NTGR - Earnings call transcript Q2 2021

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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, Rachel. Good afternoon and welcome to NETGEAR’s second quarter of 2021 financial results conference call.

company the from us are Mr. Joining Chairman Lo, and CEO Mr. and Patrick CFO. Bryan Murray, Bryan, and call The by XXXX the provided financials by the format Patrick, second by by will provided with third of guidance the and start finish a quarter business on commentary the review with of quarter Bryan. followed provided details of for

We will then have time for any questions.

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

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

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

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

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

Bryan Murray

revenue by XX, offset you, year. and in was coming primarily million, growth XXXX SMB to expected June for $XXX.X decline everyone provider with driven thank quarter for you the joining XX.X% and Thank portion from ended Erik the of strong retail last revenue today’s service call. growth Net up CHP, in the relative year-over-year,

an guidance within chain the came line our results as of on in our what been year-over-year While even supply growth our double-digit top better to performance, team particular with range, side the limited in have worldwide SMB net business. expectations could below revenue constraints managed our deliver

WiFi in the our base. As providing long-term networking dynamic and to market as we subscriber high-speed the returning and growth of a at networking become in settling position strategy. higher consumer supply the it we norm. in U.S. With another of in the our improved the the X our confident This pervasive, quarter, validation consumer portfolio, of consumer we employees environment, share mesh the strong, see premium retail strategy where single-digit year-over-year Even about portion models remote channel the by CHP products remains the the products now a growth work continue to office, through to points of And for hybrid XX% market translated our need remain paid business. U.S. to quarter the we into drive our in connectivity was added in with clear navigate wireless home than entering performance our the CHP led mid of premium and WiFi market XXXX. in

provider when of by and investments despite aforementioned service performed wave our worldwide, year riding of held is XX% growing declining check pandemic. opportunistic in our in as of to the expectation, being a WiFi Meanwhile, SMB products couple business the the made fruit reopening the the in over constraints. such brought X, areas our about to we business businesses bearing While and ProAV our experienced year-over-year demand from last supply by SMB wireless years moving leadership ago

XXXX, our Day. to points COVID-XX, navigate year, which the that came last the In we achieve way due elongated shortages, improvement expect range, second rest Component at top XXX we of do which times full some factory non-GAAP our margin with challenges Analyst was to of generated we the delivered While SMB navigated of line year’s overcome, provided successfully have we line year guidance in drive not $XX.X operating non-GAAP to our delivery a revenue and correspondingly, we at have basis for quarter, over could all hindering we non-GAAP SMB into translated all year-over-year quarter million. that ability globally. second X.X%, operating thus slightly below in income meaningful This improve operating of varying an past XXXX. the of to the growth margin growth margin our geographies of top higher, performance. together We times closures and over unforeseen guidance

is which and basis. EMEA quarter X% year-over-year X.X% second on up the down a is for revenue was the up $XXX.X XXXX, XX.X% net was of net Americas For up and million, year-over-year revenue quarter-over-quarter. which million, sequential X.X% $XX.X

$XX.X net comparable revenue quarter sequentially. XX.X% and X.X% down year is from up which million, was APAC Our the prior

non-GAAP non-GAAP GAAP second focus $XX.X down discussion planned basis XX.X% year-over-year activity. was home shipments. revenue XX a X.X the about products From quarter The is The units for comparable QX Total and the million, second and expenses XX.X%, came net on, in of in between quarter second nodes compared approximately result products our quarter will first million For up in XXXX million our as X.X release all primarily XXXX, months to operating detailed XX contributed last which today. second products earnings Products units, increased products. the wired the points was compared of the The earlier introduced XX% Shipments of of wireless XXXX, gateways reconciliation about of XX% at from last points up routers the in XX% shipments, of split is on point total shipped including second XX.X% non-GAAP prior wired months is numbers. promotional XXX X.X% the XX% combined about XX and points gross quarter respectively. X.X% in split our sequentially. of constituted was quarter to margin and year in million about basis revenue between non-GAAP X.X XX% we wireless about respectively. and XX% our which wireless The introduced and while of business a were net quarter distributed my this in down XXXX. and of of to quarter and

the from as end the of QX. XXX XXX of Our headcount down quarter, in was

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

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

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

$X.XX, diluted we year of than income bottom more the QX, non-GAAP $XX.X EPS net XX% higher prior each period. than line of reported at for comparable the Looking and million non-GAAP

balance $XX.X $XXX.X Turning to quarter. quarter sheet, from and the cash investments, second down of we XXXX in prior the short-term million ended with the million

products. We remain replenishing expect progress SMB constrained but made on quarters, supply on have inventory the our CHP substantial recent to in of side business the

During cash million average XXX,XXX the XX quarter, In spent the million total our million and repurchase over QX $XX million. by per we to of We was from used shares activity in $X an operations, expenditures share. $XX.X price equipment QX, to total brings purchases the repurchase for $X.X over in spent stock our of shares. used trailing the million $XX.X to of quarter, which trailing at the of brings XXXX, months XX we used provided months capital which cash of operations $XXX.X cash during $XX.XX our Since approximately have start XX.X million. NETGEAR common to repurchase million property

a to quarter. the to fully With shares of as continue shares in count meaningful portion position was inventory repurchase plan targeted opportunistically of approximately diluted the the end established, Our quarters. share second XX.X future of our million we

year-over-year driven turning Nighthawk includes Pro generated industry product the Connected growth net Gaming to Nighthawk, market percentage of year-over-year million basis and by The leadership the our U.S. XX.X% is on our levels. mesh down the Orbi, flat the quarter for segment results WiFi returning Now, position segment, service quarter, business provider and in to in second points leading consumer Meural the was segment, premium leading way, improved anticipated revenue $XXX.X retail Home again, X which being which during up With offset sequentially. XX%. the the the brands, to by a performance

driven the demand primarily replenishing business demand supply-constrained XX.X% we by grow is segment the The share formations, we our inventory, on was strong can a sequentially. second well our XXXX, further QX. quarter have years. businesses With year-over-year basis environments. and in of highest environment up SMB and expect million and CHP X.X% for exceptionally up quarterly level new against growth flexible The is reopening for for net of working generated progress the we executed in fully business by buoyed in $XX.X which X made revenue This revenue SMB

and low solutions We our performing continue well. count see wireless very SMB to port switches

as meaningful to year-over-year business, We in and focused see resuming our traction venues entertainment. ProAV experienced growth, we as gain such on those activities sports also continue which across

Our share QX. third switches his for for in percentage after channel turn I XX% U.S. quarter will sold through of XXXX. will provide retail in grew to I Patrick the to call X guidance the commentary, points over market now which the

Patrick Lo

Thank you, Bryan.

some virtually, capacity embracing in of environments, of a joining its function their the call they while days the variant with the begin at to model. the now able head, half of as the the accommodate world work for signs Offices the As hybrid we are as albeit for mesh Delta by WiFi segment, from growing return of in homes is of handle from that architecture. normal, it together second offering This are cornerstone to to And speed to delivering only a of varying this raising in in in X the accommodate carry businesses of of for segment rapidly solutions employees spectre working be where to the QX XXXX, capacity, least we new drive their created once entered this, multitude seeing portions Clearly, to again to XX% must of more Internet small mesh the ago. work-from-everywhere are levels outfit new bandwidth is continue X% bandwidth higher a only at as videoconference compared their and QX on being the company headed. the as demands we and They pervasive are than capacity, home. large, public draw market being and to higher before this greater home, to market a to products consumers year reopen. to are the means reopening market mesh into networks, their the in defined benefits. office. employees continue these grew Both from pandemic. continue homes the NETGEAR’s the transition an tri-band offices XX% normal. This premium opening with Businesses, as office bandwidth flexible pace if myriad and to a well faster of coverage. home speed, capable unprecedented solutions to wider new doors workspaces and home are the the to with as focused are they we need This continues a were mesh activities of the increase WiFi requirement, performed this market, the premium more cements

with subscription tri-band value-added our our sound. the So, market of with of WiFi, premium strategy together services expanding is strong attach

the the Central, Additionally, have router, our performing RAXEXXX Guide, fastest won [indiscernible], WiFi fastest Gizmodo, and last that XE as the on who was has XE router RAXEXXX the Nighthawk from to referred XE WiFi tech Digital claim router best experts Android a tri-band router at quarter WiFi planet. introduced Tom’s Trends,

mesh our of availability on at make services is goal the are design that we high-end Nighthawk CES premium see These subscriber is with honored enables am router XE fuel and premium select Orbi to Nighthawk product. the routers and WiFi second validation excited XXX,XXX remain will best-in-class this Gartner this with X ending acquisition we WiFi as Smart I outstanding million will segment, Parental a reached milestone this This in of subscribers pleased We followers We this subscribers. us available X.X on impact paid share the journey paid believe month. leading-edge Controls WiFi year-end. WiFi expansion business our of of offered accompanying likely the QX our long-term revenue incredible as those technical superior rollout also profitability that that This year the systems router continued WiFi progress by buying products experience accolades that our are coming as to surpassed part more service a significant this on provides earlier in by this crave. offerings is we subscribers, about We them. now continued quarter recurring by purchasing this drive have and features which to towards XXX,XXX in $XXX business. reception

the of year We lineup also customers premium systems. a of game-loving our the market to the X gaming to a plan this through Orbi router driving online service bring later for offering features WiFi

business, update is business business pre-pandemic to as start our solutions to an as validating for IP IP. small from hybrid working channels digital years. Also, the on has home providing reopening audio industry in premium meaning traditional fastest AV surpassed the reopen is demand on Turning video is and AV the our more businesses SMB and levels and is this the accelerating the as our becoming model paying offices focus analog our WiFi at over dividends is norm. and surging of Again, ProAV, transition over pace new strategy in recent

we though, in revenue have conspired year-over-year acceleration and new as factories to expanded challenges, these shortages additions. Despite driven by growth. points, X access portfolio compounded We well continued In supply, XX% by in our are switches component to count and WiFi several deliver QX, our ProAV. further progress executed certain transportation we by delays growth, and can limitations in WiFi offices SMB low the team and X constrain limited with home strong for product COVID-induced small what our all port

These tri-band while now X businesses available and to industry’s reliable X just the WiFi multi-gig and optimized VLANs. points, a need First, and and for coverage areas faster, the have growing highest-performing secured offices for we that both WAXXXX respectively, offer WiFi $XXX, Insight-managed for a tri-band their multitude WAXXXX, points. and attractive greater price and home Internet released $XXX are more supporting dual-band points over devices of dual- access access respectively,

Pro We $XXX SXKXX well WiFi upgrade our system for also Mini to technology addition announced mesh latest is to mesh users latest the now ecosystem. another system and WiFi Orbi with ease. This the X X want suited model, for available to WiFi who is Dual-band

We continuing investments to dividends growth our see continue ProAV in with paying accelerate. to

products are continues underway most America. [indiscernible] upgrade the HDBaseT, our for played. now to we’re top way over industry, to standards SDVoE, associated and the important in with is AVB, that professional to efforts to in transition North the certify and pave Dante, Our the of video Accordingly, integrators half way doing the the audio video audio including and XX business AV MDI

and I Before been that, service and like to to him Bryan I’ll will David would I a coming the our the Henry to of President full and to hand has to an welcome it to back best. instrumental take to our Board Bryan, in on thank and NETGEAR our NETGEAR who also with collaboration the moment Directors opportunities congratulate And nearly be comment promotion also on General Services. He his would on of Manager leadership His leader. focus continuous off Board Products Connected proven obstacles will service to be wish at for Board. by it of David’s revenue with quarter. to impressive I him and long December Gregory has like in driving closer turn amplified strategist Home tenure part Murray and Rossmann, after years we very XX of the the transition Board. time, him a over on extraordinary

Bryan Murray

you, Patrick. Thank

over XXXX of by networking to first same XXXX. be limited third the grow In SMB continue quarter. market hindsight, in saw expect half the We consumer U.S. supply in to the period the XX%

be very lower expectations. out this strong turned a While showing, to XX%

optimize in we their work quarter. As our plan to levels partners with the to proactively such, channel third inventory

X% to revenue million. Primarily range range the the of XX% see of $XXX X.X%. non-GAAP to the to of line, as the ahead in expected million And half moderating to top levels. expected in a the approximately we be quarter to leverage XXXX our GAAP result second half to is for this Accordingly, operating $XXX above second expected is third range operating in X%. Looking from lost is be of net of the to margin further X.X% growth XXXX, market to be margin of

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

believe our of performance our half non-GAAP be operating the year’s the roughly second we half to the of full guidance Day XX% intact. While year revenue year first for will remains believe year, we full now relative X% do flat margin provided last at to Analyst

our with the challenges uncertainty we occur due considerable should While unforeseen our remains ability actual events delays a in guidance are the related from the caveat, regional transportation confident particular to questions our we do the this distribution so in any and pandemic. COVID-XX differ time, into of provide We of market to to the to or foregoing at would from And partners’ manufacturing like any guidance. now operations closure could answer our results audience. centers,

Operator

you. Thank Raymond from James. Instructions] question line first the Our Tindle [Operator from comes of Adam

Your line is open.

Adam Tindle

start, previously, were just WiFi some just Could around WiFi would that think on X. WiFi out on Good Patrick, that’s CHP the quarter. X, on you focused color coming but in were out? clear afternoon. market the us cleared on you I while in Because you more the being what’s losing as shifts give want said were maybe others I to focused inventory to X come share, you why and

WiFi heavy. there? bit just sell waiting So And what’s I that why more X ASP for just on or color little presume CHP any optimize is Is there inventory in on need to would Thanks. it to through? a X WiFi you versus degradation going

Patrick Lo

Yes.

very some online more products soon and involving partner is XE and WiFi financial on Even products products. cable have some involving financial X, half, WiFi new metrics. own metrics second in their So on has based coming every their channel new open-to-buy we the

so these make into could channel profile. margin continue we come new that our we that way So to for improve products the need on to

going probably you know, has As I – that cost component mean up. been

this for margin improve very on profile. our continuous product So to us is renewal lineup of important

So of into important our new products. for partners why products the season, to that’s these inventory we season open-to-buy so new channel adjust the intend have Christmas these we coming prepare very Christmas they better for channel. the Especially for for will a the

Adam Tindle

as Okay. wants take Bryan if to guess a And it. maybe I follow-up,

to given gives expecting QX. Day fiscal about that’s and Analyst imply uptick that to for the you out achieve confidence talked year, the big What the operating maybe the key QX? experiencing going channel unexpectedly that to to of this unpack You far drivers And I’d is you a right margin that. in go optimization what here now, big can inventory in part you’re uptick. imagine a

could you if that? help us Thanks. helpful. be quantify That would So

Bryan Murray

Yes.

it mean SMB. point, is be there. got at for limited to You said this going supply right I we still

full expecting we’re So you service reiterate revenue for that what uptick year. will the saw still $XXX QX. very full in million And we from deliver of we modest the provider

So pressure top put that leverage going QX, optimized And QX, why just of top the it’s kind a that QX in certainly And it’s to think regain to that the we line moving needs logic on to I to in down leverage. some the CHP. Patrick some expect that’s from of on the through we inventory earlier, of corrected an as QX channel will line said standpoint as result. being period, walked QX phenomenon. With be we

operating to hit why year margin that XX% we X% that’s that will we believe So guidance. full

Adam Tindle

clearing clarify inventory out just typically on to looks like that allocation, Okay. generates I it capital cash. you’re And mean,

here. the the already over volatility have to in pretty I’d significant given downside going cash. share there $XX You forecast be is in a stock, imagine

just down buyback. million quarters like you sort level you the defend the $XX stock type super-size consider of Thanks. had buyback of here? did in past that You to where of Would

Bryan Murray

be continue buyers to a to stock, of we will going in number factor and our we’re of things in. Well, opportunistic

from this be some programs move quarter. balance and and think of fourth point will cash I given we to implied our QX from dating timing that year, the seasonal the of occur that in the free flow for of this probably QX neutral, revenue

all But I So where we’re continue how we we’re neutral, cash. or going factors cash in to we yes, will of about think these more at our flow terms be allocate today. be free evaluate to less

Adam Tindle

Okay, thank you.

Operator

Thank you.

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

Your open. line is

Jeffrey Rand

the on you and wasn’t side main in the that taking gives Hi, what demand question. think on seems thanks has kind pandemic? Can insight past of quarter. there like the consumer us give environment you It lot changed pull confidence the demand the a the some the what a changes of lot in of for during you part

Patrick Lo

Yes. was especially first the practically saw the had the into CHP huge the the when in real in products market we supply second of quarter channel demand. What we half,

first the the pre-pandemic So in half, grew market XX% the about over level.

still people the know, first were restrictions COVID and as in Now quite a half, not we few travel. there could

a planning XXXX XX% in So were would over growth our we planning, it that first be half.

is certainly, be vaccine of XX%, So a so it I than that, the lower XX%. our to mean, all that turns and because out

gap So optimize. extra help channel becomes the to inventory need that our to we partners

Now second the has will in vaccine over trade. second were the year good the And in in going to reopening moderate, reopening. level. XXXX will We the into anticipated XX% originally, market significant we forward, factored because this thinking the XX% growth grow the pre-pandemic we about on positive half, of operation that see half we the effect

half, market level. to the about roughly XX% Now pointing few second the weeks to be seems the into pre-pandemic a over

world, see to vaccinated. the see we the U.S. lot the their and as UK as in road a as the especially developed on getting they occasions. of in to And travel clearly, in well as the well Now families people getting are

not the as a is level. demand XX% for pre-pandemic the high thought As over what the at originally we as result, home networking

are many on reverse are The also streaming, startup wave big the are reopening positive of by business new a probably we because the we then SMB the why that’s the the up as many read pace But reports the the technology us IP reopening is as seeing in so news fastest than technology. we surprised U.S. thought, as lot all in years gave old reverse startups opening. rather audio they starts I ongoing business the we well. WiFi surprise networking and when our video that business as trade they And in the is growing, a is side and units. history. that mean we with adjusting the venues many, the as in-market the their in products is are originally buying of set are well entertainment in And analog sales the CHP same well thing So, true. of as systems sports the expectation revolutionizing

So, sports our for a NFL are umpiring. events the using of example, lot like ones of now to tens solutions do like ProAV

So positive of actually growth the SMB, of some the the the of CHP. offsetting on these of upside downside is rate

up. So and the we overall, that’s how take, so half we shaping got see and is second push

Jeffrey Rand

Great. as and how channel, Thank about as the try your think your follow-up, how will that margins? you. do And inventory impact increasing the you levels to optimize you activity just promotional my in

Bryan Murray

Yes.

of we that opportunity We subscribers the to to million be mind see XXX,XXX it’s milestone, share, in that that that are put target back major mark this as our share in more going our follow out partners. gain to end X about promotional. into channel there. continue means which for after an acquiring We importantly, on the chasing of X to and hitting quickly aggressively this being long-term then like But run, long now and for year, continue pursuing million first this and is terms QX. to heading keeping talked We important with

Jeffrey Rand

Great. Thank you.

Operator

you. Thank

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

open. is line Your

Hamed Khorsand

Hi.

any just ask as given year? components and preordering inventory, What WiFi that you far that were I have demand or of so obligations does this So much had increased going do of last when as more to has to bloating wanted to is first And have XE? just that kind you X the off dropped thought. cause year about you than you it on market the earlier as the kind off, WiFi

Patrick Lo

Well, of to for for time, WiFi a high that. the we years, WiFi end least at X last very is at XE X that X long years. believe another And is going

don’t components we wasted. that of booking believe So, be our will

So, confident. are we pretty

So products. X here we– were WiFi from And the have do to X to out. life get pretty on a that we of that’s the believe rid continue why will we first long WiFi

Hamed Khorsand

if aggressive more QX? then to so more weren’t to And was promotions in Are a promotions you down some proactive Okay. inventory? in going with of just much, the you be little clear slowing why out market QX bit

Patrick Lo

I as venues, to you about did. brick-and-mortar mean, were And probably physical ahead. still promotion sold know, of planned in today, XX% XX% are products We way stores. those actually plans

just the dime not and turn could happen. You it on make

executed heard of course, So, And Bryan, as hardware. when users continue concerned. our they that in QX, as in promotion as will QX I services far mean we then is more to aggressively from you order plan in acquire purchase we attach to and promote

Hamed Khorsand

given pressures, competitive any slowdown demand? seeing you in the Are

Patrick Lo

Well, don’t of I mean competitors. our we see particularly change any behavior from of any

heavily. the in been last pandemic, been until better to and why promoting have the have losing have share And WiFi just that’s a that position we we quarters throughout will fact, two supply well. products we our X when gaining and of matter a competitors as As promote better be share

behavior So and while for change, competitors our stopped promoting back a seeing argue are we the you could reverse, that into we now game. are our on the

Hamed Khorsand

are on side, clear-cut product, are you a a natural in beneficiary some competitors transition or SMB? not better last brand larger And of SMB having question NETGEAR of to the you the is your seeing stock this

Patrick Lo

there the big growth is side. work-from-home the SMB One are two So, areas solutions. on

enterprise. So, on with focused really we competing vendors more are American they are directly because not

our vendors. competitors environment, are I you at you to Asian big. try a business home, But at is run brand this when in the home So, do or only work-from-home your think work corporate

home-network Asian none point, is unique our VLAN-based access of XX-port why market, that’s X-port, own X-port the our suppliers. our in solution. So, kind it’s the of superior And competitors switches, wireless certainly, switches, that than far because

that’s So, one area.

is over have competitors pathway. that basically, areas A other IP. AV major our of for The AV lot

we So, unique transition capitalize very video. IP in to position industry are a on this analog to from

Hamed Khorsand

Okay, pretty clear.

Operator

the next of Instructions] Your question Paul Cowen. line Silverstein of comes [Operator from

is Your line open.

Paul Silverstein

a support a not And different. affinity the I the each for perhaps me they I billion WiFi To you the numbers, appreciate X, over projecting I be this Thanks extent it’s I you magnitude. X-year growth look from of duration $XXX believe market seems overall If the recognize question. $X.X in the X Dell’Oro to over taking still guys. at coming million period certainly to the in and of thesis, different more from question. obvious unit $X.X and market quarter iteration look market WiFi of when truly strong the of decline period. that’s offer with at ask what for is let terms XXXX Dell’Oro the SOHO numbers. will XXXX doesn’t X-year different to are But million the That’s a integrations with expansive early, WiFi recognize industry analyst And billion. prominent

Patrick, the are question, in the trenches. Now you

going longer factors, it the what you is have be the market, to than meaningfully should to and, be you think – be a are one be was quarter Amazon, some that do one seen But are you work. improving. mean, what putting your when better understand – over competitive saw. would fact, believe is Google, that better return seeing, understand etcetera, What what stronger been to informs duration? number projecting, a clear, Given aside I you would but this if, disappointment is going we still pandemic Dell’Oro market I view to in are that than in has extent there why to growth what than think, the the appears the I things to

Patrick Lo

is lot is the that the major we Yes. premium call of really what created a difference that our I are mean effort us, a putting by which Wi-Fi. segment in we is

which traditional is look the serious easy mesh the just consumer purely route, at go network, switch, or business the route, you either a a router if of for is setup more down and plus So, points. going access home you the a which bunch

$XXX segment, And there So, space. vendors, paths. providing is market. and Asian the unique basically targeting away $XXX the to a on the the are Google very or who to from $X,XXX are which $XXX all we are focusing ordinary that Amazon from we either plus. to are then And But is are two way, in that systems very unique a even plus

So, seeing system expanding. it but segment is of the $XXX giving is that’s our that mesh market, XX% interesting, only how growth the confidence now ago, it’s of the plus growth basically of the year X% And is our is a become market. segment was why – – confidence of that

as So, our competitors access unique just mesh It’s like a going after that points, do. side, not our switch going anything ProAV SMB gives with position. none And the points American is and competitors is now, on of just us after a office I home do. access mentioned

very position. our is of different So, we to unique that segment are kind in a

Paul Silverstein

given what competition the been product It it play mesh that set, quarter’s of limited and a premium, there a Patrick, the at for of why already much on your X from is say better premium. let the from goes percentage shift given always market mis-extrapolation and one to XX% offering is of that the X% have the you me your while fact advocate. in The shouldn’t have up premium total towards better rich premium goes given is view? points continues you point focus of accurate shouldn’t products, was this significant To expand an you that results. risk numbers the have But recognizing but been market year-over-year. devil’s the quarter it – continue vacuum, there logically, been not you, end why sequentially. shouldn’t if to a to that market bad, your that have percentage Why

Patrick Lo

total XX% that market. of clarify, is of represents That segment me not the the premium market. let mesh total first, Well, the XX%

Paul Silverstein

same. the That’s

Patrick Lo

Yes.

that’s same. So, the

and XX% And in Bryan So bigger we are of a our top on would XX% as definitely than perspective. the from mean pie. kind basically actually line – what a supply SMB constrained was difference seeing. the less QX not the of if smaller much line that on that’s the pie side, better I mentioned is a still bottom results, both we have of and

the towards from the towards the end market, track. we side, the mark the But sizing. the So, we big are then our overall think market end, that market CHP definitely size, high however, smaller off shift within is that premium on on

Paul Silverstein

– that of issue. from a the that Alright. here, on consumer, And revenue with the restrained respect – horse beat constraint. there SMB supply your to but revenue have a But you much other would a constraint, your wasn’t supply XX% clarify, dead which just stronger, supply-constrained been for hand, is had to

All as simply in as the and not the second quarter expected to forward being demand the of you disappointment the is as strong you look half of year.

Patrick Lo

correct. is No. That

would a I of very growth XXXX lofty to is out point one and a So on respectable, mean again, expectation. still pretty big over still XXXX growth XX% I year-on-year first half alright. have is like thing a we

would So only of is the of it average selling we growth segment the liked, is very premium continue. as not the trend it’s the ASP and still And all market. driven a high course, that strong segment, by the this [indiscernible] of driving growth is of because premium it’s the price we have as see

Paul Silverstein

Okay. Thank you.

Patrick Lo

Sure.

Operator

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

Patrick Lo

home-work market market premium we CHP there we at am NETGEAR confident high-performance, you SMB and our are team Thank ongoing And I our remains in market flex thanks us brand innovative for elevated product strong to to the With add our of continue capture addressable positioned that the the presence award-winning will to market high-speed joining environments on, now market well challenges. confident and today to that then levels, lineup. remain position opportunity everybody. both and share, steadily definitely leading total navigate will the products the segments.

thank So, to much. you. so Thanks. Talk you

Operator

conference today’s Thank concludes you. This call.

may disconnect. You now

NETGEAR (NTGR) 22 Jul 212021 Q2 Earnings call transcript