NETGEAR(NTGR)2023-02-02 00:19Financial Data and Key Metrics - Net revenue for Q4 2022 was 15.6 million with a non-GAAP operating margin of negative 1.7% [2] - Cash and short-term investments at the end of Q4 2022 were 5.8 million from the prior quarter [4] - Non-GAAP R&D expense in Q4 2022 was 7.7% of net revenue, down from 8.7% YoY and 8.5% QoQ [22] Business Line Performance - SMB revenue for the full year outperformed expectations, with managed switch products growing 65% YoY [5] - Connected Home segment revenue in Q4 2022 was 8.9 million, up 23.9% YoY and 5.3% sequentially [10] - Premium products, including ProAV managed switches, 5G mobile hotspots, and WiFi mesh products, experienced strong demand [1][26] Market Performance - Americas net revenue in Q4 2022 was 52.7 million, up 5.4% YoY and 17.6% QoQ [62] - APAC net revenue in Q4 2022 was 185 million to 25 million [13][116] - The company anticipates improved supply chain conditions in the second half of 2023, particularly for SMB products [44][111] - The company remains confident in its long-term growth potential, driven by its premium product strategy and market leadership in ProAV and WiFi mesh systems [6][94] Other Important Information - The company shipped approximately 2.2 million units in Q4 2022, including 1.4 million nodes of wireless products [85] - The company's paid subscriber count reached 747,000, up 27.9% YoY, with a target of 875,000 paid subscribers by the end of 2023 [70] - The company received three CES 2023 Innovation Awards for its premium products, including the Orbi 860 Series and Insight Managed WiFi 6E Tri-Band Access Point [71][30] Q&A Session Summary Question: Supply chain improvement timeline for SMB and CHP businesses [101] - The company expects slight improvement in Q2 2023, with more significant improvements in the second half of the year, particularly for SMB products [101][111] - The reopening of China is expected to help with supply chain issues, particularly for key components like power supplies [110] Question: Gross margin decline in Q4 2022 [104] - The decline was driven by the strengthening U.S. dollar, higher freight costs, and elevated inventory levels [115] Question: Service provider revenue guidance [105] - The company expects service provider revenue to be around 140 million [116] Question: Cash flow and inventory management [46] - The company expects to generate free cash flow at a rate of about 200% of non-GAAP net income for 2023, with Q1 2023 expected to show improved cash flow conversion [47]