Netgear 2011 Annual Report Download - page 55

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Table of Contents
2011 Net Retail Revenue and Contribution Income Compared to 2010 Retail Net Revenue and Contribution Income
We experienced strong net revenue growth in the retail business unit from 2010 to 2011. The increase was mainly driven by a 34.5%
increase in the revenue from our home wireless-N product line due to consumers transitioning from wireless-G to wireless-N technology. We
also experienced strong growth in contribution income. The increase in contribution income was primarily due to revenue growth and an
increase in gross margin, which was mainly driven by a decrease in freight costs due to a favorable shift from air to sea freight. Net revenue
increased by 10.6% and retail-related gross profit increased by 15.0% over the same period. The impact of the increase in gross profit was
partially offset by an increase in retail-related operating expenses, which increased by 16.7% over the same period.
2010 Net Retail Revenue and Contribution Income Compared to 2009 Net Retail Revenue and Contribution Income
We experienced exceptional net revenue growth in the retail business unit from 2009 to 2010. The increase was driven by an increase in
consumer demand across almost all of our product lines. In particular, revenue from our home wireless-N product line increased by 167.6% due
to consumers transitioning from wireless-G to wireless-N technology. We also experienced exceptional growth in contribution income. The
increase in contribution income was primarily due to revenue growth, while the increase in operating expenses was moderate. Net revenue
increased by 50.8%, while retail-related operating expenses increased by only 11.1% over the same period.
Commercial
2011 Net Commercial Revenue and Contribution Income Compared to 2010 Commercial Net Revenue and Contribution Income
We experienced strong net revenue growth in the commercial business unit from 2010 to 2011. The increase was driven by an increase in
demand across our product lines. In particular, revenue from our network storage product line and switch products increased by 15.1% and
18.6%, respectively. We also experienced strong growth in contribution income. The increase in contribution income was primarily due to
revenue growth, while the increase in operating expenses was moderate. Net revenue increased by 16.5%, while commercial-related operating
expenses increased by only 13.0% over the same period.
2010 Net Commercial Revenue and Contribution Income Compared to 2009 Commercial Net Revenue and Contribution Income
We experienced exceptional net revenue growth in the commercial business unit from 2009 to 2010. The increase was driven by an
increase in demand across all of our product lines. In particular, revenue from our network storage product line and switch products increased by
51.3% and 34.1%, respectively. We also experienced exceptional growth in contribution income. The increase in contribution income was
primarily due to revenue growth and a slight increase in gross margin, which was driven by favorable product mix and a decrease in freight
costs. Commercial-related operating expenses increased in line with the increase in gross profit.
51
Year Ended December 31,
2011
Percent
Change
2010
Percent
Change
2009
( in thousands, except percentage data)
Net revenue
$
331,439
16.5
%
$
284,539
35.5
%
$
209,953
Contribution income
74,746
18.6
%
63,021
45.7
%
43,255
Contribution margin
22.6
%
22.1
%
20.6
%