NETGEAR (NTGR) 6 Feb 182017 Q4 Earnings call transcript

Good afternoon. My name is Kirsten and I will be your conference operator today. At this time, I would like to welcome everyone to the NETGEAR Fourth Quarter and Fiscal Year 2017 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. time, your like host, this call turn At to over Mr. Instructions] I to would the [Operator Genualdi. Please go ahead, sir.

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

on are Company Christine by quarter start business and the Ms. The the with the from review CFO. and followed us Mr. Lo, by the CEO, Gorjanc, call Chairman the of Patrick. provided fourth of by full Christine, Patrick details format a year and and will commentary provided for Joining financials

We will Christine. Arlo quarter public finish also discuss to by separate first our company, business our plan of with provided separate into guidance XXXX a and

will We for questions. have then time any

www.netgear.com. have of a copy not visit today's you NETGEAR's received Web-site please If at release, Investor Relations

we Before that statements. formal you forward-looking contains begin today's call the remarks, advise conference we

regarding business our expenses, Arlo Forward-looking contemplated statements. revenue, statements plans business, Actual of differ these include forward-looking from outlook. and could results separation regarding statements tax operating trends materially the margins, rates, future by expected the those or

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

reconciliation of to Investor over time, press to this several measures today's the Relations now on non-GAAP In call. will Gorjanc. the Ms. financial would Christine like At non-GAAP A measures mentioned I Web-site. addition, our to found call can be GAAP on release in turn be this

you call. joining thank today's for Thank you, Christopher, and everyone

of than of that intend announced through expected on The separation of be Board less have the public separation NETGEAR. an today's the the shares the newly discuss of pursuit is of XX% NETGEAR unanimously have our federal call, tax to following generally of NETGEAR for We distribute to that a approved is Arlo stockholders purposes. will with the initial from Technologies, to spin-off we the that to We Arlo stock shares offering common lot U.S. Inc., to business just NETGEAR given tax-free IPO, of Directors our income be Arlo retain to that in issued stockholders remaining a effected of currently remaining interest. intended its

Before the XXXX for regarding dive results of the to I'd provide quarter the XXXX. details into further separation, full like and first on commentary fourth year we our

product Arlo Orbi lines. million, is guidance, of the NETGEAR primarily quarter the growth XX, were revenue. the X.X% billion, For year compared revenue the EPS on $X.XX. fourth XXXX revenue up continued by Net came our high a XXXX up and the for on our full-year of for end Overall, in sequential basis. full above XX.X% basis was XXXX revenues $X.XX full a which and net was is year fourth for $XXX.X which year-over-year up to of X.X% December net NETGEAR net XXXX, Non-GAAP quarter ended driven diluted XXXX the

for in are North in report ongoing million, basis. quarter-over-quarter. NETGEAR to the year-over-year as XX.X% net pleased up quarterly XX.X% in revenue as America was EMEA up and net region. Americas is on record $XX.X this well X.X% Net is XX.X% revenue revenue which year-over-year EMEA geography million, up our strength up net for is was sequential again revenue $XXX.X the We further the which a that and reflects once all-time improvement an by Company.

ASC XXXX. quarter-over-quarter. new prior Our January I'd and highlight moment was XXX, X.X% a APAC the to accounting be that for down fourth take We which of earnings. will down the million which financial The cash impact a to not approach the will and quarter cumulative we effect standard, year revenues, result Company's XX.X% of in adopting expect net quarter Company the operations, position. like $XX.X modified brief nature retained adjustment statement timing X, revenue flows, XXXX, effective material to the is to to of comparable revenue from the do results of recognition will and a retrospective electing apply be

expect we to a will the some Additionally, of changes on which classification balance days DSOs. couple add sheet our

will XXXX, net and was million the and including products. and nodes revenue of XX% the X.X The fourth quarter shipped for units, wired and X.X and about Shipments in combined a number million an home respectively. products our The operating expenses the distributed deemed was non-GAAP to XXXX. decrease investment reconciliation the support upside. the mix of sales to Total months year-over-year in non-GAAP including basis, in between was of primarily constituted margin seasonal the units non-GAAP million, were quarter fourth third about gateways increase which to due year-over-year split the split XX respectively. fourth in revenue net point revenue came earlier non-GAAP retail. discussion of products margin The shift XXXX today. deemed X.X% from this promotion our business was of non-GAAP in towards for the between and sequential X.X% follows of quarter XX.X% year XXXX. of about wireless higher of returns XX% XX.X%, which approximately increased is fourth For up and a The wireless million a of introduced channel products in routers wireless to detailed we X.X of quarter points and our to and on, contra-revenue quarter promotion to quarter use XX% From numbers. introduced freight Products while on activities factors, about $XX.X in fourth XX% months quarter at is in XX in shipments, provision comparable gross earnings constituted XX% sequentially. my gross GAAP focus On prior the be contra-revenue channel increased last decline air in was XX% The the the be and wired due to about XX.X% shipment. last compared release activities our

net a during heads by of increased headcount people to XX X,XXX the quarter. Our

expect to the and business for to structure to to guidance the going companies, add headcount do quantify plan NETGEAR We be in standalone XXXX will plan order both in to in the each roles included forward. that for prepare order Arlo the We costs duplicate during our separation. to we both which

was to non-GAAP expect the continue of R&D XXXX. revenue prior expense we Our to of net this absolute therefore X.X% quarter X.X% as in revenue, needed period revenue business, comparable QX and grow X.X% compared as the net in for net and to expense of to R&D fourth our dollars. is in critical year

related be GAAP Our Jobs transition tax of undistributed on the will eight approximately to by enactment effective that Tax repatriation was Cuts material and next earnings. non-recurring the two impacted fourth We million quarter items of of Act. foreign $XX.X recorded a paid the tax of years provisional the rate deemed estimate over the

XX%. charge we deferred million U.S. to for permanent of addition, XX% tax the rate net incurred assets $XX.X In of re-measurement tax the from a the decrease from of

application the As our further issued estimate provisional further by tax new refinement. law, guidance treasury require of on the the may is

earnings, U.S. than addition year. which rate, XXXX. exceeding the quarter due excludes tax lower international was tax adjustments true-up in the in from impact was favorable impact in law, of to the a tax fourth reconciliation non-GAAP XX.X% profits the of The changes at rate the other resulting for to Our of forecast the aforementioned QX our expected non-GAAP arrive to full

$XX.X income QX, line at reported the bottom of of share per earnings net diluted we for share. million per non-GAAP non-GAAP diluted Looking and $X.XX

ended we cash. sheet, with fourth balance million $XXX.X the the XXXX of to Turning quarter in

the from which operating the calculated negative million in Statement activities fourth cash Cash under flows less XXXX, had we For $XX.X capital as of presented quarter cash as of Flows free flow, expenditures. GAAP, is a in

cash view flows. recommend taking always, full-year As a we NETGEAR's of

million cash the year, flow. we in $XX.X During generated free approximately full

NETGEAR earnings We NETGEAR to to will repurchase of at to XXXX, shares XX.X our repurchase QX both have to share shares result on in XX.X% stock. to XX.X million an we XXXX. as of The deploy our diluted continue shareholder Arlo QX flexibility strategically $XX.X offer cash the spent In is ability evaluate XXX,XXX information, million QX, possessing share, cash be of our start enhance approximately repurchasing investment provide a plan by the Since generating period. price light In the in our not as to that at optimizing which We average quarter. value. separate benefit stock will Company resulted market share approximately the of potential is non-GAAP material count and per the provide lower in in compared activity of the Arlo, that per of the count which the to to business common benefit to continue in long-term to and may efforts repurchased as fully end diluted focus million to non-public opportunities to the shares meantime. $XX.XX $X.XX well share the we beginning and approximately we diluted operational for

quarter, up during the provide SMB XXXX, results quarter Now, the Patrick The X.X% I year commentary, I'll year-over-year year-over-year XX.X% which and this up which of of Connected from a of of industry-leading net quarter prior net three the now Clearly, X.X% to This $XXX.X performance million season. product for segment $XX.X $XX.X the is for first basis. segments, will very generated and down fourth the $XXX.X or generated XX.X% of of for call during down Arlo XX.X% is holiday revenue net up sequential the fourth turning which and turn segment basis million brands, guidance quarter segment, after X.X% the Orbi segment's sequentially. the with of is came are at his our to the up which XXXX. revenue and Nighthawk for on million revenue we million a sequentially. includes the XXXX. The in year-over-year a basis on over pleased on the about Home

everyone. highlight as I'd XXXX Show. you, Consumer XXXX during like the fourth our our Electronics announcements quarter recent achievements to the Thank and from Christine, of as well hello

rolled fourth three across announced segments. out business and very services the exciting quarter, our some During we new

First, and we've been with Nighthawk Orbi across actively parental Circle Disney lines. out the controls smart rolling

a parental manage allowing is bring devices. today's partnered to controls every Circle market, time parent. screen Circle Circle managing industry-leading child's WiFi the robust of systems. child's almost are their high-performance platform multiple and mind screen parental content routers and on of controls at In the across world, top a time our have screen the most – content parents level manage to parental the of controls line with and We to time

$X.XX basic $X.XX for are device per month, parental and for We controls controls a outside-of-home another free, offering premium mobile parental month. control for parental

security cyber Armor for with we that at partnered Additionally, provides leader, cyber-threat devices. bring advanced announced CES Bitdefender, of to the their to all Armor across NETGEAR industry market. have we NETGEAR protection consumers

is of offered URL While Internet to perform concern traffic the for a from the receive of for homes longer believe dynamic home. to protect devices where subscription This a outside an annual through ensure We security security best customers router be place protected. is no and the and update home, state-of-the-art firmware run are the well. it and is $XX.XX. home additional NETGEAR to residential Armor, will assessments, threat as your end-point level users able your be IoT With critical to blocking, that exits fee that consumers will all secure cyber of enterprises, enters devices vulnerability at our the inside the only capabilities and will

Using intelligence, keep users side notifications a the small Arlo too. with users fee. Arlo triggered rich to Arlo Smart, smarter of the for inform soon human which a business, service vision vision a Smart's out getting rolling will intelligence intelligence be will Arlo that Arlo monthly we'll the and whether cameras subscription ably has record. powerful new to vision provide Turning Smart is will

directly on. quick event image So the without to time so to Arlo discussed take a least, These recorded intelligent and XXX not are friend we again. be the it the our With will an from improvements easier platform services increasingly the have call call pump action make mobile Insight and notifications, as with to users can will the believe Last from to as network or rolled a app. that call, our remotely and option to customers. enable that rich alerts to solution within alert a able better but Arlo deliver management managers open notification, the security that use prior in manage platform the view will users goes earnings out app for Arlo the having IT we

our We with $X.XX product industry-leading Insight a month. $X.XX Combining offerings, key management affordability of are will Insight offering two with going levels per of segment for the Basic the SMB cloud functionality and this subscription to success for Premium be month driving forward. SMB

you of that in meeting. the November you that services we who for moving discussed quickly those Analyst For are our Day, we tuned can had that at deliver to see

are making we momentarily subsequent progress on quarters. We to to continue which on all and another making, are push fronts you push like our in gaming. service touch good on we'll that I'd also is update

announcement the the This For Internet with premium keyboards, all Router ignored. on release extremely over our of Pro The Nighthawk and cutting-edge impact at many has one have equipment, of the that of largest and straight line encouraging gaming individual the Nighthawk the one's CES Switch. Nighthawk well the Demand gamers other the for Gaming by connection, been WiFi as of gate. thousands competition. have years, in Yet Nighthawk the hundreds on best-in-class software the Nighthawk Pro experience, of Pro of accessories, completely Pro Gaming been provided out PCs, changed thing Router mice, Netduma. year the spent Gaming an headsets, is the can has pursuit dollars with that as Gaming which edge we features Router combines gaming

some switches for have time routers Nighthawk We and community. the known gaming resonate our that with

calls. of and products we I earnings specifically to new now them. on you updating look for releasing forward So subsequent are products designing in both these

published CNET Turning a to giving week Orbi of XX. it last of of out review new our X line, Satellite, a Outdoor Orbi the score

As the Outdoor Satellite it, out performs review Orbi puts this world. the of

effort December success had XXXX. promotions users Black we product the Christmas registered Also, and million of to I'm We at are approximately the market. Arlo, this worldwide our very and the tremendous to of pleased superb the proud of of team's that in due designing report bringing Arlo of Friday X.X to end

million X We are in our quickly closing possible. focusing number on this are resources as to we to continuing the mark reasonably and grow as

heard, marketplaces. the financial that now, have the brick-and-mortar provide until success of of evaluated plan of from forward business point Arlo all Up and and channels. have they taking succeed step and determined and you We to important announced an needed with Arlo resources the respective as of and today from that have had and believe for on, in reached talent we business in agility come our We're Moving we NETGEAR. are that accelerated resources NETGEAR different both position exciting that and separate separation their NETGEAR's benefited without rapid would strong another. one online part have at can the global world-class the here the play only radio with not worldwide by achieved security Arlo organization. market-leading NETGEAR markets the camera frequency extremely solution proud NETGEAR to being Arlo have been we Arlo's rest which possible at distribution have that found a can NETGEAR. in of will IP strategic and shoulders on the that have wire-free expertise widespread each where focus, a built at we Arlo we Nevertheless, the NETGEAR. time the independent being this be

growth a trajectories. now Board part different ways these their is it Following time great believe for two approval, and and pursue thorough an we that businesses to assessment opportune

months categories, a consumer the and With users, able in of still and we category to will awareness connected first Arlo capital cloud for services, of a artificial as a growing Senior new continue relative will product market brand of to step Matthew nascent its Approximately for require to new invest still strategy cash intelligence. ago infancy. NETGEAR. that is McRae be pursue hired Strategy President It Vice in raise IPO, smart its four in continue investment drive to significant acquiring

once We for of for we Gorjanc Officer Meanwhile, NETGEAR who the management team Matthew where engagement provided last from vast we Corporate like last various to and that installed over that one and of Chief serve the expected interaction Vizio Finance as as our Arlo, over based built and organization the Technology expect plan hardware where years. of the separation. worldwide. hardware Arlo over as installed with Head will that Matthew CFO that NETGEAR engagement, CFO with an of cloud current joined and base revolutionize great the of the every XX our us remain that leader Controller, other Christine a XX we XX transform CEO the at Meanwhile, focus and Bryan companies. of cycles. SMB have plan have leaders replacement believe to We to has pure on from few after serve as role is to in is be cycle is years with will been networking. serving our and with millions The years currently the occurring joined of He her same base experienced finance discipline upgrade base by installed has Murray, NETGEAR for and of served continuous would to he roles home top from will NETGEAR users NETGEAR. she our of the the NETGEAR at financial assume years. CEO global of Marketing. the mobile bringing from as in President serving of tens I within app Vice We

We It accretive via which a strategy NETGEAR very be appropriate different over and two focus growth service in lead have the separate We in Arlo a we on NETGEAR believe can to greater create revenue top strong base to market with has capital from margin my grow via we have at community can produced and profiles. product introductions revenue efficiently The into expansion needed recurring profitability rapid the markets companies and our different a intend user and healthy the for strategies. necessary that and years. will line succeed, expansion. acquisitions. Internet engaged business cash sell capital services. transforming fantastic to pursuit to focus forward Arlo distinctly will value our through on consolidation we that installed margins both We will needed intention base these XX organic And have for their and structures built around is of by as highly win to investment continue value-added deploy flow strategy

We two better create for create expect the shareholders. separation provide investors, will and value clarity long-term investment unique opportunities, for

expect the the Arlo. anticipate half that of approximately We six complete XXXX. the including completed IPO first-stage will The second second-stage in be and of after IPO be spin-off the to the separation, currently requirements. We to IPO the in market, of of subject legal considerations, by to and the spin-off, approval customary the I and Christine the for now Board is subsequent tech Directors, course would other guidance. QX back call turn NETGEAR final months

Patrick. you, Thank

For revenue the will range the of $XXX in anticipate XXXX, million we approximately be $XXX to first million. quarter of

business created the we and the expected operating First related with to to Non-GAAP its with separation service be advisory Arlo margin to talent professional operating X.X% in prepare is one-time to which fees of own. the and on is expected X.X% dis-synergies X.X%, duplicate various range the the of hire stand for approximately to up range of separation certain of to $X.X quarter of in X.X%, associated associated margin GAAP cost as includes which approximately million $X.X audit includes corresponding which includes be million that costs. costs to roles

tax guidance XXXX. interpretation significant Jobs take analysis, complexities Act, tax and Cuts concludes the tax is now of tax therefore XX% of is and the be XXXX that quarter quarter clarification and comments of be is subject Due to and the first for XX% questions. expected the and approximately and GAAP legislation. provisional only first we the Operator, is rate our can further changes to reform Tax approximately rate expected the to Our of to non-GAAP rate

Our Instructions] comes Cihra line question [Operator of Rob the first Guggenheim. from from

line Your open. is

couple your time, exciting existing of on just much revenue and business; was think which off than less questions the up amount channel just would be up, seasonal was in built I then being all -- panning I Arlo then of Arlo looking that I in shipped out I word inventories of time a guess high spinning and the of channel normally going decent was to that's of and curious QX that the out, the actually in on congratulations very right. Arlo. a is into actually then inventory guess QX, so but Thanks or in the outside at was your that's business for follow-ups, what A coming QX, realize exiting have sort ahead guys one a QX you that teens sequentially, went And low and called it couple QX from expected, like? of if if and linearity

channel So, of end six last last inventories weeks weeks looking at XX/XX/XX, the the they of of are the six probably weeks highest year. at as the on noted, are based our six always had sell-through. we Those

little why a lower come that's but into do we reasonable QX, you channel they out forward as we typically as the a that QX. we expect in amount look go So have of bit

a go bit the than as the the from of which rest the matter folded seasonality Arlo. actually of the is sequential of prepare segment would regarding as we more difference, Arlo returns we accurate look we as into and well more a as it's as revenue And separation at all sales QX contra-revenue, QX the and actually fact, business, revenue actual into little for of think actual of I the provision reported the

into takes like looked it net seasonality a why that's there's of is but before, puts the lot as calculation. the revenue severe not So, and as

had makes now lower was that quarter, meaningful so not it's guiding still is only provider, a down, this of anymore, million or a sort guess should little visibility on I is quarter think through sense. a it's million And service obviously similarly right to, your what's guess than mean best we I I knowing XX XX it but the that mean or should then good as you number maybe okay, your even just a come XXXX? looking now been think we Right,

still quarter believe be provider would service it's it be million yes. as XX XX in it hard the million in all XX million would say. are other XX million, averaging the is quarter XX it But we lumpy. generally we million, range but pretty staying know, Yes, you to is that between that XX range, to One million, million, XX to speaking,

Patrick, know have of role And lastly, to be going to to CEO going you Okay. at CFO you then one? just I your you. or it. mentioned, remain to so And Christine the NETGEAR. that's are are is is you ultimately not of going What going Arlo, Thank Arlo be

In still course, quit period will once the I of the done, other the Arlo, management But Board from They is spin-off, final but each spin-off the be before of Arlo sit XXX% on I a would Board truly of then. shareholder. a will standpoint. independent I the overlapping of are

Right.

Okay, great. Thank you much. very

Trip line from the Global Your Equities. next from question comes of Chowdhry

Your line is open.

and Patrick, a an spin-off one, IPOs? then we Orbi solid as quarter. are IPO, questions the I going off be that about Lot here. as are Congratulations news start can Arlo good have three, with four very if I Nighthawk spinning to great. very, will on spin-off. can I Arlo ask, of we first when very

are to talk to rules, According not allowed unfortunately. about SEC we that

All worries, right, no worries. no

you these subscription Arlo are very is, as My subscription be bundled selling selling service of you reason CES, and the which is at them rather it a different any services customer, services may than regarding the to both I understanding them conducive question almost have announced and bundling together offering? as Circle every Second Armor. is

later are it. going are in rollout going going competitors not our tip service this how to our this certainly Smart to we we hands to to Arlo quarter, As we're price

Beautiful.

about wrong you Google strategic definitely if in stock. of you've been your a non-event insightful almost company very paid a Nest, some is is is sauce? many outmanoeuvred industry. vision-first They or Now, thinking wrongly resources Google powerful and Nest host that on Arlo it. your that lot devices, they from big Arlo, the has investors everything failed, the done, rates, have were every has me much Nest done. Google Google for to that think Pretty $X.X vision and what Give considering side insights billion of strategic growth comes a secret behind intelligence your still it when which has perspective,

team, one would Arlo been is really the the a the product this we've Patrick great I we're we as wireless just to in RF, them. we lean mentioned, and expertise, and the many channel, and categories got we've say, we and do expertise, have able of have have nimble, battery just

I just to like would supplement.

have that As I focus to things Home thing us was always Arlo, want switching, concentration on NETGEAR, Arlo. as worry the I the as focused on both many WiFi, Google to as as gives has we reason and and because also focuses agility. as And really so many the maintain, right, one why we is important, while that's exactly nimbleness very about spin-off have well SMB

nimble, would more be off even focused, spinning more they by and So Arlo, more dedicated, resource-rich. more

believe focus continue a successful the that formula will formula. we So, be to of

superior Gamer and is imagine What players either solid solid so off all could proposed do Gamer, on very me. that Pro or Nighthawk technically it, is start. this for very may, the on Arlo. and I if that's of of a none so is about Pro Congratulations IPO Nighthawk good Thanks quarter question to again. Last this product, the what other a about product,

Thank you.

have gaming see succinctly the Both is software, come-out is one really it's our gaming PGM Gaming very happy from hardware the two, before technical reviews Gamer, Pro of two the two we is and with PC we the Router As it Android. to best best that are combined technical combination one there that other the pretty nothing sites, resonate, them of when unbeatable. routing summarize you

Router, introduced to are software there really Gaming two. all geo-filtering, which One Pro that features of we the the So, new gamers a is this the love.

The love. gamers second more even that call roll Dashboard. will out then we to the one continue But will features what we the is QoS

will them charged basis. Some of be on them add-on, of will some a monthly be

the clearly we are series. Gaming the future Pro about So, NETGEAR of excited very

actually We logo we confident about about carry teams line we our products. that Gaming our will are it, the so so continue it of are excited gaming teams, that three Pro e-sports world, and around the promote superiority of sponsored to

from Your BWS from line Financial. of next comes Hamed Khorsand question the

is open. Your line

much start easier past? just you a I'll you with jumped DSO and why explain accounts any beyond in have guys off so one. had your Can level the was receivable probably

Sure.

retailers to seasonal give For we until some not the pay they dating XX this an of that, and pay, past, extra days most of do and our typically QX. years we've terms, in large them gives had part which

based on additional customers, XX% payment our over timing of a revenue the largest always it's and terms. is has of really So, one customer,

extremely Our that we the receivable makes go for DSOs healthy on forward it up just QX. as go accounts and are

this is more significantly year's quarter. than So last

mix there [indiscernible]? terms is So, a is change or there extended

guy, into Arlo they more get [Indiscernible] mean I even are this bigger.

percentage the retail Right, bigger total mix a of bigger a is forward. becoming piece, going

going the given how and you about Got about that, you might are how commodity hurt is because separation [indiscernible]? okay. it, talent [indiscernible] NETGEAR go talent a Arlo the And little or then a you bit to more just just talk pool could obviously and talent

them also Company the development. already all finance well the Hong And operations in as as terms we for perspective don't duplicate any in furthermore, as finance, product at challenge We our Kong in chunk a operations of believe have by because to don't well as that is and probably organization, Valley talent support is thing challenge in look and each independent Silicon The have at the sales got then not separation for is hired you the And operations, we even only such talents hire in organization. frontline, technical we relatively over right, the San and to of such easily. because hiring. from in we The the sales the spread you running know, Diego, have have as is organization if across been there in we've as segment sales, segment our a world. pretty

we here that much Valley. the salespeople many here, frankly, don't So have in that salespeople Silicon

fact, companies of as the to just I it's problems in that new. And mean, do join So, are excited I really will see the separation are exactly matter recruitment. create not opposite. a people

pricing on just Arlo, have as QX? is in going been lastly, and then on that And going far continue to the promotions as Okay. the at

we're the letting could we've our as results, Absolutely. presentation I on see Web-site. are we latest seeing our positive mean in that I mean off put you not [indiscernible].

another Arlo very high market a another our share WiFi Our grew we market X even percentage, point. are though grew points in we and already share,

going are [indiscernible]. going to not to We [indiscernible]

Okay, all Thank you. right.

Woo Bloomberg. Our the of Ho from question comes next line Jin from

open. Your line is

little Patrick, or managing to of the Arlo you differently spin, do try to plan ahead drive period, the so a you growth overlap drive to during on you are are profitability? business going the the going

view, really sure focus we our I to networking or it change. can not we said we success, maximize focus right. to Arlo, short-term, along, long-term and mean SMB all on home going the job be that to is the going are as make products' on have going We're all both long-term not to is

successfully. doing been have we whatever do would we So,

terms SMB for able me overall in to are growth you you XX% Home, reaffirm within And would of Okay. are XXXX? then that financial remind that, the Connected And expectations what growth? XXXX the targets,

Arlo Connected I single-digit. all that mean still and will as we said that expect the we Day, Home that believe would grow we and XX%-plus, and then faster, Analyst the combined on grow in will the grow SMB low business

profile the in spin? thinking ex-Arlo, profile the Connected for Home mean I lastly post and Okay. of And those terms margin SMB for you about the are how businesses then margin

small Arlo years a when be is look way at reporting. reference. few you easiest good That will back segment The to and a the go was

then Shouldn't margins back had be provider a exposure. higher? larger Yes, but service you

was separated segments, both provider separated Those service out. out. they were The

pretty that then profile the will CBU, think time that the and SPBU, at to future the go margin report RBU/CBU we times you RBU contribution to be we back similar like. that looks So, what

Thank Understood. you.

the Our Cihra from again last of comes Guggenheim. from question Rob line

Your open. now line is

margins kind would first give by for of to That's Christine, do able, operating have in QX too up wait to up. follow the margins, that? you Sorry willing or K the following last Actually we for question. question the segment to us, you, just about or are

that Yes, XX-K. information have the you'll in

we'll shortly. So, file that

and have minus focus, margin all a that will for or target Okay. while the increasing fact to on a would profile mean necessarily you that or just point focus think that's begin I a users, one I Arlo And to be the profits frees be at with saying be with? loss for you it would run for if that mean model focus where Patrick's post plus to statement the Thanks. you're you where the seems out expected up then your at fleshing then [indiscernible], not even while you gotten spin, a could could the I you stay so margin given guess that

can't more as we as the IPO regarding this provide everyone At really on will but it's appropriate. point, anything we speculate information soon

Right.

Okay, very thank much. you

questions at We no this further have time.

business everybody of would call. great. I and just time right, progress effort very in are you of speaking with and believe right like We'll look today's thank forward clearly, this our the all step again excited we and is taking in separating updated right and about throughout keep to our shareholders. you. this very NETGEAR, each that and thing for mean April. you joining I the next on year Thank I for the All Arlo to

This for participation. your concludes conference call. Thank you today's

now may disconnect. You