The San Jose, Calif.-based company makes easy-to-install, wire-free home surveillance cameras, as well as baby monitors and security lights. Since selling its first camera in December 2014, it has sold more than 8.6 million smart connected devices to over 2.2 million registered users in more than 100 countries worldwide.
- Arlo makes home-security cameras that can be accessed remotely, and it also sells additional security services.
- It was spun out of Netgear (NTGR)
- IPO price of $16 a share; opened for trading at $18.50, 15.6% higher; shares jumped 38.1% to close at 22.10.
- Arlo had 48% of the U.S. market for network-connected camera systems in the second quarter by revenue at retail. The company has market leadership in the U.S., U.K., Germany and Australia
- ARLO is growing rapidly and generating impressive financial results but faces the prospect of more intense competition from major players.
Arlo has shipped 7.5 million devices in its history, and its 1.9 million registered users stream a combined 60 million videos a day on average. For information about user engagement on its own platform, Arlo cites Sensor Tower data in its prospectus. The company said that its engagement rate — the number of daily active users divided by the number of monthly active users — equaled 37% in the first quarter of the year.
Competing with the giants
Though Arlo’s products work with Amazon and Google voice assistants, those companies also compete directly against Arlo with their own products. In the risk-factor section of its prospectus, Arlo cites Amazon’s Ring and Google’s Nest as rivals.
“Some of our competitors have substantially greater resources than we do, and to be competitive we may be required to lower our prices or increase our sales and marketing expenses, which could result in reduced margins and loss of market share,” the company disclosed. The prospectus noted that competitor products tend to be “significantly” less expensive than those sold by Arlo.
Netgear, which makes networking hardware, will have more than 50% of the voting power of Arlo’s common stock following the IPO, meaning that Arlo will be a controlled company. That allows the company certain exemptions, including in regards to the number of independent directors on its board and the makeup of its compensation committee.
In its IPO filing, Arlo said that Netgear will continue to provide it some shared administrative, information-technology, and other related services for a fee.
“Our ability to operate our business effectively may suffer if we are unable to cost-effectively establish our own administrative and other support functions in order to operate as a stand-alone company after the expiration of our shared services and other intercompany agreements with Netgear,” the company listed among its risk factors.
