Netgear, Inc. (NTGR) Tops Q4 EPS by 5c, Revenues Beat

Netgear, Inc. (NASDAQ: NTGR) reported Q4 EPS of $0.34, $0.05 better than the analyst estimate of $0.29. Revenue for the quarter came in at $253 million versus the consensus estimate of $245.79 million.

• Fourth quarter 2019 net revenue of $253.0 million, a decrease of 12.4% from the comparable prior year quarter.
• Fourth quarter 2019 GAAP operating loss of $0.2 million, or (0.1)% of net revenue, as compared to operating income of $17.4 million, or 6.0% of net revenue, in the comparable prior year quarter.
  • Fourth quarter 2019 non-GAAP operating income of $11.0 million, or 4.4% of net revenue, as compared to $27.1 million, or 9.4% of net revenue in the comparable prior year quarter.
• Fourth quarter 2019 GAAP net loss per diluted share from continuing operations of $0.01, as compared to net loss of $0.02 in the comparable prior year quarter.
  • Fourth quarter 2019 non-GAAP net income per diluted share from continuing operations of $0.34, as compared to $0.68 in the comparable prior year quarter.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, “While we experienced a heavily promotional holiday season, we proceeded as planned by participating competitively in the WiFi 5 market while aggressively shifting our channel to WiFi 6 products. During the promotional period, we took advantage of incremental opportunities to gain share, thus leading to slightly higher revenue and lower non-GAAP operating margin. We also took initial steps to adjust inventory in the channel to facilitate our continuing shift to WiFi 6 and Power over Ethernet Plus. We will advance the same strategy in the first half of 2020 and expect WiFi 6 and Power over Ethernet Plus to constitute the majority of the markets in which they play in the second half of this year.”

Mr. Lo continued, “Despite the competitive environment, our product and channel execution continues to be stellar as we brought two new WiFi 6 mesh systems to market along with three other WiFi 6 products since the beginning of Q4. We also introduced five new Power over Ethernet Plus switches in the same period. We are driving our roadmap to capitalize on these ongoing technology inflections and emerge again as the leader in the next generation of networking technologies - WiFi 6, 5G, and Power over Ethernet Plus. At CES in Las Vegas, we rolled out the industry’s first WiFi 6 DOCSIS 3.1 cable gateway, which won a CES innovation honoree award.”

“We are also pleased to report that, in Q4, we drove strong increases in both the number of our registered users, up from 12.0 million to 12.8 million, and our registered app users, up from 3.6 million to 4.4 million total. The growth of these users serves as the foundation for growing our paid subscriber base, which has increased to 177,000 by the end of the fourth quarter. We will continue to execute our strategy and drive initiatives to extend this momentum in 2020.”

Bryan Murray, Chief Financial Officer of NETGEAR, added, “We finished the year with strong cash flow, generating almost $50 million in cash from operations in the fourth quarter, and, with the migration from our China manufacturing operations complete, we expect to continue to generate positive cash flow. Additionally, in the quarter, we repurchased approximately 721,000 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.”

For earnings history and earnings-related data on Netgear, Inc. (NTGR) click here.

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