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Positive Catalysts Emerge

In my previous article covering Arlo’s (ARLO) FY 2021 Q3 results, I identified 5 groupings of positive catalysts for the stock.

• Non-GAAP profitability in Q4 2021 / Q1 2022
• GAAP profitability in Q2 2022 / Q3 2022
• New strategic partnerships, especially with carrier partners, in 2022
• New product releases in 2022, 2023, and beyond
• Increased WS / mainstream financial media news coverage of the stock

Three of these groupings have recently experienced realization of key developments for the company that may be going to be overlooked by the mainstream news media and the investment community.

1. Arlo Surpasses 1 Million Paid Accounts

As of the FY 2021 Q3 earnings call, Arlo had achieved 900,000 in total paid accounts on 18-Oct-2021. On 1-Dec-2021, only ~6 weeks later, Arlo announced that it had surpassed 1,000,000 total paid accounts.

“The acceleration of our subscriber base continues with paid accounts nearly doubling since March 2021,” said Matt McRae, CEO of Arlo. “Achieving this milestone faster than forecasted demonstrates Arlo’s ability to provide trusted smart home security solutions that address fundamental customer needs. The recent launch of Arlo Secure, featuring the industry-first Emergency Response feature, shows our focus on innovation remains as we create additional value for our service offerings. We are proud to play such an important role in our customers’ lives.”

Source: Arlo’s FY 2021 Q3 Earnings Call Presentation

Services achieve a 58.8% GAAP gross margin for the company, thus meaningfully driving expanding profitability with each new paid subscriber account added. With this key milestone achieved, Arlo has likely surpassed $100M in Services revenue in FY 2021 and the company is likely well underway to achieve non-GAAP profitability in upcoming quarterly reports.

The efforts in concentrating on Paid Subscriber Accounts following the business model transition are allowing the company to establish a Business Model Competitive Advantage (SaaS business models provide highly reliable recurring revenue profiles and visibility).

Source: Arlo’s FY 2021 Q3 Earnings Call Presentation

The opportunity for further paid account additions remains compelling as Arlo has at least 5.82M registered accounts (thus 4.82M users could be targeted for conversion to a paid subscriber account).

Source: Arlo’s Website

2. Arlo Technologies Presented at the Raymond James 2021 Virtual Technology Investors Conference

One of the key catalysts in the coming years to contribute to share price appreciation would be increased Wall Street, Seeking Alpha, and mainstream financial news media coverage of the company.

The company took an important step with the Raymond James conference. Raymond James is a Global Equities & Investment Banking institution that connects institutional investors with company management teams. By proactively participating in such conferences, Arlo’s executive leadership is positioning itself well for future funding and investment inflow.

Source: Raymond James

In fact, as of 07-Jan-2022 Net Institutional Ownership for Arlo, based on New and Sold Out Positions, is increasing.

Source: Nasdaq

3. Arlo Unveils A New Product

On 3-Jan-2022, Arlo introduced the Arlo Security System, and immediately got a nod as a 2022 CES Innovation Award honoree. Remarkable, really.

Source: The Verge

Recognized as a 2022 CES Innovation Award honoree, the Arlo Security System features a first-of-its-kind, all-in-one multi-sensor capable of …….

Source: https://seekingalpha.com/article/4478902-arlo-technologies-4-positive-catalysts-realized