NETGEAR Reports Q1 Fiscal 2025 Results with Revenue Decline and Improved Gross Profit

NETGEAR, Inc. reported its financial results for the first quarter of fiscal 2025, revealing a slight decline in net revenue to $162.1 million, down from $164.6 million in the same period last year. The company experienced a notable shift in its revenue streams, with the NETGEAR for Business segment showing a 15.4% increase to $79.2 million, driven by strong demand for its Pro AV product line. In contrast, the Home Networking and Mobile segments saw declines of 8.7% and 25.3%, respectively, primarily due to reduced revenue from the service provider channel. The overall gross profit improved to $56.3 million, reflecting a gross margin increase of 550 basis points, attributed to a higher mix of NETGEAR for Business products and lower inventory costs.

In terms of profitability, NETGEAR reported a net loss of $6.0 million, or $(0.21) per share, which is a significant improvement compared to a net loss of $18.7 million, or $(0.63) per share, in the prior year. The reduction in loss from operations was primarily due to improved gross margins, despite the lower net revenue. The company also recorded other income of $8.2 million, which included proceeds from a patent sale, contributing to the overall decrease in net loss.

Operationally, NETGEAR has undergone a strategic realignment, separating its Connected Home segment into two distinct reportable segments: Home Networking and Mobile. This change, effective January 1, 2025, aims to enhance operational focus and financial management. The company continues to invest in research and development, with expenses decreasing to $18.3 million from $20.2 million year-over-year, reflecting a strategic shift in resource allocation. The total employee headcount remains stable, supporting ongoing product development and market expansion efforts.

Geographically, NETGEAR's revenue from the Americas decreased slightly, while the EMEA region saw a 3% increase, driven by the NETGEAR for Business segment. The APAC region experienced a decline, particularly in the Home Networking segment. The company is actively working to optimize inventory levels and improve supply chain management in response to fluctuating market demands and macroeconomic conditions, including inflation and geopolitical tensions.

Looking ahead, NETGEAR anticipates continued growth in its NETGEAR for Business segment, supported by strong demand for its Pro AV managed switches. However, the company acknowledges potential supply constraints that may limit its ability to fully capitalize on this demand. For the Home Networking segment, the introduction of new WiFi 7 products is expected to enhance market positioning, while the Mobile segment awaits new product launches later in the year. Overall, NETGEAR remains focused on leveraging technological advancements and expanding its product offerings to drive future growth.