Arlo Technologies ARLO shares have plunged 12.9% in the past month, against the broader Zacks Computer & Technology sector’s return of 2.4%. The Zacks Internet - Software industry also declined 0.8% in the same time frame.

ARLO has underperformed its peers like Amazon AMZN and Logitech International LOGI, which are making strong efforts to expand in the consumer electronics industry. While Amazon shares have returned 0.7%, Logitech has appreciated 1.2% over the past month.

Arlo Technologies’ underperformance can be attributed to the shift in consumer purchase decisions to lower price points, resulting in reduced average selling prices and lower product revenues.

Despite these challenges, Arlo Technologies is benefiting from strong growth in its services business, particularly through record service revenue, increased paid subscribers, and the successful launch of Arlo Secure 5.0.

Arlo’s Service Revenues Surges With Strong Subscriber Growth

Arlo Technologies’ growth in the services business has been a major growth driver for its success. Service revenues reached a record $61.9 million, up 21% year over year in the third quarter of 2024. This growth was primarily driven by the expansion of paid subscribers and a higher mix of subscribers to more premium plans. 

Arlo Technologies added 255,000 paid subscribers, a 70% increase year over year, bringing the total number of paid subscribers to 4.2 million. The upward shift in the subscriber mix to higher-priced plans boosted the average revenue per user (ARPU) to a new high of $12.24 per month, underscoring the growing value of its customer base.

The success was fueled by the launch of Arlo Secure 5.0, which has been acting as a tailwind for ARLO. This new service included innovative features such as person and vehicle recognition, custom AI detection models and widgets for iOS and Android. 

Early adoption of these features has significantly boosted the number of subscribers signing up for premium plans and increased ARPU, driving sustained growth and elevating Arlo Technologies services business to new heights.

ARLO Partners With Allstate for Enhanced Home Security

ARLO’s collaboration with Allstate ALL now offers security solutions to its 6 million home insurance customers, which also helped drive growth.

In November 2024, ARLO and Allstate introduced the Arlo Total Security bundle, offering 24/7 professional monitoring and essential hardware for smarter home protection. 

The collaboration also combines Arlo Technologies’ advanced security technology with Allstate's trusted protection plans for enhanced peace of mind.

ARLO’s Earnings Estimates Show Upward Movement

The Zacks Consensus Estimate for 2025 revenues is pegged at $513.50 million, indicating a year-over-year increase of 0.59%.

The Zacks Consensus Estimate for 2025 earnings is pegged at 56 cents per share, which has remained unchanged in the past 30 days. The figure calls for a year-over-year increase of 36.59%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

ARLO Shares – A Strong Buy

ARLO currently sports a Zacks Rank #1 (Strong Buy) and a Growth Score of B, a favorable combination that offers a strong investment opportunity, per the Zacks proprietary methodology.  You can see the complete list of today’s Zacks #1 Rank stocks here.

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