Arlo Reports Fourth Quarter and Full Year 2025 Results

CARLSBAD, Calif.--( BUSINESS WIRE)--Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security platform company, today reported financial results for the fourth quarter and full year ended December 31, 2025.

“Arlo’s subscription services strategy delivered blockbuster results in 2025 generating record levels of subscription revenue and profitability with nearly 30% growth in ARR and subscriptions and services revenue, as well as a 750-basis point improvement in non-GAAP consolidated gross margin for the full year. That success translated into tremendous Adjusted EBITDA growth of over 85% and an Adjusted EBITDA margin of 14% for the full year,” said Matthew McRae, Chief Executive Officer of Arlo Technologies. “And we are excited to announce a partnership with Comcast to provide connected home security solutions to millions of its Xfinity Internet households in the United States. As you can see from the caliber of our strategic relationships, Arlo is the preferred partner in the smart security space and these deals will accelerate our momentum towards achieving our long-range targets.”

Q4 2025 Financial Summary

Full Year 2025 Financial Summary

Three Months Ended

Twelve Months Ended

December 31,

2025

September 28,

2025

December 31,

2024

December 31,

2025

December 31,

2024

(In thousands, except percentage and per share data)

Revenue

141,297

139,529

121,572

529,297

510,886

GAAP gross margin

46.4

40.5

36.9

44.0

36.7

Non-GAAP gross margin (2)

47.8

41.4

37.5

45.1

37.6

GAAP earnings (loss) per share - basic

0.05

0.07

(0.05

)

0.14

(0.31

)

Non-GAAP EPS - diluted (2)

0.22

0.16

0.10

0.70

0.40

(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.

Q1 2026 Outlook (4) (5)

A reconciliation of our outlook on a GAAP and non-GAAP basis is provided for the three months ended March 29, 2026 in the following table:

Revenue

EPS - diluted

(In millions, except per share data)

GAAP

$135 - $145

$0.01 - $0.07

Adjustments for stock-based compensation expense and others

—

$0.16

Non-GAAP

$135 - $145

$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 reduces our product margin. The outlook ranges include the impact of our current estimate on tariff costs.

Investor Conference Call / Webcast Details

Arlo will review the fourth quarter and full-year 2025 results and discuss management’s expectations for the first quarter and full-year 2026 today, Thursday, February 26, 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) 470-1428. The international dial-in number for the live audio call is (646) 844-6383. The conference ID for the call is 913053. A replay of the call will be available via the web at https://investor.arlo.com.

About Arlo Technologies, Inc.

Arlo is an award-winning, industry leader that is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security solutions. Arlo’s deep expertise in AI- and CV-powered analytics, cloud services, user experience and product design, and innovative wireless and RF connectivity enables the delivery of a seamless, smart security experience for Arlo users that is easy to set up and interact with every day. Arlo’s cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. To date, Arlo has launched several categories of award-winning connected devices, software and services. These include wire-free, smart Wi-Fi and LTE-enabled security cameras, video doorbells, floodlights, security system, and Arlo's subscription services: Arlo Secure and Arlo Safe.

With a mission to bring users peace of mind, Arlo is as passionate about protecting user privacy as it is about safeguarding homes and families. Arlo is committed to implementing industry standards for data protection designed to keep users’ personal information private and in their control. Arlo does not monetize personal data, provides enhanced controls for user data, supports privacy legislation, keeps user data safely secure, and puts security at the forefront of company culture.

© 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.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 for Arlo Technologies, Inc.:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate,” “expect,” “believe,” “will,” “may,” “should,” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent our expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding our potential future business, operating performance and financial condition, including descriptions of our expected revenue and profitability (and related timing), GAAP and non-GAAP gross margins, adjusted EBITDA and adjusted EBITDA margins, tax rates, expenses, cash outlook, free cash flow and free cash flow margins; strategic objectives and initiatives; the recurring revenue and services first business model; expectations regarding market expansion and future growth and expectations for 2026 to be a pivotal year for our company; expectations regarding our ability to leverage our strategic partnerships to accelerate our momentum towards achieving our long-range targets; 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; and we may fail to manage costs and cost saving initiatives, the cost of developing new products and manufacturing and distribution of our existing offerings. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

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, gain on early lease termination, amortization of software development cost, depreciation expenses, other non-recurring costs, and the related tax effects. In addition, we use free cash flow as a non-GAAP measure when assessing the sources of liquidity, capital resources, and quality of earnings. We believe that free cash flow is helpful in understanding our capital requirements and provides an additional means to reflect the cash flow trends in our business.

These non-GAAP measures are not in accordance with, or an alternative for GAAP, and may be different from similarly-titled non-GAAP measures used by other companies. We believe that these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. We compensate for the limitations of non-GAAP financial measures by relying upon GAAP results to gain a complete picture of our performance.

In calculating non-GAAP financial measures, we exclude certain items to facilitate a review of the comparability of our operating performance on a period-to-period basis because such items are not, in our view, related to our ongoing operational performance. We use non-GAAP measures to evaluate the operating performance of our business, for comparison with forecasts and strategic plans, and for benchmarking performance externally against competitors. In addition, management’s incentive compensation is determined using certain non-GAAP measures. Since we find these measures to be useful, we believe that investors benefit from seeing results “through the eyes” of management in addition to seeing GAAP results. We believe that these non-GAAP measures, when read in conjunction with our GAAP measures, provide useful information to investors by offering:

The 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: gain on early lease termination, amortization of software development cost, depreciation expenses, other non-recurring costs, and the related tax effects. It is difficult to predict the occurrence or estimate the amount or timing of these items in advance. Although these events are reflected in our GAAP financial statements, these unique transactions may limit the comparability of our on-going operations with prior and future periods. The amounts result from events that often arise from unforeseen circumstances, which often occur outside of the ordinary course of continuing operations. Therefore, the amounts do not accurately reflect the underlying performance of our continuing business operations for the period in which they are incurred.

Source: Arlo-F

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

As of December 31,

2025

2024

ASSETS

Current assets:

Cash and cash equivalents

146,440

82,032

Short-term investments

19,985

69,419

Accounts receivable, net

39,666

57,332

Inventories

41,185

40,633

Prepaid expenses and other current assets

13,210

13,190

Total current assets

260,486

262,606

Property and equipment, net

13,158

4,765

Operating lease right-of-use assets, net

9,195

15,698

Goodwill

11,038

Long-term investment

12,500

—

Other non-current assets

4,171

4,293

Total assets

310,548

298,400

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

42,826

63,784

Deferred revenue

37,139

27,248

Accrued liabilities

92,372

85,730

Total current liabilities

172,337

176,762

Non-current operating lease liabilities

6,743

18,357

Other non-current liabilities

3,627

2,372

Total liabilities

182,707

197,491

Commitments and contingencies

Stockholders’ Equity:

Preferred stock: $0.001 par value; 50,000,000 shares authorized; none issued or outstanding

—

Common stock: $0.001 par value; 500,000,000 shares authorized; shares issued and outstanding: 105,030,947 at December 31, 2025 and 100,885,158 at December 31, 2024

105

101

Additional paid-in capital

510,759

498,739

Accumulated other comprehensive income

Accumulated deficit

(383,039

)

(397,965

)

Total stockholders’ equity

127,841

100,909

Total liabilities and stockholders’ equity

310,548

298,400

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except percentage and per share data)

Three Months Ended

Twelve Months Ended

December 31,

2025

September 28,

2025

December 31,

2024

December 31,

2025

December 31,

2024

Revenue:

Subscriptions and services

89,390

79,942

64,147

316,356

242,998

Products

51,907

59,587

57,425

212,941

267,888

Total revenue

141,297

139,529

121,572

529,297

510,886

Cost of revenue:

Subscriptions and services

15,412

12,424

12,029

52,336

54,613

Products

60,352

70,599

64,689

244,120

268,769

Total cost of revenue

75,764

83,023

76,718

296,456

323,382

Gross profit

65,533

56,506

44,854

232,841

187,504

Gross margin

46.4

40.5

36.9

44.0

36.7

Operating expenses:

Research and development

20,852

18,144

15,267

73,650

73,183

Sales and marketing

23,077

20,459

20,823

84,842

73,723

General and administrative

16,887

15,091

14,304

66,097

72,134

Other operating expense

—

1,940

488

2,181

3,356

Total operating expenses

60,816

55,634

50,882

226,770

222,396

Income (loss) from operations

4,717

872

(6,028

)

6,071

(34,892

)

Operating margin

3.3

0.6

(5.0

1.1

(6.8

Other income, net:

Gain on early lease termination

—

4,144

—

4,144

—

Interest income, net

1,284

1,508

1,303

5,452

5,584

Other income (expense), net

102

503

)

—

(104

)

Total other income, net

1,386

6,155

1,299

9,596

5,480

Income (loss) before income taxes

6,103

7,027

(4,729

)

15,667

(29,412

)

Provision for income taxes

339

154

132

741

1,092

Net income (loss)

5,764

6,873

(4,861

)

14,926

(30,504

)

Earnings (loss) per share:

Basic

0.05

0.07

(0.05

)

0.14

(0.31

)

Diluted

0.05

0.06

(0.05

)

0.14

(0.31

)

Weighted-average common shares outstanding:

Basic

105,434

105,198

100,687

104,203

98,630

Diluted

110,353

109,638

100,687

110,156

98,630

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

2025

2024

Cash flows from operating activities:

Net income (loss)

14,926

(30,504

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation expense, net of amounts capitalized

62,333

68,657

Depreciation and amortization

3,931

3,200

Gain on early lease termination

(4,144

)

—

Allowance for credit losses and non-cash changes to reserves

888

2,085

Deferred income taxes

(216

)

(13

)

Discount accretion on investments and other

(2,662

)

(3,259

)

Changes in assets and liabilities:

Accounts receivable, net

17,653

8,228

Inventories

(1,428

)

(4,510

)

Prepaid expenses and other assets

318

(3,577

)

Accounts payable

(21,068

)

8,289

Deferred revenue

11,064

9,437

Accrued and other liabilities

(2,873

)

(6,727

)

Net cash provided by operating activities

78,722

51,306

Cash flows from investing activities:

Purchases of property and equipment, including capitalized software

(11,826

)

(2,688

)

Purchases of short-term investments

(112,932

)

(205,068

)

Purchase of long-term investment

(12,500

)

—

Proceeds from maturities of short-term investments

165,012

218,596

Net cash provided by investing activities

27,754

10,840

Cash flows from financing activities:

Proceeds related to employee benefit plans

3,531

8,365

Repurchase of common stock

(45,599

)

(4,421

)

Restricted stock unit withholdings

—

(44,711

)

Net cash used in financing activities

(42,068

)

(40,767

)

Net increase in cash, cash equivalents, and restricted cash

64,408

21,379

Cash, cash equivalents, and restricted cash, at beginning of period

82,032

60,653

Cash, cash equivalents, and restricted cash, at end of period

146,440

82,032

Supplemental cash flow information:

Cash paid for income taxes, net

1,219

1,156

Non-cash investing activities:

Purchases of property and equipment included in accounts payable and accrued liabilities

470

708

Stock-based compensation expense capitalized for software development

1,637

—

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED)

(In thousands, except percentage data)

Three Months Ended

Twelve Months Ended

December 31,

2025

September 28,

2025

December 31,

2024

December 31,

2025

December 31,

2024

GAAP gross profit:

Subscriptions and services

73,978

67,518

52,118

264,020

188,385

Products

(8,445

)

(11,012

)

(7,264

)

(31,179

)

(881

)

Total GAAP gross profit

65,533

56,506

44,854

232,841

187,504

GAAP gross margin:

Subscriptions and services

82.8

84.5

81.2

83.5

77.5

Products

(16.3

(18.5

(12.6

(14.6

(0.3

Total GAAP gross margin

46.4

40.5

36.9

44.0

36.7

Stock-based compensation expense - Subscriptions and services cost

242

121

(19

)

823

692

Stock-based compensation expense - Products cost

963

492

426

2,997

3,333

Amortization of software development cost

864

364

290

1,841

744

Others

—

233

—

233

—

Non-GAAP gross profit:

Subscriptions and services

75,084

68,003

52,389

266,684

189,821

Products

(7,482

)

(10,287

)

(6,838

)

(27,949

)

2,452

Total Non-GAAP gross profit

67,602

57,716

45,551

238,735

192,273

Non-GAAP gross margin:

Subscriptions and services

84.0

85.1

81.7

84.3

78.1

Products

(14.4

(17.3

(11.9

(13.1

0.9

Total Non-GAAP gross margin

47.8

41.4

37.5

45.1

37.6

GAAP net income (loss)

5,764

6,873

(4,861

)

14,926

(30,504

)

Stock-based compensation expense

17,200

13,138

14,498

62,333

68,657

Depreciation and amortization

1,345

899

807

3,931

3,200

Other cost and operating expense

—

2,173

488

2,414

3,356

Gain on early lease termination

—

(4,144

)

—

(4,144

)

—

Interest income, net

(1,284

)

(1,508

)

(1,303

)

(5,452

)

(5,584

)

Other (income) expense, net

(102

)

(503

)

—

104

Provision for income taxes

339

154

132

741

1,092

Adjusted EBITDA

23,262

17,082

9,765

74,749

40,321

Adjusted EBITDA margin

16.5

12.2

8.0

14.1

7.9

ARLO TECHNOLOGIES, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (UNAUDITED) (CONTINUED)

(In thousands, except percentage and per share data)

Three Months Ended

Twelve Months Ended

December 31,

2025

September 28,

2025

December 31,

2024

December 31,

2025

December 31,

2024

GAAP net income (loss)

5,764

6,873

(4,861

)

14,926

(30,504

)

Stock-based compensation expense

17,200

13,138

14,498

62,333

68,657

Gain on early lease termination

—

(4,144

)

—

(4,144

)

—

Others

949

2,190

778

4,144

4,100

Non-GAAP net income

23,913

18,057

10,415

77,259

42,253

GAAP earnings (loss) per share - basic

0.05

0.07

(0.05

)

0.14

(0.31

)

Stock-based compensation expense

0.16

0.11

0.15

0.57

0.66

Gain on early lease termination

—

(0.04

)

—

(0.04

)

—

Others

0.01

0.02

—

0.03

0.05

Non-GAAP EPS - diluted

0.22

0.16

0.10

0.70

0.40

Weighted-average common shares outstanding:

Basic

105,434

105,198

100,687

104,203

98,630

Diluted

110,353

109,638

107,125

110,156

106,695

Free cash flow:

Net cash provided by operating activities

19,770

19,202

6,671

78,722

51,306

Less: purchases of property and equipment, including capitalized software

(1,830

)

(4,218

)

(1,076

)

(11,826

)

(2,688

)

Free cash flow (1)

17,940

14,984

5,595

66,896

48,618

Free cash flow margin (1)

12.7

10.7

4.6

12.6

9.5

(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 headcount and per share data)

As of and for the three months ended

December 31,

2025

September 28,

2025

June 29,

2025

March 30,

2025

December 31,

2024

Cash, cash equivalents and short-term investments

166,425

165,544

160,401

153,106

151,451

Accounts receivable, net

39,666

76,698

61,450

46,054

57,332

Days sales outstanding

Inventories

41,185

44,371

30,877

34,559

40,633

Inventory turns

5.9

6.4

7.7

6.3

6.4

Weeks of channel inventory:

U.S. retail channel

10.1

12.5

12.8

7.7

U.S. distribution channel

3.0

5.5

11.0

12.6

9.4

APAC distribution channel

5.2

3.7

8.2

8.4

8.5

Deferred revenue

(current and non-current)

38,615

40,515

42,544

43,177

27,551

Cumulative registered accounts (1)

12,141

11,792

11,237

10,930

10,823

Cumulative paid accounts (2)

5,687

5,396

5,115

4,897

4,599

Annual recurring revenue (ARR) (3)

330,489

323,150

315,655

276,357

257,332

Headcount

376

374

382

369

360

Non-GAAP diluted shares

110,353

109,638

108,061

108,285

107,125

(1)

Registered accounts at the end of a particular period are defined as the number of unique registered accounts on the Arlo platform. The number of registered accounts on the Arlo platform does not directly correspond to the number of users. A single account may be shared by multiple users (which we consider as one account) and a single user may have multiple accounts (which we consider as multiple accounts).

(2)

Paid accounts at the end of a particular period are defined as any account worldwide where a subscription-based or otherwise recurring service fee was collected by Arlo (either directly from a user or from a partner).

(3)

REVENUE BY GEOGRAPHY

(In thousands, except percentage data)

Three Months Ended

Twelve Months Ended

December 31,

2025

September 28,

2025

December 31,

2024

December 31,

2025

December 31,

2024

Americas

103,910

73.5

83,831

60.1

70,309

57.8

339,740

64.2

266,075

52.1

EMEA

31,583

22.4

49,602

35.5

44,841

36.9

167,400

31.6

220,821

43.2

APAC

5,804

4.1

6,096

4.4

6,422

5.3

22,157

4.2

23,990

4.7

Total

141,297

100.0

139,529

100.0

121,572

100.0

529,297

100.0

510,886

100.0