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Segment Information | 9 Months Ended
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Sep. 29, 2024
Segment Reporting [Abstract] |
Segment Information | Note 11. Segme nt Information Operating segments are components of an enterprise about which separate financial information is available and is evaluated quarterly by management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource allocation decisions. By this definition, the Company has identified its CEO as the CODM. The Company operates and reports in two segments: NETGEAR for Business and Connected Home: • NETGEAR for Business: Focuses on businesses and provides solutions for business networking, wireless local area network (“LAN”), audio and video over Ethernet for Pro AV applications, security and remote management providing enterprise-class functionality at an affordable price; and • Connected Home: 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, and routers, 4G/5G mobile products, and subscription services that provide consumers a range of value-added services focused on performance, security, privacy, and premium support. The Company believes that this structure reflects its current operational and financial management, and that it provides the best structure for the Company to focus on growth opportunities while maintaining financial discipline. The leadership team of each segment is focused on product and service development efforts, both from a product marketing and engineering standpoint, to service the unique needs of their customers. The results of the reportable segments are derived directly from the Company’s management reporting system. The results are based on the Company’s method of internal reporting and are not necessarily in conformity with accounting principles generally accepted in the United States. Management measures the performance of each segment based on several metrics, including contribution income (loss). Segment contribution income (loss) includes all product line segment revenues less the related cost of sales, research and development and sales and marketing costs. Contribution income (loss) is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Certain operating expenses are not allocated to segments because they are separately managed at the corporate level. These unallocated indirect costs include corporate costs, such as corporate research and development, corporate marketing and general and administrative expenses, amortization of intangibles, stock-based compensation expense, intangibles impairment, restructuring and other charges, litigation reserves, net, and other income (expenses), net. Effective on January 1, 2024, resulting from certain segment structure changes, the Company revised its allocation method by allocating certain historically unallocated operating expenses to its individual operating segments. The prior-year segment financial information has been recast to conform to the current-year presentation. Financial information for each reportable segment and a reconciliation of segment contribution income to income (loss) before income taxes is as follows:
|  | Three Months Ended |  |  | Nine Months Ended |  |
(In thousands, except percentage data) |  | September 29, 2024 |  |  | October 1, 2023 |  |  | September 29, 2024 |  |  | October 1, 2023 |  |
Net Revenue: |  |  |  |  |  |  |  |  |  |  |  |  |
NETGEAR for Business |  | $ | 78,530 |  |  | $ | 70,510 |  |  | $ | 207,020 |  |  | $ | 223,679 |  |
Connected Home |  |  | 104,324 |  |  |  | 127,335 |  |  |  | 284,320 |  |  |  | 328,487 |  |
Total net revenue |  | $ | 182,854 |  |  | $ | 197,845 |  |  | $ | 491,340 |  |  | $ | 552,166 |  |
Contribution Income (Loss): |  |  |  |  |  |  |  |  |  |  |  |  |
NETGEAR for Business |  | $ | 16,133 |  |  | $ | 14,547 |  | * | $ | 28,098 |  |  | $ | 42,254 |  | *
Contribution margin |  |  | 20.5 | % |  |  | 20.6 | % | * |  | 13.6 | % |  |  | 18.9 | % | *
Connected Home |  | $ | (4,780 | ) |  | $ | 9,465 |  | * | $ | (24,714 | ) |  | $ | 2,336 |  | *
Contribution margin |  |  | (4.6 | )% |  |  | 7.4 | % | * |  | (8.7 | )% |  |  | 0.7 | % | *
Total segment contribution income |  | $ | 11,353 |  |  | $ | 24,012 |  | * | $ | 3,384 |  |  | $ | 44,590 |  | *
Corporate and unallocated costs |  |  | (9,708 | ) |  |  | (18,760 | ) | * |  | (48,864 | ) |  |  | (57,145 | ) | *
Amortization of intangibles |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (257 | ) |
Stock-based compensation expense |  |  | (5,620 | ) |  |  | (4,285 | ) |  |  | (16,052 | ) |  |  | (13,637 | ) |
Intangibles impairment |  |  | — |  |  |  | (1,071 | ) |  |  | — |  |  |  | (1,071 | ) |
Restructuring and other charges |  |  | (1,072 | ) |  |  | (366 | ) |  |  | (3,792 | ) |  |  | (2,703 | ) |
Litigation reserves, net |  |  | 100,855 |  |  |  | (178 | ) |  |  | 92,625 |  |  |  | (178 | ) |
Other income, net (1) |  |  | 3,485 |  |  |  | 2,280 |  |  |  | 9,048 |  |  |  | 11,685 |  |
Income (loss) before income taxes |  | $ | 99,293 |  |  | $ | 1,632 |  |  | $ | 36,349 |  |  | $ | (18,716 | ) |
(1) Amounts included gain/(loss), net from derivatives not designated as hedging instruments of $(1.6) million and $0.5 million, for the three and nine months ended September 29, 2024, respectively, and $1.3 million and $2.2 million, for the three and nine months ended October 1, 2023, respectively, and gain/(loss), net from a litigation settlement of $6.0 million for the nine months ended October 1, 2023. * F inancial information for each reportable segment in the prior year periods were recast to conform to the current reportable segment structure. The CODM does not evaluate operating segments using discrete asset information. Operations by Geographic Region For reporting purposes, revenue is generally attributed to each geographic region based on the location of the customer. The following table shows net revenue by geography:
|  | Three Months Ended |  |  | Nine Months Ended |
(In thousands) |  | September 29, 2024 |  |  | October 1, 2023 |  |  | September 29, 2024 |  |  | October 1, 2023 |
United States (U.S.) |  | $ | 124,305 |  |  | $ | 138,013 |  |  | $ | 324,388 |  |  | $ | 368,772 |
Americas (excluding U.S.) |  |  | 3,447 |  |  |  | 3,005 |  |  |  | 8,795 |  |  |  | 10,779 |
EMEA (1) |  |  | 32,798 |  |  |  | 35,684 |  |  |  | 91,340 |  |  |  | 111,023 |
APAC (1) |  |  | 22,304 |  |  |  | 21,143 |  |  |  | 66,817 |  |  |  | 61,592 |
Total net revenue |  | $ | 182,854 |  |  | $ | 197,845 |  |  | $ | 491,340 |  |  | $ | 552,166 |
(1) No in dividual foreign country represented more than 10% of the Company’s total net revenue in the periods presented. Long-lived assets by Geographic Region The following table presents the Company’s long-lived assets located in geographic areas, which consist of property and equipment, net, and operating lease right-of-use assets:
(In thousands) |  | September 29, 2024 |  |  | December 31, 2023 |
United States (U.S.) |  | $ | 20,082 |  |  | $ | 25,051 |
Canada |  |  | 5,583 |  |  |  | 4,714 |
Americas (excluding U.S. and Canada) |  |  | 38 |  |  |  | 68 |
EMEA |  |  | 3,267 |  |  |  | 3,739 |
Singapore |  |  | 5,195 |  |  |  | 6,218 |
APAC (excluding Singapore) (1) |  |  | 7,233 |  |  |  | 5,768 |
Total |  | $ | 41,398 |  |  | $ | 45,558 |
(1) No individual country represented more than 10% of the Company’s total long-lived assets in the periods presented.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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