Netgear (NTGR)
Q2 2012 Earnings Call
July 26, 2012 5:00 pm ET
Executives
Christopher Genualdi
Patrick C. S. Lo - Co-Founder, Chairman, Chief Executive Officer and Acting General Manager of Commercial Business Unit
Christine M. Gorjanc - Chief Financial Officer
Analysts
Mark Sue - RBC Capital Markets, LLC, Research Division
Lynn Um - Barclays Capital, Research Division
Kent Schofield - Goldman Sachs Group Inc., Research Division
Ryan Hutchinson - Lazard Capital Markets LLC, Research Division
Hamed Khorsand - BWS Financial Inc.
Jonathan Goldberg - Deutsche Bank AG, Research Division
Jonathan Kees - Capstone Investments, Research Division
Rohit N. Chopra - Wedbush Securities Inc., Research Division
Presentation
Operator
Greetings, and welcome to the NETGEAR Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christopher Genualdi with The Ruth Group. Thank you Mr. You may begin.
Christopher Genualdi
Thank you, operator. Good afternoon, and welcome to NETGEAR's Second Quarter Financial Results Conference Call. Joining us from the company are Mr. Patrick Lo, Chairman and CEO; and Ms. Christine Gorjanc, CFO. The format of the call will be a brief business review by Patrick followed by Christine providing detail on the financials and other information. We'll then have time for any questions. If you have not received a copy of today's release, please call The Ruth Group or go to NETGEAR's corporate website at www.netgear.com.
Before we begin the formal remarks, the company advises that today's conference call contains forward-looking statements. Forward-looking statements include statements, among others, regarding expected revenue; earnings; growth; operating income and margins; tax rates and other projected financial results; share gain expectations; the market for our products; business prospects, including back-to-school expectations, effects and expectations regarding 2012 Olympics coverage; competition; research and development efforts, including software development; sales and marketing efforts; hiring efforts; market trends and opportunities; our growth strategy; expectations regarding our recent acquisitions; and pace of new product introductions. Forward-looking statements made during the call are being made as of today.
If this call is replayed or reviewed after today, the information presented during the call may not contain current or accurate information. Further, certain forward-looking statements are subject to certain risks and uncertainties and 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 expected or forecast in such forward-looking statements.
Information on potential risk factors are detailed in the company's periodic filings with the SEC, including, but not limited to, those risks and uncertainties listed in the company's most recent Form 10-Q filed with the SEC. 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.
In addition, several non-GAAP financial measures will be mentioned on this call. Information relating to the corresponding GAAP measures and reconciliation of the non-GAAP and GAAP measures can be found in our press release on the Investor Relations website at www.netgear.com.
At this time, I would now like to turn the call over to Mr. Patrick Lo. Please go ahead, sir.
Patrick C. S. Lo
Thank you, Christopher, and thank you, everyone, for joining today's call.
During the second quarter of 2012, NETGEAR achieved year-over-year revenue growth across all 3 business units, as well as year-over-year revenue growth in all 3 geographic regions, despite the tough economic environment in Europe. The company has delivered 10% year-over-year growth in net revenue.
Non-GAAP diluted EPS was $0.64 per share. During the second quarter, we again demonstrated our leadership in home networking technology by being first to market with the latest in WiFi networking solutions. On April 26, we announced the industry's first 802.11ac dual band gigabit WiFi router, enabling third-generation WiFi at gigabit speeds. The release of NETGEAR's 802.11ac WiFi router marks the next generation of WiFi connectivity that is revolutionizing the way we consume multimedia content wirelessly by delivering Internet speeds up to 3x faster than its predecessors.
On the commercial side, we also launched the NETGEAR ReadyDATA 5200, the first of the new series of business-class storage solutions, complementing our existing ReadyNAS line of storage products for small businesses and professional users.
The ReadyDATA 5200 is our first product that carries an average selling price over $10,000, which features enterprise-class capabilities such as 180 terabytes of storage, deduplication and snapshots for a cost of ownership that is hard to beat in the industry. We will continue to achieve the industry's first by exercising our strength in new product innovation and second-to-none worldwide distribution.
For Q2, our Americas net revenue was $163.4 million; Europe, Middle East and Africa or EMEA net revenue was $117.8 million; and our Asia Pacific or APAC net revenue was $39.4 million. In the Americas, we generated 9% year-over-year net revenue growth. In EMEA, we achieved 7% year-over-year net revenue growth despite the economic recession in most of the region. We achieved an impressive 25% year-over-year net revenue growth and 22% sequential net revenue growth in Asia Pacific, reflective of our increasing penetration into this market, where demand for wireless Internet connectivity is rapidly growing.
In Q2, we maintained a high level of shipments with 6.5 million units shipped. We also introduced 26 new products during the quarter. Among the new products are the NeoTV Pro HD streaming player and the NETGEAR ReadyNAS surveillance products suite, as well as the previously mentioned industry's first 802.11ac dual band gigabit WiFi router and the previously mentioned ReadyDATA family of enterprise-class storage products. We are starting to see results from our focused R&D plan in the expanding product pipeline.
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