Quarterly Report for Quarter Ending March 29, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words "believes," "anticipates," "plans," "expects," "intends," "could," "may," "will," and similar expressions are intended to identify forward-looking statements. The forward-looking statements represent NETGEAR's expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: NETGEAR's future operating performance and financial condition, including expectations regarding growth, revenue, expenses, operating margin, gross margin, continued profitability and cash generation; NETGEAR's reporting structure; NETGEAR's belief of the principal competitive factors in the business, consumer, and service provider markets for networking products; 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 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; expectations regarding sales channels, direct online store and in-app offerings; expectations regarding macroeconomic conditions and impacts to NETGEAR's operational and financial performance and business strategies; expectations regarding the consumer retail networking market; expectations regarding existing cash, cash equivalents and short-term investments and anticipated cash requirements; expectations regarding inventory levels, inventory management and inventory costs; expectations regarding research and development expenses, sales and marketing expenses and general and administration expenses; expectations regarding expected tax rates or tax expenses and changes in legislation related to the taxation of business entities; expectations regarding the impact of acquisitions; expectations regarding our product portfolio, and expectations regarding NETGEAR's subscription services and service revenue. These statements are based on management's current expectations and are subject to a number of risks and uncertainties, including but not limited to those described in "Part II-Item 1A-Risk Factors" and "Liquidity and Capital Resources" below and in our other SEC filings, including our Annual Report. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this document are based on information available to us as of the date hereof and we assume no obligation to update any such forward-looking statements except as required by law. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this quarterly report. Unless expressly stated or the context otherwise requires, the terms "we," "our," "us" and "NETGEAR" refer to NETGEAR, Inc. 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 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; Europe, Middle East and Africa ("EMEA"); and Asia Pacific ("APAC").

Business Overview

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. 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. 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 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, 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 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, 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 U.S. tariffs and intensified trade actions. 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. 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

In preparing our condensed consolidated financial statements, we make assumptions, judgments and estimates that can have a significant impact on our revenue, operating income, and net income, as well as on the value of certain assets and liabilities on our condensed consolidated balance sheets. We base these estimates on historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances. As of the date of issuance of these condensed consolidated financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ materially from those estimates under different assumptions and conditions.

For a complete description of what we believe to be the critical accounting estimates used in the preparation of our Unaudited Condensed Consolidated Financial Statements, refer to Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report.

Results of Operations

The following table sets forth the unaudited condensed consolidated statements of operations for the periods presented.

Net Revenue by Geographic Region

Our net revenue consists of gross product shipments and service revenue, less allowances for estimated sales returns, price protection, end-user customer rebates and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance for revenue recognition, and net changes in deferred revenue.

For reporting purposes, revenue is generally attributed to each geographic region based upon the location of the customer.

Americas

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.

EMEA

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.

APAC

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

Cost of revenue consists primarily of the following: the cost of finished products from our third party manufacturers; overhead costs, including purchasing, product planning, inventory control, warehousing and distribution logistics; third-party software licensing fees; inbound freight; import duties/tariffs; warranty costs associated with returned goods; write-downs for excess and obsolete inventory; amortization of certain acquired intangible assets and software development costs; and costs attributable to the provision of service offerings.

We outsource our manufacturing, warehousing and distribution logistics. We believe this outsourcing strategy allows us to better manage our product costs and gross margin. Our gross margin can be affected by a number of factors, including fluctuation in foreign exchange rates, sales returns, changes in average selling prices, end-user customer rebates and other channel sales incentives, changes in our cost of goods sold due to fluctuations and increases in prices paid for components, net of vendor rebates, royalty and licensing fees, warranty and overhead costs, inbound freight and duty/tariffs, conversion costs, charges for excess or obsolete inventory, amortization of acquired intangible assets and capitalized software development costs. The following table presents costs of revenue and gross margin, for the periods indicated:

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. Our cost of revenue as a percentage of net revenue can vary significantly based upon factors such as: uncertainties surrounding revenue levels, broad-based inflationary pressures and the uncertain macroeconomic environment, future pricing and/or potential discounts as a result of the economy or in response to the strengthening of the U.S. dollar in our international markets, competition, the timing of sales, and related production level variances; import customs duties and imposed tariffs; changes in technology; changes in product mix; expenses associated with writing off excessive or obsolete inventory; variability of stock-based compensation costs; royalties to third parties; fluctuations in freight costs; manufacturing and purchase price variances; changes in prices on commodity components; and warranty costs. We expect that revenue derived from paid subscription service plans will continue to increase in the future, which may have a positive impact on our gross margin. However, we will continue to experience fluctuations in our gross margin due to the factors discussed above.

Operating Expenses

Research and Development

Research and development expenses consist primarily of personnel expenses, payments to suppliers for design services, safety and regulatory testing, product certification expenditures to qualify our products for sale into specific markets, prototypes, IT and facility allocations, and other consulting fees. Research and development expenses are recognized as they are incurred. Our research and development organization is focused on enhancing our ability to introduce innovative and easy-to-use products and services. The following table presents research and development expenses, for the periods indicated:

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 second fiscal quarter of 2026 to be in line with or slightly above the first fiscal quarter of 2026 level. 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. 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.

Sales and Marketing

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

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. Expenses may fluctuate depending on revenue levels achieved as certain expenses, such as commissions, are determined based upon the revenues achieved. Forecasting sales and marketing expenses is highly dependent on expected revenue levels and could vary significantly depending on actual revenue achieved in any given quarter. Marketing expenses may also fluctuate depending upon the timing, extent and nature of marketing programs. Marketing expenditure committed with a customer is generally recorded as a reduction of revenue per authoritative guidance.

General and Administrative

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

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.

Restructuring and Other Charges

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.

Other Income, Net

Other income, net consists of interest income, which represents amounts earned and incurred on our cash, cash equivalents and short-term investments, and other income and expenses, which primarily represents gains and losses on transactions denominated in foreign currencies, gains and losses on investments, and other non-operating income and expenses. The following table presents other income, net for the periods indicated:

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

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. and numerous foreign jurisdictions. Our future foreign tax rate could be affected by changes in the composition in earnings in countries with tax rates differing from the U.S. federal rate. We are under examination in various U.S. and foreign jurisdictions.

Segment Information

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

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

** Percentage change not meaningful.

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 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. states and applicable foreign withholding taxes during the period when such repatriation occurs. We have recorded deferred taxes for the tax effect of repatriating the funds to the U.S.

Cash Flows

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

Operating activities

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 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 $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. However, we may require or desire additional funds to support our operating expenses and capital requirements or for other purposes, such as acquisitions, and may seek to raise such additional funds through public or private equity financing or from other sources. We cannot assure you that additional financing will be available at all or that, if available, such financing would be obtainable on terms favorable to us and would not be dilutive. Our future liquidity and cash requirements will depend on numerous factors, including the introduction of new products and potential acquisitions of related businesses or technology.

Stock Repurchases and Restricted Stock Unit Withholdings

From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock. Under the authorizations, the timing and actual number of shares subject to repurchase are at the discretion of management and are contingent on a number of factors, such as levels of cash generation from operations, cash requirements for acquisitions and the price of our common stock. As of March 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 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.

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.

Recent Accounting Pronouncements

Information with respect to this item may be found in Note 2, Summary of Significant Accounting Policies, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q, which are hereby incorporated by reference.