NETGEAR (NASDAQ:NTGR) Issues Quarterly Earnings Results

NETGEAR (NASDAQ:NTGR) issued its quarterly earnings results on Thursday. The communications equipment provider reported $0.16 earnings per share for the quarter, topping analysts’ consensus estimates of $0.01 by $0.15, FiscalAI reports. NETGEAR had a negative return on equity of 2.71% and a negative net margin of 3.58%.The business had revenue of $168.56 million for the quarter, compared to analyst estimates of $157.80 million. During the same quarter in the previous year, the firm earned $0.06 earnings per share. The company’s revenue was down 1.2% on a year-over-year basis.

Here are the key takeaways from NETGEAR’s conference call:

• Enterprise revenue grew 7.7% year over year to $89 million, led by Pro AV managed switches and strength in the Americas and EMEA. Enterprise now represents about 53% of total revenue and delivered a record 54.1% gross margin.
• Consolidated Q2 results exceeded the high end of guidance, with revenue of $168.6 million, non-GAAP operating margin of 2.4%, and non-GAAP EPS of $0.16. Gross margin expanded 360 basis points year over year to 41.4%, supported by the higher-margin enterprise mix and acquired switch operating-system technology.
• NETGEAR reported continued progress in its software and services transformation, including the Align platform and an enhanced Insight offering. Annual recurring revenue increased 15% year over year to $41.6 million, with 558,000 recurring subscribers exiting the quarter.
• Consumer revenue fell 9.4% year over year to $79.6 million, while gross margin declined to 27.3% amid memory-cost inflation, aggressive promotions, and supply constraints. Management expects these pressures to weigh more heavily in Q3 and projects total revenue of $165 million-$175 million and non-GAAP operating margin between -3% and 0%.
• APAC enterprise revenue declined 16% year over year as NETGEAR restructures its go-to-market model and reduces distribution layers. The company expects sequential growth to resume in Q4 under new regional leadership, but near-term execution remains a headwind.

NETGEAR Price Performance

NASDAQ:NTGR traded down $0.08 during midday trading on Thursday, hitting $24.30. The company’s stock had a trading volume of 280,633 shares, compared to its average volume of 472,499. The firm’s 50 day moving average is $23.76 and its 200-day moving average is $23.23. The firm has a market cap of $652.21 million, a P/E ratio of -27.61 and a beta of 1.20. NETGEAR has a fifty-two week low of $19.00 and a fifty-two week high of $36.86.

Insider Buying and Selling

In related news, insider Pramod Badjate sold 3,000 shares of the firm’s stock in a transaction dated Friday, July 31st. The stock was sold at an average price of $23.88, for a total transaction of $71,640.00. Following the sale, the insider directly owned 154,073 shares of the company’s stock, valued at $3,679,263.24. This trade represents a 1.91% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, Director Laura Durr sold 1,000 shares of the business’s stock in a transaction on Tuesday, June 2nd. The shares were sold at an average price of $26.76, for a total transaction of $26,760.00. Following the completion of the transaction, the director owned 42,059 shares of the company’s stock, valued at approximately $1,125,498.84. This represents a 2.32% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 12,085 shares of company stock worth $313,933 over the last ninety days. 3.10% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On NETGEAR

Several hedge funds and other institutional investors have recently added to or reduced their stakes in NTGR. Dimensional Fund Advisors LP boosted its stake in shares of NETGEAR by 5.5% in the third quarter. Dimensional Fund Advisors LP now owns 1,636,697 shares of the communications equipment provider’s stock worth $53,010,000 after acquiring an additional 85,228 shares during the last quarter. Windward Management LP purchased a new stake in shares of NETGEAR in the 4th quarter valued at approximately $35,468,000. Arrowstreet Capital Limited Partnership lifted its holdings in NETGEAR by 17.1% in the third quarter. Arrowstreet Capital Limited Partnership now owns 808,805 shares of the communications equipment provider’s stock valued at $26,197,000 after acquiring an additional 117,824 shares during the last quarter. State Street Corp lifted its holdings in NETGEAR by 4.7% in the fourth quarter. State Street Corp now owns 807,525 shares of the communications equipment provider’s stock valued at $19,809,000 after acquiring an additional 36,499 shares during the last quarter. Finally, Jacobs Levy Equity Management Inc. increased its stake in NETGEAR by 43.7% during the third quarter. Jacobs Levy Equity Management Inc. now owns 717,973 shares of the communications equipment provider’s stock worth $23,255,000 after acquiring an additional 218,347 shares during the last quarter. 82.97% of the stock is owned by hedge funds and other institutional investors.

Analyst Ratings Changes

Separately, Weiss Ratings reissued a “sell (d)” rating on shares of NETGEAR in a research report on Wednesday, June 24th. Two equities research analysts have rated the stock with a Buy rating, one has issued a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat, NETGEAR presently has an average rating of “Hold” and an average target price of $36.00.

About NETGEAR

NETGEAR, Inc (NASDAQ: NTGR) is a global provider of networking solutions for consumer, business and service provider markets. The company designs, develops and markets a comprehensive portfolio of products that enable high-speed connectivity, data storage and network security for homes, small to medium-sized businesses and large enterprises.

Its product lineup includes Wi-Fi routers, mesh networking systems, cable modems, mobile broadband gateways and Ethernet switches—offered in both managed and unmanaged configurations.