Arlo Technologies (ARLO) Soars 2.31% on Q1 Earnings Beat

Arlo Technologies (ARLO) shares surged 2.31% today, marking the third consecutive day of gains, with a cumulative increase of 3.80% over the past three days. The stock price reached its highest level since March 2025, with an intraday gain of 8.65%.

The strategy of buying ARLO shares after they reached a recent high and holding for 1 week yielded moderate returns over the past 5 years, with a 7.56% annualized return. However, the Sharpe ratio was low at 0.63, indicating that the risk-adjusted returns were modest. The strategy showed a maximum drawdown of -10.2% during the 2020 COVID market downturn, which was the lowest among all stock holding periods, suggesting it provided some downside protection. Overall, while the strategy offered stability, the returns may not have been robust enough to outpace the market or other active strategies.

Arlo Technologies recently reported its Q1 CY2025 financial results, which exceeded market revenue expectations. Despite a 4.1% year-over-year decrease in total sales to $119.1 million, the company's subscriptions and services revenue grew by 21.4% year over year to $68.8 million. This growth contributed to a record non-GAAP subscriptions and services gross margin of 83.1% and a non-GAAP net income per share of $0.15. Additionally, the company achieved a record free cash flow of $28.1 million and executed a share buyback program worth $15 million.

Arlo Technologies surpassed a significant milestone of over 5 million paid subscribers, contributing to an Annual Recurring Revenue (ARR) of $276.4 million, which grew by 21.8% year over year. This increase in subscribers solidifies Arlo’s position as a market leader in DIY security. The positive financial results and subscriber growth have likely contributed to fluctuations in the company's stock price and investor sentiment.