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Jul 03, 2022
NETGEAR Q2 2022 Earnings Report
NETGEAR's second quarter results were reported, with SMB business delivering record revenue and 20% year over year growth.
Key Takeaways
NETGEAR reported second quarter 2022 results, with revenue and non-GAAP operating margin above the high end of guidance. Strong execution drove outperformance, especially for ProAV managed switch, super premium WiFi mesh, and 5G mobile hotspot products. SMB business delivered record quarterly revenue.
Second quarter net revenue was $223.2 million, a decrease of 27.7% from the prior year quarter.
GAAP operating loss was $10.1 million, or (4.5)% of net revenue, compared to operating income of $21.5 million, or 7.0% of net revenue, in the prior year quarter.
GAAP net loss per diluted share was $0.30, compared to net income per diluted share of $0.57 in the prior year quarter.
The company ended the quarter with 654,000 paid subscribers and remains on track towards the end of the year target of 750,000 subscribers.
Revenue by Geographic Location
Forward Guidance
NETGEAR expects third quarter net revenue to be in the range of $240 million to $255 million. GAAP operating margin is expected to be in the range of (1.0)% to 0.0%, and non-GAAP operating margin is expected to be in the range of 1.5% to 2.5%. GAAP tax rate is expected to be approximately 22.0%, and non-GAAP tax rate is expected to be 15.0% for the third quarter of 2022.
Positive Outlook
- Solid demand and improving supply are expected.
- SMB and the service provider channel are expected to continue to gain momentum in the back half of the year.
- Third quarter revenue from the service provider channel will be approximately $40 million.
- SMB revenue is expected to grow sequentially.
- The supply picture continues to improve.
Challenges Ahead
- Some US retail customers intend to shrink their inventory positions further.
- The company expects to continue working with US retail customers to optimize their inventory levels.
- The company still expects to spend on airfreight to maximize SMB revenue.
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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