Corporate Overview July 27, 2016

Transcription

1 Corporate Overview July 27, 2016

2 Safe Harbor Disclosure This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of Specifically, forward-looking statements within the meaning of the Safe Harbor include statements concerning: future revenue growth, increased profitability and increasing average sales prices of products; projections on market growth for IP cameras and mobile hotspots; future market opportunities for the Internet of Things in homes; projections on LTE product performance; service provider growth opportunities; projections of DOCSIS 3.1 internet speeds; 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 II - Item 1A. Risk Factors, pages 39 through 59, in the Company's quarterly report on Form 10-Q for the fiscal quarter ended April 3, 2016, filed with the Securities and Exchange Commission on May 6, 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. This presentation may reference wireless signal rates. Maximum wireless signal rate derived from IEEE Standard specifications. Actual data throughput will vary.

3 Mission: Be the innovative leader in connecting the world to the Internet.

4 4

5 #1 Global Brand and Distribution Biggest Competitive Advantage 67% 17% 16% WORLDWIDE: 28,000 retail outlets 29,000 VARs Geographic net revenue breakdown for 2Q16

6 Growth by Design Smart Homes RETAIL SERVICE PROVIDERS COMMERCIAL Next Generation Service Providers The 21 st Century SMB 6

7 Smart Homes

8 Whole Home WiFi Coverage- Nighthawk Routers $199 Nighthawk Dual Band, 3x3, 11ac $249 Nighthawk X4S Dual Band, 160MHz, MU-MIMO $299 Nighthawk X6 Tri-Band, 11ac $399 Nighthawk X8 Tri-Band, Wave 2, MU-MIMO, 11ac

9 Introducing the Nighthawk X8 Powerful enough for increasing 4K video streaming and gaming 2.16Gbps 5.0 GHz 2.16Gbps 5.0 GHz AC5300 WiFi Mbps Tri-band, Quad-stream Wave2 WiFi, MU-MIMO 1.4GHz dual core processor 1.0Gbps 2.4 GHz Industry s 1 st Active Antennas 6 Gigabit Ethernet LAN ports Dual Port Aggregation 9

10 Every Angle Covered Arlo Cameras Arlo $ Wire-Free 720p HD Video Arlo Q $ Wired 1080p HD Video 24/7 Continuous Video Recording Arlo Q Plus $ PoE 1080p HD Video SD Card Local Recording

11 The Arlo Smart Home Security Camera The World s First 100% Wire-free, HD IP Camera Weatherproof High Definition Built-in Day and Night Vision 100% Mobile Advanced Rules Engine 11

12 Introducing Arlo Q Plus The smart 1080p HD camera that simplifies security for your business Power Over Ethernet Power the camera and connect to your network with a single cable SD card Slot For local recording and backup for Internet interruptions

13 IP Camera Market US Retail cash ring, $ Millions) $600 $500 $400 $300 $200 $100 $0 Source: NPD and NETGEAR IP cash ring

14 Our Role in the Smart Home Today Enhanced by NETGEAR Genie software

15 Next Generation Service Providers

16 DOCSIS 3.1 Internet Speeds Achievable 1Mbps Upto 300 Mbps >1Gbps Cable Internet Speeds (4x4) 2010 (8x4) 2014 (16x4) 2015 (24x8) 2016 Speed in Mbps >3x Improvement NETGEAR is one of the first vendors to receive Cablelabs certification for a DOCSIS 3.1 product. NETGEAR is working with the nation s largest service provider to get the product certified and available in the retail market. NETGEAR is a leader in retail cable modem router market. Represents approximate real life speeds achievable, (higher speeds can be achieved in a lab setting).

17 World s First 4x4 11ac vdsl Voice Gateway Powerful dual-core 1GHz processor 1x Ethernet redundant Gbit WAN Input 4x Ethernet Gbit output WiFi speeds up to 2.8Gbps* 2x USB3.0 Host ports (1 front, 1 rear) 2x FXS Voice ports 1x FXO Voice port CAT-iq 2.0 DECT base station for Voice and HMA 4G / 3G Wireless Dongle Support for fall back VPN Support

18 Speed (Mbps) LTE-Advanced is the Game-Changer 18

19 Introducing the AirCard 815S Mobile Hotspot Life-proofed with IP65 (water splash/dust proof) and MIL810G (drop/shock proof) support Battery boosting of smartphones and portable devices via BatteryBoost Dual-band 2.4/5GHz Wi-Fi Guest WiFi network and WiFi offloading THE NETGEAR DIFFERENCE + Tough: Protects against splashes (IP65), dust, multiple shocks/drops (MIL810G) + High-Performance: Supports 4G LTE Advanced (LTE Cat 9), Dual-Band 2.4/5 GHz WiFi + Long-Lasting: Up to 22 hours of battery life + Powerful: Charges your smartphone battery + Secure: Offers Guest WiFi, Content filtering, VPN support & more + Global Compatibility: Travel internationally on 4G, 3G, & 2G + Easy: Connects up to 15 WiFi devices, 2.4 touchscreen with a dedicated home and back button + Convenient: Secure WiFi on-the-go, available on your terms, lendable

20 Billions Mobile Hotspot Market Mobile WiFi Router Worldwide Revenue First to market experience Leading operator partnership Superior software content Full channel and geographic coverage $6 NETGEAR Leadership $5 $4 $3 $2 $1 $ G Technologies 4G LTE (up to 100Mbps DL) 4G LTE Advanced (over 100Mbps DL) 20

21 21 st Century SMBs

22 A Leader in SMB Networking Enterprise technologies to SMBs Best customer experience Leader in HW and SW technologies Lowest total cost of ownership Full channel coverage 10Gig, PoE, Web Managed Switching 11ac WLAN Award Winning Click Switches 22

23 Transition to 21st Century SMB Network A Hybrid Cloud & Access Network Architecture Hybrid Cloud Private Cloud Data Center Public Cloud Big Data Center Internet Virtualization Access Networks Cloud Computing Mobility/Wireless/BYOD IP Convergence (voice, video and data) We can scale to larger SMBs with multiple branch access networks

24 Smart IT, Not Big IT Quadmode AP WAC720 and WAC730 PoE, 11ac WiFi up to 1.8Gbps 4 modes: standalone, ensemble management, cloud management, and controller management No need to change HW growing up from mode to mode, unique in industry ProSAFE 28-port 10-Gigabit Smart Managed Switch XS728T Revolutionary low cost per port making 10GE connectivity available to a new class of customer Advanced QoS (Quality of Service) with L2/L3/L4 awareness and 8 priority queues including Q-in-Q Static Routing (both IPv4 and IPv6), Private VLAN, and Dynamic VLAN assignment ReadyNAS 3138 Powerful Rack Mount Business Network Storage Intel Quad Core 2.4GHz CPU, 4 drive bays, up to 32 TB Certified for VMWare vsphere 6 24

25 NETGEAR s WLAN Solutions 1 Wi-Fi in K-12 Wi-Fi in Hospitality Wi-Fi in Assisted Living Cloud Management 1 Winning Customers Hearts Starts With a Great Guest WiFi Service, Forrester, June 2013, Hotels.com 2014

26 The Next Step Forward in Ease-of-Use Moving to the Cloud Seamless evolution from standalone to cloud managed First to deliver quad mode access points More software aware Evolving management for SMBs Full lifecycle experience Self defining networks 26

27 Financial Update

28 Quarterly Net Revenue Trend (Net Revenue, $ Millions) $400 $350 $338 $353 $353 $342 $361 $300 $309 $289 $310 $312 $250 $200 $150 $100 $50 $0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

29 Segment Performance (Net Revenue, $ Millions) Retail $220 $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 $164 $148 $131 $121 $132 $111 $198 $158 $171 Service Provider Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q $160 $140 $120 $100 $80 $60 $40 $20 $0 $151 $150 $126 $115 $94 $113 $99 $84 $67 $100 Commercial $80 $60 $75 $72 $79 $73 $63 $65 $64 $68 $74 $40 $20 $0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

30 Regional Net Revenue Performance (Net revenue, $ Millions) $240 $200 $160 $120 Americas $220 $232 $211 $188 $194 $195 $194 $174 $172 $140 $120 $100 $80 $60 $100 $108 $106 EMEA $89 $68 $78 $87 $65 $52 $80 $40 $0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 $60 $50 $40 $50 $51 $52 $46 $48 $40 $20 $0 $44 $42 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q APAC $52 $49 $30 $20 $10 $0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

31 Operating Margin (Non-GAAP, % of Revenue) 14.0% 12.0% 10.0% 10.1% 10.6% 10.1% 9.2% 10.3% 10.8% 11.9% 11.6% 8.0% 7.1% 6.0% 4.0% 2.0% 0.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Operating Margin

32 Earnings Per Share Trend (Non-GAAP, $ per Share) $0.90 $0.83 $0.80 $0.70 $0.72 $0.65 $0.67 $0.74 $0.72 $0.60 $0.58 $0.50 $0.46 $0.40 $0.30 $0.29 $0.20 $0.10 $0.00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q $ per Share

33 Cash Balance (Cash, Cash Equivalents and ST Investments, $ Millions) $400 $350 $333 $353 $300 $250 $243 $243 $257 $247 $264 $278 $213 $200 $150 $100 $50 33 $0 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 Cash Balance

34 $ USD, Millions Return of Capital $ $ $ $ Shares, Millions $ $ $20.0 FY '12 FY '13 FY '14 FY '15 Share Repurchase FCF Common Stock Outstanding 25.0

35 Investment Highlights Exciting New Market Opportunities Smart Homes Nighthawk and Arlo 21 st Century SMBs 10G/PoE Switches, WLAN and Storage Next Generation Service Providers LTE-A, DOCSIS 3.1, vdsl, Fiber Global Brand & Distribution Network Second To None With 28,000 Retail Outlets and 29,000 Value Added Resellers Worldwide Industry Leading Wireless Expertise For both WiFi and LTE Strong Balance Sheet Debt free, strong cash flow