Exceeded High-End of both Revenue and
Non-GAAP EPS Guidance for the Quarter
48% Year over Year growth in Service
Revenue, Product Revenue and Total Revenue
133% Year over Year growth in Total Paid
Accounts
Ended quarter with Cash, Cash Equivalents
and Short-term Investments Balance at $178.7 million, with No
Debt
Arlo Technologies, Inc. (NYSE: ARLO), a leading
internet-connected security camera brand, today reported financial
results for the second quarter ended June 27, 2021.
Financial Highlights (1)
- Revenue of $98.6 million, an increase of 47.9% year over
year.
- GAAP gross profit of $26.2 million, an increase of 376.8% year
over year; non-GAAP gross profit of $27.5 million, an increase of
328.5% year over year.
- GAAP gross margin of 26.6%; non-GAAP gross margin of
27.9%.
- GAAP net loss per diluted share of $(0.28); non-GAAP net loss
per diluted share of $(0.04).
- Cash, cash equivalents and short-term investments of $178.7
million and no debt at the end of Q2.
“I am proud to say the Arlo team delivered exceptional results
across the entire business in Q2, successfully navigating
considerable supply chain challenges. Revenue and non-GAAP EPS both
came in above the high end of our guidance range. Our new business
model for services continued to gather momentum, adding a record
146,000 Paid Accounts in the quarter and surpassing 700,000 Paid
Accounts in total on July 4th, propelling our service revenue to a
record $25.3 million, up an impressive 48% year-over-year. Our
refreshed product line-up also contributed to very strong product
revenue growth of 48% year-over-year. We continued to execute to
plan in our partnership with Verisure, delivering 123%
year-over-year revenue growth in Europe and commencing production
of a new camera system designed specifically for the needs of the
Verisure Security Channel,” said Matthew McRae, Chief Executive
Officer of Arlo Technologies. “Our impressive revenue growth of 48%
was significantly over-indexed by non-GAAP gross profit, which grew
328% and by $21.0 million year-over-year. Our innovation in
Services accelerated with the launch of Arlo Secure and Arlo Secure
Plus, our new Service plans, which will extend Arlo’s technological
leadership, while adding significant value to our customers. Our
industry-leading hardware continued to garner acclaim, winning
multiple awards and commendations. With this tremendous progress on
all fronts, we believe we are well-positioned to achieve $100.0
million in service revenue and $410.0 to $420.0 million total
revenue this year.”
Three Months Ended
Six Months Ended
June 27, 2021
March 28, 2021
June 28, 2020
June 27, 2021
June 28, 2020
(in thousands, except
percentage and per share data)
Revenue
$
98,571
$
82,556
$
66,632
$
181,127
$
132,082
GAAP Gross Margin
26.6
%
31.3
%
8.2
%
28.7
%
7.1
%
Non-GAAP Gross Margin (1)
27.9
%
32.3
%
9.6
%
29.9
%
8.5
%
GAAP Net Income (Loss) per Diluted
Share
$
(0.28
)
$
(0.13
)
$
(0.38
)
$
(0.42
)
$
(0.89
)
Non-GAAP Net Income (Loss) per Diluted
Share (1)
$
(0.04
)
$
(0.03
)
$
(0.31
)
$
(0.07
)
$
(0.64
)
_________________________
(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.
Financial and Business Highlights
- Service revenue of $25.3 million for Q2, for growth of 48.3%
year over year, the eighth consecutive quarter of record service
revenue.
- Concluded an agreement to sublease our entire San Jose office
which starts in February 2022 and runs to the end of our committed
term in 2029. We expect the sublease will save $3 million to $4
million per annum across the business from next year, but due to
the nature of the transaction it did generate a non-cash impairment
charge of $9.1 million, which is included within our GAAP operating
expenses in Q2.
- Added a record 146,000 Paid Accounts in Q2, a sequential
increase of 28.1% over Q1, and a year over year increase of
239.5%.
- Launched Arlo Secure and Secure Plus, our next generation
service offering to deliver the ultimate security experience.
- Won numerous awards including the Editors’ Choice award from
TechHive (Pro 4 series), a Highly Recommended award from Tom’s
Guide (Ultra 2), a recommendation by Digital Trends (Essential
Indoor), acclaim from T3 (Essential Spotlight).
Third Quarter 2021 Business Outlook (2)
- Revenue of $100.0 million to $110.0 million.
- GAAP net loss per diluted share of $(0.30) to $(0.23), and
non-GAAP net loss per diluted share of $(0.19) to $(0.12).
A reconciliation of our business outlook on a GAAP and non-GAAP
basis is provided in the following table:
Three Months Ending October 3,
2021
Revenue
Net Loss per Diluted
Share
(in millions, except per share
data)
GAAP
$100.0 - $110.0
$(0.30) - $(0.23)
Estimated adjustments for (2):
Stock-based compensation expense
—
0.10
Separation expense
—
0.01
Tax effects of non-GAAP adjustments
—
—
Non-GAAP
$100.0 - $110.0
$(0.19) - $(0.12)
_________________________
(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 second quarter of 2021 results and discuss
management’s expectations for the third quarter of 2021 today,
Wednesday, August 4, 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 2694444. 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. The company’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, video doorbells, and floodlight.
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 doesn't
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.
© 2021 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
our potential future business, operating performance and financial
condition, including descriptions of our expected revenue, GAAP and
non-GAAP gross margins, operating margins, tax rates, expenses, and
cash outlook; our transition to a services-first business model;
the commercial launch and momentum of Arlo Secure and Arlo Secure
Plus; strategic objectives and initiatives, including our
collaboration with Verisure; the commercial launch and momentum of
Arlo Secure and Arlo Secure Plus; strategic objectives and
initiatives, including our collaboration with Verisure;
expectations regarding market expansion and future growth; plans to
invest in product innovation; the Company's future product
offerings; supply chain challenges; and the quote from the
Company'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 the
Company and its partners and customers operate; the Company may
fail to successfully continue to effect operating expense savings;
changes in the level of the Company'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 the Company'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 the Company's 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 March 28, 2021, filed with
the Securities and Exchange Commission on May 6, 2021 and
subsequent filings with the Securities and Exchange Commission.
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, amortization of
intangibles, impairment charges, 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
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.
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.
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,
litigation reserves, net and Impairment charges. 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
June 27, 2021
December 31, 2020
(In thousands, except share
and per share data)
ASSETS
Current assets:
Cash and cash equivalents
$
178,698
$
186,127
Short-term investments (amortized cost of
$— and $19,996)
—
19,997
Accounts receivable, net (net of allowance
for credit losses of $536 and $519)
51,890
77,643
Inventories
43,155
64,705
Prepaid expenses and other current
assets
11,852
8,076
Total current assets
285,595
356,548
Property and equipment, net
11,368
15,821
Operating lease right-of-use assets,
net
15,148
23,998
Goodwill
11,038
11,038
Restricted cash
4,113
4,164
Other non-current assets
3,519
2,399
Total assets
$
330,781
$
413,968
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
42,884
$
62,171
Deferred revenue
47,668
53,142
Accrued liabilities
97,707
121,766
Income tax payable
96
267
Total current liabilities
188,355
237,346
Non-current deferred revenue
3,235
16,563
Non-current operating lease
liabilities
22,780
25,029
Non-current income taxes payable
111
104
Other non-current liabilities
1,515
1,159
Total liabilities
215,996
280,201
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:
82,916,535 at June 27, 2021 and 79,336,242 at December 31, 2020
83
79
Additional paid-in capital
381,511
366,455
Accumulated other comprehensive income
—
3
Accumulated deficit
(266,809
)
(232,770
)
Total stockholders’ equity
114,785
133,767
Total liabilities and stockholders’
equity
$
330,781
$
413,968
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Six Months Ended
June 27, 2021
March 28, 2021
June 28, 2020
June 27, 2021
June 28, 2020
(in thousands, except
percentage and per share data)
Revenue:
Products
$
73,311
$
59,761
$
49,603
$
133,072
$
100,326
Services
25,260
22,795
17,029
48,055
31,756
Total revenue
98,571
82,556
66,632
181,127
132,082
Cost of revenue:
Products
62,019
47,157
51,186
109,176
103,374
Services
10,383
9,592
9,957
19,975
19,266
Total cost of revenue
72,402
56,749
61,143
129,151
122,640
Gross profit
26,169
25,807
5,489
51,976
9,442
Gross margin
26.6
%
31.3
%
8.2
%
28.7
%
7.1
%
Operating expenses:
Research and development
16,251
14,791
14,192
31,042
29,435
Sales and marketing
12,459
11,207
11,713
23,666
22,751
General and administrative
13,559
11,227
9,837
24,786
28,621
Impairment charges
9,116
—
—
9,116
—
Separation expense
605
54
82
659
161
Gain on sale of business
—
—
—
—
(292
)
Total operating expenses
51,990
37,279
35,824
89,269
80,676
Loss from operations
(25,821
)
(11,472
)
(30,335
)
(37,293
)
(71,234
)
Operating margin
(26.2
)%
(13.9
)%
(45.5
)%
(20.6
)%
(53.9
)%
Interest income
3
24
151
27
686
Other income (expense), net
2,662
909
1,111
3,571
2,294
Loss before income taxes
(23,156
)
(10,539
)
(29,073
)
(33,695
)
(68,254
)
Provision for income taxes
164
180
183
344
328
Net loss
$
(23,320
)
$
(10,719
)
$
(29,256
)
$
(34,039
)
$
(68,582
)
Net loss per share:
Basic
$
(0.28
)
$
(0.13
)
$
(0.38
)
$
(0.42
)
$
(0.89
)
Diluted
$
(0.28
)
$
(0.13
)
$
(0.38
)
$
(0.42
)
$
(0.89
)
Weighted average shares used to compute
net loss per share:
Basic
82,134
80,370
77,885
81,275
77,229
Diluted
82,134
80,370
77,885
81,275
77,229
ARLO TECHNOLOGIES,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 27, 2021
June 28, 2020
(In thousands)
Cash flows from operating
activities:
Net loss
$
(34,039
)
$
(68,582
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock-based compensation expense
19,949
17,337
Impairment charges
9,116
—
Depreciation and amortization
3,169
5,476
Allowance for credit losses and inventory
reserves
(1,085
)
1,182
Deferred income taxes
(115
)
27
Premium amortization (discount accretion)
on investments, net
(3
)
44
Gain on sale of business
—
(292
)
Changes in assets and liabilities:
Accounts receivable, net
25,736
80,650
Inventories
22,652
1,827
Prepaid expenses and other assets
(4,782
)
8,745
Accounts payable
(19,189
)
(58,669
)
Deferred revenue
(18,802
)
(11,553
)
Accrued and other liabilities
(26,073
)
(24,875
)
Net cash used in operating activities
(23,466
)
(48,683
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,066
)
(1,184
)
Purchases of short-term investments
—
(25,094
)
Maturities of short-term investments
20,000
25,000
Net cash provided by (used in) investing
activities
18,934
(1,278
)
Cash flows from financing
activities:
Proceeds related to employee benefit
plans
6,136
1,856
Restricted stock unit withholdings
(9,084
)
(3,149
)
Net cash used in financing activities
(2,948
)
(1,293
)
Net decrease in cash and cash equivalents
and restricted cash
(7,480
)
(51,254
)
Cash and cash equivalents and restricted
cash, at beginning of period
190,291
240,819
Cash and cash equivalents and restricted
cash, at end of period
$
182,811
$
189,565
Non-cash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
549
$
1,523
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES
UNAUDITED STATEMENT OF OPERATIONS
DATA:
Three Months Ended
Six Months Ended
June 27, 2021
March 28, 2021
June 28, 2020
June 27, 2021
June 28, 2020
(in thousands, except
percentage data)
GAAP gross profit:
Products
$
11,292
$
12,604
$
(1,583
)
$
23,896
$
(3,048
)
Services
14,877
13,203
7,072
28,080
12,490
Total GAAP gross profit
26,169
25,807
5,489
51,976
9,442
GAAP gross margin:
Products
15.4
%
21.1
%
(3.2
)%
18.0
%
(3.0
)%
Services
58.9
%
57.9
%
41.5
%
58.4
%
39.3
%
Total GAAP gross margin
26.6
%
31.3
%
8.2
%
28.7
%
7.1
%
Stock-based compensation expense
1,289
874
562
2,163
1,065
Amortization of intangibles
—
—
357
—
713
Restructuring and other charges
—
—
—
—
23
Non-GAAP gross profit:
Products
12,581
13,478
(664
)
26,059
(1,247
)
Services
14,877
13,203
7,072
28,080
12,490
Total Non-GAAP gross profit
$
27,458
$
26,681
$
6,408
$
54,139
$
11,243
Non-GAAP gross margin:
Products
17.2
%
22.6
%
(1.3
)%
19.6
%
(1.2
)%
Services
58.9
%
57.9
%
41.5
%
58.4
%
39.3
%
Total Non-GAAP gross margin
27.9
%
32.3
%
9.6
%
29.9
%
8.5
%
GAAP research and development
$
16,251
$
14,791
$
14,192
$
31,042
$
29,435
Stock-based compensation expense
(3,832
)
(2,556
)
(1,729
)
(6,388
)
(3,389
)
Non-GAAP research and development
$
12,419
$
12,235
$
12,463
$
24,654
$
26,046
GAAP sales and marketing
$
12,459
$
11,207
$
11,713
$
23,666
$
22,751
Stock-based compensation expense
(1,638
)
(1,190
)
(984
)
(2,828
)
(1,735
)
Non-GAAP sales and marketing
$
10,821
$
10,017
$
10,729
$
20,838
$
21,016
GAAP general and administrative
$
13,559
$
11,227
$
9,837
$
24,786
$
28,621
Stock-based compensation expense
(4,850
)
(3,720
)
(1,289
)
(8,570
)
(11,148
)
Restructuring and other charges
—
—
—
—
(21
)
Strategic initiative and transaction
expenses
—
—
(206
)
—
(751
)
Litigation reserves, net
(157
)
(10
)
(249
)
(167
)
(256
)
Non-GAAP general and administrative
$
8,552
$
7,497
$
8,093
$
16,049
$
16,445
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
June 27, 2021
March 28, 2021
June 28, 2020
June 27, 2021
June 28, 2020
(in thousands, except
percentage and per share data)
GAAP total operating expenses
$
51,990
$
37,279
$
35,824
$
89,269
$
80,676
Separation expense
(605
)
(54
)
(82
)
(659
)
(161
)
Strategic initiative and transaction
expenses
—
—
(206
)
—
(751
)
Stock-based compensation expense
(10,320
)
(7,466
)
(4,002
)
(17,786
)
(16,272
)
Impairment charges
(9,116
)
—
—
(9,116
)
—
Restructuring and other charges
—
—
—
—
(21
)
Litigation reserves, net
(157
)
(10
)
(249
)
(167
)
(256
)
Gain on sale of business
—
—
—
—
292
Non-GAAP total operating expenses
$
31,792
$
29,749
$
31,285
$
61,541
$
63,507
GAAP operating loss
$
(25,821
)
$
(11,472
)
$
(30,335
)
$
(37,293
)
$
(71,234
)
GAAP operating margin
(26.2
)%
(13.9
)%
(45.5
)%
(20.6
)%
(53.9
)%
Separation expense
605
54
82
659
161
Strategic initiative and transaction
expenses
—
—
206
—
751
Stock-based compensation expense
11,609
8,340
4,564
19,949
17,337
Impairment charges
9,116
—
—
9,116
—
Amortization of intangibles
—
—
357
—
713
Restructuring and other charges
—
—
—
—
44
Litigation reserves, net
157
10
249
167
256
Gain on sale of business
—
—
—
—
(292
)
Non-GAAP operating loss
$
(4,334
)
$
(3,068
)
$
(24,877
)
$
(7,402
)
$
(52,264
)
Non-GAAP operating margin
(4.4
)%
(3.7
)%
(37.3
)%
(4.1
)%
(39.6
)%
GAAP other income (expense),
net
$
2,662
$
909
$
1,111
$
3,571
$
2,294
Employee Retention Credit
$
(1,811
)
$
—
$
—
$
(1,811
)
$
—
Non-GAAP other income (expense), net
$
851
$
909
$
1,111
$
1,760
$
2,294
GAAP provision for income taxes
$
164
$
180
$
183
$
344
$
328
GAAP income tax rate
(0.7
)%
(1.7
)%
(0.6
)%
(1.0
)%
(0.5
)%
Tax effects
—
—
2
—
31
Non-GAAP provision for income taxes
$
164
$
180
$
181
$
344
$
297
Non-GAAP income tax rate
(4.7
)%
(8.4
)%
(0.8
)%
(6.1
)%
(0.6
)%
ARLO TECHNOLOGIES,
INC.
RECONCILIATIONS OF GAAP
MEASURES TO NON-GAAP MEASURES (CONTINUED)
UNAUDITED STATEMENT OF OPERATIONS DATA
(CONTINUED):
Three Months Ended
Six Months Ended
June 27, 2021
March 28, 2021
June 28, 2020
June 27, 2021
June 28, 2020
(in thousands, except
percentage and per share data)
GAAP net loss
$
(23,320
)
$
(10,719
)
$
(29,256
)
$
(34,039
)
$
(68,582
)
Separation expense
605
54
82
659
161
Strategic initiative and transaction
expenses
—
—
206
—
751
Stock-based compensation expense
11,609
8,340
4,564
19,949
17,337
Impairment charges
9,116
—
—
9,116
—
Amortization of intangibles
—
—
357
—
713
Restructuring and other charges
—
—
—
—
44
Litigation reserves, net
157
10
249
167
256
Gain on sale of business
—
—
—
—
(292
)
Employee Retention Credit
(1,811
)
—
—
(1,811
)
—
Tax effects
—
—
2
—
31
Non-GAAP net loss
$
(3,644
)
$
(2,315
)
$
(23,796
)
$
(5,959
)
$
(49,581
)
NET LOSS PER DILUTED SHARE:
GAAP net loss per diluted share
$
(0.28
)
$
(0.13
)
$
(0.38
)
$
(0.42
)
$
(0.89
)
Separation expense
0.01
—
—
0.01
0.01
Strategic initiative and transaction
expenses
—
—
—
—
0.01
Stock-based compensation expense
0.14
0.10
0.06
0.25
0.22
Impairment charges
0.11
—
—
0.11
—
Amortization of intangibles
—
—
0.01
—
0.01
Employee Retention Credit
$
(0.02
)
$
—
$
—
$
(0.02
)
$
—
Non-GAAP net loss per diluted share
$
(0.04
)
$
(0.03
)
$
(0.31
)
$
(0.07
)
$
(0.64
)
Shares used in computing GAAP net loss per
diluted share
82,134
80,370
77,885
81,275
77,229
Shares used in computing non-GAAP net loss
per diluted share
82,134
80,370
77,885
81,275
77,229
ARLO TECHNOLOGIES,
INC.
UNAUDITED SUPPLEMENTAL
FINANCIAL INFORMATION
Three Months Ended
June 27, 2021
March 28, 2021
December 31,
2020
September 27,
2020
June 28, 2020
(in thousands, except
headcount and per share data)
Cash, cash equivalents and short-term
investments
$
178,698
$
177,113
$
206,124
$
193,611
$
205,454
Cash, cash equivalents and short-term
investments per diluted share
$
2.18
$
2.20
$
2.60
$
2.46
$
2.64
Accounts receivable, net
$
51,890
$
51,121
$
77,643
$
56,431
$
46,466
Days sales outstanding
48
54
64
47
63
Inventories
$
43,155
$
55,972
$
64,705
$
69,038
$
65,814
Inventory turns
5.7
3.4
5.0
4.6
3.1
Weeks of channel inventory:
U.S. retail channel
8.0
12.5
9.2
8.4
6.6
U.S. distribution channel
12.5
9.6
11.7
8.6
8.4
APAC distribution channel
8.6
6.9
2.8
4.2
6.8
Deferred revenue (current and
non-current)
$
50,903
$
61,604
$
69,705
$
38,530
$
54,546
Cumulative registered accounts (1)
5,527
5,275
5,047
4,774
4,518
Cumulative paid accounts (2)
695
549
435
356
298
Headcount
349
355
359
358
355
Non-GAAP diluted shares
82,134
80,370
79,164
78,662
77,885
(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
Six Months Ended
June 27, 2021
March 28, 2021
June 28, 2020
June 27, 2021
June 28, 2020
(in thousands, except
percentage data)
Americas
$
66,681
68
%
$
49,636
60
%
$
50,999
76
%
$
116,317
65
%
$
101,169
77
%
EMEA
25,101
25
%
24,591
30
%
11,263
17
%
49,692
27
%
18,521
14
%
APAC
6,789
7
%
8,329
10
%
4,370
7
%
15,118
8
%
12,392
9
%
Total
$
98,571
100
%
$
82,556
100
%
$
66,632
100
%
$
181,127
100
%
$
132,082
100
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804006037/en/
Arlo Investor Relations Erik Bylin investors@arlo.com (510)
315-1004
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