It has been about a month since the last earnings report for NETGEAR, Inc. (NTGR). Shares have lost about 23.4% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is NETGEAR due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
NETGEAR Q3 Earnings Top Estimates
NETGEAR reported third-quarter 2025 non-GAAP earnings per share of 12 cents, in contrast to the Zacks Consensus Estimate of a loss of 9 cents. The company reported non-GAAP earnings of 17 cents per share in the year-ago quarter.
NETGEAR generated net revenues of $184.6 million, beating the consensus estimate by 7% and surpassing the company’s guidance of $165-$180 million. Revenues rose 0.9% year over year and 8.2% sequentially. The higher-margin enterprise segment buoyed the performance, benefiting from ASP and unit growth in ProAV-managed switch products.
It now has 560,000 recurring subscribers.
The company noted that within the Enterprise segment, it continues to witness supply headwinds, though demand for its ProAV line of managed switches remains robust. This is likely to restrict the realization of the full revenue potential of this segment. The Home Networking segment will benefit from an expanded product portfolio. Mobile segment revenues are expected to be in line with the third quarter. Net revenues for the fourth quarter are predicted between $170 million and $185 million.
Quarterly Details
Driven by the ongoing momentum for ProAV managed switch products (up double-digit year over year), revenues from the Enterprise segment jumped 15.7% to $90.8 million. The company also announced that it secured several blue-chip customer wins and increased its total number of AV Manufacturing partnerships to 500. In the third quarter, NETGEAR unveiled a new cybersecurity offering based on its Exium acquisition.
Though NETGEAR is navigating supply-chain headwinds to boost supply and lower backlog, it still anticipates returning to an optimal inventory position in the first quarter of 2026.
The Mobile segment’s revenues of $21.1 million fell 20.7% year over year but were up 3.3% sequentially. High-end Nighthawk M7 Pro mobile hotspots in retail witnessed increased uptake. The company remains focused on executing its ‘good-better-best' strategy with product launches scheduled in the coming months.
Home Networking business revenues declined 6.6% on a year-over-year basis but were up 7.6% sequentially to $72.6 million. A favorable product mix stemming from the expansion of the product WiFi 7 products portfolio, newly launched Orbi 370 and growth of the Armor subscription service acted as major catalysts. Our estimates for NFB, Home Networking and Mobile stood at $79.3 million, $72.5 million and $20.3 million, respectively.
Region-wise, net revenues from the Americas were $128.1 million (69% of total revenues), up 0.3% year over year. Europe, the Middle East and Africa generated revenues (20%) were $37 million, up 12.6%. Revenues from the Asia Pacific region (11%) fell 12.4% year over year to $19.5 million.
Margin Details
The gross margin performance gained from improved mix of the higher-margin Enterprise business and selling the older, higher cost inventory. The adjusted gross margin increased year over year to 39.6% from 31.1%. Enterprise segment non-GAAP gross margin came in at 51% up 630 basis points (bps) from the prior-year quarter. Mobile segment non-GAAP gross margin improved 1,270 bps year over year to 31%. The non-GAAP operating income was $3.8 million against an operating income of $1.6 million in the year-ago quarter.
Non-GAAP operating expenses were $69.2 million, up 25.1% year over year, due to hiring plans as well as one-time expenses related to the relocation of headquarters.
Cash Flow & Liquidity
For the quarter ended Sept. 28, 2025, NETGEAR used $7.4 million in cash from operations. The company also had $326.4 million in cash and cash equivalents, and short-term investments, as well as $239.2 million of total current liabilities.
It repurchased shares worth $20 million in the quarter under review. In 2024, NETGEAR bought back $33.6 million worth of shares. The company has 2 million shares left under its existing authorization.
Q4 Guidance
Gross margin is expected to witness a 150-bps headwind stemming from the rising cost of memory as several of the main suppliers have exited the DDR4 market. The GAAP operating margin is forecasted between (7.3)% and (4.3)%. The non-GAAP operating margin is estimated to be (2)% to 1%.
GAAP tax expenses are anticipated to be a benefit of $500,000 to an expense of $500,000, with non-GAAP tax expenses between $0.5 million and $1.5 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 38.82% due to these changes.
VGM Scores
Currently, NETGEAR has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the second quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NETGEAR has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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NETGEAR, Inc. (NTGR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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