Arlo(ARLO) - 2024 Q4 - Annual Results

Revenue Growth - Annual recurring revenue (ARR) ended at $257.3 million, growing 22.5% year over year[1] - Full year service revenue reached $243.0 million, an increase of 20.8% year over year[1] - Q4 service revenue was $64.1 million, up 14.7% year over year, accounting for 53% of total revenues[5] - Total revenue for the year ended December 31, 2024, was $510.886 million, an increase of 4.3% compared to $491.176 million in 2023[24] - Total revenue for the quarter was $121,572,000, a decrease from $137,667,000 in the previous quarter, reflecting a decline of 11.7%[36] Profitability Metrics - Record Q4 GAAP service gross margin of 81.2% and non-GAAP service gross margin of 81.7%, each up 730 basis points year over year[5] - Gross profit for the year ended December 31, 2024, was $187.504 million, resulting in a gross margin of 36.7%, up from 34.1% in 2023[24] - Non-GAAP gross profit for the twelve months ended December 31, 2024, was $192,273 thousand, up from $171,701 thousand in the previous year, representing an increase of 11.9%[29] - Non-GAAP operating income for the twelve months ended December 31, 2024, was $37,865 thousand, significantly higher than $24,957 thousand in the previous year, indicating a growth of 51.6%[29] - Non-GAAP net income for the twelve months ended December 31, 2024, was $42,253 thousand, up from $27,824 thousand in the previous year, reflecting a growth of 52.0%[31] Cash Flow and Financial Position - Free cash flow (FCF) for the full year was $48.6 million, up 37% year over year, with an FCF margin of 9.5%[5] - Cash and cash equivalents increased to $82.032 million as of December 31, 2024, from $60.653 million at the beginning of the period[26] - Cash flows from operating activities for the year ended December 31, 2024, were $51.306 million, compared to $38.302 million in 2023[26] - Cash, cash equivalents, and short-term investments increased to $151,451,000 from $146,574,000 in the previous quarter, reflecting a growth of 1.9%[34] Accounts and Subscriptions - Cumulative paid accounts increased to 4.6 million, growing 63.5% year over year[5] - Cumulative registered accounts grew to 10,823,000, compared to 10,383,000 in the previous quarter, representing a 4.2% increase[34] - Cumulative paid accounts rose to 4,599,000, up from 4,235,000 in the previous quarter, marking an increase of 8.6%[35] Expenses and Liabilities - Operating expenses for the year ended December 31, 2024, totaled $222.396 million, an increase from $192.466 million in 2023[24] - Research and development expenses for the year ended December 31, 2024, were $73.183 million, compared to $68.647 million in 2023[24] - The company had a total of $197.491 million in liabilities as of December 31, 2024, an increase from $182.262 million in 2023[22] - Total GAAP operating expenses for the three months ended December 31, 2024, were $50,882 thousand, compared to $53,869 thousand in the previous quarter, showing a decrease of 5.8%[29] Strategic Initiatives - The launch of AI-driven Arlo Secure 5.0 generated more premium subscriber additions than any other platform launch in the company's history[2] - Executed a share buyback program repurchasing $4.4 million of shares at an average price of $11.67[8] - Announced a strategic partnership with Origin AI to become the exclusive global provider of advanced security solutions[8] Future Outlook - First quarter 2025 revenue outlook is projected between $114 million and $124 million[8]