Analyst Day 2014

Analyst Day 2014
November 5, 2014
Safe Harbor Disclosure
This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act
of 1995. Specifically, forward-looking statements within the meaning of the Safe Harbor include statements concerning
projections on the total addressable market for growth, product pricing and market share trends, future growth in the number
of connected devices in U.S. homes, future IP camera POS growth trends, projections on LTE product performance and
customer base growth, service provider growth opportunities, NETGEAR's products and technology and their expected
performance characteristics, specifications and specific uses, and anticipated new product offerings and features. These
statements are based on management's current expectations and are subject to certain risks and uncertainties, including,
without limitation, the following: future demand for NETGEAR's products may be lower than anticipated; consumers may
choose not to adopt NETGEAR's new product offerings or adopt competing products; the actual price, performance and ease
of use of NETGEAR products may not meet the price, performance and ease of use requirements of customers; product
performance may be adversely affected by real world operating conditions; the ability of NETGEAR to market and sell its
products and technology; the impact and pricing of competing products and the introduction of alternative technological
solutions; NETGEAR may be unsuccessful or experience delays in manufacturing and distributing its new and existing
products; telecommunications service providers may choose to slow their deployment of NETGEAR's products or utilize
competing products; NETGEAR may be unable to collect receivables as they become due; and NETGEAR may fail to
manage costs. Further, certain forward-looking statements 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 expressed or forecast in such
forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are
detailed in the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those
risks and uncertainties listed in the section entitled “Part II - Item 1A. Risk Factors,” pages 51 through 71, in the Company's
quarterly report on Form 10-Q for the fiscal quarter ended September 28, 2014, filed with the Securities and Exchange
Commission on November 4, 2014. NETGEAR undertakes no obligation to release publicly any revisions to any forwardlooking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
All product and company names herein are or may be trademarks of their respective owners. This presentation may
reference wireless signal rates. Maximum wireless signal rate derived from IEEE Standard 802.11 specifications. Actual data
throughput will vary.
2
Questions?
E-mail:
[email protected]
Patrick Lo
Founder, Chairman and Chief Executive Officer
Industry Firsts for the Consumer
5
2007:
2010:
2014:
First 2-in-1
Powerline
Network
Extender
First to create
the WiFi range
extender
category
First with
Dynamic
Quality of
Service (QoS)
2006:
2009:
2012:
2014:
World’s first
available
wireless
networking
products based
on 802.11n
draft specs
First Dual
Band Gigabit
Wireless N
Router. PC
Magazine
Editor’s
Choice
First to market
with 802.11ac
Nighthawk X6, First
tri-band wireless
router with
breakthrough
3.2Gbps combined
speeds
Industry Firsts for Business
2003:
2007:
2010:
2013:
World’s first
Smart Switch
First full
featured Smart
Wireless Switch
Industry’s first
Unmanaged
Plus Switch
Launches world’s
fastest desktop NAS
First all 10-Gigabit
Smart Switch
First all 10-Gigabit
Unmanaged Switch
6
2000:
2005:
2008:
2011:
2014:
Industry first
Gigabit
Unmanaged
Switches
World’s first
Stackable
Smart Switch
ReadyNAS
Duo wins 100
Best Products
of the Year
Award from
PC Magazine
Industry’s first
VDSL UTM
firewall
Only networking
company to offer
lifetime 24/7
technical support
for business
products
First Smart
Switch with
10-Gigabit
Industry Firsts for Service Providers
7
2010:
2012:
2013:
First CableLabs
certified dualband
802.11n DOCS
IS3.0 Gateway
First CableLabs
certified dual-band
802.11ac 24 x 8
DOCSIS3.0
Gateway
First HDMI
Dongle with
802.11ac WiFi
2006:
2011:
2012:
2014:
First
DOCSIS3.0
Gateway
First Security
Gateway for
NA SPs
with iControl
certification
First Cat-4
Mobile
Hotspot
First G.fast
VDSL Gateway
with dualband 802.11ac
WiFi
Core Strategic Growth Areas
8
Opportunities Presented Last Year
Rapidly Grow New Product Categories
Execute on Storage
Capitalize on any
Europe Recovery
2014 2015 2016 2017 2018
9
Expand Customer Base and
Geographies
Successes in 2014
Higher ASPs
Rapid expansion on Amazon
Excel in switching
Expand LTE footprint
Strong financial discipline
Compelling return of capital to shareholders
10
Nighthawk and 802.11ac
David Henry
Vice President of Networking, Retail Business Unit
WiFi Speed Evolution
3.2 Gbps
900 Mbps
11 Mbps
802.11b
12
54 Mbps
802.11g
802.11n
802.11ac
WiFi Matching BB Speed into Homes
Docsis 3.1
10,000
XG-PON
Fiber / G.fast
Docsis 3.0
Speed in Mbps
1,000
Coaxial
LTE Cat 9
Pre Docsis 3.0
100
LTE Cat 4
4G LTE
Docsis 1.x /
2.0
Bonded VDSL
HSPA+
Copper/Fiber
10
ADSL2+
Cable Speeds
xDSL Speeds
ADSL
Mobile BB Speeds
1
2002
13
Source: NETGEAR Internal
2006
2010
2014
Older WiFi Bottlenecks BB Speed
700
N300
Nighthawk
Google Fiber 1Gbps
600
500
FIOS >500Mbps
400
300
200
Xfinity >150 Mbps
100
Uverse >45 Mbps
0
Living Room
14
2nd Floor
Backyard
Bedroom #2
Source: NETGEAR Internal Testing, Publicly Advertised BB Speeds
Master Bedroom
The NETGEAR Nighthawk Family
$199
Nighthawk
3x3 11ac
$279
Nighthawk X4
4x4 11ac
$299
Nighthawk X6
TriBand 11ac
Elevating ASP in US Market
+12%
$100
$95
$90
$85
$80
$75
$70
$65
Q112
16
Q212
Q312
Q412
Source: NPD US Monthly Data, August 2014
Q113
Q213
Q313
Q413
Q114
Q214
Q314
QTD
NETGEAR #1 US Router Market Share
15%
37%
8%
NETGEAR
Linksys
9%
Asus
Apple
10%
Belkin
21%
17
Source: NPD US Monthly Data, August 2014
Other
Older Router’s Range is Not Enough
NETGEAR invented the WiFi Range Extender
Kitchen
Existing Router or
ISP Gateway
Living Room
18
US WiFi Range Extender Market
Millions
+22%
30
25
20
15
10
5
0
Q112
19
Q212
Q312
Q412
Source: NPD US Monthly Data, August 2014
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q314E
NETGEAR Leading The Pack
N300
$59
AC750
$89
AC1200
$119
NETGEAR Range Extender Growth
6.0
Multiples of Q2 2011 Sales
5.0
4.0
3.0
2.0
1.0
Q3'11
21
Q4'11
Source: NETGEAR Internal
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
NETGEAR #1 US Range Extender Share
4%
3%
NETGEAR
9%
Linksys
12%
60%
Amped Wireless
Belkin
12%
TP-Link
All Others
22
Source: NPD US Monthly Data, August 2014
Penetration of 9+ Device Homes in US
+200% growth
30%
+200%
20%
10%
2013
Source: NETGEAR Consumer Survey
2014
2015
NETGEAR First With Tri-Band WiFi
Band 1
2.4GHz
Band 2
5GHz-1
Band 3
5GHz-2
Automatically separates slower and faster devices
in separate WiFi networks
24
Introducing Arlo
Pat Collins
Vice President of Home Automation Products
Millions
IP Camera - The Hottest IoT Device
$90
CAGR
+22%
$80
$70
$60
$50
$40
$30
$20
$10
$0
Q112
Q212
Q312
Source: NPD Monthly for US Market
26
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314 Q414E
Top Features Desired of IP Camera
1st choice
2nd choice
High definition video
15%
13%
Cameras that were 100% wire-free
10%
10%
Nightvision
10%
9%
Motion-detection alerts
10%
Indoor/outdoor cameras
5%
Built-in camera microphones
8%
Store recordings to a DVR
9%
7%
Store recordings online
6%
7%
Expand to 5+ cameras
5%
7%
Source: Consumers & Technology Q3 2013
N=3,000 Broadband heads-of-households
© 2013 Parks Associates
0%
4%
8%
11%
7%
6%
6%
4%
10%
10%
Built-in camera speakers
Pan-tilt-zoom capability
11%
10%
10%
8%
12%
9%
11%
Smartphone/tablet monitoring
27
3rd choice
8%
9%
7%
5%
5%
10%
20%
30%
% Ranking as Top Features
40%
100% Wire-free
+ No Power Outlet required, battery operated
+ Easy to set up and deploy anywhere
+ No ugly power cords, blend in elegantly
28
Weatherproof
+ Outdoor-Ready
+ Outside facing in possible
+ Put it on the fence or the tree
29
Built-in Day and Night Vision
+ Built in Infra-red Night Vision
+ See what’s going on day and night in HD
30
High Definition
+ HD 720p with 130 Degree Field of View
+ View simultaneous live streams on browser, iOS and Android
31
And More...
100% Mobile
+ iPhone, iPad, Kindle, Android App
+ Initial set up, subsequent settings
+ Streaming 4 cameras at the same time
+ Getting push notification and view recording
33
Advanced Rules Engine
+ Talk to and Trigger Between Devices
+ No Programming Necessary
34
35
21st Century SMBs
John McHugh
Senior Vice President and General Manager,
Commercial Business Unit
A Leader in SMB Networking
Enterprise technologies to SMBs
+ Simplicity
+ Full channel coverage
+ Lowest total cost of ownership
37
NETGEAR’s SMB Products
We ship 1M units a quarter
Unmanaged
Unmanaged Plus
Smart
Managed
Switching
ReadyNAS
ReadyData
Basic
Access points
Professional
Access points
Controllers
Wireless LAN
38
Storage
Transition to 21st Century SMB Network
A Hybrid Cloud & Access Network Architecture
Hybrid Cloud
Private Cloud
Data Center
Public Cloud
Big Data Center
Internet
Virtualization
Access Networks
Cloud Computing
Mobility/Wireless/BYOD
Old model
IP Convergence (voice, video and data)
New model
IP Convergence + WLAN = PoE
NETGEAR has the broadest portfolio of PoE switches for SMB
Multi Channel PoE Growth
NETGEAR PoE Switches Unit Volume Sales Through
NTGR sales data Oct 2014
NETGEAR #1 in PoE Switches Share
PoE switch Unit Market Share
Other,
19%
NTGR,
30%
CSCO,
22%
HPQ,
29%
(based on Context and NPD combined unit market share in 2Q’14)
Cloud + Virtualization = 10Gig
Fully Managed Layer 2/3
Web Managed Smart
Unmanaged Plus
NETGEAR has the broadest portfolio of 10Gig switches for SMB
Multi Channel 10Gig Growth
NETGEAR 10Gbps Switch Unit Volume Sales Through
NTGR sales data Oct 2014
NETGEAR #1 in 10Gig Switches
10Gbps switch Unit Market Share
CSCO, 4%
HPQ, 6%
NTGR,
90%
(Based on Context and NPD combined unit market share in 2Q’14 for 10Gbs switches less than $10K ASP)
The Brand New S3300 Family
• Web Managed Smart Switches w/ & w/o PoE
• 10Gbps fiber+Copper uplinks
• Stackable at non-stackable prices
• Extending NETGEAR’s leadership
NETGEAR Smart Switching
12% YoY Growth
NETGEAR Smart Switch Unit Volume Sales Through
NTGR sales data Oct 2014
NETGEAR #1 In Smart Switching
Smart Switch Unit Market Share
Other,
15%
CSCO,
11%
NTGR,
46%
HPQ,
28%
(Based on Context and NPD combined unit market share in 1H’14)
Managed Switches – Multi Channels
NETGEAR Managed Switch Unit Volume Sales Through
NTGR sales data Oct 2014
Managed Switches – Growth Opportunity
Lots of share gain opportunities
Managed switch Unit Market Share
Other,
NTGR,
15%
5%
CSCO,
32%
HPQ,
49%
(Based on Context and NPD combined unit market share in 2Q’14 for managed switches less than $10K ASP)
Wireless Introductions
Adding flexibility and capacity
WC7600 / WN370 strong traction
+
+
+
+
K-12, hospitality focus
Dover, NH School District (US)
Lake Bluff Resort (US)
Salus-Klinik Retreat (Germany)
Outdoor AP and 802.11ac SOHO
launch
+ Adds capacity and performance
+ Completes AP portfolio with outdoor
+ Opens up new opportunities
WLAN Controller Steady Growth
Controller Unit Volume Sales Through
ReadyRECOVER Backup Appliance
Full Backups Every 15 min, Forever!
What is ReadyRECOVER?

NETGEAR ReadyDATA HW+ StorageCraft ShadowProtect SW
What makes ReadyRECOVER unique?
 Every backup writes only changed data, forever!
 Every backup is verified in real time, forever!
 Every backup is a full restore point, forever!
Who else can do this?
NETGEAR SMB Solutions Win by…
• Innovation
+
+
+
Rapid deployment of next generation of performance and capabilities
Cloud experience consolidates, simplifies deployment and management
Aggressively embracing new technology and new sales channels
• Simplicity
+
+
+
Simplified management and intuitive deployment
Bringing together the SMB ecosystem
Selling where customers want to buy
• Operational Efficiency
+
+
+
World-class operations and distribution
Leading partner programs
Pursuing market development through efficient channels
Next Generation Carriers
Michael Clegg
Senior Vice President and General Manager,
Service Provider Business Unit
Service Provider Network Migration
Data, voice, video all IP-based
Home
Cloud
Cloud
Services
HFC
xDSL
FTTx
What matters is raw speed.
Consumer Devices – A Broad Footprint
Mobile
Connectivity
Ethernet
Wi-Fi
Phone
DECT
USB
DOCSIS 3.0
FTTx
xDSL
Wired
Monitoring & Automation
LTE - Accelerating Transition To All IP
Source: Ericsson
Expansion in LTE
New Accounts
New Channels
New Device Types
IoT
LTE Expansion - New Accounts
4G Cat9
4G Cat6
3.5G
4G Cat4
4G Cat3
Existing Customers
New Customers
LTE Expansion - New Channels
Retail
AC785S LTE MHS
MBR1515 LTE GW
Enterprise
Enterprise / SMB : Office in a box
LTE Expansion - New Devices
LTE Expansion - IoT Devices
4G LTE Connected Car
4G LTE Connected CE
4G LTE-enabled accessories
Cable’s Next Frontier - DOCSIS3.1
RFoG /
DPON
1+ Gbps
C7000
AC2300
24 x 8 Cable GW
Connected Home - Smarter Connectivity
Integration
Best WiFi
:::::
Multi-WAN
Financials
Christine Gorjanc
Chief Financial Officer
NETGEAR Revenue History
LTE
802.11ac
10GbE/ PoE
IoT
$M
1,600
DOCSIS 3.0
1,400
1,200
1,000
802.11n
800
802.11g
600
400
200
0
FY '03
67
FY '04
FY '05
FY '06
FY '07
FY '08
FY '09
FY '10
FY '11
FY '12
FY '13
NETGEAR Average Quarterly EPS
(Non-GAAP)
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$FY '03
FY '04
FY '05
FY '06
FY '07
FY '08
FY '09
FY '10
Average Quarterly Non-GAAP EPS
68
FY '11
FY '12
FY '13
FY '14
YTD
Operating Margin Leverage Opportunities
Continuous Supply Chain
Improvement
Sales Channel Realignment
Optimizing Tech Support
69
Capital Allocation Plan
($ Millions)
(Shares Millions)
$80.0
39.0
38.0
$70.0
68.9
37.0
68.6
63.1
$60.0
36.0
54.1
35.0
$50.0
34.0
$40.0
33.0
40.9
32.0
$30.0
31.0
$20.0
30.0
FY '12
FY '13
Share Repurchase
70
FCF
FY '14 (YTD)
Common Stock Outstanding
Patrick Lo
Founder, Chairman and Chief Executive Officer
NETGEAR Opportunities in 2015
Rapidly Grow New Product Categories
Execute on SMB
Capitalize on European Recovery
72
Expand Channel and
Customer Base
Q&A
E-mail:
[email protected]

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