Arlo Reports Third Quarter 2025 Results

CARLSBAD, Calif.--( BUSINESS WIRE)--Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security platform company, today reported financial results for the third quarter ended September 28, 2025.

“Arlo again delivered another outstanding quarter fueled by our services business. Our ARR accelerated to $323 million, up about 34% year over year, driving non-GAAP subscriptions and services gross margin to over 85%, a record level and a spectacular increase of 770 basis points year over year,” said Matthew McRae, Chief Executive Officer of Arlo Technologies. “The comprehensive launch of our refreshed product portfolio, coupled with our Arlo Secure 6 AI-driven security platform, positions us well for a successful holiday season and additional subscriptions and services revenue growth heading into 2026.”

Financial Highlights

Three Months Ended

Nine Months Ended

September 28,

2025

June 29,

2025

September 29,

2024

September 28,

2025

September 29,

2024

(In thousands, except percentage and per share data)

Revenue

139,529

129,405

137,667

388,000

389,314

GAAP gross margin

40.5

44.9

35.2

43.1

36.6

Non-GAAP gross margin (2)

41.4

45.8

36.0

44.1

37.7

GAAP net income (loss) per share - basic

0.07

0.03

(0.04

)

0.09

(0.26

)

Non-GAAP net income per share - diluted (2)

0.16

0.17

0.11

0.49

0.30

_________________________

(1)

ARR represents and is defined as the annualized paid subscriptions and services revenue we expect to recognize from subscription contracts, as calculated by taking the average paid subscriptions and services revenue per paid account of the reporting period multiplied by the number of paid accounts at the end of the reporting period.

(2)

Reconciliation of financial measures computed on a GAAP basis to the most directly comparable financial measures computed on a non-GAAP basis is provided at the end of this press release.

(3)

FCF is calculated as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue.

Fourth Quarter 2025 Business Outlook (4) (5)

A reconciliation of our business outlook on a GAAP and non-GAAP basis is provided in the following table:

Three Months Ended December 31, 2025

Revenue

Net income per share - diluted

(In millions, except per share data)

GAAP

$131 - $141

$0.00 - $0.06

Estimated adjustment for stock-based compensation and other expense

—

$0.13

Non-GAAP

$131 - $141

$0.13 - $0.19

_________________________

(4)

Business outlook does not include estimates for any currently unknown income and expense items which, by their nature, could arise late in a quarter, including: litigation reserves, net; impairment charges; discrete tax benefits or detriments relating to tax windfalls or shortfalls from equity awards; and any additional impacts relating to the implementation of U.S. tax reform. New material income and expense items such as these could have a significant effect on our guidance and future results.

(5)

The current global tariff environment is uncertain. Our products are manufactured outside the U.S., and consequently tariffs increase our product costs, which could impact our sales and reduces our product margin. The outlook ranges include the impact of our current estimate on tariff costs.

Investor Conference Call / Webcast Details

Arlo will review the third quarter 2025 results and discuss management’s expectations for the fourth quarter 2025 today, Thursday, November 6, 2025 at 5:00 p.m. ET (2:00 p.m. PT). To view the accompanying presentation, a live webcast of the conference call will be available on Arlo’s Investor Relations website at https://investor.arlo.com. The toll-free dial-in number for the live audio call is (833) 470-1428. The international dial-in number for the live audio call is (646) 844-6383. The conference ID for the call is 270899. A replay of the call will be available via the web at https://investor.arlo.com.

About Arlo Technologies, Inc.

Arlo is an award-winning, industry leader that is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security solutions. Arlo’s deep expertise in AI- and CV-powered analytics, cloud services, user experience and product design, and innovative wireless and RF connectivity enables the delivery of a seamless, smart security experience for Arlo users that is easy to set up and interact with every day. Arlo’s cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. To date, Arlo has launched several categories of award-winning connected devices, software and services. These include wire-free, smart Wi-Fi and LTE-enabled security cameras, video doorbells, floodlights, security system, and Arlo's subscription services: Arlo Secure and Arlo Safe.

With a mission to bring users peace of mind, Arlo is as passionate about protecting user privacy as it is about safeguarding homes and families. Arlo is committed to implementing industry standards for data protection designed to keep users’ personal information private and in their control. Arlo does not monetize personal data, provides enhanced controls for user data, supports privacy legislation, keeps user data safely secure, and puts security at the forefront of company culture.

© 2025 Arlo Technologies, Inc., Arlo and the Arlo logo are trademarks and/or registered trademarks of Arlo Technologies, Inc. and/or certain of its affiliates in the United States and/or other countries. Other brand and product names are for identification purposes only and may be trademarks or registered trademarks of their respective holder(s). The information contained herein is subject to change without notice. Arlo shall not be liable for technical or editorial errors or omissions contained herein. All rights reserved.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 for Arlo Technologies, Inc.:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent our expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding our potential future business, operating performance and financial condition, including descriptions of our expected revenue and profitability (and related timing), GAAP and non-GAAP gross margins, adjusted EBITDA and adjusted EBITDA margins, tax rates, expenses, cash outlook, free cash flow and free cash flow margins; strategic objectives and initiatives; the recurring revenue business model; expectations regarding market expansion and future growth, expectations regarding the ability of our new AI platform, Arlo Secure 6, to drive growth and gain access to additional households; expectations regarding our subscription momentum, holiday product launches and recent strategic partnerships to position us for continuing success; and others. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for our products may be lower than anticipated, including due to inflation, fluctuating consumer confidence, banking failures and rising interest rates; we may be unsuccessful in developing and expanding our sales and marketing capabilities; we may not be able to increase sales of our paid subscription services; consumers may choose not to adopt our new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; we may be unsuccessful or experience delays in manufacturing and distributing our new and existing products; and we may fail to manage costs and cost saving initiatives, the cost of developing new products and manufacturing and distribution of our existing offerings. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

The recent announcements of substantial new U.S. and international tariffs have created a dynamic and unpredictable trade landscape, which is adversely impacting, and may continue to adversely impact, our business. Current or future tariffs impacting our products, which are manufactured outside of the United States, have raised and may further raise our product costs. In addition, other trade restrictions could negatively impact our ability to obtain finished products from our ex-U.S. manufacturers and suppliers and, therefore, delay or impede our product deliveries. Tariff-related cost pressures and supply chain disruptions may lead to reputational harm if we are unable to deliver products or services on expected timelines or if any price increases are poorly received by customers or business partners. Furthermore, ongoing uncertainty regarding trade disputes and other political tensions between the United States and other countries, particularly in Asia, may also exacerbate unfavorable macroeconomic conditions, which may negatively impact international customer demand for our products or services and may lead to increased preference for local competitors. While we continue to monitor these developments, the full impact of these risks remains uncertain, and any prolonged economic downturn, escalation in trade tensions or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations and financial condition.

Further information on potential risk factors that could affect our business are detailed in our periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Risk Factors” in the most recently filed Annual Report and Quarterly Report filed with the Securities and Exchange Commission (the “SEC”) and subsequent filings with the SEC. Given these circumstances, you should not place undue reliance on these forward-looking statements. We undertake no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Non-GAAP Financial Measures:

To supplement our unaudited financial data prepared on a basis consistent with U.S. Generally Accepted Accounting Principles (“GAAP”), we disclose certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP gross margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income (loss) and non-GAAP net income (loss) per diluted share. These supplemental measures exclude adjustments for stock-based compensation expense, gain on early lease termination, restructuring charges, write-off of deferred financing costs, separation expenses, amortization of software development cost, depreciation expenses, litigation reserves, net, other non-recurring costs, and the related tax effects. In addition, we use free cash flow as a non-GAAP measure when assessing the sources of liquidity, capital resources, and quality of earnings. We believe that free cash flow is helpful in understanding our capital requirements and provides an additional means to reflect the cash flow trends in our business.

These non-GAAP measures are not in accordance with, or an alternative for GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our operating performance on a period-to-period basis because such items are not, in our view, related to our ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, management’s incentive compensation is determined using certain non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP measures, provide useful information to investors by offering:

The following are explanations of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding them in the reconciliations of these non-GAAP financial measures:

Stock-based compensation expense consists of non-cash charges for the estimated fair value of restricted stock units (RSU), performance-based restricted stock units, and shares under the employee stock purchase plan granted to employees, and the payroll taxes associated with stock-based compensation. We believe that the exclusion of these charges provides for more accurate comparisons of our operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, we believe it is useful to investors to understand the specific impact stock-based compensation expense has on our operating results.

Other non-GAAP items are the result of either unique or unplanned events, including, when applicable: gain on early lease termination, restructuring charges, write-off of deferred financing costs, separation expenses, amortization of software development cost, depreciation expenses, litigation reserves, net, other non-recurring costs, and the related tax effects. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that often arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.

Source: Arlo-F

***Financial Tables

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of

September 28,

2025

December 31,

2024

(In thousands, except share and per share data)

ASSETS

Current assets:

Cash and cash equivalents

86,012

82,032

Short-term investments

79,532

69,419

Accounts receivable, net

76,698

57,332

Inventories

44,371

40,633

Prepaid expenses and other current assets

15,110

13,190

Total current assets

301,723

262,606

Property and equipment, net

12,391

4,765

Operating lease right-of-use assets, net

9,654

15,698

Goodwill

11,038

Long-term investment

12,500

—

Other non-current assets

3,560

4,293

Total assets

350,866

298,400

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

78,156

63,784

Deferred revenue

40,073

27,248

Accrued liabilities

93,999

85,730

Total current liabilities

212,228

176,762

Non-current operating lease liabilities

7,210

18,357

Other non-current liabilities

2,201

2,372

Total liabilities

221,639

197,491

Commitments and contingencies

Stockholders’ Equity:

Preferred stock: $0.001 par value; 50,000,000 shares authorized; none issued or outstanding

—

Common stock: $0.001 par value; 500,000,000 shares authorized; shares issued and outstanding: 105,747,479 at September 28, 2025 and 100,885,158 at December 31, 2024

105

101

Additional paid-in capital

517,890

498,739

Accumulated other comprehensive income

Accumulated deficit

(388,803

)

(397,965

)

Total stockholders’ equity

129,227

100,909

Total liabilities and stockholders’ equity

350,866

298,400

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 28,

2025

June 29,

2025

September 29,

2024

September 28,

2025

September 29,

2024

(In thousands, except percentage and per share data)

Revenue:

Subscriptions and services

79,942

78,175

61,883

226,966

178,851

Products

59,587

51,230

75,784

161,034

210,463

Total revenue

139,529

129,405

137,667

388,000

389,314

Cost of revenue:

Subscriptions and services

12,424

12,235

14,431

36,924

42,584

Products

70,599

59,095

74,820

183,768

204,080

Total cost of revenue

83,023

71,330

89,251

220,692

246,664

Gross profit

56,506

58,075

48,416

167,308

142,650

Gross margin

40.5

44.9

35.2

43.1

36.6

Operating expenses:

Research and development

18,144

18,489

17,562

52,798

57,916

Sales and marketing

20,459

21,103

17,832

61,765

52,900

General and administrative

15,091

16,334

17,052

49,210

57,830

Other operating expense

1,940

216

1,423

2,181

2,868

Total operating expenses

55,634

56,142

53,869

165,954

171,514

Income (loss) from operations

872

1,933

(5,453

)

1,354

(28,864

)

Operating margin

0.6

1.5

(4.0

0.3

(7.4

Other income (expense):

Gain on early lease termination

4,144

—

4,144

—

Interest income, net

1,508

1,344

1,400

4,168

4,281

Other non-operating income (expense), net

503

(407

)

(57

)

(102

)

(100

)

Income (loss) before income taxes

7,027

2,870

(4,110

)

9,564

(24,683

)

Provision (benefit) for income taxes

154

(254

)

329

402

960

Net income (loss)

6,873

3,124

(4,439

)

9,162

(25,643

)

Net income (loss) per share:

Basic

0.07

0.03

(0.04

)

0.09

(0.26

)

Diluted

0.06

0.03

(0.04

)

0.08

(0.26

)

Weighted average shares to compute net income (loss) per share:

Basic

105,198

103,885

99,731

103,776

97,932

Diluted

109,638

108,061

99,731

108,664

97,932

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 28,

2025

September 29,

2024

(In thousands)

Cash flows from operating activities:

Net income (loss)

9,162

(25,643

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation expense, net of amounts capitalized

45,133

54,159

Depreciation and amortization

2,586

2,395

Gain on early lease termination

(4,144

)

—

Allowance for credit losses and non-cash changes to reserves

994

2,930

Deferred income taxes

(306

)

(23

)

Discount accretion on investments and other

(2,180

)

(2,493

)

Changes in assets and liabilities:

Accounts receivable, net

(19,400

)

(3,095

)

Inventories

(4,696

)

(16,609

)

Prepaid expenses and other assets

(883

)

(2,703

)

Accounts payable

14,422

38,159

Deferred revenue

12,964

6,714

Accrued and other liabilities

5,300

(9,157

)

Net cash provided by operating activities

58,952

44,634

Cash flows from investing activities:

Purchases of property and equipment, including capitalized software

(9,996

)

(1,612

)

Purchases of short-term investments

(112,932

)

(145,955

)

Purchase of long-term investment

(12,500

)

—

Proceeds from maturities of short-term investments

105,000

158,796

Net cash provided by (used in) investing activities

(30,428

)

11,229

Cash flows from financing activities:

Proceeds related to employee benefit plans

2,280

7,113

Repurchase of common stock

(26,824

)

—

Restricted stock unit withholdings

—

(42,943

)

Net cash used in financing activities

(24,544

)

(35,830

)

Net increase in cash, cash equivalents, and restricted cash

3,980

20,033

Cash, cash equivalents, and restricted cash, at beginning of period

82,032

60,653

Cash, cash equivalents, and restricted cash, at end of period

86,012

80,686

Non-cash investing activities:

Purchases of property and equipment included in accounts payable and accrued liabilities

423

647

Stock-based compensation expense capitalized for software development

1,402

—

ARLO TECHNOLOGIES, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

UNAUDITED STATEMENT OF OPERATIONS DATA:

Three Months Ended

Nine Months Ended

September 28,

2025

June 29,

2025

September 29,

2024

September 28,

2025

September 29,

2024

(In thousands, except percentage data)

GAAP gross profit:

Subscriptions and services

67,518

65,940

47,452

190,042

136,267

Products

(11,012

)

(7,865

)

964

(22,734

)

6,383

Total GAAP gross profit

56,506

58,075

48,416

167,308

142,650

GAAP gross margin:

Subscriptions and services

84.5

84.3

76.7

83.7

76.2

Products

(18.5

(15.4

1.3

(14.1

3.0

Total GAAP gross margin

40.5

44.9

35.2

43.1

36.6

Stock-based compensation expense - Subscriptions and services cost

121

289

581

711

Stock-based compensation expense - Products cost

492

786

666

2,034

2,907

Amortization of software development cost

364

341

152

977

454

Others

233

—

233

—

Non-GAAP gross profit:

Subscriptions and services

68,003

66,380

47,893

191,600

137,432

Products

(10,287

)

(7,079

)

1,630

(20,467

)

9,290

Total Non-GAAP gross profit

57,716

59,301

49,523

171,133

146,722

Non-GAAP gross margin:

Subscriptions and services

85.1

84.9

77.4

84.4

76.8

Products

(17.3

(13.8

2.2

(12.7

4.4

Total Non-GAAP gross margin

41.4

45.8

36.0

44.1

37.7

GAAP net income (loss)

6,873

3,124

(4,439

)

9,162

(25,643

)

Stock-based compensation expense

13,138

14,983

14,689

45,133

54,159

Depreciation and amortization

899

858

710

2,586

2,395

Other cost and operating expense

2,173

216

1,423

2,414

2,868

Gain on early lease termination

(4,144

)

—

(4,144

)

—

Interest income, net

(1,508

)

(1,344

)

(1,400

)

(4,168

)

(4,281

)

Other non-operating (income) expense, net

(503

)

407

102

100

Provision (benefit) for income taxes

154

(254

)

329

402

960

Adjusted EBITDA

17,082

17,990

11,369

51,487

30,558

Adjusted EBITDA margin

12.2

13.9

8.3

13.3

7.8

ARLO TECHNOLOGIES, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):

Three Months Ended

Nine Months Ended

September 28,

2025

June 29,

2025

September 29,

2024

September 28,

2025

September 29,

2024

(In thousands, except percentage and per share data)

GAAP net income (loss)

6,873

3,124

(4,439

)

9,162

(25,643

)

Stock-based compensation expense

13,138

14,983

14,689

45,133

54,159

Gain on early lease termination

(4,144

)

—

(4,144

)

—

Others

2,190

708

1,575

3,195

3,322

Non-GAAP net income

18,057

18,815

11,825

53,346

31,838

GAAP net income (loss) per share - basic

0.07

0.03

(0.04

)

0.09

(0.26

)

Stock-based compensation expense

0.11

0.14

0.13

0.41

0.52

Gain on early lease termination

(0.04

)

—

(0.04

)

—

Others

0.02

—

0.02

0.03

0.04

Non-GAAP net income per share - diluted

0.16

0.17

0.11

0.49

0.30

Shares used in computing GAAP net income (loss) - basic

105,198

103,885

99,731

103,776

97,932

Shares used in computing non-GAAP net income - diluted

109,638

108,061

107,294

108,664

106,368

Free cash flow:

Net cash provided by operating activities

19,202

8,830

18,366

58,952

44,634

Less: purchases of property and equipment, including capitalized software

(4,218

)

(2,975

)

(961

)

(9,996

)

(1,612

)

Free cash flow (1)

14,984

5,855

17,405

48,956

43,022

Free cash flow margin (1)

10.7

4.5

12.6

11.1

_________________________

(1)

Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue.

ARLO TECHNOLOGIES, INC.

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

As of and for the three months ended

September 28,

2025

June 29,

2025

March 30,

2025

December 31,

2024

September 29,

2024

(In thousands, except headcount and per share data)

Cash, cash equivalents and short-term investments

165,544

160,401

153,106

151,451

146,574

Accounts receivable, net

76,698

61,450

46,054

57,332

68,567

Days sales outstanding

Inventories

44,371

30,877

34,559

40,633

51,975

Inventory turns

6.4

7.7

6.3

6.4

5.8

Weeks of channel inventory:

U.S. retail channel

12.5

12.8

7.7

14.2

U.S. distribution channel

5.5

11.0

12.6

9.4

7.1

APAC distribution channel

3.7

8.2

8.4

8.5

7.5

Deferred revenue

(current and non-current)

40,515

42,544

43,177

27,551

24,827

Cumulative registered accounts (1)

11,792

11,237

10,930

10,823

10,383

Cumulative paid accounts (2)

5,396

5,115

4,897

4,599

4,235

Annual recurring revenue (ARR) (3)

323,150

315,655

276,357

257,332

241,572

Headcount

374

382

369

360

355

Non-GAAP diluted shares

109,638

108,061

108,285

107,125

107,294

_________________________

(1)

Registered accounts at the end of a particular period are defined as the number of unique registered accounts on the Arlo platform. The number of registered accounts on the Arlo platform does not directly correspond to the number of users. A single account may be shared by multiple users (which we consider as one account) and a single user may have multiple accounts (which we consider as multiple accounts).

(2)

Paid accounts at the end of a particular period are defined as any account worldwide where a subscription-based or otherwise reoccurring service fee was collected by Arlo (either directly from a user or from a partner).

(3)

REVENUE BY GEOGRAPHY

Three Months Ended

Nine Months Ended

September 28,

2025

June 29,

2025

September 29,

2024

September 28,

2025

September 29,

2024

(In thousands, except percentage data)

Americas

83,831

60.1

81,902

63.3

73,303

53.2

235,830

60.8

195,766

50.3

EMEA

49,602

35.5

43,320

33.5

57,773

42.0

135,817

35.0

175,980

45.2

APAC

6,096

4.4

4,183

3.2

6,591

4.8

16,353

4.2

17,568

4.5

Total

139,529

100.0

129,405

100.0

137,667

100.0

388,000

100.0

389,314

100.0