Arlo Technologies (ARLO) Q4 2024 earnings summary

Executive summary

• Achieved $511 million in total revenue for 2024, up $19.7 million year-over-year, with Q4 revenue of $122 million slightly ahead of consensus expectations.

• Annual recurring revenue reached $257.3 million, up 22.5% year-over-year, with service revenue of $243 million, comprising 53% of Q4 revenue and 48% for the full year.

• Paid subscriber base grew to 4.6 million, a 63% increase year-over-year, with ARPU rising 12% to $12.60.

• Non-GAAP net income for 2024 was $42.3 million, up 52% year-over-year, with free cash flow of $48.6 million and a free cash flow margin of 9.5%.

• Service gross margin exited 2024 at 82% (non-GAAP), with consolidated non-GAAP gross margin at 37.6%, up 260 basis points year-over-year.

Financial highlights

• Non-GAAP operating profit reached $37.9 million in 2024, with a 7.4% operating margin.

• Q4 non-GAAP net income was $10.4 million, or $0.10 per diluted share; full-year non-GAAP EPS was $0.40, up from $0.28 in 2023.

• Ended 2024 with $151.5 million in cash, cash equivalents, and short-term investments, up $15 million year-over-year.

• Inventory reduced to $40.6 million in Q4, improving inventory turns to 6.4 times.

• Adjusted EBITDA for FY2024 was $40.3 million, with an adjusted EBITDA margin of 7.9%.

Outlook and guidance

• Q1 2025 revenue expected between $114 million and $124 million; non-GAAP EPS between $0.09 and $0.15.

• Full-year 2025 revenue guidance is $510 million–$540 million, with service revenue expected at or above $300 million, growing over 20% year-over-year.

• Non-GAAP service gross margin expected to remain above 80% in 2025; non-GAAP EPS guidance is $0.56–$0.66, representing over 50% growth at the midpoint.

• ARR growth estimate for CY 2025 is ~25%, with Rule of 40 guidance range at 39–41%.

• Long-range plan targets 10 million paid accounts and $700 million ARR by 2030, with >25% non-GAAP operating margin.