NTGR - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by. [Operator Instructions]. I would now like to turn the conference over to Erik Bylin. Please go ahead, sir.

Erik Bylin

Thank you, David. to Conference Quarter Call. welcome XXXX Full and Results Financial afternoon, NETGEAR's and Fourth Year Good

CFO. Joining Patrick CEO; Murray, Lo, from Chairman us the and and company Mr. are Mr. Bryan

a have of Format Patrick, with review then fourth of Bryan. and for and provided and finish by year XXXX our questions. by Bryan, full will We'll business commentary the start on quarter of financials the guidance for any call provided the time the followed details quarter by first with provided by

you not release, Relations www.netgear.com. If have of received today's please website a press copy Investor visit NETGEAR's at

Before we the remarks, forward-looking contains that we advise begin conference call today's formal statements. you

trends these Forward-looking operating statements outlook. tax revenue, could include forward-looking from rates, or margins, differ contemplated those statements. regarding future materially expenses by statements expected and results business Actual

refer Any statements periodic NETGEAR's most For on NETGEAR result obligation today, and the more these filings recent events. to statements undertakes including this of no as a information, of are forward-looking Form on that SEC, or with please discussed future risk make information call the update factors in new as XX-Q. assumptions to the based we

now non-GAAP Bryan the to found release Mr. this mentioned will measures A reconciliation like turn Investor Relations can to call. our on the over Murray. time, of In be would in this several non-GAAP addition, I measures financial GAAP press call to on be today's At website.

Bryan Murray

CHP on the in year drove provider business period. which fourth grew business. of expectations, offerings in compared excess a XXXX, The the provider the the year-over-year. exceptional $XXX.X the you, in quarter demand retail XX.X% thank both sequential quarter quarter, our CHP XX% to million, channels service and our Erik, joining on XX, WiFi our call. leading strong down of as revenue you, for was X.X% prior service fourth basis. And in X the for fourth Thank continued today's Net growth With ended December everyone, for and up delivering

support with to the a and XX% work work done year-over-year business Additionally, to home from we've strong return in market, to our focus the networking a rebound SMB growth. for sequential growth right of yielding also the products on led

year compared XXXX, is the ended $X.XX December full the were XXXX. billion, full which net up NETGEAR revenues to For XX, XX.X% year

navigating to Our in lockdowns deliver team exceptional revenue, the challenges considerable did expansion. producing in COVID-induced drive an leverage many about job strong brought growth by model while to margin business the

see growth expect digits we at the we the the continue Day mid- in We market and to grow XXXX revenue trends high to in same XXXX. strong discussed to recent single experienced growth Analyst our of off

$XXX.X margin of by quarter was over year. growth the points to Our deliver adjusted to to operating income fourth strong the through up Full leverage of than compared an year in million, We profit, revenue improvement supply manage environment our the non-GAAP X.X%. operating quickly chain as with prior a XXXX. on non-GAAP XX% more a came non-GAAP resulting complicated margin non-GAAP operating operating XXX fourth at XX%, for of quarter basis in

channels. CSP the $XXX.X again Americas fourth sequential the from up was and revenue provider year-over-year million, For benefited service year-over-year XXXX, strong is a basis. X.X% quarter retail for growth XX.X% of on from down net Americas for both and which products

CHP channels. a X.X% service levels, retail products the and The lofty $XX.X the up million, up decline both downtick revenue growth constraints, As continued sequential EMEA net service for year-over-year from the expected, coupled strong sequential which moderate XX.X% in SMB year-over-year quarter-over-quarter. Americas provider to and created strength with provider supply adding was is region. the from QX's for

retail channel growth revenue the APAC prior driven strong comparable X.X% in year up from of by XX.X% Our up and quarter, the sequentially. net which is million, CHP was $XX products

points which split all numbers. quarter products our including about of XX% of and The the wireless was XX GAAP units, fourth non-GAAP third wireless to we X.X Shipments non-GAAP the earnings million the last home constituted XX% quarter the and XX split nodes net introduced fourth today. about From distributed of quarter business For the products XX.X%, and of from were in non-GAAP routers quarter respectively. and about on, The to of net total fourth contributed quarter year in fourth XX.X% of about was in compared comparable basis and and revenue million products. XXX our XXXX. basis shipped to is is wired up a will XXXX XX%, X.X fourth wireless discussion approximately and points gross The X.X units introduced for XX%, products wired Products months XX quarter points earlier in while of release was The margin XXXX, between revenue XX.X% quarter of XX% the up respectively. compared the months on between prior in about reconciliation combined shipments, focus million in XX% point my of gateways shipments. last this detailed XXXX. our

activities produce margin. While improved from gross incremental products, operating gains expenses our systems year-over-year, we non-GAAP strong QX came WiFi and on XX.X% in continue is up $XX to Total deliver year-over-year airfreight combine in X.X% to lower heavily profitable product million, sequentially. revenue, which spend combination down promotional premium at a and of to margins

increase more proportionately navigated operating team considerable environment than growth, adding a on revenue in profit incremental leverage spend operating again Our our for our XX% deliver while to year-over-year. XXX% challenging less allowing a

expenses manage prudently. always, our As we

so they need they we fund business succeed. to portions of the growth have our While that the also adequately resources ensuring

end the the XXX headcount Our as of was of quarter.

add continue manage We future to headcount, deliver believe growth. in we will areas invest we'll but our resources to that

of quarter subscription To services period our leadership, revenue the non-GAAP for to year XXXX. investment was X.X% net committed revenue technology fourth to net the prior Our as we and of and compared third net with X.X% X% quarter the continue revenue. R&D. R&D are expense in continued of in comparable in of

XXXX. the non-GAAP Our quarter was fourth rate tax XX% of in

non-GAAP bottom $X.XX, QX, for we year diluted net of coming we non-GAAP the share up Non-GAAP reported million and line was the XXXX EPS XX% year delivered comparable $XX what period. each Xx at per in earnings XXXX. Looking roughly for $X.XX, from in prior of of at diluted full income the

incrementally million We also million balance able quarter stock. of prior cash with the quarter from to million in and the to up Turning $XX.X year. of year position. the up strengthen adding quarter, our from XXXX the our fourth $XXX.X sheet. were ended short-term of We the and $XX.X the investments, million $XXX.X in beginning inventory

However, we the businesses. both remain quarter supply-constrained in across

levels. We also of to will be XXXX, believe able that within the first return historical X inventory to normalized quarters we

XX generated We in quarter, yielded to During XXX% million, $XX.X impressive which XX property These the equipment brings used flow our flow an free total from the total million $XXX.X our in efforts $XX.X operations. the and operations cash brings for year cash used months quarter, income. net cash for the to $X.X equivalent to our months which cash non-GAAP million. over provided $XXX.X capital we of purchases million million. trailing expenditures of the trailing over during from of

XXX% our ability expect XXXX, into amount, of a continue where own our basis. of move conversion on net be we year to in cash below levels inventory, fair to normal generate remain by a we non-GAAP we reestablish but carrying XX% confident normal full ratio As our income plan we to to of to

which X.X% MIMO Gaming XX.X% the fourth Now supply quarter and up Nighthawk, on basis and is the includes X our for strong and fourth a XX.X% The the net down Nighthawk million both basis turning Pro quarter, leadership increase. held quarter, sequential Home with again market despite its coming X the we share revenue in retail a in generated across to U.S. results we share headwinds segment up the Orbi, at we of segments. quarters. and XX%. fourth Connected of year-over-year our overcome once saw up revenue The $XXX.X once net product demand by constraints WiFi In X.X% sequentially. continued strong position brands, million driven industry-leading a consumer for $XX.X strong coming We, in fully of sequentially. expect is the And WiFi, on SMB supply heightened another grow for which which our the and quarter segment, XXXX, in year-over-year products, channels. again we growth provider service year-over-year WiFi again, generated can recovery in

Our dividends and mix efforts to is product improvements. shift channel with profitability paying and revenue

perform products wireless On PoE the to in our and SMB the continue market. well front, switches product

will retail in over market to QX. provide sold for commentary, the Our after through quarter came of first now XXXX. which, for his Patrick at channel switches the the I call turn in share U.S. I'll guidance XX% in

C. S. Lo

requirement and to the world. was for even virtual supplanted we XXXX everyone. many the professionals for ways, premium, expansive, from have digitally. hello, suddenly on post unprecedented forever. week work changed movies higher for in necessity, WiFi majority Born for person a people and more, here days norm ever we such stay and and X activities way trends exercising. in vast least unprecedented is pandemic. the Bryan, you, Online became quickly many as home many has an interactions Work Thank at watching driven X, throughout performance These of the the live conducted an that year communication or

still and fulfill the growth surpass thought explosive an at that Our maneuvered XXXX. achievable profit face our what significant we In outstanding was team revenue in NETGEAR of while challenges, obstacles done supply to demand has most the impressive through job efficient. team the chain to remaining fueled

value-added streaming, mesh $X.XX family to pushing commanding demands doing number the and population of demands By debut video the edge customers reemerged and world's are is It the the that is and non-GAAP This NETGEAR now, of our of tri-band U.S. market. of Only WiFi systems electrical to WiFi customers, RAAC the Galaxy remain attaching is their crisis are XX% used they're XK of Not connection. XX% the these segment portion to systems, to In of in ability homes, in healthiest almost a from none bandwidth release Nighthawk the farmers, which of XE WiFi share market next $XXX the driven these segment WiFi the premium category QX, XXXX, the North in coming that this a XE we in harness ultra-premium represented this architecture. the the services, year. video segment set XX% WiFi rising so defined category standard, that premium a tri-band clearly to XE, we WiFi suit a home. operators available. Apple QX cater now a gigabit of comprised sets of speed in it router, retain grew later X. sales at grew the of speed the from which ready the everyone is in almost of and annual category of this from X lighting, This premium of first With security, connected a already benefits beginning next the phone million. There with recently more fourth more in the riches our of America this double seeing latest is These consuming from To into growing WiFi operating the pioneered we the market updos compound XXXX. Ultra AK WiFi highest profit WiFi high constrained, of from $XXX. can and standard, supply of XE available billion. the the of products in the this To phone speeds QX time sequentially connected result, Samsung are clear though highest than the in fastest vehicles leading XX% XX% diligence the than this, forward, and exponentially. and all-purpose to we market more prospects Zoom month who of revenue including and garners XXX high-quality same quickly, clearly mesh As our is quarter. were the meet that configuration And segment home. has WiFi through growing has families X or in from demand cable Even of much more likes will can price devices for products NETGEAR gaming. With the the follow announced at through up and WiFi new router, the margins only over by in downloads which the their SX a is discipline, performance.

our product mobile for a releases only for Innovation this in control, managing parental share technology which cable proud with is the WiFi Award award not is I'm additional our incredible but house. We And XE of our the and first we year. will for how mass for with portfolio to for gateways WiFi our systems, validation of This the importance routers, is software. smart service, such of look used importantly, expand to rest an won offering, CES gateways

our for Our XX,XXX the premium XXX,XXX paid with we outstanding our And goal for to with our stream. validation more recurring both well year. subscribers, the added success business. in results fourth growing quarter, and works than in above CES In market the year produced revenue we end the subscription again subscribers XX,XXX bode

getting year million on by towards of long-term acquiring pace subscribers. to subscribers keeping our sights set of have We and end XXX,XXX X this the goal our

many plan for X to gamers to services. value the out this this recent the subscription those our tri-band XL reception of specific plan form of of to validates of second strong there. QX target the year of to router end clearly X,XXX year new customers gaming market to the Orbi our new XXXX, gaming of many offering bring online-game-loving it these features introduce we the Accordingly, features in WiFi half the achieve ways our introduced One we at service offers of that system. WiFi The premium X is in the a

is we This see both the personal homes and from from to that brand QX. and business home. QX, a to home with This forces in in sequential products XX% continue does strong in business resulted networks driving front not to traction. and needed ideal small small gaining businesses, SMB recognition evidence in for strong working business of the QX of On use grow the our between normally growth running revenue is segregate coupled consumers that

The As a many has experiencing with imperative. with employee. offices, office XX to the probably secure connection need never XX more each employees of single you are office has single become home been a

always-on ever have styles an the home professional their and work demands share separate pipe, at unlike same secured While to kits before. and the connection

cost-effective Our VLAN with in Orbi switches all probably the solutions to are coupled Tri and plug-and-play points access Management, VLAN our easiest market. most the

in that XX% as growth I SMB this continue switches will with meet offerings. for saw first as deployed we XK success Pro seize our in SMB to our for call big quarter, with signals way year-over-year we be we AV us Ethernet marquee to the our market. multi-CAS work the business. opportunity our Pro AV points, network ongoing in networks over Pro transition the broadcast result, paving a the access in products, growth we to low transition lines back and home to growth audio from now wireless business due the believe personal in XXXXp innovate Pro beyond. well and for from year. and We With a the XXXX wireless a to As installation poised the end for Orbi organizations on and plan a for our several double-digit over is XK and moving coupled have guidance. to AV Ethernet. XX% HDMI VLAN PoE year-on-year business by Despite In Bryan turn growth limitations put hampered switches an video the AV as with systems and the quarter of fitness expect driver our saw from to of AV we transport to and growth SMB With dynamic to video projects streaming, being health, industry sports next-generation towards

Bryan Murray

you, Thank Patrick.

range to of operating be in And in of the net to is supply sequential X% million first with to in remain be the of As to $XXX for is step expected expected in sales is expected constrained margin million. down our be expected to to and GAAP the an to anticipated the quarter X.X%. X%. providers, service to is range X.X% operating margin $XXX range revenue non-GAAP

is to first rate be Our for GAAP tax non-GAAP XX.X% quarter be XXXX. and rate the approximately our tax expected is XX%, expected of to

ability While like so from in COVID-XX the the located caveat now endemic. particular, any related to that provide with delays confident to answer to the We California, would we main transportation in to at due our events remains results uncertainty our this could guidance. where do are in differ guidance Southern market audience. centers actual questions we or from the distribution in unforeseen time, And should considerable occur, the foregoing

Operator

Instructions]. [Operator

of line James. Your first comes from the Tindle Raymond Adam question with

Adam Tindle

a on Congrats Okay. QX. strong

what I still Bryan, growth starting mid- expect you higher little think, fiscal the this increased 'XX sequentially. to supposed you that inventory down all guidance on down distribution just little QX channel be Analyst because, I thought at XX% XX% I also number. now for to was And retail U.S. a went time wanted that you it high over you from said bit touch in of below, is sequentially, first the think Day, that single-digit year. to off the over a and

around I of couple while a suggest points guiding is that really little you? guidance, cooling QX rated that question down are that a why XXXX So year guess bit. or maintain the things given data everything

Bryan Murray

I did Yes. saw QX, we And XXXX we in and and revenue ex QX But with provider. for be QX, the by originally that in we would would service QX, thought not obviously, in lower I business, that that realize number. the expected well doubling we had of quite outperformance in driven right? in Day, were flat the with year of CHP terms Analyst that the off think we guidance in do terms we this the at that how to was gave we SMB So regards think success largely

there. that, I did a better maybe growth than think we X% little bit

side. the I under outperformed think core we

So on to doing continuing off think some we everything can we supply-constrained is CHP And the based last for naturally, on as supply QX SMB several we're the accelerate the I are today, So visibility constrained, side. of be that. are on the extent going we quarters, little bit to going a been forward we've But to we saying products. have some right?

I as mid- think that high towards So here. that do to growth earlier, market the would for regards with to pointing be are the trends year XXXX. And us still the we QX keeping said single-digit of in full that

Adam Tindle

think the I build And out channel inventory Okay. the days normalized Can during will back year a benefit get retail? Or some the levels? there likely little at build you inventory help you said, alluded quantify be how that that? some inventory bit. to, year? maybe also that maybe help us to XX-plus you Does that occur color around much Is U.S. you should during should

Bryan Murray

the back at historically, support beyond channel It's a were but where only starting the to growth twofold, maybe it's today. to be the with market to has not Yes. We mentioning. pace to you just we're even able really channel get think seeing that that

had higher. we to historically, needed think go operated level, even So XX% retail and to X% that in they

now. quarter we have established take which today, months. going that's We're we'll into our inventory. typically But back normal the level to visibility to want So to to about portion get build our airfreight a working the that obviously, probably think business significant be our carrying having of and not also third inventory, be of up. to the We supply X of own is of that out we right inbound there, us

Adam Tindle

Patrick WiFi. market just been That's consumer throughout healthy, in one very the on it's dynamic Obviously, Maybe year. in still decline helpful. the Okay. for but share

early have an the You WiFi opposite. X, on mover so thought would were

the or be So speak and competitive over to and market landscape maybe tech why disconnect down leadership year? innovation to the between trends a coming there just seems the your share

C. S. Lo

foundries is chip produce mean, technology perspective. the Well, faster than I from could our a clearly, push what

technology on Analyst the for it the more mentioned XE chips. I call advanced think WiFi WiFi now a our well I time and fabrication X as last Day, requires in as

towards WiFi X, of constraint. sufferer So while most supply the are the are in we we aggressive biggest moving

So heavy that's price we the competitors mean, why, of a decided older still X. in lot a selling technology at very with while promotion, for our WiFi all low WiFi I to are push X

fast. than we'll see you why market - we and about that's X, And and more available WiFi able the that share, then got we're get growing get whatever market that's WiFi the means is So to clearly, we except more if why people the gain don't them, we then X, bullish losing that share, if share in because you'll are indeed if growing really want supply they supply is cannot market. be that faster is the

helps of full. as when bit save we future, time side. that hurt full, the that for early you up our always, innovation the a into is But to position believe So at And us supply look ourselves little being, constraint. it, the the and half year goes going half glass us the as you're is because glass

Adam Tindle

Okay.

Net Just basis cash continues I'm to that some build. full be me. X sounds Cash still positive in over $XX. is like I but going understand generation dip, last XXXX. if a to on it year wrong. cash me share Correct one per there's for

liquidity, just for case update clean us cash? so the on that's with you balance maybe, much a sheet and can if on Bryan, uses So such thoughts

Bryan Murray

non-GAAP net use XXXX XXX%. a at Normally, of year phenomenal XX% of roughly last Sure. half little in call carrying used levels inventory, deeper quarter this and we're Maybe converting think we'll year. to that and on have kind income. said of I bit And going to go million $XXX the kind in to a reestablish with generation to to I frame the was at cash Obviously, it, we our I've regards rate a XXX% just mentioned the of to we're of, what first of XXXX. think

this probably year. we're think to something XX% I for like steering

half first So reestablish in operationally, we're going cash year have to of to the the inventory. some to use

evaluate M&A, discuss and forward. to evaluate move to to repurchase continue Beyond as strategic stock we'll uses, we that, continue continue we we other

Operator

Financial. Our comes Hamed Khorsand with line the BWS from next question of

Hamed Khorsand

you off, you it's lead for? first you've I So could shortages mean, normalization now it thought? that industry about Or been that than you're it's Are X? WiFi you out other just beyond the are expanding growing talk you QX. faster just is period, seeing times preparing component suggesting just pushing greater

C. S. Lo

unrelated towards clear old that for everybody is market because The who have chips is The the for of And even online. moving pretty in supply more has and actually there are electronics cars, because come people two are the driving been also that. of up, overall but EV some gone mean, because down taken out again way the of you foundries stations. probably I have know, in lower more commission

And foundries to are not online. be so going fabrication, the new

is is one TSMC in in Arizona Next from probably XXXX.

the supply up. while to going to is ramp demand constrained, So continue the be continued has to chip

lead because is is strong, the times lengthen the high. So supply demand

there's as supply has tremendous now. on chip for to it's XX tightness example, of, to shipped right, yes, memory things, the almost you're gone whenever well, So weeks well. like Obviously, spillover other a

is that So Tyson again also a pipe. in

capacitors, do much, see are But not I big WiFi problem, seems ones the from constraint users, not special antennas not mean, some we other it a of and China, The XE of is a a so well. for there factories problem. that as then consistors, the PCB like

Hamed Khorsand

far XX guidance? the to Okay. able as you Are okay then And year for you been Have meeting weeks you annual as just get the allocation? mentioned here.

C. S. Lo

That's a good question.

put I to in from we we're there supply and right, pretty course, believe confident get gain standpoint, down. a demand the supply, out also if when why more they because we'll that be a disappointed. supply from is year The growth given guidance. get mean, this more reason our tricks could is overall some But single-digit you're for matter fact somehow market of I to that, we secured. supply, mean year the full a supply mean, And year a more the will we lot right? supply As if mid- we of then But high guide still be on have fact, that the better. we I to is of planning disruptions share of

Hamed Khorsand

is more Okay. different internally allocation you supply you're with focused then there on constraints? between Is of tight the that particular a last question are And just how points? just price chips model managing the

C. S. Lo

Clearly, I mean, So favoring chip, right? is give a us is I as chip mean, that are we definitely chips a a we point. favor higher chips. chips price

all X, right? WiFi under constraint. Belie all It's So

be lower Of that band, That's the course, sure. lower price speed dual higher speed versus we would tri-band, will for favor point. those

we already, as on but thus we WiFi primarily ads side, lesser X design. discussed XXac the and chip so major And that's our our side, from on by the allocation are suppliers have

Hamed Khorsand

Patrick, excuse me.

referring mistakenly I would own misunderstood models, that talked to end that I up WiFi chips chips. is think X models, own me. your and - you within XE end your I not same was would the router those where chip WiFi up the chips understood IRE the it's

C. S. Lo

understand exactly quite what... don't I No,

Hamed Khorsand

ecosystem as your getting as towards you allocating as your are routers emphasis Are just tri-band? chips Sure. all Orbi going high router models? the WiFi X chips WiFi to your X go? much Or of far putting end Are more on you evenly you the between

C. S. Lo

It all of the the X we end higher or to I chipsets, said. what just meant. supply routers matter right, within models. it it's more would allocate I or cable gateways. doesn't Orbi That's is that's mean, Well, WiFi what complete whether I

Operator

Our the Bank. with next of Jeffrey question Deutsche Rand line comes from

Jeffrey Rand

So good quarter.

revenue be operating aware lower that You're down levels? there mostly of? we in Is from dynamics Or sequentially XQ. should are guiding margins your other

Bryan Murray

to followed for earlier phenomenal I question, some obviously, it be elevated on QX No, going the And guiding an to regards a $XX adding by is in coming driver with average this of million. is side, We saw XXXX, the steering was the line margin, been going down down. result see or Adam's is that's We We down to driven know top to that in said right. first operating We quarter. a a your of all slightly million we've to to for towards we be as that It quarter return CHP quarter. shared leverage. line and is so leverage. terms step $XX back just results primarily have of would contain But business from strong in XXXX. top to, provider. supply expected service It's but on But step lumpy. a knew the it take in happens question that half service QX very

Jeffrey Rand

as obviously, with Great. adding any pandemic? very paid trends noticed subscribers through done subscribers. in change go with And you've the Have well then, you new we

C. S. Lo

such fact, skew more generally, control. the buyers services. of they as as consistent. propensity And Actually, of the subscribe going to The it's popular the doing high-end protection parental towards models. generally those the higher that expensive product matter are those No. are a pretty most control to And services the is, cyber and

So our gives hasn't mesh us introduced really high-end the changed a hint really recent of router half much. of service gaming WiFi popular as in the will of that with then second X models gaming high-end these we And year. be this trend that well introduction as

Operator

[Operator Instructions].

the line Your Paul next with of comes Silverstein question from Cowen.

Paul Silverstein

attention, Patrick, to apologize to that I I in missed going I'm paying you I'm going numbers. haven't some particular Bryan. asked on perhaps going you said the call, to speculate I I'm ask been And apologize to but think question. you repeat, if one the of to upfront

from weeks, cited siting if Patrick, you historical XX week questions, XX XX of X you're think the for XX I time, up I weeks. now ago, lead XX So days to norm to recall, and

I have those So numbers accurate?

C. S. Lo

Yes.

Paul Silverstein

just from about XX days? XX [indiscernible] a weeks been last the there Has

C. S. Lo

fantastic memory. you No, have a

Paul Silverstein

used supply you've supply of the XX%, by X% enough frame quarter, how the supply that worse? to constraints year secured supply longer to and understood that as time drive do this the fourth faster the you have do constraints and Okay. to persist the you using hoping alternatively or you're over either those And much feel use course to more be but confidence constraints for that

C. S. Lo

course, kind think we mean, just to the factories for commitment they appeals horizon committed odd. planning suppliers then have in And plan go the then year, planning that to If same, chip the got time, plan we've we have that unforeseen And there for the year if now, weeks. is they from right, disruption, we think vehicles XX a planning as live it not be because materialize. electric stick demand next provide delivery their I face don't lead to manufacturing, down. to go needs the revenue the to at new any of I elision if really to whole bets just to disruption so for ease we longer mentioned, just continue And that all of I the see actually out Arizona demand Internet already. the I chip schedule, Right to much that will will then year, don't connection Well, down. continue we're our don't online. longer. time the to would the all see until, come same next in already

the there's then So year. plan future. the future, same right, that's what all technology, predict And to. as newer goes, make you in unless way the And we're pushing that's for meet we're the going the starting for And going future. next no to why we're to we're

we're We now X, believe people I people right. mean, WiFi that for we're for will we So it XE, want do again. WiFi it it going planning and XXXX. want to got

Paul Silverstein

right. All

on demand. to Let share market me shift

share of Safepay consumer was Or concerned? WiFi said that think was sorry? quarter consumer that this XX%. correctly? WiFi, I of Patrick, Bryan? your I'm share What hear the I Did was

C. S. Lo

XX%.

Bryan Murray

Yes.

Paul Silverstein

Is XX%. from that XX% down last That's right? quarter.

C. S. Lo

That's correct.

I the quarter-over-quarter, can we below you right. like see non-carrier So sequential growth. while market channel, XX% almost all doing In we pretty clearly, are the see mean, growth,

Paul Silverstein

WiFi share? on Bryan X, Within what market So and Patrick, you emphasized reasons. is that of for the have end premium your the focused you're obvious

C. S. Lo

WiFi share. in be to X price XX% Within including estimate trying points, all over

Paul Silverstein

XX%? Over

C. S. Lo

Yes.

Paul Silverstein

seeing that went it? you them Are And incremental the Amazon, ton made they a much broader in always have Aero nose do the is last lineup of point Amazon, only them X impact I impact? market, appreciate that an not you it's many or but between early I you think down band. entry seeing know their relatively days. there's will quarter in do a - time to that up be launched, they are since how an you of last have you're speaking, over you having is to

C. S. Lo

market have X market of of expanded of the high-end example, the for XX% tri-band a certainly impact, significant from they Oh, market. to the has XX% this WiFi

the to helped clearly, So expand market. they've

gone sell even have you're going introduce Secondly, share, from right? the to you X piece, to Because something, get X. whenever you you market X

So enlarging at to buy. the they clearly growth don't same are for the market. this the pie, just as that taking of supply some tremendous enough market time, We But us share have well. in enjoy

Paul Silverstein

customers and extent All what's which of right. suspect Well, you're that is don't demand are suspect that One, speculate points I and customers high buy that products. leads WiFi those asking to the going X have X or But satisfy here. the is question have you you available, supply-constrained to cannot because I are the to maybe X you we're about speculation. the many insight, customers want what wait year available? cetera. else. reach, question to X, higher those performance for more we're WiFi to in or are high relatively with the going talking And you end, is, I WiFi et throughput, talking gives in lower be the other when What the it confidence that sophisticated someone the that appreciate about on

differences and they of may many the and suspect of WiFi they really so and more and neither that see as That appreciate. see difference very are you're aware customers want They're the appreciate throughput, to there I X, don't well the they or band. said, And dual they aware between nor dual between appreciate tri-band tri-band appreciate, band.

to else. share don't those could X And they Aero have band? or Google And I on NETGEAR or for buying from or tri-band eventually coming the somebody X so I'm insight market Any no, issues? said, WiFi dual into Amazon Awesome. yourself, X it. you wait

C. S. Lo

Yes, definitely.

Okay.

The what. absolutely WiFi matter first, People upgrade, you're right. need no

thing. right? some for X. buy home. have are people Well, the there end, to about I it or matter motor take for fast them, or dual doubt people those about I electric cannot we or it it it set don't supply we mean, have day see on story. been only Everybody They supply. discussions long. willing say is. have $XXX versus a they buy have they'll is they definitely X then who that engine a they doesn't don't a would No, WiFi in ensure [indiscernible], But on minutes, they always even have I, it. a to They not Do the XX We WiFi And dollar. with that. So knows would anybody if They pay, their same it. VX up end last $XXX point a enough been worry if X. speed of how you tri-band. and but X. at No mean it? have download understand, just enough to band you those we to a do who about high have find pay would to WiFi test do all high the China, look And that phone all to to in use So Ookla the speed WiFi

tri Ookla is but better comparable. dual, than even going It's the to Of course with let's do be speed test. it not

that. you If God, test And from even Europe, a a close. not versus could I system $X,XXX understand speed on mean, it's that do Ookla system our $XXX my everybody

Paul Silverstein

days of But apologize What's One WiFi from - a quick and percentage? the said Two I X again, if ago? total Okay. WiFi many questions percentage your versus as sales me. already other this. you

C. S. Lo

sales, at routers I Oh, if X at sales is and almost systems look WiFi and you for our mesh our and like yes. XX%. mean,

Paul Silverstein

think will the Where of it from year? XX days or be now at you end the do

C. S. Lo

love really XXX%. It be depends on would supply. it to I

Paul Silverstein

X when let that? as let I Google with high respond. Amazon but any thoughts concern, and going the any assume same end hit you focus to on is their WiFi one last that And right. product, that's your market? question. it's on on All the insight on Or Nest me relatively you're the

C. S. Lo

after [indiscernible] don't sell. retired They X introduced But because Nest they actually it for the Google sure, it not have We it, one yet. months. GX did as thing, for WiFi and

the So they Nest it. again. don't WiFi come know back out sounded of Nest WiFi, going this with would and up when or regional to out very they ever they're I come went to Google the held WiFi with they

Operator

from comes next Ho Jin with Bloomberg Your question Woo Intelligence. the of line

Woo Jin Ho

you Patrick, bit the talk XE allocations. WiFi little so a about can just

iPhone this to year? WiFi with And you're just thinking were the supply. You a the WiFi rumored I'm have earlier on chip especially given and launch how getting WiFi early about the X WiFi XX availability, X curious XE

C. S. Lo

Right. I Samsung and the XE, the it's speed just is mean, Ultra we already incredible. tested SXX is amazing, and it,

big the download need be have you to allocations in So now internet think to from of I enjoy the will WiFi products key chip speed. being two and course, be symmetric, is I the with upload very cells you wowed our those really Comcast first which and that speed can do great. so and both tight especially it, And mean very, need market. people you and

the than is very share have so for of And then unfair will that WiFi that most be total push we limited. supply. of course, overall this XE it I Of allocation chip we'll into We to XX% but more would expect the the continue be say year it. Yes, going allocation. to - still, don't

Woo Jin Ho

XE out for all you really then gain. And first it. you've you it's given three two, aggressive particular XE waiting especially how know be of don't I quarters third new launch how Orbi to announced, to markets Got Nighthawk trying when We're product, think a WiFi that's the quarter. it takes product, WiFi the got I are about to should mean, typically, that market. we I product. usually the say when ASPs upwards? that going in mean, let's about just drive you're with But

C. S. Lo

first no Well, this X, than previously. actually different time, we When was market. the client WiFi on it's there introduced

WiFi a of router month are SXX like WiFi Ultra So already, router. and us. we're Samsung X They phone This that our actually phone future-proof. our a going WiFi and are the with XE ship shifting on ahead the And a would we're first different. behind now. And the matter They almost X XE came time it's carries to first of the X months WiFi selling premise for X come. clients as from month fact, only

You going a iPhone your plan, too. Well, not X, but our is said behind words, using X quarters very just with I'm this there, and us. So to by different I'm that right? will be then, XE be the WiFi XX Orbi will speculate,

I'm absolutely Once it's supply again, This time, confident. on different. So will again, purely schedule. be this time

Operator

There this at are over Lo, I call Mr. questions back further you. the turn no time. to

C. S. Lo

us. joining XXXX. in was to for really the everyone, I'm team at Thanks, of NETGEAR what you. Thank proud able accomplish

is our technology, throughout and thank us We're to year fronts look drive is to us this more course, responding margin. market in as to deliver exciting. our in very once this and sharing help excited considerable revenue lead which innovation as you well Again, customers we and with you of forward year. to The and with rapidly, changing the very XXXX. market again in new the very quickly growth the is market to continue joining multiple Of another new for today, a market and our growth the increase year, have

Operator

This concludes today's conference call.

You may now disconnect.

NETGEAR (NTGR) 4 Feb 212020 Q4 Earnings call transcript