Arlo Technologies reported third-quarter 2026 results on November 5, and the headline is clear: the camera company is now, first and foremost, a subscription business. Subscriptions and services revenue hit a record $96.0 million, up 20.1% year over year, and accounted for 64.4% of total revenue — the fourth consecutive quarter in which services made up at least 60% of the business.
Total revenue for the quarter ended September 27, 2026, was $149.2 million, up 7% from a year earlier. Non-GAAP earnings per share came in at $0.24, up 50% from $0.16 in the same period last year and ahead of the $0.20 consensus estimate. Revenue also topped Wall Street expectations of $144.93 million. Adjusted EBITDA jumped 57.6% to $26.9 million, an 18% margin.
For smart home owners, the numbers tell a story that goes beyond one company’s balance sheet: home security is consolidating around a handful of subscription-driven platforms, and Arlo is betting that Apple’s new HomeView hub will push millions of new households into the category.
The subscription engine keeps accelerating
Arlo ended the quarter with 6.6 million paid accounts, up 23.1% year over year, after adding roughly 340,000 accounts in the quarter. Annual recurring revenue (ARR) reached $369.9 million, up 14.5% year over year. Consolidated monthly churn stayed below 1%, a level the company has now held for several quarters, and monthly retail average revenue per user (ARPU) rose to $15.50 — lifting the long-term value of a paid retail user to more than $900.
The profitability of that subscription base is striking. Non-GAAP subscriptions and services gross margin was 83.9%, and total non-GAAP gross margin rose 760 basis points year over year to 49%. For the first nine months of 2026, adjusted EBITDA reached $88 million, up 71% year over year, putting Arlo on track for more than $100 million in annual adjusted EBITDA this year. The company ended the quarter with $144 million in cash and short-term investments and generated $51 million in free cash flow so far in 2026.
Product revenue, by contrast, was $53.1 million, down from a year earlier. Management attributed the decline to the timing of Amazon Prime Day and promotional pricing across the industry. The message is deliberate: Arlo says it sells cameras at thin margins on purpose, then earns its profit from the monthly service attached to them.
Arlo Secure 7 adds AI threat assessment
Alongside the results, Arlo rolled out Arlo Secure 7, the latest version of its subscription platform. Its headline feature is Threat Assessment, an AI-powered service that goes beyond object detection or scene description to evaluate how serious an event actually is — and respond in a way matched to the situation.
Secure 7 also introduces a new $50-per-month plan that includes continuous video recording (CVR) for up to three cameras, along with a redesigned CVR experience. Even without marketing support, about 6% of new users are already choosing the new top tier, and management says it plans to use plan mix to push average revenue per user higher over time.
The launch matters because it shows where Arlo thinks the value in home security is heading: not just detecting motion, but judging it. A delivery driver on the porch and an unfamiliar person lingering at a door at 2 a.m. are very different events, and Arlo wants its AI to treat them that way — including how urgently it alerts you.
Retail momentum and the Walmart position
In retail, Arlo grew its shelf count and gained unit share during the key promotional period, while Roku and other smaller competitors exited the camera space, according to CEO Matthew McRae. During the recent Amazon Prime event, Arlo’s unit sales grew 7% year over year — and multi-camera kit sales jumped 41%, a result management welcomed because kits are the strongest driver of new subscription sign-ups.
The Arlo Solar Camera launched in time for the holiday period and is seeing strong early demand, the company said. Arlo also remains the number one security camera brand at Walmart, its deepest mass-market channel, and says it will participate aggressively in Walmart’s annual holiday event with another market-leading offer.
Comcast, ADT, and the 2027 plan
The biggest growth story in the call was not the quarter just ended, but the one coming. Arlo’s integration with Comcast is on schedule for a mid-2027 launch, and management says it has the prospect of quickly becoming the company’s largest strategic partner, driving significant ARR growth as it rolls out across Comcast’s roughly 31 million broadband households. ADT is also expanding its assortment of the DIY ADT Blu solution, ahead of a bigger push in 2027, and Arlo expects to announce additional strategic partners in the coming quarters.
On the back of those initiatives — plus the scaling of Arlo Secure 7 and Aloe Care, its elder-care business — management said it is targeting roughly 30% ARR growth in 2027, about double the current 14.5% pace. The board has also approved a substantially larger stock buyback program, a signal of management’s confidence in that outlook.
For the fourth quarter, Arlo guided to revenue of $137 million to $147 million and non-GAAP earnings of $0.17 to $0.23 per share, with subscriptions expected to make up more than 70% of revenue. Its updated full-year 2026 outlook calls for total revenue of $592 million to $602 million, subscriptions and services revenue of $375 million to $385 million, and non-GAAP earnings of $0.97 to $1.03 per share.
Why this matters for smart home owners
McRae framed the quarter in bigger terms. Apple’s HomeView announcement, he told investors, is a signal that the industry is entering the “mass market acceleration phase” of smart home security — with awareness set to spike, innovation cycles speeding up, and the next 30 million to 50 million households looking for these solutions in the near future.
His argument is that smart home and home security are merging into a single market in consumers’ minds, and that the recurring revenue in that combined market sits squarely on the security side. Nobody will pay a monthly fee to turn lights on and off, he said — but peace of mind is worth a long-term subscription relationship. With its products compatible across Apple, Alexa, Google Home, and Samsung SmartThings, Arlo is positioning itself as the platform-agnostic security layer for that mass-market wave.
Whether Arlo can actually double its ARR growth rate in 2027 will depend heavily on the Comcast launch landing on schedule. But the third quarter shows the foundation is already in place: a growing base of 6.6 million paying households, churn under 1%, and a new AI-powered subscription tier that early adopters are already choosing. For anyone shopping for a home security camera this holiday season, the takeaway is simple — the camera is increasingly the cheap part. The subscription is the product.