NTGR - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen thank you for standing by. At this time all participants are on a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Erik Bylin. sir. ahead, go Please

Unidentified Company Representative

Good Financial welcome Results Angela. Quarter NETGEAR's of XXXX Conference afternoon you, to and Third Thank Call.

Bryan Joining Mr. us CFO. Mr. Patrick are Murray, Lo, Chairman from and CEO; the company and

have call format for XXXX finish details for with Patrick, financials quarter time and we The on third We'll provided the will with by business, of the followed a Bryan, by of and the fourth guidance start Bryan. provided commentary quarter the review by then questions. by of provided

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

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

statements future rates, regarding include operating revenue, expenses statements business margins, and tax Forward-looking outlook. expected

by statements. Actual these forward-looking could results those or trends differ materially contemplated from

please factors For filings most refer NETGEAR's periodic including risk the XX-Q. recent Form to in the with discussed SEC, the more information,

that statements a future today, forward-looking based of call this as events. update Any statements assumptions to undertakes make on information or we obligation of new these NETGEAR are and on no result as

our In Relations measures in mentioned A call. today's this be non-GAAP will release measures of financial the press on addition, on reconciliation to found be website. GAAP several non-GAAP can Investor

now would At this the to call over Bryan to time, I Murray. like turn Mr.

Bryan Murray

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

to in in our of due this September The demand uncertainty of the after Europe in we Europe a with we unexpected some saw German came below presented summer heightened typically third normal the us Because quarter see and challenges. Entering increased sales possible expectations. recession. instead when recess, Brexit September start

to unstable escalating China-Hong a in sudden Kong. sociopolitical trade Kong hampered war, was region downturn economic APAC the by in addition, Hong situation and the the due In

we with on introducing to the on our level pipeline home in WiFi X a QX. stabilized, about in of America new At the we domestic market leadership the front, extend continue QX, execute products appears time, technologies that same in in the X.X%. the was to same year-over-year saw to or have WiFi indications down North However, market robust market

the products September came at our XXXX mesh $XXX.X We with we Entering X up Mesh, million, WiFi only was down third three revenue range quarter X.X% the world's for sequential Overall WiFi a in on XX.X% all-important net basis, seven, ended year-over-year the the NETGEAR and end XX, X# had WiFi the quarter, system. which ended Orbi X a including guidance quarter containing is the of on low and basis. technology.

low below non-GAAP the our in operating range. at our came at in of end coming guidance, revenue margin X.X%, With our guidance

tax beneficial to as income of period result we However, deliver domestic $X.XX prior share able time and in a of a non-GAAP international liabilities, to diluted one earnings. net revisions per were

is XX.X% the million, XX% down which up which up $XXX.X for a revenue basis. revenue net EMEA million, on is year-over-year quarter-over-quarter. X.X% and was up and Americas sequential Net X.X% was $XX.X year-over-year,

APAC quarter, from net third which XX% for year $XX.X comparable quarter X.X% XXXX, revenue down is up sequentially. the of the and Our million was prior

and The total a and between combined home we about units, million XX%, X.X about approximately quarter of products XX% net all the were wired revenue of respectively. wireless X.X for third products. For the was The nodes XXXX. respectively. net about and wireless million gateways split XX% of and shipped and products million third wired revenue quarter split XX%, was of and routers units XXXX, including wireless of X.X Shipments business between

our constituted of months months about XX quarter shipments. third about while introduced last XX% the our in products third contributed shipments, XX in of the introduced Products last XX% quarter

on reconciliation detailed in distributed is non-GAAP points release our my on from GAAP discussion will today. point earnings non-GAAP this focus to earlier The numbers. From

basis XXX of XX.X% in quarter third is to of XX the down the to compared XX.X% prior points in year the the margin gross quarter up quarter compared non-GAAP basis comparable was which and points second The as XXXX in XXXX. XX.X%,

up non-GAAP down Total and X.X% sequentially. operating $XX.X million, is expenses came at which year-over-year XX.X% in

we prudently, resources the always, making succeed. manage while also business have need of portions our they that sure that our As expenses the to growth

Our XX by end people a headcount the of of to as net quarter. XXX decreased of heads the

quarter Our X.X% as the R&D in period, of non-GAAP net X.X% future come. remains of critical to investment R&D to the was we X.X% quarters the revenue, the net continue comparable in here success to net of to invest expense for revenue the year will business and revenue of third quarter prior in compared of second our and XXXX.

in rate and Our domestic $X.XX adjustments foreign approximately XXXX. benefited X.X% non-GAAP diluted contributed This tax EPS. from our we quarter, the non-GAAP to In one-time tax to liabilities. both of was the quarter third favorable

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

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

continuing quarter, million $XX.X XX million. used which which total our cash brings trailing total from million. quarter, cash continuing capital of million trailing $XX.X in in the $X.X the purchases operations, in over and brings the months used over property $XX.X the we to during operations used XX flow used During cash to We for expenditures months our equipment

meaningful ability of Nevertheless, to our remain levels cash. we confident in generate

levels positive able sites will to be the us, buffered down out forward. expect move flow we our cash of inventory manufacturing our China going to we and With of work behind generate

have $XX XXXX, price $XXX.X NETGEAR million average we common repurchase XXX,XXX in at shares. XX share. approximately repurchase spent start million stock repurchase approximately million spent Since shares an to approximately our $XX.XX of per the of to of QX QX, we In activity

of come. XX.X opportunistically is quarter. to as the the approximately third to plan million quarters continue Our share of We count our in diluted the shares stock fully repurchase end to

the reduced Nighthawk net the industry the Orbi, EMEA Meural Gaming and million Home a Now product Nighthawk, $XXX.X basis turning during the quarter, to of revenue on XX.X% and as which decline primarily Connected brands segment results regions year-over-year X.X% a revenue segments, leading down due year-over-year our Pro the includes generated of and The result factors. of sequentially. which in up APAC the aforementioned is to is

the also U.S. to declining year-over-year. We see market continue WiFi

believe However, has our WiFi decline introduction router of to products. the stabilized due impart we X

market WiFi Our consumer XX% remain the share at quarter. strong in for third U.S.

of million year-over-year generated SMB third of up up for net the XX.X% a The XXXX, and $XX.X revenue on basis quarter segment which sequentially. is X.X%

to Our PoE+ continue lines and ProAV switching well. perform

at also Our channel through market share strong retail quarter. in for third the the switches sold was XX%

the call to the provide turn his for which I XXXX. commentary, for Patrick now I’ll quarter of guidance after will over fourth

Patrick Lo

hello and Thank you, Brian, everyone.

we in our XXXX technology both confident building strategy on quarter adjacent expanding of challenging bottom capitalizing recurring on the new of the third While was lines, revenue inflections, markets. and top service and are into

have excited We a WiFi lead by competition. of program, where substantial X our are also we over our the execution

AX we single XX the the Mesh X During while stream WiFi multiple competitors have WiFi the new $XXX X products quarter, three our router Connected X including released now Nighthawk product. WiFi products X not top still seven system, for announced technology, We Mesh WiFi X Nighthawk the and WiFi X WiFi Orbi XX,XXX with a Home extender. have

over of than introductions pipeline six have our the next X the count double the more product we WiFi products months. to Additionally,

America relative X.X%. at retail North very to year-over-year compensation is market product about remained The WiFi QX the different. decline While in of QX constant

market WiFi actually sales our QX. strong With router grew router strongly our X end line in up,

to absence in decline WiFi products. Mesh WiFi Mesh sales the in saw America we North an of However, X overall due

However, release products. with to WiFi routers increased embedded Mesh the X we and X of iPhone speed this will connecting believe consumers advantage the September WiFi XX spur of with take by

America Mesh WiFi X return WiFi that more introduce coming XXXX. and products aggressively growth market will retail quarters to believe we We the in enable to North in the will

As to reach a smaller our of Canvas II form wider for Canvas of inches starting just market at a believe the with adjacent Meural retail audience markets with would expanding digital factor XX.X we're the price and of introduction the $XXX.

of content new our exciting series to as HBO’s to adding membership, from marketplace subscription Thrones the Game be come. through also more will for well incredibly streaming as purchase Meural with popular We

NETGEAR the deployment QX, SMB across insight announced mesh, The support and to we first fully latest commercial many enhancements. configurable the wireless the enabled VLAN solution other instant grade discovery during networks mesh of to mesh extenders, mapping the segment updates network. port feature industry's configurable Turning to the cloud

cloud solution, cloud iOS industry's mobile a in now application mesh believe management LAN providers. service among insight small to a of to better providers to and manage insight task to platform of on powerful browser both we pivot health forefront wireless and mesh devices. their Android, the The businesses as the way its accessible third different solutions, management in popular by be based tool as networks managed year, We key satellites for for the offers the XX managed managed service desktop technology managers points, has proven access switches, IT well and on for network NETGEAR via The at or networks. support devices client’s mobile are security and remotely

another expanding As copper markets, for deployment for XX-port of we're XX-port ProAV into AV the extremely fiber IP the inroads modular We are solutions. into The example introduced models XX-port we the MXXXX making ideal market. about new of with compact and series modules of switching excited the groundbreaking three adjacent switch. over POE, old our and

With based systems scale in strategic IP Data, the ProAV as visual leading top to provide of with IP will Furthermore, Broad performance, one in marketing way on AVI, audio of based equipment we cost unprecedented systems announced next ProAV deploy technology for generation three joint integrators with and a ProAV just integrator, the manufacturer, this initiative efficiency a five America. levels AVI customers looking partnership the systems. North

initiative will make and of on bottom we future. our our to continue a to especially earnings both impact significant expect we stream. progress Finally, important it that build revenue stability is the with NETGEAR's as line recurring the have in This

the registered approximately of quarter third XX end of the million we users. have As

this represents Our the has XXXX. remain user over value creation of which sequential registered very about approximately excited QX X.X million, We app XX% grown initiative. user transformative opportunity count growth to

Geek At the October, Best a strategic very start with of offering Buy's Squad. also started service we

support receive with Squad, added a variety parental of installation and about Orbi controls. an value customers nodes, a year, from Mesh network Armor services, Geek For and two technical including subscription full $XXX will NETGEAR and services

of we also conversion rate seeing QX, from X% trials During paid some customer are up subscription on engagement services free NETGEAR XX-day campaigns. experimented trial to a and Armor for to our free with

are improve customer we to service will go ability as continue and learning revenue. are our our confident to We grow we

subscribers, detail beyond. and XXXX can more I rollout progress, acquiring join market WiFi you ProAV service and and that plan in our hope our to join plan, Last for success during we provide NETGEAR at MarketSite XXth NASDAQ will Financial but like would analysts the least, and November on Day, York the in New to which I not of Analysts invite for around improvement product penetration us investors our X XXXX us. margin all

please investors@netgaear.com If you attend, or Investor out NETGEAR details. Investor visit Relations would like Relations to more at out reach for to website

and towards geopolitical summary, presented quarter to into margin revenue our remain near-term In we while double-digit progress mid-single fourth confident in growth, annual our digit strategy, headwinds the XXXX. setbacks and heading operating

the I'll for fourth call now Bryan back quarter turn guidance. to

Bryan Murray

quarter seen by will The the revenues EMEA APAC. be markets core Thank fourth Patrick. impacted within we in trends you, have the and

While as see revenue our will reduces user softer there these on for an we demand, end expect be conditions. inventories the to channel new additional effect

regions In CES we're our towards Europe resources such we to greater and lower those to response In XXXX America expectations proactive China, inventory accelerated top within cost after taking in opportunities, January. prepare for actions the line further resize reduce our X as are U.S. early base enable steps redeploy an WiFi North in Japan. to and where channel in taking to see North to to America, also we in shift us

where those in Europe, sales and shrink footprint We office in to are reduce headcount appropriate going our China and markets.

to In revenue in X.X% fourth operating the of X.X%. the to and in range GAAP the margin expected range to expected the foregoing, million to of $XXX a be for $XXX expected to to net in or X.X% is X.X%, be quarter is is non-GAAP the operating of range to million, consideration be margin

is rate Our is XX.X%, GAAP tax XXXX. for our approximately rate XX% to be to of and the be expected quarter fourth tax expected non-GAAP

and our questions. take that can comments we concludes Operator, now

Operator

[Operator the line Instructions] first comes Tindle And with of Adam Raymond your James. go ahead. question from Please

Adam Tindle

afternoon. good start to the inventory. and wanted Okay. Thanks on just I

look I you the of reduce weeks out it You didn't called talked The channel about initiative line, to think proactive. inventory. significantly

is help hoping I secondly, how us help revenue? kind part, adjustment of us you the two this size that's was So, hit the with can contract needed, of to that much going And uplift look timing of forward the then to X is this this, with can into QX Or the does in it and WiFi continue that? guidance, XXXX? thereafter we all XXXX, in and

Patrick Lo

QX. It's that our implying guidance all for

looked of In terms normal say, the would you seasonality. I at if sizing,

range. of in lift us that typically non-service the You would see XX% CHP provider on portion

So this the the the Americas that is of I being would the X we're international from WiFi by coming rollout. And down say to correction facing. probably two-thirds is weighed one-third anticipate really headwinds remaining

Adam Tindle

it Does, continue into QX?

Bryan Murray

go don't channel reduction inventory forward. further We expect

Patrick Lo

right. That's

Adam Tindle

Okay. intact, the XX%, year, And you at targeting the XR just Analysts margin question double-digits, maybe were a non-GAAP operating Day picture were show a XX% you point revenue big on XXXX based operational fundamentals made how mid-single-digit with to margin to load growth. for the last

operating year I than profit of looking target to learned at instead going we dollars be half are And XX%. be margin but today. what understand like single-digits we're be that of original going XXXX, revenue down Now going you're finishing on is the full the operating a picture down to at more based to growing, that

the I here. all leverage that seeing think just of we're surprised we're amount negative that

maybe operationally sustain can you're start And this house a bit the way to no or X% to you where operating on X% what little trend? think for market reversing assumption So touch of at about just deeper this the initiatives margins do can in right that you the kind of the and think just year business? we're growth internal looking is for doing

Bryan Murray

challenges no it U.S. mean, number has this year-over-year off we in year it's a of QX. X.X% We there's still but the in starting down down QX, I the doubt with Yes, started WiFi X% stabilized faced and that market. see year

these both in and mentioned, specifically factors China Kong, the and in challenges that's accelerated I EMEA really provided Pacific, some certainly Asia September So Hong timeframe.

not came correct late much and there. course certainly it So to time

think us, ahead sales X our do in competition, WiFi routers we We grow competitors effectively specifically three there the things do saw strategies products there. But the on have don't we our correcting here necessarily end far our of see we’re in user those short-term. for themselves WiFi X that the the U.S., not top out rollouts routers in

So that us confidence it's the strategy giving working. is our

giving mid-single as we combined So Again, that get digit us what's the we we things these in all are behind is back transpired XXXX of XXXX. what growth us, XXXX. do to can kind really head think into confidence in

Patrick Lo

Yes.

not going we’re to that add robustness deploying WiFi baseline said, differences that's Brian I the in are significant into also our one, to out our XXXX. Hong or in such, Europe so so Just markets into China, versus have as reset we resources there all as has be think at baseline. Number in resetting XXXX those X would what North that we and perform assume Kong to such And shown America segment. in Japan will

in tariff to tariff. is being products we slow assessed become the of all the some see of terms What the so is trade of of believe not a surprises were that we on percentage territory the tariff move out war were and of the China, kept that them that also sudden tariffs we and the -- getting front in speed that tariffs we

gain lot So in that it. of put really a

productions a in phase of early we the of so secondly, the is testing of outside case inventory, our had why in lot just go to well still that's didn't factory China year production we in inventory. the have buffer in And

the is current right. mean get Now When in as the we it those And time same in the older I factories goes generally to China relative of in the -- to take though even inventory China. produced, applied, time expensive, outside the were will costs industry, efficiency is higher factories more before price. then selling on is relatively inventory, to those the food tariff the long buffered because sea as is was like

will of factories that the not to two, whether we those let's one all as countries. countries inventory as negative those we into, tariffs course, going factors applied Now, predict is in be will we cannot number believe will XXXX, down. the will say new apply cost gone, the unless our but move higher production tariff to worked to be other Number be in But long

in Chinese be base cost getting factories. the the with line old of

So of that's advantage XXXX. also the

WiFi that assessment we're saw going adjustment, in U.S., accelerate China-Europe, one we thing QX more are WiFi saw a more in Japan of doing on what still of U.S. revenue as what to and versus proportion we based as that importantly mix of Now, X still and into XXac keeping and our of into and back. higher Japan the well X, some that Europe come at versus will hoping we China

would operating looking at where factors WiFi we production Inherently Vietnam, ensure are Thailand and double the versus factories on of growth production and able profile and the from to on those absolutely costs this be X that are to our in margin are -- we feel hit the the by digit Indonesia, So looking year. we in the we single revenue few margin digit working in right at latest track. growth that

we market to in year, ship announce to only have last do a we order into after in we we And debut X like create real in as QX. believe as products CES get momentum to But revenue, which WiFi what will didn't year, we are CES, reality, the take prepare to generate unlike world for the is we channel. it to that this. to the ship in us we terms but to until order channel not That share. the and for would inventories into of this around of the well we week do biggest the This to announced new some product, lot products, going adjustment

in fast know that will be XXXX. transition However, we do not how

routers, only -- gateways, channel mobile accordingly. we sell So that so extenders. sell we also hotspots, we mesh sell also would really very like sell rapidly keep we also we to could we cable inventory only also sell not lean but we systems, we Because the adjust

know how shift We on want fastest technology any WiFi we're nimble, the the of these move, want be be these to to able one categories. actions able of all channel the inventory be taking We don't why And to capitalize will that's in QX. accordingly. ship to in six we and

a we could feel gives our major at ourselves all the deliverable. that a And will into over four position be like that of least technology And we year XXXX three about have we our us get WiFi competitors. that X really of to quarters a lead good long-term really confidence

would revenue how that we that, for beyond have And and service to to do the on more XXXX have get do service part. we Day Analysts revenue in kick-in are done? impact. course that of believe start And that? positive our that to to granularity And going we're will going for What the

Adam Tindle

quick just sense one you business right the you quantify then on remind Thanks. M&A of help us And meaningful that you being is of buyback would one whether what just about for to still and how much cash. help buyback use Maybe Okay. talked make means? Can in generating Bryan, confident levels the or is us cash? left the

Bryan Murray

I turnaround. Yes, into will going things QX think think, we

that accounts seasonal terms go the flow that usually some may down a other cash QX. My have programs levels. ours, these from cash of recall some which inventory XXX% we a we of in non-GAAP dating net direction in of with free we're typically income it’s position do believe of is You probably we’ll north to of work key generate some standpoint, in but guess

carry And be. completely of can. forward. three likely the try that's work It as to we'd my like quarters would we'll QX we to to do down to But that estimate and as two what us levels the best take inventory that fast will

of expect balance buyback needs I we our cash cash use an in cash cash. cash that of generate for operating in In using terms quarter. use just are. of still still we Yes, what we as said, additional appropriate to that carries the And think excess is our of think

Patrick Lo

and the our will content as And X not such space, we also, space WiFi technology tuck-in benefit some looking the such space. I just at mean, service space, revenue stop that the area, will as ProAV acquisitions growth

Operator

from question comes with the of next go line your Please Gutman ahead. Guggenheim. Robert And

Robert Gutman

for Thanks question. the taking

at the of wondering this and there promotional uncertainty dollar a the the we've point, spending was parts allocation Is revenue. sort and there impact you cited that amount? or moving I that overall all seen Given change just counter now in on

Bryan Murray

to second Relative quarter? the

Robert Gutman

that to how your prior relative Yes, plans you're for money. spending

Bryan Murray

certainly tweak as promotional Yes, was coming I there day event dollars. Day into to anticipation say that on opposed extended our typically additional a Prime mean, And two I of some but past. slight with the year, comes one day original in this being would it a account, to maybe the plan. that to quarter successful one certainly, was

certainly Friday on levels on But think it QX think had into will Black impact the searches. some I quarter. Cyber spending going that of Monday. at the QX normal Certainly, back we So promotional be and

Robert Gutman

the sort market more the to the that, coming And it's do need and development there do you a type see just, third broader for a disappointing. given quarters a looking we But you is type? see in the flattish U.S. more spend think I of or were in that that wait WiFi for obviously of little you think could move and quarter

Bryan Murray

Yeah. to momentum we will that I'm get here. hoping

I into think we we’ve that Orbi quarter. now speak. the WiFi the late as launched the Mesh, seated in market That's getting X out mentioned we

an we router on side WiFi think is We of on will that user And I touching the think that of from get third that flat that so introductions, X and component, market the said our we factor standpoint. we're a key about because we we're end a a will Mesh, in saw product QX earlier, be hopeful which the contributing success to market. closer the now

Patrick Lo

counter marketing spend going we QX don't revenue traditionally we’re years. see the prior to what than a more perspective, in From spend in that we

Robert Gutman

that's Okay, Thank you. helpful.

Operator

of line go with Liz your comes Cowen and question Please ahead. Pate Company. And the next from

Liz Pate

taking for question. thanks my Hi,

you fourth a timing of the channel just of XXXX, in you'll do. a line that return to get closer Thanks. get you growth? in back do to looking reductions terms quarter, had have of in top into wondering of to reduction the think to You out lot terms I'm top inventory just growth market just line growth? that you when comment You flat think calendar

Patrick Lo

given headwinds, If we that revenue able constant, the to to second surprises, all more no get onwards. no top expect that means geopolitical quarter be should factors growth there's more probably from we line

So that inventory later than be believe look we done and at QX adjustment Yes. the QX. we how it should be that's channel by because, not

Liz Pate

digit just a Okay, digit still of that great. on margin, so is saying? reasonable target X% operating for double And kind XXXX, low-single you're growth what revenue

Patrick Lo

is in a situation plan that Yes, normal the XXXX. economic still for

Liz Pate

service then, that And look $XX up million or rebounded kind held revenue forward? range that like in see Okay. nicely lastly, to of provider XQ. $XX Do million still you that moving in

Patrick Lo

roughly $XX plus yes, it’s Yes, or the range, in million minus.

So QX minus. was QX a big was plus, a QX was plus, big

Liz Pate

one on in have sorry, OpEx operating expenses to to bit? levers just you question a pull down there, you little I'm expect do flat, some do be XQ, other

Bryan Murray

probably the did reallocating resources It's the will a to but these see right We to we that about markets of be we're flat. we closer size those challenged, some taking opportunity. to actions talk areas bit we that of see some

Patrick Lo

in up the ramping our resources in and Japan, ProAV in headcount Yes, and definitely we're overall. for investment market America North

Liz Pate

okay. Thank very much. you Great,

Operator

from line with go of Khorsand question Financial. Hamed next your ahead. And comes Please the BWS

Hamed Khorsand

Hi. market was guess the of the Beginning commentary follow about get were just and related. somewhat here wilderness in it be that decline to on to the I you WiFi X. WiFi up X a year, wanted the

just is really case that what's Now that you I just going the home slow you're market, WiFi the WiFi you are but or losing of on share products have in market is saying on mean to carriers? the X more the

Patrick Lo

In clearly declined X full we had was the think the the to market router X market X.X because about for In for is the history in year-over-year. QX absolutely the it's declined what have improved X actually X.X%. in improved products, QX, three WiFi the we pretty WiFi we time have the we negative by is to for product when market QX from Unfortunately, we X%. we No, in saw quarter, mesh the that when whatever. first skews reason market very products there X no when X.X% the the WiFi WiFi saw market simple should doubled

it's like you, plateful a tells one other clearly drug the is that the when the and test, is So drug. in

So for the no router demand market well absolutely when side, holding history. in the but the declined market X on the WiFi mesh on very WiFi there's the X, first side, time actually there's up,

in that So on to WiFi us going a time key be is we the why and the WiFi very QX that the would both first with have side tells likely that's router very driver skews least X is X improve and then and at in totally skew WiFi we not but flat, with with X.X%. improvement mesh X, one might WiFi the X market see expanded the should of be also from

there's Now come will cable, QX see high growth. WiFi when post likelihood as return we said, and market a all to categories, be X in have that products even we mesh router CES the we and extenders will flat or

Hamed Khorsand

inventory that need WiFi faster? as Okay. that liquidate that concerned, is not how you're is X of concerned And to inventory you as much it far

Patrick Lo

believe two WiFi X much inventory to would AX take the market liquidate about is could the quarters we probably XX handedly or one that see, over. to our we still years would as single completely we push No, buffer over or is don't three as maximum XXac you because transition two it on before as

to we move the XXac have So still we in inventory liquidate a a I as really to products. XX% of are absolutely we all. mean, no hurry a so matter of lot share market XXac at wherewithal hold fact, And

Hamed Khorsand

router? move? it WiFi year, really haven't just consumers And X the the here it’s made competitors to not that's a Is if X you wanting why providing much the catalyst that your driven WiFi for for cost think spend this

Patrick Lo

-- hardware market not you it, Amazon competitors in three the at their look them, multiple mean, reasons a Google. seriously, use vendors. are write even driver is it's from and the I if because had And is are only mean have process No, I One they two development for there today. the ODM is don't the way the use of in and All model. some software their all The completely they different. right. they They from house don't software bit little chip up, developed software the stack

WiFi their very them think So of to product we as furthermore, you more their offerings. their just And collecting data. now their for and on I saw lowering it expand right focus focused is introduction costs really is difficult X recent

areas. So the just competitors financial to [ph], for them WiFi developments such X those all as is to other don't they in product engage Lynx wherewithal priority. then not the the in many WiFi have X And

So, and many that I disadvantage. have the to very products introduce financial enough think WiFi we going we're capitalize well we as model in unique on position X that the ODM absolutely as a to are

Hamed Khorsand

you. Thank

Operator

your line And question ahead. of Ho Bloomberg from Woo comes Intelligence. final Jin you're go in the Please with

Woo Jin Ho

for couple How A explosion that ones. is been my My big has taking you your and understanding today? was China Hong Kong of small. Thank quick question. it

why So impact head revenue a scratching quarter into into and be such kind there going my fourth big the would XXXX? possibly of and

Patrick Lo

right, you the end Hong at China, million. low Clearly, the as swing and I we of our would the big And could mean, about $XX Europe high is. see see, be you Kong, easily can to the how so we hit guidance, end do a least at right? usually And love of calculation that’s impact

world. is the Hong in number Now two China remember, the Kong, economy

be should number they our two market, So right?

look at Japan, And significant. pretty clearly, there also big for it's there is economies you us. Germany, the is So if which other

we got feel indexing we’re to which absolute over growth we strides fast China why be Japan, under that for that's we us, there. an will good Japan, So into as as make from in is able shift which to area and quickly possible

Woo Jin Ho

be to Hong the just you're China, market. Kong not clear, exiting And

over just to that thinking the your the exposure of reducing way You’re and resources right of Japan. shifting there Is it?

Patrick Lo

definitely exiting shrinking footprint. at all, not We're Correct. the are we but

offices to three For important it how example, give China. have we in sales mean, is, I you just

Beijing, we probably with get have plus and reality Clearly have offices. four. need Shanghai, we have sales this Hong Guangzhou, We we new Kong don't four

Woo Jin Ho

And in digit you're commentary, revenues your sounds Q&A like it XXXX. targeting in single growth

Sounds like to Analysts a preview Day. the

with focus your on unit be the takes on all puts X, WiFi driven inventory this on growth and the given ASP product to driven growth Given doing portfolio? going what a or and the is an you're

Patrick Lo

mostly growth, however, take would growth. our planning any it be horizon, For ASP we’ll unit

share come to I unit think gain. has the growth from

is we're ASP the from well. ASP planning space side, the on for growth. excited very SMB the baseline on but side, growth the -- as not But So now, is for ProAV also only our coming

times announced I of think as in that talked I we coming as and will foundation, about, which market Data $XXX opportunity good we we've you SMB a side. XX% we AVI first marketing to represents TAM. about alliance pretty to lucrative even more see $XXX excited with just that many laid the just incremental and a a have be business Broad that pretty will as share, million initiative described this which And opportunity million

Bryan Murray

Jin, actions in about the CHP some We be back with QX to And, that drops drop muted of the in low-teen coming wise. I the certainly in maybe just provider to off XX%. the XX But that that will seasonal we're That think taking still we'll with where see see U.S. the seasonality percentage holiday normally respect refer see to Patrick growth. to QX, season earlier that something said Woo in starting as we non-service

Woo Jin Ho

last one whereas Google the and best the me. Okay. question you in a good, have have better, strategy WiFi job good. product Patrick, on in focused market, Amazon done guys mastering great And the for then portfolio

Given that with to there price lower and risk product your focus the any is of up on a Google to be the spectrum, large and higher giving the of a the share base products? mesh that end pyramid WiFi might you X Amazon of

Patrick Lo

Not really.

are We of good, better, high best. the end the

on compete single we So, every level.

$XXX. look introduced for X at at router, So a we router example, you if just X WiFi WiFi

good end the the dual which new series, $XXX. is is introduced around the XX band we at just of So and Orbi priced which high a also

continue to that. we do So

always has in every operandi. basically level, in our been which And very modus because partners levels channel priced, compete single price highest we we’re want it single successful, price is but every So that.

X to single empty. every level, extender, price of price the but point higher the line For $XXX we'll and just a to continue priced a not expand going they introduced we’re product. want any We leave WiFi open

Woo Jin Ho

Understood. you. Thank

Patrick Lo

Sure.

Operator

for Lo closing now the to remarks. will I And back Patrick turn call

Patrick Lo

but enter our the as joining to strong at call. Clearly, year are and financial XXXX. are business, headwinds for optimistic very and with and today's we we us, we results the we I prospects close quickly political about the everybody you for across mean, better would out QX have readjusting, like QX, Thank

in initial areas. making We years. have in service encouraged ProAV subscribers clear good WiFi few our both We're of a partners in in listing paid million customers, acquiring steps leadership a towards subscription goal and by and X, very our progress in

York of forward Thank you seeing of to November XXth to the you forward all those all fronts updating on on Site. NASDAQ look I in at you. Analysts our at Day November New look in all and

Operator

call. conference today's concludes this And

now may disconnect. You

NETGEAR (NTGR) 23 Oct 192019 Q3 Earnings call transcript