Exceeded High-End of both Revenue and
non-GAAP EPS Guidance for the Quarter
Announced Annual Recurring Revenue of $80
million, growing 103% year over year
42% Year over Year growth in Service
Revenue
146% Year over Year growth in Cumulative
Paid Accounts
Ended Quarter with Cash, Cash Equivalents
and Short-term Investments Balance at $166.1 million, with No
Debt
Arlo Technologies, Inc. (NYSE: ARLO), a leading
internet-connected security camera brand, today reported financial
results for the third quarter ended October 3, 2021.
Financial Highlights (1)
- Revenue of $111.1 million, an increase of 0.8% year over
year.
- GAAP gross profit of $24.3 million, an increase of 13.7% year
over year; non-GAAP gross profit of $25.1 million, an increase of
10.7% year over year.
- GAAP gross margin of 21.9%; non-GAAP gross margin of
22.6%.
- GAAP net loss per diluted share of $(0.18); non-GAAP net loss
per diluted share of $(0.08).
- Cash, cash equivalents and short-term investments of $166.1
million and no debt.
“I am proud to say the Arlo team delivered strong results across
the entire business in Q3. Revenue and non-GAAP EPS both came in
above the high end of our guidance range, as our team navigated
considerable global supply chain challenges. Our new business model
for services continued to gather momentum, adding a record 182,000
paid accounts in the quarter, an increase of 214% year over year.
We surpassed 900,000 total paid accounts on October 18th, which we
believe puts us on a clear path to meet our 1,000,000 paid account
goal significantly ahead of our year-end earnings call and exceed
$100 million in service revenue this year. Our impressive paid
account growth propelled our service revenue to a record $27.0
million, up 42% year over year, while our non-GAAP service gross
margin of 59.5% was also a record for Arlo as a standalone company.
In addition, to provide new insight into our rapidly growing
services business, we reported our Annual Recurring Revenue (or
ARR) as $80 million dollars in Q3, growing 103% year over year. Our
ARR is the fastest growing and highest margin portion of our total
services revenue and represents the annualized recurring service
revenue we derive from our paid accounts.” said Matthew McRae,
Chief Executive Officer of Arlo Technologies. “While our product
revenue was constrained by global supply chain challenges, our
total revenue grew year over year by 0.8% and was significantly
over-indexed by non-GAAP gross profit, which grew 10.7%
year-over-year. Our innovation continues on all fronts. We are
pleased with the early results we are seeing from the recent launch
of Arlo Secure and Arlo Secure Plus, our new Service plans, which
extend Arlo’s technological leadership, while adding significant
value to our customers. Our industry-leading hardware continues to
garner acclaim, winning multiple awards, while we just launched the
new Arlo Go 2 smart-security camera exclusively with Verizon. With
tremendous progress across the business, we are raising our revenue
guidance for Q4, raising guidance for full year, and raising
guidance for our year-end cash balance.”
Three Months Ended
Nine Months Ended
October 3, 2021
June 27, 2021
September 27, 2020
October 3, 2021
September 27, 2020
(in thousands, except
percentage and per share data)
Revenue
$
111,149
$
98,571
$
110,236
$
292,276
$
242,318
GAAP Gross Margin
21.9
%
26.6
%
19.4
%
26.1
%
12.7
%
Non-GAAP Gross Margin (1)
22.6
%
27.9
%
20.6
%
27.1
%
14.0
%
GAAP Net Income (Loss) per Diluted
Share
$
(0.18
)
$
(0.28
)
$
(0.22
)
$
(0.60
)
$
(1.11
)
Non-GAAP Net Income (Loss) per Diluted
Share (1)
$
(0.08
)
$
(0.04
)
$
(0.10
)
$
(0.16
)
$
(0.74
)
_________________________
(1)
Reconciliation of financial
measures computed on a GAAP basis to the most directly comparable
financial measures computed on a non-GAAP basis are provided at the
end of this press release.
Financial and Business Highlights
- Service revenue of $27.0 million for Q3, for growth of 42.4%
year over year, the ninth consecutive quarter of record service
revenue.
- Announced ARR of $80 million, growing 103% year over year.
(2)
- Non-GAAP service gross margin a record for Arlo as a standalone
company at 59.5%.
- Added a record 182,000 paid accounts in Q3, a sequential
increase of 24.7% over Q2, and a year over year increase of
213.8%.
- Launched new Arlo Go 2 smart-security camera exclusively with
Verizon.
- Won three Editors' Choice awards, multiple design awards, and
features in Best of 2021 lists across the industry.
_________________________
(2)
ARR is calculated by taking our
recurring paid service revenue for the last calendar month in the
fiscal quarter, multiplied by 12 months. Recurring paid service
revenue represents the revenue we recognized from our paid accounts
and excludes prepaid service revenue and non-recurring engineering
(NRE) service revenue from strategic partners.
Fourth Quarter 2021 Business Outlook (3)
- Revenue of $130.0 million to $140.0 million.
- GAAP net loss per diluted share of $(0.16) to $(0.09), and
non-GAAP net loss per diluted share of $(0.07) to $0.00.
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending December
31, 2021
Revenue
Net Loss per Diluted
Share
(in millions, except per share
data)
GAAP
$130.0 - $140.0
$(0.16) - $(0.09)
Estimated adjustments for (3):
Stock-based compensation expense
—
0.08
Separation expense
—
0.01
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$130.0 - $140.0
$(0.07) - $0.00
_________________________
(3)
Business outlook does not include
estimates for any currently unknown income and expense items which,
by their nature, could arise late in a quarter, including:
litigation reserves, net; acquisition-related charges; impairment
charges; discrete tax benefits or detriments relating to tax
windfalls or shortfalls from equity awards; and any additional
impacts relating to the implementation of U.S. tax reform. New
material income and expense items such as these could have a
significant effect on our guidance and future results.
Investor Conference Call / Webcast Details
Arlo will review the third quarter of 2021 results and discuss
management’s expectations for the fourth quarter of 2021 today,
Tuesday, November 9, 2021 at 5:00 p.m. ET (2:00 p.m. PT). The
toll-free dial-in number for the live audio call is (888) 660-6387.
The international dial-in number for the live audio call is (929)
203-1909. The conference ID for the call is 7749064. A live webcast
of the conference call will be available on Arlo’s Investor
Relations website at https://investor.arlo.com. A replay of the
call will be available via the web at
https://investor.arlo.com.
About Arlo Technologies, Inc.
Arlo (NYSE: ARLO) is the award-winning, industry leader that is
transforming the way people experience the connected lifestyle.
Arlo’s deep expertise in product design, wireless connectivity,
cloud infrastructure and cutting-edge AI capabilities focuses on
delivering a seamless, smart home experience for Arlo users that is
easy to setup and interact with every day. Arlo’s cloud-based
platform provides users with visibility, insight and a powerful
means to help protect and connect in real-time with the people and
things that matter most, from any location with a Wi-Fi or a
cellular connection. To date, Arlo has launched several categories
of award-winning smart connected devices, including wire-free smart
Wi-Fi and LTE-enabled security cameras, indoor security cameras,
video doorbells, and floodlights.
With a mission to bring users peace of mind, Arlo is as
passionate about protecting user privacy as it is about
safeguarding homes and families. Arlo is committed to supporting
industry standards for data protection designed to keep users'
personal information private and in their control. Arlo doesn't
monetize personal data, provides enhanced controls for user data,
supports privacy legislation, keeps user data safely secure, and
puts security at the forefront of company culture.
© 2021 Arlo Technologies, Inc., Arlo and the Arlo logo are
trademarks and/or registered trademarks of Arlo Technologies, Inc.
and/or certain of its affiliates in the United States and/or other
countries. Other brand and product names are for identification
purposes only and may be trademarks or registered trademarks of
their respective holder(s). The information contained herein is
subject to change without notice. Arlo shall not be liable for
technical or editorial errors or omissions contained herein. All
rights reserved.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. The words “anticipate,” “expect,” “believe,” “will,” “may,”
“should,” “estimate,” “project,” “outlook,” “forecast” or other
similar words are used to identify such forward-looking statements.
However, the absence of these words does not mean that the
statements are not forward-looking. The forward-looking statements
represent Arlo Technologies, Inc.’s (the "Company") expectations or
beliefs concerning future events based on information available at
the time such statements were made and include statements regarding
its potential future business, operating performance and financial
condition, including descriptions of its expected revenue, GAAP and
non-GAAP gross margins, operating margins, tax rates, expenses, and
cash outlook; the Company's transition to a services-first business
model; the commercial launch and momentum of new products and
services; strategic objectives and initiatives, including the
Company's collaboration with Verisure; expectations regarding
market expansion and future growth; plans to invest in product
innovation; the Company's future product offerings; supply chain
challenges; and the quote from the Company's Chief Executive
Officer. These statements are based on management's current
expectations and are subject to certain risks and uncertainties,
including the following: future demand for the Company's products
may be lower than anticipated; consumers may choose not to adopt
the Company's new product offerings or adopt competing products;
product performance may be adversely affected by real world
operating conditions; the Company may be unsuccessful or experience
delays in manufacturing and distributing its new and existing
products; telecommunications service providers may choose to slow
their deployment of the Company's products or utilize competing
products; the Company may be unable to collect receivables as they
become due; the Company may fail to manage costs, including the
cost of developing new products and manufacturing and distribution
of its existing offerings; the Company may incur additional costs
and charges associated with the transactions contemplated by the
Verisure partnership; the Company may not receive the minimum
commitment amounts from Verisure; the COVID-19 pandemic could
continue to have an adverse impact on the Company's business,
operations and the markets and communities in which the Company and
its partners and customers operate; the Company may fail to
successfully continue to effect operating expense savings; changes
in the level of the Company's cash resources and the Company's
planned usage of such resources; changes in the Company's stock
price and developments in the business that could increase the
Company's cash needs; fluctuations in foreign exchange rates; the
actions and financial health of the Company's customers; the
anticipated financial capacity under the Company's revolving credit
line may not be available when expected, or at all; and the Company
may not be able to carry out its restructuring plan. Further,
certain forward-looking statements are based on assumptions as to
future events that may not prove to be accurate. Therefore, actual
outcomes and results may differ materially from what is expressed
or forecast in such forward-looking statements. Further information
on potential risk factors that could affect the Company's and its
business are detailed in the Company's periodic filings with the
Securities and Exchange Commission, including, but not limited to,
those risks and uncertainties listed in the section entitled “Risk
Factors” in the Company's most recently filed Quarterly Report on
Form 10-Q filed with the Securities and Exchange Commission (the
“SEC”) and subsequent filings with the SEC. Given these
circumstances, you should not place undue reliance on these
forward-looking statements. The Company undertakes no obligation to
release publicly any revisions to any forward-looking statements
contained herein to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information:
To supplement our unaudited selected financial data presented on
a basis consistent with U.S. Generally Accepted Accounting
Principles (“GAAP”), we disclose certain non-GAAP financial
measures that exclude certain charges, including non-GAAP gross
profit, non-GAAP gross margin, non-GAAP research and development,
non-GAAP sales and marketing, non-GAAP general and administrative,
non-GAAP total operating expenses, non-GAAP operating income
(loss), non-GAAP operating margin, non-GAAP other income
(expenses), net, non-GAAP provision for income taxes, non-GAAP net
income (loss) and non-GAAP net income (loss) per diluted share.
These supplemental measures exclude adjustments for separation
expense, stock-based compensation expense, amortization of
intangibles, impairment charges, restructuring and other charges,
strategic initiative and transaction expenses, gain on sale of
business, litigation reserves, and the related tax effects. These
non-GAAP measures are not in accordance with or an alternative for
GAAP, and may be different from similarly-titled non-GAAP measures
used by other companies. We believe that these non-GAAP measures
have limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP and that these measures should only be used to
evaluate our results of operations in conjunction with the
corresponding GAAP measures. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the most directly comparable GAAP measures. We
compensate for the limitations of non-GAAP financial measures by
relying upon GAAP results to gain a complete picture of our
performance.
In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of our operating
performance on a period-to-period basis because such items are not,
in our view, related to our ongoing operational performance. We use
non-GAAP measures to evaluate the operating performance of our
business, for comparison with forecasts and strategic plans, and
for benchmarking performance externally against competitors. In
addition, management’s incentive compensation is determined using
certain non-GAAP measures. Since we find these measures to be
useful, we believe that investors benefit from seeing results
“through the eyes” of management in addition to seeing GAAP
results. We believe that these non-GAAP measures, when read in
conjunction with our GAAP measures, provide useful information to
investors by offering:
– the ability to make more meaningful period-to-period
comparisons of our on-going operating results;
– the ability to better identify trends in our underlying
business and perform related trend analyses;
– a better understanding of how management plans and measures
our underlying business; and
– an easier way to compare our operating results against analyst
financial models and operating results of competitors that
supplement their GAAP results with non-GAAP financial measures.
The following are explanations of the adjustments that we
incorporate into non-GAAP measures, as well as the reasons for
excluding them in the reconciliations of these non-GAAP financial
measures:
Separation expense consists of expenses that are related to the
separation of our business from NETGEAR. These consist primarily of
costs of legal and professional services for IPO-related litigation
associated with our separation from NETGEAR. We consider our
operating results without these charges when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such charges when presenting non-GAAP financial measures.
We believe that the assessment of our operations excluding these
costs is relevant to our assessment of internal operations and
comparisons to the performance of our competitors.
Stock-based compensation expense consists of non-cash charges
for the estimated fair value of stock options, performance-based
stock options, restricted stock units, performance-based restricted
stock units, shares under the employee stock purchase plan granted
to employees and employees' annual bonus in RSU form. We believe
that the exclusion of these charges provides for more accurate
comparisons of our operating results to peer companies due to the
varying available valuation methodologies, subjective assumptions
and the variety of award types. In addition, we believe it is
useful to investors to understand the specific impact stock-based
compensation expense has on our operating results.
Amortization of intangibles consists primarily of non-cash
charges that can be impacted by, among other things, the timing and
magnitude of acquisitions. We consider our operating results
without these charges when evaluating our ongoing performance and
forecasting our earnings trends, and therefore exclude such charges
when presenting non-GAAP financial measures. We believe that the
assessment of our operations excluding these costs is relevant to
an assessment of our internal operations and comparisons to our
prior and future periods and to the performance of our
competitors.
Strategic initiative and transaction expenses consist of legal
fees associated with the strategic review of the Company and legal
fees, accounting fees and other one-time costs incurred to complete
the Verisure transaction. We consider our operating results without
these charges when evaluating our ongoing performance and
forecasting our earnings trends, and therefore exclude such charges
when presenting non-GAAP financial measures. We believe that the
assessment of our operations excluding these costs is relevant to
our assessment of internal operations and comparisons to the
performance of our competitors.
Gain on sale of business represents gain from sale of the
Company's commercial operations in Europe. We consider our
operating results without this gain when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such gain when presenting non-GAAP financial measures. We
believe that the assessment of our operations excluding the gain is
relevant to our assessment of internal operations and comparisons
to the performance of our competitors.
Other items are the result of either unique or unplanned events,
including, when applicable: restructuring and other charges,
litigation reserves, net and impairment charges. It is difficult to
predict the occurrence or estimate the amount or timing of these
items in advance. Although these events are reflected in our GAAP
financial statements, these unique transactions may limit the
comparability of our on-going operations with prior and future
periods. The amounts result from events that often arise from
unforeseen circumstances, which often occur outside of the ordinary
course of continuing operations. Therefore, the amounts do not
accurately reflect the underlying performance of our continuing
business operations for the period in which they are incurred.
Tax effects consist of the various above adjustments that we
incorporate into non-GAAP measures in order to provide a more
meaningful measure on non-GAAP net income. We also believe
providing financial information with and without the income tax
effects relating to our non-GAAP financial measures provides our
management and users of the financial statements with better
clarity regarding the on-going performance of our business.
Source: Arlo-F
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
As of
October 3, 2021
December 31,
2020
(In thousands, except share
and per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
166,057
$
186,127
Short-term investments (amortized cost of
$— and $19,996)
—
19,997
Accounts receivable, net (net of allowance
for credit losses of $326 and $519)
70,124
77,643
Inventories
39,769
64,705
Prepaid expenses and other current
assets
12,147
8,076
Total current assets
288,097
356,548
Property and equipment, net
10,681
15,821
Operating lease right-of-use assets,
net
15,619
23,998
Goodwill
11,038
11,038
Restricted cash
4,105
4,164
Other non-current assets
3,786
2,399
Total assets
$
333,326
$
413,968
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
61,660
$
62,171
Deferred revenue
39,513
53,142
Accrued liabilities
93,444
121,766
Income tax payable
106
267
Total current liabilities
194,723
237,346
Non-current deferred revenue
2,173
16,563
Non-current operating lease
liabilities
22,611
25,029
Non-current income taxes payable
114
104
Other non-current liabilities
1,481
1,159
Total liabilities
221,102
280,201
Stockholders’ Equity:
Preferred stock: $0.001 par value;
50,000,000 shares authorized; none issued or outstanding
—
—
Common stock: : $0.001 par value;
500,000,000 shares authorized; shares issued and outstanding:
84,266,833 at October 3, 2021 and 79,336,242 at December 31,
2020
84
79
Additional paid-in capital
394,136
366,455
Accumulated other comprehensive income
11
3
Accumulated deficit
(282,007
)
(232,770
)
Total stockholders’ equity
112,224
133,767
Total liabilities and stockholders’
equity
$
333,326
$
413,968
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Nine Months Ended
October 3, 2021
June 27, 2021
September 27,
2020
October 3, 2021
September 27,
2020
(in thousands, except
percentage and per share data)
Revenue:
Products
$
84,152
$
73,311
$
91,271
$
217,224
$
191,597
Services
26,997
25,260
18,965
75,052
50,721
Total revenue
111,149
98,571
110,236
292,276
242,318
Cost of revenue:
Products
75,682
62,019
79,107
184,858
182,481
Services
11,124
10,383
9,720
31,099
28,986
Total cost of revenue
86,806
72,402
88,827
215,957
211,467
Gross profit
24,343
26,169
21,409
76,319
30,851
Gross margin
21.9
%
26.6
%
19.4
%
26.1
%
12.7
%
Operating expenses:
Research and development
14,377
16,251
15,436
45,419
44,871
Sales and marketing
12,779
12,459
12,720
36,445
35,471
General and administrative
12,119
13,559
11,137
36,905
39,758
Impairment charges
—
9,116
—
9,116
—
Separation expense
683
605
77
1,342
238
Gain on sale of business
—
—
—
—
(292
)
Total operating expenses
39,958
51,990
39,370
129,227
120,046
Loss from operations
(15,615
)
(25,821
)
(17,961
)
(52,908
)
(89,195
)
Operating margin
(14.0
)
%
(26.2
)
%
(16.3
)
%
(18.1
)
%
(36.8
)
%
Interest income (expense), net
(1
)
3
74
26
760
Other income (expense), net
599
2,662
543
4,170
2,837
Loss before income taxes
(15,017
)
(23,156
)
(17,344
)
(48,712
)
(85,598
)
Provision for income taxes
181
164
115
525
443
Net loss
$
(15,198
)
$
(23,320
)
$
(17,459
)
$
(49,237
)
$
(86,041
)
Net loss per share:
Basic
$
(0.18
)
$
(0.28
)
$
(0.22
)
$
(0.60
)
$
(1.11
)
Diluted
$
(0.18
)
$
(0.28
)
$
(0.22
)
$
(0.60
)
$
(1.11
)
Weighted average shares used to compute
net loss per share:
Basic
83,809
82,134
78,662
82,191
77,705
Diluted
83,809
82,134
78,662
82,191
77,705
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
October 3, 2021
September 27,
2020
(In thousands)
Cash flows from operating
activities:
Net loss
$
(49,237
)
$
(86,041
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
27,548
26,338
Impairment charges
9,116
—
Depreciation and amortization
4,546
8,024
Loss on disposal of property and
equipment
57
19
Allowance for credit losses and inventory
reserves
(2,530
)
1,322
Deferred income taxes
(284
)
63
Premium amortization (discount accretion)
on investments, net
(3
)
60
Gain on sale of business
—
(292
)
Changes in assets and liabilities:
Accounts receivable, net
7,712
70,985
Inventories
27,274
(1,838
)
Prepaid expenses and other assets
(5,166
)
8,369
Accounts payable
(27
)
(37,554
)
Deferred revenue
(28,019
)
(27,569
)
Accrued and other liabilities
(23,643
)
(21,203
)
Net cash used in operating activities
(32,656
)
(59,317
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,938
)
(2,070
)
Purchases of short-term investments
—
(45,085
)
Maturities of short-term investments
20,000
45,000
Net cash provided by (used in) investing
activities
18,062
(2,155
)
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
7,403
3,051
Restricted stock unit withholdings
(12,938
)
(4,632
)
Net cash used in financing activities
(5,535
)
(1,581
)
Net decrease in cash and cash equivalents
and restricted cash
(20,129
)
(63,053
)
Cash and cash equivalents and restricted
cash, at beginning of period
190,291
240,819
Cash and cash equivalents and restricted
cash, at end of period
$
170,162
$
177,766
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
423
$
1,470
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
UNAUDITED STATEMENT OF OPERATIONS
DATA:
Three Months Ended
Nine Months Ended
October 3, 2021
June 27, 2021
September 27,
2020
October 3, 2021
September 27,
2020
(in thousands, except
percentage data)
GAAP gross profit:
Products
$
8,470
$
11,292
$
12,164
$
32,366
$
9,116
Services
15,873
14,877
9,245
43,953
21,735
Total GAAP gross profit
24,343
26,169
21,409
76,319
30,851
GAAP gross margin:
Products
10.1
%
15.4
%
13.3
%
14.9
%
4.8
%
Services
58.8
%
58.9
%
48.8
%
58.6
%
42.9
%
Total GAAP gross margin
21.9
%
26.6
%
19.4
%
26.1
%
12.7
%
Stock-based compensation expense -
Products
593
1,289
942
2,756
2,007
Stock-based compensation expense -
Services
194
—
—
194
—
Amortization of intangibles - Products
—
—
356
—
1,069
Restructuring and other charges -
Products
—
—
—
—
23
Non-GAAP gross profit:
Products
9,063
12,581
13,462
35,122
12,215
Services
16,067
14,877
9,245
44,147
21,735
Total Non-GAAP gross profit
$
25,130
$
27,458
$
22,707
$
79,269
$
33,950
Non-GAAP gross margin:
Products
10.8
%
17.2
%
14.8
%
16.2
%
6.4
%
Services
59.5
%
58.9
%
48.8
%
58.8
%
42.9
%
Total Non-GAAP gross margin
22.6
%
27.9
%
20.6
%
27.1
%
14.0
%
GAAP research and development
$
14,377
$
16,251
$
15,436
$
45,419
$
44,871
Stock-based compensation expense
(2,086
)
(3,832
)
(2,870
)
(8,474
)
(6,259
)
Non-GAAP research and development
$
12,291
$
12,419
$
12,566
$
36,945
$
38,612
GAAP sales and marketing
$
12,779
$
12,459
$
12,720
$
36,445
$
35,471
Stock-based compensation expense
(1,119
)
(1,638
)
(1,160
)
(3,947
)
(2,895
)
Non-GAAP sales and marketing
$
11,660
$
10,821
$
11,560
$
32,498
$
32,576
GAAP general and administrative
$
12,119
$
13,559
$
11,137
$
36,905
$
39,758
Stock-based compensation expense
(3,607
)
(4,850
)
(4,029
)
(12,177
)
(15,177
)
Restructuring and other charges
—
—
—
—
(21
)
Strategic initiative and transaction
expenses
—
—
(17
)
—
(768
)
Litigation reserves, net
—
(157
)
—
(167
)
(256
)
Non-GAAP general and administrative
$
8,512
$
8,552
$
7,091
$
24,561
$
23,536
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Nine Months Ended
October 3, 2021
June 27, 2021
September 27,
2020
October 3, 2021
September 27,
2020
(in thousands, except
percentage and per share data)
GAAP total operating expenses
$
39,958
$
51,990
$
39,370
$
129,227
$
120,046
Separation expense
(683
)
(605
)
(77
)
(1,342
)
(238
)
Strategic initiative and transaction
expenses
—
—
(17
)
—
(768
)
Stock-based compensation expense
(6,812
)
(10,320
)
(8,059
)
(24,598
)
(24,331
)
Impairment charges
—
(9,116
)
—
(9,116
)
—
Restructuring and other charges
—
—
—
—
(21
)
Litigation reserves, net
—
(157
)
—
(167
)
(256
)
Gain on sale of business
—
—
—
—
292
Non-GAAP total operating expenses
$
32,463
$
31,792
$
31,217
$
94,004
$
94,724
GAAP operating loss
$
(15,615
)
$
(25,821
)
$
(17,961
)
$
(52,908
)
$
(89,195
)
GAAP operating margin
(14.0
)%
(26.2
)%
(16.3
)%
(18.1
)%
(36.8
)%
Separation expense
683
605
77
1,342
238
Strategic initiative and transaction
expenses
—
—
17
—
768
Stock-based compensation expense
7,599
11,609
9,001
27,548
26,338
Impairment charges
—
9,116
—
9,116
—
Amortization of intangibles
—
—
356
—
1,069
Restructuring and other charges
—
—
—
—
44
Litigation reserves, net
—
157
—
167
256
Gain on sale of business
—
—
—
—
(292
)
Non-GAAP operating loss
$
(7,333
)
$
(4,334
)
$
(8,510
)
$
(14,735
)
$
(60,774
)
Non-GAAP operating margin
(6.6
)%
(4.4
)%
(7.7
)%
(5.0
)%
(25.1
)%
GAAP other income (expense), net
$
599
$
2,662
$
543
$
4,170
$
2,837
Employee Retention Credit
(196
)
(1,811
)
—
(2,007
)
—
Non-GAAP other income (expense), net
$
403
$
851
$
543
$
2,163
$
2,837
GAAP provision for income taxes
$
181
$
164
$
115
$
525
$
443
GAAP income tax rate
(1.2
)%
(0.7
)%
(0.7
)%
(1.1
)%
(0.5
)%
Tax effects
—
—
—
—
31
Non-GAAP provision for income taxes
$
181
$
164
$
115
$
525
$
412
Non-GAAP income tax rate
(2.6
)%
(4.7
)%
(1.5
)%
(4.2
)%
(0.7
)%
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Nine Months Ended
October 3, 2021
June 27, 2021
September 27,
2020
October 3, 2021
September 27,
2020
(in thousands, except
percentage and per share data)
GAAP net loss
$
(15,198
)
$
(23,320
)
$
(17,459
)
$
(49,237
)
$
(86,041
)
Separation expense
683
605
77
1,342
238
Strategic initiative and transaction
expenses
—
—
17
—
768
Stock-based compensation expense
7,599
11,609
9,001
27,548
26,338
Impairment charges
—
9,116
—
9,116
—
Amortization of intangibles
—
—
356
—
1,069
Restructuring and other charges
—
—
—
—
44
Litigation reserves, net
—
157
—
167
256
Gain on sale of business
—
—
—
—
(292
)
Employee Retention Credit
(196
)
(1,811
)
—
(2,007
)
—
Tax effects
—
—
—
—
31
Non-GAAP net loss
$
(7,112
)
$
(3,644
)
$
(8,008
)
$
(13,071
)
$
(57,589
)
NET LOSS PER DILUTED SHARE:
GAAP net loss per diluted share
$
(0.18
)
$
(0.28
)
$
(0.22
)
$
(0.60
)
$
(1.11
)
Separation expense
0.01
0.01
—
0.02
0.01
Strategic initiative and transaction
expenses
—
—
—
—
0.01
Stock-based compensation expense
0.09
0.14
0.11
0.34
0.34
Impairment charges
—
0.11
—
0.11
—
Amortization of intangibles
—
—
0.01
—
0.01
Employee Retention Credit
—
(0.02
)
—
(0.03
)
—
Non-GAAP net loss per diluted share
$
(0.08
)
$
(0.04
)
$
(0.10
)
$
(0.16
)
$
(0.74
)
Shares used in computing GAAP net loss per
diluted share
83,809
82,134
78,662
82,191
77,705
Shares used in computing non-GAAP net loss
per diluted share
83,809
82,134
78,662
82,191
77,705
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
October 3, 2021
June 27, 2021
March 28, 2021
December 31,
2020
September 27,
2020
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
166,057
$
178,698
$
177,113
$
206,124
$
193,611
Cash, cash equivalents and short-term
investments per diluted share
$
1.98
$
2.18
$
2.20
$
2.60
$
2.46
Accounts receivable, net
$
70,124
$
51,890
$
51,121
$
77,643
$
56,431
Days sales outstanding
62
48
54
64
47
Inventories
$
39,769
$
43,155
$
55,972
$
64,705
$
69,038
Inventory turns
7.6
5.7
3.4
5.0
4.6
Weeks of channel inventory:
U.S. retail channel
14.0
8.0
12.5
9.2
8.4
U.S. distribution channel
8.0
12.5
9.6
11.7
8.6
APAC distribution channel
10.2
8.6
6.9
2.8
4.2
Deferred revenue (current and
non-current)
$
41,686
$
50,903
$
61,604
$
69,705
$
38,530
Cumulative registered accounts (1)
5,822
5,527
5,275
5,047
4,774
Cumulative paid accounts (2)
877
695
549
435
356
Annual recurring revenue (ARR) (3)
$
80,400
$
69,753
$
58,238
$
46,552
$
39,634
Headcount
346
349
355
359
358
Non-GAAP diluted shares
83,809
82,134
80,370
79,164
78,662
_________________________
(1)
We define our registered accounts
at the end of a particular period as the number of unique
registered accounts on the Arlo platform as of the end of such
particular period, and includes accounts owned by Verisure
S.a.r.l.. The number of registered accounts does not necessarily
reflect the number of end-users on the Arlo platform, as one
registered account may be used by multiple people.
(2)
Paid Accounts worldwide measured
as any account where a subscription to a paid service is being
collected (either by the Company or by the Company’s customers or
channel partners), plus paid service plans of a duration of more
than 3 months bundled with products (such bundles being counted as
a paid account after 90 days have elapsed from the date of
registration). Paid accounts includes accounts transferred to
Verisure S.a.r.l..
(3)
Effective as of the quarter ended
October 3, 2021, we have adopted ARR as one of the key indicators
of our business performance. ARR represents the amount of paid
service revenue that we expect to recur annually and is calculated
by taking our recurring paid service revenue for the last calendar
month in the fiscal quarter, multiplied by 12 months. Recurring
paid service revenue represents the revenue we recognize from our
Paid Accounts and excludes prepaid service revenue, and NRE service
revenue from strategic partners. The ARR for the comparative
periods presented was derived following the same methodology.
REVENUE BY GEOGRAPHY
Three Months Ended
Nine Months Ended
October 3, 2021
June 27, 2021
September 27,
2020
October 3, 2021
September 27,
2020
(in thousands, except
percentage data)
Americas
$
74,511
67
%
$
66,681
68
%
$
75,861
69
%
$
190,828
65
%
$
177,030
73
%
EMEA
30,931
28
%
25,101
25
%
28,010
25
%
80,623
28
%
46,531
19
%
APAC
5,707
5
%
6,789
7
%
6,365
6
%
20,825
7
%
18,757
8
%
Total
$
111,149
100
%
$
98,571
100
%
$
110,236
100
%
$
292,276
100
%
$
242,318
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211109006493/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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