Arlo Technologies, Inc. 10-Q

Item 1. Financial Statements ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS As of March 29, 2026 December 31, 2025 (In thousands, except share and per share data) ASSETS Current assets: Cash and cash equivalents $ 152,636 $ 146,440 Short-term investments 14,862 19,985 Accounts receivable, net 52,174 39,666 Inventories 43,958 41,185 Prepaid expenses and other current assets 12,045 13,210 Total current assets 275,675 260,486 Property and equipment, net 14,178 13,158 Operating lease right-of-use assets, net 8,691 9,195 Goodwill 38,544 11,038 Intangible assets, net 19,490 — Long-term investment — 12,500 Other non-current assets 3,614 4,171 Total assets $ 360,192 $ 310,548 LIABILITIES AND STOCKHOLDERS ’ EQUITY Current liabilities: Accounts payable $ 40,184 $ 42,826 Deferred revenue 52,187 37,139 Accrued liabilities 89,331 92,372 Total current liabilities 181,702 172,337 Non-current operating lease liabilities 6,230 6,743 Other non-current liabilities 12,858 3,627 Total liabilities 200,790 182,707 Commitments and contingencies (Note 8) 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: 108,745,373 at March 29, 2026 and 105,030,947 at December 31, 2025 108 105 Additional paid-in capital 527,457 510,759 Accumulated other comprehensive income (loss) ( 1 ) 16 Accumulated deficit ( 368,162 ) ( 383,039 ) Total stockholders’ equity 159,402 127,841 Total liabilities and stockholders’ equity $ 360,192 $ 310,548 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 OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Three Months Ended March 29, 2026 March 30, 2025 (In thousands, except per share data) Revenue: Subscriptions and services $ 90,099 $ 68,849 Products 60,283 50,217 Total revenue 150,382 119,066 Cost of revenue: Subscriptions and services 14,682 12,265 Products 63,032 54,074 Total cost of revenue 77,714 66,339 Gross profit 72,668 52,727 Operating expenses: Research and development 22,814 16,165 Sales and marketing 22,654 20,203 General and administrative 18,207 17,785 Other operating expense 1,435 25 Total operating expenses 65,110 54,178 Income (loss) from operations 7,558 ( 1,451 ) Other income, net: Gain on sale of long-term investment 6,423 — Interest income, net 1,241 1,316 Other income (expense), net 70 ( 198 ) Total other income, net 7,734 1,118 Income (loss) before income taxes 15,292 ( 333 ) Provision for income taxes 415 502 Net income (loss) $ 14,877 $ ( 835 ) Earnings (loss) per share: Basic $ 0.14 $ ( 0.01 ) Diluted $ 0.13 $ ( 0.01 ) Weighted-average common shares outstanding: Basic 106,995 102,217 Diluted 110,488 102,217 Comprehensive income (loss): Net income (loss) $ 14,877 $ ( 835 ) Other comprehensive loss, net of tax ( 17 ) ( 29 ) Total comprehensive income (loss) $ 14,860 $ ( 864 ) 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 March 29, 2026 March 30, 2025 (In thousands) Total stockholders’ equity, beginning balances $ 127,841 $ 100,909 Common stock and additional paid-in capital: Beginning balances $ 510,864 $ 498,840 Stock-based compensation 10,986 13,115 Settlement of liability classified restricted stock units 13,848 4,996 Issuance of common stock under stock-based compensation plans — 649 Repurchases of common stock ( 8,133 ) ( 15,435 ) Ending balances $ 527,565 $ 502,165 Accumulated deficit: Beginning balances $ ( 383,039 ) $ ( 397,965 ) Net income (loss) 14,877 ( 835 ) Ending balances $ ( 368,162 ) $ ( 398,800 ) Accumulated other comprehensive income (loss): Beginning balances $ 16 $ 34 Other comprehensive loss, net of tax ( 17 ) ( 29 ) Ending balances $ ( 1 ) $ 5 Total stockholders’ equity, ending balances $ 159,402 $ 103,370 Common stock shares: Beginning balances 105,031 100,885 Issuance of common stock under stock-based compensation plans 4,286 3,817 Repurchases of common stock ( 572 ) ( 1,397 ) Ending balances 108,745 103,305 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 Three Months Ended March 29, 2026 March 30, 2025 (In thousands) Cash flows from operating activities: Net income (loss) $ 14,877 $ ( 835 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Stock-based compensation expense, net of amounts capitalized 19,734 17,012 Depreciation and amortization 1,697 829 Gain on sale of long-term investment ( 6,423 ) — Allowance for credit losses and non-cash changes to reserves 949 416 Deferred income taxes 241 ( 155 ) Discount accretion on investments and other ( 57 ) ( 657 ) Changes in assets and liabilities, net of assets acquired: Accounts receivable, net ( 12,490 ) 11,287 Inventories ( 1,828 ) 5,648 Prepaid expenses and other assets 1,481 354 Accounts payable ( 3,622 ) ( 14,983 ) Deferred revenue 14,811 15,597 Accrued and other liabilities ( 1,507 ) ( 3,594 ) Net cash provided by operating activities 27,863 30,919 Cash flows from investing activities: Purchases of property and equipment, including capitalized software ( 2,419 ) ( 2,803 ) Purchases of short-term investments ( 14,825 ) ( 44,049 ) Purchase of long-term investment — ( 12,500 ) Acquisition of business ( 36,000 ) — Proceeds from maturities of short-term investments 19,988 45,000 Proceeds from sale of long-term investment 18,923 — Net cash used in investing activities ( 14,333 ) ( 14,352 ) Cash flows from financing activities: Proceeds from employee stock plans — 649 Repurchases of common stock ( 7,334 ) ( 15,239 ) Net cash used in financing activities ( 7,334 ) ( 14,590 ) Net increase in cash and cash equivalents 6,196 1,977 Cash and cash equivalents at beginning of period 146,440 82,032 Cash and cash equivalents at end of period $ 152,636 $ 84,009 Non-cash investing and financing activities: Purchases of property and equipment included in accounts payable and accrued liabilities $ 463 $ 1,164 Stock-based compensation expense capitalized for software development $ 305 $ 601 Stock repurchases included in accounts payable $ 1,021 $ — 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, strategic partners, 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, 2025, which was filed with the SEC on February 27, 2026. 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 three months ended March 29, 2026 and are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 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, 2025. During the three months ended March 29, 2026, there have been no significant changes to such policies except for the items below. Business combinations We account for business combinations using the acquisition method of accounting in accordance with ASC 805, Business Combinations . The purchase consideration for business combinations is measured at fair value as of the acquisition date and includes the fair value of assets transferred, liabilities incurred, and equity interests issued, as well as the fair value of any contingent consideration arrangements. Transaction costs associated with business combinations, such as legal, accounting, and advisory fees, are expensed as incurred and included in other operating expense on our unaudited condensed consolidated statements of operations and comprehensive income (loss). The results of operations of acquired businesses are included in our unaudited condensed consolidated financial statements from the respective acquisition dates. Identifiable assets acquired and liabilities assumed are recognized at their acquisition‑date fair values. Any excess of the purchase consideration over the fair value of the identifiable net assets acquired is recorded as goodwill. Goodwill represents the future economic benefits arising from assets acquired that are not individually identifiable and separately recognized. Goodwill is not amortized but is subject to impairment testing at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The determination of the acquisition‑date fair values of assets acquired and liabilities assumed requires management to make significant estimates and assumptions, including assumptions related to forecasted cash flows, discount rates, expected useful lives of intangible assets, and the probability and timing of contingent payments. These estimates are based on information available as of the acquisition date and on assumptions management believes are reasonable; however, actual results may differ from those estimates. The initial accounting for business combinations may be incomplete as of the reporting date. In such cases, provisional amounts are recorded based on the best information available, and these amounts may be adjusted during the measurement period as additional information is obtained related to facts and circumstances that existed as of the acquisition date. Measurement period adjustments are recorded retrospectively, with corresponding adjustments to goodwill. The measurement period ends when we receive the information we were seeking about facts and circumstances that existed as of the acquisition date, or when it is determined that no additional information is obtainable, but shall not exceed one year from the acquisition date. 8 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Acquired intangible assets Intangible assets acquired in a business combination are recorded at their estimated fair values at the acquisition date. Intangible assets with finite lives are amortized on a straight-line basis over their estimated respective useful lives, which is based on our expected period of benefit, generally range from five to thirteen years . Amortization expense is recorded as cost of revenue or general and administrative operating expense on our unaudited condensed consolidated statements of operations and comprehensive income (loss). Intangible assets are assessed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. Accounting pronouncements recently adopted During the three months ended March 29, 2026, we adopted Accounting Standards Update (“ASU”) No. 2023-06, 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 adoption did not have a material effect on our financial statements. Accounting pronouncements not yet effective Disclosure improvements. In October 2023, the Financial Accounting Standards Board (“FASB”) issued 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. 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. 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 three months ended March 29, 2026: Contract Classification Balance Sheet Classification March 29, 2026 December 31, 2025 $ change % change (In thousands) Receivables Accounts receivable, net $ 52,174 $ 39,666 $ 12,508 31.5 % Contract liabilities, current Deferred revenue $ 52,187 $ 37,139 $ 15,048 40.5 % Contract liabilities, non-current Other non-current liabilities $ 1,239 $ 1,476 $ ( 237 ) ( 16.1 ) % Receivables increased primarily due to higher product and service sales. 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. As of March 29, 2026, there were no contract assets. For the three months ended March 29, 2026 and March 30, 2025, $ 21.4 million and $ 14.6 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 $ 54.6 million as of March 29, 2026 and $ 40.6 million as of December 31, 2025, 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 March 29, 2026, we had a backlog of $ 43.4 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 Sales incentives March 29, 2026 March 30, 2025 (In thousands) Balance at the beginning of the period $ 29,124 $ 29,846 Credits issued ( 17,668 ) ( 21,718 ) Additions 14,994 20,250 Balance at the end of the period $ 26,450 $ 28,378 Three Months Ended Sales returns March 29, 2026 March 30, 2025 (In thousands) Balance at the beginning of the period $ 9,273 $ 11,651 Credits issued ( 2,789 ) ( 5,503 ) Additions 718 2,815 Balance at the end of the period $ 7,202 $ 8,963 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 March 29, 2026 March 30, 2025 (In thousands) Americas $ 83,986 $ 70,097 EMEA 60,665 42,895 APAC 5,731 6,074 Total $ 150,382 $ 119,066 For the three months ended March 29, 2026 and March 30, 2025, one customer accounted for 40 % and 36 % of the total revenue, respectively. No other customer accounted for 10% or greater of the total revenue. As of March 29, 2026, one customer accounted for 60 %, and as of December 31, 2025, two customers accounted for 40 % and 17 % 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. Business Combinations Canary Connect, Inc. On March 11, 2026, we entered into, and simultaneously closed an Asset Purchase Agreement with Canary Connect, Inc. (“Canary”), a New York-based Internet of Things (“IoT”) company that designs and sells smart home security devices and SaaS solutions. The purpose of this transaction is to expand our presence in the AI-driven smart home security market. The transaction is accounted for as a business combination in accordance with ASC 805, Business Combinations . As a result of the transaction, we obtained control of Canary by obtaining the ability to direct its ongoing operations and to receive substantially all of the economic benefits associated. As part of this transaction, we also entered into a Transitional Service Agreement with Canary and a Platform Transformation Agreement with Smartfrog & Canary Holdings, Inc. (“Smartfrog Group”) in order to continue servicing Canary’s existing customers and subscribers. We allocate the purchase consideration to the identifiable assets acquired and liabilities assumed in this business combination based on their acquisition-date fair values, which is determined using income and market-based valuation techniques that require significant judgments and assumptions, including projected revenue, profitability and cash flows. Goodwill recognized through our business combinations represents the excess of the purchase price over the fair value of identifiable net assets and is primarily attributable to expected synergies and operational efficiencies and anticipated future economic benefits. The resulting goodwill from the Canary acquisition is deductible for income tax purposes. The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations, and those estimates and assumptions are subject to change as we obtain additional information for those estimates during the measurement period, which is up to one year from the acquisition date. The acquired intangible assets will be amortized over their estimated useful lives. The acquisition date fair value of the consideration transferred consisted of the following (in thousands): Cash paid at close $ 36,000 Fixed deferred acquisition consideration 12,907 Total purchase consideration $ 48,907 The purchase price allocation are as follows (in thousands): Assets acquired: Inventory $ 1,911 Intangible assets 19,490 Goodwill 27,506 Total assets acquired $ 48,907 Liabilities assumed: Total liabilities assumed $ — Fair value of assets acquired and liabilities assumed, net $ 48,907 During the three months ended March 29, 2026, we recorded $ 0.5 million acquisition-related costs, which are expensed when incurred and included in other operating expense on the unaudited condensed consolidated statements of operations and comprehensive income (loss). 12 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) During the three months ended March 29, 2026, Canary’s results of operations are not material and are included within our unaudited condensed consolidated financial statements from an effective date of March 1, 2026. The effect of this business combination was not material to our financial results. Therefore, the actual and pro-forma results of operations subsequent to the acquisition date to March 29, 2026 have not been presented. Aloe Care Health, Inc. On April 16, 2026, we entered into, and simultaneously closed a Merger Agreement with Aloe Care Health, Inc. (“Aloe Care”), a privately held company that provides an AI-powered medical alert and fall prevention platform for patients and their caregivers. The transaction is intended to accelerate the expansion of our AI-powered services for aging-in-place care in collaboration with health providers, patients and their families. Under the Merger Agreement, we acquired 100 % of the outstanding equity interests of Aloe Care in exchange for (i) $ 15.0 million of cash consideration paid at closing; and (ii) contingent earnout of up to $ 25.0 million, payable, at our option, in cash, shares of our common stock, or a combination of cash and shares, subject to the terms of the Merger Agreement. The transaction will be accounted for as a business combination in accordance with ASC 805, Business Combinations . As a result of the transaction, we obtained control of Aloe Care by obtaining the ability to direct its ongoing operations and to receive substantially all of the economic benefits associated with Aloe Care. During the three months ended March 29, 2026, we recorded $ 0.8 million acquisition-related costs, which are expensed when incurred and included in other operating expense on the unaudited condensed consolidated statements of operations and comprehensive income (loss). The initial accounting for this business combination is incomplete at the date of this filing as a result of limited time between the acquisition date and the filing date. Accordingly, certain disclosures required under ASC 805, Business Combinations , including the preliminary fair values of assets acquired and liabilities assumed, pre-acquisition contingencies and any residual goodwill have not been provided. We are in the process of gathering the necessary information to complete the accounting for the transaction. Such information will be included in our Quarterly Report on Form 10-Q for the quarter ending on June 28, 2026. 13 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 5. Balance Sheet Components Short-term investments As of March 29, 2026 As of December 31, 2025 Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. Treasuries $ 14,863 $ — $ ( 1 ) $ 14,862 $ 19,980 $ 5 $ — $ 19,985 Property and equipment, net As of March 29, 2026 December 31, 2025 (In thousands) Machinery and equipment $ 16,124 $ 16,093 Capitalized software development costs 24,702 22,002 Software and license 5,853 5,877 Computer equipment 881 881 Leasehold improvements 941 941 Furniture and fixtures 1,404 1,393 Total property and equipment, gross 49,905 47,187 Less: accumulated depreciation and amortization ( 35,727 ) ( 34,029 ) Total property and equipment, net $ 14,178 $ 13,158 Depreciation and amortization expense pertaining to property and equipment are as follows: Three Months Ended March 29, 2026 March 30, 2025 (In thousands) Depreciation: Operating expenses $ 356 $ 557 Amortization: Subscriptions and services cost 1,256 272 Operating expenses 85 — Total depreciation and amortization $ 1,697 $ 829 Goodwill We have determined that no event occurred or circumstances changed during the three months ended March 29, 2026 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 March 29, 2026. 14 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Intangible assets, net Intangible assets acquired through business combination as of March 29, 2026 were as follows: Gross carrying amount Weighted-average remaining useful lives (In thousands) Customer relationship $ 8,450 10 years Proprietary technologies 9,930 5 - 10 years Trade names 1,110 13 years Total intangible assets $ 19,490 Amortization of intangible assets resulting from business combination for the month of March 2026 since the acquisition date was de-minimis. There were no intangible assets impairment recognized as of March 29, 2026. The expected future amortization expense for intangible assets as of March 29, 2026 was as follows (in thousands): 2026 (Remaining nine months) $ 1,512 2027 2,026 2028 2,026 2029 2,026 2030 2,026 Thereafter 9,874 Total $ 19,490 Accrued liabilities As of March 29, 2026 December 31, 2025 (In thousands) Sales incentives and marketing expenditures $ 28,647 $ 31,976 Sales returns 7,202 9,273 Employee compensation 17,200 23,221 Cloud and other costs 8,903 6,052 Other 27,379 21,850 Total $ 89,331 $ 92,372 15 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 6. Fair Value Measurements The following table summarizes assets measured at fair value on a recurring basis: As of March 29, 2026 December 31, 2025 (In thousands) Cash equivalents: money-market funds (<90 days) $ 49,892 $ 71,987 Cash equivalents: U.S. Treasuries (<90 days) 23,699 20,506 Available-for-sale securities: U.S. Treasuries (1) 14,862 19,985 Total $ 88,453 $ 112,478 _________________________ (1) Included in short-term investments on our unaudited condensed consolidated balance sheets. Our short-term 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 March 29, 2026 and December 31, 2025, assets and liabilities measured as Level 2 fair value were not material. Sale of long-term investment During the three months ended March 29, 2026, we sold our investment in connection with a privately held company’s acquisition by a public company. This investment was accounted for as an equity security without a readily determinable fair value and was measured at cost, less impairment, adjusted for observable price changes in orderly transactions for the identical or similar investment in the same issuer in accordance with ASC 321, Investments-Equity Securities . Upon completion of the sale, we received total cash proceeds of $ 18.9 million and recognized a realized gain of $ 6.4 million, representing the excess of proceeds received over the carrying value of the investment. The gain from the sale of the investment is included in other income (expense), net on the unaudited condensed consolidated statements of operations and comprehensive income (loss). Our Chief Executive Officer served on the board of directors of the privately held company and, as a result, the investee is considered a related party and the sale of our investment is a related party transaction. As of March 29, 2026, there were no financial assets measured at fair value on a recurring basis within Level 3 fair value measurements. Our non-financial assets, such as property and equipment, goodwill, and intangible assets are assessed for impairment annually or whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. 16 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 7. 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 March 29, 2026, 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 March 29, 2026, we were in compliance with all the covenants under the Credit Agreement. No amount had been drawn under the Credit Facility as of March 29, 2026. Note 8. 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 $ 0.8 million and $ 1.4 million for the three months ended March 29, 2026 and March 30, 2025, respectively. Supplemental cash flow information related to operating leases is as follows: Three Months Ended March 29, 2026 March 30, 2025 (In thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 567 $ 1,196 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ — $ 13 17 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Weighted average remaining lease term and weighted average discount rate related to operating leases are as follows: As of March 29, 2026 December 31, 2025 Weighted average remaining lease term 5.4 years 5.5 years Weighted average discount rate 7.74 % 7.68 % The future minimum undiscounted lease payments under operating leases for each of the next five years and thereafter as of March 29, 2026 were as follows: 2026 (Remaining nine months) $ 1,922 2027 2,374 2028 1,319 2029 1,021 2030 994 Thereafter 2,622 Total future lease payments $ 10,252 Less: imputed interest ( 2,019 ) Present value of future minimum lease payments $ 8,233 Accrued liabilities $ 2,003 Non-current operating lease liabilities 6,230 Total lease liabilities $ 8,233 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 March 29, 2026, we had $ 35.6 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months . As of March 29, 2026, an additional $ 29.9 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. Tariff matters The U.S. government has implemented tariff measures affecting a broad range of imported materials, and these measures have been subject to change. We are actively monitoring the changes in global trade policy and the effects they may have on our business and broader macroeconomic environment. Given the uncertainty surrounding global markets as a result of the fluid U.S. tariff policy, we do not have clarity at this point over the potential medium to long term impacts our business may face. We continue to monitor and evaluate these developments and assess their potential impact on our business, financial condition, and results of operations. As of March 29, 2026, we have not recorded any receivables for potential tariff refunds or derecognition of tariff liabilities. 18 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 operations and 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 March 29, 2026 and December 31, 2025, we have not incurred any material costs as a result of such indemnification obligations and we are not currently aware of any indemnification claims. Note 9. 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 March 29, 2026, 3.3 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 three to four years , the first tranche at the end of 12 months and the remaining shares underlying the option vesting monthly over the remaining years. On January 23, 2026, we registered an aggregate of up to 4,200,189 shares of common stock under the 2018 Plan on a Registration Statement on Form S-8 pursuant to an “evergreen” provision contained in the 2018 Plan. 19 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The following table sets forth the available shares for grants as of March 29, 2026: Number of Shares (In thousands) Shares available for grants as of December 31, 2025 4,409 Additional authorized shares 4,200 Granted ( 5,395 ) Forfeited / expired / cancelled 105 Shares available for grants as of March 29, 2026 3,319 Employee stock purchase plan We sponsor the ESPP for eligible employees. There were no ESPP purchases during either the three months ended March 29, 2026 or March 30, 2025. As of March 29, 2026, 3.1 million shares were available for issuance under the ESPP. Option activity We did not grant options during the three months ended March 29, 2026. Stock option activity during the three months ended March 29, 2026 was as follows: Number of Shares Weighted Average Exercise Price Per Share (In thousands) (In dollars) Outstanding as of December 31, 2025 275 $ 14.10 Granted — $ — Exercised — $ — Expired / cancelled — $ — Outstanding as of March 29, 2026 275 $ 14.10 Vested and exercisable as of March 29, 2026 275 $ 14.10 RSU activity RSU activity, exclusive of PSU activity, during the three months ended March 29, 2026 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2025 6,481 $ 9.99 Granted 2,508 $ 13.78 Vested ( 2,352 ) $ 10.45 Forfeited / cancelled ( 102 ) $ 12.66 Outstanding as of March 29, 2026 6,535 $ 11.17 20 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) PSU activity Our executive officers and other senior employees have been granted PSUs with some vesting occurring when performance conditions are met. The number of units earned and eligible to vest are determined based on the achievement of various performance conditions, including annual recurring revenue, cumulative paid accounts, subscriptions and services gross profit and gross margin, and the recipients’ continued services. At the end of each reporting period, we evaluate the probability of achieving the performance conditions and record the related stock-based compensation expense based on the estimated achievement over the service period. PSU activity during the three months ended March 29, 2026 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2025 2,970 $ 10.56 Granted 2,887 $ 14.15 Vested ( 1,934 ) $ 10.29 Forfeited / cancelled ( 3 ) $ 8.28 Outstanding as of March 29, 2026 3,920 $ 11.18 Stock-based compensation expense The following table sets forth the stock-based compensation expense by line item on the unaudited condensed consolidated statements of operations and comprehensive income (loss): Three Months Ended March 29, 2026 March 30, 2025 (In thousands) Cost of revenue $ 1,374 $ 1,117 Research and development 7,171 3,900 Sales and marketing 3,174 3,073 General and administrative 8,015 8,922 Stock-based compensation, net of amounts capitalized $ 19,734 $ 17,012 Capitalized stock-based compensation 305 601 Total stock-based compensation $ 20,039 $ 17,613 As of March 29, 2026, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options. As of March 29, 2026, $ 106.6 million of unrecognized compensation cost related to unvested RSUs and PSUs is expected to be recognized over a weighted-average period of 2.3 years. 21 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 10. Income Taxes The provision for income taxes for the three months ended March 29, 2026 was $ 0.4 million or an effective tax rate of 2.7 % . The provision for income taxes for the three months ended March 30, 2025 was $ 0.5 million or an effective tax rate of ( 150.8 )%. Provision for income taxes decreased for the three months ended March 29, 2026, compared to the prior year period, primarily due to the elimination of the mandatory capitalization of research and development expenses, resulting in higher current deductions, lower taxable income and a reduced income tax provision. The lower effective tax rate for the three months ended March 29, 2026, compared to the U.S. federal statutory rate, is primarily driven by lower tax rate on foreign earnings and valuation allowance on our net U.S. deferred tax assets and certain foreign tax attributes. We evaluated the realizability of deferred tax assets on a jurisdictional basis in accordance with ASC 740 Income taxes . A valuation allowance is maintained when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. As of March 29, 2026, we continue to maintain a full valuation allowance against our deferred tax assets at both federal and state levels. In making this determination, we considered all available positive and negative evidence, with greater weight given to objectively verifiable evidence. Although we have recently generated cumulative pre-tax income, we determined that we have not yet demonstrated a sustained level of profitability sufficient to support realization of the deferred tax assets. We also considered forecasted future taxable income; however, such projections are inherently uncertain and do not outweigh the available negative evidence. Based on the totality of evidence, we concluded that it is not more-likely-than-not that the deferred tax assets will be realized. Accordingly, a full valuation allowance has been maintained as of March 29, 2026. There is a reasonable possibility that within the next few 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. Note 11. Earnings (Loss) Per Share Three Months Ended March 29, 2026 March 30, 2025 (In thousands, except per share data) Numerator: Net income (loss) $ 14,877 $ ( 835 ) Denominator: Weighted-average common shares outstanding - basic 106,995 102,217 Effect of dilutive stock-based awards 3,493 — Weighted-average common shares outstanding - diluted 110,488 102,217 Earnings (loss) per share - basic $ 0.14 $ ( 0.01 ) Earnings (loss) per share - diluted $ 0.13 $ ( 0.01 ) Anti-dilutive employee stock-based awards, excluded 635 572 22 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 12. 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 on 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 operations and comprehensive income (loss), but also the significant segment expenses and other segment items as below: Three Months Ended March 29, 2026 March 30, 2025 (In thousands) Revenue $ 150,382 $ 119,066 Less: Cost of revenue 77,714 66,339 Operating expenses: Personnel-related expense 19,867 17,567 Stock-based compensation 18,360 15,894 Outside professional services 14,024 11,513 Marketing expenditure 5,081 4,255 Credit card and in-app processing fee 4,922 3,682 Other segment items (1) 1,045 ( 494 ) Depreciation and amortization 441 557 Gain on sale of long-term investment ( 6,423 ) — Interest expense 59 86 Provision for income taxes 415 502 Segment net income (loss) $ 14,877 $ ( 835 ) Reconciliation of profit or loss: Adjustments and reconciling items — — Consolidated net income (loss) $ 14,877 $ ( 835 ) _________________________ (1) Other segment items include acquisition-related expense, corporate IT and facility overhead, freight out expense, workforce reduction costs, 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 March 29, 2026 March 30, 2025 (In thousands) United States $ 81,673 $ 67,903 Spain 39,149 31,168 Sweden 20,750 9,451 Other countries 8,810 10,544 Total $ 150,382 $ 119,066 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 March 29, 2026 December 31, 2025 (In thousands) United States $ 21,072 $ 20,242 Other countries 1,797 2,111 Total $ 22,869 $ 22,353 Note 13. Stock Repurchase Program On February 3, 2026, our Board of Directors approved a stock repurchase program for 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, 2027, 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 three months ended March 29, 2026, we repurchased and subsequently retired 0.6 million shares of Arlo common stock for an aggregate repurchase amount of $ 8.0 million. As of March 29, 2026, $ 42.0 million remained available and authorized for future repurchases. 24 Table of Contents