What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-02 · 187 added, 164 removed, 607 unchanged (37% of the section changed)

3 unchanged sentences

(In thousands)

June 30, 2024

September 29, 2024

December 31, 2023

2 unchanged sentences

Short-term investments

Accounts receivable, net of allowance for doubtful accounts of $ 417 and $ 338 as of June 30, 2024 and December 31, 2023, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 417 and $ 338 as of September 29, 2024 and December 31, 2023, respectively

Prepaid expenses and other current assets

18 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

6 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

Nine Months Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Cost of revenue

5 unchanged sentences

Restructuring and other charges

Intangibles impairment

Total operating expenses

Loss from operations

Income (loss) from operations

Other income, net

Loss before income taxes

Provision for (benefit from) income taxes

Net loss per share

Weighted average shares used to compute net loss per share:

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

Net income (loss) per share

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.

3 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2024

Nine Months Ended

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Net income (loss)

Other comprehensive income (loss), before tax:

5 unchanged sentences

Other comprehensive income (loss), net of tax

Comprehensive loss

Comprehensive income (loss)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

20 unchanged sentences

Balance as of June 30, 2024

Change in unrealized gains and losses on available-for-sale investments, net of tax

Change in unrealized gains and losses on derivatives, net of tax

Stock-based compensation

Repurchase of common stock

Restricted stock unit withholdings

Issuance of common stock under stock-based compensation plans

Balance as of September 29, 2024

Comprehensive

14 unchanged sentences

Balance as of July 2, 2023

Change in unrealized gains and losses on available-for-sale investments, net of tax

Change in unrealized gains and losses on derivatives, net of tax

Stock-based compensation

Restricted stock unit withholdings

Issuance of common stock under stock-based compensation plans

Balance as of October 1, 2023

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 29,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

1 unchanged sentence

Gain on investments, net

Intangibles impairment

Deferred income taxes

8 unchanged sentences

Income taxes payable

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

7 unchanged sentences

Restricted stock unit withholdings

Proceeds from exercise of stock options

Proceeds from issuance of common stock under employee stock purchase plan

Net cash provided by (used in) financing activities

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

31 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.

Actual results could differ materially from those estimates and operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any future period.

Actual results could differ materially from those estimates and operating results for the three and nine months ended September 29, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any future period.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3 unchanged sentences

The prior-year segment financial information has been recast to conform to the current-year presentation.

None of the changes impact previously reported consolidated net revenue, income (loss) from operations, net income (loss) per share, total assets, or stockholders’ equity.

None of the changes impacted previously reported consolidated net revenue, income (loss) from operations, net income (loss) per share, total assets, or stockholders’ equity.

Summary of Signif icant Accounting Policies

3 unchanged sentences

Improvements to Reportable Segment Disclosures”, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for the Company for the year ended 2024 and early adoption is permitted.

ASU 2023-07 is effective for the Company for the year ending 2024 and early adoption is permitted.

Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements.

4 unchanged sentences

ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions.

ASU 2023-09 is effective for the Company for the year ended December 31, 2025 and early adoption is permitted.

ASU 2023-09 is effective for the Company for the year ending December 31, 2025 and early adoption is permitted.

The guidance allows for adoption using either a prospective or retrospective transition method.

6 unchanged sentences

Non-cancellable backlog includes goods for which customer purchase orders have been accepted, that are scheduled or in the process of being scheduled for shipment, and that are not yet invoiced.

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 June 30, 2024 :

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 September 29, 2024 :

(In thousands)

14 unchanged sentences

Balance Sheet Location

June 30, 2024

September 29, 2024

December 31, 2023

5 unchanged sentences

Other non-current liabilities

The difference in the balances of the Company’s contract assets and liabilities as of June 30, 2024 and December 31, 2023, primarily results from the timing difference between the Company’s performance and the customer’s payment.

During the six months ended June 30, 2024 , $ 24.9 million of revenue was deferred primarily due to unsatisfied performance obligations for service contracts, $ 22.7 million of revenue was recognized for the satisfaction of performance obligations and $ 18.1 million of this recognized revenue was included in the contract liability balance at the beginning of the period.

The difference in the balances of the Company’s contract assets and liabilities as of September 29, 2024 and December 31, 2023, primarily results from the timing difference between the Company’s performance and the customer’s payment.

During the nine months ended September 29, 2024 , $ 37.9 million of revenue was deferred primarily due to unsatisfied performance obligations for service contracts, $ 34.8 million of revenue was recognized for the satisfaction of performance obligations and $ 23.9 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.

6 unchanged sentences

The Company operates and reports in two segments:

Connected Home and NETGEAR for Business (formerly known as Small and Medium Business, or SMB).

NETGEAR for Business (formerly known as Small and Medium Business, or SMB) and Connected Home.

Sales and usage-based taxes are excluded from n et revenue.

Three Months Ended

June 30, 2024

September 29, 2024

October 1, 2023

(In thousands)

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Six Months Ended

June 30, 2024

Nine Months Ended

September 29, 2024

October 1, 2023

(In thousands)

8 unchanged sentences

Available-for-sale investments

Amortized cost and estimated fair market value of investments classified as available-for-sale, excluding cash equivalents, as of June 30, 2024 and December 31, 2023, were as follows:

June 30, 2024

Amortized cost and estimated fair market value of investments classified as available-for-sale, excluding cash equivalents, as of September 29, 2024 and December 31, 2023, were as follows:

September 29, 2024

(In thousands)

1 unchanged sentence

treasury securities

Corporate equity securities

December 31, 2023

3 unchanged sentences

Convertible debt

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The contractual maturities on the U.S.

treasury securities as of June 30, 2024 are all due within one year.

Accrued interest receivable as of June 30, 2024 was $ 0.5 million and was recorded within Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet.

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 June 30, 2024 and December 31, 2023:

June 30, 2024

Less Than 12 Months

12 Months or Longer

(In thousands)

Estimated Fair Market Value

Gross Unrealized Losses

Estimated Fair Market Value

Gross Unrealized Losses

Estimated Fair Market Value

Gross Unrealized Losses

treasury securities

December 31, 2023

Less Than 12 Months

12 Months or Longer

(In thousands)

Estimated Fair Market Value

Gross Unrealized Losses

Estimated Fair Market Value

Gross Unrealized Losses

Estimated Fair Market Value

Gross Unrealized Losses

treasury securities

In the three and six months ended June 30, 2024 and July 2, 2023 , no unrealized losses on available-for-sale securities were recognized in income.

treasury securities as of September 29, 2024 are all due within one year.

Accrued interest receivable as of September 29, 2024 was $ 0.9 million and was recorded within Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet.

There were no investments classified as available-for-sale in a continuous unrealized loss position for which an allowance for credit losses was not recorded as of September 29, 2024 and December 31, 2023.

In the three and nine months ended September 29, 2024 and October 1, 2023 , 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.

The investments are high-quality U.S.

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.

There were no other-than-temporary impairments for these securities during the three and six months ended June 30, 2024 and July 2, 2023.

There were no other-than-temporary impairments

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

for these securities during the three and nine months ended September 29, 2024 and October 1, 2023.

Refer to Note 12, Fair Value Measurements, for detailed disclosures regarding fair value measurements.

(In thousands)

June 30, 2024

September 29, 2024

December 31, 2023

1 unchanged sentence

Finished goods

The Company records provisions for excess and obsolete inventory based on assumptions about future demand and market conditions and the amounts incurred were $ 1.9 million and $ 3.0 million for the three and six months ended June 30, 2024, respectively, and $ 0.4 million and $ 1.5 million for the three and six months ended July 2, 2023, respectively.

The Company records provisions for excess and obsolete inventory based on assumptions about future demand and market conditions and the amounts incurred were $ 2.1 million and $ 5.1 milli on for the three and nine months ended September 29, 2024, respectively, and $ 1.2 million and $ 2.7 million for the three and nine months ended October 1, 2023, 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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Property and equipment, net

(In thousands)

June 30, 2024

September 29, 2024

December 31, 2023

6 unchanged sentences

(In thousands)

June 30, 2024

September 29, 2024

December 31, 2023

2 unchanged sentences

Long-term equity investments

The Company’s long-term investments are comprised of equity investments without readily determinable fair values, investments in convertible debt securities or corporate equity securities and investments in limited partnership funds.

The Company’s long-term investments are comprised of equity investments without readily determinable fair values, investments in convertible debt securities and investments in limited partnership funds.

The changes in the carrying value of equity investments without readily determinable fair values were as follows:

Six months ended

Nine months ended

(In thousands)

June 30, 2024

September 29, 2024

October 1, 2023

Carrying value as of the beginning of the period (1)

Carrying value as of the end of the period (1)

(1) The balances excluded an investment in limited partnership funds of $ 2.3 million as of June 30, 2024 , $ 1.8 million as of July 2, 2023 , $ 2.3 million as of December 31, 2023, and $ 1.7 million as of December 31, 2022.

Additionally, the balance excluded an investment in corporate equity securities of $ 0.3 million as of June 30, 2024 , an investment in convertible debt securities of $ 0.2 million as of December 31, 2023, July 2, 2023 , and December 31, 2022, respectively.

For such equity investments without readily determinable fair values still held on June 30, 2024 , there were no cumulative downward adjustments for price changes and impairment and the cumulative upward adjustments for price changes was $ 0.3 million.

(1) The balances excluded an investment in limited partnership funds of $ 2.4 million as of September 29, 2024 , $ 2.2 million as of October 1, 2023 , $ 2.3 million as of December 31, 2023, and $ 1.7 million as of December 31, 2022.

Additionally, the balance excluded an investment in convertible debt securities of $ 0.2 million as of December 31, 2022.

For such equity investments without readily determinable fair values still held on September 29, 2024 , there were no cumulative downward adjustments for price changes and impairment and the cumulative upward adjustments for price changes was $ 0.3 million.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1 unchanged sentence

(In thousands)

June 30, 2024

September 29, 2024

December 31, 2023

4 unchanged sentences

Freight and duty

(1) Inventory expected to be received from future sales returns amounted to $ 15.5 million and $ 16.9 million as of June 30, 2024 and December 31, 2023, respectively.

Provisions to write down expected returned inventory to net realizable value amounted to $ 8.9 million and $ 9.7 million as of June 30, 2024 and December 31, 2023 , respectively.

(1) Inventory expected to be received from future sales returns amounted to $ 15.2 million and $ 16.9 million as of September 29, 2024 and December 31, 2023, respectively.

Provisions to write down expected returned inventory to net realizable value amounted to $ 8.7 million and $ 9.7 million as of September 29, 2024 and December 31, 2023 , 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.

The Company adjusts its non-designated hedges monthly and typically executes about seven non-designated forwards per quarter with maturities less than three months and an average USD notional amount of approximately $ 3.0 million.

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 $ 2.9 million.

Fair Value of Derivative Instruments

3 unchanged sentences

(In thousands)

September 29,

Derivatives not designated as hedging instruments

14 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands, except per share data)

June 30, 2024

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Net income (loss)

Weighted average common shares – basic

Potentially dilutive common share equivalent

Weighted average common shares – dilutive

3 unchanged sentences

In come Taxes

The income tax provision for the three and six months ended June 30, 2024 was $ 1.0 million, or an effective tax rate of ( 2.3 )%, and $ 0.9 million, or an effective tax rate of ( 1.4 )%, respectively.

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, or an effective tax rate of 10.1 %, respectively.

The changes in taxes for the three and six months ended June 30, 2024, compared to the prior year period, were primarily due to the continued full valuation allowance on deferred tax assets for U.S.

federal and state purposes that was established during the three months ended October 1, 2023.

The Company evaluated the current results as of the period ended June 30, 2024, coupled with the expectations for the remainder of the year, and determined that it continues to not be more likely than not that the deferred tax assets would be realized, and accordingly, has recorded no benefit for the forecasted tax loss for the three and six months ended June 30, 2024.

By comparison, for the three and six months ended July 2, 2023, tax benefits were recorded on the pre-tax loss since the valuation allowance on deferred tax assets had not yet been established .

The income tax provision for the three and nine months ended September 29, 2024 was $ 14.2 million, or an effective tax rate of 14.3 %, and $ 15.1 million, or an effective tax rate of 41.5 %, respectively.

The income tax provision for the three and nine months ended October 1, 2023 was $ 86.4 million, and $ 84.4 million, respectively.

The changes in taxes for the three and nine months ended September 29, 2024, 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.

federal and state purposes during the three months ended October 1, 2023.

The Company evaluated the current results as of the period ended September 29, 2024, coupled with the expectations for the remainder of the year, and determined that it continues to not be more likely than not that the deferred tax assets would be realized, and accordingly, has recorded no benefit for the forecasted tax loss for the three and nine months ended September 29, 2024.

The Company is subject to income taxes in the U.S.

12 unchanged sentences

and foreign jurisdictions.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company accounts for income taxes under an asset and liability approach.

Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year.

In addition, deferred tax assets and liabilities

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

are recognized for the expected future tax consequences of temporary differences resulting from different treatment for tax versus accounting for certain items, such as accruals and allowances not currently deductible for tax purposes.

In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences resulting from different treatment for tax versus accounting for certain items, such as accruals and allowances not currently deductible for tax purposes.

The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards.

13 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.

As of June 30, 2024, the Company had approximately $ 71.7 million , as compared to $ 42.6 million as of December 31, 2023, 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.

As of September 29, 2024, the Company had approximately $ 84.9 million , as compared to $ 42.6 million as of December 31, 2023, 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.

Due to an elongation of the time from order placement to production that occurred several years ago, the Company issued purchase orders to supply chain partners beyond contractual termination periods.

As of June 30, 2024, $ 257.7 million of purchase orders beyond contractual termination periods remained outstanding.

As of September 29, 2024, $ 204.1 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.

Losses incurred in relation to purchase commitments, including unique materials and components, amounted to $ 5.1 million and $ 6.2 million for the three and six months ended June 30, 2024 , respectively and $ 0.9 million and $ 1.4 million for the three and six months ended July 2, 2023, respectively.

Losses incurred in relation to purchase commitments, including unique materials and components, amounted to a gain of $ 1.2 million and a loss of $ 5.0 million for the three and nine months ended September 29, 2024 , respectively, and losses of $ 0.6 million and $ 2.0 million for the three and nine months ended October 1, 2023, respectively.

Non-Trade Commitments

As of June 30, 2024 , the Company had non-cancellable purchase commitments of $ 11.3 million pertaining to non-trade activities.

As of September 29, 2024 , the Company had non-cancellable purchase commitments of $ 11.3 million pertaining to non-trade activities.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Warranty Obligations

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2024

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Balance as of beginning of the period

2 unchanged sentences

Balance as of the end of the period

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of September 29, 2024, the Company entered into an office lease that has not yet commenced with short-term and long-term future lease payments of $ 0.3 million and $ 43.0 million, respectively, that are not yet recorded on the unaudited Consolidated Balance Sheets.

This lease will commence in 2025 with a non-cancelable lease term of 11 years .

Litigation and Other Legal Matters

28 unchanged sentences

The parties attended an evidentiary hearing for the cases on July 3, 2023.

Licensing and technical hearings followed on July 24, 2023 and July 25, 2023.

Licensing and

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

technical hearings followed on July 24, 2023 and July 25, 2023.

On or around June 12, 2024, the Jinan Court found that the Company Wi-Fi 6 products infringe Huawei’s two asserted Chinese patents.

3 unchanged sentences

The deadline for the parties to complete briefing was extended to July 3, 2024.

An interim conference is scheduled for August 29, 2024, and oral hearing for October 30 and 31, 2024.

An interim conference took place on August 29, 2024, and oral hearing was held on October 30 and 31, 2024.

On or around December 11, 2023, Huawei filed a second UPC suit, asserting EP 3 678 321 (EP 321), against the Company.

The Company submitted its Statement of Defense on April 18, 2024.

The parties are awaiting a date from the Court for oral argument.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Oral argument is scheduled to take place on March 25, 2025.

NETGEAR Inc., NETGEAR Deutschland GmbH, and NETGEAR International Limited (at the Munich District Court, Germany)

5 unchanged sentences

The Company filed a Statement of Defense for NETGEAR Germany on July 10, 2024.

The deadline for other entities’ Statement of Defense is due on October 11, 2024.

The oral hearing is scheduled for April 9, 2025.

NETGEAR (at the ITC and Northern District of California District Court)

7 unchanged sentences

On June 8, 2024, TP-Link filed a parallel lawsuit before the Northern District of California District Court alleging that the Company infringes the same Asserted Patents by the same Accused Products.

This case is stayed pending outcome of the ITC case.

On August 28, 2024, the Company entered into a settlement agreement (the “Settlement Agreement”) with TP-Link regarding all of their respective pending U.S.

International Trade Commission and patent infringement disputes, and TP-Link’s patent challenges and breach of contract claims, and NETGEAR received a $ 135 million payment as consideration for the same.

Consistent with the terms of the Settlement Agreement, all pending litigation between the parties were dismissed or not further pursued, as applicable, on or around September 11, 2024.

NETGEAR (at the Northern District of California District Court)

3 unchanged sentences

TP-Link alleged, in its Complaint, that the ’714 Patent is a Standard Essential Patent (SEP) and by suing TP-Link for patent infringement, the Company breached its contractual obligation, as a member of Wi-Fi Alliance or WFA, to offer TP- Link (also a WFA member) a license to the ’714 Patent on reasonable and non-discriminatory (RAND) terms.

The suit seeks a declaratory judgment from the Court that the Company is subject to RAND licensing obligations and damages.

The suit seeks a declaratory judgment from the Court that the Company is

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

subject to RAND licensing obligations and damages.

On June 18, 2024, TP-Link filed a motion for preliminary injunction seeking to enjoin the Company from enforcing an exclusion order from the ITC based on the ’714 patent.

The Company’s opposition to the preliminary injunction is due August 1, 2024 and an oral hearing is scheduled for August 22, 2024.

The Company’s response to the Complaint is due August 8, 2024.

The Company, at this time, is not able to reasonably estimate any financial impact to the Company resulting from these litigation matters.

The parties have settled this matter.

On or around September 11, 2024, TP-Link filed for dismissal of this case based on the Settlement Agreement described above.

As described above, for the three and nine months ended September 29, 2024, the Company received a payment from the litigation settlement with TP-Link, leading to a contra-expense of $ 92.7 million in the litigation reserves, a reversal of $ 8.2 million contingent fee recorded in litigation reserves in the prior quarter, and a reduction of $ 10.9 million in general and administrative expenses to offset the related legal fees incurred to date.

The Company included the amounts in the unaudited condensed consolidated statements of operations.

The Company, at this time, is not able to reasonably estimate any financial impact to the Company resulting from any ongoing litigation matters.

The Company does not believe that it is reasonably possible that a material loss has been incurred for any of the matters disclosed above, and consequently has not established any loss provisions.

For the three and six months ended June 30, 2024, the Company recorded an $ 8.2 million litigation reserve relating to a contingent liability tied to a successful outcome of the ITC suit against TP-Link.

The Company included the amount in Litigations reserves, net in the condensed consolidated statements of operations.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stock holders’ Equity

2 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.

During the six months ended June 30, 2024 , the Company repurchased and retired, reported based on trade date, approximately 1.6 million shares of common stock, at a cost of approximately $ 21.4 million under the repurchase authorization.

The Company did not repurchase any shares of common stock during the six months ended July 2, 2023.

As of June 30, 2024 , approximately 0.9 million shares remained authorized for repurchase under the repurchase program.

On July 16, 2024, the Board of Directors authorized management to repurchase up to 3.0 million shares of the Company’s outstanding common stock, incremental to the remaining shares under the Company’s previous repurchase program.

The Company repurchased, reported based on trade date, approxima tely 197,000 and 147,000 shares of common stock, at a cost of approximately $ 2.9 million and $ 2.1 million, during the six months ended June 30, 2024 and July 2, 2023, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving RSUs.

During the nine months ended September 29, 2024 , the Company repurchased and retired, reported based on trade date, approximately 1.7 million shares of common stock, at a cost of approximately $ 22.9 million under the repurchase authorization.

The Company did not repurchase any shares of common stock during the nine months ended October 1, 2023.

As of September 29, 2024 , approximately 3.8 million shares remained authorized for repurchase under the repurchase program.

The Company repurchased, reported based on trade date, approximately 222,000 shares and 194,000 shares of common stock, at a cost of approximately $ 3.3 million and $ 2.7 million, during the nine months ended September 29, 2024 and October 1, 2023, 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.

1 unchanged sentence

All repurchases were made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Accumulated Other Comprehensive Income (Loss)

8 unchanged sentences

Other comprehensive income (loss) before reclassifications

Amount reclassified from accumulated other comprehensive income (loss)

Amount reclassified from accumulated other comprehensive (loss) income

Net current period other comprehensive income (loss)

Balance as of June 30, 2024

Balance as of September 29, 2024

(In thousands)

8 unchanged sentences

Net current period other comprehensive income (loss)

Balance as of July 2, 2023

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Balance as of October 1, 2023

The following table provides details about significant amounts reclassified out of each component of AOCI:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2024

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Amount Reclassified from AOCI

11 unchanged sentences

Vesting periods under this plan are generally four years for options and RSUs and three years for performance shares.

As of June 30, 2024, approximately 2.0 million shares were reserved for future grants under the 2016 Plan.

As of September 29, 2024, approximately 2.3 million shares were reserved for future grants under the 2016 Plan.

In February 2024, the Company’s Board of Directors approved 2024 Inducement Equity Incentive Plan (the “2024 Inducement Plan”), under which options, restricted stock awards, RSUs, stock appreciation rights, performance units, performance shares, and other stock or cash awards can be granted to personnel for positions of substantial responsibility.

As of June 30, 2024 , approximately 0.7 million shares were reserved for future grants under the 2024 Inducement Plan.

As of September 29, 2024 , approximately 0.7 million shares were reserved for future grants under the 2024 Inducement Plan.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Additionally, the Company sponsors an Employee Stock Purchase Plan (the “ESPP”).

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The duration of each offering period is generally six months.

As of June 30, 2024, approximately 0.6 million shares were available for issuance under the ESPP.

As of September 29, 2024 , approximately 0.5 million shares were available for issuance under the ESPP.

Option Activity

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Outstanding as of December 31, 2023

Outstanding as of June 30, 2024

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Outstanding as of September 29, 2024

Time-Based RSU Activity

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Outstanding as of December 31, 2023

Outstanding as of June 30, 2024

Outstanding as of September 29, 2024

Performance-Based RSU Activity

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The stock-based compensation expense relating to PSUs with a market condition is recognized ratably from the service inception date to the vesting date for each tranche.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PSU activity was as follows:

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Outstanding as of December 31, 2023

Outstanding as of June 30, 2024

Outstanding as of September 29, 2024

Valuation and Expense Information

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2024

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

Cost of revenue

2 unchanged sentences

General and administrative

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of June 30, 2024 , $ 45.3 million of unrecognized compensation cost related to unvested RSUs and performance shares expected to be recognized over a weighted-average period of 2.5 years.

As of September 29, 2024 , $ 38.8 million of unrecognized compensation cost related to unvested RSUs and performance shares expected to be recognized over a weighted-average period of 2.3 years.

Segme nt Information

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The Company operates and reports in two segments:

Connected Home and NETGEAR for Business:

• Connected Home:

Focuses on consumers and provides high-performance, dependable and easy-to-use premium WiFi internet networking solutions such as WiFi 6, WiFi 6E and WiFi 7 Tri-band and Quad-band mesh systems, and routers, 4G/5G mobile products, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy, and premium support;

NETGEAR for Business and Connected Home:

• NETGEAR for Business:

Focuses on businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price;

• Connected Home:

The Company believes that this structure reflects its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities while maintaining financial discipline.

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Certain operating expenses are not allocated to segments because they are separately managed at the corporate level.

These unallocated indirect costs include corporate costs, such as corporate research and development, corporate marketing and general and administrative expenses, amortization of intangibles, stock-based compensation expense, restructuring and other charges, litigation reserves, net, and other income (expenses), net.

These unallocated indirect costs include corporate costs, such as corporate research and development, corporate marketing and general and administrative expenses,

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

amortization of intangibles, stock-based compensation expense, intangibles impairment, restructuring and other charges, litigation reserves, net, and other income (expenses), net.

Effective on January 1, 2024, resulting from certain segment structure changes, the Company revised its allocation method by allocating certain historically unallocated operating expenses to its individual operating segments.

The prior-year segment financial information has been recast to conform to the current-year presentation.

Financial information for each reportable segment and a reconciliation of segment contribution income (loss) to loss before income taxes is as follows:

Financial information for each reportable segment and a reconciliation of segment contribution income to income (loss) before income taxes is as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands, except percentage data)

June 30, 2024

Connected Home

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

NETGEAR for Business

Connected Home

Total net revenue

Contribution Income (Loss):

Connected Home

Contribution margin

NETGEAR for Business

Contribution margin

Connected Home

Contribution margin

Total segment contribution income

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Stock-based compensation expense

Intangibles impairment

Restructuring and other charges

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Other income, net (1)

Loss before income taxes

(1) Amounts included gain/(loss), net from derivatives not designated as hedging instruments of $ 0.6 million and $ 2.1 million, for the three and six months ended June 30, 2024, respectively, and $ 1.0 million and $ 0.9 million, for the three and six months ended July 2, 2023, respectively, and gain/(loss), net from litigation settlements of $ 6.0 million for the three and six months ended July 2, 2023, respectively .

Income (loss) before income taxes

(1) Amounts included gain/(loss), net from derivatives not designated as hedging instruments of $( 1.6 ) million and $ 0.5 million, for the three and nine months ended September 29, 2024, respectively, and $ 1.3 million and $ 2.2 million, for the three and nine months ended October 1, 2023, respectively, and gain/(loss), net from a litigation settlement of $ 6.0 million for the nine months ended October 1, 2023 .

* F inancial information for each reportable segment in the prior year periods were recast to conform to the current reportable segment structure.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The CODM does not evaluate operating segments using discrete asset information.

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

June 30, 2024

September 29, 2024

October 1, 2023

September 29, 2024

October 1, 2023

United States (U.S.)

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(1) No in dividual foreign country represented more than 10 % of the Company’s total net revenue in the periods presented.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Long-lived assets by Geographic Region

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(In thousands)

June 30, 2024

September 29, 2024

December 31, 2023

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(1) No individual country represented more than 10 % of the Company’s total long-lived assets in the periods presented.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Fair V alue Measurements

The following tables summarize assets and liabilities measured at fair value on a recurring basis:

June 30, 2024

September 29, 2024

(In thousands)

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mutual funds (1)

Available-for-sale investments:

corporate equity securities (1)

Foreign currency forward contracts (2)

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Total liabilities measured at fair value

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

December 31, 2023

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(3) Included in Other accrued liabilities on the Company's unaudited condensed consolidated balance sheets.

The Company’s investments in money-market funds, mutual funds and corporate equity securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

The Company’s investments in money-market funds and mutual funds are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

The Company’s investments in U.S.

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The Company accounts for its restructuring plans under the authoritative guidance for exit or disposal activities.

The Company includes expenses related to restructuring and other charges in Other operating expenses (income), net in the condensed consolidated statements of operations.

Accrued restructuring and other charges are classified within Accrued employee compensation and Other accrued liabilities on the condensed consolidated balance sheets.

Restructuring and other charges recognized in the three and six months ended June 30, 2024 and July 2, 2023, 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 the areas to deliver long-term growth and expanding profitability or projected revenue levels.

The liabilities as of June 30, 2024 are expected to be settled in 2024.

The Company includes expenses related to restructuring and other charges in Other operating expenses (income), net in the

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

condensed consolidated statements of operations.

Accrued restructuring and other charges are classified within Accrued employee compensation and Other accrued liabilities on the condensed consolidated balance sheets.

Restructuring and other charges recognized in the three and nine months ended September 29, 2024 and October 1, 2023, 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 the areas to deliver long-term growth and expanding profitability or projected revenue levels.

The liabilities as of September 29, 2024 are expected to be settled in 2024.

The following table provides a summary of the activity related to accrued restructuring and other charges:

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Cash Payments

Accrued Restructuring and Other Charges at June 30, 2024

Accrued Restructuring and Other Charges at September 29, 2024

Restructuring

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Cash Payments

Accrued Restructuring and Other Charges at July 2, 2023

Accrued Restructuring and Other Charges at October 1, 2023

Restructuring

3 unchanged sentences

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.

What changed 10-Q

Item 1. Financial Statements