NETGEAR Inc (NTGR) 2023 Q2 法說會逐字稿

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.

女士們先生們，謝謝你們的支持。 （操作員說明）。我現在想把會議交給艾瑞克·拜林。請繼續，先生。

Thank you, David. Good afternoon, and welcome to NETGEAR's Second Quarter of 2023 Financial Results Conference Call. Joining us from the company are Mr. Patrick Lo, Chairman and CEO; and Mr. Bryan Murray, CFO.

謝謝你，大衛。下午好，歡迎參加 NETGEAR 2023 年第二季財務業績電話會議。與我們一同出席的還有公司主席兼執行長羅偉強先生；和財務長 Bryan Murray 先生。

The format of the call will start with a review of the financials for the second quarter provided by Bryan, followed by a detailed commentary on the business provided by Patrick, and finish with the third quarter of 2023 guidance provided by Bryan. We'll then have time for any questions. If you have not received a copy of today's release, please visit NETGEAR's Investor Relations website at www.netgear.com.

電話會議的形式將首先由 Bryan 提供第二季度的財務狀況回顧，然後由 Patrick 提供對業務的詳細評論，最後由 Bryan 提供 2023 年第三季度的指導。然後我們將有時間回答任何問題。如果您尚未收到今天發布的副本，請造訪 NETGEAR 投資者關係網站 www.netgear.com。

Before we begin the formal remarks, we advise you that today's conference call contains forward-looking statements. Forward-looking statements include statements regarding expected revenue, operating margins, tax rates, expenses and future business outlook. Actual results or trends could differ materially from those contemplated by these forward-looking statements. For more information, please refer to the risk factors discussed in NETGEAR's periodic filings with the SEC, including the most recent Form 10-Q.

在我們開始正式發言之前，我們建議您今天的電話會議包含前瞻性陳述。前瞻性陳述包括有關預期收入、營業利潤、稅率、費用和未來業務前景的陳述。實際結果或趨勢可能與這些前瞻性陳述預期的結果或趨勢有重大差異。如需了解更多信息，請參閱 NETGEAR 向 SEC 定期提交的文件中討論的風險因素，包括最新的 10-Q 表。

Any forward-looking statements that we make on this call are based on assumptions as of today, and NETGEAR undertakes no obligation to update these as a result of new information or future events. In addition, several non-GAAP financial measures will be mentioned on this call. A reconciliation of the non-GAAP to GAAP measures can be found in today's press release on our Investor Relations website.

我們在本次電話會議中所做的任何前瞻性陳述均基於截至目前的假設，NETGEAR 不承擔因新資訊或未來事件而更新這些陳述的義務。此外，本次電話會議也將提及多項非公認會計準則財務指標。非公認會計準則與公認會計準則衡量標準的調節可在我們投資者關係網站上今天的新聞稿中找到。

At this time, I would now like to turn the call over to Mr. Bryan Murray.

現在，我想將電話轉給布萊恩·莫瑞先生。

Thank you, Erik, and thank you, everyone, for joining today's call. We are pleased by the execution of our team this quarter as we delivered net revenue above the high end of our guidance range. For the quarter ended July 2, 2023, revenue was $173.4 million, down 22.3% year-over-year and down 4.1% on a sequential basis.

謝謝艾瑞克，也謝謝大家參加今天的電話會議。我們對本季團隊的執行力感到高興，因為我們的淨收入高於指導範圍的高端。截至 2023 年 7 月 2 日的季度，營收為 1.734 億美元，年減 22.3%，季減 4.1%。

Enabled by increased demand, our largest service provider partner outperformed our original expectations. In the retail portion of our CHP business, our premium products, which consist of our Orbi 8 and 9 Tri- and Quad-band WiFi mesh products and 5G mobile hotspots, once again outperformed the broader market, with worldwide sales to end users growing year-over-year and sequentially. Also, we're beginning to see positive signs in the retail networking market, and its channel inventory are stabilizing.

由於需求增加，我們最大的服務提供者合作夥伴的表現超出了我們最初的預期。在我們的熱電聯產業務的零售部分，我們的優質產品（包括Orbi 8 和9 三頻和四頻WiFi 網狀網路產品以及5G 行動熱點）的表現再次優於更廣泛的市場，全球終端用戶的銷售額在這一年中不斷增長- 同比和連續。此外，我們開始看到零售網路市場的正面跡象，其通路庫存正在穩定。

Momentum behind our ProAV line of managed switches delivered another strong quarter in end user sales, up 44% year-over-year, more than offsetting some of the weakness in the traditional SMB market, which has been negatively impacted by the uncertain macroeconomic environment, particularly in Asia and Europe. While we outperformed our Q2 expectations on the top line, we continue to experience meaningful headwinds in the form of $29 million of channel inventory reductions across both our CHP and SMB businesses during the quarter.

我們的 ProAV 託管交換器系列背後的動力為最終用戶銷售帶來了另一個強勁的季度，同比增長 44%，足以抵消傳統中小企業市場的一些疲軟，該市場受到不確定的宏觀經濟環境的負面影響，特別是在亞洲和歐洲。雖然我們在第二季的營收表現超出了預期，但我們仍然面臨重大阻力，即本季我們的 CHP 和 SMB 業務的通路庫存減少了 2,900 萬美元。

Additionally, a higher mix of service provider revenue and seasonality in our CHP retail channel business affected our gross margins. Accordingly, we delivered non-GAAP operating loss of $10.7 million and non-GAAP operating margin of negative 6.2%, with the margin coming in at the high end of our guidance range. This was down 430 basis points compared to the year ago period and a decline of 230 basis points compared to the prior quarter.

此外，我們的熱電聯產零售通路業務的服務提供者收入和季節性的較高組合影響了我們的毛利率。因此，我們的非 GAAP 營運虧損為 1,070 萬美元，非 GAAP 營運利潤率為負 6.2%，利潤率處於我們指導範圍的高端。與去年同期相比下降了 430 個基點，與上一季相比下降了 230 個基點。

For the second quarter of 2023, net revenue for the Americas was $116.6 million, a decline of 19% year-over-year and down 4.4% on a sequential basis. EMEA net revenue was $36.2 million, a decrease of 19.6% year-over-year and down 7.7% quarter-over-quarter. Our APAC net revenue was $20.6 million, which is down 39.7% from the prior year comparable period and up 4.2% sequentially. Our APAC revenue saw outsized declines due to a significant market slowdown in Greater China and Korea.

2023年第二季度，美洲地區淨收入為1.166億美元，年減19%，季減4.4%。歐洲、中東和非洲地區淨收入為 3,620 萬美元，年減 19.6%，季減 7.7%。我們的亞太地區淨收入為 2,060 萬美元，比上年同期下降 39.7%，比上一季成長 4.2%。由於大中華區和韓國市場顯著放緩，我們的亞太地區收入大幅下降。

For the second quarter of 2023, we shipped a total of approximately 1.6 million units, including 830,000 nodes of wireless products. Shipments of our wired and wireless routers and gateways combined were about 426,000 units for the second quarter of 2023. The net revenue split between home and business products was about 57% and 43%, respectively. The net revenue split between wireless and wired products was about 55% and 45%, respectively.

2023年第二季度，我們總共出貨約160萬台，其中無線產品節點83萬個。 2023 年第二季度，我們的有線和無線路由器及網關的出貨量合計約為 426,000 台。無線和有線產品的淨收入佔比分別約為 55% 和 45%。

Products introduced in the last 15 months constituted about 20% of our second quarter shipments, while products introduced in the last 12 months contributed about 12% of our second quarter shipments. From this point on, my discussion points will focus on non-GAAP numbers. The reconciliation from GAAP to non-GAAP is detailed in our earnings release distributed earlier today.

過去 15 個月推出的產品約占我們第二季出貨量的 20%，而過去 12 個月推出的產品約占我們第二季出貨量的 12%。從現在開始，我的討論點將集中在非公認會計原則數字上。我們今天稍早發布的財報中詳細介紹了從 GAAP 到非 GAAP 的調整。

Non-GAAP gross margin in the second quarter of 2023 was 31.6%, which is up 390 basis points as compared to 27.7% in the prior year comparable period and down 200 basis points compared to 33.6% in the first quarter of 2023. As compared to the prior year period, improved supply for our premium, higher-margin CHP products and considerably lower total freight costs drove the improvement. As compared to the prior quarter, Q2 experienced a higher mix of service provider revenue and seasonal impact to our CHP retail channel business.

2023年第二季非美國通用會計準則毛利率為31.6%，較上年同期的27.7%上升390個基點，較2023年第一季的33.6%下降200個基點。優質、高利潤熱電聯產產品的供應增加以及總貨運成本的大幅降低推動了業績的改善。與上一季相比，第二季服務供應商收入和季節性影響對我們的熱電聯產零售通路業務的影響更大。

Total Q2 non-GAAP operating expenses came in at $65.5 million, which is down 0.9% year-over-year and down 3.6% sequentially. Our headcount was 653 as of the end of the quarter, down from 702 in Q1. We will continue to strategically invest in our business and hire in key areas we believe will deliver future growth and profitability, such as ProAV managed switches, premium Orbi WiFi mesh systems, 5G mobile hotspots and subscription services. However, we continue to evaluate other areas of the business on a regular basis, driving further cost efficiencies.

第二季非 GAAP 營運支出總額為 6,550 萬美元，較去年同期下降 0.9%，較上季下降 3.6%。截至本季末，我們的員工人數為 653 人，低於第一季的 702 人。我們將繼續對我們的業務進行策略性投資，並在我們認為將帶來未來成長和獲利能力的關鍵領域進行招聘，例如 ProAV 託管交換器、優質奧秘 WiFi 網狀系統、5G 行動熱點和訂閱服務。然而，我們繼續定期評估業務的其他領域，進一步提高成本效率。

Our non-GAAP R&D expense for the second quarter was 11.4% of net revenue as compared to 9.5% of net revenue in the prior year comparable period and 11.6% of net revenue in the first quarter of 2023. To continue our technology and subscription service leadership, we are committed to continued investment in R&D. Our non-GAAP tax expense was a benefit of $4 million in the second quarter of 2023. Looking at the bottom line for Q2, we reported non-GAAP net loss of $4.7 million and non-GAAP diluted net loss per share of $0.16.

我們第二季的非 GAAP 研發費用佔淨收入的 11.4%，而去年同期佔淨收入的 9.5%，2023 年第一季佔淨收入的 11.6%。致力於持續投資研發。 2023 年第二季度，我們的非GAAP 稅收支出為400 萬美元。 。

Turning to the balance sheet. We ended the second quarter of 2023 with $202.8 million in cash and short-term investments, down $36.4 million from the prior quarter. During the quarter, $34.6 million of cash was used by operations, which brings our total cash used by operations over the trailing 12 months to $45.6 million. We used approximately $700,000 in purchase of property and equipment during the quarter, which brings our total cash used for capital expenditures over the trailing 12 months to $5.3 million. We expect to return to positive free cash flow in the second half of the year as we make further progress in reducing our inventory and our bottom line improves.

轉向資產負債表。截至 2023 年第二季度，我們的現金和短期投資為 2.028 億美元，比上一季減少 3,640 萬美元。本季度，營運使用了 3,460 萬美元的現金，這使得過去 12 個月營運使用的現金總額達到 4,560 萬美元。本季我們使用了約 70 萬美元購買財產和設備，這使得我們過去 12 個月用於資本支出的現金總額達到 530 萬美元。隨著我們在減少庫存方面取得進一步進展並且我們的利潤得到改善，我們預計下半年將恢復正的自由現金流。

Now turning to the second quarter results of our product segments. The Connected Home segment, which includes our industry-leading Orbi, Nighthawk, Nighthawk Pro Gaming, Armor and Meural brands, generated net revenue of $98.4 million during the quarter, down 23.6% on a year-over-year basis and down 4.2% sequentially. We experienced a year-over-year decline in both the retail and service provider channels, as the year ago period was still experiencing relatively elevated demand and higher inventory carrying levels at our channel partners.

現在轉向我們產品部門的第二季業績。互聯家庭部門包括我們業界領先的 Orbi、Nighthawk、Nighthawk Pro Gaming、Armor 和 Meural 品牌，本季淨收入為 9,840 萬美元，年減 23.6%，季減 4.2% 。我們的零售和服務供應商通路均出現年減，因為去年同期我們的通路合作夥伴的需求仍然相對較高，庫存水準較高。

Despite a year-over-year double-digit decline in the consumer retail networking market overall in Q2, our premium Orbi 8 and 9 WiFi mesh and 5G mobile hotspots once again materially outperformed the market, with worldwide sales to end users growing over the same period. Importantly, these higher-margin, high-end products with higher ASPs allowed us to deliver revenue above the high end of our guidance. This is clear validation of the long-term growth and profitability potential of our core strategy.

儘管第二季消費零售網路市場整體年比出現兩位數下滑，但我們的優質奧秘 8 和 9 WiFi 網狀網路和 5G 行動熱點再次大幅跑贏市場，全球終端用戶銷售額年成長時期。重要的是，這些利潤率較高、平均售價較高的高端產品使我們能夠實現高於指導上限的收入。這清楚地驗證了我們核心策略的長期成長和獲利潛力。

On the SMB side, net revenue came in at $75 million in the second quarter, led by continued strong demand for our ProAV managed switch products. While we continue to be challenged by channel inventory compression to historically low levels as partners navigate through the uncertain macroeconomic environment, SMB end user sales were up high single digits year-on-year, demonstrating strong market momentum of our ProAV line of products.

在中小企業方面，由於對我們的 ProAV 託管交換器產品的持續強勁需求，第二季淨收入達到 7,500 萬美元。儘管隨著合作夥伴在不確定的宏觀經濟環境中前進，我們繼續面臨渠道庫存壓縮至歷史低水平的挑戰，但中小企業最終用戶銷售額同比增長了高個位數，這證明了我們的ProAV 系列產品強勁的市場動能。

Despite these near-term headwinds, it's clear that the strategic investments we've made in the rapidly expanding ProAV market continued to pay off, with end user sales in this category growing 44% as compared to the prior year. While we materially lowered channel inventory in the first half of the year across both businesses, elevated interest rates and macroeconomic uncertainty remain top of mind for our partners.

儘管存在這些近期不利因素，但很明顯，我們在快速擴張的 ProAV 市場中所做的策略性投資繼續獲得回報，該類別的最終用戶銷售額與上一年相比增長了 44%。儘管我們在上半年大幅降低了兩項業務的通路庫存，但利率上升和宏觀經濟不確定性仍然是我們合作夥伴最關心的問題。

We continue to expect top line headwinds throughout the second half of the year as our channel partners constrain both CHP and SMB products to historically low inventory carrying levels. However, we expect the revenue impact in the second half of the year to be smaller than the first half. Encouragingly, we are starting to see indicators that the broader consumer retail networking market is beginning to stabilize. And the market should remain steady as we move through the remainder of the year.

由於我們的通路合作夥伴將 CHP 和 SMB 產品限制在歷史低點的庫存水平，我們預計下半年將繼續面臨頂線阻力。不過，我們預計下半年對營收的影響將小於上半年。令人鼓舞的是，我們開始看到更廣泛的消費者零售網路市場開始穩定的跡象。隨著今年剩餘時間的推移，市場應該會保持穩定。

Despite our top line remaining challenged due to the inventory reduction in the near term, customer appetite for our premium CHP products and our SMB ProAV products remained strong, a positive indicator of the product [shift] underlying our business. I'll touch on this more when covering our guidance for the third quarter of 2023.

儘管由於近期庫存減少，我們的營收仍面臨挑戰，但客戶對我們的優質 CHP 產品和 SMB ProAV 產品的需求仍然強勁，這是我們業務基礎產品[轉變]的積極指標。我將在介紹 2023 年第三季的指導時進一步討論這一點。

I'll now turn the call over to Patrick for his commentary.

我現在將把電話轉給帕特里克，聽聽他的評論。

Thank you, Bryan. I'm pleased that our results in Q2 came in above our guidance. It's clear that the growth areas that we have based our strategy on, namely premium WiFi mesh systems, 5G mobile hotspots and paid service subscriptions as well as ProAV managed switches saw continued momentum even in the face of macroeconomic headwinds. We remain confident that these strategic investments will help lead NETGEAR to long-term growth and profitability expansion. Despite the headwinds of our channel partners optimizing the inventory levels to historically low levels, our higher margin, higher ASP premium products are selling well together with a rising paid subscriber base.

謝謝你，布萊恩。我很高興我們第二季的結果超出了我們的指導。很明顯，我們策略所依據的成長領域，即優質 WiFi 網狀系統、5G 行動熱點和付費服務訂閱以及 ProAV 託管交換機，即使在宏觀經濟逆風的情況下也保持了持續的成長勢頭。我們仍然相信，這些策略投資將有助於引領 NETGEAR 實現長期成長和獲利能力擴張。儘管我們的通路合作夥伴將庫存水準優化至歷史低水平，但我們的利潤率更高、平均售價更高的優質產品隨著付費用戶群的不斷增長而銷售良好。

Accordingly, we delivered strong non-GAAP gross margin of 31.6%, an increase of 390 basis points year-over-year and a testament to the improving transition to the high end of our product portfolio. As the market continues to stabilize, we have begun to see signs of normal seasonality, which gives us hope that we will experience improved predictability in our business once channel inventory reduction abates.

因此，我們實現了 31.6% 的強勁非 GAAP 毛利率，年增 390 個基點，證明了我們產品組合向高端過渡的改善。隨著市場持續穩定，我們已經開始看到正常季節性的跡象，這給我們帶來希望，一旦通路庫存減少減弱，我們的業務可預測性將得到改善。

In our CHP business, the demand for our high-speed, high-performance WiFi mesh systems is strong. For our best-selling Orbi 8 and Orbi 9 mesh WiFi products, end user sales grew year-over-year, solidifying confidence in our road map for the second half of the year as the imminent WiFi 7 upgrade cycle begins with our rollout of WiFi 7 Orbi mesh. We expect ASP's margin and service attach rates to expand in tandem and are confident in our ability to deliver long-term growth and profitability.

在我們的熱電聯產業務中，對高速、高效能 WiFi 網狀系統的需求非常強勁。對於我們最暢銷的 Orbi 8 和 Orbi 9 網狀 WiFi 產品，最終用戶銷量同比增長，鞏固了我們對下半年路線圖的信心，因為即將到來的 WiFi 7 升級週期從我們推出 WiFi 開始7 奧秘網。我們預計 ASP 的利潤率和服務附加率將同步成長，並對我們實現長期成長和獲利能力充滿信心。

Other than our recently announced WiFi 7 routers, the Nighthawk RS700, we will start shipping our WiFi 7 Orbi mesh, [Orbi 9 7x] during Q3. Together, they will form our initial push into WiFi 7, with additional new WiFi 7 products to follow in the coming quarters. We look forward to the new WiFi 7 upgrade cycle beginning in 2024.

除了我們最近發布的 WiFi 7 路由器 Nighthawk RS700 之外，我們還將在第三季開始出貨 WiFi 7 Orbi 網狀網路 [Orbi 9 7x]。它們將共同構成我們對 WiFi 7 的初步推動，並在未來幾季推出更多新的 WiFi 7 產品。我們期待 2024 年開始新的 WiFi 7 升級週期。

Demand for our Nighthawk M6 and M6 Pro 5G mobile hotspots also remained strong. And these products saw end-user sales in the retail channel grow both year-over-year and quarter-over-quarter. The flexibility that an unlocked mobile hotspots offers is unmatched, and NETGEAR solutions are truly best-in-class. Traction behind the unlocked category of hotspots remains solid and end-user demand grew double digits sequentially.

對 Nighthawk M6 和 M6 Pro 5G 行動熱點的需求也依然強勁。這些產品在零售通路的最終用戶銷售額年比和季比均有所成長。未鎖定的行動熱點提供的靈活性是無與倫比的，NETGEAR 解決方案確實是一流的。未鎖定熱點類別背後的吸引力仍然強勁，最終用戶需求連續成長兩位數。

In Q3, we are refreshing our lineup with a new upgraded international version of our M6 Pro. We plan to add support of all 3 major domestic carriers along with the international roaming in 125 countries, which would greatly expand our addressable market. At an MSRP of $999, it will further improve ASPs, unit growth and uplift margins over time.

在第三季度，我們推出了全新升級的 M6 Pro 國際版，刷新了我們的產品陣容。我們計劃增加對國內三大業者的支持以及 125 個國家的國際漫遊，這將大大擴大我們的潛在市場。建議零售價為 999 美元，隨著時間的推移，它將進一步提高平均售價、銷售成長和利潤率。

These exciting new products will be key contributors to top and bottom line growth for CHP in this seasonally stronger second half of the year as the retail channel inventory reduction abates. With more new products on the way, and further expansion of our direct-to-consumer web store sales worldwide, we're excited with the prospects of renewed top and bottom line growth of our CHP business in the back half of 2023 and into 2024.

隨著零售通路庫存減少的減弱，這些令人興奮的新產品將成為今年下半年季節性強勁的熱電聯產收入和利潤成長的關鍵貢獻者。隨著更多新產品的推出，以及我們在全球範圍內直接面向消費者的網上商店銷售的進一步擴大，我們對2023 年下半年和2024 年熱電聯產業務的營收和利潤重新增長的前景感到興奮。

Outside of our hardware offerings, we are experiencing growing demand of our NETGEAR Armor service, which is the only protection built directly into the router and can protect every connected device in your home. More and more connected devices are becoming integral parts of a smart home setup and as our research together with Bitdefender has shown, smart TVs and smart power plugs are the most hacked devices. Customers who refuse to compromise on cybersecurity and privacy are trusting NETGEAR Armor as the first line of defense.

除了我們的硬體產品之外，我們對 NETGEAR Armor 服務的需求也不斷增長，這是唯一直接內建在路由器中的保護措施，可以保護您家中的每個連接設備。越來越多的連網裝置正在成為智慧家庭設定中不可或缺的一部分，我們與 Bitdefender 的研究表明，智慧電視和智慧電源插頭是最常被駭客攻擊的裝置。拒絕在網路安全和隱私問題上妥協的客戶信任 NETGEAR Armor 作為第一道防線。

Given that NETGEAR Armor is the most comprehensive security solution available today, in the second quarter, we grew our paid subscribers by 22.9% year-over-year, ending the first quarter -- the second quarter with 804,000 subscribers. Service revenue grew to $10.3 million, up 29.6% year-over-year and up 7.2% sequentially. Our messaging around the cyber protection services that only NETGEAR Armor can offer is clearly resonating with customers, and we are steadily working towards our goal of 875,000 paid subscribers by the end of this year.

鑑於 NETGEAR Armor 是當今最全面的安全解決方案，第二季度我們的付費用戶數量年增了 22.9%，截至第一季末，第二季的用戶數量為 804,000 名。服務收入增至 1,030 萬美元，年增 29.6%，季增 7.2%。我們圍繞著只有 NETGEAR Armor 才能提供的網路保護服務的資訊顯然引起了客戶的共鳴，並且我們正在穩步努力實現到今年年底擁有 875,000 名付費用戶的目標。

We're also seeing strong growth in sales via our online direct-to-consumer stores worldwide, which remains a key element of our premium strategy. Our direct store provides the best platform to cater to premium, performance-conscious, less price-sensitive customers. With improved customer satisfaction and maximization of the wallet share and higher service attach rate. As our footprint with this highly profitable channel grows larger, we anticipate growing our subscriber base in tandem with the building momentum behind the premium segment of the market. We will continue to invest and grow this channel across the globe to drive our premium and subscription strategy.

我們也看到全球線上直接面向消費者商店的銷售額強勁成長，這仍然是我們高端策略的關鍵要素。我們的直營店提供了最佳平台來迎合高端、注重性能、對價格不太敏感的客戶。隨著客戶滿意度的提高、錢包份額的最大化以及更高的服務附加率。隨著我們在這個高利潤管道的足跡不斷擴大，我們預計我們的用戶群將隨著高端市場背後的勢頭不斷增強而成長。我們將繼續在全球範圍內投資和發展該管道，以推動我們的優質和訂閱策略。

Turning to our SMB business. NETGEAR's ProAV managed Ethernet switch products once again saw strong end customer growth, up 44% year-over-year. It is clear that the technological differentiation inherent in our ProAV managed Ethernet switch products is resonating with customers. With a solid presence around the globe, NETGEAR is a leader in the ProAV market, and we made progress in growing our manufacturer and integrated partnerships worldwide.

轉向我們的中小企業業務。 NETGEAR 的 ProAV 託管乙太網路交換器產品再次見證了終端客戶的強勁成長，年增 44%。顯然，我們的 ProAV 託管乙太網路交換器產品固有的技術差異引起了客戶的共鳴。 NETGEAR 在全球擁有穩固的影響力，是 ProAV 市場的領導者，我們在發展全球製造商和整合合作夥伴關係方面取得了進展。

As the industry transition from cumbersome unlocked solutions to ultrahigh resolution, intelligent digital AV over IP, we are proactively expanding into new verticals to unlock even greater available market opportunities, such as the custom residential integration and broadcast markets.

隨著業界從繁瑣的解鎖解決方案過渡到超高解析度、智慧數位 AV over IP，我們正在積極擴展到新的垂直領域，以釋放更大的可用市場機會，例如客製化住宅整合和廣播市場。

It's not only our customers and partners who are excited about our robust portfolio, industry experts are also recognizing the innovation of our ProAV line, which was designed with products specifically tailored to the unique needs of the AV industry. We are honored that our recently introduced M4350 ProAV managed switch won the InfoComm AV Technology Award for Best of Show last month in Orlando, Florida.

不僅我們的客戶和合作夥伴對我們強大的產品組合感到興奮，行業專家也認識到我們 ProAV 系列的創新，該系列產品是專為滿足 AV 行業的獨特需求而設計的。我們很榮幸我們最近推出的 M4350 ProAV 管理型交換器上個月在佛羅裡達州奧蘭多榮獲 InfoComm AV 技術獎最佳展示獎。

This powerful AV over IP managed switch enables even more PoE power budget and more 25 gigabits per second ports, all with low latency, low jitter and largest transport of AV signals. Furthermore, on the software side, we will add support of the video broadcast protocol of SMPTE 2110 later this year. As such, we expect our highly profitable SMB business to resume its trajectory in becoming a greater part of our revenue mix and improve overall margins heading into 2024.

這款功能強大的 AV over IP 託管交換機可實現更多 PoE 功率預算和更多每秒 25 GB 的端口，所有這些都具有低延遲、低抖動和最大的 AV 信號傳輸能力。此外，在軟體方面，我們將在今年稍後添加對SMPTE 2110視訊廣播協定的支援。因此，我們預計，到 2024 年，我們高利潤的中小企業業務將恢復其軌道，成為我們收入組合的更大組成部分，並提高整體利潤率。

And with that, I'll turn it back over to Bryan to comment on our opportunities and challenges in the coming quarters and year.

接下來，我將把它轉回給 Bryan，讓他評論我們在未來幾季和一年中的機會和挑戰。

Thank you, Patrick. 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 are starting to see indicators that the broader consumer retail networking market is beginning to stabilize.

謝謝你，派崔克。即使面臨持續的廣泛通膨壓力和不確定的宏觀經濟環境，我們預計中小企業業務和熱電聯產產品組合的優質部分將繼續面臨強勁的潛在需求。我們開始看到更廣泛的消費者零售網路市場開始穩定的跡象。

However, as interest rates remain high, we will continue to work with our channel partners across both businesses to optimize their inventory carrying levels, but expect a revenue impact from these efforts to be at a lesser level than experienced in the second quarter.

然而，由於利率仍然很高，我們將繼續與兩家公司的通路合作夥伴合作，優化他們的庫存水平，但預計這些努力對收入的影響將低於第二季的水平。

Accordingly, we expect our third quarter net revenue to be in the range of $175 million to $190 million. We expect third quarter GAAP operating margin to be in the range of negative 7% to negative 4%, and non-GAAP operating margin to be in the range of negative 4% to negative 1%. Our GAAP tax rate is expected to be approximately 15% and our non-GAAP tax rate is expected to be 25% for the third quarter of 2023.

因此，我們預計第三季淨收入將在 1.75 億美元至 1.90 億美元之間。我們預計第三季 GAAP 營業利潤率將在負 7% 至負 4% 範圍內，非 GAAP 營業利潤率將在負 4% 至負 1% 範圍內。 2023 年第三季度，我們的 GAAP 稅率預計約為 15%，非 GAAP 稅率預計為 25%。

We would now like to answer any questions from the audience.

現在我們想回答觀眾提出的任何問題。

(Operator Instructions) We'll take our first question from Hamed Khorsand with BWS Financial.

（操作員說明）我們將接受 BWS Financial 的 Hamed Khorsand 提出的第一個問題。

So my first question was, could you just talk a little bit more about the service provider order? How much was it for you as far as total revenue is concerned? And does this change your outlook as what service provider revenue would look like for the full year?

所以我的第一個問題是，您能多談談服務提供者訂單嗎？就總收入而言，您的收入是多少？這是否會改變您對服務提供者全年收入的預期？

Yes. On the quarter, we unlocked upside of about $10 million from service provider, largely coming from our biggest partner there. And I'd say the majority of that was coming from upside demand in the quarter. There was some, I guess, more rational thought put into inventory carrying levels.

是的。本季度，我們從服務提供者釋放了約 1000 萬美元的收益，其中大部分來自我們最大的合作夥伴。我想說，其中大部分來自本季的上行需求。我猜想，對於庫存水準有一些更理性的思考。

You may recall that we discussed last quarter that they were working inventory down to an extremely low level never seen before. They softened that a little bit, but most of that $10 million upside is coming from incremental demand pull-through. In terms of going forward and outlook, I would say that the $25 million per quarter level is probably the outlook that we would guide people to at this point.

您可能還記得我們在上個季度討論過他們正在將庫存降至前所未有的極低水平。他們稍微軟化了這一點，但這 1000 萬美元的上漲大部分來自於增量需求的拉動。就未來和前景而言，我想說的是，每季 2500 萬美元的水平可能是我們目前引導人們達到的前景。

Okay. And then as far as the home is concerned in retail, usually, Q3 has been a strong spot for you seasonality-wise. What are you not seeing that you would like to see?

好的。就零售業而言，通常第三季對您來說是季節性的強勢點。有哪些是你想看到但沒看到的？

No. Actually, we are actually going to see a seasonality returning. So the normal seasonality uplift of 10%, we expect that to happen this Q3.

不。因此，我們預計第三季會出現 10% 的正常季節性成長。

Okay. And then as far as just pricing and discounts are concerned, what is it that's preventing you from reaching a breakeven or positive operating margin?

好的。那麼就定價和折扣而言，是什麼阻礙您實現損益兩平或正營業利潤率？

Well, there's still some channel destocking. We believe that the channel destocking will last another 2 quarters. We're definitely shipping a lot less than what we actually sold through in the end-user market. That's basically hurting us from a bottom line perspective.

嗯，還有一些管道去庫存。我們認為渠道去庫存還將持續兩個季度。我們的出貨量肯定比我們在最終用戶市場上實際銷售的少得多。從底線的角度來看，這基本上傷害了我們。

Yes. And if I just might add there, the Q2 destocking level that Patrick was referring to was quite sizable, about $29 million. You may recall that Q1 was about $37 million. So it's been pretty meaningful in the first half of the year. It's going to continue in the back half, but we think it's probably at a level of about half of what we saw in the first half and probably a little more front loaded towards Q3. And for that reason, we would likely expect a step-up in Q4, probably in the neighborhood of about 10%, which we do think takes us to that non-GAAP level of profitability in the low single-digit margin level.

是的。如果我想補充一點的話，帕特里克提到的第二季度去庫存水準相當大，約為 2900 萬美元。您可能還記得第一季的銷售額約為 3700 萬美元。所以上半年是非常有意義的。這種情況將在後半段繼續，但我們認為它可能處於我們上半場看到的水平的一半左右，並且可能在第三季度之前有所增加。基於這個原因，我們可能會預期第四季度會出現成長，可能在 10% 左右，我們確實認為這將使我們達到低個位數利潤水平的非 GAAP 獲利水平。

Next, we'll go to Jake Norrison with Raymond James.

接下來，我們將邀請傑克·諾里森和雷蒙德·詹姆斯。

Perfect. So just talking about that again. So you've said you're seeing signs that the broader retail network market could be stabilizing and you had confidence that inventory levels in the channel are going to stabilize. Can you just provide more color on what you're seeing from both fronts there? There's going to be a lot of investors asking about the back half load with the operating margin expectation in 4Q, if you could just unpack that, that would be perfect.

完美的。所以只是再次談論這個。因此，您說過，您看到了更廣泛的零售網路市場可能趨於穩定的跡象，您有信心通路中的庫存水準將會穩定。您能否提供更多關於您從兩個方面看到的情況的資訊？將會有許多投資者詢問第四季度營業利潤率預期的後半負荷，如果你能解開這個問題，那就完美了。

Well, what we're seeing is every quarter, relative to pre-pandemic level, the decline is stabilizing. For example, for the last 3 quarters, each quarter's market size in U.S. retail is roughly about 15% below the pre-pandemic level. It hasn't deteriorated. So that's what we mean by stabilizing. Because of that, then the market is following the normal seasonality. That means based on -- using Q1 as a base and Q2 is down, roughly about 5%. And Q2 to Q3, we expect it to be up 10%. And then Q3 to Q4, we expect it to be flat or slightly up. So that's the normal seasonality returning because the entire market shrinkage is stabilizing relatively to the pre-pandemic level. So that's what we mean.

嗯，我們看到的是，相對於大流行前的水平，每季的下降都在趨於穩定。例如，在過去的三個季度中，美國零售業每季的市場規模比疫情前的水平大約低15%左右。它並沒有惡化。這就是我們所說的穩定。因此，市場遵循正常的季節性。這意味著以第一季為基礎，第二季下降了大約 5% 左右。第二季到第三季度，我們預計將成長 10%。然後第三季度到第四季度，我們預計將持平或略有上升。所以這是正常的季節性回歸，因為整個市場的萎縮相對於大流行前的水平正在穩定。這就是我們的意思。

In terms of channel inventory stabilizing, which means that because, think about this, they used to carry 12 weeks of inventory of a bigger market. Now when the market shrinks, not only that they would shrink to 12 weeks of the smaller market, they actually would like to shrink to 8 to 10 weeks of the smaller markets. I think we're getting there. right? We're getting there. I think it will take us 2 more quarters to get there to about 9 weeks of the smaller market, yes.

就通路庫存穩定而言，這意味著因為，想一想，他們曾經擁有一個更大市場的 12 週庫存。現在當市場萎縮時，他們不僅要縮小到12週的小市場，實際上還想縮小到8到10週的小市場。我想我們已經成功了。正確的？我們快到了。是的，我認為我們還需要 2 個季度才能達到約 9 週的較小市場。

Okay. Perfect. And then last one from me, a little more high level. Just talk about the WiFi 7 refresh opportunity in '24 and if we'll see any ASP degradation for the WiFi 6 devices.

好的。完美的。然後是我的最後一篇，等級更高一些。只要談談 24 年 WiFi 7 更新機會以及我們是否會看到 WiFi 6 裝置的 ASP 下降。

We don't believe so because of the technology of WiFi 7, which is significantly better in terms of speed and latency. Initially, the ASP will be significantly higher than the WiFi 6. And because there aren't that many WiFi 7 clients yet, so we don't see any erosion in ASP of the WiFi 6 in 2024. But of course, when you go into 2025, yes, we do expect that. But then there will be more WiFi 7 products, and there will be more weight towards WiFi 7 sales, which is of higher ASP. So we do see, because of that mix effect, ASP will continue to go up in the years to come.

我們不這麼認為，因為 WiFi 7 的技術在速度和延遲方面明顯更好。最初，ASP 將明顯高於 WiFi 6。我們確實希望如此。但隨後將會有更多的WiFi 7產品，而WiFi 7銷售的權重將會更大，也就是更高的ASP。所以我們確實看到，由於這種混合效應，平均售價將在未來幾年繼續上升。

And I show that there are no further questions at this time. I'll now turn the call back over to Patrick Lo for any additional or closing remarks.

我表明目前沒有其他問題。現在，我將把電話轉回帕特里克·羅（Patrick Lo），聽取補充或結束語。

Great. Thanks for everybody joining the call. We're really pleased we are making continuous year-over-year and quarter-over-quarter progress in the 4 pillars of our strategy. On the CHP side, it's basically the 3 things: premium products, subscription and direct-to-consumer sales. And on the SMB side, it's really focusing on a tremendous growth opportunity of ProAV.

偉大的。感謝大家加入通話。我們非常高興我們在戰略的四大支柱方面取得了持續的同比和環比進展。在熱電聯產方面，基本上有三件事：優質產品、訂閱和直接面向消費者的銷售。在中小企業方面，它真正關注的是 ProAV 的巨大成長機會。

And we're very excited about going into 2024. And we clearly will share more of those elements and how we could capitalize them more in 2024 in our Analyst Day, which is going to be somewhere at the end of November, early December, and we'll update you more on those aspects in the next earnings call. So look forward to talking to you all again.

我們對進入 2024 年感到非常興奮。 我們顯然將在 11 月底、12 月初和 2024 年的分析師日上分享更多這些要素以及如何在 2024 年更多地利用它們我們將在下一次財報電話會議上向您提供有關這些方面的更多最新資訊。所以期待再次與大家交談。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連線。