NETGEAR, Inc. (NTGR) came out with quarterly earnings of $0.06 per share, beating the Zacks Consensus Estimate of a loss of $0.16 per share. This compares to a loss of $0.74 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of +137.50%. A quarter ago, it was expected that this company would post a loss of $0.35 per share when it actually produced earnings of $0.02, delivering a surprise of +105.71%.Over the last four quarters, the ...

Financial Data and Key Metrics Changes - In Q2 2025, the company reported net revenue of $170.5 million, exceeding guidance and reflecting an 18.5% year-over-year growth and a 5.2% sequential increase [7][24]. - Non-GAAP gross margins reached an all-time high of 37.8%, a significant increase from 22.4% in the prior year [29]. - Non-GAAP operating loss was $1.2 million, resulting in a non-GAAP operating margin of negative 0.7%, an improvement of 2,090 basis points year-over-year [32]. Business Line Data and Key Metrics Changes - The NFV segment led revenue growth with $82.6 million, up 38% year-over-year and 4.3% sequentially [25]. - Home Networking revenue was $67.5 million, reflecting a 13.1% year-over-year increase and a 10% sequential growth [26]. - The Mobile segment generated $20.4 million in revenue, down 16.1% year-over-year and 5% sequentially due to weaker service provider sales [27]. Market Data and Key Metrics Changes - The company noted strong demand for its ProAV managed switch products, with a 14% sequential revenue growth despite supply constraints [11][25]. - The home networking market remains competitive, with the company gaining market share during Prime Day despite aggressive competition from TP Link [66]. Company Strategy and Development Direction - The company is focused on a transformation strategy aimed at delivering long-term shareholder value through profitable growth, with positive contribution margins achieved across all business units [8][21]. - The launch of the new AV Professional Services Group is part of the strategy to enhance enterprise value and drive higher-margin revenue [12][56]. - The company is investing in software development capabilities and enhancing go-to-market strategies to support its NFV business [35][76]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position amidst geopolitical tensions, noting that most products remain exempt from tariffs and that the company does not manufacture in China [19]. - The outlook for Q3 2025 anticipates net revenue between $165 million and $180 million, with continued investments in software development and operational capabilities [35]. Other Important Information - The company completed the acquisition of Acxiom to enhance its NFV portfolio and repurchased $7.5 million of its shares during the quarter [25][33]. - The company ended Q2 with $363.5 million in cash and short-term investments, down from the previous quarter due to acquisitions and share repurchases [33]. Q&A Session Summary Question: Can you provide more details on ProAV and the supply constraints? - Management confirmed that ProAV has become a significant part of the business, contributing to about 25% of NETGEAR's overall top line, and expects to start reducing backlog towards the end of Q3 [40][43]. Question: How should we think about OpEx ramping through the back half of the year? - Management indicated a mid-single-digit increase in OpEx due to ongoing investments, with expectations for a sequential decrease in Q4 [46][49]. Question: What parts of NFB will the new professional services affect the most? - The professional services will initially support the AV business, with expectations for significant growth in recurring revenue in 2026 [56]. Question: Any updates on TP Link and the competitive landscape? - Management remains confident that the current geopolitical climate will serve as a tailwind for NETGEAR, positioning the company well to capitalize on market opportunities [58][62]. Question: Can you provide an update on software insourcing? - The company has made significant progress in insourcing software development, which is expected to lead to better product quality and faster execution [76].

Exhibit 99.1 NEWS RELEASE 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 t ...

Core Viewpoint - NETGEAR, Inc. (NTGR) has received an upgrade to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in a company's earnings picture, which is crucial for predicting near-term stock price movements [2][3]. - A strong correlation exists between earnings estimate revisions and stock price movements, with institutional investors using these estimates to determine fair value [3]. Business Improvement Indicators - Rising earnings estimates and the Zacks rating upgrade for NETGEAR suggest an improvement in the company's underlying business, which could lead to higher stock prices [4]. - Over the past three months, the Zacks Consensus Estimate for NETGEAR has increased by 37.4% [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions [8][9].

Group 1: Acquisition and Strategic Focus - NETGEAR Inc. (NTGR) has signed a definitive agreement to acquire Exium, a cybersecurity company, emphasizing its commitment to cloud-based innovations and networking solutions for SMEs and MSPs [1][10] - The acquisition aims to create a fully integrated SASE platform, combining networking and cybersecurity functions to meet the evolving needs of SMEs [2][4] Group 2: Market Potential and Growth - The SASE market is projected to reach $25 billion by 2027, growing at a CAGR of 29%, driven by the shift towards cloud-driven networking and security solutions [3] - By integrating Exium's technology, NETGEAR for Business (NFB) plans to offer a comprehensive solution that combines wired and wireless connectivity with advanced security features [3][4] Group 3: Financial Performance and Outlook - Revenues in the NFB segment increased by 15.4% year over year to $79.2 million, with a gross margin improvement to 46.3%, reflecting a 440 basis point increase from the previous year [6] - NETGEAR reported $8.7 million in recurring revenues with a subscriber base of 559,000, which is crucial for long-term financial health [8] Group 4: Seasonal Trends and Challenges - The company's business follows a seasonal pattern, with higher sales typically in the third and fourth quarters due to back-to-school and holiday shopping [9] - Supply constraints for certain managed switch models are expected to improve starting in the second quarter of the year [7]

Industry Overview - The Zacks Computer - Networking industry is facing heightened uncertainty due to global macroeconomic conditions and volatile supply-chain dynamics, with telecom operators reducing or delaying capital expenditures [1][4] - Despite short-term challenges, the industry is expected to benefit from increased focus on cloud computing, network security, big data, and cloud storage, particularly with the rapid adoption of AI technology [1][5] Trends Influencing the Industry - The accelerated deployment of 5G technology is driving demand for robust networking infrastructure, including IoT, Advanced Driver Assistance Systems, AR/VR devices, and 5G smartphones [2][6] - The Wi-Fi 7 upgrade cycle is anticipated to further stimulate demand for innovative networking products, benefiting major players like Cisco, Extreme Networks, and NETGEAR [2][7] - Innovation in networking technologies, including network virtualization and Software-Defined Networking, is opening new business avenues as enterprises seek to manage fixed and wireless devices securely [5] Performance Metrics - The Zacks Computer - Networking industry has outperformed the S&P 500 Composite and the broader Zacks Computer and Technology sector, gaining 35% over the past year compared to the sector's 13% and the S&P 500's 12.7% [11] - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 19.90X, below the S&P 500's 21.82X and the sector's 25.79X [14] Company Highlights - **Cisco Systems, Inc. (CSCO)**: The company is embedding AI across its security and collaboration platforms, with AI infrastructure orders exceeding $600 million in the third quarter of fiscal 2025, ahead of its $1 billion annual target [18][20] - **NETGEAR, Inc. (NTGR)**: The company reported a 15.4% revenue increase in its NETGEAR for Business segment, but overall revenues declined by 1.5% year-over-year, highlighting challenges in certain business units [25][26] - **Extreme Networks (EXTR)**: The company experienced a 35% year-over-year revenue growth, driven by strong demand for its AI-driven cloud networking solutions, and has raised its revenue guidance for fiscal 2025 [30][32]

Core Viewpoint - NETGEAR Inc.'s share price has appreciated 15% over the past six months, significantly outperforming the Computer Networks Industry's growth of 6.4% and the broader market indices [1][8] Price Performance - NTGR stock closed at $29.12, nearing its 52-week high of $31.55, raising questions about its future trajectory [3] - The stock's recent performance indicates renewed investor confidence despite potential pullbacks [3] Growth Factors - The NETGEAR for Business (NFB) segment saw a revenue increase of 15.4% to $79.2 million, supported by strong demand for ProAV managed switch products [4] - The NFB segment achieved a gross margin of 46.3%, up 440 basis points year-over-year [4] - Recurring revenues reached $8.7 million in the last quarter, with a total of 559,000 recurring subscribers [6] Strategic Initiatives - NETGEAR's 2024 strategic realignment is expected to yield annual cost savings of $20 million, allowing for reinvestment in core growth areas [7] - The company successfully reduced inventory by $86 million in 2024, enhancing revenue predictability [7] - NETGEAR launched new products, including the Nighthawk M7 Pro Mobile Hotspot and the WBE710 WiFi 7 Access Point, to maintain a competitive edge [9] Capital Allocation - NETGEAR repurchased 254,000 shares worth $7.5 million in the last quarter and $33.6 million in 2024, with a remaining authorization for 3.1 million shares [10] - The company holds $392 million in cash and short-term investments, providing liquidity for continued buybacks and strategic investments [10] Valuation - NTGR stock is trading at a trailing 12-month price/book multiple of 1.57, compared to the industry average of 5.25, indicating a compelling valuation [11] Challenges - NETGEAR reported net revenues of $162.1 million, down 1.5% year-over-year, highlighting revenue challenges in certain business units, particularly the Mobile segment [13] - Mobile segment revenues decreased by 23.5% year-over-year, raising concerns about product competitiveness [14] - Despite improving margins, NETGEAR reported a non-GAAP operating loss of $2.6 million, with forecasts indicating continued pressure on profitability [15][16] Investment Outlook - Retaining NTGR stock is considered prudent due to momentum in the NFB segment, increasing recurring revenues, and a strong cash position [17]

Core Viewpoint - NETGEAR, Inc. (NTGR) shares have increased by approximately 5.6% since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this positive trend leading up to the next earnings release [1]. Group 1: Earnings Report Insights - No earnings estimate revisions have been made by analysts in the last two months, indicating a period of stability in expectations [2]. Group 2: VGM Scores - NETGEAR has a strong Growth Score of A, but a lower Momentum Score of C, and a Value Score of B, placing it in the second quintile for the value investment strategy. The overall aggregate VGM Score is A, which is significant for investors not focused on a single strategy [3]. Group 3: Outlook - NETGEAR holds a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return from the stock in the upcoming months [4].

Core Viewpoint - NETGEAR, Inc. reported a first-quarter 2025 non-GAAP earnings per share of 2 cents, exceeding the Zacks Consensus Estimate of a loss of 35 cents, and showing improvement from a non-GAAP loss of 28 cents per share in the same quarter last year [1] Financial Performance - NETGEAR generated net revenues of $162.1 million, surpassing the consensus estimate by 6.6% and exceeding the company's guidance of $145-$160 million, although revenues declined 1.5% year-over-year [2] - The company reported an adjusted gross margin increase to 35% from 29.5% year-over-year, while non-GAAP operating loss was $2.6 million compared to an operating income of $16 million in the prior year [8] Segment Performance - Revenues from the NETGEAR for Business (NFB) segment increased by 15.4% year-over-year to $79.2 million, despite a 2% sequential decline, driven by demand for ProAV managed switch products [5] - The Mobile segment revenues decreased by 23.5% year-over-year and 10.9% sequentially to $21.5 million, while Home Networking revenues fell 8.7% year-over-year and 20.8% sequentially to $61.4 million, primarily due to seasonality [6] Regional Performance - Net revenues from the Americas were $107.8 million, accounting for 66% of total revenues, down 2% year-over-year; revenues from Europe, the Middle East, and Africa were $32.1 million, up 3%; and revenues from the Asia Pacific region were $22.2 million, down 5.5% year-over-year [9] Cash Flow and Share Repurchase - For the quarter ended March 31, 2025, NETGEAR used $8.8 million in cash from operations and had $392 million in cash and cash equivalents, with total current liabilities of $241.9 million; the company repurchased 254,000 shares worth $7.5 million during the quarter [10] Guidance - For the second quarter of 2025, NETGEAR predicts net revenues between $155 million and $170 million, with gross margin expected to remain stable or decrease slightly [4][11]

Company Performance - NETGEAR, Inc. reported quarterly earnings of $0.02 per share, exceeding the Zacks Consensus Estimate of a loss of $0.35 per share, and compared to a loss of $0.28 per share a year ago, representing an earnings surprise of 105.71% [1] - The company posted revenues of $162.06 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.57%, although this is a decrease from year-ago revenues of $164.59 million [2] - Over the last four quarters, NETGEAR has surpassed consensus EPS estimates four times and has topped consensus revenue estimates four times as well [2] Stock Outlook - NETGEAR shares have declined approximately 13.9% since the beginning of the year, while the S&P 500 has decreased by 5.5% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.28 on revenues of $150.72 million, and for the current fiscal year, it is -$0.75 on revenues of $680.79 million [7] Industry Context - The Computer - Networking industry, to which NETGEAR belongs, is currently ranked in the top 27% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Cisco Systems, a competitor in the same industry, is expected to report quarterly earnings of $0.91 per share, reflecting a year-over-year change of +3.4%, with expected revenues of $14.05 billion, up 10.6% from the previous year [9]