Netgear, Inc. (NTGR) Tops Q3 EPS by 29c, Revenues Beat; Offers Q4 Revenue Guidance

Netgear, Inc. (NASDAQ: NTGR) reported Q3 EPS of $0.76, $0.29 better than the analyst estimate of $0.47. Revenue for the quarter came in at $400.6 million versus the consensus estimate of $387.72 million.

• Third quarter 2018 net revenue of $400.6 million, as compared to $355.5 million in the comparable prior year quarter, an increase of 12.7%.
• Third quarter 2018 GAAP net income of $9.9 million, as compared to $20.8 million in the comparable prior year quarter.- Third quarter 2018 non-GAAP net income of $24.9 million, as compared to $26.2 million in the comparable prior year quarter.
• Third quarter 2018 GAAP net income per diluted share of $0.30, as compared to net income per diluted share of $0.64 in the comparable prior year quarter.- Third quarter 2018 non-GAAP net income per diluted share of $0.76, as compared to $0.81 in the comparable prior year quarter.
• Arlo Technologies, Inc. completed its IPO during the third quarter 2018, raising IPO proceeds of $170.2 million, net of offering costs.
• Business outlook1: The Company expects fourth quarter 2018 net revenue to be in the range of $430 million to $445 million, with GAAP operating margin in the range of (2.5)% to (1.5)% and non-GAAP operating margin in the range of 2.5% to 3.5%. Additionally, the Company expects the GAAP tax rate to be approximately 85.0% and non-GAAP tax rate to be approximately 22.0%.

Bryan Murray, Chief Financial Officer of NETGEAR, added, "Looking forward to the fourth quarter of 2018, we expect net revenue to be in the range of $430 million to $445 million. Excluding the Arlo component, net revenue is expected to be in the range of $275 million to $290 million, while Arlo is expected to be in the range of $140 million to $155 million."

"GAAP operating margin is expected to be in the range of (2.5)% to (1.5)%, which includes approximately $7.5 million of one-time costs associated with the separation inclusive of professional services fees for various advisory and audit related costs."

"Non-GAAP operating margin is expected to be in the range of 2.5% to 3.5%, which includes approximately $21 million of costs associated with the separation of Arlo and the corresponding dis-synergies created as we hire talent to duplicate certain roles and that business begins to stand up on its own. We expect NETGEAR adjusted operating margin excluding Arlo, a non-GAAP financial measure, to be in the range of 8.5% to 9.5%, excluding any expected income from transition services agreed with Arlo."

"Our GAAP tax rate is expected to be approximately 85.0%, and our non-GAAP tax rate is expected to be 22.0% for the fourth quarter of 2018.”

GUIDANCE:

Netgear, Inc. sees Q4 2018 revenue of $430-445 million, versus the consensus of $438 million.

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

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