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What changed in NETGEAR, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NETGEAR, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+420 added−393 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in NETGEAR, INC.'s 2024 10-K

420 paragraphs added · 393 removed · 284 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+48 added−64 removed45 unchanged
Biggest changeThese products and services are sold into the business marketplace through an extensive network of DMRs and VARs, NETGEAR.com, and through brick-and-mortar retail and e-commerce channels and include: • Pro AV Solutions, which include high-performance, flexible Ethernet switches that are engineered for easy configuration of AV over IP for both commercial and high-end residential installations; • Pro Routers, which provide the internet gateway for businesses and combine with access points, Ethernet switches, and our Insight cloud management software to create a Total Network Solution for businesses; • Enterprise-grade, Cloud managed or standalone Pro WiFi access points, which are used to provide wide coverage areas and fast WiFi on a campus, boutique hotel, or an office, providing secure WiFi connections to smart phones, tablets, laptops and other computing devices; • General purpose Ethernet switches, in a wide range of sizes which are used to connect devices that are networked together for exchanging information including IoT devices; • NETGEAR Insight remote management software, which help VARs and small businesses remotely deploy, monitor, manage and secure their networks easily and seamlessly; and • NETGEAR Engage Controller which provides quick, profile-based configuration for audio and video signals over a network to integrate our products with those from a myriad of AV end point manufacturers for fast, easy deployments that help eliminate cost and complexity.
Biggest changeThese products and services are sold into the business marketplace through an extensive network of DMRs and VARs, NETGEAR.com, and through brick-and-mortar retail and e-commerce channels and include: Pro AV • Pro AV Solutions: devices that include high-performance, flexible Ethernet switches that are engineered for easy configuration of AV over IP for both commercial and high-end residential installations, and switches that allow connecting network equipment and WiFi access points to the network; and • NETGEAR Engage Controller: used to provide quick, profile-based configuration for audio and video over an IP network to integrate our products with those from a myriad of AV end point manufacturers for fast, easy deployments that help eliminate cost and complexity.
We believe that the principal competitive factors in the consumer, business and service provider markets for networking products include product breadth, price points, size and scope of the sales channel, brand name, timeliness of new product introductions, product availability, performance, features, functionality and reliability, ease-of-installation, maintenance and use, security and privacy, and customer service and support.
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.
Accordingly, we are subject to a number of risks related to international operations such as macroeconomic and microeconomic conditions, geopolitical instability, governmental regulations, preference for locally branded products, exchange rate fluctuations, increased difficulty in managing inventory, challenges of staffing and managing foreign operations, the effect of international sales on our tax structure, and changes in local tax laws.
Accordingly, we are subject to a number of 5 Table of Contents risks related to international operations such as macroeconomic and microeconomic conditions, geopolitical instability, governmental regulations, preference for locally branded products, exchange rate fluctuations, increased difficulty in managing inventory, challenges of staffing and managing foreign operations, the effect of international sales on our tax structure, and changes in local tax laws.
No single patent is solely responsible for protecting the Company's products and services. In addition, we currently have approximately 21 pending United States and foreign patent applications related to technology and products offered by us.
No single patent is solely responsible for protecting the Company's products and services. In addition, we currently have approximately 14 pending United States and foreign patent applications related to technology and products offered by us.
Several of our competitors, such as TP-Link, offer a range of products that directly compete with most of our product offerings. Several of our other competitors compete in a more limited manner. For example, Dell sells networking products primarily targeted at larger businesses or enterprises while Google and Amazon primarily only sell WiFi mesh systems.
Several of our competitors, such as TP-Link, offer a range of products that directly compete with most of our product offerings. Several of our other competitors compete in a more limited manner. For example, Dell sells networking products primarily targeted at larger businesses or enterprises while Amazon primarily only sells WiFi mesh systems.
Our research and development employees work closely with our technology and manufacturing partners to bring high quality new products and services to market in a timely and cost-efficient manner. 8 Table of Contents We identify, qualify and create new technologies to develop products using one or both of the methodologies described below.
Our research and development employees work closely with our technology and manufacturing partners to bring high quality new products and services to market in a timely and cost-efficient manner. We identify, qualify and create new technologies to develop products using one or both of the methodologies described below.
While there is always a need for point solutions that enhance or extend the functionality provided by internet service providers (“ISPs”), there is also a growing demand for premium WiFi networking products that combine the newest WiFi standards with elegant design, comprehensive security and a seamless app experience to accommodate the end-to-end networking needs of homes that are becoming increasingly smarter.
While there is always a need for point solutions that enhance or extend the functionality provided by internet service providers (“ISPs”), there is also a growing demand for WiFi networking products that combine the newest WiFi standards with elegant design, excellent security features and a seamless app experience to accommodate the end-to-end networking needs of homes that are becoming increasingly smarter.
We work directly with our retail channels on market 4 Table of Contents development activities, such as co-advertising, online promotions and video demonstrations, instant rebate programs, event sponsorship and sales associate training. Our largest retailers include Amazon.com, Inc, Best Buy Co., Inc., Wal-Mart Stores, Inc. and their respective affiliates. DMRs and VARs.
We work directly with our retail channels on market development activities, such as co-advertising, online promotions and video demonstrations, instant rebate programs, event sponsorship and sales associate training. Our largest retailers include Amazon.com, Inc, Best Buy Co., Inc., Wal-Mart Stores, Inc. and their respective affiliates. DMRs and VARs.
For example, Hewlett-Packard Enterprise has significant brand name recognition and has an advertising presence substantially greater than ours. Similarly, Cisco Systems is well recognized as a leader in providing networking products to businesses, while Google and Amazon compete in the consumer WiFi product market, and both have substantially greater financial resources than we do.
For example, Hewlett-Packard Enterprise has significant brand name recognition and has an advertising presence substantially greater than ours. Similarly, Cisco Systems is well recognized as a leader in providing networking products to businesses, while Amazon competes in the consumer WiFi product market, and has substantially greater financial resources than we do.
We have policies and procedures in place to promote compliance with these laws and regulations. To date, our compliance actions and costs relating to these laws, rules and regulations have not resulted in a material cost or effect on our capital expenditures, earnings or competitive position.
We have policies and procedures in place to promote compliance with these laws and regulations. To date, our compliance actions and costs relating to these laws, rules and regulations have not resulted in a material cost 11 Table of Contents or effect on our capital expenditures, earnings or competitive position.
And, in an environment that makes it possible for people to work or learn from anywhere, digital nomads, road warriors, vacationers, even those living in rural areas without access to reliable wired broadband, need robust, secure mobile solutions to support their online lives.
And, in an environment that makes it possible for people to work or learn from anywhere, digital nomads, road warriors, vacationers, and even those living in rural areas without access to reliable wired broadband, need robust mobile solutions with embedded security features to support their online lives.
We primarily rely on a combination of copyright, trademark, trade secret, and patent laws, nondisclosure agreements with employees, consultants and suppliers and other contractual provisions to establish, maintain and protect our proprietary rights. We hold approximately 225 issued United States patents that expire between years 2024 and 2040 and 36 foreign patents that expire between 2024 and 2035.
We primarily rely on a combination of copyright, trademark, trade secret, and patent laws, nondisclosure agreements with employees, consultants and suppliers and other contractual provisions to establish, maintain and protect our proprietary rights. We hold approximately 152 issued United States patents that expire between years 2025 and 2040 and 22 foreign patents that expire between 2025 and 2035.
Our principal competitors include: • within the consumer markets, companies such as ARRIS, ASUS, AVM, Devolo, D-Link, Eero (owned by Amazon), Linksys (owned by Foxconn), Minim (Motorola licensee), Google WiFi, Samsung, and TP- Link; • within the business markets, companies such as Allied Telesys, Barracuda, Buffalo, Cisco Systems, Dell, D-Link, Extreme, Fortinet, Hewlett-Packard Enterprise, Palo Alto Networks, QNAP Systems, SonicWall, Snap AV, Synology, TP- Link, Ubiquiti, and WatchGuard; and • within the service provider markets, companies such as Actiontec, Airties, Arcadyan, ARRIS, ASUS, AVM, Compal Broadband, D-Link, Eero (owned by Amazon), Franklin, Google, Hitron, Huawei, Inseego, Nokia, Plume, Sagem, Sercomm, SMC Networks, TechniColor, TP-Link, Ubee, ZTE and ZyXEL.
Our principal competitors include: • within the business markets, companies such as Allied Telesys, Arista, Barracuda, Buffalo, Cisco Systems, Dell, D-Link, Extreme, Fortinet, Hewlett-Packard Enterprise Aruba, Juniper Networks Mist, Mellanox (owned by Nvidia), Palo Alto Networks, QNAP Systems, Ruckus (owned by CommScope), SonicWall, Snap AV, Synology, TP- Link, TRENDnet, Ubiquiti, and WatchGuard; • within the consumer markets, companies such as ARRIS, ASUS, AVM, Devolo, D-Link, Eero (owned by Amazon), Linksys (owned by Foxconn), Minim (Motorola licensee), Google WiFi, Samsung, and TP- Link; and • within the service provider markets, companies such as Actiontec, Airties, Arcadyan, ARRIS, ASUS, AVM, Compal Broadband, D-Link, Eero (owned by Amazon), Franklin, Google, Hitron, Huawei, Inseego, Nokia, Orbic, Plume, Sagem, Sercomm, Sonim, SMC Networks, TechniColor, TP-Link, Ubee, ZTE and ZyXEL.
Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, such as multi-Gigabit internet service to homes, WiFi 7, audio and video over Ethernet, non-fungible token (“NFT”) artwork, and future technologies.
Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, such as audio and video over Ethernet, multi-Gigabit internet service to homes, WiFi 7, eSIM and future technologies.
Our investments reflect our enhanced focus on the security of our products and systems, as the threat of cyber-attacks and exploitation of potential security vulnerabilities in our industry is on the rise and is increasingly a significant consumer concern.
Our investments reflect our enhanced focus on the security of our products and systems, as the threat of cyber-attacks and exploitation of potential security vulnerabilities in our industry is on the rise and is increasingly a significant concern for consumers and governments alike.
Seasonal Business We have historically experienced increased net sales in our third and fourth fiscal quarters as compared to the first and second quarters in our fiscal year due to seasonal demand from consumer markets primarily relating to the beginning of the school year and the holiday season.
Seasonal Business We have historically experienced increased net sales in our third and fourth fiscal quarters as compared to the first and second quarters in our fiscal year due to seasonal demand from consumer markets primarily relating to the beginning of the school year and the holiday season. In recent years, we had a flatter trend than we historically observe.
For further discussion of how government regulations may affect our business, see the related discussion in “Risk Factors – Financial, Legal, Regulatory and Tax Compliance Risks, Including Recent Impairment Charges.” Human Capital As of December 31, 2023, we had 635 full-time employees, with 210 in sales, marketing and technical support, 228 in research and development, 77 in operations, and 120 in finance, information systems and administration.
For further discussion of how government regulations may affect our business, see the related discussion in “Risk Factors – Financial, Legal, Regulatory and Tax Compliance Risks, Including Recent Impairment Charges.” Human Capital As of December 31, 2024, we had 655 full-time employees, with 223 in sales, marketing and technical support, 235 in research and development, 76 in operations, and 121 in finance, information systems and administration.
Other competitors include numerous local vendors such as Xiaomi in China, AVM in Germany and Buffalo in Japan. 7 Table of Contents Our potential competitors include other consumer electronics vendors, including Apple, Lifelock, LG Electronics, McAfee, 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.
Our potential competitors include other consumer electronics vendors, including Apple, Lifelock, LG Electronics, McAfee, 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.
Netherlands serves the EMEA region, and Likewize Logistics Pty Ltd. in Melbourne, VIC, Australia serves Australia and New Zealand. 9 Table of Contents Sales and Marketing We work directly with our retail partners on market development activities, such as co-advertising, online promotions and video demonstrations, live and virtual event sponsorships and sales associate training.
Netherlands serves the EMEA region, and Likewize Logistics Pty Ltd. in Sydney, Australia serves Australia and New Zealand. Sales and Marketing We work directly with our retail partners and value-added resellers (VARs) on market development activities, such as co-advertising, online promotions and video demonstrations, live and virtual event sponsorships and sales associate training.
Our product line consists of devices that create and extend wired and wireless networks, devices that attach to the network, such as smart digital displays as well as services that complement and enhance our product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region. Connected Home.
Our product line helps to create and extend wired and wireless networks as well as devices that attach to the network, such as services that complement and enhance our product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region. NETGEAR for Business.
We also own, or have applied for registration of trademarks, in connection with our products in the United States and internationally, including NETGEAR, NETGEAR Armor, NETGEAR Insight, NPG, NPG logo, Orbi, Nighthawk, FASTLANE3, Meural, Trueart, Digital Canvas, and ProSafe.
We have trade secret rights for our products, consisting mainly of product design, technical product documentation and software. We also own, or have applied for registration of trademarks, in connection with our products in the United States and internationally, including NETGEAR, NETGEAR Armor, NETGEAR Insight, NPG, NPG logo, Orbi, Nighthawk, FASTLANE3, Meural, Trueart, Digital Canvas, and ProSafe.
Before 13 Table of Contents joining NETGEAR in 2001, he worked in public accounting at Deloitte and Touche LLP. He holds a B.A. from the University of California, Santa Barbara, and is licensed as a Certified Public Accountant (inactive). Heidi B. Cormack has served as our Chief Marketing Officer since July 2021.
Before joining NETGEAR in 2001, he worked in public accounting at Deloitte and Touche LLP. He holds a B.A. from the University of California, Santa Barbara, and is licensed as a Certified Public Accountant (inactive). 13 Table of Contents Pramod Badjate has served as our President and General Manager of NETGEAR for Business since July 2024.
We also rely on third-party licensors for patented hardware and software license rights in technology that are incorporated into and are necessary for the operation and functionality of our products.
We also rely on third-party licensors for patented hardware and software license rights in technology that are incorporated into and are necessary for the operation and functionality of our products. Our success will depend in part on our continued ability to have access to these technologies.
("Tile"), a technology company, in January 2022 and served as the Chief Executive Officer of Tile from September 2018 to January 2022. Mr. Prober also previously served as a member of Tile’s board of directors from February 2018 to January 2022, including as its Executive Chairman from February 2018 to September 2018.
Prober also previously served as a member of Tile’s board of directors from February 2018 to January 2022, including as its Executive Chairman from February 2018 to September 2018.
If these sources fail to satisfy our supply requirements or component lead times deviate from expectations, our ability to meet scheduled product deliveries would be harmed and we may lose sales and experience increased costs to procure supply.
If these sources fail to satisfy our supply requirements or component lead times deviate from expectations, our ability to meet scheduled product deliveries would be harmed and we may lose sales and experience increased costs to procure supply. We currently outsource warehousing and distribution logistics to four main third-party providers who are responsible for warehousing, distribution logistics and order fulfillment.
We believe our products are competitive in these markets based on these factors. To remain competitive, we believe we must continue to aggressively invest resources in highly differentiated, premium connectivity solutions, complemented by valuable subscription services, expanding our sales channels including our direct-to-consumer capabilities, increasing engagement with our customers and maintaining customer satisfaction worldwide.
To remain competitive, we believe we must continue to aggressively invest resources in highly differentiated, “good, better, best”, high performance reliable and trusted connectivity solutions, complemented by valuable subscription services, expanding our sales channels including our direct-to-consumer capabilities and custom installers, increasing engagement with our customers and manufacturing partners, and maintaining customer satisfaction worldwide.
Marketing tactics include driving the social media and online marketing strategy, public relations, installed base marketing programs, community engagement programs, sponsorships and events, and corporate websites worldwide, as well as creative production for all product categories. We conduct most of our international sales and marketing operations through wholly-owned subsidiaries, which operate via sales and marketing subsidiaries and branch offices worldwide.
Marketing tactics include driving the social media and online marketing strategy, public relations, installed base marketing programs, community engagement programs, sponsorships and events, and corporate websites worldwide, as well as creative production for all product categories.
We are dedicated to delivering innovative and highly differentiated, connected solutions ranging from easy-to-use premium WiFi solutions, security and support services to protect and enhance home networks, to switching and wireless solutions to augment business networks and audio and video over Ethernet for Pro AV applications.
Our highly differentiated connected solutions range from switching and wireless products to augment business networks and audio and video (“AV”) over Ethernet for Pro AV applications to our good, better, and best WiFi solutions, security and support services to protect and enhance business and home networks.
In our Connected Home business, our core long-term strategy focuses on the premium and higher-margin segments of the market, where we demonstrate our highly differentiated technology leadership. 6 Table of Contents Our products that target the business market are generally designed with an industrial appearance, including metal cases and, for some product categories, the ability to mount the product within standard data networking racks as well as unique mounting solutions for other uses.
Our products that target the business market are generally designed with an industrial appearance, including metal cases and, for some product categories, the ability to mount the product within standard data networking racks as well as unique mounting solutions for other uses.
Our product marketing group focuses on product and service strategy, product and service development roadmaps, the new product introduction process, product lifecycle management, demand assessment and competitive analysis. The group works closely with our sales and research and development groups to align our product development roadmap to meet customer technology demands from a strategic perspective.
The group works closely with our sales and research and development groups to align our product development roadmap to meet customer technology demands from a strategic perspective.
The Connected Home segment focuses on consumers and provides high-performance, dependable and easy-to-use premium WiFi networking solutions such as WiFi 6, WiFi 6E and WiFi 7 Tri-band and Quad-band mesh systems and routers, 4G/5G mobile products, smart devices such as Meural digital displays, and subscription services that provide 3 Table of Contents consumers a range of value-added services focused on performance, security, privacy and premium support.
The Connected Home segment offers advanced connectivity, powerful performance, and enhanced security features right out of the box, designed to help keep families safe online, whether at home or on the go, including high-performance, dependable and easy-to-use premium WiFi networking solutions such as 4G/5G mobile products, WiFi 7 Tri-band and Quad-band mesh systems and routers, WiFi 6E, WiFi 6, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy and premium support.
The competitive environment in which we operate changes rapidly due to technological reasons and other factors outside of our control, such as new entrants to the market and the ability of market participants to adapt to changing environments. Other companies with significant resources could also become direct competitors, either through acquiring a competitor or through internal efforts.
The competitive environment in which we operate changes 8 Table of Contents rapidly due to technological reasons and other factors outside of our control, such as new entrants to the market and the ability of market participants to adapt to changing environments.
As a result of the hybrid work model, there continues to be a shift in the demand and use cases for NETGEAR for Business products as more small businesses now run out of homes or remote offices. This shift has contributed to growing the market for lower port count switches and our NETGEAR for Business wireless offerings.
IP provides an economical path to building high performance, scalable AV networks. As a result of the hybrid work model, there continues to be a shift in demand and use cases for NETGEAR for Business products as more small businesses now run out of homes or remote offices.
Westhead 53 Chief Technology Officer, Software Charles (CJ) Prober has served as our Chief Executive Officer and a member of the board of directors since January 2024. Prior to joining the Company, Mr. Prober served as President of Life360, Inc. ("Life360"), a technology platform company, from January 2022 to July 2023. He joined Life360 via the acquisition of Tile, Inc.
("Life360"), a technology platform company, from January 2022 to July 2023. He joined Life360 via the acquisition of Tile, Inc. ("Tile"), a technology company, in January 2022 and served as the Chief Executive Officer of Tile from September 2018 to January 2022. Mr.
Our products and services are designed to meet the specific needs of the consumer, business and service provider markets. We tailor various elements of the software interface, product design, including component specification, physical characteristics such as casing, design and coloration, and specific user interface features to meet the needs of these markets.
We tailor various elements of the software interface, product design, including component specification, physical characteristics such as casing, design and coloration, and specific user interface features to meet the needs of these markets. We also leverage many of our technological developments, high volume manufacturing, technical support and engineering infrastructure across our markets to maximize business efficiencies.
In addition, our Insight line of cloud-connected networking devices can be managed remotely and securely via mobile apps or browser interfaces, providing continuous monitoring and instantaneous fault notification. Competition The consumer, business and service provider markets are intensely competitive and subject to rapid technological change. We expect competition to continue to intensify.
In addition, our Insight line of cloud-connected networking devices can be managed remotely via mobile apps or browser interfaces, providing continuous monitoring and instantaneous fault notification.
Information About Our Executive Officers The following table sets forth the names, ages and positions of our executive officers as of February 9, 2024. Name Age Position Charles (CJ) Prober 52 Chief Executive Officer Bryan D. Murray 49 Chief Financial Officer Heidi B. Cormack 49 Chief Marketing Officer Michael F. Falcon 67 Chief Operations Officer David J.
Information About Our Executive Officers The following table sets forth the names, ages and positions of our executive officers as of February 7, 2025. Name Age Position Charles (CJ) Prober 53 Chief Executive Officer Bryan D.
Security requirements within our products for business broadband access include firewall and VPN capabilities that allow for secure interactions between remote offices and business headquarter locations over the internet. Our connectivity product offerings for the business market include enhanced security and remote configurability often required in a business setting.
This shift has contributed to growing the market for lower port count switches and our NETGEAR for Business wireless offerings. Security requirements within our products for business broadband access include firewall and VPN capabilities to aid in securing interactions between remote offices and business headquarter locations over the internet.
Any disruptions from natural disasters, health epidemics and political, social and economic instability would affect the ability of our manufacturers to manufacture our products. If our manufacturing or warehousing facilities are disrupted or destroyed, we would not have readily available alternatives for manufacturing our products and our business would be significantly impacted.
If our manufacturing or warehousing facilities are disrupted or destroyed, we would not have readily available alternatives for manufacturing our products and our business would be significantly impacted. In addition to their responsibility for the manufacturing of our products, our manufacturers typically purchase all necessary parts and materials to produce finished goods.
In 2023, we had a flatter trend than we historically observe mainly driven by channel inventory compression driven by the uncertain macroeconomic environment and a contraction of the U.S. retail market. Governmental Regulations Environmental Laws Our products and manufacturing process are subject to numerous governmental regulations, which cover both the use of various materials as well as environmental concerns.
Governmental Regulations Environmental Laws Our products and manufacturing process are subject to numerous governmental regulations, which cover both the use of various materials as well as environmental concerns.
We manufacture US bound products in Vietnam, Thailand, Indonesia, and Taiwan, with a limited number of legacy products produced in China. We distribute our manufacturing among a limited number of key suppliers and seek to avoid excessive concentration with any one single supplier.
We distribute our manufacturing among a limited number of key suppliers and seek to avoid excessive concentration with any one single supplier. Any disruptions from natural disasters, health epidemics and political, social and economic instability would affect the ability of our manufacturers to manufacture our products.
We provide modems that connect to DOCSIS 3.x, xDSL, and 4G/5G mobile; • WiFi Gateways, which are WiFi routers with an integrated broadband modem, for broadband internet access; • WiFi range extenders, which extend the range of an existing WiFi network to eliminate WiFi dead spots; • Powerline adapters, which extend wired and WiFi internet connections to any AC outlet using existing electrical wiring; and • WiFi network adapters, which enable computing devices to be connected to the network via WiFi.
Customer Premise Equipment • WiFi routers: devices that connect to a modem to enable wireless Internet connectivity; • WiFi Mesh Systems: devices with one main Wi-Fi router and multiple additional Wi-Fi nodes that work together, i.e. a local area network (“LAN”), to provide extensive coverage under a unified network; • Broadband modems: devices that convert the broadband signals into Ethernet data that feeds internet into homes and small businesses; • WiFi Gateways: WiFi routers with an integrated broadband modem, for broadband internet access; and • Network accessories: WiFi range extenders, which extend the range of an existing WiFi network to eliminate WiFi dead spots; Powerline adapters, which extend wired and WiFi internet connections to any AC outlet using existing electrical wiring; and WiFi network adapters, which enable computing devices to be connected to the network via WiFi.
In addition, we continue to see a shift from traditional AV applications utilizing HDMI technology to Ethernet switching driven by a transition from the 1080p to 4K to 8K resolution video, and broadcast moving towards multicast streaming. IP provides an economical path to building high performance, scalable AV networks.
Some of these products are also designed to support transmission modes such as fiber optic cabling, which is common in more sophisticated business environments. We continue to see a shift from traditional AV applications utilizing HDMI technology to Ethernet switching driven by a transition from the 1080p to 4K to 8K resolution video, and broadcast moving towards multicast streaming.
NETGEAR.com is a destination where we deliver to early tech adopters and inexperienced audiences alike a premium and comprehensive product and brand experience. The largest portion of our net revenues was derived from the Americas, representing approximately 68%, 66% and 67% of net revenue in the years ended December 31, 2023, 2022 and 2021, respectively.
The largest portion of our net revenues was derived from the Americas, representing approximately 68%, 68% and 66% of net revenue in the years ended December 31, 2024, 2023 and 2022, respectively. We have continuously committed resources to our international operations and sales channels.
Customer Support We design our products with ease-of-use top of mind. We respond globally to customer inquiries through a variety of channels including phone, chat, community, social media, and email. Customers can also get self-help service through the comprehensive knowledge base, chatbot and user forums on our website.
We conduct most of our international sales and marketing operations through wholly owned subsidiaries, which operate via sales and marketing subsidiaries and branch offices worldwide. Customer Support We design our products with ease-of-use top of mind. We respond globally to customer inquiries through a variety of channels including phone, chat, community, social media, and email.
In addition to their responsibility for the manufacturing of our products, our manufacturers typically purchase all necessary parts and materials to produce finished goods. Our own product quality organization based in Singapore and Taiwan is responsible for auditing and inspecting product quality on the premises of our ODMs to maintain quality standards for our suppliers.
Our own product quality organization based in Singapore and Taiwan is responsible for auditing and inspecting product quality on the premises of our ODMs to maintain quality standards for our suppliers. 9 Table of Contents We obtain several key components from limited or sole sources.
We also participate in major industry trade shows and marketing events. Our marketing department is comprised of our channel marketing, product marketing and corporate marketing groups. Our channel marketing team focuses on working with the sales teams to maximize our participation in channel partner marketing activities and merchandise our products both online and in store.
Our channel marketing team focuses on working with the sales teams to maximize our participation in channel partner marketing activities and merchandise our products both online and in store. Our product marketing group focuses on product and service messaging and strategy, product and service development roadmaps, new product introductions, product lifecycle management, demand assessment and competitive analysis.
In particular, consumers with large numbers of connected devices and fast broadband subscriptions are investing in premium home WiFi solutions, such as our Orbi WiFi 6E and WiFi 7 Tri-band and Quad-band Mesh products.
With included design services, training and dedicated support, NETGEAR business solutions are integral to the success of many of our customers and partners. 4 Table of Contents Consumers with large numbers of connected devices and fast broadband subscriptions are investing in our broad range of offerings, such as our Orbi WiFi, WiFi 7 Tri-band and Quad-band Mesh products, our lineup of Nighthawk standalone WiFi 7 routers and Nighthawk 5G and WiFi 7 mobile hotspots.
Product Offerings Our products are designed to simplify and improve people’s lives. Our goal is to enable people to collaborate and connect to a world of information and entertainment at or outside of the home.
Product Offerings Our goal is to power extraordinary experiences where people collaborate and connect to a world of information and innovation.
Customer support is provided through a combination of a limited number of permanent employees and use of subcontracted, out-sourced resources. Our permanent employees design our technical support model and process and are responsible for training and managing our outsourced sub-contractors. They also handle escalations from the outsourced resources.
Our permanent employees design our technical support model and process and are responsible for training and managing our vendors and their agents. They also handle escalations from the 10 Table of Contents outsourced agents. We utilize the information gained from customer interactions to enhance our product offerings, including further simplifying the installation process.
He has been with NETGEAR since July 2004, most recently serving as our Senior Vice President of Connected Home Products and Services from January 2017 to July 2021, Senior Vice President of Home Networking from January 2016 to December 2016, Vice President of Product Management of our retail business unit from March 2011 to January 2016 and as our Senior Director of Product Marketing from October 2010 to March 2011.
He has been with NETGEAR since August 2013, most recently serving as our Vice President of Worldwide Service Provider Sales and Mobile Products from July 2024 to January 2025, Worldwide VP of Service Provider and APAC Sales from October 2023 to July 2024, Worldwide VP of the Service Provider Business Unit from October 2015 to October 2023, and Regional Managing Director, ANZ & SE Asia, Service Provider Business Unit from August 2013 to September 2015.
We consistently monitor our workplace with the lens of Health and Safety to maintain a clean environment, practice emergency preparedness, minimize injury and illness, promote industrial hygiene, provide ergonomic training and equipment, machine safeguarding, and more. Our Corporate Emergency Response Team and Business Continuity Program equip employees with essential knowledge and supplies in case of emergencies.
In addition to healthcare benefits, we provide a variety of wellness resources and programs designed to help employees achieve good physical, financial, emotional, intellectual and social well-being. We monitor our workplace to maintain a clean and safe environment, identify hazards, minimize injury and illness, promote industrial hygiene, provide ergonomic training and equipment, machine safeguarding and more.
As homes get smarter with the ever-growing number of internet-connected devices, such as security cameras, smart TVs, appliances, doorbells, lighting and more, increasing internet speeds available to homes, new WiFi standards (the transition from WiFi 5 and 6 to WiFi 6E and WiFi 7) and the growth of bandwidth-hungry applications such as 8K video streaming and gaming, real time streaming of entertainment and cultural events as well as augmented reality (“AR”) and virtual reality (“VR”) and applications have all increased the need for more robust networking solutions.
Factors driving the demand for high-performance products within these markets include the growing need for always on, high speed internet connectivity anywhere and with exceptional security features, the availability of faster internet speeds and new WiFi standards such as WiFi 7 and the growth of bandwidth-hungry applications such as 8K video streaming and gaming, real time streaming of entertainment and cultural events, collaborative platforms that support the transfer of very large data sets and immersive experiences as well as artificial intelligence (“AI”), augmented reality (“AR”) and virtual reality (“VR”) applications.
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Item 1. B usiness General We are a global company that turns ideas into innovative, high-performance, and premium networking products that connect people, power businesses and advance the way we live. We operate and report in two segments: Connected Home, and NETGEAR for Business (formerly known as Small and Medium Business, or SMB).
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Item 1. B usiness General We are a global leader in innovative and advanced networking technologies for businesses, homes, and service providers. We deliver a wide range of intelligent solutions designed to unleash the full potential of connectivity. Through 2024, we operated and reported in two segments: NETGEAR for Business and Connected Home.
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The NETGEAR for Business segment focuses on businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price . We conduct business across three geographic territories: Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific (“APAC”).
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The NETGEAR for Business segment offers reliable, easy-to-use, high-performance networking solutions, including switches, routers, access points, software, and AV over IP technologies, tailored to meet the diverse needs of organizations of all sizes.
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In the years ended December 31, 2023, 2022, and 2021, we generated net revenue of $740.8 million, $932.5 million, and $1.17 billion, respectively. Markets Our mission is to be the innovative leader in connecting the world to the internet by providing advanced, high-performance and premium networking technologies and internet-connected products for consumers, businesses and service providers.
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We conduct business across three geographic territories: Americas; Europe, Middle East and Africa (“EMEA”); and Asia Pacific (“APAC”).
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There are a number of factors that are driving today’s demand for products within these markets. As consumer behavior has shifted to do more online, including shopping, hybrid work, fitness, and college curriculum, as well as a shift from cable TV to streaming - including live sports, we see high demand for high-performance, dependable and secure WiFi continuing to increase.
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As we announced in February 2025, beginning with the first quarter of 2025, the Connected Home segment will be separated into two segments, consisting of Mobile and Home Networking, in order to further strengthen operational and financial management and enable further focus on growth opportunities while maintaining financial discipline.
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The growing need for always on, secure high speed internet connectivity anywhere and everywhere has become a greater priority for consumers and businesses.
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Following this separation, the Company will operate and report in three segments: NETGEAR for Business, Mobile and Home Networking. In the years ended December 31, 2024, 2023, and 2022, we generated net revenue of $673.8 million, $740.8 million, and $932.5 million, respectively.
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Over the last decade, technology transformation has driven a need for constant connectivity. Consumers, businesses and service providers demand networking products, incorporating the latest technology, that fit their specific needs and budgets.
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Markets Our mission is to unleash the full potential of connectivity with intelligent solutions that delight and help protect businesses, consumers and service providers.
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We have continuously committed resources to our international operations and sales channels.
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With the availability of increasingly fast and ubiquitous internet, the proliferation of IoT devices and the rise of generative AI, also comes a steep increase in malware, data theft, intrusion and other cyber threats necessitating comprehensive yet simple to use solutions. Founded and based in the USA since 1996, NETGEAR has had a longstanding commitment to security and privacy.
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Our products and services are built on a variety of technologies such as wireless (WiFi and 4G/5G mobile), Ethernet and powerline, with a focus on reliability and ease-of-use.
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Rigorous security protections are built into our hardware and software, and we make further protections available to consumers via our Armor service, all of which are backed by our ongoing mission to respect and bolster the protection of customer privacy and personal information.
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Includes premium connectivity solutions that create and extend wired and wireless networks in homes and small businesses to connect devices to the internet, enable connection to broadband networks and a suite of valuable subscription services enhancing such networks.
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As employees continue to return to the office in various ways, the need for reliable networking, both IT and AV, put pressure on businesses to enhance network availability and create equal and engaging experiences for customers and employees whether they are onsite or not.
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These products meet the growing needs of the premium customer for always on, secure, highspeed internet connectivity for all of their devices anywhere in and around the home and on the road.
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Business customers are looking for innovative, dependable IT and AV networking solutions to maximize productivity, streamline operations, and provide flawless experience for employees, customers and partners. They find that these critical benefits not only help them to focus on their core business, but also give them a competitive edge in today’s hyper-connected world.
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They are sold primarily via our direct online store as well as traditional retailers, increasingly 5 Table of Contents leveraging their online presence, in addition to their brick-and-mortar stores, and service provider channels and include: • WiFi routers and home WiFi Mesh Systems, which create a local area network (“LAN”) for home or office computer, mobile and smart devices to connect and share a broadband internet connection; • WiFi Hotspots, which create mobile WiFi Internet access that utilizes 4G/5G mobile and 5G data networks for secure use on the go, and at home in place of traditional wired broadband internet access; • Value-added service offerings such as security and privacy, technical support, and parental controls for consumers; • Digital Displays, which enable users to showcase digital art and photos, including non-fungible token (“NFT”) artwork by supporting the most popular crypto wallets. • Broadband modems, which are devices that convert the broadband signals into Ethernet data that feeds internet into homes and offices.
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To achieve their goals, they seek a trusted partner that delivers customer-centric technologies that are easy to deploy, manage, and scale, backed by expert support for maximum uptime and reliability. Investing in our AV switches and management software and our Total Network Solution for IT networking provides value beyond the products themselves.
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We also leverage many of our technological developments, high volume manufacturing, technical support and engineering infrastructure across our markets to maximize business efficiencies.
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NETGEAR.com is a destination where we deliver to early tech adopters and inexperienced audiences alike a premium and comprehensive product and brand experience. Our largest direct partners include Crestron, Q-Sys, Savant, Biamp, and Sonos.
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Some of these products are also designed to support transmission modes such as fiber optic cabling, which is common in more sophisticated business environments.
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Includes Pro AV, Total Network Solutions, which offer a complete IT network solution for a small and medium enterprise including WiFi, Switching, Routing and Security through channel partners, and Unmanaged and Plus Ethernet switches, which are comprised of devices that connect IT equipment within a Local Area Network (“LAN”).
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Our vision for the home network is about intelligently controlling and monitoring all devices connected to the home network at all times, thus creating a Smart Environment. Our Connected Home business continues to make progress on our core long-term strategy of focusing on the premium and higher-margin segments of the market, where we demonstrate highly differentiated technology.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeProduct security vulnerabilities, system security risks, data protection breaches, cyber-attacks and improper use of artificial intelligence ("AI") tools, could disrupt our products, services, internal operations or information technology systems, and any such disruption could increase our expenses, damage our reputation, harm our business and adversely affect our stock price. Our products and services may contain unknown security vulnerabilities.
Biggest changeAs a result, our business, operating results and financial condition could be materially adversely affected. 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.
International operations are subject to a number of other risks, including: • exchange rate fluctuations and inflation; • geopolitical and economic tensions, such as in the Middle East, between China/Taiwan, international terrorism and anti-American sentiment, particularly in emerging markets; • potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; • preference for locally branded products, and laws and business practices favoring local competition; • changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws (including potential responses to the higher U.S. tariffs on certain imported products implemented by the U.S.); • increased difficulty in managing inventory and reduced inventory level targets; • delayed revenue recognition; • unpredictable judicial systems, which may unfairly favor domestic plaintiffs over foreign corporations, or which may more easily impose harsher penalties such as import injunctions; • less effective protection of intellectual property; • stringent consumer protection and product compliance regulations, including but not limited to the Restriction of Hazardous Substances directive, the Waste Electrical and Electronic Equipment directive and the European Ecodesign directive, or EuP, that are costly to comply with and may vary from country to country; • difficulties and costs of staffing and managing foreign operations; and • business difficulties, including potential bankruptcy or liquidation, of any of our worldwide third-party logistics providers.
International operations are subject to a number of other risks, including: • exchange rate fluctuations and inflation; • geopolitical and economic tensions, such as in the Middle East, between China/Taiwan, and international terrorism and anti-American sentiment, particularly in emerging markets; • potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; • preference for locally branded products, and laws and business practices favoring local competition; • changes in local tax and customs duty laws or changes in the enforcement, application or interpretation of such laws (including potential responses to the higher U.S. tariffs on certain imported products implemented by the U.S.); • increased difficulty in managing inventory and reduced inventory level targets; • delayed revenue recognition; • unpredictable judicial systems, which may unfairly favor domestic plaintiffs over foreign corporations, or which may more easily impose harsher penalties such as import injunctions; • less effective protection of intellectual property; • stringent consumer protection and product compliance regulations, including but not limited to the Restriction of Hazardous Substances directive, the Waste Electrical and Electronic Equipment directive and the European Ecodesign directive, or EuP, that are costly to comply with and may vary from country to country; • difficulties and costs of staffing and managing foreign operations; and • business difficulties, including potential bankruptcy or liquidation, of any of our worldwide third-party logistics providers.
We devote considerable time and resources to uncovering and remedying these vulnerabilities, using both internal and external resources, but the threats to network and data security are increasingly diverse and sophisticated and we continue to implement additional protections and increase our monitoring and threat intelligence.
We devote considerable time and resources to uncovering and remedying these threats and vulnerabilities, using both internal and external resources, but the threats to network and data security are increasingly diverse and sophisticated and we continue to implement additional protections and increase our monitoring and threat intelligence.
Other factors that could affect our quarterly and annual operating results include those listed in the risk factors section of this report and others such as: • operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; • component supply constraints, including specialized WiFi 6 or WiFi 7 chipsets, or sudden, unforeseen price increases from our manufacturers, suppliers and vendors; • unanticipated increases in costs, including air and ocean freight, associated with shipping and delivery of our products; • the inability to maintain stable operations by our suppliers, distribution centers and other parties with which we have commercial relationships; • seasonal shifts in end market demand for our products, particularly in our Connected Home business 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; • unfavorable or compressed level of inventory and turns; • changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements; • unanticipated decreases, reduced inventory targets or delays in purchases of our products by our significant traditional and online retail customers; • shift in overall product mix sales from higher to lower gross margin products, from lower-priced products to premium products, or from one business segment to another, that would adversely impact our revenue and gross margins; • an increase in price protection claims, redemptions of marketing rebates, product warranty and stock rotation returns or allowance for doubtful accounts; • delay or failure to fulfill orders for our products on a timely basis; • changes in the pricing policies of or the introduction of new products by us or our competitors; • unexpected challenges or delays in our ability to further develop services and applications that complement our products and result in meaningful subscriber growth and future recurring revenue; • discovery or exploitation of security vulnerabilities in our products, services or systems, leading to negative publicity, decreased demand or potential liability, including potential breach of our customers’ data privacy or disruption of the continuous operation of our cloud infrastructure and our products; • introductions of new technologies and changes in consumer preferences that result in either unanticipated or unexpectedly rapid product category shifts; • slow or negative growth in the networking product, personal computer, Internet infrastructure, smart home, home electronics and related technology markets; • delays in the introduction of new products by us or market acceptance of these products; • delays in regulatory approvals or consumer adoption of WiFi 6E or WiFi 7 technology in various regions; 26 Table of Contents • increases in expenses related to the development, introduction and marketing of new products that adversely impact our margins; • increases in expenses related to the development and marketing related to the Company’s direct online sales channels that adversely impact our margins; • changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities; • changes in U.S. and international trade policy that adversely affect customs, tax or duty rates; • foreign currency exchange rate fluctuations in the jurisdictions where we transact sales and expenditures in local currency; • unanticipated increases in expenses related to periodic restructuring measures undertaken to achieve profitability and other business goals, including the reallocation or relocation of resources; • delay or failure of our service provider customers to purchase at their historic volumes or at the volumes that they or we forecast; • litigation involving alleged patent infringement, consumer class actions, securities class actions or other claims that could negatively impact our reputation, brand, business and financial condition; • disruptions or delays related to our financial and enterprise resource planning systems; • allowance for doubtful accounts exposure with our existing retailers, distributors and other channel partners and new retailers, distributors and other channel partners, particularly as we expand into new international markets; • geopolitical disruption, including sudden changes in immigration policies and economic sanctions, leading to disruption in our workforce or delay or even stoppage of our operations in manufacturing, transportation, technical support and research and development; • terms of our contracts with customers or suppliers that cause us to incur additional expenses or assume additional liabilities; • epidemic or widespread product failure, performance problems or unanticipated safety issues in one or more of our products that could negatively impact our reputation, brand and business; • any changes in accounting rules; • challenges associated with integrating acquisitions that we make, or with realizing value from our strategic investments in other companies; • failure to effectively manage our third-party customer support partners, which may result in customer complaints and/or harm to our brand; • our inability to monitor and ensure compliance with our code of ethics, our anti-corruption compliance program and domestic and international anti-corruption laws and regulations, whether in relation to our employees or with our suppliers or customers; • labor unrest at facilities managed by our third-party manufacturers; • workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate, which may require quarantine of affected products, affect our brand and negatively affect our products’ acceptance by consumers; • overall performance of the equity markets and the economy as a whole; • unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate; and • our failure to implement and maintain the appropriate internal controls over financial reporting which may result in restatements of our financial statements. 27 Table of Contents As a result, period-to-period comparisons of our operating results may not be meaningful, and you should not rely on them as an indication of our future performance.
Other factors that could affect our quarterly and annual operating results include those listed in the risk factors section of this report and others such as: • operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; • component supply constraints, including specialized WiFi 7 or WiFi 6 chipsets, or sudden, unforeseen price increases from our manufacturers, suppliers and vendors; • unanticipated increases in costs, including air and ocean freight, associated with shipping and delivery of our products; • the inability to maintain stable operations by our suppliers, distribution centers and other parties with which we have commercial relationships; • seasonal shifts in end market demand for our products, particularly in our Connected Home business 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; • unfavorable or compressed level of inventory and turns; • changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements; • unanticipated decreases, reduced inventory targets or delays in purchases of our products by our significant traditional and online retail customers; • shift in overall product mix sales from higher to lower gross margin products, from lower-priced products to premium products, or from one business segment to another, that would adversely impact our revenue and gross margins; • an increase in price protection claims, redemptions of marketing rebates, product warranty and stock rotation returns or allowance for doubtful accounts; • delay or failure to fulfill orders for our products on a timely basis; • changes in the pricing policies of or the introduction of new products by us or our competitors; • unexpected challenges or delays in our ability to further develop services and applications that complement our products and result in meaningful subscriber growth and future recurring revenue; • discovery or exploitation of security vulnerabilities in our products, services or systems, leading to negative publicity, decreased demand or potential liability, including potential breach of our customers’ data privacy or disruption of the continuous operation of our cloud infrastructure and our products; • introductions of new technologies and changes in consumer preferences that result in either unanticipated or unexpectedly rapid product category shifts; • slow or negative growth in the networking product, personal computer, Internet infrastructure, smart home, home electronics and related technology markets; • delays in the introduction of new products by us or market acceptance of these products; • delays in regulatory approvals or consumer adoption of WiFi 7 or WiFi 6E technology in various regions; 25 Table of Contents • increases in expenses related to the development, introduction and marketing of new products that adversely impact our margins; • increases in expenses related to the development and marketing related to the Company’s direct online sales channels that adversely impact our margins; • changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities; • changes in U.S. and international trade policy that adversely affect customs, tax or duty rates; • foreign currency exchange rate fluctuations in the jurisdictions where we transact sales and expenditures in local currency; • unanticipated increases in expenses related to periodic restructuring measures undertaken to achieve profitability and other business goals, including the reallocation or relocation of resources; • delay or failure of our service provider customers to purchase at their historic volumes or at the volumes that they or we forecast; • litigation involving alleged patent infringement, consumer class actions, securities class actions or other claims that could negatively impact our reputation, brand, business and financial condition; • disruptions or delays related to our financial and enterprise resource planning systems; • allowance for doubtful accounts exposure with our existing retailers, distributors and other channel partners and new retailers, distributors and other channel partners, particularly as we expand into new international markets; • geopolitical disruption, including sudden changes in immigration policies and economic sanctions, leading to disruption in our workforce or delay or even stoppage of our operations in manufacturing, transportation, technical support and research and development; • terms of our contracts with customers or suppliers that cause us to incur additional expenses or assume additional liabilities; • epidemic or widespread product and/or component failure, performance problems or unanticipated safety issues in one or more of our products that could negatively impact our reputation, brand and business; • any changes in accounting rules; • challenges associated with integrating acquisitions that we make, or with realizing value from our strategic investments in other companies; • failure to effectively manage our third-party customer support partners, which may result in customer complaints and/or harm to our brand; • our inability to monitor and ensure compliance with our code of ethics, our anti-corruption compliance program and domestic and international anti-corruption laws and regulations, whether in relation to our employees or with our suppliers or customers; • labor unrest at facilities managed by our third-party manufacturers; • workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate, which may require quarantine of affected products, affect our brand and negatively affect our products’ acceptance by consumers; • overall performance of the equity markets and the economy as a whole; • unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate; and • our failure to implement and maintain the appropriate internal controls over financial reporting which may result in restatements of our financial statements. 26 Table of Contents As a result, period-to-period comparisons of our operating results may not be meaningful, and you should not rely on them as an indication of our future performance.
Acquisitions involve numerous risks and challenges, including but not limited to the following: • integrating the companies, assets, systems, products, sales channels and personnel that we acquire; • higher than anticipated acquisition and integration costs and expenses; • reliance on third parties to provide transition services for a period of time after closing to ensure an orderly transition of the business; 29 Table of Contents • growing or maintaining revenues to justify the purchase price and the increased expenses associated with acquisitions; • entering into territories or markets with which we have limited or no prior experience; • establishing or maintaining business relationships with customers, vendors and suppliers who may be new to us; • overcoming the employee, customer, vendor and supplier turnover that may occur as a result of the acquisition; • disruption of, and demands on, our ongoing business as a result of integration activities including diversion of management’s time and attention from running the day-to-day operations of our business; • inability to implement uniform standards, disclosure controls and procedures, internal controls over financial reporting and other procedures and policies in a timely manner; • inability to realize the anticipated benefits of or successfully integrate with our existing business the businesses, products, technologies or personnel that we acquire; and • potential post-closing disputes.
Acquisitions involve numerous risks and challenges, including but not limited to the following: • integrating the companies, assets, systems, products, sales channels and personnel that we acquire; • higher than anticipated acquisition and integration costs and expenses; • reliance on third parties to provide transition services for a period of time after closing to ensure an orderly transition of the business; 28 Table of Contents • growing or maintaining revenues to justify the purchase price and the increased expenses associated with acquisitions; • entering into territories or markets with which we have limited or no prior experience; • establishing or maintaining business relationships with customers, vendors and suppliers who may be new to us; • overcoming the employee, customer, vendor and supplier turnover that may occur as a result of the acquisition; • disruption of, and demands on, our ongoing business as a result of integration activities including diversion of management’s time and attention from running the day-to-day operations of our business; • inability to implement uniform standards, disclosure controls and procedures, internal controls over financial reporting and other procedures and policies in a timely manner; • inability to realize the anticipated benefits of or successfully integrate with our existing business the businesses, products, technologies or personnel that we acquire; and • potential post-closing disputes.
In addition, third parties, some of whom are potential competitors, have initiated and may continue to initiate litigation against our manufacturers, suppliers, members of our sales channels or our service provider customers or even end user customers, alleging infringement of their proprietary rights with respect to existing or future products.
In addition, third parties, some of whom are potential competitors, have initiated and may continue to initiate litigation against us, our manufacturers, suppliers, members of our sales channels or our service provider customers or even end user customers, alleging infringement of their proprietary rights with respect to existing or future products.
In addition, health epidemics, war, terrorism, geopolitical uncertainties, social and economic instability, public health issues, sudden changes in trade and immigration policies (such as the higher tariffs on certain products imported from China, U.S. sanctions against Russia as a result of the Russia-Ukraine dispute, and the Israel-Hamas conflicts and Red Sea crisis), and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics providers, manufacturing vendors and customers.
In addition, health epidemics, war, terrorism, geopolitical uncertainties, social and economic instability, public health issues, sudden changes in trade and immigration policies (such as the higher tariffs on certain products imported from China, U.S. sanctions against Russia as a result of the Russia-Ukraine dispute, the Israel-Hamas conflict, and Red Sea crisis), and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics providers, manufacturing vendors and customers.
Risks Related to Our Products, Technology and Intellectual Property 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.
Risks Related to Our Products, Technology, Intellectual Property and Data 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.
New interpretations of existing laws and regulations, whether by courts or by the state, federal or foreign governmental authorities charged with the enforcement of those laws and regulations, may also impact our business in ways we are currently unable to predict.
New interpretations or applications of existing laws and regulations, whether by courts or by the state, federal or foreign governmental authorities charged with the enforcement of those laws and regulations, may also impact our business in ways we are currently unable to predict.
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. 16 Table of Contents To remain competitive and stimulate consumer and business demand, we must successfully manage new product introductions and transitions of products and services.
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. 15 Table of Contents To remain competitive and stimulate consumer and business demand, we must successfully manage new product introductions and transitions of products and services.
If we or our third-party providers are unable to successfully prevent breaches of security relating to our products, services, systems or customer private information, including customer personal identification information, or if these third-party systems failed for other reasons, it could result in litigation and potential liability for us, damage our brand and reputation, or otherwise harm our business.
If we or our third-party providers are unable to successfully prevent breaches of security relating to our products, services, systems or customer private information, including customer personal data, or if these third-party systems failed for other reasons, it could result in litigation and potential liability for us, damage our brand and reputation, or otherwise harm our business.
If we do not successfully overcome these challenges, we will not be able to profitably manage our service provider sales channel and our financial results will be harmed. 25 Table of Contents We expect our operating results to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.
If we do not successfully overcome these challenges, we will not be able to profitably manage our service provider sales channel and our financial results will be harmed. 24 Table of Contents We expect our operating results to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.
We are also required to comply with local environmental legislation and our customers rely on this compliance in order to sell our products. If our customers do not agree with 23 Table of Contents our interpretations and requirements of new legislation, they may cease to order our products and our revenue would be harmed.
We are also required to comply with local environmental legislation and our customers rely on this compliance in order to sell our products. If our customers do not agree with 22 Table of Contents our interpretations and requirements of new legislation, they may cease to order our products and our revenue would be harmed.
Any changes, bugs, or technical issues in such systems, or changes in our relationships with mobile operating system partners, handset manufacturers, browser developers, or mobile carriers, or in their terms of service or policies that degrade our products’ functionality, reduce or eliminate our ability to update or distribute our products or services, give preferential treatment to competitive products, or charge fees related to the distribution of our products could adversely affect the usage of our subscription services products or our other products and services on mobile devices.
Any changes, bugs, or technical issues in such systems, or changes in our relationships with mobile operating system partners, handset manufacturers, browser developers, or mobile carriers, or in their terms of service or policies that degrade our products’ functionality, reduce or eliminate our ability to update or distribute our products or services, give preferential treatment to 35 Table of Contents competitive products, or charge fees related to the distribution of our products could adversely affect the usage of our subscription services products or our other products and services on mobile devices.
In addition, even if we have a product which a service provider customer may wish to purchase, we may choose not to supply products to the potential service provider customer if the contract requirements, such as service level 24 Table of Contents requirements, penalties, and liability provisions, are too onerous.
In addition, even if we have a product which a service provider customer may wish to purchase, we may choose not to supply products to the potential service provider customer if the contract requirements, such as service level 23 Table of Contents requirements, penalties, and liability provisions, are too onerous.
As also noted in the risk factor “ We make substantial investments in software research and development and unsuccessful investments could materially adversely affect our 33 Table of Contents 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.
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.
In addition, as mentioned above in the risk factor " Accurately managing our sales channel inventory 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 to more closely match with product demand.
In addition, as mentioned above in the risk factor " Accurately managing our sales channel inventory and product mix within the current environment is 27 Table of Contents 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 to more closely match with product demand.
For example, as mentioned above in the risk factor “ Accurately managing our sales channel inventory 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.
For example, as mentioned above in the risk factor “ Accurately managing our sales channel inventory and product mix within the current environment is challenging, and we have, and may in the future, 17 Table of Contents 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.
International trade disputes, geopolitical tensions, and military conflicts have led, and continue to lead, to new and increasing export 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 28 Table of Contents restrict our ability to conduct operations.
International trade disputes, geopolitical tensions, and military conflicts have led, and continue to lead, to new and increasing export 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.
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. We have invested, and in the future may invest, in new business strategies.
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. We have invested, and in the future may invest, in new business strategies and adjust existing business strategies.
Each of these regions are known for or susceptible to seismic activity and other natural disasters, such as drought, wildfires, storms, sea-level rise, and flooding. Furthermore, the global effects of climate change have resulted in increased frequency and severity of these extreme weather events and could cause physical damage or disrupt operations.
Each of these regions are known for or susceptible to seismic activity and other natural disasters, such as drought, wildfires, storms, sea-level rise, and flooding. Furthermore, the global effects of climate change have resulted in increased frequency and severity of these 42 Table of Contents extreme weather events and could cause physical damage or disrupt operations.
Certain substantial competitors have business models that are more focused on customer acquisition and access to customer data rather than on financial return from product sales, and these competitors have the ability to provide sustained price competition to many of our products in the market. 22 Table of Contents Average sales prices have declined in the past and may again decline in the future.
Certain substantial competitors have business models that are more focused on customer acquisition and access to customer data rather than on financial return from product sales, and these competitors have the ability to provide sustained price competition to many of our products in the market. Average sales prices have declined in the past and may again decline in the future.
Global economic 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 ProAV, networking and smart home products.
Global economic 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.
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. In addition, our regular testing and quality control efforts may not be effective in controlling or detecting all quality issues and defects.
Any delay in the development, production or 34 Table of Contents marketing of a new software solution could result in us not being among the first to market, which could further harm our competitive position. In addition, our regular testing and quality control efforts may not be effective in controlling or detecting all quality issues and defects.
In addition, we manufacture and sell our products in many international jurisdictions that offer reduced levels of protection and recourse from intellectual property misuse or theft, as compared to the United States. 34 Table of Contents Our inability to secure and protect our intellectual property rights could significantly harm our brand and business, operating results and financial condition.
In addition, we manufacture and sell our products in many international jurisdictions that offer reduced levels of protection and recourse from intellectual property misuse or theft, as compared to the United States. Our inability to secure and protect our intellectual property rights could significantly harm our brand and business, operating results and financial condition.
Financial, Legal, Regulatory and Tax Compliance Risks, Including Recent Impairment Charges 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.
Financial, Legal, Regulatory and Tax Compliance Risks 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.
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.
While we 41 Table of Contents 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.
This shift may have a longer-term impact on the inventory levels our customers choose to carry. 18 Table of Contents Additionally, concentration and consolidation among our customer base may allow certain customers to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.
This shift may have a longer-term impact on the inventory levels our customers choose to carry. Additionally, concentration and consolidation among our customer base may allow certain customers to command increased leverage in negotiating prices and other terms of sale, which could adversely affect our profitability.
If we are 40 Table of Contents unable to successfully anticipate changing economic, geopolitical and financial conditions, we may be unable to effectively plan for and respond to those changes which could further disrupt our business or limit our ability to access certain assets and materially adversely affect our business and results of operations.
If we are unable to successfully anticipate changing economic, geopolitical and financial conditions, we may be unable to effectively plan for and respond to those changes which could further disrupt our business or limit our ability to access certain assets and materially adversely affect our business and results of operations.
The Tax Cuts and Jobs Act of 2017 included provisions effective for the 2022 tax year that eliminate the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize 36 Table of Contents such expenditures over five years for domestic payments and 15 years for payments to foreign parties.
The Tax Cuts and Jobs Act of 2017 included provisions effective for the 2022 tax year that eliminate the option to deduct research and development expenditures immediately in the year incurred and requires taxpayers to amortize such expenditures over five years for domestic payments and 15 years for payments to foreign parties.
Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, and any disruptions due to natural disasters, climate change, health epidemics and political, social and economic instability in 21 Table of Contents the region would affect the ability of our third-party manufacturers to manufacture our products.
Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, and any disruptions due to natural disasters, climate change, health epidemics and political, social and economic instability in the region would affect the ability of our third-party manufacturers to manufacture our products.
Factors that could materially affect our future effective tax rates include but are not limited to: • changes in tax laws or the regulatory environment; • changes in accounting and tax standards or practices; • changes in the composition of operating income by tax jurisdiction; and • our operating results before taxes.
Factors that could materially affect our future effective tax rates include but are not limited to: • changes in tax laws or the regulatory environment; • changes in accounting and tax standards or practices; • changes in the composition of operating income by tax jurisdiction; and 37 Table of Contents • our operating results before taxes.
If we are unable to properly monitor and help our channel partners to optimize their inventory levels and maintain an appropriate level and mix of products with our retail partners and wholesale distributors and within our sales channels, we may incur increased and unexpected costs associated with this inventory.
If we are unable to properly monitor and optimize our channel partners' inventory levels and maintain an appropriate level and mix of products with our retail partners and wholesale distributors and within our sales channels, we may incur increased and unexpected costs associated with this inventory.
In addition, we may not have the resources to maintain compliance with these customer requirements and failure to comply may result in decreased sales to these customers, which may have a material adverse effect on our business, financial condition and results of operations.
In addition, we may not have the resources 39 Table of Contents to maintain compliance with these customer requirements and failure to comply may result in decreased sales to these customers, which may have a material adverse effect on our business, financial condition and results of operations.
For example, we have made a strategic shift to focus on premium, higher margin products and have committed a substantial amount of resources to the development, manufacture, branding, marketing and sale of our Nighthawk mobile hotspot products, Orbi WiFi systems and ProAV managed switches, and to introducing additional and improved models and services in these lines.
For example, we previously made a strategic shift to focus on premium, higher margin products and have committed a substantial amount of resources to the development, manufacture, branding, marketing and sale of our Nighthawk mobile hotspot products, Orbi WiFi systems and Pro AV managed switches, and to introducing additional and improved models and services in these lines.
Our non-marketable equity investments in private companies are not liquid, and we may not be able to dispose of these investments on favorable 30 Table of Contents terms or at all. The occurrence of any of these events could harm our results.
Our non-marketable equity investments in private companies are not liquid, and we may not be able to dispose of these investments on favorable terms or at all. The occurrence of any of these events could harm our results.
Our sales and operations in international markets have exposed us to and may in the future expose us to operational, financial and regulatory risks. International sales comprise a significant amount of our overall net revenue. International sales were approximately 34% of overall net revenue in fiscal 2023 and approximately 36% of overall net revenue in fiscal 2022.
Our sales and operations in international markets have exposed us to and may in the future expose us to operational, financial and regulatory risks. International sales comprise a significant amount of our overall net revenue. International sales were approximately 34% of overall net revenue in fiscal 2024 and fiscal 2023.
In addition, the supply-chain due diligence investigation required by the conflict minerals rules requires expenditures of resources and management attention regardless of the results of the investigation.
In addition, the supply-chain due diligence investigation required by the conflict minerals rules require expenditures of resources and management attention regardless of the results of the investigation.
Consumer class-action lawsuits related to the marketing and performance of our home networking products have been asserted and may in the future be asserted against us. Finally, we have been sued in securities class action lawsuits, and may in the future be named in other similar lawsuits.
Consumer class-action lawsuits related to the marketing and performance of our home networking products have been asserted and may in the future be asserted against us. Finally, we have been sued in securities class action lawsuits, and may in the future 36 Table of Contents be named in other similar lawsuits.
Such report must contain among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective.
Such report must contain among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of our fiscal year, including a statement as 43 Table of Contents to whether or not our internal control over financial reporting is effective.
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.
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.
If there is a new law or regulation that significantly increases our costs of manufacturing or causes us to significantly alter the way that we manufacture our products, this would have a material adverse effect on our business, financial condition and results of operations.
If there is a new law or regulation, or a new interpretation and application of existing laws, that significantly increases our costs of manufacturing or causes us to significantly alter the way that we manufacture our products, this would have a material adverse effect on our business, financial condition and results of operations.
Also, many standardized components used broadly in electronic devices are manufactured in significant quantities in concentrated geographic regions, particularly in Greater China. As a result, protracted crises, such as the COVID-19 pandemic, geopolitical unrest and uncertain economic conditions, could lead to eventual shortages of necessary components sourced from impacted regions or increased component costs.
Also, many standardized components used broadly in electronic devices are manufactured in significant quantities in concentrated geographic regions, particularly in Greater China. As a result, protracted crises, geopolitical unrest and uncertain economic conditions, could lead to eventual shortages of necessary components sourced from impacted regions or increased component costs.
We manufacture and sell products which contain electronic components, and such components may contain materials that are subject to government regulation in both the locations that we manufacture and assemble our products, as well as the locations where we sell our products. For example, certain regulations limit the use of lead in electronic components.
For example, we manufacture and sell products which contain electronic components, and such components may contain materials that are subject 38 Table of Contents to government regulation in both the locations that we manufacture and assemble our products, as well as the locations where we sell our products. Certain regulations also limit the use of lead in electronic components.
If, in any period our stock price decreases to the point where our market capitalization is less than our book 39 Table of Contents value, this too could indicate a potential impairment and we may be required to record an impairment charge in that period.
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.
Other competitors may have fewer resources but may be more nimble in developing new or disruptive technology or in entering new markets. We anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets.
Other competitors may have fewer resources but may be more nimble in developing new or disruptive technology or in entering new markets. We 19 Table of Contents anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets.
Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, economic, legal and regulatory challenges, inadequate return on capital, potential impairment of tangible and intangible assets, and significant write-offs. New business strategies are inherently risky and may not be successful.
Such endeavors may involve significant risks and uncertainties, including distraction of management from current operations, greater-than-expected liabilities and expenses, economic, legal and regulatory challenges, inadequate return on capital, potential impairment of tangible and intangible assets, and significant write-offs. Changes in business 16 Table of Contents strategies are inherently risky and may not be successful.
If we are unsuccessful in defending our tax positions, our profitability will be reduced. We are also subject to examination by other tax authorities, including state revenue agencies and other foreign governments.
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.
During the transition periods, there may be uncertainty among investors, employees and others concerning our future direction and performance. For example, we appointed a new Chief Executive Officer effective January 31, 2024. The failure to successfully transition could adversely affect our results of operations.
During the transition periods, there may be uncertainty among investors, employees and others concerning our future direction and performance. For example, we appointed a new Chief Executive Officer effective January 31, 2024 and have made other leadership changes and hires. The failure to successfully transition could adversely affect our results of operations.
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 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.
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.
Risks Related to our Business, Industry and Operations Helping our channel partners optimize their 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.
Risks Related to our Business, Industry and Operations 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.
We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition. Our principal competitors in the consumer market include ARRIS, ASUS, AVM, Devolo, D-Link, Eero (owned by Amazon), Linksys (owned by Foxconn), Minim (Motorola licensee), Google WiFi, Samsung, and TP-Link.
We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition. Our principal competitors in the consumer market include ARRIS, ASUS, D-Link, Eero (owned by Amazon), Linksys (owned by Foxconn), Google WiFi, and TP-Link.
The cost of any necessary licenses could significantly harm our business, operating results and financial condition. We may also choose to join defensive patent aggregation services in order to prevent or settle litigation against such non-practicing entities and avoid the associated significant costs and uncertainties of litigation.
The cost of any necessary licenses or cost to defend litigation could significantly harm our business, operating results and financial condition. We may also choose to join defensive patent aggregation services in order to prevent or settle litigation and avoid the associated significant costs and uncertainties of litigation.
As a result of our acquisitions, we have significant goodwill recorded on our balance sheets. 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.
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.
This requires material investment in capital, time and resources and carries the risk that it may not achieve 20 Table of Contents the expected return on investment that we are expecting, and that it may adversely affect our relationships with our existing channel partners, which ultimately may materially and adversely affect our results of operations.
This requires material investment in capital, time and resources and carries the risk that it may not achieve the expected return on investment that we are expecting, and that it may adversely affect our relationships with our existing channel partners, which ultimately may materially and adversely affect our results of operations. 20 Table of Contents We also sell products to broadband service providers.
While transportation costs have recently decreased, if the cost of ocean and air freight were to significantly increase again, it would severely disrupt our business and harm our operating results, and in particular, our profitability.
While transportation costs have recently decreased, if the cost of ocean and air freight were to significantly increase again, it would severely disrupt our business and harm our operating results, and in particular, our profitability. Expansion of our operations and infrastructure may strain our operations and increase our operating expenses.
If we fail to establish a presence in an important developing sales channel, such as sales directly to consumers from our own e-commerce platforms, our business could be harmed. We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.
We must also continuously monitor and evaluate emerging sales channels. If we fail to establish a presence in an important developing sales channel, such as sales directly to consumers from our own e-commerce platforms, our business could be harmed. We depend on a limited number of third-party manufacturers for substantially all of our manufacturing needs.
We cannot ensure that we will be successful in selecting, executing and integrating acquisitions. Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. In addition, if stock market analysts or our stockholders do not support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline.
Failure to manage and successfully integrate acquisitions could materially harm our business and operating results. In addition, if stock market analysts or our stockholders do not support or believe in the value of the acquisitions that we choose to undertake, our stock price may decline.
Ensuring that a manufacturer is qualified to manufacture our products to our standards is time consuming. In addition, there is no assurance that a manufacturer can scale its production of our products at the volumes and in the quality that we require.
Ensuring that a manufacturer is qualified to manufacture our products to our standards is time consuming. In addition, there is no assurance that a manufacturer can produce our products at the appropriate volumes and in the quality that we require.
Potential breaches of our security measures and the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, our employees or our customers, including the potential loss or disclosure of such information or data as a result of improper use of AI tools, employee error or other employee actions, hacking, fraud, social engineering or other forms of deception, could expose us, our 32 Table of Contents 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, damage our brand and reputation, or otherwise harm our business.
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.
Some of our customers also require that we comply with their own unique requirements relating to these matters. 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.
Some of our customers also require that we comply with their own unique requirements relating to these matters. 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. We are a global company subject to numerous U.S. and foreign laws and regulations.
Future benefit of these deferred tax assets will be realized in the period they are utilized. We are subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of our products, as well as any such future laws and regulations.
Future benefit of these deferred tax assets will be realized in the period they are utilized. 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.
We devote considerable internal and external resources to network security, data encryption and other security measures to protect our systems and customer data, but these security measures cannot provide absolute security.
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.
Management of environmental pollution, climate change and other ESG considerations has produced significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and the number of countries participating.
One area which has a large number of evolving and developing regulations is environmental compliance. Management of environmental pollution, climate change and other ESG considerations has produced significant legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and the number of countries participating.
If these financial institutions default on their obligations or their credit ratings are negatively impacted by liquidity issues, credit deterioration or losses, financial results, or other factors, the value of our cash equivalents and short-term investments could decline and result in a material impairment, which could have a material adverse effect on our financial condition and operating results.
If these financial institutions default on their obligations or their credit ratings are negatively impacted by liquidity issues, credit deterioration or losses, financial results, or other factors, the value of our cash equivalents and short-term investments could decline and result in a material impairment, which could have a material adverse effect on our financial condition and operating results. 40 Table of Contents Governmental regulations of imports or exports affecting Internet security could affect our net revenue.
These provisions have not been deferred, modified, or repealed by Congress as was previously anticipated might occur. These provisions have a material impact on our cash taxes which will continue in the future if these provisions are not modified, or repealed by Congress. We have been audited by the Italy Tax Authority (“ITA”) for the 2004 through 2012 tax years.
These provisions have not been deferred, modified, or repealed by Congress as was previously anticipated might occur. In years where we are profitable, these provisions have a material impact on our cash taxes which will continue in the future if these provisions are not modified, or repealed by Congress.
If there is an unanticipated new regulation which significantly impacts our use of various components or requires more expensive components, that regulation would have a material adverse impact on our business, financial condition and results of operations. One area which has a large number of regulations is environmental compliance.
If there is an unanticipated new regulation or new interpretations or applications of existing laws and regulations which significantly impacts our use of various components or requires more expensive components, that regulation would have a material adverse impact on our business, financial condition and results of operations.
For example, in 2022, demand for our Connected Home products turned out to be lower than we previously forecasted and resulted in our revenue for our Connected Home products to come in lower than expected, as our channel partners in the U.S. replenished inventory slower than they sold through to end users to right size their inventory carrying position based on the lower demand levels than were previously expected.
For example, when demand for our Connected Home products turns out to be lower than we previously forecasted, it results in our revenue for our Connected Home products to come in lower than expected, as our channel partners in the U.S. replenish inventory slower than they sell through to end users to right size their inventory carrying position based on the lower demand levels than previously expected.
Significant disruptions to the transportation network could lead to significant disruptions in our business, delays in shipments, and revenue and profitability shortfalls which could materially and adversely affect our business and financial results, especially if they were to take place within the last few weeks of any quarter. Our international freight is regularly subjected to inspection by governmental entities.
Significant disruptions to the transportation network could lead to significant disruptions in our business, delays in shipments, increased shipping costs, and revenue and profitability shortfalls which could materially and adversely affect our business and financial results, especially if they were to take place within the last few weeks of any quarter.
If the U.S. government does not agree with our determinations, we could be required to pay additional amounts, including potential penalties, and our profitability would be adversely impacted. Expansion of our operations and infrastructure may strain our operations and increase our operating expenses.
If the U.S. government does not agree with our determinations, we could be required to pay additional amounts, including potential penalties, and our profitability would be adversely impacted.
In addition, we make our products available for purchase directly by consumers through our website. We rely on third-party providers for a number of critical aspects of our cloud services, e-commerce site and customer support, including web hosting services, billing and payment processing, and consequently we do not maintain direct control over the security or stability of the associated systems.
We rely on third-party providers for a number of critical aspects of our cloud services, e-commerce site, software development, manufacturing and customer support, including web hosting services, billing and payment processing, and consequently we do not maintain direct control over the security or stability of the associated systems.
Compliance with laws and regulations concerning artificial intelligence, privacy, cybersecurity, data governance and data protection is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms ensuring compliance with the laws and regulations and incur substantial expenditures.
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.
For example, as mentioned in the risk factor above “ To remain competitive and 17 Table of Contents stimulate consumer and business demand, we must successfully manage new product introductions and transitions of products and services ”, we have made a strategic shift to focus on premium, higher margin products and services.
For example, as mentioned in the risk factor above “ To remain competitive and stimulate consumer and business demand, we must successfully manage new product introductions and transitions of products and services ”, we previously made a strategic shift to focus on premium, higher margin products and services and we continue to make changes in our business strategies, including pursuing new, adjacent markets.
If we fail to comply with any such laws or regulations, we may face significant fines and penalties that could adversely affect our business, financial condition and results of operations. Furthermore, the laws are not consistent, and compliance in the event of a widespread data breach is costly.
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. Furthermore, obligations (including laws and regulations) are not consistent and compliance remains costly.
In addition, epidemic failure clauses are found in certain of our customer contracts, especially contracts with service providers. If invoked, these clauses may entitle the customer to return for replacement or obtain credits for products and inventory, as well as assess liquidated damage penalties and terminate an existing contract and cancel future or then current purchase orders.
If invoked, these clauses may entitle the customer to return for replacement or obtain credits for products and inventory, as well as assess liquidated damage penalties and terminate an existing contract and cancel future or then current purchase orders.
Our success depends on senior management being able to execute at a very high level. The loss of any of our senior management or other key engineering, research, development, sales or marketing personnel, particularly if lost to competitors, could harm our ability to implement our business strategy and respond to the rapidly changing needs of our business.
The loss of our senior management or other key engineering, research, development, sales or marketing personnel, particularly if lost to competitors, could harm our ability to implement our business strategy and respond to the rapidly changing needs of our business. Our future success also depends on our ability to hire for key functions.
It is also possible that an attacker could compromise our internal code repository or those of our 31 Table of Contents partners and insert a ‘backdoor’ that would give them easy access to any of our devices using this code. This particular kind of attack is very sophisticated, relatively new, and hard to defend against.
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.
If successful, these attacks could adversely affect our business, operating results, and financial condition, be expensive to remedy, and damage our reputation. In addition, any such breaches may result in negative publicity, adversely affect our brand, decrease demand for our products and services, and adversely affect our operating results and financial condition.
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.
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.
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. 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.
We also sell products to broadband service providers. Competition for selling to broadband service providers is fierce and intense. Penetrating service provider accounts typically involves a long sales cycle and the challenge of displacing incumbent suppliers with established relationships and field-deployed products.
Competition for selling to broadband service providers is fierce and intense. Penetrating service provider accounts typically involves a long sales cycle and the challenge of displacing incumbent suppliers with established relationships and field-deployed products. If we are unable to maintain and expand our sales channels, our growth would be limited and our business would be harmed.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Factors in this Annual Report on Form 10-K, including 43 Table of Contents “ Product security vulnerabilities, system security risks, data protection breaches, cyber-attacks and improper use of artificial intelligence tools, could disrupt our products, services, internal operations or information technology systems, and any such disruption could increase our expenses, damage our reputation, harm our business and adversely affect our stock price ”.
Biggest changeRisk Factors in this Annual Report on Form 10-K, including “ 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.
Our cybersecurity functions include representatives from information technology, information security, legal, impacted business units or products and other departments as applicable (together, the “Cybersecurity Team”) helps identify, assess and manage the Company’s cybersecurity threats and risks.
Our cybersecurity functions include representatives from information technology, engineering, information security, legal, impacted business units or products and other departments as applicable (together, the “Cybersecurity Team”) helps identify, assess and manage the Company’s cybersecurity threats and risks.
Cybersecurity Risk management and strategy We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property and confidential information that is proprietary, strategic or competitive in nature (“Information Systems and Data”).
Cybersecurity Risk management and strategy We implement and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, communications systems, hardware and software, and our critical data, including intellectual property and confidential information that is proprietary, strategic or competitive in nature (“Information Systems and Data”).
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: (1) having an information security incident response plan for incident detection and response; (2) maintaining a disaster recovery plan, business continuity program, vulnerability management process and vendor risk management process; (3) conducting periodic risk assessments and employee training on cybersecurity; (4) maintaining security controls intended to address the National Institute of Standards and Technology and Cybersecurity Framework; (5) encrypting and segregating data, having network security controls, access controls and physical security, monitoring systems, managing assets (tracking and disposal) and conducting penetration testing; and (6) maintaining cybersecurity insurance.
Depending on the environment, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example: (1) having an information security incident response plan for incident detection and response; (2) maintaining a disaster recovery plan, business continuity program, vulnerability management process and vendor risk management process; (3) conducting periodic risk assessments and employee training on cybersecurity; (4) maintaining security controls intended to address certain recognized industry cyber frameworks; (5) encrypting and segregating data, having network security controls, access controls and physical security, monitoring systems, managing assets (tracking and disposal) and conducting penetration testing; and (6) maintaining cybersecurity insurance.
The Cybersecurity Team identifies, assesses and manages cybersecurity risks by monitoring and evaluating our threat environment using various methods including, for example manual and automated tools such as vulnerability scans, penetration tests and a public bug bounty program; subscribing to reports and services that identify cybersecurity threats; conducting risk assessments and internal and external audits; using external intelligence feeds; and conducting tabletop incident response exercises.
The Cybersecurity Team is responsible for identifying, assessing and managing cybersecurity risks by monitoring and evaluating our threat environment using various methods including, for example manual and automated tools such as vulnerability scans, penetration tests and a public bug bounty program; subscribing to reports and services that identify cybersecurity threats; conducting risk assessments and internal and external audits; using external intelligence feeds; and conducting tabletop incident response exercises.
We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example using professional services firms, threat intelligence service providers, managed cybersecurity service providers, penetration testing firms and forensic investigators. We also have a public bug bounty program.
We use third-party service providers to assist us from time to time in an effort to identify, assess, and manage material risks from cybersecurity threats. For example, these service providers include professional services firms, threat intelligence service providers, managed cybersecurity service providers, penetration testing firms and forensic investigators. We also have a public bug bounty program.
We have a vendor management process for managing cybersecurity risks associated with our use of these providers. This process includes risk assessments, security questionnaires, review of vendor security programs, review of available security assessments, reports, and audits.
We have a vendor management process designed to manage cybersecurity risks associated with our use of these providers. This process includes risk assessments, security questionnaires, review of vendor security programs, review of available security assessments, reports, and audits.
For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program; (2) our Cybersecurity Team works with our management team (comprised of our Chief Legal Officer, Chief Financial Officer and Chief Risk Officer) to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; (3) our Cybersecurity Team and management team evaluates material risks from cybersecurity threats against our overall business objectives and reports to the cybersecurity committee chairperson of the board of directors who may then notify the cybersecurity committee and board of directors (as appropriate), to further evaluate our overall enterprise risk.
For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program; (2) our Cybersecurity Team works with our management team in an effort to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business; (3) our Cybersecurity Team and management team evaluates material risks from cybersecurity threats against our overall business objectives and reports to the cybersecurity committee chairperson of the board of 44 Table of Contents directors who may then notify the cybersecurity committee and board of directors (as appropriate), to further evaluate our overall enterprise risk.
The cybersecurity committee receives periodic notices (written and verbal) from the Cybersecurity Team concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented that are intended to address them. The cybersecurity committee also receives quarterly reports, summaries or presentations related to cybersecurity threats, risk and mitigation.
The cybersecurity committee receives periodic notices (written and verbal) from the Cybersecurity Team concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented that are intended to address them.
Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function. The board of directors’ cybersecurity committee is responsible for overseeing the Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
The board of directors’ cybersecurity committee is responsible for overseeing the Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
Added
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 .”. Governance Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
Added
The cybersecurity committee also receives quarterly reports, summaries or presentations related to the Company's cybersecurity program as it relates to both our corporate systems and products. 45 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

3 edited+2 added−0 removed2 unchanged
Biggest changeItem 2. Properties Our principal administrative, sales, marketing and research and development facilities currently occupy approximately 142,700 square feet in an office complex in San Jose, California, under a lease that expires in September 2025. Our international headquarters occupy approximately 7,000 square feet in an office complex in Cork, Ireland, under a lease that expires in December 2037.
Biggest changeItem 2. Properties Our principal administrative, sales, marketing, and research and development facilities currently occupy approximately 142,700 square feet in an office complex in San Jose, California, under a lease that expires in September 2025.
Our international sales personnel are based out of local sales offices or home offices in Australia, Canada, China, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea, Poland, Singapore, Sweden, Switzerland, New Zealand, Spain, the Netherlands, and the United Kingdom. We also have operations personnel using leased facilities in Singapore, and Taipei (Taiwan).
Our international sales personnel are based out of local sales offices or home offices in Australia, Canada, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea, Poland, Singapore, Sweden, Switzerland, New Zealand, Spain, the Netherlands, and the United Kingdom. We also have operations personnel using leased facilities in Singapore, and Taipei (Taiwan).
We have invested in internal capacity and strategic relationships with outside manufacturing vendors as needed to meet anticipated demand for our products. We use third parties to provide warehousing services to us in facilities located in both Northern and Southern California, Netherlands, Singapore and Australia. 44 Table of Contents
We have invested in internal capacity and strategic relationships with outside manufacturing vendors as needed to meet anticipated demand for our products. We use third parties to provide warehousing services to us in facilities located in both Northern and Southern California, Netherlands, Singapore and Australia.
Added
In September 2024, we entered into a lease agreement to relocate our principal facilities to another office complex that occupies approximately 89,409 square feet in San Jose, California. This new lease will commence in 2025 and expires in September 2036.
Added
Our international headquarters occupy approximately 7,000 square feet in an office complex in Cork, Ireland, under a lease that expires in December 2037.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−3 removed3 unchanged
Biggest changeRepurchase of Equity Securities by the Company Period Total Number of Shares Purchased (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) October 2, 2023 - October 29, 2023 — $ — — 2.5 October 30, 2023 - November 26, 2023 1,577 $ 12.64 — 2.5 November 27, 2023 - December 31, 2023 2,160 $ 14.26 — 2.5 Total 3,737 $ 13.58 — (1) From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock.
Biggest changeRepurchase of Equity Securities by the Company Period Total Number of Shares Purchased (2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) September 30, 2024 - October 27, 2024 957 $ 20.06 — 3.8 October 28, 2024 - November 24, 2024 223,691 $ 23.93 222,155 3.6 November 25, 2024 - December 31, 2024 202,289 $ 26.57 201,256 3.4 Total 426,937 $ 25.18 423,411 (1) From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock, depending on market conditions, in the open market or through privately negotiated transactions.
Recent Sales of Unregistered Securities None. 46 Table of Contents Stock Performance Graph Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the price performance of our common stock shall not be deemed “filed” with the SEC or “soliciting material” under the Exchange Act and shall not be incorporated by reference into any such filings.
Recent Sales of Unregistered Securities None. 47 Table of Contents Stock Performance Graph Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the price performance of our common stock shall not be deemed “filed” with the SEC or “soliciting material” under the Exchange Act and shall not be incorporated by reference into any such filings.
The following graph shows a comparison from December 31, 2018 through December 31, 2023 of cumulative total return for our common stock, the Nasdaq Composite Index and the Nasdaq Computer Index. Such returns are based on historical results and are not intended to suggest future performance.
The following graph shows a comparison from December 31, 2019 through December 31, 2024 of cumulative total return for our common stock, the Nasdaq Composite Index and the Nasdaq Computer Index. Such returns are based on historical results and are not intended to suggest future performance.
(2) During the three months ended December 31, 2023, we repurchased and retired, as reported on trade date, 3,737 shares of common stock at a cost of approximately $51,000 to facilitate tax withholding for Restricted Stock Units.
(2) During the three months ended December 31, 2024, we repurchased and retired, as reported on trade date, approximately 4,000 shares of common stock at a cost of approximately $79,000 to facilitate tax withholding for Restricted Stock Units.
Holders of Common Stock On February 9, 2024, there were 77 stockholders of record, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
Holders of Common Stock On February 7, 2025, there were 68 stockholders of record, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
Data for the Nasdaq Composite Index and the Nasdaq Computer Index assume reinvestment of dividends. We have never paid dividends on our common stock and have no present plans to do so. On December 31, 2018, NETGEAR completed the spin-off of Arlo Technologies, Inc.
Data for the Nasdaq Composite Index and the Nasdaq Computer Index assume reinvestment of dividends. We have never paid dividends on our common stock and have no present plans to do so. 48 Table of Contents
Removed
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.
Removed
(“Arlo”) with the pro rata distribution of 1.980295 shares of Arlo’s common stock for every share of NETGEAR’s common stock to our stockholders, pursuant to which Arlo became an independent company.
Removed
For the purpose of this graph, the effect of the final separation of Arlo is reflected in the cumulative total return of NETGEAR common stock as a reinvested dividend. 47 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+28 added−26 removed42 unchanged
Biggest changeRecent Accounting Pronouncements For a complete description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, refer to Note 1, The Company and Summary of Significant Accounting Policies , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 53 Table of Contents Results of Operations The following table sets forth, for the periods presented, the consolidated statements of operations data, which is derived from the accompanying consolidated financial statements: Year Ended December 31, (In thousands, except percentage data) 2023 2022 2021 Net revenue $ 740,840 100.0 % $ 932,472 100.0 % $ 1,168,073 100.0 % Cost of revenue 491,588 66.4 % 681,923 73.1 % 802,236 68.7 % Gross profit 249,252 33.6 % 250,549 26.9 % 365,837 31.3 % Operating expenses: Research and development 83,295 11.2 % 88,443 9.5 % 92,967 8.0 % Sales and marketing 127,778 17.4 % 139,675 15.0 % 145,961 12.4 % General and administrative 66,243 8.9 % 56,316 6.0 % 59,659 5.1 % Goodwill impairment — — % 44,442 4.8 % — — % Intangibles impairment 1,071 0.1 % — — % — — % Other operating expenses, net 4,140 0.5 % 4,597 0.5 % 653 0.1 % Total operating expenses 282,527 38.1 % 333,473 35.8 % 299,240 25.6 % Income (loss) from operations (33,275 ) (4.5 )% (82,924 ) (8.9 )% 66,597 5.7 % Other income (expenses), net 14,139 1.9 % 902 0.1 % (1,093 ) (0.1 )% Income (loss) before income taxes (19,136 ) (2.6 )% (82,022 ) (8.8 )% 65,504 5.6 % Provision for (benefit from) income taxes 85,631 11.5 % (13,035 ) (1.4 )% 16,117 1.4 % Net income (loss) $ (104,767 ) (14.1 )% $ (68,987 ) (7.4 )% $ 49,387 4.2 % 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.
Biggest changeRecent Accounting Pronouncements For a complete description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, refer to Note 1, The Company and Summary of Significant Accounting Policies , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 54 Table of Contents Results of Operations The following table sets forth, for the periods presented, the consolidated statements of operations data, which is derived from the accompanying consolidated financial statements: Year Ended December 31, (In thousands, except percentage data) 2024 2023 2022 Net revenue $ 673,759 100.0 % $ 740,840 100.0 % $ 932,472 100.0 % Cost of revenue 477,832 70.9 % 491,588 66.4 % 681,923 73.1 % Gross profit 195,927 29.1 % 249,252 33.6 % 250,549 26.9 % Operating expenses: Research and development 81,082 12.0 % 83,295 11.2 % 88,443 9.5 % Sales and marketing 123,694 18.4 % 127,778 17.4 % 139,675 15.0 % General and administrative 63,468 9.4 % 66,243 8.9 % 56,316 6.0 % Litigation reserves, net (89,012 ) (13.2 )% 178 0.0 % 20 0.0 % Restructuring and other charges 4,479 0.7 % 3,962 0.5 % 4,577 0.5 % Goodwill impairment — — % — — % 44,442 4.8 % Intangibles impairment — — % 1,071 0.1 % — — % Total operating expenses 183,711 27.3 % 282,527 38.1 % 333,473 35.8 % Income (loss) from operations 12,216 1.8 % (33,275 ) (4.5 )% (82,924 ) (8.9 )% Other income, net 12,672 1.9 % 14,139 1.9 % 902 0.1 % Income (loss) before income taxes 24,888 3.7 % (19,136 ) (2.6 )% (82,022 ) (8.8 )% Provision for (benefit from) income taxes 12,525 1.9 % 85,631 11.5 % (13,035 ) (1.4 )% Net income (loss) $ 12,363 1.8 % $ (104,767 ) (14.1 )% $ (68,987 ) (7.4 )% 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.
Other Income (Expenses), Net Other income (expenses), 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, including gain on litigation settlements.
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, including gain on litigation settlements.
For details on the changes in Other income (expenses), net, refer to Note 6, Other Income (Expenses), Net , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
For details on the changes in Other income, net, refer to Note 6, Other Income, Net , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
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.
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 56 Table of Contents 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.
A further $323.7 million of purchase orders beyond contractual termination periods remained outstanding. Consequently, we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order if the purchase order is cancelled. Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value.
A further $213.7 million of purchase orders beyond contractual termination periods remained outstanding. Consequently, we may incur expenses for materials and components, such as chipsets purchased by the supplier to fulfill the purchase order if the purchase order is cancelled. Expenses incurred in respect of cancelled purchase orders have historically not been significant relative to the original order value.
Provisions for Excess and Obsolete Inventory On a quarterly basis we assess the value of our inventory and write down its value for estimated excess and obsolete inventory based upon assumptions about the future demand by reviewing inventory quantities on hand and 51 Table of Contents on order under non-cancelable purchase commitments in comparison to our estimated forecast of product demand to determine what inventory, if any, is not saleable at or above cost.
Provisions for Excess and Obsolete Inventory On a quarterly basis we assess the value of our inventory and write down its value for estimated excess and obsolete inventory based upon assumptions about the future demand by reviewing inventory quantities on hand and on order under non-cancelable purchase commitments in comparison to our estimated forecast of product demand to determine what inventory, if any, is not saleable at or above cost.
For a discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
Goodwill Goodwill is not amortized, but instead tested for impairment on an annual basis, or more frequently if certain events or indicators of potential impairment exists, and goodwill is written down when it is determined to be impaired.
Goodwill Goodwill is not amortized, but instead tested for impairment on an annual basis, or more frequently if certain events or indicators of potential impairment exist, and goodwill is written down when it is determined to be impaired.
Our retail channel includes traditional and online retailers both domestically and internationally, such as Amazon.com (worldwide), Best Buy, Wal-Mart, Costco, 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.
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.
We believe that the principal competitive factors in the consumer, business, and service provider markets for networking products include product breadth, price points, size and scope of the sales channel, brand name, timeliness of new product introductions, product availability, performance, features, functionality, reliability, ease-of-installation, maintenance and use, security, as well as customer service and support.
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.
Segment Information 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 11, Segment Information , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
Additional information on the change, 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 11, Segment Information , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
During the years ended December 31, 2023 and 2022, we repurchased and retired, reported based on trade date, approximately 198,000 and 202,000 shares of common stock at a cost of $2.8 million and $4.8 million, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.
During the years ended December 31, 2024 and 2023, we repurchased and retired, reported based on trade date, approximately 226,000 and 198,000 shares of common stock at a cost of $3.4 million and $2.8 million, respectively, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving Restricted Stock Units.
Our product line consists of devices that create and extend wired and wireless networks, devices that attach to the network, such as smart digital displays as well as services that complement and enhance our product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region.
Our product line helps to create and extend wired and wireless networks as well as devices that attach to the network, such as services that complement and enhance our product line offerings. These products are available in multiple configurations to address the changing needs of our customers in each geographic region.
As of December 31, 2023, approximately 33% of our cash and cash equivalents and short-term investments were outside of the U.S. The cash and cash equivalents and short-term investments balances outside of the U.S. are subject to fluctuation based on the settlement of intercompany balances.
As of December 31, 2024, approximately 23% of our cash and cash equivalents and short-term investments were outside of the U.S. The cash and cash equivalents and short-term investments balances outside of the U.S. are subject to fluctuation based on the settlement of intercompany balances.
Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, such as multi-Gigabit internet service to homes, WiFi 7, audio and video over Ethernet, non-fungible token (“NFT”) artwork, and future technologies.
Additionally, we continually invest in research and development to create new technologies and services and to capitalize on technological inflection points and trends, such as audio and video over Ethernet, multi-Gigabit internet service to homes, WiFi 7, eSIM and future technologies.
Our commitments for property and equipment purchases as of December 31, 2023 were not material. (2) Represent undiscounted non-cancellable remaining lease payments. For a detailed discussion on our operating leases, refer to Note 14, Leases, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
For a detailed discussion on our purchase obligations, refer to Note 8, Commitments and Contingencies , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. Our commitments for property and equipment purchases as of December 31, 2024 were not material. (2) Represent undiscounted non-cancellable remaining lease payments.
These include conditions such as the potential for a recession, fluctuations in inflation, elevated interest rates, and the related negative impact on the global economy, foreign exchange rate fluctuations, particularly changes of the U.S. dollar, and ongoing worldwide tensions, including the Russia-Ukraine conflict, Israel-Hamas conflicts, and Red Sea crisis.
These include conditions such as the new tariffs by the Trump administration, the potential for a recession, fluctuations in inflation, interest rate changes, and the related negative impact on the global economy, foreign exchange rate fluctuations, particularly changes of the U.S. dollar, and ongoing worldwide tensions, including the Russia-Ukraine conflict, Israel-Hamas conflict, and Red Sea crisis.
This section generally discusses the results of our operations for the year ended December 31, 2023 (“fiscal 2023”) compared to the year ended December 31, 2022 (“fiscal 2022”).
This section generally discusses the results of our operations for the year ended December 31, 2024 (“fiscal 2024”) compared to the year ended December 31, 2023 (“fiscal 2023”).
The Company made an accounting policy election related to accounting for the tax effects of Global Intangible Low-Taxed Income (“GILTI”) that was implemented as part of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), enacted on December 22, 2017.
We include interest expense and penalties related to uncertain tax positions as additional tax expense. The Company made an accounting policy election related to accounting for the tax effects of Global Intangible Low-Taxed Income (“GILTI”) that was implemented as part of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), enacted on December 22, 2017.
Our investments reflect our steadfast focus on cybersecurity of our products and systems, as the rising threat of cyber-attacks and exploitation of security vulnerabilities in our industry is a significant consumer concern.
Our investments reflect our enhanced focus on the security of our products and systems, as the threat of cyber-attacks and exploitation of potential security vulnerabilities in our industry is on the rise and is increasingly a significant consumer concern.
Our accounts payable (excluding payables related to property and equipment) decreased from $85.3 million as of December 31, 2022, to $46.4 million as of December 31, 2023, primarily due to the reduction and timing of inventory receipts and supplier payments.
Our accounts payable (excluding payables related to property and equipment) increased from $46.4 million as of December 31, 2023, to $57.4 million as of December 31, 2024, primarily due to the timing of inventory receipts and supplier payments.
For a detailed discussion of restructuring and other charges, refer to Note 13. Restructuring and Other Charges, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
Restructuring and Other Charges, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
We identified the reporting units for the purpose of goodwill impairment testing still as Connected Home and NETGEAR for Business. The results of the quantitative testing indicated that the fair value of the NETGEAR for Business reporting unit substantially exceeded its carrying amount, including goodwill, thus no goodwill impairment was recognized.
The results of the quantitative testing indicated that the fair value of the NETGEAR for Business reporting unit substantially exceeded its carrying amount, including goodwill, thus no goodwill impairment was recognized.
Liquidity and Capital Resources Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of December 31, 2023, we had cash, cash equivalents and short-term investment of $283.6 million, an increase of $56.2 million from December 31, 2022.
Liquidity and Capital Resources Our principal sources of liquidity are cash, cash equivalents, short-term investments and cash generated from operations. As of December 31, 2024, we had cash, cash equivalents and short-term investment of $408.7 million, an increase of $125.0 million from December 31, 2023.
The unrecognized tax benefits have been excluded from the contractual obligations table because reasonable estimates cannot be made of whether, or when, any cash payments for such items might occur.
The timing of any payments that could result from these unrecognized tax benefits will depend upon a number of factors. The unrecognized tax benefits have been excluded from the contractual obligations table because reasonable estimates cannot be made of whether, or when, any cash payments for such items might occur.
Financial Overview During the year ended December 31, 2023, our net revenue decreased by $191.6 million compared to the prior year, mainly driven by decreases of $112.0 million in our Connected Home segment, and $79.7 million in our NETGEAR for Business segment.
Financial Overview During the year ended December 31, 2024, our net revenue decreased by $67.1 million, compared to the prior year, mainly driven by decreases of $60.9 million in our Connected Home segment, and $6.2 million in our NETGEAR for Business segment.
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 currently under examination in various U.S. and foreign jurisdictions.
These provisions resulted in a net reduction of tax of $0.5 million. 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.
Investing activities Net cash used in investing activities decreased by $52.1 million for fiscal 2023, compared to the prior year, mainly driven by lower net purchases of short-term investments.
Investing activities Net cash used in investing activities decreased by $1.3 million in fiscal 2024, compared to the prior year, mainly driven by lower net purchases of short-term investments, partially offset by higher purchases of property and equipment.
We aim to execute on our strategy of capitalizing on the technological inflection points of the recent release of WiFi 7, WiFi 6E, WiFi 6, 5G, audio and video over Ethernet, to develop and expand the premium WiFi market through new product introductions and to develop and roll out service offerings that build recurring service revenue streams.
We aim to execute on our strategy of capitalizing on the technological inflection points of audio and video over Ethernet, WiFi 7, WiFi 6E, WiFi 6, and 5G, to develop products that serve a broader segment of the market with a good, better, best product strategy, and to simplify, develop and roll out service offerings that build recurring service revenue streams.
For a detailed discussion of our common stock repurchases, refer to Note 9, Stockholders’ Equity , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. We remain confident in our ability to generate meaningful levels of cash, and plan to continue to opportunistically repurchase shares in the future.
For a detailed discussion of our common stock repurchases, refer to Note 9, Stockholders’ Equity , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
During the year ended December 31, 2022, we repurchased and retired, and reported based on trade date, approximately 1.0 million shares of common stock at a cost of $24.4 million under the repurchase program.
During the year ended December 31, 2024, we repurchased and retired, reported based on trade date, approximately 2.1 million shares of common stock, at a cost of approximately $33.6 million under the repurchase authorization. As of December 31, 2024, common stock repurchases at a cost of approximately $0.5 million were pending settlement.
Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Americas $ 504,349 (18.3 )% $ 617,211 (21.5 )% $ 786,326 Percentage of net revenue 68.1 % 66.2 % 67.3 % EMEA $ 148,922 (17.0 )% $ 179,358 (22.0 )% $ 229,829 Percentage of net revenue 20.1 % 19.2 % 19.7 % APAC $ 87,569 (35.6 )% $ 135,903 (10.5 )% $ 151,918 Percentage of net revenue 11.8 % 14.6 % 13.0 % Total net revenue $ 740,840 (20.6 )% $ 932,472 (20.2 )% $ 1,168,073 2023 vs 2022 Americas Net revenue in Americas decreased in fiscal 2023, driven by declines of 19.2% in Connected Home net revenue and 15.9% in NETGEAR for Business net revenue, compared to the prior year.
Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Americas $ 456,040 (9.6 )% $ 504,349 (18.3 )% $ 617,211 Percentage of net revenue 67.7 % 68.1 % 66.2 % EMEA $ 127,260 (14.5 )% $ 148,922 (17.0 )% $ 179,358 Percentage of net revenue 18.9 % 20.1 % 19.2 % APAC $ 90,459 3.3 % $ 87,569 (35.6 )% $ 135,903 Percentage of net revenue 13.4 % 11.8 % 14.6 % Total net revenue $ 673,759 (9.1 )% $ 740,840 (20.6 )% $ 932,472 2024 vs 2023 Americas Net revenue in Americas decreased in fiscal 2024, primarily attributable to a decline in Connected Home segment's net revenue of 13.0%, compared to the prior year.
Sales incentives and price protection are determined based on a combination of the actual amounts committed and through estimating future expenditure based upon historical customary business practice, historical pricing information, current pricing trends, and channel inventory levels. We continue to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur.
Sales incentives and price protection are determined based on a combination of the actual amounts committed and through estimating future expenditure based upon historical customary business practice, historical pricing information, current pricing trends, and channel inventory levels.
We believe that deferred tax assets recorded for foreign jurisdictions are recoverable; however, if there were a change in our ability to recover these assets, we would be required to take a charge in the period in which we determined that recovery was not more likely than not. 52 Table of Contents Uncertain tax provisions are recognized under guidance that provides that a company should use a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken.
We believe that deferred tax assets recorded for foreign jurisdictions are recoverable; however, if there were a change in our ability to recover these assets, we would be required to take a charge in the period in which we determined that recovery was not more likely than not.
Refer to Note 3, Balance Sheet Components , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for details.
For a detailed discussion on our operating leases, refer to Note 14, Leases , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
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.
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.
The decline in Connected Home net revenue was mainly due to a contraction of the U.S. retail market and lower net revenue from the service provider channel.
The decrease in Connected Home net revenue was mainly due to market contraction, leading to a year-over-year decline in the retail channel, and, to a lesser extent, a decline in net revenue in the service provider channel.
We are dedicated to delivering innovative and highly differentiated, connected solutions ranging from easy-to-use premium WiFi solutions, security and support services to protect and enhance home networks, to switching and wireless solutions to augment business networks and audio and video over Ethernet for Pro AV applications.
Our highly differentiated connected solutions range from switching and wireless products to augment business networks and audio and video (“AV”) over Ethernet for Pro AV applications to our good, better, and best WiFi solutions, security and support services to protect and enhance business and home networks.
We continue to invest in research and development to grow our cloud platform capabilities, our services and mobile applications and to create and expand our hardware product offerings focused on premium WiFi 7, and WiFi 6/6E, Advanced 4G/5G mobile and 5G coverage solutions, audio and video over Ethernet, web-managed, AV over IP managed switches and NETGEAR for Business wireless products.
We continue to invest in research and development to grow audio and video over Ethernet, web-managed, AV over IP managed switches, NETGEAR for Business wireless products, our cloud platform capabilities, our recurring services and mobile applications, and to broaden our WiFi 7 offerings for consumers to align to our good-better-best strategy and broaden our 5G mobile products.
Cash Flows The following table presents our cash flows for the periods presented: Year Ended December 31, (In thousands) 2023 2022 2021 Cash provided by (used in) operating activities $ 56,853 $ (13,732 ) $ (4,579 ) Cash used in investing activities (27,433 ) (79,517 ) (9,985 ) Cash provided by (used in) financing activities 797 (24,023 ) (68,124 ) Net cash increase (decrease) $ 30,217 $ (117,272 ) $ (82,688 ) 2023 vs 2022 Operating activities Net cash provided by operating activities was $56.9 million, compared to net cash used of $13.7 million in the prior year, primarily due to favorable working capital movements.
Cash Flows The following table presents our cash flows for the periods presented: Year Ended December 31, (In thousands) 2024 2023 2022 Cash provided by (used in) operating activities $ 164,797 $ 56,853 $ (13,732 ) Cash used in investing activities (26,157 ) (27,433 ) (79,517 ) Cash provided by (used in) financing activities (28,913 ) 797 (24,023 ) Net cash increase (decrease) $ 109,727 $ 30,217 $ (117,272 ) 2024 vs 2023 Operating activities Net cash provided by operating activities increased by $107.9 million in fiscal 2024, compared to the prior year, primarily due to a net proceed before tax of $103.6 million resulting from the litigation settlement payment from TP-Link and favorable working capital movements.
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 as a percentage of net revenue in fiscal 2024 to be in line with or slightly below fiscal 2023 levels.
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.
Financing activities Net cash provided by financing activities was $0.8 million, compared to net cash used of $24.0 million in the prior year, primarily due to lower purchases of our common stock.
Financing activities Net cash used in financing activities was $28.9 million in fiscal 2024, compared to net cash provided of $0.8 million in the prior year, primarily due to repurchases of our common stock in the current year, partially offset by proceeds from exercise of stock options.
The Connected Home segment focuses on consumers and provides high-performance, dependable, and easy-to-use premium WiFi internet networking solutions such as WiFi 6, WiFi 6E, and WiFi 7 tri-band and Quad-band mesh systems, 4G/5G mobile products, smart devices such as Meural digital displays, and subscription services that provide consumers a range of value-added services focused on security, performance, privacy, and premium support.
The Connected Home segment offers advanced connectivity, powerful performance, and enhanced security features right out of the box, designed to help keep families safe online, whether at home or on the go, including high-performance, dependable and easy-to-use premium WiFi networking solutions such as 4G/5G mobile products, WiFi 7 Tri-band and Quad-band mesh systems and routers, WiFi 6E, WiFi 6, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy and premium support.
We expect general and administration expenses as a percentage of net revenue in fiscal 2024 to be in line with or slightly below fiscal 2023 levels.
We expect general and administration expenses as a percentage of net revenue in the first fiscal quarter of 2025 to be below the same quarter of 2024 level.
We operate and report in two segments: Connected Home, and NETGEAR for Business (formerly known as Small and Medium Business, or SMB). We believe that this structure reflects our current operational and financial management, and that it provides the best structure for us to focus on growth opportunities while maintaining financial discipline.
Through 2024, we operated and reported in two segments: NETGEAR for Business and Connected Home. We believe that this structure reflected our operational and financial management, and that it enabled us to focus on growth opportunities while maintaining financial discipline.
The amounts presented are consistent with contractual terms and are not expected to differ significantly, unless a substantial change in our headcount needs requires us to exit an office facility early or expand our occupied space. (3) Represent non-cancellable purchase commitments pertaining to non-trade activities.
These balances (excluding the amounts for the office lease described below) are included on our consolidated balance sheets. These lease payments are consistent with contractual terms and are not expected to differ significantly, unless a substantial change in our headcount needs requires us to exit an office facility early or expand our occupied space.
The following table presents research and development expenses, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Research and development $ 83,295 (5.8 )% $ 88,443 (4.9 )% $ 92,967 2023 vs 2022 The decline in research and development expenses in fiscal 2023, compared to the prior year, was primarily driven by a decrease in personnel-related expenditures of $4.7 million mainly due to decreased headcount primarily in our Connected Home segment and shared services functions.
The following table presents research and development expenses, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Research and development $ 81,082 (2.7 )% $ 83,295 (5.8 )% $ 88,443 2024 vs 2023 The decline in research and development expenses in fiscal 2024, compared to the prior year, was primarily driven by a decrease in IT and facility allocation of $1.4 million, and a decrease in engineering projects and outside professional service fees of $1.0 million.
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.
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.
Provision for Income Taxes Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Provision for (benefit from) income taxes $ 85,631 ** $ (13,035 ) ** $ 16,117 Effective tax rate (447.5 )% 15.9 % 24.6 % ___________________ ** Percentage change not meaningful. 2023 vs 2022 The tax expense in 2023 resulted primarily from the full valuation allowance recorded against the U.S. federal and state deferred tax assets.
Provision for (Benefit from) Income Taxes Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Provision for (benefit from) income taxes $ 12,525 (85.4 )% $ 85,631 ** $ (13,035 ) Effective tax rate 50.3 % (447.5 )% 15.9 % ___________________ ** Percentage change not meaningful. 2024 vs 2023 The tax expense in 2024 resulted primarily from the increase in profits, plus the change in valuation allowance, partially offset by the benefit from certain changes in estimate upon filing the 2023 U.S. federal tax return and the 59 Table of Contents recognition of uncertain tax benefits.
The following table presents other income (expenses), net for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Other income (expenses), net $ 14,139 ** $ 902 ** $ (1,093 ) ___________________ ** Percentage change not meaningful. 2023 vs 2022 The change in other income (expenses), net for fiscal 2023 was primarily due to an increase of $7.1 million in higher interest earned on our investment in U.S. treasuries and money market funds and $6.0 million cash received relating to a favorable litigation settlement during the second fiscal quarter of 2023.
The following table presents other income, net for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Other income, net $ 12,672 (10.4 )% $ 14,139 ** $ 902 ___________________ ** Percentage change not meaningful. 2024 vs 2023 The decrease in other income, net for fiscal 2024 was primarily due to $6.0 million cash received relating to a favorable litigation settlement for false product marketing in the prior year but not in the current year, partially offset by higher interest income resulting from higher interest rates and higher cash and short-term investment balances.
The following table presents costs of revenue and gross margin, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Cost of revenue $ 491,588 (27.9 )% $ 681,923 (15.0 )% $ 802,236 Gross margin percentage 33.6 % 26.9 % 31.3 % 2023 vs 2022 Gross margin percentage increased for fiscal 2023, compared to the prior year, primarily due to a more favorable mix of premium Connected Home products which carry higher gross margins, combined with continued growth of our services business.
The following table presents costs of revenue and gross margin for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Cost of revenue $ 477,832 (2.8 )% $ 491,588 (27.9 )% $ 681,923 Gross margin percentage 29.1 % 33.6 % 26.9 % 2024 vs 2023 Gross margin percentage decreased for fiscal 2024, compared to the prior year, primarily attributable to higher cost of inventory and freight costs, and higher excess and obsolete inventory expense as we accelerated the depletion of our slower moving inventory, partially offset by higher mix of NETGEAR for Business products, which generally carry higher gross margin.
The possible reduction in liabilities for uncertain tax positions in multiple jurisdictions that may impact the statements of operations in the next 12 months is approximately $0.7 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities. 61 Table of Contents Our contractual and other obligations are expected to be funded by our existing cash, cash equivalents and short-term investments, together with cash generated from operations. 62 Table of Contents
The possible reduction in liabilities for uncertain tax positions in multiple jurisdictions that may impact the statements of operations in the next 12 months was approximately $1.3 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities.
NETGEAR for Business Segment Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Net revenue $ 293,975 (21.3 )% $ 373,649 18.8 % $ 314,601 Percentage of net revenue 39.7 % 40.1 % 26.9 % Contribution income $ 58,532 (22.8 )% $ 75,790 22.0 % $ 62,136 Contribution margin 19.9 % 20.3 % 19.8 % 2023 vs 2022 NETGEAR for Business net revenue decreased in fiscal 2023, compared to the prior year, primarily due to a reduction in inventory carrying levels across our channel partners driven by the continued pressure of the uncertain macroeconomic environment, particularly in Asia and Europe.
NETGEAR for Business Segment Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Net revenue $ 287,812 (2.1 )% $ 293,975 (21.3 )% $ 373,649 Percentage of net revenue 42.7 % 39.7 % 40.1 % Contribution income $ 44,005 (22.5 )% $ 56,765 (22.8 )% $ 73,542 Contribution margin 15.3 % 19.3 % 19.7 % 2024 vs 2023 NETGEAR for Business net revenue decreased in fiscal 2024, compared to the prior year, primarily due to our work with our channel partners to optimize their inventory carrying levels in the first half of 2024.
As of December 31, 2023, approximately 2.5 million shares remained authorized for repurchase under the repurchase program. We did not repurchase any shares of common stock during the year ended December 31, 2023 under the repurchase program.
We did not repurchase any shares of common stock during the year ended December 31, 2023. Under the Inflation Reduction Act signed into law in 2022, the exercise tax on stock repurchases was approximately $0.2 million for the year ended December 31, 2024.
Despite the year-over-year decline in net revenue, demand for our premium WiFi mesh systems and 5G mobile hotspots, continued to grow, bolstered by the addition of our recently released WiFi 7 mesh systems. During the year, we also experienced continued strong demand for the Pro AV product line of managed switches, and growth in our services revenue.
Despite the year-over-year decline in net revenue, we saw continued strong demand for the Pro AV product line of managed switches, which experienced double digit growth in end market sales, and growth in our services revenue. In addition, our premium portfolio of products in Connected Home segment continued to outperform the market.
The following table presents sales and marketing expenses, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Sales and marketing $ 127,778 (8.5 )% $ 139,675 (4.3 )% $ 145,961 2023 vs 2022 The decline in sales and marketing expenses for fiscal 2023, compared to the prior year, was primarily attributable to decreases in outbound freight costs for product deliveries to our customers of $7.0 million, in personnel-related expenditures and variable compensation of $4.2 million, mainly due to lower headcount and 56 Table of Contents performance-based compensation expenses, and outside service expenditures of $2.8 million, mainly attributable to lower call center support costs.
The following table presents sales and marketing expenses, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Sales and marketing $ 123,694 (3.2 )% $ 127,778 (8.5 )% $ 139,675 2024 vs 2023 The decline in sales and marketing expenses for fiscal 2024, compared to the prior year, was primarily attributable to a decrease in brand marketing expenditures of $5.7 million, partially offset by an increase in personnel-related expenditures of $1.2 million, mainly due to higher variable compensation. 57 Table of Contents We expect sales and marketing expenses as a percentage of net revenue in the first fiscal quarter of 2025 to be in line with the same quarter of 2024 level.
The decline in Connected Home net revenue was primarily driven by the macroeconomic environment headwinds. For further discussions specific to our Connected Home and NETGEAR for Business, refer to the "Segment Information" section below.
The net revenue increase in APAC in fiscal 2024, compared to the prior year, was partially offset by a decrease in our Connected Home segment’s net revenue of 15.8%, primarily driven by the lower demand for traditional broadband gateways. For further discussions specific to our NETGEAR for Business and Connected Home, refer to the "Segment Information" section below.
Accounts receivable decreased from $277.5 million as of December 31, 2022, to $185.1 million as of December 31, 2023, primarily due to lower revenue and the timing of cash collections. Inventory decreased from $299.6 million as of December 31, 2022 to $248.9 million as of December 31, 2023, as we make further progress in optimizing our inventory levels.
Accounts receivable decreased from $185.1 million as of December 31, 2023, to $156.2 million as of December 31, 2024, primarily due to the timing of cash 61 Table of Contents collections and lower revenue.
Connected Home Segment Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Net revenue $ 446,865 (20.0 )% $ 558,823 (34.5 )% $ 853,472 Percentage of net revenue 60.3 % 59.9 % 73.1 % Contribution income (loss) $ 19,052 ** $ (8,539 ) ** $ 116,889 Contribution margin 4.3 % (1.5 %) 13.7 % ___________________ ** Percentage change not meaningful. 2023 vs 2022 Connected Home net revenue decreased in fiscal 2023, compared to the prior year, primarily due to a contraction of the U.S. retail market and lower net revenue from the service provider channel.
NETGEAR for Business contribution income decreased in fiscal 2024, compared to the prior year, primarily due to lower net revenue, and lower gross margin achievement mainly attributable to higher cost of inventory, higher excess and obsolete inventory expense as we accelerated the depletion of our slower moving inventory, and higher freight costs. 60 Table of Contents Connected Home Segment Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Net revenue $ 385,947 (13.6 )% $ 446,865 (20.0 )% $ 558,823 Percentage of net revenue 57.3 % 60.3 % 59.9 % Contribution (loss) income $ (26,011 ) ** $ 9,545 ** $ (17,531 ) Contribution margin (6.7 )% 2.1 % (3.1 )% ___________________ ** Percentage change not meaningful. 2024 vs 2023 Connected Home net revenue decreased in fiscal 2024, compared to the prior year, primarily due to market contraction, leading to a year-over-year decline in the retail channel, and, to a lesser extent, a decline in net revenue in service provider channel.
The following table presents general and administrative expenses, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 General and administrative $ 66,243 17.6 % $ 56,316 (5.6 )% $ 59,659 2023 vs 2022 The increase in general and administrative expenses for fiscal 2023, compared to the prior year, was primarily driven by an increase in legal and professional services fees of $7.5 million, mainly associated with litigation matters, which included fees incurred while reaching the favorable litigation settlement mentioned below in “Other income (expenses), net”, as well as an increase in personnel-related expenditures of $1.8 million, primarily due to increased deferred compensation benefits and stock-based compensation.
The following table presents general and administrative expenses, for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 General and administrative $ 63,468 (4.2 )% $ 66,243 17.6 % $ 56,316 2024 vs 2023 The decrease in general and administrative expenses for fiscal 2024, compared to the prior year, was primarily due to a decrease in legal and professional services fees of $13.9 million, mainly attributable to a $10.9 million reduction in expenses to offset the legal fees incurred to date associated with the litigation settlement payment from TP-Link.
Geographically, net revenue from Connected Home and NETGEAR for Business decreased across all three regions during the year ended December 31, 2023, compared to the prior year.
Geographically, net revenue from NETGEAR for Business decreased in Americas and EMEA but increased in APAC, whereas net revenue from Connected Home decreased in all three regions, during the year ended December 31, 2024, compared to the prior year. Global Events Affecting our Business and Operations Macroeconomic and geopolitical trends created uncertainty in the global economic environment in recent years.
(4) Represent estimated liability related to a one-time transaction tax that resulted from the passage of the Tax Act. (5) Included on our consolidated balance sheets. (6) For a detailed discussion, refer to Note 8, Commitments and Contingencies , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
(3) Represent non-cancellable purchase commitments pertaining to non-trade activities. (4) Represent estimated liability related to a one-time transaction tax that resulted from the passage of the Tax Act. (5) Included on our consolidated balance sheets.
Income tax positions that meet the more-likely-than-not recognition threshold should be measured in order to determine the tax benefit to be recognized in the financial statements. We include interest expense and penalties related to uncertain tax positions as additional tax expense.
Uncertain tax provisions are recognized under guidance that provides that a company should use a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold should be measured in order to determine the tax benefit to 53 Table of Contents be recognized in the financial statements.
Contractual and Other Obligations The following table summarizes our non-cancelable short-term and long-term contractual and other obligations as of December 31, 2023: (In thousands) Short-term Long-term Total Purchase obligations (1) (6) $ 42,616 $ — $ 42,616 Operating leases (2) (5) 13,814 34,741 48,555 Other non-trade purchase commitments (3) (6) 1,823 11,282 13,105 Tax Act payables (4) (5) 3,005 3,756 6,761 $ 61,258 $ 49,779 $ 111,037 (1) Represent non-cancellable inventory-related purchase agreements with suppliers.
We remain confident in our ability to generate meaningful levels of cash, and plan to continue to opportunistically repurchase shares in the future. 62 Table of Contents Contractual and Other Obligations The following table summarizes our non-cancelable short-term and long-term contractual and other obligations as of December 31, 2024: (In thousands) Short-term Long-term Total Purchase obligations (1) (6) $ 57,430 $ — $ 57,430 Operating leases (2) 13,149 65,401 78,550 Other non-trade purchase commitments (3) (6) 1,914 9,368 11,282 Tax Act payables (4) (5) 3,756 — 3,756 $ 76,249 $ 74,769 $ 151,018 (1) Represent non-cancellable inventory-related purchase agreements with suppliers.
Refer to Item 1A, Risk Factors of Part I of this 50 Table of Contents Annual Report on Form 10-K for various risks and uncertainties associated with the macroeconomic trends and uncertainty.
Refer to Item 1A, Risk Factors of Part I of this Annual Report on Form 10-K for various risks and uncertainties associated with the macroeconomic trends and uncertainty. 51 Table of Contents In 2024, we completed efforts to work with our channel partners to optimize their inventory carrying levels for both the NETGEAR for Business and Connected Home businesses and started to see more predictable performance aligned to the market during the second half of the year.
The leadership team of each segment is focused on serving customer needs through product and service development efforts, both from a product marketing and engineering standpoint.
The leadership team of each segment is focused on serving customer needs through product and service development efforts, both from a product marketing and engineering standpoint. The NETGEAR for Business segment offers reliable, easy-to-use, high-performance networking solutions, including switches, routers, access points, software, and AV over IP technologies, tailored to meet the diverse needs of organizations of all sizes.
For a detailed discussion of goodwill and intangibles impairment, refer to Note 3, Balance Sheet Components , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 57 Table of Contents Other Operating Expenses, Net Other operating expenses, net consists of restructuring and other charges, and litigation reserves, net.
No goodwill impairment was recognized for our NETGEAR for Business reporting unit in the years ended December 31, 2024, 2023 and 2022. Refer to Note 3, Balance Sheet Components , in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for details.
The year-over-year decrease in Connected Home net revenue was mainly due to a contraction of the U.S. retail market and lower net revenue from the service provider channel. The year-over-year decrease in NETGEAR for Business net revenue was mainly due to channel inventory compression driven by the continued pressure of the uncertain macroeconomic environment.
The net revenue decline in Connected Home was mainly due to market contraction, leading to a year-over-year decline in both the retail and service provider channels.
To remain competitive, we believe we must continue to aggressively invest resources to develop new products and subscription services, enhance our 49 Table of Contents current products, and expand our channels and direct-to-consumer capabilities, while increasing engagement and maintaining satisfaction with our customers.
To remain competitive, 50 Table of Contents we believe we must continue to aggressively invest resources in highly differentiated, “good, better, best”, high performance reliable and trusted connectivity solutions, complemented by valuable subscription services, expanding our sales channels including our direct-to-consumer capabilities and custom installers, increasing engagement with our customers and manufacturing partners, and maintaining customer satisfaction worldwide.
Geographically, net revenue decreased across all regions compared to the prior year. Connected Home contribution income increased in fiscal 2023, compared to the prior year, primarily due to higher gross margin achievement through strong demand for higher-margin premium products, decreased operating expenses and freight transportation costs, partially offset by lower net revenue.
Connected Home contribution income decreased in fiscal 2024, compared to the prior year, primarily due to lower net revenue, and lower gross margin achievements due to higher cost of inventory, and higher freight costs, partially offset by lower warranty expense as a percentage of net revenue, which also represented a lower warranty in absolute dollar amount.
Goodwill and Intangibles Impairment The following table presents goodwill and intangibles impairment charges for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2023 % Change 2022 % Change 2021 Goodwill impairment $ — ** $ 44,442 ** $ — Intangibles impairment $ 1,071 ** $ — ** $ — ___________________ ** Percentage change not meaningful.
Restructuring and Other Charges The following table presents restructuring and other charge for the periods indicated: Year Ended December 31, (In thousands, except percentage data) 2024 % Change 2023 % Change 2022 Restructuring and other charges $ 4,479 13.0 % $ 3,962 (13.4 )% $ 4,577 2024 vs 2023 The restructuring and other charges were slightly higher in fiscal 2024, compared to the prior year.
These benefits were partially offset by the impact of the write-off of non-deductible goodwill during the year. 58 Table of Contents During fiscal 2023, we evaluated the impact of the Global Intangible Low-Tax Income “GILTI”, Foreign Derived Intangible Income (“FDII”) and Base Erosion and Anti-abuse Tax “BEAT” provisions. These provisions resulted in a net reduction of tax of $0.3 million.
The tax expense in 2023 resulted primarily from the full valuation allowance recorded against the U.S. federal and state deferred tax assets. During fiscal 2024, we evaluated the impact of the Global Intangible Low-Tax Income (“GILTI”), Foreign Derived Intangible Income (“FDII”) and Base Erosion and Anti-abuse Tax (“BEAT”) provisions.
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. 60 Table of Contents Stock Repurchase Program From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock.
Stock Repurchases From time to time, our Board of Directors has authorized programs under which we may repurchase shares of our common stock.
We believe that a combination of improved product mix with increased sales of premium Connected Home products, higher subscription services and improved transportation costs, including less reliance on higher-cost air freight, will continue to help with margin performance in fiscal 2024. 55 Table of Contents 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.
We expect our gross margin in the first fiscal quarter of 2025 to be higher than the same quarter of 2024 level. Forecasting gross margin percentages is difficult, and there are a number of risks related to our ability to maintain or improve our current gross margin levels.
The decrease in products for the traditional NETGEAR for Business market, compared with the prior year, was partially offset by the strong demand for the Pro AV product line of managed switches.
APAC Net revenue in APAC increased in fiscal 2024, compared to the prior year, mainly attributable to an increase in NETGEAR for Business segment’s net revenue of 21.3%, primarily driven by the higher demand for the Pro AV product line of managed switches.
Despite a decline in the overall consumer networking market during fiscal 2023, our premium WiFi 6 mesh systems and 5G mobile hotspots continued to grow, bolstered by the addition of our recently released WiFi 7 mesh systems, and we saw growth in our services revenue, as compared to the prior year period.
Despite the decline in the overall consumer networking market in fiscal year 2024, our premium portfolio of products continued to outperform the market, and we saw growth in our service revenue. Geographically, Connected Home net revenue decreased across all three regions, compared to the prior year.
The decline was mainly driven by meaningful channel inventory compression driven by the continued pressure of the uncertain macro environment. Net revenue for our Connected Home segment in fiscal 2023 experienced a decline of 7.3% due to a contraction of the market.
The decline in Connected Home segment's net revenue was mainly due to market contraction, leading to a year-over-year decline in the retail channel.
The decline in NETGEAR for Business net revenue was mainly due to channel inventory compression. 54 Table of Contents EMEA Net revenue in EMEA decreased in fiscal 2023, compared to the prior year, primarily due to the performance of our NETGEAR for Business segment, which experienced a decline in net revenue of 20.7%.
NETGEAR For Business segment's net revenue slightly decreased, compared to the prior year. 55 Table of Contents EMEA Net revenue in EMEA decreased in fiscal 2024, compared to the prior year, attributable to declines in NETGEAR for Business segment's net revenue of 13.7% and in Connected Home segment's net revenue of 16.5%.
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.
Most of our incremental investments in sales and marketing in 2025 will be related to go-to-market capabilities of our product offerings in the NETGEAR for Business segment, partially offset by efficiencies in marketing on the consumer side. Expenses may fluctuate depending on revenue levels achieved as certain expenses, such as commissions, are determined based upon the revenues achieved.
The declines were partially offset by an increase in brand-marketing related expenditures of $2.3 million, compared to the prior year. We expect sales and marketing expenses as a percentage of net revenue in fiscal 2024 to be in line with fiscal 2023 levels.
We expect research and development expenses as a percentage of net revenue in the first fiscal quarter of 2025 to be in line with or slightly higher than the same quarter of 2024 level.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical 10% movement in foreign exchange rates would result in a before-tax positive or negative impact of approximately $0.7 million, $1.0 million and $0.7 million net income, net of our hedged position as of December 31, 2023, 2022 and 2021, respectively.
Biggest changeA hypothetical 10% movement in foreign exchange rates would result in a before-tax positive or negative impact of approximately $0.7 million, $0.7 million and $1.0 million net income (loss), net of our hedged position as of December 31, 2024, 2023 and 2022, respectively.
The contracts are marked-to-market on a monthly basis with gains and losses included in other income (expenses), net in the consolidated statements of operations or in accumulated other comprehensive income (loss) on the consolidated balance sheets which are further reclassified from other comprehensive income (loss) to revenue, cost of revenue, or operating expenses when the underlying hedged items are recognized.
The contracts are marked-to-market on a monthly basis with gains and losses included in other income, net in the consolidated statements of operations or in accumulated other comprehensive income (loss) on the consolidated balance sheets which are further reclassified from other comprehensive income (loss) to revenue, cost of revenue, or operating expenses when the underlying hedged items are recognized.
We also use foreign currency forward contracts to partially offset our business exposure to foreign currency exchange rate risk associated with our foreign currency denominated assets and liabilities. These non-designated hedges are carried at fair value with adjustments to fair value recorded to other income (expenses), net in our consolidated statements of operations.
We also use foreign currency forward contracts to partially offset our business exposure to foreign currency exchange rate risk associated with our foreign currency denominated assets and liabilities. These non-designated hedges are carried at fair value with adjustments to fair value recorded to other income, net in our consolidated statements of operations.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk Interest Rate Risk We do not use derivative financial instruments in our investment portfolio. We have an investment portfolio of fixed income securities that are classified as available-for-sale securities, which was immaterial as of December 31, 2023 and 2022.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk Interest Rate Risk We do not use derivative financial instruments in our investment portfolio. We have an investment portfolio of fixed income securities that are classified as available-for-sale securities, which was immaterial as of December 31, 2024 and 2023.
For additional disclosure on our foreign currency contracts, refer to Note 4, Derivative Financial Instruments, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. As of December 31, 2023 and 2022, we had net assets in various local currencies.
For additional disclosure on our foreign currency contracts, refer to Note 4, Derivative Financial Instruments, in Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. As of December 31, 2024 and 2023, we had net assets in various local currencies.
Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analyses performed as of December 31, 2023, and 2022 due to the inherent limitations associated with predicting the foreign currency exchange rates, and our actual exposures and positions.
Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analyses performed as of December 31, 2024 and 2023 due to the inherent limitations associated with predicting the foreign currency exchange rates, and our actual exposures and positions.
We monitor our interest rate and credit risks, including our credit exposure to specific rating categories and to individual issuers. There were no impairment charges on such investments during fiscal years 2023, 2022 and 2021.
We monitor our interest rate and credit risks, including our credit exposure to specific rating categories and to individual issuers. There were no impairment charges on such investments during fiscal years 2024, 2023 and 2022.
For the years ended December 31, 2023, 2022, and 2021, 24% of total net revenue was denominated in a currency other than the U.S. dollar, respectively. 63 Table of Contents
For the years ended December 31, 2024, 2023, and 2022, 24% of total net revenue was denominated in a currency other than the U.S. dollar. 64 Table of Contents

Other NTGR 10-K year-over-year comparisons