Netgear (NTGR) Q2 Revenue Jumps 18.5%

Key Points

• GAAP net revenue rose 18.5% year over year to $170.5 million in Q2 2025, beating estimates by $8.4 million.

• Non-GAAP EPS turned positive to $0.06 in Q2 2025, ahead of expectations for a $0.15 loss.

• Record-high GAAP and non-GAAP gross margins, along with a narrowed operating loss in Q2 2025, reflect benefits from recent restructuring and product innovation.

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Netgear (NASDAQ:NTGR), the networking technology company known for its consumer and business connectivity solutions, reported its Q2 2025 earnings on July 30, 2025. The company announced GAAP net revenue of $170.5 million, exceeding consensus GAAP estimates of $162.06 million, and non-GAAP earnings per share (EPS) of $0.06, beating the estimated non-GAAP loss of $0.15 per share. The quarter showed strong progress in profitability and operational discipline, driven by innovation, sharp execution in the business networking segment, and a rebound in home networking. While the company set records in both GAAP and non-GAAP gross margins and narrowed its operating loss, profitability on a GAAP basis remained negative. Overall, the quarter delivered substantial improvement compared to both internal guidance and analyst expectations.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

About Netgear and Business Overview

Netgear sells networking products that power home WiFi, small business connectivity, and mobile internet solutions. Its product lineup ranges from WiFi routers and mesh systems for consumers to switches, access points, and security-optimized solutions for business customers. It operates globally across the Americas, EMEA (Europe, Middle East, Africa), and APAC (Asia-Pacific) regions, with sales through retail channels, value-added resellers, and direct distribution.

In recent years, Netgear has placed an emphasis on technological innovation—investing in new wireless standards like WiFi 7 and network security enhancement. Following a major restructuring at the start of fiscal 2025, Netgear now manages three core segments: NETGEAR for Business (NFB), Home Networking, and Mobile. This restructuring aims to sharpen operational focus and improve financial management. Key success factors include rolling out advanced solutions such as WiFi 7 mesh systems and business cloud management, alongside expanding distribution channels and maintaining cost discipline.

Quarter Highlights: Revenue Growth, Margin Expansion, and Segment Results

NFB revenue (GAAP) climbed to $82.6 million, an increase of 38.0% from the prior year. This segment includes ethernet switches, network management software, and ProAV (professional audio/video) solutions for small and medium-sized enterprises. Non-GAAP gross margin within NFB rose sharply to 46.7%, up 13.0 percentage points from the same quarter last year. Management pointed to ongoing demand for ProAV solutions, which saw double-digit sales growth across the Americas, EMEA, and APAC. Backlog remained significant due to component supply constraints, which are expected to persist into the following quarter.

Home Networking, which covers WiFi routers and mesh systems for residential customers, generated $67.5 million in GAAP sales—a 13.1% rise year over year. Non-GAAP gross margin in this segment improved by 18.0 percentage points to 29.5%, supported by a favorable product mix, inventory sell-through, and expanded launches of WiFi 7 mesh products. The company recently introduced the new Orbi 370, its lowest-priced WiFi 7 mesh offering. This product is part of Netgear's “good-better-best” tiered strategy aimed at capturing a broader range of customers and price points.

Mobile, which consists of portable internet hotspots and 5G routers like the Nighthawk M3 mobile 5G router, reported GAAP revenue of $20.4 million. This figure was down 16.1% year over year, reflecting weaker demand from service providers. However, Netgear reported stronger-than-expected retail demand. The segment’s non-GAAP gross margin improved by 7.5 percentage points year over year to 29.1%, though operating profit remained low. Management attributes the decline to softer-than-expected service provider demand, but sees stabilization in retail performance as a positive signal for future periods.

Gross margins for the overall company reached new highs—GAAP margin stood at 37.5%, while non-GAAP reached 37.8%. Operating loss narrowed significantly on both a GAAP and non-GAAP basis, reflecting the impact of cost reductions and more efficient allocation of resources following the recent restructuring. Netgear ended Q2 2025 with $363.5 million in cash and short-term investments, a decrease of $28.5 million from the prior quarter, mostly due to the acquisition of Exium, a company focused on SASE (secure access service edge) security, and $7.5 million in stock repurchases. Inventory turns, an indicator of inventory management efficiency, increased to 2.7 from 2.4 a year ago.

The period also saw continued investment in innovation and digital security. Netgear expanded its software development efforts, particularly by leveraging a new in-house team in Chennai, India, stemming from a prior acquisition. Headcount increased from 622 to 707 year over year. Geographic revenue mix remained stable, with the Americas accounting for 68%, EMEA 20%, and APAC 12%.

Management highlighted improvements in working capital management, reporting days sales outstanding (DSO)—a measure of how long it takes to collect revenue—at its lowest in about eight years, at 77 days, down from 93 days in Q2 2024.

Strategic Moves and One-Time Events

Several material developments shaped the quarter. In product offerings, Netgear launched new WiFi 7 mesh systems for the consumer segment and continued enhancements in its ProAV and managed switch portfolios for business users. The completion of the Exium acquisition expanded security offerings—by integrating this SASE technology, Netgear aims to offer more secure, cloud-managed network services to business clients. This tie-in is expected to increase the value proposition of its core NFB offerings.

The restructuring that began in the first quarter is showing visible results. Netgear’s segmentation now provides clearer accountability and more targeted operational strategies. The company is actively reinvesting cost savings into research, development, and direct go-to-market initiatives, notably through insourcing India-based software expertise. Non-GAAP contribution margins improved significantly across all segments. Most notably, Home Networking's non-GAAP profitability (contribution margin) moved from negative to positive territory compared to the prior year.

These moves trimmed cash reserves but position the company to strengthen its competitive differentiation in security. Netgear also noted a persistent supply-constrained environment for components, which led to a significant backlog, particularly in the NFB segment. U.S. retail channel inventory levels increased to 12.0 weeks from 9.5 weeks a year ago

Looking Ahead: Guidance and Investor Focus

For Q3 2025, management provided GAAP revenue guidance of $165 million to $180 million, implying expectations for flat to modest growth compared with the current period. Operating margin is projected to remain negative—between (11.0)% and (8.0)% under GAAP, and (5.5)% to (2.5)% on a non-GAAP basis, reflecting continued investments in research and development and expansion of business networking capabilities. The company did not provide full-year revenue or earnings guidance.

Netgear expects demand for business solutions, especially ProAV switches and WiFi 7-enabled products, to remain strong. However, it foresees continued supply constraints and a flat outlook for Mobile until new products are launched. Investors should watch for sustained progress in gross and operating margins and monitor inventory trends in retail channels. The company’s strategic focus will remain on innovation, operational discipline, expansion of recurring service revenue, and further improvements in segment profitability.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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