NETGEAR® Reports Second Quarter 2021 Results

Rhea-AI Summary

NETGEAR, Inc. (NASDAQ: NTGR) reported Q2 2021 financial results with net revenue of $308.8 million, up 10.3% year-over-year. GAAP operating income reached $21.5 million, a margin of 7.0%. Non-GAAP operating income was $26.5 million, or 8.6% of net revenue. GAAP net income per diluted share was $0.57, compared to $0.20 in the prior year. Despite supply chain constraints, SMB revenue grew 58% year-over-year. For Q3, the company expects revenue between $285 million to $300 million and a GAAP operating margin of 2.1% to 3.1%.

Positive

• Q2 2021 net revenue of $308.8 million, up 10.3% year-over-year.
• GAAP operating income increased to $21.5 million from $8.9 million year-over-year.
• Non-GAAP operating income rose to $26.5 million compared to $21.0 million year-over-year.
• GAAP net income per diluted share increased to $0.57 from $0.20 year-over-year.
• SMB revenue grew 58% year-over-year, reflecting strong demand.

Negative

• Supply chain constraints hindered potential revenue growth.
• Q2 performance fell short of operating margin goals.
• Q3 revenue guidance reflects a decline with expectations of $285 million to $300 million.

NETGEAR, Inc. (NASDAQ: NTGR), a global networking company that delivers innovative networking and Internet connected products to consumers and businesses, today reported financial results for the second quarter ended June 27, 2021.

• Second quarter 2021 net revenue of $308.8 million, an increase of 10.3% from the comparable prior year quarter.
• Second quarter 2021 GAAP operating income of $21.5 million, or 7.0% of net revenue, as compared to $8.9 million, or 3.2% of net revenue, in the comparable prior year quarter.
  • Second quarter 2021 non-GAAP operating income of $26.5 million, or 8.6% of net revenue, as compared to $21.0 million, or 7.5% of net revenue, in the comparable prior year quarter.
• Second quarter 2021 GAAP net income per diluted share of $0.57, as compared to $0.20 in the comparable prior year quarter.
  • Second quarter 2021 non-GAAP net income per diluted share of $0.66, as compared to $0.54 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.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, “Second quarter revenue came in at $308.8 million, representing 10.3% topline growth year over year. Worldwide supply chain constraints, however, such as component shortages, increased freight costs and transit times, and factory closures due to COVID-19, led to a perfect storm of factors that held back our revenue number and saw us fall short of our operating margin goals. As we continue to navigate through this rapidly changing environment, our long-term thesis that premium WiFi will drive the growth of the consumer networking market and our service subscriber base remains intact. With vaccination rates rising and businesses reopening, work from anywhere and hybrid work models are here to stay and we anticipate that the U.S. consumer networking market will grow 20% above pre-pandemic levels in the second half of this year. Meanwhile, demand for our SMB products rebounded strongly in the second quarter as businesses reopened post-COVID. Despite supply constraints, SMB net revenue grew approximately 58% year over year.”

Mr. Lo continued, “We continue to regain market share in the U.S. consumer WiFi market, adding three points to end the quarter at 46%. In addition, we added 33,000 subscribers in the quarter and remain confident in our ability to achieve our goal of 650,000 subscribers by the end of the year. We also launched our smart parental controls service on select Nighthawk WiFi routers in Q2, with plans to roll it out across our WiFi 6 Orbi line in the third quarter. These are important milestones as we build our recurring subscription services business. Finally, I’m delighted to welcome David Henry to the NETGEAR Board of Directors and would like to congratulate him on his promotion to President and General Manager of Connected Home Products and Services.”

Bryan Murray, Chief Financial Officer of NETGEAR, added, “During the second quarter of 2021, we repurchased approximately 654,000 shares of common stock for $25.0 million. With a meaningful portion of our targeted inventory position established, we plan to continue to opportunistically repurchase shares in future quarters.”

Business Outlook

Mr. Murray continued, “With hindsight, the first half of 2021 saw the U.S. consumer networking market grow 40% over the same period in 2019. While a very strong showing, this turned out to be 10% below our expectations. As such, we plan to proactively work with our channel partners to optimize their inventory levels in the third quarter. Looking ahead to the second half of 2021, we expect the market growth to moderate further to approximately 20% above second half 2019 levels. We also expect SMB to continue to be supply-bound, and thus expect our third quarter net revenue to be in the range of $285 million to $300 million. With reduced leverage from our topline, our GAAP operating margin for the third quarter is expected to be in the range of 2.1% to 3.1%, and non-GAAP operating margin is expected to be in the range of 5.0% to 6.0%. Our GAAP tax rate is expected to be approximately 27.5%, and our non-GAAP tax rate is expected to be 24.5% for the third quarter of 2021. While we are confident in our ability to provide guidance at this time, we do so with the caveat that, while conditions are improving, considerable uncertainty remains in the market due to the COVID-19 pandemic and, should unforeseen events occur, in particular challenges related to closure of our manufacturing partners operations or transportation delays into any of our regional distribution centers, our actual results could differ from the foregoing guidance.”

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

		Three months ending October 3, 2021
		Operating Margin Rate		Tax Rate
GAAP		2.1% - 3.1%		27.5%
Estimated adjustments for1:
Amortization of intangibles		0.1%		-
Stock-based compensation expense		2.6%		-
Restructuring and other charges		0.2%		-
Non-GAAP tax adjustments		-		(3.0)%
Non-GAAP		5.0% - 6.0%		24.5%

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 second quarter results and discuss management's expectations for the third quarter of 2021 today, Wednesday, July 21, 2021 at 5 p.m. ET (2 p.m. PT). The toll free dial-in number for the live audio call is (844) 709-2008. The international dial-in number for the live audio call is (647) 253-8663. The conference ID for the call is 9796754. 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.

© 2021 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 continued profitability and cash generation; expectations regarding continuing market demand for the Company’s products and the Company’s ability to respond to this demand; the timing, distribution, sales momentum and market acceptance of recent and anticipated new product introductions that position the Company for growth and market share gain; expectations regarding supply constraints; expectations regarding the ability to participate in promotional activities leading to further market share gains; expectations regarding expected tax rates; and expectations regarding NETGEAR's paid subscriber base growth. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: uncertainty surrounding the duration and impact of the global COVID-19 pandemic, including with respect to the Company’s supply chain and potential disruptions in the Company’s transportation network, including with respect to the Company’s distribution centers; future demand for the Company's products may be lower than anticipated; the Company may be unsuccessful, or experience delays, in manufacturing and distributing its new and existing products; consumers may choose not to adopt the Company's new product offerings or adopt competing products; the Company may be unable to continue to grow its number of registered users, its number of registered app users and/or its paid subscriber base; product performance may be adversely affected by real world operating conditions; the Company may fail to manage costs, including the cost of air freight and ocean freight and the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully manage channel inventory levels; the Company may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources, including potential repurchases of the Company’s common stock; changes in the Company's stock price and developments in the business that could increase the Company's cash needs; fluctuations in foreign exchange rates; and the actions and financial health of the Company's customers, including the Company’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 the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Part II - Item 1A. Risk Factors” in the Company's quarterly report on Form 10-Q for the fiscal quarter ended March 28, 2021, filed with the Securities and Exchange Commission on April 30, 2021. 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, non-GAAP operating margin, non-GAAP other income (expense), net, non-GAAP net income and non-GAAP net income per diluted share. These supplemental measures exclude adjustments for amortization of intangibles, stock-based compensation expense, change in fair value of contingent consideration, 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: change in fair value of contingent consideration, 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. We also believe providing financial information with and without the income tax effects relating to our non-GAAP financial measures provides our management and users of the financial statements with better clarity regarding the on-going performance of our business.

Source: NETGEAR-F

NETGEAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		As of
		June 27, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents		$	328,941			$	346,460
Short-term investments			6,378				6,858
Accounts receivable, net			290,598				337,052
Inventories			251,764				172,112
Prepaid expenses and other current assets			34,110				30,696
Total current assets			911,791				893,178
Property and equipment, net			14,217				16,080
Operating lease right-of-use assets, net			25,798				29,411
Intangibles, net			2,184				3,899
Goodwill			80,721				80,721
Other non-current assets			77,496				82,750
Total assets		$	1,112,207			$	1,106,039
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	70,381			$	90,902
Accrued employee compensation			32,729				35,020
Other accrued liabilities			222,903				218,375
Deferred revenue			15,620				13,458
Income taxes payable			1,719				7,318
Total current liabilities			343,352				365,073
Non-current income taxes payable			20,370				19,174
Non-current operating lease liabilities			21,887				25,512
Other non-current liabilities			3,598				6,896
Total liabilities			389,207				416,655
Stockholders’ equity:
Common stock			31				30
Additional paid-in capital			906,327				882,709
Accumulated other comprehensive income (loss)			82				(35	)
Accumulated deficit			(183,440	)			(193,320	)
Total stockholders’ equity			723,000				689,384
Total liabilities and stockholders’ equity		$	1,112,207			$	1,106,039

NETGEAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and percentage data)
(Unaudited)
		Three Months Ended												Six Months Ended
		June 27, 2021				March 28, 2021				June 28, 2020				June 27, 2021				June 28, 2020
Net revenue		$	308,811			$	317,925			$	280,052			$	626,736			$	510,015
Cost of revenue			215,455				206,984				198,751				422,439				362,473
Gross profit			93,356				110,941				81,301				204,297				147,542
Gross margin			30.2	%			34.9	%			29.0	%			32.6	%			28.9	%
Operating expenses:
Research and development			22,586				23,829				21,144				46,415				40,883
Sales and marketing			35,740				37,815				34,384				73,555				67,415
General and administrative			15,623				15,405				15,481				31,028				28,615
Other operating expenses (income), net			(2,097	)			2,565				1,425				468				1,093
Total operating expenses			71,852				79,614				72,434				151,466				138,006
Income from operations			21,504				31,327				8,867				52,831				9,536
Operating margin			7.0	%			9.9	%			3.2	%			8.4	%			1.9	%
Interest income			3				10				49				13				311
Other income (expense), net			696				(562	)			314				134				(4,272	)
Income before income taxes			22,203				30,775				9,230				52,978				5,575
Provision for income taxes			4,369				7,815				3,247				12,184				3,765
Net income		$	17,834			$	22,960			$	5,983			$	40,794			$	1,810
Net income per share:
Basic		$	0.58			$	0.75			$	0.20			$	1.33			$	0.06
Diluted		$	0.57			$	0.72			$	0.20			$	1.29			$	0.06
Weighted average shares used to compute net income per share:
Basic			30,574				30,665				29,617				30,614				29,608
Diluted			31,464				31,814				30,070				31,648				30,079

NETGEAR, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentage data)
(Unaudited)
STATEMENT OF OPERATIONS DATA:
		Three Months Ended												Six Months Ended
		June 27, 2021				March 28, 2021				June 28, 2020				June 27, 2021				June 28, 2020
GAAP gross profit		$	93,356			$	110,941			$	81,301			$	204,297			$	147,542
GAAP gross margin			30.2	%			34.9	%			29.0	%			32.6	%			28.9	%
Amortization of intangibles			178				179				179				357				357
Stock-based compensation expense			362				834				1,501				1,196				2,206
Non-GAAP gross profit		$	93,896			$	111,954			$	82,981			$	205,850			$	150,105
Non-GAAP gross margin			30.4	%			35.2	%			29.6	%			32.8	%			29.4	%
GAAP research and development		$	22,586			$	23,829			$	21,144			$	46,415			$	40,883
Stock-based compensation expense			(1,272	)			(1,146	)			(1,707	)			(2,418	)			(2,741	)
Non-GAAP research and development		$	21,314			$	22,683			$	19,437			$	43,997			$	38,142
GAAP sales and marketing		$	35,740			$	37,815			$	34,384			$	73,555			$	67,415
Amortization of intangibles			—				(1,266	)			(1,340	)			(1,266	)			(2,681	)
Stock-based compensation expense			(1,953	)			(1,780	)			(1,890	)			(3,733	)			(3,669	)
Non-GAAP sales and marketing		$	33,787			$	34,769			$	31,154			$	68,556			$	61,065
GAAP general and administrative		$	15,623			$	15,405			$	15,481			$	31,028			$	28,615
Stock-based compensation expense			(3,315	)			(3,200	)			(4,074	)			(6,515	)			(6,892	)
Non-GAAP general and administrative		$	12,308			$	12,205			$	11,407			$	24,513			$	21,723
GAAP other operating expenses (income), net		$	(2,097	)		$	2,565			$	1,425			$	468			$	1,093
Change in fair value of contingent consideration			3,003				—				(311	)			3,003				(89	)
Restructuring and other charges			(886	)			(2,270	)			(1,117	)			(3,156	)			(982	)
Litigation reserves, net			(20	)			(295	)			3				(315	)			(22	)
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												Six Months Ended
		June 27, 2021				March 28, 2021				June 28, 2020				June 27, 2021				June 28, 2020
GAAP total operating expenses		$	71,852			$	79,614			$	72,434			$	151,466			$	138,006
Amortization of intangibles			—				(1,266	)			(1,340	)			(1,266	)			(2,681	)
Stock-based compensation expense			(6,540	)			(6,126	)			(7,671	)			(12,666	)			(13,302	)
Change in fair value of contingent consideration			3,003				—				(311	)			3,003				(89	)
Restructuring and other charges			(886	)			(2,270	)			(1,117	)			(3,156	)			(982	)
Litigation reserves, net			(20	)			(295	)			3				(315	)			(22	)
Non-GAAP total operating expenses		$	67,409			$	69,657			$	61,998			$	137,066			$	120,930
GAAP operating income		$	21,504			$	31,327			$	8,867			$	52,831			$	9,536
GAAP operating margin			7.0	%			9.9	%			3.2	%			8.4	%			1.9	%
Amortization of intangibles			178				1,445				1,519				1,623				3,038
Stock-based compensation expense			6,902				6,960				9,172				13,862				15,508
Change in fair value of contingent consideration			(3,003	)			—				311				(3,003	)			89
Restructuring and other charges			886				2,270				1,117				3,156				982
Litigation reserves, net			20				295				(3	)			315				22
Non-GAAP operating income		$	26,487			$	42,297			$	20,983			$	68,784			$	29,175
Non-GAAP operating margin			8.6	%			13.3	%			7.5	%			11.0	%			5.7	%
GAAP other income (expense), net		$	696			$	(562	)		$	314			$	134			$	(4,272	)
Gain/loss on investments, net			(41	)			49				—				8				4,530
Non-GAAP other income (expense), net		$	655			$	(513	)		$	314			$	142			$	258

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												Six Months Ended
		June 27, 2021				March 28, 2021				June 28, 2020				June 27, 2021				June 28, 2020
GAAP net income		$	17,834			$	22,960			$	5,983			$	40,794			$	1,810
Amortization of intangibles			178				1,445				1,519				1,623				3,038
Stock-based compensation expense			6,902				6,960				9,172				13,862				15,508
Change in fair value of contingent consideration			(3,003	)			—				311				(3,003	)			89
Restructuring and other charges			886				2,270				1,117				3,156				982
Litigation reserves, net			20				295				(3	)			315				22
Gain/loss on investments, net			(41	)			49				—				8				4,530
Non-GAAP tax adjustments			(1,971	)			(2,416	)			(1,778	)			(4,387	)			(3,289	)
Non-GAAP net income		$	20,805			$	31,563			$	16,321			$	52,368			$	22,690
NET INCOME PER DILUTED SHARE:
GAAP net income per diluted share		$	0.57			$	0.72			$	0.20			$	1.29			$	0.06
Amortization of intangibles			0.01				0.05				0.05				0.05				0.10
Stock-based compensation expense			0.22				0.22				0.31				0.44				0.52
Change in fair value of contingent consideration			(0.10	)			—				0.01				(0.09	)		0.00
Restructuring and other charges			0.03				0.07				0.04				0.10				0.03
Litigation reserves, net		0.00					0.01			(0.00)					0.01			0.00
Gain/loss on investments, net		(0.00)				0.00					—			0.00					0.15
Non-GAAP tax adjustments			(0.07	)			(0.08	)			(0.07	)			(0.15	)			(0.11	)
Non-GAAP net income per diluted share		$	0.66			$	0.99			$	0.54			$	1.65			$	0.75

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
		June 27, 2021				March 28, 2021				December 31, 2020				September 27, 2020				June 28, 2020
Cash, cash equivalents and short-term investments		$	335,319			$	370,656			$	353,318			$	306,818			$	258,552
Cash, cash equivalents and short-term investments per diluted share		$	10.66			$	11.65			$	11.31			$	9.98			$	8.60
Accounts receivable, net		$	290,598			$	312,922			$	337,052			$	340,004			$	277,490
Days sales outstanding (DSO)			86				86				87				82				90
Inventories		$	251,764			$	215,705			$	172,112			$	144,302			$	150,585
Ending inventory turns			3.4				3.8				5.9				7.3				5.3
Weeks of channel inventory:
U.S. retail channel			12.9				11.8				8.6				5.7				6.4
U.S. distribution channel			3.4				3.6				4.9				2.8				4.2
EMEA distribution channel			7.8				4.9				5.7				6.8				4.7
APAC distribution channel			11.5				7.6				8.2				10.1				11.9
Deferred revenue (current and non-current)		$	18,482			$	18,116			$	16,623			$	13,813			$	10,792
Headcount			769				775				818				803				788
Non-GAAP diluted shares			31,464				31,814				31,235				30,741				30,070

NET REVENUE BY GEOGRAPHY
		Three Months Ended																								Six Months Ended
		June 27, 2021								March 28, 2021								June 28, 2020								June 27, 2021								June 28, 2020
Americas		$	212,634				69	%		$	219,150				69	%		$	202,246				72	%		$	431,784				69	%		$	360,436				70	%
EMEA			61,772				20	%			61,090				19	%			48,359				17	%			122,862				20	%			90,507				18	%
APAC			34,405				11	%			37,685				12	%			29,447				11	%			72,090				11	%			59,072				12	%
Total		$	308,811				100	%		$	317,925				100	%		$	280,052				100	%		$	626,736				100	%		$	510,015				100	%

NETGEAR, INC.
SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)
(In thousands)
(Unaudited)
NET REVENUE BY SEGMENT
	Three Months Ended												Six Months Ended
	June 27, 2021				March 28, 2021				June 28, 2020				June 27, 2021				June 28, 2020
Connected Home	$	229,863			$	240,918			$	230,017			$	470,781			$	394,680
SMB		78,948				77,007				50,035				155,955				115,335
Total net revenue	$	308,811			$	317,925			$	280,052			$	626,736			$	510,015

SERVICE PROVIDER NET REVENUE
	Three Months Ended												Six Months Ended
	June 27, 2021				March 28, 2021				June 28, 2020				June 27, 2021				June 28, 2020
Connected Home	$	35,391			$	22,238			$	44,152			$	57,629			$	70,839
SMB		522				799				871				1,321				1,668
Total service provider net revenue	$	35,913			$	23,037			$	45,023			$	58,950			$	72,507

 

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FAQ

What were NETGEAR's Q2 2021 financial results?

NETGEAR reported Q2 2021 net revenue of $308.8 million, a 10.3% increase year-over-year.

What is the forecast for NETGEAR's third quarter of 2021?

For Q3 2021, NETGEAR expects revenue between $285 million and $300 million.

How did NETGEAR's net income change in Q2 2021?

The GAAP net income per diluted share rose to $0.57 in Q2 2021, up from $0.20 the prior year.

What challenges did NETGEAR face in Q2 2021?

NETGEAR encountered supply chain constraints affecting revenue and operating margins.

What growth did NETGEAR see in its SMB products?

SMB product revenue grew approximately 58% year-over-year in Q2 2021.