Arlo Technologies, Inc.

Q1 total revenue was a record $150.4 million, up 26% year over year. Non-GAAP EPS was $0.28, up 86% year over year. Subscriptions and services revenue was a record $90 million, up 31% year over year and 60% of total revenue. ARPU was $15.60, up 16% year over year, and ARR was $357 million, up 29% year over year. Non-GAAP consolidated gross margin was 50%, up 460 basis points year over year; subscriptions and services gross margin was 85.4%, up 230 bps, and product margin improved 340 bps. Adjusted EBITDA was $30.4 million, up 85% year over year, and free cash flow was $25.4 million. For Q2 2026, Arlo guided to revenue of $145 million to $155 million and non-GAAP EPS of $0.17 to $0.23. Management said it remains confident in the full-year 2026 outlook for subscriptions and services revenue, total revenue, and EPS previously given last quarter.

Matthew McRae struck a highly upbeat tone, calling the quarter “spectacular” and emphasizing that Arlo is benefiting from both hardware lock-in and a services-led model. He highlighted a strengthening strategic pipeline, with ADT and Samsung likely launching soon, Comcast progressing toward a 2027 impact, and more partnership announcements possible. He also framed Aloe Care as a small but strategic bet on a large, fragmented age-in-place market where he believes Arlo can add scale and distribution.

Kurt Binder focused on the mechanics behind the profitability improvement: record subscriptions and services revenue of $90 million, services gross margin of 85.4%, and consolidated gross margin crossing 50% despite a 430 bps tariff headwind. He cited $45.2 million of non-GAAP operating expenses, $30.4 million of adjusted EBITDA, $25.4 million of free cash flow, and $167.5 million in available cash, cash equivalents and short-term investments. He also noted product revenue of $60.3 million versus $50.2 million a year ago, inventory of $44 million, DSOs of 31 days, and said memory costs are rising but remain manageable because memory is only 6% to 8% of BOM. On tariffs, he said the company has filed claims and is waiting on eligibility and timing.

Analysts pressed on Aloe Care, ADT, Samsung, Comcast, capital allocation, retail trends, memory costs, and tariffs. Management said Aloe Care was attractive because of its team and AI-driven innovation, including fall prediction and other senior safety capabilities, and said ADT and Samsung are close to launch while Comcast should matter more in 2027. On capital allocation, management said it will balance internal investment, acquisitions, and buybacks based on valuation and sees the stock as undervalued; on tariffs, it said relief claims have been filed but there is uncertainty around processing and timing.