Q2 ARR ended at $117 million, growing 67%
year over year
Revenue Growth of 20.7% year over year,
exceeding high-end of Guidance for the Quarter
Record GAAP gross profit of $33.7 million,
record non-GAAP gross profit of $35.1 million
113% Year over Year growth in Cumulative
Paid Accounts, surpassing 1.5 million in July
Delivered GAAP operating loss of $11.3
million, third consecutive quarter of non-GAAP Operating Profit of
$1.0 million
Arlo Technologies, Inc. (NYSE: ARLO), a leading smart home
security brand, today reported financial results for the second
quarter ended July 3, 2022.
Financial Highlights (1)
- Record revenue for any second fiscal quarter of $119.0 million,
an increase of 20.7% year over year.
- GAAP gross profit of $33.7 million, an increase of 28.9% year
over year; non-GAAP gross profit of $35.1 million, an increase of
27.7% year over year and an all-time record for the company.
- GAAP gross margin of 28.4%; non-GAAP gross margin of
29.5%.
- GAAP operating loss of $11.3 million, a decrease of $14.5
million year over year; non-GAAP operating profit of $1.0 million,
an increase of $5.3 million year over year and the third
consecutive quarter of non-GAAP operating profitability.
- GAAP net loss per diluted share of $(0.13); non-GAAP net income
per diluted share of $0.01.
"The strong growth of our service business coupled with solid
execution by the Arlo team continues to deliver exceptional results
across all metrics. In Q2, revenue reached $119.0 million for 20.7%
growth year over year, above the top end of our guidance and a
record for the quarter. This growth was driven by highly profitable
ARR, which ended Q2 at $117 million. Arlo posted record non-GAAP
gross profit and our third consecutive quarter of non-GAAP
operating profitability. These exceptional Q2 results underline how
the powerful combination of our recurring revenue business model
coupled with our successful channel and product diversification are
delivering truly transformative results for Arlo,” said Matthew
McRae, Chief Executive Officer of Arlo Technologies. “Having
delivered a record-breaking first half year of non-GAAP operating
profit, we are looking forward to deploying the building blocks of
our long-range plan in the second half of the year. Firstly, we are
excited to commence the roll out of our brand awareness advertising
campaign this month, which we will conduct in a targeted manner
focused on new household formation to drive incremental
subscription revenue. Secondly, we will be expanding our product
portfolio with our new personal protection app, Arlo Safe, and our
new innovative security system, which will bring full sensor-based
security functionality to our ecosystem of smart cameras. We expect
both of these will be available before the end of the year and will
provide significant opportunities to drive new subscriptions and
increase ARPU. Thirdly, we continue to broaden our routes to market
and build on the success we are seeing with partners such as
Verisure, Calix, Verizon and T-Mobile. We look forward to reporting
more to you on the success of these initiatives which we believe
will drive incremental long-term growth and profitability."
Three Months Ended
Six Months Ended
July 3, 2022
April 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
(in thousands, except
percentage and per share data)
Revenue
$
118,979
$
124,751
$
98,571
$
243,730
$
181,127
GAAP Gross Margin
28.4
%
26.9
%
26.6
%
27.6
%
28.7
%
Non-GAAP Gross Margin (1)
29.5
%
27.6
%
27.9
%
28.5
%
29.9
%
GAAP Net Loss per Diluted Share
$
(0.13
)
$
(0.10
)
$
(0.28
)
$
(0.23
)
$
(0.42
)
Non-GAAP Net Income (Loss) per Diluted
Share (1)
$
0.01
$
0.01
$
(0.04
)
$
0.02
$
(0.07
)
_________________________
(1)
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.
Financial and Business Highlights
- Record Q2 service revenue of $32.8 million, for growth of 29.8%
year over year.
- Ended Q2 with ARR of $116.6 million, growing 67.2% year over
year. (2)
- GAAP service gross margin of 65.2%. Non-GAAP service gross
margin of 65.8% in Q2 which is a record for Arlo as a standalone
company. (1)
- Added a record 206,000 paid accounts in Q2, a sequential
increase of 0.5% over Q1, and a year over year increase of
41.1%.
- Our Go 2 LTE/Wi-Fi camera won the Editor’s Choice Award at
PCMag.
_________________________
(1)
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.
(2)
ARR is calculated by taking our recurring
paid service revenue for the last calendar month in the fiscal
quarter, multiplied by 12 months. Recurring paid service revenue
represents the revenue we recognized from our paid accounts and
excludes prepaid service revenue and non-recurring engineering
(NRE) service revenue from strategic partners.
Third Quarter 2022 Business Outlook (3)
- Revenue of $125.0 million to $135.0 million.
- GAAP net loss per diluted share of $(0.28) to $(0.21), and
non-GAAP net loss per diluted share of $(0.17) to $(0.10).
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending October 2,
2022
Revenue
Net Loss per Diluted
Share
(in millions, except per share
data)
GAAP
$125.0 - $135.0
$(0.28) - $(0.21)
Estimated adjustments for (3):
Stock-based compensation expense
—
0.11
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$125.0 - $135.0
$(0.17) - $(0.10)
_________________________
(3)
Business outlook does not include
estimates for any currently unknown income and expense items which,
by their nature, could arise late in a quarter, including:
litigation reserves, net; acquisition-related charges; impairment
charges; discrete tax benefits or detriments relating to tax
windfalls or shortfalls from equity awards; and any additional
impacts relating to the implementation of U.S. tax reform. New
material income and expense items such as these could have a
significant effect on our guidance and future results.
Investor Conference Call / Webcast Details
Arlo will review the second quarter of 2022 results and discuss
management’s expectations for the third quarter of 2022 today,
Tuesday, August 9, 2022 at 5:00 p.m. ET (2:00 p.m. PT). The
toll-free dial-in number for the live audio call is (888) 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, including wire-free smart
Wi-Fi and LTE-enabled security cameras, indoor security cameras,
audio and video doorbells, and floodlights.
With a mission to bring users peace of mind, Arlo is as
passionate about protecting user privacy as it is about
safeguarding homes and families. Arlo is committed to supporting
industry standards for data protection designed to keep users'
personal information private and in their control. Arlo does not
monetize personal data, provides enhanced controls for user data,
supports privacy legislation, keeps user data safely secure, and
puts security at the forefront of company culture.
© 2022 Arlo Technologies, Inc., Arlo and the Arlo logo are
trademarks and/or registered trademarks of Arlo Technologies, Inc.
and/or certain of its affiliates in the United States and/or other
countries. Other brand and product names are for identification
purposes only and may be trademarks or registered trademarks of
their respective holder(s). The information contained herein is
subject to change without notice. Arlo shall not be liable for
technical or editorial errors or omissions contained herein. All
rights reserved.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995:
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. The words “anticipate,” “expect,” “believe,” “will,” “may,”
“should,” “estimate,” “project,” “outlook,” “forecast” or other
similar words are used to identify such forward-looking statements.
However, the absence of these words does not mean that the
statements are not forward-looking. The forward-looking statements
represent Arlo Technologies, Inc.’s (the "Company") expectations or
beliefs concerning future events based on information available at
the time such statements were made and include statements regarding
its potential future business, operating performance and financial
condition, including descriptions of its expected revenue, GAAP and
non-GAAP gross margins, operating margins, tax rates, expenses, and
cash outlook; the deployment of elements of the Company’s
long-range plan in the second half of 2022; the commencement of the
deployment of the brand awareness advertising campaign and the
targeting thereof; the expansion of the Company’s product portfolio
with Arlo Safe and the new security system, the timing of
availability thereof and the potential to provide opportunities for
new subscription and increased ARPU; and the broadening of routes
to market and continued relationships with Verisure, Calix,
Verizon, and T-Mobile. These statements are based on management's
current expectations and are subject to certain risks and
uncertainties, including the following: deployment of elements of
the Company’s long-range plans may be delayed or may not occur; the
deployment of the brand awareness advertising campaign may be
delayed or may not occur and the risk that it may not drive
incremental paid accounts; the expansion of the Company’s product
portfolio with Arlo Safe and the new security system may not
materialize; routes to market may not materialize or prove as
successful as anticipated; the relationships with Verisure, Calix,
Verizon, and T-Mobile may deteriorate; future demand for the
Company's products may be lower than anticipated; the Company may
be unsuccessful in developing and expanding its sales and marketing
capabilities; the COVID-19 pandemic could continue to have an
adverse impact on the Company's business, operations and the
markets and communities in which the Company and its partners and
customers operate; and the actions and financial health of the
Company's customers. Further, certain forward-looking statements
are based on assumptions as to future events that may not prove to
be accurate. Therefore, actual outcomes and results may differ
materially from what is expressed or forecast in such
forward-looking statements. Further information on potential risk
factors that could affect the Company and its business are detailed
in the Company's periodic filings with the Securities and Exchange
Commission, including, but not limited to, those risks and
uncertainties listed in the section entitled “Risk Factors” in the
Company's most recently filed Annual Report and Quarterly Report
filed with the Securities and Exchange Commission (the “SEC”) and
subsequent filings with the SEC. Given these circumstances, you
should not place undue reliance on these forward-looking
statements. The Company undertakes no obligation to release
publicly any revisions to any forward-looking statements contained
herein to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events.
Non-GAAP Financial Information:
To supplement our unaudited selected financial data presented on
a basis consistent with U.S. Generally Accepted Accounting
Principles (“GAAP”), we disclose certain non-GAAP financial
measures that exclude certain charges, including non-GAAP gross
profit, non-GAAP gross margin, non-GAAP research and development,
non-GAAP sales and marketing, non-GAAP general and administrative,
non-GAAP total operating expenses, non-GAAP operating income
(loss), non-GAAP operating margin, non-GAAP other income
(expenses), net, non-GAAP provision for income taxes, non-GAAP net
income (loss) and non-GAAP net income (loss) per diluted share.
These supplemental measures exclude adjustments for separation
expense, stock-based compensation expense, litigation reserves,
employee retention credit and the related tax effects. These
non-GAAP measures are not in accordance with or an alternative for
GAAP, and may be different from similarly-titled non-GAAP measures
used by other companies. We believe that these non-GAAP measures
have limitations in that they do not reflect all of the amounts
associated with our results of operations as determined in
accordance with GAAP and that these measures should only be used to
evaluate our results of operations in conjunction with the
corresponding GAAP measures. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the most directly comparable GAAP measures. We
compensate for the limitations of non-GAAP financial measures by
relying upon GAAP results to gain a complete picture of our
performance.
In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of our operating
performance on a period-to-period basis because such items are not,
in our view, related to our ongoing operational performance. We use
non-GAAP measures to evaluate the operating performance of our
business, for comparison with forecasts and strategic plans, and
for benchmarking performance externally against competitors. In
addition, management’s incentive compensation is determined using
certain non-GAAP measures. Since we find these measures to be
useful, we believe that investors benefit from seeing results
“through the eyes” of management in addition to seeing GAAP
results. We believe that these non-GAAP measures, when read in
conjunction with our GAAP measures, provide useful information to
investors by offering:
– the ability to make more meaningful period-to-period
comparisons of our on-going operating results; – the ability to
better identify trends in our underlying business and perform
related trend analyses; – a better understanding of how management
plans and measures our underlying business; and – an easier way to
compare our operating results against analyst financial models and
operating results of competitors that supplement their GAAP results
with non-GAAP financial measures.
The following are explanations of the adjustments that we
incorporate into non-GAAP measures, as well as the reasons for
excluding them in the reconciliations of these non-GAAP financial
measures:
Separation expense consists of expenses that are related to the
separation of our business from NETGEAR. These consist primarily of
costs of legal and professional services for IPO-related litigation
associated with our separation from NETGEAR. We consider our
operating results without these charges when evaluating our ongoing
performance and forecasting our earnings trends, and therefore
exclude such charges when presenting non-GAAP financial measures.
We believe that the assessment of our operations excluding these
costs is relevant to our assessment of internal operations and
comparisons to the performance of our competitors.
Stock-based compensation expense consists of non-cash charges
for the estimated fair value of stock options, performance-based
stock options, restricted stock units, performance-based restricted
stock units, shares under the employee stock purchase plan granted
to employees and employees' annual bonus in RSU form. We believe
that the exclusion of these charges provides for more accurate
comparisons of our operating results to peer companies due to the
varying available valuation methodologies, subjective assumptions
and the variety of award types. In addition, we believe it is
useful to investors to understand the specific impact stock-based
compensation expense has on our operating results.
Other items are the result of either unique or unplanned events,
including, when applicable: 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.
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
July 3, 2022
December 31,
2021
(In thousands, except share
and per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
85,537
$
175,749
Short-term investments (amortized cost of
$49,901 and $—)
49,721
—
Accounts receivable, net (net of allowance
for credit losses of $405 and $337)
73,998
79,564
Inventories
39,208
38,390
Prepaid expenses and other current
assets
8,890
9,919
Total current assets
257,354
303,622
Property and equipment, net
7,478
9,595
Operating lease right-of-use assets,
net
15,242
14,814
Goodwill
11,038
11,038
Restricted cash
4,125
4,107
Other non-current assets
4,441
4,314
Total assets
$
299,678
$
347,490
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
77,423
$
84,098
Deferred revenue
13,445
29,442
Accrued liabilities
82,225
97,377
Income tax payable
138
12
Total current liabilities
173,231
210,929
Non-current deferred revenue
577
1,344
Non-current operating lease
liabilities
21,469
21,470
Non-current income taxes payable
94
94
Other non-current liabilities
1,906
1,001
Total liabilities
197,277
234,838
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:
87,529,758 at July 3, 2022 and 84,453,212 at December 31, 2021
88
84
Additional paid-in capital
411,316
401,367
Accumulated other comprehensive income
(168
)
—
Accumulated deficit
(308,835
)
(288,799
)
Total stockholders’ equity
102,401
112,652
Total liabilities and stockholders’
equity
$
299,678
$
347,490
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
July 3, 2022
April 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
(in thousands, except
percentage and per share data)
Revenue:
Products
$
86,191
$
94,825
$
73,311
$
181,016
$
133,072
Services
32,788
29,926
25,260
62,714
48,055
Total revenue
118,979
124,751
98,571
243,730
181,127
Cost of revenue:
Products
73,829
80,777
62,019
154,606
109,176
Services
11,410
10,399
10,383
21,809
19,975
Total cost of revenue
85,239
91,176
72,402
176,415
129,151
Gross profit
33,740
33,575
26,169
67,315
51,976
Gross margin
28.4
%
26.9
%
26.6
%
27.6
%
28.7
%
Operating expenses:
Research and development
17,402
16,379
16,251
33,781
31,042
Sales and marketing
14,506
13,168
12,459
27,674
23,666
General and administrative
13,149
12,621
13,559
25,770
24,786
Impairment charges
—
—
9,116
—
9,116
Separation expense
25
79
605
104
659
Total operating expenses
45,082
42,247
51,990
87,329
89,269
Loss from operations
(11,342
)
(8,672
)
(25,821
)
(20,014
)
(37,293
)
Operating margin
(9.5
) %
(7.0
) %
(26.2
) %
(8.2
) %
(20.6
) %
Interest income (expense), net
129
(5
)
3
124
27
Other income (expense), net
(116
)
411
2,662
295
3,571
Loss before income taxes
(11,329
)
(8,266
)
(23,156
)
(19,595
)
(33,695
)
Provision for income taxes
228
213
164
441
344
Net loss
$
(11,557
)
$
(8,479
)
$
(23,320
)
$
(20,036
)
$
(34,039
)
Net loss per share:
Basic
$
(0.13
)
$
(0.10
)
$
(0.28
)
$
(0.23
)
$
(0.42
)
Diluted
$
(0.13
)
$
(0.10
)
$
(0.28
)
$
(0.23
)
$
(0.42
)
Weighted average shares used to compute
net loss per share:
Basic
86,868
85,222
82,134
85,966
81,275
Diluted
86,868
85,222
82,134
85,966
81,275
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
July 3, 2022
June 27, 2021
(In thousands)
Cash flows from operating
activities:
Net loss
$
(20,036
)
$
(34,039
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
21,834
19,949
Impairment charges
—
9,116
Depreciation and amortization
2,523
3,169
Allowance for credit losses and inventory
reserves
(120
)
(1,085
)
Deferred income taxes
133
(115
)
Premium amortization (discount accretion)
on investments, net
89
(3
)
Changes in assets and liabilities:
Accounts receivable, net
5,498
25,736
Inventories
(628
)
22,652
Prepaid expenses and other assets
767
(4,782
)
Accounts payable
(6,565
)
(19,189
)
Deferred revenue
(16,763
)
(18,802
)
Accrued and other liabilities
(16,113
)
(26,073
)
Net cash used in operating activities
(29,381
)
(23,466
)
Cash flows from investing
activities:
Purchases of property and equipment
(451
)
(1,066
)
Purchases of short-term investments
(59,490
)
—
Proceeds from maturities of short-term
investments
9,512
20,000
Net cash provided by (used in) investing
activities
(50,429
)
18,934
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
3,171
6,136
Restricted stock unit withholdings
(13,555
)
(9,084
)
Net cash used in financing activities
(10,384
)
(2,948
)
Net decrease in cash and cash equivalents
and restricted cash
(90,194
)
(7,480
)
Cash and cash equivalents and restricted
cash, at beginning of period
179,856
190,291
Cash and cash equivalents and restricted
cash, at end of period
$
89,662
$
182,811
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
333
$
549
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
UNAUDITED STATEMENT OF OPERATIONS
DATA:
Three Months Ended
Six Months Ended
July 3, 2022
April 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
(in thousands, except
percentage data)
GAAP gross profit:
Products
$
12,362
$
14,048
$
11,292
$
26,410
$
23,896
Services
21,378
19,527
14,877
40,905
28,080
Total GAAP gross profit
33,740
33,575
26,169
67,315
51,976
GAAP gross margin:
Products
14.3
%
14.8
%
15.4
%
14.6
%
18.0
%
Services
65.2
%
65.3
%
58.9
%
65.2
%
58.4
%
Total GAAP gross margin
28.4
%
26.9
%
26.6
%
27.6
%
28.7
%
Stock-based compensation expense -
Products
1,148
855
1,289
2,003
2,163
Stock-based compensation expense -
Services
187
55
—
242
—
Non-GAAP gross profit:
Products
13,510
14,903
12,581
28,413
26,059
Services
21,565
19,582
14,877
41,147
28,080
Total Non-GAAP gross profit
$
35,075
$
34,485
$
27,458
$
69,560
$
54,139
Non-GAAP gross margin:
Products
15.7
%
15.7
%
17.2
%
15.7
%
19.6
%
Services
65.8
%
65.4
%
58.9
%
65.6
%
58.4
%
Total Non-GAAP gross margin
29.5
%
27.6
%
27.9
%
28.5
%
29.9
%
GAAP research and development
$
17,402
$
16,379
$
16,251
$
33,781
$
31,042
Stock-based compensation expense
(3,621
)
(2,302
)
(3,832
)
(5,923
)
(6,388
)
Non-GAAP research and development
$
13,781
$
14,077
$
12,419
$
27,858
$
24,654
GAAP sales and marketing
$
14,506
$
13,168
$
12,459
$
27,674
$
23,666
Stock-based compensation expense
(1,790
)
(1,380
)
(1,638
)
(3,170
)
(2,828
)
Non-GAAP sales and marketing
$
12,716
$
11,788
$
10,821
$
24,504
$
20,838
GAAP general and administrative
$
13,149
$
12,621
$
13,559
$
25,770
$
24,786
Stock-based compensation expense
(5,499
)
(4,997
)
(4,850
)
(10,496
)
(8,570
)
Litigation reserves, net
(65
)
(47
)
(157
)
(112
)
(167
)
Non-GAAP general and administrative
$
7,585
$
7,577
$
8,552
$
15,162
$
16,049
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
July 3, 2022
April 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
(in thousands, except
percentage and per share data)
GAAP total operating expenses
$
45,082
$
42,247
$
51,990
$
87,329
$
89,269
Separation expense
(25
)
(79
)
(605
)
(104
)
(659
)
Stock-based compensation expense
(10,910
)
(8,679
)
(10,320
)
(19,589
)
(17,786
)
Impairment charges
—
—
(9,116
)
—
(9,116
)
Litigation reserves, net
(65
)
(47
)
(157
)
(112
)
(167
)
Non-GAAP total operating expenses
$
34,082
$
33,442
$
31,792
$
67,524
$
61,541
GAAP operating loss
$
(11,342
)
$
(8,672
)
$
(25,821
)
$
(20,014
)
$
(37,293
)
GAAP operating margin
(9.5
) %
(7.0
) %
(26.2
) %
(8.2
) %
(20.6
) %
Separation expense
25
79
605
104
659
Stock-based compensation expense
12,245
9,589
11,609
21,834
19,949
Impairment charges
—
—
9,116
—
9,116
Litigation reserves, net
65
47
157
112
167
Non-GAAP operating income (loss)
$
993
$
1,043
$
(4,334
)
$
2,036
$
(7,402
)
Non-GAAP operating margin
0.8
%
0.8
%
(4.4
) %
0.8
%
(4.1
) %
GAAP other income (expense),
net
$
(116
)
$
411
$
2,662
$
295
$
3,571
Employee Retention Credit
(26
)
(39
)
(1,811
)
(65
)
(1,811
)
Non-GAAP other income (expense), net
$
(142
)
$
372
$
851
$
230
$
1,760
GAAP provision for income taxes
$
228
$
213
$
164
$
441
$
344
GAAP income tax rate
(2.0
) %
(2.6
) %
(0.7
) %
(2.3
) %
(1.0
) %
Tax effects
—
—
—
—
—
Non-GAAP provision for income taxes
$
228
$
213
$
164
$
441
$
344
Non-GAAP income tax rate
23.3
%
15.1
%
(4.7
) %
18.5
%
(6.1
) %
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
July 3, 2022
April 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
(in thousands, except
percentage and per share data)
GAAP net loss
$
(11,557
)
$
(8,479
)
$
(23,320
)
$
(20,036
)
$
(34,039
)
Separation expense
25
79
605
104
659
Stock-based compensation expense
12,245
9,589
11,609
21,834
19,949
Impairment charges
—
—
9,116
—
9,116
Litigation reserves, net
65
47
157
112
167
Employee Retention Credit
(26
)
(39
)
(1,811
)
(65
)
(1,811
)
Tax effects
—
—
—
—
—
Non-GAAP net income (loss)
$
752
$
1,197
$
(3,644
)
$
1,949
$
(5,959
)
NET LOSS PER SHARE - BASIC AND
DILUTED:
GAAP net loss per share - basic and
diluted
$
(0.13
)
$
(0.10
)
$
(0.28
)
$
(0.23
)
$
(0.42
)
Separation expense
—
—
0.01
—
0.01
Stock-based compensation expense
0.14
0.11
0.14
0.25
0.25
Impairment charges
—
—
0.11
—
0.11
Tax effects
—
—
—
—
—
Employee Retention Credit
—
—
(0.02
)
—
(0.02
)
Non-GAAP net income (loss) - diluted
$
0.01
$
0.01
$
(0.04
)
$
0.02
$
(0.07
)
Shares used in computing GAAP net income
(loss) - basic
86,868
85,222
82,134
85,966
81,275
Shares used in computing non-GAAP net
income (loss) - diluted
91,787
93,135
82,134
92,687
81,275
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
July 3, 2022
April 3, 2022
December 31,
2021
October 3, 2021
June 27, 2021
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
135,258
$
145,541
$
175,749
$
166,057
$
178,698
Cash, cash equivalents and short-term
investments per diluted share
$
1.47
$
1.56
$
1.94
$
1.98
$
2.18
Accounts receivable, net
$
73,998
$
78,054
$
79,564
$
70,124
$
51,890
Days sales outstanding
57
58
50
62
48
Inventories
$
39,208
$
37,038
$
38,390
$
39,769
$
43,155
Inventory turns
7.5
8.7
10.5
7.6
5.7
Weeks of channel inventory:
U.S. retail channel
11.9
15.8
7.0
14.0
8.0
U.S. distribution channel
7.4
10.5
8.5
8.0
12.5
APAC distribution channel
9.8
18.1
8.9
10.2
8.6
Deferred revenue (current and
non-current)
$
14,022
$
17,375
$
30,786
$
41,686
$
50,903
Cumulative registered accounts (1)
6,640
6,389
6,131
5,822
5,527
Cumulative paid accounts (2)
1,478
1,272
1,067
877
695
Annual recurring revenue (ARR) (3)
$
116,601
$
101,341
$
90,100
$
80,400
$
69,753
Headcount
354
358
353
346
349
Non-GAAP diluted shares
91,787
93,135
90,679
83,809
82,134
_________________________
(1)
We define our registered accounts at the
end of a particular period as the number of unique registered
accounts on the Arlo platform as of the end of such particular
period, and includes accounts owned by Verisure. The number of
registered accounts does not necessarily reflect the number of
end-users on the Arlo platform, as one registered account may be
used by multiple people.
(2)
Paid accounts worldwide measured as any
account where a subscription to a paid service is being collected
(either by the Company or by the Company’s customers or channel
partners), plus paid service plans of a duration of more than 3
months bundled with products (such bundles being counted as a paid
account after 90 days have elapsed from the date of registration).
Paid accounts includes accounts transferred to Verisure.
(3)
Effective as of the third quarter of 2021,
we adopted ARR as one of the key indicators of our business
performance. ARR represents the amount of paid service revenue that
we expect to recur annually and is calculated by taking our
recurring paid service revenue for the last calendar month in the
fiscal quarter, multiplied by 12 months. Recurring paid service
revenue represents the revenue we recognize from our paid accounts
and excludes prepaid service revenue, and NRE service revenue from
strategic partners. The ARR for the comparative periods presented
was derived following the same methodology. ARR is a performance
metric and should be viewed independently of revenue and deferred
revenue, and is not intended to be a substitute for, or combined
with, any of these items.
REVENUE BY GEOGRAPHY
Three Months Ended
Six Months Ended
July 3, 2022
April 3, 2022
June 27, 2021
July 3, 2022
June 27, 2021
(in thousands, except
percentage data)
Americas
$
60,345
51
%
$
68,466
55
%
$
66,681
68
%
$
128,811
53
%
$
116,317
65
%
EMEA
54,483
46
%
49,975
40
%
25,101
25
%
104,458
43
%
49,692
27
%
APAC
4,151
3
%
6,310
5
%
6,789
7
%
10,461
4
%
15,118
8
%
Total
$
118,979
100
%
$
124,751
100
%
$
98,571
100
%
$
243,730
100
%
$
181,127
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220809005503/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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