ADT and Comcast expansion — Addressing questions about the status of major partnerships, McRae said ADT’s planned expansion remained unchanged despite developments involving its potential privatization.
He said Comcast integration was progressing toward a mid-2027 launch, with an initial regional rollout expected to precede broader deployment. The full-year financial impact would not be realized until 2028.
“I think it will be a little bit like ADT, shifted out, where we will see it launch, scale, and then the full-year impact wouldn’t be until 2028, but obviously at a much larger scale.”
McRae also identified Samsung as an ongoing strategic relationship but said it remained uncertain when or whether that work would develop into something more substantial.
Retail subscription conversion — Questions about Arlo’s promotional strategy prompted McRae to explain how the company is using customer analytics to prioritize products associated with higher subscription adoption.
Multi-camera packages have become a particular focus because buyers are more likely to subscribe and select higher-priced service tiers. Arlo is applying those findings to holiday promotions, including offers involving multi-camera kits and video doorbells.
“Now, the reason that is important is based on the data analytics we have, the propensity to subscribe and subscribe at a higher subscription tier is a lot higher on a multi-cam pack.”
McRae said the company had already observed increased trials and initial subscriptions following Amazon Prime Day, although the results remained preliminary.
Smart home competition and acquisitions — Questions about security capabilities being incorporated into smart displays and speakers from Apple and Amazon led McRae to discuss Arlo’s broader product strategy.
He emphasized compatibility with major smart home ecosystems and said customers increasingly interact with connected devices through multiple interfaces rather than individual applications.
“I think this multimodal way to utilize the platform in general, and as we see smart home and home security combine into really what we call smart home security, that these use cases will blur and start to merge.”
On potential acquisitions, McRae said Arlo would evaluate whether to develop, acquire or partner for specific capabilities. He expects partnerships to remain the primary approach, with selective acquisitions considered where ownership could provide meaningful differentiation and recurring revenue opportunities.
New partnership timing — Asked whether additional strategic agreements could contribute to the 2027 recurring revenue target, McRae said several discussions or negotiations were underway, with potential announcements in the next two or three quarters.
However, he cautioned that integration requirements and launch schedules would likely push meaningful financial contributions from those prospective relationships into 2028.
“So when we’re speaking about the 30% target for ARR in 2027, I’m not including any substantial material revenue from brand new partnerships that we haven’t talked about.”
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