NETGEAR Q2 Earnings Beat Estimates, Revenues Decline Y/Y

The higher-margin Enterprise segment cushioned the performance, benefiting from growth in ProAV-managed switch products. Subscription and services annual recurring revenues were approximately $42 million.

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NTGR stock is up 2.4% in the pre-market trading session today. In the past year, shares of NTGR have declined 3.4% against the Communications-Components industry’s growth of 205.7%.

NTGR's Enterprise Growth Holds Firm

Driven by the ongoing momentum for ProAV managed switch products, revenues from the Enterprise segment (roughly 53% of total revenues) jumped 7.7% to $89 million. The company surpassed more than 600 partners in its AV ecosystem and cited several customer wins in broadcast and education verticals.

NETGEAR also highlighted higher uptake of Engage as well as the launches of Align and Insight 10.0 as steps to strengthen its Enterprise offering. 

The Consumer segment’s revenues of $79.6 million fell 9.4% year over year amid a tough memory-cost environment. Service Provider net revenues were $23.8 million compared with $27.2 million in the year-ago quarter, while the remainder of Consumer revenues was $55.8 million, down from 60.7 million in the prior-year quarter.

Management continues to prioritize gross profit over revenues in core home networking amid memory cost headwinds. Even with constrained sales, ARR from the home-networking business increased 15% year over year.

Our estimates for Enterprise and Consumer stood at $83.9 million and $74.1 million, respectively.

Region-wise, Americas revenues were $116.5 million, representing 69% of total revenues, compared with $116.3 million a year earlier. EMEA revenues increased 6% year over year to $36.4 million and represented 22% of revenues.

APAC revenues fell 21.5% year over year to $15.6 million. The regional performance contrasted with the relatively stable Americas business and growth in EMEA.

NTGR’s Margin Details

Non-GAAP gross margin expanded 360 basis points (bps) year over year to 41.4%. Enterprise non-GAAP gross margin reached 54.1%, up 740 bps, while Consumer non-GAAP gross margin declined 210 bps to 27.3%.

Non-GAAP operating income was $4 million against an operating loss of $1.2 million a year earlier. The corresponding operating margin improved to 2.4% from negative 0.7%, while non-GAAP operating expenses were $65.8 million compared with $65.7 million.

NTGR’s Cash Flow & Liquidity

Cash, cash equivalents and short-term investments totaled $267.9 million at June 28, 2026, compared with $296.5 million at the end of the first quarter. 

Net cash used in operating activities was $8.5 million for the six months ended June 28.

NETGEAR repurchased $12.9 million of shares during the quarter, bringing repurchases since the beginning of 2024 to more than $116 million. Approximately $75 million remained under the current authorization at quarter-end.

NETGEAR’s Q3 Guidance

For the third quarter of 2026, NETGEAR expects net revenues of $165 million to $175 million. Service Provider and related products revenues are projected at $22 million, down about 19% year over year.

Management expects Enterprise growth to continue on strong ProAV demand, but memory costs and supply constraints are set to weigh more heavily on Consumer. The company expects roughly a 200-basis-point headwind to combined gross margin in the second half compared with the first half, with a greater impact in the third quarter

The GAAP operating margin is forecasted between (12)% and (9)%. The non-GAAP operating margin is estimated to be (3)% to 0%.

GAAP tax expenses are anticipated to be a benefit of $0.5 million to $1.5 million, with non-GAAP tax expenses between $1 million and $2 million.

NTGR’s Zacks Rank

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 the Same Space

Ciena Corporation CIEN reported fiscal second-quarter 2026 adjusted earnings of $1.64 per share, beating the Zacks Consensus Estimate of $1.46. The bottom line surged 290% year over year as AI-driven network investments continued to accelerate.

Ciena’s quarterly revenues rose 39.5% year over year to $1.57 billion and surpassed the consensus estimate of $1.50 billion. Record revenues, expanding cloud demand and strong optical networking adoption fueled the performance. Shares of CIEN are up 324.7% in the past year.

Corning Incorporated GLW reported second-quarter 2026 results with non-GAAP earnings of 78 cents per share, up 30% year over year and 2.6% above the Zacks Consensus Estimate. Core revenues of $4.74 billion surged 17%, surpassing the consensus by 2.9%.

Corning’s revenue growth was driven by Optical Communications and Solar segments. Enterprise Networks sales jumped 65%, supported by accelerating demand for generative artificial intelligence infrastructure. Shares of GLW are up 138.9% in the past year.

Viavi Solutions Inc. VIAV reported better-than-expected fourth-quarter fiscal 2026 results. Non-GAAP earnings of 34 cents per share beat the consensus estimate by 13.33%, while revenues of $443.1 million increased 52.5% year over year.

Viavi Solutions’ robust performance was driven by sustained demand from the data center ecosystem and aerospace and defense markets, along with contributions from acquired Spirent product lines. The Network and Service Enablement segment remained the primary growth engine, delivering nearly 70% year-over-year revenue growth. Shares of VIAV are up 271.3% in the past year.

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