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Arlo Technologies Inc (ARLO)
NYSE:ARLO
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Arlo Technologies
(NYSE:ARLO)
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Rating:59Neutral
Price Target:
$15.50
▲(10.79% Upside)
Arlo Technologies' overall stock score is driven by strong earnings call performance and financial stability, but is weighed down by poor technical indicators and high valuation concerns. The company shows potential for growth, but operational efficiency and profitability need improvement.
Positive Factors
SaaS Growth
The significant increase in paid accounts and ARR growth of 34% year-over-year highlights Arlo's successful SaaS strategy, indicating strong customer acquisition and retention, which is crucial for long-term revenue stability and growth.
Product Launch Success
The successful execution of a major product launch with significant sales growth demonstrates Arlo's innovation and market responsiveness, enhancing its competitive position and supporting future revenue streams.
Financial Position
A strong cash position and record free cash flow generation provide Arlo with financial flexibility to invest in growth opportunities and weather potential market challenges, reinforcing its long-term financial health.
Negative Factors
Product Revenue Decline
The decline in product revenue reflects challenges in maintaining hardware sales amidst industry-wide ASP declines, which could impact overall revenue growth and necessitate strategic adjustments.
Negative Product Margins
Negative product margins due to tariffs and pricing pressures highlight cost management challenges, potentially affecting profitability and requiring strategic cost optimization efforts.
Profitability Challenges
Low net and negative EBIT margins indicate ongoing operational efficiency issues, which could hinder Arlo's ability to achieve sustainable profitability and necessitate operational improvements.
Arlo Technologies (ARLO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.48B
Dividend YieldN/A
Average Volume (3M)1.08M
Price to Earnings (P/E)400.3
Beta (1Y)1.98
Revenue Growth-2.83%
EPS GrowthN/A
CountryUS
Employees360
SectorIndustrials
Sector Strength72
IndustrySecurity & Protection Services
Share Statistics
EPS (TTM)0.16
Shares Outstanding105,992,270
10 Day Avg. Volume1,111,939
30 Day Avg. Volume1,077,547
Financial Highlights & Ratios
PEG Ratio-1.24
Price to Book (P/B)10.94
Price to Sales (P/S)2.16
P/FCF Ratio22.70
Enterprise Value/Market Cap1.15
Enterprise Value/Revenue3.35
Enterprise Value/Gross Profit8.06
Enterprise Value/Ebitda294.26
Forecast
1Y Price Target
$24.00Price Target Upside71.55% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)0.8
Revenue Forecast (FY)$563.31M
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 through multiple streams, primarily consisting of hardware sales and subscription services. The company sells its security cameras, doorbells, and other smart home devices directly to consumers through various retail channels and e-commerce platforms. A significant portion of Arlo's income comes from subscription services, including Arlo Smart, which offers enhanced features such as cloud storage, advanced AI detection, and activity zones for a monthly or annual fee. Additionally, Arlo has established partnerships with major retailers and telecom providers to expand its distribution channels and reach a broader customer base, further contributing to its revenue growth.
Arlo Technologies Earnings Call Summary
Earnings Call Date:Nov 06, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 26, 2026
Earnings Call Sentiment Positive
The earnings call reflects a strong performance by Arlo with significant growth in SaaS and service revenue, successful product launches, and improved profitability. However, challenges remain in product revenue declines and negative gross margins on products due to tariffs and promotional activities.Q3-2025 Updates
Positive Updates
Record-Breaking SaaS Growth
Arlo added 281,000 paid accounts in Q3, surpassing the target range of 190,000 to 230,000, increasing total paid accounts to 5.4 million. This contributed to annual recurring revenue (ARR) reaching $323 million, up 34% year-over-year.
Successful Product Launch
Arlo executed the largest product launch in its history, contributing to a nearly 30% year-over-year unit sales growth in Q3. The launch included new platforms across Essential, Pro, and Ultra tiers, with 20% to 35% reduction in BOM costs.
Improved Profitability
Adjusted EBITDA increased by 50% year-over-year, reaching $17 million. GAAP earnings per share was $0.07, a new record for Arlo, with a year-to-date improvement of $0.35 compared to the previous year.
Service Revenue Growth
Subscriptions and services revenue was $79.9 million, up 29% year-over-year, driven by increased ARPU and the introduction of AI-driven Arlo Secure 6 rate plan offerings.
Strong Financial Position
Arlo ended the quarter with $165.5 million in cash and generated a record free cash flow of $49 million during the first 9 months, representing a free cash flow margin of almost 13%.
Negative Updates
Decline in Product Revenue
Product revenue for the period was $59.6 million, down $16.2 million or 21% compared to the prior year, due to industry-wide decline in ASPs and promotional campaigns to clear end-of-life products.
Negative Product Gross Margins
Product gross margins were negative, mainly due to the impact of tariffs approximating $5 million, coupled with industry-wide ASP declines and promotional spending on end-of-life products.
Company Guidance
During Arlo Technologies' Third Quarter 2025 earnings call, the company highlighted remarkable performance across various metrics, indicating robust growth and strategic progress. Notably, Arlo added 281,000 paid accounts in the quarter, surpassing their target range of 190,000 to 230,000, bringing the total to 5.4 million paid accounts. The company's annual recurring revenue (ARR) reached $323 million, marking a 34% year-over-year increase. Service gross margins expanded by 770 basis points to exceed 85%, while average revenue per user (ARPU) was over $15 per month. Arlo also executed a significant product launch, achieving a nearly 30% year-over-year unit sales growth, despite challenges such as tariffs and promotional spend on end-of-life products. The company’s adjusted EBITDA rose by 50% year-over-year to $17 million, and GAAP earnings per share reached $0.07, setting a new record. Arlo's strategic partnerships, particularly with Verisure, contributed to these results, and the company remains well-positioned for continued growth as it aims to reach its long-term targets of 10 million paid accounts and $700 million in ARR.Arlo Technologies Financial Statement Overview
Summary
Arlo Technologies shows strong revenue growth and improved gross margins, indicating positive business momentum. The balance sheet is stable with low leverage, but profitability remains a challenge. Cash flow management shows improvement, though there are areas for enhancement.Income Statement
Arlo Technologies has shown a strong revenue growth rate of 36.7% in the TTM, indicating a positive trajectory. The gross profit margin improved to 41.6%, reflecting better cost management. However, the net profit margin remains low at 0.8%, and EBIT margin is negative, suggesting challenges in operational efficiency.72
Positive
Balance Sheet
The company maintains a low debt-to-equity ratio of 0.056, indicating low leverage and financial stability. Return on equity is modest at 3.8%, showing limited profitability. The equity ratio stands at 36.8%, suggesting a balanced capital structure.65
Positive
Cash Flow
Operating cash flow has improved, with a coverage ratio of 0.31, indicating better cash generation relative to net income. Free cash flow to net income ratio is strong at 0.83, though free cash flow growth is slightly negative, highlighting potential cash flow management issues.68
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 509.57M | 510.89M | 491.18M | 490.41M | 435.14M | 357.15M |
| Gross Profit | 212.16M | 187.50M | 167.56M | 136.03M | 108.03M | 55.39M |
| EBITDA | 5.81M | -31.69M | -20.24M | -52.11M | -45.05M | -94.66M |
| Net Income | 4.30M | -30.50M | -22.04M | -56.63M | -56.03M | -101.25M |
Balance Sheet | ||||||
| Total Assets | 350.87M | 298.40M | 285.54M | 272.20M | 347.49M | 413.97M |
| Cash, Cash Equivalents and Short-Term Investments | 165.54M | 151.45M | 136.50M | 113.72M | 175.75M | 206.12M |
| Total Debt | 7.21M | 18.36M | 17.02M | 23.47M | 26.08M | 29.43M |
| Total Liabilities | 221.64M | 197.49M | 182.26M | 184.51M | 234.84M | 280.20M |
| Stockholders Equity | 129.23M | 100.91M | 103.28M | 87.69M | 112.65M | 133.77M |
Cash Flow | ||||||
| Free Cash Flow | 54.55M | 48.62M | 35.45M | -47.97M | -25.46M | -50.42M |
| Operating Cash Flow | 65.62M | 51.31M | 38.30M | -45.96M | -23.20M | -46.53M |
| Investing Cash Flow | -30.82M | 10.84M | -50.69M | -31.77M | 17.73M | -3.98M |
| Financing Cash Flow | -29.48M | -40.77M | -15.14M | -13.94M | -4.97M | -23.00K |
Arlo Technologies Technical Analysis
Neutral
13.99
Price Trends
14.25
Negative
16.03
Negative
15.12
Negative
Market Momentum
-0.16
Negative
49.71
Neutral
75.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARLO, the sentiment is Neutral. The current price of 13.99 is above the 20-day moving average (MA) of 13.83, below the 50-day MA of 14.25, and below the 200-day MA of 15.12, indicating a neutral trend. The MACD of -0.16 indicates Negative momentum. The RSI at 49.71 is Neutral, neither overbought nor oversold. The STOCH value of 75.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ARLO.
Arlo Technologies Risk Analysis
Arlo Technologies disclosed 56 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $1.41B | 32.18 | 25.03% | 1.29% | -2.28% | -9.94% | |
69 Neutral | $165.52M | -5.55 | 8.75% | ― | 54.35% | 70.17% | |
67 Neutral | $100.77M | ― | ― | ― | ― | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | $1.48B | 400.28 | 3.80% | ― | -2.83% | ― | |
48 Neutral | $1.11B | -17.09 | -51.67% | ― | 41.61% | -1.76% | |
41 Neutral | $51.21M | -0.65 | -164.48% | ― | 5.50% | 51.32% |
* Industrials Sector Average
ARLO
Arlo Technologies
13.99
2.16
18.26%
SNT
Senstar Technologies
4.32
0.96
28.57%
NSSC
Napco Security Technologies
39.52
5.13
14.92%
EVLV
Evolv Technologies Holdings
6.38
3.19
100.00%
BAER
Bridger Aerospace Group Holdings
2.98
0.00
0.00%
KSCP
Knightscope Inc Class A
4.45
-7.55
-62.92%
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.