NETGEAR, Inc NTGR recently announced preliminary results for the fourth quarter of 2023. Management highlighted that the quarterly performance was driven by continued solid underlying demand in the premium portion of its Connected Home or CHP product portfolio. The CHP segment performance primarily gained from the success of its Orbi WiFi 7 launch, which continued throughout the holiday season.

Management also remained positive as its retail channel partners maintained their inventory positions as anticipated. Also, NTGR continued to work with its SMB channel partners to streamline their inventory carrying levels.

However, the performance of the SMB business segment was affected by the prevailing uncertain macro-economic environment owing to rising interest rates, geopolitical turmoil and stagnant GDP growth in certain markets.

NTGR now expects revenues to be between $179 million and $189 million compared with earlier guided range of $175-$190 million.

GAAP operating margin is now forecast to be between (3.0)% and (1.5)% compared with the prior guidance of (4.4)%-(1.4)%. Non-GAAP operating margin is now expected to be between 0% and 1.5% compared with the prior guidance of (2.0)%--1.0%.

NETGEAR, Inc. Price and Consensus

NETGEAR, Inc. price-consensus-chart | NETGEAR, Inc. Quote

Operating margin performance benefited from an increased mix of the company’s premium products within its CHP business, along with SMB revenues (which carry higher margins) remaining unchanged sequentially.

The GAAP tax expense is expected in the range of $1---$2 million, unchanged from the previous guidance. Non-GAAP tax expense is anticipated in the range of $1.5-$2.5 million (previous guidance was in the range of $0-$1 million).

NTGR is scheduled to report full results for its fourth quarter of 2023 on Feb 7, 2024.

Following the announcement, shares are up 2% in the pre-market trading on Feb 1. Shares of the company have lost 26.5% compared with the sub-industry’s gain of 4% in the past year.

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NETGEAR, which currently sports a Zacks Rank #1 (Strong Buy), is a leading provider of advanced, high-performance and premium networking technologies and internet-connected products for consumers, businesses and service providers.

NTGR benefits from the rising demand for robust networking solutions owing to growing number of internet-connected devices, the shift from WiFi 5 and 6 to WiFi 6E and the anticipated WiFi 7, growth of bandwidth-intensive applications such as 8K video streaming and gaming, coupled with anticipated augmented reality or virtual reality and Metaverse.

It had 844,000 paid service subscribers at the end of the last reported quarter, up 26.7% year over year. The company expects to reach about 875,000 paid subscribers by the end of 2023.