NETGEAR (NASDAQ:NTGR) Issues Quarterly Earnings Results, Beats Estimates By $0.15 EPS

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

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 Stock Performance

Shares of NTGR traded down $0.08 during trading hours on Thursday, reaching $24.30. 280,633 shares of the company traded hands, compared to its average volume of 376,693. The stock’s fifty day moving average is $23.76 and its 200 day moving average is $23.23. NETGEAR has a 1-year low of $19.00 and a 1-year high of $36.86. The stock has a market cap of $652.21 million, a P/E ratio of -27.61 and a beta of 1.20.

Wall Street Analysts Forecast Growth

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 assigned a Hold rating and one has given a Sell rating to the company’s stock. According to MarketBeat, the company has a consensus rating of “Hold” and a consensus price target of $36.00.

Insider Transactions at NETGEAR

In other news, insider Pramod Badjate sold 3,000 shares of the stock in a transaction that occurred on Friday, July 31st. The stock was sold at an average price of $23.88, for a total value of $71,640.00. Following the completion of the transaction, the insider directly owned 154,073 shares of the company’s stock, valued at approximately $3,679,263.24. This represents a 1.91% decrease in their position. The sale was disclosed in a filing with the SEC, which is accessible through the SEC website. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, Director Sarah Butterfass sold 2,704 shares of the firm’s stock in a transaction that occurred on Monday, June 1st. The stock was sold at an average price of $26.90, for a total value of $72,737.60. Following the transaction, the director owned 38,953 shares of the company’s stock, valued at $1,047,835.70. This trade represents a 6.49% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 12,085 shares of company stock valued at $313,933. Company insiders own 3.10% of the company’s stock.

Institutional Investors Weigh In On NETGEAR

Several institutional investors and hedge funds have recently made changes to their positions in the company. Dimensional Fund Advisors LP lifted its holdings in NETGEAR by 5.5% during the 3rd quarter. Dimensional Fund Advisors LP now owns 1,636,697 shares of the communications equipment provider’s stock valued at $53,010,000 after purchasing an additional 85,228 shares during the last quarter. Windward Management LP acquired a new stake in shares of NETGEAR during the fourth quarter worth approximately $35,468,000. Arrowstreet Capital Limited Partnership boosted its holdings in shares of NETGEAR by 17.1% in the 3rd quarter. Arrowstreet Capital Limited Partnership now owns 808,805 shares of the communications equipment provider’s stock worth $26,197,000 after acquiring an additional 117,824 shares in the last quarter. State Street Corp boosted its holdings in shares of NETGEAR by 4.7% in the 4th quarter. State Street Corp now owns 807,525 shares of the communications equipment provider’s stock worth $19,809,000 after acquiring an additional 36,499 shares in the last quarter. Finally, Jacobs Levy Equity Management Inc. grew its position in NETGEAR by 43.7% during the 3rd 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. Institutional investors and hedge funds own 82.97% of the company’s stock.

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.