[10-Q] Arlo Technologies, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Arlo Technologies (ARLO) reported Q3 results highlighted by a services-driven mix shift and a return to profitability. Revenue was $139.5 million, with subscriptions and services at $79.9 million and products at $59.6 million. Net income reached $6.9 million, or $0.06 per diluted share, as total gross margin improved to 40.5% from 35.2% a year ago. A $4.1 million gain from an early lease termination also contributed to results.

Recurring metrics continued to strengthen. Annual recurring revenue was $323.2 million, supported by 5.396 million cumulative paid accounts and 11.792 million cumulative registered accounts as of September 28, 2025. Operating cash flow for the first nine months was $59.0 million, cash and cash equivalents were $86.0 million, and short‑term investments were $79.5 million. The company repurchased 2.1 million shares for $26.8 million under its $50 million program, leaving $18.8 million authorized. Arlo ended the quarter with no borrowings and $45.0 million of unused capacity on its revolving credit facility. Americas revenue grew while EMEA declined, and product gross margin was negative, reflecting promotional activity and higher duties and freight.

Insights

Subscription business model analyst

Services growth and ARPU gains lifted margins and profit.

Arlo generated $79.9M in subscriptions and services revenue in Q3, up 29.2% year over year, while product revenue fell to $59.6M. The mix shift, along with cloud cost optimization, expanded total gross margin to 40.5% and supported net income of $6.9M and diluted EPS of $0.06.

Annual recurring revenue reached $323.2M with cumulative paid accounts at 5.396M, indicating a growing recurring base. Negative product margins reflect promotions and higher duties and freight, suggesting profitability depends on sustaining services growth and margin discipline.

Cash from operations of $59.0M year to date, cash of $86.0M, and an undrawn $45.0M revolver provide flexibility. Subsequent filings may provide further detail on regional demand trends and product margin recovery levers.

Balance sheet and capital allocation specialist

Stronger cash generation and buybacks, no debt drawn.

Year-to-date operating cash flow was $58.95M with cash and cash equivalents at $86.01M and short-term investments at $79.53M. The company recorded a new $12.5M long-term strategic investment and maintained an undrawn $45.0M revolving facility.

Arlo repurchased and retired 2.1M shares for $26.8M, leaving $18.8M available under the program through December 31, 2026. Deferred revenue rose to $40.07M, and backlog tied to its largest customer was $17.6M, indicating near-term fulfillment visibility.

The quarter included a $4.14M gain on early lease termination that boosted non-operating income. Future results will reflect execution on services growth and any normalization of product margins.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 (Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number: 001-38618

ARLO TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter) 

Delaware						38-4061754
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)
5770 Fleet Street
Carlsbad,			California			92008
(Address of principal executive offices)						(Zip Code)

(408) 890-3900

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

ARLO

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x   No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐  No  x

The number of outstanding shares of the registrant’s Common Stock, $0.001 par value, was 105,992,268 as of October 31, 2025.

Table of Contents

Arlo Technologies, Inc.

Form 10-Q

For the Quarterly Period Ended September 28, 2025

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
						Page
Item 1.			Financial Statements			3
			Unaudited Condensed Consolidated Balance Sheets			3
			Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)			4
			Unaudited Condensed Consolidated Statements of Stockholders’ Equity			5
			Unaudited Condensed Consolidated Statements of Cash Flows			6
			Notes to Unaudited Condensed Consolidated Financial Statements			7
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			35
Item 4.			Controls and Procedures			35
PART II: OTHER INFORMATION
Item 1.			Legal Proceedings			36
Item 1A.			Risk Factors			36
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 5.			Other Information			38
Item 6.			Exhibits			39
Signatures						40

2

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1.Financial Statements

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 (Note 7)
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

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Table of Contents

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands, except per share data)
Revenue:
Subscriptions and services			$	79,942					$	61,883					$	226,966					$	178,851
Products			59,587						75,784						161,034						210,463
Total revenue			139,529						137,667						388,000						389,314
Cost of revenue:
Subscriptions and services			12,424						14,431						36,924						42,584
Products			70,599						74,820						183,768						204,080
Total cost of revenue			83,023						89,251						220,692						246,664
Gross profit			56,506						48,416						167,308						142,650
Operating expenses:
Research and development			18,144						17,562						52,798						57,916
Sales and marketing			20,459						17,832						61,765						52,900
General and administrative			15,091						17,052						49,210						57,830
Other operating expense			1,940						1,423						2,181						2,868
Total operating expenses			55,634						53,869						165,954						171,514
Income (loss) from operations			872						(5,453)						1,354						(28,864)
Other income (expense):
Gain on early lease termination			4,144						—						4,144						—
Interest income, net			1,508						1,400						4,168						4,281
Other non-operating income (expense), net			503						(57)						(102)						(100)
Income (loss) before income taxes			7,027						(4,110)						9,564						(24,683)
Provision for income taxes			154						329						402						960
Net income (loss)			$	6,873					$	(4,439)					$	9,162					$	(25,643)
Net income (loss) per share:
Basic			$	0.07					$	(0.04)					$	0.09					$	(0.26)
Diluted			$	0.06					$	(0.04)					$	0.08					$	(0.26)
Weighted average shares used to compute net income (loss) per share:
Basic			105,198						99,731						103,776						97,932
Diluted			109,638						99,731						108,664						97,932
Comprehensive income (loss):
Net income (loss)			$	6,873					$	(4,439)					$	9,162					$	(25,643)
Other comprehensive income (loss), net of tax			43						45						1						(84)
Total comprehensive income (loss)			$	6,916					$	(4,394)					$	9,163					$	(25,727)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
Total stockholders’ equity, beginning balances			$	118,274					$	99,268					$	100,909					$	103,276
Common stock:
Beginning balances			$	104					$	98					$	101					$	95
Issuance of common stock under stock-based compensation plans			2						3						6						8
Issuance of common stock under employee stock purchase plan			—						—						—						—
Repurchase of common stock			(1)						—						(2)						—
Restricted stock unit withholdings			—						(1)						—						(3)
Ending balances			$	105					$	100					$	105					$	100
Additional paid-in capital:
Beginning balances			$	513,854					$	487,644					$	498,739					$	470,322
Stock-based compensation			9,876						12,073						34,072						42,596
Settlement of liability classified restricted stock units			4,942						5,691						9,938						12,594
Issuance of common stock under stock-based compensation plans			(2)						4,730						799						5,413
Issuance of common stock under employee stock purchase plan			—						—						1,475						1,692
Repurchase of common stock			(10,780)						—						(27,133)						—
Restricted stock unit withholdings			—						(20,461)						—						(42,940)
Ending balances			$	517,890					$	489,677					$	517,890					$	489,677
Accumulated deficit:
Beginning balances			$	(395,676)					$	(388,665)					$	(397,965)					$	(367,461)
Net income (loss)			6,873						(4,439)						9,162						(25,643)
Ending balances			$	(388,803)					$	(393,104)					$	(388,803)					$	(393,104)
Accumulated other comprehensive income (loss):
Beginning balances			$	(8)					$	191					$	34					$	320
Other comprehensive income (loss), net of tax			43						45						1						(84)
Ending balances			$	35					$	236					$	35					$	236
Total stockholders’ equity, ending balances			$	129,227					$	96,909					$	129,227					$	96,909
Common stock shares:
Beginning balances			104,289						98,326						100,885						95,380
Issuance of common stock under stock-based compensation plans			2,080						3,403						6,818						8,187
Issuance of common stock under employee stock purchase plan			—						—						155						233
Repurchase of common stock			(622)						—						(2,111)						—
Restricted stock unit withholdings			—						(1,407)						—						(3,478)
Ending balances			105,747						100,322						105,747						100,322

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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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
Reconciliation of cash, cash equivalents, and restricted cash to unaudited condensed consolidated balance sheets
Cash and cash equivalents			$	86,012					$	77,032
Restricted cash			—						3,654
Total cash, cash equivalents, and restricted cash			$	86,012					$	80,686
Supplemental cash flow information:
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					$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.    Description of Business and Basis of Presentation

Description of Business

Arlo Technologies, Inc. (“we,” “our,” “us,” or “Arlo”) is transforming the ways in which people can protect everything that matters to them with home, business, and personal security services that combine a globally scaled cloud platform, monitoring and analytics capabilities, and award-winning app-controlled devices to create a personalized security ecosystem. Arlo’s experience in cloud services, AI and computer vision analytics, wireless connectivity and intuitive user experience design delivers seamless, smart home security for Arlo users that can be setup by the customers and engaged with every day. Our 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.

We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and primarily generate revenue by selling paid subscription services, as well as devices through retail, wholesale distribution, wireless carrier channels, security solution providers, and Arlo’s direct to consumer store.

Our corporate headquarters is located in Carlsbad, California, with other satellite offices across North America and various other global locations.

Basis of Presentation

We prepare our unaudited condensed consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of Arlo and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 27, 2025. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for fair statement of the unaudited condensed consolidated financial statements for interim periods.

Fiscal Periods

Our fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. We report the results on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31.

Reclassification

Certain prior periods amounts have been reclassified to conform to the current period’s presentation. None of these reclassifications had a material impact to the unaudited condensed consolidated financial statements.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Use of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. Management bases its estimates on various assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates and operating results for the nine months ended September 28, 2025 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future period.

Note 2.    Significant Accounting Policies and Recent Accounting Pronouncements

Our significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to such policies except for the item below during the nine months ended September 28, 2025.

We invested in a strategic investment, which consists of non-marketable securities in a privately held company in which we do not have a controlling interest or significant influence. We apply the measurement alternative for non-marketable equity securities that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. For this investment, we recognize remeasurement adjustments, including upward and downward adjustments, and impairments, if any, in other non-operating income (expense), net on the unaudited condensed consolidated statements of comprehensive income (loss).

The strategic investment is subject to periodic impairment analysis, which involves an assessment of both qualitative and quantitative factors, including the investee’s financial metrics, market acceptance of the investee’s product or technology, and the rate at which the investee is using its cash. An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred. If the strategic investment is considered impaired, we will recognize an impairment through other non-operating income (expense), net on the unaudited condensed consolidated statements of comprehensive income (loss) and establish a new carrying value for the investment.

Accounting Pronouncements Recently Adopted

There were no accounting pronouncements adopted during the nine months ended September 28, 2025.

Accounting Pronouncements Not Yet Effective

Disclosure Improvements. In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements of a variety of Topics in the Codification. Among the various codification amendments, Topic 470 Debt is applicable to Arlo which requires the disclosure of amounts, terms and weighted-average interest rates of unused lines of credit. The effective date is either (i) the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or (ii) on June 30, 2027, if the SEC has not removed the requirement by that date, with early adoption prohibited. The adoption of this new standard will not have a material impact on our financial statements and related disclosures.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Tax Disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires on an annual basis to (1) disclose specific categories in the rate reconciliation, (2) provide additional information for reconciling items that meet a quantitative threshold, and (3) disclose income taxes paid disaggregated by jurisdiction. This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact that this guidance may have on our financial statements and related disclosures.

Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement: Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses, which improves disclosure requirements and mandates enhanced transparency about the types of expenses in commonly presented expense captions in financial statements. This guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. We are currently evaluating the impact that this guidance may have on our financial statements and related disclosures.

Credit Losses Accounting. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit

Losses: Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient permitting companies to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. This guidance is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted and is effective on a prospective basis. We plan to adopt this guidance for our fiscal year beginning January 1, 2026, and we do not expect it to have a material effect on our financial statements.

Software Development Costs Accounting and Disclosure. In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to “development stages”. It also clarifies the criteria for capitalization, which begins when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. This guidance is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. We are currently evaluating the impact that this guidance may have on our financial statements and related disclosures.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 3.    Revenue

Contract Balances

The following table reflects the changes in contract balances for the nine months ended September 28, 2025:

Contract Classification						Balance Sheet Classification						September 28, 2025						December 31, 2024						$ change						% change
												(In thousands)
Receivables						Accounts receivable, net						$	76,698					$	57,332					$	19,366					33.8		%
Contract liabilities, current						Deferred revenue						$	40,073					$	27,248					$	12,825					47.1		%
Contract liabilities, non-current						Other non-current liabilities						$	442					$	326					$	116					35.6		%

Receivables are recorded in the period we deliver products or provide subscriptions and services when we have an unconditional right to payment. Contract assets are related to the value of products or subscriptions and services transferred to the customer for which the right to payment is not just dependent on the passage of time. As of September 28, 2025, there were no contract assets.

Contract liabilities are recognized when we receive payment or have an unconditional right to payment in advance of the satisfaction of performance. Contract liabilities increased primarily due to increases in subscriptions and services revenue as a result of changes in consumer subscription plans and a shift to additional annual prepaid subscriptions, as well as increases in cumulative paid accounts and rates of subscriptions. For the nine months ended September 28, 2025 and September 29, 2024, $25.6 million and $17.3 million, respectively, of the recognized revenue was included in deferred revenue at the beginning of the periods. There were no significant changes in estimates during the periods that would affect the contract balances.

Remaining Performance Obligations

The total estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and remaining was $43.1 million as of September 28, 2025 and $29.5 million as of December 31, 2024, substantially related to performance obligations classified as less than one year.

Under the Supply Agreement with Verisure Sàrl (“Verisure”), our largest customer, a performance obligation is not deemed to exist until we receive and accept Verisure’s purchase order. As of September 28, 2025, we had a backlog of $17.6 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months.

Variable Consideration

Revenue from all sales is recognized at transaction price, the amount we expect to be entitled to in exchange for providing services or transferring goods. Transaction price is calculated as selling price net of variable consideration which includes estimates for sales incentives and sales returns related to current period products revenue. Sales incentives are determined based on a combination of the actual amounts committed and estimated future expenditure based upon historical customary business practice. Sales returns are estimated by analyzing certain factors, including historical sales and returns data, channel inventory levels, current economic trends, and changes in customer demand for our products. Variable consideration estimates are based on predictive historical data or future commitments that we plan and control. However, we continue to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. The following tables provide activities related to sales incentives and sales returns that are recognized as contra-revenue.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

						Three Months Ended												Nine Months Ended
Sales Incentives						September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
						(In thousands)
Balance at the beginning of the period						$	34,892					$	26,593					$	29,846					$	26,110
Credits issued						(27,012)						(20,783)						(68,564)						(53,165)
Additions						29,247						20,655						75,845						53,520
Balance at the end of the period						$	37,127					$	26,465					$	37,127					$	26,465

						Three Months Ended												Nine Months Ended
Sales Returns						September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
						(In thousands)
Balance at the beginning of the period						$	8,090					$	8,763					$	11,651					$	17,058
Credits issued						(3,935)						(6,038)						(12,684)						(19,878)
Additions						5,242						7,314						10,430						12,859
Balance at the end of the period						$	9,397					$	10,039					$	9,397					$	10,039

Disaggregation of Revenue

We disaggregate our revenue into three geographic regions: the Americas, EMEA, and APAC, where we conduct our business. The following table presents revenue disaggregated by geographic region.

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
Americas			$	83,831					$	73,303					$	235,830					$	195,766
EMEA			49,602						57,773						135,817						175,980
APAC			6,096						6,591						16,353						17,568
Total			$	139,529					$	137,667					$	388,000					$	389,314

For the three months ended September 28, 2025 and September 29, 2024, one customer accounted for 36% and 42% of the total revenue, respectively. For the nine months ended September 28, 2025 and September 29, 2024, one customer accounted for 35% and 45% of the total revenue, respectively. No other customers accounted for 10% or greater of the total revenue. As of September 28, 2025, two customers accounted for 51% and 15%, and as of December 31, 2024, two customers accounted for 54% and 13% of the total accounts receivable, net. No other customers accounted for 10% or greater of the total accounts receivable, net.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 4.    Balance Sheet Components

Short-Term Investments

			As of September 28, 2025																								As of December 31, 2024
			Amortized Cost						Unrealized Gains						Unrealized Losses						Estimated Fair Value						Amortized Cost						Unrealized Gains						Unrealized Losses						Estimated Fair Value
			(In thousands)
U.S. Treasuries			$	79,497					$	35					$	—					$	79,532					$	69,385					$	34					$	—					$	69,419

Accounts Receivable, Net

			As of
			September 28, 2025						December 31, 2024
			(In thousands)
Gross accounts receivable			$	76,866					$	57,464
Allowance for credit losses			(168)						(132)
Total			$	76,698					$	57,332

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
Balance at the beginning of the period			$	202					$	142					$	132					$	333
Provision for (release of) expected credit losses			(34)						79						36						(112)
Balance at the end of the period			$	168					$	221					$	168					$	221

Property and Equipment, Net

The components of property and equipment are as follows.

			As of
			September 28, 2025						December 31, 2024
			(In thousands)
Machinery and equipment			$	15,602					$	14,399
Capitalized software development costs			20,022						10,612
Software and license			6,265						6,306
Computer equipment			870						894
Leasehold improvements			932						3,302
Furniture and fixtures			1,385						1,839
Total property and equipment, gross			45,076						37,352
Less: accumulated depreciation and amortization			(32,685)						(32,587)
Total property and equipment, net			$	12,391					$	4,765

For comparative purposes, amounts in prior periods have been recast.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Depreciation and amortization expense pertaining to property and equipment are as follows:

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
Depreciation:
Operating expenses			$	435					$	558					$	1,358					$	1,941
Amortization:
Subscriptions and services cost			364						152						977						454
Operating expenses			100						—						251						—
Total depreciation and amortization			$	899					$	710					$	2,586					$	2,395

Goodwill

We have determined that no event occurred or circumstances changed during the nine months ended September 28, 2025 that would more likely than not reduce the fair value of goodwill below the carrying amount. There was no accumulated goodwill impairment recognized as of September 28, 2025.

Accrued Liabilities

			As of
			September 28, 2025						December 31, 2024
			(In thousands)
Sales incentives and marketing expenditures			$	39,774					$	31,947
Sales returns			9,397						11,651
Employee compensation			16,930						12,921
Cloud and other costs			6,478						9,497
Other			21,420						19,714
Total			$	93,999					$	85,730

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 5.    Fair Value Measurements

The following table summarizes assets measured at fair value on a recurring basis:

			As of
			September 28, 2025						December 31, 2024
			(In thousands)
Cash equivalents: money-market funds (<90 days)			$	11,573					$	4,095
Cash equivalents: U.S. Treasuries (<90 days)			20,308						22,504
Available-for-sale securities: U.S. Treasuries (1)			79,532						69,419
Total			$	111,413					$	96,018

_________________________

(1)Included in short-term investments on our unaudited condensed consolidated balance sheets.

Our investments in cash equivalents and marketable securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. As of September 28, 2025 and December 31, 2024, assets and liabilities measured as Level 2 fair value were not material.

Our strategic equity investment without readily determinable fair value is classified within Level 3 of the fair value hierarchy and the subsequent adjustment to its fair value by applying the measurement alternative will be disclosed as non-recurring fair value measurement and included in the level of the fair value hierarchy that was used. As of September 28, 2025, the carrying value of our strategic equity investment was $12.5 million. There was no observable price change or impairment during the nine months ended September 28, 2025.

Note 6.    Revolving Credit Facility

On November 14, 2024, we entered into a credit agreement (the “Credit Agreement”) with HSBC Bank USA, National Association, as administrative agent, issuing bank, and lender. The Credit Agreement provides for a three-year revolving credit facility (the “Credit Facility”) of up to $45.0 million that matures on November 14, 2027, which also includes a $10.0 million sublimit for the issuance thereunder of letters of credit. As of September 28, 2025, we had unused borrowing capacity of $45.0 million based on the terms and conditions of the Credit Agreement. In addition, the Credit Agreement includes an uncommitted accordion feature that allows us to, from time to time, request an increase to the aggregate revolving loan commitments by up to an additional $30.0 million in the aggregate, subject to the satisfaction of certain conditions. The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes.

The obligations under the Credit Agreement are secured by substantially all of our assets, including substantially all of the assets of a material subsidiary, Arlo Technologies International Limited, a limited corporation organized under the laws of Ireland. Borrowings under the Credit Agreement will bear interest at a floating rate equal to: (i) the term secured overnight financing rate plus the applicable rate of 2.25% to 2.75%, or (ii) the base rate plus the applicable rate of 1.25% to 1.75% both determined based on a total net leverage ratio. Among other fees, we are required to pay a quarterly unused fee of 0.20% per annum on the amount by which the lenders’ aggregate commitment under the Credit Facility exceeds the daily revolver usage during such quarter. The Credit Agreement contains events of default, representations and warranties, and affirmative and negative covenants customary for credit facilities of this type. The Credit Agreement also contains financial covenants that require us to (i) maintain a fixed charge coverage ratio of at least 1.50 to 1.00 and (ii) maintain a total net leverage ratio, not to exceed 3.00 to 1.00; both covenants being tested quarterly on a trailing four consecutive fiscal quarter basis.

As of September 28, 2025, we were in compliance with all the covenants under the Credit Agreement. No amount had been drawn under the Credit Facility as of September 28, 2025.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 7.    Commitments and Contingencies

Operating Leases

Our operating lease obligations mostly include offices, equipment, and distribution centers, with various expiration dates through June 2033. Certain lease agreements include options to renew or terminate the lease, which are generally not reasonably certain to be exercised and therefore are not factored into our determination of lease payments. The terms of certain leases provide for rental payments on a graduated scale. Gross lease expense was $1.2 million and $4.0 million for the three and nine months ended September 28, 2025, respectively, and $1.4 million and $4.2 million for the three and nine months ended September 29, 2024, respectively.

Supplemental cash flow information related to operating leases is as follows:

			Nine Months Ended
			September 28, 2025						September 29, 2024
			(In thousands)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases			$	4,987					$	4,486
Right-of-use assets obtained in exchange for lease liabilities
Operating leases			$	65					$	—

Weighted average remaining lease term and weighted average discount rate related to operating leases are as follows:

			As of
			September 28, 2025						December 31, 2024
Weighted average remaining lease term			5.6 years						5.4 years
Weighted average discount rate			7.62		%				6.66		%

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The future minimum undiscounted lease payments under operating leases for each of the next five years and thereafter are as follows:

			As of
			September 28, 2025
			(In thousands)
2025 (Remaining three months)			$	412
2026			2,479
2027			2,361
2028			1,301
2029			1,019
Thereafter			3,616
Total future lease payments			$	11,188
Less: imputed interest			(2,334)
Present value of future minimum lease payments			$	8,854
Accrued liabilities			$	1,644
Non-current operating lease liabilities			7,210
Total lease liabilities			$	8,854

In July 2025, we entered into a conditional termination agreement for our office lease located in San Jose, California. The termination became effective following the landlord’s exercise of its termination option, which exercise notice was provided in late July. Our obligation stipulated in the agreement includes a termination fee of $1.0 million and base rent through the effective date of termination, as well as vacating the premises timely. We recorded the derecognition of right-of-use assets and lease liabilities and recognized a gain of $4.1 million, net of $1.6 million write-off loss from sublease and $1.0 million lease termination fees, upon the termination effective in the third quarter of 2025. Contemporaneously with this termination, our sublease arrangement was terminated and our letter of credit in connection with this lease was released as of September 28, 2025.

Purchase Obligations

We have entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50% of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25% of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. As of September 28, 2025, we had $28.9 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months.

As of September 28, 2025, an additional $15.6 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements. Consequently, we may incur expenses for the materials and components, such as chipsets already purchased by the supplier to fulfill our orders if the purchase order is cancelled. Expenses incurred have historically not been material relative to the original order value.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Litigation and Other Legal Matters

We are, and from time to time, we may become involved in disputes, litigation, and other legal actions in the ordinary course of business. At each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. Significant judgment is required to determine both the probability and the estimated amount of loss. In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as litigation reserves in other operating expense on the unaudited condensed consolidated statements of comprehensive income (loss). We monitor developments in these legal matters that could affect the estimate we had previously accrued. We currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position within the next 12 months. There are many uncertainties associated with any litigation, and these actions or other third-party claims against us may cause us to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, our business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from our estimates, which could result in the need to adjust the liability and record additional expenses.

Indemnifications

In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, distributors, resellers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising from breach of such agreements or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with members of our Board of Directors and certain of our executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited. As of September 28, 2025 and December 31, 2024, we have not incurred any material costs as a result of such indemnification obligations and we are not currently aware of any indemnification claims.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 8.    Employee Benefit Plans

We grant options and restricted stock units (“RSUs”) under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees. We also grant performance-based and market-based restricted stock units (“PSUs”) to our executive officers and other senior employees periodically. Award vesting periods for the 2018 Plan are generally three to five years. As of September 28, 2025, 5.2 million shares were available for future grants. Options may be granted for periods of up to 10 years or such shorter term as may be provided in the agreement and at prices no less than 100% of the fair market value of Arlo’s common stock on the date of grant. Options granted under the 2018 Plan generally vest over four years, the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years.

On January 24, 2025, we registered an aggregate of up to 5,050,450 shares of common stock on a Registration Statement on Form S-8, including 4,050,450 shares under the 2018 Plan and 1,000,000 shares under the Employee Stock Purchase Plan (“ESPP”), both pursuant to an “evergreen” provision contained in the respective plans.

On July 29, 2025, the Compensation and Human Capital Committee of the Board of Directors unanimously approved an amendment to the 2018 Plan to reserve an additional 1,500,000 shares of our common stock to be used exclusively for grants of awards to individuals who were not previously employees or non-employee directors, as an inducement to the individual’s employment with us within the meaning of Rule 303A.08 of the New York Stock Exchange Listed Company Manual. On August 28, 2025, we registered an aggregate of up to 1,500,000 shares of common stock on a Registration Statement on Form S-8.

The following table sets forth the available shares for grants as of September 28, 2025:

			Number of Shares
			(In thousands)
Shares available for grants as of December 31, 2024			3,356
Additional authorized shares			5,550
Granted			(4,403)
Forfeited / expired / cancelled			690
Shares available for grants as of September 28, 2025			5,193

Employee Stock Purchase Plan

We sponsor the ESPP for eligible employees, under which, employees purchased 155 thousand shares and 233 thousand shares during the nine months ended September 28, 2025 and September 29, 2024, respectively. As of September 28, 2025, 3.3 million shares were available for issuance under the ESPP.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Option Activity

We did not grant options during the nine months ended September 28, 2025. Stock option activity during the nine months ended September 28, 2025 was as follows:

			Number of Shares						Weighted Average Exercise Price Per Share
			(In thousands)						(In dollars)
Outstanding as of December 31, 2024			549						$	13.24
Granted			—						$	—
Exercised			(94)						$	8.55
Expired / cancelled			(180)						$	14.39
Outstanding as of September 28, 2025			275						$	14.10
Vested and exercisable as of September 28, 2025			275						$	14.10

RSU Activity

RSU activity, exclusive of PSU activity, during the nine months ended September 28, 2025 was as follows:

			Number of Shares						Weighted Average Grant Date Fair Value Per Share
			(In thousands)						(In dollars)
Outstanding as of December 31, 2024			7,112						$	7.76
Granted			2,538						$	12.75
Vested			(3,284)						$	8.81
Forfeited / cancelled			(507)						$	8.64
Outstanding as of September 28, 2025			5,859						$	9.26

PSU Activity

Our executive officers and other senior employees have been granted PSUs with some vesting occurring when performance conditions are met and some vesting occurring at the end of a three or five-year period when market conditions are met. The number of units earned and eligible to vest are determined based on the achievement of various performance conditions or market conditions, including annual recurring revenue, cumulative paid accounts, subscriptions and services gross margin, stock price, and the recipients’ continued services. At the end of each reporting period, we evaluate the probability of achieving the performance and record the related stock-based compensation expense based on the estimated achievement over the service period.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PSU activity during the nine months ended September 28, 2025 was as follows:

			Number of Shares						Weighted Average Grant Date Fair Value Per Share
			(In thousands)						(In dollars)
Outstanding as of December 31, 2024			4,777						$	9.24
Granted			1,865						$	11.22
Vested			(3,440)						$	9.08
Forfeited / cancelled			(3)						$	8.28
Outstanding as of September 28, 2025			3,199						$	10.57

Stock-Based Compensation Expense

The following table sets forth the stock-based compensation expense by line item on the unaudited condensed consolidated statements of comprehensive income (loss):

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
Cost of revenue			$	613					$	955					$	2,615					$	3,618
Research and development			3,752						3,584						12,152						13,266
Sales and marketing			1,837						1,594						6,989						6,010
General and administrative			6,936						8,556						23,377						31,265
Stock-based compensation, net of amounts capitalized			$	13,138					$	14,689					$	45,133					$	54,159
Capitalized stock-based compensation			533						—						1,402						—
Total stock-based compensation			$	13,671					$	14,689					$	46,535					$	54,159

As of September 28, 2025, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options. As of September 28, 2025, $57.8 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.2 years.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 9.     Income Taxes

The provision for income taxes for the three and nine months ended September 28, 2025 was $0.2 million and $0.4 million, respectively, or an effective tax rate of 2.2% and 4.2%, respectively. The provision for income taxes for the three and nine months ended September 29, 2024 was $0.3 million and $1.0 million, respectively, or an effective tax rate of (8.0)% and (3.9)%, respectively. Provision for income taxes decreased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to lower international tax on account of expected research and development credits in Ireland and the removal by the One Big Beautiful Bill Act (“OBBBA”) of the mandatory capitalization and amortization requirements for U.S. research and development expenditures previously enacted under the Tax Cuts and Jobs Act (“TCJA”). Although the tax provision declined, the effective tax rate increased compared to the prior year period reflecting the shift from pre-tax loss in the prior year period to pre-tax income in the current year period. The lower effective tax rate for the three and nine months ended September 28, 2025, compared to the U.S. federal income tax rate, is primarily due to the valuation allowance on our net U.S. deferred tax assets and the impact of a lower tax rate on foreign earnings.

We regularly evaluate the realizability of our net deferred tax assets. As of September 28, 2025, all our U.S. deferred tax assets, net of deferred tax liabilities, were subject to a valuation allowance. If our financial results continue to improve, our assessment of the realization of our U.S. net deferred tax assets could result in the release of some or all the valuation allowance. Such a release would result in a material non-cash income tax benefit in our consolidated statements of comprehensive income (loss) in the period of release and the recording of additional deferred tax assets on our consolidated balance sheets. There is a reasonable possibility that within the next several quarters, sufficient positive evidence will become available to reach a conclusion that all or a significant portion of the valuation allowance against our U.S. net deferred tax assets would no longer be required.

On July 4, 2025, the OBBBA, a significant tax reform package, was enacted. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, and certain capital expenditures, as well as other changes to the U.S. taxation of profits derived from foreign operations. Management is continuing to evaluate the provisions of the OBBBA, including treatment of previously capitalized domestic U.S. research and development expenses. Based on information available to date, management does not expect the enactment of the OBBBA to have a material impact on our consolidated financial statements; however, the ultimate effect may differ from the amounts reflected in the interim financial statements once the analysis is complete and elections are finalized.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 10.     Net Income (Loss) Per Share

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands, except per share data)
Numerator:
Net income (loss)			$	6,873					$	(4,439)					$	9,162					$	(25,643)
Denominator:
Weighted average shares - basic			105,198						99,731						103,776						97,932
Effect of dilutive stock-based awards			4,440						—						4,888						—
Weighted average shares - diluted			109,638						99,731						108,664						97,932
Net income (loss) per share - basic			$	0.07					$	(0.04)					$	0.09					$	(0.26)
Net income (loss) per share - diluted			$	0.06					$	(0.04)					$	0.08					$	(0.26)
Anti-dilutive employee stock-based awards, excluded			—						789						310						739

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 11.     Segment and Geographic Information

Segment Information

We operate as one operating and reportable segment. Our Chief Executive Officer (“CEO”) is identified as the Chief Operating Decision Maker (“CODM”), who reviews financial information presented in a consolidated basis and considers budget-to-actual variances quarterly for allocation of operating and capital resources and evaluation of financial performance. The CODM does not review segment assets at a different asset level and category. The consolidated net income (loss) is the measure of segment net income (loss) that is most consistent with U.S. GAAP.

The CODM is regularly provided with not only the consolidated expenses on our unaudited condensed consolidated statements of comprehensive income (loss), but also the significant segment expenses and other segment items as below:

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
Revenue			$	139,529					$	137,667					$	388,000					$	389,314
Less:
Cost of revenue			83,023						89,251						220,692						246,664
Operating expenses:
Personnel-related expense			18,165						16,857						54,441						52,309
Stock-based compensation			12,525						13,734						42,518						50,541
Outside professional services			12,176						13,613						34,785						42,226
Marketing expenditure			4,680						4,726						14,724						12,847
Credit card and in-app processing fee			4,582						2,135						12,232						6,195
Other segment items (1)			(3,279)						1,051						(2,831)						1,819
Depreciation			534						282						1,609						1,069
Interest expense			96						128						266						327
Provision for income taxes			154						329						402						960
Segment net income (loss)			$	6,873					$	(4,439)					$	9,162					$	(25,643)
Reconciliation of profit or loss:
Adjustments and reconciling items			—						—						—						—
Consolidated net income (loss)			$	6,873					$	(4,439)					$	9,162					$	(25,643)

_________________________

(1)Other segment items include corporate IT and facility overhead, freight out expense, restructuring charges, separation expense, litigation reserves, gain on early lease termination, interest income, foreign currency exchange gain (loss), net and others.

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ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Geographic Information for Revenue

Revenue consists of subscriptions and services revenue and product sales, less allowances for estimated sales returns, price protection, end-user customer rebates, net changes in deferred revenue, and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance. Sales and usage-based taxes are excluded from revenue. For reporting purposes, revenue by geographic area is generally based upon the bill-to location of the customer. The following table presents revenue by geographic area.

			Three Months Ended												Nine Months Ended
			September 28, 2025						September 29, 2024						September 28, 2025						September 29, 2024
			(In thousands)
United States			$	81,270					$	71,461					$	228,630					$	189,194
Spain			32,195						35,051						89,015						111,241
Sweden			13,614						13,220						36,152						38,819
Other countries			12,450						17,935						34,203						50,060
Total			$	139,529					$	137,667					$	388,000					$	389,314

Geographic Information for Long-Lived Assets

Long-lived assets include property and equipment, net and operating lease right-of-use assets, net. Our long-lived assets are based on the physical location of the assets. The following table presents long-lived assets by geographic area.

			As of
			September 28, 2025						December 31, 2024
			(In thousands)
United States			$	20,022					$	18,201
Other countries			2,023						2,262
Total			$	22,045					$	20,463

Note 12.     Stock Repurchase Program

On September 24, 2024, we announced that our Board of Directors approved a stock repurchase program of up to an aggregate of $50.0 million of shares of Arlo’s common stock through open market purchases in a manner deemed to be in the best interests of our company and stockholders, considering the economic cost and prevailing market conditions, including the relative trading prices and volumes of Arlo’s common stock. The stock repurchase program is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors.

The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. During the nine months ended September 28, 2025, we repurchased and subsequently retired 2.1 million shares of Arlo common stock for an aggregate repurchase amount of $26.8 million. As of September 28, 2025, $18.8 million remained available and authorized for future repurchases.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,” “expects,” “intends,” “could,” “may,” “will,” and similar expressions are intended to identify forward-looking statements, including statements concerning our business and the expected performance characteristics, specifications, reliability, market acceptance, market growth, specific uses, user feedback, and market position of our products and technology. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed in “Part II—Item 1A—Risk Factors” and “Liquidity and Capital Resources” below.

All forward-looking statements in this document are based on information available to us as of the date hereof, such information may be limited or incomplete, and we assume no obligation to update any such forward-looking statements. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report. Unless expressly stated or the context otherwise requires, the terms “we,” “our,” “us,” the “Company,” and “Arlo” refer to Arlo Technologies, Inc. and our subsidiaries.

Business and Executive Overview

Arlo is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security services that combine a globally scaled cloud platform, advanced monitoring and analytics capabilities, and award-winning app-controlled devices to create a personalized security ecosystem. Arlo’s deep expertise in cloud services, cutting-edge AI and computer vision analytics, wireless connectivity and intuitive user experience design delivers seamless, smart home security for Arlo users that is easy to setup and engage with every day. Our highly secure, 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 – all rooted in a commitment to safeguard privacy for our users and their personal data.

Since the launch of our first product in December 2014, we have shipped over 41.4 million smart connected devices. As of September 28, 2025, the Arlo platform had approximately 11.8 million cumulative registered accounts across more than 100 countries around the world coupled with approximately 5.4 million cumulative paid accounts and annual recurring revenue (“ARR”) of $323.2 million.

We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and we primarily generate revenue by selling paid subscription services, as well as devices through retail, wholesale distribution, wireless carrier channels, security solution providers, and Arlo’s direct to consumer store. For the three months ended September 28, 2025 and September 29, 2024, we generated total revenue of $139.5 million and $137.7 million, respectively, and income (loss) from operations was $0.9 million and $(5.5) million, respectively. For the nine months ended September 28, 2025 and September 29, 2024, we generated total revenue of $388.0 million and $389.3 million, respectively, and income (loss) from operations was $1.4 million and $(28.9) million, respectively.

Our goal is to continue to develop innovative, world-class smart security solutions to expand and further monetize our current and future user and paid account bases. We believe that the growth of our business is dependent on many factors, including our ability to innovate and launch successful new products on a timely basis and grow our installed base, to increase subscription-based recurring revenue, to invest in channel and other strategic partnerships and to continue our

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global expansion. We expect to increase our investment in research and development going forward as we continue to introduce new and innovative products and services to enhance the Arlo platform and compete for engineering talent. We also expect our sales and marketing expenses to increase in the future as we invest in marketing to drive demand for our products and services.

Key Business Metrics

In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions. We believe these key business metrics provide useful information by offering the ability to make more meaningful period-to-period comparisons of our on-going operating results and a better understanding of how management plans and measures our underlying business. Our key business metrics may be calculated in a manner different from the same key business metrics used by other companies. We regularly review our processes for calculating these metrics, and from time to time we may discover a need to make adjustments to better reflect our business. We believe that any such adjustments are immaterial unless otherwise stated.

			As of
			September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Cumulative registered accounts			11,792						13.6		%				10,383
Cumulative paid accounts			5,396						27.4		%				4,235
Annual recurring revenue (“ARR”)			$	323,150					33.8		%				$	241,572

Cumulative Registered Accounts. 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).

Cumulative Paid Accounts. 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).

Annual Recurring Revenue. We believe ARR enables measurement of our business initiatives and serves as an indicator of our future growth. 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. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items.

Impact of Global Geopolitical, Economic and Business Conditions

The U.S. government implemented new tariff measures affecting a broad range of imported materials. Certain countries have responded to the U.S. tariffs by imposing or threatening retaliatory tariffs. While we are actively monitoring the changes in global trade policy and the effects they may have on our business and broader macroeconomic environment, we have not experienced a material impact on our financial position to date and do not expect them to have a material detrimental impact on our business operations in the near term. However, given the uncertainty surrounding global markets as a result of the new U.S. tariff policy, we do not have clarity at this point over the potential medium to long term impacts our business may face. The availability of certain goods could be affected if foreign suppliers choose to limit their exposure to U.S. markets in response to unfavorable trade policies, which could negatively impact our suppliers ability to deliver materials or manufacture equipment for us and, therefore, delay or impede our product deliveries. Furthermore, rising inflation, slower economic growth and increases in unemployment that may result from global trade disruptions could further deflate consumer demand and impact the demand for our products.

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Results of Operations

We operate as one operating and reportable segment. The following table sets forth, for the periods presented, the unaudited condensed consolidated statements of comprehensive income (loss) data, which we derived from the accompanying unaudited condensed consolidated financial statements:

			Three Months Ended																								Nine Months Ended
			September 28, 2025												September 29, 2024												September 28, 2025												September 29, 2024
			(In thousands, except percentage data)
Revenue:
Subscriptions and services			$	79,942					57.3		%				$	61,883					45.0		%				$	226,966					58.5		%				$	178,851					45.9		%
Products			59,587						42.7		%				75,784						55.0		%				161,034						41.5		%				210,463						54.1		%
Total revenue			139,529						100.0		%				137,667						100.0		%				388,000						100.0		%				389,314						100.0		%
Cost of revenue:
Subscriptions and services			12,424						8.9		%				14,431						10.5		%				36,924						9.5		%				42,584						11.0		%
Products			70,599						50.6		%				74,820						54.3		%				183,768						47.4		%				204,080						52.4		%
Total cost of revenue			83,023						59.5		%				89,251						64.8		%				220,692						56.9		%				246,664						63.4		%
Gross profit			56,506						40.5		%				48,416						35.2		%				167,308						43.1		%				142,650						36.6		%
Operating expenses:
Research and development			18,144						13.0		%				17,562						12.8		%				52,798						13.6		%				57,916						14.9		%
Sales and marketing			20,459						14.7		%				17,832						13.0		%				61,765						15.9		%				52,900						13.6		%
General and administrative			15,091						10.8		%				17,052						12.4		%				49,210						12.7		%				57,830						14.9		%
Other operating expense			1,940						1.4		%				1,423						1.0		%				2,181						0.6		%				2,868						0.7		%
Total operating expenses			55,634						39.9		%				53,869						39.2		%				165,954						42.8		%				171,514						44.1		%
Income (loss) from operations			872						0.6		%				(5,453)						(4.0)		%				1,354						0.3		%				(28,864)						(7.5)		%
Gain on early lease termination			4,144						3.0		%				—						—		%				4,144						1.1		%				—						—		%
Interest income, net			1,508						1.1		%				1,400						1.0		%				4,168						1.1		%				4,281						1.1		%
Other non-operating income (expense), net			503						0.4		%				(57)						—		%				(102)						—		%				(100)						—		%
Income (loss) before income taxes			7,027						5.1		%				(4,110)						(3.0)		%				9,564						2.5		%				(24,683)						(6.4)		%
Provision for income taxes			154						0.1		%				329						0.2		%				402						0.1		%				960						0.2		%
Net income (loss)			$	6,873					5.0		%				$	(4,439)					(3.2)		%				$	9,162					2.4		%				$	(25,643)					(6.6)		%

Revenue

Our gross revenue consists primarily of paid subscriptions and services revenue and sales of devices. Our paid subscription services are billed in advance of the start of the monthly subscription and revenue is recognized ratably over the subscription period. We generally recognize revenue from product sales at the time the product is shipped and transfer of control from us to the customer occurs.

Our revenue consists of gross revenue, less customer rebates and other channel sales incentives, allowances for estimated sales returns, price protection, and net changes in deferred revenue. A significant portion of our marketing expenditure is with customers and is deemed to be a reduction of revenue under authoritative guidance for revenue recognition.

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We conduct business across three geographic regions—(i) the Americas; (ii) EMEA; and (iii) APAC—and generally base revenue by geographic region on the bill-to location of the customer for device location for subscriptions and services sales and device sales.

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Americas			$	83,831					14.4		%				$	73,303					$	235,830					20.5		%				$	195,766
Percentage of revenue			60.1		%										53.2		%				60.8		%										50.3		%
EMEA			49,602						(14.1)		%				57,773						135,817						(22.8)		%				175,980
Percentage of revenue			35.5		%										42.0		%				35.0		%										45.2		%
APAC			6,096						(7.5)		%				6,591						16,353						(6.9)		%				17,568
Percentage of revenue			4.4		%										4.8		%				4.2		%										4.5		%
Total revenue			$	139,529					1.4		%				$	137,667					$	388,000					(0.3)		%				$	389,314

Revenue by classification is as follows:

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Revenue:
Subscriptions and services			$	79,942					29.2		%				$	61,883					$	226,966					26.9		%				$	178,851
Products			59,587						(21.4)		%				75,784						161,034						(23.5)		%				210,463
Total revenue			$	139,529					1.4		%				$	137,667					$	388,000					(0.3)		%				$	389,314

Subscriptions and services revenue increased by $18.1 million or 29.2%, and $48.1 million or 26.9%, for the three and nine months ended September 28, 2025 compared to the prior year periods, respectively, primarily due to a 27.4% increase in cumulative paid accounts and continued increase in average revenue per user (“ARPU”) on retail and direct paid subscription services.

Products revenue decreased by $16.2 million or 21.4%, and $49.4 million or 23.5%, for the three and nine months ended September 28, 2025 compared to the prior year periods, respectively, primarily from the decrease in product sales in EMEA due to the timing of device shipments from our largest customer and the reduction in average selling prices (“ASPs”) of our products as we increased promotional activities to stimulate household acquisition and subscriber growth. The decrease in products revenue was due to the higher sales incentives which are deemed to be reductions of revenue.

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Cost of Revenue

Cost of revenue consists of both subscriptions and services cost as well as products cost. Subscriptions and services cost consists of costs attributable to the provision and maintenance of our cloud-based platform, including personnel expense, data storage, security and computing, IT and facilities overhead, and amortization of software development. Products cost primarily consists of the cost of finished products from our third-party manufacturers and overhead costs, including personnel expense for operations staff, purchasing, product planning, inventory control, warehousing and distribution logistics, third-party software licensing fees, inbound freight, duty and tariff costs, IT and facilities overhead, warranty costs associated with returned goods, write-downs for excess and obsolete inventory and excess components, and royalties to third parties.

Our cost of revenue as a percentage of revenue can vary based upon a number of factors, including those that may affect our revenue set forth above and factors that may affect our cost of revenue, including, without limitation, product mix, sales channel mix, registered accounts’ acceptance of paid subscription service offerings, and changes in our cost of goods sold due to fluctuations in prices paid for components, net of vendor rebates, cloud platform costs, warranty and overhead costs, inbound freight, duty and tariff costs, and charges for excess or obsolete inventory. We outsource our manufacturing, warehousing, and distribution logistics. We also outsource certain components of the required infrastructure to support our cloud-based back-end IT infrastructure. We believe this outsourcing strategy generally allows us to better manage our products cost and subscriptions and services cost and gross margin and allows us to adapt to changing market dynamics and supply chain constraints. However, with respect to manufacturing that we have outsourced to ex-U.S. manufacturers, our ability to manage product costs through this strategy has been, and may continue to be, negatively impacted by tariffs.

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Cost of revenue:
Subscriptions and services			$	12,424					(13.9)		%				$	14,431					$	36,924					(13.3)		%				$	42,584
Products			70,599						(5.6)		%				74,820						183,768						(10.0)		%				204,080
Total cost of revenue			$	83,023					(7.0)		%				$	89,251					$	220,692					(10.5)		%				$	246,664

Subscriptions and services cost of revenue decreased by 13.9% and 13.3% for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily due to cost savings as we optimize our cloud platform to improve customer experience which assists in reduced data storage and cloud costs.

Products cost of revenue decreased by 5.6% and 10.0% for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily due to the decrease in product sales partially offset by an increase in freight cost mainly as a result of increased duties and tariffs, and to a lesser extent, the utilization of air freight.

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Gross Profit

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Gross profit:
Subscriptions and services			$	67,518					42.3		%				$	47,452					$	190,042					39.5		%				$	136,267
Products			(11,012)						**						964						(22,734)						**						6,383
Total gross profit			$	56,506					16.7		%				$	48,416					$	167,308					17.3		%				$	142,650
Gross margin percentage:
Subscriptions and services			84.5		%										76.7		%				83.7		%										76.2		%
Products			(18.5)		%										1.3		%				(14.1)		%										3.0		%
Total gross margin			40.5		%										35.2		%				43.1		%										36.6		%

**Percentage change not meaningful.

Subscriptions and services gross profit increased by $20.1 million and $53.8 million for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily due to subscriptions and services revenue growth as a result of increases in cumulative paid accounts, continued increase in ARPU on retail subscriptions, and cost optimizations.

Products gross profit decreased by $12.0 million and $29.1 million for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily driven by a reduction in the ASPs of our products as we increased promotional activities to stimulate household acquisition and subscriber growth and an increase in freight cost mainly as a result of increased duties and tariffs, and to a lesser extent, the utilization of air freight.

Operating Expenses

Research and Development 

Research and development expense consists primarily of personnel-related expense, safety, security, regulatory services and testing, other research and development consulting fees, and allocated IT and facilities overhead. Generally, we recognize research and development expenses as they are incurred, exclusive of capitalized software development costs. We have invested in and expanded our research and development organization to enhance our ability to introduce innovative products and services. We expect research and development expense to increase in absolute dollars as we develop new product and service offerings and compete for engineering talent. We believe that innovation and technological leadership are critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products and services, including our hardware devices, cloud-based software, AI-based algorithms, and machine learning capabilities.

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Research and development expense			$	18,144					3.3		%				$	17,562					$	52,798					(8.8)		%				$	57,916

Research and development expense slightly increased by $0.6 million for the three months ended September 28, 2025 compared to the prior year period, primarily due to an increase of $2.1 million in personnel-related expenses due to the headcount increases as a result of our research and development investment, partially offset by a decrease of $1.3 million in professional services due to the capitalization of software development costs as we invest in software capabilities.

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Research and development expense decreased by $5.1 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to decreases of $5.0 million in professional services, $2.9 million in IT and facilities overhead related to allocation associated with corporate infrastructure, and $1.1 million in personnel-related expenses due to the capitalization of software development costs as we invest in software capabilities, partially offset by an increase of $3.8 million in personnel-related expenses due to the headcount increases as a result of our research and development investment.

Sales and Marketing

Sales and marketing expense consists primarily of personnel expense for sales and marketing staff, technical support expense, advertising, trade shows, media and placement, corporate communications and other marketing expense, product marketing expense, allocated IT and facilities overhead, outbound freight costs, and credit card processing fees. We expect our sales and marketing expense to increase in the future as we invest in marketing to drive demand for our subscriptions and services and device products.

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Sales and marketing expense			$	20,459					14.7		%				$	17,832					$	61,765					16.8		%				$	52,900

Sales and marketing expense increased by $2.6 million for the three months ended September 28, 2025 compared to the prior year period, primarily due to increases of $2.4 million in credit card and in-app processing fees as a result of increases in paid accounts and focused efforts to improve our customer’s app experience.

Sales and marketing expense increased by $8.9 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to increases of $6.5 million in credit card and in-app processing fees as a result of increases in paid accounts and focused efforts to improve our customer’s app experience, $1.4 million in marketing expenditures, and $1.0 million in personnel-related expenses mainly from stock-based compensation as a result of the increase in our stock price.

General and Administrative

General and administrative expense consists primarily of personnel-related expense for certain executives, finance and accounting, investor relations, human resources, legal, information technology, professional fees, allocated IT and facilities overhead, strategic initiative expense, and other general corporate expense. We expect our general and administrative expense to fluctuate as a percentage of our revenue in future periods based on fluctuations in our revenue and the timing of such expense.

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
General and administrative expense			$	15,091					(11.5)		%				$	17,052					$	49,210					(14.9)		%				$	57,830

General and administrative expense decreased by $2.0 million and $8.6 million for the three and nine months ended September 28, 2025, respectively compared to the prior year periods, primarily due to (i) the decrease of $1.6 million and $7.9 million, respectively, in personnel-related expenses mainly from stock-based compensation as a result of the achievement of certain performance-based equity award targets in the prior year periods; and (ii) the decrease of $0.3 million and $0.9 million, respectively, in IT and facilities overhead related to allocation associated with corporate infrastructure.

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Other operating expenses

Other operating expenses include restructuring charges, which consist primarily of severance costs, and separation expenses, which consist primarily of costs of legal and professional services.

Other Income (Expense)

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Gain on early lease termination			$	4,144					**						$	—					4,144						**						—
Interest income, net			$	1,508					7.7		%				$	1,400					4,168						(2.6)		%				4,281
Other non-operating income (expense), net			$	503					**						$	(57)					(102)						**						(100)

** Percentage change not meaningful.

In July 2025, we entered into a termination agreement for our office lease located in San Jose, California. We recorded the derecognition of right-of-use assets and lease liabilities and recognized a gain of $4.1 million upon the termination effective in the third quarter of 2025.

Interest income, net increased for the three months ended September 28, 2025 compared to the prior year period, primarily due to the increase in our short-term investments balance. Interest income, net decreased for the nine months ended September 28, 2025 compared to the prior year period, primarily due to the declines in interest rates.

Provision for Income Taxes

			Three Months Ended																		Nine Months Ended
			September 28, 2025						% Change						September 29, 2024						September 28, 2025						% Change						September 29, 2024
			(In thousands, except percentage data)
Provision for income taxes			$	154					(53.2)		%				$	329					$	402					(58.1)		%				$	960
Effective tax rate			2.2		%										(8.0)		%				4.2		%										(3.9)		%

The effective tax rate for the three and nine months ended September 28, 2025 was lower than the U.S. federal income tax rate due to a lower effective tax rate on foreign earnings and valuation allowance on our net U.S. deferred tax assets and certain foreign tax attributes. Based on a review of all available evidence, we have concluded that it is more likely than not that we will not be able to realize the benefit of the deferred tax assets in the foreseeable future. As a result, we are maintaining the full valuation allowance. However, as we continue to generate income, we are approaching the point at which the accumulated rolling 36-month pre-tax income turns positive—a key piece of objectively verifiable evidence supporting the realizability of deferred tax assets. There is a reasonable possibility that within the next several quarters, sufficient positive evidence will become available to reach a conclusion that all or a significant portion of the valuation allowance against our U.S. net deferred tax assets would no longer be required.

On July 4, 2025, the OBBBA, a significant tax reform package, was enacted. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, and certain capital expenditures, as well as other changes to the U.S. taxation of profits derived from foreign operations. Management is continuing to evaluate the provisions of the OBBBA, including treatment of previously capitalized domestic U.S. research and development expenses. Based on information available to date, management does not expect the enactment of the OBBBA to have a material impact on our consolidated financial statements; however, the ultimate effect may differ from the amounts reflected in the interim financial statements once the analysis is complete and elections are finalized.

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Liquidity and Capital Resources

As of September 28, 2025, our cash and cash equivalents and short-term investments totaled $165.5 million and our unused borrowing capacity was $45.0 million based on the terms and conditions of the Credit Agreement. The proceeds of the borrowings under this credit facility may be used for working capital and general corporate purposes.

We have a history of losses and may incur operating and net losses in the future. As of September 28, 2025, our accumulated deficit was $388.8 million. Historically, we have funded our principal business activities through cash flows generated from operations and available cash on hand.

Material Cash Requirements

We believe that our existing sources of liquidity will be sufficient to meet our anticipated cash requirements for at least the next 12 months and beyond. However, in the future we may require or desire additional funds to support our operating expenses and capital requirements. To the extent that current and anticipated future sources of liquidity are insufficient, we may seek to raise additional funds through public or private equity. We have no commitments to obtain such additional financing and cannot provide assurance that additional financing will be available at all or, if available, that such financing would be obtainable on terms favorable to us and would not be dilutive.

Our future liquidity and cash requirements may vary from those currently planned and will depend on numerous factors, including the introduction of new products, the growth in our subscriptions and services revenue, the ability to increase our gross margin dollars, as well as cost optimization initiatives and controls over our operating expenditures. As we grow our installed base and related cost structure, there will be a need for additional working capital, hence, we may increase our product and subscription rates in the future.

Operating Leases and Contractual Commitments

Our operating lease obligations mostly include offices, equipment, and distribution centers. Our contractual commitments are primarily inventory-related purchase obligations with suppliers.

Legal Contingencies

We are, and from time to time, we may become involved in disputes, litigation, and other legal actions in the ordinary course of business. At each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. Significant judgment is required to determine both the probability and the estimated amount of loss. In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as litigation reserves in other operating expense on the unaudited condensed consolidated statements of comprehensive income (loss).

Refer to Note 7. Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report for further information about our operating leases, purchase obligations, and legal contingencies.

Stock Repurchase Program

Our Board of Directors authorized a stock repurchase program of up to an aggregate of $50.0 million of shares, which commenced in September 2024 and is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors. During the nine months ended September 28, 2025, we repurchased and subsequently retired 2.1 million shares of Arlo common stock for an aggregate amount of $26.8 million. As of September 28, 2025, $18.8 million remained available and authorized for future repurchases.

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Cash Flow

			Nine Months Ended
			September 28, 2025						September 29, 2024
			(In thousands)
Net cash provided by operating activities			$	58,952					$	44,634
Net cash provided by (used in) investing activities			(30,428)						11,229
Net cash used in financing activities			(24,544)						(35,830)
Net cash increase			$	3,980					$	20,033

Operating activities

Net cash provided by operating activities increased by $14.3 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to improved profitability, partially offset by unfavorable working capital movements as a result of (i) higher accounts receivable balances in connection with our subscription sales growth; and (ii) decreased accounts payable balances mainly due to timing of payments; partially offset by (i) higher inventory balances as we prepare for the holiday season and (ii) increases in deferred revenue due to the growth in our paid accounts and subscription rates.

Investing activities

Net cash used in investing activities increased by $41.7 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to higher net purchases of short-term investments, coupled with our strategic long-term investment in a privately-held company, as well as to a lesser extent, the increases in capitalized software development costs.

Financing activities

Net cash used in financing activities decreased by $11.3 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to the decrease in withholding tax from RSU and PSU releases as a result of the sell-to-cover method being applied to all Arlo employees for their tax withholding effective on January 1, 2025, partially offset by the stock repurchases.

Critical Accounting Policies and Estimates

For a complete description of what we believe to be the critical accounting policies and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates during the nine months ended September 28, 2025, other than as discussed in Note 2. Significant Accounting Policies and Recent Accounting Pronouncements, in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

During the nine months ended September 28, 2025, there were no material changes to our market risk disclosures as set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on this evaluation, our management, including our CEO and our CFO, has concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were, in design and operation, effective at the reasonable assurance level. A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within an organization have been detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1.Legal Proceedings

We are, and from time to time, we may become involved in disputes, litigation and other legal actions in the ordinary course of business. We are not currently party to any claim or proceedings that, in the opinion of our management, are likely to have a material adverse effect on our financial position. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. For additional discussion of certain risks associated with legal proceedings, see the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report.

Item 1A.Risk Factors

Our business, reputation, results of operations and financial condition, as well as the price of our stock, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Risk Factors.” Except as set forth below, during the nine months ended September 28, 2025, there have been no significant changes to the risk factors under the heading “Risk Factors” described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.

The current international trade environment and related unfavorable macroeconomic conditions have adversely affected, and may continue to adversely affect, our business.

Substantial new U.S. and international tariffs and other restrictive trade policies 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 or other retaliatory trade measures may increase the costs of raw materials or finished goods, which could negatively impact our suppliers’ ability to deliver materials or manufacture equipment for us and, therefore, delay or impede our product deliveries. Tariff-related costs 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, tariffs and other geopolitical 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. In addition, trade developments have heightened, and may continue to heighten, the risks related to the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2024.

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Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table summarizes the share repurchase activity for the quarter ended September 28, 2025.

Period						Total Number of Shares Purchased						Average Price Paid Per Share (2)						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)						Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
June 30, 2025 - July 27, 2025						—						$—						—						$29,429,729
July 28, 2025 - August 24, 2025						283,700						$16.76						283,700						$24,736,795
August 25, 2025 - September 28, 2025						338,048						$17.51						338,048						$18,823,206
Total						621,748												621,748						$18,823,206

_________________________

(1)     On September 24, 2024, we announced that our Board of Directors approved a stock repurchase program of up to an aggregate of $50.0 million of shares of Arlo’s common stock through open market purchases in a manner deemed to be in the best interests of our company and stockholders, considering the economic cost and prevailing market conditions, including the relative trading prices and volumes of Arlo’s common stock. The stock repurchase program is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors.

(2)     Average price paid per share includes commission costs, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022. Commission costs associated with share repurchases and excise taxes do not reduce the remaining authorized amount under our repurchase programs.

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Item 5.    Other Information

Trading Arrangements

During the quarter ended September 28, 2025, our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated the contracts, instructions or written plans for the purchase or sale of Arlo’s securities set forth in the table below:

Type of Trading Arrangement

Name and Position

Action

Action Date

Rule 10b5-1 (1)

Non-Rule 10b5-1 (2)

Total Shares of Common Stock to be Sold

Expiration Date

Kurtis Binder, Chief Financial Officer and Chief Operating Officer

Adoption

August 21, 2025

(3)

X

136,248

(4)

April 3, 2026

Brian Busse, General Counsel

Adoption

August 15, 2025

(3)

X

236,292

November 20, 2026

Ralph Faison, Director

Adoption

August 27, 2025

(3)

X

100,000

(5)

November 27, 2026

_________________________

(1)Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act.

(2)“Non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K under the Exchange Act.

(3)Adopted for personal tax planning purposes.

(4)This plan covers shares underlying certain of Mr. Binder’s equity awards, and with respect to one such equity award, the actual number of shares to be sold will depend on (i) the shares granted to Mr. Binder in the first quarter of 2026 in settlement of his annual bonus (which is assumed to be achieved at 100% of target and settled using a price per share based on a 30-day average as of August 21, 2025, which was the adoption date of this plan), and (ii) state and federal tax rates applicable on the relevant vesting date. With respect to certain of the equity awards in this plan, Mr. Binder has designated certain target prices for the sale of shares, and if our stock is not trading at or above such target prices, the shares cannot be sold.

(5)The actual number of shares that may be sold under this plan is equal to the number of shares that remain unsold under Mr. Faison’s plan that was previously adopted on August 26, 2024 and disclosed in the Quarterly Report on Form 10-Q for the quarter ended September 29, 2024.

In addition, our officers (as defined in Rule 16a-1(f) under the Exchange Act) have entered into sell-to-cover arrangements adopted pursuant to Rule 10b5-1 authorizing the pre-arranged sale of shares to satisfy our tax withholding obligations arising exclusively from the vesting of RSUs and PSUs and the related issuance of shares. The amount of shares to be sold to satisfy our tax withholding obligations under these arrangements is dependent on future events which cannot be known at this time, including the future trading price of our shares. The expiration date relating to these arrangements is dependent on future events which cannot be known at this time, including the final vest date of the applicable RSUs and PSUs and the officer’s termination of service.

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Item 6.Exhibits

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

Date

Number

Filed Herewith

3.1

Amended and Restated Certificate of Incorporation of Arlo Technologies, Inc.

8-K

8/7/2018

3.1

3.2

Amended and Restated Bylaws of Arlo Technologies, Inc.

8-K

8/7/2018

3.2

4.1

Common Stock Certificate of Arlo Technologies, Inc.

S-1/A

7/23/2018

4.1

10.1*

Arlo Technologies, Inc. 2018 Equity Incentive Plan, as amended.

X

31.1

Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

X

31.2

Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

X

32.1#

Section 1350 Certification of Principal Executive Officer

X

32.2#

Section 1350 Certification of Principal Financial Officer

X

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

X

101.SCH

Inline XBRL Taxonomy Extension Schema Document

X

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

X

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

X

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

X

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

X

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

X

#

This certification is deemed to accompany this Quarterly Report on Form 10-Q and will not be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section. This certification will not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

*

Indicates management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ARLO TECHNOLOGIES, INC.

Registrant

/s/ MATTHEW MCRAE

Matthew McRae

Chief Executive Officer

(Principal Executive Officer)

/s/ KURTIS BINDER

Kurtis Binder

Chief Financial Officer and Chief Operating Officer

(Principal Financial and Accounting Officer)

Date: November 6, 2025

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