Netgear (NTGR 13.10%), a leading provider of networking equipment and solutions for homes and businesses, reported its fiscal second quarter 2025 earnings on July 30, 2025. The company delivered GAAP revenue of $170.5 million, surpassing both internal and analyst expectations, driven by a resurgence in its NETGEAR for Business (NFB) segment and broad-based margin improvements. Revenue (GAAP) totaled $170.5 million, outpacing the consensus GAAP estimate of $162.06 million. Non-GAAP earnings per share reached $0.06, a pronounced turnaround from the estimated non-GAAP loss of ($0.15) per share. The period was characterized by substantial gains in both gross and operating margins, with overall business progress and mounting strength in core segments. However, ongoing supply constraints and continued operating losses were noted at a group level, preventing a full return to sustained profitability.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.06 | ($0.15) | ($0.74) | nm |
| Revenue (GAAP) | $170.5 million | $162.06 million | $143.9 million | 18.5 % |
| Gross Margin (Non-GAAP) | 37.8 % | 22.4 % | 15.4 pp | |
| Operating Margin (Non-GAAP) | (0.7 %) | (21.6 %) | 20.9 pp | |
| Cash, cash equivalents and short-term investments | $363.5 million | $294.3 million | 23.5 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Netgear’s Business and Success Factors
Netgear makes networking hardware and software solutions used by consumers, small businesses, and commercial clients. Its core product lines include WiFi mesh systems, network switches, security platforms, and mobile broadband devices. The company sells these products under three main segments: NETGEAR for Business (NFB), Home Networking, and Mobile.
Recently, Netgear has focused on technological innovation and product launches. Its success depends on continuous development—such as adopting WiFi 7, integrating advanced security, and expanding cloud management tools. The company relies on robust sales channels, strong brand positioning, and effective supply chain management. Consistent investment in software development and manufacturing resilience are seen as central to its ongoing competitiveness.
Quarter in Detail: Financial and Operational Highlights
Netgear achieved a marked improvement in revenue, rising to $170.5 million (GAAP), which was $8.4 million above analyst expectations for GAAP revenue and represented an 18.5% increase from the prior year quarter (Q2 2024). Non-GAAP earnings per share swung to $0.06 from a loss in both the previous quarter and the same quarter a year ago. Notably, the company delivered a record non-GAAP gross margin of 37.8%, up 15.4 percentage points year-over-year. The overall non-GAAP operating margin narrowed its loss to (0.7)%, an improvement of 20.9 percentage points compared to the year before.
The NFB segment led growth with sales surging 38.0% year over year to $82.6 million. Non-GAAP gross margin for this unit climbed to 46.7%, while non-GAAP contribution margin improved markedly year-over-year. Home Networking revenue increased 13.1% to $67.5 million, as the addition of new WiFi 7 mesh systems including the Orbi 370 supported both higher sales and product profitability. The Mobile segment saw its revenue fall by 16.1% to $20.4 million, attributed to lower demand from service providers, though non-GAAP gross and contribution margins improved.
Netgear continued to invest in product innovation, integrating a Secure Access Service Edge (SASE) platform through the acquisition of Exium. The goal is to merge advanced security within the company’s cloud management offerings. The insourcing of software engineering in Chennai and selective hiring offset reductions in outsourced R&D expenses. The company’s service revenue, generated from recurring subscriptions, increased 19.3% year-over-year in Q1 2025. Days sales outstanding (DSO)—a measure of the average collection period for sales—dropped to 77 days, signaling a healthier sales channel than in nearly eight years. Inventory turns, which measure how often inventory is sold and replaced, rose to 2.7 times, up from 2.4 times in Q2 2024.
Operational strength was visible in channel management and distribution. The company also completed a restructuring begun in Q1, reducing annualized operating expenses by approximately $20 million. These savings were redeployed to accelerate insourcing of software development and bolster product innovation, notably in areas serving small and midsize enterprises.
The competitive environment was shaped by continuing exemption from most U.S.-China tariffs, giving Netgear a relative cost advantage over certain competitors. ProAV networking solutions—an area for business-grade audio and video over Ethernet—showed double-digit year-over-year growth across all regions and the addition of new manufacturing partners brought the total to approximately 460. The company, however, faced unfulfilled demand and supply constraints, particularly in the NFB segment. This resulted in a backlog of orders carried into the next quarter. Despite those operational improvements, the company’s Mobile segment has yet to regain sales momentum, as revenue declined 16.1% year over year, although profitability within Mobile recovered somewhat after cost reductions and a refined product offering.
Throughout the quarter, the company remained focused on improving execution, managing risk by keeping inventory balanced, and leveraging its position as a U.S.-based maker unaffected by most tariffs. This competitive stance may be vulnerable if tariffs shift or channel demand slows unexpectedly.
Looking Forward: Guidance and Investor Considerations
For Q3 2025, Netgear management projects GAAP revenue between $165 million and $180 million. Both GAAP and non-GAAP operating margins are expected to remain negative, ranging from (11.0)% to (8.0)% and (5.5)% to (2.5)% respectively. The company anticipates continued investment in product engineering and go-to-market strategies.
Management stated it expects supply constraints, particularly in NFB, to persist but also sees potential improvement as the year progresses. No explicit annual financial guidance was provided beyond the next quarter. Investors are advised to monitor the pace of supply chain improvements, Mobile segment performance, and the ability to convert strong gross margins into consistent operating profitability. NTGR does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
