NETGEAR® Reports Third Quarter 2024 Results

About this update from Netgear, Inc.

Q3 net revenue of $182.9 million , above the high end of guidance Achieved GAAP and non-GAAP profitability, above the high end of guidance Fifth consecutive quarter of free cash flow generation Added more than $100 million to cash and cash equivalents to end Q3 with $395.7 million SAN JOSE, Calif. --(BUSINESS WIRE)-- NETGEAR, Inc. (NASDAQ: NTGR), a global leader in intelligent networking solutions for businesses, homes, and service providers, today reported financial results for the third quarter ended September 29, 2024 . Third quarter 2024 net revenue of $182.9 million , a decrease of 7.6% from the comparable prior-year quarter. Third quarter 2024 GAAP operating income of $95.8 million , or 52.4% of net revenue, as compared to operating loss of $0.6 million , or (0.3)% of net revenue, in the comparable prior-year quarter. Third quarter 2024 non-GAAP operating income of $1.6 million , or 0.9% of net revenue, as compared to non-GAAP operating income of $5.3 million , or 2.7% of net revenue, in the comparable prior-year quarter. Third quarter 2024 GAAP net income per diluted share of $2.90 , as compared to net loss per diluted share of $2.87 in the comparable prior-year quarter. Third quarter 2024 non-GAAP net income per diluted share of $0.17 , as compared to non-GAAP net income per diluted share of $0.23 in the comparable prior-year quarter. Cash, cash equivalents and short-term investments ended at $395.7 million , up $101.4 million from the previous quarter. The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis. CJ Prober, Chief Executive Officer of NETGEAR, commented, "Today marks my nine-month anniversary with NETGEAR, and I am thrilled with our progress and the speed at which we are executing on our transformation. Q3 was an excellent quarter where we exceeded revenue and operating income guidance, achieved profitability, and increased our cash balance by over $100 million .” Mr. Prober continued, “Our ProAV business had another record quarter in end user sales, and we added over 30 new manufacturing partners to strengthen our differentiation and software leadership in this category. We also launched several innovative products, including the M7 Pro, the industry’s first mobile hotspot that combines 5G and WIFI 7. With great executives joining the team and already driving positive early results, we are confident that we are positioning NETGEAR to fully capitalize on numerous market opportunities to generate long-term growth and profitability and we remain focused on creating long-term value for shareholders.” Bryan Murray , Chief Financial Officer of NETGEAR, added, “We continued to execute on our plan to reduce our inventory, which declined by $27.0 million sequentially and represents less than 4 months of inventory, including finished goods and components, for the first time in over 3 years. Gross margin for the quarter exceeded 30% and NFB topline grew over 10% year over year and returned to historical levels on contribution margin. In Q3 we also delivered a fifth consecutive quarter of free cash flow generation, even after removing the effect of the TP-Link settlement, and we exited the quarter with $395.7 million in cash and cash equivalents, a $101.4 million sequential increase. In addition, we repurchased approximately $1.5 million of NETGEAR common stock before being restricted from further repurchases in the quarter due to trading restrictions associated with our TP-Link settlement negotiations. We expect to resume our share repurchase program in Q4 as we continue to believe that share repurchases are an important part of our capital allocation plan.” Business Outlook Mr. Murray continued, “As we experienced in the third quarter, we expect to continue to see more predictable performance that is aligned with the market for both of our businesses. Within NFB, we expect to experience continued growth led by our ProAV line of managed switches. While we are seeing the signs of market recovery in CHP, we expect increased promotional activity within our retail business due in part to the holiday period. As we were able to pull forward the launch of our M7 Pro mobile hotspot into the third quarter, we expect revenue from the service provider channel to be approximately $20 million in Q4, down slightly on a sequential basis. Accordingly, we expect fourth quarter net revenue to be in the range of $160 million to $175 million . We expect gross margins and operating margins to continue to be impacted by our inventory reduction efforts and higher than expected transportation costs due to a variety of factors, including the Red Sea shipping crisis. We also expect margins to be impacted from the increased promotional activities within our CHP retail business. Accordingly, we expect our fourth quarter GAAP operating margin to be in the range of (12.4)% to (9.4)%, and non-GAAP operating margin to be in the range of (8.0)% to (5.0)%. Our GAAP tax benefit is expected to be in the range of $2.0 million to $3.0 million , and our non-GAAP tax benefit is expected to be in the range of $0.0 million to $1.0 million for the fourth quarter of 2024.” A reconciliation between the Business Outlook on a GAAP and non-GAAP basis is provided in the following table: Three months ending December 31, 2024 (In millions, except for percentage data) Operating Margin Rate Tax Expense (Benefit) GAAP (12.4)% - (9.4)% $(3.0) - $(2.0) Estimated adjustments for1: Stock-based compensation expense 3.9% - Restructuring and other charges 0.5% - Non-GAAP tax adjustments - $2.0 Non-GAAP (8.0)% - (5.0)% $(1.0) - $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 third quarter results and discuss management's expectations for the fourth quarter of 2024 today, Wednesday, October 30, 2024 at 5 p.m. ET ( 2 p.m. PT ). The toll-free dial-in number for the live audio call is (888) 660-6392. The international dial-in number for the live audio call is (929) 203-0899. The conference ID for the call is 1030183. 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. Founded in 1996 and headquartered in the USA , NETGEAR® (NASDAQ: NTGR) is a global leader in innovative networking technologies for businesses, homes, and service providers. NETGEAR delivers a wide range of award-winning, intelligent solutions designed to unleash the full potential of connectivity and power extraordinary experiences. For businesses, NETGEAR offers reliable, easy-to-use, high-performance networking solutions, including switches, routers, access points, software, and AV over IP technologies, tailored to meet the diverse needs of organizations of all sizes. NETGEAR’s Connected Home products deliver advanced connectivity, powerful performance, and enhanced security features right out of the box, designed to keep families safe online, whether at home or on the go. More information is available from the NETGEAR Press Room or by calling (408) 907-8000. Connect with NETGEAR: Facebook, Instagram and the NETGEAR blog at NETGEAR.com . © 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. Source: NETGEAR-F 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, including expectations regarding growth, revenue, operating margin and gross margin; creating long-term value for shareholders; positioning NETGEAR for long term success; long-term potential and profitable growth; NETGEAR’s continued NFB growth led by the ProAV line of managed switches; expectations regarding more predictable performance that is aligned to the market; expectations regarding volatility from shifting channel inventory levels; expectations regarding gross margins and operating margins being impacted by inventory reduction efforts and transportation costs; revenue from the service provider channel; timing of the launch of next generation 5G mobile hotspots; expectations regarding continuing market demand for the NETGEAR’s products and services; expectations regarding expected tax benefits or tax expenses; and plans to repurchase shares of NETGEAR common stock. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for NETGEAR’s products and services may be lower than anticipated; NETGEAR may be unsuccessful, or experience delays, in manufacturing and distributing its new and existing products and services; consumers may choose not to adopt NETGEAR’s new product and services offerings or adopt competing products and services; NETGEAR may fail to manage costs, including the cost of key components, the cost of air freight and ocean freight, and the cost of developing new products and manufacturing and distribution of its existing offerings; NETGEAR may fail to successfully manage channel inventory levels; NETGEAR may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and NETGEAR’s planned usage of such resources, including potential repurchases of NETGEAR’s common stock; changes in NETGEAR’s stock price and developments in the business that could increase NETGEAR’s cash needs; fluctuations in foreign exchange rates; loss of services of key personnel may affect NETGEAR’s ability to executive on business strategy effectively; and the actions and financial health of NETGEAR’s customers, including NETGEAR’s ability to collect receivables as they become due. 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 NETGEAR’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 NETGEAR’s quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2024 , filed with the Securities and Exchange Commission on August 2, 2024 . 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 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, 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: 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. 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. Source: NETGEAR-F -Financial Tables Attached- NETGEAR, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) September 29, 2024 December 31, 2023 ASSETS Current assets: Cash and cash equivalents $ 273,767 $ 176,717 Short-term investments 121,965 106,931 Accounts receivable, net 177,326 185,059 Inventories 161,976 248,851 Prepaid expenses and other current assets 34,302 30,421 Total current assets 769,336 747,979 Property and equipment, net 10,640 8,273 Operating lease right-of-use assets 30,758 37,285 Goodwill 36,279 36,279 Other non-current assets 15,623 17,326 Total assets $ 862,636 $ 847,142 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 52,035 $ 46,850 Accrued employee compensation 19,964 21,286 Other accrued liabilities 155,193 168,084 Deferred revenue 29,596 27,091 Income taxes payable 14,569 1,037 Total current liabilities 271,357 264,348 Non-current income taxes payable 8,510 12,695 Non-current operating lease liabilities 22,016 29,698 Other non-current liabilities 10,423 4,906 Total liabilities 312,306 311,647 Stockholders’ equity: Common stock 29 30 Additional paid-in capital 987,576 967,651 Accumulated other comprehensive income 152 136 Accumulated deficit (437,427 ) (432,322 ) Total stockholders’ equity 550,330 535,495 Total liabilities and stockholders’ equity $ 862,636 $ 847,142 NETGEAR, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share and percentage data) (Unaudited) Three Months Ended Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 Net revenue $ 182,854 $ 143,900 $ 197,845 $ 491,340 $ 552,166 Cost of revenue 126,371 112,077 128,911 354,797 368,550 Gross profit 56,483 31,823 68,934 136,543 183,616 Gross margin 30.9 % 22.1 % 34.8 % 27.8 % 33.3 % Operating expenses: Research and development 20,905 19,851 20,738 60,983 63,703 Sales and marketing 31,196 29,757 30,865 91,482 97,226 General and administrative 8,357 19,186 16,364 45,610 49,136 Litigation reserves, net (100,855 ) 8,200 178 (92,625 ) 178 Restructuring and other charges 1,072 1,688 366 3,792 2,703 Intangibles impairment — — 1,071 — 1,071 Total operating expenses (39,325 ) 78,682 69,582 109,242 214,017 Income (loss) from operations 95,808 (46,859 ) (648 ) 27,301 (30,401 ) Operating margin 52.4 % (32.6 )% (0.3 )% 5.6 % (5.5 )% Other income, net 3,485 2,713 2,280 9,048 11,685 Income (loss) before income taxes 99,293 (44,146 ) 1,632 36,349 (18,716 ) Provision for income taxes 14,219 1,029 86,431 15,100 84,382 Net income (loss) $ 85,074 $ (45,175 ) $ (84,799 ) $ 21,249 $ (103,098 ) Net income (loss) per share: Basic $ 2.96 $ (1.56 ) $ (2.87 ) $ 0.73 $ (3.52 ) Diluted $ 2.90 $ (1.56 ) $ (2.87 ) $ 0.72 $ (3.52 ) Weighted average shares used to compute net income (loss) per share: Basic 28,705 28,883 29,524 28,992 29,266 Diluted 29,364 28,883 29,524 29,389 29,266 NETGEAR, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 29, 2024 October 1, 2023 Cash flows from operating activities: Net income (loss) $ 21,249 $ (103,098 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 4,761 5,491 Stock-based compensation 16,052 13,637 Gain on investments, net (2,971 ) (2,301 ) Intangibles impairment — 1,071 Deferred income taxes 254 82,205 Provision for excess and obsolete inventory 5,084 2,705 Changes in assets and liabilities: Accounts receivable, net 7,733 76,585 Inventories 81,790 15,990 Prepaid expenses and other assets 3,146 (3,020 ) Accounts payable 4,727 (38,443 ) Accrued employee compensation (1,322 ) (4,952 ) Other accrued liabilities (9,608 ) (46,929 ) Deferred revenue 3,073 4,771 Income taxes payable 9,347 (3,130 ) Net cash provided by operating activities 143,315 582 Cash flows from investing activities: Purchases of short-term investments (107,454 ) (97,291 ) Proceeds from maturities of short-term investments 90,290 85,006 Purchases of property and equipment (6,502 ) (3,601 ) Purchases of long-term investments (225 ) (585 ) Net cash used in investing activities (23,891 ) (16,471 ) Cash flows from financing activities: Repurchases of common stock (22,917 ) — Restricted stock unit withholdings (3,330 ) (2,742 ) Proceeds from exercise of stock options 308 — Proceeds from issuance of common stock under employee stock purchase plan 3,565 3,590 Net cash (used in) provided by financing activities (22,374 ) 848 Net increase (decrease) in cash and cash equivalents 97,050 (15,041 ) Cash and cash equivalents, at beginning of period 176,717 146,500 Cash and cash equivalents, at end of period $ 273,767 $ 131,459 NETGEAR, INC. RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (In thousands, except percentage data) (Unaudited) STATEMENT OF OPERATIONS DATA: Three Months Ended Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 GAAP gross profit $ 56,483 $ 31,823 $ 68,934 $ 136,543 $ 183,616 GAAP gross margin 30.9 % 22.1 % 34.8 % 27.8 % 33.3 % Amortization of intangibles — — — — 257 Stock-based compensation expense 444 413 354 1,222 1,047 Non-GAAP gross profit $ 56,927 $ 32,236 $ 69,288 $ 137,765 $ 184,920 Non-GAAP gross margin 31.1 % 22.4 % 35.0 % 28.0 % 33.5 % GAAP research and development $ 20,905 $ 19,851 $ 20,738 $ 60,983 $ 63,703 Stock-based compensation expense (868 ) (844 ) (841 ) (2,410 ) (3,050 ) Non-GAAP research and development $ 20,037 $ 19,007 $ 19,897 $ 58,573 $ 60,653 GAAP sales and marketing $ 31,196 $ 29,757 $ 30,865 $ 91,482 $ 97,226 Stock-based compensation expense (1,520 ) (1,235 ) (1,271 ) (3,992 ) (4,099 ) Non-GAAP sales and marketing $ 29,676 $ 28,522 $ 29,594 $ 87,490 $ 93,127 GAAP general and administrative $ 8,357 $ 19,186 $ 16,364 $ 45,610 $ 49,136 Stock-based compensation expense (2,788 ) (3,396 ) (1,819 ) (8,428 ) (5,441 ) Non-GAAP general and administrative $ 5,569 $ 15,790 $ 14,545 $ 37,182 $ 43,695 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 Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 GAAP total operating expenses $ (39,325 ) $ 78,682 $ 69,582 $ 109,242 $ 214,017 Stock-based compensation expense (5,176 ) (5,475 ) (3,931 ) (14,830 ) (12,590 ) Intangibles impairment — — (1,071 ) — (1,071 ) Restructuring and other charges (1,072 ) (1,688 ) (366 ) (3,792 ) (2,703 ) Litigation reserves, net 100,855 (8,200 ) (178 ) 92,625 (178 ) Non-GAAP total operating expenses $ 55,282 $ 63,319 $ 64,036 $ 183,245 $ 197,475 GAAP operating income (loss) $ 95,808 $ (46,859 ) $ (648 ) $ 27,301 $ (30,401 ) GAAP operating margin 52.4 % (32.6 )% (0.3 )% 5.6 % (5.5 )% Amortization of intangibles — — — — 257 Stock-based compensation expense 5,620 5,888 4,285 16,052 13,637 Intangibles impairment — — 1,071 — 1,071 Restructuring and other charges 1,072 1,688 366 3,792 2,703 Litigation reserves, net (100,855 ) 8,200 178 (92,625 ) 178 Non-GAAP operating income (loss) $ 1,645 $ (31,083 ) $ 5,252 $ (45,480 ) $ (12,555 ) Non-GAAP operating margin 0.9 % (21.6 )% 2.7 % (9.3 )% (2.3 )% GAAP other income, net $ 3,485 $ 2,713 $ 2,280 $ 9,048 $ 11,685 Gain/loss on investments, net (49 ) (69 ) (14 ) (17 ) 16 Gain on litigation settlements — — — — (6,000 ) Non-GAAP other income, net $ 3,436 $ 2,644 $ 2,266 $ 9,031 $ 5,701 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 Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 GAAP net income (loss) $ 85,074 $ (45,175 ) $ (84,799 ) $ 21,249 $ (103,098 ) Amortization of intangibles — — — — 257 Stock-based compensation expense 5,620 5,888 4,285 16,052 13,637 Intangibles impairment — — 1,071 — 1,071 Restructuring and other charges 1,072 1,688 366 3,792 2,703 Litigation reserves, net (100,855 ) 8,200 178 (92,625 ) 178 Gain/loss on investments, net (49 ) (69 ) (14 ) (17 ) 16 Gain on litigation settlements — — — — (6,000 ) Non-GAAP tax adjustments 14,203 8,025 85,781 26,816 87,724 Non-GAAP net income (loss) $ 5,065 $ (21,443 ) $ 6,868 $ (24,733 ) $ (3,512 ) NET INCOME (LOSS) PER DILUTED SHARE: GAAP net income (loss) per diluted share $ 2.90 $ (1.56 ) $ (2.87 ) $ 0.72 $ (3.52 ) Amortization of intangibles — — — — 0.01 Stock-based compensation expense 0.19 0.20 0.14 0.55 0.47 Intangibles impairment — — 0.04 — 0.04 Restructuring and other charges 0.04 0.06 0.01 0.13 0.09 Litigation reserves, net (3.43 ) 0.28 0.01 (3.19 ) 0.01 Gain/loss on investments, net — — — — — Gain on litigation settlements — — — — (0.21 ) Non-GAAP tax adjustments 0.47 0.28 2.90 0.94 2.99 Non-GAAP net income (loss) per diluted share 1 $ 0.17 $ (0.74 ) $ 0.23 $ (0.85 ) $ (0.12 ) Shares used in computing GAAP net income (loss) per diluted share 29,364 28,883 29,524 29,389 29,266 Shares used in computing non-GAAP net income (loss) per diluted share 29,364 28,883 29,581 28,992 29,266 1 The per share reconciliation of GAAP to non-GAAP may not aggregate due to both calculations utilizing a different share basis. The net loss per diluted share calculation uses a lower share count as it excludes potentially dilutive shares included in the 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 September 29, 2024 June 30, 2024 March 31, 2024 December 31, 2023 October 1, 2023 Cash, cash equivalents and short-term investments $ 395,732 $ 294,339 $ 289,421 $ 283,648 $ 228,045 Cash, cash equivalents and short-term investments per diluted share $ 13.48 $ 10.19 $ 9.85 $ 9.56 $ 7.71 Accounts receivable, net $ 177,326 $ 147,069 $ 172,771 $ 185,059 $ 200,900 Days sales outstanding (DSO) 88 93 96 89 92 Inventories $ 161,976 $ 188,936 $ 211,270 $ 248,851 $ 280,918 Ending inventory turns 3.1 2.4 2.2 2.0 1.8 Weeks of channel inventory: U.S. retail channel 9.5 9.5 11.2 10.8 11.8 U.S. distribution channel 2.4 2.8 4.0 7.9 5.8 EMEA distribution channel 5.3 5.2 5.9 6.4 7.4 APAC distribution channel 9.5 8.3 8.0 10.0 13.1 Deferred revenue (current and non-current) $ 35,068 $ 34,216 $ 33,714 $ 31,994 $ 29,796 Headcount 638 622 628 635 644 Non-GAAP diluted shares 29,364 28,883 29,395 29,683 29,581 NET REVENUE BY GEOGRAPHY Three Months Ended Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 Americas $ 127,752 70 % $ 95,503 66 % $ 141,018 71 % $ 333,183 67 % $ 379,551 69 % EMEA 32,798 18 % 27,355 19 % 35,684 18 % 91,340 19 % 111,023 20 % APAC 22,304 12 % 21,042 15 % 21,143 11 % 66,817 14 % 61,592 11 % Total $ 182,854 100 % $ 143,900 100 % $ 197,845 100 % $ 491,340 100 % $ 552,166 100 % NETGEAR, INC. SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED) (In thousands) (Unaudited) NET REVENUE BY SEGMENT Three Months Ended Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 NETGEAR for Business $ 78,530 $ 59,867 $ 70,510 $ 207,020 $ 223,679 Connected Home 104,324 84,033 127,335 284,320 328,487 Total net revenue $ 182,854 $ 143,900 $ 197,845 $ 491,340 $ 552,166 SERVICE PROVIDER NET REVENUE Three Months Ended Nine Months Ended September 29, 2024 June 30, 2024 October 1, 2023 September 29, 2024 October 1, 2023 NETGEAR for Business $ 268 $ 202 $ 219 $ 713 $ 427 Connected Home 22,949 19,732 32,403 70,234 71,346 Total service provider net revenue $ 23,217 $ 19,934 $ 32,622 $ 70,947 $ 71,773 View source version on businesswire.com : https://www.businesswire.com/news/home/20241030206080/en/ NETGEAR Investor Relations Erik Bylin [email protected] Source: NETGEAR, Inc.

View stock analysis, news, and events for Netgear, Inc.