NETGEAR, Inc. (NASDAQ:NTGR) Q1 2023 Earnings Conference Call April 26, 2023 5:00 PM ET

Company Participants

Erik Bylin - IR

Patrick Lo - Chairman and Chief Executive Officer

Bryan Murray - Chief Financial Officer

Conference Call Participants

Hamed Khorsand - BWS Financial

Jake Norrison - Raymond James

Operator

Good afternoon, ladies and gentlemen and welcome to the NETGEAR First Quarter 2023 Results Conference Call. At this time, all participants are in a listen-only mode and please be advised that this call is being recorded. After the speakers' prepared remarks, there will be a question-and-answer session. [Operator Instructions]

And at this time, I will turn things over to Mr. Erik Bylin. Mr. Bylin, you may begin.

Erik Bylin

Thank you, Bob. Good afternoon and welcome to NETGEAR's first quarter of 2023 financial results conference call. Joining us from the company are Mr. Patrick Lo, Chairman and CEO; and Mr. Bryan Murray, CFO.

The format of the call will start with a review of the financials for the first quarter provided by Bryan, followed by details and commentary on the business provided by Patrick and finish with the second quarter of 2023 guidance provided by Bryan. We will 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.

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. 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.

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

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

Bryan Murray

Thank you, Eric, and thank you everyone for joining today's call.

While we came into the quarter forecasting approximately $28 million in channel inventory reductions of both CHP and SMB products, our actual experience was a reduction of $37 million or $9 million higher than anticipated. This increase was due to an unprecedented inventory reduction by our largest service provider partner, as well as a meaningful reduction in SMB inventory by our largest e-commerce partner. This resulted in an unexpected challenge to our top line.