Arlo Technologies, Inc.

Ladies and gentlemen, thank you for standing by. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press the star 1 on your push-button phone. I would now like to turn the conference over to Tom and Clark. Please go ahead, sir.

Thank you, Operator. Good afternoon, and welcome to Arlo Technologies' fourth quarter and year-end 2025 Financial Results Conference Call. Joining us from the company are Mr. Matthew McCrae, CEO, and Mr. Kurt Binder, COO and CFO. If you have not received a copy of today's release, please visit Arlo's investor relations website at investor.arlo.com. Before we begin the formal remarks, we advise you that today's conference call contains forward-looking statements. Forward-looking statements include statements regarding our potential future business, operating results and financial condition, including descriptions of our revenue, gross margins, operating margins, earnings per share, expenses, cash outlook, free cash flow and free cash flow margin, ARR, Rule of 40 and other KPIs, guidance for the first quarter and full year of 2026, the long-range plan targets, the rate and timing of paid subscriber growth, the commercial launch and momentum of new products and services, the timing and impact of tariffs, strategic objectives and initiatives, market expansion and future growth, partnerships with various market leaders and strategic collaborators, continued new product and service differentiation, and the impact of general macroeconomic conditions on our business, operating results, and financial condition. Actual results or trends could differ materially from those contemplated by these forward-looking statements. For more information, please refer to the risk factors discussed in Arlo's periodic filings with the SEC, including our annual report on Form 10-K filed earlier today. Any forward-looking statements that we make on this call are based on assumptions of today, and Arlo undertakes no obligation to update these statements as a result of new information or future events. In addition, several non-GAAP financial measures will be discussed on this call. A reconciliation of the GAAP to non-GAAP measures can be found in today's press release on an investor relations website. At this time, I would now like to turn the call over to Matt.

Thank you, Tommen, and thank you everyone for joining us today. In addition to providing an overview of our recent performance, we have designed this year-end call to provide a deeper dive into our broader strategy and the investments which provide a path for continuing growth into the future. But first, let's jump straight into our results. Arlo had an incredibly strong fourth quarter. Total revenue came in at $141 million, slightly above the high end of our guidance range and fueled by our product launches and impressive performance across our services business. In fact, service revenue hit $89 million, representing 63% of total revenue and grew at an astounding 39% year over year. This momentum propelled our annual recurring revenue to $330 million, which is up 28% year-over-year. Fourth quarter EBITDA hit $23 million, up an incredible 138% year-over-year, and resulted in Arlo posting 22 cents of non-GAAP EPS, substantially above the high end of our guidance range. And looking at our SaaS performance in the quarter by utilizing the rule of 40, Arlo achieved a score of 45, putting us in an elite handful of companies executing at this level. Underpinning the record breaking quarter and continued expansion of our services business is a world class team that is executing at the highest level. I would like to touch on a couple of examples. Last year, we continued our strong pace of innovation and deployed Arlo Secure 6 across our user base, introducing a myriad of class-leading features, including an advanced multi-recognition engine, AI-based scene descriptions, numerous new AI-based audio detections, and the only personalized AI micro model capability in the world. We also made innumerable performance and interface improvements throughout the year to retain our leadership position in simple yet powerful user experiences. And in the second half of 2025, Arlo executed the largest device launch in company history, comprising of more than 109 unique SKUs across our channel partners. We shipped more than 800,000 units in the first 60 days of production and achieved our planned supply X ramp to ensure strong unit sales in the quarter with no excess inventory. This was an extraordinarily complex endeavor and the team executed flawlessly. The reception of our new products and services has been outstanding. Our customer and professional reviews are the strongest Arlo has seen for a new product launch in our history, with numerous models already receiving multiple editor's choice and best of awards. Our new lineup not only contributed to Q4 results, it serves as the foundation of our continuing growth in 2026. The other example of exceptional execution is when you look across our SAS performance metrics. Our monthly consolidated churn dropped to 1% in the fourth quarter. Or said another way, our monthly subscriber retention rate is 99%, which means a paying user stays with our service for more than eight years on average. This achievement is the culmination of numerous small improvements across our platform, including performance enhancements customer care improvements billing system improvements and deeper insights at the user cohort level, driven by our vast data sets. And when you dig deeper into our retail and direct accounts, Arlo's SaaS unit economics are world-class. Average monthly revenue per user grew to $15.30 during Q4, aided by additional upward migration of customers to our AI-driven service plans. And these subscriptions, which account for 89% of our annual recurring revenue, generated an outstanding 94% gross margin. These numbers, coupled with our low churn, drove the lifetime value, or LTV, per subscriber up to $917, up 23% from a year ago, and a new record for Arlo. Despite this being the promotional holiday quarter, our customer acquisition costs, or CAC, remained stable, while retail unit sales grew more than 20% year over year. Taken together, this performance drove Arlo's LTV to CAC ratio up to 4.0. This is an optimal result for our services business, as a score below three would indicate a less efficient user funnel, and a score above five would indicate missing opportunities for additional growth. We constantly balance our unit growth, product gross margin, household formation, conversion, and other key metrics to ultimately expand our financial results, which are clear again this quarter. Arlo's corporate non-GAAP gross margin grew by more than 1,000 basis points year over year to a record 47.8%, and our non-GAAP EPS improved 120% to a record 22 cents. Looking back at the full year in review, the goals we set at the beginning of last year were ambitious, and Arlo delivered across the board. Arlo Secure 6 provided significant platform innovation by launching numerous AI enhancements that drove subscriptions and user engagement. Arlo executed the largest product launch in the company's history, which fueled our unit sales growth in the second half. Our expanded product lineup allowed us to nearly double our shelf share at Walmart and significantly increase our assortment across other retail and e-commerce channel partners. Arlo landed several new strategic partners, which creates incremental growth opportunities and further diversifies our revenue sources, a topic I will discuss later in more detail. We targeted a minimum of 20% growth or $300 million in service revenue and actually achieved an outstanding $316 million of service revenue in 2025. And finally, we set out to be one of a handful of SaaS companies whose business was growing fast enough to be Rule of 40. Arlo delivered a full year score of 42.5, which places us amongst an extremely small selection of public companies to achieve such profitable growth. 2025 was a phenomenal year for Arlo, and I want to thank the team for the dedication and outstanding execution across every aspect of our business. And now, I will turn it over to Kurt, who will provide more details on our operating results.