Arlo Technologies, Inc. 10-Q

Item 1. Financial Statements ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS As of September 28, 2025 December 31, 2024 (In thousands, except share and per share data) ASSETS Current assets: Cash and cash equivalents $ 86,012 $ 82,032 Short-term investments 79,532 69,419 Accounts receivable, net 76,698 57,332 Inventories 44,371 40,633 Prepaid expenses and other current assets 15,110 13,190 Total current assets 301,723 262,606 Property and equipment, net 12,391 4,765 Operating lease right-of-use assets, net 9,654 15,698 Goodwill 11,038 11,038 Long-term investment 12,500 — Other non-current assets 3,560 4,293 Total assets $ 350,866 $ 298,400 LIABILITIES AND STOCKHOLDERS ’ EQUITY Current liabilities: Accounts payable $ 78,156 $ 63,784 Deferred revenue 40,073 27,248 Accrued liabilities 93,999 85,730 Total current liabilities 212,228 176,762 Non-current operating lease liabilities 7,210 18,357 Other non-current liabilities 2,201 2,372 Total liabilities 221,639 197,491 Commitments and contingencies (Note 7) Stockholders’ Equity: Preferred stock: $ 0.001 par value; 50,000,000 shares authorized; none issued or outstanding — — Common stock: $ 0.001 par value; 500,000,000 shares authorized; shares issued and outstanding: 105,747,479 at September 28, 2025 and 100,885,158 at December 31, 2024 105 101 Additional paid-in capital 517,890 498,739 Accumulated other comprehensive income 35 34 Accumulated deficit ( 388,803 ) ( 397,965 ) Total stockholders’ equity 129,227 100,909 Total liabilities and stockholders’ equity $ 350,866 $ 298,400 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents ARLO TECHNOLOGIES, INC. 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, 2024 (In thousands, except per share data) Revenue: Subscriptions and services $ 79,942 $ 61,883 $ 226,966 $ 178,851 Products 59,587 75,784 161,034 210,463 Total revenue 139,529 137,667 388,000 389,314 Cost of revenue: Subscriptions and services 12,424 14,431 36,924 42,584 Products 70,599 74,820 183,768 204,080 Total cost of revenue 83,023 89,251 220,692 246,664 Gross profit 56,506 48,416 167,308 142,650 Operating expenses: Research and development 18,144 17,562 52,798 57,916 Sales and marketing 20,459 17,832 61,765 52,900 General and administrative 15,091 17,052 49,210 57,830 Other operating expense 1,940 1,423 2,181 2,868 Total operating expenses 55,634 53,869 165,954 171,514 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 income (expense), net 503 ( 57 ) ( 102 ) ( 100 ) Income (loss) before income taxes 7,027 ( 4,110 ) 9,564 ( 24,683 ) Provision for income taxes 154 329 402 960 Net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 ) Net income (loss) per share: Basic $ 0.07 $ ( 0.04 ) $ 0.09 $ ( 0.26 ) Diluted $ 0.06 $ ( 0.04 ) $ 0.08 $ ( 0.26 ) Weighted average shares used to compute net income (loss) per share: Basic 105,198 99,731 103,776 97,932 Diluted 109,638 99,731 108,664 97,932 Comprehensive income (loss): Net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 ) Other comprehensive income (loss), net of tax 43 45 1 ( 84 ) Total comprehensive income (loss) $ 6,916 $ ( 4,394 ) $ 9,163 $ ( 25,727 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Three Months Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (In thousands) Total stockholders’ equity, beginning balances $ 118,274 $ 99,268 $ 100,909 $ 103,276 Common stock: Beginning balances $ 104 $ 98 $ 101 $ 95 Issuance of common stock under stock-based compensation plans 2 3 6 8 Issuance of common stock under employee stock purchase plan — — — — Repurchase of common stock ( 1 ) — ( 2 ) — Restricted stock unit withholdings — ( 1 ) — ( 3 ) Ending balances $ 105 $ 100 $ 105 $ 100 Additional paid-in capital: Beginning balances $ 513,854 $ 487,644 $ 498,739 $ 470,322 Stock-based compensation 9,876 12,073 34,072 42,596 Settlement of liability classified restricted stock units 4,942 5,691 9,938 12,594 Issuance of common stock under stock-based compensation plans ( 2 ) 4,730 799 5,413 Issuance of common stock under employee stock purchase plan — — 1,475 1,692 Repurchase of common stock ( 10,780 ) — ( 27,133 ) — Restricted stock unit withholdings — ( 20,461 ) — ( 42,940 ) Ending balances $ 517,890 $ 489,677 $ 517,890 $ 489,677 Accumulated deficit: Beginning balances $ ( 395,676 ) $ ( 388,665 ) $ ( 397,965 ) $ ( 367,461 ) Net income (loss) 6,873 ( 4,439 ) 9,162 ( 25,643 ) Ending balances $ ( 388,803 ) $ ( 393,104 ) $ ( 388,803 ) $ ( 393,104 ) Accumulated other comprehensive income (loss): Beginning balances $ ( 8 ) $ 191 $ 34 $ 320 Other comprehensive income (loss), net of tax 43 45 1 ( 84 ) Ending balances $ 35 $ 236 $ 35 $ 236 Total stockholders’ equity, ending balances $ 129,227 $ 96,909 $ 129,227 $ 96,909 Common stock shares: Beginning balances 104,289 98,326 100,885 95,380 Issuance of common stock under stock-based compensation plans 2,080 3,403 6,818 8,187 Issuance of common stock under employee stock purchase plan — — 155 233 Repurchase of common stock ( 622 ) — ( 2,111 ) — Restricted stock unit withholdings — ( 1,407 ) — ( 3,478 ) Ending balances 105,747 100,322 105,747 100,322 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 Table of Contents ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 28, 2025 September 29, 2024 (In thousands) Cash flows from operating activities: Net income (loss) $ 9,162 $ ( 25,643 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: 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 Deferred income taxes ( 306 ) ( 23 ) Discount accretion on investments and other ( 2,180 ) ( 2,493 ) Changes in assets and liabilities: Accounts receivable, net ( 19,400 ) ( 3,095 ) Inventories ( 4,696 ) ( 16,609 ) Prepaid expenses and other assets ( 883 ) ( 2,703 ) Accounts payable 14,422 38,159 Deferred revenue 12,964 6,714 Accrued and other liabilities 5,300 ( 9,157 ) Net cash provided by operating activities 58,952 44,634 Cash flows from investing activities: Purchases of property and equipment, including capitalized software ( 9,996 ) ( 1,612 ) Purchases of short-term investments ( 112,932 ) ( 145,955 ) Purchase of long-term investment ( 12,500 ) — Proceeds from maturities of short-term investments 105,000 158,796 Net cash provided by (used in) investing activities ( 30,428 ) 11,229 Cash flows from financing activities: Proceeds related to employee benefit plans 2,280 7,113 Repurchase of common stock ( 26,824 ) — Restricted stock unit withholdings — ( 42,943 ) Net cash used in financing activities ( 24,544 ) ( 35,830 ) Net increase in cash, cash equivalents, and restricted cash 3,980 20,033 Cash, cash equivalents, and restricted cash , at beginning of period 82,032 60,653 Cash, cash equivalents, and restricted cash , at end of period $ 86,012 $ 80,686 Reconciliation of cash, cash equivalents, and restricted cash to unaudited condensed consolidated balance sheets Cash and cash equivalents $ 86,012 $ 77,032 Restricted cash — 3,654 Total cash, cash equivalents, and restricted cash $ 86,012 $ 80,686 Supplemental cash flow information: Non-cash investing activities: Purchases of property and equipment included in accounts payable and accrued liabilities $ 423 $ 647 Stock-based compensation expense capitalized for software development $ 1,402 $ — The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Description of Business and Basis of Presentation Description of Business Arlo Technologies, Inc. (“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. Our cloud-based platform provides users with visibility, insight and a powerful means to help protect and connect in real-time with the people and things that matter most, from any location with a Wi-Fi or a cellular connection. We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and primarily generate revenue by selling paid subscription services, as well as devices through retail, wholesale distribution, wireless carrier channels, security solution providers, and Arlo’s direct to consumer store. Our corporate headquarters is located in Carlsbad, California, with other satellite offices across North America and various other global locations. Basis of Presentation We prepare our unaudited condensed consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of Arlo and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 27, 2025. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for fair statement of the unaudited condensed consolidated financial statements for interim periods. Fiscal Periods Our fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. We report the results on a fiscal quarter basis rather than on a calendar quarter basis. 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. 7 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Use of Estimates The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. 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 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. Note 2. 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 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. 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 unaudited condensed consolidated statements of comprehensive income (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 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 nine months ended September 28, 2025. Accounting Pronouncements Not Yet Effective Disclosure Improvements. In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements of a variety of Topics in the Codification. 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 (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. 8 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Income Tax Disclosures. In December 2023, the FASB issued ASU No. 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) disclose income taxes paid disaggregated by jurisdiction. 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. 2024-03, Income Statement: Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses, which improves disclosure requirements and mandates enhanced transparency about the types of expenses in commonly presented expense captions in financial statements. This guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. 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. Credit Losses Accounting. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses: 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. 9 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 3. Revenue Contract Balances The following table reflects the changes in contract balances for the nine months ended September 28, 2025: Contract Classification Balance Sheet Classification September 28, 2025 December 31, 2024 $ change % change (In thousands) 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 % 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 $ 43.1 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 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 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. Variable consideration estimates are based on predictive historical data or future commitments that we plan and control. However, we continue to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. The following tables provide activities related to sales incentives and sales returns that are recognized as contra-revenue. 10 Table of Contents 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, 2024 (In thousands) Balance at the beginning of the period $ 34,892 $ 26,593 $ 29,846 $ 26,110 Credits issued ( 27,012 ) ( 20,783 ) ( 68,564 ) ( 53,165 ) Additions 29,247 20,655 75,845 53,520 Balance at the end of the period $ 37,127 $ 26,465 $ 37,127 $ 26,465 Three Months Ended Nine Months Ended Sales Returns September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (In thousands) Balance at the beginning of the period $ 8,090 $ 8,763 $ 11,651 $ 17,058 Credits issued ( 3,935 ) ( 6,038 ) ( 12,684 ) ( 19,878 ) Additions 5,242 7,314 10,430 12,859 Balance at the end of the period $ 9,397 $ 10,039 $ 9,397 $ 10,039 Disaggregation of Revenue We disaggregate our revenue into three geographic regions: the Americas, EMEA, and APAC, where we conduct our business. The following table presents revenue disaggregated by geographic region. Three Months Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (In thousands) Americas $ 83,831 $ 73,303 $ 235,830 $ 195,766 EMEA 49,602 57,773 135,817 175,980 APAC 6,096 6,591 16,353 17,568 Total $ 139,529 $ 137,667 $ 388,000 $ 389,314 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 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. 11 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 4. Balance Sheet Components Short-Term Investments 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 (In thousands) U.S. Treasuries $ 79,497 $ 35 $ — $ 79,532 $ 69,385 $ 34 $ — $ 69,419 Accounts Receivable, Net As of September 28, 2025 December 31, 2024 (In thousands) Gross accounts receivable $ 76,866 $ 57,464 Allowance for credit losses ( 168 ) ( 132 ) Total $ 76,698 $ 57,332 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 Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (In thousands) Balance at the beginning of the period $ 202 $ 142 $ 132 $ 333 Provision for (release of) expected credit losses ( 34 ) 79 36 ( 112 ) Balance at the end of the period $ 168 $ 221 $ 168 $ 221 Property and Equipment, Net The components of property and equipment are as follows. As of September 28, 2025 December 31, 2024 (In thousands) Machinery and equipment $ 15,602 $ 14,399 Capitalized software development costs 20,022 10,612 Software and license 6,265 6,306 Computer equipment 870 894 Leasehold improvements 932 3,302 Furniture and fixtures 1,385 1,839 Total property and equipment, gross 45,076 37,352 Less: accumulated depreciation and amortization ( 32,685 ) ( 32,587 ) Total property and equipment, net $ 12,391 $ 4,765 For comparative purposes, amounts in prior periods have been recast. 12 Table of Contents 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, 2024 (In thousands) Depreciation: Operating expenses $ 435 $ 558 $ 1,358 $ 1,941 Amortization: Subscriptions and services cost 364 152 977 454 Operating expenses 100 — 251 — Total depreciation and amortization $ 899 $ 710 $ 2,586 $ 2,395 Goodwill 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 As of September 28, 2025 December 31, 2024 (In thousands) Sales incentives and marketing expenditures $ 39,774 $ 31,947 Sales returns 9,397 11,651 Employee compensation 16,930 12,921 Cloud and other costs 6,478 9,497 Other 21,420 19,714 Total $ 93,999 $ 85,730 13 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 5. Fair Value Measurements The following table summarizes assets measured at fair value on a recurring basis: As of September 28, 2025 December 31, 2024 (In thousands) Cash equivalents: money-market funds (<90 days) $ 11,573 $ 4,095 Cash equivalents: U.S. Treasuries (<90 days) 20,308 22,504 Available-for-sale securities: U.S. Treasuries (1) 79,532 69,419 Total $ 111,413 $ 96,018 _________________________ (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. Note 6. Revolving Credit Facility On November 14, 2024, we entered into a credit agreement (the “Credit Agreement”) with HSBC Bank USA, National Association, as administrative agent, issuing bank, and lender. 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 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. Borrowings under the Credit Agreement will bear interest at a floating rate equal to: (i) the term secured overnight financing rate plus the applicable rate of 2.25 % to 2.75 %, or (ii) the base rate plus the applicable rate of 1.25 % to 1.75 % both determined based on a total net leverage ratio. Among other fees, we are required to pay a quarterly unused fee of 0.20 % per annum on the amount by which the lenders’ aggregate commitment under the Credit Facility exceeds the daily revolver usage during such quarter. The Credit Agreement contains events of default, representations and warranties, and affirmative and negative covenants customary for credit facilities of this type. The Credit Agreement also contains financial covenants that require us to (i) maintain a fixed charge coverage ratio of at least 1.50 to 1.00 and (ii) maintain a total net leverage ratio, not to exceed 3.00 to 1.00; both covenants being tested quarterly on a trailing four consecutive fiscal quarter basis. 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. 14 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 7. Commitments and Contingencies Operating Leases Our operating lease obligations mostly include offices, equipment, and distribution centers, with various expiration dates through June 2033. Certain lease agreements include options to renew or terminate the lease, which are generally not reasonably certain to be exercised and therefore are not factored into our determination of lease payments. The terms of certain leases provide for rental payments on a graduated scale. 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: Nine Months Ended September 28, 2025 September 29, 2024 (In thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 4,987 $ 4,486 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 65 $ — Weighted average remaining lease term and weighted average discount rate related to operating leases are as follows: As of September 28, 2025 December 31, 2024 Weighted average remaining lease term 5.6 years 5.4 years Weighted average discount rate 7.62 % 6.66 % 15 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The future minimum undiscounted lease payments under operating leases for each of the next five years and thereafter are as follows: As of September 28, 2025 (In thousands) 2025 (Remaining three months) $ 412 2026 2,479 2027 2,361 2028 1,301 2029 1,019 Thereafter 3,616 Total future lease payments $ 11,188 Less: imputed interest ( 2,334 ) Present value of future minimum lease payments $ 8,854 Accrued liabilities $ 1,644 Non-current operating lease liabilities 7,210 Total lease liabilities $ 8,854 In July 2025, we entered into a conditional termination agreement for our office lease located in San Jose, California. 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 We have entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50 % of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25 % of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. 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. Expenses incurred have historically not been material relative to the original order value. 16 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Litigation and Other Legal Matters 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. We currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position within the next 12 months. There are many uncertainties associated with any litigation, and these actions or other third-party claims against us may cause us to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, our business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from our estimates, which could result in the need to adjust the liability and record additional expenses. Indemnifications In the ordinary course of business, we may provide indemnification of varying scope and terms to customers, distributors, resellers, vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising from breach of such agreements or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with members of our Board of Directors and certain of our executive officers that require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited. 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. 17 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 8. 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 and other senior employees periodically. Award vesting periods for the 2018 Plan are generally three to five years . 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. 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 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. 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 (In thousands) Shares available for grants as of December 31, 2024 3,356 Additional authorized shares 5,550 Granted ( 4,403 ) Forfeited / expired / cancelled 690 Shares available for grants as of September 28, 2025 5,193 Employee Stock Purchase Plan 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. 18 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Option Activity 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 (In thousands) (In dollars) Outstanding as of December 31, 2024 549 $ 13.24 Granted — $ — Exercised ( 94 ) $ 8.55 Expired / cancelled ( 180 ) $ 14.39 Outstanding as of September 28, 2025 275 $ 14.10 Vested and exercisable as of September 28, 2025 275 $ 14.10 RSU Activity 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 (In thousands) (In dollars) Outstanding as of December 31, 2024 7,112 $ 7.76 Granted 2,538 $ 12.75 Vested ( 3,284 ) $ 8.81 Forfeited / cancelled ( 507 ) $ 8.64 Outstanding as of September 28, 2025 5,859 $ 9.26 PSU Activity 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 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. 19 Table of Contents 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 (In thousands) (In dollars) Outstanding as of December 31, 2024 4,777 $ 9.24 Granted 1,865 $ 11.22 Vested ( 3,440 ) $ 9.08 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 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, 2024 (In thousands) Cost of revenue $ 613 $ 955 $ 2,615 $ 3,618 Research and development 3,752 3,584 12,152 13,266 Sales and marketing 1,837 1,594 6,989 6,010 General and administrative 6,936 8,556 23,377 31,265 Stock-based compensation, net of amounts capitalized $ 13,138 $ 14,689 $ 45,133 $ 54,159 Capitalized stock-based compensation 533 — 1,402 — Total stock-based compensation $ 13,671 $ 14,689 $ 46,535 $ 54,159 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. 20 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 9. Income Taxes 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 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. 21 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 10. Net Income (Loss) Per Share Three Months Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (In thousands, except per share data) Numerator: Net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 ) Denominator: Weighted average shares - basic 105,198 99,731 103,776 97,932 Effect of dilutive stock-based awards 4,440 — 4,888 — Weighted average shares - diluted 109,638 99,731 108,664 97,932 Net income (loss) per share - basic $ 0.07 $ ( 0.04 ) $ 0.09 $ ( 0.26 ) Net income (loss) per share - diluted $ 0.06 $ ( 0.04 ) $ 0.08 $ ( 0.26 ) Anti-dilutive employee stock-based awards, excluded — 789 310 739 22 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11. Segment and Geographic Information Segment Information We operate as one operating and reportable segment. Our Chief Executive Officer (“CEO”) is identified as the Chief Operating Decision Maker (“CODM”), who reviews financial information presented in a consolidated basis and considers budget-to-actual variances quarterly for allocation of operating and capital resources and evaluation of financial performance. The CODM does not review segment assets at a different asset level and category. The consolidated net income (loss) is the measure of segment net income (loss) that is most consistent with U.S. GAAP. 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, 2024 (In thousands) Revenue $ 139,529 $ 137,667 $ 388,000 $ 389,314 Less: Cost of revenue 83,023 89,251 220,692 246,664 Operating expenses: Personnel-related expense 18,165 16,857 54,441 52,309 Stock-based compensation 12,525 13,734 42,518 50,541 Outside professional services 12,176 13,613 34,785 42,226 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) ( 3,279 ) 1,051 ( 2,831 ) 1,819 Depreciation 534 282 1,609 1,069 Interest expense 96 128 266 327 Provision for income taxes 154 329 402 960 Segment net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 ) Reconciliation of profit or loss: Adjustments and reconciling items — — — — Consolidated net income (loss) $ 6,873 $ ( 4,439 ) $ 9,162 $ ( 25,643 ) _________________________ (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. 23 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Geographic Information for Revenue 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. For reporting purposes, revenue by geographic area is generally based upon the bill-to location of the customer. The following table presents revenue by geographic area. Three Months Ended Nine Months Ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 (In thousands) United States $ 81,270 $ 71,461 $ 228,630 $ 189,194 Spain 32,195 35,051 89,015 111,241 Sweden 13,614 13,220 36,152 38,819 Other countries 12,450 17,935 34,203 50,060 Total $ 139,529 $ 137,667 $ 388,000 $ 389,314 Geographic Information for Long-Lived Assets Long-lived assets include property and equipment, net and operating lease right-of-use assets, net. Our long-lived assets are based on the physical location of the assets. The following table presents long-lived assets by geographic area. As of September 28, 2025 December 31, 2024 (In thousands) United States $ 20,022 $ 18,201 Other countries 2,023 2,262 Total $ 22,045 $ 20,463 Note 12. Stock Repurchase Program On September 24, 2024, we announced that our Board of Directors approved a stock repurchase program of up to an aggregate of $ 50.0 million of shares of Arlo’s common stock through open market purchases in a manner deemed to be in the best interests of our company and stockholders, considering the economic cost and prevailing market conditions, including the relative trading prices and volumes of Arlo’s common stock. The stock repurchase program is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors. The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. 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 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. 24 Table of Contents