NETGEAR, INC.

Previous wording

This section generally discusses the results of our operations for the year ended December 31, 2024 (“fiscal 2024”) compared to the year ended December 31, 2023 (“fiscal 2023”). For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, 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.

Current wording

This section generally discusses the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 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, 2024.

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 provider of networking technologies for businesses, homes, and service providers. We deliver a wide range of networking hardware, software, and services designed to enable reliable connectivity and security. Our mission is to unleash the full potential of 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 products and services are delivered through integrated platforms that combine hardware, software, and services. Our connected solutions range from switching and wireless products that support audio and video (“AV”) over Ethernet for Pro AV applications and business networks to WiFi networking solutions, security and support services for enterprise and home networks. 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 7, eSIM and future technologies. Our product line enables the creation and extension of wired and wireless networks and includes services that complement and enhance our hardware offerings. These products are available in multiple configurations to address the changing needs of our customers across geographic regions.

Previous wording

The markets in which our segments operate are intensely competitive and subject to rapid technological evolution. 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. To remain competitive, we believe we must continue to aggressively invest resources in highly differentiated, “good, better, best”, high performance reliable and trusted connectivity solutions, complemented by valuable subscription services, expanding our sales channels including our direct-to-consumer capabilities and custom installers, increasing engagement with our customers and manufacturing partners, and maintaining customer satisfaction worldwide. Our investments reflect our enhanced focus on the 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.

Current wording

The enterprise, consumer, and service provider markets are intensely competitive and subject to rapid technological 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 focus on investing in differentiated connectivity solutions across a range of performance tiers, complemented by subscription-based services, expanding and supporting our sales channels, strengthening engagement with customers and partners, and maintaining a high level of customer satisfaction. Our investments align with our strategic priorities, including investments in enterprise and Pro AV initiatives and selective acquisitions intended to enhance software and security capabilities.

Previous wording

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, direct market resellers (“DMRs”), value-added resellers (“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, 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.

Current wording

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, direct market resellers (“DMRs”), managed service providers (“MSPs”), 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. In addition, we also sell products directly to broadband service providers in the United States and internationally providing WiFi, cable and 4G/5G mobile broadband 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.

Previous wording

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

Current wording

Geographically, net revenue from Enterprise increased in all three regions, whereas net revenue from Consumer decreased in all three regions, during the year ended December 31, 2025, compared to the prior year.

Previous wording

Macroeconomic and geopolitical trends created uncertainty in the global economic environment in recent years. These include conditions such as the new tariffs by the Trump administration, the potential for a recession, fluctuations in inflation, interest rate changes, and the related negative impact on the global economy, foreign exchange rate fluctuations, particularly changes of the U.S. dollar, and ongoing worldwide tensions, including the Russia-Ukraine conflict, Israel-Hamas conflict, and Red Sea crisis. 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 I of this Annual Report on Form 10-K 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, 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 the potential for expanded or modified tariff regimes, continues to affect global commerce and supply chain 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 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 I of this Annual Report on Form 10-K for various risks and uncertainties associated with the macroeconomic trends and uncertainty.

Previous wording

We completed our annual impairment test of goodwill as of the first day of the fourth fiscal quarter of 2024, or September 30, 2024. We identified the reporting units for the purpose of goodwill impairment testing as NETGEAR for Business and Connected Home and performed a qualitative test. The results of the quantitative testing indicated that the fair value of the NETGEAR for Business reporting unit substantially exceeded its carrying amount, including goodwill, thus no goodwill impairment 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. No goodwill impairment was recognized for our NETGEAR for Business reporting unit in the years ended December 31, 2024, 2023 and 2022. 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.

Current wording

We completed our annual impairment test of goodwill as of the first day of the fourth fiscal quarter of 2025, or September 29, 2025. We identified the reporting units for the purpose of goodwill impairment testing as Enterprise and Consumer and performed a qualitative test for 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 qualitative testing, we concluded that it was more-likely-than-not that the fair value of the Enterprise reporting unit was greater than its carrying value and therefore, no further quantitative impairment testing was required. No goodwill impairment was recognized for our Enterprise reporting unit in the years ended December 31, 2025, 2024 and 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.

Previous wording

For our NETGEAR for Business 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.

Current wording

For our Enterprise 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.

Previous wording

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

Current wording

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

Previous wording

Cost of revenue consists primarily of the following: the cost of finished products from our third-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 intangibles and software development costs; and costs attributable to the provision of service offerings.

Current wording

Cost of revenue consists primarily of the following: the cost of finished products from our third 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 intangible assets and software development costs; and costs attributable to the provision of service offerings.

Previous wording

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 intangibles and capitalized software development costs. The following table presents costs of revenue and gross margin for the periods indicated:

Current wording

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 intangible assets and capitalized software development costs. The following table presents costs of revenue and gross margin, for the periods indicated:

Previous wording

Gross margin percentage decreased for fiscal 2024, compared to the prior year, primarily attributable to higher cost of inventory and freight costs, and higher excess and obsolete inventory expense as we accelerated the depletion of our slower moving inventory, partially offset by higher mix of NETGEAR for Business products, which generally carry higher gross margin.

Current wording

Gross margin percentage increased in the year ended December 31, 2025, compared to the prior year, primarily attributable to a higher mix of Enterprise products, which generally carry higher gross margins, lower inventory costs resulting from the depletion of older, higher-cost inventory, reduced sales returns, and lower charges for excess and obsolete inventory.

Previous wording

We expect our gross margin in the first fiscal quarter of 2025 to be higher than the same quarter of 2024 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 first fiscal quarter of 2026 to be higher than the same quarter of 2025 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.

Previous wording

The decline in research and development expenses in fiscal 2024, compared to the prior year, was primarily driven by a decrease in IT and facility allocation of $1.4 million, and a decrease in engineering projects and outside professional service fees of $1.0 million.

Current wording

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

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 as a percentage of net revenue in the first fiscal quarter of 2025 to be in line with or slightly higher than the same quarter of 2024 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 receive most of our incremental investments for 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. 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.

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 the first fiscal quarter of 2026 to be higher in absolute dollars than the same quarter of 2025 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 7, eSIM and future technologies. Our research and development efforts increasingly focus on software, security, and capabilities that support subscription-based services and margin improvement. Our Enterprise segment will receive most of our incremental investments for 2026 with a focus on in-sourcing our software capabilities 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.

Previous wording

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, 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:

Current wording

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 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:

Previous wording

The decline in sales and marketing expenses for fiscal 2024, compared to the prior year, was primarily attributable to a decrease in brand marketing expenditures of $5.7 million, partially offset by an increase in personnel-related expenditures of $1.2 million, mainly due to higher variable compensation.

Current wording

The increase in sales and marketing expenses in the year ended December 31, 2025, compared to the prior year, was primarily attributable to a higher personnel-related expenditure of $11.1 million, mainly due to higher head count and higher variable compensation, reflecting investments to expand our go-to-market capabilities in support of our Enterprise business. The increase was partially offset by a decrease in brand marketing expenditures of $3.6 million and outside professional service fees of $3.1 million.

Previous wording

We expect sales and marketing expenses as a percentage of net revenue in the first fiscal quarter of 2025 to be in line with the same quarter of 2024 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.

Current wording

We expect sales and marketing expenses in the first fiscal quarter of 2026 to be higher in absolute dollars than the same quarter of 2025 level. 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 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, 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:

Current wording

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 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:

Previous wording

The decrease in general and administrative expenses for fiscal 2024, compared to the prior year, was primarily due to a decrease in legal and professional services fees of $13.9 million, mainly attributable to a $10.9 million reduction in expenses to offset the legal fees incurred to date associated with the litigation settlement payment from TP-Link. The decrease in general and administrative expenses was partially offset by an increase in personnel-related expenditures of $10.2 million, primarily due to higher compensations, which also included stock-based compensation, associated with executives’ transition, and higher variable compensation.

Current wording

The increase in general and administrative expenses in the year ended December 31, 2025, compared to the prior year, was primarily due to the absence of a $10.9 million reduction in expenses recorded in the prior year period to offset legal fees associated with the successful TP-Link litigation settlement. The increase was also driven by a higher personnel-related expenditure of $6.6 million, primarily due to increased stock-based compensation associated with executive transitions, and higher variable compensation.

Previous wording

We expect general and administration expenses as a percentage of net revenue in the first fiscal quarter of 2025 to be below the same quarter of 2024 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, 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.

Current wording

We expect general and administration expenses in the first fiscal quarter of 2026 to be in line with or slightly higher than the same 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 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.

Previous wording

The decrease in litigation reserves, net for fiscal 2024, compared to the prior year, was mainly attributable to a contra-expense of $92.7 million associated with the litigation settlement payment from TP-Link, partially offset by a $3.6 million litigation reserve associated with a liability from a settlement.

Current wording

A net litigation expense of $0.2 million was incurred in the year ended December 31, 2025, compared to a net benefit of $89.0 million in the prior year. The prior year net benefit consisted of a $92.7 million contra-expense related to a litigation settlement payment from TP-Link, partially offset by a $3.6 million litigation reserve.

Previous wording

The restructuring and other charges were slightly higher in fiscal 2024, compared to the prior year. The charges were primarily associated with the reorganization of our business in each year to better align the cost structure of the business with the areas to deliver long-term growth and expanding profitability. For a detailed discussion of restructuring and other charges, refer to Note 13. Restructuring and Other Charges, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Current wording

The increase in restructuring and other charges in the year ended December 31, 2025, compared to the prior year, was 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 Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

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, 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:

Previous wording

The decrease in other income, net for fiscal 2024 was primarily due to $6.0 million cash received relating to a favorable litigation settlement for false product marketing in the prior year but not in the current year, partially offset by higher interest income resulting from higher interest rates and higher cash and short-term investment balances. For details on the changes in Other income, net, refer to Note 6, Other Income, Net, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Current wording

The increase in other income, net in the year ended December 31, 2025, compared to the prior year, was primarily due to $4.7 million of proceeds from the sale of patents in the current year, and higher net gains on foreign currency transactions and contracts, offset by lower interest income resulting from lower average cash and short-term investment balances. For details on the changes in Other income, net, refer to Note 7, Other Income, Net, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Previous wording

The tax expense in 2024 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 2023 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.

Current wording

The tax expense in the 2025 versus 2024 years resulted primarily from the change in valuation allowance, partially offset by the benefit from certain changes in estimate upon filing the 2024 U.S. federal tax return and the recognition of uncertain tax benefits.

Previous wording

In the first fiscal quarter of 2024, resulting from certain segment structure changes, we revised our allocation method by allocating certain historically unallocated operating expenses to our individual operating segments. The segment financial information from the prior years has been recast to conform to the current year presentation. Additional information on the change, 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, Segment Information, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Current wording

As 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 2025, we streamlined our operating and reporting structure and returned to two reportable segments. These changes did not impact our segment financial information for the year ended December 31, 2025, and prior-period segment information has been presented on a comparable basis. Accordingly, the impact on the full-year disclosure relates primarily to segment naming, reflecting the Enterprise (formerly NETGEAR for Business) and Consumer (previously reported as Connected Home) segments. Additional information on the 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 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.

Previous wording

Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of December 31, 2024, we had cash, cash equivalents and short-term investment of $408.7 million, an increase of $125.0 million from December 31, 2023.

Current wording

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

Previous wording

As of December 31, 2024, approximately 23% of our cash and cash equivalents and short-term investments were outside of the U.S. The cash and cash equivalents and short-term investments balances outside of the U.S. 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.

Current wording

As of December 31, 2025, approximately 28% of our cash and cash equivalents and short-term investments were outside of the U.S. The cash and cash equivalents and short-term investments balances outside of the U.S. 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.

Previous wording

Net cash provided by operating activities increased by $107.9 million in fiscal 2024, compared to the prior year, primarily due to a net proceed before tax of $103.6 million resulting from the litigation settlement payment from TP-Link and favorable working capital movements. Our accounts payable (excluding payables related to property and equipment) increased from $46.4 million as of December 31, 2023, to $57.4 million as of December 31, 2024, primarily due to the timing of inventory receipts and supplier payments. Accounts receivable decreased from $185.1 million as of December 31, 2023, to $156.2 million as of December 31, 2024, 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.

Current wording

Net cash provided by operating activities decreased by $163.2 million in the year ended December 31, 2025, compared to the prior year, primarily due to $103.6 million of pre-tax net proceeds received in the prior year from the TP- Link litigation settlement, as well as unfavorable working capital movements in the current year. Our accounts payable (excluding payables related to property and equipment) decreased from $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. Inventory increased from $162.5 million as of December 31, 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.

Previous wording

Net cash used in investing activities decreased by $1.3 million in fiscal 2024, compared to the prior year, mainly driven by lower net purchases of short-term investments, partially offset by higher purchases of property and equipment.

Current wording

Net cash used in investing activities decreased by $3.5 million in the year ended December 31, 2025, compared to the prior year, mainly due to lower net purchases of short-term investments, partially offset by payments related to the acquisition of Exium, and higher purchases of property and equipment, primarily related to leasehold improvements for our new headquarters office.

Previous wording

Net cash used in financing activities was $28.9 million in fiscal 2024, compared to net cash provided of $0.8 million in the prior year, primarily due to repurchases of our common stock in the current year, partially offset by proceeds from exercise of stock options.

Current wording

Net cash used in financing activities increased by $26.6 million in the year ended December 31, 2025, compared to the prior year, primarily due to higher repurchases of our common stock and higher payments for restricted stock unit tax withholdings.

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. On July 16, 2024, the Board of Directors authorized management to repurchase up to 3.0 million shares of the Company’s outstanding common stock, incremental to the remaining shares under the Company’s previous repurchase program. As of December 31, 2024, approximately 3.4 million shares remained authorized for repurchase under the repurchase program. During the year ended December 31, 2024, we repurchased and retired, reported based on trade date, approximately 2.1 million shares of common stock, at a cost of approximately $33.6 million under the repurchase authorization. As of December 31, 2024, common stock repurchases at a cost of approximately $0.5 million were pending settlement. We did not repurchase any shares of common stock during the year ended December 31, 2023. Under the Inflation Reduction Act signed into law in 2022, the exercise tax on stock repurchases was approximately $0.2 million for the year ended December 31, 2024.

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 December 31, 2025, approximately 1.5 million shares remained authorized for repurchase under the repurchase program. We repurchased and retired, reported based on trade date, approximately 1.9 million and 2.1 million shares of common stock, at a cost of approximately $50.0 million and $33.6 million under the repurchase authorization during the years ended December 31, 2025 and December 31, 2024, respectively. Under the Inflation Reduction Act signed into law in 2022, the excise tax on stock repurchases was approximately $0.1 million and $0.2 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

During the years ended December 31, 2024 and 2023, we repurchased and retired, reported based on trade date, approximately 226,000 and 198,000 shares of common stock at a cost of $3.4 million and $2.8 million, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.

Current wording

We also withheld and reported, based on trade date, approximately 515,000 shares and 226,000 shares of common stock, at a cost of approximately $13.8 million and $3.4 million during the years ended December 31, 2025 and December 31, 2024, respectively, to facilitate the administrative process of withholding and remitting personal income and payroll taxes for individuals receiving Restricted Stock Units.

Previous wording

(1) Represent non-cancellable inventory-related purchase agreements with suppliers. A further $213.7 million of purchase orders beyond contractual termination periods remained outstanding. Consequently, we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order if the purchase order is cancelled. Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value. For a detailed discussion on our purchase obligations, refer to Note 8, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Current wording

(1) Represent non-cancellable inventory-related purchase agreements with suppliers. A further $200.5 million of purchase orders beyond contractual termination periods remained outstanding. Consequently, we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order if the purchase order is cancelled. Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value. For a detailed discussion on our purchase obligations, refer to Note 9, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Previous wording

(2)Represent undiscounted non-cancellable remaining lease payments. These balances (excluding the amounts for the office lease described below) are included on our consolidated balance sheets. These lease payments are consistent with contractual terms and are not expected to differ significantly, unless a substantial change in our headcount needs requires us to exit an office facility early or expand our occupied space. For a detailed discussion on our operating leases, refer to Note 14, Leases, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Current wording

(2)Represent undiscounted non-cancellable remaining lease payments. These balances are included on our consolidated balance sheets. These lease payments are consistent with contractual terms and are not expected to differ significantly, unless a substantial change in our headcount needs requires us to exit an office facility early or expand our occupied space. For a detailed discussion on our operating leases, refer to Note 15, Leases, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Previous wording

(6)For a detailed discussion, refer to Note 8, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Current wording

(3) Represent non-cancellable commitments pertaining to non-trade activities. For a detailed discussion, refer to Note 9, Commitments and Contingencies, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.

Previous wording

In addition, as of December 31, 2024, we had $7.3 million of total gross unrecognized tax benefits and related interest and penalties. The timing of any payments that could result from these unrecognized tax benefits will depend upon a number of factors. The unrecognized tax benefits have been excluded from the contractual obligations table because reasonable estimates cannot be made of whether, or when, any cash payments for such items might occur. The possible reduction in liabilities for uncertain tax positions in multiple jurisdictions that may impact the statements of operations in the next 12 months was approximately $1.3 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities.

Current wording

In addition, as of December 31, 2025, we had $6.5 million of total gross unrecognized tax benefits and related interest and penalties. The timing of any payments that could result from these unrecognized tax benefits will depend upon a number of factors. The unrecognized tax benefits have been excluded from the contractual obligations table because reasonable estimates cannot be made of whether, or when, any cash payments for such items might occur. The possible reduction in liabilities for uncertain tax positions in multiple jurisdictions that may impact the statements of operations in the next 12 months was approximately $1.4 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities.