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Apr 03, 2022
NETGEAR Q1 2022 Earnings Report
NETGEAR's financial performance declined with a decrease in net revenue and operating loss, impacted by supply chain constraints and a contracting U.S. consumer WiFi market.
Key Takeaways
NETGEAR reported a decrease in net revenue to $210.6 million, a GAAP operating loss of $58.5 million, and a non-GAAP operating loss of $9.3 million for the first quarter of 2022. The company faced challenges due to COVID-induced lockdowns in China and a softening U.S. consumer WiFi market, but saw continued growth in its SMB products and super-premium mesh products.
Net revenue decreased by 33.8% compared to the prior year quarter, reaching $210.6 million.
GAAP operating loss was $58.5 million, impacted by non-cash impairment charges of $44.4 million.
Non-GAAP operating loss was $9.3 million, compared to operating income of $42.3 million in the prior year quarter.
Ended the quarter with 627,000 paid subscribers for services business.
Revenue by Geographic Location
Forward Guidance
NETGEAR expects second quarter net revenue to be in the range of $205 million to $220 million, GAAP operating margin to be in the range of (6.5)% to (5.5)%, and non-GAAP operating margin to be in the range of (4.0)% to (3.0)%.
Positive Outlook
- Expects second quarter revenue from the service provider channel to be approximately $30 million.
- SMB to perform slightly above Q1 2022.
- Remain hopeful that sea transportation costs will ease.
- SMB supply will improve in the second half of the year.
- Cost reduction efforts will create a much more favorable environment for top and bottom lines.
Challenges Ahead
- U.S. consumer WiFi market is currently roughly flat to 2019 levels, lower than expectations.
- Taking actions to optimize retail channel partners’ inventory levels to align them to current demand expectations.
- Taking steps to better align the cost structure of the CHP business with its current projected revenue levels.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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