NETGEAR (NTGR) 26 Oct 182018 Q3 Earnings call transcript

Good evening. My name is Josh and I will be your conference operator today. At this time, I would like to welcome everyone to the NETGEAR Third Quarter 2018 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 [Operator Instructions]. you. Thank of may Director Relations, Investor Genualdi, begin. you Chris

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

the Joining and the Murray, and business are quarter CEO, us guidance with by a fourth the company details Lo, the start finished provided from and financials provided provided by of Chairman followed for call Mr. will the and quarter XXXX The by commentary Bryan. CFO. Patrick Bryan with on review Patrick format third of of Mr. by the Bryan,

have then will time We for any questions.

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

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

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

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

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

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

that make is Arlo the reporting I'd regarding consolidation, Before complete. now financial Technology to like comments of few begin, we a IPO and

stock with exception attributable of the loss portion loss the Arlo common XX.X% NETGEAR's not Third share quarter Technologies consolidated of owned by are into of the Arlo's NETGEAR. per the and of net results, to for results XXXX

final of the As and shareholders intend of in first position distribute end at of all by conditions to approximate approval Arlo including market NETGEAR to by Day currently other in we and XXXX, to NETGEAR's subject financial September, requirements. XX.X% the our Analyst Board factors customary stated our ownership quarter other Directors

Arlo NETGEAR periods including the into all distribution the discontinued reclassified distribution the quarter which operations. will occurs results be Following in historical for

year-over-year to third results, record in a million, came by turning X.X% above of basis, quarter revenue our a success high ended continued for up and guidance, revenue year-over-year again switches which up the quarter of and September third net a is Orbi, which XX.X% reflects NETGEAR is our quarterly the $XXX.X Overall by X.X% and Now XX.X% net strength business. quarterly a million, net on cable in Americas revenue driven XXXX Arlo and gateways, down was NETGEAR. is $XXX.X sequential X.X% On Prime for North which a net region seeing the up EMEA a basis. was year-over-year growth. The quarter-over-quarter up revenue which comes in up out cost. higher XX.X% are a from basis. on Net we was America. EMEA in at Arlo $XX.X result channel our was for This basis. XX, on quarter-over-quarter Day million, focus end once the quarter-over-quarter the revenue of and of SMB and XXXX NETGEAR the success the marketing of is sequential sales modems perspective decline geography

provider Australian from year-over-year the a revenue The quarter-over-quarter. of comparable quarter third and decline down up Our which prior anticipation introduction APAC is primarily in net for service the X.X% XXXX, the XG. quarters, was in is driven $XX.X upcoming revenue million decline by XX.X% of

non-GAAP split of million Shipments of combined units and units, net including wireless about focus of the in gross today. between our second net up the quarter third XX%, total Products months all were products about Total while and we XX.X% reconciliation the routers of XXXX. XX% about last product between XX% quarter split in and in detailed million shipments, X.X was gateways business introduced constituted approximately wired respectively. the XXXX products. million, comparable wireless numbers. and of quarter about earliest XX%, XX% on X.X% The XX.X% XX expenses revenue in release of was third quarter prior about was XX% discussion the third contributed and in X.X third points quarter The the shipments. $XX XX and up XXXX, revenue point XX.X%, The of of home came For X.X third year-over-year wireless and in respectively. non-GAAP at our nodes to margin to is products shipped From compared GAAP distributed wired XX% for of The earlier million and introduced last non-GAAP in to is quarter months the operating XXXX. a of the year this quarter non-GAAP our sequentially. will on which

public two on discussed prior as in duplicate Technologies As anticipation earnings a we've been operating calls, company. standalone Arlo adding of costs our

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

quarter company the are business, to areas add Technologies and headcount of expect our We during to Arlo as key XXXX. in to as begins adding resources, of the operate growth a additional to resources addition fourth adding to public continue

quarter the margin X.X%, we X.X% third X.X% the expect duplicate continue comparable quarter for quarter as XXXX vital year duplicate compared as this quarter operating up corresponding was quarter second million associated million we dis-synergies on Arlo X.X% second in is begins third the in $XX.X as in Non-GAAP created prior of to R&D talent R&D of to to of quarter needed This the grow XXXX. to third its business and quarter and cost roles of certain The net operating to duplicate compares $X.X separation for second revenue absolute compared net X% to as the non-GAAP Arlo dollars. quarter prior non-GAAP stand of expenses includes X.X% the revenue, our to in instance period comparable therefore to XXXX. in the year the was with XXXX. for to in and XXXX own. third and hired of margin cost zero of Our the the the

Excluding was Arlo XX.X% the the excluding non-GAAP XX%, when standalone Technologies, for services third when and margin the of of including agreements. with these NETGEAR Technologies, quarter transition benefit operating agreement Arlo benefit

tax non-GAAP XX.X% Our rate third XXXX. the was of quarter in

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

Arlo the to attributable mentioned, previously the for Technologies As loss loss includes non-controlling that the XX.X% is quarter, except this third for interest.

million quarter $XXX.X the with held we This $XXX.X Technologies. ended in includes of XXXX in third cash. Turning to the sheet, balance million cash Arlo the by

approximately Arlo, Excluding QX ended with NETGEAR million in cash. $XXX

cash operations the generated which flow quarter brings of cash trailing months XX flow $XX.X we total in our During million. generated to the from million $XX

the total ability we in confident We property levels brings and Additionally capital during generate million to our used equipment quarter $X.X QX QX, cash. $XX.X share. their of XXXX trailing spent XXX,XXX of $XX.XX we approximately which million of purchases stock, XX.X activity shares million. in in average start we the expenditures to common In for $XX over per the cash shares. of of repurchase remain meaningful our an million used to XX At approximately NETGEAR had price repurchase months

program diluted end repurchase shares million the to There we buyback quarter. million of are remaining the fully X.X our third Our planned stock come. in count share of approved to is under quarters our approximately and as XX opportunistically

a generated Neo for Now turning brands, basis Nighthawk year-over-year Nighthawk, leading the home Gaming, is connected and X.X% on includes results to Pro the up which $XXX.X segment, which of sequentially. our net Orbi, segments, million industry X.X% and the up revenue

Excluding cable Wi-Fi and performers modems net revenue Both and during sales lineup to of third up service up XX.X% sequentially. year-over-year gateways were providers' XX.X% Orbi our the our quarter. was Mesh product and strong

the hold XX.X% the a we share extenders. sequentially. that for As generated million Mesh, U.S. of we third XXXX net market SMB to covers up and continue year-over-year X.X% which quarter and to retail up of routers, which a pleased basis products revenue gateways see result, is XX% segment $XX.X on The Wi-Fi in are

power world continues our the products. 'XX to portfolio for due our note results switching Please was period SMB. for for to SMB storage channel the Our around particularly weak QX, that destocking

market up strength remains in the high our line With e-commerce U.S. channel at and XX%. share retail our switching of

related but needless to today please distributed refer say, in are QX terms to user subscriber Orlo results Technologies, the For to pleased earlier growth. was which with separate growth, of very acquisitions release performance paid we particularly earnings and revenue reported the

the to tariffs business. I'd Patrick, excluding over discuss neutralize to to we our like impact the of the are I Orlo the cost business taking actions Before on turn call

not but that noting already only First, is also geography. supplier by the supply by we it's to supply operate chain worth that deliver

are products produced our a amount China. While of significant in

of We has also process years, of lower production prior labor projects in to increased of produced cost the tariffs. manufacturing to Vietnam. China begun meaningful implemented a The we locations in but in recent recently moving amount the had already cost

obviously now this. accelerating have third managing next can the we process, the but by experience This we are will production our this have moved implemented move and year. moving are the are confident mark is locations middle And very quickly. that we that be not We overnight, time complete in something we be will of that

increasing do the net and further EPS. competition the will our expect Using neutralize can impact prices on be products strategy income effect and tariffs mitigate the we our we of to the increasing we chain, prices of and our supply expect moving the tariffs, selectively of Second, of this same. will that that our

quarter that mitigating his we I'll dollars a call will EPS after will for operating to the As the believe now fourth result for margin targets XXXX of guidance XXXX. over efforts, which I the provide for the turn our Patrick be and commentary and of preserved.

and this gateways, extremely line of pleased top with which the auto the the Bryan, cable and driven quarter XXXX bottom our you, business. expectations our quarter was for success SMB results Orbi, Thank for switches of third line. everyone. the and The modems by both hello, and exceeded We're

York It ticker was of from completed the NETGEAR happen. like teams During and acknowledge this no all the the to ARLO. the both did the Arlo the work the making a the of I went IPO under New quarter, task, we great is job the teams small Exchange and Stock but business. two would in, Arlo Technology trades now on that successful to hard Arlo

recurring revenue time that something is spend of is Since about to I streams. our these financial capitalizing some is you strategy of activities: annual key know, technology categories early based NETGEAR business our we September inflection forward. The our on for new many the driving at like in our inflections. we in the have in founding day, priorities. each Capitalizing It as speaking business service been on creating would analyst Now outlined technology points; three now building and of strategy on DNA.

broad optimized us The has created rise Wi-Fi opportunities release our from in the to great Next which in neighborhood mitigating Given cycle the to opportunity In introducing began congestion gain AOX.XX Generation and the the current for share. XXXX. accommodating ASPs AX was AC we standard the see standard businesses of is Wi-Fi devices aggressively each product for us newest AOX.XX home. new mobile to continue the Wi-Fi of Historically upgrade to networking will exposure for market. and and home Reducing network many quarter, innovating standard leading interference. last AX in that small AOX.XX is the consumers for see you Wi-Fi

battery to longer devices range to of on end four XX% entire across will Nighthawk We'll client the Our throughput which devices. be XX of of can shifting our and AX life technology path increasingly of higher incorporating continue the the times Wi-Fi portfolio, AX number AOX.XX at high sales router the market. deliver us handle the improve our XX% allow all

wireline created optimized of from managing market that to display. the take landscape are for AV for advantage mobile XG to HDMI an move over the innovate business line are than inflection On in speed More side, switches from plus will that Pro switching we completely point from another LTE positioned video the few a for interconnect increases to off. new transition provide large is have multiple far It and in better and to switching both opportunity POE reduced on-premise will connectivity. SMB XG change evolution gigabit gigabit driven is countless We latency, to audio-visual The expect alternative expect Ethernet applications to the broadband exist. not today. a XX imaginative to that years. whole last fixed that have we the has We currently XG emerge shift from the what provide recently globe. do can the the to viable ASP also can X around to POE new and our us

first Creating market. year We on the products to we categories to history both were We more were as successful gamers. you More us will doing in specifically and recently software, we to introduction the been the retail throughout channels. in is be with develop introducing to first routing XG provider a available. basis. to market the a the specifically avid from current with regular bring router built the bring related our and mobile that wire were the a for service expect XXXX, We quarter in outdoor try do public cameras hotspots quite XG company. for first free AV Pro developed XX the something for we switches, can market have to so, And new

treated were joined with of If Analyst at newest this then two our you financial you year us innovations. our Day

the and Voice, MASH buildings. industry's Wi-Fi assistant is Orbi a The voice first hotspot speaker with first

a during call for of hard we QX, we is hardware acquisition innovation Router, platform second the calculated Gaming Home are is The under category a business, completed Pro which Nighthawk Meural Meural newest cloud digital Orbi work. that distribution The recent Connected all our part Voice which and and lifestyle. small

positioning confident each of unique proposition and are value our these lines. of in We product market the

to Finally, initiative improve streams. drive will to on like significant higher. drive are we greatest opportunity service the continuously operating I'd on revenue This build capabilities of initiative recurring to to experimentation our our After that confident revenue. a we margins provides year discuss recurring

with we us. customers and year, have our During registered very the engaged getting active, last been

our our and that us more are our cycle is time them gateways and opted unique Half messages ownership. a product user day X data about into our customers on of replacement three from customers. to form for approximately Wi-Fi and with NETGEAR for customers a believe have installed SMB we We right our ID them value million with already systems so that routers, to five plus We registered customers historical all have available and can the the services services fit estimated million them our deliver represents This updated us their every that us. of marketing products user different deliver to different connected needs. services XX currently for in to Based About of we our consumer home of services. customers learning opportunity credentials and base massive tap worldwide. also shipment,

QX for key added to market, continue I connectivity rolling guidance. will by be turn hardware base. to soon Our forefront on need, installed end the goal them. in million most paid as The back services of internet right to and the gear which service is added By will to X connectivity paid for the supplemented the software, innovation the will to possible. to command while install call desired at net our subscribers innovation be are we future of the differentiated as get will our the focused that creating they continuing to by being provide value Bryan to now premium value successfully out base services

you, Patrick. Thank

to For fourth and is for for separation Net we related approximately the range revenue professional XXXX, other to million, expected anticipate with includes quarter in $X.X of million GAAP on begins of of margin to in the is costs. advisory be the $XXX of to business the and as to SMB various is the of $XXX roles range is Non-GAAP $XXX $XXX own. million. which expected operating of certain $XXX cost the inclusive of million of negative margin range be service costs negative of CHP the of which includes - up be X.X% approximately Arlo million in range be quarter expected million. combination operating million the to to expected fees one-time begins be X.X%, to associated stand X.X%, approximately the million revenue Fourth range Arlo duplicate to will while $XXX as to $XX X.X% in its and in

NETGEAR of X.X% Arlo. the X.X%, expect services margins benefit operating Arlo, transition which with the from to we be excludes non-GAAP range agree Excluding any and

XX% that is comments of expected concludes approximately can we and questions. rate tax is be for expected to be the fourth GAAP take our the now tax non-GAAP Our XX% quarter to approximately Operator and rate XXXX.

from first with [Operator question James. Your Raymond comes Instructions] Tindle Adam

Your is line open

to evening. Brian Okay ex-Arlo just you're sequentially thanks and operating sequentially, like margin growth on wanted good start I guidance. QX Looks implying but revenue QX down ex-Arlo.

I how the additional why that you the we some ran the costs I'm in there and more that could through buckets just September So leverage. through to you on a see of end, they sequential last quarter Are basis? at quarter? there maybe there hoping run wouldn't the know but compare weren't

Yeah in the non-GAAP driver relates in the business. the operating think the big I Arlo margin sequential to movement

they're a heard to to You and marketing require that earlier accelerating team may result management dollars. users. from going end acquire have efforts the as embarking And some additional that's

So area. the of we that's into two bigger has promotional from a Cyber Black some very do typically grown investments QX probably expanding that Friday, one weeks. event make where in season is day driver. or couple Monday a

So very period a time. certainly promotional of

product And seasonal also like than the as more of line. is Camera our rest promotional more I looks we've mean seen IT and at,

So bigger that's it why influence. a gets

okay. Right

is to that So you ex-Arlo intact? operating Analyst that XX% that Day, still XXXX is the then at decreased outlined the margin XX% or also

It stays intact.

that offset are are percentage EPS. approach operating I may we driving we in impact with of September. said income on the implied towards guided regards probably the income type efforts mitigating how as EPS embarking dollars again, As same we to on the to the to slightly. dollars to But it committed well that, tariffs, the we as and Depending change operating

Got it.

it given more not you cause Arlo. and wanted market maybe quick to to just the about to ask volatility sale one for this logistics the I reaction in little just the distribution ensuring the maybe Thanks. a one Patrick. why significant of Can on what the business talk mean of prohibit and bit I doesn't shares? far? would And Okay. explore instead so IPO this,

influenced have No you is heavily they've time holding plus I success they have lot I doorbell. position CES. I think, and you and confident the still market risk market that the of We term of announce about the added in another the by stock expanding just XX% ship cannot more. basically very mean is like Arlo. will long portfolio. of they are And which better same at significantly category And ship also [ph] the expanding even new we mean product the actually mentality. come

So I think in there is position that. nothing better for

are still very and that of shares. we distribution ahead to good there go of confident really we're be the market will acceptance going So the

to come across that anytime I the we plan now never for plan on is confident is and But say soon. but was, that path. mean we're the it So never anything change on our will happen, still we're pretty never it mind

you. Okay. Thank

Cowen Your Rob next question from comes the Company. Stone & with

Your open. line is

include the Is of Hi of possible end well. before guys. you a qualifies guess stated be and end I that still of necessary distribution distribution I redistribution expected XXXX? I the to that for so the before QX. getting it's it know forth. ask most you you that And to sure hurdles a as completed the could about making separated fully companies tax make wanted of some

the of fast end we're committing 'XX. 'XX Definitely Obviously offer. we between now of QX, and end what as working we're is able QX, we're But can. the as sometime to to

locations, variables tied up feel contracts Customer moving running. systems We lot and all up. like of IT

work of do. still So yeah, lot is there to a

Okay.

So sometime in QX.

Absolutely.

transition mentioned in duplicate is time providing the when services amount a fourth that quarter including you're significant to you Arlo. there of expenses some And the

off you're extra will can consolidated report providing where a and is services you drop of your spun that you once sense synergies expenses, obviously So these you you have us give pare how Arlo. to quickly then can expenses but Arlo back just also

able core see post the So might NETGEAR to we OpEx be step in separation? how big a down

way in able us to of in we underlying we I that think that believe at pressure of upward XXXX of the double-digit functions experience performance that both day and topline. and services the shared business CHP by just revenues as messaged the SMB is analyst taking it what OpEx deliver Arlo committed remain confidence gives net But margin we a the in again on be the off to will that. operating percentage for some

operating the expect half that, Of business course the the better be in of it second in CHP first lighter seasonality percentage. the given margin of half would you and in terms

seems location whether of end us a markets since consumer So any respect obviously for with prices demand, major a but pricing sense chain shouldn't just a effect scope if this the Can going companies expect it the that necessarily that might a competitive what be of effect a such this have everybody is to the has it's demand? to a of impact, about the everybody supply China in on Okay, thinking problem raise of be perhaps give to on sense would dampening you it have for tariff you us serve. likely impact you impact price increase. give like you

and not produced good foremost States. are and Vietnam of then the also that to of not subject are in also our products and all United chunk our in already said first all products we products are sold Well our a tariffs,

only XXX%. what tariff. XX% QX not as try when that product our the tariff objective to then one the to affected you so much right products the is another that So on bringing pair minimize just XX% impact after anything a is to are all out and possible make that import those is now in And are of as we

completed than expect of that next to the move later We our of factories be middle no year.

in year, mostly tax-free be hopefully will of XX%. a not completely even U.S. the which for goods import QX to is plan our So next

then got the will to mean, that all account So to plans I course, tariff you're executed of when take effects very so our - be in if completely minimal.

right. that So to we but need offset still

prices elastic. fixed people we're that not for percentage. that I demand with to a products prices we thirdly number price to that people going less we going particular believe raise on raise dampen pay that are one not board And have a mean we product. unique advantage raise surgically would do that would will it. it the prices we're So across Two, that for we but believe

the know, put would you why of together. effect still operating full that's have and it tariff that our year achieving We're confident minimal all So margin pretty dollars XXXX EPS.

and be wanted well you question grow those some which take the know, a products. Patrick. the of quarter revenue. introducing final their both to this while XG of the first you're I Okay to for to it'll going for sense get in you is time things overall share imagine as I as AXX.XX But of for up AX

have we So to by on but when notice not we really a think impact, begin inflections we'll asking do when for specific impact you expect percentage, those that went revenue? material a Thanks. just should to

get some Well is product, new given up the XX%. we generally the right, technology introduce going the for of speaking line kicked ASP you that year ASP know that fact XX% every to up notch, to all when particular be kicked another for

So this introduction onesy, significant and the because shipment into is twoesy. And our the online introducing accounted selling basis. is We're like not the revenues on channels.

of with concerned we out material. perspective to next be From the So into probably as is far first year revenue as QX perspective, half would that XXX a agree is do say XG from material. it last sales and take part of I still is the you, the would material.

XXAC introduction. years pretty However, much the XXN based XX into experience overtook three our the on AC

pretty at would XXXX the out. as primary be well by the of both XXXX. say we now like our XG means the then portion XX I and So filled introduce AX much time, XG during will of Christmas shipments XXAX as That end and

Thanks. Great. color. That's super helpful

Bob comes Your Partners. from Cihra of Guggenheim next question

Your line is open.

Hi thank very you much.

a of sure everything I a a you a in just I out not didn't One think it's contributor. if since or couple as didn't have necessarily Pro you strong was year-over-year don't ago. mean clearly, Gaming Nighthawk that you if I Patrick, things. because that I Just out can't was wasn't just year contributor called call Router

even due sort long had that's So I just the the is such sort Was of the a guess a new was that how kind being all and $XX thing. else Thanks. then, term now in was you that's of was going a And of weaker I'm the decline something there thing. curious that is that go-forward with that number provider there on Telstra separately and quarter or good to expected thing. service a there and probably refresh million than of

Okay first first. answer questions,

I I Orbi, I I call out Pro think out call did did Arlo, out did AV. call

not And newest line think Pro my NETGEAR is NETGEAR on the the of is Nighthawk I So gaming, line Pro gaming but is gamer. gamer furthermore product. son-in-law just son a my a and

we're high how very mean But performance. come us. this with that's I margin to I kind And it they it's Pro So performed well. all mind first. mean the Gaming really pleased very it's Nighthawk my so clearly fits, for well recognized and

we that We pleased price XXX, sell, point. we tried they that premium pro gaming is a cool. just SKU and the and second new introduced a So router week introduced pretty at last

and have position, talked they we confident, priorities we won't then Because the lumpiness I sales inventory think I quarter of will terms just about still so average quarter. provider a of are stay And basis their we it. at different quarter. very, that on with I pretty in one CapEx one four range pleased service very quarter $XX around from that in which look look million And it was mean in I an mean that it

I telling me mean but the for only I XG tell bullets I only. And is it. know could they're that Now cannot more I'm I you them. is some speak save coming how buying that The XG I right. I'm if that's wouldn't, Telstra XG I'm exactly not you I mean thing not probably them, is And know for why I would not guessing saying.

I miss any that So did questions.

that just No different the thing, last good. mean to impact domestic provider. don't sort I I look or that's the service Does or of is the whatever is know there if planning else guess you Australia? for And hesitation why I your similarly or anything the sounds XG. and you at business

not just I why? specify I say that or to why that. right, XG is said Europe. or I I North should I do No, hard coming have it's just if all I a customer. on up more load whether carrier But inventory that that's I mean tell saying XG generally and our Australia know to I'm didn't It's want America speaking

mean going Okay. and And that I if to the point you if services on quite obviously the at there kind you'd that is import that's actual But would but dollar we're reporting it when this you'd that definition, then just. would that that I'm like thing you. follow be to even Is by was one at out that it, could I guys terms? number. Thank towards I horizon type is guess revenue mean that's up might to services point, the of want mean enough last just early. to curious of I I actually or guess thing what in start you big call

imply that the I mean it's immaterial. don't to I pretty anything Sure, want simple,

material. been it's today's So

it would which all basis, have company something. operating this. material, actually But you on on have Now top you how there, XX% circle little for basically be say line understand our we bottom the that it through a on it's a control, wouldn't know parental I we're most X% be the bit to our primarily report would on only armor, do And because never mean. and right the of line, our for gaming, we I pass expenses I basis because count on it revenue. Top a material, hardware line purely very NETDUMA services still cut to these, or net are defender,

that time say overall probably would by profit, XX% to is then look we'll start the That deploying So more I than service contributing the of operating revenue our at I it. it. how

I'll All look Okay. then. right. forward that you. Thank to

Yeah, soon. hopefully very

next Your from Financial. with question Hamed comes BWS Khorsand

line open. is Your

for this commentary. October. could AX off, you were of also talking it's you First that? early you your end it ask September what wanted Day and there reason delayed mentioned Hi, been I product to upon or come out Was But but about based the about that Analyst XX at a that

firmware software get is standard, would by not introduce and we primarily it's going vendors to to the that solid pretty up is, if to our believe we're that simple, it. they chip at before introduce stand Yes, the them. to supplied And was not up is it our software QA have that the the

Okay. you then in think as deciding concerned far on businesses or level? switches. $XX sustainable million at the SMB event as you the do were you And Is that some from onetime here a growth the momentum can

all calls. both POE and Day plus mean our and I Pro and we an that I'd good $XX we're Yes, going continue out have change in mid-single-digit kind switches switches million annual and forward as the I level pretty mean is is basis the we future. would Analyst mean powering grow pounding the said basis pointed I many and see on setting powered to to growth don't engage our the to in a near we this of that go times the and AV by will

three and there I think that three we, two, two, introduced, a another two, time. be this that be right, the knows, will will in on category next All significant, will years we who trend years we pushing category it we're new a in for star new and hopefully App Switches. call it three until, maybe is is years' which continue

Okay. QX standpoint. also then And a just from

your talked plans anything. or really any of about haven't marketing You

the a keeping comfortable marketing the done. stable? assuming on that an I'm just Are So basis, you on historically ongoing threats horizon? you've you're competitive Are you just but with seeing

earlier QX said promotional season. is we that the think I a more typically

So time expecting we're that normal year. I be think of to for it

I QX. little promotional they're that to be that Arlo their more little more going is users and business a we mentioned the given acquiring also push a in seasonal, for think

that, think you QX period. other than it's see what similar So to would I in the

Okay.

Now my NETGEAR, over the, from general. competitive Arlo? a focused on I was questions standpoint, really now in

period. the I be behavior as A Monday little NETGEAR, past. control seen focused expected Yes. QX promotional Friday more marketing we've Black by similar the and to in in revenue Cyber driven

Okay. you. Thank

question Woo Jin comes Bloomberg Ho from Your with Intelligence. next

Your line is open. now

you taking my Thank question. Great. for

bit. So question a service around let me spin the little provider

connected quarter the that revenues driving the in home uptick That service What record you're 'XX. for that strong business. since quarter? So via sequential was third 'XX,

it's thing, mean, market to Nighthawk Gaming, the I is it's Pro the point forward. pretty - the same Orbi, NETGEAR I would, X. that Pro those Again. we I is cable, are to the drive able continue out amazing were

in market cost, competitors to is remarks then want given And okay. they you. cost of of to confidence your what that but on your terms take terms share that you raise that to of your away tariff especially you competitors the part pass from ability mentioned you will believe on the that Sure, customers, competitors follow through the and prepared suit their gives I will the

is of let to market required the your days have increases this so distributors you have we and our while no advance. have years and we on I intelligence, XX the right most know, your ground price you Well, retailers contracts reading and our mean, in of course,

in well have competitors unlike we're a China. us that within furthermore So situation all I mean production and our XXX%

in stronger So no which ability is at about. the of the talk to always to could figure furthermore pass in you who have you the position anyway, or it XX% matter matter talking the carriers are much XX% a We upper products absorb on competitors parts hand. about we so come and out premium of than would fact

terms coming on tariffs, in given of gave you the year the the all next in are revenue Day? ASPs, then And Analyst products for factors do you new confidence your growth targets have that out your X% the to XXXX, on still X% that

top tariff Definitely, as I the the line. one nuance mean is on, and is all tag counted in

thank you. Great,

comes question from next Chowdhry Your with Trip Research. Equities Global

Your line is open.

the I is since explain and product your business the and very you, think Can about a next congratulations model you to it? acquired we And product outlook. overall get on very is? over three a this guidance. evolved really company, had solid on question how behind quarter will And two years? can what Thank you this the what solid how

the I to so around want. it channel one. to I me it friends. that show to customers really gave mean this partner, confidence the it, they the we've in one of curation on it's has taking an All Well, but got oh, want it's that to have and all probably not is I pretty touch showing electronics I really magazine brushes crying just people didn't loud, you I something it's you've banter. to so showing you it the mean, seen say, I where simple, right, mean review display for said it, background is it's artwork it the is that want I it person they it's out the There mean real the art quality. world explanation showing been not a love time single the and curated of the

real. that So it's so

and on you whether you even are or get buy you freebies monthly to on yearly on pay attractive the art if though or have great rate, depends quarterly hardware a it rate are the more freebies order and But to you're those that's all to high a gain right with canvas put is attach tune $X about monthly up actually. the that month basis to curated they platform. So some good to access, all in going $X a begin to

all to get revenue do and model that rate negotiating art the expanding the and they there the deals curated the work, is or could attachment intriguing. stage However, I very still a complete next - go access for business of XX,XXX more are beyond people is high of

and the we We're with I gaming. excited rival line NETGEAR in platform can coupled we combination of that and it's add the it. the lot can channels a technology fantastic a by to have all nobody coupled this of combining is powerful distribution very mean triumvirate products of with worldwide house they Pro So voice, a believe the tremendous have and furthermore that. about a built lifestyle we pretty with

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cannot a having in future fantastic product plan disclose. We the are I which

at the updates Beautiful. Do you think round Electronic see Show? do new from we Consumer some we - can

Absolutely. Please come.

Beautiful. Congratulations on very a quarter. solid

Thank you.

I'll are the presenters. at back turn call There no further this the questions time. to

for We everybody with you QX. quarter the successful pleased Thank today's in joining very call.

on that call next in you Thank our Arlo. And the exciting three SMB all earnings to about you. I businesses ahead Connected us opportunities Bye-bye. QX. For specifically We're are excited season. of Home, more after again look even holiday of and and forward updating very all

conclude call. This today's conference

now may You disconnect.