Arlo(US:ARLO)2025-08-07 20:28Financial Performance - Annual recurring revenue (ARR) ended at $316 million, growing 34% year over year[1] - Record subscriptions and services revenue of $78 million, increasing 30% year over year, accounting for 60.4% of total revenues[4] - Record adjusted EBITDA of $18 million, up 82.3% year over year, with an adjusted EBITDA margin of 13.9%[4] - Total revenue for the three months ended June 29, 2025, was $129,405,000, representing an increase from $119,066,000 in the previous quarter[26] - Subscriptions and services revenue increased to $78,175,000 for the three months ended June 29, 2025, up from $68,849,000 in the previous quarter[26] - Net income for the three months ended June 29, 2025, was $3,124,000, a significant recovery from a net loss of $835,000 in the previous quarter[26] - The company reported a GAAP net income of $3,124 for the three months ended June 29, 2025, compared to a net loss of $11,560 in the same quarter last year, marking a substantial turnaround[30] - Non-GAAP net income for the six months ended June 30, 2025, was $35,289, compared to $20,013 for the same period last year, reflecting a significant increase of 76.2%[32] Margins and Profitability - Record GAAP subscriptions and services gross margin of 84.3% and non-GAAP gross margin of 85%, each up 850 basis points year over year[4] - Gross profit for the six months ended June 29, 2025, was $110,802,000, compared to $94,234,000 for the same period in 2024, reflecting a gross margin improvement from 37.4% to 44.6%[26] - Total GAAP gross profit for the three months ended June 29, 2025, was $58,075, an increase from $52,727 in the previous quarter, and $46,854 in the same quarter last year, representing a year-over-year growth of 24.0%[30] - Subscriptions and services gross profit for the three months ended June 29, 2025, was $65,940, representing a gross margin of 84.3%, compared to 82.2% in the previous quarter[30] Cash Flow and Assets - Free cash flow (FCF) of $34 million with a FCF margin of 13.7% in the first half of 2025[4] - Free cash flow for the three months ended June 29, 2025, was $5,855, with a free cash flow margin of 4.5%, down from 23.6% in the previous quarter[32] - The company reported a net cash provided by operating activities of $39,749,000 for the six months ended June 29, 2025, compared to $26,268,000 for the same period in 2024[28] - Cash and cash equivalents decreased to $71,244,000 as of June 29, 2025, down from $82,032,000 at the end of the previous year[24] - Total assets increased to $319,741,000 as of June 29, 2025, compared to $298,400,000 at December 31, 2024[24] - Total liabilities rose to $201,467,000 as of June 29, 2025, from $197,491,000 at the end of 2024[24] User Growth and Engagement - Cumulative paid accounts increased to 5.1 million, growing 28.5% year over year[4] - The company had cumulative registered accounts of 11,237 as of June 29, 2025, an increase from 10,930 in the previous quarter, showing growth in user engagement[35] Future Outlook and Strategy - The company expects third-quarter revenue to be between $133 million and $143 million, with non-GAAP net income per share projected between $0.12 and $0.18[6] - The company plans to continue investing in new product development and market expansion strategies to drive future growth[22] - Strategic partnership with ADT announced, positioning the company for continued success[3] - The launch of the new AI platform, Arlo Secure 6, is driving growth in the subscriptions business[3]