NETGEAR, Inc., (NASDAQ: NTGR), today reported certain
preliminary financial results for its fourth fiscal quarter ended
December 31, 2023. NETGEAR will announce full results for the
fourth quarter on February 7, 2024.
NETGEAR currently expects net revenue for the fourth quarter of
2023 to be between $179 million and $189 million, compared to prior
guidance of $175 million to $190 million for the fourth quarter of
2023. The Company continued to experience strong underlying demand
in the premium portion of its CHP product portfolio, riding on the
success of its Orbi WiFi 7 launch which continued through the
holiday season. The Company is also encouraged that its retail
channel partners maintained their inventory positions as expected.
The Company continued to work with its SMB channel partners to
optimize their inventory carrying levels. The uncertain macro
environment created by high interest rates, geopolitical tensions,
and stagnant GDP growth in certain markets continued to weigh on
the Company’s SMB business as expected.
GAAP operating margin for the fourth quarter of 2023 is expected
to be between (3.0)% and (1.5)%, compared to prior guidance of
(4.4)% to (1.4)%. Non-GAAP operating margin for the fourth quarter
of 2023 is expected to be between 0% and 1.5%, compared to prior
guidance of (2.0)% to 1.0%. The increased mix of the Company’s
premium products within its CHP business, coupled with SMB
revenues, which carry higher margins, remaining in line with Q3
performance, positively impacted the Company’s operating margin
performance relative to its expectations last October.
Additionally, the GAAP tax expense is expected to be in the range
of $1 million to $2 million, which is in line with the prior
guidance, and the non-GAAP tax expense is expected to be in the
range of $1.5 million to $2.5 million, compared to prior guidance
of $0 to $1 million for the fourth quarter of 2023.
A reconciliation between each of NETGEAR’s operating margin rate
and NETGEAR's tax expense, on a GAAP and non-GAAP basis is provided
in the following table:
Three months ending
December 31, 2023
(in millions, except for percentage
data)
Operating Margin Rate
Tax Expense (Benefit)
GAAP
(3.0)% - (1.5)%
$1.0 - $2.0
Estimated adjustments for1:
Stock-based compensation expense
2.3%
-
Restructuring and other charges
0.7%
-
Non-GAAP tax adjustments
-
$0.5
Non-GAAP
0.0% - 1.5%
$1.5-$2.5
1
Operating margin rate 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. New material income and
expense items such as these could have a significant effect on our
guidance and future GAAP results.
NETGEAR will release its full financial results for the fourth
quarter and full year 2023 after the close of trading on February
7, 2024. Management will host a conference call on February 7, 2024
at 5 p.m. ET (2 p.m. PT) to review the results.
About NETGEAR, Inc.
For more than 25 years, NETGEAR® (NASDAQ: NTGR) has been the
innovative leader in connecting the world to the internet with
advanced networking technologies for homes, businesses and service
providers around the world. As staying connected has become more
important than ever, NETGEAR delivers award-winning network
solutions for remote work, distance learning, ultra high def
streaming, online game play and more. To enable people to
collaborate and connect to a world of information and
entertainment, NETGEAR is dedicated to providing a range of
connected solutions. From ultra-premium Orbi Mesh WiFi systems and
high performance Nighthawk routers, to high-speed cable modems and
5G mobile wireless products to cloud-based subscription services
for network management and security, to smart networking products
and Video over Ethernet for Pro AV applications, NETGEAR keeps you
connected. NETGEAR is headquartered in San Jose, California. Learn
more on the NETGEAR Investor Page or by calling (408) 907-8000.
Connect with NETGEAR: Twitter, Facebook, Instagram, LinkedIn and
the NETGEAR blog at NETGEAR.com.
Source: NETGEAR-F
© 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.
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. These forward-looking
statements include, but are not limited to, the Company’s estimates
of future revenues and earnings. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
that could cause the actual results of the Company to be materially
different from the historical results and/or from any future
results or outcomes expressed or implied by such forward-looking
statements. Such factors include, among others, the Company’s
completion of its fourth quarter financial close processes,
including without limitation its tax expense. Such factors are
further addressed in the Company’s Quarterly Report on Form 10-Q
for the period ended October 1, 2023 and such other documents as
are filed with the Securities and Exchange Commission from time to
time (available at www.sec.gov). The Company assumes no obligation,
except as required by law, to update any forward-looking statements
in order to reflect events or circumstances that may arise after
the date of this release.
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 (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, goodwill impairment,
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:
goodwill impairment, intangibles impairment, restructuring and
other charges, litigation reserves, net, gain on litigation
settlements, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240131070912/en/
NETGEAR Investor Relations Erik Bylin investors@netgear.com
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