Arlo Technologies 2025 Q2 Earnings Returns to Profitability with 127% Net Income Surge

Arlo Technologies (ARLO) reported its fiscal 2025 Q2 earnings on Aug 8, 2025, marking a return to profitability and beating expectations with a significant turnaround in net income. The company exceeded its financial guidance with a 34% year-over-year growth in ARR and a 30% rise in subscription revenue, reflecting improved operational efficiency and customer retention.

Revenue
Arlo Technologies reported total revenue of $129.41 million in Q2 2025, a 1.5% increase compared to $127.45 million in the same period last year. Subscription and services revenue grew significantly to $78.17 million, driven by the launch of its AI platform, Arlo Secure 6, while product sales contributed $51.23 million. The company’s focus on high-margin recurring revenue is evident in the strong performance of its subscription segment.

Earnings/Net Income
Arlo returned to profitability with an EPS of $0.03 in Q2 2025, compared to a loss of $0.12 per share in the prior year, representing a 125.0% improvement. Net income surged to $3.12 million, a 127.0% positive swing from a $11.56 million net loss in 2024 Q2. This turnaround highlights the company's successful cost management and revenue diversification efforts.

Price Action
Arlo’s stock edged up 1.17% on the latest trading day and gained 1.42% over the past week, although it declined 1.20% month-to-date.

Post Earnings Price Action Review
A post-earnings investment strategy of buying Arlo shares following its Q2 2025 report and holding for 30 days delivered a 62.76% return over the past three years, outperforming the benchmark by 15.67%. The strategy demonstrated a 18.29% CAGR, zero maximum drawdown, and a Sharpe ratio of 0.31, indicating strong risk-adjusted returns despite a volatility of 59.40%.

CEO Commentary
Matthew McRae, CEO, emphasized the success of Arlo’s subscription model, driven by the new AI platform and a 34% year-over-year increase in ARR. Non-GAAP gross margin for subscriptions and services reached 85%, up 850 basis points year over year. McRae expressed optimism about future growth, citing holiday product launches and a strategic partnership with ADT.

Guidance
Arlo provided third-quarter 2025 revenue guidance of $133–$143 million. GAAP net income per share is expected to range from $0.04 to $0.10, with non-GAAP net income per share between $0.12 and $0.18. The guidance excludes items such as litigation reserves and tax reform-related effects, and accounts for current estimates of tariff impacts.

Additional News
Recent geopolitical developments include a U.S.-Russia meeting expected as early as next week, with discussions likely to touch on global economic and trade issues. In the Americas, U.S. President Trump announced changes to census methodology by excluding undocumented immigrants and nominated a key economic advisor to the Federal Reserve. In Europe, Portugal extended a national alert due to a severe wildfire season, while EU pharmaceutical companies brace for potential U.S. tariff impacts. In Asia-Pacific, India resisted recent tariff increases, and a new ceasefire agreement was signed between Cambodia and Thailand. In the Middle East, the UN highlighted the worsening humanitarian crisis in Gaza as famine spreads and peace talks stall.