Arlo Stock Surges 38% After IPO

Sonos who? Arlo Technologies stock soars 38% after IPO with focus on RMR generated from surveillance cameras.

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With all the hoopla last week surrounding the successful stock surges of Sonos (Nasdaq: SONO) and Control4 (Nasdaq: CTRL), neither of them was the top smart home stock market play last week. That notability went to Arlo Technologies Inc. (NYSE: ARLO), which debuted on the stock market on Friday and surged a remarkable 33 percent on its first day of trading. At press time, the stock is continuing to rise, now up 38 percent from its IPO price.

Arlo, makers of home surveillance cameras, is a spinoff from Netgear (Nasdaq: NTGR). In its initial filing, the company reported it has shipped 7.5 million devices and has 1.9 million registered users, who stream 60 million videos per day on average. The company 37 percent of its users engage with the camera every day. 

The IPO price for the stock was $16, which was below its price-range estimate, according to some stock watchers. 

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The big differentiator for Arlo is that it generates recurring monthly revenue (RMR). Users get a free trial period and then are converted to a paid subscription model that issues alerts to homeowners, with options to notify the police.

Currently, Arlo says the subscription revenue represents 8 percent of its total income, with the rest coming from hardware sales. 

“In the future, we plan to continue to introduce new categories of devices and services that will connect to and complement the Arlo platform, and we expect that our operating results will be impacted by these releases,” the company said in its prospectus. “We also believe we can grow our subscription-based recurring revenue stream by improving current Arlo Smart service features and introducing new premium service features to our growing user base.”

Netgear has a booth at CEDIA Expo in San Diego Sept. 6-8. Register FREE for CEDIA Expo Using CE Pro's Special Promo Code: EXIV840604.