NETGEAR, INC. Earnings Per Share Disclosure
Note 6. Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of restricted stock units and performance shares, and issuances of shares under the Employee Stock Purchase Plan (the “ESPP”), which are reflected in diluted net income per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net income per share when their effect is anti-dilutive.
Net income (loss) per share consisted of the following:
|
|
|
Year Ended December 31, |
||||||
(In thousands, except per share data) |
|
|
2025 |
|
|
2024 |
|
|
2023 |
Numerator: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(17,923) |
|
$ |
12,363 |
|
$ |
(104,767) |
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
Weighted average common shares – basic |
|
|
28,607 |
|
|
28,905 |
|
|
29,355 |
Potentially dilutive common share equivalent |
|
|
— |
|
|
778 |
|
|
— |
Weighted average common shares – dilutive |
|
|
28,607 |
|
|
29,683 |
|
|
29,355 |
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share |
|
$ |
(0.63) |
|
$ |
0.43 |
|
$ |
(3.57) |
Diluted net income (loss) per share |
|
$ |
(0.63) |
|
$ |
0.42 |
|
$ |
(3.57) |
|
|
|
|
|
|
|
|
|
|
Anti-dilutive employee stock-based awards, excluded |
|
|
378 |
|
|
1,127 |
|
|
2,362 |
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.