Netgear, Inc. (NASDAQ: NTGR) reported Q1 EPS of $0.60, $0.11 better than the analyst estimate of $0.49. Revenue for the quarter came in at $249.1 million versus the consensus estimate of $244.3 million.

• First quarter 2019 net revenue of $249.1 million, an increase of 1.6% from the comparable prior year quarter.
• First quarter 2019 GAAP operating income of $14.0 million, or 5.6% of net revenue, as compared to $1.5 million, or 0.6% of net revenue, in the comparable prior year quarter.◦ First quarter 2019 non-GAAP operating income of $22.7 million, or 9.1% of net revenue, as compared to $10.4 million, or 4.3% of net revenue in the comparable prior year quarter.
• First quarter 2019 GAAP net income per diluted share from continuing operations of $0.39, as compared to $0.03 in the comparable prior year quarter.◦ First quarter 2019 non-GAAP net income per diluted share from continuing operations of $0.60, as compared to $0.26 in the comparable prior year quarter.

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, "We had a successful first quarter of 2019, driven by the Orbi line of mesh WiFi systems, the Nighthawk Pro Gaming line, cable modems and gateways, and our SMB switching portfolio. Our financial results for the quarter came in at the high end of our guidance range for revenue, and slightly above the range in non-GAAP operating margin."

Mr. Lo continued, “We are pleased to report that we reached 10.4 million registered users in Q1, which represents the foundation for building our paid subscriber base. Furthermore, our number of registered app users reached 2 million in the first quarter."

"On the product front, we now have three Nighthawk WiFi 6 routers on the market, and a fourth rolling out this May. We’ll be driving early adoption of these products just as new and much-anticipated WiFi 6 enabled smartphones and laptops are hitting the market. In order to quickly establish our market leadership, we intend to increase our marketing effort in the current quarter to push our entire WiFi 6 portfolio."

GUIDANCE:

Netgear, Inc. sees Q2 2019 revenue of $215-230 million, versus the consensus of $256.15 million.

Bryan Murray, Chief Financial Officer of NETGEAR, added, "Due to reduced service provider shipments, our second quarter net revenue is expected to be in the range of $215 million to $230 million. Given this decline in our topline and the increased marketing spend to support our WiFi 6 initiatives, second quarter GAAP operating margin is expected to be in the range of 0.0% to 1.0%, and non-GAAP operating margin is expected to be in the range of 4.0% to 5.0%. Our GAAP tax rate is expected to be approximately 28.5%, and our non-GAAP tax rate is expected to be 23.5% for the second quarter of 2019. We expect our operating margin will significantly improve in the second half of the year when service provider revenue and marketing spend should both return to normal levels.”

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