10q10k10q10k.net

What changed in Arlo Technologies, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Arlo Technologies, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+363 added−343 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-27)

Top changes in Arlo Technologies, Inc.'s 2025 10-K

363 paragraphs added · 343 removed · 253 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

48 edited+21 added−45 removed48 unchanged
Biggest changeThe all-new second generation Essential cameras and doorbells offer several new advancements, with up to 2K video resolution, providing customers with powerful smart home security solutions at affordable price points. Additionally, each device features USB-C connections for easy re-charging, and a new quick set-up process using Bluetooth for a faster, easier onboarding experience.
Biggest changeAdditionally, each device features USB-C connections for easy re-charging, and a new quick set-up process for an even faster, easier onboarding experience. Arlo Pro 6 , released in the fourth quarter of 2025, is the latest generation of Arlo’s award-winning Pro Series wireless security cameras.
Competition We believe we are well-positioned to compete within the broader smart security market, both within and beyond the home as we continue to launch new product lines and services on our highly secure, globally-scaled platform. However, our market is highly competitive and evolving, and we expect competition to increase in the future.
Competition We believe we are well-positioned to compete within the broader smart security market, both within and beyond the home as we continue to launch new services and product lines on our highly secure, globally-scaled platform. However, our market is highly competitive and evolving, and we expect competition to increase in the future.
We believe the principal competitive factors impacting the market for our products and services include price, service offerings, functionality, brand, technology, design, distribution channels and customer service.
We believe the principal competitive factors impacting the market for our services and products include price, service offerings, functionality, brand, technology, design, distribution channels and customer service.
Nevertheless, the smart security market remains highly competitive, and has a multitude of participants, including: large global technology companies, such as Amazon (Ring and Blink) and Google (Nest); security service vendors, such as ADT; telecom service providers, such as AT&T, Verizon and Comcast; and other companies, such as TP Link, Eufy and Wyze.
Nevertheless, the smart security market remains highly competitive, and has a multitude of participants, including: large global technology companies, such as Amazon (Blink and Ring) and Google (Nest); security service vendors, such as ADT; telecom service providers, such as AT&T, Verizon, and Comcast; and other companies, such as TP Link, Eufy, and Wyze.
If directed by the user, Arlo’s Emergency Response team can also provide critical location information to responders en route to better prepare them, such as gate codes, medical conditions of family members, and pet details. • 2K and 4K Cloud-based Video Recording – View 30 days of recordings securely stored on Arlo’s SmartCloud platform, for ultimate peace of mind and protection even if the device is damaged or stolen in a break-in, storm or other physical incident. • Unlimited Cameras – Users can enjoy Arlo Secure service for all cameras in their home with one all-encompassing plan and can add newly purchased Arlo cameras for no additional service charge. • Advanced Object Detectio n – Arlo processes and filters approximately 195 million events each day through advanced object detection backed by visual AI, allowing for better recognition of people, packages, vehicles, and animals to add key context to notifications and reduce unwanted alerts. • Smart Interactive Notifications – Users can take quicker action by responding to rich notifications or viewing an animated preview of a notification video through the lock screen on their smartphone. • Smoke and CO Alarm Detection – Users can get notified when the camera hears a smoke or CO alarm triggered. • Cloud-based Activity Zones – Users can reduce unwanted notifications by highlighting specific areas on their property where they want motion to be detected. • Call a Friend – Users can instantly call a friend through the Arlo App from their notification screen with one tap. • 24/7 Priority Support – Users get priority technical support through the in-app Help Center with omnichannel access to phone, chat, Community or self-help articles. • 24/7 Professional Monitoring – Users have access to Live Security Experts who swiftly assist in an emergency, regardless of whether a user is home or away.
If directed by the user, Arlo’s Emergency Response team can also provide critical location information to responders en route to better prepare them, such as gate codes, medical conditions of family members, and pet details. • 2K and 4K Cloud-based Video Recording – View 60 days of recordings securely stored on Arlo’s SmartCloud platform, for ultimate peace of mind and protection even if the device is damaged or stolen in a break-in, storm or other physical incident. • Unlimited Cameras – Users can enjoy Arlo Secure service for all cameras in their home with one all-encompassing plan and can add newly purchased Arlo cameras for no additional service charge. • Advanced Object Detectio n – Arlo processes and filters approximately 300 million events each day through advanced object detection backed by visual AI, allowing for better recognition of people, packages, vehicles, and animals to add key context to notifications and reduce unwanted alerts. • Smart Interactive Notifications – Users can take quicker action by responding to rich notifications or viewing an animated preview of a notification video through the lock screen on their smartphone. • Smoke and CO Alarm Detection – Users can get notified when the camera hears a smoke or CO alarm triggered. • Cloud-based Activity Zones – Users can reduce unwanted notifications by highlighting specific areas on their property where they want motion to be detected. • Call a Friend – Users can instantly call a friend through the Arlo App from their notification screen with one tap. • 24/7 Priority Support – Users get priority technical support through the in-app Help Center with omnichannel access to phone, chat, Community or self-help articles. • 24/7 Professional Monitoring – Users have access to Live Security Experts who swiftly assist in an emergency, regardless of whether a user is home or away.
Services Arlo Secure Arlo Secure is our subscription service that provides advanced AI-based detection, DIY home security as well as professional monitoring, and an enhanced Emergency Response capability. These premium services boast support for unlimited household security devices, along with advanced AI object detection, and smarter, more interactive notifications.
Subscriptions and Services Arlo Secure Arlo Secure is our subscription service that provides advanced AI-based detection, DIY home security as well as professional monitoring, and an enhanced Emergency Response capability. These premium services boast support for unlimited household security devices, along with advanced AI object detection, and smarter, more interactive notifications.
Manufacturing While all of our products are primarily designed in North America, we currently outsource manufacturing to Foxconn Cloud Network Technology Singapore Pte. Ltd., Alpha Networks Inc., Pegatron Corporation, and Chicony Electronics Co., Ltd., which are all headquartered in Asia.
Manufacturing While all of our products are primarily designed in North America, we currently outsource manufacturing to Foxconn Cloud Network Technology Singapore Pte. Ltd., Tonly Technology Co., Ltd, Alpha Networks Inc., Pegatron Corporation, and Chicony Electronics Co., Ltd., which are all headquartered in Asia.
In the third quarter of 2019, we launched our online direct to consumer store to sell our products directly to our customers. We also sell our subscription services, such as Arlo Secure, Arlo Total Security, and Arlo Safe, directly to consumers.
Arlo.com . In the third quarter of 2019, we launched our online direct to consumer store to sell our products directly to our customers. We also sell our subscription services, such as Arlo Secure, Arlo Total Security, and Arlo Safe, directly to consumers.
Our operations teams based in the United States, Ireland, Taiwan, and Vietnam coordinate with our manufacturers’ engineering, manufacturing and quality control personnel to develop the requisite manufacturing processes, quality checks and testing and general oversight of the manufacturing activities.
Our operations teams based in the United States, Canada, Ireland, Taiwan, and Vietnam coordinate with our manufacturers’ engineering, manufacturing and quality control personnel to develop the requisite manufacturing processes, quality checks and testing and general oversight of the manufacturing activities.
Our website also provides a link to Section 16 filings which are available free of charge on the same day as such filings are made. Information contained on or accessible through these websites is not a part of this Annual Report on Form 10-K. 15 Table of Contents
Our website also provides a link to Section 16 filings which are available free of charge on the same day as such filings are made. Information contained on or accessible through these websites is not a part of this Annual Report on Form 10-K. 14 Table of Contents
For additional information, see “ Risk Factors-Risks Related to Our Business-Some of our competitors have substantially greater resources than we do, and to be competitive we may be required to lower our prices or increase our sales and marketing expenses, which could result in reduced margins and loss of market share .” Research and Development We are passionate about developing new and innovative products and services that enhance the smart security experience.
For additional information, see “ Risk Factors-Risks Related to Our Business-Some of our competitors have substantially greater resources than we do, and to be 9 Table of Contents competitive we may be required to lower our prices or increase our sales and marketing expenses, which could result in reduced margins and loss of market share .” Research and Development We are passionate about developing new and innovative products and services that enhance the smart security experience.
Managed through the Arlo Secure App, the award-winning security system pairs with Arlo's advanced video security cameras, such as the Arlo Pro 5s, to enable video verification by 24/7 Professional Monitoring security experts of an emergency situation – a growing requirement across municipalities to reduce false alarms and unnecessary utilization of emergency services. 6 Table of Contents Arlo Safe Arlo Safe is a personal safety service with a panic button accessory featuring one-tap, 24/7 Emergency Response, family safety, automatic crash detection and more.
Managed through the Arlo Secure App, the award-winning security system pairs with Arlo's advanced video security cameras, such as the Arlo Pro 6, to enable video verification by 24/7 Professional Monitoring security experts of an emergency situation – a growing requirement across municipalities to reduce false alarms and unnecessary utilization of emergency services. 6 Table of Contents Arlo Safe Arlo Safe is a personal safety service with a panic button accessory featuring one-tap, 24/7 Emergency Response, family safety, and more.
We believe that we compete favorably in these areas based on our market position in the U.S. consumer network connected camera systems market, best-in-class technology, direct relationship with users and user engagement, trusted Arlo platform, strong Arlo brand and channel partners and deep strategic partnerships with key suppliers, such as Infineon Technologies AG, OmniVision Technologies Inc., Realtek and Qualcomm Incorporated.
We believe that we compete favorably in these areas based on our market position in the U.S. consumer network connected camera systems market, best-in-class technology, direct relationship with users and user engagement, trusted Arlo platform, strong Arlo brand and channel partners and deep strategic partnerships with key suppliers, such as Infineon Technologies Americas Corp, OmniVision Technologies Inc., Realtek Semiconductor Corp, and Qualcomm Incorporated.
Our operations team coordinates with our manufacturers to ensure that the shipment of our products from the manufacturers to these logistics hubs meets customer demand. Arlo Cloud Engineering Operations We currently serve our users from third-party data center hosting facilities.
Our operations team coordinates with our manufacturers to ensure that the shipment of our products from the manufacturers to these logistics hubs meets customer demand. Arlo Cloud Engineering Operations 10 Table of Contents We currently serve our users from third-party data center hosting facilities.
As of December 31, 2024, our research and development staff consisted of 148 employees, located in our offices worldwide, and was comprised of front-end and back-end software engineers, radio frequency engineers, electrical engineers, mechanical engineers, system test engineers, computer vision scientists and data analysis engineers, UX and industrial design engineers and mobile app developers.
As of December 31, 2025, our research and development staff consisted of 186 employees, located in our offices worldwide, and was comprised of front-end and back-end software engineers, radio frequency engineers, electrical engineers, mechanical engineers, system test engineers, computer vision scientists and data analysis engineers, UX and industrial design engineers and mobile app developers.
We believe this model has enabled us to quickly and efficiently deliver high-quality and innovative products, while enabling us to minimize costs and manage inventory. 10 Table of Contents Our products are manufactured and packaged for retail sale by our manufacturers mostly in Vietnam, Thailand, and Indonesia, and shipped to our logistics hubs located in the United States, Hong Kong, and Australia.
We believe this model has enabled us to quickly and efficiently deliver high-quality and innovative products, while enabling us to minimize costs and manage inventory. Our products are manufactured and packaged for retail sale by our manufacturers mostly in Vietnam, Thailand, and Indonesia, and shipped to our logistics hubs in the United States, Hong Kong, and Australia.
Additionally, the 24/7, one-touch Emergency Response is available with the Secure Plus and Premium plans, enabling Arlo users to directly dispatch first responders during an emergency for quicker action. A trial period of Arlo Secure is provided with various Arlo cameras, home security, and doorbell products.
Additionally, the 24/7, one-touch Emergency Response is available with the Secure Premium plan, enabling Arlo users to directly dispatch first responders during an emergency for quicker action. Subscriptions of Arlo Secure are available with various Arlo cameras, home security, and doorbell products.
Customer Care We provide customer care to Arlo users globally through a variety of communication channels, including phone, chat, email, social media and our Arlo Community, as well as self-guided resources such as knowledge-base articles, how-to videos and technical documentation on our website.
Customer Care We provide global customer care to Arlo users through a range of communication channels, including phone, chat, email, social media, the Arlo Community, and self‑service options such as knowledge‑base articles, how‑to videos, and technical documentation on our website.
We rely upon a combination of patent, copyright, trade secret, and trademark laws and contractual restrictions, such as confidentiality agreements and licenses, to establish and protect our proprietary rights.
We rely upon a combination of patent, copyright, trade secret, and trademark laws and contractual restrictions, such as confidentiality agreements and licenses, to establish and protect our proprietary rights. Some of our technology relies upon third-party licensed intellectual property.
The features of Arlo Secure subscriptions include: 5 Table of Contents • AI-powered Recognition and Detection – Leveraging advanced computer vision AI and recognition engines, Arlo Secure 5 provides more meaningful, detailed alerts so users can make informed decisions about their security and safety.
The features of Arlo Secure subscriptions include: 5 Table of Contents • AI-powered Recognition and Detection – Leveraging advanced computer vision AI and recognition engines, Arlo Secure 6 provides event captions, video search, advanced video and audio detection capabilities so users can make informed decisions about their security and safety.
Products Smart Security Devices Arlo Essential Cameras and Doorbells (2nd Generation) , released in the third quarter of 2023, deliver smart home protection for everyone at an incredible value.
Products Smart Security Devices Arlo Essential Cameras and Doorbells , refreshed in the fourth quarter of 2025, deliver smart home protection for everyone at an incredible value.
Other Services Arlo SmartCloud is a SaaS solution that delivers scalable security cloud services for business. Its comprehensive offering includes computer vision, multi-object detection, audio analysis, security services, scaled storage and numerous ecosystem integrations.
Other Services Arlo SmartCloud is a SaaS solution that delivers advanced smart security cloud services with Arlo Intelligence for businesses looking to rapidly integrate and deploy smart security at scale. Its comprehensive offering includes computer vision, multi-object detection, audio analysis, security services, scaled storage and numerous ecosystem integrations.
Company Information We were incorporated in Delaware in January 2018. Our principal executive offices are located at 5770 Fleet Street, Carlsbad, California 92008, and our telephone number is (408) 890-3900. Our website is http://www.arlo.com.
We conduct regular surveys that gauge employee sentiment in areas like career development, manager performance, workplace culture, and career growth opportunities. Company Information We were incorporated in Delaware in January 2018. Our principal executive offices are located at 5770 Fleet Street, Carlsbad, California 92008, and our telephone number is (408) 890-3900. Our website is http://www.arlo.com.
Retailers . We sell to traditional and online retailers, either directly or through wholesale distributors. We work directly with our retail channels on market development activities, such as co-advertising, including digital and traditional media, online promotions and video demonstrations, instant rebate programs, event sponsorship and sales associate training.
We work directly with our retail channels on market development activities, such as co-advertising, including digital and traditional media, online promotions and video demonstrations, instant rebate programs, event sponsorship and sales associate training. We sell a substantial portion of our products through traditional and online retailers, including Amazon, Best Buy, Walmart, Sam’s Club, Home Depot, Lowe’s and Costco.
Arlo Home Security System , released in the fourth quarter of 2022, is a first-of-its-kind smart security system featuring the Arlo All-in-One Multi-Sensor capable of eight different sensing functions.
The wired floodlight works with Amazon Alexa and Google Home for easy interaction, automation, and control. 7 Table of Contents Arlo Home Security System , released in the fourth quarter of 2022, is a first-of-its-kind smart security system featuring the Arlo All-in-One Multi-Sensor capable of eight different sensing functions.
Moreover, our focus on building a smart security platform, combined with our leadership in innovation in the consumer network connected camera systems market, has led to the strength of our Arlo brand worldwide.
Moreover, our focus on building a smart security platform, combined with our leadership in innovation in the consumer network connected camera systems market, has led to the strength of our Arlo brand worldwide. We believe this focus allows us to compete favorably with companies that have introduced or have announced plans to introduce smart security services and devices.
As our installed base continues to grow in new geographies, categories and technologies, we will continue to focus on building a scalable support infrastructure that enables our users to engage with us through the channel that is most convenient and efficient for their needs.
As our installed base expands across new geographies, product categories, and technologies, we remain focused on building a scalable, flexible support infrastructure that enables users to reach us through the channels that are most convenient and efficient for their needs.
We recognize our people are most likely to thrive when they have the resources to meet their needs and the time and support to succeed in their professional and personal lives.
Given our need to compete for specialized talent, we benchmark against technology companies to ensure our compensation packages attract and retain top talent. We recognize that our people are most likely to thrive when they have the resources to meet their needs and the time and support to succeed in their professional and personal lives.
Agreement with Verisure Verisure is the exclusive distributor of our products in Europe for all retail channels and direct channels in connection with Verisure’s security business. On April 25, 2024, Verisure notified us that it was exercising its right under the Supply Agreement to extend the term for another five years (through November 2029) with no minimum purchase obligations.
On April 25, 2024, Verisure notified us that it was exercising its right under the Supply Agreement to extend the term for another five years (through November 2029) with no minimum purchase obligations. Under the Supply Agreement, a purchase obligation is not deemed to exist until we receive and accept Verisure’s purchase order.
This sales channel is and will continue to be the key route-to-market for our current portable LTE-enabled camera and any future cellular-enabled security solutions. Security Solution Providers . We sell our products and services to security solution providers, including Verisure, from which we derived 43.2% of our revenue in 2024. Arlo.com .
We supply our products to major wireless carriers around the world, including AT&T, T-Mobile, Verizon, Telstra and Vodafone. This sales channel is and will continue to be the key route-to-market for our current portable LTE-enabled camera and any future cellular-enabled security solutions. Security S olution Providers . We sell our products and services to security solution providers, including Verisure.
We also pursue the registration of our domain names and trademarks and service marks in the United States and in certain locations outside the United States. We currently have six registered trademarks and six pending trademark applications in the United States, as well as 82 registered trademarks and 25 pending trademark applications outside of the United States.
We currently have six registered trademarks and six pending trademark applications in the United States, as well as 110 registered trademarks and 8 pending trademark applications outside of the United States.
The Arlo Anti-Theft Mount enables users to lock their Arlo camera in place to prevent tampering and theft.
Mounts feature innovative designs that allow users to mount their cameras outdoors or indoors, on ceilings or countertops. The Arlo Anti-Theft Mount enables users to lock their Arlo camera in place to prevent tampering and theft.
The Wire-Free Outdoor Siren extends protection outside of the home with a loud wire-free siren featuring a weather-resistant design, built-in strobe and adjustable volume settings. The Arlo Cellular and Battery Backup module gives the Arlo Security System up to 12 hours of power during outages and stacks discretely beneath the Security System hub for a sleek all-in-on design.
Arlo Accessories Security System Accessories provide added functionality to the Arlo Security System for greater peace of mind. The Wire-Free Outdoor Siren extends protection outside of the home with a loud wire-free siren featuring a weather-resistant design, built-in strobe and adjustable volume settings.
For those looking to eliminate battery swaps entirely, the mountable and weather-resistant Arlo Solar Panel connects to various Arlo cameras to keep batteries charged with just a few hours of direct sunlight. Mounts feature innovative designs that allow users to mount their cameras outdoors or indoors, on ceilings or countertops.
With the Arlo Charging Station, users can charge up to two batteries with fast-charging technology so there is always a battery ready to go. For those looking to eliminate battery swaps entirely, the mountable and weather-resistant Arlo Solar Panel connects to various Arlo cameras to keep batteries charged with just a few hours of direct sunlight.
We sell directly to our distributors, including Ingram Micro, Inc., D&H Distributing Company and Synnex Corporation. Broadcast Channels . We also sell our products through TV shopping networks such as HSN and QVC. Wireless Carriers . We supply our products to major wireless carriers around the world, including AT&T, T-Mobile, Verizon, Telstra and Vodafone.
Wholesale Distributors . Our distribution channel supplies our products to retailers, e-commerce resellers, wireless carriers and broadcast channels. We sell directly to our distributors, including Synnex Corporation and D&H Distributing Company. Broadcast Channels . We also sell our products through TV shopping networks such as HSN and QVC. 8 Table of Contents Wireless Carriers .
Additional outdoor, tabletop, and other adjustable mounts give users added flexibility to customize their camera position to suit any unique location they need to monitor. 8 Table of Contents Sales Channels We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, broadcast channels, wireless carriers, security solution providers as well as directly to consumers through our own online store.
Sales Channels We sell our products through multiple sales channels worldwide, including traditional and online retailers, wholesale distributors, broadcast channels, wireless carriers, security solution providers as well as directly to consumers through our own online store. Retailers . We sell to traditional and online retailers, either directly or through wholesale distributors.
Under the Supply Agreement, a purchase obligation is not deemed to exist until we receive and accept Verisure’s purchase order. As of December 31, 2024, we had a backlog of $33.5 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months.
For the year ended December 31, 2025, 32% of our total revenue was derived from Verisure. As of December 31, 2025, we had a backlog of $46.3 million which represents performance obligations that will be recognized as revenue once fulfilled, which is expected to occur over the next six months.
Pro 5S is backed by the Arlo Secure App which features an all-new, 7 Table of Contents highly intuitive interface that streamlines access to critical tools like Emergency Response. Since Pro 5S operates on the lowest power band when in sleep mode, users will appreciate significant battery life improvements.
Pro 6 is backed by the Arlo Secure App which features an updated, highly intuitive interface that streamlines access to critical tools like Emergency Response.
Environmental, Social, and Governance We believe that responsible and sustainable business practices support our long-term success. As a company, we are deeply committed to protecting all stakeholders including support of our employees, our environment, and our communities.
Environmental, Social, and Governance We believe that responsible and sustainable business practices support our long-term success and strive to proactively manage and address the environmental, social, and governance (“ESG”) topics most important to our stakeholders.
It has an adjustable camera and ultra-bright 2000 lumen articulating floodlights for flexible coverage where it is needed. The wired floodlight works with Amazon Alexa and Google Home for easy interaction, automation, and control. Arlo Accessories Security System Accessories provide added functionality to the Arlo Security System for greater peace of mind.
The introduction of the wired floodlight camera in the third quarter of 2024 offers an adjustable security camera with ultra-bright 2000 lumen articulating floodlights for flexible coverage where it is needed.
These events provide a platform for dialogue and an opportunity for every employee to learn, discuss, and appreciate differences between colleagues as we grow to drive greater inclusion at Arlo and truly reflect the customers we serve. We continually strive to be a deeply inclusive employer with diversity reflected in our teams.
These events provide a platform for dialogue and listening—an opportunity for every employee to learn, discuss, and appreciate differences between colleagues as we continue to reflect the customers we serve. We work to foster a highly engaged and energized workplace, where everyone is treated with dignity and respect.
Human Capital Resources The human capital measures and objectives we employ to drive our business results focus primarily on our talent and culture as we look to develop the Arlo workforce for the future. We nurture and develop our talent through carefully crafted processes and development opportunities that drive culture and performance at Arlo.
Talent Development We nurture and develop our talent through carefully crafted processes that drive culture and performance. We aim to have the right people in the right roles at the right time to drive our business outcomes.
All the patents and patent applications generally relate to certain aspects of our hardware devices, accessories, software and services. We continually review our development efforts to assess the existence and patentability of new intellectual property.
We currently hold 146 issued United States patents, 54 pending United States patent applications, 107 international patents, including patents issued by China and the EU, 40 pending patent applications outside of the United States. All the patents and patent applications generally relate to certain aspects of our hardware devices, accessories, software and services.
The floodlight camera brings powerful LEDs, an integrated 2K HDR camera, 160-degree field of view, two-way audio, custom lighting configurations and a built-in siren to any home or small business. The floodlight camera can automatically measure the amount of surrounding light to allow for true customization for when the floodlight automatically turns on.
Arlo Floodlight Cameras , available in both a wire-free battery-powered model and a wired version that easily replaces conventional powered floodlights, brings powerful visibility with 2K HDR video resolution, a wide 160-degree field view, two-way audio, custom lighting configurations and a built-in siren to any home or small business.
We identify potential workplace risks in order to develop measures to mitigate possible hazards. We support employees with general safety, security and crisis management training, and by putting specific programs in place for those working in potentially high-hazard environments.
Health and Safety We work to protect the health and safety of our employees across all of our global locations. We identify potential workplace risks to develop measures that mitigate possible hazards and follow all applicable health and safety regulations and training requirements. We support employees with general safety, security, and crisis management training, as well as harassment prevention training.
Charging Accessories are designed to offer additional convenient ways to keep Arlo wire-free cameras up and running even longer. With the Arlo Charging Station, users can charge up to two batteries with fast-charging technology so there is always a battery ready to go.
The Arlo Cellular and Battery Backup module gives the Arlo Security System up to 12 hours of power during outages and stacks discretely beneath the Security System hub for a sleek all-in-on design. Charging Accessories are designed to offer additional convenient ways to keep Arlo wire-free cameras up and running even longer.
We believe that we maintain a great working relationship with our employees, as evidenced by our regular employee engagement surveys, and we have not experienced any labor disputes. We want our employees’ voices to be heard and believe that when our workplace encourages employees to fully participate in an inclusive environment, we can provide high quality outcomes for our customers.
We maintain strong working relationships with our employees, as evidenced by our regular employee engagement surveys, and we have not experienced any material labor disputes. Compensation and Benefits We provide our employees with compensation that is market-competitive, internally equitable, and performance-based.
Employee Engagement We believe that open and honest communication among team members, managers and leaders helps create an open, collaborative work environment where everyone can contribute, grow and succeed. Team members are encouraged to come to their managers with questions, feedback or concerns, and we conduct surveys that gauge employee sentiment in areas like career development, manager performance and inclusivity.
We put specific programs in place for those working in potentially high-risk environments. 13 Table of Contents Employee Engagement We believe that open and honest communication among team members, managers, and leaders helps create a collaborative work environment where everyone can contribute, grow, and succeed. This is essential as we execute on our long-range goals.
Removed
The features of Arlo Safe subscriptions include: • One-Touch Emergency Response – Access live safety experts 24/7 to rapidly send fire, police, or medical responders directly to the user’s exact location. • Family Safety – Never miss a moment with the ability to know where opt-in family members have been, see their current location, or send help directly to them in an emergency situation. • Crash Detection and Response – Advanced impact detection can expedite emergency response in the event of a vehicle accident by sharing appropriate location and medical information with first responders.
Added
The new 2025 lineup features the Arlo Essential Pan Tilt powered security cameras with 360-degree coverage and 2K video resolution, as well as new versions of the Essential Battery-Powered, Essential Indoor and Essential XL Security Cameras with dual-band WiFi for expanded connectivity options.
Removed
The new lineup features the Arlo Essential XL Outdoor Camera with 4X the battery life of the new standard Essential Outdoor Camera, as well as a new Essential Indoor Camera with an automated privacy shield. A new Video Doorbell with head-to-toe 180-degree field of view is also available.
Added
The Essential Video Doorbell with head-to-toe 180-degree field of view is also available with options for both 2K and HD video resolution. The all-new Essential cameras offer customers smart security protection with easy DIY setup at affordable price points.
Removed
Arlo Pro 5S , released in the fourth quarter of 2022, is an all-new wireless security camera with advanced 2K video resolution. The latest addition to the award-winning Pro series, Pro 5S boasts tri-band connectivity - operating via dual-band Wi-Fi and Arlo SecureLink technology.
Added
With an expanded field of view, dual-band WiFi and extended battery life with the Pro 6 XL version, the new Pro Series security cameras provide a step-up value for customers looking for superior video quality and convenience features like swappable batteries.
Removed
Additionally, tri-band connectivity provides longer Wi-Fi range, and mitigates RF interference and active jamming attempts while maximizing picture quality. Pro 5S seamlessly pairs with other SecureLink devices for continuous security and connectivity, even during power and internet outages.
Added
Arlo Ultra 3 , released in the fourth quarter of 2025, delivers ultimate protection with crisp 4K HDR video resolution, auto-zoom and tracking, and an expansive 180-degree field of view.
Removed
Arlo Ultra 2, released in the second quarter of 2020, is designed to deliver an enhanced user experience with improved range, building on advanced features such as 4K video with HDR, an ultra-wide, 180-degree field of view, auto zoom and tracking on moving objects with clarity and detail, color night vision allowing the user to see video in color rather than traditional black and white, built-in siren that is automatically triggered by motion or audio, or manually triggered via the Arlo App and more.
Added
Designed for elite-level security, the premium video capabilities of Ultra 3 combined with Arlo Secure’s advanced AI-capabilities such as custom detection and video search deliver maximum peace of mind for homes and businesses.
Removed
Arlo Ultra 2 works with Amazon Alexa, Google Assistant, and Apple Homekit for easy interaction, automation and control. Arlo Floodlight Camera , released in the first quarter of 2020, is the first wire-free floodlight camera on the market.
Added
Additional outdoor, tabletop, and other adjustable mounts give users added flexibility to customize their camera position to suit any unique location they need to monitor.
Removed
The floodlight camera also offers three different light patterns – constant, flashing, and pulsating – which users can control manually on-demand or via automation rules. In the third quarter of 2024, we also released the all-new wired floodlight camera, which brings crystal clear details with 2K HDR video and a 160-degree field of view.
Added
Agreements with Strategic Partners We have several strategic partners who we engage with to provide our products and services to, and through whom we reach different geographies or markets. Verisure is the exclusive distributor of our products in Europe for all retail channels and direct channels in connection with Verisure’s security business.
Removed
We sell a substantial portion of our products through traditional and online retailers, including Amazon, Best Buy Co., Inc., Walmart, Inc., and Costco Wholesale Corporation and their affiliates. Wholesale Distributors . Our distribution channel supplies our products to retailers, e-commerce resellers, wireless carriers and broadcast channels.
Added
In June 2025, we entered into a partnership agreement with ADT, one of the largest security companies in North America. The partnership is designed to leverage ADT’s large customer base to expand Arlo’s subscriptions and services revenue stream. No revenue related to the partnership agreement with ADT was recognized in the year ended December 31, 2025.
Removed
We believe this focus allows us to compete favorably with 9 Table of Contents companies that have introduced or have announced plans to introduce smart security devices or services.
Added
We believe that timely, responsive support—combined with accessible educational content—helps drive ongoing user engagement, build loyalty to our brand, and provide valuable insight into the evolving needs of our users. The Arlo Community continues to be a highly effective and efficient platform for peer‑to‑peer support, product education, and real‑time user feedback.
Removed
We believe that providing timely, responsive customer support and educational content to our users helps foster an ongoing engagement that builds loyalty to our brand and also enables us to understand user needs as they evolve.
Added
We regularly analyze user interactions and feedback from all channels and share these insights with our product, design, and engineering teams to help inform future enhancements to our products and services. To support our global user base, we manage and continually optimize our service operations through a combination of Arlo employees and subcontracted, outsourced resources.
Removed
The online Arlo Community in particular serves as an efficient and engaging platform through which we can deliver customer care and receive feedback from users. We gather and analyze user feedback from all platforms to help inform our design and engineering teams about future enhancements to our products and services.
Added
We continually review our development efforts to assess the existence and patentability of new intellectual property. 11 Table of Contents We also pursue the registration of our domain names and trademarks and service marks in the United States and in certain locations outside the United States.
Removed
In order to best serve our users globally, we manage and continually adjust our resources worldwide through a mixture of permanent employees and subcontracted, outsourced resources.
Added
We have integrated ESG considerations into many of our business practices and policies, and work together with our customers, suppliers, and strategic partners to promote improvement in human rights, labor, environment, health and safety, anti-corruption, ethics and management system standards within our operations and our supply chain.
Removed
Some of our technology relies upon third-party licensed intellectual property. 11 Table of Contents We currently hold 135 issued United States patents, 50 pending United States patent applications, 66 international patents, including patents issued by China and the EU, 43 pending patent applications outside of the United States.
Added
For more information on ESG, including our climate and energy-usage performance, see our recently published ESG report on our website at https://www.arlo.com/en-us/esg-report.html. Human Capital Resources Our vision—to bring peace of mind by connecting and protecting what people care about most, drives everything we do, including how we build and develop our team.
Removed
That commitment is reflected through various corporate initiatives as well as day-to-day activities, including our adoption of sustainability-focused policies and procedures, our publicly recognized and award-winning focus on fostering an inclusive workplace, our constant drive toward more efficient use of materials and energy, our careful and active management of our supply chain, our services and products which help reduce carbon footprints and enhance road safety, and our impactful and globally integrated ethics and compliance program.
Added
As a rapidly scaling SaaS company our success depends on attracting, developing, and retaining exceptional talent who can execute on our ambitious growth targets while maintaining our culture of innovation and customer focus.
Removed
Our adoption of environmental, social and governance (“ESG”) practices is based on several principles that help position our business for long-term, sustainable success. We believe a holistic ESG approach creates competitive advantage over business rivals as our partners, suppliers, and customers increasingly require relationships with companies that boast sustainable and adaptable business operations.
Added
Workforce Composition and Strategic Talent Our Workforce As of December 31, 2025, we employed approximately 376 full-time employees, of which 64% were based in the United States, and 36% were based in other global regions, such as Canada, Australia, Taiwan, India, and Ireland. Our geographic distribution enables 24/7 platform operations and access to world-class engineering talent.
Removed
Environmental We are committed to providing customers with high quality products, conducting operations in a socially responsible, ethical, and sustainable manner to protect the environment and promoting compliance with all relevant regulations, customer specifications, and environmental legislation. This commitment continues to be a driving force at our company, and a principle that is deeply ingrained in our values.
Added
Key development areas include: 12 Table of Contents • Technical skills training • Leadership programs to prepare managers for scaling teams • Cross-functional collaboration • Performance management tied to both company metrics and individual contributions Culture and Belonging We work hard to attract and retain exceptionally talented and ethical employees from all backgrounds, and we're proud of the culture we've built.

… 34 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

130 edited+58 added−30 removed385 unchanged
Biggest changeWe anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets. For example, price competition is intense in our industry in certain geographical regions and product categories. Many of our competitors price their products significantly below our product costs. Average sales prices have declined in the past and may again decline in the future.
Biggest changeOther competitors may have fewer resources, but may be more nimble in developing new or disruptive technology or in entering new markets. 22 Table of Contents We anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets. For example, price competition is intense in our industry in certain geographical regions and product categories.
During times of war and other major conflicts, we, the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products and services.
During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our products and services.
Other factors that could affect our quarterly and annual operating results include, but are not limited to: • changes in the pricing policies of, or the introduction of new products by, us or our competitors; • delays in the introduction of new products by us or market acceptance of these products; • health epidemics and other outbreaks, which could significantly disrupt our operations; • introductions of new technologies and changes in consumer preferences that result in either unanticipated or unexpectedly rapid product category shifts; • competition with greater resources may cause us to lower prices and in turn could result in reduced margins and loss of market share; • epidemic or widespread product failure, or unanticipated safety issues, in one or more of our products; • slow or negative growth in the smart security, home electronics, and related technology markets; • seasonal shifts in end-market demand for our products; • unanticipated decreases or delays in purchases of our products by our significant retailers, distributors, and other channel partners; • component supply constraints from our vendors; 19 Table of Contents • unanticipated increases in costs, including air freight, associated with shipping and delivery of our products; • the inability to maintain stable operations by our suppliers and other parties with whom we have commercial relationships; • discovery of security vulnerabilities in our products, services or systems, leading to negative publicity, decreased demand, or potential liability; • foreign currency exchange rate fluctuations in the jurisdictions where we transact sales and expenditures in local currency; • excess levels of inventory and low turns; • changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements; • delay or failure to fulfill orders for our products on a timely basis; • delay or failure of our retailers, distributors, and other channel partners to purchase at their historic volumes or at the volumes that they or we forecast; • changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities; • changes in U.S. and international tax policy, including changes that adversely affect customs, tax or duty rates such as tariffs on product imports, as well as income tax legislation and regulations that affect the countries where we conduct business; • operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; • disruptions or delays related to our financial and enterprise resource planning systems; • our inability to accurately forecast product demand, resulting in increased inventory exposure; • allowance for credit losses exposure with our existing retailers, distributors and other channel partners and new retailers, distributors and other channel partners, particularly as we expand into new international markets; • geopolitical disruption, including sudden changes in immigration policies, leading to disruption in our workforce or delay or even stoppage of our operations in manufacturing, transportation, technical support, and research and development; • terms of our contracts with channel partners or suppliers that cause us to incur additional expenses or assume additional liabilities; • an increase in price protection claims, redemptions of marketing rebates, product warranty and stock rotation returns or allowance for credit losses; • litigation involving alleged patent infringement; 20 Table of Contents • failure to effectively manage our third-party customer support partners, which may result in customer complaints and/or harm to the Arlo brand; • our inability to monitor and ensure compliance with our code of ethics, our anti-corruption compliance program, and domestic and international anti-corruption laws and regulations, whether in relation to our employees or with our suppliers or retailers, distributors, or other channel partners; • labor unrest at facilities managed by our third-party manufacturers; • workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate, which may affect the Arlo brand and negatively affect our products’ acceptance by consumers; • unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate; • failure to implement and maintain the appropriate internal controls over financial reporting, which may result in restatements of our financial statements; and • any changes in accounting rules.
Other factors that could affect our quarterly and annual operating results include, but are not limited to: • changes in the pricing policies of, or the introduction of new products by, us or our competitors; • delays in the introduction of new products by us or market acceptance of these products; • health epidemics and other outbreaks, which could significantly disrupt our operations; 18 Table of Contents • introductions of new technologies and changes in consumer preferences that result in either unanticipated or unexpectedly rapid product category shifts; • competition with greater resources may cause us to lower prices and in turn could result in reduced margins and loss of market share; • epidemic or widespread product failure, or unanticipated safety issues, in one or more of our products; • slow or negative growth in the smart security, home electronics, and related technology markets; • seasonal shifts in end-market demand for our products; • unanticipated decreases or delays in purchases of our products by our significant retailers, distributors, and other channel partners; • component supply constraints from our vendors; • unanticipated increases in costs, including air freight, associated with shipping and delivery of our products; • the inability to maintain stable operations by our suppliers and other parties with whom we have commercial relationships; • discovery of security vulnerabilities in our products, services or systems, leading to negative publicity, decreased demand, or potential liability; • foreign currency exchange rate fluctuations in the jurisdictions where we transact sales and expenditures in local currency; • excess levels of inventory and low turns; • changes in or consolidation of our sales channels and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements; • delay or failure to fulfill orders for our products on a timely basis; • delay or failure of our retailers, distributors, and other channel partners to purchase at their historic volumes or at the volumes that they or we forecast; • changes in tax rates or adverse changes in tax laws that expose us to additional income tax liabilities; • changes in U.S. and international tax policy, including changes that adversely affect customs, tax or duty rates such as tariffs on product imports, as well as income tax legislation and regulations that affect the countries where we conduct business; • operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; • disruptions or delays related to our financial and enterprise resource planning systems; • our inability to accurately forecast product demand, resulting in increased inventory exposure; 19 Table of Contents • allowance for credit losses exposure with our existing retailers, distributors and other channel partners and new retailers, distributors and other channel partners, particularly as we expand into new international markets; • geopolitical disruption, including sudden changes in immigration policies, leading to disruption in our workforce or delay or even stoppage of our operations in manufacturing, transportation, technical support, and research and development; • terms of our contracts with channel partners or suppliers that cause us to incur additional expenses or assume additional liabilities; • an increase in price protection claims, redemptions of marketing rebates, product warranty and stock rotation returns or allowance for credit losses; • litigation involving alleged patent infringement; • failure to effectively manage our third-party customer support partners, which may result in customer complaints and/or harm to the Arlo brand; • our inability to monitor and ensure compliance with our code of ethics, our anti-corruption compliance program, and domestic and international anti-corruption laws and regulations, whether in relation to our employees or with our suppliers or retailers, distributors, or other channel partners; • labor unrest at facilities managed by our third-party manufacturers; • workplace or human rights violations in certain countries in which our third-party manufacturers or suppliers operate, which may affect the Arlo brand and negatively affect our products’ acceptance by consumers; • unanticipated shifts or declines in profit by geographical region that would adversely impact our tax rate; • failure to implement and maintain the appropriate internal controls over financial reporting, which may result in restatements of our financial statements; and • any changes in accounting rules.
Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future. 35 Table of Contents Instability in geographies where we have operations and personnel or where we derive amounts of revenue could have a material adverse effect on our business, customers, operations and financial results.
Such perception could adversely affect the market price for our common stock and our ability to obtain financing in the future. 35 Table of Contents Instability in geographies where we have operations or where we derive amounts of revenue could have a material adverse effect on our business, customers, operations and financial results.
Acquisitions and other strategic transactions involve numerous risks and challenges, including relating to: the successful integration of an acquired business, product, service, technology or talent; entering into new territories or markets with which we have limited or no prior experience; establishing or maintaining business relationships with new retailers, distributors, or other channel partners, vendors, and suppliers; maintaining customers on terms similar to, or better than, those in place with the acquired business; the diversion of our management’s time and attention from current operations; unanticipated costs; legal and regulatory challenges; equity or debt financing transactions to finance an acquisition, including potential dilution to stockholders, the incurrence of debt or the failure to obtain satisfactory financing terms; the failure of due diligence to identify significant issues associated with or arising out of an acquisition or other strategic transaction, such as the quality of a new product or technology, issues related to financial reporting or accounting practices, unknown liabilities or noncompliance with foreign laws and regulations; potential post-closing disputes; our inability to fully realize the expected financial or strategic benefits of an acquisition or other strategic transaction in the timeframe expected or at all; the failure to retain acquired talent; employee retention costs; adverse tax consequences; and the failure to maintain our internal controls and systems.
Acquisitions and other strategic transactions involve numerous risks and challenges, including relating to: the successful integration of an acquired business, product, service, technology or talent; entering into new territories or markets with which we have limited or no prior experience; establishing or maintaining business relationships with new retailers, distributors, or other channel partners, vendors, and suppliers; maintaining customers on terms similar to, or better than, those in place with the acquired business; the diversion of our management’s time and attention from current operations; unanticipated costs; legal and regulatory challenges; equity or debt financing transactions to finance an acquisition, including potential dilution to stockholders, the incurrence of debt or the failure to obtain satisfactory financing terms; the failure of due diligence to identify significant issues associated with or arising out of an acquisition or other strategic transaction, such as the quality of a new product or technology, issues related to financial reporting or accounting practices, unknown liabilities or noncompliance with foreign laws and regulations; potential post-closing disputes; our 42 Table of Contents inability to fully realize the expected financial or strategic benefits of an acquisition or other strategic transaction in the timeframe expected or at all; the failure to retain acquired talent; employee retention costs; adverse tax consequences; and the failure to maintain our internal controls and systems.
We had historically maintained a Loan and Security Agreement with Bank of America, N.A., which expired and automatically terminated on October 27, 2024. On November 14, 2024, we entered into a new credit agreement (the “Credit Agreement”) with HSBC Bank USA, National Association, as administrative agent, issuing bank, and lender.
We had historically maintained a Loan and Security Agreement with Bank of America, N.A., which expired and automatically terminated on October 27, 2024. 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.
Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the Board of Directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the Board of Directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.
Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation (an “interested stockholder”) shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a 52 Table of Contents three-year period following the date on which the person became an interested stockholder, unless (i) prior to such time, the Board of Directors of such corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; (ii) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of such corporation at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) the voting stock owned by directors who are also officers or held in employee benefit plans in which the employees do not have a confidential right to tender or vote stock held by the plan); or (iii) on or subsequent to such time the business combination is approved by the Board of Directors of such corporation and authorized at a meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock of such corporation not owned by the interested stockholder.
As a result, we would be unable to sell our products and our sales and profitability could be reduced, our relationships with our sales channel could be harmed, and our reputation and brand would suffer. 17 Table of Contents Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, primarily in Vietnam, and any disruptions due to natural disasters, health epidemics, and political, social, and economic instability in the region would affect the ability of our third-party manufacturers to manufacture our products.
As a result, we would be unable to sell our products and our sales and profitability could be reduced, our relationships with our sales channel could be harmed, and our reputation and brand would suffer. 16 Table of Contents Specifically, substantially all of our manufacturing and assembly occurs in the Asia Pacific region, primarily in Vietnam, and any disruptions due to natural disasters, health epidemics, and political, social, and economic instability in the region would affect the ability of our third-party manufacturers to manufacture our products.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences such as: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; diversion of management’s attention; monetary fund diversions; interruptions in our operations (including availability of data); negative impacts to our business, results of operations and financial condition; financial loss; and other similar harms.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences such as: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; diversion of management’s attention; monetary fund diversions; interruptions in our operations (including availability of data); negative impacts to our business, results of 25 Table of Contents operations and financial condition; financial loss; and other similar harms.
The market price of our common stock could be volatile and is influenced by many factors, some of which are beyond our control, including those described above in “ Risks Related to Our Business ” and the following: • the failure of securities analysts to cover our common stock or changes in financial estimates by analysts; • changes in stock market analyst recommendations regarding our common stock, other comparable companies, or our industry generally. 48 Table of Contents • the inability to meet the financial estimates of securities analysts who follow our common stock or changes in earnings estimates by analysts; • strategic actions by us or our competitors; • announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; • our quarterly or annual earnings, or those of other companies in our industry; • actual or anticipated fluctuations in our operating results and those of our competitors; • actual or anticipated changes in the growth rate of the smart security market, our growth rate or our competitors’ growth rates; • delays in the introduction of new products by us or market acceptance of these products; • changes in governmental regulation, including taxation and tariff policies; • interest rate or currency exchange rate fluctuations; • any announcements related to, our stock repurchase program; • instances of stockholder activism; • general economic and stock market conditions; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • risks related to our business and our industry, including those discussed above; • changes in conditions or trends in our industry, markets or customers; • the trading volume of our common stock; • future sales of our common stock or other securities; and • investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.
The market price of our common stock could be volatile and is influenced by many factors, some of which are beyond our control, including those described above in “ Risks Related to Our Business ” and the following: • the failure of securities analysts to cover our common stock or changes in financial estimates by analysts; • changes in stock market analyst recommendations regarding our common stock, other comparable companies, or our industry generally. • the inability to meet the financial estimates of securities analysts who follow our common stock or changes in earnings estimates by analysts; • strategic actions by us or our competitors; 49 Table of Contents • announcements by us or our competitors of significant contracts, acquisitions, joint marketing relationships, joint ventures or capital commitments; • our quarterly or annual earnings, or those of other companies in our industry; • actual or anticipated fluctuations in our operating results and those of our competitors; • actual or anticipated changes in the growth rate of the smart security market, our growth rate or our competitors’ growth rates; • delays in the introduction of new products by us or market acceptance of these products; • changes in governmental regulation, including taxation and tariff policies; • interest rate or currency exchange rate fluctuations; • the implementation of a new stock repurchase program; • instances of stockholder activism; • general economic and stock market conditions; • the public reaction to our press releases, our other public announcements and our filings with the SEC; • risks related to our business and our industry, including those discussed above; • changes in conditions or trends in our industry, markets or customers; • the trading volume of our common stock; • future sales of our common stock or other securities; and • investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.
These provisions include, among others: • the inability of our stockholders to call a special meeting; • the inability of our stockholders to act without a meeting of stockholders; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; • the right of our Board of Directors to issue preferred stock without stockholder approval; • the division of our Board of Directors into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult; • a provision that stockholders may only remove directors with cause while the Board of Directors is classified; and 51 Table of Contents • the ability of our directors, and not stockholders, to fill vacancies on our Board of Directors.
These provisions include, among others: • the inability of our stockholders to call a special meeting; • the inability of our stockholders to act without a meeting of stockholders; • rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; • the right of our Board of Directors to issue preferred stock without stockholder approval; • the division of our Board of Directors into three classes of directors, with each class serving a staggered three-year term, and this classified board provision could have the effect of making the replacement of incumbent directors more time consuming and difficult; • a provision that stockholders may only remove directors with cause while the Board of Directors is classified; and • the ability of our directors, and not stockholders, to fill vacancies on our Board of Directors.
If we are unable to manage the cost of older products or successfully introduce new products with higher gross margin, our revenue and overall gross margin would likely decline. 30 Table of Contents We have spent, and expect to continue to spend, significant amounts on advertising and other marketing campaigns, which may not be successful or cost effective.
If we are unable to manage the cost of older products or successfully introduce new products with higher gross margin, our revenue and overall gross margin would likely decline. 33 Table of Contents We have spent, and expect to continue to spend, significant amounts on advertising and other marketing campaigns, which may not be successful or cost effective.
Factors that could materially affect our future effective tax rates include, but are not limited to: • changes in tax laws or the regulatory environment; • changes in the valuation allowance against deferred tax assets; • increases in interests and penalties related to income taxes; • changes in accounting and tax standards or practices; • changes in the composition of operating income by tax jurisdiction; and • changes in our operating results before taxes.
Factors that could materially affect our future effective tax rates include, but are not limited to: • changes in tax laws or the regulatory environment; • changes in the valuation allowance against deferred tax assets; • increases in interest and penalties related to income taxes; • changes in accounting and tax standards or practices; • changes in the composition of operating income by tax jurisdiction; and • changes in our operating results before taxes.
If we identify any additional material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 of the SOX Act in a timely manner, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be materially adversely affected, and we could become subject to investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources. 54 Table of Contents Item 1B.
Additionally, if we identify any additional material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 of the SOX Act in a timely manner, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be materially adversely affected, and we could become subject to investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources. 55 Table of Contents Item 1B.
The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. Refer to Note 7, Revolving Credit Facility in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for further details on the Credit Agreement.
The proceeds of the borrowings under the Credit Facility may be used for working capital and general corporate purposes. Refer to Note 6, Revolving Credit Facility in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for further details on the Credit Agreement.
In the event that there is a lapse of service, elimination of AWS services or features that we use, interruption of internet service provider connectivity, or damage to such facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our solutions for deployment on a different cloud 27 Table of Contents infrastructure service provider, which could materially and adversely affect our business, results of operations, and financial condition.
In the event that there is a lapse of service, elimination of AWS services or features that we use, interruption of internet service provider connectivity, or damage to such facilities, we could experience interruptions in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or re-architecting our solutions for deployment on a different cloud infrastructure service provider, which could materially and adversely affect our business, results of operations, and financial condition.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including but not limited to: loss of customers; interruptions or stoppages in our business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize our 31 Table of Contents products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
In addition, we offer a comprehensive online cloud management service, Arlo Secure, paired with our end products, including our cameras, baby monitors, and smart lights, and in 2021, we launched our direct to consumer store to sell our products directly to our customers.
In addition, we offer a comprehensive online cloud management service, Arlo Secure, paired with our end products, including our cameras, baby monitors, and smart lights, and in 2019, we launched our direct to consumer store to sell our products directly to our customers.
If we fail to successfully maintain, promote, and position our 31 Table of Contents brand and protect our reputation, or if we incur significant expenses in this effort, our business, financial condition and operating results may be adversely affected.
If we fail to successfully maintain, promote, and position our 34 Table of Contents brand and protect our reputation, or if we incur significant expenses in this effort, our business, financial condition and operating results may be adversely affected.
In addition, increasing market share concentration among one or a few retailers in a particular country or region increases the risk that if any one of them substantially reduces its purchases of our devices, we may be unable to find a sufficient number of other retail outlets for our products to sustain the same level of sales.
In addition, increasing market share concentration among one or a few retailers in a particular country or region increases the risk that if any one of them substantially reduces its purchases of our devices, we may be unable to find a sufficient number of other retail 32 Table of Contents outlets for our products to sustain the same level of sales.
The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to 32 Table of Contents recover significant statutory damages. Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.
The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages. Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.
These information security risks have significantly increased in recent years in part due to the proliferation of new technologies and the increased sophistication and activities of organized crime, hackers, terrorists, threat actors, “hacktivists,” personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors and other external parties.
These information security risks have significantly increased in recent years in part due to the proliferation of new technologies and the increased sophistication and activities of organized crime, hackers, terrorists, 23 Table of Contents threat actors, “hacktivists,” personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors and other external parties.
Our business model materially depends on our ability to process personal data, so we are particularly exposed to the risks associated with the rapidly changing legal 34 Table of Contents landscape. For example, we may be at heightened risk of regulatory scrutiny, and any changes in the regulatory framework could require us to fundamentally change our business model.
Our business model materially depends on our ability to process personal data, so we are particularly exposed to the risks associated with the rapidly changing legal landscape. For example, we may be at heightened risk of regulatory scrutiny, and any changes in the regulatory framework could require us to fundamentally change our business model.
For example, we use AI/ML in our products and services, and if such AI/ML-based outputs are deemed to be biased, we could face adverse consequences, including exposure to reputational and competitive harm, customer loss, and legal liability. Our future success depends on our ability to increase sales of our paid subscription services.
For example, we use AI/ML in our products and services, and if such AI/ML-based outputs are deemed to be biased, we could face adverse consequences, including exposure to reputational and competitive harm, customer loss, and legal liability. 26 Table of Contents Our future success depends on our ability to increase sales of our paid subscription services.
Further, the imposition of and changes in the U.S.' and other governments' duties, trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, including the evolving relations between U.S. and China and evolving relations with Russia due to the current hostilities between Russia and Ukraine, create uncertainty regarding our ability to market and distribute our products into non-U.S. jurisdictions and any failure to effectively anticipate or respond to such events could materially and adversely affect our business, results of operations, and financial condition.
Further, the imposition of and changes in the U.S.' and other governments' duties, trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, including the evolving relations between U.S. and China and evolving relations with Russia due to the ongoing conflict between Russia and Ukraine, create uncertainty regarding our ability to market and distribute our products into non-U.S. jurisdictions and any failure to effectively anticipate or respond to such events could materially and adversely affect our business, results of operations, and financial condition.
Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and consumer lawsuits. If we are unable to use 33 Table of Contents generative AI, it could make our business less efficient and result in competitive disadvantages. We use AI/ML to assist us in making certain decisions, which are regulated by certain privacy laws.
Our use of this technology could result in additional compliance costs, regulatory investigations and actions, and consumer lawsuits. If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages. We use AI/ML to assist us in making certain decisions, which are regulated by certain privacy laws.
Similarly, the future announcement of the termination or suspension of the stock repurchase program, or our decision not to utilize the full authorized repurchase amount under the stock repurchase program, could result in a decrease in the trading price of our stock.
Similarly, the future announcement of a new stock repurchase program or the termination or suspension of such stock repurchase program, or our decision not to utilize the full authorized repurchase amount under such stock repurchase program, could result in a decrease in the trading price of our stock.
If there is a decline in our stock price based on market conditions and deterioration of our business, we may have to record a charge to our earnings for the associated goodwill impairment of up to $11.0 million. Your percentage ownership in Arlo may be diluted in the future.
If there is a decline in our stock price based on market conditions and deterioration of our business, we may have to record a charge to our earnings for the associated goodwill impairment of up to $11.0 million. 51 Table of Contents Your percentage ownership in Arlo may be diluted in the future.
We also expect the regulations under Section 404 of the SOX Act to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time consuming, and costly.
We 54 Table of Contents also expect the regulations under Section 404 of the SOX Act to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time consuming, and costly.
Additionally, sensitive information of the Company or our customers could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies.
Additionally, sensitive information about our company or our customers could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies.
Any reduction in sales by our retailers could materially and adversely affect our business, results of operations, and financial condition. 29 Table of Contents We depend on large, recurring purchases from certain significant retailers, distributors, and other channel partners, and a loss, cancellation, or delay in purchases by these channel partners could negatively affect our revenue.
Any reduction in sales by our retailers could materially and adversely affect our business, results of operations, and financial condition. We depend on large, recurring purchases from certain significant retailers, distributors, and other channel partners, and a loss, cancellation, or delay in purchases by these channel partners could negatively affect our revenue.
In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
In particular, the European Economic Area (“EEA”) and the United Kingdom (“UK”) have significantly restricted the transfer of personal data to the United States and other countries whose 29 Table of Contents privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
Furthermore, if our retailers, distributors and other channel partners choose to delay, defer, or reduce transactions with us or do business with 41 Table of Contents our competitors instead of us as a result of perceived uncertainties as to our future direction, then our business, financial condition, and operating results would be adversely affected.
Furthermore, if our retailers, distributors and other channel partners choose to delay, defer, or reduce transactions with us or do business with our competitors instead of us as a result of perceived uncertainties as to our future direction, then our business, financial condition, and operating results would be adversely affected.
In addition, the stock repurchase program could have the impact of diminishing our cash reserves, which may impact our ability to finance our growth, complete acquisitions and execute our strategic plan.
In addition, any future stock repurchase program could have the impact of diminishing our cash reserves, which may impact our ability to finance our growth, complete acquisitions and execute our strategic plan.
In addition, many of our products are sold to consumers via the internet. Many of the competition-related laws that govern these internet sales were adopted prior to the advent of the internet and, as a result, do not contemplate or address the unique issues raised by online sales.
In addition, many of our products are sold to 46 Table of Contents consumers via the internet. Many of the competition-related laws that govern these internet sales were adopted prior to the advent of the internet and, as a result, do not contemplate or address the unique issues raised by online sales.
We entered into an asset purchase agreement (the “Asset Purchase Agreement”) and supply agreement (the “Supply Agreement”) with Verisure Sàrl (“Verisure”) that gives Verisure exclusive marketing and distribution rights for our products in Europe as well as the ability to sell our products through their direct channel globally.
We have an asset purchase agreement (the “Asset Purchase Agreement”) and supply agreement (the “Supply Agreement”) with Verisure Sàrl (“Verisure”) that gives Verisure exclusive marketing and distribution rights for our products in Europe as well as the ability to sell our products through their direct channel globally.
For example, the Federal Trade Commission (“FTC”) has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege such companies have violated privacy and consumer protection laws.
For example, the Federal Trade Commission (“FTC”) has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege such companies have violated privacy and consumer 30 Table of Contents protection laws.
We have committed a substantial amount of resources to the manufacture, development and sale of our Arlo Secure services and our wire-free smart Wi-Fi cameras, advanced baby monitors, and smart lights, and to introducing additional and improved models in these lines.
We have committed a substantial amount of resources to the manufacture, development and sale of our Arlo Secure services and our wire-free smart Wi-Fi cameras, advanced baby monitors, and smart lights, and to introducing additional and improved models in 20 Table of Contents these lines.
In addition, we sell to wholesale distributors, including Ingram Micro, Inc., D&H Distributing Company, and Synnex Corporation. We expect that a significant portion of our revenue will continue to come from sales to a small number of such retailers, distributors, and other channel partners.
In addition, we sell to wholesale distributors, including Synnex Corporation and D&H Distributing Company. We expect that a significant portion of our revenue will continue to come from sales to a small number of such retailers, distributors, and other channel partners.
In general, the objective of these laws is to promote and maintain free 45 Table of Contents competition by prohibiting certain forms of conduct that tend to restrict production, raise prices or otherwise control the market for goods or services to the detriment of consumers of those goods and services.
In general, the objective of these laws is to promote and maintain free competition by prohibiting certain forms of conduct that tend to restrict production, raise prices or otherwise control the market for goods or services to the detriment of consumers of those goods and services.
Any bankruptcies or illiquidity among our customer base or sublease counterparties could harm our business and have a material adverse effect on our financial condition and results of operations.
Any bankruptcies or illiquidity among our customer base could harm our business and have a material adverse effect on our financial condition and results of operations.
Due to these potential inaccuracies or flaws, the model could be biased and could lead us to make 26 Table of Contents decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits.
Due to these potential inaccuracies or flaws, the model could be biased and could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits.
Our valuation methodology for assessing impairment requires management to 50 Table of Contents make judgments and assumptions based on projections of future operating performance. We operate in highly competitive environments and projections of future operating results and cash flows may vary significantly from actual results.
Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on projections of future operating performance. We operate in highly competitive environments and projections of future operating results and cash flows may vary significantly from actual results.
We are also subject to various domestic and international anti-corruption laws, such as the United States Foreign Corrupt Practices Act, as well as other similar anti-bribery laws and regulations. These laws and regulations generally prohibit companies and their employees and intermediaries from authorizing, offering, providing, and accepting improper payments or benefits for improper purposes.
We are also subject to various domestic and international anti-corruption laws, such as the United States Foreign Corrupt Practices Act, as well as other similar anti-bribery laws and regulations. These laws and regulations generally 45 Table of Contents prohibit companies and their employees and intermediaries from authorizing, offering, providing, and accepting improper payments or benefits for improper purposes.
Despite efforts to protect our intellectual property, unauthorized third parties may attempt to 38 Table of Contents design around, copy aspects of our product design or obtain and use technology or other intellectual property associated with our products. Furthermore, our competitors may independently develop similar technology or design around our intellectual property.
Despite efforts to protect our intellectual property, unauthorized third parties may attempt to design around, copy aspects of our product design or obtain and use technology or other intellectual property associated with our products. Furthermore, our competitors may independently develop similar technology or design around our intellectual property.
We are exposed to the credit risk of some of our customers and sublease counterparties and to credit exposures in certain markets, which could result in material losses.
We are exposed to the credit risk of some of our customers and to credit exposures in certain markets, which could result in material losses.
As of December 31, 2024, we had unused borrowing capacity of $45.0 million based on the terms and conditions of the Credit Agreement.
As of December 31, 2025, we had unused borrowing capacity of $45.0 million based on the terms and conditions of the Credit Agreement.
We have no 22 Table of Contents commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. If adequate financing is not available, we may further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations.
We have no commitments to obtain such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. If adequate financing is not available, we may further delay, postpone or terminate product and service expansion and curtail certain selling, general and administrative operations.
We take steps to detect and remediate vulnerabilities, but we have not always been able in the past and may not be able in the future to detect and remediate all vulnerabilities in our information technology systems (including our products) because such threats and techniques used to 25 Table of Contents exploit vulnerabilities change frequently and are often sophisticated in nature.
We take steps to detect and remediate vulnerabilities, but we have not always been able in the past and may not be able in the future to detect and remediate all vulnerabilities in our information technology systems (including our products) because such threats and techniques used to exploit vulnerabilities change frequently and are often sophisticated in nature.
In addition, if Verisure fails to pay us on a timely basis, or at all, or otherwise does not perform under the Supply Agreement, our cash flow would be 23 Table of Contents reduced. We are also exposed to increased credit risk if Verisure fails or becomes insolvent.
In addition, if Verisure fails to pay us on a timely basis, or at all, or otherwise does not perform under the Supply Agreement, our cash flow would be reduced. We are also exposed to increased credit risk if Verisure fails or becomes insolvent.
International sales comprise a significant amount of our overall revenue. International sales were 50% and 39% of overall revenue for the years ended December 31, 2024 and 2023, respectively. We continue to be committed to growing our international sales, and while we have committed resources to expanding our international operations and sales channels, these efforts may not be successful.
International sales comprise a significant amount of our overall revenue. International sales were 38% and 50%, of overall revenue for the years ended December 31, 2025 and 2024, respectively. We continue to be committed to growing our international sales, and while we have committed resources to expanding our international operations and sales channels, these efforts may not be successful.
Moreover, for the year ended December 31, 2024, we derived 43.2% of our revenue from Verisure and its affiliates. Beginning in the year ended December 31, 2025 through November 2029, Verisure will no longer be subject to minimum purchase obligations under our Supply Agreement.
Moreover, for the year ended December 31, 2025, we derived 32% of our revenue from Verisure and its affiliates. Beginning in the year ended December 31, 2025 through November 2029, Verisure will no longer be subject to minimum purchase obligations under our Supply Agreement.
Political developments impacting government spending and international trade, including future government shutdowns in the United States or elsewhere, debt ceiling negotiations, potential government shutdowns, armed conflict such as the conflicts in Ukraine and Israel, retaliatory actions, treaties, increased barriers, policies favoring domestic industries, increased import or export licensing requirements or restrictions, trade disputes and tariffs, including the U.S.’s ongoing trade disputes with China and other countries, inflation, and high interest rates, may adversely impact markets and cause weaker macroeconomic conditions.
Political developments impacting government spending and international trade, including future government shutdowns in the United States or elsewhere, debt ceiling negotiations, actual or potential government shutdowns, armed, geopolitical conflicts, retaliatory actions, treaties, increased barriers, policies favoring domestic industries, increased import or export licensing requirements or restrictions, trade disputes and tariffs, including the U.S.’s ongoing trade disputes with China and other countries, inflation, and high interest rates, may adversely impact markets and cause weaker macroeconomic conditions.
International operations are subject to a number of risks, including but not limited to: • exchange rate fluctuations; 39 Table of Contents • political and economic instability, international terrorism, and anti-American sentiment, particularly in emerging markets; • potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; • preference for locally branded products, and laws and business practices favoring local competition; • potential consequences of, and uncertainty related to, the “Brexit” process in the United Kingdom, which could lead to additional expense and complexity in doing business there; • increased difficulty in managing inventory; • delayed revenue recognition; • less effective protection of intellectual property; • stringent consumer protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances directive, the Waste Electrical and Electronic Equipment directive and the European Ecodesign directive, that are costly to comply with and may vary from country to country; • difficulties and costs of staffing and managing foreign operations; • business difficulties, including potential bankruptcy or liquidation, of any of our worldwide third-party logistics providers; and • changes in local tax and customs duty laws or changes in the enforcement, application, or interpretation of such laws.
International operations are subject to a number of risks, including but not limited to: • exchange rate fluctuations; • political and economic instability, international terrorism, and anti-American sentiment, particularly in emerging markets; • potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; 39 Table of Contents • preference for locally branded products, and laws and business practices favoring local competition; • increased difficulty in managing inventory; • delayed revenue recognition; • less effective protection of intellectual property; • stringent consumer protection and product compliance regulations, including but not limited to General Data Protection Regulation in the European Union, European competition law, the Restriction of Hazardous Substances directive, the Waste Electrical and Electronic Equipment directive and the European Ecodesign directive, that are costly to comply with and may vary from country to country; • difficulties and costs of staffing and managing foreign operations; • business difficulties, including potential bankruptcy or liquidation, of any of our worldwide third-party logistics providers; and • changes in local tax and customs duty laws or changes in the enforcement, application, or interpretation of such laws.
Testing and maintaining internal control over financial reporting can divert our management’s attention from other matters that are 53 Table of Contents important to the operation of our business.
Testing and maintaining internal control over financial reporting can divert our management’s attention from other matters that are important to the operation of our business.
From time to time, we may undertake acquisitions or engage in other strategic transactions to add new product and service lines and technologies, acquire talent, gain new sales channels, or enter into new sales territories. We have evaluated and expect to continue to evaluate a wide array of potential acquisitions and strategic transactions.
From time to time, we may undertake acquisitions or engage in other strategic transactions to add new product and service lines and technologies, acquire talent, gain new sales channels, or enter into new sales territories. We have evaluated and expect to continue to evaluate a wide array of potential acquisitions and strategic transactions as part of our growth strategy.
We also use AI/ML technologies in our products and services. The development and use of AI/ML present various privacy and security risks that may impact our business. AI/ML are subject to privacy and data security laws, as well as increasing regulation and scrutiny.
We also use AI/ML technologies, including generative AI and automated decision-making technologies in our products and services. The development and use of AI/ML present various privacy and security risks that may impact our business. AI/ML are subject to privacy and data security laws, as well as increasing regulation and scrutiny.
When tariffs, duties, or other restrictions are placed on goods imported into the United States from China or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed. In recent years, the U.S.
When tariffs, duties, or other restrictions are placed on goods imported into the United States from China or any related counter-measures are taken by China, our revenue and results of operations may be materially harmed.
If we fail to continue to introduce or acquire new products or services that achieve broad market acceptance on a timely basis, or if our products or services are not adopted as expected, we will not be able to compete effectively and we will be unable to increase or maintain revenue and gross margin.
If we fail to continue to introduce or acquire new products or services that achieve broad market acceptance on a timely basis, if our products or services are not adopted as expected, or if we fail to successfully manage the introduction of such products or services, we will not be able to compete effectively and we will be unable to increase or maintain revenue and gross margin.
As a result of stimulus programs put in place over the past three years, the U.S. and many countries are currently experiencing an inflationary environment. In addition, the U.S. Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which in turn has negatively impacted equity values.
As a result of stimulus programs put in place in recent years, the U.S. and many countries are currently experiencing an inflationary environment. In addition, although the U.S. Federal Reserve recently lowered interest rates, in the past it has raised, and may again raise, interest rates in response to concerns about inflation, which in turn has negatively impacted equity values.
Our traditional retail customers have faced increased and significant competition from online retailers. If 37 Table of Contents we cannot effectively manage our business amongst our online customers and traditional retail customers, our business would be harmed.
Our traditional retail customers have faced increased and significant competition from online retailers. If we cannot effectively manage our business amongst our online customers and traditional retail customers, our business would be harmed.
As a public company, we are required to document and test our internal control over financial reporting in order to satisfy the requirements of rules and regulations of the SEC regarding compliance with Section 404 of the SOX Act, which requires an annual management assessment of the effectiveness of our internal control over financial reporting.
As a public company, we are required to document and test our internal control over financial reporting in order to satisfy the requirements of rules and regulations of the SEC regarding compliance with Section 404 of the SOX Act, which requires an annual management assessment of the effectiveness of our internal control over financial reporting We are required to provide our independent registered public accounting firm’s annual report addressing the effectiveness of internal control over financial reporting.
A prolonged transportation disruption or a significant increase in the cost of freight could materially and adversely affect our business, results of operations, and financial condition. 18 Table of Contents If we lose the services of key personnel, we may not be able to execute our business strategy effectively.
A prolonged transportation disruption or a significant increase in the cost of freight could materially and adversely affect our business, results of operations, and financial condition. 17 Table of Contents If we lose the services of key personnel or are unable to attract new qualified personnel, we may not be able to execute our business strategy effectively.
If we are unable to maintain and expand our revenue from Verisure in the absence of minimum purchase obligations, our revenue, business, results of operations, financial condition and cash flows may be materially and adversely affected. We must also continuously monitor and evaluate emerging sales channels.
If we are unable to maintain and expand our revenue from Verisure, our revenue, business, results of operations, financial condition and cash flows may be materially and adversely affected. We must also continuously monitor and evaluate emerging sales channels.
While we believe we are in compliance with local laws, we cannot assure that tax and customs authorities will agree with our reporting positions and upon audit such tax and customs authorities may assess additional taxes, duties, interest, and penalties against us.
While we believe we are in compliance with local laws, we can provide no assurance that tax and customs authorities will agree with our reporting positions and upon audit such tax and customs authorities may assess additional taxes, duties, interest, and penalties against us.
In addition, price volatility may be greater if the public float and trading volume of our common stock is low. 49 Table of Contents Stock repurchases could increase the volatility of the trading price of our common stock and diminish our cash reserves, and we cannot guarantee that our stock repurchase program will be fully implemented or that such program will enhance long-term stockholder value.
In addition, price volatility may be greater if the public float and trading volume of our common stock is low. 50 Table of Contents Stock repurchases could increase the volatility of the trading price of our common stock and diminish our cash reserves, and we cannot guarantee that any stock repurchase program we implement will enhance long-term stockholder value.
On December 31, 2018, NETGEAR completed a special stock dividend (the “Distribution”) to its stockholders of the 62,500,000 shares of our common stock that it owned. As of December 31, 2024, we have 100,885,158 shares of common stock outstanding. In the future, we may issue our securities in connection with investments or acquisitions.
On December 31, 2018, NETGEAR completed a special stock dividend (the “Distribution”) to its stockholders of the 62,500,000 shares of our common stock that it owned. As of December 31, 2025, we have 105,030,947 shares of common stock outstanding. In the future, we may issue our securities in connection with investments or acquisitions.
Interruptions with the cloud-based systems that we use in our operations provided by an affiliate of Amazon, which is also one of our primary competitors, may materially and adversely affect our business, results of operations, and financial condition.
In either case, our results of operations and growth prospects could be adversely affected. Interruptions with the cloud-based systems that we use in our operations provided by an affiliate of Amazon, which is also one of our primary competitors, may materially and adversely affect our business, results of operations, and financial condition.
Repurchases will be made 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 our common stock.
Repurchases under this program were made through open market purchases in a manner deemed 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 our common stock.
However, on April 25, 2024, Verisure notified us that it was exercising its right under the Supply Agreement to extend the term of the Supply Agreement for another five years (through November 2029) with no minimum purchase obligations.
However, on April 25, 2024, Verisure notified us that it was exercising its right under the Supply Agreement to extend the term of the Supply Agreement for another five years (through November 2029) with no minimum purchase obligations. In the absence of the minimum purchase obligations, we have experienced lower purchase volumes from Verisure.
Government has imposed increases to the ad valorem duties applicable to certain products imported from China, including increases of up to 25% for some items. We are actively addressing the risks related to these additional duties, which have affected, or have the potential to affect, at least some of our imports from China.
In recent years, the U.S. government has imposed increases to the ad valorem duties applicable to certain products imported from China, including increases of 10% or more for some items. We are actively addressing the risks related to these additional duties, which have affected, or have the potential to affect, at least some of our imports from China.
Within such a regulatory environment, we could experience discriminatory or anti-competitive practices that could impede our domestic and international growth, cause us to incur additional expense, or otherwise materially and adversely affect our business, results of operations, and financial condition. In addition, the enactment or application of network neutrality laws could impact our business.
Within such a regulatory environment, we could experience discriminatory or anti-competitive practices that could impede our domestic and international growth, cause us to incur additional expense, or otherwise materially and adversely affect our business, results of operations, and financial condition.
Under these circumstances, we would be responsible for any shortfall. If our products are not compatible with some or all leading third-party IoT products and protocols, we could be materially and adversely affected. A core part of our solution is the interoperability of our platform with third-party IoT products and protocols.
If our products are not compatible with some or all leading third-party IoT products and protocols, we could be materially and adversely affected. A core part of our solution is the interoperability of our platform with third-party IoT products and protocols.
Although our stock repurchase program is intended to enhance long-term stockholder value, we cannot guarantee that it will do so, and short-term stock price fluctuations could reduce the effectiveness of the stock repurchase program.
Although stock repurchase programs are intended to enhance long-term stockholder value, we cannot guarantee that any stock repurchase program we implement will do so, and short-term stock price fluctuations could reduce the effectiveness of any such stock repurchase program.
We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition. Our principal competitors include Amazon (Blink and Ring), Canary, D-Link, Eufy, Google (Nest), Foxconn Corporation (Belkin), Night Owl, Samsung, SimpliSafe, Swann, and Wyze. Other competitors include numerous local vendors such as Netatmo, Logitech, Bosch, Instar, and Uniden.
We compete in a rapidly evolving and fiercely competitive market, and we expect competition to continue to be intense, including price competition. Our principal competitors include Amazon (Blink and Ring), Google (Nest), Canary, D-Link, Foxconn Corporation (Belkin), Night Owl, Samsung, SimpliSafe, Swann, TP Link, Eufy, and Wyze.
Alternatively, if a court were to find one or more of these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Arlo may incur further significant additional costs associated with resolving such matters in other 52 Table of Contents jurisdictions or forums, all of which could materially and adversely affect Arlo’s business, financial condition, or results of operations.
Alternatively, if a court were to find one or more of these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, Arlo may incur further significant additional costs associated with resolving such matters in other jurisdictions or forums, all of which could materially and adversely affect Arlo’s business, financial condition, or results of operations. 53 Table of Contents Our Board of Directors has the ability to issue blank check preferred stock, which may discourage or impede acquisition attempts or other transactions.
Our business model requires extremely skilled and experienced senior management who are able to withstand the rigorous requirements and expectations of our business. Our success depends on senior management being able to execute at a very high level.
We do not maintain any key person life insurance policies. Our business model requires extremely skilled and experienced senior management who are able to withstand the rigorous requirements and expectations of our business. Our success depends on senior management being able to execute at a very high level.
Economic, civil, military and political uncertainty exists and may increase in regions where we operate and derive our revenue. Various countries in which we operate are experiencing and may continue to experience military action and civil and political unrest.
Economic, civil, military and political uncertainty exists and may increase in regions where we operate and derive our revenue. Various countries in which we operate are experiencing and may continue to experience military action and civil and political unrest. We have operations in the emerging market economies of Eastern Europe.
We are subject to income tax examinations by taxing authorities globally. We apply judgment in determining our provision for income taxes and other tax liabilities. While we believe our estimates are reasonably adequate, there are many transactions where the final tax determination is uncertain.
These developments may result in material impacts to our financial statements. 44 Table of Contents We are subject to income tax examinations by taxing authorities globally. We apply judgment in determining our provision for income taxes and other tax liabilities. While we believe our estimates are reasonably adequate, there are many transactions where the final tax determination is uncertain.
To the degree that turmoil in the credit markets makes it more difficult for some customers or sublease counterparties to obtain financing, our customers’ or sublease counterparties' ability to pay could be adversely impacted, which in turn could materially and adversely affect our business, results of operations, and financial condition.
To the degree that turmoil in the credit markets makes it more difficult for some customers to obtain financing, our customers’ ability to pay could be adversely impacted, which in turn could materially and adversely affect our business, results of operations, and financial condition. 47 Table of Contents We are subject to payment processing risk.

… 138 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+2 added−1 removed9 unchanged
Biggest changeOur Chief Technology Officer and Vice President of Cybersecurity work with our incident response team to help us mitigate and remediate cybersecurity incidents of which they are notified. In addition, our incident response vulnerability management processes include reporting to the Cybersecurity and Privacy Committee for certain cybersecurity incidents.
Biggest changeOur cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our Information Security department. Our Chief Technology Officer and Vice President of Cybersecurity work with our incident response team to help us mitigate and remediate cybersecurity incidents of which they are notified.
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the 55 Table of Contents provider, our vendor management process may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider.
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor management process may involve different levels of assessment designed to help identify 56 Table of Contents cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider.
Our Chief Technology Officer, Vice President of Cybersecurity and Information Security, as well as Engineering, Legal, Risk Management teams, together with our third-party service providers, help identify, assess and manage our cybersecurity threats and risks, including through the use of our cybersecurity risk assessment program.
Our Chief Technology Officer, Vice President of Cybersecurity, as well as Engineering, Legal, Risk Management teams, together with our third-party service providers, help identify, assess and manage our cybersecurity threats and risks, including through the use of our cybersecurity risk assessment program.
In doing so, they identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods including, for example, automated and manual tools, third party threat assessments and intelligence feeds, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and threat actors, conducting scans of the threat environment, evaluating our and the industry’s risk profile, evaluating reported threats, performing internal and external audits, conducting assessments for internal and external threats, conducting assessments to identify vulnerabilities, and conducting red/blue team testing and tabletop incident response exercises jointly with external third parties.
In doing so, they identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment and our risk profile using various methods including, for example, automated and manual tools, third party threat assessments and intelligence feeds, subscribing to reports and services that identify cybersecurity threats, analyzing reports of threats and threat actors, conducting scans of the threat environment, evaluating our and the industry’s risk profile, evaluating reported threats, performing internal and external audits, conducting assessments for internal and external threats, conducting assessments to identify vulnerabilities, and tabletop incident response exercises.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of management, including our Chief Technology Officer, who has 30 years of Engineering/Technology/Security experience and our Vice President of Cybersecurity, who has 24 years of Technology/Infrastructure/Security experience and maintains the Certified Information Security Manager and Certified Information Systems Security Professional certifications.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain members of management, including our Chief Technology Officer, who has over 30 years of Engineering/Technology/Security experience, our Vice President of Cybersecurity, who has over 25 years of Technology/Infrastructure/Security experience and maintains the Certified Information Security Manager and Certified Information Systems Security Professional certifications, and our Senior Director of Privacy who brings 25 years of Audit/Compliance/Privacy experience and holds the Certified Information Privacy Manager and Certified Information Privacy Professional/US certifications and the Fellow of Information Privacy designation from the International Association of Privacy Professionals.
The Chief Technology Officer is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel. The Chief Technology Officer and the Director of Privacy are also responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports.
The Chief Technology Officer is responsible for hiring appropriate personnel, helping to integrate cybersecurity risk considerations into our overall risk management strategy, and communicating key priorities to relevant personnel.
The Cybersecurity and Privacy Committee receives quarterly reports from the Chief Technology Officer concerning our significant cybersecurity threats and risk and the processes we have implemented to address them. The Cybersecurity and Privacy Committee also receives various reports, summaries or presentations related to cybersecurity threats, risk and mitigation. 56 Table of Contents
The Cybersecurity and Privacy Committee also receives various reports, summaries or presentations related to cybersecurity threats, risk and mitigation. 57 Table of Contents
Removed
Additionally, the Cybersecurity and Privacy Committee reviews and has oversight over these functions. Our cybersecurity incident response and vulnerability management processes are designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our Information Security department.
Added
The Chief Technology Officer and the Senior Director of Privacy are also responsible for approving budgets, helping prepare for cybersecurity incidents, approving cybersecurity processes, and reviewing security assessments and other security-related reports. Additionally, the Cybersecurity and Privacy Committee reviews and has oversight over these functions.
Added
In addition, our incident response vulnerability management processes include reporting to the Cybersecurity and Privacy Committee for certain cybersecurity incidents. The Cybersecurity and Privacy Committee receives quarterly reports from the Chief Technology Officer concerning our significant cybersecurity threats and risk and the processes we have implemented to address them.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed0 unchanged
Biggest changeOur U.S. principal general and administrative (“G&A”), sales and marketing (“S&M”) and research and development (“R&D”) facilities are currently located in the cities of Milpitas, Irvine, and Carlsbad in California. Our international principal G&A, S&M and R&D facilities are located in leased offices in Cork (Ireland).
Biggest changeWe also lease offices in Milpitas and Irvine, California, which we primarily use for principal research and development (“R&D”), sales and marketing (“S&M”), and general and administrative (“G&A”). Our international principal R&D, S&M, and G&A facilities are located in leased offices in Cork (Ireland).
We also have R&D and operations personnel based in leased offices in Taipei (Taiwan) and some R&D personnel based in leased offices in Richmond (Canada). In addition, we use third parties to provide warehousing services to us, consisting of facilities in Southern California, Texas, Tennessee, Mexico, Hong Kong, and Australia.
We also lease facilities in Richmond (Canada) for R&D, as well as in Taipei (Taiwan) for R&D and operations. In addition, we use third parties to provide warehousing services to us, consisting of facilities in Southern California, Texas, Mexico, Hong Kong, and Australia.
Item 2. Properties We are a global company with corporate headquarters located in Carlsbad, California, where we occupy approximately 36,700 square feet of office space pursuant to a lease agreement that expires in June 2033. We also lease approximately 77,800 square feet of office space in San Jose, California pursuant to a lease agreement that expires in June 2029.
Item 2. Properties We are a global company with corporate headquarters located in Carlsbad, California, where we occupy a facility totaling approximately 36,700 square feet under a lease that expires in June 2033.
Removed
In June 2021, we entered into a sublease agreement, with a term that runs concurrent with the term of the head lease, for our San Jose office space in light of the COVID-19 pandemic and its impact on the changing nature of office space use by our workforce.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 3. Legal Proceedings From time to time, we may become involved in disputes, litigation and other legal actions in the ordinary course of business. We are not currently party to any claim or proceedings that, in the opinion of our management, are likely to have a material adverse effect on our financial position.
Biggest changeItem 3. Legal Proceedings We are, and from time to time, we may become involved in disputes, litigation and other legal actions in the ordinary course of business. We are not currently party to any claim or proceedings that, in the opinion of our management, are likely to have a material adverse effect on our financial position.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed6 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) September 30 - October 27, 2024 — — — — October 28 - December 1, 2024 — — — — December 2 - December 31, 2024 378,745 $11.67 378,745 $45,579,229 Total 378,745 378,745 $45,579,229 _________________________ (1) On September 24, 2024, we announced that our Board of Directors approved a stock repurchase program of up to an aggregate of $50 million of shares of Arlo’s common stock.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) September 29 - October 26, 2025 67,629 $16.69 67,629 $17,696,029 October 27 - November 30, 2025 1,148,069 $15.37 1,148,069 $73,158 December 1 - December 31, 2025 — $— — $73,158 Total 1,215,698 1,215,698 $73,158 _________________________ (1) On September 24, 2024, we announced that our Board of Directors approved a stock repurchase program of up to an aggregate of $50.0 million of shares of Arlo’s common stock through open market purchases in a manner deemed to be in the best interests of our company and stockholders, considering the economic cost and prevailing market conditions, including the relative trading prices and volumes of Arlo’s common stock.
Recent Sales of Unregistered Securities None. 58 Table of Contents Stock Performance Graph Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the price performance of our common stock shall not be deemed “filed” with the SEC or “soliciting material” under the Exchange Act and shall not be incorporated by reference into any such filings.
Recent Sales of Unregistered Securities None. 59 Table of Contents Stock Performance Graph Notwithstanding any statement to the contrary in any of our previous or future filings with the SEC, the following information relating to the price performance of our common stock shall not be deemed “filed” with the SEC or “soliciting material” under the Exchange Act and shall not be incorporated by reference into any such filings.
Dividend Policy We have not historically declared or paid cash dividends on our common stock. We do not anticipate paying cash dividends in the foreseeable future. Repurchases of Equity Securities by the Issuer The following table summarizes the share repurchase activity for the quarter ended December 31, 2024.
Dividend Policy We have not historically declared or paid cash dividends on our common stock. We do not anticipate paying cash dividends in the foreseeable future. Repurchases of Equity Securities by the Issuer The following table summarizes the share repurchase activity for the quarter ended December 31, 2025.
The following graph shows a comparison from December 31, 2020 through December 31, 2024 of cumulative total return for our common stock, the NYSE Composite Index, the Standard and Poor’s 600 Information Technology Index, (“S&P 600 Information Technology Index”), the Standard and Poor’s Small Cap 600 Index (“S&P Small Cap 600 Index”) and the Russell 2000 Index.
The following graph shows a comparison from December 31, 2020 through December 31, 2025 of cumulative total return for our common stock, the NYSE Composite Index, the Standard and Poor’s 600 Information Technology Index, (“S&P 600 Information Technology Index”), the Standard and Poor’s Small Cap 600 Index (“S&P Small Cap 600 Index”) and the Russell 2000 Index.
Holders of Record On February 25, 2025, there were nine stockholders of record, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
Holders of Record On February 20, 2026, there were nine stockholders of record, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”).
The stock repurchase program is expected to continue through December 31, 2026 unless extended or shortened by our Board of Directors. (2) Average price paid per share includes commission costs, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
As of December 31, 2025, the stock repurchase program of $50.0 million has been concluded. (2) Average price paid per share includes commission costs, but excludes the 1% excise tax accrued on our share repurchases as a result of the Inflation Reduction Act of 2022.
Removed
The timing and actual number of shares repurchased depend on a variety of factors, including price, general business and market conditions, and other investment opportunities, and shares may be repurchased through open market purchases, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

54 edited+29 added−12 removed19 unchanged
Biggest changeThe following table sets forth our consolidated statements of operations data: Year Ended December 31, 2024 2023 (In thousands, except percentage data) Revenue: Products $ 267,888 52.4 % $ 289,938 59.0 % Services 242,998 47.6 % 201,238 41.0 % Total revenue 510,886 100.0 % 491,176 100.0 % Cost of revenue: Products 268,769 52.6 % 270,663 55.1 % Services 54,613 10.7 % 52,950 10.8 % Total cost of revenue 323,382 63.3 % 323,613 65.9 % Gross profit 187,504 36.7 % 167,563 34.1 % Operating expenses: Research and development 73,183 14.3 % 68,647 14.0 % Sales and marketing 73,723 14.4 % 66,141 13.5 % General and administrative 72,134 14.1 % 56,371 11.5 % Others 3,356 0.7 % 1,307 0.2 % Total operating expenses 222,396 43.5 % 192,466 39.2 % Loss from operations (34,892) (6.8) % (24,903) (5.1) % Interest income 5,584 1.1 % 3,935 0.8 % Other income (expense), net (104) (0.0) % 107 0.0 % Loss before income taxes (29,412) (5.8) % (20,861) (4.3) % Provision for income taxes 1,092 0.2 % 1,175 0.2 % Net loss $ (30,504) (6.0) % $ (22,036) (4.5) % 64 Table of Contents Revenue We conduct business across three geographic regions—(i) the Americas; (ii) EMEA; and (iii) APAC—and generally base revenue by geographic region on the bill-to location of the customer for device sales and device location for service sales.
Biggest changeThe following table sets forth our consolidated statements of operations data: Year Ended December 31, 2025 2024 (In thousands, except percentage data) Revenue: Subscriptions and services $ 316,356 59.8 % $ 242,998 47.6 % Products 212,941 40.2 % 267,888 52.4 % Total revenue 529,297 100.0 % 510,886 100.0 % Cost of revenue: Subscriptions and services 52,336 9.9 % 54,613 10.7 % Products 244,120 46.1 % 268,769 52.6 % Total cost of revenue 296,456 56.0 % 323,382 63.3 % Gross profit 232,841 44.0 % 187,504 36.7 % Operating expenses: Research and development 73,650 13.9 % 73,183 14.3 % Sales and marketing 84,842 16.0 % 73,723 14.4 % General and administrative 66,097 12.5 % 72,134 14.1 % Other operating expense 2,181 0.4 % 3,356 0.7 % Total operating expenses 226,770 42.8 % 222,396 43.5 % Income (loss) from operations 6,071 1.2 % (34,892) (6.8) % Other income, net: Gain on early lease termination 4,144 0.8 % — — % Interest income, net 5,452 1.0 % 5,584 1.1 % Other income (expense), net — 0.0 % (104) (0.0) % Total other income, net 9,596 1.8 % 5,480 1.1 % Income (loss) before income taxes 15,667 3.0 % (29,412) (5.8) % Provision for income taxes 741 0.1 % 1,092 0.2 % Net income (loss) $ 14,926 2.8 % $ (30,504) (6.0) % Revenue Our gross revenue consists primarily of paid subscriptions and services revenue and sales of devices.
Our cost of revenue as a percentage of revenue can vary based upon a number of factors, including those that may affect our revenue set forth above and factors that may affect our cost of revenue, including, without limitation, product mix, sales channel mix, registered accounts’ acceptance of paid subscription service offerings, and changes in our cost of goods sold due to fluctuations in prices paid for components, net of vendor rebates, cloud platform costs, warranty and overhead costs, inbound freight and duty costs, and charges for excess or obsolete inventory.
Our cost of revenue as a percentage of revenue can vary based upon a number of factors, including those that may affect our revenue set forth above and factors that may affect our cost of revenue, including, without limitation, product mix, sales channel mix, registered accounts’ acceptance of paid subscription service offerings, and changes in our cost of goods sold due to fluctuations in prices paid for components, net of vendor rebates, cloud platform costs, warranty and overhead costs, inbound freight, duty and tariff costs, and charges for excess or obsolete inventory.
As we grow our installed base and related cost structure, there will be a need for additional working capital, hence, we may increase our product and subscription rates in the future. Leases and Contractual Commitments Our operating lease obligations mostly include offices, equipment, data centers, and distribution centers. Our contractual commitments are primarily inventory-related purchase obligations with suppliers.
As we grow our installed base and related cost structure, there will be a need for additional working capital, hence, we may increase our product and subscription rates in the future. Operating leases and contractual commitments Our operating lease obligations mostly include offices, equipment, and distribution centers. Our contractual commitments are primarily inventory-related purchase obligations with suppliers.
Refer to Note 8, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for further information about our operating leases, purchase obligations, and legal contingencies.
Refer to Note 7, Commitments and Contingencies in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K for further information about our operating leases, purchase obligations, and legal contingencies.
Valuation of Long-Lived Assets Long-lived assets, including property and equipment and operating lease right-of-use assets, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.
Long-lived assets, including property and equipment and operating lease right-of-use assets, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.
We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and we primarily generate revenue by selling devices through retail, wholesale distribution, wireless carrier channels, security solution providers, Arlo’s direct to consumer store and paid subscription services.
We conduct business across three geographic regions—(i) the Americas; (ii) Europe, Middle-East and Africa (“EMEA”); and (iii) Asia Pacific (“APAC”)—and we primarily generate revenue by selling paid subscription services, as well as devices through retail, wholesale distribution, wireless carrier channels, security solution providers, and Arlo’s direct to consumer store.
We also expect our sales and marketing expenses to increase in the future as we invest in marketing to drive demand for our products and services. 60 Table of Contents Key Business Metrics In addition to the measures presented in our consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions.
We also expect our sales and marketing expenses to increase in the future as we invest in marketing to drive demand for our products and services. 61 Table of Contents Key Business Metrics In addition to the measures presented in our consolidated financial statements, we use the following key metrics to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions.
We generally recognize revenue from product sales at the time the product is shipped and transfer of control from us to the customer occurs. Our paid subscription services are billed in advance of the start of the monthly subscription and revenue is recognized ratably over subscription period.
Our paid subscription services are billed in advance of the start of the annual or monthly subscription and revenue is recognized ratably over the subscription period. We generally recognize revenue from product sales at the time the product is shipped and transfer of control from us to the customer occurs.
Transaction price is calculated as selling price net of variable consideration which may include estimates for sales returns and sales incentives related to current period product revenue. 69 Table of Contents 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.
For product revenue, transaction price is calculated as selling price net of variable consideration which may include estimates for sales returns and sales incentives related to current period product revenue. 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.
Our future liquidity and cash requirements may vary from those currently planned and will depend on numerous factors, including the introduction of new products, the growth in our service revenue, the ability to increase our gross margin dollars, as well as cost optimization initiatives and controls over our operating expenditures.
Our future liquidity and cash requirements may vary from those currently planned and will depend on numerous factors, including the introduction of new products, the growth in our subscriptions and services revenue, the ability to increase our gross margin dollars, as well as cost optimization initiatives and controls over our operating expenditures.
Our revenue consists of gross revenue, less customer rebates and other channel sales incentives, allowances for estimated sales returns, price protection, and net changes in deferred revenue. A significant portion of our marketing expenditure is with customers and is deemed to be a reduction of revenue under authoritative guidance for revenue recognition.
Our revenue consists of gross revenue, less customer rebates and other channel sales incentives, allowances for estimated sales returns, price protection, and net changes in deferred revenue. A significant portion of our marketing 63 Table of Contents expenditure is with customers and is deemed to be a reduction of revenue under authoritative guidance for revenue recognition.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 29, 2024.
For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 27, 2025.
The proceeds of the borrowings under this credit facility may be used for working capital and general corporate purposes. We have a history of losses and may incur operating and net losses in the future. As of December 31, 2024, our accumulated deficit was $398.0 million.
The proceeds of the borrowings under this credit facility may be used for working capital and general corporate purposes. We have a history of losses and may incur operating and net losses in the future. As of December 31, 2025, our accumulated deficit was $383.0 million.
Product costs primarily consist of the cost of finished products from our third-party manufacturers and overhead costs, including personnel expense for operation staff, purchasing, product planning, inventory control, warehousing and distribution logistics, third-party software licensing fees, inbound freight, IT and facilities overhead, warranty costs associated with returned goods, write-downs for excess and obsolete inventory and excess components, and royalties to third parties.
Products cost primarily consists of the cost of finished products from our third-party manufacturers and overhead costs, including personnel expense for operations staff, purchasing, product planning, inventory control, warehousing and distribution logistics, third-party software licensing fees, inbound freight, duty and tariff costs, IT and facilities overhead, warranty costs associated with returned goods, write-downs for excess and obsolete inventory and excess components, and royalties to third parties.
We regularly review our processes for calculating these metrics, and from time to time we may discover a need to make adjustments to better reflect our business or to improve their accuracy. We believe that any such adjustments are immaterial unless otherwise stated.
We regularly review our processes for calculating these metrics, and from time to time we may discover a need to make adjustments to better reflect our business. We believe that any such adjustments are immaterial unless otherwise stated.
We accrue estimated contra revenue or marketing expense for these sales incentives either when the related revenue is recognized or prior to customer commitment if customary business practice creates an implied expectation of future activities. As of December 31, 2024 and 2023, accrued sales incentives amounted to $31.9 million and $28.2 million, respectively.
We accrue estimated contra revenue or marketing expense for these sales incentives either when the related revenue is recognized or prior to customer commitment if customary business practice creates an implied expectation of future activities. As of December 31, 2025 and 2024, accrued sales incentives amounted to $32.0 million and $31.9 million, respectively.
Our standard warranty obligation to our retailers and wholesale distributors allows for returns of damaged and defective products only. At the time we recognize revenue, we record an estimate of sales returns to reduce revenue in the amount of the expected credit or refund to be provided to our customers as a contra revenue.
Our standard warranty obligation to our retailers and wholesale distributors allows for returns of damaged and defective products only. At the time we recognize revenue, we record an estimate of sales returns to reduce revenue in the amount of the expected credit or refund to be provided to our customers as a contra revenue, which can vary from actual results.
ARR represents and is defined as the annualized paid service revenue we expect to recognize from subscription contracts, as calculated by taking the average paid service revenue multiplied by the number of subscription accounts at the end of the reporting period.
ARR represents and is defined as the annualized paid subscriptions and services revenue we expect to recognize from subscription contracts, as calculated by taking the average paid subscriptions and services revenue per paid account of the reporting period multiplied by the number of paid accounts at the end of the reporting period.
Research and Development Research and development expense consists primarily of personnel-related expense, safety, security, regulatory services and testing, other research and development consulting fees, and allocated IT and facilities overhead. Generally, we recognize research and development expenses as they are incurred.
Operating Expenses Research and Development Research and development expense consists primarily of personnel-related expense, safety, security, regulatory services and testing, other research and development consulting fees, and allocated IT and facilities overhead. Generally, we recognize research and development expenses as they are incurred, exclusive of capitalized software development costs.
GAAP and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The preparation of the consolidated financial statements requires management to make assumptions, judgments and estimates that can have a significant impact on the reported amounts of assets, liabilities, revenue and expenses.
Critical Accounting Estimates We prepare the consolidated financial statements in accordance with U.S. GAAP and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The preparation of the consolidated financial statements requires management to make assumptions, judgments and estimates that can have a significant impact on the reported amounts of assets, liabilities, revenue and expenses.
We outsource our manufacturing, warehousing, and distribution logistics. We also outsource certain components of the required infrastructure to support our cloud-based back-end IT infrastructure. We believe this outsourcing strategy allows us to better manage our product and service costs and gross margin and allows us to adapt to changing market dynamics and supply chain constraints.
We outsource our manufacturing, warehousing, and distribution logistics. We also outsource certain components of the required infrastructure to support our cloud-based back-end IT infrastructure. We believe this outsourcing strategy generally allows us to better manage our products cost and subscriptions and services cost and gross margin and allows us to adapt to changing market dynamics and supply chain constraints.
Service gross profit increased for the year ended December 31, 2024 compared to the prior year, primarily due to service revenue growth in all regions as a result of increases in cumulative paid accounts, continued increase in ARPU of retail subscriptions, and cost optimizations.
Subscriptions and services gross profit increased by $75.6 million for the year ended December 31, 2025 compared to the prior year, primarily due to subscriptions and services revenue growth as a result of increases in cumulative paid accounts, continued increase in ARPU on retail subscriptions, and cost optimizations.
Contingencies We are involved in disputes, litigation, and other legal actions. 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.
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.
Since the launch of our first product in December 2014, we have shipped over 37.4 million smart security devices. As of December 31, 2024, the Arlo platform had approximately 10.8 million cumulative registered accounts across more than 100 countries around the world coupled with 4.6 million cumulative paid subscribers and annual recurring revenue of $257.3 million.
Since the launch of our first product in December 2014, we have shipped over 42.7 million smart security devices. As of December 31, 2025, the Arlo platform had approximately 12.1 million cumulative registered accounts across more than 100 countries around the world coupled with approximately 5.7 million cumulative paid accounts and annual recurring revenue of $330.5 million.
Recent Accounting Pronouncements For a complete description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, refer to Note 2, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 70 Table of Contents
During the years ended December 31, 2025 and 2024, no impairment of long-lived assets has been identified. 72 Table of Contents Recent Accounting Pronouncements For a complete description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, refer to Note 2, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. 73 Table of Contents
In such cases, we accrue for the amount or, if a range, we accrue the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within litigation reserves, net.
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 consolidated statements of operations and comprehensive income (loss).
For the years ended December 31, 2024 and 2023, we generated total revenue of $510.9 million and $491.2 million, respectively. Loss from operations was $34.9 million and $24.9 million for the years ended December 31, 2024 and 2023, respectively.
For the years ended December 31, 2025 and 2024, we generated total revenue of $529.3 million and $510.9 million, respectively. Income from operations was $6.1 million and our loss from operations was $34.9 million for the years ended December 31, 2025 and 2024, respectively.
Service costs consist of costs attributable to the provision and maintenance of our cloud-based platform, including personnel, storage, security and computing, IT and facilities overhead.
Subscriptions and services cost consists of costs attributable to the provision and maintenance of our cloud-based platform, including personnel expense, data storage, security and computing, IT and facilities overhead, and amortization of software development.
Year Ended December 31, 2024 2023 (In thousands) Net cash provided by operating activities $ 51,306 $ 38,302 Net cash provided by (used in) investing activities 10,840 (50,686) Net cash used in financing activities (40,767) (15,142) Net cash increase (decrease) $ 21,379 $ (27,526) Operating activities Net cash provided by operating activities increased by $13.0 million for the year ended December 31, 2024 compared to the prior year period, primarily due to improved profitability coupled with favorable working capital movements as the results of (i) higher accounts receivable collections due to the growth of our sales; (ii) higher accounts payable balances mainly due to timing of the payments; and (iii) increase in deferred revenue due to the growth in our service subscription paid accounts and subscription rates expansion, partially offset by increased inventory purchases.
Year Ended December 31, 2025 2024 (In thousands) Net cash provided by operating activities $ 78,722 $ 51,306 Net cash provided by (used in) investing activities 27,754 10,840 Net cash used in financing activities (42,068) (40,767) Net cash increase $ 64,408 $ 21,379 Operating activities Net cash provided by operating activities increased by $27.4 million for the year ended December 31, 2025 compared to the prior year period, primarily due to improved profitability, partially offset by unfavorable working capital movements as a result of the decrease in accounts payable balances mainly due to timing of payments; offset by (i) lower accounts receivable balance primarily due to strong collections coupled with lower product sales to our retail customers in the fourth quarter of 2025; and (ii) increases in deferred revenue due to the growth in our paid accounts and subscription rates.
As of and for the Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Cumulative registered accounts 10,823 25.1 % 8,652 Cumulative paid accounts 4,599 63.5 % 2,813 Annual recurring revenue (“ARR”) $ 257,332 22.5 % $ 210,078 Cumulative Registered Accounts .
As of and for the Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Cumulative registered accounts 12,141 12.2 % 10,823 Cumulative paid accounts 5,687 23.7 % 4,599 Annual recurring revenue (“ARR”) $ 330,489 28.4 % $ 257,332 Cumulative Registered Accounts .
We expect our sales and marketing expense to increase in the future as we invest in marketing to drive demand for our products and services. 62 Table of Contents General and Administrative General and administrative expense consists primarily of personnel-related expense for certain executives, finance and accounting, investor relations, human resources, legal, information technology, professional fees, allocated IT and facilities overhead, strategic initiative expense, and other general corporate expense.
General and Administrative General and administrative expense consists primarily of personnel-related expense for certain executives, finance and accounting, investor relations, human resources, legal, information technology, professional fees, allocated IT and facilities overhead, strategic initiative expense, and other general corporate expense.
Paid accounts are defined as any account worldwide where a subscription to a paid service is being collected (either by us or by our customers or channel partners, including Verisure). Annual Recurring Revenue . We believe ARR enables measurement of our business initiatives and serves as an indicator of our future growth.
Paid accounts at the end of a particular period are defined as any account worldwide where a subscription-based or otherwise recurring service fee was collected by Arlo (either directly from a user or from a partner). Annual Recurring Revenue . We believe ARR enables measurement of our business initiatives and serves as an indicator of our future growth.
Stock Repurchase Program Our Board of Directors has authorized a stock repurchase program of up to an aggregate of $50.0 million of shares, which commenced in September 2024 and is expected to continue through December 31, 2026 unless extended or shortened by the Board of Directors.
Stock repurchase program Our Board of Directors authorized a stock repurchase program of up to an aggregate of $50.0 million of shares, which commenced in September 2024 and was fully implemented and completed as of December 31, 2025.
Sales incentives that are mutually agreed with customers are recognized as contra revenue while marketing expenses paid to the third parties are recognized as a marketing expense.
As of December 31, 2025 and 2024, accrued sales returns amounted to $9.3 million and $11.7 million, respectively. Sales incentives that are mutually agreed with retail customers are recognized as contra revenue while marketing expenses paid to the third parties are recognized as a marketing expense.
Sales and Marketing Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Sales and marketing expense $ 73,723 11.5 % $ 66,141 Sales and marketing expense increased by $7.6 million for the year ended December 31, 2024 compared to the prior year, primarily due to increases of $4.0 million in personnel-related expenses mainly from stock-based compensation and merit increases, $3.1 million in marketing expenditures, $1.5 million in credit card processing fees as a result of increases in paid subscriber accounts, and $0.9 million in professional services as a result of continued investment in improved customer experience, partially offset by a decrease of $1.6 million in freight-out expenses. 66 Table of Contents General and Administrative Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) General and administrative expense $ 72,134 28.0 % $ 56,371 General and administrative expense increased by $15.8 million for the year ended December 31, 2024 compared to the prior year, primarily due to increases of $12.3 million in personnel-related expenses mainly from stock-based compensation as a result of the achievement of certain performance-based equity award targets, $2.0 million in legal and professional services, and $0.8 million in corporate IT and facilities overhead costs.
Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) General and administrative expense $ 66,097 (8.4) % $ 72,134 General and administrative expense decreased by $6.0 million for the year ended December 31, 2025 compared to the prior year, primarily due to decreases of $7.7 million in personnel-related expenses mainly from stock-based compensation as a result of the achievement of certain performance-based equity award targets in the prior year periods and $1.3 million in IT and facilities overhead related to allocation associated with corporate infrastructure; partially offset by the increase of $2.6 million in legal and professional services.
We define our registered accounts at the end of a particular period as the number of unique registered accounts on the Arlo platform as of the end of such period.
Registered accounts at the end of a particular period are defined as the number of unique registered accounts on the Arlo platform. The number of registered accounts on the Arlo platform does not directly correspond to the number of users.
Provision for Income Taxes Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Provision for income taxes $ 1,092 (7.1) % $ 1,175 Effective tax rate (3.7) % (5.6) % The effective tax rate for the year ended December 31, 2024 was lower than the U.S. federal income tax rate due to a lower effective tax rate on foreign earnings and valuation allowance on our net U.S. deferred tax assets and certain foreign tax attributes as it is more likely than not that some or all of our deferred tax assets will not be realized. 67 Table of Contents Liquidity and Capital Resources As of December 31, 2024, our cash and cash equivalents and short-term investments totaled $151.5 million.
Provision for Income Taxes Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Provision for income taxes $ 741 (32.1) % $ 1,092 Effective tax rate 4.7 % (3.7) % The effective tax rate for the year ended December 31, 2025 was lower than the U.S. federal income tax rate due to a lower effective tax rate on foreign earnings and valuation allowance on our net U.S. deferred tax assets and certain foreign tax attributes.
Valuation of Goodwill We perform an annual assessment of goodwill at the reporting unit level o n the first day of the fourth quarter of each year and whenever events or changes in circumstances indicate the carrying value may not be recoverable . We operate as one operating and reportable segment.
Goodwill and long-lived assets impairment We assess goodwill for impairment annually at the reporting unit level on the first day of the fourth fiscal quarter each year or whenever events or changes in circumstances indicate the carrying value may not be fully recoverable.
If such review indicates that the carrying amount of property and equipment and operating lease assets is not recoverable, the carrying amount of such assets is reduced to the fair value. During the years ended December 31, 2024 and 2023, no impairment of long-lived assets has been identified.
If such review indicates that the carrying amount of property and equipment and operating lease assets is not recoverable, and the assets’ fair value is less than the carrying amount, an impairment charge is recognized.
Interest income, net increased for the year ended December 31, 2024, compared to the prior year, primarily due to the increase in our cash and cash equivalents and short-term investments as well as higher interest rates.
Interest income, net decreased for the year ended December 31, 2025, compared to the prior year period, primarily due to the declines in interest rates.
Revenue Recognition Revenue from all sales types is recognized at transaction price, which is the amount we expect to be entitled to in exchange for transferring goods or providing services.
Note 2, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K describes the significant accounting policies and the effect on our consolidated financial statements. 71 Table of Contents Revenue recognition Revenue from all sales types is recognized at transaction price, which is the amount we expect to be entitled to in exchange for transferring goods or providing services.
Operating Expenses Research and Development Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Research and development expense $ 73,183 6.6 % $ 68,647 Research and development expense increased by $4.5 million for the year ended December 31, 2024 compared to the prior year, primarily due to an increase of $5.3 million in personnel-related expenses mainly from stock-based compensation and merit increases, partially offset by a decrease of $0.6 million in corporate IT and facilities overhead.
Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Research and development expense $ 73,650 0.6 % $ 73,183 Research and development expense increased by $0.5 million for the year ended December 31, 2025 compared to the prior year, primarily due to increases of $6.9 million in personnel-related expenses from headcount increases as a result of our research and development investment and $2.2 million from stock-based compensation as a result of the increase in our stock price, partially offset by decreases of $5.2 million in professional services and $2.9 million in IT and facilities overhead as we strategically shifted to the investment in technologies that met the criteria for capitalization of software development costs. 66 Table of Contents Sales and Marketing Sales and marketing expense consists primarily of personnel expense for sales and marketing staff, technical support expense, advertising, trade shows, media and placement, corporate communications and other marketing expense, product marketing expense, allocated IT and facilities overhead, outbound freight costs, and credit card processing fees.
Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Americas $ 266,075 (11.7) % $ 301,418 Percentage of revenue 52.1 % 61.4 % EMEA $ 220,821 34.0 % $ 164,750 Percentage of revenue 43.2 % 33.5 % APAC $ 23,990 (4.1) % $ 25,008 Percentage of revenue 4.7 % 5.1 % Total revenue $ 510,886 4.0 % $ 491,176 Revenue by classification is as follows: Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Product Revenue $ 267,888 (7.6) % $ 289,938 Service Revenue 242,998 20.8 % 201,238 Total revenue $ 510,886 4.0 % $ 491,176 Product revenue decreased by $22.1 million, or 7.6% for the year ended December 31, 2024 compared to the prior year, primarily driven by the decrease in product sales in two geographic regions Americas and APAC.
Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Americas $ 339,740 27.7 % $ 266,075 Percentage of revenue 64.2 % 52.1 % EMEA $ 167,400 (24.2) % $ 220,821 Percentage of revenue 31.6 % 43.2 % APAC $ 22,157 (7.6) % $ 23,990 Percentage of revenue 4.2 % 4.7 % Total revenue $ 529,297 3.6 % $ 510,886 Revenue by classification is as follows: Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Revenue: Subscriptions and services $ 316,356 30.2 % $ 242,998 Products 212,941 (20.5) % 267,888 Total revenue $ 529,297 3.6 % $ 510,886 Subscriptions and services revenue increased by $73.4 million, or 30.2%, for the year ended December 31, 2025 compared to the prior year, primarily due to a 23.7% increase in cumulative paid accounts and continued increase in average revenue per user (“ARPU”) on retail and direct paid subscription services.
The decline was partially offset by the increase in product sales in EMEA due to stronger customer demand and the lower sales returns that are deemed to be reductions of revenue.
The decrease in products revenue was due to the higher sales incentives partially offset by the lower sales returns, which are both deemed to be reductions of revenue. 64 Table of Contents Cost of Revenue Cost of revenue consists of both subscriptions and services cost as well as products cost.
Interest Income and Other Income (Expense), Net Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Interest income, net $ 5,584 41.9 % $ 3,935 Other income (expense), net $ (104) ** $ 107 **Percentage change not meaningful.
Other operating expenses Other operating expenses primarily include workforce reduction costs. 67 Table of Contents Other Income, Net Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Gain on early lease termination $ 4,144 ** $ — Interest income, net $ 5,452 (2.4) % $ 5,584 Other income (expense), net $ — ** $ (104) **Percentage change not meaningful.
ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items. 61 Table of Contents Components of Results of Operations Revenue Our gross revenue consists primarily of sales of devices and paid subscription service revenue.
ARR is a performance metric and should be viewed independently of revenue and deferred revenue, and is not intended to be a substitute for, or combined with, any of these items. Impact of Global Geopolitical, Economic and Business Conditions The U.S. government implemented new tariff measures affecting a broad range of imported materials.
Gross Profit Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Gross profit: Products $ (881) (104.6) % $ 19,275 Services 188,385 27.0 % 148,288 Total gross profit $ 187,504 11.9 % $ 167,563 Gross margin: Products (0.3) % 6.6 % Services 77.5 % 73.7 % Total gross margin 36.7 % 34.1 % Product gross profit decreased for the year ended December 31, 2024 compared to the prior year, primarily driven by a reduction in the ASPs on our products as we increased promotional activities to stimulate household acquisition and subscriber growth coupled with an increase in inventory reserves.
Products cost of revenue decreased by $24.6 million, or 9.2%, for the year ended December 31, 2025 compared to the prior year, primarily due to the decrease in product sales partially offset by an increase in freight cost mainly as a result of increased duties and tariffs, and to a lesser extent, the utilization of air freight. 65 Table of Contents Gross Profit Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Gross profit: Subscriptions and services $ 264,020 40.1 % $ 188,385 Products (31,179) ** (881) Total gross profit $ 232,841 24.2 % $ 187,504 Gross margin: Subscriptions and services 83.5 % 77.5 % Products (14.6) % (0.3) % Total gross margin 44.0 % 36.7 % **Percentage change not meaningful.
Cost of Revenue Year Ended December 31, 2024 % Change 2023 (In thousands, except percentage data) Cost of revenue: Products $ 268,769 (0.7) % $ 270,663 Services 54,613 3.1 % 52,950 Total cost of revenue $ 323,382 (0.1) % $ 323,613 Cost of product revenue decreased for the year ended December 31, 2024 compared to the prior year, primarily due to a decline in product shipments coupled with decreases in freight-in costs due to normalization of the supply chain and utilization of ocean freight, partially offset by increases in product warranty and inventory reserves. 65 Table of Contents Cost of service revenue increased for the year ended December 31, 2024 compared to the prior year, primarily due to service revenue growth as a result of the increase in cumulative paid accounts, partially offset by cost optimizations.
Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Cost of revenue: Subscriptions and services $ 52,336 (4.2) % $ 54,613 Products 244,120 (9.2) % 268,769 Total cost of revenue $ 296,456 (8.3) % $ 323,382 Subscriptions and services cost of revenue decreased by $2.3 million, or 4.2%, for the year ended December 31, 2025 compared to the prior year, primarily due to cost savings as we optimize our cloud platform to improve customer experience which assists in reduced data storage and cloud costs, despite the increase in paid accounts.
Financing activities Net cash used in financing activities increased by $25.6 million for the year ended December 31, 2024 compared to the prior year period, primarily due to an increase in withholding tax from RSU releases and the repurchases of common stock. Critical Accounting Estimates We prepare the consolidated financial statements in accordance with U.S.
Financing activities Net cash used in financing activities increased by $1.3 million for the year ended December 31, 2025 compared to the prior year period, primarily due to the higher stock repurchases and lower proceeds related to employee benefit plans, partially offset by the decrease in withholding tax from RSU and PSU releases as a result of the sell-to-cover method being applied to all Arlo employees for their tax withholding effective on January 1, 2025.
The decline in product sales is driven by a reduction in average selling prices (“ASPs”) of our products as we increased promotional activities to stimulate household acquisition and subscriber growth, and the increase in related sales incentives that are deemed to be reductions of revenue.
Products revenue decreased by $54.9 million, or 20.5%, for the year ended December 31, 2025 compared to the prior year, primarily due to the timing of device shipments from our largest customer in the EMEA, and the reduction in average selling prices (“ASPs”) of our products in retail channels as we increased promotional activities to stimulate household acquisition and subscriber growth.
Investing activities Net cash provided by (used in) investing activities increased by $61.5 million for the year ended December 31, 2024 compared to the prior year period, primarily due to higher proceeds from maturities of short-term investments.
Investing activities Net cash provided by investing activities increased by $16.9 million for the year ended December 31, 2025 compared to the prior year period, primarily due to less available-for-sale securities purchases attributable to changes in our investment strategy to maintain higher liquidity, partially offset by our strategic long-term investment in a privately-held company, as well as the capitalized software development costs.
We believed that it was more-likely-than-not that the fair value of the reporting unit is greater than the respective carrying value and therefore performing the next step of impairment test for the reporting unit was unnecessary.
In the annual assessment, g oodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying amount.
In the annual assessment, a qualitative assessment is performed in consideration of macroeconomic conditions, industry and market conditions, cost factors, overall company financial performance, and c hanges in our stock price.
The qualitative assessment considers macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, and events affecting our stock price. If the reporting unit does not pass the qualitative assessment, we estimate the fair value using a discounted cash flow method and compare the fair value with the carrying amount of our reporting unit, including goodwill.
We also discuss our critical accounting estimates with the Audit Committee of our Board of Directors. Note 2, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Annual Report on Form 10-K describes the significant accounting policies and the effect in our consolidated financial statements.
We also discuss our critical accounting estimates with the Audit Committee of our Board of Directors.
Removed
We believe that our ability to increase our user base is an indicator of our market penetration and growth of our business as we continue to expand and innovate our Arlo platform.
Added
A single account may be shared by multiple users (which we consider as one account) and a single user may have multiple accounts (which we consider as multiple accounts). Cumulative Paid Accounts .
Removed
The number of registered accounts does not necessarily reflect the number of end-users on the Arlo platform as one registered account may be used by multiple end-users to monitor the devices attached to that household. Cumulative Paid Accounts .
Added
Certain countries have responded to the U.S. tariffs by imposing or threatening retaliatory tariffs.
Removed
Cost of Revenue Cost of revenue consists of both product costs and service costs.
Added
While we are actively monitoring the changes in global trade policy and the effects they may have on our business and broader macroeconomic environment, we have not experienced a material impact on our financial position to date and do not expect them to have a material detrimental impact on our business operations in the near term.
Removed
Sales and Marketing Sales and marketing expense consists primarily of personnel expense for sales and marketing staff, technical support expense, advertising, trade shows, media and placement, corporate communications and other marketing expense, product marketing expense, allocated IT and facilities overhead, outbound freight costs, and credit card processing fees.
Added
However, 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.
Removed
Others Others include restructuring charges, which consist of severance costs, office exit expense, and other exit expense associated with the abandonment of certain lease contracts and cancellation of contractual services arrangements with certain suppliers.
Added
The availability of certain goods could be affected if foreign suppliers choose to limit their exposure to U.S. markets in response to unfavorable trade policies, which could negatively impact our suppliers ability to deliver materials or manufacture equipment for us and, therefore, delay or impede our product deliveries.
Removed
Others also include the write-off of deferred financing and separation related expenses, which consist primarily of costs of legal and professional services. 63 Table of Contents Results of Operations In this section, we discuss the results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
Added
Furthermore, rising inflation, slower economic growth and increases in unemployment that may result from global trade disruptions could further deflate consumer demand and impact the demand for our products. 62 Table of Contents Results of Operations In this section, we discuss the results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Removed
Service revenue increased in all regions by $41.8 million, or 20.8%, for the year ended December 31, 2024 compared to the prior year, primarily due to a 63.5% increase in cumulative paid accounts and the continued increase in average revenue per user (“ARPU”) of retail subscriptions.
Added
We conduct business across three geographic regions—(i) the Americas; (ii) EMEA; and (iii) APAC—and generally base revenue by geographic region on the bill-to location of the customer for device location for subscriptions and services sales and device sales.
Removed
Additionally, on November 14, 2024, we entered into the Credit Agreement, which provides for a three-year revolving credit facility of up to $45.0 million that matures on November 14, 2027. As of December 31, 2024, we had unused borrowing capacity of $45.0 million based on the terms and conditions of the Credit Agreement.
Added
However, with respect to manufacturing that we have outsourced to ex-U.S. manufacturers, our ability to manage product costs through this strategy has been, and may continue to be, negatively impacted by tariffs.
Removed
In the fourth quarter of fiscal 2024, we repurchased and subsequently retired 378,745 shares of our common stock for an aggregate purchase price of $4.4 million. As of December 31, 2024, $45.6 million remained available and authorized for future repurchases. 68 Table of Contents Cash Flow The following table presents our cash flows for the periods presented.
Added
Products gross profit decreased by $30.3 million for the year ended December 31, 2025 compared to the prior year, primarily driven by a reduction in the ASPs of our products as we increased promotional activities to stimulate household acquisition and subscriber growth, as well as an increase in freight cost mainly as a result of increased duties and tariffs, and to a lesser extent, the utilization of air freight.
Removed
Our estimated allowances for product warranties can vary from actual results, and we may have to record additional contra revenue, which could materially impact our financial position and results of operations. As of December 31, 2024 and 2023, accrued sales returns amounted to $10.6 million and $16.6 million, respectively.
Added
Tariff costs increased by $13.5 million for the year ended December 31, 2025 compared to the prior year, which accounted for the decline of 6.3% in products gross margin.
Removed
If there are events occurred or circumstances changed (i.e. a decline in our stock price based on market conditions and deterioration of our business) that would more likely than not reduce our fair value below the carrying amount, we may have to record a charge to our earnings for the associated goodwill impairment of up to $11.0 million.
Added
We expect our sales and marketing expense to increase in the future as we invest in marketing to drive demand for our subscriptions and services and device products.
Removed
No goodwill impairment was recognized in the years ended December 31, 2024 and 2023.
Added
Year Ended December 31, 2025 % Change 2024 (In thousands, except percentage data) Sales and marketing expense $ 84,842 15.1 % $ 73,723 Sales and marketing expense increased by $11.1 million for the year ended December 31, 2025 compared to the prior year, primarily due to increases of $8.8 million in credit card and in-app processing fees as a result of increases in paid accounts and focused efforts to improve our customer’s app experience, $1.5 million in personnel-related expenses due to the headcount and merit increases, $1.3 million in stock-based compensation as a result of the increase in our stock price, and $0.8 million in marketing expenditures.
Added
The increase was partially offset by decreases of $0.8 million in allocated IT and facilities overhead and $0.5 million in sales freight out expenses.
Added
In July 2025, we entered into a termination agreement for our office lease located in San Jose, California. We recorded the derecognition of right-of-use assets and lease liabilities and recognized a gain of $4.1 million upon the termination effective in the third quarter of 2025.

… 15 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed7 unchanged
Biggest changeFor the years ended December 31, 2024, 2023, and 2022, no more than 3% of our total revenue was denominated in currencies other than the U.S. dollar. 71 Table of Contents
Biggest changeFor the years ended December 31, 2025, 2024, and 2023, no more than 3% of our total revenue was denominated in currencies other than the U.S. dollar. 74 Table of Contents
We monitor our interest rate and credit risks, including our credit exposure to specific rating categories and to individual issuers. There was no impairment charge on our investments for the year ended December 31, 2024. Foreign Currency Exchange Rate Risk We are exposed to risks associated with foreign exchange rate fluctuations due to our international sales and operating activities.
We monitor our interest rate and credit risks, including our credit exposure to specific rating categories and to individual issuers. There was no impairment charge on our investments for the year ended December 31, 2025. Foreign currency exchange rate risk We are exposed to risks associated with foreign exchange rate fluctuations due to our international sales and operating activities.
Such a decline in the demand for our products could reduce sales and materially and adversely affect our business, results of operations, and financial condition. Certain operating expenses of our foreign operations require payment in local currencies. As of December 31, 2024, we had net assets in various local currencies.
Such a decline in the demand for our products could reduce sales and materially and adversely affect our business, results of operations, and financial condition. Certain operating expenses of our foreign operations require payment in local currencies. As of December 31, 2025, we had net assets in various local currencies.
Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analysis performed as of December 31, 2024 due to the inherent limitations associated with predicting foreign currency exchange rates and our actual exposures and positions.
Actual future gains and losses associated with our foreign currency exposures and positions may differ materially from the sensitivity analysis performed as of December 31, 2025 due to the inherent limitations associated with predicting foreign currency exchange rates and our actual exposures and positions.

Other ARLO 10-K year-over-year comparisons