Shares of Arlo Technologies Inc. (ARLO) surged 5.67% in pre-market trading on Thursday, as investors reacted positively to the company's latest operational update ahead of its first-quarter earnings report.

The smart home security company announced it has exceeded 5 million paid subscription accounts and surpassed $275 million in annual recurring revenue. This milestone demonstrates Arlo's strong growth in its subscription-based business model, which has become increasingly important for the company's long-term strategy.

The timing of this announcement is particularly significant as Arlo is scheduled to report its first-quarter earnings after the market close on Thursday. Analysts are expecting the company to report earnings of $0.12 per share for the quarter. The pre-market surge suggests that investors are optimistic about the potential for a strong earnings report, buoyed by the positive subscription and revenue news.

This pre-market movement highlights the growing importance of recurring revenue streams in the tech sector, particularly for companies like Arlo that are transitioning from hardware-focused business models to more software and services-oriented approaches. The market's reaction indicates that investors are placing a high value on Arlo's ability to grow its subscriber base and recurring revenue, which can provide more stable and predictable income compared to one-time hardware sales.