NTGR 10-K & 10-Q changes, risk factors and insider trading

If we are unable to properly monitor and optimize our channel partners' inventory levels and maintain an appropriate level and mix of products with our retail partners and wholesale distributors and within our sales channels, we may incur increased and unexpected costs associated with this inventory. In 2022 and the first half of 2023, many of our retail and service provider partners began significantly reducing their target inventory levels which adversely affected our results of operations. While we seebelieve signsour ofchannel thepartners' retailcurrent networkinginventory markettargets stabilizing,are at reasonable levels, the uncertain macroeconomic and geopolitical environment and high inflation and interest rates arecould also putting pressure onchange our NETGEARpartners' fordesired Businessinventory channeltargets. partners.In Wethe past, we have experienced and continue to experience lower revenue as a result of our channel partners lowering their inventory levels and higher cost of carrying excess channel inventory. On the other hand, low channel inventory levels increase the likelihood that our sales channel customers may not be able to fulfill end user demand, leading to delayed or lost sales, unhappy customers and potential impacts to our brand and reputation. Inadequate stock levels could also hinder our ability to fulfill large orders or take advantage of unexpected demand spikes, thereby limiting revenue growth opportunities. Moreover, reductions in target inventory levels put pressure on our ability to accurately forecast customer demand and inventory requirements and increases the likelihood that the accuracy of such forecasts would be lower. We determine production levels based on our forecasts of demand for our products. Actual demand for our products depends on many factors, which makes it difficult to forecast. We have experienced differences between our actual and our forecasted demand in the past and expect differences to arise in the future. If we improperly forecast demand for our products and channel inventory levels, we could end up with too many products and be unable to sell the excess inventory in a timely manner, if at all, or, alternatively we could end up with too few products and not be able to satisfy demand. This problem is exacerbated because we attempt to closely match inventory levels with product demand leaving limited margin for error. Also, during the transition from an existing product to a new replacement product, we must accurately predict the demand for the existing and the new product. If we improperly forecast demand for our products and channel inventory levels, we could incur increased expenses associated with writing off excessive or obsolete inventory, lose sales, incur penalties for late delivery or have to ship products by air freight to meet immediate demand incurring incremental freight costs above the sea freight costs and suffering a corresponding decline in gross margins. For example, when demand for our Connected Home products turns out to be lower than we previously forecasted, it results in our revenue for our Connected Home products to come in lower than expected, as our channel partners in the U.S. replenish inventory slower than they sell through to end users to right size their inventory carrying position based on the lower demand levels than previously expected. In addition, we generally allow wholesale distributors and traditional retailers to return a limited amount of our products in exchange for other products. Under our price protection policy, if we reduce the list price of a product, we are often required to issue a credit in an amount equal to the reduction for each of the products held in inventory by our wholesale distributors and retailers. If our wholesale distributors and retailers are unable to sell their inventory in a timely manner, we might lower the price of the products, or these parties may exchange the products for newer products or decrease their purchases of our products in subsequent periods, which would adversely affect our revenue and results of operations.

To remain competitive and stimulate consumer and business demand, generally and in compliance with newly proposed or future regulations, we must successfully manage new product introductions and transitions of products and services.services, services, including with increasing investments in security features and sourcing of critical components from sources to enhance the security features of our products as well as regulatory compliance readiness.

We operate in a highly competitive, quickly changing environment, and our future success depends on our ability to develop or acquire and introduce new products and services, enhance existing products and services, effectively stimulate customer and business demand for new and upgraded products and services, and successfully manage the transition to these new and upgraded products and services. Our future success will depend in large part upon our ability to identify demand trends in the consumer, business and service provider markets, and to quickly develop or acquire, manufacture and market and sell products and services that satisfy these demands in a cost-effective manner. In order to differentiate our products from our competitors’ products, we must continue to increase our focus and capital investment in research and development and marketing and sales, including software development for our products and complementary services and applications. For example, we previously made a strategic shift to focus on premium, higher margin products and have committed a substantial amount of resources to the development, manufacture, branding, marketing and sale of our Nighthawk mobile hotspot products, Orbi WiFi systems and Pro AV managed switches, and to introducing additional and improved models and services in these lines. In the third quarter of 2023, we launched our first WiFi 7 products, namely the Orbi 97X mesh system and the Nighthawk RS700 router, and will continue to invest in a strong pipeline of WiFi 7 introductions in 2024 across all our major product lines. To get ahead of the rapidly evolving regulatory compliance landscape, and given the critical importance of cyber security in the networking space, we have also invested in cybersecurity, security features and procuring internet-connected components from sources outside of nations deemed foreign adversaries by the US government, which enhance the Company’s compliance and cyber security posture, but also comes at greater cost. The success of new products and services depends on a number of factors, including timely and successful development either through rapid innovation or acquisition, market acceptance, our ability to manage the risks and costs, such as investment costs and marketing costs, associated with development and introduction of new products and services, the effective management of purchase commitments and channel inventory levels in line with anticipated product demand, availability of products in appropriate quantities and at expected costs to meet anticipated demand, the risk that new products and services may have delays, quality or other defects or deficiencies and our ability to effectively manage marketing and reviews of our products and services.

We have invested, and in the future may invest, in new business strategies and adjust existing business strategies.strategies, including but not limited to investments in cybersecurity, security features and the procurement of internet-connected components from sources to ensure the security of our products and regulatory readiness. Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, economic, legal and regulatory challenges, inadequate return on capital, potential impairment of tangible and intangible assets, and significant write-offs. Changes in business strategies are inherently risky and may not be successful. The failure of any significant investment could materially adversely affect our business, reputation, results of operations and financial condition. For example, as mentioned in the risk factor above “To remain competitive and stimulate consumer and business demand, we must successfully manage new product introductions and transitions of products and services”, we previously made a strategic shift to focus on premium, higher margin products and services and we continue to make changes in our business strategies, including pursuing new, adjacent markets. Changes in business strategy would require us to hire in key areas and make certain investments, including marketing; however, such investments may not prove to be successful. Additionally, a significant part of our business strategy and culture is to focus on long-term growth and as a result, our profitability may be lower than it would be if our strategy were to maximize short-term financial results. If we are ultimately unable to improve profitability at the level or during the time frame anticipated by securities or industry analysts and our stockholders, the trading price of our common stock may decline. If we fail to develop and successfully execute on our business strategies, our business, financial condition, results of operations and reputation could be materially adversely affected.

We sell a substantial portion of our products through traditional and online retailers, including Best Buy Co., Inc., Amazon.com, Inc. and their affiliates, wholesale distributors, including Ingram Micro, Inc. and TD Synnex, and service providers, such as AT&T. We expect that a significant portion of our net revenue will continue to come from sales to a small number of customers for the foreseeable future. In addition, because our accounts receivable are often concentrated with a small group of purchasers, the failure of any of them to pay on a timely basis, or at all, would reduce our cash flow. We are also exposed to increased credit risk if any one of these limited numbers of customers fails or becomes insolvent. We generally have no minimum purchase commitments or long-term contracts with any of these customers. These purchasers could decide at any time to discontinue, decrease or delay their purchases of our products. If our customers increase the size of their product orders without sufficient lead-time for us to process the order, our ability to fulfill product demands would be compromised. These customers have a variety of suppliers to choose from and therefore can make substantial demands on us, including demands on product pricing and on contractual terms, which often results in the allocation of risk to us as the supplier. Accordingly, the prices that they pay for our products are subject to negotiation and could change at any time. For example, as mentioned below in the risk factors “If disruptions in our transportation network continue to occur or our shipping costs substantially increase again in the future, we may be unable to sell or timely deliver our products, and net revenue and our gross margin could decrease” and “We obtain several key components from limited or sole sources, and if these sources fail to satisfy our supply requirements or we are unable to properly manage our supply requirements with our third-party manufacturers, we may lose sales and experience increased component costscosts,”, we had previously experienced high freight costs and component costs and had issued price increases to our customers. Our ability to maintain strong relationships with our principal customers is essential to our future performance. If any of our major customers reduce their level of purchases or refuse to pay the prices that we set for our products, our net revenue and operating results could be harmed.

In addition, adverse changes in economic conditions or unforeseen disruptions in the businesses of any of our key customers could adversely impact the sale of our products to end users and the quantity of products our customers decide to purchase from us. For example, as mentioned above in the risk factor “Accurately managingOptimizing our sales channel partners' inventory levels and product mix within the current environment is challenging, and we have, and may in the future, incur costs associated with excess inventory, or lose sales from having too few products,” many of our retail and service provider customers have reduced and continue to reduce their target inventory levels. This shift may have a longer-term impact on the inventory levels our customers choose to carry.

We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition. Our principal competitors in the consumer market include ARRIS, ASUS, D-Link, Eero (owned by Amazon), Linksys (owned by Foxconn), Google WiFi, and TP-Link. Our principal competitors in the business market include Arista, Cisco Systems, D-Link, Extreme Networks, Fortinet, Haiwei, Hewlett-Packard Enterprise, Juniper Mist, Ruckus Networks, TP-Link, and Ubiquiti. Our principal competitors in the service provider market include Cradlepoint,Compal, Franklin, Huawei, Inseego, Nokia, Orbic, Sonim, TP-Link, WNC, and ZTE. Other competitors include numerous local vendors such as Xiaomi in China, AVM in Germany and Buffalo in Japan. In addition, these local vendors may target markets outside of their local regions and may increasingly compete with us in other regions worldwide. Our potential competitors also include other consumer electronics vendors, including Apple, LG Electronics, Microsoft, Panasonic, Sony, Toshiba and Vizio, who could integrate networking and streaming capabilities into their line of products, such as televisions, set top boxes and gaming consoles, and our channel customers who may decide to offer self-branded networking products. We also face competition from service providers who may bundle a free networking device with their broadband service offering, which would reduce our sales if we were not the supplier of choice to those service providers. In the service provider space, we also face significant and increased competition from original design manufacturers, or ODMs, and contract manufacturers who sell and attempt to sell their products directly to service providers around the world.

Many of our existing and potential competitors have longer operating histories, greater name recognition and substantially greater financial, technical, sales, marketing and other resources. These competitors may, among other things, undertake more extensive marketing campaigns, adopt more aggressive pricing policies, obtain more favorable pricing from suppliers and manufacturers, and exert more influence on sales channels than we can. Certain of our significant competitors also serve as key sales and marketing channels for our products, potentially giving these competitors a marketplace advantage based on their knowledge of our business activities and/or their ability to negatively influence our sales opportunities. For example, Amazon provides an important sales channel for our products, but it also competes with us in the mesh WiFi systems product category through its subsidiary Eero. In addition, certain competitors may have different business models, such as integrated manufacturing capabilities, that may allow them to achieve cost savings and to compete on the basis of price. Other competitors may have fewer resources but may be more nimble in developing new or disruptive technology or in entering new markets. We anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets. For example, in the past certain network security companies such as Symantec have introduced security routers for the home consumer market to compete with us and we believe that other network security companies may also seek to do the same. Also, due to our recent success in the audio visual over IP market, some of our competitors may seek to enter this market as well. Price competition is intense in our industry in certain geographical regions and product categories. Many of our competitors in the service provider and retail spaces price their products significantly below our product costs in order to gain market share. Certain substantial competitors have business models that are more focused on customer acquisition and access to customer data rather than on financial return from product sales, and these competitors have the ability to provide sustained price competition to many of our products in the market. Average sales prices have declined in the past and may again decline in the future. These competitors may have more advanced technology, more extensive distribution channels, stronger brand names, greater access to shelf space in retail locations, bigger promotional budgets and larger customer bases than we do. In addition, many of these competitors leverage a broader product portfolio and offer lower pricing as part of a more comprehensive end-to-end solution which we may not have. These companies could devote more capital resources to develop, manufacture and market competing products than we could. Our competitors may acquire other companies in the market and leverage combined resources to gain market share. In some instances, our competitors may be acquired by larger companies with additional formidable resources, such as the purchase of ARRIS by CommScope,CommScope and Eero by Amazon and Linksys by Foxconn.Amazon. Additionally, in the case of Linksys, Foxconn is one of our main third-party manufacturing partners, which presents an additional risk if Foxconn decides to prioritize its interest in Linksys over its relationship with us. If any of these companies are successful in competing against us, our sales could decline, our margins could be negatively impacted and we could lose market share, any of which could seriously harm our business and results of operations.

We depend substantially on our sales channels,channels and ourcertain significant customers and loss of and/or failure to maintain and expand our customer sales volume and/or sales channels would result in lower sales and reduced net revenue.

To maintain and grow our market share, net revenue and brand, we must maintain and expand our sales channels. Our sales channels consist of traditional retailers, online retailers, DMRs, VARs,MSPs, and broadband service providers. Some of these entities purchase our products through our wholesale distributor customers. We generally have no minimum purchase commitments or long-term contracts with any of these third parties.

Our traditional retail customers have faced increased and significant competition from online retailers. Further, we have experienced the shift to a greater percentage of purchases taking place online versus traditional retail customers. If we cannot effectively manage our business and inventory requirements amongst our online customers and traditional retail customers, our business would be harmed. The recent trend in the consolidation of online retailers and DMR channels has resulted in intensified competition for preferred product placement, such as product placement on an online retailer’s Internet home page. Expanding our presence in the VARMSP channel may be difficult and expensive. We compete with established companies that have longer operating histories and longstanding relationships with VARsMSPs that we would find highly desirable as sales channel partners. In addition, our efforts to realign or consolidate our sales channels may cause temporary disruptions in our product sales and revenue, and these changes may not result in the expected longer-term benefits. We also sell products and services directly to consumers from our own e-commerce platforms. This requires material investment in capital, time and resources and carries the risk that it may not achieve the expected return on investment that we are expecting, and that it may adversely affect our relationships with our existing channel partners, which ultimately may materially and adversely affect our results of operations.

All of our products are manufactured, assembled, tested and generally packaged by a limited number of third-party manufacturers, including original design manufacturers, or ODMs, as well as their sub-contract manufacturers. In most cases, we rely on these manufacturers to procure approved components and, in some cases, subcontract engineering work. Some of our products are manufactured by a single manufacturer. We do not have any long-term contracts with any of our third-party manufacturers. Some of these third-party manufacturers produce products for our competitors or are themselves competitors in certain product categories. Due to uncertain and changing economic and geopolitical conditions, the viability of some of these third-party manufacturers may be at risk. The loss of the services of any of our primary third-party manufacturers could cause a significant disruption in operations and delays in product shipments. Qualifying a new manufacturer and commencing volume production is expensive and time consuming. Ensuring that a manufacturer is qualified to manufacture our products to our standards is time consuming. In addition, there is no assurance that a manufacturer can produce our products at the appropriate volumes and in the quality that we require. In addition, as we recently have transitioned a substantial portion of our manufacturing facilities to different regions, we are subject to additional significant challenges in ensuring that quality, processes and costs, among other issues, are consistent with our expectations. For example, while we expect our manufacturers to be responsible for penalties assessed on us because of excessive failures of the products, there is no assurance that we will be able to collect such reimbursements from these manufacturers, which causes us to take on additional risk for potential failures of our products.

Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, and any disruptions due to natural disasters, climate change, health epidemics and political, social and economic instability in the region would affect the ability of our third-party manufacturers to manufacture our products. For example, in late August 2021, heavy rains caused our manufacturer in Thailand to become flooded and created a one-month delay in manufacturing and required us to move some non-U.S. manufacturing back to China. Furthermore, if the cost of production charged by our third-party manufacturers increases, it may affect our margins and ability to lower prices for our products to stay competitive. Labor or geopolitical unrest in Southeast Asia, China or other locations where components and our products are manufactured may also affect our third-party manufacturers as workers may strike and cause production delays. If our third-party manufacturers fail to maintain good relations with their employees or contractors, and production and manufacturing of our products is affected, then we may be subject to shortages of products and quality of products delivered may be affected. Further, if our manufacturers or warehousing facilities are disrupted or destroyed, we would have no other readily available alternatives for manufacturing and assembling our products and our business would be significantly harmed.

International sales comprise a significant amount of our overall net revenue. International sales were approximately 34% of overall net revenue in fiscal 20242025 and fiscal 2023.2024, respectively. We continue to be committed to growing our international sales, and while we have committed resources to expanding our international operations and sales channels, these efforts may not be successful. For example, in fiscal 2022 we experienced the strengthening of the U.S. dollar, which had a meaningful negative impact on our international revenue and our profitability.

geopolitical and economic tensions, such as in the Middle East, between China/Taiwan,tensions and international terrorism and anti-American sentiment, particularly in emerging markets;

seasonal shifts in end market demand for our products, particularly in our Connected Home businessConsumer segment;

changes in U.S. and international trade policy and/or regulations that adversely affect our operations or supply chain, customs, tax or duty rates as well as tariffs, the threat of new or increased tariffs, and escalating trade tensions;

The transportation network is subject to disruption or congestion from a variety of causes, including labor disputes or port strikes, acts of war, terrorism or other geopolitical conflicts, like the Middle East conflict, natural disasters, effects of climate change, pandemics like COVID-19 and congestion resulting from higher shipping volumes. We are highly dependent upon the transportation systems we use to ship our products, including surface and air freight. Our attempts to closely match our inventory levels to our product demand intensify the need for our transportation systems to function effectively and without delay. On a quarterly basis, our shipping volume also tends to steadily increase as the quarter progresses, which means that any disruption in our transportation network in the latter half of a quarter will likely have a more material effect on our business than at the beginning of a quarter. For example, at times during the COVID-19 pandemic, we experienced significant limitations on the availability of key transportation resources and significant increases to the cost of air and ocean freight. When these occur, it has negatively impacted our profitability as we seek to transport an increased number of products from manufacturing locations in Asia to other markets around the world as quickly as possible. Moreover, feeder vessels that move containers to key trans-Pacific terminal locations can be subject to similar impacts due to the timing of container transfers and vessel departure dates. In addition, the global effects of climate change can result in increased frequency and severity of natural disasters that could also disrupt our transportation network. Furthermore, labor disputes among freight carriers and at ports of entry are common. A port worker strike, work slow-down or other transportation disruption in the ports of Singapore, Rotterdam, Los Angeles or Long Beach, California, where we have significant distribution centers, or East coast or Gulf coast of United States due to the volume of imports coming to the U.S. via ports there, could significantly disrupt our business. For example, at times, during the course of the COVID-19 pandemic, we had experienced disruptions at the ports, due to multiple factors, such as supply and demand imbalance, a shortage of warehouse workers, truck drivers, and transport equipment (tractors and trailers), and other causes, and had suffered from heightened congestion, bottleneck and gridlock, leading to abnormally high transportation delays. In addition, as mentioned above in the risk factor "Accurately managingOptimizing our sales channel partners' inventory levels and product mix within the current environment is challenging, and we have, and may in the future, incur costs associated with excess inventory, or lose sales from having too few products," many of our retail and service provider customers have and continue to reduce their target inventory levels to more closely match with product demand. This further intensifies the need for our transportation systems to function effectively and without delay. Significant disruptions to the transportation network could lead to significant disruptions in our business, delays in shipments, increased shipping costs, and revenue and profitability shortfalls which could materially and adversely affect our business and financial results, especially if they were to take place within the last few weeks of any quarter.

As part of the terms of acquisition, we may commit to pay additional contingent consideration if certain revenue or other performance milestones are met. We are required to evaluate the fair value of such commitments at each reporting date and adjust the amount recorded if there are changes to the fair value. Additionally, future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity risks and vulnerabilities, as our systems or products could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.technologies and our diligence may not have discovered such security issues.

We have made, and continue to seek to make,made investments in companies around the world to further our strategic objectives and support our key business initiatives. These investments mayhave includeincluded equity or debt instruments of public or private companies, and may be non-marketable at the time of our initial investment. We do not restrict the types of companies in which we seek to invest. These companies may range from early-stage companies that are often still defining their strategic direction to more mature companies with established revenue streams and business models. If any company in which we invest fails, we could lose all or part of our investment in that company. If we determine that an other-than-temporary decline in the fair value exists for an equity or debt investment in a public or private company in which we have invested, we will have to write down the investment to its fair value and recognize the related write-down as an investment loss. The performance of any of these investments could result in significant impairment charges and gains (losses) on investments. We must also analyze accounting and legal issues when making these investments. If we do not structure these investments properly, we may be subject to certain adverse accounting issues, such as potential consolidation of financial results.

We rely upon third parties for certain technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to develop, sell, maintain and support technologically innovative products would be limited.

Product security vulnerabilities, system security risks, data protection breaches, cyber-attacks, improper use of artificial intelligence (“AI”) tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work. Actual or perceived non-compliance with our privacy and security obligations could lead to regulatory investigations or actions, litigation, fines and penalties, business operation disruption, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.

We and the third parties with whom we work process personal data and other sensitive information, and we disclose certain such sensitive information to relevant third parties as reasonably necessary to operate our business while maintaining measures designed to protect such information. Among other products and services, we offer comprehensive online cloud management services paired with a number of our products. Our products and services could be compromised due to a variety of evolving threats and security vulnerabilities. We have in the past experienced, and expect to continue to be the target of, cyber attacks (including by highly sophisticated nation-state actors) or other sources of compromise, and given the increasingly sophisticated and evolving threat landscape, we could experience a cyber incident that would materially affect our business operations. We devote considerable time and resources to uncovering and remedying these threats and vulnerabilities, using both internal and external resources, but the threats to network and data security are increasingly diverse and sophisticated and we continue to implement additional protections and increase our monitoring and threat intelligence. Despite our efforts and processes to prevent breaches, our systems and products are vulnerable to cybersecurity risks, including cyber-attacks such as viruses and worms, vulnerabilities such as command injection, cross site scripting, credential stuffing attacks, authentication and session management, and stack-based buffer overflow, social-engineering attacks (including through deep fakes, which may be increasingly difficult to identify as fake and phishing attacks), supply-chain attacks, malware (including as a result of advanced persistent threat intrusions), and other sophisticated attacks or exploits. These threats can come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through error or malfeasance), sophisticated nation states, and nation-state-supported actors. Additionally, our systems and products may be disrupted for reasons other than a cyberattack, such as software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, and floods. Threat actors may also gain access to other networks and systems after a compromise of our networks and systems. For example, threat actors may use an initial compromise of one part of our environment to gain access to other parts of our environment, or leverage a compromise of our networks or systems to gain access to the networks or systems of third parties with whom we work, such as through phishing or supply chain attacks. It is also possible that an attacker could compromise our internal code repository or those of our partners and insert a ‘backdoor’ that would give them easy access to any of our devices using this code. Severe ransomware attacks are also becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our products or services, loss of sensitive data and income, reputational harm, and diversion of funds. Further, most of our major offices worldwide operate under a hybrid work model, allowing personnel the flexibility to work from homeremotely and at the workplace. WorkRemote from homework arrangements present additional cybersecurity risks, including potential increases in malware and phishing attacks, greater challenges to secure home officerelevant data, and potential service degradation or disruption to key internal business applications and third-party services. Although we have taken measures to address these risks, they present challenges that could impact business operations and could cause recovery times to increase.

We have not in the past and may not in the future besuccessfully ablediscover, toget discoverahead of and/or protect against these threats and vulnerabilities, and ourif inabilityunable to remedy compromises of our products, services or data in a timely manner, or at all, it may impact our brand and reputation and otherwise harm our business. For example, with respect to our making available patches or information for vulnerabilities in our products or services, our customers may be unwilling or unable to deploy such patches and use such information effectively and in a timely manner. In the past, we have experienced attempted exploitation of such vulnerabilities and anticipate continuing to experience similar attempts in the future. Such attacks against and other compromises of us, our customers or third parties with whom we work could lead to material interruptions, delays or loss of data, unauthorized access to data, and loss of consumer confidence. Successful attacks or actualcompromises compromisesof us, our customers or third parties with whom we work could materially adversely affect our business, be expensive to remedy, damage our reputation, result in negative publicity, adversely affect our brand, decrease demand for our products and services, and otherwise materially adversely affect our operating results and financial condition. Applicable data privacy and security obligations may require us, or we may voluntarily choose to, notify relevant stakeholders, including affected individuals, customers, regulators, investors and others of security breaches. Such disclosures and related actions can be costly and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences. Further, under certain circumstances, we may need to prioritize fixing vulnerabilities or responding to security breaches over new product development, which may impact our revenues and adversely affect our business.

With respect to certain of our products and services, we employ a shared responsibility model where our customers are responsible for using, configuring and otherwise implementing security measures related to our products and services in a manner that addresses their information security risks. As part of this shared responsibility security model, we make certain security features available to our customers that can be implemented at our customers’ discretion or identify security areas or measures for which our customers are responsible. For example, customers may choose not to enable two-factor authentication for their NETGEAR account (which would likely increase the risk of compromise) or they could choose to disable automatic updates (which would likely delay or prevent entirely, important security updates). In certain cases, where our customers choose not to implement or incorrectly implement thosesuch or similar features or measures, misuse our products or services, continue to use deprecated NETGEAR equipment no longer receiving security updates or otherwise experience their own vulnerabilities or other compromises, even if we are not the cause of a resulting customer security issue or incident, our customer relationships, reputation and revenue could be adversely impacted. If our products or services are compromised, a significant number or, in some instances, all of our customers and their data could be simultaneously affected. The potential liability and associated consequences we could suffer as a result of such a large-scale event could result in irreparable harm.

Maintaining the security of our information systems, communication systems and data is a critical issue for us and our customers. Malicious actors may develop and deploy malware that is designed to manipulate our products and systems, including our internal network, or those of our vendors or customers. Additionally, outside parties may attempt to fraudulently induce our personnel to disclose sensitive information in order to gain access to our information systems, our data or our customers’ data. We have established a crisis management plan, business continuity program, information security incident response plan and Generative AI policy. While we test and update these plans, policies and programs, there can be no assurance that the plans, policies and programs can withstand an actual or serious disruption in our business, including a data protection breach or cyber-attack. While we have established infrastructure and geographic redundancy for our critical systems, our ability to utilize these redundant systems requires further testing and we cannot be assured that such systems are fully functional. For example, much of our order fulfillment process is automated and the order information is stored on our servers. A significant business interruption could result in losses or damages and harm our business. If our information systems become unavailable, our ability to recognize revenue may be delayed until we are able to utilize back-up systems and continue to process and ship our orders, which could cause our stock price to decline significantly.

We devote considerable internal and external resources to network security, data encryption and other security measures to protect our information systems and data (including customer data,data), but our efforts cannot provide an absolute guarantee of security. In addition, U.S. and foreign regulators have increased their focus on cybersecurity (including imposing specific security measures related to the products and services we sell) and data protection and many states, countries and other jurisdictions have laws and regulations that may impose significant penalties and fines for failure to comply with these requirements. Compliance with laws, regulations, industry standards, contracts, policies and other obligations concerning artificial intelligence, privacy, cybersecurity, data governance and data protection is a rigorous and time-intensive process, that continuously evolves and develops, and we have in the past and may in the future be required to put in place additional mechanisms ensuring compliance with such obligations and incur substantial expenditures. Many of these laws are new, in the nascent stages of applicability, untested in terms of scope by applicable courts, regulators and/or administrative bodies, and technically complex. As such, their interpretation remains inherently uncertain. If we fail to properly interpret or otherwise comply with any such obligations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations. Furthermore, obligations (including laws and regulations) are not consistent (and may not be interpreted in a consistent manner) and compliance remains costly.

Actual and potential breaches of our security measures as well as the loss, disclosuredisclosure, dissemination or disseminationother compromise of proprietary information or sensitive or confidential data about us, our personnel or our customers, including the potential loss or disclosure of such information or data as a result of improper use of AI tools, personnel error or other personnel actions, hacking, fraud, social engineering or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, subject us to significant governmental fines and penalties (as well as other enforcement and remediation actions), damage our brand and reputation, or otherwise harm our business. Security incidents and attendant material consequences may prevent or cause customers to stop using our products and services, deter new customers from using our products and services, and otherwise negatively impact our ability to grow and operate our business. In particular, because our product and service offerings involve protecting the information or systems of our customers, a security incident could heighten the impact of these material adverse consequences because of the nature of our business and our customers’ expectations. It may be difficult and/or costly to detect, investigate, mitigate, contain and remediate security breaches and our efforts to do so may not be successful. Actions taken by us or third parties with whom we work to detect, investigate, mitigate, contain and remediate a security breach could result in outages, data losses, disruptions to our business and otherwise harm our business. Unauthorized parties may also gain access to other networks, systems and products after a compromise of our networks, systems, and products. For example, threat actors (including those sponsored by nation states) have, in the past, attacked or otherwise sought to compromise our products and other hardware nearing end of life and/or running on outdated firmware without the latest security updates.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws and other similar laws (such as wiretapping laws). Certain US states have enacted comprehensive consumer privacy laws that impose significant and costly obligations on covered businesses.businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services. Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance. For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses subject to the law to provide specific disclosures in privacy notices and respond to requests of such individuals to exercise certain privacy rights. The CCPA provides for fines and allows private litigants affected by certain data breaches to recover significant statutory damages. Outside the United States, an increasing number of laws, regulations and industry standards govern data privacy and security. For example, the European Union’s General Data Protection Regulation (“EU GDPR”) and the United Kingdom’s GDPR (“UK GDPR”) (collectively, “GDPR”), Australia’s Privacy Act, and Canada's Personal Information Protection and Electronic Documents Act (“PIPEDA”) (as well as various related provincial laws) impose strict requirements for processing personal data. For example, under the GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros under the EU GDPR, 17.5 million pounds sterling under the UK GDPR or, in each case, 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. In Europe, the Network and Information Security Directive (“NIS2”) regulates resilience and incident response capabilities of entities operating in a number of sectors. Non-compliance with NIS2 may lead up to administrative fines of a maximum of 10 million Euros or up to 2% of the total worldwide revenue of the preceding fiscal year.

In the ordinary course of business, we transfer personal data from Europe and other jurisdictions to the United States and other countries. Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. These data localization and cross-border data transfer laws have led to additional compliance efforts and non-compliance with such obligations could lead to adverse consequences such as interruption of our operations, increased exposure to regulatory actions, and difficulty transferring data to partners, vendors and other third parties with whom we work.

We are currently involved in numerousseveral litigation matters in the ordinary course and may in the future become involved in additional litigation, including litigation regarding intellectual property rights, consumer class actions and securities class actions, any of which could be costly and subject us to significant liability.

The networking industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding infringement of patents, trade secrets and other intellectual property rights. In particular, leading companies in the data communications markets, some of which are our competitors, have extensive patent portfolios with respect to networking technology. From time to time, third parties, including these leading companies, have asserted and may continue to assert exclusive patent, copyright, trademark and other intellectual property rights against us demanding license or royalty payments or seeking payment for damages, injunctive relief and other available legal remedies through litigation. These also include third-party non-practicing entities who claim to own patents or other intellectual property that cover industry standards that our products comply with. If we are unable to resolve these matters or obtain licenses on acceptable or commercially reasonable terms, we could be sued or we may be forced to initiate litigation to protect our rights. The cost of any necessary licenses or cost to defend litigation could significantly harm our business, operating results and financial condition. We may also choose to join defensive patent aggregation services in order to prevent or settle litigation and avoid the associated significant costs and uncertainties of litigation. These patent aggregation services may obtain, or have previously obtained, licenses for the alleged patent infringement claims against us and other patent assets that could be used offensively against us. The costs of such defensive patent aggregation services, while potentially lower than the costs of litigation, may be significant as well. At any time, any of these non-practicing entities, or any other third-party could initiate litigation against us, or we may be forced to initiate litigation against them, which could divert management attention, be costly to defend or prosecute, prevent us from using or selling the challenged technology, require us to design around the challenged technology and cause the price of our stock to decline. For example, in the past, various third parties have initiated litigation against us in Europe, China and the United States that carried the threat of an injunction on the importation of our products into certain European territories, the United States and China, as well as a significant increase in time and resources to defend against. In addition, third parties, some of whom are potential competitors, have initiated and may continue to initiate litigation against us, our manufacturers, suppliers, members of our sales channels or our service provider customers or even end user customers, alleging infringement of their proprietary rights with respect to existing or future products. In the event successful claims of infringement are brought by third parties, and we are unable to obtain licenses or independently develop alternative technology on a timely basis, we may be subject to indemnification obligations, be unable to offer competitive products, or be subject to increased expenses. Consumer class-action lawsuits related to the marketing and performance of our home networking products have been asserted and may in the future be asserted against us. Finally, we have been sued in securities class action lawsuits, and may in the future be named in other similar lawsuits. For additional information regarding certain of the lawsuits in which we are involved, see the information set forth in Note 8,[9], Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. If we do not resolve these claims on a favorable basis, our business, operating results and financial condition could be significantly harmed.

Changes in applicable direct or indirect tax lawslaws, and failure to comply with the same, or exposure to additional income tax liabilitiesliabilities, could result in liability and/or affect our future profitability.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rate has fluctuated in the past and may fluctuate in the future. Future effective tax rates could be affected by changes in the composition of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws. Foreign jurisdictions have increased the volume of tax audits of multinational corporations. Further, many countries continue to consider changes in their tax laws by implementing new taxes such as the digital service tax and initiatives such as the Organization for Economic Co-operation and Development’s (OECD) Pillar II global minimum tax. More than 140 countries agreed to enact the Pillar II global minimum tax. While the OECD issued a framework model, eachmany countrycountries willhave enactenacted itstheir own laws to incorporate Pillar II.II while certain countries, most notably the United States have not incorporated Pillar II into law. While Pillar II is a global model, the country by country enactment of different laws to incorporate the framework is complex and there is uncertainty as to how the enactment of these laws will impact the Company. These changes could increase our total tax burden in the future. In addition, the acceleration of employee mobility as a result of the pandemic potentially increases the jurisdictional tax risk of our workforce. Changes in tax laws could affect the distribution of our earnings, result in double taxation and adversely affect our results.

The Tax Cuts and Jobs Act of 2017 included provisions effective for the 2022 tax year that eliminate the option to deduct research and development (R&D) expenditures immediately in the year incurred and requiresrequired taxpayers to amortize such expenditures over five years for domestic payments and 15 years for payments to foreign parties. These provisions havewere notrecently beenmodified deferred,under modified,The orOne repealedBig byBeautiful CongressBill Act (“OB3A”) which was enacted into law on July 4, 2025. Under OB3A U.S. domestic R&D expenses are retroactively deductible as wasof previouslyJanuary anticipated1, might2025. occur.Under Inprior law, in years where we are profitable, these provisions havehad a material impact on our cash taxestaxes. whichWhile willchanges continue into the futuretreatment ifof thesedomestic provisionsR&D expenses is favorable, there is continuing risk that foreign R&D expenses that are notstill modified,required orto repealedbe bycapitalized Congress.could have adverse consequences on both cash taxes and tax expense since the company has a full valuation allowance on its US deferred tax assets.

We have been audited by the Italy Tax Authority (“ITA”) for the 2004 through 2012 tax years. The ITA examination included an audit of income, gross receipts and value-added taxes. We have been in litigation with the ITA for the 2004 through 2012 years. This litigation was appealed by the ITA to the Italian Supreme Court. Our hearing on all years at the Italian Supreme Court was held on March 6, 2024. Decisions were issued in the Company’s favor for the 20062007 through 2012 tax years. DecisionsIn onQ4 2025, the Italian Tax Court upheld the Company’s appeal with respect to the 2004 through 2006 tax years wereand revertedannulled backthe related ITA tax assessments. The ITA retains the right to appeal this decision to the lowerItalian courtSupreme forCourt re-hearing.and, accordingly, the 2004 through 2006 tax years remain subject to ongoing litigation. If we are unsuccessful in defending our tax positions for the remaining years, our profitability will be reduced.

We are also subject to examination by other tax authorities, including state revenue agencies and other foreign governments. While we regularly assess the likelihood of favorable or unfavorable outcomes resulting from examinations by the IRS and other tax authorities to determine the adequacy of our provision for income taxes, there can be no assurance that the actual outcome resulting from these examinations will not materially adversely affect our financial condition and operating results. Additionally, the IRS and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles.intangible assets. Tax authorities could disagree with our intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If we do not prevail in any such disagreements, our profitability may be affected.

Historically the computation of our tax provision assumes that we will have sufficient profitability in the respective jurisdictions to continue to record deferred tax assets without a valuation allowance. As of the period ended October 1, 2023, we determined that it was no longer more likely than not that we would have sufficient profitability to realize the U.S. federal and state deferred tax assets. Accordingly, we recorded a full valuation allowance to impair U.S. federal and state deferred tax assets. Future benefit of these deferred tax assets will be realized in the period they are utilized.

We are subject to, and must remain in compliance with numerous new, existing and changing laws and regulations worldwide concerning the manufacturing, use, distribution and sale of our products.business. Some of our customers also require that we comply with their own unique requirements relating to these matters. Any failure to comply with such laws, regulations and requirements, and any associated unanticipated costs, may adversely affect our business, financial condition and results of operations.

We are a global company subject to numerous U.S. and foreign laws and regulations. Many of these laws and regulations are continuously evolving and developing, and the interpretations, application or impact of these laws and regulations on us are uncertain and could be interpreted in ways that harm our business. For example, we manufacture and sell products which contain electronic components, and such components may contain materials that are subject to government regulation in both the locations that we manufacture and assemble our products, as well as the locations where we sell our products. Certain regulations also limit the use of lead in electronic components. To our knowledge, we maintain compliance with all applicable current government regulations concerning the materials utilized in our products, for all the locations in which we operate. Since we operate on a global basis, this is a complex process which requires continual monitoring of regulations and an ongoing compliance process to ensure that we and our suppliers are in compliance with all existing regulations. There are areas where new regulations have been enacted which could increase our cost of the components that we utilize or require us to expend additional resources to ensure compliance. For example, the SEC’s “conflict minerals” rules apply to our business, and we expended significant resources to ensure compliance. The implementation of these requirements by government regulators and our partners and/or customers could adversely affect the sourcing, availability, and pricing of minerals used in the manufacture of certain components used in our products. In addition, the supply-chain due diligence investigation required by the conflict minerals rules require expenditures of resources and management attention regardless of the results of the investigation. Additionally, beginning August 1, 2025, products sold in Europe must comply with the Radio Equipment Directive (RED) (Directive 2014/53/EU). If our products do not fully comply with RED requirements on a timely basis, including as a result of the directive being interpreted by authorities in unforeseen or unanticipated ways, our ability to sell our products in the Europe will be impacted, which may negatively impact our international revenue and our profitability. If there is an unanticipated new regulation or new interpretations or applications of existing laws and regulations which significantly impacts our use of various components or requires more expensive components, that regulation would have a material adverse impact on our business, financial condition and results of operations.

As a result of our acquisitions, we have significant goodwill recorded on our balance sheets. In addition, significant negative industry or economic trends, such as those that have occurred as a result of the recent economic downturn, including reduced estimates of future cash flows or disruptions to our business could indicate that goodwill might be impaired. If, in any period our stock price decreases to the point where our market capitalization is less than our book value, this too could indicate a potential impairment and we may be required to record an impairment charge in that period. Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on projections of future operating performance. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. For example, in 2022, the market price of our common stock and market capitalization declined and the U.S. WiFi market contracted, which had a significant negative impact on our Connected Homethen-Consumer business. As a result, we recognized a goodwill impairment charge in the first quarter of 2022. We have not recognized any impairment charge on our NETGEAR for BusinessEnterprise reporting unit. However, we operate in highly competitive environments and projections of future operating results and cash flows may vary significantly from actual results. As a result, we may incur substantial impairment charges to earnings in our financial statements should an impairment of our goodwill be determined on our NETGEAR for BusinessEnterprise reporting unit, resulting in an adverse impact on our results of operations.

Changes in our management team may disrupt our business, strategic and employee relationships, which may delay or prevent the achievement of our business objectives. During the transition periods, there may be uncertainty among investors, employees and others concerning our future direction and performance. For example, we appointed a new Chief Executive Officer effectivein January 31, 2024 and have made other leadership changes and hires. The failure to successfully transition could adversely affect our results of operations. We do not maintain any key person life insurance policies. Our business model requires extremely skilled and experienced senior management who are able to withstand the rigorous requirements and expectations of our business. Our success depends on senior management being able to execute at a very high level. The loss of our senior management or other key engineering, research, development, sales or marketing personnel, particularly if lost to competitors, could harm our ability to implement our business strategy and respond to the rapidly changing needs of our business. Our future success also depends on our ability to hire for key functions. The market for talent in the technology industry, especially in the areas of software and subscription services is competitive, and we may not have the resources to compete at the same level as larger companies who are able to offer more compelling compensation packages. Therefore, our ability to recruit new talent and retain existing talent may be adversely affected, and as a result our business as a whole may suffer. While we believe that we have mitigated some of the business execution and business continuity risk with our organization into two business segments with separate leadership teams, the loss of any key personnel would still be disruptive and harm our business, especially given that our business is leanly staffed and relies on the expertise and high performance of our key personnel.

Global economic and geopolitical conditions could materially adversely affect our revenue and results of operations.

This section generally discusses the results of our operations for the year ended December 31, 2024 (“fiscal 2024”)2025 compared to the year ended December 31, 2023 (“fiscal 2023”).2024. For a discussion of the year ended December 31, 20232024 compared to the year ended December 31, 2022,2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.2024.

We are a global leaderprovider in innovative and advancedof networking technologies for businesses, homes, and service providers. We deliver a wide range of intelligentnetworking solutionshardware, software, and services designed to enable reliable connectivity and security. Our mission is to unleash the full potential of connectivity.connectivity with intelligent solutions that delight and protect. We are executing a multi-phase transformation to strengthen execution, reinforce our core businesses, and support long-term growth and margin expansion, while exercising strong operational discipline. Our goal is to power extraordinary experiences where people collaborate and connect to a world of information and innovation. Our highlyproducts differentiatedand services are delivered through integrated platforms that combine hardware, software, and services. Our connected solutions range from switching and wireless products tothat augment business networks andsupport audio and video (“AV”) over Ethernet for Pro AV applications and business networks to ourWiFi good, better, and best WiFinetworking solutions, security and support services tofor protect and enhance businessenterprise and home networks. Additionally, weWe continually invest in research and development to create new technologies and services and to capitalize onaddress technological inflection points and trends,trends such as audio and videoAV over Ethernet, multi-Gigabit internet service to homes,connectivity, WiFi 7, eSIM and future technologies. Our product line helpsenables tothe createcreation and extendextension of wired and wireless networks asand well as devices that attach to the network, such asincludes services that complement and enhance our product linehardware offerings. These products are available in multiple configurations to address the changing needs of our customers in eachacross geographic region.regions.

The enterprise, consumer, and service provider markets in which our segments operate are intensely competitive and subject to rapid technological evolution.change. We expect competition to continue to intensify. We believe that the principal competitive factors in the business, consumer, and service provider markets for networking products include product breadth, price points, brand name, security and privacy, performance, features, functionality and reliability, product availability, timeliness of new product introductions, size and scope of the sales channel, ease-of-installation, maintenance and use, and customer service and support. We seek to differentiate our offerings through integrated hardware and software solutions, partner relationships, centralized management capabilities, and services. To remain competitive, we believefocus weon must continue to aggressively invest resourcesinvesting in highlydifferentiated differentiated,connectivity “good,solutions better,across best”,a highrange of performance reliable and trusted connectivity solutions,tiers, complemented by valuable subscriptionsubscription-based services, expanding and supporting our sales channelschannels, including our direct-to-consumer capabilities and custom installers, increasingstrengthening engagement with our customers and manufacturing partners, and maintaining a high level of customer satisfaction worldwide.satisfaction. Our investments reflectalign with our enhancedstrategic focuspriorities, onincluding theinvestments in enterprise and Pro AV initiatives and selective acquisitions intended to enhance software and security of our products and systems, as the threat of cyber-attacks and exploitation of potential security vulnerabilities in our industry is on the rise and is increasingly a significant consumer concern.capabilities.

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, direct market resellers (“DMRs”), value-addedmanaged resellersservice providers (“VARsMSPs”), broadband service providers, and through our direct online store at www.netgear.com. Our main wholesale distributors include Ingram Micro, TD Synnex, and D&H Distribution Company. Our retail channel includes traditional and online retail locations both domestically and internationally, such as Amazon.com (worldwide), Best Buy, Wal-Mart, Staples, Office Depot, Target, Electra (Sweden), Fnac Darty (Europe), JB HiFi (Australia), Elkjop (Norway), and Boulanger (France). Our DMRs include CDW Corporation, Insight Corporation, and PC Connection in domestic markets. Our main wholesale distributors include Ingram Micro, TD Synnex, and D&H Distribution Company. In addition, we also sell our products throughdirectly to broadband service providers,providers suchin asthe multipleUnited system operators, xDSL, mobile,States and otherinternationally providing WiFi, cable and 4G/5G mobile broadband technology operators domestically and internationally.products. Some of these retailers and broadband service providers purchase directly from us, while others are fulfilled through wholesale distributors around the world. A substantial portion of our net revenue is derived from a limited number of wholesale distributors, service providers and retailers. While we expect these channels to continue to be a significant part of our sales strategy, increasingly, customers are choosing to purchase products and services directly from us. We expect revenue through our direct online store or in-app offerings to continue to increase as a percentage of overall revenue for the foreseeable future.

Geographically, net revenue from NETGEAR for Business decreased in Americas and EMEA butEnterprise increased in APAC,all three regions, whereas net revenue from Connected HomeConsumer decreased in all three regions, during the year ended December 31, 2024,2025, compared to the prior year.

Macroeconomic and geopolitical trends createdhave continued to create uncertainty in the global economic environmentenvironment. inContributing recent years. Thesefactors include conditions such as the new tariffs by the Trump administration, the potential for a recession, fluctuations inpersistent inflation, elevated interest rate changes, and the related negative impact on the global economy,rates, foreign exchange rate fluctuations, particularly changes ofinvolving the U.S. dollar, and ongoing worldwidetrade tensions,policy shifts, including tariffs related to the U.S. and key international countries as well as U.S. tariffs and intensified trade actions. Trade policy uncertainty, including the Russia-Ukrainepotential conflict,for Israel-Hamasexpanded conflict,or modified tariff regimes, continues to affect global commerce and Redsupply Seachain crisis.planning. Geopolitical tensions and episodic maritime security incidents, to the extent that disrupt global shipping routes, along with evolving supply chain disruptions and volatile ocean freight spot rates, have added complexity to the global operating environment. Ongoing geopolitical conflicts and regional instability, including disruptions affecting key global shipping routes, have contributed to continued volatility in logistics, freight availability, and transportation costs, and increases in memory costs, driven in part by industry demand related to AI data center deployments, have created additional cost pressures within our supply chain. In light of this environment, we continue to invest in cybersecurity, product security, and sourcing to enhance the security of our products as well as our regulatory compliance readiness. The extent of impacts from these macroeconomic and geopolitical trends onand from our ongoing investment and go-to-market initiatives on our operational and financial performance, including our ability to execute our business strategies in the expected time frame, will depend on future developments. The broader implications of the macroeconomic uncertainty, and any related disruptions to channel partners and freight areremain unpredictable. Refer to Item 1A, Risk Factors of Part I of this Annual Report on Form 10-K for various risks and uncertainties associated with the macroeconomic trends and uncertainty.

We completed our annual impairment test of goodwill as of the first day of the fourth fiscal quarter of 2024,2025, or September 30,29, 2024.2025. We identified the reporting units for the purpose of goodwill impairment testing as NETGEAR for BusinessEnterprise and Connected HomeConsumer and performed a qualitative test.test Thefor the Enterprise reporting unit as the Consumer reporting unit has had no goodwill since the first fiscal quarter of 2022. Based upon the results of the quantitativequalitative testingtesting, indicatedwe concluded that it was more-likely-than-not that the fair value of the NETGEAR for BusinessEnterprise reporting unit substantiallywas exceededgreater than its carrying amount,value includingand goodwill, thustherefore, no goodwillfurther quantitative impairment testing was recognized. An interim goodwill impairment test performed in the first fiscal quarter of 2022 resulted in an impairment charge of $44.4 million in respect to our Connected Home reporting unit, which reduced the goodwill of this reporting unit to zero.required. No goodwill impairment was recognized for our NETGEAR for BusinessEnterprise reporting unit in the years ended December 31, 2024,2025, 20232024 and 2022.2023. Refer to Note 3, Balance Sheet Components, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for details.

For our NETGEAR for BusinessEnterprise reporting unit, we do not believe it is likely that there will be a material change in the estimates or assumptions we use to test for impairment losses on goodwill. However, if the actual results are not consistent with our estimates or assumptions, we may be exposed to a future impairment charge that could be material.

Net revenue in EMEA decreasedincreased in fiscalthe 2024,year ended December 31, 2025, compared to the prior year, primarily attributable to declinesa 19.6% increase in NETGEAR for BusinessEnterprise segment's net revenue of, 13.7%partially andoffset by a 13.2% decrease in ConnectedConsumer Home segment'ssegment net revenue of 16.5%.revenue. The net revenue declineincrease in NETGEAR for BusinessEnterprise was mainly driven by lowercontinued netstrong revenuedemand for ourthe traditionalPro transactionAV product line of managed switches andin ouraddition workto benefitting from inventory optimization efforts with our channel partners to optimize their inventory carrying levelscompleted in the first half of 2024.the prior year. The net revenue decline in ConnectedConsumer Homesegment's net revenue was mainly due to marketlower contraction,net leading to a year-over-year declinerevenue in both the retail and the service provider channels.

For further discussions specific to our NETGEAR for BusinessEnterprise and ConnectedConsumer Home,segments, refer to the "Segment Information" section below.

Cost of revenue consists primarily of the following: the cost of finished products from our third-partythird party manufacturers; overhead costs, including purchasing, product planning, inventory control, warehousing and distribution logistics; third-party software licensing fees; inbound freight; import duties/tariffs; warranty costs associated with returned goods; write-downs for excess and obsolete inventory; amortization of certain acquired intangiblesintangible assets and software development costs; and costs attributable to the provision of service offerings.

We outsource our manufacturing, warehousing and distribution logistics. We believe this outsourcing strategy allows us to better manage our product costs and gross margin. Our gross margin can be affected by a number of factors, including fluctuation in foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, net of vendor rebates, royalty and licensing fees, warranty and overhead costs, inbound freight and duty/tariffs, conversion costs, charges for excess or obsolete inventory, amortization of acquired intangiblesintangible assets and capitalized software development costs. The following table presents costs of revenue and gross marginmargin, for the periods indicated:

We expect our gross margin in the first fiscal quarter of 20252026 to be higher than the same quarter of 20242025 level.level, mainly driven by a higher mix of Enterprise products. Memory cost increases, driven in part by industry demand related to AI data center deployments, represent emerging pressure within our cost structure. While we have mitigated the impact to date and currently expect limited gross margin impact in the first half of fiscal 2026, continued escalation in memory costs could adversely affect gross margin in the second half of the year. The potential impact is greater in our Consumer business, where memory represents a higher proportion of product costs, while the Enterprise business is less sensitive due to product mix and pricing dynamics. We are taking mitigation actions; however, these measures may not fully offset future cost pressures. Forecasting gross margin percentages is difficult, and there are a number of risks related to our ability to maintain or improve our current gross margin levels. Our cost of revenue as a percentage of net revenue can vary significantly based upon factors such as: uncertainties surrounding revenue levels, broad-based inflationary pressures and the uncertain macroeconomic environment, future pricing and/or potential discounts as a result of the economy or in response to the strengthening of the U.S. dollar in our international markets, competition, the timing of sales, and related production level variances; import customs duties and imposed tariffs; changes in technology; changes in product mix; expenses associated with writing off excessive or obsolete inventory; variability of stock-based compensation costs; royalties to third parties; fluctuations in freight costs; manufacturing and purchase price variances; changes in prices on commodity components; and warranty costs. We expect that revenue derived from paid subscription service plans will continue to increase in the future, which may have a positive impact on our gross margin. However, we will continue to experience fluctuations in our gross margin due to the factors discussed above.

The declineincrease in research and development expenses in fiscalthe 2024,year ended December 31, 2025, compared to the prior year, was primarily driven by a decreasehigher personnel-related expenditure of $7.1 million, mainly due to higher head count and higher variable compensation, largely in IT and facility allocationsupport of $1.4our million,Enterprise andbusiness, including expanded software development capabilities. The increase was partially offset by a decrease in engineering projects and outside professional service fees of $1.0$2.6 million.

We believe that innovation and technological leadership is critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products and services. We expect research and development expenses as a percentage of net revenue in the first fiscal quarter of 20252026 to be higher in lineabsolute with or slightly higherdollars than the same quarter of 20242025 level. We continue tocontinually invest in research and development to growcreate audionew technologies and videoservices and to address technological trends such as AV over Ethernet, web-managed,multi-Gigabit AVconnectivity, overWiFi IP7, managedeSIM switches,and NETGEARfuture fortechnologies. BusinessOur wirelessresearch products,and ourdevelopment cloudefforts platformincreasingly capabilities,focus ouron recurringsoftware, security, and capabilities that support subscription-based services and mobilemargin applications, and to broaden our WiFi 7 offerings for consumers to align to our good-better-best strategy and broaden our 5G mobile products.improvement. Our NETGEAR for BusinessEnterprise segment will receive most of our incremental investments for 20252026 andwith wea will be focusedfocus on in-sourcing our software capabilities,capabilities and expanding our product portfolio that will allow us to grow our share in the sizable AV and enterprise WiFi markets. The research and development expense resulting from the incremental investment is partially offset by efficiencies in the research and development expense on the consumer side as affected by our restructuring in January 2025. Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a percentage of net revenue, depending on actual revenues achieved in any given quarter.

Sales and marketing expenses consist primarily of advertising, trade shows, corporate communications and other marketing expenses, product marketing expenses, outbound freight costs, amortization of certain intangibles,intangible assets, personnel expenses for sales and marketing staff, technical support expenses, and IT and facility allocations. The following table presents sales and marketing expenses, for the periods indicated:

We expect sales and marketing expenses as a percentage of net revenue in the first fiscal quarter of 20252026 to be higher in lineabsolute withdollars than the same quarter of 20242025 level. Most of our incremental investments in sales and marketing in 2025 will be related to go-to-market capabilities of our product offerings in the NETGEAR for Business segment, partially offset by efficiencies in marketing on the consumer side. Expenses may fluctuate depending on revenue levels achieved as certain expenses, such as commissions, are determined based upon the revenues achieved. Forecasting sales and marketing expenses is highly dependent on expected revenue levels and could vary significantly depending on actual revenue achieved in any given quarter. Marketing expenses may also fluctuate depending upon the timing, extent and nature of marketing programs. Marketing expenditure committed with a customer is generally recorded as a reduction of revenue per authoritative guidance.

General and administrative expenses consist of salaries and related expenses for executives, finance and accounting, human resources, information technology, professional fees, including legal costs associated with defending claims against us,us and business acquisition related expenses, allowance for doubtful accounts, IT and facility allocations, and other general corporate expenses. The following table presents general and administrative expenses, for the periods indicated:

The decreaseincrease in general and administrative expenses forin fiscalthe 2024,year ended December 31, 2025, compared to the prior year, was primarily due to athe decrease in legal and professional services feesabsence of $13.9 million, mainly attributable to a $10.9 million reduction in expenses recorded in the prior year period to offset the legal fees incurred to date associated with the successful TP-Link litigation settlement payment from TP-Link.settlement. The decrease in general and administrative expensesincrease was partiallyalso offsetdriven by ana increase inhigher personnel-related expendituresexpenditure of $10.2$6.6 million, primarily due to higher compensations, which also includedincreased stock-based compensation,compensation associated with executives’executive transition,transitions, and higher variable compensation.

We expect general and administration expenses as a percentage of net revenue in the first fiscal quarter of 20252026 to be belowin line with or slightly higher than the same quarter of 20242025 level. General and administrative expenses could fluctuate depending on a number of factors, including the level and timing of expenditures associated with litigation defense costs in connection with the litigation matters described in Note 8,9, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. Future general and administrative expense increases or decreases in absolute dollars are difficult to predict due to the lack of visibility of certain costs, including legal costs associated with defending claims against us, as well as legal costs associated with asserting and enforcing our intellectual property portfolio and other factors.

TheA decreasenet litigation expense of $0.2 million was incurred in litigationthe reserves,year netended forDecember fiscal31, 2024,2025, compared to a net benefit of $89.0 million in the prior year,year. wasThe mainlyprior attributableyear tonet benefit consisted of a contra-expense of $92.7 million associatedcontra-expense withrelated theto a litigation settlement payment from TP-Link, partially offset by a $3.6 million litigation reserve associated with a liability from a settlement.reserve.

The increase in restructuring and other charges were slightly higher in fiscalthe 2024,year ended December 31, 2025, compared to the prior year.year, The charges werewas primarily associateddue withto restructuring activities initiated in January 2025 and carried out throughout the reorganizationyear. ofThis ourrestructuring businesswas inaimed eachat yearreducing tocosts, betterand alignreinvesting the cost structure ofinto the business withto thecapitalize areason our highest priority opportunities to deliverdrive long-termrevenue growth and expandingimprove profitability. For a detailed discussion of restructuring and other charges, refer to Note 13.14. Restructuring and Other Charges, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Other income, net consists of interest income, which represents amounts earned and incurred on our cash, cash equivalents and short-term investments, and other income and expenses, which primarily represents gains and losses on transactions denominated in foreign currencies, gains and losses on investments, imputed interest expense, and other non-operating income and expenses, including gain on litigation settlements. The following table presents other income, net for the periods indicated:

The decreaseincrease in other income, net forin fiscalthe 2024year ended December 31, 2025, compared to the prior year, was primarily due to $6.0$4.7 million cashof receivedproceeds relating to a favorable litigation settlement for false product marketing infrom the priorsale yearof but notpatents in the current year, partiallyand higher net gains on foreign currency transactions and contracts, offset by higherlower interest income resulting from higherlower interest rates and higheraverage cash and short-term investment balances. For details on the changes in Other income, net, refer to Note 6,7, Other Income, Net, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

The tax expense in the 2025 versus 2024 years resulted primarily from the increase in profits, plus the change in valuation allowance, partially offset by the benefit from certain changes in estimate upon filing the 20232024 U.S. federal tax return and the recognition of uncertain tax benefits. The tax expense in 2023 resulted primarily from the full valuation allowance recorded against the U.S. federal and state deferred tax assets.

InAs described above, during 2025 we realigned our business structure and reportable segments. Effective January 1, 2025, we began reporting in three segments, following a realignment that separated the previously reported Connected Home segment into Home Networking and Mobile. Beginning on the first day of the fourth fiscal quarter of 2024,2025, resultingwe fromstreamlined certainour segmentoperating and reporting structure changes,and we revised our allocation method by allocating certain historically unallocated operating expensesreturned to ourtwo individual operatingreportable segments. TheThese changes did not impact our segment financial information fromfor the prioryear yearsended December 31, 2025, and prior-period segment information has been recastpresented on a comparable basis. Accordingly, the impact on the full-year disclosure relates primarily to conformsegment tonaming, reflecting the currentEnterprise year(formerly presentation.NETGEAR for Business) and Consumer (previously reported as Connected Home) segments. Additional information on the change,changes, a description of our products and services, as well as segment financial data, for each segment and a reconciliation of segment contribution income (loss) to income (loss) before income taxes can be found in Note 11,1, , The Company and Summary of Significant Accounting Policies, and Note 12, Segment Information, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Connected HomeEnterprise Segment

Connected HomeConsumer net revenue decreased in fiscalthe 2024,year ended December 31, 2025, compared to the prior year, primarily duedriven to market contraction, leading to a year-over-year decline in the retail channel, and, to a lesser extent,by a decline in net revenue infrom service provider channel.channel, Despitepartially theoffset declineby inincreased therevenue overallfrom consumerWiFi networking7 market in fiscal year 2024, our premium portfolio of products continued to outperform the market, and we saw growth in our service revenue.products. Geographically, Connected HomeConsumer net revenue decreased across all three regions, compared to the prior year.

Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of December 31, 2024,2025, we had cash, cash equivalents and short-term investment of $408.7$323.0 million, ana increasedecrease of $125.0$85.7 million from December 31, 2023.2024.

Net cash provided by operating activities increaseddecreased by $107.9$163.2 million in fiscalthe 2024,year ended December 31, 2025, compared to the prior year, primarily due to a net proceed before tax of $103.6 million resultingof pre-tax net proceeds received in the prior year from the TP- Link litigation settlementsettlement, paymentas fromwell TP-Linkas and favorableunfavorable working capital movements.movements in the current year. Our accounts payable (excluding payables related to property and equipment) increaseddecreased from $46.4 million as of December 31, 2023, to $57.4 million as of December 31, 2024, to $41.6 million as of December 31, 2025, primarily due to the timing of inventory receipts and supplier payments. AccountsInventory receivable decreasedincreased from $185.1$162.5 million as of December 31, 2023,2024 to $176.5 million as of December 31, 2025, as we work to realign inventory carrying levels with projected demands. Accounts receivable decreased from $156.2 million as of December 31, 2024, to $142.0 million as of December 31, 2025, primarily due to the timing of cash collections and lower revenue. Inventory decreased from $248.9 million as of December 31, 2023 to $162.5 million as of December 31, 2024, as we made further progress in optimizing our inventory levels.collections.

If we are unable to properly monitor and optimize our channel partners' inventory levels and maintain an appropriate level and mix of products with our retail partners and wholesale distributors and within our sales channels, we may incur increased and unexpected costs associated with this inventory. In 2022 and the first half of 2023, many of our retail and service provider partners began significantly reducing their target inventory levels which adversely affected our results of operations. While we believe our channel partners' current inventory targets are at reasonable levels, the uncertain macroeconomic and geopolitical environment and high inflation and interest rates could change our partners' desired inventory targets. In the past, we have experienced lower revenue as a result of our channel partners lowering their inventory levels and higher cost of carrying excess channel inventory. On the other hand, low channel inventory levels increase the likelihood that our sales channel customers may not be able to fulfill end user demand, leading to delayed or lost sales, unhappy customers and potential impacts to our brand and reputation. Inadequate stock levels could also hinder our ability to fulfill large orders or take advantage of unexpected demand spikes, thereby limiting revenue growth opportunities. Moreover, reductions in target inventory levels put pressure on our ability to accurately forecast customer demand and inventory requirements and increases the likelihood that the accuracy of such forecasts would be lower. We determine production levels based on our forecasts of demand for our products. Actual demand for our products depends on many factors, which makes it difficult to forecast. We have experienced differences between our actual and our forecasted demand in the past and expect differences to arise in the future. If we improperly forecast demand for our products and channel inventory levels, we could end up with too many products and be unable to sell the excess inventory in a timely manner, if at all, or, alternatively we could end up with too few products and not be able to satisfy demand. This problem is exacerbated because we attempt to closely match inventory levels with product demand leaving limited margin for error. Also, during the transition from an existing product to a new replacement product, we must accurately predict the demand for the existing and the new product. If we improperly forecast demand for our products and channel inventory levels, we could incur increased expenses associated with writing off excessiveexcess or obsolete inventory, lose sales, incur penalties for late delivery or have to ship products by air freight to meet immediate demand incurring incremental freight costs above the sea freight costs and suffering a corresponding decline in gross margins. For example, when demand for our products turns out to be lower than we previously forecasted, it results in our revenue for our products to come in lower than expected, as our channel partners in the U.S. replenish inventory slower than they sell through to end users to right size their inventory carrying position based on the lower demand levels than previously expected. In addition, we generally allow wholesale distributors and traditional retailers to return a limited amount of our products in exchange for other products. Under our price protection policy, if we reduce the list price of a product, we are often required to issue a credit in an amount equal to the reduction for each of the products held in inventory by our wholesale distributors and retailers. If our wholesale distributors and retailers are unable to sell their inventory in a timely manner, we might lower the price of the products, or these parties may exchange the products for newer products or decrease their purchases of our products in subsequent periods, which would adversely affect our revenue and results of operations.

We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition. Our principal competitors in the consumer market include ARRIS, ASUS, D-Link, Eero (owned by Amazon), and TP-Link. Our principal competitors in the business market include Arista, Cisco Systems, D-Link, Extreme Networks, Fortinet, Haiwei,Huawei, Hewlett-Packard Enterprise, Ruckus Networks, TP-Link, and Ubiquiti. Our principal competitors in the service provider market include Compal, Franklin, Huawei, Inseego, Nokia, Orbic, Sonim, TP-Link, and ZTE. Other competitors include numerous local vendors such as Xiaomi in China, AVM in Germany and Buffalo in Japan. In addition, these local vendors may target markets outside of their local regions and may increasingly compete with us in other regions worldwide. Our potential competitors also include other consumer electronics vendors, including Apple, LG Electronics, Microsoft, Panasonic, Sony, Toshiba and Vizio, who could integrate networking and streaming capabilities into their line of products, such as televisions, set top boxes and gaming consoles, and our channel customers who may decide to offer self-branded networking products. We also face competition from service providers who may bundle a free networking device with their broadband service offering, which would reduce our sales if we were not the supplier of choice to those service providers. In the service provider space, we also face significant and increased competition from original design manufacturers, or ODMs, and contract manufacturers who sell and attempt to sell their products directly to service providers around the world.

All of our products must satisfy safety and regulatory standards and some of our products must also receive government certifications. Our third-party manufacturers are primarily responsible for conducting the tests that support our applications for most regulatory approvals for our products. If our third-party manufacturers fail to timely and accurately conduct these tests, we would be unable to obtain the necessary domestic or foreign regulatory approvals or certificates to sell our products in certain jurisdictions. As a result, we would be unable to sell our products and our sales and profitability could be reduced, our relationships with our sales channel could be harmed, and our reputation and brand would suffer.

International sales comprise a significant amount of our overall net revenue. International sales were approximately 35%33% of overall net revenue in the firstsecond fiscal quarter of fiscal 2026 and 34% of overall net revenue in fiscal 2025. We continue to be committed to growing our international sales, and while we have committed resources to expanding our international operations and sales channels, these efforts may not be successful. For example, in fiscal 2022 we experienced the strengthening of the U.S. dollar, which had a meaningful negative impact on our international revenue and our profitability.

We have embarked on an AI transformation effort to take full advantage of automation, artificial intelligence, machine learning and other technologies to drive efficiencies and improve productivity within our Company and to develop and improve our products, services and customer experiences. As we increase our investment in technology, software and systems to support this transformation effort, such investments may not increase productivity, result in more efficient operations or deliver better products, services and customer experiences. In addition, the evolution of these technologies may create unforeseen competitive pressures or cause disruption or delays to our operations, which may harm our business. Our competitors may incorporate AI technologies into their products and services more quickly or more successfully than us and could impair our ability to compete effectively and adversely affect our results of operations. Further, the rapid evolution of AI may require the dedication of significant resources to develop, test and maintain AI technologies. If our incorporation of AI technologies does not increase our operational efficiency in accordance with our expectations, or if competition increases for the technology and services provided by third parties, our business, results of operations and financial condition may be harmed. While we have established an AI transformation leadership team to coordinate and oversee our approach to AI adoption, the legal and regulatory landscape surrounding generative AI technologies is rapidly evolving and uncertain, including in the areas of intellectual property, discrimination, cybersecurity, privacy and data protection. Compliance with existing, new, and changing laws, regulations, and industry standards relating to AI may limit some uses of AI, impose significant operational costs, and limit our ability to develop, deploy, or use AI technologies. Further, the continued integration of any AI technologies into our products and services may result in new or enhanced governmental or regulatory scrutiny. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.

We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective tax rate has fluctuated in the past and may fluctuate in the future. Future effective tax rates could be affected by changes in the composition of earnings in countries with differing tax rates, changes in deferred tax assets and liabilities, or changes in tax laws. Foreign jurisdictions have increased the volume of tax audits of multinational corporations. Further, many countries continue to consider changes in their tax laws by implementing new taxes such as the digital service tax and initiatives such as the Organization for Economic Co-operation and Development’s (OECD) Pillar IITwo global minimum tax. More than 140 countries agreed to enact the Pillar IITwo global minimum tax. While the OECD issued a framework model, many countries have enacted their own laws to incorporate Pillar IITwo while certain countries, most notably the United States have not incorporated Pillar IITwo into law. While Pillar IITwo is a global model, the country by country enactment of different laws to incorporate the framework is complex and there is uncertainty as to how the enactment of these laws will impact the Company. These changes could increase our total tax burden in the future. In addition, the acceleration of employee mobility as a result of the pandemic potentially increases the jurisdictional tax risk of our workforce. Changes in tax laws could affect the distribution of our earnings, result in double taxation and adversely affect our results.

We have been audited by the Italy Tax Authority (“ITA”) for the 2004 through 2012 tax years. The ITA examination included an audit of income, gross receipts and value-added taxes. We have been in litigation with the ITA for the 2004 through 2012 years. This litigation was appealed by the ITA to the Italian Supreme Court. Our hearing on all years at the Italian Supreme Court was held on March 6, 2024. Decisions were issued in the Company’s favor for the 2007 through 2012 tax years. In the fourth quarter of 2025, the Italian Tax Court upheld the Company’s appeal with respect to the 2004 through 2006 tax years and annulled the related ITA tax assessments. On March 24, 2026, the Italian Revenue Agency filed an appeal before the Italian Supreme Court challenging the favorable decisions issued by the Second Level Tax Court of Milan with respect tofor the 2004, 2005, and 2006 tax years.year. We timely filed the counter briefs with the Supreme Court in late April 2026. The 2004 through 2006 tax years remain pending before the Supreme Court and have not been fully resolved. If we are unsuccessful in defending our tax positions for the remaining years, our profitability will be reduced.

We are also subject to examination by other tax authorities, including state revenue agencies and other foreign governments. TheWe Companyare wascurrently recentlyunder notifiedexamination thatby the Internal Revenue Service has(“IRS”) commenced an examination offor the 2023 tax year. The examination is in its preliminary stages,ongoing, and thewe Company isare unable to predict the outcome or estimate the range of any potential adjustmentadjustments at this time. While we regularly assess the likelihood of favorable or unfavorable outcomes resulting from examinations by the IRS and other tax authorities to determine the adequacy of our provision for income taxes, there can be no assurance that the actual outcome resulting from these examinations will not materially adversely affect our financial condition and operating results. Additionally, the IRS and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangible assets. Tax authorities could disagree with our intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If we do not prevail in any such disagreements, our profitability may be affected.

One area which has a large number of evolving and developing regulations is environmental compliance. Management of environmental pollution, climate change and other ESG considerations has produced significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and the number of countries participating. These changes could directly increase the cost of energy which may have an impact on the way we manufacture products or utilize energy to produce our products. In addition, any new regulations or laws in the environmental area might increase the cost of raw materials we use in our products. Environmental regulations require us to reduce product energy usage, monitor and exclude an expanding list of restricted substances and to participate in required recover and recycling of our products. While future changes in regulations are certain, we are currently unable to predict how any such changes will impact us and if such impacts will be material to our business. If there is a new law or regulation, or a new interpretation and application of existing laws, that significantly increases our costs of manufacturing or causes us to significantly alter the way that we manufacture our products, this would have a material adverse effect on our business, financial condition and results of operations.

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,” “expects,” “intends,” “could,” “may,” “will,” and similar expressions are intended to identify forward-looking statements. The forward-looking statements represent NETGEAR’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: NETGEAR’s future operating performance and financial condition, including expectations regarding growth, revenue, expenses, operating margin, gross margin, continued profitability and cash generation; NETGEAR'sNETGEAR’s reporting structure; NETGEAR'sNETGEAR’s belief of the principal competitive factors in the business, consumer, and service provider markets for networking products; expectations regarding transportation costs; expectations regarding product costs, including the impact of rising memory costs and our mitigation efforts on our gross margin; NETGEAR’s ability to continue launching new consumer router models,models and other new products, providing software updates to existing products, and maintain conditional approval from the Federal Communications Commission in connection with its Covered List designation of foreign-produced routers and additional costs incurred in connection with complying with applicable regulations; NETGEAR’s strategy of capitalizing on technological inflection points, developing products that serve a broader segment and simplifying and developing service offerings that build recurring service revenue streams; expectations regarding paid revenue from paid subscription service plans; expectations regarding product mix and market demand for NETGEAR’s products and services, including Enterprise and Consumer products and subscription services and NETGEAR’s ability to respond to this demand; expectations regarding competition, competitive factors, consumer price sensitivity and demand for NETGEAR’s products and services; expectations regarding sales channels, direct online store and in-app offerings; expectations regarding macroeconomic conditions and impacts to NETGEAR’s operational and financial performance and business strategies; expectations regarding the consumer retail networking market; expectations regarding existing cash, cash equivalents and short-term investments and anticipated cash requirements; expectations regarding inventory levels, inventory management and inventory costs; expectations regarding research and development expenses, sales and marketing expenses and general and administrationadministrative expenses; expectations regarding expected tax rates or tax expenses and changes in legislation related to the taxation of business entities; expectations regarding the impact of acquisitions; expectations regarding our product portfolio, and expectations regarding NETGEAR’s subscription services and service revenue. These statements are based on management’s current expectations and are subject to a number of risks and uncertainties, including but not limited to those described in “Part II—Item 1A—Risk Factors” and “Liquidity and Capital Resources” below and in our other SEC filings, including our Annual Report. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this document are based on information available to us as of the date hereof and we assume no obligation to update any such forward-looking statements except as required by law. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this quarterly report. Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us” and “NETGEAR” refer to NETGEAR, Inc. and its subsidiaries.

During the three months ended MarchJune 29,28, 2026, our net revenue decreased by $3.2$2.0 million, or 2.0%,1.2%, compared to the prior year period, driven by aan $7.8$8.3 million, or 9.5%,9.4%, decrease in our Consumer segment, partially offset by a $4.6$6.3 million, or 5.8%,7.7%, increase in our Enterprise segment. The decrease in Consumer net revenue reflectedwas adriven 31.9%by decline inlower sales of our service provider and related products, consistent with our strategy of harvesting this business.business, Itas alsowell reflectedas by declines in our core consumer business attributable to continued softness in the broader home networking retail market, attributable in part toincluding electronics pricing pressures from rising memory costs. In light of these conditions, we have been prioritizing gross profit over revenue growth in our Consumer business. These declines were partially offset by growth in our core consumer business, led by our premium WiFi 7 portfolio. The increase in Enterprise net revenue was mainly attributable to continued strong demand for our Pro AV product line of managed switches, which experienced double-digit end-market sales growth in the Americas and EMEA regions, benefitingprimarily fromdriven by higher average selling prices and increased unit volumes.prices. Gross margin improved by 570270 basis points year-over-year to 40.5%,40.2%, primarily driven by margin expansion in both segments, a higher revenue mix from our higher-margin Enterprise segmentsegment, partially offset by higher excess or obsolete inventory charges and lowerhigher salesproduct returnscosts withinassociated with memory chip price increases in our consumerConsumer business. We recorded an operating loss of $13.6$8.4 million, an improvement compared to an operating loss of $12.8$9.5 million in the prior year period, as the gross margin improvement wasmore partiallythan offset by higher operating expenses, which were mainly driven by higher headcount and related investments as we continue to focus on and shift resources toward growing our Enterprise business.

Geographically, net revenue from our Enterprise segment increased in Americas and EMEA and slightly decreased in APAC, while net revenue from our Consumer segment declined in Americas and APAC and slightlywas increasedrelatively flat in EMEA, during the three and six months ended MarchJune 29,28, 2026, compared to the prior year period.periods.

Macroeconomic and geopolitical trends have continued to create uncertainty in the global economic environment. Contributing factors include persistent inflation, elevated interest rates, foreign exchange rate fluctuations, particularly involving the U.S. dollar, and ongoing trade policy shifts, including tariffs related to the U.S. and key international countries as well as U.S. tariffs and intensified trade actions. Trade policy uncertainty, including recently announced and proposed U.S. tariff actions and the potential for further expanded or modified tariff regimes, continues to affect global commerce and supply chain planning, and could increase our product costs. Geopolitical tensions and episodic maritime security incidents, to the extent that they disrupt global shipping routes, along with evolving supply chain disruptions and volatile ocean freight spot rates, have added complexity to the global operating environment. We are exposed to lengthening lead times and increasing costs on various components, including a significant increase in memory prices, driven in part by industry demand related to AI data center deployments, which have created additional pressures within our supply chain.chain and could adversely affect our product costs and gross margin. In light of this environment, we continue to invest in cybersecurity, product security, and sourcing to enhance the security of our products as well as our regulatory compliance readiness. The extent of impacts from these macroeconomic and geopolitical trends and from our ongoing investment and go-to-market initiatives on our operational and financial performance, including our ability to execute our business strategies in the expected time frame, will depend on future developments. In addition, in March 2026, the Federal Communications Commission issued regulations adding foreign-produced routers to its Covered List, and in April 2026 we were granted conditional approval allowing us to continue to launch new consumer router models and provide software updates to existing products while the designation is maintained. The broader implications of the macroeconomic uncertainty, the evolving regulatory environment affecting our products, and any related disruptions to channel partners and freight remain unpredictable. Refer to Item 1A, Risk Factors of Part II of this Quarterly Report on Form 10-Q for various risks and uncertainties associated with the macroeconomic trends and uncertainty.

Looking forward, we expect end-user demand for our Pro AV product line of managed switches within the Enterprise segment to remain strong, and we have secured sufficient memory supply for substantially all of our 2026 production plans for this segment. We continue to have visibility into memory cost impacts for the balance of the year and have made significant progress in accessing supply directly from memory manufacturers. The memory cost challenge is expanding to other parts of the Bill of Materials (“BOM”), and we are also experiencing modest production delays given the tightening environment. We expect the impact of rising memory costs on our Enterprise business to beremain nominal, given the relatively higher average selling prices and gross margins of these products and the benefit of our abilityrecent toprice adjust pricing consistent with broader market trends.increases. In our Consumer segment, while our broader product portfolio continues to address market needs, we expect rising memory costs to continue to buildadversely throughoutimpact 2026our and,business accordingly,despite the mitigation efforts we intendhave undertaken with our channel partners. As we manage through the current memory supply environment, we will continue to prioritize gross profit over revenue in this segment as we manage through the current memory supply environment.segment. For our service provider and related products, we remain focused on harvesting this business and expect revenue to decline compared to the prior year period. We expect the greater benefit of our memory cost mitigation efforts to accrue to our Enterprise business. We are continuing to ramp our planned investments, with a focus on expanding our insourced software development capabilities and enhancing our go-to-market efforts, particularly in support of our Enterprise business. These investments support our strategy of differentiating our portfolio through software, services, and security offerings. Within our Consumer business, we are addressing key technology transitions, including WiFi 8, WiFi 7, WiFi 6E, WiFi 6, and 5G, through a good, better, best product strategy. We are also continuing to expand service offerings, strengthen direct-to-consumer capabilities, and introduce new products, including the planned launch of our eSIM-enabled M7 mobile hotspot, to support the expansion of recurring non-device revenue streams over time.

Net revenue in Americas decreasedwas inrelatively flat for the three months ended MarchJune 29,28, 2026, and decreased slightly for the six months ended June 28, 2026, compared to the prior year period, primarily driven by a $6.2 million, or 9.1%, decline inperiods. Consumer segment net revenue,revenue mainlydeclined attributableby to$5.9 reducedmillion and $12.0 million for the three- and six-month periods, respectively. The decreases in Consumer net revenue were driven by lower sales of our service provider and related products, consistent with our strategy of harvesting this business.business, Thisas declinewell wasas by declines in our core consumer business attributable to continued softness in the broader home networking retail market, including electronics pricing pressures from rising memory costs. The decreases were partially offset by a $4.3 million, or 10.5%, increaseincreases in Enterprise segment net revenue,revenue drivenof by$6.1 continuedmillion strongand demand$10.4 million for the three- and six-month periods, respectively, primarily attributable to our Pro AV product line of managed switches.switches, driven mainly by higher average selling prices.

Net revenue in EMEA increased infor both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods, primarily driven by growth in both theour Enterprise segment of $2.5 million and Consumer$3.2 segments.million, The increase in Enterprise revenue was primarilyrespectively, attributable to continued strong demand for our Pro AV product line of managed switches, while the increase in Consumer revenue was primarily driven by higher salesaverage ofselling ourprices. mobileConsumer hotspotsegment products.net revenue in EMEA was relatively flat for both the three and six months ended June 28, 2026, compared to the prior year periods.

Our gross margin increased for both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods, primarily driven by margin expansion in both segments, a higher revenue mix from our higher-margin Enterprise segment, andtogether with lower saleswarranty returnscosts withinfor the six-month period, partially offset by higher excess or obsolete inventory charges in our Consumer business.

We expect our gross margin in the secondthird fiscal quarter of 2026 to be in line with or slightlymodestly below the firstsecond fiscal quarter of 2026,2026 reflectinglevel, our expectation that mitigation efforts will largely offsetas the impact of rising memory costs,costs withcontinues to increase. The memory cost challenge is expanding to other parts of the greaterBOM, benefitand accruingwe toare ouralso Enterpriseexperiencing business.modest production delays given the tightening environment. Forecasting gross margin percentages is difficult, and there are a number of risks related to our ability to maintain or improve our current gross margin levels. Our cost of revenue as a percentage of net revenue can vary significantly based upon factors such as: uncertainties surrounding revenue levels, broad-based inflationary pressures and the uncertain macroeconomic environment, future pricing and/or potential discounts as a result of the economy or in response to the strengthening of the U.S. dollar in our international markets, competition, the timing of sales, and related production level variances; import customs duties and imposed tariffs; changes in technology; changes in product mix; expenses associated with writing off excessive or obsolete inventory; variability of stock-based compensation costs; royalties to third parties; fluctuations in freight costs; manufacturing and purchase price variances; changes in prices on commodity components; and warranty costs. We expect that revenue derived from paid subscription service plans will continue to increase in the future, which may have a positive impact on our gross margin. However, we will continue to experience fluctuations in our gross margin due to the factors discussed above.

Research and development expenses increased for both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods. primarilyThese drivenmovements byreflected, higherfor the three and six months ended June 28, 2026, increases in personnel-related expenditures of $2.1$1.1 million and $3.2 million, mainlyrespectively, primarily due to higher headcount in support of our Enterprise business, with an emphasis on insourcing software development, and higherincreases in IT and facility allocations of $0.9$0.7 million.million and $1.6 million, respectively. Research and development headcount increased to 387 employees at June 28, 2026, compared to 280 employees at June 29, 2025.

We believe that innovation and technological leadership is critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products and services. We expect research and development expenses inas absolutea dollarpercentage amountof net revenue in the secondthird fiscal quarter of 2026 to be in line with or slightly above the firstsecond fiscal quarter of 2026 level. We continually invest in research and development to create new technologies and services and to address technological trends such as AV over Ethernet, multi-Gigabit connectivity, WiFi 8, WiFi 7, eSIM and future technologies. We anticipate that our research and development efforts will increasingly focus on software, security, and capabilities that support subscription-based services and margin improvement. We also expect that our Enterprise segment will receive most of our incremental investments for 2026 with a focus on in-sourcing our software capabilities, building on our prior-year establishment of an in-house research and development center in Chennai, India and acquisitions of VAAG SystemsExium and Exium completed in the priorsource year,code for our managed switches, and expanding our product portfolio to grow our share in the sizable AV and enterprise WiFi markets. Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a percentage of net revenue, depending on actual revenues achieved in any given quarter.

Sales and marketing expenses increased for both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods. These movements primarily drivenreflected, byfor higherthe personnel-relatedthree expendituresand six months ended June 28, 2026, increased investment in sales resources of $2.9$2.4 million and $6.1 million, mainlyrespectively, dueincluding toheadcount higheras headcount,well reflectingas investmentsoutsourced arrangements, to expand our go-to-market capabilities in support of our Enterprise business, and higher outside professional service fees of $0.7 million.business.

We expect sales and marketing expenses inas absolutea dollarpercentage amountof revenue in the secondthird fiscal quarter of 2026 to be in line with or slightly above the firstsecond fiscal quarter of 2026 level. We expect most of our incremental investments in sales and marketing in 2026 will be related to go-to-market capabilities of our product offerings in the Enterprise segment, partially offset by efficiencies in marketing on the Consumer side. Expenses may fluctuate depending on revenue levels achieved as certain expenses, such as commissions, are determined based upon the revenues achieved. Forecasting sales and marketing expenses is highly dependent on expected revenue levels and could vary significantly depending on actual revenue achieved in any given quarter. Marketing expenses may also fluctuate depending upon the timing, extent and nature of marketing programs. Marketing expenditure committed with a customer is generally recorded as a reduction of revenue per authoritative guidance.

We expect general and administrative expenses in absolute dollar amount in the secondthird fiscal quarter of 2026 to be in line with or slightly below the firstsecond fiscal quarter of 2026 level. General and administrative expenses could fluctuate depending on a number of factors, including the level and timing of expenditures associated with litigation defense costs in connection with the litigation mattersand describedother legal matters, as discussed in Note 9, Commitments and Contingencies, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q. Future increases or decreases in general and administrative expenses are difficult to predict in absolute dollars due to the lack of visibility of certain costs, including legal costs associated with defending claims against us, asserting and enforcing our intellectual property portfolio, acquisition related activities, and other factors.

Restructuring and other charges for the three and six months ended MarchJune 29,28, 20262026, were essentially flat compared to the prior year period.periods. Charges in the current year primarily reflectreflected a new restructuring action initiated in the first quarter of 2026, with the resulting savings intended to be reinvested in our strategic priorities to support our ongoing transformation. For a detailed discussion of restructuring and other charges, refer to Note 14, Restructuring and Other Charges, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

The decreasedecreases in other income, net for the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods, waswere primarily due to $4.7 million of proceeds from the sale of patents recognized in the prior year period with no comparable amount in the current year, $1.3 million of lower interest income of $1.4 million and $2.6 million, respectively, resulting from lower average cash and short-term investment balances, and $0.6 million of imputed interest expense of $0.6 million and $1.3 million, respectively, recognized in the current year periodperiods related to an intangible asset acquisition. The six-month decrease also reflected $4.7 million of proceeds from a sale of patents in the prior year period, with no comparable amount in the current year.

Enterprise segment net revenue increased infor both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods, primarily driven by continued strong demand for our Pro AV product line of managed switches, which experienced double-digit end-market sales growth in the Americas and EMEA regions, benefitingprimarily fromdriven by higher average selling pricesprices. Geographically, for both the three and increasedsix unitmonths volumes.ended Geographically,June 28, 2026, net revenue from our Enterprise segment increased in Americas and EMEA and slightly decreased in APAC. The declines in APAC reflect the transformation of our go-to-market approach currently underway in the region, which we do not expect to contribute to revenue growth in the near term.

Enterprise segment contribution income increased infor both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period,periods, primarily due to higher net revenue and higher gross margins, mainly driven by a higher mix of our Pro AV product line of managed switches, together with a continuing benefit from a perpetual software license acquired in the fourth quarter of fiscal 2025. These increases were partially offset by higher operating expenses, primarily driven by increased headcount and related investments as we continue to focus on and shift resources toward growing our Enterprise business.

Consumer segment net revenue decreased infor both the three and six months ended MarchJune 29,28, 2026, compared to the prior year period.periods. The decrease in Consumer net revenue reflectedwas adriven 31.9%by decline inlower sales of our service provider and related products, consistent with our strategy of harvesting this business.business, Itas alsowell reflectedas by declines in our core consumer business attributable to continued softness in the broader home networking retail market, attributable in part toincluding electronics pricing pressures from rising memory costs. These declines were partially offset by growth in our core consumer business, including our premium WiFi 7 portfolio. Geographically, Consumer segment net revenue declined in Americas and APAC and slightlywas increasedrelatively flat in EMEA.EMEA for both periods. Given the rising cost of memory and related components, we are prioritizing gross profit over revenue growth in our Consumer business.

Consumer segment recorded contribution losslosses decreasedfor inboth the three and six months ended MarchJune 29,28, 2026, compared to contribution income in the prior year period.periods. The improvementmovements wasin primarilyboth periods were mainly driven by lower net revenue and higher charges for excess or obsolete inventory, partially offset by lower warranty costs for the six-month period. The six-month period also benefited from higher gross margins,margin whichattributable benefited fromto a more favorable product mixmix, ofincluding our premium WiFi 7 products, and lower sales returns.products.

Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of MarchJune 29,28, 2026, we had cash, cash equivalents and short-term investments of $296.5$267.9 million, a decrease of $26.5$55.2 million from December 31, 2025.

As of MarchJune 29,28, 2026, approximately 30%35% of our cash and cash equivalents and short-term investments were outside of the U.S., which are subject to fluctuation based on the settlement of intercompany balances. As we repatriate these funds in accordance with our designation of funds not permanently reinvested outside of the U.S., we will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. We have recorded deferred taxes for the tax effect of repatriating the funds to the U.S.

Net cash providedused byin operating activities wasdecreased $1.6by $2.0 million for the threesix months ended MarchJune 29,28, 2026, compared to $8.7the millionprior year period. Although the net loss increased and movement in working capital used more cash than in the prior year period, primarilythese reflectingeffects favorablewere workingmore capitalthan movementsoffset inby thehigher currentnon-cash period.charges, principally stock-based compensation and depreciation and amortization. Accounts receivable increased slightlyto $152.8 million as of June 28, 2026 from $142.0 million as of December 31, 20252025, mainly due to $142.2the million astiming of Marchcash 29,receipts 2026.and marketing claims processing. Our inventory decreased from $176.5 million as of December 31, 2025 to $169.3$174.9 million as of MarchJune 29,28, 2026, mainly due to the timing of purchases. Accounts payable (excluding payables related to property and equipment) increased from $41.6 million as of December 31, 2025 to $42.7$53.4 million as of MarchJune 29,28, 2026, primarily due to the timing of inventory receipts and supplier payments.

Net cash usedprovided inby investing activities increasedwas by $2.7$14.5 million for the threesix months ended MarchJune 29,28, 2026, compared to $16.9 million used in the prior year period, primarily due to higherlower purchase of short-term investments of $19.5 million and the absence of $12.2 million of payments for propertya andbusiness equipment.acquisition made in the prior year period.

Net cash used in financing activities increased by $17.5$23.6 million for the threesix months ended MarchJune 29,28, 2026, compared to the prior year period,period. The increase in cash used was primarily due to $12.0$17.4 million of higher repurchases of our common stock, the absence of $4.6$5.3 million of proceeds from the exercise of stock options that were received in the prior year period,period and $2.5 million of principal payments on the deferred purchase price of an intangible asset acquisition in the fourth fiscal quarter of 2025,acquisition, partially offset by $1.1 million of lower payments for restricted stock unit tax withholdings.

From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock. Under the authorizations, the timing and actual number of shares subject to repurchase are at the discretion of management and are contingent on a number of factors, such as levels of cash generation from operations, cash requirements for acquisitions and the price of our common stock. As of March 29, 2026, approximately 559,000 shares remained authorized for repurchase under the repurchase program. On April 22, 2026, our Board of Directors authorized an incremental $75.0 million for repurchases of our common stock under the existing repurchase program. As of June 28, 2026, approximately $75.0 million remained authorized for repurchase under the repurchase program. We repurchased, retired and reported, based on trade date, approximately 0.91.5 million and 0.30.5 million shares of common stock, at a cost of approximately $20.0$32.9 million and $7.5$15.0 million under the repurchase authorization during the threesix months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively. We also withheld and reported, based on trade date, approximately 193,000376,000 shares and 186,000370,000 shares of common stock, at a cost of approximately $4.0$8.6 million and $5.1$9.7 million during the threesix months ended MarchJune 29,28, 2026 and MarchJune 30,29, 2025, respectively, to facilitate the administrative process of withholding and remitting personal income and payroll taxes for individuals receiving Restricted Stock Units. For a detailed discussion of our common stock repurchases, refer to Note 10, Stockholders’ Equity, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Except as follows, there were no material changes outside of the ordinary course of business in our contractual obligations as of MarchJune 29,28, 2026, from those as of December 31, 2025, disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

We have entered into various inventory-related purchase agreements with suppliers. We are exposed to lengthening lead times and increasing costs on various components, certain of which are non-cancelable regardless of lead time, and as a result thewe Company hashave issued purchase orders to supply chain partners beyond contractual termination periods. As of MarchJune 29,28, 2026, we had $62.9$67.9 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $55.3 million as of December 31, 2025. As of MarchJune 29,28, 2026, $224.7$231.8 million of purchase orders beyond contractual termination periods remained outstanding. These purchase orders may be cancelled by either party, however we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order, in the event of cancellation. Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value.