NETGEAR reported Q1 2023 net revenue of $180.9 million, a decrease of 14.1% from the comparable period a year ago. First quarter 2023 GAAP operating loss was $12.0 million, or (6.6)% of net revenue, as compared to operating loss of $58.5 million, or (27.8)% of net revenue, in the comparable prior-year quarter. First quarter 2023 non-GAAP operating loss was $7.1 million, or (3.9)% of net revenue, as compared to operating loss of $9.3 million, or (4.4)% of net revenue, in the comparable prior-year quarter.
Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, “Due to unprecedented inventory reduction by our largest Service Provider partner, as well as a similar reduction in SMB inventory by our largest e-commerce partner, our first quarter revenue and operating margin came in below our expectations. As a result of the uncertain macroeconomic environment and concerns over their own operations, our channel partners continue to materially reduce their inventory to historically low levels, greatly impacting our top line and resulting in lost operating leverage. However, propelled by ProAV, SMB end user sales grew by double digits year over year, and our premium CHP products again vastly outperformed the broader market, growing sequentially despite normal seasonal patterns. Buoyed by the shift to our higher-margin, premium products, and improved transportation costs, NETGEAR delivered an impressive non-GAAP gross margin of 33.6% for an improvement of 540 basis points year over year.”
Bryan Murray, Chief Financial Officer of NETGEAR, added, “We expect to continue to experience strong underlying demand in the SMB business and the premium portion of our CHP product portfolio, even in the face of ongoing broad-based inflationary pressures and an uncertain macroeconomic environment. We will continue to work with our channel partners across both businesses to optimize their inventory carrying levels, and expect a revenue impact from these efforts to be at a similar level as experienced in the first quarter. Accordingly, we expect our second quarter net revenue to be in the range of $150 million to $165 million.”
