3 unchanged sentences
(In thousands)
+Added: October 1, 2023
December 31, 2022
2 unchanged sentences
Short-term investments
−Removed: Accounts receivable, net of allowance for doubtful accounts $ 397 as of July 2, 2023 and December 31, 2022, respectively
+Added: Accounts receivable, net of allowance for doubtful accounts of $ 396 and $ 397 as of October 1, 2023 and December 31, 2022, respectively
Prepaid expenses and other current assets
28 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Cost of revenue
4 unchanged sentences
Goodwill impairment
−Removed: Other operating expenses (income), net
+Added: Intangibles impairment
+Added: Other operating expenses, net
Total operating expenses
1 unchanged sentence
Other income (expenses), net
−Removed: Loss before income taxes
−Removed: Benefit from income taxes
−Removed: Net loss per share
−Removed: Weighted average shares used to compute net loss per share:
+Added: Income (loss) before income taxes
+Added: Provision for (benefit from) income taxes
+Added: Net income (loss)
+Added: Net income (loss) per share
+Added: Weighted average shares used to compute net income (loss) per share:
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
NETGEAR, INC.
−Removed: UNAUDITED CONDENSED CONSOLIDATED S TATEMENTS OF COMPREHENSIVE LOSS
+Added: UNAUDITED CONDENSED CONSOLIDATED S TATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
+Added: Net income (loss)
Other comprehensive income (loss), before tax:
5 unchanged sentences
Other comprehensive income (loss), net of tax
−Removed: Comprehensive loss
+Added: Comprehensive income (loss)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
18 unchanged sentences
Balance as of July 2, 2023
+Added: Change in unrealized gains and losses on available-for-sale investments, net of tax
+Added: Change in unrealized gains and losses on derivatives, net of tax
+Added: Stock-based compensation
+Added: Restricted stock unit withholdings
+Added: Issuance of common stock under stock-based compensation plans
+Added: Balance as of October 1, 2023
Comprehensive
16 unchanged sentences
Balance as of July 3, 2022
+Added: Change in unrealized gains and losses on available-for-sale investments, net of tax
+Added: Change in unrealized gains and losses on derivatives, net of tax
+Added: Stock-based compensation
+Added: Restricted stock unit withholdings
+Added: Issuance of common stock under stock-based compensation plans
+Added: Balance as of October 2, 2022
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2 unchanged sentences
(In thousands)
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: October 1, 2023
+Added: October 2, 2022
Cash flows from operating activities:
4 unchanged sentences
Goodwill impairment
+Added: Intangibles impairment
Deferred income taxes
56 unchanged sentences
These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known.
−Removed: Actual results could differ materially from those estimates and operating results for the three and six months ended July 2, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any future period.
+Added: Actual results could differ materially from those estimates and operating results for the three and nine months ended October 1, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any future period.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9 unchanged sentences
This disclosure includes estimates of variable consideration.
−Removed: The following table summarizes estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of July 2, 2023:
+Added: The following table summarizes estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of October 1, 2023:
(In thousands)
13 unchanged sentences
Balance Sheet Location
+Added: October 1, 2023
December 31, 2022
5 unchanged sentences
Other non-current liabilities
−Removed: The difference in the balances of the Company's contract assets and liabilities as of July 2, 2023 and December 31, 2022, primarily results from the timing difference between the Company's performance and the customer’s payment.
+Added: The difference in the balances of the Company's contract assets and liabilities as of October 1, 2023 and December 31, 2022, primarily results from the timing difference between the Company's performance and the customer’s payment.
+Added: During the nine months ended October 1, 2023 , $ 34.9 million of revenue was deferred primarily due to unsatisfied performance obligations for service contracts, $ 30.1 million of revenue was recognized for the satisfaction of performance
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: During the six months ended July 2, 2023 , $ 22.4 million of revenue was deferred primarily due to unsatisfied performance obligations for service contracts, $ 19.8 million of revenue was recognized for the satisfaction of performance obligations and $ 14.8 million of this recognized revenue was included in the contract liability balance at the beginning of the period.
+Added: obligations and $ 19.1 million of this recognized revenue was included in the contract liability balance at the beginning of the period.
There were no significant changes in estimates during the period that would affect the contract balances.
9 unchanged sentences
Three Months Ended
+Added: October 1, 2023
+Added: October 2, 2022
(In thousands)
3 unchanged sentences
Non-service provider
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: Six Months Ended
+Added: Nine Months Ended
+Added: October 1, 2023
+Added: October 2, 2022
(In thousands)
6 unchanged sentences
Available-for-sale investments
−Removed: Amortized cost and estimated fair market value of investments classified as available-for-sale, excluding cash equivalents, as of July 2, 2023, and December 31, 2022, were as follows:
+Added: Amortized cost and estimated fair market value of investments classified as available-for-sale, excluding cash equivalents, as of October 1, 2023, and December 31, 2022, were as follows:
+Added: October 1, 2023
(In thousands)
9 unchanged sentences
Certificates of deposit
−Removed: (1) On the Company’s unaudited condensed consolidated balance sheets, $ 173,000 included in Short-term investments as of July 2, 2023 , and December 31, 2022, respectively, and $ 173,000 included in Other non-current assets as of July 2, 2023 , and December 31, 2022, respectively.
+Added: (1) On the Company’s unaudited condensed consolidated balance sheets, $ 173,000 included in Short-term investments as of October 1, 2023 , and December 31, 2022, respectively, and $ 173,000 included in Other non-current assets as of December 31, 2022.
The contractual maturities on the U.S.
−Removed: treasury securities as of July 2, 2023, are all due within one year.
−Removed: Accrued interest receivable as of July 2, 2023 , was $ 0.2 million and was recorded within Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet.
−Removed: The following table summarizes investments classified as available-for-sale in a continuous unrealized loss position for which an allowance for credit losses was not recorded as of July 2, 2023, and December 31, 2022:
+Added: treasury securities as of October 1, 2023, are all due within one year.
+Added: Accrued interest receivable as of October 1, 2023 , was $ 0.3 million and was recorded within Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet.
+Added: The following table summarizes investments classified as available-for-sale in a continuous unrealized loss position for which an allowance for credit losses was not recorded as of October 1, 2023, and December 31, 2022:
+Added: October 1, 2023
Less Than 12 Months
19 unchanged sentences
treasury securities
−Removed: In the three and six months ended July 2, 2023, and July 3, 2022 , no unrealized losses on available-for-sale securities were recognized in income.
+Added: In the three and nine months ended October 1, 2023, and October 2, 2022 , no unrealized losses on available-for-sale securities were recognized in income.
The Company does not intend to sell, and it is unlikely that it will be required to sell the investments in an unrealized loss position prior to their anticipated recovery.
1 unchanged sentence
treasury securities and the decline in fair value is largely due to changes in interest rates and other market conditions with the fair value expected to recover as they reach maturity.
−Removed: There were no other-than-temporary impairments for these securities during the three and six
+Added: There were no other-than-temporary impairments for these securities during the
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: months ended July 2, 2023, and July 3, 2022.
+Added: three and nine months ended October 1, 2023, and October 2, 2022.
Refer to Note 12, Fair Value Measurements, for detailed disclosures regarding fair value measurements.
(In thousands)
+Added: October 1, 2023
December 31, 2022
1 unchanged sentence
Finished goods
−Removed: The Company records provisions for excess and obsolete inventory based on assumptions about future demand and market conditions and the amounts incurred were $ 0.4 million and $ 1.5 million for the three and six months ended July 2, 2023 , respectively, and $ 1.1 million and $ 2.6 million for the three and six months ended July 3, 2022, respectively.
+Added: The Company records provisions for excess and obsolete inventory based on assumptions about future demand and market conditions and the amounts incurred were $ 1.2 million and $ 2.7 million for the three and nine months ended October 1, 2023 , respectively, and $ 0.4 million and $ 3.0 million for the three and nine months ended October 2, 2022, respectively.
While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand.
1 unchanged sentence
(In thousands)
+Added: October 1, 2023
December 31, 2022
5 unchanged sentences
Intangibles, net
+Added: October 1, 2023
December 31, 2022
(In thousands)
−Removed: Amortization of purchased intangibles was $ 0.2 million and $ 0.3 million for th e three and six months ended July 2, 2023 and July 3, 2022, respectively.
+Added: Amortization of purchased intangibles was $ 0.3 million for the nine months ended October 1, 2023 , and $ 0.1 million and $ 0.4 million for the three and nine months ended October 2, 2022, respectively.
+Added: During the three months ended October 1, 2023, the Company identified a triggering event indicating that the carrying amount of the intangibles may be impaired (Refer to below “Goodwill”
+Added: for details of the triggering event).
+Added: The Company performed a recoverability test of its intangible assets based on estimated future net undiscounted cash flows expected to be generated from the use of the long-lived asset group and determined that the carrying amount of such asset group was not recoverable.
+Added: Therefore, in the third fiscal quarter of 2023, the Company recognized an intangible asset impairment charge of $ 1.1 million for its Connected Home reporting unit.
+Added: Each year on the first day of the fourth fiscal quarter, the Company assesses its goodwill for potential impairment.
+Added: This impairment testing is applied more frequently than once a year if the Company is aware of changed conditions or circumstances since the last impairment testing that might call into question whether the current balances are fairly recorded.
+Added: During the three months ended October 1, 2023, the Company reassessed the valuation allowance for the deferred tax assets and determined to establish a full valuation allowance on its U.S.
+Added: deferred tax assets (refer to Note 7, Income Taxes for detailed disclosures regarding the valuation allowance on deferred tax assets).
+Added: Additionally, the Company experienced a reduction in its market capitalization.
+Added: Due to these factors, the Company determined that a triggering event had occurred, and an interim goodwill impairment assessment was performed.
+Added: Prior to performing a goodwill impairment test, the Company assessed its long-lived assets and concluded the carrying amount of the intangible assets for its Connected Home reporting unit was not recoverable
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Added: as noted above.
+Added: No other impairments of long-lived assets were identified.
+Added: The Company elected to bypass the qualitative goodwill impairment assessment and proceeded directly to the quantitative test, measured as of October 1, 2023.
+Added: The fair values of the reporting units, namely Connected Home and SMB, were determined using an income and market approach.
+Added: Under the income approach, the Company calculated the fair values of its reporting units based on the present value of estimated future cash flows.
+Added: Cash flow projections were based on management's estimates of revenue growth rates and net operating income margins, taking into consideration market and industry conditions.
+Added: The discount rate used was based on the weighted-average cost of capital adjusted for the risk, size premium, and business-specific characteristics related to the business's ability to execute on the projected cash flows.
+Added: Under the market approach, the Company evaluated the fair value based on forward-looking earnings multiples derived from comparable publicly traded companies with similar market position and size as the reporting unit.
+Added: The underlying unobservable inputs used to measure the fair value included projected revenue growth rates, the weighted average cost of capital, the normalized working capital level, capital expenditures assumptions, profitability projections, control premium, the determination of appropriate market comparison companies and terminal growth rates.
+Added: The two approaches generated similar results and indicated that the fair value of the SMB reporting unit substantially exceeded its carrying amount, including goodwill, thus no goodwill impairment was recognized.
Other non-current assets
(In thousands)
+Added: October 1, 2023
December 31, 2022
1 unchanged sentence
Long-term investments
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Long-term equity investments
1 unchanged sentence
The changes in the carrying value of equity investments without readily determinable fair values were as follows:
−Removed: Six Months Ended
+Added: Nine months ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
Carrying value as of the beginning of the period (1)
Carrying value as of the end of the period (1)
−Removed: (1) The balances excluded an investment in limited partnership funds of $ 1.8 million as of July 2, 2023 , $ 1.4 million as of July 3, 2022 , $ 1.7 million as of December 31, 2022, and $ 0.9 million as of December 31, 2021.
−Removed: Additionally, the balance excluded an investment in convertible debt securities of $ 0.2 million as of July 2, 2023 , and December 31, 2022, respectively, $ 0.3 million as of July 3, 2022 , and December 31, 2021, respectively.
−Removed: For such equity investments without readily determinable fair values still held at July 2, 2023, there were no cumulative downward adjustments for price changes and impairment and the cumulative upward adjustments for price changes was $ 0.3 million.
+Added: (1) The balances excluded an investment in limited partnership funds of $ 2.2 million as of October 1, 2023 , $ 1.5 million as of October 2, 2022 , $ 1.7 million as of December 31, 2022, and $ 0.9 million as of December 31, 2021.
+Added: Additionally, the balance excluded an investment in convertible debt securities of $ 0.2 million as of October 2, 2022 , and December 31, 2022, respectively, and $ 0.3 million as of December 31, 2021.
+Added: For such equity investments without readily determinable fair values still held at October 1, 2023 , there were no cumulative downward adjustments for price changes and impairment and the cumulative upward adjustments for price changes was $ 0.3 million.
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Other accrued liabilities
(In thousands)
+Added: October 1, 2023
December 31, 2022
4 unchanged sentences
Freight and duty
−Removed: (1) Inventory expected to be received from future sales returns amounted to $ 18.3 million and $ 21.8 million as of July 2, 2023 and December 31, 2022, respectively.
−Removed: Provisions to write down expected returned inventory to net realizable value amounted to $ 11.6 million and $ 11.8 million as of July 2, 2023 , and December 31, 2022, respectively.
+Added: (1) Inventory expected to be received from future sales returns amounted to $ 17.6 million and $ 21.8 million as of October 1, 2023 , and December 31, 2022, respectively.
+Added: Provisions to write down expected returned inventory to net realizable value amounted to $ 10.7 million and $ 11.8 million as of October 1, 2023 , and December 31, 2022, respectively.
Derivative F inancial Instruments
7 unchanged sentences
The Company enters into non-designated hedges that are generally expected to offset the changes in value of its net non-functional currency asset and liability position resulting from foreign exchange rate fluctuations.
−Removed: The Company adjusts its non-designated hedges monthly and typically executes about nine non-designated forwards per quarter with maturities less than three months and an average USD notional amount of approximately $ 2.0 million.
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Added: The Company adjusts its non-designated hedges monthly and typically executes about eight non-designated forwards per quarter with maturities less than three months and an average USD notional amount of approximately $ 2.5 million.
Fair Value of Derivative Instruments
11 unchanged sentences
Refer to Note 9, Stockholders' Equity , for details on the accumulated other comprehensive income (loss) activity related to derivatives and refer to Note 11, Segment Information , for details on gain/(loss), net pertaining to derivatives not designated as hedging instruments that were recognized in Other income (expenses), net.
−Removed: Net Loss Per Share
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Added: Net I ncome (Loss) Per Share
Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period.
2 unchanged sentences
Potentially dilutive common shares are excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive.
−Removed: Net loss per share consisted of the following:
+Added: Net income (loss) per share consisted of the following:
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except per share data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
+Added: Net income (loss)
Weighted average common shares - basic
+Added: Potentially dilutive common share equivalent
Weighted average common shares - dilutive
−Removed: Basic net loss per share
−Removed: Diluted net loss per share
+Added: Basic net income (loss) per share
+Added: Diluted net income (loss) per share
Anti-dilutive employee stock-based awards, excluded
In come Taxes
−Removed: The income tax benefit for the three and six months ended July 2, 2023 was $ 1.2 million, or an effective tax rate of 12.2 % and $ 2.0 million of an effective tax rate of 10.1 %, respectively.
−Removed: The income tax benefit for the three and six months ended July 3, 2022 was $ 2.3 million, or an effective tax rate of 21.5 % and $ 4.7 million, or an effective tax rate of 6.6 %, respectively.
−Removed: The change in taxes for the three months ended July 2, 2023, compared to the prior year period, was primarily due to higher shortfalls related to stock based compensation.
−Removed: Shortfalls occur when the deferred tax benefit that was previously recorded for
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: stock-based compensation is higher than the actual tax benefit realized.
−Removed: In the three and six months ended July 3, 2022, the forecasted annual loss was significantly higher (in relative terms) as compared to the forecasted earnings for 2023 due to the impairment of goodwill.
−Removed: The tax benefits on the three and six months ended July 3, 2022 were partially offset by the tax impact of non-tax-deductible goodwill impairment which substantially reduced the effective tax rate for that period.
+Added: The income tax provision for the three and nine months ended October 1, 2023 was $ 86.4 million and $ 84.4 million, respectively.
+Added: The income tax benefit for the three and nine months ended October 2, 2022 was $ 4.3 million and $ 9.0 million, respectively.
+Added: The changes in taxes for the three and nine months ended October 1, 2023, compared to the prior year periods, were primarily due to the recognition of a valuation allowance of $ 81.5 million on deferred tax assets for U.S.
+Added: federal and state purposes during the three month period.
+Added: In evaluating the current results, coupled with expectation for the remainder of the year, the Company reassessed its position and determined that it was not more likely than not that the deferred tax assets would be realized, and accordingly recorded a full valuation allowance on the net deferred tax assets in the U.S.
+Added: In the three and nine months ended October 2, 2022, the forecasted annual loss was significantly higher (in relative terms) as compared to the forecasted earnings for 2023 due to the impairment of goodwill in the first fiscal quarter of 2022.
+Added: The tax benefits on the three and nine months ended October 2, 2022 were partially offset by the tax impact of non-tax-deductible goodwill impairment which substantially reduced the effective tax rate for that period.
+Added: Tax benefits on current year losses for the three and nine months ended October 1, 2023 were offset by the valuation allowance.
The Company is subject to income taxes in the U.S.
12 unchanged sentences
and foreign jurisdictions.
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company accounts for income taxes under an asset and liability approach.
8 unchanged sentences
Accordingly, in assessing its future taxable income on a jurisdictional basis, the Company considers the effect of its transfer pricing policies on that income.
−Removed: As of the period ended July 2, 2023, the Company had a net deferred tax asset balance of $ 93.5 million.
−Removed: Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company's control, it is at least reasonably possible that the Company’s judgment about the need for a valuation allowance for deferred taxes could change in the near term in light of year-to-date losses.
+Added: During the three months ended October 1, 2023, the Company determined that recovery of its U.S.
+Added: federal and state deferred tax assets was no longer more likely than not and established a full valuation allowance on those net assets, based on evaluation of all available evidence, including actual and anticipated business results.
+Added: Accordingly, the balance sheet net deferred tax assets from the U.S.
+Added: federal and state jurisdictions reported in “Other Non-current Assets”
+Added: were reduced after the effect of establishing the valuation allowance.
Commitment s and Contingencies
2 unchanged sentences
Generally, under these agreements, 50 % of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25 % of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date.
−Removed: As of July 2, 2023, the Company had approximately $ 72.2 million , as compared to $ 105.1 million as of December 31, 2022, in short-term non-cancelable purchase commitments with suppliers or where the suppliers had procured unique materials and components upon receipts of the Company’s purchase orders.
+Added: As of October 1, 2023, the Company had approximately $ 68.5 million , as compared to $ 105.1 million as of December 31, 2022, in short-term non-cancelable purchase commitments with suppliers or where the suppliers had procured unique materials and components upon receipts of the Company’s purchase orders.
During the height of COVID-19 pandemic, the Company saw an elongation of the time from order placement to production.
In response, the Company issued purchase orders to supply chain partners beyond contractual termination periods.
−Removed: As of July 2, 2023 , $ 421.7 million of purchase orders beyond contractual termination periods remained outstanding.
+Added: As of October 1, 2023 , $ 367.1 million of purchase orders beyond contractual termination periods remained outstanding.
Consequently, the Company 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.
3 unchanged sentences
Such loss liability is included in Other accrued liabilities on the Company’s unaudited condensed consolidated balance sheets.
−Removed: Losses incurred in relation to purchase
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: commitments, including unique materials and components, amounted to $ 0.9 million and $ 1.4 million for the three and six months ended July 2, 2023 , respectively, and $ 1.6 million and $ 3.0 million for the three and six months ended July 3, 2022, respectively.
+Added: Losses incurred in relation to purchase commitments, including unique materials and components, amounted to $ 0.6 million and $ 2.0 million for the three and nine months ended October 1, 2023 , respectively, and $ 1.6 million and $ 4.6 million for the three and nine months ended October 2, 2022, respectively.
Non-Trade Commitments
−Removed: As of July 2, 2023 , the Company had non-cancellable purchase commitments of $ 14.8 million pertaining to non-trade activities.
+Added: As of October 1, 2023 , the Company had non-cancellable purchase commitments of $ 13.1 million pertaining to non-trade activities.
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Warranty Obligations
1 unchanged sentence
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Balance as of beginning of the period
20 unchanged sentences
408) against the Company’s WiFi 6 products.
−Removed: The Company’s challenge of the Jinan Court’s jurisdiction in both cases has been denied by the Supreme Court of China.
+Added: The Company’s challenge of the Jinan Court’s jurisdiction in both cases was denied by the Supreme Court of China.
In the German cases, on or around February 9, 2023, the Federal Patent Court issued preliminary opinions finding both asserted patents invalid.
1 unchanged sentence
The Company attended an oral hearing for both infringement cases on March 21, 2023 before the Dusseldorf District Court and the Court rendered its decisions on May 11, 2023.
−Removed: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: dismissed case no.
+Added: The Court dismissed case no.
09/22 for the ‘741 Patent and stayed case no.
1 unchanged sentence
Huawei has filed a notice of appeal for the dismissal of case no.
+Added: The parties are preparing their appellate briefs.
In the Chinese cases, the parties attended an evidentiary hearing for cases on July 3, 2023.
1 unchanged sentence
After the July 25th hearing, the Court indicated it will confer internally and advise the parties of further action.
+Added: NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NETGEAR Inc., NETGEAR Deutschland GmbH, and NETGEAR International Limited
On or around July 3, 2023, the Company learned that Huawei filed a new infringement suit, asserting patent EP 3 611 989 (the ’989 Patent), against NETGEAR Inc., NETGEAR Deutschland GmbH, and NETGEAR International Limited at the recently established Unified Patent Court (UPC) in Munich, Germany.
−Removed: The Company is awaiting service of the Complaint for more details.
+Added: The Company’s statement of defense is due November 7, 2023.
The Company, at this time, is not able to reasonably estimate any financial impact to the Company resulting from these litigation matters.
4 unchanged sentences
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 the Company's common stock.
−Removed: The Company did no t repurchase any shares of common stock during the six months ended July 2, 2023.
−Removed: During the six months ended July 3, 2022 , the Company repurchased, reported based on trade date, approximately 1.0 million shares of common stock at a cost of approximately $ 24.4 million under the repurchase authorizations.
−Removed: As of July 2, 2023 , 2.5 million shares remained authorized for repurchase under the repurchase program.
−Removed: The Company repurchased, reported based on trade date, ap proximately 147,000 and 153,000 shares of common stock, at a cost of approximately $ 2.1 million and $ 3.6 million, during the six months ended July 2, 2023, and July 3, 2022, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving RSUs.
+Added: The Company did no t repurchase any shares of common stock during the nine months ended October 1, 2023.
+Added: During the nine months ended October 2, 2022 , the Company repurchased, reported based on trade date, approximately 1.0 million shares of common stock at a cost of approximately $ 24.4 million under the repurchase authorizations.
+Added: As of October 1, 2023 , 2.5 million shares remained authorized for repurchase under the repurchase program.
+Added: The Company repurchased, reported based on trade date, approximately 194,000 and 198,000 shares of common stock, at a cost of approximately $ 2.7 million and $ 4.7 million, during the nine months ended October 1, 2023, and October 2, 2022, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving RSUs.
These shares were retired upon repurchase.
2 unchanged sentences
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
−Removed: Accumulated Other Comprehensive Income
−Removed: The following tables set forth the changes in accumulated other comprehensive income ("AOCI") by component:
+Added: Accumulated Other Comprehensive Income (Loss)
+Added: The following tables set forth the changes in accumulated other comprehensive income (loss) ("AOCI") by component:
(In thousands)
8 unchanged sentences
Net current period other comprehensive income (loss)
−Removed: Balance as of July 2, 2023
+Added: Balance as of October 1, 2023
(In thousands)
8 unchanged sentences
Net current period other comprehensive income (loss)
−Removed: Balance as of July 3, 2022
+Added: Balance as of October 2, 2022
The following table provides details about significant amounts reclassified out of each component of AOCI:
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Amount Reclassified from AOCI
12 unchanged sentences
In June 2023, the stockholders of the Company approved an amendment to the 2016 Plan which increased the number of shares of the Company’s common stock that may be issued under the 2016 plan by an additional 2.0 million shares.
−Removed: As of July 2, 2023 , approximately 2.5 million shares were reserved for future grants under the 2016 Plan.
+Added: As of October 1, 2023 , approximately 2.4 million shares were reserved for future grants under the 2016 Plan.
Additionally, the Company sponsors an Employee Stock Purchase Plan (the “ESPP”), pursuant to which eligible employees may contribute up to 10 % of compensation, subject to certain income limits, to purchase shares of the Company's
3 unchanged sentences
The duration of each offering period is generally six months.
−Removed: As of July 2, 2023 , approximately 0.9 million shares were available for issuance under the ESPP.
+Added: As of October 1, 2023 , approximately 0.8 million shares were available for issuance under the ESPP.
Option Activity
3 unchanged sentences
Outstanding as of December 31, 2022
−Removed: Outstanding as of July 2, 2023
+Added: Outstanding as of October 1, 2023
RSU activity was as follows:
2 unchanged sentences
Outstanding as of December 31, 2022
−Removed: Outstanding as of July 2, 2023
+Added: Outstanding as of October 1, 2023
Performance Shares Activity
−Removed: In July 2020, July 2021 and April 2022, the Company's executive officers were granted performance shares with vesting occurring at the end of a three-year period if performance conditions are met.
+Added: In July 2020, July 2021, April 2022 and July 2023, the Company's executive officers were granted performance shares with vesting occurring at the end of a three-year period if performance conditions are met.
The number of performance shares earned and eligible to vest are determined based on achievement of the pre-determined performance conditions and the recipients’
6 unchanged sentences
Outstanding as of December 31, 2022
−Removed: Outstanding as of July 2, 2023
+Added: Outstanding as of October 1, 2023
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Cost of revenue
2 unchanged sentences
General and administrative
−Removed: As of July 2, 2023 , $ 25,000 of unrecognized compensation cost related to stock options was expected to be recognized over a weighted-average period of 0.1 years and $ 35.3 million of unrecognized compensation cost related to unvested RSUs and performance shares was expected to be recognized over a weighted-average period of 2.6 years.
+Added: As of October 1, 2023 , $ 32.0 million of unrecognized compensation cost related to unvested RSUs and performance shares was expected to be recognized over a weighted-average period of 2.4 years.
Segme nt Information
4 unchanged sentences
Connected Home:
−Removed: Focuses on consumers and provides high-performance, dependable and easy-to-use premium WiFi internet networking solutions such as WiFi 6 and WiFi 6E Tri-band and Quad-band mesh systems, routers, 4G/5G mobile products, smart devices such as Meural digital canvasses, and subscription services that provide consumers a range of value-added services focused on security, performance, privacy, and premium support;
+Added: Focuses on consumers and provides high-performance, dependable and easy-to-use premium WiFi internet networking solutions such as recently released WiFi 7, WiFi 6 and WiFi 6E Tri-band and Quad-band mesh systems, and routers, 4G/5G mobile products, smart devices such as Meural digital canvasses, and subscription services that provide consumers a range of value-added services focused on security, performance, privacy, and premium support;
Focuses on small and medium sized businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price.
7 unchanged sentences
Certain operating expenses are not allocated to segments because they are separately managed at the corporate level.
−Removed: These unallocated indirect costs include corporate costs, such as corporate research and development, corporate marketing expense and general and administrative costs, amortization of intangibles, stock-based compensation expense, goodwill impairment, restructuring and other charges, litigation reserves, net, and other income (expenses), net.
+Added: These unallocated indirect costs include corporate costs, such as corporate research and development, corporate marketing expense and general and administrative costs, amortization of intangibles, stock-based compensation expense, goodwill impairment, intangibles impairment, restructuring and other charges, litigation reserves, net, and other income (expenses), net.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1 unchanged sentence
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Connected Home
9 unchanged sentences
Goodwill impairment
+Added: Intangibles impairment
Restructuring and other charges
1 unchanged sentence
Other income (expenses), net (2)
−Removed: Loss before income taxes
+Added: Income (loss) before income taxes
(1) Amounts exclude amortization expense related to patents within purchased intangibles in cost of revenue.
−Removed: (2) Amounts included gain/(loss), net from litigation settlements of $ 6.0 million for the three and six months ended July 2, 2023, and gain/(loss), net from derivatives not designated as hedging instruments of $ 1.0 million and $ 0.9 million, for the three and six months ended July 2, 2023 , respectively, and $ 2.3 million and $ 3.5 million for the three and six months ended July 3, 2022 , respectively.
+Added: (2) Amounts included gain/(loss), net from litigation settlements of $ 6.0 million for the nine months ended October 1, 2023, and gain/(loss), net from derivatives not designated as hedging instruments of $ 1.3 million and $ 2.2 million, for the three and nine months ended October 1, 2023 , respectively, and $ 3.4 million and $ 6.9 million for the three and nine months ended October 2, 2022 , respectively.
The CODM does not evaluate operating segments using discrete asset information.
3 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
United States (U.S.)
6 unchanged sentences
(In thousands)
+Added: October 1, 2023
December 31, 2022
5 unchanged sentences
The following tables summarize assets and liabilities measured at fair value on a recurring basis:
+Added: October 1, 2023
(In thousands)
33 unchanged sentences
(1) Included in Short-term investments on the Company's unaudited condensed consolidated balance sheets.
−Removed: (2) On the Company’s unaudited condensed consolidated balance sheets, $ 173,000 included in Short-term investments and the remaining included in Other non-current assets as of July 2, 2023 and December 31, 2022, respectively.
+Added: (2) On the Company’s unaudited condensed consolidated balance sheets, $ 173,000 included in Short-term investments as of October 1, 2023, and $ 173,000 included in Short-term investments and the remaining included in Other non-current assets as of December 31, 2022.
(3) Included in Prepaid expenses and other current assets on the Company's unaudited condensed consolidated balance sheets.
12 unchanged sentences
Accrued restructuring and other charges are classified within Accrued employee compensation and Other accrued liabilities on the condensed consolidated balance sheets.
−Removed: Restructuring and other charges recognized in the six months ended July 2, 2023 and July 3, 2022, respectively, were primarily for severance, and other costs in relation to the reorganization of our business to better align the cost structure of the business with projected revenue levels.
−Removed: The liabilities as of July 2, 2023 are expected to be settled in 2023.
+Added: Restructuring and other charges recognized in the nine months ended October 1, 2023 and October 2, 2022, respectively, were primarily for severance, and other costs in relation to the reorganization of our business to better align the cost structure of the business with projected revenue levels.
+Added: The liabilities as of October 1, 2023 are expected to be settled in 2023.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3 unchanged sentences
Cash Payments
−Removed: Accrued Restructuring and Other Charges at July 2, 2023
+Added: Accrued Restructuring and Other Charges at October 1, 2023
Restructuring
5 unchanged sentences
Cash Payments
−Removed: Accrued Restructuring and Other Charges at July 3, 2022
+Added: Accrued Restructuring and Other Charges at October 2, 2022
Restructuring
17 unchanged sentences
The forward-looking statements represent NETGEAR, Inc.’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding:
−Removed: NETGEAR’s future operating performance and financial condition, including expectations regarding growth, revenue, expenses, operating margin, continued profitability and cash generation;
−Removed: NETGEAR’s strategic shift to focusing on the premium, higher-margin segments of the market and targeting consumers with the highest propensity to subscribe to NETGEAR’s service offerings;
+Added: NETGEAR’s future operating performance and financial condition, including expectations regarding growth, revenue, expenses, operating margin, gross margin, continued profitability and cash generation;
+Added: NETGEAR’s strategic shift to focusing on the premium, higher-margin segments of the market and growing service revenue;
NETGEAR’s investments in developing new products and subscription services, enhancing current products and expanding channels and direct-to-consumer capabilities;
−Removed: expectations regarding product mix and market demand for NETGEAR's products, including SMB and premium Connected Home products and NETGEAR's ability to respond to this demand;
+Added: NETGEAR's outsourcing strategy and its impact to products cost and gross margin;
+Added: expectations regarding product mix and market demand for NETGEAR's products and services, including SMB and premium Connected Home products and subscription services and NETGEAR's ability to respond to this demand;
expectations regarding the timing, distribution, sales momentum and market acceptance of recent and anticipated new product and services introductions that position NETGEAR for growth and market share gain;
−Removed: expectations regarding inventory levels, sales and inventory management;
+Added: expectations regarding competition, competitive factors, consumer price sensitivity and demand for NETGEAR's products and services;
+Added: expectations regarding sales channels, direct online store and in-app offerings;
+Added: expectations regarding macroeconomic conditions and impacts to NETGEAR's operational and financial performance and business strategies;
+Added: expectations regarding the consumer retail networking market;
+Added: expectations regarding existing cash, cash equivalents and short-term investments and anticipated cash requirements;
+Added: expectations regarding inventory management and inventory costs;
expectations regarding transportation costs;
−Removed: expectations regarding general and administration expenses;
−Removed: expectations regarding expected tax rates;
−Removed: and expectations regarding NETGEAR’s subscription services and paid subscriber base growth, revenue and registered users.
+Added: expectations regarding research and development expenses, sales and marketing expenses and general and administration expenses;
+Added: expectations regarding expected tax rates or tax expenses;
+Added: and expectations regarding NETGEAR’s subscription services, paid subscriber base growth, service revenue and gross margin.
These statements are based on management’s current expectations and are subject to a number of risks and uncertainties, including but not limited to those described in “Part II—Item 1A—Risk Factors”
22 unchanged sentences
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 WiFi 7, audio and video over Ethernet, non-fungible token (“NFT”) artwork, and future technologies.
−Removed: Our product line consists of devices that create and extend wired and wireless networks, devices that attach to the network, such as smart digital canvasses as well as services that complement and enhance our product line offerings.
+Added: Our product line consists of devices that create and extend wired and wireless networks, devices that attach to the network, such as smart digital canvasses as well as services that complement and
+Added: enhance our product line offerings.
These products are available in multiple configurations to address the changing needs of our customers in each geographic region.
3 unchanged sentences
The leadership team of each segment is focused on serving customer needs through product and service development efforts, both from a product marketing and engineering standpoint.
−Removed: The Connected Home segment focuses on consumers and provides high-performance, dependable and easy-to-use premium
−Removed: WiFi internet networking solutions such as WiFi 6/6E Tri-band and Quad-band mesh systems, routers, 4G/5G mobile products, smart devices such as Meural digital canvasses, and subscription services that provide consumers a range of value-added services focused on security, performance, privacy, and premium support.
+Added: The Connected Home segment focuses on consumers and provides high-performance, dependable, and easy-to-use premium WiFi internet networking solutions such as WiFi 6/6E and recently released WiFi 7 Tri-band and Quad-band mesh systems, and routers, 4G/5G mobile products, smart devices such as Meural digital canvasses, and subscription services that provide consumers a range of value-added services focused on security, performance, privacy, and premium support.
The SMB segment focuses on small and medium sized businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price.
18 unchanged sentences
Financial Overview
−Removed: During the three months ended July 2, 2023, our net revenue decreased by $49.8 million compared to the prior year period, mainly driven by a decrease of $30.5 million in our Connected Home segment, primarily due to elevated demand with higher inventory carrying levels at our channel partners in the prior year.
−Removed: Our SMB net revenue decreased by $19.4 million, primarily due to a reduction in inventory carrying levels with our channel partners.
−Removed: Our gross margin percentage increased for the three months ended July 2, 2023, compared to the prior year period, in part due to an improved mix of our premium Connected Home products, as well as a higher mix of SMB net revenue, both of which carry higher gross margins.
+Added: During the three months ended October 1, 2023, our net revenue decreased by $51.7 million, compared to the prior year period, mainly driven by decreases of $28.5 million in our SMB segment, and $23.2 million in our Connected Home segment.
+Added: The year-over-year decrease in SMB net revenue was primarily due to a reduction in inventory carrying levels across our channel partners driven by the continued pressure of the uncertain macroeconomic environment.
+Added: The year-over-year decrease in Connected Home net revenue was primarily due to a contraction of the U.S.
+Added: retail market and higher inventory carrying levels at our channel partners in the prior year period.
+Added: Despite the year-over-year decline in net revenue during the three months ended October 1, 2023, demand for our premium WiFi mesh systems and 5G mobile hotspots, continued to grow, bolstered by the addition of our recently released WiFi 7 mesh systems and routers.
+Added: We also experienced continued strong demand for the Pro AV product line of managed switches, and growth in our services revenue.
+Added: Our gross margin percentage increased 730 basis points for the three months ended October 1, 2023, compared to the prior year period, in part due to a more favorable mix of our premium Connected Home products, combined with continued growth of our services business.
Additionally, we incurred lower sea freight costs when the inventory was purchased in the second half of 2022, and less reliance on higher cost air freight due to an improved supply picture.
−Removed: Loss from operations increased by $7.7 million for the three months ended July 2, 2023, compared to the prior year period, primarily due to the decrease in net revenue.
−Removed: Geographically, net revenue from Connected Home and SMB decreased across all three regions during the three months ended July 2, 2023, compared to the prior year period.
+Added: Loss from operations decreased by $1.5 million for the three months ended October 1, 2023, compared to the prior year period, primarily driven by reduced operating expenses and higher gross profit in spite of lower net revenue in the current period.
+Added: Geographically, net revenue from Connected Home and SMB decreased across all three regions during the three months ended October 1, 2023, compared to the prior year period.
Global Events Affecting our Business and Operations
In 2022, we saw a positive downward trend on the cost per container to move goods via sea, with rates returning to near pre-pandemic levels by the end of 2022.
−Removed: In the first half of fiscal 2023, we began to realize the gross margin benefits from the inventory we obtained with lower sea freight rates.
+Added: In 2023, we began to realize the gross margin benefits from the inventory we obtained with lower sea freight rates.
Additionally, we also decreased our use of higher cost air freight in 2023 due to an improved supply picture.
1 unchanged sentence
These include conditions such as the potential for a recession, high inflation, rising interest rates, and the related negative impact on the global economy, foreign exchange rate fluctuations, particularly changes of the U.S.
−Removed: dollar, as well as the continued conflict between Russia and Ukraine.
−Removed: The extent of impacts from these macroeconomic 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.
−Removed: broader implications of the macroeconomic uncertainty and any related disruptions to channel partners are unpredictable.
+Added: dollar, and ongoing worldwide tensions, including the Russia-Ukraine and Israel-Hamas conflicts.
+Added: 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.
+Added: The broader implications of the macroeconomic uncertainty and any related disruptions to channel partners are unpredictable.
Refer to Item 1A, Risk Factors of Part II of this Quarterly Report on Form 10-Q for various risks and uncertainties associated with the macroeconomic trends and uncertainty.
−Removed: Looking forward, in spite of the on-going broad-based inflationary pressures and the uncertain macroeconomic environment, we expect to continue to experience strong underlying demand in our SMB segment driven by Pro AV products, and the premium portion of our Connected Home product portfolio powered by our premium WiFi mesh systems and 5G mobile hotspots.
−Removed: We are starting to see indicators that the broader consumer retail networking market is beginning to stabilize.
−Removed: However, as interest rates remain high, we will continue to work with our channel partners across both businesses to optimize their inventory carrying levels but expect a revenue impact from these efforts to be at a lesser level than that in the first half of 2023.
−Removed: We aim to execute on our strategy of capitalizing on the technological inflection points of WiFi 6E, WiFi 6, 5G, audio and video over Ethernet and the recent release of WiFi 7, to develop and expand the premium WiFi market through new product introductions and to develop and roll out service offerings that build recurring service revenue streams.
+Added: Looking forward, in spite of the on-going broad-based inflationary pressures and the uncertain macroeconomic environment, we expect to continue to experience strong underlying demand in the premium portion of our Connected Home product portfolio powered by our premium WiFi mesh systems and 5G mobile hotspots.
+Added: We are starting to see indicators that the broader consumer retail networking market is stabilizing and our retail channel partners are now maintaining rather than depleting their inventories.
+Added: However, we will continue to work with our SMB channel partners to optimize their inventory carrying levels.
+Added: Accordingly, for the fourth quarter of 2023, we expect the Connected Home net revenue to be relatively flat sequentially, in line with market seasonality, and SMB to be down sequentially.
+Added: We aim to execute on our strategy of capitalizing on the technological inflection points of the recent release of WiFi 7, WiFi 6E, WiFi 6, 5G, audio and video over Ethernet, to develop and expand the premium WiFi market through new product introductions and to develop and roll out service offerings that build recurring service revenue streams.
Critical Accounting Estimates
8 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Cost of revenue
3 unchanged sentences
General and administrative
−Removed: Goodwill impairment charge
−Removed: Other operating expenses (income), net
+Added: Goodwill impairment
+Added: Intangibles impairment
+Added: Other operating expenses, net
Total operating expenses
1 unchanged sentence
Other income (expenses), net
−Removed: Loss before income taxes
−Removed: Benefit from income taxes
+Added: Income (loss) before income taxes
+Added: Provision for (benefit from) income taxes
+Added: Net income (loss)
Net Revenue by Geographic Region
2 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Percentage of net revenue
2 unchanged sentences
Total net revenue
−Removed: Net revenue in Americas decreased in the three and six months ended July 2, 2023, driven by declines in Connected Home net revenue of 22.2% and 22.0%, respectively, and declines in SMB net revenue of 11.9% and 5.7%, respectively, compared to the prior year periods.
−Removed: The declines in net revenue were primarily due to higher inventory carrying levels at our channel partners across both the Connected Home and SMB businesses as well as elevated demand for our Connected Home products in the prior year periods.
−Removed: Net revenue in EMEA decreased in the three and six months ended July 2, 2023, primarily due to the performance of our
−Removed: SMB segment, which experienced declines in net revenue of 23.0% and 13.6%, respectively, compared to the prior year periods.
−Removed: Our Connected Home segment experienced a decline in net revenue of 10.7% and an increase of 7.8% for the three and six months ended July 2, 2023, respectively, compared to the prior year periods.
−Removed: Net revenue in APAC decreased in the three and six months ended July 2, 2023, compared to the prior year periods, driven by declines of 42.4% and 46.9%, respectively, in our Connected Home segment and declines of 37.3% and 26.1%, respectively, in our SMB segment.
−Removed: Our APAC revenue declined due to a significant market slowdown in Greater China and Korea.
+Added: Net revenue in Americas decreased in the three and nine months ended October 1, 2023, driven by declines in Connected Home net revenue of 12.9% and 18.6%, respectively, and declines in SMB net revenue of 26.2% and 13.4%, respectively, compared to the prior year periods.
+Added: The declines in Connected Home net revenue were primarily due to a contraction of the U.S.
+Added: retail market, along with higher inventory carrying levels at our channel partners in the prior year periods.
+Added: The declines in SMB net revenue were primarily due to higher inventory carrying levels at our channel partners in the prior year periods.
+Added: Net revenue in EMEA decreased in the three and nine months ended October 1, 2023, primarily due to the performance of our SMB segment, which experienced declines in net revenue of 23.2% and 17.0%, respectively, compared to the prior year periods, mainly driven by meaningful reductions in our channel partner inventory carrying levels, stemming from the continued pressure of the uncertain macro environment.
+Added: Net revenue for our Connected Home segment in the nine months ended October 1, 2023 remained relatively flat, while the three months ended October 1, 2023 experienced a decline in net revenue of 13.1%, driven by macroeconomic environment headwinds weighing on the market, compared to the prior year periods.
+Added: Net revenue in APAC decreased in the three and nine months ended October 1, 2023, compared to the prior year periods, driven by declines of 34.3% and 42.2%, respectively, in our Connected Home segment and declines of 46.4% and 33.1%, respectively, in our SMB segment.
+Added: The declines in SMB net revenue were mainly due to meaningful reductions in our channel partner inventory carrying levels, driven by the uncertain macro environment.
+Added: The declines in Connected Home net revenue were primarily driven by the macroeconomic environment headwinds.
For further discussions specific to our Connected Home and SMB business, refer to the " Segment Information " section below.
15 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Cost of revenue
Gross margin percentage
−Removed: Our gross margin percentages increased for the three and six months ended July 2, 2023, compared to the prior year periods, primarily due to a more favorable mix of premium Connected Home products, as well as a higher overall mix of SMB net revenue, both of which carry higher gross margins.
+Added: Our gross margin percentages increased for the three and nine months ended October 1, 2023, compared to the prior year periods, primarily due to a more favorable mix of premium Connected Home products which carry higher gross margins.
Additionally, we incurred lower sea freight costs when the inventory was purchased in the second half of 2022, and less reliance on higher cost air freight due to an improved supply picture.
−Removed: We believe that a combination of improved product mix with increased sales of premium Connected Home products and SMB products, higher subscription services and stabilized transportation costs, including less reliance on higher-cost air freight, will help to deliver improvement to margin performance from fiscal 2022 levels in the second half of 2023.
+Added: We believe that a combination of improved product mix with increased sales of premium Connected Home products, higher subscription services and stabilized transportation costs, including less reliance on higher-cost air freight, will help to deliver improvement to margin performance from fiscal 2022 levels in the remainder of 2023.
Over the past couple of years, we incurred meaningful and continuously elevated cost of materials and components for our products, as well as freight transportation costs.
−Removed: Starting in the second quarter of 2022, we saw a positive downward trend for sea freight transportation with rates stabilizing slightly above pre-pandemic levels in the first half of 2023.
−Removed: We began to realize the gross margin benefits from the inventory we obtained with lower sea freight rates.
+Added: Starting in the second quarter of 2022, we saw a positive downward trend for sea freight transportation costs.
+Added: In the first half of 2023, sea freight rates stabilized slightly above pre-pandemic levels at which time we began to realize the gross margin benefits from the lower sea freight rates.
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.
13 unchanged sentences
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.
−Removed: However, we may experience fluctuations in our gross margin due to the factors discussed above.
+Added: However, we will continue to experience fluctuations in our gross margin due to the factors discussed above.
Operating Expenses
5 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Research and development
−Removed: Research and development expenses decreased for the three and six months ended July 2, 2023, primarily driven by a decrease in personnel-related expenditures of $1.1 million and $2.7 million, respectively, compared to the prior year periods, mainly due to decreased headcount.
+Added: Research and development expenses decreased for the three and nine months ended October 1, 2023, primarily driven by a decrease in personnel-related expenditures of $1.3 million and $4.1 million, respectively, compared to the prior year periods, mainly due to decreased headcount.
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.
−Removed: We expect research and development expenses for the remainder of fiscal 2023 to be in line or slightly higher in absolute dollars than the first half of 2023 levels.
+Added: We expect research and development expenses for the fourth fiscal quarter of 2023 to be in line or slightly lower in absolute dollars than in the first three quarters of 2023.
We continue to invest in research and development to grow our cloud platform capabilities, our services and mobile applications and to create and expand our hardware product offerings focused on premium WiFi 7, and WiFi 6/6E, Advanced 4G/5G mobile and 5G coverage solutions, audio and video over Ethernet, web-managed, AV over IP managed switches and SMB wireless products.
4 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Sales and marketing
−Removed: The declines in sales and marketing expenses for the three and six months ended July 2, 2023, compared to the prior year periods, were primarily attributable to decreases in outbound freight costs for product deliveries to our customers of $1.7 million and $3.5 million, respectively, personnel-related expenditures of $0.8 million and $1.2 million, respectively, mainly due to lower performance-based compensation expenses and decreased headcount, and lower outside service expenditures of $0.7 million and $1.0 million, respectively, mainly attributable to lower call center support costs.
−Removed: These declines were partially offset by increases in brand-marketing related expenditures of $1.3 million and $2.1 million, respectively, compared to the prior year periods.
−Removed: We expect sales and marketing expenses for the remainder of fiscal 2023 to be lower as a percentage of net revenue than the first half of 2023 levels.
+Added: The declines in sales and marketing expenses for the three and nine months ended October 1, 2023, compared to the prior year periods, were primarily attributable to decreases in outbound freight costs for product deliveries to our customers of $1.7 million and $5.2 million, respectively, personnel-related expenditures of $0.9 million and $2.1 million, respectively, mainly due to lower performance-based compensation expenses and decreased headcount, and lower outside service expenditures of $1.0 million and $2.0 million, respectively, mainly attributable to lower call center support costs.
+Added: The declines were partially offset by increases in brand-marketing related expenditures for the nine months ended October 1, 2023 of $2.5 million, compared to the prior year period.
+Added: We expect sales and marketing expenses for the fourth fiscal quarter of 2023 to be lower in absolute dollars than in the first three quarters of 2023.
Expenses may fluctuate depending on revenue levels achieved as certain expenses, such as commissions, are determined based upon the revenues achieved.
−Removed: 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.
+Added: Forecasting sales and marketing expenses is highly dependent
+Added: 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.
4 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
General and administrative
−Removed: The increases in general and administrative expenses for the three and six months ended July 2, 2023, were primarily driven by increases in legal and professional services fees of $1.7 million and $3.6 million, respectively, mainly associated with litigation matters, which included fees incurred while reaching the favorable litigation settlement mentioned below in "Other income (expenses), net", as well as increases in personnel-related expenditures of $0.5 million and $0.9 million, respectively, compared to the prior year periods.
−Removed: We expect general and administration expenses for the remainder of fiscal 2023 to be lower in absolute dollars than the first half of 2023 levels.
+Added: The increases in general and administrative expenses for the three and nine months ended October 1, 2023, were primarily driven by increases in legal and professional services fees of $1.6 million and $5.1 million, respectively, mainly associated with litigation matters, which included fees incurred while reaching the favorable litigation settlement mentioned below in "Other income (expenses), net", as well as increases in personnel-related expenditures of $0.6 million and $1.5 million, respectively, compared to the prior year periods.
+Added: We expect general and administration expenses for the fourth fiscal quarter of 2023 to be in line in absolute dollars with the first three quarters of 2023.
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 Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.
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.
−Removed: Goodwill Impairment Charge
+Added: Goodwill and Intangibles Impairment
The following table presents goodwill impairment charge for the periods indicated:
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Goodwill impairment charge
+Added: Intangibles impairment charge
** Percentage change not meaningful.
−Removed: There were no goodwill impairment charges for the three and six months ended July 2, 2023, as compared to the prior year period charge of $44.4 million for the Connected Home segment resulting from an interim goodwill impairment assessment performed in the first fiscal quarter of 2022.
+Added: There was no goodwill impairment for the three and nine months ended October 1, 2023, as compared to the prior year period charge of $44.4 million for the Connected Home segment resulting from an interim goodwill impairment assessment performed in the first fiscal quarter of 2022.
+Added: In the third quarter of fiscal 2023, we recognized a $1.1 million intangibles impairment charge for the Connected Home segment resulting from an interim impairment assessment performed in the quarter.
+Added: For a detailed discussion on the interim intangible impairment assessment, refer to Note 4, Balance Sheet Components, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Other Operating Expenses (Income), Net
2 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
−Removed: Other operating expenses (income), net
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
+Added: Other operating expenses, net
** Percentage change not meaningful.
−Removed: For the three and six months ended July 2, 2023, we incurred restructuring and other charges of $2.2 million and $2.3 million, respectively, associated with our reorganization to better align the cost structure of the business with projected revenue levels.
+Added: For the three and nine months ended October 1, 2023, we incurred restructuring and other charges of $0.4 million and $2.7 million, respectively, associated with our reorganization to better align the cost structure of the business with projected revenue levels.
For a detailed discussion of restructuring and other charges, refer to Note 13, 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.
3 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Other income (expenses), net
** Percentage change not meaningful.
−Removed: The changes in other income (expenses), net for the three and six months ended July 2023, compared to the prior year periods, were primarily due to $6.0 million cash received relating to a favorable litigation settlement during the second quarter of 2023, and higher interest earned on our short-term investment in U.S.
−Removed: Benefit from Income Taxes
+Added: The changes in other income (expenses), net for the three and nine months ended October 1, 2023, compared to the prior year periods, were primarily due to higher interest earned on our short-term investment in U.S.
+Added: The increase in other income (expenses), net for the nine months ended October 1, 2023, was also attributable to $6.0 million cash received relating to a favorable litigation settlement during the second quarter of 2023.
+Added: Provision for (Benefit from) Income Taxes
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
−Removed: Benefit from income taxes
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
+Added: Provision for (benefit from) income taxes
Effective tax rate
−Removed: The change in taxes for the three months ended July 2, 2023, compared to the prior year period was primarily due to higher shortfalls related to stock-based compensation.
−Removed: Shortfalls occur when the deferred tax benefit that was previously recorded for stock-based compensation is higher than the actual tax benefit realized.
−Removed: In the three and six months ended July 3, 2022, the forecasted annual loss was significantly higher (in relative terms) as compared to the forecasted earnings for 2023 due to the impairment of goodwill.
−Removed: The tax benefit on the three and six months ended April 3, 2022 was partially offset by the tax impact of non-tax-deductible goodwill impairment which substantially reduced the effective tax rate for that period.
+Added: ** Percentage change not meaningful.
+Added: The changes in taxes for the three and nine months ended October 1, 2023, compared to the prior year periods, were primarily due to the recognition of a valuation allowance of $81.5 million on deferred tax assets for U.S.
+Added: federal and state purposes during the current quarter.
+Added: In evaluating the current results, coupled with expectation for the remainder of the year, we reassessed our position and determined that it was not more likely than not that the deferred tax assets would be realized, and accordingly recorded a full valuation allowance on the net deferred tax assets in the U.S.
+Added: In the three and nine months ended October 2, 2022, the forecasted annual loss was significantly higher (in relative terms) as compared to the forecasted loss for 2023 due to the impairment of goodwill during the first fiscal quarter of 2022.
+Added: The tax benefits on the three and nine months ended October 2, 2022 were partially offset by the tax impact of non-tax-deductible goodwill impairment which substantially reduced the effective tax rate for that period.
+Added: Tax benefits on current year losses for the three and nine month period ended October 1, 2023 were offset by the valuation allowance.
We are subject to income taxes in the U.S.
10 unchanged sentences
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Percentage of net revenue
−Removed: Contribution loss
+Added: Contribution income (loss)
Contribution margin
** Percentage change not meaningful.
−Removed: Connected Home net revenue decreased in both the retail and service provider channels in the three and six months ended July 2, 2023, compared to the prior year periods, primarily due to elevated demand with higher inventory carrying levels at our channel partners in the prior year periods.
−Removed: Despite a decline in the overall consumer networking market during the three and six months ended July 2, 2023, our premium WiFi 6 mesh systems and 5G mobile hotspots both outperformed the broader
−Removed: market and we saw growth in our services revenue as compared to the prior year periods.
−Removed: Geographically, during the three months ended July 2, 2023, net revenue in all regions decreased, and during the six months ended July 2, 2023, net revenue in EMEA increased and net revenue in Americas and APAC decreased, compared to the prior year periods.
−Removed: Connected Home contribution loss increased in the three months ended July 2, 2023, compared to the prior year period, primarily due to the decrease of net revenue, partially offset by a decline in operating expenses, and higher gross margin achievement through strong demand for higher-margin premium products and decreased freight transportation costs.
−Removed: In the six months ended July 2, 2023, the Connected Home contribution loss decreased, compared to the prior year period, as the increased gross margin achievement and decreased operating expenses outweighed the decline in net revenue.
+Added: Connected Home net revenue decreased in both the retail and service provider channels in the three and nine months ended October 1, 2023, compared to the prior year periods, primarily due to a contraction of the U.S.
+Added: retail market and higher inventory carrying levels at our channel partners in the prior year periods.
+Added: Despite a decline in the overall consumer networking market during the three and nine months ended October 1, 2023, our premium WiFi 6 mesh systems and 5G mobile hotspots continued to grow, bolstered by the addition of our recently released WiFi 7 mesh systems and routers, and we saw growth in our services revenue as compared to the prior year periods.
+Added: Geographically, during the three months ended October 1, 2023, net revenue in all regions decreased, and during the nine months ended October 1, 2023, net revenue in EMEA remained relatively flat and net revenue in Americas and APAC decreased, compared to the prior year periods.
+Added: Connected Home contribution income increased in the three and nine months ended October 1, 2023, compared to the prior year periods, primarily due higher gross margin achievement through strong demand for higher-margin premium products, decreased operating expenses and freight transportation costs, partially offset by decreases in net revenue.
Three Months Ended
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands, except percentage data)
+Added: October 1, 2023
+Added: October 2, 2022
+Added: October 1, 2023
+Added: October 2, 2022
Percentage of net revenue
1 unchanged sentence
Contribution margin
−Removed: SMB net revenue decreased for the three and six months ended July 2, 2023, compared to the prior year periods, primarily due to a reduction in inventory carrying levels across our channel partners driven by some of the weakness in the traditional SMB market which has been negatively impacted by the uncertain macroeconomic environment, particularly in Asia and Europe.
+Added: SMB net revenue decreased for the three and nine months ended October 1, 2023, compared to the prior year periods, primarily due to a reduction in inventory carrying levels across our channel partners driven by the continued pressure of the uncertain macroeconomic environment, particularly in Asia and Europe.
The decreases in products for the traditional SMB market were partially offset by the continued strong demand for the Pro AV product line of managed switches.
−Removed: Geographically, SMB net revenue decreased across all regions in the three and six months ended July 2, 2023, compared to the prior year periods.
−Removed: While SMB contribution margin improved in both the three and six months ended July 2, 2023, compared to the prior year periods, contribution income decreased due to lower net revenue, partially offset by higher gross margin achievement mainly through decreased transportation costs.
+Added: Geographically, SMB net revenue decreased across all regions in the three and nine months ended October 1, 2023, compared to the prior year periods.
+Added: SMB contribution income decreased in the three and nine months ended October 1, 2023, compared to the prior year periods, primarily due to lower net revenue, partially offset by decreased transportation costs.
Liquidity and Capital Resources
Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations.
−Removed: As of July 2, 2023, we had cash, cash equivalents and short-term investment of $202.8 million, a decrease of $24.6 million from December 31, 2022.
−Removed: As of July 2, 2023, approximately 32% 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.
+Added: As of October 1, 2023, we had cash, cash equivalents and short-term investment of $228.0 million, an increase of $0.6 million from December 31, 2022.
+Added: As of October 1, 2023, approximately 25% 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.
2 unchanged sentences
The following table presents our cash flows for the periods presented.
−Removed: Six Months Ended
+Added: Nine Months Ended
(In thousands)
+Added: October 1, 2023
+Added: October 2, 2022
Cash provided by (used in) operating activities
3 unchanged sentences
Operating activities
−Removed: Net cash used in operating activities was $25.5 million, compared to net cash provided of $6.4 million in the prior year period, primarily due to unfavorable working capital movements.
−Removed: Our accounts payable (excluding payables related to property
−Removed: and equipment) decreased from $85.3 million as of December 31, 2022, to $34.9 million as of July 2, 2023, primarily due to the reduction and timing of inventory receipts and supplier payments.
−Removed: Accounts receivable decreased from $277.5 million as of December 31, 2022 to $179.5 million as of July 2, 2023.
−Removed: Inventory increased from $299.6 million as of December 31, 2022, to $324.5 million as of July 2, 2023, mainly due to an unexpected and unprecedented level of inventory reduction by our channel partners.
−Removed: We expect cashflows from operating activities to improve in the second half of 2023 as we make further progress in reducing our inventory.
+Added: Net cash provided by operating activities was $0.6 million, compared to net cash used of $8.8 million in the prior year period, primarily due to favorable working capital movements.
+Added: Our accounts payable (excluding payables related to property and equipment) decreased from $85.3 million as of December 31, 2022, to $46.1 million as of October 1, 2023, primarily due to the reduction and timing of inventory receipts and supplier payments.
+Added: Accounts receivable decreased from $277.5 million as of December 31, 2022, to $200.9 million as of October 1, 2023, primarily due to the timing of cash collections and lower revenue.
+Added: Inventory decreased from $299.6 million as of December 31, 2022, to $280.9 million as of October 1, 2023, as we work to optimize our inventory carrying value.
+Added: We expect to continue generating positive cash flows from operating activities in the remainder of fiscal 2023 as we make further progress in reducing our inventory.
Investing activities
−Removed: Net cash used in investing activities decreased by $81.7 million in the six months ended July 2, 2023, compared to the prior year period, mainly driven by lower net purchases of short-term investments.
+Added: Net cash used in investing activities decreased by $81.6 million in the nine months ended October 1, 2023, compared to the prior year period, mainly driven by lower net purchases of short-term investments.
Financing activities
−Removed: Net cash provided by financing activities was $0.2 million in the six months ended July 2, 2023, compared to net cash used of $24.6 million in the prior year period, primarily due to lower purchases of our common stock and lower tax withholdings pertaining to restricted stock unit releases.
+Added: Net cash provided by financing activities was $0.9 million in the nine months ended October 1, 2023, compared to net cash used of $23.9 million in the prior year period, primarily due to lower purchases of our common stock and lower tax withholdings pertaining to restricted stock unit releases.
Based on our current plans and market conditions, we believe that our existing cash, cash equivalents and short-term investments, together with cash generated from operations, will be sufficient to satisfy our anticipated cash requirements in the short-term and long-term.
4 unchanged sentences
From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock.
−Removed: 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.
−Removed: We did not repurchase any shares of common stock during the six months ended July 2, 2023.
−Removed: During the six months ended July 3, 2022, we repurchased and retired, reported based on trade date, approximately 1.0 million shares of common stock at a cost of approximately $24.4 million under the repurchase authorizations.
−Removed: As of July 2, 2023, approximately 2.5 million shares remained authorized for repurchase under the repurchase program.
−Removed: We also repurchased and retired, reported based on trade date, approximately 147,000 and 153,000 shares of common stock, respectively, at a cost of approximately $2.1 million and $3.6 million during the six months ended July 2, 2023, and July 3, 2022, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.
+Added: Under the authorizations, the timing and actual number of shares subject to repurchase are at the discretion of
+Added: 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.
+Added: We did not repurchase any shares of common stock during the nine months ended October 1, 2023.
+Added: During the nine months ended October 2, 2022, we repurchased and retired, reported based on trade date, approximately 1.0 million shares of common stock at a cost of approximately $24.4 million under the repurchase authorizations.
+Added: As of October 1, 2023, approximately 2.5 million shares remained authorized for repurchase under the repurchase program.
+Added: We also repurchased and retired, reported based on trade date, approximately 194,000 and 198,000 shares of common stock, respectively, at a cost of approximately $2.7 million and $4.7 million during the nine months ended October 1, 2023, and October 2, 2022, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.
For a detailed discussion of our common stock repurchases, refer to Note 9.
3 unchanged sentences
Contractual and Other Obligations
−Removed: Except as follows, there were no material changes outside of the ordinary course of business in our contractual obligations as of July 2, 2023, from those as of December 31, 2022, disclosed in Part II, Item 7, of our Annual Report.
−Removed: As of July 2, 2023, we had $72.2 million of purchase obligations which represented non-cancellable inventory-related purchase agreements with suppliers, down from $105.1 million as of December 31, 2022, as we align our procurement with anticipated demand for our products.
+Added: Except as follows, there were no material changes outside of the ordinary course of business in our contractual obligations as of October 1, 2023, from those as of December 31, 2022, disclosed in Part II, Item 7, of our Annual Report.
+Added: As of October 1, 2023, we had $68.5 million of purchase obligations which represented non-cancellable inventory-related purchase agreements with suppliers, down from $105.1 million as of December 31, 2022, as we align our procurement with anticipated demand for our products.
During the height of COVID-19 pandemic, we saw an elongation of the time from order placement to production.
In response, we issued purchase orders to supply chain partners beyond contractual termination periods.
−Removed: As of July 2, 2023, $421.7 million of purchase orders beyond contractual termination periods remained outstanding.
+Added: As of October 1, 2023, $367.1 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.
−Removed: Expenses incurred in respect of cancelled purchase orders has historically not been significant relative to the original order value.
+Added: Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value.
For a detailed discussion, refer to Note 8, 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.
Recent Accounting Pronouncements
−Removed: Information with respect to this item many be found in Note 2.
+Added: Information with respect to this item may be found in Note 2.
Summary of Significant Accounting Policies, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Report on Form 10-Q, which are hereby incorporated by reference.
Quantitative and Qualitative Disclosures About Market Risk
−Removed: During the six months ended July 2, 2023, there were no material changes to our market risk disclosures as set forth in Part II Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report.
+Added: During the nine months ended October 1, 2023, there were no material changes to our market risk disclosures as set forth in Part II Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.