NETGEAR (NASDAQ:NTGR) executives said the company delivered its first year of revenue growth since 2020 in fiscal 2025, paired with record gross margins and full-year non-GAAP profitability, as management continued to reshape the business toward higher-margin enterprise opportunities and recurring subscription revenue.
2025 turnaround: revenue growth, record margins, and non-GAAP profitability
CEO C.J. Prober said 2025 marked a “financial and operational success” after years of declining revenue, crediting foundational changes made in 2024 and a restructuring at the start of 2025 that redirected investment toward areas with higher growth and profitability potential. Prober said full-year revenue increased by more than $25 million and non-GAAP gross margin improved by 920 basis points, translating into a $1.35 improvement in non-GAAP EPS and non-GAAP net profit in each quarter.
On profitability, Murray said NETGEAR produced full-year non-GAAP operating profit of $5.9 million (0.8% operating margin), its first full-year non-GAAP operating profit since 2021. Full-year non-GAAP net income was $13.3 million, or $0.44 per share.
Fourth quarter highlights: enterprise strength and mix lift margins
NETGEAR closed the year with fourth-quarter revenue of $182.5 million, which Murray said was near the high end of guidance, down 1.1% sequentially and flat year over year. Management attributed results to continued enterprise strength, including growth in both average selling price and units in Pro AV managed switch products, as well as double-digit year-over-year growth in end-user demand for that category to a record level.
Non-GAAP gross margin reached a record 41.2% in Q4, up 840 basis points from the prior-year period and up 160 basis points sequentially. Murray said the quarter marked a sixth consecutive quarter of sequential gross margin expansion. Non-GAAP operating income was $5.9 million (3.3% operating margin), and non-GAAP net income was approximately $7.7 million, or $0.26 per share.
Segment results in Q4 included:
- Enterprise revenue: $89.4 million, down 1.6% sequentially and up 10.6% year over year. Enterprise represented 49% of revenue, up 470 basis points year over year. Enterprise non-GAAP gross margin was 51.4%, up 750 basis points year over year.
- Consumer revenue: $93.1 million, down 8.4% year over year and down 0.7% sequentially. Murray said domestic Wi-Fi systems grew sequentially and NETGEAR “modestly” gained U.S. retail share sequentially. Consumer non-GAAP gross margin was 31.4%, up 750 basis points year over year, aided by Wi-Fi 7 mix and strength in the direct-to-consumer channel (about 15% of retail sales).
Murray also highlighted operational metrics, including days sales outstanding of 73 days, which he called a 10-year low. NETGEAR ended the quarter with $323 million in cash and short-term investments and repurchased $15 million of shares in Q4.
Software, Pro AV ecosystem expansion, and recurring revenue focus
Prober emphasized a strategy of adding software value to NETGEAR’s hardware, particularly in enterprise. He said NETGEAR acquired two software teams—Bog and Axiom—to form the foundation of in-house enterprise software capabilities, and also acquired the software stack that powers its Pro AV solutions to reduce dependence on external partners and speed innovation. Murray added that in Q4 the company entered a strategic agreement to acquire a perpetual license for the operating system powering its AV managed switches; he said the deal improved Q4 gross margin by roughly 100 basis points and is expected to yield about 150 basis points of gross margin expansion on a full-quarter basis.
In Pro AV, Prober said NETGEAR launched a “full service team” to support deployments and expanded its ecosystem partner count to 524 by year-end, an increase of more than 150 partners during the year. The company also made changes to enterprise go-to-market, including leadership and organizational shifts, updated incentives, a partner program, pricing changes, and updates to its website and partner portal.
On consumer, Prober said NETGEAR released a slate of new products during 2025 aimed at strengthening its router and mesh lineup, supporting share gains in low and mid tiers and feeding subscription services. He also said the company formed consumer-focused software teams and launched a new mobile app alongside the M7 mobile hotspot.
Recurring revenue was another focal point. Prober said ARR grew 18% year over year in Q4, ending the year above $40 million. Murray reported Q4 ARR of $40.4 million and said the company exited the quarter with 558,000 recurring subscribers, citing improved conversion and a push toward the higher-ASP Armor Plus offering.
Restructuring and memory-cost headwinds shape 2026 outlook
Entering 2026, Prober said NETGEAR executed a “small restructuring” impacting about 5% of employees, including several senior leaders. He characterized the move as intended to improve business unit empowerment and streamline execution while maintaining capacity to invest in transformational initiatives.
Management repeatedly pointed to an industry-wide memory shortage—tied to AI data-center buildouts—as a key risk in 2026. Prober said NETGEAR has mitigated impacts to date and expects only limited gross margin pressure in the first half, but called the second-half impact “uncertain,” with consumer more exposed because memory is a larger portion of its bill of materials and margins are lower. Murray echoed that view, saying the company expects to largely mitigate DDR4 pricing impacts in the first half of 2026, but sees risk of an “outsized effect” on consumer costs in the back half if mitigation strategies fall short.
For enterprise, Prober said the situation is more manageable, noting memory is a smaller portion of costs and the company can pursue price increases in line with industry moves.
Q1 2026 guidance: revenue down sequentially, margin pressure from memory
For the first quarter of 2026, Murray guided net revenue to $145 million to $160 million. He said end-user demand for Pro AV managed switches is expected to remain strong and supply is improving, but consumer demand was “softening” at the start of the quarter. For service provider and related products, he said NETGEAR expects around $20 million of revenue, which he said would be down about 35% compared with Q1 2025.
NETGEAR expects a roughly 100-basis-point gross margin headwind in Q1 tied mainly to rising memory costs. The company guided GAAP operating margin to a range of -16.3% to -13.3% and non-GAAP operating margin to -6% to -3%. Non-GAAP tax expense is expected to range from $300,000 to $1.3 million.
During Q&A, management said the first half of 2026 is more visible than the second half, citing about 4.5 months of inventory. Prober also discussed regulatory and policy developments impacting the competitive landscape in consumer networking, referencing reports and actions involving TP-Link and an FCC rule related to certifications for companies subject to foreign-adversary jurisdictions, while emphasizing NETGEAR was following publicly available information.
In closing remarks, Prober reiterated that share repurchases remain a priority and said the company views AI as a long-term tailwind, including for software development efficiency and potential future product capabilities.
About NETGEAR (NASDAQ:NTGR)
NETGEAR, Inc (NASDAQ: NTGR) is a global provider of networking solutions for consumer, business and service provider markets. The company designs, develops and markets a comprehensive portfolio of products that enable high-speed connectivity, data storage and network security for homes, small to medium-sized businesses and large enterprises.
Its product lineup includes Wi-Fi routers, mesh networking systems, cable modems, mobile broadband gateways and Ethernet switches—offered in both managed and unmanaged configurations.
