Arlo Technologies Experiences Mixed Performance Amid Growth

Arlo Technologies shares have faced a 12.9% decline, contrasting with sector gains. Despite challenges, strong service revenue growth and an increase in paid subscribers present a strong investment outlook.

Date: 08-01-2025

AI Rating: 6

Stock Performance

Arlo Technologies (ARLO) has seen its shares decline by 12.9% over the last month, significantly underperforming the broader Computer & Technology sector, which returned 2.4%. This decline is also notable against the Internet - Software industry, which dipped by 0.8%. Rival companies like Amazon (AMZN) and Logitech (LOGI) have shown a positive trend, with respective increases of 0.7% and 1.2%.

Service Revenue and Subscriber Growth

Despite the overall decline in share price, Arlo is achieving considerable growth in its services sector, reporting record service revenues of $61.9 million, marking a year-over-year increase of 21% in the third quarter of 2024. This growth can largely be attributed to an increase in paid subscribers, which surged by 255,000 (a 70% increase year over year), resulting in a total of 4.2 million paid subscribers. The upward shift towards premium plans has lifted the average revenue per user (ARPU) to $12.24 per month. The successful launch of Arlo Secure 5.0 has further enhanced this growth trajectory.

Partnership and Future Growth Estimates

Arlo’s partnership with Allstate provides a new avenue for growth, aimed at enhancing home security for millions of customers. The Zacks Consensus Estimate for 2025 revenues stands at $513.50 million, reflecting a modest year-over-year increase of 0.59%. However, earnings are projected at 56 cents per share, indicating a more optimistic year-over-year growth rate of 36.59%.

Earnings Estimates and Investment Ratings

The EPS estimates indicate potential for improvement, especially with a Zacks Rank of #1 (Strong Buy) and a Growth Score of B, positioning Arlo Technologies as an attractive investment. The favorable combination of market positioning and growth in service revenue may offset the recent share price decline.

Stocks: ARLO AMZN LOGI ALL