What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-01 compared with 2025-10-31 · 158 added, 227 removed, 199 unchanged (66% of the section changed)

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NETGEAR's belief of the principal competitive factors in the business, consumer, and service provider markets for networking products;

expectations regarding more predictable performance that is aligned to the market, including as a result of our efforts to work with our channel partners to optimize their inventory carrying levels;

expectations regarding transportation costs;

expectations regarding product costs;

NETGEAR’s ability to continue launching new consumer router models, providing software updates to existing products, and maintain conditional approval from the Federal Communications Commission in connection with its Covered List designation of foreign-produced routers and additional costs incurred in connection with complying with applicable regulations;

NETGEAR’s strategy of capitalizing on technological inflection points, developing products that serve a broader segment and simplifying and developing service offerings that build recurring service revenue streams;

expectations regarding paid revenue from paid subscription service plans;

expectations regarding product mix and market demand for NETGEAR’s products and services, including Enterprise, 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 Enterprise and Consumer products and subscription services and NETGEAR’s ability to respond to this demand;

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

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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;

expectations regarding the impact of acquisitions;

expectations regarding our product portfolio, and expectations regarding NETGEAR’s subscription services and service revenue.

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and its subsidiaries.

Use of Non-GAAP Financial Measures

In the following discussion and analysis, we present certain non-GAAP financial measures, including segment gross profit, segment gross margin, segment operating expenses (consisting of segment research and development, and sales and marketing), segment contribution income (loss) and segment contribution margin.

These segment measures exclude amortization of intangible assets, stock-based compensation expense, acquisition related expenses, restructuring and other charges, litigation reserves, net, and other corporate-level items that are managed at the corporate level and not allocated to our segments, as further described in Note 12, Segment Information, in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Our Chief Operating Decision Maker (“CODM”) uses these non-GAAP segment measures to evaluate the operating performance of each segment, in connection with operating and resource allocation decisions, for comparison with forecasts and strategic plans, and in determining management incentive compensation.

We believe these measures, when read together with our GAAP results, provide useful information to investors by facilitating period-to-period comparisons of our ongoing segment results and offering insight into how management measures segment performance.

These non-GAAP measures are not in accordance with, or an alternative for, financial measures prepared in accordance with GAAP, and may be different from non-GAAP measures used by other companies.

They have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, and should not be considered in isolation or as a substitute for the most directly comparable GAAP measures.

Investors should evaluate these measures only in conjunction with the corresponding GAAP measures and the reconciliation of segment contribution income (loss) to income (loss) before income taxes included in Note 12, Segment Information, in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Business and Executive Overview

We are a global leader in innovative and advanced networking technologies for businesses, homes, and service providers.

We deliver a wide range of intelligent solutions designed to unleash the full potential of connectivity.

Our goal is to power extraordinary experiences where people collaborate and connect to a world of information and innovation.

Our 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 our good, better, and best WiFi solutions, security and support services to protect and enhance business and home networks.

Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, including cybersecurity and product security, audio and video over Ethernet, multi-Gigabit internet service to homes, WiFi 7, eSIM and future technologies.

Our 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 our product line offerings.

These products are available in multiple configurations to address the changing needs of our customers in each geographic region.

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 strengthened our operational and financial management and enabled greater focus on

segment-specific growth opportunities while maintaining financial discipline.

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

Enterprise, Home Networking and Mobile.

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

Beginning in the fourth quarter of 2025, we plan to further streamline our reporting structure by transitioning to two reportable segments:

NETGEAR Enterprise and NETGEAR Consumer.

This next phase of realignment is intended to align our financial reporting more closely with our go-forward business strategy and customer focus.

The simplified structure is designed to enhance operational efficiency, better align resources with our strategic priorities, and provide greater transparency into business performance.

We are a global provider of networking technologies for businesses, homes, and service providers.

We deliver a wide range of networking hardware, software, and services designed to enable reliable connectivity and security.

Our mission is to unleash the full potential of connectivity with intelligent solutions that delight and protect.

We are executing a multi-phase transformation to strengthen execution, reinforce our core businesses, and support long-term growth and margin expansion, while exercising strong operational discipline.

Our products and services are delivered through integrated platforms that combine hardware, software, and services.

Our connected solutions range from switching and wireless products that support audio and video (“AV”) over Ethernet for Pro AV applications and business networks to WiFi networking solutions, security and support services for enterprise and home networks.

We continually invest in research and development to create new technologies and services and to address technological trends such as AV over Ethernet, multi-Gigabit connectivity, WiFi 7, eSIM and future technologies.

Our product line enables the creation and extension of wired and wireless networks and includes services that complement and enhance our hardware offerings.

These products are available in multiple configurations to address the changing needs of our customers across geographic regions.

We operate and report in two segments:

Enterprise (formerly NETGEAR for Business, renamed in the fourth quarter of 2025) and Consumer.

The leadership team of each segment focuses on serving the unique needs of its customers through product and service development, while also managing the sales and marketing functions that support the business.

During 2025, we realigned our reportable segments, first separating the former Connected Home segment into Home Networking and Mobile effective in the first quarter of 2025, and then combining Home Networking and Mobile into a single Consumer segment beginning in the fourth quarter of 2025.

Prior-year segment information has been recast to conform to the current two-segment presentation.

For additional information regarding the segment realignments, refer to Note 12, Segment Information , in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

The Enterprise segment focuses on small and medium enterprises and provides solutions for audio and video over Ethernet for AV applications, enterprise networking solutions, including wireless local area network (“LAN”) and cloud-managed networking capabilities, software platforms for deployment and remote management, and security offerings, including firewall and secure access service edge (“SASE”) functionality, designed to address the networking, security, and manageability requirements of organizations seeking reliable and cost-effective connectivity.

The Consumer 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, together with 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.

We conduct business across three geographic regions:

Americas, EMEA, and APAC.

Europe, Middle East and Africa (“EMEA”);

and Asia Pacific (“APAC”).

Business Overview

The markets in which our segments operate are intensely competitive and subject to rapid technological evolution.

The enterprise, consumer, and service provider markets are intensely competitive and subject to rapid technological change.

We expect competition to continue to intensify.

We believe that the principal competitive factors in the business, consumer, and service provider markets for networking products include product breadth, price points, brand name, security and privacy, performance, features, functionality and reliability, product availability, timeliness of new product introductions, size and scope of the sales channel, ease-of-installation, maintenance and use, and customer service and support.

To remain competitive, we believe we must continue to aggressively invest resources in highly differentiated, “good, better, best”, high performance reliable and trusted connectivity solutions, complemented by valuable subscription services, expanding our sales channels including our direct-to-consumer capabilities and custom installers, increasing engagement with our customers and manufacturing partners, and maintaining customer satisfaction worldwide.

Our investments reflect our enhanced focus on the security of our products and systems, as the threat of cyber-attacks and exploitation of potential security vulnerabilities in our industry is on the rise and is increasingly a significant consumer concern.

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, DMRs, VARs, broadband service providers, and through our direct online store at www.netgear.com.

Our retail channel includes traditional and online retail locations both domestically and internationally, such as Amazon.com (worldwide), Best Buy, Wal-Mart, Staples, Office Depot, Target, Electra (Sweden), Fnac Darty (Europe), JB HiFi (Australia), Elkjop (Norway), and Boulanger (France).

Our DMRs include CDW Corporation, Insight Corporation, and Connection in domestic markets.

We seek to differentiate our offerings through integrated hardware and software solutions, partner relationships, centralized management capabilities, and services.

To remain competitive, we focus on investing in differentiated connectivity solutions across a range of performance tiers, complemented by subscription-based services, expanding and supporting our sales channels, strengthening engagement with customers and partners, and maintaining a high level of customer satisfaction.

Our investments

align with our strategic priorities, including investments in enterprise and Pro AV initiatives and selective acquisitions intended to enhance software and security capabilities.

We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, direct market resellers (“DMRs”), managed service providers (“MSPs”), broadband service providers, and through our direct online store at www.netgear.com.

Our main wholesale distributors include Ingram Micro, TD Synnex, and D&H Distribution Company.

In addition, we also sell our products through broadband service providers, such as multiple system operators, xDSL, mobile, and other broadband technology operators domestically and internationally.

Our DMRs include CDW Corporation, Insight Corporation, and PC Connection in domestic markets.

In addition, we also sell products directly to broadband service providers in the United States and internationally providing WiFi, cable and 4G/5G mobile broadband products.

Some of these retailers and broadband service providers purchase directly from us, while others are fulfilled through wholesale distributors around the world.

A substantial portion of our net revenue is derived from a limited number of wholesale distributors, service providers and retailers.

While we expect these channels to continue to be a significant part of our sales strategy, additionally customers are purchasing products and services directly from us.

We expect revenue through our direct online store or in-app offerings to continue to increase for the foreseeable future.

While we expect these channels to continue to be a significant part of our sales strategy, increasingly, customers are choosing to purchase products and services directly from us.

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

Financial Overview

During the three months ended September 28, 2025, our net revenue increased by $1.7 million, compared to the prior year period, primarily due to a $12.3 million increase in the Enterprise segment, partially offset by a $5.5 million decline in the Mobile segment and a $5.1 million decline in the Home Networking segment.

The increase in Enterprise net revenue was mainly attributable to continued strong demand for Pro AV product line of managed switches, which achieved double-digit end-market sales growth, benefiting from higher average selling prices and increased unit volumes.

The decline in the Mobile

segment was mainly due to lower service provider channel sales.

The decline in the Home Networking segment was primarily due to a reduction in market share amid increased competition.

Gross margin improved by 820 basis points year-over-year, primarily due to a favorable product mix weighted toward Enterprise and lower inventory costs resulting from the depletion of older, higher-cost inventory.

These improvements, along with higher net revenue, partially offset the operating loss for the current period.

We recorded an operating loss of $7.1 million, compared to operating income of $95.8 million in the prior year period.

The change was mainly attributable to the payment received from the successful settlement of TP-Link litigation in the prior year, which resulted in the recognition of a $92.7 million contra-expense in litigation reserves, the reversal of an $8.2 million contingent liability for success-based legal fees, and a $10.9 million reduction in general and administrative expenses to offset the related legal fees incurred.

Additionally, we incurred higher facility-related costs in the current quarter associated with the completion of our relocation to the new San Jose headquarters.

Geographically, net revenue from Enterprise segment increased in all three regions, while net revenue from Mobile segment slightly increased in EMEA but decreased in Americas and APAC, and net revenue from Home Networking segment declined in all three regions, during the three months ended September 28, 2025, compared to the prior year period, respectively.

During the three months ended March 29, 2026, our net revenue decreased by $3.2 million, or 2.0%, compared to the prior year period, driven by a $7.8 million, or 9.5%, decrease in our Consumer segment, partially offset by a $4.6 million, or 5.8%, increase in our Enterprise segment.

The decrease in Consumer net revenue reflected a 31.9% decline in sales of our service provider and related products, consistent with our strategy of harvesting this business.

It also reflected continued softness in the broader home networking retail market, attributable in part to electronics pricing pressures from rising memory costs.

In light of these conditions, we have been prioritizing gross profit over revenue growth in our Consumer business.

These declines were partially offset by growth in our core consumer business, led by our premium WiFi 7 portfolio.

The increase in Enterprise net revenue was mainly attributable to continued strong demand for our Pro AV product line of managed switches, which experienced double-digit end-market sales growth in the Americas and EMEA regions, benefiting from higher average selling prices and increased unit volumes.

Gross margin improved by 570 basis points year-over-year to 40.5%, primarily driven by margin expansion in both segments, a higher revenue mix from our higher-margin Enterprise segment and lower sales returns within our consumer business.

We recorded an operating loss of $13.6 million, compared to an operating loss of $12.8 million in the prior year period, as the gross margin improvement was partially offset by higher operating expenses, mainly driven by higher headcount and related investments as we continue to focus on and shift resources toward growing our Enterprise business.

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

Global Events Affecting our Business and Operations

Macroeconomic and geopolitical trends have continued to create uncertainty in the global economic environment.

Contributing factors include persistent inflation, recent delays in the release of certain U.S.

economic data, elevated though declining interest rates, foreign exchange rate fluctuation, particularly involving the U.S.

Contributing factors include persistent inflation, elevated interest rates, foreign exchange rate fluctuations, particularly involving the U.S.

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

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

and key international countries as well as U.S.

tariffs and intensified trade actions.

Geopolitical tensions and episodic maritime security incidents along with evolving supply chain disruptions and volatile ocean freight spot rates have further added to the complexity of the global landscape.

In light of this environment, we continue to invest in cybersecurity, product security, and sourcing to enhance security of our products as well as regulatory compliance readiness.

Trade policy uncertainty, including recently announced and proposed U.S.

tariff actions and the potential for further expanded or modified tariff regimes, continues to affect global commerce and supply chain planning, and could increase our product costs.

Geopolitical tensions and episodic maritime security incidents, to the extent that they disrupt global shipping routes, along with evolving supply chain disruptions and volatile ocean freight spot rates, have added complexity to the global operating environment.

We are exposed to lengthening lead times and increasing costs on various components, driven in part by industry demand related to AI data center deployments, which have created additional pressures within our supply chain.

In light of this environment, we continue to invest in cybersecurity, product security, and sourcing to enhance the security of our products as well as our regulatory compliance readiness.

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

The broader implications of the macroeconomic uncertainty, and any related disruptions to channel partners and freight remain unpredictable.

Refer to Item 1A, Risk Factors of Part II of this Quarterly Report on Form 10-Q for various risks and uncertainties associated with the macroeconomic trends, uncertainty and strategic investment initiatives.

Looking forward, we expect continued strong end-user demand for our Pro AV product line of managed switches within the Enterprise segment.

While we anticipate ongoing improvements in our supply position, we expect supply constraints to persist, which may limit our ability to fully capture the topline potential of this growing business.

For our Home Networking segment, we are seeing positive signs from our broader product portfolio as it continues to address market needs.

For our Mobile segment, we expect revenue to remain consistent with the third fiscal quarter as we await new product introductions to expand the portfolio, with benefits expected to materialize next year.

As we further ramp our planned investments, with a focus on insourcing software development capabilities and enhancing our go-to-market efforts to support our Enterprise business, we are also executing 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.

In addition, in March 2026, the Federal Communications Commission issued regulations adding foreign-produced routers to its Covered List, and in April 2026 we were granted conditional approval allowing us to continue to launch new consumer router models and provide software updates to existing products while the designation is maintained.

The broader implications of the macroeconomic uncertainty, the evolving regulatory environment affecting our

products, and any related disruptions to channel partners and freight remain unpredictable.

Refer to Item 1A, Risk Factors of Part II of this Quarterly Report on Form 10-Q for various risks and uncertainties associated with the macroeconomic trends and uncertainty.

Looking forward, we expect end-user demand for our Pro AV product line of managed switches within the Enterprise segment to remain strong, and we have secured sufficient memory supply for substantially all of our 2026 production plans for this segment.

We expect the impact of rising memory costs on our Enterprise business to be nominal, given the relatively higher average selling prices and gross margins of these products and our ability to adjust pricing consistent with broader market trends.

In our Consumer segment, while our broader product portfolio continues to address market needs, we expect rising memory costs to continue to build throughout 2026 and, accordingly, we intend to prioritize gross profit over revenue in this segment as we manage through the current memory supply environment.

For our service provider and related products, we remain focused on harvesting this business and expect revenue to decline compared to the prior year period.

We expect the greater benefit of our memory cost mitigation efforts to accrue to our Enterprise business.

We are continuing to ramp our planned investments, with a focus on expanding our insourced software development capabilities and enhancing our go-to-market efforts, particularly in support of our Enterprise business.

These investments support our strategy of differentiating our portfolio through software, services, and security offerings.

Within our Consumer business, we are addressing key technology transitions, including WiFi 7, WiFi 6E, WiFi 6, and 5G, through a good, better, best product strategy.

We are also continuing to expand service offerings, strengthen direct-to-consumer capabilities, and introduce new products, including the planned launch of our eSIM-enabled M7 mobile hotspot, to support the expansion of recurring non-device revenue streams over time.

Critical Accounting Estimates

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Cost of revenue

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Total operating expenses

Income (loss) from operations

Loss from operations

Other income, net

Income (loss) before income taxes

Loss before income taxes

Provision for income taxes

Net income (loss)

Net Revenue by Geographic Region

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Percentage of net revenue

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Total net revenue

Net revenue in Americas increased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to growth in Enterprise segment's net revenue of 13.2% and 25.8%, partially offset by decreases in the Mobile segment’s net revenue of 21.0% and 25.2%, respectively.

Enterprise net revenue increased primarily due to higher demand for Pro AV product line of managed switches, while Mobile segment net revenue declined primarily due to lower sales in the service provider channel, compared to the prior year periods.

Additionally, Enterprise net revenue for the nine-month period benefited from the prior year’s first-half inventory optimization efforts with channel partners.

Net revenue in EMEA increased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily driven by growth in the Enterprise segment, which increased 21.9% and 22.8%, respectively.

The improvement reflected continued strong demand for the Pro AV product line of managed switches.

Net revenue in EMEA in the nine-month period also benefited from the prior-year first-half inventory optimization efforts with our channel partners.

Net revenue in APAC decreased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily attributable to declines in the Home Networking segment’s net revenue of 52.0% and 45.8%, respectively, mainly driven by lower sales in both the retail and the service provider channels.

These declines were partially offset by growth in the Enterprise segment’s net revenue of 12.7% and 11.0%, respectively, primarily attributable to higher demand for the Pro AV product line of managed switches.

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

Net revenue in Americas decreased in the three months ended March 29, 2026, compared to the prior year period, primarily driven by a $6.2 million, or 9.1%, decline in Consumer segment net revenue, mainly attributable to reduced sales of our service provider and related products, consistent with our strategy of harvesting this business.

This decline was partially offset by a $4.3 million, or 10.5%, increase in Enterprise segment net revenue, driven by continued strong demand for our Pro AV product line of managed switches.

Net revenue in EMEA increased in the three months ended March 29, 2026, compared to the prior year period, primarily driven by growth in both the Enterprise and Consumer segments.

The increase in Enterprise revenue was primarily attributable to continued strong demand for our Pro AV product line of managed switches, while the increase in Consumer revenue was primarily driven by higher sales of our mobile hotspot products.

Net revenue in APAC decreased in the three months ended March 29, 2026, compared to the prior year period, primarily attributable to a 29.1% decline in Consumer segment net revenue, driven by lower sales in the service provider channel, and a slight decrease in Enterprise segment net revenue.

For further discussions specific to our Enterprise and Consumer segments, refer to the " Segment Information " section below.

Cost of Revenue and Gross Margin

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Cost of revenue

Gross margin percentage

Our gross margin increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to a higher mix of Enterprise products, which generally carry higher gross margins, and lower inventory costs resulting from the depletion of older, higher-cost inventory.

The increase in the nine-month period also benefited from reduced sales returns and lower charges for excess and obsolete inventory.

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

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

We expect our gross margin in the second fiscal quarter of 2026 to be in line with or slightly below the first fiscal quarter of 2026, reflecting our expectation that mitigation efforts will largely offset the impact of rising memory costs, with the greater benefit accruing to our Enterprise business.

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

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Research and development

Research and development expenses increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily driven by higher personnel-related expenditures of $1.9 million and $3.8 million, respectively, mainly due to higher head count and higher variable compensation.

These increases were partially offset by decreases in engineering projects and outside professional services of $0.5 million and $1.9 million, for the three- and nine-month periods, respectively.

Additionally, IT and facility allocations increased by $0.7 million for the three-month period but decreased by $0.7 million for the nine-month period.

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

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 fourth fiscal quarter of 2025 to be in line or slightly increase from the third 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, Enterprise 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 Enterprise 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.

In the second quarter of 2025, we 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 recently onboarded teams focus on leveraging artificial intelligence or integrating networking security to significantly simplify networking solutions for small and medium-sized businesses.

We expect research and development expenses in absolute dollar amount in the second fiscal quarter of 2026 to be in line with or slightly above the first fiscal quarter of 2026 level.

We anticipate that our research and development efforts will increasingly focus on software, security, and capabilities that support subscription-based services and margin improvement.

We also expect that our Enterprise segment will receive most of our incremental investments for 2026 with a focus on in-sourcing our software capabilities, building on our acquisitions of VAAG Systems and Exium completed in the prior year, and expanding our product portfolio to grow our share in the sizable AV and enterprise WiFi markets.

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

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Sales and marketing

Sales and marketing expenses increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily driven by higher personnel-related expenditures of $3.1 million and $6.8 million, respectively, mainly due to higher headcount and variable compensation.

These increases were partially offset by decreases in brand marketing expenditures of $0.8 million and $2.9 million and in outside professional services of $0.7 million and $2.1 million for the three- and nine-month periods, respectively.

Additionally, outbound freight costs increased by $0.5 million for the three-month period but decreased by $0.6 million for the nine-month period.

We expect sales and marketing expenses in absolute dollar amount in the fourth fiscal quarter of 2025 to be in line with the third quarter of 2025 level.

Sales and marketing expenses increased for the three months ended March 29, 2026, compared to the prior year period, primarily driven by higher personnel-related expenditures of $2.9 million, mainly due to higher headcount, reflecting investments to expand our go-to-market capabilities in support of our Enterprise business, and higher outside professional service fees of $0.7 million.

We expect sales and marketing expenses in absolute dollar amount in the second fiscal quarter of 2026 to be in line with the first fiscal quarter of 2026 level.

We expect most of our incremental investments in sales and marketing in 2026 will be related to go-to-market capabilities of our product offerings in the Enterprise segment, partially offset by efficiencies in marketing on the Consumer side.

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General and administrative

General and administrative expenses increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to the absence of a $10.9 million reduction in expenses recorded in the prior year periods to offset legal fees associated with the successful TP-Link litigation settlement.

The increases for the three- and nine-month periods were also driven by higher personnel-related expenditures of $2.0 million and $4.0 million, respectively.

The higher personnel-related expenditures were mainly due to increased stock-based compensation associated with executive transitions, and higher variable compensation.

We expect general and administration expenses in absolute dollar amount in the fourth fiscal quarter of 2025 to decrease from the third quarter of 2025 level.

General and administrative expenses increased for the three months ended March 29, 2026, compared to the prior year period, primarily due to higher personnel-related expenditures of $1.2 million, mainly driven by stock-based compensation expense from our executive transition.

We expect general and administrative expenses in absolute dollar amount in the second fiscal quarter of 2026 to be in line with the first fiscal quarter of 2026 level.

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

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

Litigation Reserves, Net

Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Litigation reserves, net

** Percentage change not meaningful.

The increases in litigation reserves, net for the three and nine months ended September 28, 2025, compared to the prior year periods, were primarily attributable to the prior-year recognition of a $92.7 million contra-expense and the reversal of an $8.2 million contingent liability for success-based legal fees, both resulting from payment received from the successful settlement of TP-Link litigation.

Restructuring and Other Charges

Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

March 29, 2026

March 30, 2025

Restructuring and other charges

Restructuring and other charges increased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to restructuring activities initiated in January 2025 and carried out throughout the year.

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.

Restructuring and other charges for the three months ended March 29, 2026 were essentially flat compared to the prior year period.

Charges in the current year primarily reflect a new restructuring action initiated in the first quarter of 2026, with the resulting savings intended to be reinvested in our strategic priorities to support our ongoing transformation.

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

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Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

March 29, 2026

March 30, 2025

Other income, net

The decrease in other income, net for the three months ended September 28, 2025, compared to the prior year period, was primarily due to lower interest income resulting from lower cash and short-term investment balances.

The increase in other income, net for the nine months ended September 28, 2025, compared to the prior year period, was primarily due to $4.7 million of proceeds from the sale of patents in the current year, higher net gains on foreign currency transactions and contracts, and higher interest income resulting from higher average cash and short-term investment balances.

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

Provision for Income Taxes

Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

March 29, 2026

March 30, 2025

Provision for income taxes

Effective tax rate

Due to our full valuation allowance for U.S.

federal and state tax purposes, the changes in taxes for the three and nine months ended September 28, 2025, compared to the prior year periods, were primarily a result of our reporting $99.3 million and $36.3 million of pretax book income for the three and nine months ended September 29, 2024, respectively, and the current income tax implications of this income with no deferred tax benefit in the 2024 year as compared to our reporting $4.0 million and $14.2 million of pretax book loss for the three and nine months ended September 28, 2025 and the current income tax implications in the 2025 year with no deferred tax benefit.

The year-over-year change was primarily driven by increased losses in the United States and lower income in foreign jurisdictions during the first quarter of 2026 relative to the prior-year period.

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

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and foreign jurisdictions.

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

The OBBBA is not currently expected to materially impact our 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.

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

Enterprise, Home Networking and Mobile.

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

Additional information on the realignment, a description of our products and services, as well as segment financial data, for each segment and a reconciliation of segment contribution income (loss) to income (loss) before income taxes can be found in Note 12, Segment Information , and information on net revenue by sales channels can be found in Disaggregation of Revenue in Note 3, Revenue , in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

As disclosed above, during 2025 we realigned our reportable segments, first separating the former Connected Home segment into Home Networking and Mobile effective in the first quarter of 2025, and then combining Home Networking and Mobile into a single Consumer segment and renaming our NETGEAR for Business segment to Enterprise beginning in the fourth quarter of 2025.

As a result, we now operate and report in two segments:

Enterprise and Consumer.

Prior-period segment financial information has been recast to conform to the current presentation.

Additional information on the realignment, a description of our products and services, as well as segment financial data, for each segment and a reconciliation of segment contribution income (loss) to income (loss) before income taxes can be found in Note 12, Segment Information , and information on net revenue by product category can be found in Disaggregation of Revenue in Note 4, Revenue , in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Enterprise Segment

Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

March 29, 2026

March 30, 2025

Percentage of net revenue

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Contribution margin

Enterprise segment's net revenue increased in the three and nine months ended September 28, 2025, primarily driven by continued strong demand for Pro AV product line of managed switches, compared to the prior year periods.

This growth reflected double-digit end-market sales expansion, benefiting from higher average selling prices and increased unit volumes.

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

Geographically, net revenue increased in all three regions in the three- and nine-month periods, driven by higher demand for the Pro AV product line of managed switches, with the nine-month period also benefiting from first-half prior-year inventory optimization efforts with our channel partners.

Enterprise segment's contribution income increased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to higher net revenue and improved gross margins, mainly driven by a higher mix of our Pro AV product line of managed switches.

The increase for the nine-month period was also attributable to the reduced charges for excess or obsolete inventory.

Home Networking Segment

Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

Percentage of net revenue

Contribution income (loss)

Contribution margin

** Percentage change not meaningful.

Home Networking segment's net revenue decreased in the three and nine months ended September 28, 2025, compared to the prior year periods.

The decrease in the three-month period was primarily driven by reduced market share amid increased competition, while the decline in the nine-month period reflected the impact of broader market softness experienced earlier in the year.

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 declined across all three regions

for the three and nine months ended September 28, 2025, compared to the prior year periods, except for an increase in Americas during the nine-month period.

Home Networking segment generated contribution income in the three and nine months ended September 28, 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, higher service revenue, 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 initiated in January 2025 and carried out throughout the year.

Mobile Segment

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

Geographically, net revenue from our Enterprise segment increased in Americas and EMEA and slightly decreased in APAC.

Enterprise segment contribution income increased in the three months ended March 29, 2026, compared to the prior year period, primarily due to higher net revenue and higher gross margins, mainly driven by a higher mix of our Pro AV product line of managed switches, together with a continuing benefit from a perpetual software license acquired in the fourth quarter of fiscal 2025.

These increases were partially offset by higher operating expenses, primarily driven by increased headcount and related investments as we continue to focus on and shift resources toward growing our Enterprise business.

Consumer Segment

Three Months Ended

Nine Months Ended

(In thousands, except percentage data)

September 28, 2025

September 29, 2024

September 28, 2025

September 29, 2024

March 29, 2026

March 30, 2025

Percentage of net revenue

Contribution income (loss)

Contribution loss

Contribution margin

** Percentage change not meaningful.

Mobile segment's net revenue decreased in the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to declines in net revenue in service provider channel.

Geographically, Mobile segment's net revenue declined across all three regions for the three and nine months ended September 28, 2025, except for a slight increase in EMEA during the three-month period, compared to the prior year periods.

Mobile segment generated contribution income in the three and nine months ended September 28, 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, decreased contra-revenue marketing expenses, lower charges for excess or obsolete inventory, and favorable changes in product mix.

Consumer segment net revenue decreased in the three months ended March 29, 2026, compared to the prior year period.

The decrease in Consumer net revenue reflected a 31.9% decline in sales of our service provider and related products, consistent with our strategy of harvesting this business.

It also reflected continued softness in the broader home networking retail market, attributable in part to electronics pricing pressures from rising memory costs.

These declines were partially offset by growth in our core consumer business, including our premium WiFi 7 portfolio.

Geographically, Consumer segment net revenue declined in Americas and APAC and slightly increased in EMEA.

Given the rising cost of memory and related components, we are prioritizing gross profit over revenue growth in our Consumer business.

Consumer segment contribution loss decreased in the three months ended March 29, 2026, compared to the prior year period.

The improvement was primarily driven by higher gross margins, which benefited from a more favorable product mix of WiFi 7 products, and lower sales returns.

Liquidity and Capital Resources

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

As of September 28, 2025, we had cash, cash equivalents and short-term investment of $326.4 million, a decrease of $82.3 million from December 31, 2024.

As of September 28, 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 of March 29, 2026, we had cash, cash equivalents and short-term investments of $296.5 million, a decrease of $26.5 million from December 31, 2025.

As of March 29, 2026, approximately 30% of our cash and cash equivalents and short-term investments were outside of the U.S., which are subject to fluctuation based on the settlement of intercompany balances.

As we repatriate these funds in accordance with our designation of funds not permanently reinvested outside of the U.S., we will be required to pay income taxes in certain U.S.

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The following table presents our cash flows for the periods presented.

Nine Months Ended

Three Months Ended

(In thousands)

September 28, 2025

September 29, 2024

March 29, 2026

March 30, 2025

Cash provided by (used in) operating activities

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Cash used in financing activities

Net cash increase (decrease)

Net cash decrease

Operating activities

Net cash used in operating activities was $17.9 million for the nine months ended September 28, 2025, compared to $143.3 million provided in the prior year period, The change was primarily due to $103.6 million of pre-tax net proceeds

received in the prior year period from the TP- Link litigation settlement, as well as unfavorable working capital movements in the current year period.

Accounts receivable increased from $156.2 million as of December 31, 2024 to $159.9 million as of September 28, 2025, primarily due to the timing of cash collections.

Our inventory increased from $162.5 million as of December 31, 2024 to $166.6 million as of September 28, 2025, as we work to realign inventory carrying levels with projected demands.

Accounts payable (excluding payables related to property and equipment) decreased from $57.4 million as of December 31, 2024 to $54.9 million as of September 28, 2025, primarily due to the timing of inventory receipts and supplier payments.

Net cash provided by operating activities was $1.6 million for the three months ended March 29, 2026, compared to $8.7 million used in the prior year period, primarily reflecting favorable working capital movements in the current period.

Accounts receivable increased slightly from $142.0 million as of December 31, 2025 to $142.2 million as of March 29, 2026.

Our inventory decreased from $176.5 million as of December 31, 2025 to $169.3 million as of March 29, 2026, mainly due to the timing of purchases.

Accounts payable (excluding payables related to property and equipment) increased from $41.6 million as of December 31, 2025 to $42.7 million as of March 29, 2026, primarily due to the timing of inventory receipts and supplier payments.

Investing activities

Net cash used in investing activities increased by $2.7 million for the nine months ended September 28, 2025, compared to the prior year period, mainly due to $12.2 million of payments related to the acquisition of Exium, and higher purchases of property and equipment, primarily related to leasehold improvements for our new headquarters office, partially offset by lower net purchases of short-term investments.

Net cash used in investing activities increased by $2.7 million for the three months ended March 29, 2026, compared to the prior year period, primarily due to higher payments for property and equipment.

Financing activities

Net cash used in financing activities increased by $16.1 million for the nine months ended September 28, 2025, compared to the prior year period, primarily due to higher repurchases of our common stock and higher payments for restricted stock unit tax withholdings, partially offset by higher proceeds from the exercise of stock options.

Net cash used in financing activities increased by $17.5 million for the three months ended March 29, 2026, compared to the prior year period, primarily due to $12.0 million of higher repurchases of our common stock, the absence of $4.6 million of proceeds from the exercise of stock options that were received in the prior year period, and $2.5 million of principal payments

on the deferred purchase price of an intangible asset acquisition in the fourth fiscal quarter of 2025, partially offset by $1.1 million of lower payments for restricted stock unit tax withholdings.

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.

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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 September 28, 2025, approximately 2.0 million shares remained authorized for repurchase under the repurchase program.

We repurchased, retired and reported, based on trade date, approximately 1.3 million and 1.7 million shares of common stock, at a cost of approximately $35.0 million and $22.9 million under the repurchase authorization during the nine months ended September 28, 2025 and September 29, 2024, respectively.

We also withheld and reported, based on trade date, approximately 452,000 shares and 222,000 shares of common stock, at a cost of approximately $11.8 million and $3.3 million during the nine months ended September 28, 2025 and September 29, 2024, respectively, to facilitate the administrative process of withholding and remitting personal income and payroll taxes for individuals receiving Restricted Stock Units.

As of March 29, 2026, approximately 559,000 shares remained authorized for repurchase under the repurchase program.

On April 22, 2026, our Board of Directors authorized an incremental $75.0 million for repurchases of our common stock under the existing repurchase program.

We repurchased, retired and reported, based on trade date, approximately 0.9 million and 0.3 million shares of common stock, at a cost of approximately $20.0 million and $7.5 million under the repurchase authorization during the three months ended March 29, 2026 and March 30, 2025, respectively.

We also withheld and reported, based on trade date, approximately 193,000 shares and 186,000 shares of common stock, at a cost of approximately $4.0 million and $5.1 million during the three months ended March 29, 2026 and March 30, 2025, respectively, to facilitate the administrative process of withholding and remitting personal income and payroll taxes for individuals receiving Restricted Stock Units.

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

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 September 28, 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 September 28, 2025, we had $60.5 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 September 28, 2025, $171.3 million of purchase orders beyond contractual termination periods remained outstanding.

Except as follows, there were no material changes outside of the ordinary course of business in our contractual obligations as of March 29, 2026, from those as of December 31, 2025, disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

We are exposed to lengthening lead times and increasing costs on various components, certain of which are non-cancelable regardless of lead time, and as a result the Company has issued purchase orders to supply chain partners beyond contractual termination periods.

As of March 29, 2026, we had $62.9 million of purchase obligations which represented short-term non-cancellable inventory-related purchase agreements with suppliers, as compared to $55.3 million as of December 31, 2025.

As of March 29, 2026, $224.7 million of purchase orders beyond contractual termination periods remained outstanding.

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

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

During the third fiscal quarter of 2025, the lease commencement date for the new headquarters office lease, which was executed in 2024, occurred.

While the contractual commencement date under the lease agreement differs from the accounting commencement date, the lease has a remaining non-cancelable term of 11 years and is now recognized on the unaudited consolidated balance sheets.

Short-term and long-term undiscounted non-cancelable lease payments associated with this lease totaled approximately $3.1 million and $39.8 million, respectively, as of September 28, 2025.

This lease replaced our previous headquarters lease, which expired in September 2025, around the time of our relocation to the new facility.

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.

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Quantitative and Qualitative Disclosures About Market Risk

During the nine months ended September 28, 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 three months ended March 29, 2026, 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