Arlo Technologies Q2 Earnings Exceed Expectations with 1.5% Revenue Growth and 11.3% EPS Beat

Arlo Technologies reported Q2 revenue of $129.4 million, up 1.5% YoY, beating analyst estimates. Non-GAAP profit per share was $0.17, 11.3% above estimates. Revenue guidance for Q3 is $138 million, above estimates, while adjusted EPS guidance is $0.15, below estimates. Market capitalization is $1.7 billion.

Arlo Technologies (ARLO) has reported its second-quarter (Q2) 2025 earnings, demonstrating robust performance with revenue of $129.4 million, up 1.5% year-over-year (YoY), and surpassing analyst estimates. The company’s non-GAAP profit per share was $0.17, 11.3% above estimates. Following the earnings announcement, Arlo’s stock rose by 2.05% in aftermarket trading, closing at $16.43.

Key Takeaways
- Revenue: $129.4 million, up 1.5% YoY, exceeding forecasts by 4.92%.
- Non-GAAP profit per share: $0.17, 11.3% above estimates.
- Service revenue grew by 30% YoY, contributing significantly to overall performance.
- Strategic partnership with ADT announced, enhancing competitive position.

Company Performance
Arlo Technologies reported a notable performance in Q2 2025, marked by significant revenue and earnings growth. The company’s strategic focus on expanding its product offerings and enhancing service revenues has paid off, as evidenced by a 30% YoY increase in service revenue. The successful execution of its largest product launch in history, featuring over 100 new SKUs, has positioned Arlo well within the competitive landscape.

Financial Highlights
- Revenue: $129.4 million, up YoY.
- Service revenue: $78 million, 30% YoY growth.
- Annual Recurring Revenue (ARR): $316 million, 34% YoY growth.
- Adjusted EBITDA: $18 million, 82% YoY increase.
- Gross margin: 46%, an increase of 800 basis points YoY.

Market Reaction
Following the earnings release, Arlo’s stock increased by 2.05% in aftermarket trading, closing at $16.43. This price movement reflects investor enthusiasm about the company’s ability to surpass earnings and revenue forecasts. The stock’s performance is notable against its 52-week range, with a high of $17.983 and a low of $7.84, indicating a positive trajectory.

Outlook & Guidance
Arlo Technologies has raised its full-year service revenue guidance to $310 million, expecting 5-10% growth. The company anticipates a year-end ARR of $335 million. For Q3, Arlo projects revenue between $133 million and $143 million, with non-GAAP EPS guidance ranging from $0.12 to $0.18. This outlook reflects confidence in continued growth and strategic execution.

Executive Commentary
CEO Matthew McCray stated, "Arlo just reported the best first half in our corporate history," highlighting the company’s strong performance and strategic milestones. COO/CFO Kurt Binder emphasized, "Our extraordinary transformation to a subscriptions and services organization underpins our success," underscoring the importance of service revenue in Arlo’s growth strategy.

Risks and Challenges
Supply chain disruptions could impact product availability and pricing. Market saturation in certain segments may limit growth opportunities. Macroeconomic factors, such as inflation, could affect consumer spending. Competitive pressures from established players in the smart home technology market. Dependence on strategic partnerships for growth, such as the agreement with ADT.

References:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-arlo-technologies-q2-2025-sees-earnings-beat-stock-rises-93CH-4179872