Does Arlo Technologies’ (ARLO) Profit Turn and Raised Guidance Signal a Shift in Its Growth Story?

• In early August 2025, Arlo Technologies reported second quarter results showing a return to profitability, with revenue of US$129.41 million and net income of US$3.12 million, alongside improved quarterly guidance for both revenue and earnings per share.
• This turnaround from a net loss in the prior year and the forecast for further gains highlights a significant shift in the company’s earnings momentum and operational outlook.
• We'll explore how Arlo’s return to profitability and stronger guidance may impact its long-term investment narrative and growth expectations.

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Arlo Technologies Investment Narrative Recap

To be a shareholder in Arlo Technologies, you need to believe in its ability to expand recurring subscription revenue and maintain margin resilience despite intense competition and potential pricing pressure in hardware. The company’s recent return to profitability supports the case for operational execution as a near-term catalyst, yet does not fully eliminate the risk of margin compression if average selling prices continue to fall or market share is challenged by larger peers. In the short run, steady earnings remain the most important signal, while sustaining high service margins and subscriber growth presents the biggest risk if competitive dynamics shift, this result does not materially change these factors but provides increased confidence in management’s targets.

Arlo’s August 2025 earnings guidance, forecasting Q3 revenue between US$133 million and US$143 million with net income per share of US$0.04 to US$0.10, is particularly relevant as it directly addresses the market’s focus on earnings strength following the Q2 turnaround. This guidance underscores the company’s outlook for continued profitability and offers reassurance around the short-term catalyst of achieving positive earnings, which is closely watched by investors following Arlo’s shift from losses to profit.

However, if adoption trends for Arlo’s higher-margin services were to soften, investors should be aware that...

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

Arlo Technologies' outlook anticipates $632.0 million in revenue and $103.1 million in earnings by 2028. Achieving these targets would require 7.6% annual revenue growth and a $110.1 million increase in earnings from the current -$7.0 million level.

Uncover how Arlo Technologies' forecasts yield a $23.20 fair value, a 36% upside to its current price.

Exploring Other Perspectives

Fair value estimates from the Simply Wall St Community range from US$7.79 to US$25.46, spanning three independent perspectives. While service margin strength features in the current earnings improvement, these diverse valuations show just how differently investors see Arlo’s future and invite you to explore several viewpoints beyond consensus.

Explore 3 other fair value estimates on Arlo Technologies - why the stock might be worth as much as 49% more than 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 and 1 important warning sign 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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