Netgear Inc. (NASDAQ:NTGR) Q4 2018 Earnings Conference Call Transcript

Feb 06, 2019 • 05:00 pm ET

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Netgear Inc. (NASDAQ:NTGR) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the NETGEAR Fourth Quarter and Full-Year 2018 Earnings Conference Call. (Operator Instructions) Also, as a reminder, this conference call is being recorded.

At this time, I'd like to turn the call over to your host to Chris Genualdi. Please go ahead, sir.

Executive
Christopher Genualdi

Thank you, operator. Good afternoon, and welcome to NETGEAR's fourth-quarter and full-year 2018 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 fourth quarter and full year, provided by Bryan, followed by details and commentary on the business provided by Patrick, and finish with first quarter of 2019 guidance provided by Bryan. We'll then have time for any questions. If you've 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 statements include 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-Q.

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. On December 31st, we completed the spin-off of the Arlo business through a distribution of Arlo Technologies' common stock to NETGEAR's shareholders. Upon the completion of the distribution, NETGEAR no longer owns any shares of Arlo common stock. Arlo's financial results for all historical periods, including the fourth quarter of 2018 during which the distribution occurred will now be reclassified into NETGEAR's discontinued operations.

The results discussed on this call will be focused on NETGEAR continuing operations only and will not include historical results for discontinued operations. We'd like to acknowledge all of the hard work from both the NETGEAR and Arlo teams that went into completing the spin.

Now, turning to our results for the fourth quarter and full year of 2018. For the full year of 2018, NETGEAR net revenues were $1.06 billion, which was up 1.9% compared to full-year 2017's net revenue. Full-year non-GAAP operating income was $76.3 million, resulting in a non-GAAP operating margin of 7.2% for the full year. The reconciliation from GAAP to non-GAAP is detailed in our earnings release distributed earlier today. Non-GAAP diluted earnings per share for the