Exceeded High-End of EPS Guidance for the
Quarter
Delivered Highest Gross Margin in Nine
Quarters
Fourth Quarter Service Revenue Growth of
72.1% Year Over Year for a Sixth Consecutive Quarterly
Record
89.1% Paid Account Growth Year Over
Year
Ended Year with Cash, Cash Equivalents and
Short-term Investments Balance at $206.1 million with No
Debt
Arlo Technologies, Inc. (NYSE: ARLO), a leading
internet-connected security camera brand, today reported financial
results for the fourth quarter and fiscal year ended December 31,
2020.
Financial Highlights (1)
- Fourth quarter revenue of $114.8 million, a decrease of 6.2%
year over year.
- Fourth quarter GAAP gross profit of $24.5 million, an increase
of 79.0% year over year; non-GAAP gross profit of $25.7 million, an
increase of 73.0% year over year.
- Fourth quarter GAAP gross margin of 21.4%; non-GAAP gross
margin of 22.4%.
- Fourth quarter GAAP net loss per diluted share of $(0.19);
non-GAAP net loss per diluted share of $(0.08).
- 2020 revenue of $357.2 million, a decrease of 3.5% compared to
prior year.
- 2020 GAAP gross profit of $55.4 million, an increase of 54.7%
compared to prior year; non-GAAP gross profit of $59.7 million, an
increase of 51.5% compared to prior year.
- 2020 GAAP gross margin of 15.5%; non-GAAP gross margin of
16.7%.
- 2020 GAAP net loss per diluted share of $(1.30); non-GAAP net
loss per diluted share of $(0.82).
- Cash, cash equivalents and short-term investments of $206.1
million and no debt at the end of Q4.
"2020 was an unprecedented year and I am exceedingly proud of
our team’s perseverance and determination in the face of the
ongoing pandemic. In Q4, revenue grew 4.2% sequentially to $114.8
million to come in at the top end of our guidance. The strength of
our new business model, a free, 90-day trial of Arlo Smart,
continues to accelerate the momentum of our paid account growth and
the fourth quarter was another great example. We closed out the
year with an 89.1% year over year paid account growth and saw
service gross margin improve 10 percentage points year over year.
Our unwavering commitment to operational efficiency drove a
significant year over year decrease in operating expenses and led
us to solidly outperform the high end of our guidance for EPS. We
also kept our focus on robust innovation and launched two new
products in the fourth quarter,” said Matthew McRae, Chief
Executive Officer of Arlo Technologies. “In 2020 we laid a solid
foundation to become a more profitable and predictable business
with strong progress with our Verisure partnership and by
refreshing our entire product line up to drive paid account growth
with our new business model. Looking forward, we expect to roughly
triple our paid account additions in 2021 and reach one million
paid accounts by this time next year. We believe Arlo is on solid
financial and operational footing and look forward to continuing
our execution in 2021."
Three Months Ended
Twelve Months Ended
December 31, 2020
September 27, 2020
December 31, 2019
December 31, 2020
December 31, 2019
(in thousands, except
percentage and per share data)
Revenue
$
114,836
$
110,236
$
122,413
$
357,154
$
370,007
GAAP Gross Margin
21.4
%
19.4
%
11.2
%
15.5
%
9.7
%
Non-GAAP Gross Margin (1)
22.4
%
20.6
%
12.2
%
16.7
%
10.6
%
GAAP Net Income (Loss) per Diluted
Share
$
(0.19
)
$
(0.22
)
$
0.26
$
(1.30
)
$
(1.14
)
Non-GAAP Net Income (Loss) per Diluted
Share (1)
$
(0.08
)
$
(0.10
)
$
(0.26
)
$
(0.82
)
$
(1.42
)
_________________________
(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
- Full year service revenue of $72.3 million, for growth of 54.6%
year over year.
- Service revenue of $21.6 million for Q4, for growth of 72.1%
year over year.
- Added a record 79,000 paid accounts in Q4, a sequential
increase of 22.2% over Q3, and a year over year increase of
89.1%.
- Announced the all new Arlo Touchless Video Doorbell, which
builds on the award-winning features of the Video Doorbell.
Utilizing our precise Proximity Sensing Technology, the Touchless
Video Doorbell can automatically detect a visitor’s approach and
“press” the doorbell, alerting both homeowner and visitor without
the need for physical contact with the device. The Touchless Video
Doorbell also includes a three-month subscription to Arlo
Smart.
- Expanded the Arlo Essential product family with the addition of
the Essential Indoor Camera, which sports all of the Essential’s
great features while incorporating new design elements for optimal
indoor use. The Essential Indoor Camera features a stand mount and
a power cord for easy and flexible indoor placement, along with a
built-in motorized shutter to quickly and easily turn the camera on
and off. This Essential Indoor Camera also includes a three-month
subscription to Arlo Smart.
- Partnered with Calix and its broad network of Communications
Service Providers to seamlessly offer Arlo products and services as
part of a homeowner’s overall managed WiFi experience.
- The newly announced Essential Indoor Camera and Touchless Video
Doorbell were named CES 2021 Innovation Award Honorees, making this
the third consecutive year of recognition for Arlo products by the
Consumer Technology Association.
First Quarter 2021 Business Outlook (2)
- Revenue of $70.0 million to $80.0 million.
- GAAP net loss per diluted share of $(0.35) to $(0.29), and
non-GAAP net loss per diluted share of $(0.23) to $(0.17).
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending March 28,
2021
Revenue
Net Loss per Diluted
Share
(in millions, except per share
data)
GAAP
$70.0 - $80.0
$(0.35) - $(0.29)
Estimated adjustments for (2):
Stock-based compensation expense
—
0.12
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$70.0 - $80.0
$(0.23) - $(0.17)
_________________________
(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 fourth quarter of 2020 results and discuss
management’s expectations for the first quarter of 2021 today,
Tuesday, February 23, 2021 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 8394616. 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 II - Item 1A.
Risk Factors,” in the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 27, 2020, filed with the
Securities and Exchange Commission on November 5, 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.
CONSOLIDATED BALANCE
SHEETS
As of
December 31,
2020
December 31,
2019
(In thousands, except share
and per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
186,127
$
236,680
Short-term investments (amortized cost of
$19,996 and $19,967)
19,997
19,990
Accounts receivable, net (net of allowance
for credit losses of $519 and $609)
77,643
127,317
Inventories
64,705
68,624
Prepaid expenses and other current
assets
8,076
16,958
Total current assets
356,548
469,569
Property and equipment, net
15,821
21,352
Operating lease right-of-use assets,
net
23,998
31,300
Intangibles, net
—
1,306
Goodwill
11,038
11,038
Restricted cash
4,164
4,139
Other non-current assets
2,399
4,008
Total assets
$
413,968
$
542,712
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
62,171
$
111,650
Deferred revenue
53,142
50,362
Accrued liabilities
121,766
127,400
Income tax payable
267
4,489
Total current liabilities
237,346
293,901
Non-current deferred revenue
16,563
15,736
Non-current operating lease
liabilities
25,029
29,001
Non-current income taxes payable
104
92
Other non-current liabilities
1,159
606
Total liabilities
280,201
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:
79,336,242 at December 31, 2020 and 75,785,952 at December 31,
2019
79
76
Additional paid-in capital
366,455
334,821
Accumulated other comprehensive income
3
(2
)
Accumulated deficit
(232,770
)
(131,519
)
Total stockholders’ equity
133,767
203,376
Total liabilities and stockholders’
equity
$
413,968
$
542,712
ARLO TECHNOLOGIES,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months Ended
Twelve Months Ended
December 31,
2020
September 27,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(in thousands, except
percentage and per share data)
Revenue:
Products
$
93,271
$
91,271
$
109,883
$
284,868
$
323,242
Services
21,565
18,965
12,530
72,286
46,765
Total revenue
114,836
110,236
122,413
357,154
370,007
Cost of revenue:
Products
81,424
79,107
100,470
263,905
307,348
Services
8,874
9,720
8,237
37,860
26,855
Total cost of revenue
90,298
88,827
108,707
301,765
334,203
Gross profit
24,538
21,409
13,706
55,389
35,804
Gross margin
21.4
%
19.4
%
11.2
%
15.5
%
9.7
%
Operating expenses:
Research and development
15,266
15,436
16,928
60,137
69,384
Sales and marketing
13,593
12,720
14,596
49,064
56,985
General and administrative
11,338
11,137
15,112
51,096
47,624
Separation expense
10
77
153
248
1,913
Gain on sale of business
—
—
(54,881
)
(292
)
(54,881
)
Total operating expenses
40,207
39,370
(8,092
)
160,253
121,025
Income (loss) from operations
(15,669
)
(17,961
)
21,798
(104,864
)
(85,221
)
Operating margin
(13.6
)%
(16.3
)%
17.8
%
(29.4
)%
(23.0
)%
Interest income
42
74
567
802
2,737
Other income (expense), net
599
543
775
3,436
913
Income (loss) before income taxes
(15,028
)
(17,344
)
23,140
(100,626
)
(81,571
)
Provision for income taxes
182
115
3,525
625
4,380
Net income (loss)
$
(15,210
)
$
(17,459
)
$
19,615
$
(101,251
)
$
(85,951
)
Net income (loss) per share:
Basic
$
(0.19
)
$
(0.22
)
$
0.26
$
(1.30
)
$
(1.14
)
Diluted
$
(0.19
)
$
(0.22
)
$
0.26
$
(1.30
)
$
(1.14
)
Weighted average shares used to compute
net income (loss) per share:
Basic
79,164
78,662
75,805
78,084
75,074
Diluted
79,164
78,662
76,090
78,084
75,074
ARLO TECHNOLOGIES,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
Twelve Months Ended
December 31,
2020
December 31,
2019
(In thousands)
Cash flows from operating
activities:
Net loss
$
(101,251
)
$
(85,951
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
10,206
10,681
Stock-based compensation expense
35,247
22,894
Allowance for (release of) credit losses
and inventory reserves
964
(2,921
)
Gain on sale of business
(292
)
(54,881
)
Deferred income taxes
50
(210
)
Premium amortization (discount accretion)
on investments, net
54
(461
)
Changes in assets and liabilities:
Accounts receivable, net
49,765
38,247
Inventories
2,862
53,604
Prepaid expenses and other assets
10,441
11,525
Accounts payable
(49,282
)
28,791
Deferred revenue
3,607
22,567
Accrued and other liabilities
(8,901
)
(34,714
)
Net cash provided by (used in) operating
activities
(46,530
)
9,171
Cash flows from investing
activities:
Purchases of property and equipment
(3,892
)
(6,664
)
Proceeds from sale of business
—
52,694
Purchases of short-term investments
(50,083
)
(29,768
)
Maturities of short-term investments
50,000
60,000
Net cash provided by (used in) investing
activities
(3,975
)
76,262
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
4,755
1,837
Restricted stock unit withholdings
(4,778
)
(1,875
)
Net cash used in financing activities
(23
)
(38
)
Net increase (decrease) in cash and cash
equivalents and restricted cash
(50,528
)
85,395
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
$
190,291
$
240,819
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
564
$
1,086
De-recognition of build-to-suit assets and
liabilities
$
—
$
(21,610
)
Supplemental cash flow information:
Cash paid for income taxes
$
5,614
$
960
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
STATEMENT OF OPERATIONS DATA:
Three Months Ended
Twelve Months Ended
December 31,
2020
September 27,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(in thousands, except
percentage data)
GAAP gross profit:
Products
$
11,847
$
12,164
$
9,413
$
20,963
$
15,894
Services
12,691
9,245
4,293
34,426
19,910
Total GAAP gross profit
24,538
21,409
13,706
55,389
35,804
GAAP gross margin:
Products
12.7
%
13.3
%
8.6
%
7.4
%
4.9
%
Services
58.9
%
48.8
%
34.3
%
47.6
%
42.6
%
Total GAAP gross margin
21.4
%
19.4
%
11.2
%
15.5
%
9.7
%
Stock-based compensation expense
955
942
727
2,962
2,013
Amortization of intangibles
237
356
373
1,306
1,517
Restructuring and other charges
—
—
69
23
69
Non-GAAP gross profit:
Products
13,039
13,462
10,582
25,254
19,493
Services
12,691
9,245
4,293
34,426
19,910
Total Non-GAAP gross profit
$
25,730
$
22,707
$
14,875
$
59,680
$
39,403
Non-GAAP gross margin:
Products
14.0
%
14.7
%
9.6
%
8.9
%
6.0
%
Services
58.9
%
48.8
%
34.3
%
47.6
%
42.6
%
Total Non-GAAP gross margin
22.4
%
20.6
%
12.2
%
16.7
%
10.6
%
GAAP research and development
$
15,266
$
15,436
$
16,928
$
60,137
$
69,384
Stock-based compensation expense
(2,795
)
(2,870
)
(2,367
)
(9,054
)
(6,868
)
Restructuring and other charges
—
—
(262
)
—
(262
)
Non-GAAP research and development
$
12,471
$
12,566
$
14,299
$
51,083
$
62,254
GAAP sales and marketing
$
13,593
$
12,720
$
14,596
$
49,064
$
56,985
Stock-based compensation expense
(1,211
)
(1,160
)
(1,137
)
(4,106
)
(3,859
)
Restructuring and other charges
—
—
(198
)
—
(198
)
Non-GAAP sales and marketing
$
12,382
$
11,560
$
13,261
$
44,958
$
52,928
GAAP general and administrative
$
11,338
$
11,137
$
15,112
$
51,096
$
47,624
Stock-based compensation expense
(3,948
)
(4,029
)
(3,402
)
(19,125
)
(10,154
)
Restructuring and other charges
—
—
(102
)
(21
)
(102
)
Strategic initiative and transaction
expenses
(2
)
(17
)
(1,868
)
(770
)
(2,370
)
Activist shareholder response costs
—
—
—
—
(237
)
Litigation reserves, net
—
—
(1,287
)
(256
)
(1,427
)
Non-GAAP general and administrative
$
7,388
$
7,091
$
8,453
$
30,924
$
33,334
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Twelve Months Ended
December 31,
2020
September 27,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(in thousands, except
percentage and per share data)
GAAP total operating expenses
$
40,207
$
39,370
$
(8,092
)
$
160,253
$
121,025
Separation expense
(10
)
(77
)
(154
)
(248
)
(1,913
)
Strategic initiative and transaction
expenses
(2
)
(17
)
(1,868
)
(770
)
(2,370
)
Stock-based compensation expense
(7,954
)
(8,059
)
(6,906
)
(32,285
)
(20,881
)
Restructuring and other charges
—
—
(562
)
(21
)
(562
)
Litigation reserves, net
—
—
(1,287
)
(256
)
(1,427
)
Activist shareholder response costs
—
—
—
—
(237
)
Gain on sale of business
—
—
54,881
292
54,881
Non-GAAP total operating expenses
$
32,241
$
31,217
$
36,012
$
126,965
$
148,516
GAAP operating income (loss)
$
(15,669
)
$
(17,961
)
$
21,798
$
(104,864
)
$
(85,221
)
GAAP operating margin
(13.6
)%
(16.3
)%
17.8
%
(29.4
)%
(23.0
)%
Separation expense
10
77
154
248
1,913
Strategic initiative and transaction
expenses
2
17
1,868
770
2,370
Stock-based compensation expense
8,909
9,001
7,633
35,247
22,894
Amortization of intangibles
237
356
373
1,306
1,517
Restructuring and other charges
—
—
631
44
631
Litigation reserves, net
—
—
1,287
256
1,427
Activist shareholder response costs
—
—
—
—
237
Gain on sale of business
—
—
(54,881
)
(292
)
(54,881
)
Non-GAAP operating loss
$
(6,511
)
$
(8,510
)
$
(21,137
)
$
(67,285
)
$
(109,113
)
Non-GAAP operating margin
(5.7
)%
(7.7
)%
(17.3
)%
(18.8
)%
(29.5
)%
GAAP provision for income taxes
$
182
$
115
$
3,525
$
625
$
4,380
GAAP income tax rate
(1.2
)%
(0.7
)%
15.2
%
(0.6
)%
(5.4
)%
Tax effects
(3
)
—
3,241
28
3,337
Non-GAAP provision for income taxes
$
185
$
115
$
284
$
597
$
1,043
Non-GAAP income tax rate
(3.2
)%
(1.5
)%
(1.4
)%
(0.9
)%
(1.0
)%
GAAP net income (loss)
$
(15,210
)
$
(17,459
)
$
19,615
$
(101,251
)
$
(85,951
)
Separation expense
10
77
154
248
1,913
Strategic initiative and transaction
expenses
2
17
1,868
770
2,370
Stock-based compensation expense
8,909
9,001
7,633
35,247
22,894
Amortization of intangibles
237
356
373
1,306
1,517
Restructuring and other charges
—
—
631
44
631
Litigation reserves, net
—
—
1,287
256
1,427
Activist shareholder response costs
—
—
—
—
237
Gain on sale of business
—
—
(54,881
)
(292
)
(54,881
)
Tax effects
(3
)
—
3,241
28
3,337
Non-GAAP net loss
$
(6,055
)
$
(8,008
)
$
(20,079
)
$
(63,644
)
$
(106,506
)
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Twelve Months Ended
December 31,
2020
September 27,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(in thousands, except
percentage and per share data)
NET INCOME (LOSS) PER DILUTED SHARE:
GAAP net income (loss) per diluted
share
$
(0.19
)
$
(0.22
)
$
0.26
$
(1.30
)
$
(1.14
)
Separation expense
—
—
—
—
0.02
Strategic initiative and transaction
expenses
—
—
0.02
0.01
0.03
Stock-based compensation expense
0.11
0.11
0.10
0.45
0.31
Amortization of intangibles
—
0.01
—
0.02
0.02
Restructuring and other charges
—
—
0.01
—
0.01
Litigation reserves, net
—
—
0.02
—
0.02
Gain on sale of business
—
—
(0.72
)
—
(0.72
)
Tax effects
—
—
0.05
—
0.04
Non-GAAP net loss per diluted share
$
(0.08
)
$
(0.10
)
$
(0.26
)
$
(0.82
)
$
(1.42
)
Shares used in computing GAAP net income
(loss) per diluted share
79,164
78,662
76,090
78,084
75,074
Shares used in computing non-GAAP net
income (loss) per diluted share
79,164
78,662
76,090
78,084
75,074
ARLO TECHNOLOGIES,
INC.
SUPPLEMENTAL FINANCIAL
INFORMATION
Three Months Ended
December 31,
2020
September 27,
2020
June 28, 2020
March 29, 2020
December 31,
2019
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
206,124
$
193,611
$
205,454
$
206,582
$
256,670
Cash, cash equivalents and short-term
investments per diluted share
$
2.60
$
2.46
$
2.64
$
2.70
$
3.37
Accounts receivable, net
$
77,643
$
56,431
$
46,466
$
61,376
$
127,317
Days sales outstanding
64
47
63
83
97
Inventories
$
64,705
$
69,038
$
65,814
$
61,027
$
68,624
Inventory turns
5.0
4.6
3.1
3.4
5.9
Weeks of channel inventory:
U.S. retail channel
9.2
8.4
6.6
13.7
6.3
U.S. distribution channel
11.7
8.6
8.4
20.3
8.0
APAC distribution channel
2.8
4.2
6.8
6.0
3.6
Deferred revenue (current and
non-current)
$
69,705
$
38,530
$
54,546
$
59,848
$
66,098
Cumulative registered accounts (1)
5,047
4,774
4,518
4,245
4,015
Cumulative paid accounts (2)
435
356
298
255
230
Headcount
359
358
355
356
349
Non-GAAP diluted shares
79,164
78,662
77,885
76,560
76,090
_________________________
(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
Twelve Months Ended
December 31,
2020
September 27,
2020
December 31,
2019
December 31,
2020
December 31,
2019
(in thousands, except
percentage data)
Americas
$
92,301
81
%
$
75,861
69
%
$
94,668
77
%
$
269,395
76
%
$
289,160
78
%
EMEA
15,302
13
%
28,010
25
%
19,862
16
%
61,832
17
%
57,232
15
%
APAC
7,233
6
%
6,365
6
%
7,883
7
%
25,927
7
%
23,615
7
%
Total
$
114,836
100
%
$
110,236
100
%
$
122,413
100
%
$
357,154
100
%
$
370,007
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210223006040/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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