NETGEAR beats Q2 revenue expectations

Overview

• NETGEAR Q2 revenue up 18.5% yr/yr, beating analysts estimates

• GAAP gross margin hits record 37.5%, up 1,540 bps from Q2 prior yr

• Co completes Exium acquisition to enhance NFB security offerings

Outlook

• NETGEAR expects Q3 revenue between $165 mln and $180 mln

• Company anticipates Q3 GAAP operating margin of -11.0% to -8.0%

• NETGEAR sees Q3 non-GAAP operating margin of -5.5% to -2.5%

• Company expects Q3 GAAP tax expense of $0.8 mln to $1.8 mln

Result Drivers

• PROAV DEMAND - Strong demand for ProAV solutions drove NFB segment revenue up 38% yr/yr, despite supply constraints

• PRODUCT MIX - Favorable product mix and operational improvements led to better-than-expected results in Home Networking segment

• EXIUM ACQUISITION - Acquisition of Exium enhances security offerings, expected to drive future growth

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 1 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the communications & networking peer group is "buy"

• Wall Street's median 12-month price target for NETGEAR Inc is $29.00, about 13.5% above its July 29 closing price of $25.09

Press Release: ID:nBwb1s0bSa