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NETGEAR® Reports Third Quarter 2019 Results

October 23, 2019

SAN JOSE, Calif., Oct. 23, 2019 (GLOBE NEWSWIRE) -- NETGEAR, Inc. (NASDAQ: NTGR), a global networking company that delivers innovative networking and Internet connected products to consumers and businesses, today reported financial results for the third quarter ended September 29, 2019.

  • Third quarter 2019 net revenue of $265.9 million, a decrease of 1.3% from the comparable prior year quarter.
  • Third quarter 2019 GAAP operating income of $12.1 million, or 4.5% of net revenue, as compared to $19.9 million, or 7.4% of net revenue, in the comparable prior year quarter.
    • Third quarter 2019 non-GAAP operating income of $20.8 million, or 7.8% of net revenue, as compared to $28.3 million, or 10.5% of net revenue in the comparable prior year quarter.
  • Third quarter 2019 GAAP net income per diluted share from continuing operations of $0.39, as compared to $0.49 in the comparable prior year quarter.
    • Third quarter 2019 non-GAAP net income per diluted share from continuing operations of $0.65, as compared to $0.73 in the comparable prior year quarter. The third quarter of 2019 included a $0.13 per diluted share benefit from revisions to domestic and international tax liabilities pertaining to previous years.

The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, “Our financial results for the third quarter came in at the low end of our guidance range for revenue, which consequently weighed on our non-GAAP operating margin. While North America performed well for us in Q3, this was countered by headwinds in EMEA and APAC that dampened our sales late in the quarter due to geopolitical factors such as Brexit uncertainty, Yuan depreciation and the unexpected economic slowdown in the China/Hong Kong region. On the positive side, during the third quarter of 2019, we continued to see strong market reception of our new WiFi 6 products, particularly in North America. We successfully introduced and shipped WiFi 6 Orbi mesh and the 12 stream WiFi 6 router at the end of Q3.”

Mr. Lo continued, “Despite the challenging environment, our team continues to execute well and is seeding the market with innovative new products. We are working with our channel partners worldwide to prepare for the continued rollout of WiFi 6 mesh and router products in the coming months. We are also pleased to report that we increased our number of registered users from 11.2 million in the prior quarter to 12.0 million in Q3, which serves as the foundation for building our paid subscriber base. Furthermore, our number of registered app users reached 3.6 million in the third quarter, showing strong sequential growth from 2.8 million at the end of Q2. We remain confident that growing our registered user base and our number of app users will pay future dividends, and we will continue to drive initiatives to extend this momentum.”

Bryan Murray, Chief Financial Officer of NETGEAR, added, “During the third quarter of 2019, we repurchased approximately 679,000 shares of common stock for $22.0 million. We remain confident in our ability to generate meaningful levels of cash, and plan to continue to opportunistically repurchase shares in future quarters.”

Business Outlook

Mr. Murray continued, "Looking ahead to the fourth quarter of 2019, we expect our revenue will continue to be negatively impacted by continuing international uncertainty in Europe and China/Hong Kong. In addition, we are taking proactive steps to reduce channel inventories in North America in preparation for an accelerated shift towards WiFi 6, which we believe will contribute to steering the U.S. consumer WiFi market back towards growth in 2020. Accordingly, net revenue is expected to be in the range of $240 million to $255 million. GAAP operating margin for the fourth quarter is expected to be in the range of 0.1% to 1.1%, and non-GAAP operating margin is expected to be in the range of 4.5% to 5.5%. Our GAAP tax rate is expected to be approximately 33.5%, and our non-GAAP tax rate is expected to be 23.0% for the fourth quarter of 2019.”

A reconciliation between the Business Outlook on a GAAP and non-GAAP basis is provided in the following table:

    Three months ending
    December 31, 2019
    Operating Margin
Rate
  Tax Rate
GAAP   0.1% - 1.1%   33.5%
Estimated adjustments for1:        
Amortization of intangibles   0.6%   __
Stock-based compensation expense   3.5%   __
Restructuring and other charges   0.3%   __
Tax effects of non-GAAP adjustments   __   (10.5)%
Non-GAAP   4.5% - 5.5%   23.0%

1 Business outlook does not include estimates for any currently unknown income and expense items which, by their nature, could arise late in a quarter, including: litigation reserves, net; acquisition-related charges; impairment charges; and discrete tax benefits or detriments that cannot be forecasted (e.g., windfalls or shortfalls from equity awards or items related to the resolution of uncertain tax positions). New material income and expense items such as these could have a significant effect on our guidance and future GAAP results.

Investor Conference Call / Webcast Details
NETGEAR will review the third quarter results and discuss management's expectations for the fourth quarter of 2019 today, Wednesday, October 23, 2019 at 5 p.m. ET (2 p.m. PT). The toll free dial-in number for the live audio call is (844) 709-2008. The international dial-in number for the live audio call is (647) 253-8663. The conference ID for the call is 2487109. A live webcast of the conference call will be available on NETGEAR's Investor Relations website at http://investor.netgear.com. A replay of the call will be available via the web at http://investor.netgear.com.

About NETGEAR, Inc.
NETGEAR (NASDAQ: NTGR) is a global networking company that delivers innovative products to consumers, businesses and service providers. The Company's products are built on a variety of proven technologies such as wireless (WiFi and LTE), Ethernet and powerline, with a focus on reliability and ease-of-use. The product line consists of wired and wireless devices that enable networking, broadband access and network connectivity. These products are available in multiple configurations to address the needs of the end-users in each geographic region in which the Company's products are sold. NETGEAR products are sold in approximately 24,000 retail locations around the globe, and through approximately 20,000 value-added resellers, as well as multiple major cable, mobile and wireline service providers around the world. The company's headquarters are in San Jose, Calif., with additional offices in approximately 20 countries. More information is available at http://investor.netgear.com or by calling (408) 907-8000. Connect with NETGEAR at http://twitter.com/NETGEAR and http://www.facebook.com/NETGEAR.

© 2019 NETGEAR, Inc. NETGEAR, the NETGEAR logo, NETGEAR Armor, Orbi and Nighthawk are trademarks or registered trademarks of NETGEAR, Inc. and its affiliates in the United States and/or other countries. Other brand and product names are trademarks or registered trademarks of their respective holders.  The information contained herein is subject to change without notice. NETGEAR shall not be liable for technical or editorial errors or omissions contained herein.  All rights reserved.

Contact:
NETGEAR Investor Relations
Erik Bylin
investors@netgear.com

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc .:
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent NETGEAR, Inc.’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: NETGEAR’s future operating performance and financial condition, expected net revenue, GAAP and non-GAAP operating margins, and GAAP and non-GAAP tax rates; expectations regarding the timing, distribution, sales momentum and market acceptance of recent and anticipated new product introductions that position the Company for growth; expectations regarding NETGEAR's paid subscriber base, registered users and registered app users and their effect on NETGEAR's paid subscriber base; international sales headwinds in EMEA and APAC; and expectations regarding the Company’s ability to generate cash and continue its share repurchase program. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for the Company's products may be lower than anticipated; consumers may choose not to adopt the Company's new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company 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 the Company's products or utilize competing products; the Company may be unable to grow its number of registered users and/or registered app users; the Company may be unable to grow its paid subscriber base; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources, including potential repurchases of the Company’s common stock; changes in the Company's stock price and developments in the business that could increase the Company's cash needs; fluctuations in foreign exchange rates; and the actions and financial health of the Company's customers. 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” in the Company's quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2019, filed with the Securities and Exchange Commission on August 2, 2019. Given these circumstances, you should not place undue reliance on these forward-looking statements. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Non-GAAP Financial Information:

To supplement our unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles (“GAAP”), we disclose certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP other operating expenses, net, non-GAAP total operating expenses, non-GAAP operating income, non-GAAP operating margin, Non-GAAP other income (expense), net, non-GAAP net income and non-GAAP net income per diluted share. These non-GAAP financial measures represent results from continuing operations. These supplemental measures exclude adjustments for amortization of intangibles, stock-based compensation expense, separation expense, change in fair value of contingent consideration, restructuring and other charges, litigation reserves, net, gain/loss on investments, net, and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our operating performance on a period-to-period basis because such items are not, in our view, related to our ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, management’s incentive compensation is determined using certain non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by offering:

  • the ability to make more meaningful period-to-period comparisons of our on-going operating results;
  • the ability to better identify trends in our underlying business and perform related trend analyses;
  • a better understanding of how management plans and measures our underlying business; and
  • an easier way to compare our operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding them in the reconciliations of these non-GAAP financial measures:

Amortization of intangibles consists primarily of non-cash charges that can be impacted by, among other things, the timing and magnitude of acquisitions. We consider our operating results without these charges when evaluating our ongoing performance and forecasting our earnings trends, and therefore exclude such charges when presenting non-GAAP financial measures. We believe that the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of our competitors.

Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options, restricted stock units and shares under the employee stock purchase plan granted to employees. We believe that the exclusion of these charges provides for more accurate comparisons of our operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, we believe it is useful to investors to understand the specific impact stock-based compensation expense has on our operating results.

Other items consist of certain items that are the result of either unique or unplanned events, including, when applicable: separation expense, change in fair value of contingent consideration, restructuring and other charges, litigation reserves, net, and gain/loss on investments, net. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that often arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.

Tax effects consist of the various above adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income. We also believe providing financial information with and without the income tax effects relating to our non-GAAP financial measures provides our management and users of the financial statements with better clarity regarding the on-going performance of our business.

Source: NETGEAR-F

-Financial Tables Attached-


NETGEAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)


  As of
  September 29,
 2019
  December 31,
 2018
ASSETS      
Current assets:      
Cash and cash equivalents $ 168,002     $ 201,047  
Short-term investments 3,915     73,317  
Accounts receivable, net 248,070     303,667  
Inventories 275,584     243,871  
Prepaid expenses and other current assets 31,153     35,997  
Total current assets 726,724     857,899  
Property and equipment, net 19,671     20,177  
Operating lease right-of-use assets, net 31,610      
Intangibles, net 11,699     17,146  
Goodwill 80,721     80,721  
Other non-current assets 72,636     67,433  
Total assets $ 943,061     $ 1,043,376  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 83,912     $ 139,748  
Accrued employee compensation 18,103     31,666  
Other accrued liabilities 163,333     199,472  
Deferred revenue 5,812     11,086  
Income taxes payable 1,314     2,020  
Total current liabilities 272,474     383,992  
Non-current income taxes payable 13,219     19,600  
Non-current operating lease liabilities 27,178      
Other non-current liabilities 8,052     12,232  
Total liabilities 320,923     415,824  
Stockholders' equity:      
Common stock 31     32  
Additional paid-in capital 821,966     793,585  
Accumulated other comprehensive loss (18 )   (15 )
Accumulated deficit (199,841 )   (166,050 )
Total stockholders' equity 622,138     627,552  
Total liabilities and stockholders' equity $ 943,061     $ 1,043,376  


NETGEAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and percentage data)
(Unaudited)


  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
                   
Net revenue $ 265,858     $ 230,852     $ 269,411     $ 745,792     $ 769,888  
Cost of revenue 188,666     165,407     174,966     521,147     518,844  
Gross profit 77,192     65,445     94,445     224,645     251,044  
Gross margin 29.0 %   28.3 %   35.1 %   30.1 %   32.6 %
Operating expenses:                  
Research and development 19,537     18,814     20,136     57,183     63,273  
Sales and marketing 33,491     34,541     37,892     103,887     114,318  
General and administrative 11,887     10,463     16,184     35,467     50,403  
Other operating expenses, net 212     1,301     380     1,709     1,752  
Total operating expenses 65,127     65,119     74,592     198,246     229,746  
Income from operations 12,065     326     19,853     26,399     21,298  
Operating margin 4.5 %   0.1 %   7.4 %   3.5 %   2.8 %
Interest income, net 639     782     985     2,122     2,806  
Other income (expense), net (403 )   487     955     425     425  
Income before income taxes 12,301     1,595     21,793     28,946     24,529  
Provision (benefit) for income taxes (228 )   756     5,483     2,735     6,668  
Net income from continuing operations 12,529     839     16,310     26,211     17,861  
Net loss from discontinued operations, net of tax (1)         (7,160 )       (8,351 )
Net income 12,529     839     9,150     26,211     9,510  
Net loss attributable to non-controlling interest in discontinued operations (1)         (799 )       (799 )
Net income attributable to NETGEAR, Inc. $ 12,529     $ 839     $ 9,949     $ 26,211     $ 10,309  
                   
Net income per share - basic:                  
Income from continuing operations $ 0.41     $ 0.03     $ 0.51     $ 0.84     $ 0.56  
Loss from discontinued operations attributable to NETGEAR, Inc. (1)         (0.20 )       (0.23 )
Net income attributable to NETGEAR, Inc. $ 0.41     $ 0.03     $ 0.31     $ 0.84     $ 0.33  
                   
Net income per share - Diluted:                  
Income from continuing operations $ 0.39     $ 0.03     $ 0.49     $ 0.81     $ 0.54  
Loss from discontinued operations attributable to NETGEAR, Inc. (1)         (0.19 )       (0.23 )
Net income attributable to NETGEAR, Inc. $ 0.39     $ 0.03     $ 0.30     $ 0.81     $ 0.31  
                   
Weighted average shares used to compute net income per share:                  
Basic 30,933     31,246     31,802     31,221     31,634  
Diluted 31,819     32,112     32,974     32,327     32,826  

(1)  Historical results of Arlo Technologies, Inc. are reflected as discontinued operations for the periods presented.


NETGEAR, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentage data)
(Unaudited)


STATEMENT OF OPERATIONS DATA:                
                   
  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
                   
GAAP gross profit $ 77,192     $ 65,445     $ 94,445     $ 224,645     $ 251,044  
GAAP gross margin 29.0 %   28.3 %   35.1 %   30.1 %   32.6 %
Amortization of intangibles 179     178     116     536     648  
Stock-based compensation expense 706     755     619     2,129     1,754  
Non-GAAP gross profit $ 78,077     $ 66,378     $ 95,180     $ 227,310     $ 253,446  
Non-GAAP gross margin 29.4 %   28.8 %   35.3 %   30.5 %   32.9 %
                   
GAAP research and development $ 19,537     $ 18,814     $ 20,136     $ 57,183     $ 63,273  
Stock-based compensation expense (1,496 )   (1,288 )   (1,037 )   (3,976 )   (3,171 )
Non-GAAP research and development $ 18,041     $ 17,526     $ 19,099     $ 53,207     $ 60,102  
                   
GAAP sales and marketing $ 33,491     $ 34,541     $ 37,892     $ 103,887     $ 114,318  
Amortization of intangibles (1,341 )   (1,504 )   (1,806 )   (4,676 )   (5,319 )
Stock-based compensation expense (2,097 )   (2,085 )   (1,970 )   (6,223 )   (6,363 )
Non-GAAP sales and marketing $ 30,053     $ 30,952     $ 34,116     $ 92,988     $ 102,636  
                   
GAAP general and administrative $ 11,887     $ 10,463     $ 16,184     $ 35,467     $ 50,403  
Stock-based compensation expense (2,687 )   (2,611 )   (2,492 )   (7,855 )   (8,940 )
Non-GAAP general and administrative $ 9,200     $ 7,852     $ 13,692     $ 27,612     $ 41,463  
                   
GAAP other operating expenses, net $ 212     $ 1,301     $ 380     $ 1,709     $ 1,752  
Separation expense         (379 )   (264 )   (379 )
Change in fair value of contingent consideration (199 )           (199 )    
Restructuring and other charges 77     (1,291 )   (1 )   (1,146 )   (1,368 )
Litigation reserves, net (90 )   (10 )       (100 )   (5 )
Non-GAAP other operating expenses, net $     $     $     $     $  


NETGEAR, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
(In thousands, except percentage data)
(Unaudited)


STATEMENT OF OPERATIONS DATA (CONTINUED):            
           
  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
                   
GAAP total operating expenses $ 65,127     $ 65,119     $ 74,592     $ 198,246     $ 229,746  
Amortization of intangibles (1,341 )   (1,504 )   (1,806 )   (4,676 )   (5,319 )
Stock-based compensation expense (6,280 )   (5,984 )   (5,499 )   (18,054 )   (18,474 )
Separation expense         (379 )   (264 )   (379 )
Change in fair value of contingent consideration (199 )           (199 )    
Restructuring and other charges 77     (1,291 )   (1 )   (1,146 )   (1,368 )
Litigation reserves, net (90 )   (10 )       (100 )   (5 )
Non-GAAP total operating expenses $ 57,294     $ 56,330     $ 66,907     $ 173,807     $ 204,201  
                   
GAAP operating income $ 12,065     $ 326     $ 19,853     $ 26,399     $ 21,298  
GAAP operating margin 4.5 %   0.1 %   7.4 %   3.5 %   2.8 %
Amortization of intangibles 1,520     1,682     1,922     5,212     5,967  
Stock-based compensation expense 6,986     6,739     6,118     20,183     20,228  
Separation expense         379     264     379  
Change in fair value of contingent consideration 199             199      
Restructuring and other charges (77 )   1,291     1     1,146     1,368  
Litigation reserves, net 90     10         100     5  
Non-GAAP operating income $ 20,783     $ 10,048     $ 28,273     $ 53,503     $ 49,245  
Non-GAAP operating margin 7.8 %   4.4 %   10.5 %   7.2 %   6.4 %
                   
GAAP other income (expense), net $ (403 )   $ 487     $ 955     $ 425     $ 425  
Gain/loss on investments, net (2) 223         (349 )   223     1,051  
Non-GAAP other income (expense), net $ (180 )   $ 487     $ 606     $ 648     $ 1,476  


NETGEAR, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)
(In thousands, except per share data)
(Unaudited)


STATEMENT OF OPERATIONS DATA (CONTINUED):            
                   
  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
                   
GAAP net income from continuing operations $ 12,529     $ 839     $ 16,310     $ 26,211     $ 17,861  
Amortization of intangibles 1,520     1,682     1,922     5,212     5,967  
Stock-based compensation expense 6,986     6,739     6,118     20,183     20,228  
Separation expense         379     264     379  
Change in fair value of contingent consideration 199             199      
Restructuring and other charges (77 )   1,291     1     1,146     1,368  
Litigation reserves, net 90     10         100     5  
Gain/loss on investments, net (2) 223         (349 )   223     1,051  
Tax effects of above non-GAAP adjustments (725 )   (1,707 )   (312 )   (4,138 )   (4,744 )
Non-GAAP net income from continuing operations $ 20,745     $ 8,854     $ 24,069     $ 49,400     $ 42,115  
                   
NET INCOME PER DILUTED SHARE:                  
GAAP net income per diluted share from continuing operations $ 0.39     $ 0.03     $ 0.49     $ 0.81     $ 0.54  
Amortization of intangibles 0.05     0.05     0.06     0.16     0.18  
Stock-based compensation expense 0.22     0.21     0.19     0.62     0.62  
Separation expense         0.01     0.01     0.01  
Change in fair value of contingent consideration 0.01             0.00      
Restructuring and other charges (0.00 )   0.04     0.00     0.04     0.04  
Litigation reserves, net 0.00     0.00         0.00     0.00  
Gain/loss on investments, net (2) 0.01         (0.01 )   0.01     0.03  
Tax effects of above non-GAAP adjustments (0.03 )   (0.05 )   (0.01 )   (0.12 )   (0.14 )
Non-GAAP net income per diluted share from continuing operations $ 0.65     $ 0.28     $ 0.73     $ 1.53     $ 1.28  

(2) Gain/loss on investments includes realized gains or losses, impairments, and adjustments for observable price changes pertaining to investments. Upon adopting ASU 2016-1 in the first quarter of 2018, the Company elected to record investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes.

NETGEAR, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(In thousands, except per share data, DSO, inventory turns, weeks of channel inventory, headcount and percentage data)
(Unaudited)


  Three Months Ended
  September 29,
 2019
  June 30,
 2019
  March 31,
 2019
  December 31,
 2018
  September 30,
 2018
                   
Cash, cash equivalents and short-term investments $ 171,917     $ 218,311     $ 212,652     $ 274,364     $ 341,968  
Cash, cash equivalents and short-term investments per diluted share $ 5.40     $ 6.80     $ 6.47     $ 8.36     $ 10.37  
                   
Accounts receivable, net $ 248,070     $ 238,635     $ 262,531     $ 303,667     $ 241,862  
Days sales outstanding (DSO)   85       94       95       97       82  
                   
Inventories $ 275,584     $ 276,316     $ 236,123     $ 243,871     $ 198,037  
Ending inventory turns   2.7       2.4       2.8       3.3       3.5  
                                   
Weeks of channel inventory:                                  
U.S. retail channel   8.6       10.6       10.4       7.7       9.8  
U.S. distribution channel   5.4       5.5       5.7       5.2       4.1  
EMEA distribution channel   5.8       4.6       4.0       4.1       4.3  
APAC distribution channel   7.8       7.4       6.4       7.4       6.6  
                   
Deferred revenue (current and non-current) $ 7,712     $ 12,047     $ 13,598     $ 11,865     $ 9,726  
                   
Headcount 802     824     828     837     833  
Non-GAAP diluted shares 31,819     32,112     32,874     32,803     32,974  

NET REVENUE BY GEOGRAPHY

  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
Americas $ 178,679   67 %   $ 157,170   68 %   $ 175,932   65 %   $ 483,878   65 %   $ 510,358   67 %
EMEA 49,554   19 %   43,091   19 %   53,158   20 %   149,608   20 %   148,801   19 %
APAC 37,625   14 %   30,591   13 %   40,321   15 %   112,306   15 %   110,729   14 %
Total $ 265,858   100 %   $ 230,852   100 %   $ 269,411   100 %   $ 745,792   100 %   $ 769,888   100 %


NETGEAR, INC.
SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)
(In thousands)
(Unaudited)

NET REVENUE BY SEGMENT

  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
Net revenue:                  
Connected Home $ 190,672     $ 167,495     $ 194,683     $ 527,532     $ 555,422  
SMB 75,186     63,357     74,728     218,260     214,466  
Total net revenue $ 265,858     $ 230,852     $ 269,411     $ 745,792     $ 769,888  

SERVICE PROVIDER NET REVENUE

  Three Months Ended   Nine Months Ended
  September 29,
 2019
  June 30,
 2019
  September 30,
 2018
  September 29,
 2019
  September 30,
 2018
Connected Home $ 35,482     $ 26,901     $ 30,769     $ 99,201     $ 118,899  
SMB 972     922     1,191     3,370     2,954  
Total service provider net revenue $ 36,454     $ 27,823     $ 31,960     $ 102,571     $ 121,853  

NG-Logo_2018_web.jpg

Source: NETGEAR, Inc.

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