57.4% Paid Account Growth Year over Year

Arlo Technologies, Inc. (NYSE: ARLO), a global network connected camera company that delivers innovative internet connected products to consumers and businesses, today reported financial results for the first quarter ended March 29, 2020.

Financial Highlights (1)

  • Revenue of $65.5 million, an increase of 13.1% year over year.
  • GAAP gross margin of 6.0%; non-GAAP gross margin of 7.4%.
  • GAAP net loss per diluted share of $(0.51), non-GAAP net loss per diluted share of $(0.34).

“The team at Arlo showed their dedication to our business in delivering a solid first quarter despite facing unprecedented challenges across all aspects of business execution. While our supply chain and internal teams are largely at full force, we are seeing disruptions in our distribution channels that impede our ability to serve our customer in the near term,” said Matthew McRae, Chief Executive Officer of Arlo Technologies. “However, we saw both record growth of paid subscribers and record service revenue, as our revenue for paid accounts comfortably surpassed pre-paid in the quarter. These are important data points that reflect our new business model phasing in and we expect continued strength in the services business as we complete our new product launches throughout 2020. Our latest launch, Arlo’s new Pro 3 Floodlight, the first wire-free floodlight in the world, is now available in our channels, brings our award winning Pro 3 technology to a large, fast-growing market segment and is well-received by customers and critics alike. We feel that we are well positioned with a solid balance sheet, best-in-class product offering, and strengthening services momentum.”

 

Three Months Ended

 

March 29, 2020

 

December 31, 2019

 

March 31, 2019

 

(in thousands, except percentage and per share data)

Revenue

$

65,450

 

 

$

122,413

 

 

$

57,880

 

GAAP Gross Margin

6.0

%

 

11.2

%

 

3.4

%

Non-GAAP Gross Margin

7.4

%

 

12.2

%

 

4.7

%

GAAP Net Income (Loss) per Diluted Share

$

(0.51

)

 

$

0.26

 

 

$

(0.55

)

Non-GAAP Net Income (Loss) per Diluted Share

$

(0.34

)

 

$

(0.26

)

 

$

(0.47

)

_________________________

(1) Reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis are provided at the end of this press release.

Business Highlights

  • Service revenue of $14.7 million, for growth of 30.7% year over year.
  • 57.4% year over year paid account growth in Q1.
  • 35.8% year over year cumulative registered account growth in Q1.
  • Added a record 25,000 paid subscribers in the quarter.
  • Announced a partnership with Second Harvest in Silicon Valley and Orange County to provide meals with each purchase of an Ultra system, Pro 3 system or Video Doorbell, resulting in over 30,000 meals donated to feed those in need.
  • Partnered with Kartchner Homes to integrate Arlo’s Video Doorbell into homes built over the next twelve months, providing homebuyers with a premiere solution in smart entry technology and a free three-month trial of Arlo Smart.
  • Announced the channel availability of our all-new Arlo Floodlight Camera, the first wire-free integrated floodlight camera on the market, featuring powerful LEDs, an integrated 2K HDR camera, 160-degree field of view, two-way audio, custom lighting configurations, a rechargeable battery, and a built-in siren. The Floodlight Camera is paired with a three month subscription to Arlo Smart.

Second Quarter 2020 Business Outlook (2)

  • Revenue of $50.0 million to $60.0 million.
  • GAAP net loss per diluted share of $(0.53) to $(0.46), and non-GAAP net loss per diluted share of $(0.46) to $(0.39).

Due to the uncertainty presented by the ongoing COVID-19 pandemic Arlo is withdrawing full year guidance.

A reconciliation of our business outlook on a GAAP and non-GAAP basis is provided in the following table:

 

Three Months Ending June 28, 2020

 

Revenue

 

Net Loss per Diluted Share

 

(in millions, except per share data)

GAAP

$50.0 - $60.0

 

($0.53) - ($0.46)

Estimated adjustments for (2):

 

 

 

Stock-based compensation expense

 

0.06

Amortization of intangibles

 

0.01

Tax effects of non-GAAP adjustments

 

Non-GAAP

$50.0 - $60.0

 

($0.46) - ($0.39)

_________________________

(2) 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 first quarter of 2020 results and discuss management’s expectations for the second quarter of 2020 today, Monday, May 11, 2020 at 5:00 p.m. ET (2:00 p.m. PT). The toll free dial-in number for the live audio call is (866) 393-4306. The international dial-in number for the live audio call is (734) 385-2616. The conference ID for the call is 8891925. 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 cameras, advanced baby monitors and smart security lights.

© 2019 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 expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding: Arlo’s future operating performance and financial condition, expected revenue, GAAP and non-GAAP gross margins, operating margins, and tax expense; expectations regarding market expansion and future growth; plans to invest in product innovation; Arlo's future product offerings; and the quote from Arlo'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 have an adverse impact on the Company's business, operations and the markets and communities in which Arlo and its partners and customers operate; the Company may fail to successfully continue to effect operating expense savings; changes in the level of Arlo'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 Arlo'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 Arlo 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 “Part I - Item 1A. Risk Factors,” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 28, 2020 and other periodic filings with the Securities and Exchange Commission. Given these circumstances, you should not place undue reliance on these forward-looking statements. Arlo 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 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, activist shareholder response costs, 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 third-party consulting fees, legal fees, IT costs, employee bonuses for services related to the separation, and other one-time expenses incurred to complete the separation. 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 and shares under the employee stock purchase plan granted to employees. 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.

Activist shareholder response costs primarily consist of legal fees and third-party consulting costs incurred. 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.

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 and litigation reserves, net. 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

 

March 29, 2020

 

December 31, 2019

 

(in thousands)

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

176,425

 

 

$

236,680

 

Short-term investments

30,157

 

 

19,990

 

Accounts receivable, net

61,376

 

 

127,317

 

Inventories

61,027

 

 

68,624

 

Prepaid expenses and other current assets

12,569

 

 

16,958

 

Total current assets

341,554

 

 

469,569

 

Property and equipment, net

19,284

 

 

21,352

 

Operating lease right-of-use assets, net

30,184

 

 

31,300

 

Intangibles, net

950

 

 

1,306

 

Goodwill

11,038

 

 

11,038

 

Restricted cash

4,117

 

 

4,139

 

Other non-current assets

3,049

 

 

4,008

 

Total assets

$

410,176

 

 

$

542,712

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

39,103

 

 

$

111,650

 

Deferred revenue

46,875

 

 

50,362

 

Accrued liabilities

100,447

 

 

127,400

 

Income tax payable

4,120

 

 

4,489

 

Total current liabilities

190,545

 

 

293,901

 

Non-current deferred revenue

12,973

 

 

15,736

 

Non-current operating lease liabilities

27,776

 

 

29,001

 

Non-current income taxes payable

92

 

 

92

 

Other non-current liabilities

229

 

 

606

 

Total liabilities

231,615

 

 

339,336

 

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: 75,785,952 at December 31, 2019 and 74,247,250 at December 31, 2018

77

 

 

76

 

Additional paid-in capital

349,212

 

 

334,821

 

Accumulated other comprehensive income

117

 

 

(2

)

Accumulated deficit

(170,845

)

 

(131,519

)

Total stockholders’ equity

178,561

 

 

203,376

 

Total liabilities and stockholders’ equity

$

410,176

 

 

$

542,712

 

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended

 

March 29, 2020

 

December 31, 2019

 

March 31, 2019

(in thousands, except percentage and per share data)

Revenue:

 

 

 

 

 

Products

$

50,723

 

 

$

109,883

 

 

$

46,608

 

Services

14,727

 

 

12,530

 

 

11,272

 

Total revenue

65,450

 

 

122,413

 

 

57,880

 

Cost of revenue:

 

 

 

 

 

Products

52,188

 

 

100,470

 

 

50,284

 

Services

9,309

 

 

8,237

 

 

5,651

 

Total cost of revenue

61,497

 

 

108,707

 

 

55,935

 

Gross profit

3,953

 

 

13,706

 

 

1,945

 

Gross margin

6.0

%

 

11.2

%

 

3.4

%

Operating expenses:

 

 

 

 

 

Research and development

15,243

 

 

16,928

 

 

18,161

 

Sales and marketing

11,038

 

 

14,596

 

 

14,221

 

General and administrative

18,784

 

 

15,112

 

 

10,536

 

Separation expense

79

 

 

153

 

 

906

 

Gain on sale of business

(292

)

 

(54,881

)

 

 

Total operating expenses

44,852

 

 

(8,092

)

 

43,824

 

Income (loss) from operations

(40,899

)

 

21,798

 

 

(41,879

)

Operating margin

(62.5

)%

 

17.8

%

 

(72.4

)%

Interest income

535

 

 

567

 

 

862

 

Other income (expense), net

1,183

 

 

775

 

 

(47

)

Income (loss) before income taxes

(39,181

)

 

23,140

 

 

(41,064

)

Provision for income taxes

145

 

 

3,525

 

 

220

 

Net income (loss)

$

(39,326

)

 

$

19,615

 

 

$

(41,284

)

Net income (loss) per share:

 

 

 

 

 

Basic

$

(0.51

)

 

$

0.26

 

 

$

(0.55

)

Diluted

$

(0.51

)

 

$

0.26

 

 

$

(0.55

)

Weighted average shares used to compute net income (loss) per share:

 

 

 

 

 

Basic

76,560

 

 

75,805

 

 

74,409

 

Diluted

76,560

76,090

74,409

ARLO TECHNOLOGIES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Three Months Ended

 

March 29, 2020

 

March 31, 2019

 

(In thousands)

Cash flows from operating activities:

 

 

 

Net loss

$

(39,326

)

 

$

(41,284

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

2,773

 

 

2,375

 

Stock-based compensation expense

12,773

 

 

4,653

 

Allowance for credit losses and inventory reserves

1,709

 

 

3,280

 

Gain on sale of business

(292

)

 

 

Deferred income taxes

100

 

 

(12

)

Premium amortization / discount accretion on investments, net

(5

)

 

(137

)

Changes in assets and liabilities:

 

 

 

Accounts receivable, net

65,685

 

 

94,174

 

Inventories

6,142

 

 

(9,411

)

Prepaid expenses and other assets

5,273

 

 

13,114

 

Accounts payable

(71,834

)

 

(27,486

)

Deferred revenue

(6,251

)

 

(2,254

)

Accrued and other liabilities

(25,651

)

 

(52,497

)

Net cash used in operating activities

(48,904

)

 

(15,485

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(1,111

)

 

(4,260

)

Purchases of short-term investments

(20,096

)

 

(9,897

)

Maturities of short-term investments

10,000

 

 

15,000

 

Net cash provided by (used in) used in investing activities

(11,207

)

 

843

 

Cash flows from financing activities:

 

 

 

Proceeds related to employee benefit plans

1,854

 

 

1

 

Restricted stock unit withholdings

(2,020

)

 

(1,068

)

Net cash used in financing activities

(166

)

 

(1,067

)

Net decrease in cash and cash equivalents and restricted cash

(60,277

)

 

(15,709

)

Cash and cash equivalents and restricted cash, at beginning of period

240,819

 

 

155,424

 

Cash and cash equivalents and restricted cash, at end of period

$

180,542

 

 

$

139,715

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

Purchases of property and equipment included in accounts payable and accrued liabilities

$

323

 

 

$

1,880

 

De-recognition of build-to-suit assets and liabilities

$

 

 

$

(21,610

)

ARLO TECHNOLOGIES, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

 

STATEMENT OF OPERATIONS DATA:

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

March 29, 2020

 

December 31, 2019

 

March 31, 2019

 

(in thousands, except percentage data)

GAAP gross profit

$

3,953

 

 

$

13,706

 

 

$

1,945

 

GAAP gross margin

6.0

%

 

11.2

%

 

3.4

%

Stock-based compensation expense

503

 

 

727

 

 

369

 

Amortization of intangibles

356

 

 

373

 

 

381

 

Restructuring and other charges

23

 

 

69

 

 

 

Non-GAAP gross profit

$

4,835

 

 

$

14,875

 

 

$

2,695

 

Non-GAAP gross margin

7.4

%

 

12.2

%

 

4.7

%

 

 

 

 

 

 

GAAP research and development

$

15,243

 

 

$

16,928

 

 

$

18,161

 

Stock-based compensation expense

(1,660

)

 

(2,367

)

 

(1,297

)

Restructuring and other charges

 

 

(262

)

 

 

Non-GAAP research and development

$

13,583

 

 

$

14,299

 

 

$

16,864

 

 

 

 

 

 

 

GAAP sales and marketing

$

11,038

 

 

$

14,596

 

 

$

14,221

 

Stock-based compensation expense

(751

)

 

(1,137

)

 

(940

)

Restructuring and other charges

 

 

(198

)

 

 

Non-GAAP sales and marketing

$

10,287

 

 

$

13,261

 

 

$

13,281

 

 

 

 

 

 

 

GAAP general and administrative

$

18,784

 

 

$

15,112

 

 

$

10,536

 

Stock-based compensation expense

(9,859

)

 

(3,402

)

 

(2,047

)

Restructuring and other charges

(21

)

 

(102

)

 

 

Strategic initiative and transaction expenses

(545

)

 

(1,868

)

 

 

Litigation reserves, net

(7

)

 

(1,287

)

 

 

Non-GAAP general and administrative

$

8,352

 

 

$

8,453

 

 

$

8,489

 

 

 

 

 

 

 

GAAP total operating expenses

$

44,852

 

 

$

(8,092

)

 

$

43,824

 

Separation expense

(79

)

 

(154

)

 

(906

)

Strategic initiative and transaction expenses

(545

)

 

(1,868

)

 

 

Stock-based compensation expense

(12,270

)

 

(6,906

)

 

(4,284

)

Restructuring and other charges

(21

)

 

(562

)

 

 

Litigation reserves, net

(7

)

 

(1,287

)

 

 

Gain on sale of business

292

 

 

54,881

 

 

 

Non-GAAP total operating expenses

$

32,222

 

 

$

36,012

 

 

$

38,634

 

ARLO TECHNOLOGIES, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

 

 

 

 

Three Months Ended

 

March 29, 2020

 

December 31, 2019

 

March 31, 2019

 

(in thousands, except percentage and per share data)

GAAP operating income (loss)

$

(40,899

)

 

$

21,798

 

 

$

(41,879

)

GAAP operating margin

(62.5

)%

 

17.8

%

 

(72.4

)%

Separation expense

79

 

 

154

 

 

906

 

Strategic initiative and transaction expenses

545

 

 

1,868

 

 

 

Stock-based compensation expense

12,773

 

 

7,633

 

 

4,653

 

Amortization of intangibles

356

 

 

373

 

 

381

 

Restructuring and other charges

44

 

 

631

 

 

 

Litigation reserves, net

7

 

 

1,287

 

 

 

Gain on sale of business

(292

)

 

(54,881

)

 

 

Non-GAAP operating loss

$

(27,387

)

 

$

(21,137

)

 

$

(35,939

)

Non-GAAP operating margin

(41.8

)%

 

(17.3

)%

 

(62.1

)%

 

 

 

 

 

 

GAAP provision for income taxes

$

145

 

 

$

3,525

 

 

$

220

 

GAAP income tax rate

(0.4

)%

 

15.2

%

 

(0.5

)%

Tax effects

29

 

 

3,241

 

 

 

Non-GAAP provision for income taxes

$

116

 

 

$

284

 

 

$

220

 

Non-GAAP income tax rate

(0.5

)%

 

(1.4

)%

 

(0.6

)%

 

 

 

 

 

 

GAAP net income (loss)

$

(39,326

)

 

$

19,615

 

 

$

(41,284

)

Separation expense

79

 

 

154

 

 

906

 

Strategic initiative and transaction expenses

545

 

 

1,868

 

 

 

Stock-based compensation expense

12,773

 

 

7,633

 

 

4,653

 

Amortization of intangibles

356

 

 

373

 

 

381

 

Restructuring and other charges

44

 

 

631

 

 

 

Litigation reserves, net

7

 

 

1,287

 

 

 

Gain on sale of business

(292

)

 

(54,881

)

 

 

Tax effects

29

 

 

3,241

 

 

 

Non-GAAP net loss

$

(25,785

)

 

$

(20,079

)

 

$

(35,344

)

ARLO TECHNOLOGIES, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

STATEMENT OF OPERATIONS DATA (CONTINUED):

 

 

 

 

 

 

 

Three Months Ended

 

March 29, 2020

 

December 31, 2019

 

March 31, 2019

 

(in thousands, except percentage and per share data)

NET INCOME (LOSS) PER DILUTED SHARE:

 

 

 

 

 

 

 

 

 

GAAP net income (loss) per diluted share

$

(0.51

)

 

$

0.26

 

 

$

(0.55

)

Separation expense

 

 

 

 

0.01

 

Strategic initiative and transaction expenses

0.01

 

 

0.02

 

 

 

Stock-based compensation expense

0.16

 

 

0.10

 

 

0.06

 

Amortization of intangibles

 

 

 

 

0.01

 

Restructuring and other charges

 

 

0.01

 

 

 

Litigation reserves, net

 

 

0.02

 

 

 

Gain on sale of business

 

 

(0.72

)

 

 

Tax effects

 

 

0.05

 

 

 

Non-GAAP net loss per diluted share

$

(0.34

)

 

$

(0.26

)

 

$

(0.47

)

 

 

 

 

 

 

Shares used in computing GAAP net income (loss) per diluted share

76,560

 

 

76,090

 

 

74,409

 

Shares used in computing non-GAAP net income (loss) per diluted share

76,560

 

 

76,090

 

 

74,409

 

ARLO TECHNOLOGIES, INC.

UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

 

 

Three Months Ended

 

 

March 29, 2020

December 31, 2019

September 29, 2019

June 30, 2019

March 31, 2019

 

 

(in thousands, except headcount and per share data)

 

Cash, cash equivalents and short-term investments

$

206,582

$

256,670

$

153,811

$

137,927

$

180,374

 

Cash, cash equivalents and short-term investments per diluted share

$

2.70

$

3.37

$

2.04

$

1.85

$

2.42

 

 

 

 

 

 

 

 

Accounts receivable, net

$

61,376

$

127,317

$

99,698

$

79,707

$

71,566

 

Days sales outstanding

83

97

85

87

111

 

 

 

 

 

 

 

 

Inventories

$

61,027

$

68,624

$

74,117

$

97,222

$

131,227

 

Inventory turns

3.4

5.9

4.8

2.8

1.5

 

 

 

 

 

 

 

 

Weeks of channel inventory:

 

 

 

 

 

 

U.S. retail channel

13.7

6.3

13.3

10.1

14.5

 

U.S. distribution channel

20.3

8.0

3.3

8.9

8.9

 

APAC distribution channel

6.0

3.6

4.3

5.1

6.7

 

 

 

 

 

 

 

 

Deferred revenue (current and non-current)

$

59,848

$

66,098

$

47,995

$

47,464

$

47,737

 

 

 

 

 

 

 

 

Cumulative registered accounts (1)

 

4,245

 

4,015

 

3,691

 

3,397

 

3,126

 

Cumulative paid accounts (2)

 

255

 

230

 

211

 

187

 

162

*

 

 

 

 

 

 

 

Headcount

 

356

 

349

 

406

 

402

 

401

 

Non-GAAP diluted shares

 

76,560

 

76,090

 

75,337

 

74,729

 

74,409

 

_________________________

*

 

We factored in an adjustment to our Q1’19 paid account number and have subsequently revised the Q1’19 total to 162,000.

(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.

REVENUE BY GEOGRAPHY

 

Three Months Ended

 

March 29, 2020

 

December 31, 2019

 

March 31, 2019

 

(in thousands, except percentage data)

Americas

$

50,158

 

77

%

 

$

94,668

 

77

%

 

$

44,366

 

77

%

EMEA

7,573

 

11

%

 

19,862

 

16

%

 

9,302

 

16

%

APAC

7,719

 

12

%

 

7,883

 

7

%

 

4,212

 

7

%

Total

$

65,450

 

100

%

 

$

122,413

 

100

%

 

$

57,880

 

100

%

 

Arlo Investor Relations Erik Bylin investors@arlo.com (510) 315-1004

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