Netgear Inc. (NASDAQ:NTGR) Q1 2019 Earnings Conference Call - Final Transcript

Apr 24, 2019 • 05:00 pm ET

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Netgear Inc. (NASDAQ:NTGR) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon. My name is Jodi and I will be your conference operator today. At this time, I would like to welcome everyone to the NETGEAR First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

Chris Genualdi, Director of Investor Relations, you may begin your conference.

Executive
Christopher Genualdi

Thank you, Operator. Good afternoon, and welcome to NETGEAR's first quarter of 2019 financial results conference call. Joining us from the company are Mr. Patrick Lo, Chairman and CEO; and Mr. Bryan Murray, CFO.

The format of the call will start with a review of the financials for the first quarter provided by Bryan followed by details and commentary on the business provided by Patrick and finish with second quarter of 2019 guidance provided by Bryan. We will then have time for any questions. If you have not received a copy of today's release please visit NETGEAR's Investor Relations website at www.netgear.com.

Before we begin the formal remarks, we advise you that today's conference call contains forward-looking statements. Forward-looking statement includes statements regarding expected revenue, operating margins, tax rates, expenses and future business outlook. Actual results or trends could differ materially from those contemplated by these forward-looking statements.

For more information please refer to the risk factors discussed in NETGEAR's periodic filings with the SEC, including the most recent Form 10-K. Any forward-looking statements that we make on this call are based on assumptions as of today and NETGEAR undertakes no obligation to update these statements as a result of new information or future events.

In addition several non-GAAP financial measures will be mentioned on this call. A reconciliation of the non-GAAP to GAAP measures can be found in today's press release on our Investor Relations website.

At this time, I would now like to turn the call over to Mr. Bryan Murray.

Executive
Bryan Murray

Thank you, Christopher, and thank you, everyone for joining today's call. Results for the first quarter of 2019 came in at the high end of our guidance range for net revenue and slightly above the range in non-GAAP operating margin.

Our success was driven by the Orbi lines of mesh WiFi systems, the Nighthawk Pro Gaming line, cable modems and gateways, and our SMB switching portfolio. Overall NETGEAR net revenue for the first quarter ended March 31st, 2019 was $249.1 million, which is up 1.6% on a year-over-year basis and down 13.8% on a sequential basis. Sequential decline is primarily due to typical seasonality as consumer spending slows following the holiday season.

Looking at net revenue by geography. We generated $148 million of net revenue in the Americas, which is down 7.5% year-over-year and down 22.2% on a sequential basis. The year-over-year drop in North America was due to reduced service provider sales. In Q1 the U.S. retail WiFi market declined 8% relative to the prior year comparable period.

This was primarily due to the accelerated decline of the