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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 FORM 8-K
 
 CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 9, 2023
 
 ARLO TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware001-3861838-4061754
(State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification Number)
2200 Faraday Ave.,Suite #150
Carlsbad,California92008
(Address of principal executive offices)(Zip Code)

(408) 890-3900
(Registrant's telephone number, including area code)  
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):  

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareARLONew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐


Item 2.02    Results of Operations and Financial Condition.

On November 9, 2023, Arlo Technologies, Inc. issued a press release announcing its financial results for the third quarter ended October 1, 2023. A copy of this press release is attached hereto as Exhibit 99.1.

The information in this Item 2.02, including Exhibit 99.1 hereto, are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act, unless expressly incorporated by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits.

(d) Exhibits
    
Exhibit NumberDescription
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


    




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.    


ARLO TECHNOLOGIES, INC.
Registrant
/s/ KURTIS BINDER
Kurtis Binder
Chief Financial Officer

Dated: November 9, 2023    





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NEWS RELEASE

Arlo Reports Third Quarter 2023 Results

Revenue of $130.0 million, at the high end of guidance range
Annual recurring revenue (ARR) ended at $200.0 million, growing 59.5% year over year
Free cash flow (FCF) of $7.0 million with FCF margin of 5.4% (1)
GAAP EPS of $(0.01); record non-GAAP EPS of $0.09
Successful launch of innovative Essential 2 camera portfolio

Carlsbad, California - November 9, 2023 - Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home security brand, today reported financial results for the third quarter ended October 1, 2023.

“Our third quarter results illustrate the power of our services business, which reached $200 million in annual recurring revenue, a significant milestone that grew nearly 60% year over year. This performance drove our solid free cash flow and record earnings per share, and continued Arlo's trajectory of profit expansion," said Matthew McRae, Chief Executive Officer of Arlo Technologies. “We also launched our Essential 2 product line, the largest product launch in our company's history, bringing higher performance and an improved experience to new lower price points. Arlo believes everyone has a right to feel safe and Essential 2 allows us to address a wider audience just as our industry expands into the mass market this holiday season.”

Financial and Business Highlights (2)

•Q3 total revenue of $130.0 million, an increase of 1.4% year over year.
•Record Q3 service revenue of $51.0 million, growing 44.0% year over year.
•Q3 GAAP services gross margin of 73.5% and non-GAAP services gross margin of 74.1%.
•GAAP net loss per share of $(0.01); record non-GAAP earnings per diluted share of $0.09.
•Ended the quarter with ARR (3) of $200.0 million, growing 59.5% year over year.
•Added 197,000 paid accounts in Q3, ending cumulative paid accounts around 2.5 million, growing 48.6% year over year.
•Successful launch of Essential 2 camera portfolio targeted at creating a lower price entry point into the Arlo ecosystem.
•Ending cash and cash equivalents and short-term investments balance of $126.0 million, up $2.4 million sequentially.
Page 1


Three Months EndedNine Months Ended
October 1,
2023		July 2,
2023		October 2,
2022		October 1, 2023October 2, 2022
(In thousands, except percentage and per share data)
Revenue$130,003 $115,076 $128,157 $356,083 $371,887 
GAAP Gross Margin33.2 %36.4 %28.7 %33.8 %28.0 %
Non-GAAP Gross Margin (2)
34.0 %37.3 %29.7 %34.6 %29.0 %
GAAP Net Loss per Share$(0.01)$(0.08)$(0.16)$(0.25)$(0.40)
Non-GAAP Net Income per Diluted Share (2)
$0.09 $0.06 $(0.05)$0.17 $(0.03)
_________________________
(1)    FCF is calculated as net cash provided by (used in) operating activities less capital expenditures. FCF margin is the FCF divided by revenue.

(2)    Reconciliation of financial measures computed on a GAAP basis to the most directly comparable financial measures computed on a non-GAAP basis is provided at the end of this press release.

(3)    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.

Fourth Quarter 2023 Business Outlook (4)

A reconciliation of our business outlook on a GAAP and non-GAAP basis is provided in the following table:
Three Months Ended December 31, 2023
RevenueNet Income (Loss)
per Diluted Share
(In millions, except per share data)
GAAP
$129 - $139
$(0.05) - $0.01
Estimated adjustment for stock-based compensation and other expense—0.11
Non-GAAP
$129 - $139
$0.06 - $0.12
_________________________
(4)    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; 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.

Page 2

Investor Conference Call / Webcast Details

Arlo will review the third quarter 2023 results and discuss management’s expectations for the fourth quarter of 2023 today, Thursday, November 9, 2023 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 +1 (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 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, software and services, including wire-free smart Wi-Fi and LTE-enabled security cameras, audio and video doorbells, a floodlight, home security systems, and the Arlo Apps: Arlo Secure, and Arlo Safe, AI-based subscription services designed to maximize security through personalized notifications and emergency services for quicker help during a crisis.

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.

© 2023 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.




Contact:

Arlo Investor Relations
Tahmin Clarke
investors@arlo.com


Page 3

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for Arlo Technologies, Inc.:

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 our expectations or beliefs concerning future events based on information available at the time such statements were made and include statements regarding our potential future business, operating performance and financial condition, including descriptions of our expected revenue and profitability (and related timing), GAAP and non-GAAP gross margins, operating margins, tax rates, expenses, cash outlook, free cash flow and free cash flow margin; the ability of the Essential 2 product line to allow us to address a wider audience; strategic objectives and initiatives; the recurring revenue business model; expectations regarding market expansion and future growth; and others. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including the following: future demand for our products may be lower than anticipated, including due to inflation, fluctuating consumer confidence, banking failures and rising interest rates; we may be unsuccessful in developing and expanding our sales and marketing capabilities; we may not be able to increase sales of our paid subscription services; consumers may choose not to adopt our new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; we may be unsuccessful or experience delays in manufacturing and distributing our new and existing products; we may fail to manage costs and cost saving initiatives, including restructuring initiatives, the cost of developing new products and manufacturing and distribution of our existing offerings. 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 our business are detailed in our 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 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. We undertake 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 stock-based compensation expense, restructuring charges, impairment charges, separation expense, amortization of development of software cost, litigation reserves, net, employee retention credit and the related tax effects. In addition, we use free cash flow as non-GAAP measure when assessing the sources of liquidity, capital resources, and quality of earnings. We believe that free cash flow (usage) is helpful in understanding our capital requirements and provides an additional means to reflect the cash flow trends in our business. 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.

Page 4

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:

Stock-based compensation expense consists of non-cash charges for the estimated fair value of stock options, performance-based stock options, restricted stock units (RSU), 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.

Other non-GAAP items are the result of either unique or unplanned events, including, when applicable: restructuring charges, impairment charges, separation expense, amortization of development of software cost, litigation reserves, net and employee retention credit. 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.



Source: Arlo-F

***Financial Tables
Page 5

ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As of
October 1,
2023		December 31,
2022
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents$51,133 $84,024 
Short-term investments74,916 29,700 
Accounts receivable, net70,313 65,960 
Inventories53,496 46,554 
Prepaid expenses and other current assets11,100 6,544 
Total current assets260,958 232,782 
Property and equipment, net5,752 7,336 
Operating lease right-of-use assets, net12,190 12,809 
Goodwill11,038 11,038 
Restricted cash4,079 4,155 
Other non-current assets3,620 4,081 
Total assets$297,637 $272,201 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$82,479 $52,132 
Deferred revenue17,678 11,291 
Accrued liabilities85,999 98,855 
Total current liabilities186,156 162,278 
Non-current operating lease liabilities17,970 19,279 
Other non-current liabilities3,318 2,949 
Total liabilities207,444 184,506 
Commitments and contingencies
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: 94,581,808 at October 1, 2023 and 88,887,139 at December 31, 2022
94 89 
Additional paid-in capital458,015 433,138 
Accumulated other comprehensive income (loss)237 (107)
Accumulated deficit(368,153)(345,425)
Total stockholders’ equity90,193 87,695 
Total liabilities and stockholders’ equity$297,637 $272,201 

Page 6

ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months EndedNine Months Ended
October 1,
2023		July 2,
2023		October 2,
2022		October 1,
2023		October 2,
2022
(In thousands, except percentage and per share data)
Revenue:
Products$78,961 $64,749 $92,720 $210,770 $273,736 
Services51,042 50,327 35,437 145,313 98,151 
Total revenue130,003 115,076 128,157 356,083 371,887 
Cost of revenue:
Products73,335 60,446 79,386 197,520 233,992 
Services13,529 12,772 12,021 38,349 33,830 
Total cost of revenue86,864 73,218 91,407 235,869 267,822 
Gross profit43,139 41,858 36,750 120,214 104,065 
Gross margin33.2 %36.4 %28.7 %33.8 %28.0 %
Operating expenses:
Research and development16,829 17,618 16,471 52,197 50,252 
Sales and marketing15,863 16,921 22,193 48,137 49,867 
General and administrative12,460 15,007 12,253 43,089 38,023 
Others263 341 273 1,236 377 
Total operating expenses45,415 49,887 51,190 144,659 138,519 
Loss from operations(2,276)(8,029)(14,440)(24,445)(34,454)
Operating margin(1.8)%(7.0)%(11.3)%(6.9)%(9.3)%
Interest income, net1,175 835 290 2,736 414 
Other income, net10 52 19 23 314 
Loss before income taxes(1,091)(7,142)(14,131)(21,686)(33,726)
Provision for income taxes29 221 304 1,042 745 
Net loss$(1,120)$(7,363)$(14,435)$(22,728)$(34,471)
Net loss per share - basic and diluted$(0.01)$(0.08)$(0.16)$(0.25)$(0.40)
Weighted average shares used to compute net loss per share - basic and diluted94,243 92,337 88,124 92,069 86,677 

Page 7

ARLO TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 Nine Months Ended
October 1,
2023		October 2,
2022
(In thousands)
Cash flows from operating activities:
Net loss$(22,728)$(34,471)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Stock-based compensation expense37,851 31,787 
Depreciation and amortization3,809 3,653 
Allowance for credit losses and inventory reserves1,218 (211)
Deferred income taxes257 259 
Others(1,224)39 
Changes in assets and liabilities:
Accounts receivable, net (4,262)(3,171)
Inventories(8,250)(34,613)
Prepaid expenses and other assets (4,353)(105)
Accounts payable 31,049 23,229 
Deferred revenue6,202 (18,544)
Accrued and other liabilities(9,202)(2,635)
Net cash provided by (used in) operating activities30,367 (34,783)
Cash flows from investing activities:
Purchases of property and equipment (2,448)(815)
Purchases of short-term investments(110,905)(69,305)
Proceeds from maturities of short-term investments67,259 24,542 
Net cash used in investing activities(46,094)(45,578)
Cash flows from financing activities:
Proceeds related to employee benefit plans5,293 3,172 
Restricted stock unit withholdings(22,533)(17,766)
Net cash used in financing activities(17,240)(14,594)
Net decrease in cash, cash equivalents and restricted cash
(32,967)(94,955)
Cash, cash equivalents and restricted cash, at beginning of period88,179 179,856 
Cash, cash equivalents and restricted cash, at end of period$55,212 $84,901 
Non-cash investing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities$726 $209 
Page 8

ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

UNAUDITED STATEMENT OF OPERATIONS DATA:
Three Months EndedNine Months Ended
October 1,
2023		July 2,
2023		October 2,
2022		October 1,
2023		October 2,
2022
(In thousands, except percentage data)
GAAP gross profit:
Products$5,626 $4,303 $13,334 $13,250 $39,744 
Services37,513 37,555 23,416 106,964 64,321 
Total GAAP gross profit43,139 41,858 36,750 120,214 104,065 
GAAP gross margin:
Products7.1 %6.6 %14.4 %6.3 %14.5 %
Services73.5 %74.6 %66.1 %73.6 %65.5 %
Total GAAP gross margin33.2 %36.4 %28.7 %33.8 %28.0 %
Stock-based compensation expense - Products723 848 1,132 2,483 3,135 
Stock-based compensation expense - Services145 119 233 213 475 
Amortization of development of software cost - Services152 151 — 454 — 
Non-GAAP gross profit:
Products6,349 5,151 14,466 15,733 42,879 
Services37,810 37,825 23,649 107,631 64,796 
Total Non-GAAP gross profit$44,159 $42,976 $38,115 $123,364 $107,675 
Non-GAAP gross margin:
Products8.0 %8.0 %15.6 %7.5 %15.7 %
Services74.1 %75.2 %66.7 %74.1 %66.0 %
Total Non-GAAP gross margin34.0 %37.3 %29.7 %34.6 %29.0 %
GAAP research and development$16,829 $17,618 $16,471 $52,197 $50,252 
Stock-based compensation expense(2,847)(3,311)(2,679)(10,069)(8,602)
Non-GAAP research and development$13,982 $14,307 $13,792 $42,128 $41,650 
Percentage of revenue10.8 %12.4 %10.8 %11.8 %11.2 %
GAAP sales and marketing$15,863 $16,921 $22,193 $48,137 $49,867 
Stock-based compensation expense(1,224)(1,670)(1,389)(4,616)(4,559)
Non-GAAP sales and marketing$14,639 $15,251 $20,804 $43,521 $45,308 
Percentage of revenue11.3 %13.3 %16.2 %12.2 %12.2 %
GAAP general and administrative$12,460 $15,007 $12,253 $43,089 $38,023 
Stock-based compensation expense(5,348)(7,025)(4,520)(20,470)(15,016)
Litigation reserves, net— — (5)— (117)
Non-GAAP general and administrative$7,112 $7,982 $7,728 $22,619 $22,890 
Percentage of revenue5.5 %6.9 %6.0 %6.4 %6.2 %
Page 9


ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):
Three Months EndedNine Months Ended
October 1,
2023		July 2,
2023		October 2,
2022		October 1,
2023		October 2,
2022
(In thousands, except percentage data)
GAAP total operating expenses$45,415 $49,887 $51,190 $144,659 $138,519 
Stock-based compensation expense(9,419)(12,006)(8,588)(35,155)(28,177)
Others(263)(341)(278)(1,236)(494)
Non-GAAP total operating expenses$35,733 $37,540 $42,324 $108,268 $109,848 
GAAP operating loss$(2,276)$(8,029)$(14,440)$(24,445)$(34,454)
GAAP operating margin(1.8)%(7.0)%(11.3)%(6.9)%(9.3)%
Stock-based compensation expense10,287 12,973 9,953 37,851 31,787 
Others415 492 278 1,690 494 
Non-GAAP operating income (loss)$8,426 $5,436 $(4,209)$15,096 $(2,173)
Non-GAAP operating margin6.5 %4.7 %(3.3)%4.2 %(0.6)%
GAAP other income, net$10 $52 $19 $23 $314 
Employee retention credit— — — — (65)
Non-GAAP other income, net$10 $52 $19 $23 $249 
GAAP provision for income taxes$29 $221 $304 $1,042 $745 
GAAP income tax rate(2.7)%(3.1)%(2.2)%(4.8)%(2.2)%
Non-GAAP provision for income taxes$29 $221 $304 $1,042 $745 
Non-GAAP income tax rate0.3 %3.5 %(7.8)%5.8 %(49.3)%


Page 10

ARLO TECHNOLOGIES, INC.
RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

UNAUDITED STATEMENT OF OPERATIONS DATA (CONTINUED):
Three Months EndedNine Months Ended
October 1,
2023		July 2,
2023		October 2,
2022		October 1,
2023		October 2,
2022
(In thousands, except percentage and per share data)
GAAP net loss$(1,120)$(7,363)$(14,435)$(22,728)$(34,471)
Stock-based compensation expense10,287 12,973 9,953 37,851 31,787 
Others415 492 278 1,690 429 
Non-GAAP net income (loss)$9,582 $6,102 $(4,204)$16,813 $(2,255)
GAAP net loss per share - basic and diluted$(0.01)$(0.08)$(0.16)$(0.25)$(0.40)
Stock-based compensation expense0.10 0.14 0.11 0.41 0.37 
Others— — — 0.01 — 
Non-GAAP net income (loss) - diluted $0.09 $0.06 $(0.05)$0.17 $(0.03)
Shares used in computing GAAP net loss - basic94,243 92,337 88,124 92,069 86,677 
Shares used in computing non-GAAP net income - diluted102,116 99,187 88,124 99,238 86,677 
Free cash flow (usage):
Net cash provided by (used in) operating activities$7,459 $12,578 $(5,402)$30,367 $(34,783)
Less: Purchases of property and equipment(494)(1,031)(364)(2,448)(815)
Free cash flow (usage) (1)
$6,965 $11,547 $(5,766)$27,919 $(35,598)
Free cash flow (usage) margin (1)
5.4 %10.0 %(4.5)%7.8 %(9.6)%
_________________________
(1)    Free cash flow (usage) is calculated as net cash provided by (used in) operating activities less capital expenditures. Free cash flow (usage) margin is the free cash flow (usage) divided by revenue.
Page 11

ARLO TECHNOLOGIES, INC.
UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION

Three Months Ended
October 1,
2023		July 2,
2023		April 2,
2023		December 31,
2022		October 2,
2022
(In thousands, except headcount and per share data)
Cash, cash equivalents and short-term investments$126,049 $123,675 $118,673 $113,724 $125,272 
Cash, cash equivalents and short-term investments per diluted share$1.23 $1.25 $1.27 $1.28 $1.42 
Accounts receivable, net$70,313 $57,327 $52,837 $65,960 $82,707 
Days sales outstanding49 45 44 50 59 
Inventories$53,496 $39,429 $39,922 $46,554 $73,243 
Inventory turns5.5 6.1 6.4 6.4 4.3 
Weeks of channel inventory:
U.S. retail channel 10.9 9.7 14.6 11.9 13.6 
U.S. distribution channel7.4 9.3 17.6 14.1 5.5 
APAC distribution channel7.2 7.7 5.8 4.7 9.4 
Deferred revenue
(current and non-current)		$17,706 $17,702 $15,289 $11,503 $12,242 
Cumulative registered accounts (1)
8,193 7,860 7,510 7,220 6,930 
Cumulative paid accounts (2)
2,486 2,289 2,044 1,862 1,673 
Annual recurring revenue (ARR) (3)
$199,993 $193,633 $182,583 $137,764 $125,402 
Headcount353 345 334 343 360 
Non-GAAP diluted shares102,116 99,187 93,236 88,743 88,124 
_________________________
(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 period. 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 end-users to monitor the devices attached to that household.

(2)    Paid accounts are defined as any account worldwide where a subscription to a paid service is being collected (either by us or by our customers or channel partners, including Verisure).

(3)    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. 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.

Page 12


REVENUE BY GEOGRAPHY

Three Months EndedNine Months Ended
October 1,
2023		July 2,
2023		October 2,
2022		October 1,
2023		October 2,
2022
(In thousands, except percentage data)
Americas$79,948 61.5 %$78,136 67.9 %$71,040 55.4 %$214,716 60.3 %$199,851 53.8 %
EMEA42,887 33.0 %30,958 26.9 %52,542 41.0 %122,317 34.4 %157,000 42.2 %
APAC7,168 5.5 %5,982 5.2 %4,575 3.6 %19,050 5.3 %15,036 4.0 %
Total$130,003 100.0 %$115,076 100.0 %$128,157 100.0 %$356,083 100.0 %$371,887 100.0 %


Page 13
v3.23.3
Cover Page
Nov. 09, 2023
Cover [Abstract]  
Entity Ex Transition Period false
Entity Central Index Key 0001736946
Entity Emerging Growth Company true
Title of 12(b) Security Common Stock, par value $0.001 per share
Pre-commencement Issuer Tender Offer false
Pre-commencement Tender Offer false
Soliciting Material false
Written Communications false
City Area Code 408
Entity Tax Identification Number 38-4061754
Document Type 8-K
Document Period End Date Nov. 09, 2023
Entity Registrant Name ARLO TECHNOLOGIES, INC.
Entity Incorporation, State or Country Code DE
Entity File Number 001-38618
Entity Address, Address Line Two Suite #150
Entity Address, Address Line One 2200 Faraday Ave.,
Entity Address, City or Town Carlsbad,
Entity Address, State or Province CA
Entity Address, Postal Zip Code 92008
Local Phone Number 890-3900
Trading Symbol ARLO
Security Exchange Name NYSE
Amendment Flag false
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