NETGEAR (NTGR) 22 Apr 202020 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Erik Bylin. Please go ahead, sir.

Adrianne. you, Thank welcome Conference and First XXXX Quarter Good to Results Call. Financial afternoon, NETGEAR's

from Mr. Joining and company the us are Mr. Murray, CEO; Patrick Bryan CFO. and Chairman Lo,

of provided by followed call with will business Format on and Bryan, for provided of quarter a by by the Patrick. review first the the commentary start the details financials

will have We then time for any questions.

website a copy please Investor Relations release, of visit press received at today's not you've If www.netgear.com. NETGEAR's

call advise Before statements. contains we conference the that begin forward-looking we you remarks, today's formal

Forward-looking results statements expected statements. regarding those revenue, operating and future forward-looking margins, expenses, include statements could from tax business or materially these rates, outlook. differ by Actual contemplated trends

For on of today, periodic update a Any based Form more discussed XX-K. these as to the this factors on statements as new assumptions most risk in events. filings information we that obligation call recent information, forward-looking NETGEAR's no to statements are or of future make please SEC, refer and the with including undertakes NETGEAR result the

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

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

And you, Erik. for call. joining today's you, Thank thank everyone,

We our are very first pleased results. with quarter XXXX

levels cash flow, the well worldwide adapted the quarter. operating the by market free net of channel for financial Despite executed operational market inventory the revenue, team while and distribution targets we our and final beginning the of disruptions and set at working overachieved quickly pandemic, the mix. on margin, rapidly product and presented team in Our quarter changing the demand a weeks from home few for COVID-XX logistics and

This planned quarter, but million, to decline the guidance, benefited approximately 'XX market the world. million. revenue in service March sequential the The provider X.X% above first deadline. due of due in massive driven of demand Revenue to period XX, from strong by The to the towards down basis. in the home from side. WiFi around level us a end our shift originally from the exceptionally U.K., demand above partners X work the year-over-year certain Brexit is came reduction range, guidance quarter in product increase end helped $XXX for revenue channel a of top revenue $XX down centric adjust CHP to in primarily year-over-year Power-over-Ethernet and on end Net pull-forward channel X.X% of user the side the QX was XXXX on a become ahead to the our and SMB more centric on inventory mix and ended

operating first in non-GAAP margin for outperformance. above of created at the guidance by range, leverage X.X%, our top came revenue driven quarter largely Our end the by the also our

$XXX.X net XXXX, year, quarter-over-quarter. XX.X% million, of which sequential The X.X% of quarter in anticipation EMEA was the the prior partners Americas first down from QX a originally seasonal the the year-over-year created as by was XX% distribution on due a difficult requirements. and Brexit our the increased which to increased from deadline. scheduled up comparison, work-from-home year-over-year For was million, in down the basis. for demand lessened the revenue benefited and was This revenue was $XX.X shipments from net largely Americas down U.K. benefiting year-over-year decline to 'XX X.X%

partners on of as service year-over-year the a was our products. awaited XG basis, lower revenue Additionally, net provider launch

Greater also XG Australia, we challenges China and sequentially. a launch the awaiting million, Our APAC down COVID-XX revenue in faced sequentially, as is the are comparable provider products, net revenue by service the is on quarter decline was prior-year year-over-year which basis of The XX.X% XX.X% from largely down in $XX.X they region. from while driven

net total about million wired a million combined and business introduced was shipped about XX% of products For months XX% split between the of in were XX% units, Products quarter was XX% nodes split wireless contributed between last gateways the revenue units XXXX. quarter about wireless X.X and respectively. million first wireless wired the including XX shipments, approximately first and all last X.X of XXXX, our of and shipments. X.X products about quarter The home first routers Shipments XX% net revenue respectively. and while and XX of about constituted we for of products. quarter first The of months introduced XX% products our the in

in from largely lower 'XX, 'XX we anticipation drag to volumes high of deadline. into gross expected numbers. release XXX QX on of the when distributed in fourth quarter basis in to market QX to partially as XXXX XXX significantly is from The in compared the and my in was margin which on, decline today. earlier is to points Brexit Gross XXX non-GAAP expected as of due the shipped XX.X%, comparable compared XX.X% previously From quarter, discussion will point GAAP SMB tariffs The products 'XX Section detailed quarter points compared the first QX as points non-GAAP basis compared up year-on-year was reconciliation this down of margin the non-GAAP XXXX. margin in prior-year XX.X% the The earnings shipments was U.K. in eliminated. focus our improved to to gross

non-GAAP X.X% QX came at and million, sequentially. X.X% $XX.X year-over-year down is expenses operating Total down in which

expenses the growth our have manage portions ensuring our need also of while we to that business prudently, that the they succeed. resources always, As

XX quarter. from headcount XXX end of of Our was prior down the as quarter, the the by

headcount As times always, tightly, uncertainty. very of economic manage especially in our we

will of the in of R&D and first empower quarter for period leading-edge our X.X% are future revenue in prior-year of share. is revenue, continue the revenue the of comparable introductions fourth as X.X% net net quarter of non-GAAP was compared gain X.X% net expense to Our area the we to us our resources XXXX. growth commit where R&D product one engine because and to

of Our XXXX. non-GAAP first tax in the rate was quarter XX.X%

for $X.X reported income $X.XX. of we Looking of net non-GAAP line and at QX, bottom diluted non-GAAP million EPS the

cash as million Turning the reduced to first million up $XX.X inventory strong QX, which the cash we prior shift ability $XX.X in provided million. cash, X. and with short-term over be our of property XX XXXX expect during by delivered domestic and our to and confident generated used successfully from over generate XX $X.X during in quarter, mix the we total our $XXX.X total and $XX trailing quarter, million ended of remainder million brings able We the months we operations, to to towards investments, on continue for the capital to WiFi cash the in the quarter. million balance sheet, purchases from the further million. we $XX quarter months the from to expenditures demand operations our In We which used will remain to continued our brings increase $X.X of in We position equipment cash XXXX. trailing in flow cash

approximately in million In spent QX, we common have Since average $XX an per million of QX at repurchase XXX,XXX shares. repurchase $XXX.X our share. $XX.XX price shares spent XXXX, the XX.X to of to stock repurchase activity we million of NETGEAR start

the approximately to practice maintain of XX first balance end sheet. in a time position million our uncertainty, shares strong shares desire Our the of a fully is as repurchasing with strong maintaining share diluted our of a of the quarter. cash importance and balance count We recognize of we'll

more growth Americas, both offset we provider the increased where which million X.X% decline of This at down and the $XX quarter, to share the our the turning Orbi, includes Nighthawk the demand service revenue connected approximately XX% QX on for Pro and was year-over-year 'XX. WiFi, and U.S. retail segments. lower XX.X% segment, in compared industry-leading market Now, and down was The prior the compared year. million Gaming, brands, year-over-year than half coming first is generated which for product to in the revenue, again basis, consumer service which The as We down to mainly $XXX.X of net in channels results quarter. sequentially. in saw Nighthawk, EPAC, provider to decline home held Meural attributable of the strong

net sequentially. $XX.X the which segment quarter XXXX, XX.X% year-over-year on SMB first a million of The is down basis, X.X% down revenue generated for of and

in experienced and of QX while originally the 'XX anticipation the the scheduled deadline, European As benefited declines in with demand QX Americas onset the the mentioned, previously from 'XX, increased Brexit pandemic. region of

and PoE On AV lines to well Plus perform front, in the Pro our product switching the continue market.

Our channel market share retail remained through U.S. at in sold QX. switches in XX%

November by in for given demand, the noted the of of shutdowns and the Day. Consequently, the practice to are XXXX we economy we uncertainty release, unpredictable guidance. year gave it that its pandemic in the of margin suspend on our market withdrawing about operating corresponding at brought to and due prudent is our we COVID-XX year full targets Analyst the in As feel effect global prior last revenue the press giving

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

Thank Bryan. you,

First, team I since I demand, navigated Asia accelerated team inbound these global family's home and e-comm, such very delivered early [ph] demand product am we sales, moment, execution in like disruptions of work the on customers to come keeping workforce disruptive basis to and in quarter. that while in as the February, through outbound the from supply, our start would this We in shift saying faced through pleased our Despite then difficult proud and retail to for in that to and for how slower enormously pivoting by difficult grateful extremely and this starting at considerable all and hurdles, in EXP the a faith. our environment while to from a themselves environment our I'm adjustment channel first challenges, SMB March.

number products balance an pivoting strengthening NETGEAR uncertain to in By of of sheet. set while environment, mix channels key our our right financial outperformed the and a broad metrics,

and and financial upgrading according home performance [indiscernible] people and work home ecommerce home stores. necessity, and from requirements three various price demand due we on connections growth connected put a points, SMB in demands connected ability. double-digit across end Also, of from for unprecedented home geographies, to saw business physical the growth their market QX, recognized their The work as by WiFi the worldwide, home WiFi responded our retail both mobilized mandates. Our at end strong saw networks. many now that is shuttering home Families school at home of strong towards from to

that this NETGEAR operating advanced to we component demand headwinds share from building significantly results of our of market SMB side run. inflections, exited saw from capitalizing performance faced the shutdown home recurring increased in in double-digit came and most markets, drove further business. March to to of WiFi revenue on non-essential adjacent on gain, The expanding Even of but disrupted in the the propel businesses we in technology CP line, the But, to each into as out given mid-March, search markets signs helped market, strategy, the revenue, margin long growth, quarter.

January Currently, networking our North leadership involvement the retail March. it to product in and February, in paying in market a back significantly X is growth growth WiFi and accelerated early dividend; propelled America

While point QX. With QX we will at XX% growth North more new can't confident double-digit products system and will seeing WiFi still our supply, this is WiFi demand be QX. home and believe we and of X in increase last, market about long search Mesh America the beyond. how and in we're router proportion this in demand

products $XXX, $XXX homes We WiFi Mesh two-pack have suit the now pricings in at sizes. different to with market, different X of and $XXX, three

of We hotspots market different of the X competitors We're ship our now a yet ranging product. performance X the competitive into to major routers, market end to quarter. levels. EMEA towards of WiFi have two mobile with $XXX, WiFi XG $XXX in models spanning Our to the have pricing, excited the batch six introduce from first single

We meaningful this the provider expect provider ramp service mobile in sales service to QX, revenue grow due rest the be to quarters anticipate worldwide. our up and revenue the XX% in year. of hotspot increased sequentially component a will to to We category our come in

during this Mobile hotspots Internet now not are by used access. now used wired home to also are being able pandemic. are Hotspots first get from high-speed when extensively they by working responders people

is by what to donating to school of hundreds doing districts In mobile Francisco students' San NETGEAR addition, they for Area the community use. various Bay help hotspots the team can

progress began XX,XXX providing We help free those with with XXX,XXX are added Furthermore, driving have subscribers, need recurring in record subscribers. efforts. end school on home record we partner, We from to XXX,XXX stream. quarter revenue thankful for out AT&T, to plans and a paid the for data their paid our to

than are off subscriber during of great to attaining start our We a towards goal XXXX. doubling more our base

audio professionals, Pro and February, switching, unmanaged our at being other switches the from to solutions demonstrated how Conference architects, engineers, the making transition, we over designers, unmanaged Integrated IP Ethernet In for switches. demand the integrated small AV accelerate growth for increases. to excel but and SMB events in similar while certified up easier Systems on very AV are market, large in we and home CES offices and saw Clearly, Power strong installations. could visual, the focused to Europe more integrator. our can continue by set the when over we easily expand Furthermore, In installations

switches pre-configured networks Our plug-and-play, the feature AV to welcome enable AV integrators world. to a over the IP be around

components point our reliability. AV Crestron In deployment is work high growing A switches ability of IP provides MXXXX. our Series dominant March, over rigorous out-of-box Pro program player to together we AV in to by data the a certification certified validating Crestron AV deliver market. another and for announced that This the to Crestron AV accelerate IP, seamlessly transition ensure over worldwide.

revive by decline are XX% mitigate XX% as home switches, not the uptick we we SMB the from product a SMB decline seeing if work in currently IT the in SMB and encouraged QX. IT to which Ethernet in from our fallout result expect are a traditional half. decline sequentially, the of Pro our demand setups While by the revenue Overall, pandemic, demand AV together does we in world

about The in COVID-XX brought considerable short pandemic in has our business order. a shift

customers The seeing shift, connected softness service resulting in that retail are demand coupled SMB. by freight bolsters countered the We for mixed and in the as respond with demand believe QX by us both with surge on times to we the outlook the home X whole recently, quickly will XG. in to availability WiFi they to their the WiFi increasing our costs serving from our increased higher channels, by X.X WiFi operating products and more current home to XG, by we X, lineup, provider us margins the be expediting committed subscribe of in expanders, in side, WiFi our services. cable the quarter. to Despite from likely upgrade reward CHP upgrading home by to airfreight constrain are levels the helping rate from their will to to our a customers across to well, X future likely WiFi performance routers value-added to We

or the demand will it surge for the after from in will work WiFi look cannot how predict the We long subsides. demand like products last for upgrades home what

the However, we we have that material will by and availability, bar is supply a set. factory the remain that we constrained hopeful higher by have deliver are volumes finite been In worldwide, as we freight to next uptime, capacity. limited few can channels capacity quarters,

healthy constraint operating decline, retail long to shift while in QX. the in to we channel would from structures, which, as online, demand partners revenue channel inventory growth to With more efficient expect for move further the term, our

QX, are XG, AV and availability confident our predict products the in benefactor us over pandemic of the in long X, difficult demand subsides, cannot many SMB Ethernet, we beyond, Power the the be While possibly WiFi biggest will shut leadership business our depress position these IT products how our the down and superior experiencing will of worldwide performance customers times. to so after with and during Pro we

us the our safe. on essential on entire and the I responder, all behalf the finally, business would keeping for NETGEAR like show medical, first and fighting of to the gratitude to deepest us frontlines And team, teams

with up Q&A. the And for I'll open that, call

question of [Operator Tindle Instructions] Raymond Adam The the from first comes from line James.

a positives Understand start segment on wanted just afternoon. Good lot CHP guidance, does in I it you segment. the not of seem moving providing to highlighted the but thanks. forward. Okay, like maybe

second inventory, North biggest inventory, decade. through. past lowest in and your channel showing on in retail, channel market sell on In first two-parter, America, essentially a the is Just level the

and targeting range. four up of permanently XX that XX inventory I range think this Is secondly, trended? very do comments for to first, it you're through look like that very like on QX. now? you, indicators indicators And strong channel XX-week weeks in search that thinking below should have it's certain how weeks current Just the guess, remain changed? peak? past about there to to you think Do favorable, inventory. like channel number then sell-through how get are normal XX-week demand they you I Is sell you're trends What seems right maybe to? a also and be

curbside We're Well, side, have more scenario first, partners we the physical as the to them this in on place, permanently. their inventory. from to well work significantly online, channel to as And pickup, shelter channel online which less successfully inventory inventory more do landscape efficient transitioning that in are a stores our of order, more home the believe and pandemic and seeing requires manner. also, some enable manage online altered moving channel which

overall, do that related the is product to channel going believe good trend in retail to we inventory QX So for particular, -- And downwards. question. the second in

As just week quarter, up network channel of consumer demand the the the down. home to world, the fourth -- still digits. in that mentioned, on week side, work is seeing continue helps inventory really third to to we're around side, the the double which now, we the WiFi the And sell-through

the to that shipped produce search limit on sell locations we our want. of inventory around in And could last until We could We as the in all because the continued and and produce end believe many move just this would demand QX. we we volume that we channel them cannot demand the that depleting how have we still immediately we much through EAV quarter. discussed, way end market a to be down [ph], that to the

I will to not once it the the opened inventory channel that will come continue are retail the do but level. prior that stores down. believe up be to again, it believe do But we back So trend

they are in a few our partners. with on to level of easy channel Number versus one sales a most in-store of factors. back come going what to QX of up mix is So depends online

much that. and is I flying. mean, Secondly the logistics how And how world heard of are that less we can have you opening up. of fly in is can QX, produce than planes used to the freight, we the XX% the probably

so are kind there channel help factors the foster are three so basically of depletion of the So I sales; for inventory doesn't next really multiple that the that and quarters. think

up, can year. follow the throughout you Thanks, is Okay, And that variables update hoping Patrick. margin that's to the some helpful. operating improvement a this maybe just of maybe

to you walk when QX XXX timeframe. -- going the can entirely we during how from supposed points declines guiding But it of imagine that the I that sounds much were probably was know year. look about first tariffs But or had points from think of in supposed of to is pretty year-over-year to improve. the And segment. basis the in just the the was activity strong to segment. promotional the XXX happen we that now in the when like improve, Thanks. fading SMB upswing half I'd to so that going margin, we're It the that basis operating the CHP so is maybe update terms is sizable be. SMB delta decide ASPs

business, a we're touched profitable the Patrick us. of a seeing this. very little Certainly, that's bit on the SMB headwinds for think I that business we know within

look the that. highlights can two and the at and certainly margins differential businesses, You it contribution between

impact our the on today. as seeing even though gross So we're side, see a having headwinds overall significant at CHP can and upside least as margin, we there, mix the with on is the far

to what surge we XXX been tariffs improvements. based In exited the we said rates that capacity. I our what in our with did were the need terms location It certainly, in demand that margin stronger, but airspace Patrick as year-over-year do the quarter manufacturing given were with terms airfreight seeing deliver normally points about X.XX would We'd we would we the airfreight, to improvement, and see, of aimed think gross move. have relenting, on basis about of

in sooner the that and of to terms were certainly, we think used we are the SMB normal, variables businesses to return can up, we deliver to start forward. can to for business year. those we'll things move margin remotely the were close aiming the bigger something build as back, I and So see come we to expansion And back what that

Okay, thank you.

The next Hamed from line of Financial. question Khorsand BWS with comes the

just are receivables your you top want how So payment first as managing on you to terms customers Are cash of right I off, and ask, are the extending now? that receipts?

very continuously been material do in we and partners, capacity. in of well always dealt right-sized with starting But we've very news of customers. businesses We any sorts, these our not and XXXX. Yes, monitoring vigilant distribution with then historically worthiness we credit, XXXX, information, credit the in and faced have monitor established globally speaking, of write-offs and downturns, any again we've the in kind so

to well we're monitor So the we situation. prepared think

across Okay, just the are and are go, any then or product as the products spectrum? specific categories growth, as that seeing the it there far is

we as economic at discussed, upgrading spectrum across just the to of us Yes, performance has apparent it's across board WiFi become pretty in strata because all the the spectrum. home much it is

$XX for they WiFi simple financials clearly So Orbi, Tri-Band, a with chasing expand maybe extender $XXX it. But have opt bedrooms. significant headroom, to just financial that, with or paying for families for the upgrade, signals through after they're that know. so they also XX-Stream, for limited We the those you would a up X, needs, WiFi

It's across it's So spectrum. equal. the

charges? were lastly not talking component an then, that are about meet you purely to Or Okay. demand. And enough from still facing having Is is product standpoint? you airfreight

if of sometimes. that airfreight, a unpredictable because to Both. the even the And one, Number willing pay plane secondly, pandemic. can't fly availability for components the just we're find we to is

shut doing down in a also weeks few supply factories memory packaging they chips, interrupted then some few And shuttered on and few last manufactured. is just they of final is some of in rising in in weeks. chips, components that Mexico Malaysia, example, putting the back the in curve they're and for RF place, weeks. It the was which just the had shelter hit, the some this factories, happened which pandemic of For they a situation, the pandemic

we're fighting supply these constantly So challenges.

from assembly in good is our the the thing been then are final components main to has humming the Indonesia, and and in Thailand China XXX%, XXX%. supply back that Now, Vietnam, along factory factories

it's around, now, trying what's predict we and have are still different be starting hit we other to pandemic going the to to no next. So to happen about the places all that navigating way

as to Are able as as track you with is do far at the turnover all? to far concerned refresh customer Are is routers, the you able concerned? rate that as

until sign to our what we we X.X Other the have base, service sign-on XX% than download them Today, single install XX about registration apps. for apps. they of million little and call and believe Not have up of to that base. data the very we we that that, We have the rest. increased install about have million our exposure downloaded of

Okay. All you. right, thank

Sure.

question line Paul Silverstein of with from The Cowen. the comes next

guys. Thanks,

recognize ask were you Because tell to WiFi total QX, chunk what be but I the numbers? X date? I to shipments the can what Before are going big and questions, were my units us real the the of QX's Patrick, unit during what that, shipments

Traditionally, sells we last the do year of and our shipment. part end systems. has products grown later not whole, share WiFi to X the on But for break our from in out XX% the market out specific QX demand XX% in towards of of the mesh the routers by

by that So we're trend. encouraged very

of the of coming When of SMB, small world obviously I've apologies. quickly. particularly think been questions. throughout the the got the the worst in term, crisis, businesses -- thoughts that first impact terms perspective? to severe. so my look SMB with worst handful, particular long-term thinking down certainly longer you if the part enterprise we But going now we for got you are of market been eviscerated. first a businesses Okay, a better demand expecting in look time to business the out It's look COVID's once have from and rebound crisis, to I would spend unlikely break segment limited start is type for as of presumably What levels, it's some your what in of are the any terms to get IT. resources you hurting with come, beyond be from but current to of resuming, availability on The

home in bricks in in definition, respect market, did you have that saying out, share But I scenario a in you imagine it the weren't by bricks market dominate shelf with business, the your pointed then And they in and your today. primary assume mortar as to mortar, is and competitors space consumer products market if your dramatic. goes which and without we

hand less if the competitors is and shift, share, relatively X strong, would think, online, than in and far other in On bricks your mortar. your WiFi be products still it I dominant do market but

revenue see return do there, closed So bricks have when fact, is your people to you in Do that? from question competitors? the to don't for and stay want expect product If to visibility competitive shop for primary on or mortar you any mortars in got the meaningfully questions. of set would your then through those and dynamics? the a bricks the room market? products another worse Would that even when it impact reopens, that change I've competitive And your

you So more or do it? have that's questions,

got let to you others respond those, I'll I've I'll for a wait [ph]. couple then more. and

Okay.

manufacturing, major like. typical our as clearly, customers that well the our businesses that's government. side, is there no companies. to going what question are the the on post-pandemic, businesses as I major half first we or of and and IT engineering of departments about look in customers, primarily estimate Those way startups to school, local mean, Typically, small the for are So business SMB your saw

Manufacturing continue the level. have right? resume. and It it run. will close. is experience to the to products, XXX% our government be should not to Schools is develop still be previous they still activities have Now, resume, Engineering all come to back, may pretty that So departments be has going when to be run.

that, benefiting on completely hand, other the from are that's mentioned, new. trends and I'm two So new that's that is we why also

be them, the Pro done one, as don't kind from trend, could which to more And from I and you software XXXXK they [Technical or is completely is designers, what, most PCs, from world from so we know to Mac is and and more they for we've XK. that mean, people which Difficulty] video, need is more UX which And moving XK to even adjacent architects which XK incremental. over tasted and work AV sophisticated use work I the Pro, such market, go of the time, home, now, home, AV video Because from more getting the very the figure actually is work office developed I developers, All all to it, digital completely as is and high-res, and multi-gig. of requires to when home. the and out, digital IT. or to

so, up their at to set home offices. networks And home they Ethernet actually outfit

believe prior level. office, going the that, incremental, the And home we it think return mitigating compensate is and the IT our which go longer scenario. Pro return is than level, and customers. not not, setup over, and when as for prior IT AV is and to will time right indicated believe away, they the I is do home new more take completely a that to will If we the decline. now, demand to which to demand to is our office going that AV, of the is pandemic resume the And So Pro can typical part hopefully, for

first the that's So part.

online business thinking online stores stocking or three logistical all that share the because I everybody's significant move and the shelf why to the as about But actually the all moving having mean, right. physical over one second It's we world about. in stores. The actually, significant you're in online, think the and the higher surprise, to you that clearly store dominate you're you physical the have that's one mentioned, two, part, moves is physical we as delivering. to months not the to space, difficulty last

such going online So Best a perspective. lot is of and as share actually from partners our business traditional perspective. Walmart, to where dominate we the still Buy, U.S. a a Costco, from market That's

that we them we actually international aggressively internationally, over in the the cannot a an they because of From or demand. share We we retail five matter as the levels the four online. perspective, afford And have requirement actually stores very have and just have moved margin market years of fact, last little stock reverse.

moved benefit only is had now, we And for the of gain it, online, the internationally. definitely XXX% So shift way to it's a share. because us online with

this to also, strengthen you mentioned, us. choice. all to online And hands. So beneficial actually I move about We think is as online our is

levels there'll like of mobile that. with X level cable come traditional of in like to X, nationally, WiFi a If hotspot, we three our WiFi our online the have you to expanders. different all adapters, performance and X choice, routers, the starting be performance channel different go gateways just WiFi while leadership WiFi X And more six WiFi and even of plus X

think single our I versus a advance product with continue we'll online competitors our offering. share to typically

So that's how I look at it.

business, other associated you response. business I expect insight may. business big sounds new, What to opportunity. year? is appreciate the some provide? if set this questions, a that appreciated. to That'd providers? do at gross the last visibility like you'd With the like I the with What you provide Any do did hotspot the look ASPs it? to that extend How be What's margin to that color? care XG to service your One respect in of Can present? exciting

way go. is Well, to the clearly, XG

the from their the So operators around variety base quickly moving a subscriber is for of reasons. world XG to

a airwaves. is delivering more XG most is the over important think way reason data I efficient of significantly

hardware-oriented it's base perspective; the advantage of XG user, more to to data the station is cheaper XG Secondly, incentive upgrade inherent to move the to so end routing the about from latency And maintain from about is an over operators significantly then the speed. XG. for there because is and software-oriented for clearly and than

moving speed And ASP standpoint. more from perspective, is definitely, world significantly a will be from expensive turning way. back. data an initially There's the XG that no So

decline become think would time, well XG However, I popular, the back into to everybody. will it so that super it over available

double mobile that. To own give mobile But store, performing you you an you a X selling idea or amazon.com $XXX. probably now, at go the WiFi if hotspot our the highest see is XG will online hotspot is that right to XG about new

operators But strategy, time, the is the whatever want. that's converge. continue two ASPs. over to will course, And sell of our the So

both from but -- is technology different older during people there trend. items. greatest basic demand there and I for expensive, capitalize time, As quite and this it's on value, financial just a there mentioned home good demand the also means, this with we'll most And to the work is latest, good are for different continue

that's be our a we will we revenue, we'll this perspective, pretty nobody that third sequential significant has a that portfolio hotspots our confident mobile of growth And we well. XX% that broad continue hotspots boost mobile with seeing about shift. in the of terms quarter, quarter are which talk is On why a the now dominated by do. in the as second pretty much And and sequential provider growth XG service

corporate What margin business to like look average? relative that gross Fantastic. the does for

is of segment. We in CHP pretty similar the many business business margin contribution said the to other service the previously provider of occasions the channel

Okay. it Thank it. you. on. I'll I appreciate pass

Sure.

comes question Woo Jin from with Intelligence. line Ho Next the Bloomberg of

It's Woo give if Hey, and you Yes, Jin wireless mind? again, please, that don't Could hi. number Bryan. not Wuhan. node you us

Wireless nodes.

was think X.X it about I million.

in the strength you're the that wireless half? your have result, may that terms or and said may frontloaded half about about there do is the normalized second in So, demand weakened products, pent-up have XQ, demand you have Patrick, a you the I had a mean, given concern as and of if any what given second a for you thinking year what had sales, we wireless

as technology, the demand been also I are there buying latest The mean, low-end people expander and that well. means the buying older board. lot are predict. a the it's to across has difficult encouraging people adapter But things very to AC or there is the technology we the X. see of XX WiFi far upgrading That

space your upgrade to people that, bigger their which your a afterthought. an people to us WiFi watching, doing for they getting should home, your like know afford WiFi doing think be a people home WiFi I on. to is be gaming, what, should school could it that, X what doing work, now, us cell I not at And getting and WiFi your with have phone. whatever upgrade as realized are to you movie your them later leaves home, think at all doing really be So of performance as important taste

even year for them, they years, there there. people year WiFi five whenever every out to And four years, or iPhone upgrading tend is other years. a three sometimes every cell phones upgrade So are new their

going frequency, phones it. be Now, I match very cell upgrade their hope quickly. WiFi And able look to we're our to that's I at how

know going in terms the service second then side provider, half. don't you provider And have of Okay. service how visibility I into on the much a

to that in as relates the million-ish be range the calls to quarter there? prior expect to at the XG $XX $XX you per You said we it back Are had rollout. still million-ish

$XX then in a growth Yes. first And as And with be first roughly I the growth half XX% we service we will quarter the about believe provider second over million expect revenue, the that which mentioned, QX. mean, a of I finished we half. double-digit sequential

Got it.

Okay. on end Got Subscriber let's on application. in your it. a numbers And good high were very this then a of terms note.

more So could to you application it, to paid users convert able talk How a little are about bit please? you subs?

trial. doing free it. few way is are and trial do everybody's There ways We're doing error. still I also, the it, a a most We're it you we're giving obvious to learning. still doing mean,

XX trials, the highlight that the paid we all days. everybody goodies, a the we'll to XX advantages, free you into for sure trial free And a you subscriber. during before give even give or after turn days that, So the and all make try would

they all we'll a that to promotions, sign course, dangle up longer of period. and them So coupons for entice if

we do. So thing services. of we easiest the is out sales, And also the standard that's to the catch that, that the them way at second subscription that's point to find the buy classes

own us they at card subscription for credit entice all So buying hardware. same because products to buy, buy time given them the whatever a website, our we'll for a on the service they've already

successful pretty that's too. So

at the the that have example, hand, then including Costco, And sales, for point year a is in skew subscription. of of we on other a

people buying that pretty that too. So be happy seem with to too. They're

those So still entice trying. think that I are the people. of many ways to we we're But are two other trying trying avenues

looking get one, many subscription. So We're still at at ways free basically, point of hardware as possible. as those is getting to board. trial for the trying people to avenues purchases of now, on onto is subscribers Two purchase of other into get buy the

Thank you.

Sure.

now call to will turn Lo over I Patrick the And closing for back remarks.

you, time. today again, thank hard like thank and everybody, for and once would flexibility And me. this for our partners I to work the joining our employees and Okay, during

next beyond. strategy our our will Bye-bye. the of a with beyond. and strong at contributors soon. remain the Talk delivered confident We this more And updating look to you be the our quarter to start and strong XXXX, on progress forward have I we that and year you success strategy in components of to

call. This today's concludes

disconnect. now You may