Arlo’s second quarter results drew a positive market reaction, supported by the company’s continued shift toward subscription and services revenue. Management emphasized accelerating subscriber growth and robust demand across retail and partner channels, with CEO Matthew McRae highlighting that “service revenue hit $78 million, up 30% year-over-year and is now more than 60% of our total revenue.” The quarter also benefited from higher average revenue per user, driven by customer adoption of premium service tiers and ongoing upgrades to the Arlo Secure platform. These factors, combined with operational improvements and effective inventory management, underpinned Arlo’s margin expansion and improved profitability.

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

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 Q2 Earnings Call

• Jacob Stephan (Lake Street) asked for details on the ADT partnership structure, prompting CEO Matthew McRae to clarify that the agreement is unique and will involve both devices and service revenue, with more details expected later in the year.

• Jacob Stephan (Lake Street) also inquired about the scale and impact of the upcoming product launches. McRae explained that the launch covers over 100 SKUs, with significant cost reductions and expansion into new categories to increase shelf space and market share.

• Scott Searle (ROTH Capital) questioned the sources of net subscriber additions across channels. McRae noted broad-based strength, highlighting Amazon, Best Buy, Walmart, and international partners, with no single channel dominating gains.

• Adam Tindle (Raymond James) asked about the sustainability of ARPU growth following the new service plan rollout. McRae and Binder confirmed a full-quarter impact in Q2, with incremental ARPU gains expected as more annual subscribers renew at higher rates.

• Hamed Khorsand (BWS Financial) probed whether subscriber guidance increases reflect unit sales or conversion improvements. McRae responded that higher guidance is mainly due to increased retail and partner unit sales, with some additional benefit from better conversion and retention.

Catalysts in Upcoming Quarters

Looking ahead, our analysts will track (1) the pace of adoption and sell-through for Arlo’s new device portfolio, (2) the initial revenue impact and operational integration of the ADT partnership, and (3) trends in ARPU and subscriber retention as more customers shift to updated service plans. Execution on cost management and mitigation of tariff risks will also be key signposts.

Arlo Technologies currently trades at $17.09, up from $16.45 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

The Best Stocks for High-Quality Investors

When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.