Arlo Technologies (ARLO) AI Stock Analysis

• Market Cap: $1.77B
• Dividend Yield: N/A
• Average Volume (3M): 930.21K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.81
• Revenue Growth: 0.27%
• EPS Growth: -18.75%
• Country: US
• Employees: 360
• Sector: Industrials
• Sector Strength: 87
• Industry: Security & Protection Services
• EPS (TTM): 0.15
• Shares Outstanding: 103,400,955
• 10 Day Avg. Volume: 1,123,682
• 30 Day Avg. Volume: 930,213
• PEG Ratio: 1.22
• Price to Book (P/B): 3.49
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -6.37
• Enterprise Value/Market Cap: 0.14
• Enterprise Value/Revenue: 0.12
• Enterprise Value/Gross Profit: 1.27
• Enterprise Value/Ebitda: -2.34
• 1Y Price Target: $20.00
• Price Target Upside: 17.16% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 73 Outperform
• Price Target: $18.00 ▲(5.45%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

Revenue Growth

Arlo Technologies surpassing $300 million in annualized recurring revenue puts the Company on a faster growth trajectory than forecasted.

Strategic Initiatives

Arlo has been prioritizing service revenue by offering cameras at below cost, resulting in more customers purchasing cameras and opting for a subscription after the free trial period.

Negative Factors

Market 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, 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 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

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

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

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.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
505.75M	510.89M	491.18M	490.41M	435.14M	357.15M
	Gross Profit
192.85M	187.50M	167.56M	136.03M	108.03M	55.39M
	EBIT
-24.82M	-34.89M	-24.21M	-55.07M	-49.43M	-104.91M
	EBITDA
-23.32M	-31.69M	-20.24M	-50.88M	-45.05M	-94.66M
	Net Income Common Stockholders
-21.70M	-30.50M	-22.04M	-56.63M	-56.03M	-101.25M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
153.11M	151.45M	136.50M	113.72M	175.75M	206.12M
	Total Assets
296.57M	298.40M	285.54M	272.20M	347.49M	413.97M
	Total Debt
17.44M	18.36M	17.02M	23.47M	21.47M	25.03M
	Net Debt
-66.57M	-63.67M	-39.50M	-60.55M	-154.28M	-161.10M
	Total Liabilities
193.20M	197.49M	182.26M	184.51M	234.84M	280.20M
	Stockholders Equity
103.37M	100.91M	103.28M	87.69M	112.65M	133.77M
Cash Flow		Free Cash Flow
57.28M	48.62M	35.45M	-47.97M	-25.46M	-50.42M
	Operating Cash Flow
62.42M	51.31M	38.30M	-45.96M	-23.20M	-46.53M
	Investing Cash Flow
-3.07M	10.84M	-50.69M	-31.77M	17.73M	-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 Price: 17.07
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 17.07 is above the 20-day moving average (MA) of 14.94, above the 50-day MA of 12.05, and above the 200-day MA of 11.66, indicating a bullish trend. The MACD of 1.41 indicates Negative momentum. The RSI at 80.02 is Negative, neither overbought nor oversold. The STOCH value of 82.14 is Negative, 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	78 Outperform	$984.12M	22.47	27.48%	2.03%	-1.05%	-2.78%
REZI	76 Outperform	$3.05B	51.96	2.58%	―	14.02%	-69.91%
SNT	74 Outperform	$92.37M	65.29	-3.47%	―	―	―
ARLO	73 Outperform	$1.77B	―	-21.34%	―	0.27%	-18.75%
ADT	72 Outperform	$6.78B	13.88	16.26%	2.71%	-5.44%	-16.05%
Sector *	66 Neutral	$4.47B	12.22	5.40%	3.65%	4.14%	-12.00%
EVLV	58 Neutral	$828.18M	―	-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.