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Arlo Technologies Inc (ARLO)
NYSE:ARLO
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Arlo Technologies
(NYSE:ARLO)
68Neutral
Positive Factors
Revenue Performance
Arlo Technologies reported revenue of $121.6 million compared to the estimate of $120.4 million.
Subscriber Growth
The significant increase in paid subscribers, with 364K new additions, demonstrates Arlo Technologies' ability to expand its customer base effectively.
Negative Factors
Forecast Concerns
ARLO is projecting fourth quarter revenue of $116 million to $126 million, which is down sequentially and drawing much of the negative reaction in ARLO’s stock price.
Hardware Pricing Strategy
Arlo Technologies has managed to maintain an elite LTV/CAC ratio of 4:1 despite negative gross margins from its hardware pricing strategy.
Arlo Technologies (ARLO) vs. S&P 500 (SPY)
Market Cap
$909.65M
Dividend YieldN/A
Average Volume (3M)1.17M
Price to Earnings (P/E)―
Beta (1Y)1.77
Revenue Growth4.01%
EPS Growth-27.92%
CountryUS
Employees360
SectorIndustrials
Sector Strength70
IndustrySecurity & Protection Services
Share Statistics
EPS (TTM)-0.31
Shares Outstanding102,437,935
10 Day Avg. Volume1,094,816
30 Day Avg. Volume1,169,827
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.11
Price to Cash Flow (P/CF)40.40
P/FCF Ratio48.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$20.00Price Target Upside125.23% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Arlo Technologies Business Overview & Revenue Model
Company DescriptionArlo Technologies, Inc. is a leading provider in the smart home security industry, specializing in wireless, connected devices that offer advanced monitoring and control capabilities. The company designs, develops, and manufactures a range of home security products, including wireless security cameras, video doorbells, and floodlight cameras. These products are known for their high-quality video and audio performance, user-friendly interfaces, and seamless integration with smart home ecosystems. Arlo's mission is to provide innovative security solutions that offer peace of mind for consumers and businesses alike.
How the Company Makes MoneyArlo Technologies generates revenue primarily through the sale of its smart home security products. The company's key revenue streams include the direct sale of hardware devices, such as wireless cameras, doorbells, and other security-related products. Additionally, Arlo offers subscription-based services that provide enhanced features, cloud storage, and additional support for users, which serve as an important recurring revenue source. The company also benefits from strategic partnerships with retailers and technology companies, which help expand its market reach and drive sales. By leveraging its brand reputation and continuous product innovation, Arlo maintains a competitive position in the growing smart home security market.
Arlo Technologies Financial Statement Overview
Summary
Arlo Technologies exhibits a mixed financial performance with notable revenue growth and improving cash flow generation. Despite these positives, the company continues to face profitability challenges, reflected in the negative net income and EBIT margins. The balance sheet remains stable with low leverage, but the company's inability to turn a profit highlights the need for strategic adjustments to enhance long-term financial health.Income Statement
Arlo Technologies has demonstrated revenue growth with a positive trend over the years, notably from $357M in 2020 to $510M in 2024, indicative of a strong market position. The gross profit margin improved significantly from 15.5% in 2020 to 36.7% in 2024, reflecting increased operational efficiency. However, the company consistently reported negative net income, with a slight improvement from -$101M in 2020 to -$30M in 2024. EBIT and EBITDA margins remain negative, indicating ongoing challenges in achieving profitability.65
Positive
Balance Sheet
The balance sheet shows a stable equity base with stockholders' equity growing from $134M in 2020 to $101M in 2024. The debt-to-equity ratio has remained low, indicating low leverage and financial risk. However, the equity ratio declined from 32.3% in 2020 to 33.8% in 2024, suggesting a slight decrease in financial stability. Overall, the balance sheet presents a solid but not strong financial position.60
Neutral
Cash Flow
Arlo Technologies has shown improvement in cash flow generation, with operating cash flow turning positive and growing from -$46M in 2020 to $51M in 2024. The free cash flow has also improved from -$50M in 2020 to $48M in 2024, indicating better capital management and operational efficiency. The company maintains a healthy cash balance, supporting its strategic initiatives.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 510.89M | 491.18M | 490.41M | 435.14M | 357.15M | Gross Profit |
| 187.50M | 167.56M | 136.03M | 108.03M | 55.39M | EBIT |
| -34.89M | -24.21M | -55.07M | -49.43M | -104.91M | EBITDA |
| -34.89M | -20.24M | -50.88M | -45.05M | -94.66M | Net Income Common Stockholders |
| -30.50M | -22.04M | -56.63M | -56.03M | -101.25M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 151.45M | 136.50M | 113.72M | 175.75M | 206.12M | Total Assets |
| 298.40M | 285.54M | 272.20M | 347.49M | 413.97M | Total Debt |
| 18.36M | 17.02M | 23.47M | 21.47M | 25.03M | Net Debt |
| -63.67M | -39.50M | -60.55M | -154.28M | -161.10M | Total Liabilities |
| 197.49M | 182.26M | 184.51M | 234.84M | 280.20M | Stockholders Equity |
| 100.91M | 103.28M | 87.69M | 112.65M | 133.77M |
| Cash Flow | Free Cash Flow | |||
| 48.62M | 35.45M | -47.97M | -25.46M | -50.42M | Operating Cash Flow |
| 51.31M | 38.30M | -45.96M | -23.20M | -46.53M | Investing Cash Flow |
| 10.84M | -50.69M | -31.77M | 17.73M | -3.98M | Financing Cash Flow |
| -40.77M | -15.14M | -13.94M | -4.97M | -23.00K |
Arlo Technologies Technical Analysis
Negative
8.88
Price Trends
10.88
Negative
11.39
Negative
11.98
Negative
Market Momentum
-0.40
Positive
35.85
Neutral
11.81
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARLO, the sentiment is Negative. The current price of 8.88 is below the 20-day moving average (MA) of 9.86, below the 50-day MA of 10.88, and below the 200-day MA of 11.98, indicating a bearish trend. The MACD of -0.40 indicates Positive momentum. The RSI at 35.85 is Neutral, neither overbought nor oversold. The STOCH value of 11.81 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARLO.
Arlo Technologies Risk Analysis
Arlo Technologies disclosed 55 risk factors in its most recent earnings report. Arlo Technologies reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arlo Technologies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $6.62B | 15.04 | 14.41% | 2.81% | -13.19% | 10.03% | |
70 Outperform | $2.29B | 21.97 | 3.83% | ― | 8.31% | -49.90% | |
68 Neutral | $785.91M | 16.55 | 29.13% | 1.62% | 5.14% | 12.03% | |
68 Neutral | $909.65M | ― | -29.88% | ― | 4.01% | -27.92% | |
66 Neutral | $72.26M | 65.29 | -3.47% | ― | ― | ― | |
62 Neutral | $7.62B | 13.01 | 3.19% | 3.32% | 3.77% | -14.28% | |
49 Neutral | $529.37M | ― | -72.62% | ― | 17.67% | 86.99% |
* Industrials Sector Average
Performance Comparison
ARLO
Arlo Technologies
8.88
-2.07
-18.90%
SNT
Senstar Technologies
3.10
1.72
124.64%
NSSC
Napco Security Technologies
21.59
-16.84
-43.82%
ADT
Adt
7.82
1.78
29.47%
REZI
Resideo Technologies
15.51
-4.83
-23.75%
EVLV
Evolv Technologies Holdings
3.36
-0.62
-15.58%
Arlo Technologies Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -25.50% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
Arlo Technologies showed significant growth in subscription services and strategic partnerships, indicating strong operational execution. However, increased customer acquisition costs and a decline in product revenue highlight challenges in balancing growth and profitability. The overall outlook remains positive with substantial growth expectations for 2025.Highlights
Strong Growth in Subscription Services
Arlo reported nearly 4.5 million paid subscribers and $250 million in annual recurring revenue, growing over 20% year-over-year. Gross margin on service revenue was above 80%.
Expansion of Product Launches
Arlo plans to refresh nearly every camera in their lineup and expand into new segments, marking the largest device launch in the company's history for holiday 2025.
Partnerships Enhancing Capabilities
New partnerships with companies like RapidSOS and Origin Wireless are set to expand Arlo's capabilities and international reach, providing enhanced emergency response and motion detection features.
Improvement in Financial Metrics
Arlo achieved total revenue of $511 million for 2024, with Q4 revenue of $122 million slightly ahead of expectations. Non-GAAP service revenue gross margins reached 82% in Q4.
Positive Outlook for 2025
Arlo's 2025 guidance includes consolidated revenue between $510 million to $540 million, with service revenue expected to exceed $300 million, growing over 20% year-over-year.
Lowlights
Increased Customer Acquisition Costs
Customer acquisition costs doubled from $100 to $200 in 2024 due to promotional strategies, although LTV to CAC ratio remained favorable at 4.
Product Revenue Decline
Product revenue for 2024 was $268 million, down by $22.1 million compared to the prior year, impacted by aggressive promotional activities in retail channels.
Negative Product Gross Margins in Q4
Product gross margins were negative in Q4 2024 due to aggressive promotional activities, though a rebound is expected in 2025.
Company Guidance
During the call, Arlo Technologies provided key metrics and guidance for the upcoming financial periods. For the full year 2025, the company expects consolidated revenue to range between $510 million to $540 million, with service revenue surpassing $300 million, reflecting a growth rate of over 20% year-over-year. Arlo has nearly 11 million registered accounts with over 4.5 million paid subscribers, generating more than $250 million in annual recurring revenue, growing at more than 20% year-over-year. The company boasts a gross margin above 80% on service revenue and maintains an LTV to CAC ratio of 4. In 2024, Arlo achieved a total revenue of $511 million, with service revenue constituting 53% in Q4. The company also reported a non-GAAP net income of $42.3 million for the year, up 52% from 2023. For Q1 2025, Arlo anticipates consolidated revenue between $114 million to $124 million, with non-GAAP net income per diluted share expected to be between $0.09 and $0.15. The company also highlighted plans for a significant product launch and continued strategic partnerships to drive further growth.Arlo Technologies Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Arlo Technologies Shifts Executive Compensation Strategy
Positive
Nov 7, 2024
Arlo Technologies has revamped its executive retention plan, offering performance-based restricted stock units instead of cash bonuses to CEO Matt McRae and General Counsel Brian Busse, contingent on achieving key subscriber and revenue milestones by 2027. This change is part of Arlo’s broader strategy to align executive compensation with long-term shareholder value, following shareholder feedback emphasizing performance-based equity grants. The company aims to drive growth in paid subscriptions and annual recurring revenue while ensuring executive retention aligns with shareholder interests.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.