Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission file number: 000-50350 NETGEAR, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporati ...

NETGEAR, Inc (NTGR) reported first-quarter 2024 non-GAAP loss of 28 cents per share compared with non-GAAP loss of 19 cents recorded in the year-ago quarter. The reported figure was wider than the Zacks Consensus Estimate of a loss of 27 cents.NTGR generated net revenues of $164.6 million, down 9% year over year. However, the top line beat the consensus estimate by 0.4%.Management noted that tough macroeconomic conditions along with inflationary pressure and high interest rates compelled channel partners to ...

Products & Technology NETGEAR FOR BUSINESS OTAL NETWORK NETGEAR® NETGEAR® AV NETGEAR® ju Total Network Solution NETGEAR® EARNINGS PRESENTATION Q 1 2024 SAFE HARBOR DISCLOSURE This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words "anticipate," "expect," "believe," "will," "may," "should," "estimate," "project," "outlook," "forecast" or other similar words are used to identify such forward-looking statements. However, t ...

Financial Data and Key Metrics - Non-GAAP gross margin in Q1 2024 was 29.5%, down 410 basis points YoY and 550 basis points QoQ [17] - Non-GAAP operating expenses in Q1 were $64.6 million, down 4.8% YoY and up 2.1% sequentially [19] - Non-GAAP net loss in Q1 was $8.4 million, with a diluted loss per share of $0.28 [21] - Cash and short-term investments at the end of Q1 were $289.4 million, up $5.8 million from the prior quarter [103] - Inventory reduction efforts are ongoing, with a target of reaching three months of supply by the end of the year [23][71] Business Line Performance - Connected Home Products (CHP) segment revenue was $96 million in Q1, down 6.6% YoY and 18.9% sequentially [41] - NETGEAR for Business (NFB) segment revenue was $68.6 million in Q1, down 2.4% sequentially, with strong demand in pro AV managed switches [42] - Service provider channel revenue was $28 million in Q1, partially offsetting retail challenges [95] - Premium products accounted for over 25% of CHP retail sales, up 500 basis points YoY [106] Market Performance - Americas revenue in Q1 was $109.9 million, down 9.8% YoY and 11.9% sequentially [97] - EMEA revenue was $31.2 million, down 20.4% YoY and 17.7% sequentially [97] - APAC revenue was $23.5 million, up 18.5% YoY but down 9.6% sequentially [97] Strategy and Industry Competition - The company is shifting away from product bundles to improve margins and recurring revenue [6][87] - New partnerships with home security providers and professional audio companies aim to enhance customer experience and expand market reach [5][8] - The company is focusing on a "good, better, best" product strategy to compete more effectively, especially on Amazon [86] - Efforts are being made to streamline operations and improve organizational efficiency [11][118] Management Commentary on Operating Environment and Future Outlook - The macroeconomic environment remains challenging, with higher-than-expected inflation and interest rates impacting channel inventory levels [62][120] - The company expects to generate cash in Q2 and the rest of the year, driven by inventory reductions [23][38] - Long-term growth opportunities are seen in pro AV managed switches, premium Wi-Fi mesh systems, 5G mobile hotspots, and subscription services [101] - The company is accelerating destocking efforts, expecting a $25 million to $30 million revenue headwind in Q2 [83][108] Other Important Information - The company exited the Meural business, writing off $500,000 of non-finished goods inventory in Q1 [74] - Share repurchases totaled $11.4 million in Q1, with 783,000 shares bought at an average price of $14.62 [105] - The company is implementing AI transformation efforts to enhance operations and product development [118] Q&A Session Summary Question: Why the hard reset in strategy? - The company is acting quickly to address COVID-related market conditions and set up for long-term success, pulling forward challenges to improve the second half of the year [29] Question: State of the consumer and inventory build-up? - The company is not seeing trade-down activity but is struggling to pull customers up to premium products [32] - Slower-moving inventory includes wireless LAN products on the SMB side, with efforts to transition to Wi-Fi 7 [33][34] Question: Cash generation and share repurchases? - Cash generation in Q2 is expected to be around half of Q1 levels, with inventory reduction being a key driver [38] - The company remains committed to opportunistic share repurchases [56]

NETGEAR, Inc. (NTGR) came out with a quarterly loss of $0.28 per share versus the Zacks Consensus Estimate of a loss of $0.27. This compares to loss of $0.19 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -3.70%. A quarter ago, it was expected that this company would post earnings of $0.04 per share when it actually produced earnings of $0.09, delivering a surprise of 125%.Over the last four quarters, the company has surpasse ...

Exhibit 99.1 NEWS RELEASE NETGEAR® REPORTS FIRST QUARTER 2024 RESULTS Page 1 • First quarter 2024 net revenue of $164.6 million, a decrease of 9.0% from the comparable prior-year quarter. • First quarter 2024 GAAP operating loss of $21.6 million, or (13.2)% of net revenue, as compared to operating loss of $12.0 million, or (6.6)% of net revenue, in the comparable prior-year quarter. ◦ First quarter 2024 non-GAAP operating loss of $16.0 million, or (9.7)% of net revenue, as compared to non- GAAP operating lo ...

Revenue and Financial Performance - Net revenue for the year ended December 31, 2023, was $740.84 million, a decrease of 20.5% compared to $932.47 million in 2022[341]. - The total revenue for the year ended December 31, 2023, is $740.840 million, a decrease from $932.472 million in 2022, representing a decline of approximately 20.5%[414]. - Revenue from the United States decreased to $489,968,000 in 2023, down 18.2% from $598,649,000 in 2022[488]. - The company reported a net loss for 2023 of $104.77 million, compared to a net loss of $68.99 million in 2022, indicating a worsening of 52%[341]. - The company reported a basic net loss per share of $3.57 for 2023, compared to a loss of $2.38 per share in 2022[341]. - The company reported a loss before income taxes of $19.14 million for the year ended December 31, 2023, compared to a loss of $82.02 million in 2022[486]. Assets and Liabilities - Total current assets decreased to $747.98 million in 2023 from $834.29 million in 2022, reflecting a decline of 10.3%[339]. - Total liabilities decreased to $311.65 million in 2023 from $398.93 million in 2022, a reduction of 21.8%[339]. - Total stockholders' equity decreased to $535.50 million in 2023 from $620.86 million in 2022, a decline of 13.7%[339]. - The company's accounts receivable, net, decreased to $185.059 million as of December 31, 2023, from $277.485 million in 2022, indicating a reduction of about 33.3%[409]. - The total amount of unrecognized tax benefits (UTB) as of December 31, 2023, was $8.618 million, with a net UTB of $6.2 million that could affect the effective tax rate if recognized[447]. Cash Flow and Investments - Cash and cash equivalents increased to $176.72 million in 2023 from $146.50 million in 2022, an increase of 20.6%[339]. - Cash flows from operating activities provided $56.85 million in 2023, a significant improvement from a cash outflow of $13.73 million in 2022[350]. - The company reported a net cash used in investing activities of $27.43 million in 2023, a decrease from $79.52 million in 2022[350]. - The company’s available-for-sale investments had an estimated fair value of $98.627 million as of December 31, 2023, compared to $74.152 million in 2022, reflecting an increase of approximately 33%[415]. Research and Development - The company has made substantial investments in software research and development, which could materially adversely affect its business if these investments are unsuccessful[14]. - Research and development expenses for 2023 were $83.30 million, down from $88.44 million in 2022, a decrease of 5%[341]. - The company has invested in research and development for new technologies, including WiFi 7 and audio/video over Ethernet[352]. Inventory and Cost Management - The provision for excess and obsolete inventory was recorded at $3.2 million for the year ended December 31, 2023[334]. - The company recorded provisions for excess and obsolete inventory amounting to $3.2 million for the year ended December 31, 2023, down from $3.7 million in 2022[418]. - The company’s total inventory decreased to $248.851 million as of December 31, 2023, from $299.614 million in 2022, representing a decline of about 17%[418]. Foreign Exchange and Risk Management - As of December 31, 2023, 24% of total net revenue was denominated in currencies other than the U.S. dollar, indicating exposure to foreign currency exchange rate fluctuations[322]. - A hypothetical 10% movement in foreign exchange rates could result in a before-tax impact of approximately $0.7 million on net income as of December 31, 2023[322]. - The company faces risks associated with foreign exchange rate fluctuations due to international sales and operating activities, which could negatively impact financial condition[320]. Customer Concentration and Credit Risk - The company reported a significant reliance on a limited number of traditional and online retailers, which poses a risk to net revenue if these customers reduce purchases or refuse to pay requested prices[11]. - As of December 31, 2023, Best Buy, Inc. and affiliates accounted for approximately 21% of total accounts receivable[367]. - The company evaluates its customers' ability to pay based on historical payment experience, financial metrics, and customer credit scores[379]. Stock and Equity Management - As of December 31, 2023, the company has 2.5 million shares authorized for repurchase under its stock repurchase program, but did not repurchase any shares during the year[463]. - The company repurchased approximately 1.0 million and 2.1 million shares at a cost of approximately $24.4 million and $75.0 million during the years ended December 31, 2022 and 2021, respectively[463]. - The total stock-based compensation expense for the year ended December 31, 2023, was $17.94 million, slightly up from $17.73 million in 2022[480]. Taxation and Deferred Taxes - The company recorded a valuation allowance of $99.8 million against U.S. federal and state tax attributes in 2023, indicating uncertainty in the recovery of these assets[442]. - The effective tax rate for 2023 was impacted by a valuation allowance of (474.3)%, significantly affecting the overall tax provision[443]. - The total non-current deferred income taxes decreased from $85.7 million as of December 31, 2022, to $3.3 million as of December 31, 2023[426]. Other Financial Metrics - Total advertising and promotional expenses were $28.9 million, $27.0 million, and $25.2 million for the years ended December 31, 2023, 2022, and 2021 respectively[391]. - The company incurred shipping and handling costs associated with outbound freight totaling $8.8 million, $16.9 million, and $16.4 million for the years ended December 31, 2023, 2022, and 2021 respectively[389]. - The company recognized revenue from contracts with customers when control of the promised goods or services is transferred, primarily from product sales and subscriptions[378][379].

Financial Data and Key Metrics Changes - For Q4 2023, revenue was $188.7 million, down 4.6% sequentially and down 24.3% year-over-year [8] - Full year 2023 net revenues were $740.8 million, a decline of 20.6% compared to 2022 [20] - Non-GAAP gross margin for Q4 was 35%, up 1,010 basis points from the prior year [64] - Non-GAAP operating income for Q4 was $2.7 million, with a non-GAAP operating margin of 1.4% [23] Business Line Data and Key Metrics Changes - The Connected Homes segment generated net revenue of $118.4 million for Q4, down 20.6% year-over-year [40] - SMB net revenue was $70.3 million in Q4, slightly above expectations, but faced challenges from high interest rates and stagnant growth in major markets [10] - Service revenue for Q4 was $11.4 million, a year-over-year increase of 27.7% [69] Market Data and Key Metrics Changes - Americas net revenue for Q4 was $124.8 million, down 21.6% year-over-year [36] - EMEA net revenue was $37.9 million, a decrease of 28.1% year-over-year [36] - APAC net revenue was $26 million, down 30.2% from the prior year [36] Company Strategy and Development Direction - The company aims to strengthen its core business and focus on premium, higher-margin products [18] - There is a strategic emphasis on the Pro AV market, leveraging partnerships and unique solutions to drive growth [71] - The company plans to capitalize on the WiFi 7 upgrade cycle and the growing demand for connectivity solutions [35] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic conditions, including elevated interest rates, continue to impact growth prospects [20] - The company expects first quarter net revenue to be in the range of $155 million to $170 million, reflecting seasonal declines [45] - Management expressed confidence in the stabilization of the retail market and the potential for growth as new WiFi 7 devices are launched [49] Other Important Information - The company ended Q4 2023 with $283.7 million in cash, up $55.6 million from the prior year [39] - The company is committed to continued investment in R&D, with non-GAAP R&D expense at 9.9% of net revenue for Q4 [65] - The company has a stock repurchase program with 2.5 million shares remaining [82] Q&A Session Summary Question: What organizational shift will enable from a strategy and capital allocation perspective long term? - Management indicated that they are exploring growth adjacencies and will provide more details in future calls [46] Question: What gives confidence that the retail market will stabilize? - Management noted a return to normal seasonal behavior and the upcoming WiFi 7 product launches as factors contributing to stabilization [48][80] Question: How does the company reconcile the guidance for Q1 with the stabilization comment? - Management explained that the seasonal decline is typical and does not contradict the stabilization narrative, as they expect a return to growth later in the year [50][81]

Financial Data and Key Metrics Changes - For Q3 2023, revenue was $197.8 million, up 14.1% sequentially but down 20.7% year-over-year [2] - Non-GAAP operating income was $5.3 million with a non-GAAP operating margin of 2.7%, up 200 basis points year-over-year and 890 basis points sequentially [7] - Non-GAAP gross margin improved to 35%, up 740 basis points year-over-year and 340 basis points sequentially [11] Business Line Data and Key Metrics Changes - The Connected Home segment generated $127.3 million in revenue, down 15.4% year-over-year but up 29.4% sequentially [41] - SMB net revenue was $70.5 million, below expectations due to macroeconomic pressures [42] - Premium solutions in the retail CHP business saw double-digit growth year-over-year, significantly outperforming the overall market [4][16] Market Data and Key Metrics Changes - Americas net revenue was $141 million, down 16.7% year-over-year but up 20.9% sequentially [8] - EMEA net revenue was $35.7 million, down 20.4% year-over-year and down 1.3% quarter-over-quarter [8] - APAC net revenue was $21.1 million, down 40.3% year-over-year but up 2.4% sequentially [8] Company Strategy and Development Direction - The company is focusing on strategic investments in high-margin products and subscription services, particularly in Pro AV managed switches and WiFi 7 products [14][30] - The launch of WiFi 7 products is expected to drive growth and profitability, with plans for more introductions in 2024 [44][49] - The company aims to return inventory levels to pre-pandemic norms by mid-2024 while managing costs and improving product mix [53] Management's Comments on Operating Environment and Future Outlook - Management noted that the retail networking market is stabilizing, with positive signs from the WiFi 7 upgrade cycle and holiday season [3][20] - The uncertain macroeconomic environment is impacting the SMB business, particularly in key markets like Greater China and Germany [34] - The company expects overall fourth quarter net revenue to be in the range of $175 million to $190 million, with challenges in the SMB segment [36] Other Important Information - The company ended Q3 2023 with $228 million in cash and short-term investments, up $25.2 million from the prior quarter [27] - Non-GAAP net income for Q3 was $6.9 million, with diluted earnings per share of $0.23 [26] - The company added 40,000 paid service subscribers, reaching a total of 844,000, contributing to a 25% growth in service revenue [32][46] Q&A Session Summary Question: What is the expected impact of inventory reduction on margins? - Management indicated that they expect to see a 150 basis point headwind in Q4 due to inventory reduction efforts, with expectations of improvement in subsequent quarters [40] Question: How is the holiday season shaping up? - Management noted strong demand for both high-end and lower-cost products, with positive reception for WiFi 7 products and strategic promotions planned for lower-end products [69] Question: What is the performance of the Armor cybersecurity service? - The Armor service remains the top service by subscribers, with strong uptake and renewal rates, and plans to expand features in 2024 [58]

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