Q2 net revenue of $143.9 million, above the
high end of guidance
Completed destocking of channel, with
approximately $30 million reduction
Fourth consecutive quarter of FCF
generation
New Board member appointed and President of B2B
business unit hired
NETGEAR, Inc. (NASDAQ: NTGR), a global networking company that
delivers innovative products to global consumers and businesses,
today reported financial results for the second quarter ended June
30, 2024. As expected, second quarter results reflect the impact of
destocking approximately $30 million of channel inventory, and the
costs associated with an aggressive reduction of legacy
inventory.
- Second quarter 2024 net revenue of $143.9 million, a decrease
of 17.0% from the comparable prior-year quarter.
- Second quarter 2024 GAAP operating loss of $46.9 million, or
(32.6)% of net revenue, as compared to operating loss of $17.8
million, or (10.3)% of net revenue, in the comparable prior-year
quarter.
- Second quarter 2024 non-GAAP operating loss of $31.1 million,
or (21.6)% of net revenue, as compared to non-GAAP operating loss
of $10.7 million, or (6.2)% of net revenue, in the comparable
prior-year quarter.
- Second quarter 2024 GAAP net loss per diluted share of $1.56,
as compared to net loss per diluted share of $0.29 in the
comparable prior-year quarter.
- Second quarter 2024 non-GAAP net loss per diluted share of
$0.74, as compared to non-GAAP net loss per diluted share of $0.16
in the comparable prior-year quarter.
- Cash, cash equivalents and short-term investments ended at
$294.3 million, up $4.9 million from the previous quarter and net
of stock repurchases in the second quarter of $10.0 million.
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, “Last
quarter we outlined a plan for transforming NETGEAR with a focus on
creating long term value for shareholders. I’m very happy to report
that our team demonstrated stellar execution in the second quarter
and delivered on our goals, including the achievement of an
accelerated destocking plan of approximately $30 million and a
significant decrease in our finished goods inventory. With revenue
and non-GAAP operating margin above the high end of our guidance, a
fourth consecutive quarter of free cash flow generation and our
strategic internal reorganization completed, we have positioned
NETGEAR well for long term success.”
“In our NFB business, we delivered a record quarter of end
market sales for our ProAV managed switch products and the
sell-through for this business grew in each of our three global
regions. This progress is enabled by our broadening base of
manufacturing partners and early momentum in our expansion into the
broadcast vertical. Although we remain challenged in the
traditional IT and WIFI Lan markets, the long-term potential of NFB
is very exciting and we have hired a seasoned leader to help us
unlock profitable growth for this business. Pramod Badjate has
joined us as the President and GM of NFB. Pramod is a networking
veteran with a strong track record at Cisco, Ruckus and, most
recently, Arista. Pramod and I have a shared belief that we can
unlock significant value from our B2B segment and the opportunity
ahead is why we are able to attract such an accomplished leader for
NFB.”
“In our CHP business, we continue to drive growth in our premium
products while executing on the strategy of delivering industry
leading products for the broader market. Our recently launched,
lower priced WIFI 7 products and cable modems are outperforming our
expectations, and we are beginning to see signs of recovery in the
US consumer networking market. Our subscription business continues
to grow and we exited the quarter with over 958,000 subscribers, of
which 544,000 were recurring subscribers that drove 30% growth in
our recurring subscriber revenue year over year. Innovation remains
a key imperative and we have a slate of products across a range of
price points planned for release over the next 12 months, which we
anticipate will further expand our market presence and broaden our
subscription funnel to drive continued recurring revenue
growth.”
Mr. Prober continued, “Finally, I’m delighted to welcome Laura
Orvidas to the team as our newest board member, along with Pramod
and the many new leaders who have recently joined NETGEAR as part
of our internal reorganization. The wealth of industry expertise
and operational acumen this team collectively possesses will be
invaluable as we bring NETGEAR into its next phase of growth,
return to profitability and deliver long-term value creation for
our shareholders.”
Bryan Murray, Chief Financial Officer of NETGEAR, added, “We
continued to make progress in reducing our inventory, which
declined by $22.3 million sequentially and drove a fourth
consecutive quarter of free cash flow generation. Converting our
working capital into cash remains a key focus, with our cash, cash
equivalents and short-term investments increasing by $4.9 million
sequentially. We repurchased approximately 799,800 shares of
NETGEAR common stock and in addition, our Board of Directors has
authorized the repurchase of up to an incremental 3,000,000 shares
of the Company’s common stock, bringing our repurchase program
total to 3,875,000 shares, or approximately $62 million based on
this week’s opening share price. We plan to continue to be
opportunistic on repurchases.”
Business Outlook
Mr. Murray continued, “We have completed our destocking actions
for both the NFB and CHP businesses in the second quarter and
expect to see more predictable performance that is aligned to the
market. However, while we anticipate less volatility from shifting
channel inventory levels, participating more significantly in the
broader CHP market and growing our NFB business momentum will take
time to execute fully. We anticipate revenue from the service
provider channel to be approximately $15 million in the third
quarter as our partners prepare to launch our next generation 5G
mobile hotspots early in the fourth quarter. Accordingly, we expect
third quarter net revenue to be in the range of $160 million to
$175 million, up 16% sequentially at the midpoint. We expect gross
margins and operating margins to continue to be impacted by our
inventory reduction efforts and higher than expected transportation
costs due to a variety of factors, including the Red Sea shipping
crisis. Accordingly, we expect our third quarter GAAP operating
margin to be in the range of (15.3)% to (12.3)%, and non-GAAP
operating margin to be in the range of (11.0)% to (8.0)%. 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 $1.5 million to $2.5 million for the third 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
September 29, 2024
(In millions, except for percentage
data)
Operating Margin Rate
Tax Expense (Benefit)
GAAP
(15.3)% - (12.3)%
$1.0 - $2.0
Estimated adjustments for1:
Stock-based compensation expense
3.4%
-
Restructuring and other charges
0.9%
-
Non-GAAP tax adjustments
-
$(3.5)
Non-GAAP
(11.0)% - (8.0)%
$(2.5) - $(1.5)
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 2024 today,
Wednesday, July 31, 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.
NETGEAR® (NASDAQ: NTGR) has pioneered advanced networking
technologies for homes, businesses, and service providers around
the world since 1996 and leads the industry with a broad range of
award-winning products designed to simplify and improve people's
lives. By enabling people to collaborate and connect to a world of
information and entertainment, NETGEAR is dedicated to delivering
innovative and advanced connected solutions ranging from mobile and
cloud-based services for enhanced control and security, to smart
networking products, video over Ethernet for Pro AV applications,
easy-to-use WIFI solutions and performance gaming routers to
enhance online game play. The company is headquartered out of San
Jose, Calif. with offices located around the globe. More
information is available from the NETGEAR Press Room or by calling
(408) 907-8000. Connect with NETGEAR: Facebook, Instagram 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; positioning NETGEAR for long term
success; long-term potential and profitable growth of NFB; growth
in premium products and delivering industry leading products for
the broader market; recovery in the US consumer networking market;
NETGEAR’s upcoming product releases and its impact to market
presence, broadening subscription funnel and recurring revenue
growth; NETGEAR’s next phase of growth, return to profitability and
long-term value creation for shareholders; NETGEAR’s focus on
converting working capital into cash; expectations regarding more
predictable performance that is aligned to the market; expectations
regarding volatility from shifting channel inventory levels;
expectations regarding gross margins and operating margins being
impacted by inventory reduction efforts and transportation costs;
revenue from service provider channel; timing of the launch of next
generation 5G mobile hotspots; expectations regarding continuing
market demand for the NETGEAR’s products and services; expectations
regarding expected tax benefits or tax expenses; unlocking
significant value from the B2B segment; participating more
significantly in the broader CHP market and growing NFB business
momentum; and plans to repurchase shares of NETGEAR common stock.
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 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; loss of services of key personnel may
affect NETGEAR’s ability to executive on business strategy
effectively; 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 II - Item 1A.
Risk Factors" in NETGEAR’s quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 2024, filed with the Securities and
Exchange Commission on May 1, 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, gain on litigation settlements, 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)
June 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
177,104
$
176,717
Short-term investments
117,235
106,931
Accounts receivable, net
147,069
185,059
Inventories
188,936
248,851
Prepaid expenses and other current
assets
27,228
30,421
Total current assets
657,572
747,979
Property and equipment, net
11,041
8,273
Operating lease right-of-use assets
33,394
37,285
Goodwill
36,279
36,279
Other non-current assets
15,800
17,326
Total assets
$
754,086
$
847,142
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
40,129
$
46,850
Accrued employee compensation
23,966
21,286
Other accrued liabilities
159,586
168,084
Deferred revenue
28,682
27,091
Income taxes payable
665
1,037
Total current liabilities
253,028
264,348
Non-current income taxes payable
8,076
12,695
Non-current operating lease
liabilities
24,748
29,698
Other non-current liabilities
8,835
4,906
Total liabilities
294,687
311,647
Stockholders’ equity:
Common stock
29
30
Additional paid-in capital
980,069
967,651
Accumulated other comprehensive income
(loss)
(104
)
136
Accumulated deficit
(520,595
)
(432,322
)
Total stockholders’ equity
459,399
535,495
Total liabilities and stockholders’
equity
$
754,086
$
847,142
NETGEAR, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share and percentage data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Net revenue
$
143,900
$
164,586
$
173,413
$
308,486
$
354,321
Cost of revenue
112,077
116,349
119,113
228,426
239,639
Gross profit
31,823
48,237
54,300
80,060
114,682
Gross margin
22.1
%
29.3
%
31.3
%
26.0
%
32.4
%
Operating expenses:
Research and development
19,851
20,227
20,831
40,078
42,965
Sales and marketing
29,757
30,529
32,482
60,286
66,361
General and administrative
19,186
18,067
16,536
37,253
32,772
Other operating expenses, net
9,888
1,062
2,229
10,950
2,337
Total operating expenses
78,682
69,885
72,078
148,567
144,435
Loss from operations
(46,859
)
(21,648
)
(17,778
)
(68,507
)
(29,753
)
Operating margin
(32.6
)%
(13.2
)%
(10.3
)%
(22.2
)%
(8.4
)%
Other income, net
2,713
2,850
7,999
5,563
9,405
Loss before income taxes
(44,146
)
(18,798
)
(9,779
)
(62,944
)
(20,348
)
Provision for (benefit from) income
taxes
1,029
(148
)
(1,192
)
881
(2,049
)
Net loss
$
(45,175
)
$
(18,650
)
$
(8,587
)
$
(63,825
)
$
(18,299
)
Net loss per share:
Basic
$
(1.56
)
$
(0.63
)
$
(0.29
)
$
(2.19
)
$
(0.63
)
Diluted
$
(1.56
)
$
(0.63
)
$
(0.29
)
$
(2.19
)
$
(0.63
)
Weighted average shares used to compute
net loss per share:
Basic
28,883
29,395
29,319
29,136
29,170
Diluted
28,883
29,395
29,319
29,136
29,170
NETGEAR, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30, 2024
July 2, 2023
Cash flows from operating
activities:
Net loss
$
(63,825
)
$
(18,299
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
3,048
3,866
Stock-based compensation
10,432
9,352
Gain on investments, net
(1,985
)
(1,464
)
Deferred income taxes
542
(7,839
)
Provision for excess and obsolete
inventory
2,954
1,531
Changes in assets and liabilities:
Accounts receivable, net
37,991
97,989
Inventories
56,961
(26,401
)
Prepaid expenses and other assets
3,866
962
Accounts payable
(6,620
)
(49,747
)
Accrued employee compensation
2,680
(1,870
)
Other accrued liabilities
(7,641
)
(37,200
)
Deferred revenue
2,222
2,664
Income taxes payable
(4,990
)
988
Net cash provided by (used in) operating
activities
35,635
(25,468
)
Cash flows from investing
activities:
Purchases of short-term investments
(67,998
)
(68,042
)
Proceeds from maturities of short-term
investments
60,000
55,006
Purchases of property and equipment
(4,817
)
(1,599
)
Purchases of long-term investments
(90
)
(225
)
Net cash used in investing activities
(12,905
)
(14,860
)
Cash flows from financing
activities:
Repurchases of common stock
(21,444
)
—
Restricted stock unit withholdings
(2,885
)
(2,105
)
Proceeds from issuance of common stock
under employee stock purchase plan
1,986
2,286
Net cash provided by (used in) financing
activities
(22,343
)
181
Net increase (decrease) in cash and cash
equivalents
387
(40,147
)
Cash and cash equivalents, at beginning of
period
176,717
146,500
Cash and cash equivalents, at end of
period
$
177,104
$
106,353
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 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
GAAP gross profit
$
31,823
$
48,237
$
54,300
$
80,060
$
114,682
GAAP gross margin
22.1
%
29.3
%
31.3
%
26.0
%
32.4
%
Amortization of intangibles
—
—
128
—
257
Stock-based compensation expense
413
365
342
778
693
Non-GAAP gross profit
$
32,236
$
48,602
$
54,770
$
80,838
$
115,632
Non-GAAP gross margin
22.4
%
29.5
%
31.6
%
26.2
%
32.6
%
GAAP research and development
$
19,851
$
20,227
$
20,831
$
40,078
$
42,965
Stock-based compensation expense
(844
)
(698
)
(1,144
)
(1,542
)
(2,209
)
Non-GAAP research and development
$
19,007
$
19,529
$
19,687
$
38,536
$
40,756
GAAP sales and marketing
$
29,757
$
30,529
$
32,482
$
60,286
$
66,361
Stock-based compensation expense
(1,235
)
(1,237
)
(1,397
)
(2,472
)
(2,828
)
Non-GAAP sales and marketing
$
28,522
$
29,292
$
31,085
$
57,814
$
63,533
GAAP general and administrative
$
19,186
$
18,067
$
16,536
$
37,253
$
32,772
Stock-based compensation expense
(3,396
)
(2,244
)
(1,804
)
(5,640
)
(3,622
)
Non-GAAP general and administrative
$
15,790
$
15,823
$
14,732
$
31,613
$
29,150
GAAP other operating expenses, net
$
9,888
$
1,062
$
2,229
$
10,950
$
2,337
Restructuring and other charges
(1,688
)
(1,032
)
(2,229
)
(2,720
)
(2,337
)
Litigation reserves, net
(8,200
)
(30
)
—
(8,230
)
—
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 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
GAAP total operating expenses
$
78,682
$
69,885
$
72,078
$
148,567
$
144,435
Stock-based compensation expense
(5,475
)
(4,179
)
(4,345
)
(9,654
)
(8,659
)
Restructuring and other charges
(1,688
)
(1,032
)
(2,229
)
(2,720
)
(2,337
)
Litigation reserves, net
(8,200
)
(30
)
—
(8,230
)
—
Non-GAAP total operating expenses
$
63,319
$
64,644
$
65,504
$
127,963
$
133,439
GAAP operating loss
$
(46,859
)
$
(21,648
)
$
(17,778
)
$
(68,507
)
$
(29,753
)
GAAP operating margin
(32.6
)%
(13.2
)%
(10.3
)%
(22.2
)%
(8.4
)%
Amortization of intangibles
—
—
128
—
257
Stock-based compensation expense
5,888
4,544
4,687
10,432
9,352
Restructuring and other charges
1,688
1,032
2,229
2,720
2,337
Litigation reserves, net
8,200
30
—
8,230
—
Non-GAAP operating loss
$
(31,083
)
$
(16,042
)
$
(10,734
)
$
(47,125
)
$
(17,807
)
Non-GAAP operating margin
(21.6
)%
(9.7
)%
(6.2
)%
(15.3
)%
(5.0
)%
GAAP other income, net
$
2,713
$
2,850
$
7,999
$
5,563
$
9,405
Gain/loss on investments, net
(69
)
101
19
32
30
Gain on litigation settlements
—
—
(6,000
)
—
(6,000
)
Non-GAAP other income, net
$
2,644
$
2,951
$
2,018
$
5,595
$
3,435
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 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
GAAP net loss
$
(45,175
)
$
(18,650
)
$
(8,587
)
$
(63,825
)
$
(18,299
)
Amortization of intangibles
—
—
128
—
257
Stock-based compensation expense
5,888
4,544
4,687
10,432
9,352
Restructuring and other charges
1,688
1,032
2,229
2,720
2,337
Litigation reserves, net
8,200
30
—
8,230
—
Gain/loss on investments, net
(69
)
101
19
32
30
Gain on litigation settlements
—
—
(6,000
)
—
(6,000
)
Non-GAAP tax adjustments
8,025
4,588
2,781
12,613
1,943
Non-GAAP net loss
$
(21,443
)
$
(8,355
)
$
(4,743
)
$
(29,798
)
$
(10,380
)
NET LOSS PER DILUTED SHARE:
GAAP net loss per diluted share
$
(1.56
)
$
(0.63
)
$
(0.29
)
$
(2.19
)
$
(0.63
)
Amortization of intangibles
—
—
—
—
0.01
Stock-based compensation expense
0.20
0.15
0.16
0.36
0.32
Restructuring and other charges
0.06
0.04
0.08
0.09
0.08
Litigation reserves, net
0.28
—
—
0.28
—
Gain/loss on investments, net
—
—
—
—
—
Gain on litigation settlements
—
—
(0.20
)
—
(0.21
)
Non-GAAP tax adjustments
0.28
0.16
0.09
0.44
0.07
Non-GAAP net loss per diluted share
$
(0.74
)
$
(0.28
)
$
(0.16
)
$
(1.02
)
$
(0.36
)
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 30, 2024
March 31, 2024
December 31, 2023
October 1, 2023
July 2, 2023
Cash, cash equivalents and short-term
investments
$
294,339
$
289,421
$
283,648
$
228,045
$
202,836
Cash, cash equivalents and short-term
investments per diluted share
$
10.19
$
9.85
$
9.56
$
7.71
$
6.92
Accounts receivable, net
$
147,069
$
172,771
$
185,059
$
200,900
$
179,496
Days sales outstanding (DSO)
93
96
89
92
94
Inventories
$
188,936
$
211,270
$
248,851
$
280,918
$
324,483
Ending inventory turns
2.4
2.2
2.0
1.8
1.5
Weeks of channel inventory:
U.S. retail channel
9.5
11.2
10.8
11.8
12.0
U.S. distribution channel
2.8
4.0
7.9
5.8
5.1
EMEA distribution channel
5.2
5.9
6.4
7.4
6.9
APAC distribution channel
8.3
8.0
10.0
13.1
12.4
Deferred revenue (current and
non-current)
$
34,216
$
33,714
$
31,994
$
29,796
$
27,689
Headcount
622
628
635
644
653
Non-GAAP diluted shares
28,883
29,395
29,683
29,581
29,319
NET REVENUE BY GEOGRAPHY
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Americas
$
95,503
66
%
$
109,928
67
%
$
116,611
67
%
$
205,431
67
%
$
238,533
68
%
EMEA
27,355
19
%
31,187
19
%
36,161
21
%
58,542
19
%
75,339
21
%
APAC
21,042
15
%
23,471
14
%
20,641
12
%
44,513
14
%
40,449
11
%
Total
$
143,900
100
%
$
164,586
100
%
$
173,413
100
%
$
308,486
100
%
$
354,321
100
%
NETGEAR, INC.
SUPPLEMENTAL FINANCIAL
INFORMATION (CONTINUED)
(In thousands)
(Unaudited)
NET REVENUE BY SEGMENT
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Connected Home
$
84,033
$
95,963
$
98,406
$
179,996
$
201,152
NETGEAR for Business
59,867
68,623
75,007
128,490
153,169
Total net revenue
$
143,900
$
164,586
$
173,413
$
308,486
$
354,321
SERVICE PROVIDER NET REVENUE
Three Months Ended
Six Months Ended
June 30, 2024
March 31, 2024
July 2, 2023
June 30, 2024
July 2, 2023
Connected Home
$
19,732
$
27,553
$
24,916
$
47,285
$
38,943
NETGEAR for Business
202
243
18
445
208
Total service provider net revenue
$
19,934
$
27,796
$
24,934
$
47,730
$
39,151
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240731011307/en/
NETGEAR Investor Relations Erik Bylin investors@netgear.com
NETGEAR (NASDAQ:NTGR)
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