Netgear Inc. (NASDAQ:NTGR) Q4 2019 Earnings Conference Call - Final Transcript

Feb 05, 2020 • 05:00 pm ET

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Netgear Inc. (NASDAQ:NTGR) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the NETGEAR Fourth Quarter 2019 Results Conference Call.

[Operator Instructions]

I would now like to hand the conference over to your speaker today, Erik Bylin. Thank you. Please go ahead, sir.

Executive
Erik Bylin

Thank you, David. Good afternoon and welcome to NETGEAR's fourth quarter and full-year 2019 financial results conference call.

Joining us from the company are Mr. Patrick Lo, Chairman and CEO, and Mr. Bryan Murray, CFO. 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 2020 guidance provided by Bryan. We'll then have time for any questions. If you've not received a copy of today's press 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 the 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 forward-looking statements as a result of new information or future events.

In addition, several non-GAAP financial measures will be mentioned on the call today. Reconciliation of the GAAP to non-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, Erik, and thank you everyone for joining today's call.

Net revenue for the fourth quarter ended December 31, 2019, was $253 million, near the top end of our guidance range, but down 12.4% year-over-year and down 4.8% on a sequential basis. As anticipated, we saw visible quarter-over-quarter declines in the Greater China region, while all other regions enjoyed the seasonal holiday boost from an end-user demand perspective. We were able to take the initial step of adjusting channel inventory world-wide to prepare for the strong push to Wi-Fi 6 in 2020.

For the full-year 2019, NETGEAR net revenues were $998.8 million, which is down 5.7%, compared to the year ended December 31, 2018. As presented at our Analyst Day, this past November, we are committed to growing our top and bottom lines going forward, with our strategy of delivering leading products during technology inflections, expanding into new adjacent markets and developing a robust subscription revenue stream. We saw early success in Q4 in Wi-Fi 6, Pro AV and subscriber growth, and we will continue to push in these directions in 2020. We remain confident our strategy will pay off in the years to come.

Non-GAAP operating margins for the fourth quarter came