Netgear beats Q1 expectations with strong SMB revenue

Higher-than-expected demand for SMB products helped drive the results

Netgear on Wednesday reported better-than-expected first quarter financial results, in part thanks to strong SMB sales. 

Non-GAAP net income per diluted share came to 99 cents. Net revenue was $317.9 million, an increase of 38.3 percent from the comparable prior year quarter. 

Analysts were expecting earnings of 66 cents per share on revenue of $310.21 million. 

The SMB business brought in $77 million, growing nearly 18 percent year-over-year. Its Connected Home business brought in $240.9 million, up 46 percent year-over-year. 

"With both businesses performing well, Q1 marks a strong beginning to the year for us," CEO Patrick Lo said in a statement. "The Netgear team again navigated the ongoing challenges in the supply chain to deliver strong revenue growth... The higher than anticipated demand for SMB products propelled us over the high end of our topline guidance range. Non-GAAP operating margin significantly exceeded expectations, buoyed by a higher mix of SMB and higher margin e-commerce revenue as well as lower air freight expense."

Netgear's SMB business benefited from the reopening of economies worldwide, while the Consumer Home business was led by the premium segment. The company gained Consumer Home market share globally and saw its US market share in consumer WiFi climb two points in the first quarter. 

Netgear is on track to reach its goal of  650,000 subscribers by the end of the year, Lo said. The company added 44,000 subscribers in Q1, exiting the quarter with 481,000. 

Second quarter net revenue is expected to be in the range of $305 million to $320 million.