Operating cash flow consistently exceeds net income, with OCF/NI at 3.77x in Q2 2026, and free cash flow turned positive at $8.5M, though heavy stock-based compensation of $21.7M warrants monitoring for dilution.
Arlo Technologies, Inc. (ARLO) cash flow statement — 10-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 |
|---|
| Cash from Operations | 79.28M | 78.72M | 51.31M | 38.3M | -45.96M | -23.2M | -46.53M | 9.17M | -17.69M | -38.98M | -33.07M |
| Operating CF Margin % | - | 14.87% | 10.04% | 7.8% | -9.37% | -5.33% | -13.03% | 2.48% | -3.75% | -10.52% | -17.91% |
| Operating CF Growth % | 221.05% | 53.44% | 33.95% | 183.33% | -98.14% | 50.15% | -607.36% | 151.85% | 54.63% | -17.89% | - |
| Net Income | 24.53M | 14.93M | -30.5M | -22.04M | -56.63M | -56.03M | -101.25M | -85.95M | -75.48M | 6.55M | -13.74M |
| Depreciation & Amortization | 9.03M | 3.93M | 3.2M | 4.66M | 4.77M | 5.97M | 10.21M | 10.68M | 5.31M | 3.74M | 2.13M |
| Stock-Based Compensation | 80.38M | 62.33M | 68.66M | 47.95M | 48.48M | 38.03M | 35.25M | 22.89M | 8.83M | 2.45M | 1.52M |
| Deferred Taxes | 416K | -216K | -13K | 112K | 181K | -296K | 50K | -210K | -1.11M | -388K | -665K |
| Other Non-Cash Items | -1.82M | -5.92M | -1.17M | -1.73M | -166K | 5.99M | 726K | -58.26M | -120K | 121.35M | 62.7M |
| Working Capital Changes | -33.26M | 3.67M | 11.14M | 9.34M | -42.59M | -16.86M | 8.49M | 120.02M | 44.89M | -51.34M | -22.31M |
| Change in Receivables | 15.48M | 17.65M | 8.23M | 690K | 13.52M | -1.74M | 49.77M | 38.25M | -118.65M | -75.84M | -46.34M |
| Change in Inventory | -9.26M | -1.43M | -4.51M | 7.78M | -7.89M | 29.26M | 2.86M | 53.6M | -42.32M | -35.23M | -22.09M |
| Change in Payables | -30.76M | -21.07M | 8.29M | 3.72M | -32.52M | 22.16M | -49.28M | 28.79M | 87.31M | -350K | 11.51M |
| Cash from Investing | -23.8M | 27.75M | 10.84M | -50.69M | -31.77M | 17.73M | -3.98M | 76.26M | -71.28M | -4.32M | -10.29M |
| Capital Expenditures | -10.78M | -11.83M | -2.69M | -2.85M | -2.01M | -2.27M | -3.89M | -6.66M | -21.67M | -3.58M | -1.48M |
| CapEx % of Revenue | 1.81% | 2.23% | 0.53% | 0.58% | 0.41% | 0.52% | 1.09% | 1.8% | 4.59% | 0.97% | 0.8% |
| Acquisitions | -48.16M | 0 | 0 | 0 | 29.76M | 0 | 83K | 52.69M | 0 | -737K | -8.81M |
| Investments | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 18.92M | 0 | 0 | 0 | -29.76M | 0 | -83K | 0 | -49.62M | 0 | 0 |
| Cash from Financing | -59.98M | -42.07M | -40.77M | -15.14M | -13.94M | -4.97M | -23K | -38K | 244.29M | 43.19M | 43.58M |
| Debt Issued (Net) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Equity Issued (Net) | -61.23M | -45.6M | -4.42M | -23.64M | -18.2M | -13.2M | -4.78M | 0 | 173.4M | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -63.19M | -45.6M | -4.42M | -23.64M | -18.2M | -13.2M | -4.78M | 0 | 0 | 0 | 0 |
| Other Financing | 1.25M | 3.53M | -36.35M | 8.49M | 4.26M | 8.23M | 4.75M | -38K | 70.89M | 43.19M | 43.58M |
| Net Change in Cash | -4.5M | 64.41M | 21.38M | -27.53M | -91.68M | -10.44M | -50.53M | 85.39M | 155.32M | -112K | 220K |
| Free Cash Flow | 68.51M | 66.9M | 48.62M | 35.45M | -47.97M | -25.46M | -50.42M | 2.51M | -39.35M | -42.56M | -34.55M |
| FCF Margin % | 11.48% | 12.64% | 9.52% | 7.22% | -9.78% | -5.85% | -14.12% | 0.68% | -8.34% | -11.48% | -18.72% |
| FCF Growth % | 25.58% | 37.6% | 37.13% | 173.91% | -88.38% | 49.5% | -2111.25% | 106.37% | 7.54% | -23.19% | - |
| FCF per Share | 0.62 | 0.61 | 0.49 | 0.38 | -0.55 | -0.31 | -0.65 | 0.03 | -0.59 | -0.59 | -0.48 |
| FCF Conversion (FCF/Net Income) | 2.79x | 5.27x | -1.68x | -1.74x | 0.81x | 0.41x | 0.46x | -0.11x | 0.26x | -5.95x | 2.41x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 1.16M | 1.2M | 415K | 964K | 5.61M | 960K | 89K | 0 | 0 |
Quick answers to the most common questions about buying ARLO stock.
Arlo Technologies, Inc. (ARLO) generated $78.7M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Arlo Technologies, Inc. (ARLO) generated $66.9M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Arlo Technologies, Inc. (ARLO) spent $11.8M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Arlo Technologies, Inc. (ARLO) spent $45.6M on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Subscription mix concentration risk
Metrics are mathematically derived from official filings.
Cash Conversion Outpaces GAAP Earnings
Arlo's operating cash flow consistently exceeds net income, with OCF/NI reaching 3.77x in Q2 2026, according to the latest cash flow statement, indicating strong cash conversion despite heavy stock-based compensation.
The persistent gap between operating cash flow and net income, particularly in quarters where net income was negative (e.g., 2024Q1-Q3), suggests that non-cash charges like depreciation and stock-based compensation are inflating reported losses while cash generation remains positive. In Q2 2026, OCF of $11.4M against net income of $3.0M implies that earnings quality is high, but investors should note that SBC of $21.7M in the same quarter represents a significant non-cash expense that may not reflect true cash costs.
Free Cash Flow Inflection Point
Free cash flow turned positive and accelerated, reaching $25.4M in Q1 2026 and $8.5M in Q2 2026, as per the cash flow statement, with FCF margins expanding from 4.5% to 16.9% over the past year.
The trajectory of free cash flow shows a clear inflection from negative or minimal levels in 2024 to consistently positive and growing figures in 2025-2026. The FCF margin of 16.9% in Q1 2026 is particularly notable, suggesting that the business model is generating increasing cash per dollar of revenue. However, the sequential decline from Q1 to Q2 2026 (from $25.4M to $8.5M) may reflect seasonal working capital swings, and the implied revenue guidance for Q3 2026 suggests a potential moderation in FCF growth.
Capital-Light Model with Strategic Investments
Capital expenditures remain minimal, averaging under 2% of revenue in recent quarters, as reported in the cash flow statement, indicating a capital-light model that prioritizes software and subscription growth over hardware manufacturing.
CapEx intensity has been consistently low, with CapEx/Revenue ranging from 0.2% to 3.0% over the past ten quarters. This suggests that Arlo's growth is not heavily dependent on physical asset expansion, which is consistent with its pivot to a software-centric model. The slight uptick in CapEx in Q3 2025 (3.0% of revenue) may indicate targeted investments in cloud infrastructure or product development, but overall capital requirements remain modest, allowing for strong FCF conversion.
Working Capital Volatility Masks Cash Strength
Working capital changes swung from a $14.3M positive contribution in Q1 2025 to a -$16.4M drag in Q2 2026, as per the cash flow statement, highlighting the lumpy nature of collections and inventory management.
The working capital line is highly volatile, with significant swings quarter-to-quarter. For instance, Q1 2025 saw a $14.3M positive contribution, while Q2 2026 saw a -$16.4M drag. This volatility likely reflects the timing of receivables collections and inventory builds ahead of peak selling seasons. The negative working capital impact in Q2 2026, despite strong OCF, suggests that cash generation was partially offset by increased inventory or slower collections, which investors should monitor for potential signs of demand softening or channel stuffing.
Aggressive Buybacks Offset by Acquisition Spend
Arlo deployed $22.9M on buybacks in Q2 2026 and $12.2M on acquisitions, according to the cash flow statement, while paying no dividends, indicating a focus on shareholder returns and strategic investments.
Capital deployment has been active, with buybacks occurring in most quarters, totaling over $100M in the past year. The $22.9M buyback in Q2 2026 is the largest in the period, suggesting management's confidence in the stock. However, the $12.2M acquisition spend in the same quarter indicates that cash is also being used for M&A, which could dilute the impact of buybacks. With no dividends, the return of capital is entirely through buybacks, which may be a signal that management views the stock as undervalued.
Cumulative Cash Generation vs. GAAP Losses
Over the past ten quarters, Arlo generated cumulative operating cash flow of approximately $169M despite cumulative net losses of $3M, as per the cash flow statement, underscoring the divergence between accounting earnings and cash reality.
The cumulative gap between net income and operating cash flow is stark: while net income has been negative in several quarters, operating cash flow has been consistently positive, totaling around $169M over the period. This divergence is primarily driven by non-cash charges such as depreciation and stock-based compensation, which are added back to net income. The implication is that Arlo's underlying cash-generating ability is stronger than GAAP profitability suggests, but investors should be cautious about the sustainability of this gap if SBC continues to grow.
What the Cash Flow Statement Obscures
Stock-based compensation of $21.7M in Q2 2026, as disclosed in the cash flow statement, exceeds net income, suggesting that reported cash generation may be overstated when considering the dilutive impact of equity compensation.
While operating cash flow appears robust, the substantial stock-based compensation expense—totaling over $150M in the past ten quarters—represents a real economic cost to shareholders that is not captured in traditional cash flow metrics. Additionally, the $12.2M acquisition spend in Q2 2026 may involve undisclosed earn-outs or contingent liabilities that could impact future cash flows. Investors should also consider that the company's heavy reliance on subscription revenue, while beneficial for margins, introduces concentration risk if subscriber growth or retention falters, which could disproportionately affect cash generation.