Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>ARLO reported a non-GAAP profit in the first quarter of 2023 after the Company implemented a price increase on its subscription plan</li>
<li>ARLO added 182 thousand paid subscribers in the quarter and ended the first quarter with more than 2 million paying subscribers</li>
<li>Service revenue has allowed for greater operating leverage with gross margin expected to rise further in future quarter with the growth in service revenue</li>
</ul>


ARLO reported a non-GAAP profit in the first quarter of 2023 after the Company implemented a price increase on its subscription plan
ARLO added 182 thousand paid subscribers in the quarter and ended the first quarter with more than 2 million paying subscribers
Service revenue has allowed for greater operating leverage with gross margin expected to rise further in future quarter with the growth in service revenue


ARLO: Recurring Revenue Growth, PT to $11

<ul>
<li>ARLO initiated a new marketing strategy based on price and it seems consumers have responded well in an otherwise tough market backdrop.</li>
<li>The sell through led to ARLO growing the number of paid subscribers more than we were expecting, and on pace to surpass 2 million paid subscribers in first quarter 2023</li>
<li>The revenue achieved in the fourth quarter was approximately $3 million higher than the top end of the guidance range ARLO had previously provided</li>
</ul>


ARLO initiated a new marketing strategy based on price and it seems consumers have responded well in an otherwise tough market backdrop.
The sell through led to ARLO growing the number of paid subscribers more than we were expecting, and on pace to surpass 2 million paid subscribers in first quarter 2023
The revenue achieved in the fourth quarter was approximately $3 million higher than the top end of the guidance range ARLO had previously provided


<ul>
<li>ARLO spent the fourth quarter adjusting to a tough consumer environment with deep discounts to clear out channel inventory. </li>
<li>ARLO had already provided quarterly revenue guidance taking into consideration the discounting and promotions that would run during the quarter.</li>
<li>Paying subscriber count rising remains the value proposition in owning shares of ARLO. Quarterly adds closer to what ARLO has been achieving would be a positive for the stock. </li>
</ul>


ARLO spent the fourth quarter adjusting to a tough consumer environment with deep discounts to clear out channel inventory. 
ARLO had already provided quarterly revenue guidance taking into consideration the discounting and promotions that would run during the quarter.
Paying subscriber count rising remains the value proposition in owning shares of ARLO. Quarterly adds closer to what ARLO has been achieving would be a positive for the stock. 


<ul>
<li>ARLO affirmed the slowdown in consumer purchasing that began in September and is expecting the market to remain soft through the middle of 2023</li>
<li>While ARLO had reduced channel inventory in the second quarter, it had started to ship more product into the channel by the time there was a shift in the market</li>
<li>Number of paid subscribers continues to rise in Q3 with ARLO adding 195 thousand. ARLO is expecting paid subscriber growth to continue as the channel sells units to the consumer</li>
</ul>


ARLO affirmed the slowdown in consumer purchasing that began in September and is expecting the market to remain soft through the middle of 2023
While ARLO had reduced channel inventory in the second quarter, it had started to ship more product into the channel by the time there was a shift in the market
Number of paid subscribers continues to rise in Q3 with ARLO adding 195 thousand. ARLO is expecting paid subscriber growth to continue as the channel sells units to the consumer


ARLO: Service in a Tough Market, PT to $8

<ul>
<li>ARLO has the help of a product purchase agreement to smooth out lumpiness in consumer spending in the current macroenvironment</li>
<li>While ARLO is targeting a higher income consumer with products that are priced higher than competition, there is still a risk that could have played out in September.</li>
<li>Number of paid subscribers should continue to rise in the third quarter with possibility it could be materially higher than our forecast</li>
</ul>


ARLO has the help of a product purchase agreement to smooth out lumpiness in consumer spending in the current macroenvironment
While ARLO is targeting a higher income consumer with products that are priced higher than competition, there is still a risk that could have played out in September.
Number of paid subscribers should continue to rise in the third quarter with possibility it could be materially higher than our forecast


United States

CTS Corporation designs and manufactures electronic components and sensors to original equipment manufacturers in the automotive, communications, medical, defense and aerospace, industrial and computer markets.

PC Connection, Inc. is a direct marketer of personal computers and related peripherals, software, accessories, and networking products. The Company sells to small and medium-sized businesses. PC Connection carries high turnover products in inventory, and in addition provides customer service and technical support.

Benchmark Electronics, Inc. provides contract electronics manufacturing and design services.  The Company serves original equipment manufacturers of medical devices, industrial control equipment, testing and instrumentation products, and telecommunications equipment.  Benchmark also offers product design, printed circuit board layout, prototyping and test development services.

Knowles Corporation designs and manufactures advanced acoustic components. The Company produces components for hearing aids and surface mount microphones for cell phones and consumer electronics. Knowles offers its products around the world.

Hollysys Automation Technologies Ltd. manufactures automation and control systems.  The Company produces process, industrial, rail and subway, and nuclear power plant automation equipment.

Hollysys Automation Technologies (HOLI US)

TTM Technologies, Inc. is an independent provider of time-critical, one-stop manufacturing services for printed circuit boards.  The circuit boards serve as a foundation for electronic products such as routers, switches, servers, memory modules, and cellular base stations. The Company's customers include original equipment manufacturers and electronic manufacturing services companies.

ePlus inc. provides IT hardware, software and services. The Company offers IT solutions for data center, cloud computing, security, managed and professional services, lease financing, proprietary software, and other related products. ePlus focuses on serving the middle market and larger commercial enterprises as well as state and local governments.

Rogers Corporation manufactures and markets specialty materials and components for applications in the communications, computer, imaging, consumer, and transportation markets.  The Company's products include elastomers, high frequency circuit materials, flexible circuit materials, molding materials, and composite materials.  Rogers sells its products around the world.

ScanSource, Inc. is a value-added wholesale distributor of specialty technology products to the reseller market.  The Company provides automatic identification and point-of-sale products, as well as telephony and computer telephony integration products. ScanSource distributes its products in the United States and internationally.

OSI Systems, Inc. produces medical monitoring and anesthesia systems; security and inspection systems; and lasers, optics, and optoelectronic components.  The Company's products include blood pressure monitors, anesthesia machines and hemoglobin saturation monitors; systems for inspecting baggage, people, and vehicles; and lasers, lenses, prisms, and microelectronic components.

Topcorn Corporation manufactures and sells measuring equipment and medical equipment primarily for ophthalmologist use. The Company also manufactures industrial products including projectors and optical devices.

KCE Electronics Public Company Limited and its subsidiaries manufacture and export single-layered, multi-layered, and double-sided printed circuit boards (PCBs) under its KCE trademark.  Multi-layered PCBs are used mainly in high technology equipment and high precision instruments.  Double-sided PCBs are used largely in telecommunication and computing equipment.

Nippon Electric Glass Co., Ltd. manufactures a wide range of glass related products.  The Company's products include fluorescent light tubes, lenses for light-emitting diodes (LEDs), ceramic integrated circuits (IC) packages, bulbs for cathode ray tube (CRT) displays, and precision sheet glass for liquid crystal displays (LCDs).

Chengdu Santai Holding Group Co., Ltd. is a manufacturer and solutions provider in the security industry. The Company's products include QMS, note management systems, DVR, monitoring solutions, face identification, and fingerprint identification.

Wuhu Token Science Co., Ltd. researches, produces and sells vacuum thin film material for flat panel displays.  The Company's products are liquid crystal display conductive film glass, touch-screen conductive film glass, and mobile phone panel material.

Codan Limited develops rugged and electronics solutions for international government, corporate, NGO and consumer markets. The company's line of business includes provision of radio communications, metal detection and tracking solutions.

Shenzhen Topband Co., Ltd. researches, manufactures and markets electronic intelligent controllers for electric household appliances.

Lotte Energy Materials Corporation manufactures and distributes electric foils. The Company produces printed circuit board and lithium ion secondary batteries elecfoil, electrolytic and epoxy copper foil, electrolytic capacitor aluminum foil, and other related products. Lotte Energy Materials also offers energy and glass and window construction services.

Beijing Zhongke Sanhuan High-Tech Co., Ltd. develops and manufactures rare earth permanent magnetic materials and products.  The Company's main product is neodymium iron boron magnetic materials.

Beijing Zhong Ke San Huan Hi Tech (000970 CH)

Amano Corporation manufactures electric time recorders and information systems. The Company also produces time stamps and parking lot traffic and fee collection management systems.  The Company produces environment related systems such as dust collectors, air filters, and gas/water cleaning equipment.

Arlo Technologies, Inc. provides software solutions. The Company offers cloud-based platform with a variety of connected devices such as security cameras. Arlo Technologies serves customers in the United States.

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Arlo Technologies Inc (ARLO US)

ARLO: Recurring Revenue Growth, PT to $11

ARLO reported reaching over 2 million paid subscribers. The quarterly additions continue at a pace above our expectations and puts ARLO on pace to...

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ARLO: Profitability Back in View

ARLO is now focused on winning customers at the point of sale through lower prices and it is evident the strategy worked in the fourth quarter....

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ARLO: Discounts and Subscriber Growth

ARLO being able to grow the number of paying subscribers would be beneficial to the earnings story. The hardware side of the business continues to...

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ARLO: Service in a Tough Market, PT to $8

What was looking like consumer retracting ahead of October's Prime Day in September snowballed into retailers reducing inventory levels and ARLO...

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ARLO: Disconnected to Ongoing Growth

There is a possibility ARLO experienced a slowdown in September, which could have been attributed to Prime Day falling in October. Nevertheless, we...

BWS Financial Inc

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