Why Arlo Technologies (ARLO) Is Up 6.0% After Subscriptions Surpass 60% of Revenue in Q2 Turnaround

• Arlo Technologies recently announced its second quarter 2025 results, reporting US$129.41 million in revenue and a net income of US$3.12 million, a turnaround from a net loss in the same period the previous year.
• A notable shift is that subscriptions and services now account for over 60% of total revenue, highlighting the company's transformation toward recurring, higher-margin income streams.
• We'll review how the surge in recurring service revenue growth informs the evolving investment narrative for Arlo Technologies.

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Arlo Technologies Investment Narrative Recap

To be an Arlo Technologies shareholder is to believe in the company's transition from hardware sales to a software-driven, subscription-based model, where recurring revenue and margin expansion take center stage. The latest earnings confirm accelerating service revenue and improving profitability, fuel for the bull case, yet also shine a brighter spotlight on continued reliance on strong subscriber growth as the key catalyst, and the ongoing risk posed by potential margin pressure in hardware if that growth falters. This transformation remains at the core of Arlo's short-term outlook, and the latest results reinforce this narrative but have not changed the immediate risk/reward profile in a material way.

Of the recent updates, the launch of Arlo Secure 6 stands out: it is an AI-powered upgrade to the company's core subscription service, and management has credited it for a lift in recurring revenue and high gross margins. The product launch signals execution on the vision of higher-margin services but also connects back to the company’s adherence to a hardware-based subscriber acquisition strategy, which must remain efficient for the subscription story to work.

But with all the excitement around new services and improved margins, investors still need to keep an eye on...

Read the full narrative on Arlo Technologies (it's free!)

Arlo Technologies' outlook anticipates $596.1 million in revenue and $151.5 million in earnings by 2028. This implies a 5.6% annual revenue growth rate and a $173.2 million increase in earnings from -$21.7 million currently.

Uncover how Arlo Technologies' forecasts yield a $21.40 fair value, a 28% upside to its current price.

Exploring Other Perspectives

Across three fair value estimates submitted to the Simply Wall St Community, assessed valuations for Arlo span from US$7.79 to US$25.44 per share. Against this range, the company's accelerating recurring revenue growth from service upgrades is driving much of the current optimism around future performance; explore the diversity of views and discover several distinct approaches to Arlo’s potential.

Explore 3 other fair value estimates on Arlo Technologies - why the stock might be worth less than half the current price!

Build Your Own Arlo Technologies Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Arlo Technologies research is our analysis highlighting 4 key rewards that could impact your investment decision.
• Our free Arlo Technologies research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Arlo Technologies' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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