What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 225 added, 152 removed, 439 unchanged (46% of the section changed)

36 unchanged sentences

shares issued and outstanding:

103,304,904 at March 30, 2025 and 100,885,158 at December 31, 2024

104,288,914 at June 29, 2025 and 100,885,158 at December 31, 2024

Additional paid-in capital 513,854 498,739

Accumulated other comprehensive income

Accumulated other comprehensive income (loss) ( 8 ) 34

Accumulated deficit ( 395,676 ) ( 397,965 )

3 unchanged sentences

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

2025 March 31,

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands, except per share data)

13 unchanged sentences

Total operating expenses 56,142 59,655 110,320 117,645

Loss from operations

( 1,451 ) ( 10,610 )

Income (loss) from operations 1,933 ( 12,801 ) 482 ( 23,411 )

Interest income, net 1,344 1,495 2,660 2,881

Other non-operating expense, net ( 407 ) ( 18 ) ( 605 ) ( 43 )

Loss before income taxes

( 333 ) ( 9,249 )

Provision for income taxes 502 395

$ ( 835 ) $ ( 9,644 )

Net loss per share:

Basic and diluted

$ ( 0.01 ) $ ( 0.10 )

Weighted average shares used to compute net loss per share:

Basic and diluted

102,217 96,264

Comprehensive loss:

Income (loss) before income taxes 2,870 ( 11,324 ) 2,537 ( 20,573 )

Provision (benefit) for income taxes

( 254 ) 236 248 631

Net income (loss) $ 3,124 $ ( 11,560 ) $ 2,289 $ ( 21,204 )

Net income (loss) per share:

Basic $ 0.03 $ ( 0.12 ) $ 0.02 $ ( 0.22 )

Diluted $ 0.03 $ ( 0.12 ) $ 0.02 $ ( 0.22 )

Weighted average shares used to compute net income (loss) per share:

Basic 103,885 97,843 103,060 97,051

Diluted 108,061 97,843 107,692 97,051

Comprehensive income (loss):

Net income (loss) $ 3,124 $ ( 11,560 ) $ 2,289 $ ( 21,204 )

Other comprehensive loss, net of tax ( 13 ) ( 89 ) ( 42 ) ( 129 )

( 29 ) ( 40 )

Total comprehensive loss

$ ( 864 ) $ ( 9,684 )

Total comprehensive income (loss) $ 3,111 $ ( 11,649 ) $ 2,247 $ ( 21,333 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended

2025 March 31,

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

4 unchanged sentences

Issuance of common stock under stock-based compensation plans 1 2 4 5

Issuance of common stock under employee stock purchase plan — — — —

Repurchase of common stock — — ( 1 ) —

3 unchanged sentences

Beginning balances $ 502,062 $ 476,665 $ 498,739 $ 470,322

Stock-based compensation expense 13,115 13,224

Stock-based compensation 11,081 17,299 24,196 30,523

Settlement of liability classified restricted stock units — — 4,996 6,903

Issuance of common stock under stock-based compensation plans 155 113 801 683

Issuance of common stock under employee stock purchase plan 1,475 1,692 1,475 1,692

Repurchase of common stock ( 919 ) — ( 16,353 ) —

Restricted stock unit withholdings

— ( 8,125 ) — ( 22,479 )

Ending balances $ 513,854 $ 487,644 $ 513,854 $ 487,644

1 unchanged sentence

Beginning balances $ ( 398,800 ) $ ( 377,105 ) $ ( 397,965 ) $ ( 367,461 )

( 835 ) ( 9,644 )

Net income (loss) 3,124 ( 11,560 ) 2,289 ( 21,204 )

Ending balances $ ( 395,676 ) $ ( 388,665 ) $ ( 395,676 ) $ ( 388,665 )

Accumulated other comprehensive income:

Accumulated other comprehensive income (loss):

Beginning balances $ 5 $ 280 $ 34 $ 320

Other comprehensive loss, net of tax ( 13 ) ( 89 ) ( 42 ) ( 129 )

( 29 ) ( 40 )

Ending balances $ ( 8 ) $ 191 $ ( 8 ) $ 191

4 unchanged sentences

Issuance of common stock under stock-based compensation plans 921 1,563 4,738 4,784

Issuance of common stock under employee stock purchase plan 155 233 155 233

Repurchase of common stock ( 92 ) — ( 1,489 ) —

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

2025 March 31,

Six Months Ended

2025 June 30,

(In thousands)

Cash flows from operating activities:

$ ( 835 ) $ ( 9,644 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Stock-based compensation expense 17,012 18,550

Net income (loss) $ 2,289 $ ( 21,204 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation expense, net of amounts of capitalized 31,995 39,470

Depreciation and amortization 1,687 1,684

12 unchanged sentences

Cash flows from investing activities:

Purchases of property and equipment ( 2,803 ) ( 356 )

Purchases of property and equipment, including capitalized software

( 5,778 ) ( 651 )

Purchases of short-term investments ( 83,390 ) ( 111,519 )

7 unchanged sentences

Net cash used in financing activities ( 13,869 ) ( 20,101 )

Net increase in cash, cash equivalents, and restricted cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

( 10,788 ) 5,899

Cash, cash equivalents, and restricted cash , at beginning of period

9 unchanged sentences

Purchases of property and equipment included in accounts payable and accrued liabilities $ 566 $ 233

Stock-based compensation expense capitalized for software development $ 868 $ —

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

31 unchanged sentences

Management bases its estimates on various assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results could differ materially from those estimates and operating results for the three months ended March 30, 2025 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future period.

Actual results could differ materially from those estimates and operating results for the six months ended June 29, 2025 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or any future period.

Significant Accounting Policies and Recent Accounting Pronouncements

Our significant accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no significant changes to such policies except the one below during the three months ended March 30, 2025.

There have been no significant changes to such policies except for the item below during the six months ended June 29, 2025.

We invested in a strategic investment, which consists of non-marketable securities in a privately held company in which we do not have a controlling interest or significant influence.

We apply the measurement alternative for non-marketable equity securities that do not have readily determinable fair values, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

For this investment, we recognize remeasurement adjustments, including upward and downward adjustments, and impairments, if any, in “Other non-operating income (expense), net” on the consolidated statements of comprehensive loss.

The strategic investment is subject to periodic impairment analysis, which involves an assessment of both qualitative and quantitative factors, including the investee’s financial metrics, market acceptance of the investee’s product or technology, and the rate at which the investee is using its cash.

An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred.

If the strategic investment is considered impaired, we will recognize an impairment through “Other non-operating income (expense), net” on the consolidated statements of comprehensive loss and establish a new carrying value for the investment.

If the strategic investment is considered impaired, we will recognize an impairment through “Other non-operating income (expense), net” on the unaudited condensed consolidated statements of comprehensive income (loss) and establish a new carrying value for the investment.

Accounting Pronouncements Recently Adopted

There were no accounting pronouncements adopted during the three months ended March 30, 2025.

There were no accounting pronouncements adopted during the six months ended June 29, 2025.

Accounting Pronouncements Not Yet Effective

Disclosure Improvements

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2 unchanged sentences

Among the various codification amendments, Topic 470 Debt is applicable to Arlo which requires the disclosure of amounts, terms and weighted-average interest rates of unused lines of credit.

The effective date is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirement by that date, with early adoption prohibited.

The effective date is either (i) the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or (ii) on June 30, 2027, if the SEC has not removed the requirement by that date, with early adoption prohibited.

The adoption of this new standard will not have a material impact on our financial statements and related disclosures.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Income Tax Disclosures

In December 2023, the FASB issued ASU No.

1 unchanged sentence

Improvements to Income Tax Disclosures, which requires on an annual basis to (1) disclose specific categories in the rate reconciliation, (2) provide additional information for reconciling items that meet a quantitative threshold, and (3) income taxes paid disaggregated by jurisdiction.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact that this guidance may have on our financial statements and related disclosures.

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU No.

5 unchanged sentences

Contract Balances

The following table reflects the changes in contract balances for the three months ended March 30, 2025:

Contract Balances

Balance Sheet Location March 30, 2025 December 31, 2024

The following table reflects the changes in contract balances for the six months ended June 29, 2025:

Contract Classification

Balance Sheet Classification

June 29, 2025 December 31, 2024 $ change % change

(In thousands)

2 unchanged sentences

Contract liabilities non-current Other non-current liabilities $ 437 $ 326 $ 111 34.0 %

Deferred revenue as of March 30, 2025 increased primarily due to increases in subscription and service revenue as a result of changes in consumer subscription plans and a shift to additional annual prepaid subscriptions, as well as increases in cumulative paid accounts and rates of subscriptions.

For the three months ended March 30, 2025 and March 31, 2024, $ 14.6 million and $ 12.1 million, respectively, of the recognized revenue was included in deferred revenue at the beginning of the periods.

Deferred revenue as of June 29, 2025 increased primarily due to increases in subscriptions and services revenue as a result of changes in consumer subscription plans and a shift to additional annual prepaid subscriptions, as well as increases in cumulative paid accounts and rates of subscriptions.

For the six months ended June 29, 2025 and June 30, 2024, $ 21.7 million and $ 15.2 million, respectively, of the recognized revenue was included in deferred revenue at the beginning of the periods.

There were no significant changes in estimates during the periods that would affect the contract balances.

Remaining Performance Obligations

The total estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and remaining was $ 44.6 million as of March 30, 2025 and $ 29.5 million as of December 31, 2024, substantially related to performance obligations classified as less than one year .

On April 25, 2024, Verisure Sàrl (“Verisure”), our largest customer, notified us that it was exercising its right under the Supply Agreement to extend the term for another five years (through November 2029) with no minimum purchase obligations.

Under the Supply Agreement, a purchase obligation is not deemed to exist until we receive and accept Verisure’s purchase order.

As of March 30, 2025, we had a backlog of $ 35.5 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months .

Variable Consideration

Revenue from all sales types is recognized at transaction price, the amount we expect to be entitled to in exchange for providing services or transferring goods.

Transaction price is calculated as selling price net of variable consideration which includes estimates for sales incentives and sales returns related to current period product revenue.

Sales incentives are determined based on a combination of the actual amounts committed and estimated future

The total estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and remaining was $ 43.8 million as of June 29, 2025 and $ 25.9 million as of December 31, 2024, substantially related to performance obligations classified as less than one year .

Under the Supply Agreement with Verisure Sàrl (“Verisure”), our largest customer, a performance obligation is not deemed to exist until we receive and accept Verisure’s purchase order.

As of June 29, 2025, we had a backlog of $ 40.4 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months .

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

expenditure based upon historical customary business practice.

Variable Consideration

Revenue from all sales is recognized at transaction price, the amount we expect to be entitled to in exchange for providing services or transferring goods.

Transaction price is calculated as selling price net of variable consideration which includes estimates for sales incentives and sales returns related to current period products revenue.

Sales incentives are determined based on a combination of the actual amounts committed and estimated future expenditure based upon historical customary business practice.

Sales returns are estimated by analyzing certain factors, including historical sales and returns data, channel inventory levels, current economic trends, and changes in customer demand for our products.

1 unchanged sentence

However, we continue to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur.

The following table provides activities related to sales incentives and sales returns that are recognized as contra-revenue.

Sales Incentives

Sales Returns

Three Months Ended Three Months Ended

2025 March 31,

2024 March 30,

2025 March 31,

(In thousands) (In thousands)

The following tables provide activities related to sales incentives and sales returns that are recognized as contra-revenue.

Three Months Ended Six Months Ended

Sales Incentives June 29,

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

Balance at the beginning of the period $ 28,378 $ 21,319 $ 29,846 $ 26,110

3 unchanged sentences

Balance at the end of the period $ 34,892 $ 26,593 $ 34,892 $ 26,593

Three Months Ended Six Months Ended

Sales Returns June 29,

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

Balance at the beginning of the period $ 8,963 $ 11,558 $ 11,651 $ 17,058

Credits issued

( 3,246 ) ( 5,300 ) ( 8,749 ) ( 13,840 )

2,373 2,505 5,188 5,545

Balance at the end of the period $ 8,090 $ 8,763 $ 8,090 $ 8,763

Disaggregation of Revenue

2 unchanged sentences

The following table presents revenue disaggregated by geographic region.

Three Months Ended

2025 March 31,

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

3 unchanged sentences

Total $ 129,405 $ 127,447 $ 248,471 $ 251,647

For the three months ended March 30, 2025 and March 31, 2024, one customer accounted for 36.0 % and 49.4 % of the total revenue, respectively.

For the six months ended June 29, 2025 and June 30, 2024, one customer accounted for 35 % and 47 % of the total revenue, respectively.

No other customers accounted for 10% or greater of the total revenue.

As of March 30, 2025, two customers accounted for 41 % and 20 %, and as of December 31, 2024, two customers accounted for 54 % and 13 % of the total accounts receivable, net.

As of June 29, 2025, two customers accounted for 47 % and 16 %, and as of December 31, 2024, two customers accounted for 54 % and 13 % of the total accounts receivable, net.

No other customers accounted for 10% or greater of the total accounts receivable, net.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Balance Sheet Components

Short-Term Investments

As of March 30, 2025 As of December 31, 2024

As of June 29, 2025 As of December 31, 2024

Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value

1 unchanged sentence

Treasuries $ 89,166 $ — $ ( 9 ) $ 89,157 $ 69,385 $ 34 $ — $ 69,419

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Accounts Receivable, Net

5 unchanged sentences

The following table provides a roll-forward of the allowance for credit losses that is deducted from the amortized cost basis of accounts receivable to present the net amount expected to be collected.

Three Months Ended

2025 March 31,

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

Balance at the beginning of the period $ 124 $ 218 $ 132 $ 333

Release of expected credit losses

Provision for (release of) expected credit losses

78 ( 76 ) 70 ( 191 )

Balance at the end of the period $ 202 $ 142 $ 202 $ 142

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Property and Equipment, Net

The components of property and equipment are as follows.

For comparative purposes, amounts in prior periods have been recast.

2025 December 31,

1 unchanged sentence

Machinery and equipment $ 14,994 $ 14,399

Software 19,774 16,918

Capitalized software development costs

16,095 10,612

Software and license 6,257 6,306

Computer equipment 906 894

2 unchanged sentences

Total property and equipment, gross 43,193 37,352

Accumulated depreciation ( 33,354 ) ( 32,587 )

accumulated depreciation and amortization ( 34,213 ) ( 32,587 )

Total property and equipment, net $ 8,980 $ 4,765

$ 7,194 $ 4,765

Depreciation expense pertaining to property and equipment was $ 0.8 million and $ 0.9 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

We have determined that no event occurred or circumstances changed during the three months ended March 30, 2025 that would more likely than not reduce the fair value of goodwill below the carrying amount.

There was no accumulated goodwill impairment recognized during the three months ended March 30, 2025.

Depreciation and amortization expense pertaining to property and equipment are as follows in our unaudited condensed consolidated statements of comprehensive income (loss).

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

Depreciation:

Operating expenses $ 366 $ 631 $ 923 $ 1,382

Amortization:

Subscriptions and services cost 341 151 613 302

Operating expenses 151 — 151 —

Total depreciation and amortization $ 858 $ 782 $ 1,687 $ 1,684

We have determined that no event occurred or circumstances changed during the six months ended June 29, 2025 that would more likely than not reduce the fair value of goodwill below the carrying amount.

There was no accumulated goodwill impairment recognized as of June 29, 2025.

ARLO TECHNOLOGIES, INC.

3 unchanged sentences

(In thousands)

Sales and marketing incentives

Sales incentives and marketing expenditures

$ 37,556 $ 31,947

Sales returns

Compensation 13,200 12,921

Employee compensation

15,449 12,921

Cloud and other costs 6,637 9,497

10 unchanged sentences

Treasuries (<90 days)

20,096 22,504

Available-for-sale securities:

5 unchanged sentences

Our investments in cash equivalents and available-for-sale securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets.

As of March 30, 2025 and December 31, 2024, assets and liabilities measured as Level 2 fair value were not material.

As of June 29, 2025 and December 31, 2024, assets and liabilities measured as Level 2 fair value were not material.

Our strategic long-term investment that does not have a readily determinable fair value was accounted for using a measurement alternative under which it is measured at cost and adjusted for observable price changes and impairments.

This investment without readily determinable fair value is classified within Level 3 in the fair value hierarchy and the subsequent adjustment to its fair value by applying the measurement alternative will be disclosed as non-recurring fair value measurement, including the level in the fair value hierarchy that was used.

As of March 30, 2025, the carrying value of long-term investment was $ 12.5 million.

There was no observable price change or impairment during the three months ended March 30, 2025.

As of June 29, 2025, the carrying value of long-term investment was $ 12.5 million.

There was no observable price change or impairment during the six months ended June 29, 2025.

ARLO TECHNOLOGIES, INC.

3 unchanged sentences

The Credit Agreement provides for a three-year revolving credit facility (the “Credit Facility”) of up to $ 45.0 million that matures on November 14, 2027, which also includes a $ 10.0 million sublimit for the issuance thereunder of letters of credit.

As of March 30, 2025, we had unused borrowing capacity of $ 45.0 million based on the terms and conditions of the Credit Agreement.

As of June 29, 2025, we had unused borrowing capacity of $ 45.0 million based on the terms and conditions of the Credit Agreement.

In addition, the Credit Agreement includes an uncommitted accordion feature that allows us to, from time to time, request an increase to the aggregate revolving loan commitments by up to an additional $ 30.0 million in the aggregate, subject to the satisfaction of certain conditions.

7 unchanged sentences

both covenants being tested quarterly on a trailing four consecutive fiscal quarter basis.

As of March 30, 2025, we were in compliance with all the covenants under the Credit Agreement.

The Credit Agreement also provides for a number of customary events of default, including a provision that a material adverse change constitutes an event of default that permits the Administrative Agent, at its option, to accelerate the loan.

No amount had been drawn under the Credit Facility as of March 30, 2025.

As of June 29, 2025, we were in compliance with all the covenants under the Credit Agreement.

No amount had been drawn under the Credit Facility as of June 29, 2025.

ARLO TECHNOLOGIES, INC.

5 unchanged sentences

The terms of certain leases provide for rental payments on a graduated scale.

Gross lease expense was $ 1.4 million and $ 1.5 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

We recorded sublease income as reduction of lease expense, in the amount of $ 0.7 million and $ 0.5 million for the three months ended March 30, 2025 and March 31, 2024, respectively.

Gross lease expense was $ 1.4 million and $ 2.8 million for the three and six months ended June 29, 2025, respectively, and $ 1.3 million and $ 2.8 million for the three and six months ended June 30, 2024, respectively.

We recorded sublease income as reduction of lease expense, in the amount of $ 0.7 million and $ 1.3 million for each of the three and six months ended June 29, 2025 and June 30, 2024, respectively.

Supplemental cash flow information related to operating leases is as follows:

Three Months Ended

2025 March 31,

Six Months Ended

2025 June 30,

(In thousands)

9 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The future minimum undiscounted lease payments under operating leases and future non-cancelable rent payments from our subtenants for each of the next five years and thereafter as of March 30, 2025 are as follows:

Operating Lease Payments Sublease Payments Net

(In thousands)

2025 (Remaining nine months) $ 3,456 $ ( 1,646 ) $ 1,810

2025 (Remaining six months) $ 2,332 $ ( 1,097 ) $ 1,235

2026 5,591 ( 2,066 ) 3,525

9 unchanged sentences

Total lease liabilities $ 20,559

Lease Early Termination

In July 2025, we entered into a conditional termination agreement for our office lease located in San Jose, California.

The termination will be effective following the landlord’s exercise of its termination option, which exercise notice was provided in late July.

Our obligation stipulated in the termination agreement includes a termination fee of $ 1.0 million and base rent through the effective date of termination, as well as vacating the premises timely.

We expect to record the derecognition of right-of-use assets and lease liabilities in the third quarter of 2025, and to recognize a gain which is currently being evaluated.

Letters of Credit

In connection with the lease agreement for our office space located in San Jose, California, we executed a letter of credit with the landlord as the beneficiary.

As of March 30, 2025, we had $ 3.6 million of unused letters of credit outstanding, of which $ 3.1 million pertains to the lease arrangement in San Jose, California.

As of June 29, 2025, we had $ 3.6 million of unused letters of credit outstanding, of which $ 3.1 million pertains to the lease arrangement in San Jose, California.

Following the effectiveness of the early termination agreement, this letter of credit will be terminated.

Purchase Obligations

2 unchanged sentences

Orders are non-cancelable within 30 days prior to the expected shipment date.

As of March 30, 2025, we had $ 23.3 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months .

As of March 30, 2025, an additional $ 24.3 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements.

As of June 29, 2025, we had $ 36.6 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months .

As of June 29, 2025, an additional $ 31.3 million of purchase orders beyond contractual termination periods have been issued to supply chain partners in anticipation of demand requirements.

Consequently, we may incur expenses for the materials and components, such as chipsets already purchased by the supplier to fulfill our orders if the purchase order is cancelled.

16 unchanged sentences

The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited.

As of March 30, 2025 and December 31, 2024, we have not incurred any material costs as a result of such indemnification obligations and we are not currently aware of any indemnification claims.

As of June 29, 2025 and December 31, 2024, we have not incurred any material costs as a result of such indemnification obligations and we are not currently aware of any indemnification claims.

Employee Benefit Plans

We grant options and restricted stock units (“RSUs”) under the 2018 Equity Incentive Plan (the “2018 Plan”), under which awards may be granted to all employees.

We also grant performance-based and market-based restricted stock units (“PSUs”) to our executive officers periodically.

We also grant performance-based and market-based restricted stock units (“PSUs”) to our executive officers and other senior employees periodically.

Award vesting periods for the 2018 Plan are generally three to five years .

As of March 30, 2025, 4.1 million shares were available for future grants.

As of June 29, 2025, 4.0 million shares were available for future grants.

Options may be granted for periods of up to 10 years or such shorter term as may be provided in the agreement and at prices no less than 100 % of the fair market value of Arlo’s common stock on the date of grant.

Options granted under the 2018 Plan generally vest over four years , the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining three years .

On January 24, 2025, we registered an aggregate of up to 5,050,450 shares of common stock on a Registration Statement on Form S-8, including 4,050,450 shares issuable pursuant to the 2018 Plan that were automatically added to the shares authorized for issuance under the 2018 Plan and 1,000,000 shares issuable pursuant to the Employee Stock Purchase Plan (“ESPP”) that were automatically added to the shares authorized for issuance on January 1, 2025, both pursuant to an “evergreen” provision contained in the respective plans.

On January 24, 2025, we registered an aggregate of up to 5,050,450 shares of common stock on a Registration Statement on Form S-8, including 4,050,450 shares under the 2018 Plan and 1,000,000 shares under the Employee Stock Purchase Plan (“ESPP”), both pursuant to an “evergreen” provision contained in the respective plans.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the available shares for grants as of March 30, 2025:

The following table sets forth the available shares for grants as of June 29, 2025:

Number of Shares

4 unchanged sentences

Forfeited / cancelled 361

Shares available for grants as of March 30, 2025

Shares available for grants as of June 29, 2025

Employee Stock Purchase Plan

We sponsor the ESPP to eligible employees.

There were no ESPP purchases during either the three months ended March 30, 2025 or March 31, 2024.

As of March 30, 2025, 3.4 million shares were available for issuance under the ESPP.

We sponsor the ESPP for eligible employees, under which, employees purchased 155 thousand shares and 233 thousand shares during the six months ended June 29, 2025 and June 30, 2024, respectively.

As of June 29, 2025, 3.3 million shares were available for issuance under the ESPP.

Option Activity

We did not grant options during the three months ended March 30, 2025.

Stock option activity during the three months ended March 30, 2025 was as follows:

We did not grant options during the six months ended June 29, 2025.

Stock option activity during the six months ended June 29, 2025 was as follows:

Number of Shares Weighted Average Exercise Price Per Share

5 unchanged sentences

Expired — $ 14.39

Outstanding as of March 30, 2025

Vested and exercisable as of March 30, 2025

RSU activity, excluding PSU activity, during the three months ended March 30, 2025 was as follows:

Outstanding as of June 29, 2025

Vested and exercisable as of June 29, 2025

RSU activity, exclusive of PSU activity, during the six months ended June 29, 2025 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 178 ) $ 8.25

Outstanding as of March 30, 2025

Outstanding as of June 29, 2025

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Our executive officers and other senior employees have been granted performance-based awards with some vesting occurring when performance conditions are met and some vesting occurring at the end of a three or five-year period when market conditions are met.

Our executive officers and other senior employees have been granted PSUs with some vesting occurring when performance conditions are met and some vesting occurring at the end of a three or five-year period when market conditions are met.

The number of units earned and eligible to vest are determined based on the achievement of various performance conditions or market conditions, including the cumulative paid accounts targets, stock price, cash balances at reporting period, and the recipients’ continued services.

At the end of each reporting period, we evaluate the probability of achieving the performance and record the related stock-based compensation expense based on the achievement over the service period.

PSU activity during the three months ended March 30, 2025 was as follows:

At the end of each reporting period, we evaluate the probability of achieving the performance and record the related stock-based compensation expense based on the estimated achievement over the service period.

PSU activity during the six months ended June 29, 2025 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 3 ) $ 8.28

Outstanding as of March 30, 2025

Outstanding as of June 29, 2025

4,466 $ 10.57

Stock-Based Compensation Expense

The following table sets forth the stock-based compensation expense included in our unaudited condensed consolidated statements of comprehensive loss:

Three Months Ended

2025 March 31,

The following table sets forth the stock-based compensation expense included in our unaudited condensed consolidated statements of comprehensive income (loss):

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

3 unchanged sentences

General and administrative 7,519 12,674 16,441 22,709

Total $ 17,012 $ 18,550

As of March 30, 2025, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options.

As of March 30, 2025, $ 74.0 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.7 year.

During the three months ended March 30, 2025 and March 31, 2024, we settled executive and employee bonuses by granting and issuing RSUs (non-cash financing activities) that vested immediately amounting to $ 5.0 million and $ 6.9 million, respectively.

Stock-based compensation, net of amounts capitalized $ 14,983 $ 20,920 $ 31,995 $ 39,470

Capitalized stock-based compensation 267 — 868 —

Total stock-based compensation $ 15,250 $ 20,920 $ 32,863 $ 39,470

As of June 29, 2025, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options.

As of June 29, 2025, $ 63.9 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.1 year.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The provision for income taxes for the three months ended March 30, 2025 was $ 0.5 million or an effective tax rate of ( 150.8 )%.

The provision for income taxes for the three months ended March 31, 2024 was $ 0.4 million or an effective tax rate of ( 4.3 )%.

Provision for income taxes increased for the three months ended March 30, 2025, compared to the prior year period, primarily due to the increase in state income taxes that no longer have the net operating losses in the U.S.

The lower effective tax rate this quarter is due to the lower loss from operations this quarter compared to the prior year period.

Consistent with the prior year periods, we maintained a valuation allowance against our U.S.

federal and state deferred tax assets and did not record a tax benefit on these deferred tax assets since it is more likely than not that these deferred tax assets will not be realized.

The lower effective tax rate for the three months ended March 30, 2025, compared to the U.S.

The provision (benefit) for income taxes for the three and six months ended June 29, 2025 was $( 0.3 ) million and $ 0.2 million, respectively, or an effective tax rate of ( 8.9 )% and 9.8 %, respectively.

The provision for income taxes for the three and six months ended June 30, 2024 was $ 0.2 million and $ 0.6 million, respectively, or an effective tax rate of ( 2.1 )% and ( 3.1 )%, respectively.

Provision for income taxes decreased for the three and six months ended June 29, 2025, compared to the prior year period, primarily due to lower international tax on account of expected use of research and development credits in Ireland and a reduction in the domestic year-to-date pre-tax book income ratio used to estimate the quarterly tax provision.

The higher effective tax rate this quarter is due to the low income from operations this quarter compared to the much higher amount of loss in prior year period.

The lower effective tax rate for the three and six months ended June 29, 2025, compared to the U.S.

federal income tax rate, is primarily due to the valuation allowance on our net U.S.

deferred tax assets and the impact of a lower tax rate on foreign earnings.

Net Loss Per Share

Three Months Ended

2025 March 31,

We have recorded a full valuation allowance against U.S.

net deferred tax assets.

We will continue to maintain a full valuation allowance on U.S.

net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance.

However, given our current and anticipated future domestic earnings, we believe that there is a reasonable possibility that within the next 12 - 24 months, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion of the U.S.

valuation allowance will no longer be needed.

A release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense, which could be material, for the period the release is recorded.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBB“), a significant tax reform package, was enacted.

The bill introduced a number of corporate tax changes effective for tax years beginning after December 31, 2024.

Key provisions of the OBBB include:

• Reinstatement of immediate expensing for domestic research and development expenses under new Section 174A;

• Restoration of 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025;

• Modifications to the limitation on business interest expense under Section 163(j).

We are currently evaluating the potential impacts of the OBBB on our future financial results.

The restoration of research and development expensing, in particular, may result in tax benefits beginning in 2025, depending on future elections and capital spending plans.

These impacts, if any, will be reflected in the financial statements for the period ending December 31, 2025.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Net Income (Loss) Per Share

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands, except per share data)

$ ( 835 ) $ ( 9,644 )

Weighted average common shares - basic and diluted

102,217 96,264

Basic and diluted net loss per share

$ ( 0.01 ) $ ( 0.10 )

Net income (loss) $ 3,124 $ ( 11,560 ) $ 2,289 $ ( 21,204 )

Weighted average shares - basic 103,885 97,843 103,060 97,051

Effect of dilutive stock-based awards 4,176 — 4,632 —

Weighted average shares - diluted 108,061 97,843 107,692 97,051

Net income (loss) per share - basic $ 0.03 $ ( 0.12 ) $ 0.02 $ ( 0.22 )

Net income (loss) per share - diluted $ 0.03 $ ( 0.12 ) $ 0.02 $ ( 0.22 )

Anti-dilutive employee stock-based awards, excluded 331 733 514 904

7 unchanged sentences

The consolidated net loss is the measure of segment net loss that is most consistent with U.S.

The CODM is regularly provided with not only the consolidated expenses on the unaudited condensed consolidated statements of comprehensive loss, but also the significant segment expenses and other segment items as below:

Three Months Ended

2025 March 31,

The CODM is regularly provided with not only the consolidated expenses in our unaudited condensed consolidated statements of comprehensive income (loss), but also the significant segment expenses and other segment items as below:

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

7 unchanged sentences

Other segment items (1)

4,911 2,552 8,099 4,828

Depreciation 518 323 1,075 787

Interest expense 84 105 170 200

Income taxes expense 502 395

Segment net loss $ ( 835 ) $ ( 9,644 )

Provision (benefit) for income taxes

( 254 ) 236 248 631

Segment net income (loss) $ 3,124 $ ( 11,560 ) $ 2,289 $ ( 21,204 )

Reconciliation of profit or loss:

Adjustments and reconciling items — — — —

Consolidated net loss $ ( 835 ) $ ( 9,644 )

Consolidated net income (loss) $ 3,124 $ ( 11,560 ) $ 2,289 $ ( 21,204 )

_________________________

(1) Other segment items include corporate IT and facility overhead, freight out expense, credit card fees, restructuring charges, separation expense, litigation reserves, interest income, net, foreign currency exchange gain (loss), net and others.

(1) Other segment items include corporate IT and facility overhead, freight out expense, credit card fees, restructuring charges, separation expense, litigation reserves, interest income, foreign currency exchange gain (loss), net and others.

ARLO TECHNOLOGIES, INC.

1 unchanged sentence

Geographic Information for Revenue

Revenue consists of subscription and service revenue and product sales, less allowances for estimated sales returns, price protection, end-user customer rebates, net changes in deferred revenue, and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance.

Revenue consists of subscriptions and services revenue and product sales, less allowances for estimated sales returns, price protection, end-user customer rebates, net changes in deferred revenue, and other channel sales incentives deemed to be a reduction of revenue per the authoritative guidance.

Sales and usage-based taxes are excluded from revenue.

1 unchanged sentence

The following table presents revenue by geographic area.

Three Months Ended

2025 March 31,

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

(In thousands)

18 unchanged sentences

Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

During the three months ended March 30, 2025, we repurchased and subsequently retired 1.4 million shares of Arlo common stock for an aggregate amount of $ 15.2 million.

As of March 30, 2025, $ 30.3 million remained available and authorized for future repurchases.

During the six months ended June 29, 2025, we repurchased and subsequently retired 1.5 million shares of Arlo common stock for an aggregate repurchase amount of $ 16.1 million.

As of June 29, 2025, $ 29.4 million remained available and authorized for future repurchases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements