Revenue growth accelerated to 20.5% YoY in Q2 2026, with gross margin reaching a record 48.2%, while operating income swung to a positive $2.5M from a -$12.8M loss two years prior, indicating strong operating leverage.
Arlo Technologies, Inc. (ARLO) annual income statement — 10-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 |
|---|
| Sales/Revenue | 596.79M | 529.3M | 510.89M | 491.18M | 490.41M | 435.14M | 357.15M | 370.01M | 472.02M | 370.66M | 184.6M |
| Revenue Growth % | 17.12% | 3.6% | 4.01% | 0.16% | 12.7% | 21.83% | -3.47% | -21.61% | 27.35% | 100.79% | - |
| Cost of Goods Sold | 314.01M | 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 | 282.78M | 232.84M | 187.5M | 167.56M | 136.03M | 108.03M | 55.39M | 35.8M | 99.18M | 91.23M | 38.03M |
| Gross Margin % | 47.38% | 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 | 267.02M | 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 | 173.42M | 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 | 90.05M | 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 | 15.76M | 6.07M | -34.89M | -24.9M | -56.88M | -60.14M | -104.86M | -138.19M | -67.67M | 5.73M | -13.15M |
| Operating Margin % | 2.64% | 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 | 24.79M | 10M | -31.69M | -20.24M | -52.11M | -54.16M | -94.66M | -127.51M | -62.36M | 9.47M | -11.02M |
| EBITDA Margin % | 4.15% | 1.89% | -6.2% | -4.12% | -10.63% | -12.45% | -26.5% | -34.46% | -13.21% | 2.56% | -5.97% |
| EBITDA Growth % | 2032.42% | 131.56% | -56.57% | 61.16% | 3.79% | 42.78% | 25.76% | -104.47% | -758.44% | 185.94% | - |
| D&A (Non-Cash Add-back) | 9.03M | 3.93M | 3.2M | 4.66M | 4.77M | 5.97M | 10.21M | 10.68M | 5.31M | 3.74M | 2.13M |
| EBIT | 27.05M | 15.67M | -29.41M | -20.86M | -55.65M | -51.02M | -104.86M | -138.19M | -47.52M | 7.12M | -13.15M |
| Net Interest Income | 4.59M | 5.45M | 5.58M | 3.94M | 926K | 11K | 802K | 2.74M | 1.24M | 0 | 0 |
| Interest Income | 4.59M | 5.45M | 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 | 11.29M | 9.6M | 5.48M | 4.04M | 1.23M | 4.79M | 4.24M | 56.62M | -27.19M | 1.95M | -512K |
| Pretax Income | 27.05M | 15.67M | -29.41M | -20.86M | -55.65M | -55.35M | -100.63M | -81.57M | -67.61M | 7.68M | -13.66M |
| Pretax Margin % | 4.53% | 2.96% | -5.76% | -4.25% | -11.35% | -12.72% | -28.17% | -22.05% | -14.32% | 2.07% | -7.4% |
| Income Tax | 2.52M | 741K | 1.09M | 1.18M | 975K | 677K | 625K | 4.38M | 772K | 1.13M | 83K |
| Effective Tax Rate % | 9.33% | 4.73% | -3.71% | -5.63% | -1.75% | -1.22% | -0.62% | -5.37% | -1.14% | 14.69% | -0.61% |
| Net Income | 24.53M | 14.93M | -30.5M | -22.04M | -56.63M | -56.03M | -101.25M | -85.95M | -68.38M | 6.55M | -13.74M |
| Net Margin % | 4.11% | 2.82% | -5.97% | -4.49% | -11.55% | -12.88% | -28.35% | -23.23% | -14.49% | 1.77% | -7.44% |
| Net Income Growth % | 470.36% | 148.93% | -38.43% | 61.09% | -1.07% | 44.66% | -17.8% | -25.7% | -1144.1% | 147.65% | - |
| Net Income (Continuing) | 24.53M | 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) | 0.22 | 0.14 | -0.31 | -0.24 | -0.65 | -0.68 | -1.30 | -1.14 | -1.02 | 0.09 | -0.19 |
| EPS Growth % | 579.01% | 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 | 110.6M | 110.16M | 98.63M | 92.75M | 87.17M | 82.69M | 78.08M | 75.07M | 67.23M | 72.72M | 72.72M |
| Basic Shares Outstanding | 107.66M | 104.2M | 98.63M | 92.75M | 87.12M | 82.4M | 77.89M | 75.07M | 67.23M | 72.72M | 72.72M |
| Dividend Payout Ratio | - | - | - | - | - | - | - | - | - | - | - |
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.
Key Metrics
Top Statement Risk
Subscription mix concentration risk
Metrics are mathematically derived from official filings.
Revenue Acceleration Driven by Services
Arlo's revenue growth accelerated to 20.5% YoY in Q2 2026, up from 1.5% in Q2 2025, according to the latest quarterly report, signaling a successful pivot toward higher-margin subscription services.
The 20.5% YoY growth in Q2 2026 marks a sharp inflection from the near-flat growth of 1.5% in the prior year quarter, suggesting that the company's strategic focus on Arlo Secure subscriptions is gaining traction. This acceleration appears to be driven by a mix shift toward recurring service revenue, which carries higher margins and more predictable cash flows. The sequential revenue increase from $150.4M in Q1 2026 to $155.9M in Q2 2026, despite typical seasonality, indicates that the growth is not solely dependent on holiday hardware sales. Investors should monitor whether this momentum can be sustained, as the forward guidance of $140M-$150M implies a potential sequential decline, which may reflect normal seasonality or a moderation in demand.
Gross Margin Expansion Reflects Mix Shift
Gross margin reached a record 48.2% in Q2 2026, up from 44.9% a year earlier, as reported in the income statement, highlighting the increasing contribution of high-margin subscription revenue.
The 330 basis point YoY expansion in gross margin to 48.2% underscores the structural shift toward services, which carry significantly higher margins than hardware. This improvement is consistent with the company's strategy to monetize its installed base through Arlo Secure subscriptions and AI features. The margin expansion appears durable, as it is driven by a favorable revenue mix rather than one-time cost reductions. However, the reliance on subscription revenue concentration introduces a risk: any slowdown in subscriber additions or an uptick in churn could disproportionately impact profitability. The low operating margin of 1.6% leaves limited buffer, so the trajectory of gross margin warrants close monitoring.
Operating Leverage Emerging from Cost Discipline
Operating income swung to $2.5M in Q2 2026 from a loss of $12.8M in Q2 2024, as per the income statement, indicating that revenue growth is now outpacing fixed cost increases.
The transition from a -10.0% operating margin in Q2 2024 to +1.6% in Q2 2026 demonstrates that Arlo is beginning to scale its cost base effectively. While R&D and SG&A expenses have grown in absolute terms, they have grown slower than revenue, allowing operating leverage to emerge. The 20.5% revenue growth in Q2 2026 was accompanied by a 28% increase in gross profit, while SG&A rose only 26% YoY, suggesting improved overhead efficiency. This trend appears sustainable if the company can maintain its subscription attach rates and control marketing spend. However, the thin operating margin of 1.6% indicates that any cost overrun or revenue shortfall could quickly erode profitability.
Earnings Quality Tempered by Stock Compensation
Net income of $3.0M in Q2 2026 was overshadowed by $21.7M in stock-based compensation, as disclosed in the financial statements, suggesting that reported profitability may overstate cash generation.
The gap between net income and SBC is substantial, with SBC exceeding net income by a factor of seven in Q2 2026. This indicates that a significant portion of operating expenses is non-cash, which may inflate reported earnings relative to actual cash profitability. The company's ability to achieve GAAP profitability while incurring such high SBC suggests that underlying cash flows are still negative or minimal. Investors should adjust for SBC to assess the true economic earnings power. The low net margin of 1.9% further highlights the fragility of current profitability, which could be vulnerable to changes in tax rates or non-operating items.
R&D and SG&A Efficiency Improving
R&D and SG&A as a percentage of revenue declined to 15.2% and 30.3% in Q2 2026, respectively, from 15.4% and 30.7% a year earlier, based on the income statement, indicating improved cost discipline.
The modest decline in R&D and SG&A intensity suggests that Arlo is gaining operational efficiency as it scales. R&D spending increased 28% YoY in Q2 2026, but revenue grew 20.5%, indicating that the company is investing in innovation while managing costs. SG&A rose 26% YoY, slightly outpacing revenue growth, which may reflect increased marketing spend to drive subscriber acquisition. The overall cost structure remains heavily weighted toward SG&A, which is typical for a consumer brand, but the trend toward lower expense ratios is positive. If the company can continue to grow revenue while keeping these costs in check, operating margins should expand further.
Q2 2026 Marks a Turning Point
Q2 2026 delivered record revenue of $155.9M and a positive operating income of $2.5M, a stark contrast to the -$12.8M operating loss in Q2 2024, as per the income statement, signaling a definitive operational inflection.
The two-year transformation from a -10.0% operating margin to +1.6% represents a critical inflection point in Arlo's history. This shift was driven by a combination of gross margin expansion (from 36.8% to 48.2%) and disciplined cost management. The company's ability to achieve profitability while investing in R&D and marketing suggests that the business model is now sustainable. The lasting impact of this inflection is the validation of the services-led growth strategy, which should support higher valuations if sustained. However, the implied sequential revenue decline in the next quarter's guidance raises questions about the durability of this momentum, warranting close monitoring of subscriber metrics.
What Could Invalidate the Base Case
Despite the strong Q2 2026 beat, the forward revenue guidance of $140M-$150M implies a sequential decline from $155.9M, as per the latest earnings release, raising concerns about demand sustainability.
The most significant challenge to the bullish narrative is the implied sequential revenue decline in the next quarter, which could indicate a pull-forward of demand or a slowdown in hardware attach rates. If hardware sales weaken, the subscription growth that drives margins may also decelerate, given that new subscribers are primarily acquired through hardware purchases. Additionally, the low operating margin of 1.6% provides minimal cushion against any cost inflation or pricing pressure from competitors like Wyze and Eufy. The heavy reliance on stock-based compensation, which exceeded net income by $18.7M in Q2 2026, suggests that reported profitability may not translate into cash earnings, potentially limiting the company's ability to invest in growth without further dilution. Investors should monitor subscriber churn and ARPU trends to validate the durability of the services-led model.