Item 1. Financial Statements
Item 1. Financial Statements
NETGEAR, INC.
UNAUDITED CONDENSED CONS OLIDATED BALANCE SHEETS
(In thousands)
June 29, 2025
December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents
$
241,020
$
286,444
Short-term investments
122,452
122,246
Accounts receivable, net of allowance for doubtful accounts of $ 507 and $ 507 as of June 29, 2025 and December 31, 2024, respectively
144,871
156,210
Inventories
157,305
162,539
Prepaid expenses and other current assets
33,018
30,590
Total current assets
698,666
758,029
Property and equipment, net
13,677
11,288
Operating lease right-of-use assets
23,164
28,047
Intangible assets, net
4,360
—
Goodwill
45,790
36,279
Other non-current assets
17,893
16,587
Total assets
$
803,550
$
850,230
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
58,904
$
58,481
Accrued employee compensation
27,228
23,290
Other accrued liabilities
127,364
148,078
Deferred revenue
28,881
30,261
Income taxes payable
764
9,973
Total current liabilities
243,141
270,083
Non-current income taxes payable
8,348
7,583
Non-current operating lease liabilities
16,305
19,796
Other non-current liabilities
12,598
11,702
Total liabilities
280,392
309,164
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock
29
29
Additional paid-in capital
1,017,438
997,912
Accumulated other comprehensive income (loss)
( 34
)
241
Accumulated deficit
( 494,275
)
( 457,116
)
Total stockholders’ equity
523,158
541,066
Total liabilities and stockholders’ equity
$
803,550
$
850,230
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NETGEAR, INC.
UNAUDITED CONDENSED CONSOLIDA TED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
Six Months Ended
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
Net revenue
$
170,532
$
143,900
$
332,592
$
308,486
Cost of revenue
106,554
112,077
212,288
228,426
Gross profit
63,978
31,823
120,304
80,060
Operating expenses:
Research and development
20,845
19,851
39,154
40,078
Sales and marketing
31,053
29,757
59,094
60,286
General and administrative
20,683
19,186
38,753
37,253
Litigation reserves, net
75
8,200
38
8,230
Restructuring and other charges
862
1,688
5,604
2,720
Total operating expenses
73,518
78,682
142,643
148,567
Loss from operations
( 9,540
)
( 46,859
)
( 22,339
)
( 68,507
)
Other income, net
3,976
2,713
12,147
5,563
Loss before income taxes
( 5,564
)
( 44,146
)
( 10,192
)
( 62,944
)
Provision for income taxes
864
1,029
2,270
881
Net loss
$
( 6,428
)
$
( 45,175
)
$
( 12,462
)
$
( 63,825
)
Net loss per share
Basic
$
( 0.22
)
$
( 1.56
)
$
( 0.43
)
$
( 2.19
)
Diluted
$
( 0.22
)
$
( 1.56
)
$
( 0.43
)
$
( 2.19
)
Weighted average shares used to compute net loss per share:
Basic
28,911
28,883
28,815
29,136
Diluted
28,911
28,883
28,815
29,136
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NETGEAR, INC.
UNAUDITED CONDENSED CONSOLIDATED S TATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Three Months Ended
Six Months Ended
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
Net loss
$
( 6,428
)
$
( 45,175
)
$
( 12,462
)
$
( 63,825
)
Other comprehensive income (loss), before tax:
Change in unrealized gains and losses on derivatives
115
( 82
)
( 165
)
( 24
)
Change in unrealized gains and losses on available-for-sale investments
( 56
)
( 53
)
( 134
)
( 219
)
Other comprehensive income (loss), before tax
59
( 135
)
( 299
)
( 243
)
Tax benefit (provision) related to derivatives
( 11
)
10
24
3
Other comprehensive income (loss), net of tax
48
( 125
)
( 275
)
( 240
)
Comprehensive loss
$
( 6,380
)
$
( 45,300
)
$
( 12,737
)
$
( 64,065
)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NETGEAR, INC.
UNAUDITED CONDENSED CONSOLIDATED S TATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholder's
Equity
Balance as of December 31, 2024
28,500
$
29
$
997,912
$
241
$
( 457,116
)
$
541,066
Change in unrealized gains and losses on available-for-sale investments, net of tax
—
—
—
( 78
)
—
( 78
)
Change in unrealized gains and losses on derivatives, net of tax
—
—
—
( 245
)
—
( 245
)
Net loss
—
—
—
—
( 6,034
)
( 6,034
)
Stock-based compensation
—
—
5,496
—
—
5,496
Repurchase of common stock
( 254
)
—
—
—
( 7,500
)
( 7,500
)
Restricted stock unit withholdings
( 186
)
—
—
—
( 5,141
)
( 5,141
)
Issuance of common stock under stock-based compensation plans
722
—
6,679
—
—
6,679
Balance as of March 30, 2025
28,782
29
1,010,087
( 82
)
( 475,791
)
534,243
Change in unrealized gains and losses on available-for-sale investments, net of tax
—
—
—
( 56
)
—
( 56
)
Change in unrealized gains and losses on derivatives, net of tax
—
—
—
104
—
104
Net loss
—
—
—
—
( 6,428
)
( 6,428
)
Stock-based compensation
—
—
6,675
—
—
6,675
Repurchase of common stock
( 258
)
—
—
—
( 7,500
)
( 7,500
)
Restricted stock unit withholdings
( 184
)
—
—
—
( 4,556
)
( 4,556
)
Issuance of common stock under stock-based compensation plans
653
—
676
—
—
676
Balance as of June 29, 2025
28,993
$
29
$
1,017,438
$
( 34
)
$
( 494,275
)
$
523,158
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Common Stock
Shares
Amount
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholder's
Equity
Balance as of December 31, 2023
29,616
$
30
$
967,651
$
136
$
( 432,322
)
$
535,495
Change in unrealized gains and losses on available-for-sale investments, net of tax
—
—
—
( 166
)
—
( 166
)
Change in unrealized gains and losses on derivatives, net of tax
—
—
—
51
—
51
Net loss
—
—
—
—
( 18,650
)
( 18,650
)
Stock-based compensation
—
—
4,544
—
—
4,544
Repurchase of common stock
( 783
)
( 1
)
—
—
( 11,443
)
( 11,444
)
Restricted stock unit withholdings
( 32
)
—
—
—
( 454
)
( 454
)
Issuance of common stock under stock-based compensation plans
270
—
1,986
—
—
1,986
Balance as of March 31, 2024
29,071
29
974,181
21
( 462,869
)
511,362
Change in unrealized gains and losses on available-for-sale investments, net of tax
—
—
—
( 53
)
—
( 53
)
Change in unrealized gains and losses on derivatives, net of tax
—
—
—
( 72
)
—
( 72
)
Net loss
—
—
—
—
( 45,175
)
( 45,175
)
Stock-based compensation
—
—
5,888
—
—
5,888
Repurchase of common stock
( 800
)
( 1
)
—
—
( 10,120
)
( 10,121
)
Restricted stock unit withholdings
( 165
)
—
—
—
( 2,431
)
( 2,431
)
Issuance of common stock under stock-based compensation plans
573
1
—
—
—
1
Balance as of June 30, 2024
28,679
$
29
$
980,069
$
( 104
)
$
( 520,595
)
$
459,399
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NETGEAR, INC.
UNAUDITED CONDENSED CONSOLIDA TED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended
June 29,
2025
June 30,
2024
Cash flows from operating activities:
Net loss
$
( 12,462
)
$
( 63,825
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization
3,291
3,048
Stock-based compensation
12,171
10,432
Gain on investments, net
( 995
)
( 1,985
)
Deferred income taxes
( 99
)
542
Provision for excess and obsolete inventory
2,179
2,954
Changes in assets and liabilities:
Accounts receivable, net
11,339
37,991
Inventories
3,055
56,961
Prepaid expenses and other assets
( 2,166
)
3,866
Accounts payable
273
( 6,620
)
Accrued employee compensation
3,939
2,680
Other accrued liabilities
( 19,802
)
( 7,641
)
Deferred revenue
( 1,583
)
2,222
Income taxes payable
( 9,660
)
( 4,990
)
Net cash provided by (used in) operating activities
( 10,520
)
35,635
Cash flows from investing activities:
Purchases of short-term investments
( 59,683
)
( 67,998
)
Proceeds from maturities of short-term investments
60,000
60,000
Purchases of property and equipment
( 4,927
)
( 4,817
)
Purchases of long-term investments
( 105
)
( 90
)
Payments made in connection with business acquisitions, net of cash acquired
( 12,185
)
—
Net cash used in investing activities
( 16,900
)
( 12,905
)
Cash flows from financing activities:
Repurchases of common stock
( 15,662
)
( 21,444
)
Restricted stock unit withholdings
( 9,697
)
( 2,885
)
Proceeds from exercise of stock options
5,266
—
Proceeds from issuance of common stock under employee stock purchase plan
2,089
1,986
Net cash used in financing activities
( 18,004
)
( 22,343
)
Net increase (decrease) in cash and cash equivalents
( 45,424
)
387
Cash and cash equivalents, at beginning of period
286,444
176,717
Cash and cash equivalents, at end of period
$
241,020
$
177,104
Non-cash investing and financing activities:
Unpaid property and equipment
$
2,863
$
1,630
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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NETGEAR, INC.
NOTES TO UNAUDITED CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Basis of Presentation
NETGEAR, Inc. (“NETGEAR” or the “Company”) was incorporated in Delaware in January 1996. The Company is a global leader in innovative and advanced networking technologies for businesses, homes, and service providers. The Company delivers a wide range of intelligent solutions designed to unleash the full potential of connectivity. Its highly differentiated connected solutions range from switching and wireless products to augment business networks and audio and video (“AV”) over Ethernet for Pro AV applications to the good, better, and best WiFi solutions, security and support services to protect and enhance business and home networks. Additionally, the Company continually invests in research and development to create new technologies and services and to capitalize on technological inflection points and trends, such as audio and video over Ethernet, multi-Gigabit internet service to homes, WiFi 7, eSIM and future technologies. Its product line helps to create and extend wired and wireless networks as well as devices that attach to the network, such as services that complement and enhance its product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region.
The Company sells networking products through multiple sales channels worldwide, including traditional retailers, online retailers, wholesale distributors, direct market resellers (“DMRs”), value-added resellers (“VARs”), broadband service providers and its direct online store at www.netgear.com .
The accompanying unaudited condensed consolidated financial statements include the accounts of NETGEAR, Inc. and its wholly owned subsidiaries. They have been prepared in accordance with established guidelines for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. All significant intercompany balances and transactions have been eliminated in consolidation. The balance sheet dated December 31, 2024, has been derived from audited financial statements at such date. These unaudited condensed consolidated financial statements do not include all of the information and footnotes typically found in the audited consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary to fairly state the Company's financial position, results of operations, comprehensive income (loss), stockholder's equity and cash flows for the periods indicated. These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the “Annual Report”).
The Company's fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the financial statements, and (iii) the reported amounts of net revenue and expenses during the reported period. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances. As of the date of issuance of these condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. 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 29, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025, or any future period.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Segments
As previously announced, in the first fiscal quarter of 2025, the Company realigned its business structure by separating the Connected Home segment into two distinct reportable segments: Mobile and Home Networking. This realignment is intended to further strengthen the Company's operational and financial management and enable further focus on growth opportunities while maintaining financial discipline. Effective January 1, 2025, the Company operates and reports in three segments: NETGEAR for Business, Mobile, and Home Networking. The prior-year segment financial information has been recast to conform to the current-year presentation. None of the changes impacted previously reported consolidated net revenue, income (loss) from operations, net income (loss) per share, total assets, or stockholders’ equity. In addition, a s the goodwill balance was zero for the Connected Home segment before the segment realignment, no goodwill has been allocated to the Mobile and Home Networking segments, and the entire goodwill balance of $ 36.3 million prior to the segment realignment in the first quarter of 2025 remained in the NETGEAR for Business segment. An additional $ 9.5 million of goodwill was recorded in the NETGEAR for Business segment in the second quarter of 2025 in connection with the acquisition of Exium Inc. Refer to Note 4, Business Acquisition and Note 12, Segment Information for additional information.
Note 2. Summary of Signif icant Accounting Policies
No material changes have been made to the Company’s significant accounting policies disclosed in Note 1, The Company and Summary of Significant Accounting Policies , in Part II, Item 8 “Financial Statements and Supplementary Data” in its Annual Report.
Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): 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 December 31, 2024 and early adoption is permitted. The Company adopted the new standard effective December 31, 2024 on a retrospective basis. The adoption did not have any impact on the Company’s financial position, results of operations or cash flows. Refer to Note 12, Segment Information, for details.
Accounting Pronouncements Not Yet Effective
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which enhances annual income tax disclosures. ASU 2023-09 requires the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires 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 annual reporting period of the year ending December 31, 2025 and early adoption is permitted. The guidance allows for adoption using either a prospective or retrospective transition method. The Company is evaluating the impact that the updated standard will have on its financial statement disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which expands the disclosure requirements for specific costs and expenses. ASU 2024-03 is effective for the Company for the year ending December 31, 2027 and early adoption is permitted. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company does not expect that the guidance will have material impacts on its financial position, results of operations or cash flows. The Company is evaluating the impact that the updated standard will have on its financial statement disclosures.
With the exception of the new standards discussed above, there have been no other new accounting pronouncements that have significance, or potential significance, to the Company’s financial position, results of operations and cash flows.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 3. Rev enue
Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
Transaction Price Allocated to the Remaining Performance Obligations
Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. 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 29, 2025 :
(In thousands)
Less than 1 year
1 to 2 years
Beyond 2 years
Total
Performance obligations
$
74,722
$
2,846
$
2,113
$
79,681
Contract Balances
The Company records accounts receivable when it has an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Contract liabilities are mainly classified as Deferred revenue on the unaudited condensed consolidated balance sheets.
Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer.
The following table reflects the contract balances:
(In thousands)
Balance Sheet Location
June 29, 2025
December 31, 2024
Accounts receivable, net
Accounts receivable, net
$
144,871
$
156,210
Contract liabilities – current
Deferred revenue
$
28,881
$
30,261
Contract liabilities – non-current
Other non-current liabilities
$
4,898
$
5,101
The difference in the balances of the Company’s contract assets and liabilities as of June 29, 2025 and December 31, 2024, primarily results from the timing difference between the Company's performance and the customer's payment.
During the six months ended June 29, 2025, $ 23.5 million of revenue was deferred primarily due to unsatisfied performance obligations for service contracts, $ 25.0 million of revenue was recognized for the satisfaction of performance obligations and $ 20.0 million of this recognized revenu e 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.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Disaggregation of Revenue
In the following tables, net revenue is disaggregated by geographic region and sales channel. The Company conducts business across three geographic regions: Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific (“APAC”). The tables also include reconciliations of the disaggregated revenue by reportable segment. As disclosed above, effective January 1, 2025, the Company operates and reports in three segments: NETGEAR for Business, Mobile, and Home Networking. The prior-year segment financial information has been recast to conform to the current-year presentation. Sales and usage-based taxes are excluded from net revenue.
Three Months Ended
June 29, 2025
June 30, 2024
(In thousands)
NETGEAR for Business
Mobile
Home Networking
Total
NETGEAR for Business
Mobile
Home Networking
Total
Geographic regions (1) :
Americas
$
41,690
$
12,852
$
61,737
$
116,279
$
29,221
$
15,764
$
50,518
$
95,503
EMEA
26,948
4,710
2,717
34,375
18,397
5,072
3,886
27,355
APAC
13,983
2,846
3,049
19,878
12,249
3,496
5,297
21,042
Total
$
82,621
$
20,408
$
67,503
$
170,532
$
59,867
$
24,332
$
59,701
$
143,900
Sales channels:
Service provider
$
238
$
14,311
$
942
$
15,491
$
202
$
17,724
$
2,008
$
19,934
Non-service provider
82,383
6,097
66,561
155,041
59,665
6,608
57,693
123,966
Total
$
82,621
$
20,408
$
67,503
$
170,532
$
59,867
$
24,332
$
59,701
$
143,900
Six Months Ended
June 29, 2025
June 30, 2024
(In thousands)
NETGEAR for Business
Mobile
Home Networking
Total
NETGEAR for Business
Mobile
Home Networking
Total
Geographic regions (1) :
Americas
$
82,171
$
27,593
$
114,276
$
224,040
$
61,154
$
38,028
$
106,249
$
205,431
EMEA
51,287
7,318
7,899
66,504
41,574
8,047
8,921
58,542
APAC
28,354
6,979
6,715
42,048
25,762
6,996
11,755
44,513
Total
$
161,812
$
41,890
$
128,890
$
332,592
$
128,490
$
53,071
$
126,925
$
308,486
Sales channels:
Service provider
$
508
$
31,262
$
1,661
$
33,431
$
445
$
40,662
$
6,623
$
47,730
Non-service provider
161,304
10,628
127,229
299,161
128,045
12,409
120,302
260,756
Total
$
161,812
$
41,890
$
128,890
$
332,592
$
128,490
$
53,071
$
126,925
$
308,486
_____________________________
(1) No i ndividual foreign country represented more than 10 % of the Company ’ s total net revenue in the periods presented.
Note 4. Business Acquisition
On June 16, 2025, the Company acquired Exium Inc. (“Exium”), a cybersecurity company focused on developing and delivering Secure Access Service Edge (SASE) platforms, as part of its continued investment in cloud-based solutions for advanced business connectivity. The Company believes that Exium’s products and expertise will enhance its network offering by adding an integrated SASE platform tailored for small and medium enterprises, which strategically aligns with its existing products, teams, and target markets.
The preliminary total purchase consideration was $ 12.5 million, which consisted of $ 12.1 million in cash paid in the second quarter of 2025, and $ 0.4 million in acquisition holdback for potential purchase price adjustments and indemnification, if any. In addition, $ 2.4 million may be payable as retention compensation. The acquisition qualified as a business combination and was accounted for using the acquisition method. The results of Exium have been included in the unaudited condensed consolidated financial statements since the date of acquisition. Pro forma results of operations for the acquisition are not presented as the financial impact to the Company's consolidated results of operations is not material.
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Of the total preliminary purchase consideration, $ 9.5 million was allocated to goodwill, $ 4.3 million to developed technology platform, and $ 1.2 million to deferred tax liability. All the other assets acquired and liabilities assumed were immaterial.
The goodwill recorded on the acquisition of Exium is not deductible for U.S. federal or U.S. state income tax purposes. The goodwill recognized was allocated to the Company's NETGEAR for Business segment, and it is primarily attributable to expected synergies, and future growth opportunities associated with Exium’s cybersecurity platform.
Developed technology platform of $ 4.3 million was valued using the multi-period excess earnings method under the income approach, which discounted the asset's projected future cash flows at 28.5 %. The provisional amortization period is seven years .
In co nnection with the acquisition, the Company recorded net deferred tax liabilities of $ 1.2 million, resulting from the recognition of $ 4.4 million in gross temporary differences related to the book basis of the intangible assets for which the Company has no tax basis.
Note 5. Balance Sheet Components
Available-for-sale investments
Amortized cost and estimated fair market value of investments classified as available-for-sale, excluding cash equivalents, as of June 29, 2025 and December 31, 2024, were as follows:
June 29, 2025
(In thousands)
Amortized Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
U.S. treasury securities
$
119,665
$
37
$
—
$
119,702
Total
$
119,665
$
37
$
—
$
119,702
December 31, 2024
(In thousands)
Amortized Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair Value
U.S. treasury securities
$
119,199
$
171
$
—
$
119,370
Total
$
119,199
$
171
$
—
$
119,370
The contractual maturities on the U.S. treasury securities as of June 29, 2025 are all due within one year. Accrued interest receivable as of June 29, 2025 was $ 1.4 million and was recorde d within Prepaid expenses and other current assets on the unaudited condensed consolidated balance sheet.
There we re no investments classified as ava ilable-for-sale in a continuous unrealized loss position for which an allowance for credit losses was not recorded as of June 29, 2025 and December 31, 2024.
In the three and six months ended June 29, 2025 and June 30, 2024 , 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. There were no other-than-temporary impairments for these
13
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
securities during the three and six months ended June 29, 2025 and June 30, 2024. Refer to Note 13, Fair Value Measurements, for detailed disclosures regarding fair value measurements.
Inventories
(In thousands)
June 29, 2025
December 31, 2024
Raw materials
$
11,544
$
13,439
Finished goods
145,761
149,100
Total
$
157,305
$
162,539
The Company records provisions for exce ss and obsolete inventory based on assumptions about future demand and market conditions and the amounts incurred were $ 0.8 million and $ 2.2 million for the three and six months ended June 29, 2025 , respectively, and $ 1.9 million and $ 3.0 million for the three and six months ended June 30, 2024, respectively. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is a risk that additional charges may be necessary if current forecasts are greater than actual demand.
Property and equipment, net
(In thousands)
June 29, 2025
December 31, 2024
Machinery and equipment
$
55,534
$
54,355
Furniture, fixtures, and leasehold improvements
22,973
20,028
Software
24,654
24,610
Computer equipment
5,554
5,384
Total property and equipment, gross
108,715
104,377
Accumulated depreciation
( 95,038
)
( 93,089
)
Total
$
13,677
$
11,288
Other non-current assets
(In thousands)
June 29, 2025
December 31, 2024
Non-current deferred income taxes
$
2,455
$
2,332
Long-term investments
8,699
8,381
Restricted cash
2,100
2,107
Other
4,639
3,767
Total
$
17,893
$
16,587
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Long-term equity investments
The Company’s long -term investments are primarily comprised of equity investments without readily determinable fair values and investments in limited partnership funds. The carrying value of the equity investments without readily determinable fair values was $ 6.1 million as of June 29, 2025 and June 30, 2024 , respectively. For such equity investments without readily determinable fair value still held at June 29, 2025 , there were no cumulative downward adjustments for price changes or impairment, and the cumulative upward adjustments for price changes was $ 0.3 million. Investments in limited partnership funds amounted to $ 2.6 million as of June 29, 2025 , and $ 2.3 million as of June 30, 2024, December 31, 2024, and December 31, 2023, respectively.
Other accrued liabilities
(In thousands)
June 29, 2025
December 31, 2024
Current operating lease liabilities
$
9,426
$
10,837
Sales and marketing
53,183
59,129
Warranty obligations
5,565
5,192
Sales returns (1)
22,758
31,711
Freight and duty
4,807
4,979
Other
31,625
36,230
Total
$
127,364
$
148,078
(1) Inventory expected to be received from future sales returns amounted to $ 10.6 million and $ 15.1 million as of June 29, 2025 and December 31, 2024 , respectively. Provisions to write down expected returned inventory to net realizable value amounted to $ 7.4 million and $ 9.0 million as of June 29, 2025 and December 31, 2024 , respectively.
Note 6. Derivative F inancial Instruments
The Company’s subsidiaries have material future cash flows related to revenue and expenses denominated in currencies other than the U.S. dollar, the Company’s functional currency worldwide. The Company executes currency forward contracts that typically mature in less than six months to mitigate its currency risk, in currencies including Australian dollars, British pounds, euros, Canadian dollars, and Japanese yen. The Company does not enter into derivatives transactions for trading or speculative purposes. The Company’s foreign currency forward contracts do not contain any credit-risk-related contingent features. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any individual counterparty .
The Company typically execut es ten cash flow hedges per quarter with maturities under six months and with an average USD notional amount of approximately $ 4.8 million that are designated as cash flow hedges.
The Company enters into non-des ignated 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 ten non-designated forwards per quarter with maturities less than three months and an average USD notional amount of approximately $ 3.0 million.
Fair Value of Derivative Instruments
The fair values of the Company’s derivative instruments and the line items on the unaudited condensed consolidated balance sheets to which they were recorded were summarized as follows:
Balance Sheet
Balance Sheet
(In thousands)
Location
June 29,
2025
December 31,
2024
Location
June 29,
2025
December 31,
2024
Derivatives not designated as hedging instruments
Prepaid expenses and other current assets
$
405
$
979
Other accrued liabilities
$
1,578
$
254
Derivatives designated as hedging instruments
Prepaid expenses and other current assets
30
74
Other accrued liabilities
116
19
Total
$
435
$
1,053
$
1,694
$
273
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Refer to Note 13, Fair Value Measurements for detailed disclosures regarding fair value measurements. Refer to Note 10, Stockholders ’ Equity , for details on the accumulated other comprehensive income (loss) activity related to derivatives and refer to Note 12, Segment Information , for details on gain/(loss), net pertaining to derivatives not designated as hedging instruments that were recognized in Other income (expenses), net.
Note 7. Net I ncome (Loss) Per Share
Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of Restricted Stock Units (“RSUs”) and performance shares, and issuances of shares under the Employee Stock Purchase Plan (the “ESPP”), which are reflected in diluted net income (loss) per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net income (loss) per share when their effect is anti-dilutive.
Net income (loss) per share consisted of the following:
Three Months Ended
Six Months Ended
(In thousands, except per share data)
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
Numerator:
Net loss
$
( 6,428
)
$
( 45,175
)
$
( 12,462
)
$
( 63,825
)
Denominator:
Weighted average common shares – basic
28,911
28,883
28,815
29,136
Weighted average common shares – dilutive
28,911
28,883
28,815
29,136
Basic net loss per share
$
( 0.22
)
$
( 1.56
)
$
( 0.43
)
$
( 2.19
)
Diluted net loss per share
$
( 0.22
)
$
( 1.56
)
$
( 0.43
)
$
( 2.19
)
Anti-dilutive employee stock-based awards, excluded
331
2,060
362
1,968
Note 8. In come Taxes
The income tax provision for the three and six months ended June 29, 2025 was $ 0.9 million, or an effective tax rate of ( 15.5 )%, and $ 2.3 million, or an effective tax rate of ( 22.3 )%, respectively. 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 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.
The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. The future foreign tax rate could be affected by changes in the composition in earnings in countries with tax rates differing from the U.S. federal rate. The Company is under examination in various U.S. and foreign jurisdictions.
The Company files income tax returns in the U.S. federal jurisdiction as well as various state, local, and foreign jurisdictions. Due to the uncertain nature of ongoing tax audits, the Company has recorded its liability for uncertain tax positions as part of its long-term liability as payments cannot be anticipated over the next twelve months. The existing tax positions of the Company continue to generate an increase in the liability for uncertain tax positions. The liability for uncertain tax positions may be reduced for liabilities that are settled with taxing authorities or on which the statute of limitations could expire without assessment from tax authorities. The possible reduction in liabilities for uncertain tax positions in multiple jurisdictions in the
16
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
next twelve months is approximately $ 1.4 million excluding the interest, penalties and the effect of any related deferred tax assets or liabilities. The Company is currently under examination in various U.S. and foreign jurisdictions.
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 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. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. The Company must then assess the likelihood that the Company’s deferred tax assets will be recovered from future taxable income and to the extent the Company believes that recovery is not more likely than not, the Company must establish a valuation allowance. The Company’s assessment considers the recognition of deferred tax assets on a jurisdictional basis. Accordingly, in assessing its future taxable income on a jurisdictional basis, the Company considers the effect of its transfer pricing policies on that income. As of the period ended October 1, 2023, the Company determined that recovery of its U.S. federal and state deferred tax assets was no longer more likely than not and established a full valuation allowance on those net assets, based on evaluation of all available evidence, including actual and anticipated business results. Accordingly, the balance sheet net deferred tax assets from the U.S. federal and state jurisdictions reported in “Other Non-current Assets” were reduced after the effect of establishing the valuation allowance.
The Company evaluated the current results as of the period ended June 29, 2025, 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 months ended June 29, 2025.
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.
Note 9. Commitment s and Contingencies
Purchase Obligations
The Company has entered into various inventory-related purchase agreements with suppliers. 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 29, 2025, the Company had approximately $ 60.2 million , as compared to $ 57.4 million as of December 31, 2024, 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 29, 2025 , $ 208.7 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. Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value. For those orders not governed by master purchase agreements, the commitments are governed by the commercial terms on the Company’s purchase orders subject to acknowledgment from its suppliers. The Company establishes a loss liability for all products it does not expect to sell or orders it anticipates canceling for which it has committed purchases from suppliers. 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 $ 0.2 million and $ 0.3 million for the three and six months ended June 29, 2025 , respectively, and $ 5.1 million and $ 6.2 million for the three and six months ended June 30, 2024, respectively.
17
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Non-Trade Commitments
As of June 29, 2025, the Company had non-cancellable purchase commit ments of $ 9.4 million pertaining to non-trade activities.
Warranty Obligations
Changes in the Company’s warranty obligations, which is included in Other accrued liabilities on the unaudited condensed consolidated balance sheets, were as follows:
Three Months Ended
Six Months Ended
(In thousands)
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
Balance as of beginning of the period
$
5,307
$
5,087
$
5,192
$
5,738
Provision for warranty liability made
1,422
800
2,676
1,408
Settlements made
( 1,164
)
( 1,116
)
( 2,303
)
( 2,375
)
Balance as of the end of the period
$
5,565
$
4,771
$
5,565
$
4,771
Leases
As of June 29, 2025 , the Company 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 the unaudited consolidated balance sheets. This lease will commence in the third fiscal quarter of 2025 with a non-cancelable lease term of 11 years .
Litigation and Other Legal Matters
The Company is involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. In such cases, the Company accrues for the amount, or if a range, the Company accrues the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within litigation reserves, net. The Company monitors developments in these legal matters that could affect the estimate the Company had previously accrued. In relation to such matters, the Company currently believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its financial position within the next twelve months, or the outcome of these matters is currently not determinable. There are many uncertainties associated with any litigation, and these actions or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, the Company’s business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company’s estimates, which could result in the need to adjust the liability and record additional expenses.
The Company does not believe that it will incur a material loss for any of its pending litigation matters at this time, and consequently has not established any material loss provisions.
Note 10. Stock holders’ Equity
Stock Repurchases
From time to time, the Company’s Board of Directors has authorized programs under which the Company may repurchase shares of its common stock, depending on market conditions, in the open market or through privately negotiated transactions. 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 29, 2025 and June 30, 2024 , the Company repurchased, retired and reported, based on trade date, approximately 0.5 million and 1.6 million shares of
18
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
common stock, at a cost of approximately $ 15.0 million and $ 21.4 million, respectively. As of June 29, 2025 , approximately 2.8 million shares remained authorized for repurchase under the repurchase program.
The Company repurchased and rep orted, 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 RSUs.
These shares were retired upon repurchase. The Company’s policy related to repurchases of its common stock is to charge the excess of cost over par value to retained earnings. All repurchases were made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended.
Accumulated Other Comprehensive Income (Loss)
The following tables set forth the changes in accumulated other comprehensive income (loss) (“AOCI”) by component:
(In thousands)
Unrealized gains (losses)
on available
-for-sale
investments
Unrealized
gains (losses)
on derivatives
Estimated tax benefit (provision)
Total
Balance as of December 31, 2024
$
169
$
79
$
( 7
)
$
241
Other comprehensive income (loss) before reclassifications
( 134
)
( 985
)
196
( 923
)
Less: Amount reclassified from accumulated other comprehensive income (loss)
—
( 820
)
172
( 648
)
Net current period other comprehensive income (loss)
( 134
)
( 165
)
24
( 275
)
Balance as of June 29, 2025
$
35
$
( 86
)
$
17
$
( 34
)
(In thousands)
Unrealized gains (losses)
on available
-for-sale
investments
Unrealized
gains (losses)
on derivatives
Estimated tax
benefit (provision)
Total
Balance as of December 31, 2023
$
126
$
7
$
3
$
136
Other comprehensive income (loss) before reclassifications
( 219
)
( 186
)
37
( 368
)
Less: Amount reclassified from accumulated other comprehensive income (loss)
—
( 162
)
34
( 128
)
Net current period other comprehensive income (loss)
( 219
)
( 24
)
3
( 240
)
Balance as of June 30, 2024
$
( 93
)
$
( 17
)
$
6
$
( 104
)
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following table provides details about significant amounts reclassified out of each component of AOCI:
Three Months Ended
Six Months Ended
(In thousands)
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
Amount Reclassified from AOCI
Gains (losses) on cash flow hedge:
Foreign currency forward contracts
Affected line item in the statement of operations
Net revenue
$
( 542
)
$
( 130
)
$
( 1,064
)
$
( 209
)
Cost of revenue
3
—
3
—
Research and development
20
( 1
)
52
( 2
)
Sales and marketing
71
33
150
42
General and administrative
10
( 1
)
39
7
Total before tax
( 438
)
( 99
)
( 820
)
( 162
)
Tax impact
92
21
172
34
Total, net of tax
$
( 346
)
$
( 78
)
$
( 648
)
$
( 128
)
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 11. Employe e Benefit Plans
2025 Equity Incentive Plan
In April 2025, t he Company's Board of Directors adopted the 2025 Equity Incentive Plan (the "2025 Plan") which was approved by the Company's stockholders at the 2025 Annual Meeting of Stockholders on May 29, 2025. The 2025 Plan provides for the granting of stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to eligible directors, employees and consultants of the Company. The maximum aggregate number of shares that may be issued under the 2025 Plan is 750,000 shares, plus (i) any shares that were available for grant under the 2016 Plan as of immediately prior to the date the 2025 Plan becomes effective, plus (ii) any shares granted under the 2016 Plan t hat expire, are forfeited to or repurchased by the Company. As of June 29, 2025 , approximately 2.5 mil lion shares were reserved and available for future grants under the 2025 Plan.
Time-based RSUs granted generally vest over three years with the first tranche at the end of twelve months from the vest start date and the remaining vesting quarterly over the remaining two years . RSUs do not have an expiration date. Performance-based RSUs granted generally vest at the end of a three-year period if performance conditions are met.
Any shares that are tendered by a participant of the 2025 Plan or retained by the Company as full or partial payment for the purchase of an award or to satisfy tax withholding obligations in connection with an award shall again be made available for issuance under the 2025 Plan.
2016 Equity Incentive Plan
The Company granted options, time-based RSUs and performance-based RSUs under the 2016 Incentive Plan (the “2016 Plan”), under which awards were granted to employees. Vesting periods under this plan were generally four years for options, three years for performance-based RSUs, and three or four years for time-based RSUs. As of June 29, 2025, as disclosed above, the Company adopted the 2025 Plan, which superseded the 2016 Plan with respect to new equity award grants. No additional awards will be granted under the 2016 Plan following the effective date of the 2025 Plan. However, (i) any shares that remained available for grant under the 2016 Plan immediately prior to the 2025 Plan’s effective date and (ii) any shares subject to awards granted under the 2016 Plan that are subsequently forfeited, expire, or are repurchased by the Company, will become available for issuance under the 2025 Plan. All outstanding awards previously granted under the 2016 Plan remain outstanding and continue to be governed by the applicable terms and conditions of that plan. Any shares that are tendered by a participant of the 2016 Plan or retained by the Company as full or partial payment to the Company for the purchase of an award or to satisfy tax withholding obligations in connection with an award shall no longer again be made available for issuance under the 2016 Plan.
2024 Inducement 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. In May 2025, the Company’s Board of Directors approved an amendment to the 2024 Inducement Plan which increased t he number of shares of the Company’s common stock that may be issued under the 2024 Inducement Plan by an additional 600,000 shares. As of June 29, 2025, approxim ately 0.5 million shares were reserved for future grants under the 2024 Inducement Plan.
Employee Stock Purchase Plan
The Company sponsors an Employee Stock Purchase Plan (the “ESPP”). The terms of the plan include a look-back feature that enables employees to purchase stock semi-annually at a price equal to 85 % of the lesser of the fair market value at the beginning of the offering period or the purchase date. The duration of each offering period is generally six months. In May 2025, the stockholders of the Company appr oved an amendment to the 2003 Employee Stock Purchase Plan to increase the number of shares of common stock authorized for sale under the ESPP by 1.5 million shares. As of June 29, 2025 , approximately 1.8 million shares were available for issuance under the ESPP.
21
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Option Activity
Stock option activity was as follows:
(In thousands, except per share amounts)
Number of
Shares
Weighted Average Exercise Price Per Share
Outstanding as of December 31, 2024
475
$
32.60
Exercised
( 198
)
$
26.56
Expired
( 170
)
$
38.97
Outstanding as of June 29, 2025
107
$
33.73
Time-Based RSU Activity
Time-based RSU activity was as follows:
(In thousands, except per share amounts)
Number
of Shares
Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2024
2,550
$
17.64
Granted
548
$
28.19
Vested
( 765
)
$
17.91
Cancelled
( 127
)
$
18.34
Outstanding as of June 29, 2025
2,206
$
20.12
Performance-Based RSU Activity
Since 2020, the Company’s executives have been granted performance-based restricted stock units (“PSUs”) under the 2016 Plan with vesting occurring at the end of a three-year period, contingent upon the achievement of specified performance conditions. In February 2024, the Company granted PSUs under the 2024 Inducement Plan to its newly-hired Chief Executive Officer with 1/3 of the target PSUs being allocated to each tranche and vesting occurring at the end of each anniversary of the vesting commencement date over a three-year period. In addition, in 2024 and 2025, the Company granted PSUs under the 2016 Plan, 2024 Inducement Plan and 2025 Plan to its newly-hired employees or executives with vesting occurring at the end of a three-year period if performance conditions are met. The number of PSUs earned and eligible to vest are determined based on achievement of the pre-determined performance or market conditions and the recipients’ continued service with the Company. The number of PSUs to vest could range from 0 % to 150 % of the target shares granted. For PSUs with a performance condition, at the end of each reporting period, the Company evaluates the probability of achieving the performance conditions and records the related stock-based compensation expense based on performance to date over the service period. 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.
PSU activity was as follows:
(In thousands, except per share amounts)
Number
of Shares
Weighted Average Grant Date Fair Value Per Share
Outstanding as of December 31, 2024
655
$
20.93
Granted
374
$
47.13
Vested
( 249
)
$
20.85
Cancelled
( 31
)
$
19.80
Outstanding as of June 29, 2025
749
$
34.10
22
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Valuation and Expense Information
The following table sets forth the stock-based compensation expense resulting from stock options, RSUs (time-based and performance-based) and the ESPP included in the Company’s unaudited condensed consolidated statements of operations:
Three Months Ended
Six Months Ended
(In thousands)
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
Cost of revenue
$
456
$
413
$
878
$
778
Research and development
1,000
844
1,592
1,542
Sales and marketing
1,816
1,235
3,129
2,472
General and administrative
3,403
3,396
6,572
5,640
Total
$
6,675
$
5,888
$
12,171
$
10,432
As of June 29, 2025 , $ 59.7 million of unrecognized compensation cost related to unvested RSUs (time-based and performance-based) expected to be recognized over a weighted-average period of 2.1 years.
Note 12. Segme nt Information
Operating segments are components of an enterprise about which separate financial information is available and is evaluated quarterly by management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By this definition, the Company has identified its CEO as the CODM. As previously announced, i n the first fiscal quarter of 2025, the Company realigned its business structure by separating the Connected Home segment into two distinct reportable segments: Mobile and Home Networking. This realignment is intended to further strengthen the Company's operational and financial management and enable further focus on growth opportunities while maintaining financial discipline. 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. Effective January 1, 2025, the Company operates and reports in three segments: NETGEAR for Business, Mobile, and Home Networking. The prior-year segment financial information has been recast to conform to the current-year presentation.
• 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;
• Mobile: 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.
• Home Networking: 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 results of the reportable segments are derived directly from the Company’s management reporting system. The results are based on the Company’s method of internal reporting and are not necessarily in conformity with accounting principles generally accepted in the United States. Management measures the performance of each segment based on several metrics, including contribution income (loss). Segment contribution income (loss) includes all product line segment revenues less the related cost of sales, research and development and sales and marketing costs. Contribution income (loss) is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. 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, stock-based compensation expense, acquisition related expenses, restructuring and other charges, litigation reserves, net, and other income (expenses), net.
23
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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
June 29, 2025
June 30, 2024
(In thousands, except percentage data)
NETGEAR for Business
Mobile
Home Networking
Total
NETGEAR for Business
Mobile (2)
Home Networking (2)
Total
Net revenue
$
82,621
$
20,408
$
67,503
$
170,532
$
59,867
$
24,332
$
59,701
$
143,900
Cost of revenue
44,036
14,476
47,586
106,098
39,720
19,081
52,863
111,664
Gross profit
38,585
5,932
19,917
64,434
20,147
5,251
6,838
32,236
Gross margin
46.7
%
29.1
%
29.5
%
37.8
%
33.7
%
21.6
%
11.5
%
22.4
%
Operating expenses
22,623
5,799
16,763
45,185
18,086
6,418
19,465
43,969
Contribution income (loss)
15,962
133
3,154
19,249
2,061
( 1,167
)
( 12,627
)
( 11,733
)
Contribution margin
19.3
%
0.7
%
4.7
%
11.3
%
3.4
%
( 4.8
)%
( 21.2
)%
( 8.2
)%
Corporate and unallocated costs
( 20,472
)
( 19,350
)
Stock-based compensation expense
( 6,675
)
( 5,888
)
Acquisition related expenses
( 705
)
—
Restructuring and other charges
( 862
)
( 1,688
)
Litigation reserves, net
( 75
)
( 8,200
)
Other income, net (1)
3,976
2,713
Loss before income taxes
$
( 5,564
)
$
( 44,146
)
Six Months Ended
June 29, 2025
June 30, 2024
(In thousands, except percentage data)
NETGEAR for Business
Mobile
Home Networking
Total
NETGEAR for Business
Mobile (2)
Home Networking (2)
Total
Net revenue
$
161,812
$
41,890
$
128,890
$
332,592
$
128,490
$
53,071
$
126,925
$
308,486
Cost of revenue
86,566
30,678
94,166
211,410
79,609
42,853
105,186
227,648
Gross profit
75,246
11,212
34,724
121,182
48,881
10,218
21,739
80,838
Gross margin
46.5
%
26.8
%
26.9
%
36.4
%
38.0
%
19.3
%
17.1
%
26.2
%
Operating expenses
41,649
10,822
33,292
85,763
36,916
12,366
39,525
88,807
Contribution income (loss)
33,597
390
1,432
35,419
11,965
( 2,148
)
( 17,786
)
( 7,969
)
Contribution margin
20.8
%
0.9
%
1.1
%
10.6
%
9.3
%
( 4.0
)%
( 14.0
)%
( 2.6
)%
Corporate and unallocated costs
( 39,240
)
( 39,156
)
Stock-based compensation expense
( 12,171
)
( 10,432
)
Acquisition related expenses
( 705
)
—
Restructuring and other charges
( 5,604
)
( 2,720
)
Litigation reserves, net
( 38
)
( 8,230
)
Other income, net (1)
12,147
5,563
Loss before income taxes
$
( 10,192
)
$
( 62,944
)
(1) Amoun ts included interest income of $ 3.1 million and $ 6.4 million for the three and six months ended June 29, 2025, respectively, and $ 2.5 million and $ 5.0 million for the three and six months ended June 30, 2024, respectively. Amounts also included gain/(loss), net from derivatives not designated as hedging instruments of $( 2.1 ) million and $( 3.1 ) million for the three and six months ended June 29, 2025 , respectively, and $ 0.6 million and $ 2.1 million for the three and six months ended June 30, 2024, respectively. For the six months ended June 29, 2025 , the amount also included proceeds of $ 4.7 million from a sale of patents.
(2) Financial information for the Mobile segment and Home Networking segment in the prior year period were recast to conform to the current reportable segment structure.
The CODM does not evaluate operating segments using discrete asset information.
24
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Operations by Geographic Region
For reporting purposes, revenue is generally attributed to each geographic region based on the location of the customer.
The following table shows net revenue by geography:
Three Months Ended
Six Months Ended
(In thousands)
June 29, 2025
June 30, 2024
June 29, 2025
June 30, 2024
United States (U.S.)
$
112,762
$
92,794
$
216,801
$
200,083
Americas (excluding U.S.)
3,517
2,709
7,239
5,348
EMEA (1)
34,375
27,355
66,504
58,542
APAC (1)
19,878
21,042
42,048
44,513
Total net revenue
$
170,532
$
143,900
$
332,592
$
308,486
(1) No individual foreign country represented more than 10 % of the Company’s total net revenue in the periods presented.
Long-lived assets by Geographic Region
The following table presents the Company’s long-lived assets located in geographic areas, which consist of property and equipment, net, and operating lease right-of-use assets:
(In thousands)
June 29, 2025
December 31, 2024
United States (U.S.)
$
18,605
$
19,057
Canada
4,980
5,573
Americas (excluding U.S. and Canada)
19
39
EMEA
2,883
3,127
Singapore
3,974
4,841
APAC (excluding Singapore) (1)
6,380
6,698
Total
$
36,841
$
39,335
(1) No individual country represented more than 10 % of the Company’s total long-lived assets in the periods presented.
25
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 13. Fair V alue Measurements
The following tables summarize assets and liabilities measured at fair value on a recurring basis:
June 29, 2025
(In thousands)
Total
Quoted market
prices in active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Assets:
Cash equivalents: money-market funds
$
114,933
$
114,933
$
—
Available-for-sale investments: U.S. treasury securities (1)
119,702
—
119,702
Trading securities: mutual funds (1)
2,750
2,750
—
Foreign currency forward contracts (2)
435
—
435
Total assets measured at fair value
$
237,820
$
117,683
$
120,137
Liabilities:
Foreign currency forward contracts (3)
$
1,694
$
—
$
1,694
Total liabilities measured at fair value
$
1,694
$
—
$
1,694
December 31, 2024
(In thousands)
Total
Quoted market
prices in active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Assets:
Cash equivalents: money-market funds
$
111,043
$
111,043
$
—
Available-for-sale investments: U.S. treasury securities (1)
119,370
—
119,370
Trading securities: mutual funds (1)
2,876
2,876
—
Foreign currency forward contracts (2)
1,053
—
1,053
Total assets measured at fair value
$
234,342
$
113,919
$
120,423
Liabilities:
Foreign currency forward contracts (3)
$
273
$
—
$
273
Total liabilities measured at fair value
$
273
$
—
$
273
(1) Included in Short-term investments on the Company’s unaudited condensed consolidated balance sheets.
(2) Included in Prepaid expenses and other current assets on the Company’s unaudited condensed consolidated balance sheets.
(3) Included in Other accrued liabilities on the Company's unaudited condensed consolidated balance sheets.
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. treasury securities are classified within Level 2 of the fair value hierarchy because they are valued based on readily available pricing sources for comparable or identical instruments in less active markets. The Company’s foreign currency forward contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that consider the contract terms as well as currency rates and counterparty credit rates. The Company verifies the reasonableness of these pricing models using observable market data for related inputs into such models. The Company enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher. The carrying value of non-financial assets and liabilities measured at fair value in the financial statements on a recurring basis, including accounts receivable and accounts payable, approximate fair value due to their short maturities.
Note 14. Restructuring and Other Charges
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.
26
Table of Contents
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Restructuring and other charges recognized in the three and six months ended June 29, 2025 and June 30, 2024, respectively, were primarily for severance, and other costs in relation to the reorganization of the business. These initiatives were undertaken to reduce costs, and reinvest into the business to capitalize on the Company's highest priority opportunities to drive revenue growth and improve profitability. The vast majority of the liabilities as of June 29, 2025 are expected to be settled in 2025.
The following table provides a summary of the activity related to accrued restructuring and other charges:
(In thousands)
Accrued Restructuring and Other Charges at December 31, 2024
Additions
Cash Payments
Adjustments
Accrued Restructuring and Other Charges at June 29, 2025
Restructuring
Employee termination charges
$
664
$
5,531
$
( 4,783
)
$
20
$
1,432
Lease contract termination and other charges
—
73
( 10
)
( 35
)
28
Total Restructuring and other charges
$
664
$
5,604
$
( 4,793
)
$
( 15
)
$
1,460
(In thousands)
Accrued Restructuring and Other Charges at December 31, 2023
Additions
Cash Payments
Adjustments
Accrued Restructuring and Other Charges at June 30, 2024
Restructuring
Employee termination charges
$
257
$
2,504
$
( 2,139
)
$
—
$
622
Lease contract termination and other charges
30
216
( 86
)
( 160
)
—
Total Restructuring and other charges
$
287
$
2,720
$
( 2,225
)
$
( 160
)
$
622
27
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.