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NETGEAR (NTGR) Q2 Earnings Beat Estimates, Revenues Up Y/Y
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NETGEAR, Inc. (NTGR - Free Report) second-quarter 2018 adjusted earnings per share came in at 57 cents, surpassing the Zacks Consensus Estimate of 52 cents. However, the figure was lower than 60 cents per share reported a year ago.
On a GAAP basis, net loss for the reported quarter came in at $5.2 million or 17 cents per share against net income of $14.6 million or 44 cents per share in the year-ago quarter. The year-over-year decline can primarily be attributed to rise in the company’s operating expenses.
Non-GAAP net income came in at $18.6 million compared with $19.9 million in the year-ago quarter.
Inside the Headlines
Quarterly net revenues grew 10.9% year over year to $366.8 million. The top line also outpaced the Zacks Consensus Estimate of $351 million. Strong growth across all the company’s three segments drove the overall top line.
Non-GAAP gross margin was 30.2% compared with 28.4% in the year-ago quarter.
Total non-GAAP operating expenses were $88.9 million, up 35.1% year over year. Non-GAAP operating margin was 5.9% compared with 8.5% in the prior-year quarter.
Segmental Performance
Net revenues from Arlo increased 33.2% year over year to $104.8 million. The rise was driven by the rapid expansion of smart camera market combined with the success of Arlo Pro 2 camera.
Connected Homesegment, which includes the industry leading Nighthawk and Orbi brands, generated net revenues of $191.2 million, up 2.9% year over year. The improvement was primarily driven by Orbi, the Nighthawk Pro Gaming Router and the company’s cable modems and gateway.
The SMB segment net revenues increased 7.1% year over year to $70.8 million, primarily due to increased sales from switches. The company is witnessing strength in switching lines especially in the areas of 10-gig multi-gig and POE switches categories.
Cash Flow and Liquidity
During the quarter, NETGEAR used cash flow from operating activities of $16.9 million.
As of Jul 1, 2018, the company had $227.4 million of cash and cash equivalents and $266 million as other accrued current liabilities.
Guidance
For third-quarter 2018, NETGEAR’s management expect net revenues to be between $380 million and $395 million.
Non-GAAP operating margin is projected to be in the range of 4.0-5.0%. GAAP tax rate is expected to be approximately 108% while non-GAAP tax rate is expected to be 23.5%.
Adobe Systems surpassed estimates in each of the trailing four quarters with an average beat of 8.94%.
Cisco Systems exceeded estimates thrice in the trailing four quarters with an average beat of 2.50%.
AMETEK surpassed estimates in each of the trailing four quarters with an average beat of 6.03%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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NETGEAR (NTGR) Q2 Earnings Beat Estimates, Revenues Up Y/Y
NETGEAR, Inc. (NTGR - Free Report) second-quarter 2018 adjusted earnings per share came in at 57 cents, surpassing the Zacks Consensus Estimate of 52 cents. However, the figure was lower than 60 cents per share reported a year ago.
On a GAAP basis, net loss for the reported quarter came in at $5.2 million or 17 cents per share against net income of $14.6 million or 44 cents per share in the year-ago quarter. The year-over-year decline can primarily be attributed to rise in the company’s operating expenses.
Non-GAAP net income came in at $18.6 million compared with $19.9 million in the year-ago quarter.
Inside the Headlines
Quarterly net revenues grew 10.9% year over year to $366.8 million. The top line also outpaced the Zacks Consensus Estimate of $351 million. Strong growth across all the company’s three segments drove the overall top line.
NETGEAR, Inc. Price, Consensus and EPS Surprise
NETGEAR, Inc. Price, Consensus and EPS Surprise | NETGEAR, Inc. Quote
Operating Metrics
Non-GAAP gross margin was 30.2% compared with 28.4% in the year-ago quarter.
Total non-GAAP operating expenses were $88.9 million, up 35.1% year over year. Non-GAAP operating margin was 5.9% compared with 8.5% in the prior-year quarter.
Segmental Performance
Net revenues from Arlo increased 33.2% year over year to $104.8 million. The rise was driven by the rapid expansion of smart camera market combined with the success of Arlo Pro 2 camera.
Connected Homesegment, which includes the industry leading Nighthawk and Orbi brands, generated net revenues of $191.2 million, up 2.9% year over year. The improvement was primarily driven by Orbi, the Nighthawk Pro Gaming Router and the company’s cable modems and gateway.
The SMB segment net revenues increased 7.1% year over year to $70.8 million, primarily due to increased sales from switches. The company is witnessing strength in switching lines especially in the areas of 10-gig multi-gig and POE switches categories.
Cash Flow and Liquidity
During the quarter, NETGEAR used cash flow from operating activities of $16.9 million.
As of Jul 1, 2018, the company had $227.4 million of cash and cash equivalents and $266 million as other accrued current liabilities.
Guidance
For third-quarter 2018, NETGEAR’s management expect net revenues to be between $380 million and $395 million.
Non-GAAP operating margin is projected to be in the range of 4.0-5.0%. GAAP tax rate is expected to be approximately 108% while non-GAAP tax rate is expected to be 23.5%.
Zacks Rank & Stocks to Consider
NETGEAR currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same space are Adobe Systems Incorporated (ADBE - Free Report) , Cisco Systems, Inc. (CSCO - Free Report) and AMETEK, Inc. (AME - Free Report) . While Adobe Systems sports a Zacks Rank #1 (Strong Buy), Cisco Systems and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Adobe Systems surpassed estimates in each of the trailing four quarters with an average beat of 8.94%.
Cisco Systems exceeded estimates thrice in the trailing four quarters with an average beat of 2.50%.
AMETEK surpassed estimates in each of the trailing four quarters with an average beat of 6.03%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>