Arlo Technologies reported better-than-expected Q3 revenue of $139.5 million, up 1.4% YoY, beating analyst estimates by 0.6%. Non-GAAP EPS was $0.16, exceeding estimates by 8%. Q4 revenue guidance is $136 million, in line with expectations. CEO Matthew McRae highlighted strong services business performance, driving record margins.

Arlo Technologies, a smart security company, saw a 34% YoY increase in ARR to $323 million. The company, spun off from Netgear in 2018, offers cloud-based security devices and services. With $509.6 million in revenue over the last year, it faces challenges due to its smaller size but has room for growth.

Arlo Technologies showed a 6.9% CAGR in sales over the last five years, indicating stronger demand than average business services companies. Recent performance, however, suggests a slowdown in growth, with a 3.6% annualized revenue increase over the last two years, below the five-year trend.

Despite modest YoY revenue growth of 1.4% in Q3, Arlo Technologies beat estimates by 0.6% and forecasts an 11.9% YoY sales increase next quarter. Analysts expect an 8.3% revenue growth over the next 12 months. The company’s newer products and services are anticipated to drive improved performance.

Arlo Technologies saw a 120% CAGR in EPS over the last two years, surpassing its revenue growth rate. Its operating margin expansion was a key driver of higher earnings. Q3 adjusted EPS of $0.16 beat estimates by 8%, with analysts projecting a 25.6% growth in full-year EPS over the next 12 months.

Investors were disappointed by Arlo Technologies’ Q3 results, leading to a 2% drop in shares post-earnings. While the quarter showed strong metrics, some were below expectations. Long-term business quality and valuation will determine if Arlo Technologies is a buy. Research reports offer insights for active Edge members.

Read more at Yahoo Finance: Arlo Technologies’s (NYSE:ARLO) Q3 Sales Beat Estimates