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NEWS RELEASE
Arlo Reports Third Quarter 2025 Results
Annual recurring revenue (ARR)(1) ended at $323 million, growing 33.8% year over year
Record subscriptions and services revenue of approximately $80 million, growing 29.2% year over year
Record GAAP subscriptions and services gross margin of 84.5%; record non-GAAP subscriptions and services gross margin of 85.1%
Adjusted EBITDA(2) of $17 million; adjusted EBITDA margin of 12.2%
Record GAAP earnings per share (EPS) of $0.07; non-GAAP EPS of $0.16
Carlsbad, California – November 6, 2025 – 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
•Ended the quarter with ARR(1) of $323.2 million, growing 33.8% year over year.
•Record subscriptions and services revenue of $79.9 million, an increase of 29.2% year over year, accounting for 57.3% of total revenues.
•Record GAAP subscriptions and services gross margin of 84.5% and record non-GAAP subscriptions and services gross margin of 85.1%; up 780 and 770 basis points year over year, respectively.
•GAAP gross margin of 40.5% and non-GAAP gross margin of 41.4%; up 530 and 540 basis points year over year, respectively.
•Adjusted EBITDA(2) of $17.1 million, up 50.3% year over year with adjusted EBITDA margin of 12.2%.
•Record GAAP EPS of $0.07 and non-GAAP EPS of $0.16.
•Cumulative paid accounts increased to 5.4 million, growing 27.4% year over year.
•Free cash flow (FCF)(3) of $49.0 million with FCF margin of 12.6% in the 2025 year-to-date period.
•Ended with cash and cash equivalents and short-term investments of $165.5 million, up $19.0 million year over year.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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.
Contact:
Arlo Investor Relations
Tahmin Clarke
investors@arlo.com
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 ability to make more meaningful period-to-period comparisons of our on-going operating results;
•the ability to better identify trends in our underlying business and perform related trend analyses;
•a better understanding of how management plans and measures our underlying business; and
•an easier way to compare our operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.
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 | | | 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 | 35 | | | 34 | |
| 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 | | | 99 | | | 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 | | | 57 | | | 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 | % |
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| ARLO TECHNOLOGIES, INC. |
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| RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED) |
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UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED): | | | | |
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| 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 | |
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| 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 | |
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| 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 | |
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| 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 | |
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| 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 | |
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| 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 | % | | 12.6 | % | | 11.1 | % |
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(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.
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| ARLO TECHNOLOGIES, INC. |
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UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION |
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| 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 | |
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| Accounts receivable, net | $ | 76,698 | | | $ | 61,450 | | | $ | 46,054 | | | $ | 57,332 | | | $ | 68,567 | |
| Days sales outstanding | 50 | | | 43 | | | 34 | | | 44 | | | 45 | |
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| Inventories | $ | 44,371 | | | $ | 30,877 | | | $ | 34,559 | | | $ | 40,633 | | | $ | 51,975 | |
| Inventory turns | 6.4 | | | 7.7 | | | 6.3 | | | 6.4 | | | 5.8 | |
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| Weeks of channel inventory: | | | | | | | | | |
| U.S. retail channel | 12.5 | | | 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 | |
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Deferred revenue
(current and non-current) | $ | 40,515 | | | $ | 42,544 | | | $ | 43,177 | | | $ | 27,551 | | | $ | 24,827 | |
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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 | |
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| Headcount | 374 | | | 382 | | | 369 | | | 360 | | | 355 | |
| Non-GAAP diluted shares | 109,638 | | | 108,061 | | | 108,285 | | | 107,125 | | | 107,294 | |
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(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) 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.
REVENUE BY GEOGRAPHY
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| 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 | % |
