GICS Sector : Industrials
Arlo Technologies, Inc., together with its subsidiaries, provides a cloud-based platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific regions.It combines an intelligent cloud infrastructure and mobile app with various smart connected devices.The company offers Arlo essential indoor camera; Arlo Go 2 LTE/Wi-Fi security camera; Arlo Q and Arlo Q Plus, an indoor wired solution that allows users to monitor their surroundings; and Arlo Go, an LTE-enabled wire-free camera that provides untethered mobile security.
Arlo Technologies reported a robust fourth quarter with total revenue of $141 million, slightly above guidance, driven by product launches and services business growth. Service revenue hit $89 million, representing 63% of total revenue and growing at 39% year-over-year. The company's non-GAAP EPS came in at $0.22, beating estimates of $0.16. Annual recurring revenue (ARR) reached $330 million, up 28% year-over-year, and EBITDA hit $23 million, up 138% year-over-year.
Publication Date: Mar -07
The company's service revenue growth is attributed to the core business, new subscriptions, and ARPU expansion. Arlo's SaaS performance metrics are impressive, with monthly consolidated churn dropping to 1% in the fourth quarter, and monthly subscriber retention rate at 99%. Average monthly revenue per user (ARPU) grew to $15.30, and these subscriptions generated an outstanding 94% gross margin. The company's non-GAAP subscriptions and services gross margin came in at 84% for the quarter, up 230 basis points when compared to the same period last year.
Arlo's installed base of paid accounts grew to 5.7 million, and the paid account growth aligns with the 23% increase in retail POS volume. The company is well-positioned to continue its growth trajectory, driven by its commitment to data ownership and security, and its strategic partnerships with Samsung and Comcast. Arlo is targeting more than 20% service revenue growth again in 2026 and will invest in new adjacent market segments.
Given Arlo's strong growth prospects, its current valuation metrics appear reasonable. The company's P/E Ratio stands at 98.19, and its P/S Ratio is 2.78. With expected revenue growth of 9.2% next year, the stock may continue to attract investors seeking exposure to the smart home security market. Arlo's ROIC is 4.18%, and its ROE is 12.47%, indicating a decent return on equity.
The company generated $68 million in free cash flow in 2025 and expects it to grow to $80 million in 2026. Arlo's capital allocation plan includes organic investment, share repurchase, and inorganic investment. The company has demonstrated its commitment to share repurchase, repurchasing over 3.3 million shares last year, and its Board has approved an additional $50 million to repurchase shares.
A Look at Arlo Technologies Inc (ARLO) After 4.6% Gain -- GF Value $10.40 vs Price $13.72
Apr -13
Kurtis Joseph Binder Sells 25,000 Shares of Arlo Technologies (NYSE:ARLO) Stock
Apr -09
Comparing Riskified (NYSE:RSKD) & Arlo Technologies (NYSE:ARLO)
Apr -08
Arlo Technologies, Inc. (NYSE:ARLO) Receives $23.33 Average PT from Analysts
Mar -30
Arlo: Poised To Keep Rallying As Subscribers Grow
Mar -28
Arlo Technologies General Counsel Sells 25000 Shares for $352000 to Cover Taxes
Mar -22
Arlo Technologies (NYSE:ARLO) Board Declares Stock Buyback Plan
Mar -05
Arlo Adopts Stock Repurchase Program
Mar -04
Arlo Technologies' Smart Connected Devices segment growth is driven by increasing adoption of IoT devices, rising demand for home security and automation, growing need for remote monitoring, and advancements in AI-powered camera technology. Additionally, the shift towards smart homes and cities, and increasing awareness of security threats are contributing to the 7% growth rate.
Arlo Technologies, Inc.'s services growth is driven by increasing demand for smart home security solutions, expansion into new markets, and strategic partnerships. The rise of IoT and AI adoption, coupled with growing concerns about home security, are also key contributors. Additionally, Arlo's innovative products and subscription-based model are attracting a growing customer base, fueling revenue growth.
Battery-powered, weather-resistant cameras that can be placed indoors or outdoors to provide a clear view of your home or business.
Indoor cameras that plug into a power outlet and provide a clear view of your home or business.
Wire-free cameras with advanced features like weather resistance, night vision, and motion detection.
A smart doorbell with a built-in speaker and microphone that allows for two-way audio communication.
Wireless, motion-sensing lights that can be placed indoors or outdoors to provide additional security and illumination.
A central hub that connects and manages all Arlo devices, providing a single point of control and monitoring.
Arlo Technologies, Inc. faces moderate threat from substitutes as there are alternative security camera solutions available in the market, but the company's innovative products and strong brand reputation help to mitigate this threat.
Arlo Technologies, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are designed to be user-friendly, making it easy for customers to use and maintain, reducing their bargaining power.
Arlo Technologies, Inc. relies on a few key suppliers for components and manufacturing, which gives them some bargaining power. However, the company's strong relationships with suppliers and its ability to negotiate prices help to mitigate this threat.
The security camera market is highly competitive, and new entrants can easily enter the market with innovative products, posing a significant threat to Arlo Technologies, Inc. The company needs to continuously innovate and improve its products to stay ahead of the competition.
The security camera market is highly competitive, with many established players and new entrants vying for market share. Arlo Technologies, Inc. faces intense rivalry from competitors, which can lead to pricing pressure and reduced market share if the company is not able to differentiate its products and services.
| Value | |
|---|---|
| Debt Weight | 17.05% |
| Debt Cost | 3.95% |
| Equity Weight | 82.95% |
| Equity Cost | 13.31% |
| WACC | 11.71% |
| Leverage | 20.56% |
Value: 1.2
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Yield: 1.0
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