Arlo Technologies’ subscription business continued to become a larger component of its overall financial model during the second quarter of 2026, with record subscriptions and services revenue reaching $93 million and representing 59.7% of total revenue.
Subscriptions and services revenue increased 19% year-over-year, while annual recurring revenue increased 15.6% to $365 million. Cumulative paid accounts climbed 23.2% to 6.3 million, highlighting the expansion of Arlo’s recurring customer base.
The economics of the subscription business also remained strong. GAAP subscriptions and services gross margin reached 81.1%, while non-GAAP subscriptions and services gross margin was 84.1%. Company-wide non-GAAP gross margin reached a record 50.6%, an improvement of 480 basis points year-over-year.
Total quarterly revenue reached a record $155.9 million, up 21% from $129.4 million a year earlier. Arlo generated $3 million of GAAP net income and record adjusted EBITDA of $30.6 million, up 70.3%, with an adjusted EBITDA margin of 19.6%.
The company generated $33.9 million of free cash flow during the first half of 2026 and ended the quarter with $141.1 million of cash, cash equivalents and short-term investments after spending related to the Aloe Care Health acquisition and share repurchases. Arlo repurchased $22 million of stock during the quarter under its $50 million authorization.
Arlo also expanded the partnership between Aloe Care Health and Home Helpers Home Care around a new AI-powered wellness service, extending the company’s platform beyond conventional connected security devices.
Following the quarter, Arlo raised its annual expectations for both revenue and earnings per share. Full-year revenue is now expected to be between $580 million and $600 million, with non-GAAP diluted EPS of $0.90 to $1.00.
KEY QUOTES:
“We delivered outstanding financial results in the period with record total revenue of $156 million, up 21% year over year and record adjusted EBITDA of $31 million with EBITDA margin of 20%. Continued strength in subscriptions and services revenue drove the top and bottom-line growth, resulting in record levels of both consolidated non-GAAP gross margin and non-GAAP net income. As a result, we are increasing our annual guidance on both total revenue and EPS for the year.”
“Our operational execution is best-in-class, and the Arlo brand gained further recognition on Newsweek’s list of the Most Trustworthy Companies in America. We are proud that our exceptional user experience and trusted lifelong customer relationships are catalysts for our strategic partners to make Arlo their trusted technology brand of choice for safety and security solutions.”
Matthew McRae, CEO of Arlo Technologies
