Arlo Technologies Reports Strong Subscriber Growth Amid Revenue Challenges

Arlo Technologies ((ARLO)) has held its Q1 earnings call. Read on for the main highlights of the call.

Arlo Technologies Earnings Call Highlights Robust Subscriber Growth Amidst Revenue Challenges

The recent earnings call for Arlo Technologies painted a picture of strong growth in its subscriber base and service revenue, achieving record financial metrics. Despite facing challenges in product revenue and international sales, the company maintains a positive outlook, driven by strategic initiatives aimed at mitigating tariff impacts and enhancing its competitive positioning.

Subscriber Growth and Milestones

Arlo Technologies reported a significant milestone in subscriber growth, adding 298,000 new subscribers in the first quarter of 2025. This brought the total number of paid accounts to 4.9 million, marking a 51% increase year-over-year. The company also surpassed its forecast by reaching over 5 million subscribers ahead of schedule.

Record ARPU and Revenue

The average revenue per user (ARPU) reached a record high of $13.48, contributing to a subscriptions and services revenue of $69 million. This represents a more than 20% increase year-over-year, with the annual recurring revenue (ARR) growing to $276 million.

Strong Financial Performance

Arlo achieved a non-GAAP services gross margin of 83%, an improvement of 600 basis points from the previous year. The company also reported a record free-cash flow of $28 million and earnings per share of $0.15, underscoring its strong financial performance.

Decline in Product Revenue

Product revenue for Arlo was reported at $50.2 million, a decline from the previous year. This decrease is primarily attributed to a reduction in the average selling price (ASP) across the industry.

Challenges in International Revenue

International revenue faced a decline, with European sales down 30% year-over-year. This was due to factors such as Verisure’s stocking patterns and regulatory changes impacting the market.

Negative Product Gross Margins

The company experienced slightly negative product gross margins, a result of aggressive promotional activity and competitive pricing pressures in the market.

Positive Outlook and Guidance

Arlo Technologies reaffirmed its full-year guidance, projecting to exit 2025 with more than $300 million in ARR and achieving Rule of 40 status. The company remains optimistic about its subscriptions and services business, anticipating continued strength throughout the year.

In summary, Arlo Technologies’ earnings call highlighted robust subscriber growth and strong service revenue, despite challenges in product and international sales. The company remains confident in its strategic initiatives and forward-looking guidance, positioning itself as a leading SaaS company.