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Earnings Beat May Change The Case For Arlo (ARLO) Stock

Simply Wall St · 2d ago
  • Arlo Technologies reported third quarter 2026 revenue of US$149.18 million and net income of US$0.86 million, alongside nine month revenue of US$455.5 million and net income of US$18.77 million. The company also completed US$44.11 million of share repurchases under its March 2026 program.
  • The business continues to lean into subscriptions and services as a larger share of sales, supported by new AI focused offerings, partnerships with major distributors, and a new US$100 million buyback authorization that reflects management’s focus on recurring revenue and capital allocation.
  • The next area of attention will be how Arlo Technologies’ expanding subscription mix could reshape its investment narrative and long term appeal.

Scan how Arlo Technologies’ subscription and AI focused pivot compares with other recurring revenue plays by reviewing our hand picked 38 high quality undervalued stocks that combine cash generation with balance sheet strength.

What Is Arlo Technologies' Investment Narrative?

To own Arlo Technologies, you need to be comfortable with a security hardware brand that is trying to become a subscription and AI services platform. The latest quarter fits that story. Total revenue was US$149.18 million, subscription and services income continues to take a larger slice of the pie, and management is leaning into that with AI focused offerings and partner channels like Comcast and ADT. At the same time, Q3 net income of US$0.86 million and guidance that brackets Q4 EPS between a small loss and a small profit show that execution on profitability is still tight.

The bigger short term levers are clear. Paid accounts and ARPU growth need to justify Arlo’s 54.1x P/E and the new US$100 million buyback signals that management is willing to recycle cash into the stock while subscriptions trend toward more than 70% of sales. On the risk side, quality of earnings is complicated by a US$17.6 million one off gain in the last 12 months and the share price has fallen about 17% over the past year despite consistent estimate beats, which indicates that the market is still testing how durable this subscription pivot is.

Even so, there is a less comfortable part of the Arlo Technologies story that sits just beneath those upbeat subscription headlines...

There's only one way to know the right time to buy, sell or hold Arlo Technologies. Head to Simply Wall St's company report for the latest analysis of Arlo Technologies's Fair Value.

NYSE:ARLO 1-Year Stock Price Chart
NYSE:ARLO 1-Year Stock Price Chart

Exploring Other Perspectives

One alternate view fixates on hardware losses. Bearish analysts worry that if Arlo Technologies cannot keep subscription and ARPU gains strong, product level pressure might dominate. Before this quarter, the lowest estimates had revenue growing only about 3.1% annually with earnings sliding toward roughly US$24.7 million. That is a much more cautious story. Use this earnings print as a chance to compare those expectations with your own and weigh how the subscription shift might rewrite the script from here.

Explore 3 other Arlo Technologies fair value estimates, including one that suggests as much as 51% downside from the current price.

The Verdict Is Yours

Don't just follow the ticker. Dig into the data and build a conviction that's truly your own.

Looking For More Investment Ideas Beyond Arlo Technologies?

If this earnings story has you rethinking where recurring revenue, cash generation, and balance sheet quality fit in your portfolio, it can help to line Arlo Technologies up against a wider watchlist of opportunities using the Simply Wall St Screener.

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  • When you want potential mispricing backed by solid foundations, check out a targeted 19 high quality undiscovered gems that filters for quality businesses the market may be overlooking.