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Arlo's Q1 2025 Earnings: Unpacking Contradictions on Tariffs, Inventory, and Revenue Growth
Generated by AI AgentEarnings Decrypt
Monday, May 19, 2025 4:55 pm ET1min read
Tariffs and inventory strategy, Secure 5 impact on , inventory management and tariffs, tariff impact and product strategy, subscription and service revenue projections are the key contradictions discussed in Arlo's latest 2025Q1 earnings call.
Subscription and Services Growth:
- reported 298,000 new subscribers in Q1 2025, ending the quarter with 4.9 million paid accounts, representing a 51% increase year-over-year.
- The growth in subscriptions and services revenue, which reached $69 million for the quarter, was driven by the success of Arlo Secure 5 plans and new service plans that increased Average Revenue per User (ARPU) to a record $13.48.
Impact of Tariffs and Competitive Landscape:
- Arlo Technologies expects that less than 25% of its revenue from hardware devices will be directly impacted by announced tariffs, with the majority of its profit coming from services.
- The company believes the tariffs will have a minimal impact on its consolidated gross margins and potentially presents opportunities to capture market share as competitors struggle with higher costs.
International Revenue and Strategic Partnerships:
- Arlo's international revenue generated from EMEA region, primarily through Verisure, declined to $51 million, representing 43% of total revenue compared to 56% in the prior year.
- Verisure's destocking and regulatory requirements affected product sales, but the company remains optimistic about maintaining a strong relationship and expects to achieve growth in this segment in 2025.
Ad Platform and Product Strategy:
- Arlo's ad platform, focused initially on promoting its own services and hardware, will debut in Q2, aiming to enhance customer engagement and conversion rates.
- The company plans to refresh its product portfolio in the second half of the year, reducing bill of materials (BOM) costs by between 20% to 35%, which will help mitigate tariff impacts and enhance competitive positioning.
Subscription and Services Growth:
- reported 298,000 new subscribers in Q1 2025, ending the quarter with 4.9 million paid accounts, representing a 51% increase year-over-year.
- The growth in subscriptions and services revenue, which reached $69 million for the quarter, was driven by the success of Arlo Secure 5 plans and new service plans that increased Average Revenue per User (ARPU) to a record $13.48.
Impact of Tariffs and Competitive Landscape:
- Arlo Technologies expects that less than 25% of its revenue from hardware devices will be directly impacted by announced tariffs, with the majority of its profit coming from services.
- The company believes the tariffs will have a minimal impact on its consolidated gross margins and potentially presents opportunities to capture market share as competitors struggle with higher costs.
International Revenue and Strategic Partnerships:
- Arlo's international revenue generated from EMEA region, primarily through Verisure, declined to $51 million, representing 43% of total revenue compared to 56% in the prior year.
- Verisure's destocking and regulatory requirements affected product sales, but the company remains optimistic about maintaining a strong relationship and expects to achieve growth in this segment in 2025.
Ad Platform and Product Strategy:
- Arlo's ad platform, focused initially on promoting its own services and hardware, will debut in Q2, aiming to enhance customer engagement and conversion rates.
- The company plans to refresh its product portfolio in the second half of the year, reducing bill of materials (BOM) costs by between 20% to 35%, which will help mitigate tariff impacts and enhance competitive positioning.
Earnings Decrypt
Discover what executives don't want to reveal in conference calls
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