NETGEAR's Q4 Loss Narrower Than Expected, Revenues Down

NETGEAR, Inc. NTGR reported fourth-quarter 2024 non-GAAP loss per share of 6 cents, which was significantly narrower than the Zacks Consensus Estimate of a loss of 25 cents. The company had reported non-GAAP earnings of 9 cents in the year-ago quarter. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.NETGEAR generated net revenues of $182.4 million, beating the consensus estimate by 8.9%. The figure also beat the guidance of $160-$175 million. Revenues were down 3.3% on a year-over-year basis. The company completed a successful destocking plan, leading to a $86 million or 35% reduction in inventory in 2024. This is expected to help NTGR to align sell-in with sell-through with channel partners, thereby increasing revenue predictability. NETGEAR generated  $35 million of recurring revenues in 2024. It now has 556,000 recurring subscribers. NETGEAR, Inc. Stock Price, Consensus and EPS Surprise NETGEAR, Inc. price-consensus-eps-surprise-chart | NETGEAR, Inc. QuoteNTGR noted that within NETGEAR for Business (“NFB”) segment, though demand for its ProAV line of managed switches remains robust, it is witnessing lengthy lead times for supply. This is likely to result in lower shipping of these products in the first quarter, leading to a muted revenue performance.  Within the Connected Home (“CHP”) segment, it is seeing signs of market stability and forecasts normal seasonality in the retail portion of this business for the first quarter. Revenues from the service provider channel are expected to be lower sequentially to $15 million, while overall first quarter net revenues are predicted to be between $145 million and $160 million.In the past year, shares of NTGR have gained 96.5% compared with the Computer Networking industry’s growth of 24.7%.Image Source: Zacks Investment ResearchNETGEAR Q4 Performance DetailsCHP segment (which includes Orbi, Nighthawk and Armor brands) generated revenues of $101.6 million, down 14.2% year over year and 2.6% sequentially. The segment continues to witness strength in the premium products portfolio and saw positive demand trends for WiFi 7 Orbi and Nighthawk products. Revenues from the Service provider channel were $19.8 million, gaining from the strong uptake of Nighthawk 5G and WiFi 7 mobile hotspots, Nighthawk WiFi 7 routers and Orbi WiFi 7 mesh products.  Driven by ongoing momentum for ProAV managed switch products (which grew in double digits year over year), revenues from NFB segment jumped 14.9% year over year and 2.9% sequentially to $80.8 million.Adjusted gross margin increased to 32.8% from 35% year over year. Non-GAAP operating loss was $4.2 million against operating income of $2.7 million in the year-ago quarter.Non-GAAP operating expenses were $63.9 million, up 1%.Region-wise, net revenues from the Americas were $122.9 million (67% of total revenues), down 1.6% year over year. Europe, the Middle East and Africa generated revenues (20%) of $35.9 million, down 5.2%. Revenues from the Asia Pacific region (13%) down 9% year over year to $23.6 million.NTGR’s Cash Flow & LiquidityFor the quarter ended Dec. 31, 2024, NETGEAR generated $21.5 million in cash from operations. It also had $408.7 million in cash and cash equivalents and short-term investments and $395.7 million of total current liabilities. NTGR repurchased 423,000 shares worth $10.7 million in the quarter under review. In 2024, NTGR bought back $33.6 million worth of shares. The company has 3.4 million shares left under existing authorization. NTGR’s Q1 GuidanceGross margin is expected to be same as the fourth quarter of 2024. Operating margins are likely to be affected by the muted top line.GAAP operating margin is forecasted to be between (16.4)% and (13.4)%. Non-GAAP operating margin is estimated in the band of (10)-(7)%. GAAP tax expense is expected to be between $1 million and $2 million, with a non-GAAP tax benefit estimated to be between $0.5 million and $1 million for the first quarter of 2025.NTGR's Zacks RankNETGEAR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Recent Performance of Other Companies in Broader Tech SpaceDigi International DGII reported first quarter of fiscal 2025 earnings of 50 cents per share, in line with the Zacks Consensus Estimate. The figure compares with earnings of 48 cents per share a year ago. It posted revenues of $104 million, missing the Zacks Consensus Estimate by 0.3%. It reported revenues of $106.09 million in the year ago quarter. CACI International Inc CACI reported EPS of $5.95 for the second quarter of fiscal 2025, beating the Zacks Consensus Estimate by 15.1%. CACI reported revenues of $2.1 billion, which surpassed the consensus mark by 5.76%. The top line increased 14.5% from the prior-year quarter, primarily driven by 8.1% organic growth.Seagate Technology Holdings plc STX reported second-quarter fiscal 2025 non-GAAP earnings of $2.03 per share, beating the Zacks Consensus Estimate by 7.98%. The figure was toward the high end of management’s guidance of $1.85 per share (+/- 20 cents). Non-GAAP revenues of $2.325 billion beat the Zacks Consensus Estimate by 0.64%. The figure increased 49.5% year over year and 7.2% sequentially. This upside resulted from strong momentum in the nearline cloud segment and significant improvements in the enterprise markets. 7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Seagate Technology Holdings PLC (STX): Free Stock Analysis Report Digi International Inc. (DGII): Free Stock Analysis Report NETGEAR, Inc. (NTGR): Free Stock Analysis Report CACI International, Inc. (CACI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks