Why Arlo Technologies stock is in focus after updated 2026 guidance

Arlo Technologies (ARLO) is back on investor radars after raising its full year 2026 revenue and earnings guidance, alongside detailed outlooks around third quarter expectations and recent second quarter results.

The company now expects 2026 revenue between US$580 million and US$600 million and diluted EPS between US$0.11 and US$0.21. Management also issued third quarter revenue guidance of US$140 million to US$150 million, with diluted EPS projected in a range from a loss of US$0.06 to roughly breakeven.

These guidance updates followed Arlo Technologies reporting second quarter revenue of US$155.94 million, compared with US$129.41 million a year earlier. Net income for the quarter was US$3.03 million compared with US$3.12 million in the same period last year, with diluted EPS from continuing operations unchanged at US$0.03.

For the first six months of 2026, Arlo Technologies reported revenue of US$306.32 million compared with US$248.47 million a year ago. Net income for the period was US$17.91 million compared with US$2.29 million a year earlier, with diluted EPS from continuing operations at US$0.16 compared with US$0.02.

The updated 2026 guidance has arrived, with the share price now at US$15.23, a 30-day share price return of 17.15%, and a year-to-date gain of 15.12%. Momentum has picked up in recent weeks. However, the 1-year total shareholder return is down 8.86%, while the 3-year and 5-year total shareholder returns of 39.98% and 155.11% highlight a much stronger long-term picture.

If Arlo Technologies has you rethinking where growth could come from next, it can help to see what else is on the move with 56 AI infrastructure stocks

Arlo Technologies now trades at a sizable discount to both its intrinsic value estimate and the average analyst target, even after the recent bounce. Is this a mispriced recovery story, or a market warning that deserves respect?

Most Popular Arlo Technologies Narrative: 28.8% Undervalued

With Arlo Technologies closing at US$15.23 against a widely followed fair value narrative of US$21.40, the gap between price and narrative is hard to ignore.

Continual migration of subscribers to higher-priced AI-driven service tiers (Arlo Secure 6) and the corresponding increase in ARPU (now over $15, up 26% y/y) reinforces the long-term shift to recurring, high-margin (85% non-GAAP service margin) subscription revenue, supporting expanding net margins and earnings visibility.

Want to see what sits behind that services heavy story? The narrative leans on steady revenue growth, rising margins and a punchy future earnings multiple. Curious which assumptions really carry the fair value case?

Result: Fair Value of $21.40 (UNDERVALUED)

However, Arlo Technologies still faces pressure from lower hardware pricing and heavier dependence on subscriptions, which could weigh on margins if customer appetite or pricing power softens.

Next Steps

Feeling torn between the upbeat guidance and the remaining questions around Arlo Technologies? Use the latest data, weigh both sides and focus on the 4 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Arlo Technologies?

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• Target stronger income potential by reviewing companies that appear as resilient income payers within the 8 dividend fortresses.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.