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Arlo Technologies Inc (ARLO)
NYSE:ARLO

Arlo Technologies (ARLO) AI Stock Analysis

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Arlo Technologies

(NYSE:ARLO)

Rating:73Outperform
Price Target:
$18.00
▲(2.27%Upside)
Arlo Technologies' stock score is driven by strong technical indicators and positive earnings call sentiment, reflecting robust growth in subscriptions and services. However, profitability challenges and a high P/E ratio weigh on the overall score.
Positive Factors
Market Position and Strategy
ARLO is positioning itself as a leading SaaS provider in the growing DIY home security market, which could reward investors with strengthening profitability and recurring revenue growth.
Profitability and Cash Flow
The growth in service revenue has resulted in ARLO becoming free cash flow positive.
Recurring Revenue Growth
Arlo Technologies surpassing $300 million in annualized recurring revenue puts the Company on a faster growth trajectory than forecasted.
Negative Factors
Competitive Threats
Arlo Technologies (ARLO) has a new competitor poised to take share in an already crowded space.
Hardware Pricing Strategy
Arlo Technologies has managed to maintain an elite LTV/CAC ratio of 4:1 despite negative gross margins from its hardware pricing strategy.
Stock Valuation Concerns
Arlo Technologies' stock has yet to benefit from the continued gains the company has achieved in having a recurring revenue.

Arlo Technologies (ARLO) vs. SPDR S&P 500 ETF (SPY)

Arlo Technologies Business Overview & Revenue Model

Company DescriptionArlo 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 MoneyArlo Technologies generates revenue primarily through the sale of its smart home security products, including wireless cameras, doorbells, and related accessories. The company also earns money from subscription services that provide users with enhanced features such as cloud storage, advanced AI capabilities, and emergency response services. Key revenue streams include direct product sales through retail partners and online platforms, as well as recurring revenue from subscriptions to Arlo's various service plans. Strategic partnerships with major retailers and technology companies further bolster Arlo's market reach and contribute to its earnings.

Arlo Technologies Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q1-2025)
|
% Change Since: 65.41%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Arlo's strong growth in subscriber base and service revenue, achieving record ARPU and financial metrics. Despite challenges in product revenue and international sales, the company maintains a positive outlook with strategic initiatives to mitigate tariff impacts and enhance competitive positioning.
Q1-2025 Updates
Positive Updates
Subscriber Growth and Milestones
Arlo added 298,000 subscribers in Q1 2025, reaching 4.9 million paid accounts, a 51% increase year-over-year. They surpassed 5 million subscribers ahead of their 2025 forecast.
Record ARPU and Revenue
Average revenue per user (ARPU) rose to a record $13.48. Subscriptions and services revenue reached $69 million, with annual recurring revenue growing to $276 million, both up over 20% year-over-year.
Strong Financial Performance
Non-GAAP services gross margin improved to 83%, up 600 basis points from last year. Record free-cash flow of $28 million and earnings per share of $0.15 were achieved.
Positive Outlook and Guidance
Arlo reaffirmed its full-year guidance, expecting to exit 2025 with more than $300 million in ARR and achieving Rule of 40 status.
Negative Updates
Decline in Product Revenue
Product revenue was $50.2 million, down from the prior year, primarily due to a decline in average selling price (ASP) across the industry.
Challenges in International Revenue
International revenue declined, with Europe down 30% year-over-year, attributed to factors such as Verisure's stocking patterns and regulatory changes.
Negative Product Gross Margins
Product gross margins remained slightly negative due to aggressive promotional activity and competitive pricing pressures.
Company Guidance
During the first quarter of 2025, Arlo Technologies demonstrated strong financial performance with a significant focus on its growing subscriptions and services business. The company added 298,000 subscribers, reaching a total of 4.9 million paid accounts, marking a 51% increase year-over-year. The average revenue per user (ARPU) hit a record $13.48, driven by the success of Arlo Secure 5 and new service plans, resulting in a subscriptions and services revenue of $69 million for the quarter. The annual recurring revenue (ARR) grew to $276 million, a 20% year-over-year increase. Arlo reported a non-GAAP services gross margin of 83%, up 600 basis points from the previous year, contributing to a record free-cash flow of $28 million and earnings per share of $0.15. The company anticipates continued strength in its subscriptions and services business throughout 2025 and announced it surpassed 5 million subscribers, two years ahead of its original forecast. Despite the tariff environment, Arlo remains optimistic, expecting to exit 2025 with more than $300 million in ARR, reinforcing its position as a leading SaaS company.

Arlo Technologies Financial Statement Overview

Summary
Arlo Technologies shows robust revenue growth and improved cash flow management, with a strong balance sheet and better debt metrics. However, persistent net losses and negative profit margins remain challenges for achieving profitability.
Income Statement
66
Positive
Arlo Technologies has shown consistent revenue growth over the years, with improvements in gross profit margins, despite persistent net losses. The TTM data indicates a slight decline in revenue compared to the previous annual period and negative EBIT and EBITDA margins. While the company is making strides in reducing its EBIT and EBITDA losses, the net profit margin remains negative, indicating ongoing challenges in achieving profitability.
Balance Sheet
72
Positive
The company maintains a strong equity base with a debt-to-equity ratio that has improved over time, suggesting a low reliance on debt financing. The equity ratio is stable, reflecting a solid financial position despite the negative net income. Return on equity remains negative due to ongoing net losses, but the reduction in total liabilities over time is a positive indicator of financial stability.
Cash Flow
78
Positive
Arlo Technologies has shown significant improvement in cash flow management, with a positive free cash flow and operating cash flow in the TTM period. The operating cash flow to net income ratio is strong, indicating efficient cash conversion despite net losses. The free cash flow to net income ratio is also positive, reflecting effective capital expenditure management and operational efficiency.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue505.75M510.89M491.18M490.41M435.14M357.15M
Gross Profit192.85M187.50M167.56M136.03M108.03M55.39M
EBITDA-23.32M-31.69M-20.24M-50.88M-45.05M-94.66M
Net Income-21.70M-30.50M-22.04M-56.63M-56.03M-101.25M
Balance Sheet
Total Assets296.57M298.40M285.54M272.20M347.49M413.97M
Cash, Cash Equivalents and Short-Term Investments153.11M151.45M136.50M113.72M175.75M206.12M
Total Debt17.44M18.36M17.02M23.47M21.47M25.03M
Total Liabilities193.20M197.49M182.26M184.51M234.84M280.20M
Stockholders Equity103.37M100.91M103.28M87.69M112.65M133.77M
Cash Flow
Free Cash Flow57.28M48.62M35.45M-47.97M-25.46M-50.42M
Operating Cash Flow62.42M51.31M38.30M-45.96M-23.20M-46.53M
Investing Cash Flow-3.07M10.84M-50.69M-31.77M17.73M-3.98M
Financing Cash Flow-41.58M-40.77M-15.14M-13.94M-4.97M-23.00K

Arlo Technologies Technical Analysis

Technical Analysis Sentiment
Positive
Last Price17.60
Price Trends
50DMA
14.18
Positive
100DMA
12.39
Positive
200DMA
12.02
Positive
Market Momentum
MACD
0.82
Positive
RSI
69.86
Neutral
STOCH
63.25
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 17.6 is above the 20-day moving average (MA) of 17.03, above the 50-day MA of 14.18, and above the 200-day MA of 12.02, indicating a bullish trend. The MACD of 0.82 indicates Positive momentum. The RSI at 69.86 is Neutral, neither overbought nor oversold. The STOCH value of 63.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ARLO.

Arlo Technologies Risk Analysis

Arlo Technologies disclosed 55 risk factors in its most recent earnings report. Arlo Technologies reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Arlo Technologies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.07B24.5427.48%1.86%-1.05%-2.78%
SNSNT
79
Outperform
$117.57M65.29-3.47%
77
Outperform
$3.58B60.922.58%14.02%-69.91%
73
Outperform
$1.82B-21.34%0.27%-18.75%
ADADT
72
Outperform
$7.09B14.4916.26%2.60%-5.44%-16.05%
65
Neutral
$10.77B15.805.51%1.90%3.03%-26.66%
54
Neutral
$987.26M-33.80%36.53%52.99%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ARLO
Arlo Technologies
17.60
3.80
27.54%
SNT
Senstar Technologies
5.04
3.30
189.66%
NSSC
Napco Security Technologies
30.14
-23.62
-43.94%
ADT
Adt
8.47
1.32
18.46%
REZI
Resideo Technologies
24.08
4.99
26.14%
EVLV
Evolv Technologies Holdings
6.02
3.44
133.33%

Arlo Technologies Corporate Events

Executive/Board ChangesShareholder Meetings
Arlo Technologies Holds Annual Stockholders Meeting
Neutral
Jun 25, 2025

On June 20, 2025, Arlo Technologies held its Annual Meeting of Stockholders where key decisions were made. Stockholders elected Ralph Faison and Jocelyn Carter-Miller as Class I directors to serve until 2028, ratified Deloitte & Touche LLP as the independent registered public accounting firm for 2025, and approved the compensation of named executive officers.

The most recent analyst rating on (ARLO) stock is a Buy with a $24.00 price target. To see the full list of analyst forecasts on Arlo Technologies stock, see the ARLO Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 06, 2025