Earnings release
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Arlo Reports Second Quarter 2026 Results AUGUST 6 , 2026 CARLSBAD , Calif .-- ( BUSINESS WIRE ) -- Arlo Technologies , Inc. ( NYSE : ARLO ) , a leading smart home security platform company , today reported financial results for the second quarter ended June 28 , 2026 . " We delivered outstanding financial results in the period with record total revenue of $ 156 million , up 21 % year over year and record adjusted EBITDA of $ 31 million with EBITDA margin of 20 % . Continued strength in subscriptions and services revenue drove the top and bottom - line growth , resulting in record levels of both consolidated non - GAAP gross margin and non - GAAP net income . As a result , we are increasing our annual guidance on both total revenue and EPS for the year , " said Matthew McRae , Chief Executive Officer of Arlo Technologies . " Our operational execution is best - in - class , and the Arlo brand gained further recognition on Newsweek's list of the Most Trustworthy Companies in America . We are proud that our exceptional user experience and trusted lifelong customer relationships are catalysts for our strategic partners to make Arlo their trusted technology brand of choice for safety and security solutions . " Financial Summary • Record subscriptions and services revenue of $ 93.0 million , growing 19.0 % year over year , accounting for 59.7 % of total revenues . • Ended with annual recurring revenue ( ARR ) ( 2 ) of $ 365.0 million , growing 15.6 % year over year . • GAAP subscriptions and services gross margin of 81.1 % and non - GAAP subscriptions and services gross margin of 84.1 % . • GAAP gross margin of 48.2 % and record non - GAAP gross margin of 50.6 % ; growing 330 and 480 basis points year over year , respectively . • Record adjusted EBITDA of $ 30.6 million , up 70.3 % year over year with adjusted EBITDA margin of 19.6 % . • GAAP EPS of $ 0.03 and non - GAAP EPS of $ 0.28 , including the tariff refund impact of $ 0.07 . • Cumulative paid accounts increased to 6.3 million , growing 23.2 % year over year . ⚫ Free cash flow ( FCF ) of $ 33.9 million with FCF margin of 11.1 % in the first half of 2026 . • Cash and cash equivalents and short - term investments of $ 141.1 million , including the cash outflows for the acquisition of Aloe Care Health and stock repurchases . Business Highlights • Repurchased $ 22 million of common stock during the second quarter , as part of the authorized stock repurchase program of $ 50 million . • Recognized by Newsweek as one of the Most Trustworthy Companies in America for 2026 in the Appliances and Electronics Category . • Announced expanded partnership between Aloe Care Health and Home Helpers Home Care to deploy a new Al- powered wellness service . Three Months Ended June 28 , 2026 March 29 , 2026 June 29 , 2025 Six Months Ended June 28 , June 29 , 2026 2025 Revenue $ ( In thousands , except percentage and per share data ) 155,937 $ 150,382 $ 129,405 $ 306,319 $ 248,471 GAAP gross margin ( 1 ) Non - GAAP gross margin 48.2 % 50.6 % 48.3 % 50.1 % 44.9 % 45.8 % 48.3 % 50.3 % 44.6 % 45.7 % GAAP EPS - diluted $ ( 1 ) Non - GAAP EPS - diluted 0.03 $ 0.28 $ 0.13 $ 0.28 $ 0.03 $ 0.17 $ 0.16 $ 0.56 $ 0.02 0.33 ( 1 ) 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 . ( 2 ) 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
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the reporting period multiplied by the number of paid accounts at the end of the reporting period. (3)FCF is calculated as net cash provided by operating activities less capital expenditures. FCF margin is the FCF divided by revenue. The third quarter and full year 2026 Outlook A reconciliation of our outlook on a GAAP and non-GAAP basis is provided for the three months ended September 27, 2026 and full year 2026 in the following table: Third Quarter 2026 Full Year 2026 Revenue EPS - diluted Revenue EPS - diluted (In millions) (In millions) GAAP $140 - $150 $(0.06) - $0.00 $580 - $600 $0.11 - $0.21 Adjustments for stock-based compensation expense and others — $0.23 — $0.79 Non-GAAP $140 - $150 $0.17 - $0.23 $580 - $600 $0.90 - $1.00 _________________________ (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 non-GAAP EPS outlook range above includes an expected tariff refund, all of which we expect will be reinvested in growth initiatives to support our subscriptions and services business. Investor Conference Call / Webcast Details Arlo will review the second quarter 2026 results and discuss management’s expectations for the third quarter and full year 2026 today, Thursday, August 6, 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 (833) 461-5787. The international dial-in number for the live audio call is (585) 542-9983. The conference ID for the call is 430549116. 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. Source: Arlo-F ARLO TECHNOLOGIES, INC. (4) (5)
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UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) As of June 28, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 101,382$ 146,440 Short-term investments 39,749 19,985 Accounts receivable, net 63,607 39,666 Inventories 48,415 41,185 Restricted cash 1,920 — Prepaid expenses and other current assets 17,577 13,210 Total current assets 272,650 260,486 Property and equipment, net 15,976 13,158 Operating lease right-of-use assets, net 8,180 9,195 Goodwill 47,936 11,038 Intangible assets, net 25,713 — Long-term investment — 12,500 Other non-current assets 4,127 4,171 Total assets $ 374,582$ 310,548 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 50,832$ 42,826 Deferred revenue 50,842 37,139 Accrued liabilities 92,782 92,372 Total current liabilities 194,456 172,337 Non-current operating lease liabilities 5,716 6,743 Other non-current liabilities 15,885 3,627 Total liabilities 216,057 182,707 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: 107,560,075 at June 28, 2026 and 105,030,947 at December 31, 2025 107 105 Additional paid-in capital 523,552 510,759 Accumulated other comprehensive income — 16 Accumulated deficit (365,134) (383,039) Total stockholders’ equity 158,525 127,841 Total liabilities and stockholders’ equity $ 374,582$ 310,548 ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except percentage and per share data) Three Months Ended Six Months Ended June 28, 2026 March 29, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Revenue: Subscriptions and services $ 93,047$ 90,099$ 78,175$183,146$147,024 Products 62,890 60,283 51,230 123,173 101,447 Total revenue 155,937 150,382 129,405 306,319 248,471 Cost of revenue: Subscriptions and services 17,582 14,682 12,235 32,264 24,500
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Products 63,139 63,032 59,095 126,171 113,169 Total cost of revenue 80,721 77,714 71,330 158,435 137,669 Gross profit 75,216 72,668 58,075 147,884 110,802 Operating expenses: Research and development 23,658 22,814 18,489 46,472 34,654 Sales and marketing 24,085 22,654 21,103 46,739 41,306 General and administrative 23,128 18,207 16,334 41,335 34,119 Other operating expense 1,889 1,435 216 3,324 241 Total operating expenses 72,760 65,110 56,142 137,870 110,320 Income from operations 2,456 7,558 1,933 10,014 482 Other income, net: Gain on sale of long-term investment — 6,423 — 6,423 — Interest income, net 979 1,241 1,344 2,220 2,660 Other income (expense), net 25 70 (407) 95 (605) Total other income, net 1,004 7,734 937 8,738 2,055 Income before income taxes 3,460 15,292 2,870 18,752 2,537 Provision (benefit) for income taxes 432 415 (254) 847 248 Net income $ 3,028$ 14,877$ 3,124$ 17,905$ 2,289 Earnings per share: Basic $ 0.03$ 0.14$ 0.03$ 0.17$ 0.02 Diluted $ 0.03$ 0.13$ 0.03$ 0.16$ 0.02 Weighted-average common shares outstanding: Basic 108,123 106,995 103,885 107,569 103,060 Diluted 110,819 110,488 108,061 111,094 107,692 ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended June 28, 2026 June 29, 2025 Cash flows from operating activities: Net income $ 17,905$ 2,289 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense, net of amounts capitalized 41,444 31,995 Depreciation and amortization 4,625 1,687 Gain on sale of long-term investment (6,423) — Allowance for credit losses and non-cash changes to reserves 1,351 — Deferred income taxes 161 (107) Discount accretion on investments and other (249) (1,390) Changes in assets and liabilities, net of effect of acquisitions: Accounts receivable, net (23,943) (4,188) Inventories (4,119) 9,826 Prepaid expenses and other assets (4,356) (2,758) Accounts payable 6,063 (13,888) Deferred revenue 13,155 14,956 Accrued and other liabilities (6,342) 1,327 Net cash provided by operating activities 39,272 39,749 Cash flows from investing activities: Purchases of property and equipment, including capitalized software (5,326) (5,778) Purchases of short-term investments (44,520) (83,390) Purchase of long-term investment — (12,500) Acquisitions of businesses, net of cash acquired (48,155) — Proceeds from maturities of short-term investments 24,989 65,000 Proceeds from sale of long-term investment 18,923 — Net cash used in investing activities (54,089) (36,668)
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Cash flows from financing activities: Proceeds from employee stock plans 1,955 2,280 Repurchases of common stock (30,276) (16,149) Net cash used in financing activities (28,321) (13,869) Net decrease in cash and cash equivalents (43,138) (10,788) Cash, cash equivalents, and restricted cash, at beginning of period 146,440 82,032 Cash, cash equivalents, and restricted cash, at end of period $ 103,302$ 71,244 Reconciliation of cash, cash equivalents, and restricted cash to Consolidated Balance Sheets Cash and cash equivalents $ 101,382$ 71,244 Restricted cash 1,920 — Total cash, cash equivalents, and restricted cash $ 103,302$ 71,244 Non-cash investing and financing activities: Purchases of property and equipment included in accounts payable and accrued liabilities $ 382$ 566 Stock-based compensation expense capitalized for software development $ 778$ 868 ARLO TECHNOLOGIES, INC. RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) (In thousands, except percentage data) Three Months Ended Six Months Ended June 28, 2026 March 29, 2026 June 29, 2025 June 28, 2026 June 29, 2025 GAAP gross profit: Subscriptions and services $ 75,465$ 75,417$ 65,940$150,882$122,524 Products (249) (2,749) (7,865) (2,998) (11,722) Total GAAP gross profit 75,216 72,668 58,075 147,884 110,802 Stock-based compensation - Subscriptions and services cost 262 300 99 562 460 Stock-based compensation - Products cost 874 1,074 786 1,948 1,542 Amortization of software development cost 1,275 1,256 341 2,531 613 Amortization of intangible assets 1,217 — — 1,217 — Non-GAAP gross profit: Subscriptions and services 78,219 76,973 66,380 153,975 123,597 Products 625 (1,675) (7,079) 167 (10,180) Total Non-GAAP gross profit $ 78,844$ 75,298$ 59,301$154,142$113,417 GAAP net income $ 3,028$ 14,877$ 3,124$ 17,905$ 2,289 Stock-based compensation expense 21,710 19,734 14,983 41,444 31,995 Depreciation and amortization 2,928 1,697 858 4,625 1,687 Acquisition-related expense 1,667 1,329 — 2,996 — Other operating expense 1,871 106 216 1,977 241 Gain on sale of long-term investment — (6,423) — (6,423) — Interest income, net (979) (1,241) (1,344) (2,220) (2,660) Other (income) expense, net (25) (70) 407 (95) 605 Provision (benefit) for income taxes 432 415 (254) 847 248 Adjusted EBITDA $ 30,632$ 30,424$ 17,990$ 61,056$ 34,405 ARLO TECHNOLOGIES, INC. RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) (CONTINUED) (In thousands, except percentage and per share data) Three Months Ended Six Months Ended June 28, 2026 March 29, 2026 June 29, 2025 June 28, 2026 June 29, 2025 GAAP net income $ 3,028$ 14,877$ 3,124$ 17,905$ 2,289 Stock-based compensation expense 21,710 19,734 14,983 41,444 31,995
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Gain on sale of long-term investment — (6,423) — (6,423) — Others 6,360 2,776 708 9,136 1,005 Non-GAAP net income $ 31,098$ 30,964$ 18,815$ 62,062$ 35,289 GAAP EPS - diluted $ 0.03$ 0.13$ 0.03$ 0.16$ 0.02 Stock-based compensation expense 0.20 0.18 0.14 0.38 0.30 Gain on sale of long-term investment — (0.06) — (0.06) — Others 0.05 0.03 — 0.08 0.01 Non-GAAP EPS - diluted $ 0.28$ 0.28$ 0.17$ 0.56$ 0.33 Weighted-average common shares outstanding: Basic 108,123 106,995 103,885 107,569 103,060 Diluted 110,819 110,488 108,061 111,094 107,692 Free cash flow: Net cash provided by operating activities$ 11,408$ 27,863$ 8,830$ 39,272$ 39,749 Less: purchases of property and equipment, including capitalized software (2,907) (2,419) (2,975) (5,326) (5,778) Free cash flow $ 8,501$ 25,444$ 5,855$ 33,946$ 33,971 Free cash flow margin 5.5% 16.9% 4.5% 11.1% 13.7% _________________________ (1)Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Free cash flow margin is the free cash flow divided by revenue. ARLO TECHNOLOGIES, INC. SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED) (In thousands, except inventory turns, weeks of channel inventory, headcount, and per share data) As of and for the three months ended June 28, 2026 March 29, 2026 December 31, 2025 September 28, 2025 June 29, 2025 Cash, cash equivalents and short-term investments $ 141,131$ 167,498$ 166,425$ 165,544$ 160,401 Accounts receivable, net $ 63,607$ 52,174$ 39,666$ 76,698$ 61,450 Days sales outstanding 37 31 26 50 43 Inventories $ 48,415$ 43,958$ 41,185$ 44,371$ 30,877 Inventory turns 5.2 5.7 5.9 6.4 7.7 Weeks of channel inventory: U.S. retail channel 9.6 13.2 10.1 12.5 12.5 U.S. distribution channel 5.9 9.5 3.0 5.5 11.0 APAC distribution channel 5.5 8.6 5.2 3.7 8.2 Deferred revenue (current and non-current) $ 51,799$ 53,426$ 38,615$ 40,515$ 42,544 Cumulative registered accounts 13,569 13,052 12,141 11,792 11,237 Cumulative paid accounts 6,303 6,005 5,687 5,396 5,115 Annual recurring revenue (ARR) $ 364,959$ 356,921$ 330,489$ 323,150$ 315,655 Headcount 384 369 376 374 382 Diluted shares 110,819 110,488 110,353 109,638 108,061 _________________________ (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. (1) (1) (1) (2) (3)
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REVENUE BY GEOGRAPHY (In thousands, except percentage data) Three Months Ended Six Months Ended June 28, 2026 March 29, 2026 June 29, 2025 June 28, 2026 June 29, 2025 Americas $88,96957.1%$83,98655.9%$81,90263.3%$172,95556.5%$151,99961.2% EMEA 61,47939.4%60,66540.3%43,32033.5%122,14439.9%86,21534.7% APAC 5,4893.5% 5,7313.8% 4,1833.2%11,2203.6%10,2574.1% Total $155,937100.0%$150,382100.0%$129,405100.0%$306,319100.0%$248,471100.0% Arlo Investor Relations Tahmin Clarke Source: Arlo Technologies, Inc.