| Commitments and Contingencies | Commitments and Contingencies Operating Leases Our operating lease obligations mostly include offices, equipment, and distribution centers, with various expiration dates through June 2029. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments. The terms of certain leases provide for rental payments on a graduated scale. Gross lease expense was $1.4 million and $4.2 million for the three and nine months ended September 29, 2024, respectively, and $1.5 million and $4.5 million for the three and nine months ended October 1, 2023, respectively. We recorded sublease income as reduction of lease expense, in the amount of $0.5 million and $1.5 million for the three and nine months ended September 29, 2024 and October 1, 2023, respectively. Supplemental cash flow information related to operating leases is as follows: Nine Months Ended September 29, October 1, (In thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 4,486 $ 5,274 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ — $ 1,851 Weighted average remaining lease term and weighted average discount rate related to operating leases are as follows: As of September 29, December 31, Weighted average remaining lease term 4.3 years 5.0 years Weighted average discount rate 5.75 % 5.74 % The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of September 29, 2024 are as follows: Operating Lease Payments Sublease Payments Net (In thousands) 2024 (Remaining three months) $ 1,267 $ (533) $ 734 2025 4,593 (2,006) 2,587 2026 4,734 (2,066) 2,668 2027 4,635 (2,322) 2,313 2028 3,658 (2,392) 1,266 Thereafter 1,750 (1,228) 522 Total future lease payments $ 20,637 $ (10,547) $ 10,090 Less: imputed interest (2,388) Present value of future minimum lease payments $ 18,249 Accrued liabilities $ 3,770 Non-current operating lease liabilities 14,479 Total lease liabilities $ 18,249 We entered into an operating lease for our new corporate headquarter located in Carlsbad, California. Upon lease commencement expected to be December 1, 2024, the initial base term is 8.5 years, with a renewal option to extend the term for an additional five years. As of September 29, 2024, we had approximately $7.3 million of future lease obligations subject to non-cancellable leases that have been signed but have not yet commenced. Letters of Credit In connection with the lease agreement for our office space located in San Jose, California, we executed a letter of credit with the landlord as the beneficiary. As of September 29, 2024, we had $3.6 million of unused letters of credit outstanding, of which $3.1 million pertains to the lease arrangement in San Jose, California. Purchase Obligations We have entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50% of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25% of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. As of September 29, 2024, we had $29.3 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months. As of September 29, 2024, an additional $25.8 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements. Consequently, we may incur expenses for the materials and components, such as chipsets already purchased by the supplier to fulfill our orders if the purchase order is cancelled. Expenses incurred have historically not been material relative to the original order value. Warranty Obligations Changes in warranty obligations, which are included in accrued liabilities in the unaudited condensed consolidated balance sheets, are as follows: Three Months Ended Nine Months Ended September 29, October 1, September 29, October 1, (In thousands) Balance at the beginning of the period $ 1,056 $ 1,093 $ 1,193 $ 1,174 Provision for (release of) warranty obligations (89) 86 (80) 141 Settlements (63) (65) (209) (201) Balance at the end of the period $ 904 $ 1,114 $ 904 $ 1,114 Litigation and Other Legal Matters We are involved in disputes, litigation, and other legal actions. In all cases, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within general and administrative expenses. We monitor developments in these legal matters that could affect the estimate we had previously accrued. In relation to such matters, we currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position within the next 12 months, or the outcome of these matters is currently not determinable. There are many uncertainties associated with any litigation, and these actions or other third-party claims against us may cause us to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, our business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from our estimates, which could result in the need to adjust the liability and record additional expenses. Indemnifications In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, distributors, resellers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising from breach of such agreements or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with members of our board of directors and certain of our executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited. As of September 29, 2024 and December 31, 2023, we have not incurred any material costs as a result of such indemnification obligations and we are not currently aware of any indemnification claims. |
