Arlo Technologies Inc.

11/06/2025 | Press release | Distributed by Public on 11/06/2025 15:35

Quarterly Report for Quarter Ending September 28, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Statements
This Quarterly Report on Form 10-Q (the "Quarterly Report") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words "believes," "anticipates," "plans," "expects," "intends," "could," "may," "will," and similar expressions are intended to identify forward-looking statements, including statements concerning our business and the expected performance characteristics, specifications, reliability, market acceptance, market growth, specific uses, user feedback, and market position of our products and technology. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a discrepancy include, but are not limited to, those discussed in "Part II-Item 1A-Risk Factors" and "Liquidity and Capital Resources" below.
All forward-looking statements in this document are based on information available to us as of the date hereof, such information may be limited or incomplete, and we assume no obligation to update any such forward-looking statements. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes contained in this Quarterly Report. Unless expressly stated or the context otherwise requires, the terms "we," "our," "us," the "Company," and "Arlo" refer to Arlo Technologies, Inc. and our subsidiaries.
Business and Executive Overview
Arlo is transforming the ways in which people can protect everything that matters to them with advanced home, business, and personal security services that combine a globally scaled cloud platform, advanced monitoring and analytics capabilities, and award-winning app-controlled devices to create a personalized security ecosystem. Arlo's deep expertise in cloud services, cutting-edge AI and computer vision analytics, wireless connectivity and intuitive user experience design delivers seamless, smart home security for Arlo users that is easy to setup and engage with every day. Our highly secure, cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection - all rooted in a commitment to safeguard privacy for our users and their personal data.
Since the launch of our first product in December 2014, we have shipped over 41.4 million smart connected devices. As of September 28, 2025, the Arlo platform had approximately 11.8 million cumulative registered accounts across more than 100 countries around the world coupled with approximately 5.4 million cumulative paid accounts and annual recurring revenue ("ARR") of $323.2 million.
We conduct business across three geographic regions-(i) the Americas; (ii) Europe, Middle-East and Africa ("EMEA"); and (iii) Asia Pacific ("APAC")-and we primarily generate revenue by selling paid subscription services, as well as devices through retail, wholesale distribution, wireless carrier channels, security solution providers, and Arlo's direct to consumer store. For the three months ended September 28, 2025 and September 29, 2024, we generated total revenue of $139.5 million and $137.7 million, respectively, and income (loss) from operations was $0.9 million and $(5.5) million, respectively. For the nine months ended September 28, 2025 and September 29, 2024, we generated total revenue of $388.0 million and $389.3 million, respectively, and income (loss) from operations was $1.4 million and $(28.9) million, respectively.
Our goal is to continue to develop innovative, world-class smart security solutions to expand and further monetize our current and future user and paid account bases. We believe that the growth of our business is dependent on many factors, including our ability to innovate and launch successful new products on a timely basis and grow our installed base, to increase subscription-based recurring revenue, to invest in channel and other strategic partnerships and to continue our
global expansion. We expect to increase our investment in research and development going forward as we continue to introduce new and innovative products and services to enhance the Arlo platform and compete for engineering talent. We also expect our sales and marketing expenses to increase in the future as we invest in marketing to drive demand for our products and services.
Key Business Metrics
In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions. We believe these key business metrics provide useful information by offering the ability to make more meaningful period-to-period comparisons of our on-going operating results and a better understanding of how management plans and measures our underlying business. Our key business metrics may be calculated in a manner different from the same key business metrics used by other companies. We regularly review our processes for calculating these metrics, and from time to time we may discover a need to make adjustments to better reflect our business. We believe that any such adjustments are immaterial unless otherwise stated.
As of
September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Cumulative registered accounts 11,792 13.6 % 10,383
Cumulative paid accounts 5,396 27.4 % 4,235
Annual recurring revenue ("ARR")
$ 323,150 33.8 % $ 241,572
Cumulative Registered Accounts. Registered accounts at the end of a particular period are defined as the number of unique registered accounts on the Arlo platform. The number of registered accounts on the Arlo platform does not directly correspond to the number of users. A single account may be shared by multiple users (which we consider as one account) and a single user may have multiple accounts (which we consider as multiple accounts).
Cumulative Paid Accounts. Paid accounts at the end of a particular period are defined as any account worldwide where a subscription-based or otherwise reoccurring service fee was collected by Arlo (either directly from a user or from a partner).
Annual Recurring Revenue. We believe ARR enables measurement of our business initiatives and serves as an indicator of our future growth. ARR represents and is defined as the annualized paid subscriptions and services revenue we expect to recognize from subscription contracts, as calculated by taking the average paid subscriptions and services revenue per paid account of the reporting period multiplied by the number of paid accounts at the end of the reporting period. ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items.
Impact of Global Geopolitical, Economic and Business Conditions
The U.S. government implemented new tariff measures affecting a broad range of imported materials. Certain countries have responded to the U.S. tariffs by imposing or threatening retaliatory tariffs. While we are actively monitoring the changes in global trade policy and the effects they may have on our business and broader macroeconomic environment, we have not experienced a material impact on our financial position to date and do not expect them to have a material detrimental impact on our business operations in the near term. However, given the uncertainty surrounding global markets as a result of the new U.S. tariff policy, we do not have clarity at this point over the potential medium to long term impacts our business may face. The availability of certain goods could be affected if foreign suppliers choose to limit their exposure to U.S. markets in response to unfavorable trade policies, which could negatively impact our suppliers ability to deliver materials or manufacture equipment for us and, therefore, delay or impede our product deliveries. Furthermore, rising inflation, slower economic growth and increases in unemployment that may result from global trade disruptions could further deflate consumer demand and impact the demand for our products.
Results of Operations
We operate as one operating and reportable segment. The following table sets forth, for the periods presented, the unaudited condensed consolidated statements of comprehensive income (loss) data, which we derived from the accompanying unaudited condensed consolidated financial statements:
Three Months Ended Nine Months Ended
September 28,
2025 		September 29,
2024 		September 28,
2025 		September 29,
2024
(In thousands, except percentage data)
Revenue:
Subscriptions and services $ 79,942 57.3 % $ 61,883 45.0 % $ 226,966 58.5 % $ 178,851 45.9 %
Products 59,587 42.7 % 75,784 55.0 % 161,034 41.5 % 210,463 54.1 %
Total revenue 139,529 100.0 % 137,667 100.0 % 388,000 100.0 % 389,314 100.0 %
Cost of revenue:
Subscriptions and services 12,424 8.9 % 14,431 10.5 % 36,924 9.5 % 42,584 11.0 %
Products 70,599 50.6 % 74,820 54.3 % 183,768 47.4 % 204,080 52.4 %
Total cost of revenue 83,023 59.5 % 89,251 64.8 % 220,692 56.9 % 246,664 63.4 %
Gross profit 56,506 40.5 % 48,416 35.2 % 167,308 43.1 % 142,650 36.6 %
Operating expenses:
Research and development 18,144 13.0 % 17,562 12.8 % 52,798 13.6 % 57,916 14.9 %
Sales and marketing 20,459 14.7 % 17,832 13.0 % 61,765 15.9 % 52,900 13.6 %
General and administrative 15,091 10.8 % 17,052 12.4 % 49,210 12.7 % 57,830 14.9 %
Other operating expense 1,940 1.4 % 1,423 1.0 % 2,181 0.6 % 2,868 0.7 %
Total operating expenses 55,634 39.9 % 53,869 39.2 % 165,954 42.8 % 171,514 44.1 %
Income (loss) from operations 872 0.6 % (5,453) (4.0) % 1,354 0.3 % (28,864) (7.5) %
Gain on early lease termination 4,144 3.0 % - - % 4,144 1.1 % - - %
Interest income, net 1,508 1.1 % 1,400 1.0 % 4,168 1.1 % 4,281 1.1 %
Other non-operating income (expense), net 503 0.4 % (57) - % (102) - % (100) - %
Income (loss) before income taxes 7,027 5.1 % (4,110) (3.0) % 9,564 2.5 % (24,683) (6.4) %
Provision for income taxes 154 0.1 % 329 0.2 % 402 0.1 % 960 0.2 %
Net income (loss) $ 6,873 5.0 % $ (4,439) (3.2) % $ 9,162 2.4 % $ (25,643) (6.6) %
Revenue
Our gross revenue consists primarily of paid subscriptions and services revenue and sales of devices. Our paid subscription services are billed in advance of the start of the monthly subscription and revenue is recognized ratably over the subscription period. We generally recognize revenue from product sales at the time the product is shipped and transfer of control from us to the customer occurs.
Our revenue consists of gross revenue, less customer rebates and other channel sales incentives, allowances for estimated sales returns, price protection, and net changes in deferred revenue. A significant portion of our marketing expenditure is with customers and is deemed to be a reduction of revenue under authoritative guidance for revenue recognition.
We conduct business across three geographic regions-(i) the Americas; (ii) EMEA; and (iii) APAC-and generally base revenue by geographic region on the bill-to location of the customer for device location for subscriptions and services sales and device sales.
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Americas $ 83,831 14.4 % $ 73,303 $ 235,830 20.5 % $ 195,766
Percentage of revenue 60.1 % 53.2 % 60.8 % 50.3 %
EMEA 49,602 (14.1) % 57,773 135,817 (22.8) % 175,980
Percentage of revenue 35.5 % 42.0 % 35.0 % 45.2 %
APAC 6,096 (7.5) % 6,591 16,353 (6.9) % 17,568
Percentage of revenue 4.4 % 4.8 % 4.2 % 4.5 %
Total revenue $ 139,529 1.4 % $ 137,667 $ 388,000 (0.3) % $ 389,314
Revenue by classification is as follows:
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Revenue:
Subscriptions and services $ 79,942 29.2 % $ 61,883 $ 226,966 26.9 % $ 178,851
Products 59,587 (21.4) % 75,784 161,034 (23.5) % 210,463
Total revenue $ 139,529 1.4 % $ 137,667 $ 388,000 (0.3) % $ 389,314
Subscriptions and services revenue increased by $18.1 million or 29.2%, and $48.1 million or 26.9%, for the three and nine months ended September 28, 2025 compared to the prior year periods, respectively, primarily due to a 27.4% increase in cumulative paid accounts and continued increase in average revenue per user ("ARPU") on retail and direct paid subscription services.
Products revenue decreased by $16.2 million or 21.4%, and $49.4 million or 23.5%, for the three and nine months ended September 28, 2025 compared to the prior year periods, respectively, primarily from the decrease in product sales in EMEA due to the timing of device shipments from our largest customer and the reduction in average selling prices ("ASPs") of our products as we increased promotional activities to stimulate household acquisition and subscriber growth. The decrease in products revenue was due to the higher sales incentives which are deemed to be reductions of revenue.
Cost of Revenue
Cost of revenue consists of both subscriptions and services cost as well as products cost. Subscriptions and services cost consists of costs attributable to the provision and maintenance of our cloud-based platform, including personnel expense, data storage, security and computing, IT and facilities overhead, and amortization of software development. Products cost primarily consists of the cost of finished products from our third-party manufacturers and overhead costs, including personnel expense for operations staff, purchasing, product planning, inventory control, warehousing and distribution logistics, third-party software licensing fees, inbound freight, duty and tariff costs, IT and facilities overhead, warranty costs associated with returned goods, write-downs for excess and obsolete inventory and excess components, and royalties to third parties.
Our cost of revenue as a percentage of revenue can vary based upon a number of factors, including those that may affect our revenue set forth above and factors that may affect our cost of revenue, including, without limitation, product mix, sales channel mix, registered accounts' acceptance of paid subscription service offerings, and changes in our cost of goods sold due to fluctuations in prices paid for components, net of vendor rebates, cloud platform costs, warranty and overhead costs, inbound freight, duty and tariff costs, and charges for excess or obsolete inventory. We outsource our manufacturing, warehousing, and distribution logistics. We also outsource certain components of the required infrastructure to support our cloud-based back-end IT infrastructure. We believe this outsourcing strategy generally allows us to better manage our products cost and subscriptions and services cost and gross margin and allows us to adapt to changing market dynamics and supply chain constraints. However, with respect to manufacturing that we have outsourced to ex-U.S. manufacturers, our ability to manage product costs through this strategy has been, and may continue to be, negatively impacted by tariffs.
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Cost of revenue:
Subscriptions and services $ 12,424 (13.9) % $ 14,431 $ 36,924 (13.3) % $ 42,584
Products 70,599 (5.6) % 74,820 183,768 (10.0) % 204,080
Total cost of revenue $ 83,023 (7.0) % $ 89,251 $ 220,692 (10.5) % $ 246,664
Subscriptions and services cost of revenue decreased by 13.9% and 13.3% for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily due to cost savings as we optimize our cloud platform to improve customer experience which assists in reduced data storage and cloud costs.
Products cost of revenue decreased by 5.6% and 10.0% for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily due to the decrease in product sales partially offset by an increase in freight cost mainly as a result of increased duties and tariffs, and to a lesser extent, the utilization of air freight.
Gross Profit
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Gross profit:
Subscriptions and services $ 67,518 42.3 % $ 47,452 $ 190,042 39.5 % $ 136,267
Products (11,012) ** 964 (22,734) ** 6,383
Total gross profit $ 56,506 16.7 % $ 48,416 $ 167,308 17.3 % $ 142,650
Gross margin percentage:
Subscriptions and services 84.5 % 76.7 % 83.7 % 76.2 %
Products (18.5) % 1.3 % (14.1) % 3.0 %
Total gross margin 40.5 % 35.2 % 43.1 % 36.6 %
**Percentage change not meaningful.
Subscriptions and services gross profit increased by $20.1 million and $53.8 million for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily due to subscriptions and services revenue growth as a result of increases in cumulative paid accounts, continued increase in ARPU on retail subscriptions, and cost optimizations.
Products gross profit decreased by $12.0 million and $29.1 million for the three and nine months ended September 28, 2025, compared to the prior year periods, respectively, primarily driven by a reduction in the ASPs of our products as we increased promotional activities to stimulate household acquisition and subscriber growth and an increase in freight cost mainly as a result of increased duties and tariffs, and to a lesser extent, the utilization of air freight.
Operating Expenses
Research and Development
Research and development expense consists primarily of personnel-related expense, safety, security, regulatory services and testing, other research and development consulting fees, and allocated IT and facilities overhead. Generally, we recognize research and development expenses as they are incurred, exclusive of capitalized software development costs. We have invested in and expanded our research and development organization to enhance our ability to introduce innovative products and services. We expect research and development expense to increase in absolute dollars as we develop new product and service offerings and compete for engineering talent. We believe that innovation and technological leadership are critical to our future success, and we are committed to continuing a significant level of research and development to develop new technologies, products and services, including our hardware devices, cloud-based software, AI-based algorithms, and machine learning capabilities.
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Research and development expense $ 18,144 3.3 % $ 17,562 $ 52,798 (8.8) % $ 57,916
Research and development expense slightly increased by $0.6 million for the three months ended September 28, 2025 compared to the prior year period, primarily due to an increase of $2.1 million in personnel-related expenses due to the headcount increases as a result of our research and development investment, partially offset by a decrease of $1.3 million in professional services due to the capitalization of software development costs as we invest in software capabilities.
Research and development expense decreased by $5.1 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to decreases of $5.0 million in professional services, $2.9 million in IT and facilities overhead related to allocation associated with corporate infrastructure, and $1.1 million in personnel-related expenses due to the capitalization of software development costs as we invest in software capabilities, partially offset by an increase of $3.8 million in personnel-related expenses due to the headcount increases as a result of our research and development investment.
Sales and Marketing
Sales and marketing expense consists primarily of personnel expense for sales and marketing staff, technical support expense, advertising, trade shows, media and placement, corporate communications and other marketing expense, product marketing expense, allocated IT and facilities overhead, outbound freight costs, and credit card processing fees. We expect our sales and marketing expense to increase in the future as we invest in marketing to drive demand for our subscriptions and services and device products.
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Sales and marketing expense $ 20,459 14.7 % $ 17,832 $ 61,765 16.8 % $ 52,900
Sales and marketing expense increased by $2.6 million for the three months ended September 28, 2025 compared to the prior year period, primarily due to increases of $2.4 million in credit card and in-app processing fees as a result of increases in paid accounts and focused efforts to improve our customer's app experience.
Sales and marketing expense increased by $8.9 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to increases of $6.5 million in credit card and in-app processing fees as a result of increases in paid accounts and focused efforts to improve our customer's app experience, $1.4 million in marketing expenditures, and $1.0 million in personnel-related expenses mainly from stock-based compensation as a result of the increase in our stock price.
General and Administrative
General and administrative expense consists primarily of personnel-related expense for certain executives, finance and accounting, investor relations, human resources, legal, information technology, professional fees, allocated IT and facilities overhead, strategic initiative expense, and other general corporate expense. We expect our general and administrative expense to fluctuate as a percentage of our revenue in future periods based on fluctuations in our revenue and the timing of such expense.
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
General and administrative expense $ 15,091 (11.5) % $ 17,052 $ 49,210 (14.9) % $ 57,830
General and administrative expense decreased by $2.0 million and $8.6 million for the three and nine months ended September 28, 2025, respectively compared to the prior year periods, primarily due to (i) the decrease of $1.6 million and $7.9 million, respectively, in personnel-related expenses mainly from stock-based compensation as a result of the achievement of certain performance-based equity award targets in the prior year periods; and (ii) the decrease of $0.3 million and $0.9 million, respectively, in IT and facilities overhead related to allocation associated with corporate infrastructure.
Other operating expenses
Other operating expenses include restructuring charges, which consist primarily of severance costs, and separation expenses, which consist primarily of costs of legal and professional services.
Other Income (Expense)
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Gain on early lease termination
$ 4,144 ** $ - 4,144 ** -
Interest income, net
$ 1,508 7.7 % $ 1,400 4,168 (2.6) % 4,281
Other non-operating income (expense), net $ 503 ** $ (57) (102) ** (100)
** Percentage change not meaningful.
In July 2025, we entered into a termination agreement for our office lease located in San Jose, California. We recorded the derecognition of right-of-use assets and lease liabilities and recognized a gain of $4.1 million upon the termination effective in the third quarter of 2025.
Interest income, net increased for the three months ended September 28, 2025 compared to the prior year period, primarily due to the increase in our short-term investments balance. Interest income, net decreased for the nine months ended September 28, 2025 compared to the prior year period, primarily due to the declines in interest rates.
Provision for Income Taxes
Three Months Ended Nine Months Ended
September 28,
2025 		% Change September 29,
2024 		September 28,
2025 		% Change September 29,
2024
(In thousands, except percentage data)
Provision for income taxes $ 154 (53.2) % $ 329 $ 402 (58.1) % $ 960
Effective tax rate 2.2 % (8.0) % 4.2 % (3.9) %
The effective tax rate for the three and nine months ended September 28, 2025 was lower than the U.S. federal income tax rate due to a lower effective tax rate on foreign earnings and valuation allowance on our net U.S. deferred tax assets and certain foreign tax attributes. Based on a review of all available evidence, we have concluded that it is more likely than not that we will not be able to realize the benefit of the deferred tax assets in the foreseeable future. As a result, we are maintaining the full valuation allowance. However, as we continue to generate income, we are approaching the point at which the accumulated rolling 36-month pre-tax income turns positive-a key piece of objectively verifiable evidence supporting the realizability of deferred tax assets. There is a reasonable possibility that within the next several quarters, sufficient positive evidence will become available to reach a conclusion that all or a significant portion of the valuation allowance against our U.S. net deferred tax assets would no longer be required.
On July 4, 2025, the OBBBA, a significant tax reform package, was enacted. Included in this legislation are provisions that allow for the immediate expensing of domestic U.S. research and development expenses, and certain capital expenditures, as well as other changes to the U.S. taxation of profits derived from foreign operations. Management is continuing to evaluate the provisions of the OBBBA, including treatment of previously capitalized domestic U.S. research and development expenses. Based on information available to date, management does not expect the enactment of the OBBBA to have a material impact on our consolidated financial statements; however, the ultimate effect may differ from the amounts reflected in the interim financial statements once the analysis is complete and elections are finalized.
Liquidity and Capital Resources
As of September 28, 2025, our cash and cash equivalents and short-term investments totaled $165.5 million and our unused borrowing capacity was $45.0 million based on the terms and conditions of the Credit Agreement. The proceeds of the borrowings under this credit facility may be used for working capital and general corporate purposes.
We have a history of losses and may incur operating and net losses in the future. As of September 28, 2025, our accumulated deficit was $388.8 million. Historically, we have funded our principal business activities through cash flows generated from operations and available cash on hand.
Material Cash Requirements
We believe that our existing sources of liquidity will be sufficient to meet our anticipated cash requirements for at least the next 12 months and beyond. However, in the future we may require or desire additional funds to support our operating expenses and capital requirements. To the extent that current and anticipated future sources of liquidity are insufficient, we may seek to raise additional funds through public or private equity. We have no commitments to obtain such additional financing and cannot provide assurance that additional financing will be available at all or, if available, that such financing would be obtainable on terms favorable to us and would not be dilutive.
Our future liquidity and cash requirements may vary from those currently planned and will depend on numerous factors, including the introduction of new products, the growth in our subscriptions and services revenue, the ability to increase our gross margin dollars, as well as cost optimization initiatives and controls over our operating expenditures. As we grow our installed base and related cost structure, there will be a need for additional working capital, hence, we may increase our product and subscription rates in the future.
Operating Leases and Contractual Commitments
Our operating lease obligations mostly include offices, equipment, and distribution centers. Our contractual commitments are primarily inventory-related purchase obligations with suppliers.
Legal Contingencies
We are, and from time to time, we may become involved in disputes, litigation, and other legal actions in the ordinary course of business. At each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. Significant judgment is required to determine both the probability and the estimated amount of loss. In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as litigation reserves in other operating expense on the unaudited condensed consolidated statements of comprehensive income (loss).
Refer to Note 7. Commitments and Contingencies in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report for further information about our operating leases, purchase obligations, and legal contingencies.
Stock Repurchase Program
Our Board of Directors authorized a stock repurchase program of up to an aggregate of $50.0 million of shares, which commenced in September 2024 and is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors. During the nine months ended September 28, 2025, we repurchased and subsequently retired 2.1 million shares of Arlo common stock for an aggregate amount of $26.8 million. As of September 28, 2025, $18.8 million remained available and authorized for future repurchases.
Cash Flow
Nine Months Ended
September 28,
2025 		September 29,
2024
(In thousands)
Net cash provided by operating activities
$ 58,952 $ 44,634
Net cash provided by (used in) investing activities (30,428) 11,229
Net cash used in financing activities (24,544) (35,830)
Net cash increase $ 3,980 $ 20,033
Operating activities
Net cash provided by operating activities increased by $14.3 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to improved profitability, partially offset by unfavorable working capital movements as a result of (i) higher accounts receivable balances in connection with our subscription sales growth; and (ii) decreased accounts payable balances mainly due to timing of payments; partially offset by (i) higher inventory balances as we prepare for the holiday season and (ii) increases in deferred revenue due to the growth in our paid accounts and subscription rates.
Investing activities
Net cash used in investing activities increased by $41.7 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to higher net purchases of short-term investments, coupled with our strategic long-term investment in a privately-held company, as well as to a lesser extent, the increases in capitalized software development costs.
Financing activities
Net cash used in financing activities decreased by $11.3 million for the nine months ended September 28, 2025 compared to the prior year period, primarily due to the decrease in withholding tax from RSU and PSU releases as a result of the sell-to-cover method being applied to all Arlo employees for their tax withholding effective on January 1, 2025, partially offset by the stock repurchases.
Critical Accounting Policies and Estimates
For a complete description of what we believe to be the critical accounting policies and estimates used in the preparation of our unaudited condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting policies and estimates during the nine months ended September 28, 2025, other than as discussed in Note 2. Significant Accounting Policies and Recent Accounting Pronouncements,in the Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report.
Arlo Technologies Inc. published this content on November 06, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 06, 2025 at 21:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]