Arlo’s third quarter results were met with a negative market reaction, despite the company delivering revenue and non-GAAP earnings that modestly exceeded analyst expectations. Management attributed performance to strong growth in paid SaaS accounts, the commercial launch of its Arlo Secure 6 platform, and a significant new product rollout that drove nearly 30% year-over-year unit sales growth. CEO Matthew McRae pointed to the company’s “record-breaking quarter for paid accounts and annual recurring revenue,” with a notable shift toward higher-margin service revenue. However, management acknowledged that product gross margins remained under pressure due to tariffs and promotional activity required to clear prior-generation inventory.

Is now the time to buy ARLO? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Arlo Technologies’s Q3 Earnings Call

• Adam Tindle (Raymond James) asked about the impact of BOM cost reductions on product gross margins and whether inventory clear-out effects would continue. CFO Kurt Binder clarified that tariff costs and end-of-life promotions weighed on margins in Q3 but anticipates improvement as new product sales ramp.
• Adam Tindle (Raymond James) inquired about the potential for Verisure’s ADT Mexico acquisition to drive broader Latin American expansion. CEO Matthew McRae confirmed Arlo’s products are already certified for Mexico and expects the partnership to facilitate further regional growth.
• Adam Tindle (Raymond James) sought detail on the magnitude of the pending ADT partnership. McRae stated he could not share specifics yet but emphasized that execution is on track and further updates are anticipated as the market launch nears.
• Jacob Stephan (Lake Street Capital Markets) questioned whether the strong Q3 product revenue reflected any pull-forward from Q4. Binder responded that there was no pull-in and attributed performance to strong execution and product load-in for the new lineup.
• Jacob Stephan (Lake Street Capital Markets) asked about the evolving retail channel, specifically Walmart. Binder explained that Walmart shelf presence nearly doubled, supporting mass market strategy and increased unit velocity.

Catalysts in Upcoming Quarters

Our analysts will be closely tracking (1) the pace of paid account additions and ARPU growth following the holiday season, (2) tangible progress on strategic partnerships, particularly further announcements related to Verisure and ADT, and (3) the impact of promotional activity and BOM cost reductions on consolidated margins. We will also monitor whether Arlo can sustain momentum in retail channel expansion and successfully navigate ongoing tariff pressures.

Arlo Technologies currently trades at $15.57, down from $16.92 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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