Record Q1 2026 results lift Arlo (NYSE: ARLO) subscriptions and cash flow
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Arlo Technologies reported record first-quarter 2026 results, driven by its subscription business and higher profitability. Subscriptions and services revenue reached $90.1 million, up 30.9% year over year and nearly 60% of total revenue, while annual recurring revenue climbed 29.2% to $356.9 million. GAAP gross margin improved to 48.3%, and adjusted EBITDA rose to $30.4 million with a 20.2% margin. GAAP EPS was $0.14 and non-GAAP EPS was $0.28, both record levels.
The company reinforced its growth strategy and capital returns. Arlo ended the quarter with 6.0 million cumulative paid accounts and free cash flow of $25.4 million. It acquired Aloe Care Health to expand AI-powered aging-in-place services, repurchased $8.0 million of stock under a $50 million program, and realized a $6.4 million gain from selling its Origin Wireless investment. For the second quarter of 2026, Arlo forecasts revenue of $145–$155 million and GAAP diluted EPS of $0.00–$0.06, with non-GAAP diluted EPS of $0.17–$0.23.
Positive
- Subscription-led growth and recurring revenue strength: Subscriptions and services revenue grew 30.9% year over year to $90.1 million, nearly 60% of total revenue, while ARR reached $356.9 million, up 29.2%, reinforcing visibility and the shift toward a higher-quality revenue mix.
- Rapid profitability and cash flow improvement: Adjusted EBITDA rose 85.3% year over year to $30.4 million with a 20.2% margin, non-GAAP EPS reached $0.28, and free cash flow was $25.4 million, signaling stronger earnings power and cash generation.
- Strategic capital deployment and portfolio moves: Arlo acquired Aloe Care Health to expand AI-powered aging-in-place services, repurchased $8.0 million of stock under a $50 million program, and realized a $6.4 million gain from selling its Origin Wireless investment.
Negative
- None.
Insights
Arlo’s Q1 2026 shows strong subscription-led growth, margin expansion, and rising cash generation.
Arlo’s shift to a subscription and services model is evident, with $90.1 million of subscriptions and services revenue, up 30.9% year over year and representing 59.9% of total revenue. Annual recurring revenue reached $356.9 million, growing 29.2%, providing a more predictable revenue base. GAAP and non-GAAP gross margins improved to 48.3% and 50.1%, respectively, reflecting operating leverage.
Profitability scaled quickly, with adjusted EBITDA of $30.4 million, up 85.3% year over year and a 20.2% margin, while non-GAAP diluted EPS increased to $0.28. Free cash flow of $25.4 million and cash, cash equivalents and short-term investments of $167.5 million support both growth and shareholder returns. Management highlights the Aloe Care acquisition and strategic partnerships as additional growth vectors, while guidance for Q2 2026 targets revenue of $145–$155 million with non-GAAP diluted EPS of $0.17–$0.23, implying continued profitability.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Subscriptions and services revenue: $90,099 thousand
Annual recurring revenue (ARR): $356,921 thousand
GAAP gross margin: 48.3%
+5 more
8 metrics
Subscriptions and services revenue
$90,099 thousand
Q1 2026; up 30.9% year over year
Annual recurring revenue (ARR)
$356,921 thousand
Q1 2026; up 29.2% year over year
GAAP gross margin
48.3%
Q1 2026; improved from 44.3% in Q1 2025
Non-GAAP EPS - diluted
$0.28
Q1 2026; up from $0.15 in Q1 2025
Adjusted EBITDA
$30,424 thousand
Q1 2026; margin 20.2%
Free cash flow
$25,444 thousand
Q1 2026; free cash flow margin 16.9%
Q2 2026 revenue outlook
$145–$155 million
Company guidance for three months ending June 28, 2026
Stock repurchases
$8.0 million
Common stock repurchased during Q1 2026 under $50 million program
Key Terms
annual recurring revenue (ARR), adjusted EBITDA, free cash flow (FCF), non-GAAP EPS, +2 more
6 terms
annual recurring revenue (ARR) financial
"Annual recurring revenue (ARR)(1) of $357 million, growing 29% year over year"
Annual Recurring Revenue (ARR) is the predictable amount of money a company expects to earn in a year from its ongoing services or subscriptions. It helps businesses understand their steady income stream, much like knowing how much rent they can count on each year, which is important for planning and growth.
adjusted EBITDA financial
"Record GAAP net income of $15 million and record adjusted EBITDA(2) of $30 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
free cash flow (FCF) financial
"Free cash flow (FCF)(3) of $25.4 million with FCF margin of 16.9%"
Free cash flow (FCF) is the cash a company generates from its regular business after paying for necessary investments like equipment, buildings, or repairs—think of it as the money left in your wallet after paying bills and fixing the car. Investors watch FCF because it shows how much real, spendable cash a company has to pay dividends, pay down debt, buy back shares, or fund growth, making it a key measure of financial health and flexibility.
non-GAAP EPS financial
"Record GAAP EPS of $0.14 and record non-GAAP EPS of $0.28"
Non-GAAP EPS is a measure of a company's profit per share that excludes certain expenses or income items that are included in standard accounting reports. It is used by investors to get a clearer picture of the company's core performance, much like removing one-time costs from a personal budget to see regular spending habits. This adjusted figure helps investors compare companies more consistently and understand their ongoing profitability.
aging-in-place care other
"expand the expansion of our AI-powered services for aging-in-place care"
stock-based compensation expense financial
"These supplemental measures exclude adjustments for stock-based compensation expense, acquisition-related expense"
Stock-based compensation expense is the value that a company records when it gives employees or executives shares or options to buy shares as part of their pay. It matters because it shows the true cost of paying employees this way, which can affect the company's profits and how investors see its financial health.
Earnings Snapshot
Total revenue: $150,382 thousand · Guidance included
Q1 2026
Total revenue
$150,382 thousand
GAAP EPS - basic
$0.14
Non-GAAP EPS - diluted
$0.28
Adjusted EBITDA
$30,424 thousand
Q2 2026 revenue outlook
$145–$155 million
Guidance
For Q2 2026, Arlo guides revenue to $145–$155 million, GAAP diluted EPS to $0.00–$0.06, and non-GAAP diluted EPS to $0.17–$0.23.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 7, 2026
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
(408 ) 890-3900
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| 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. | ☐ | ||||
Item 2.02 Results of Operations and Financial Condition.
On May 7, 2026, Arlo Technologies, Inc. issued a press release announcing its financial results for the first quarter ended March 29, 2026. A copy of this press release is attached hereto as Exhibit 99.1.
The information in this Item 2.02, including Exhibit 99.1 hereto, are being furnished and shall not be deemed “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, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, unless expressly incorporated by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description | |||||||
99.1 | Press Release, Dated May 7, 2026 | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ARLO TECHNOLOGIES, INC. | ||
| Registrant | ||
| /s/ KURTIS BINDER | ||
| Kurtis Binder | ||
| Chief Financial Officer and Chief Operating Officer | ||
Date: May 7, 2026
NEWS RELEASE
Arlo Reports First Quarter 2026 Results
Record subscriptions and services revenue of $90 million, growing 31% year over year
Annual recurring revenue (ARR)(1) of $357 million, growing 29% year over year
Record GAAP gross margin of 48%, growing 400 basis points and record non-GAAP gross margin(2) of 50%, growing 460 basis points
Record GAAP net income of $15 million and record adjusted EBITDA(2) of $30 million; adjusted EBITDA margin of 20%
Record GAAP EPS of $0.14 and record non-GAAP EPS of $0.28
Carlsbad, California – May 7, 2026 – Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security platform company, today reported financial results for the first quarter ended March 29, 2026.
“Our strong momentum continued into 2026 as Arlo delivered outstanding financial results in the first quarter, generating exceptional revenue growth and profitability. Record subscriptions and services revenue of $90 million and ARR of $357 million both grew by about 30%. Accelerating profitability resulted in adjusted EBITDA of $30 million and non-GAAP earnings per share of $0.28 which both grew by over 85% year over year,” said Matthew McRae, Chief Executive Officer of Arlo Technologies. “Sustained operational excellence in our core business enabled us to confidently leverage our capital allocation program to expand into new market opportunities as evidenced by our acquisition of Aloe Care in April. We believe these types of inorganic opportunities combined with the scale of our strategic partnerships will provide additional durable growth vectors on our path to surpass our long-range targets early.”
Financial Summary
•Record subscriptions and services revenue of $90.1 million, an increase of 30.9% year over year, accounting for 59.9% of total revenues.
•Ended with ARR of $356.9 million, growing 29.2% year over year.
•GAAP subscriptions and services gross margin of 83.7% and record non-GAAP subscriptions and services gross margin of 85.4%; up 150 and 230 basis points year over year, respectively.
•Record GAAP gross margin of 48.3% and record non-GAAP gross margin of 50.1%; up 400 and 460 basis points year over year, respectively.
•Record adjusted EBITDA of $30.4 million, up 85.3% year over year with adjusted EBITDA margin of 20.2%.
•Record GAAP EPS of $0.14 and record non-GAAP EPS of $0.28.
•Cumulative paid accounts increased to 6.0 million, growing 22.6% year over year.
•Free cash flow (FCF)(3) of $25.4 million with FCF margin of 16.9%.
•Cash and cash equivalents and short-term investments of $167.5 million, up $14.4 million year over year.
Business Highlights
•Acquisition of Aloe Care Health to accelerate the expansion of our AI-powered services for aging-in-place care in collaboration with health providers, patients, and their families.
•Surpassed 6 million paid accounts, a significant milestone in our long-range plan to reach 10 million paid accounts.
•Repurchased $8.0 million of common stock during the first quarter, as part of a recent newly authorized stock repurchase program of $50 million of our shares.
•Recorded a gain from the sale of our strategic investment in Origin Wireless of $6.4 million resulting in a 51% return.
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| Three Months Ended | |||||||||||||||||
| March 29, 2026 | December 31, 2025 | March 30, 2025 | |||||||||||||||
| (In thousands, except percentage and per share data) | |||||||||||||||||
| Revenue | $ | 150,382 | $ | 141,297 | $ | 119,066 | |||||||||||
| GAAP gross margin | 48.3 | % | 46.4 | % | 44.3 | % | |||||||||||
Non-GAAP gross margin (2) | 50.1 | % | 47.8 | % | 45.5 | % | |||||||||||
GAAP earnings (loss) per share - basic | $ | 0.14 | $ | 0.05 | $ | (0.01) | |||||||||||
Non-GAAP EPS - diluted (2) | $ | 0.28 | $ | 0.22 | $ | 0.15 | |||||||||||
_________________________
(1) ARR represents and is defined as the annualized paid subscriptions and services revenue we expect to recognize from subscription contracts, as calculated by taking the average paid subscriptions and services revenue per paid account of the reporting period multiplied by the number of paid accounts at the end of the reporting period.
(2) Reconciliation of financial measures computed on a GAAP basis to the most directly comparable financial measures computed on a non-GAAP basis is provided at the end of this press release.
(3) FCF is calculated as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue.
The second quarter 2026 Outlook (4) (5)
A reconciliation of our outlook on a GAAP and non-GAAP basis is provided for the three months ended June 28, 2026 in the following table:
| Revenue | EPS - diluted | ||||||||||
| (In millions, except per share data) | |||||||||||
| GAAP | $145 - $155 | $0.00 - $0.06 | |||||||||
| Adjustments for stock-based compensation expense and others | — | $0.17 | |||||||||
| Non-GAAP | $145 - $155 | $0.17 - $0.23 | |||||||||
_________________________
(4) The outlook does not include estimates for any currently unknown income and expense items which, by their nature, could arise late in a quarter, including: litigation reserves, net; impairment charges; discrete tax benefits or detriments relating to tax windfalls or shortfalls from equity awards; and any additional impacts relating to the implementation of U.S. tax reform. New material income and expense items such as these could have a significant effect on our guidance and future results.
(5) The current global tariff environment is uncertain. Our products are manufactured outside the U.S., and consequently tariffs increase our product costs, which could impact our sales and reduce our product margin. The outlook ranges include the impact of our current estimate on tariff costs.
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Investor Conference Call / Webcast Details
Arlo will review the first quarter 2026 results and discuss management’s expectations for the second quarter 2026 today, Thursday, May 7, 2026 at 5:00 p.m. ET (2:00 p.m. PT). To view the accompanying presentation, a live webcast of the conference call will be available on Arlo’s Investor Relations website at https://investor.arlo.com. The toll-free dial-in number for the live audio call is (800) 715-9871. The international dial-in number for the live audio call is (646) 307-1963. The conference ID for the call is 5685809. A replay of the call will be available via the web at https://investor.arlo.com.
About Arlo Technologies, Inc.
Arlo is an award-winning, industry leader that is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security solutions. Arlo's deep expertise in AI- and CV-powered analytics, cloud services, user experience and product design, and innovative wireless and RF connectivity enables the delivery of a seamless, smart security experience for Arlo users that is easy to set up and interact with every day. Arlo's cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. Arlo has recently launched several categories of award-winning connected devices, software and services. These include wire-free, smart Wi-Fi and LTE-enabled security cameras, video doorbells, floodlights, security system, and Arlo's subscription service, Arlo Secure.
With a mission to bring users peace of mind, Arlo is as passionate about protecting user privacy as it is about safeguarding homes and families. Arlo is committed to implementing industry standards for data protection designed to keep users' personal information private and in their control. Arlo provides enhanced controls for user data, supports privacy legislation, keeps user data safely secure, and puts security at the forefront of company culture.
© 2026 Arlo Technologies, Inc., Arlo and the Arlo logo are trademarks and/or registered trademarks of Arlo Technologies, Inc. and/or certain of its affiliates in the United States and/or other countries. Other brand and product names are for identification purposes only and may be trademarks or registered trademarks of their respective holder(s). The information contained herein is subject to change without notice. Arlo shall not be liable for technical or editorial errors or omissions contained herein. All rights reserved.
Contact:
Arlo Investor Relations
Tahmin Clarke
investors@arlo.com
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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 for Arlo Technologies, Inc.:
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent our expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding our potential future business, operating performance and financial condition, including descriptions of our expected revenue and profitability, GAAP and non-GAAP gross margins, adjusted EBITDA and adjusted EBITDA margins, tax rates, expenses, cash outlook, free cash flow and free cash flow margins; strategic objectives and initiatives; expectations regarding the accelerated expansion of our AI-powered services for aging-in-place care and the expansion of our presence in the AI-driven smart home security market; expectations regarding the anticipated benefits, synergies and value creation from our recent acquisitions, including the acquisitions of Aloe Care and Canary, and the successful integration thereof; expectations regarding the realization of returns on our strategic investments, including the disposition of our investment in Origin Wireless; expectations regarding our ability to combine our strategic opportunities with the scale of our strategic partnerships to provide additional growth vectors on our quest to surpass our long-range targets early; and others. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for our products may be lower than anticipated, including due to inflation, fluctuating consumer confidence, banking failures and high interest rates; we may be unsuccessful in developing and expanding our sales and marketing capabilities; we may not be able to increase sales of our paid subscription services; consumers may choose not to adopt our new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; we may be unsuccessful or experience delays in manufacturing and distributing our new and existing products; we may fail to manage costs and cost saving initiatives, the cost of developing new products and manufacturing and distribution of our existing offerings; we may fail to successfully integrate acquired businesses, technologies or personnel, or to realize the anticipated benefits, synergies or cost savings from our recent acquisitions; we may experience difficulties retaining key employees of acquired companies; the costs and management attention associated with the integration of acquired businesses may be greater than anticipated; and we may not realize the expected returns on our future strategic investments, if any. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.
Under the current U.S. administration, tariffs, and retaliatory tariffs imposed by other nations, have created a dynamic and unpredictable trade landscape, which is adversely impacting, and may continue to adversely impact, our business. Current or future tariffs impacting our products, which are manufactured outside of the United States, have raised and may further raise our product costs. In addition, other trade restrictions could negatively impact our ability to obtain finished products from our ex-U.S. manufacturers and suppliers and, therefore, delay or impede our product deliveries. Tariff-related cost pressures and supply chain disruptions may lead to reputational harm if we are unable to deliver products or services on expected timelines or if any price increases are poorly received by customers or business partners. Furthermore, ongoing uncertainty regarding trade disputes and other political tensions between the United States and other countries, including in Asia, may also exacerbate unfavorable macroeconomic conditions, which may negatively impact international customer demand for our products or services and may lead to increased preference for local competitors. While we continue to monitor these developments, the full impact of these risks remains uncertain, and any prolonged economic downturn, escalation in trade tensions or deterioration in international perception of U.S.-based companies could materially and adversely affect our business, results of operations and financial condition.
Further information on potential risk factors that could affect our business are detailed in our periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Risk Factors” in the most recently filed Annual Report and Quarterly Report filed with the Securities and Exchange Commission (the “SEC”) and subsequent filings with the SEC. Given these circumstances, you should not place undue reliance on these forward-looking statements. We undertake no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Measures:
To supplement our unaudited financial data prepared on a basis consistent with U.S. Generally Accepted Accounting Principles (“GAAP”), we disclose certain non-GAAP financial measures that exclude certain charges, including non-GAAP gross profit, non-GAAP gross margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP earnings per diluted share. These supplemental measures exclude adjustments for stock-based compensation expense, acquisition-related expense, gain on sale of long-term investment, amortization of software development cost, depreciation expenses, and the related tax effects. In addition, we use free cash flow as a non-GAAP measure when assessing the sources of liquidity, capital resources, and quality of earnings. We believe that free cash flow is helpful in understanding our capital requirements and provides an additional means to reflect the cash flow trends in our business.
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These non-GAAP measures are not in accordance with, or an alternative for GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.
In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our operating performance on a period-to-period basis because such items are not, in our view, related to our ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, management’s incentive compensation is determined using certain non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP measures, provide useful information to investors by offering:
•the ability to make more meaningful period-to-period comparisons of our on-going operating results;
•the ability to better identify trends in our underlying business and perform related trend analyses;
•a better understanding of how management plans and measures our underlying business; and
•an easier way to compare our operating results against analyst financial models and operating results of competitors that supplement their GAAP results with non-GAAP financial measures.
The following are explanations of the adjustments that we incorporate into non-GAAP measures, as well as the reasons for excluding them in the reconciliations of these non-GAAP financial measures:
Stock-based compensation expense consists of non-cash charges for the estimated fair value of restricted stock units , performance-based restricted stock units, and shares under the employee stock purchase plan granted to employees, and the payroll taxes associated with stock-based compensation. We believe that the exclusion of these charges provides for more accurate comparisons of our operating results to peer companies due to the varying available valuation methodologies, subjective assumptions and the variety of award types. In addition, we believe it is useful to investors to understand the specific impact stock-based compensation expense has on our operating results.
Other non-GAAP items are the result of either unique or unplanned events, including, when applicable: acquisition-related expense, gain on sale of long-term investment, amortization of software development cost, depreciation expenses, and the related tax effects. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that often arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.
Source: Arlo-F
***Financial Tables
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| ARLO TECHNOLOGIES, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands, except share and per share data) | ||
| As of | |||||||||||
| March 29, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 152,636 | $ | 146,440 | |||||||
| Short-term investments | 14,862 | 19,985 | |||||||||
| Accounts receivable, net | 52,174 | 39,666 | |||||||||
| Inventories | 43,958 | 41,185 | |||||||||
| Prepaid expenses and other current assets | 12,045 | 13,210 | |||||||||
| Total current assets | 275,675 | 260,486 | |||||||||
| Property and equipment, net | 14,178 | 13,158 | |||||||||
| Operating lease right-of-use assets, net | 8,691 | 9,195 | |||||||||
| Goodwill | 38,544 | 11,038 | |||||||||
Intangible assets, net | 19,490 | — | |||||||||
Long-term investment | — | 12,500 | |||||||||
| Other non-current assets | 3,614 | 4,171 | |||||||||
| Total assets | $ | 360,192 | $ | 310,548 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 40,184 | $ | 42,826 | |||||||
| Deferred revenue | 52,187 | 37,139 | |||||||||
| Accrued liabilities | 89,331 | 92,372 | |||||||||
| Total current liabilities | 181,702 | 172,337 | |||||||||
| Non-current operating lease liabilities | 6,230 | 6,743 | |||||||||
| Other non-current liabilities | 12,858 | 3,627 | |||||||||
| Total liabilities | 200,790 | 182,707 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ Equity: | |||||||||||
Preferred stock: $0.001 par value; 50,000,000 shares authorized; none issued or outstanding | — | — | |||||||||
Common stock: $0.001 par value; 500,000,000 shares authorized; shares issued and outstanding: 108,745,373 at March 29, 2026 and 105,030,947 at December 31, 2025 | 108 | 105 | |||||||||
| Additional paid-in capital | 527,457 | 510,759 | |||||||||
Accumulated other comprehensive income (loss) | (1) | 16 | |||||||||
| Accumulated deficit | (368,162) | (383,039) | |||||||||
| Total stockholders’ equity | 159,402 | 127,841 | |||||||||
| Total liabilities and stockholders’ equity | $ | 360,192 | $ | 310,548 | |||||||
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| ARLO TECHNOLOGIES, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (In thousands, except percentage and per share data) | ||
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | December 31, 2025 | March 30, 2025 | |||||||||||||||
| Revenue: | |||||||||||||||||
| Subscriptions and services | $ | 90,099 | $ | 89,390 | $ | 68,849 | |||||||||||
| Products | 60,283 | 51,907 | 50,217 | ||||||||||||||
| Total revenue | 150,382 | 141,297 | 119,066 | ||||||||||||||
| Cost of revenue: | |||||||||||||||||
| Subscriptions and services | 14,682 | 15,412 | 12,265 | ||||||||||||||
| Products | 63,032 | 60,352 | 54,074 | ||||||||||||||
| Total cost of revenue | 77,714 | 75,764 | 66,339 | ||||||||||||||
| Gross profit | 72,668 | 65,533 | 52,727 | ||||||||||||||
| Gross margin | 48.3 | % | 46.4 | % | 44.3 | % | |||||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 22,814 | 20,852 | 16,165 | ||||||||||||||
| Sales and marketing | 22,654 | 23,077 | 20,203 | ||||||||||||||
| General and administrative | 18,207 | 16,887 | 17,785 | ||||||||||||||
| Other operating expense | 1,435 | — | 25 | ||||||||||||||
| Total operating expenses | 65,110 | 60,816 | 54,178 | ||||||||||||||
| Income (loss) from operations | 7,558 | 4,717 | (1,451) | ||||||||||||||
| Operating margin | 5.0 | % | 3.3 | % | (1.2) | % | |||||||||||
| Other income, net: | |||||||||||||||||
Gain on sale of long-term investment | 6,423 | — | — | ||||||||||||||
| Interest income, net | 1,241 | 1,284 | 1,316 | ||||||||||||||
| Other income (expense), net | 70 | 102 | (198) | ||||||||||||||
| Total other income, net | 7,734 | 1,386 | 1,118 | ||||||||||||||
| Income (loss) before income taxes | 15,292 | 6,103 | (333) | ||||||||||||||
| Provision for income taxes | 415 | 339 | 502 | ||||||||||||||
| Net income (loss) | $ | 14,877 | $ | 5,764 | $ | (835) | |||||||||||
| Earnings (loss) per share: | |||||||||||||||||
| Basic | $ | 0.14 | $ | 0.05 | $ | (0.01) | |||||||||||
| Diluted | $ | 0.13 | $ | 0.05 | $ | (0.01) | |||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||
| Basic | 106,995 | 105,434 | 102,217 | ||||||||||||||
| Diluted | 110,488 | 110,353 | 102,217 | ||||||||||||||
Page 7
| ARLO TECHNOLOGIES, INC. | ||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (In thousands) | ||
| Three Months Ended | |||||||||||
| March 29, 2026 | March 30, 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | 14,877 | $ | (835) | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Stock-based compensation expense, net of amounts capitalized | 19,734 | 17,012 | |||||||||
| Depreciation and amortization | 1,697 | 829 | |||||||||
Gain on sale of long-term investment | (6,423) | — | |||||||||
| Allowance for credit losses and non-cash changes to reserves | 949 | 416 | |||||||||
| Deferred income taxes | 241 | (155) | |||||||||
| Discount accretion on investments and other | (57) | (657) | |||||||||
Changes in assets and liabilities, net of assets acquired: | |||||||||||
| Accounts receivable, net | (12,490) | 11,287 | |||||||||
| Inventories | (1,828) | 5,648 | |||||||||
| Prepaid expenses and other assets | 1,481 | 354 | |||||||||
| Accounts payable | (3,622) | (14,983) | |||||||||
| Deferred revenue | 14,811 | 15,597 | |||||||||
| Accrued and other liabilities | (1,507) | (3,594) | |||||||||
| Net cash provided by operating activities | 27,863 | 30,919 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment, including capitalized software | (2,419) | (2,803) | |||||||||
| Purchases of short-term investments | (14,825) | (44,049) | |||||||||
| Purchase of long-term investment | — | (12,500) | |||||||||
Acquisition of business | (36,000) | — | |||||||||
| Proceeds from maturities of short-term investments | 19,988 | 45,000 | |||||||||
Proceeds from sale of long-term investment | 18,923 | — | |||||||||
Net cash used in investing activities | (14,333) | (14,352) | |||||||||
| Cash flows from financing activities: | |||||||||||
Proceeds from employee stock plans | — | 649 | |||||||||
Repurchases of common stock | (7,334) | (15,239) | |||||||||
| Net cash used in financing activities | (7,334) | (14,590) | |||||||||
| Net increase in cash and cash equivalents | 6,196 | 1,977 | |||||||||
Cash and cash equivalents at beginning of period | 146,440 | 82,032 | |||||||||
Cash and cash equivalents at end of period | $ | 152,636 | $ | 84,009 | |||||||
Non-cash investing and financing activities: | |||||||||||
| Purchases of property and equipment included in accounts payable and accrued liabilities | $ | 463 | $ | 1,164 | |||||||
| Stock-based compensation expense capitalized for software development | $ | 305 | $ | 601 | |||||||
Stock repurchases included in accounts payable | $ | 1,021 | $ | — | |||||||
Page 8
| ARLO TECHNOLOGIES, INC. | ||
| RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) | ||
| (In thousands, except percentage data) | ||
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | December 31, 2025 | March 30, 2025 | |||||||||||||||
| GAAP gross profit: | |||||||||||||||||
| Subscriptions and services | $ | 75,417 | $ | 73,978 | $ | 56,584 | |||||||||||
| Products | (2,749) | (8,445) | (3,857) | ||||||||||||||
| Total GAAP gross profit | 72,668 | 65,533 | 52,727 | ||||||||||||||
| GAAP gross margin: | |||||||||||||||||
| Subscriptions and services | 83.7 | % | 82.8 | % | 82.2 | % | |||||||||||
| Products | (4.6) | % | (16.3) | % | (7.7) | % | |||||||||||
| Total GAAP gross margin | 48.3 | % | 46.4 | % | 44.3 | % | |||||||||||
Stock-based compensation - Subscriptions and services cost | 300 | 242 | 361 | ||||||||||||||
Stock-based compensation - Products cost | 1,074 | 963 | 756 | ||||||||||||||
| Amortization of software development cost | 1,256 | 864 | 272 | ||||||||||||||
| Non-GAAP gross profit: | |||||||||||||||||
| Subscriptions and services | 76,973 | 75,084 | 57,217 | ||||||||||||||
| Products | (1,675) | (7,482) | (3,101) | ||||||||||||||
| Total Non-GAAP gross profit | $ | 75,298 | $ | 67,602 | $ | 54,116 | |||||||||||
| Non-GAAP gross margin: | |||||||||||||||||
| Subscriptions and services | 85.4 | % | 84.0 | % | 83.1 | % | |||||||||||
| Products | (2.8) | % | (14.4) | % | (6.2) | % | |||||||||||
| Total Non-GAAP gross margin | 50.1 | % | 47.8 | % | 45.5 | % | |||||||||||
| GAAP net income (loss) | $ | 14,877 | $ | 5,764 | $ | (835) | |||||||||||
| Stock-based compensation expense | 19,734 | 17,200 | 17,012 | ||||||||||||||
| Depreciation and amortization | 1,697 | 1,345 | 829 | ||||||||||||||
Acquisition-related expense | 1,329 | — | — | ||||||||||||||
| Other operating expense | 106 | — | 25 | ||||||||||||||
Gain on sale of long-term investment | (6,423) | — | — | ||||||||||||||
| Interest income, net | (1,241) | (1,284) | (1,316) | ||||||||||||||
| Other (income) expense, net | (70) | (102) | 198 | ||||||||||||||
| Provision for income taxes | 415 | 339 | 502 | ||||||||||||||
| Adjusted EBITDA | $ | 30,424 | $ | 23,262 | $ | 16,415 | |||||||||||
| Adjusted EBITDA margin | 20.2 | % | 16.5 | % | 13.8 | % | |||||||||||
Page 9
| ARLO TECHNOLOGIES, INC. | ||
| RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) (CONTINUED) | ||
| (In thousands, except percentage and per share data) | ||
| Three Months Ended | |||||||||||||||||
| March 29, 2026 | December 31, 2025 | March 30, 2025 | |||||||||||||||
| GAAP net income (loss) | $ | 14,877 | $ | 5,764 | $ | (835) | |||||||||||
| Stock-based compensation expense | 19,734 | 17,200 | 17,012 | ||||||||||||||
Gain on sale of long-term investment | (6,423) | — | — | ||||||||||||||
| Others | 2,776 | 949 | 297 | ||||||||||||||
| Non-GAAP net income | $ | 30,964 | $ | 23,913 | $ | 16,474 | |||||||||||
GAAP earnings (loss) per share - basic | $ | 0.14 | $ | 0.05 | $ | (0.01) | |||||||||||
| Stock-based compensation expense | 0.18 | 0.16 | 0.16 | ||||||||||||||
| Gain on sale of long-term investment | (0.06) | — | — | ||||||||||||||
| Others | 0.02 | 0.01 | — | ||||||||||||||
| Non-GAAP EPS - diluted | $ | 0.28 | $ | 0.22 | $ | 0.15 | |||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||
| Basic | 106,995 | 105,434 | 102,217 | ||||||||||||||
| Diluted | 110,488 | 110,353 | 108,285 | ||||||||||||||
| Free cash flow: | |||||||||||||||||
| Net cash provided by operating activities | $ | 27,863 | $ | 19,770 | $ | 30,919 | |||||||||||
| Less: purchases of property and equipment, including capitalized software | (2,419) | (1,830) | (2,803) | ||||||||||||||
Free cash flow (1) | $ | 25,444 | $ | 17,940 | $ | 28,116 | |||||||||||
Free cash flow margin (1) | 16.9 | % | 12.7 | % | 23.6 | % | |||||||||||
_________________________
(1) Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue.
Page 10
| ARLO TECHNOLOGIES, INC. | ||
SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) | ||
| (In thousands, except headcount and per share data) | ||
As of and for the three months ended | |||||||||||||||||||||||||||||
| March 29, 2026 | December 31, 2025 | September 28, 2025 | June 29, 2025 | March 30, 2025 | |||||||||||||||||||||||||
| Cash, cash equivalents and short-term investments | $ | 167,498 | $ | 166,425 | $ | 165,544 | $ | 160,401 | $ | 153,106 | |||||||||||||||||||
| Accounts receivable, net | $ | 52,174 | $ | 39,666 | $ | 76,698 | $ | 61,450 | $ | 46,054 | |||||||||||||||||||
| Days sales outstanding | 31 | 26 | 50 | 43 | 34 | ||||||||||||||||||||||||
| Inventories | $ | 43,958 | $ | 41,185 | $ | 44,371 | $ | 30,877 | $ | 34,559 | |||||||||||||||||||
| Inventory turns | 5.7 | 5.9 | 6.4 | 7.7 | 6.3 | ||||||||||||||||||||||||
| Weeks of channel inventory: | |||||||||||||||||||||||||||||
| U.S. retail channel | 13.2 | 10.1 | 12.5 | 12.5 | 12.8 | ||||||||||||||||||||||||
| U.S. distribution channel | 9.5 | 3.0 | 5.5 | 11.0 | 12.6 | ||||||||||||||||||||||||
| APAC distribution channel | 8.6 | 5.2 | 3.7 | 8.2 | 8.4 | ||||||||||||||||||||||||
| Deferred revenue (current and non-current) | $ | 53,426 | $ | 38,615 | $ | 40,515 | $ | 42,544 | $ | 43,177 | |||||||||||||||||||
Cumulative registered accounts (1) | 13,052 | 12,141 | 11,792 | 11,237 | 10,930 | ||||||||||||||||||||||||
Cumulative paid accounts (2) | 6,005 | 5,687 | 5,396 | 5,115 | 4,897 | ||||||||||||||||||||||||
Annual recurring revenue (ARR) (3) | $ | 356,921 | $ | 330,489 | $ | 323,150 | $ | 315,655 | $ | 276,357 | |||||||||||||||||||
| Headcount | 369 | 376 | 374 | 382 | 369 | ||||||||||||||||||||||||
Diluted shares | 110,488 | 110,353 | 109,638 | 108,061 | 108,285 | ||||||||||||||||||||||||
_________________________
(1) Registered accounts at the end of a particular period are defined as the number of unique registered accounts on our platforms. The number of registered accounts does not directly correspond to the number of users. A single account may be shared by multiple users (which we consider as one account) and a single user may have multiple accounts (which we consider as multiple accounts).
(2) Paid accounts at the end of a particular period are defined as any account worldwide where a subscription-based or otherwise recurring service fee was collected by Arlo (either directly from a user or from a partner).
(3) ARR represents and is defined as the annualized paid subscriptions and services revenue we expect to recognize from subscription contracts, as calculated by taking the average paid subscriptions and services revenue per paid account of the reporting period multiplied by the number of paid accounts at the end of the reporting period.
Page 11
REVENUE BY GEOGRAPHY
(In thousands, except percentage data)
| Three Months Ended | ||||||||||||||||||||||||||
| March 29, 2026 | December 31, 2025 | March 30, 2025 | ||||||||||||||||||||||||
| Americas | $ | 83,986 | 55.9 | % | $ | 103,910 | 73.5 | % | $ | 70,097 | 58.9 | % | ||||||||||||||
| EMEA | 60,665 | 40.3 | % | 31,583 | 22.4 | % | 42,895 | 36.0 | % | |||||||||||||||||
| APAC | 5,731 | 3.8 | % | 5,804 | 4.1 | % | 6,074 | 5.1 | % | |||||||||||||||||
| Total | $ | 150,382 | 100.0 | % | $ | 141,297 | 100.0 | % | $ | 119,066 | 100.0 | % | ||||||||||||||
Page 12
FAQ
How did Arlo Technologies (ARLO) perform in Q1 2026?
Arlo delivered record Q1 2026 results, with strong revenue mix and higher profitability. Subscriptions and services revenue reached $90.1 million, up 30.9% year over year, ARR rose to $356.9 million, and adjusted EBITDA climbed to $30.4 million with a 20.2% margin.
How fast is Arlo Technologies’ subscription business growing?
Arlo’s subscription business is growing rapidly. Subscriptions and services revenue was $90.1 million in Q1 2026, up 30.9% year over year, accounting for 59.9% of total revenue. Annual recurring revenue reached $356.9 million, a 29.2% year-over-year increase, supported by 6.0 million cumulative paid accounts.
What guidance did Arlo Technologies give for Q2 2026?
For Q2 2026, Arlo expects revenue between $145 million and $155 million. The company guides GAAP diluted EPS to a range of $0.00 to $0.06 and non-GAAP diluted EPS to $0.17 to $0.23, excluding stock-based compensation and certain other items from the non-GAAP figures.
What strategic actions did Arlo Technologies take in Q1 2026?
In Q1 2026, Arlo acquired Aloe Care Health, aiming to expand AI-powered aging-in-place services. The company also repurchased $8.0 million of its common stock under a $50 million authorization and sold its Origin Wireless investment, realizing a $6.4 million gain and a 51% return.
How strong is Arlo Technologies’ balance sheet and cash position?
Arlo ended Q1 2026 with $167.5 million in cash, cash equivalents and short-term investments, up $14.4 million year over year. Free cash flow was $25.4 million, and total stockholders’ equity increased to $159.4 million, providing flexibility for acquisitions, product investment, and share repurchases.