Exceeded Revenue and EPS Guidance
104% GAAP Gross Profit Growth Year Over
Year
100% Non-GAAP Gross Profit Growth Year Over
Year
61% Service Revenue Growth Year Over
Year
Cash, Cash Equivalents and Short-term
Investments Balance of $193.6 million with No Debt
Arlo Technologies, Inc. (NYSE: ARLO), a leading
internet-connected security camera brand, today reported financial
results for the third quarter ended September 27, 2020.
Financial Highlights (1)
- Revenue of $110.2 million, an increase of 3.9% year over
year.
- GAAP gross profit $21.4 million, an increase of 104% year over
year; non-GAAP gross profit $22.7 million, an increase of 100% year
over year.
- GAAP gross margin of 19.4%; non-GAAP gross margin of
20.6%.
- GAAP net loss per diluted share of $(0.22); non-GAAP net loss
per diluted share of $(0.10).
- Cash, cash equivalents and short-term investments of $193.6
million and no debt at the end of Q3.
“The Arlo team delivered another strong quarter that exceeded
our guidance in every measure. Paid account growth and strong
performance from our European partner, Verisure, helped contribute
to revenue coming in at $110.2 million for a growth rate of 65%
sequentially and 4% year over year. We also made considerable
progress on gross margins – both product and service – and
maintained our operating discipline to improve our non-GAAP net
loss by $16.3 million year over year,” said Matthew McRae, Chief
Executive Officer of Arlo Technologies. “In our most prolific new
product quarter ever, we added four new cameras to our line up and
entered a large and fast-growing market with our wire-free video
doorbell. All of these new products are on our new business model,
a free, 90-day trial of Arlo Smart, and should add to our service
revenue growth. Fueled by our robust innovation and new business
model, the third quarter marks another example of the progress Arlo
is making in the business.”
Three Months Ended
Nine Months Ended
September 27, 2020
June 28, 2020
September 29, 2019
September 27, 2020
September 29, 2019
(in thousands, except
percentage and per share data)
Revenue
$
110,236
$
66,632
$
106,116
$
242,318
$
247,594
GAAP Gross Margin
19.4
%
8.2
%
9.9
%
12.7
%
8.9
%
Non-GAAP Gross Margin (1)
20.6
%
9.6
%
10.7
%
14.0
%
9.9
%
GAAP Net Income (Loss) per Diluted
Share
$
(0.22
)
$
(0.38
)
$
(0.41
)
$
(1.11
)
$
(1.41
)
Non-GAAP Net Income (Loss) per Diluted
Share (1)
$
(0.10
)
$
(0.31
)
$
(0.32
)
$
(0.74
)
$
(1.15
)
_________________________
(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
- Added a record 58,000 paid accounts in Q3, a sequential
increase of 35% over Q2.
- Cash, cash equivalents, and short-term investments balance of
$193.6 million and no debt at the end of Q3.
- 68.7% year over year paid account growth in Q3.
- Service revenue of $19.0 million for Q3, for growth of 60.6%
year over year.
- Announced the all new Arlo Essential Wire-Free Doorbell which
brings the same award-winning features of the Wired Video Doorbell
in a wire-free and battery-powered design, with industry-leading
180-degree viewing angle, high-definition video, two-way audio, and
the ability to connect directly to Wi-Fi. The Essential Wire-Free
Doorbell also includes a three-month subscription to Arlo
Smart.
- Expanded the Arlo Essential product family with the addition of
the Essential XL Spotlight Camera and the Essential. The Essential
XL Spotlight sports all Essential Spotlight’s great features and
adds an incredible 12 months of battery life while the Essential is
a simplified version targeted to price-sensitive consumers. These
cameras also include a three-month subscription to Arlo Smart.
- Upgraded the Arlo award-winning Pro and Ultra product families
with the Pro 4 and the Ultra 2 Wire-Free Spotlight Cameras. These
additions bring all the great features of the original Ultra and
Pro 3, with new features and improved performance. The Pro 4 and
Ultra 2 are also paired with a three-month subscription to Arlo
Smart.
Fourth Quarter 2020 Business Outlook (2)
- Revenue of $105.0 million to $115.0 million.
- GAAP net loss per diluted share of $(0.36) to $(0.26), and
non-GAAP net loss per diluted share of $(0.26) to $(0.16).
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending December
31, 2020
Revenue
Net Loss per Diluted
Share
(in millions, except per share
data)
GAAP
$105.0 - $115.0
$(0.36) - $(0.26)
Estimated adjustments for (1):
Stock-based compensation expense
—
0.10
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$105.0 - $115.0
$(0.26) - $(0.16)
_________________________
(1) Business outlook does not include
estimates for any currently unknown income and expense items which,
by their nature, could arise late in a quarter, including:
litigation reserves, net; acquisition-related charges; impairment
charges; discrete tax benefits or detriments relating to tax
windfalls or shortfalls from equity awards; and any additional
impacts relating to the implementation of U.S. tax reform. New
material income and expense items such as these could have a
significant effect on our guidance and future results.
Investor Conference Call / Webcast Details
Arlo will review the third quarter of 2020 results and discuss
management’s expectations for the fourth quarter of 2020 today,
Thursday, November 5, 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 3079383. 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, video doorbells and floodlight
cameras.
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.
© 2020 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 II - Item 1A.
Risk Factors,” in the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 28, 2020, filed with the Securities
and Exchange Commission on August 6, 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
September 27,
2020
December 31,
2019
(in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
173,619
$
236,680
Short-term investments
19,992
19,990
Accounts receivable, net
56,431
127,317
Inventories
69,038
68,624
Prepaid expenses and other current
assets
10,317
16,958
Total current assets
329,397
469,569
Property and equipment, net
16,832
21,352
Operating lease right-of-use assets,
net
25,031
31,300
Intangibles, net
238
1,306
Goodwill
11,038
11,038
Restricted cash
4,147
4,139
Other non-current assets
2,216
4,008
Total assets
$
388,899
$
542,712
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
74,727
$
111,650
Deferred revenue
30,567
50,362
Accrued liabilities
106,027
127,400
Income tax payable
431
4,489
Total current liabilities
211,752
293,901
Non-current deferred revenue
7,963
15,736
Non-current operating lease
liabilities
26,024
29,001
Non-current income taxes payable
92
92
Other non-current liabilities
1,261
606
Total liabilities
247,092
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:
79,026,508 at September 27, 2020 and 75,785,952 at December 31,
2019
79
76
Additional paid-in capital
359,297
334,821
Accumulated other comprehensive income
(9
)
(2
)
Accumulated deficit
(217,560
)
(131,519
)
Total stockholders’ equity
141,807
203,376
Total liabilities and stockholders’
equity
$
388,899
$
542,712
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Nine Months Ended
September 27,
2020
June 28, 2020
September 29,
2019
September 27,
2020
September 29,
2019
(in thousands, except
percentage and per share data)
Revenue:
Products
$
91,271
$
49,603
$
94,306
$
191,597
$
213,359
Services
18,965
17,029
11,810
50,721
34,235
Total revenue
110,236
66,632
106,116
242,318
247,594
Cost of revenue:
Products
79,107
51,186
88,755
182,481
206,878
Services
9,720
9,957
6,858
28,986
18,618
Total cost of revenue
88,827
61,143
95,613
211,467
225,496
Gross profit
21,409
5,489
10,503
30,851
22,098
Gross margin
19.4
%
8.2
%
9.9
%
12.7
%
8.9
%
Operating expenses:
Research and development
15,436
14,192
16,701
44,871
52,456
Sales and marketing
12,720
11,713
13,657
35,471
42,389
General and administrative
11,137
9,837
11,062
39,758
32,512
Separation expense
77
82
137
238
1,760
Gain on sale of business
—
—
—
(292
)
—
Total operating expenses
39,370
35,824
41,557
120,046
129,117
Loss from operations
(17,961
)
(30,335
)
(31,054
)
(89,195
)
(107,019
)
Operating margin
(16.3
)%
(45.5
)%
(29.3
)%
(36.8
)%
(43.2
)%
Interest income
74
151
596
760
2,170
Other income, net
543
1,111
154
2,837
138
Loss before income taxes
(17,344
)
(29,073
)
(30,304
)
(85,598
)
(104,711
)
Provision for income taxes
115
183
286
443
855
Net loss
$
(17,459
)
$
(29,256
)
$
(30,590
)
$
(86,041
)
$
(105,566
)
Net loss per share:
Basic
$
(0.22
)
$
(0.38
)
$
(0.41
)
$
(1.11
)
$
(1.41
)
Diluted
$
(0.22
)
$
(0.38
)
$
(0.41
)
$
(1.11
)
$
(1.41
)
Weighted average shares used to compute
net loss per share:
Basic
78,662
77,885
75,337
77,705
74,831
Diluted
78,662
77,885
75,337
77,705
74,831
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 27,
2020
September 29,
2019
(In thousands)
Cash flows from operating
activities:
Net loss
$
(86,041
)
$
(105,566
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
8,024
7,757
Loss on disposal of fixed assets
19
—
Stock-based compensation expense
26,338
15,261
Allowance for (release of) credit losses
and inventory reserves
1,322
(3,232
)
Gain on sale of business
(292
)
—
Deferred income taxes
63
(109
)
Premium amortization (discount accretion)
on investments, net
60
(391
)
Changes in assets and liabilities:
Accounts receivable, net
70,985
65,920
Inventories
(1,838
)
54,335
Prepaid expenses and other assets
8,369
(1,729
)
Accounts payable
(37,554
)
(24,381
)
Deferred revenue
(27,569
)
(1,996
)
Accrued and other liabilities
(21,203
)
(48,584
)
Net cash used in operating activities
(59,317
)
(42,715
)
Cash flows from investing
activities:
Purchases of property and equipment
(2,070
)
(5,023
)
Purchases of short-term investments
(45,085
)
(29,768
)
Maturities of short-term investments
45,000
40,000
Net cash provided by (used in) investing
activities
(2,155
)
5,209
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
3,051
1,837
Restricted stock unit withholdings
(4,632
)
(1,755
)
Net cash provided by (used in) financing
activities
(1,581
)
82
Net decrease in cash and cash equivalents
and restricted cash
(63,053
)
(37,424
)
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
$
177,766
$
118,000
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
1,470
$
1,578
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
Nine Months Ended
September 27,
2020
June 28, 2020
September 29,
2019
September 27,
2020
September 29,
2019
(in thousands, except
percentage data)
GAAP gross profit
$
21,409
$
5,489
$
10,503
$
30,851
$
22,098
GAAP gross margin
19.4
%
8.2
%
9.9
%
12.7
%
8.9
%
Stock-based compensation expense
942
562
467
2,007
1,286
Amortization of intangibles
356
357
381
1,069
1,144
Restructuring and other charges
—
—
—
23
—
Non-GAAP gross profit
$
22,707
$
6,408
$
11,351
$
33,950
$
24,528
Non-GAAP gross margin
20.6
%
9.6
%
10.7
%
14.0
%
9.9
%
GAAP research and development
$
15,436
$
14,192
$
16,701
$
44,871
$
52,456
Stock-based compensation expense
(2,870
)
(1,729
)
(1,569
)
(6,259
)
(4,501
)
Non-GAAP research and development
$
12,566
$
12,463
$
15,132
$
38,612
$
47,955
GAAP sales and marketing
$
12,720
$
11,713
$
13,657
$
35,471
$
42,389
Stock-based compensation expense
(1,160
)
(984
)
(791
)
(2,895
)
(2,722
)
Non-GAAP sales and marketing
$
11,560
$
10,729
$
12,866
$
32,576
$
39,667
GAAP general and administrative
$
11,137
$
9,837
$
11,062
$
39,758
$
32,512
Stock-based compensation expense
(4,029
)
(1,289
)
(2,392
)
(15,177
)
(6,752
)
Restructuring and other charges
—
—
—
(21
)
—
Strategic initiative and transaction
expenses
(17
)
(206
)
(502
)
(768
)
(502
)
Litigation reserves, net
—
(249
)
(140
)
(256
)
(140
)
Non-GAAP general and administrative
$
7,091
$
8,093
$
8,028
$
23,536
$
25,118
GAAP total operating expenses
$
39,370
$
35,824
$
41,557
$
120,046
$
129,117
Separation expense
(77
)
(82
)
(136
)
(238
)
(1,759
)
Strategic initiative and transaction
expenses
(17
)
(206
)
(502
)
(768
)
(502
)
Stock-based compensation expense
(8,059
)
(4,002
)
(4,752
)
(24,331
)
(13,975
)
Restructuring and other charges
—
—
—
(21
)
—
Litigation reserves, net
—
(249
)
(140
)
(256
)
(140
)
Activist shareholder response costs
—
—
—
—
(237
)
Gain on sale of business
—
—
—
292
—
Non-GAAP total operating expenses
$
31,217
$
31,285
$
36,027
$
94,724
$
112,504
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Nine Months Ended
September 27,
2020
June 28, 2020
September 29,
2019
September 27,
2020
September 29,
2019
(in thousands, except
percentage and per share data)
GAAP operating loss
$
(17,961
)
$
(30,335
)
$
(31,054
)
$
(89,195
)
$
(107,019
)
GAAP operating margin
(16.3
)%
(45.5
)%
(29.3
)%
(36.8
)%
(43.2
)%
Separation expense
77
82
136
238
1,759
Strategic initiative and transaction
expenses
17
206
502
768
502
Stock-based compensation expense
9,001
4,564
5,219
26,338
15,261
Amortization of intangibles
356
357
381
1,069
1,144
Restructuring and other charges
—
—
—
44
—
Litigation reserves, net
—
249
140
256
140
Activist shareholder response costs
—
—
—
—
237
Gain on sale of business
—
—
—
(292
)
—
Non-GAAP operating loss
$
(8,510
)
$
(24,877
)
$
(24,676
)
$
(60,774
)
$
(87,976
)
Non-GAAP operating margin
(7.7
)%
(37.3
)%
(23.3
)%
(25.1
)%
(35.5
)%
GAAP provision for income taxes
$
115
$
183
$
286
$
443
$
855
GAAP income tax rate
(0.7
)%
(0.6
)%
(0.9
)%
(0.5
)%
(0.8
)%
Tax effects
—
2
(46
)
31
96
Non-GAAP provision for income taxes
$
115
$
181
$
332
$
412
$
759
Non-GAAP income tax rate
(1.5
)%
(0.8
)%
(1.4
)%
(0.7
)%
(0.9
)%
GAAP net loss
$
(17,459
)
$
(29,256
)
$
(30,590
)
$
(86,041
)
$
(105,566
)
Separation expense
77
82
136
238
1,759
Strategic initiative and transaction
expenses
17
206
502
768
502
Stock-based compensation expense
9,001
4,564
5,219
26,338
15,261
Amortization of intangibles
356
357
381
1,069
1,144
Restructuring and other charges
—
—
—
44
—
Litigation reserves, net
—
249
140
256
140
Activist shareholder response costs
—
—
—
—
237
Gain on sale of business
—
—
—
(292
)
—
Tax effects
—
2
(46
)
31
96
Non-GAAP net loss
$
(8,008
)
$
(23,796
)
$
(24,258
)
$
(57,589
)
$
(86,427
)
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Nine Months Ended
September 27,
2020
June 28, 2020
September 29,
2019
September 27,
2020
September 29,
2019
(in thousands, except
percentage and per share data)
NET INCOME (LOSS) PER DILUTED SHARE:
GAAP net income (loss) per diluted
share
$
(0.22
)
$
(0.38
)
$
(0.41
)
$
(1.11
)
$
(1.41
)
Separation expense
—
—
—
0.01
0.02
Strategic initiative and transaction
expenses
—
—
0.01
0.01
0.01
Stock-based compensation expense
0.11
0.06
0.07
0.34
0.21
Amortization of intangibles
0.01
0.01
0.01
0.01
0.02
Restructuring and other charges
—
—
—
—
—
Litigation reserves, net
—
—
—
—
—
Gain on sale of business
—
—
—
—
—
Tax effects
—
—
—
—
0.00
Non-GAAP net loss per diluted share
$
(0.10
)
$
(0.31
)
$
(0.32
)
$
(0.74
)
$
(1.15
)
Shares used in computing GAAP net income
(loss) per diluted share
78,662
77,885
75,337
77,705
74,831
Shares used in computing non-GAAP net
income (loss) per diluted share
78,662
77,885
75,337
77,705
74,831
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
September 27,
2020
June 28, 2020
March 29, 2020
December 31,
2019
September 29,
2019
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
193,611
$
205,454
$
206,582
$
256,670
$
153,811
Cash, cash equivalents and short-term
investments per diluted share
$
2.46
$
2.64
$
2.70
$
3.37
$
2.04
Accounts receivable, net
$
56,431
$
46,466
$
61,376
$
127,317
$
99,698
Days sales outstanding
47
63
83
97
85
Inventories
$
69,038
$
65,814
$
61,027
$
68,624
$
74,117
Inventory turns
4.6
3.1
3.4
5.9
4.8
Weeks of channel inventory:
U.S. retail channel
8.4
6.6
13.7
6.3
13.3
U.S. distribution channel
8.6
8.4
20.3
8.0
3.3
APAC distribution channel
4.2
6.8
6.0
3.6
4.3
Deferred revenue (current and
non-current)
$
38,530
$
54,546
$
59,848
$
66,098
$
47,995
Cumulative registered accounts (1)
4,774
4,518
4,245
4,015
3,691
Cumulative paid accounts (2)
356
298
255
230
211
Headcount
358
355
356
349
406
Non-GAAP diluted shares
78,662
77,885
76,560
76,090
75,337
_________________________
(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
Nine Months Ended
September 27,
2020
June 28, 2020
September 29,
2019
September 27,
2020
September 29,
2019
(in thousands, except
percentage data)
Americas
$
75,861
69
%
$
50,971
76
%
$
85,562
81
%
$
176,990
73
%
$
194,492
79
%
EMEA
28,010
25
%
11,263
17
%
13,002
12
%
46,846
19
%
37,370
15
%
APAC
6,365
6
%
4,398
7
%
7,552
7
%
18,482
8
%
15,732
6
%
Total
$
110,236
100
%
$
66,632
100
%
$
106,116
100
%
$
242,318
100
%
$
247,594
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105006024/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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