Arlo Technologies Inc (NYSE:ARLO) Reports Q3 2025 Earnings Beat Amid Revenue Miss

Arlo Technologies Inc (NYSE:ARLO) reported financial results for the third quarter of 2025, delivering a performance characterized by a narrow revenue miss but a solid earnings beat relative to analyst expectations. The company's stock moved lower in after-hours trading following the announcement, indicating a mixed market reception to the quarterly update.

Earnings and Revenue Performance Versus Estimates

The smart home security provider posted revenue of $139.5 million for the quarter ended September 28, 2025, falling approximately 1.3% short of the $141.3 million analysts had projected. This represents a modest 1.4% increase compared to the same quarter last year.

However, Arlo demonstrated stronger profitability than expected, with non-GAAP earnings per share of $0.16 surpassing the consensus estimate of $0.15 by approximately 6.7%. This earnings beat marks a significant improvement from the year-ago quarter's $0.11 per share.

Key financial metrics from the quarter include:

• Revenue: $139.5 million (estimated $141.3 million)
• Non-GAAP EPS: $0.16 (estimated $0.15)
• GAAP EPS: $0.07, compared to a loss of $0.04 in Q3 2024

Market Reaction and Forward Guidance

The market's initial response was negative, with shares declining approximately 2.6% in after-hours trading. This reaction appears to reflect investor focus on the revenue miss despite the earnings beat.

Looking ahead, management provided fourth-quarter revenue guidance ranging between $131 million and $141 million. The midpoint of this range, $136 million, sits slightly below the analyst consensus of $139.9 million for Q4 2025. The company expects non-GAAP EPS between $0.13 and $0.19 for the coming quarter.

Strategic Highlights and Business Momentum

Beyond the headline numbers, Arlo's earnings release highlighted significant progress in its strategic transition toward a subscription-based model. The company's services business continues to demonstrate robust growth and impressive profitability.

Notable achievements from the quarter include:

• Annual Recurring Revenue (ARR) reached $323.2 million, growing 33.8% year-over-year
• Subscription and services revenue hit a record $79.9 million, accounting for 57.3% of total revenue
• Non-GAAP subscription and services gross margin reached a record 85.1%, expanding 770 basis points
• Cumulative paid accounts grew to 5.4 million, increasing 27.4% year-over-year
• Adjusted EBITDA increased 50.3% to $17.1 million

CEO Matthew McRae emphasized the company's momentum in the services segment, noting that the launch of their refreshed product portfolio and Arlo Secure 6 AI-driven platform positions the company for "a successful holiday season and additional subscriptions and services revenue growth heading into 2026."

For investors seeking more detailed analysis of future earnings projections and historical performance, additional earnings estimates and data for Arlo are available for review.

Disclaimer: This article presents financial data and analysis for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.