Netgear raises Q3 revenue view to $170M-$180M from $160M-$175M

One estimates $167.2M. In a regulatory filing, Netgear states: “The Company today provided an update to its business outlook for the third fiscal quarter ending September 29, 2024. The updated guidance reflects the above-referenced litigation settlement, as well as the earlier than anticipated launch of its next generation 5G mobile hotspot in the third quarter which was previously expected to occur in the fourth quarter of 2024. Driven by the earlier than anticipated launch of its latest 5G mobile hotspot, NETGEAR currently expects net revenue for the third quarter of 2024 to be between $170 million and $180 million, compared to prior guidance of $160 million to $175 million for the third quarter of 2024. NETGEAR expects to report a net benefit before taxes of $103.6 million after backing out associated fees. Of this amount: $10.9 million is expected to be recorded as a reduction in GAAP G&A expenses to offset actual fees incurred to date. $92.7 million is expected to be recorded as a contra-expense in litigation reserves, net within operating expenses which will more than offset the Company’s total operating expenses for the quarter and lead to a significant GAAP operating profit. Additionally, NETGEAR will reverse the $8.2 million contingent fee recorded in its second quarter of 2024 as all associated fees are captured in the net benefit noted above. As such, NETGEAR currently expects GAAP operating margin for the third quarter of 2024 to be between 48.0% and 51.0%, compared to prior guidance of (15.3)% to (12.3)%, with the change primarily driven by the settlement and the profits from the expected increase in revenue. The Company now expects its GAAP tax expense to be in the range of $19.0 million to $20.0 million, compared to prior guidance of $1.0 million to $2.0 million The full benefit of the settlement will not be included in the third quarter Non-GAAP earnings. The portion of the settlement to be included in the Q3 Non-GAAP earnings is expected to be as follows: $10.9 million is expected to be recorded as a reduction in G&A expenses, reflecting a reversal of the actual fees incurred prior to the settlement which were previously included in Non-GAAP earnings; *As such, NETGEAR currently expects Non-GAAP operating margin for Q3 to be between (4.0)% and (1.0)%, compared to prior guidance of (11.0)% to (8.0)%, with the change primarily driven by the settlement and the profits from the expected increase in revenue; The Company now expects its Non-GAAP tax expense to be in the range of zero to $1.0 million, compared to prior guidance of a tax benefit of $1.5 million to $2.5 million. The Company believes that the cash benefit of the settlement after associated fees and expected tax, net of other applicable tax benefits anticipated in the year, will be approximately $90.3 million.”