NETGEAR® Reports Third Quarter 2022 Results
NETGEAR (NASDAQ: NTGR) reported a 14% decline in net revenue to $249.6 million for Q3 2022, with a GAAP operating loss of $2.2 million. Non-GAAP net income per diluted share dropped to $0.21, down from $0.50 year-over-year. Despite challenges, the SMB business achieved record revenue with 21% year-over-year growth, driven by demand for high-end products like WiFi mesh systems and 5G hotspots. Looking forward, the company anticipates Q4 revenue of between $235 million and $250 million, facing supply constraints and foreign exchange headwinds.
- Record revenue in the SMB business with 21% year-over-year growth.
- Continued strong demand for high-end WiFi mesh and 5G mobile hotspot products.
- Positive outlook for fourth-quarter revenue from the service provider channel, expected to reach approximately $50 million.
- Overall net revenue decreased by 14% year-over-year.
- GAAP operating loss of $2.2 million, compared to operating income of $12.9 million in Q3 2021.
- Supply constraints affecting the SMB business and overall operating margin.
- Significant foreign exchange headwinds anticipated, given 50% of SMB revenue is in foreign currency.
SMB business delivers record revenue;
-
Third quarter 2022 net revenue of
$249.6 million 14.0% from the comparable prior year quarter. -
Third quarter 2022 GAAP operating loss of
$2.2 million $12.9 million 4.5% of net revenue, in the comparable prior year quarter.-
Third quarter 2022 non-GAAP operating income of
$1.8 million 0.7% of net revenue, as compared to$19.5 million 6.7% of net revenue, in the comparable prior year quarter.
-
Third quarter 2022 non-GAAP operating income of
-
Third quarter 2022 GAAP net income per diluted share of
$0.10 $0.31 -
Third quarter 2022 non-GAAP net income per diluted share of
$0.21 $0.50
-
Third quarter 2022 non-GAAP net income per diluted share of
The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.
Business Outlook
“While we are confident in our ability to provide guidance at this time, we do so with the caveat that considerable uncertainty remains in the market due to the COVID-19 pandemic and supply chain conditions continuing to remain challenged and, should unforeseen events occur, in particular challenges related to closures affecting our manufacturing partners’ operations, increased transportation delays into any of our regional distribution or manufacturing centers, greater than expected freight or component costs, or lower than expected end market demand, 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:
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Three months ending |
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Operating Margin Rate |
Tax Rate |
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|
|
|
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GAAP |
|
(4.2)% - (3.2)% |
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||||
Estimated adjustments for1: |
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|
||||||
Stock-based compensation expense |
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|
|
- |
||||
Amortization of intangibles |
|
|
|
- |
||||
Non-GAAP tax adjustments |
|
- |
|
|
|
|||
Non-GAAP |
|
(2.0)% - (1.0)% |
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||||
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 third quarter results and discuss management's expectations for the fourth quarter of 2022 today,
About
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
© 2022
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for
This press release contains forward-looking statements within the meaning of the
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, change in fair value of contingent consideration, goodwill impairment, 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, goodwill impairment, 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 provides our management and users of the financial statements with better clarity regarding 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. 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. Included in the non-GAAP tax adjustments for the three and nine months ended
Source: NETGEAR-F
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
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ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
132,928 |
|
|
$ |
263,772 |
|
Short-term investments |
|
|
100,269 |
|
|
|
7,744 |
|
Accounts receivable, net |
|
|
259,908 |
|
|
|
261,158 |
|
Inventories |
|
|
298,090 |
|
|
|
315,667 |
|
Prepaid expenses and other current assets |
|
|
38,851 |
|
|
|
34,752 |
|
Total current assets |
|
|
830,046 |
|
|
|
883,093 |
|
Property and equipment, net |
|
|
10,230 |
|
|
|
13,335 |
|
Operating lease right-of-use assets |
|
|
37,371 |
|
|
|
23,176 |
|
Intangibles, net |
|
|
1,457 |
|
|
|
1,856 |
|
|
|
|
36,279 |
|
|
|
80,721 |
|
Other non-current assets |
|
|
89,835 |
|
|
|
76,350 |
|
Total assets |
|
$ |
1,005,218 |
|
|
$ |
1,078,531 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
87,432 |
|
|
$ |
73,729 |
|
Accrued employee compensation |
|
|
20,375 |
|
|
|
24,704 |
|
Other accrued liabilities |
|
|
202,208 |
|
|
|
224,584 |
|
Deferred revenue |
|
|
19,293 |
|
|
|
16,500 |
|
Income taxes payable |
|
|
1,089 |
|
|
|
1,528 |
|
Total current liabilities |
|
|
330,397 |
|
|
|
341,045 |
|
Non-current income taxes payable |
|
|
16,737 |
|
|
|
18,990 |
|
Non-current operating lease liabilities |
|
|
31,577 |
|
|
|
18,569 |
|
Other non-current liabilities |
|
|
3,580 |
|
|
|
3,112 |
|
Total liabilities |
|
|
382,291 |
|
|
|
381,716 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
29 |
|
|
|
29 |
|
Additional paid-in capital |
|
|
941,655 |
|
|
|
923,228 |
|
Accumulated other comprehensive income (loss) |
|
|
(115 |
) |
|
|
149 |
|
Accumulated deficit |
|
|
(318,642 |
) |
|
|
(226,591 |
) |
Total stockholders’ equity |
|
|
622,927 |
|
|
|
696,815 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,005,218 |
|
|
$ |
1,078,531 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share and percentage data) (Unaudited) |
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Three Months Ended |
|
Nine Months Ended |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
249,587 |
|
|
$ |
223,224 |
|
|
$ |
290,150 |
|
|
$ |
683,369 |
|
|
$ |
916,886 |
|
Cost of revenue |
|
|
181,058 |
|
|
|
161,803 |
|
|
|
203,309 |
|
|
|
494,516 |
|
|
|
625,748 |
|
Gross profit |
|
|
68,529 |
|
|
|
61,421 |
|
|
|
86,841 |
|
|
|
188,853 |
|
|
|
291,138 |
|
Gross margin |
|
|
27.5 |
% |
|
|
27.5 |
% |
|
|
29.9 |
% |
|
|
27.6 |
% |
|
|
31.8 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
22,167 |
|
|
|
22,205 |
|
|
|
23,472 |
|
|
|
68,193 |
|
|
|
69,887 |
|
Sales and marketing |
|
|
34,203 |
|
|
|
34,546 |
|
|
|
36,176 |
|
|
|
104,335 |
|
|
|
109,731 |
|
General and administrative |
|
|
13,949 |
|
|
|
14,147 |
|
|
|
14,056 |
|
|
|
41,698 |
|
|
|
45,084 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44,442 |
|
|
|
— |
|
Other operating expenses (income), net |
|
|
361 |
|
|
|
573 |
|
|
|
222 |
|
|
|
931 |
|
|
|
690 |
|
Total operating expenses |
|
|
70,680 |
|
|
|
71,471 |
|
|
|
73,926 |
|
|
|
259,599 |
|
|
|
225,392 |
|
Income (loss) from operations |
|
|
(2,151 |
) |
|
|
(10,050 |
) |
|
|
12,915 |
|
|
|
(70,746 |
) |
|
|
65,746 |
|
Operating margin |
|
|
(0.9 |
)% |
|
|
(4.5 |
)% |
|
|
4.5 |
% |
|
|
(10.4 |
)% |
|
|
7.2 |
% |
Other income (expenses), net |
|
|
638 |
|
|
|
(820 |
) |
|
|
(132 |
) |
|
|
(1,164 |
) |
|
|
15 |
|
Income (loss) before income taxes |
|
|
(1,513 |
) |
|
|
(10,870 |
) |
|
|
12,783 |
|
|
|
(71,910 |
) |
|
|
65,761 |
|
Provision for (benefit from) income taxes |
|
|
(4,314 |
) |
|
|
(2,336 |
) |
|
|
3,199 |
|
|
|
(8,967 |
) |
|
|
15,383 |
|
Net income (loss) |
|
$ |
2,801 |
|
|
$ |
(8,534 |
) |
|
$ |
9,584 |
|
|
$ |
(62,943 |
) |
|
$ |
50,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.10 |
|
|
$ |
(0.30 |
) |
|
$ |
0.32 |
|
|
$ |
(2.17 |
) |
|
$ |
1.65 |
|
Diluted |
|
$ |
0.10 |
|
|
$ |
(0.30 |
) |
|
$ |
0.31 |
|
|
$ |
(2.17 |
) |
|
$ |
1.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used to compute net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,891 |
|
|
|
28,891 |
|
|
|
30,301 |
|
|
|
29,023 |
|
|
|
30,495 |
|
Diluted |
|
|
29,029 |
|
|
|
28,891 |
|
|
|
30,798 |
|
|
|
29,023 |
|
|
|
31,356 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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|
Nine Months Ended |
|||||||
|
|
|
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(62,943 |
) |
|
$ |
50,378 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
7,845 |
|
|
|
10,922 |
|
|
Stock-based compensation |
|
13,266 |
|
|
|
20,072 |
|
|
Gain/loss on investments, net |
|
342 |
|
|
|
174 |
|
|
|
|
44,442 |
|
|
|
— |
|
|
Change in fair value of contingent consideration |
|
— |
|
|
|
(3,003 |
) |
|
Deferred income taxes |
|
(13,895 |
) |
|
|
4,838 |
|
|
Provision for excess and obsolete inventory |
|
3,005 |
|
|
|
3,045 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
1,250 |
|
|
|
70,526 |
|
|
Inventories |
|
14,572 |
|
|
|
(136,062 |
) |
|
Prepaid expenses and other assets |
|
(2,858 |
) |
|
|
(5,678 |
) |
|
Accounts payable |
|
13,432 |
|
|
|
(15,344 |
) |
|
Accrued employee compensation |
|
(4,329 |
) |
|
|
(12,654 |
) |
|
Other accrued liabilities |
|
(23,504 |
) |
|
|
6,193 |
|
|
Deferred revenue |
|
3,268 |
|
|
|
2,061 |
|
|
Income taxes payable |
|
(2,692 |
) |
|
|
(3,966 |
) |
|
Net cash used in operating activities |
|
(8,799 |
) |
|
|
(8,498 |
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of short-term investments |
|
(143,933 |
) |
|
|
(145 |
) |
|
Proceeds from maturities of short-term investments |
|
50,418 |
|
|
|
165 |
|
|
Purchases of property and equipment |
|
(4,133 |
) |
|
|
(6,918 |
) |
|
Purchases of long-term investments |
|
(450 |
) |
|
|
(535 |
) |
|
Net cash used in investing activities |
|
(98,098 |
) |
|
|
(7,433 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Repurchases of common stock |
|
(24,377 |
) |
|
|
(53,634 |
) |
|
Restricted stock unit withholdings |
|
(4,731 |
) |
|
|
(7,456 |
) |
|
Proceeds from exercise of stock options |
|
743 |
|
|
|
8,912 |
|
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
4,418 |
|
|
|
4,916 |
|
|
Net cash used in financing activities |
|
(23,947 |
) |
|
|
(47,262 |
) |
|
Net decrease in cash and cash equivalents |
|
(130,844 |
) |
|
|
(63,193 |
) |
|
Cash and cash equivalents, at beginning of period |
|
263,772 |
|
|
|
346,460 |
|
|
Cash and cash equivalents, at end of period |
$ |
132,928 |
|
|
$ |
283,267 |
|
|
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except percentage data) (Unaudited) |
||||||||||||||||||||
STATEMENT OF OPERATIONS DATA: |
||||||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross profit |
|
$ |
68,529 |
|
|
$ |
61,421 |
|
|
$ |
86,841 |
|
|
$ |
188,853 |
|
|
$ |
291,138 |
|
GAAP gross margin |
|
|
27.5 |
% |
|
|
27.5 |
% |
|
|
29.9 |
% |
|
|
27.6 |
% |
|
|
31.8 |
% |
Amortization of intangibles |
|
|
129 |
|
|
|
128 |
|
|
|
145 |
|
|
|
386 |
|
|
|
502 |
|
Stock-based compensation expense |
|
|
283 |
|
|
|
358 |
|
|
|
430 |
|
|
|
1,027 |
|
|
|
1,626 |
|
Non-GAAP gross profit |
|
$ |
68,941 |
|
|
$ |
61,907 |
|
|
$ |
87,416 |
|
|
$ |
190,266 |
|
|
$ |
293,266 |
|
Non-GAAP gross margin |
|
|
27.6 |
% |
|
|
27.7 |
% |
|
|
30.1 |
% |
|
|
27.8 |
% |
|
|
32.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP research and development |
|
$ |
22,167 |
|
|
$ |
22,205 |
|
|
$ |
23,472 |
|
|
$ |
68,193 |
|
|
$ |
69,887 |
|
Stock-based compensation expense |
|
|
(968 |
) |
|
|
(1,095 |
) |
|
|
(1,414 |
) |
|
|
(3,150 |
) |
|
|
(3,832 |
) |
Non-GAAP research and development |
|
$ |
21,199 |
|
|
$ |
21,110 |
|
|
$ |
22,058 |
|
|
$ |
65,043 |
|
|
$ |
66,055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP sales and marketing |
|
$ |
34,203 |
|
|
$ |
34,546 |
|
|
$ |
36,176 |
|
|
$ |
104,335 |
|
|
$ |
109,731 |
|
Amortization of intangibles |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,266 |
) |
Stock-based compensation expense |
|
|
(1,249 |
) |
|
|
(1,570 |
) |
|
|
(2,008 |
) |
|
|
(4,275 |
) |
|
|
(5,741 |
) |
Non-GAAP sales and marketing |
|
$ |
32,954 |
|
|
$ |
32,976 |
|
|
$ |
34,168 |
|
|
$ |
100,060 |
|
|
$ |
102,724 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP general and administrative |
|
$ |
13,949 |
|
|
$ |
14,147 |
|
|
$ |
14,056 |
|
|
$ |
41,698 |
|
|
$ |
45,084 |
|
Stock-based compensation expense |
|
|
(940 |
) |
|
|
(2,106 |
) |
|
|
(2,358 |
) |
|
|
(4,814 |
) |
|
|
(8,873 |
) |
Non-GAAP general and administrative |
|
$ |
13,009 |
|
|
$ |
12,041 |
|
|
$ |
11,698 |
|
|
$ |
36,884 |
|
|
$ |
36,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP other operating expenses (income), net |
|
$ |
361 |
|
|
$ |
573 |
|
|
$ |
222 |
|
|
$ |
931 |
|
|
$ |
690 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,003 |
|
Restructuring and other charges |
|
|
(361 |
) |
|
|
(573 |
) |
|
|
(222 |
) |
|
|
(911 |
) |
|
|
(3,378 |
) |
Litigation reserves, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
(315 |
) |
Non-GAAP other operating expenses, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) (In thousands, except percentage data) (Unaudited) |
||||||||||||||||||||
STATEMENT OF OPERATIONS DATA (CONTINUED): |
||||||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP total operating expenses |
|
$ |
70,680 |
|
|
$ |
71,471 |
|
|
$ |
73,926 |
|
|
$ |
259,599 |
|
|
$ |
225,392 |
|
Amortization of intangibles |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,266 |
) |
Stock-based compensation expense |
|
|
(3,157 |
) |
|
|
(4,771 |
) |
|
|
(5,780 |
) |
|
|
(12,239 |
) |
|
|
(18,446 |
) |
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,003 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(44,442 |
) |
|
|
— |
|
Restructuring and other charges |
|
|
(361 |
) |
|
|
(573 |
) |
|
|
(222 |
) |
|
|
(911 |
) |
|
|
(3,378 |
) |
Litigation reserves, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
(315 |
) |
Non-GAAP total operating expenses |
|
$ |
67,162 |
|
|
$ |
66,127 |
|
|
$ |
67,924 |
|
|
$ |
201,987 |
|
|
$ |
204,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income (loss) |
|
$ |
(2,151 |
) |
|
$ |
(10,050 |
) |
|
$ |
12,915 |
|
|
$ |
(70,746 |
) |
|
$ |
65,746 |
|
GAAP operating margin |
|
|
(0.9 |
)% |
|
|
(4.5 |
)% |
|
|
4.5 |
% |
|
|
(10.4 |
)% |
|
|
7.2 |
% |
Amortization of intangibles |
|
|
129 |
|
|
|
128 |
|
|
|
145 |
|
|
|
386 |
|
|
|
1,768 |
|
Stock-based compensation expense |
|
|
3,440 |
|
|
|
5,129 |
|
|
|
6,210 |
|
|
|
13,266 |
|
|
|
20,072 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,003 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44,442 |
|
|
|
— |
|
Restructuring and other charges |
|
|
361 |
|
|
|
573 |
|
|
|
222 |
|
|
|
911 |
|
|
|
3,378 |
|
Litigation reserves, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
315 |
|
Non-GAAP operating income (loss) |
|
$ |
1,779 |
|
|
$ |
(4,220 |
) |
|
$ |
19,492 |
|
|
$ |
(11,721 |
) |
|
$ |
88,276 |
|
Non-GAAP operating margin |
|
|
0.7 |
% |
|
|
(1.9 |
)% |
|
|
6.7 |
% |
|
|
(1.7 |
)% |
|
|
9.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP other income (expenses), net |
|
$ |
638 |
|
|
$ |
(820 |
) |
|
$ |
(132 |
) |
|
$ |
(1,164 |
) |
|
$ |
15 |
|
Gain/loss on investments, net |
|
|
(52 |
) |
|
|
(216 |
) |
|
|
166 |
|
|
|
251 |
|
|
|
174 |
|
Non-GAAP other income (expenses), net |
|
$ |
586 |
|
|
$ |
(1,036 |
) |
|
$ |
34 |
|
|
$ |
(913 |
) |
|
$ |
189 |
|
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) (In thousands, except per share data) (Unaudited) |
||||||||||||||||||||
STATEMENT OF OPERATIONS DATA (CONTINUED): |
||||||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) |
|
$ |
2,801 |
|
|
$ |
(8,534 |
) |
|
$ |
9,584 |
|
|
$ |
(62,943 |
) |
|
$ |
50,378 |
|
Amortization of intangibles |
|
|
129 |
|
|
|
128 |
|
|
|
145 |
|
|
|
386 |
|
|
|
1,768 |
|
Stock-based compensation expense |
|
|
3,440 |
|
|
|
5,129 |
|
|
|
6,210 |
|
|
|
13,266 |
|
|
|
20,072 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,003 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
44,442 |
|
|
|
— |
|
Restructuring and other charges |
|
|
361 |
|
|
|
573 |
|
|
|
222 |
|
|
|
911 |
|
|
|
3,378 |
|
Litigation reserves, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
315 |
|
Gain/loss on investments, net |
|
|
(52 |
) |
|
|
(216 |
) |
|
|
166 |
|
|
|
251 |
|
|
|
174 |
|
Non-GAAP tax adjustments |
|
|
(715 |
) |
|
|
(2,552 |
) |
|
|
(1,026 |
) |
|
|
(3,976 |
) |
|
|
(5,413 |
) |
Non-GAAP net income (loss) |
|
$ |
5,964 |
|
|
$ |
(5,472 |
) |
|
$ |
15,301 |
|
|
$ |
(7,643 |
) |
|
$ |
67,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) PER DILUTED SHARE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) per diluted share |
|
$ |
0.10 |
|
|
$ |
(0.30 |
) |
|
$ |
0.31 |
|
|
$ |
(2.17 |
) |
|
$ |
1.61 |
|
Amortization of intangibles |
|
0.00 |
|
|
0.00 |
|
|
0.00 |
|
|
|
0.01 |
|
|
|
0.06 |
|
|||
Stock-based compensation expense |
|
|
0.12 |
|
|
|
0.18 |
|
|
|
0.20 |
|
|
|
0.46 |
|
|
|
0.64 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.10 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.53 |
|
|
|
— |
|
Restructuring and other charges |
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.03 |
|
|
|
0.11 |
|
Litigation reserves, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.00 |
|
|
|
0.01 |
|
Gain/loss on investments, net |
|
(0.00) |
|
|
|
(0.01 |
) |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
Non-GAAP tax adjustments |
|
|
(0.02 |
) |
|
|
(0.08 |
) |
|
|
(0.03 |
) |
|
|
(0.13 |
) |
|
|
(0.18 |
) |
Non-GAAP net income (loss) per diluted share |
|
$ |
0.21 |
|
|
$ |
(0.19 |
) |
|
$ |
0.50 |
|
|
$ |
(0.26 |
) |
|
$ |
2.16 |
|
SUPPLEMENTAL FINANCIAL INFORMATION (In thousands, except per share data, DSO, inventory turns, weeks of channel inventory, headcount and percentage data) (Unaudited) |
||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments |
|
$ |
233,197 |
|
|
$ |
250,137 |
|
|
$ |
263,788 |
|
|
$ |
271,516 |
|
|
$ |
292,195 |
|
Cash, cash equivalents and short-term investments per diluted share |
|
$ |
8.03 |
|
|
$ |
8.66 |
|
|
$ |
8.99 |
|
|
$ |
9.10 |
|
|
$ |
9.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
$ |
259,908 |
|
|
$ |
217,873 |
|
|
$ |
219,911 |
|
|
$ |
261,158 |
|
|
$ |
266,526 |
|
Days sales outstanding (DSO) |
|
|
95 |
|
|
|
89 |
|
|
|
97 |
|
|
|
93 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
$ |
298,090 |
|
|
$ |
300,796 |
|
|
$ |
327,309 |
|
|
$ |
315,667 |
|
|
$ |
305,129 |
|
Ending inventory turns |
|
|
2.4 |
|
|
|
2.2 |
|
|
|
1.9 |
|
|
|
2.2 |
|
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weeks of channel inventory: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13.5 |
|
|
|
18.2 |
|
|
|
19.6 |
|
|
|
12.7 |
|
|
|
14.7 |
|
|
|
|
3.6 |
|
|
|
3.8 |
|
|
|
4.1 |
|
|
|
3.0 |
|
|
|
3.1 |
|
EMEA distribution channel |
|
|
5.3 |
|
|
|
6.2 |
|
|
|
6.6 |
|
|
|
6.8 |
|
|
|
6.8 |
|
APAC distribution channel |
|
|
16.0 |
|
|
|
14.0 |
|
|
|
14.4 |
|
|
|
13.4 |
|
|
|
9.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue (current and non-current) |
|
$ |
22,868 |
|
|
$ |
21,593 |
|
|
$ |
21,305 |
|
|
$ |
19,600 |
|
|
$ |
18,684 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Headcount |
|
|
731 |
|
|
|
740 |
|
|
|
766 |
|
|
|
771 |
|
|
|
780 |
|
Non-GAAP diluted shares |
|
|
29,029 |
|
|
|
28,891 |
|
|
|
29,350 |
|
|
|
29,822 |
|
|
|
30,798 |
|
NET REVENUE BY GEOGRAPHY |
||||||||||||||||||||||||||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
169,360 |
|
|
|
68 |
% |
|
$ |
144,027 |
|
|
|
65 |
% |
|
$ |
195,123 |
|
|
|
67 |
% |
|
$ |
458,036 |
|
|
|
67 |
% |
|
$ |
626,907 |
|
|
|
68 |
% |
EMEA |
|
|
44,827 |
|
|
|
18 |
% |
|
|
44,951 |
|
|
|
20 |
% |
|
|
56,940 |
|
|
|
20 |
% |
|
|
126,643 |
|
|
|
19 |
% |
|
|
179,802 |
|
|
|
20 |
% |
APAC |
|
|
35,400 |
|
|
|
14 |
% |
|
|
34,246 |
|
|
|
15 |
% |
|
|
38,087 |
|
|
|
13 |
% |
|
|
98,690 |
|
|
|
14 |
% |
|
|
110,177 |
|
|
|
12 |
% |
Total |
|
$ |
249,587 |
|
|
|
100 |
% |
|
$ |
223,224 |
|
|
|
100 |
% |
|
$ |
290,150 |
|
|
|
100 |
% |
|
$ |
683,369 |
|
|
|
100 |
% |
|
$ |
916,886 |
|
|
|
100 |
% |
SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED) (In thousands) (Unaudited) |
||||||||||||||||||||
NET REVENUE BY SEGMENT |
||||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Connected Home |
$ |
150,581 |
|
|
$ |
128,864 |
|
|
$ |
208,539 |
|
|
$ |
409,787 |
|
|
$ |
679,320 |
|
|
SMB |
|
99,006 |
|
|
|
94,360 |
|
|
|
81,611 |
|
|
|
273,582 |
|
|
|
237,566 |
|
|
Total net revenue |
$ |
249,587 |
|
|
$ |
223,224 |
|
|
$ |
290,150 |
|
|
$ |
683,369 |
|
|
$ |
916,886 |
|
|
SERVICE PROVIDER NET REVENUE |
||||||||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Connected Home |
$ |
40,448 |
|
|
$ |
33,975 |
|
|
$ |
41,726 |
|
|
|
92,544 |
|
|
$ |
99,355 |
|
|
SMB |
|
1,171 |
|
|
|
1,615 |
|
|
|
449 |
|
|
|
3,515 |
|
|
|
1,770 |
|
|
Total service provider net revenue |
$ |
41,619 |
|
|
$ |
35,590 |
|
|
$ |
42,175 |
|
|
|
96,059 |
|
|
$ |
101,125 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20221026005443/en/
NETGEAR Investor Relations
investors@netgear.com
Source:
FAQ
What were NETGEAR's Q3 2022 financial results?
How did the SMB business perform in Q3 2022 for NETGEAR?
What is NETGEAR's outlook for Q4 2022?
What are the challenges faced by NETGEAR currently?
