Arlo Technologies (ARLO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $127.4 million, up 10.8% year-over-year, with service revenue up 19.7% and ARR rising 21.4% to $235 million; paid accounts surpassed 4 million, up 73.9% year-over-year.

• Non-GAAP net income per share was $0.10 for Q2 and $0.19 for the first half; GAAP net loss per share was $(0.12) for Q2.

• Service revenue mix increased to 47% of total revenue, reflecting a shift to a services-first model.

• Strategic partnerships with Verisure and Allstate were renewed and expanded, supporting growth and entry into InsurTech.

• Free cash flow for the first half was $25.6 million, with a margin of 10.2%.

Financial highlights

• Q2 2024 service revenue was $60.3 million (up 19.7% year-over-year), with ARPU for retail and direct paid accounts at $12.

• Product revenue for Q2 was $67.2 million (up 3.8% year-over-year), with 1.3 million devices shipped, a 36% increase in volume.

• Q2 GAAP gross profit was $46.9 million (36.8% margin); non-GAAP gross profit was $48.3 million (37.9% margin); service gross margin was 76.4%.

• Q2 non-GAAP operating profit was $9.2 million, up 70% year-over-year; first-half non-GAAP operating profit grew 166%.

• Cash, cash equivalents, and short-term investments totaled $144 million at quarter end, up $20 million year-over-year.

Outlook and guidance

• Q3 2024 revenue guidance is $132–$142 million; non-GAAP EPS guidance is $0.08–$0.14.

• Full year 2024 revenue guidance: $510–$545 million; non-GAAP EPS: $0.35–$0.45.

• Service revenue forecasted to grow ~20% year-over-year, with service gross margins at or above 75% for 2024.

• Product gross margins expected to remain in the low to mid-single digits (5%-6%) for the remainder of 2024.

• Long-range plan targets 10 million paid accounts and $700 million ARR by 2030.