Arlo Technologies, Inc. 10-Q

Item 1. Financial Statements ARLO TECHNOLOGIES, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS As of June 28, 2026 December 31, 2025 (In thousands, except share and per share data) ASSETS Current assets: Cash and cash equivalents $ 101,382 $ 146,440 Short-term investments 39,749 19,985 Accounts receivable, net 63,607 39,666 Inventories 48,415 41,185 Restricted cash 1,920 — Prepaid expenses and other current assets 17,577 13,210 Total current assets 272,650 260,486 Property and equipment, net 15,976 13,158 Operating lease right-of-use assets, net 8,180 9,195 Goodwill 47,936 11,038 Intangible assets, net 25,713 — Long-term investment — 12,500 Other non-current assets 4,127 4,171 Total assets $ 374,582 $ 310,548 LIABILITIES AND STOCKHOLDERS ’ EQUITY Current liabilities: Accounts payable $ 50,832 $ 42,826 Deferred revenue 50,842 37,139 Accrued liabilities 92,782 92,372 Total current liabilities 194,456 172,337 Non-current operating lease liabilities 5,716 6,743 Other non-current liabilities 15,885 3,627 Total liabilities 216,057 182,707 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: 107,560,075 at June 28, 2026 and 105,030,947 at December 31, 2025 107 105 Additional paid-in capital 523,552 510,759 Accumulated other comprehensive income — 16 Accumulated deficit ( 365,134 ) ( 383,039 ) Total stockholders’ equity 158,525 127,841 Total liabilities and stockholders’ equity $ 374,582 $ 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 Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands, except per share data) Revenue: Subscriptions and services $ 93,047 $ 78,175 $ 183,146 $ 147,024 Products 62,890 51,230 123,173 101,447 Total revenue 155,937 129,405 306,319 248,471 Cost of revenue: Subscriptions and services 17,582 12,235 32,264 24,500 Products 63,139 59,095 126,171 113,169 Total cost of revenue 80,721 71,330 158,435 137,669 Gross profit 75,216 58,075 147,884 110,802 Operating expenses: Research and development 23,658 18,489 46,472 34,654 Sales and marketing 24,085 21,103 46,739 41,306 General and administrative 23,128 16,334 41,335 34,119 Other operating expense 1,889 216 3,324 241 Total operating expenses 72,760 56,142 137,870 110,320 Income from operations 2,456 1,933 10,014 482 Other income, net: Gain on sale of long-term investment — — 6,423 — Interest income, net 979 1,344 2,220 2,660 Other income (expense), net 25 ( 407 ) 95 ( 605 ) Total other income, net 1,004 937 8,738 2,055 Income before income taxes 3,460 2,870 18,752 2,537 Provision (benefit) for income taxes 432 ( 254 ) 847 248 Net income $ 3,028 $ 3,124 $ 17,905 $ 2,289 Earnings per share: Basic $ 0.03 $ 0.03 $ 0.17 $ 0.02 Diluted $ 0.03 $ 0.03 $ 0.16 $ 0.02 Weighted-average common shares outstanding: Basic 108,123 103,885 107,569 103,060 Diluted 110,819 108,061 111,094 107,692 Comprehensive income (loss): Net income $ 3,028 $ 3,124 $ 17,905 $ 2,289 Other comprehensive income (loss), net of tax 1 ( 13 ) ( 16 ) ( 42 ) Total comprehensive income $ 3,029 $ 3,111 $ 17,889 $ 2,247 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 Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Total stockholders’ equity, beginning balances $ 159,402 $ 103,370 $ 127,841 $ 100,909 Common stock and additional paid-in capital: Beginning balances $ 527,565 $ 502,165 $ 510,864 $ 498,840 Stock-based compensation expense 16,277 11,081 27,263 24,196 Settlement of liability classified restricted stock units — — 13,848 4,996 Issuance under stock-based compensation plans — 156 — 805 Issuance under employee stock purchase plan 1,955 1,475 1,955 1,475 Repurchases of common stock ( 22,138 ) ( 919 ) ( 30,271 ) ( 16,354 ) Ending balances $ 523,659 $ 513,958 $ 523,659 $ 513,958 Accumulated deficit: Beginning balances $ ( 368,162 ) $ ( 398,800 ) $ ( 383,039 ) $ ( 397,965 ) Net income 3,028 3,124 17,905 2,289 Ending balances $ ( 365,134 ) $ ( 395,676 ) $ ( 365,134 ) $ ( 395,676 ) Accumulated other comprehensive income (loss): Beginning balances $ ( 1 ) $ 5 $ 16 $ 34 Other comprehensive income (loss), net of tax 1 ( 13 ) ( 16 ) ( 42 ) Ending balances $ — $ ( 8 ) $ — $ ( 8 ) Total stockholders’ equity, ending balances $ 158,525 $ 118,274 $ 158,525 $ 118,274 Common stock shares: Beginning balances 108,745 103,305 105,031 100,885 Issuance under stock-based compensation plans 329 921 4,615 4,738 Issuance under employee stock purchase plan 187 155 187 155 Repurchases of common stock ( 1,701 ) ( 92 ) ( 2,273 ) ( 1,489 ) Ending balances 107,560 104,289 107,560 104,289 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 Six Months Ended June 28, 2026 June 29, 2025 (In thousands) Cash flows from operating activities: Net income $ 17,905 $ 2,289 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense, net of amounts capitalized 41,444 31,995 Depreciation and amortization 4,625 1,687 Gain on sale of long-term investment ( 6,423 ) — Allowance for credit losses and non-cash changes to reserves 1,351 — Deferred income taxes 161 ( 107 ) Discount accretion on investments and other ( 249 ) ( 1,390 ) Changes in assets and liabilities, net of effect of acquisitions: Accounts receivable, net ( 23,943 ) ( 4,188 ) Inventories ( 4,119 ) 9,826 Prepaid expenses and other assets ( 4,356 ) ( 2,758 ) Accounts payable 6,063 ( 13,888 ) Deferred revenue 13,155 14,956 Accrued and other liabilities ( 6,342 ) 1,327 Net cash provided by operating activities 39,272 39,749 Cash flows from investing activities: Purchases of property and equipment, including capitalized software ( 5,326 ) ( 5,778 ) Purchases of short-term investments ( 44,520 ) ( 83,390 ) Purchase of long-term investment — ( 12,500 ) Acquisitions of businesses, net of cash acquired ( 48,155 ) — Proceeds from maturities of short-term investments 24,989 65,000 Proceeds from sale of long-term investment 18,923 — Net cash used in investing activities ( 54,089 ) ( 36,668 ) Cash flows from financing activities: Proceeds from employee stock plans 1,955 2,280 Repurchases of common stock ( 30,276 ) ( 16,149 ) Net cash used in financing activities ( 28,321 ) ( 13,869 ) Net decrease in cash and cash equivalents ( 43,138 ) ( 10,788 ) Cash, cash equivalents, and restricted cash, at beginning of period 146,440 82,032 Cash, cash equivalents, and restricted cash, at end of period $ 103,302 $ 71,244 Reconciliation of cash, cash equivalents, and restricted cash to Consolidated Balance Sheets Cash and cash equivalents $ 101,382 $ 71,244 Restricted cash 1,920 — Total cash, cash equivalents, and restricted cash $ 103,302 $ 71,244 Non-cash investing and financing activities: Purchases of property and equipment included in accounts payable and accrued liabilities $ 382 $ 566 Stock-based compensation expense capitalized for software development $ 778 $ 868 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 period 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 six months ended June 28, 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 six months ended June 28, 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 ranging from five to thirteen years . Amortization expense is recorded as cost of subscriptions and services revenue 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 six months ended June 28, 2026, we adopted Accounting Standards Update (“ASU”) No. 2025-05, 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 six months ended June 28, 2026: Contract Classification Balance Sheet Classification June 28, 2026 December 31, 2025 $ change % change (In thousands) Receivables Accounts receivable, net $ 63,607 $ 39,666 $ 23,941 60.4 % Contract liabilities, current Deferred revenue $ 50,842 $ 37,139 $ 13,703 36.9 % Contract liabilities, non-current Other non-current liabilities $ 957 $ 1,476 $ ( 519 ) ( 35.2 ) % Receivables increased primarily due to higher product and service sales. Contract liabilities increased primarily due to growth in subscriptions and services revenue driven by changes in consumer subscription plans, a shift toward additional annual prepaid subscriptions, and increases in cumulative paid accounts and subscription rates. As of June 28, 2026, there were no contract assets. For the six months ended June 28, 2026 and June 29, 2025, $ 29.5 million and $ 21.7 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 $ 54.0 million as of June 28, 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 June 28, 2026, we had a backlog of $ 40.0 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 Six Months Ended Sales incentives June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Balance at the beginning of the period $ 26,450 $ 28,378 $ 29,124 $ 29,846 Credits issued ( 19,078 ) ( 19,834 ) ( 36,746 ) ( 41,552 ) Additions 18,929 26,348 33,923 46,598 Balance at the end of the period $ 26,301 $ 34,892 $ 26,301 $ 34,892 Three Months Ended Six Months Ended Sales returns June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Balance at the beginning of the period $ 7,202 $ 8,963 $ 9,273 $ 11,651 Credits issued ( 2,985 ) ( 3,246 ) ( 5,774 ) ( 8,749 ) Additions 1,181 2,373 1,899 5,188 Balance at the end of the period $ 5,398 $ 8,090 $ 5,398 $ 8,090 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 Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Americas $ 88,969 $ 81,902 $ 172,955 $ 151,999 EMEA 61,479 43,320 122,144 86,215 APAC 5,489 4,183 11,220 10,257 Total $ 155,937 $ 129,405 $ 306,319 $ 248,471 For the six months ended June 28, 2026 and June 29, 2025, one customer accounted for 40 % and 35 % of the total revenue, respectively. No other customer accounted for 10% or greater of the total revenue. As of June 28, 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 with Canary. 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 the Canary acquisition 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 associated with Canary 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 is as follows (in thousands): Assets acquired: Inventory $ 1,911 Intangible assets 19,090 Goodwill 27,906 Total assets acquired $ 48,907 Liabilities assumed: Total liabilities assumed $ — Fair value of assets acquired and liabilities assumed, net $ 48,907 12 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The fair values and useful lives of identifiable intangible assets were as follows: Gross amount Estimated useful life (In thousands) (In years) Customer relationship (1) $ 8,320 10 Proprietary technologies (2) 9,670 5 - 10 Trade names (3) 1,100 13 Total intangible assets $ 19,090 _________________________ (1) Customer relationship intangible assets were valued using the multi-period excess earnings method, which is the present value of the projected cash flows expected to be generated by the existing customer relationships, after deducting contributory asset charges representing a fair return on other assets required to generate those cash flows. Key assumptions included discounted cash flow and estimated customer retention rates. (2) Proprietary technologies intangible assets comprised of various developed technologies, which were valued using the relief-from-royalty method and the multi-period excess earnings method. For the proprietary technology intangible asset valued using the relief-from-royalty method, which is based on the discounted cash flow savings accruing to the owner from not having to license the technology from a third party. Key assumptions included attributable revenue, royalty rates, and technology obsolescence rates. For the proprietary technology intangible asset valued using the multi-period excess earnings method, which is based on the discounted cash flows after deducting contributory asset charges representing a fair return on other assets required to generate those cash flows. Key assumptions included attributable revenue, profitability, cash flows, and technology obsolescence rates. (3) Trade names intangible assets were valued using the relief from royalty method, which is the discounted cash flow savings accruing to the owner by virtue of the fact that the owner is not required to license the trade names from a third party. Key assumptions included attributable revenue expected from the trade names, royalty rates, and assumed asset life. During the six months ended June 28, 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). During the six months ended June 28, 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 from the acquisition date to June 28, 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. 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 Aloe Care by obtaining the ability to direct its ongoing operations and to receive substantially all of the economic benefits associated with Aloe Care. 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. 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 13 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) techniques that require significant judgments and assumptions, including projected revenue, profitability and cash flows. Goodwill recognized through the Aloe Care acquisition 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 associated with Aloe Care is not 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 (1) $ 14,102 Earnout contingent consideration (2) 5,380 Total purchase consideration $ 19,482 _________________________ (1) Cash paid at close does not include the acquisition-related costs which are expensed when incurred and are not purchase consideration. (2) The earnout was accounted for as contingent consideration at fair value and was valued using a Monte Carlo simulation model, applying a revenue discount rate of 6.3 % to the projected revenue inputs and a discount rate of 7.75 % to present value the resulting payment as of the acquisition date. The fair value measurement was based on significant inputs not observable in the market, including projected revenue, probability, and the timing of achieving the earnout targets. The purchase price allocation is as follows (in thousands): Assets acquired: Cash $ 27 Restricted cash (1) 1,920 Inventories 2,455 Other acquired assets 433 Intangible assets 7,840 Goodwill 8,992 Total assets acquired $ 21,667 Liabilities assumed: Accounts payable $ 1,960 Other assumed liabilities 225 Total liabilities assumed $ 2,185 Fair value of assets acquired and liabilities assumed, net $ 19,482 _________________________ (1) Restricted cash is in escrow funds to secure post-acquisition indemnification obligations and working capital adjustments. 14 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) The fair values and useful lives of identifiable intangible assets were as follows: Gross amount Estimated useful life (In thousands) (In years) Customer relationship (1) $ 470 5 Proprietary technologies (2) 4,810 10 Trade names (3) 2,560 10 Total intangible assets $ 7,840 _________________________ (1) Customer relationship intangible assets were valued using the distributor method, which is the present value of the after-tax cash flows expected to be generated by the existing customer relationships, after reduction by an estimated fair rate of return on contributory assets required to generate the customer relationship revenues. Key assumptions included the discount rate, estimated customer retention rates, and the selected distributor profit margin derived from guideline public distributor companies. (2) Proprietary technologies intangible assets were valued using the multi-period excess earnings method based on the discounted cash flows and technology obsolescence rate. Key assumptions included attributable revenue, profitability, cash flows, and technology obsolescence rates. (3) Trade names intangible assets were valued using the relief from royalty method, which is the discounted cash flow savings accruing to the owner by virtue of the fact that the owner is not required to license the trade names from a third party. Key assumptions included attributable revenue expected from the trade names, royalty rates, and assumed asset life. During the six months ended June 28, 2026, we recorded $ 2.2 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). During the six months ended June 28, 2026, Aloe Care’s results of operations are not material and are included within our unaudited condensed consolidated financial statements from an effective date of April 16, 2026. The effect of this business combination was not material to our financial results. Therefore, the actual and pro-forma results of operations from the acquisition date to June 28, 2026 have not been presented. 15 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 5. Balance Sheet Components Short-term investments As of June 28, 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 $ 39,749 $ — $ — $ 39,749 $ 19,980 $ 5 $ — $ 19,985 Property and equipment, net As of June 28, 2026 December 31, 2025 (In thousands) Machinery and equipment $ 16,331 $ 16,093 Capitalized software development costs 27,974 22,002 Software and license 5,850 5,877 Computer equipment 881 881 Leasehold improvements 941 941 Furniture and fixtures 1,410 1,393 Total property and equipment, gross 53,387 47,187 Less: accumulated depreciation and amortization ( 37,411 ) ( 34,029 ) Total property and equipment, net $ 15,976 $ 13,158 Depreciation and amortization expense pertaining to property and equipment are as follows: Three Months Ended Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Depreciation: Operating expenses $ 346 $ 366 $ 702 $ 923 Amortization: Subscriptions and services cost 1,275 341 2,531 613 Operating expenses 90 151 175 151 Total depreciation and amortization $ 1,711 $ 858 $ 3,408 $ 1,687 Goodwill We have determined that no event occurred or circumstances changed during the six months ended June 28, 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 June 28, 2026. 16 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Intangible assets, net Intangible assets acquired through business combinations as of June 28, 2026 were as follows: Gross carrying amount Accumulated amortization Net carrying amount Weighted-average remaining amortization periods (In thousands) Customer relationship $ 8,790 ( 630 ) 8,160 9.4 years Proprietary technologies 14,480 ( 495 ) 13,985 9.4 years Trade names 3,660 ( 92 ) 3,568 10.6 years Total intangible assets $ 26,930 $ ( 1,217 ) $ 25,713 Amortization of intangible assets resulting from business combinations during the three and six months ended June 28, 2026 was $ 1.2 million and $ 1.2 million, respectively. There were no accumulated intangible assets impairment recognized as of June 28, 2026. The expected future amortization expense for intangible assets as of June 28, 2026 was as follows (in thousands): 2026 (Remaining six months) $ 1,879 2027 3,261 2028 3,060 2029 2,903 2030 2,788 Thereafter 11,822 Total $ 25,713 Accrued liabilities As of June 28, 2026 December 31, 2025 (In thousands) Sales incentives and marketing expenditures $ 28,707 $ 31,976 Sales returns 5,398 9,273 Employee compensation 20,791 23,221 Cloud and other costs 9,154 6,052 Other 28,732 21,850 Total $ 92,782 $ 92,372 17 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 6. Fair Value Measurements Fair value on a recurring basis As of June 28, 2026 December 31, 2025 (In thousands) Cash equivalents: money-market funds (<90 days) $ 24,671 $ 71,987 Cash equivalents: U.S. Treasuries (<90 days) 24,853 20,506 Available-for-sale securities: U.S. Treasuries (1) 39,749 19,985 Total $ 89,273 $ 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 June 28, 2026 and December 31, 2025, assets and liabilities measured as Level 2 fair value were not material and there were no financial assets measured as Level 3 fair value. Earnout contingent consideration recognized through the Aloe Care acquisition is measured at the fair value on a recurring basis and is classified within Level 3 of the fair value hierarchy because the measurement requires the use of significant unobservable inputs. The fair value of the earnout contingent consideration was estimated using income and market-based valuation techniques and discounted to present value. Significant unobservable inputs used in the valuation include projected revenue, profitability, cash flows, and the discount rate. Changes in these assumptions could result in a significantly higher or lower fair value measurement. The contingent consideration liability was $ 5.4 million as of June 28, 2026 and was included in other non-current liabilities on the unaudited condensed consolidated balance sheets. Changes in the fair value of the contingent consideration liability will be recognized in other operating expense on the unaudited condensed consolidated statements of operations and comprehensive income (loss). During the six months ended June 28, 2026, there was no fair value adjustment related to the earnout contingent consideration. Fair value on a non-recurring basis 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. Sale of long-term investment During the first fiscal quarter of 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. 18 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 June 28, 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 June 28, 2026, we were in compliance with all the covenants under the Credit Agreement. No amount had been drawn under the Credit Facility as of June 28, 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 $ 1.6 million for the three and six months ended June 28, 2026, respectively, and $ 1.4 million and $ 2.8 million for the three and six months ended June 29, 2025, respectively. Supplemental cash flow information related to operating leases is as follows: Six Months Ended June 28, 2026 June 29, 2025 (In thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 1,210 $ 4,075 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ — $ 65 19 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 June 28, 2026 December 31, 2025 Weighted-average remaining lease term 5.3 years 5.5 years Weighted-average discount rate 7.81 % 7.68 % The future minimum undiscounted lease payments under operating leases for each of the next five years and thereafter as of June 28, 2026 were as follows (in thousands): 2026 (remaining six months) $ 1,278 2027 2,370 2028 1,311 2029 1,021 2030 994 Thereafter 2,622 Total future lease payments $ 9,596 Less: imputed interest ( 1,867 ) Present value of future minimum lease payments $ 7,729 Accrued liabilities $ 2,013 Non-current operating lease liabilities 5,716 Total lease liabilities $ 7,729 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 June 28, 2026, we had $ 37.4 million in non-cancelable purchase commitments with suppliers which is expected to be paid over the next twelve months . As of June 28, 2026, an additional $ 32.8 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. 20 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Tariff refunds On February 20, 2026, the U.S. Supreme Court ruled that certain of the tariffs imposed in fiscal 2025 under the International Emergency Economic Powers Act (“IEEPA”) were unlawful. The ruling did not address potential refunds; however, on March 4, 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to begin refunding all tariffs imposed under IEEPA. On April 20, 2026, the CBP launched a process for submitting IEEPA refund claims and subsequently, we submitted refund claims. We applied a gain contingency model in accordance with ASC 450, Contingencies, and account for refunds when the amounts are collected as a reduction of cost of revenue on the unaudited condensed consolidated statements of operations and comprehensive income (loss). Additionally, interest associated with refunds is accounted for as interest income on the unaudited condensed consolidated statements of operations and comprehensive income (loss). For the three months ended June 28, 2026, we received and recognized tariff refunds of $ 8.0 million and interest income of $ 0.2 million. Subsequent to June 28, 2026, we received and recognized tariff refunds of $ 6.3 million and interest income of $ 0.2 million. We have received substantially all tariff refunds as of the date the financial statements were issued. 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 June 28, 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. 21 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 June 28, 2026, 2.9 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. The following table sets forth the available shares for grants as of June 28, 2026: Number of Shares (In thousands) Shares available for grants as of December 31, 2025 4,409 Additional authorized shares 4,200 Granted ( 5,949 ) Forfeited / expired / cancelled 209 Shares available for grants as of June 28, 2026 2,869 Employee stock purchase plan We sponsor the ESPP for eligible employees, under which, employees purchased 187 thousand shares and 155 thousand shares during the six months ended June 28, 2026 and June 29, 2025, respectively. As of June 28, 2026, 3.0 million shares were available for issuance under the ESPP. Option activity We did not grant options during the six months ended June 28, 2026. Stock option activity during the six months ended June 28, 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 June 28, 2026 275 $ 14.10 Vested and exercisable as of June 28, 2026 275 $ 14.10 22 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) RSU activity RSU activity, exclusive of PSU activity, during the six months ended June 28, 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 3,062 $ 13.81 Vested ( 2,681 ) $ 10.58 Forfeited / cancelled ( 206 ) $ 13.06 Outstanding as of June 28, 2026 6,656 $ 11.41 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 six months ended June 28, 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 $ 11.95 Vested ( 1,934 ) $ 10.29 Forfeited / cancelled ( 3 ) $ 8.28 Outstanding as of June 28, 2026 3,920 $ 11.72 23 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Cost of revenue $ 1,136 $ 885 $ 2,510 $ 2,002 Research and development 6,730 4,500 13,901 8,400 Sales and marketing 2,896 2,079 6,070 5,152 General and administrative 10,948 7,519 18,963 16,441 Stock-based compensation, net of amounts capitalized $ 21,710 $ 14,983 $ 41,444 $ 31,995 Capitalized stock-based compensation 472 267 778 868 Total stock-based compensation $ 22,182 $ 15,250 $ 42,222 $ 32,863 As of June 28, 2026, all outstanding options were fully vested, therefore, there was no unrecognized compensation cost related to stock options. As of June 28, 2026, $ 92.9 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. Note 10. Income Taxes The provision for income taxes for the three and six months ended June 28, 2026 was $ 0.4 million and $ 0.8 million, respectively, or an effective tax rate of 12.5 % and 4.5 %, respectively. The provision (benefit) for income taxes for the three and six months ended June 29, 2025 was $( 0.3 ) million and $ 0.2 million, respectively, or an effective tax rate of ( 8.9 )% and 9.8 %, respectively. Provision for income taxes increased for the three and six months ended June 28, 2026 compared to the prior year periods, primarily due to higher pre-tax income in the current periods and the prior year three-month period’s income tax benefit. The lower effective tax rate for the six months ended June 28, 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 June 28, 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 June 28, 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. 24 Table of Contents ARLO TECHNOLOGIES, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Note 11. Earnings Per Share Three Months Ended Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands, except per share data) Numerator: Net income $ 3,028 $ 3,124 $ 17,905 $ 2,289 Denominator: Weighted-average common shares outstanding - basic 108,123 103,885 107,569 103,060 Effect of dilutive stock-based awards 2,696 4,176 3,525 4,632 Weighted-average common shares outstanding - diluted 110,819 108,061 111,094 107,692 Earnings per share - basic $ 0.03 $ 0.03 $ 0.17 $ 0.02 Earnings per share - diluted $ 0.03 $ 0.03 $ 0.16 $ 0.02 Anti-dilutive employee stock-based awards, excluded 603 331 500 514 25 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 Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) Revenue $ 155,937 $ 129,405 $ 306,319 $ 248,471 Less: Cost of revenue 80,721 71,330 158,435 137,669 Operating expenses: Personnel-related expense 21,395 18,709 41,262 36,277 Stock-based compensation 20,575 14,098 38,935 29,993 Outside professional services 15,417 11,097 29,441 22,608 Marketing expenditure 5,336 5,788 10,417 10,043 Credit card and in-app processing fee 4,360 4,422 9,282 8,104 Other segment items (1) 3,951 489 4,996 ( 5 ) Depreciation and amortization 436 518 877 1,075 Gain on sale of long-term investment — — ( 6,423 ) — Interest expense 286 84 345 170 Provision (benefit) for income taxes 432 ( 254 ) 847 248 Segment net income (loss) $ 3,028 $ 3,124 $ 17,905 $ 2,289 Reconciliation of profit or loss: Adjustments and reconciling items — — — — Consolidated net income (loss) $ 3,028 $ 3,124 $ 17,905 $ 2,289 _________________________ (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. 26 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 Six Months Ended June 28, 2026 June 29, 2025 June 28, 2026 June 29, 2025 (In thousands) United States $ 86,875 $ 79,457 $ 168,548 $ 147,360 Spain 38,418 25,653 77,567 56,820 Sweden 22,700 13,086 43,450 22,538 Other countries 7,944 11,209 16,754 21,753 Total $ 155,937 $ 129,405 $ 306,319 $ 248,471 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 June 28, 2026 December 31, 2025 (In thousands) United States $ 22,665 $ 20,242 Other countries 1,491 2,111 Total $ 24,156 $ 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 six months ended June 28, 2026, we repurchased and subsequently retired 2.3 million shares of Arlo common stock for an aggregate repurchase amount of $ 29.9 million. As of June 28, 2026, $ 20.1 million remained available and authorized for future repurchases. 27 Table of Contents