Arlo Technologies Q2 2025 Earnings Call Highlights: Service Revenue Growth Amid Product Challenges and ADT Partnership.

Arlo Technologies reported Q2 2025 revenue of $129 million, up YoY and sequentially, with service revenue reaching $78 million, a 30% YoY increase and now accounting for more than 60% of total revenue. The company added 218,000 paid subscriptions, reaching 5.1 million. However, product revenue declined due to ASP declines, and international revenue contribution decreased. The company signed a strategic partnership with ADT, expected to provide material upside to subscriptions and services revenue starting in 2026.

Arlo Technologies Inc. (NYSE:ARLO) reported its Q2 2025 financial results, showcasing robust growth in its subscription and services segment while facing challenges in product revenue. The company's total revenue for the quarter was $129 million, up year-over-year (YoY) and sequentially. Service revenue, which reached $78 million, marked a 30% YoY increase and now constitutes more than 60% of total revenue [1].

The company added 218,000 paid subscriptions, bringing the total to 5.1 million. This significant subscriber growth is attributed to higher unit sales across multiple channels and aggressive promotions [1]. However, product revenue declined to $51.2 million due to a decrease in average selling prices (ASPs) and a decline in international revenue contribution [1].

International operations generated approximately $50 million, down from $64 million in the prior year period. The introduction of tariffs in the quarter represented a gross margin headwind of approximately 100 basis points [1]. Despite these challenges, the company signed a strategic partnership with ADT, which is expected to provide material upside to subscriptions and services revenue starting in 2026 [1].

Arlo Technologies is focused on maintaining and growing service gross margins at 85% or higher while addressing the impact of tariffs through cost reductions and other measures [1]. The company is also preparing for a significant product launch, with over 100 new device models expected to reduce unit costs by up to 35% [1].

The company expects 20-30% camera unit growth year-over-year for Q3 and Q4, which is anticipated to boost service revenue [1]. Arlo Technologies is guided by a strategic shift towards subscription-based services, aiming to capture market share in retail and direct channels [1].

References:
[1] https://finance.yahoo.com/news/arlo-technologies-inc-arlo-q2-074159201.html
[2] https://www.nasdaq.com/articles/arlo-arlo-q2-revenue-beats-16