Arlo Technologies (ARLO) AI Stock Analysis

• Market Cap: $1.38B
• Dividend Yield: N/A
• Average Volume (3M): 707.68K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.77
• Revenue Growth: 0.27%
• EPS Growth: -18.75%
• Country: US
• Employees: 360
• Sector: Industrials
• Sector Strength: 92
• Industry: Security & Protection Services
• EPS (TTM): 0.15
• Shares Outstanding: 103,400,955
• 10 Day Avg. Volume: 760,957
• 30 Day Avg. Volume: 707,677
• PEG Ratio: 1.69
• Price to Book (P/B): 9.85
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 20.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $20.00
• Price Target Upside: 50.38% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 75 Outperform
• Price Target: $15.50 ▲( 16.54% Upside)

Arlo Technologies shows strong growth in its subscriber base and service revenue, supported by a solid balance sheet. However, persistent net losses and negative profit margins remain a challenge, impacting its valuation. Despite technical indicators showing overbought conditions, the company's strategic initiatives and positive earnings call outlook provide support for future growth.

Positive Factors

Financial Performance

Arlo Technologies reported revenue of $121.6 million compared to the estimate of $120.4 million.

Service Revenue Growth

The growth in service revenue has resulted in ARLO becoming free cash flow positive.

Subscriber Growth

The significant increase in paid subscribers, with 364K new additions, demonstrates Arlo Technologies' ability to expand its customer base effectively.

Negative Factors

Competition

Arlo Technologies (ARLO) has a new competitor poised to take share in an already crowded space.

Stock Valuation

Arlo Technologies' stock has yet to benefit from the continued gains the company has achieved in having a recurring revenue.

Arlo Technologies Business Overview & Revenue Model

Company Description

Arlo Technologies, Inc., together with its subsidiaries, provides a cloud-based platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific regions. It combines an intelligent cloud infrastructure and mobile app with various smart connected devices. The company offers Arlo essential indoor camera; Arlo Go 2 LTE/Wi-Fi security camera; Arlo Q and Arlo Q Plus, an indoor wired solution that allows users to monitor their surroundings; and Arlo Go, an LTE-enabled wire-free camera that provides untethered mobile security. It also provides Arlo Baby, a baby monitor with air quality and temperature sensors, motion and audio detection, and advanced night vision; Arlo Chime that pairs with the Arlo Video Doorbell to play a variety of ringtones or act as a siren; Arlo Ultra, an integrated spotlight and crystal-clear two-way audio with advanced noise cancellations camera; Arlo Pro 3, an integrated spotlight with color night vision camera; Arlo Video Doorbell delivers direct-to-mobile video calls and personalized alerts; Arlo Floodlight Camera, a wire-free variant LED camera, as well as Arlo Essential Spotlight; Arlo Ultra 2; Arlo Essential XL Spotlight; Arlo Essential Wire-Free Video Doorbell; and Arlo Pro 4 Wire-Free Spotlight. In addition, it provides Arlo accessories, such as charging accessories, device mounts, and device skins. Further, it offers Arlo app for iOS and Android devices that allow users to connect various devices; and Arlo Secure, with coverage for unlimited cameras and an enhanced emergency response solutions. The company offers its products through retailers, wholesale distributors, broadcast channels, wireless carriers, and security solution providers, as well as through its website. Arlo Technologies, Inc. was incorporated in 2018 and is headquartered in Carlsbad, California.

How the Company Makes Money

Arlo Technologies generates revenue primarily through the sale of its smart home security products. The company's key revenue streams include the direct sale of hardware devices, such as wireless cameras, doorbells, and other security-related products. Additionally, Arlo offers subscription-based services that provide enhanced features, cloud storage, and additional support for users, which serve as an important recurring revenue source. The company also benefits from strategic partnerships with retailers and technology companies, which help expand its market reach and drive sales. By leveraging its brand reputation and continuous product innovation, Arlo maintains a competitive position in the growing smart home security market.

Arlo Technologies Financial Statement Overview

Summary

Arlo Technologies exhibits a mixed financial performance with notable revenue growth and improving cash flow generation. Despite these positives, the company continues to face profitability challenges, reflected in the negative net income and EBIT margins. The balance sheet remains stable with low leverage, but the company's inability to turn a profit highlights the need for strategic adjustments to enhance long-term financial health.

Income Statement

Arlo Technologies has demonstrated revenue growth with a positive trend over the years, notably from $357M in 2020 to $510M in 2024, indicative of a strong market position. The gross profit margin improved significantly from 15.5% in 2020 to 36.7% in 2024, reflecting increased operational efficiency. However, the company consistently reported negative net income, with a slight improvement from -$101M in 2020 to -$30M in 2024. EBIT and EBITDA margins remain negative, indicating ongoing challenges in achieving profitability.

Balance Sheet

The balance sheet shows a stable equity base with stockholders' equity growing from $134M in 2020 to $101M in 2024. The debt-to-equity ratio has remained low, indicating low leverage and financial risk. However, the equity ratio declined from 32.3% in 2020 to 33.8% in 2024, suggesting a slight decrease in financial stability. Overall, the balance sheet presents a solid but not strong financial position.

Cash Flow

Arlo Technologies has shown improvement in cash flow generation, with operating cash flow turning positive and growing from -$46M in 2020 to $51M in 2024. The free cash flow has also improved from -$50M in 2020 to $48M in 2024, indicating better capital management and operational efficiency. The company maintains a healthy cash balance, supporting its strategic initiatives.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
510.89M	491.18M	490.41M	435.14M	357.15M
	Gross Profit
187.50M	167.56M	136.03M	108.03M	55.39M
	EBIT
-34.89M	-24.21M	-55.07M	-49.43M	-104.91M
	EBITDA
-34.89M	-20.24M	-50.88M	-45.05M	-94.66M
	Net Income Common Stockholders
-30.50M	-22.04M	-56.63M	-56.03M	-101.25M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
151.45M	136.50M	113.72M	175.75M	206.12M
	Total Assets
298.40M	285.54M	272.20M	347.49M	413.97M
	Total Debt
18.36M	17.02M	23.47M	21.47M	25.03M
	Net Debt
-63.67M	-39.50M	-60.55M	-154.28M	-161.10M
	Total Liabilities
197.49M	182.26M	184.51M	234.84M	280.20M
	Stockholders Equity
100.91M	103.28M	87.69M	112.65M	133.77M
Cash Flow		Free Cash Flow
48.62M	35.45M	-47.97M	-25.46M	-50.42M
	Operating Cash Flow
51.31M	38.30M	-45.96M	-23.20M	-46.53M
	Investing Cash Flow
10.84M	-50.69M	-31.77M	17.73M	-3.98M
	Financing Cash Flow
-40.77M	-15.14M	-13.94M	-4.97M	-23.00K

Arlo Technologies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 13.30
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARLO, the sentiment is Positive. The current price of 13.3 is above the 20-day moving average (MA) of 12.01, above the 50-day MA of 10.64, and above the 200-day MA of 11.43, indicating a bullish trend. The MACD of 1.00 indicates Negative momentum. The RSI at 72.13 is Negative, neither overbought nor oversold. The STOCH value of 62.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARLO.

Arlo Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NSSC	80 Outperform	$1.00B	22.88	27.48%	1.69%	-1.05%	-2.78%
REZI	76 Outperform	$2.95B	50.32	2.58%	―	14.02%	-69.91%
ARLO	75 Outperform	$1.38B	―	-21.34%	―	0.27%	-18.75%
SNT	73 Outperform	$87.24M	65.29	-3.47%	―	―	―
ADT	72 Outperform	$6.88B	14.06	16.26%	2.68%	-5.44%	-16.05%
Sector *	64 Neutral	$4.39B	11.81	5.20%	249.39%	3.96%	-12.36%
EVLV	56 Neutral	$936.42M	―	-33.80%	―	36.53%	52.99%

Arlo Technologies Corporate Events

Arlo Technologies Shifts Executive Compensation Strategy

Arlo Technologies has revamped its executive retention plan, offering performance-based restricted stock units instead of cash bonuses to CEO Matt McRae and General Counsel Brian Busse, contingent on achieving key subscriber and revenue milestones by 2027. This change is part of Arlo’s broader strategy to align executive compensation with long-term shareholder value, following shareholder feedback emphasizing performance-based equity grants. The company aims to drive growth in paid subscriptions and annual recurring revenue while ensuring executive retention aligns with shareholder interests.