Arlo Technologies, Inc. Piper Sandler 5th Annual Growth Frontiers Conference

Thanks, Jim. Thanks for having us.

Yeah, great question. Thanks. Let me start by setting the stage. I guess it was back in 2024 to the early 2025, we set out for ourselves three key metrics. One was 10 million subs, the second one was $700 million in ARR, and the third one was a 25% EBITDA margin or greater. We have actually progressed pretty well on that relative to our five-year term, going out to 2030. If you look at what we did when we first set those up, we were really looking at our core business at that point in time with maybe one or two strategic partners, the biggest of which was Verisure. We just projected that out over five years and said, "Hey, if we keep doing what we are doing, we will hit these targets." Okay? A fairly conservative approach. As you look at what we have done today, we have actually expanded on our core business.

We have a new software app coming out here, actually in the next few weeks, called Arlo Secure 7, which will really ignite and push us further into our consumer-based subscribers. As well as give us a path to some SMB opportunities. Two, we have added a couple marquee names to our subscriber or our strategic partner list with Comcast and ADT, and to a lesser extent, Samsung, but we can talk about that a bit more in a few minutes. Then, most recently, we acquired a business called Aloe Care Health, which gets us into the elder or senior living space for in-home health type services.

Those key vectors, we think, provide growth that will allow us not to just achieve our objectives in 2030 around our long range plan, but actually accelerate that a bit, maybe a year or so. So we are pretty excited and the path is clearly defined and we are executing pretty well.

Yeah. It's a great question, and obviously it's a timely question, and this is one of those ones where we think it has an impact on some of the volatility in our stock. That is that most people look at the Arlo brand and obviously have a direct tie to consumer spending, when in fact, over the last several years in our transformation at this stage, 60-plus percent of our revenue is generated by subscription and services revenue. We have a backlog. That backlog is ARR. We ended Q2 with $365 million in ARR, which shows what we think we can do in the next 12 months. So there is a level of transparency and stability in the business, which we think ultimately, essentially mitigates some of that consumer element that you're referencing.

That being said, when we look at where we are today, we do believe that where the consumer sits, we have factored that into our near and long-term goals. We understand there's a lot of macroeconomic elements that are at play right now. But what we see in terms of the consumer spending is in line with our expectations. We have seen some ebbs and flows through the first half of this year, and if you look at our numbers through the second quarter, we've actually out-executed some of those ebbs and flows. We're pretty custom to understanding the consumer. It's part of our DNA relative to where we came from with Netgear and working with the big box retailers. We do a really good job, I think, of having insight and foresight into what's happening with the consumer and factoring those into our assumptions.

Right now, relative to our forecast, we feel really good about where we are.