NETGEAR's Q1 Earnings Surpass Estimates, Revenues Down Y/Y

NETGEAR, Inc. NTGR reported first-quarter 2025 non-GAAP earnings per share of 2 cents, which beat the Zacks Consensus Estimate of a loss of 35 cents. The company reported a non-GAAP loss of 28 cents per share in the year-ago quarter.

NETGEAR generated net revenues of $162.1 million, which beat the consensus estimate by 6.6%. The figure also surpassed the company's guidance of $145-$160 million. Revenues were down 1.5% on a year-over-year basis. The company added that the successful destocking plan in 2024 has boosted its sell-in with sell-through with channel partners, thereby increasing revenue predictability. NETGEAR generated $8.7 million of recurring revenues in the reported quarter. It now has 559,000 recurring subscribers.

NTGR is now reporting revenues under three segments, NETGEAR for Business (“NFB”), Mobile and Home networking.

NTGR noted that within NFB segment, though demand for its ProAV line of managed switches remains robust, it has been witnessing lengthy lead times for supply. This is likely to restrict the realization of full revenue potential of this segment. Home Networking segment will benefit from a broader product portfolio and experience normal seasonality. Mobile segment revenues are expected to be in line with the first quarter. Net revenues for the second quarter are predicted to be between $155 million and $170 million.

Shares surged 13.6% in yesterday’s after-market trading session. In the past year, shares of NTGR have gained 104.8% compared with the Computer-Networking industry’s growth of 21.7%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

NETGEAR’s Q1 in Details

Driven by ongoing momentum for ProAV managed switch products, revenues from NFB segment jumped 15.4% year over year, but were down 2% sequentially to $79.2 million. NTGR continues to witness supply constraints around certain managed switch products but expects these to ease in the second quarter and improve in the remaining half of the year.

Mobile segment revenues of $21.5 million were down 23.5% year over year and 10.9% sequentially. The company remains focused on executing its ‘good-better-best' strategy with new product launches scheduled for later in the year.

Home Networking business revenues decline 8.7% year-over-year basis and 20.8% sequentially to $61.4 million. This was mainly due to seasonality.

Adjusted gross margin increased to 35% from 29.5% year over year. Non-GAAP operating loss was $2.6 million against operating income of $16 million in the year-ago quarter.

NETGEAR, Inc. Price, Consensus and EPS Surprise

NETGEAR, Inc. price-consensus-eps-surprise-chart | NETGEAR, Inc. Quote

Non-GAAP operating expenses were $59.3 million, down 8.2% due to a delay in hiring plans, owing to a cautious approach due to the uncertain tariff situation.

Region-wise, net revenues from the Americas were $107.8 million (66% of total revenues), down 2% year over year. Europe, the Middle East and Africa generated revenues (20%) of $32.1 million, up 3%. Revenues from the Asia Pacific region (14%) were down 5.5% year over year to $22.2 million.

NTGR’s Cash Flow & Liquidity

For the quarter ended March 31, 2025, NETGEAR used $8.8 million in cash from operations.

It also had $392 million in cash and cash equivalents and short-term investments and $241.9 million of total current liabilities.

NTGR repurchased 254,000 shares worth $7.5 million in the quarter under review. In 2024, NTGR bought back $33.6 million worth of shares. The company has 3.1 million shares left under its existing authorization. 

NTGR’s Q2 Guidance

Gross margin is expected to be the same as the first quarter of 2025 or decrease slightly.

GAAP operating margin is forecasted to be between (10.4)% and (7.4)%. Non-GAAP operating margin is estimated to be in the band of (6.5)-(3.5)%.

GAAP tax expense is expected to be between $0.5 million and $1.5 million. Non-GAAP tax expense is projected to be between $1 million and $2 million for the second quarter of 2025.

Zacks Rank of NTGR

NETGEAR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Recent Performance of Other Companies in Broader Tech Space

Intrusion Inc INTZ reported second-quarter fiscal 2025 loss of 11 cents per share, which was in line with the Zacks Consensus Estimate. The figure compares with a loss of 94 cents per share a year ago. Intrusion posted revenues of $1.8 million, beating the Zacks Consensus Estimate by 7.3%. It reported revenues of $1.1 million in the year-ago quarter. Shares of Intrusion are up 31.9%.

Western Digital Corporation WDC reported third-quarter fiscal 2025 non-GAAP earnings of $1.36 per share, which surpassed the Zacks Consensus Estimate of $1.17. The company reported earnings of 63 cents per share in the prior-year quarter. Management anticipated fiscal third-quarter non-GAAP earnings per share to be between 90 cents and $1.20. Revenues of $2.29 billion surged 31% year over year, beating the Zacks Consensus Estimate of $2.24 billion. The upside resulted from increasing demand momentum across Cloud-end markets. On a sequential basis, revenues decreased 5%. For third-quarter fiscal 2025, Western Digital expected non-GAAP revenues in the range of $3.75-$3.95 billion.

Seagate Technology Holdings plc STX reported third-quarter fiscal 2025 non-GAAP earnings of $1.90 per share, beating the Zacks Consensus Estimate by 7.95%. The bottom line was in the upper end of STX’s guidance of $1.70 per share (+/- 20 cents), highlighting operational discipline and effective cost management. The company reported non-GAAP earnings of 33 cents per share in the year-ago quarter. The expansion reflects the benefits of a more resilient and optimized business model, along with robust supply-demand dynamics in mass capacity storage. Non-GAAP revenues of $2.16 billion beat the Zacks Consensus Estimate by 1.3%. Revenues were up from the midpoint of guidance, rising 31% year over year.

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