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Oct 02, 2022
NETGEAR Q3 2022 Earnings Report
Net revenue decreased by 14.0% year over year, GAAP operating loss was (0.9)% of net revenue, and GAAP net income per diluted share was $0.10.
Key Takeaways
NETGEAR reported third quarter 2022 financial results with net revenue of $249.6 million, a decrease of 14.0% from the comparable prior year quarter. GAAP operating loss was $2.2 million, or (0.9)% of net revenue, and GAAP net income per diluted share was $0.10.
Achieved revenue in the upper half of guidance range, driven by strong demand for high-end WiFi mesh, 5G mobile hotspots, and ProAV managed switches.
Delivered record revenue in the SMB business despite supply challenges.
Experienced year-over-year growth in end-user demand for super premium WiFi mesh systems and 5G mobile hotspots.
The retail networking market declined by double digits relative to the pre-pandemic period due to the challenging macroeconomic environment for most consumers.
Revenue by Geographic Location
Forward Guidance
NETGEAR expects fourth quarter net revenue to be in the range of $235 million to $250 million. GAAP operating margin for the fourth quarter is expected to be in the range of (4.2)% to (3.2)%, and non-GAAP operating margin is expected to be in the range of (2.0)% to (1.0)%. GAAP tax rate is expected to be approximately 20.0%, and non-GAAP tax rate is expected to be 23.0% for the fourth quarter of 2022.
Positive Outlook
- Strong underlying demand in the SMB business
- Strong demand in the premium portion of CHP product portfolio
- Expect fourth quarter revenue from the service provider channel to increase to approximately $50 million.
Challenges Ahead
- SMB business will remain supply constrained
- Continue to use higher cost air freight as a means to partially mitigate supply constraints
- Continuing to work with retail channel partners in the coming quarters to reduce their inventory levels.
- Significant foreign exchange headwinds going from Q3 into Q4 as roughly 50% of SMB revenue is in foreign currency.
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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