NETGEAR® Reports Second Quarter 2025 Results

Q2 revenue and operating margin above the high end of guidance

Achieved record high GAAP and non-GAAP gross margin

Positive contribution margin in each business unit

Completed acquisition of Exium to add security to NFB offering

Vast Majority of NETGEAR products continue to remain exempt from tariffs

NETGEAR, Inc. (NASDAQ: NTGR), a global leader in intelligent networking solutions designed to power extraordinary experiences, today reported financial results for the second quarter ended June 29, 2025.

Q2 2025

• Net revenue of $170.5 million, up 18.5% from Q2 prior year
• GAAP gross margin of 37.5%, up 1,540 basis points from 22.1% in Q2 prior year
  
  Non-GAAP gross margin of 37.8%, up 1,540 basis points from 22.4% in Q2 prior year
• GAAP operating income of $(9.5) million compared to $(46.9) million from Q2 prior year
  
  Non-GAAP operating income of $(1.2) million compared to $(31.1) million from Q2 prior year
• GAAP EPS of $(0.22) compared to $(1.56) from Q2 prior year
  
  Non-GAAP EPS of $0.06 compared to $(0.74) from Q2 prior year

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

CJ Prober, Chief Executive Officer, commented, “In Q2 we once again delivered revenue and operating margin above the high end of our guidance, in addition to generating record gross margin. The transformation of our three business units continues to accelerate thanks to the proactive and strategic investments we’ve made, and we are thrilled with the strong execution by our global team this quarter. We completed our restructuring in Q1 to further streamline our operating costs and strategically reinvest in the business. The new products we’ve launched as part of our growth strategy are clearly generating significant improvements across both the top and bottom line. Despite a supply constrained environment, we delivered an over 500 basis point year over year increase in contribution margin across each business unit and saw strong demand for our leading products such as our ProAV and Wifi 7 connectivity solutions, all of which resulted in positive non-GAAP EPS in Q2. This momentum positions us well for further growth and profitability expansion as we continue to deliver on our transformation.”

Bryan Murray, Chief Financial Officer, added, “We delivered another excellent quarter and, enabled by the improved linearity across NETGEAR’s three business units, DSOs reached their lowest levels in nearly eight years at 77 days. We exited the quarter with nearly $364 million in cash and short-term investments, down $28.5 million from the prior quarter due largely to the Exium acquisition and approximately $7.5 million of common stock repurchases. The team remains focused on maximizing long-term shareholder value and we are utilizing the annual operating expense savings unlocked by the Q1 restructuring for strategic reinvestment into the business. As we make progress in growing our best-in-class portfolio of products and services, the trajectory of NETGEAR’s top and bottom-line expansion remains steady, underscoring our confidence in the robust competitive advantage held by our business units and the potential for renewed growth and improved profitability moving forward.”

NETGEAR For Business (NFB) Segment Results

• Revenue was $82.6 million, up 38.0% year over year
• Non-GAAP gross margin was 46.7%, up 1,300 basis points year over year
• Non-GAAP contribution margin was 19.3%, up 1,590 basis points year over year

Mr. Prober continued, “NFB again had a great quarter, led by our highly sought after and differentiated ProAV solutions which saw sell-through grow double digits year over year across all three geographies. Although we entered the quarter once again limited by supply constraints, we saw better than expected top line performance thanks to the excellent operational execution of our team. Given ongoing strong demand and limited supply we are carrying a significant backlog into Q3. We also made progress in our go-to-market initiatives, grew our total AV Manufacturing partnership count to approximately 460 and launched our AV Professional Services group to provide customers with expert engineering support during mission-critical deployments — further extending our solutions-based differentiation in the AV-over-IP market. It’s clear that the investments we’ve made in NFB are beginning to drive additional growth and profitability and we expect this trajectory to remain solid as we move through 2025 and beyond. We also completed the acquisition of Exium in Q2 and are excited about the growth potential associated with their SASE platform, especially as we integrate this into our cloud management service, Insight, so that we can deliver a fully integrated networking and cloud security solution purpose-built for small and mid-sized enterprises.”

Home Networking Segment Results

• Revenue was $67.5 million, up 13.1% year over year
• Non-GAAP gross margin was 29.5%, up 1,800 basis points year over year
• Non-GAAP contribution margin was 4.7%, up 2,590 basis points year over year

Mr. Prober continued, “In the Home Networking segment, revenue and profitability came in ahead of expectations, led by a more favorable product mix as we benefited from our broadening product portfolio, along with an improved operational footprint and progress in selling through older inventory. The team did a great job delivering in Q2 to set us up for a successful Prime Day this year. With the latest Orbi 370 offering launched yesterday as NETGEAR’s most affordable WiFi 7 mesh system to date, we continue to demonstrate our focus on streamlined execution of our ‘good-better-best’ product strategy. Most importantly, we are pleased to welcome Jonathan Oakes to lead the business and look forward to seeing his progress in expanding our reach across an even greater portion of the market while positioning NETGEAR for additional expansion.”

Mobile Segment Results

• Revenue was $20.4 million, down 16.1% year over year
• Non-GAAP gross margin was 29.1%, up 750 basis points year over year
• Non-GAAP contribution margin was 0.7%, up 550 basis points year over year

Mr. Prober continued, “The strategy behind our Mobile business remains laser focused, with recent product introductions aligning to our good, better, best strategy and additional new products planned for later this year. Our relatively new Nighthawk M3 mobile 5G router is performing well, further reinforcing the strategy to participate with a broader product portfolio. While we expect to make progress in top and bottom-line expansion, this transition will take time to fully execute. We saw softer than expected service provider demand in Q2, which led to a slightly muted performance in the quarter. Encouragingly, in our retail channel, underlying demand for our mobile products led us to come in ahead of expectations in that part of the business. We continue to expect our strategy to drive our Mobile segment towards growth and sustained profitability as we enter 2026.”

Business Outlook

We expect to continue to see more predictable performance that is aligned with the market for all of our businesses. Within NFB, end user demand for our ProAV line of managed switches is expected to remain strong, and, although we expect to continue to make improvements in our supply position, we continue to face lengthy lead times for supply, which may limit our ability to capture the full topline potential of this growing business. On the Home Networking side, we are seeing signs of the benefit of our broader product portfolio to address the market. On the Mobile side, we expect revenue to be in line with Q2 as we await our new product introductions to round out the portfolio later in the year. Accordingly, we expect third quarter net revenue to be in the range of $165 million to $180 million. In the third quarter we expect to further ramp our planned investments, with continued focus on insourcing software development capabilities and enhancing our go to market capabilities supporting our NFB business, accordingly we expect our third quarter GAAP operating margin to be in the range of (11.0)% to (8.0)%, and non-GAAP operating margin to be in the range of (5.5)% to (2.5)%. Our GAAP tax expense is expected to be in the range of $0.8 million to $1.8 million, and our non-GAAP tax expense is expected to be in the range of $(0.5) million to $0.5 million for the third quarter of 2025.

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

Investor Conference Call / Webcast Details

NETGEAR will review the second quarter results and discuss management's expectations for the third quarter of 2025 today, Wednesday, July 30, 2025 at 5 p.m. ET (2 p.m. PT). The toll-free dial-in number for the live audio call is (888) 660-6392. The international dial-in number for the live audio call is (929) 203-0899. The conference ID for the call is 1030183. 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 via the web at http://investor.netgear.com.

About NETGEAR, Inc.

Founded in 1996 and headquartered in the USA, NETGEAR® (NASDAQ: NTGR) is a global leader in innovative networking technologies for businesses, homes, and service providers. NETGEAR delivers a wide range of award-winning, intelligent solutions designed to unleash the full potential of connectivity and power extraordinary experiences. For businesses, NETGEAR offers reliable, easy-to-use, high-performance networking solutions, including switches, routers, access points, software, and AV over IP technologies, tailored to meet the diverse needs of organizations of all sizes. NETGEAR’s Home Networking products deliver advanced connectivity, powerful performance, and enhanced security features right out of the box, designed to keep families safe online at home. NETGEAR’s Mobile products provide high-performance 4G/5G products, including WiFi 7 and WiFi 6/6E-enabled mobile hotspots and routers, designed to meet the growing demand for high-speed and reliable internet connectivity on the go. More information is available from the NETGEAR Press Room or by calling (408) 907-8000. Connect with NETGEAR: Facebook, Instagram and the NETGEAR blog at NETGEAR.com.

© 2025 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.

Source: NETGEAR-F

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: NETGEAR’s future operating performance and financial condition, including expectations regarding growth, revenue, operating margin and gross margin; creating long-term value for shareholders; positioning NETGEAR for long term success; long-term potential and profitable growth; continued end user demand for NETGEAR’s ProAV line of managed switches; expectations regarding more predictable performance that is aligned to the market; revenue from the service provider channel; expectations regarding continuing market demand for the NETGEAR’s products and services; and expectations regarding expected tax benefits or tax expenses. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for NETGEAR’s products and services may be lower than anticipated; NETGEAR may be unsuccessful, or experience delays, in manufacturing and distributing its new and existing products and services; consumers may choose not to adopt NETGEAR’s new product and services offerings or adopt competing products and services; NETGEAR may fail to manage costs, including the cost of key components, the cost of air freight and ocean freight, and the cost of developing new products and manufacturing and distribution of its existing offerings; NETGEAR may fail to successfully continue to effect operating expense savings; changes in the level of NETGEAR's cash resources and NETGEAR’s planned usage of such resources; changes in NETGEAR’s stock price and developments in the business that could increase NETGEAR’s cash needs; fluctuations in foreign exchange rates; loss of services of key personnel may affect NETGEAR’s ability to executive on business strategy effectively; and the actions and financial health of NETGEAR’s customers, including NETGEAR’s ability to collect receivables as they become due. 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 NETGEAR’s periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Part I - Item 1A. Risk Factors” in NETGEAR’s annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the Securities and Exchange Commission on February 14, 2025. Given these circumstances, you should not place undue reliance on these forward-looking statements. 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, except as required by law.

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 (loss), non-GAAP operating margin, non-GAAP other income (expenses), net, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. These supplemental measures exclude adjustments for stock-based compensation expense, acquisition related expenses, restructuring and other charges, litigation reserves, net, gain/loss on investments and others, and adjust for effects related to non-GAAP tax adjustments. 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:

Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options, restricted stock units, performance shares 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: acquisition related expenses, restructuring and other charges, litigation reserves, net, and gain/loss on investments and others. 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 often 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.

Non-GAAP tax adjustments consist of adjustments that we incorporate into non-GAAP measures in order to provide a more meaningful measure on non-GAAP net income (loss). We believe providing financial information with and without the income tax effects relating to our non-GAAP financial measures, as well as adjustments for valuation allowances on deferred tax assets, provides our management and users of the financial statements with better clarity regarding both current period performance and the on-going performance of our business. Non-GAAP income tax expense (benefit) is computed on a current and deferred basis with non-GAAP income (loss) consistent with use of non-GAAP income (loss) as a performance measure. The Non-GAAP tax provision (benefit) is calculated by adjusting the GAAP tax provision (benefit) for the impact of the non-GAAP adjustments, with specific tax provisions such as state income tax and Base-erosion and Anti-Abuse Tax recomputed on a non-GAAP basis, as well as adjustments for valuation allowances on deferred tax assets. The tax valuation allowance is a non-cash adjustment primarily reflecting our expectations of, and assumptions as to, future operating results and applicable tax laws, that are not directly attributable to the current quarter’s operating performance. For interim periods, the non-GAAP income tax provision (benefit) is calculated based on the forecasted annual non-GAAP tax rate before discrete items and adjusted for interim discrete items.

-Financial Tables Attached-