What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 215 added, 179 removed, 485 unchanged (45% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

September 28,

2025 December 31,

32 unchanged sentences

shares issued and outstanding:

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

105,747,479 at September 28, 2025 and 100,885,158 at December 31, 2024

Additional paid-in capital 517,890 498,739

Accumulated other comprehensive income (loss) ( 8 ) 34

Accumulated other comprehensive income 35 34

Accumulated deficit ( 388,803 ) ( 397,965 )

4 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands, except per share data)

14 unchanged sentences

Income (loss) from operations 872 ( 5,453 ) 1,354 ( 28,864 )

Other income (expense):

Gain on early lease termination 4,144 — 4,144 —

Interest income, net 1,508 1,400 4,168 4,281

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

Other non-operating income (expense), net 503 ( 57 ) ( 102 ) ( 100 )

Income (loss) before income taxes 7,027 ( 4,110 ) 9,564 ( 24,683 )

Provision (benefit) for income taxes

( 254 ) 236 248 631

Provision for income taxes 154 329 402 960

Net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 )

7 unchanged sentences

Net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 )

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

Other comprehensive income (loss), net of tax 43 45 1 ( 84 )

Total comprehensive income (loss) $ 6,916 $ ( 4,394 ) $ 9,163 $ ( 25,727 )

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

16 unchanged sentences

Restricted stock unit withholdings — ( 20,461 ) — ( 42,940 )

— ( 8,125 ) — ( 22,479 )

Ending balances $ 517,890 $ 489,677 $ 517,890 $ 489,677

5 unchanged sentences

Beginning balances $ ( 8 ) $ 191 $ 34 $ 320

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

Other comprehensive income (loss), net of tax 43 45 1 ( 84 )

Ending balances $ 35 $ 236 $ 35 $ 236

11 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

2025 June 30,

Nine Months Ended

September 28,

2025 September 29,

(In thousands)

2 unchanged sentences

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

Stock-based compensation expense, net of amounts capitalized

45,133 54,159

Depreciation and amortization 2,586 2,395

Gain on early lease termination ( 4,144 ) —

Allowance for credit losses and non-cash changes to reserves 994 2,930

9 unchanged sentences

Net cash provided by operating activities 58,952 44,634

39,749 26,268

Cash flows from investing activities:

Purchases of property and equipment, including capitalized software ( 9,996 ) ( 1,612 )

( 5,778 ) ( 651 )

Purchases of short-term investments ( 112,932 ) ( 145,955 )

1 unchanged sentence

Proceeds from maturities of short-term investments 105,000 158,796

Net cash used in investing activities ( 36,668 ) ( 268 )

Net cash provided by (used in) investing activities ( 30,428 ) 11,229

Cash flows from financing activities:

3 unchanged sentences

Net cash used in financing activities ( 24,544 ) ( 35,830 )

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

( 10,788 ) 5,899

Net increase in cash, cash equivalents, and restricted cash

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

16 unchanged sentences

Arlo Technologies, Inc.

(“we” or “Arlo”) is transforming the ways in which people can protect everything that matters to them with home, business, and personal security services that combine a globally scaled cloud platform, monitoring and analytics capabilities, and award-winning app-controlled devices to create a personalized security ecosystem.

(“we,” “our,” “us,” or “Arlo”) is transforming the ways in which people can protect everything that matters to them with home, business, and personal security services that combine a globally scaled cloud platform, monitoring and analytics capabilities, and award-winning app-controlled devices to create a personalized security ecosystem.

Arlo’s experience in cloud services, AI and computer vision analytics, wireless connectivity and intuitive user experience design delivers seamless, smart home security for Arlo users that can be setup by the customers and engaged with every day.

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Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31.

Reclassification

Certain prior periods amounts have been reclassified to conform to the current period’s presentation.

None of these reclassifications had a material impact to the unaudited condensed consolidated financial statements.

ARLO TECHNOLOGIES, INC.

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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 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.

Actual results could differ materially from those estimates and operating results for the nine months ended September 28, 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 for the item below during the six months ended June 29, 2025.

There have been no significant changes to such policies except for the item below during the nine months ended September 28, 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.

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Accounting Pronouncements Recently Adopted

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

There were no accounting pronouncements adopted during the nine months ended September 28, 2025.

Accounting Pronouncements Not Yet Effective

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2023-09, Income Taxes:

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 permitted.

7 unchanged sentences

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

Credit Losses Accounting.

In July 2025, the FASB issued ASU No.

2025-05, Financial Instruments - Credit

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient permitting companies to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets.

This guidance is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted and is effective on a prospective basis.

We plan to adopt this guidance for our fiscal year beginning January 1, 2026, and we do not expect it to have a material effect on our financial statements.

Software Development Costs Accounting and Disclosure.

In September 2025, the FASB issued ASU No.

2025-06, Intangibles - Goodwill and Other - Internal-Use Software:

Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the recognition and capitalization framework to reflect current software development practices, including iterative and agile methodologies, by removing references to “development stages”.

It also clarifies the criteria for capitalization, which begins when both of the following occur:

(1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended.

This guidance is effective for annual periods beginning after December 15, 2027, and for interim periods within those annual reporting periods.

Early adoption is permitted and is effective on either a prospective basis or retrospective basis.

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

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Contract Balances

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

The following table reflects the changes in contract balances for the nine months ended September 28, 2025:

Contract Classification

Balance Sheet Classification

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

September 28, 2025 December 31, 2024 $ change % change

(In thousands)

Accounts receivable, net Accounts receivable, net $ 61,450 $ 57,332 $ 4,118 7.2 %

Receivables Accounts receivable, net $ 76,698 $ 57,332 $ 19,366 33.8 %

Contract liabilities, current Deferred revenue $ 40,073 $ 27,248 $ 12,825 47.1 %

Contract liabilities, non-current Other non-current liabilities $ 442 $ 326 $ 116 35.6 %

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.

Receivables are recorded in the period we deliver products or provide subscriptions and services when we have an unconditional right to payment.

Contract assets are related to the value of products or subscriptions and services transferred to the customer for which the right to payment is not just dependent on the passage of time.

As of September 28, 2025, there were no contract assets.

Contract liabilities are recognized when we receive payment or have an unconditional right to payment in advance of the satisfaction of performance.

Contract liabilities 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 nine months ended September 28, 2025 and September 29, 2024, $ 25.6 million and $ 17.3 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 $ 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 .

The total estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied and remaining was $ 43.1 million as of September 28, 2025 and $ 29.5 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)

As of September 28, 2025, we had a backlog of $ 17.6 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

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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,

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Three Months Ended Nine Months Ended

Sales Incentives September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

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Balance at the end of the period $ 37,127 $ 26,465 $ 37,127 $ 26,465

Three Months Ended Six Months Ended

Sales Returns June 29,

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

Sales Returns September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

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The following table presents revenue disaggregated by geographic region.

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

3 unchanged sentences

Total $ 139,529 $ 137,667 $ 388,000 $ 389,314

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

For the three months ended September 28, 2025 and September 29, 2024, one customer accounted for 36 % and 42 % of the total revenue, respectively.

For the nine months ended September 28, 2025 and September 29, 2024, one customer accounted for 35 % and 45 % of the total revenue, respectively.

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

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.

As of September 28, 2025, two customers accounted for 51 % and 15 %, 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.

3 unchanged sentences

Short-Term Investments

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

As of September 28, 2025 As of December 31, 2024

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

2 unchanged sentences

Accounts Receivable, Net

September 28,

2025 December 31,

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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 Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

3 unchanged sentences

Balance at the end of the period $ 168 $ 221 $ 168 $ 221

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.

September 28,

2025 December 31,

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Total property and equipment, net $ 12,391 $ 4,765

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,

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

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Depreciation and amortization expense pertaining to property and equipment are as follows:

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

5 unchanged sentences

Total depreciation and amortization $ 899 $ 710 $ 2,586 $ 2,395

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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

We have determined that no event occurred or circumstances changed during the nine months ended September 28, 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 September 28, 2025.

Accrued Liabilities

September 28,

2025 December 31,

8 unchanged sentences

Total $ 93,999 $ 85,730

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Fair Value Measurements

The following table summarizes assets measured at fair value on a recurring basis:

September 28,

2025 December 31,

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_________________________

(1) Included in short-term investments in our unaudited condensed consolidated balance sheets.

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 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 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.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1) Included in short-term investments on our unaudited condensed consolidated balance sheets.

Our investments in cash equivalents and marketable 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 September 28, 2025 and December 31, 2024, assets and liabilities measured as Level 2 fair value were not material.

Our strategic equity investment without readily determinable fair value is classified within Level 3 of 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 and included in the level of the fair value hierarchy that was used.

As of September 28, 2025, the carrying value of our strategic equity investment was $ 12.5 million.

There was no observable price change or impairment during the nine months ended September 28, 2025.

Revolving Credit Facility

1 unchanged sentence

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

As of September 28, 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.

The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes.

The obligations under the Credit Agreement are secured by substantially all of our assets, including substantially all of the assets of a material subsidiary, Arlo Technologies International Limited, a limited corporation organized under the laws of Ireland (which is the sole guarantor of the Credit Facility as of the closing of the Credit Facility).

Borrowings under the Credit Agreement will bear interest at a floating rate equal to:

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

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.

As of September 28, 2025, we were in compliance with all the covenants under the Credit Agreement.

No amount had been drawn under the Credit Facility as of September 28, 2025.

ARLO TECHNOLOGIES, INC.

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

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.

Gross lease expense was $ 1.2 million and $ 4.0 million for the three and nine months ended September 28, 2025, respectively, and $ 1.4 million and $ 4.2 million for the three and nine months ended September 29, 2024, respectively.

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

Six Months Ended

2025 June 30,

Nine Months Ended

September 28,

2025 September 29,

(In thousands)

4 unchanged sentences

Weighted average remaining lease term and weighted average discount rate related to operating leases are as follows:

September 28,

2025 December 31,

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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 June 29, 2025 are as follows:

Operating Lease Payments Sublease Payments Net

The future minimum undiscounted lease payments under operating leases for each of the next five years and thereafter are as follows:

September 28, 2025

(In thousands)

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

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

2027 5,562 ( 2,322 ) 3,240

2028 4,596 ( 2,392 ) 2,204

2029 2,715 ( 1,228 ) 1,487

2025 (Remaining three months) $ 412

Thereafter 3,616

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Total lease liabilities $ 8,854

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 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.

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

Our obligation stipulated in the 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 recorded the derecognition of right-of-use assets and lease liabilities and recognized a gain of $ 4.1 million, net of $ 1.6 million write-off loss from sublease and $ 1.0 million lease termination fees, upon the termination effective in the third quarter of 2025.

Contemporaneously with this termination, our sublease arrangement was terminated and our letter of credit in connection with this lease was released as of September 28, 2025.

Purchase Obligations

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

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.

As of September 28, 2025, we had $ 28.9 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months .

As of September 28, 2025, an additional $ 15.6 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.

3 unchanged sentences

Litigation and Other Legal Matters

From time to time, we may become involved in disputes, litigation, and other legal actions.

In all cases, at each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within general and administrative expenses.

We are, and from time to time, we may become involved in disputes, litigation, and other legal actions in the ordinary course of business.

At each reporting period, we evaluate whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

Significant judgment is required to determine both the probability and the estimated amount of loss.

In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as litigation reserves in other operating expense on the unaudited condensed consolidated statements of comprehensive income (loss).

We monitor developments in these legal matters that could affect the estimate we had previously accrued.

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

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.

As of September 28, 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.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Employee Benefit Plans

2 unchanged sentences

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

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

As of September 28, 2025, 5.2 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.

1 unchanged sentence

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 June 29, 2025:

On July 29, 2025, the Compensation and Human Capital Committee of the Board of Directors unanimously approved an amendment to the 2018 Plan to reserve an additional 1,500,000 shares of our common stock to be used exclusively for grants of awards to individuals who were not previously employees or non-employee directors, as an inducement to the individual’s employment with us within the meaning of Rule 303A.08 of the New York Stock Exchange Listed Company Manual.

On August 28, 2025, we registered an aggregate of up to 1,500,000 shares of common stock on a Registration Statement on Form S-8.

The following table sets forth the available shares for grants as of September 28, 2025:

Number of Shares

3 unchanged sentences

Granted ( 4,403 )

Forfeited / cancelled 361

Shares available for grants as of June 29, 2025

Forfeited / expired / cancelled 690

Shares available for grants as of September 28, 2025

Employee Stock Purchase Plan

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.

We sponsor the ESPP for eligible employees, under which, employees purchased 155 thousand shares and 233 thousand shares during the nine months ended September 28, 2025 and September 29, 2024, respectively.

As of September 28, 2025, 3.3 million shares were available for issuance under the ESPP.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Option Activity

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:

We did not grant options during the nine months ended September 28, 2025.

Stock option activity during the nine months ended September 28, 2025 was as follows:

Number of Shares Weighted Average Exercise Price Per Share

3 unchanged sentences

Exercised ( 94 ) $ 8.55

Forfeited / cancelled ( 180 ) $ —

Expired — $ 14.39

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:

Expired / cancelled ( 180 ) $ 14.39

Outstanding as of September 28, 2025

Vested and exercisable as of September 28, 2025

RSU activity, exclusive of PSU activity, during the nine months ended September 28, 2025 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

3 unchanged sentences

Vested ( 3,284 ) $ 8.81

Forfeited ( 178 ) $ 8.25

Outstanding as of June 29, 2025

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Forfeited / cancelled ( 507 ) $ 8.64

Outstanding as of September 28, 2025

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.

The number of units earned and eligible to vest are determined based on the achievement of various performance conditions or market conditions, including annual recurring revenue, cumulative paid accounts, subscriptions and services gross margin, stock price, 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 estimated achievement over the service period.

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

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

PSU activity during the nine months ended September 28, 2025 was as follows:

Number of Shares Weighted Average Grant Date Fair Value Per Share

3 unchanged sentences

Vested ( 3,440 ) $ 9.08

Forfeited ( 3 ) $ 8.28

Outstanding as of June 29, 2025

Forfeited / cancelled ( 3 ) $ 8.28

Outstanding as of September 28, 2025

3,199 $ 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 income (loss):

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

The following table sets forth the stock-based compensation expense by line item on the unaudited condensed consolidated statements of comprehensive income (loss):

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

6 unchanged sentences

Total stock-based compensation $ 13,671 $ 14,689 $ 46,535 $ 54,159

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.

As of September 28, 2025, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options.

As of September 28, 2025, $ 57.8 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 1.2 years.

ARLO TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

The provision for income taxes for the three and nine months ended September 28, 2025 was $ 0.2 million and $ 0.4 million, respectively, or an effective tax rate of 2.2 % and 4.2 %, respectively.

The provision for income taxes for the three and nine months ended September 29, 2024 was $ 0.3 million and $ 1.0 million, respectively, or an effective tax rate of ( 8.0 )% and ( 3.9 )%, respectively.

Provision for income taxes decreased for the three and nine months ended September 28, 2025, compared to the prior year periods, primarily due to lower international tax on account of expected research and development credits in Ireland and the removal by the One Big Beautiful Bill Act (“OBBBA”) of the mandatory capitalization and amortization requirements for U.S.

research and development expenditures previously enacted under the Tax Cuts and Jobs Act (“TCJA”).

Although the tax provision declined, the effective tax rate increased compared to the prior year period reflecting the shift from pre-tax loss in the prior year period to pre-tax income in the current year period.

The lower effective tax rate for the three and nine months ended September 28, 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.

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.

We regularly evaluate the realizability of our net deferred tax assets.

As of September 28, 2025, all our U.S.

deferred tax assets, net of deferred tax liabilities, were subject to a valuation allowance.

If our financial results continue to improve, our assessment of the realization of our U.S.

net deferred tax assets could result in the release of some or all the valuation allowance.

Such a release would result in a material non-cash income tax benefit in our consolidated statements of comprehensive income (loss) in the period of release and the recording of additional deferred tax assets on our consolidated balance sheets.

There is a reasonable possibility that within the next several quarters, sufficient positive evidence will become available to reach a conclusion that all or a significant portion of the valuation allowance against our U.S.

net deferred tax assets would no longer be required.

On July 4, 2025, the OBBBA, a significant tax reform package, was enacted.

Included in this legislation are provisions that allow for the immediate expensing of domestic U.S.

research and development expenses, and certain capital expenditures, as well as other changes to the U.S.

taxation of profits derived from foreign operations.

Management is continuing to evaluate the provisions of the OBBBA, including treatment of previously capitalized domestic U.S.

research and development expenses.

Based on information available to date, management does not expect the enactment of the OBBBA to have a material impact on our consolidated financial statements;

however, the ultimate effect may differ from the amounts reflected in the interim financial statements once the analysis is complete and elections are finalized.

ARLO TECHNOLOGIES, INC.

1 unchanged sentence

Net Income (Loss) Per Share

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands, except per share data)

13 unchanged sentences

The CODM does not review segment assets at a different asset level and category.

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 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,

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

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

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

6 unchanged sentences

Marketing expenditure 4,680 4,726 14,724 12,847

Credit card and in-app processing fee 4,582 2,135 12,232 6,195

Other segment items (1)

2 unchanged sentences

Interest expense 96 128 266 327

Provision (benefit) for income taxes

( 254 ) 236 248 631

Provision for income taxes 154 329 402 960

Segment net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 )

3 unchanged sentences

_________________________

(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.

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

ARLO TECHNOLOGIES, INC.

5 unchanged sentences

The following table presents revenue by geographic area.

Three Months Ended Six Months Ended

2025 June 30,

2024 June 29,

2025 June 30,

Three Months Ended Nine Months Ended

September 28,

2025 September 29,

2024 September 28,

2025 September 29,

(In thousands)

8 unchanged sentences

The following table presents long-lived assets by geographic area.

September 28,

2025 December 31,

8 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 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.

During the nine months ended September 28, 2025, we repurchased and subsequently retired 2.1 million shares of Arlo common stock for an aggregate repurchase amount of $ 26.8 million.

As of September 28, 2025, $ 18.8 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