What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-01 compared with 2025-05-02 · 185 added, 117 removed, 234 unchanged (56% of the section changed)

13 unchanged sentences

expectations regarding paid revenue from paid subscription service plans;

expectations regarding product mix and market demand for NETGEAR’s products and services, including NETGEAR for Business, Home Networking and Mobile products and subscription services and NETGEAR’s ability to respond to this demand;

expectations regarding product mix and market demand for NETGEAR’s products and services, including NETGEAR for Business, Mobile, and Home Networking products and subscription services and NETGEAR’s ability to respond to this demand;

expectations regarding competition, competitive factors, consumer price sensitivity and demand for NETGEAR’s products and services;

5 unchanged sentences

expectations regarding research and development expenses, sales and marketing expenses and general and administration expenses;

expectations regarding expected tax rates or tax expenses;

expectations regarding expected tax rates or tax expenses and changes in legislation related to the taxation of business entities;

expectations regarding the impact of acquisitions, including the acquisition of Exium;

and expectations regarding NETGEAR’s subscription services and service revenue.

15 unchanged sentences

As we announced in February 2025, beginning with the first quarter of 2025, we realigned our business structure by separating the previously disclosed Connected Home segment into two distinct reportable segments:

Home Networking and Mobile.

This realignment further strengthens our operational and financial management and enables us to further focus on

growth opportunities while maintaining financial discipline.

Mobile and Home

This realignment further strengthens our operational and financial management and enables us to further focus on growth opportunities while maintaining financial discipline.

Effective January 1, 2025, we operate and report in three segments:

NETGEAR for Business, Home Networking, and Mobile.

NETGEAR for Business, Mobile, and Home Networking.

The leadership team of each segment focuses on serving the unique needs of their customers through product and service development from both a product marketing and engineering standpoint, while also managing the sales and marketing functions that support their businesses.

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

The Home Networking segment focuses on consumers and provides high-performance, dependable and easy-to-use WiFi internet networking solutions such as WiFi 6, WiFi 6E and WiFi 7 Tri-band and Quad-band mesh systems, routers, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy, and premium support.

The Mobile segment focuses on both consumers and businesses and provides high-performance Mobile (4G/5G) products, including WiFi 7, WiFi 6/6E-enabled portable mobile hotspots and mobile routers, designed to meet the growing demand for on-the-go, high-speed and reliable internet connectivity with advanced security features.

The Home Networking segment focuses on consumers and provides high-performance, dependable and easy-to-use WiFi internet networking solutions such as WiFi 6, WiFi 6E and WiFi 7 multi-band mesh systems, routers, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy, and premium support.

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

16 unchanged sentences

Financial Overview

During the three months ended March 30, 2025, our net revenue decreased by $2.5 million, compared to the prior year period, primarily due to a decline of $7.3 million in our Mobile segment and a decline of $5.8 million in our Home Networking segment.

The decreases were partially offset by an increase of $10.6 million in our NETGEAR for Business segment.

The declines in Mobile and Home Networking net revenue were mainly driven by lower net revenue in the service provider channel.

Conversely, the increase in NETGEAR for Business net revenue was primarily due to continued strong demand for the Pro AV product line of managed switches, which experienced double digit growth in end market sales, as well as growth in service revenue.

Gross margin increased by 550 basis points compared to the prior year period, largely due to a higher mix of NETGEAR for Business products, which generally carry higher gross margin, as well as due to lower cost of inventory.

Loss from operations decreased by $8.8 million, primarily due to the improved gross margin, partially offset by the lower net revenue.

Geographically, net revenue from NETGEAR for Business increased in all three regions, while net revenue from Home Networking decreased in Americas and APAC but increased in EMEA, and net revenue from Mobile decreased in Americas

and EMEA but increased in APAC, during the three months ended March 30, 2025, compared to the prior year period, respectively.

During the three months ended June 29, 2025, our net revenue increased by $26.6 million, compared to the prior year period, mainly due to inventory optimization efforts with our channel partners in the prior year, which primarily drove a $22.8 million increase in the NETGEAR for Business segment and a $7.8 million increase in the Home Networking segment, partially offset by a $3.9 million decline in the Mobile segment.

The increase in NETGEAR for Business net revenue was primarily attributable to sustained strong demand for Pro AV managed switches, which delivered double-digit end-market sales growth.

Growth in the Home Networking segment was mainly driven by higher retail channel sales, despite a continued, though moderating, overall consumer networking market decline, as well as increased service revenue.

The decline in the Mobile segment reflected lower service provider channel sales as we await new product introductions to expand the portfolio later in the year.

Gross margin improved by 1,540 basis points year-over-year, mainly due to a favorable product mix weighted toward NETGEAR for Business, reduced sales returns, and lower charges for excess and obsolete inventory.

Operating loss decreased by $37.3 million, primarily attributable to higher net revenue, improved gross margin, and the absence of an $8.2 million

litigation reserve for a contingent liability related to success-based fees owed to outside legal counsel in connection with the favorable outcome of the TP-Link litigation.

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

On June 16, 2025, we completed the acquisition of Exium Inc.

at a purchase price of approximately $12.5 million, with an additional $2.4 million in retention compensation.

The transaction qualified as a business acquisition and was accounted for using the acquisition method.

We believe this acquisition enhances our portfolio of cloud-based networking and security offerings, enabling us to deliver an integrated, all-in-one solution for our small and medium-sized business customers.

For further details, refer to Note 4 , Business Acquisition, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q .

Global Events Affecting our Business and Operations

2 unchanged sentences

dollar, and ongoing trade policy shifts, including tariffs related to the U.S.

and key international countries.

Geopolitical tensions, such as the Russia-Ukraine conflict, the Israel-Hamas war, and the Red Sea crisis, along with lingering supply chain disruptions, have further added to the complexity of the global landscape.

and key international countries as well as recently proposed U.S.

Geopolitical tensions, such as the Russia-Ukraine conflict, the Israel-Hamas war, and the recently escalated Red Sea crisis, along with lingering supply chain disruptions, have further added to the complexity of the global landscape.

The extent of impacts from these macroeconomic and geopolitical trends on our ongoing operational and financial performance, including our ability to execute our business strategies in the expected time frame, will depend on future developments.

1 unchanged sentence

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.

Looking forward, we expect to continue to see more predictable performance that is aligned with the market for all of our businesses as our destocking and inventory reduction actions were completed.

We expect to experience continued net revenue growth in our NETGEAR for Business segment, led by strong end-user demand for the Pro AV line of managed switches.

Looking forward, we expect to continue to see more predictable performance that is aligned with the market for all of our businesses as the inventory optimization with our channel partners and our inventory reduction actions were completed.

We expect to continue to experience strong net revenue in our NETGEAR for Business segment, led by strong end-user demand for the Pro AV line of managed switches.

However, although we expect to make continued improvements in our supply position, we anticipate that supply constraints will persist, which may limit our ability to fully capture the revenue potential of this growing business.

For our Home Networking segment, we are seeing early signs of the benefit of our expanded product portfolio, including our more recently introduced WiFi 7 mesh and router products, addressing the market more effectively, and we expect to experience normal seasonality in this business.

For our Mobile segment, we expect revenue to be in line with the first fiscal quarter of 2025 level as we await new product introductions later this year that will strengthen the portfolio.

For our Home Networking segment, we are seeing signs of the benefit of our expanded product portfolio, including our more recently introduced WiFi 7 mesh and router products, addressing the market.

For our Mobile segment, we expect revenue to be in line with the second fiscal quarter of 2025 level as we await new product introductions to expand the portfolio later in the year.

We aim to execute on our strategy of capitalizing on the technological inflection points of audio and video over Ethernet, WiFi 7, WiFi 6E, WiFi 6, and 5G, to develop products that serve a broader segment of the market with a good, better, best product strategy, and to simplify, develop and roll out service offerings that build recurring service revenue streams.

9 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Cost of revenue

9 unchanged sentences

Loss before income taxes

Provision for (benefit from) income taxes

Provision for income taxes

Net Revenue by Geographic Region

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Percentage of net revenue

2 unchanged sentences

Total net revenue

Net revenue in Americas decreased in the three months ended March 30, 2025, compared to the prior year period, primarily driven by declines in Mobile segment's net revenue of 33.8%, and in Home Networking segment’s net revenue of 5.7%, partially offset by an increase in NETGEAR for Business segment’s net revenue of 26.8%.

The declines in Mobile and Home Networking segments' net revenue were primarily due to lower net revenue in the service provider channel.

The increase in NETGEAR for Business segment's net revenue was primarily due to a higher demand for the Pro AV product line of managed switches, compared to the prior year period.

Net revenue in EMEA increased in the three months ended March 30, 2025, compared to the prior year period, mainly driven by an increase in NETGEAR for Business segment’s net revenue of 5.0%, primarily attributable to higher demand for the Pro AV product line of managed switches.

Net revenue in APAC decreased in the three months ended March 30, 2025, compared to the prior year period, primarily attributable to a decrease in Home Networking segment’s net revenue of 43.2%, which was mainly driven by decreases in both the retail and the service provider channels.

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

Net revenue in Americas increased in the three and six months ended June 29, 2025, compared to the prior year periods, mainly due to prior-year inventory optimization efforts with our channel partners, which primarily drove increases in NETGEAR for the Business segment's net revenue of 42.7% and 34.4%, and in the Home Networking segment’s net revenue of 22.2% and 7.6%, partially offset by decreases in the Mobile segment’s net revenue of 18.5% and 27.4%, respectively.

The increases in NETGEAR for Business segment's net revenue were primarily due to a higher demand for the Pro AV product line of managed switches, while the increases in Home Networking segment's net revenue were primarily driven by stronger sales

in the retail channel, compared to the prior year periods.

The decreases in Mobile segment's net revenue were primarily attributable to lower sales in the service provider channel, compared to the prior year periods.

Net revenue in EMEA increased in the three and six months ended June 29, 2025, compared to the prior year periods, mainly due to prior-year inventory optimization efforts with our channel partners, which primarily drove increases in the NETGEAR for Business segment’s net revenue of 46.5% and 23.4%.

We continued to see growing demand for the Pro AV product line of managed switches.

Net revenue in APAC decreased in the three and six months ended June 29, 2025, compared to the prior year periods, primarily attributable to declines in the Home Networking segment’s net revenue of 42.4% and 42.9%, respectively, mainly driven by lower sales in both the retail and the service provider channels.

These declines were partially offset by increases in the NETGEAR for Business segment’s net revenue of 14.2% and 10.1%, respectively, primarily attributable to higher demand for the Pro AV product line of managed switches.

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

Cost of Revenue and Gross Margin

7 unchanged sentences

write-downs for excess and obsolete inventory;

amortization of certain acquired intangibles and software development costs;

amortization of certain acquired intangible assets and software development costs;

and costs attributable to the provision of service offerings.

1 unchanged sentence

We believe this outsourcing strategy allows us to better manage our product costs and gross margin.

Our gross margin can be affected by a number of factors, including fluctuation in foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, net of vendor rebates, royalty and licensing fees, warranty and overhead costs, inbound freight and duty/tariffs, conversion costs, charges for excess or obsolete inventory, amortization of acquired intangibles and capitalized software development costs.

The following table presents costs of revenue and gross margin, for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Cost of revenue

Gross margin percentage

Our gross margin increased for the three months ended March 30, 2025, compared to the prior year period, primarily due to a higher mix of NETGEAR for Business products, which generally carry a higher gross margin, as well as due to lower cost of inventory.

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

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

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

Forecasting gross margin percentages is difficult, and there are a number of risks related to our ability to maintain or improve our current gross margin levels.

12 unchanged sentences

and warranty costs.

We expect that revenue derived from paid subscription service plans will continue to increase in the future, which may have a positive impact on our gross margin.

We expect that revenue derived from paid subscription service plans will continue to increase in the future, which may have a

positive impact on our gross margin.

However, we will continue to experience fluctuations in our gross margin due to the factors discussed above.

6 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Research and development

Research and development expenses decreased for the three months ended March 30, 2025, compared to the prior year period, primarily attributable to decreases in engineering projects and outside professional services of $1.0 million, and in IT and facility allocations of $0.8 million.

These reductions were largely driven by the previously announced restructuring and right-sizing of investments undertaken in January 2025, primarily impacting our Home Networking segment.

Research and development expenses increased for the three months ended June 29, 2025, but decreased for the six months ended June 29, 2025, compared to the prior year periods.

These movements reflected increases in personnel-related expenditures of $2.0 million and $1.8 million, respectively, primarily due to higher head count and higher variable compensation.

These increases were partially offset or more than offset by decreases in IT and facility allocations of $0.6 million and $1.4 million, and in engineering projects and outside professional services of $0.4 million and $1.4 million, for the three- and six-month periods, respectively.

The reductions were largely driven by the restructuring undertaken in January 2025, which primarily impacted our Home Networking segment.

We believe that innovation and technological leadership is critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products and services.

We expect research and development expenses in absolute dollar amount in the second fiscal quarter of 2025 to increase from the first fiscal quarter of 2025 level.

We expect research and development expenses in absolute dollar amount in the third fiscal quarter of 2025 to increase from the second quarter of 2025 level.

We continue to invest in research and development to grow audio and video over Ethernet, web-managed, AV over IP managed switches, NETGEAR for Business wireless products, our cloud platform capabilities, our recurring services and mobile applications, and to broaden our WiFi 7 offerings for consumers to align to our good-better-best strategy and broaden our 5G mobile products.

Our NETGEAR for Business segment will continue to receive most of our incremental investments in the remainder of 2025 and we will be focused on in-sourcing our software capabilities, expanding our product portfolio that will allow us to grow our share in the sizable AV and enterprise WiFi markets.

We recently established an in-house research and development center in Chennai, India through the hiring of a team of experienced engineers.

This strategic initiative is expected to accelerate the Company’s transition to internally managed software development, resulting in increased innovation velocity, reduced development costs, and decreased reliance on third-party vendors.

The newly onboarded team will focus on leveraging artificial intelligence to significantly simplify networking solutions for small and medium-sized businesses.

We recently established an in-house research and development center in Chennai, India through the hiring of a team of experienced engineers, and completed the acquisition of Exium.

These strategic initiatives are expected to accelerate the transition to internally managed software development, increase innovation velocity, reduce development costs, and reduce reliance on third-party vendors.

The newly onboarded teams will focus on leveraging artificial intelligence or integrating networking security to significantly simplify networking solutions for small and medium-sized businesses.

Research and development expenses may fluctuate depending on the timing and number of development activities and could vary significantly as a percentage of net revenue, depending on actual revenues achieved in any given quarter.

Sales and Marketing

Sales and marketing expenses consist primarily of advertising, trade shows, corporate communications and other marketing expenses, product marketing expenses, outbound freight costs, amortization of certain intangibles, personnel expenses for sales and marketing staff, technical support expenses, and IT and facility allocations.

Sales and marketing expenses consist primarily of advertising, trade shows, corporate communications and other marketing expenses, product marketing expenses, outbound freight costs, amortization of certain intangible assets, personnel expenses for sales and marketing staff, technical support expenses, and IT and facility allocations.

The following table presents sales and marketing expenses, for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Sales and marketing

Sales and marketing expenses decreased for the three months ended March 30, 2025, compared to the prior year period, primarily attributable to decreases in outbound freight costs of $0.9 million, in outside professional services of $0.8 million, and in brand marketing expenditures of $0.6 million.

These reductions were primarily in our Home Networking and Mobile segments and were partially offset by increased investments in our NETGEAR for Business segment.

We expect sales and marketing expenses in absolute dollar amount in the second fiscal quarter of 2025 to increase from the first fiscal quarter of 2025 level.

Most of our incremental investments in sales and marketing in 2025 will be related to go-to-market capabilities of our product offerings in the NETGEAR for Business segment, partially offset by efficiencies in marketing on the consumer side.

Sales and marketing expenses increased for the three months ended June 29, 2025, but decreased for the six months ended June 29, 2025, compared to the prior year periods.

These movements reflected increases in personnel-related expenditures of $3.7 million and $3.8 million, for the three- and six-month periods, respectively, primarily due to higher headcount and variable compensation.

These increases were partially offset or more than offset by decreases in brand marketing expenditures of $1.5 million and $2.1 million, in outside professional services of $0.7 million and $1.5 million, and in outbound freight costs of $0.3 million and $1.2 million, for the three- and six-month periods, respectively.

The reductions were

concentrated in our Home Networking and Mobile segments and were partially offset by increased investments in our NETGEAR for Business segment.

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

We expect most of our incremental investments in sales and marketing in 2025 will be related to go-to-market capabilities of our product offerings in the NETGEAR for Business segment, partially offset by efficiencies in marketing on the consumer side.

Expenses may fluctuate depending on revenue levels achieved as certain expenses, such as commissions, are determined based upon the revenues achieved.

3 unchanged sentences

General and Administrative

General and administrative expenses consist of salaries and related expenses for executives, finance and accounting, human resources, information technology, professional fees, including legal costs associated with defending claims against us, allowance for doubtful accounts, IT and facility allocations, and other general corporate expenses.

General and administrative expenses consist of salaries and related expenses for executives, finance and accounting, human resources, information technology, professional fees, including legal costs associated with defending claims against us and business acquisition related expenses, allowance for doubtful accounts, IT and facility allocations, and other general corporate expenses.

The following table presents general and administrative expenses, for the periods indicated:

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

General and administrative

General and administrative expenses remained flat for the three months ended March 30, 2025, compared to the prior year period.

The decrease in legal and professional services of $2.2 million for the three months ended March 30, 2025 was offset by increases in personnel-related expenditures of $1.1 million, mainly due to stock-based compensation associated with executives’ transition and higher variable compensation, and in IT and facility allocations of $0.8 million.

We expect general and administration expenses in absolute dollar amount in the second fiscal quarter of 2025 to be in line with the first fiscal quarter of 2025 level.

General and administrative expenses increased for the three and six months ended June 29, 2025, compared to the prior year periods, primarily driven by higher personnel-related expenditures of $0.9 million and $2.1 million, respectively, mainly due to higher variable compensation and increased stock-based compensation associated with executive transitions.

The six-month increase also reflected higher IT and facility allocations of $1.0 million, partially offset by lower legal and professional service costs of $1.9 million.

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

General and administrative expenses could fluctuate depending on a number of factors, including the level and timing of expenditures associated with litigation defense costs in connection with the litigation matters described in Note 9, Commitments and Contingencies, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Future 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.

Future increases or decreases in general and administrative expenses are difficult to predict in absolute dollars due to the lack of visibility of certain costs, including legal costs associated with defending claims against us, asserting and enforcing our intellectual property portfolio, acquisition related activities, and other factors.

Litigation Reserves, Net

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Litigation reserves, net

** Percentage change not meaningful.

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

Restructuring and Other Charges

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Restructuring and other charges

** Percentage change not meaningful.

Restructuring and other charges for the three months ended March 30, 2025 increased, compared to the prior year period, primarily due to our previously announced reorganization undertaken in January 2025.

This restructuring was aimed at reducing costs, which we are reinvesting into the business to capitalize on our highest priority opportunities to expand revenue and profitability.

Restructuring and other charges decreased for the three months ended June 29, 2025, but increased for six months ended June 29, 2025, compared to the prior year periods, primarily due to the restructuring undertaken in January 2025.

This restructuring was aimed at reducing costs, and reinvesting into the business to capitalize on our highest priority opportunities to drive revenue growth and improve profitability.

For a detailed discussion of restructuring and other charges, refer to Note 14, Restructuring and Other Charges , in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

3 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Other income, net

** Percentage change not meaningful.

Other income, net for the three months ended March 30, 2025, increased compared to the prior year period, primarily due to proceeds of $4.7 million from a sale of patents in the current year.

The increase in other income, net for the three months ended June 29, 2025, compared to the prior year period was primarily due to higher interest income resulting from higher cash and short-term investment balances and higher net gains on transactions and contracts denominated in foreign currencies.

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

Provision for Income Taxes

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

Provision for (benefit from) income taxes

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Provision for income taxes

Effective tax rate

** Percentage change not meaningful.

The change in taxes for the three months ended March 30, 2025, compared to the prior year period, was primarily due to lower foreign profits, combined with foreign reserve releases resulting from audits effectively settled in the three months ended March 31, 2024.

The changes in taxes for the three and six months ended June 29, 2025, compared to the prior year periods, were primarily due to tax benefits recorded for the reversal of a portion of the federal and state valuation allowances that offset deferred tax liabilities resulting from intangibles established in purchased accounting for the Exium acquisition.

Further, in the period ended June 30, 2024, there were lower foreign profits combined with foreign reserve releases resulting from audits effectively settled in 2024.

We are subject to income taxes in the U.S.

4 unchanged sentences

and foreign jurisdictions.

The One Big Beautiful Bill Act (“OBBBA”) was enacted on July 4, 2025 and the Company continues to evaluate the impact on its financial position.

The OBBBA is not currently expected to materially impact the Company’s effective tax rate or cash flows in the current fiscal year.

Segment Information

As disclosed above, in the first fiscal quarter of 2025, we realigned our business structure by separating the Connected Home segment into two distinct reportable segments:

Home Networking and Mobile.

Mobile and Home Networking.

Effective January 1, 2025, we operate and report in three segments:

NETGEAR for Business, Home Networking and Mobile.

NETGEAR for Business, Mobile, and Home Networking.

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

2 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Percentage of net revenue

1 unchanged sentence

Contribution margin

NETGEAR for Business net revenue increased in the three months ended March 30, 2025, primarily due to continued strong demand for Pro AV product line of managed switches, which experienced double digit growth in end market sales, compared to the prior year period.

The growth was partially offset by lower demand for transactional switches.

** Percentage change not meaningful.

NETGEAR for Business net revenue increased in the three and six months ended June 29, 2025, primarily due to continued strong demand for Pro AV product line of managed switches, which experienced double digit growth in end market sales, compared to the prior year periods.

We also began to see more predictable performance aligned to the market.

Geographically, NETGEAR for Business net revenue increased in all three regions.

NETGEAR for Business segment's contribution income increased in the three months ended March 30, 2025, compared to the prior year period, primarily due to higher net revenue and higher gross margin achievement, mainly driven by lower sales returns, lower charges for excess or obsolete inventory, and lower cost of inventory.

Home Networking Segment

Geographically, as a result of prior-year inventory optimization efforts with our channel partners and higher demand for the Pro AV product line of managed switches, NETGEAR for Business net revenue increased in all three regions.

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

Mobile Segment

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Percentage of net revenue

Contribution loss

Contribution income (loss)

Contribution margin

Home Networking net revenue decreased in the three months ended March 30, 2025, compared to the prior year period, primarily due to a decline in net revenue in service provider channel, and, to a lesser extent, due to market contraction.

Despite the decline in the overall consumer networking market during the three months ended March 30, 2025, our premium portfolio of products continued to outperform the market, and we saw growth in our service revenue, as compared to the prior year period.

Geographically, Home Networking net revenue in the three months ended March 30, 2025 decreased in Americas and APAC, but increased in EMEA, compared to the prior year period.

Home Networking segment's contribution loss decreased in the three months ended March 30, 2025, compared to the prior year period, primarily attributable to higher gross margin achievement mainly driven by lower product costs and sales returns, as well as lower operating expenses as a proportion of net revenue, largely due to the previously announced reorganization undertaken in January 2025.

Mobile Segment

** Percentage change not meaningful.

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

Geographically, Mobile net revenue in the three and six months ended June 29, 2025 decreased in all three regions, compared to the prior year period.

Mobile segment generated contribution income in the three and six months ended June 29, 2025, compared to contribution losses in the prior year periods.

The improvements were primarily due to higher gross margins, mainly driven by lower product cost, lower charges for excess or obsolete inventory, and favorable changes in product mix.

Home Networking Segment

Three Months Ended

Six Months Ended

(In thousands, except percentage data)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

June 29, 2025

June 30, 2024

Percentage of net revenue

2 unchanged sentences

** Percentage change not meaningful.

Mobile segment's net revenue decreased in the three months ended March 30, 2025, compared to the prior year period, primarily due to a decline in net revenue in service provider channel.

Geographically, Mobile net revenue in the three months ended March 30, 2025 decreased in Americas and EMEA, but increased in APAC, compared to the prior year period.

Mobile segment's contribution income was $0.3 million in the three months ended March 30, 2025, compared to contribution loss of $1.0 million in the prior year period, primarily due to higher gross margin achievement, mainly driven by lower product cost and a favorable change in product mix.

Home Networking segment's net revenue increased in the three and six months ended June 29, 2025, compared to the prior year periods, primarily due to increases in net revenue in the retail channel, despite continued, though moderating, overall consumer networking market declines.

Our premium portfolio of products continued to outperform the market, and we saw growth in our service revenue, compared to the prior year periods.

Geographically, Home Networking segment's net revenue in the three and six months ended June 29, 2025 increased in Americas, but decreased in EMEA and APAC, compared to the prior year periods.

Home Networking segment generated contribution income in the three and six months ended June 29, 2025, compared to contribution losses in the prior year periods.

The improvements were primarily driven by higher gross margins, which benefited from a more favorable product mix of WiFi 7 products, lower product costs, reduced sales returns, decreased contra-revenue marketing expenses, and lower charges for excess and obsolete inventory.

Additionally, operating expenses declined, largely due to the restructuring undertaken in January 2025.

Liquidity and Capital Resources

Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations.

As of March 30, 2025, we had cash, cash equivalents and short-term investment of $391.9 million, a decrease of $16.8 million from December 31, 2024.

As of March 30, 2025, 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 of June 29, 2025, we had cash, cash equivalents and short-term investment of $363.5 million, a decrease of $45.2 million from December 31, 2024.

As of June 29, 2025, approximately 27% 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.

Three Months Ended

Six Months Ended

(In thousands)

March 30, 2025

March 31, 2024

June 29, 2025

June 30, 2024

Cash provided by (used in) operating activities

1 unchanged sentence

Cash used in financing activities

Net cash decrease

Net cash increase (decrease)

Operating activities

Net cash used in operating activities was $8.7 million in three months ended March 30, 2025, compared to $17.2 million provided in the prior year period, primarily due to unfavorable working capital movements.

Accounts receivable decreased from $156.2 million as of December 31, 2024 to $142.7 million as of March 30, 2025, primarily due to the timing of cash collections and lower revenue.

Our inventory decreased from $162.5 million as of December 31, 2024 to $157.9 million as of March 30, 2025, as we continued in optimizing our inventory levels.

Accounts payable (excluding payables related to property and equipment) decreased from $57.4 million as of December 31, 2024 to $53.3 million as of March 30, 2025, primarily due to the timing of inventory receipts and supplier payments.

Net cash used in operating activities was $10.5 million for the six months ended June 29, 2025, compared to $35.6 million provided in the prior year period, primarily due to unfavorable working capital movements, partially offset by lower net loss.

Accounts receivable decreased from $156.2 million as of December 31, 2024 to $144.9 million as of June 29, 2025, primarily due to the timing of cash collections.

Our inventory decreased from $162.5 million as of December 31, 2024 to $157.3 million as of June 29, 2025, as we continued in optimizing our inventory levels.

Accounts payable (excluding payables related to property and equipment) decreased from $57.4 million as of December 31, 2024 to $56.0 million as of June 29, 2025, primarily due to the timing of inventory receipts and supplier payments.

Investing activities

Net cash used in investing activities decreased by $10.1 million in the three months ended March 30, 2025, compared to the prior year period, mainly driven by lower net purchases of short-term investments and lower purchases of property and equipment.

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

Financing activities

Net cash used in financing activities decreased by $3.3 million in the three months ended March 30, 2025, compared to the prior year period, primarily due to higher proceeds from the exercise of stock options and lower repurchases of our common stock, partially offset by higher payments for restricted stock unit tax withholdings.

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

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.

5 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 our common stock.

As of March 30, 2025, approximately 3.1 million shares remained authorized for repurchase under the repurchase program.

We repurchased, retired and reported, based on trade date, approximately 0.3 million and 0.8 million shares of common stock, at a cost of approximately $7.5 million and $11.4 million under the repurchase authorization during the three months ended March 30, 2025 and March 31, 2024, respectively.

We also repurchased and retired, reported based on trade date, approximately 186,000 shares and 32,000 shares of common stock, at a cost of approximately $5.1 million and $0.5 million during the three months ended March 30, 2025 and March 31, 2024, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.

As of June 29, 2025, approximately 2.8 million shares remained authorized for repurchase under the repurchase program.

We repurchased, retired and reported, based on trade date, approximately 0.5 million and 1.6 million shares of common stock, at a cost of approximately $15.0 million and $21.4 million under the repurchase authorization during the six months ended June 29, 2025 and June 30, 2024, respectively.

We also repurchased, retired, and reported based on trade date, approximately 370,000 shares and 197,000 shares of common stock, at a cost of approximately $9.7 million and $2.9 million during the six months ended June 29, 2025 and June 30, 2024, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.

For a detailed discussion of our common stock repurchases, refer to Note 10, Stockholders’ Equity , in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Contractual and Other Obligations

Except as follows, there were no material changes outside of the ordinary course of business in our contractual obligations as of March 30, 2025, from those as of December 31, 2024, disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

As of March 30, 2025, we had $51.3 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $57.4 million as of December 31, 2024.

Except as follows, there were no material changes outside of the ordinary course of business in our contractual obligations as of June 29, 2025, from those as of December 31, 2024, disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

As of June 29, 2025, we had $60.2 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $57.4 million as of December 31, 2024.

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

As of March 30, 2025, $239.8 million of purchase orders beyond contractual termination periods remained outstanding.

These purchase orders may be cancelled by either party, however we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order, in

the event of cancellation.

As of June 29, 2025, $208.7 million of purchase orders beyond contractual termination periods remained outstanding.

These purchase orders may be cancelled by either party, however we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order, in the event of cancellation.

Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value.

As of March 30, 2025, we entered into an office lease that has not yet commenced with short-term and long-term future lease payments of $1.7 million and $41.2 million, respectively, that are not yet recorded on our unaudited consolidated balance sheets.

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

As of June 29, 2025, we entered into an office lease that has not yet commenced with short-term and long-term future lease payments of $2.3 million and $40.6 million, respectively, that are not yet recorded on our unaudited consolidated balance sheets.

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

For a detailed discussion, refer to Note 9, Commitments and Contingencies , in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

2 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

During the three months ended March 30, 2025, 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.

During the six months ended June 29, 2025, 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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis