The NCO operates by repeatedly adding a fixed value to an accumulator. Additions occur at the input clock rate. The accumulator will overflow with a carry periodically, which is the raw NCO output (NCO_overflow). This effectively reduces the input clock by the ratio of the addition value to the maximum accumulator value. See the following equation.
It is apparent from the equation that there is a linear relationship between the increment value and the overflow frequency. This linear advantage over divide-by-n timers comes at the cost of output jitter. However, the jitter is always plus or minus one NCO clock period that occurs periodically, depending on the division remainder. For example, there is no jitter when there is no division remainder, whereas a division remainder of 0.5 will result in a jitter frequency one half of the overflow frequency.