NETGEAR® Reports First Quarter 2024 Results

Published

Q1 net revenue of $164.6 million, above midpoint of guidance

Q1 service revenue growth of 21.2% year over year

Cashflow from operations of $17.2 million; growth of 88.4% year over year

Repurchased approximately 783,000 shares of common stock

Transformation Effort Underway

SAN JOSE, Calif.--(BUSINESS WIRE)-- NETGEAR, Inc. (NASDAQ: NTGR), a global networking company that delivers innovative networking and Internet connected products to consumers and businesses, today reported preliminary financial results for the first quarter ended March 31, 2024.

  • First quarter 2024 net revenue of $164.6 million, a decrease of 9.0% from the comparable prior-year quarter.
  • First quarter 2024 GAAP operating loss of $21.6 million, or (13.2)% of net revenue, as compared to operating loss of $12.0 million, or (6.6)% of net revenue, in the comparable prior-year quarter.
    • First quarter 2024 non-GAAP operating loss of $16.0 million, or (9.7)% of net revenue, as compared to non-GAAP operating loss of $7.1 million, or (3.9)% of net revenue, in the comparable prior-year quarter.
  • First quarter 2024 GAAP net loss per diluted share of $0.63, as compared to net loss per diluted share of $0.33 in the comparable prior-year quarter.
    • First quarter 2024 non-GAAP net loss per diluted share of $0.28, as compared to non-GAAP net loss per diluted share of $0.19 in the comparable prior-year quarter.

The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

CJ Prober, Chief Executive Officer of NETGEAR, commented, “I am pleased that we were able to deliver revenue within our guidance range in the first quarter. However, the challenging macroeconomic environment coupled with continued high inflation and interest rates are pressuring our channel partners to drive inventory to historical lows across both our consumer and B2B businesses. While we have been working to bring down channel inventories, this higher level of destocking, combined with a mix shift from our premium consumer products to our service provider products and a slightly more promotional retail market, unfavorably impacted our profitability in the first quarter.”

“As we saw channel destocking come in higher than expected in Q1, we developed a plan to expedite the remaining destocking in Q2. While this creates a near-term challenge in terms of expected financial results for Q2, it is the right action for the long-term health of the business and clears the way for a stronger second half of the year. Going forward, we will work to closely align sell through with our revenue, which will allow us to become a more predictable and profitable company in subsequent quarters. We will also more aggressively lower our own inventory through the rest of the year to reduce our working capital and generate cash.”

Mr. Prober continued, “After my first 90 days as CEO of NETGEAR, which included an expansive global tour meeting dozens of customers, partners and NETGEAR teams, I am sincerely excited about our growth opportunities and plans for returning to profitability. We remain fully committed to creating long-term value for our shareholders and these decisive near-term strategy adjustments enable this. We expect to emerge from Q2 with a solid foundation as we formalize our long-term strategy and capital allocation priorities throughout the rest of 2024.”

Bryan Murray, Chief Financial Officer of NETGEAR, added, “We continued to make progress in reducing our own inventory levels, which were down $37.6 million in the first quarter, and we continue to drive towards our desired level of three months of supply. Our cash and short-term investments increased $5.8 million sequentially and we generated 88.4% greater cash from operations compared to the first quarter of 2023 while also repurchasing approximately 783,000 shares of NETGEAR common stock.”

Business Outlook

Mr. Murray continued, “We expect to accelerate our way through NFB and CHP destocking activities within the second quarter. We expect this effort to represent a headwind of between $25 million to $30 million to our Q2 topline, which is reflected in our guidance. We believe taking this immediate action, as compared to spreading it over multiple future quarters, will allow us to align our revenue with our sell through and ultimately manage a more efficient channel in future quarters. Revenue from the service provider channel is expected to be approximately $15 million in the second quarter as our partners await our next generation 5G mobile hotspots expected to launch in the second half of the year. Accordingly, we expect second quarter net revenue to be in the range of $125 million to $140 million. As we continue to make meaningful progress in reducing our own inventory levels, we will be consuming higher cost inventory. We expect we will be back to our historically normal inventory costs after we reach our target inventory levels of three months. We are also taking more aggressive action to consume some of our slower moving products in an accelerated fashion which will put pressure on our Q2 margins. Accordingly, we expect our second quarter GAAP operating margin to be in the range of (30.9)% to (27.9)%, and non-GAAP operating margin to be in the range of (25.0)% to (22.0)%. Our GAAP tax expense is expected to be in the range of $1.0 million to $2.0 million, and our non-GAAP tax benefit is expected to be in the range of $7.0 million to $8.0 million for the second quarter of 2024.”

A reconciliation between the Business Outlook on a GAAP and non-GAAP basis is provided in the following table:

 

 

Three months ending

 

 

June 30, 2024

(In millions, except for percentage data)

 

Operating Margin

Rate

 

Tax Expense (Benefit)

 

 

 

 

 

GAAP

 

(30.9)% - (27.9)%

 

$1.0 - $2.0

Estimated adjustments for1:

 

 

 

 

Stock-based compensation expense

 

4.0%

 

-

Restructuring and other charges

 

1.9%

 

-

Non-GAAP tax adjustments

 

-

 

$(9.0)

Non-GAAP

 

(25.0)% - (22.0)%

 

$ (8.0) - $ (7.0)

1 Business outlook does not include estimates for any currently unknown income and expense items which, by their nature, could arise late in a quarter, including: litigation reserves, net; acquisition-related charges; impairment charges; restructuring and other charges and discrete tax benefits or detriments that cannot be forecasted (e.g., windfalls or shortfalls from equity awards or items related to the resolution of uncertain tax positions). New material income and expense items such as these could have a significant effect on our guidance and future GAAP results.

Investor Conference Call / Webcast Details

NETGEAR will review the first quarter results and discuss management's expectations for the second quarter of 2024 today, Wednesday, May 1, 2024 at 5 p.m. ET (2 p.m. PT). The toll-free dial-in number for the live audio call is (888) 660-6392. The international dial-in number for the live audio call is (929) 203-0899. The conference ID for the call is 1030183. A live webcast of the conference call will be available on NETGEAR's Investor Relations website at http://investor.netgear.com. A replay of the call will be available via the web at http://investor.netgear.com.

About NETGEAR, Inc.

For more than 25 years, NETGEAR® (NASDAQ: NTGR) has been the innovative leader in connecting the world to the internet with advanced networking technologies for homes, businesses and service providers around the world. As staying connected has become more important than ever, NETGEAR delivers award-winning network solutions for remote work, distance learning, ultra high def streaming, online game play and more. To enable people to collaborate and connect to a world of information and entertainment, NETGEAR is dedicated to providing a range of connected solutions. From ultra-premium Orbi Mesh WiFi systems and high performance Nighthawk routers, to high-speed cable modems and 5G mobile wireless products to cloud-based subscription services for network management and security, to smart networking products and Video over Ethernet for Pro AV applications, NETGEAR keeps you connected. NETGEAR is headquartered in San Jose, California. Learn more on the NETGEAR Investor Page or by calling (408) 907-8000. Connect with NETGEAR: Twitter, Facebook, Instagram, LinkedIn and the NETGEAR blog at NETGEAR.com.

© 2024 NETGEAR, Inc. NETGEAR and the NETGEAR logo are trademarks or registered trademarks of NETGEAR, Inc. and its affiliates in the United States and/or other countries. Other brand and product names are trademarks or registered trademarks of their respective holders. The information contained herein is subject to change without notice. NETGEAR shall not be liable for technical or editorial errors or omissions contained herein. All rights reserved.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc.:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent NETGEAR, Inc.’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: NETGEAR’s future operating performance and financial condition, including expectations regarding growth, revenue, operating margin, gross margin, continued profitability and cash generation; creating long-term value for shareholders; NETGEAR’s plan to closely align end sales with revenue and expected efficiency, predictability and profitability; NETGEAR’s desired level of inventory supply; NETGEAR’s expected launch of next generation 5G mobile hotspots; expectations regarding continuing market demand for the NETGEAR’s products and services, including NFB and CHP products and subscription services, and NETGEAR’s ability to respond to this demand; NETGEAR’s strategic adjustments, long-term strategy and capital allocation priorities; expectations regarding the mix of NETGEAR’s products and services; expectations regarding accelerated destocking and its impact to NETGEAR’s financials; expectations regarding growth opportunities and plans for returning to profitability expectations regarding inventory management, inventory levels and inventory costs and its impact to long term revenue, margin expansion and cash generation; expectations regarding expected tax rates or tax expenses; expectations regarding seasonal shifts in market demand; and expectations regarding NETGEAR's subscription services and service revenue. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for NETGEAR’s products and services may be lower than anticipated; NETGEAR may be unsuccessful, or experience delays, in manufacturing and distributing its new and existing products and services; consumers may choose not to adopt NETGEAR’s new product and services offerings or adopt competing products and services; NETGEAR may be unable to continue to grow its number of registered users, its number of registered app users and/or its paid subscriber base and service revenue; product performance may be adversely affected by real world operating conditions; NETGEAR may fail to manage costs, including the cost of key components, the cost of air freight and ocean freight, and the cost of developing new products and manufacturing and distribution of its existing offerings; NETGEAR may fail to successfully manage channel inventory levels; NETGEAR may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and NETGEAR’s planned usage of such resources, including potential repurchases of NETGEAR’s common stock; changes in NETGEAR’s stock price and developments in the business that could increase NETGEAR’s cash needs; fluctuations in foreign exchange rates; and the actions and financial health of NETGEAR’s customers, including NETGEAR’s ability to collect receivables as they become due. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in NETGEAR’s periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Part I - Item 1A. Risk Factors" in NETGEAR’s annual report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 16, 2024. Given these circumstances, you should not place undue reliance on these forward-looking statements. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Non-GAAP Financial Information:

To supplement our unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles (“GAAP”), we disclose certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP other operating expenses, net, non-GAAP total operating expenses, non-GAAP operating income (loss), non-GAAP operating margin, non-GAAP other income (expenses), net, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. These supplemental measures exclude adjustments for amortization of intangibles, stock-based compensation expense, restructuring and other charges, litigation reserves, net, gain/loss on investments, net, and adjust for effects related to non-GAAP tax adjustments. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our operating performance on a period-to-period basis because such items are not, in our view, related to our ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, management’s incentive compensation is determined using certain non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by offering:

  • the ability to make more meaningful period-to-period comparisons of our on-going operating results;
  • the ability to better identify trends in our underlying business and perform related trend analyses;
  • a better understanding of how management plans and measures our underlying business; and
  • an easier way to compare our operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding them in the reconciliations of these non-GAAP financial measures:

Amortization of intangibles consists primarily of non-cash charges that can be impacted by, among other things, the timing and magnitude of acquisitions. We consider our operating results without these charges when evaluating our ongoing performance and forecasting our earnings trends, and therefore exclude such charges when presenting non-GAAP financial measures. We believe that the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of our competitors.

Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options, restricted stock units, performance shares and shares under the employee stock purchase plan granted to employees. We believe that the exclusion of these charges provides for more accurate comparisons of our operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, we believe it is useful to investors to understand the specific impact stock-based compensation expense has on our operating results.

Other items consist of certain items that are the result of either unique or unplanned events, including, when applicable: restructuring and other charges, litigation reserves, net, and gain/loss on investments, net. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that often arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.

Non-GAAP tax adjustments consist of adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income (loss). We believe providing financial information with and without the income tax effects relating to our non-GAAP financial measures, as well as adjustments for valuation allowances on deferred tax assets, provides our management and users of the financial statements with better clarity regarding both current period performance and the on-going performance of our business. Non-GAAP income tax expense (benefit) is computed on a current and deferred basis with non-GAAP income (loss) consistent with use of non-GAAP income (loss) as a performance measure. The Non-GAAP tax provision (benefit) is calculated by adjusting the GAAP tax provision (benefit) for the impact of the non-GAAP adjustments, with specific tax provisions such as state income tax and Base-erosion and Anti-Abuse Tax recomputed on a non-GAAP basis, as well as adjustments for valuation allowances on deferred tax assets. The tax valuation allowance is a non-cash adjustment primarily reflecting our expectations of, and assumptions as to, future operating results and applicable tax laws, that are not directly attributable to the current quarter’s operating performance. For interim periods, the non-GAAP income tax provision (benefit) is calculated based on the forecasted annual non-GAAP tax rate before discrete items and adjusted for interim discrete items.

Source: NETGEAR-F

-Financial Tables Attached-

NETGEAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

 

 

March 31, 2024

 

December 31, 2023

 

 

 

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

172,656

 

 

$

176,717

 

Short-term investments

 

 

116,765

 

 

 

106,931

 

Accounts receivable, net

 

 

172,771

 

 

 

185,059

 

Inventories

 

 

211,270

 

 

 

248,851

 

Prepaid expenses and other current assets

 

 

30,178

 

 

 

30,421

 

Total current assets

 

 

703,640

 

 

 

747,979

 

Property and equipment, net

 

 

9,353

 

 

 

8,273

 

Operating lease right-of-use assets

 

 

34,713

 

 

 

37,285

 

Goodwill

 

 

36,279

 

 

 

36,279

 

Other non-current assets

 

 

17,294

 

 

 

17,326

 

Total assets

 

$

801,279

 

 

$

847,142

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

38,451

 

 

$

46,850

 

Accrued employee compensation

 

 

22,193

 

 

 

21,286

 

Other accrued liabilities

 

 

154,567

 

 

 

168,084

 

Deferred revenue

 

 

28,393

 

 

 

27,091

 

Income taxes payable

 

 

713

 

 

 

1,037

 

Total current liabilities

 

 

244,317

 

 

 

264,348

 

Non-current income taxes payable

 

 

11,885

 

 

 

12,695

 

Non-current operating lease liabilities

 

 

26,742

 

 

 

29,698

 

Other non-current liabilities

 

 

6,973

 

 

 

4,906

 

Total liabilities

 

 

289,917

 

 

 

311,647

 

Stockholders’ equity:

 

 

 

 

Common stock

 

 

29

 

 

 

30

 

Additional paid-in capital

 

 

974,181

 

 

 

967,651

 

Accumulated other comprehensive income

 

 

21

 

 

 

136

 

Accumulated deficit

 

 

(462,869

)

 

 

(432,322

)

Total stockholders’ equity

 

 

511,362

 

 

 

535,495

 

Total liabilities and stockholders’ equity

 

$

801,279

 

 

$

847,142

 

NETGEAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share and percentage data)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

Net revenue

 

$

164,586

 

 

$

188,674

 

 

$

180,908

 

Cost of revenue

 

 

116,349

 

 

 

123,038

 

 

 

120,526

 

Gross profit

 

 

48,237

 

 

 

65,636

 

 

 

60,382

 

Gross margin

 

 

29.3

%

 

 

34.8

%

 

 

33.4

%

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

20,227

 

 

 

19,592

 

 

 

22,134

 

Sales and marketing

 

 

30,529

 

 

 

30,552

 

 

 

33,879

 

General and administrative

 

 

18,067

 

 

 

17,107

 

 

 

16,236

 

Other operating expenses, net

 

 

1,062

 

 

 

1,259

 

 

 

108

 

Total operating expenses

 

 

69,885

 

 

 

68,510

 

 

 

72,357

 

Loss from operations

 

 

(21,648

)

 

 

(2,874

)

 

 

(11,975

)

Operating margin

 

 

(13.2

)%

 

 

(1.5

)%

 

 

(6.6

)%

Other income, net

 

 

2,850

 

 

 

2,454

 

 

 

1,406

 

Loss before income taxes

 

 

(18,798

)

 

 

(420

)

 

 

(10,569

)

Provision for (benefit from) income taxes

 

 

(148

)

 

 

1,249

 

 

 

(857

)

Net loss

 

$

(18,650

)

 

$

(1,669

)

 

$

(9,712

)

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

Basic

 

$

(0.63

)

 

$

(0.06

)

 

$

(0.33

)

Diluted

 

$

(0.63

)

 

$

(0.06

)

 

$

(0.33

)

 

 

 

 

 

 

 

Weighted average shares used to compute net loss per share:

 

 

 

 

 

 

Basic

 

 

29,395

 

 

 

29,623

 

 

 

29,040

 

Diluted

 

 

29,395

 

 

 

29,623

 

 

 

29,040

 

NETGEAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

April 2, 2023

Cash flows from operating activities:

 

 

 

Net loss

$

(18,650

)

 

$

(9,712

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

1,488

 

 

 

2,011

 

Stock-based compensation

 

4,544

 

 

 

4,665

 

Gain/loss on investments, net

 

(883

)

 

 

(663

)

Deferred income taxes

 

84

 

 

 

(4,629

)

Provision for excess and obsolete inventory

 

1,132

 

 

 

1,174

 

Changes in assets and liabilities:

 

 

 

Accounts receivable, net

 

12,288

 

 

 

84,945

 

Inventories

 

36,449

 

 

 

(38,747

)

Prepaid expenses and other assets

 

367

 

 

 

(1,778

)

Accounts payable

 

(8,516

)

 

 

(5,922

)

Accrued employee compensation

 

907

 

 

 

(2,425

)

Other accrued liabilities

 

(12,605

)

 

 

(23,665

)

Deferred revenue

 

1,719

 

 

 

1,609

 

Income taxes payable

 

(1,134

)

 

 

2,259

 

Net cash provided by operating activities

 

17,190

 

 

 

9,122

 

Cash flows from investing activities:

 

 

 

Purchases of short-term investments

 

(38,829

)

 

 

(38,733

)

Proceeds from maturities of short-term investments

 

30,000

 

 

 

25,006

 

Purchases of property and equipment

 

(2,510

)

 

 

(870

)

Net cash used in investing activities

 

(11,339

)

 

 

(14,597

)

Cash flows from financing activities:

 

 

 

Repurchases of common stock

 

(11,444

)

 

 

 

Restricted stock unit withholdings

 

(454

)

 

 

(120

)

Proceeds from issuance of common stock under employee stock purchase plan

 

1,986

 

 

 

2,286

 

Net cash provided by (used in) financing activities

 

(9,912

)

 

 

2,166

 

Net decrease in cash and cash equivalents

 

(4,061

)

 

 

(3,309

)

Cash and cash equivalents, at beginning of period

 

176,717

 

 

 

146,500

 

Cash and cash equivalents, at end of period

$

172,656

 

 

$

143,191

 

NETGEAR, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except percentage data)

(Unaudited)

 

STATEMENT OF OPERATIONS DATA:

 

 

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

GAAP gross profit

 

$

48,237

 

 

$

65,636

 

 

$

60,382

 

GAAP gross margin

 

 

29.3

%

 

 

34.8

%

 

 

33.4

%

Amortization of intangibles

 

 

 

 

 

 

 

 

129

 

Stock-based compensation expense

 

 

365

 

 

 

358

 

 

 

351

 

Non-GAAP gross profit

 

$

48,602

 

 

$

65,994

 

 

$

60,862

 

Non-GAAP gross margin

 

 

29.5

%

 

 

35.0

%

 

 

33.6

%

 

 

 

 

 

 

 

GAAP research and development

 

$

20,227

 

 

$

19,592

 

 

$

22,134

 

Stock-based compensation expense

 

 

(698

)

 

 

(885

)

 

 

(1,065

)

Non-GAAP research and development

 

$

19,529

 

 

$

18,707

 

 

$

21,069

 

 

 

 

 

 

 

 

GAAP sales and marketing

 

$

30,529

 

 

$

30,552

 

 

$

33,879

 

Stock-based compensation expense

 

 

(1,237

)

 

 

(1,237

)

 

 

(1,431

)

Non-GAAP sales and marketing

 

$

29,292

 

 

$

29,315

 

 

$

32,448

 

 

 

 

 

 

 

 

GAAP general and administrative

 

$

18,067

 

 

$

17,107

 

 

$

16,236

 

Stock-based compensation expense

 

 

(2,244

)

 

 

(1,821

)

 

 

(1,818

)

Non-GAAP general and administrative

 

$

15,823

 

 

$

15,286

 

 

$

14,418

 

 

 

 

 

 

 

 

GAAP other operating expenses, net

 

$

1,062

 

 

$

1,259

 

 

$

108

 

Restructuring and other charges

 

 

(1,032

)

 

 

(1,259

)

 

 

(108

)

Litigation reserves, net

 

 

(30

)

 

 

 

 

 

 

Non-GAAP other operating expenses, net

 

$

 

 

$

 

 

$

 

NETGEAR, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

(In thousands, except percentage data)

(Unaudited)

 

STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

GAAP total operating expenses

 

$

69,885

 

 

$

68,510

 

 

$

72,357

 

Stock-based compensation expense

 

 

(4,179

)

 

 

(3,943

)

 

 

(4,314

)

Restructuring and other charges

 

 

(1,032

)

 

 

(1,259

)

 

 

(108

)

Litigation reserves, net

 

 

(30

)

 

 

 

 

 

 

Non-GAAP total operating expenses

 

$

64,644

 

 

$

63,308

 

 

$

67,935

 

 

 

 

 

 

 

 

GAAP operating loss

 

$

(21,648

)

 

$

(2,874

)

 

$

(11,975

)

GAAP operating margin

 

 

(13.2

)%

 

 

(1.5

)%

 

 

(6.6

)%

Amortization of intangibles

 

 

 

 

 

 

 

 

129

 

Stock-based compensation expense

 

 

4,544

 

 

 

4,301

 

 

 

4,665

 

Restructuring and other charges

 

 

1,032

 

 

 

1,259

 

 

 

108

 

Litigation reserves, net

 

 

30

 

 

 

 

 

 

 

Non-GAAP operating income (loss)

 

$

(16,042

)

 

$

2,686

 

 

$

(7,073

)

Non-GAAP operating margin

 

 

(9.7

)%

 

 

1.4

%

 

 

(3.9

)%

 

 

 

 

 

 

 

GAAP other income, net

 

$

2,850

 

 

$

2,454

 

 

$

1,406

 

Gain/loss on investments, net

 

 

101

 

 

 

(8

)

 

 

11

 

Non-GAAP other income, net

 

$

2,951

 

 

$

2,446

 

 

$

1,417

 

NETGEAR, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

(In thousands, except per share data)

(Unaudited)

 

STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

GAAP net loss

 

$

(18,650

)

 

$

(1,669

)

 

$

(9,712

)

Amortization of intangibles

 

 

 

 

 

 

 

 

129

 

Stock-based compensation expense

 

 

4,544

 

 

 

4,301

 

 

 

4,665

 

Restructuring and other charges

 

 

1,032

 

 

 

1,259

 

 

 

108

 

Litigation reserves, net

 

 

30

 

 

 

 

 

 

 

Gain/loss on investments, net

 

 

101

 

 

 

(8

)

 

 

11

 

Non-GAAP tax adjustments

 

 

4,588

 

 

 

(1,138

)

 

 

(838

)

Non-GAAP net income (loss)

 

$

(8,355

)

 

$

2,745

 

 

$

(5,637

)

 

 

 

 

 

 

 

NET INCOME (LOSS) PER DILUTED SHARE:

 

 

 

 

 

 

GAAP net loss per diluted share

 

$

(0.63

)

 

$

(0.06

)

 

$

(0.33

)

Amortization of intangibles

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

0.15

 

 

 

0.14

 

 

 

0.16

 

Restructuring and other charges

 

 

0.04

 

 

 

0.04

 

 

 

 

Litigation reserves, net

 

 

 

 

 

 

 

 

 

Gain/loss on investments, net

 

 

 

 

 

 

 

 

 

Non-GAAP tax adjustments

 

 

0.16

 

 

 

(0.03

)

 

 

(0.02

)

Non-GAAP net income (loss) per diluted share

 

$

(0.28

)

 

$

0.09

 

 

$

(0.19

)

 

 

 

 

 

 

 

Shares used in computing GAAP net loss per diluted share

 

 

29,395

 

 

 

29,623

 

 

 

29,040

 

Shares used in computing non-GAAP net income (loss) per diluted share

 

 

29,395

 

 

 

29,683

 

 

 

29,040

 

NETGEAR, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, except per share data, DSO, inventory turns, weeks of channel inventory, headcount and percentage data)

(Unaudited)

 

 

 

Three Months Ended

 

 

March 31,

2024

 

December 31,

2023

 

October 1,

2023

 

July 2,

2023

 

April 2,

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and short-term investments

 

$

289,421

 

$

283,648

 

$

228,045

 

$

202,836

 

$

239,210

Cash, cash equivalents and short-term investments per diluted share

 

$

9.85

 

 

$

9.56

 

 

$

7.71

 

 

$

6.92

 

 

$

8.24

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net

 

$

172,771

 

 

$

185,059

 

 

$

200,900

 

 

$

179,496

 

 

$

192,540

 

Days sales outstanding (DSO)

 

 

96

 

 

 

89

 

 

 

92

 

 

 

94

 

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

Inventories

 

$

211,270

 

 

$

248,851

 

 

$

280,918

 

 

$

324,483

 

 

$

337,187

 

Ending inventory turns

 

 

2.2

 

 

 

2.0

 

 

 

1.8

 

 

 

1.5

 

 

 

1.4

 

 

 

 

 

 

 

 

 

 

 

 

Weeks of channel inventory:

 

 

 

 

 

 

 

 

 

 

U.S. retail channel

 

 

11.2

 

 

 

10.8

 

 

 

11.8

 

 

 

12.0

 

 

 

12.7

 

U.S. distribution channel

 

 

4.0

 

 

 

7.9

 

 

 

5.8

 

 

 

5.1

 

 

 

4.4

 

EMEA distribution channel

 

 

5.9

 

 

 

6.4

 

 

 

7.4

 

 

 

6.9

 

 

 

8.5

 

APAC distribution channel

 

 

8.0

 

 

 

10.0

 

 

 

13.1

 

 

 

12.4

 

 

 

14.0

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue (current and non-current)

 

$

33,714

 

 

$

31,994

 

 

$

29,796

 

 

$

27,689

 

 

$

26,634

 

 

 

 

 

 

 

 

 

 

 

 

Headcount

 

 

628

 

 

 

635

 

 

 

644

 

 

 

653

 

 

 

702

 

Non-GAAP diluted shares

 

 

29,395

 

 

 

29,683

 

 

 

29,581

 

 

 

29,319

 

 

 

29,040

 

NET REVENUE BY GEOGRAPHY

 

 

 

Three Months Ended

 

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas

 

$109,928

 

67%

 

$124,798

 

66%

 

$121,922

 

67%

EMEA

 

31,187

 

19%

 

37,899

 

20%

 

39,178

 

22%

APAC

 

23,471

 

14%

 

25,977

 

14%

 

19,808

 

11%

Total

 

$164,586

 

100%

 

$188,674

 

100%

 

$180,908

 

100%

NETGEAR, INC.

SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)

(In thousands)

(Unaudited)

 

NET REVENUE BY SEGMENT

 

 

Three Months Ended

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

 

 

Connected Home

$

95,963

 

 

$

118,378

 

 

$

102,746

 

NETGEAR for Business

 

68,623

 

 

 

70,296

 

 

 

78,162

 

Total net revenue

$

164,586

 

 

$

188,674

 

 

$

180,908

 

SERVICE PROVIDER NET REVENUE

 

 

Three Months Ended

 

March 31, 2024

 

December 31, 2023

 

April 2, 2023

 

 

 

 

 

 

 

 

 

Connected Home

$

27,553

 

 

$

27,313

 

 

$

14,027

 

NETGEAR for Business

 

243

 

 

 

152

 

 

 

190

 

Total service provider net revenue

$

27,796

 

 

$

27,465

 

 

$

14,217

 

 

NETGEAR Investor Relations Erik Bylin investors@netgear.com

Source: NETGEAR, Inc.

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