NETGEAR, INC.

Previous wording

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's reporting structure; NETGEAR's belief of the principal competitive factors in the business, consumer, and service provider markets for networking products; expectations regarding more predictable performance that is aligned to the market, including as a result of our efforts to work with our channel partners to optimize their inventory carrying levels; expectations regarding transportation costs; 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 NETGEAR for Business, Mobile, and Home Networking 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 administration 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, including the acquisition of Exium; and expectations regarding NETGEAR’s subscription services and s…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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's reporting structure; NETGEAR's belief of the principal competitive factors in the business, consumer, and service provider markets for networking products; expectations regarding more predictable performance that is aligned to the market, including as a result of our efforts to work with our channel partners to optimize their inventory carrying levels; expectations regarding transportation costs; 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, Home Networking and Mobile 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 administration 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, including the acquisition of Exium; expectations regarding our product portfolio, and expectations regarding NE…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We are a global leader in innovative and advanced networking technologies for businesses, homes, and service providers. We deliver a wide range of intelligent solutions designed to unleash the full potential of connectivity. Our goal is to power extraordinary experiences where people collaborate and connect to a world of information and innovation. Our highly differentiated connected solutions range from switching and wireless products to augment business networks and audio and video (“AV”) over Ethernet for Pro AV applications to our good, better, and best WiFi solutions, security and support services to protect and enhance business and home networks. Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, such as audio and video over Ethernet, multi-Gigabit internet service to homes, WiFi 7, eSIM and future technologies. Our product line helps to create and extend wired and wireless networks as well as devices that attach to the network, such as services that complement and enhance our product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region.

Current wording

We are a global leader in innovative and advanced networking technologies for businesses, homes, and service providers. We deliver a wide range of intelligent solutions designed to unleash the full potential of connectivity. Our goal is to power extraordinary experiences where people collaborate and connect to a world of information and innovation. Our highly differentiated connected solutions range from switching and wireless products to augment business networks and audio and video (“AV”) over Ethernet for Pro AV applications to our good, better, and best WiFi solutions, security and support services to protect and enhance business and home networks. Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, including cybersecurity and product security, audio and video over Ethernet, multi-Gigabit internet service to homes, WiFi 7, eSIM and future technologies. Our product line helps to create and extend wired and wireless networks as well as devices that attach to the network, such as services that complement and enhance our product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region.

Previous wording

Networking. This realignment further strengthens our operational and financial management and enables us to further focus on growth opportunities while maintaining financial discipline. Effective January 1, 2025, we operate and report in three segments: NETGEAR for Business, Mobile, and Home Networking. The leadership team of each segment focuses on serving the unique needs of their customers through product and service development from both a product marketing and engineering standpoint, while also managing the sales and marketing functions that support their businesses. The NETGEAR for Business segment focuses on businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price. The Mobile segment focuses on both consumers and businesses and provides high-performance Mobile (4G/5G) products, including WiFi 7, WiFi 6/6E-enabled portable mobile hotspots and mobile routers, designed to meet the growing demand for on-the-go, high-speed and reliable internet connectivity with advanced security features. The Home Networking segment focuses on consumers and provides high-performance, dependable and easy-to-use WiFi internet networking solutions such as WiFi 6, WiFi 6E and WiFi 7 multi-band mesh systems, routers, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy, and premium support. The prior-year segment financial information has been recast to conform to the current-year presentation. We conduct business across three geographic regions: Americas, EMEA, and APAC.

Current wording

As we announced in February 2025, beginning with the first quarter of 2025, we realigned our business structure by separating the previously disclosed Connected Home segment into two distinct reportable segments: Home Networking and Mobile. This realignment strengthened our operational and financial management and enabled greater focus on segment-specific growth opportunities while maintaining financial discipline. Effective January 1, 2025, we operate and report in three segments: Enterprise, Home Networking and Mobile. The leadership team of each segment focuses on serving the unique needs of their customers through product and service development from both a product marketing and engineering standpoint, while also managing the sales and marketing functions that support their businesses. The Enterprise segment focuses on businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price. The Home Networking segment focuses on consumers and provides high-performance, dependable and easy-to-use WiFi internet networking solutions such as WiFi 6, WiFi 6E and WiFi 7 multi-band mesh systems, routers, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy, and premium support. The Mobile segment focuses on both consumers and businesses and provides high-performance Mobile (4G/5G) products, including WiFi 7, WiFi 6/6E-enabled portable mobile hotspots and mobile routers, designed to meet the growing demand for on-the-go, high-speed and reliable internet connectivity with advanced security features. The prior-year segment financial information has been recast to conform to the current-year presentation.

Previous wording

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, DMRs, VARs, broadband service providers, and through our direct online store at www.netgear.com. 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 through broadband service providers, such as multiple system operators, xDSL, mobile, and other broadband technology operators domestically and internationally. 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, additionally customers are purchasing products and services directly from us. We expect revenue through our direct online store or in-app offerings to continue to increase for the foreseeable future.

Current wording

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, DMRs, VARs, broadband service providers, and through our direct online store at www.netgear.com. 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 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 through broadband service providers, such as multiple system operators, xDSL, mobile, and other broadband technology operators domestically and internationally. 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, additionally customers are purchasing products and services directly from us. We expect revenue through our direct online store or in-app offerings to continue to increase for the foreseeable future.

Previous wording

During the three months ended June 29, 2025, our net revenue increased by $26.6 million, compared to the prior year period, mainly due to inventory optimization efforts with our channel partners in the prior year, which primarily drove a $22.8 million increase in the NETGEAR for Business segment and a $7.8 million increase in the Home Networking segment, partially offset by a $3.9 million decline in the Mobile segment. The increase in NETGEAR for Business net revenue was primarily attributable to sustained strong demand for Pro AV managed switches, which delivered double-digit end-market sales growth. Growth in the Home Networking segment was mainly driven by higher retail channel sales, despite a continued, though moderating, overall consumer networking market decline, as well as increased service revenue. The decline in the Mobile segment reflected lower service provider channel sales as we await new product introductions to expand the portfolio later in the year. Gross margin improved by 1,540 basis points year-over-year, mainly due to a favorable product mix weighted toward NETGEAR for Business, reduced sales returns, and lower charges for excess and obsolete inventory. Operating loss decreased by $37.3 million, primarily attributable to higher net revenue, improved gross margin, and the absence of an $8.2 million litigation reserve for a contingent liability related to success-based fees owed to outside legal counsel in connection with the favorable outcome of the TP-Link litigation.

Current wording

During the three months ended September 28, 2025, our net revenue increased by $1.7 million, compared to the prior year period, primarily due to a $12.3 million increase in the Enterprise segment, partially offset by a $5.5 million decline in the Mobile segment and a $5.1 million decline in the Home Networking segment. The increase in Enterprise net revenue was mainly attributable to continued strong demand for Pro AV product line of managed switches, which achieved double-digit end-market sales growth, benefiting from higher average selling prices and increased unit volumes. The decline in the Mobile segment was mainly due to lower service provider channel sales. The decline in the Home Networking segment was primarily due to a reduction in market share amid increased competition. Gross margin improved by 820 basis points year-over-year, primarily due to a favorable product mix weighted toward Enterprise and lower inventory costs resulting from the depletion of older, higher-cost inventory. These improvements, along with higher net revenue, partially offset the operating loss for the current period. We recorded an operating loss of $7.1 million, compared to operating income of $95.8 million in the prior year period. The change was mainly attributable to the payment received from the successful settlement of TP-Link litigation in the prior year, which resulted in the recognition of a $92.7 million contra-expense in litigation reserves, the reversal of an $8.2 million contingent liability for success-based legal fees, and a $10.9 million reduction in general and administrative expenses to offset the related legal fees incurred. Additionally, we incurred higher facility-related costs in the current quarter associated with the completion of our relocation to the new San Jose headquarters.

Previous wording

Geographically, net revenue from NETGEAR for Business segment increased in all three regions, while net revenue from Home Networking segment increased in Americas, but decreased in EMEA and APAC, and net revenue from Mobile segment decreased in in all three regions, during the three and six months ended June 29, 2025, compared to the prior year periods, respectively.

Current wording

Geographically, net revenue from Enterprise segment increased in all three regions, while net revenue from Mobile segment slightly increased in EMEA but decreased in Americas and APAC, and net revenue from Home Networking segment declined in all three regions, during the three months ended September 28, 2025, compared to the prior year period, respectively.

Previous wording

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 fluctuation, 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 recently proposed U.S. tariffs. Geopolitical tensions, such as the Russia-Ukraine conflict, the Israel-Hamas war, and the recently escalated Red Sea crisis, along with lingering supply chain disruptions, have further added to the complexity of the global landscape. The extent of impacts from these macroeconomic and geopolitical trends on our ongoing 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 are 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.

Current wording

Macroeconomic and geopolitical trends have continued to create uncertainty in the global economic environment. Contributing factors include persistent inflation, recent delays in the release of certain U.S. economic data, elevated though declining interest rates, foreign exchange rate fluctuation, 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 recently proposed U.S. tariffs and intensified trade actions. Geopolitical tensions and episodic maritime security incidents along with evolving supply chain disruptions and volatile ocean freight spot rates have further added to the complexity of the global landscape. In light of this environment, we continue to invest in cybersecurity, product security, and sourcing to enhance security of our products as well as 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. The broader implications of the macroeconomic uncertainty, 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, uncertainty and strategic investment initiatives.

Previous wording

Looking forward, we expect to continue to see more predictable performance that is aligned with the market for all of our businesses as the inventory optimization with our channel partners and our inventory reduction actions were completed. We expect to continue to experience strong net revenue in our NETGEAR for Business segment, led by strong end-user demand for the Pro AV line of managed switches. However, although we expect to make continued improvements in our supply position, we anticipate that supply constraints will persist, which may limit our ability to fully capture the revenue potential of this growing business. For our Home Networking segment, we are seeing signs of the benefit of our expanded product portfolio, including our more recently introduced WiFi 7 mesh and router products, addressing the market. For our Mobile segment, we expect revenue to be in line with the second fiscal quarter of 2025 level as we await new product introductions to expand the portfolio later in the year. We aim to execute on our strategy of capitalizing on the technological inflection points of audio and video over Ethernet, WiFi 7, WiFi 6E, WiFi 6, and 5G, to develop products that serve a broader segment of the market with a good, better, best product strategy, and to simplify, develop and roll out service offerings that build recurring service revenue streams.

Current wording

Looking forward, we expect continued strong end-user demand for our Pro AV product line of managed switches within the Enterprise segment. While we anticipate ongoing improvements in our supply position, we expect supply constraints to persist, which may limit our ability to fully capture the topline potential of this growing business. For our Home Networking segment, we are seeing positive signs from our broader product portfolio as it continues to address market needs. For our Mobile segment, we expect revenue to remain consistent with the third fiscal quarter as we await new product introductions to expand the portfolio, with benefits expected to materialize next year. As we further ramp our planned investments, with a focus on insourcing software development capabilities and enhancing our go-to-market efforts to support our Enterprise business, we are also executing on our strategy of capitalizing on the technological inflection points of audio and video over Ethernet, WiFi 7, WiFi 6E, WiFi 6, and 5G, to develop products that serve a broader segment of the market with a good, better, best product strategy, and to simplify, develop and roll out service offerings that build recurring service revenue streams.

Previous wording

Net revenue in Americas increased in the three and six months ended June 29, 2025, compared to the prior year periods, mainly due to prior-year inventory optimization efforts with our channel partners, which primarily drove increases in NETGEAR for the Business segment's net revenue of 42.7% and 34.4%, and in the Home Networking segment’s net revenue of 22.2% and 7.6%, partially offset by decreases in the Mobile segment’s net revenue of 18.5% and 27.4%, respectively. The increases in NETGEAR for Business segment's net revenue were primarily due to a higher demand for the Pro AV product line of managed switches, while the increases in Home Networking segment's net revenue were primarily driven by stronger sales in the retail channel, compared to the prior year periods. The decreases in Mobile segment's net revenue were primarily attributable to lower sales in the service provider channel, compared to the prior year periods.

Current wording

Net revenue in Americas increased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to growth in Enterprise segment's net revenue of 13.2% and 25.8%, partially offset by decreases in the Mobile segment’s net revenue of 21.0% and 25.2%, respectively. Enterprise net revenue increased primarily due to higher demand for Pro AV product line of managed switches, while Mobile segment net revenue declined primarily due to lower sales in the service provider channel, compared to the prior year periods. Additionally, Enterprise net revenue for the nine-month period benefited from the prior year’s first-half inventory optimization efforts with channel partners.

Previous wording

Net revenue in APAC decreased in the three and six months ended June 29, 2025, compared to the prior year periods, primarily attributable to declines in the Home Networking segment’s net revenue of 42.4% and 42.9%, respectively, mainly driven by lower sales in both the retail and the service provider channels. These declines were partially offset by increases in the NETGEAR for Business segment’s net revenue of 14.2% and 10.1%, respectively, primarily attributable to higher demand for the Pro AV product line of managed switches.

Current wording

Net revenue in APAC decreased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily attributable to declines in the Home Networking segment’s net revenue of 52.0% and 45.8%, respectively, mainly driven by lower sales in both the retail and the service provider channels. These declines were partially offset by growth in the Enterprise segment’s net revenue of 12.7% and 11.0%, respectively, primarily attributable to higher demand for the Pro AV product line of managed switches.

Previous wording

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

Current wording

For further discussions specific to our Enterprise, Home Networking and Mobile segments, refer to the "Segment Information" section below.

Previous wording

Our gross margin increased for the three and six months ended June 29, 2025, compared to the prior year periods, primarily due to a higher mix of NETGEAR for Business products, which generally carry higher gross margins, as well as due to lower sales returns, reduced charges for excess and obsolete inventory and lower inventory costs reflecting the depletion of older, higher-cost inventory.

Current wording

Our gross margin increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to a higher mix of Enterprise products, which generally carry higher gross margins, and lower inventory costs resulting from the depletion of older, higher-cost inventory. The increase in the nine-month period also benefited from reduced sales returns and lower charges for excess and obsolete inventory.

Previous wording

We expect our gross margin in the third fiscal quarter of 2025 to be in line with or decrease slightly from the second quarter of 2025 level. 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.

Current wording

We expect our gross margin in the fourth fiscal quarter of 2025 to be in line with or slightly decrease from the third quarter of 2025 level. 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.

Previous wording

Research and development expenses increased for the three months ended June 29, 2025, but decreased for the six months ended June 29, 2025, compared to the prior year periods. These movements reflected increases in personnel-related expenditures of $2.0 million and $1.8 million, respectively, primarily due to higher head count and higher variable compensation. These increases were partially offset or more than offset by decreases in IT and facility allocations of $0.6 million and $1.4 million, and in engineering projects and outside professional services of $0.4 million and $1.4 million, for the three- and six-month periods, respectively. The reductions were largely driven by the restructuring undertaken in January 2025, which primarily impacted our Home Networking segment.

Current wording

Research and development expenses increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily driven by higher personnel-related expenditures of $1.9 million and $3.8 million, respectively, mainly due to higher head count and higher variable compensation. These increases were partially offset by decreases in engineering projects and outside professional services of $0.5 million and $1.9 million, for the three- and nine-month periods, respectively. Additionally, IT and facility allocations increased by $0.7 million for the three-month period but decreased by $0.7 million for the nine-month period.

Previous wording

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 in absolute dollar amount in the third fiscal quarter of 2025 to increase from the second quarter of 2025 level. We continue to invest in research and development to grow audio and video over Ethernet, web-managed, AV over IP managed switches, NETGEAR for Business wireless products, our cloud platform capabilities, our recurring services and mobile applications, and to broaden our WiFi 7 offerings for consumers to align to our good-better-best strategy and broaden our 5G mobile products. Our NETGEAR for Business segment will continue to receive most of our incremental investments in the remainder of 2025 and we will be focused on in-sourcing our software capabilities, expanding our product portfolio that will allow us to grow our share in the sizable AV and enterprise WiFi markets. We recently established an in-house research and development center in Chennai, India through the hiring of a team of experienced engineers, and completed the acquisition of Exium. These strategic initiatives are expected to accelerate the transition to internally managed software development, increase innovation velocity, reduce development costs, and reduce reliance on third-party vendors. The newly onboarded teams will focus on leveraging artificial intelligence or integrating networking security to significantly simplify networking solutions for small and medium-sized businesses. 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.

Current wording

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 in absolute dollar amount in the fourth fiscal quarter of 2025 to be in line or slightly increase from the third quarter of 2025 level. We continue to invest in research and development to grow audio and video over Ethernet, web-managed, AV over IP managed switches, Enterprise wireless products, our cloud platform capabilities, our recurring services and mobile applications, and to broaden our WiFi 7 offerings for consumers to align to our good-better-best strategy and broaden our 5G mobile products. Our Enterprise segment will continue to receive most of our incremental investments in the remainder of 2025 and we will be focused on in-sourcing our software capabilities, expanding our product portfolio that will allow us to grow our share in the sizable AV and enterprise WiFi markets. In the second quarter of 2025, we established an in-house research and development center in Chennai, India through the hiring of a team of experienced engineers, and completed the acquisition of Exium. These strategic initiatives are expected to accelerate the transition to internally managed software development, increase innovation velocity, reduce development costs, and reduce reliance on third-party vendors. The recently onboarded teams focus on leveraging artificial intelligence or integrating networking security to significantly simplify networking solutions for small and medium-sized businesses. 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.

Previous wording

Sales and marketing expenses increased for the three months ended June 29, 2025, but decreased for the six months ended June 29, 2025, compared to the prior year periods. These movements reflected increases in personnel-related expenditures of $3.7 million and $3.8 million, for the three- and six-month periods, respectively, primarily due to higher headcount and variable compensation. These increases were partially offset or more than offset by decreases in brand marketing expenditures of $1.5 million and $2.1 million, in outside professional services of $0.7 million and $1.5 million, and in outbound freight costs of $0.3 million and $1.2 million, for the three- and six-month periods, respectively. The reductions were concentrated in our Home Networking and Mobile segments and were partially offset by increased investments in our NETGEAR for Business segment.

Current wording

Sales and marketing expenses increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily driven by higher personnel-related expenditures of $3.1 million and $6.8 million, respectively, mainly due to higher headcount and variable compensation. These increases were partially offset by decreases in brand marketing expenditures of $0.8 million and $2.9 million and in outside professional services of $0.7 million and $2.1 million for the three- and nine-month periods, respectively. Additionally, outbound freight costs increased by $0.5 million for the three-month period but decreased by $0.6 million for the nine-month period.

Previous wording

We expect sales and marketing expenses in absolute dollar amount in the third fiscal quarter of 2025 to be in line with or slightly increase from the second quarter of 2025 level. We expect 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.

Current wording

We expect sales and marketing expenses in absolute dollar amount in the fourth fiscal quarter of 2025 to be in line with the third quarter of 2025 level. We expect 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 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.

Previous wording

General and administrative expenses increased for the three and six months ended June 29, 2025, compared to the prior year periods, primarily driven by higher personnel-related expenditures of $0.9 million and $2.1 million, respectively, mainly due to higher variable compensation and increased stock-based compensation associated with executive transitions. The six-month increase also reflected higher IT and facility allocations of $1.0 million, partially offset by lower legal and professional service costs of $1.9 million.

Current wording

General and administrative expenses increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to the absence of a $10.9 million reduction in expenses recorded in the prior year periods to offset legal fees associated with the successful TP-Link litigation settlement. The increases for the three- and nine-month periods were also driven by higher personnel-related expenditures of $2.0 million and $4.0 million, respectively. The higher personnel-related expenditures were mainly due to increased stock-based compensation associated with executive transitions, and higher variable compensation.

Previous wording

We expect general and administration expenses in absolute dollar amount in the third fiscal quarter of 2025 to be in line with or slightly increase from the second quarter of 2025 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 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.

Current wording

We expect general and administration expenses in absolute dollar amount in the fourth fiscal quarter of 2025 to decrease from the third quarter of 2025 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 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.

Previous wording

The decreases in litigation reserves, net for the three and six months ended June 29, 2025, compared to the prior year periods, were primarily due to the absence of an $8.2 million reserve recorded in the prior year for a contingent liability related to success-based fees owed to outside legal counsel in connection with the favorable outcome of the TP-Link litigation.

Current wording

The increases in litigation reserves, net for the three and nine months ended September 28, 2025, compared to the prior year periods, were primarily attributable to the prior-year recognition of a $92.7 million contra-expense and the reversal of an $8.2 million contingent liability for success-based legal fees, both resulting from payment received from the successful settlement of TP-Link litigation.

Previous wording

Restructuring and other charges decreased for the three months ended June 29, 2025, but increased for six months ended June 29, 2025, compared to the prior year periods, primarily due to the restructuring undertaken in January 2025. This restructuring was aimed at reducing costs, and reinvesting into the business to capitalize on our highest priority opportunities to drive revenue growth and improve profitability. 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.

Current wording

Restructuring and other charges increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to restructuring activities initiated in January 2025 and carried out throughout the year. This restructuring was aimed at reducing costs, and reinvesting into the business to capitalize on our highest priority opportunities to drive revenue growth and improve profitability. 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.

Previous wording

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, and other non-operating income and expenses, including gain on litigation settlements. The following table presents other income, net for the periods indicated:

Current wording

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, and other non-operating income and expenses. The following table presents other income, net for the periods indicated:

Previous wording

The increase in other income, net for the three months ended June 29, 2025, compared to the prior year period was primarily due to higher interest income resulting from higher cash and short-term investment balances and higher net gains on transactions and contracts denominated in foreign currencies. The increase in other income, net for the six months ended June 29, 2025, compared to the prior year period, was primarily due to proceeds of $4.7 million from a sale of patents in the current year, as well as higher interest income resulting from higher cash and short-term investment balances.

Current wording

The decrease in other income, net for the three months ended September 28, 2025, compared to the prior year period, was primarily due to lower interest income resulting from lower cash and short-term investment balances. The increase in other income, net for the nine months ended September 28, 2025, compared to the prior year period, was primarily due to $4.7 million of proceeds from the sale of patents in the current year, higher net gains on foreign currency transactions and contracts, and higher interest income resulting from higher average cash and short-term investment balances.

Previous wording

The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025 and the Company continues to evaluate the impact on its financial position. The OBBBA is not currently expected to materially impact the Company’s effective tax rate or cash flows in the current fiscal year.

Current wording

The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025 and we continue to evaluate the impact on its financial position. The OBBBA is not currently expected to materially impact our effective tax rate or cash flows in the current fiscal year.

Previous wording

As disclosed above, in the first fiscal quarter of 2025, we realigned our business structure by separating the Connected Home segment into two distinct reportable segments: Mobile and Home Networking. Effective January 1, 2025, we operate and report in three segments: NETGEAR for Business, Mobile, and Home Networking. The prior-year segment financial information has been recast to conform to the current-year presentation. Additional information on the realignment, 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 12, Segment Information, and information on net revenue by sales channels can be found in Disaggregation of Revenuein Note 3, Revenue, in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Current wording

As disclosed above, in the first fiscal quarter of 2025, we realigned our business structure by separating the Connected Home segment into two distinct reportable segments: Home Networking and Mobile. Effective January 1, 2025, we operate and report in three segments: Enterprise, Home Networking and Mobile. The prior-year segment financial information has been recast to conform to the current-year presentation. Additional information on the realignment, 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 12, Segment Information, and information on net revenue by sales channels can be found in Disaggregation of Revenuein Note 3, Revenue, in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Previous wording

NETGEAR for Business net revenue increased in the three and six months ended June 29, 2025, primarily due to continued strong demand for Pro AV product line of managed switches, which experienced double digit growth in end market sales, compared to the prior year periods. We also began to see more predictable performance aligned to the market. Geographically, as a result of prior-year inventory optimization efforts with our channel partners and higher demand for the Pro AV product line of managed switches, NETGEAR for Business net revenue increased in all three regions.

Current wording

Enterprise segment's net revenue increased in the three and nine months ended September 28, 2025, primarily driven by continued strong demand for Pro AV product line of managed switches, compared to the prior year periods. This growth reflected double-digit end-market sales expansion, benefiting from higher average selling prices and increased unit volumes. We also began to see more predictable performance aligned to the market. Geographically, net revenue increased in all three regions in the three- and nine-month periods, driven by higher demand for the Pro AV product line of managed switches, with the nine-month period also benefiting from first-half prior-year inventory optimization efforts with our channel partners.

Previous wording

NETGEAR for Business segment's contribution income increased in the three and six months ended June 29, 2025, compared to the prior year periods, primarily due to higher net revenue and improved gross margins, mainly driven by lower sales returns and reduced charges for excess or obsolete inventory.

Current wording

Enterprise segment's contribution income increased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to higher net revenue and improved gross margins, mainly driven by a higher mix of our Pro AV product line of managed switches. The increase for the nine-month period was also attributable to the reduced charges for excess or obsolete inventory.

Previous wording

Home Networking segment's net revenue increased in the three and six months ended June 29, 2025, compared to the prior year periods, primarily due to increases in net revenue in the retail channel, despite continued, though moderating, overall consumer networking market declines. Our premium portfolio of products continued to outperform the market, and we saw growth in our service revenue, compared to the prior year periods. Geographically, Home Networking segment's net revenue in the three and six months ended June 29, 2025 increased in Americas, but decreased in EMEA and APAC, compared to the prior year periods.

Current wording

Home Networking segment's net revenue decreased in the three and nine months ended September 28, 2025, compared to the prior year periods. The decrease in the three-month period was primarily driven by reduced market share amid increased competition, while the decline in the nine-month period reflected the impact of broader market softness experienced earlier in the year. Our premium portfolio of products continued to outperform the market, and we saw growth in our service revenue, compared to the prior year periods. Geographically, Home Networking segment's net revenue declined across all three regions for the three and nine months ended September 28, 2025, compared to the prior year periods, except for an increase in Americas during the nine-month period.

Previous wording

Home Networking segment generated contribution income in the three and six months ended June 29, 2025, compared to contribution losses in the prior year periods. The improvements were primarily driven by higher gross margins, which benefited from a more favorable product mix of WiFi 7 products, lower product costs, reduced sales returns, decreased contra-revenue marketing expenses, and lower charges for excess and obsolete inventory. Additionally, operating expenses declined, largely due to the restructuring undertaken in January 2025.

Current wording

Home Networking segment generated contribution income in the three and nine months ended September 28, 2025, compared to contribution losses in the prior year periods. The improvements were primarily driven by higher gross margins, which benefited from a more favorable product mix of WiFi 7 products, higher service revenue, lower product costs, reduced sales returns, decreased contra-revenue marketing expenses, and lower charges for excess and obsolete inventory. Additionally, operating expenses declined, largely due to the restructuring initiated in January 2025 and carried out throughout the year.

Previous wording

Mobile segment's net revenue decreased in the three and six months ended June 29, 2025, compared to the prior year periods, primarily due to declines in net revenue in service provider channel as we await new product introductions to expand the portfolio later in the year. Geographically, Mobile net revenue in the three and six months ended June 29, 2025 decreased in all three regions, compared to the prior year period.

Current wording

Mobile segment's net revenue decreased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to declines in net revenue in service provider channel. Geographically, Mobile segment's net revenue declined across all three regions for the three and nine months ended September 28, 2025, except for a slight increase in EMEA during the three-month period, compared to the prior year periods.

Previous wording

Mobile segment generated contribution income in the three and six months ended June 29, 2025, compared to contribution losses in the prior year periods. The improvements were primarily due to higher gross margins, mainly driven by lower product cost, lower charges for excess or obsolete inventory, and favorable changes in product mix.

Current wording

Mobile segment generated contribution income in the three and nine months ended September 28, 2025, compared to contribution losses in the prior year periods. The improvements were primarily due to higher gross margins, mainly driven by lower product cost, decreased contra-revenue marketing expenses, lower charges for excess or obsolete inventory, and favorable changes in product mix.

Previous wording

Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of June 29, 2025, we had cash, cash equivalents and short-term investment of $363.5 million, a decrease of $45.2 million from December 31, 2024.

Current wording

Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of September 28, 2025, we had cash, cash equivalents and short-term investment of $326.4 million, a decrease of $82.3 million from December 31, 2024.

Previous wording

Net cash used in operating activities was $10.5 million for the six months ended June 29, 2025, compared to $35.6 million provided in the prior year period, primarily due to unfavorable working capital movements, partially offset by lower net loss. Accounts receivable decreased from $156.2 million as of December 31, 2024 to $144.9 million as of June 29, 2025, primarily due to the timing of cash collections. Our inventory decreased from $162.5 million as of December 31, 2024 to $157.3 million as of June 29, 2025, as we continued in optimizing our inventory levels. Accounts payable (excluding payables related to property and equipment) decreased from $57.4 million as of December 31, 2024 to $56.0 million as of June 29, 2025, primarily due to the timing of inventory receipts and supplier payments.

Current wording

Net cash used in operating activities was $17.9 million for the nine months ended September 28, 2025, compared to $143.3 million provided in the prior year period, The change was primarily due to $103.6 million of pre-tax net proceeds received in the prior year period from the TP- Link litigation settlement, as well as unfavorable working capital movements in the current year period. Accounts receivable increased from $156.2 million as of December 31, 2024 to $159.9 million as of September 28, 2025, primarily due to the timing of cash collections. Our inventory increased from $162.5 million as of December 31, 2024 to $166.6 million as of September 28, 2025, as we work to realign inventory carrying levels with projected demands. Accounts payable (excluding payables related to property and equipment) decreased from $57.4 million as of December 31, 2024 to $54.9 million as of September 28, 2025, primarily due to the timing of inventory receipts and supplier payments.

Previous wording

Net cash used in investing activities increased by $4.0 million for the six months ended June 29, 2025, compared to the prior year period, mainly due to $12.2 million payments related to the acquisition of Exium, partially offset by lower net purchases of short-term investments.

Current wording

Net cash used in investing activities increased by $2.7 million for the nine months ended September 28, 2025, compared to the prior year period, mainly due to $12.2 million of payments related to the acquisition of Exium, and higher purchases of property and equipment, primarily related to leasehold improvements for our new headquarters office, partially offset by lower net purchases of short-term investments.

Previous wording

Net cash used in financing activities decreased by $4.3 million for the six months ended June 29, 2025, compared to the prior year period, primarily due to lower repurchases of our common stock and higher proceeds from the exercise of stock options, partially offset by higher payments for restricted stock unit tax withholdings.

Current wording

Net cash used in financing activities increased by $16.1 million for the nine months ended September 28, 2025, compared to the prior year period, primarily due to higher repurchases of our common stock and higher payments for restricted stock unit tax withholdings, partially offset by higher proceeds from the exercise of stock options.

Previous wording

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 June 29, 2025, approximately 2.8 million shares remained authorized for repurchase under the repurchase program. We repurchased, retired and reported, based on trade date, approximately 0.5 million and 1.6 million shares of common stock, at a cost of approximately $15.0 million and $21.4 million under the repurchase authorization during the six months ended June 29, 2025 and June 30, 2024, respectively. We also repurchased, retired, and reported based on trade date, approximately 370,000 shares and 197,000 shares of common stock, at a cost of approximately $9.7 million and $2.9 million during the six months ended June 29, 2025 and June 30, 2024, respectively, to administratively facilitate the withholding and subsequent remittance of 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.

Current wording

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 September 28, 2025, approximately 2.0 million shares remained authorized for repurchase under the repurchase program. We repurchased, retired and reported, based on trade date, approximately 1.3 million and 1.7 million shares of common stock, at a cost of approximately $35.0 million and $22.9 million under the repurchase authorization during the nine months ended September 28, 2025 and September 29, 2024, respectively. We also withheld and reported, based on trade date, approximately 452,000 shares and 222,000 shares of common stock, at a cost of approximately $11.8 million and $3.3 million during the nine months ended September 28, 2025 and September 29, 2024, 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.

Previous wording

As of June 29, 2025, we had $60.2 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $57.4 million as of December 31, 2024. Due to an elongation of the time from order placement to production that occurred several years ago, we issued purchase orders to supply chain partners beyond contractual termination periods. As of June 29, 2025, $208.7 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.

Current wording

As of September 28, 2025, we had $60.5 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $57.4 million as of December 31, 2024. Due to an elongation of the time from order placement to production that occurred several years ago, we issued purchase orders to supply chain partners beyond contractual termination periods. As of September 28, 2025, $171.3 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.