NETGEAR(US:NTGR)2023-02-17 21:55Revenue and Financial Performance - Netgear reported net revenue of $932.472 million for the year ended December 31, 2022, a decrease of 20.2% compared to $1,168.073 million in 2021[361]. - Total net revenue for the year ended December 31, 2022, was $932.472 million, an increase from $853.472 million in 2021, representing a growth of approximately 9.3%[440]. - Connected Home segment revenue declined to $558,823 in 2022 from $853,472 in 2021, representing a 34.4% decrease[515]. - SMB segment revenue increased to $373,649 in 2022, up 18.7% from $314,601 in 2021[515]. - The U.S. accounted for $598,649 of total net revenue in 2022, down 21.2% from $759,865 in 2021[517]. - Total segment contribution income fell to $67,251 in 2022 from $179,025 in 2021, a decrease of 62.5%[515]. - The company incurred a net loss of $68.987 million in 2022, compared to a net income of $49.387 million in 2021, resulting in a basic and diluted loss per share of $2.38[361]. - Basic net loss per share was $(2.38) for 2022, down from a profit of $1.63 per share in 2021[466]. Assets and Liabilities - Total current assets decreased to $834.291 million as of December 31, 2022, down from $883.093 million in 2021, primarily due to a reduction in cash and cash equivalents[359]. - Total liabilities increased to $398.930 million as of December 31, 2022, compared to $381.716 million in 2021, with current liabilities slightly rising to $345.971 million[359]. - The company's accumulated deficit grew to $324.762 million as of December 31, 2022, compared to $226.591 million in 2021[359]. - Cash and cash equivalents decreased significantly from $263.772 million in 2021 to $146.500 million in 2022, reflecting liquidity challenges[359]. - Total non-current assets increased to $97.793 million from $76.350 million as of December 31, 2021[451]. - Total property and equipment, net, decreased to $9.225 million as of December 31, 2022, from $13.335 million in 2021, a decline of approximately 30.5%[445]. Inventory and Cost Management - The provision for excess and obsolete inventory was recorded at $3.7 million for the year ended December 31, 2022, reflecting management's assessment of future demand[353]. - The Company plans to continue evaluating its inventory management strategies to mitigate excess and obsolete inventory risks in the future[354]. - The Company recorded provisions for excess and obsolete inventory of $3.7 million for the year ended December 31, 2022, compared to $3.9 million in 2021[444]. - The Company’s total inventories decreased to $299.614 million as of December 31, 2022, from $315.667 million in 2021, a reduction of approximately 5.1%[443]. Research and Development - The company has made substantial investments in software research and development, which could materially affect its financial condition if these investments are unsuccessful[17]. - The company plans to continue investing in research and development for new technologies, including WiFi 7 and audio/video over Ethernet[373]. - Operating expenses totaled $333.473 million in 2022, an increase from $299.240 million in 2021, driven by higher research and development costs[361]. Foreign Currency and Exchange Risks - Approximately 24% of total net revenue for the years ended December 31, 2022, 2021, and 2020 was denominated in currencies other than the U.S. dollar, indicating exposure to foreign currency exchange rate fluctuations[341]. - A hypothetical 10% movement in foreign exchange rates could result in a before-tax impact of approximately $1.0 million on net income as of December 31, 2022[341]. - The company experienced a foreign currency transaction loss of $2.335 million in 2022, compared to a loss of $4.848 million in 2021[467]. Legal and Regulatory Matters - The company is involved in numerous litigation matters, which could adversely affect its financial condition and results of operations[17]. - The Company is involved in ongoing litigation matters but does not believe that a material loss has been incurred, thus no loss provisions have been established[488]. Stock and Compensation - Total stock-based compensation expense for the year ended December 31, 2022, was $17.7 million, a decrease from $26.0 million in 2021[510]. - The total fair value of RSUs vested in 2022 was $14.6 million, compared to $24.3 million in 2021[506]. - The Company executed an average of ten forward contracts per quarter with an average USD notional amount of approximately $6.0 million designated as cash flow hedges[458]. - The Company has issued $580.7 million of purchase orders beyond contractual termination periods in anticipation of demand requirements as of December 31, 2022[479]. Customer Concentration - Two customers accounted for 15% and 11% of net revenue in 2022, indicating a reliance on key customers[519]. - The company reported a significant reliance on a limited number of traditional and online retailers, which poses a risk to net revenue if these customers reduce purchases or refuse to pay requested prices[14].