NETGEAR reported Q2 2022 revenue of $223.2 million, a decrease of 27.7% from the comparable prior year quarter. Second quarter 2022 non-GAAP net loss per diluted share of $0.19, as compared to net income per diluted share of $0.66 in the comparable prior year quarter.
Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, “In the second quarter, we delivered both revenue and non-GAAP operating margin above the high end of our guidance range. Strong execution by our team in navigating supply chain headwinds drove the outperformance, most notably for our ProAV managed switch, super premium WiFi mesh and 5G mobile hotspot products, and, as a result, each of these categories delivered double-digit year over year growth. This improved supply picture fueled strength in our SMB business, which delivered record quarterly revenue, and sales to our service provider customers, and we expect this momentum to continue into the second half as demand remains robust and our supply situation continues to improve.”
Mr. Lo continued, “Within our CHP business, we are pleased with our progress in growing the super-premium mesh market. This once again reinforces our strategy of focusing primarily on the premium, higher margin segments of the market and targeting those consumers with the highest propensity to subscribe to our service offerings. Accordingly, we continue to make progress growing our services business, ending the quarter with 654,000 paid subscribers, and remain on track towards our end of the year target of 750,000 subscribers.”
Bryan Murray, Chief Financial Officer of NETGEAR, added, “During the second quarter of 2022, we repurchased approximately 678,000 shares of common stock for $15.0 million. Preserving strong liquidity and generating cash remain paramount as the pandemic and its related supply chain challenges continue to persist. We expect to continue to opportunistically repurchase shares in future periods.”
Mr. Murray continued, “With solid demand and improving supply, we expect SMB and the service provider channel to continue to gain momentum in the back half of the year. We expect third quarter revenue from the service provider channel will be approximately $40 million, and SMB revenue to grow sequentially. With some of our US retail customers intending to shrink their inventory positions further, we expect to continue working with them in the coming quarter to optimize their inventory levels. Together, these factors lead us to expect our third quarter net revenue to be in the range of $240 million to $255 million. While the supply picture continues to improve, we still expect to spend on airfreight to maximize our SMB revenue. As a result of these factors, our GAAP operating margin for the third quarter 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%. Our GAAP tax rate is expected to be approximately 22.0%, and our non-GAAP tax rate is expected to be 15.0% for the third quarter of 2022.
