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NETGEAR® Reports Fourth Quarter and Full Year 2019 Results

SAN JOSE, Calif., Feb. 05, 2020 (GLOBE NEWSWIRE) -- NETGEAR, Inc. (NTGR), a global networking company that delivers innovative networking and Internet connected products to consumers and businesses, today reported financial results for the fourth quarter and full year ended December 31, 2019.

  • 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.

  • Fiscal 2019 net revenue of $998.8 million, a decrease of 5.7% from the prior year.

  • Fiscal 2019 GAAP operating income of $26.2 million, or 2.6% of net revenue, as compared to $38.7 million, or 3.7% of net revenue, in the prior year.

    • Fiscal 2019 non-GAAP operating income of $64.5 million, or 6.5% of net revenue, as compared to $76.3 million, or 7.2% of net revenue in the prior year.

  • Fiscal 2019 GAAP net income per diluted share from continuing operations of $0.81, as compared to $0.52 in the prior year.

    • Fiscal 2019 non-GAAP net income per diluted share from continuing operations of $1.87, as compared to $1.94 in the prior year.

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, “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.”

Business Outlook

Mr. Murray continued, “Due to reduced service provider shipments as carriers are awaiting roll outs of 5G product offerings, and our continued efforts to rebalance the channel inventory mix towards WiFi 6 products, our first quarter net revenue is expected to be in the range of $205 million to $220 million. Given this decline in our topline, our GAAP operating margin for the first quarter is expected to be in the range of (1.8)% to (0.8)%, and non-GAAP operating margin is expected to be in the range of 2.0% to 3.0%. Our GAAP tax rate is expected to be approximately (16.0)%, and our non-GAAP tax rate is expected to be 25.0% for the first quarter of 2020.”

A reconciliation between the Business Outlook on a GAAP and non-GAAP basis is provided in the following table:

Three months ending

March 29, 2020

Operating Margin
Rate

Tax Rate

GAAP

(1.8)% - (0.8)%

(16.0)%

Estimated adjustments for1:

Amortization of intangibles

0.7%


Stock-based compensation expense

3.1%


Tax effects of non-GAAP adjustments


41.0%

Non-GAAP

2.0% - 3.0%

25.0%

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 fourth quarter and full year results and discuss management's expectations for the first quarter of 2020 today, Wednesday, February 5, 2020 at 5 p.m. ET (2 p.m. PT). The toll free dial-in number for the live audio call is (844) 709-2008. The international dial-in number for the live audio call is (647) 253-8663. The conference ID for the call is 2864226. 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.
NETGEAR (NTGR) has pioneered advanced networking technologies for homes, businesses, and service providers around the world since 1996 and leads the industry with a broad range of award-winning products designed to simplify and improve people’s lives. By enabling people to collaborate and connect to a world of information and entertainment, NETGEAR is dedicated to delivering innovative and advanced connected solutions ranging from mobile and cloud-based services for enhanced control and security, to smart networking products, video over Ethernet for Pro AV applications, easy-to-use WiFi solutions and performance gaming routers to enhance online game play. NETGEAR products are sold in approximately 24,000 retail locations around the globe, and through approximately 20,000 value-added resellers, as well as multiple major cable, mobile and wireline service providers around the world. The company's headquarters are in San Jose, Calif., with additional offices in approximately 20 countries. More information is available at http://investor.netgear.com or by calling (408) 907-8000. Connect with NETGEAR at http://twitter.com/NETGEAR and http://www.facebook.com/NETGEAR.

© 2020 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.

Contact:
NETGEAR Investor Relations
Erik Bylin
investors@netgear.com

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, expected net revenue, GAAP and non-GAAP operating margins, and GAAP and non-GAAP tax rates; expectations regarding the timing, distribution, sales momentum and market acceptance of recent and anticipated new product introductions that position the Company for growth; expectations regarding NETGEAR's paid subscriber base, registered users and registered app users and their effect on NETGEAR's paid subscriber base; and expectations regarding the Company’s ability to generate cash and continue its share repurchase program. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for the Company's products may be lower than anticipated; consumers may choose not to adopt the Company's new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of the Company's products or utilize competing products; the Company may be unable to grow its number of registered users and/or registered app users; the Company may be unable to grow its paid subscriber base; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources, including potential repurchases of the Company’s common stock; changes in the Company's stock price and developments in the business that could increase the Company's cash needs; fluctuations in foreign exchange rates; and the actions and financial health of the Company's customers. 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 the Company'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 the Company's quarterly report on Form 10-Q for the fiscal quarter ended September 29, 2019, filed with the Securities and Exchange Commission on November 1, 2019. 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 other operating expenses, net, non-GAAP total operating expenses, non-GAAP operating income, non-GAAP operating margin, Non-GAAP other income (expense), net, non-GAAP net income and non-GAAP net income per diluted share. These non-GAAP financial measures represent results from continuing operations. These supplemental measures exclude adjustments for amortization of intangibles, stock-based compensation expense, separation expense, change in fair value of contingent consideration, restructuring and other charges, litigation reserves, net, gain/loss on investments, net, and the related tax effects. 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 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: separation expense, change in fair value of contingent consideration, 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.

Tax effects consist of the various above adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income. We also believe providing financial information with and without the income tax effects relating to our non-GAAP financial measures provides our management and users of the financial statements with better clarity regarding the on-going performance of our business.

Source: NETGEAR-F

-Financial Tables Attached-

NETGEAR, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

As of

December 31,
2019

December 31,
2018

ASSETS

Current assets:

Cash and cash equivalents

$

190,208

$

201,047

Short-term investments

5,499

73,317

Accounts receivable, net

277,168

303,667

Inventories

235,489

243,871

Prepaid expenses and other current assets

35,745

35,997

Total current assets

744,109

857,899

Property and equipment, net

17,683

20,177

Operating lease right-of-use assets, net

28,917

Intangibles, net

10,104

17,146

Goodwill

80,721

80,721

Other non-current assets

74,279

67,433

Total assets

$

955,813

$

1,043,376

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

80,531

$

139,748

Accrued employee compensation

20,024

31,666

Other accrued liabilities

189,547

199,472

Deferred revenue

6,450

11,086

Income taxes payable

1,839

2,020

Total current liabilities

298,391

383,992

Non-current income taxes payable

15,307

19,600

Non-current operating lease liabilities

25,434

Other non-current liabilities

7,988

12,232

Total liabilities

347,120

415,824

Stockholders’ equity:

Common stock

30

32

Additional paid-in capital

831,365

793,585

Accumulated other comprehensive income (loss)

21

(15

)

Accumulated deficit

(222,723

)

(166,050

)

Total stockholders’ equity

608,693

627,552

Total liabilities and stockholders’ equity

$

955,813

$

1,043,376


NETGEAR, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and percentage data)
(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

Net revenue

$

252,971

$

265,858

$

288,928

$

998,763

$

1,058,816

Cost of revenue

183,388

188,666

198,274

704,535

717,118

Gross profit

69,583

77,192

90,654

294,228

341,698

Gross margin

27.5

%

29.0

%

31.4

%

29.5

%

32.3

%

Operating expenses:

Research and development

20,799

19,537

19,143

77,982

82,416

Sales and marketing

34,263

33,491

38,251

138,150

152,569

General and administrative

13,965

11,887

14,454

49,432

64,857

Other operating expenses, net

767

212

1,390

2,476

3,142

Total operating expenses

69,794

65,127

73,238

268,040

302,984

Income (loss) from operations

(211

)

12,065

17,416

26,188

38,714

Operating margin

-0.1

%

4.5

%

6.0

%

2.6

%

3.7

%

Interest income, net

417

639

1,174

2,539

3,980

Other income (expense), net

419

(403

)

85

844

510

Income before income taxes

625

12,301

18,675

29,571

43,204

Provision (benefit) for income taxes

1,045

(228

)

19,210

3,780

25,878

Net income (loss) from continuing operations

(420

)

12,529

(535

)

25,791

17,326

Net loss from discontinued operations, net of tax 2

(27,304

)

(35,655

)

Net income (loss)

(420

)

12,529

(27,839

)

25,791

(18,329

)

Net loss attributable to non-controlling interest in discontinued operations 2

(8,368

)

(9,167

)

Net income (loss) attributable to NETGEAR, Inc.

$

(420

)

$

12,529

$

(19,471

)

$

25,791

$

(9,162

)

Net income (loss) per share - basic:

Income (loss) from continuing operations

$

(0.01

)

$

0.41

$

(0.02

)

$

0.83

$

0.55

Loss from discontinued operations attributable to NETGEAR, Inc. 2

(0.60

)

(0.84

)

Net income (loss) attributable to NETGEAR, Inc.

$

(0.01

)

$

0.41

$

(0.62

)

$

0.83

$

(0.29

)

Net income (loss) per share - Diluted:

Income (loss) from continuing operations

$

(0.01

)

$

0.39

$

(0.02

)

$

0.81

$

0.52

Loss from discontinued operations attributable to NETGEAR, Inc. 2

(0.60

)

(0.80

)

Net income (loss) attributable to NETGEAR, Inc.

$

(0.01

)

$

0.39

$

(0.62

)

$

0.81

$

(0.28

)

Weighted average shares used to compute net income (loss) per share:

Basic

30,103

30,933

31,604

30,936

31,626

Diluted

30,103

31,819

31,604

31,965

33,137

2 Historical results of Arlo Technologies, Inc. are reflected as discontinued operations for the periods presented.


NETGEAR, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except percentage data)
(Unaudited)

STATEMENT OF OPERATIONS DATA:

Three Months Ended

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

GAAP gross profit

$

69,583

$

77,192

$

90,654

$

294,228

$

341,698

GAAP gross margin

27.5

%

29.0

%

31.4

%

29.5

%

32.3

%

Amortization of intangibles

178

179

181

714

829

Stock-based compensation expense

714

706

681

2,843

2,435

Non-GAAP gross profit

$

70,475

$

78,077

$

91,516

$

297,785

$

344,962

Non-GAAP gross margin

27.9

%

29.4

%

31.7

%

29.8

%

32.6

%

GAAP research and development

$

20,799

$

19,537

$

19,143

$

77,982

$

82,416

Stock-based compensation expense

(2,556

)

(1,496

)

(1,112

)

(6,532

)

(4,283

)

Non-GAAP research and development

$

18,243

$

18,041

$

18,031

$

71,450

$

78,133

GAAP sales and marketing

$

34,263

$

33,491

$

38,251

$

138,150

$

152,569

Amortization of intangibles

(1,341

)

(1,341

)

(1,831

)

(6,017

)

(7,150

)

Stock-based compensation expense

(2,846

)

(2,097

)

(1,904

)

(9,069

)

(8,267

)

Non-GAAP sales and marketing

$

30,076

$

30,053

$

34,516

$

123,064

$

137,152

GAAP general and administrative

$

13,965

$

11,887

$

14,454

$

49,432

$

64,857

Stock-based compensation expense

(2,838

)

(2,687

)

(2,536

)

(10,693

)

(11,476

)

Non-GAAP general and administrative

$

11,127

$

9,200

$

11,918

$

38,739

$

53,381

GAAP other operating expenses, net

$

767

$

212

$

1,390

$

2,476

$

3,142

Separation expense

(550

)

(264

)

(929

)

Change in fair value of contingent consideration

224

(199

)

25

Restructuring and other charges

(931

)

77

(830

)

(2,077

)

(2,198

)

Litigation reserves, net

(60

)

(90

)

(10

)

(160

)

(15

)

Non-GAAP other operating expenses, net

$

$

$

$

$


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

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

GAAP total operating expenses

$

69,794

$

65,127

$

73,238

$

268,040

$

302,984

Amortization of intangibles

(1,341

)

(1,341

)

(1,831

)

(6,017

)

(7,150

)

Stock-based compensation expense

(8,240

)

(6,280

)

(5,552

)

(26,294

)

(24,026

)

Separation expense

(550

)

(264

)

(929

)

Change in fair value of contingent consideration

224

(199

)

25

Restructuring and other charges

(931

)

77

(830

)

(2,077

)

(2,198

)

Litigation reserves, net

(60

)

(90

)

(10

)

(160

)

(15

)

Non-GAAP total operating expenses

$

59,446

$

57,294

$

64,465

$

233,253

$

268,666

GAAP operating income (loss)

$

(211

)

$

12,065

$

17,416

$

26,188

$

38,714

GAAP operating margin

(0.1

)%

4.5

%

6.0

%

2.6

%

3.7

%

Amortization of intangibles

1,519

1,520

2,012

6,731

7,979

Stock-based compensation expense

8,954

6,986

6,233

29,137

26,461

Separation expense

550

264

929

Change in fair value of contingent consideration

(224

)

199

(25

)

Restructuring and other charges

931

(77

)

830

2,077

2,198

Litigation reserves, net

60

90

10

160

15

Non-GAAP operating income

$

11,029

$

20,783

$

27,051

$

64,532

$

76,296

Non-GAAP operating margin

4.4

%

7.8

%

9.4

%

6.5

%

7.2

%

GAAP other income (expense), net

$

419

$

(403

)

$

85

$

844

$

510

Gain/loss on investments, net 3

223

(190

)

223

861

Non-GAAP other income (expense), net

$

419

$

(180

)

$

(105

)

$

1,067

$

1,371


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

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

GAAP net income (loss) from continuing operations

$

(420

)

$

12,529

$

(535

)

$

25,791

$

17,326

Amortization of intangibles

1,519

1,520

2,012

6,731

7,979

Stock-based compensation expense

8,954

6,986

6,233

29,137

26,461

Separation expense

550

264

929

Change in fair value of contingent consideration

(224

)

199

(25

)

Restructuring and other charges

931

(77

)

830

2,077

2,198

Litigation reserves, net

60

90

10

160

15

Gain/loss on investments, net 3

223

(190

)

223

861

Tax effects of above non-GAAP adjustments

(460

)

(725

)

13,424

(4,598

)

8,680

Non-GAAP net income from continuing operations

$

10,360

$

20,745

$

22,334

$

59,760

$

64,449

NET INCOME (LOSS) PER DILUTED SHARE:

GAAP net income (loss) per diluted share from continuing operations

$

(0.01

)

$

0.39

$

(0.02

)

$

0.81

$

0.52

Amortization of intangibles

0.05

0.05

0.06

0.21

0.24

Stock-based compensation expense

0.29

0.22

0.19

0.91

0.80

Separation expense

0.02

0.01

0.03

Change in fair value of contingent consideration

(0.01

)

0.01

(0.00

Restructuring and other charges

0.03

(0.00

0.03

0.06

0.07

Litigation reserves, net

0.00

0.00

0.00

0.01

0.00

Gain/loss on investments, net 3

0.01

(0.01

)

0.01

0.02

Tax effects of above non-GAAP adjustments

(0.01

)

(0.03

)

0.41

(0.15

)

0.26

Non-GAAP net income per diluted share from continuing operations 4

$

0.34

$

0.65

$

0.68

$

1.87

$

1.94

Shares used in computing GAAP net income (loss) per diluted share

30,103

31,819

31,604

31,965

33,137

Shares used in computing non-GAAP net income per diluted share

30,800

31,819

32,803

31,965

33,137

3 Gain/loss on investments includes realized gains or losses, impairments, and adjustments for observable price changes pertaining to investments. Upon adopting ASU 2016-1 in the first quarter of 2018, the Company elected to record investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes.

4 The per share reconciliation of GAAP to non-GAAP may not aggregate due to both calculations utilizing a different share basis. The GAAP net loss per diluted share calculation uses a lower share count as it excludes potentially dilutive shares included in the non-GAAP 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

December 31,
2019

September 29,
2019

June 30,
2019

March 31,
2019

December 31,
2018

Cash, cash equivalents and short-term investments

$

195,707

$

171,917

$

218,311

$

212,652

$

274,364

Cash, cash equivalents and short-term investments per diluted share

$

6.35

$

5.40

$

6.80

$

6.47

$

8.36

Accounts receivable, net

$

277,168

$

248,070

$

238,635

$

262,531

$

303,667

Days sales outstanding (DSO)

102

85

94

95

97

Inventories

$

235,489

$

275,584

$

276,316

$

236,123

$

243,871

Ending inventory turns

3.1

2.7

2.4

2.8

3.3

Weeks of channel inventory:

U.S. retail channel

8.0

8.6

10.6

10.4

7.7

U.S. distribution channel

4.5

5.4

5.5

5.7

5.2

EMEA distribution channel

5.9

5.8

4.6

4.0

4.1

APAC distribution channel

9.6

7.8

7.4

6.4

7.4

Deferred revenue (current and non-current)

$

8,511

$

7,712

$

12,047

$

13,598

$

11,865

Headcount

809

802

824

828

837

Non-GAAP diluted shares

30,800

31,819

32,112

32,874

32,803


NET REVENUE BY GEOGRAPHY

Three Months Ended

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

Americas

$

169,128

67

%

$

178,679

67

%

$

190,335

66

%

$

653,006

65

%

$

700,693

66

%

EMEA

50,491

20

%

49,554

19

%

58,798

20

%

200,099

20

%

207,599

20

%

APAC

33,352

13

%

37,625

14

%

39,795

14

%

145,658

15

%

150,524

14

%

Total

$

252,971

100

%

$

265,858

100

%

$

288,928

100

%

$

998,763

100

%

$

1,058,816

100

%


NETGEAR, INC.
SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED)
(In thousands)
(Unaudited)

NET REVENUE BY SEGMENT

Three Months Ended

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

Connected Home

$

183,859

$

190,672

$

215,638

$

711,391

$

771,060

SMB

69,112

75,186

73,290

287,372

287,756

Total net revenue

$

252,971

$

265,858

$

288,928

$

998,763

$

1,058,816


SERVICE PROVIDER NET REVENUE

Three Months Ended

Twelve Months Ended

December 31,
2019

September 29,
2019

December 31,
2018

December 31,
2019

December 31,
2018

Connected Home

$

29,651

$

35,482

$

37,772

$

128,852

$

156,671

SMB

1,095

972

670

4,465

3,624

Total service provider net revenue

$

30,746

$

36,454

$

38,442

$

133,317

$

160,295