Q3 net revenue of $182.9 million, above the
high end of guidance
Achieved GAAP and non-GAAP profitability, above
the high end of guidance
Fifth consecutive quarter of free cash flow
generation
Added more than $100 million to cash and cash
equivalents to end Q3 with $395.7 million
NETGEAR, Inc. (NASDAQ: NTGR), a global leader in intelligent
networking solutions for businesses, homes, and service providers,
today reported financial results for the third quarter ended
September 29, 2024.
- Third quarter 2024 net revenue of $182.9 million, a decrease of
7.6% from the comparable prior-year quarter.
- Third quarter 2024 GAAP operating income of $95.8 million, or
52.4% of net revenue, as compared to operating loss of $0.6
million, or (0.3)% of net revenue, in the comparable prior-year
quarter.
- Third quarter 2024 non-GAAP operating income of $1.6 million,
or 0.9% of net revenue, as compared to non-GAAP operating income of
$5.3 million, or 2.7% of net revenue, in the comparable prior-year
quarter.
- Third quarter 2024 GAAP net income per diluted share of $2.90,
as compared to net loss per diluted share of $2.87 in the
comparable prior-year quarter.
- Third quarter 2024 non-GAAP net income per diluted share of
$0.17, as compared to non-GAAP net income per diluted share of
$0.23 in the comparable prior-year quarter.
- Cash, cash equivalents and short-term investments ended at
$395.7 million, up $101.4 million from the previous quarter.
The accompanying schedules provide a reconciliation of financial
measures computed on a GAAP basis to financial measures computed on
a non-GAAP basis.
CJ Prober, Chief Executive Officer of NETGEAR, commented, "Today
marks my nine-month anniversary with NETGEAR, and I am thrilled
with our progress and the speed at which we are executing on our
transformation. Q3 was an excellent quarter where we exceeded
revenue and operating income guidance, achieved profitability, and
increased our cash balance by over $100 million.”
Mr. Prober continued, “Our ProAV business had another record
quarter in end user sales, and we added over 30 new manufacturing
partners to strengthen our differentiation and software leadership
in this category. We also launched several innovative products,
including the M7 Pro, the industry’s first mobile hotspot that
combines 5G and WIFI 7. With great executives joining the team and
already driving positive early results, we are confident that we
are positioning NETGEAR to fully capitalize on numerous market
opportunities to generate long-term growth and profitability and we
remain focused on creating long-term value for shareholders.”
Bryan Murray, Chief Financial Officer of NETGEAR, added, “We
continued to execute on our plan to reduce our inventory, which
declined by $27.0 million sequentially and represents less than 4
months of inventory, including finished goods and components, for
the first time in over 3 years. Gross margin for the quarter
exceeded 30% and NFB topline grew over 10% year over year and
returned to historical levels on contribution margin. In Q3 we also
delivered a fifth consecutive quarter of free cash flow generation,
even after removing the effect of the TP-Link settlement, and we
exited the quarter with $395.7 million in cash and cash
equivalents, a $101.4 million sequential increase. In addition, we
repurchased approximately $1.5 million of NETGEAR common stock
before being restricted from further repurchases in the quarter due
to trading restrictions associated with our TP-Link settlement
negotiations. We expect to resume our share repurchase program in
Q4 as we continue to believe that share repurchases are an
important part of our capital allocation plan.”
Business Outlook
Mr. Murray continued, “As we experienced in the third quarter,
we expect to continue to see more predictable performance that is
aligned with the market for both of our businesses. Within NFB, we
expect to experience continued growth led by our ProAV line of
managed switches. While we are seeing the signs of market recovery
in CHP, we expect increased promotional activity within our retail
business due in part to the holiday period. As we were able to pull
forward the launch of our M7 Pro mobile hotspot into the third
quarter, we expect revenue from the service provider channel to be
approximately $20 million in Q4, down slightly on a sequential
basis. Accordingly, we expect fourth quarter net revenue to be in
the range of $160 million to $175 million. We expect gross margins
and operating margins to continue to be impacted by our inventory
reduction efforts and higher than expected transportation costs due
to a variety of factors, including the Red Sea shipping crisis. We
also expect margins to be impacted from the increased promotional
activities within our CHP retail business. Accordingly, we expect
our fourth quarter GAAP operating margin to be in the range of
(12.4)% to (9.4)%, and non-GAAP operating margin to be in the range
of (8.0)% to (5.0)%. Our GAAP tax benefit is expected to be in the
range of $2.0 million to $3.0 million, and our non-GAAP tax benefit
is expected to be in the range of $0.0 million to $1.0 million for
the fourth quarter of 2024.”
A reconciliation between the Business Outlook on a GAAP and
non-GAAP basis is provided in the following table:
Three months ending
December 31, 2024
(In millions, except for percentage
data)
Operating Margin Rate
Tax Expense (Benefit)
GAAP
(12.4)% - (9.4)%
$(3.0) - $(2.0)
Estimated adjustments for1:
Stock-based compensation expense
3.9%
-
Restructuring and other charges
0.5%
-
Non-GAAP tax adjustments
-
$2.0
Non-GAAP
(8.0)% - (5.0)%
$(1.0) - $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; restructuring and other 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 2024 today,
Wednesday, October 30, 2024 at 5 p.m. ET (2 p.m. PT). The toll-free
dial-in number for the live audio call is (888) 660-6392. The
international dial-in number for the live audio call is (929)
203-0899. The conference ID for the call is 1030183. 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.
Founded in 1996 and headquartered in the USA, NETGEAR® (NASDAQ:
NTGR) is a global leader in innovative networking technologies for
businesses, homes, and service providers. NETGEAR delivers a wide
range of award-winning, intelligent solutions designed to unleash
the full potential of connectivity and power extraordinary
experiences. For businesses, NETGEAR offers reliable, easy-to-use,
high-performance networking solutions, including switches, routers,
access points, software, and AV over IP technologies, tailored to
meet the diverse needs of organizations of all sizes. NETGEAR’s
Connected Home products deliver advanced connectivity, powerful
performance, and enhanced security features right out of the box,
designed to keep families safe online, whether at home or on the
go. More information is available from the NETGEAR Press Room or by
calling (408) 907-8000. Connect with NETGEAR: Facebook, Instagram
and the NETGEAR blog at NETGEAR.com.
© 2024 NETGEAR, Inc. NETGEAR and the NETGEAR logo 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.
Source: NETGEAR-F
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, including
expectations regarding growth, revenue, operating margin and gross
margin; creating long-term value for shareholders; positioning
NETGEAR for long term success; long-term potential and profitable
growth; NETGEAR’s continued NFB growth led by the ProAV line of
managed switches; expectations regarding more predictable
performance that is aligned to the market; expectations regarding
volatility from shifting channel inventory levels; expectations
regarding gross margins and operating margins being impacted by
inventory reduction efforts and transportation costs; revenue from
the service provider channel; timing of the launch of next
generation 5G mobile hotspots; expectations regarding continuing
market demand for the NETGEAR’s products and services; expectations
regarding expected tax benefits or tax expenses; and plans to
repurchase shares of NETGEAR common stock. These statements are
based on management's current expectations and are subject to
certain risks and uncertainties, including the following: future
demand for NETGEAR’s products and services may be lower than
anticipated; NETGEAR may be unsuccessful, or experience delays, in
manufacturing and distributing its new and existing products and
services; consumers may choose not to adopt NETGEAR’s new product
and services offerings or adopt competing products and services;
NETGEAR may fail to manage costs, including the cost of key
components, the cost of air freight and ocean freight, and the cost
of developing new products and manufacturing and distribution of
its existing offerings; NETGEAR may fail to successfully manage
channel inventory levels; NETGEAR may fail to successfully continue
to effect operating expense savings; changes in the level of
NETGEAR's cash resources and NETGEAR’s planned usage of such
resources, including potential repurchases of NETGEAR’s common
stock; changes in NETGEAR’s stock price and developments in the
business that could increase NETGEAR’s cash needs; fluctuations in
foreign exchange rates; loss of services of key personnel may
affect NETGEAR’s ability to executive on business strategy
effectively; and the actions and financial health of NETGEAR’s
customers, including NETGEAR’s ability to collect receivables as
they become due. 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
NETGEAR’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 NETGEAR’s quarterly report on Form 10-Q for the
fiscal quarter ended June 30, 2024, filed with the Securities and
Exchange Commission on August 2, 2024. 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 total
operating expenses, non-GAAP operating income (loss), non-GAAP
operating margin, non-GAAP other income (expenses), net, non-GAAP
net income (loss) and non-GAAP net income (loss) per diluted share.
These supplemental measures exclude adjustments for amortization of
intangibles, stock-based compensation expense, intangibles
impairment, restructuring and other charges, litigation reserves,
net, gain/loss on investments, net, gain on litigation settlements,
and adjust for effects related to non-GAAP tax adjustments. 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, performance shares 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:
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.
Non-GAAP tax adjustments consist of adjustments that we
incorporate into non-GAAP measures in order to provide a more
meaningful measure on non-GAAP net income (loss). We believe
providing financial information with and without the income tax
effects relating to our non-GAAP financial measures, as well as
adjustments for valuation allowances on deferred tax assets,
provides our management and users of the financial statements with
better clarity regarding both current period performance and the
on-going performance of our business. Non-GAAP income tax expense
(benefit) is computed on a current and deferred basis with non-GAAP
income (loss) consistent with use of non-GAAP income (loss) as a
performance measure. The Non-GAAP tax provision (benefit) is
calculated by adjusting the GAAP tax provision (benefit) for the
impact of the non-GAAP adjustments, with specific tax provisions
such as state income tax and Base-erosion and Anti-Abuse Tax
recomputed on a non-GAAP basis, as well as adjustments for
valuation allowances on deferred tax assets. The tax valuation
allowance is a non-cash adjustment primarily reflecting our
expectations of, and assumptions as to, future operating results
and applicable tax laws, that are not directly attributable to the
current quarter’s operating performance. For interim periods, the
non-GAAP income tax provision (benefit) is calculated based on the
forecasted annual non-GAAP tax rate before discrete items and
adjusted for interim discrete items.
Source: NETGEAR-F
-Financial Tables Attached-
NETGEAR, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
September 29, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
273,767
$
176,717
Short-term investments
121,965
106,931
Accounts receivable, net
177,326
185,059
Inventories
161,976
248,851
Prepaid expenses and other current
assets
34,302
30,421
Total current assets
769,336
747,979
Property and equipment, net
10,640
8,273
Operating lease right-of-use assets
30,758
37,285
Goodwill
36,279
36,279
Other non-current assets
15,623
17,326
Total assets
$
862,636
$
847,142
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
52,035
$
46,850
Accrued employee compensation
19,964
21,286
Other accrued liabilities
155,193
168,084
Deferred revenue
29,596
27,091
Income taxes payable
14,569
1,037
Total current liabilities
271,357
264,348
Non-current income taxes payable
8,510
12,695
Non-current operating lease
liabilities
22,016
29,698
Other non-current liabilities
10,423
4,906
Total liabilities
312,306
311,647
Stockholders’ equity:
Common stock
29
30
Additional paid-in capital
987,576
967,651
Accumulated other comprehensive income
152
136
Accumulated deficit
(437,427
)
(432,322
)
Total stockholders’ equity
550,330
535,495
Total liabilities and stockholders’
equity
$
862,636
$
847,142
NETGEAR, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per
share and percentage data) (Unaudited)
Three Months Ended
Nine Months Ended
September 29, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
Net revenue
$
182,854
$
143,900
$
197,845
$
491,340
$
552,166
Cost of revenue
126,371
112,077
128,911
354,797
368,550
Gross profit
56,483
31,823
68,934
136,543
183,616
Gross margin
30.9
%
22.1
%
34.8
%
27.8
%
33.3
%
Operating expenses:
Research and development
20,905
19,851
20,738
60,983
63,703
Sales and marketing
31,196
29,757
30,865
91,482
97,226
General and administrative
8,357
19,186
16,364
45,610
49,136
Litigation reserves, net
(100,855
)
8,200
178
(92,625
)
178
Restructuring and other charges
1,072
1,688
366
3,792
2,703
Intangibles impairment
—
—
1,071
—
1,071
Total operating expenses
(39,325
)
78,682
69,582
109,242
214,017
Income (loss) from operations
95,808
(46,859
)
(648
)
27,301
(30,401
)
Operating margin
52.4
%
(32.6
)%
(0.3
)%
5.6
%
(5.5
)%
Other income, net
3,485
2,713
2,280
9,048
11,685
Income (loss) before income taxes
99,293
(44,146
)
1,632
36,349
(18,716
)
Provision for income taxes
14,219
1,029
86,431
15,100
84,382
Net income (loss)
$
85,074
$
(45,175
)
$
(84,799
)
$
21,249
$
(103,098
)
Net income (loss) per share:
Basic
$
2.96
$
(1.56
)
$
(2.87
)
$
0.73
$
(3.52
)
Diluted
$
2.90
$
(1.56
)
$
(2.87
)
$
0.72
$
(3.52
)
Weighted average shares used to compute
net income (loss) per share:
Basic
28,705
28,883
29,524
28,992
29,266
Diluted
29,364
28,883
29,524
29,389
29,266
NETGEAR, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
Nine Months Ended
September 29, 2024
October 1, 2023
Cash flows from operating
activities:
Net income (loss)
$
21,249
$
(103,098
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
4,761
5,491
Stock-based compensation
16,052
13,637
Gain on investments, net
(2,971
)
(2,301
)
Intangibles impairment
—
1,071
Deferred income taxes
254
82,205
Provision for excess and obsolete
inventory
5,084
2,705
Changes in assets and liabilities:
Accounts receivable, net
7,733
76,585
Inventories
81,790
15,990
Prepaid expenses and other assets
3,146
(3,020
)
Accounts payable
4,727
(38,443
)
Accrued employee compensation
(1,322
)
(4,952
)
Other accrued liabilities
(9,608
)
(46,929
)
Deferred revenue
3,073
4,771
Income taxes payable
9,347
(3,130
)
Net cash provided by operating
activities
143,315
582
Cash flows from investing
activities:
Purchases of short-term investments
(107,454
)
(97,291
)
Proceeds from maturities of short-term
investments
90,290
85,006
Purchases of property and equipment
(6,502
)
(3,601
)
Purchases of long-term investments
(225
)
(585
)
Net cash used in investing activities
(23,891
)
(16,471
)
Cash flows from financing
activities:
Repurchases of common stock
(22,917
)
—
Restricted stock unit withholdings
(3,330
)
(2,742
)
Proceeds from exercise of stock
options
308
—
Proceeds from issuance of common stock
under employee stock purchase plan
3,565
3,590
Net cash (used in) provided by financing
activities
(22,374
)
848
Net increase (decrease) in cash and cash
equivalents
97,050
(15,041
)
Cash and cash equivalents, at beginning of
period
176,717
146,500
Cash and cash equivalents, at end of
period
$
273,767
$
131,459
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, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
GAAP gross profit
$
56,483
$
31,823
$
68,934
$
136,543
$
183,616
GAAP gross margin
30.9
%
22.1
%
34.8
%
27.8
%
33.3
%
Amortization of intangibles
—
—
—
—
257
Stock-based compensation expense
444
413
354
1,222
1,047
Non-GAAP gross profit
$
56,927
$
32,236
$
69,288
$
137,765
$
184,920
Non-GAAP gross margin
31.1
%
22.4
%
35.0
%
28.0
%
33.5
%
GAAP research and development
$
20,905
$
19,851
$
20,738
$
60,983
$
63,703
Stock-based compensation expense
(868
)
(844
)
(841
)
(2,410
)
(3,050
)
Non-GAAP research and development
$
20,037
$
19,007
$
19,897
$
58,573
$
60,653
GAAP sales and marketing
$
31,196
$
29,757
$
30,865
$
91,482
$
97,226
Stock-based compensation expense
(1,520
)
(1,235
)
(1,271
)
(3,992
)
(4,099
)
Non-GAAP sales and marketing
$
29,676
$
28,522
$
29,594
$
87,490
$
93,127
GAAP general and administrative
$
8,357
$
19,186
$
16,364
$
45,610
$
49,136
Stock-based compensation expense
(2,788
)
(3,396
)
(1,819
)
(8,428
)
(5,441
)
Non-GAAP general and administrative
$
5,569
$
15,790
$
14,545
$
37,182
$
43,695
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, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
GAAP total operating expenses
$
(39,325
)
$
78,682
$
69,582
$
109,242
$
214,017
Stock-based compensation expense
(5,176
)
(5,475
)
(3,931
)
(14,830
)
(12,590
)
Intangibles impairment
—
—
(1,071
)
—
(1,071
)
Restructuring and other charges
(1,072
)
(1,688
)
(366
)
(3,792
)
(2,703
)
Litigation reserves, net
100,855
(8,200
)
(178
)
92,625
(178
)
Non-GAAP total operating expenses
$
55,282
$
63,319
$
64,036
$
183,245
$
197,475
GAAP operating income (loss)
$
95,808
$
(46,859
)
$
(648
)
$
27,301
$
(30,401
)
GAAP operating margin
52.4
%
(32.6
)%
(0.3
)%
5.6
%
(5.5
)%
Amortization of intangibles
—
—
—
—
257
Stock-based compensation expense
5,620
5,888
4,285
16,052
13,637
Intangibles impairment
—
—
1,071
—
1,071
Restructuring and other charges
1,072
1,688
366
3,792
2,703
Litigation reserves, net
(100,855
)
8,200
178
(92,625
)
178
Non-GAAP operating income (loss)
$
1,645
$
(31,083
)
$
5,252
$
(45,480
)
$
(12,555
)
Non-GAAP operating margin
0.9
%
(21.6
)%
2.7
%
(9.3
)%
(2.3
)%
GAAP other income, net
$
3,485
$
2,713
$
2,280
$
9,048
$
11,685
Gain/loss on investments, net
(49
)
(69
)
(14
)
(17
)
16
Gain on litigation settlements
—
—
—
—
(6,000
)
Non-GAAP other income, net
$
3,436
$
2,644
$
2,266
$
9,031
$
5,701
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, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
GAAP net income (loss)
$
85,074
$
(45,175
)
$
(84,799
)
$
21,249
$
(103,098
)
Amortization of intangibles
—
—
—
—
257
Stock-based compensation expense
5,620
5,888
4,285
16,052
13,637
Intangibles impairment
—
—
1,071
—
1,071
Restructuring and other charges
1,072
1,688
366
3,792
2,703
Litigation reserves, net
(100,855
)
8,200
178
(92,625
)
178
Gain/loss on investments, net
(49
)
(69
)
(14
)
(17
)
16
Gain on litigation settlements
—
—
—
—
(6,000
)
Non-GAAP tax adjustments
14,203
8,025
85,781
26,816
87,724
Non-GAAP net income (loss)
$
5,065
$
(21,443
)
$
6,868
$
(24,733
)
$
(3,512
)
NET INCOME (LOSS) PER DILUTED
SHARE:
GAAP net income (loss) per diluted
share
$
2.90
$
(1.56
)
$
(2.87
)
$
0.72
$
(3.52
)
Amortization of intangibles
—
—
—
—
0.01
Stock-based compensation expense
0.19
0.20
0.14
0.55
0.47
Intangibles impairment
—
—
0.04
—
0.04
Restructuring and other charges
0.04
0.06
0.01
0.13
0.09
Litigation reserves, net
(3.43
)
0.28
0.01
(3.19
)
0.01
Gain/loss on investments, net
—
—
—
—
—
Gain on litigation settlements
—
—
—
—
(0.21
)
Non-GAAP tax adjustments
0.47
0.28
2.90
0.94
2.99
Non-GAAP net income (loss) per diluted
share 1
$
0.17
$
(0.74
)
$
0.23
$
(0.85
)
$
(0.12
)
Shares used in computing GAAP net income
(loss) per diluted share
29,364
28,883
29,524
29,389
29,266
Shares used in computing non-GAAP net
income (loss) per diluted share
29,364
28,883
29,581
28,992
29,266
1
The per share reconciliation of GAAP to
non-GAAP may not aggregate due to both calculations utilizing a
different share basis. The net loss per diluted share calculation
uses a lower share count as it excludes potentially dilutive shares
included in the net income per diluted share calculation.
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, 2024
June 30, 2024
March 31, 2024
December 31, 2023
October 1, 2023
Cash, cash equivalents and short-term
investments
$
395,732
$
294,339
$
289,421
$
283,648
$
228,045
Cash, cash equivalents and short-term
investments per diluted share
$
13.48
$
10.19
$
9.85
$
9.56
$
7.71
Accounts receivable, net
$
177,326
$
147,069
$
172,771
$
185,059
$
200,900
Days sales outstanding (DSO)
88
93
96
89
92
Inventories
$
161,976
$
188,936
$
211,270
$
248,851
$
280,918
Ending inventory turns
3.1
2.4
2.2
2.0
1.8
Weeks of channel inventory:
U.S. retail channel
9.5
9.5
11.2
10.8
11.8
U.S. distribution channel
2.4
2.8
4.0
7.9
5.8
EMEA distribution channel
5.3
5.2
5.9
6.4
7.4
APAC distribution channel
9.5
8.3
8.0
10.0
13.1
Deferred revenue (current and
non-current)
$
35,068
$
34,216
$
33,714
$
31,994
$
29,796
Headcount
638
622
628
635
644
Non-GAAP diluted shares
29,364
28,883
29,395
29,683
29,581
NET REVENUE BY GEOGRAPHY
Three Months Ended
Nine Months Ended
September 29, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
Americas
$
127,752
70
%
$
95,503
66
%
$
141,018
71
%
$
333,183
67
%
$
379,551
69
%
EMEA
32,798
18
%
27,355
19
%
35,684
18
%
91,340
19
%
111,023
20
%
APAC
22,304
12
%
21,042
15
%
21,143
11
%
66,817
14
%
61,592
11
%
Total
$
182,854
100
%
$
143,900
100
%
$
197,845
100
%
$
491,340
100
%
$
552,166
100
%
NETGEAR, INC. SUPPLEMENTAL
FINANCIAL INFORMATION (CONTINUED) (In thousands)
(Unaudited)
NET REVENUE BY SEGMENT
Three Months Ended
Nine Months Ended
September 29, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
NETGEAR for Business
$
78,530
$
59,867
$
70,510
$
207,020
$
223,679
Connected Home
104,324
84,033
127,335
284,320
328,487
Total net revenue
$
182,854
$
143,900
$
197,845
$
491,340
$
552,166
SERVICE PROVIDER NET REVENUE
Three Months Ended
Nine Months Ended
September 29, 2024
June 30, 2024
October 1, 2023
September 29, 2024
October 1, 2023
NETGEAR for Business
$
268
$
202
$
219
$
713
$
427
Connected Home
22,949
19,732
32,403
70,234
71,346
Total service provider net revenue
$
23,217
$
19,934
$
32,622
$
70,947
$
71,773
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030206080/en/
NETGEAR Investor Relations Erik Bylin investors@netgear.com
NETGEAR (NASDAQ:NTGR)
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