Arlo Technologies, Inc. — Call Transcript 2026

I know we'll have folks trickling in from lunch, but we'll go ahead and get started here. Thanks everybody for joining. I'm Adam Tindle, and this is part of my connected devices coverage here at Raymond James. Very happy to have Matt and Kurt, CEO and CFO from Arlo Technologies. In terms of the format, I know many folks are newer to the story, and there's obviously been a lot of positive change over the years. Matt's gonna go through some slides, just for, you know, 10, 15 minutes or so, and we'll save another 10 or 15 minutes for questions. I know he'd love it if you do have questions along the way, feel free to raise your hand, and we'd love to keep it as interactive as possible. With that, Matt. Thanks. Thank you. Thank you, Adam. Thanks for coming. I'm gonna go through these relatively quick 'cause I see familiar faces and a mix of new faces in the room. I'll try and do a background, but also make sure I'm leaving a lot of time for questions. Welcome to our presentation from Arlo. For those of you who not familiar with the company, we invented the DIY home security space. About 10 years ago, we were inside of a company called NETGEAR that had actually acquired and created the first DIY security home camera in the world, and actually created what is now nearly 2/3 of the home security space, which is actually now DIY. We're very much focused on a subscription business model. When we first came about, we were a very hardware-centric company inside of NETGEAR, just selling as many cameras as we could. Once we spun and went public, we changed the focus of the company into really a recurring service model type business. That transformation was complete several years ago, and we've been accelerating, which I'll show you, a lot of the business metrics and financial metrics since then. The markets we operate in are really the two darker blue areas for now. Think of the DIY home security space from a hardware perspective. Also, like I mentioned, we are obviously very active in the services. We see the hardware business as our cost of acquisition. It's how we seed the market. We've been bringing down hardware prices to bring down the barrier of entry into the marketplace. In return for that, we then sell subscription services to that hardware. Attach rate's roughly around 60%+, $15 ARPU per month, so about $15 a month on average for these subscribers. We have 5.7 million subscribers now on that service. You're looking at roughly $25 billion market that we currently operate in. We're seeing this TAM start to expand in several areas, including the general smart home business, which we're starting to move into, and we're seeing the smart home and home security starting to combine into just smart home security, where all of the recurring revenue is actually coming from the security side, which we're centered in. There's a lot of adjacent markets that we're starting to seed for some future growth, including SMB and things like age in place and some of the other markets that leverage a platform fairly very similar to ours, but have had no real innovation or it's a very fragmented market. We're in about a $25 billion TAM, and we think that can grow to a $200+ billion TAM over the next 3-5 years as we continue to kinda expand our purview. Couple things that we've done recently, so those of you who are on our last earnings call, last year was a big year for us. We actually did the largest product launch in company history coming into the holiday. We launched 109 SKUs, shipped 800,000 units in less than two months and refreshed basically almost our entire product line, which drove a lot of promotional activity in Q3, but also a lot of growth in Q4. We also launched Arlo Secure 6 last year, which is our subscription services. That includes normal things like computer vision for the cameras, but also, you know, object detection, facial recognition, vehicle recognition, scene description or context awareness of what's happening at your house to give you really intelligent view of your home or small business. That's launched last year as well. We tend to be considered the highest quality product and solution on the marketplace. We just launched our new products, as I mentioned in the roughly October timeframe is when they went into the channel. We've already won multiple Best Of awards, Editor's Choice awards and the like. While hardware is really our customer acquisition pipeline, it is still something we do extraordinarily well and I think differentiates us from our competition. 60%-70% of our R&D now is really in the services business where we've got AI functionality that nobody else has in the market and keeps us competitive. If you look at from a service metric perspective, comparing us to other services in the market that go to consumers, we have one of the lowest churns in the industry. We have about 1% churn per month. That is both because we work on this every day, and we make sure that we've got a great customer experience. It is also because we operate in a market, that has a very high stickiness. People tend not to cancel their subscription services when it's security. Even when we came out of COVID and there was a subscription fatigue and people had multiple movie streaming services and multiple music streaming services, and they started canceling some subscription, we didn't see churn move at all. It's an extraordinary sticky service. It's something they don't cancel very often. Our average customer is actually with us for more than eight years. If you look at other service metrics, like I said, our ARPU is about $15, $30 per month per user, and our gross margin on our retail accounts, meaning they bought, you know, our hardware and came to arlo.com and signed up, is 94% gross margin. It's extraordinarily profitable service that we're deploying. There's a great service metric that people look at, which is LTV/CAC. Our long-term value of a customer has grown to over $900, and our cost of acquisition of that customer is just over $200. That CAC is fully netted, so if we do a promotion on the hardware, that actually is included in this CAC. This isn't just the CAC to get the subscriber, this is the all-in cost of acquisition of getting that customer across all of our activities, across both hardware, software, service, marketing, sales, everything else. What that means is our LTV/CAC ratio is four. Those of you who invest or are familiar with enterprise SaaS companies, anything above a three is considered stellar. The way we look at it is we want to keep our LTV/CAC ratio roughly a four, you know, between 3 and 5, 'cause if it's more than five, we're probably leaving some growth on the table, and we could have captured maybe more customers. If it's less than three, then we're being a little bit inefficient. We're spending a lot of money to capture those customers. Four is considered world-class. That's where we're focused on. Last quarter, which is one of the most promotional quarters, typically the most expensive quarter to get customers in the holiday quarter, we had an LTV/CAC ratio of four. Real quick, just a snapshot of Q4. It was a stellar quarter for Arlo. If you look across, you know, our revenue, it's $141 million. That was slightly above guidance. We hit nearly $90 million in service revenue, $330 million in ARR, and we actually netted out $0.22 EPS. That was well above the high range of our guidance going into the quarter. We've got a lot of momentum. We see a lot of potential for growth in the company. We exited the year extraordinarily strong in what many considered a difficult quarter. If you're familiar, if you're a SaaS investor, you're familiar with the Rule of 40, that's a measure of profitable growth in a lot of purely subscription-based startups. Rule of 40, if you're anywhere near Rule of 40, you're considered a stellar company. We actually in the quarter scored a 45, putting us as one of, I think, five public companies that are actually growing at this rate profitably. Real quick, I'm just gonna cut through these real fast. We're focused on four main areas for growth across the company. One is to continue the expansion of our core retail and direct markets. That is extraordinarily important. You're gonna see us continue to innovate on AI-based services. That's what's driving the service revenue in the company and the ARPU expansion you've seen over time. We have been growing our B2B accounts, we go to market through, you know, retail, Best Buy, Walmart, you know, some of the biggest retailers, Amazon from an e-tailer perspective. Increasingly, we're finding routes to market through partnerships. We've got a huge partnership named Verisure in Europe where we go to market, but recently we announced partners such as ADT, Samsung, and Comcast. Those are gonna provide some growth in 2026 as we do integration and work with them. It's already building in a substantial amount of growth going into 2027 and 2028. Finally, launching new markets. We are very much focused not only on our core business, but now that we've built such a strong foundation and we have such a great path to growth over the next couple years, you will see us start to plant seeds in some adjacent markets. It might be small business, age in place is one we've talked about, but it's time for us to expand beyond just our core market, as I mentioned when we were talking about the TAM slide. All this, I won't go into a lot of detail, but all of this is built on a platform that we've spent, you know, half a billion dollars and 10 years building on. I think it's the best platform in the world, not only for servicing smart home security customers in the field, but servicing our partners in a way that is very scalable and allows it to provide great services to those end users. When I look, I'm gonna skip guidance. Kurt can talk about guidance as we go forward. Looking ahead, like we talked about, what are we focused on? We're focused on the SaaS platform innovation, which is what's driving our growth as a company. Continued growth, as I mentioned, in our current channels. New strategic partners. We just announced three very, very large partners that are gonna provide growth over the next three years. Expansion into adjacent markets, like I mentioned. We've forecasted over 20% service growth again, which will make us one of the fastest service growth companies in the country or in the world. We've actually feel that we're undervalued, so the board actually approved a $50 million stock repurchase, renewed another $50 million on top of the one we did last year. We'll be in the market buying Arlo stock as well. That's it. Thank you. Hopefully, that was helpful. Great job. It's a great overview. Maybe I'll just start, if I were to pick out one of the growth drivers that investors have been focusing on maybe most in the conversations that I've heard, and discussions, today and recently, it's the strategic partnerships aspect. Yeah. It's new. We're all trying to figure it out. There's only so much that you can say I know, so you're a little bit hamstrung by that. Maybe just double-click on that. Talk about, you know, the new partners. Who are they? How big could this be? What's the nature of the partnership, and what kind of growth could that bring? Like I mentioned, partnerships has been a key area of growth for us over the last 5 or 6 years. Again, Verisure being a big example of that. It's provided diversification of revenue, but also, you know, alternative routes to market to find additional consumers. Important part of our business, and one that we've stated if you look from where we are today and we're trying to get to the long-range targets that we've set out, which is 10 million subscribers and over $700 million in ARR, we think about 60% of the growth from today till then will be coming from strategic partners. Most recently, as I mentioned, we've announced ADT, which is one of the largest traditional security provider here in the United States. They'll be launching later this year. In fact, if you read the ADT's earnings transcript from yesterday, you'll see them talk about ADT Blue, a big focus on DIY, investing tens of millions of dollars in marketing. That is a platform that we're powering for them from a device level and also from a back-end perspective. That'll launch later this year, and they're viewing that as a way to drive growth and more efficient routes to market. We're happy to provide all the platform for that, very similar to what we do with Verisure in Europe. Samsung is one we announced, and they actually announced at CES. They're gonna be deploying an emergency response service across initially tablets and cell phones, but you'll eventually see it on all their devices, where you can call emergency services and get help from any point on a single tap on all of those devices. It'll be a subscription service. We're gonna be powering that for Samsung across the United States to begin with and then across the world over time. Comcast, which is the one that we announced on the day of earnings. Can't say a lot about that. We're gonna be doing integration and development with Comcast this year with a market launch towards the end of the year and the beginning of 2027 to power basically an Xfinity smart home security system to their 31 million broadband customers in the U.S. Tremendous scale, and we've commented that one's obviously a very large potential partner. Once at scale, we think that could be as big, if not bigger, than Verisure as far as the impact to us on service revenue and profitability. Awesome. Any questions so far for the team? Who did you replace in these places? Like ADT. Yeah. Good question. In all three of the most recent ones, it's actually net new. New? New. Meaning. No, I know what you mean, but who's... Were they doing it before? Didn't exist. No, they weren't doing it before. ADT is not in the DIY space. We're now developing that solution with them to go enter that space. Comcast had an existing solution, I think it was homegrown, for home security, and it hasn't had a lot of innovation on the services side or the hardware side, so they're kind of replacing an old internal, I think, solution. Samsung, this is a net new subscription that they're providing from a services perspective. Yeah. Yeah. Hey, Matt. exciting to see all the growth. I'm hoping this is a softball for you, can you talk a little bit about net retention growth of that existing subscriber base... Yeah. With all those exciting new products being launched? If you look at our core business, you know, that's growing quite well. What we'll call retail and direct business, as you saw is at 94% gross margin, our gross margin's actually been going up. We made some subscription platform changes at the beginning of last year, including getting rid of our basic plan because we were seeing mix-up happening in the plans already because we launched a bunch of new AI capabilities that people were desiring. You also saw ARPU rise through the year quite substantially. Despite ARPU rising, we actually saw churn go down. Our retention, which is 99% now, is actually the highest retention I think we've reported in, you know, for years. I mean, down at 1% churn. We're actually seeing across all of the key metrics in that core business, all the key measures and metrics have actually improved over the course of the last year, we think we can get it to continue to improve through 2026. Are the splits that you have with the new, well, with each of those deals, are they similar? Do you have like most favored nation on those types of things? Well, in many cases, we're gonna be exclusive. Right. In those areas. You did different deals with different contracts. Yeah. Are they similar splits? Um- Do you have, like I said, a most favored nation with these guys? Yeah, there's no most favored nation. We basically have a price list for a lot of the services and hardware we provide. If somebody's buying hardware, we have a price list, they purchase it. On the services, what we typically do is we have different tiers of service, you know, storage, AI, different AI capabilities, and we price out our storage, compute, everything we do. Are you offering their customers that same strata? It's up to them. I don't know exactly what the tiers will be when they deploy or in some cases, I do and I can't say. What we do is we price it to a partner that way, and then a partner takes those costs and decide how to bundle together a service they wanna deploy into the marketplace. In general, maybe it's too early to tell, in general, do people pick typically the middle plan or because it's security, they tend to go to the high? It's interesting. I can give you some a little bit of color on that because of what happened at the end of 2024 going into 2025. At the end of 2024, we had three plans. We had the kinda Basic, Plus, and Premium. I would tell you that most people were on Basic, we had a good number on Plus, and a small amount on Premium. The typical distribution you would expect, you know, from a consumer-type service plan. When we launched our latest AI features at the end of 2025, we saw a dramatic shift from Basic to Plus, our middle tier. That told us that the AI functionality we had deployed as part of that service launch was really compelling, was actually driving people to the middle tier plan. At the beginning of last year, we actually killed the Basic plan. We got rid of it 'cause we saw everybody moving up anyways. Right now, we have two plans, and that's because we saw where customer demand was going. We're also leaving ourselves open to have space to launch potentially a third plan later this year going into 2027. I don't really have a middle plan right now. Most people are now on Plus, which was our middle plan, and we're concentrating also on mixing people up to Premium through this year. I think there was a question in the back. Just, just a question. The B2B, business, is it 95% gross margin on the service side also? We don't disclose it yet because most of our business in that category is Verisure. What I can tell you at a high level, the ARPU is lower in that area, but the gross margin is still very high, what I would say. The LTV/CAC is technically infinite, I guess. We don't have any customer acquisition cost over there. What we see actually drop down at the gross margin level can be relatively strong to even what we do in retail because it's just structured differently. Think of it as lower ARPU, almost zero or zero customer acquisition cost, still very healthy gross margin, but also dropping to the bottom line. Ultimately what we, you know, from strategic perspective, where we wanna get to is to be agnostic on how we find that customer. If somebody decides to be a home security customer and they buy at a Walmart or a Best Buy, and they sign up to an Arlo subscription service versus eventually getting it through Comcast Xfinity, you know, home security, if we do all the deals correctly, and we think we're moving in that direction, quite quickly, it should be agnostic to us on the bottom line. Yep. I may have misheard. Did you say your attachment rates were 60%? Yeah, correct. Can you explain that with regards to the very low churn rates? Once people attach, they don't churn. Correct. How do you get them to attach given that numbers seem quite low relative to churn? We measure a couple... Let me walk you through maybe the customer journey. In retail and direct, that's kinda where I'm talking the retail direct piece. Often with our partners, the attach rate's 100%. For instance, when Verisure deploys an Arlo camera in their direct channel, they only do that with service attached. That's actually 100%. Put that aside because that can mix, you know, skew the numbers a little bit. If you look at just retail churn, somebody will buy an Arlo device or a kit at a retail channel. They then get a free trial of our service for 30 days once they onboard it, and at the end of the free trial, we measure did they convert. Our first measure is conversion, and that's roughly 40%-50% conversion, where they convert within 30 days of the free trial ending. What we do is we follow that cohort over 6 months, and we call that attach. The attach rate goes up another 10-15 points over that 6-month period. If you measure it out farther, sometimes it can be even higher than that. The two metrics that we publish are conversion, which is 40%-50%, and that's 30 days with the free trial end, and attach, which is 6 months later. Some people do buy the cameras for other purposes. Maybe it's checking on their pets, you know, when they're at work, or we have people that will put a camera above a bird's nest in the spring and watch, it's not really being used for security purposes. Some cameras just weren't sold to be in security. We get an attach rate that goes as high as 60%. Once they're subscribed, that's when the churn number comes in. Once they're subscribed, they've gone through that funnel, and they've attached to service, we then have a 1% churn per month across all of our users. That, if you compute it out to what's the term of that customer is just over 8 years. Do you have any information about why? Yes Don't convert? Well, don't convert is usually they bought the camera for another purpose, or some other things. I thought you were gonna ask do you know why they churn? Also interesting. The why they don't convert is typically 'cause they didn't buy the camera for security, or they, you know, they bought it for another purpose. On the churn, I'll, yeah. Mm-hmm Since I, since I prompted it. On the churn, the number one source of churn is actually involuntary. It's their credit card expired, they didn't know. You know, those types of things where they moved house and their street address got updated and the credit card's no longer valid. That's actually the number one reason for churn. All the other ones kinda build up to be another 30%, 40%. Can you talk to the regulatory environment of some of the Chinese competitors that are out there and what, you know, may happen in the future as well? Yeah. You wanna take that? This has been the easiest fireside ever for you. I would say it's a pretty interesting environment right now in which we live on many levels. Relative to the Chinese brands. There are a number of Chinese brands that are in this space. Obviously, they're focused on delivering high volume, low priced hardware. They're not really in the subscription business, as we like to say it. The challenge has been is that from a data privacy and that area, it's still questionable as to whether or not they're protecting U.S. consumers' information the way they should be. They've been susceptible to a number of cyberattacks. We've actually been in discussions with a number of the bodies of the federal government, in particular the FCC, the Department of Commerce, Department of Justice, there are actually active investigations specifically against TP-Link for improper competitive positioning and also improper use of personal data. It's hard to say whether or not this will actually result in an actual enforcement. We do know that they're being pursued in the area of routers as well because, as Matt pointed out, our initial parent company, NETGEAR, has been active at that. The level of activity intensity has picked up considerably. Most likely there'll be some actions here in 2026. The state of Texas just filed lawsuit against TP-Link on the router side. We suspect that some of this type activity is gonna fall in the area of security. What that means for us is there is a market share there of Lower priced hardware, we will work to make sure that we position our portfolio to ensure that we can garnish as much as that market share as possible. Our goal is not necessarily to get hardware consumers, but more the service consumers. We're looking to find ways to, you know, take those households and convert them into service customers. Where are they manufactured? Most of these are. They actually manufacture out of Vietnam. Where they're manufactured is not the concern. It's actually all of the software and back-end development that occurs. From what we can tell, at least in the case of TP-Link and eufy, most of that happens in Beijing and Shenzhen. We have NETGEAR, next door at 325 as well for the Zoom. You know. Plug those guys. What it may do is unlock market share here in the U.S. There's a general trend that we're seeing in this market as it's starting to move mass market. The penetration of this space and kinda smart visual-based security, camera-based security is about 20 some percent if you look at kinda third-party market research. It means we're entering the mass market. We have two things happening. One is we're seeing a lot more people buy this product category because of awareness and because pricing has come down. At the same time, we're starting to see a trend towards consolidation. The bigger, more successful brands tend to win the market or capturing the shelf share. What this is doing is adding potentially another layer onto that consolidation where the federal government may come in and say, "These brands are no longer allowed in the United States," triggering retail, e-com, others to reduce their assortment even more and bet on the providers that are successful in the marketplace. We're seeing a trend of consolidation happening anyways. This may spur another kinda stairstep function in that if a import ban actually happens in the space. What is their market share at the moment? So it's market share data in this segment is very difficult to get because there's several brands that don't actually report. There's several retailers that don't report everything. Our guess is if you take just some of the top brands from a unit share perspective, maybe somewhere between 10%, 15%, 20% that could unlock and be available. Kurt made a great point, too, is we're not looking for just share on the hardware side. What we're really focused on is finding the share in the household that are potential subscribers to service, 'cause we're not a hardware company, we're a services company, and we use the hardware really as a way to instantiate that relationship with the end user to drive that subscription. You're talking about potentially millions of units, you know, market share becoming available for future growth. Lots of exciting stuff ahead. We've got a breakout in Cordova 4. It's been a great discussion. Matt, do you wanna bring us home? Kinda final message you'd like to leave with the investors? Yeah. I mean, the final message I would say is, you know, I think we've done a great job transitioning the business into services. We've spent the last two, three years accelerating the growth. I would encourage you to listen to the last earnings call 'cause we think we're set up well for 2026. Some of these strategic accounts and some of the things we've done in our core business, we think we're already set up for a strong 2027 as well. Anyways. Love it. Thanks, guys. All right. Thank you. Thank you.

Speaker 1: I know we'll have folks trickling in from lunch, but we'll go ahead and get started here. Thanks everybody for joining. I'm Adam Tindle, and this is part of my connected devices coverage here at Raymond James. Very happy to have Matt and Kurt, CEO and CFO from Arlo Technologies. In terms of the format, I know many folks are newer to the story, and there's obviously been a lot of positive change over the years. Matt's gonna go through some slides, just for, you know, 10, 15 minutes or so, and we'll save another 10 or 15 minutes for questions. I know he'd love it if you do have questions along the way, feel free to raise your hand, and we'd love to keep it as interactive as possible. With that, Matt. Thanks. I know we'll have folks trickling in from lunch, but we'll go ahead and get started here. i know we'll have folks trickling in from lunch but we'll go ahead and get started here Thanks everybody for joining. thanks everybody for joining I'm Adam Tindle, and this is part of my connected devices coverage here at Raymond James. i'm adam tindle and this is part of my connected devices coverage here at raymond james Very happy to have Matt and Kurt, CEO and CFO from Arlo Technologies. very happy to have matt and kurt ceo and cfo from arlo technologies In terms of the format, I know many folks are newer to the story, and there's obviously been a lot of positive change over the years. in terms of the format i know many folks are newer to the story and there's obviously been a lot of positive change over the years Matt's gonna go through some slides, just for, you know, 10, 15 minutes or so, and we'll save another 10 or 15 minutes for questions. matt's gonna go through some slides just for you know 10 15 minutes or so and we'll save another 10 or 15 minutes for questions I know he'd love it if you do have questions along the way, feel free to raise your hand, and we'd love to keep it as interactive as possible. i know he'd love it if you do have questions along the way feel free to raise your hand and we'd love to keep it as interactive as possible With that, Matt. with that matt Thanks. thanks

Speaker 3: Thank you. Thank you, Adam. Thanks for coming. I'm gonna go through these relatively quick 'cause I see familiar faces and a mix of new faces in the room. I'll try and do a background, but also make sure I'm leaving a lot of time for questions. Welcome to our presentation from Arlo. For those of you who not familiar with the company, we invented the DIY home security space. About 10 years ago, we were inside of a company called NETGEAR that had actually acquired and created the first DIY security home camera in the world, and actually created what is now nearly 2/3 of the home security space, which is actually now DIY. We're very much focused on a subscription business model. Thank you. thank you thank Thank you, Adam. thank you adam Thanks for coming. thanks for coming I'm gonna go through these relatively quick 'cause I see familiar faces and a mix of new faces in the room. i'm gonna go through these relatively quick 'cause i see familiar faces and a mix of new faces in the room I'll try and do a background, but also make sure I'm leaving a lot of time for questions. i'll try and do a background but also make sure i'm leaving a lot of time for questions Welcome to our presentation from Arlo. welcome to our presentation from arlo For those of you who not familiar with the company, we invented the DIY home security space. for those of you who not familiar with the company we invented the diy home security space About 10 years ago, we were inside of a company called NETGEAR that had actually acquired and created the first DIY security home camera in the world, and actually created what is now nearly 2/3 of the home security space, which is actually now DIY. about 10 years ago we were inside of a company called netgear that had actually acquired and created the first diy security home camera in the world and actually created what is now nearly 2/3 of the home security space which is actually now diy We're very much focused on a subscription business model. we're very much focused on a subscription business model When we first came about, we were a very hardware-centric company inside of NETGEAR, just selling as many cameras as we could. Once we spun and went public, we changed the focus of the company into really a recurring service model type business. That transformation was complete several years ago, and we've been accelerating, which I'll show you, a lot of the business metrics and financial metrics since then. The markets we operate in are really the two darker blue areas for now. Think of the DIY home security space from a hardware perspective. Also, like I mentioned, we are obviously very active in the services. We see the hardware business as our cost of acquisition. It's how we seed the market. When we first came about, we were a very hardware-centric company inside of NETGEAR , just selling as many cameras as we could. when we first came about we were a very hardware-centric company inside of netgear just selling as many cameras as we could Once we spun and went public, we changed the focus of the company into really a recurring service model type business. once we spun and went public we changed the focus of the company into really a recurring service model type business That transformation was complete several years ago, and we've been accelerating, which I'll show you, a lot of the business metrics and financial metrics since then. that transformation was complete several years ago and we've been accelerating which i'll show you a lot of the business metrics and financial metrics since then The markets we operate in are really the two darker blue areas for now. the markets we operate in are really the two darker blue areas for now Think of the DIY home security space from a hardware perspective. think of the diy home security space from a hardware perspective Also, like I mentioned, we are obviously very active in the services. also like i mentioned we are obviously very active in the services We see the hardware business as our cost of acquisition. we see the hardware business as our cost of acquisition It's how we seed the market. it's how we seed the market We've been bringing down hardware prices to bring down the barrier of entry into the marketplace. In return for that, we then sell subscription services to that hardware. Attach rate's roughly around 60%+, $15 ARPU per month, so about $15 a month on average for these subscribers. We have 5.7 million subscribers now on that service. You're looking at roughly $25 billion market that we currently operate in. We're seeing this TAM start to expand in several areas, including the general smart home business, which we're starting to move into, and we're seeing the smart home and home security starting to combine into just smart home security, where all of the recurring revenue is actually coming from the security side, which we're centered in. We've been bringing down hardware prices to bring down the barrier of entry into the marketplace. we've been bringing down hardware prices to bring down the barrier of entry into the marketplace In return for that, we then sell subscription services to that hardware. in return for that we then sell subscription services to that hardware Attach rate's roughly around 60%+, $15 ARPU per month, so about $15 a month on average for these subscribers. attach rate's roughly around 60%+ $15 arpu per month so about $15 a month on average for these subscribers We have 5.7 million subscribers now on that service. we have 5.7 million subscribers now on that service You're looking at roughly $25 billion market that we currently operate in. you're looking at roughly $25 billion market that we currently operate in We're seeing this TAM start to expand in several areas, including the general smart home business, which we're starting to move into, and we're seeing the smart home and home security starting to combine into just smart home security, where all of the recurring revenue is actually coming from the security side, which we're centered in. we're seeing this tam start to expand in several areas including the general smart home business which we're starting to move into and we're seeing the smart home and home security starting to combine into just smart home security where all of the recurring revenue is actually coming from the security side which we're centered in There's a lot of adjacent markets that we're starting to seed for some future growth, including SMB and things like age in place and some of the other markets that leverage a platform fairly very similar to ours, but have had no real innovation or it's a very fragmented market. We're in about a $25 billion TAM, and we think that can grow to a $200+ billion TAM over the next 3-5 years as we continue to kinda expand our purview. Couple things that we've done recently, so those of you who are on our last earnings call, last year was a big year for us. We actually did the largest product launch in company history coming into the holiday. There's a lot of adjacent markets that we're starting to seed for some future growth, including SMB and things like age in place and some of the other markets that leverage a platform fairly very similar to ours, but have had no real innovation or it's a very fragmented market. there's a lot of adjacent markets that we're starting to seed for some future growth including smb and things like age in place and some of the other markets that leverage a platform fairly very similar to ours but have had no real innovation or it's a very fragmented market We're in about a $25 billion TAM, and we think that can grow to a $200+ billion TAM over the next 3- 5 years as we continue to kinda expand our purview. we're in about a $25 billion tam and we think that can grow to a $200+ billion tam over the next 3- 5 years as we continue to kinda expand our purview Couple things that we've done recently, so those of you who are on our last earnings call, last year was a big year for us. couple things that we've done recently so those of you who are on our last earnings call last year was a big year for us We actually did the largest product launch in company history coming into the holiday. we actually did the largest product launch in company history coming into the holiday We launched 109 SKUs, shipped 800,000 units in less than two months and refreshed basically almost our entire product line, which drove a lot of promotional activity in Q3, but also a lot of growth in Q4. We also launched Arlo Secure 6 last year, which is our subscription services. That includes normal things like computer vision for the cameras, but also, you know, object detection, facial recognition, vehicle recognition, scene description or context awareness of what's happening at your house to give you really intelligent view of your home or small business. That's launched last year as well. We tend to be considered the highest quality product and solution on the marketplace. We launched 109 SKUs, shipped 800,000 units in less than two months and refreshed basically almost our entire product line, which drove a lot of promotional activity in Q3, but also a lot of growth in Q4. we launched 109 skus shipped 800,000 units in less than two months and refreshed basically almost our entire product line which drove a lot of promotional activity in q3 but also a lot of growth in q4 We also launched Arlo Secure 6 last year, which is our subscription services. we also launched arlo secure 6 last year which is our subscription services That includes normal things like computer vision for the cameras, but also, you know, object detection, facial recognition, vehicle recognition, scene description or context awareness of what's happening at your house to give you really intelligent view of your home or small business. that includes normal things like computer vision for the cameras but also you know object detection facial recognition vehicle recognition scene description or context awareness of what's happening at your house to give you really intelligent view of your home or small business That's launched last year as well. that's launched last year as well We tend to be considered the highest quality product and solution on the marketplace. we tend to be considered the highest quality product and solution on the marketplace We just launched our new products, as I mentioned in the roughly October timeframe is when they went into the channel. We've already won multiple Best Of awards, Editor's Choice awards and the like. While hardware is really our customer acquisition pipeline, it is still something we do extraordinarily well and I think differentiates us from our competition. 60%-70% of our R&D now is really in the services business where we've got AI functionality that nobody else has in the market and keeps us competitive. If you look at from a service metric perspective, comparing us to other services in the market that go to consumers, we have one of the lowest churns in the industry. We have about 1% churn per month. We just launched our new products, as I mentioned in the roughly October timeframe is when they went into the channel. we just launched our new products as i mentioned in the roughly october timeframe is when they went into the channel We've already won multiple Best Of awards, Editor's Choice awards and the like. we've already won multiple best of awards editor's choice awards and the like While hardware is really our customer acquisition pipeline, it is still something we do extraordinarily well and I think differentiates us from our competition. 60%-70% of our R&D now is really in the services business where we've got AI functionality that nobody else has in the market and keeps us competitive. while hardware is really our customer acquisition pipeline it is still something we do extraordinarily well and i think differentiates us from our competition 60%-70% of our r&d now is really in the services business where we've got ai functionality that nobody else has in the market and keeps us competitive If you look at from a service metric perspective, comparing us to other services in the market that go to consumers, we have one of the lowest churns in the industry. if you look at from a service metric perspective comparing us to other services in the market that go to consumers we have one of the lowest churns in the industry We have about 1% churn per month. we have about 1% churn per month That is both because we work on this every day, and we make sure that we've got a great customer experience. It is also because we operate in a market, that has a very high stickiness. People tend not to cancel their subscription services when it's security. Even when we came out of COVID and there was a subscription fatigue and people had multiple movie streaming services and multiple music streaming services, and they started canceling some subscription, we didn't see churn move at all. It's an extraordinary sticky service. It's something they don't cancel very often. Our average customer is actually with us for more than eight years. That is both because we work on this every day, and we make sure that we've got a great customer experience. that is both because we work on this every day and we make sure that we've got a great customer experience It is also because we operate in a market, that has a very high stickiness. it is also because we operate in a market that has a very high stickiness People tend not to cancel their subscription services when it's security. people tend not to cancel their subscription services when it's security Even when we came out of COVID and there was a subscription fatigue and people had multiple movie streaming services and multiple music streaming services, and they started canceling some subscription, we didn't see churn move at all. even when we came out of covid and there was a subscription fatigue and people had multiple movie streaming services and multiple music streaming services and they started canceling some subscription we didn't see churn move at all It's an extraordinary sticky service. it's an extraordinary sticky service It's something they don't cancel very often. it's something they don't cancel very often Our average customer is actually with us for more than eight years. our average customer is actually with us for more than eight years If you look at other service metrics, like I said, our ARPU is about $15, $30 per month per user, and our gross margin on our retail accounts, meaning they bought, you know, our hardware and came to arlo.com and signed up, is 94% gross margin. It's extraordinarily profitable service that we're deploying. There's a great service metric that people look at, which is LTV/CAC. Our long-term value of a customer has grown to over $900, and our cost of acquisition of that customer is just over $200. That CAC is fully netted, so if we do a promotion on the hardware, that actually is included in this CAC. If you look at other service metrics, like I said, our ARPU is about $15, $30 per month per user, and our gross margin on our retail accounts, meaning they bought, you know, our hardware and came to arlo.com and signed up, is 94% gross margin. if you look at other service metrics like i said our arpu is about $15 $30 per month per user and our gross margin on our retail accounts meaning they bought you know our hardware and came to arlo.com and signed up is 94% gross margin It's extraordinarily profitable service that we're deploying. it's extraordinarily profitable service that we're deploying There's a great service metric that people look at, which is LTV/ CAC. there's a great service metric that people look at which is ltv/ cac Our long-term value of a customer has grown to over $900, and our cost of acquisition of that customer is just over $200. our long-term value of a customer has grown to over $900 and our cost of acquisition of that customer is just over $200 That CAC is fully netted, so if we do a promotion on the hardware, that actually is included in this CAC. that cac is fully netted so if we do a promotion on the hardware that actually is included in this cac This isn't just the CAC to get the subscriber, this is the all-in cost of acquisition of getting that customer across all of our activities, across both hardware, software, service, marketing, sales, everything else. What that means is our LTV/CAC ratio is four. Those of you who invest or are familiar with enterprise SaaS companies, anything above a three is considered stellar. The way we look at it is we want to keep our LTV/CAC ratio roughly a four, you know, between 3 and 5, 'cause if it's more than five, we're probably leaving some growth on the table, and we could have captured maybe more customers. If it's less than three, then we're being a little bit inefficient. We're spending a lot of money to capture those customers. This isn't just the CAC to get the subscriber, this is the all-in cost of acquisition of getting that customer across all of our activities, across both hardware, software, service, marketing, sales, everything else. this isn't just the cac to get the subscriber this is the all-in cost of acquisition of getting that customer across all of our activities across both hardware software service marketing sales everything else What that means is our LTV/ CAC ratio is four. what that means is our ltv/ cac ratio is four Those of you who invest or are familiar with enterprise SaaS companies, anything above a three is considered stellar. those of you who invest or are familiar with enterprise saas companies anything above a three is considered stellar The way we look at it is we want to keep our LTV/ CAC ratio roughly a four, you know, between 3 and 5, 'cause if it's more than five, we're probably leaving some growth on the table, and we could have captured maybe more customers. the way we look at it is we want to keep our ltv/ cac ratio roughly a four you know between 3 and 5 'cause if it's more than five we're probably leaving some growth on the table and we could have captured maybe more customers If it's less than three, then we're being a little bit inefficient. if it's less than three then we're being a little bit inefficient We're spending a lot of money to capture those customers. we're spending a lot of money to capture those customers Four is considered world-class. That's where we're focused on. Last quarter, which is one of the most promotional quarters, typically the most expensive quarter to get customers in the holiday quarter, we had an LTV/CAC ratio of four. Real quick, just a snapshot of Q4. It was a stellar quarter for Arlo. If you look across, you know, our revenue, it's $141 million. That was slightly above guidance. We hit nearly $90 million in service revenue, $330 million in ARR, and we actually netted out $0.22 EPS. That was well above the high range of our guidance going into the quarter. We've got a lot of momentum. We see a lot of potential for growth in the company. Four is considered world-class. four is considered world-class That's where we're focused on. that's where we're focused on Last quarter, which is one of the most promotional quarters, typically the most expensive quarter to get customers in the holiday quarter, we had an LTV/ CAC ratio of four. last quarter which is one of the most promotional quarters typically the most expensive quarter to get customers in the holiday quarter we had an ltv/ cac ratio of four Real quick, just a snapshot of Q4. real quick just a snapshot of q4 It was a stellar quarter for Arlo. it was a stellar quarter for arlo If you look across, you know, our revenue, it's $141 million. if you look across you know our revenue it's $141 million That was slightly above guidance. that was slightly above guidance We hit nearly $90 million in service revenue, $330 million in ARR, and we actually netted out $0.22 EPS. we hit nearly $90 million in service revenue $330 million in arr and we actually netted out $0.22 eps That was well above the high range of our guidance going into the quarter. that was well above the high range of our guidance going into the quarter We've got a lot of momentum. we've got a lot of momentum We see a lot of potential for growth in the company. we see a lot of potential for growth in the company We exited the year extraordinarily strong in what many considered a difficult quarter. If you're familiar, if you're a SaaS investor, you're familiar with the Rule of 40, that's a measure of profitable growth in a lot of purely subscription-based startups. Rule of 40, if you're anywhere near Rule of 40, you're considered a stellar company. We actually in the quarter scored a 45, putting us as one of, I think, five public companies that are actually growing at this rate profitably. Real quick, I'm just gonna cut through these real fast. We're focused on four main areas for growth across the company. One is to continue the expansion of our core retail and direct markets. That is extraordinarily important. We exited the year extraordinarily strong in what many considered a difficult quarter. we exited the year extraordinarily strong in what many considered a difficult quarter If you're familiar, if you're a SaaS investor, you're familiar with the Rule of 40, that's a measure of profitable growth in a lot of purely subscription-based startups. if you're familiar if you're a saas investor you're familiar with the rule of 40 that's a measure of profitable growth in a lot of purely subscription-based startups Rule of 40, if you're anywhere near Rule of 40, you're considered a stellar company. rule of 40 if you're anywhere near rule of 40 you're considered a stellar company We actually in the quarter scored a 45, putting us as one of, I think, five public companies that are actually growing at this rate profitably. we actually in the quarter scored a 45 putting us as one of i think five public companies that are actually growing at this rate profitably Real quick, I'm just gonna cut through these real fast. real quick i'm just gonna cut through these real fast We're focused on four main areas for growth across the company. we're focused on four main areas for growth across the company One is to continue the expansion of our core retail and direct markets. one is to continue the expansion of our core retail and direct markets That is extraordinarily important. that is extraordinarily important You're gonna see us continue to innovate on AI-based services. That's what's driving the service revenue in the company and the ARPU expansion you've seen over time. We have been growing our B2B accounts, we go to market through, you know, retail, Best Buy, Walmart, you know, some of the biggest retailers, Amazon from an e-tailer perspective. Increasingly, we're finding routes to market through partnerships. We've got a huge partnership named Verisure in Europe where we go to market, but recently we announced partners such as ADT, Samsung, and Comcast. Those are gonna provide some growth in 2026 as we do integration and work with them. It's already building in a substantial amount of growth going into 2027 and 2028. Finally, launching new markets. You're gonna see us continue to innovate on AI-based services. you're gonna see us continue to innovate on ai-based services That's what's driving the service revenue in the company and the ARPU expansion you've seen over time. that's what's driving the service revenue in the company and the arpu expansion you've seen over time We have been growing our B2B accounts, we go to market through, you know, retail, Best Buy, Walmart, you know, some of the biggest retailers, Amazon from an e-tailer perspective. we have been growing our b2b accounts we go to market through you know retail best buy walmart you know some of the biggest retailers amazon from an e-tailer perspective Increasingly, we're finding routes to market through partnerships. increasingly we're finding routes to market through partnerships We've got a huge partnership named Verisure in Europe where we go to market, but recently we announced partners such as ADT, Samsung, and Comcast. we've got a huge partnership named verisure in europe where we go to market but recently we announced partners such as adt samsung and comcast Those are gonna provide some growth in 2026 as we do integration and work with them. those are gonna provide some growth in 2026 as we do integration and work with them It's already building in a substantial amount of growth going into 2027 and 2028. it's already building in a substantial amount of growth going into 2027 and 2028 Finally, launching new markets. finally launching new markets We are very much focused not only on our core business, but now that we've built such a strong foundation and we have such a great path to growth over the next couple years, you will see us start to plant seeds in some adjacent markets. It might be small business, age in place is one we've talked about, but it's time for us to expand beyond just our core market, as I mentioned when we were talking about the TAM slide. All this, I won't go into a lot of detail, but all of this is built on a platform that we've spent, you know, half a billion dollars and 10 years building on. We are very much focused not only on our core business, but now that we've built such a strong foundation and we have such a great path to growth over the next couple years, you will see us start to plant seeds in some adjacent markets. we are very much focused not only on our core business but now that we've built such a strong foundation and we have such a great path to growth over the next couple years you will see us start to plant seeds in some adjacent markets It might be small business, age in place is one we've talked about, but it's time for us to expand beyond just our core market, as I mentioned when we were talking about the TAM slide. it might be small business age in place is one we've talked about but it's time for us to expand beyond just our core market as i mentioned when we were talking about the tam slide All this, I won't go into a lot of detail, but all of this is built on a platform that we've spent, you know, half a billion dollars and 10 years building on. all this i won't go into a lot of detail but all of this is built on a platform that we've spent you know half a billion dollars and 10 years building on I think it's the best platform in the world, not only for servicing smart home security customers in the field, but servicing our partners in a way that is very scalable and allows it to provide great services to those end users. When I look, I'm gonna skip guidance. Kurt can talk about guidance as we go forward. Looking ahead, like we talked about, what are we focused on? We're focused on the SaaS platform innovation, which is what's driving our growth as a company. Continued growth, as I mentioned, in our current channels. New strategic partners. We just announced three very, very large partners that are gonna provide growth over the next three years. Expansion into adjacent markets, like I mentioned. I think it's the best platform in the world, not only for servicing smart home security customers in the field, but servicing our partners in a way that is very scalable and allows it to provide great services to those end users. i think it's the best platform in the world not only for servicing smart home security customers in the field but servicing our partners in a way that is very scalable and allows it to provide great services to those end users When I look, I'm gonna skip guidance. when i look i'm gonna skip guidance Kurt can talk about guidance as we go forward. kurt can talk about guidance as we go forward Looking ahead, like we talked about, what are we focused on? looking ahead like we talked about what are we focused on We're focused on the SaaS platform innovation, which is what's driving our growth as a company. we're focused on the saas platform innovation which is what's driving our growth as a company Continued growth, as I mentioned, in our current channels. continued growth as i mentioned in our current channels New strategic partners. new strategic partners We just announced three very, very large partners that are gonna provide growth over the next three years. we just announced three very very large partners that are gonna provide growth over the next three years Expansion into adjacent markets, like I mentioned. expansion into adjacent markets like i mentioned We've forecasted over 20% service growth again, which will make us one of the fastest service growth companies in the country or in the world. We've actually feel that we're undervalued, so the board actually approved a $50 million stock repurchase, renewed another $50 million on top of the one we did last year. We'll be in the market buying Arlo stock as well. That's it. Thank you. Hopefully, that was helpful. We've forecasted over 20% service growth again, which will make us one of the fastest service growth companies in the country or in the world. we've forecasted over 20% service growth again which will make us one of the fastest service growth companies in the country or in the world We've actually feel that we're undervalued, so the board actually approved a $50 million stock repurchase, renewed another $50 million on top of the one we did last year. we've actually feel that we're undervalued so the board actually approved a $50 million stock repurchase renewed another $50 million on top of the one we did last year We'll be in the market buying Arlo stock as well. we'll be in the market buying arlo stock as well That's it. that's it Thank you. thank you Hopefully, that was helpful. hopefully that was helpful

Speaker 1: Great job. It's a great overview. Maybe I'll just start, if I were to pick out one of the growth drivers that investors have been focusing on maybe most in the conversations that I've heard, and discussions, today and recently, it's the strategic partnerships aspect. Great job. great job It's a great overview. it's a great overview Maybe I'll just start, if I were to pick out one of the growth drivers that investors have been focusing on maybe most in the conversations that I've heard, and discussions, today and recently, it's the strategic partnerships aspect. maybe i'll just start if i were to pick out one of the growth drivers that investors have been focusing on maybe most in the conversations that i've heard and discussions today and recently it's the strategic partnerships aspect

Speaker 3: Yeah. Yeah. yeah

Speaker 1: It's new. We're all trying to figure it out. There's only so much that you can say I know, so you're a little bit hamstrung by that. Maybe just double-click on that. Talk about, you know, the new partners. Who are they? How big could this be? What's the nature of the partnership, and what kind of growth could that bring? It's new. it's new We're all trying to figure it out. we're all trying to figure it out There's only so much that you can say I know, so you're a little bit hamstrung by that. there's only so much that you can say i know so you're a little bit hamstrung by that Maybe just double-click on that. maybe just double-click on that Talk about, you know, the new partners. talk about you know the new partners Who are they? who are they How big could this be? how big could this be What's the nature of the partnership, and what kind of growth could that bring? what's the nature of the partnership and what kind of growth could that bring

Speaker 3: Like I mentioned, partnerships has been a key area of growth for us over the last 5 or 6 years. Again, Verisure being a big example of that. It's provided diversification of revenue, but also, you know, alternative routes to market to find additional consumers. Important part of our business, and one that we've stated if you look from where we are today and we're trying to get to the long-range targets that we've set out, which is 10 million subscribers and over $700 million in ARR, we think about 60% of the growth from today till then will be coming from strategic partners. Most recently, as I mentioned, we've announced ADT, which is one of the largest traditional security provider here in the United States. Like I mentioned, partnerships has been a key area of growth for us over the last 5 or 6 years. like i mentioned partnerships has been a key area of growth for us over the last 5 or 6 years Again, Verisure being a big example of that. again verisure being a big example of that It's provided diversification of revenue, but also, you know, alternative routes to market to find additional consumers. it's provided diversification of revenue but also you know alternative routes to market to find additional consumers Important part of our business, and one that we've stated if you look from where we are today and we're trying to get to the long-range targets that we've set out, which is 10 million subscribers and over $700 million in ARR, we think about 60% of the growth from today till then will be coming from strategic partners. important part of our business and one that we've stated if you look from where we are today and we're trying to get to the long-range targets that we've set out which is 10 million subscribers and over $700 million in arr we think about 60% of the growth from today till then will be coming from strategic partners Most recently, as I mentioned, we've announced ADT, which is one of the largest traditional security provider here in the United States. most recently as i mentioned we've announced adt which is one of the largest traditional security provider here in the united states They'll be launching later this year. In fact, if you read the ADT's earnings transcript from yesterday, you'll see them talk about ADT Blue, a big focus on DIY, investing tens of millions of dollars in marketing. That is a platform that we're powering for them from a device level and also from a back-end perspective. That'll launch later this year, and they're viewing that as a way to drive growth and more efficient routes to market. We're happy to provide all the platform for that, very similar to what we do with Verisure in Europe. Samsung is one we announced, and they actually announced at CES. They'll be launching later this year. they'll be launching later this year In fact, if you read the ADT's earnings transcript from yesterday, you'll see them talk about ADT Blue, a big focus on DIY, investing tens of millions of dollars in marketing. in fact if you read the adt's earnings transcript from yesterday you'll see them talk about adt blue a big focus on diy investing tens of millions of dollars in marketing That is a platform that we're powering for them from a device level and also from a back-end perspective. that is a platform that we're powering for them from a device level and also from a back-end perspective That'll launch later this year, and they're viewing that as a way to drive growth and more efficient routes to market. that'll launch later this year and they're viewing that as a way to drive growth and more efficient routes to market We're happy to provide all the platform for that, very similar to what we do with Verisure in Europe. we're happy to provide all the platform for that very similar to what we do with verisure in europe Samsung is one we announced, and they actually announced at CES. samsung is one we announced and they actually announced at ces They're gonna be deploying an emergency response service across initially tablets and cell phones, but you'll eventually see it on all their devices, where you can call emergency services and get help from any point on a single tap on all of those devices. It'll be a subscription service. We're gonna be powering that for Samsung across the United States to begin with and then across the world over time. Comcast, which is the one that we announced on the day of earnings. Can't say a lot about that. They're gonna be deploying an emergency response service across initially tablets and cell phones, but you'll eventually see it on all their devices, where you can call emergency services and get help from any point on a single tap on all of those devices. they're gonna be deploying an emergency response service across initially tablets and cell phones but you'll eventually see it on all their devices where you can call emergency services and get help from any point on a single tap on all of those devices It'll be a subscription service. it'll be a subscription service We're gonna be powering that for Samsung across the United States to begin with and then across the world over time. we're gonna be powering that for samsung across the united states to begin with and then across the world over time Comcast, which is the one that we announced on the day of earnings. comcast which is the one that we announced on the day of earnings Can't say a lot about that. can't say a lot about that We're gonna be doing integration and development with Comcast this year with a market launch towards the end of the year and the beginning of 2027 to power basically an Xfinity smart home security system to their 31 million broadband customers in the U.S. Tremendous scale, and we've commented that one's obviously a very large potential partner. Once at scale, we think that could be as big, if not bigger, than Verisure as far as the impact to us on service revenue and profitability. We're gonna be doing integration and development with Comcast this year with a market launch towards the end of the year and the beginning of 2027 to power basically an Xfinity smart home security system to their 31 million broadband customers in the U.S. we're gonna be doing integration and development with comcast this year with a market launch towards the end of the year and the beginning of 2027 to power basically an xfinity smart home security system to their 31 million broadband customers in the u.s Tremendous scale, and we've commented that one's obviously a very large potential partner. tremendous scale and we've commented that one's obviously a very large potential partner Once at scale, we think that could be as big, if not bigger, than Verisure as far as the impact to us on service revenue and profitability. once at scale we think that could be as big if not bigger than verisure as far as the impact to us on service revenue and profitability

Speaker 1: Awesome. Any questions so far for the team? Awesome. awesome Any questions so far for the team? any questions so far for the team

Speaker 4: Who did you replace in these places? Like ADT. Who did you replace in these places? who did you replace in these places Like ADT. like adt

Speaker 3: Yeah. Good question. In all three of the most recent ones, it's actually net new. Yeah. yeah Good question. good question In all three of the most recent ones, it's actually net new. in all three of the most recent ones it's actually net new

Speaker 4: New? New? new

Speaker 3: New. Meaning. New. new Meaning. meaning

Speaker 4: No, I know what you mean, but who's... Were they doing it before? No, I know what you mean, but who's... no i know what you mean but who's Were they doing it before? were they doing it before

Speaker 3: Didn't exist. No, they weren't doing it before. ADT is not in the DIY space. We're now developing that solution with them to go enter that space. Comcast had an existing solution, I think it was homegrown, for home security, and it hasn't had a lot of innovation on the services side or the hardware side, so they're kind of replacing an old internal, I think, solution. Samsung, this is a net new subscription that they're providing from a services perspective. Yeah. Didn't exist. didn't exist No, they weren't doing it before. no they weren't doing it before ADT is not in the DIY space. adt is not in the diy space We're now developing that solution with them to go enter that space. we're now developing that solution with them to go enter that space Comcast had an existing solution, I think it was homegrown, for home security, and it hasn't had a lot of innovation on the services side or the hardware side, so they're kind of replacing an old internal, I think, solution. comcast had an existing solution i think it was homegrown for home security and it hasn't had a lot of innovation on the services side or the hardware side so they're kind of replacing an old internal i think solution Samsung, this is a net new subscription that they're providing from a services perspective. samsung this is a net new subscription that they're providing from a services perspective Yeah. yeah

Speaker 4: Yeah. Hey, Matt. exciting to see all the growth. I'm hoping this is a softball for you, can you talk a little bit about net retention growth of that existing subscriber base... Yeah. yeah Hey, Matt. exciting to see all the growth. hey matt exciting to see all the growth I'm hoping this is a softball for you, can you talk a little bit about net retention growth of that existing subscriber base... i'm hoping this is a softball for you can you talk a little bit about net retention growth of that existing subscriber base

Speaker 3: Yeah. Yeah. yeah

Speaker 4: With all those exciting new products being launched? With all those exciting new products being launched? with all those exciting new products being launched

Speaker 3: If you look at our core business, you know, that's growing quite well. What we'll call retail and direct business, as you saw is at 94% gross margin, our gross margin's actually been going up. We made some subscription platform changes at the beginning of last year, including getting rid of our basic plan because we were seeing mix-up happening in the plans already because we launched a bunch of new AI capabilities that people were desiring. You also saw ARPU rise through the year quite substantially. Despite ARPU rising, we actually saw churn go down. Our retention, which is 99% now, is actually the highest retention I think we've reported in, you know, for years. I mean, down at 1% churn. If you look at our core business, you know, that's growing quite well. if you look at our core business you know that's growing quite well What we'll call retail and direct business, as you saw is at 94% gross margin, our gross margin's actually been going up. what we'll call retail and direct business as you saw is at 94% gross margin our gross margin's actually been going up We made some subscription platform changes at the beginning of last year, including getting rid of our basic plan because we were seeing mix-up happening in the plans already because we launched a bunch of new AI capabilities that people were desiring. we made some subscription platform changes at the beginning of last year including getting rid of our basic plan because we were seeing mix-up happening in the plans already because we launched a bunch of new ai capabilities that people were desiring You also saw ARPU rise through the year quite substantially. you also saw arpu rise through the year quite substantially Despite ARPU rising, we actually saw churn go down. despite arpu rising we actually saw churn go down Our retention, which is 99% now, is actually the highest retention I think we've reported in, you know, for years. our retention which is 99% now is actually the highest retention i think we've reported in you know for years I mean, down at 1% churn. i mean down at 1% churn We're actually seeing across all of the key metrics in that core business, all the key measures and metrics have actually improved over the course of the last year, we think we can get it to continue to improve through 2026. We're actually seeing across all of the key metrics in that core business, all the key measures and metrics have actually improved over the course of the last year, we think we can get it to continue to improve through 2026. we're actually seeing across all of the key metrics in that core business all the key measures and metrics have actually improved over the course of the last year we think we can get it to continue to improve through 2026

Speaker 4: Are the splits that you have with the new, well, with each of those deals, are they similar? Do you have like most favored nation on those types of things? Are the splits that you have with the new, well, with each of those deals, are they similar? are the splits that you have with the new well with each of those deals are they similar Do you have like most favored nation on those types of things? do you have like most favored nation on those types of things

Speaker 3: Well, in many cases, we're gonna be exclusive. Well, in many cases, we're gonna be exclusive. well in many cases we're gonna be exclusive

Speaker 4: Right. Right. right

Speaker 3: In those areas. In those areas. in those areas

Speaker 4: You did different deals with different contracts. You did different deals with different contracts. you did different deals with different contracts

Speaker 3: Yeah. Yeah. yeah

Speaker 4: Are they similar splits? Are they similar splits? are they similar splits

Speaker 3: Um- Um- um-

Speaker 4: Do you have, like I said, a most favored nation with these guys? Do you have, like I said, a most favored nation with these guys? do you have like i said a most favored nation with these guys

Speaker 3: Yeah, there's no most favored nation. We basically have a price list for a lot of the services and hardware we provide. If somebody's buying hardware, we have a price list, they purchase it. On the services, what we typically do is we have different tiers of service, you know, storage, AI, different AI capabilities, and we price out our storage, compute, everything we do. Yeah, there's no most favored nation. yeah there's no most favored nation We basically have a price list for a lot of the services and hardware we provide. we basically have a price list for a lot of the services and hardware we provide If somebody's buying hardware, we have a price list, they purchase it. if somebody's buying hardware we have a price list they purchase it On the services, what we typically do is we have different tiers of service, you know, storage, AI, different AI capabilities, and we price out our storage, compute, everything we do. on the services what we typically do is we have different tiers of service you know storage ai different ai capabilities and we price out our storage compute everything we do

Speaker 4: Are you offering their customers that same strata? Are you offering their customers that same strata? are you offering their customers that same strata

Speaker 3: It's up to them. I don't know exactly what the tiers will be when they deploy or in some cases, I do and I can't say. What we do is we price it to a partner that way, and then a partner takes those costs and decide how to bundle together a service they wanna deploy into the marketplace. It's up to them. it's up to them I don't know exactly what the tiers will be when they deploy or in some cases, I do and I can't say. i don't know exactly what the tiers will be when they deploy or in some cases i do and i can't say What we do is we price it to a partner that way, and then a partner takes those costs and decide how to bundle together a service they wanna deploy into the marketplace. what we do is we price it to a partner that way and then a partner takes those costs and decide how to bundle together a service they wanna deploy into the marketplace

Speaker 4: In general, maybe it's too early to tell, in general, do people pick typically the middle plan or because it's security, they tend to go to the high? In general, maybe it's too early to tell, in general, do people pick typically the middle plan or because it's security, they tend to go to the high? in general maybe it's too early to tell in general do people pick typically the middle plan or because it's security they tend to go to the high

Speaker 3: It's interesting. I can give you some a little bit of color on that because of what happened at the end of 2024 going into 2025. At the end of 2024, we had three plans. We had the kinda Basic, Plus, and Premium. I would tell you that most people were on Basic, we had a good number on Plus, and a small amount on Premium. The typical distribution you would expect, you know, from a consumer-type service plan. When we launched our latest AI features at the end of 2025, we saw a dramatic shift from Basic to Plus, our middle tier. That told us that the AI functionality we had deployed as part of that service launch was really compelling, was actually driving people to the middle tier plan. It's interesting. it's interesting I can give you some a little bit of color on that because of what happened at the end of 2024 going into 2025. i can give you some a little bit of color on that because of what happened at the end of 2024 going into 2025 At the end of 2024, we had three plans. at the end of 2024 we had three plans We had the kinda Basic, Plus, and Premium. we had the kinda basic plus and premium I would tell you that most people were on Basic, we had a good number on Plus, and a small amount on Premium. i would tell you that most people were on basic we had a good number on plus and a small amount on premium The typical distribution you would expect, you know, from a consumer-type service plan. the typical distribution you would expect you know from a consumer-type service plan When we launched our latest AI features at the end of 2025, we saw a dramatic shift from Basic to Plus, our middle tier. when we launched our latest ai features at the end of 2025 we saw a dramatic shift from basic to plus our middle tier That told us that the AI functionality we had deployed as part of that service launch was really compelling, was actually driving people to the middle tier plan. that told us that the ai functionality we had deployed as part of that service launch was really compelling was actually driving people to the middle tier plan At the beginning of last year, we actually killed the Basic plan. We got rid of it 'cause we saw everybody moving up anyways. Right now, we have two plans, and that's because we saw where customer demand was going. We're also leaving ourselves open to have space to launch potentially a third plan later this year going into 2027. I don't really have a middle plan right now. Most people are now on Plus, which was our middle plan, and we're concentrating also on mixing people up to Premium through this year. At the beginning of last year, we actually killed the Basic plan. at the beginning of last year we actually killed the basic plan We got rid of it 'cause we saw everybody moving up anyways. we got rid of it 'cause we saw everybody moving up anyways Right now, we have two plans, and that's because we saw where customer demand was going. right now we have two plans and that's because we saw where customer demand was going We're also leaving ourselves open to have space to launch potentially a third plan later this year going into 2027. we're also leaving ourselves open to have space to launch potentially a third plan later this year going into 2027 I don't really have a middle plan right now. i don't really have a middle plan right now Most people are now on Plus, which was our middle plan, and we're concentrating also on mixing people up to Premium through this year. most people are now on plus which was our middle plan and we're concentrating also on mixing people up to premium through this year

Speaker 1: I think there was a question in the back. I think there was a question in the back. i think there was a question in the back

Speaker 4: Just, just a question. The B2B, business, is it 95% gross margin on the service side also? Just, just a question. just just a question The B2B, business, is it 95% gross margin on the service side also? the b2b business is it 95% gross margin on the service side also

Speaker 3: We don't disclose it yet because most of our business in that category is Verisure. What I can tell you at a high level, the ARPU is lower in that area, but the gross margin is still very high, what I would say. The LTV/CAC is technically infinite, I guess. We don't have any customer acquisition cost over there. What we see actually drop down at the gross margin level can be relatively strong to even what we do in retail because it's just structured differently. Think of it as lower ARPU, almost zero or zero customer acquisition cost, still very healthy gross margin, but also dropping to the bottom line. Ultimately what we, you know, from strategic perspective, where we wanna get to is to be agnostic on how we find that customer. We don't disclose it yet because most of our business in that category is Verisure. we don't disclose it yet because most of our business in that category is verisure What I can tell you at a high level, the ARPU is lower in that area, but the gross margin is still very high, what I would say. what i can tell you at a high level the arpu is lower in that area but the gross margin is still very high what i would say The LTV/ CAC is technically infinite, I guess. the ltv/ cac is technically infinite i guess We don't have any customer acquisition cost over there. we don't have any customer acquisition cost over there What we see actually drop down at the gross margin level can be relatively strong to even what we do in retail because it's just structured differently. what we see actually drop down at the gross margin level can be relatively strong to even what we do in retail because it's just structured differently Think of it as lower ARPU, almost zero or zero customer acquisition cost, still very healthy gross margin, but also dropping to the bottom line. think of it as lower arpu almost zero or zero customer acquisition cost still very healthy gross margin but also dropping to the bottom line Ultimately what we, you know, from strategic perspective, where we wanna get to is to be agnostic on how we find that customer. ultimately what we you know from strategic perspective where we wanna get to is to be agnostic on how we find that customer If somebody decides to be a home security customer and they buy at a Walmart or a Best Buy, and they sign up to an Arlo subscription service versus eventually getting it through Comcast Xfinity, you know, home security, if we do all the deals correctly, and we think we're moving in that direction, quite quickly, it should be agnostic to us on the bottom line. Yep. If somebody decides to be a home security customer and they buy at a Walmart or a Best Buy, and they sign up to an Arlo subscription service versus eventually getting it through Comcast Xfinity, you know, home security, if we do all the deals correctly, and we think we're moving in that direction, quite quickly, it should be agnostic to us on the bottom line. if somebody decides to be a home security customer and they buy at a walmart or a best buy and they sign up to an arlo subscription service versus eventually getting it through comcast xfinity you know home security if we do all the deals correctly and we think we're moving in that direction quite quickly it should be agnostic to us on the bottom line Yep. yep

Speaker 4: I may have misheard. Did you say your attachment rates were 60%? I may have misheard. i may have misheard Did you say your attachment rates were 60%? did you say your attachment rates were 60%

Speaker 3: Yeah, correct. Yeah, correct. yeah correct

Speaker 4: Can you explain that with regards to the very low churn rates? Once people attach, they don't churn. Can you explain that with regards to the very low churn rates? can you explain that with regards to the very low churn rates Once people attach, they don't churn. once people attach they don't churn

Speaker 3: Correct. Correct. correct

Speaker 4: How do you get them to attach given that numbers seem quite low relative to churn? How do you get them to attach given that numbers seem quite low relative to churn? how do you get them to attach given that numbers seem quite low relative to churn

Speaker 3: We measure a couple... Let me walk you through maybe the customer journey. In retail and direct, that's kinda where I'm talking the retail direct piece. Often with our partners, the attach rate's 100%. For instance, when Verisure deploys an Arlo camera in their direct channel, they only do that with service attached. That's actually 100%. Put that aside because that can mix, you know, skew the numbers a little bit. If you look at just retail churn, somebody will buy an Arlo device or a kit at a retail channel. They then get a free trial of our service for 30 days once they onboard it, and at the end of the free trial, we measure did they convert. We measure a couple... we measure a couple Let me walk you through maybe the customer journey. let me walk you through maybe the customer journey In retail and direct, that's kinda where I'm talking the retail direct piece. in retail and direct that's kinda where i'm talking the retail direct piece Often with our partners, the attach rate's 100%. often with our partners the attach rate's 100% For instance, when Verisure deploys an Arlo camera in their direct channel, they only do that with service attached. for instance when verisure deploys an arlo camera in their direct channel they only do that with service attached That's actually 100%. that's actually 100% Put that aside because that can mix, you know, skew the numbers a little bit. put that aside because that can mix you know skew the numbers a little bit If you look at just retail churn, somebody will buy an Arlo device or a kit at a retail channel. if you look at just retail churn somebody will buy an arlo device or a kit at a retail channel They then get a free trial of our service for 30 days once they onboard it, and at the end of the free trial, we measure did they convert. they then get a free trial of our service for 30 days once they onboard it and at the end of the free trial we measure did they convert Our first measure is conversion, and that's roughly 40%-50% conversion, where they convert within 30 days of the free trial ending. What we do is we follow that cohort over 6 months, and we call that attach. The attach rate goes up another 10-15 points over that 6-month period. If you measure it out farther, sometimes it can be even higher than that. The two metrics that we publish are conversion, which is 40%-50%, and that's 30 days with the free trial end, and attach, which is 6 months later. Some people do buy the cameras for other purposes. Our first measure is conversion, and that's roughly 40%-50% conversion, where they convert within 30 days of the free trial ending. our first measure is conversion and that's roughly 40%-50% conversion where they convert within 30 days of the free trial ending What we do is we follow that cohort over 6 months, and we call that attach. what we do is we follow that cohort over 6 months and we call that attach The attach rate goes up another 10-15 points over that 6-month period. the attach rate goes up another 10-15 points over that 6-month period If you measure it out farther, sometimes it can be even higher than that. if you measure it out farther sometimes it can be even higher than that The two metrics that we publish are conversion, which is 40%-50%, and that's 30 days with the free trial end, and attach, which is 6 months later. the two metrics that we publish are conversion which is 40%-50% and that's 30 days with the free trial end and attach which is 6 months later Some people do buy the cameras for other purposes. some people do buy the cameras for other purposes Maybe it's checking on their pets, you know, when they're at work, or we have people that will put a camera above a bird's nest in the spring and watch, it's not really being used for security purposes. Some cameras just weren't sold to be in security. We get an attach rate that goes as high as 60%. Once they're subscribed, that's when the churn number comes in. Once they're subscribed, they've gone through that funnel, and they've attached to service, we then have a 1% churn per month across all of our users. That, if you compute it out to what's the term of that customer is just over 8 years. Maybe it's checking on their pets, you know, when they're at work, or we have people that will put a camera above a bird's nest in the spring and watch, it's not really being used for security purposes. maybe it's checking on their pets you know when they're at work or we have people that will put a camera above a bird's nest in the spring and watch it's not really being used for security purposes Some cameras just weren't sold to be in security. some cameras just weren't sold to be in security We get an attach rate that goes as high as 60%. we get an attach rate that goes as high as 60% Once they're subscribed, that's when the churn number comes in. once they're subscribed that's when the churn number comes in Once they're subscribed, they've gone through that funnel, and they've attached to service, we then have a 1% churn per month across all of our users. once they're subscribed they've gone through that funnel and they've attached to service we then have a 1% churn per month across all of our users That, if you compute it out to what's the term of that customer is just over 8 years. that if you compute it out to what's the term of that customer is just over 8 years

Speaker 4: Do you have any information about why? Do you have any information about why? do you have any information about why

Speaker 3: Yes Yes yes

Speaker 4: Don't convert? Don't convert? don't convert

Speaker 3: Well, don't convert is usually they bought the camera for another purpose, or some other things. I thought you were gonna ask do you know why they churn? Also interesting. The why they don't convert is typically 'cause they didn't buy the camera for security, or they, you know, they bought it for another purpose. On the churn, I'll, yeah. Well, don't convert is usually they bought the camera for another purpose, or some other things. well don't convert is usually they bought the camera for another purpose or some other things I thought you were gonna ask do you know why they churn? i thought you were gonna ask do you know why they churn Also interesting. also interesting The why they don't convert is typically 'cause they didn't buy the camera for security, or they, you know, they bought it for another purpose. the why they don't convert is typically 'cause they didn't buy the camera for security or they you know they bought it for another purpose On the churn, I'll, yeah. on the churn i'll yeah

Speaker 4: Mm-hmm Mm-hmm mm-hmm

Speaker 3: Since I, since I prompted it. On the churn, the number one source of churn is actually involuntary. It's their credit card expired, they didn't know. You know, those types of things where they moved house and their street address got updated and the credit card's no longer valid. That's actually the number one reason for churn. All the other ones kinda build up to be another 30%, 40%. Since I, since I prompted it. since i since i prompted it On the churn, the number one source of churn is actually involuntary. on the churn the number one source of churn is actually involuntary It's their credit card expired, they didn't know. it's their credit card expired they didn't know You know, those types of things where they moved house and their street address got updated and the credit card's no longer valid. you know those types of things where they moved house and their street address got updated and the credit card's no longer valid That's actually the number one reason for churn. that's actually the number one reason for churn All the other ones kinda build up to be another 30%, 40%. all the other ones kinda build up to be another 30% 40%

Speaker 4: Can you talk to the regulatory environment of some of the Chinese competitors that are out there and what, you know, may happen in the future as well? Can you talk to the regulatory environment of some of the Chinese competitors that are out there and what, you know, may happen in the future as well? can you talk to the regulatory environment of some of the chinese competitors that are out there and what you know may happen in the future as well

Speaker 3: Yeah. You wanna take that? Yeah. yeah You wanna take that? you wanna take that

Speaker 1: This has been the easiest fireside ever for you. This has been the easiest fireside ever for you. this has been the easiest fireside ever for you

Speaker 2: I would say it's a pretty interesting environment right now in which we live on many levels. Relative to the Chinese brands. There are a number of Chinese brands that are in this space. Obviously, they're focused on delivering high volume, low priced hardware. They're not really in the subscription business, as we like to say it. The challenge has been is that from a data privacy and that area, it's still questionable as to whether or not they're protecting U.S. consumers' information the way they should be. They've been susceptible to a number of cyberattacks. I would say it's a pretty interesting environment right now in which we live on many levels. i would say it's a pretty interesting environment right now in which we live on many levels Relative to the Chinese brands. relative to the chinese brands There are a number of Chinese brands that are in this space. there are a number of chinese brands that are in this space Obviously, they're focused on delivering high volume, low priced hardware. obviously they're focused on delivering high volume low priced hardware They're not really in the subscription business, as we like to say it. they're not really in the subscription business as we like to say it The challenge has been is that from a data privacy and that area, it's still questionable as to whether or not they're protecting U.S. consumers' information the way they should be. the challenge has been is that from a data privacy and that area it's still questionable as to whether or not they're protecting u.s consumers' information the way they should be They've been susceptible to a number of cyberattacks. they've been susceptible to a number of cyberattacks We've actually been in discussions with a number of the bodies of the federal government, in particular the FCC, the Department of Commerce, Department of Justice, there are actually active investigations specifically against TP-Link for improper competitive positioning and also improper use of personal data. It's hard to say whether or not this will actually result in an actual enforcement. We do know that they're being pursued in the area of routers as well because, as Matt pointed out, our initial parent company, NETGEAR, has been active at that. The level of activity intensity has picked up considerably. Most likely there'll be some actions here in 2026. We've actually been in discussions with a number of the bodies of the federal government, in particular the FCC, the Department of Commerce, Department of Justice, there are actually active investigations specifically against TP-Link for improper competitive positioning and also improper use of personal data. we've actually been in discussions with a number of the bodies of the federal government in particular the fcc the department of commerce department of justice there are actually active investigations specifically against tp-link for improper competitive positioning and also improper use of personal data It's hard to say whether or not this will actually result in an actual enforcement. it's hard to say whether or not this will actually result in an actual enforcement We do know that they're being pursued in the area of routers as well because, as Matt pointed out, our initial parent company, NETGEAR, has been active at that. we do know that they're being pursued in the area of routers as well because as matt pointed out our initial parent company netgear has been active at that The level of activity intensity has picked up considerably. the level of activity intensity has picked up considerably Most likely there'll be some actions here in 2026. most likely there'll be some actions here in 2026 The state of Texas just filed lawsuit against TP-Link on the router side. We suspect that some of this type activity is gonna fall in the area of security. What that means for us is there is a market share there of Lower priced hardware, we will work to make sure that we position our portfolio to ensure that we can garnish as much as that market share as possible. Our goal is not necessarily to get hardware consumers, but more the service consumers. We're looking to find ways to, you know, take those households and convert them into service customers. The state of Texas just filed lawsuit against TP-Link on the router side. the state of texas just filed lawsuit against tp-link on the router side We suspect that some of this type activity is gonna fall in the area of security. we suspect that some of this type activity is gonna fall in the area of security What that means for us is there is a market share there of Lower priced hardware, we will work to make sure that we position our portfolio to ensure that we can garnish as much as that market share as possible. what that means for us is there is a market share there of lower priced hardware we will work to make sure that we position our portfolio to ensure that we can garnish as much as that market share as possible Our goal is not necessarily to get hardware consumers, but more the service consumers. our goal is not necessarily to get hardware consumers but more the service consumers We're looking to find ways to, you know, take those households and convert them into service customers. we're looking to find ways to you know take those households and convert them into service customers

Speaker 4: Where are they manufactured? Where are they manufactured? where are they manufactured

Speaker 2: Most of these are. They actually manufacture out of Vietnam. Where they're manufactured is not the concern. It's actually all of the software and back-end development that occurs. From what we can tell, at least in the case of TP-Link and eufy, most of that happens in Beijing and Shenzhen. Most of these are. most of these are They actually manufacture out of Vietnam. they actually manufacture out of vietnam Where they're manufactured is not the concern. where they're manufactured is not the concern It's actually all of the software and back-end development that occurs. it's actually all of the software and back-end development that occurs From what we can tell, at least in the case of TP-Link and eufy, most of that happens in Beijing and Shenzhen. from what we can tell at least in the case of tp-link and eufy most of that happens in beijing and shenzhen

Speaker 1: We have NETGEAR, next door at 325 as well for the Zoom. You know. Plug those guys. We have NETGEAR, next door at 325 as well for the Zoom. we have netgear next door at 325 as well for the zoom You know. you know Plug those guys. plug those guys

Speaker 3: What it may do is unlock market share here in the U.S. There's a general trend that we're seeing in this market as it's starting to move mass market. The penetration of this space and kinda smart visual-based security, camera-based security is about 20 some percent if you look at kinda third-party market research. It means we're entering the mass market. We have two things happening. One is we're seeing a lot more people buy this product category because of awareness and because pricing has come down. At the same time, we're starting to see a trend towards consolidation. The bigger, more successful brands tend to win the market or capturing the shelf share. What it may do is unlock market share here in the U.S. what it may do is unlock market share here in the u.s There's a general trend that we're seeing in this market as it's starting to move mass market. there's a general trend that we're seeing in this market as it's starting to move mass market The penetration of this space and kinda smart visual-based security, camera-based security is about 20 some percent if you look at kinda third-party market research. the penetration of this space and kinda smart visual-based security camera-based security is about 20 some percent if you look at kinda third-party market research It means we're entering the mass market. it means we're entering the mass market We have two things happening. we have two things happening One is we're seeing a lot more people buy this product category because of awareness and because pricing has come down. one is we're seeing a lot more people buy this product category because of awareness and because pricing has come down At the same time, we're starting to see a trend towards consolidation. at the same time we're starting to see a trend towards consolidation The bigger, more successful brands tend to win the market or capturing the shelf share. the bigger more successful brands tend to win the market or capturing the shelf share What this is doing is adding potentially another layer onto that consolidation where the federal government may come in and say, "These brands are no longer allowed in the United States," triggering retail, e-com, others to reduce their assortment even more and bet on the providers that are successful in the marketplace. We're seeing a trend of consolidation happening anyways. This may spur another kinda stairstep function in that if a import ban actually happens in the space. What this is doing is adding potentially another layer onto that consolidation where the federal government may come in and say, "These brands are no longer allowed in the United States," triggering retail, e-com, others to reduce their assortment even more and bet on the providers that are successful in the marketplace. what this is doing is adding potentially another layer onto that consolidation where the federal government may come in and say "these brands are no longer allowed in the united states," triggering retail e-com others to reduce their assortment even more and bet on the providers that are successful in the marketplace We're seeing a trend of consolidation happening anyways. we're seeing a trend of consolidation happening anyways This may spur another kinda stairstep function in that if a import ban actually happens in the space. this may spur another kinda stairstep function in that if a import ban actually happens in the space

Speaker 4: What is their market share at the moment? What is their market share at the moment? what is their market share at the moment

Speaker 3: So it's market share data in this segment is very difficult to get because there's several brands that don't actually report. There's several retailers that don't report everything. Our guess is if you take just some of the top brands from a unit share perspective, maybe somewhere between 10%, 15%, 20% that could unlock and be available. Kurt made a great point, too, is we're not looking for just share on the hardware side. What we're really focused on is finding the share in the household that are potential subscribers to service, 'cause we're not a hardware company, we're a services company, and we use the hardware really as a way to instantiate that relationship with the end user to drive that subscription. You're talking about potentially millions of units, you know, market share becoming available for future growth. So it's market share data in this segment is very difficult to get because there's several brands that don't actually report. so it's market share data in this segment is very difficult to get because there's several brands that don't actually report There's several retailers that don't report everything. there's several retailers that don't report everything Our guess is if you take just some of the top brands from a unit share perspective, maybe somewhere between 10%, 15%, 20% that could unlock and be available. our guess is if you take just some of the top brands from a unit share perspective maybe somewhere between 10% 15% 20% that could unlock and be available Kurt made a great point, too, is we're not looking for just share on the hardware side. kurt made a great point too is we're not looking for just share on the hardware side What we're really focused on is finding the share in the household that are potential subscribers to service, 'cause we're not a hardware company, we're a services company, and we use the hardware really as a way to instantiate that relationship with the end user to drive that subscription. what we're really focused on is finding the share in the household that are potential subscribers to service 'cause we're not a hardware company we're a services company and we use the hardware really as a way to instantiate that relationship with the end user to drive that subscription You're talking about potentially millions of units, you know, market share becoming available for future growth. you're talking about potentially millions of units you know market share becoming available for future growth

Speaker 1: Lots of exciting stuff ahead. We've got a breakout in Cordova 4. It's been a great discussion. Matt, do you wanna bring us home? Kinda final message you'd like to leave with the investors? Lots of exciting stuff ahead. lots of exciting stuff ahead We've got a breakout in Cordova 4. we've got a breakout in cordova 4 It's been a great discussion. it's been a great discussion Matt, do you wanna bring us home? matt do you wanna bring us home Kinda final message you'd like to leave with the investors? kinda final message you'd like to leave with the investors

Speaker 3: Yeah. I mean, the final message I would say is, you know, I think we've done a great job transitioning the business into services. We've spent the last two, three years accelerating the growth. I would encourage you to listen to the last earnings call 'cause we think we're set up well for 2026. Some of these strategic accounts and some of the things we've done in our core business, we think we're already set up for a strong 2027 as well. Anyways. Yeah. yeah I mean, the final message I would say is, you know, I think we've done a great job transitioning the business into services. i mean the final message i would say is you know i think we've done a great job transitioning the business into services We've spent the last two, three years accelerating the growth. we've spent the last two three years accelerating the growth I would encourage you to listen to the last earnings call 'cause we think we're set up well for 2026. i would encourage you to listen to the last earnings call 'cause we think we're set up well for 2026 Some of these strategic accounts and some of the things we've done in our core business, we think we're already set up for a strong 2027 as well. some of these strategic accounts and some of the things we've done in our core business we think we're already set up for a strong 2027 as well Anyways. anyways

Speaker 1: Love it. Thanks, guys. Love it. love it Thanks, guys. thanks guys

Speaker 3: All right. Thank you. All right. all right Thank you. thank you

Speaker 2: Thank you. Thank you. thank you