Earnings

Arlo Subscriptions and Services Hit Record as Products’ GAAP Loss Widens

The Tip Desk · November 11, 2026 · 3 min read

Subscriptions and services revenue reached a record $96.0 million, or 64.4% of the $149.2 million total, as products’ GAAP gross-margin loss widened to 15.9%.

Arlo Technologies, Inc. (ARLO), a smart home security platform company, reported record subscriptions and services revenue of $96.0 million in the third quarter ended September 27, 2026, up 20.1% from a year earlier. That line accounted for 64.4% of total revenue of $149.2 million.

The subscription mix had already been expanding. In the second quarter, subscriptions and services were $93.0 million, or 59.7% of a $155.9 million total. Products revenue fell to $53.1 million from $59.6 million a year earlier, after $62.9 million in the immediately preceding quarter.

Year-over-year growth in the quarter was 6.9%, after 21.0% growth in the second quarter. Chief Executive Officer Matthew McRae said the company delivered 20% growth in subscriptions and services and expanding profitability, with adjusted EBITDA up more than 50% year over year.

Annual recurring revenue ended at $369.9 million, up 14.5% from a year earlier. Cumulative paid accounts rose to 6.6 million, up 23.1%.

GAAP gross margin was 46.5%, up 600 basis points from a year earlier. Non-GAAP gross margin was 49.0%, up 760 basis points. Subscriptions and services GAAP gross margin was 81.0%. Products GAAP gross margin was a 15.9% loss, after a 0.4% loss in the second quarter. Products non-GAAP gross margin was a 14.2% loss, after a 1.0% profit in the second quarter.

Adjusted EBITDA was $26.9 million, up 57.6% from a year earlier, with an 18.0% margin. GAAP net income was $0.9 million, or $0.01 a share. Non-GAAP EPS was $0.24.

Americas revenue was $90.5 million, or 60.7% of the total. EMEA was $52.7 million, or 35.3%. APAC was $6.0 million, or 4.0%.

Free cash flow was $16.6 million in the quarter, with an 11.1% margin. Cash and cash equivalents and short-term investments were $144.0 million, including cash outflows for business acquisitions and stock repurchases.

Arlo repurchased $14 million of common stock in the third quarter under a $50 million authorization. It then authorized a new repurchase program of up to $100 million through December 31, 2028. McRae said the authorization underscored confidence in future growth.

The company launched Arlo Secure 7 Smart Security, including Threat Assessment and Arlo Summary, and introduced an Arlo Ultra Secure Plan with 24/7 monitoring.

For the fourth quarter of 2026, Arlo guides to revenue of $137 million to $147 million, GAAP EPS of $(0.03) to $0.03, and non-GAAP EPS of $0.17 to $0.23. The company said the outlook does not include unknown items such as litigation reserves, impairments or discrete tax effects, and that the global tariff environment is uncertain because products are manufactured outside the United States.

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