The global smart home security market is experiencing accelerated growth, projected to expand from $23.7 billion in 2024 to approximately $39 billion by 2029, representing a CAGR of 8.6%. Property crime statistics, while declining overall, have seen increases in package theft incidents, directly correlating with growth in the video doorbell segment. A home burglary occurs every 30 seconds in the US where homes without a security system are 300% more likely to be burglarized, consumers are today expecting smart, convenient, and affordable security solutions

Home security equipment usage is also increasing consistently, with over 94 million American homes utilizing devices like cameras, alarms, and access control systems, according to a SafeHome report. Security cameras experienced the largest usage increase, from 42% in 2023 to 52% in 2024, to be the most frequently used equipment. Video doorbells also spiked - 37% to 45% - while alarm systems and access control decreased modestly. Security cameras are now installed in an estimated 68 million homes, and at least 14 million access control systems. Homeowners remain more inclined to employ security devices than renters, although use among both is growing. Tenants are more and more inclined to avail themselves of such equipment as video doorbells and access control because they often fell victim to lease prohibitions on other installations. Just 25% of homes no longer have any security system, down from previous years.

SafeHome – 2025 Home Security Market Report

Arlo Solutions offers different solutions:

  • Arlo Secure: It upgrades DIY home security with AI-powered detection, 2K/4K cloud video storage, and support for unlimited devices. It filters millions of events daily to recognize people, vehicles, and packages, while one-tap emergency dispatch and smart alerts make responses faster and easier.
  • Arlo Total Security: It pairs 24/7 pro monitoring with a unique multi-sensor that detects motion, leaks, smoke alarms, and more, using video to verify emergencies in real time.
  • Arlo Safe: It offers mobile protection with crash detection, location sharing, and a panic button linked to live agents. Behind it all, Arlo SmartCloud powers scalable AI and storage solutions for industries like automotive and insurance.

Arlo offers intelligent security equipment in an array of home and remote protection products. Second-generation Essential Cameras and Doorbells offer 2K resolution, quicker Bluetooth setup, and USB-C charging, including products like the Essential XL Outdoor Camera that has extended battery life and a new indoor camera with privacy cover. Arlo Home Security System includes an eight-function multi-sensor and is compatible with 24/7 monitoring. Arlo Pro 5S has tri-band connectivity and extended battery life, while Go 2 introduces 4G LTE and GPS for use in areas without a grid connection. Ultra 2 provides 4K HDR video and automatic tracking, and Arlo Floodlight Cameras - wafer and wire models - are combined with high-lumen lighting and 2K video. Add-ons include backup power modules, anti-theft mounts, solar panels, and charging stations. Products are available globally via retailers, wireless carriers, security companies, and Arlo's webstore, with major partners including Amazon, Best Buy, and Verisure as the exclusive distributor in Europe across both direct and retail platforms where their agreement was extended through November 2029.

Arlo competed in the tech-savvy and DIY segment alongside Google Nest and Amazon’s Ring. While Ring and Blink benefit from Amazon’s ecosystem and pricing scale, and Nest from Google’s smart home integration. Unlike Reolink and ICSEE Cam, which cater to budget-conscious buyers, Arlo targets consumers seeking advanced functionality and cloud connectivity. The brand also competes indirectly with ADT and telecom providers like AT&T, Comcast, Verizon, and other companies, such as TP Link, Eufy and Wyze. Arlo also face major competitors holding significant market share like Hikvision (38%) and Dahua technology (16%) focusing on residential, commercial, and industrial environments.

In 2024, Arlo Technologies reported total revenue of $510.9 million, up 4.0% year over year and up from $370 million in 2017. The growth was driven by a 20.8% increase in service revenue, which reached $243.0 million and now represents nearly half of total revenue - highlighting the company’s shift toward higher-margin, recurring business. Product revenue totaled $268 million, and the group posted a 7.41% operating margin. Analysts expect continued improvement, with net margin projected to reach 9.42% and operating margin 13.5% by 2027.

Geographically, in 2024, the group generated 52% of its revenue in the Americas, followed closely by EMEA at 43%, driven by its exclusive partnership with Verisure aimed at becoming the leading security device provider in Europe. APAC accounted for the remaining 5%.

GAAP service gross margin reached 77.5%, and overall GAAP gross margin rose to 36.7%. Free cash flow grew 37% year over year to $48.6 million, with a 9.5% margin. In 2024, EBITDA rose by 38.6% to $41 million, with 8% margin, while EBIT increased by 51% to $37.8 million. The group is on track to achieve positive net income in 2025, projected at $19.6 million, with forecasts reaching $52.8 million by 2026.

In Q1 2025, Arlo reported solid financials driven by continued growth in its subscription business. Subscriptions and services revenue reached a record $68.8 million, up 21.4% YoY and accounting for 57.8% of total revenue. ARR rose to $276.4 million, reflecting a 21.8% increase, and gross margins reached new highs, with GAAP subscriptions and services margin at 82.2% and non-GAAP at 83.1%. The company posted FCF of $28.1 million, with a 23.6% margin, while cumulative paid accounts grew 51.4% YoY, surpassing 5 million. Operational strength supported strategic initiatives, including a $15.2 million share buyback and a $12.5 million investment in Origin Wireless.

The group trades at a high forward P/E ratio - 105x for 2025 and 33x for 2026. By comparison, competitors and parent companies of rival brands show much lower projected valuations for 2025: Google at 17.1x, Amazon at 32.9x, AT&T at 12.3x, Verizon at 9.56x, Hikvision at 19.1x, and Dahua Technology at 15.2x. Despite the premium valuation, Arlo appears to be benefiting from strong momentum, with the stock up over 20% year-to-date. The company is also expected to report positive EPS for the first time in 2025, reaching $0.13, followed by $0.41 in 2026.

Arlo enters mid-2025 with solid momentum as subscriptions now drive most of the revenues, supported by over 5 million paid subscribers. Its AI platform allows the group to stand out despite increasing competition from cheaper peers like Ring. Risks include hardware margins are low, expansion overseas lags peers, and supply chains are extremely Asia-focused. At 105x forward earnings, the shares, Arlo's success will hinge on sustaining service growth, foreign expansion, and sustaining its technology leadership as cloud models face pressure from new local storage options.