Arlo Technologies (ARLO) AI Stock Analysis

• Market Cap: $1.66B
• Dividend Yield: N/A
• Average Volume (3M): 1.25M
• Price to Earnings (P/E): 115.6
• Beta (1Y): 1.99
• Revenue Growth: -2.83%
• EPS Growth: N/A
• Country: US
• Employees: 360
• Sector: Industrials
• Sector Strength: 72
• Industry: Security & Protection Services
• EPS (TTM): 0.22
• Shares Outstanding: 105,992,270
• 10 Day Avg. Volume: 1,175,020
• 30 Day Avg. Volume: 1,246,521
• PEG Ratio: -0.67
• Price to Book (P/B): 11.40
• Price to Sales (P/S): 2.75
• P/FCF Ratio: 21.79
• Enterprise Value/Market Cap: 0.92
• Enterprise Value/Revenue: 2.88
• Enterprise Value/Gross Profit: 6.54
• Enterprise Value/Ebitda: 82.43
• 1Y Price Target: $23.50
• Price Target Upside: 49.78% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 0.78
• Revenue Forecast (FY): $563.20M

• Rating: 71 Outperform
• Price Target: $17.50 ▲(11.54% Upside)
• Action: Upgraded Date: 02/28/26
• Date: Action: Upgraded 02/28/26

Score is driven by strong financial improvement (notably robust free cash flow and low leverage) and a positive earnings-call backdrop with rapid ARR/account growth and margin expansion. Offsetting factors are a stretched valuation (very high P/E, no dividend) and technicals that appear overbought with slightly weakening MACD, increasing near-term volatility risk.

Positive Factors

Recurring revenue scale (ARR & paid accounts)

Arlo's 34% YoY ARR growth and 281k paid-account adds demonstrate scalable recurring revenue. A growing installed base increases revenue visibility, improves lifetime value and retention economics, and reduces cyclicality versus pure hardware sales as services become a larger share.

High service margins and ARPU

Service gross margins exceeding 85% and rising ARPU indicate high-margin, stickier revenue. Durable service profitability supports cash generation and funds product and AI investment, insulating overall margins from intermittent hardware price pressure as subscription mix grows.

Strong cash generation and low leverage

Robust FCF and minimal debt provide financial flexibility. Positive cash flow and liquidity let Arlo invest in software, marketing and partnerships without reliance on external funding, enabling durable execution of growth targets and cushioning near-term operational volatility.

Negative Factors

Product revenue decline & negative product margins

A 21% drop in product revenue and negative product gross margins from tariffs and promotions show hardware remains a weak, volatile element. Persistent product margin headwinds can depress consolidated profitability and require material service growth to fully offset gross-margin deterioration.

Thin operating profitability

Despite returning to GAAP profit, operating margins remain very slim (EBITDA ~1.1%), leaving earnings vulnerable to modest revenue or cost swings. Sustainable margin expansion requires continued service scale and structural product-margin recovery to create durable operating leverage.

Ongoing reliance on hardware introduces cyclicality

The company's business mix still depends on hardware cycles, retail channels and promotional activity. That exposure generates revenue and margin cyclicality, channel inventory risk, and sensitivity to ASP declines—structural constraints that limit predictability until services dominate 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 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 Financial Statement Overview

Summary

Multi-year turnaround with strong recent cash generation and improving profitability. Free cash flow is strong in 2023–2025 (2025 FCF $66.9M) and leverage is low with debt down to $6.7M. Key risk is that profitability is still early and thin (2025 EBITDA margin ~1.1%), following multiple loss years.

Income Statement

Revenue has grown steadily from $357M (2020) to $529M (2025), with modest growth in 2024–2025. Profitability has improved materially: the company moved from sizable losses in 2020–2024 to positive net income in 2025 ($14.9M, ~2.8% net margin). Gross margin also expanded meaningfully (about 15.5% in 2020 to ~44.0% in 2025), supporting the turnaround. The key weakness is that operating profitability remains thin (EBITDA margin ~1.1% in 2025) and the business only recently returned to profitability after multiple loss years.

Balance Sheet

Leverage is low and improving: total debt fell sharply to $6.7M in 2025 and debt relative to equity is modest (~0.05). Equity has increased versus 2024, and returns improved to a positive level in 2025 after several years of negative returns. The main watch-out is that the asset base has fluctuated over time and profitability is still early in its recovery, which could limit balance-sheet strengthening if margins slip.

Cash Flow

Cash generation is a standout. Operating cash flow and free cash flow are strongly positive in 2023–2025, reaching $78.7M and $66.9M in 2025, respectively, with strong free cash flow growth in 2025. This is a meaningful improvement versus negative cash flow in 2020–2022. A constraint is that cash flow can be volatile historically (notably negative in 2020–2022), so durability through a cycle remains the key question despite the recent strength.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	529.30M	510.89M	491.18M	490.41M	435.14M
Gross Profit	232.84M	187.50M	167.56M	136.03M	108.03M
EBITDA	19.60M	-31.69M	-20.24M	-52.11M	-45.05M
Net Income	14.93M	-30.50M	-22.04M	-56.63M	-56.03M
Balance Sheet
Total Assets	310.55M	298.40M	285.54M	272.20M	347.49M
Cash, Cash Equivalents and Short-Term Investments	166.43M	151.45M	136.50M	113.72M	175.75M
Total Debt	6.74M	18.36M	17.02M	23.47M	26.08M
Total Liabilities	182.71M	197.49M	182.26M	184.51M	234.84M
Stockholders Equity	127.84M	100.91M	103.28M	87.69M	112.65M
Cash Flow
Free Cash Flow	66.90M	48.62M	35.45M	-47.97M	-25.46M
Operating Cash Flow	78.72M	51.31M	38.30M	-45.96M	-23.20M
Investing Cash Flow	27.75M	10.84M	-50.69M	-31.77M	17.73M
Financing Cash Flow	-42.07M	-40.77M	-15.14M	-13.94M	-4.97M

Arlo Technologies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 15.69
• 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 15.69 is above the 20-day moving average (MA) of 12.19, above the 50-day MA of 13.09, and above the 200-day MA of 15.54, indicating a bullish trend. The MACD of -0.07 indicates Negative momentum. The RSI at 74.92 is Negative, neither overbought nor oversold. The STOCH value of 88.66 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	$1.66B	35.32	26.42%	1.29%	-2.28%	-9.94%
ARLO	71 Outperform	$1.66B	115.62	3.80%	―	-2.83%	―
BAER	69 Neutral	$134.97M	-4.70	8.75%	―	54.35%	70.17%
SNT	67 Neutral	$80.71M	―	―	―	―	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
EVLV	48 Neutral	$925.47M	-14.52	-51.67%	―	41.61%	-1.76%
KSCP	41 Neutral	$45.69M	-0.59	-164.48%	―	5.50%	51.32%