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 transportation costs; expectations regarding product costs; NETGEAR’s ability to continue launching new consumer router models, providing software updates to existing products, and maintain conditional approval from the Federal Communications Commission in connection with its Covered List designation of foreign-produced routers and additional costs incurred in connection with complying with applicable regulations; NETGEAR’s strategy of capitalizing on technological inflection points, developing products that serve a broader segment and simplifying and developing service offerings that build recurring service revenue streams; expectations regarding paid revenue from paid subscription service plans; expectations regarding product mix and market demand for NETGEAR’s products and services, including Enterprise and Consumer products and subscription services and NETGEAR’s ability to respond to this demand; expectations regarding competition, competitive factors, consumer price sensitivity and demand for NETGEAR’s products and services; expectations regarding sales channels, direct online store and in-app offerings; expectations regarding macroeconomic conditions and impacts to NETGEAR’s operational and financial performance and business strategies; expectations regarding the consumer retail networking market; expectations regarding existing cash, cash equivalents and short-term investments and anticipated cash requirements; expectations regarding inventory levels, inventory management and inventory costs; expectations regarding research and development expenses, sales and marketing expenses and general and administration expenses; expectations regarding expected tax rates or tax expenses and changes in legislation related to the taxation of…

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 transportation costs; expectations regarding product costs, including the impact of rising memory costs and our mitigation efforts on our gross margin; NETGEAR’s ability to continue launching new consumer router models and other new products, providing software updates to existing products, and maintain conditional approval from the Federal Communications Commission in connection with its Covered List designation of foreign-produced routers and additional costs incurred in connection with complying with applicable regulations; NETGEAR’s strategy of capitalizing on technological inflection points, developing products that serve a broader segment and simplifying and developing service offerings that build recurring service revenue streams; expectations regarding paid revenue from paid subscription service plans; expectations regarding product mix and market demand for NETGEAR’s products and services, including Enterprise and Consumer products and subscription services and NETGEAR’s ability to respond to this demand; expectations regarding competition, competitive factors, consumer price sensitivity and demand for NETGEAR’s products and services; expectations regarding sales channels, direct online store and in-app offerings; expectations regarding macroeconomic conditions and impacts to NETGEAR’s operational and financial performance and business strategies; expectations regarding 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 administrative expenses; expectations regarding expected tax rates or tax expenses …

Excerpt shortened here; the source contains the full paragraph.

Previous 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. Within our consumer business, we expect revenue through our direct online store and in-app offerings to continue to increase as a percentage of consumer revenue for the foreseeable future.

Current wording

(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. Within our consumer business, we expect revenue through our direct online store and in-app offerings to continue to increase as a percentage of consumer revenue for the foreseeable future.

Previous wording

During the three months ended March 29, 2026, our net revenue decreased by $3.2 million, or 2.0%, compared to the prior year period, driven by a $7.8 million, or 9.5%, decrease in our Consumer segment, partially offset by a $4.6 million, or 5.8%, increase in our Enterprise segment. The decrease in Consumer net revenue reflected a 31.9% decline in sales of our service provider and related products, consistent with our strategy of harvesting this business. It also reflected continued softness in the broader home networking retail market, attributable in part to electronics pricing pressures from rising memory costs. In light of these conditions, we have been prioritizing gross profit over revenue growth in our Consumer business. These declines were partially offset by growth in our core consumer business, led by our premium WiFi 7 portfolio. The increase in Enterprise net revenue was mainly attributable to continued strong demand for our Pro AV product line of managed switches, which experienced double-digit end-market sales growth in the Americas and EMEA regions, benefiting from higher average selling prices and increased unit volumes. Gross margin improved by 570 basis points year-over-year to 40.5%, primarily driven by margin expansion in both segments, a higher revenue mix from our higher-margin Enterprise segment and lower sales returns within our consumer business. We recorded an operating loss of $13.6 million, compared to an operating loss of $12.8 million in the prior year period, as the gross margin improvement was partially offset by higher operating expenses, mainly driven by higher headcount and related investments as we continue to focus on and shift resources toward growing our Enterprise business.

Current wording

During the three months ended June 28, 2026, our net revenue decreased by $2.0 million, or 1.2%, compared to the prior year period, driven by an $8.3 million, or 9.4%, decrease in our Consumer segment, partially offset by a $6.3 million, or 7.7%, increase in our Enterprise segment. The decrease in Consumer net revenue was driven by lower sales of our service provider and related products, consistent with our strategy of harvesting this business, as well as by declines in our core consumer business attributable to continued softness in the broader home networking retail market, including electronics pricing pressures from rising memory costs. In light of these conditions, we have been prioritizing gross profit over revenue growth in our Consumer business. The increase in Enterprise net revenue was mainly attributable to continued strong demand for our Pro AV product line of managed switches, which experienced double-digit end-market sales growth in the Americas and EMEA regions, primarily driven by higher average selling prices. Gross margin improved by 270 basis points year-over-year to 40.2%, primarily driven by a higher revenue mix from our higher-margin Enterprise segment, partially offset by higher excess or obsolete inventory charges and higher product costs associated with memory chip price increases in our Consumer business. We recorded an operating loss of $8.4 million, an improvement compared to an operating loss of $9.5 million in the prior year period, as the gross margin improvement more than offset higher operating expenses, which were mainly driven by higher headcount and related investments as we continue to focus on and shift resources toward growing our Enterprise business.

Previous wording

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

Current wording

Geographically, net revenue from our Enterprise segment increased in Americas and EMEA and decreased in APAC, while net revenue from our Consumer segment declined in Americas and APAC and was relatively flat in EMEA, during the three and six months ended June 28, 2026, compared to the prior year periods.

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 fluctuations, particularly involving the U.S. dollar, and ongoing trade policy shifts, including tariffs related to the U.S. and key international countries as well as U.S. tariffs and intensified trade actions. Trade policy uncertainty, including recently announced and proposed U.S. tariff actions and the potential for further expanded or modified tariff regimes, continues to affect global commerce and supply chain planning, and could increase our product costs. Geopolitical tensions and episodic maritime security incidents, to the extent that they disrupt global shipping routes, along with evolving supply chain disruptions and volatile ocean freight spot rates, have added complexity to the global operating environment. We are exposed to lengthening lead times and increasing costs on various components, driven in part by industry demand related to AI data center deployments, which have created additional 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. In addition, in March 2026, the Federal Communications Commission issued regulations adding foreign-produced routers to its Covered List, and in April 2026 we were granted conditional approval allowing us to continue to launch new consumer router models and provide software updates to existing products while the designation is maintained. The broader implications of the macroeconomic uncertainty, the evolving regulatory environment affecting our products, and any related disruptions to channel partners and freight remain unpredictable. Refer to Item 1A, Risk Factors of Part II of this Quarterly Report on Form 10-Q for various risks and uncertainties associated with the macroeconomic trends and uncertainty.

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

Previous wording

Looking forward, we expect end-user demand for our Pro AV product line of managed switches within the Enterprise segment to remain strong, and we have secured sufficient memory supply for substantially all of our 2026 production plans for this segment. We expect the impact of rising memory costs on our Enterprise business to be nominal, given the relatively higher average selling prices and gross margins of these products and our ability to adjust pricing consistent with broader market trends. In our Consumer segment, while our broader product portfolio continues to address market needs, we expect rising memory costs to continue to build throughout 2026 and, accordingly, we intend to prioritize gross profit over revenue in this segment as we manage through the current memory supply environment. For our service provider and related products, we remain focused on harvesting this business and expect revenue to decline compared to the prior year period. We expect the greater benefit of our memory cost mitigation efforts to accrue to our Enterprise business. We are continuing to ramp our planned investments, with a focus on expanding our insourced software development capabilities and enhancing our go-to-market efforts, particularly in support of our Enterprise business. These investments support our strategy of differentiating our portfolio through software, services, and security offerings. Within our Consumer business, we are addressing key technology transitions, including WiFi 7, WiFi 6E, WiFi 6, and 5G, through a good, better, best product strategy. We are also continuing to expand service offerings, strengthen direct-to-consumer capabilities, and introduce new products, including the planned launch of our eSIM-enabled M7 mobile hotspot, to support the expansion of recurring non-device revenue streams over time.

Current wording

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

Previous wording

Our gross margin increased for the three months ended March 29, 2026, compared to the prior year period, primarily driven by margin expansion in both segments, a higher revenue mix from our higher-margin Enterprise segment, and lower sales returns within our Consumer business.

Current wording

Our gross margin increased for both the three and six months ended June 28, 2026, compared to the prior year periods, primarily driven by a higher revenue mix from our higher-margin Enterprise segment, together with lower warranty costs for the six-month period, partially offset by higher excess or obsolete inventory charges in our Consumer business.

Previous wording

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

Previous wording

Research and development expenses increased for the three months ended March 29, 2026, compared to the prior year period, primarily driven by higher personnel-related expenditures of $2.1 million, mainly due to higher headcount in support of our Enterprise business, with an emphasis on insourcing software development, and higher IT and facility allocations of $0.9 million.

Current wording

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

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 second fiscal quarter of 2026 to be in line with or slightly above the first fiscal quarter of 2026 level. We continually invest in research and development to create new technologies and services and to address technological trends such as AV over Ethernet, multi-Gigabit connectivity, WiFi 7, eSIM and future technologies. We anticipate that our research and development efforts will increasingly focus on software, security, and capabilities that support subscription-based services and margin improvement. We also expect that our Enterprise segment will receive most of our incremental investments for 2026 with a focus on in-sourcing our software capabilities, building on our acquisitions of VAAG Systems and Exium completed in the prior year, 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.

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

Previous wording

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

Current wording

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

Previous wording

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

Previous wording

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

Current wording

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

Previous wording

The decrease in other income, net for the three months ended March 29, 2026, compared to the prior year period, was primarily due to $4.7 million of proceeds from the sale of patents recognized in the prior year period with no comparable amount in the current year, $1.3 million of lower interest income resulting from lower average cash and short-term investment balances, and $0.6 million of imputed interest expense recognized in the current year period related to an intangible asset acquisition.

Current wording

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

Previous wording

Enterprise segment net revenue increased in the three months ended March 29, 2026, compared to the prior year period, primarily driven by continued strong demand for our Pro AV product line of managed switches, which experienced double-digit end-market sales growth in the Americas and EMEA regions, benefiting from higher average selling prices and increased unit volumes. Geographically, net revenue from our Enterprise segment increased in Americas and EMEA and slightly decreased in APAC.

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Consumer segment net revenue decreased in the three months ended March 29, 2026, compared to the prior year period. The decrease in Consumer net revenue reflected a 31.9% decline in sales of our service provider and related products, consistent with our strategy of harvesting this business. It also reflected continued softness in the broader home networking retail market, attributable in part to electronics pricing pressures from rising memory costs. These declines were partially offset by growth in our core consumer business, including our premium WiFi 7 portfolio. Geographically, Consumer segment net revenue declined in Americas and APAC and slightly increased in EMEA. Given the rising cost of memory and related components, we are prioritizing gross profit over revenue growth in our Consumer business.

Current wording

Consumer segment net revenue decreased for both the three and six months ended June 28, 2026, compared to the prior year periods. The decrease in Consumer net revenue was driven by lower sales of our service provider and related products, consistent with our strategy of harvesting this business, as well as by declines in our core consumer business attributable to continued softness in the broader home networking retail market, including electronics pricing pressures from rising memory costs. These declines were partially offset by growth in our core consumer business, including our premium WiFi 7 portfolio. Geographically, Consumer segment net revenue declined in Americas and APAC and was relatively flat in EMEA for both periods. Given the rising cost of memory and related components, we are prioritizing gross profit over revenue growth in our Consumer business.

Previous wording

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

Current wording

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

Previous wording

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

Current wording

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

Previous wording

Net cash provided by operating activities was $1.6 million for the three months ended March 29, 2026, compared to $8.7 million used in the prior year period, primarily reflecting favorable working capital movements in the current period. Accounts receivable increased slightly from $142.0 million as of December 31, 2025 to $142.2 million as of March 29, 2026. Our inventory decreased from $176.5 million as of December 31, 2025 to $169.3 million as of March 29, 2026, mainly due to the timing of purchases. Accounts payable (excluding payables related to property and equipment) increased from $41.6 million as of December 31, 2025 to $42.7 million as of March 29, 2026, primarily due to the timing of inventory receipts and supplier payments.

Current wording

Net cash used in operating activities decreased by $2.0 million for the six months ended June 28, 2026, compared to the prior year period. Although the net loss increased and movement in working capital used more cash than in the prior year period, these effects were more than offset by higher non-cash charges, principally stock-based compensation and depreciation and amortization. Accounts receivable increased to $152.8 million as of June 28, 2026 from $142.0 million as of December 31, 2025, mainly due to the timing of cash receipts and marketing claims processing. Our inventory decreased from $176.5 million as of December 31, 2025 to $174.9 million as of June 28, 2026, mainly due to the timing of purchases. Accounts payable (excluding payables related to property and equipment) increased from $41.6 million as of December 31, 2025 to $53.4 million as of June 28, 2026, primarily due to the timing of inventory receipts and supplier payments.

Previous wording

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

Current wording

Net cash used in financing activities increased by $23.6 million for the six months ended June 28, 2026, compared to the prior year period. The increase in cash used was primarily due to $17.4 million of higher repurchases of our common stock, the absence of $5.3 million of proceeds from the exercise of stock options received in the prior year period and $2.5 million of principal payments on the deferred purchase price of an intangible asset acquisition, partially offset by $1.1 million of lower 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. As of March 29, 2026, approximately 559,000 shares remained authorized for repurchase under the repurchase program. On April 22, 2026, our Board of Directors authorized an incremental $75.0 million for repurchases of our common stock under the existing repurchase program. We repurchased, retired and reported, based on trade date, approximately 0.9 million and 0.3 million shares of common stock, at a cost of approximately $20.0 million and $7.5 million under the repurchase authorization during the three months ended March 29, 2026 and March 30, 2025, respectively. We also withheld and reported, based on trade date, approximately 193,000 shares and 186,000 shares of common stock, at a cost of approximately $4.0 million and $5.1 million during the three months ended March 29, 2026 and March 30, 2025, respectively, to facilitate the administrative process of withholding and remitting personal income and payroll taxes for individuals receiving Restricted Stock Units. For a detailed discussion of our common stock repurchases, refer to Note 10, Stockholders’ Equity, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

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. On April 22, 2026, our Board of Directors authorized an incremental $75.0 million for repurchases of our common stock under the existing repurchase program. As of June 28, 2026, approximately $75.0 million remained authorized for repurchase under the repurchase program. We repurchased, retired and reported, based on trade date, approximately 1.5 million and 0.5 million shares of common stock, at a cost of approximately $32.9 million and $15.0 million under the repurchase authorization during the six months ended June 28, 2026 and June 29, 2025, respectively. We also withheld and reported, based on trade date, approximately 376,000 shares and 370,000 shares of common stock, at a cost of approximately $8.6 million and $9.7 million during the six months ended June 28, 2026 and June 29, 2025, respectively, to facilitate the administrative process of withholding and remitting personal income and payroll taxes for individuals receiving Restricted Stock Units. For a detailed discussion of our common stock repurchases, refer to Note 10, Stockholders’ Equity, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Previous wording

We are exposed to lengthening lead times and increasing costs on various components, certain of which are non-cancelable regardless of lead time, and as a result the Company has issued purchase orders to supply chain partners beyond contractual termination periods. As of March 29, 2026, we had $62.9 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $55.3 million as of December 31, 2025. As of March 29, 2026, $224.7 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

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