NETGEAR® Reports Third Quarter 2026 Results

CJ Prober, Chief Executive Officer of NETGEAR

“We are encouraged by the continued progress in our transformation into a software-differentiated, Enterprise-led company.”

CJ Prober, Chief Executive Officer of NETGEAR

“Our Enterprise business continues to benefit from strong customer demand, particularly across our line of ProAV managed switches, while our expanding software and services capabilities are strengthening our competitive differentiation and creating new opportunities for long-term profitable growth.”

CJ Prober, Chief Executive Officer of NETGEAR

“While the underlying fundamentals of our Enterprise business continue to improve, manufacturing challenges at a key production partner have constrained our ability to fully translate customer demand into revenue during the quarter.”

CJ Prober, Chief Executive Officer of NETGEAR

“We are working closely with our partner to improve production output and product availability and expect to be back to normal production levels by Q1 2027.”

CJ Prober, Chief Executive Officer of NETGEAR

“When combined with our supply constraints, our strategy to harvest our consumer Service Provider products and optimize the Consumer segment for gross profit are intentionally constraining our topline revenue.”

CJ Prober, Chief Executive Officer of NETGEAR

“We remain confident in our strategic direction and remain focused on translating the progress we are making across our business into sustainable growth, greater profitability, and long-term shareholder value.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Our third-quarter results demonstrate the continued progress toward a structurally more profitable business model, with Enterprise accounting for over 54% of our revenue and now approximately 70% of non-GAAP gross profit, underscoring the financial benefits of our strategic transformation.”

Bryan Murray, Chief Financial Officer of NETGEAR

“We delivered non-GAAP operating income of $3.3 million and a non-GAAP operating margin of 2.0%, exceeding the high end of our guidance range, while consolidated non-GAAP gross margin expanded approximately 170 basis points year over year to 41.3%.”

Bryan Murray, Chief Financial Officer of NETGEAR

“These results reflect the growing contribution from our higher-margin Enterprise business and continued financial discipline, even as manufacturing constraints impacted shipments during the quarter.”

Bryan Murray, Chief Financial Officer of NETGEAR

“We also maintained a strong balance sheet, ending the quarter with over $242 million in cash and short-term investments, while repurchasing approximately $15 million of common stock during Q3, bringing our cumulative share repurchases since the beginning of 2024 to more than $131 million.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Looking ahead, we remain focused on improving manufacturing execution, managing Consumer profitability, and maintaining the financial flexibility to invest in our strategic priorities and drive sustainable long-term value creation.”

CJ Prober, Chief Executive Officer of NETGEAR

“Our Enterprise business continues to demonstrate encouraging underlying momentum, particularly across our Pro AV line of managed switches.”

CJ Prober, Chief Executive Officer of NETGEAR

“Despite our supply constraints, end customer sell through increased approximately 6% year over year globally, led by double-digit growth from our managed switch products, with even more positive trends in both the Americas and Europe.”

CJ Prober, Chief Executive Officer of NETGEAR

“While sell through and our reported revenue does not fully reflect end customer demand, these trends reinforce our confidence in the competitiveness of our solutions and the opportunities ahead.”

CJ Prober, Chief Executive Officer of NETGEAR

“Enterprise backlog exited Q3 more than 2.5x times higher than the end of Q2, which was already at an elevated level due to shortages in the prior quarter as well.”

CJ Prober, Chief Executive Officer of NETGEAR

“Our most immediate priority is restoring reliable product availability following the factory transition at one of our key manufacturing partners given we have secured critical components to support our production plans.”

CJ Prober, Chief Executive Officer of NETGEAR

“Given the elevated cost of supply and our pricing leverage in this category, we implemented an additional price increase for our Enterprise products that will take effect in November.”

CJ Prober, Chief Executive Officer of NETGEAR

“In Consumer, we continued to execute our transformation with discipline, prioritizing gross profit in core home networking while managing the service provider business for value as we navigate the higher cost supply environment.”

CJ Prober, Chief Executive Officer of NETGEAR

“Although revenue remained constrained for these reasons, the recurring revenue component of our home networking business continued to perform well, driving 12% year-over-year growth in our total annual recurring revenue.”

CJ Prober, Chief Executive Officer of NETGEAR

“Consistent with the pricing actions in our Enterprise business, we are implementing a price increase for the products in this segment that will take effect in early 2027.”

CJ Prober, Chief Executive Officer of NETGEAR

“In Q3, we also implemented a restructuring to drive efficiencies in this segment, and those cost reduction efforts will benefit our financial results beginning in 2027.”

CJ Prober, Chief Executive Officer of NETGEAR

“We also continue to monitor developments in the U.S. regulatory environment that could positively influence the competitive landscape for home networking products.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Within Enterprise, we continue to see encouraging underlying demand, particularly for our Pro AV managed switches.”

Bryan Murray, Chief Financial Officer of NETGEAR

“However, our near-term revenue outlook remains constrained by manufacturing output and the timing of product availability, which we expect to persist into the first quarter of 2027.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Our guidance reflects the uncertainty surrounding improvements in production execution which we expect will still fall short of customer demand for the fourth quarter.”

Bryan Murray, Chief Financial Officer of NETGEAR

“For service provider and related products, we expect revenue of approximately $17 million and, while it reflects our focus on optimizing contribution profits, this would represent an approximate 28% year over year decline for this category.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Taking these factors into account, we expect fourth-quarter net revenue of $160 million to $175 million.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Turning to profitability, we anticipate approximately 150 basis points of consolidated gross margin pressure in the fourth quarter compared to the prior quarter, primarily driven by rising memory costs and increasing transportation costs associated with our production recovery efforts.”

Bryan Murray, Chief Financial Officer of NETGEAR

“While our pricing actions and cost mitigation efforts have offset the rising component cost headwinds within the Enterprise business, we expect elevated component costs to continue weighing on margins within the Consumer business in the fourth quarter.”

Bryan Murray, Chief Financial Officer of NETGEAR

“In addition, ongoing manufacturing challenges could affect our product mix and the timing of shipments, creating further uncertainty around near-term gross margin performance.”

Bryan Murray, Chief Financial Officer of NETGEAR

“Taking these factors into account, we expect fourth-quarter GAAP operating margin to be in the range of (8.7)% to (5.7)% and non-GAAP operating margin to be in the range of 0% to 3%.”