Arlo Technologies Inc. (ARLO) shares surged 7.79% in Thursday's pre-market trading session following the company's announcement of significant milestones in its subscription-based business model. The smart home security firm revealed it has exceeded 5 million paid subscription accounts and surpassed $275 million in annual recurring revenue, showcasing robust growth in its recurring revenue streams.

This achievement comes at a crucial time, as Arlo is set to report its first-quarter earnings after the market close on Thursday. Analysts are anticipating earnings of $0.12 per share for the quarter. The pre-market rally suggests that investors are optimistic about the potential for a strong earnings report, bolstered by the positive subscription and revenue news.

The market's enthusiastic response underscores the growing importance of recurring revenue in the tech sector, particularly for companies like Arlo that are transitioning from hardware-focused models to more software and services-oriented approaches. This shift towards a subscription-based model is seen as a strategy to provide more stable and predictable income compared to one-time hardware sales, which is likely contributing to investor confidence in Arlo's long-term prospects.