William Blair analyst Dylan Becker initiated coverage of Arlo Technologies with an Outperform rating. Arlo participates in "a structurally large and underpenetrated" U.S. smart home security market and subscription revenues now account for roughly 60% of total revenues, up from just 48% in fiscal 2024, the analyst tells investors. Software gross margins of 85% compare favorably to Arlo's current 50% blended margin, which the firm sees "setting the stage for an accelerating Rule-of-40-plus financial profile over time," the analyst added.
