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A month has gone by since the last earnings report for NETGEAR, Inc. (NTGR). Shares have added about 9.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NETGEAR due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NETGEAR Q3 Earnings and Revenues Top Estimates
NETGEAR reported third-quarter 2024 non-GAAP earnings of 17 cents per share, which beat the Zacks Consensus Estimate of a loss of 4 cents. The company had reported non-GAAP earnings of 23 cents in the year-ago quarter.
NETGEAR generated net revenues of $182.9 million, beating the consensus estimate by 4.5%. The figure also beat the guidance of $170- $180 million. Revenues improved 27.1% sequentially. But the metric was down 7.6% on a year-over-year basis. The company completed a successful destocking plan, leading to a $27 million reduction in inventory in the third quarter. This is expected to help it to align sell-in with sell-through with channel partners, thereby increasing revenue predictability. NETGEAR also witnessed a 22% spike in recurring revenues in the quarter under review. It now has 555,000 recurring subscribers.
Region-wise, net revenues from the Americas were $127.8 million (70% of total revenues), down 9.4% year over year. Europe, the Middle East and Africa generated revenues (18%) of $32.8 million, down 8.1%. Revenues from the Asia Pacific region (12%) increased 5.5% year over year to $22.3 million.
Segmental Details
CHP segment (which includes Orbi, Nighthawk and Armor brands) generated revenues of $104.3 million, down 18.1% year over year but up 24.1% sequentially. The segment continues to witness strength in the premium products portfolio and saw positive demand trends for new M7 Pro mobile hotspots and Nighthawk products. Revenues from the Service provider channel were $22.9 million, gaining from the earlier launch of M7 Pro mobile hotspots.
Driven by ongoing momentum for ProAV managed switch products (which grew in double digits year over year), revenues from NFB unit jumped 11.4% year over year and 31.2% sequentially to $78.5 million.
Adjusted gross margin decreased to 31.1% from 35% year over year. Non-GAAP operating income was $1.6 million compared with operating income of $5.3 million in the year-ago quarter.
Non-GAAP operating expenses were $55.3 million, down 13.7%.