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Oct 03, 2021
NETGEAR Q3 2021 Earnings Report
Reported third quarter results within revenue guidance and above non-GAAP operating margin guidance, driven by SMB performance.
Key Takeaways
NETGEAR reported Q3 2021 net revenue of $290.2 million, a decrease of 23.3% year-over-year, but within guidance. GAAP operating income was $12.9 million, or 4.5% of net revenue, while non-GAAP operating income was $19.5 million, or 6.7% of net revenue, exceeding guidance. GAAP net income per diluted share was $0.31, and non-GAAP net income per diluted share was $0.50.
Delivered third quarter topline revenue within guidance.
Achieved SMB revenue growth of 3.4% quarter over quarter and 33% growth year over year.
Reached 552,000 paid subscription services at the end of Q3.
Board authorized the repurchase of up to an incremental 3,000,000 shares of the Company’s common stock.
Revenue by Geographic Location
Forward Guidance
NETGEAR expects fourth quarter net revenue to be in the range of $250 million to $265 million. GAAP operating margin for the fourth quarter is expected to be in the range of (0.5)% to 0.5%, and non-GAAP operating margin is expected to be in the range of 2.0% to 3.0%. GAAP tax rate is expected to be approximately 80.0%, and non-GAAP tax rate is expected to be 26.5% for the fourth quarter of 2021.
Challenges Ahead
- Lengthening product transit times due to numerous disruptions on the logistics front.
- Logistics costs rapidly increasing with ocean freight costs currently standing at eight times normal historical rates.
- U.S. consumer WiFi market growth coming in below prior expectations.
- Expect lower service provider revenue, which will be impacted by supply availability.
- Revenue for our SMB business will continue to face supply constraints, limiting our ability to achieve its full topline potential.
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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