NETGEAR reported a decrease in net revenue and operating margin for Q1 2023, impacted by inventory reduction by its largest Service Provider and e-commerce partners. Despite these challenges, SMB end user sales grew by double digits year over year, and premium CHP products outperformed the broader market. The company delivered a non-GAAP gross margin of 33.6%, representing a 540 basis points improvement year over year.
Q1 2023 net revenue was $180.9 million, a decrease of 14.1% from the prior-year quarter.
GAAP operating loss was $12.0 million, or (6.6)% of net revenue, improved from a loss of $58.5 million, or (27.8)% of net revenue, in the prior-year quarter.
Non-GAAP operating loss was $7.1 million, or (3.9)% of net revenue, improved from a loss of $9.3 million, or (4.4)% of net revenue, in the prior-year quarter.
Ended the quarter with 772,000 paid subscribers, with the company on pace to reach its full year target of 875,000 subscribers.
NETGEAR expects strong underlying demand in the SMB business and the premium portion of its CHP product portfolio. The company anticipates a similar revenue impact from channel partners optimizing inventory levels as experienced in the first quarter. Second quarter net revenue is expected to be in the range of $150 million to $165 million.
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