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.