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Risks Related to our Business, Industry and Operations
+Added: • We obtain several key components from limited or sole sources and if these sources fail to satisfy our supply requirements or we are unable to properly manage our supply requirements with our third-party manufacturers, we may lose sales and experience increased component costs.
• Optimizing our channel partners' inventory levels and product mix within the current environment is challenging, and we have, and may in the future, incur costs associated with excess inventory, or lose sales from having too few products.
−Removed: • To remain competitive and stimulate consumer and business demand, generally and in compliance with newly proposed or future regulations, we must successfully manage new product introductions and transitions of products and services, including with increasing investments in security features and sourcing of critical components from sources to enhance the security features of our products as well as regulatory compliance readiness.
+Added: • To remain competitive and stimulate consumer and business demand, generally and in compliance with newly proposed or future regulations, we must successfully manage new product introductions and transitions of products and services.
• Changes in trade policy and regulation in the United States and other countries, including but not limited to the potential imposition of tariffs, may adversely impact our business, results of operations and financial condition.
• Investment in new business strategies could disrupt our ongoing business, present risks not originally contemplated and materially adversely affect our business, reputation, results of operations and financial condition.
−Removed: • We rely on a limited number of traditional and online retailers, wholesale distributors and service provider customers for a substantial portion of our sales, and our net revenue could decline if they refuse to pay our requested prices or reduce their level of purchases, if there are unforeseen disruptions in their businesses, or if there is significant consolidation in our customer base that results in fewer customers for our products.
−Removed: • We obtain several key components from limited or sole sources.
• Some of our competitors have substantially greater resources than we do, and to be competitive we may be required to lower our prices or increase our sales and marketing expenses, which could result in reduced margins or loss of market share and revenue.
−Removed: • We depend substantially on our sales channels, and our failure to maintain and expand our sales channels would result in lower sales and reduced net revenue.
+Added: • We depend substantially on our sales channels and certain significant customers and loss of and/or failure to maintain and expand our customer sales volume and/or sales channels would result in lower sales and reduced net revenue.
• We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.
−Removed: • Our sales and operations in international markets have exposed us to and may in the future expose us to operational, financial and regulatory risks.
−Removed: • We depend on large, recurring purchases from certain significant customers, and a loss, cancellation or delay in purchases by these customers could negatively affect our revenue.
+Added: If these third-party manufacturers experience any delay, disruption or quality control problems in their operations, we could lose revenue and our brand may suffer.
• The average selling prices of our products typically decrease rapidly over the sales cycle of the product, which may negatively affect our net revenue and gross margins.
−Removed: • If we fail to overcome the challenges associated with managing our broadband service provider sales channel, our net revenue and gross profit will be negatively impacted.
• We expect our operating results to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.
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If we fail to successfully select, execute or integrate our acquisitions, then our business and operating results could be harmed and our stock price could decline.
−Removed: • We invest in companies primarily for strategic reasons but may not realize a return on our investments.
Risks Related to Our Products, Technology, Intellectual Property and Data
−Removed: • We rely upon third parties for technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to develop, sell, maintain and support technologically innovative products would be limited.
−Removed: • Product security vulnerabilities, system security risks, data protection breaches, cyber-attacks, improper use of artificial intelligence (“AI”) tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work.
+Added: • We rely upon third parties for certain technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to develop, sell, maintain and support technologically innovative products would be limited.
+Added: • Product security vulnerabilities, system security risks, data breaches, cyber-attacks, improper use of artificial intelligence (“AI”) tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work.
Actual or perceived non-compliance with our privacy and security obligations could lead to regulatory investigations or actions, litigation, fines and penalties, business operation disruption, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.
• If we are unable to successfully leverage AI technology to automate and drive efficiencies in our operations and products and services, our business, reputation, results of operations and financial condition could be harmed.
−Removed: • We make substantial investments in software research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations.
• If our products contain defects or errors, we could incur significant unexpected expenses, experience product returns and lost sales, experience product recalls, suffer damage to our brand and reputation, and be subject to product liability or other claims.
−Removed: • Our user growth, engagement, and monetization of our subscription services depend upon effective operation with mobile operating systems, networks, technologies, products, and standards that we do not control.
• If we are unable to secure and protect our intellectual property rights, our ability to compete could be harmed.
Financial, Legal, Regulatory and Tax Compliance Risks
−Removed: • We are currently involved in litigation matters and may in the future become involved in additional litigation.
+Added: • We are currently involved in several litigation matters in the ordinary course and may in the future become involved in additional litigation which could be costly and subject us to significant liability.
• We have been exposed to and may in the future be exposed to adverse currency exchange rate fluctuations in jurisdictions where we transact in local currency, which could harm our financial results and cash flows.
−Removed: • We are exposed to the credit risk of some of our customers and to credit exposures in weakened markets.
−Removed: • Changes in tax laws or exposure to additional income tax liabilities could affect our future profitability.
−Removed: • We are subject to, and must remain in compliance with numerous new, existing and changing laws and regulations worldwide.
−Removed: • We must comply with indirect tax laws in multiple jurisdictions, as well as complex customs duty regimes worldwide.
−Removed: Audits of our compliance with these rules may result in additional liabilities for taxes, duties, interest and penalties related to our international operations which would reduce our profitability.
−Removed: • We are exposed to credit risk and fluctuations in the market values of our investment portfolio.
−Removed: • Governmental regulations of imports or exports affecting Internet security could affect our net revenue.
−Removed: • If our goodwill becomes impaired, as occurred in 2022, we may be required to record a significant charge to earnings.
+Added: • We are exposed to the credit risk of some of our customers and to credit exposures, including bank failures, in weakened markets, which could result in material losses.
+Added: • Changes in applicable direct or indirect tax laws, and failure to comply with the same, or exposure to additional income tax liabilities, could result in liability and/or affect our future profitability.
+Added: • We are subject to, and must remain in compliance with numerous new, existing and changing laws and regulations worldwide concerning our business.
+Added: Some of our customers also require that we comply with their own unique requirements relating to these matters.
+Added: Any failure to comply with such laws, regulations and requirements, and any associated unanticipated costs, may adversely affect our business, financial condition and results of operations.
General Risk Factors
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• Global economic and geopolitical conditions could materially adversely affect our revenue and results of operations.
−Removed: • Political events, war, terrorism, public health issues, natural disasters, sudden changes in trade and immigration policies, and other circumstances could materially adversely affect us.
• Our stock price has experienced recent volatility and may be volatile in the future and your investment in our common stock could suffer a decline in value.
−Removed: • We are required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could impact investor confidence in the reliability of our internal controls over financial reporting.
Additional factors that could affect our businesses, results of operations and financial condition are discussed in Forward-Looking Statements in Management's Discussion and Analysis of Financial Condition and Results of Operations.
−Removed: However, other factors not discussed below or elsewhere in this Quarterly Report on Form 10-Q could also adversely affect our businesses, results of operations and financial condition.
+Added: However, other factors not discussed below or elsewhere in this Quarterly Report on Form 10-Q could also adversely affect
+Added: our businesses, results of operations and financial condition.
Therefore, the risk factors below should not be considered a complete list of potential risks that we may face.
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Risks Related to our Business, Industry and Operations
+Added: We obtain several key components from limited or sole sources, and if these sources fail to satisfy our supply requirements or we are unable to properly manage our supply requirements with our third-party manufacturers, we may lose sales and experience increased component costs.
+Added: Shortages or delay in the supply of key product components, or sudden, unforeseen price increases for such components, such as current uncertainty regarding memory semiconductors and related components, could harm our ability to meet product deliveries as scheduled or as budgeted.
+Added: Many of the semiconductors used in our products are obtained from sole source suppliers on a purchase order basis.
+Added: In addition, some components that are used in all our products are obtained from limited sources.
+Added: We also obtain switching fabric semiconductors, which are used in our Ethernet switches and Internet gateway products, and WiFi chipsets, which are used in all of our wireless products, from a limited number of suppliers.
+Added: We also use Cable Modem chipsets and Mobile chipsets in our cable and mobile products.
+Added: Semiconductor suppliers have experienced and continue to experience component shortages themselves, such as with lead-frames and substrates used in manufacturing chipsets, which in turn adversely impact our ability to procure semiconductors from them in sufficient quantities and in a timely manner.
+Added: For example, we had previously experienced certain chipset shortages for some of our switching products from two of our semiconductor suppliers who did not have enough wafer capacity to satisfy our demand, and this shortage continued for several quarters.
+Added: Our third-party manufacturers generally purchase these components on our behalf on a purchase order basis, and we do not have any guaranteed supply arrangements with our suppliers.
+Added: If demand for a specific component increases, we may not be able to obtain an adequate number of that component in a timely manner, and prices to obtain such components may increase.
+Added: In addition, if worldwide demand for the components increases significantly, the availability of these components could be limited and prices for such components may increase.
+Added: For example, as the demand for Artificial Intelligence chips increases, semiconductor production capacity may be shifted to these specific components thereby constraining supply of or increasing cost on chips used in our products.
+Added: Further, dependence on a sole source for certain key components of our products may allow such sole source suppliers to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.
+Added: As a result, we may be left with little choice but to accept such higher prices or other fees for key components in order to ensure continuity of supply.
+Added: This could affect our profitability or if we choose to push back against more onerous terms, could lead to inadequate supply, which could materially adversely affect our business.
+Added: Our suppliers may also experience financial or other difficulties as a result of uncertain and weak worldwide economic, geopolitical conditions, trade disputes or public health issues.
+Added: Other factors which may affect our suppliers’ ability or willingness to supply components to us include internal management product allocation decisions or reorganizational issues, such as roll-out of new equipment or disruptions to information infrastructure or power transmission or navigation miscalculations which may delay or disrupt supply of previously forecasted components, or industry consolidation and divestitures, which may result in changed business and product priorities among certain suppliers.
+Added: It could be difficult, costly and time consuming to obtain alternative sources for components we currently procure, or to change product designs to make use of alternative components.
+Added: In addition, difficulties
+Added: in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill orders for our products.
+Added: We provide our third-party manufacturers with a rolling forecast of demand and purchase orders, which they use to determine our material and component requirements.
+Added: Lead times for ordering materials and components vary significantly and depend on various factors, such as the specific supplier, contract terms and demand and supply for a component at a given time.
+Added: Some of our components have long lead times, such as WiFi chipsets, switching fabric chips, physical layer transceivers, and logic, power, analog and RF chipsets.
+Added: If our forecasts are not timely provided or are less than our actual requirements, our third-party manufacturers may be unable to manufacture products in a timely manner.
+Added: If our forecasts are too high, our third-party manufacturers will be unable to use the components they have purchased on our behalf.
+Added: Historically, the cost of the components used in our products tends to drop rapidly as volumes increase and the technologies mature.
+Added: Therefore, if our third-party manufacturers are unable to promptly use components purchased on our behalf, our cost of producing products may be higher than our competitors due to an oversupply of higher-priced components.
+Added: Moreover, if they are unable to use components ordered at our direction, we will need to reimburse them for any losses they incur, which could be material.
+Added: If we are unable to obtain a sufficient supply of components due to factors including but not limited to increased demand due to trade policy or regulatory requirements, or if we experience any interruption in the supply of components, our product shipments could be reduced or delayed or our cost of obtaining these components may increase.
+Added: Component shortages and delays affect our ability to meet scheduled product deliveries, damage our brand and reputation in the market, and cause us to lose sales and market share.
+Added: At times we have elected to purchase components on the spot market or to use more expensive transportation methods, such as air freight, to make up for manufacturing delays caused by component shortages, which reduces our margins.
Optimizing our channel partners' inventory levels and product mix within the current environment is challenging, and we have, and may in the future, incur costs associated with excess inventory, or lose sales from having too few products.
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In the past, we have experienced lower revenue as a result of our channel partners lowering their inventory levels and higher cost of carrying excess channel inventory.
−Removed: On the other hand, low channel inventory levels increase the likelihood that our sales channel customers
−Removed: may not be able to fulfill end user demand, leading to delayed or lost sales, unhappy customers and potential impacts to our brand and reputation.
+Added: On the other hand, low channel inventory levels increase the likelihood that our sales channel customers may not be able to fulfill end user demand, leading to delayed or lost sales, unhappy customers and potential impacts to our brand and reputation.
Inadequate stock levels could also hinder our ability to fulfill large orders or take advantage of unexpected demand spikes, thereby limiting revenue growth opportunities.
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Under our price protection policy, if we reduce the list price of a product, we are often required to issue a credit in an amount equal to the reduction for each of the products held in inventory by our wholesale distributors and retailers.
−Removed: If our wholesale distributors and retailers are unable to sell their inventory in a timely manner, we might lower the price of the products, or these parties may exchange the products for newer products or decrease their purchases of our products in subsequent periods, which would adversely affect our revenue and results of operations.
−Removed: *To remain competitive and stimulate consumer and business demand, generally and in compliance with newly proposed or future regulations, we must successfully manage new product introductions and transitions of products and services.
+Added: If our wholesale distributors and retailers are unable to sell their inventory in a timely manner, we might lower the price of the products, or these parties may exchange the products
+Added: for newer products or decrease their purchases of our products in subsequent periods, which would adversely affect our revenue and results of operations.
+Added: To remain competitive and stimulate consumer and business demand, generally and in compliance with newly proposed or future regulations, we must successfully manage new product introductions and transitions of products and services, including with increasing investments in security features and sourcing of critical components from sources to enhance the security features of our products as well as regulatory compliance readiness.
We operate in a highly competitive, quickly changing environment, and our future success depends on our ability to develop or acquire and introduce new products and services, enhance existing products and services, effectively stimulate customer and business demand for new and upgraded products and services, and successfully manage the transition to these new and upgraded products and services.
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In the third quarter of 2023, we launched our first WiFi 7 products, namely the Orbi 97X mesh system and the Nighthawk RS700 router, and will continue to invest in a strong pipeline of WiFi 7 introductions in 2024 across all our major product lines.
−Removed: Given the critical importance of cyber security in the networking space, we have also invested in cybersecurity, security features and procuring internet-connected components from sources outside of nations deemed foreign adversaries by the US government, including China, which enhance the protection of our customers, but also comes at greater cost.
+Added: To get ahead of the rapidly evolving regulatory compliance landscape, and given the critical importance of cyber security in the networking space, we have also invested in cybersecurity, security features and procuring internet-connected components from sources outside of nations deemed foreign adversaries by the US government, which enhance the Company’s compliance and cyber security posture, but also comes at greater cost.
The success of new products and services depends on a number of factors, including timely and successful development either through rapid innovation or acquisition, market acceptance, our ability to manage the risks and costs, such as investment costs and marketing costs, associated with development and introduction of new products and services, the effective management of purchase commitments and channel inventory levels in line with anticipated product demand, availability of products in appropriate quantities and at expected costs to meet anticipated demand, the risk that new products and services may have delays, quality or other defects or deficiencies and our ability to effectively manage marketing and reviews of our products and services.
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Our management may not have the experience of selling in these new markets and we may not be able to grow our business as planned.
−Removed: If we are unable to effectively and successfully further
−Removed: develop these new product lines, we may not be able to increase or maintain our sales and our gross margins may be adversely affected.
+Added: If we are unable to effectively and successfully further develop these new product lines, we may not be able to increase or maintain our sales and our gross margins may be adversely affected.
Accordingly, if we cannot properly drive customer and business demand, manage future introductions and transitions of products and services, this could result in:
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In addition, if we are unable to successfully introduce or acquire new products with higher gross margins, or enhance and improve our services and subscription offerings for customer retention or service revenue growth, or if we are unable to improve the margins on our previously introduced and rapidly growing product and services lines, our net revenue and overall gross margin would likely decline.
−Removed: Changes in trade policy and regulation in the United States and other countries, including the imposition of tariffs and the resulting consequences, may adversely impact our business, results of operations and financial condition.
+Added: *Changes in trade policy and regulation in the United States and other countries, including but not limited to the imposition of tariffs, may adversely impact our business, results of operations and financial condition.
International trade disputes, geopolitical tensions, and military conflicts have led, and continue to lead, to new and increasing export restrictions, import restrictions, trade barriers, tariffs, and other trade measures that can increase our manufacturing and transportation costs, limit our ability to sell to certain customers or markets, limit our ability to procure, or increase our costs for, components or raw materials, impede or slow the movement of our goods across borders, or otherwise restrict our ability to conduct operations.
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customers, suppliers, employees, partners and investors.
−Removed: While the tariffs as currently implemented do not have a material impact on our business, specifics regarding the scope and application of recently announced tariffs have not yet been announced and we expect that additional tariffs will be announced or implemented that could adversely impact our business.
+Added: While the tariffs as currently implemented do not have a material impact on our business, future tariff policy changes could adversely impact our business.
For example, we manufacture our products overseas in Thailand, Vietnam, Indonesia and Taiwan.
−Removed: If additional tariffs are announced or otherwise implemented in a manner that apply to our products imported to the United States from those countries, our margins will be adversely affected beginning as early as fiscal 2025 depending on the ultimate scope and duration of tariffs imposed.
+Added: If additional tariffs are announced or otherwise implemented in a manner that apply to our products imported to the United States from those countries, our margins could be adversely affected.
However, given the volatility and uncertainty regarding the scope and duration of such tariffs and other aspects of U.S.
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or foreign jurisdictions related to compliance with trade regulations.
−Removed: The evolving trade environment may also exacerbate broader macroeconomic and financial market weakness, including decreased consumer spending, inflationary pressures affecting interest rates, exchange rate volatility, and financing challenges due to market instability, which may result in decreased customer demand, delayed purchases, limited expansion opportunities with customers, increased operational costs,
−Removed: and difficulties attracting capital.
+Added: The evolving trade environment may also exacerbate broader macroeconomic and financial market weakness, including decreased consumer spending, inflationary pressures affecting interest rates, exchange rate volatility, and financing challenges due to market instability, which may result in decreased customer demand, delayed purchases, limited expansion opportunities with customers, increased operational costs, and difficulties attracting capital.
Ongoing tariff, trade policy and regulations and macroeconomic uncertainty may also contribute to volatility in the price of our common stock.
+Added: In March 2026, the U.S.
+Added: Federal Communications Commission issued regulations adding foreign-produced consumer 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.
+Added: Such conditional approval requires us to comply with applicable regulations, and such compliance may impose additional costs which could impact our profitability.
We cannot predict what further actions may be taken with respect to export regulations, import regulations, tariffs or other trade regulations between the United States and other countries, what products or companies may be subject to such actions, or what actions may be taken by other countries in retaliation.
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These purchasers could decide at any time to discontinue, decrease or delay their purchases of our products.
−Removed: If our customers increase the size of their product
−Removed: orders without sufficient lead-time for us to process the order, our ability to fulfill product demands would be compromised.
+Added: If our customers increase the size of their product orders without sufficient lead-time for us to process the order, our ability to fulfill product demands would be compromised.
These customers have a variety of suppliers to choose from and therefore can make substantial demands on us, including demands on product pricing and on contractual terms, which often results in the allocation of risk to us as the supplier.
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For example, Amazon owns Eero, one of our competitors in the mesh WiFi systems product category.
−Removed: Our traditional retail customers have faced increased and significant competition from online retailers, and some of these traditional retail customers have increasingly become a smaller portion of our business.
+Added: Our traditional retail customers have faced increased and significant competition from online retailers, and some of
+Added: these traditional retail customers have increasingly become a smaller portion of our business.
If key retail customers continue to reduce their level of purchases, our business could be harmed.
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In addition, adverse changes in economic conditions or unforeseen disruptions in the businesses of any of our key customers could adversely impact the sale of our products to end users and the quantity of products our customers decide to purchase from us.
−Removed: For example, as mentioned above in the risk factor “ Optimizing our channel partners' inventory levels and product mix within the current environment is challenging, and we have, and may in the future, incur costs associated with excess inventory, or lose sales from having too few products, ” many of our retail and service provider customers have and continue to reduce their target inventory levels.
+Added: For example, as mentioned above in the risk factor “ Optimizing our channel partners' inventory levels and product mix within the current environment is challenging, and we have, and may in the future, incur costs associated with excess inventory, or lose sales from having too few products, ” many of our retail and service provider customers have reduced and continue to reduce their target inventory levels.
This shift may have a longer-term impact on the inventory levels our customers choose to carry.
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If consolidation among our customer base becomes more prevalent, our operating results may be harmed.
−Removed: We obtain several key components from limited or sole sources, and if these sources fail to satisfy our supply requirements or we are unable to properly manage our supply requirements with our third-party manufacturers, we may lose sales and experience increased component costs.
−Removed: Any shortage or delay in the supply of key product components, or any sudden, unforeseen price increase for such components, would harm our ability to meet product deliveries as scheduled or as budgeted.
−Removed: Many of the semiconductors used in our products are obtained from sole source suppliers on a purchase order basis.
−Removed: In addition, some components that are used in all our products are obtained from limited sources.
−Removed: We also obtain switching fabric semiconductors, which are used in our Ethernet switches and Internet gateway products, and WiFi chipsets, which are used in all of our wireless products, from a limited number of suppliers.
−Removed: We also use Cable Modem chipsets and Mobile chipsets in our cable and mobile products.
−Removed: Semiconductor suppliers have experienced and continue to experience component shortages themselves, such as with lead-frames and substrates used in manufacturing chipsets, which in turn adversely impact our ability to procure semiconductors from them in sufficient quantities and in a timely manner.
−Removed: For example, we had previously experienced certain chipset shortages for some of our switching products from two of our semiconductor suppliers who did not have enough wafer capacity to satisfy
−Removed: our demand, and this shortage continued for several quarters.
−Removed: Our third-party manufacturers generally purchase these components on our behalf on a purchase order basis, and we do not have any guaranteed supply arrangements with our suppliers.
−Removed: If demand for a specific component increases, we may not be able to obtain an adequate number of that component in a timely manner, and prices to obtain such components may increase.
−Removed: In addition, if worldwide demand for the components increases significantly, the availability of these components could be limited and prices for such components may increase.
−Removed: For example, as the demand for Artificial Intelligence chips increase, semiconductor production capacity may be shifted to these specific components thereby constraining supply of or increasing cost on chips used in our products.
−Removed: Further, dependence on a sole source for certain key components of our products may allow such sole source suppliers to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.
−Removed: As a result, we may be left with little choice but to accept such higher prices or other fees for key components in order to ensure continuity of supply.
−Removed: This could affect our profitability or if we choose to push back against more onerous terms, could lead to inadequate supply, which could materially adversely affect our business.
−Removed: Our suppliers may also experience financial or other difficulties as a result of uncertain and weak worldwide economic, geopolitical conditions, trade disputes or public health issues.
−Removed: Other factors which may affect our suppliers’ ability or willingness to supply components to us include internal management product allocation decisions or reorganizational issues, such as roll-out of new equipment or disruptions to information infrastructure or power transmission or navigation miscalculations which may delay or disrupt supply of previously forecasted components, or industry consolidation and divestitures, which may result in changed business and product priorities among certain suppliers.
−Removed: It could be difficult, costly and time consuming to obtain alternative sources for components we currently procure, or to change product designs to make use of alternative components.
−Removed: In addition, difficulties in transitioning from an existing supplier to a new supplier could create delays in component availability that would have a significant impact on our ability to fulfill orders for our products.
−Removed: We provide our third-party manufacturers with a rolling forecast of demand and purchase orders, which they use to determine our material and component requirements.
−Removed: Lead times for ordering materials and components vary significantly and depend on various factors, such as the specific supplier, contract terms and demand and supply for a component at a given time.
−Removed: Some of our components have long lead times, such as WiFi chipsets, switching fabric chips, physical layer transceivers, and logic, power, analog and RF chipsets.
−Removed: If our forecasts are not timely provided or are less than our actual requirements, our third-party manufacturers may be unable to manufacture products in a timely manner.
−Removed: If our forecasts are too high, our third-party manufacturers will be unable to use the components they have purchased on our behalf.
−Removed: Historically, the cost of the components used in our products tends to drop rapidly as volumes increase and the technologies mature.
−Removed: Therefore, if our third-party manufacturers are unable to promptly use components purchased on our behalf, our cost of producing products may be higher than our competitors due to an oversupply of higher-priced components.
−Removed: Moreover, if they are unable to use components ordered at our direction, we will need to reimburse them for any losses they incur, which could be material.
−Removed: If we are unable to obtain a sufficient supply of components due to factors including but not limited to increased demand due to trade policy or regulatory requirements, or if we experience any interruption in the supply of components, our product shipments could be reduced or delayed or our cost of obtaining these components may increase.
−Removed: Component shortages and delays affect our ability to meet scheduled product deliveries, damage our brand and reputation in the market, and cause us to lose sales and market share.
−Removed: At times we have elected to purchase components on the spot market or to use more expensive transportation methods, such as air freight, to make up for manufacturing delays caused by component shortages, which reduces our margins.
Some of our competitors have substantially greater resources than we do, and to be competitive we may be required to lower our prices or increase our sales and marketing expenses, which could result in reduced margins or loss of market share and revenue.
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Our principal competitors in the consumer market include ARRIS, ASUS, D-Link, Eero (owned by Amazon), and TP-Link.
−Removed: Our principal competitors in the business market include Arista, Cisco Systems, D-Link, Extreme Networks, Fortinet, Hewlett-Packard Enterprise, Ruckus Networks, TP-Link, and Ubiquiti.
−Removed: Our principal competitors in the service provider market include Cradlepoint, Franklin, Huawei, Inseego, Nokia, Orbic, Sonim, TP-Link, WNC, and ZTE.
+Added: Our principal competitors in the business market include Arista, Cisco Systems, D-Link, Extreme Networks, Fortinet, Haiwei, Hewlett-Packard Enterprise, Ruckus Networks, TP-Link, and Ubiquiti.
+Added: Our principal competitors in the service provider market include Compal, Franklin, Huawei, Inseego, Nokia, Orbic, Sonim, TP-Link, and ZTE.
Other competitors include numerous local vendors such as Xiaomi in China, AVM in Germany and Buffalo in Japan.
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Our potential competitors also include other consumer electronics vendors, including Apple, LG Electronics, Microsoft, Panasonic, Sony, Toshiba and Vizio, who could integrate networking and streaming capabilities into their line of products, such as televisions, set top boxes and gaming consoles, and our channel customers who may decide to offer self-branded networking products.
−Removed: We also face competition from service providers who may bundle a free networking device with
−Removed: their broadband service offering, which would reduce our sales if we were not the supplier of choice to those service providers.
+Added: We also face competition from service providers who may bundle a free networking device with their broadband service offering, which would reduce our sales if we were not the supplier of choice to those service providers.
In the service provider space, we also face significant and increased competition from original design manufacturers, or ODMs, and contract manufacturers who sell and attempt to sell their products directly to service providers around the world.
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We anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets.
−Removed: For example, in the past certain network security companies such as Symantec have introduced security routers for the home consumer market to compete with us and we believe that other network security companies may also seek to do the same.
+Added: in the past certain network security companies such as Symantec have introduced security routers for the home consumer market to compete with us and we believe that other network security companies may also seek to do the same.
Also, due to our recent success in the audio visual over IP market, some of our competitors may seek to enter this market as well.
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If any of these companies are successful in competing against us, our sales could decline, our margins could be negatively impacted and we could lose market share, any of which could seriously harm our business and results of operations.
−Removed: We depend substantially on our sales channels, and our failure to maintain and expand our sales channels would result in lower sales and reduced net revenue.
+Added: We depend substantially on our sales channels and certain significant customers and loss of and/or failure to maintain and expand our customer sales volume and/or sales channels would result in lower sales and reduced net revenue.
To maintain and grow our market share, net revenue and brand, we must maintain and expand our sales channels.
−Removed: Our sales channels consist of traditional retailers, online retailers, DMRs, VARs, and broadband service providers.
+Added: Our sales channels consist of traditional retailers, online retailers, DMRs, MSPs, and broadband service providers.
Some of these entities purchase our products through our wholesale distributor customers.
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Further, we have experienced the shift to a greater percentage of purchases taking place online versus traditional retail customers.
−Removed: effectively manage our business and inventory requirements amongst our online customers and traditional retail customers, our business would be harmed.
+Added: If we cannot effectively manage our business and inventory requirements amongst our online customers and traditional retail customers, our business would be harmed.
The recent trend in the consolidation of online retailers and DMR channels has resulted in intensified competition for preferred product placement, such as product placement on an online retailer’s Internet home page.
−Removed: Expanding our presence in the VAR channel may be difficult and expensive.
−Removed: We compete with established companies that have longer operating histories and longstanding relationships with VARs that we would find highly desirable as sales channel partners.
+Added: Expanding our presence in the MSP channel may be difficult and expensive.
+Added: We compete with established companies that have longer operating histories and longstanding relationships with MSPs that we would find highly desirable as sales channel partners.
In addition, our efforts to realign or consolidate our sales channels may cause temporary disruptions in our product sales and revenue, and these changes may not result in the expected longer-term benefits.
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All of our products must satisfy safety and regulatory standards and some of our products must also receive government certifications.
−Removed: Our third-party manufacturers are primarily responsible for conducting the tests that support our applications for
−Removed: most regulatory approvals for our products.
+Added: Our third-party manufacturers are primarily responsible for conducting the tests that support our applications for most regulatory approvals for our products.
If our third-party manufacturers fail to timely and accurately conduct these tests, we would be unable to obtain the necessary domestic or foreign regulatory approvals or certificates to sell our products in certain jurisdictions.
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International sales comprise a significant amount of our overall net revenue.
−Removed: International sales were approximately 33% of overall net revenue in the third fiscal quarter of 2025 and 34% of overall net revenue in fiscal 2024.
+Added: International sales were approximately 35% of overall net revenue in the first fiscal quarter of fiscal 2026 and 34% of overall net revenue in fiscal 2025.
We continue to be committed to growing our international sales, and while we have committed resources to expanding our international operations and sales channels, these efforts may not be successful.
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Difficulties and challenges in selling to service providers include a longer sales cycle, more stringent product testing and validation requirements, a higher level of customization demands, requirements that suppliers take on a larger share of the risk with respect to contractual business terms, competition from established suppliers, pricing pressure resulting in lower gross margins, and irregular and unpredictable ordering habits.
−Removed: For example, rigorous service provider certification processes may delay our sale of new products, or our products ultimately may
−Removed: fail these tests.
+Added: For example, rigorous service provider certification processes may delay our sale of new products, or our products ultimately may fail these tests.
In either event, we may lose some or all of the amounts we expended in trying to obtain business from the service provider, as well as lose the business opportunity altogether.
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Further, successful engagements with service provider customers requires a constant analysis of technology trends.
−Removed: If we are unable to anticipate technology trends and service provider customer product needs, and to allocate research and development resources to the right projects, we may not be successful in continuing to sell products to service provider customers.
+Added: If we are unable to anticipate technology trends and service provider customer product needs, and to allocate research and
+Added: development resources to the right projects, we may not be successful in continuing to sell products to service provider customers.
In addition, because our service provider customers command significant resources, including for software support, and demand extremely competitive pricing, certain ODMs have declined to develop service provider products on an ODM basis.
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• the inability to maintain stable operations by our suppliers, distribution centers and other parties with which we have commercial relationships;
−Removed: • seasonal shifts in end market demand for our products, particularly in our Home Networking and Mobile business segments;
+Added: • seasonal shifts in end market demand for our products, particularly in our Consumer segment;
• our inability to accurately forecast product demand or optimal product mix such as the proportion of lower-priced products versus premium products resulting in increased inventory exposure and/or lost sales;
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Moreover, feeder vessels that move containers to key trans-Pacific terminal locations can be subject to similar impacts due to the timing of container transfers and vessel departure dates.
−Removed: In addition, the global effects of climate change can result in increased frequency and severity of natural disasters that could also disrupt our transportation network.
+Added: In addition, the global effects of climate change can result in increased frequency and severity of natural
+Added: disasters that could also disrupt our transportation network.
Furthermore, labor disputes among freight carriers and at ports of entry are common.
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We are required to evaluate the fair value of such commitments at each reporting date and adjust the amount recorded if there are changes to the fair value.
−Removed: Additionally, future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity risks and vulnerabilities, as our systems or products could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
+Added: Additionally, future or past business transactions (such as acquisitions or integrations) could also expose us to additional cybersecurity risks and vulnerabilities, as our systems or products could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies and our diligence may not have discovered such security issues.
We cannot ensure that we will be successful in selecting, executing and integrating acquisitions.
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These investments have included equity or debt instruments of public or private companies, and may be non-marketable at the time of our initial investment.
−Removed: If any company in which we invest fails, we could lose all or part of our investment in that company.
+Added: If any company in which we invest fails, we could lose all or part of our
+Added: investment in that company.
If we determine that an other-than-temporary decline in the fair value exists for an equity or debt investment in a public or private company in which we have invested, we will have to write down the investment to its fair value and recognize the related write-down as an investment loss.
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Risks Related to Our Products, Technology, Intellectual Property and Data
−Removed: We rely upon third parties for technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to develop, sell, maintain and support technologically innovative products would be limited.
+Added: We rely upon third parties for certain technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to develop, sell, maintain and support technologically innovative products would be limited.
We rely on third parties to obtain non-exclusive patented hardware and software license rights in technologies that are incorporated into and necessary for the operation and functionality of most of our products.
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However, there is no guarantee that we would be able to fully understand and use the source code, as we may not have the expertise to do so.
−Removed: We are increasingly exposed to these risks as we continue to develop and market more products and services containing third-party software, such as our subscription service offerings related to network security and smart parental
+Added: We are increasingly exposed to these risks as we continue to develop and market more products and services containing third-party software, such as our subscription service offerings related to network security and smart parental controls.
If we are unable to license the necessary technology, we may be forced to acquire or develop alternative technology, which could be of lower quality or performance standards.
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As a result, our business, operating results and financial condition could be materially adversely affected.
−Removed: Product security vulnerabilities, system security risks, data protection breaches, cyber-attacks, improper use of artificial intelligence (“AI”) tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work.
−Removed: Actual or perceived non-compliance with our privacy and security obligations could lead to regulatory investigations or actions, litigation, fines and penalties, business operation disruption, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.
+Added: Product security vulnerabilities, system security risks, data breaches, cyber-attacks, improper use of artificial intelligence (“AI”) tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work.
+Added: Actual or perceived non-compliance with our privacy and security obligations could lead to regulatory investigations or actions, litigation, fines and penalties,
+Added: business operation disruption, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.
We and the third parties with whom we work process personal data and other sensitive information, and we disclose certain such sensitive information to relevant third parties as reasonably necessary to operate our business while maintaining measures designed to protect such information.
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Additionally, our systems and products may be disrupted for reasons other than a cyberattack, such as software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, and floods.
+Added: Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
+Added: For example, threat actors may use an initial compromise of one part of our environment to gain access to other parts of our environment, or leverage a compromise of our networks or systems to gain access to the networks or systems of third parties with whom we work, such as through phishing or supply chain attacks.
It is also possible that an attacker could compromise our internal code repository or those of our partners and insert a ‘backdoor’ that would give them easy access to any of our devices using this code.
Severe ransomware attacks are also becoming increasingly prevalent and can lead to significant interruptions in our operations, ability to provide our products or services, loss of sensitive data and income, reputational harm, and diversion of funds.
−Removed: Further, most of our major offices worldwide operate under a hybrid work model, allowing personnel the flexibility to work from home and at the workplace.
−Removed: Work from home arrangements present additional cybersecurity risks, including potential increases in malware and phishing attacks, greater challenges to secure home office data, and potential service degradation or disruption to key internal business applications and third-party services.
+Added: Further, most of our major offices worldwide operate under a hybrid work model, allowing personnel the flexibility to work remotely and at the workplace.
+Added: Remote work arrangements present additional cybersecurity risks, including potential increases in malware and phishing attacks, greater challenges to secure relevant data, and potential service degradation or disruption to key internal business applications and third-party services.
Although we have taken measures to address these risks, they present challenges that could impact business operations and could cause recovery times to increase.
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Such attacks against and other compromises of us, our customers or third parties with whom we work could lead to material interruptions, delays or loss of data, unauthorized access to data, and loss of consumer confidence.
−Removed: Successful attacks or actual compromises could materially adversely affect our business, be expensive to remedy, damage our reputation, result in negative publicity, adversely affect our brand, decrease demand for our products and services, and otherwise materially adversely affect our operating results and financial condition.
+Added: Successful attacks or compromises of us, our customers or third parties with whom we work could materially adversely affect our business, be expensive to remedy, damage our reputation, result in negative publicity, adversely affect our brand, decrease demand for our products and services, and otherwise materially adversely affect our operating results and financial condition.
Applicable data privacy and security obligations may require us, or we may voluntarily choose to, notify relevant stakeholders, including affected individuals, customers, regulators, investors and others of security breaches.
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As part of this shared responsibility security model, we make certain security features available to our customers that can be implemented at our customers’ discretion or identify security areas or measures for which our customers are responsible.
−Removed: For example, customers may choose not to enable two-factor authentication for their NETGEAR account (which would likely increase the risk of compromise) or they could choose to disable automatic updates (which would likely delay or prevent entirely, important security updates).
−Removed: In certain cases, where our customers choose not to implement or incorrectly implement those features or measures, misuse our products or services, continued use of old NETGEAR equipment no longer receiving security updates or otherwise experience their own vulnerabilities or other compromises, even if we are not the cause of a resulting customer security issue or incident, our customer relationships, reputation and revenue could be adversely impacted.
+Added: For example, customers may choose not to enable two-factor authentication
+Added: for their NETGEAR account (which would likely increase the risk of compromise) or they could choose to disable automatic updates (which would likely delay or prevent entirely, important security updates).
+Added: In certain cases, where our customers choose not to implement or incorrectly implement such or similar features or measures, misuse our products or services, continue to use deprecated NETGEAR equipment no longer receiving security updates or otherwise experience their own vulnerabilities or other compromises, even if we are not the cause of a resulting customer security issue or incident, our customer relationships, reputation and revenue could be adversely impacted.
If our products or services are compromised, a significant number or, in some instances, all of our customers could be simultaneously affected.
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If our information systems become unavailable, our ability to recognize revenue may be delayed until we are able to utilize back-up systems and continue to process and ship our orders, which could cause our stock price to decline significantly.
−Removed: We devote considerable internal and external resources to network security, data encryption and other security measures to protect our information systems and customer data, but our efforts cannot provide an absolute guarantee of security.
+Added: We devote considerable internal and external resources to network security, data encryption and other security measures to protect our information systems and data (including customer data), but our efforts cannot provide an absolute guarantee of security.
In addition, U.S.
−Removed: and foreign regulators have increased their focus on cybersecurity (including imposing specific security measures related to the products and services we sell) and data protection and many states, countries and jurisdictions have laws and regulations that may impose significant penalties and fines for failure to comply with these requirements.
−Removed: Compliance with laws, regulations, industry standards, contracts, policies and other obligations concerning artificial intelligence, privacy, cybersecurity, data governance and data protection is a rigorous and time-intensive process, that continuously evolves and develops, and we may be required to put in place additional mechanisms ensuring compliance with such obligations and incur substantial expenditures.
+Added: and foreign regulators have increased their focus on cybersecurity (including imposing specific security measures related to the products and services we sell) and data protection and many states, countries and other jurisdictions have laws and regulations that may impose significant penalties and fines for failure to comply with these requirements.
+Added: Compliance with laws, regulations, industry standards, contracts, policies and other obligations concerning artificial intelligence, privacy, cybersecurity, data governance and data protection is a rigorous and time-intensive process, that continuously evolves and develops, and we have in the past and may in the future be required to put in place additional mechanisms ensuring compliance with such obligations and incur substantial expenditures.
Many of these laws are new, in the nascent stages of applicability, untested in terms of scope by applicable courts, regulators and/or administrative bodies, and technically complex.
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If we fail to properly interpret or otherwise comply with any such obligations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations.
−Removed: Furthermore, obligations (including laws and regulations) are not consistent and compliance remains costly.
−Removed: Actual and potential breaches of our security measures as well as the loss, disclosure or dissemination of proprietary information or sensitive or confidential data about us, our personnel or our customers, including the potential loss or disclosure of such information or data as a result of improper use of AI tools, personnel error or other personnel actions, hacking, fraud, social engineering or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, subject us to significant governmental fines and penalties (as well as other enforcement and remediation actions), damage our brand and reputation, or otherwise harm our business.
+Added: Furthermore, obligations (including laws and regulations) are not consistent (and may not be interpreted in a consistent manner) and compliance remains costly.
+Added: Actual and potential breaches of our security measures as well as the loss, disclosure, dissemination or other compromise of proprietary information or sensitive or confidential data about us, our personnel or our customers, including the potential loss or disclosure of such information or data as a result of improper use of AI tools, personnel error or other personnel actions, hacking, fraud, social engineering or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, subject us to significant governmental fines and penalties (as well as other enforcement and remediation actions), damage our brand and reputation, or otherwise harm our business.
Security incidents and attendant material consequences may prevent or cause customers to stop using our products and services, deter new customers from using our products and services, and otherwise negatively impact our ability to grow and operate our business.
−Removed: In particular, because our product and service offerings involve protecting the information or systems of our customers, a security incident could heighten the impact of these material adverse consequences because of the nature
−Removed: of our business and our customers’ expectations.
+Added: In particular, because our product and service offerings involve protecting the information or systems of our customers, a security incident could heighten the impact of these material adverse consequences because of the nature of our business and our customers’ expectations.
It may be difficult and/or costly to detect, investigate, mitigate, contain and remediate security breaches and our efforts to do so may not be successful.
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Unauthorized parties may also gain access to other networks, systems and products after a compromise of our networks, systems, and products.
−Removed: For example, threat actors (including those sponsored by nation states) have, in the past, attacked or otherwise sought to compromise our products and other hardware nearing end of life and/or running on outdated firmware without the latest security updates.
+Added: For example, threat actors (including those sponsored by
+Added: nation states) have, in the past, attacked or otherwise sought to compromise our products and other hardware nearing end of life and/or running on outdated firmware without the latest security updates.
Limitations of liability in our contracts and our insurance coverage may be inadequate to address losses or other expenditures arising out of or related to non-compliance with our obligations or security incidents.
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In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws and other similar laws (such as wiretapping laws).
−Removed: Certain US states have enacted comprehensive consumer privacy laws that impose significant and costly obligations on covered businesses.
+Added: Certain US states have enacted comprehensive consumer privacy laws that impose significant and costly obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
+Added: As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.
+Added: The exercise of these rights may impact our business and ability to provide our products and services.
+Added: Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments.
+Added: These state laws allow for statutory fines for noncompliance.
+Added: For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses subject to the law to provide specific disclosures in privacy notices and respond to requests of such individuals to exercise certain privacy rights.
+Added: The CCPA provides for fines and allows private litigants affected by certain data breaches to recover significant statutory damages.
Outside the United States, an increasing number of laws, regulations and industry standards govern data privacy and security.
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Non-compliance with NIS2 may lead up to administrative fines of a maximum of 10 million Euros or up to 2% of the total worldwide revenue of the preceding fiscal year.
+Added: We may also become subject to new laws that regulate non-personal data.
+Added: For example, the European Union’s Data Act imposes certain data and cloud service interoperability and switching obligations to enable users to switch between cloud service providers without undue delay or cost, as well as certain requirements concerning cross-border international transfers of, and governmental access to, non-personal data outside the EEA.
+Added: Depending on how this Act and any similar laws are implemented and interpreted, we may have to adapt our business practices, contractual arrangements, and products and services to comply with such obligations.
In the ordinary course of business, we transfer personal data from Europe and other jurisdictions to the United States and other countries.
Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.
−Removed: These data localization and cross-border data transfer laws could lead to adverse consequences such as interruption of our operations, increased exposure to regulatory actions, and difficulty transferring data to partners, vendors and other third parties with whom we work.
+Added: These data localization and cross-border data transfer laws have led to additional compliance efforts and non-compliance with such obligations could lead to adverse consequences such as interruption of our operations, increased exposure to regulatory actions, and difficulty transferring data to partners, vendors and other third parties with whom we work.
+Added: Additionally, the U.S.
+Added: Department of Justice issued a rule entitled the Access to U.S.
+Added: Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons, which places additional restriction on certain data transactions involving countries of concern (e.g., China, Russia, Iran) and “covered persons” (as defined by the rule) that impacts certain business activities such as vendor engagements, the sale or sharing of data, employment of certain individuals, and investor agreements.
+Added: Violations of the rule could lead to significant civil and criminal fines and penalties.
+Added: We are also subject to industry standards and bound by contractual obligations in each case related to data privacy and security, and our efforts to comply with such obligations may not be successful.
+Added: We also publish privacy policies, marketing materials, and other statements, such as statements concerning data privacy, and security and AI.
+Added: Regulators are increasingly scrutinizing these statements, and if these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigations and enforcement actions by regulators and experience other adverse consequences.
Preparing for and complying with our data privacy and security obligations requires us to devote significant resources which has in the past and may in the future necessitate changes to our products and services, information systems and practices.
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Due to these potential inaccuracies or flaws, the model could be biased and could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits.
+Added: Several jurisdictions around the globe, including Europe and certain U.S.
+Added: states, have proposed, enacted, or are considering laws governing the development and use of AI technologies, such as the EU’s AI Act, the Colorado Artificial Intelligence Act, California Bot Disclosure Law, the Utah Artificial Intelligence Policy Act, and the CCPA regulations on automated decision-making technology.
+Added: For example, the EU AI Act sets out a risk-based framework, subjecting certain AI technologies to numerous compliance obligations, including transparency, conformity and risk assessment, monitoring and human oversight requirements.
+Added: Under the EU AI Act, non-compliant companies may be subject to administrative fines of up to 35 million Euros or 7% of a company’s total worldwide annual turnover for the preceding financial year, whichever is the higher.
+Added: We expect other jurisdictions will adopt similar laws.
+Added: Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI technologies.
+Added: These obligations have in the past and may in the future make it harder for us to conduct our business using AI technologies, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI technologies, or prevent or limit our use of AI technologies.
+Added: For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI technologies where it has alleged that a non-compliant company has violated relevant laws.
+Added: If we cannot use AI technologies or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
We make substantial investments in software research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations.
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Any delay in the development, production or marketing of a new software solution could result in us not being among the first to market, which could further harm our competitive position.
−Removed: In addition, our regular
−Removed: testing and quality control efforts may not be effective in controlling or detecting all quality issues and defects.
+Added: In addition, our regular testing and quality control efforts may not be effective in controlling or detecting all quality issues and defects.
We may be unable to determine the cause, find an appropriate solution or offer a temporary fix to address defects.
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Some errors and defects may be discovered only after a product has been installed and used by the end-user.
−Removed: As also noted in the risk factor “ We make substantial investments in software research and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations ” above, we devote considerable time and resources on testing and quality control efforts to detect quality issues and defects, and any reallocation of resources to fix such quality issues and defects could lead to delays in product introductions, which could further harm our competitive position.
+Added: As also noted in the risk factor “ We make substantial investments in software research
+Added: and development and unsuccessful investments could materially adversely affect our business, financial condition and results of operations ” above, we devote considerable time and resources on testing and quality control efforts to detect quality issues and defects, and any reallocation of resources to fix such quality issues and defects could lead to delays in product introductions, which could further harm our competitive position.
Additionally, certain software components in our product and corporate systems can be directly updated by our third-party partners.
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Financial, Legal, Regulatory and Tax Compliance Risks
−Removed: We are currently involved in numerous litigation matters in the ordinary course and may in the future become involved in additional litigation, including litigation regarding intellectual property rights, consumer class actions and securities class actions, any of which could be costly and subject us to significant liability.
+Added: We are currently involved in several litigation matters in the ordinary course and may in the future become involved in additional litigation which could be costly and subject us to significant liability.
The networking industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding infringement of patents, trade secrets and other intellectual property rights.
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We may enter into foreign currency forward contracts or other instruments, the majority of which mature within approximately five months.
−Removed: Our foreign currency forward contracts reduce, but do not eliminate, the impact of currency exchange rate movements.
+Added: Our foreign currency forward contracts reduce,
+Added: but do not eliminate, the impact of currency exchange rate movements.
For example, we do not execute forward contracts in all currencies in which we conduct business.
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Furthermore, to the degree that turmoil in the credit markets makes it more difficult for some customers to obtain financing, our customers’ ability to pay could be adversely impacted, which in turn could have a material adverse impact on our business, operating results, and financial condition.
−Removed: Changes in tax laws or exposure to additional income tax liabilities could affect our future profitability.
+Added: *Changes in applicable direct or indirect tax laws, and failure to comply with the same, or exposure to additional income tax liabilities, could result in liability and/or affect our future profitability.
Factors that could materially affect our future effective tax rates include but are not limited to:
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Further, many countries continue to consider changes in their tax laws by implementing new taxes such as the digital service tax and initiatives such as the Organization for Economic Co-operation and Development’s (OECD) Pillar II global minimum tax.
−Removed: More than 140 countries agreed to enact the Pillar II
−Removed: global minimum tax.
+Added: More than 140 countries agreed to enact the Pillar II global minimum tax.
While the OECD issued a framework model, many countries have enacted their own laws to incorporate Pillar II while certain countries, most notably the United States have not incorporated Pillar II into law.
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Decisions were issued in the Company’s favor for the 2007 through 2012 tax years.
−Removed: Decisions on the 2004 through 2006 tax years were reverted back to the lower court for re-hearing.
+Added: In the fourth quarter of 2025, the Italian Tax Court upheld the Company’s appeal with respect to the 2004 through 2006 tax years and annulled the related ITA tax assessments.
+Added: On March 24, 2026, the Italian Revenue Agency filed an appeal before the Italian Supreme Court challenging the favorable decisions issued by the Second Level Tax Court of Milan with respect to the 2004, 2005, and 2006 tax years.
If we are unsuccessful in defending our tax positions for the remaining years, our profitability will be reduced.
We are also subject to examination by other tax authorities, including state revenue agencies and other foreign governments.
+Added: The Company was recently notified that the Internal Revenue Service has commenced an examination of the 2023 tax year.
+Added: The examination is in its preliminary stages, and the Company is unable to predict the outcome or estimate the range of any potential adjustment at this time.
While we regularly assess the likelihood of favorable or unfavorable outcomes resulting from examinations by the IRS and other tax authorities to determine the adequacy of our provision for income taxes, there can be no assurance that the actual outcome resulting from these examinations will not materially adversely affect our financial condition and operating results.
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Future benefit of these deferred tax assets will be realized in the period they are utilized.
−Removed: We are subject to, and must remain in compliance with numerous new, existing and changing laws and regulations worldwide concerning the manufacturing, use, distribution and sale of our products.
+Added: We are subject to, and must remain in compliance with numerous new, existing and changing laws and regulations worldwide concerning our business.
Some of our customers also require that we comply with their own unique requirements relating to these matters.
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There are areas where new regulations have been enacted which could increase our cost of the components that we utilize or require us to expend additional resources to ensure compliance.
−Removed: For example, the SEC’s “conflict minerals” rules apply to our business, and we
−Removed: expended significant resources to ensure compliance.
+Added: For example, the SEC’s “conflict minerals” rules apply to our business, and we expended significant resources to ensure compliance.
The implementation of these requirements by government regulators and our partners and/or customers could adversely affect the sourcing, availability, and pricing of minerals used in the manufacture of certain components used in our products.
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We also incorporate encryption technology into certain of our solutions.
−Removed: These encryption solutions and underlying technology may be exported outside of the United States only with the required export authorizations or exceptions, including by license, a license exception, appropriate classification notification requirement and encryption authorization.
+Added: These encryption solutions and underlying technology may be exported outside of the United States
+Added: only with the required export authorizations or exceptions, including by license, a license exception, appropriate classification notification requirement and encryption authorization.
Furthermore, our activities are subject to U.S.
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This additional regulation of encryption technology could delay or prevent the acceptance and use of encryption products and public networks for secure communications, resulting in decreased demand for our products and services.
−Removed: In addition, some foreign
−Removed: competitors are subject to less stringent controls on exporting their encryption technologies.
+Added: In addition, some foreign competitors are subject to less stringent controls on exporting their encryption technologies.
As a result, they may be able to compete more effectively than we can in the United States and the international Internet security market.
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In addition, significant negative industry or economic trends, such as those that have occurred as a result of the recent economic downturn, including reduced estimates of future cash flows or disruptions to our business could indicate that goodwill might be impaired.
−Removed: If, in any period our stock price decreases to the point where our market capitalization is less than our book value, this too could indicate a potential impairment and we may be required to record an impairment charge in that period.
+Added: If, in any period
+Added: our stock price decreases to the point where our market capitalization is less than our book value, this too could indicate a potential impairment and we may be required to record an impairment charge in that period.
Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on projections of future operating performance.
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For example, in 2022, the market price of our common stock and market capitalization declined and the U.S.
−Removed: WiFi market contracted, which had a significant negative impact on our then-Connected Home business.
+Added: WiFi market contracted, which had a significant negative impact on our then-Consumer business.
As a result, we recognized a goodwill impairment charge in the first quarter of 2022.
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During the transition periods, there may be uncertainty among investors, employees and others concerning our future direction and performance.
−Removed: For example, we appointed a new Chief Executive Officer effective January 31, 2024 and have made other leadership changes and hires.
+Added: For example, we appointed a new Chief Executive Officer in January 2024 and have made other leadership changes and hires.
The failure to successfully transition could adversely affect our results of operations.
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Therefore, our ability to recruit new talent and retain existing talent may be adversely affected, and as a result our business as a whole may suffer.
−Removed: While we believe that we have mitigated some of the business execution and business continuity risk with our organization into three business segments with separate leadership teams, the loss of any key personnel would still be disruptive and harm our business, especially given that our business is leanly staffed and relies on the expertise and high performance of our key personnel.
−Removed: Global economic conditions could materially adversely affect our revenue and results of operations.
+Added: While we believe that we have mitigated some of the business execution and business continuity risk with our organization into two business segments with separate leadership teams, the loss of any key personnel would still be disruptive and harm our business, especially given that our business is leanly staffed and relies on the expertise and high performance of our key personnel.
+Added: Global economic and geopolitical conditions could materially adversely affect our revenue and results of operations.
Our business has been and may continue to be affected by a number of factors that are beyond our control, such as general geopolitical, economic and business conditions, conditions in the financial markets, and changes in the overall demand for Pro AV, networking and smart home products.
1 unchanged sentence
Weakness in, and uncertainty about, global economic conditions may cause businesses to postpone spending in response to tighter credit, negative financial news and/or declines in income or asset values, which could have a material negative effect on the demand for networking products.
−Removed: Adverse changes in economic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations
−Removed: could adversely impact the demand and sale of our products to end users and the quantity of products our customers decide to purchase from us (or change the mix of products demanded) and make it more challenging to forecast our operating results and make business decisions.
+Added: Adverse changes in economic conditions, including inflation, slower growth or recession, new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment and currency fluctuations could adversely impact the demand and sale of our products to end users and the quantity of products our customers decide to purchase from us (or change the mix of products demanded) and make it more challenging to forecast our operating results and make business decisions.
The uncertainty in global and regional economic conditions have also affected the financial markets and financial institutions on which we rely and have resulted in a number of adverse effects including a low level of liquidity in many financial markets, banking sector disruptions, extreme volatility in credit, equity, currency and fixed income markets, instability in the stock market, high inflation and high unemployment.
34 unchanged sentences
• conditions in the financial markets in general or changes in general economic, political and market conditions, including government efforts to mitigate economic downturns or control inflation;
−Removed: • novel and unforeseen market forces and trading strategies, such as the massive short squeeze rally caused by retail investors on companies such as GameStop;
• actual or anticipated changes in governmental regulation, including taxation and tariff policies;
15 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.