Exited 2021 with Annual Recurring Revenue of
$90 million, growing 94% year over year
Exceeded High-End of both Revenue and
non-GAAP EPS Guidance for the Quarter
145% Year over Year growth in Cumulative
Paid Accounts
Delivered GAAP operating loss of $7.2
million, non-GAAP Operating Profit of $3.5 million
Ended with Cash and Cash Equivalents Balance
at $175.7 million, with No Debt
Arlo Technologies, Inc. (NYSE: ARLO), a leading
internet-connected security camera brand, today reported financial
results for the fourth quarter and fiscal year ended December 31,
2021.
Financial Highlights (1)
Q4'2021 Summary
- Revenue of $142.9 million, an increase of 24.4% year over
year.
- GAAP gross profit of $31.7 million, an increase of 29.3% year
over year; non-GAAP gross profit of $32.7 million, an increase of
27.0% year over year.
- GAAP gross margin of 22.2%; non-GAAP gross margin of
22.9%.
- GAAP operating loss of $7.2 million, a decrease of $8.4 million
year over year; non-GAAP operating profit of $3.5 million, an
increase of $10.0 million year over year.
- GAAP net loss per diluted share of $(0.08); non-GAAP net income
per diluted share of $0.04.
FY'2021 Summary
- 2021 revenue of $435.1 million, an increase of 21.8% year over
year.
- 2021 GAAP gross profit of $108.0 million, an increase of 95.0%
year over year; non-GAAP gross profit of $112.0 million, an
increase of 87.6% year over year.
- 2021 GAAP gross margin of 24.8%; non-GAAP gross margin of
25.7%.
- 2021 GAAP net loss per diluted share of $(0.68); non-GAAP net
loss per diluted share of $(0.11).
- Cash and cash equivalents of $175.7 million and no debt.
“I am proud to say the Arlo team successfully navigated
considerable global supply chain challenges to deliver strong
results across the entire business in Q4. Revenue and non-GAAP EPS
both came in above the high end of our guidance and we are very
pleased to share that we crossed over to a non-GAAP operating
profit for the first time in our history as a public company. Our
new business model for subscriptions continued its momentum, adding
a record 190,000 paid accounts in Q4, an increase of 141% year over
year. Our impressive paid account growth drove our strong recurring
revenue growth as we exited 2021 with Annual Recurring Revenue
(ARR) of $90.1 million growing at 94% year over year," said Matthew
McRae, Chief Executive Officer of Arlo Technologies. “Importantly,
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
differentiation and produces considerable value for our customers.
Recently, we expanded our industry-leading product and service
portfolio with the award-winning Arlo Security System as well as
Arlo Safe. With tremendous progress across the business, we are
excited to capitalize on the opportunities ahead of us.”
Three Months Ended
Twelve Months Ended
December 31,
2021
October 3,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(in thousands, except
percentage and per share data)
Revenue
$
142,861
$
111,149
$
114,836
$
435,137
$
357,154
GAAP Gross Margin
22.2
%
21.9
%
21.4
%
24.8
%
15.5
%
Non-GAAP Gross Margin (1)
22.9
%
22.6
%
22.4
%
25.7
%
16.7
%
GAAP Net Loss per Diluted Share
$
(0.08
)
$
(0.18
)
$
(0.19
)
$
(0.68
)
$
(1.30
)
Non-GAAP Net Income (Loss) per Diluted
Share (1)
$
0.04
$
(0.08
)
$
(0.08
)
$
(0.11
)
$
(0.82
)
_________________________
(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
- Full year service revenue of $103.5 million, for growth of
43.2% year over year.
- Service revenue of $28.5 million for Q4, for growth of 32.0%
year over year, the tenth consecutive quarter of record service
revenue.
- Exited 2021 with ARR of $90.1 million, growing 93.5% year over
year. (2)
- GAAP service gross margin of 62.5%; non-GAAP service gross
margin of 63.2% in Q4 a record for Arlo as a standalone company.
(1)
- Added a record 190,000 paid accounts in Q4, a sequential
increase of 4.4% over Q3, and a year over year increase of
140.5%.
- Announced significant expansion of our service and product
offerings with the Arlo Security Systems and Arlo Safe.
- Won two 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.
First Quarter 2022 Business Outlook (3)
- Revenue of $110.0 million to $120.0 million.
- GAAP net loss per diluted share of $(0.19) to $(0.13), and
non-GAAP net loss per diluted share of $(0.06) 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 April 3,
2022
Revenue
Net Loss per
Diluted Share
(in millions, except per share
data)
GAAP
$110.0 - $120.0
$(0.19) - $(0.13)
Estimated adjustments for (3):
Stock-based compensation expense
—
0.13
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$110.0 - $120.0
$(0.06) - $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 Q4 and full year 2021 results and discuss
management’s expectations for the first quarter of 2022 today,
Tuesday, March 1, 2022 at 5:00 p.m. ET (2:00 p.m. PT). The
toll-free dial-in number for the live audio call is (888) 394-8218.
The international dial-in number for the live audio call is +1
(773) 377-9070. The conference ID for the call is 3670093. 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 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,
audio and 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 does not
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.
© 2022 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 quotes 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; the Company may be unsuccessful in developing and
expanding its sales and marketing capabilities; 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 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; and the actions and financial health of
the Company's customers; 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 Annual Report and Quarterly Report
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
December 31,
2021
December 31,
2020
(In thousands, except share
and per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
175,749
$
186,127
Short-term investments (amortized cost of
$— and $19,996)
—
19,997
Accounts receivable, net (net of allowance
for credit losses of $337 and $519)
79,564
77,643
Inventories
38,390
64,705
Prepaid expenses and other current
assets
9,919
8,076
Total current assets
303,622
356,548
Property and equipment, net
9,595
15,821
Operating lease right-of-use assets,
net
14,814
23,998
Goodwill
11,038
11,038
Restricted cash
4,107
4,164
Other non-current assets
4,314
2,399
Total assets
$
347,490
$
413,968
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
84,098
$
62,171
Deferred revenue
29,442
53,142
Accrued liabilities
97,377
121,766
Income tax payable
12
267
Total current liabilities
210,929
237,346
Non-current deferred revenue
1,344
16,563
Non-current operating lease
liabilities
21,470
25,029
Non-current income taxes payable
94
104
Other non-current liabilities
1,001
1,159
Total liabilities
234,838
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:
84,453,212 at December 31, 2021 and 79,336,242 at December 31,
2020
84
79
Additional paid-in capital
401,367
366,455
Accumulated other comprehensive income
—
3
Accumulated deficit
(288,799
)
(232,770
)
Total stockholders’ equity
112,652
133,767
Total liabilities and stockholders’
equity
$
347,490
$
413,968
ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Twelve Months Ended
December 31,
2021
October 3,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(in thousands, except
percentage and per share data)
Revenue:
Products
$
114,396
$
84,152
$
93,271
$
331,620
$
284,868
Services
28,465
26,997
21,565
103,517
72,286
Total revenue
142,861
111,149
114,836
435,137
357,154
Cost of revenue:
Products
100,476
75,682
81,424
285,334
263,905
Services
10,669
11,124
8,874
41,768
37,860
Total cost of revenue
111,145
86,806
90,298
327,102
301,765
Gross profit
31,716
24,343
24,538
108,035
55,389
Gross margin
22.2
%
21.9
%
21.4
%
24.8
%
15.5
%
Operating expenses:
Research and development
13,644
14,377
15,266
59,063
60,137
Sales and marketing
12,464
12,779
13,593
48,909
49,064
General and administrative
12,584
12,119
11,338
49,489
51,096
Impairment charges
—
—
—
9,116
—
Separation expense
254
683
10
1,596
248
Gain on sale of business
—
—
—
—
(292
)
Total operating expenses
38,946
39,958
40,207
168,173
160,253
Loss from operations
(7,230
)
(15,615
)
(15,669
)
(60,138
)
(104,864
)
Operating margin
(5.1
) %
(14.0
) %
(13.6
)%
(13.8
) %
(29.4
)%
Interest income (expense), net
(15
)
(1
)
42
11
802
Other income (expense), net
605
599
599
4,775
3,436
Loss before income taxes
(6,640
)
(15,017
)
(15,028
)
(55,352
)
(100,626
)
Provision for income taxes
152
181
182
677
625
Net loss
$
(6,792
)
$
(15,198
)
$
(15,210
)
$
(56,029
)
$
(101,251
)
Net loss per share:
Basic
$
(0.08
)
$
(0.18
)
$
(0.19
)
$
(0.68
)
$
(1.30
)
Diluted
$
(0.08
)
$
(0.18
)
$
(0.19
)
$
(0.68
)
$
(1.30
)
Weighted average shares used to compute
net loss per share:
Basic
84,367
83,809
79,164
82,688
78,084
Diluted
84,367
83,809
79,164
82,688
78,084
ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
December 31,
2021
December 31,
2020
(In thousands)
Cash flows from operating
activities:
Net loss
$
(56,029
)
$
(101,251
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
38,030
35,247
Impairment charges
9,116
—
Depreciation and amortization
5,975
10,206
Allowance for credit losses and inventory
reserves
(3,125
)
964
Deferred income taxes
(296
)
50
Premium amortization (discount accretion)
on investments, net
(3
)
54
Gain on sale of business
—
(292
)
Changes in assets and liabilities:
Accounts receivable, net
(1,739
)
49,765
Inventories
29,258
2,862
Prepaid expenses and other assets
(3,463
)
10,441
Accounts payable
22,156
(49,282
)
Deferred revenue
(38,919
)
3,607
Accrued and other liabilities
(24,158
)
(8,901
)
Net cash used in operating activities
(23,197
)
(46,530
)
Cash flows from investing
activities:
Purchases of property and equipment
(2,268
)
(3,892
)
Purchases of short-term investments
—
(50,083
)
Maturities of short-term investments
20,000
50,000
Net cash provided by (used in) investing
activities
17,732
(3,975
)
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
8,231
4,755
Restricted stock unit withholdings
(13,201
)
(4,778
)
Net cash used in financing activities
(4,970
)
(23
)
Net decrease in cash and cash equivalents
and restricted cash
(10,435
)
(50,528
)
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
$
179,856
$
190,291
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
379
$
564
Supplemental cash flow information:
Cash paid for income taxes
$
964
$
5,614
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
UNAUDITED STATEMENT OF OPERATIONS
DATA:
Three Months Ended
Twelve Months Ended
December 31,
2021
October 3,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(in thousands, except
percentage data)
GAAP gross profit:
Products
$
13,920
$
8,470
$
11,847
$
46,286
$
20,963
Services
17,796
15,873
12,691
61,749
34,426
Total GAAP gross profit
31,716
24,343
24,538
108,035
55,389
GAAP gross margin:
Products
12.2
%
10.1
%
12.7
%
14.0
%
7.4
%
Services
62.5
%
58.8
%
58.9
%
59.7
%
47.6
%
Total GAAP gross margin
22.2
%
21.9
%
21.4
%
24.8
%
15.5
%
Stock-based compensation expense -
Products
776
593
955
3,532
2,962
Stock-based compensation expense -
Services
191
194
—
385
—
Amortization of intangibles - Products
—
—
237
—
1,306
Restructuring and other charges -
Products
—
—
—
—
23
Non-GAAP gross profit:
Products
14,696
9,063
13,039
49,818
25,254
Services
17,987
16,067
12,691
62,134
34,426
Total Non-GAAP gross profit
$
32,683
$
25,130
$
25,730
$
111,952
$
59,680
Non-GAAP gross margin:
Products
12.9
%
10.8
%
14.0
%
15.0
%
8.9
%
Services
63.2
%
59.5
%
58.9
%
60.0
%
47.6
%
Total Non-GAAP gross margin
22.9
%
22.6
%
22.4
%
25.7
%
16.7
%
GAAP research and development
$
13,644
$
14,377
$
15,266
$
59,063
$
60,137
Stock-based compensation expense
(2,391
)
(2,086
)
(2,795
)
(10,865
)
(9,054
)
Non-GAAP research and development
$
11,253
$
12,291
$
12,471
$
48,198
$
51,083
GAAP sales and marketing
$
12,464
$
12,779
$
13,593
$
48,909
$
49,064
Stock-based compensation expense
(1,444
)
(1,119
)
(1,211
)
(5,391
)
(4,106
)
Non-GAAP sales and marketing
$
11,020
$
11,660
$
12,382
$
43,518
$
44,958
GAAP general and administrative
$
12,584
$
12,119
$
11,338
$
49,489
$
51,096
Stock-based compensation expense
(5,680
)
(3,607
)
(3,948
)
(17,857
)
(19,125
)
Restructuring and other charges
—
—
—
—
(21
)
Strategic initiative and transaction
expenses
—
—
(2
)
—
(770
)
Litigation reserves, net
(3
)
—
—
(170
)
(256
)
Non-GAAP general and administrative
$
6,901
$
8,512
$
7,388
$
31,462
$
30,924
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Twelve Months Ended
December 31,
2021
October 3,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(in thousands, except
percentage and per share data)
GAAP total operating expenses
$
38,946
$
39,958
$
40,207
$
168,173
$
160,253
Separation expense
(254
)
(683
)
(10
)
(1,596
)
(248
)
Strategic initiative and transaction
expenses
—
—
(2
)
—
(770
)
Stock-based compensation expense
(9,515
)
(6,812
)
(7,954
)
(34,113
)
(32,285
)
Impairment charges
—
—
—
(9,116
)
(256
)
Restructuring and other charges
—
—
—
—
(21
)
Litigation reserves, net
(3
)
—
—
(170
)
(256
)
Gain on sale of business
—
—
—
—
292
Non-GAAP total operating expenses
$
29,174
$
32,463
$
32,241
$
123,178
$
126,965
GAAP operating loss
$
(7,230
)
$
(15,615
)
$
(15,669
)
$
(60,138
)
$
(104,864
)
GAAP operating margin
(5.1
)%
(14.0
)%
(13.6
)%
(13.8
)%
(29.4
)%
Separation expense
254
683
10
1,596
248
Strategic initiative and transaction
expenses
—
—
2
—
770
Stock-based compensation expense
10,482
7,599
8,909
38,030
35,247
Impairment charges
—
—
—
9,116
—
Amortization of intangibles
—
—
237
—
1,306
Restructuring and other charges
—
—
—
—
44
Litigation reserves, net
3
—
—
170
256
Gain on sale of business
—
—
—
—
(292
)
Non-GAAP operating income (loss)
$
3,509
$
(7,333
)
$
(6,511
)
$
(11,226
)
$
(67,285
)
Non-GAAP operating margin
2.5
%
(6.6
)%
(5.7
)%
(2.6
)%
(18.8
)%
GAAP other income (expense), net
$
605
$
599
$
599
$
4,775
$
3,436
Employee Retention Credit
(103
)
(196
)
—
(2,110
)
—
Non-GAAP other income (expense), net
$
502
$
403
$
599
$
2,665
$
3,436
GAAP provision for income taxes
$
152
$
181
$
182
$
677
$
625
GAAP income tax rate
(2.3
)%
(1.2
)%
(1.2
)%
(1.2
)%
(0.6
)%
Tax effects
—
—
(3
)
—
28
Non-GAAP provision for income taxes
$
152
$
181
$
185
$
677
$
597
Non-GAAP income tax rate
3.8
%
(2.6
)%
(3.2
)%
(7.9
)%
(0.9
)%
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Twelve Months Ended
December 31,
2021
October 3,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(in thousands, except
percentage and per share data)
GAAP net loss
$
(6,792
)
$
(15,198
)
$
(15,210
)
$
(56,029
)
$
(101,251
)
Separation expense
254
683
10
1,596
248
Strategic initiative and transaction
expenses
—
—
2
—
770
Stock-based compensation expense
10,482
7,599
8,909
38,030
35,247
Impairment charges
—
—
—
9,116
—
Amortization of intangibles
—
—
237
—
1,306
Restructuring and other charges
—
—
—
—
44
Litigation reserves, net
3
—
—
170
256
Gain on sale of business
—
—
—
—
(292
)
Employee Retention Credit
(103
)
(196
)
—
(2,110
)
—
Tax effects
—
—
(3
)
—
28
Non-GAAP net income (loss)
$
3,844
$
(7,112
)
$
(6,055
)
$
(9,227
)
$
(63,644
)
NET LOSS PER DILUTED SHARE:
GAAP net loss per diluted share
$
(0.08
)
$
(0.18
)
$
(0.19
)
$
(0.68
)
$
(1.30
)
Separation expense
—
0.01
—
0.02
—
Strategic initiative and transaction
expenses
—
—
—
—
0.01
Stock-based compensation expense
0.12
0.09
0.11
0.46
0.45
Impairment charges
—
—
—
0.11
—
Amortization of intangibles
—
—
—
—
0.02
Tax effects
—
—
—
—
—
Employee Retention Credit
—
—
—
(0.02
)
—
Non-GAAP net income (loss) per diluted
share
$
0.04
$
(0.08
)
$
(0.08
)
$
(0.11
)
$
(0.82
)
Shares used in computing GAAP net income
(loss) per diluted share
84,367
83,809
79,164
82,688
78,084
Shares used in computing non-GAAP net
income (loss) per diluted share
90,679
83,809
79,164
82,688
78,084
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
December 31,
2021
October 3,
2021
June 27,
2021
March 28,
2021
December 31,
2020
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
175,749
$
166,057
$
178,698
$
177,113
$
206,124
Cash, cash equivalents and short-term
investments per diluted share
$
1.94
$
1.98
$
2.18
$
2.20
$
2.60
Accounts receivable, net
$
79,564
$
70,124
$
51,890
$
51,121
$
77,643
Days sales outstanding
50
62
48
54
64
Inventories
$
38,390
$
39,769
$
43,155
$
55,972
$
64,705
Inventory turns
10.5
7.6
5.7
3.4
5.0
Weeks of channel inventory:
U.S. retail channel
7.0
14.0
8.0
12.5
9.2
U.S. distribution channel
8.5
8.0
12.5
9.6
11.7
APAC distribution channel
8.9
10.2
8.6
6.9
2.8
Deferred revenue (current and
non-current)
$
30,786
$
41,686
$
50,903
$
61,604
$
69,705
Cumulative registered accounts (1)
6,131
5,822
5,527
5,275
5,047
Cumulative paid accounts (2)
1,067
877
695
549
435
Annual recurring revenue (ARR) (3)
$
90,100
$
80,400
$
69,753
$
58,238
$
46,552
Headcount
353
346
349
355
359
Non-GAAP diluted shares
90,679
83,809
82,134
80,370
79,164
_________________________
(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. 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.
(3)
Effective as of the third quarter of 2021,
we 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. ARR is a performance
metric and should be viewed independently of revenue and deferred
revenue, and is not intended to be a substitute for, or combined
with, any of these items.
REVENUE BY GEOGRAPHY
Three Months Ended
Twelve Months Ended
December 31,
2021
October 3,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(in thousands, except
percentage data)
Americas
$
80,354
56
%
$
74,511
67
%
$
92,365
81
%
$
271,182
62
%
$
269,395
76
%
EMEA
53,609
38
%
30,931
28
%
15,301
13
%
134,232
31
%
61,832
17
%
APAC
8,898
6
%
5,707
5
%
7,170
6
%
29,723
7
%
25,927
7
%
Total
$
142,861
100
%
$
111,149
100
%
$
114,836
100
%
$
435,137
100
%
$
357,154
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220301005558/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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