Telecom Research Institute RFP for the manufacturing of 5G transport network routers for China Telecom's STN network and the execution of the associated frame agreements in early 2025, the Company received its initial purchase order under this framework and successfully delivered the products to the customer in 2H 2025.
Network expansion for a Mobile Network Operator in Europe. In 2H 2025, UTStarcom received a purchase order for a batch of NetRing TN704ES, the product that was developed earlier specifically to meet the customer's network expansion requirements.
Post-sale support services to customers globally. In 2H 2025, the Company continued to provide support to its customers around the world in accordance with existing support and maintenance contracts for products such as NetRing PTN, SyncRing, IMS, SSTP.
UTStarcom's Chief Executive Officer Mr. Hua Li commented, "We have made great efforts in our current products, including research and development, manufacturing, and marketing. However, the results have not met our expectations due to intense market competition. Looking ahead, we aim to explore new directions and products related to AI networking. Artificial intelligence has tremendous potential and is expected to impact nearly every aspect of business and daily life. With our long-term expertise and experience in communication system development, we believe we are well positioned to expand into this new area and expect to achieve meaningful progress and results."
Second Half and Full Year 2025 Financial Results (Unaudited)
Summary of 2H 2025 Key Financials (Unaudited)
2H 2025
2H 2024
Y/Y Change
Revenue
$4.3
$5.2
-17.3%
Gross Profit
$0.3
$1.2
-75.0%
Operating Expenses
$4.7
$4.9
-4.1%
Operating Loss
($4.4)
($3.7)
($0.7)
Net Loss
($4.2)
($2.4)
($1.8)
Basic EPS
($0.46)
($0.26)
($0.20)
Cash Balance (including Restricted Cash)
$42.4
$53.1
-20.2%
Summary of Full Year 2025 Key Financials (Unaudited)
2025
2024
Y/Y Change
Revenue
$9.0
$10.9
-17.4%
Gross Profit
$1.1
$2.9
-62.1%
Operating Expenses
$9.6
$10.2
-5.9%
Operating Loss
($8.5)
($7.3)
($1.2)
Net Loss
($8.0)
($4.4)
($3.6)
Basic EPS
($0.87)
($0.48)
($0.39)
Cash Balance (including Restricted Cash)
$42.4
$53.1
-20.2%
* Dollar comparisons are used where percentage comparisons are not meaningful.* All amounts are in U.S. Dollars millions except for Earnings Per Share (EPS)
Total Revenues
Six months ended December 31, 2025
Total revenues for the second half of 2025 were $4.3 million, compared to $5.2 million in the corresponding period in 2024.
Net equipment sales for the second half of 2025 were $0.2 million, a decrease of 65.9% from $0.6 million in the corresponding period in 2024. The decrease was mainly due to decreased revenue from customers in India.
Net services sales for the second half of 2025 were $4.1 million, a decrease of 9.0% from $4.6 million in the corresponding period in 2024. The decrease was mainly due to the completion of current projects and no new major projects in India.
Twelve months ended December 31, 2025
2025 total revenues were $9.0 million, a decrease of 17.5% from $10.9 million in 2024.
2025 net equipment sales were $0.8 million, a decrease of 46.6% from $1.4 million in the corresponding period in 2024. The decrease was mainly due to decreased revenue from customers in India.
2025 net services sales were $8.2 million, a decrease of 13.1% from $9.5 million in 2024. The decrease was mainly due to the completion of current projects and no new major projects in India.
Gross Profit
Six months ended December 31, 2025
Gross profit was $0.3 million, or 6.9% of net sales, for the second half of 2025, compared to $1.2 million, or 23.1% of net sales, in the corresponding period in 2024.
Equipment gross loss for the second half of 2025 was $0.5 million, compared to gross profit of $0.1 million in the corresponding period in 2024. Equipment gross margin for the second half of 2025 was (232%), compared to 16.2% for the corresponding period in 2024. The decrease in gross margin was due to lower equipment revenue, an increase in inventory reserves, and a change in expected recovery of cost from suppliers.
Service gross profit for the second half of 2025 was $0.8 million, compared to $1.1 million in the corresponding period in 2024. Service gross margin for the second half of 2025 was 19.0%, compared to 24.0% for the corresponding period in 2024, due to fixed labor cost with lower service revenue.
Twelve months ended December 31, 2025
2025 gross profit was $1.1 million, or 11.7% of net sales, compared to $2.9 million, or 26.7% of net sales, in 2024.
2025 equipment gross loss was $0.7 million, compared to gross profit $0.2 million in 2024. 2025 equipment gross margin was (86.6%), compared to 13.0% in 2024. The decrease in gross margin was due to lower equipment revenue, an increase in inventory reserves, and a change in expected recovery of cost from suppliers.
2025 service gross profit was $1.7 million, compared to $2.7 million in 2024. 2025 service gross margin was 20.7%, compared to 28.7% in 2024, due to fixed labor cost with lower service revenue.
Operating Expenses
Six months ended December 31, 2025
Operating expenses for the second half of 2025 were $4.7 million, compared to $4.9 million in the corresponding period in 2024.
Selling, general and administrative ("SG&A") expenses for the second half of 2025 were $2.4 million, compared to $2.4 million in the corresponding period in 2024.
Research and development ("R&D") expenses for the second half of 2025 were $2.3 million, compared to $2.5 million in the corresponding period in 2024, lower due to decreased personnel cost resulting from cost reduction initiatives.
Twelve months ended December 31, 2025
2025 operating expenses were $9.6 million, compared to $10.2 million in 2024.
2025 SG&A expenses were $4.9 million, compared to $5.1 million in 2024. The decrease was mainly due to continued tight cost controls.
2025 R&D expenses were $4.6 million, compared to $5.1 million in 2024, lower due to decreased personnel cost resulting from cost reduction.
Operating Loss
Operating loss for the second half of 2025 was $4.4 million, compared to $3.7 million in the corresponding period in 2024.
Full year 2025 operating loss was $8.6 million, compared to $7.3 million in 2024.
Interest Income, Net
Net interest income for the second half of 2025 was $1.1 million, compared to $1.5 million in the corresponding period in 2024.
Full year 2025 net interest income was $2.2 million, compared to $2.8 million in ...
