Free cash flow generation has improved significantly, reaching a 16.9% margin in 2026Q1, supported by a disciplined capital expenditure profile that peaked at only 3.0% of revenue in 2025Q3.
| Cash from Operations | 75.67M | 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 % | 227.63% | 53.44% | 33.95% | 183.33% | -98.14% | 50.15% | -607.36% | 151.85% | 54.63% | -17.89% | - |
| Net Income | 30.64M | 14.93M | -30.5M | -22.04M | -56.63M | -56.03M | -101.25M | -85.95M | -75.48M | 6.55M | -13.74M |
| Depreciation & Amortization | 4.8M | 3.93M | 3.2M | 4.66M | 4.77M | 5.97M | 10.21M | 10.68M | 5.31M | 3.74M | 2.13M |
| Stock-Based Compensation | 65.06M | 62.33M | 68.66M | 47.95M | 48.48M | 38.03M | 35.25M | 22.89M | 8.83M | 2.45M | 1.52M |
| Deferred Taxes | 180K | -216K | -13K | 112K | 181K | -296K | 50K | -210K | -1.11M | -388K | -665K |
| Other Non-Cash Items | -11.21M | -5.92M | -1.17M | -1.73M | -166K | 5.99M | 726K | -58.26M | -120K | 121.35M | 62.7M |
| Working Capital Changes | -13.8M | 3.67M | 11.14M | 9.34M | -42.59M | -16.86M | 8.49M | 120.02M | 44.89M | -51.34M | -22.31M |
| Change in Receivables | -6.12M | 17.65M | 8.23M | 690K | 13.52M | -1.74M | 49.77M | 38.25M | -118.65M | -75.84M | -46.34M |
| Change in Inventory | -8.9M | -1.43M | -4.51M | 7.78M | -7.89M | 29.26M | 2.86M | 53.6M | -42.32M | -35.23M | -22.09M |
| Change in Payables | -9.71M | -21.07M | 8.29M | 3.72M | -32.52M | 22.16M | -49.28M | 28.79M | 87.31M | -350K | 11.51M |
| Cash from Investing | 27.77M | 27.75M | 10.84M | -50.69M | -31.77M | 17.73M | -3.98M | 76.26M | -71.28M | -4.32M | -10.29M |
| Capital Expenditures | -11.44M | -11.83M | -2.69M | -2.85M | -2.01M | -2.27M | -3.89M | -6.66M | -21.67M | -3.58M | -1.48M |
| CapEx % of Revenue | 2.04% | 2.23% | 0.53% | 0.58% | 0.41% | 0.52% | 1.09% | 1.8% | 4.59% | 0.97% | 0.8% |
| Acquisitions | -36M | 0 | 0 | 0 | 29.76M | 0 | 83K | 52.69M | 0 | -737K | -8.81M |
| Investments | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 6.42M | 0 | 0 | 0 | -29.76M | 0 | -83K | 0 | -49.62M | 0 | 0 |
| Cash from Financing | -34.81M | -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) | -37.69M | -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 | -37.69M | -45.6M | -4.42M | -23.64M | -18.2M | -13.2M | -4.78M | 0 | 0 | 0 | 0 |
| Other Financing | 2.88M | 3.53M | -36.35M | 8.49M | 4.26M | 8.23M | 4.75M | -38K | 70.89M | 43.19M | 43.58M |
| Net Change in Cash | 68.63M | 64.41M | 21.38M | -27.53M | -91.68M | -10.44M | -50.53M | 85.39M | 155.32M | -112K | 220K |
| Free Cash Flow | 64.22M | 66.9M | 48.62M | 35.45M | -47.97M | -25.46M | -50.42M | 2.51M | -39.35M | -42.56M | -34.55M |
| FCF Margin % | 11.46% | 12.64% | 9.52% | 7.22% | -9.78% | -5.85% | -14.12% | 0.68% | -8.34% | -11.48% | -18.72% |
| FCF Growth % | 12.12% | 37.6% | 37.13% | 173.91% | -88.38% | 49.5% | -2111.25% | 106.37% | 7.54% | -23.19% | - |
| FCF per Share | 0.58 | 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) | 2.10x | 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 |
High stock-based compensation dilution
As reported in recent financial statements, Arlo's operating cash flow frequently decouples from net income, with the company generating $27.9M in cash from operations against $14.9M in net income during 2026Q1, highlighting a persistent reliance on non-cash adjustments to bridge the gap between accounting and reality.
The significant variance between net income and operating cash flow suggests that GAAP earnings may understate the company's underlying cash-generating capacity. Investors should monitor whether this conversion quality remains sustainable as the business scales, particularly given the heavy reliance on non-cash expenses to reconcile these figures.
Based on the provided cash flow data, Arlo has demonstrated a positive free cash flow trajectory, reaching a 16.9% margin in 2026Q1, which indicates that the company is successfully converting its subscription-led revenue growth into tangible liquidity despite the ongoing costs associated with its hardware-centric customer acquisition strategy.
The upward trend in FCF margins appears to validate the strategic pivot toward recurring service revenue. However, the volatility in quarterly FCF suggests that the company remains sensitive to working capital fluctuations and the timing of promotional hardware cycles.
According to historical cash flow filings, Arlo maintains a disciplined capital expenditure profile, with CapEx as a percentage of revenue peaking at only 3.0% in 2025Q3, suggesting that the company's infrastructure requirements are relatively light compared to its high-growth software-as-a-service peers in the security sector.
The low capital intensity implies that the company does not require massive reinvestment in physical plant or equipment to support its service ecosystem. This lean asset profile may provide management with greater flexibility to allocate capital toward R&D or strategic acquisitions rather than maintenance.
As evidenced by the latest quarterly data, stock-based compensation remains a material factor, with $19.7M in SBC recorded in 2026Q1, which effectively offsets a significant portion of the company's operating cash flow and warrants careful scrutiny regarding the true economic cost of talent acquisition.
While SBC is a non-cash expense, its magnitude relative to operating cash flow suggests that the company's reported cash generation may be flattered by equity-based incentives. Investors should consider the dilutive impact of these grants when evaluating the long-term sustainability of the company's cash flow profile.
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.