Arlo Technologies (ARLO) Q2 2026 earnings summary

Executive summary

• Achieved record Q2 2026 revenue of $156 million, up 21% year-over-year, with service revenue at $93 million, and adjusted EBITDA of $31 million, up 70% year-over-year.

• Cumulative paid accounts grew 23% year-over-year to 6.3 million, with ARR up 16% to $365 million.

• Non-GAAP EPS was $0.28, including a $0.07 benefit from an $8 million tariff refund; GAAP EPS was $0.03.

• Net income for Q2 was $3.0 million; non-GAAP net income was $31.1 million.

• Two acquisitions (Canary Connect and Aloe Care Health) expanded AI-driven smart home and health services.

Financial highlights

• Total revenue reached $156 million, up over 20% year-over-year, with service revenue comprising 60% of total revenue.

• Subscriptions and services revenue was $93 million, up 19% year-over-year, with gross margin at 84.1%.

• Adjusted EBITDA margin improved to 20%, and non-GAAP gross margin reached a record 50.6%, up 480 basis points year-over-year.

• Free cash flow for the first half was $33.9 million (11% margin); cash and equivalents totaled $141 million after acquisitions and repurchases.

• $8 million in tariff refunds recognized as a reduction of cost of revenue.

Outlook and guidance

• Q3 2026 revenue expected between $140–$150 million; non-GAAP EPS guidance of $0.17–$0.23.

• Full-year 2026 revenue outlook raised to $580–$600 million; non-GAAP EPS to $0.90–$1.00.

• ARR growth targeted at 20% for the year, supported by new product launches and higher-tier subscription offerings.

• Guidance includes expected tariff refund, to be reinvested in growth initiatives.

• Existing liquidity expected to be sufficient for at least the next 12 months.