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NETGEAR® Reports Second Quarter 2017 Results

  • Second quarter 2017 net revenue of $330.7 million, as compared to $311.7 million in the comparable prior year quarter, an increase of 6.1%.
  • Second quarter 2017 GAAP net income of $14.6 million, as compared to $16.0 million in the comparable prior year quarter.
       •   Second quarter 2017 non-GAAP net income of $19.9 million, as compared to $24.1 million in the comparable prior year quarter.
  • Second quarter 2017 GAAP net income per diluted share of $0.44, as compared to $0.48 in the comparable prior year quarter.
       •   Second quarter 2017 non-GAAP net income per diluted share of $0.60, as compared to $0.72 in the comparable prior year quarter.
  • Business outlook1: Company expects third quarter 2017 net revenue to be in the range of $340 million to $355 million, with GAAP operating margin in the range of 6.5% to 7.5% and non-GAAP operating margin in the range of 9.0% to 10.0%. Additionally, the Company expects the GAAP tax rate to be approximately 35.0% and non-GAAP tax rate to be approximately 33.5%.

SAN JOSE, Calif., July 26, 2017 (GLOBE NEWSWIRE) -- NETGEAR, Inc. (NASDAQ:NTGR), a global networking company that delivers innovative networking and Internet connected products to consumers and growing businesses, today reported financial results for the second quarter ended July 2, 2017.

Net revenue for the second quarter ended July 2, 2017 was $330.7 million, as compared to $311.7 million in the second quarter ended July 3, 2016, and $323.7 million in the first quarter ended April 2, 2017. Net income, computed in accordance with GAAP, for the second quarter of 2017 was $14.6 million, or $0.44 net income per diluted share. This compared to GAAP net income of $16.0 million, or $0.48 net income per diluted share, in the second quarter of 2016, and GAAP net income of $16.0 million, or $0.47 net income per diluted share, in the first quarter of 2017. Non-GAAP net income was $0.60 per diluted share in the second quarter of 2017, as compared to non-GAAP net income of $0.72 per diluted share in the second quarter of 2016 and $0.64 per diluted share in the first quarter of 2017.

Operating margin, computed in accordance with GAAP, for the second quarter of 2017 was 5.8%, as compared to 8.2% in the year ago comparable quarter, and 7.0% in the first quarter of 2017. Non-GAAP operating margin was 8.5% in the second quarter of 2017, as compared to 11.6% in the second quarter of 2016 and 10.0% in the first quarter of 2017.

The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, "We are very pleased with our second quarter results, which were driven by both the triple digit growth of Arlo, as well as the strength of Orbi and Nighthawk. The Arlo segment grew an impressive 104% year-over-year. We reached all-time highs in market share in both the IP camera and consumer WiFi markets during the quarter, and will continue to execute on our strategy of increasing market share in the quarters to come."

Christine Gorjanc, Chief Financial Officer of NETGEAR, added, "During the second quarter of 2017, we used approximately $45 million to repurchase an approximate 929,000 shares of NETGEAR common stock at an average price of $48.44. We continue to believe that stock repurchases are an effective way of returning capital to shareholders, and plan to be opportunistic buyers of our stock in the coming quarters.”

Business Outlook

Christine Gorjanc, Chief Financial Officer of NETGEAR, added, "Looking forward to the third quarter of 2017, we expect net revenue to be in the range of $340 million to $355 million. GAAP operating margin is expected to be in the range of 6.5% to 7.5% and non-GAAP operating margin is expected to be in the range of 9.0% to 10.0%. Our GAAP tax rate is expected to be approximately 35.0% and our non-GAAP tax rate is expected to be 33.5% for the third quarter of 2017.”

A reconciliation between the Business Outlook on a GAAP and non-GAAP basis is provided in the following table:

     
    Three months ended
    October 1, 2017
    Operating Margin Rate   Tax Rate
GAAP   6.5% - 7.5%   35.0 %
Estimated adjustments for1:        
Amortization of intangibles   0.8 %   __
Stock-based compensation expense   1.7 %   __
Tax effect of non-GAAP adjustments   __   (1.5 )%
Non-GAAP   9.0% -10.0%   33.5 %
           

1 Business outlook does not include estimates for any currently unknown income and expense items which, by their nature, could arise late in a quarter, including: restructuring and other charges; litigation reserves, net; acquisition-related charges; impairment charges; and discrete tax benefits or detriments relating to tax windfalls or shortfalls from equity awards. New material income and expense items such as these could have a significant effect on our guidance and future GAAP results.

Investor Conference Call / Webcast Details
NETGEAR will review the second quarter results and discuss management's expectations for the third quarter of 2017 today, Wednesday, July 26, 2017 at 5 p.m. ET (2 p.m. PT). The dial-in number for the live audio call is (201) 689-8471. A live webcast of the conference call will be available on NETGEAR's Investor Relations website at http://investor.netgear.com. A replay of the call will be available 2 hours following the call through midnight ET (9 p.m. PT) on Wednesday, August 2, 2017 by telephone at (412) 317-6671 and via the web at http://investor.netgear.com. The account number to access the phone replay is 13666400.

About NETGEAR, Inc.
NETGEAR (NASDAQ:NTGR) is a global networking company that delivers innovative products to consumers, businesses and service providers. The Company's products are built on a variety of proven technologies such as wireless (WiFi and LTE), Ethernet and powerline, with a focus on reliability and ease-of-use. The product line consists of wired and wireless devices that enable networking, broadband access and network connectivity. These products are available in multiple configurations to address the needs of the end-users in each geographic region in which the Company's products are sold. NETGEAR products are sold in approximately 31,000 retail locations around the globe, and through approximately 25,000 value-added resellers, as well as multiple major cable, mobile and wireline service providers around the world. The company's headquarters are in San Jose, Calif., with additional offices in approximately 25 countries. More information is available at http://investor.netgear.com or by calling (408) 907-8000. Connect with NETGEAR at http://twitter.com/NETGEAR and http://www.facebook.com/NETGEAR.

© 2017 NETGEAR, Inc. NETGEAR and the NETGEAR logo are trademarks or registered trademarks of NETGEAR, Inc. and its affiliates in the United States and/or other countries. Other brand and product names are trademarks or registered trademarks of their respective holders.  The information contained herein is subject to change without notice. NETGEAR shall not be liable for technical or editorial errors or omissions contained herein.  All rights reserved.

/EIN News/ -- Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc.:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements.  However, the absence of these words does not mean that the statements are not forward-looking.  The forward-looking statements represent NETGEAR, Inc.’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: expected net revenue, GAAP and non-GAAP operating margins, and GAAP and non-GAAP tax rates; expectations regarding the timing, distribution, sales momentum and market acceptance of recent and anticipated new product introductions that position the Company for growth; and expectations regarding seasonal changes in the Company’s business performance. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for the Company's products may be lower than anticipated; consumers may choose not to adopt the Company's new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of the Company's products or utilize competing products; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources, including potential repurchases of the Company’s common stock; changes in the Company's stock price and developments in the business that could increase the Company's cash needs; fluctuations in foreign exchange rates; and the actions and financial health of the Company's customers. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Part II - Item 1A. Risk Factors,” pages 48 through 69, in the Company's quarterly report on Form 10-Q for the fiscal quarter ended April 2, 2017, filed with the Securities and Exchange Commission on May 5, 2017.  NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Information:

To supplement our unaudited selected financial data presented on a basis consistent with Generally Accepted Accounting Principles (“GAAP”), we disclose certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP gross margin, non-GAAP research and development, non-GAAP sales and marketing, non-GAAP general and administrative, non-GAAP total operating expenses, non-GAAP operating income, non-GAAP operating margin, non-GAAP other income (expense), net, non-GAAP net income and non-GAAP net income per diluted share. These supplemental measures exclude adjustments for amortization of intangibles, stock-based compensation expense, restructuring and other charges, litigation reserves, net, gain on litigation settlements, loss pertaining to cost method investment, and the related tax effects. These non-GAAP measures are not in accordance with or an alternative for GAAP, and may be different from non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our operating performance on a period-to-period basis because such items are not, in our view, related to our ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, management’s incentive compensation is determined using certain non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP financials, provide useful information to investors by offering:

· the ability to make more meaningful period-to-period comparisons of our on-going operating results;
· the ability to better identify trends in our underlying business and perform related trend analyses;
· a better understanding of how management plans and measures our underlying business; and
· an easier way to compare our operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.

The following are explanations of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding them in the reconciliations of these non-GAAP financial measures:

Amortization of intangibles consists primarily of non-cash charges that can be impacted by, among other things, the timing and magnitude of acquisitions. We consider our operating results without these charges when evaluating our ongoing performance and forecasting our earnings trends, and therefore exclude such charges when presenting non-GAAP financial measures. We believe that the assessment of our operations excluding these costs is relevant to our assessment of internal operations and comparisons to the performance of our competitors.

Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options, restricted stock units and shares under the employee stock purchase plan granted to employees. We believe that the exclusion of these charges provides for more accurate comparisons of our operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, we believe it is useful to investors to understand the specific impact stock-based compensation expense has on our operating results.

Other items consist of certain items that are the result of either unique or unplanned events, including, when applicable: restructuring and other charges, litigation reserves, net, gain on litigation settlements, and loss pertaining to cost method investment. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.

Tax effects consist of various adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income. We also believe providing financial information with and without the income tax effects relating to our non-GAAP financial measures provides our management and users of the financial statements with better clarity regarding the on-going performance of our business.

Source: NETGEAR-F

-Financial Tables Attached-


     
NETGEAR, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(In thousands) 
(Unaudited)
    As of
    July 2,
 2017
  December 31,
 2016
ASSETS        
Current assets:        
Cash and cash equivalents   $ 190,676     $ 240,468  
Short-term investments   114,847     125,514  
Accounts receivable, net   304,588     313,839  
Inventories   263,773     247,862  
Prepaid expenses and other current assets   27,705     35,102  
Total current assets   901,589     962,785  
Property and equipment, net   18,829     19,473  
Intangibles, net   30,215     37,899  
Goodwill   85,463     85,463  
Other non-current assets   79,493     78,836  
Total assets   $ 1,115,589     $ 1,184,456  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable   $ 72,886     $ 112,436  
Accrued employee compensation   24,017     33,096  
Other accrued liabilities   173,714     170,674  
Deferred revenue   36,533     35,301  
Income taxes payable       5,146  
Total current liabilities   307,150     356,653  
Non-current income taxes payable   15,721     15,119  
Other non-current liabilities   16,796     15,865  
Total liabilities   339,667     387,637  
Stockholders' equity:        
Common stock   32     33  
Additional paid-in capital   584,097     566,307  
Accumulated other comprehensive income (loss)   (4,810 )   1,938  
Retained earnings   196,603     228,541  
Total stockholders' equity   775,922     796,819  
Total liabilities and stockholders' equity   $ 1,115,589     $ 1,184,456  
                 


 
NETGEAR, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(In thousands, except per share and percentage data) 
(Unaudited)
         
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
                     
Net revenue   $ 330,723     $ 323,657     $ 311,655     $ 654,380     $ 621,911  
Cost of revenue   238,787     226,725     213,867     465,512     423,558  
Gross profit   91,936     96,932     97,788     188,868     198,353  
Gross margin   27.8 %   29.9 %   31.4 %   28.9 %   31.9 %
Operating expenses:                    
Research and development   23,357     22,683     21,804     46,040     43,941  
Sales and marketing   36,461     38,229     36,089     74,690     73,366  
General and administrative   12,950     13,194     13,035     26,144     25,884  
Restructuring and other charges   22     37     1,311     59     3,989  
Litigation reserves, net   53         35     53     45  
Total operating expenses   72,843     74,143     72,274     146,986     147,225  
Income from operations   19,093     22,789     25,514     41,882     51,128  
Operating margin   5.8 %   7.0 %   8.2 %   6.4 %   8.2 %
Interest income   482     405     279     887     513  
Other income (expense), net   383     335     (332 )   718     (698 )
Income before income taxes   19,958     23,529     25,461     43,487     50,943  
Provision for income taxes   5,376     7,535     9,427     12,911     18,320  
Net income   $ 14,582     $ 15,994     $ 16,034     $ 30,576     $ 32,623  
                     
Net income per share:                    
Basic   $ 0.45     $ 0.49     $ 0.49     $ 0.94     $ 1.00  
Diluted   $ 0.44     $ 0.47     $ 0.48     $ 0.91     $ 0.98  
                     
Weighted average shares used to compute net income per share:                    
Basic   32,352     32,944     32,639     32,650     32,578  
Diluted   33,116     34,136     33,493     33,656     33,390  
                               


 
NETGEAR, INC. 
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES 
(In thousands, except percentage data) 
(Unaudited)
                     
STATEMENT OF OPERATIONS DATA:                    
                     
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
                     
GAAP gross profit   $ 91,936     $ 96,932     $ 97,788     $ 188,868     $ 198,353  
GAAP gross margin   27.8 %   29.9 %   31.4 %   28.9 %   31.9 %
Amortization of intangibles   1,374     2,611     2,394     3,985     4,788  
Stock-based compensation expense   542     436     451     978     890  
Non-GAAP gross profit   $ 93,852     $ 99,979     $ 100,633     $ 193,831     $ 204,031  
Non-GAAP gross margin   28.4 %   30.9 %   32.3 %   29.6 %   32.8 %
                     
GAAP research and development   $ 23,357     $ 22,683     $ 21,804     $ 46,040     $ 43,941  
Stock-based compensation expense   (1,373 )   (1,319 )   (1,118 )   (2,692 )   (1,984 )
Non-GAAP research and development   $ 21,984     $ 21,364     $ 20,686     $ 43,348     $ 41,957  
                     
GAAP sales and marketing   $ 36,461     $ 38,229     $ 36,089     $ 74,690     $ 73,366  
Amortization of intangibles   (1,772 )   (1,771 )   (1,772 )   (3,543 )   (3,543 )
Stock-based compensation expense   (1,438 )   (1,247 )   (1,338 )   (2,685 )   (2,535 )
Non-GAAP sales and marketing   $ 33,251     $ 35,211     $ 32,979     $ 68,462     $ 67,288  
                     
GAAP general and administrative   $ 12,950     $ 13,194     $ 13,035     $ 26,144     $ 25,884  
Stock-based compensation expense   (2,348 )   (2,126 )   (2,112 )   (4,474 )   (4,021 )
Non-GAAP general and administrative   $ 10,602     $ 11,068     $ 10,923     $ 21,670     $ 21,863  
                     
GAAP total operating expenses   $ 72,843     $ 74,143     $ 72,274     $ 146,986     $ 147,225  
Amortization of intangibles   (1,772 )   (1,771 )   (1,772 )   (3,543 )   (3,543 )
Stock-based compensation expense   (5,159 )   (4,692 )   (4,568 )   (9,851 )   (8,540 )
Restructuring and other charges   (22 )   (37 )   (1,311 )   (59 )   (3,989 )
Litigation reserves, net   (53 )       (35 )   (53 )   (45 )
Non-GAAP total operating expenses   $ 65,837     $ 67,643     $ 64,588     $ 133,480     $ 131,108  
                                         


 
NETGEAR, INC. 
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) 
(In thousands, except percentage data) 
(Unaudited)
             
STATEMENT OF OPERATIONS DATA (CONTINUED):            
             
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
                     
GAAP operating income   $ 19,093     $ 22,789     $ 25,514     $ 41,882     $ 51,128  
GAAP operating margin   5.8 %   7.0 %   8.2 %   6.4 %   8.2 %
Amortization of intangibles   3,146     4,382     4,166     7,528     8,331  
Stock-based compensation expense   5,701     5,128     5,019     10,829     9,430  
Restructuring and other charges   22     37     1,311     59     3,989  
Litigation reserves, net   53         35     53     45  
Non-GAAP operating income   $ 28,015     $ 32,336     $ 36,045     $ 60,351     $ 72,923  
Non-GAAP operating margin   8.5 %   10.0 %   11.6 %   9.2 %   11.7 %
                     
GAAP other income (expense), net   $ 383     $ 335     $ (332 )   $ 718     $ (698 )
Gain on litigation settlements                   (5 )
Loss pertaining to cost method investment           479         479  
Non-GAAP other income (expense), net   $ 383     $ 335     $ 147     $ 718     $ (224 )
                     
GAAP net income   $ 14,582     $ 15,994     $ 16,034     $ 30,576     $ 32,623  
Amortization of intangibles   3,146     4,382     4,166     7,528     8,331  
Stock-based compensation expense   5,701     5,128     5,019     10,829     9,430  
Restructuring and other charges   22     37     1,311     59     3,989  
Litigation reserves, net   53         35     53     45  
Gain on litigation settlements                   (5 )
Loss pertaining to cost method investment           479         479  
Tax effect of non-GAAP adjustments   (3,640 )   (3,850 )   (2,960 )   (7,490 )   (6,203 )
Non-GAAP net income   $ 19,864     $ 21,691     $ 24,084     $ 41,555     $ 48,689  
                                         


 
NETGEAR, INC. 
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) 
(In thousands, except per share data) 
(Unaudited)
             
STATEMENT OF OPERATIONS DATA (CONTINUED):            
                     
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
                     
NET INCOME PER DILUTED SHARE:                
GAAP net income per diluted share   $ 0.44     $ 0.47     $ 0.48     $ 0.91     $ 0.98  
Amortization of intangibles   0.09     0.13     0.12     0.22     0.25  
Stock-based compensation expense   0.17     0.15     0.15     0.32     0.28  
Restructuring and other charges   0.00     0.00     0.04     0.00     0.12  
Litigation reserves, net   0.00         0.00     0.00     0.00  
Gain on litigation settlements                   0.00  
Loss pertaining to cost method investment           0.01         0.01  
Tax effect of non-GAAP adjustments   (0.10 )   (0.11 )   (0.08 )   (0.22 )   (0.18 )
Non-GAAP net income per diluted share   $ 0.60     $ 0.64     $ 0.72     $ 1.23     $ 1.46  
                                         


 
NETGEAR, INC. 
SUPPLEMENTAL FINANCIAL INFORMATION 
(In thousands, except per share data, DSO, inventory turns, weeks of channel inventory, headcount and percentage data) 
(Unaudited)
     
    Three Months Ended
    July 2,
 2017
  April 2,
 2017
  December 31,
 2016
  October 2,
 2016
  July 3,
 2016
                     
Cash, cash equivalents and short-term investments   $ 305,523   $ 361,235   $ 365,982   $ 403,016   $ 352,672
Cash, cash equivalents and short-term investments per diluted share   $ 9.23   $ 10.58   $ 10.79   $ 11.88   $ 10.53
                     
Accounts receivable, net   $ 304,588   $ 265,254   $ 313,839   $ 233,911   $ 230,550
Days sales outstanding (DSO)   84   75   77   63   67
                     
Inventories   $ 263,773   $ 267,826   $ 247,862   $ 217,621   $ 207,841
Ending inventory turns   3.6   3.4   4.2   4.3   4.1
                     
Weeks of channel inventory:                    
U.S. retail channel   8.6   8.2   7.2   8.9   8.8
U.S. distribution channel   4.3   5.8   6.2   4.5   5.0
EMEA distribution channel   4.7   5.1   5.3   4.5   3.8
APAC distribution channel   7.0   5.9   7.4   6.8   6.7
                     
Deferred revenue (current and non-current)   $ 44,727   $ 40,225   $ 42,947   $ 31,526   $ 32,973
                     
Headcount   953   951   945   944   928
Non-GAAP diluted shares   33,116   34,136   33,925   33,913   33,493


 
NET REVENUE BY GEOGRAPHY
         
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
Americas   $ 226,949   68 %   $ 211,629   65 %   $ 210,908   67 %   $ 438,578   67 %   $ 404,758   65 %
EMEA   55,204   17 %   58,445   18 %   51,653   17 %   113,649   17 %   116,158   19 %
APAC   48,570   15 %   53,583   17 %   49,094   16 %   102,153   16 %   100,995   16 %
Total   $ 330,723   100 %   $ 323,657   100 %   $ 311,655   100 %   $ 654,380   100 %   $ 621,911   100 %
                                                             


 
NETGEAR, INC. 
SUPPLEMENTAL FINANCIAL INFORMATION (CONTINUED) 
(In thousands) 
(Unaudited)
 
NET REVENUE BY SEGMENT
 
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
Net revenue:                    
Arlo   $ 78,732     $ 60,712     $ 38,585     $ 139,444     $ 62,850  
Connected Home   185,905     194,361     198,654     380,266     414,764  
SMB   66,086     68,584     74,416     134,670     144,297  
Total net revenue   $ 330,723     $ 323,657     $ 311,655     $ 654,380     $ 621,911  
                                         


SERVICE PROVIDER NET REVENUE
         
    Three Months Ended   Six Months Ended
    July 2,
 2017
  April 2,
 2017
  July 3,
 2016
  July 2,
 2017
  July 3,
 2016
Arlo   $ 7,972     $ 1,977     $ 5,236     $ 9,949     $ 11,217  
Connected Home   48,485     53,193     61,356     101,678     138,208  
SMB   588     790     746     1,378     2,194  
Total service provider net revenue   $ 57,045     $ 55,960     $ 67,338     $ 113,005     $ 151,619  
                                         
Contact:
                    NETGEAR Investor Relations
                    Christopher Genualdi
                    netgearIR@netgear.com
                    (408) 890-3520

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