Q4 net revenue of $188.7 million, at the high
end of guidance
Q4 GAAP gross margin of 34.8%; non-GAAP gross
margin of 35.0%
877,000 paid subscribers; Q4 service revenue
growth of 27.7% year over year
Cash and short-term investments increased $55.6
million sequentially
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
fourth quarter and full year ended December 31, 2023.
- Fourth quarter 2023 net revenue of $188.7 million, a decrease
of 24.3% from the comparable prior-year quarter.
- Fourth quarter 2023 GAAP operating loss of $2.9 million, or
(1.5)% of net revenue, as compared to operating loss of $12.2
million, or (4.9)% of net revenue, in the comparable prior-year
quarter.
- Fourth quarter 2023 non-GAAP operating income of $2.7 million,
or 1.4% of net revenue, as compared to non-GAAP operating loss of
$3.9 million, or (1.6)% of net revenue, in the comparable
prior-year quarter.
- Fourth quarter 2023 GAAP net loss per diluted share of $0.06,
as compared to net loss per diluted share of $0.21 in the
comparable prior-year quarter.
- Fourth quarter 2023 non-GAAP net income per diluted share of
$0.09, as compared to non-GAAP net loss per diluted share of $0.03
in the comparable prior-year quarter.
- Fiscal 2023 net revenue of $740.8 million, a decrease of 20.6%
from the prior year.
- Fiscal 2023 GAAP operating loss of $33.3 million, or (4.5)% of
net revenue, as compared to operating loss of $82.9 million, or
(8.9)% of net revenue, in the prior year.
- Fiscal 2023 non-GAAP operating loss of $9.9 million, or (1.3)%
of net revenue, as compared to non-GAAP operating loss of $15.6
million, or (1.7)% of net revenue, in the prior year.
- Fiscal 2023 GAAP net loss per diluted share of $3.57, as
compared to net loss per diluted share of $2.38 in the prior year.
- Fiscal 2023 non-GAAP net loss per diluted share of $0.03, as
compared to non-GAAP net loss per diluted share of $0.29 in the
prior year.
The accompanying schedules provide a reconciliation of financial
measures computed on a GAAP basis to financial measures computed on
a non-GAAP basis.
Bryan Murray, Chief Financial Officer of NETGEAR, commented,
“I’m pleased with our fourth quarter results where NETGEAR
delivered revenue and operating margin near the high end of our
updated guidance. Thanks to the strong market reception of our
leading WiFi 7 products, stabilization of our SMB business and our
continued disciplined expense management, this quarter demonstrates
the progress in our core long-term growth and profitability
strategy. Despite a more promotional environment in the U.S. retail
networking market, our premium CHP products remain resilient and
once again outperformed the market, growing double digits
sequentially and more than 30% year over year. Spurred by the
success of our recently released Orbi 97x WiFi 7 mesh system, our
premium products increased to approximately 25% of our CHP retail
business. In addition to the solid performance of our products, we
were able to exceed our paid subscriber target for the year, ending
the fourth quarter with 877,000 paid subscribers and service
revenue of over $11 million in Q4.”
Mr. Murray continued, “Although channel inventory compression
constrained the topline across both our CHP and SMB businesses
during the year, the strong contribution of our premium products
powered us to equal our highest annual gross margin performance
since 2007. As we progress through the WiFi 7 upgrade cycle, we
believe our CHP product mix will continue to shift towards our
higher-margin products. While channel inventory compression will
continue to constrain SMB growth in the next few quarters, we are
confident in the business’ ability to generate long-term revenue
and margin expansion for NETGEAR.”
Mr. Murray added, “We continued to make progress in reducing our
own inventory levels in the fourth quarter, which helped us
generate meaningful cash once again. I’m pleased to report that we
grew our cash and short-term investments by over $55 million during
the quarter. We expect to continue to generate meaningful cash in
the first quarter of 2024 as we continue to optimize our inventory
levels.”
Business Outlook
Mr. Murray continued, “We expect the retail portion of our CHP
business to experience a seasonal decline coming off the holiday
period. Revenue from the service provider channel is expected to be
approximately $25 million in the first quarter. As interest rates
remain high, we will continue to work with our SMB channel partners
to optimize their inventory carrying levels during the next few
quarters. Accordingly, we expect first quarter net revenue to be in
the range of $155 million to $170 million. As we continue to make
meaningful progress in reducing our own inventory levels, we will
be consuming higher cost inventory. We expect we will be back to
our historically normal inventory costs in the second half of this
year. Accordingly, we expect our first quarter GAAP operating
margin to be in the range of (11.4)% to (8.4)%, and non-GAAP
operating margin to be in the range of (8.5)% to (5.5)%. Our GAAP
tax expense is expected to be in the range of $6.5 million to $7.5
million, and our non-GAAP tax benefit is expected to be in the
range of $0.0 to $1.0 million for the first quarter of 2024. We
expect to continue to generate meaningful cash in the first 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
March 31, 2024
(In millions, except for percentage
data)
Operating Margin Rate
Tax Expense (Benefit)
GAAP
(11.4)% - (8.4)%
$6.5 - $7.5
Estimated adjustments for1:
Stock-based compensation expense
2.9%
-
Non-GAAP tax adjustments
-
$(7.5)
Non-GAAP
(8.5)% - (5.5)%
$(1.0) - $0.0
1 Business outlook does not include
estimates for any currently unknown income and expense items which,
by their nature, could arise late in a quarter, including:
litigation reserves, net; acquisition related charges; impairment
charges; restructuring and other charges and discrete tax benefits
or detriments that cannot be forecasted (e.g., windfalls or
shortfalls from equity awards or items related to the resolution of
uncertain tax positions). New material income and expense items
such as these could have a significant effect on our guidance and
future GAAP results.
Investor Conference Call / Webcast Details
NETGEAR will review the fourth quarter and full year results and
discuss management's expectations for the first quarter of 2024
today, Wednesday, February 7, 2024 at 5 p.m. ET (2 p.m. PT). The
toll-free dial-in number for the live audio call is (888) 660-6392.
The international dial-in number for the live audio call is (929)
203-0899. The conference ID for the call is 1030183. A live webcast
of the conference call will be available on NETGEAR's Investor
Relations website at http://investor.netgear.com. A replay of the
call will be available via the web at
http://investor.netgear.com.
About NETGEAR, Inc.
For more than 25 years, NETGEAR® (NASDAQ: NTGR) has been the
innovative leader in connecting the world to the internet with
advanced networking technologies for homes, businesses and service
providers around the world. As staying connected has become more
important than ever, NETGEAR delivers award-winning network
solutions for remote work, distance learning, ultra high def
streaming, online game play and more. To enable people to
collaborate and connect to a world of information and
entertainment, NETGEAR is dedicated to providing a range of
connected solutions. From ultra-premium Orbi Mesh WiFi systems and
high performance Nighthawk routers, to high-speed cable modems and
5G mobile wireless products to cloud-based subscription services
for network management and security, to smart networking products
and Video over Ethernet for Pro AV applications, NETGEAR keeps you
connected. NETGEAR is headquartered in San Jose, California. Learn
more on the NETGEAR Investor Page or by calling (408) 907-8000.
Connect with NETGEAR: Twitter, Facebook, Instagram, LinkedIn and
the NETGEAR blog at NETGEAR.com.
© 2024 NETGEAR, Inc. NETGEAR and the NETGEAR logo are trademarks
or registered trademarks of NETGEAR, Inc. and its affiliates in the
United States and/or other countries. Other brand and product names
are trademarks or registered trademarks of their respective
holders. The information contained herein is subject to change
without notice. NETGEAR shall not be liable for technical or
editorial errors or omissions contained herein. All rights
reserved.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995 for NETGEAR, Inc.:
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. The words “anticipate,” “expect,” “believe,” “will,” “may,”
“should,” “estimate,” “project,” “outlook,” “forecast” or other
similar words are used to identify such forward-looking statements.
However, the absence of these words does not mean that the
statements are not forward-looking. The forward-looking statements
represent NETGEAR, Inc.’s expectations or beliefs concerning future
events based on information available at the time such statements
were made and include statements regarding: NETGEAR’s future
operating performance and financial condition, including
expectations regarding growth, revenue, operating margin, gross
margin, continued profitability and cash generation; expectations
regarding continuing market demand for the NETGEAR’s products and
services, including SMB and premium CHP products and subscription
services, and NETGEAR’s ability to respond to this demand;
NETGEAR’s strategic shift to focusing on the premium, higher-margin
segments of the market and growing service revenue; expectations
regarding the mix of NETGEAR’s premium, higher margin products and
services; expectations regarding inventory management, inventory
levels and inventory costs and its impact to long term revenue,
margin expansion and cash generation; expectations regarding
expected tax rates or tax expenses; expectations regarding seasonal
shifts in market demand; and expectations regarding NETGEAR's
subscription services, paid subscriber base growth and service
revenue. These statements are based on management's current
expectations and are subject to certain risks and uncertainties,
including the following: future demand for NETGEAR’s products and
services may be lower than anticipated; NETGEAR’s shift in focus to
premium products at the expense of lower end products may not prove
to be successful; NETGEAR may be unsuccessful, or experience
delays, in manufacturing and distributing its new and existing
products and services; consumers may choose not to adopt NETGEAR’s
new product and services offerings or adopt competing products and
services; NETGEAR may be unable to continue to grow its number of
registered users, its number of registered app users and/or its
paid subscriber base and service revenue; product performance may
be adversely affected by real world operating conditions; NETGEAR
may fail to manage costs, including the cost of key components, the
cost of air freight and ocean freight, and the cost of developing
new products and manufacturing and distribution of its existing
offerings; NETGEAR may fail to successfully manage channel
inventory levels; NETGEAR may fail to successfully continue to
effect operating expense savings; changes in the level of NETGEAR's
cash resources and NETGEAR’s planned usage of such resources,
including potential repurchases of NETGEAR’s common stock; changes
in NETGEAR’s stock price and developments in the business that
could increase NETGEAR’s cash needs; fluctuations in foreign
exchange rates; and the actions and financial health of NETGEAR’s
customers, including NETGEAR’s ability to collect receivables as
they become due. Further, certain forward-looking statements are
based on assumptions as to future events that may not prove to be
accurate. Therefore, actual outcomes and results may differ
materially from what is expressed or forecast in such
forward-looking statements. Further information on potential risk
factors that could affect NETGEAR and its business are detailed in
NETGEAR’s periodic filings with the Securities and Exchange
Commission, including, but not limited to, those risks and
uncertainties listed in the section entitled "Part II - Item 1A.
Risk Factors" in NETGEAR’s quarterly report on Form 10-Q for the
fiscal quarter ended October 1, 2023, filed with the Securities and
Exchange Commission on November 3, 2023. 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, goodwill impairment,
intangibles impairment, 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:
goodwill impairment, intangibles impairment, restructuring and
other charges, litigation reserves, net, gain on litigation
settlements, 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. Included in the non-GAAP tax
adjustments for the three and twelve months ended December 31, 2023
are adjustments to tax expense (benefit) related to differences
between our prior forecasts and actual results for the twelve
months ended. In addition, included in the non-GAAP tax adjustments
for the twelve months ended December 31, 2023 are adjustments to
tax expenses (benefit) related to the effects of a valuation
allowance computed in accordance with GAAP.
Source: NETGEAR-F
NETGEAR, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
(Unaudited)
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
176,717
$
146,500
Short-term investments
106,931
80,925
Accounts receivable, net
185,059
277,485
Inventories
248,851
299,614
Prepaid expenses and other current
assets
30,421
29,767
Total current assets
747,979
834,291
Property and equipment, net
8,273
9,225
Operating lease right-of-use assets
37,285
40,868
Intangibles, net
—
1,329
Goodwill
36,279
36,279
Other non-current assets
17,326
97,793
Total assets
$
847,142
$
1,019,785
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
46,850
$
85,550
Accrued employee compensation
21,286
24,132
Other accrued liabilities
168,084
213,476
Deferred revenue
27,091
21,128
Income taxes payable
1,037
1,685
Total current liabilities
264,348
345,971
Non-current income taxes payable
12,695
14,972
Non-current operating lease
liabilities
29,698
34,085
Other non-current liabilities
4,906
3,902
Total liabilities
311,647
398,930
Stockholders’ equity:
Common stock
30
29
Additional paid-in capital
967,651
946,123
Accumulated other comprehensive income
(loss)
136
(535
)
Accumulated deficit
(432,322
)
(324,762
)
Total stockholders’ equity
535,495
620,855
Total liabilities and stockholders’
equity
$
847,142
$
1,019,785
NETGEAR, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share and percentage data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Net revenue
$
188,674
$
197,845
$
249,103
$
740,840
$
932,472
Cost of revenue
123,038
128,911
187,407
491,588
681,923
Gross profit
65,636
68,934
61,696
249,252
250,549
Gross margin
34.8
%
34.8
%
24.8
%
33.6
%
26.9
%
Operating expenses:
Research and development
19,592
20,738
20,250
83,295
88,443
Sales and marketing
30,552
30,865
35,340
127,778
139,675
General and administrative
17,107
16,364
14,618
66,243
56,316
Goodwill impairment
—
—
—
—
44,442
Intangibles impairment
—
1,071
—
1,071
—
Other operating expenses, net
1,259
544
3,666
4,140
4,597
Total operating expenses
68,510
69,582
73,874
282,527
333,473
Loss from operations
(2,874
)
(648
)
(12,178
)
(33,275
)
(82,924
)
Operating margin
(1.5
)%
(0.3
)%
(4.9
)%
(4.5
)%
(8.9
)%
Other income (expenses), net
2,454
2,280
2,066
14,139
902
Income (loss) before income taxes
(420
)
1,632
(10,112
)
(19,136
)
(82,022
)
Provision for (benefit from) income
taxes
1,249
86,431
(4,068
)
85,631
(13,035
)
Net loss
$
(1,669
)
$
(84,799
)
$
(6,044
)
$
(104,767
)
$
(68,987
)
Net loss per share:
Basic
$
(0.06
)
$
(2.87
)
$
(0.21
)
$
(3.57
)
$
(2.38
)
Diluted
$
(0.06
)
$
(2.87
)
$
(0.21
)
$
(3.57
)
$
(2.38
)
Weighted average shares used to compute
net income (loss) per share:
Basic
29,623
29,524
28,959
29,355
29,007
Diluted
29,623
29,524
28,959
29,355
29,007
NETGEAR, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve Months Ended
December 31, 2023
December 31, 2022
Cash flows from operating
activities:
Net loss
$
(104,767
)
$
(68,987
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
7,161
10,070
Stock-based compensation
17,938
17,734
Gain/loss on investments, net
(3,226
)
(87
)
Goodwill impairment
—
44,442
Intangibles impairment
1,071
—
Deferred income taxes
82,319
(21,842
)
Provision for excess and obsolete
inventory
3,168
3,657
Changes in assets and liabilities:
Accounts receivable, net
92,425
(16,327
)
Inventories
47,595
12,396
Prepaid expenses and other assets
(3,189
)
5,696
Accounts payable
(38,947
)
11,857
Accrued employee compensation
(2,846
)
(572
)
Other accrued liabilities
(45,893
)
(13,332
)
Deferred revenue
6,969
5,425
Income taxes payable
(2,925
)
(3,862
)
Net cash provided by (used in) operating
activities
56,853
(13,732
)
Cash flows from investing
activities:
Purchases of short-term investments
(135,920
)
(153,577
)
Proceeds from maturities of short-term
investments
115,006
80,417
Purchases of property and equipment
(5,799
)
(5,757
)
Purchases of long-term investments
(720
)
(600
)
Net cash used in investing activities
(27,433
)
(79,517
)
Cash flows from financing
activities:
Repurchases of common stock
—
(24,377
)
Restricted stock unit withholdings
(2,793
)
(4,807
)
Proceeds from exercise of stock
options
—
743
Proceeds from issuance of common stock
under employee stock purchase plan
3,590
4,418
Net cash provided by (used in) financing
activities
797
(24,023
)
Net increase (decrease) in cash and cash
equivalents
30,217
(117,272
)
Cash and cash equivalents, at beginning of
period
146,500
263,772
Cash and cash equivalents, at end of
period
$
176,717
$
146,500
NETGEAR, INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
(In thousands, except
percentage data)
(Unaudited)
STATEMENT OF OPERATIONS DATA:
Three Months Ended
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP gross profit
$
65,636
$
68,934
$
61,696
$
249,252
$
250,549
GAAP gross margin
34.8
%
34.8
%
24.8
%
33.6
%
26.9
%
Amortization of intangibles
—
—
128
257
514
Stock-based compensation expense
358
354
326
1,405
1,353
Non-GAAP gross profit
$
65,994
$
69,288
$
62,150
$
250,914
$
252,416
Non-GAAP gross margin
35.0
%
35.0
%
24.9
%
33.9
%
27.1
%
GAAP research and development
$
19,592
$
20,738
$
20,250
$
83,295
$
88,443
Stock-based compensation expense
(885
)
(841
)
(1,027
)
(3,935
)
(4,177
)
Non-GAAP research and development
$
18,707
$
19,897
$
19,223
$
79,360
$
84,266
GAAP sales and marketing
$
30,552
$
30,865
$
35,340
$
127,778
$
139,675
Stock-based compensation expense
(1,237
)
(1,271
)
(1,328
)
(5,336
)
(5,603
)
Non-GAAP sales and marketing
$
29,315
$
29,594
$
34,012
$
122,442
$
134,072
GAAP general and administrative
$
17,107
$
16,364
$
14,618
$
66,243
$
56,316
Stock-based compensation expense
(1,821
)
(1,819
)
(1,787
)
(7,262
)
(6,601
)
Non-GAAP general and administrative
$
15,286
$
14,545
$
12,831
$
58,981
$
49,715
GAAP other operating expenses, net
$
1,259
$
544
$
3,666
$
4,140
$
4,597
Restructuring and other charges
(1,259
)
(366
)
(3,666
)
(3,962
)
(4,577
)
Litigation reserves, net
—
(178
)
—
(178
)
(20
)
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
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP total operating expenses
$
68,510
$
69,582
$
73,874
$
282,527
$
333,473
Stock-based compensation expense
(3,943
)
(3,931
)
(4,142
)
(16,533
)
(16,381
)
Goodwill impairment
—
—
—
—
(44,442
)
Intangibles impairment
—
(1,071
)
—
(1,071
)
—
Restructuring and other charges
(1,259
)
(366
)
(3,666
)
(3,962
)
(4,577
)
Litigation reserves, net
—
(178
)
—
(178
)
(20
)
Non-GAAP total operating expenses
$
63,308
$
64,036
$
66,066
$
260,783
$
268,053
GAAP operating loss
$
(2,874
)
$
(648
)
$
(12,178
)
$
(33,275
)
$
(82,924
)
GAAP operating margin
(1.5
)%
(0.3
)%
(4.9
)%
(4.5
)%
(8.9
)%
Amortization of intangibles
—
—
128
257
514
Stock-based compensation expense
4,301
4,285
4,468
17,938
17,734
Goodwill impairment
—
—
—
—
44,442
Intangibles impairment
—
1,071
—
1,071
—
Restructuring and other charges
1,259
366
3,666
3,962
4,577
Litigation reserves, net
—
178
—
178
20
Non-GAAP operating income (loss)
$
2,686
$
5,252
$
(3,916
)
$
(9,869
)
$
(15,637
)
Non-GAAP operating margin
1.4
%
2.7
%
(1.6
)%
(1.3
)%
(1.7
)%
GAAP other income (expenses), net
$
2,454
$
2,280
$
2,066
$
14,139
$
902
Gain/loss on investments, net
(8
)
(14
)
20
8
271
Gain on litigation settlements
—
—
—
(6,000
)
—
Non-GAAP other income (expenses), net
$
2,446
$
2,266
$
2,086
$
8,147
$
1,173
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
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
GAAP net loss
$
(1,669
)
$
(84,799
)
$
(6,044
)
$
(104,767
)
$
(68,987
)
Amortization of intangibles
—
—
128
257
514
Stock-based compensation expense
4,301
4,285
4,468
17,938
17,734
Goodwill impairment
—
—
—
—
44,442
Intangibles impairment
—
1,071
—
1,071
—
Restructuring and other charges
1,259
366
3,666
3,962
4,577
Litigation reserves, net
—
178
—
178
20
Gain/loss on investments, net
(8
)
(14
)
20
8
271
Gain on litigation settlements
—
—
—
(6,000
)
—
Non-GAAP tax adjustments
(1,138
)
85,781
(3,109
)
86,586
(7,085
)
Non-GAAP net income (loss)
$
2,745
$
6,868
$
(871
)
$
(767
)
$
(8,514
)
NET INCOME (LOSS) PER DILUTED
SHARE:
GAAP net loss per diluted share
$
(0.06
)
$
(2.87
)
$
(0.21
)
$
(3.57
)
$
(2.38
)
Amortization of intangibles
—
—
—
0.01
0.02
Stock-based compensation expense
0.14
0.14
0.15
0.61
0.61
Goodwill impairment
—
—
—
—
1.53
Intangibles impairment
—
0.04
—
0.04
—
Restructuring and other charges
0.04
0.01
0.13
0.13
0.16
Litigation reserves, net
—
0.01
—
0.01
—
Gain/loss on investments, net
—
—
—
—
0.01
Gain on litigation settlements
—
—
—
(0.20
)
—
Non-GAAP tax adjustments
(0.03
)
2.90
(0.10
)
2.94
(0.24
)
Non-GAAP net income (loss) per diluted
share
$
0.09
$
0.23
$
(0.03
)
$
(0.03
)
$
(0.29
)
Shares used in computing GAAP net loss per diluted share
29,623
29,524
28,959
29,355
29,007
Shares used in computing non-GAAP net income (loss) per diluted
share
29,683
29,581
28,959
29,355
29,007
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
December 31, 2023
October 1, 2023
July 2, 2023
April 2, 2023
December 31, 2022
Cash, cash equivalents and short-term
investments
$
283,648
$
228,045
$
202,836
$
239,210
$
227,425
Cash, cash equivalents and short-term
investments per diluted share
$
9.56
$
7.71
$
6.92
$
8.24
$
7.85
Accounts receivable, net
$
185,059
$
200,900
$
179,496
$
192,540
$
277,485
Days sales outstanding (DSO)
89
92
94
98
100
Inventories
$
248,851
$
280,918
$
324,483
$
337,187
$
299,614
Ending inventory turns
2.0
1.8
1.5
1.4
2.5
Weeks of channel inventory:
U.S. retail channel
10.8
11.8
12.0
12.7
10.4
U.S. distribution channel
7.9
5.8
5.1
4.4
5.2
EMEA distribution channel
6.4
7.4
6.9
8.5
8.7
APAC distribution channel
10.0
13.1
12.4
14.0
18.5
Deferred revenue (current and
non-current)
$
31,994
$
29,796
$
27,689
$
26,634
$
25,025
Headcount
635
644
653
702
691
Non-GAAP diluted shares
29,683
29,581
29,319
29,040
28,959
NET REVENUE BY GEOGRAPHY
Three Months Ended
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Americas
$
124,798
66
%
$
141,018
71
%
$
159,175
64
%
$
504,349
68
%
$
617,211
66
%
EMEA
37,899
20
%
35,684
18
%
52,715
21
%
148,922
20
%
179,358
19
%
APAC
25,977
14
%
21,143
11
%
37,213
15
%
87,569
12
%
135,903
15
%
Total
$
188,674
100
%
$
197,845
100
%
$
249,103
100
%
$
740,840
100
%
$
932,472
100
%
NETGEAR, INC.
SUPPLEMENTAL FINANCIAL
INFORMATION (CONTINUED)
(In thousands)
(Unaudited)
NET REVENUE BY SEGMENT
Three Months Ended
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Connected Home
$
118,378
$
127,335
$
149,036
$
446,865
$
558,823
SMB
70,296
70,510
100,067
293,975
373,649
Total net revenue
$
188,674
$
197,845
$
249,103
$
740,840
$
932,472
SERVICE PROVIDER NET REVENUE
Three Months Ended
Twelve Months Ended
December 31, 2023
October 1, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Connected Home
$
27,313
$
32,403
$
55,787
$
98,659
$
148,331
SMB
152
219
719
579
4,234
Total service provider net revenue
$
27,465
$
32,622
$
56,506
$
99,238
$
152,565
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240207265135/en/
NETGEAR Investor Relations Erik Bylin investors@netgear.com
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