NETGEAR Inc (NTGR) 2024 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. (Operator Instructions)

女士們先生們，謝謝你們的支持。（操作員說明）

I would now like to turn the conference over to Erik Bylin. Please go ahead, sir.

我現在想把會議交給艾瑞克·拜林。請繼續，先生。

Thank you, Rob. Good afternoon, and welcome to NETGEAR's first quarter of 2024 financial results conference call. Joining us from the company are Mr. CJ Prober, CEO; and Mr. Bryan Murray, CFO. The format of the call will start with commentary on the business provided by CJ, followed by a review of the financials for the first quarter and guidance for the second quarter 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.

謝謝你，羅布。下午好，歡迎參加 NETGEAR 2024 年第一季財務業績電話會議。加入我們公司的還有執行長 CJ Prober 先生；和財務長 Bryan Murray 先生。電話會議的形式將從 CJ 提供的商業評論開始，然後是 Bryan 對第一季財務狀況的回顧和第二季度的指導。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 expense, expenses and future business outlook. Actual results or trends could differ materially from those contemplated by these forward-looking statements.

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、稅費、開支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。

For more information, please refer to the risk factors discussed in our periodic filings with the SEC, including the most recent Form 10-K. 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 statements as a result of new information or future events.

如需了解更多信息，請參閱我們向 SEC 定期提交的文件中討論的風險因素，包括最新的 10-K 表格。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聲明的義務。

In addition, non-GAAP financial measures will be mentioned on this call for a reconciliation of the non-GAAP measures, GAAP measures can be found in today's press release on our Investor Relations website.

此外，本次呼籲對非公認會計準則財務措施進行協調時將提及非公認會計準則財務措施，公認會計準則措施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 CJ.

這時，我想把電話轉給CJ。

Thanks, Erik, and good afternoon, to those of you joining this call. So I've just passed my 90-day anniversary with NETGEAR, and I am unequivocally more excited about the opportunity ahead than when I joined. I've just completed my listening tour that involve meeting dozens of customers and partners as well as the global NETGEAR teams across nine countries in the Americas, Europe and Asia. And I will be opening today's call by covering three main topics.

謝謝艾瑞克，各位參加這次電話會議的人下午好。我剛剛度過了與 NETGEAR 的 90 天週年紀念日，對於未來的機會，我無疑比剛加入時更加興奮。我剛完成了我的聆聽之旅，其中包括與美洲、歐洲和亞洲九個國家的數十位客戶和合作夥伴以及全球 NETGEAR 團隊會面。我將透過討論三個主要主題來開始今天的電話會議。

First, the decisive near-term actions we're taking for the long-term health of the business that are reflected in our Q1 results and Q2 guidance. Second, near-term strategy adjustments to both our consumer and B2B businesses. And third, our plan for developing a long-term strategy and prioritizing the allocation of our capital to build a higher growth, more profitable business.

首先，我們為業務的長期健康所採取的決定性的近期行動，反映在我們第一季的業績和第二季的指導中。其次，我們的消費者和 B2B 業務的近期策略調整。第三，我們計劃制定長期策略並優先配置我們的資本，以建立更高成長、更有利可圖的業務。

One important theme that cuts across all these topics is that our decision making is focused on creating long-term value for shareholders. The Board has aligned my incentive compensation with shareholder value creation. In our most recent equity grants to the broader executive team that will be disclosed in NETGEAR's proxy. We have similarly implemented an incentive structure that rewards executives on shareholder value creation.

貫穿所有這些主題的一個重要主題是，我們的決策專注於為股東創造長期價值。董事會已將我的激勵薪酬與股東價值創造結合。我們最近向更廣泛的管理團隊授予的股權將在 NETGEAR 的代理書中揭露。我們也實施了類似的激勵結構，獎勵為股東創造價值的高階主管。

In doing so, we're moving away from incentivizing performance based on much narrower metric like subscriber count or subscription revenue. All of the steps we are taking to transform this business will be driven by the goal of creating higher growth, more profitable business that delivers long-term value for our shareholders.

在此過程中，我們將不再基於訂閱者數量或訂閱收入等更狹窄的指標來激勵績效。我們為實現業務轉型所採取的所有步驟都將以創造更高成長、更有利可圖的業務為目標，為我們的股東帶來長期價值。

With that context, let me start with a couple of decisive actions we're taking for the long-term health of the business that are reflected in our Q1 results and Q2 guidance.

在此背景下，讓我先介紹我們為業務的長期健康而採取的幾項決定性行動，這些行動反映在我們第一季的業績和第二季的指導中。

First, as you all know, the macroeconomic environment remains challenged, and we're seeing higher than expected inflation and interest rates persist. While we've made good progress on our efforts to destock the channel, these macro conditions continue to impact our channel partners' posture on inventory.

首先，眾所周知，宏觀經濟環境仍面臨挑戰，通膨和利率持續高於預期。雖然我們在通路去庫存方面取得了良好進展，但這些宏觀條件繼續影響我們通路合作夥伴的庫存狀況。

As a result, we're seeing more destocking than expected in both our businesses and the cost of carrying excess channel inventory is higher than expected as well. In Q1 these factors impacted our revenue and were amongst the main drivers for missing our non-GAAP operating margin target for the quarter.

因此，我們的業務去庫存量超出預期，且通路庫存過剩的成本也高於預期。在第一季度，這些因素影響了我們的收入，也是導致我們未能實現本季非公認會計原則營業利潤率目標的主要因素之一。

NETGEAR's original plan coming into Q1 was to destock the channel throughout the year so that our channel partners could exit 2024 with normalized level of inventory. Given the increasing pressure on channel inventory and costs associated with having excess channel inventory. We're instead electing to accelerate our way through this challenging Q2.

NETGEAR 在第一季的最初計劃是全年減少通路庫存，以便我們的通路合作夥伴能夠以正常庫存水準退出 2024 年。鑑於通路庫存壓力日益增大，以及通路庫存過剩帶來的成本增加。相反，我們選擇加速度過這個充滿挑戰的第二季。

We expect this effort to represent a headwind of $25 million to $30 million in revenue which is reflected in our Q2 guidance. While this creates a near-term challenge in terms of financial results, this is the right long-term action for the business. So we are resolute about immediately addressing this challenge in Q2.

我們預計這項努力將帶來 2,500 萬至 3,000 萬美元的收入逆風，這反映在我們的第二季指引中。雖然這對財務表現造成了短期挑戰，但這對企業來說是正確的長期行動。因此，我們決心在第二季立即解決這項挑戰。

While there could be small pockets of excess channel inventory as we exit Q2, overall, we expect to be able to match sell-in with sell through after Q2, we are seeing some channel partners at historic lows in terms of weeks of supply. So this could create revenue upside in future years with macro economic environment improvements and lower interest rates.

雖然當我們退出第二季時，可能會出現少量過剩的通路庫存，但總體而言，我們預計能夠在第二季之後將售入與售出相匹配，但我們看到一些通路合作夥伴的供應週數處於歷史低點。因此，隨著宏觀經濟環境的改善和利率的降低，這可能會在未來幾年創造收入成長。

Second, as you all know, the dynamic of the demand pull forward during the early days of COVID, combined with the supply constraints that followed MedNet here and many other companies to exit 2022 with a substantial inventory position. Supply challenges and historically long lead times for that gear to make bets on certain product categories, some of these bets worked incredibly well, while others have led to a higher than optimal inventory position.

其次，眾所周知，新冠肺炎疫情初期需求的動態成長，加上 MedNet 和許多其他公司在 2022 年退出時面臨的供應限制，並擁有大量庫存。由於供應挑戰和歷史上較長的交貨時間，該設備在某些產品類別上進行了押注，其中一些押注效果非常好，而另一些則導致了高於最佳庫存狀況。

This isn't surprising or uncommon given the impossibility of predicting product mix so far in advance of making purchase commitments in such a dynamic environment. Last year, the team did a good job working down our inventory position, and we exited 2023 with roughly six months of supply. The plan for this year was to get the four months of supply by the end of the year.

鑑於在如此動態的環境中做出購買承諾之前不可能預測產品組合，這並不奇怪或不常見。去年，該團隊在減少庫存方面做得很好，2023 年結束時，我們的供應量約為六個月。今年的計劃是在年底前獲得四個月的供應量。

However, now that we have visibility into the Q1 performance of some of the products where we have excess supply, we are going to accelerate the depletion of these problematic areas faster than originally contemplated.

然而，現在我們已經了解了一些供應過剩產品的第一季表現，我們將比最初預期的更快地加速這些有問題的領域的消耗。

We are driving to lower our inventory to closer to three months of supply, which will help with profitability and cash generation. More importantly, the high level of inventories negatively impacted our ability to launch new innovative products for our customers.

我們正在努力將庫存降低至接近三個月的供應量，這將有助於提高獲利能力和現金產生。更重要的是，高庫存水準對我們為客戶推出新創新產品的能力產生了負面影響。

For an example, NETGEAR decided to delay the launch of many WiFi 7 products to avoid possible cannibalization of our prior-generation products where we had excess supply. While seemingly prudent from an inventory depletion perspective, consumers want the latest and greatest products, so that caused us to not aggressively capture this early technology we're demand.

例如，NETGEAR 決定延遲推出許多 WiFi 7 產品，以避免供應過剩的上一代產品可能被蠶食。雖然從庫存消耗的角度來看似乎是謹慎的，但消費者想要最新、最好的產品，因此這導致我們沒有積極地捕捉我們所需的這種早期技術。

It's important that we optimize our inventory positions quickly and deliver the exciting new product lineup we have coming over the course of the year. In order to achieve this normalized level of inventory more quickly, we're taking a harder look at products and chips that are moving more slowly than we'd like.

重要的是，我們必須快速優化我們的庫存狀況，並提供我們在這一年中推出的令人興奮的新產品陣容。為了更快地達到這種標準化的庫存水平，我們正在更仔細地審視那些移動速度比我們希望的慢的產品和晶片。

The Q1 results and the Q2 guidance reflect the costs associated with moving through these problematic areas more quickly than originally planned with the goal of exiting the year with a normalized level of working capital.

第一季的結果和第二季的指導反映了與比原計劃更快解決這些問題領域相關的成本，目標是在今年結束時達到正常的營運資本水準。

In order to avoid these inventory challenges in the future, we're implementing a tighter and more constrained approach to demand and supply planning. A couple of less significant decisions impacting our Q1 results and Q2 guidance or the decision to exit the neuro business and restructuring charge relating to executive transitions.

為了避免未來出現這些庫存挑戰，我們正在實施更嚴格、更受限制的需求和供應規劃方法。一些不太重要的決定影響我們第一季的業績和第二季的指導，或是退出神經業務的決定以及與高階主管過渡相關的重組費用。

While Meural is a well executed product, it has a small target market and does not fit well with the rest of our portfolio. The current plan is to sell through our remaining inventory into continuing to maintain the service for existing subscribers.

雖然 Meural 是一款執行良好的產品，但它的目標市場很小，與我們產品組合的其他產品不太適合。目前的計劃是出售我們剩餘的庫存，以繼續為現有訂戶維持服務。

However, we did write off approximately [500,000] of non finished goods inventory in Q1. On the restructuring as part of the reorganization, we're estimating costs of approximately $2.5 million in Q1 for executive transitions, and this is reflected in our guidance.

然而，我們在第一季確實註銷了大約 [500,000] 的非成品庫存。關於作為重組一部分的重組，我們估計第一季高階主管過渡的成本約為 250 萬美元，這反映在我們的指導下。

Despite the aggressive near-term actions to set us up for long-term success. We generated over $17 million of cash from operations in Q1, and we expect to generate cash this year and in Q2 as well. I'm proud of the team for making the hard decisions that set us up for long-term success while accelerating our introduction of new products that will be critical to our growth going forward.

儘管近期採取了積極的行動，為我們長期成功奠定了基礎。我們第一季的營運產生了超過 1700 萬美元的現金，我們預計今年和第二季也將產生現金。我為團隊所做的艱難決定感到自豪，這些決定為我們長期成功奠定了基礎，同時加快了新產品的推出，這對我們未來的成長至關重要。

So with that context on Q1 and Q2, I'd now like to discuss some near-term adjustments to our strategy for both our consumer home products business or CHP and our B2B business, which we previously referred to as SMB and will now be referred to as NETGEAR for business or NFB. On the consumer side, NETGEAR has established itself as the industry leading brand and consumer network working over many years.

因此，在第一季和第二季的背景下，我現在想討論我們的消費者家用產品業務或 CHP 和 B2B 業務（我們之前稱為 SMB，現在將稱為 SMB）策略的一些近期調整。稱為NETGEAR 商業版或NFB。在消費者方面，NETGEAR 多年來已成為行業領先品牌和消費者網絡。

The recent focus on the high end of the market has showcased this better than ever with our industry leading products like the WiFi 7, Orbi 970 and the Nighthawk and 6 Pro hotspots. That said, we've now realized we move too aggressively to focus on the high end of the market for the following three reasons.

最近對高端市場的關注比以往任何時候都更好地展示了我們領先業界的產品，如 WiFi 7、Orbi 970 以及 Nighthawk 和 6 Pro 熱點。也就是說，我們現在意識到，由於以下三個原因，我們過於激進地專注於高端市場。

First, the market size of our high-end Mesh products is not reaching the scale we had hoped while the high-end Mash segment is still growing and we remain the clear market share leader. We are pulling up as many customers as we'd like to our premium products.

首先，我們的高端Mesh產品的市場規模尚未達到我們希望的規模，而高端Mash細分市場仍在成長，我們仍然是明顯的市佔率領先者。我們正在為我們的優質產品吸引盡可能多的客戶。

Second, there are significant benefits to playing in the larger segments at the medium and low end of the market with a good, better, best product strategy. This is particularly true with Amazon, where their algorithms favor, high-volume SKUs, and it's hard to move customers into our flagship products if we don't appear in their searches for good or better products.

其次，透過良好、更好、最好的產品策略，進入中低階市場的較大細分市場有顯著的好處。對於亞馬遜來說尤其如此，他們的演算法偏向於大批量的 SKU，如果我們沒有出現在他們對好的或更好的產品的搜尋中，就很難將客戶轉移到我們的旗艦產品上。

Third, the foreign competition that has been growing share with sub per products at lower price points is now moving up into the high end of the market. So we're starting to face competition there as well. So given these market dynamics, we're making the following adjustments to our CHP strategy.

第三，外國競爭者以較低價格點的次品產品所佔的份額不斷增加，現在正在轉移到高端市場。因此，我們也開始面臨競爭。因此，考慮到這些市場動態，我們正在對我們的熱電聯產策略進行以下調整。

First, we're developing products that serve a broader segment of the market and follow with a simple, good, better, best product strategy. This will enable us to compete more effectively on Amazon and especially internationally, where online channels are our primary route to market.

首先，我們正在開發服務更廣泛市場的產品，並遵循簡單、好、更好、最好的產品策略。這將使我們能夠在亞馬遜上更有效地競爭，尤其是在國際上，線上通路是我們進入市場的主要途徑。

Second, we're evolving our marketing messaging to highlight our points of differentiation versus trying to compete with low-cost foreign competition on speeds and feeds alone. This includes the fact that as a US-based US-listed public company we are the trusted brand in the space in the space focused on delivering a secure, safe and high performance connectivity experience.

其次，我們正在改進我們的行銷訊息，以突出我們的差異化點，而不是僅僅在速度和流量上與低成本的外國競爭對手競爭。這包括作為一家總部位於美國的美國上市公司，我們是該領域值得信賴的品牌，專注於提供可靠、安全和高效能的連接體驗。

Third, we'll be leveraging our position in independents to forge value added partnerships that drive innovation and improve the experience for our customers. As an example of this, we recently entered into a partnership with a leading provider of home security to enable Whole Home WiFi alongside their security implementations to ensure the most reliable and secure experiences for our joint customers.

第三，我們將利用我們在獨立企業中的地位來建立增值合作夥伴關係，推動創新並改善客戶體驗。舉個例子，我們最近與一家領先的家庭安全提供者建立了合作夥伴關係，在其安全實施的同時啟用 Whole Home WiFi，以確保為我們的共同客戶提供最可靠、最安全的體驗。

The other benefit of addressing some of the higher volume segments is it increases the funnel into our subscription services. I mentioned earlier how we're moving away from incentive compensation tied to subscriber count.

解決一些高容量細分市場的另一個好處是它增加了我們訂閱服務的管道。我之前提到我們如何擺脫與訂閱者數量掛鉤的激勵薪酬。

And this is not a reflection of a change in the importance we place on recurring revenue. Subscriptions remain an important focus, and we're implementing some strategy changes here to simplify the offering, improve the value and grow the recurring revenue.

這並不反映我們對經常性收入的重視程度改變了。訂閱仍然是一個重要的焦點，我們正在實施一些策略變更，以簡化產品、提高價值並增加經常性收入。

In this regard, we've decided to move away from product bundles that include the device like a router, and an extended subscription period like a year. While this strategy drove up subscriber count, nonrecurring subscription revenue, it leads to lower margins, increased churn and fewer recurring revenue subscribers, so does not help with long-term value creation.

在這方面，我們決定放棄包含路由器等設備和延長訂閱期（例如一年）的產品捆綁。雖然這種策略增加了訂閱者數量和非經常性訂閱收入，但它會導致利潤率下降、客戶流失增加和經常性收入訂閱者減少，因此無助於長期價值創造。

This change, the bundling will only affect newly released products. So you won't likely see this reflected in our metrics until 2025. Why I'm confident these near-term changes to our CHP strategy will improve our trajectory and market share in the near-term. The overall CHP market is not recovering as we expected and was down double digits year-over-year in Q1.

這項變化，捆綁只會影響新發布的產品。因此，直到 2025 年，您才可能在我們的指標中看到這一點。為什麼我相信我們的熱電聯產策略的這些近期變化將在短期內改善我們的發展軌跡和市場份額。整體熱電聯產市場並未像我們預期的那樣復甦，第一季同比下降了兩位數。

While we were able to achieve our sell-through targets doing so required us in Q1, doing so required us to be more promotional than expected. As a result of these near-term actions and because of the ongoing CHP market challenges, we are withdrawing the full year guidance that was discussed at the analyst day in December last year. As we no longer believe such guidance to be achievable for the full year.

雖然我們能夠在第一季實現銷售目標，但這樣做需要我們比預期進行更多的促銷活動。由於這些近期行動以及持續的熱電聯產市場挑戰，我們將撤回去年 12 月分析師日討論的全年指引。因為我們不再相信全年可以實現這樣的指導。

This is not a reflection of how we feel about our long-term prospects, but rather the reality of where we find ourselves right now relative to our December guidance. We do plan to continue to provide quarterly guidance, and Bryan will cover this later in the call.

這並不是我們對長期前景的看法的反映，而是我們目前相對於 12 月指引的現實情況。我們確實計劃繼續提供季度指導，布萊恩將在稍後的電話會議中討論這一點。

In our NETGEAR for business segment, our managed switch business has been capitalizing on the transition to IP-based video and audio and has been on a great trajectory over the last few years. While we saw a slowdown at the end of last year due to macroeconomic conditions and demand remains strong in this product categories on a renewed growth trajectory.

在我們的 NETGEAR 業務部門中，我們的託管交換器業務一直在利用向基於 IP 的視訊和音訊的過渡，並且在過去幾年中一直處於良好的發展軌道。儘管由於宏觀經濟狀況，我們在去年底看到了經濟放緩，但該產品類別的需求仍然強勁，並處於新的成長軌道上。

This is a segment of the market where we have strong product leadership and a clear price to value proposition. Our 265 manufacturing integrations, reliability and stability really set us apart from the competition. And this is an area where we will continue to innovate. Recent partnership announcements include names for you, a leading residential manufacture and audio Tactica, a Japanese professional audio equipment company.

在這個細分市場中，我們擁有強大的產品領先地位和明確的性價比主張。我們的 265 製造整合、可靠性和穩定性確實使我們在競爭中脫穎而出。這是我們將繼續創新的領域。最近的合作夥伴公告包括領先的住宅製造商 for you 和日本專業音頻設備公司 audio Tactica。

Additionally, we've also secured partnership wins with companies such as Crestron, Sure, Sevan, Visionary Solutions and Sennheiser. As we make inroads with these partnerships, we are for the first time deploying our products and businesses of all sizes including Fortune 5,500 and100 companies.

此外，我們也與 Crestron、Sure、Sevan、Visionary Solutions 和 Sennheiser 等公司建立了合作夥伴關係。隨著我們在這些合作夥伴關係中取得進展，我們首次部署各種規模的產品和業務，包括財富 5,500 強和 100 強公司。

These successes are starting to build credibility for our brand with the CIO community, which we expect will open doors in the future. We will also capitalize on our leadership position to pursue new adjacent verticals. We recently announced our new interoperability partnerships with Intel and Panasonic Connect, leveraging our recently launched 70 capable managed switches.

這些成功開始在 CIO 社群中建立我們品牌的信譽，我們預計這將在未來打開大門。我們還將利用我們的領導地位來追求新的相鄰垂直領域。我們最近宣布與 Intel 和 Panasonic Connect 建立新的互通性合作夥伴關係，利用我們最近推出的 70 款功能強大的託管交換器。

This marks a major step forward in our initiative to expand our reach into the broadcast industry. A new market for NETGEAR that greatly broadens our total addressable market. Furthermore, we've also secured Ross video as another broadcast partner and expect more partnerships to be announced soon. With projects closing just weeks after release this warm response to our new switches is encouraging.

這標誌著我們擴大廣播業影響力的舉措向前邁出了重要一步。NETGEAR 的新市場大大拓寬了我們的整體目標市場。此外，我們還確保羅斯視訊成為另一個廣播合作夥伴，並預計很快就會宣布更多合作夥伴關係。隨著專案在發布幾週後就結束，人們對我們的新交換器的熱烈反應令人鼓舞。

I would certainly for managed switch business, we're seeing slower progress than we would like in growing our WiFi land business. While we have recently launched a total network solution. There are elements of this that need improvement before we can significantly grow our share in this market segment. The team is focused on adjusting our strategy here to ensure that we're set up for success and are able to build off our momentum in managed switches. We know what is needed and we are acting quickly to better address this attractive opportunity.

我當然認為，對於託管交換器業務來說，我們在發展 WiFi 陸地業務方面看到的進展速度比我們希望的要慢。而我們最近推出了整體網路解決方案。在我們能夠大幅增加我們在這一細分市場的份額之前，有一些因素需要改進。團隊專注於調整我們的策略，以確保我們為成功做好準備，並能夠在託管交換器領域增強我們的勢頭。我們知道需要什麼，並且正在迅速採取行動，以更好地抓住這個有吸引力的機會。

Despite all the progress in NFB our overall go to market capabilities still skewed to consumer. So our near-term focus is to ensure we are building a world-class B2B sales and marketing capability to capitalize on the momentum afforded by our managed switch business. And this is an area where we are targeting incremental investment in the second half of the year. This is a market opportunity with a sizable addressable market, and we have great momentum with our existing products, and we're excited about the potential for capturing incremental growth.

儘管 NFB 取得了所有進展，但我們的整體上市能力仍然偏向消費者。因此，我們近期的重點是確保我們建立世界一流的 B2B 銷售和行銷能力，以利用我們的託管交換器業務帶來的動力。這也是我們下半年增加投資的目標。這是一個具有相當大的潛在市場的市場機會，我們現有的產品勢頭強勁，我們對實現增量成長的潛力感到興奮。

In addition to the immediate actions impacting Q1 and Q2 and the near-term strategy adjustments for CHP and NFB, we are launching a process to develop a longer-term strategy for both business units in the second half of this year, which will impact how we prioritize the allocation of our capital.

除了影響第一季和第二季的立即行動以及 CHP 和 NFB 的近期策略調整外，我們還在今年下半年啟動了為這兩個業務部門制定長期策略的流程，這將影響我們優先配置我們的資本。

My first executive hires, a VP of Strategy who I've worked with in the past, and he's joining us from Amazon. He's working with me, Bryan and the rest of the leadership team to validate several of our growth opportunities we're considering and we look forward to discussing these further in upcoming calls.

我聘用的第一位主管是一位策略副總裁，我過去曾與他共事過，他是從亞馬遜加入我們的。他正在與我、布萊恩和領導團隊的其他成員合作，驗證我們正在考慮的幾個成長機會，我們期待在即將舉行的電話會議中進一步討論這些機會。

I'll end my prepared remarks with a few points on culture team and organization. Over the course of my listening tour, I was very impressed by the global talent at the company and the unwavering desire to profitably grow our business.

我將以關於文化團隊和組織的幾點觀點來結束我準備好的發言。在我的聆聽之旅中，公司的全球人才以及對業務獲利成長的堅定渴望給我留下了深刻的印象。

Despite this talented team and positive attitude, I didn't cover a complex organizational model and some cultural challenges that are hindering our ability to reach our potential. And our internal audience later today, we will be announcing three initiatives to address this.

儘管有這個才華橫溢的團隊和積極的態度，但我沒有討論複雜的組織模式和一些阻礙我們發揮潛力的文化挑戰。今天晚些時候，我們將向我們的內部觀眾宣布三項措施來解決這個問題。

First, our reorganization that will drive stronger focus alignment and accountability and empower the business units to achieve their long-term growth and profitability targets.

首先，我們的重組將推動更強有力的重點協調和問責制，並使業務部門能夠實現長期成長和獲利目標。

Second, an effort to evolve our culture beginning with the reformulation of our values that will be integrated into all aspects of our work and talent management with the goal of improving shareholder value creation.

其次，努力發展我們的文化，從重新制定我們的價值觀開始，將其融入我們工作和人才管理的各個方面，以提高股東價值創造為目標。

Finally, and the AI transformation effort to ensure we're taking full advantage of this technology and how we work. And in the products and services we developed for our customers.

最後，還有人工智慧轉型工作，以確保我們充分利用這項技術和我們的工作方式。以及我們為客戶開發的產品和服務。

In closing, we're taking decisive action in both CHP and NFB to prepare us for long-term success. We're implementing both product and channel strategies that position us for a return to growth, reimplementing, a long-term execution plan for all parts of the business that we believe will deliver significant value creation.

最後，我們在 CHP 和 NFB 方面採取果斷行動，為長期成功做好準備。我們正在實施產品和通路策略，使我們能夠恢復成長，並為業務的所有部分重新實施長期執行計劃，我們相信這將帶來重大的價值創造。

We have a strong balance sheet and as we showed in Q1, we believe share repurchases is a good use of capital in the near-term and expect to have broader plans to deploy capital as we chart our course for the long-term. These moves, coupled with the organizational changes being made to streamline our operations and delivery are aligned with the needs of our shareholders and we believe will create significant long-term value. I'm truly excited about the journey ahead.

我們擁有強大的資產負債表，正如我們在第一季所顯示的那樣，我們相信股票回購是短期內資本的良好利用，並預計在我們制定長期路線時有更廣泛的資本部署計劃。這些舉措，加上為簡化我們的營運和交付而進行的組織變革，符合我們股東的需求，我們相信將創造巨大的長期價值。我對未來的旅程感到非常興奮。

And with that, I'll hand it over to Bryan and look forward to your questions.

接下來，我會將其交給 Bryan，並期待您的提問。

Thank you, CJ, and thank you again, everyone for joining today's call. We are pleased with the execution by our team this quarter and delivering revenue within our guidance range amidst a challenging marketplace.

謝謝 CJ，再次感謝大家參加今天的電話會議。我們對我們的團隊本季的執行力以及在充滿挑戰的市場中在我們的指導範圍內實現的收入感到滿意。

For the quarter ended March 31, 2024, revenue was $164.6 million, down 12.8% on a sequential basis and down 9% year-over-year. However, we saw greater than expected destocking across both sides of the business in the first quarter. As the macroeconomic environment pressures continued to persist and way on our channel partners.

截至 2024 年 3 月 31 日的季度，營收為 1.646 億美元，季減 12.8%，年減 9%。然而，我們看到第一季業務雙方的庫存去化幅度超出了預期。隨著宏觀經濟環境的壓力持續存在，我們的通路夥伴面臨壓力。

This came along with a shift in product mix, which combined with a slightly more promotional CHP retail market led to profitability come in below our expectations. The CJ alluded to, we believe we have an opportunity to work tightly with our channel partners and execute what we believe to be the remaining destock in the second quarter.

這伴隨著產品結構的轉變，再加上熱電聯產零售市場促銷力道稍大，導致獲利能力低於我們的預期。CJ 提到，我們相信我們有機會與我們的通路合作夥伴緊密合作，並執行我們認為在第二季度剩餘的去庫存工作。

This accelerated destock is a significant driver behind the step-down in revenue and profitability that you see in the second quarter guidance. And critically important step to creating value in the second half of the year and beyond. Simply stated, we were looking to get the destock headwind behind us as quickly as possible to enable our future growth in both CHP and NFB businesses.

這種加速的去庫存是第二季指引中收入和獲利能力下降的重要驅動因素。這是在下半年及以後創造價值的至關重要的一步。簡而言之，我們希望盡快擺脫去庫存的逆風，以實現我們未來在 CHP 和 NFB 業務方面的成長。

On the CHP side, the US retail market overall underperformed our expectations due to continued pressures with the challenging macroeconomic environment on consumer spending. This resulted in higher promotional costs than we expected in the first quarter. In part due to the lack of new products to boost the market, while was consumer existing supply.

在熱電聯產方面，由於充滿挑戰的宏觀經濟環境對消費者支出的持續壓力，美國零售市場整體表現低於我們的預期。這導致第一季的促銷成本高於我們的預期。部分原因是缺乏新產品來提振市場，而消費者現有的供應。

Meanwhile, we did see some upside with our service provider customers with associated revenue coming in at approximately $28 million, partially mitigating the top line challenge on the retail side, but unfavorably impacting our gross margin performance. Despite these headwinds, our premium portfolio products continued to outperform the market even as other competitors into this segment of the market follow our lead of moving upstream.

同時，我們確實看到了服務提供者客戶的一些優勢，相關收入約為 2,800 萬美元，部分緩解了零售方面的頂線挑戰，但對我們的毛利率表現產生了不利影響。儘管有這些不利因素，我們的優質產品組合產品的表現仍持續跑贏市場，儘管進入該細分市場的其他競爭對手紛紛效仿我們向上游移動。

While our premium mix remains at 25% of our sales in users in the first quarter, our growth was limited in this segment due to a slower rollout of our WiFi 7 or Orbi 97x and international markets due to varying regional requirements for NETGEAR band technology.

雖然我們的高階產品組合仍佔第一季用戶銷售額的25%，但由於WiFi 7 或Orbi 97x 的推出速度較慢，以及國際市場對NETGEAR 頻段技術的區域要求不同，我們在這一領域的成長受到限制。

We are happy to have established leadership in this segment. However, as CJ noted, we believe we can successfully compete below the very top end of the market and will be approaching the good and better segments with updated products and marketing efforts in the future.

我們很高興在這一領域建立了領導地位。然而，正如 CJ 所指出的，我們相信我們能夠成功地在最高端市場以下進行競爭，並將在未來透過更新的產品和行銷努力來接近好的和更好的細分市場。

We remain pleased with the underlying end market demand and our NETGEAR for business segment, formerly known as SMB which came in as expected, thanks to continued momentum in our growing Pro AV business.

我們對潛在的終端市場需求和我們的 NETGEAR 業務部門（以前稱為 SMB）感到滿意，這得益於我們不斷增長的專業 AV 業務的持續成長勢頭。

However, there are some challenges in the more traditional business as the macro conditions in certain markets are still impacting the near-term with customers hesitant to make investments. Traditionally, destocking of NETGEAR for business products remains a challenge as the uncertain geopolitical and macroeconomic environment continued to pressure our channel partners to reduce their inventory carrying levels more significantly than we had expected within the quarter.

然而，由於某些市場的宏觀狀況仍在影響短期，客戶對投資猶豫不決，因此更傳統的業務面臨一些挑戰。傳統上，NETGEAR 商業產品的去庫存仍然是一個挑戰，因為不確定的地緣政治和宏觀經濟環境繼續迫使我們的通路合作夥伴比我們在本季的預期更大幅度地降低庫存水準。

For the first quarter of 2024, net revenue for the Americas was $109.9 million, a decline of 9.8% year-over-year and down 11.9% on a sequential basis. EMEA net revenue was $31.2 million, a decrease of 20.4% year-over-year and down 17.7% quarter over quarter. Our APAC net revenue was $23.5 million which is up 18.5% from prior year comparable period and down 9.6% sequentially.

2024年第一季，美洲地區淨收入為1.099億美元，年減9.8%，季減11.9%。歐洲、中東和非洲地區淨收入為 3,120 萬美元，年減 20.4%，季減 17.7%。我們的亞太地區淨收入為 2,350 萬美元，比去年同期成長 18.5%，比上一季下降 9.6%。

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. The combination of this quarter's change in product mix primarily due to higher levels of destocking by our channel partners combined with a slightly more social CHP retail market. Costs associated with exiting the Meural business.

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。本季產品組合的變化主要是由於我們的通路夥伴的去庫存水準較高，加上社會熱電聯產零售市場的社會化程度稍高。與退出 Meural 業務相關的成本。

In addition to the expected higher cost of inventory, put pressure on our profitability and we delivered first quarter non-GAAP operating loss of $16 million and non-GAAP operating margin of negative 9.7%. Below the low end of our guidance. This was down 580 basis points compared to the year ago period and then 1,110 basis points compared to the prior quarter.

除了預期的庫存成本上升之外，我們的獲利能力也面臨壓力，第一季非 GAAP 營運虧損為 1,600 萬美元，非 GAAP 營運利潤率為負 9.7%。低於我們指導的低端。與去年同期相比下降了 580 個基點，與上一季相比下降了 1,110 個基點。

Non-GAAP gross margin in the first quarter of 2024 was 29.5%, down 410 basis points compared to 33.6% in the prior comparable period. And then 550 basis points compared to the fourth quarter of 2023. Relative to the prior year period, we experienced a higher cost of inventory across both businesses as well as challenges to changes in product mix in particular with lower mix of NFB products.

2024 年第一季非 GAAP 毛利率為 29.5%，較上年同期的 33.6% 下降 410 個基點。與 2023 年第四季相比，成長了 550 個基點。與去年同期相比，我們兩個業務的庫存成本都較高，且產品組合變化面臨挑戰，特別是 NFB 產品組合減少。

In the prior year, we were still benefiting from an NFB market that was just come into a healthier supply position. We also experienced a greater mix of service, better products and increased marketing spend within the CHP retail business as compared to the prior year period.

去年，我們仍然受益於剛進入更健康供應狀況的 NFB 市場。與去年同期相比，我們在熱電聯產零售業務中也經歷了更豐富的服務組合、更好的產品和增加的行銷支出。

We exited the first quarter with 928,000 paying subscribers, and we generated $11.7 million in service revenue in the quarter. The year-over-year increase of 21.2%. We continue to see increased emphasis placed by consumers on cybersecurity protection, privacy and premium support. As noted earlier, we plan to make improvements here with an aim to grow our recurring revenue.

第一季結束時，我們擁有 928,000 名付費用戶，本季的服務收入為 1,170 萬美元。年增21.2%。我們繼續看到消費者越來越重視網路安全保護、隱私和高級支援。如前所述，我們計劃在此方面進行改進，以增加我們的經常性收入。

Total Q1 non-GAAP operating expenses came in at $64.6 million, down 4.8% year-over-year and up 2.1% sequentially. Our headcount was 628 as of the end of the quarter, down from 635 in Q4. We are currently refining our long-term strategy to align spending with the areas that will deliver long-term growth and expanding profitability.

第一季非 GAAP 營運支出總額為 6,460 萬美元，年減 4.8%，季增 2.1%。截至本季末，我們的員工人數為 628 人，低於第四季的 635 人。我們目前正在完善我們的長期策略，以使支出與能夠實現長期成長和擴大獲利能力的領域保持一致。

In the near term, we continue to see profitable and upside across probably the middle switches, premium Orbi Mesh WiFi systems, 5G mobile hotspots. And subscription services and expect to continue to invest for growth in these areas.

短期內，我們將繼續看到中間交換器、優質 Orbi Mesh WiFi 系統、5G 行動熱點的利潤和上行空間。並期望繼續投資訂閱服務以促進這些領域的成長。

Our non-GAAP R&D expense for the first quarter was 11.9% of net revenue as compared to 11.6% of net revenue in the prior comparable period and 9.9% of net revenues in the fourth quarter of 2023. To continue our technology and product leadership, we are committed to continued investment in R&D.

我們第一季的非 GAAP 研發費用佔淨收入的 11.9%，而去年同期佔淨收入的 11.6%，2023 年第四季佔淨收入的 9.9%。為了維持我們的技術和產品領先地位，我們致力於持續投資研發。

Our non-GAAP tax benefit was $4.7 million in the first quarter of 2024. Looking at the bottom line for Q1, we reported non-GAAP net loss of $8.4 million and non-GAAP diluted loss per share of $0.28.

2024 年第一季度，我們的非 GAAP 稅收優惠為 470 萬美元。看看第一季的底線，我們報告非 GAAP 淨虧損為 840 萬美元，非 GAAP 攤薄後每股虧損為 0.28 美元。

Turning to the balance sheet. We ended the first quarter of 2024 with $289.4 million in cash and short-term investments, up $5.8 million from the prior quarter and equating to $9.85 per share. While we are pleased with the decrease in inventory during the quarter, we were expecting a greater reduction. The combination of higher inventory and a higher loss on the quarter drove our cash generation during the quarter below our expectations.

轉向資產負債表。截至 2024 年第一季末，我們的現金和短期投資為 2.894 億美元，比上一季增加 580 萬美元，相當於每股 9.85 美元。雖然我們對本季庫存的減少感到滿意，但我們預計庫存將減少更多。庫存增加和本季虧損增加導致我們本季的現金產生量低於我們的預期。

During the quarter, $17.2 million of cash provided by operations, which brings our total cash provided by operations over the trailing 12 months to $64.9 million. We used $2.5 million in purchase of property and equipment during the quarter, which brings our total cash used for capital expenditures over the trailing 12 months to $7.4 million.

本季度，營運提供了 1,720 萬美元的現金，這使得過去 12 個月營運提供的現金總額達到 6,490 萬美元。本季我們使用 250 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 740 萬美元。

Despite our near-term headwinds, we expect to generate cash in the second quarter and the rest of the year in part due to further expected inventory reductions as we work towards our target of three months. In Q1 we spent $11.4 million to repurchase approximately 783,000 shares of NETGEAR common stock at an average price of $14.62 per share.

儘管我們近期面臨阻力，但我們預計第二季和今年剩餘時間將產生現金，部分原因是我們在努力實現三個月的目標時預計庫存將進一步減少。第一季度，我們花費 1,140 萬美元以每股 14.62 美元的平均價格回購了約 783,000 股 NETGEAR 普通股。

We have 1.7 million shares additional shares remain in our current authorization. And since the beginning of 2020, we have spent $134.6 million to repurchase 4.9 million shares. We are committed to returning value to our shareholders and plan to continue to opportunistically repurchase shares in future periods. Fully diluted share count is approximately 29.6 million shares as of the end of the first quarter.

我們目前的授權中還有 170 萬股額外股份。自2020年初以來，我們已花費1.346億美元回購490萬股股票。我們致力於為股東回報價值，並計劃在未來繼續擇機回購股票。截至第一季末，完全攤薄後的股票數量約為 2,960 萬股。

Now turning to the first quarter results for product segments. The Connected Home segment, which includes our industry-leading Orbi, Nighthawk and Armor brands generated net revenue of $96 million in the quarter, down 6.6% on a year-over-year basis and then 18.9% sequentially.

現在轉向產品部門的第一季業績。互聯家居部門包括我們業界領先的 Orbi、Nighthawk 和 Armor 品牌，本季淨收入為 9,600 萬美元，年減 6.6%，季減 18.9%。

In the comparable prior-year period. Our CHP business benefit from higher gross shipments and larger total addressable market, leading to a year-over-year decline in the retail channel. However, the saturation of our premium products to our CHP retail business remain over 25% of sales to end users, up over 500 basis points from the prior year period. Bolstered by the addition of our recently released WiFi 7 or Orbi 97x Mesh system and our premium mobile hotspots, all of which command some of our highest CHPs.

與去年同期相比。我們的熱電聯產業務受益於總出貨量的增加和潛在市場總量的擴大，導致零售通路較去年同期下降。然而，我們的熱電聯產零售業務的優質產品的飽和度仍佔最終用戶銷售額的 25% 以上，比去年同期成長了 500 個基點以上。由於我們最近發布的 WiFi 7 或 Orbi 97x Mesh 系統以及我們的優質行動熱點，所有這些都需要我們最高的 CHP。

Also, as CJ mentioned, we thus far have focused our efforts on the high end premium segment of the market, but we see potential for profitable growth as well in the lower price tiers. On the NFB side, destocking in our channel partners remained a headwind, leading to net revenue of $68.6 million in the first quarter below our expectations and down 2.4% sequentially.

此外，正如 CJ 所提到的，到目前為止，我們的工作重點是高端市場，但我們也看到了較低價格市場的獲利成長潛力。在 NFB 方面，我們通路合作夥伴的去庫存仍然是一個阻力，導致第一季淨收入為 6,860 萬美元，低於我們的預期，比上一季下降 2.4%。

However, end-user demand was in line with our expectations and led by a growing prudently managed switch line. However, the reduction in inventory carrying levels at our channel partners beyond our expectations pressured our top line, which declined 12.2% year-over-year.

然而，最終用戶的需求符合我們的預期，並由不斷增長的謹慎管理的交換器產品線帶動。然而，通路合作夥伴庫存水準的下降超出了我們的預期，給我們的營收帶來了壓力，營收年減了 12.2%。

Facing a challenging macroeconomic and geopolitical environment, we will work rapidly to rightsize the channel inventory held by our partners impacting our second quarter top line guidance. Nevertheless, we remain confident in the long-term growth potential of the Pro AV business and the adjacent markets we're expanding into.

面對充滿挑戰的宏觀經濟和地緣政治環境，我們將迅速努力調整合作夥伴持有的影響我們第二季營收指引的通路庫存規模。儘管如此，我們對專業視聽業務和我們正在拓展的鄰近市場的長期成長潛力仍然充滿信心。

Now let me discuss our Q2 2024 outlook. While we expect to continue to see strong underlying demand of our CHP premium products as well as our Pro AV managed switches, we are taking action to manage our way through NFB and CHP destocking activities with our channel partners in the second quarter. We are changing course from our previous plan to do this more get organically, given the increasing pressure to reduce inventory levels and the increasing costs associated with a slower approach. The estimated impact to our second quarter accelerated the destocking is in the range of $25 million to $30 million.

現在讓我討論一下我們對 2024 年第二季的展望。雖然我們預計我們的 CHP 優質產品以及 Pro AV 託管交換器的潛在需求將繼續強勁，但我們正在採取行動，與我們的通路合作夥伴一起在第二季度透過 NFB 和 CHP 去庫存活​​動來管理我們的方式。鑑於降低庫存水準的壓力越來越大，以及與較慢的方法相關的成本不斷增加，我們正在改變先前的計劃，以更有機的方式做到這一點。加速去庫存對我們第二季的估計影響在 2500 萬至 3000 萬美元之間。

We believe taking this immediate action as compared to spreading over multiple quarters, will allow us to align our revenue with sell through and ultimately manage a more efficient and predictable channel in future quarters.

我們相信，與分散在多個季度相比，立即採取這項行動將使我們能夠將收入與銷售保持一致，並最終在未來幾季管理更有效率、更可預測的管道。

Our revenue from the service provider channel is expected to be approximately $15 million in the second quarter as our largest customer in this channel prepares for the launch of our next-generation mobile hotspots in the second half of the year.

由於我們在該管道的最大客戶準備在下半年推出下一代行動熱點，因此我們第二季度來自服務提供商管道的收入預計約為 1500 萬美元。

Accordingly, we expect second quarter net revenue to be in the range of $125 million to $140 million. As we continue to make meaningful progress in reducing their own inventory levels. We will be continuing to consume higher cost inventory.

因此，我們預計第二季淨收入將在 1.25 億美元至 1.4 億美元之間。隨著我們繼續在降低自身庫存水準方面取得有意義的進展。我們將繼續消耗成本較高的庫存。

We expect we'll be back at historical normal inventory costs after we reach our target inventory levels of three months. So accordingly, we expect our second quarter GAAP operating margin to be in the range of negative 30.9% to negative 27.9% and non-GAAP operating margin to be in the range of negative 22% to negative 25%. And GAAP tax expense is expected to be in the range of $1 million to $2 million and our non-GAAP tax benefit to be in the range of $7 million to $8 million in the second quarter of 2024.

我們預計，在達到三個月的目標庫存水準後，我們將恢復到歷史正常庫存成本。因此，我們預計第二季 GAAP 營業利潤率將在負 30.9% 至負 27.9% 範圍內，非 GAAP 營業利潤率將在負 22% 至負 25% 範圍內。到 2024 年第二季度，GAAP 稅收支出預計將在 100 萬至 200 萬美元之間，非 GAAP 稅收優惠將在 700 萬至 800 萬美元之間。

Operator, that concludes our remarks, and we will be happy to take any questions.

接線員，我們的發言到此結束，我們很樂意回答任何問題。

Thank you. (Operator Instructions)

謝謝。（操作員說明）

Hamed Khorsand, BWS.

哈米德·霍爾桑德，BWS。

Hi, It's Hamed. Excuse the background noise. But just wanted to ask you was hard reset. What will what's the sign that all of a sudden you need to change things up all of a sudden?

嗨，我是哈米德。請原諒背景噪音。但只是想問一下你是否進行了硬重置。什麼跡象表明你突然需要改變一切？

Yeah, I guess, I'll take a shot at that. I mean, there is I guess it's a combination of factors. I think if you break them down into things that we weren't expecting or the team wasn't expecting back in December of last year? And then things that, it has changed since then. So obviously, the CHP market, as we talked about, was not recovering to our expectations.

是的，我想，我會嘗試一下。我的意思是，我想這是多種因素綜合作用的結果。我想如果你把它們分解成去年 12 月我們沒有預料到的或是團隊沒有預料到的事情呢？然後事情從那時起就發生了變化。顯然，正如我們所說，熱電聯產市場並未恢復到我們的預期。

And on top of that, we continue to be the market leader in premium and we can premium continues to grow, but we're not pulling as many people. And so when you combine that with the higher than expected destocking in the costs related to holding that channel inventory. And then as we looked at product performance in Q1 was some of the longer in the tooth inventory. It just all added up to, hey, we should get through this as quickly as possible.

最重要的是，我們仍然是高端市場的領導者，我們可以繼續成長高端產品，但我們並沒有吸引那麼多人。因此，當您將其與持有該通路庫存相關的成本高於預期的去庫存結合時。然後，當我們查看第一季的產品表現時，牙齒庫存中的一些時間較長。所有這些加起來就是，嘿，我們應該盡快解決這個問題。

It's kind of like think about it as acting quickly to get over a COVID hangover. That's been made worse by some of these market conditions that I mentioned. So when we -- when it became clear that the December guidance wasn't going to be achievable, we wanted to set ourselves up for long-term success and make these decisive actions to put the business in a good place for obviously a better second half of the year, not relative to second, the December guidance. But relative to the first half, because our team, we're pulling forward a lot of this pain to set us up for a better second half. So that was the thinking.

這有點像快速採取行動克服新冠宿醉一樣。我提到的一些市場狀況使情況變得更糟。因此，當我們清楚 12 月的指導方針無法實現時，我們希望為長期成功做好準備，並採取這些果斷行動，使業務處於一個良好的位置，以實現更好的第二個目標半年的數據，與第二個12 月的指引無關。但相對於上半場，因為我們的球隊，我們正在克服很多痛苦，為下半場更好的表現做好準備。這就是我們的想法。

Okay. Now, what do you mean by accelerating destocking and giving the product away for free? I mean, why was NETGEAR able to do this before because destocking has been part of the vocabulary for the last two years when comes NETGEAR earnings?

好的。那麼，加速去庫存、免費贈送產品是什麼意思呢？我的意思是，為什麼 NETGEAR 以前能夠做到這一點，因為去庫存一直是過去兩年 NETGEAR 盈利時的詞彙之一？

Yeah, it's varies a little bit by channel. I mean, interestingly, it's very mixed even across both businesses. So some of our channel partners are at historic lows to a point where we're actually having to improve how we operate the business in order to avoid POS. And others, it just became the macro conditions continued to persist and people were expecting lower interest rates at each one of these partners that has more inventories than they would like. They start turning the screws on their own internal teams around how do we get lower and lower and lower. And then that just blows back on us in terms of cost and missing selling opportunities because they've got the wrong mix of inventory.

是的，不同管道略有不同。我的意思是，有趣的是，即使在這兩個行業中，情況也非常複雜。因此，我們的部分通路合作夥伴處於歷史低點，以至於我們實際上必須改善業務運作方式以避免使用 POS。而其他人則認為，宏觀狀況持續存在，人們預計這些庫存比他們希望的更多的合作夥伴的利率會更低。他們開始對自己的內部團隊施加壓力，圍繞著我們如何變得越來越低。然後，這只會在成本和錯失銷售機會方面對我們造成打擊，因為他們的庫存組合錯誤。

And so we are going to we work, it's varies by partner where we've got to plan and we're going to do it in an orderly way with our partners. It's mostly going to be by just not shipping in products that they need, and that's going to set us up to be even to be in a better position to meet demand going forward.

因此，我們要開始工作，具體情況因合作夥伴而異，我們必須制定計劃，並且我們將與合作夥伴一起有序地開展工作。這主要是因為不運送他們需要的產品，這將使我們能夠更好地滿足未來的需求。

Okay. Thank you.

好的。謝謝。

Jake Norrison, Raymond James.

傑克諾里森，雷蒙德詹姆斯。

Okay. Great, good afternoon. I'm hoping you could just touch a little bit more on the state of the consumer, particularly at the higher end of the market. Are you seeing any trade down activity in your premium cohort?And then just dovetailing that with could you touch on what product segments or categories were actually experiencing that excess build of inventory?

好的。太好了，下午好。我希望您能多談談消費者的狀況，特別是在高端市場。您是否在您的優質群體中看到任何折價活動？那麼，您能否談談哪些產品細分或類別實際上正在經歷庫存過剩？

Yes. So let me take the first one and then maybe, Bryan, you could take the second one. So on the first question, it's not that we're seeing trade downs versus what we would have expected in the annual guidance last year is that we're not pulling as many people up.

是的。所以讓我選擇第一個，布萊恩，也許你可以選擇第二個。因此，關於第一個問題，並不是說我們看到了貿易下降，而我們在去年的年度指導中所預期的是，我們沒有拉動那麼多人。

And one of the things that we've concluded is like one of the challenges around why we're not doing that is because we're not playing in the bigger parts of the market. So I mentioned Amazon. And so if you're not present in all the different price points on Amazon and our dot-com, it's just very hard to pull people up. So it's not that they're going down. It's just that we're not pulling as many as we would like.

我們得出的結論之一就​​像我們不這樣做的挑戰之一是因為我們沒有在更大的市場領域發揮作用。所以我提到了亞馬遜。因此，如果你沒有在亞馬遜和我們的網路上展示所有不同的價位，那麼就很難吸引人們。所以這並不是說他們會下降。只是我們沒有拉出我們想要的那麼多。

Yeah, Jake. In terms of some of the slower moving inventory, I'll give you some examples. One is our wireless land business on the SMB side where we think there's a lot of potential there, but we haven't found the perfect execution, the right products to expand there.

是的，傑克。對於一些流動較慢的庫存，我給大家舉一些例子。一是我們在中小企業方面的無線陸地業務，我們認為那裡有很大的潛力，但我們還沒有找到完美的執行方式，也沒有找到合適的產品來在那裡擴展。

It's not been a huge portion of our historical NETGEAR for business product mix but we have had hopes in launching starting with some of the WiFi 6, 18, and we're now actually starting to move twice by 7. That's an area where I think we're looking to increase some velocity. Some other examples, I'd say on that on the CHP side or maybe more niche products, but we have some combined mesh and cable offerings that are unique things to consumers.

它並不是我們歷史上的 NETGEAR 商業產品組合的很大一部分，但我們曾希望從一些 WiFi 6、18 開始推出，而我們現在實際上開始兩次移動 7。我認為我們正在尋求提高這個領域的速度。我想說的是熱電聯產方面的其他一些例子，或者可能是更多利基產品，但我們有一些組合的網狀和電纜產品，這對消費者來說是獨特的。

There's usually customers who are in the market looking for mesh to solve one problem. And then there's other people looking for cable, but we have combined gateway there that would have been one of those areas, and that is maybe Meural to a small degree. I mean, we talked about why we're exiting that business. It's just not a great fit from the markets.

市場上通常有客戶正在尋找網格來解決某個問題。然後還有其他人在尋找電纜，但我們在那裡合併了網關，這本來是這些區域之一，這可能在某種程度上是 Meural 的。我的意思是，我們討論了為什麼要退出該業務。它只是不太適合市場。

So those are some of the examples of areas where I'd say we've been targeting and obviously in broader terms there's certainly some WiFi 6 offerings that we have out there across some of the more broad CHP categories that, of course, we're looking to start moving towards WiFi 7 with a more slimmed-down portfolio of products there, but we do have some products in those areas that we'll be working through.

這些是我想說的我們一直瞄準的領域的一些例子，顯然從更廣泛的角度來看，我們肯定在一些更廣泛的 CHP 類別中提供了一些 WiFi 6 產品，當然，我們'我們希望開始向WiFi 7 邁進，並提供更精簡的產品組合，但我們確實在這些領域擁有一些我們將要研究的產品。

Yes. Maybe one thing that wasn't -- was behind your question, is that just how to think about like the second half of the year and the destocking in Q1, Bryan touched on it. There was significant destocking in Q2 is significant. So this is a direct drawdown from revenue. But as we said, we expect it to be $25 million to $30 million. And so we are expecting and are thinking about the second half putting aside, we've obviously said you got to put aside the December guidance.

是的。也許你的問題背後沒有一件事，那就是如何思考下半年和第一季的去庫存，布萊恩談到了這一點。第二季庫存大幅去化，意義重大。因此，這是收入的直接減少。但正如我們所說，我們預計該金額為 2500 萬至 3000 萬美元。因此，我們正在期待並正在考慮將下半年擱置，我們顯然已經說過必須擱置 12 月的指導。

But we do expect some regular seasonality there. And so one of the things that we've talked about doing is burning down inventory at a higher rate. So that could positively impact revenue but also negatively impact margin because of the promotional aspect of it. So I don't know if that's what you were ultimately asking, but just wanted to provide a little color there.

但我們確實預期那裡會有一些規律的季節性。因此，我們討論過的事情之一是以更高的速度燃燒庫存。因此，這可能會對收入產生正面影響，但由於促銷方面的原因，也會對利潤率產生負面影響。所以我不知道這是否是您最終要問的，但只是想提供一點顏色。

Yeah, that's great, very helpful. And then just last for me, is there any way we could think about the magnitude of cash generation in the second quarter and the rest of the year? And maybe if you guys are thinking in more formulaic terms sort of Durbin context of share repurchases? Thank you.

是的，這很棒，非常有幫助。最後對我來說，我們是否可以考慮第二季和今年剩餘時間的現金產生量？也許你們正在以更公式化的方式思考德賓股票回購的情況？謝謝。

Yeah, in terms of cash generation, I mean, we are going to generate more cash in Q2, largely because the benefits of continuing to work down our inventory. I would steer it probably in the magnitude of -- may be half of what we saw in the first quarter to somewhere on the high end up and around that range. The rest of the year, I would just probably steer you to kind of we stated our target is to get down to three months of inventory.

是的，就現金產生而言，我的意思是，我們將在第二季產生更多現金，很大程度上是因為繼續減少庫存的好處。我會引導它的幅度可能是我們在第一季看到的一半，達到該範圍的高端某個位置。在今年剩下的時間裡，我可能會引導您了解我們所說的目標是將庫存減少到三個月。

We're going to be aggressively trying to work to do that by the end of this year. There will be offsets obviously, from an income standpoint, Q2's guide with the consumption of cash there. So there'll be offsets to that. But I would say most of the cash generation for this year will still continue to be tied to inventory reduction working towards our targets.

我們將積極努力，在今年年底前實現這一目標。從收入的角度來看，第二季的現金消費指南顯然會產生抵銷。所以會有一些抵消。但我想說，今年的大部分現金產生仍將繼續與實現我們目標的庫存減少掛鉤。

In terms of capital allocation, I think was your second question there. We repurchased shares in the first quarter, which is something we probably hadn't done in almost two years. And I think we still believe that we're going to be opportunistic buyers of our stock in this market.

在資本配置方面，我認為這是你的第二個問題。我們在第一季回購了股票，這可能是我們近兩年來沒有做過的事。我認為我們仍然相信我們將成為這個市場上股票的機會主義買家。

And there are no further questions at this time. I will now turn the call over to CJ Prober for system final closing remarks.

目前沒有其他問題。我現在將把電話轉給 CJ Prober 進行系統最後的結束語。

Thanks, everybody, for joining and look forward to future calls over the coming quarters.

感謝大家的加入，並期待未來幾季的來電。

This concludes today's conference call. Thank you for your participation. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。