Unpacking Q2 Earnings: Arlo (NYSE:ARLO) In The Context Of Other Internet of Things Stocks
Wrapping up Q2 earnings, we look at the numbers and key takeaways for the internet of things stocks, including Arlo (NYSE:ARLO) and its peers.
Industrial Internet of Things (IoT) companies are buoyed by the secular trend of a more connected world. They often specialize in nascent areas such as hardware and services for factory automation, fleet tracking, or smart home technologies. Those who play their cards right can generate recurring subscription revenues by providing cloud-based software services, boosting their margins. On the other hand, if the technologies these companies have invested in don’t pan out, they may have to make costly pivots.
The 7 internet of things stocks we track reported a softer Q2. As a group, revenues missed analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 3.4% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
In light of this news, internet of things stocks have held steady with share prices up 1.4% on average since the latest earnings results.
Arlo (NYSE:ARLO)
With its name deriving from the Old English word meaning “to see,” Arlo (NYSE:ARLO) provides home security products and other accessories to protect homes and businesses.
Arlo reported revenues of $127.4 million, up 10.8% year on year. This print exceeded analysts’ expectations by 1.9%. Despite the top-line beat, it was still a softer quarter for the company with full-year revenue guidance missing analysts’ expectations and a miss of analysts’ earnings estimates.
Arlo scored the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 6.9% since reporting and currently trades at $268.
Is now the time to buy Arlo? Access our full analysis of the earnings results here, it’s free.
Best Q2: Rockwell Automation (NYSE:ROK)
One of the first companies to address industrial automation, Rockwell Automation (NYSE:ROK) sells products that help customers extract more efficiency from their machinery.
Rockwell Automation reported revenues of $2.05 billion, down 8.4% year on year, in line with analysts’ expectations. The business had a very strong quarter with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 6.9% since reporting. It currently trades at $268.
Is now the time to buy Rockwell Automation? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Vontier (NYSE:VNT)
A spin-off of a spin-off, Vontier (NYSE:VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Vontier reported revenues of $696.4 million, down 8.9% year on year, falling short of analysts’ expectations by 6.7%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
Vontier delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 13.7% since the results and currently trades at $33.88.
Read our full analysis of Vontier’s results here.
SmartRent (NYSE:SMRT)
Founded by an employee at a real estate rental company, SmartRent (NYSE:SMRT) provides smart home devices and software for multifamily residential properties, single-family rental homes, and student housing communities.
SmartRent reported revenues of $48.52 million, down 9.1% year on year. This result missed analysts’ expectations by 6%. It was a disappointing quarter as it also produced a miss of analysts’ earnings estimates.
The stock is up 6.6% since reporting and currently trades at $1.77.
Read our full, actionable report on SmartRent here, it’s free.
Emerson Electric (NYSE:EMR)
Founded in 1890, Emerson Electric (NYSE:EMR) is a multinational technology and engineering company providing solutions in the industrial, commercial, and residential markets.
Emerson Electric reported revenues of $4.38 billion, up 11% year on year. This result came in 1.3% below analysts' expectations. Overall, it was a disappointing quarter as it also produced a miss of analysts’ earnings estimates.
Emerson Electric scored the fastest revenue growth among its peers. The stock is flat since reporting and currently trades at $108.80.
Read our full, actionable report on Emerson Electric here, it’s free.
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