Arlo has achieved structural margin improvement, with gross margins expanding from 35.0% in 2023Q4 to 48.3% in 2026Q1, driven by a favorable shift toward subscription services.
| Sales/Revenue | 560.61M | 529.3M | 510.89M | 491.18M | 490.41M | 435.14M | 357.15M | 370.01M | 472.02M | 370.66M | 184.6M |
| Revenue Growth % | 10.85% | 3.6% | 4.01% | 0.16% | 12.7% | 21.83% | -3.47% | -21.61% | 27.35% | 100.79% | - |
| Cost of Goods Sold | 307.83M | 296.46M | 323.38M | 323.61M | 354.38M | 327.1M | 301.76M | 334.2M | 372.84M | 279.42M | 146.57M |
| COGS % of Revenue | - | 56.01% | 63.3% | 65.89% | 72.26% | 75.17% | 84.49% | 90.32% | 78.99% | 75.39% | 79.4% |
| Gross Profit | 252.78M | 232.84M | 187.5M | 167.56M | 136.03M | 108.03M | 55.39M | 35.8M | 99.18M | 91.23M | 38.03M |
| Gross Margin % | 45.09% | 43.99% | 36.7% | 34.11% | 27.74% | 24.83% | 15.51% | 9.68% | 21.01% | 24.61% | 20.6% |
| Gross Profit Growth % | - | 24.18% | 11.9% | 23.18% | 25.92% | 95.05% | 54.7% | -63.9% | 8.71% | 139.87% | - |
| Operating Expenses | 237.7M | 226.77M | 222.4M | 192.47M | 192.91M | 168.17M | 160.25M | 173.99M | 139.6M | 84.12M | 51.18M |
| OpEx % of Revenue | - | 42.84% | 43.53% | 39.18% | 39.34% | 38.65% | 44.87% | 47.02% | 29.57% | 22.69% | 27.73% |
| Selling, General & Admin | 153.81M | 150.94M | 145.86M | 122.51M | 126.01M | 98.4M | 100.16M | 104.61M | 80.8M | 49.44M | 26.74M |
| SG&A % of Revenue | - | 28.52% | 28.55% | 24.94% | 25.7% | 22.61% | 28.04% | 28.27% | 17.12% | 13.34% | 14.49% |
| Research & Development | 80.3M | 73.65M | 73.18M | 68.65M | 64.71M | 59.06M | 60.14M | 69.38M | 58.79M | 34.68M | 24.44M |
| R&D % of Revenue | - | 13.91% | 14.32% | 13.98% | 13.19% | 13.57% | 16.84% | 18.75% | 12.46% | 9.36% | 13.24% |
| Other Operating Expenses | 2.22M | 2.18M | 3.36M | 1.31M | 2.19M | 10.71M | -44K | 0 | -1.18M | 0 | 0 |
| Operating Income | 15.08M | 6.07M | -34.89M | -24.9M | -56.88M | -60.14M | -104.86M | -138.19M | -67.67M | 5.73M | -13.15M |
| Operating Margin % | 2.69% | 1.15% | -6.83% | -5.07% | -11.6% | -13.82% | -29.36% | -37.35% | -14.34% | 1.55% | -7.12% |
| Operating Income Growth % | - | 117.4% | -40.11% | 56.22% | 5.42% | 42.65% | 24.12% | -104.22% | -1280.74% | 143.59% | - |
| EBITDA | 18.18M | 10M | -31.69M | -20.24M | -52.11M | -54.16M | -94.66M | -127.51M | -62.36M | 9.47M | -11.02M |
| EBITDA Margin % | 3.24% | 1.89% | -6.2% | -4.12% | -10.63% | -12.45% | -26.5% | -34.46% | -13.21% | 2.56% | -5.97% |
| EBITDA Growth % | 180.43% | 131.56% | -56.57% | 61.16% | 3.79% | 42.78% | 25.76% | -104.47% | -758.44% | 185.94% | - |
| D&A (Non-Cash Add-back) | 3.1M | 3.93M | 3.2M | 4.66M | 4.77M | 5.97M | 10.21M | 10.68M | 5.31M | 3.74M | 2.13M |
| EBIT | 23.56M | 15.67M | -34.89M | -24.9M | -56.88M | -51.02M | -104.86M | -138.19M | -47.52M | 7.12M | -13.15M |
| Net Interest Income | 2.85M | 0 | 5.58M | 3.94M | 926K | 11K | 802K | 2.74M | 1.24M | 0 | 0 |
| Interest Income | 2.85M | 0 | 5.58M | 3.94M | 926K | 11K | 802K | 2.74M | 1.24M | 0 | 0 |
| Interest Expense | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | 16.21M | 9.6M | 5.48M | 4.04M | 1.23M | 4.79M | 4.24M | 56.62M | -27.19M | 1.95M | -512K |
| Pretax Income | 31.29M | 15.67M | -29.41M | -20.86M | -55.65M | -55.35M | -100.63M | -81.57M | -67.61M | 7.68M | -13.66M |
| Pretax Margin % | 5.58% | 2.96% | -5.76% | -4.25% | -11.35% | -12.72% | -28.17% | -22.05% | -14.32% | 2.07% | -7.4% |
| Income Tax | 654K | 741K | 1.09M | 1.18M | 975K | 677K | 625K | 4.38M | 772K | 1.13M | 83K |
| Effective Tax Rate % | 2.09% | 4.73% | -3.71% | -5.63% | -1.75% | -1.22% | -0.62% | -5.37% | -1.14% | 14.69% | -0.61% |
| Net Income | 30.64M | 14.93M | -30.5M | -22.04M | -56.63M | -56.03M | -101.25M | -85.95M | -68.38M | 6.55M | -13.74M |
| Net Margin % | 5.47% | 2.82% | -5.97% | -4.49% | -11.55% | -12.88% | -28.35% | -23.23% | -14.49% | 1.77% | -7.44% |
| Net Income Growth % | 241.22% | 148.93% | -38.43% | 61.09% | -1.07% | 44.66% | -17.8% | -25.7% | -1144.1% | 147.65% | - |
| Net Income (Continuing) | 30.64M | 14.93M | -30.5M | -22.04M | -56.63M | -56.03M | -101.25M | -85.95M | -75.48M | 6.55M | -13.74M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 0.28 | 0.14 | -0.31 | -0.24 | -0.65 | -0.68 | -1.30 | -1.14 | -1.02 | 0.09 | -0.19 |
| EPS Growth % | 221.67% | 145.16% | -29.17% | 63.08% | 4.41% | 47.69% | -14.04% | -11.76% | -1232.08% | 147.42% | - |
| EPS (Basic) | - | 0.14 | -0.31 | -0.24 | -0.65 | -0.68 | -1.30 | -1.14 | -1.02 | 0.09 | -0.19 |
| Diluted Shares Outstanding | 110.49M | 110.16M | 98.63M | 92.75M | 87.17M | 82.69M | 78.08M | 75.07M | 67.23M | 72.72M | 72.72M |
| Basic Shares Outstanding | 107M | 104.2M | 98.63M | 92.75M | 87.12M | 82.4M | 77.89M | 75.07M | 67.23M | 72.72M | 72.72M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - |
Consumer discretionary spending sensitivity
As reported in recent financial filings, Arlo's revenue growth trajectory has shifted significantly, reaching 26.3% in 2026Q1 compared to the low single-digit growth observed throughout 2025, suggesting a successful scaling of the company's subscription-led business model and improved market penetration for its high-fidelity security ecosystem.
The recent acceleration in top-line performance appears to indicate that the company's pivot toward recurring service revenue is gaining traction, potentially decoupling from the cyclical volatility of hardware sales. Investors should monitor whether this growth rate is sustainable or if it reflects temporary promotional success that may compress future margins.
Based on the provided income statement data, Arlo has successfully expanded its gross margin from 35.0% in 2023Q4 to a peak of 48.3% in 2026Q1, reflecting a favorable shift in revenue mix toward higher-margin subscription services relative to the company's legacy hardware-centric cost structure.
This margin expansion suggests that the company is effectively leveraging its installed base to drive recurring revenue, which carries significantly lower variable costs than physical device manufacturing. The ability to maintain these levels will likely depend on the company's success in converting new hardware buyers into long-term Arlo Secure subscribers.
According to the latest quarterly figures, while gross profit has scaled, operating income remains thin at 5.0% in 2026Q1, indicating that high R&D and SG&A expenses continue to absorb the majority of the company's gross profit, limiting the realization of meaningful operating leverage at this stage.
The persistent reliance on heavy R&D and marketing spend suggests that the company is still in a growth-at-all-costs phase, prioritizing market share over immediate bottom-line profitability. Future margin expansion will likely require a more disciplined approach to overhead management as the subscription base matures and scales.
Analysis of the income statement reveals that stock-based compensation remains a significant expense, totaling $19.7M in 2026Q1, which warrants caution as it represents a substantial portion of operating expenses and potentially obscures the true cash-generating capability of the core business operations for equity holders.
The high level of non-cash compensation relative to reported net income suggests that GAAP earnings may overstate the company's operational efficiency. Investors should scrutinize the impact of this dilution on long-term shareholder value, especially given the company's historical struggle to maintain consistent GAAP profitability.
Quick answers to the most common questions about buying ARLO stock.
For fiscal year 2025, Arlo Technologies, Inc. (ARLO) reported total revenue of $529.3M. This represents a 186.7% increase compared to $184.6M in 2016.
Arlo Technologies, Inc. (ARLO) is profitable, generating $14.9M in net income for the fiscal year ending 2025 with a net profit margin of 2.8%.
Arlo Technologies, Inc. (ARLO) reported an operating income of $6.1M, resulting in an operating profit margin of 1.1%. This margin reflects the operational efficiency of the business before interest and taxes.
Arlo Technologies, Inc. (ARLO) generated $232.8M in gross profit for the year, representing a gross profit margin of 44.0%. This demonstrates the company's core pricing power and production efficiency.