Corporate Overview...This presentation contains forward-looking statements within the meaning of the...
32
April 26, 2017 Corporate Overview
Transcript of Corporate Overview...This presentation contains forward-looking statements within the meaning of the...
April 26, 2017
Corporate Overview
2
Safe Harbor Disclosure This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Specifically, forward-looking statements within the meaning of the Safe Harbor include statements concerning: future financial performance; projections on market share and market growth; future market opportunities; NETGEAR's products and technology and their expected performance characteristics, specifications and specific uses; and anticipated new product offerings and features. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including, without limitation, the following: future demand for NETGEAR's products may be lower than anticipated; consumers may choose not to adopt NETGEAR's new product offerings or adopt competing products; the actual price, performance and ease of use of NETGEAR products may not meet the price, performance and ease of use requirements of customers; product performance may be adversely affected by real world operating conditions; new cyber threats may challenge the effectiveness of features in NETGEAR's products; the ability of NETGEAR to market and sell its products and technology, the impact and pricing of competing products, and the introduction of alternative technological solutions; NETGEAR may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of NETGEAR's products or utilize competing products; NETGEAR may be unable to collect receivables as they become due; and NETGEAR may fail to manage costs. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Part I - Item 1A. Risk Factors,” pages 10 through 31, in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission on February 24, 2017. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
All product and company names herein are or may be trademarks of their respective owners.
Mission
Be the innovative leader in connecting the world to the Internet.
3
Strategy for Growth
Distribution
Innovation
Brand
4
5
Innovation
2013 2014 2015 2015
The Original Nighthawk Nighthawk X6 Nighthawk X4S Nighthawk X8
6
Nighthawk - Innovation in Premium WiFi
AD7200 Smart WiFi Router
®
Introducing the Nighthawk X10
New Ultra High Speed 802.11ad
1.7GHz Quad Core Processor
Plex Media Server Support
Ultimate 4K Streaming & VR Gaming
MSRP $499.99
7
DSL & Cable Range Extender Switching LTE Mobile Router
8
Nighthawk – Extended Across Product Lines
9
New Arlo Pro…
10
Arlo Pro
+
Mobile Connectivity
Seamless WiFi roaming in
the covered area
1 dedicated 5GHz band for
inter-Orbi stations traffic
Up to 2x Faster Than Any Competing Solutions
The World’s First Tri-Band WiFi Mesh System
Covers homes up to 5,000 sq. ft.
with 2 Orbi stations
Meet Orbi
2 dedicated bands (2.4GHz and
5GHz) for end user WiFi traffic
Add more Orbi stations to cover
bigger homes, front and backyards
Consistent high speed WiFi at
every corner of the house
Industry’s First Gigabit Unmanaged
Switches
2000
A History of Innovation in
SMB Switching
World’s First Smart Switch
2003
World’s First Stackable Smart Switch
2005
First Full Featured Smart Switch
2007
Industry’s First Lightly Managed
Plus Switch
2010
First Smart Switch with 10-Gigabit
2011
First All 10-Gigabit Smart Switch
First All 10-Gigabit
Plus Switch
2013
World’s First Click Switch for Flexible Mounting
2014
First 28-Port 10-Gigabit Smart Switch
Captures #1 Position
in Web-Managed Ethernet Switching
2015
Introduces Half Width Top of the Rack Switches
2016
Leadership in 10-Gigabit Switching
Fully Managed
Switches
“Smart” Fully
Web Managed
Switches
“Plus” Lightly
Web Managed
Switches
10GbE for mobility, voice, video and virtualization
PoE – one wire for power and connectivity
Unique “Spine & Leaf” Stacking – increased scalability
Easy mounting – flexible form factors
#1 Market Share in Web-Managed Switching
Entry-level management with web-browser based interface
Control and security features with lowest TCO
Network Control - QoS, VLAN, and IGMP
Network Security - Storm Control and DoS
Source: IHS Markit
16
17
Brand
18
High End WiFi Router Market Share NPD, US 1Q17
Source: The NPD Group / U.S. Monthly Retail Tracking Service, Premium Routers, 1Q17, based on dollar share
54%
23%
14%
7% 1% 1% 1%
NETGEAR
Linksys Group
ASUS
TP-Link
D-Link
Belkin
All Other
19
IP Camera Market Share NPD, US 1Q17
Source: The NPD Group / U.S. Monthly Retail Tracking Service, IP Camera, 1Q17, based on dollar share
33%
13%
9%
8%
8%
7%
3%
2%
2%
2%
13% NETGEAR
Nest / Dropcam
Lorex
Night Owl Security
Swann Communications
Samsung
Dps
Canary Communications
D-Link
Ring
All Other
20
Core Switches Market Share NPD, Retail, US 1Q17
Source: The NPD Group / U.S. Monthly Retail Tracking Service, Networking Devices, Hubs, Switches, 1Q17, based on dollar share
55%
13%
12%
5%
4%
3% 3%
1% 1% 2% NETGEAR
TP-Link
Ubiquiti Networks
Linksys Group
Cisco Systems
TRENDnet
D-Link
Luxul Wireless
Zyxel
All Other
21
Distribution
Global Brand and Distribution Biggest Competitive Advantage
65% 18% 17%
WORLDWIDE: 31,000 retail outlets 28,000 VARs
Geographic net revenue breakdown for 1Q17
22
23
Financials
24
Quarterly Net Revenue (Net Revenue, $ Millions)
$309
$289
$342 $361
$310 $312
$339
$368
$324
$0
$50
$100
$150
$200
$250
$300
$350
$400
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
New Segments Change
Segments Displayed Using FY16 Net Revenue
Legacy Segments
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CBU
SPBU
RBU
Revised Segments
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Connected
Home
SMB
Arlo
25
26
New Segments Performance (Net Revenue, $ Millions)
0
50
100
150
200
250
300
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Connected Home
Retail Service Provider
0
20
40
60
80
100
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Arlo
0
10
20
30
40
50
60
70
80
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
SMB
27
Regional Performance (Net Revenue, $ Millions)
0
50
100
150
200
250
300
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
Americas
0
20
40
60
80
100
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
EMEA
0
10
20
30
40
50
60
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
APAC
28
Operating Margin (Non-GAAP, % of Revenue)
9.2%
7.1%
10.3% 10.8%
11.9% 11.6% 11.5% 11.4%
10.0%
0%
2%
4%
6%
8%
10%
12%
14%
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
29
Earnings Per Share (Non-GAAP, $ per Share)
$0.46
$0.29
$0.67
$0.83
$0.74 $0.72
$0.76
$0.88
$0.64
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
30
Cash Balance (Cash, Cash Equivalents and Short-Term Investments, $ Millions)
$247
$213
$264 $278
$333 $353
$403
$366 $361
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17
31
Return of Capital
29.0
30.0
31.0
32.0
33.0
34.0
35.0
36.0
37.0
38.0
39.0
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
FY'12 FY'13 FY'14 FY'15 FY'16
Sha
res, M
illion
s $
US
D, M
illio
ns
Share repurchase ($) FCF Shares Outstanding
