Arlo Technologies Inc: AI Home Security Stock up 383% off March Lows

Arlo Technologies Inc: Great Momentum on Solid Q3 Guidance

Arlo Technologies Inc (NYSE:ARLO) is an excellent tech stock that just reported second-quarter results, which beat top- and bottom-line expectations. The wireless, artificial intelligence (AI) home security company also provided solid third-quarter revenue guidance of $85.0 million to $95.0 million.

The San Jose, California-based company actually has a long history of reporting solid financial results and healthy guidance. This explains why Arlo Technologies stock has advanced 127% year-over-year, 83% since the start of 2020, and a whopping 383% over March lows.

Investors may believe they have missed out on the biggest opportunities, but ARLO stock is just getting started, with the back half of 2020 shaping up to be an even stronger period of growth.

Chart courtesy of StockCharts.com

ARLO Stock Overview

Arlo Technologies Inc is America’s number one Internet-connected camera security and video brand. The company is focused on bringing together wireless connectivity, radio frequency (RF) engineering, cloud infrastructure, and leading AI capabilities in the smart home. (Source: “Investor Presentation, March 2020,” Arlo Technologies Inc, last accessed August 27, 2020.)

Arlo’s cloud-based platform allows its customers to connect, and protect in real-time, from any location, with a Wi-Fi or cellular connection. Which means you can check out your security feed on your smartwatch, laptop, or mobile phone.

The company’s product line includes wire-free smart Wi-Fi and LTE-enabled cameras, video doorbells, and floodlight cameras. To date, Arlo has shipped 17 million devices, has 4.5 million registered accounts and 290,000 paid accounts, and witnesses 180 million events per day.

Q2 Results Beat Top- and Bottom-Line Expectations

On August 5, Arlo Technologies Inc announced that revenue for the second quarter ended June 30 slipped 20.3% year-over-year to $66.6 million. (Source: “Arlo Reports Second Quarter 2020 Results,” Arlo Technologies Inc, August 5, 2020.)

The company posted a second-quarter net loss of $29.2 million, or a loss of $0.38 per share. During the second quarter of 2019, Arlo reported a net loss of $33.6 million, or a loss of $0.45 per share. The company reported an adjusted second-quarter net loss of $0.31 per share, an improvement over the adjusted net loss of $0.36 per share recorded in the same prior-year period.

Arlo ended the second quarter with cash, cash equivalents, and short-term investments of $205.5 million, and zero debt.

Q2 Business Highlights

• Added a record 43,000 paid accounts
• 4% year-over-year paid account growth in Q2
• Service revenue up 52.7% year-over-year to $17.0 million
• Announced an agreement with Securitas Security Services USA for integration of “Arlo SmartCloud” and its award-winning cameras into their platform
• Launched “Arlo Essential Spotlight Camera,” which connects directly to a Wi-Fi network

“I am extraordinarily proud of the team at Arlo for their remarkable execution in outperforming our expectations for the quarter, delivering top and bottom line results above the upper end of our guidance, despite supply and go-to-market challenges,” said Matthew McRae, CEO.

Q3 Outlook

For the third quarter, Arlo currently expects to report:

• Revenue of $85.0 million to $95.0 million
• Net loss per diluted share of $(0.41) to $(0.32)
• Adjusted net loss per diluted share of $(0.33) to $(0.24)

Analyst Take

Arlo Technologies Inc is a leader in the Internet-connected camera security and video industry. The company has a strong balance sheet and no long-term debt, and its second-quarter results beat the company’s aggressive top- and bottom-end guidance. It set records for registered accounts, paid accounts, and service revenue. And the company expects these record-setting ways to continue.